Audited financial statements of Shanghai New Power Automotive Technology Co., Ltd. for 2021
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd
1. Basic information: Shanghai New Power Automotive Technology Co., Ltd. (formerly Shanghai Diesel Engine Co.Ltd(600841) , “the company”) is a joint stock limited company registered in Shanghai, the people’s Republic of China, which was established on December 27, 1993. The A shares of RMB ordinary shares / B shares of domestic listed foreign shares issued by the company have been listed on the Shanghai Stock Exchange. The headquarters of the company is located at 2636 Jungong Road, Yangpu District, Shanghai. The main business activities of the company and its subsidiaries (“the group”) are: the design, production and sales of diesel engines and their parts for commercial vehicles, construction machinery, ships and generator sets, as well as the development, manufacturing and sales of automobiles (excluding passenger cars with nine seats and less) and parts, automobile assembly The parent company and ultimate parent company of the group are Saic Motor Corporation Limited(600104) (” Saic Motor Corporation Limited(600104) “) and Shanghai Automotive Industry (Group) Corporation established in the people’s Republic of China. The financial statements have been approved by the board of directors of the company on March 17, 2022. According to the articles of association, the financial statements will be submitted to the general meeting of shareholders for deliberation. The consolidation scope of the consolidated financial statements is determined on the basis of control. See note VI for the changes in this year. 2、 Preparation basis of financial statements the financial statements are prepared in accordance with the accounting standards for business enterprises – Basic Standards issued by the Ministry of Finance and the specific accounting standards, application guidelines, interpretations and other relevant provisions issued and revised later (collectively referred to as “accounting standards for business enterprises”). The financial statements are presented on a going concern basis. When preparing the financial statements, except for some financial instruments, the valuation principle is historical cost. If an asset is impaired, the corresponding impairment provision shall be withdrawn in accordance with relevant regulations. As stated in note VI and 1, the company completed the acquisition of SAIC Hongyan Automobile Co., Ltd. this year, forming a business merger under the same control. The company included SAIC Hongyan Automobile Co., Ltd. in the scope of merger since the earliest period of comparing the consolidated financial statements (January 1, 2020). 3、 Important accounting policies and accounting estimates the group has formulated specific accounting policies and accounting estimates according to the actual production and operation characteristics, which are mainly reflected in the provision for bad debts of accounts receivable, depreciation of fixed assets, amortization of intangible assets, amortization of long-term deferred expenses, revenue recognition and measurement, and provision of product quality margin. 1. In accordance with the statement of accounting standards for business enterprises, the financial statements comply with the requirements of accounting standards for business enterprises and truly and completely reflect the financial position of the company and the group as of December 31, 2021 and the operating results and cash flow of 2021.
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd. (Continued)
III. important accounting policies and accounting estimates in 2021 (Continued) The accounting period of the group is the Gregorian calendar year, i.e. from January 1 to December 31 each year. 3. Bookkeeping base currency the bookkeeping base currency of the group and the currency used in the preparation of the financial statements are RMB. Unless otherwise specified, it is expressed in RMB. 4. Business combination business combination is divided into business combination under the same control and business combination not under the same control. Business combination under the same control: a business combination under the same control refers to a business combination in which the enterprises participating in the combination are ultimately controlled by the same party or the same parties before and after the combination, and the control is not temporary. For business combinations under the same control, the party that obtains control over other enterprises participating in the merger on the merger date is the merging party, and other enterprises participating in the merger are the merged party. The merger date refers to the date on which the combining party actually obtains control over the merged party. The assets and liabilities acquired by the combining party in the business combination under the same control (including the goodwill formed by the final controller’s acquisition of the combined party) shall be subject to relevant accounting treatment based on the book value in the final controller’s financial statements on the combination date. For the difference between the book value of the net assets obtained by the combining party and the book value of the merger consideration paid, the equity premium in the capital reserve shall be adjusted. If it is insufficient to offset, the retained earnings shall be adjusted. A business combination not under the same control is a business combination not under the same control if the enterprise participating in the combination is not ultimately controlled by the same party or the same parties before and after the combination. For business combinations not under the same control, the party that obtains control over other enterprises participating in the merger on the acquisition date is the acquirer, and other enterprises participating in the merger are the acquiree. The date of purchase refers to the date on which the purchaser actually obtains control over the acquiree. The identifiable assets, liabilities and contingent liabilities of the acquiree obtained in the business combination not under the same control shall be measured at fair value on the acquisition date. The difference between the sum of the fair value of the merger consideration paid (or the fair value of the equity securities issued) and the fair value of the equity of the acquiree held before the acquisition date is greater than the fair value share of the identifiable net assets of the acquiree obtained in the merger is recognized as goodwill and subsequently measured at cost less accumulated impairment losses. If the sum of the fair value of the merger consideration paid (or the fair value of the equity securities issued) and the fair value of the equity of the acquiree held before the acquisition date is less than the fair value share of the identifiable net assets of the acquiree obtained in the merger, the identifiable assets The measurement of the fair value of liabilities and contingent liabilities, the fair value of the merger consideration paid (or the fair value of equity securities issued) and the fair value of the equity held by the acquiree before the acquisition date shall be reviewed, If the sum of the fair value of the merger consideration paid after review (or the fair value of the equity securities issued) and the fair value of the equity of the acquiree held before the acquisition date is still less than the fair value share of the identifiable net assets of the acquiree obtained in the merger, the difference shall be included in the current profit and loss.
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd. (Continued)
III. important accounting policies and accounting estimates of RMB in 2021 (Continued) Consolidated financial statements the consolidation scope of consolidated financial statements is determined on the basis of control, including the financial statements of the company and all subsidiaries. Subsidiaries refer to the entities controlled by the company (including the separable parts of enterprises and invested units, as well as the structured entities controlled by the company). When preparing the consolidated financial statements, the subsidiaries adopt the accounting year and accounting policy consistent with that of the company. Assets, liabilities, equity, income, expenses and cash flows arising from all transactions between companies within the group are fully offset at the time of consolidation. If the current loss shared by the minority shareholders of a subsidiary exceeds the share enjoyed by the minority shareholders in the opening shareholders’ equity of the subsidiary, the balance shall still be offset against the reduced shareholders’ equity. For subsidiaries acquired through business combination not under the same control, the operating results and cash flow of the acquiree shall be included in the consolidated financial statements from the date when the group obtains control until the group terminates its control.
When preparing the consolidated financial statements, the financial statements of subsidiaries shall be adjusted on the basis of the fair value of all identifiable assets, liabilities and contingent liabilities determined on the acquisition date. For subsidiaries obtained through business combination under the same control, the operating results and cash flow of the combined party shall be included in the consolidated financial statements from the beginning of the current period. When preparing and comparing the consolidated financial statements, the relevant items of the previous financial statements are adjusted, which is regarded as the reporting entity formed after the merger has existed since the final controller began to implement control. If changes in relevant facts and circumstances lead to changes in one or more of the control elements, the group reassesses whether to control the investee. 6. Classification of joint venture arrangements and joint operation joint venture arrangements are divided into joint operation and joint venture. Joint operation refers to the joint arrangement in which the joint venture party enjoys the relevant assets of the arrangement and bears the relevant liabilities of the arrangement. A joint venture refers to a joint venture arrangement in which the joint venture party has rights only to the net assets of the arrangement. The joint venture confirms the following items related to its share of interests in joint operation: confirm the assets held separately and jointly held assets according to its share; Recognize the liabilities undertaken individually and jointly according to their shares; Recognize the income generated from the sale of its share of joint operation output; Recognize the income generated from the sale of output in the joint operation according to its share; Recognize the expenses incurred separately and the expenses incurred in joint operation according to their share.
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd. (Continued)
III. important accounting policies and accounting estimates of RMB in 2021 (Continued) Cash and cash equivalents refer to the group’s 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 group, which are easy to be converted into known amounts of cash and have little risk of value change. 8. Foreign currency business the group converts the amount of foreign currency into the amount of functional currency for foreign currency transactions. When foreign currency transactions are initially recognized, the amount of foreign currency is converted into the amount of functional currency at the spot exchange rate on the transaction date. On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The difference arising from the conversion of foreign currency and construction projects shall be included in the current profit and loss in accordance with the capitalization principle, except that the difference arising from the capitalization of foreign currency and the settlement of foreign currency shall be included in the current profit and loss. Foreign currency non monetary items measured at historical cost shall still be translated at the spot exchange rate on the transaction date without changing the amount in the functional currency. Foreign currency non monetary items measured at fair value are translated at the spot exchange rate on the date when the fair value is determined, and the resulting difference is included in the current profit and loss or other comprehensive income according to the nature of non monetary items. Foreign currency cash flows are translated at the average exchange rate of the current period in which the cash flows occur. The impact of exchange rate changes on cash is presented separately in the cash flow statement as a reconciliation item. 9. Financial instruments financial instruments refer to the contracts that form the financial assets of an enterprise and form the financial liabilities or equity instruments of other units. Recognition and derecognition of financial instruments the Group recognizes a financial asset or financial liability when it becomes a party to the financial instrument contract. Financial instruments refer to the contracts that form the financial assets of an enterprise and form the financial liabilities or equity instruments of other units. If the following conditions are met, the recognition of financial assets (or part of financial assets, or part of a group of similar financial assets) shall be terminated, that is, they shall be written off from their accounts and balance sheets: (1) the right to receive the cash flow of financial assets expires; (2) Transferred the right to receive the cash flow of financial assets, or assumed the obligation to timely pay the full amount of the received cash flow to a third party under the “handling agreement”; And (a) substantially transferred almost all the risks and rewards of the ownership of the financial asset, or (b) abandoned the control of the financial asset although substantially neither transferred nor retained almost all the risks and rewards of the ownership of the financial asset.
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd. (Continued)
III. important accounting policies and accounting estimates of RMB in 2021 (Continued) Financial instruments (Continued) recognition and derecognition of financial instruments (Continued) if the responsibility of financial liabilities has been fulfilled, revoked or expired, the recognition of financial liabilities shall be derecognized. If the existing financial liabilities are replaced by another financial liability with substantially different terms by the same creditor, or the terms of the existing liabilities are substantially modified, such replacement or modification shall be treated as derecognition of the original liabilities and recognition of new liabilities, and the difference shall be included in the current profits and losses. Financial assets bought and sold in a conventional way shall be recognized and derecognized according to the accounting on the trading day. Buying and selling financial assets by conventional means refers to receiving or delivering financial assets within the time limit specified by laws and regulations or common practices in accordance with the terms of the contract. Trading day refers to the date on which the group promises to buy or sell financial assets. Classification and measurement of financial assets the financial assets of the group are classified into: financial assets measured at fair value through profit or loss, financial assets measured at amortized cost and financial assets measured at fair value through other comprehensive income according to the business model of financial assets managed by the group and the contractual cash flow characteristics of financial assets at the time of initial recognition. When and only when the group changes the business model of managing financial assets, all affected relevant financial assets are reclassified. Financial assets are measured at fair value at the time of initial recognition, but if the accounts receivable or notes receivable arising from the sale of goods or the provision of services do not contain significant financing components or do not consider the financing components of no more than one year, the initial measurement shall be made according to the transaction price. For the financial assets measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss, and the relevant transaction costs of other types of financial assets are included in their initial recognition amount. The subsequent measurement of financial assets depends on their classification: if the debt instrument investment financial assets measured at amortized cost meet the following conditions at the same time, they are classified as financial assets measured at amortized cost: the business model of managing the financial assets is to collect contract cash flow; The contractual terms of the financial asset stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the outstanding principal amount. The interest income of such financial assets is recognized by the effective interest rate method, and the gains or losses arising from the derecognition, modification or impairment are included in the current profit and loss.
Notes to financial statements of Shanghai New Power Automotive Technology Co., Ltd. (Continued)
III. important accounting policies and accounting estimates of RMB in 2021 (Continued) Financial instruments (Continued) classification and measurement of financial assets (Continued) debt instrument investment financial assets measured at fair value with changes included in other comprehensive income, which meet the following conditions at the same time, are classified as financial assets measured at fair value with changes included in other comprehensive income: the business model of the group’s management of the financial assets is to target both the receipt of contractual cash flow and the sale of financial assets; On the date specified in the financial contract
