Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2018shares | |
Document and Entity Information | |
Entity Registrant Name | CHINA NEW BORUN Corp |
Entity Central Index Key | 0001490366 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 25,725,000 |
Document Fiscal Year Focus | 2018 |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Current assets | |||
Cash | $ 90,750,611 | ¥ 624,211,652 | ¥ 728,249,297 |
Trade accounts receivable, net of allowance for doubtful accounts of RMB nil and RMB nil ($ nil), as of December 31, 2017 and 2018, respectively (note 4) | 18,463,572 | 126,998,338 | 509,737,390 |
Inventories (note 5) | 209,541,532 | 1,441,293,500 | 434,185,431 |
Advance to suppliers (note 6) | 32,647 | 224,554 | 562,196,185 |
Other receivables (note 7) | 27,905,665 | 191,944,065 | 66,391,456 |
Prepaid expenses | 796,265 | 5,476,967 | 2,781,503 |
Total current assets | 347,490,292 | 2,390,149,076 | 2,303,541,262 |
Property, plant and equipment, net (note 8) | 87,511,216 | 601,930,062 | 766,055,948 |
Land use rights, net (note 9) | 18,019,187 | 123,941,714 | 127,627,629 |
Total assets | 453,020,695 | 3,116,020,852 | 3,197,224,839 |
Current liabilities | |||
Trade accounts payable | 1,478,181 | 10,167,408 | 36,890,637 |
Accrued expenses and other payables (note 10) | 6,061,539 | 41,693,201 | 54,770,180 |
Income taxes payable | 4,416,472 | 30,377,905 | 66,717,710 |
Short-term borrowings (note 11) | 106,340,912 | 731,446,715 | 698,667,011 |
Bonds payable - current portion | 14,538,436 | 100,000,000 | |
Total current liabilities | 132,835,540 | 913,685,229 | 857,045,538 |
Bonds payable, outstanding principal amount of RMB300,000,000 ($43,615,301), bearing fixed annual interest rate of 6.5%, with maturity on November 2, 2021 (less unamortized debt issuance costs based on imputed interest rate of 6.75% of RMB 5,419,012 and RMB 4,005,357 ($582,316) as of December 31, 2017 and 2018, respectively) (note 12) | 28,494,555 | 195,994,643 | 294,580,988 |
Total liabilities | 161,330,095 | 1,109,679,872 | 1,151,626,526 |
Commitments and contingencies (note 15) | |||
Shareholders' equity | |||
Ordinary share-par value of RMB0.0068259; 25,725,000 shares authorized, issued and outstanding as of December 31, 2017 and 2018, respectively | 25,725 | 175,596 | 175,596 |
Additional paid-in capital | 68,059,098 | 468,132,187 | 468,132,187 |
Retained earnings-appropriated (note 2) | 25,567,986 | 175,864,784 | 171,207,400 |
Retained earnings-unappropriated | 198,116,895 | 1,362,711,200 | 1,406,583,669 |
Accumulated other comprehensive loss | (79,104) | (542,787) | (500,539) |
Total shareholders' equity | 291,690,600 | 2,006,340,980 | 2,045,598,313 |
Total liabilities and shareholders' equity | $ 453,020,695 | ¥ 3,116,020,852 | ¥ 3,197,224,839 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) | Dec. 31, 2018USD ($)shares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥) |
CONSOLIDATED BALANCE SHEETS | |||||
Trade accounts receivable, allowance for doubtful accounts | $ 0 | ¥ 0 | ¥ 0 | ||
Debt instrument, face amount | $ 43,615,301 | ¥ 300,000,000 | $ 43,615,301 | ¥ 300,000,000 | |
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | |
Unamortized debt issuance costs interest rate (as a percentage) | 6.75% | 6.75% | 6.75% | 6.75% | |
Debt issuance costs | $ 582,316 | ¥ 4,005,357 | ¥ 5,419,012 | ¥ 6,830,549 | |
Ordinary share, par value (in CNY per share) | ¥ / shares | ¥ 0.0068259 | ¥ 0.0068259 | |||
Ordinary share, shares authorized | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 | |
Ordinary share, shares issued | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 | |
Ordinary share, shares outstanding | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | 12 Months Ended | |||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
Revenues | $ 262,256,112 | ¥ 1,803,881,198 | ¥ 2,140,871,979 | ¥ 2,132,680,185 |
Cost of goods sold | 241,710,246 | 1,662,560,180 | 1,907,898,919 | 1,950,614,338 |
Gross profit | 20,545,866 | 141,321,018 | 232,973,060 | 182,065,847 |
Operating expenses (income), net: | ||||
Selling | 512,307 | 3,523,809 | 3,657,645 | 4,164,703 |
General and administrative | 7,696,043 | 52,935,840 | 49,015,721 | 48,413,749 |
Government subsidy | 0 | (117,216,600) | 0 | |
Others, net | (144,500) | (993,917) | (104,649) | (4,086,154) |
Impairment losses of property, plant and equipment | 7,268,586 | 49,995,656 | 0 | 0 |
Total operating expenses(income), net | 15,332,436 | 105,461,388 | (64,647,883) | 48,492,298 |
Income from operations | 5,213,429 | 35,859,630 | 297,620,943 | 133,573,549 |
Interest income | 556,920 | 3,830,674 | 4,154,446 | 4,043,903 |
Interest expense | (9,069,499) | (62,382,917) | (66,125,464) | (52,669,508) |
Income (loss) before income tax expenses | (3,299,150) | (22,692,613) | 235,649,925 | 84,947,944 |
Income tax (credit) expenses (note 14) | ||||
Current | 2,402,109 | 16,522,472 | 58,912,481 | 19,481,789 |
Deferred | ¥ | 1,755,197 | |||
Income tax expenses | 2,402,109 | 16,522,472 | 58,912,481 | 21,236,986 |
Net income (loss) attributable to ordinary shareholders | (5,701,259) | (39,215,085) | 176,737,444 | 63,710,958 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment | (6,142) | (42,248) | 61,376 | (59,426) |
Other comprehensive income (loss) | (6,142) | (42,248) | 61,376 | (59,426) |
Total comprehensive income attributable to ordinary shareholders | $ (5,707,401) | ¥ (39,257,333) | ¥ 176,798,820 | ¥ 63,651,532 |
Earnings (loss) per share (note 2): | ||||
Basic and Diluted (in CNY or dollars per share) | (per share) | $ (0.22) | ¥ (1.52) | ¥ 6.87 | ¥ 2.48 |
Weighted average ordinary shares outstanding (note 2): | ||||
Basic and diluted (in shares) | shares | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | Ordinary ShareUSD ($)shares | Ordinary ShareCNY (¥)shares | Additional Paid-in CapitalUSD ($) | Additional Paid-in CapitalCNY (¥) | Retained Earnings-AppropriatedUSD ($) | Retained Earnings-AppropriatedCNY (¥) | Retained Earnings-UnappropriatedUSD ($) | Retained Earnings-UnappropriatedCNY (¥) | Accumulated Other Comprehensive LossUSD ($) | Accumulated Other Comprehensive LossCNY (¥) | USD ($)shares | CNY (¥)shares |
Beginning Balance at Dec. 31, 2015 | ¥ 175,596 | ¥ 468,132,187 | ¥ 147,162,560 | ¥ 1,190,180,107 | ¥ (502,489) | ¥ 1,805,147,961 | ||||||
Beginning Balance (in shares) at Dec. 31, 2015 | shares | 25,725,000 | 25,725,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) for the year | 63,710,958 | 63,710,958 | ||||||||||
Transfer to statutory reserves | 6,371,096 | (6,371,096) | ||||||||||
Foreign currency translation adjustment | (59,426) | (59,426) | ||||||||||
Ending Balance at Dec. 31, 2016 | ¥ 175,596 | 468,132,187 | 153,533,656 | 1,247,519,969 | (561,915) | 1,868,799,493 | ||||||
Ending Balance (in shares) at Dec. 31, 2016 | shares | 25,725,000 | 25,725,000 | ||||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) for the year | 176,737,444 | 176,737,444 | ||||||||||
Transfer to statutory reserves | 17,673,744 | (17,673,744) | ||||||||||
Foreign currency translation adjustment | 61,376 | 61,376 | ||||||||||
Ending Balance at Dec. 31, 2017 | ¥ 175,596 | 468,132,187 | 171,207,400 | 1,406,583,669 | (500,539) | ¥ 2,045,598,313 | ||||||
Ending Balance (in shares) at Dec. 31, 2017 | shares | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net income (loss) for the year | (39,215,085) | $ (5,701,259) | ¥ (39,215,085) | |||||||||
Transfer to statutory reserves | 4,657,384 | (4,657,384) | ||||||||||
Foreign currency translation adjustment | (42,248) | (6,142) | (42,248) | |||||||||
Ending Balance at Dec. 31, 2018 | $ 25,725 | ¥ 175,596 | $ 68,059,098 | ¥ 468,132,187 | $ 25,567,986 | ¥ 175,864,784 | $ 198,116,895 | ¥ 1,362,711,200 | $ (79,104) | ¥ (542,787) | $ 291,690,600 | ¥ 2,006,340,980 |
Ending Balance (in shares) at Dec. 31, 2018 | shares | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
Net income/(loss) | $ (5,701,259) | ¥ (39,215,085) | ¥ 176,737,444 | ¥ 63,710,958 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Interest income on held-to-maturity debt securities | (1,587,889) | |||
Impairment loss of property, plant and equipment | 7,268,586 | 49,995,656 | 0 | 0 |
Gain on disposal of property, plant and equipment | (3,743,590) | |||
Deferred income taxes | 1,755,197 | |||
Depreciation | 15,485,648 | 106,515,229 | 112,816,310 | 115,744,856 |
Amortization expense | 535,874 | 3,685,914 | 2,832,576 | 4,828,862 |
Amortized debt issuance costs associated to the bonds | 205,523 | 1,413,655 | 1,411,537 | 672,831 |
Changes in operating assets and liabilities: | ||||
Trade accounts receivable | 47,024,324 | 323,448,304 | (94,115,818) | 99,898,697 |
Inventories | (146,417,761) | (1,007,108,069) | 168,443,408 | (163,787,747) |
Prepaid expenses and other current assets | 81,304,725 | 559,239,834 | (300,755,630) | 87,668,833 |
Trade accounts payable | (3,885,140) | (26,723,230) | 13,247,376 | 1,351,129 |
Accrued expenses and other payables | (10,782,480) | (74,165,333) | 5,219,296 | (32,647,208) |
Income tax payable | (6,241,769) | (42,932,879) | 54,475,346 | (13,932,965) |
Net cash provided by/ (used in) operating activities | (21,203,729) | (145,846,004) | 140,311,845 | 159,931,964 |
Cash flows from investing activities: | ||||
Purchases of property, plant and equipment and construction in progress | (950,000) | (3,592,397) | ||
Proceeds from disposal of property, plant and equipment | 1,107,102 | 7,615,000 | 3,743,590 | |
Net cash provided by/ (used in) investing activities | 1,107,102 | 7,615,000 | (950,000) | 151,193 |
Cash flows from financing activities: | ||||
Proceeds from borrowings | 4,971,180 | 34,193,359 | 880,867,011 | 961,870,000 |
Repayments of borrowings | (1,087,370,000) | (893,900,000) | ||
Settlement of bonds | (221,279,238) | |||
Proceeds from the issuance of bonds, net of debt issuance costs paid | 292,924,529 | |||
Net cash provided by/(used in) financing activities | 4,971,180 | 34,193,359 | (206,502,989) | 139,615,291 |
Effect of foreign currency exchange translation | (5,282) | (36,333) | 61,376 | 10 |
Net increase/ (decrease) in cash | (15,125,447) | (104,037,645) | (67,079,768) | 299,698,458 |
Cash-beginning of year | 105,876,058 | 728,249,297 | 795,329,065 | 495,630,607 |
Cash-end of year | 90,750,611 | 624,211,652 | 728,249,297 | 795,329,065 |
Supplemental disclosure of cash flow information: | ||||
Cash paid for income taxes | 2,402,109 | 16,522,472 | 4,437,138 | 33,414,753 |
Cash paid for interest | $ 9,069,499 | ¥ 62,382,917 | 64,796,999 | 76,584,346 |
Non-cash investing activities: | ||||
Accrued fixed asset purchases | ¥ 1,936,729 | |||
Offsetting other payables to the debt securities issuer for the principal amounts of held-to-maturity debt securities to be received upon matured | 98,720,762 | |||
Non-cash financing activities: | ||||
Offsetting other receivables from the bonds holder upon the settlement of bonds | ¥ 98,720,762 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Description of Business | |
Description of Business | 1. Description of Business The accompanying consolidated financial statements include the financial statements of China New Borun Corporation (“New Borun”), Golden Direction Limited (“Golden Direction”), China High Enterprises Limited (“China High”), Shandong Borun Industrial Co., Ltd. (“Shandong Borun”) and Daqing Borun Biotechnology Co., Ltd (“Daqing Borun”). New Borun, Golden Direction, China High, Shandong Borun and Daqing Borun are collectively referred to as the “Company”. New Borun, the holding company, was incorporated in Cayman Islands on December 21, 2009. Golden Direction was incorporated in the British Virgin Islands on March 28, 2008. Effective as of March 31, 2010, New Borun consummated a share exchange agreement with Golden Direction whereby New Borun acquired 100% of the voting capital stock of Golden Direction. As of the date of that agreement, (1) Golden Direction became a wholly owned subsidiary of New Borun and (2) Golden Direction held approximately 74.24% of the voting capital stock of China High Enterprises Limited, or China High, our Hong Kong holding company. Effective as of March 31, 2010, New Borun and Golden Direction consummated a share exchange agreement whereby New Borun through Golden Direction acquired the remaining 25.76% equity interest of China High. China High was incorporated in Hong Kong’s Special Administrative Region on July 15, 2008. Weifang Great Chemical, Inc. (“WGC”) was established as a limited liability company on March 21, 2001 in China’s Shandong Province under the laws of the People’s Republic of China (“PRC”). For restructuring and reorganization purposes, pursuant to an equity interest acquisition agreement, China High acquired all of the equity interests of WGC on September 30, 2008. In December 2008, China High through WGC acquired a 100% equity interest in Shandong Borun, the operating company. Shandong Borun was the predecessor of the Company and operated all of the business of the Company prior to a restructuring in 2008 (the “Restructuring”). Shandong Borun was set up in the city of Shouguang in China’s Shandong Province by Mr. Jinmiao Wang (“Mr. Wang”) and his family members (collectively the “Wang Family”) on December 1, 2000. The establishment of China High and the acquisition of Shandong Borun through WGC has been accounted for as a recapitalization or reorganization of Shandong Borun since the stockholders consisted of the same majority shareholders (no change in control) and there was no change in management immediately following the completion of the transaction in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805-50-15-6, “Business Combinations” . On July 9, 2008, Shandong Borun acquired all of the equity interests in Daqing Borun, a company formerly called Daqing Anxin Tongwei Alcohol Manufacturing Co., Ltd. (Anxin Tongwei), a limited liability company established under the laws of the PRC on September 20, 2004 in Daqing city, Heilongjiang Province, China. The total purchase price of RMB139,000,000 was allocated based on the estimated fair values of the assets acquired and liabilities assumed at the date of purchase in accordance with FASB ASC Topic 805, “Business Combinations”. Anxin Tongwei began production of edible alcohol in 2005; however, due to operation and financing problems, Anxin Togwei ceased production and applied for bankruptcy on July 26, 2007. On July 1, 2008, the Court made the verdict to approve that certain Acquisition Agreement between Shandong Borun and Anxin Tongwei on June 26, 2008, and on July 9, 2008 the parties completed the acquisition pursuant to which Anxin Tongwei became a wholly owned subsidiary of Shandong Borun. As of the acquisition date, Anxin Tongwei had been idle for more than one year, with no management personnel or production, employees or revenue. Accordingly, under FASB ABC Topic 805, since the acquired set of assets exclude several key items (employees, processes and customers), the Company concluded that the acquired set of assets does not constitute a business and, as a result, accounted for the transaction as an asset acquisition. Subsequent to the acquisition, we spent more than a year and approximately RMB110 million in facility improvements, including improvements to machinery and equipment, in order to replace the previous owner’s “dry” method manufacturing process with our in-house developed Borun Wet Process and we also changed the name of Anxin Tongwei to Daqing Borun Biotechnology Co., Ltd. (since we regard “corn deep-processing” as a part of the biotechnology field, we named it accordingly). The establishment of New Borun on December 21, 2009 and acquisition through share exchange between New Borun, Golden Direction and China High effective as of March 31, 2010 has been accounted for as a recapitalization or reorganization since the stockholders consisted of the same majority shareholders (no change in control) and there was no change in management immediately following the completion of the transaction in accordance with the provision of FASB ASC Topic 805-50-15-6. Accordingly, the transaction is treated as a recapitalization or reorganization of China High and the assets and liabilities and the historical operations that are reflected in the financial statements are those of China High and its subsidiaries and are recorded at the historical cost basis. New Borun, Golden Direction and China High are holding companies. Financial statements and financial information presented for prior years have been retrospectively adjusted to furnish comparative information for periods during which Golden Direction, China High, WGC and Shandong Borun were under common control. On November 15, 2012, WGC merged into Shandong Borun, as a result of the merger WGC is deregistered and China High obtained 100% direct control over Shandong Borun. During the year ended December 31, 2016, the Company has disposed all long-lived assets of foam insulation business segment and exited the business accordingly. The income (loss) before income tax expenses of foam insulation business segment for the years ended December 31, 2015 and 2016 were RMB(6,891,333) and RMB810,840, respectively, which represented (4%) and 1% to the Company’s consolidated income before income tax expenses for the years ended December 31, 2015 and 2016, respectively. The disposal of foam insulation business does not represent a strategic shift that had a major effect on our operations and financial results. As such, the disposal of long-lived assets of foam insulation business segment have not been reported in discontinued operations as required by FASB ASC Topic 205-20, “Presentation of Financial Statements—Discontinued Operations” in the consolidated financial statements for the periods presented. The Company develops and operates its business through Shandong Borun and Daqing Borun. The Company is principally engaged in manufacture and distribution of edible alcohol and chemical products. The Company also produces Distillers Dried Grains with Solubles high-protein feed (“DDGS Feed”), liquid carbon dioxide and crude corn oil as by-products of edible alcohol production. The Company’s chemical products are chlorinated polyethylene (“CPE”) and 2-Acrylamido-2-methylpropane sulfonic acid (“AMPS”) that are widely used in a broad range of industries. The Company operates and manages its business as two reportable segments: “Corn-base edible alcohol and its by-products” and “Chemical products”. The “Chemical products” segment comprises of AMPS, CPE and foam insulation (disposed during the year ended December 31, 2016). |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation and Presentation The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements include the financial statements of the New Borun, Golden Direction, China High, Shandong Borun and Daqing Borun. All significant inter-company transactions and balances have been eliminated upon consolidation. Foreign Currency Translation The Company’s financial statements are presented in Chinese Renminbi (“RMB”), which is the Company’s reporting currency. The functional currency of the Company’s subsidiary in Hong Kong is the U.S. dollar while the functional currency of the Company’s subsidiaries in the PRC is RMB. In accordance with FASB ASC Topic 830, “Foreign Currency Matters” , the Company translates the assets and liabilities into RMB using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from U.S. dollar into RMB are recorded in shareholders’ equity as part of accumulated other comprehensive income. Convenience Translation into United States Dollar Amounts The Company reports its financial statements using the RMB. The Dollar amounts disclosed in the accompanying financial statements are presented solely for the convenience of the reader, and have been converted at the rate of RMB 6.87832 to one Dollar ($), which is published by OANDA. Such translations should not be construed as representations that the RMB amounts represent, have been, or could be, converted into, $ at that or any other rate. Use of Estimates The preparation and presentation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. Cash Cash includes cash on hand, and cash accounts and interest-bearing savings accounts in the financial institutions. Accounts Receivable Accounts receivable are carried at the amounts invoiced to customers less allowance for doubtful accounts, if any. When applicable, the Company estimates an allowance based on a review of the payment history of individual customers and future expectations of economic conditions of those customers. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. Inventories Inventories are stated at the lower of cost or net realizable value. The cost of a general inventory item is determined using the weighted average method. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. Cost of work in progress and finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. From November 2013, the Company initiated a “bill and hold” arrangement with the granaries whereby the Company took the possession of the corn upon purchase and storage of the corn by the granaries. Purchased corn are recognized as inventories when the significant risks and rewards of ownership are considered to be transferred to the Company upon full payment of the corn price made to the granaries and the quantity and quality of the purchased corn had been inspected and acknowledged by the Company. Property, Plant, and Equipment Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Depreciation is calculated using the straight-line method (after taking into account their respective estimated residual value) over the estimated useful lives as follows. Buildings and improvements 20 to 30 Years Machinery 10 Years Office equipment and furnishing 3 to 5 Years Motor vehicles 4 to 5 Years Maintenance and repairs are charged directly to expense as incurred, whereas improvements and renewals are generally capitalized in their respective property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized in the consolidated statements of income and comprehensive income. Land Use Rights According to the laws of the PRC, land is owned by the state or rural collective economic organizations in the PRC. Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years. Intangible Assets Intangible assets include production license for use in the production and distribution of edible alcohol and is accounted for under FASB ASC Topic 350-30, “General Intangibles Other Than Goodwill” . The current production license for use in the production and distribution of edible alcohol is renewed in October 2016 with an additional five years. The production license renewal is normally subject to inspection and renewed every five years with a small renewal application fee cost. Based on the Company’s historical experience in producing and distributing edible alcohol, the Company does not expect to incur significant cost to renew its production license nor does it expect any material modifications to the existing terms of the production license, or any difficulties in renewing the license. Amortization expense is calculated on a straight-line basis over the useful life of the production license which include additional five-year expected renewal period. The intangible assets have been fully amortized during the year ended December 31, 2016. Valuation of Long-Lived Assets The Company, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment” , reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing projected undiscounted cash flows associated with such assets to the related carrying value. An impairment loss would be recognized when estimated discounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. The Company records impairment losses of RMB nil, RMB nil and RMB 49,995,656 for the years ended December 31, 2016, 2017 and 2018, respectively. Value added tax All the subsidiaries of the Company in the PRC are subject to value added tax (“VAT”) imposed by the Government of the PRC on its purchase and sales of goods, its purchase of property, plant and equipment and the freight expenses being incurred. The output VAT is charged to customers who purchase goods from the Company and debited to trade accounts receivable and credited to VAT payable – output VAT. The input VAT is incurred when the Company purchases goods and property, plant and equipment from its vendors and the freight expenses being incurred. The input VAT incurred is debited to VAT recoverable or VAT payable – input VAT and credited to payables accounts or cash and cash equivalent. VAT payable is computed on a monthly basis and payable in the following month based on the difference between the amount of output VAT and input VAT as of month-end, The applicable VAT rate is ranged from 0% to 17% in general, depending on the types of products purchased and sold. If the amount of validated input VAT being aroused by purchasing goods and property, plant, equipment and the freight expenses incurred exceeds that of output VAT for sales of goods during the month, the debit VAT payable balance as of month-end will be carried forward to be creditable against future collection of output VAT in the following months, and will be reclassified as VAT recoverable under other receivables. In addition, input VAT is off-the-price and not included in the cost of inventory. According to Cai Shui [2012] No. 38 issued by the PRC State Administration of Taxation, since July 2012, the input VAT paid for purchase of corns can only be offset against the output VAT when the required conditions are being fulfilled and validated by the PRC Taxing Authority, otherwise, the input VAT paid will be temporarily recorded as VAT recoverable under other receivables. As of December 31, 2017 and 2018, VAT recoverable consisted of input VAT paid for purchase of corn but not yet validated by the PRC Taxing Authority of RMB45,179,459 and RMB 176,873,571 ($25,714,651), respectively. According to Cai Kuai [2013] No. 36, sales taxes and surcharges has been replaced with value-added taxes effective from May 1, 2016. Revenue Recognition We recognizes revenue in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers”. We recognize revenues when persuasive evidence of an arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist, collection is reasonably assured and delivery of products has occurred or services have been rendered. Delivery occurs upon receipt of products by the customers at the customers’ warehouse or designated destination, or at the time products are picked up by the customers at our warehouse. Revenues presented on the consolidated statements of income and comprehensive income are net of sales taxes and surcharges. Cost of Goods Sold The Company’s cost of goods sold includes product costs, shipping and handling costs, and costs related to inventory adjustments, including write downs for excess and obsolete inventory. Product costs include raw materials, production overhead costs, amortization of production license, and depreciation of property, plant and equipment used directly or indirectly for production. Research and Development Costs Research and development costs are expensed as incurred. The Company did not incur any material research and development costs for the years ended December 31, 2016, 2017 and 2018. Advertising Expenses Costs associated with advertising are expensed as incurred. The Company did not incur any advertising expenses for the years ended December 31, 2016, 2017 and 2018. Shipping and Handling Costs The Company records all charges to customers for outbound shipping and handling as revenue. All corresponding shipping and handling costs are classified as cost of goods sold for the years ended December 31, 2016, 2017 and 2018. Allowance for Doubtful Accounts The Company regularly monitors and assesses the risk of not collecting amounts owed to the Company by customers. This evaluation is based upon a variety of factors including: an analysis of amounts current and past due along with relevant history and facts particular to the customer. Based upon the results of this analysis, the Company did not have an allowance for doubtful accounts for this risk. Retirement and Other Postretirement Benefits Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts for the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of FASB ASC Topic 715, “Compensation—Retirement Benefits” . The total amounts for such employee benefits, which were expensed, were RMB10,016,774, RMB 11,558,233, and RMB13,394,085 ($1,947,290) for the years ended December 31, 2016, 2017 and 2018, respectively. Borrowing cost Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the statement of income and comprehensive income in the period in which they are incurred. For the years ended December 31, 2016, 2017 and 2018, no interests were capitalized as borrowing cost in property, plant and equipment. Government Subsidies The Company's subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. The government subsidies received are recorded as part of other income or accounted for by reductions of expenses, if the subsidies received are earmarked to compensate a specific expense, such as research and development expense or interest expenses. Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met. For the years ended December 31, 2016, 2017 and 2018, the government subsidies received and recorded as other income were RMB nil, RMB 117,216,600, and RMB nil, respectively. All of the subsidies received was for the purpose of compensating the Company’s corn procurement. No government subsidy was accounted for by reduction of expense during the years December 31, 2016, 2017 and 2018. Income Taxes The Company follows FASB ASC Topic 740, “Income Taxes” , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has adopted FASB ASC Topic 740-10-25 since January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2017 and 2018, the management of the Company considered that the Company had no additional liabilities for uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in the future. There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements for the years ended December 31, 2016, 2017 and 2018, respectively. The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities and the major one is the China Tax Authority. Comprehensive Income (Loss) The Company presents comprehensive income (loss) in accordance with FASB ASC Topic 220, “Comprehensive Income” . FASB ASC Topic 220 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported net of taxes in the consolidated statements of income and comprehensive income. The components of comprehensive income were the net income for the years, the foreign currency translation adjustments and the unrealized holding gain (loss) or any reclassification adjustment of available-for-sale securities. Appropriated Retained Earnings The income of the Company’s PRC subsidiaries is distributable to their shareholder after transfer to reserves as required by relevant PRC laws and regulations and the subsidiaries’ Articles of Association. As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors. Reserves include statutory surplus reserves and discretionary reserves. Statutory surplus reserves can be used to offset the accumulated losses, if any, and may be converted into capital in proportion to the existing equity interests of shareholders, provided that the balance after such conversion is not less than 25% of the registered capital. The appropriation to the statutory surplus reserves must not be less than 10% of net profit after taxation. Such appropriation may cease to apply if the balance of the fund is equal to 50% of the entity’s registered capital. The annual appropriation of reserves of both Shandong Borun and Daqing Borun is 10% of the net income after income tax expenses. For the years ended December 31, 2016, 2017 and 2018, the Company made the transfers to this reserve fund in the amounts of RMB6,371,096, RMB17,673,744 and RMB4,657,384 ($677,111), respectively, separately presented as “Retained earnings—appropriated” in the balance sheets. Dividends The Company provides discretionary dividend payments based on the approval of the Company’s Board of Directors. The Board of Directors of the Company had not proposed any dividend payment for the years ended December 31, 2016, 2017 and 2018. Earnings Per Share Earnings per share is calculated in accordance with FASB ASC Topic 260, “Earnings Per Share” Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. Diluted earnings per share also reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. The following table sets forth the computation of basic and diluted earnings per share for the years indicated: Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Numerator: Net income/(loss), representing undistributed earnings available to ordinary shareholder—basic and diluted 63,710,958 176,737,444 (39,215,085) (5,701,259) Denominator: Weighted average number ordinary shares outstanding—basic and diluted 25,725,000 25,725,000 25,725,000 25,725,000 Earnings per share: Basic and diluted 2.48 6.87 (1.52) (0.22) Operating Risk Concentrations of Credit Risk Trade Accounts Receivable —Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers dispersed across diverse markets and generally short payment terms. Credit is extended based on an evaluation of the customer’s financial condition and collateral generally is not required. The Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will record a specific allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. As of December 31, 2017 and 2018, there was no individual trade accounts receivable amounted over 10% of the total balance. Revenues —Substantially, all of the Company’s revenues are derived from sales of edible alcohol and its by-products, including DDGS Feed, liquid carbon dioxide and crude corn oil and the Company’s chemical products CPE and AMPS in PRC. Any significant decline in market acceptance of the Company’s products or in the financial condition of our existing customers could impair our ability to operate effectively. None of the individual customers contributed over 10% of the total revenue for the years ended December 31, 2016, 2017 and 2018. Additionally, the Company derives substantially all of its revenue from sales in Northeast China. Purchases — The Company had a concentration of risk for its supply of its primary raw material, corn, which used in the production of edible alcohol. The granary located in Daqing, Heilongjiang as described in the accounting policy for “Inventories” above, supplied 25.0% of the Company’s purchases of corn in 2018. Interest Rate Risk Borrowings and Bonds —The Company’s significant interest-bearing financial liabilities are borrowings and bonds. As of December 31, 2018, all balance of borrowing are short-term borrowings which will be matured at various dates within the year ending December 31, 2019 and do not expose the Company to interest rate risk. The Company’s interest rate risk arises primarily from bonds. The Company’s bonds were issued at fixed rates on November 2, 2016 and expose the Company to fair value and interest rate risk which will be matured at fiscal year 2021. The interest rates profile and terms of repayment of the Company’s bonds payable at the end of the reporting periods are disclosed in note 12, to the consolidated financial statements. Other than the above, other financial assets and liabilities do not have material interest rate risk. Liquidity Risk The Company’s working capital is sufficient to meet our present requirements. The Company may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. In the long-term, the Company intends to rely primarily on cash flows from operations and additional borrowings from the financial institutions in order to meet the Company’s anticipated cash needs. If the anticipated cash flow is insufficient to meet the requirements, the Company’s may also seek to issue additional equity, debt or equity-linked securities. Country Risk The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods taxation, pricing and supply of corns and coals, among other things. There can be no assurance; however, those changes in political and other conditions will not result in any adverse impact. Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016- 02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. This ASU will be effective for the Company on January 1, 2019. We will adopt ASU 2016-02 on January 1, 2019. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements FASB ASC Topic 820, “Fair Value Measurements” , defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. FASB ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. FASB ASC Topic 820 establishes three levels of inputs that may be used to measure fair value: · Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company holds. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. · Level 2—Valuation based on quoted prices in markets that are not active for which all significant inputs are observable, either directly or indirectly. · Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. The Company has adopted FASB ASC Topic 820 since January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). FASB ASC Topic 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The Company has not adopted FASB ASC Topic 820 for nonfinancial assets and nonfinancial liabilities, as these items are not recognized at fair value on a recurring basis. Disclosures of fair value information about financial instruments (whether or not recognized in the balance sheets), for which it is practicable to estimate that value, are required each reporting periods in addition to any financial instruments carried at fair value on a recurring basis as prescribed by FASB ASC Topic 825, “Financial Instruments” . In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Fair value measured or disclosed on a recurring basis The fair value of financial items of the Company for disclosure purpose including cash, other receivables, advance to suppliers, accrued expenses and other payables and short-term borrowings, approximate their carrying value due to their short-term nature. The Company’s investment (held-to-maturity debt securities) is disclosed using significant other observable inputs (Level 2), because it does not have regular market pricing. Liabilities of the Company for fair value disclosure purpose within Level 2 include long-term borrowings from financial institutions and bonds payable. Their carrying amounts are reasonable approximates of their fair value at the end of the reporting period due to all the long-term debts carry interest rates which approximate rates currently offered by the financial institutions for similar debt instruments of comparable maturities. The Company did not have any financial instruments measured or disclosed at fair value using Level 3 as of December 31, 2017 and 2018. Fair value measured on a non-recurring basis The Company reviews long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate the possibility of impairment. For the continuing operations, long-lived assets are measured at fair value on a nonrecurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. For discontinued operations, long-lived assets are measured at the lower of carrying amount or fair value less cost to sell. The fair value of these assets were determined using models with significant unobservable inputs which were classified as Level 3 inputs, primarily the discounted future cash flow. In determining the fair value, The Company used projections of cash flows directly associated with, and which are expected to arise as a direct result of, the use and eventual disposition of the assets. This approach required significant judgments including the Company's projected net cash flows, which were derived using the most recent available estimate for the reporting unit containing the assets tested. Several key assumptions included periods of operation, projections of product pricing, production levels, product costs, market supply and demand, and inflation. |
Trade Accounts Receivable, Net
Trade Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2018 | |
Trade Accounts Receivable, Net | |
Trade Accounts Receivable, Net | 4. Trade Accounts Receivable, Net Trade receivable consists of receivables resulting from sales of products during the normal course of business. Trade accounts receivable at end of years presented consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Trade accounts receivable 509,737,390 126,998,338 18,463,572 Less: Allowance for doubtful accounts — — — Total trade accounts receivable, net 509,737,390 126,998,338 18,463,572 As of December 31, 2017 and 2018, no trade accounts receivables were pledged as collateral for borrowings from financial institutions. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2018 | |
Inventories | |
Inventories | 5. Inventories Inventories consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Raw materials 414,172,830 1,387,287,531 201,689,909 Work-in-process 2,681,530 1,764,835 256,579 Finished goods 17,331,071 52,241,134 7,595,044 Total inventories 434,185,431 1,441,293,500 209,541,532 The Company did not set up any inventory reserve as of December 31, 2017 and 2018. As of December 31, 2017 and 2018, no raw materials were pledged as collateral for borrowings from financial institutions. |
Advance to Suppliers
Advance to Suppliers | 12 Months Ended |
Dec. 31, 2018 | |
Advance to Suppliers | |
Advance to Suppliers | 6. Advance to Suppliers Advances to suppliers consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Advance to granaries (note (i)) 559,300,277 — — Others 2,895,908 224,554 32,647 Total advance to suppliers 562,196,185 224,554 32,647 Note (i): Advance to granaries represents corn cost paid but related materials and services have not been provided to the Company. |
Other Receivables
Other Receivables | 12 Months Ended |
Dec. 31, 2018 | |
Other Receivables | |
Other Receivables | 7. Other Receivables Other receivables consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) VAT recoverable (note (i)) 45,434,459 176,873,571 25,714,651 Deposit for loan guarantee 17,900,000 15,000,000 2,180,765 Others 3,056,997 70,494 10,249 Total other receivables 66,391,456 191,944,065 27,905,665 Note (i): As of December 31, 2017 and 2018, VAT recoverable mainly consisted of input VAT paid for purchase of corns but not yet validated by the PRC Taxing Authority of RMB45,179,459 and 176,873,571 ($25,714,651), respectively. Note (ii): The deposit for loan guarantee is a financial instrument. Based on its maturity is within one operating period, the Company believes its carrying value approximates fair value. |
Property, Plant and Equipment,
Property, Plant and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net | |
Property, Plant and Equipment, Net | 8. Property, Plant and Equipment, Net Property, plant and equipment, net, consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Buildings and improvements 655,923,713 653,961,713 95,075,805 Machinery 943,742,391 888,973,826 129,242,890 Office equipment and furnishing 1,468,593 1,468,593 213,510 Motor vehicles 1,715,958 1,496,611 217,584 Total cost 1,602,850,655 1,545,900,743 224,749,789 Total accumulated depreciation (838,181,436) (955,605,318) (138,930,067) Construction in progress 1,386,729 11,634,637 1,691,494 Total property, plant, and equipment, net 766,055,948 601,930,062 87,511,216 The buildings, machinery, equipment, and motor vehicles in Shandong and Daqing were pledged as collateral for borrowings from the financial institutions as of December 31, 2017 and 2018. For the years ended December 31, 2016, 2017 and 2018, no interests were capitalized as borrowing cost in property, plant and equipment. For the years ended December 31, 2016, 2017, and 2018, impairment loss of RMB nil. RMB nil, and RMB49,995,656 ($7,268,586) was charged to accumulated depreciation, respectively. The depreciation expenses for the years ended December 31, 2016, 2017 and 2018 were RMB115,744,856, RMB112,816,310 and RMB 106,515,229 ($15,485,648), respectively. Construction in progress refers to mainly the new production facilities under construction. |
Land Use Rights, Net
Land Use Rights, Net | 12 Months Ended |
Dec. 31, 2018 | |
Land Use Rights, Net. | |
Land Use Rights, Net | 9. Land Use Rights, Net Land use rights consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Land use rights at cost 144,726,756 144,045,981 20,942,033 Accumulated amortization (17,099,127) (20,104,267) (2,922,846) Total land use rights, net 127,627,629 123,941,714 $ 18,019,187 As of December 31, 2017 and 2018, certain land use rights with an aggregate carrying value of RMB10,076,146 and RMB 9,827,352 ($1,428,743), respectively, were pledged as collateral for borrowings from the financial institutions. The amortization expenses for the years ended December 31, 2016, 2017 and 2018 were RMB2,832,578, RMB2,832,577 and RMB2,832,576 ($433,500), respectively. No provision for impairment loss has been charged for the years ended December 31, 2016, 2017 and 2018. Future amortization of land use rights is as follows: (RMB) Years Ending December 31, Amount 2019 2,832,576 2020 2,832,576 2021 2,832,576 2022 2,832,576 2023 2,832,576 Thereafter 109,778,834 Total 123,941,714 |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Payables | |
Accrued Expenses and Other Payables | 10. Accrued Expenses and Other Payables Accrued expenses and other payables consisted of the following: As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Payroll and welfare payables 22,288,807 15,695,733 2,281,914 VAT and other tax payables 28,569,804 23,081,723 3,355,722 Other payables and accruals 3,911,569 2,915,745 423,903 Total accrued expenses and other payables 54,770,180 41,693,201 6,061,539 |
Borrowings
Borrowings | 12 Months Ended |
Dec. 31, 2018 | |
Borrowings | |
Borrowings | 11. Borrowings Borrowings consisted of the following: December 31, 2017 2018 2018 RMB RMB $ • Agricultural Bank of China All borrowings under the loan agreements were guaranteed by third party companies. These loans have been repaid as of December 31, 2018. The interest rate is 4.35%. 320,000,000 — — • Agricultural Bank of China The amount of RMB43,200,000 will be due on January 4, 2019. The amount of RMB40,000,000 will be due on January 28, 2019. The amount of RMB10,000,000 will be due on June 7, 2019. The amount of RMB20,000,000 will be due on June 13, 2019. The amount of RMB20,000,000 will be due on July 15, 2019. The amount of RMB40,000,000 will be due on August 15, 2019. The amount of RMB20,000,000 will be due on September 12, 2019. The amount of RMB30,000,000 will be due on October 10, 2019. The amount of RMB20,000,000 will be due on October 11, 2019. The amount of RMB30,000,000 will be due on October 26, 2019. The amount of RMB10,000,000 will be due on November 5, 2019. The amount of RMB40,000,000 will be due on November 9, 2019. All borrowings under the loan agreements are guaranteed by third party companies. The interest rate is 4.35%. — 323,200,000 46,988,225 • Agricultural Bank of China The amount of RMB33,319,295 will be due on September 28, 2019. The borrowings under this loan agreement is guaranteed by Mr. Wang, Jingmiao, the CEO of the Company, and Shandong Borun. The interest rate is 5.0025%. — 33,319,295 4,844,104 • Construction Bank of China The amount of RMB114,972,579 was repaid during the year of 2018. The amount of RMB84,427,421 was renewed and will be payable in 2019. All borrowings under the loan agreements were guaranteed by Shandong Borun, Mr. Jinmiao Wang, the CEO of the Company, and his family members. The Company also pledged its fixed assets as collateral. The interest rate is 5.22%. 199,800,000 — — • Construction Bank of China The amount of RMB30,000,000 will be due on February 11, 2019. The amount of RMB25,000,000 will be due on March 6, 2019. The amount of RMB20,000,000 will be due on March 15, 2019. The amount of RMB19,827,421 will be due on March 16, 2019. The amount of RMB20,000,000 will be due on April 12, 2019. The amount of RMB25,000,000 will be due on April 21, 2019. The amount of RMB20,000,000 will be due on May 9, 2019. The amount of RMB37,100,000 will be due on December 29, 2019. All borrowings under the loan agreements were guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and his family members. The Company also pledged its fixed assets as collateral. The annual interest rate ranges from 4.785% to 5.655%. — 196,927,421 28,630,167 • CITIC Bank This loan was repaid in 2018. The borrowing under the loan agreement was guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and two third-party companies. The interest rate is 5.655%. 129,867,011 — — • CITIC Bank The amount of RMB129,000,000 will be due on October 15, 2019. The borrowing under the loan agreement was guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and two third-party companies. The interest rate is 5.8725%. — 129,000,000 18,754,582 • Daqing Rural Commercial Bank The amount of RMB49,000,000 was originally due on September 7, 2018 with annual interest rate of 3.50%. In 2018, the Company renewed the loan and the new due date is August 17, 2019. The new interest rate is 2.917% per month. The loan is guaranteed by a third party guarantee company. Daiqing Borun provided the counter guarantee for this company which is pledged by property, plant and equipment and land use rights and by Shandong Borun, the Company’s CEO, two natural persons and three third-party companies simultaneously. 49,000,000 49,000,000 7,123,834 Total 698,667,011 731,446,715 106,340,912 Interest expense related to borrowings amounted to RMB44,696,999 ($6,840,470) and RMB40,427,287 ($5,877,495) for the years ended December 31, 2017 and 2018, respectively. |
Bonds Payable
Bonds Payable | 12 Months Ended |
Dec. 31, 2018 | |
Bonds Payable | |
Bonds Payable | 12. Bonds Payable On November 2, 2016, the Company’s subsidiary, Shandong Borun has issued a private placement bonds (the “Bonds”) with a principal amount of RMB300,000,000 ($43,615,301) that registered with the Shanghai Stock Exchange. The proceeds from the issuance of the Bonds were used in the purpose for the Company’s working capital and capital expenditures. The Bonds were issued at face value of RMB100 ($14) each, bear a fixed annual interest rate of 6.5%, with maturity on November 2, 2021, and RMB 100,000,000 ($14,538,434) would be repaid at the end of each of the third, fourth and fifth year life of the Bonds. The imputed interest rate in connection with the Bonds was 6.75%. Interests of the Bonds charged to the consolidated statement of income for the year ended December 31, 2016, 2017, and 2018 was RMB 2,865,835, RMB 20,263,965, and RMB 21,955,630 ($3,192,005), respectively. The Company has prepaid interests of RMB3,000,000 ($432,464) at the time of the issuance of the Bonds on November 2, 2016. As of December 31, 2016, 2017 and 2018, the prepaid interest of RMB 134,165 and RMB 781,737 and RMB 181,737 ($26,422), respectively, was outstanding and recorded as prepaid expense under current assets. Debt issuance costs associated to the Bonds of RMB7,075,472 ($1,028,663) represented cost incurred for professional services from the sponsors and other various parties, which was net of “Bonds payable in connection with Bonds” in the balance sheets. The amortized debt issuance costs of the Bonds based on imputed interest rate of 6.75% for the years ended December 31, 2016, 2017 and 2018 were RMB 244,923, RMB 1,411,537, and RMB 1,413,655 ($205,523), respectively, which was recorded as “Interest expense” in the statements of income and comprehensive income. As of December 31, 2016, 2017 and 2018, unamortized debt issuance costs associated to the Bonds was RMB 6,830,549, RMB 5,419,012, and RMB 4,005,357 ($582,316), respectively. As of December 31, 2016, 2017, and 2018 non-current bonds payable less unamortized debt issuance costs was RMB 293,169,451, RMB 294,580,988, and RMB 195,994,643 ($28,494,555), respectively. RMB 100,000,000 ($14,538,436) has been classified as bonds payable current portion for the amount due within one operating period. |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2018 | |
Restricted Net Assets | |
Restricted Net Assets | 13. Restricted Net Assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s PRC subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the statements of income and comprehensive income prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries. In accordance with the Regulations on Enterprises with Foreign Investment of China and their articles of association, a foreign invested enterprise established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A wholly owned foreign invested enterprise is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Shandong Borun is a wholly-owned foreign invested enterprise and therefore are subject to the above mandated restrictions on distributable profits. Additionally, in accordance with the Company Law of the PRC, a domestic enterprise is required to provide a statutory common reserve of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide for discretionary surplus reserve, at the discretion of the board of directors, from the profits determined in accordance with the enterprise’s PRC statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. Daqing Borun was established as domestic invested enterprises and therefore are subject to the above mandated restrictions on distributable profits. As a result of these PRC laws and regulations that require annual appropriations of 10% of after-tax income to be set aside prior to payment of dividends as general reserve fund, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. Amounts restricted include paid-in capital, capital surplus and statutory reserves of the Company’s PRC subsidiaries as determined pursuant to the PRC accounting standards and regulations, totaling approximately RMB1,371,710,109 and RMB 1,377,388,085 ($200,250,684) as of December 31, 2017 and 2018, respectively. |
Income Tax Expenses
Income Tax Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Expenses | |
Income Tax Expenses | 14. Income Tax Expenses New Borun incorporated in Cayman Islands and Golden Direction incorporated in the British Virgin Islands are at statutory tax rate of nil, China High was incorporated in Hong Kong Special Administrative Region is at statutory tax rate of 16.5%. Shandong Borun and Daqing Borun are PRC operating companies and are subject to PRC Enterprise Income Tax (“EIT”). Pursuant to the PRC Enterprise Income Tax Law, Enterprise Income Tax is generally imposed at a statutory rate of 25%. Pursuant to PRC EIT, the PRC subsidiaries of China New Borun are obligated to withhold income tax on dividends paid-out to non-resident, for earnings retained after January 1, 2008. The applicable tax rate is 5% or 10% on the dividends paid-out. As the PRC subsidiaries are wholly or majority owned by the U.S. holding entity, the Company anticipates no cash dividends in the foreseeable futures, and all earnings will be used to re-invest in the PRC subsidiaries. Accordingly, no withholding income tax was accrued. The income tax expenses consisted of taxes on income from operations plus changes in deferred taxes for the reporting periods presented: Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Current 19,481,789 58,912,481 16,522,472 2,402,109 Deferred 1,755,197 — — — Income tax expenses 21,236,986 58,912,481 16,522,472 2,402,109 Reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before income tax expenses is for the reporting periods presented as follows: Year Ended December 31, 2016 2017 2018 Statutory rate 25.00 % 25.00 % 25.00 % Expenses not deductible — % — % — % Effective tax rate 25.00 % 25.00 % 25.00 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | 15. Commitments and Contingencies Commitments As of December 31, 2017 and 2018, capital commitment for purchase of property, plant and equipment were RMB 11,200,000 and RMB nil, respectively. The Company did not have any significant lease commitment as of December 31, 2017 and 2018. Guarantees and Indemnities The Company was a party to enter into contracts to indemnify third parties for certain liabilities, and as of December 31, 2017 and 2018, the Company guaranteed the third parties’ borrowings from the financial institutions amounting to RMB 844,200,000 and RMB562,550,000 ($81,785,959), respectively, as a guarantor. In most cases, the Company cannot estimate the potential amount of future payments under these indemnities until events arise that would result in a liability under the indemnities. The Company believes that the liabilities for potential future payments of these guarantees and indemnities are not probable. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Segment Information | 16. Segment Information The Company currently operates and manages its business as two reportable segments: “Corn-base edible alcohol and its by-products” and “Chemical products”. The Company’s reportable segments are strategic business units that require different technology and marketing strategies and offer different products and services. The Company’s chief operating decision maker, the Chief Executive Officer, receives and reviews the results of the operations of each separate segment, assesses and manages their performance and makes decisions. Most of the businesses were established as a unit, and the management at the time of the establishment was retained. Following the disposal of “Foam insulation” production line during the year ended December 31, 2016 and introduction of AMPS product line during the year ended December 31, 2017, certain prior year's amounts have been reclassified to conform to current year presentations of "Chemical products" segment. There was no change to previously reported segment totals and consolidated totals information. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current market prices. Contributions of the major activities, profitability information and asset information of the Company’s reportable segments for the years ended December 31, 2016, 2017 and 2018 are as follows: Year ended December 31, 2016 2017 2018 Inter- Profit Inter- Profit Inter- Profit Net segment (loss) Net segment (loss) Net segment (loss) sales sales before tax sales sales befor tax sales sales before tax (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 2,034,302,643 — 79,446,037 2,031,865,359 — 79,446,037 1,280,313,234 — (16,108,554) Chemical products 98,377,542 — 5,501,907 109,006,620 — 5,501,907 523,567,964 — (6,584,059) Segment total 2,132,680,185 84,947,944 2,140,871,979 84,947,944 1,803,881,198 (22,692,613) Reconciliation to consolidated totals: Sales eliminations — — — — — — — — — Consolidated totals: Revenues 2,132,680,185 — 2,140,871,979 — 1,803,881,198 — Revenues ($) 262,256,112 — Income before income taxes 84,947,944 235,649,925 (22,692,613) Income before income taxes ($) (3,299,150) Year ended December 31, 2016 2017 2018 Interest Interest Income tax Interest Interest Income tax Interest Interest Income tax income expense expense Income expense expense Income expense expense (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 4,043,903 52,669,508 17,524,049 4,154,446 66,125,464 56,120,900 3,830,674 62,382,917 7,303,298 Chemical products — — 3,712,937 — — 2,791,581 — — 9,219,174 Consolidated total 4,043,903 52,669,508 21,236,986 4,154,446 66,125,464 58,912,481 3,830,674 62,382,917 16,522,472 Consolidated total ($) 556,920 9,069,499 2,402,109 As of and Year ended December 31, 2016 2017 2018 Depreciation Depreciation Depreciation Identifiable Capital and Identifiable Capital and Identifiable Capital and assets expenditure amortization assets expenditure amortization assets expenditure amortization (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 2,871,332,164 — 105,774,948 2,919,052,502 2,631,729 98,816,218 2,902,982,823 — 95,966,036 Chemical products 279,306,560 3,592,397 14,798,770 278,172,337 — 16,832,668 213,038,029 — 14,235,107 Segment totals 3,150,638,724 3,592,397 120,573,718 3,197,224,839 2,631,729 115,648,886 3,116,020,852 — 110,201,143 Reconciliation to consolidated totals: Elimination of receivables from intersegments — — — — — — — — — Consolidated totals 3,150,638,724 3,592,397 120,573,718 3,197,224,839 2,631,729 115,648,886 3,116,020,852 — 110,201,143 Consolidated totals ($) 453,020,695 16,021,522 As we primarily generate our revenues from customers in the PRC, and all of our sales and all of our identifiable assets are located in the PRC, no geographical segments are presented. |
Condensed Financial Information
Condensed Financial Information of New Borun | 12 Months Ended |
Dec. 31, 2018 | |
Condensed Financial Information of New Borun | |
Condensed Financial Information of New Borun | 17. Condensed Financial Information of New Borun The condensed financial statements of New Borun (the “Registrant”) have been prepared in accordance with U.S. GAAP. Under the PRC laws and regulations, the Registrant’s subsidiaries registered in the PRC are restricted in their ability to transfer certain of their net assets to the Registrant in the form of dividend payments, loans or advances. The amounts restricted include paid-in capital, capital surplus and statutory reserves, as determined pursuant to PRC generally accepted accounting principles. The condensed financial information of the Registrant represents as follows: CONDENSED BALANCE SHEETS As of December 31, 2017 2018 2018 (RMB) (RMB) ($) ASSETS Current assets Cash 137 — — Amounts due from subsidiaries 244,532,160 244,532,160 35,551,151 Total current assets 244,532,297 244,532,160 35,551,151 Investments in subsidiaries 1,801,071,015 1,801,071,015 261,847,555 Total assets 2,045,603,312 2,045,603,175 297,398,707 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accrued expenses and other payables 4,999 5,250 763 Total current liabilities and total liabilities 4,999 5,250 763 Total shareholders’ equity 2,045,598,313 2,045,597,925 297,397,943 Total liabilities and shareholders’ equity 2,045,603,312 2,045,603,175 297,398,707 CONDENSED STATEMENTS OF INCOME Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Operating expenses: General and administrative — — 144 21 Loss from operations — — — — Other income: Interest income — — — — Equity in earnings of subsidiaries 63,710,958 176,737,444 (39,215,085) (5,701,259) Income before income tax expense 63,710,958 176,737,444 (39,215,085) (5,701,259) Income tax expense — — — — Net income 63,710,958 176,737,444 (39,215,085) (5,701,259) CONDENSED STATEMENTS OF CASH FLOWS Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Net cash provided by operating activities — (9) 107 15 Net cash provided by investing activities — — — — Net cash provided by financing activities — — — — Effect of exchange rate changes on cash and cash equivalents 10 — (244) (36) Net increase/(decrease) in cash 10 (9) (137) (21) Cash—beginning of year 136 146 137 21 Cash—end of year 146 137 — — NOTES TO CONDENSED FINANCIAL STATEMENTS Basis of Presentation The condensed financial information has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the Registrant has used equity method to account for its investments in subsidiaries. Investments in subsidiaries The Registrant records its investments in its subsidiaries under the equity method of accounting as prescribed in FASB ASC Topic 323, “Investment—Equity Method and Joint Ventures” . The Registrant’s investments in subsidiaries are stated at cost plus its equity interest in undistributed earnings of subsidiaries less impairment loss, if any, since inception, and are presented on the Registrant’s balance sheets as “Investments in subsidiaries” and share of the subsidiaries’ income or loss as “Equity in earnings (loss) of subsidiaries”, on the Registrant’s statements of income and comprehensive income. The Company’s subsidiaries did not distribute any dividend to the Registrant for the years ended December 31, 2016, 2017, and 2018. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation and Presentation | Principles of Consolidation and Presentation The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The consolidated financial statements include the financial statements of the New Borun, Golden Direction, China High, Shandong Borun and Daqing Borun. All significant inter-company transactions and balances have been eliminated upon consolidation. |
Foreign Currency Translation | Foreign Currency Translation The Company’s financial statements are presented in Chinese Renminbi (“RMB”), which is the Company’s reporting currency. The functional currency of the Company’s subsidiary in Hong Kong is the U.S. dollar while the functional currency of the Company’s subsidiaries in the PRC is RMB. In accordance with FASB ASC Topic 830, “Foreign Currency Matters” , the Company translates the assets and liabilities into RMB using the rate of exchange prevailing at the applicable balance sheet date and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from U.S. dollar into RMB are recorded in shareholders’ equity as part of accumulated other comprehensive income. |
Convenience Translation into United States Dollar Amounts | Convenience Translation into United States Dollar Amounts The Company reports its financial statements using the RMB. The Dollar amounts disclosed in the accompanying financial statements are presented solely for the convenience of the reader, and have been converted at the rate of RMB 6.87832 to one Dollar ($), which is published by OANDA. Such translations should not be construed as representations that the RMB amounts represent, have been, or could be, converted into, $ at that or any other rate. |
Use of Estimates | Use of Estimates The preparation and presentation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates. |
Cash | Cash Cash includes cash on hand, and cash accounts and interest-bearing savings accounts in the financial institutions. |
Accounts Receivable | Accounts Receivable Accounts receivable are carried at the amounts invoiced to customers less allowance for doubtful accounts, if any. When applicable, the Company estimates an allowance based on a review of the payment history of individual customers and future expectations of economic conditions of those customers. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. The cost of a general inventory item is determined using the weighted average method. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. Cost of work in progress and finished goods comprise direct material, direct production costs and an allocated portion of production overhead costs based on normal operating capacity. From November 2013, the Company initiated a “bill and hold” arrangement with the granaries whereby the Company took the possession of the corn upon purchase and storage of the corn by the granaries. Purchased corn are recognized as inventories when the significant risks and rewards of ownership are considered to be transferred to the Company upon full payment of the corn price made to the granaries and the quantity and quality of the purchased corn had been inspected and acknowledged by the Company. |
Property, Plant, and Equipment | Property, Plant, and Equipment Property, plant and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Depreciation is calculated using the straight-line method (after taking into account their respective estimated residual value) over the estimated useful lives as follows. Buildings and improvements 20 to 30 Years Machinery 10 Years Office equipment and furnishing 3 to 5 Years Motor vehicles 4 to 5 Years Maintenance and repairs are charged directly to expense as incurred, whereas improvements and renewals are generally capitalized in their respective property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized in the consolidated statements of income and comprehensive income. |
Land Use Rights | Land Use Rights According to the laws of the PRC, land is owned by the state or rural collective economic organizations in the PRC. Companies or individuals are authorized to possess and use the land only through the land use rights granted by the government. The land use rights represent cost of the rights to use the land in respect of properties located in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years. |
Intangible Assets | Intangible Assets Intangible assets include production license for use in the production and distribution of edible alcohol and is accounted for under FASB ASC Topic 350-30, “General Intangibles Other Than Goodwill” . The current production license for use in the production and distribution of edible alcohol is renewed in October 2016 with an additional five years. The production license renewal is normally subject to inspection and renewed every five years with a small renewal application fee cost. Based on the Company’s historical experience in producing and distributing edible alcohol, the Company does not expect to incur significant cost to renew its production license nor does it expect any material modifications to the existing terms of the production license, or any difficulties in renewing the license. Amortization expense is calculated on a straight-line basis over the useful life of the production license which include additional five-year expected renewal period. The intangible assets have been fully amortized during the year ended December 31, 2016. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets The Company, in accordance with FASB ASC Topic 360, “Property, Plant and Equipment” , reviews for impairment of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability is determined by comparing projected undiscounted cash flows associated with such assets to the related carrying value. An impairment loss would be recognized when estimated discounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. The Company records impairment losses of RMB nil, RMB nil and RMB 49,995,656 for the years ended December 31, 2016, 2017 and 2018, respectively. |
Value added tax | Value added tax All the subsidiaries of the Company in the PRC are subject to value added tax (“VAT”) imposed by the Government of the PRC on its purchase and sales of goods, its purchase of property, plant and equipment and the freight expenses being incurred. The output VAT is charged to customers who purchase goods from the Company and debited to trade accounts receivable and credited to VAT payable – output VAT. The input VAT is incurred when the Company purchases goods and property, plant and equipment from its vendors and the freight expenses being incurred. The input VAT incurred is debited to VAT recoverable or VAT payable – input VAT and credited to payables accounts or cash and cash equivalent. VAT payable is computed on a monthly basis and payable in the following month based on the difference between the amount of output VAT and input VAT as of month-end, The applicable VAT rate is ranged from 0% to 17% in general, depending on the types of products purchased and sold. If the amount of validated input VAT being aroused by purchasing goods and property, plant, equipment and the freight expenses incurred exceeds that of output VAT for sales of goods during the month, the debit VAT payable balance as of month-end will be carried forward to be creditable against future collection of output VAT in the following months, and will be reclassified as VAT recoverable under other receivables. In addition, input VAT is off-the-price and not included in the cost of inventory. According to Cai Shui [2012] No. 38 issued by the PRC State Administration of Taxation, since July 2012, the input VAT paid for purchase of corns can only be offset against the output VAT when the required conditions are being fulfilled and validated by the PRC Taxing Authority, otherwise, the input VAT paid will be temporarily recorded as VAT recoverable under other receivables. As of December 31, 2017 and 2018, VAT recoverable consisted of input VAT paid for purchase of corn but not yet validated by the PRC Taxing Authority of RMB45,179,459 and RMB 176,873,571 ($25,714,651), respectively. According to Cai Kuai [2013] No. 36, sales taxes and surcharges has been replaced with value-added taxes effective from May 1, 2016. |
Revenue Recognition | Revenue Recognition We recognizes revenue in accordance with FASB ASC Topic 606, “Revenue from Contracts with Customers”. We recognize revenues when persuasive evidence of an arrangement exists, the price is fixed or determinable, no other significant obligations of the Company exist, collection is reasonably assured and delivery of products has occurred or services have been rendered. Delivery occurs upon receipt of products by the customers at the customers’ warehouse or designated destination, or at the time products are picked up by the customers at our warehouse. Revenues presented on the consolidated statements of income and comprehensive income are net of sales taxes and surcharges. |
Cost of Goods Sold | Cost of Goods Sold The Company’s cost of goods sold includes product costs, shipping and handling costs, and costs related to inventory adjustments, including write downs for excess and obsolete inventory. Product costs include raw materials, production overhead costs, amortization of production license, and depreciation of property, plant and equipment used directly or indirectly for production. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. The Company did not incur any material research and development costs for the years ended December 31, 2016, 2017 and 2018. |
Advertising Expenses | Advertising Expenses Costs associated with advertising are expensed as incurred. The Company did not incur any advertising expenses for the years ended December 31, 2016, 2017 and 2018. |
Shipping and Handling Costs | Shipping and Handling Costs The Company records all charges to customers for outbound shipping and handling as revenue. All corresponding shipping and handling costs are classified as cost of goods sold for the years ended December 31, 2016, 2017 and 2018. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company regularly monitors and assesses the risk of not collecting amounts owed to the Company by customers. This evaluation is based upon a variety of factors including: an analysis of amounts current and past due along with relevant history and facts particular to the customer. Based upon the results of this analysis, the Company did not have an allowance for doubtful accounts for this risk. |
Retirement and Other Postretirement Benefits | Retirement and Other Postretirement Benefits Full-time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on certain percentages of the employees’ salaries. The Company accounts for the mandated defined contribution plan under the vested benefit obligations approach based on the guidance of FASB ASC Topic 715, “Compensation—Retirement Benefits” . The total amounts for such employee benefits, which were expensed, were RMB10,016,774, RMB 11,558,233, and RMB13,394,085 ($1,947,290) for the years ended December 31, 2016, 2017 and 2018, respectively. |
Borrowing cost | Borrowing cost Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the statement of income and comprehensive income in the period in which they are incurred. For the years ended December 31, 2016, 2017 and 2018, no interests were capitalized as borrowing cost in property, plant and equipment. |
Government Subsidies | Government Subsidies The Company's subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. The government subsidies received are recorded as part of other income or accounted for by reductions of expenses, if the subsidies received are earmarked to compensate a specific expense, such as research and development expense or interest expenses. Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met. For the years ended December 31, 2016, 2017 and 2018, the government subsidies received and recorded as other income were RMB nil, RMB 117,216,600, and RMB nil, respectively. All of the subsidies received was for the purpose of compensating the Company’s corn procurement. No government subsidy was accounted for by reduction of expense during the years December 31, 2016, 2017 and 2018. |
Income Taxes | Income Taxes The Company follows FASB ASC Topic 740, “Income Taxes” , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company has adopted FASB ASC Topic 740-10-25 since January 1, 2007, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax position. The Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The Company performed self-assessment and the Company’s liability for income taxes includes the liability for unrecognized tax benefits, interest and penalties which relate to tax years still subject to review by taxing authorities. Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of December 31, 2017 and 2018, the management of the Company considered that the Company had no additional liabilities for uncertain tax positions affecting its consolidated financial position and results of operations or cash flows, and will continue to evaluate for any uncertain position in the future. There are no estimated interest costs and penalties provided in the Company’s consolidated financial statements for the years ended December 31, 2016, 2017 and 2018, respectively. The Company’s tax positions related to open tax years are subject to examination by the relevant tax authorities and the major one is the China Tax Authority. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) The Company presents comprehensive income (loss) in accordance with FASB ASC Topic 220, “Comprehensive Income” . FASB ASC Topic 220 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported net of taxes in the consolidated statements of income and comprehensive income. The components of comprehensive income were the net income for the years, the foreign currency translation adjustments and the unrealized holding gain (loss) or any reclassification adjustment of available-for-sale securities. |
Appropriated Retained Earnings | Appropriated Retained Earnings The income of the Company’s PRC subsidiaries is distributable to their shareholder after transfer to reserves as required by relevant PRC laws and regulations and the subsidiaries’ Articles of Association. As stipulated by the relevant laws and regulations in the PRC, these PRC subsidiaries are required to maintain reserves which are non-distributable to shareholders. Appropriations to the reserves are approved by the respective boards of directors. Reserves include statutory surplus reserves and discretionary reserves. Statutory surplus reserves can be used to offset the accumulated losses, if any, and may be converted into capital in proportion to the existing equity interests of shareholders, provided that the balance after such conversion is not less than 25% of the registered capital. The appropriation to the statutory surplus reserves must not be less than 10% of net profit after taxation. Such appropriation may cease to apply if the balance of the fund is equal to 50% of the entity’s registered capital. The annual appropriation of reserves of both Shandong Borun and Daqing Borun is 10% of the net income after income tax expenses. For the years ended December 31, 2016, 2017 and 2018, the Company made the transfers to this reserve fund in the amounts of RMB6,371,096, RMB17,673,744 and RMB4,657,384 ($677,111), respectively, separately presented as “Retained earnings—appropriated” in the balance sheets. |
Dividends | Dividends The Company provides discretionary dividend payments based on the approval of the Company’s Board of Directors. The Board of Directors of the Company had not proposed any dividend payment for the years ended December 31, 2016, 2017 and 2018. |
Earnings Per Share | Earnings Per Share Earnings per share is calculated in accordance with FASB ASC Topic 260, “Earnings Per Share” Basic earnings per share is computed by dividing income attributable to holders of ordinary shares by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. Diluted earnings per share also reflects the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised or converted into ordinary shares. The following table sets forth the computation of basic and diluted earnings per share for the years indicated: Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Numerator: Net income/(loss), representing undistributed earnings available to ordinary shareholder—basic and diluted 63,710,958 176,737,444 (39,215,085) (5,701,259) Denominator: Weighted average number ordinary shares outstanding—basic and diluted 25,725,000 25,725,000 25,725,000 25,725,000 Earnings per share: Basic and diluted 2.48 6.87 (1.52) (0.22) |
Operating Risk | Operating Risk Concentrations of Credit Risk Trade Accounts Receivable —Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers dispersed across diverse markets and generally short payment terms. Credit is extended based on an evaluation of the customer’s financial condition and collateral generally is not required. The Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company is aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will record a specific allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. As of December 31, 2017 and 2018, there was no individual trade accounts receivable amounted over 10% of the total balance. Revenues —Substantially, all of the Company’s revenues are derived from sales of edible alcohol and its by-products, including DDGS Feed, liquid carbon dioxide and crude corn oil and the Company’s chemical products CPE and AMPS in PRC. Any significant decline in market acceptance of the Company’s products or in the financial condition of our existing customers could impair our ability to operate effectively. None of the individual customers contributed over 10% of the total revenue for the years ended December 31, 2016, 2017 and 2018. Additionally, the Company derives substantially all of its revenue from sales in Northeast China. Purchases — The Company had a concentration of risk for its supply of its primary raw material, corn, which used in the production of edible alcohol. The granary located in Daqing, Heilongjiang as described in the accounting policy for “Inventories” above, supplied 25.0% of the Company’s purchases of corn in 2018. Interest Rate Risk Borrowings and Bonds —The Company’s significant interest-bearing financial liabilities are borrowings and bonds. As of December 31, 2018, all balance of borrowing are short-term borrowings which will be matured at various dates within the year ending December 31, 2019 and do not expose the Company to interest rate risk. The Company’s interest rate risk arises primarily from bonds. The Company’s bonds were issued at fixed rates on November 2, 2016 and expose the Company to fair value and interest rate risk which will be matured at fiscal year 2021. The interest rates profile and terms of repayment of the Company’s bonds payable at the end of the reporting periods are disclosed in note 12, to the consolidated financial statements. Other than the above, other financial assets and liabilities do not have material interest rate risk. Liquidity Risk The Company’s working capital is sufficient to meet our present requirements. The Company may, however, require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. In the long-term, the Company intends to rely primarily on cash flows from operations and additional borrowings from the financial institutions in order to meet the Company’s anticipated cash needs. If the anticipated cash flow is insufficient to meet the requirements, the Company’s may also seek to issue additional equity, debt or equity-linked securities. Country Risk The Company has significant investments in the PRC. The operating results of the Company may be adversely affected by changes in the political and social conditions in the PRC and by changes in Chinese government policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods taxation, pricing and supply of corns and coals, among other things. There can be no assurance; however, those changes in political and other conditions will not result in any adverse impact. |
Recently Issued Accounting Pronouncements Adopted and Not Yet Adopted | Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016- 02 requires a lessee to record a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, on the balance sheet for all leases with terms longer than 12 months, as well as the disclosure of key information about leasing arrangements. ASU 2016-02 requires recognition in the statement of operations of a single lease cost, calculated so that the cost of the lease is allocated over the lease term. ASU 2016-02 requires classification of all cash payments within operating activities in the statement of cash flows. Disclosures are required to provide the amount, timing and uncertainty of cash flows arising from leases. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. This ASU will be effective for the Company on January 1, 2019. We will adopt ASU 2016-02 on January 1, 2019. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement – Reporting Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive income as required by GAAP. The amendments in this Update are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company does not believe the adoption of this ASU would have a material effect on the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives for property, plant and equipment | Buildings and improvements 20 to 30 Years Machinery 10 Years Office equipment and furnishing 3 to 5 Years Motor vehicles 4 to 5 Years |
Schedule of computation of basic and diluted earnings per share | Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Numerator: Net income/(loss), representing undistributed earnings available to ordinary shareholder—basic and diluted 63,710,958 176,737,444 (39,215,085) (5,701,259) Denominator: Weighted average number ordinary shares outstanding—basic and diluted 25,725,000 25,725,000 25,725,000 25,725,000 Earnings per share: Basic and diluted 2.48 6.87 (1.52) (0.22) |
Trade Accounts Receivable, Net
Trade Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Trade Accounts Receivable, Net | |
Schedule of trade accounts receivable, net | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Trade accounts receivable 509,737,390 126,998,338 18,463,572 Less: Allowance for doubtful accounts — — — Total trade accounts receivable, net 509,737,390 126,998,338 18,463,572 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventories | |
Schedule of inventory | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Raw materials 414,172,830 1,387,287,531 201,689,909 Work-in-process 2,681,530 1,764,835 256,579 Finished goods 17,331,071 52,241,134 7,595,044 Total inventories 434,185,431 1,441,293,500 209,541,532 |
Advance to Suppliers (Tables)
Advance to Suppliers (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Advance to Suppliers | |
Schedule of advances to suppliers | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Advance to granaries (note (i)) 559,300,277 — — Others 2,895,908 224,554 32,647 Total advance to suppliers 562,196,185 224,554 32,647 Note (i): Advance to granaries represents corn cost paid but related materials and services have not been provided to the Company. |
Other Receivables (Tables)
Other Receivables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Receivables | |
Schedule of other receivables | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) VAT recoverable (note (i)) 45,434,459 176,873,571 25,714,651 Deposit for loan guarantee 17,900,000 15,000,000 2,180,765 Others 3,056,997 70,494 10,249 Total other receivables 66,391,456 191,944,065 27,905,665 Note (i): As of December 31, 2017 and 2018, VAT recoverable mainly consisted of input VAT paid for purchase of corns but not yet validated by the PRC Taxing Authority of RMB45,179,459 and 176,873,571 ($25,714,651), respectively. |
Property, Plant and Equipment_2
Property, Plant and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment, Net | |
Schedule of property, plant and equipment, net | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Buildings and improvements 655,923,713 653,961,713 95,075,805 Machinery 943,742,391 888,973,826 129,242,890 Office equipment and furnishing 1,468,593 1,468,593 213,510 Motor vehicles 1,715,958 1,496,611 217,584 Total cost 1,602,850,655 1,545,900,743 224,749,789 Total accumulated depreciation (838,181,436) (955,605,318) (138,930,067) Construction in progress 1,386,729 11,634,637 1,691,494 Total property, plant, and equipment, net 766,055,948 601,930,062 87,511,216 |
Land Use Rights, Net (Tables)
Land Use Rights, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Land Use Rights, Net. | |
Summary of land use rights | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Land use rights at cost 144,726,756 144,045,981 20,942,033 Accumulated amortization (17,099,127) (20,104,267) (2,922,846) Total land use rights, net 127,627,629 123,941,714 $ 18,019,187 |
Schedule of future amortization of land use rights | (RMB) Years Ending December 31, Amount 2019 2,832,576 2020 2,832,576 2021 2,832,576 2022 2,832,576 2023 2,832,576 Thereafter 109,778,834 Total 123,941,714 |
Accrued Expenses and Other Pa_2
Accrued Expenses and Other Payables (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accrued Expenses and Other Payables | |
Summary of accrued expenses and other payables | As of December 31, 2017 2018 2018 (RMB) (RMB) ($) Payroll and welfare payables 22,288,807 15,695,733 2,281,914 VAT and other tax payables 28,569,804 23,081,723 3,355,722 Other payables and accruals 3,911,569 2,915,745 423,903 Total accrued expenses and other payables 54,770,180 41,693,201 6,061,539 |
Borrowings (Tables)
Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Borrowings | |
Schedule of borrowings | December 31, 2017 2018 2018 RMB RMB $ • Agricultural Bank of China All borrowings under the loan agreements were guaranteed by third party companies. These loans have been repaid as of December 31, 2018. The interest rate is 4.35%. 320,000,000 — — • Agricultural Bank of China The amount of RMB43,200,000 will be due on January 4, 2019. The amount of RMB40,000,000 will be due on January 28, 2019. The amount of RMB10,000,000 will be due on June 7, 2019. The amount of RMB20,000,000 will be due on June 13, 2019. The amount of RMB20,000,000 will be due on July 15, 2019. The amount of RMB40,000,000 will be due on August 15, 2019. The amount of RMB20,000,000 will be due on September 12, 2019. The amount of RMB30,000,000 will be due on October 10, 2019. The amount of RMB20,000,000 will be due on October 11, 2019. The amount of RMB30,000,000 will be due on October 26, 2019. The amount of RMB10,000,000 will be due on November 5, 2019. The amount of RMB40,000,000 will be due on November 9, 2019. All borrowings under the loan agreements are guaranteed by third party companies. The interest rate is 4.35%. — 323,200,000 46,988,225 • Agricultural Bank of China The amount of RMB33,319,295 will be due on September 28, 2019. The borrowings under this loan agreement is guaranteed by Mr. Wang, Jingmiao, the CEO of the Company, and Shandong Borun. The interest rate is 5.0025%. — 33,319,295 4,844,104 • Construction Bank of China The amount of RMB114,972,579 was repaid during the year of 2018. The amount of RMB84,427,421 was renewed and will be payable in 2019. All borrowings under the loan agreements were guaranteed by Shandong Borun, Mr. Jinmiao Wang, the CEO of the Company, and his family members. The Company also pledged its fixed assets as collateral. The interest rate is 5.22%. 199,800,000 — — • Construction Bank of China The amount of RMB30,000,000 will be due on February 11, 2019. The amount of RMB25,000,000 will be due on March 6, 2019. The amount of RMB20,000,000 will be due on March 15, 2019. The amount of RMB19,827,421 will be due on March 16, 2019. The amount of RMB20,000,000 will be due on April 12, 2019. The amount of RMB25,000,000 will be due on April 21, 2019. The amount of RMB20,000,000 will be due on May 9, 2019. The amount of RMB37,100,000 will be due on December 29, 2019. All borrowings under the loan agreements were guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and his family members. The Company also pledged its fixed assets as collateral. The annual interest rate ranges from 4.785% to 5.655%. — 196,927,421 28,630,167 • CITIC Bank This loan was repaid in 2018. The borrowing under the loan agreement was guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and two third-party companies. The interest rate is 5.655%. 129,867,011 — — • CITIC Bank The amount of RMB129,000,000 will be due on October 15, 2019. The borrowing under the loan agreement was guaranteed by Shandong Borun, Wang Jinmiao, the CEO of the Company, and two third-party companies. The interest rate is 5.8725%. — 129,000,000 18,754,582 • Daqing Rural Commercial Bank The amount of RMB49,000,000 was originally due on September 7, 2018 with annual interest rate of 3.50%. In 2018, the Company renewed the loan and the new due date is August 17, 2019. The new interest rate is 2.917% per month. The loan is guaranteed by a third party guarantee company. Daiqing Borun provided the counter guarantee for this company which is pledged by property, plant and equipment and land use rights and by Shandong Borun, the Company’s CEO, two natural persons and three third-party companies simultaneously. 49,000,000 49,000,000 7,123,834 Total 698,667,011 731,446,715 106,340,912 |
Income Tax Expenses (Tables)
Income Tax Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Expenses | |
Summary of income tax expenses | Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Current 19,481,789 58,912,481 16,522,472 2,402,109 Deferred 1,755,197 — — — Income tax expenses 21,236,986 58,912,481 16,522,472 2,402,109 |
Schedule of reconciliation between total income tax expenses and the amount computed by applying the statutory income tax rate to income before income tax expenses | Year Ended December 31, 2016 2017 2018 Statutory rate 25.00 % 25.00 % 25.00 % Expenses not deductible — % — % — % Effective tax rate 25.00 % 25.00 % 25.00 % |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Schedule of contributions of the major activities, profitability information and asset information of reportable segments | Year ended December 31, 2016 2017 2018 Inter- Profit Inter- Profit Inter- Profit Net segment (loss) Net segment (loss) Net segment (loss) sales sales before tax sales sales befor tax sales sales before tax (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 2,034,302,643 — 79,446,037 2,031,865,359 — 79,446,037 1,280,313,234 — (16,108,554) Chemical products 98,377,542 — 5,501,907 109,006,620 — 5,501,907 523,567,964 — (6,584,059) Segment total 2,132,680,185 84,947,944 2,140,871,979 84,947,944 1,803,881,198 (22,692,613) Reconciliation to consolidated totals: Sales eliminations — — — — — — — — — Consolidated totals: Revenues 2,132,680,185 — 2,140,871,979 — 1,803,881,198 — Revenues ($) 262,256,112 — Income before income taxes 84,947,944 235,649,925 (22,692,613) Income before income taxes ($) (3,299,150) Year ended December 31, 2016 2017 2018 Interest Interest Income tax Interest Interest Income tax Interest Interest Income tax income expense expense Income expense expense Income expense expense (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 4,043,903 52,669,508 17,524,049 4,154,446 66,125,464 56,120,900 3,830,674 62,382,917 7,303,298 Chemical products — — 3,712,937 — — 2,791,581 — — 9,219,174 Consolidated total 4,043,903 52,669,508 21,236,986 4,154,446 66,125,464 58,912,481 3,830,674 62,382,917 16,522,472 Consolidated total ($) 556,920 9,069,499 2,402,109 As of and Year ended December 31, 2016 2017 2018 Depreciation Depreciation Depreciation Identifiable Capital and Identifiable Capital and Identifiable Capital and assets expenditure amortization assets expenditure amortization assets expenditure amortization (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) (RMB) Segment: Corn-base edible alcohol and its by-products 2,871,332,164 — 105,774,948 2,919,052,502 2,631,729 98,816,218 2,902,982,823 — 95,966,036 Chemical products 279,306,560 3,592,397 14,798,770 278,172,337 — 16,832,668 213,038,029 — 14,235,107 Segment totals 3,150,638,724 3,592,397 120,573,718 3,197,224,839 2,631,729 115,648,886 3,116,020,852 — 110,201,143 Reconciliation to consolidated totals: Elimination of receivables from intersegments — — — — — — — — — Consolidated totals 3,150,638,724 3,592,397 120,573,718 3,197,224,839 2,631,729 115,648,886 3,116,020,852 — 110,201,143 Consolidated totals ($) 453,020,695 16,021,522 |
Condensed Financial Informati_2
Condensed Financial Information of New Borun (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Condensed Financial Information of New Borun | |
CONDENSED BALANCE SHEETS | CONDENSED BALANCE SHEETS As of December 31, 2017 2018 2018 (RMB) (RMB) ($) ASSETS Current assets Cash 137 — — Amounts due from subsidiaries 244,532,160 244,532,160 35,551,151 Total current assets 244,532,297 244,532,160 35,551,151 Investments in subsidiaries 1,801,071,015 1,801,071,015 261,847,555 Total assets 2,045,603,312 2,045,603,175 297,398,707 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accrued expenses and other payables 4,999 5,250 763 Total current liabilities and total liabilities 4,999 5,250 763 Total shareholders’ equity 2,045,598,313 2,045,597,925 297,397,943 Total liabilities and shareholders’ equity 2,045,603,312 2,045,603,175 297,398,707 |
CONDENSED STATEMENTS OF INCOME | CONDENSED STATEMENTS OF INCOME Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Operating expenses: General and administrative — — 144 21 Loss from operations — — — — Other income: Interest income — — — — Equity in earnings of subsidiaries 63,710,958 176,737,444 (39,215,085) (5,701,259) Income before income tax expense 63,710,958 176,737,444 (39,215,085) (5,701,259) Income tax expense — — — — Net income 63,710,958 176,737,444 (39,215,085) (5,701,259) |
CONDENSED STATEMENTS OF CASH FLOWS | CONDENSED STATEMENTS OF CASH FLOWS Year Ended December 31, 2016 2017 2018 2018 (RMB) (RMB) (RMB) ($) Net cash provided by operating activities — (9) 107 15 Net cash provided by investing activities — — — — Net cash provided by financing activities — — — — Effect of exchange rate changes on cash and cash equivalents 10 — (244) (36) Net increase/(decrease) in cash 10 (9) (137) (21) Cash—beginning of year 136 146 137 21 Cash—end of year 146 137 — — |
Description of Business (Detail
Description of Business (Details) | Nov. 15, 2012 | Jul. 10, 2008CNY (¥) | Jul. 09, 2008CNY (¥) | Dec. 31, 2018USD ($)segment | Dec. 31, 2018CNY (¥)segment | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) | Mar. 31, 2010 | Dec. 31, 2008 |
Description of business | ||||||||||
Payments for facility improvements | ¥ 950,000 | ¥ 3,592,397 | ||||||||
Income before income taxes | $ (3,299,150) | ¥ (22,692,613) | 235,649,925 | 84,947,944 | ||||||
Number of reportable segments | segment | 2 | 2 | ||||||||
Operating segments | ||||||||||
Description of business | ||||||||||
Income before income taxes | ¥ (22,692,613) | ¥ 84,947,944 | 84,947,944 | |||||||
Foam insulation | Operating segments | ||||||||||
Description of business | ||||||||||
Income before income taxes | ¥ 810,840 | ¥ (6,891,333) | ||||||||
Income before income tax expenses (as a percentage) | 1.00% | (4.00%) | ||||||||
New Borun | Golden Direction | ||||||||||
Description of business | ||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||
New Borun | China High | ||||||||||
Description of business | ||||||||||
Percentage of voting interests acquired | 25.76% | |||||||||
Golden Direction | China High | ||||||||||
Description of business | ||||||||||
Percentage of voting capital stock held | 74.24% | |||||||||
China High | Shandong Borun | ||||||||||
Description of business | ||||||||||
Percentage of direct control | 100.00% | |||||||||
China High | Shandong Borun | ||||||||||
Description of business | ||||||||||
Percentage of voting interests acquired | 100.00% | |||||||||
Shandong Borun | Daqing Borun | ||||||||||
Description of business | ||||||||||
Total purchase price | ¥ 139,000,000 | |||||||||
Payments for facility improvements | ¥ 110,000,000 | |||||||||
Shandong Borun | Daqing Borun | Minimum | ||||||||||
Description of business | ||||||||||
Idle period prior to acquisition | 1 year |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Foreign Currency Translation (Details) | Dec. 31, 2018¥ / $ |
Summary of Significant Accounting Policies | |
Rate used to convert RMB to USD | 6.87832 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property, Plant, and Equipment (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Buildings and improvements | Minimum | |
Property, plant and equipment, net | |
Estimated useful lives | 20 years |
Buildings and improvements | Maximum | |
Property, plant and equipment, net | |
Estimated useful lives | 30 years |
Machinery | |
Property, plant and equipment, net | |
Estimated useful lives | 10 years |
Office equipment and furnishing | Minimum | |
Property, plant and equipment, net | |
Estimated useful lives | 3 years |
Office equipment and furnishing | Maximum | |
Property, plant and equipment, net | |
Estimated useful lives | 5 years |
Motor vehicles | Minimum | |
Property, plant and equipment, net | |
Estimated useful lives | 4 years |
Motor vehicles | Maximum | |
Property, plant and equipment, net | |
Estimated useful lives | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Land Use Rights, Intangible Assets, Impairment of Long-Lived Assets (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Impairment or Disposal of Tangible Assets Disclosure | ||||
Impairment loss | $ 7,268,586 | ¥ 49,995,656 | ¥ 0 | ¥ 0 |
Land use rights | ||||
Intangible Assets, Net | ||||
Useful life | 50 years | 50 years | ||
Production license | ||||
Intangible Assets, Net | ||||
Useful life | 5 years | 5 years | ||
Production license renewal term | 5 years | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Value Added, Consumption and Income Taxes, Retirement Benefits, Appropriated Retained Earnings (Details) | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | |
Significant Accounting Policy | |||||
Input VAT paid for purchase of corns but not yet validated by the PRC Taxing Authority | $ 25,714,651 | ¥ 45,179,459 | ¥ 176,873,571 | ||
Retirement and other postretirement benefits | |||||
Expense for employee benefits | 1,947,290 | ¥ 13,394,085 | 11,558,233 | ¥ 10,016,774 | |
Interests capitalized as borrowing cost in property, plant and equipment | 0 | 0 | 0 | ||
Government subsidy | $ 0 | 117,216,600 | 0 | ||
Uncertain tax positions | 0 | ¥ 0 | |||
Estimated interest costs and penalties provided for uncertain tax positions | ¥ 0 | 0 | 0 | ||
PRC | |||||
Retirement and other postretirement benefits | |||||
Statute of limitations period | 5 years | 5 years | |||
Threshold percentage to determine whether statutory surplus reserves can be converted into capital | 25.00% | 25.00% | |||
Required minimum percentage of after-tax-profit allocated to statutory surplus reserve | 10.00% | 10.00% | |||
Threshold percentage of statutory surplus reserves of the registered capital, used as criteria of allocation requirement | 50.00% | 50.00% | |||
Transfer to statutory reserves | $ 677,111 | ¥ 4,657,384 | ¥ 17,673,744 | ¥ 6,371,096 | |
PRC | Shandong Borun | |||||
Retirement and other postretirement benefits | |||||
Annual percentage of after-tax-profit allocated to statutory surplus reserve | 10.00% | 10.00% | |||
PRC | Daqing Borun | |||||
Retirement and other postretirement benefits | |||||
Annual percentage of after-tax-profit allocated to statutory surplus reserve | 10.00% | 10.00% | |||
Minimum | |||||
Significant Accounting Policy | |||||
Value added tax rate (as a percent) | 0.00% | 0.00% | |||
Maximum | |||||
Significant Accounting Policy | |||||
Value added tax rate (as a percent) | 17.00% | 17.00% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Earnings Per Share (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2018CNY (¥)¥ / sharesshares | Dec. 31, 2017CNY (¥)¥ / sharesshares | Dec. 31, 2016CNY (¥)¥ / sharesshares | |
Summary of Significant Accounting Policies | ||||
Net income/(loss), representing undistributed earnings available to ordinary shareholder-basic and diluted | $ (5,701,259) | ¥ (39,215,085) | ¥ 176,737,444 | ¥ 63,710,958 |
Weighted average number of ordinary shares outstanding - basic and diluted | 25,725,000 | 25,725,000 | 25,725,000 | 25,725,000 |
Basic and diluted (in dollars per share) | (per share) | $ (0.22) | ¥ (1.52) | ¥ 6.87 | ¥ 2.48 |
Operating Risk | ||||
concentration of risk | 25.00% | 25.00% |
Trade Accounts Receivable, Ne_2
Trade Accounts Receivable, Net (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Trade Accounts Receivable, Net | |||
Trade accounts receivable | $ 18,463,572 | ¥ 126,998,338 | ¥ 509,737,390 |
Less: Allowance for doubtful accounts | 0 | 0 | 0 |
Total trade accounts receivable, net | $ 18,463,572 | 126,998,338 | 509,737,390 |
Trade accounts receivables pledged as collateral for borrowings from financial institutions | ¥ 0 | ¥ 0 |
Inventories (Details)
Inventories (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Inventories | |||
Raw materials | $ 201,689,909 | ¥ 1,387,287,531 | ¥ 414,172,830 |
Work-in-process | 256,579 | 1,764,835 | 2,681,530 |
Finished goods | 7,595,044 | 52,241,134 | 17,331,071 |
Total inventories | $ 209,541,532 | 1,441,293,500 | 434,185,431 |
Raw materials | |||
Inventories | |||
Amount pledged as collateral for borrowings from financial institutions | ¥ 0 | ¥ 0 |
Advance to Suppliers (Details)
Advance to Suppliers (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Advance to Suppliers | |||
Advance to granaries | ¥ 559,300,277 | ||
Others | $ 32,647 | ¥ 224,554 | 2,895,908 |
Total Advance to suppliers | $ 32,647 | ¥ 224,554 | ¥ 562,196,185 |
Other Receivables (Details)
Other Receivables (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Other Receivables | |||
VAT recoverable | $ 25,714,651 | ¥ 176,873,571 | ¥ 45,434,459 |
Deposit for loan guarantee | 2,180,765 | 15,000,000 | 17,900,000 |
Others | 10,249 | 70,494 | 3,056,997 |
Total other receivables | 27,905,665 | 191,944,065 | 66,391,456 |
Input VAT paid for purchase of corns but not yet validated by the PRC Taxing Authority | $ 25,714,651 | ¥ 176,873,571 | ¥ 45,179,459 |
Property, Plant and Equipment_3
Property, Plant and Equipment, Net (Details) | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | |
Property, plant and equipment, net | |||||
Total cost | $ 224,749,789 | ¥ 1,602,850,655 | ¥ 1,545,900,743 | ||
Total accumulated depreciation | (138,930,067) | (838,181,436) | (955,605,318) | ||
Construction in progress | 1,691,494 | 1,386,729 | 11,634,637 | ||
Total property, plant, and equipment, net | 87,511,216 | 766,055,948 | 601,930,062 | ||
Interests capitalized as borrowing cost in property, plant and equipment | ¥ 0 | 0 | ¥ 0 | ||
Impairment loss | 7,268,586 | 49,995,656 | 0 | 0 | |
Depreciation expenses | 15,485,648 | ¥ 106,515,229 | 112,816,310 | ¥ 115,744,856 | |
Buildings and improvements | |||||
Property, plant and equipment, net | |||||
Total cost | 95,075,805 | 655,923,713 | 653,961,713 | ||
Machinery | |||||
Property, plant and equipment, net | |||||
Total cost | 129,242,890 | 943,742,391 | 888,973,826 | ||
Office equipment and furnishing | |||||
Property, plant and equipment, net | |||||
Total cost | 213,510 | 1,468,593 | 1,468,593 | ||
Motor vehicles | |||||
Property, plant and equipment, net | |||||
Total cost | $ 217,584 | ¥ 1,715,958 | ¥ 1,496,611 |
Land Use Rights, Net (Details)
Land Use Rights, Net (Details) - Land use rights | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Land Use Rights, Net | |||
Land use rights at cost | $ 20,942,033 | ¥ 144,045,981 | ¥ 144,726,756 |
Accumulated amortization | (2,922,846) | (20,104,267) | (17,099,127) |
Total | 18,019,187 | 123,941,714 | 127,627,629 |
Amount pledged as collateral for borrowings from the financial institutions | $ 1,428,743 | ¥ 9,827,352 | ¥ 10,076,146 |
Land Use Rights, Net - Future A
Land Use Rights, Net - Future Amortization (Details) | 12 Months Ended | ||||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | |
Land Use Rights, Net | |||||
Amortization expense | $ 535,874 | ¥ 3,685,914 | ¥ 2,832,576 | ¥ 4,828,862 | |
Land use rights | |||||
Land Use Rights, Net | |||||
Amortization expense | 433,500 | 2,832,576 | 2,832,577 | 2,832,578 | |
Provision for impairment loss charged | ¥ 0 | 0 | ¥ 0 | ||
Future amortization of land use rights | |||||
2019 | ¥ 2,832,576 | ||||
2020 | 2,832,576 | ||||
2021 | 2,832,576 | ||||
2022 | 2,832,576 | ||||
2023 | 2,832,576 | ||||
Thereafter | 109,778,834 | ||||
Total | $ 18,019,187 | ¥ 127,627,629 | ¥ 123,941,714 |
Accrued Expenses and Other Pa_3
Accrued Expenses and Other Payables (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Accrued Expenses and Other Payables | |||
Payroll and welfare payables | $ 2,281,914 | ¥ 15,695,733 | ¥ 22,288,807 |
VAT and other tax payables | 3,355,722 | 23,081,723 | 28,569,804 |
Other payables and accruals | 423,903 | 2,915,745 | 3,911,569 |
Total accrued expenses and other payables | $ 6,061,539 | ¥ 41,693,201 | ¥ 54,770,180 |
Borrowings (Details)
Borrowings (Details) | Dec. 29, 2019CNY (¥) | Nov. 09, 2019CNY (¥) | Nov. 05, 2019CNY (¥) | Oct. 26, 2019CNY (¥) | Oct. 11, 2019CNY (¥) | Oct. 10, 2019CNY (¥) | Sep. 28, 2019CNY (¥) | Sep. 12, 2019CNY (¥) | Aug. 15, 2019CNY (¥) | Jul. 15, 2019CNY (¥) | Jun. 13, 2019CNY (¥) | Jun. 07, 2019CNY (¥) | May 09, 2019CNY (¥) | Apr. 21, 2019CNY (¥) | Apr. 12, 2019CNY (¥) | Mar. 16, 2019CNY (¥) | Mar. 15, 2019CNY (¥) | Mar. 06, 2019CNY (¥) | Feb. 11, 2019CNY (¥) | Jan. 28, 2019CNY (¥) | Jan. 04, 2019CNY (¥) | Sep. 07, 2018CNY (¥) | Dec. 31, 2019CNY (¥) | Dec. 31, 2018USD ($)companyperson | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥)company | Dec. 31, 2016CNY (¥) | Aug. 17, 2019 | Dec. 31, 2018CNY (¥)companyperson |
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 106,340,912 | ¥ 698,667,011 | ¥ 731,446,715 | |||||||||||||||||||||||||||
Interest rate (as a percent) | 6.50% | 6.50% | 6.50% | |||||||||||||||||||||||||||
Bank debt repaid | ¥ 1,087,370,000 | ¥ 893,900,000 | ||||||||||||||||||||||||||||
Interest expenses related to borrowings | $ 5,877,495 | ¥ 40,427,287 | $ 6,840,470 | 44,696,999 | ||||||||||||||||||||||||||
Agricultural Bank of China in 2017 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | ¥ 320,000,000 | |||||||||||||||||||||||||||||
Interest rate (as a percent) | 4.35% | |||||||||||||||||||||||||||||
Agricultural Bank of China | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 46,988,225 | ¥ 323,200,000 | ||||||||||||||||||||||||||||
Interest rate (as a percent) | 4.35% | 4.35% | ||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due January 04, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 43,200,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due January 28, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 40,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due June 07, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 10,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due June 13, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due July 15, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due August 15, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 40,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due September 12, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due September 28, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 4,844,104 | ¥ 33,319,295 | ||||||||||||||||||||||||||||
Interest rate (as a percent) | 5.0025% | |||||||||||||||||||||||||||||
Bank debt repaid | ¥ 33,319,295 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due October 10, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 30,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due October 11, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due October 26, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 30,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due November 05, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 10,000,000 | |||||||||||||||||||||||||||||
Agricultural Bank of China | Notes payable to bank due November 09, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 40,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China in 2017 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | ¥ 199,800,000 | |||||||||||||||||||||||||||||
Interest rate (as a percent) | 5.22% | |||||||||||||||||||||||||||||
Construction Bank of China in 2017 | Notes payable to bank due December 31, 2018 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | 114,972,579 | |||||||||||||||||||||||||||||
Construction Bank of China in 2017 | Notes payable to bank due December 31, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 84,427,421 | |||||||||||||||||||||||||||||
Construction Bank of China | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 28,630,167 | ¥ 196,927,421 | ||||||||||||||||||||||||||||
Construction Bank of China | Minimum | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Interest rate (as a percent) | 4.785% | 4.785% | ||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due February 11, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 30,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due March 06, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 25,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due March 15, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due March 16, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 19,827,421 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due April 12, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due April 21, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 25,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due May 09, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 20,000,000 | |||||||||||||||||||||||||||||
Construction Bank of China | Notes payable to bank due December 29, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 37,100,000 | |||||||||||||||||||||||||||||
China Construction Bank | Maximum | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Interest rate (as a percent) | 5.655% | 5.655% | ||||||||||||||||||||||||||||
China CITIC Bank | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 18,754,582 | ¥ 129,867,011 | ¥ 129,000,000 | |||||||||||||||||||||||||||
Interest rate (as a percent) | 5.8725% | 5.655% | 5.8725% | |||||||||||||||||||||||||||
Number of third-party companies | company | 2 | 2 | 2 | |||||||||||||||||||||||||||
China CITIC Bank | Notes payable to bank due October 15, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Bank debt repaid | ¥ 129,000,000 | |||||||||||||||||||||||||||||
Daqing Rural Commercial Bank | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Short-term borrowings | $ 7,123,834 | ¥ 49,000,000 | ¥ 49,000,000 | |||||||||||||||||||||||||||
Number of third-party companies | company | 3 | 3 | ||||||||||||||||||||||||||||
Number of natural persons | person | 2 | 2 | ||||||||||||||||||||||||||||
Daqing Rural Commercial Bank | Notes payable to bank due September 07, 2018 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Interest rate (as a percent) | 3.50% | |||||||||||||||||||||||||||||
Bank debt repaid | ¥ 49,000,000 | |||||||||||||||||||||||||||||
Daqing Rural Commercial Bank | Notes payable to bank due August 17, 2019 | ||||||||||||||||||||||||||||||
Borrowings | ||||||||||||||||||||||||||||||
Interest rate (as a percent) | 2.917% |
Bonds Payable (Details)
Bonds Payable (Details) | Nov. 02, 2016USD ($)$ / shares | Nov. 02, 2016CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Nov. 02, 2016CNY (¥)¥ / shares |
Bonds Payable | ||||||||||
Debt instrument, face amount | $ 43,615,301 | ¥ 300,000,000 | $ 43,615,301 | ¥ 300,000,000 | ||||||
Debt instrument, fixed interest rate (as a percent) | 6.50% | 6.50% | 6.50% | 6.50% | ||||||
Unamortized debt issuance costs interest rate (as a percentage) | 6.75% | 6.75% | 6.75% | 6.75% | ||||||
Interests incurred | $ 3,192,005 | ¥ 21,955,630 | ¥ 20,263,965 | ¥ 2,865,835 | ||||||
Prepaid interests | $ 432,464 | 26,422 | 134,165 | ¥ 181,737 | ¥ 781,737 | ¥ 3,000,000 | ||||
Cost associated to the debt issuance of Bonds | 1,028,663 | 7,075,472 | ||||||||
Amortized deferred expenses | 205,523 | 1,413,655 | 1,411,537 | 672,831 | ||||||
Outstanding deferred expenses | 582,316 | 6,830,549 | 4,005,357 | 5,419,012 | ||||||
Non-current liabilities | ||||||||||
Bonds payable-Outstanding principal non current | 28,494,555 | 293,169,451 | 195,994,643 | ¥ 294,580,988 | ||||||
Current liabilities | ||||||||||
Bonds payable-Outstanding principal current | 14,538,436 | ¥ 100,000,000 | ||||||||
Interest expense | ||||||||||
Bonds Payable | ||||||||||
Amortized deferred expenses | $ 205,523 | ¥ 1,413,655 | ¥ 1,411,537 | ¥ 244,923 | ||||||
Shandong Borun | ||||||||||
Bonds Payable | ||||||||||
Debt instrument, face amount | $ 43,615,301 | ¥ 300,000,000 | ||||||||
Face value of Bonds issued (in CNY or USD per share) | (per share) | $ (14) | ¥ 100 | ||||||||
Debt instrument, fixed interest rate (as a percent) | 6.50% | 6.50% | ||||||||
Debt instrument, maturity date | Nov. 2, 2021 | Nov. 2, 2021 | ||||||||
Amount to be repaid at the end of each of the third, fourth and fifth year life of the Bonds | $ 14,538,434 | ¥ 100,000,000 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | |
Restricted Net Assets | |||
Required minimum percentage of after-tax-profit allocated to general reserve | 10.00% | ||
Threshold percentage of general reserve of the registered capital, used as criteria of allocation requirement | 50.00% | ||
Required minimum percentage of after-tax-profit allocated to statutory common reserve | 10.00% | ||
Threshold percentage of statutory common reserve of the registered capital, used as criteria of allocation requirement | 50.00% | ||
Amount of restricted paid-in-capital and statutory reserve funds | $ 200,250,684 | ¥ 1,377,388,085 | ¥ 1,371,710,109 |
Income Tax Expenses (Details)
Income Tax Expenses (Details) - CNY (¥) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income taxes | |||
Statutory tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
Withholding income tax accrued | ¥ 0 | ||
Cayman Islands | New Borun | |||
Income taxes | |||
Statutory tax rate (as a percent) | 0.00% | ||
British Virgin Islands | Golden Direction | |||
Income taxes | |||
Statutory tax rate (as a percent) | 0.00% | ||
Hong Kong | China High | |||
Income taxes | |||
Statutory tax rate (as a percent) | 16.50% | ||
PRC | |||
Income taxes | |||
Statutory tax rate (as a percent) | 25.00% | ||
PRC | Minimum | |||
Income taxes | |||
Tax rate on dividends (as a percent) | 5.00% | ||
PRC | Maximum | |||
Income taxes | |||
Tax rate on dividends (as a percent) | 10.00% |
Income Tax Expenses - Current a
Income Tax Expenses - Current and Deferred Income Taxes (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Income Tax Expenses | ||||
Current | $ 2,402,109 | ¥ 16,522,472 | ¥ 58,912,481 | ¥ 19,481,789 |
Deferred | 1,755,197 | |||
Income tax expenses | $ 2,402,109 | ¥ 16,522,472 | ¥ 58,912,481 | ¥ 21,236,986 |
Income Tax Expenses - Reconcili
Income Tax Expenses - Reconciliation Between The Statutory Tax Rate and the Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Expenses | |||
Statutory rate (as a percent) | 25.00% | 25.00% | 25.00% |
Effective tax rate (as a percent) | 25.00% | 25.00% | 25.00% |
Commitments and Contingencies -
Commitments and Contingencies - Commitments (Details) - CNY (¥) | Dec. 31, 2018 | Dec. 31, 2017 |
Capital commitment for purchase of property, plant and equipment | ||
Commitments and contingencies | ||
Purchase obligations | ¥ 0 | ¥ 11,200,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Guarantees and Indemnities (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) |
Guarantee of short-term bank loans | Third parties guaranteed | |||
Commitments and contingencies | |||
Guaranteed amount | $ 81,785,959 | ¥ 562,550,000 | ¥ 844,200,000 |
Segment Information (Details)
Segment Information (Details) | 12 Months Ended | ||||
Dec. 31, 2018USD ($)segment | Dec. 31, 2018CNY (¥)segment | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2018CNY (¥) | |
Segment information | |||||
Number of reportable segments | segment | 2 | 2 | |||
Net sales | $ 262,256,112 | ¥ 1,803,881,198 | ¥ 2,140,871,979 | ¥ 2,132,680,185 | |
Profit (loss) before tax | (3,299,150) | (22,692,613) | 235,649,925 | 84,947,944 | |
Interest income | 556,920 | 3,830,674 | 4,154,446 | 4,043,903 | |
Interest expense | 9,069,499 | 62,382,917 | 66,125,464 | 52,669,508 | |
Income tax expense | 2,402,109 | 16,522,472 | 58,912,481 | 21,236,986 | |
Identifiable assets | 453,020,695 | 3,197,224,839 | 3,150,638,724 | ¥ 3,116,020,852 | |
Capital expenditure | 2,631,729 | 3,592,397 | |||
Depreciation and amortization | $ 16,021,522 | 110,201,143 | 115,648,886 | 120,573,718 | |
Operating segments | |||||
Segment information | |||||
Net sales | 1,803,881,198 | 2,140,871,979 | 2,132,680,185 | ||
Profit (loss) before tax | (22,692,613) | 84,947,944 | 84,947,944 | ||
Identifiable assets | 3,197,224,839 | 3,150,638,724 | 3,116,020,852 | ||
Capital expenditure | 2,631,729 | 3,592,397 | |||
Depreciation and amortization | 110,201,143 | 115,648,886 | 120,573,718 | ||
Operating segments | Corn-base edible alcohol and its by-products | |||||
Segment information | |||||
Net sales | 1,280,313,234 | 2,031,865,359 | 2,034,302,643 | ||
Profit (loss) before tax | (16,108,554) | 79,446,037 | 79,446,037 | ||
Interest income | 3,830,674 | 4,154,446 | 4,043,903 | ||
Interest expense | 62,382,917 | 66,125,464 | 52,669,508 | ||
Income tax expense | 7,303,298 | 56,120,900 | 17,524,049 | ||
Identifiable assets | 2,919,052,502 | 2,871,332,164 | 2,902,982,823 | ||
Capital expenditure | 2,631,729 | ||||
Depreciation and amortization | 95,966,036 | 98,816,218 | 105,774,948 | ||
Operating segments | Chemical products | |||||
Segment information | |||||
Net sales | 523,567,964 | 109,006,620 | 98,377,542 | ||
Profit (loss) before tax | (6,584,059) | 5,501,907 | 5,501,907 | ||
Income tax expense | 9,219,174 | 2,791,581 | 3,712,937 | ||
Identifiable assets | 278,172,337 | 279,306,560 | ¥ 213,038,029 | ||
Capital expenditure | 3,592,397 | ||||
Depreciation and amortization | ¥ 14,235,107 | ¥ 16,832,668 | ¥ 14,798,770 |
Condensed Financial Informati_3
Condensed Financial Information of New Borun - Condensed Balance Sheets (Details) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | Dec. 31, 2015CNY (¥) |
Current assets | ||||||
Cash | $ 90,750,611 | ¥ 624,211,652 | $ 105,876,058 | ¥ 728,249,297 | ¥ 795,329,065 | ¥ 495,630,607 |
Total current assets | 347,490,292 | 2,390,149,076 | 2,303,541,262 | |||
Total assets | 453,020,695 | 3,116,020,852 | 3,197,224,839 | 3,150,638,724 | ||
Current liabilities | ||||||
Accrued expenses and other payables | 6,061,539 | 41,693,201 | 54,770,180 | |||
Total liabilities | 161,330,095 | 1,109,679,872 | 1,151,626,526 | |||
Total shareholders' equity | 291,690,600 | 2,006,340,980 | 2,045,598,313 | 1,868,799,493 | 1,805,147,961 | |
Total liabilities and shareholders' equity | 453,020,695 | 3,116,020,852 | 3,197,224,839 | |||
New Borun | ||||||
Current assets | ||||||
Cash | $ 21 | 137 | ¥ 146 | ¥ 136 | ||
Amounts due from subsidiaries | 35,551,151 | 244,532,160 | 244,532,160 | |||
Total current assets | 35,551,151 | 244,532,160 | 244,532,297 | |||
Investments in subsidiaries | 261,847,555 | 1,801,071,015 | 1,801,071,015 | |||
Total assets | 297,398,707 | 2,045,603,175 | 2,045,603,312 | |||
Current liabilities | ||||||
Accrued expenses and other payables | 763 | 5,250 | 4,999 | |||
Total liabilities | 763 | 5,250 | 4,999 | |||
Total shareholders' equity | 297,397,943 | 2,045,597,925 | 2,045,598,313 | |||
Total liabilities and shareholders' equity | $ 297,398,707 | ¥ 2,045,603,175 | ¥ 2,045,603,312 |
Condensed Financial Informati_4
Condensed Financial Information of New Borun - Condensed Statements of Income (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
Operating expenses: | ||||
General and administrative | $ (7,696,043) | ¥ (52,935,840) | ¥ (49,015,721) | ¥ (48,413,749) |
Loss from operations | 5,213,429 | 35,859,630 | 297,620,943 | 133,573,549 |
Other income: | ||||
Interest income | 556,920 | 3,830,674 | 4,154,446 | 4,043,903 |
Income (loss) before income tax expenses | (3,299,150) | (22,692,613) | 235,649,925 | 84,947,944 |
Income tax expense | 2,402,109 | 16,522,472 | 58,912,481 | 21,236,986 |
Net income (loss) attributable to ordinary shareholders | (5,701,259) | (39,215,085) | 176,737,444 | 63,710,958 |
New Borun | ||||
Operating expenses: | ||||
General and administrative | 21 | 144 | ||
Other income: | ||||
Equity in earnings of subsidiaries | (5,701,259) | (39,215,085) | 176,737,444 | 63,710,958 |
Income (loss) before income tax expenses | (5,701,259) | (39,215,085) | 176,737,444 | 63,710,958 |
Net income (loss) attributable to ordinary shareholders | $ (5,701,259) | ¥ (39,215,085) | ¥ 176,737,444 | ¥ 63,710,958 |
Condensed Financial Informati_5
Condensed Financial Information of New Borun - Condensed Statements of Cash Flows (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017CNY (¥) | Dec. 31, 2016CNY (¥) | |
CONDENSED STATEMENTS OF CASH FLOWS | ||||
Net cash provided by operating activities | $ (21,203,729) | ¥ (145,846,004) | ¥ 140,311,845 | ¥ 159,931,964 |
Net cash provided by investing activities | 1,107,102 | 7,615,000 | (950,000) | 151,193 |
Net cash provided by financing activities | 4,971,180 | 34,193,359 | (206,502,989) | 139,615,291 |
Effect of exchange rate changes on cash and cash equivalents | (5,282) | (36,333) | 61,376 | 10 |
Net increase/ (decrease) in cash | (15,125,447) | (104,037,645) | (67,079,768) | 299,698,458 |
Cash-beginning of year | 105,876,058 | 728,249,297 | 795,329,065 | 495,630,607 |
Cash-end of year | 90,750,611 | 624,211,652 | 728,249,297 | 795,329,065 |
New Borun | ||||
CONDENSED STATEMENTS OF CASH FLOWS | ||||
Net cash provided by operating activities | 15 | 107 | (9) | |
Effect of exchange rate changes on cash and cash equivalents | (36) | (244) | 10 | |
Net increase/ (decrease) in cash | (21) | (137) | (9) | 10 |
Cash-beginning of year | $ 21 | ¥ 137 | 146 | 136 |
Cash-end of year | ¥ 137 | ¥ 146 |