Notes to financial statements
1、 Basic information of the company 1. Overview of the company
Yingkou Fengguang New Material Co., Ltd. (hereinafter referred to as the company or the company), formerly Yingkou Fengguang Chemical Co., Ltd. (hereinafter referred to as Fengguang Chemical Co., Ltd.), was established on November 17, 2003 with the investment of Wang Wenzhong and Han Xiulan (Wang Wenzhong’s wife).
On May 16, 2017, according to the resolution of the shareholders’ meeting on May 16, 2017 and the provisions of the sponsors’ agreement and articles of association of Fengguang chemical company, all shareholders of the company unanimously agreed to change Fengguang chemical company into a joint stock limited company. Grant Thornton Certified Public Accountants (special general partnership) issued the capital verification report (ztyz (2017) No. 110zc0309) on June 2, 2017 for verification. All assets, liabilities and equity of the original Fengguang chemical company shall be inherited by the joint stock limited company after the overall change; The name of the company was changed to “Yingkou Fengguang New Material Co., Ltd.”.
On October 26, 2021, the China Securities Regulatory Commission issued 5000000000 RMB common shares (A shares) to the public with the approval of the reply on Approving the registration of the initial public offering of shares of Yingkou scenery new materials Co., Ltd. (CSRC license No. 3366). On December 17, 2021, with the consent of SZS (2021) No. 1287 document of Shenzhen Stock Exchange, the RMB common shares issued by the company were listed on Shenzhen Stock Exchange, the stock is referred to as “Fengguang shares” for short, and the stock code is “301100”. After this public offering, the total share capital of the company increased from 150 million shares to 200 million shares, which was verified by the capital verification report (ztyz (2021) No. 110c Jiangsu Fasten Company Limited(000890) ) issued by Zhitong accounting firm (special general partnership) on December 14, 2021. On January 7, 2022, the company completed the above industrial and commercial change registration.
The registered address of the company is Jiangjia village, Lunan Town, Laobian District, Yingkou City, the legal representative is Wang Lei, and the registered capital is 200 million yuan. The business scope of the company’s business license includes: licensed projects: production of dangerous chemicals, road cargo transportation (excluding dangerous goods), and operation of dangerous chemicals (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 results); General items: Sales of special chemical products (excluding hazardous chemicals), manufacturing of special chemical products (excluding hazardous chemicals), sales of chemical products (excluding licensed chemical products), production of chemical products (excluding licensed chemical products), technical services, technical development, technical consultation, technical exchange, technology transfer, technology promotion, new material technology promotion services, machinery and equipment leasing, oil refining Sales of special equipment for chemical production and mechanical equipment (except for projects subject to approval according to law, carry out business activities independently according to law with business license). The company has established the corporate governance structure of the board of shareholders and the board of directors. At present, it has set up production department, sales department, supply department, operation office, finance department, R & D center and other departments.
The financial statements and notes to the financial statements were approved by the 12th meeting of the second board of directors on April 14, 2022. 2. Scope of consolidated financial statements
The consolidation scope of the company in the reporting period includes three secondary subsidiaries, as follows:
Subsidiary name subsidiary type shareholding proportion% voting right proportion%
Subsidiary name subsidiary type shareholding proportion% voting right proportion%
Baitward (Dalian) Petrochemical Co., Ltd. (hereinafter referred to as baitward as a wholly-owned subsidiary)
Shaanxi aikelaite New Material Co., Ltd. (hereinafter referred to as aikelaite holding subsidiary)
Beijing Sanshi Minghui Technology Development Co., Ltd. (hereinafter referred to as 100.00, 100.00 Sanshi Minghui, a wholly-owned subsidiary)
Note: see note VI for details of subsidiaries. 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 and revenue recognition policies according to its own production and operation characteristics. See note III, 15, note III, 19 and note III and 26 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, consolidation and the company’s 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 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 excluded from accounting
Except for the adjustment due to different policies, it shall be measured according to the book value of the combined party in the consolidated financial statements of the final controller on the merger date. For the difference between the book value of the merger consideration and the book value of the net assets obtained in the merger, adjust the capital reserve (capital stock premium). If the capital reserve (capital stock 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.
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 shall be transferred to the current profit and loss 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. The equity of the acquiree held before the acquisition date shall be remeasured according to the fair value of the equity on the acquisition date, and the difference between the fair value and its book value shall be included in the current income; 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 to the invested unit, enjoys variable returns by participating in relevant activities of the invested unit, and is able to use the power to the invested unit 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, and the major transactions and transaction balances between companies 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, the retained earnings shall be adjusted. (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 sum of the consideration obtained from the disposal of equity and the fair value of the remaining equity, less
According to the original shareholding ratio, 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 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 in accordance with the relevant accounting standards for business enterprises
