China Jushi FY2007: Cash generation and working capital

China Fiberglass, the listed issuer now known as China Jushi, reported consolidated FY2007 revenue of CNY 3.201 billion, compared with CNY 2.041 billion in the restated FY2006 comparative column of this filing. Management attributed the increase to commissioning Jushi Group's 120,000-tonne line and a 40,000-tonne Chengdu line, which increased production and sales. These are annual design capacities, not the tonnes actually sold during the year. The reported revenue amounts imply growth of about 56.83%, as stated in the management report; the revenue note instead prints 56.38%. Consolidated net profit was CNY 633.749 million, comprising CNY 308.620 million attributable to the parent's shareholders and CNY 325.129 million attributable to minority shareholders. The latter interests are included in consolidated operations but do not belong to the listed issuer's shareholders. These are the figures as presented in this original FY2007 filing; later comparative revisions remain separate historical records.

Revenue / 2007 / fy2007 consolidated operating revenue

RMB 3,200,867,436.59

Revenue / 2006 / fy2007 consolidated operating revenue comparative

RMB 2,040,995,771.89

Reported consolidated net profit / 2007 / fy2007 consolidated net profit original

RMB 633,749,021.77

Profit attributable to subsidiary minority / 2007 / fy2007 consolidated minority profit original

RMB 325,128,698.51

Consolidated FY2007 operating cash inflow net of operating payments was CNY 604.444 million, up from CNY 323.289 million. Cash spent acquiring or constructing fixed assets, intangible assets and other long-term assets was CNY 1.288 billion, so that spending exceeded operating cash generation. Net investing cash outflow was CNY 1.188 billion after investment recoveries and asset or business disposals. Net financing inflow was CNY 974.952 million: the group received CNY 695.235 million of investment cash, all shown as investment from minority shareholders into subsidiaries, and CNY 3.063 billion of new borrowing; it repaid CNY 2.484 billion of debt and paid CNY 299.472 million in the combined dividend, profit-distribution and interest category. Those subsidiary investment receipts are not an issuance of shares by the listed parent. After a CNY 5.332 million adverse exchange-rate effect, the cash-flow statement reported a CNY 385.859 million increase and closing cash and cash equivalents of CNY 989.158 million. Cash investment payments, construction-account additions and transfers to fixed assets measure different stages and should not be used interchangeably.

Net cash from operating activities / 2007 / fy2007 consolidated operating cash

RMB 604,443,878.94

Reported cash capital expenditure / 2007 / fy2007 consolidated long lived asset cash

RMB 1,287,770,655.38

Net cash from investing activities / 2007 / fy2007 consolidated investing cash

RMB -1,188,205,570.08

Net cash from financing activities / 2007 / fy2007 consolidated financing cash

RMB 974,952,234.97

Minority investment cash / 2007 / fy2007 consolidated minority subscription cash

RMB 695,234,633.71

Reported cash borrowing receipts / 2007 / fy2007 consolidated borrowing cash

RMB 3,063,259,652.89

Reported cash debt repayments / 2007 / fy2007 consolidated debt repayment cash

RMB 2,484,069,846

Reported cash change / 2007 / fy2007 consolidated cash change

RMB 385,858,872.11

Net cash from operating activities / 2006 / fy2007 consolidated operating cash comparative

RMB 323,289,457.08

Reported monetary-funds balance / 2007 / fy2007 consolidated cash equivalents closing

RMB 989,158,381.66

Advance payments rose from CNY 127.921 million at the start of FY2007 to CNY 653.175 million at year end. The financial note attributed the increase mainly to advances for Jushi Group project 216 and Chengdu project 220. It classified CNY 619.603 million, or 94.86% of the closing balance, as less than one year old. The five largest advance balances totaled CNY 220.842 million, or 33.81%, and were described as equipment or construction payments. These are amounts paid ahead of the supplier's performance, rather than customer receivables or evidence that the equipment was already installed. Project 220 is the code stated in this advance-payment note; the disclosure does not by itself establish a one-to-one link to one of the capacity plans. The project identity therefore remains bounded by the information actually reported.

Consolidated trade payables rose from CNY 304.024 million to CNY 1.349 billion during FY2007. The note attributed the increase mainly to platinum-rhodium alloy purchases. The largest named payable, to GERALD METALS, INC, was CNY 912.918 million for that alloy, representing a reported 67.69% of closing trade payables. The report says Jushi Group and Jushi Chengdu had issued one-year letters of credit for this obligation, with payment maturities between March and October 2008. This links the production-asset build-up to subsequent supplier payments. The disclosed payable is not an additional bank loan to add to the borrowing balances, and the maturity window does not establish that all payments were subsequently made. The supplier name and obligation are recorded as disclosed; this review does not extend into research on the supplier's own business.

Reported trade payables / 2007 / fy2007 consolidated trade payables closing

RMB 1,348,705,399.55

Reported trade payables / 2006 / fy2007 consolidated trade payables opening

RMB 304,023,856.8

Reported trade payables / 2007 / fy2007 gerald metals alloy payable closing

RMB 912,918,209.18

The fixed-asset note shows platinum-rhodium alloy increasing from CNY 1.314 billion to CNY 2.033 billion during FY2007. It reports CNY 793.101 million of additions and CNY 73.683 million of reductions. These are accounting movements in the alloy asset row, not cash purchase amounts or physical metal consumption. The accounting policy identifies platinum-rhodium bushings as important glass-fiber production equipment: the company periodically repairs them, charges actual maintenance losses to production cost, does not depreciate them, and compares their carrying value with recoverable value at the balance-sheet date. That policy explains why precious-metal production capital and the cost of using it have different accounting roles. It should not be generalized to every equipment item; the fixed-asset table separately reports depreciation for other machinery, buildings and vehicles.

Reported platinum-rhodium production assets / 2007 / fy2007 consolidated alloy asset closing

RMB 2,033,492,124.88

Reported platinum-rhodium production assets / 2006 / fy2007 consolidated alloy asset opening

RMB 1,314,074,183.33

At 31 December 2007, consolidated trade receivables were CNY 512.232 million before a CNY 21.233 million allowance, leaving CNY 490.999 million net. The opening figures were CNY 516.994 million gross, CNY 32.740 million allowance and CNY 484.254 million net. Gross balances therefore fell slightly while net balances rose; the difference cannot be explained simply as more sales or better collections. The allowance reconciliation includes CNY 3.429 million of additions and CNY 14.936 million of write-offs, comprising older Jushi balances and the allowance of a deregistered composites subsidiary. Writing off a balance is not receipt of customer cash. The five largest closing debtors owed CNY 173.220 million, a reported 33.82% of gross receivables, and their listed balances were within one year. They included Gibson, Jushi Panden, Poly Base, Future Composites Technology and Hengshi. That debtor concentration uses a balance-sheet denominator and differs from the 30.12% share of annual sales represented by the top five sales customers; the two lists and percentages should not be treated as identical.

Accounts receivable gross balance / 2007 / fy2007 consolidated trade receivables closing

RMB 512,231,771.97

Accounts receivable gross balance / 2006 / fy2007 consolidated trade receivables opening

RMB 516,994,312.54

Accounts receivable credit-loss allowance / 2007 / fy2007 consolidated trade receivables closing

RMB 21,232,991.03

Accounts receivable credit-loss allowance / 2006 / fy2007 consolidated trade receivables opening

RMB 32,740,391.12

Accounts receivable net carrying amount / 2007 / fy2007 consolidated trade receivables closing

RMB 490,998,780.94

Accounts receivable net carrying amount / 2006 / fy2007 consolidated trade receivables opening

RMB 484,253,921.42

Consolidated inventory net of its allowance fell from CNY 299.274 million to CNY 263.251 million in FY2007. Finished goods fell from CNY 130.990 million to CNY 84.131 million, while goods already dispatched but still recorded as inventory rose from CNY 30.801 million to CNY 47.981 million. Raw materials remained a substantial component at CNY 118.333 million, compared with CNY 123.332 million at the start of the year. These carrying values describe product stages and funds tied up in the operating cycle; dispatched inventory is not automatically recognized revenue or cash received. Separately, customer advances rose from CNY 72.751 million to CNY 172.107 million. The note attributes the increase to Jushi's sales and its policy of collecting from some customers before dispatch. Customer advances can fund the operating cycle but are liabilities tied to future performance, not an additional sale to add to revenue or a measure of the entire contracted order book. The closing inventory allowance was CNY 111,506, unchanged from the opening amount; the filing's allowance should not be interpreted as proof that every stock item was immediately saleable.

Inventory after allowance / 2007 / fy2007 consolidated inventory net closing

RMB 263,250,738.59

Inventory after allowance / 2006 / fy2007 consolidated inventory net opening

RMB 299,274,398.34

Gross finished goods / 2007 / fy2007 consolidated finished goods closing

RMB 84,130,843.82

Gross finished goods / 2006 / fy2007 consolidated finished goods opening

RMB 130,990,443.14

Goods dispatched remaining inventory / 2007 / fy2007 consolidated dispatched inventory closing

RMB 47,981,068.72

Goods dispatched remaining inventory / 2006 / fy2007 consolidated dispatched inventory opening

RMB 30,801,426.27

Reported raw material inventory / 2007 / fy2007 consolidated raw material inventory closing

RMB 118,332,513.29

Reported raw material inventory / 2006 / fy2007 consolidated raw material inventory opening

RMB 123,331,571.87

Customer advances in contract liabilities / 2007 / fy2007 consolidated customer advances closing

RMB 172,107,258.27

Customer advances in contract liabilities / 2006 / fy2007 consolidated customer advances opening

RMB 72,750,640.32

Tianjian Huazheng Zhongzhou (Beijing) issued an unqualified audit opinion dated 3 March 2008 on China Fiberglass's FY2007 financial statements. The report covered the parent and consolidated balance sheets at 31 December 2007, income and cash-flow statements for the year, changes in shareholders' equity and the accompanying notes. The opinion states that the statements fairly presented the company's financial position, operating results and cash flows in all material respects under the Chinese Accounting Standards for Business Enterprises issued in February 2006. The audit report describes consideration of financial-reporting controls to design audit procedures, while explicitly saying that this financial audit was not an opinion on the effectiveness of those controls. It is assurance on the historical financial statements, not independent verification of all technology rankings, forecast commissioning dates or this site's English editorial work.

The original FY2007 filing reports CNY 308.620 million of profit attributable to the parent's ordinary shareholders and CNY 229.402 million after excluding its disclosed non-recurring items. The resulting CNY 79.219 million net contribution is a shareholder-profit measure after tax and minority-interest effects. It differs from the CNY 80.864 million pre-tax fair-value gain on trading financial assets in the consolidated income statement, and from the CNY 68.084 million profit impact presented in a narrower management table. The non-recurring schedule includes government grants of CNY 46.795 million, trading-asset holding and disposal income of CNY 8.754 million, asset-disposal losses and other adjustments, followed by CNY 29.476 million of tax effects and CNY 18.632 million of minority-interest effects. Summing the printed schedule components gives a net figure one cent above its printed total, which is preserved as a rounding or printing difference rather than corrected. Excluding these items helps separate manufacturing performance from the disclosed financial and other contributions; it does not establish future sustainable profit or cash generation.

Profit attributable to shareholders / 2007 / fy2007 consolidated nonrecurring schedule

RMB 308,620,323.26

Fair value income / 2007 / fy2007 consolidated nonrecurring schedule

RMB 80,863,910

Nonrecurring tax adjustment / 2007 / fy2007 consolidated nonrecurring schedule

RMB 29,476,443.79

Nonrecurring minority adjustment / 2007 / fy2007 consolidated nonrecurring schedule

RMB 18,631,881.15

Nonrecurring owner result / 2007 / fy2007 consolidated nonrecurring schedule

RMB 79,218,721.03

Profit excluding nonrecurring / 2007 / fy2007 consolidated nonrecurring schedule

RMB 229,401,602.23

Trading asset holding income / 2007 / fy2007 consolidated nonrecurring schedule

RMB 8,753,578.06

The issuer began applying the 2006 Chinese Accounting Standards on 1 January 2007. In its separate parent-company accounts, investments in consolidated subsidiaries changed from the equity method to the cost method, with retrospective adjustments. The parent retained-profit reconciliation moves from CNY 277.823 million before adjustment to negative CNY 79.570 million after a CNY 357.393 million reduction; this is a restatement of the opening balance, not a cash loss incurred during FY2007. The consolidated retained-profit reconciliation moves in the opposite direction, from CNY 177.405 million to CNY 254.220 million, because the two reporting perimeters differ. The parent then earned CNY 79.783 million in FY2007 and paid CNY 42.739 million for the previous year's distribution, leaving negative CNY 42.527 million available for distribution at year end. The board therefore proposed neither a FY2007 profit distribution nor a conversion of capital reserve into share capital. This is the proposal reported in this filing, not evidence of a later shareholder vote. Management expected a planned absorption merger of Jushi Group to change how its earnings entered the parent; the expectation does not establish that the merger had already occurred.

Reported parent retained earnings / 2006 / fy2007 parent opening restated

RMB -79,570,398.9

Reported retained earnings adjustment / 2006 / fy2007 parent opening restatement adjustment

RMB -357,393,243.92

Reported parent retained earnings / 2007 / fy2007 parent closing distribution schedule

RMB -42,527,009.37

The FY2007 tax note lists 15% income-tax rates for the issuer, Beixin Technology, Jushi Chengdu and several Beixin subsidiaries, 33% for Jushi Jiujiang and 14.94% for Jushi Group. It explains Jushi Group's actual 14.94% rate by reference to the then applicable foreign-invested-enterprise regime and local tax notices. These are legal-entity rates reported for this historical period; they are not one consolidated effective rate. The same page then states that the company's applicable rate would change from 33% to 25% on 1 January 2008. That general statement is not reconciled with the 15% issuer row, so it is retained as a source-scope difference rather than used to replace all entity rates. The note illustrates why the tax treatment of different manufacturing entities matters when reading profit, but does not establish their later or current tax status.

Reported historical corporate-income-tax rate by entity / 2007 / fy2007 historical tax issuer

15 percent

Reported historical corporate-income-tax rate by entity / 2007 / fy2007 historical tax jushi group

14.94 percent

Reported historical corporate-income-tax rate by entity / 2007 / fy2007 historical tax jushi jiujiang

33 percent

The consolidated investment-income note totals CNY 9.919 million for FY2007. It includes negative CNY 139,064 of equity-method results, CNY 1.939 million of long-term equity disposal gains, CNY 8.754 million from holding or disposing of trading financial assets and negative CNY 634,460 of other investment results. The equity-method subtotal includes CNY 14.864 million for CNBM Investment, offset by losses of CNY 10.785 million for the Jushi Panden electronic-substrate joint venture and CNY 4.118 million for Nanjing Huafu property development, plus smaller contributions. Panden's investment was reported at CNY 103.608 million at year end after its loss contribution, and the joint-venture holding was 50%. The CNY 10.785 million is the investor's recorded equity-method contribution, not Panden's full-company loss or the trade receivable owed by Panden. A following table prints CNY 1.166 million as a total excluding the CNY 8.754 million trading-asset contribution; the two totals reconcile when that contribution is added. These realized or equity-accounted results also differ from the separate CNY 80.864 million fair-value gain. Keeping those perimeters distinct prevents securities returns, investee losses and subsidiary manufacturing profit from being treated as the same earnings source.

Consolidated investment income or loss / 2007 / fy2007 consolidated investment income all

RMB 9,919,151.01

Consolidated equity-method investment income / 2007 / fy2007 consolidated equity method income total

RMB -139,063.89

Consolidated equity-method investment income / 2007 / fy2007 panden equity method loss contribution

RMB -10,784,915.52

Consolidated equity-method investment income / 2007 / fy2007 huafu equity method loss contribution

RMB -4,118,309.7