China Jushi FY2006: Debt and related-party balances

The consolidated monetary-funds balance was CNY 603.300 million at the end of FY2006, compared with CNY 535.774 million at the end of FY2005. Its closing components were CNY 1.199 million of cash, CNY 396.728 million of bank deposits and CNY 205.372 million of other monetary funds. The last category mainly included CNY 20.000 million of bill security deposits at Beixin Technology and CNY 178.540 million of bill and letter-of-credit security deposits at Jushi Group. Those named deposits supported financing arrangements and should not be described as freely available cash. The note does not identify the nature of every remaining amount in the other-monetary-funds category, so the full CNY 205.372 million should not automatically be labeled either restricted or unrestricted. This distinction matters when assessing the cash available to support the expansion program and debt repayment; the balance-sheet total alone is insufficient for an unrestricted-cash or net-debt calculation.

Reported monetary funds / 2006 / fy2006 consolidated monetary funds 2006

RMB 603,299,509.55

Reported monetary funds / 2005 / fy2006 consolidated monetary funds 2005

RMB 535,773,916.63

Reported other monetary funds / 2006 / fy2006 consolidated other monetary funds 2006

RMB 205,372,327.05

Interest expense in the consolidated finance-cost note was CNY 150.905 million, compared with CNY 97.373 million in FY2005. Net finance expense was CNY 117.651 million, after interest income of CNY 16.743 million, an exchange gain of CNY 12.578 million, fees of CNY 4.684 million and a negative CNY 8.617 million other component. The issuer attributed the rise in net finance expense to higher long- and short-term borrowings. Separately, the construction-in-progress table reports CNY 10.229 million of interest capitalized during the year. That amount was included in construction asset costs rather than the same period's expensed-interest subtotal. Keeping the two accounting treatments separate helps assess how debt financed expansion without treating every borrowing cost as an immediate charge to earnings or confusing either amount with cash interest paid.

Reported interest expense / 2006 / fy2006 consolidated finance note interest expense 2006

RMB 150,905,090.77

Reported interest expense / 2005 / fy2006 consolidated finance note interest expense 2005

RMB 97,373,400.82

Consolidated net finance expense / 2006 / fy2006 consolidated net finance expense 2006

RMB 117,651,082.93

Capitalised interest in the year / 2006 / fy2006 consolidated construction capitalized interest 2006

RMB 10,228,688.29

Consolidated short-term borrowings rose to CNY 1.632 billion from CNY 1.345 billion. The closing amount comprised CNY 540 million of unsecured credit borrowing, CNY 946 million of guaranteed borrowing and CNY 146 million of borrowing secured by mortgages. The report attributes the increase to the expansion of production and operations. Non-current long-term borrowings were CNY 1.528 billion, compared with CNY 731.288 million a year earlier; a separate CNY 200 million of long-term borrowing was classified as due within one year. The non-current total includes the reported renminbi equivalents of USD 16.5 million and USD 26 million borrowings, rather than treating the dollar amounts as additional renminbi debt. The note states that the current portion had no amount already due and unpaid at year end; that is a statement about that borrowing category, not a guarantee against future repayment risk. Some loans had related-party guarantees, and the USD 26 million loan also had fixed-asset security. These balances measure debt still outstanding, whereas new borrowing receipts, repayments and capitalized interest in the cash-flow and construction notes measure different events.

Reported short-term borrowings / 2006 / fy2006 consolidated short term borrowings 2006

RMB 1,632,000,000

Reported short-term borrowings / 2005 / fy2006 consolidated short term borrowings 2005

RMB 1,345,000,000

Reported long term borrowings / 2006 / fy2006 consolidated noncurrent long term borrowings 2006

RMB 1,528,479,750

Reported long term borrowings / 2005 / fy2006 consolidated noncurrent long term borrowings 2005

RMB 731,288,300

Reported current long term borrowings / 2006 / fy2006 consolidated current long term borrowings 2006

RMB 200,000,000