Shang Gong Group Co., Ltd.
Semi-annual Report 2018
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
IMPORTANT NOTES
1. The board of directors, the board of supervisors, directors, supervisors and senior executives of
the Company undertake that the content of the semi-annual report is true, accurate and complete, and
contains no false records, misleading statements, or major omissions, and will assume joint and several
legal liabilities arising therefrom.
2. All the directors of Shang Gong Group Co., Ltd. attended the meeting of the board of directors.
3. The semi-annual report is not audited.
4. Zhang Min, Chairman of the Company, Li Jiaming, the principal in charge of the accounting,
and Zhao Lixin, Chief of Accounting Affairs, declare and guarantee the veracity, accuracy and integrity
of the financial report in the semi-annual report.
5. Plan of profit distribution or transfer of reserves deliberated by the board
The profit distribution cannot be made in report period, neither the transferring of capital reserves into
share capital.
6. Warning statement of forward-looking statements
The Company’s future plan, development strategy and other forward-looking statements in the report do
not constitute any material commitment of the Company to investors. Investors and relevant persons shall be
sufficiently mindful of risks, and undertake the difference in plans, predictions and commitments.
7. There was no occupation of fund of the Company occurred for non-operating use by holding
shareholder and its related parties.
8. There was no external guarantee against the rules and regulations of the Company.
9. Major risk waring
The Company has described in detail the risks faced by the Company in this report. For details see
“Discussion and Analysis on Business Operation” and other relevant chapters in this report.
10. This report is prepared in both Chinese and English. In the case of any inconsistent
understanding between the Chinese version and the English version, the Chinese version shall prevail.
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
TABLE OF CONTENTS
Chapter 1 Definition .......................................................................................................................................... 1
Chapter 2 Company Profile and Main Financial Index ..................................................................................... 1
Chapter 3 Summary of Company Business ....................................................................................................... 3
Chapter 4 Discussion and Analysis on the Business Operation ......................................................................... 6
Chapter 5 Important Events ............................................................................................................................. 13
Chapter 6 Changes in Shares of Common Stock and Information about Common Stock Shareholders ......... 17
Chapter 7 Information about Preferred Shares ................................................................................................ 18
Chapter 8 Inforamtion about Directors, Supervisors and Senior Managers..................................................... 19
Chapter 9 Corporate Bonds.............................................................................................................................. 19
Chapter 10 Financial Report ............................................................................................................................ 20
Chapter 11 Documents for Reference ............................................................................................................ 102
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Chapter 1 Definition
As used in this report, the following terms have the following meanings unless the context requires
otherwises:
Definition of common terms
ShangGong Group, SGG, the
refer to Shang Gong Group Co., Ltd.
Company
PKFR refers to Shanghai Puke Flyingman Investment Co., Ltd
State-owned Assets Supervision and Administration Commission of
Pudong SASAC refers to
Shanghai Pudong New Aear People’s Government
DAP AG, SGE refer to DAP Industrial AG, former ShangGong (Europe) Holding Corp. GmbH
DA AG refers to Dürkopp Adler AG
PFAFF GmbH refers to PFAFF Industriesystemeund Maschinen GmbH
KSL refers to PFAFF Industriesystemeund Maschinen GmbH Zweigniederlassung KSL
STOLL KG, STOLL refers to H. Stoll AG & Co. KG
ISMB refers to Shang Gong Group Co., Ltd. Industrial Sewing Machine Branch
Butterfly Branch refers to Shang Gong Group Co., Ltd. Shanghai Butterfly Sewing Machine Branch
SGGEMSY refers to Zhejiang ShangGong GEMSY CO., LTD.
PIZ refers to PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd.
DAMSH refers to Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd.
Richpeace refers to Tianjin Richpeace Computer & Machinery Co.,Ltd
DAPSH refers to DAP (China) Co., Ltd.
SG Butterfly refers to Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd.
SHENSY refers to Shanghai Shensy Enterprise Development Co., Ltd.
Report period, reporting period refers to From 1st January 2018 to 30th June 2018
Yuan, RMB refer to The lawful currency of the People’s Republic of China
Euro, EUR refer to The lawful currency of the European Union
Chapter 2 Company Profile and Main Financial Index
1. Company information
Company name in Chinese 上工申贝（集团）股份有限公司
Abbreviation of the Company name in Chinese 上工申贝
Compay name in English Shang Gong Group Co., Ltd.
Abbreviation of the Company name in English ShangGong Group
Legal representative Zhang Min
2. Contact information
Secretary of Board of Directors Representative of Securities Affairs
Name Zhou Yongqiang Shen Lijie
Office
No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai
address
Tel 021-68407515 021-68407700-437
Fax 021-63302939 021-63302939
Email zyq@sgsbgroup.com shenlj@sgsbgroup.com
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3. Basic situation introduction
Room A-D, 12th Floor, Orient Mansion, No. 1500 Century Avenue, China (Shanghai) Pilot Free
Registered address
Trade Zone
Postal code of registered address 200122
Office address No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai
Postal code of office address 201206
Company website http://www.sgsbgroup.com/
Email 600843@sgsbgroup.com
4. Place for information disclosure and consulting
Newspaper selected by the Company for information disclosure Shanghai Securities News; Hong Kong Commercial Daily
Website appointed by CSRC for publishing semi-annual report http://www.sse.com.cn
Lodging address of semi-annual report of the Company Office of the Company
5. Corporate stock
Type Stock exchange Stock abbreviation Stock code
A Share Shanghai Stock Exchange SGSB 600843
B Share Shanghai Stock Exchange SGBG 900924
6. Other information
Not applicable.
7. Main accounting data and financial index
7.1 Main accounting data
Unit: Yuan, Currency: RMB
Same period of the
Reporting period Increase or decrease over
previous year
Main accounting data (from January to June the same period of the
(from January to June
2018) previous year (%)
2017)
Operaing income 1,494,794,413.27 1,532,562,601.12 -2.46
Net profit attributable to shareholders of listed company 100,161,346.50 125,980,892.71 -20.49
Net profit attributable to shareholders of listed company
after deduction of non-recurrent account profits and 89,370,615.19 113,282,323.52 -21.11
losses
Net cash flow from operating activities -57,703,154.75 -59,790,323.47 N/A
Increase or decrease at
the end of the reporting
30th June 2018 31st December 2017
period from the end of
the previous year(%)
Net assets attributable to shareholders of listed company 2,214,142,646.86 2,145,214,676.69 3.21
Total assets 3,824,540,859.31 3,703,515,071.60 3.27
7.2 Main financial index
Same period of the
Reporting period Increase or decrease over
previous year
Main financial index (from January to June the same period of the
(from January to June
2018) previous year (%)
2017)
Basic earnings per share (yuan/share) 0.1826 0.2296 -20.47
Diluted earning per share (yuan/share) 0.1826 0.2296 -20.47
Basic earnings per share after deduction of non-recurrent profits
0.1629 0.2065 -21.11
and losses (yuan/share)
Weighted average return on net assets (%) 4.5625 6.3648 Decrease 1.80 percent
Weighted average return on net assets after deduction of
4.0710 5.7232 Decrease 1.65 percent
non-recurrent profits and losses (%)
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8. Accounting data differences between domestic and foreign accounting standards
Not applicable.
9. Items and amount of non-recurring profit and loss
Unit: Yuan, Currency: RMB
Item Amount
Profits and losses from disposal of non-current assets -571,141.92
Government subsidies recorded in the current profit and loss 2,636,373.56
Except effective hedging business relevant to the normal business of the Company, gains and losses from
changes in fair value arising from trading financial assets and trading financial liabilities, and investment
7,286,382.96
income from disposal of trading financial assets, trading financial liabilities and available-for-sale financial
assets
Other non-operating income and expenditure except the above-said items 2,380,381.79
Impact on minority interests -776,580.59
Impact on income tax -164,684.49
Total 10,790,731.31
Chapter 3 Summary of Company Business
1. The Company’s main business, business model in the report period and industry situation
During the reporting period, the Company's main business is the sewing equipment manufacturing
industry. The Company’s business also involved flat knitting machines, office machinery, logistics services
and trade. The Company's sewing equipment includes industrial sewing machines, household sewing machines
and custom-made industrial machines for special purposes.
The Company adheres to globalization of business, and implements unified management of sales of
sewing equipment. The Company adopts a gradient-based specialized multi-brand marketing strategy, and
conducts gradient division management on production sites throughout Europe and Asia. The Company pays
attention to collaborative research and development, and seizes the global high-end market of sewing
equipment with leading technology. At the same time, the Company is cultivating the business model of
“Shanghai Manufacturing”, which means R&D and marketing in Shanghai while production in Jiangsu,
Zhejiang and other provinces.
In recent years, through the implementation of mergers and acquisitions at home and abroad and the
reorganization and integration within the Company, with the business philosophy of “market orientation and
benefit first” to manage subsidiaries in a unified manner, the synergy effect has gradually emerged and the
international business model has achieved good results.
China’s sewing machinery manufacturing industry is a branch of light industry in China. It has
established the most complete industrial system in the world, and is capable of manufacturing a full range of
sewing machinery products, including household and industrial sewing machine, embroidery machine and
cutting machine, and the related controller, motor ability and spare parts, which satisfies all kinds of social
needs. However, compared with the advanced in the world, there is still a large gap for China’s sewing
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machinery manufacturing industry in independent innovation ability, industrial structure, technology, product
and brand quality and other aspects. The whole industry is big but not strong. The development of the world
sewing machinery industry started in the middle of the nineteenth Century in Europe and the United States.
After 100 years of development, at present the world sewing machine industry development center has been
transferred to the Asian region like China and Japan, and gradually formed tripartite confrontation pattern
between China, Germany and Japan.
In the first half of 2018, China's sewing machinery industry seized the opportunities of the upgrading
needs of downstream industry and the changing of domestic and foreign market structure, accelerated the
adjustment of product structure, continued to increase production and quality, actively expanded the
international market, continued to expand the scale of the industry, and continued to maintain medium and
high growth in production. The economic operation in the first half of 2018 is characterized by “stable but
slower growth”. According to statistics from China Sewing Machinery Association, from January to June 2018,
the top 100 backbone machine manufacturers in the industry achieved total industrial output value of 10,126
million yuan, a year-on-year increase of 23.87%, and the total amount of sewing machines produced was
3,417,500 sets, a year-on-year increase of 21.70%. Among them, 2,586,000 industrial sewing machines were
produced, a year-on-year increase of 31.81%. However, since the second quarter, the industry's domestic
demand market has been sharply reduced. The sales of sewing machinery products, especially industrial
sewing machine products, have maintained double-digit growth year-on-year, but the chain growth has turned
negative. In the first half of 2018, the operating income of enterprises above designated size grew by 20.38%
year-on-year; total profit increased by 9.13% year-on-year; gross profit margin was 17.87%, a decrease of
0.89% year-on-year.
2. Description of major changes in main assets of the Company during the reporting period
For details of major changes in the Company's major assets in the report period, please refer to “(3)
Analysis of assets and liabilities” in “Chapter 4 Disscussion and Analysis on Business Operation”.
The Company’s overseas assets amounted to 2,038.3241 million yuan, accounting for 53.3% of the total
assets.
The Company’s overseas assets mainly come from the Company’s previous overseas acquisitions and the
business growth of overseas subsidiaries. The Company’s wholly-owned subsidiary SGE acquired DA AG in
2005, acquired PFAFF GmbH and KSL in 2013, and invested in STOLL KG in 2016.
3. Core competitiveness analysis in the report period
]The Company is the first listed company with the longest history in the domestic sewing equipment
industry, and has more than 50-year experience in sewing equipment production. The Company’s "Butterfly"
household sewing machine originated in 1919 and has a history of nearly 100 years.The Company controlled
DA AG and PFAFF GmbH, both are famous sewing machine manufacturing companies in the world with
more than 150 years’ history, as well as PFAFF KSL Branch, which possesses the world's top sewing
technology. STOLL KG, which is invested by the Company and the Company is its biggest limited partner,
also has a history of more than 140 years and possesses a leading position in the field of flat knitting machine
manufacturing technology in the global industry. In the report period, the Company focused on the main
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上工申贝（集团）股份有限公司
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industry – sewing equipment manufacturing, continued to promote the integration of global resources, further
promote the reorganization and integration of SGE, strengthen research and development ability and increase
investment in research and development. The Company's core competitiveness is further consolidated and
enhanced, and the foundation for sustainable and healthy development of the Company is further consolidated.
The core competence of the Company is mainly shown in the following aspects:
(1) Strong technological research and development capability
The Company always adheres to the guidance of science and technology and develop through innovation,
attaches much importance to the construction of technological research and development capabilities, which
have become the important force driving the development of the Company. The Company has owned a
powerful technological research and development team, has advanced testing methods and has strong
continuous development capabilities of product and application technology.
. The research and development of Industrial 4.0, which has been developed by the R & D team, has made
preliminary achievements in the application of sewing equipment. ShangGong Technology Centre is the city
level of research and development centre in Shanghai, and the technology R&D centre of SGGEMSY is also
the provionce level of research and development centre in Zhejiang.
(2) Advanced technology advantage
The Company has the world’s high-end intelligent and 3D sewing technology of flexible material, and the
Company is a global leader in special sewing machine for medium or heavy materials, garment automatic
sewing unit, robot-control automatic sewing technology and textile material welding technology and other
fields. The products are not only applied in the traditional market for sewing machine industry but also applied
in some fields, such as automobile, environmental protection, aeronautics and astronautics and renewable
energy, etc. Especially, the Company has a leaing position in sewing technology for light carbon fiber, 3D
sewing automation and QONDAC 4.0 Intelligent Industrial Sewing Network Online Production Monitoring
System.
(3) Multiple brand and product advantage
The Company owns some internationally well-known brands, such as DA, PFAFF Industrial, KSL,
Beisler, and etc., and some famous domestic brands, such as Butterfly with 99 years’ history, Bee, Flyingman,
and Shanggong with over 50 years’ history. In recent years, the Company is cultivating industrial machine
brands, such as SGGEMSY, Mauser and so on. The Company has a full range of high-end sewing equipment
product chain, these brands of the Company has a high recognition and reputation in the industry. The
Company has a group of customers with great value and stability in the field of high-end automotive
accessories manufacturing and luxury goods manufacting.
(4) Global resource integration capability
The Company utilizes and develops the basis and advantages of its respective domestic and foreign
subsidiaries, implements globalization layout and integration in the production base, sales network,
procurement of raw materials, technology R&D and other aspects, implements resource sharing, has
complementary advantages and develops collaboratively. The Company not only has a wide sales network and
business base in China, but also has established a relatively complete marketing channel and service network
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in the world. The Company has established three sewing machine R&D and production bases in Shanghai,
Zhejiang and Zhangjiagang; the Company also has five R&D and manufacturing bases in Germany, Czech
Republic and Romania.
(5) Internationalized operation and management experience
Since 2004, the Company has begun to implement an overseas merger and acquisition strategy for
international operations. In recent years, the Company has increased the pace of overseas acquisitions and
mergers, and the proportion of overseas businesses has grown. The Company's multi-year international
operation and management has gradually cultivated a management team with an international perspective and
multinational operating capabilities, and has accumulated rich international management experience.
Chapter 4 Discussion and Analysis on the Business Operation
1. Discussion and analysis on the business operation
During the reporting period, the Company achieved operating income of 1.495 billion yuan, down 2.46%
year-on-year, of which sewing equipment operating income was 986 million yuan, up 4.64% year-on-year. The
main reason for the slight decline in operating income was the decrease in the company's logistics service
business revenue year-on-year. The Company achieved operating profit of 143 million yuan, down 23.03%
year-on-year; net profit attributable to shareholders of listed companies was 100 million yuan, down 20.49%
year-on-year. The main reason for the decrease in profit was the slight decrease in the gross profit margin of
sewing equipment sales and the impact of exchange losses, as well as the large consulting fees during the
restructuring of the Company's overseas subsidiaries.
As one of the representative enterprises of “Made in Shanghai”, the Company has not forgotten the initial
intention of revitalizing Shanghai's old brands, seized the opportunity of the state to attach importance to the
development of real economy, and vigorously developed China Manufacturing and Shanghai Intelligent
Manufacturing while maintaining the Company's leading technology in the global sewing industry. In June
2018, the Company was awarded the title of “Top 30 Enterprises in China's Light Industry Equipment
Manufacturing Industry” and “Top Ten Enterprises in China's Sewing Machinery Industry” in 2017.
In the first half of 2018, the Company focused on the following aspects:
(1) Continue to deepen internal integration and promote mergers and acquisitions in due course
In the first half of 2018, the Company implemented the internal asset restructuring and business
integration of as planned. In Europe, the Company overcame difficulties and steadily promoted DAP AG's
squeeze-out of about 6% of the minority shareholders of DA AG. In July 2018, DAP AG completed the
commercial record of the merger of DAP AG and DA AG. The legal procedures for this merger have been
basically completed. In the first half of 2018, the Company launched the integration of PFAFF GmbH and its
KSL Branch, and has started to adjust its organization; production integration and product transfer are
underway. The goal of the integration is to promote the transformation of PFAFF GmbH to KSL technology
and products, and realize the rapid development of the Company's intelligent equipment R & D and
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manufacturing. Through the asset restructuring and business integration of SGE, the Company can make full
use of the technology, production, procurement, sales, capital and human resources of DA AG and its
subsidiaries, PFAFF GmbH and KSL Branch to give full play to the overall advantages and enhance
profitability. In China, the import and export business integration of Butterfly Imp. & Exp., Shanggong Imp. &
Exp. and SMPIC Imp. & Exp. has been steadily advanced, and the transfer of personnel and business has been
basically completed. In addition, with the merger of SG Butterfly and DAPSH into the parent company, the
effect of the materialized operation of the parent company has gradually emerged. The rising cost of human
resources has been digested, and the operating profit of the parent company has increased significantly.
The Company continues to take advantage of the strong acquisition and integration capabilities and
timely promote mergers and acquisitions suitable for enterprise development. The Company focused on the
main business of sewing equipment manufacturing, promoted the implementation of the Company's sewing
intelligent strategy, and actively prepared for the acquisition of 65% equity of Richpeace and capital increase
in the first half of 2018. This acquisition will help solve the problem of the Company's relatively weak ability
to undertake KSL product technology in domestic software development and automatic sewing solution
technology, thereby enhancing the Company's market share in the domestic high-end special sewing
equipment field, which will help improve the overall performance of the Company. Furthermore, Richpeace's
automated cutting and embroidering equipment complements the Company's product range. Its automatic
patterning machine and other automation solutions are also an effective extension of the Company's existing
business. At the beginning of August 2018, the Company has completed the relevant procedures for the
acquisition of the 65% equity in Richpeace, and the business collaboration has already begun.
(2) Adhere to specialized multi-brand strategy, increase product market share
The Company will adhere to the Market-oriented, Benefit-first business philosophy, unswervingly
continue to implement the specialized multi-brand marketing strategy, expand brand influence, and increase
the market share of each classified product.
In the first half of 2018, the Company further improved the marketing management of countries in
Southeast Asia such as Singapore, Vietnam and Indonesia, and started the official operation of sales
organizations in South Asia such as India and Bangladesh, and achieved good operating results; meanwhile,
SGG and DAP AG established sales organizations in South America and Africa, gradually restored the sales
share in the South American market and consolidated the sales share in the African market. In report period,
the Company continued to do a good job in domestic market sales, timely adjusted the sales organization
framework, and achieved unified management and coordinated development. The Company has actively
developed the Mauser brand promotion strategy for positioning mid-range products. The Mauser special
garment machine and the Mauser industrial thick material machine series are being complemented. The
Company further improved the four automatic sample pipelines of “Two Suits Two Pants” and actively sought
to cooperate with brand clothing enterprises for customized production. Further overcome the weak market
such as sofas and luggage, and has made major breakthroughs. At the same time, SGG actively develop the
prison market and strive to achieve sales breakthroughs in basic products. In 2018, Butterfly Branch continued
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to sell household sewing machines, actively carried out the "Butterfly" brand promotion activities, and
participated in the EXPOSITION ON CHINA INDIGENOUS BRAND, which achieved good results.
(3) Maintain product technology leadership and strengthen manufacturing capabilities
The Company sticks to the technology-leading and innovative-development strategy as always. Through
integration of Made-in-China and Made-in –Germany, the Company vigorously develops Shanghai Intelligent
Manufacturing and ShangGong Creation, and accelerates the construction of production base to enhance
manufacturing ability.
The Company introduced QONDAC 4.0 to the market vigorously in the first half of 2018. And research
and develop the prototype machine of new M-type 3.0 as planned. Continuous improvement of automatic
sewing units was developed as well. The Company continued to research and trial-produce the button attaching
and holing machine and the sewing machine, improve the market competitiveness of shirt automatic sewing
products, and research and manufacture front trousers sealing machine and cowboy series machines as planned.
In addition, the Mauser brand basic series product design is basically completed, and the L-Type platform
project market research work is in progress.
(4) Link subsidiaries at home and abroad, consolidate the production base
In the first half of 2018, the Company actively promoted the construction of production bases and
continuously enhanced its manufacturing capabilities. In Europe, in order to increase the R&D investment of
automatic and intelligent sewing equipment, solve the problem of limited production site of KSL Branch, and
maximize economic benefits, as approved by the board of directors of SGG, DAP AG invested in the
development of intelligent product development centers and trial production bases in Bensheim, Germany. DA
AG's expansion project at the DARO plant in Romania is under construction. As the core components will
determine the quality level of automatic sewing units and special sewing equipment, DARO will further
increase production capacity and increase the self-manufacturing rate of core components. In China, the
Company completed the preparatory work for the feasibility study and analysis of the investment in the
construction of the Taizhou Huangyan Manufacturing Base. Based on the existing industry, the Company will
graft German DA AG and PFAFF Industrial product technology, develop multi-brand and intelligent product
manufacturing, and build the Company's largest sewing machine production base in Huangyan, Taizhou. PIZ
actively carried out the localization of parts and components, and started the domestic collaborative processing
of parts and components of DA1767 and other parts and components. By introducing technology and
integrating resources, DAMSH has tried to expand the robot control technology into the processing technology
of rigid materials and the field of automated assembly technology, laying a solid foundation for the Company
to expand its intelligent manufacturing business.
1.1 Main business analysis
1.1.1 Analysis of changes of items in profit statement and cash flow statement
Unit: Yuan, Currency: RMB
Reporting period Same period of the previous Increase or decrease over
Item (from January to June year (from January to June the same period of the Reason
2018) 2017) previous year (%)
Operating income 1,494,794,413.27 1,532,562,601.12 -2.46 Note 1
Operating cost 1,052,451,025.46 1,088,801,959.30 -3.34 Note 2
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Selling expenses 147,600,554.52 141,412,181.17 4.38 Note 3
General and administration expenses 154,556,576.41 143,922,099.95 7.39 Note 4
Finance expenses 12,091,231.56 -6,849,775.62 276.52 Note 5
Net cash flow from operating activities -57,703,154.75 -59,790,323.47 3.49 Note 6
Net cash flow from investing activities -78,130,173.37 -43,334,008.59 -80.30 Note 7
Net cash flow from financing activities 53,164,117.81 -20,766,385.53 356.01 Note 8
Research and development expenditures 50,906,101.66 41,659,397.60 22.20 Note 9
Note 1: Mainly due to the year-on-year decline in logistics service revenue.
Note 2: Mainly due to the year-on-year decrease in operating income and corresponding reduction in
costs.
Note 3: Mainly due to the year-on-year increase in sales expenses of overseas subsidiaries.
Note 4: Mainly due to the year-on-year increase in project consulting fees and remuneration.
Note 5: Mainly due to the year-on-year increase in exchange lossesr.
Note 6: Mainly due to the year-on-year decrease in taxes paid and the increase in cash paid to employees
and the increase in cash paid for employees.
Note 7: Mainly due to the year-on-year increase in bank entrusted loans and expenditures in the purchase
and construction of fixed assets.
Note 8: Mainly due to the year-on-year increase in bank loans.
Note 9: Mainly due to the year-on-year increase in expenditure on R&D projects by DAP AG.
1.1.2 Others
(1) Detailed description of major changes in the Company's profit composition or source of profit
Significant changes of items in the Company's consolidated statement of comprehensive incomes during
the reporting period and the reasons
Unit: Yuan, Currency: RMB
Increase /
Same period of the Increase / Decrease
Item Reporting period Decrease Reason
previous year (Amount)
(%)
Financial expense 12,091,231.56 -6,849,775.62 18,941,007.18 276.52 Note 1
Assets impairment loss -350,484.13 4,522,446.97 -4,872,931.10 -107.75 Note 2
Asset disposal income -571,141.92 9,747,624.59 -10,318,766.51 -105.86 Note 3
Non-operating income 3,355,954.72 105,785.34 3,250,169.38 3,072.42 Note 4
Non-operating expense 955,572.93 305,083.71 650,489.22 213.22 Note 5
Net after tax of other
-27,605,940.81 30,819,765.91 -58,425,706.72 -189.57 Note 6
consolidated income
Note 1: Mainly due to the year-on-year increase in exchange lossesr.
Note 2: Mainly due to the reversal of accounts receivable bad debt provision resulting from the receipt of
bad debt provision for accounts receivable in the report period.
Note 3: Mainly due to the year-on-year reduction of housing relocation compensation income.
Note 4: Mainly due to the clearing of accounts payable unable to pay in the current period.
Note 5: Mainly due to the year-on-year increase in external donations and forfeit penalty.
Note 6: Mainly due to the decrease in the gains and losses from changes in fair value of available-for-sale
financial assets and the decrease in the translation differences in foreign currency financial statements.
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(2) Others
①Cash flow
Unit: Yuan, Currency: RMB
Increase / Increase /
Same period of
Item Reporting period Decrease Decrease Reason
the previous year
(Amount) (%)
Net cash flow from investing activities -78,130,173.37 -43,334,008.59 -34,796,164.78 -80.30 Note 1
Net cash flow from financing activities 53,164,117.81 -20,766,385.53 73,930,503.34 356.01 Note 2
Influence of fluctuation of exchange rate
-5,925,323.34 22,569,433.51 -28,494,756.85 -126.25 Note 3
upon cash and cash equivalents
Note 1: Mainly due to the year-on-year increase in bank entrusted loans and expenditures in the purchase
and construction of fixed assets.
Note 2: Mainly due to the year-on-year increase in bank loans.
Note 3: Mainly due to the impact of changes in the exchange rate of the euro.
②Main business by industry
Unit: Yuan, Currency: RMB
Main business by industry
Operating Operating cost
Gross Gross margin increase/
Industry Operating income Operating cost income increase/ increase/
margin (%) decrease (%)
decrease (%) decrease (%)
Sewing
985,774,967.92 605,647,768.16 38.56 4.64 6.85 Decrease 1.28 percent
equipment
Logistic
362,468,133.25 328,405,699.46 9.40 -8.87 -10.20 Increase 1.35 percent
service
Export trade 71,866,470.94 69,998,913.72 2.60 -30.10 -30.03 Decrease 0.09 percent
Office
equipment and 25,407,756.35 22,184,504.00 12.69 -9.52 -5.13 Decrease 4.03 percent
film materials
Others 3,695,477.63 2,978,009.45 19.41 -20.43 -1.39 Decrease 15.57 percent
Total 1,449,212,806.09 1,029,214,894.79 28.98 -1.77 -2.81 Increase 0.76 percent
③Main business by region
Unit: Yuan, Currency: RMB
Region Operating income Increase/ Decrease (%)
Domestic 825,303,711.19 -5.65
Overseas 729,241,145.97 2.01
1.2 Explanation of significant changes in profit caused by non-main business
Not applicable.
1.3 Analysis on assets and liabilities
1.3.1 Analysis on assets and liabilities
Unit: Yuan, Currency: RMB
Ratio of
Ratio of
Ending
Ending
Balance to
Balance to Ending balance
Ending balance Total Increase /
Item Total (31st December Reason
(30th June 2018) Assets Decrease (%)
Assets (30th 2017)
(31st
June 2018)
December
(%)
2017) (%)
Prepayments 25,109,489.12 0.66 64,393,627.71 1.74 -61.01 Mainly due to the land transfer
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Ratio of
Ratio of
Ending
Ending
Balance to
Balance to Ending balance
Ending balance Total Increase /
Item Total (31st December Reason
(30th June 2018) Assets Decrease (%)
Assets (30th 2017)
(31st
June 2018)
December
(%)
2017) (%)
payments prepaid by domestic
subsidiaries were carried over to the
“intangible assets” subject in
reporting period
Due to the dividends distributed by
Dividends
37,322,644.64 0.98 0.00 0.00 STOLL KG and Shanghai Fuji Xerox
receivable
Co., Ltd.
Mainly due to the temporary
Other
78,240,002.47 2.05 58,944,411.21 1.59 32.74 borrowings increased by domestic
receivable
subsidiaries in the current period.
Mainly due to the increase in the cost
Construction of the construction of modern
23,656,574.34 0.62 12,665,274.09 0.34 86.78 logistics management center project
in progress
and the Czech factory workshop
renovation project in current period.
Due to the increase of bank
Notes payable 40,489,531.56 1.06 12,311,525.18 0.33 228.88 acceptance bills of SGGEMSY in the
current period.
Mainly due to the increase in interest
Dividends payable on bank borrowings by the
1,490,484.14 0.04 1,110,553.06 0.03 34.21
payable overseas subsidiaries in the report
period.
Due to the newly-added long-term
Long-term
92,374,501.87 2.42 62,956,504.27 1.70 46.73 borrowing of DAP AG borrowed
loans
from ABC Frankfurt branch.
Mainly due to the decrease in the fair
Other value of the available-for-sale
comprehensive -97,564,133.00 -2.55 -72,163,452.90 -1.95 -35.20 financial assets and the decrease in
income the foreign currency statement
translation difference
1.3.2 Restricted major assets as of the end of the reporting period
Not applicable.
1.4 Analysis of investment
(1) General analysis
Unit: 10,000 Yuan, Currency: RMB
Long - term equity investment in the report period 2,000
Increase / Decrease 2,000
Long - term equity investment in 2016 0
Increase / Decrease (%) /
During the reporting period, SGG invested 20,000,000 yuan in its subsidiary DAMSH. After the capital
increase was completed, SGG directly held 51.28% equity of DAMSH and held 48.72% equity of DAMSH
through its wholly-owned subsidiary DAPSH.
(2) Significant equity investment
Not applicable.
(3) Significant non-equity investment
Not applicable.
(4) Financial assets at fair value
Unit: Yuan, Currency: RMB
Stock Stock Initial Accounting Book Value at Profit or Loss Changes in Accounting Source of
code Abbreviation Investment for the the End of the for the Report Owners' Equity Item Shares
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Shang Gong Group Co., Ltd
Cost proportion Period Period during the
of the Report Period
company's
equity (％)
Changjiang
600757 Publishing 72,085,722.82 0.85 58,598,658.46 1,029,853.40 -12,976,152.84 Note 1
& Media
Lujia B Available
900932 773,099.71 0.01 2,138,690.51 / 5,985.65 for sale Enforcement
Share
financial
Shenwan & assets
000166 200,000.00 0.00 955,378.14 / -218,622.00 Purchased
Hongyuan
Bank of
601229 951,400.00 0.01 16,493,738.32 / 1,653,560.06 Purchased
Shanghai
Total 74,010,222.53 / 78,186,465.43 1,029,853.40 -11,535,229.13 / /
Note: Shares of Changjiang Publishing & Media were transferred to the Company by bank to which
interests of Changjiang Publishing & Media were compensated in the bankruptcy and restructuring.
1.5 Significant assets and equity sale
Not applicable.
1.6 Analysis of main subsidiaries
Unit: 10,000 Yuan, Currency: RMB
Registered Operating Operating
Name Business scope Total assets Net assets Net profit
capital income profit
Investment, asset
management, and
DAP Industrial production, 12.5 million
198,173 95,767 73,712 9,191 6,136
AG processing, and euro
sales of industrial
sewing equipment
Shanghai Shensy
Enterprise Freight, Logistics
17,882 41,861 25,652 36,247 1,319 979
Development Co., services
Ltd.
Zhejiang
Sewing equipment
ShangGong
manufacturing 21,600 33,415 20,946 16,201 -130 -147
GEMSY CO.,
and sales
LTD.
1.7 Structured entities controlled by the Company
Not applicable.
2. Others
2.1 Warning and destription if the Company predicts that its accumulated net profit form the
beginning of the year to the end of the next reporting period may be negative or may have any
significant change as compared with the profit in the same period of the previous.
Not applicable.
2.2 Possible risks
(1) Industrial and market risk
The sewing equipment industry is an industry full of market competition, with obvious periodicity, and
has strong dependence on downstream textile and garment, leather bags and other industries, and is greatly
affected by the macroeconomic environment. Due to the large proportion of the Company's sewing equipment
industry, the Company is more likely to be affected by the overall industry fluctuations. The Company may
face increased competition in the industry, lower gross profit margins and lower product prices.
(2) Transnational operations and integration risk
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Shang Gong Group Co., Ltd
With the expansion of the Company's overseas assets and business scale, transnational operations put
forward higher requirements for the Company's organizational structure, business model, management team
and staff. In the process of production, operation and the integration of overseas subsidiaries, the Company
will face challenges arising from differences in domestic and international policy systems, corporate culture
and management concepts.
(3) Risk of exchange rate fluctuations
The bookkeeping base currency of the Company's consolidated statements is RMB. Domestic product
exports are mostly settled in US dollars. The daily operations of the Company's subsidiary DAP AG and its
holding subsidiaries are mainly settled in foreign currencies such as the Euro. Fluctuations in the RMB
exchange rate will bring certain exchanges on the future operation of the Company, resulting in asset
depreciation risk.
2.3 Others
(1) Implementation of furtherintegration of SGE
At the thirty-fifth meeting of the seventh board of directors of the company, the “Proposal on Further
Integration of SGE” was reviewed and approved, and the plan for further integration of the company’s
wholly-owned subsidiary SGE and its subsidiaries was agreed. It includes SGE's merger with its holding
subsidiary DA AG, squeezing out the minority shareholders holding approximately 5.99% of DA AG's
shares.(For details, please refer to Announcements 2017-029, 2018-003, 2018-005, 2018-016, 2018-020, and
2018-023 disclosed by SGG on September 26, 2017, February 9, 2018, March 27, 2018, June 1, 2018, June 23,
2018, and July 18, 2018.)
The matter was basically completed by the end of July 2018, and DA AG’s shares have been delisted from
the Frankfurt, Berlin and Düsseldorf stock exchanges. After the completion of the above matters, the name of
SGE was renamed to “Dürkopp Adler AG” by “DAP Industrial AG”.
Chapter 5 Important Events
1. Brief introduction of shareholder’s meeting
Inquiry index of designated website for Disclosure date for publishing
Name of meeting Date of meeting
publishing resolutions resolutions
The 2017 Annual Shareholders’ Meeting 20th June 2018 www.sse.com.cn 21st June 2018
2. Plan of profit distribution or transfer of reserves
Whether distribute profits or transfer reserves No
3. Commitment
Whether
Whether Reason for Future Plan
Timely
Commitment Commitment There is Failure to if Fail to
Background Type Commitment Content and
Party period a Time Fulfill Fulfill
Strictly
Limit Commitment Commitment
Perform
Shares of SGG held by
Commitment in 29th December
PKFR will not be less
the Statement of 2016 to 28th
Other PKFR than shares held by Yes Yes N/A N/A
Changes in December
Pudong SASAC From 29th
Equity 2019
December 2016 to 28th
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上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
December 2019.
4. Appointment and dismiss of accounting firm
Not applicable.
5. Bankruptcy
Not applicable.
6. Important lawsuit and arbitration
The 22nd meeting of the 7th Board of Directors of the Company examined and approved the Proposal on
Investing in STOLL KG through ShangGong Europe, and agreed that the wholly-owned subsidiary
ShangGong Europe would invest in STOLL KG to become a 26% Minority shareholders. (See bulletin No.
2015-030 released on 29th August 2015 and bulletin No. 2016-002 released on 14th January 2016 for details).
Accounting to the Contract signed on 29th August 2015 by ShangGong Europe, the calculation of share
price is based on the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that
share price will be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and
related clauses in the Contract. Now the parties have disputes on the calculation of net assets of STOLL's
audited consolidated statement in 2015 and the understanding of the relevant terms of the Contract, resulting in
a difference of approximately 4.26 million euro in the calculation of the price adjustment. ShangGong Europe
has received the Application for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited
partners of STOLL KG on 20th July 2017. ShangGong Europe will, in accordance with the terms of the
contract, settle the dispute by arbitration in accordance with German legal procedures.
As of the date of this report, the arbitration is still in progress and has significant uncertainty. The
Company has made a preliminary judgment that the matter has little impact on the Company's profit and loss.
But it might affect the Company's investment costs for STOLL KG and will not have a significant impact on
the Company.
7. Punishment on and rectification of listed company and its directors, supervisors, senior managers,
controlling shareholders, actual controller and purchaser
Not applicable.
8. Credit status of the company and its controlling shareholder and actual controller
Not applicable.
9. Company stock right incentives, espo, and other employee incentives
Not applicable.
10. Major related party transactions
Summary of matters Query index
Shanghai SGSB Electronic Co., Ltd., a wholly-owned subsidiary of the Company, sells products to
For details, please refer
Fiji Xerox of Shanghai Limited., and is its permanent accessory supplier. The above-said transaction
to Announcement No.
constitutes the daily associated transaction. It is estimated that in 2018, the amount of products that
2018-009 disclosed by
it will sell to Fiji Xerox is 20 million yuan, and in the report period, the sales amount was 9.8061
SGG on 17th April 2018.
million yuan
11. Significant contracts and their implementation
11.1 Trusteeship, contracting and lease
Not applicable.
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上工申贝（集团）股份有限公司
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Shang Gong Group Co., Ltd
11.2 Guarantee
Unit: 10,000 Yuan, Currency: RMB
公司对外担保情况（不包括对子公司的担保）
Relations Guarantee
Guarantee
available?
If counter
guarantee
of the date
Overdue
Overdue
amounts
Relation
Amount Start Expiration If
for
Guarantor guarantor Security party (agreement Type guarantee
related
guaranteed date date is done
to listed signoff party?
company date
Commerzbank 25 Joint
The 25 March
SGG Shanghai 7,000 March liability No No 0 No No
Company 2014 guarantee
Branch 2014
Commerzbank Joint
The 30 June 1 July
SGG Shanghai 6,733 liability No No 0 No No
Company 2014 2014 guarantee
Branch
Commerzbank 19 19 Joint
The
SGG Shanghai 10,100 September Sept. liability No No 0 No No
Company 2016 2016 guarantee
Branch
Commerzbank 28 Joint
The 28 August
SGG Shanghai 8,417 August liability No No 0 No No
Company 2015 guarantee
Branch 2015
Industrial &
Commercial
21 Joint
The Bank of China 21 Dec. 21 Dec.
SGG 6,121 December liability No No 0 No No
Company Shanghai 2015 2020 guarantee
2015
Hongkou
Branch
Wholly 07 Joint
07 January 30 July
DAP AG owned Commerzbank 2,104 January liability No No 0 No No
2016 2018 guarantee
subsidiary 2016
Guarantee amounts spent during the report period (excluded guarantee to
0
affiliate company.
Total balance of guarantee at the end of period (affiliate companies are not
40,475
quailed.)（A）
Guarantee of company to affiliates
Total guarantee amounts of subsidiaries in the report period
Total balance of guarantee to subsidiaries at the end of report period (B)
Company total guarantee amounts (including those to subsidiaries)
Total guarantee amounts（A+B） 40,475
Ratio of total guarantee amounts to company net assets (%) 18.28
In which:
Guarantee amounts provided to stockholders, actual controller and affiliated
parties (C)
Guarantee amounts directly or indirectly provided for liabilities of guarantor
whose assets liabilities ratio is higher than 70%（D）
Differences of total guarantee amounts exceeds 50% of the net assets（E）
Total guarantee amounts of the above-mentioned three items （C+D+E）
On 25th March 2014, the Company's wholly-owned subsidiary, DAP Industrial AG (Formerly known as
ShangGong (Europe) Holding Corp. GmbH) , applied to the Bielefeld Branch of Commerzbank for a current
fund loan of not more than the equivalent of 58 million yuan in euro, the Shanghai Branch of Commerzbank
issued a financing guarantee letter for the funds, and the Company issued a corporate letter of guarantee for
payment of 70 million yuan as counter guarantee for the abovementioned financing guarantee letter.
On 30th June 2014, the Company's wholly owned subsidiary DAP AG applied to the Bielefeld Branch of
Commerzbank for a current fund loan of 8 million euro, the Shanghai Branch of Commerzbank issued a
financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable corporate
letter of guarantee for payment of 8.8 million euro as counter guarantee for the abovementioned financing
guarantee letter.
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Shang Gong Group Co., Ltd
On 19th September 2016, the Company's wholly owned subsidiary DAP AG applied to the Bielefeld
Branch of Commerzbank for a short-term credit loan of 12 million euro, the Shanghai Branch of
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 13.20 million euro.
On 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to the
Kaiserslautern Branch of Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for the
abovementioned financing guarantee letter.
On 21st December 2015, the Company's wholly owned subsidiary DAP AG applied to the Frankfurt
Branch of the Commerzbank for a limit loan of 7.878 million euro so as to pay the acquisition fee to Stoll KG.
ICBC Shanghai Hongkou Branch issued a financing guarantee letter for the funds, and the Company issued an
unconditionally irrecoverable corporate letter of guarantee for self-using fix assets where No.603 Dapu Road
as counter guarantee for the abovementioned financing guarantee letter.
DAP AG pledges 500 million shares of DA AG held by DAP AG to obtain a 2.75 million euro bank
guarantee issued by Commerzbank, Germany, for the period from 7th January 2016 to 30th July 2017 and
from 7th January 2016 to 30th July 2018 respectively. It provided guarantees for DAP AG to pay equity
purchase price to German H. Stoll AG & Co. KG equity sellers.
11.3 Other significant contracts
Not applicable.
12. Poverty alleviation of listed company
Not applicable.
13. Convertible corporate bonds
Not applicable.
14. Environmental information
The Company and its subsidiaries do not belong to the key pollutant discharge units announced by the
environmental protection department. During the report period, the Company and its subsidiaries strictly
enforced the laws and regulations concerning environmental protection, formulated strict environmental
practices, and took corresponding measures against pollution sources. There were no violations of
environmental laws and regulations and pollution accidents. The Company has not been punished by the
environmental protection department for environmental violations.
15. Other significant events
15.1 The changes, causes and effects of changes in accounting policies, accounting estimates and
accounting methods compared with the previous accounting period
Not applicable.
15.2 The correction of major accounting errors during the reporting period
Not applicable.
16
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
15.3 Others
In May 2018, the Company entrusted Bank of Shanghai Co., Ltd. Fumin Branch to issue a loan of RMB
53 million to Richpeace. The loan period was from May 22, 2018 to November 22, 2018, with an annual
interest rate of 4.7%. Richpeace is collateralized by the property located at No. 6 Baozhong Road, Tianjin
(prescription certificate No. 124031304818, and Tianjin (2016) Baodi District No. 1001390). At the same time,
all the equity of Richpeace held by Tianjin Tongshang Software Co., Ltd. and Shenzhen Yingning Venture
Capital Co., Ltd. were also pledged to the Company in May 2018.
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to acquire 65% equity of Richpeace and increase its capital. The total investment is 156.137
million yuan, including: equity acquisition of 136,663,800 yuan and capital increase of 19.5 million yuan. On
August 9, 2018, Richpeace completed the change of registration caused by the equity acquisition and obtained
the latest business license. SGG has paid the first equity transfer price on August 15, 2018.
Chapter 6 Changes in Shares of Common Stock and Information about
Common Stock Shareholders
1. Changes in shares of common stock
1.1 Changes in shares of common stock
Not applicable.
1.2 Change of non-tradable shares
Not applicable.
2. Shareholder
2.1 Total number of shareholders
Total number of shareholder at the end of report period 56,562 (A Share: 29,705; B Share: 26,857)
2.2 Shareholding status of top 10 shareholders and top 10 unrestricted shareholders
Unit: Share
Top 10 Shareholders
Total Shares Shares Pledged or
Increase or
Held at the Frozen
Decrease in Proportion Restricted Nature of
Name of Shareholder End of
the Report (%) Share shareholders
Report Status Amount
Period
Period
Domestic
Shanghai Puke Flyingman
0 60,789,457 11.08 0 Pledged 60,000,000 Non-state-owned
Investment Co., Ltd.
Legal Person
State-owned Assets Supervision and
Administration Commission of
0 45,395,358 8.27 0 / State
Shanghai Pudong New Area
People's Government
China Great Wall Asset State-owned
0 22,200,000 4.05 0 /
Management Co., Ltd. Legal Person
SHANGHAI INTERNATIONAL
State-owned
GROUP Asset Management Co., 0 10,968,033 2.00 0 /
Legal Person
Ltd.
SCBHK A/C KG INVESTMENTS Foreign Legal
242,136 5,151,591 0.94 0 /
ASIA LIMITED Person
17
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
GREAT WALL GUORONG
State-owned
INVESTMENT AND 0 4,770,654 0.87 0 /
Legal Person
MANAGEMENT CO., LTD.
ISHARES CORE MSCI Foreign Legal
3,880,500 4,236,700 0.77 0 /
EMERGING MARKETS ETF Person
Industrial and Commercial Bank of
China Co., Ltd.-Hua'an Reverse
3,761,900 3,761,900 0.69 0 / Other
Strategy Hybrid Securities
Investment Fund
VANGUARD EMERGING Foreign Legal
0 3,678,113 0.67 0 /
MARKETS STOCK INDEX FUND Person
Domestic
Zeng Weili 3,540,091 3,540,091 0.65 0 /
Natural Person
Top 10 Unrestricted Shareholders
Share Type and Amount
Name Unrestricted Shares
Type Amount
Shanghai Puke Flyingman Investment Co., Ltd. 60,789,457 A Share 60,789,457
State-owned Assets Supervision and Administration
Commission of Shanghai Pudong New Area 45,395,358 A Share 45,395,358
People's Government
China Great Wall Asset Management Co., Ltd. 22,200,000 A Share 22,200,000
SHANGHAI INTERNATIONAL GROUP Asset
10,968,033 A Share 10,968,033
Management Co., Ltd.
SCBHK A/C KG INVESTMENTS ASIA LIMITED 5,151,591 B Share 5,151,591
GREAT WALL GUORONG INVESTMENT AND
4,770,654 A Share 4,770,654
MANAGEMENT CO., LTD.
ISHARES CORE MSCI EMERGING MARKETS
4,236,700 B Share 4,236,700
ETF
Industrial and Commercial Bank of China Co.,
Ltd.-Hua'an Reverse Strategy Hybrid Securities 3,761,900 A Share 3,761,900
Investment Fund
VANGUARD EMERGING MARKETS STOCK
3,678,113 B Share 3,678,113
INDEX FUND
Zeng Weili 3,540,091 A Share 3,540,091
REAT WALL GUORONG INVESTMENT AND MANAGEMENT CO., LTD. is the
Notes on shareholder relationship and consistent
wholly-owned subsidiary of China Great Wall Asset Management Co., Ltd. The
actions:
Company does not know the relationship and consistent of other shareholders
The Number of Restricted Shares Held by Top Ten Shareholders and the Conditions for Sale:
Not applicable.
2.3 Strategic investors or general legal persons become the top 10 shareholders due to the
placement of new shares
Not applicable.
3. Change of controlling shareholder and actual controller
Not applicable.
Chapter 7 Information about Preferred Shares
Not applicable.
18
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Shang Gong Group Co., Ltd
Chapter 8 Inforamtion about Directors, Supervisors and Senior Managers
1. Share change
1.1 Share change of current and former directors, supervisors and senior managers
Unit: Share
Shares Held at the Increase / Decrease
Shares Held at the End
Name Title Beginning of reporting during the reporting Reason
of reporting period
period period
Increased holdings in
Zheng Ying Senior manager 21,500 23,500 2,000
the secondary market
1.2 Equity incentive granted to directors, supervisors, and senior managers in the report period
Not applicable.
2. Change of directors, supervisors and senior managers of the Company
Name Title Change
Zheng Ying Deputy General Manager Outgoing
Li Wenhao Director Out going
Li Chen Director Election
Note:
1. Ms. Zheng Ying submitted her resignation application on February 26, 2018, and no longer holds any
position in the company and its subsidiaries.
2. Mr. Li Wenhao submitted his resignation application on April 4, 2018, and no longer serves as a
director of the Company and a member of the Strategy Committee.
3. The 2017 Annual Shareholders’ Meeting held on June 20, 2018 selected Mr. Li Chen as a director of
theCompany.
Chapter 9 Corporate Bonds
Not applicable.
19
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Shang Gong Group Co., Ltd
Chapter 10 Financial Report
1. Audit report
Not applicable.
2. Financial statements
Shang Gong Group Co., Ltd.
Consolidated Statement of Financial Position
30 June 2018
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 646,652,222.60 723,337,878.53
Deposit reservation for balance
Lending funds
Financial assets at fair value whose fluctuation
is attributed to profit or loss for current period
Derivative financial assets
Notes receivable 71,154,988.87 61,337,538.87
Accounts receivable 526,607,735.97 464,759,380.20
Prepayment 25,109,489.12 64,393,627.71
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable 21,645.73
Dividends receivable 37,322,644.64
Other receivables 78,240,002.47 58,944,411.21
Redemptory monetary capital for sale
Inventories 792,428,800.07 705,141,821.59
Assets held for sale
Non-current assets maturing within one year
Other current assets 383,988,701.58 366,533,356.84
Total current assets 2,561,504,585.32 2,444,469,660.68
Non-current assets:
Loans and payments on behalf
Available-for-sale financial assets 109,512,714.88 118,959,944.05
Held-to-maturity investments
Long-term receivables
Long-term equity investments 253,201,385.72 275,799,606.70
Investment properties 147,443,679.65 149,502,332.46
Fixed assets 386,655,827.26 397,788,367.78
Construction in progress 23,656,574.34 12,665,274.09
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
20
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Intangible assets 186,743,200.28 149,988,157.46
Development expenditures 16,810,150.46 16,683,772.84
Goodwill 71,081,127.21 72,482,033.43
Long-term deferred expenses 1,444,628.38 1,631,013.88
Deferred income tax assets 66,486,985.81 63,544,908.23
Other non-current assets
Total non-current assets 1,263,036,273.99 1,259,045,410.92
Total assets 3,824,540,859.31 3,703,515,071.60
Current liabilities:
Short-term loans 354,170,348.62 330,389,201.62
Borrowings from central bank
Deposits from customers and interbank
Borrowings from banks and other financial
institutions
Financial liabilities at fair value whose
fluctuation is attributed to profit or loss for current
period
Derivative financial liabilities
Notes payable 40,489,531.56 12,311,525.18
Accounts payable 203,320,210.56 194,031,795.38
Receipt in advance 34,936,329.32 38,326,094.65
Financial assets sold for repurchase
Handling charges and commissions payable
Employee benefits payable 78,968,315.54 91,112,179.00
Taxes and surcharges payable 10,408,022.03 14,074,587.91
Interest payable 1,490,484.14 1,110,553.06
Dividends payable 1,032,818.86 1,032,818.86
Other payables 174,677,791.04 193,617,747.74
Reinsurance accounts payable
Provision for insurance contracts
Acting trading securities
Acting underwriting securities
Liabilities held for sale
Non-current liabilities maturing within one year 1,260,000.00 1,260,000.00
Other current liabilities 45,909.00 48,330.03
Total current liabilities 900,799,760.67 877,314,833.43
Non-current liabilities:
Long-term loans 92,374,501.87 62,956,504.27
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 2,982,645.99 3,121,893.11
Long-term employee benefits payable 234,900,081.93 247,420,777.32
Special payables
Estimated liabilities 546,461.91 546,461.91
Deferred income 2,340,000.00 2,340,000.00
Deferred income tax liabilities 54,798,654.66 52,863,141.42
21
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 388,462,346.36 369,768,778.03
Total liabilities 1,289,262,107.03 1,247,083,611.46
Owners' equity
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 966,167,899.33 972,000,595.56
Less: treasury stock
Other comprehensive income -97,564,133.00 -72,163,452.90
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
General risk reserves
Undistributed profits 792,403,038.01 692,241,691.51
Total owners' equity attributable to the parent
2,214,142,646.86 2,145,214,676.69
company
Minority equity 321,136,105.42 311,216,783.45
Total owners' equity 2,535,278,752.28 2,456,431,460.14
Liabilities and owners' equity 3,824,540,859.31 3,703,515,071.60
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Financial Position
30 June 2018
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 100,425,649.01 137,028,156.51
Financial assets at fair value whose fluctuation
is attributed to profit or loss for current period
Derivative financial assets
Notes receivable 11,112,204.19 18,619,880.00
Accounts receivable 39,942,843.94 36,846,572.06
Prepayment 380,597.56 3,488,722.53
Interest receivable
Dividends receivable 9,949,000.00
Other receivables 129,928,237.91 107,954,125.03
Inventories 134,102,254.13 114,386,355.60
Assets held for sale
Non-current assets maturing within one year
Other current assets 325,620,952.57 310,981,332.13
Total current assets 751,461,739.31 729,305,143.86
Non-current assets:
Available-for-sale financial assets 109,512,714.88 118,959,944.05
Held-to-maturity investments
22
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Long-term receivables 134,908,835.57 135,720,449.62
Long-term equity investments 659,310,221.03 639,310,221.03
Investment properties 85,384,196.83 88,389,027.77
Fixed assets 6,072,256.85 8,036,379.04
Construction in progress 1,685,694.08 2,871,501.40
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 11,098,980.59 11,541,893.86
Development expenditures
Goodwill
Long-term deferred expenses 1,334,557.48 1,496,482.78
Deferred income tax assets 587,977.83 587,977.83
Other non-current assets
Total non-current assets 1,009,895,435.14 1,006,913,877.38
Total assets 1,761,357,174.45 1,736,219,021.24
Current liabilities:
Short-term loans 348,148.62 348,148.62
Financial liabilities at fair value whose
fluctuation is attributed to profit or loss for current
period
Derivative financial liabilities
Notes payable
Accounts payable 143,551,161.23 123,067,605.01
Receipt in advance 2,799,019.60 14,500,867.77
Employee benefits payable 1,326,805.83 9,133,348.57
Taxes and surcharges payable 364,948.66 579,085.22
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 155,151,331.38 153,278,589.85
Liabilities held for sale
Non-current liabilities maturing within one year 1,260,000.00 1,260,000.00
Other current liabilities
Total current liabilities 305,834,234.18 303,200,463.90
Non-current liabilities:
Long-term loans 1,489,984.87 1,489,984.87
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 1,574,312.63 1,574,312.63
Long-term employee benefits payable
Special payables
Provisions
Deferred income
Deferred income tax liabilities 1,197,067.41 1,197,067.41
23
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 4,781,364.91 4,781,364.91
Total liabilities 310,615,599.09 307,981,828.81
Owners' equity:
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 1,003,282,687.73 1,003,282,687.73
Less: treasury stock
Other comprehensive income 4,176,242.90 15,711,472.03
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
Undistributed profits -109,853,197.79 -143,892,809.85
Total owners' equity 1,450,741,575.36 1,428,237,192.43
Liabilities and owners' equity 1,761,357,174.45 1,736,219,021.24
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Consolidated Statement of Comprehensive Incomes
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Same period of the
Reporting period
previous year
Item Note (from January to June
(from January to June
2018)
2017)
1. Incomes 1,494,794,413.27 1,532,562,601.12
Including: operating income 1,494,794,413.27 1,532,562,601.12
Interest income
Premiums earned
Income from handling charges and commissions
2. Costs 1,371,509,135.49 1,377,803,455.91
Including: Cost of sales 1,052,451,025.46 1,088,801,959.30
Interest expenses
Handling charges and commissions expenses
Surrender value
Net amount of compensation payout
Net amount withdrawn for insurance contract reserves
Policy dividend payment
Reinsurance costs
taxes and surcharges 5,160,231.67 5,994,544.14
Selling expenses 147,600,554.52 141,412,181.17
General and administrative expenses 154,556,576.41 143,922,099.95
Financial expenses 12,091,231.56 -6,849,775.62
Losses from asset impairment -350,484.13 4,522,446.97
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 17,485,066.32 18,495,885.65
Including: income from investment in associates and -1,691,101.14 11,737,352.98
24
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Same period of the
Reporting period
previous year
Item Note (from January to June
(from January to June
2018)
2017)
joint ventures
Gains on disposal of assets -571,141.92 9,747,624.59
Foreign exchange gains ("-" for losses)
Other gains 2,616,373.56 2,540,381.10
3. Operating profits ("-" for losses) 142,815,575.74 185,543,036.55
Plus: non-operating income 3,355,954.72 105,785.34
Less: non-operating expenses 955,572.93 305,083.71
4. Total profits ("-" for total losses) 145,215,957.53 185,343,738.18
Less: income tax expenses 32,930,028.35 46,499,111.30
5. Net profit ("-" for net loss) 112,285,929.18 138,844,626.88
(1) Classified by operating sustainability
a. Net profit from continuing operations ("-" for losses) 112,285,929.18 138,844,626.88
b. Net profit from discontinued operations ("-" for losses)
(2) Classified by ownership
a. Non-controlling interests 100,161,346.50 125,980,892.71
b. Net profit attributable to owners of the parent company 12,124,582.68 12,863,734.17
6. Net of tax of other comprehensive income -27,605,940.81 30,819,765.91
Net of tax of other comprehensive income attributable to
-25,400,680.10 26,307,833.02
owners of the parent company
(1) Other comprehensive income can't be reclassified to gains
and losses later
a. Changes in net liabilities or assets due to the
remeasurement and redefinition of the benefit plan
b. The shares in other comprehensive income of the investee
that can't be reclassified to gains and losses under the equity method
(2) Other comprehensive income to be reclassified to gains
-25,400,680.10 26,307,833.02
and losses later
a. The shares in other comprehensive income of the investee
that can be reclassified to gains and losses under the equity method
b. Gains and losses from changes in fair value of
-11,535,229.13 -6,813,128.79
available-for-sale financial assets
c. Gains and losses from the reclassification of the
held-to-maturity investment to held-for-sale financial assets
d. The effective portion of the gains and losses from cash
flow hedging
e. Translation differences of financial statements -13,865,450.97 33,120,961.81
f. Others
Net of tax of other comprehensive income attributable to
-2,205,260.71 4,511,932.89
non-controlling shareholders
7. Total comprehensive incomes 84,679,988.37 169,664,392.79
Total comprehensive income attributable to owners of the
74,760,666.40 152,288,725.73
parent company
Total comprehensive income attributable to non-controlling
9,919,321.97 17,375,667.06
shareholders
8. Earnings per share
(1) Basic earnings per share (yuan/share) 0.1826 0.2296
(2) Diluted earnings per share (yuan/share) 0.1826 0.2296
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
25
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Statement of Comprehensive Incomes
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Same period of the
Reporting period
previous year
Item Note (from January to June
(from January to June
2018)
2017)
1. Operating income 184,812,505.26 46,385,796.09
Less: Operating cost 125,430,105.96 23,996,317.49
tax and surcharges 2,284,387.24 1,891,943.39
Selling expenses 18,213,101.44 2,643,464.25
General and Administration expenses 25,487,850.62 20,078,331.44
Finance expenses 63,811.51 -8,681,598.18
Impairment losses on assets 1,388,117.84 177,256.58
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 18,852,017.46 6,106,969.93
Including: Investment income in associates and joint
ventures
Gain on disposal of assets ("-" for losses) 1,906.38 9,449,919.98
Other income 524,688.70 30,381.10
2. Operating profits ("-" for losses) 31,323,743.19 21,867,352.13
Plus: Non-operating income 3,287,449.06 1,060.85
Less: Non-operating expenses 571,580.19 200,000.00
3. Total profits ("-" for total losses) 34,039,612.06 21,668,412.98
Less: income tax expenses
4. Net profit ("-" for net loss) 34,039,612.06 21,668,412.98
a. Net profit from continuing operations ("-" for losses) 34,039,612.06 21,668,412.98
b. Net profit from discontinued operations ("-" for losses)
5. Net of tax of other comprehensive income -11,535,229.13 -6,813,128.79
Net of tax of other comprehensive income attributable to
owners of the parent company
(1) Other comprehensive income can't be reclassified to gains
and losses later
a. Changes in net liabilities or assets due to the
remeasurement and redefinition of the benefit plan
(2) Other comprehensive income to be reclassified to gains
-11,535,229.13 -6,813,128.79
and losses later
a. The shares in other comprehensive income of the investee
that can be reclassified to gains and losses under the equity method
b. Gains and losses from changes in fair value of
-11,535,229.13 -6,813,128.79
available-for-sale financial assets
c. Gains and losses from the reclassification of the
held-to-maturity investment to held-for-sale financial assets
d. The effective portion of the gains and losses from cash
flow hedging
e. Translation differences of financial statements
f. Others
6. Total comprehensive incomes 22,504,382.93 14,855,284.19
7. Earnings per share
(1) Basic earnings per share (yuan/share)
(2) Diluted earnings per share (yuan/share)
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
26
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Consolidated Statement of Cash Flows
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Same period of the previous
Reporting period
Item Note year
(from January to June 2018)
(from January to June 2017)
1. Cash flows from operating activities:
Cash received from sale of goods and provision of
1,468,995,000.92 1,558,790,106.65
services
Net increase in customer bank deposits and placement
from banks and other financial institutions
Net increase in borrowings from central bank
Net increase in loans from other financial institutions
Premiums received from original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from
policyholders
Net increase from disposal of financial assets at fair
value whose fluctuation is attributed to profit or loss for
current period
Cash received from interest, handling charges and
commissions
Net increase in loans from banks and other financial
institutions
Net capital increase in repurchase business
Refunds of taxes and surcharges 24,524,599.65 23,417,955.22
Cash received from other operating activities 20,025,299.88 21,723,964.87
Sub-total of cash inflows from operating activities 1,513,544,900.45 1,603,932,026.74
Cash paid for goods purchased and services received 1,000,221,408.15 1,106,016,865.34
Net increase in loans and advances to customers
Net increase in deposits in central bank and other
banks and financial institutions
Cash paid for original insurance contract claims
Cash paid for interests, handling charges and
commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 359,869,785.40 323,950,873.52
Cash paid for taxes and surcharges 66,300,639.21 101,258,510.93
Cash paid for other operating activities 144,856,222.44 132,496,100.42
Sub-total of cash outflows from operating activities 1,571,248,055.20 1,663,722,350.21
Net cash flows from operating activities -57,703,154.75 -59,790,323.47
2. Cash flows from investing activities:
Cash inflow from divestment 415,980,156.89 606,327,427.90
Cash inflow from investment incomes 1,290,784.50 801,400.43
Cash gain from disposal of fixed assets, intangible
497,493.66 10,661,268.33
assets, and other long-term investment
Cash inflow from disposal of subsidiaries and other
operating units
Cash received from other investing activities
Sub-total of cash inflows from investing activities 417,768,435.05 617,790,096.66
Cash paid for acquisition of fixed assets, intangible
50,035,946.10 41,015,907.75
assets and other long-term assets
Cash paid for investments 445,862,662.32 620,108,197.50
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other
business units
Cash paid for other investing activities
27
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Same period of the previous
Reporting period
Item Note year
(from January to June 2018)
(from January to June 2017)
Sub-total of cash outflows from investing activities 495,898,608.42 661,124,105.25
Net cash flows from investing activities -78,130,173.37 -43,334,008.59
3. Cash flows from financing activities
Cash received from investors
Including: cash received by subsidiaries from
investments by non-controlling shareholders
Cash received from loans 137,855,600.00 330,195,595.00
Cash received from bonds issuance
Cash received from other financing activities 429,112.68
Sub-total of cash inflows from financing activities 137,855,600.00 330,624,707.68
Cash paid for debt repayments 77,888,834.00 341,839,165.55
Cash paid for distribution of dividends and profits or
6,802,648.19 9,551,927.66
payment of interest
Including: dividends and profits paid to
1,833,942.30
non-controlling shareholders by subsidiaries
Cash paid for other financing activities
Sub-total of cash outflows from financing activities 84,691,482.19 351,391,093.21
Net cash flows from financing activities 53,164,117.81 -20,766,385.53
4. Effect of fluctuation in exchange rate on cash and
-5,925,323.34 22,569,433.51
cash equivalents
5. Net increase in cash and cash equivalents -88,594,533.65 -101,321,284.08
Plus: beginning balance of cash and cash equivalents 713,813,720.45 750,357,929.63
6. Ending balance of cash and cash equivalents 625,219,186.80 649,036,645.55
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Statement of Cash Flows
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Same period of the previous
Reporting period
Item Note year
(from January to June 2018)
(from January to June 2017)
1. Cash flows from operating activities:
Cash received from sale of goods and provision of
197,477,098.52 50,038,010.69
services
Refunds of taxes and surcharges 997,057.43 29,728.60
Cash received from other operating activities 18,901,316.47 11,242,643.33
Sub-total of cash inflows from operating activities 217,375,472.42 61,310,382.62
Cash paid for goods purchased and services received 139,833,572.71 25,174,592.83
Cash paid to and on behalf of employees 27,806,037.36 14,056,014.14
Cash paid for taxes and surcharges 3,134,689.28 3,224,645.83
Cash paid for other operating activities 53,107,805.94 35,520,905.54
Sub-total of cash outflows from operating activities 223,882,105.29 77,976,158.34
Net cash flows from operating activities -6,506,632.87 -16,665,775.72
2. Cash flows from investing activities:
Cash inflow from divestment 376,654,041.82 526,075,598.49
Cash inflow from investment incomes 1,472,034.50 10,692,049.83
Cash gain from disposal of fixed assets, intangible
980.58 9,901,416.00
assets, and other long-term investment
Cash inflow from disposal of subsidiaries and other
operating units
28
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Same period of the previous
Reporting period
Item Note year
(from January to June 2018)
(from January to June 2017)
Cash received from other investing activities 10,303,934.17
Sub-total of cash inflows from investing activities 378,127,056.90 556,972,998.49
Cash paid for acquisition of fixed assets, intangible
192,643.35 2,231,017.10
assets and other long-term assets
Cash paid for investments 408,033,790.00 520,211,083.00
Net cash paid to acquire subsidiaries and other
business units
Cash paid for other investing activities
Sub-total of cash outflows from investing activities 408,226,433.35 522,442,100.10
Net cash flows from investing activities -30,099,376.45 34,530,898.39
3. Cash flows from financing activities
Cash received from investors
Cash received from loans
Cash received from bonds issuance
Cash received from other financing activities
Sub-total of cash inflows from financing activities
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or
payment of interest
Cash paid for other financing activities
Sub-total of cash outflows from financing activities
Net cash flows from financing activities
4. Effect of fluctuation in exchange rate on cash and
3,501.82 1,977.90
cash equivalents
5. Net increase in cash and cash equivalents -36,602,507.50 17,867,100.57
Plus: beginning balance of cash and cash equivalents 137,028,156.51 119,210,234.41
6. Ending balance of cash and cash equivalents 100,425,649.01 137,077,334.98
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
29
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Consolidated Statement of Changes in Equity
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Reporting period
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Minority Total owners'
Capital Special Surplus Undistributed
Share capital Preference Perpetual treasury comprehensive risk equity equity
Others reserves reserves reserves profits
shares bonds stock income reserves
1. Previous year ending
548,589,600.00 972,000,595.56 -72,163,452.90 4,546,242.52 692,241,691.51 311,216,783.45 2,456,431,460.14
balance brought forward
Plus: accounting policy
0.00
changes
Correction of
previous-period accounting 0.00
errors
Business combination
involving entities under 0.00
common control
Others 0.00
2. Beginning balance of
548,589,600.00 972,000,595.56 -72,163,452.90 4,546,242.52 692,241,691.51 311,216,783.45 2,456,431,460.14
current year
3. Increase/ (decrease) for the
-5,832,696.23 -25,400,680.10 100,161,346.50 9,919,321.97 78,847,292.14
current year ("-" for losses)
(1) Total comprehensive
-25,400,680.10 100,161,346.50 9,919,321.97 84,679,988.37
incomes
(2) Investment/ (divestment) -5,832,696.23 -5,832,696.23
a. Common shares from
0.00
shareholders
b. Investment capital from
the holders of other equity 0.00
instruments
c. Amount of the share-based
payment included in the 0.00
owners' equity
d. Others -5,832,696.23 -5,832,696.23
(3) Distribution of profits
a. Surplus reserves
b. General risk reserves
c. Distribution to owners or
shareholders
d. Others
(4) Internal transfer of
owners' equity
a. Capital reserve turn to
stock equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to recover
30
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Reporting period
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Minority Total owners'
Capital Special Surplus Undistributed
Share capital Preference Perpetual treasury comprehensive risk equity equity
Others reserves reserves reserves profits
shares bonds stock income reserves
loss
d. Others
(5) Special reserves
a. Appropriation for current
year
b. Use in current year
(6) Others
4. Ending balance of the
548,589,600.00 0.00 0.00 0.00 966,167,899.33 0.00 -97,564,133.00 0.00 4,546,242.52 0.00 792,403,038.01 321,136,105.42 2,535,278,752.28
current year
Same period of the previous year
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Capital Special Surplus Undistributed Minority equity
Share capital Preference Perpetual treasury comprehensive risk equity
Others reserves reserves reserves profits
shares bonds stock income reserves
1. Previous year ending
548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
balance brought forward
Plus: accounting policy
0.00
changes
Correction of
previous-period accounting 0.00
errors
Business
combination involving
0.00
entities under common
control
Others 0.00
2. Beginning balance of
548,589,600.00 0.00 0.00 0.00 971,603,120.27 0.00 -103,144,046.15 0.00 4,546,242.52 0.00 494,754,465.24 291,984,568.18 2,208,333,950.06
current year
3. Increase/ (decrease) for
the current year ("-" for 0.00 0.00 0.00 0.00 -3,413,389.32 0.00 26,307,833.02 0.00 0.00 0.00 125,980,892.71 15,541,724.76 164,417,061.17
losses)
(1) Total comprehensive
26,307,833.02 125,980,892.71 17,375,667.06 169,664,392.79
incomes
(2) Investment/
0.00 0.00 0.00 0.00 -3,413,389.32 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -3,413,389.32
(divestment)
a. Common shares from
0.00
shareholders
b. Investment capital from
the holders of other equity 0.00
instruments
c. Amount of the
share-based payment 0.00
included in the owners'
31
上工申贝（集团）股份有限公司
Semi-annual Report 2018
Shang Gong Group Co., Ltd
Same period of the previous year
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Capital Special Surplus Undistributed Minority equity
Share capital Preference Perpetual treasury comprehensive risk equity
Others reserves reserves reserves profits
shares bonds stock income reserves
equity
d. Others -3,413,389.32 -3,413,389.32
(3) Distribution of profits -1,833,942.30 -1,833,942.30
a. Surplus reserves 0.00
b. General risk reserves 0.00
c. Distribution to owners or
-1,833,942.30 -1,833,942.30
shareholders
d. Others 0.00
(4) Internal transfer of
0.00
owners' equity
a. Capital reserve turn to
0.00
stock equity
b. Surplus reserve turn to
0.00
stock equity
c. Surplus reserve to
0.00
recover loss
d. Others 0.00
(5) Special reserves 0.00
a. Appropriation for current
0.00
year
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the
548,589,600.00 0.00 0.00 0.00 968,189,730.95 0.00 -76,836,213.13 0.00 4,546,242.52 0.00 620,735,357.95 307,526,292.94 2,372,751,011.23
current year
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Statement of Changes in Equity
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
Reporting period
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bonds stock income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 15,711,472.03 4,546,242.52 -143,892,809.85 1,428,237,192.43
brought forward
Plus: accounting policy changes 0.00
Correction of
0.00
previous-period accounting errors
Others 0.00
2. Beginning balance of current 548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 15,711,472.03 0.00 4,546,242.52 -143,892,809.85 1,428,237,192.43
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Reporting period
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bonds stock income
year
3. Increase/(decrease) for the
0.00 0.00 0.00 0.00 0.00 0.00 -11,535,229.13 0.00 0.00 34,039,612.06 22,504,382.93
current year ("-" for losses)
(1) Total comprehensive incomes -11,535,229.13 34,039,612.06 22,504,382.93
(2) Investment/ (divestment) 0.00
a. Common shares from
0.00
shareholders
b. Investment capital from the
0.00
holders of other equity instruments
c. Amount of the share-based
payment included in the owners' 0.00
equity
d. Others 0.00
(3) Distribution of profits 0.00
a. Surplus reserves 0.00
b. Distribution to owners or
0.00
shareholders
c. Others 0.00
(4) Internal transfer of owners'
0.00
equity
a. Capital reserve turn to stock
0.00
equity
b. Surplus reserve turn to stock
0.00
equity
c. Surplus reserve to recover loss 0.00
d. Others 0.00
(5) Special reserves 0.00
a. Appropriation for current year 0.00
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the current
548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 4,176,242.90 0.00 4,546,242.52 -109,853,197.79 1,450,741,575.36
year
Same period of the previous year
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bonds stock income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 33,970,766.78 4,546,242.52 -206,831,240.38 1,383,558,056.65
brought forward
Plus: accounting policy changes 0.00
Correction of
0.00
previous-period accounting errors
Others 0.00
2. Beginning balance of current 548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 33,970,766.78 0.00 4,546,242.52 -206,831,240.38 1,383,558,056.65
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Same period of the previous year
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bonds stock income
year
3. Increase/(decrease) for the
0.00 0.00 0.00 0.00 5,646,023.55 0.00 -6,813,128.79 0.00 0.00 21,668,412.98 20,501,307.74
current year ("-" for losses)
(1) Total comprehensive incomes -6,813,128.79 21,668,412.98 14,855,284.19
(2) Investment/ (divestment) 5,646,023.55 5,646,023.55
a. Common shares from
0.00
shareholders
b. Investment capital from the
0.00
holders of other equity instruments
c. Amount of the share-based
payment included in the owners' 0.00
equity
d. Others 5,646,023.55 5,646,023.55
(3) Distribution of profits 0.00
a. Surplus reserves 0.00
b. Distribution to owners or
0.00
shareholders
c. Others 0.00
(4) Internal transfer of owners'
0.00
equity
a. Capital reserve turn to stock
0.00
equity
b. Surplus reserve turn to stock
0.00
equity
c. Surplus reserve to recover loss 0.00
d. Others 0.00
(5) Special reserves 0.00
a. Appropriation for current year 0.00
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the current
548,589,600.00 0.00 0.00 0.00 1,008,928,711.28 0.00 27,157,637.99 0.00 4,546,242.52 -185,162,827.40 1,404,059,364.39
year
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
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(In the following notes, amounts are expressed in RMB yuan unless otherwise specified.)
3. Company basic information
3.1 Company profile
Shang Gong Group Co., Ltd., a joint stock limited company with publicly issued A & B shares on the
Shanghai Stock Exchange, is the first listed company in the sewing machinery industry of China. The
Company was incorporated in April 1994. The registration number has changed to 91310000132210544K
(Unified social credit code) in 2016. The organizational form of the Company is a joint stock limited company
(a Sino-foreign joint venture and a listed company) and the registered capital amounts to 548,589,600.00 yuan.
The registered address is Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, China
(Shanghai) Pilot Free Trade Zone and the head office is located in No. 1566 New Jinqiao Road, Pudong New
Area, Shanghai. The legal representative is Mr. Zhang Min.
On 22 May 2006, it was decided on the General Meeting on equity division reform by the Company that:
the non-tradable equity stockholders pay partially their shares to all the tradable equity shareholders at a ratio
of 10 to 6 as consideration of getting tradable rights. After the above consideration of share donation, the total
number of shares remains unchanged, but consequently the equity structure has changed. As at 31st December
2013, there were 448,886,777 shares in total.
On 28 February 2014, CSRC approved the non-public offering of A shares of the Company under the
Official Reply to the Approval of Non-public Offering of Shares of Shang Gong Group Co., Ltd. ([2014] No.
237). The number of shares issued was 99,702,823.00 and the total number of share capital after the issue was
548,589,600.00. The Company handled equity registration and escrow formalities with the CSDC Shanghai
Branch; the corresponding registered capital was changed to RMB 548,589,600.00 yuan and had been verified
by the Verification Report (PCPAR [2014] No.111126) issued by BDO CHINA Shu Lun Pan Certified Public
Accountants LLP on 26 March 2014.
On 29 December 2016, Pudong SASAC, the former controlling shareholder and former actual controller
of the Company, had sold 60.00 million A shares of the Company to Shanghai Puke Flyman Investment Co.,
Ltd. which is the wholly-owned subsidiary of Shanghai Pudong Science and Technology Investment Co., Ltd.
China Securities Depository and Clearing Co., Ltd. has issued a "transfer registration confirmation" on the
same day. After the transfer, PKFR held A shares accounted for 10.94% of the total share capital of the
Company, which is the largest shareholder of the Company; Pudong SASAC held A shares accounted for
8.27%, which is the second largest shareholder of the Company. After the completion of the equity transfer,
the Company has changed to a listed company with no controlling shareholder and no actual controller.
As of 31 December 2017, the Company’s total share capital was 548,589,600.00, including 548,589,600
shares with no restrictive terms, accounting for 100.00% of the total number of shares.
The Company belongs to special equipment manufacturing industry; main operating activities of the
Company are: production and sales of sewing equipment.
According to the resolution of the 7th meeting of the 8th board of directors, the financial statements were
approved for disclosure by all directors of the Company on 29 August 2018.
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3.2 Scope of the consolidated financial statements
As of 30 December 2018, the subsidiaries within the consolidated financial statements of the Company
are as follows:
Name of subsidiary
1. Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd.
2. DAP (Shanghai) Co., Ltd.
3. Shanghai SMPIC IMPORT & EXPORT CO., LTD.
4. Shanghai SGSB Electronics Co., Ltd.
5. Shanghai SGSB Asset Management Co., Ltd.
6. Shanghai Sewing Construction Property Co., Ltd.
7. DAP Industrial AG
8. Zhejiang ShangGong GEMSY Co., Ltd.
9. Shanghai Shensy Enterprise Development Co., Ltd.
10. Shanghai ShangGong Financial Leasing Co., Ltd.
11. PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd.
12. DAP (Vietnam) Co., Ltd.
13. ShangGong Sewing Equipment (Zhejiang) Co., Ltd.
14. Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd.
See “Note 8 Changes in the scope of consolidation" and “Note 9 Equity in other subjects" for details of
the scope of consolidated financial statements in the current year and the changes thereof.
4. Preparation basis of financial statements
4.1 Preparation basis
The Company prepares the financial statements based on going concern, according to the transactions and
events actually occurred and in accordance with the Accounting Standards for Business Enterprises - Basic
Standard and various specific accounting standards, application guidance and interpretations for accounting
standards for business enterprises and other relevant provisions (hereinafter collectively referred to as
"Accounting Standards for Business Enterprises") promulgated by the Ministry of Finance and disclosure
provisions of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing
Securities No. 15 - General Rules on Financial Reports of the China Securities Regulatory Commission.
4.2 Going concern
The Company has going-concern ability for 12 months from the end of the report period and has no
matters or situations that may lead to serious doubts about the Company's going-concern ability.
5. Principal accounting policies and accounting estimates
The following disclosure has covered the Company's specific accounting policies and accounting
estimates prepared according to the actual production and operation characteristics.
5.1 Statement on compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for
Business Enterprises and truly and completely reflect the Company’s financial position, operating results, cash
flows and other related information in the report period.
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5.2 Accounting period
The accounting year is from 1st Januaryto 31st December in calendar year.
5.3 Operating cycle
The Company's operating cycle is 12 months.
5.4 Functional currency
The Company adopts RMB as its functional currency.
5.5 Accounting treatment methods for business combinations under or not under common control
Business combinations under common control: Assets and liabilities acquired from business combinations
by the Company are measured at book value of assets and liabilities (including goodwill formed from the
purchase of the acquiree by the ultimate controller) in the consolidated financial statements of the ultimate
controller. Stock premium in the capital reserve shall be adjusted according to the difference between the book
value of net asset acquired from the combinations and that of consideration (or total face value of the shares
issued) paid. In case the stock premium in the capital reserve is not enough, the retained earnings shall to be
adjusted.
Business combinations not under common control: Assets paid for consideration and liabilities incurred
or borne by the Company on the acquisition date shall be measured at their fair values. The difference between
the fair value and the book value should be included in the current profit and loss. The Company shall
recognize the difference of the combination costs in excess of the fair value of the identifiable net assets
acquired from the acquiree as goodwill. The Company shall include the difference of the combination costs in
short of the fair value of the identifiable net assets acquired from the acquiree in the current profit and loss
after review.
Intermediary service charges such as audit fee, legal service fee, appraisal and consultancy fee paid for
business combinations and other directly relevant expenses are included in the current profit and loss when
incurred; the transaction costs for the issuance of equity securities shall be used to offset equities.
5.6 Preparation methods of consolidated financial statements
5.6.1 Scope of consolidation
The scope of consolidation of the Company's consolidated financial statements is recognized based on the
control. All subsidiaries (including the divisible part of the investee controlled by the Company) shall be
included in the consolidated financial statements.
5.6.2 Consolidation procedure
The Company prepares consolidated financial statements based on its own financial statements and
financial statements of its subsidiaries according to other relevant materials. When the Company prepares its
consolidated financial statements, it shall regard the whole enterprise group as an accounting entity to reflect
the overall financial position, operating results and cash flows of the enterprise group according to the
requirements for recognition, measurement and presentation of the relevant Accounting Standards for Business
Enterprises and the unified accounting policies.
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Accounting policies and accounting periods adopted by all subsidiaries included in the consolidation
scope of the consolidated financial statements shall be consistent with those of the Company. If accounting
policies and accounting periods adopted by all subsidiaries are inconsistent with those of the Company, in the
preparation of the consolidated financial statements, necessary adjustments shall be made according to the
accounting policies and accounting periods of the Company. For the subsidiaries acquired through business
combination not under common control, adjustments to their financial statements shall be made based on the
fair values of identifiable net assets on the acquisition date. For the subsidiaries acquired through business
combination not under common control, adjustments to their financial statements shall be made based on the
fair values of their assets and liabilities (including goodwill from acquisition of the subsidiaries by the ultimate
controller) in the financial statements of the ultimate controller.
The owner's equity of subsidiaries, net profits and losses in the current period and comprehensive income
attributable to minority shareholders in the current period shall separately presented under the item of owner's
equity of the Consolidated Statement of Financial Position, the item of net profit of the Consolidated Statement
of Comprehensive Income and the item of total comprehensive income. The difference formed by the loss in
the current period shared by minority shareholders of the subsidiaries in excess of the share of minority
shareholders in the owner's equity at the beginning of the period of the subsidiaries shall be used to offset the
minority equity.
(1) Increase in subsidiaries or business
In the report period, if the Company increased subsidiaries or business from business combinations under
common control, the beginning amount of the Consolidated Statement of Financial Position shall be adjusted;
the incomes, expenses and profits from the beginning of the current period of the subsidiaries or business
combination to the end of the report period shall be included in the Consolidated Statement of Comprehensive
Income; cash flows from the beginning of the current period of the subsidiaries or business combination to the
end of the report period shall be included in the Consolidated Statement of Cash Flows. At the same time, the
Company shall adjust the relevant items of the comparative statements and deem that the reporting entity
already exists when the ultimate controller starts its control.
If the Company controls the investee under common control from additional investments, it shall be
deemed that the parties involved in the combination have make adjustments at the current state when the
ultimate controller starts its control. For the equity investments held before the Company controls the acquiree,
the relevant profit and loss, other comprehensive income and changes in other net assets recognized during the
period from the later of the date when the Company obtains the original equity and the date when the acquirer
and the acquiree are under common control, shall be used to offset the retained earnings at the beginning of the
period or the current profit and loss in the period of the comparative statements.
In the report period, if the Company increased subsidiaries or business from combinations not under
common control, the beginning amount of the Consolidated Statement of Financial Position shall not be
adjusted; the incomes, expenses and profits from the subsidiaries and business from the acquisition date to the
end of the report period shall be included in the Consolidated Statement of Comprehensive Income; cash flows
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of the subsidiaries or business from the acquisition date to the end of the report period shall be included in the
Consolidated Statement of Cash Flows.
If the Company controls the investee not under common control from additional investments, it shall
re-measure equity of the acquiree held before the acquisition date at the fair value on the acquisition date and
include the difference of fair value and book value in the investment income in the current period.
the relevant other comprehensive income and other changes in owner's equity shall be transferred to
investment income in the current year which the acquisition date falls in, except for other comprehensive
income from changes arising from re-measurement of net liabilities or net assets of defined benefit plan.
If the equity of the acquiree held before the acquisition date involves the other comprehensive income and
changes in owner's equity other than net profit and loss, other comprehensive income and profit distribution
accounted under equity method, the relevant other comprehensive income and changes in other owner's equity
shall be transferred to investment income in the current period which the acquisition date falls in, except for
other comprehensive income from changes arising from re-measurement of net liabilities or net assets of
defined benefit plan.
(2) Disposal of subsidiaries or business
①General treatment methods
In the reporting period, if the Company disposed subsidiaries or business, then the incomes, expenses and
profits from the subsidiaries and business from the beginning of the year to the disposal date shall be included
in the Consolidated Income Statement; cash flows from the combinations of the subsidiaries and business from
the beginning of the year to the disposal date shall be included in the Consolidated Cash Flow Statement.
When the Company losses the control over the original subsidiary due to disposal of partial equity
investments or other reasons, the remaining equity investments after the disposal will be re-measured at the
fair value at the date of loss of the control. The difference of total amount of the consideration from disposal of
equities plus the fair value of the remaining equities less the shares calculated at the original shareholding ratio
in net assets of the original subsidiary which are continuously calculated as of the acquisition date is included
in the investment income of the period at the loss of control. Other comprehensive income associated with the
original equity investments of the subsidiary and other changes in owner's equity other than net profit and loss,
other comprehensive income and profit distribution are transferred into investment income in the current year
when the control is lost, except for other comprehensive income from changes arising from re-measurement of
net liabilities or net assets of defined benefit plan.
②Disposal of subsidiary by stages
Where the Company disposes the equity investments in subsidiary through multiple transactions and by
stages until it loses the control, if the effect of the disposal on the terms and conditions of all transactions of
equity investments in subsidiary and economic effect meet one or more of the following circumstance, it
usually indicates that the multiple transactions should be accounted for as a package deal:
i. These transactions are concluded at the same time or under the consideration of mutual effect;
ii. These transactions as a whole can reach a complete business results;
iii. The occurrence of a transaction depends on the occurrence of at least one other transaction;
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ⅳ. A single transaction is uneconomical but it is economical when considered together with other
transactions.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control
belong to a package deal, accounting treatment shall be made by the Company on the transactions as a
transaction to dispose subsidiaries and lose the control; however, the difference between each disposal cost and
net asset share in the subsidiaries corresponding to each disposal of investments before loss of the control
should be recognized as other comprehensive income in the consolidated financial statements and should be
transferred into the current profit or loss at the loss of the control.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control do
not belong to a package deal, before the loss of the control, accounting treatment shall be made according to
the relevant policies for partial disposal of equity investments in the subsidiary without losing control; at the
loss of the control, accounting treatment shall be made according to general treatment methods for disposal of
subsidiaries.
(3) Purchase of minority interest of subsidiaries
The difference between long-term equity investments newly acquired by the Company through purchase
of minority interest and the subsidiary’s identifiable net assets attributable to the Company calculated
continuously from the acquisition date (or the combination date) in accordance with the newly increased
shareholding ratio shall be charged against stock premium within capital reserves in the consolidated balance
sheet; when stock premium within capital reserves is insufficient to offset, the retained earnings shall be
adjusted.
(4) Partial disposal of equity investments in the subsidiary without losing control
The difference between the proceeds from partial disposal of equity investments in the subsidiary and the
share of identifiable net assets of the subsidiary attributable to the Company which are calculated continuously
from the acquisition date (or the combination date) and which are corresponding to the disposal of long-term
equity investments without losing control shall be charged against stock premium within capital reserves in the
consolidated balance sheet; when stock premium within capital reserves is insufficient to offset, the retained
earnings shall be adjusted.
5.7 Determination of cash and cash equivalents
In preparing the cash flow statement, cash on hand and the unrestricted deposits of the Company are
recognized as cash. Short-term (maturing within three months as of the acquisition date) and highly liquid
investments held by the Company that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of change in value are recognized as cash equivalents.
5.8 Foreign currency transactions and translation of foreign currency statements
5.8.1 Foreign currency transactions
Foreign currency transactions are, on initial recognition, translated to RMB at the spot exchange rates at
the dates of the transactions.
The balance of foreign currency monetary items is adjusted and translated into functional currency at
balance sheet date using the spot exchange rate. Regarding the year-end differences of translation in foreign
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currency, except those special borrowing accounts under the acquisition, building or production of assets to be
capitalized are capitalized and accounted into related assets cost, all the other differences are accounted into
current profits and losses. The foreign currency non-monetary items at historical cost are translated using the
spot exchange rate. And the foreign currency non-monetary items at fair value are adjusted and translated into
measurement currency at adoption date of fair value using the spot exchange rate. The difference of translation
between different currencies is accounted into current profits and losses or capital reserves.
5.8.2 Translation of foreign currency statements
The assets and liabilities of foreign operation are translated to RMB at the spot exchange rate at the
balance sheet date. The equity items, excluding “Retained earning”, are translated to RMB at the spot
exchange rates at the transaction dates. The income and expenses of foreign operation are translated to RMB at
the spot exchange rates or the rates that approximate the spot exchange rates at the transaction dates. The
resulting exchange differences are recognized in a separate component of equity.
Upon entire/partial disposal of a foreign operation, the entire/partial cumulative amount of the exchange
differences recognized in equity which relates to that foreign operation is transferred to profit or loss in the
period in which the disposal occurs.
5.9 Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
5.9.1 Classification of financial instruments
At the initial recognition, financial assets and financial liabilities are classified as: financial assets or
financial liabilities measured at fair value through current profit and loss, including financial assets or financial
liabilities held for trading, and financial assets or financial liabilities that are directly to be measured at fair
value through current profit and loss, held-to-maturity investments, accounts receivable, available-for-sale
financial assets and other financial liabilities, etc.
5.9.2Recognition basis and measurement method of financial instruments
(1) Financial assets (financial liabilities) measured at fair value through current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash
dividends that have been declared but not distributed and bond interest that has matured but not been drawn).
Relevant transaction expenses are included in the current profit and loss.
The interest or cash dividends to be received during the holding period are recognized as investment
income. Change in fair values is included in the current profit and loss at the end of the period.
Upon the disposal, difference between the fair value and the initial book-entry value is recognized as
investment income; meanwhile, adjustment is made to gains or losses from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at the sum of fair values (less the bond interest that
has matured but not been drawn) and relevant transaction expenses when acquired.
During the period of holding the investment, the interest income is calculated and recognized according to
the amortized costs and effective interest rate, and included in the investment income. The effective interest
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rates are determined upon acquisition and remain unchanged during the expected remaining period, or a
shorter period if applicable.
Difference between the proceeds and the book value of the investment is recognized as investment
income upon disposal.
(3) Receivables
For creditor’s rights receivable arising from external sales of goods or rendering of service by the
Company and creditor's rights of other enterprises (excluding creditor’s right quoted in the active market) held
by the Company, including accounts receivable, other receivables, the initial recognition amount shall be the
contract price or agreement price receivable from the purchasing party; for those with financing nature, they
are initially recognized at their present values.
The difference between the amount received and the book value of accounts receivable is included in the
current profit and loss upon the recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash
dividends that have been declared but not distributed and bond interest that have matured but not been drawn)
and relevant transaction costs when acquired.
The interest or cash dividends to be received during the holding period is or are recognized as investment
income. Available-for-sale financial assets are measured at fair value at the end of the year and the changes in
fair value are included in other comprehensive income. However, equity instrument investments that have no
quoted price in the active market and of which fair values cannot be measured reliably and derivative financial
assets that relate to such equity instruments and that shall be settled through the delivery of such equity
instruments shall be measured at cost.
Difference between the proceeds and the book value of the financial assets is recognized as investment
income upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair value
which is originally and directly included in other comprehensive income shall be transferred out and
recognized as the current profit and loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at fair values plus related transaction costs. The
subsequent measurement is based on amortized costs.
5.9.3 Recognition and measurement of transfer of financial assets
Upon occurrence of transfer of a financial asset, the Company shall de-recognize the transfer of the
financial asset if nearly all the risks and rewards associated with the ownership of the financial assets have
been transferred to the transferee; and shall not de-recognize the transfer of the financial asset if nearly all the
risks and rewards associated with the ownership of the financial assets are retained.
The principle of substance over form is adopted to determine whether a financial asset meets the above
de-recognition conditions for the financial asset. The transfer of a financial asset of the Company is classified
into the entire transfer and the partial transfer of financial asset. If the entire transfer of financial asset satisfies
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the criteria for de-recognition, the difference between the amounts of the following two items shall be included
in the current profit and loss:
(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the accumulated amount of the changes in
fair value originally and directly included in shareholders’ equity (the situation where the financial asset
transferred is an available-for-sale financial asset is involved in).
If the partial transfer of financial asset satisfies the criteria for de-recognition, the entire book value of the
transferred financial asset shall be split into the derecognized part and recognized part according to their
respective fair value and the difference between the amounts of the following two items shall be included in
current profit and loss:
(1) The book value of derecognized part;
(2) The sum of the consideration for the derecognized part and the portion of de-recognition
corresponding to the accumulated amount of the changes in fair value originally and directly included in
owners' equity (the situation where the financial asset transferred is an available-for-sale financial asset is
involved in).
If the transfer of financial assets does not meet the de-recognition criteria, the financial assets shall
continue to be recognized and the consideration received will be recognized as a financial liability.
5.9.4 Derecognition criteria of financial liabilities
A financial liability shall be wholly or partly derecognized if its present obligations are wholly or partly
dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing
financial liabilities with any new financial liability, and the new financial liability is substantially different
from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing
financial liability, and shall at the same time recognize new financial liability.
Where substantial revisions are made to some or all of the contractual stipulations of the existing financial
liability, the Company shall derecognize the existing financial liability wholly or partly, and at the same time
recognize the financial liability with revised contractual stipulations as a new financial liability.
Upon whole or partial derecognition of financial liabilities, the difference between the book value of the
financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new
financial liabilities assumed) shall be included in the current profit and loss.
Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the
entire book value of financial liabilities according to the comparative fair value of the part that continues to be
recognized and de-recognized part. The difference between the book value allocated to the derecognized part
and the considerations paid (including non-cash assets surrendered and the new financial liabilities assumed)
shall be included in the current profit and loss.
5.9.5 Determination method of fair value of financial assets and financial liabilities
Where there is an active market for financial instruments, the fair values shall be determined according to
quoted prices in active markets. Where there is no active market, the fair values shall be determined using
reasonable valuation techniques. At the time of valuation, the Company adopted valuation techniques
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applicable in the current situation and supported by enough available data and other information, select input
values consistent with the features of assets or liabilities considered by market participants in the transaction
related to the assets or liabilities, and give priority to using the relevant observable input values. Only when it
is unable or impracticable to obtain the relevant observable input values, unobservable input values can be
used.
5.9.6 Test method and accounting treatment of depreciation of financial assets (excluding
receivables)
Except for the financial assets measured at fair values through current profit and loss, the book value of
financial assets on the balance sheet date should be checked. If there is objective evidence that a financial asset
is impaired, provision for impairment shall be made.
(1) Provision for impairment of available-for-sale financial assets:
If the fair value of available-for-sale financial assets has significantly declined at the end of the period, or
it is expected that the trend of decrease in value is non-temporary after considering of various relevant factors,
the impairment shall be recognized, and accumulated losses from decreases in fair value originally and directly
included in owners' equity shall be all transferred out and recognized as impairment loss.
For available-for-sale debt instruments whose impairment losses have been recognized, if their fair values
rise in the subsequent accounting period and such rise is objectively related to the matters occurring after the
recognition of impairment loss, the previously recognized impairment loss shall be reversed and recorded into
the current profit and loss.
Impairment losses on available-for-sale equity instruments should not be reversed through profit and loss.
Criteria of the Company for "serious" decline of fair value of investments in available-for-sale equity
instruments: In general, for highly liquid equity investments that are actively traded in the market, over 50% of
the decline is considered to be a serious fall. Criteria for "non-temporary" decline of fair value: In general, if a
continuous decline lasts for more than six months, it is considered as "non-temporary decline."
(2) Provision for impairment of held-to-maturity investments:
Measurement of provision for impairment loss on held-to-maturity investments is treated in accordance
with the measurement method of impairment loss on accounts receivable.
5.10 Provision for bad debts of receivables
5.10.1 Receivables that are individually significant but with provision for bad debts made on an
individual basis
Assessment basis or standard of amount
Top five biggest balance accounts.
individually significant
An impairment test shall be separately made. Provision for bad debts shall be accrued
based on the difference between the present value of estimated future cash flow and its
Method of provision for bad debts of receivables book value. And it shall be recorded into the current profit and loss. If the difference
individually significant between expected future cash flow of short-term receivables and its present value is very
small, it does not discount its expected future cash flows when determining the relevant
impairment losses.
5.10.2 Provision for bad debts of receivables made on credit risk characteristics portfolio basis
Methods of provision for bad debts made on credit risk characteristics portfolio basis
Balances of receivables other than accounts receivable subject to provisions for bad debts on an individual basis and other
Portfolio
receivables
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Portfolio Aging analysis method
Provision for bad debts made at aging analysis method in the portfolio:
Proportion of Provision for Accounts Proportion of Provision for Other
Aging
Receivable (%) Receivables (%)
Within 1 year (including 1 year) 5 5
1 to 2 years 20 20
2 to 3 years 50 50
Over 3 years 100 100
5.10.3 Receivables that are individually insignificant but with provision for bad debts made on an
individual basis
Reason for bad debt provision
Receivables of a particular object
provided on an individual basis
An impairment test shall be separately made. If there is objective evidence that it has been impaired,
Method of provision for bad debts provision for bad debts is made based on the difference between the present value of expected future cash
flows and its book value, which is included in the current profit or loss.
5.11 Inventories
5.11.1 Classification of inventories
Inventories are classified into Materials in transit, raw materials, revolving materials, stock commodities,
goods in progress, dispatched goods, material procurement, consigned processing materials, labor cost and
others.
5.11.2 Measurement method of dispatched inventories
Inventories are measured with weighted average method when dispatched. The percentage matches
method of the labor cost and labor revenue. One-off amortization method is adopted for low-cost consumables
when they are consumed.
5.11.3 Recognition basis for net realizable values of inventories of different categories
In normal operation process, for merchandise inventories for direct sale, including finished goods, stock
commodities and materials for sale, their net realizable values are determined at the estimated selling prices
minus the estimated selling expenses and relevant taxes and surcharges; in normal operation process, for
material inventories that need further processing, their net realizable values are determined at the estimated
selling prices of finished goods minus estimated costs to completion, estimated selling expenses and relevant
taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable
values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts
are less than the quantities held by the Company, the net realizable value of the excess portion of inventories
shall be based on general selling prices.
At the end of the period, provisions for inventory depreciation reserve are made on an individual basis.
For inventories with large quantity and low unit price, the provisions for inventory depreciation reserve are
made on a category basis. For inventories related to the product portfolios manufactured and sold in the same
area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate
from other items for measurement purposes, the provisions for inventory depreciation reserve shall be made on
a portfolio basis.
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Except that there is clear evidence that the market price is abnormal on the balance sheet date, the net
realizable value of inventory items shall be recognized at the market price on the balance sheet date.
Net realizable value of inventory items at the end of the year is recognized at the market price on the
balance sheet date.
5.11.4 Inventory system
Perpetual inventory system is adopted.
5.12 Assets held for sale
Not applicable.
5.13 Long-term equity investments
5.13.1 Criteria for judgment of common control and significant influence
The term “common control” refers to the sharing of control over an arrangement in accordance with the
relevant agreement, and related activities of the arrangement must be unanimously agreed by the parties that
share the right of control. Where the Company and other investors exert common joint control over the
investee and have rights over the net assets of the investee, the investee is a joint venture of the Company.
Significant influence refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with
other parties. Where the Company is able to exert significant influence over the investee, the investee is its
associate.
5.13.2 Recognition of initial investment costs
(1) Long-term equity investments acquired from business combination
Business combination under common control: if the Company makes payment in cash, transfers non-cash
assets or bears debts and issues equity securities as the consideration for the business combination, the book
value of the owner's equity of the acquiree in the consolidated financial statements of the ultimate controller is
recognized as the initial cost of the long-term equity investment on the combination date. In case the Company
can exercise control over the investee under common control for additional investment or other reasons, the
initial investment cost of long-term equity investments is recognized at the share of book value of net asset of
the acquiree after the combination in the consolidated financial statements of the ultimate controller on the
combination date. The stock premium should be adjusted at the difference between the initial investment cost
of long-term equity investments on the combination date and the book value of long-term equity investments
before the combination plus the book value of consideration paid for additional shares; if there is no sufficient
stock premium for write-downs, the retained earnings are adjusted.
Business combination not under common control: The Company recognizes the combination cost
determined on the combination date as the initial cost of long-term equity investments. Where the Company
can exercise control over the investee not under common control for additional investments or other reasons,
the initial investment cost changed to be accounted for under the cost method should be recognized at the book
value of originally held equity investments plus costs of additional investments.
(2) Long-term equity investment acquired by other means
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For a long-term equity investment acquired through making payments in cash, its initial cost is the
actually paid purchase cost.
For a long-term equity investment acquired from issuance of equity securities, its initial cost is the fair
value of the issued equity securities.
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out
and traded in can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes and
surcharges payable unless there is any conclusive evidence that the fair values of the assets traded in are more
reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value of the assets
traded out and the relevant taxes and surcharges payable are recognized as the initial cost of long-term equity
investment traded in.
For a long-term equity investment acquired from debt restructuring, its initial cost is determined based on
the fair value.
5.13.3 Subsequent measurement and recognition of gains and losses
(1) Long-term equity investment accounted for under the cost method
Long-term equity investments in subsidiaries are accounted for under the cost method. Except for the
actual price paid for acquisition of investment or the cash dividends or profits contained in the consideration
which have been declared but not yet distributed, the Company recognizes the investment income in the
current year at the cash dividends or profits declared by the investee.
(2) Long-term equity investments accounted for under the equity method
Long-term equity investments in associates and joint ventures are accounted for under the equity method.
If the cost of initial investment is in excess of the proportion of the fair value of the net identifiable assets in
the investee when the investment is made, the difference will not be adjusted to the initial cost of the long-term
equity investments; if the cost of initial investment is in short of the proportion of the fair value of the net
identifiable assets in the investee when the investment is made, the difference will be included in the current
profit and loss.
The Company shall recognize the investment income and other comprehensive income at the shares of net
profit and loss and other comprehensive income realized by the investee which the Company shall enjoy or
bear and adjust the book value of long-term equity investments at the same time; the Company shall calculate
the shares according to profits or cash dividends declared by the investee and correspondingly reduce the book
value of long-term equity investments; the book value of long-term equity investments shall be adjusted
according to the investee's other changes in owner's equity other than net profit and loss, other comprehensive
income and profit distribution, which should be included in owner's equity.
The share of the investee's net profit or loss should be recognized after adjustments are made to net profit
of the investee based on the fair value of identifiable net assets of the investee upon acquisition of investments
and according to accounting policies and accounting period of the Company. When holding the investment, the
investee should prepare the consolidated financial statements, it shall account for the investment income based
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on the net profit, other comprehensive income and the changes in other owner's equity attributable to the
investee.
When the Company recognizes its share of loss incurred to the investee, treatment shall be done in
following sequence: firstly, the book value of the long-term equity investment shall be reduced. Secondly,
where the book value thereof is insufficient to cover the share of losses, investment losses are recognized to
the extent of book value of other long-term equities which form net investment in the investee in substance and
the book value of long term receivables shall be reduced. Finally, after all the above treatments, if the
Company is still responsible for any additional liability in accordance with the provisions stipulated in the
investment contracts or agreements, provisions are recognized and included into current investment loss
according to the obligations estimated to undertake.
(3) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between its book value and the actual price
shall be included in the current profit and loss.
For long-term equity investments accounted for under the equity method, when the Company disposes
such investments, accounting treatment should be made to the part that is originally included in other
comprehensive income according to the corresponding proportion by using the same basis for the investee to
directly dispose the relevant assets or liabilities. Owner's equity recognized at the changes in the investee's
other owner's equity other than net profit or loss, other comprehensive income and profit distribution shall be
transferred to the current profit and loss according to the proportion, except for other comprehensive income
from changes arising from re-measurement of net liabilities or net assets of defined benefit plan.
In case the joint control or significant influence over the investee is lost for disposing part of equity
investments or other reasons, the remaining equity will be changed to be accounted for according to the
recognition and measurement principles of financial instruments. The difference between the fair value and the
book value on the date of the loss of joint control or significant influence should be included in the current
profit and loss. For other comprehensive income recognized from accounting of the original equity
investments under the equity method, accounting treatment should be made by using the same basis for the
investee to directly dispose the relevant assets or liabilities when the equity method is no longer adopted.
Owner's equity recognized from the investee's changes in other owner's equity other than net profit or loss,
other comprehensive income and profit distribution should all transferred to the current profit and loss when
the equity method confirmed is no longer adopted.
In case the control over the investee is lost for disposing part of equity investments or other reasons, when
the Company prepares the individual financial statements, where the remaining equity after the disposal can
exercise joint control or significant effect on the investee, then such equity will be changed to be accounted for
under the equity method and the remaining equity is deemed to have been adjusted under the equity method on
acquisition; where the remaining equity after the disposal cannot exercise joint control or significant effect on
the investee, then accounting treatment shall be changed to be made according to the relevant provisions on the
recognition and measurement principles of financial instruments. The difference between the fair value and the
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book value on the date of the loss of joint control or significant influence should be included in the current
profit and loss.
In case the disposed equity is acquired from additional investments or other reasons, when the Company
prepares the individual financial statements, where the remaining equity after the disposal is accounted for
under the cost method or the equity method, other comprehensive income and other owner's equity recognized
from the accounting of equity investments held before the acquisition date under the equity method shall be
transferred according to the proportion; where accounting treatment of the remaining equity after the disposal
is changed to be made according to the recognition and measurement principles of financial instruments, all of
other comprehensive income and other owner's equity shall be transferred.
5.14 Investment property
Investment properties are properties to earn rentals or for capital appreciation or both. Examples include
land leased out under operating leases, land held for long-term capital appreciation, buildings leased out under
operating leases, (including buildings that have been constructed or developed for future lease out under
operating leases, and buildings that are being constructed or developed for future lease out under operating
leases).
The Company adopts the cost model to measure all current investment properties. The Company adopts
the same depreciation policy for the investment property measured at cost model - building for renting as that
for the Company’s fixed assets and the same amortization policy of land use right for renting as that for the
Company’s intangible assets.
5.15 Fixed assets
5.15.1 Recognition criteria for fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providing services,
renting or business management with useful lives exceeding one accounting year. Fixed assets will only be
recognized when all the following criteria are satisfied:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and
(2) The costs of the fixed asset can be measured reliably.
5.15.2 Depreciation method
Category Depreciation Method Depreciation Life (years) Residual Rate (%) Annual Depreciation Rate (%)
Buildings and
Straight-line method 5-50 0-10 2.00-25.00
constructions
Machinery equipment Straight-line method 3-15 0-10 6.00-33.33
Transportation
Straight-line method 3-14 0-10 6.43-33.33
equipment
Electronic equipment Straight-line method 3-14 0-10 6.43-33.33
Renovations of fixed
Straight-line method 5-15 0 6.67-20.00
assets
Other equipment Straight-line method 3-14 0-10 6.43-33.33
Depreciation of fixed assets is provided on a category basis using the straight-line method. The
depreciation rates are determined according to the categories, estimated useful lives and estimated net residual
rates of fixed assets. If the components of a fixed asset have different useful lives or cause economic benefit
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for the Company in different ways, different depreciation rate or method shall be adopted for depreciation on
an individual component basis.
5.15.3 Identification basis and pricing method of financing lease fixed assets
If one of the following conditions is stipulated in the terms of the lease agreement signed between the
Company and the lessor, it is recognized as a leased asset under finance:
(1) The ownership of the leased assets after the lease expires belongs to the Company;
(2) The Company has the option to purchase assets. The purchase price is much lower than the fair value
of the assets when the option is exercised;
(3) The lease period accounts for the majority of the useful life of the leased asset;
(4) The present value of the minimum lease payment on the lease start date is not significantly different
from the fair value of the asset.
At the beginning of the lease, the Company uses the lower of the fair value of the leased asset and the
present value of the minimum lease payments as the entry value of the leased asset, and uses the minimum
lease payment as the entry value of long-term payables. The difference is as unrecognized financing fee.
5.16 Construction in progress
The book values of the construction in progress are stated at total expenditures incurred before reaching
working condition for their intended use. For construction in progress that has reached working condition for
intended use but relevant budgets for the completion of projects have not been completed, the estimated values
of project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and
depreciation should be provided according to relevant policies of the Company when working condition is
reached. After the completion of budgets needed for the completion of projects, the estimated values should be
substituted by actual costs, but depreciation already provided is not adjusted.
5.17 Borrowing costs
5.17.1 Recognition criteria for capitalization of borrowing costs
Borrowing costs include the interest on borrowings, the amortization of discount or premium, auxiliary
expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction
or production of assets eligible for capitalization should be capitalized and recorded into asset costs; other
borrowing costs should be recognized as costs according to the amount incurred and be included into current
profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets
which may reach their intended use or sale status only after long-time acquisition and construction or
production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) The asset disbursements have already incurred, which shall include the cash paid, non-cash assets
transferred or interest bearing debts undertaken for the acquisition and construction or production activities for
preparing assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
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(3) Purchase, construction or manufacturing activities that are necessary to prepare the asset for its
intended use or sale have already started.
5.17.2 Capitalization period of borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its
cessation; period of suspension for capitalization is excluded.
When the qualified asset under acquisition and construction or production is ready for the intended use or
sale, the capitalization of the borrowing costs shall be ceased.
When some projects among the acquired and constructed or produced assets eligible for capitalization are
completed and can be used separately, the capitalization of borrowing costs of such projects should be ceased.
Where construction for each part of assets purchased, constructed or manufactured has been completed
separately but can be used or sold only after the entire assets have been completed, capitalization of
attributable borrowing costs should cease at the completion of the entire assets.
5.17.3 Period of capitalization suspension
If the acquisition and construction or production activities of assets eligible for capitalization are
interrupted abnormally and this condition lasts for more than three months, the capitalization of borrowing
costs should be suspended; if the interruption is necessary for the acquisition and construction or production to
prepare the assets for their intended use or sale, the capitalization of borrowing costs should continue. The
borrowing costs incurred during interruption are recognized in the current profit and loss, and the capitalization
of borrowing costs continues after the restart of the acquisition and construction or production activities of the
assets.
5.17.4 Capitalization rate and measurement of capitalized amounts of borrowing costs
As for special borrowings borrowed for acquiring and constructing or producing assets eligible for
capitalization, the to-be-capitalized amount shall be determined at interest expense of special borrowing
actually incurred in the current period less the interest income of the borrowings unused and deposited in bank
or return on temporary investment.
As for general borrowings used for acquiring and constructing or producing assets eligible for
capitalization, the to-be-capitalized amount should be calculated by multiplying the weighted average of asset
disbursements of the part of accumulated asset disbursements exceeding special borrowings by the
capitalization rate of used general borrowings. The capitalization rate is calculated by using the weighted
average interest rate of general borrowings.
5.18 Biological assets
Not applicable.
5.19 Oil and gas assets
Not applicable.
5.20 Intangible assets
5.20.1 Measurement of intangible assets
(1) The Company initially measures intangible assets at cost on acquisition
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The costs of external purchase of intangible assets comprise their purchase prices, related taxes and
surcharges and any other directly attributable expenditure incurred to prepare the asset for its intended use. If
payments for the purchase of intangible assets are extended beyond the normal credit terms with financing
nature, the costs of intangible assets are determined on the basis of present values of the purchase prices.
For intangible assets obtained from debtors in settlement of his liabilities in case of debt restructuring,
they should be initially stated at their fair values. Differences between the book values and the fair values of
the intangible assets are charged to profit or loss for the current period.
If the exchange of non-monetary assets has commercial substance, and the fair values of these assets can
be measured reliably, the book-entry values of intangible assets traded in are based on the fair values of the
intangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded in
are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of the
intangible assets traded in should be the book values of the assets traded out and relevant taxes and surcharges
paid, and no profit or loss shall be recognized.
(2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
As for intangible assets with limited useful life, straight-line amortization method is adopted in the period
when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets
generate economic benefit for enterprise cannot be forecasted, the intangible assets shall be deemed as those
with indefinite useful life and shall not be amortized.
5.20.2 Estimate of the useful life of the intangible assets with finite useful lives
Item Estimated Useful Lives
Land use right 50 years
Right to use trade mark 10 years
Patent and non-patent technology 4-8 years
Computer software 3-10 years
The useful lives and amortization methods of intangible assets with limited useful lives are reviewed at
each year end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year
are not different from those estimated before.
5.20.3 Specific criteria divided the research stage and development stage
Expenditure internal research and development project is divided into research expenditures and
development expenditures.
Research stage: the planned investigation and research activities to acquire and understand new scientific
or technological knowledge.
Development stage: before commercial production and use, the research findings or other knowledge are
applied in some plan or design to produce new or substantially improved materials, devices, products, etc.
5.20.4 Specific criteria to fulfill for development costs to be capitalized
If it can be reliably estimated that future economic benefits will flow to the entity, and that the purchase
and production costs can be reliably measured, the development cost should be capitalized. The measurement
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of production cost of internally generated intangible assets is based on direct cost, indirect cost and
amortization.
If it can be clearly defined that newly developed products or methods are technically feasible, and that
they are intended for private use or sale, the development cost should be capitalized. The capitalized
development cost should be amortized within a product’s expected 5 to 8 years’ life cycle, using a straight-line
method. If the value in use cannot be recognized, impairment and amortization should be carried out. Research
cost and the development cost which cannot be capitalized should be expense when it occurs.
5.21 Impairment of long-term assets
The Company will conduct the impairment test if any evidence suggests that the long-term assets, such as
the long-term equity investment and the investment property, fixed assets, construction in progress and
intangible assets, are impaired on the balance sheet date. If impairment test results indicate that the recoverable
amounts of the assets are lower than their carrying amounts, the provision for impairment is made based on the
differences which are recognized as impairment losses. The recoverable amount is the higher of the fair value
of the asset minus the disposal expenses and the present value of the estimated future cash flow of the asset.
The provision for assets impairment is calculated and recognized by the individual asset. If it is difficult to
estimate the recoverable amount of an individual asset, the Company shall estimate the recoverable amount of
the asset portfolio that the individual asset belongs to. The asset portfolio is the minimum asset group that can
independently generate the cash inflow.
Goodwill is tested for impairment at least at the end of each year.
The Company conducts an impairment test for the goodwill. The book value of goodwill arising from
business combinations is amortized to relevant asset groups with a reasonable method since the date of
acquisition; or amortized to relevant combination of asset groups if it is difficult to be amortized to relevant
asset groups. The book value of goodwill is amortized to relevant asset groups or combinations of asset groups
according to the proportion of the fair value of such asset groups or combinations of asset groups in the total
fair value of relevant asset groups or combinations of asset groups. Where the fair value cannot be reliably
measured, it should be amortized according to proportion of the book value of each asset group or combination
of asset group in the total book value of relevant asset groups or combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containing
goodwill, if any indication shows that the asset groups or combinations of asset groups related to the goodwill
may be impaired, the Company shall first conduct an impairment test on the asset groups or combinations of
asset groups not containing goodwill, calculate the recoverable amount and compare it with the relevant book
value to recognize the corresponding impairment loss. Then the Company shall conduct an impairment test on
the asset groups or combinations of asset groups containing goodwill, and compare the book value of these
asset groups or combinations of asset groups (including the book value of the goodwill apportioned thereto)
with the recoverable amount. Where the recoverable amount of the relevant asset groups or combinations of
asset groups is lower than the book value thereof, the Company shall recognize the impairment loss of the
goodwill. The above impairment loss is not reversed in the future accounting period once recognized.
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5.22 Long-term deferred expenses
Not applicable.
5.23 Employee compensation
5.23.1 Accounting treatment of short-term remuneration
During the accounting period in which employees provide service to the Company, the short-term
remuneration actually incurred is recognized as liabilities and charged to the current profit or loss or the
relevant assets cost.
The medical insurance premium, work-related injury insurance premium and the housing provident fund
paid by the Company for its employees, together with the labor union expenditures and employee education
are used to calculate and determine the relevant employee compensation amount based on the prescribed
accrual basis and accrual proportion.
The non-monetary benefits for employees that can be measured reliably are measured at fair value.
5.23.2 Accounting treatment of benefits paid after departure
(1) Defined withdrawal plan
The basic endowment insurance premium and unemployment insurance premium paid by the Company
for its employees in accordance with relevant provisions of the local government are recognized as liabilities
and charged to the current profit or loss or the relevant assets cost, with the payable amount calculated based
on the local prescribed payment base and percentage, during the accounting period in which the employees
provide services to the Company.
In addition to the basic endowment insurance, the Company also builds the enterprise annuity payment
system (supplementary pension insurance) in accordance with relevant national policies for enterprise annuity
system. The Company pays a certain percentage of the total employee compensation to the local social
institution, and record the relevant expenditures into the current profit or loss or the relevant assets cost.
(2) Defined benefit plan
The Company attributes the welfare obligation arising from the defined benefit plan to the period during
which the employees provide services, in accordance with the formula determined under the estimated
accumulated welfare unit method, and records the same into the current profit or loss or the relevant asset cost.
A net liability or net asset in relation to the defined benefit plan is recognized at the present value of the
obligation under the defined benefit plan less the deficit or surplus arising out of the fair value of the assets in
relation to the defined benefit plan. Where the defined benefit plan has any surplus, the Company will
determine the net assets in relation to the defined benefit plan at the lower of the surplus of the defined benefit
plan or the asset cap.
The obligations under the defined benefit plan, including the estimated payment obligation within 12
months following the annual report period during which the employees provide service, are discounted to the
present value at the market return of the national debt of which the term and currency match those of the
obligation under the defined benefit plan on the balance sheet date, or of the high-quality corporate debt in an
active market.
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The service cost incurred by the defined benefit plan, together with the net interest on the net liability or
net asset in relation to the defined benefit plan, are charged to the current profit or loss or the relevant asset
cost; the change arising from the re-measurement of the net liability or net asset in relation to the defined
benefit plan are recorded into other comprehensive income and are not reversed to the profit or loss in the
subsequent accounting period.
The gains or losses on the settlement in respect of the defined benefit plan are recognized at the difference
between the present value and the settlement price of the obligation under the defined benefit plan on the
settlement date.
5.23.3 Accounting treatment of dismissal welfare
Where the Company cannot unilaterally withdraw the dismissal welfare offered in view of the
cancellation of the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the
restructuring involving the payment of dismissal welfare (whichever is earlier), the employee compensation
arising from the dismissal welfare should be recognized as the liabilities and charged to the current profit or
loss.
5.24 Estimated liabilities
5.24.1 Recognition criteria for estimated liabilities
The Company should recognize an obligation in relation to contingencies as an estimated liability, such as
the litigation, debt guarantee, loss-making contract or restructuring, when all the following conditions are
satisfied:
(1) The obligation is a present obligation of the Company;
(2) The performance of such obligation is likely to result in outflow of economic benefits from the
Company;
(3) The amount of the obligation can be measured reliably.
5.24.2 Measurement of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required
for the performance of relevant present obligations.
The risks, uncertainties, time value of money, and other factors relating to the contingencies. If the time
value of money is significant, the best estimates shall be determined after discount of relevant future cash
outflows.
The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all
the outcomes within this range are equal, the best estimate shall be determined at the average amount of upper
and lower limits within the range.
Given the fact that there is no continuous range (or interval) for the necessary expenses, or probabilities of
occurrence of all the outcomes within this range are unequal despite such a range exists, in case that the
contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the
contingency involves two or more items, the best estimate should be determined according to all the possible
outcomes with their relevant probabilities.
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When all or part of the expenses necessary for the settlement of an estimated liabilities are expected to be
compensated by a third party or other parties, the compensation shall be separately recognized as an asset only
when it is virtually certain that the compensation will be received. The amount recognized for the
compensation shall not exceed the book value of the estimated liabilities.
5.25 Share payment
Not applicable.
5.26 Other financial instruments such as preferred shares and perpetual bonds
Not applicable.
5.27 Incomes
5.27.1 Specific criteria for determining the timing of income recognition for sales of goods
The Company will confirm that the sales income of the goods is realized when the Company has
transferred the major risks and rewards of ownership of the goods to the purchaser; the Company does not
retain the right to continue management linked to ownership, nor does it have effective control over the
products sold; the amount of income can be measured reliably; the related costs incurred or to be incurred can
be reliably measured.
The specific judgment criteria are as follows:
(1) Domestic sales: After the delivery of the goods, the Company confirms the sales income. According
to the delivery method agreed in the sales order, the detailed standards for income recognition are:
When the customer goes directly to the warehouse of the Company to pick up goods, based on the
outbound documents confirmed by the parties in various ways, the income is confirmed when the goods leave
the warehouse.
When the customer appoints a carrier, based on the logistics document issued by the carrier, income is
recognized when the goods are delivered to the carrier.
When the Company appoints a carrier, based on the logistics receipts signed and confirmed by the
customer, income is recognized when the customer actually signs the receipt.
When the Company sells through the e-commerce platform, income is recognized when the electronic
order received by the customer to confirm the receipt or the e-commerce receipt period expires.
If an unconditional return period or acceptance period has been agreed upon, the income recognition will
be delayed to the expiry of unconditional return periodor acceptance period.
For sales on behalf of distributors, the income is recognized when the dealership list with the final
customer confirmation is received.
(2) International sales: If choose to apply international trade terms, sale income is recognized according to
the time point of risk transfer agreed in the specific applicable international trade terms. If an unconditional
return period or acceptance period is agreed upon, the income recognition will be extended to the
unconditional return period or the acceptance period after meeting the applicable trade term risk transfer point.
If no international trade terms have been selected, the Company will recognize income after obtaining various
types of risk transfer documents according to the agreed delivery method and the time of risk transfer.
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(3) Sales of specialized sewing machine: As the customer has deeply customized the machine, according
to the relevant agreement in the contract signed by both parties, the specific delivery obligations under each
technical clause are distinguished, and the corresponding income is confirmed according to the completion of
the customer demand and the relevant confirmation documents.
5.27.2 Recognition of income from transfer of assets use right
When the economic benefit related to the transaction is probably to flow into the Company and the
relevant income can be reliably measured, the income from transfer of the assets use right is determined as
follows:
(1) Interest income is measured based on the length of time for which the Company's monetary funds is
used by others and the applicable interest rate;
(2) Royalty income is measured according to the period and method of charging as stipulated in the
relevant agreements or contracts.
5.27.3 Measurement principles and methods of completion stage where revenues from rendering of
labor are recognized under percentage-of-completion method
The Company confirmed the income from the labor service when obtain the written settlement
confirmation from the customer and issue the settlement certificate.
If the outcome of transactions can be estimated reliably at the balance sheet date, income from rendering
of labor service is recognized under the percentage-of-completion method. The percentage of completion is
determined by measurement of completed work as a percentage of total estimated costs.
Income from rendering of labor service is determined by prices stated in the contracts or agreements,
whether already received or to be received, unless such relevant prices are unfair. The current income from the
rendering of labor service is recognized at the amount of multiplying the total income from the rendering of
labor service by completion progress and deducting the accumulated income from the rendering of labor
service recognized in previous accounting periods on the balance sheet date; meanwhile, the current cost of
labor service is carried forward by the amount of multiplying the total costs of the rendering of labor service
by completion progress and deducting the accumulated cost from the rendering of labor services recognized in
previous accounting periods.
When the outcome of transactions involving the rendering of services cannot be estimated reliably,
income is recognized and measured at the balance sheet date as follows:
(1) If the service costs incurred are expected to be fully recoverable, the amounts equal to the labor costs
incurred shall be recognized as incomes and the equivalent amounts of labor costs shall be carried forward;
(2) If the service costs incurred are not expected to be fully recoverable, the labor costs incurred shall be
included in the current profit and loss, with no income from the rending of labor services not recognized.
The Company's income from logistics service and sewing equipment maintenance services is recognized
when related services have been provided, service costs have actually occurred, and service settlement
documents confirmed by the service recipient have been obtained.
5.28 Government grants
5.28.1 Types
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Government grants refer to the monetary or non-monetary assets obtained by the Company from the
government for free. Government grants are classified into government grants related to assets and government
grants related to income.
Government grants related to assets refer to government grants obtained by the Company that are used to
purchase, construct or form long-term assets, including financial allocations for purchases of fixed assets or
intangible assets, and financial discounts for special loans for fixed assets. Government grants related to
income refer to government grants other than those related to assets.
The Company's specific criteria for classifying government grants as related to assets are: government
grants obtained by the Company that are used to purchase, construct or form long-term assets.
The Company's specific criteria for classifying government grants as related to income are: government
grants other than those related to assets.
If the government documents do not clearly specify the target of the grant, the judgment basis of
classifying the government grant as related to the assets or related to the income is whether it is used to
purchase or construct or form long-term assets.
5.28.2 Accounting treatment
Government grants related to assets: write down the carrying amount of the related assets or recognize
them as deferred income. If it is recognized as deferred income, it shall be recorded into current profits and
losses in a reasonable and systematic way within the useful life of the relevant assets (related to the Company's
daily activities, included in other income; unrelated to the Company's daily activities, included in
non-operating income).
Government grants related to income: grants used to compensate for the related costs or losses of the
Company in the future period, shall be recognized as deferred income, and shall be recorded in the current
profits and losses (related to the Company's daily activities, included in other income; unrelated to the
Company's daily activities, included in non-operating income), or be used to reduce the related costs, expenses
or losses during the period for confirming the relevant costs, expenses or losses.
5.29 Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets shall be recognized for deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be utilized.
Deferred income tax assets should be recognized for deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be
utilized.
Taxable temporary differences are recognized as deferred income tax liabilities except in special
circumstances.
Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not be
recognized include: the initial recognition of goodwill; other transactions or events excluding business
combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when
occurred.
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If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and
discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the
current period shall be presented based on the net amount after offset.
When the Company has the legal rights to balance income tax assets and income tax liabilities for the
current period with net settlement, and deferred income tax assets and deferred income tax liabilities are
related to the income tax which are imposed on the same taxpaying subject by the same tax collection authority
or on different tax paying subjects, but, in each important future period in connection with the reverse of
deferred income tax assets and liabilities, the involved tax paying subject intends to balance income tax assets
and liabilities for the current period with net settlement at the time of obtaining assets and discharging
liabilities, deferred income tax assets and deferred income tax liabilities shall be presented based on the net
amount after offset.
5.30 Lease
5.30.1 Accounting treatment of operating lease
(1) Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the
whole lease period (including rent-free period) and shall be included in the current expenses. Initial direct costs
relating to lease transactions incurred by the Company shall be recognized as the current expenses.
If the expense related to the lease which shall be paid by the Company is assumed by the lessor of the
asset, then such expenses shall be deducted from total lease fees, and the balances shall be amortized over the
lease term s and charged to the current expenses.
(2) The lease fees received for the assets acquired under lease shall be recognized as current expenses
over the lease terms (including rent-free periods) on a straight-line basis. The initial direct costs related to lease
transactions paid by the Company, included in the current expenses; if a larger amount is to be capitalized,
according to confirm the same basis throughout the period of the lease installments related to the lease income
is recognized in profit gains.
If expenses relating to leases which should be borne by the lessee of the assets are paid by the Company,
they shall be deducted from the total lease income and the balances shall be amortized over the lease terms by
the Company.
5.30.2 Accounting treatment of financial lease
(1) Assets rented in by financial lease: At the beginning of the lease, the Company uses the lower of the
fair value of the leased assets and the present value of the minimum lease payments as the entry value of the
leased assets, and uses the minimum lease payment as the entry value of the long-term payables. The
difference is used as unrecognized financing expenses. The Company adopts the actual interest rate method to
amortize the unrecognized financing expenses during the asset lease period and count it into financial expenses.
The initial direct costs incurred by the company are included in the value of the leased assets.
(2) Assets rented out by financial lease: At the lease beginning date, the Company recognizes the
financial lease receivables, difference between the sum of unguaranteed residual value and its current value as
unrealized financing income. It is recognized as lease income in each period during which rent is received in
the future. The initial direct costs incurred by the Company in relation to the lease transaction are included in
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the initial measurement of the financial lease receivable, and the amount of income recognized in the lease
period is reduced.
5.31 Discontinued operation
Discontinued operation is the component that meets any of the following conditions, is disposed or
classified as the held-for-sale one and can be separately distinguished at the time of preparation of financial
statements:
(1) Such component represents an independent primary business or a major business area;
(2) Such component is part of the disposition plan for an independent primary business or a major
business area;
(3) Such component is a subsidiary acquired for just re-sale.
5.32 Adjustment for changes in principal accounting policies and accounting estimates
5.32.1Adjustment for changes in accounting policies
Not applicable
5.32.2 Adjustment for changes in principal accounting estimates
Not applicable
6. Tax
Tax type Basis of tax assessment Tax rate
Calculated based on the income from sales of goods and the
provision of taxable labor services according to tax law, and 3%、5%、6%、7%、10%、11%、16%、
Value-added tax (VAT) value added tax payable should be the balance of the output
tax for the period after deducting the deductible input tax for 17%、19%
the period.
Levied based on the taxable income (reclassified to VAT from
Business tax
1st May 2016)
Urban maintenance and
construction tax
Levied based on the actual payment of business tax and VAT. 1%、5%、7%
Enterprise income tax (EIT) Levied based on the taxable income 16%-38%、25%
Education surtax and local
education sutax
Levied based on the actual payment of business tax and VAT. 2%、3%
Note: The EIT rate applicable to DAP AG, a subsidiary of the Company, and its subsidiaries in the scope
of consolidation varies in a range from16% to 38%; and the VAT rate is 19%.
7. Notes to items of consolidated financial statements
7.1 Cash and cash equivalents
Item Ending Balance Beginning Balance
Cash on hand 607,616.78 707,925.98
Bank deposit 624,229,571.66 712,794,196.15
Other monetary funds 21,815,034.16 9,835,756.40
Total 646,652,222.60 723,337,878.53
Including: total amount of cash and cash
319,099,196.70 373,357,927.57
equivalents offshore
其他说明
Details of cash and cash equivalents restricted for use due to mortgage, pledge or freezing are follows:
Item Ending Balance Beginning Balance Note
Bank Acceptance Deposit Guarantee 20,983,035.80 6,539,032.60 Note 1
Deposit held for foreign exchange inspection 2,585,125.48
Other guaranteed deposit 450,000.00 400,000.00 Note 2
Total 21,433,035.80 9,524,158.08
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Note 1: The ending balance was the monetary fund that could not be withdrawn at any time due to the
opening of bank acceptance bills by Zhejiang ShangGong GEMSY Co., Ltd., a subsidiary of the Company.
Note 3: The ending balance was a fraud guarantee for the Company's subsidiary, Shanghai Butterfly
Import & Export Co., Ltd.
7.2 Financial assets at fair value whose fluctuation is attributed to profit and loss for current period
Not applicable.
7.3 Derivative financial assets
Not applicable.
7.4 Notes receivable
7.4.1 Presentation of notes receivable by category
Item Ending Balance Beginning Balance
Bank acceptance bills 52,624,035.60 47,405,556.75
Commercial acceptance bills 18,530,953.27 13,931,982.12
Total 71,154,988.87 61,337,538.87
7.4.2 Notes receivable pledged as at the end of period
Not applicable.
7.4.3 Notes receivable endorsed or discounted at the end of the period and have not yet expired at
the balance sheet date
Item Termination Amount as at 30 June 2018 Unterminated Confirmation Amount as at 30 June 2018
Bank acceptance bills 10,807,531.96
Commercial acceptance bills
Total 10,807,531.96
7.4.4 Notes receivable transferred to accounts receivable due to the issuer's performance failure
Not applicable.
7.5 Accounts receivable
7.5.1 Disclosure of accounts receivable by category
Ending balance Beginning balance
Type Book balance Provision for bad debt Book balance Provision for bad debt
Book Value Book Value
Amount % Amount % Amount % Amount %
Accounts receivable with significant
individual amount and provision for 93,824,615.95 14.54 19,243,522.50 20.51 74,581,093.45 79,818,629.27 13.64 19,622,784.50 24.58 60,195,844.77
bad debt is accrued separately
Accounts receivable with provision for
bad debt accrued by credit risk 144,540,052.79 22.39 73,122,242.33 50.59 71,417,810.46 119,721,460.79 20.46 72,220,264.69 60.32 47,501,196.10
characteristics of a portfolio
Accounts receivable with insignificant
individual amount but provision for 407,077,372.30 63.07 26,468,540.24 6.50 380,608,832.06 385,572,745.19 65.90 28,510,405.86 7.39 357,062,339.33
bad debt is accrued separately
Total 645,442,041.04 100.00 118,834,305.07 18.41 526,607,735.97 585,112,835.25 100.00 120,353,455.05 20.57 464,759,380.20
Accounts receivable with significant individual amount and provision for bad debt is accrued separately at
the end of the period
Ending balance
Accounts receivable
(By entity) Proportion of
Accounts receivable Provision for bad debt Reason for provision
provision%
No.1 Client 32,005,363.63 Unimpaired according to the separate test
No.2 Client 19,243,522.50 19,243,522.50 100.00 Impaired according to the separate test
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No.3 Client 15,188,120.84 Unimpaired according to the separate test
No.4 Client 14,667,925.50 Unimpaired according to the separate test
No.5 Client 12,719,683.48 Unimpaired according to the separate test
Total 93,824,615.95 19,243,522.50 20.51 /
Accounts receivable with provision for bad debt accrued using the aging analysis method in the portfolio
Ending balance
Aging
Accounts receivable Provision for bad debt Proportion of provision
Within 1 year 70,323,893.08 3,516,194.66 5.00
1-2 years 4,262,124.05 852,424.80 20.00
2-3 years 2,400,825.59 1,200,412.80 50.00
Over 3 years 67,553,210.07 67,553,210.07 100.00
Total 144,540,052.79 73,122,242.33 50.59
Accounts receivable with insignificant individual amount but provision for bad debt is accrued separately
Ending Balance
Proportion
Accounts Receivable (By Entity) Accounts Provision for of
Reason for Provision
Receivable Bad Debt Provision
%
Other insignificant accounts receivable (Note 1) 19,159,368.44 10,404,886.11 54.31 Impaired according to the separate test
Other insignificant accounts receivable (Note 2) 226,034,375.30 8,424,322.73 3.73 Impaired according to the separate test
Other insignificant accounts receivable (Note 3) 13,615,878.23 983,465.88 7.22 Impaired according to the separate test
Other insignificant accounts receivable (Note 4) 119,735,577.68 Unimpaired according to separate test
Other insignificant accounts receivable (Note 5) 261,219.20 261,219.20 100.00 Impaired according to the separate test
Other insignificant accounts receivable (Note 6) 11,610.00 11,610.00 100.00 Impaired according to the separate test
Other insignificant accounts receivable (Note 7) 285,616.31 Unimpaired according to separate test
Other insignificant accounts receivable (Note 8) 307,600.00 Unimpaired according to separate test
Other insignificant accounts receivable (Note 9) 5,039,543.75 251,977.19 5.00 Impaired according to the separate test
Other insignificant accounts receivable (Note
16,594,700.26 99,176.00 0.60 Impaired according to the separate test
10)
Other insignificant accounts receivable (Note
6,031,883.13 6,031,883.13 100.00 Impaired according to the separate test
11)
Total 407,077,372.30 26,468,540.24 6.50
Note 1: It mainly represents the accounts receivable due from Shang Gong Group Co., Ltd., and the
provision for impairment is accrued based on separate test.
Note 2: It mainly represents the accounts receivable due from the subsidiary, DAP AG, and the provision
for impairment is accrued based on separate test.
Note 3: It mainly represents the accounts receivable due from the subsidiary, DAP (Shanghai) Co., Ltd.,
and the provision for impairment is accrued based on separate test.
Note 4: It mainly represents the accounts receivable due from the subsidiary, Shanghai Shensy Enterprise
Development Co., Ltd, and is unimpaired based on separate test.
Note 5: It mainly represents the accounts receivable due from the subsidiary, Shanghai SMPIC Import &
Export Co., Ltd., and the provision for impairment is accrued based on separate test.
Note 6: It mainly represents the accounts receivable due from Shanghai SGSB Electronics Co., Ltd., and
the provision for impairment is accrued based on separate test.
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Note 7: It mainly represents the accounts receivable due from DAP Vietnam Co., Ltd., and and is
unimpaired based on separate test.
Note 8: It mainly represents the accounts receivable due from DAMSH, and and is unimpaired based on
separate test.
Note 9: It mainly represents the accounts receivable due from PIZ, and the provision for impairment is
accrued based on separate test.
Note 10: It mainly represents the accounts receivable due from SGGEMSY, and the provision for
impairment is accrued based on separate test.
Note 11: It mainly represents the accounts receivable due from SG Butterfly, and the provision for
impairment is accrued based on separate test.
7.5.2 The accrual, reversal or recovery of the provision for bad debts in the current period
The provision for bad debts accrued in the current period is 5,739,430.83 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 7,787,922.44 yuan.
7.5.3 Accounts receivable actually write-off in the current period
Item Amount
Accounts receivable actually write-off 3,436,227.61
7.5.4 Top five accounts receivable in terms of their ending balance
Company name Ending balance
Proportion in total accounts
Accounts receivable Provision for bad debt
receivable ratio (%)
No.1 Client 32,005,363.63 4.96
No.2 Client 19,243,522.50 2.98 19,243,522.50
No.3 Client 15,188,120.84 2.35
No.4 Client 14,667,925.50 2.28
No.5 Client 12,719,683.48 1.97
Total 93,824,615.95 14.54 19,243,522.50
7.6 Prepayment
7.6.1 Presentation of prepayments by aging
Ending Balance Beginning Balance
Aging
Book Balance Proportion (%) Book Balance Proportion (%)
Within 1 year 18,938,959.38 75.43 58,228,035.05 90.44
1-2 years 5,242.00 0.02 9,442.01 0.00
2-3 years 6,153,751.37 24.50 6,153,752.47 9.56
Over 3 years 11,536.37 0.05 2,398.18 0.00
Total 25,109,489.12 100.00 64,393,627.71 100.00
7.6.2 Top five prepayments to suppliers in terms of their ending balance
Proportion in Total Ending Balance of Advances to
Supplier Ending Balance
Suppliers (%)
No.1 Supplier 6,147,650.83 24.48
No.2 Supplier 3,676,882.99 14.64
No.3 Supplier 2,000,000.00 7.97
No.4 Supplier 1,414,872.75 5.63
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No.5 Supplier 1,154,533.00 4.60
Total 14,393,939.57 57.32
7.7 Interest receivable
Item Ending Balance Beginning Balance
Fixed deposit 21,645.73
Total 21,645.73
7.8 Dividends receivable
Investee Ending Balance Beginning Balance
Shanghai Fuji Xerox Co., Ltd. 9,949,000.00
H. Stoll AG & Co. KG 27,373,644.64
Total 37,322,644.64
7.9 Other receivables
7.9.1 Disclosure of other receivables by category
Ending Balance Beginning Balance
Type Provision for Bad Provision for Bad
Book Balance Book Balance
Debt Book Value Debt Book Value
Amount % Amount % Amount % Amount %
Other receivables with
significant individual
amount and provision 55,150,317.72 50.33 13,651,280.20 24.75 41,499,037.52 30,666,334.88 33.51 13,304,781.50 43.39 17,361,553.38
for bad debt is accrued
separately
Other receivables with
provision for bad debt
accrued by credit risk 23,629,081.18 21.57 16,849,284.10 71.31 6,779,797.08 24,977,450.21 27.29 16,622,435.95 66.55 8,355,014.26
characteristics of a
portfolio
Other receivables with
insignificant individual
amount but provision 30,787,853.38 28.10 826,685.51 2.69 29,961,167.87 35,869,414.39 39.20 2,641,570.82 7.36 33,227,843.57
for bad debt is accrued
separately
Total 109,567,252.28 100.00 31,327,249.81 28.59 78,240,002.47 91,513,199.48 100.00 32,568,788.27 35.59 58,944,411.21
Other receivables with significant individual amount and provision for bad debt is accrued separately at
the end of period
Ending Balance
Other Receivables (By
Entity) Provision for bad Proportion of
Other receivables Reason for Provision
debt provision
No.1 Client 24,213,732.50 Unimpaired according to the separate test
No.2 Client 13,651,280.20 13,651,280.20 100.00 Impaired according to the separate test
No.3 Client (Note) 10,785,305.02 Unimpaired according to the separate test
No.4 Client 3,500,000.00 Unimpaired according to the separate test
No.5 Client 3,000,000.00 Unimpaired according to the separate test
Total 55,150,317.72 13,651,280.20 24.75 /
Note: It mainly represents the export tax refund receivable arising from the export sale by the subsidiary,
and is unimpaired according to the separate impairment test.
Other receivables with provision for bad debt accrued using the aging analysis method in the portfolio:
Ending Balance
Aging
Other receivables Provision for bad debt Proportion of provision%
Within 1 year 6,531,177.64 326,558.88 5.00%
1-2 years 352,923.20 70,584.64 20.00%
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2-3 years 585,679.52 292,839.76 50.00%
Over 3 years 16,159,300.82 16,159,300.82 100.00%
Total 23,629,081.18 16,849,284.10 71.31
Other receivable with insignificant individual amount but provision for bad debt is accrued separately at
the end of period
Provision for bad Proportion of
Book balance Reason for provision
debt provision (%)
Other insignificant other receivables Impaired according to the separate
1,123,511.90 19,335.00 0.47
(Note 1) test
Other insignificant other receivables Unimpaired according to the
353,051.55
(Note 2) separate test
Other insignificant other receivables Impaired according to the separate
2,629,049.41
(Note 3) test
Other insignificant other receivables Impaired according to the separate
25,021,160.96 757,350.51 3.03
(Note 4) test
Other insignificant other receivables Unimpaired according to the
1,202,841.13
(Note 5) separate test
Other insignificant other receivables Impaired according to the separate
96,746.78
(Note 6) test
Other insignificant other receivables Unimpaired according to the
18,228.07
(Note 7) separate test
Other insignificant other receivables Impaired according to the separate
293,263.58
(Note 8) test
Other insignificant other receivables Impaired according to the separate
50,000.00 50,000.00 100.00
(Note 9) test
Total 30,787,853.38 826,685.51 2.69
Note 1: It mainly represents the other receivables of SGG, and the provision for impairment is accrued
based on the separate test.
Note 2: It mainly represents the other receivablesof DAPSH, which is unimpaired based on the separate
test.
Note 3: It mainly represents the other receivablesof DAP AG, which is unimpaired based on the separate
test.
Note 4: It mainly represents the other receivables of SHENSY, and the provision for impairment is
accrued based on the separate test.
Note 5: It mainly represents the other receivablesof SGGEMSY, which is unimpaired based on the
separate test.
Note 6: It mainly represents the other receivablesof DAP Vietnam Co., Ltd., which is unimpaired based
on the separate test.
Note 7: It mainly represents the other receivablesof ShangGong Sewing Machine (Zhejiang) Co., Ltd.,
which is unimpaired based on the separate test.
Note 8: It mainly represents the other receivablesof Shanghai ShangGong Asset Management Co., Ltd.,
which is unimpaired based on the separate test.
Note 9: It mainly represents the other receivables of Shanghai SGSB Electronics Co., Ltd., and the
provision for impairment is accrued based on the separate test.
7.9.2 The accrual, reversal or recovery of the provision for bad debts in the current period
The provision for bad debts accrued in the current period is 1,677,260.40 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 38,095.00 yuan.
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7.9.3 Other receivables actually write-off in the current period
Item Amount
Other receivables actually write-off 534,288.45
7.9.4 Top five other receivables in terms of their ending balance
Proportion in the
Company Provision for bad debt
Nature Ending balance Aging ending balance of total
name ending balance
other receivable (%)
No.1 Client Current accounts 24,213,732.50 Within 1year 22.10
From within 1year
No.2 Client Current accounts 13,651,280.20 12.46 13,651,280.20
to over 3 years
No.3 Client Export tax refund receivable 10,785,305.02 Within 1year 9.84
No.4 Client Current accounts 3,500,000.00 Within 1year 3.19
No.5 Client Current accounts 3,000,000.00 Within 1year 2.74
Total / 55,150,317.72 50.33 13,651,280.20
7.9.5 Receivables involving government grants
Not applicable.
7.9.6 Other receivables derecognized due to the transfer of financial assets
Not applicable.
7.9.7 Amount of assets and liabilities transferred from other receivables and continue to be involved
Not applicable.
7.10 Inventories
7.10.1 Classification of inventories
Ending balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Raw materials 301,357,553.44 50,711,796.95 250,645,756.49 285,435,138.31 52,813,472.76 232,621,665.55
Goods in progress 174,185,839.20 27,956,246.49 146,229,592.71 153,406,126.71 28,555,276.42 124,850,850.29
Finished goods 318,688,609.66 37,963,289.59 280,725,320.07 283,033,493.86 39,909,017.40 243,124,476.46
Revolving materials 864,868.58 864,868.58 1,427,640.89 1,427,640.89
Consigned processing
2,533,368.32 2,533,368.32 3,273,904.32 3,273,904.32
materials
Dispatched goods 17,990,212.66 17,990,212.66 20,569,892.77 20,569,892.77
Labor costs 93,439,681.24 93,439,681.24 79,273,391.31 79,273,391.31
Total 909,060,133.10 116,631,333.03 792,428,800.07 826,419,588.17 121,277,766.58 705,141,821.59
7.10.2 Inventory depreciation reserve
Increase in current period Decrease in current period
Item Beginning balance Ending balance
Provision Others Reversal or write-off Others
Raw materials 52,813,472.76 2,101,675.81 50,711,796.95
Goods in progress 28,555,276.42 599,029.93 27,956,246.49
Finished goods 39,909,017.40 226,353.29 197,763.14 1,974,317.96 37,963,289.59
Total 121,277,766.58 226,353.29 2,898,468.88 1,974,317.96 116,631,333.03
7.10.3 Explanation of the amount of capitalization of borrowing costs in the ending balance of
inventory
Not applicable.
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7.11 Assets held for sale
Not applicable.
7.12 Non-current assets maturing within one year
Not applicable.
7.13 Other current assets
Item Ending balance Beginning balance
Input tax to be credited 31,109,538.78 31,638,470.24
Rentals and insurance fees 4,540,107.68 1,592,432.66
Overpaid enterprise income tax 339,055.12 902,284.30
Financial products 20,000,000.00
Structured deposit 275,000,000.00 332,000,000.00
Unamortized expense 400,169.64
Entrusted Loan 53,000,000.00
Total 383,988,701.58 366,533,356.84
Note: The entrusted loan is a loan that the company entrusted the Bank of Shanghai Co., Ltd. Fumin
Sub-branch to Richpeace.
7.14 Available-for-sale financial assets
7.14.1 Available-for-sale financial assets
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Available for sale debt
instruments
Available for sale equity
111,210,846.79 1,698,131.91 109,512,714.88 120,658,075.96 1,698,131.91 118,959,944.05
instruments
Including:
78,186,465.43 78,186,465.43 89,721,694.56 89,721,694.56
Measured at fair value
Measured at cost 33,024,381.36 1,698,131.91 31,326,249.45 30,936,381.40 1,698,131.91 29,238,249.49
Total 111,210,846.79 1,698,131.91 109,512,714.88 120,658,075.96 1,698,131.91 118,959,944.05
Available-for-sale financial assets measured at fair value as at the end of report period:
Available-for-sale Equity Available-for-sale Debt
Classification of available-for-sale Financial Assets Total
Instruments Instruments
Cost of equity instruments 74,010,222.53 74,010,222.53
Fair value 78,186,465.43 78,186,465.43
Accumulated changes in fair value included in other
4,176,242.90 4,176,242.90
comprehensive income
Accrued provision for impairment
7.14.2 Available-for-sale financial assets measured atcost at the end of report period
Book balance Provision for impairment Shareholding Cash dividend
Investee Beginning Ending Beginning Ending ratio in investee in report
+ - + - (%) period
balance balance balance balance
Shanghai Fuji
29,140,749.49 29,140,749.49 15.92 9,949,000.00
Xerox Co., Ltd.
Shanghai Hirose
Precision Industrial 30.00 900,000.00
Co., Ltd. (Note 1)
Changshu Qixing
Elec-plating Co., 90.00
Ltd.
Shanghai Huazhijie
Plastic Co., Ltd. 736,283.66 736,283.66 736,283.66 736,283.66 23.04
(Note 2)
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Book balance Provision for impairment Shareholding Cash dividend
Investee Beginning Ending Beginning Ending ratio in investee in report
+ - + - (%) period
balance balance balance balance
Shanghai
Xingguang
308,033.99 308,033.99 308,033.99 308,033.99 14.30
Underwear Factory
(South Africa)
Wuxi Shanggong
Sewing Machines 153,814.26 153,814.26 153,814.26 153,814.26 80.00
Co., Ltd. (Note 3)
China Perfect
Machinery Co., 90,000.00 90,000.00 0.0993
Ltd.
Shanghai Baoding
Investment Co., 7,500.00 7,500.00 0.008
Ltd.
Shanghai
Shanggong Jiarong
500,000.00 500,000.00 500,000.00 500,000.00 12.50
Sewing Machine
Trade Co., Ltd.
Shanghai Pacific
Industrial Co., Ltd. 2,087,999.96 2,087,999.96 48.00
(Note 4)
Total 30,936,381.40 2,087,999.96 33,024,381.36 1,698,131.91 1,698,131.91 10,849,000.00
Note 1: SGG holds 30% shares of Shanghai Hirose Precision Industrial Co., Ltd. According to the articles
of association, the Company obtains guaranteed minimum revenue each year. In addition, the Company does
not participate in the decision-making process of daily operations, and does not have significant influence on
the invested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of Shanghai
Hirose Precision Industrial Co., Ltd.
Note 2: SGG holds 23.04% shares of Shanghai Huazhijie Plastic Co., Ltd. According to the articles of
association, SGG does not have facto control over the invested enterprise. In addition, the Company does not
participate in the decision-making process of daily operations, and does not have significant influence on the
invested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of Shanghai
Huazhijie Plastic Co., Ltd.
Note 3: SGG holds 80.00% shares of Wuxi Shanggong Sewing Machines Co., Ltd. According to the
articles of association, SGG does not have facto control over the invested enterprise. In addition, the Company
does not participate in the decision-making process of daily operations, and does not have significant influence
on the invested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of Wuxi
Shanggong Sewing Machines Co., Ltd.
Note 4: SGG holds 48.00% shares of Shanghai Pacific Industrial Co., Ltd. SGG does not participate in the
decision-making process of daily operations, and does not have significant influence on the invested enterprise.
Therefore, it adopts cost accounting to measure its revenue from its shares of Shanghai Pacific Industrial Co.,
Ltd.
7.14.3 Changes in available-for-sale financial assets in current period
Available-for-sale Equity Available-for-sale Debt
Classification of Available-for-sale Financial Assets Total
Instruments Instruments
Balance of provision for impairment accrued as at 1
1,698,131.91 1,698,131.91
January 2018
Provision in Report Period
Including: transfer-in from other comprehensive income
Decrease in Report Period
Including: reversal due to the subsequent increase in
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fair value
Balance of provision for impairment accrued as at 30
1,698,131.91 1,698,131.91
June 2018
7.15 Held-to-maturity investments
Not applicable.
7.16 Long-term receivables
Not applicable.
7.17 Long-term equity investment
Change in current period
Ending
Beginning Return on Other Ending Balance of
Declared Cash
Increas
Increas
Decrea
Investees
Equity
Chang
Invest
Invest
Invest
Other
ment
ment
ment
se in
es in
Balance Investment Comprehensive Balance Provision of
e in
e in
Dividends or Other
under Equity Income Impairment
Profit
Method Adjustment
Joint operation
H. Stoll
AG & 275,799,606.70 -1,691,101.14 15,587,523.17 -5,319,596.67 253,201,385.72
Co. KG
Subtotal 275,799,606.70 -1,691,101.14 15,587,523.17 -5,319,596.67 253,201,385.72
Total 275,799,606.70 -1,691,101.14 15,587,523.17 -5,319,596.67 253,201,385.72
7.18 Investment properties
Investment property measured at cost
Buildings and Leased Land Use Investment Real
Item Total
Constructions Rights Estate Decoration
1. Original book value
(1) Beginning balance 226,181,075.92 50,523,752.24 2,583,492.92 279,288,321.08
(2) Increase in current period 2,257,192.50 2,257,192.50
① Outsourcing 2,257,192.50 2,257,192.50
②Transfer in from inventories, fixed
assets or construction in progress
③ Increase by corporate combination
(3) Decrease in current period 1,748,829.60 1,748,829.60
① Disposal
② Others
③ Exchange rate fluctuation 1,748,829.60 1,748,829.60
(4) Ending balance 226,689,438.82 50,523,752.24 2,583,492.92 279,796,683.98
2. Accumulated depreciation and
accumulated amortization
(1) Beginning balance 105,181,671.01 16,183,322.31 688,931.76 122,053,925.08
(2) Increase in current period 2,266,441.82 552,001.62 252,499.28 3,070,942.72
①Amortization or accrual 2,266,441.82 552,001.62 252,499.28 3,070,942.72
(3) Decrease in current period 354,484.51 354,484.51
① Disposal
② Others
③ Exchange rate fluctuation 354,484.51 354,484.51
(4) Ending balance 107,093,628.32 16,735,323.93 941,431.04 124,770,383.29
3. Provision for impairment
(1) Beginning balance 7,732,063.54 7,732,063.54
(2) Increase in current period 81,186.01 81,186.01
①Accrual 81,186.01 81,186.01
(3) Decrease in current period 230,628.51 230,628.51
① Disposal
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② Others
③ Exchange rate fluctuation 230,628.51 230,628.51
(4) Ending balance 7,582,621.04 7,582,621.04
4. Book value
(1) Book value at the end of the period 112,013,189.46 33,788,428.31 1,642,061.88 147,443,679.65
(2) Book value at the beginning of the
113,267,341.37 34,340,429.93 1,894,561.16 149,502,332.46
period
7.19 Fixed assets
7.19.1 Fixed assets
Buildings and Machinery Transportation Electronic
Item Other Equipment Total
Constructions Equipment Equipment Equipment
1. Original book value
(1) Beginning balance 449,191,194.52 391,885,505.83 14,935,691.94 3,916,967.73 280,602,586.17 1,140,531,946.19
(2) Increase in current
665,680.50 8,746,480.52 457,746.67 173,931.72 10,816,088.00 20,859,927.41
period
① Purchase 489,696.00 8,746,480.52 457,746.67 164,046.81 10,816,088.00 20,674,058.00
② Transfer from
175,984.50 175,984.50
construction in progress
③ Increase by
corporate combination
④Exchange rate
9,884.91 9,884.91
fluctuation
(3) Decrease in
9,337,713.11 18,049,772.71 130,687.09 244,299.70 8,573,582.19 36,336,054.80
current period
①Disposal or
1,334,825.00 7,994,397.05 130,687.09 244,299.70 1,723,785.18 11,427,994.02
scrap
②Exchange rate
8,002,888.11 10,055,375.66 6,849,797.01 24,908,060.78
fluctuation
(4).Ending Balance 440,519,161.91 382,582,213.64 15,262,751.52 3,846,599.75 282,845,091.98 1,125,055,818.80
2. Accumulated
depreciation
(1) Beginning
226,646,410.27 261,274,240.20 7,965,828.54 2,667,327.07 231,928,699.23 730,482,505.31
balance
(2) Increase in
4,664,501.54 8,749,489.73 804,691.85 343,840.48 7,692,988.94 22,255,512.54
current period
①Accrual 4,664,501.54 8,749,489.73 804,691.85 343,840.48 7,692,988.94 22,255,512.54
②Exchange rate
fluctuation
(3) Decrease in
5,762,995.99 12,705,285.07 92,468.63 212,772.85 7,706,130.94 26,479,653.48
current period
①Disposal or
1,025,915.06 5,673,168.65 92,468.63 212,772.85 1,651,711.00 8,656,036.19
scrap
②Exchange rate
4,737,080.93 7,032,116.42 6,054,419.94 17,823,617.29
fluctuation
(4) Ending balance 225,547,915.82 257,318,444.86 8,678,051.76 2,798,394.70 231,915,557.23 726,258,364.37
3. Provision for
impairment
(1) Beginning
4,913,777.92 7,232,165.07 75,908.67 37,818.61 1,402.83 12,261,073.10
balance
(2) Increase in
current period
①Accrual
(3) Decrease in
119,445.93 119,445.93
current period
① Disposal or
119,445.93 119,445.93
scrap
(4) Ending balance 4,913,777.92 7,112,719.14 75,908.67 37,818.61 1,402.83 12,141,627.17
4. Book value
(1) Book value at the
210,057,468.17 118,151,049.64 6,508,791.09 1,010,386.44 50,928,131.92 386,655,827.26
end of the period
(2) Book value at the 217,631,006.33 123,379,100.56 6,893,954.73 1,211,822.05 48,672,484.11 397,788,367.78
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beginning of the period
7.19.2 Idle fixed assets
Not applicable.
7.19.3 Fixed assets leased through financial lease
Item Book value Accumulated depreciation Impairment Book value
Transportation
1,276,282.05 261,248.39 1,015,033.66
Equipment
Total 1,276,282.05 261,248.39 1,015,033.66
7.19.4 Fixed assets leased out through operating leases
Not applicable.
7.19.5 Fixed assets without certificate of title
Item Book value Reason for failure in completing the formalities for obtaining certificates of title
Buildings and constructions (Note 1) 1,755,677.80 Self-built housing, the certificates are in the process
Buildings and constructions (Note 2) 63,486.74 Self-built housing, the certificates are in the process
Note 1: Self-built housing for the Company’s subsidiary Shanghai SGSB Asset Management Co., Ltd.
Note 2: Self-built housing, for the Company.
7.20 Construction in progress
7.20.1 Construction in progress
Ending balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Sewing Equipment
7,944,603.26 7,944,603.26 4,347,153.83 4,347,153.83
Engineering
ERP project 471,415.10 471,415.10
Household multifunctional
1,214,278.98 1,214,278.98 1,025,599.74 1,025,599.74
sewing machine
Zhangjiagang manufacture
1,845,901.66 1,845,901.66
base project
Modern logistics
12,145,141.67 12,145,141.67 4,858,082.75 4,858,082.75
management center
Huangyan factory
201,496.64 201,496.64
reconstruction
Czech workshop
1,493,472.01 1,493,472.01 402,369.43 402,369.43
reconstruction
Kingdee QR code system
186,166.68 186,166.68 186,166.68 186,166.68
project
Total 23,656,574.34 23,656,574.34 12,665,274.09 12,665,274.09
7.20.2 Changes in major construction in progress for current period
Accumulated amount of
interest capitalization in
Amount Transferred in
Interest capitalization
interest capitalization
Including: amount of
Fixed Assets for the
Proportion
rate in 2017(%)
Construction in
Current Period
of the
progress
Other
Budget
2017
Beginning Increase in accumulated Source of
Item decreases in Ending balance
balance current period investment Fund
current period
in project in
budget (%)
Sewing Equipment Self-owned
4,347,153.83 3,773,433.93 175,984.50 7,944,603.26
Engineering fund
Raised
ERP project (Note) 471,415.10 471,415.10
fund
Household
Self-owned
multifunctional 1,025,599.74 188,679.24 1,214,278.98
fund
sewing machine
Zhangjiagang
Self-owned
manufacture base 1,845,901.66 1,845,901.66
fund
project
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Accumulated amount of
interest capitalization in
Amount Transferred in
Interest capitalization
interest capitalization
Including: amount of
Fixed Assets for the
Proportion
rate in 2017(%)
Construction in
Current Period
of the
progress
Other
Budget
2017
Beginning Increase in accumulated Source of
Item decreases in Ending balance
balance current period investment Fund
current period
in project in
budget (%)
Modern logistics Self-owned
4,858,082.75 7,287,058.92 12,145,141.67
management center fund
Huangyan factory Self-owned
201,496.64 201,496.64
reconstruction fund
Kingdee QR code Self-owned
186,166.68 186,166.68
system project fund
Czech workshop Self-owned
402,369.43 1,091,102.58 1,493,472.01
reconstruction fund
/
Total 12,665,274.09 13,013,186.41 175,984.50 1,845,901.66 23,656,574.34
Note: The second phase of ERP project
7.20.3 Provision for impairment of construction in progress in the current period
Not applicable.
7.21 Project materials
Not applicable.
7.22 Disposal of fixed assets
Not applicable.
7.23 Productive biological assets
Not applicable.
7.24 Oil and gas assets
Not applicable.
7.25 Intangible assets
7.25.1 Intangible assets
Patent and Non-patent Trademark Use Computer
Item Land Use Right Others Total
Technology Right Software
1. Original book value
(1) Beginning balance 101,054,020.23 134,827,412.78 20,161,268.51 5,273,690.04 6,187,223.90 267,503,615.46
(2) Increase in current
37,499,895.00 14,247,590.00 0.00 0.00 0.00 51,747,485.00
period
① Purchase 37,499,895.00 1,709,710.80 39,209,605.80
②Transfer from
construction in progress/ 12,537,879.20 12,537,879.20
development expenditure
③Exchange rate
fluctuation
(3) Decrease in current
4,044,335.93 4,044,335.93
period
① Disposal
②Exchange rate
4,044,335.93 4,044,335.93
fluctuation
(4) .Ending Balance 138,553,915.23 145,030,666.85 20,161,268.51 5,273,690.04 6,187,223.90 315,206,764.53
2. Accumulated amortization
(1) Beginning balance 9,445,749.34 79,996,390.86 20,161,268.51 1,724,825.39 6,187,223.90 117,515,458.00
(2) Increase in current
1,333,445.98 9,300,372.48 0.00 500,231.93 0.00 11,134,050.39
period
① Accrual 1,333,445.98 9,300,372.48 500,231.93 11,134,050.39
(3) Decrease in current
185,944.14 185,944.14
period
① Disposal
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Patent and Non-patent Trademark Use Computer
Item Land Use Right Others Total
Technology Right Software
② Exchange rate
185,944.14 185,944.14
fluctuation
4.Ending Balance 10,779,195.32 89,110,819.20 20,161,268.51 2,225,057.32 6,187,223.90 128,463,564.25
3. Provision for impairment
(1) Beginning balance
(2) Increase in current
period
① Accrual
(3) Decrease in current
period
① Disposal
(4) Ending balance
4. Book value
(1) Book value at the end of
127,774,719.91 55,919,847.65 3,048,632.72 186,743,200.28
the period
(2) Book value at the
91,608,270.89 54,831,021.92 3,548,864.65 149,988,157.46
beginning of the period
At the end of the period, the intangible assets formed through internal research and development of the
company accounted for 6.71% of the balance of intangible assets.
7.25.2 Land use right without certificate of title
Not applicable.
7.26 Development Expenditures
Increase in current period Decrease in current period
Beginning
Item Internal Development Recognized as Transferred to Current Ending Balance
Balance Others
Expenditure Intangible Assets Profits and Losses
Sewing
11,968,675.38 12,664,256.82 12,537,879.20 12,095,053.00
equipment
Freight
3,615,282.96 3,615,282.96
platform
WeChat
1,099,814.50 1,099,814.50
platform
Total 16,683,772.84 12,664,256.82 12,537,879.20 16,810,150.46
7.27 Goodwill
7.27.1 Book value of goodwill
Increase in Current Period Decrease in Current Period
Name of investee or
Beginning Balance Exchange Rate Ending Balance
goodwill formation events Acquisition Others Disposal
Fluctuation
PFAFF GmbH 72,482,033.43 1,400,906.22 71,081,127.21
Beisler 22,732,781.28 439,370.88 22,293,410.40
Total 95,214,814.71 1,840,277.10 93,374,537.61
7.27.2 Provision for impairment of goodwill
Increase in Current Period Decrease in Current Period
Name of investee or
Beginning Balance Exchange Rate Ending Balance
goodwill formation events Acquisition Others Disposal
Fluctuation
Beisler 22,732,781.28 439,370.88 22,293,410.40
Total 22,732,781.28 439,370.88 22,293,410.40
7.28 Long-term deferred expenses
Increase in Current Amortization in Other Decreases in
Item Beginning Balance Ending Balance
Period Current Period Current Period
Enterprise Mailbox
142,249.20 3,300.00 129,049.20 9,900.00
rental expense
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Online brand
486,727.12 19,716.90 187,464.45 279,545.77
registration fee
Landscape
134,531.10 24,460.20 110,070.90
engineering
Tooling cost 743,589.75 316,513.65 120,708.42 939,394.98
Leasehold
123,916.71 18,199.98 105,716.73
improvements
Total 1,631,013.88 316,513.65 186,385.50 316,513.65 1,444,628.38
Note: In current period, the amortized amount of long-term deferred expenses is 186,385.50 yuan, which
is recorded in general and administrative expenses.
7.29 Deferred income tax assets / deferred income tax liabilities
7.29.1 Deferred income tax assets without offset
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
differences assets differences assets
Long-term assets 7,585,901.32 353,743.29
Inventories 20,792,206.45 19,654,766.53
Receivables 2,604,410.62 1,885,764.75
Other liabilities 4,176,672.81 3,796,682.43
Unrealized profits from internal
11,066,767.51 11,066,767.51
transactions
Pension (Europe) 30,814,948.31 34,005,022.74
Deferred income 550,000.00 550,000.00
Estimated liabilities 136,615.48 136,615.48
Offset number -11,240,536.69 -7,904,454.50
Total 66,486,985.81 63,544,908.23
7.29.2 Deferred income tax liabilities
Ending balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
differences liabilities differences liabilities
Long-term assets 57,240,132.93 49,472,348.52
Inventories 437,604.05 446,228.60
Receivables 5,249,536.68 6,146,045.08
Other liabilities 3,111,913.33 4,702,973.72
Offset number -11,240,532.33 -7,904,454.50
Total 54,798,654.66 52,863,141.42
7.30 Other non-current assets
Not applicable.
7.31 Short-term loans
Item Ending balance Beginning balance
Mortgage loans 10,221,013.00
Guaranteed loans 353,822,200.00 319,820,040.00
Credit loans 348,148.62 348,148.62
Total 354,170,348.62 330,389,201.62
Note 1: The guaranteed loans are: the funds amounted to 205,060,200.00 yuan (26,800,000.00 euros)
borrowed by DAP AG from the Bielefeld Branch of Commerzbank; and funds amounted to 61,212,000.00
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yuan (8,000,000.00 euros) borrowed by PFAFF GmbH from Kaiserslautern Branch of Commerzbank.
Guarantees related to the above matters refer to Note 14.2.
Note 2: Except the guaranteed loans above; other guaranteed loans are as follows: SHENSY borrowed
15,000,000.00 yuan from Bank of Shanghai Fumin Branch; SHENSY borrowed 30,000,000.00 yuan from
China Construction Bank Shanghai Baoshan Baogang Branch, 28,000,000.00 yuan from Bank of
Communications Shanghai Branch of Baoshan. The guarantee company is Shanghai Shensy Kaile Internet of
Things Co., Ltd.
7.32 Financial liabilities measured at fair value through profit or loss for the current period
Not applicable.
7.33 Derivative financial liabilities
Not applicable.
7.34 Notes payable
Not applicable.
7.35 Accounts payable
Item Ending Balance Beginning Balance
Payables to suppliers 203,320,210.56 194,031,795.38
Total 203,320,210.56 194,031,795.38
7.36 Receipt in advance
Item Ending Balance Beginning Balance
Advances on sales 34,936,329.32 38,326,094.65
Total 34,936,329.32 38,326,094.65
7.37 Employee compensation payable
7.37.1 Employee compensation payable
Increase in current Decrease in current
Item Beginning balance Ending balance
period period
Short-term remuneration 70,429,400.35 311,321,764.46 323,651,259.57 58,099,905.24
Post-employment benefits - defined
591,856.15 6,890,465.75 6,445,016.60 1,037,305.30
benefit plans
Dismissal welfare
Defined benefit plan maturing within
20,090,922.50 19,831,105.00 20,090,922.50 19,831,105.00
one year
Total 91,112,179.00 338,043,335.21 350,187,198.67 78,968,315.54
7.37.2 Short-term remuneration
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
(1) Salary, bonus, allowance and
69,704,983.42 245,188,227.88 258,130,757.94 56,762,453.36
subsidy
(2) Employee welfare 8,639.56 60,007,529.04 60,002,191.84 13,976.76
(3) Social insurance expenses 490,969.52 3,868,691.46 3,628,187.11 731,473.87
Including: medical insurance premium 342,596.18 3,180,774.14 2,978,844.59 544,525.73
Work-related injury insurance
37,465.61 299,857.36 289,339.40 47,983.57
premium
Maternity insurance premium 20,885.53 288,091.07 264,948.23 44,028.37
Other 90,022.20 99,968.89 95,054.89 94,936.20
(4) Housing provident funds 160,871.34 1,723,306.00 1,458,392.10 425,785.24
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Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
(5) Labor union expenditures and
63,936.51 534,010.08 431,730.58 166,216.01
employee education expenses
(6) Short-term paid absences
(7) short-term profit-sharing plan
Total 70,429,400.35 311,321,764.46 323,651,259.57 58,099,905.24
7.37.3 Defined contribution plan
Increase in current Decrease in current
Item Beginning balance Ending balance
period period
Basic endowment insurance premium 574,972.14 6,700,673.78 6,280,238.08 995,407.84
Unemployment insurance premium 16,884.01 189,791.97 164,778.52 41,897.46
Payment of annuity
Total 591,856.15 6,890,465.75 6,445,016.60 1,037,305.30
7.38 Taxes and surcharges payable
Item Ending balance Beginning balance
Value-added tax 3,537,447.13 4,454,097.17
Enterprise income tax 2,967,674.60 3,646,204.96
Individual income tax 3,342,181.47 5,613,216.71
Urban maintenance and construction tax 154,606.52 186,230.26
Educational surtax 170,421.11 168,142.01
Use tax of land 231,028.00
Stamp tax 4,663.20 6,696.80
Total 10,408,022.03 14,074,587.91
7.39 Interest Payable
Item Ending balance Beginning balance
Term interest on long-term borrowings due in
454,600.48 471,243.32
installments
Short-term loan interest payable 1,035,883.66 639,309.74
Total 1,490,484.14 1,110,553.06
7.40 Dividends payable
Item Ending balance Beginning balance
Light Industrial Holding Group Co., Ltd 959,269.79 959,269.79
Privately-owned corporate shares 73,549.07 73,549.07
Total 1,032,818.86 1,032,818.86
7.41 Other payables
Item Ending balance Beginning balance
Other payables 174,677,791.04 193,617,747.74
Total 174,677,791.04 193,617,747.74
7.42 Liabilities held for sale
Not applicable.
7.43 Non-current liabilities maturing within 1 year
Item Ending balance Beginning balance
Deferred income due within one year 1,260,000.00 1,260,000.00
Total 1,260,000.00 1,260,000.00
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7.44 Other current liabilities
Item Ending balance Beginning balance
Short-term bond payable
Interest and rentals 45,909.00 48,330.03
Total 45,909.00 48,330.03
7.45 Long-term loans
Item Ending balance Beginning balance
Mortgage loans 60,278,517.00 61,466,519.40
Credit loans 32,095,984.87 1,489,984.87
Total 92,374,501.87 62,956,504.27
Note 1: The amount of mortgage loans at the end of report period is 60,278,517.00 yuan (7,938,398.00
euros). The relevant matters of the mortgage loan above see Note 14.2.
Note 2: The amount of credit loans at the end of report period is 30,606,000.00 yuan (4,000,000.00 euros),
which is lent by DAP AG from Agricultural Bank of China Co., Ltd. Frankfurt Branch.
7.46 Bonds payable
Not applicable.
7.47 Long-term payables
Item Beginning balance Ending balance
Financing lease payments payable 960,531.14 679,488.44
Less: Unconfirmed financing charges 79,007.64 39,349.69
Others 2,240,369.61 2,342,507.24
Total 3,121,893.11 2,982,645.99
7.48 Long-term employee compensation payable
Item Ending balance Beginning balance
1. Post-employment benefits - net liability of
231,071,533.86 243,516,774.09
defined benefit plan
2. Dismissal welfare
3. Other long-term benefits 3,828,548.07 3,904,003.23
Total 234,900,081.93 247,420,777.32
Note: Defined benefit plan of DAP AG is based on supporting commitment.
The base of measuring supporting liability is on actuarial and hypothesis, not only consider known and
possessed right to draw defined benefit plan, but the increase of future payroll and defined benefit plan.
7.49 Special payable
Not applicable.
7.50 Estimated liabilities
Item Beginning Balance Ending Balance Reason
Pending litigation 546,461.91 546,461.91 Expected compensation expenses
Total 546,461.91 546,461.91 /
7.51 Deferred income
Item Beginning Balance Increase in Current Period Decrease in Current Period Ending Balance Reason
Government grants 2,340,000.00 2,340,000.00
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Total 2,340,000.00 2,340,000.00 /
Projects that involve government grants:
Subsidies Subsidies Included in
Increased in Current Other Asset-related /
Item Beginning Balance Ending Balance
Current Non-operating Change Income-related
period Income
Guiding funds of
developing service 2,200,000.00 2,200,000.00 Asset-related
industry
Taizhou science and
Technology Bureau R
140,000.00 140,000.00 Income-related
& D expenditure
subsidy
2,340,000.00
Total 2,340,000.00 /
7.52 Other non-current liabilities
Item Ending Balance Beginning Balance
Other long-term loan 520,000.00 520,000.00
Total 520,000.00 520,000.00
7.53 Share capital
Change in Current Period（+/-）
Beginning Balance Ending Balance
Issuance of New Shares Others Sub-total
Total shares 548,589,600.00 548,589,600.00
7.54 Other equity instruments
Not applicable.
7.55 Capital reserves
Item Beginning Balance Increase in Current Period Decrease in Current Period Ending Balance
Stock premium 851,345,853.61 851,345,853.61
Other capital reserves 120,654,741.95 5,832,696.23 114,822,045.72
Total 972,000,595.56 5,832,696.23 966,167,899.33
7.56 Treasury stock
Not applicable.
7.57 Other Comprehensive Income
Change in Current Period
Less: recognized as
Beginning other comprehensive Less: Ending
Item Accrual before
income for previous Income
Attributable to Attributable to
Balance Income tax for the Owners of the Minority Balance
years and transferred in Tax
Current Period Parent Company Shareholders
the profit or loss for the Expenses
current year
1. Other comprehensive
income that cannot be
-43,487,893.99 -43,487,893.99
reclassified in the loss and
gain in the future
Including: change in
re-measurement of the net
liabilities and net assets
-43,487,893.99 -43,487,893.99
under defined benefit plan
A share in other
comprehensive income of
investee that cannot be
reclassified in the losses
and gains under the equity
method
2. Other comprehensive
income that will be
-28,675,558.91 -25,400,680.10 -25,400,680.10 -2,205,260.71 -54,076,239.01
reclassified in the loss and
gain in the future
Including: a share in other
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Change in Current Period
Less: recognized as
Beginning other comprehensive Less: Ending
Item Accrual before
income for previous Income
Attributable to Attributable to
Balance Income tax for the Owners of the Minority Balance
years and transferred in Tax
Current Period Parent Company Shareholders
the profit or loss for the Expenses
current year
comprehensive income of
investee that will be
reclassified in the loss
and gain under the equity
method
Losses and gains on the
change in fair value of
15,711,472.03 -11,535,229.13 -11,535,229.13 4,176,242.90
available-for-sale financial
assets
Held-to-maturity
investments reclassified as
losses and gains on
available-for-sale financial
assets
Effective portion of losses
and gains on cash flow
hedges
Foreign currency
-44,387,030.94 -13,865,450.97 -13,865,450.97 -2,205,260.71 -58,252,481.91
translation differences
Total other comprehensive
income
-72,163,452.90 -25,400,680.10 -25,400,680.10 -2,205,260.71 -97,564,133.00
7.58 Special reserve
Not applicable.
7.59 Surplus reserves
Item Beginning balance Increase in current period Decrease in current period Ending balance
Statutory surplus reserves 2,273,121.26 2,273,121.26
Discretionary surplus reserves 2,273,121.26 2,273,121.26
Total 4,546,242.52 4,546,242.52
7.60 Undistributed profits
Item Reporting period Same period of the previous year
Adjustments to undistributed profits as at December
31, 2017
692,241,691.51 494,754,465.24
Adjustments to total undistributed profits as at
January 1, 2018 ("+" for increase, "-" for decrease)
Adjusted undistributed profits as at January 1, 2018 692,241,691.51 494,754,465.24
Plus: net profit attributable to owners of the parent
company for current period
100,161,346.50 125,980,892.71
Less: withdrawal of statutory surplus reserves
Withdrawal of discretionary surplus reserves
Withdrawal of general risk reserves
Ordinary share dividends payable
Ordinary share dividend transferred to share
capital (paid-in capital)
Adjustments to undistributed profits as at June 30,
2018
792,403,038.01 620,735,357.95
7.61 Operating income and operating costs
Reporting period Same period of the previous year
Item
Income Cost Income Cost
Main business 1,449,212,806.09 1,029,214,894.79 1,475,369,961.67 1,058,968,570.27
Other businesses 45,581,607.18 23,236,130.67 57,192,639.45 29,833,389.03
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Total 1,494,794,413.27 1,052,451,025.46 1,532,562,601.12 1,088,801,959.30
7.62 Taxes and surcharges
Item Reporting period Same period of the previous year
Urban maintenance and construction tax 806,953.97 1,544,451.83
Educational surtax 718,049.63 1,127,628.59
Property tax 2,215,365.99 2,099,054.97
land use tax 958,617.88 563,526.02
Vehicle and vessel tax 16,544.80 14,736.70
Stamp tax 444,355.20 372,161.70
Other 344.20 272,984.33
Total 5,160,231.67 5,994,544.14
7.63 Selling expenses
Item Reporting period Same period of the previous year
Employee compensation 68,477,738.65 61,279,120.79
Fix and after-sale service charges 11,855,231.61 10,393,706.68
Office expenses 411,478.32 748,646.43
Travelling expenses 9,834,477.29 9,321,861.67
Transportation cost 12,094,658.88 10,512,550.73
Advertising expense 2,394,034.63 2,899,425.63
Commission 11,350,261.62 12,103,473.04
Leasing and storage charges 3,982,825.41 5,401,842.88
Insurance premium 328,652.94 706,961.69
Conference fees 118,897.55 1,088,991.90
Depreciation costs 1,211,664.30 1,009,487.88
Exhibition fees 1,585,467.46 3,241,152.99
Sample printed matter and product loss 5,905,187.62 5,033,980.47
Entertainment expenses 757,129.82 363,905.44
Other 17,292,848.42 17,307,072.95
Total 147,600,554.52 141,412,181.17
7.64 General and administrative expenses
Item Reporting period Same period of the previous year
Employee compensation 69,551,075.61 63,094,127.39
Office expenses 1,947,623.71 3,083,576.02
Water and electricity 571,118.40 609,344.98
Entertainment expenses 3,324,228.18 2,626,271.81
Property insurance premium 1,172,655.05 1,192,827.02
Conference fees 130,873.98 741,776.34
Travelling expenses 3,880,277.57 4,188,197.13
Depreciation costs 4,242,979.64 3,479,775.53
Repair charges 242,365.23 432,790.41
Transportation cost 776,519.62 2,360,059.15
Rental fees 5,210,376.21 3,455,833.49
Costs of board meetings and supervisors' meetings 251,601.17 1,217,959.56
Agency fees and advisory expenses 10,898,525.41 5,537,470.16
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Litigation cost 485,226.44 390,851.06
New product development expenses 46,213,646.73 45,322,190.06
Amortization of intangible assets 708,107.57 1,068,674.61
Amortization of long-term deferred expenses 186,385.50 152,812.53
Other 4,762,990.39 4,967,562.70
Total 154,556,576.41 143,922,099.95
7.65 Financial expenses
Item Reporting period Same period of the previous year
Interest expenses 6,107,454.56 6,091,395.25
Less: Interest income -2,498,914.91 -487,251.03
Gains and losses on exchange 7,052,428.53 -13,178,688.63
Others 1,430,263.38 724,768.79
Total 12,091,231.56 -6,849,775.62
7.66 Losses from asset impairment
Item Reporting period Same period of the previous year
Losses from bad debts -409,326.21 4,347,324.27
Losses from inventory impairment 58,842.08 175,122.70
Total -350,484.13 4,522,446.97
7.67 Gains from changes in fair value
Not applicable.
7.68 Investment income
Item Reporting period Same period of the previous year
Long-term equity investments measured under equity method -1,691,101.14 11,737,352.98
Investment income from disposal of long-term equity
investment
investment income of a financial asset at its fair value and
whose changes are included in the current profits and losses
during the period of holding
Investment income obtained from the disposal of financial
assets at fair value and their changes are included in the 26,338.67 9,509.24
current profits and losses
Investment income of the held-to-maturity investment during
the holding period
Investment income derived from available-for-sale financial
11,889,784.50 1,001,400.43
assets
Investment income from disposal of available-for-sale
financial assets
After the loss of control, the residual equity is measured at fair
value
Others 7,260,044.29 5,747,623.00
Total 17,485,066.32 18,495,885.65
7.69 Gains on disposal of assets
Item Reporting period Same period of the previous year
Fixed assets -571,141.92 9,747,624.59
Total -571,141.92 9,747,624.59
7.70 Other gains
Item Reporting period Same period of the previous year
Financial support fund 466,000.00
Unemployment insurance subsidies 46,700.00
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Innovation Drives Industry Transformation and Upgrade
80,000.00
Assessment Award
Property tax return 717,178.80
Qiantang Economic Development Zone Subsidy 1,250,000.00 2,510,000.00
Comprehensive Bonded Area Management Committee
44,000.00
Subsidy
Other 12,494.76 30,381.10
Total 2,616,373.56 2,540,381.10
7.71 Non-operating income
Non-operating income
Same period of the previous Amount included in current
Item Reporting period
year non-recurring gains and losses
Government grants 20,000.00 102,594.49 20,000.00
Unpayable payables 398,451.43 398,451.43
Other 2,937,503.29 3,190.85 2,937,503.29
Total 3,355,954.72 105,785.34 3,355,954.72
Government grants included in current profit and loss
Same period of the Asset-related
Item Reporting period
previous year /Income-related
Financial support fund 466,000.00 Income-related
Unemployment insurance subsidies 46,700.00 Income-related
Innovation Drives Industry Transformation and Upgrade Assessment Award 80,000.00 Income-related
Innovation Award of Science and Technology Bureau of Jiaojiang District,
20,000.00 Income-related
Taizhou City
Property tax return 717,178.80 Income-related
Qiantang Economic Development Zone Subsidy 1,250,000.00 2,510,000.00 Income-related
Comprehensive Bonded Area Management Committee Subsidy 44,000.00 Income-related
Financial subsidies for employee vocational training 11,988.70 27,570.22 Income-related
Shanghai old public housing management fee subsidies 102,594.49 Income-related
Other 506.06 2,810.88 Income-related
Total 2,636,373.56 2,642,975.59 /
7.72 Non-operating expenses
Same period of the previous Amount Included in Current Non-
Item Reporting period
year recurring Gains and Losses
Donations made 651,000.00 200,000.00 651,000.00
Amercement and overdue fine outlay 217,621.81 102,210.07 217,621.81
Others 86,951.12 2,873.64 86,951.12
Total 955,572.93 305,083.71 955,572.93
7.73 Income tax expenses
Item Reporting period Same period of the previous year
Current income tax expenses 31,390,146.67 41,432,540.20
Deferred income tax expenses 1,539,881.68 5,066,571.10
Total 32,930,028.35 46,499,111.30
7.74 Other comprehensive income
See notes for details.
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7.75 Items of the statement of cash flows
7.75.1 Cash received from other operating activities
Item Reporting period Same period of the previous year
Current accounts and advances withdrawn 14,390,620.52 12,540,492.70
Special subsidies and grants 2,636,373.56 2,642,975.59
Interest income 1,914,330.36 853,706.23
Non-operating income: 49,158.26 278,981.82
Other 1,034,817.18 5,407,808.53
Total 20,025,299.88 21,723,964.87
7.75.2 Cash paid for other operating activities
Item Reporting period Same period of the previous year
Current accounts paid 30,750,544.80 6,762,109.04
Selling expenses 50,045,373.71 58,958,164.15
General and administrative expenses 56,975,876.20 59,104,891.27
Non-operating expenses 766,673.43 296,919.37
Others 6,317,754.30 7,374,016.59
Total 144,856,222.44 132,496,100.42
7.75.3 Cash received from other investing activities
Not applicable.
7.75.4 Cash paid from other investing activities
Not applicable.
7.75.5 Cash received from other financing activities
Item Reporting period Same period of the previous year
Bank deposit, security deposit and other pledge, mortgage 429,112.68
Total 429,112.68
7.75.6 Cash paid from other financing activities
Not applicable.
7.76 Supplementary information to the statement of cash flows
7.76.1 Supplementary information to the statement of cash flows
Same period of the
Supplementary Information Reporting period
previous year
1. Net profit adjusted to cash flows from operating activities
Net profit 112,285,929.18 138,844,626.88
Plus: Provision for assets impairment -350,484.13 4,522,446.97
Depreciation of fixed assets and others 25,407,641.27 22,411,409.44
Amortization of intangible assets 11,134,050.39 11,462,504.90
Amortization of long-term deferred expenses 186,385.50 152,812.53
Losses on disposal of fixed assets, intangible assets and other long-term assets ("-"
571,141.92 -9,747,624.59
for gains)
Losses on write-off of fixed assets （“-” for gains）
Losses from changes in fair value ("-" for gains)
Financial expenses (“-” for income) 13,159,883.09 -7,087,293.38
Investments losses ("-" for gains) -17,485,066.32 -18,495,885.65
Decreases in the deferred income tax assets (“-” for increases) -2,942,077.58 -3,010,459.74
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Same period of the
Supplementary Information Reporting period
previous year
Increases in the deferred income tax liabilities (“-” for decreases) 1,935,513.24 8,292,541.39
Decreases in inventories (“-” for increases) -82,640,544.93 -69,790,264.64
Decreases in operating payables (“-” for increases) -105,872,538.02 -83,128,510.00
Increases in operating payables (“-” for decreases) -13,092,988.36 -54,216,627.58
Others
Net cash flows from operating activities -57,703,154.75 -59,790,323.47
2. Significant investment and financing activities involving no cash receipts and
payments
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets acquired under financial lease
3. Net change in cash and cash equivalents:
Ending balance of cash 625,219,186.80 649,036,645.55
Less: beginning balance of cash 713,813,720.45 750,357,929.63
Plus: ending balance of cash equivalents
Less: beginning balance of cash equivalents
Net increase in cash and cash equivalents -88,594,533.65 -101,321,284.08
7.76.2 Net cash paid to acquire subsidiaries during the current period
Not applicable.
7.76.3 Net cash received from disposal of subsidiaries during the current period
Not applicable.
7.76.4 Composition of cash and cash equivalents
Item Ending balance Beginning balance
1. Cash 625,219,186.80 713,813,720.45
Including: cash on hand 607,616.78 707,925.98
Unrestricted bank deposit 624,229,571.66 712,794,196.15
Other unrestricted monetary funds 381,998.36 311,598.32
Deposit in central bank available for payment
Deposits with banks and other financial
institutions
Loans from banks and other financial
institutions
2. Cash equivalents
Including: bond investments maturing within three
months
3. Balance of cash and cash equivalents as at 30th
625,219,186.80 713,813,720.45
June 2018
Including: cash and cash equivalents restricted for
use by the parent company or subsidiaries within the
group
7.77 Notes of items in Statement of Changes in Equity
Not applicable.
7.78 Assets with restricted ownership or use rights
Unit: 10,000 Yuan, Currency: RMB
Item Book value at the end of period Restricted reasons
Monetary funds 2,143.30 Bank acceptance money deposit and foreign exchange funds to be verified
Notes receivable
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Shang Gong Group Co., Ltd
Item Book value at the end of period Restricted reasons
Inventary
Fixed assets 9,828.04 Bank loan guarantee
Intangible assets
Investment property 2,832.74 Financing Bond Guarantee
Long-term equity investment 4,607.61 Equity purchase price guarantee
Total 19,411.69 /
Note: Book value of long-term equity investment at the end of period was 50 million shares of DA AG
7.79 Monetary items in foreign currency
7.79.1 Monetary items in foreign currency
Ending balance of foreign Ending balance of conversion
Item Exchange rate
currency into RMB
Monetary funds
Including: USD 6,306,655.76 6.6166 41,728,618.53
EUR 40,553,602.43 7.6515 310,295,888.99
HKD 459,386.82 0.8431 387,309.03
SGD 1,932,805.81 4.8386 9,352,074.19
VND 2,911,637,000.00 0.00003 87,349.11
7.79.2 Description of overseas operating entities
The domicile of primary operation of the Company's subsidiary, DAP Industrial AG, is in Germany, with
Euro as functional currency for it is the applicable currency for the operation region.
The domicile of primary operation of the Company's subsidiary, DAP Vietnam Co., Ltd., is in Vietnam,
with VND as functional currency for it is the applicable currency for the operation region.
7.80 Hedging
Not applicable.
7.81 Government grants
Amount recognized in current
Type Amount Item
profits and losses
Financial support fund 466,000.00 Other income 466,000.00
Unemployment insurance subsidies 46,700.00 Other income 46,700.00
Innovation Drives Industry Transformation and Upgrade
80,000.00 Other income 80,000.00
Assessment Award
Innovation Award of Science and Technology Bureau of
20,000.00 Non-operating income 20,000.00
Jiaojiang District, Taizhou City
Property tax return 717,178.80 Other income 717,178.80
Qiantang Economic Development Zone Subsidy 1,250,000.00 Other income 1,250,000.00
Comprehensive Bonded Area Management Committee
44,000.00 Other income 44,000.00
Subsidy
Financial subsidies for employee vocational training 11,988.70 Other income 11,988.70
Other 506.06 Other income 506.06
Total 2,636,373.56 2,636,373.56
7.82 Others
Not applicable.
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8. Change in the scope of consolidation
8.1 Business combinations not under common control
Not applicable.
8.2 Business combinations under common control
Not applicable.
8.3 Reverse purchase
Not applicable.
8.4 Disposal of subsidiaries
Not applicable.
8.5 Changes in consolidation scope with other reasons
During the reporting period, the Company invested RMB 20 million to increase the capital of DAMSH,
with a shareholding ratio of 51.28%. The chairman, general manager and chief financial officer are all
dispatched by the Company to directly manage the business. DAMSH is included in the direct consolidation
scope of the Company from the date of completion of the capital increase.
9. Equity in other entities
9.1 Equity in subsidiaries
9.1.1 Composition of enterprise groups
Domicile of Shareholding
Registered Ratio (%) Acquisition
Name of Subsidiary Primary Business Nature
Place method
Operation Direct Indirect
Shanghai Shanggong & Butterfly Production and sales of
Shanghai Shanghai 100.00 Investment
Sewing Machine Co., Ltd. sewing machines
DAP (Shanghai) Co., Ltd. Shanghai Shanghai Sales of sewing machines 100.00 Investment
Shanghai SMPIC Imp. & Exp. Co., Sales, import and export
Shanghai Shanghai 100.00 Investment
Ltd. of office equipment
Production and sales of
Shanghai SGSB Electronics Co., Ltd. Shanghai Shanghai 100.00 Investment
electronic equipment
Shanghai SGSB Asset Management Asset and property
Shanghai Shanghai 100.00 Investment
Co., Ltd. management
Business
Shanghai Fengjian Property Co., Ltd. Shanghai Shanghai Property Management 100.00 combination under
common control
Production and sales of
DAP Industrial AG Germany Germany 100.00 Investment
sewing machines
Zhejiang ShangGong GEMSY CO., Production and sales of
Taizhou Taizhou 60.00 Investment
LTD. sewing machines
Business
Shanghai Shensy Enterprise combination not
Shanghai Shanghai Logistics, etc. 40.03
Development Co., Ltd. under common
control
Shanghai ShangGong Financial
Shanghai Shanghai Financial Leasing 51.00 49.00 Investment
Leasing Co., Ltd.
PFAFF Industrial Sewing Machine Production and sales of
Zhangjiagang Zhangjiagang 30.25 69.75 Note
(Zhangjiagang) Co., Ltd. sewing machines
DAP Vietnam Co., Ltd. Vietnam Vietnam Sales of sewing machines 100.00 Investment
ShangGong Sewing Equipment Production and sales of
Zhejiang Zhejiang 100.00 Investment
(Zhejiang) Co., Ltd. sewing machines
Dürkopp Adler Industrial Production and sales of
Shanghai Shanghai 51.28 48.72 Investment
Manufacturing (Shanghai) Co., Ltd. sewing machines
Note: As the Company directly manages the business activities of PIZ, PIZ included in the scope of
consolidation from the date of the merger.
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9.1.2 Important non-wholly owned subsidiary
Other comprehensive
Minority Profit and loss attributable The dividend declared to
income attributable to
Name of subsidiary shareholders to minority shareholders for minority shareholders in
minority shareholders in this
Shareholding% the current period the current period
period
Dürkopp Adler AG 6.00 6,844,016.46 83,814,383.37
Zhejiang ShangGong GEMSY
40.00 -588,153.70 83,749,285.76
CO., LTD.
Shanghai Shensy Enterprise
59.97 5,868,719.92 153,572,436.29
Development Co., Ltd.
9.1.3 Major restrictions on the use of group assets and liquidation of group debt
Not applicable.
9.1.4 Financial support or other support provided to structured entities included in the scope of
consolidated financial statements
Not applicable.
9.2 Equity in joint operation and joint venture
9.2.1 Important joint operation and joint venture
Shareholding Accounting Measurement
Name of Joint Domicile of
Registered Ratio (%) for Investment in Joint
Operation and Joint Primary Business Nature
Place Operation and Joint
Venture Operation Direct Indirect
Venture
H. Stoll AG & Co. Reutlingen, Reutlingen, Computerized flat knitting
26.00 Equity method
KG Germany Germany machine manufacturing
9.2.2 Main financial information of joint operation and joint venture
Unit: 10,000 Yuan, Currency: RMB
H. Stoll AG & Co. KG Ending balance / Current period Beginning balance / Same period of the previous year
Current assets 150,122.43 168,299.51
Non-current assets 31,141.61 26,033.15
Total assets 181,264.04 194,332.66
Current liabilities 50,040.81 57,559.13
Non-current liabilities 33,131.00 33,250.28
Total liabilities 83,171.81 90,809.41
The book value of equity investments in
26,613.24 27,579.96
joint operation and joint venture
Operating income 82,096.92 108,918.28
Net profit 76.52 5,218.24
9.2.3 Description of major restrictions on the ability of a joint venture or an associate to transfer
funds to the company
Not applicable.
9.2.4 Excessive losses incurred by joint ventures or associates
Not applicable.
9.2.5 Unconfirmed commitments related to investment in joint ventures
Not applicable.
9.2.6 Contingent liabilities related to investments in joint ventures or associates
Not applicable.
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9.3 Important common management
Not applicable.
9.4 Equity in structured entities not included in the scope of consolidated financial statements
Not applicable.
10. Risks related to financial instruments
The Company faces various financial risks in the course of its operations: credit risk, market risk and
liquidity risk. The Board of Directors of the Company is fully responsible for the determination of risk
management objectives and policies, and assumes ultimate responsibility for risk management objectives and
policies. The Board of Directors reviews the effectiveness of the implemented procedures and the rationality of
risk management objectives and policies through monthly reports submitted by the heads of functional
departments and subsidiaries. The Company's internal audit department will audit the risk management
policies and procedures and report the findings to the audit committee.
The overall goal of the Company's risk management is to formulate a risk management policy that
minimizes risks without excessively affecting the Company's competitiveness and resilience.
10.1 Credit risk
Credit risk refers to the risk that one party to a financial instrument fails to perform its obligations and
causes financial losses to the other. The Company's credit risk is mainly related to accounts receivable.
(1) Accounts Receivable
The accounts receivable of the Company are mainly exposed to the credit risk of customers caused by
credit sales. Before opening up new customers and signing new framework contracts, the Company will
evaluate new customers' credit risks, including external credit ratings and, in some cases, bank credit
certificates (when this information is available).
For the sewing machine business and export trading business, the Company sets a credit limit for each
customer, which is the maximum amount that does not require additional approval. For sales that exceed the
credit limit, the Company only sells it on the premise of additional approval. Otherwise, it must demand that it
pay the corresponding amount in advance. For customers who have not completed payment in a timely manner
on the previous credit sale, the Company will no longer accept new product orders before recovering accounts
receivable.
For the logistics business, the Company only deals with customers that have been approved and have a
good reputation and have a certain scale. After the credit period expires, the Company will perform various
forms of collection for customers who have not paid on time. Due to the high dispersion of customers in the
logistics business, there is no significant concentration of credit risk.
As of the end of the report period, the top five customers' accounts receivable of the Company accounted
for 15.62% of the ending balance, and the Company did not have significant credit risk.
(2) Other Receivables
The Company's other receivables mainly include export tax refund receivables, various types of deposits
and deposits. The Company manages and monitors this type of payments together with related economic
activities to ensure that the Company does not have significant bad debt risks.
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10.2 Market risk
The market risk of financial instruments refers to the risk that the fair value or future cash flow of
financial instruments fluctuates due to changes in market prices, including exchange rate risk, interest rate risk
and other price risks.
(1) Interest Rate Risk
Interest rate risk refers to the risk that the fair value or future cash flow of a financial instrument will
fluctuate due to changes in market interest rates. The interest rate risk that the Company may face is mainly
derived from bank loans that carry interest at floating rates.
As of 30 June 2018, the Company’s short-term bank loans with Euribor as benchmark interest rate totaled
34.80 million euros, and long-term loans with Euribor as benchmark interest rate totaled 11.878 million euros.
Supposing that other variables remain unchanged, a 50% benchmark change in interest rates would have no
significant impact on the Company's current profit or loss and shareholders' equity.
(2) Exchange Rate Risk
Exchange rate risk refers to the risk of loss due to exchange rate changes. The foreign exchange risk of
the Company mainly includes the risk associated with the monetary assets and liabilities formed by the
Company and its subsidiaries and overseas customers through the settlement of non-standard currencies, as
well as the risk of translation differences in foreign currency statements. The former risk affects the current
period profit and loss, and the latter risk affects owner's equity (other comprehensive income).
See Note 7.77 for details of monetary items in foreign currency as of 30 June 2018.
Exchange rate risk sensitivity analysis:
With the other variables unchanged, the pre-tax impact of reasonable changes in exchange rates on the
current profit or loss and owner's equity is as follows:
Reporting period Same period of the previous year
Item Exchange rate changes Impact on current Impact on owner's Impact on current Impact on owner's
profits and losses equity profits and losses equity
Foreign currency 10% appreciation of
6,146,172.97 95,841,411.32 10,300,943.11 83,066,369.13
statement conversion RMB
Foreign currency 10% depreciation of
-6,146,172.97 -95,841,411.32 -10,300,943.11 -83,066,369.13
statement conversion RMB
Foreign Currency 10% appreciation of
7,693,309.93 7,693,309.93 6,813,799.33 6,813,799.33
Items RMB
Foreign Currency 10% depreciation of
-7,693,309.93 -7,693,309.93 -6,813,799.33 -6,813,799.33
Items RMB
(3) Other Price Risks
The Company holds equity investments in other listed companies. The management of the Company
believes that the market price risks faced by these investment activities are acceptable. The listed company’s
equity investment held by the Company is listed as follows:
Item Ending Balance Beginning Balance
Available-for-sale financial assets and trading financial assets 78,186,465.43 89,721,694.56
If all other variables remain unchanged, if the value of the equity instrument increases or decreases by
20%, the Company will increase or decrease the other comprehensive income by 14,802,044.51 yuan (31st
December 2017: Others Comprehensive income of 15,711,472.03 yuan). The management of the Company
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believes that 20% reasonably reflects the reasonable range of possible changes in the value of equity
instruments in the next year.
10.3 Liquidity risk
Liquidity risk refers to the risk of shortage of funds when performing obligations settled by way of
delivery of cash or other financial assets. The Company's policy is to ensure that it has sufficient cash to repay
the debts due. Liquidity risk is centrally controlled by the Company's financial department. By monitoring cash
balances, marketable securities that can be realised at any time, and rolling forecasts of cash flows for the next
12 months, the financial department ensures that the Company has sufficient funds to repay debts under all
reasonably foreseen circumstances.
The Company's external sources of funds mainly include bank loans. As of 30 June 2018, the Company's
unused bank loan quota was 10.75 million euros (is equivalent to 82.2536 million yuan at the end of the period)
and 300.00 million yuan. The Company's own funds are relatively abundant and liquidity risk is relatively
small.
11. Disclose of fair value
11.1 The fair value at end of current period of assets and liabilities measured at fair value
Fair value at the end of reporting period
Item Measured at the fair
Measured at the fair Measured at the fair
value of the second Total
value of the first level value of the third level
level
1. Measurement at fair value
based on going concern
(1) Financial assets measured at
fair value through current profit and
loss
A. Financial assets held for trading
a. Investment in debt instruments
b. Investments in equity instruments
c. Derivative financial assets
B. Financial assets designated to be
measured at fair value through
current profit and loss
a. Investment in debt instruments
b. investments in equity instruments
(2) Available-for-sale financial
78,186,465.43 78,186,465.43
assets
a. Investment in debt instruments
b. Investments in equity instruments 78,186,465.43 78,186,465.43
c. Others
(3) Investment property
A. Use right of leased land
B. Leased buildings
C. Land use right held for transfer
upon appreciation
(4) Biological assets
A. Consumable biological assets
B. Productive biological assets
Total amount of assets measured
at fair value based on going 78,186,465.43 78,186,465.43
concern
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Fair value at the end of reporting period
Item Measured at the fair
Measured at the fair Measured at the fair
value of the second Total
value of the first level value of the third level
level
(5) Financial liabilities held for
trading
Including: issued bonds held for
trading
Derivative financial liabilities
Others
(6) Designated financial liabilities
measured at fair value through
current profit and loss
Total amount of liabilities
measured at fair value based on
going concern
2. Measurement at fair value
based on going concern
(1) Assets held for sale
Total amount of assets measured
at fair value not based on going
concern
Total amount of liabilities
measured at fair value not based
on going concern
11.2 Basis for determination of market price for measurement of fair value of the first level based
on going concern and not based on going concern
The fair value at end of reporting period of available-for-sale financial assets was determined on the basis
of the closing price of Shenzhen Stock Exchange and Shanghai Stock Exchange on the last trading day in June
2018.
12. Related party and related party transaction
12.1 The parent company of the Company
The Company is a listed company with no controlling shareholder and no actual controller.
12.2 The subsidiaries of the Company
See the Note 9 Equity in Other Entities for the details.
12.3 The joint operation and joint ventures of the Company
Not applicable.
12.4 Other related parties
Name of Other Related Parties Relationship with the Company
Shanghai Hirose Precision Industrial Co., Ltd. Investee
Shanghai Fuji Xerox Co., Ltd. Investee
Shanghai Kaile Investment Management Co., Ltd. Subsidiary’s minority shareholders
Zhejiang GEMSY Electromechanical Co., Ltd. Subsidiary’s minority shareholders
Stoll Electronics Co., Ltd. Other related party
12.5 Related transactions
12.5.1 Related transactions for purchase and sale of goods, receiving and rendering of services
Table of purchase of goods / receipt of services
Related Party Content of Related Transaction Reporting period Same period of the previous year
Stoll Electronics Co., Ltd. Purchase of goods / Receiving of service 10,978,177.50 6,436,020.33
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Table of sales of goods /rendering of services
Related Party Content of Related Transaction Reporting period Same period of the previous year
Shanghai Fuji Xerox Co., Ltd. Sales of goods 9,806,140.15 12,162,227.27
Stoll Electronics Co., Ltd. Sales of goods 454,513.14 293,594.29
12.5.2 Associated trusteeship/contracting and entrusted management/outsourcing
Not applicable.
12.5.3 Related lease
The Company acted as lessor:
Unit: 10,000 Yuan, Currency: RMB
Name of leasee Type of leased asset Rental recognized in report period Rental recognized in last period
Shanghai Hirose Precision Industrial Co., Ltd. Machinery equipment 25.00 25.00
12.5.4 Related guarantees
Not applicable.
12.5.5 Related party funds lending
Not applicable.
12.5.6 Related party assets transfer and debt reorganization
Not applicable.
12.5.7 Compensation for key managers
Not applicable.
12.6 Receivables and payables from related parties
12.6.1 Receivables
Ending balance Beginning balance
Item Related party Provision for Provision for
Book balance Book balance
bad debts bad debts
Shanghai Fuji Xerox Co., Ltd. 1,999,860.81 99,993.04 2,365,537.24 118,276.86
Accounts receivable
Stoll Electronics Co., Ltd. 49,745.00
Zhejiang GEMSY Electromechanical
Prepayment 6,147,650.83 6,147,650.83
Co., Ltd.
Dividends receivable Shanghai Fuji Xerox Co., Ltd. 9,949,000.00
Dividends receivable H. Stoll AG & Co. KG 27,373,644.64
Zhejiang GEMSY Electromechanical
Other receivables 701,761.69 617,279.69
Co., Ltd.
12.6.2 Payables
Item Related party Ending balance Beginning balance
Account payables Stoll Electronics Co., Ltd. 2,418,441.66 1,630,680.70
12.7 Related party commitments
Not applicable.
13. Share payment
Not applicable.
14. Commitments and contingencies
14.1 Important commitments
Not applicable.
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14.2 Contingencies
14.2.1 Important contingent events at the balance sheet date
(1) Contingent liabilities formed by debt guarantees provided by the Company for its subsidiary DAP AG
as of 30 June 2018
Commencement Whether the
Expiration Date
Guarantee Guarantee Amount Date of Guarantee has been Note
of Guarantee
Guarantee Fulfilled or not
The equivalent of
25th March
Shanghai Branch of the Commerzbank RMB 58.00 million in No Note 1
2014
EUR
Shanghai Branch of the Commerzbank EUR 8.00 million 1st July 2014 No Note 2
th
19 September
Shanghai Branch of the Commerzbank EUR 12.00 million No Note 3
2016
28th August
Shanghai Branch of the Commerzbank EUR 10.00 million No Note 4
2015
Industrial and Commercial bank Shanghai 21st December st
21 December
EUR 7.878 million No Note 5
Hongkou Branch 2015 2020
Note 1: On 25th March 2014, the Company's wholly-owned subsidiary, DAP Industrial AG, applied to
the Bielefeld Branch of the Commerzbank for a current fund loan of not more than the equivalent of 58 million
yuan in euro, the Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, and
the Company issued a corporate letter of guarantee for payment of 70 million yuan as counter guarantee for the
abovementioned financing guarantee letter.
Note 2: on 30th June 2014, the Company's wholly owned subsidiary, DAP Industrial AG, applied to the
Bielefeld Branch of the Commerzbank for a current fund loan of 8 million euro, the Shanghai Branch of the
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 8.8 million euro as counter guarantee for the
abovementioned financing guarantee letter.
Note 3: on 19th September 2016, the Company's wholly owned subsidiary, DAP Industrial AG, applied to
the Bielefeld Branch of the Commerzbank for a short-term credit loan of 12 million euro, the Shanghai Branch
of the Commerzbank issued a financing guarantee letter for the funds, and the Company issued an
unconditionally irrecoverable corporate letter of guarantee for payment of 13.20 million euro.
Note 4: on 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to the
Kaiserslautern Branch of the Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of the
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for the
abovementioned financing guarantee letter.
Note 5: on 21st December 2015, the Company's wholly owned subsidiary, DAP Industrial AG, applied to
the Frankfurt Branch of ICBC for a loan of no more than 7.878 million euro so as to pay the acquisition fee to
Stoll KG. ICBC Shanghai Hongkou Branch issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for self-using fix assets where No.603
Dapu Road as counter guarantee for the abovementioned financing guarantee letter.
As of 30 June 2018, there is no outflow of economic benefits arising from the above contingencies.
(2) The Agreement to Increase Capital to Shanghai Shensy Enterprise Development Co., Ltd.
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According to the capital increase agreement of Shanghai Shensy Enterprise Development Co., Ltd., by 30
June 2018, if SHENSY has not realized IPO and listed independently in A shares market, the persons acting in
concert, Shanghai Pudong New Industrial Investment Co., Ltd., will be entitled to require the Company and
another shareholder, Zhang Ping, to repurchase all or some of the shares that Shanghai Pudong New Industrial
Investment Co., Ltd. holds in cash, within 3 months after it requests in writing. And assist it in the approval
process of State-owned Assets Supervision and Administration Commission, commercial registration, etc. Per
the agreement, the Company and Zhang Ping will respectively assume 50% of the above mentioned amount,
and the Company bears unconditional joint responsibility to repurchase the shares that Shanghai Pudong New
Industrial Investment Co., Ltd. holds.
If Shanghai Pudong New Industrial Investment Co., Ltd. has not listed in A shares market by 30 June
2018, it has 6 months (e.g. before 31 December 2018) to request our company and Zhang Ping to repurchase
the shares which it holds in Shanghai Shensy Enterprise Development Co., Ltd.. If not, our company and
Zhang Ping will not assume the above mentioned repurchase responsibility.
As of 30 June 2018, SHENSY has failed to complete its IPO and be listed on the A-shares independently.
Shanghai Pudong New Industrial Investment Co., Ltd. has already formally notified the Company to fulfill the
agreement to repurchase all the shares held by Shanghai Pudong New Industrial Investment Co., Ltd.
(3) Arbitration on investment of 26% equity in H. Stoll AG & Co. KG
Accounting to the Contract signed on 29th August 2015 by SGE, the calculation of share price is based on
the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that share price will
be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and related clauses
in the Contract. Now the parties have disputes on the calculation of net assets of STOLL's audited consolidated
statement in 2015 and the understanding of the relevant terms of the Contract, resulting in a difference of
approximately 4.26 million euro in the calculation of the price adjustment. SGE has received the Application
for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited partners of STOLL KG on 20
July 2017. SGE will, in accordance with the terms of the contract, settle the dispute by arbitration in
accordance with German legal procedures.
As of the date of this report, the arbitration is in process and with great uncertainty.
(4) Controversial litigation with Shanghai Card Line World Supply Chain Management Co., Ltd.
(hereinafter refer to as “KXTX”)
The Company’S wholly-owned subsidiary, Shanghai Shensy Kaile Things Network Co., Ltd., had a
dispute with KXTX during the current period. The case has been publicly heard by the People's Court of
Pudong New Area, Shanghai and the first-instance judgment was issued on 7 September 2017 with the (2017)
civil judgment No. Hu0115 Minchu18286. Shanghai Shensy Kaile Things Network Co., Ltd. is required to pay
a total of 1,186,599.88 yuan for the transportation fee of KXTX based on the judgment.
Shanghai Shensy Kaile Things Network Co., Ltd. has filed an appeal on 25 September 2017. As of 30
June 2018, the court has not made a second-instance judgment. Shanghai Shensy Kaile Things Network Co.,
Ltd. has provided corresponding estimated liabilities according to the judgment of the first instance.
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15. Post balance sheet event
15.1 Important non-adjusting events
Not applicable.
15.2 Profit distribution
According to the resolution of the Company’s 7th Meeting of the 8th Board of Directors on 29 August
2018, no dividends of the first half of 2018 will be distributed.
15.3 Sales return
Not applicable.
15.4 Others
(1) 500,000 shares mortgage of DA AG
DAP AG pledges 500 million shares of DA AG held by DAP AG to obtain a 2.75 million euro bank
guarantee issued by Commerzbank, Germany, for the period from 7 January 2016 to 30 July 2017 and from 7
January 2016 to 30 July 2018 respectively. It provided guarantees for DAP AG to pay equity purchase price to
German H. Stoll AG & Co. KG equity sellers. As of 30 June 2017, DAP AG has paid the third equity purchase
price. The 500,000 shares of DA AG were released from mortgage on 26 July 2018.
(2) DAP AG merges its holding subsidiary DA AG
DAP AG, a wholly-owned subsidiary of SGG, merges its holding subsidiary DA AG, squeezing out the
minority shareholders holding approximately 5.99% shares of DA AG. This matter was recorded on July 2018
in the District Court of Bielefeld, Germany. And DA AG has completed the trading of its shares on the
Frankfurt, Berlin and Düsseldorf stock exchanges at the end of July 2018.
(3) SGG acquire 65% equity of Richpeace and capital increase of Richpeace
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to acquire 65% equity of Richpeace and increase its capital. The total investment is 156.137
million yuan, including: equity acquisition of 136,663,800 yuan and capital increase of 19.5 million yuan. The
matter is in progress.
(4) Investment and construction of Taizhou Manufacturing Base
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to invest to construct manufacturing base in Huangyan District, Taizhou, Zhejiang. The total
investment is 154 million yuan, including: purchase of land use right and related tax and expenses of 37
million yuan and construction of plant and supporting facilities of 117 million yuan. The source of funds is
self-owned funds. The undertaking unit of this project is the Company's wholly-owned subsidiary ShangGong
Sewing Machine (Zhejiang) Co., Ltd.
16. Other significant events
16.1 Correction of previous accounting errors
Not applicable.
16.2 Debt reorganization
Not applicable.
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16.3 Asset replacement
Not applicable.
16.4 Annuity plan
Not applicable.
16.5 Discontinued operations
Not applicable.
16.6 Division information
16.6.1 Basis for determining the report division
According to the Company's development strategy, four report divisions are identified according to the
nature of the business: sewing equipment, logistics services, export trade and other business segments. Each of
the Company's reporting segments offers different products and services.
16.6.2 Report division’s financial information
Sewing equipment Logistics service Export trade Other business Offset between
Item Total
division division division segments divisions
1. Operating
1,243,429,826.77 362,468,133.25 68,834,028.31 56,221,864.47 236,159,439.53 1,494,794,413.27
income
Including:
External
1,013,250,015.18 362,468,133.25 68,834,028.31 50,242,236.53 1,494,794,413.27
transaction
income
Inter-segment
transaction 230,179,811.59 - - 5,979,627.94 236,159,439.53
income
2. Investment
income from
-1,232,754.40 - - - 458,346.74 -1,691,101.14
associates and
joint ventures
asset impairment
-187,737.85 -278,617.45 -117,160.01 -19,942.47 -252,973.65 -350,484.13
losses
4. Depreciation
30,246,257.57 1,205,635.93 5,415.30 5,270,768.36 36,728,077.16
and amortization
5. Total profit 110,582,259.24 13,047,783.86 -80,874.94 11,237,651.22 -8,028,756.36 142,815,575.74
6. Income tax
30,480,024.94 3,261,690.94 - 57,487.94 869,175.47 32,930,028.35
expenses
7. Net profit 82,502,616.09 9,786,092.92 -80,874.94 11,180,163.28 -8,897,931.83 112,285,929.18
8. Total assets 3,697,502,543.60 418,613,690.46 30,534,425.72 989,987,043.06 1,312,096,843.53 3,824,540,859.31
9. Total
1,599,929,613.50 162,096,929.35 22,465,178.07 142,802,158.78 638,031,772.67 1,289,262,107.03
liabilities
10. Other
important
non-cash items
16.7 Other significant events
Not applicable.
17. Notes to mains items of the financial statements of the parent company
17.1 Accounts receivable
17.1.1 Disclosure of classification of accounts receivable
Ending balance Beginning balance
Type Book balance Provision for bad debts Book balance Provision for bad debts
Book value Book value
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable
with significant single
amount and provision 9,823,991.89 8.78 5,385,491.84 54.82 4,438,500.05 15,115,630.80 13.88 5,561,028.32 36.79 9,554,602.48
for bad debt made on
an individual basis
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Accounts receivable
with provision for bad
debt made on a
88,866,687.61 79.46 61,497,260.66 69.20 27,369,426.95 80,650,765.60 74.09 61,342,035.96 76.06 19,308,729.64
portfolio with similar
risk credit
characteristics basis
Accounts receivables
with insignificant
single amount and
13,154,311.21 11.76 5,019,394.27 38.16 8,134,916.94 13,092,694.77 12.03 5,109,454.83 39.03 7,983,239.94
provision for bad debt
made on an individual
basis
Total 111,844,990.71 100.00 71,902,146.77 64.29 39,942,843.94 108,859,091.17 100.00 72,012,519.11 66.15 36,846,572.06
Accounts receivable with significant single amount and provision for bad debts made on an individual
basis at the end of report period
Ending balance
Accounts receivable (By
entity) Accounts Provision for bad Provision
Reason for provision
receivable debts ratio
Impairment was occurred on a separate
Customer C 5,713,872.47 5,179,985.87 90.66
test.
Impairment was occurred on a separate
Customer E 4,110,119.42 205,505.97 5.00
test.
Total 9,823,991.89 5,385,491.84 54.82 /
Accounts receivable with provision for bad debt made using the aging analysis method among the
portfolios
Ending balance
Aging
Accounts receivable Provision for bad debts Provision ratio
Within 1 year 26,034,904.42 1,301,745.23 5%
1 to 2 years 3,043,895.14 608,779.03 20%
2 to 3 years 402,303.31 201,151.66 50%
Over 3 years 59,385,584.74 59,385,584.74 100%
Total 88,866,687.61 61,497,260.66 69.20
17.1.2 Bad debt provision recovered or reversed in report period
The amount of provision for bad debts was 1,526,013.93 yuan in current period; the amount of bad debt
provision recovered or reversed in the current period was 137,896.09 yuan.
17.1.3 Accounts receivable actually written off in current period
Item Write-off amount
Accounts receivable actually written off 3,436,227.61
17.1.4 Top five accounts receivable by the ending balance of the borrowers
Ending balance
Company name
Accounts receivable Proportion in total accounts receivable (%) Provision for bad debts
Customer A 11,530,775.39 10.31 11,530,775.39
Customer B 7,480,189.67 6.69 7,480,189.67
Customer C 5,713,872.47 5.11 5,179,985.87
Customer D 4,679,327.49 4.18 4,679,327.49
Customer E 4,110,119.42 3.67 205,505.97
Total 33,514,284.44 29.96 29,075,784.39
17.1.5 Receivables derecognized due to transfer of financial assets
Not applicable.
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17.1.6 Transfer of accounts receivable and continued involvement in the formation of assets,
liabilities
Not applicable.
17.2 Other receivables
17.2.1 Disclosure of classification of other receivables
Ending balance Beginning balance
Type Provision for bad Provision for bad
Book balance Book balance
debts Book Value debts Book Value
Amount % Amount % Amount % Amount %
Other receivables with significant single amount
and provision for bad debt made on an individual 62,643,254.90 29.34 61,720,677.84 98.53 922,577.06 61,325,622.45 32.26 61,325,622.45 100.00
basis
Other receivables with provision for bad debt
made on a portfolio with similar risk credit 144,429,440.88 67.63 21,875,233.92 15.15 122,554,206.96 125,819,372.64 66.20 20,769,399.12 16.51 105,049,973.52
characteristics basis
Other receivables with insignificant single
amount and provision for bad debt made on an 6,470,788.89 3.03 19,335.00 0.30 6,451,453.89 2,925,886.51 1.54 21,735.00 0.74 2,904,151.51
individual basis
Total 213,543,484.67 100.00 83,615,246.76 39.16 129,928,237.91 190,070,881.60 100.00 82,116,756.57 43.20 107,954,125.03
Other receivables with significant single amount and provision for bad debts made on an individual basis
at the end of report period
Ending Balance
Other receivables (By entity)
Other receivables Provision for bad debts Proportion of provision (%) Reason for provision
Customer B 48,991,974.70 48,069,397.64 98.12 Unexpected to recover
Customer E 13,651,280.20 13,651,280.20 100.00 Unexpected to recover
Total 62,643,254.90 61,720,677.84 98.53 /
Other receivables with provision for bad debts made using the aging analysis method among those
portfolios
Ending Balance
Aging
Other Receivables Provision for Bad Debts Proportion of Provision (%)
Within 1 year 128,847,914.69 6,442,395.73 5.00
1 to 2 years 185,800.00 37,160.00 20.00
2 to 3 years 96.00 48.00 50.00
Over 3 years 15,395,630.19 15,395,630.19 100.00
Total 144,429,440.88 21,875,233.92 15.15
17.2.2 Withdrawal, recovery or reversal of provision for bad debt
The provision for bad debts in current period was 1,498,490.19 yuan, and the amount of provision for bad
debt recovered or reversed this period was0 yuan.
17.2.3 Other receivables actually written off in current period
Item Write off amount
Other receivables actually written off 534,288.45
17.2.4 Other receivables classified by nature of payment
Not applicable.
17.2.5 Top five other receivables by the ending balance of the borrowers
Proportion in total other Ending balance of
Company name Nature of fund Ending balance Aging
receivable (%) provision for bad debts
Customer A Current accounts 58,701,194.06 Within 1 year 27.49 2,935,059.70
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From within 1
Customer B Current accounts 48,991,974.70 year to over 3 22.94 48,069,397.64
years
Customer C Current accounts 31,755,000.00 Within 1 year 14.87 1,587,750.00
Customer D Current accounts 20,181,250.00 Within 1 year 9.45 1,009,062.50
From within 1
Customer E Current accounts 13,651,280.20 year to over 3 6.39 13,651,280.20
years
Total / 173,280,698.96 81.14 67,252,550.04
17.2.6 Receivables involving government grants
Not applicable.
17.2.7 Other receivables derecognized due to the transfer of financial assets
Not applicable.
17.2.8 Transfer of other receivables and continued involvement in the formation of assets, liabilities
Not applicable.
17.3 Long-term equity investments
Ending balance Beginning balance
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investment in subsidiaries 664,810,221.03 5,500,000.00 659,310,221.03 644,810,221.03 5,500,000.00 639,310,221.03
Investment in associates and
joint ventures
Total 664,810,221.03 5,500,000.00 659,310,221.03 644,810,221.03 5,500,000.00 639,310,221.03
(1) Investment in subsidiaries
Decrease Provision for
Ending balance of
Increase in in impairment
Name Beginning balance Ending balance provision for
current period current provided in
impairment
period current period
Shanghai Shanggong Butterfly Sewing
79,000,000.00 79,000,000.00
Machines Co., Ltd
DAP Industrial AG 142,370,693.64 142,370,693.64
DAP (Shanghai) Co., Ltd. 59,046,675.86 59,046,675.86
Shanghai SGSB Electronics Co., Ltd 20,000,000.00 20,000,000.00
Shanghai SMPIC Imp. & Exp. Co.,
12,000,000.00 12,000,000.00
Ltd.
Shanghai SGSB Asset Management
60,000,000.00 60,000,000.00 5,000,000.00
Co., Ltd.
Shanghai Fengjian Property Co., Ltd. 500,000.00 500,000.00 500,000.00
Zhejiang ShangGong GEMSY CO.,
129,600,000.00 129,600,000.00
LTD.
Shanghai Shensy Enterprise
86,083,077.64 86,083,077.64
Development Co., Ltd.
Shanghai ShangGong Financial
33,452,430.00 33,452,430.00
Leasing Co.,Ltd.
PFAFF Industrial Sewing Machine
12,553,070.89 12,553,070.89
(Zhangjiagang) Co., Ltd.
DAP Vietnam Co., Ltd. 204,273.00 204,273.00
ShangGong Sewing Equipment
10,000,000.00 10,000,000.00
(Zhejiang) Co., Ltd.
Dürkopp Adler Industrial
20,000,000.00
Manufacturing (Shanghai) Co., Ltd. 20,000,000.00
(Note)
Total 644,810,221.03 20,000,000.00 664,810,221.03 5,500,000.00
Note: SGG increase the capital of DAMSH with RMB 20,000,000 yuan in report period, which held
51.28% of equity of DAMSH. DAMSH became the subsidiary of the Company from the Company’s
third-level subsidiary.
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(2) Investment in associates and joint ventures
Not applicable.
17.4 Operating income and operating costs
Reporting period Same period of the previous year
Item
Income Cost Income Cost
Main Business 161,971,986.03 119,608,864.69 22,930,783.21 17,955,581.70
Other Business 22,840,519.23 5,821,241.27 23,455,012.88 6,040,735.79
Total 184,812,505.26 125,430,105.96 46,385,796.09 23,996,317.49
17.5 Investment income
Item Reporting period Same period of the previous year
Long-term equity investment measured at cost method
Long-term equity investment measured at equity method
Investment income from disposal of long-term equity investments
Investment income from holding of financial assets measured at fair
value through current profit and loss
Investment income from disposal of financial assets measured at fair
26,338.67 9,509.24
value through current profit and loss
Investment income from holding of available-for-sale financial assets
Investment income from holding of available-for-sale financial assets 11,889,784.50 1,001,400.43
Investment income from disposal of available-for-sale financial assets
Gains from re-measurement of residual equity at fair value after the loss
of control right
Others 6,935,894.29 5,096,060.26
Total 18,852,017.46 6,106,969.93
18. Supplementary information
18.1 Extraordinary profit or loss for current period
Item Amount Note
Profits or losses from disposal of non-current assets -571,141.92
Tax returns, deduction and exemption approved beyond the authority or without official approval
documents
Government grants included in current profits and losses (except for government grants closely related
2,636,373.56
to the enterprise business, obtained by quota or quantity at unified state standards)
Payment for use of state funds received from non-financial institutions recorded in current profits and
losses
Gains from the difference between the investment costs of acquisition of subsidiaries, associates and
joint ventures and share in the net fair value of the identifiable assets of the investee when investing
Gains or losses from non-monetary asset exchange
Gains or losses from entrusting the investments or management of asset
Impairment provision for force majeure such as natural calamities
Gains or losses from debt restructuring
Restructure expenses, such as the compensation for employee relocation and integration costs
Gains or losses from transactions with obvious unfair transaction price
Year-to-date net profits or losses of subsidiaries arising from business combinations under common
control
Profits or losses arising from contingencies not related to the company’s normal business
Except for effective hedging business related to the normal business of the company, profits or losses
from fair value changes in held-for-trading financial assets and held-for-trading financial liabilities, and
7,286,382.96
investment income from disposal of held-for-trading financial assets, held-for-trading financial
liabilities and available-for-sale financial assets
Reversal of the impairment provision for receivables subject to separate impairment test
Profits or losses from entrusted loans
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Item Amount Note
Profits or losses from fair value changes in investment property subsequently calculated with the fair
value mode
Impacts of one-time adjusting the current profits or losses in accordance with requirements of tax and
accounting laws and regulations on the current profits and losses
Custodian income from entrusted management
Other non-operating income and expenditure except for the above items 2,380,381.79
Other profits or losses which can be deemed as non-recurring profits or losses
Income tax effects -164,684.49
Minority interest effects -776,580.59
Total 10,790,731.31
18.2 Return on equity and earnings per share
Earnings per share
Weighted average return on equity
Profit in Report Period Basic earnings Diluted earnings
(%)
per share per share
Net profit attributable to common shareholders of the company 4.5625 0.1826 0.1826
Net profit attributable to common shareholders of the company
4.0710 0.1629 0.1629
after deducting non-recurring gains and losses
18.3 Differences in accounting data under domestic and overseas accounting standards
Not applicable.
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Chapter 11 Documents for Reference
Fiancial statements signed and sealed by the chairman of the Company, the principal in charge of
accounting and the Chief of Accounting Affairs.
Documents for reference
The oringinals of all the Company’s documents and announcements publicly disclosed on the website
designated by China Securities Regulatory Commission in the report period.
Shang Gong Group Co., Ltd.
Chairman of Board of Directors: Zhang Min
29th August 2018
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