China Jushi FY2007: Debt and related-party balances

At the end of FY2007, consolidated short-term borrowings were CNY 2.222 billion, compared with CNY 1.632 billion at the start of the year. The note attributed the increase to funding for projects 216 and 217. Long-term loans totaled CNY 1.695 billion before classification by maturity: CNY 138.723 million was due within one year and CNY 1.556 billion remained in non-current long-term borrowings. The opening equivalents were CNY 200 million current and CNY 1.528 billion non-current. The current portion is part of the gross long-term loan total and must not be counted again on top of it. Loan security included third-party or group guarantees and mortgaged assets; the note also separately classified loans carrying both a mortgage and a guarantee. These are outstanding consolidated loan balances, not annual cash raised or remaining undrawn credit capacity.

Short-term borrowings / 2007 / fy2007 consolidated loans closing

RMB 2,221,800,952.89

Short-term borrowings / 2006 / fy2007 consolidated loans opening

RMB 1,632,000,000

Non-current long-term borrowings after current-portion deduction / 2007 / fy2007 consolidated loans closing

RMB 1,555,984,688

Non-current long-term borrowings after current-portion deduction / 2006 / fy2007 consolidated loans opening

RMB 1,528,479,750

Long-term loans due within one year / 2007 / fy2007 consolidated loans closing

RMB 138,723,000

Long-term loans due within one year / 2006 / fy2007 consolidated loans opening

RMB 200,000,000

The fixed-asset note reports new buildings of Jushi Group, Jushi Jiujiang and Jushi Chengdu with CNY 463.400 million original cost and CNY 441.151 million net carrying value for which property certificates were still being processed. It separately discusses older Beixin and Baoyu buildings without certificates and explains the Baoyu issue by reference to the absence of land-use certificates. These are disclosed documentation matters; the filing does not state that all affected production had stopped or that the buildings were unlawful. Elsewhere, production-related land and buildings were pledged to support borrowings. For example, Chengdu land with CNY 10.898 million net value secured a CNY 15 million loan outstanding at year end, due in November 2008. The asset carrying value, secured loan balance, maximum credit limit and documentation status describe different constraints on the manufacturing asset base; none is a measure of additional production capacity.

The original FY2007 borrowing-cost note reports CNY 196.433 million expensed and CNY 40.804 million capitalized, totaling CNY 237.238 million. The capitalized amount also appears among the year's construction additions, so it is part of recorded asset cost rather than a second capital expenditure to add on top of that construction total. Expensed interest rose from CNY 150.905 million in the comparative year. Net financial expenses were lower than gross interest, at CNY 159.042 million, after interest income of CNY 16.694 million and exchange gains of CNY 25.878 million, plus CNY 5.181 million of fees and other costs. The note attributes the rise in financial expenses to increased borrowing. Expensed cost, capitalized cost, net financial expense and cash interest payments have different accounting roles; these figures do not measure undrawn credit or the all-in cost of every loan. They retain the original FY2007 filing's presentation rather than substituting a later annual report's comparative column.

Consolidated finance-note interest expense / 2007 / fy2007 consolidated expensed interest

RMB 196,433,131.36

Capitalised interest in the year / 2007 / fy2007 consolidated capitalized borrow cost

RMB 40,804,430.81

Reported net finance expense / 2007 / fy2007 consolidated net finance expense

RMB 159,042,023