Yunnan Diqing Nonferrous Metals Co., Ltd
January September 2021, 2020 and 2019
audit report
Index page number
Audit report financial statements of the company
– balance sheet 1-2
– income statement 3
– cash flow statement 4
– statement of changes in owner’s equity 5-7
– Notes to financial statements 8-89
1、 Basic information of the company
Yunnan Diqing Nonferrous Metals Co., Ltd. (hereinafter referred to as “the company”) was established in 2004 and is now a limited liability company under Yunnan Copper Co.Ltd(000878) . The company obtained the business license for enterprise legal person No. 53340001000608, organization code certificate No. 76044510-9 and tax registration certificate No. 533421760445109 issued by the Administration for Industry and Commerce of Diqing Tibetan Autonomous Prefecture on June 8, 2004, On December 25, 2018, it obtained the business license with unified social credit code No. 915334007604451096 issued by the Administration for Industry and Commerce of Diqing Tibetan Autonomous Prefecture, Yunnan Province. After several equity changes and capital increases, the registered capital of the company is 1948.21 million yuan and the paid in capital is 1948.21 million yuan, respectively Yunnan Copper Co.Ltd(000878) 974.2998 million yuan, accounting for 50.01% of the total capital; Yunnan Copper Co.Ltd(000878) (Group) Co., Ltd. is 744800700 yuan, accounting for 38.23% of the total capital; Yunnan Gold Mining Group Co., Ltd. is 229.1095 million yuan, accounting for 11.76% of the total capital.
Registered address: Pulang copper mine, GEZAN village, GEZAN Township, Shangri La City, Diqing Tibetan Autonomous Prefecture, Yunnan Province.
Legal representative: Li shanbing.
Registered capital of the company: RMB 1948.21 million.
The business scope mainly includes: Mining and dressing of mineral resources and product sales of Pulang copper mine, mining development project management, mining engineering project construction, comprehensive management of mine production and operation, scientific and technological research and development and technical consulting; Geological exploration, mineral resources exploration and purchase and sales of mineral products of Pulang copper mine; Purchase and sale of raw materials, lease of land and houses, and lease of mechanical equipment.
The parent company of the company is Yunnan Copper Co.Ltd(000878) , and the final controller is the state owned assets supervision and Administration Commission of the State Council.
2、 Preparation basis of financial statements
(I) preparation basis
The financial statements of the company are based on the assumption of going concern, according to the actual transactions and events, in accordance with the accounting standards for business enterprises – Basic Standards (issued by order No. 33 of the Ministry of Finance and revised by order No. 76 of the Ministry of Finance), the specific accounting standards, application guidelines of accounting standards for business enterprises issued and revised on and after February 15, 2006 The interpretation of accounting standards for business enterprises and other relevant provisions (hereinafter collectively referred to as “accounting standards for business enterprises”) are prepared based on the accounting policies and accounting estimates described in “IV. important accounting policies and accounting estimates” in this note.
(II) going concern
The company confirmed that the company has the ability of sustainable operation after the evaluation of the sustainable operation ability for 12 months from the end of the reporting period, and no major adverse factors affecting the sustainable operation ability were found. The company prepares financial statements on the basis of going concern assumption.
3、 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 company’s financial position, operating results, cash flow and other relevant information.
4、 Important accounting policies and accounting estimates
The company focuses on the mining and beneficiation of mineral resources and product sales, mainly engaged in the production and sales of copper concentrate. The specific accounting policies and accounting estimates formulated by the company according to the actual production and operation characteristics are described in note IV.
(I) accounting period
The accounting period of the company is divided into annual period and interim period, which refers to the reporting period shorter than a complete accounting year. The accounting year of the company adopts the Gregorian calendar, i.e. from January 1 to December 31 each year.
(II) business cycle
Normal business cycle refers to the period from the purchase of assets for processing to the realization of cash or cash equivalents. The company takes 12 months as an operating cycle and takes it as the liquidity division standard of assets and liabilities.
(III) recording currency
RMB is the currency in the main economic environment in which the company operates, and the company takes RMB as the bookkeeping base currency. The currency used by the company in preparing the financial statements is RMB.
(IV) cash and cash equivalents
Cash in the company’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, strong liquidity, easy to convert into known amount of cash and little risk of value change.
(V) financial instruments
The company 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 company 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 company classifies financial assets that meet the following conditions as financial assets measured at amortized cost: ① the business model of managing the financial assets is to collect contract cash flow. ② The contractual terms of the financial asset 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 company classifies the financial assets that meet the following conditions at the same time as the financial assets measured at fair value and whose changes are included in other comprehensive income: ① the business model of managing the financial assets aims at both receiving contract cash flow and selling the financial assets.
② The contractual terms of the financial asset 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. Except for those designated as hedged items, other gains or losses arising from such financial assets, except for credit impairment losses or gains, exchange gains and losses and the interest of such financial assets calculated according to the effective interest rate method, shall be included in other comprehensive income; When a financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in the current profits and losses.
The company recognizes interest income in accordance with the effective interest rate method. The 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.
Except for the above financial assets classified as measured at amortized cost and financial assets classified as measured at fair value and whose changes are included in other comprehensive income. The company classifies it into two financial assets measured at fair value and whose changes are included in the current profit and loss. Such financial assets are initially measured at fair value, and relevant transaction costs are directly included in current profits and losses. The gains or losses of such financial assets shall be included in the current profits and losses.
If the contingent consideration recognized by the company in the business combination not under the same control constitutes a financial asset, the financial asset is classified as a financial asset measured at fair value and the change is included in the current profit and loss.
(2) Recognition basis and measurement method of financial asset transfer
The company 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 the financial assets are transferred, the company transfers almost all the risks and rewards of the ownership of the financial assets; ③ When a financial asset is transferred, the company neither transfers nor retains almost all the risks and rewards on 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
Classification, recognition basis and measurement method of financial liabilities
The company’s financial liabilities are classified as financial liabilities measured at fair value through profit or loss and other financial liabilities at initial recognition.
Financial liabilities measured at fair value with changes included in current profits and losses include trading financial liabilities and financial liabilities designated at initial recognition as measured at fair value with changes included in current profits and losses (relevant classification basis shall be disclosed with reference to the classification basis of financial assets). Subsequent measurement shall be made according to the fair value, and the gains or losses arising from changes in the fair value and the dividends and interest expenses related to the financial liabilities shall be included in the current profits and losses.
Other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. Except for the following items, the company classifies financial liabilities as financial liabilities measured at amortized cost: ① financial liabilities measured at fair value and whose changes are included in the current profit and loss, including trading financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities designated as measured at fair value and whose changes are included in the current profit and loss. ② Financial liabilities formed by the transfer of financial assets that do not meet the conditions for derecognition or continued involvement in the transferred financial assets. ③ Financial guarantee contracts that do not fall under the circumstances of ① or ② above, and loan commitments that do not fall under the circumstances of ① above and loan at a lower market interest rate.
If the company forms financial liabilities from the contingent consideration recognized as the purchaser in the business combination not under the same control, it shall be measured at fair value and the changes shall be included in the current profits and losses for accounting treatment.
3. Conditions for derecognition of financial liabilities
When the current obligation of a financial liability has been relieved in whole or in part, the part of the financial liability or obligation that has been relieved shall be derecognized. If the company signs an agreement with the creditor to replace the existing financial liabilities by undertaking new financial liabilities, and the contract terms of the new financial liabilities and the existing financial liabilities are substantially different, the existing financial liabilities shall be derecognized and the new financial liabilities shall be recognized at the same time. If the company materially modifies all or part of the contract terms of the existing financial liabilities, the existing financial liabilities or part thereof shall be derecognized, and the financial liabilities after the modified terms shall be recognized as a new financial liability. The difference between the book value of the derecognized part and the consideration paid shall be included in the current profits and losses.
4. Determination method of fair value of financial assets and financial liabilities
The company measures the fair value of financial assets and financial liabilities at the price of the main market. If there is no main market, the fair value of financial assets and financial liabilities shall be measured at the price of the most favorable market, and the valuation technology applicable at that time and supported by sufficient available data and other information shall be adopted. The input value used for fair value measurement is divided into three levels, that is, the input value of the first level is the unadjusted quotation of the same assets or liabilities that can be obtained on the measurement date in the active market; The second level input value is the directly or indirectly observable input value of relevant assets or liabilities in addition to the first level input value; The third level input value is the unobservable input value of related assets or liabilities. The company gives priority to the first level input value, and finally uses the third level input value. The level of the fair value measurement results is determined by the lowest level of the input value that is of great significance to the fair value measurement as a whole.
The company’s investment in equity instruments is measured at fair value. However, under limited circumstances, if the recent information used to determine the fair value is insufficient, or the possible estimated amount of the fair value is widely distributed, and the cost represents the best estimate of the fair value within the range, the cost can represent its appropriate estimate of the fair value within the distribution range.
5. Offset of financial assets and financial liabilities
The financial assets and financial liabilities of the company are presented separately in the balance sheet and do not offset each other. However, when the following conditions are met at the same time, the net amount after mutual offset shall be listed in the balance sheet: (1) the company has the legal right to offset the recognized amount, and such legal right is currently enforceable; (2) The company plans to settle at net amount, or realize the financial assets and pay off the financial liabilities at the same time.
6. Distinction between financial liabilities and equity instruments and relevant treatment methods
The company distinguishes between financial liabilities and equity instruments according to the following principles: (1) if the company cannot unconditionally avoid cash payment
