China Jushi FY2008: Projects and construction progress

The report identifies four production milestones: Chengdu line 3, a 40,000-tonne alkali-free line, in January; Tongxiang line 4, a 140,000-tonne alkali-free line, in March; and Chengdu line 4, a 60,000-tonne medium-alkali line, plus Tongxiang line 5, another 140,000-tonne alkali-free line, in July. The construction note separately records CNY 3.551 billion transferred to fixed assets during 2008 and CNY 76.65 million of construction remaining at year-end. Those accounting amounts cover more than a line's current cash spending. The construction table contains two 140,000-tonne projects with different codes, 216 and 218; equal capacity alone does not identify which code corresponds to which Tongxiang line.

Reported construction opening balance / 2008 / consolidated construction opening original fy2008

RMB 743,741,072.28

Reported construction carrying-value additions / 2008 / consolidated construction additions original fy2008

RMB 2,883,631,752.93

Reported construction transfer to fixed assets / 2008 / consolidated construction transfer original fy2008

RMB 3,550,727,748.26

Reported construction closing balance / 2008 / consolidated construction closing original fy2008

RMB 76,645,076.95

The construction note records three distinct Chengdu and Jiujiang developments. Code 221 was a 150,000-tonne powder-processing line at Chengdu, with CNY 2.67 million of closing construction; that capacity refers to powder processing, not glass fiber yarn. Code 222 concerned a 40,000-tonne retrofit of Chengdu project 214, with CNY 36.93 million of closing construction and a stated CNY 1.188 billion budget. Code 223 concerned a 350,000-tonne glass fiber production base at Jiujiang, with CNY 2.02 million of closing construction and a CNY 1.9 billion budget. The latter two were shown as self-funded and at 3% and 0.11% of budget, respectively. These year-end construction disclosures are not commissioning evidence, and do not establish that a later phase or differently named project is the same development.

Reported closing construction carrying value / 2008 / chengdu code221 powder closing original fy2008

RMB 2,674,781.86

Reported closing construction carrying value / 2008 / chengdu code222 retrofit closing original fy2008

RMB 36,926,637.57

Reported closing construction carrying value / 2008 / jiujiang code223 base closing original fy2008

RMB 2,018,591.34

Reported construction budget / 2008 / chengdu code222 retrofit budget original fy2008

RMB 1,188,376,600

Reported construction budget / 2008 / jiujiang code223 base budget original fy2008

RMB 1,900,000,000

Issuer-reported investment-to-budget ratio / 2008 / chengdu code222 retrofit investment budget ratio original fy2008

3%

Issuer-reported investment-to-budget ratio / 2008 / jiujiang code223 base investment budget ratio original fy2008

0.11%

Gross fixed assets increased from CNY 5.095 billion to CNY 9.240 billion; after accumulated depreciation of CNY 677.21 million, the closing net amount was CNY 8.563 billion. Management linked the increase to construction projects entering production and being transferred to fixed assets. The machinery category includes CNY 4.241 billion of platinum-rhodium alloy, up from CNY 2.033 billion, with CNY 2.412 billion of additions and CNY 204.52 million of reductions in that row. The related-party procurement disclosure also identifies platinum-rhodium bushings and processing services as production inputs. These assets and their changes are part of the manufacturing capital base, not simply the purchase of ordinary machinery. Management attributes the reduction in gross fixed assets to alloy amortisation during production; the alloy row and the total fixed-asset reductions have different amounts. Accounting additions and reductions should not be substituted for cash expenditure, physical alloy consumption or a disclosed allocation to individual lines.

Reported gross fixed assets / 2007 / consolidated total fixed assets gross original fy2007 reviewed asset row

RMB 5,094,610,672.93

Reported gross fixed assets / 2008 / consolidated total fixed assets gross original fy2008 reviewed asset row

RMB 9,240,372,375.86

Reported accumulated fixed-asset depreciation / 2008 / consolidated accumulated depreciation original fy2008 reviewed asset row

RMB 677,209,478.05

Reported net fixed assets / 2008 / consolidated total fixed assets net original fy2008 reviewed asset row

RMB 8,563,162,897.81

Reported precious metal assets / 2007 / machinery platinum rhodium alloy original fy2007 reviewed asset row

RMB 2,033,492,124.88

Reported precious metal assets / 2008 / machinery platinum rhodium alloy original fy2008 reviewed asset row

RMB 4,241,315,113.75

Reported fixed asset additions / 2008 / machinery platinum rhodium alloy original fy2008 reviewed asset row

RMB 2,412,344,217.06

Reported fixed asset reductions / 2008 / machinery platinum rhodium alloy original fy2008 reviewed asset row

RMB 204,521,228.19

At 31 December 2008, the fixed-asset note lists CNY 480.58 million of net assets for which property title certificates had not been completed, spread across Jushi headquarters, Jiujiang, Chengdu, Beixin Technology and Baoyu Industry. A separate intangible-asset note lists land-use rights with CNY 5.09 million of net value at Jushi headquarters and Chengdu whose certificates were also outstanding. These are accounting carrying values and disclosed title-document status, not estimated market values. Incomplete certificates do not by themselves establish that every affected operation lacked permission to produce, that production had stopped, or that the assets had no economic value. The property and land disclosures retain their separate asset categories and reporting scope.

Reported net fixed assets / 2008 / consolidated fixed assets with title certificates not completed original fy2008

RMB 480,584,267.56

Reported consolidated land-use rights net carrying value / 2008 / jushi headquarters and chengdu title certificates not completed original fy2008

RMB 5,088,653.63