KN(SH:603111)2023-04-28 16:00Government Subsidies and Grants - The company received government subsidies totaling 19,838,665.91 RMB, a significant increase from the previous year's 10,520,246.74 RMB[3] - Government grants related to assets and income amounted to 12,975,193.72 RMB, with an additional 3,810,000.00 RMB related to income[11] Interest and Income - Interest income rose to 23,684,312.43 RMB from 16,492,481.36 RMB in the previous year[3] - The company's income tax expense for the year was 23,528,976.93 RMB[1] Cash and Cash Equivalents - The company's cash and cash equivalents decreased to 1,154,068,382.16 RMB from 1,296,360,882.11 RMB at the beginning of the year[7] - The company lost control of Nanjing Kangni Ring Network Switch Equipment Co., Ltd., resulting in a net cash reduction of 1,878,215.76 RMB[6] Foreign Currency and Exchange - The company's foreign currency payables included 101,709.22 USD, 86,690.60 EUR, and 2,081,700.00 JPY[9] - The company's foreign currency holdings include USD 1,477,987.83, EUR 2,748,226.75, and THB 1,075,487.87, converted to RMB at the respective exchange rates[51] - The company's accounts receivable include USD 5,672,269.05 and EUR 6,250,620.33, converted to RMB at the respective exchange rates[51] Subsidiaries and Ownership - Kangni Electronics holds a 100% direct ownership stake in Kangni Electronics, located in Nanjing, focusing on rail and public transportation equipment and automatic control system design[13] - Kangni Intelligent Control has a 66% indirect ownership stake, based in Nanjing, specializing in intelligent equipment, robotics, and electric tool sales[13] - Xuzhou Kangpeng is fully owned (100% indirect) and operates in Xuzhou, dealing with rail transit equipment and software development[13] - Kangni Technology holds a 62.5% direct stake, located in Nanjing, focusing on rail vehicle connectors and electrical equipment[13] - Kangni New Energy has a 65.64% direct ownership stake, based in Nanjing, specializing in automotive parts and charging equipment[13] - Kangni Precision Machinery holds a 62.2% direct stake, located in Nanjing, focusing on precision CNC machines and mechanical parts[13] - Kangni Smart has a 100% direct ownership stake, based in Nanjing, specializing in intelligent motion devices and electric bicycles[13] - Kangni France is fully owned (100% direct) and operates in La Rochelle, France, focusing on platform safety doors and rail vehicle interior systems[13] - Kangni USA is fully owned (100% direct) and operates in Albany, USA, specializing in rail transit equipment production and maintenance[13] - Kangni Thailand is fully owned (100% direct) and operates in Bangkok, focusing on platform safety doors and screen door systems[13] Financial Instruments and Risks - The company's financial instruments are exposed to market risks, including exchange rate risk and interest rate risk, with a focus on managing these risks within acceptable limits[17] - The fair value of trading financial assets at the end of the period is measured based on the closing price of the Shenzhen Stock Exchange[18] Guarantees and Liabilities - The company provided guarantees totaling RMB 24,300,000 for several subsidiaries, with guarantee periods extending up to 2026[20] - The company's total guarantee amount (including guarantees for subsidiaries) is RMB 203,469,893.68, accounting for 5.45% of the company's net assets[102] - The company's guarantee amount for subsidiaries is RMB 316,329,760.46[102] - The company's guarantee amount for entities with a debt-to-asset ratio exceeding 70% is RMB 117,468,057.24[102] - The company's board approved a guarantee limit of RMB 520 million for subsidiaries in 2022, including RMB 50 million for Kangni Electronics, RMB 80 million for Kangni Technology, RMB 130 million for Kangni Precision, and RMB 250 million for Kangni New Energy[102] Revenue and Profit - The company's revenue is segmented into Rail Division (RMB 2,210,274,348.36), New Energy Division (RMB 621,802,492.18), and Other Divisions (RMB 462,849,365.81), totaling RMB 3,294,926,206.35[27] - The company's net profit for the year was 290,509,063.78 RMB, up from 249,769,910.31 RMB in the previous period, representing a 16.3% increase[33] - The company's total revenue from external transactions was 314,038,040.71 RMB, up from 271,285,485.52 RMB in the previous period, representing a 15.8% increase[33] Investments and Assets - The company's total investment in subsidiaries increased to 325,427,098.91 RMB, up from 240,746,888.91 RMB in the previous period, representing a 35.2% increase[41] - The company's total assets increased to 5,958,145,545.03 RMB, up from 5,099,860,206.55 RMB in the previous period, representing a 16.8% increase[33] - The company's total liabilities increased to 2,258,857,960.20 RMB, up from 1,556,246,899.22 RMB in the previous period, representing a 45.1% increase[33] Accounts Receivable and Bad Debt - The company's total bad debt provision for the risk portfolio increased to 22,357,729.88 RMB, up from 14,822,582.41 RMB in the previous period, representing a 51% increase[30] - The company's total accounts receivable for the top five debtors was 429,554,863.74 RMB, accounting for 34.11% of the total accounts receivable balance[35] - The company's bad debt losses for the period include RMB -12,583,107.10 for accounts receivable and RMB -3,677,774.93 for notes receivable[46] Cash Flow and Operating Activities - The company's cash flow from operating activities decreased by RMB 476,980,500, a 100.61% drop compared to 2021, primarily due to a decrease in cash received from sales of goods and services by RMB 711,452,900[59] - Operating cash flow was negative RMB 317.12 million, a significant decline compared to the positive RMB 103.90 million in 2021[63] Market Share and Industry Outlook - The company's market share for urban rail vehicle door systems has exceeded 50% for over a decade, and its high-speed rail door system market share has also consistently exceeded 50%[67] - China's urban rail transit industry is expected to add 3,000 kilometers of new urban rail transit operation mileage during the 14th Five-Year Plan period[76] - By the end of 2025, China's railway operating mileage is expected to reach 165,000 kilometers, with high-speed railway mileage reaching 50,000 kilometers[77] Training and Development - The company conducted leadership training for 57 managers and technical training for 1,609 professionals in 2022[79] - The company's online learning platform, KN-ELN, launched 77 internal training courses and covered 100% of new employee training[80] Legal and Compliance - The company discovered that it overpaid 2.42 billion yuan to the original 20 shareholders of Longxin Technology during the acquisition process[97] - The company filed lawsuits against 17 original shareholders of Longxin Technology for violating the asset purchase agreement[97] - The company's lawsuits against the original shareholders of Longxin Technology were initially dismissed but later ordered to continue by the Jiangsu High People's Court[97] - The company received a criminal ruling from the Jiangsu High Court in May 2022, stating that Liao Liangmao is guilty of contract fraud and must return the criminal proceeds to the company. The execution case has been filed with the Nanjing Intermediate People's Court[98] Environmental and Social Responsibility - The company completed the environmental impact assessment and obtained approval for the bracket assembly robot and auxiliary facilities project in 2022[91] - The company conducted 2 emergency environmental incident drills in 2022, with post-drill evaluations and reports to enhance emergency response capabilities[91] - The company revised its environmental emergency response plan and related management systems, which were filed with the ecological environment bureau[92] - The company actively responded to heavy pollution weather emergency emission reduction requirements[92] Financial Reporting and Audits - The company paid a total of 1,400,000.00 for the services of Suya Jincheng Accounting Firm (Special General Partnership) for the 2022 annual report audit[95] - The company renewed its contract with Suya Jincheng Accounting Firm (Special General Partnership) for the 2022 annual report audit, including financial statement audits and internal control audits[95] - The company's financial report-related internal controls were audited by Suya Jincheng Accounting Firm, which issued a standard unqualified opinion[88] Investments and Financial Products - The company invested 135 million yuan in bank wealth management products using its own funds, with an outstanding balance of 54.5 million yuan[104] - The company invested 8 million yuan in securities firm products using its own funds[104] - A principal-guaranteed income certificate with Huatai Securities yielded an annualized return of 3.35%, generating 37.08 million yuan in actual income[107] - A 14 million yuan structured deposit with China CITIC Bank yielded an annualized return of 3.25%, generating 115.93 million yuan in actual income[107] - A 12.5 million yuan structured deposit with Nanjing Bank yielded an annualized return of 3.25%, generating 175.18 million yuan in actual income[107] - A 5 million yuan structured deposit with China Merchants Bank yielded an annualized return of 3.10%, generating 38.22 million yuan in actual income[107] - A 6 million yuan structured deposit with Bank of China is set to mature on February 10, 2023, with an annualized return of 3.663%[108] - A 12.5 million yuan structured deposit with Nanjing Bank is set to mature on May 10, 2023, with an annualized return of 3.25%[108] - A 5 million yuan structured deposit with China Merchants Bank is set to mature on February 1, 2023, with an annualized return of 2.85%[108] - A 5 million yuan structured deposit with Bank of Communications is set to mature on February 7, 2023, with an annualized return of 3.10%[108] Financial Statements and Accounting Policies - The company's financial statements are prepared using consistent accounting policies and periods across all subsidiaries[130] - The company's cash equivalents are defined as investments with a short maturity period (generally within three months from the date of purchase), high liquidity, and low risk of value fluctuation[133] - The company's merger costs are determined based on the fair value of assets, liabilities, and equity securities issued, along with any contingent consideration[125] - The company uses the spot exchange rate (middle rate) published by the People's Bank of China on the transaction date for initial recognition of foreign currency transactions[134] - Foreign currency monetary items are adjusted at the balance sheet date or settlement date using the spot exchange rate, with exchange differences recognized as financial expenses or capitalized if related to qualifying assets[134] - Foreign currency non-monetary items measured at historical cost are not adjusted for exchange rate changes, while those measured at fair value have exchange differences recognized in current profit or loss[134][135] - The company translates foreign currency financial statements using the spot exchange rate at the balance sheet date for assets and liabilities, and the transaction date rate for income and expenses[135] - Financial assets are classified into three categories: amortized cost, fair value through other comprehensive income, and fair value through profit or loss[138] - Financial liabilities are classified as either fair value through profit or loss or amortized cost[139] - Financial assets are initially measured at fair value, with transaction costs either expensed or capitalized depending on the classification[141] - Financial liabilities are initially classified as fair value through profit or loss or other financial liabilities, with transaction costs either expensed or capitalized accordingly[147] - The company designates certain non-trading equity investments as fair value through other comprehensive income, with dividend income recognized in profit or loss and fair value changes in other comprehensive income[146] - For financial liabilities designated as fair value through profit or loss, changes in fair value due to the company's own credit risk are recognized in other comprehensive income[148] - The company terminates recognition of financial assets when it transfers substantially all risks and rewards of ownership, and recognizes any resulting rights or obligations as separate assets or liabilities[150] - Financial liabilities are derecognized when the present obligation is discharged, with the difference between the carrying amount and the consideration paid recognized in profit or loss[151] - Financial assets and liabilities are presented separately on the balance sheet unless specific conditions for netting are met[152] - Equity instruments are treated as equity changes when issued, repurchased, sold or cancelled, with related transaction costs deducted from equity[155] - Fair value of financial instruments is determined using active market quotes or valuation techniques with observable inputs prioritized[156] - Expected credit losses are recognized for financial assets measured at amortized cost or fair value through other comprehensive income[157] - Credit risk is considered significantly increased if the probability of default is substantially higher than at initial recognition, or if payments are overdue by 30 days or more[162] - Expected credit losses are calculated using probability-weighted present value of cash flow shortfalls based on past events, current conditions and future economic forecasts[158] - Receivables are grouped based on credit risk characteristics to calculate expected credit losses when individual assessment is not feasible[163] - Loss allowances for financial assets measured at fair value through other comprehensive income are recognized in profit or loss while adjusting other comprehensive income[163] - Inventory is classified into in-transit materials, raw materials, packaging materials, work-in-progress, and finished goods[166] - The company uses the weighted average method for valuing issued materials and finished goods[166] - Inventory is measured at the lower of cost or net realizable value, with net realizable value determined based on estimated selling price minus selling expenses and taxes[166] - The company uses the perpetual inventory system and conducts regular physical inventory counts[168] - Contract assets are recognized when the company has the right to consideration for goods transferred to customers, contingent on factors other than time passage[169] - The company classifies non-current assets or disposal groups as held for sale when they are available for immediate sale and the sale is highly probable within one year[171] - Long-term equity investments are initially measured at cost, including directly attributable costs and taxes[174] - The company uses the cost method for long-term equity investments in subsidiaries and recognizes dividends as investment income[175] - For joint ventures and associates, the company uses the equity method and adjusts the investment cost if the initial cost differs from the share of net assets[176] - The company recognizes investment income from associates and joint ventures by offsetting unrealized internal transaction profits based on the shareholding ratio before confirming investment gains or losses[178] - The company determines the basis for joint control and significant influence over investees, with joint control requiring unanimous agreement among parties sharing control[179] - Fixed assets are recognized when economic benefits are likely to flow to the company and the cost can be reliably measured[180] - Depreciation methods and rates for fixed assets include straight-line method with annual rates ranging from 4.75% to 31.67% depending on the asset category[182] - Finance lease assets are recognized based on the lower of fair value or present value of minimum lease payments, with depreciation policies consistent with owned assets[183] - Construction in progress is converted to fixed assets when the asset reaches its intended usable state, with costs including direct materials, labor, and machinery expenses[184] - Borrowing costs are capitalized when directly attributable to the acquisition, construction, or production of qualifying assets, with capitalization starting when expenditures are incurred and activities begin[186] - Capitalization of borrowing costs is suspended if the construction or production of qualifying assets is interrupted abnormally for more than 3 months[186] - Borrowing costs cease to be capitalized when the qualifying asset reaches its intended usable or saleable state[187] - The amount of borrowing costs to be capitalized is determined by the actual interest expense on specific borrowings, less any interest income from unused funds[187] - The company capitalizes interest on general borrowings based on the weighted average of accumulated asset expenditures exceeding specific borrowings, multiplied by the capitalization rate of the general borrowings[188] - For leases other than short-term and low-value asset leases, the company recognizes right-of-use assets and lease liabilities at the commencement of the lease term, with depreciation and interest expenses recognized over the lease term[189] - The company uses the cost model for subsequent measurement of right-of-use assets, which is cost less accumulated depreciation and impairment losses[190] - The company capitalizes development stage expenditures for internally developed intangible assets if they meet specific criteria, including technical feasibility and the ability to generate future economic benefits[195] - The company amortizes intangible assets with finite useful lives using the straight-line method over their useful lives, with no residual value[192] - The company conducts impairment tests for long-term assets, including goodwill and intangible assets with indefinite useful lives, at least annually[197] - The company capitalizes foreign exchange differences on principal and interest of foreign currency-specific borrowings during the capitalization period[188] - The company recognizes lease incentives and initial direct costs in the initial measurement of right-of-use assets[189] - The company amortizes software over a useful life of 2-10 years with an annual amortization rate of 50.00-10.00%[193] - The company capitalizes borrowing costs related to specific borrowings and general borrowings based on the weighted average of accumulated expenditures[188] - The company conducts impairment tests on goodwill by allocating its book value to relevant asset groups or combinations based on their fair value or book value proportions[198] - Long-term deferred expenses are amortized using the straight-line method over their beneficial periods[199] - Contract liabilities are recognized when the company receives or is entitled to receive payment from customers before transferring goods[200]