Beijing Relpow Technology Co.Ltd(300593) : annual audit report in 2021

Beijing Relpow Technology Co.Ltd(300593)

2021 annual audit report

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catalogue

Page

1、 Audit report 1-8

2、 Financial statements 9-20

(1) Consolidated balance sheet 9-10

(2) Consolidated income statement 11

(3) Consolidated cash flow statement 12

(4) Consolidated statement of changes in owner’s equity 13-14

(5) Balance sheet of parent company 15-16

(6) Income statement of parent company 17

(7) Cash flow statement of parent company 18

(8) Statement of changes in owner’s equity of parent company 19-20

3、 Notes to financial statements 21-160

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Tel.057188879999 Fax. 05718887900

Audit report

Zhonghui kuaishan [2022] No. 2485 Beijing Relpow Technology Co.Ltd(300593) all shareholders:

1、 Audit opinion

We have audited the financial statements of Beijing Relpow Technology Co.Ltd(300593) (hereinafter referred to as Beijing Relpow Technology Co.Ltd(300593) company), including the consolidated and parent company’s balance sheet as of December 31, 2021, the consolidated and parent company’s income statement, consolidated and parent company’s cash flow statement, consolidated and parent company’s statement of changes in owner’s equity and notes to financial statements in 2021. In our opinion, the attached financial statements are prepared in accordance with the provisions of the accounting standards for business enterprises in all material aspects and fairly reflect the consolidated and parent company’s financial position of Beijing Relpow Technology Co.Ltd(300593) company as of December 31, 2021 and the consolidated and parent 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 Beijing Relpow Technology Co.Ltd(300593) company 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. We confirm that the following matters are the key audit matters that need to be communicated in the audit report.

Floors 5-8, 12 and 23, block a, UDC times building, No. 8 Xinye Road, Qianjiang New Town, Hangzhou, China www.zhcpa.com cn.

Floors5-8,12and23,BlockA,UDC Times Building,No.8 Xinye Road,Qianjiang New City,Hangzhou

Tel.057188879999 Fax. 05718887900

(I) recognition of sales revenue

1. Description of key audit matters

Beijing Relpow Technology Co.Ltd(300593) company has fulfilled the performance obligations in the contract, that is, revenue is recognized when the customer obtains the control of relevant goods. Specifically, according to the sales contract, the products are delivered to the customer, and the sales revenue is recognized after the customer passes the acceptance. In 2021, Beijing Relpow Technology Co.Ltd(300593) company’s main business income was 14705193 million yuan, of which China’s sales income accounted for about 74.44% of the total main business income, and foreign sales income accounted for 25.56% of the total main business income.

As revenue is one of the key performance indicators of Beijing Relpow Technology Co.Ltd(300593) company, there is an inherent risk that the management manipulates the time point of revenue recognition in order to achieve specific goals or expectations. We recognize the recognition of product sales revenue as a key audit matter.

For the disclosure of this event in the financial statements, please refer to note 3 to the financial statements, accounting policies and accounting estimates (XXXII) income, and (XXXIX) description of major accounting judgments and estimates; (39) operating income / operating cost in note V to the financial statements and notes to items in the consolidated financial statements.

2. Audit response

(1) Understand and evaluate the management’s design of internal control in the sales process of Beijing Relpow Technology Co.Ltd(300593) company from sales order approval to sales revenue entry, and test the effectiveness of key control implementation;

(2) Interview with finance department and management to understand the recognition policy of product sales revenue of Beijing Relpow Technology Co.Ltd(300593) company; (3) Sample inspection of sales contracts, and analyze and evaluate the time point of control transfer related to the recognition of product sales revenue;

(4) Check the supporting documents related to revenue recognition, verify the integrity and authenticity of revenue, and compare them through analytical review;

(5) Combined with the audit of notes receivable and accounts receivable, select the main customers to confirm the current sales volume; (6) Recheck the large amount of contract liabilities, check the relevant sales contracts, understand whether they have been implemented and the income has not been carried forward in time, and further verify their authenticity through correspondence;

(7) Perform cut-off test on operating income to evaluate whether the income is recorded in the correct accounting period.

(II) expected credit loss of accounts receivable and notes receivable

1. Description of key audit matters

The book balance of accounts receivable and notes receivable (hereinafter referred to as accounts receivable) in the consolidated financial statements on December 31, 2021 was RMB 792555800, the bad debt provision was RMB 29265800, and the book value was RMB 763.29 million.

Beijing Relpow Technology Co.Ltd(300593) company withdraws loss reserves for receivables according to the expected credit loss of the whole duration. For receivables with objective evidence indicating impairment and other receivables applicable to single evaluation, impairment test shall be conducted separately, expected credit loss shall be recognized, and single impairment provision shall be withdrawn. For accounts receivable without objective impairment or when the information of expected credit loss cannot be evaluated by a single account receivable at a reasonable cost, Beijing Relpow Technology Co.Ltd(300593) company divides the accounts receivable into several combinations according to the characteristics of credit risk, and measures the expected credit loss on the basis of the combination. For the accounts receivable classified into portfolio, Beijing Relpow Technology Co.Ltd(300593) company refers to the experience of historical credit loss, combines the current situation and the prediction of future economic conditions, prepares the aging analysis table of accounts receivable and the comparison model of expected credit loss rate in the whole duration to measure the expected credit loss.

The expected credit loss of receivables has a significant impact on the financial statements and involves significant judgments and estimates of the management. Therefore, we identify it as a key audit event.

The disclosure of this event in the financial statements is detailed in note 3 to the financial statements, accounting policies and accounting estimates: (x) financial instruments, (XII) impairment of notes receivable, (XIII) impairment of accounts receivable, (XXXIX) description of major accounting judgments and estimates; Note 5 to the financial statements: (II) notes receivable and (III) accounts receivable in the notes to the items of the consolidated financial statements.

2. Audit response

(1) Understand the process of accruing expected credit loss of receivables and relevant internal control, and test the effectiveness of key internal control design and implementation;

(2) For the evaluation of expected credit loss based on individual receivables, take samples to check the relevant objective evidence of impairment of receivables, and review the basis for the evaluation of expected credit loss by the management based on the customer’s financial status and credit status, historical repayment records and prediction of future economic conditions;

(3) For accounts receivable that calculate the expected credit loss according to the combination of credit risk characteristics, review the rationality of the divided combination and the estimated expected credit loss rate of different combinations based on the historical credit loss experience and combined with the current situation and the prediction of future economic conditions, and evaluate the rationality of the expected loss rate with reference to the historical audit experience and forward-looking information, And select samples to test the accuracy of the combination classification and aging division of accounts receivable, and recalculate the accuracy of the provision amount of expected credit loss.

(4) Whether there is a dispute with the customer over the aging of accounts receivable for more than 1 year, and whether the company pays attention to the key accounts receivable of the company;

(5) Confirm the accounts receivable with large balance at the end of the period;

(6) Pay attention to the payment collection after the period, and select samples to check the payment collection after the period.

(III) impairment of goodwill

1. Description of key audit matters

On December 31, 2021, the book value of goodwill in the consolidated financial statements of Beijing Relpow Technology Co.Ltd(300593) company was 921679 million yuan, accounting for 8.19% of the net assets attributable to the parent company in the consolidated balance sheet. This goodwill was formed by the acquisition of 52% equity of Wuhan Yongli Technology Co., Ltd. in 2018 Beijing Relpow Technology Co.Ltd(300593) the company conducts impairment test on goodwill every year and compares the book value of the asset group containing goodwill with its recoverable amount to evaluate whether it is necessary to withdraw impairment.

When determining the present value of the future cash flow of the asset group, the management made significant judgments. The key assumptions used in the calculation of value in use include: compound growth rate in the detailed forecast period, growth rate in the subsequent forecast period, gross profit margin and discount rate.

As the amount of goodwill is significant, and the impairment test of goodwill involves complex and significant judgments. Therefore, we recognize the impairment of goodwill as a key audit event.

For the disclosure of this event in the financial statements, please refer to note 3 to the financial statements, accounting policies and accounting estimates (XXVI) impairment of long-term assets and (XXXIX) description of major accounting judgments and estimates; (17) Goodwill in note 5 to the financial statements and notes to items in the consolidated financial statements.

2. Audit response

(1) Understand and evaluate the design of internal control related to goodwill impairment provision by the management, including the review and approval of key assumptions and impairment provision amount, and test the effectiveness of the implementation of key control;

(2) Compare and analyze the actual results of relevant asset groups in this year with the corresponding forecast data of previous years to evaluate the historical accuracy of cash flow forecast by the management;

(3) Evaluate the competence, professional quality and objectivity of the external independent evaluation institution hired by the management to assist it in the impairment test;

(4) Obtain the goodwill impairment calculation table prepared by the management and the evaluation report issued by the external independent evaluation organization. With the assistance of the evaluation experts and by referring to the practices of the same industry, evaluate the appropriateness of the evaluation method of the present value of future cash flow selected in the impairment test model and the discount rate used in the impairment test model;

(5) Comprehensively considering the operation of the asset group, the income growth rate and gross profit margin included in the impairment test model are compared with the historical data, and the impact of market trend is considered;

(6) The sensitivity test is conducted for the key parameters used in the future cash flow forecast of the asset group. 4、 Other information

The management of Beijing Relpow Technology Co.Ltd(300593) company (hereinafter referred to as the management) is responsible for other information. Other information includes the information covered in the 2021 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 and consider whether other information is materially inconsistent with the financial statements or the information we have learned in the audit process, or there seems to be material misstatement.

Based on the work we have performed, if we determine that there is a material misstatement in other information, we should report that fact. In this regard, we have nothing to report.

5、 Responsibilities of management and governance for financial statements

The management is responsible for preparing the financial statements in accordance with the provisions of the accounting standards for business enterprises to achieve a fair reflection, and designing, implementing and maintaining necessary internal control so that the financial statements are free from material misstatement caused by fraud or error.

When preparing the financial statements, the management is responsible for evaluating the continuous operation ability of Beijing Relpow Technology Co.Ltd(300593) company, disclosing matters related to continuous operation (if applicable), and applying the assumption of continuous operation, unless the management plans to liquidate Beijing Relpow Technology Co.Ltd(300593) company

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