China Jushi FY2014: Debt and related-party balances

Operating cash flow was positive CNY 1,663,215,648.34, investing cash flow negative CNY 1,464,564,652.96 and financing cash flow negative CNY 1,004,272,604.86. Management links the operating increase to cash from goods sales and the financing outflow to more bank-debt repayments. These are category totals, not payments for each project. Monetary funds ended at CNY 1,209,076,952.68; the comparison reflects concentrated short-term financing receipts at the end of 2013 as well as subsequent uses. Fixed assets were CNY 12,123,424,742.48 and construction in progress CNY 395,732,152.16. Management attributes the shift partly to completion of an 80,000-tonne line and refurbishment projects being transferred into fixed assets; an accounting transfer is not new cash spending or proof of full utilization. Short-term borrowing was CNY 6,070,394,123.85, current portions of non-current liabilities CNY 2,139,531,242.01 and long-term borrowing CNY 2,393,534,711.76. Repayment and reclassification explain part of the long-term decline. Bonds were CNY 2,234,294,581.96 and other current liabilities CNY 800,000,000.00, with management describing new private debt and medium-term notes alongside matured short-term paper. A decline in one category does not prove lower total refinancing exposure. The cash notes distinguish bank-acceptance deposits from funds available on demand; the debt notes separately describe maturities, rate exposure and lease commitments. Those scopes explain liquidity constraints while the manufacturing business expands, without attributing every balance or repayment to an individual factory.

Guarantees to subsidiaries incurred during 2014 were CNY 13,370,674,000.00, while the outstanding closing balance was CNY 7,509,374,000.00. The reported ratio to net assets was 186.78%. Outstanding guarantees outside the subsidiary perimeter and guarantees for shareholders, actual controllers and their related parties were separately reported as zero. Those bounded zeros do not mean there were no guarantees. Guarantees involving recipients with debt-to-asset ratios above 70% were CNY 838,774,000.00; the amount above half of net assets was CNY 5,499,208,106.28. The table totals its stated categories at CNY 6,337,982,106.28. These categories are not another amount to add to total outstanding exposure. Likewise, annual incurred guarantees and closing guarantees are different measures, rather than two loan principals or actual cash payments. The issuer says all guarantees were for subsidiaries, without allocating every balance to a particular factory or project. The absence of a reported procedural breach does not establish the absence of credit risk or future obligations.

Guarantees incurred / 2014 / subsidiaries

RMB 13,370,674,000

Outstanding subsidiary guarantees / 2014 / subsidiaries

RMB 7,509,374,000

Guarantees to net assets / 2014 / report defined

186.78 percent

Guarantees for recipients above70percentleverage / 2014 / report defined

RMB 838,774,000

Guarantees above half net assets / 2014 / report defined

RMB 5,499,208,106.28

The report says approximately 50% of sales receipts were denominated in US dollars. This is a currency exposure statement, distinct from the geographic share of overseas sales. It describes outstanding foreign-exchange forwards used as cash-flow hedges, expected to settle during 2015 and 2016. Their reported fair value was negative CNY 60,554,289.00 at year end. The financial-liability note records CNY 60,554,289.00 as a derivative liability, while the effective hedge result after tax was negative CNY 51,471,145.65 in other comprehensive income, outside the income statement's current profit. The deferred-tax note records CNY 9,083,143.35 associated with the cash-flow hedge valuation. These figures describe valuation and tax effects, not proof that the entire loss was paid in cash in 2014. The fair-value classification table labels the same CNY 60,554,289.00 as a derivative financial asset, conflicting with the liability note and negative contract valuation. The conflicting label is preserved as a source issue; no second asset is created or netted against the liability. Authorization to transact in derivatives and a policy against speculation do not mean no contracts existed.

Derivative financial liability / 2014 / consolidated forward derivative liability

RMB 60,554,289

Effective cash-flow hedge gains after tax / 2014 / owners oci

RMB -51,471,145.65

The restricted-asset note lists CNY 4,564,758,301.66 of fixed assets and CNY 47,030,732.88 of intangible assets used as collateral for borrowing. Together with restricted monetary funds of CNY 215,727,180.24, the reported restricted-asset total is CNY 4,827,516,214.78. The operating-asset amounts are carrying values, not bank valuations, loan principals or an additional cash balance. The monetary restriction and asset collateral therefore cannot simply be added to borrowings as another debt measure. The note establishes encumbrance within the disclosed scope but does not allocate all balances to named factories or identify each lender's enforcement conditions. This is relevant to flexibility in financing the manufacturing business; it is not evidence of a plant shutdown, foreclosure or an independent estimate of collateral recovery. The existing restricted-cash fact is reused rather than duplicated.

Restricted fixed assets / 2014 / consolidated

RMB 4,564,758,301.66

Restricted intangible assets / 2014 / consolidated

RMB 47,030,732.88

Restricted assets / 2014 / consolidated

RMB 4,827,516,214.78

The issuer reports that 64.42% of debt matured in less than one year at December 2014, compared with 56.84% a year earlier. That is its reported debt measure, not a ratio calculated against every operating payable. Existing short-term borrowing of CNY 6,070,394,123.85 comprised pledged borrowing of CNY 162,887,100.00, mortgaged borrowing of CNY 790,000,000.00, guaranteed borrowing of CNY 3,199,887,884.53 and unsecured credit borrowing of CNY 1,917,619,139.32. Long-term borrowing, excluding the current portion, was CNY 2,393,534,711.76: CNY 408,464,719.59 mortgaged and CNY 1,985,069,992.17 guaranteed. A further CNY 1,981,098,110.19 of long-term borrowing was due within one year. Guarantees describe credit support, not another borrowing balance to add. Fixed-rate interest-bearing borrowing accounted for about 33.12%, down from 46.69% in the prior-year comparison. These maturity and rate disclosures describe refinancing and interest-cost exposure while the manufacturing business expands. They do not establish future lender availability, a default or the interest-inclusive cost of refinancing. The table is labeled an analysis of undiscounted contractual cash flows; its displayed borrowing balances are not a reason to invent undisclosed future interest payments.

Bank borrowing category / 2014 / short term pledged

RMB 162,887,100

Bank borrowing category / 2014 / short term mortgaged

RMB 790,000,000

Bank borrowing category / 2014 / short term guaranteed

RMB 3,199,887,884.53

Bank borrowing category / 2014 / short term unsecured

RMB 1,917,619,139.32

Bank borrowing category / 2014 / noncurrent mortgaged

RMB 408,464,719.59

Bank borrowing category / 2014 / noncurrent guaranteed

RMB 1,985,069,992.17

Long-term loans due within one year / 2014 / consolidated

RMB 1,981,098,110.19

Reported debt due under one year / 2014 / issuer reported debt

64.42 percent

Reported debt due under one year / 2013 / issuer reported debt prior year comparison

56.84 percent

Reported fixed-rate borrowing share / 2014 / issuer interest bearing borrowing

33.12 percent

Reported fixed-rate borrowing share / 2013 / issuer interest bearing borrowing prior year comparison

46.69 percent

The short-term instrument rollforward reports CNY 800,000,000.00 issued and CNY 1,437,953,999.99 repaid during 2014, leaving the already recorded CNY 800,000,000.00 closing balance. The note identifies an unsecured CNY 100,000,000.00 issuer instrument issued on April 10 and an unsecured CNY 700,000,000.00 Jushi Group instrument issued on October 13, each with a 365-day term. Those new receipts are not automatically permanent funding for an individual factory. The noncurrent bond table includes the existing 2012 bond at CNY 1,192,347,200.04 carrying value; two three-year instruments at CNY 500,000,000.00 and CNY 200,000,000.00; a five-year instrument with CNY 300,000,000.00 face value and CNY 296,054,881.92 closing carrying value; and a directed instrument at CNY 45,892,500.00. The source does not give a term for that last row. The noncurrent rollforward's new issue amount is CNY 1,041,392,500.00, with CNY 1,912,000.10 discount or premium amortization, reconciling the opening and closing carrying amounts. Face values, issue proceeds, amortized carrying values and annual cash received from bond issuance have separate measures. The existing total CNY 2,234,294,581.96 is reused, rather than adding these instrument rows to it as further debt.

Short financing paper issue / 2014 / consolidated

RMB 800,000,000

Short financing paper repayments / 2014 / consolidated

RMB 1,437,953,999.99

Nominal debt balance / 2014 / 2012 glass fiber bond

RMB 1,192,347,200.04

Nominal debt balance / 2014 / 2014 ppn002

RMB 500,000,000

Nominal debt balance / 2014 / 2014 ppn001

RMB 200,000,000

Nominal debt balance / 2014 / 2014 jushi mtn001

RMB 296,054,881.92

Nominal debt balance / 2014 / reported noncurrent directed instrument

RMB 45,892,500

Noncurrent instrument issue amount / 2014 / consolidated

RMB 1,041,392,500

Bond carrying-value amortization / 2014 / consolidated

RMB 1,912,000.1

Finance-lease payables classified as noncurrent were CNY 238,863,835.11. The current long-term-payable category was CNY 158,433,131.82; together with current long-term borrowing, it explains the existing current noncurrent-liability total. Noncurrent long-term payables also include CNY 186,396.98 labeled other, producing a total of CNY 239,050,232.09. That total cannot all be renamed lease principal. Future minimum finance-lease payments were CNY 429,280,958.98, including CNY 172,976,885.41 within one year, CNY 117,612,642.00 in the second year, CNY 117,614,655.15 in the third and CNY 21,076,776.42 beyond three years. These are commitments measured at year end, not payments already made in those future years. The note reports CNY 31,797,595.07 of unrecognized finance charges. Minimum payments less that charge match total noncurrent long-term payables plus the current portion; using only the specifically labeled noncurrent lease balance leaves a CNY 186,396.98 difference. Although it equals the other-payable row, the text does not explicitly classify that row as leasing, so the narrower lease bridge remains unresolved. Gross leased production assets of CNY 1,527,870,094.12 and net carrying value of CNY 887,544,084.93 describe machinery and precious-metal resources, not another cash financing receipt.

Finance-lease payable / 2014 / consolidated

RMB 238,863,835.11

Long-term payables due within one year / 2014 / consolidated

RMB 158,433,131.82

Long-term payables / 2014 / other noncurrent

RMB 186,396.98

Long-term payables / 2014 / consolidated noncurrent total

RMB 239,050,232.09

Minimum finance-lease payments / 2014 / future total at report date

RMB 429,280,958.98

Minimum finance-lease payments / 2014 / future within one year

RMB 172,976,885.41

Minimum finance-lease payments / 2014 / future second year

RMB 117,612,642

Minimum finance-lease payments / 2014 / future third year

RMB 117,614,655.15

Minimum finance-lease payments / 2014 / future beyond three years

RMB 21,076,776.42

Unrecognised lease finance charges / 2014 / consolidated

RMB 31,797,595.07

Three disclosed sale-and-leaseback contracts concern existing production equipment. In the first, Jushi Group transferred equipment valued at CNY 400,189,851.46 to CMB Financial Leasing and leased it back for three years; total rent was CNY 400,189,851.46, first rent CNY 100,189,851.46 and Jushi Chengdu was the guarantor. In the second, Jushi Group equipment valued at CNY 353,260,957.65 was transferred to the same lessor for a four-year arrangement with CNY 300,000,000.00 total rent and CNY 53,260,957.65 first rent; the listed issuer, then China Fiberglass, guaranteed the debt. In the third, Jushi Chengdu transferred specialized production plates, equipment and platinum-rhodium bushings valued at CNY 125,645,400.00 to Bank of Communications Financial Leasing. Its term was 60 months, total rent CNY 143,161,216.75 and first rent CNY 1,601,066.67; Jushi Group was the guarantor. In each description, equipment stayed with its operator, with no physical delivery to the lessor, and ownership was deemed transferred when the lessor paid. These arrangements explain financing against operating resources rather than evidence that a factory stopped producing. The annual cash-flow note separately reports CNY 300,000,000.00 received from sale and leaseback in 2014. Contract asset values and total rents are not all current-year cash receipts, and contract identifiers do not independently establish that every agreement was newly signed in 2014. Counterparties are limited to the issuer's disclosed relationships.

Lease contract equipment value / 2014 / jushi group cmb first

RMB 400,189,851.46

Lease contract total rent / 2014 / jushi group cmb first

RMB 400,189,851.46

Lease contract first rent / 2014 / jushi group cmb first

RMB 100,189,851.46

Lease contract equipment value / 2014 / jushi group cmb second

RMB 353,260,957.65

Lease contract total rent / 2014 / jushi group cmb second

RMB 300,000,000

Lease contract first rent / 2014 / jushi group cmb second

RMB 53,260,957.65

Lease contract equipment value / 2014 / chengdu bocom

RMB 125,645,400

Lease contract total rent / 2014 / chengdu bocom

RMB 143,161,216.75

Lease contract first rent / 2014 / chengdu bocom

RMB 1,601,066.67

Lease contract term / 2014 / chengdu bocom

60 months

Sale-and-leaseback financing receipts / 2014 / consolidated

RMB 300,000,000

Finance expense was CNY 781,789,011.49. Its disclosed components were CNY 770,862,143.85 interest expense, less CNY 43,181,554.56 interest income, plus CNY 30,605,192.72 exchange loss and CNY 23,503,229.48 other costs. The original interest-income row carries a negative sign, consistent with its deduction in the total. This net finance expense is not a cash-interest-only measure. Separately, CNY 47,786,702.18 of borrowing costs was capitalized, using disclosed capitalization rates of 5% to 6%. Under the stated accounting policy, qualifying borrowing costs enter the associated asset's cost; other borrowing costs enter current profit or loss. The capitalized amount cannot be presented as a new cash inflow or added to an individual project's budget without allocation evidence. Current finance costs matter because debt funding supports production assets and expansion while interest and exchange effects reduce reported earnings. Exchange loss in current profit, exchange effects on cash and cash-flow hedge amounts in other comprehensive income have separate categories; one is not a second copy of another.

Finance expenses / 2014 / consolidated

RMB 781,789,011.49

Interest expense / 2014 / consolidated

RMB 770,862,143.85

Interest income deduction in finance expense / 2014 / consolidated

RMB -43,181,554.56

Exchange loss in finance expense / 2014 / consolidated

RMB 30,605,192.72

Other finance expense / 2014 / consolidated

RMB 23,503,229.48

Capitalised interest in the year / 2014 / consolidated

RMB 47,786,702.18

Parent cash fell from CNY 189,104,081.98 to CNY 86,471,772.43. The cash-flow statement reports positive operating cash flow of CNY 98,053,800.91 and investing cash flow of CNY 297,167,777.74, offset by negative financing cash flow of CNY 497,853,888.20, producing a CNY 102,632,309.55 cash decline. Parent borrowing receipts were CNY 1,750,000,000.00 and repayments CNY 2,000,000,000.00; the combined dividend, profit-distribution and interest payment line was CNY 247,853,888.20, not a shareholder-dividend-only measure. At year end the parent balance sheet shows CNY 700,000,000.00 short-term borrowing, CNY 100,000,000.00 of noncurrent liabilities due within one year, CNY 100,000,000.00 of other current liabilities and CNY 1,692,347,200.04 bonds. The noncurrent long-term-borrowing closing cell is blank; the CNY 1,000,000,000.00 shown in that row belongs to the prior balance. Parent annual borrowing flows, these closing categories and consolidated debt have different periods and entities and are not added together as new external financing. The cash comparison explains liquidity at the listed issuer without attributing all consolidated factory spending to the parent.

Consolidated monetary funds / 2014 / parent company

RMB 86,471,772.43

Net cash from operating activities / 2014 / parent company

RMB 98,053,800.91

Net cash from investing activities / 2014 / parent company

RMB 297,167,777.74

Net cash from financing activities / 2014 / parent company

RMB -497,853,888.2

Reported consolidated borrowing cash receipts / 2014 / parent company

RMB 1,750,000,000

Reported consolidated debt repayment cash / 2014 / parent company

RMB 2,000,000,000

Reported consolidated cash for dividends profit distributions or interest / 2014 / parent company

RMB 247,853,888.2

Short-term borrowings / 2014 / parent company

RMB 700,000,000

Bonds payable / 2014 / parent company

RMB 1,692,347,200.04

The foreign-currency monetary-item note reports translated short-term borrowings of CNY 750,775,280.95. This is a currency-denominated subset of the previously reported consolidated short-term debt, not an extra borrowing balance. Its US-dollar row translates to CNY 746,872,790.53. Three smaller rows contain unresolved source labels: the row labeled Hong Kong dollars pairs 311,652.00 with a rate of 7.4556 and CNY 2,323,552.65; the row labeled Korean won pairs 30,000,000.00 with 0.0514 and CNY 1,542,000.00; and the row labeled Indian rupees pairs 15,825.95 with 2.3340 and CNY 36,937.77. In the same note, the other Hong Kong-dollar, Korean-won and Indian-rupee entries use 0.7889, 0.0057 and 0.0954, while 7.4556, 0.0514 and 2.3340 occur for euros, Japanese yen and Brazilian reais. The original images confirm these printed combinations. They do not establish which label or rate should be corrected, so no replacement currency exposure is invented. The four reported translated rows sum to the printed subset total. Egypt's operating entity is described as based in Suez and using Egyptian pounds as its functional currency; neither that city nor the currency supplies a factory street address or coordinates. Currency settlement exposure, overseas sales geography and the existing forward-hedge valuation remain different measures.

Foreign currency note short borrowing translated / 2014 / consolidated currency subset as reported

RMB 750,775,280.95

Foreign currency note short borrowing translated / 2014 / printed hkd label unresolved

RMB 2,323,552.65

Foreign currency note short borrowing translated / 2014 / printed krw label unresolved

RMB 1,542,000

Foreign currency note short borrowing translated / 2014 / printed inr label unresolved

RMB 36,937.77

Jushi Group completed an ultra-short-term financing-note issue on 21 January 2015, with a CNY 300,000,000.00 issue amount, a 270-day term and a 4.7% issue rate; interest began on 22 January. This subsequent issue explains a later funding event relevant to refinancing and expansion. It is not included as another FY2014 cash receipt or added to the FY2014 closing debt instruments already described. The disclosure does not allocate the proceeds to a particular overseas line or guarantee the availability of longer-term financing. The March 2015 board dividend proposal likewise remains a subsequent capital-allocation proposal rather than evidence that the FY2014 distribution was paid during 2014.

Subsequent financing issue amount / 2015 / jushi group january2015 issue

RMB 300,000,000

Subsequent financing term / 2015 / jushi group january2015 issue

270 days

Subsequent financing issue rate / 2015 / jushi group january2015 issue

4.7%

The FY2014 tax note lists 25% and 15% domestic corporate-income-tax rates and describes specific preferential treatment rather than one group-wide rate. The issuer says Jushi Group continued high-technology-enterprise recognition following an October 2014 notice and continued to enjoy a 15% income-tax rate. Jushi Jiujiang's disclosed high-technology recognition ran from 8 July 2013 to 7 July 2016, with the same preferential rate during that validity period. Chengdu's local tax approval of 17 March 2014 covered the Western Development preference from 1 January 2013 to 31 December 2020 at 15%. The electronic-substrate subsidiary passed a high-technology re-examination and held a three-year certificate, also with a disclosed 15% rate during its validity. The note does not supply an exact start-and-end date for that certificate here. Hong Kong and other overseas entities followed their registration jurisdictions' tax rules; no foreign rate is invented. These historical eligibility disclosures help explain differing subsidiary tax effects in the existing tax reconciliation. They do not establish today's rates, perpetual qualification or a consolidated effective rate of 15%.

Disclosed income-tax concession rate / 2014 / jushi group

15%

Disclosed income-tax concession rate / 2014 / jushi jiujiang

15%

Disclosed income-tax concession rate / 2014 / jushi chengdu

15%

Disclosed income-tax concession rate / 2014 / jushi electronic substrate

15%