FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2022

Financial Instruments

FINANCIAL INSTRUMENTS

18. FINANCIAL INSTRUMENTS

(a) Financial assets

Set out below is an overview of financial assets, other than cash and short-term deposits, held by the Group as of December 31, 2021 and June 30, 2022:

	December 31,		June 30,
	2021		2022		2022
	CNY		CNY		US$
	(Audited)		(Unaudited)		(Unaudited)
Debt instruments at amortized cost:
Accounts receivable: current		41,526		43,609		6,510
Accounts receivable: non-current		9,501		8,455		1,262
Financial assets included in other receivables		85,224		87,870		13,116
Financial assets at fair value through other comprehensive income:
Bills receivable		—		11,700		1,746
Total		136,251		151,634		22,634
Total Current		126,750		143,179		21,372
Total Non-current		9,501		8,455		1,262

(b) Financial liabilities

Set out below, is an overview of financial liabilities of the Group as of December 31, 2021 and June 30, 2022:

	December 31,		June 30,		June 30
	2021		2022		2022
	CNY		CNY		US$
	(Audited)		(Unaudited)		(Unaudited)
Derivatives not designated as hedging instruments：
Derivative financial liabilities (i)		1,710		1,224		183
Financial liabilities at amortized cost:
Trade payables		21,118		17,810		2,658
Financial liabilities in other payables and accruals		5,903		9,174		1,368
Dividends payable		5,048		5,048		753
Lease liabilities		2,189		1,646		246
Due to related companies		5,710		5,986		893
Due to the Shareholder		14,050		14,050		2,097
Interest-bearing loans and borrowings		77,000		75,500		11,270
Total		132,728		130,438		19,468
Total current		57,520		56,905		8,491
Total non-current		75,208		73,533		10,977

(i) On January 20, 2021, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company issued and sold on January 22, 2021, (i) in a registered direct offering, an aggregate of 3,960,000 of its common shares at a price of US$1.85 per share, and (ii) in a concurrent private placement, warrants initially exercisable for an aggregate of 1,584,000 of the Company’s common shares with an initial exercise price of US$2.35 per share.

The Company recognized the warrants issued to the investors as derivative financial liabilities (not designated as hedging instruments) with a fair value of CNY9,246 (US$1,427)* on the issue date as the investors have the right to exercise their warrants on a cashless basis. Per IAS 32, a contract settled by a single net payment (generally referred to as net cash-settled or net equity-settled as the case may be) is a financial liability and not an equity instrument. The fair value gain of CNY1,208 and CNY559 (US$83) (Note 6) were recognized according to fair value changes for the six months ended June 30, 2021 and 2022, respectively.

* As the changes in equity from this private placement transaction are denominated in US$, the amount in US$ is the actual transaction amount and the corresponding amount in CNY was translated from US$ at the applicable exchange rate of the transaction date, January 22, 2021.

(c) Fair value

Set out below is a comparison, by class, of the carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values:

	December 31,				June 30,
	2021				2022				2022
	CNY				CNY				US$
	(Audited)				(Unaudited)				(Unaudited)
	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value
Financial liabilities
Interest-bearing loans and borrowings		77,000		79,003		75,500		78,471		11,270		11,713
Total		77,000		79,003		75,500		78,471		11,270		11,713

The following table provides the fair value measurement hierarchy of the Group’s financial assets and financial liabilities as of December 31, 2021 and June 30, 2022:

As of December 31, 2021 (Audited)	Fair value measurement using
	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
	CNY		CNY		CNY		CNY
Recurring fair value measurement:
Financial liabilities
Derivative financial liabilities		—		1,710		—		1,710

As of June 30, 2022 (Unaudited)	Fair value measurement using
	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
	CNY		CNY		CNY		CNY
Recurring fair value measurement:
Financial assets
Bills receivables		—		11,700		—		11,700
Financial liabilities
Derivative financial liabilities		—		1,224		—		1,224

As of June 30, 2022 (Unaudited)	Fair value measurement using
	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
	US$		US$		US$		US$
Recurring fair value measurement:
Financial assets
Bills receivables		—		1,746		—		1,746
Financial liabilities
Derivative financial liabilities		—		183		—		183

Level 2:

Bills receivable

The fair value valuation of bills receivable is based on directly or indirectly observable inputs (such as recent bill discount rates) through valuation techniques. The fair value of the bills receivable approximate their book value due to the short-term maturity.

Derivative financial liabilities

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

There is no established public trading market for the warrants issued to investors on January 22, 2021. As of June 30, 2022, the Group measured the fair value of those warrants on a recurring basis using a binomial lattice pricing model with significant inputs including the underlying spot price of the Company’s ordinary shares, exercise price, time to expiration, risk-free rate and equity volatility, etc., which are all relevant observable inputs.