Lanzhou Ls Heavy Equipment Co.Ltd(603169)
audit report
Dhsz [2022] No. 001250
Dahua Certified Public Accountants (special general partnership)
Da Hua Certified Public Accountants（Special General Partnership）
Lanzhou Ls Heavy Equipment Co.Ltd(603169)
Audit report and financial statements
(from January 1, 2021 to December 31, 2021)
Contents page 1. Audit report 1-6 II. Audited financial statements
Consolidated balance sheet 1-2 consolidated income statement 3 consolidated cash flow statement 4 consolidated statement of changes in shareholders' equity 5-6 parent company balance sheet 7-8 parent company income statement 9 cash flow statement of parent company 10 statement of changes in shareholders' equity of parent company 11-12 notes to financial statements 1-117
Dahua Certified Public Accountants (special general partnership) 12 / F, building 7, yard 16, Middle West Fourth Ring Road, Haidian District, Beijing [100039] Tel: 86 (10) 5835 0011 Fax: 86 (10) 5835 0006 www.dahua-cpa. com. Audit report
Dahuashen Zi [2022] No. 001250 Lanzhou Ls Heavy Equipment Co.Ltd(603169) all shareholders:
1、 Audit opinion
We have audited the financial statements of Lanzhou Ls Heavy Equipment Co.Ltd(603169) (hereinafter referred to as Lanzhou Ls Heavy Equipment Co.Ltd(603169) company), including the consolidated and parent company's balance sheet as of December 31, 2021, the consolidated and parent company's income statement, consolidated and parent company's cash flow statement, consolidated and parent company's statement of changes in shareholders' equity and relevant notes to financial statements in 2021.
In our opinion, the attached financial statements are prepared in accordance with the accounting standards for business enterprises in all material aspects, and fairly reflect the consolidated and parent company's financial position as of December 31, 2021 and the consolidated and parent company's operating results and cash flow in 2021. 2、 Basis for forming audit opinions
We conducted our audit in accordance with the auditing standards for Chinese certified public accountants. The "responsibilities of certified public accountants for the audit of financial statements" in the audit report further expounds our responsibilities under these standards. According to the code of professional ethics for Chinese certified public accountants, we are independent of Lanzhou Ls Heavy Equipment Co.Ltd(603169) company and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a basis for our audit opinion. 3、 Key audit matters
The key audit matters are the most important matters that we consider to audit the current financial statements according to our professional judgment. The response to these matters is based on the overall audit of the financial statements and the formation of audit opinions. We will not express separate opinions on these matters.
We confirm that the following matters are the key audit matters that need to be communicated in the audit report. 1. Recognition of equipment sales revenue.
2. Business combination not under the same control.
（1） Recognition of equipment sales revenue
1. Event description
As shown in note IV to the financial statements, important accounting policies, accounting estimates (34), income and note VI, and note 43 to the main items of the consolidated financial statements. Lanzhou Ls Heavy Equipment Co.Ltd(603169) revenue types mainly include equipment sales revenue, engineering design service revenue and engineering general contracting business revenue. In 2021, Lanzhou Ls Heavy Equipment Co.Ltd(603169) realized an operating revenue of 4037.061 million yuan, including equipment sales revenue of 2969.4318 million yuan, accounting for 73.55% of the total operating revenue. Operating revenue is the key indicator of the company's performance assessment. The revenue from equipment sales accounts for a large proportion of operating revenue and has a significant impact on the financial statements. Therefore, we identify the recognition of equipment sales revenue as a key audit matter.
2. Audit response
Our important audit procedures for the recognition of equipment sales revenue include: (1) understand, test and evaluate the effectiveness of key internal control design and operation related to equipment sales revenue.
(2) Select important sales customers to check the sales contract, identify and check the contract terms and conditions related to the transfer of equipment sales control, and evaluate whether the recognition time point of equipment sales revenue meets the requirements of accounting standards for business enterprises and the company's revenue accounting policies.
(3) Combined with market and industry trends and other factors, implement revenue analysis procedures for different equipment types to analyze the rationality of changes in equipment sales revenue and gross profit margin.
(4) Carry out the detailed test of equipment sales revenue, check the supporting evidence such as main customer contracts, delivery orders, sales invoices and transportation receipts, and evaluate whether the relevant revenue recognition complies with the accounting policies of the company for revenue recognition.
(5) Select samples to implement the revenue confirmation procedure and check the authenticity and accuracy of the confirmed equipment sales revenue.
(6) Whether the equipment sales are properly recorded during the accounting period.
Based on the audit work performed, we believe that the recognition of equipment sales revenue of Lanzhou Ls Heavy Equipment Co.Ltd(603169) company complies with the provisions of accounting standards for business enterprises.
（2） Business combinations not under the same control
1. Event description
As shown in note VII to the financial statements, in November 2021, Lanzhou Ls Heavy Equipment Co.Ltd(603169) company completed the transaction of acquiring 55.00% equity of China Nuclear Jiahua Equipment Manufacturing Co., Ltd. (hereinafter referred to as "China Nuclear Jiahua"). Before and after the merger, the acquirer Lanzhou Ls Heavy Equipment Co.Ltd(603169) company and the acquiree Zhonghe Jiahua are not controlled by the same party and are treated as business combinations not under the same control. For the business combination, Lanzhou Ls Heavy Equipment Co.Ltd(603169) company hired a third-party evaluation institution with relevant qualifications to evaluate the fair value of the identifiable net assets of CNNC Jiahua, and confirmed the goodwill of RMB 89.2326 million. Since the judgment on the acquisition date, the determination of the fair value on the acquisition date and the calculation of goodwill in the business combination not under the same control involve the significant judgment and estimation of the management, we recognize the accounting treatment of the above business combination not under the same control as a key audit event.
2. Audit response
Our important audit procedures for business combinations not under the same control include:
(1) Test the effectiveness of the design and operation of key internal controls related to the business merger.
(2) Obtain and check the resolutions of the board of directors, equity transfer agreement, purchase price payment documents, property right transfer procedures and other relevant documents, and analyze whether the determination of the purchase date is reasonable.
(3) Review whether the management's allocation of the merger consideration on the purchase date and the calculation of goodwill are correct. Assess the appropriateness of the key assumptions adopted by the management for the goodwill valuation model and the rationality of the data; Obtain the equity evaluation report prepared by the third-party evaluation institution hired by the management, and review the rationality and objectivity of the important parameters and valuation methods in the evaluation report; And evaluate the objectivity, independence and professional competence of the third-party evaluation organization hired by the management. Based on the audit work performed, we believe that the accounting treatment of business combinations not under the same control by Lanzhou Ls Heavy Equipment Co.Ltd(603169) company in this period is in line with the provisions of the accounting standards for business enterprises.
4、 Other information
The management of the company is responsible for other information. Other information includes the information covered in the 2021 annual report, but does not include the financial statements and our audit report.
Our audit opinion on the financial statements does not cover other information, and we will not issue any form of assurance conclusion on other information.
In combination with our audit of the financial statements, our responsibility is to read other information and consider whether other information is materially inconsistent with the financial statements or the information we understand in the audit process, or there seems to be material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.
5、 Responsibilities of management and governance for financial statements
Lanzhou Ls Heavy Equipment Co.Ltd(603169) the management of the company is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.
When preparing the financial statements, the management of Lanzhou Ls Heavy Equipment Co.Ltd(603169) company is responsible for evaluating the continuous operation ability of Lanzhou Ls Heavy Equipment Co.Ltd(603169) company, disclosing matters related to continuous operation (if applicable), and applying the assumption of continuous operation, unless the management plans to liquidate Lanzhou Ls Heavy Equipment Co.Ltd(603169) company, terminate operation or has no other realistic choice.
The management is responsible for supervising the Lanzhou Ls Heavy Equipment Co.Ltd(603169) company's financial reporting process.
6、 Responsibilities of certified public accountants for the audit of financial statements
Our goal is to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement due to fraud or error, and issue an audit report containing audit opinions. Reasonable assurance is a high-level assurance, but it does not guarantee that the audit performed in accordance with the audit standards will always be found when a major misstatement exists. Misstatement may be caused by fraud or error. If it is reasonably expected that the misstatement alone or in summary may affect the economic decisions made by the users of the financial statements based on the financial statements, the misstatement is generally considered to be significant.
In the process of carrying out the audit work in accordance with the audit standards, we use professional judgment and maintain professional doubt. At the same time, we also carry out the following work:
1. Identify and assess the risks of material misstatement of financial statements due to fraud or error, design and implement audit procedures to deal with these risks, and obtain sufficient and appropriate audit evidence as the basis for issuing audit opinions. Since fraud may involve collusion, forgery, intentional omission, misrepresentation or override of internal control, the risk of failing to find major misstatement caused by fraud is higher than that caused by error.
2. Understand the internal control related to audit to design appropriate audit procedures.
3. Evaluate the appropriateness of accounting policies selected by the management and the rationality of accounting estimates and related disclosures.
4. Draw a conclusion on the appropriateness of the going concern assumption used by the management. At the same time, according to the audit evidence obtained, draw a conclusion on whether there are major uncertainties in the matters or circumstances that may lead to major doubts about the going concern ability of Lanzhou Ls Heavy Equipment Co.Ltd(603169) company. If we conclude that there are significant uncertainties, the auditing standards require us to draw the attention of report users to the relevant disclosures in the financial statements in the audit report; If the disclosure is insufficient, we should express a non unqualified opinion. Our conclusions are based on the information available as of the date of the audit report. However, future events or circumstances may cause Lanzhou Ls Heavy Equipment Co.Ltd(603169) company to be unable to continue its business.
5. Evaluate the overall presentation, structure and content of the financial statements, and evaluate the correctness of the financial statements
Consolidated balance sheet
December 31, 2021
Prepared by: Lanzhou Ls Heavy Equipment Co.Ltd(603169) (unless otherwise specified, the amount unit is RMB). Note 6 to assets closing balance opening balance closing balance of last period
Current assets:
Notes to monetary funds 1 2670330076.70 1671887742.00 1671887742.00 trading financial assets derivative financial assets
Notes receivable note 2
