Notes to financial statements
1、 Basic information of the company 1. Overview of the company
Sino Biological Inc(301047) (hereinafter referred to as “the company” or “the company”) is a joint stock limited company registered in Beijing, formerly known as Beijing Sino Biological Inc(301047) Technology Co., Ltd. (hereinafter referred to as “Yiqiao Co., Ltd”). Yiqiao Co., Ltd., a limited liability company established by Sinocelltech Group Limited(688520) derivative division, obtained the certificate of division and establishment issued by Beijing Administration for Industry and Commerce on December 22, 2016, obtained the newly issued business license on the same day, unified social credit code 91110302ma00ar3f76, registered capital 4571738 yuan, and was reorganized into a joint stock limited company on March 27, 2020, The registered capital is 51 million yuan.
According to the resolutions of the company’s second extraordinary general meeting in 2020 and the first extraordinary general meeting in 2021, with the approval of China Securities Regulatory Commission (CSRC license (2021) No. 2364), the company issued 17 million RMB common shares (A shares) with a par value of RMB 1.00 each to public investors, The issue price is RMB 292.92 per share. After the issuance, the registered capital of the company is 68 million yuan, the par value of each share is 1 yuan, and the total number of shares is 68 million shares. The company’s shares were listed on Shenzhen Stock Exchange on August 16, 2021, stock code: Sino Biological Inc(301047) .
Company domicile: room 306, building 9, yard 18, Kechuang 10th Street, Beijing Economic and Technological Development Zone, Beijing.
The company is a biotechnology company engaged in the R & D, production, sales and technical services of biological reagents. Its main business includes products such as recombinant protein, antibody, gene and culture medium, as well as services such as the development of recombinant protein and antibody and biological analysis and detection.
The financial statements and notes to the financial statements were approved by the 13th meeting of the first board of directors of the company on February 25, 2022. 2. Scope of consolidated financial statements
As of December 31, 2021, the company has 5 subsidiaries included in the consolidation scope. See “VII. Equity in other entities” in this note for details. The changes of the company’s consolidation scope in 2021 are detailed in “VI. changes of consolidation scope” in this note. 2、 Preparation basis of financial statements
The financial statements are prepared in accordance with the accounting standards for business enterprises and its application guidelines, interpretations and other relevant provisions issued by the Ministry of Finance (collectively referred to as “accounting standards for business enterprises”). In addition, the company also disclosed relevant financial information in accordance with the rules for the preparation of information disclosure of companies offering securities to the public No. 15 – General Provisions on financial reports (revised in 2014) of the CSRC.
The financial statements are presented on a going concern basis.
The accounting of the company is based on the accrual basis. Except for some financial instruments, the financial statements are measured on the basis of historical cost. If an asset is impaired, the corresponding impairment provision shall be withdrawn in accordance with relevant regulations. 3、 Important accounting policies and accounting estimates
The company determines the depreciation of fixed assets, amortization of intangible assets, capitalization conditions of R & D expenses and revenue recognition policies according to its own production and operation characteristics. See note III, 14, note III, 17, note III, 18 and note III and 24 for specific accounting policies. 1. Statement of compliance with accounting standards for business enterprises
The financial statements comply with the requirements of the accounting standards for business enterprises, and truly and completely reflect the company’s consolidation and the company’s financial position as of December 31, 2021, as well as the consolidation and the company’s operating results and cash flow in 2021. 2. Accounting period
The accounting period of the company adopts the Gregorian calendar year, i.e. from January 1 to December 31 each year.
3. Business cycle
The business cycle of the company is 12 months. 4. Recording currency
The company and its domestic subsidiaries use RMB as the recording currency. The overseas subsidiaries of the company adopt US dollar and euro as the bookkeeping base currency respectively according to the currency in the main economic environment in which they operate. The currency used by the company in preparing the financial statements is RMB. 5. Accounting treatment methods for business combinations under the same control and not under the same control (1) business combinations under the same control
For business combinations under the same control, the assets and liabilities of the combined party obtained by the combining party in the combination shall be measured according to the book value of the combined party in the consolidated financial statements of the final controller on the combination date, except for the adjustment due to different accounting policies. For the difference between the book value of the merger consideration (or the total face value of the issued shares) and the book value of the net assets obtained in the merger, adjust the capital reserve (share capital premium). If the capital reserve (share capital premium) is insufficient to offset, adjust the retained earnings. Business combination under the same control is realized step by step through multiple transactions
In individual financial statements, the share of the book value of the combined party’s net assets in the final controller’s consolidated financial statements on the consolidation date calculated by the shareholding ratio on the consolidation date shall be regarded as the initial investment cost of the investment; For the difference between the initial investment cost and the sum of the book value of the investment held before the merger plus the book value of the newly paid consideration on the merger date, the capital reserve (equity premium) shall be adjusted. If the capital reserve is insufficient to be offset, the retained earnings shall be adjusted.
In the consolidated financial statements, the assets and liabilities of the combined party obtained by the combining party in the merger shall be measured according to the book value in the consolidated financial statements of the final controller on the merger date, except for the adjustment due to different accounting policies; For the difference between the sum of the book value of the investment held before the merger and the book value of the newly paid consideration on the merger date and the book value of the net assets obtained in the merger, the capital reserve (equity premium) shall be adjusted. If the capital reserve is insufficient to be offset, the retained earnings shall be adjusted. For the long-term equity investment held by the combining party before obtaining the control of the combined party, the changes in relevant profits and losses, other comprehensive income and other owner’s rights and interests that have been recognized between the later of the date of obtaining the original equity and the date when the combining party and the combined party are under the final control of the same party and the date of combination shall offset the beginning retained earnings or current profits and losses during the comparative statement period respectively. (2) Business combination not under the same control
For business combination not under the same control, the combination cost is the fair value of assets paid, liabilities incurred or assumed and equity securities issued to obtain the control over the acquiree on the acquisition date. On the acquisition date, the assets, liabilities and contingent liabilities obtained from the acquiree are recognized at fair value.
The difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination shall be recognized as goodwill, and the subsequent measurement shall be carried out according to the cost minus the accumulated impairment provision; The difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination shall be included in the current profit and loss after review.
The contingent consideration involved shall be included in the merger cost according to its fair value on the acquisition date. If there is new or further evidence of the existing situation on the acquisition date within 12 months after the acquisition date and the contingent consideration needs to be adjusted, the consolidated goodwill shall be adjusted accordingly.
Business combination not under the same control is realized step by step through multiple transactions
In individual financial statements, the sum of the book value of the equity investment held by the acquiree before the acquisition date and the new investment cost on the acquisition date is taken as the initial investment cost of the investment. For other comprehensive income recognized for equity investment held before the purchase date due to accounting with the equity method, this part of other comprehensive income will not be treated on the purchase date. When disposing of the investment, the accounting treatment will be carried out on the same basis as the investee’s direct disposal of relevant assets or liabilities; The owner’s equity recognized due to changes in the owner’s equity of the investee other than net profit and loss, other comprehensive income and profit distribution shall be transferred to the current profit and loss during the disposal period when the investment is disposed. If the equity investment held before the purchase date is measured at fair value, the cumulative changes in fair value originally included in other comprehensive income will be transferred to retained earnings when accounting by cost method.
In the consolidated financial statements, the combination cost is the sum of the consideration paid on the acquisition date and the fair value of the equity of the acquiree held before the acquisition date on the acquisition date. If the difference between the fair value of the equity held by the purchasing party and the fair value of the equity held by the purchasing party is remeasured on the current date, it shall be included in the current book value; The equity of the acquiree held before the acquisition date involves other comprehensive income and other changes in owner’s equity, which are transferred to the current income on the acquisition date, except for other comprehensive income arising from the change in net liabilities or net assets of the investee’s remeasurement and setting income plan. (3) Treatment of transaction expenses in business combination
The intermediary expenses such as audit, legal services, appraisal and consultation and other relevant management expenses incurred for business combination shall be included in the current profit and loss when incurred. The transaction expenses of equity securities or debt securities issued as merger consideration shall be included in the initial recognition amount of equity securities or debt securities. 6. Preparation method of consolidated financial statements (1) consolidation scope
The consolidation scope of the consolidated financial statements is determined on the basis of control. Control means that the company has the power over the investee, enjoys variable returns by participating in relevant activities of the investee, and has the ability to use the power over the investee to affect its return amount. Subsidiaries refer to the entities controlled by the company (including the separable parts of enterprises and invested units, structured entities, etc.). (2) Preparation method of consolidated financial statements
The consolidated financial statements are prepared by the company based on the financial statements of the company and its subsidiaries and other relevant information. When preparing the consolidated financial statements, the accounting policies and accounting period requirements of the company and its subsidiaries shall be consistent
Major transactions and current balances of the company shall be offset.
During the reporting period, the subsidiaries and businesses increased due to business combination under the same control shall be deemed to be included in the consolidation scope of the company from the date when they are controlled by the final controller, and their operating results and cash flows from the date when they are controlled by the final controller shall be included in the consolidated income statement and consolidated cash flow statement respectively.
For the subsidiaries and businesses increased due to business combination not under the same control during the reporting period, the income, expenses and profits of the subsidiaries and businesses from the purchase date to the end of the reporting period shall be included in the consolidated income statement, and their cash flows shall be included in the consolidated cash flow statement.
The part of the subsidiary’s shareholders’ equity that is not owned by the company is separately listed as minority shareholders’ equity under shareholders’ equity in the consolidated balance sheet; The shares belonging to minority shareholders’ equity in the current net profit and loss of subsidiaries are listed as “minority shareholders’ profit and loss” under the net profit item in the consolidated income statement. The loss of a subsidiary shared by minority shareholders exceeds the share of minority shareholders in the owner’s equity of the subsidiary at the beginning of the period, and the balance is still offset against the reduced shareholder’s equity. (3) Purchase of minority shareholders’ equity of subsidiaries
The difference between the cost of long-term equity investment newly obtained due to the purchase of minority shares and the share of net assets of subsidiaries continuously calculated from the purchase date or merger date according to the newly increased shareholding ratio, As well as the difference between the disposal price obtained from the partial disposal of equity investment in subsidiaries and the share of net assets of subsidiaries continuously calculated from the purchase date or merger date corresponding to the disposal of long-term equity investment without losing control, the capital reserve (capital stock premium) in the consolidated balance sheet shall be adjusted. If the capital reserve is insufficient to be offset, Adjust retained earnings. (4) Disposal of loss of control of subsidiaries
If the control over the original subsidiary is lost due to the disposal of part of the equity investment or other reasons, the remaining equity shall be re measured according to its fair value on the date of loss of control; The difference between the sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity minus the sum of the share of the book value of the net assets of the original subsidiary continuously calculated from the purchase date and the goodwill calculated according to the original shareholding ratio shall be included in the investment income of the current period when the control right is lost.
Other comprehensive income related to the equity investment of the original subsidiary shall be transferred to the current profit and loss when the control right is lost, except for other comprehensive income arising from the change of net liabilities or net assets due to the re measurement and setting of income plan by the investee. 7. Classification of joint venture arrangement and accounting treatment method of joint operation
Joint venture arrangement refers to an arrangement jointly controlled by two or more participants. The joint venture arrangement of the company is divided into joint operation and joint venture. (1) Joint operation
Joint operation refers to the joint venture arrangement in which the company enjoys the relevant assets of the arrangement and undertakes the relevant liabilities of the arrangement.
The company recognizes the following items related to the share of interests in joint operation and carries out accounting treatment in accordance with the provisions of relevant accounting standards for business enterprises:
A. Recognize the assets held separately and jointly held assets according to their shares;
B. Recognize the liabilities undertaken individually and jointly according to their shares;
C. Recognize the income generated from the sale of its share of joint operation output;
D. Recognize the income generated from the sale of output in the joint operation according to its share;
E. Recognize the expenses incurred separately and the expenses incurred in joint operation according to their share. (2) Joint venture
A joint venture refers to a joint venture arrangement in which the company has rights only to the net assets of the arrangement.
The company carries out accounting treatment for the investment of joint ventures in accordance with the provisions of equity method accounting related to long-term equity investment. 8. Criteria for determining cash and cash equivalents
Cash refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to the short-term, highly liquid investments held by the company, which are easy to be converted into known amounts of cash and have little risk of value change. 9. Foreign currency business and translation of foreign currency statements (1) foreign currency business
