Audited financial statements of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. for 2021
catalogue
Page I. audit report 1 - 8 II. Audited financial statements
Consolidated balance sheet 9 - 11 consolidated income statement 12 - 13 consolidated statement of changes in owner's equity 14 - 15 consolidated cash flow statement 16 - 17 company balance sheet 18 - 19 company income statement twenty
Statement of changes in shareholders' equity 21 - 22 cash flow statement 23 - 24 notes to financial statements 25 - 200 supplementary information
1. Detailed statement of non recurring gains and losses 1
2. Return on net assets and earnings per share 1
audit report
Ernst & Young Huaming (2022) Shen Zi No. 61249778b01 Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. all shareholders of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd.:
1、 Audit opinion
We have audited the financial statements of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd., including the consolidated and company's balance sheet as of December 31, 2021, the consolidated and company's income statement, statement of changes in shareholders' equity, cash flow statement and notes to relevant financial statements in 2021.
In our opinion, the attached financial statements of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. are prepared in accordance with the accounting standards for business enterprises in all material aspects, and fairly reflect the consolidated and company's financial position of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. as of December 31, 2021, as well as the consolidated and 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. In accordance with the code of professional ethics for Chinese certified public accountants, we are independent of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. 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. Our description of how to deal with each of the following matters in the audit is also against this background.
We have fulfilled the responsibilities described in the "responsibilities of certified public accountants for the audit of financial statements" section of this report, including those related to these key audit matters. Accordingly, our audit work includes the implementation of audit procedures designed to deal with the risk of material misstatement of the assessed financial statements. The results of our audit procedures, including the procedures for the following key audit matters, provide a basis for our overall audit opinion on the financial statements.
Audit report (Continued)
Key matters of Shanghai Huayong audit Co., Ltd. (Continued)
Key audit matters: how to deal with them in the audit:
1. Inventory falling price reserves
In addition, we are mainly engaged in the inventory preparation and handling procedures of Shanghai Heavy Machinery Co., Ltd., including the inventory preparation and handling of Shanghai bulk Machinery Co., Ltd; Through the inventory supervision and other related audit procedures for the manufacturing of large steel structures, the inventory mainly includes work procedures. Check whether the management has identified the slow turnover, defective and other raw materials, purchased parts, products in process and the inventory of the stockist, and then check whether they are qualified. Due to the long production cycle of products, relevant inventories have been considered when withdrawing inventory falling price reserves; The net realizable value is easily affected by the change of market demand, and the calculation table of inventory falling price reserves withdrawn by the management is changed, resulting in the risk of inventory falling price. The management checks the calculation method and results according to the inventory, and accrues the reserves considered by the inventory falling price layer in the process of calculating the net realizable value of the inventory for the difference between the management cost and the net realizable value.
The net realizable value is determined according to the estimated selling price of the inventory minus the estimated selling price, the estimated total cost of completion and other key costs to be incurred at the time of completion, and the estimated elements, through the amount after the sales expenses of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) shares and relevant taxes, The analysis of relevant historical data of the company and the determination of net realizable value after the period shall be based on the assumptions and estimation assumptions adopted by the management by using certain procedures such as comparison of estimation data. If the actual figure is different from the original estimate; Review the difference in the amount of inventory decline in the financial statements, and the relevant difference will affect the disclosure of inventory book value reserves. Value and impairment loss during the estimated change period.
On December 31, 2021, the balance of inventories in the consolidated financial statements was RMB 23.25 billion, and the provision for inventory falling price was RMB 1.17 billion; The balance of inventories in the company's financial statements is RMB 19.94 billion, and the provision for inventory falling price is RMB 1.17 billion.
The accounting policies and other disclosures related to inventories are set out in notes III and 9, notes III and 34 and notes V and 8 to the financial statements.
Audit report (Continued)
Key matters of Shanghai Huayong audit Co., Ltd. (Continued)
Key audit matters: how to deal with them in the audit:
2. Provision for bad debts of accounts receivable
Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. our procedures mainly include the evaluation of the accounts receivable related to the impairment provision, which mainly comes from the relevant accounting estimates of Hong Kong Machinery and marine engineering manufacturing, such as the business contract of the counterparty. Due to the large contract amount, financial status and credit rating of the construction week; Check the account period of accounts receivable is long, the technical parameters are complex, the execution age of the contract and the historical repayment records, and evaluate whether there is a cyclical impact of the economic environment. The financial difficulties of the other party of accounts receivable in production and trade have an impact on the recoverability of accounts receivable due to possible contract disputes or the depression of its industry; Under the condition of portfolio evaluation, there is a certain risk in its recoverability. For accounts receivable, the management reviewed the recognition of bad debt provision for credit risk accounts based on expected credit loss, the setting of characteristic combination, and sampled and reviewed the major judgments and estimates involved in each combination. The management analyzed the key information such as the aging and credit record of the transaction, and reviewed the historical repayment record of the accounts receivable evaluated by the management, the credit risk of the counterparty, the application level of the expected credit loss amount and the future economic situation based on the financial status of the credit party, the guarantee obtained from the accounts receivable and the combination of risk characteristics, so as to evaluate the accounts receivable, including testing the historical default data, And check the credit risk. Credit losses actually incurred this year; Review the disclosure of bad debt reserves of accounts receivable in the financial statements.
As of December 31, 2021, the balance of accounts receivable in the consolidated financial statements was RMB 8.48 billion, and the bad debt provision of accounts receivable was RMB 2.03 billion; The balance of accounts receivable in the company's financial statements is RMB 16.93 billion, and the bad debt provision of accounts receivable is RMB 1.89 billion.
The accounting policies and other disclosures related to the provision for bad debts of accounts receivable are set out in notes III and 8, notes III and 34, notes V and 4 and notes XII and 1 to the financial statements.
Audit report (Continued)
Ernst & Young Huaming (2022) Shen Zi No. 61249778b01 Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. III. key audit matters (Continued)
Key audit matters: how to deal with them in the audit:
3. Revenue recognition
Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. our procedures mainly include the evaluation and testing. Most of the revenue of the pipe comes from the large-scale management customized for customers and the internal control related to revenue recognition; Select the sales contracts of port equipment, heavy equipment, steel structure products and large construction amount, and the construction contract income of the construction project according to the new income standard. According to the requirements of the five-step method, check the important contract terms related to revenue recognition, and evaluate the management's application of the new revenue standard and the amount of revenue recognition (including variable consideration) since January 1, 2020. The management has read and analyzed the contracts of various revenue types according to the requirements of the five-step method and the accounting method recognized at a certain time point or period of time. Judgment and accounting estimation of large port facilities; By selecting samples, check whether the contract revenue recognized in the manufacturing contract of spare parts, heavy equipment and some steel structure products in the current year meets the performance obligations contained in the revenue and does not meet the recognition conditions for performing within a certain period of time; The implementation of the income cut-off inspection procedure is the condition of the bank's performance obligations. Therefore, on the basis of comprehensive consideration to determine whether the income has been recognized in the appropriate accounting period, it is recognized with the control right of relevant products; Revenue is recognized at the time point of receipt and transfer recognized in a certain period of time. Evaluate the judgment and estimation made by the management on the estimated total contract cost and the estimated total processing volume, and sample it in 2021. The operating revenue in the consolidated financial statements is RMB 25.98 billion based on the incurred contract cost and the estimated total contract cost; Recalculate the income amount of the current year determined in the company's financial statements; The operating revenue was 22.99 billion yuan. Analysis of the implementation of accounting policies and procedures related to the disclosure of gross profit of various businesses; The of income recognition in the review financial statements is disclosed in notes III and 24 and notes III and 34 of the financial statements. Notes V and 49 and notes XII and 4.
Audit report (Continued)
Ernst & Young Huaming (2022) Shen Zi No. 61249778b01 Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. IV. other information
The management of Shanghai Shanghai Zhenhua Heavy Industries Co.Ltd(600320) (Group) Co., Ltd. is responsible for other information. Other information includes the information covered in the 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
