China Jushi FY2008: Cash generation and working capital

Consolidated operating cash flow moved from a CNY 604.44 million inflow in 2007 to a CNY 456.90 million outflow in 2008. Management attributed the change mainly to longer receivable collection times; the cash-flow reconciliation also records increases in inventory and operating receivable balances. Investing activities used CNY 2.635 billion, including CNY 2.842 billion paid to acquire fixed assets, intangible assets and other long-term assets. Financing generated CNY 3.393 billion, supported by CNY 7.140 billion of new borrowing against CNY 3.351 billion of debt repayments. After a CNY 10.84 million exchange effect, reported cash increased by CNY 289.43 million. New borrowing receipts are gross financing flows, not the year-end debt balance.

Net cash from operating activities / 2008 / consolidated cash flow fy2008

RMB -456,898,932.05

Net cash from investing activities / 2008 / consolidated cash flow fy2008

RMB -2,635,333,850.62

Net cash from financing activities / 2008 / consolidated cash flow fy2008

RMB 3,392,500,567.83

Reported cash capital expenditure / 2008 / long lived assets cash acquisition fy2008

RMB 2,841,827,219.79

Reported cash borrowing receipts / 2008 / consolidated gross new borrowing fy2008

RMB 7,139,954,640

Reported cash debt repayments / 2008 / consolidated debt cash repayment fy2008

RMB 3,351,468,994.42

Reported cash change / 2008 / consolidated net cash change fy2008

RMB 289,432,038.82

The group reported CNY 1.279 billion of cash and cash equivalents at year-end. Within CNY 100.32 million of other monetary funds, the monetary-funds note identifies CNY 76 million of deposits pledged for bank borrowing. The restricted-assets note also records that pledged cash. However, the cash-equivalent note labels all other monetary funds as readily available for payment and leaves its restricted-cash line blank. This inconsistency prevents treating the entire reported balance as clearly unrestricted liquidity. The disclosed pledged amount is retained alongside the reported cash total; no single reconciled unrestricted-cash or net-debt figure is supplied.

Gross trade receivables rose from CNY 512.23 million at the end of 2007 to CNY 932.85 million at the end of 2008, an increase of 82.11%. Management attributed the increase to business expansion and higher sales at Jushi Group and its subsidiaries, leaving more sales proceeds uncollected at year-end. After an allowance of CNY 29.58 million, the 2008 net balance was CNY 903.27 million. The five largest debtors owed CNY 308.09 million, or 33.03% of gross receivables; this measures year-end collection exposure rather than the annual sales share of the five largest customers. Receivable age does not by itself establish that an invoice is overdue or in default. These amounts are the original FY2008 report figures; the following year's comparative gross receivable balance differs and is retained as a separate source vintage.

Reported gross trade receivables / 2008 / consolidated trade original fy2008

RMB 932,850,521.66

Reported trade-receivable allowance / 2008 / consolidated trade original fy2008

RMB 29,578,521.28

Reported net trade receivables / 2008 / consolidated trade original fy2008

RMB 903,272,000.38

Reported gross trade receivables / 2007 / consolidated trade original fy2007

RMB 512,231,771.97

Reported trade-receivable allowance / 2007 / consolidated trade original fy2007

RMB 21,232,991.03

Reported net trade receivables / 2007 / consolidated trade original fy2007

RMB 490,998,780.94

Reported top five receivable balance / 2008 / consolidated top five debtors original fy2008

RMB 308,093,599.4

Reported top five receivable percentage / 2008 / consolidated gross trade denominator original fy2008

33.03%

Net inventory increased from CNY 263.25 million to CNY 916.90 million. Finished goods accounted for CNY 723.80 million of the closing balance, compared with CNY 84.02 million a year earlier; raw materials increased from CNY 118.33 million to CNY 164.23 million. Management attributed the larger stocks to expansion of the manufacturing business and the funds required for raw-material reserves and finished goods. These monetary balances are not physical production volumes, confirmed orders or a measure of capacity utilisation. The inventory allowance remained CNY 111,506.25; its small size does not independently demonstrate that every item could be sold without loss. The report's narrative prints an inventory increase of CNY 653,652,749.30, whereas subtracting the reported net balances gives CNY 653,652,748.30. The CNY 1 source difference is preserved rather than silently corrected.

Reported gross inventory / 2008 / consolidated total original fy2008

RMB 917,014,994.14

Reported inventory allowance / 2008 / consolidated total original fy2008

RMB 111,506.25

Reported net inventory / 2008 / consolidated total original fy2008

RMB 916,903,486.89

Reported net inventory category / 2008 / consolidated finished goods original fy2008

RMB 723,799,853.78

Reported raw material inventory / 2008 / consolidated raw materials original fy2008

RMB 164,225,540.12

Reported gross inventory / 2007 / consolidated total original fy2007

RMB 263,362,244.84

Reported inventory allowance / 2007 / consolidated total original fy2007

RMB 111,506.25

Reported net inventory / 2007 / consolidated total original fy2007

RMB 263,250,738.59

Reported net inventory category / 2007 / consolidated finished goods original fy2007

RMB 84,019,337.57

Reported raw material inventory / 2007 / consolidated raw materials original fy2007

RMB 118,332,513.29

At the end of 2008, consolidated borrowings comprised CNY 2.722 billion of short-term loans, CNY 116.52 million of long-term loans due within one year and CNY 4.401 billion classified as non-current long-term loans. The latter increased from CNY 1.556 billion in 2007; management attributed the increase mainly to loans for new production lines and expansion at Jushi Group and its subsidiaries. The 2008 non-current balance comprised CNY 1.316 billion of credit loans, CNY 1.982 billion in the guaranteed category, CNY 736.68 million in the mortgaged category and CNY 365.87 million classified as both mortgaged and guaranteed. Each category enters the total once: supporting guarantees and collateral values are not additional borrowing balances. The CNY 116.52 million current portion was scheduled to mature in 2009, a historical repayment exposure rather than today's maturity schedule. Borrowing balances describe funding outstanding, distinct from the year's gross borrowing receipts and repayments.

Reported short-term borrowings / 2008 / consolidated short term original fy2008

RMB 2,722,180,600

Reported short-term borrowings / 2007 / consolidated short term original fy2007

RMB 2,221,800,952.89

Reported current long term borrowings / 2008 / consolidated long term current portion original fy2008

RMB 116,517,260

Reported noncurrent long term borrowings / 2008 / consolidated noncurrent long term original fy2008

RMB 4,400,653,597.35

Reported noncurrent long term borrowings / 2007 / consolidated noncurrent long term original fy2007

RMB 1,555,984,688

Reported unsecured long term borrowings / 2008 / consolidated noncurrent credit category original fy2008

RMB 1,316,189,769.35

Reported guaranteed long term borrowings / 2008 / consolidated noncurrent guaranteed category original fy2008

RMB 1,981,918,640

Reported mortgaged long term borrowings / 2008 / consolidated noncurrent mortgaged category original fy2008

RMB 736,680,000

Reported supported borrowing balance / 2008 / consolidated noncurrent mortgaged and guaranteed category original fy2008

RMB 365,865,188

The FY2008 inventory table also contains a one-yuan total discrepancy: gross inventory of CNY 917,014,994.14 less the CNY 111,506.25 allowance gives CNY 916,903,487.89, while the printed net total is CNY 916,903,486.89. The narrative increase of CNY 653,652,749.30 matches the change in gross balances, whereas the change in the printed net balances is CNY 653,652,748.30. The two annual allowances are the same. All printed values remain source figures; the calculated amounts are reconciliation results and do not replace them.

Net finance expense increased from CNY 159.04 million in 2007 to CNY 331.65 million in 2008. The 2008 finance-expense table includes CNY 380.14 million of interest expense, less CNY 25.36 million of interest income, as well as exchange losses, exchange gains and other financing charges. These are accounting expense components rather than a statement of cash interest paid. Management linked higher finance expense to business expansion, working-capital borrowing and the commissioning of construction projects. Its explanation says capitalized interest decreased, but the borrowing-cost note reports CNY 46.72 million capitalized in 2008 against CNY 40.80 million in 2007, an increase in the printed annual totals. This difference between the causal explanation and the tabulated amounts remains explicit; it is not resolved by assuming an undisclosed project allocation. Capitalized borrowing costs enter qualifying asset costs instead of the current interest-expense line.

Consolidated net finance expense / 2008 / consolidated net finance expense original fy2008

RMB 331,645,224.52

Reported interest expense / 2008 / consolidated expensed borrowing cost original fy2008

RMB 380,140,623.62

Reported interest income / 2008 / consolidated finance interest income original fy2008

RMB 25,363,281.62

Reported capitalized borrowing cost / 2008 / consolidated capitalized borrowing cost original fy2008

RMB 46,716,459.54

Consolidated net finance expense / 2007 / consolidated net finance expense original fy2007

RMB 159,042,023

Reported interest expense / 2007 / consolidated expensed borrowing cost original fy2007

RMB 196,433,131.36

Reported interest income / 2007 / consolidated finance interest income original fy2007

RMB 16,693,884.94

Reported capitalized borrowing cost / 2007 / consolidated capitalized borrowing cost original fy2007

RMB 40,804,430.81

Government grants recognized in non-operating income rose from CNY 46.79 million to CNY 92.95 million. The disclosed Jushi Group support schedule includes CNY 15 million for a high-technology industrial demonstration of oxy-fuel furnace drawing and CNY 2.05 million of retrospective science and technology support. Other entries cover production infrastructure, technical upgrading, natural gas, tax refunds and compensation for a power interruption. The cash-flow note separately reports CNY 45.09 million received for enterprise renovation funds and technical-upgrading rewards, compared with CNY 53.52 million in 2007. That cash line is narrower in description than the recognized grant schedule. Recognition, timing and scope should not be equated: the difference between the two amounts is not a disclosed receivable balance, nor proof that all recognized support was received in cash during 2008. These amounts describe group support and do not measure the profit attributable to listed-company shareholders.

Government grants recognized in income / 2008 / consolidated nonoperating government grants original fy2008

RMB 92,948,510.31

Government grants recognized in income / 2007 / consolidated nonoperating government grants original fy2007

RMB 46,794,860.98

Reported grant cash receipts / 2008 / consolidated operating cash technical renovation support original fy2008

RMB 45,093,600

Reported grant cash receipts / 2007 / consolidated operating cash technical renovation support original fy2007

RMB 53,519,360.98

Government grants recognized in income / 2008 / jushi oxyfuel demonstration component original fy2008

RMB 15,000,000

Government grants recognized in income / 2008 / jushi science and technology retrospective support component original fy2008

RMB 2,050,000

The consolidated accounts reported a CNY 92.75 million loss from changes in the fair value of trading financial assets in 2008, compared with a CNY 80.86 million gain in 2007. This is a securities valuation result, separate from revenue and costs of making glass fiber. At 31 December 2008, trading equity investments had a carrying value of CNY 59.19 million, against CNY 110.04 million a year earlier. The year-end holdings table identifies 2,934,754 shares in Tianwei Baobian. A closing investment balance is an asset stock, whereas the fair-value result is an annual income-statement amount; their difference is not a measure of cash proceeds or a complete reconciliation of annual valuation movements. The report also presents financial-asset holding and disposal income separately within investment income, so that line should not be substituted for the fair-value result.

Trading financial-asset fair-value result / 2008 / consolidated trading financial asset fair value original fy2008

RMB -92,746,942.87

Trading financial-asset fair-value result / 2007 / consolidated trading financial asset fair value original fy2007

RMB 80,863,910

Investment carrying value / 2008 / consolidated trading equity closing original fy2008

RMB 59,193,988.18

Investment carrying value / 2007 / consolidated trading equity closing original fy2007

RMB 110,043,435

Consolidated investment income was CNY 54.86 million in 2008, compared with CNY 9.92 million in 2007. The 2008 total combines a CNY 15.56 million equity-method loss, CNY 19.29 million of long-term equity-transfer gains, CNY 41.92 million of financial-asset holding and disposal income, and CNY 9.21 million of other investment income. These sources explain part of reported earnings but do not measure manufacturing sales or cash collected. The equity-method loss includes CNY 13.48 million attributed to Jushi Pandeng Electronic Substrate, while the long-term equity-transfer gain is attributed to CNBM Investment. The holding and disposal category is combined in the source and cannot be described wholly as realized disposal income. The investee breakdown prints a CNY 12.94 million subtotal that excludes the CNY 41.92 million holding and disposal category; adding those two printed amounts exactly matches the CNY 54.86 million consolidated investment-income total. However, the four component amounts in the source table sum to CNY 54,863,536.30, which is CNY 27 below the printed CNY 54,863,563.30 total. The three components excluding holding and disposal income likewise sum to CNY 12,943,016.67, CNY 27 below the printed CNY 12,943,043.67 subtotal. This small unexplained source difference is retained alongside the distinct subtotal scope; none of the printed amounts is silently replaced.

Consolidated investment income or loss / 2008 / consolidated total investment income original fy2008 reviewed component difference

RMB 54,863,563.3

Consolidated investment income or loss / 2007 / consolidated total investment income original fy2007 reviewed component difference

RMB 9,919,151.01

Equity method result / 2008 / consolidated equity method result original fy2008 reviewed component difference

RMB -15,561,078.16

Reported investment disposal income / 2008 / consolidated long term equity transfer gain original fy2008 reviewed component difference

RMB 19,290,280.43

Reported investment summary amount / 2008 / consolidated financial asset holding and disposal income original fy2008 reviewed component difference

RMB 41,920,519.63

Reported investment summary amount / 2008 / consolidated other investment income original fy2008 reviewed component difference

RMB 9,213,814.4

Reported investment summary amount / 2008 / investee breakdown excluding financial asset holding disposal original fy2008 reviewed component difference

RMB 12,943,043.67

The tax note reports a 25% corporate income-tax rate for the listed parent and Jushi Jiujiang, while Jushi Chengdu used a 15% rate in 2008 under the disclosed regional policy. Jushi Group obtained high-technology enterprise recognition under a notice dated 11 December 2008, valid for three years, and the report states that it qualified for a 15% corporate income-tax preference. The note also describes Jiujiang approval in March 2008 for equipment-related relief against 2007 income tax, distinct from its reported 2008 rate and the prior-year settlement correction. Shenzhen-registered Beixin and the specified subsidiaries were described as subject to an 18% transitional rate in 2008, with staged increases in later years; overseas entities followed their local tax rules. These historical entity-specific descriptions help explain different profit perimeters. They are not a single effective rate for all consolidated earnings, proof that each tax preference produced an equal cash receipt, or a statement of current tax law.

The collateral note describes Jushi Group pledging CNY 76 million of deposits for a borrowing contract stated as USD 11 million. Its closing sentence then prints a year-end borrowing balance of USD 1.1 million together with a CNY 75,180,600 equivalent. The printed dollar amounts and the yuan equivalent cannot be treated as one reconciled borrowing figure without further evidence. The source values are retained and the smaller dollar amount is not silently changed. Other disclosed security arrangements use manufacturing equipment and platinum-rhodium bushings to support borrowing. Pledged deposits, collateral carrying values and contractual security limits are different from loan principal, so they should not be added to the group borrowing balance as additional debt. The monetary-funds and cash-equivalent availability discrepancy remains separately explained.