1、 Basic information of the company
Haitian Water Group Co.Ltd(603759) (hereinafter referred to as the company or the company, collectively referred to as the group when including subsidiaries) was established on March 7, 2008, formerly known as Sichuan Haitian water Co., Ltd. On March 7, 2008, the company obtained the business license for enterprise legal person with the registration number of 51000 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 3209 issued by Sichuan Administration for Industry and commerce, and the current registration number / unified social credit code is 91510 Yango Group Co.Ltd(000671) 4374300. The legal representative of the company is Fei Junjie. The registered address of the company is No. 10, unit 1, building 1, No. 57, community main street, Chang town, Xinglong Street, Tianfu new area, Chengdu, Sichuan Province.
According to the reply on approving Haitian Water Group Co.Ltd(603759) initial public offering of shares (zjxk [2021] No. 22) issued by the China Securities Regulatory Commission, the company publicly issued RMB common shares (A shares) to the public in March 2021 and was listed on the Shanghai Stock Exchange on March 26, 2021 with the stock code of Haitian Water Group Co.Ltd(603759) .
The group belongs to the water industry and is mainly engaged in water supply and sewage treatment. Business scope: production and supply of tap water (for projects that must be approved according to law, business activities can be carried out only after being approved by relevant departments, and the specific business projects shall be subject to the approval documents or licenses of relevant departments). General projects: technical services for sewage treatment and recycling, technical development, technical consultation, technical exchange, technology transfer, technology promotion, project cost consulting business, project management services, sales of mechanical equipment Leasing of machinery and equipment (except for projects subject to approval according to law, carry out business activities independently according to law with business license).
The general meeting of shareholders of the company is the highest authority of the company and exercises the decision-making power on major matters such as the company’s business policy, financing, investment and profit distribution according to law. The company has a board of directors, which is responsible for the general meeting of shareholders and exercises the company’s business decision-making power according to law. The general manager leads the management to organize and implement the resolutions of the general meeting of shareholders and the board of directors, and preside over the production, operation and management of the enterprise. The company has administrative department, securities department, human resources department, financial management department, engineering construction department, material procurement department, strategic investment department, supervision and audit department, technology department, operation management center, R & D center and other functional departments.
2、 Scope of consolidated financial statements
The consolidated statements of the group this year include the company and 33 subsidiaries, of which the companies directly controlled include Ziyang Haitian water Co., Ltd. (hereinafter referred to as Ziyang Haitian), Sichuan Long Yuan Construction Group Co.Ltd(600491) Co., Ltd. (hereinafter referred to as Long Yuan Construction Group Co.Ltd(600491) ), Lezhi Haitian water Co., Ltd. (hereinafter referred to as Lezhi Haitian), Leshan Haitian water Co., Ltd. (hereinafter referred to as Leshan Haitian) Emeishan Haitian water Co., Ltd. (hereinafter referred to as Emeishan Haitian), Jintang Haitian water Co., Ltd. (hereinafter referred to as Jintang Haitian), Chengdu Tianfu New Area Haitian water Co., Ltd. (hereinafter referred to as Tianfu Haitian), Jianyang Tuojiang environmental protection Biochemical Co., Ltd. (hereinafter referred to as Jianyang environmental protection), Yibin Haitian water Co., Ltd. (hereinafter referred to as Yibin Haitian) Gongxian Haitian water Co., Ltd. (hereinafter referred to as Gongxian Haitian), Kaifeng Haitian water Co., Ltd. (hereinafter referred to as Kaifeng Haitian), Xinjin Haitian water Co., Ltd. (hereinafter referred to as Xinjin Haitian), Puyang Qingyuan Water Co., Ltd. (hereinafter referred to as Qingyuan Water), Meishan Pengshan Haitian water Co., Ltd. (hereinafter referred to as Pengshan Haitian), Pingchang Haitian water Co., Ltd. (hereinafter referred to as Pingchang Haitian) Lushi yuyuanqing sewage treatment Co., Ltd. (hereinafter referred to as yuyuanqing sewage), Jiangyou Haitian Hongfei environmental protection Co., Ltd. (hereinafter referred to as Jiangyou Haitian), Ya’an Haitian water Co., Ltd. (hereinafter referred to as Ya’an Haitian), Chengdu Haitian science and Technology Co., Ltd. (hereinafter referred to as Haitian science and Technology), Pingyu Haitian Environmental Protection Industry Co., Ltd. (hereinafter referred to as Pingyu Haitian) Xinjiang Gaoxin Haitian water Co., Ltd. (hereinafter referred to as Xinjiang Gaoxin Haitian), Luoping Haitian Changqing water Co., Ltd. (hereinafter referred to as Luoping Haitian), Chengdu Tianfu New Area jinyuetai Trade Co., Ltd. (hereinafter referred to as jinyuetai trade), Yibin Cuiping Haitian water Co., Ltd. (hereinafter referred to as Cuiping Haitian), Pujiang Dahai water Co., Ltd. (hereinafter referred to as Pujiang Dahai) Sichuan Haiyi Environmental Protection Technology Co., Ltd. (hereinafter referred to as Sichuan Haiyi), Leshan Wutongqiao Dahai water affairs Co., Ltd. (hereinafter referred to as Wutongqiao Dahai), Leshan Jinkouhe Dahai water affairs Co., Ltd. (hereinafter referred to as Jinkouhe Dahai), Leshan Mabian Dahai water affairs Co., Ltd. (hereinafter referred to as Mabian Dahai) and zhonghaikang Environmental Protection Technology Co., Ltd. (hereinafter referred to as zhonghaikang environmental protection). Indirectly controlled companies include Jianyang Haitian water Co., Ltd. (hereinafter referred to as Jianyang Haitian), Ziyang Haitian sewage treatment Co., Ltd. (hereinafter referred to as Ziyang sewage) and Jintang Dahai water Co., Ltd. (hereinafter referred to as Jintang Dahai).
See “VII. Changes in the scope of consolidation” and “VIII. Interests in other entities” in this note for details. 3、 Preparation basis of financial statements
(1) Preparation basis
The financial statements of the group are prepared on the basis of going concern, according to the actual transactions and events, in accordance with the accounting standards for business enterprises and relevant regulations issued by the Ministry of finance, and based on the accounting policies and accounting estimates described in “IV. important accounting policies and accounting estimates” in this note.
(2) Going concern
Based on the operation, cash flow and other possible financial resources of the group in recent years, the Group believes that it is reasonable to prepare the financial statements on the basis of going concern.
4、 Important accounting policies and accounting estimates
1. Statement of compliance with accounting standards for business enterprises
The financial statements prepared by the company comply with the requirements of the accounting standards for business enterprises and truly and completely reflect the financial status, operating results, cash flow and other relevant information of the company and the group.
2. Accounting period
The accounting period of the group is from January 1 to December 31 of the Gregorian calendar.
3. Business cycle
The group takes 12 months as an operating cycle and takes it as the liquidity division standard of assets and liabilities.
4. Recording currency
The group takes RMB as the recording currency.
5. Accounting treatment methods for business combinations under the same control and not under the same control
The assets and liabilities obtained by the group as the combining party in business combination under the same control shall be measured at the book value of the combined party in the consolidated statements of the final controller on the combination date. The difference between the book value of the net assets obtained and the book value of the merger consideration paid shall be adjusted to the capital reserve; If the capital reserve is insufficient to offset, the retained earnings shall be adjusted.
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 combination cost is the sum of the fair value of cash or non cash assets, liabilities issued or assumed, equity securities issued, etc. paid by the group to obtain the control over the acquiree on the acquisition date and all directly related expenses incurred in the business combination (for the business combination realized step by step through multiple transactions, the combination cost is the sum of the costs of each single transaction). The difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination is recognized as goodwill; If the merger cost is less than the fair value share of the identifiable net assets of the acquiree obtained in the merger, the fair value of all identifiable assets, liabilities and contingent liabilities obtained in the merger, as well as the fair value of non cash assets or equity securities issued for the merger consideration shall be reviewed first. After review, if the merger cost 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 non operating income of the current period of consolidation.
6. Preparation method of consolidated financial statements
The group includes all controlled subsidiaries in the scope of consolidated financial statements.
When preparing the consolidated financial statements, if the accounting policies or accounting periods adopted by the subsidiary are inconsistent with those adopted by the company, the financial statements of the subsidiary shall be adjusted as necessary according to the accounting policies or accounting periods of the company.
All major internal transactions, current balances and unrealized profits within the consolidation scope shall be offset during the preparation of the consolidated statements. The shares in the owner’s equity of subsidiaries that do not belong to the parent company and the shares in the current net profit and loss, other comprehensive income and total comprehensive income that belong to minority shareholders’ equity are listed in the items of “minority shareholders’ equity, minority shareholders’ profit and loss, other comprehensive income attributable to minority shareholders and total comprehensive income attributable to minority shareholders” in the consolidated financial statements respectively.
For the subsidiaries obtained through business combination under the same control, their operating results and cash flows 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 financial statements of the previous year are adjusted, which is deemed that the reporting entity formed after the merger has existed since the time point when the final controller began to control.
For subsidiaries acquired through business combination not under the same control, the operating results and cash flows shall be included in the consolidated financial statements from the date when the group obtains 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.
7. Classification of joint venture arrangement and accounting treatment method of joint operation
The joint venture arrangement of the group is a joint venture, and the accounting policy of the group’s investment in joint ventures is shown in note IV and 15 Long term equity investment.
8. Cash and cash equivalents
Cash in the group’s cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents in the cash flow statement refer to investments with a holding period of no more than 3 months, which are highly liquid, easy to convert into known amounts of cash and have little risk of value change.
9. Financial assets and financial liabilities
The Group recognizes a financial asset or financial liability when it becomes a party to the financial instrument contract.
(1) Financial assets
1) Classification, recognition basis and measurement method of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, the Group classifies financial assets into financial assets measured at amortized cost, financial assets measured at fair value with changes included in other comprehensive income, and financial assets measured at fair value with changes included in current profit and loss. The financial assets held by the group are mainly financial assets measured at amortized cost.
The Group classifies financial assets that meet the following conditions as financial assets measured at amortized cost: ① the business model for managing the financial assets is to collect contractual cash flow. ② The contractual terms of the financial assets stipulate that the cash flow generated on a specific date is only the payment of the principal and interest based on the outstanding principal amount. Such financial assets are initially measured at fair value, and relevant transaction costs are included in the initially recognized amount; Subsequent measurement is made at amortized cost. Except for those designated as hedged items, the difference between the initial amount and the due amount shall be amortized according to the effective interest rate method, and the amortization, impairment, exchange gains and losses and gains or losses arising from derecognition shall be included in the current profits and losses.
The Group recognizes interest income in accordance with the effective interest rate method. Interest income is calculated and determined according to the book balance of financial assets multiplied by the effective interest rate, except for the following circumstances: ① for the purchased or originated financial assets with credit impairment, the interest income is calculated and determined according to the amortized cost of the financial assets and the effective interest rate adjusted by credit from the initial recognition. ② For the financial assets purchased or generated without credit impairment but become credit impairment in the subsequent period, the interest income shall be calculated and determined according to the amortized cost and effective interest rate of the financial assets in the subsequent period.
The group adopts BOT to participate in public infrastructure business, or as a social capital Party of PPP business, to participate in the construction and operation of government public infrastructure. If BOT is adopted, the project company obtains the franchise of public infrastructure projects from government departments to participate in the construction and operation of projects. After the expiration of the franchise right, the project company needs to hand over the relevant infrastructure to the government or the government designated department. If the franchise contract stipulates that the group has the right to collect fees from the objects who obtain public goods and services, and meets the conditions of having the right to receive a determinable amount of cash (or other financial assets), the Group recognizes the receivables when it has the right to receive the consideration (the right only depends on the factors of time lapse), Accounting treatment shall be carried out in accordance with the accounting standards for Business Enterprises No. 22 – recognition and measurement of financial instruments. When the PPP project assets reach the expected usable state, the Group recognizes the difference between the consideration amount of relevant project assets or the recognized construction income amount and the cash (or other financial assets) entitled to receive a determinable amount as intangible assets.
When the investment of the group is recognized as a financial asset, the effective interest rate is calculated according to the agreed investment principal recovery method and investment return rate, amortized according to the effective interest rate method and recognized as income.
If the group participates in the public infrastructure construction business by means of construction transfer (BT), it meets the recognition conditions of financial assets, that is, when it has the right to receive the consideration (the right only depends on the factors of time passing), it recognizes the receivables and measures them at the amortized value.
2) Recognition basis and measurement method of financial asset transfer
The group derecognizes the financial assets that meet one of the following conditions: ① the contractual right to receive the cash flow of the financial assets is terminated; ② When financial assets are transferred, the group transfers almost all the risks and rewards of the ownership of financial assets; ③ When a financial asset is transferred, the group neither transfers nor retains almost all the risks and rewards of the ownership of the financial asset, nor retains the control over the financial asset.
If the overall transfer of financial assets meets the conditions for derecognition, the book value of the transferred financial assets shall be, The difference between the sum of the consideration received due to the transfer and the amount corresponding to the derecognized part of the cumulative amount of changes in fair value originally directly included in other comprehensive income (the contract terms involving the transferred financial assets stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the amount of outstanding principal) is included in the current profit and loss.
If the partial transfer of financial assets meets the conditions for derecognition, the overall book value of the transferred financial assets shall be apportioned between the derecognized part and the non derecognized part according to their respective relative fair values, And the sum of the consideration received due to the transfer and the amount corresponding to the derecognized part in the cumulative amount of changes in fair value originally included in other comprehensive income that should be apportioned to the derecognized part (the contract terms involving the transferred financial assets stipulate that the cash flow generated on a specific date is only the payment of principal and interest based on the amount of outstanding principal), The difference with the overall book value of the above-mentioned financial assets shall be included in the current profits and losses.
(2) Financial liabilities
1) Classification, recognition basis and measurement method of financial liabilities
The group’s financial liabilities are classified as financial liabilities measured at fair value through profit or loss and other financial liabilities at initial recognition.
During the reporting period, the financial liabilities of the group are mainly other financial liabilities, which are realized
