10-K/A
Adient plc (ADNT)
10-K/A
2020-06-23
For: 2019-09-30
View Original
Added on
April 08, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| FORM | 10-K/A |
|---|---|
| (Amendment No. 1) |
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2019
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-37757
| Adient plc | |
|---|---|
| (exact name of Registrant as specified in its charter) | |
| Ireland | 98-1328821 |
| --- | --- |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
25-28 North Wall Quay, IFSC, Dublin 1, Ireland D01 H104
(Address of principal executive offices)
734-254-5000
(Registrant's telephone number, including area code)
| Securities registered pursuant to Section 12(b) of the Act: | ||
|---|---|---|
| Title of each class | Trading Symbol | Name of exchange on which registered |
| Ordinary Shares, par value $0.001 | ADNT | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer | ☑ | Accelerated filer | ☐ |
|---|---|---|---|
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of March 31, 2019, the last business day of the Registrant’s most recently completed second fiscal quarter, was approximately $1.2 billion. At September 30, 2019, 93,620,714 ordinary shares were outstanding.
Documents Incorporated by Reference
Portions of the Registrant's definitive proxy statement relating to its 2020 annual general meeting of shareholders held on March 12, 2020 (the "2020 Proxy Statement") are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2020 Proxy Statement was filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.
Adient plc | Form 10-K | 2
Explanatory Note
This Amendment No. 1 to Form 10-K (this “Amendment”) amends the Annual Report on Form 10-K for the fiscal year ended September 30, 2019, originally filed on November 22, 2019 (the “Original 10-K”), of Adient plc (“Adient”). Adient is filing this Amendment to amend Item 15 of the Original 10-K to include the separate financial statements of Yanfeng Adient Seating Co, Ltd. (“YFAS”) as required by Rule 3-09 of Regulation S-X because YFAS was deemed significant to Adient under Rule 3-09 of Regulation S-X (the “Rule 3-09 financial statements”). The Rule 3-09 financial statements were not included in the Original 10-K because, as previously disclosed, YFAS’s fiscal year ended on December 31, 2019, after the date of the filing of the Original 10-K. The Rule 3-09 financial statements include consolidated balance sheets of YFAS as of December 31, 2019, 2018 and 2017 and the related consolidated statements of income, of changes in owners’ equity, and cash flows for each of the three years in the period ended December 31, 2019. In accordance with Rule 3-09 of Regulation S-X, only the financial statements as of and for the years ended December 31, 2019 and December 31, 2018 are required to be audited. The Rule 3-09 financial statements as of and for the year ended December 31, 2017 are unaudited. The Rule 3-09 financial statements were prepared and provided to Adient by YFAS.
This Amendment should be read in conjunction with the Original 10-K. The Original 10-K has not been amended or updated to reflect events occurring after November 22, 2019, except as specifically set forth in this Amendment.
Adient plc | Form 10-K | 3
ADIENT AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
| Year Ended<br>September 30, | ||||||
|---|---|---|---|---|---|---|
| (in millions) | 2019 | 2018 | 2017 | |||
| Accounts Receivable - Allowance for Doubtful Accounts | ||||||
| Balance at beginning of period | $ | 15 | $ | 20 | $ | 21 |
| Provision charged to costs and expenses | 15 | 12 | 13 | |||
| Reserve adjustments | (16) | (17) | (14) | |||
| Balance at end of period | $ | 14 | $ | 15 | $ | 20 |
| Deferred Tax Assets - Valuation Allowance | ||||||
| Balance at beginning of period | $ | 846 | $ | 223 | $ | 267 |
| Allowance provision for new operating and other loss carryforwards | 488 | 669 | 23 | |||
| Allowance provision (benefit) adjustments | (30) | (46) | (67) | |||
| Balance at end of period | $ | 1,304 | $ | 846 | $ | 223 |
The financial statements of YFAS and its consolidated subsidiaries required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.1 to this Amendment.
All other financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this Form 10-K.
Adient plc | Form 10-K | 4
| (3) | Exhibits required by Item 601 of Regulation S-K |
|---|
EXHIBIT INDEX
Adient plc | Form 10-K | 5
Adient plc | Form 10-K | 6
Adient plc | Form 10-K | 7
Adient plc | Form 10-K | 8
| 32.1 | Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. † |
|---|---|
| 32.2 | Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, datedJune22, 2020. |
| 99.1 | Financial Statements of YFAS and Consolidated Subsidiaries as of December 31, 2019, December 31, 2018 and December 31, 2017 and for the years ended December 31, 2019, December 31, 2018 and December 31, 2017. |
| 101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | XBRL Taxonomy Extension Schema Document. |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
| # | Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Adient hereby undertakes to furnish copies of any of the omitted schedules and exhibits upon request by the SEC. |
| --- | --- |
| * | Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit hereto. |
| † | Previously filed with the Original 10-K. |
Adient plc | Form 10-K | 9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Adient plc | |
|---|---|
| By: | /s/ Douglas G. Del Grosso |
| Douglas G. Del Grosso | |
| President and Chief Executive Officer and a Director | |
| Date: | June 22, 2020 |
| By: | /s/ Jeffrey M. Stafeil |
| Jeffrey M. Stafeil | |
| Executive Vice President and Chief Financial Officer | |
| Date: | June 22, 2020 |
Adient plc | Form 10-K | 10
Document
| Exhibit 23.2 |
|---|
| CONSENT OF INDEPENDENT AUDITORS |
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-214320 and 333-237106) of Adient plc of our report dated June 22, 2020 relating to the consolidated financial statements of Yanfeng Adient Seating Co., Ltd., which appears in this Form 10-K/A.
| /s/ PricewaterhouseCoopers Zhong Tian LLP |
|---|
| PricewaterhouseCoopers Zhong Tian LLP<br>Shanghai, the People’s Republic of China |
June 22, 2020
Document
| Exhibit 31.3 |
|---|
| Certification |
I, Douglas G. Del Grosso, certify that:
| 1 | I have reviewed this Amendment to the Annual Report on Form 10-K/A of Adient plc for the year ended September 30, 2019; | ||
|---|---|---|---|
| 2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and | ||
| --- | --- | ||
| 3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. | ||
| --- | --- | ||
| Date: | June 22, 2020 | ||
| --- | --- | --- | --- |
| By: | /s/ Douglas G. Del Grosso | ||
| Douglas G. Del Grosso | |||
| President and Chief Executive Officer and a Director |
Document
| Exhibit 31.4 |
|---|
| Certification |
I, Jeffrey M. Stafeil, certify that:
| 1 | I have reviewed this Amendment to the Annual Report on Form 10-K/A of Adient plc for the year ended September 30, 2019; | ||
|---|---|---|---|
| 2 | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and | ||
| --- | --- | ||
| 3 | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. | ||
| --- | --- | ||
| Date: | June 22, 2020 | ||
| --- | --- | --- | --- |
| By: | /s/ Jeffrey M. Stafeil | ||
| Jeffrey M. Stafeil | |||
| Executive Vice President and Chief Financial Officer |
Document
| Exhibit 32.2 |
|---|
| CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER |
| PURSUANT TO |
| 18 U.S.C. SECTION 1350, |
| AS ADOPTED PURSUANT TO |
| SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 |
In connection with Amendment to the Annual Report on Form 10-K/A of Adient plc for the year ended September 30, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Douglas G. Del Grosso, Chief Executive Officer of Adient plc, and Jeffrey M. Stafeil, as Chief Financial Officer of Adient plc, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
| 1 | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | ||
|---|---|---|---|
| 2 | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Adient plc. | ||
| Adient plc | |||
| --- | |||
| Date: | June 22, 2020 | ||
| --- | --- | --- | --- |
| By: | /s/ Douglas G. Del Grosso | ||
| Douglas G. Del Grosso | |||
| President and Chief Executive Officer and a Director | |||
| Date: | June 22, 2020 | ||
| --- | --- | --- | --- |
| By: | /s/ Jeffrey M. Stafeil | ||
| Jeffrey M. Stafeil | |||
| Executive Vice President and Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to Adient plc and will be retained by Adient plc and furnished to the Securities and Exchange Commission or its staff upon request.
Document
Exhibit 99.1
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT AUDITOR
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017
| YANFENG ADIENT SEATING CO., LTD.<br><br><br><br>CONSOLIDATED FINANCIAL STATEMENTS AND<br><br>REPORT OF INDEPENDENT AUDITOR<br><br>FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 | |
|---|---|
| Contents | Page |
| Report of Independent Auditor | 1 - 2 |
| Consolidated balance sheets | 3 - 4 |
| Consolidated income statements | 5 |
| Consolidated cash flow statements | 6 |
| Consolidated statements of changes in owners’ equity | 7 - 8 |
| Notes to the consolidated financial statements | 9 - 94 |
Report of Independent Auditors
To the Board of Directors of Yanfeng Adient Seating Co., Ltd.
We have audited the accompanying consolidated financial statements of Yanfeng Adient Seating Co., Ltd. and its subsidiaries which comprise the consolidated balance sheets as of 31 December 2019 and 2018, and the related consolidated statements of income, of changes in owners’ equity and of cash flow for the years then ended.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the requirements of Accounting Standards for Business Enterprises in the People’s Republic of China; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Yanfeng Adient Seating Co., Ltd. and its subsidiaries as of 31 December 2019 and 2018, and the results of their operations and their cash flows for the years then ended in accordance with the requirements of Accounting Standards for Business Enterprises in the People’s Republic of China.
Emphasis of Matter
Accounting Standards for Business Enterprises in the People’s Republic of China vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 14 to the consolidated financial statements.
Other Matter
The accompanying consolidated balance sheet of Yanfeng Adient Seating Co., Ltd. and its subsidiaries as of 31 December 2017, and the related consolidated statements of income, of changes in owners’ equity and of cash flow for the year then ended are presented for purposes of complying with Rule 3-09 of SEC Regulation S-X; however, Rule 3-09 does not require the 2017 financial statements to be audited and they are therefore not covered by this report.
/s/ PricewaterhouseCoopers Zhong Tian LLP
PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
22 June 2020
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2019, 2018 AND 2017*
(All amounts in RMB Yuan unless otherwise stated)
| ASSETS | Note | 31 December 2019<br>Consolidated | 31 December 2018<br>Consolidated<br>（Restatement） | 31 December 2017*<br>Consolidated<br>(Restatement) |
|---|---|---|---|---|
| Current assets | ||||
| Cash at bank and on hand | 7(1) | 9,576,491,276 | 9,297,999,049 | 8,133,672,578 |
| Notes receivables | 7(2) | 6,500,000 | 2,004,305,172 | 1,400,014,717 |
| Accounts receivables | 7(3) | 5,534,227,429 | 4,532,004,921 | 8,172,820,877 |
| Receivables financing | 7(4) | 2,276,839,586 | — | — |
| Advances to suppliers | 7(6) | 179,745,843 | 164,039,316 | 203,060,113 |
| Other receivables | 7(5) | 569,661,523 | 761,450,480 | 846,479,167 |
| Inventories | 7(7) | 817,538,039 | 699,247,505 | 894,975,575 |
| Other current assets | 7(8) | 267,288,176 | 262,322,994 | 147,488,522 |
| Total current assets | 19,228,291,872 | 17,721,369,437 | 19,798,511,549 | |
| Non-current assets | ||||
| Long-term equity investments | 7(9) | 158,345,314 | 187,583,985 | 210,259,121 |
| Investment properties | 7(10) | 39,398,263 | 41,346,528 | 42,529,486 |
| Fixed assets | 7(11) | 1,857,447,136 | 1,889,156,233 | 1,828,614,100 |
| Construction in progress | 7(12) | 432,670,178 | 364,441,463 | 278,761,927 |
| Intangible assets | 7(13) | 398,336,191 | 382,752,582 | 360,392,024 |
| Goodwill | 7(14) | 71,566,642 | 71,566,642 | 71,566,642 |
| Long-term prepaid expenses | 7(15) | 116,759,866 | 131,768,290 | 164,414,655 |
| Deferred tax assets | 7(16) | 1,746,772,809 | 1,510,284,687 | 1,090,403,831 |
| Other non-current assets | 7(17) | 24,614,465 | 53,966,768 | 80,605,952 |
| Total non-current assets | 4,845,910,864 | 4,632,867,178 | 4,127,547,738 | |
| TOTAL ASSETS | 24,074,202,736 | 22,354,236,615 | 23,926,059,287 |
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED BALANCE SHEETS AS AT 31 DECEMBER 2019, 2018 AND 2017* (Cont’d)
(All amounts in RMB Yuan unless otherwise stated)
| LIABILITIES AND OWNERS' EQUITY | Note | 31 December 2019<br>Consolidated | 31 December 2018<br>Consolidated<br>(Restatement) | 31 December 2017*<br>Consolidated<br>(Restatement) | |
|---|---|---|---|---|---|
| Current liabilities | |||||
| Short-term borrowings | 7(18) | 433,051,550 | 578,660,000 | 551,280,196 | |
| Notes payables | 7(19) | 634,111,311 | 665,390,579 | 653,798,483 | |
| Accounts payables | 7(20) | 11,994,465,250 | 10,447,210,448 | 12,797,027,105 | |
| Advances from customers | 40,985,353 | 16,559,431 | 18,356,209 | ||
| Employee benefits payable | 7(21) | 830,091,899 | 835,145,685 | 847,097,224 | |
| Taxes payable | 7(22) | 427,592,840 | 545,954,818 | 656,622,866 | |
| Other payables | 7(23) | 4,410,897,268 | 3,975,311,258 | 3,527,012,379 | |
| Current portion of long-term borrowings | 7(24) | — | 1,500,000 | 3,000,000 | |
| Current portion of non-current liabilities | 27,056 | 22,770 | 22,770 | ||
| Total current liabilities | 18,771,222,527 | 17,065,754,989 | 19,054,217,232 | ||
| Non-current liabilities | |||||
| Long-term borrowings | 7(24) | — | — | 1,500,000 | |
| Provisions | 29,811,077 | 6,569,571 | 3,371,338 | ||
| Deferred income | 7(25) | 16,529,595 | 14,135,470 | 9,117,415 | |
| Deferred tax liabilities | 7(16) | 1,364,283 | — | — | |
| Total non-current liabilities | 47,704,955 | 20,705,041 | 13,988,753 | ||
| Total liabilities | 18,818,927,482 | 17,086,460,030 | 19,068,205,985 | ||
| Owners' equity | |||||
| Paid-in capital | 439,853,380 | 439,853,380 | 439,853,380 | ||
| Other comprehensive income | 7(39(b)) | 6,398,374 | 1,515,997 | 1,414,254 | |
| Surplus reserve | 7(26) | 568,303,779 | 508,075,017 | 441,810,777 | |
| Undistributed profits | 7(27) | 3,668,099,694 | 3,774,252,967 | 3,463,983,805 | |
| Total equity attributable to equity<br> owners of the Company | 4,682,655,227 | 4,723,697,361 | 4,347,062,216 | ||
| Minority interests | 572,620,027 | 544,079,224 | 510,791,086 | ||
| Total owners' equity | 5,255,275,254 | 5,267,776,585 | 4,857,853,302 | ||
| TOTAL LIABILITIES AND OWNERS' EQUITY | 24,074,202,736 | 22,354,236,615 | 23,926,059,287 | ||
| * Not covered by the AUDITOR’S report included herein | |||||
| The accompanying notes form an integral part of these consolidated financial statements. | |||||
| Legal representative: Jianxu Jia Principal in charge of accounting: Chungao Zang Head of accounting department: Jianjun Chu |
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017*
(All amounts in RMB Yuan unless otherwise stated)
| Item | Note | 2019 Consolidated | 2018 Consolidated | 2017* Consolidated | |||||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 7(28) | 28,503,974,080 | 33,315,911,601 | 32,043,195,882 | |||||
| Less: | Cost of sales | 7(28),7(31) | (23,352,653,637) | (27,732,668,176) | (26,532,394,041) | ||||
| Taxes and surcharges | 7(29) | (101,149,380) | (125,178,415) | (196,541,376) | |||||
| Selling and distribution expenses | 7(31) | (248,297,155) | (262,664,282) | (256,281,872) | |||||
| General and administrative expenses | 7(31) | (1,410,223,435) | (1,228,709,486) | (1,323,142,177) | |||||
| Research and development expenses | 7(31) | (886,837,747) | (1,009,683,099) | (998,729,114) | |||||
| Add: | Financial income - net | 7(30) | 99,711,336 | 121,914,465 | 17,829,635 | ||||
| Including: Interest expenses | (33,861,533) | (33,145,222) | (29,854,734) | ||||||
| Interest income | 145,057,748 | 148,779,198 | 75,511,218 | ||||||
| Other income | 7(36) | 161,150,992 | 115,237,585 | 129,108,171 | |||||
| Investment income | 7(34) | 98,629,932 | 87,055,079 | 90,174,271 | |||||
| Including: Share of profit of associates and joint ventures | 72,152,126 | 66,200,119 | 78,876,545 | ||||||
| Gains/(Losses) on disposals of assets | 7(35) | 368,565 | (2,352,770) | (3,021,988) | |||||
| Less: | Asset impairment losses | 7(32) | (31,899,677) | (10,801,480) | (2,945,857) | ||||
| Credit impairment losses | 7(33) | (113,054,480) | — | — | |||||
| Operating profit | 2,719,719,394 | 3,268,061,022 | 2,967,251,534 | ||||||
| Add: | Non-operating income | 7(37(a)) | 3,370,496 | 4,511,490 | 2,346,311 | ||||
| Less: | Non-operating expenses | 7(37(b)) | (17,184,819) | (3,801,129) | (1,873,547) | ||||
| Total profit | 2,705,905,071 | 3,268,771,383 | 2,967,724,298 | ||||||
| Less: | Income tax expenses | 7(38) | (430,101,932) | (562,455,731) | (589,007,692) | ||||
| Net profit | 2,275,803,139 | 2,706,315,652 | 2,378,716,606 | ||||||
| Classified by continuity of operations | |||||||||
| Net profit from continuing operations | 2,275,803,139 | 2,706,315,652 | 2,378,716,606 | ||||||
| Net profit from discontinued operations | — | — | — | ||||||
| Classified by ownership of the equity | |||||||||
| Attributable to equity owners of the <br> Company | 2,090,702,900 | 2,481,903,963 | 2,083,076,727 | ||||||
| Minority interests | 185,100,239 | 224,411,689 | 295,639,879 | ||||||
| Other comprehensive income, net of tax | 4,882,377 | 101,743 | 430,299 | ||||||
| Translation differences on translation of foreign currency financial statements | 7(39(a)) | 4,882,377 | 101,743 | 430,299 | |||||
| Total comprehensive income | 2,280,685,516 | 2,706,417,395 | 2,379,146,905 | ||||||
| Attributable to equity owners of the Company | 2,095,585,277 | 2,482,005,706 | 2,083,507,026 | ||||||
| Attributable to minority interests | 185,100,239 | 224,411,689 | 295,639,879 | ||||||
| * Not covered by the AUDITOR’S report included herein | |||||||||
| The accompanying notes form an integral part of these consolidated financial statements. | |||||||||
| Legal representative: Jianxu Jia Principal in charge of accounting: Chungao Zang Head of accounting department: Jianjun Chu |
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED CASH FLOW STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017*
(All amounts in RMB Yuan unless otherwise stated)
| Item | Note | 2019 Consolidated | 2018 Consolidated | 2017*<br>Consolidated |
|---|---|---|---|---|
| Cash flows from operating activities | ||||
| Cash received from sales of goods or rendering of services | 32,478,166,214 | 42,620,231,769 | 37,188,574,231 | |
| Refund of taxes and surcharges | 109,369,385 | 80,523,553 | 80,158,334 | |
| Cash received relating to other operating activities | 223,984,165 | 127,319,648 | 184,480,725 | |
| Sub-total of cash inflows | 32,811,519,764 | 42,828,074,970 | 37,453,213,290 | |
| Cash paid for goods and services | (22,973,666,250) | (32,914,683,413) | (26,183,767,105) | |
| Cash paid to and on behalf of employees | (2,348,822,105) | (2,335,518,600) | (2,003,249,397) | |
| Payments of taxes and surcharges | (1,496,741,101) | (1,966,165,908) | (2,679,623,127) | |
| Cash paid relating to other operating activities | (2,970,174,195) | (2,123,658,626) | (2,121,766,998) | |
| Sub-total of cash outflows | (29,789,403,651) | (39,340,026,547) | (32,988,406,627) | |
| Net cash flows from operating activities | 7(40(a)) | 3,022,116,113 | 3,488,048,423 | 4,464,806,663 |
| Cash flows used in investing activities | ||||
| Cash received from disposal of investments | 214,908,931 | 235,645,347 | 279,239,352 | |
| Cash received from returns on investments | 100,967,962 | 103,980,826 | 67,768,049 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 25,102,657 | 14,751,486 | 24,565,265 | |
| Sub-total of cash inflows | 340,979,550 | 354,377,659 | 371,572,666 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | (643,582,858) | (650,226,838) | (524,461,586) | |
| Cash paid to acquire investments | — | — | (837,615,093) | |
| Sub-total of cash outflows | (643,582,858) | (650,226,838) | (1,362,076,679) | |
| Net cash flows used in investing activities | (302,603,308) | (295,849,179) | (990,504,013) | |
| Cash flows used in financing activities | ||||
| Cash received from capital contributions | 30,000,000 | — | — | |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | 30,000,000 | — | — | |
| Cash received from borrowings | 796,250,880 | 990,189,943 | 844,949,190 | |
| Sub-total of cash inflows | 826,250,880 | 990,189,943 | 844,949,190 | |
| Cash repayments of borrowings | (944,186,127) | (964,983,332) | (711,559,282) | |
| Cash payments for distribution of profits or interest expenses | (2,307,354,144) | (2,142,677,741) | (1,848,390,388) | |
| Including: Cash payments for profits to minority shareholders of subsidiaries | (199,904,958) | (77,397,401) | (333,196,736) | |
| Sub-total of cash outflows | (3,251,540,271) | (3,107,661,073) | (2,559,949,670) | |
| Net cash flows used in financing activities | (2,425,289,391) | (2,117,471,130) | (1,715,000,480) | |
| Effect of foreign exchange rate changes on cash and cash equivalents | — | — | — | |
| Net increase in cash and cash equivalents | 7(40(b)) | 294,223,414 | 1,074,728,114 | 1,759,302,170 |
| Add: Cash and cash equivalents at beginning of year | 9,013,241,794 | 7,938,513,680 | 6,179,211,510 | |
| Cash and cash equivalents at end of year | 7(40(c)) | 9,307,465,208 | 9,013,241,794 | 7,938,513,680 |
| * Not covered by the AUDITOR’S report included herein | ||||
| The accompanying notes form an integral part of these consolidated financial statements. | ||||
| Legal representative: Jianxu Jia Principal in charge of accounting: Chungao Zang Head of accounting department: Jianjun Chu |
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017*
(All amounts in RMB Yuan unless otherwise stated)
| Attributable to equity holders of the Company | |||||||
|---|---|---|---|---|---|---|---|
| Item | Note | Paid-in <br>capital | Surplus <br>reserves | Other comprehensive income | Undistributed profits | Minority interests | Total owners' equity |
| Balance at 1 January 2017* | 439,853,380 | 376,736,592 | 983,955 | 3,005,135,145 | 549,306,952 | 4,372,016,024 | |
| Movements for the year ended 31 December 2017* | |||||||
| Total comprehensive income | |||||||
| Net profit | — | — | — | 2,083,076,727 | 295,639,879 | 2,378,716,606 | |
| Other comprehensive income | |||||||
| Translation differences on translation of foreign currency financial statements | 7(39(a)) | — | — | 430,299 | — | — | 430,299 |
| Total comprehensive income for the year | — | — | 430,299 | 2,083,076,727 | 295,639,879 | 2,379,146,905 | |
| Capital contribution and withdrawal by owners | |||||||
| Disposal of a subsidiary | — | — | — | — | (470,521) | (470,521) | |
| Profit distribution | |||||||
| Appropriation to surplus reserves | 7(26) | — | 65,074,185 | — | (65,074,185) | — | — |
| Profit distribution to equity owners | 7(27) | — | — | — | (1,493,770,914) | (333,196,736) | (1,826,967,650) |
| Appropriation to staff welfare and incentive funds | 7(21(a)) | — | — | — | (65,382,968) | (488,488) | (65,871,456) |
| Balance at 31 December 2017* | 439,853,380 | 441,810,777 | 1,414,254 | 3,463,983,805 | 510,791,086 | 4,857,853,302 | |
| Balance at 1 January 2018 | 439,853,380 | 441,810,777 | 1,414,254 | 3,463,983,805 | 510,791,086 | 4,857,853,302 | |
| Movements for the year ended 31 December 2018 | |||||||
| Total comprehensive income | |||||||
| Net profit | — | — | — | 2,481,903,963 | 224,411,689 | 2,706,315,652 | |
| Other comprehensive income | |||||||
| Translation differences on translation of foreign currency<br> financial statements | 7(39(a)) | — | — | 101,743 | — | — | 101,743 |
| Total comprehensive income for the year | — | — | 101,743 | 2,481,903,963 | 224,411,689 | 2,706,417,395 | |
| Profit distribution | |||||||
| Appropriation to surplus reserves | 7(26) | — | 66,264,240 | — | (66,264,240) | — | — |
| Profit distribution to equity owners | 7(27) | — | — | — | (2,038,991,145) | (190,933,981) | (2,229,925,126) |
| Appropriation to staff welfare and incentive funds | 7(21(a)) | — | — | — | (66,379,416) | (189,570) | (66,568,986) |
| Balance at 31 December 2018 | 439,853,380 | 508,075,017 | 1,515,997 | 3,774,252,967 | 544,079,224 | 5,267,776,585 |
YANFENG ADIENT SEATING CO., LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN OWNERS’ EQUITY FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017* (Cont’d)
(All amounts in RMB Yuan unless otherwise stated)
| Attributable to equity holders of the Company | |||||||
|---|---|---|---|---|---|---|---|
| Item | Note | Paid-in <br>capital | Surplus <br>reserves | Other comprehensive income | Undistributed profits | Minority interests | Total owners' equity |
| Balance at 1 January 2019 | 439,853,380 | 508,075,017 | 1,515,997 | 3,774,252,967 | 544,079,224 | 5,267,776,585 | |
| Movements for the year ended 31 December 2019 | |||||||
| Total comprehensive income | |||||||
| Net profit | — | — | — | 2,090,702,900 | 185,100,239 | 2,275,803,139 | |
| Other comprehensive income | |||||||
| Translation differences on translation of foreign currency<br> financial statements | 7(39(a)) | — | — | 4,882,377 | — | — | 4,882,377 |
| Total comprehensive income for the year | — | — | 4,882,377 | 2,090,702,900 | 185,100,239 | 2,280,685,516 | |
| Capital contribution and withdrawal by owners | |||||||
| Capital contribution by owners | — | — | — | — | 30,000,000 | 30,000,000 | |
| Profit distribution | |||||||
| Appropriation to surplus reserves | 7(26) | — | 60,228,762 | — | (60,228,762) | — | — |
| Profit distribution to equity owners | 7(27) | — | — | — | (2,076,279,518) | (186,368,378) | (2,262,647,896) |
| Appropriation to staff welfare and incentive funds | 7(21(a)) | — | — | — | (60,347,893) | (191,058) | (60,538,951) |
| Balance at 31 December 2019 | 439,853,380 | 568,303,779 | 6,398,374 | 3,668,099,694 | 572,620,027 | 5,255,275,254 | |
| * Not covered by the AUDITOR’S report included herein | |||||||
| The accompanying notes form an integral part of these consolidated financial statements. | |||||||
| Legal representative: Jianxu Jia Principal in charge of accounting: Chungao Zang Head of accounting department: Jianjun Chu |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 1 | General information |
|---|---|
| Yanfeng Adient Seating Co., Ltd. (formerly known as “Shanghai Yanfeng Johnson Controls Seating Co., Ltd.”, “the Company”) is a sino-foreign joint venture company set up by Yanfeng Automotive Trim Systems Co., Ltd. (“Yanfeng Trim” and formerly known as “Yanfeng Visteon Automotive Trim Systems Co., Ltd.”) and Johnson Controls International Inc. (“JCI”) on 18 December 1997. The approved operating period is 25 years and the registered capital is USD 24,770,700. | |
| After several times of equity interest transfer till 8 November 2012, the investors of the Company were changed to Yanfeng Trim and Johnson Controls Asia Holding Co., Ltd., with 50.01% and 49.99% of equity interest respectively. The registered capital of the Company was increased to USD 62,000,000. On 2 February 2017, Johnson Controls Asia Holding Co., Ltd. was renamed as Adient Asia Holding Co., Ltd. (“Adient Asia”). In April 2017, the Company was renamed as “Yanfeng Adient Seating Co., Ltd.”. | |
| The approved scope of business of the Company and its subsidiaries (together ,“the Group”) is to research, develop, manufacture automotive seats, headliners, sun visors, overhead systems and their components, sell self-manufactured products; wholesale, commission agency (excluding auction), import and export of associated business and chemical products, and provide relevant services, lease certain of its real estate. For the year ended 31 December 2019, the Group’s business scope was the same as the scope of operation. | |
| These financial statements are authorised for issue by the Company’s responsible person on 22 June 2020. | |
| 2 | Basis of preparation |
| The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance of the P.R. China on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the Accounting Standards for Business Enterprises” or “CAS”).<br><br><br><br>The financial statements are prepared on a going concern basis. | |
| 3 | Statement of compliance with the Accounting Standards for Business Enterprises |
| The financial statements of the Company for the years ended 31 December 2019, 31 December 2018 and 31 December 2017 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the consolidated financial position of the Company as at 31 December 2019, 31 December 2018 and 31 December 2017 and of its financial performance, cash flows and other information for the years then ended. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates |
|---|---|
| (1) | Accounting year |
| The Company’s accounting year starts on 1 January and ends on 31 December. | |
| (2) | Recording currency |
| The Company’s recording currency is Renminbi (RMB). The recording currency of the Company’s subsidiaries is determined based on the primary economic environment in which they operate. The recording currency of the Company’s domestic subsidiaries is RMB and the recording currency of the Company’s foreign subsidiaries is local currency. The financial statements are presented in RMB. | |
| (3) | Foreign currency translation |
| (a) | Foreign currency transactions |
| Foreign currency transactions are translated into recording currency using the exchange rates prevailing at the dates of the transactions. | |
| At the balance sheet date, monetary items denominated in foreign currencies are translated into recording currency using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement. | |
| (b) | Translation of foreign currency financial statements |
| The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the owners’ equity items, the items other than “undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented in other comprehensive income. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement. | |
| (4) | Cash and cash equivalents |
| Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (5) | Financial instruments (applicable for 2019) |
| A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. A financial asset or a financial liability is recognised when the Group becomes a party to the contractual provisions of the instrument. | |
| (a) | Financial assets |
| (i) | Classification and measurement |
| Based on the business model for managing the financial assets and the contractual cash flow characteristics of the financial assets, financial assets are classified as: (1) financial assets at amortised cost; (2) financial assets at fair value through other comprehensive income; (3) financial assets at fair value through profit or loss. | |
| Financial assets are initially recognised at fair value. For financial assets at fair value through profit and loss, the related transaction costs are directly recognised in profit or loss. For other financial assets, the related transaction costs are included in initially recognised amounts. Accounts receivable or notes receivable arising from sales of products or rendering of services (excluding or without regard to significant financing components) are initially recognised at the consideration that is entitled to be charged by the Group as expected. | |
| Debt instruments | |
| The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the issuer, and are measured in the following three ways: | |
| Measured at amortised cost: | |
| The objective of the Group’s business model is to hold the financial assets to collect the contractual cash flows, and the contractual cash flow characteristics are consistent with a basic lending arrangement, which gives rise on specified dates to the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The interest income of such financial assets is recognised using the effective interest method. Such financial assets mainly comprise cash at bank and on hand, notes receivable, accounts receivable, other receivables, debt investments and long-term receivables, etc. Debt investments and long-term receivables that are due within one year (inclusive) as from the balance sheet date are included in the current portion of non-current assets; debt investments with maturities of no more than one year (inclusive) at the time of acquisition are included in other current assets. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (5) | Financial assets (applicable for 2019) (Cont’d) |
| (a) | Financial assets (Cont’d) |
| (i) | Classification and measurement (Cont’d) |
| Measured at fair value through other comprehensive income: | |
| The objective of the Group’s business model is to hold the financial assets to both collect the contractual cash flows and sell such financial assets, and the contractual cash flow characteristics are consistent with a basic lending arrangement. Such financial assets are measured at fair value through other comprehensive income, except for the impairment gains or losses, foreign exchange gains and losses, and interest income calculated using the effective interest method which are recognised in profit or loss for the current period. The financial assets include receivables financing and other debt investments. Other debt investments that are due within one year (inclusive) as from the balance sheet date are included in the current portion of non-current assets; other debt investments with maturities of no more than one year (inclusive) at the time of acquisition are included in other current assets. | |
| Measured at fair value through profit or loss: | |
| Debt instruments held by the Group that are not classified as those at amortised cost, or those measured at fair value through other comprehensive income, are measured at fair value through profit or loss and included in financial assets held for trading. At initial recognition, the Group designates a portion of financial assets as at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch. Financial assets that are due over one year (inclusive) as from the balance sheet date and are expected to be held over one year are included in other non-current financial assets. | |
| Equity instruments | |
| Investments in equity instruments, over which the Group has no control, joint control or significant influence, are measured at fair value through profit or loss under financial assets held for trading; investments in equity instruments expected to be held over one year as from the balance sheet date are included in other non-current financial assets.<br><br>In addition, a portion of certain investments in equity instruments not held for trading are designated as financial assets at fair value through other comprehensive income under investments in other equity instruments. The relevant dividend income of such financial assets is recognised in profit or loss for the current period. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (5) | Financial assets(applicable for 2019) (Cont’d) |
| (a) | Financial assets (Cont’d) |
| (ii) | Impairment |
| Loss provision for financial assets at amortised cost, investments in debt instruments at fair value through other comprehensive income, as well as financial guarantee contracts is recognised on the basis of expected credit losses (“ECL”). | |
| Giving consideration to reasonable and supportable information on past events, current conditions and forecasts of future economic conditions, as well as the default risk weight, the Group recognises the ECL as the probability-weighted amount of the present value of the difference between the cash flows receivable from the contract and the cash flows expected to collect. | |
| As at each balance sheet date, the ECL of financial instruments at different stages are measured respectively. 12-month ECL provision is recognised for financial instruments in Stage 1 that have not had a significant increase in credit risk since initial recognition; lifetime ECL provision is recognised for financial instruments in Stage 2 that have had a significant increase in credit risk yet without credit impairment since initial recognition; and lifetime ECL provision is recognised for financial instruments in Stage 3 that have had credit impairment since initial recognition. | |
| For the financial instruments with lower credit risk on the balance sheet date, the Group assumes there is no significant increase in credit risk since initial recognition and recognises the 12-month ECL provision. | |
| For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Group calculates the interest income by applying the effective interest rate to the gross carrying amount (before deduction of the impairment provision). For the financial instrument in Stage 3, the interest income is calculated by applying the effective interest rate to the amortised cost (after deduction of the impairment provision from the gross carrying amount). | |
| For notes receivable, accounts receivable and receivables financing arising from sales of goods or rendering of services in the ordinary course of the activities, the Group measures the loss provision based on the lifetime ECL regardless of whether there exists a significant financing component. | |
| In case the ECL of an individually assessed financial asset cannot be evaluated with reasonable cost, the Group divides the receivables into certain groupings based on credit risk characteristics, and calculates the ECL for the groupings. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (5) | Financial assets (applicable for 2019) (Cont’d) |
| (a) | Financial assets (Cont’d) |
| (ii) | Impairment (Cont’d) |
| For notes receivable and receivables financing arising from sales of goods or rendering of services in the ordinary course of the activities, and receivables that are classified into groupings, the Group prepares the cross-reference between the number of overdue days and the lifetime ECL rate, and calculates the ECL with consideration to historical credit loss experience, current conditions and forecasts of future economic conditions. For notes receivable and receivables financing other than those mentioned above and other receivables that are classified into groupings, the Group calculates the ECL through default risk exposure and the 12-month/lifetime ECL rate, on the basis of historical credit losses experience, the current conditions and forecasts of future economic conditions. | |
| The Group recognises the loss provision made or reversed into profit or loss for the current period. For debt instruments held at fair value through other comprehensive income, the Group adjusts other comprehensive income while the impairment loss or gain is recognised in profit or loss for the current period. | |
| (iii) | Derecognition |
| A financial asset is derecognised when: (i) the contractual rights to the cash flows from the financial asset expire, (ii) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee, or (iii) the financial asset has been transferred and the Group has not retained control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset.<br><br>When a financial asset is derecognised, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that are previously recognised directly in other comprehensive income is recognised in profit or loss for the current period, except for those as investments in other equity instruments, the difference aforementioned is recognised in retained earnings instead. | |
| (b) | Financial liabilities |
| Financial liabilities are classified as financial liabilities at amortised cost and financial liabilities at fair value through profit or loss at initial recognition. | |
| Financial liabilities of the Group mainly comprise financial liabilities at amortised cost, including notes payable, accounts payable, other payables, borrowings, bonds payable, etc. Such financial liabilities are initially recognised at fair value, net of transaction costs incurred, and subsequently measured using the effective interest method. Financial liabilities that are due within one year (inclusive) are classified as current liabilities; those with maturities over one year but are due within one year (inclusive) as from the balance sheet date are classified as current portion of non-current liabilities. Others are classified as non-current liabilities. | |
| A financial liability is derecognised or partly derecognised when the underlying present obligation is discharged or partly discharged. The difference between the carrying amount of the derecognised part of the financial liability and the consideration paid is recognised in profit or loss for the current period. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (5) | Financial assets (applicable for 2019) (Cont’d) |
| (c) | Determination of fair value of financial instruments |
| The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. In valuation, the Group adopts valuation techniques applicable in the current situation and supported by adequate available data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant transactions of assets or liabilities by market participants, and gives priority to the use of relevant observable inputs. When relevant observable inputs are not available or feasible, unobservable inputs are adopted. | |
| (6) | Financial assets (applicable for 2018 and 2017) |
| Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on the Group’s intention and ability to hold the financial assets. The financial assets held by the Group are mainly receivables. | |
| (a) | Receivables |
| Receivables, including notes receivables, accounts receivables and other receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market (Note 4(7)). | |
| (b) | Recognition and measurement |
| Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. In the case of financial assets at fair value through profit or loss, the related transaction costs incurred at the time of acquisition are recognised in profit or loss for the current period. For other financial assets, transaction costs that are attributable to acquisition of the financial assets are included in their initially recognised amounts. A financial asset is derecognised when the contractual rights to receive the cash flows from the financial asset have expired, or all the substantial risks and rewards of ownership of the financial asset have been transferred. Receivables are subsequently measured at amortised cost by using the effective interest method. | |
| (c) | Impairment of financial assets |
| The Group assesses the carrying amounts of financial assets other than those at fair value through profit or loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for. | |
| When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of the impairment loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised in profit or loss. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |||
|---|---|---|---|---|
| (7) | Receivables | |||
| Receivables comprise notes receivables, accounts receivables and other receivables. Accounts receivables arising from sale of goods or rendering of services are initially recognised at fair value of the contractual payments from the buyers or service recipients. | ||||
| Receivables with amounts that are individually significant are subject to separate assessment for impairment. If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for bad debts of that receivable is made at the difference between its carrying amount and the present value of its estimated future cash flows. | ||||
| Receivables with amounts that are not individually significant and those receivables that have been individually assessed for impairment and have not been found impaired are classified into certain groupings based on their credit risk characteristics. Provision for bad debts is determined based on the historical loss experience for groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances. | ||||
| When the Group transfers the accounts receivables to the financial institutions without recourse, the difference between the proceeds received from the transaction and their carrying amounts and the related taxes is recognised in profit or loss for the current period. | (8) | Inventories | ||
| --- | --- | |||
| Inventories include raw materials, work in progress and finished goods, and are stated at the lower of cost and net realisable value. | ||||
| Cost is determined using planned cost method. Cost of inventories used or sold is carried forward at the end of the month to carry the cost variance it should be borne, and the planned cost is adjusted to actual cost. The cost of finished goods and work in progress comprise raw materials, direct labour and systematically allocated production overhead based on the normal production capacity. | ||||
| Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. | ||||
| The Group adopts the perpetual inventory system. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (9) | Long-term equity investments |
| Long-term equity investments comprise the Group’s long-term equity investments in its joint ventures and associates. | |
| (a) | Joint ventures and associates |
| A joint venture is a joint arrangement which is structured through a separate vehicle over which the Group has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances; An associate is the investee over which the Group has significant influence on its financial and operating policy decisions. | |
| Investments in joint ventures and associates are accounted for using the equity method. Where the initial investment cost exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the investment is initially measured at that cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is included in profit or loss for the current period and the cost of the long-term equity investment is adjusted upwards accordingly. | |
| Under the equity method of accounting, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group does not recognise further losses when the carrying amounts of the long-term equity investment together with any long-term interests that, in substance, form part of the Group’s net investment in investees are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions are satisfied, the Group continues recognising the investment losses and the provisions at the amount it expects to undertake. The Group’s share of the changes in investee’s owner's equity other than those arising from the net profit or loss, other comprehensive income and profit distribution is recognised in capital surplus with a corresponding adjustment to the carrying amounts of the long-term equity investment. The carrying amount of the investment is reduced by the Group’s share of the profit distribution or cash dividends declared by the investees. Unrealised gains or losses on transactions between the Group and its investees are eliminated to the extent of the Group’s equity interest in the investees, based on which the investment income or losses are recognised. Any losses resulting from transactions between the Group and its investees, which are attributable to asset impairment losses are not eliminated. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |||
|---|---|---|---|---|
| (10) | Investment properties | |||
| Investment properties, including land use rights that have already been leased out, buildings that are held for the purpose of leasing and buildings that are being constructed or developed for future use for leasing, are measured initially at cost. Subsequent expenditures incurred in relation to an investment property are included in the cost of the investment property when it is probable that the associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise, the expenditures are recognised in profit or loss for the period in which they are incurred. | ||||
| Investment properties are subsequently measured using the cost model and are depreciated or amortised to their estimated residual values over their estimated useful lives. The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation (amortisation) rates of investment properties are as follows: | ||||
| Estimated useful lives | Estimated residual values | Annual<br><br>depreciation rates | ||
| Land use rights | 50 years | 0% | 2% | |
| Buildings | 20 years | 0% | 5% | |
| When an investment property is transferred to owner-occupied properties, it is reclassified as fixed asset or intangible asset with the carrying amount at the date of the transfer. When an owner-occupied property is transferred out for earning rentals or for capital appreciation, the fixed asset or intangible asset is transferred to investment properties with the carrying amount at the date of the transfer. | ||||
| The estimated useful life and the estimated residual value of an investment property and the depreciation (amortisation) method applied to the asset are reviewed, and adjusted as appropriate at each year-end. | ||||
| An investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposal. The net amount of proceeds from sale, transfer, retirement or damage of an investment property after its carrying amount and related taxes and expenses is recognised in profit or loss for the current period. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |||
|---|---|---|---|---|
| (11) | Fixed assets | |||
| Fixed assets comprise buildings, machinery and equipment, motor vehicles, computers and electronic equipment and office equipment and tooling. Fixed assets purchased or constructed by the Group are initially measured at cost at the time of acquisition. Fixed assets contributed by the investor are initially recorded at their approved value upon its contribution to the Company. | ||||
| Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss for the period in which they are incurred. | ||||
| Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives. | ||||
| The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows: | ||||
| Estimated useful lives | Estimated residual values | Annual<br><br>depreciation rates | ||
| Buildings | 5-20 years | 0%-10% | 4.50%-20.00% | |
| Machinery and equipment | 3-15 years | 0%-5% | 6.33%-33.33% | |
| Motor vehicles | 3-6 years | 0%-5% | 15.83%-33.33% | |
| Computers and electronic<br><br>equipment and office<br><br>equipment | 3-7 years | 0%-5% | 13.57%-33.33% | |
| Tooling | 3-5 years | 0%-5% | 19.00%-33.33% | |
| The estimated useful life and the estimated residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end. | ||||
| A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (12) | Construction in progress |
| Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation is charged starting from the following month. | |
| (13) | Intangible assets |
| Intangible assets include land use rights, patent rights and non-patented technology and software, and are measured at cost. Intangible assets also include identifiable assets acquired from business combinations involving enterprises not under common control, such as customer relationships, and are measured at fair value at the time of acquisition. | |
| (a) | Land use rights |
| Land use rights are amortised on the straight-line basis over their estimated useful lives. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets. | |
| (b) | Patent rights and non-patented technology |
| Patent rights and non-patented technology are amortised on a straight-line basis over the patent protection period as stipulated by the laws. | |
| (c) | Software |
| Software is amortised on a straight-line basis over the period as stipulated by law. | |
| (d) | Customer relationship |
| Customer relationship acquired from business combination involving enterprises not under common control are amortised over their beneficial periods. | |
| (e) | Periodical review of useful life and amortisation method |
| For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (14) | Research and development |
| The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at the end of the project. | |
| Expenditure on the research phase is recognised in profit or loss in the period in which it is incurred; expenditure on the development phase is capitalised only if all of the following conditions are satisfied:<br><br><br><br>•it is technically feasible to complete the intangible asset so that it will be available for use or sale;<br><br>•management intends to complete the intangible asset and use or sell it;<br><br>•it can be demonstrated how the intangible asset will generate economic benefits;<br><br>•there are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and<br><br>•the expenditure attributable to the intangible asset during its development phase can be reliably measured.<br><br><br><br>Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use. | |
| (15) | Goodwill |
| Goodwill is recognised at the excess of the cost of a business combination involving enterprises not under common control over the interest in the fair value of the acquirees’ identifiable net assets acquired in the business combination as at the acquisition date. | |
| (16) | Long-term prepaid expenses |
| Long-term prepaid expenses include the expenditure for improvements to fixed assets held under operating leases, and other expenditures that have been incurred but should be recognised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (17) | Impairment of long-term assets |
| Fixed assets, construction in progress, intangible assets with finite useful lives, long-term equity investments in joint ventures and associates and long-term prepaid expenses are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets that are not yet available for their intended use are tested for impairment at least annually, irrespective of whether there is any indication of impairment. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows. | |
| Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset group or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or a group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset group or group of asset groups in proportion to the carrying amounts of assets other than goodwill. | |
| Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods. | |
| (18) | Borrowing costs |
| The borrowing costs that are directly attributable to acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalised and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of an asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed. | |
| (19) | Borrowings (applicable for 2018 and 2017) |
| Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings of which the period is within one year (inclusive) are classified as the short-term borrowings, and the others are classified as long-term borrowings. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (20) | Employee benefits |
| Employee benefits refer to all forms of consideration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits and post-employment benefits. | |
| (a) | Short-term employee benefits |
| Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs, short-term paid absences and etc. The short-term employee benefits actually occurred are recognised as a liability in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Non-monetary benefits are measured at fair value. | |
| (b) | Post-employment benefits |
| The Group classifies post-employment benefit plans as defined contribution plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions. During the reporting period, the Group's post-employment benefits mainly include the premiums or contributions on basic pensions and unemployment insurance, both of which belong to defined contribution plans. | |
| Basic pensions | |
| The Group’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to the bases and percentage prescribed by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. | |
| (c) | Termination benefits |
| The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss for the current period at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses for a restructuring that involves the payment of termination benefits. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | ||
|---|---|---|---|
| (21) | Provisions | ||
| Provisions for product warranties and etc. are recognised when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably. | |||
| A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense. | |||
| The carrying amount of provisions is reviewed at each balance sheet date and adjusted to reflect the current best estimate. | |||
| The provisions expected to be settled within one year since the balance sheet date are classified as current liabilities. | |||
| (22) | Deferred tax assets and deferred tax liabilities | ||
| Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. | |||
| Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilised. | Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilised, the corresponding deferred tax assets are recognised. | ||
| --- | |||
| Deferred tax assets and liabilities are offset when:<br><br>•the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,<br><br>•that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |
|---|---|---|
| (23) | Revenue recognition | |
| The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is stated net of discounts, rebates and returns. | ||
| Revenue is recognised when it’s probable that the economic benefits associated with the transaction will flow to the Group, the related revenue can be reliably measured, and the specific criteria of revenue recognition have been met for each type of the Group’s activities as described below: | ||
| (a) | Sale of goods | |
| The Group manufactures and sells automobile seating products. Revenue is recognised when the Group has delivered the products to the location specified in the sales contract and the buyer has confirmed the acceptance of the products. Upon delivery of the products, the buyer has the right to sell the products and takes the risks of any obsolescence and loss of the products. | ||
| (b) | Rendering of services | |
| Revenue is recognised when service is completed and it is probable that the associated economic benefits will flow to the Group and its total revenue and cost can be reliably measured. | ||
| (c) | Developing of projects | |
| Revenue is recognised when the project is completed and is checked and accepted by the clients, and it’s probable that the economic benefits associated with the transaction will flow to the Group, the related revenue can be reliably measured. | ||
| (24) | Government grants | |
| Government grants refer to the monetary or non-monetary assets obtained by the Group from the government, including tax return, financial subsidy and etc. | ||
| Government grants are recognised when the grants can be received and the Group can comply with all attached conditions. If a government grant is a monetary asset, it will be measured at the amount received or receivable. If a government grant is a non-monetary asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be measured at its nominal amount. | ||
| Government grants related to assets refer to government grants which are obtained by the Group for the purposes of purchase, construction or acquisition of the long-term assets. Government grants related to income refer to the government grants other than those related to assets. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (24) | Government grants (Cont’d) |
| Government grants related to assets are either deducted against the carrying amount of the assets, or recorded as deferred income and recognised in profit or loss on a systemic basis over the useful lives of the assets. Government grants related to income that compensate the future costs, expenses or losses are recorded as deferred income and recognised in profit or loss, or deducted against related costs, expenses or losses in reporting the related expenses; government grants related to income that compensate the incurred costs, expenses or losses are recognised in profit or loss, or deducted against related costs, expenses or losses directly in current period. The Group applies the presentation method consistently to the similar government grants in the financial statements. | |
| Government grants that are related to ordinary activities are included in operating profit, otherwise, they are recorded in non-operating income or expenses. | |
| (25) | Leases |
| A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a lease other than a finance lease. | |
| Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and are either capitalised as part of the cost of related assets, or charged as an expense for the current period. | |
| Rental income from an operating lease is recognised on a straight-line basis over the period of the lease. | |
| (26) | Profit distribution |
| Proposed profit distribution is recognised as a liability in the period in which it is approved by the Board of Directors’ meeting. | |
| (27) | Preparation of consolidated financial statements |
| The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries. | |
| Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date is presented separately in the consolidated income statement. | |
| In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (27) | Preparation of consolidated financial statements (Cont’d) |
| All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of subsidiaries’ owners' equity and the portion of subsidiaries’ net profits and losses and comprehensive incomes for the period not attributable to the Company are recognised as minority interests, net profit attributed to minority interests and total comprehensive incomes attributed to minority interests, and presented separately in the consolidated financial statements under owners’ equity, net profits and total comprehensive income respectively. Unrealised profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealised profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealised profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary. | |
| If the accounting treatment of a transaction is inconsistent in the financial statements at the Group level and at the Company or its subsidiary level, adjustment will be made from the perspective of the Group. | |
| (28) | Critical accounting estimates and judgments |
| The Group continually evaluates the critical accounting estimates and key judgments applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. | |
| (a) | Critical accounting estimates and key assumptions |
| The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below: | |
| (i) | Classification of financial assets (applicable for 2019) |
| Significant judgements made by the Group in the classification of financial assets include business model and analysis on contractual cash flow characteristics. | |
| The Group determines the business model for financial asset management on the grouping basis, and factors to be considered include the methods for evaluating financial asset performance and reporting the financial asset performance to key management personnel, the risks affecting financial asset performance and corresponding management methods, the ways in which related business management personnel are remunerated, etc. | |
| When assessing whether contractual cash flow characteristics of financial assets are consistent with basic lending arrangement, key judgements made by the Group include: the possibility of changes in time schedule or amount of the principal during the lifetime due to reasons such as repayment in advance; whether interest only include time value of money, credit risks, other basic lending risks and considerations for costs and profits; for example, whether the repayment in advance reflects the principal outstanding and corresponding interest and reasonable compensation paid for early termination of the contract. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) |
|---|---|
| (28) | Critical accounting estimates and judgments (Cont’d) |
| (a) | Critical accounting estimates and key assumptions (Cont’d) |
| (ii) | Judgement on significant increase in credit risk (applicable for 2019) |
| Judgement made by the Group for significant increase in credit risk is mainly based on whether one or more of the following indicators change significantly: business environment of the debtor, internal and external credit rating, significant changes in actual or expected operating results, significant decrease in value of collateral or credit rate of guarantor, etc. | |
| Judgement made by the Group for the occurrence of credit impairment is mainly based on whether one or more of the following conditions is/are satisfied: the debtor is suffering significant financial difficulties, the debtor is undergoing other debt restructuring, or the debtor probably goes bankrupt, etc. | |
| (b) | Critical judgments in applying the accounting policies |
| (i) | Accounting estimates on impairment of goodwill |
| The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of asset groups and groups of asset groups is the present value of the future cash flows expected to be derived from them. These calculations require use of estimates. | |
| If management revises the gross margin that is used in the calculation of the future cash flows of asset groups and groups of asset groups, and the revised gross margin is lower than the one currently used, the Group would need to recognise further impairment against goodwill. | |
| If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised pre-tax discount rate is higher than the one currently applied, the Group may need to recognise impairment against goodwill. | |
| If the actual gross margin/pre-tax discount rate is higher/lower than management’s estimates, the impairment loss of goodwill previously provided for is not allowed to be reversed by the Group. | |
| (ii) | Income taxes |
| The Group is subject to income taxes in numerous jurisdictions. There are some transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is required from the Group in determining the provision for income taxes in each of these jurisdictions. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. | |
| (iii) | ECL measurement (applicable for 2019) |
| The Group calculates ECL through default risk exposure and ECL rate, and determines the ECL rate based on default probability and default loss rate. In determining the ECL rate, the Company uses data such as internal historical credit loss experience, etc., and adjusts historical data based on current conditions and forward-looking information. When considering forward-looking information, the indicators used by the Group include the risk of economic downturn,, external market environment, technological environment and changes in customer situations. The Group regularly monitors and reviews assumptions related to the calculation of ECL. In 2019, there was no significant change in the above estimation techniques and key assumptions. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (29) | Significant changes in accounting policies | ||||||
| The Ministry of Finance released the revised CAS 22 - Recognition and Measurement of Financial Instruments, CAS 23 - Transfer of Financial Assets, CAS 24 - Hedge Accounting and CAS 37 - Presentation of Financial Instruments (collectively referred to as “new financial instruments standards”) in 2017 and released the Circular of the Ministry of Finance on Revising and Issuing the Formats of Corporate Financial Statements for 2019 (Cai Kuai [2019] No. 6), revised CAS 7 - Exchange of Non-monetary Assets (hereinafter referred to as “revised standard on exchange of non-monetary assets) and CAS 12 - Debt Restructuring (hereinafter referred to as “revised standard on debt restructuring”) in 2019. The financial statements for the year ended 31 December 2019 have been prepared in accordance with the above standards and circular. The revised standards on exchange of non-monetary assets and debt restructuring have no significant impacts on the Group, and impacts of other revisions on the financial statements of the Group and are as follows: | |||||||
| (a) | Revisions on the formats of corporate financial statements | ||||||
| (i) | Impacts on consolidated balance sheet are as follows: | ||||||
| The nature and the reasons of the changes in accounting policies | The line items affected | The amounts affected | |||||
| The Group | |||||||
| 31 December 2018 | 31 December 2017 | ||||||
| The Group split notes and accounts receivables into accounts receivable and notes receivable. | Accounts receivable | Increased 4,532,004,921 | Increased 8,172,820,877 | ||||
| Notes receivable | Increased 2,004,305,172 | Increased 1,400,014,717 | |||||
| Notes and accounts receivables | Decreased 6,536,310,093 | Decreased 9,572,835,594 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (29) | Significant changes in accounting policies (Cont’d) | ||||||
| (a) | Revisions on the formats of corporate financial statements (Cont’d) | ||||||
| (i) | Impacts on consolidated balance sheet are as follows (Cont’d): | ||||||
| The nature and the reasons of the changes in accounting policies | The line items affected | The amounts affected | |||||
| The Group | |||||||
| 31 December 2018 | 1 January 2018 | ||||||
| The Group split notes and accounts payables into accounts payable and notes payable. | Accounts payable | Increased 10,447,210,448 | Increased 12,797,027,105 | ||||
| Notes payable | Increased 665,390,579 | Increased 653,798,483 | |||||
| Notes and accounts payables | Decreased 11,112,601,027 | Decreased 13,450,825,588 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |||||
|---|---|---|---|---|---|---|
| (29) | Significant changes in accounting policies (Cont’d) | |||||
| (b) | Financial instruments | |||||
| In accordance with relevant provisions of the new financial instruments standards, the Group recognised the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings in 2019 and other relevant line items in the financial statements. The comparatives were not restated. As at 31 December 2018 and 1 January 2019, the Group had no financial assets designated as at fair value through profit or loss. | ||||||
| (i) | As at 1 January 2019, the financial assets presented in the Group’s consolidated financial statements were classified and measured in accordance with the old/new financial instruments standards as follows: | |||||
| Old financial instruments standards | New financial instruments standards | |||||
| Line item | Measurement | Carrying amount | Line item | Measurement | Carrying amount | |
| Cash at bank and on hand | Amortised cost | 9,297,999,049 | Cash at bank and on hand | Amortised cost | 9,297,999,049 | |
| Notes receivables | Amortised cost | 12,000,000 | ||||
| Notes receivables | Amortised cost | 2,004,305,172 | Receivables financing | Fair value through other comprehensive income | 1,992,305,172 | |
| Accounts receivables | Amortised cost | 4,532,004,921 | Accounts receivables | Amortised cost | 4,532,004,921 | |
| Other receivables | Amortised cost | 761,450,480 | Other receivables | Amortised cost | 761,450,480 | |
| The adoption of above new financial instruments standards had no significant impact on the Group’s opening balance of retained earnings of 2019. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | |||||
|---|---|---|---|---|---|---|
| (29) | Significant changes in accounting policies (Cont’d) | |||||
| (b) | Financial instruments (Cont'd) | |||||
| (ii) | As at 1 January 2019, the carrying amount of financial assets of the Group is reconciled from the old financial instruments standards to the new financial instruments standards based on the new measurement: | |||||
| Measurement under the new financial instruments standards | Note | |||||
| Financial assets at amortised cost | Table 1 | |||||
| Financial assets at fair value through other comprehensive income | Table 2 | |||||
| Table 1: Financial assets at amortised cost under the new financial instruments standards | ||||||
| Note | Carrying amount | |||||
| Receivables (Note 1)<br><br>31 December 2018 | 7,297,760,573 | |||||
| Less: Transfer to financial assets at fair value through<br><br>other comprehensive income (under the new<br><br>financial instruments standards) | i) | (1,992,305,172) | ||||
| Remeasurement: Total expected credit losses | - | |||||
| 1 January 2019 | 5,305,455,401 | |||||
| Note 1: As at 31 December 2018 and 1 January 2019, receivables mainly comprise notes receivable, accounts receivable and other receivables. | ||||||
| Table 2: Financial assets at fair value through other comprehensive income under the new financial instruments standards. | ||||||
| Note | Carrying amount | |||||
| Receivables financing<br><br>31 December 2018 | - | |||||
| Add: Transfer from notes receivable (under the old financial instruments standards) | i) | 1,992,305,172 | ||||
| 1 January 2019 | 1,992,305,172 | |||||
| i) | Certain bank acceptance notes of some subsidiaries of the Company were discounted and endorsed for the purpose of daily treasury management. The objective of the business model was to manage such bank acceptance notes to both collect contractual cash flows and sell such financial assets. Therefore, as at 1 January 2019, bank acceptance notes of RMB 1,992,305,172 were reclassified to financial assets at fair value through other comprehensive income and listed as receivables financing. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 4 | Summary of significant accounting policies and accounting estimates (Cont’d) | ||||
|---|---|---|---|---|---|
| (29) | Significant changes in accounting policies (Cont’d) | ||||
| (b) | Financial instruments (Cont'd) | ||||
| (iii) | As at January 1 2019, provision for bad debot of financial assets of the Group is reconciled from the old financial instruments standards to the new financial instruments standards based on the new measurement: | ||||
| Measurement category | Provision for bad debts under old financial instruments standards | Reclassification | Remeasurement | Provision for bad debts under new financial instruments standards | |
| Financial assets at amortised cost | |||||
| Provision for bad debts of accounts receivables | 77,811,901 | - | - | 77,811,901 | |
| Financial assets at fair value through other comprehensive income | |||||
| Provision for bad debts of receivables financing | — | - | - | - | |
| 77,811,901 | - | - | 77,811,901 | ||
| 5 | Taxation | ||||
| --- | --- | --- | --- | ||
| The main categories and rates of taxes applicable to the Group during the years 2019, 2018 and 2017 are set out below: | |||||
| Type | Tax rate | Taxable base | |||
| Enterprise income tax (a)(b) | 25% , 21% and 20% | Taxable income | |||
| Value added tax (“VAT”) (c) | 16%,13%, 11%, 10%,9%, 6% and others | Taxable value added amount (Tax payable is calculated using the taxable sales amount multiplied by the applicable tax rate less deductible VAT input of current period) | |||
| City maintenance and<br><br>construction tax | 7%, 5% and 1% | The payment amount of VAT |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 5 | Taxation (Cont’d) | ||
|---|---|---|---|
| (a) | In 2019, 2018 and 2017, the enterprise income tax rates applicable to the Company and its subsidiaries are as follows: | ||
| (1) The Company is a foreign-invested production enterprise set up in Pudong New Area, Shanghai. It was certificated as the hi-technology enterprise by Shanghai Science and Technology Committee in 2017 (valid for 3 years, GF201731001090). According to the Guo Shui Han (2009), No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | |||
| (2) Shanghai Jixiang Automobile Roof Trimming Co., Ltd. is a domestic enterprise set up in Shanghai. It was certificated as the hi-technology enterprise by Shanghai Science and Technology Committee in 2015 (valid for 3 years) and 2018 (valid for 3 years, GR201831000189). According to the Guo Shui Han (2009), No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | |||
| (3) Wuhu Adient Yunhe Automotive Seating Co., Ltd. is a foreign-invested manufacturing enterprise set up in Wuhu Economic and Technological Development Zone. It was certificated as the hi-technology enterprise in 2016 (valid for 3 years, GR201634000612) and 2019 (valid for 3 years, GR201934001828). According to the Guo Shui Han (2009) No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | |||
| (4) Hefei Adient Yunhe Automotive Seating Co., Ltd. is a foreign-invested manufacturing enterprise set up in Hefei Economic and Technological Development Zone. It was certificated as the hi-technology enterprise by Hefei Science and Technology Committee in 2015 (valid for 3 years) and 2018 (valid for 3 years, GR201834001000). According to the Guo Shui Han (2009) No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | (5) Yanfeng Adient (Shenyang) Seating Co., Ltd. (“Shenyang Yanfeng Adient”) is a domestic enterprise set up in Shenyang. It was certificated as the hi-technology enterprise by Department of Science and Technology of Liaoning Province in 2016 (valid for 3 years, GF201621000205). According to the Guo Shui Han (2009) No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2018 and 2017. | ||
| --- | |||
| (6) Jiangsu Yueda Yanfeng Adient Automotive Seating Co., Ltd. is a domestic enterprise set up in Yancheng. It was certificated as the hi-technology enterprise by Department of Science and Technology of Jiangsu Province on 30 November 2016 (valid for 3 years, GR201632003222) and 2019 (valid for 3 years). According to the Guo Shui Han (2009), No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | |||
| (7) Chengdu Yanfeng Adient Automotive Components Co., Ltd (“Chengdu Yanfeng Adient”) is a domestic enterprise set up in Chengdu, Sichuan. Entitled to the preferential policy for development of the west regions, the applicable income tax rate of Chengdu Yanfeng Adient is 15% in year 2019, 2018 and 2017. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 5 | Taxation (Cont’d) | |||
|---|---|---|---|---|
| (a) | In 2019, 2018 and 2017, the enterprise income tax rates applicable to the Company and its subsidiaries are as follows (Cont’d): | |||
| (8) Chongqing Yanfeng Adient Automotive Components Co., Ltd. (“Chongqing Yanfengn Adient”) is a foreign-invested manufacturing enterprise set up in Chongqing. It was certificated as the hi-technology enterprise again through the review in July 2016(valid for 3 years, GR201651100279) and 2019 (valid for 3 years). According to the Guo Shui Han (2009), No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2019, 2018 and 2017. | ||||
| (9) Daqing Yanfeng Adient Automotive Components Co., Ltd. (“Daqing Yanfeng Adient”) is a domestic enterprise set up in Daqing in 2014. It was certificated as the hi-technology enterprise for the first time in 2015 (valid for 3 years). According to the Guo Shui Han (2009) No. 203 “The notice on implementing preferential corporate income tax rate of hi-technology enterprises”, the applicable income tax rate is 15% in year 2017. | ||||
| (10) The applicable income tax rate of other domestic entities is 25% in year 2019, 2018 and 2017. | ||||
| (11) Yanfeng Adient (Thailand) Co., Ltd. is an enterprise set up in Rayong, Thailand. Pursuant to local Income Tax Law, the enterprise income tax rate applicable to the subsidiary in 2019, 2018 and 2017 is 20%. <br><br>(12) Yanfeng Adient America Seating Inc. is an enterprise set up in Michigan, USA. Pursuant to local Income Tax Law, the enterprise income tax rate applicable to the subsidiary in 2019 and 2018 is 21%.<br><br>(13) Yanfeng Adient Germany Seating GmbH is an enterprise set up in Burscheid, North Rhine-Westphalia, Germany. Pursuant to local Income Tax Law, the enterprise income tax rate applicable to the subsidiary in 2019 and 2018 is 15%. | ||||
| (14) Yanfeng Adient (India) Private Limited is an enterprise set up in Gujarat, India. Pursuant to local Income Tax Law, the enterprise income tax rate applicable to the subsidiary in 2019 is 25%. | (b) | Pursuant to the 'Circular on Enterprise Income Tax Policy concerning Deductions for Equipment and Appliances' (Cai Shui [2018] 54) issued by the State Administration of Taxation, during the period from 1 January 2018 to 31 December 2020, the cost of newly purchased equipment with the original cost less than RMB 5 million can be fully deducted against taxable profit in the next month after the asset is put into use, instead of being depreciated annually for tax filing. | ||
| --- | --- | |||
| (c) | Pursuant to the 'Circular on Adjustment of Tax Rate of Value Added Tax' (Cai Shui [2018] 32) jointly issued by the Ministry of Finance and the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform (Cai Shui Haiguan [2019] No. 39) issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, the State Administration of Taxation, the applicable VAT tax rates of the Company and its subsidiaries’ revenues arising from sales of auto parts and components and rendering of leasing and transportation service are 13% and 9% from 1 April 2019 and the applicable rates were 16% and 10% from 1 May 2018 to 31 March 2019, while it was 17% and 11% before 1 May 2018. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 6 | Subsidiaries | |||||||
|---|---|---|---|---|---|---|---|---|
| (1) | Significant subsidiaries included in the consolidation scope as at 31 December 2019 are as follows: | |||||||
| Share holding (%) | Voting rights (%) | |||||||
| Place of registration | Registered<br>Capital | Nature of business | Direct | Indirect | Direct | Indirect | ||
| Shenyang Yanfeng<br><br>Adient | Shenyang | RMB<br><br>30,000,000 | Develop, produce and sell automotive interior, automotive seating overhead systems and parts production and provide after-sale service. Self-management or agency of import and export of goods and technologies (excluding goods prohibited or restricted by the national authorities), house lease. | 100% | 100% | |||
| Yanfeng Adient<br><br>(Yantai) Seating<br><br>Co., Ltd. | Yantai | RMB 35,000,000 | Production and sales of automotive seating assembly, parts and functional high molecule materials for automobile; import and export of goods and technologies. | 100% | 100% | |||
| Nanjing Yanfeng<br><br>Adient Seating Co.,<br><br>Ltd. | Nanjing | RMB 45,000,000 | Produce and sell automotive seating and provide after-sale service; sales of self-manufactured products, import and export of self-run and agent products and technologies | 60% | 60% | |||
| Yanfeng Adient<br><br>(Shanghai Jiading)<br><br>Seating Co., Ltd. | Shanghai | RMB 15,000,000 | Design, develop, produce and sell automotive seating assembly and parts, provide after-sale service; import and export goods. | 100% | 100% | |||
| Yanfeng Adient<br><br>(Ningbo) Seating<br><br>Co., Ltd. | Ningbo | RMB 35,000,000 | Design, development, manufacture and provision of technical engineering service of automotive seating, auto roof trims, sunshades, trim systems and related parts, sales of self-manufactured products, import and export of self-run and agent products and technologies (excluding goods and technologies prohibited or restricted by the national authorities). | 100% | 100% | |||
| Yanfeng Adient<br><br>(Wuhan) Seating<br><br>Co.,Ltd. | Wuhan | RMB 45,000,000 | Design, development, manufacture and sales of automotive seating, auto roof trims, sunshades, trim systems and related parts, provision of technical engineering service, import and export of goods (excluding goods prohibited or restricted by the national authorities). | 100% | 100% |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 6 | Subsidiaries (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (1) | Significant subsidiaries included in the consolidation scope as at 31 December 2019 are as follows (Cont’d): | |||||||
| Share holding (%) | Voting rights (%) | |||||||
| Place of registration | Registered Capital | Nature of business | Direct | Indirect | Direct | Indirect | ||
| Chengdu Yanfeng<br><br>Adient | Chengdu | RMB 10,000,000 | Design, development, manufacture and sales of automotive seating, auto roof trims, sunshades, trim systems and related parts; provide relative<br>technical and after-sale services | 100% | 100% | |||
| Daqing Yanfeng<br><br>Adient | Chongqing | RMB 10,000,000 | Design, produce and sale automotive spare parts, import and export of goods. | 100% | 100% | |||
| Guangzhou Dongfeng<br><br>Adient Automotive<br><br>Seating Co., Ltd | Guangzhou | USD 4,066,300 | Design, development, manufacture and sales of automotive seating assembly and related parts, sale own goods. | 50% | 62.5% | |||
| (a) The newly established subsidiaries of the Group in 2018 included Yanfeng Adient (Liuzhou) Seating Co., Ltd., Yanfeng Adient (Rudong) Seating Co., Ltd., Yanfeng Adient (India) Private Limited, Yanfeng Adient (Ningde) Seating Co., Ltd., Yanfeng Adient (Zhengzhou) Seating Co., Ltd. and Yanfeng Adient Fangde Electric Engine Co., Ltd. The newly established subsidiaries of the Group in 2017 included Xiangtan Yanfeng Adient Automotive Components Co., Ltd., Taizhou Yanfeng Adient Automotive Components Co., Ltd. and Yanfeng Adient (Changshu) Seating Co., Ltd. In 2019, there was no subsidiaries established by the Group. | ||||||||
| (b) In 2018, the Company closed Johnson Controls Automotive Systems (Kunshan) Co., Ltd. In 2017, the Company closed Zhejiang Yanjiang Sanjing Vehicle Parts Co., Ltd. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 6 | Subsidiaries (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (2) | Information of non-wholly-owned subsidiaries | |||||||||
| Total profit attributable to minority shareholders for the year ended 31 December 2019 | Dividends declared to minority interests for the year ended<br><br>31 December 2019 | Accumulated minority interests as at 31 December 2019 | ||||||||
| 185,100,239 | 186,368,378 | 572,620,027 | ||||||||
| Total profit attributable to minority shareholders for the year ended 31 December 2018 | Dividends declared to minority interests for the year ended<br><br>31 December 2018 | Accumulated minority interests as at 31 December 2018 | ||||||||
| 224,411,689 | 190,933,981 | 544,079,224 | ||||||||
| Total profit attributable to minority shareholders for the year ended 31 December 2017 | Dividends declared to minority interests for the year ended<br><br>31 December 2017 | Accumulated minority interests as at 31 December 2017 | ||||||||
| 295,639,879 | 333,196,736 | 510,791,086 | ||||||||
| In 2019, 2018 and 2017, dividends paid to minority interests were RMB 199,904,958, RMB 77,397,401 and RMB 333,196,736, respectively. | ||||||||||
| There is no individual subsidiary with significant non-wholly-owned interest within the Group. Considering all the subsidiaries are automobile industry related companies, their principal activities are production and sale of automotive parts as well as components and they all operate their business in China mainland, the summarised aggregated financial information for all the subsidiaries that have non-wholly-owned interests are set out below: | ||||||||||
| 31 December 2019 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |||||
| 6,357,552,569 | 1,437,523,692 | 7,795,076,261 | 6,474,415,787 | 31,439,698 | 6,505,855,485 | |||||
| 31 December 2018 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |||||
| 5,810,066,449 | 1,371,148,443 | 7,181,214,892 | 5,965,872,370 | 15,786,728 | 5,981,659,098 | |||||
| 31 December 2017 | ||||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | |||||
| 6,613,955,042 | 1,179,786,779 | 7,793,741,821 | 6,658,480,423 | 11,920,490 | 6,670,400,913 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 6 | Subsidiaries (Cont’d) | |||
|---|---|---|---|---|
| (2) | Information of non-wholly-owned subsidiaries (Cont’d) | |||
| 2019 | ||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| 10,134,852,816 | 399,897,453 | 399,897,453 | 1,007,554,200 | |
| 2018 | ||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| 11,314,074,835 | 494,810,785 | 494,810,785 | 192,890,151 | |
| 2017 | ||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | |
| 11,589,006,649 | 626,758,381 | 626,758,381 | 1,268,118,975 | |
| 7 | Notes to the consolidated financial statements | |||
| --- | --- | --- | --- | --- |
| (1) | Cash at bank and on hand | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Cash on hand | 13,183 | 8,652 | 19,307 | |
| Cash at bank | 9,307,452,025 | 9,013,233,142 | 7,938,494,373 | |
| Other cash balances (a) | 269,026,068 | 284,757,255 | 195,158,898 | |
| 9,576,491,276 | 9,297,999,049 | 8,133,672,578 | ||
| (a) | As at 31 December 2019, 2018 and 2017, RMB 266,026,068, RMB 284,757,255 and RMB 195,158,898 of bank deposit is pledged as guarantee for the Group to issue notes payable of RMB 297,611,514, RMB 258,170,177 and RMB 237,154,087 (Note 7(19)). As at 31 December 2019, Rmb 3,000,000 of deposit is pledged as guarantee for the Group to issue warranty letter. | |||
| (2) | Notes receivable | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Bank acceptance notes | 6,500,000 | 2,004,305,172 | 1,400,014,717 | |
| In 2019, certain bank acceptance notes of the Group were discounted and endorsed as collateral for the purpose of daily treasury management, so they were classified to financial assets at fair value through other comprehensive income under receivables financing (Note 7(4)). | ||||
| As at 31 December 2018 and 2017, notes receivable with amount of RMB 242,674,481 and RMB 236,414,979 is pledged as guarantee for the Group to issue notes payable of RMB 257,245,279 and RMB 230,171,732 (Note 7(19)). |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||
|---|---|---|---|---|---|
| (3) | Accounts receivables | ||||
| 31 December 2018 | 31 December 2019 | ||||
| Accounts receivables | 4,609,816,822 | 5,718,656,833 | |||
| Accrual in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||
| Less: Provision for<br><br>bad debts | (77,811,901) | (107,272,799) | 655,296 | (184,429,404) | |
| 4,532,004,921 | 5,534,227,429 | ||||
| 31 December 2017 | 31 December 2018 | ||||
| --- | --- | --- | --- | --- | |
| Accounts receivables | 8,256,708,592 | 4,609,816,822 | |||
| Reversal in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||
| Less: Provision for<br><br>bad debts | (83,887,715) | 3,090,578 | 2,985,236 | (77,811,901) | |
| 8,172,820,877 | 4,532,004,921 | ||||
| 31 December 2016 | 31 December 2017 | ||||
| --- | --- | --- | --- | --- | |
| Accounts receivables | 5,932,536,523 | 8,256,708,592 | |||
| Accrual in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||
| Less: Provision for<br><br>bad debts | (80,730,455) | (3,789,237) | 631,977 | (83,887,715) | |
| 5,851,806,068 | 8,172,820,877 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (3) | Accounts receivables (Cont’d) | ||||||
| (a) | Provision for bad debts | ||||||
| For accounts receivable, the Group measures the loss provision based on the lifetime ECL regardless of whether there exists a significant financing component. | (i) | Provision for bad debts made on the individual basis for accounts receivable is as follows: | |||||
| --- | --- | --- | --- | --- | |||
| 31 December 2019 | |||||||
| Carrying amount | Provision for bad debts | ||||||
| Amount | Lifetime ECL (%) | Amount | |||||
| Provision for bad debts made on the individual basis for accounts receivable | 90,591,751 | 100.00% | (90,591,751) | ||||
| (ii) | As at 31 December 2019, provision for bad debts made on the grouping basis for accounts receivable was analysed as follows: | ||||||
| --- | --- | --- | --- | --- | |||
| 31 December 2019 | |||||||
| Carrying amount | Provision for bad debts | ||||||
| Amount | Lifetime ECL (%) | Amount | |||||
| Within 1 year | 5,514,021,007 | 0.74% | (40,839,297) | ||||
| 1 to 2 years | 81,785,614 | 30.09% | (24,611,491) | ||||
| 2 to 3 years | 6,148,945 | 50.49% | (3,104,627) | ||||
| Over 3 years | 26,109,516 | 100.00% | (26,109,516) | ||||
| 5,628,065,082 | (94,664,931) |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||
|---|---|---|---|---|
| (3) | Accounts receivables (Cont’d) | |||
| (a) | Provision for bad debts (Cont’d) | |||
| (iii) | As at 31 December 2018, the aging of accounts receivables and related provisions for bad debts are analysed below: | |||
| 31 December 2018 | ||||
| Amount | % of total balance | Provision for bad debts | ||
| Within 1 year | 4,508,867,365 | 97.80% | (20,886,218) | |
| 1 to 2 years | 48,804,894 | 1.06% | (8,604,789) | |
| 2 to 3 years | 7,647,338 | 0.17% | (3,823,669) | |
| Over 3 years | 44,497,225 | 0.97% | (44,497,225) | |
| 4,609,816,822 | 100.00% | (77,811,901) | ||
| (iv) | As at 31 December 2017, the aging of accounts receivables and related provisions for bad debts are analysed below: | |||
| 31 December 2017 | ||||
| Amount | % of total balance | Provision for bad debts | ||
| Within 1 year | 8,179,122,053 | 99.06% | (36,085,610) | |
| 1 to 2 years | 27,233,389 | 0.33% | (3,128,392) | |
| 2 to 3 years | 11,603,363 | 0.14% | (5,923,926) | |
| Over 3 years | 38,749,787 | 0.47% | (38,749,787) | |
| 8,256,708,592 | 100.00% | (83,887,715) |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (4) | Receivables financing | |||||||
| 31 December<br>2019 | 31 December<br>2018 | 31 December<br>2017 | ||||||
| Receivables financing | 2,276,839,586 | — | — | |||||
| As at 31 December 2019, bank acceptance notes, listed in receivables financing, with carrying amount of RMB 164,760,000 were pledged as collateral for the Group’s bank acceptance notes of RMB 164,400,375 (Note 7(19)). | ||||||||
| (5) | Other receivables | |||||||
| 31 December 2018 | 31 December 2019 | |||||||
| Related party cash<br><br>pool receivables | 473,712,938 | 305,344,687 | ||||||
| Receivables for<br><br>modules paid-on-<br><br>behalf of others | 170,686,050 | 178,526,339 | ||||||
| Material price<br><br>difference | 48,187,104 | 23,168,718 | ||||||
| Dividends | 18,935,255 | - | ||||||
| Deposits | 15,490,870 | 23,871,858 | ||||||
| Others | 34,438,263 | 44,540,330 | ||||||
| 761,450,480 | 575,451,932 | |||||||
| Accrual in<br><br>the current<br><br>year | Differences arising from translation of foreign currency | |||||||
| Less: Provision for<br><br>bad debts | - | (5,781,681) | (8,728) | (5,790,409) | ||||
| 761,450,480 | 569,661,523 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (5) | Other receivables (Cont’d) | ||||||
| 31 December 2017 | 31 December 2018 | ||||||
| Related party cash<br><br>pool receivables | 694,358,284 | 473,712,938 | |||||
| Receivables for<br><br>modules paid-on-<br><br>behalf of others | 103,917,630 | 170,686,050 | |||||
| Material price<br><br>difference | 594,627 | 48,187,104 | |||||
| Dividends | 12,872,698 | 18,935,255 | |||||
| Deposits | 21,922,930 | 15,490,870 | |||||
| Others | 12,825,136 | 34,438,263 | |||||
| 846,491,305 | 761,450,480 | ||||||
| Reversal in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||||
| Less: Provision for<br><br>bad debts | (12,138) | 12,138 | - | - | |||
| 846,479,167 | 761,450,480 | ||||||
| 31 December 2016 | 31 December 2017 | ||||||
| Related party cash<br><br>pool receivables | 150,982,542 | 694,358,284 | |||||
| Receivables for<br><br>modules paid-on-<br><br>behalf of others | 102,700,877 | 103,917,630 | |||||
| Deposits | 53,632,667 | 21,922,930 | |||||
| Dividends | 12,071,405 | 12,872,698 | |||||
| Material price<br><br>difference | - | 594,627 | |||||
| Others | 17,147,736 | 12,825,136 | |||||
| 336,535,227 | 846,491,305 | ||||||
| Reversal in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||||
| Less: Provision for<br><br>bad debts | (3,128,470) | 2,182,720 | 933,612 | (12,138) | |||
| 333,406,757 | 846,479,167 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||
|---|---|---|---|---|---|---|
| (5) | Other receivables (Cont’d) | |||||
| (a) | As at 31 December 2019, 31 December 2018 and 31 December 2017, the ageing of other receivables is analysed as follows: | |||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||
| Within 1 year | 499,100,653 | 728,976,869 | 823,906,224 | |||
| 1 to 2 years | 53,112,878 | 13,523,741 | 8,434,324 | |||
| 2 to 3 years | 12,140,697 | 7,618,296 | 3,658,154 | |||
| Over 3 years | 11,097,704 | 11,331,574 | 10,492,603 | |||
| 575,451,932 | 761,450,480 | 846,491,305 | ||||
| (b) | Provision for losses and changes in book value statement | |||||
| Stage 1 | ||||||
| --- | --- | --- | --- | --- | ||
| 12-month ECL (grouping) | ||||||
| Carrying amount | Provision for bad debts | |||||
| 31 December 2018 | 761,450,480 | - | ||||
| Changes in accounting policies | - | - | ||||
| 1 January 2019 | 761,450,480 | - | ||||
| Decrease in current year | (185,998,548) | - | ||||
| Provision for bad debts made in<br><br>current year | - | (5,790,409) | ||||
| 31 December 2019 | 575,451,932 | (5,790,409) | The Group had no significant change in provision for bad debt due to changes in the parameters and data used in determining ECL. | |||
| --- | ||||||
| As at 31 December 2019, the Group did not have any other receivables at stage 2 or stage 3. Other receivables of which provision for bad debts was calculated were all in stage 1, which are analysed below: | ||||||
| (i) | Other receivables of which provision for bad debts was calculated on individual basis , which are analysed below: | |||||
| --- | --- | --- | --- | --- | ||
| 31 December 2019 | ||||||
| Carrying amount | Provision for bad debts | |||||
| Amount | ECL (%) in the next 12 months | Amount | ||||
| Related party cash pool receivables | 305,344,687 | 0% | - | |||
| Deposits | 23,871,858 | 0% | - | |||
| 329,216,545 | - |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (5) | Other receivables (Cont’d) | ||||||
| (b) | Provision for losses and changes in book value statement (Cont’d) | ||||||
| (ii) | Other receivables of which provision for bad debts was calculated on group basis were all in stage 1, which are analysed below: | ||||||
| 31 December 2019 | |||||||
| Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | Percentage | |||||
| Receivables for modules paid-on-behalf of others groups: | |||||||
| Within 1 year | 162,056,377 | 810,282 | 0.50% | ||||
| 1 to 2 years | 16,469,962 | 4,940,988 | 30.00% | ||||
| Other aging group: | |||||||
| Within 1 year | 68,412,188 | 39,139 | 0.06% | ||||
| 246,938,527 | 5,790,409 | ||||||
| (c) | As at 31 December 2018 and 2017, other receivables and related provisions for bad debts are analysed below: | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| 31 December 2018 | 31 December 2017 | ||||||
| Amount | % of total balance | Provision for bad debts | Amount | % of total balance | Provision for bad debts | ||
| Within 1 year | 728,976,869 | 95.73% | - | 823,906,224 | 97.33% | - | |
| 1 to 2 years | 13,523,741 | 1.78% | - | 8,434,324 | 1.00% | - | |
| 2 to 3 years | 7,618,296 | 1.00% | - | 3,658,154 | 0.43% | - | |
| Over 3 years | 11,331,574 | 1.49% | - | 10,492,603 | 1.24% | (12,138) | |
| 761,450,480 | 100.00% | - | 846,491,305 | 100.00% | (12,138) |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (6) | Advances to suppliers | |||||||
| The ageing of advances to suppliers is analysed as follows: | ||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||
| Amount | % of total balance | Amount | % of total balance | Amount | % of total balance | |||
| Within 1 year | 174,175,472 | 96.90% | 158,247,276 | 96.47% | 199,510,957 | 98.25% | ||
| 1 to 2 years | 4,875,902 | 2.71% | 5,341,881 | 3.26% | 2,313,617 | 1.14% | ||
| 2 to 3 years | 694,469 | 0.39% | 450,159 | 0.27% | 360,539 | 0.18% | ||
| Over 3 years | - | - | - | - | 875,000 | 0.43% | ||
| 179,745,843 | 100.00% | 164,039,316 | 100.00% | 203,060,113 | 100.00% |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||
|---|---|---|---|---|---|---|
| (7) | Inventories | |||||
| 31 December 2018 | 31 December 2019 | |||||
| Cost - | ||||||
| Raw materials | 523,152,832 | 643,932,982 | ||||
| Work in progress | 20,328,713 | 18,760,231 | ||||
| Finished goods | 188,737,324 | 202,690,447 | ||||
| 732,218,869 | 865,383,660 | |||||
| Less: Provision for<br><br>declines in<br><br>the value of<br><br>inventories | Accrual in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||
| Raw materials | (27,268,302) | (19,603,942) | 12,951,297 | (33,920,947) | ||
| Work in progress | (195,100) | (243,722) | - | (438,822) | ||
| Finished goods | (5,507,962) | (9,641,194) | 1,663,304 | (13,485,852) | ||
| (32,971,364) | (29,488,858) | 14,614,601 | (47,845,621) | |||
| 699,247,505 | 817,538,039 | |||||
| 31 December 2017 | 31 December 2018 | |||||
| --- | --- | --- | --- | --- | --- | |
| Cost - | ||||||
| Raw materials | 602,556,481 | 523,152,832 | ||||
| Work in progress | 17,096,427 | 20,328,713 | ||||
| Finished goods | 299,240,009 | 188,737,324 | ||||
| 918,892,917 | 732,218,869 | |||||
| Less: Provision for<br><br>declines in<br><br>the value of<br><br>inventories | Accrual in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||
| Raw materials | (20,509,594) | (9,603,523) | 2,844,815 | (27,268,302) | ||
| Work in progress | (68,147) | (126,953) | - | (195,100) | ||
| Finished goods | (3,339,601) | (3,540,553) | 1,372,192 | (5,507,962) | ||
| (23,917,342) | (13,271,029) | 4,217,007 | (32,971,364) | |||
| 894,975,575 | 699,247,505 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (7) | Inventories (Cont’d) | 31 December 2016 | 31 December 2017 | |||||||
| --- | --- | --- | --- | --- | --- | |||||
| Cost - | ||||||||||
| Raw materials | 552,763,560 | 602,556,481 | ||||||||
| Work in progress | 36,748,461 | 17,096,427 | ||||||||
| Finished goods | 234,736,592 | 299,240,009 | ||||||||
| 824,248,613 | 918,892,917 | |||||||||
| Less: Provision for<br><br>declines in<br><br>the value of<br><br>inventories | Reversal/ (Accrual)<br><br>Reversal in<br><br>the current<br><br>year | Write-off in<br><br>the current<br><br>year | ||||||||
| Raw materials | (23,817,530) | 433,754 | 2,874,182 | (20,509,594) | ||||||
| Work in progress | (31,664) | (36,483) | - | (68,147) | ||||||
| Finished goods | (2,720,754) | (1,536,611) | 917,764 | (3,339,601) | ||||||
| (26,569,948) | (1,139,340) | 3,791,946 | (23,917,342) | |||||||
| 797,678,665 | 894,975,575 | (8) | Other current assets | |||||||
| --- | --- | --- | --- | --- | ||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Input VAT to be<br><br>deducted | 259,033,677 | 253,201,082 | 123,276,797 | |||||||
| Prepaid income tax | 7,663,457 | 7,817,048 | 9,121,155 | |||||||
| Others | 591,042 | 1,304,864 | 15,090,570 | |||||||
| 267,288,176 | 262,322,994 | 147,488,522 | ||||||||
| (9) | Long-term equity investments | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Associates (a) | 116,394,997 | 149,489,926 | 163,821,432 | |||||||
| Joint venture (b) | 41,950,317 | 38,094,059 | 46,437,689 | |||||||
| 158,345,314 | 187,583,985 | 210,259,121 | ||||||||
| Less: Provision for<br><br>impairment of<br><br>long-term equity<br><br>investments | - | - | - | |||||||
| 158,345,314 | 187,583,985 | 210,259,121 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (9) | Long-term equity investments (Cont’d) | |||||||||||||||
| (a) | Associates | |||||||||||||||
| Investments in associates are set out below: | ||||||||||||||||
| 31 December<br><br>2018 | Share of net profit under equity method | Profit/Cash dividends declared by associates | Decrease in the current year | 31 December<br><br>2019 | ||||||||||||
| 149,489,926 | 41,305,774 | (41,264,000) | (33,136,703) | 116,394,997 | 31 December<br><br>2017 | Increase in<br><br>investment | Share of net profit under equity method | Profit/Cash dividends declared by associates | 31 December<br><br>2018 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| 163,821,432 | - | 55,608,494 | (69,940,000) | 149,489,926 | ||||||||||||
| 31 December<br><br>2016 | Increase in<br><br>investment | Share of net profit under equity method | Profit/Cash dividends declared by associates | 31 December<br><br>2017 | ||||||||||||
| 140,094,694 | - | 69,726,738 | (46,000,000) | 163,821,432 | ||||||||||||
| General information of associates: | ||||||||||||||||
| Major business location | Place of registration | Nature of business | Interest held | Whether strategic to the Group’s activities | ||||||||||||
| Wuhan Dongfeng Taiji<br><br>Aisi Adient Seating<br><br>Co., Ltd.(“Wuhan<br><br>Taiji”,formerly known<br><br>as “Wuhan Taiji<br><br>Adient Seating<br><br>Co., Ltd.”) (i) | Wuhan | Wuhan | Design, develop, produce and process auto key parts; sell the produced parts and provide after-sale service | 20.00% | Yes | |||||||||||
| Dongfeng Adient<br><br>Automotive Seating<br><br>Co., Ltd. (“Dongfeng<br><br>Adient Seating”) | Wuhan | Wuhan | Design, develop, produce and process auto key parts; sell the produced parts and provide after-sale service | 50.00% | Yes | |||||||||||
| (i) As at 31 March 2019, the company transfered its 20% equity in Wuhan Taiji to Dongfeng Adient Automotive Seating Co., Ltd. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||
|---|---|---|---|---|
| (9) | Long-term equity investments (Cont’d) | |||
| (a) | Associates (Cont’d) | |||
| Summarised financial information for significant associates | ||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Current assets | 562,390,982 | 1,200,716,516 | 1,586,899,084 | |
| Non-current assets | 345,319,707 | 295,963,873 | 277,068,182 | |
| Total assets | 907,710,689 | 1,496,680,389 | 1,863,967,266 | |
| Current liabilities | 661,516,717 | 1,109,472,246 | 1,446,257,505 | |
| Non-current liabilities | - | - | - | |
| Total liabilities | 661,516,717 | 1,109,472,246 | 1,446,257,505 | |
| Net assets | 246,193,972 | 387,208,143 | 417,709,761 | |
| Shares of net assets based on share holding (i) | 123,096,986 | 144,796,073 | 159,127,579 | |
| Adjustments (ii) | (6,701,989) | 4,693,853 | 4,693,853 | |
| Carrying amount of<br><br>investment in joint<br><br>ventures | 116,394,997 | 149,489,926 | 163,821,432 | |
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Revenue | 1,584,261,861 | 3,510,917,720 | 3,805,236,233 | |
| Net profit | 103,585,078 | 169,198,382 | 192,371,153 | |
| Other comprehensive<br><br>income | - | - | - | |
| Total comprehensive<br><br>income | 103,585,078 | 169,198,382 | 192,371,153 | |
| Dividends received from<br><br>associates by the Group<br><br>for the current year | 41,264,000 | 69,940,000 | 46,000,000 | |
| (i) The Group calculates the shares of net assets in proportion of the shareholdings and based on the amount attributable to the parent company of the associates in their consolidated financial statements, which has taken into account the impact of both the fair value of the identifiable assets and liabilities of the associates upon acquisition of investment in associates and the unification of accounting policies adopted by the associates to those adopted by the Company. | ||||
| (ii) The adjustments include the goodwill arising from the acquisition of the investment in the associates by the Group, the elimination of unrealised profits or losses resulting from transactions between the Group and the associates, impairment loss and unrecognised excess loss. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (9) | Long-term equity investments (Cont’d) | |||||||||
| (b) | Joint venture | |||||||||
| Investments in joint venture are set out below: | ||||||||||
| 31 December<br><br>2018 | Increase<br><br>in investment | Share of net profit under equity method | Profit/Cash dividends declared by associates | 31 December 2019 | ||||||
| 38,094,059 | - | 30,846,352 | (26,990,094) | 41,950,317 | ||||||
| 31 December<br><br>2017 | Increase<br><br>in investment | Share of net profit under equity method | Profit/Cash dividends declared by associates | 31 December 2018 | ||||||
| 46,437,689 | - | 10,591,625 | (18,935,255) | 38,094,059 | ||||||
| 31 December<br><br>2016 | Increase<br><br>in investment | Share of net profit under equity method | Profit/Cash dividends declared by associates | 31 December 2017 | ||||||
| 50,160,580 | - | 9,149,807 | (12,872,698) | 46,437,689 | ||||||
| General information of joint venture: | ||||||||||
| Major business location | Place of registration | Nature of business | Interest held | Whether strategic to the Group’s activities | ||||||
| CRH Automotive<br><br>Shenyang Co.,<br><br>Ltd. (“CRH<br><br>Shenyang”) | Shenyang | Shenyang | Design, develop, manufacture, sell auto seats frame and relevant parts; provide after-sale service; import and export goods (exclude those forbidden by the State or restricted by imports and exports). | 50.00% | Yes |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||
|---|---|---|---|---|---|
| (10) | Investment properties | ||||
| Buildings and relevant land use rights | |||||
| Cost | |||||
| 31 December 2018 | 43,294,794 | ||||
| Accumulated depreciation and amortisation | |||||
| 31 December 2018 | (1,948,266) | ||||
| Increase in the current year | (1,948,265) | ||||
| 31 December 2019 | (3,896,531) | ||||
| Carrying amount | |||||
| 31 December 2019 | 39,398,263 | Cost | |||
| --- | --- | ||||
| 31 December 2017 | 42,529,486 | ||||
| Transfer from construction in progress<br><br>(Note(7)(12)) | 765,308 | ||||
| 31 December 2018 | 43,294,794 | ||||
| Accumulated depreciation and amortisation | |||||
| 31 December 2017 | - | ||||
| Increase in the current year | (1,948,266) | ||||
| 31 December 2018 | (1,948,266) | ||||
| Carrying amount | |||||
| 31 December 2018 | 41,346,528 | ||||
| Cost | |||||
| 31 December 2016 | - | ||||
| Transfer from construction in progress<br><br>(Note(7)(12)) | 42,529,486 | ||||
| 31 December 2017 | 42,529,486 | ||||
| Accumulated depreciation and amortisation | |||||
| 31 December 2016 | - | ||||
| Increase in the current year | - | ||||
| 31 December 2017 | - | ||||
| Carrying amount | |||||
| 31 December 2017 | 42,529,486 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (11) | Fixed assets | Buildings | Machinery and<br><br>equipment | Motor<br><br>vehicles | Computers and<br><br>electronic<br><br>equipment and<br><br>office equipment | Tooling | Total | ||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost | |||||||||
| 31 December 2018 | 823,296,793 | 2,360,545,078 | 16,095,364 | 305,776,332 | 293,845,307 | 3,799,558,874 | |||
| Transfer from construction in progress (Note(7)(12)) | 34,014,346 | 361,241,293 | 1,876,957 | 41,893,443 | 55,739,084 | 494,765,123 | |||
| Other increases in the current year | 2,920,133 | 2,669,421 | 57,832 | 113,870 | 313,399 | 6,074,655 | |||
| Decrease in the current year | (2,435,491) | (40,072,694) | (1,265,573) | (6,046,512) | (12,065,903) | (61,886,173) | |||
| 31 December 2019 | 857,795,781 | 2,684,383,098 | 16,764,580 | 341,737,133 | 337,831,887 | 4,238,512,479 | |||
| Accumulated depreciation | |||||||||
| 31 December 2018 | (276,040,453) | (1,216,023,928) | (9,514,872) | (203,971,103) | (201,730,151) | (1,907,280,507) | |||
| Increase in the current year | (41,860,062) | (361,120,993) | (2,698,876) | (46,028,422) | (66,988,830) | (518,697,183) | |||
| Decrease in the current year | 364,741 | 31,106,618 | 595,780 | 5,825,559 | 11,596,670 | 49,489,368 | |||
| 31 December 2019 | (317,535,774) | (1,546,038,303) | (11,617,968) | (244,173,966) | (257,122,311) | (2,376,488,322) | |||
| Provision for impairment loss | |||||||||
| 31 December 2018 | - | (2,892,470) | - | - | (229,664) | (3,122,134) | |||
| Increase in the current year | - | (2,358,065) | - | (639) | (52,115) | (2,410,819) | |||
| Decrease in the current year | - | 795,580 | - | - | 160,352 | 955,932 | |||
| 31 December 2019 | - | (4,454,955) | - | (639) | (121,427) | (4,577,021) | |||
| Carrying amount | |||||||||
| 31 December 2019 | 540,260,007 | 1,133,889,840 | 5,146,612 | 97,562,528 | 80,588,149 | 1,857,447,136 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (11) | Fixed assets (Cont’d) | Buildings | Machinery and<br><br>equipment | Motor<br><br>vehicles | Computers and<br><br>electronic<br><br>equipment and<br><br>office equipment | Tooling | Total | ||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost | |||||||||
| 31 December 2017 | 817,951,252 | 2,050,132,338 | 12,541,334 | 259,320,267 | 214,060,211 | 3,354,005,402 | |||
| Transfer from construction in progress (Note(7)(12)) | 4,273,903 | 327,567,319 | 5,016,988 | 53,124,161 | 81,320,875 | 471,303,246 | |||
| Other increases in the current year | 1,116,638 | 11,251,865 | 142,883 | 1,846,637 | 2,820,252 | 17,178,275 | |||
| Decrease in the current year | (45,000) | (28,406,444) | (1,605,841) | (8,514,733) | (4,356,031) | (42,928,049) | |||
| 31 December 2018 | 823,296,793 | 2,360,545,078 | 16,095,364 | 305,776,332 | 293,845,307 | 3,799,558,874 | |||
| Accumulated depreciation | |||||||||
| 31 December 2017 | (225,845,875) | (971,947,841) | (8,112,450) | (166,590,517) | (150,405,142) | (1,522,901,825) | |||
| Increase in the current year | (50,239,578) | (264,341,867) | (2,744,395) | (44,742,896) | (55,011,796) | (417,080,532) | |||
| Decrease in the current year | 45,000 | 20,265,780 | 1,341,973 | 7,362,310 | 3,686,787 | 32,701,850 | |||
| 31 December 2018 | (276,040,453) | (1,216,023,928) | (9,514,872) | (203,971,103) | (201,730,151) | (1,907,280,507) | |||
| Provision for impairment loss | |||||||||
| 31 December 2017 | - | (2,259,813) | - | - | (229,664) | (2,489,477) | |||
| Increase in the current year | - | (633,167) | - | - | - | (633,167) | |||
| Decrease in the current year | - | 510 | - | - | - | 510 | |||
| 31 December 2018 | - | (2,892,470) | - | - | (229,664) | (3,122,134) | |||
| Carrying amount | |||||||||
| 31 December 2018 | 547,256,340 | 1,141,628,680 | 6,580,492 | 101,805,229 | 91,885,492 | 1,889,156,233 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (11) | Fixed assets (Cont’d) | Buildings | Machinery and<br><br>equipment | Motor<br><br>vehicles | Computers and<br><br>electronic<br><br>equipment and<br><br>office equipment | Tooling | Total | ||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost | |||||||||
| 31 December 2016 | 765,812,975 | 1,749,296,461 | 6,838,925 | 257,756,641 | 172,609,872 | 2,952,314,874 | |||
| Transfer from construction in progress (Note(7)(12)) | 58,878,093 | 355,802,525 | 5,887,788 | 32,222,418 | 69,308,003 | 522,098,827 | |||
| Other increases in the current year | 93,202 | 88,572 | - | 9,286 | 5,828 | 196,888 | |||
| Decrease in the current year | (6,833,018) | (55,055,220) | (185,379) | (30,637,992) | (27,736,142) | (120,447,751) | |||
| Transfer to long-term prepaid expenses | - | - | - | (30,086) | (127,350) | (157,436) | |||
| 31 December 2017 | 817,951,252 | 2,050,132,338 | 12,541,334 | 259,320,267 | 214,060,211 | 3,354,005,402 | |||
| Accumulated depreciation | |||||||||
| 31 December 2016 | (182,533,783) | (764,667,167) | (6,400,178) | (154,423,773) | (121,076,895) | (1,229,101,796) | |||
| Increase in the current year | (46,101,317) | (246,635,251) | (1,850,999) | (42,533,912) | (49,280,656) | (386,402,135) | |||
| Decrease in the current year | 2,789,225 | 39,354,577 | 138,727 | 30,357,139 | 19,869,631 | 92,509,299 | |||
| Transfer to long-term prepaid expenses | - | - | - | 10,029 | 82,778 | 92,807 | |||
| 31 December 2017 | (225,845,875) | (971,947,841) | (8,112,450) | (166,590,517) | (150,405,142) | (1,522,901,825) | |||
| Provision for impairment loss | |||||||||
| 31 December 2016 | - | (3,116,116) | - | - | (283,584) | (3,399,700) | |||
| Decrease in the current year | - | 856,303 | - | - | 53,920 | 910,223 | |||
| 31 December 2017 | - | (2,259,813) | - | - | (229,664) | (2,489,477) | |||
| Carrying amount | |||||||||
| 31 December 2017 | 592,105,377 | 1,075,924,684 | 4,428,884 | 92,729,750 | 63,425,405 | 1,828,614,100 | |||
| In 2019, 2018 and 2017, the amount of depreciation expense charged to cost of sales were RMB 449,186,223, RMB 328,563,804 and RMB 313,444,037, respectively. | |||||||||
| In 2019, 2018 and 2017, the amount of depreciation expense charged to research and development expenses were RMB 26,040,541, RMB 39,028,327 and RMB 25,644,243, respectively. | |||||||||
| In 2019, 2018 and 2017, the amount of depreciation expense charged to selling expenses were RMB 25,648, RMB 25,649 and RMB 25,648, respectively. | |||||||||
| In 2019, 2018 and 2017, the amount of depreciation expense charged to general and administrative expenses were RMB 43,444,771, RMB 49,462,752 and RMB 47,288,207, respectively. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (12) | Construction in progress | Project name | 31 December 2018 | Increase in<br><br>the current year | Transfer to<br><br>fixed assets<br><br>(Note(7)(11)) | Transfer to<br><br>long-term<br><br>prepaid expenses | Transfer to<br><br>intangible assets<br><br>(Note(7)(13)) | Decrease in the current year | 31 December 2019 | |
| --- | --- | --- | --- | --- | --- | --- | --- | |||
| Building and improvements | 104,604,128 | 136,311,391 | (34,014,346) | (11,660,205) | (38,987,535) | (337,924) | 155,915,509 | |||
| Machinery and equipment | 205,381,663 | 378,899,271 | (361,241,293) | (4,578,112) | - | (2,422,133) | 216,039,396 | |||
| Other projects | 54,455,672 | 138,236,316 | (99,509,484) | (6,093,179) | (18,983,636) | (7,390,416) | 60,715,273 | |||
| 364,441,463 | 653,446,978 | (494,765,123) | (22,331,496) | (57,971,171) | (10,150,473) | 432,670,178 | ||||
| Including: Capitalised<br><br>borrowing cost | - | - | - | - | - | - | - | |||
| Less: Provision for<br><br>impairment of<br><br>construction in<br><br>progress | - | - | - | - | - | - | - | |||
| 364,441,463 | 653,446,978 | (494,765,123) | (22,331,496) | (57,971,171) | (10,150,473) | 432,670,178 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7<br><br><br><br>(12) | Notes to the consolidated financial statements (Cont’d)<br><br><br><br>Construction in progress (Cont’d) | | --- | --- || Project name | 31 December 2017 | Increase in<br><br>the current year | Transfer to<br><br>fixed assets<br><br>(Note(7)(11)) | Transfer to<br><br>long-term<br><br>prepaid expenses | Transfer to<br><br>intangible assets<br><br>(Note(7)(13)) | Transfer to<br><br>investment properties<br><br>(Note(7)(10)) | Decrease in the current year | 31 December 2018 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Building and improvements | 69,232,968 | 51,504,218 | (4,273,903) | (10,113,248) | - | (765,308) | (980,599) | 104,604,128 | | Machinery and equipment | 129,894,139 | 410,311,345 | (327,567,319) | (6,985,673) | - | - | (270,829) | 205,381,663 | | Other projects | 79,634,820 | 175,688,466 | (139,462,024) | - | (61,360,645) | - | (44,945) | 54,455,672 | | | 278,761,927 | 637,504,029 | (471,303,246) | (17,098,921) | (61,360,645) | (765,308) | (1,296,373) | 364,441,463 | | Including: Capitalised<br><br>borrowing cost | - | - | - | - | - | - | - | - | | Less: Provision for<br><br>impairment of<br><br>construction in<br><br>progress | - | - | - | - | - | - | - | - | | | 278,761,927 | 637,504,029 | (471,303,246) | (17,098,921) | (61,360,645) | (765,308) | (1,296,373) | 364,441,463 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7<br><br><br><br>(12) | Notes to the consolidated financial statements (Cont’d)<br><br><br><br>Construction in progress (Cont’d) | | --- | --- || Project name | 31 December 2016 | Increase in<br><br>the current year | Transfer to<br><br>fixed assets<br><br>(Note(7)(11)) | Transfer to<br><br>long-term<br><br>prepaid expenses | Transfer to<br><br>intangible assets<br><br>(Note(7)(13)) | Transfer to<br><br>investment properties<br><br>(Note(7)(10)) | Decrease in the current year | 31 December 2017 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Building and improvements | 153,518,569 | 28,398,407 | (58,878,093) | (11,276,429) | - | (42,529,486) | - | 69,232,968 | | Machinery and equipment | 216,942,984 | 283,936,643 | (355,802,525) | (14,982,963) | - | - | (200,000) | 129,894,139 | | Other projects | 71,761,570 | 130,949,613 | (107,418,209) | (3,537,361) | (12,120,793) | - | - | 79,634,820 | | | 442,223,123 | 443,284,663 | (522,098,827) | (29,796,753) | (12,120,793) | (42,529,486) | (200,000) | 278,761,927 | | Including: Capitalised<br><br>borrowing cost | - | - | - | - | - | - | - | - | | Less: Provision for<br><br>impairment of<br><br>construction in<br><br>progress | - | (200,000) | - | - | - | - | 200,000 | - | | | 442,223,123 | 443,084,663 | (522,098,827) | (29,796,753) | (12,120,793) | (42,529,486) | - | 278,761,927 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (13) | Intangible assets | Land use rights | Software | Patents | Non-patent technology | Customer relationship | Total | ||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost | |||||||||
| 31 December 2018 | 399,694,892 | 196,295,597 | 495,000 | 30,837,586 | 533,881,400 | 1,161,204,475 | |||
| Transfer from construction in progress<br><br>(Note(7)(12)) | 38,987,535 | 18,983,636 | - | - | - | 57,971,171 | |||
| Other increases in the current year | - | 9,851,824 | - | - | - | 9,851,824 | |||
| Decrease in the current year | - | (474,458) | - | - | - | (474,458) | |||
| 31 December 2019 | 438,682,427 | 224,656,599 | 495,000 | 30,837,586 | 533,881,400 | 1,228,553,012 | |||
| Accumulated depreciation | |||||||||
| 31 December 2018 | (88,668,576) | (155,541,877) | (360,040) | - | (533,881,400) | (778,451,893) | |||
| Increases in the current year | (23,546,664) | (24,650,999) | (9,500) | (3,597,718) | - | (51,804,881) | |||
| Decrease in the current year | - | 39,953 | - | - | - | 39,953 | |||
| 31 December 2019 | (112,215,240) | (180,152,923) | (369,540) | (3,597,718) | (533,881,400) | (830,216,821) | |||
| Carrying amount | |||||||||
| 31 December 2019 | 326,467,187 | 44,503,676 | 125,460 | 27,239,868 | - | 398,336,191 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (13) | Intangible assets (Cont’d) | Land use rights | Software | Patents | Non-patent technology | Customer relationship | Total | ||
| --- | --- | --- | --- | --- | --- | --- | |||
| Cost | |||||||||
| 31 December 2017 | 399,694,892 | 160,476,467 | 495,000 | - | 825,411,900 | 1,386,078,259 | |||
| Transfer from construction in progress<br><br>(Note(7)(12)) | - | 30,523,059 | - | 30,837,586 | - | 61,360,645 | |||
| Other increases in the current year | - | 5,846,000 | - | - | - | 5,846,000 | |||
| Reduction from disposal of subsidiaries | - | - | - | - | (291,530,500) | (291,530,500) | |||
| Decrease in the current year | - | (549,929) | - | - | - | (549,929) | |||
| 31 December 2018 | 399,694,892 | 196,295,597 | 495,000 | 30,837,586 | 533,881,400 | 1,161,204,475 | |||
| Accumulated depreciation | |||||||||
| 31 December 2017 | (66,028,900) | (134,013,157) | (232,278) | - | (825,411,900) | (1,025,686,235) | |||
| Increases in the current year | (22,639,676) | (22,003,716) | (127,762) | - | - | (44,771,154) | |||
| Reduction from disposal of subsidiaries | - | - | - | - | 291,530,500 | 291,530,500 | |||
| Decrease in the current year | - | 474,996 | - | - | - | 474,996 | |||
| 31 December 2018 | (88,668,576) | (155,541,877) | (360,040) | - | (533,881,400) | (778,451,893) | |||
| Carrying amount | |||||||||
| 31 December 2018 | 311,026,316 | 40,753,720 | 134,960 | 30,837,586 | - | 382,752,582 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (13) | Intangible assets (Cont’d) | Land use rights | Software | Patents | Customer relationship | Total | ||
| --- | --- | --- | --- | --- | --- | |||
| Cost | ||||||||
| 31 December 2016 | 306,589,892 | 142,802,642 | 495,000 | 825,411,900 | 1,275,299,434 | |||
| Transfer from construction in progress<br><br>(Note(7)(12)) | - | 12,120,793 | - | - | 12,120,793 | |||
| Other increases in the current year | 93,105,000 | 5,553,032 | - | - | 98,658,032 | |||
| 31 December 2017 | 399,694,892 | 160,476,467 | 495,000 | 825,411,900 | 1,386,078,259 | |||
| Accumulated depreciation | ||||||||
| 31 December 2016 | (43,371,720) | (111,740,945) | (196,111) | (825,411,900) | (980,720,676) | |||
| Increases in the current year | (22,657,180) | (22,272,212) | (36,167) | - | (44,965,559) | |||
| 31 December 2017 | (66,028,900) | (134,013,157) | (232,278) | (825,411,900) | (1,025,686,235) | |||
| Carrying amount | ||||||||
| 31 December 2017 | 333,665,992 | 26,463,310 | 262,722 | - | 360,392,024 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (14) | Goodwill | ||||||||||
| 31 December 2018 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2019 | ||||||||
| Goodwill | 71,566,642 | - | - | 71,566,642 | |||||||
| Less: Provision for<br><br>impairment | - | - | - | - | |||||||
| 71,566,642 | - | - | 71,566,642 | ||||||||
| 31 December 2017 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2018 | ||||||||
| Goodwill | 71,566,642 | - | - | 71,566,642 | |||||||
| Less: Provision for<br><br>impairment | - | - | - | - | |||||||
| 71,566,642 | - | - | 71,566,642 | 31 December 2016 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2017 | ||||
| --- | --- | --- | --- | --- | |||||||
| Goodwill | 71,566,642 | - | - | 71,566,642 | |||||||
| Less: Provision for<br><br>impairment | - | - | - | - | |||||||
| 71,566,642 | - | - | 71,566,642 | ||||||||
| The recoverable amount of asset groups and groups of asset groups is calculated using the estimated cash flows determined according to the three-year budget approved by management, together with the constant growth rates thereafter. The latter are set out in the following table. | |||||||||||
| --- | --- | ||||||||||
| The main assumptions applied in calculating discounted future cash flows are as follows: | |||||||||||
| Growth rate | 17% | ||||||||||
| Gross margin | 16% | ||||||||||
| Discount rate | 17% | ||||||||||
| The growth rates mentioned above are the weighted average growth rates applied by management to extrapolate cash flows beyond the three-year period, and the growth rates are consistent with those estimated in the industry reports, and do not exceed the long-term average growth rates of each product. Management determines budgeted gross margin based on past experience and forecast on future market development. The discount rates used by management are the pre-tax interest rates that are able to reflect the risks specific to the related asset groups and groups of asset groups. The above assumptions are used to assess the recoverable amount of each asset group and group of asset groups within the corresponding operating segment. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||
|---|---|---|---|---|
| (15) | Long-term prepaid expenses | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Improvements to fixed<br><br>assets held under<br><br>operating leases | 112,233,393 | 124,120,670 | 156,879,052 | |
| Others | 4,526,473 | 7,647,620 | 7,535,603 | |
| 116,759,866 | 131,768,290 | 164,414,655 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (16) | Deferred tax assets and deferred tax liabilities | |||||||||||
| (a) | Deferred tax assets | |||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||
| Deferred tax assets | Deductible temporary difference | Deferred tax assets | Deductible temporary difference | Deferred tax assets | Deductible temporary difference | |||||||
| Provisions for asset impairment | 46,093,808 | 240,274,539 | 21,356,591 | 116,200,729 | 20,633,379 | 111,836,540 | ||||||
| Depreciation of fixed assets | 12,798,620 | 105,377,068 | 9,966,815 | 62,355,547 | 1,295,205 | 9,981,627 | ||||||
| Amortisation of long-term prepaid<br><br>expenses | - | - | - | - | 2,254,799 | 15,031,991 | ||||||
| Accrued expenses and accounts<br><br>payable | 1,606,864,759 | 7,669,659,199 | 1,430,062,002 | 7,141,338,768 | 1,053,271,240 | 5,348,617,949 | ||||||
| Accrued payroll | 10,867,983 | 54,616,346 | 8,141,074 | 47,454,161 | 5,690,242 | 34,712,085 | ||||||
| Deferred income | 2,204,028 | 10,006,409 | 2,892,300 | 12,568,240 | 1,962,772 | 7,851,089 | ||||||
| Deductible losses | 114,867,867 | 464,372,958 | 63,988,585 | 255,954,341 | 5,296,194 | 21,184,773 | ||||||
| Provision | 3,627,170 | 17,616,583 | 485,776 | 2,629,978 | - | - | ||||||
| 1,797,324,235 | 8,561,923,102 | 1,536,893,143 | 7,638,501,764 | 1,090,403,831 | 5,549,216,054 | Including: | ||||||
| --- | --- | --- | --- | |||||||||
| Expected to be recovered within one<br><br>year (inclusive) | 1,710,888,610 | 1,449,978,909 | 1,085,568,850 | |||||||||
| Expected to be recovered after one<br><br>year | 86,435,625 | 86,914,234 | 4,834,981 | |||||||||
| 1,797,324,235 | 1,536,893,143 | 1,090,403,831 | ||||||||||
| (b) | Deductible temporary differences and deductible losses that are not recognised as deferred tax assets are analysed as follows: | |||||||||||
| --- | --- | --- | --- | --- | ||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||
| Deductible temporary differences | 44,129,778 | - | - | |||||||||
| Deductible losses | 18,663,475 | - | 46,742,064 | |||||||||
| 62,793,253 | - | 46,742,064 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (16) | Deferred tax assets and deferred tax liabilities (Cont’d) | |||||||||||||
| (c) | Deductible losses that are not recognised as deferred tax assets will be expired as follows: | |||||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||||
| Within 1 year | - | - | - | |||||||||||
| Between 1 to 2 years | - | - | - | |||||||||||
| Between 2 to 3 years | 2,349,884 | - | - | |||||||||||
| Between 3 to 4 years | 4,960,180 | - | 5,240,533 | |||||||||||
| Over 4 years | 11,353,411 | - | 41,501,531 | |||||||||||
| 18,663,475 | - | 46,742,064 | (d) | Deferred tax liabilities | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||||
| Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | Deferred tax liabilities | Taxable temporary difference | |||||||||
| Depreciation of fixed assets | 51,915,709 | 225,788,337 | 26,608,456 | 117,098,760 | - | - | ||||||||
| Including: | ||||||||||||||
| Expected to be recovered within one<br> year (inclusive) | 14,083,910 | 5,214,740 | - | |||||||||||
| Expected to be recovered after one year | 37,831,799 | 21,393,716 | - | |||||||||||
| 51,915,709 | 26,608,456 | - | (e) | The net balances of deferred tax assets and liabilities after offsetting are as follows: | ||||||||||
| --- | --- | --- | --- | --- | ||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||||
| Deferred tax assets, net | 1,746,772,809 | 1,510,284,687 | 1,090,403,831 | |||||||||||
| Deferred tax liabilities, net | 1,364,283 | - | - |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (17) | Other non-current assets | ||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||
| Prepayment for equipment | 14,493,976 | 40,666,389 | 64,819,673 | ||||||||
| Rental deposits | 10,120,489 | 13,300,379 | 15,786,279 | ||||||||
| 24,614,465 | 53,966,768 | 80,605,952 | (18) | Short-term borrowings | |||||||
| --- | --- | --- | --- | --- | --- | ||||||
| Currency | 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Unsecured | RMB | 433,051,550 | 578,660,000 | 551,280,196 | |||||||
| As at 31 December 2019, 2018 and 2017, the weighted average interest rate of short-term borrowings is 4.46%, 4.57% and 4.40% per annum, respectively. | |||||||||||
| --- | --- | --- | --- | --- | |||||||
| (19) | Notes payable | ||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||
| Bank acceptance notes | 634,111,311 | 665,390,579 | 653,798,483 | ||||||||
| As at 31 December 2019, 2018 and 2017, bank acceptance notes of RMB 297,611,514, RMB 258,170,177and RMB 237,154,087 were secured with bank deposits of RMB 266,026,068, RMB 284,757,255 and RMB 195,158,898, respectively (Note 7(1)).<br><br><br><br>As at 31 December 2019, bank acceptance notes of RMB 164,400,375 were secured with receivables financing of RMB 164,760,000 (Note 7(4)).<br><br><br><br>As at 31 December 2018 and 2017, bank acceptance notes of RMB 257,245,279 and RMB 230,171,732 were secured with notes receivable of RMB 242,674,481 and RMB 236,414,979 (Note 7(2)). | |||||||||||
| (20) | Accounts payable | ||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||
| Payment for goods | 11,990,045,939 | 10,443,534,582 | 12,793,184,831 | ||||||||
| Others | 4,419,311 | 3,675,866 | 3,842,274 | ||||||||
| 11,994,465,250 | 10,447,210,448 | 12,797,027,105 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (21) | Employee benefits payable | ||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||
| Short-term employee benefits<br><br>payable (a) | 816,052,563 | 816,643,016 | 831,474,529 | ||||||||
| Defined contribution plans<br><br>payable (b) | 14,039,336 | 18,502,669 | 15,622,695 | ||||||||
| 830,091,899 | 835,145,685 | 847,097,224 | |||||||||
| (a) | Short-term employee benefits payable | ||||||||||
| --- | --- | --- | --- | --- | --- | ||||||
| 31 December 2018 | Increase in the current year | Decrease in the current year | 31 December 2019 | ||||||||
| Wages and salaries, bonus,<br><br>allowances and subsidies | 455,707,696 | 1,686,722,556 | (1,595,079,549) | 547,350,703 | |||||||
| Staff welfare | 3,407,045 | 119,342,542 | (122,749,587) | - | |||||||
| Social security contributions | 10,980,289 | 100,625,248 | (100,993,057) | 10,612,480 | |||||||
| Including: Medical insurance | 5,772,576 | 84,994,744 | (85,377,463) | 5,389,857 | |||||||
| Work injury insurance | 687,160 | 5,637,529 | (5,788,326) | 536,363 | |||||||
| Maternity insurance | 4,520,553 | 9,992,975 | (9,827,268) | 4,686,260 | |||||||
| Housing funds | 11,036,554 | 130,765,637 | (130,541,936) | 11,260,255 | |||||||
| Labour union funds and<br><br>employee education funds | 25,223,805 | 33,299,523 | (35,316,363) | 23,206,965 | |||||||
| Other short-term employee<br><br>benefits | 338,679 | 1,408,558 | (815,197) | 932,040 | |||||||
| Staff welfare and incentive<br><br>funds | 309,948,948 | 60,538,951 | (147,797,779) | 222,690,120 | |||||||
| 816,643,016 | 2,132,703,015 | (2,133,293,468) | 816,052,563 | 31 December 2017 | Increase in the current year | Decrease in the current year | 31 December 2018 | ||||
| --- | --- | --- | --- | --- | |||||||
| Wages and salaries, bonus,<br><br>allowances and subsidies | 415,273,617 | 1,646,027,829 | (1,605,593,750) | 455,707,696 | |||||||
| Staff welfare | 294,436 | 108,856,363 | (105,743,754) | 3,407,045 | |||||||
| Social security contributions | 12,176,698 | 100,345,310 | (101,541,719) | 10,980,289 | |||||||
| Including: Medical insurance | 8,009,193 | 83,187,795 | (85,424,412) | 5,772,576 | |||||||
| Work injury insurance | 1,108,309 | 6,829,819 | (7,250,968) | 687,160 | |||||||
| Maternity insurance | 3,059,196 | 10,327,696 | (8,866,339) | 4,520,553 | |||||||
| Housing funds | 13,267,157 | 128,950,351 | (131,180,954) | 11,036,554 | |||||||
| Labour union funds and<br><br>employee education funds | 19,722,413 | 32,894,214 | (27,392,822) | 25,223,805 | |||||||
| Other short-term employee<br><br>benefits | 830,618 | 1,043,665 | (1,535,604) | 338,679 | |||||||
| Staff welfare and incentive<br><br>funds | 369,909,590 | 66,568,986 | (126,529,628) | 309,948,948 | |||||||
| 831,474,529 | 2,084,686,718 | (2,099,518,231) | 816,643,016 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (21) | Employee benefits payable (Cont’d) | ||||||
| (a) | Short-term employee benefits payable (Cont’d) | 31 December 2016 | Increase in the current year | Decrease in the current year | 31 December 2017 | ||
| --- | --- | --- | --- | --- | |||
| Wages and salaries, bonus,<br><br>allowances and subsidies | 411,675,946 | 1,489,660,689 | (1,486,063,018) | 415,273,617 | |||
| Staff welfare | - | 141,248,778 | (140,954,342) | 294,436 | |||
| Social security contributions | 9,463,619 | 84,333,102 | (81,620,023) | 12,176,698 | |||
| Including: Medical insurance | 7,296,574 | 69,361,143 | (68,648,524) | 8,009,193 | |||
| Work injury insurance | 759,177 | 6,369,010 | (6,019,878) | 1,108,309 | |||
| Maternity insurance | 1,407,868 | 8,602,949 | (6,951,621) | 3,059,196 | |||
| Housing funds | 11,402,998 | 83,767,222 | (81,903,063) | 13,267,157 | |||
| Labour union funds and<br><br>employee education funds | 22,226,096 | 23,487,067 | (25,990,750) | 19,722,413 | |||
| Other short-term employee<br><br>benefits | 709,841 | 1,202,100 | (1,081,323) | 830,618 | |||
| Staff welfare and incentive<br><br>funds | 316,115,041 | 65,871,456 | (12,076,907) | 369,909,590 | |||
| 771,593,541 | 1,889,570,414 | (1,829,689,426) | 831,474,529 | ||||
| (b) | Defined contribution plans payable | ||||||
| --- | --- | --- | --- | ||||
| 2019 | |||||||
| Amount payable | Ending balance | ||||||
| Basic pensions | 203,042,439 | 13,503,909 | |||||
| Unemployment insurance | 7,032,736 | 535,427 | |||||
| 210,075,175 | 14,039,336 | ||||||
| 2018 | |||||||
| Amount payable | Ending balance | ||||||
| Basic pensions | 224,024,929 | 17,521,898 | |||||
| Unemployment insurance | 6,774,048 | 980,771 | |||||
| 230,798,977 | 18,502,669 | ||||||
| 2017 | |||||||
| Amount payable | Ending balance | ||||||
| Basic pensions | 169,528,098 | 14,558,763 | |||||
| Unemployment insurance | 5,459,505 | 1,063,932 | |||||
| 174,987,603 | 15,622,695 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (22) | Taxes payable | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Enterprise income tax payable | 365,985,608 | 481,588,064 | 416,057,834 | |||||||
| Unpaid VAT | 47,761,785 | 44,727,170 | 200,453,088 | |||||||
| Withholding individual income<br><br>tax payable | 4,215,613 | 6,251,468 | 15,867,945 | |||||||
| Others | 9,629,834 | 13,388,116 | 24,243,999 | |||||||
| 427,592,840 | 545,954,818 | 656,622,866 | (23) | Other payables | ||||||
| --- | --- | --- | --- | --- | ||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Accrued expenses | 3,696,624,945 | 2,906,378,476 | 2,897,471,960 | |||||||
| Payables for toolings | 181,926,915 | 626,924,525 | 314,966,958 | |||||||
| Payables for long-term assets | 159,882,579 | 135,718,398 | 133,318,793 | |||||||
| Expenses paid by others on<br><br>behalf of the Group | 82,572,594 | 66,157,854 | 18,811,831 | |||||||
| Payables for service fee | 69,664,489 | 71,544,812 | 63,833,732 | |||||||
| Transportation fee payables | 35,129,876 | 16,427,855 | 30,867,845 | |||||||
| Others | 185,095,870 | 152,159,338 | 67,741,260 | |||||||
| 4,410,897,268 | 3,975,311,258 | 3,527,012,379 | (24) | Long-term borrowings | ||||||
| --- | --- | --- | --- | --- | ||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Unsecured | - | 1,500,000 | 4,500,000 | |||||||
| Less: Current portion of long-<br><br>term borrowings | - | (1,500,000) | (3,000,000) | |||||||
| - | - | 1,500,000 | ||||||||
| As at 31 December 2018 and 2017, the weighted average interest rate of long-term borrowings is 5.06% and 4.55% per annum, respectively. | ||||||||||
| (25) | Deferred income | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Government grants (a) | 16,529,595 | 14,135,470 | 9,117,415 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (25) | Deferred income (Cont’d) | |||||||
| (a) | Government grants | |||||||
| 31 December 2018 | Increase in the current year | Charged to other income | 31 December 2019 | Asset related/ Income related | ||||
| Asset-related subsidies | 14,025,470 | 7,544,997 | (5,040,872) | 16,529,595 | Asset related | |||
| Income-related subsidies | 110,000 | - | (110,000) | - | Income related | |||
| 14,135,470 | 7,544,997 | (5,150,872) | 16,529,595 | |||||
| The government grants recognised in profit or loss or deducted against related expenses in the year 2019 are set out as follows: | ||||||||
| Government grants | Amount | Presentation items | ||||||
| Asset-related subsidies | 5,040,872 | Other income | ||||||
| Income-related subsidies | 110,000 | Other income | ||||||
| 5,150,872 | ||||||||
| 31 December 2017 | Increase in the current year | Charged to other income | 31 December 2018 | Asset related/ Income related | ||||
| Asset-related subsidies | 9,007,415 | 7,675,000 | (2,656,945) | 14,025,470 | Asset related | |||
| Income-related subsidies | 110,000 | - | - | 110,000 | Income related | |||
| 9,117,415 | 7,675,000 | (2,656,945) | 14,135,470 | |||||
| The government grants recognised in profit or loss or deducted against related expenses in the year 2018 are set out as follows: | ||||||||
| Government grants | Amount | Presentation items | ||||||
| Asset-related subsidies | 2,656,945 | Other income |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (25) | Deferred income (Cont’d) | |||||||
| (a) | Government grants (Cont’d) | |||||||
| 31 December 2016 | Increase in the current year | Charged to other income | 31 December 2017 | Asset related/ Income related | ||||
| Asset-related subsidies | 9,995,949 | 1,164,730 | (2,153,264) | 9,007,415 | Asset related | |||
| Income-related subsidies | - | 110,000 | - | 110,000 | Income related | |||
| 9,995,949 | 1,274,730 | (2,153,264) | 9,117,415 | |||||
| The government grants recognised in profit or loss or deducted against related expenses in the year 2017 are set out as follows: | ||||||||
| Government grants | Amount | Presentation items | ||||||
| Asset-related subsidies | 2,153,264 | Other income |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||
|---|---|---|---|---|---|
| (26) | Surplus reserve | ||||
| 31 December 2018 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2019 | ||
| Reserve Fund | 190,600,071 | 20,076,254 | - | 210,676,325 | |
| Enterprise Expansion<br><br>Fund | 317,474,946 | 40,152,508 | - | 357,627,454 | |
| 508,075,017 | 60,228,762 | - | 568,303,779 | ||
| 31 December 2017 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2018 | ||
| Reserve Fund | 168,511,991 | 22,088,080 | - | 190,600,071 | |
| Enterprise Expansion<br><br>Fund | 273,298,786 | 44,176,160 | - | 317,474,946 | |
| 441,810,777 | 66,264,240 | - | 508,075,017 | ||
| 31 December 2016 | Increase in<br><br>the current year | Decrease in<br><br>the current year | 31 December 2017 | ||
| Reserve Fund | 146,820,596 | 21,691,395 | - | 168,511,991 | |
| Enterprise Expansion<br><br>Fund | 229,915,996 | 43,382,790 | - | 273,298,786 | |
| 376,736,592 | 65,074,185 | - | 441,810,777 | ||
| In accordance with the Law of the PRC on Chinese and Foreign Equity Joint Ventures and the Company’s Articles of Association, appropriations from net profit should be made to the reserve fund and the staff and workers’ bonus and welfare fund and enterprise expansion fund, after offsetting accumulated losses from prior years, and before profit distributions to the investors. The percentages to be appropriated for the reserve fund and enterprise expansion fund are determined by the Board of Directors of the Company. | |||||
| --- | |||||
| In accordance with the articles of the Company and the resolution at the Board of Directors’ meeting, the Company appropriated 1% of annual net profit amounted to RMB 20,076,254, RMB 22,088,080 and RMB 21,691,395 to Reserve Fund for the years of 2019, 2018 and 2017, respectively, and 2% of annual net profit amounted to RMB 40,152,508, RMB 44,176,160 and RMB 43,382,790 to the Enterprise Expansion Fund for the years of 2019, 2018 and 2017, respectively. | (27) | Undistributed profits | |||
| --- | --- | ||||
| In accordance with the resolution at the Board of Directors’ meeting dated on 26 June 2019, 23 May 2018, and 8 May 2017, the Company proposed a dividend in the amount of RMB 2,076,279,518, RMB 2,038,991,145 and RMB 1,493,770,914 to the investors, respectively. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (28) | Revenue and cost of sales | |||||||||
| 2019 | 2018 | 2017 | ||||||||
| Revenue | Cost of sales | Revenue | Cost of sales | Revenue | Cost of sales | |||||
| Revenue from<br><br>main operations | ||||||||||
| - sales of<br><br>automotive<br><br>spare parts | 27,698,552,475 | (22,956,482,992) | 32,474,029,564 | (27,360,907,165) | 31,247,431,443 | (26,011,033,680) | ||||
| Revenue from<br><br>other operations | ||||||||||
| - sales of raw<br><br>materials | 119,215,215 | (34,485,369) | 389,532,355 | (132,592,960) | 359,516,400 | (195,735,293) | ||||
| - service income | 518,549,949 | (316,692,783) | 381,564,501 | (191,639,970) | 388,691,895 | (302,641,103) | ||||
| - others | 167,656,441 | (44,992,493) | 70,785,181 | (47,528,081) | 47,556,144 | (22,983,965) | ||||
| 28,503,974,080 | (23,352,653,637) | 33,315,911,601 | (27,732,668,176) | 32,043,195,882 | (26,532,394,041) | |||||
| (29) | Taxes and surcharges | |||||||||
| --- | --- | --- | --- | --- | ||||||
| 2019 | 2018 | 2017 | ||||||||
| City maintenance and construction tax | 40,676,934 | 46,998,407 | 81,994,619 | |||||||
| Educational surcharge | 34,735,268 | 46,266,440 | 80,752,122 | |||||||
| Others | 25,737,178 | 31,913,568 | 33,794,635 | |||||||
| 101,149,380 | 125,178,415 | 196,541,376 | (30) | Financial income - net | ||||||
| --- | --- | --- | --- | --- | ||||||
| 2019 | 2018 | 2017 | ||||||||
| Interest income | 145,057,748 | 148,779,198 | 75,511,218 | |||||||
| Interest costs - borrowings | (31,169,389) | (26,289,474) | (20,952,425) | |||||||
| Charges for discounted notes receivable | (2,692,144) | (6,855,748) | (8,902,309) | |||||||
| Exchange (losses)/gains - net | (6,976,874) | 9,460,142 | (25,419,145) | |||||||
| Others | (4,508,005) | (3,179,653) | (2,407,704) | |||||||
| 99,711,336 | 121,914,465 | 17,829,635 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (31) | Expenses by nature | |||||||||
| The cost of sales, selling expenses, general and administrative expenses and research and development expenses in the income statements are listed as follows by nature: | 2019 | 2018 | 2017 | |||||||
| --- | --- | --- | --- | |||||||
| Changes in inventories of finished goods and<br><br>work in progress | (12,384,641) | 107,270,399 | (44,851,383) | |||||||
| Consumed raw materials and low value<br><br>consumables, etc. | 20,396,955,099 | 24,882,462,206 | 24,184,797,504 | |||||||
| Employee benefits expenses | 2,282,239,239 | 2,248,916,709 | 1,998,686,561 | |||||||
| Depreciation and amortisation expenses | 623,241,023 | 522,293,316 | 496,272,154 | |||||||
| Sample Experimental manufacturing<br><br>expenses | 375,607,843 | 261,794,721 | 161,938,159 | |||||||
| Rental expenses | 304,860,201 | 225,299,598 | 233,653,070 | |||||||
| Transportation and logistics fee | 219,862,544 | 231,219,524 | 221,398,652 | |||||||
| Experiment and inspection expenses | 185,896,714 | 192,077,986 | 299,650,447 | |||||||
| Utilities | 152,355,655 | 122,494,624 | 126,211,508 | |||||||
| Maintenance cost | 124,919,841 | 131,534,567 | 133,919,273 | |||||||
| Consulting fee | 43,625,344 | 182,869,519 | 165,879,871 | |||||||
| Other expenses | 1,200,833,112 | 1,125,491,874 | 1,132,991,388 | |||||||
| 25,898,011,974 | 30,233,725,043 | 29,110,547,204 | ||||||||
| No research and development expenses were capitalised in 2019, 2018 and 2017. | ||||||||||
| --- | (32) | Asset impairment losses | ||||||||
| --- | --- | --- | --- | --- | ||||||
| 2019 | 2018 | 2017 | ||||||||
| Accrual in the value of<br><br>inventories | 29,488,858 | 13,271,029 | 1,139,340 | |||||||
| Impairment of fixed assets | 2,410,819 | 633,167 | - | |||||||
| Bad debts (reversal)/provision | - | (3,102,716) | 1,606,517 | |||||||
| Impairment of construction in progress | - | - | 200,000 | |||||||
| 31,899,677 | 10,801,480 | 2,945,857 | (33) | Credit losses | ||||||
| --- | --- | --- | --- | --- | ||||||
| 2019 | 2018 | 2017 | ||||||||
| Losses on bad debts of accounts receivable | 107,272,799 | - | - | |||||||
| Losses on bad debts of other receivables | 5,781,681 | - | - | |||||||
| 113,054,480 | - | - |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (34) | Investment income | |||||||||
| 2019 | 2018 | 2017 | ||||||||
| Share of net profit of investees under equity<br><br>method | 72,152,126 | 66,200,119 | 78,876,545 | |||||||
| Gains on disposal of long-term equity<br><br>Investments | 13,403,977 | - | 212 | |||||||
| Interest income from entrusted loans and<br><br>cash pool | 13,073,829 | 20,854,960 | 11,297,514 | |||||||
| 98,629,932 | 87,055,079 | 90,174,271 | ||||||||
| (35) | Gains/(Losses) on disposals of assets | |||||||||
| 2019 | 2018 | 2017 | ||||||||
| Gains/(Losses) on disposals of fixed assets,<br><br>net | 368,565 | (153,978) | (2,524,116) | |||||||
| Losses on disposals of construction in<br><br>progress, net | - | (738,376) | - | |||||||
| Losses on disposals of long-term prepaid<br><br>expenses, net | - | (1,460,416) | (497,872) | |||||||
| 368,565 | (2,352,770) | (3,021,988) | ||||||||
| (36) | Other income | 2019 | 2018 | 2017 | Asset related/<br><br>Income related | |||||
| --- | --- | --- | --- | --- | ||||||
| Income-related subsidies | 156,110,120 | 112,580,640 | 126,954,907 | Income related | ||||||
| Asset-related subsidies | 5,040,872 | 2,656,945 | 2,153,264 | Asset related | ||||||
| 161,150,992 | 115,237,585 | 129,108,171 | (37) | Non-operating income and expenses | ||||||
| --- | --- | --- | --- | --- | ||||||
| (a) | Non-operating income | |||||||||
| 2019 | 2018 | 2017 | ||||||||
| Others | 3,370,496 | 4,511,490 | 2,346,311 | (b) | Non-operating expenses | |||||
| --- | --- | --- | --- | --- | ||||||
| 2019 | 2018 | 2017 | ||||||||
| Others | 17,184,819 | 3,801,129 | 1,873,547 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (38) | Income tax expenses | |||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Current income tax | 665,225,771 | 982,336,587 | 848,031,982 | |||||||||
| Deferred income tax | (235,123,839) | (419,880,856) | (259,024,290) | |||||||||
| 430,101,932 | 562,455,731 | 589,007,692 | ||||||||||
| The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated financial statements to the income tax expenses is listed below: | ||||||||||||
| 2019 | 2018 | 2017 | ||||||||||
| Total profit | 2,705,905,071 | 3,268,771,383 | 2,967,724,298 | |||||||||
| Income tax expenses calculated at<br><br>applicable tax rates | 676,476,268 | 817,192,846 | 741,931,075 | |||||||||
| Effect of favourable tax rates | (100,012,578) | (208,007,157) | (146,106,657) | |||||||||
| Investment income under equity method | (11,828,117) | (9,930,018) | (11,831,513) | |||||||||
| Additional deduction of research and<br><br>development expenses | (6,532,947) | (13,314,447) | (12,071,490) | |||||||||
| Costs, expenses and losses not deductible<br><br>for tax purposes | 16,804,386 | 10,358,294 | 7,450,807 | |||||||||
| Deductible losses and deductible temporary<br><br>differences for which no deferred income<br><br>tax asset was recognised | 7,192,509 | 172,182 | 10,375,383 | |||||||||
| Prior year income tax reconciliation<br><br>differences | (99,578,022) | (8,581,469) | (1,798,875) | |||||||||
| Reversal of previously recognised/<br><br>(Utilisation of previously unrecognised)<br><br>deductible losses and deductible<br><br>temporary differences | 1,763,480 | (25,434,500) | 1,687,064 | |||||||||
| Effect of change in the tax rates | (54,183,047) | - | (628,102) | |||||||||
| Income tax expenses | 430,101,932 | 562,455,731 | 589,007,692 | (39) | Other comprehensive income | |||||||
| --- | --- | --- | --- | --- | ||||||||
| (a) | Items of other comprehensive income with the related income tax effect and the amount reclassified to profit or loss | |||||||||||
| 2019 | ||||||||||||
| Amount<br><br>before tax | Income tax | Net amount<br><br>after tax | ||||||||||
| Other comprehensive income items which<br><br>will be reclassified subsequently to profit or loss | ||||||||||||
| Differences arising from translation of foreign<br><br>currency financial statements | 4,882,377 | - | 4,882,377 | |||||||||
| Less: Reclassification of previous other<br><br>comprehensive income to profit or loss | - | - | - | |||||||||
| 4,882,377 | - | 4,882,377 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (39) | Other comprehensive income (Cont’d) | ||||||||||||
| (a) | Items of other comprehensive income with the related income tax effect and the amount reclassified to profit or loss (Cont’d) | ||||||||||||
| 2018 | |||||||||||||
| Amount<br><br>before tax | Income tax | Net amount<br><br>after tax | |||||||||||
| Other comprehensive income items which<br><br>will be reclassified subsequently to profit or loss | |||||||||||||
| Differences arising from translation of foreign<br><br>currency financial statements | 101,743 | - | 101,743 | ||||||||||
| Less: Reclassification of previous other<br><br>comprehensive income to profit or loss | - | - | - | ||||||||||
| 101,743 | - | 101,743 | 2017 | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| Amount<br><br>before tax | Income tax | Net amount<br><br>after tax | |||||||||||
| Other comprehensive income items which will<br><br>be reclassified subsequently to profit or loss | |||||||||||||
| Differences arising from translation of foreign<br><br>currency financial statements | 430,299 | - | 430,299 | ||||||||||
| Less: Reclassification of previous other<br><br>comprehensive income to profit or loss | - | - | - | ||||||||||
| 430,299 | - | 430,299 | |||||||||||
| (b) | Reconciliation of other comprehensive income | Attributable to equity owners<br><br>of the Company | Minority interests | Total | |||||||||
| --- | --- | --- | --- | ||||||||||
| Differences arising from translation of foreign currency financial statements | |||||||||||||
| 31 December 2016 | 983,955 | - | 983,955 | ||||||||||
| Movements for the year<br><br>ended 31 December 2017 | 430,299 | - | 430,299 | ||||||||||
| 31 December 2017 | 1,414,254 | - | 1,414,254 | ||||||||||
| Movements for the year<br><br>ended 31 December 2018 | 101,743 | - | 101,743 | ||||||||||
| 31 December 2018 | 1,515,997 | - | 1,515,997 | ||||||||||
| Movements for the year<br><br>ended 31 December 2019 | 4,882,377 | - | 4,882,377 | ||||||||||
| 31 December 2019 | 6,398,374 | - | 6,398,374 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 7 | Notes to the consolidated financial statements (Cont’d) | |||||
|---|---|---|---|---|---|---|
| (40) | Notes to the consolidated cash flow statements | |||||
| (a) | Reconciliation from net profit to cash flows from operating activities | |||||
| 2019 | 2018 | 2017 | ||||
| Net profit | 2,275,803,139 | 2,706,315,652 | 2,378,716,606 | |||
| Add: Provisions for asset impairment | 31,899,677 | 10,801,480 | 2,945,857 | |||
| Credit losses | 113,054,480 | — | — | |||
| Depreciation of fixed assets | 518,697,183 | 417,080,532 | 386,402,135 | |||
| Amortisation of intangible assets | 51,804,881 | 44,771,154 | 44,965,559 | |||
| Amortisation of long-term prepaid<br><br>expenses | 50,790,694 | 58,493,364 | 64,904,460 | |||
| Depreciation of investment properties | 1,948,265 | 1,948,266 | - | |||
| (Gains)/Losses on disposal of fixed<br><br>assets, intangible assets and other<br><br>long-term assets | (509,615) | 2,352,770 | 3,021,988 | |||
| Financial expenses | 31,169,389 | 26,289,474 | 20,952,425 | |||
| Investment income | (98,629,932) | (87,055,079) | (90,174,271) | |||
| Increase in deferred tax assets | (236,488,122) | (419,880,856) | (259,024,290) | |||
| Increase in deferred tax liabilities | 1,364,283 | - | - | |||
| (Increase)/Decrease in inventories | (147,779,392) | 182,457,041 | (98,436,250) | |||
| (Increase)/Decrease in operating<br><br>receivables | (1,378,894,631) | 2,720,701,496 | (1,958,865,113) | |||
| Increase/(Decrease)in operating<br><br>payables | 1,807,885,814 | (2,176,226,871) | 3,969,397,557 | |||
| Net cash flows from operating activities | 3,022,116,113 | 3,488,048,423 | 4,464,806,663 | |||
| (b) | Net increase in cash and cash equivalents | |||||
| 2019 | 2018 | 2017 | ||||
| Cash and cash equivalents at the end of the<br><br>year | 9,307,465,208 | 9,013,241,794 | 7,938,513,680 | |||
| Less: Cash and cash equivalents at the<br><br>beginning of the year | (9,013,241,794) | (7,938,513,680) | (6,179,211,510) | |||
| Net increase in cash and cash equivalents | 294,223,414 | 1,074,728,114 | 1,759,302,170 | |||
| (c) | Cash and cash equivalents | |||||
| --- | --- | --- | --- | --- | ||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||
| Cash at bank and on hand (Note 7(1)) | 9,576,491,276 | 9,297,999,049 | 8,133,672,578 | |||
| Less: Other restricted cash balances | (269,026,068) | (284,757,255) | (195,158,898) | |||
| Cash and cash equivalents at the end of the<br><br>year | 9,307,465,208 | 9,013,241,794 | 7,938,513,680 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (1) | The parent company and subsidiaries | |||||||||||
| The general information and other related information of the subsidiaries is set out in Note 6. | ||||||||||||
| (a) | General information of the parent company | |||||||||||
| Place of registration | Nature of business | |||||||||||
| Yanfeng Trim | Shanghai, China | Development and production of plastic and decorating products used for automobiles, trucks and motorcycles, moulds, stamping parts, standard fasteners; sales of self-produced products, import and export of products and technologies, industrial investment; technical development, transfer, consultancy and service, and business information consultancy in the special area of auto parts; and self-owned house leasing. | ||||||||||
| The parent company is Yanfeng Trim and the ultimate holding company is Shanghai Automotive Industry Corporation. | ||||||||||||
| (b) | Registered capital and changes in registered capital of the parent company | |||||||||||
| 31 December<br><br>2018 | Current year changes | 31 December<br><br>2019 | ||||||||||
| RMB | RMB | |||||||||||
| Yanfeng Trim | 1,078,947,853 | - | 1,078,947,853 | |||||||||
| 31 December<br><br>2017 | Current year changes | 31 December<br><br>2018 | ||||||||||
| RMB | RMB | |||||||||||
| Yanfeng Trim | 1,078,947,853 | - | 1,078,947,853 | |||||||||
| 31 December<br><br>2016 | Current year changes | 31 December<br><br>2017 | ||||||||||
| RMB | RMB | |||||||||||
| Yanfeng Trim | 1,078,947,853 | - | 1,078,947,853 | |||||||||
| (c) | The proportion of interests and voting rights in the Company held by the parent company | |||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||||
| Share<br><br>holding | Voting<br><br>rights | Share<br><br>holding | Voting<br><br>rights | Share<br><br>holding | Voting<br><br>rights | |||||||
| Yanfeng Trim | 50.01% | 50.00% | 50.01% | 50.00% | 50.01% | 50.00% |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | |||
|---|---|---|---|---|
| (2) | Related parties that do not control or are not controlled by the Company | |||
| Relationship with the Group | ||||
| Dongfeng Adient Seating (i) | Associate | |||
| Wuhan Taiji (i)(iv) | Associate | |||
| CRH Shenyang (i) | Joint venture | |||
| Chengdu Dongfeng Adient Automotive Seating<br><br>Co., Ltd. (i) | Subsidiary of the associate | |||
| Shanghai Yanfeng Jinqiao Automotive Trim<br><br>Systems Co.,Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automotive Trim Systems Guangzhou Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Shanghai Songjiang Chunshen Plastic Products Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automotive Interior Systems (Shanghai) Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Shanghai Yankang Automative Components Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yankang (Rugao) Automative Components Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automobile Safety Systems Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Woodbridge Light Composite Materials Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automotive Trim Systems (Chongqing) Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automotive Trim Systems Zhejiang Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Automotive Trim Systems Liuzhou Co., Ltd. (ii) | Subsidiary of the parent company | |||
| Yanfeng Visteon Automotive Electronics Co., Ltd. (ii) | Associate of the parent company | |||
| Yanfeng Key (Shanghai) Automotive<br><br>Safety Systems Co.,Ltd. (ii) | Joint venture of the parent company | |||
| Adient Yanfeng Seating Mechanism Co., Ltd. (ii) | Joint venture of the parent company | |||
| Shanghai Key Automotive Plastic Component<br><br>Co., Ltd. (ii) | Joint venture of the parent company | |||
| Adient Yanfeng (Changshu) Seating Mechanism Co., Ltd. (ii) | Joint venture of the parent company | |||
| Dongfeng Antolin (Wuhan) Automotive Trim System Co., Ltd.<br><br>(ii) | Joint venture of the parent company | |||
| Yanfeng Plastic Omnium (Shanghai) Automotive Exterior<br><br>Systems Co., Ltd. (ii) | Joint venture of the parent company | |||
| Dongfeng Yanfeng (Shiyan) Automotive Trim Systems<br><br>Co., Ltd. (ii) | Joint venture of the parent company | |||
| Beijing BAIC Motor Yanfeng Automative<br><br>Components Co., Ltd. (ii) | Joint venture of the parent company | |||
| SAIC General Motors Sales Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| SAIC Finance Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| SAIC Motor Corporation Limited (iii) | Subsidiary of the ultimate holding company | |||
| Jiangsu Anji-ceva Automative Logistics Co., Ltd.<br><br>(formerly known as “Jiangsu ANJI Logistics<br><br>Co., Ltd.”) (ii) | Subsidiary of the ultimate holding company | |||
| Shanghai Sanhuan Spring Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| Nanjing Automobile (Group) Corporation (ii) | Subsidiary of the ultimate holding company | |||
| Donghua Automotive Industrial Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| SAIC GM Wuling Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| SAIC Activity Centre Co., Ltd. (ii) | Subsidiary of the ultimate holding company | |||
| SAIC Maxus Vehicle Co., Ltd. (iii) | Subsidiary of the ultimate holding company | |||
| Shanghai Haitong International Automotive Logistics<br><br>Co., Ltd. (ii) | Subsidiary of the ultimate holding company |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | ||
|---|---|---|---|
| (2) | Related parties that do not control or are not controlled by the Company (Cont’d) | ||
| Relationship with the Group | |||
| Chongqing Zhonghai Spring Co., Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| Nanjing MG Automative Trading Co., Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| Shanghai International Auto Parts Sourcing Center<br><br>Co.,Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| SAIC Motor International Co.,Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| SAIC Maxus RV Technology Co., Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| Shanghai Automotive Industry Sales Co.,Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| Shanghai SAIC Anji Auto Sales Service Co., Ltd. (ii) | Subsidiary of the ultimate holding company | ||
| Shanghai International Automotive City<br><br>Development Co., Ltd. (ii) | Associate of the ultimate holding company | ||
| Shanghai Boze Auto Parts Co., Ltd. (ii) | Associate of the ultimate holding company | ||
| Shanghai LEAR STEC Automotive Parts<br><br>Co., Ltd. (ii) | Associate of the ultimate holding company | ||
| SAIC Volkswagen Automotive Co., Ltd. (ii) | Joint venture of the ultimate holding company | ||
| SAIC General Motors Co., Ltd. (ii) | Joint venture of the ultimate holding company | ||
| Shanghai GM (Shenyang) Norsom Motors Co., Ltd.<br><br>(ii) | Joint venture of the ultimate holding company | ||
| SAIC GM Dong Yue Motors Co., Ltd. (ii) | Joint venture of the ultimate holding company | ||
| Shanghai TRW Automotive Safety Systems Co., Ltd.<br><br>(ii) | Joint venture of the ultimate holding company | ||
| Nanjing Iveco Automobile Co., Ltd. (ii) | Joint venture of the ultimate holding company | ||
| Huayu Visual Technology (Shanghai) Co., Ltd.<br><br>(formerly know as “Shanghai Koito Automotive<br><br>Lamp Co., Ltd.” ) (ii) | Joint venture of the ultimate holding company | ||
| Shanghai Tongzhou Automative Components Co.,<br><br>Ltd. (ii) | Joint venture of the ultimate holding company | ||
| Pan Asia Technical Automotive Center Co.,Ltd. (ii) | Joint venture of the ultimate holding company | ||
| Adient Plc (iii) | Ultimate holding company of Adient Asia | ||
| Beijing Johnson Controls Automotive Components<br><br>Co.,Ltd. (iii) | Subsidiary of Adient plc | ||
| Anhui Adient Xinnangang Automobile Trim Co., Ltd. (iii) | Subsidiary of Adient plc | ||
| Kinryo Kogyo Co., Ltd. (iii) | Subsidiary of Adient plc | ||
| Guangzhou Adient Automotive Seating Co., Ltd. (iii) | Subsidiary of Adient plc | ||
| Changsha Adient Auto Parts Co., Ltd. (iii) | Subsidiary of Adient plc | ||
| Other subsidiaries of Adient plc (iii) | Subsidiary of Adient plc | ||
| (i) The related parties are collectively referred to as “Associates and its subsidiaries and joint ventures”. | |||
| (ii) The related parties are collectively referred to as “SAIC, its subsidiaries, associates and joint<br><br>ventures”. | |||
| (iii) The related parties are collectively referred to as “Adient, its subsidiaries and joint ventures”. | |||
| (iv) As at 31 March 2019, the company transfered its 20% equity in Wuhan Taiji to Dongfeng Adient<br><br>Automotive Seating Co., Ltd. Since then, Wuhan Taiji is no longer a related party of the Group. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | |||
|---|---|---|---|---|
| (3) | Related party transactions | |||
| (a) | Pricing policies | |||
| The Group’s pricing on products sold to related parties, purchased from related parties, rendering of services and lease payments are negotiated by both parties and by making reference to the market price. | ||||
| (b) | Purchase of goods | |||
| 2019 | 2018 | 2017 | ||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 6,159,139,859 | 7,998,704,118 | 7,058,894,379 | |
| Associates and its subsidiaries and joint<br><br>ventures | 538,655,025 | 601,676,483 | 633,584,983 | |
| Adient, its subsidiaries and joint ventures | 173,075,737 | 470,609,580 | 497,208,601 | |
| 6,870,870,621 | 9,070,990,181 | 8,189,687,963 | ||
| (c) | Sale of goods | |||
| 2019 | 2018 | 2017 | ||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 16,570,744,317 | 21,350,575,491 | 19,925,396,626 | |
| Adient, its subsidiaries and joint ventures | 815,341,392 | 521,821,709 | 803,593,799 | |
| Associates and its subsidiaries and joint <br> ventures | 61,517,295 | 59,715,050 | 101,654,541 | |
| 17,447,603,004 | 21,932,112,250 | 20,830,644,966 | ||
| (d) | Technical service fee | |||
| 2019 | 2018 | 2017 | ||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 204,248,591 | 71,475,320 | 70,139,730 | |
| Adient, its subsidiaries and joint ventures | 22,363,536 | 45,173,056 | 31,344,660 | |
| 226,612,127 | 116,648,376 | 101,484,390 | ||
| (e) | Increase/(Decrease) on entrusted loans and cash pool - net | |||
| 2019 | 2018 | 2017 | ||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 167,646,780 | 121,752,264 | (443,761,187) | |
| Associates and its subsidiaries and joint <br> ventures | (105,326) | 114,719,890 | (114,615,610) | |
| 167,541,454 | 236,472,154 | (558,376,797) |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (3) | Related party transactions (Cont’d) | ||||||||||||
| (f) | Interest income from entrusted loans and cash pool- net | 2019 | 2018 | 2017 | |||||||||
| --- | --- | --- | --- | ||||||||||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 13,073,829 | 18,892,661 | 9,636,399 | ||||||||||
| Associates and its subsidiaries and joint<br><br>ventures | - | 1,962,020 | 1,661,115 | ||||||||||
| 13,073,829 | 20,854,681 | 11,297,514 | (g) | Purchase of long-term assets | |||||||||
| --- | --- | 2019 | 2018 | 2017 | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| SAIC, its subsidiaries, associates and joint<br><br>ventures | 367,341 | 73,107,599 | - | ||||||||||
| (4) | Receivables from and payables to related parties | ||||||||||||
| (a) | Accounts receivable | ||||||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 2,005,016,457 | 3,379,672,917 | 6,823,996,373 | ||||||||||
| Adient, its subsidiaries and<br><br>joint ventures | 201,941,928 | 241,517,928 | 313,213,838 | ||||||||||
| Associates and its subsidiaries<br><br>and joint ventures | 82,514,138 | 95,894,679 | 84,559,064 | ||||||||||
| 2,289,472,523 | 3,717,085,524 | 7,221,769,275 | (b) | Notes receivable | |||||||||
| --- | --- | --- | --- | --- | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | - | 464,757,984 | 81,970,500 | (c) | Receivables financing | ||||||||
| --- | --- | --- | --- | --- | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 526,482,182 | — | — |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (4) | Receivables from and payables to related parties (Cont’d) | |||||||||
| (d) | Advances to suppliers | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 11,298,330 | 10,474,163 | 2,243,546 | (e) | Other receivables | |||||
| --- | --- | --- | --- | --- | ||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 312,494,062 | 489,914,438 | 594,743,730 | |||||||
| Associates and its subsidiaries<br><br>and joint ventures | - | 18,935,255 | 112,487,252 | |||||||
| 312,494,062 | 508,849,693 | 707,230,982 | ||||||||
| (f) | Other current assets | |||||||||
| --- | --- | --- | --- | --- | --- | |||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| Associates and its subsidiaries<br><br>and joint ventures | - | - | 15,000,000 | |||||||
| (g) | Cash at bank | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 1,603,830,729 | 1,811,430,396 | 2,326,653,158 | |||||||
| (h) | Accounts payable | |||||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||||||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 1,844,642,820 | 1,598,564,685 | 4,251,960,126 | |||||||
| Associates and its subsidiaries<br><br>and joint ventures | 160,853,992 | 200,575,015 | 262,329,935 | |||||||
| Adient, its subsidiaries and<br><br>joint ventures | 37,742,845 | 53,935,601 | 110,414,579 | |||||||
| 2,043,239,657 | 1,853,075,301 | 4,624,704,640 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 8 | Related parties and related party transactions (Cont’d) | |||
|---|---|---|---|---|
| (4) | Receivables from and payables to related parties (Cont’d) | |||
| (i) | Notes payable | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 58,647,032 | 65,153,215 | 41,630,000 | |
| (j) | Other payables | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Adient, its subsidiaries and<br><br>joint ventures | 19,109,950 | 79,676,099 | 1,918,956 | |
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 10,436,282 | - | 2,623,882 | |
| Associates and its subsidiaries<br><br>and joint ventures | 1,000,010 | - | - | |
| 30,546,242 | 79,676,099 | 4,542,838 | ||
| (5) | Commitments in relation to related parties | |||
| --- | --- | --- | --- | --- |
| The commitments in relation to related parties contracted for by the Group but not yet necessary to be recognised on the balance sheet as at the balance sheet date are as follows: | ||||
| (a) | Leases | |||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| - Lessee | ||||
| SAIC, its subsidiaries,<br><br>associates and joint ventures | 135,687,477 | 84,391,765 | 90,558,920 | |
| 9 | Commitments | |||
| (1) | Capital commitments | |||
| Capital expenditures contracted for by the Group but are not yet necessary to be recognised on the balance sheet as at the balance sheet date are as follows: | ||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Buildings, machinery and<br><br>equipment | 38,670,849 | 45,963,602 | 108,938,923 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 9 | Commitments (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (2) | Operating lease commitments | ||||||
| The future minimum lease payments due under the signed irrevocable operating leases contracts are summarised as follows: | |||||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | |||||
| Within 1 year | 163,026,111 | 159,228,397 | 140,700,650 | ||||
| 1 and 2 years | 154,348,367 | 131,942,062 | 116,925,255 | ||||
| 2 and 3 years | 150,796,730 | 116,737,697 | 111,404,872 | ||||
| Over 3 years | 326,513,920 | 310,344,520 | 343,124,106 | ||||
| 794,685,128 | 718,252,676 | 712,154,883 | 10 | Events after the balance sheet date | |||
| --- | --- | ||||||
| After the outbreak of Coronavirus Disease 2019 (“COVID-19 outbreak”) in early 2020, a series of precautionary and control measures have been and continued to be implemented across the country/region. The Group will pay close attention to the development of the COVID-19 outbreak and evaluate its impact on the financial position and operating results of the Group. As at the date on which this set of financial statements were authorised for issue, the Group was not aware of any material adverse effects on the financial statements as a result of the COVID-19 outbreak. | |||||||
| 11 | Financial risk | ||||||
| The Group’s activities expose it to a variety of financial risks: market risk (primarily including currency risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. | |||||||
| (1) | Market risk | ||||||
| (a) | Foreign exchange risk | ||||||
| The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising from the recognised assets and liabilities, and future transactions denominated in foreign currencies, primarily with respect to US dollars. The Group’s finance department at its headquarters is responsible for monitoring the amount of assets and liabilities, and transactions denominated in foreign currencies to minimise the foreign exchange risk. Therefore, the Group may consider entering into forward exchange contracts or currency swap contracts to mitigate the foreign exchange risk. During 2019, 2018 and 2017, the Group did not enter into any forward exchange contracts or currency swap contracts. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 11 | Financial risk (Cont’d) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (1) | Market risk (Cont’d) | ||||||||
| (a) | Foreign exchange risk (Cont’d) | ||||||||
| The financial assets and the financial liabilities denominated in foreign currencies, which are held by the subsidiaries of the Group, whose recording currencies are RMB, are expressed in RMB as at 31 December 2019, 2018 and 2017 as follows: | |||||||||
| 31 December 2019 | |||||||||
| USD | Others | Total | |||||||
| Financial assets denominated in<br><br>foreign currency - | |||||||||
| Cash at bank and on hand | 76,850,694 | 55,094,863 | 131,945,557 | ||||||
| Receivables | 95,454,874 | 179,314,843 | 274,769,717 | ||||||
| 172,305,568 | 234,409,706 | 406,715,274 | |||||||
| Financial liabilities denominated<br><br>in foreign currency - | |||||||||
| Payables | 34,371,896 | 78,269,014 | 112,640,910 | 31 December 2018 | |||||
| --- | --- | --- | --- | ||||||
| USD | Others | Total | |||||||
| Financial assets denominated in<br><br>foreign currency - | |||||||||
| Cash at bank and on hand | 50,213,457 | 65,760,379 | 115,973,836 | ||||||
| Receivables | 122,414,691 | 213,130,083 | 335,544,774 | ||||||
| 172,628,148 | 278,890,462 | 451,518,610 | |||||||
| Financial liabilities denominated<br><br>in foreign currency - | |||||||||
| Payables | 40,311,332 | 126,466,498 | 166,777,830 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 11 | Financial risk (Cont’d) | ||
|---|---|---|---|
| (1) | Market risk (Cont’d) | ||
| (a) | Foreign exchange risk (Cont’d) | ||
| The financial assets and the financial liabilities denominated in foreign currencies, which are held by the subsidiaries of the Group, whose recording currencies are RMB, are expressed in RMB as at 31 December 2019, 2018 and 2017 as follows (Cont’d): | |||
| Others | Total | ||
| Financial assets denominated in foreign currency - | |||
| Cash at bank and on hand | 15,968,386 | 32,033,043 | |
| Receivables | 214,098,674 | 370,108,657 | |
| 230,067,060 | 402,141,700 | ||
| Financial liabilities denominated in foreign currency - | |||
| Payables | 129,818,845 | 168,073,465 | |
| As at 31 December 2019, 2018 and 2017, if the RMB had strengthened/weakened by 10% against the while all other variables had been held constant, the Group’s profit before tax for the years would have been approximately RMB 13,793,367, RMB 13,231,682 and RMB 13,382,002 lower/higher for various financial assets and liabilities denominated in . | |||
| (b) | Interest rate risk | ||
| The Group's interest rate risk mainly arises from related party entrusted loans and interest-bearing bank borrowings. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 31 December 2019, 2018 and 2017, the Group’s long-term interest bearing borrowings were RMB-denominated with floating rates, amounting to Nil, Nil and 1,500,000 (Note 7(24)). | |||
| The Group’s finance department at its headquarters continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rate borrowings, and therefore could have a material adverse effect on the Group’s financial performance. The Group makes adjustments timely with reference to the latest market conditions and may enter into interest rate swap agreements to mitigate its exposure to interest rate risk. During 2019, 2018 and 2017, the Group did not enter into any interest rate swap agreements. | |||
| As at 31 December 2019, 2018 and 2017, if interest rates on the floating rate borrowings had risen/fallen by 50 basis points while all other variables had been held constant, the Group’s total profit would have decreased/increased by approximately Nil, Nil, and 7,500, respectively. |
All values are in US Dollars.
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 11 | Financial risk (Cont’d) | |||||||
|---|---|---|---|---|---|---|---|---|
| (2) | Credit risk | |||||||
| Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notes receivable, accounts receivables, other receivables etc. | ||||||||
| The Group expects that there is no significant credit risk associated with cash at bank since they are deposited at state-owned banks, other medium or large size listed banks and related party. Management does not expect that there will be any significant losses from non-performance by these counterparties. | ||||||||
| In addition, the Group has policies to limit the credit exposure on notes receivable, accounts receivables, other receivables. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent. | ||||||||
| As at the balance sheet date, the Group has no significant collateral or other credit enhancements held as a result of the debtor's mortgage. | (3) | Liquidity risk | ||||||
| --- | --- | --- | --- | --- | --- | |||
| Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in its headquarters. The Group’s finance department at its headquarters monitors rolling forecasts of the Group’s short-term and long-term liquidity requirements to ensure it has sufficient cash that are readily convertible to cash to meet operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institution so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements. | ||||||||
| The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash flow: | ||||||||
| 31 December 2019 | ||||||||
| Within 1 year | 1 to 5 years | Over 5 years | Total | |||||
| Short-term borrowings | 442,658,296 | - | - | 442,658,296 | ||||
| Notes payable | 634,111,311 | - | - | 634,111,311 | ||||
| Accounts payable | 11,994,465,250 | - | - | 11,994,465,250 | ||||
| Other payables | 4,410,897,268 | - | - | 4,410,897,268 | ||||
| 17,482,132,125 | - | - | 17,482,132,125 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 11 | Financial risk (Cont’d) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (3) | Liquidity risk (Cont’d) | |||||||||||
| The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash flow (Cont’d): | ||||||||||||
| 31 December 2018 | ||||||||||||
| Within 1 year | 1 to 5 years | Over 5 years | Total | |||||||||
| Short-term borrowings | 578,660,000 | - | - | 578,660,000 | ||||||||
| Notes payable | 665,390,579 | - | - | 665,390,579 | ||||||||
| Accounts payable | 10,447,210,448 | - | - | 10,447,210,448 | ||||||||
| Other payables | 3,990,807,212 | - | - | 3,990,807,212 | ||||||||
| Long-term borrowings | 1,500,000 | - | - | 1,500,000 | ||||||||
| 15,683,568,239 | - | - | 15,683,568,239 | 31 December 2017 | ||||||||
| --- | --- | --- | --- | --- | --- | |||||||
| Within 1 year | 1 to 5 years | Over 5 years | Total | |||||||||
| Short-term borrowings | 551,280,196 | - | - | 551,280,196 | ||||||||
| Notes payable | 653,798,483 | - | - | 653,798,483 | ||||||||
| Accounts payable | 12,797,027,105 | - | - | 12,797,027,105 | ||||||||
| Other payables | 3,540,365,714 | 6,125 | - | 3,540,371,839 | ||||||||
| Long-term borrowings | 3,000,000 | 1,500,000 | - | 4,500,000 | ||||||||
| 17,545,471,498 | 1,506,125 | - | 17,546,977,623 | |||||||||
| 12 | Fair value estimates | |||||||||||
| (1) | Financial assets and liabilities not measured at fair value | |||||||||||
| The level in which fair value measurement is categorised is determined by the level of the fair value hierarchy of the lowest level input that is significant to the entire fair value measurement:<br><br><br><br>Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.<br><br><br><br>Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.<br><br><br><br>Level 3: Unobservable inputs for the asset or liability. | ||||||||||||
| (a) | Financial instruments not measured at fair value | |||||||||||
| The Group’s financial assets and financial liabilities measured at amortised cost mainly represent notes receivable, accounts receivable, other receivables, short-term borrowings, payables and long-term borrowings. | ||||||||||||
| The carrying amount of the Group's financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 12 | Fair value estimates (Cont’d) | ||||||
|---|---|---|---|---|---|---|---|
| (1) | Financial assets and liabilities not measured at fair value (Cont’d) | ||||||
| (b) | Financial instruments measured at fair value | ||||||
| The Group's financial assets measured at fair value are receivables financing, belonging to Level 3 (Note 7(4)). | |||||||
| 13 | Capital management | ||||||
| The Group’s capital management policies aim to safeguard the Group’s ability to continue as a going concern in order to provide returns for investors and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital. | |||||||
| In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to investors, refund capital to investors or sell assets to reduce debts. | |||||||
| The Group’s total capital is calculated as ‘owners’ equity’ as shown in the consolidated balance sheets. The Group is not subject to external mandatory capital requirements. | 14 | Reconciliation to United States generally accepted accounting principles | |||||
| --- | --- | --- | --- | --- | |||
| The financial statements have been prepared in accordance with Accounting Standards for Business Enterprises in the People's Republic of China (“PRC GAAP”), which differ in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). The significant differences which have an impact on either net profit or owners’ equity of the Company are described in the reconciliation tables below. Other differences do not have a significant effect on either net profit or owners’ equity. The effects of the significant adjustments to net profit for the years ended 31 December 2019, 2018 and 2017 which would be required if U.S. GAAP were to be applied instead of PRC GAAP are summarized in the following table. Also, ASC 606, Revenue from Contracts with Customers, would become effective January 1, 2019 to the Company if U.S. GAAP were to be applied instead of PRC GAAP. The Company assessed the adoption impact following the 5-step model under ASC 606 and using a modified retrospective transition method, which requires a cumulative-effect adjustment, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. Per the assessment, the impact of adoption of ASC 606 would be immaterial to the Company. | |||||||
| 2019 | 2018 | 2017 | |||||
| Net profit under PRC GAAP | 2,275,803,139 | 2,706,315,652 | 2,378,716,606 | ||||
| Adjustments: | |||||||
| Inventory impairment reversals (a) | 260,105 | (135,814) | 2,694,821 | ||||
| Staff Welfare and Incentive Fund (b) | (147,797,779) | (126,529,628) | (12,076,907) | ||||
| Tax effect of the reconciling items (c) | (7,869) | 20,372 | (404,223) | ||||
| Net profit under U.S. GAAP | 2,128,257,596 | 2,579,670,582 | 2,368,930,297 |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 14 | Reconciliation to United States generally accepted accounting principles (Cont’d) | |||
|---|---|---|---|---|
| The effects of the significant adjustments to owners’ equity for the years ended 31 December 2019, 2018 and 2017 which would be required if U.S. GAAP were to be applied instead of PRC GAAP are summarized as follows: | ||||
| 31 December 2019 | 31 December 2018 | 31 December 2017 | ||
| Owners’ equity under PRC<br> GAAP | 5,255,275,254 | 5,267,776,585 | 4,857,853,302 | |
| Adjustments: | ||||
| Inventory impairment<br><br>reversals (a) | (311,468) | (571,573) | (435,759) | |
| Staff Welfare and Incentive<br><br>Fund (b) | 222,690,120 | 309,948,948 | 369,909,590 | |
| Tax effect of the reconciling<br><br>items (c) | 77,867 | 85,736 | 65,364 | |
| Owners’ equity under U.S.<br> GAAP | 5,477,731,773 | 5,577,239,696 | 5,227,392,497 | |
| (a) | Inventory impairment reversals | |||
| Under PRC GAAP, reversals of inventory impairment charges (limited to the amounts of the original impairment) are required for subsequent recoveries. Impairments and any subsequent reversals are included in a separate profit and loss line item - “Asset impairment losses”, which is outside of cost of goods sold. Under U.S. GAAP, reversals of impairments are prohibited, as a write-down of inventories to the lower of cost or market creates a new cost basis that subsequently cannot be reversed. | ||||
| (b) | Staff Welfare and Incentive Fund | |||
| In accordance with the Law of the PRC on Chinese-Foreign Equity Joint Ventures and the Company’s Articles of Association, the Company appropriated the Staff Welfare and Incentive Fund of net profit after setting off accumulated losses of previous years and before profit distributions to the investors. The Staff Welfare and Incentive Fund is restricted to fund payments of special bonus to employees and for the collective welfare of employees. None of it is allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor can it be distributed except under liquidation.<br><br><br><br>Under PRC GAAP, appropriation of the Staff Welfare and Incentive Fund is a liability in nature and accounted for as a transfer from retained earnings to Staff Welfare and Incentive Fund, a liability account. Subsequent payments is accounted for as a release of the Company’s liability. | ||||
| Under U.S. GAAP, appropriation to the Staff Welfare and Incentive Fund is accounted for as a transfer from retained earnings to the statutory reserves. Subsequent payment is accounted for as expenses or assets based on the usage of the payment, and proportionate retained earnings and the statutory reserves are reversed concurrently. |
YANFENG ADIENT SEATING CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2019, 2018 AND 2017 (AMOUNTS AS OF AND FOR THE YEAR ENDED 31 DECEMBER 2017 IS NOT COVERED BY THE AUDITOR’S REPORT INCLUDED HEREIN)
(All amounts in RMB Yuan unless otherwise stated)
| 14 | Reconciliation to United States generally accepted accounting principles (Cont’d) |
|---|---|
| (c) | Tax effect of the reconciling items |
| The applicable statutory tax rate used to calculate the tax effect of the reconciling items on the net profit reconciliation between PRC GAAP and U.S. GAAP for the year ended December 31, 2019 was 25% and 15%, while it was 15% for the year ended December 2018 and 2017. |
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