方大集团股份有限公司
CHINA FANGDA GROUP CO., LTD.
Annual Report 2010
Table of Contents
I. Company Profile .......................................................................................................................... 2
II. Financial Highlight .................................................................................................................... 3
III. Particulars About the Capital Share and Shareholders ....................................................... 6
IV. Particulars about the Directors, Supervisors, Senior Management and Employees ........ 10
V. Administrative Structure......................................................................................................... 13
VI. Particulars about the Shareholders’ Meeting ...................................................................... 16
VII. Report of the Board of Directors ......................................................................................... 17
VIII. Report of the Supervisory Committee ............................................................................... 29
IX. Significant Events ................................................................................................................... 30
X. Financial Report ....................................................................................................................... 35
XI. Documents For Reference ................................................................................................... 35
Important Prompt
The Board of Directors and the directors of the Company guarantee that there are no significant
omissions, fictitious or misleading statements carried in the Report and we will accept individual
and joint responsibilities for the truthfulness, accuracy and completeness of the Report.
This report has been examined and passed by the 28th meeting of the 5th Board of Directors. All of
the 7 directors presented the meeting personally.
This report is prepared both in English and Chinese. When there is any conflict in interpreting, the
Chinese version shall prevail.
Mr. Xiong Jianming, the Chairman, and Mr. Lin Kebing, the Financial Principal hereby declares
that: The financial statements carried in this annual report are of authentic and complete.
I. Company Profile
1. Legal Name of the Company in Chinese and English
In Chinese: 方大集团股份有限公司 （abbreviation：方大集团）
In English: CHINA FANGDA GROUP CO., LTD. （abbreviation：CFGC ）
2. Legal Representative: Mr. Xiong Jianming
3. Secretary of the Board: Mr. Zhou Zhigang
Securities affair liaison: Ms. Wang Shuiying
Address: Fangda Town, Xili Longjing, Nanshan District, Shenzhen, PRC
Post code: 518055
Tel: 86(755) 26788571 ext. 6622
Fax: 86(755) 26788353
Email: zqb@fangda.com
4. Registered Address of the Company:
Fangda Building, Kejinan 12th Avenue, High-tech Zone, Shenzhen, PR China.
Post code: 518057
Head office: Technology Building, Fangda Town, Xili Longjing, Nanshan District, Shenzhen,
PRC
Post code: 518055
Website: http://www.fangda.com
Email: fd@fangda.com
5. Official Medias of Information Disclosure
China Securities Journal, Security Times, Shanghai Securities Daily, Hong Kong Commercial
Daily
Place where Annual Reports are available: Secretary Office of the Board of Directors.
Website assigned by China Securities Regulatory Commission for the disclosing of Annual
Report:
http://www.cninfo.com.cn
6. Abbreviations and Codes of the Stock and the Stock Exchange Where Listed
A Stock: Fangda Group 000055 Shenzhen Stock Exchange
B Stock: Fangda B 200055 Shenzhen Stock Exchange
7. Miscellaneous Information of the Company
Initial registration date and place: December 13th, 1995, Shenzhen Bureau of Industry &
Commerce Administration
Business license number: 440301501124785
Tax registration number: No.440305192448589
Organization code: 19244858-9
Public accountants invited by the Company:
Ascenda Certified Public Accountants
Office address: A-12/F, Global Trade Center, 36 Beishanhuan Rd. East, Dongcheng District,
Beijing
II. Financial Highlight
1. Major Accounting Data of Year 2010 (in RMB Yuan)
Items Amount
Operation profit 49,637,958.64
Total profit 67,655,340.40
Net profit attributable to the shareholders of the listed company 55,063,374.25
Net profit attributable to the owners of the PLC after deducting of non-recurring
25,603,881.05
gains/losses
Cash flow generated by business operation, net -31,187,262.97
Note: Non-recurring gains amounted to RMB29,459,493.20, details are as the followings:
In RMB
Non-recurring gain and loss items Amount
Gain/loss of non-current assets 7,068,397.05
Government subsidies accounted into current gain/loss account, other than those
closely related to the Company’s common business, comply with the national 5,537,950.00
policy and continues to enjoy at certain fixed rate or amount.
Gain/loss from debt reorganization -434,040.66
Enterprise reorganizing expenses, such as employee placement fee and
-1,273,987.08
integration fee
Gain/loss from change of fair value of transactional asset and liabilities, and
investment gains from disposal of transactional financial assets and liabilities
3,176,516.97
and sellable financial assets, other than valid period value instruments related to
the Company’s common businesses
Gain/loss from change of fair value of investment property measured at fair
13,921,217.90
value in follow-up measurement
Other non-business income and expenditures other than the above 5,845,075.37
Influenced amount of minority shareholders’ equity -93,798.81
Influenced amount of income tax -4,287,837.54
Total 29,459,493.20
2. Influences of adjustment on net profit and net asset according to IAS
In RMB
Net profit attributable to the Owners’ equity to shareholders of the
shareholders of the listed company listed company
Amount of last
Current term End of term Beginning of term
term
On IAS 55,063,374.25 44,052,511.46 1,014,754,137.31 628,058,991.81
On domestic accounting
55,063,374.25 44,052,511.46 1,009,990,739.07 623,295,593.57
standard
Individual and total of adjustment according to IAS
Capitalizing of borrowing
0.00 0.00 4,763,398.24 4,763,398.24
expenses
Total of differences between
the IAS and domestic 0.00 0.00 4,763,398.24 4,763,398.24
accounting standard
Statement on differences The different of owners’ equity attributable to the listed company on IAS was
between the IAS and Chinese mainly the part of interest capitalized in years previous to application of the
Accounting Standard new accounting standard on January 1, 2007.
3. Major financial data and accounting indices for latest 3 years In RMB
Increase/decrease
2010 2009 Year 2008
(%)
Turnover (yuan) 1,161,933,356.48 912,979,118.31 27.27% 784,720,562.64
Gross profit (RMB) 67,655,340.40 45,108,302.29 49.98% 16,312,073.26
Net profit attributable to
shareholders of the listed company 55,063,374.25 44,052,511.46 24.99% 23,260,881.91
(yuan)
Net profit attributable to the
shareholders of the listed company
25,603,881.05 21,304,916.08 20.18% 2,391,027.81
and after deducting of
non-recurring gain/loss(RMB)
Net Cash flow generated by
-31,187,262.97 46,698,915.92 -166.78% 23,093,735.18
business operation (RMB)
Increase/decrease
End of 2010 End of 2009 End of 2008
(%)
Gross Assets (RMB) 1,991,161,158.84 1,482,814,012.11 34.28% 1,395,570,931.42
Owners’ equity attributable to the
shareholders of the listed company 1,009,990,739.07 623,295,593.57 62.04% 559,715,901.95
(yuan)
Capital shares (shares) 504,606,604.00 426,786,359.00 18.23% 426,786,359.00
4. According to the document “Information Disclosure Criteria No. 9 for PLCs”
(Revised 2010) issued by China Securities Regulatory Commission, the Company
calculates net income on asset ratio, basic earnings per share, and diluted
earnings per share on weighted average basis for year 2010. Details are:
Earnings per share
Weighted
(yuan/share)
average net
Diluted
income/asset
Basic earnings earnings per
ratio (%)
Items per share share
Net profit attributable to common shareholders of
6.76% 0.11 0.05
the Company
Net profit attributable to the common owners of
the PLC after deducting of non-recurring 3.14% 0.11 0.05
gains/losses
5. Change of owners’ equity in 2010 (shares, RMB yuan)
Total of equity attributable
Surplus
Items Share capital Capital reserves Retained profit to the owners of the parent
reserves
co.
Beginning
426,786,359 80,622,488.67 13,360,180.84 102,526,565.06 623,295,593.57
of term
Increased
77,820,245 288,641,671.73 4,474,797.13 55,063,374.25 426,000,088.11
this term
Decreased
- 34,830,145.48 - 4,474,797.13 39,304,942.61
this term
End of
504,606,604 334,434,014.92 17,834,977.97 153,115,142.18 1,009,990,739.07
term
Issuing of new
providing of
Cause of shares, Premium of Profit of the
surplus
change transferred share placing year
reserves
from reserves
III. Particulars About the Capital Share and Shareholders
1. Statement of Changes in Shares
In shares
Before the change Changed (+,-) After the change
Transferred
Issuing of Bonus
Amount Proportion from Others Sub-total Amount Proportion
new shares shares
reserves
I. Shares with conditional
65,073 0.02% 47,945,200 4,555 47,949,755 48,014,828 9.52%
subscription
1. State-owned shares
2. State-owned legal
person shares
3. Other domestic shares 0 0 47,945,200 47,945,200 47,945,200 9.50%
Incl. Non-government
domestic legal person 0 0 18,200,000 18,200,000 18,200,000 3.61%
shares
Domestic natural
29,745,200 29,745,200 29,745,200 5.89%
person shares
4. Share held by foreign
investors
Incl. Shares held by
foreign legal persons
Foreign natural
person shares
5. Management shares 65,073 0.02% 4,555 4,555 69,628 0.01%
II. Shares with
unconditional 426,721,286 99.98% 29,870,490 29,870,490 456,591,776 90.48%
subscription
1. Common shares in
217,405,903 50.94% 15,218,413 15,218,413 232,624,316 46.10%
RMB
2. Foreign shares in
209,315,383 49.04% 14,652,077 14,652,077 223,967,460 44.38%
domestic market
3. Foreign shares in
overseas market
4. Others
III. Total of capital shares 426,786,359 100.00% 47,945,200 29,875,045 77,820,245 504,606,604 100.00%
Change of conditional shares
in shares
Conditional Conditional
Name of the Released Increased Date of
shares at shares at end of Reason of condition
shareholder this year this year releasing
beginning of year year
Management shares
48,117 0 with restriction to
Xiong Jianming 3,368 51,485 sale
Management shares
16,956 0 with restriction to
Wang Shengguo 1,187 18,143 sale
Tieling Xinxin
Issuing of new Jul 15
Copper Industry 0 0 11,200,000 11,200,000
shares 2011
Co., Ltd.
Issuing of new Jul 15
0 0
Chen Binblin 10,000,000 10,000,000 shares 2011
Issuing of new Jul 15
0 0
Shi Baozhong 7,000,000 7,000,000 shares 2011
Issuing of new Jul 15
0 0
Zhang Xu 7,000,000 7,000,000 shares 2011
Zhongrong
Issuing of new Jul 15
International Trust 0 0 7,000,000 7,000,000
shares 2011
Co., Ltd.
Issuing of new Jul 15
0 0
Shen Cangqiong 5,745,200 5,745,200 shares 2011
65,073 47,949,755 48,014,828
Total 0 － －
2. Share placing and listing
(1) In the report term, the Company issued privately 47.9452 million A shares to six particular
investors at price of RMB7.30 each. Totally RMB349.99996 million was raised. The shares were
listed on July 15, 2010. The Company hadn’t issued shares in prior three years.
(2) In the report term, common reserve capitalizing plan for year 2009 was implemented: basing
on the total of 426,786,359 capital shares, 0.7 bonus share was given to each 10 shares of the
entire shareholders, namely the capital shares have been increased by 29,875,045 shares. Among
them, 15,222,968 were allotted to A shareholders at 0.7 to 10 basis; 14,652,077 shares were
allotted to B shareholders at 0.7 to 10 basis as well. The capital shares of the Company was
increased up to 456,661,404 shares after completion of this capitalization.
In the report term, the Company issued 47.9452 million A shares privately. Upon completion of
this private issue, the capital shares have increased to 504,606,604 shares including 280,639,145 A
shares and 223,967,459 B shares.
(3) No employees’ shares issued in the Company
3. Shareholders and shareholding status (ended December 31 2010, in shares)
Total of shareholders 63,780 (including 42,319 A-share holders, and 21,461 B-share holders) at the end of report term
Top 10 Shareholders
Name of the Properties of Share Total Conditional
Pledged or frozen
shareholder shareholder proportion % shares shares
Shenzhen Banglin
Domestic
Technologies
non-state-owned 9.09% 0 0
Development Co., 45,849,515
legal person
Ltd.
Domestic
Shenzhen Shilihe
non-state-owned 2.36% 0 0
Investment Co., Ltd. 11,907,328
legal person
Tieling Xinxin Domestic
Copper Industry Co., non-state-owned 2.22% 11,200,000 N/A
11,200,000
Ltd. legal person
Domestic natural
Chen Binblin 1.98% 10,000,000 N/A
person 10,000,000
Hong Kong Onforce
Overseas legal
International Co., 1.63% 0 0
person 8,200,000
Ltd.
Domestic natural
Shi Baozhong 1.39% 7,000,000 N/A
person 7,000,000
Domestic natural
Zhang Xu 1.39% 7,000,000 N/A
person 7,000,000
Zhongrong Domestic
International Trust non-state-owned 1.39% 7,000,000 N/A
7,000,000
Co., Ltd. legal person
Domestic natural
Shen Cangqiong 1.14% 5,745,200 N/A
person 5,745,200
Domestic natural
Li Xiaohua 0.57% 0 N/A
person 2,878,600
Top 10 holders of unconditional shares
Name of the shareholder Unconditional shares Category of shares
Shenzhen Banglin Technologies
45,849,515 A shares
Development Co., Ltd.
Shenzhen Shilihe Investment
11,907,328 A shares
Co., Ltd.
Hong Kong Onforce
8,200,000 B shares
International Co., Ltd.
Li Xiaohua 2,878,600 A shares
Cao Yifan 2,330,010 B shares
Yu Baixiang 1,537,118 B shares
Chen Lihong 1,536,777 B shares
Zhen Fan 1,295,242 B shares
Zhongrong International Trust
1,227,098 A shares
Co., Ltd. – Huian No.6
Xiao Gengning 1,020,086 B shares
Notes to relationship
Among the top 10 shareholders, Banglin and Onforce are parties with action in concert. Banglin and
or “action in
Shilihe are assolicated. As for the other holders of current shares, the Company has not been
concert” among the informed any situation of related parties or action in concert parties.
top ten shareholders.
4. Profile of the controlling shareholder:
Name of the Share Legal Date Registered Business scope
shareholder proportion % representative incorporated capital
Industrial investment,
Shenzhen Banglin developing of electronic
Technologies 2002 RMB30 products, technical
9.09% Chen Jinwu
Development Co., June 7th million consulting, domestic
Ltd. commerce, material
trading
5. The investors of Shenzhen Banglin Technologies Development Co., Ltd.- the
controlling shareholder of the Company are natural persons, in which Mr. Xiong
Jianming, the Chairman of the Company is holding 85% of the shares, thus he’s
the substantial controller of the Company. Mr. Xiong Jianming is a resident of
Peoples’ Republic of China. He has been the Chairman and President of the
Company for the past five years.
6. Neither the controlling shareholder nor the substantial controller of the
Company has changed in the report term.
7. Chart of the controlling relationship between the practical controller and the
Company
98%
Xiong Jianming
85%
Shenzhen Banglin Technologies
Development Co., Ltd. Onforce International Ltd.
0.014%
9.09% 1.63%
China Fangda Group Co.,
Ltd.
8. Other legal person shareholders who are holding over 10% of the shares
In the report term, no legal person shareholders who are holding over 10% of the shares.
9. In the report term, except for those held by the directors, supervisors, and
executives which are frozen according to the law, none of the shares of the
Company was under restriction of sale.
IV. Particulars about the Directors, Supervisors, Senior
Management and Employees
1. Particulars about the Directors, Supervisors, and Senior Management
(1) Profiles
Remuneration
Shares Shares
accepted from
held at the held at Shares Cause of
Names Position Sex Age Job term the company in
beginning the end increased change
report term
of term of term
(RMB0’000)
Capital
Xiong Chairman,
M 53 2008.6.6-2011.6.6 64,156 68,647 4,491 reserves 91.99
Jianming president
capitalized
Director, Capital
Wang
Vice M 53 2008.6.6-2011.6.6 22,608 24,191 1,583 reserves 47.38
Shengguo
president capitalized
Xiong
Director M 42 2008.6.6-2011.6.6 0 0 ----- 40.05
Jianwei
Director,
Zhou
Secretary of M 48 2008.6.6-2011.6.6 0 0 ----- 32.66
Zhigang
the Board
Dong Independent
M 68 2008.6.6-2011.6.6 0 0 ----- 8.00
Likun Director
Guo Independent
M 49 2008.6.6-2011.6.6 0 0 ----- 8.00
Jinlong Director
Shao Independent
F 72 2008.6.6-2011.6.6 0 0 ----- 8.00
Hanqing Director
Host of the
Yu Guoan Supervisory M 51 2008.6.6-2011.6.6 0 0 ----- 22.58
Committee
Song
Supervisor M 49 2008.6.6-2011.6.6 0 0 ----- 3.00
Wenqing
Zhen Hua Supervisor F 51 2008.6.6-2011.6.6 0 0 ----- 29.81
Yang Vice
M 57 2008.6.6-2011.6.6 0 0 ----- 27.26
Xiaozhuan President
Vice
Lin Kebin president and M 33 2008.6.6-2011.6.6 0 0 ----- 31.91
CFO
Total --- --- --- ----- 86,764 92,838 6074 ----- 350.64
Note: The Company hasn’t conducted any share option incentive program. None of the directors,
supervisors and executives is holding share options or conditional shares. None of them is getting
paid from the shareholding parties or other related parties.
(2) Status of directors and supervisors taking positions in shareholding parties
Get remuneration or
Name Name of the shareholder Job taken Job term
not
Xiong Since Mar. 23
Onforce International Ltd. Chairman No
Jianming 2001
Since Oct. 19
Chairman No
Wang Shenzhen Shilihe Investment 2006
Shengguo Co., Ltd. General Since Sept. 29
No
Manager 2003
Shenzhen Shilihe Investment Since Jun 12
Xiong Jianwei Director No
Co., Ltd. 2001
Shenzhen Shilihe Investment Since Oct. 19
Zhou Zhigang Director No
Co., Ltd. 2006
Shenzhen Shilihe Investment Since Oct. 19
Zhen Hua Supervisor No
Co., Ltd. 2006
(3) Working experiences of current directors, supervisors and executives in recent five years
Mr. Xiong Jianming: PHD; senior engineer; part-time professor of Beijing Institute of Civil
Engineering and Architecture and Nanchang University. He was once employed by Jiangxi
Provincial Machinery Design Academe, Administration Bureau of Shekou District of Shenzhen
government, etc. He’s now assuming Chairman of the Board and President of our company,
Deputy to the 10th People’s Congress of Guangdong Province, Deputy to the 3rd People’s
Congress of Shenzhen City, member of Commission of Legislative Affairs, Deputy Director of
China Construction Metal Structure Association, Deputy Director of Shenzhen League of Industry
and Economy, Chief Director of Shenzhen Semiconductor Lighting Industry Commission, and
Honorary Chairman of Shenzhen Nanshan Charity Society.
Mr. Wang Shengguo: Master degree; Visiting Scholar from University of Essen; senior engineer.
He once held such positions as Chief Engineer of Design Institute of the 2nd Heavy Machinery
factory of Machinery Industrial Ministry. Mr. Wang is now assuming Director and Vice President
of our company.
Mr. Xiong Jianwei: MBA. He is now assuming director of our company.
Mr. Zhou Zhigang, bachelor’s degree. Currently director, secretary of Board, and head of
Securities Dept.
Mr. Guo Jinlong, member of China Democratic League, master of economics, certified accountant,
certified tax consultant, deputy professor. He once was project manager and department leader of
Pan-China Shenzhen CPA Ltd., chief of Profession Division, assistant to chief secretary, vice chief
secretary of Shenzhen CPA Association. At present he’s independent director of Shenzhen Tefa
Information Co., Ltd., Shenzhen Agriculture Product Co., Ltd., partner of ShineWing Certified
Public Account, off-campus instructor of Management School of Sun Yat-Sen University, and
independent director of the Company.
Ms. Shao Hanqing, professor, doctorial course instructor. Once she was the Vice Director General
of Shenzhen Bureau of Planning, assistant to the Mayor, Vice Chief Secretary of the City
Government, standing commissioner of city council, PR director, and vice chief secretary of
Shenzhen Political Consultative Conference. At present she’s the vice chief of China Production
Association, chief of Shenzhen Production Association, commissioner of enterprise research
centre of National Economics and Trade Committee, part-time professor of China People’s
University, and independent director of the Company.
Mr. Dong Likun, bachelor’s degree, licensed lawyer. Once he was the head of Shanghai Social
Science Institute International Law Division, dean of Law School of Shenzhen University,
peoples’ delegate of Shanghai, commissioner of Guangdong Political Consultative Conference,
standing commissioner of Shenzhen People’s Congress. At present he’s the professor of Law
School of Shenzhen University, senior researcher of Hong Kong & Macao Institute of National
Government Development Researching Center, and independent director of the Company.
Mr. Yu Guo’an: doctorial degree. Once he’s the deputy professor of Northeast University, general
manager of the technical center of the Company. At present he’s the chief technical officer of the
Company and the convener of the Supervisory Committee.
Mr. Song Wenqing: Bachelor’s degree. Currently the supervisor of the Company.
Ms. Zhen Hua: Bachelor degree. She is now assuming supervisor, Chairwoman of Trade Union,
Director of HR Dept. and Director of President Office of our company.
Mr. Yang Xiaozhuan: Bachelor degree; senior engineer. He once worked for Hubei Provincial
machinery Industry Department and held such positions as managing director of the 2nd Machine
Tool factory of Hubei, and Deputy Manager of Shenzhen Jinxin Investment Co., Ltd. Mr. Yang is
now assuming Vice President of our company several other positions.
Mr. Lin Kebin, bachelor’s degree. At present he’s the Vice President and CFO of the Company.
(4) Particulars about the salaries of the current directors, supervisors and senior
management (tax included)
Through the approval of 2007 Shareholders’ General Meeting, the allowance was RMB80
thousand per year for independent directors of the 5th term Board of Directors, RMB60 thousand
for directors, and RMB30 thousand per year for the supervisors of the 5th term Supervisory
Committee. Through the approval of the 1st meeting of the 5th term Board of Directors, the
payments to senior management were formed by basic salary and floating salary based upon their
achievement.
All of the current directors, supervisors and executives of the Company took remunerations from
the Company and took no remunerations from the shareholding parties. Remunerations of current
directors, supervisors and executives are totaled to RMB3.5062 million.
(5) None of the directors, supervisors and executives has changed in the report term.
2. Particulars about the employees
There are totally 2289 employees currently in the Company, among which, 596 production
employees, 97 sales employees, 135 technical employees, 54 accounting employees, 1145
engineering administrative, and 262 other administrative employees.
Among them, 1727 employees hold intermediate vocational certificate and above, account for
75.44% of total employees.
V. Administrative Structure
1. Company Administration
The Company carried out its business operation strictly following with the Company Law,
Securities Law and relative regulations of China Securities Regulatory Commission and Shenzhen
Stock Exchange. And the administration structure has been further improved without conflict with
the laws and regulations.
1) Particulars about the administration of the Company in the report term:
According to the Company Law, Securities Law, Shenzhen Stock Exchange Share Listing Rules,
Enterprise Accounting System and Enterprise Accounting Standard, the Company has produced
the Shareholders’ Meeting Criteria, Working Regulations of the Board of Directors, Supervisory
Committee Meeting Criteria, President Work Criteria, Independent Director Working Criteria,
Internal Control Criteria, Information Disclosure Criteria, Proceed Administration Regulations,
Accounting Criteria, Internal Auditing Criteria, Manpower Management Regulations, Legal Affair
Administration Rules, and Purchase Regulations. These have composed a mature and effective
internal control system covering all aspects of the business operation including investment
decision-making, related transactions, financial management, R&D management, HRM, executive
management, purchase management, production and sales management and information
disclosure. All of them have been implemented smoothly and there isn’t any major defect or
fraudulent practices in executing of the internal control system. The internal control system was
designed under principles of scientific, rational, and standardization, and with reference to the
Company’s practical business operations.
2) Establishing and operation of internal financial controlling system
The Company has established independent accounting structure and deployed reasonable jobs and
responsibilities. Professional accounting personnel were employed to ensure smooth operation of
the system.
The Company has established the “Accounting Regulations”, “Accounting Seal Regulations”,
“Cashier Regulations”, “Accounting Calculation Criteria”, “Online Banking Criteria”, “Payment
Authorization Regulations”, “Financial Documentation Criteria”, “Accounting Authorization
Regulations”, “Proceeds Administration Regulations”, “Related Transaction Regulations”, and
“External Investment Regulations”. These have been effectively controlling over the business
operations. The Company has also established clear and effective accounting documentation,
booking and reporting procedures. All transactions can be recorded timely, accurately, and
completely, to ensure preparing of financial statements is complying with the accounting standard.
Verifications were taken on book value and substantial assets to make sure they are according to
each other. Configuration of accounting positions has ensured frankly and objectively reflection of
financial situations, business performance and cash flow.
No major fault exist in the internal controlling of financial reporting system in the report term.
To exercise the “Fundamental accounting work regulatory inspection in PLCs” (证局发〔2010〕
109 号) issued by Shenzhen Securities Regulatory Office, the Company produced “The operation
plan for fundamental accounting work regulatory inspection” on April 14, 2010. As approved at
the 10th meeting of the 5th term of Board, the special leading team was founded with the
President as the leader. From April 16 to May 21, the Company performed full inspection on the
fundamental accounting works according to the “Questionnaire on Fundamental Accounting
Works” and “Common Problems of Accounting Works in PLCs” provided by Shenzhen Securities
Regulatory Office, and come out with the “Self-investigation report on fundamental accounting
works”. According to the results of self-inspection, the Company performed a number of measures
to improve its accounting works. As of December 31, 2010, all of the problems have been
resolved and come out with the “Self-investigation report on fundamental accounting works”
which was approved by the Auditing Committee and the Board of Directors.
3) In the report term, the Company was fully executing the circulars issued by China Securities
Regulatory Commission and National Government State-owned Asset Administrative Commission,
namely “Circular about capital transaction and providing of external guarantees by listed
companies” [Zheng-Jian-Fa (2003)56], and “Circular about collectively resolve the problems
regard capital adoption and illegal guarantees of listed companies” [Zheng-Jian-Fa (2005)37. No
capital of the Company was adopted by the holding shareholder or providing guarantees to
external parties. The Company has been improving its business operation and preventing risks to
guard the benefits of the Company and the shareholders.
4) In the report term, the Company has convened and held the Shareholders’ Meetings strictly
according to the regulations and ensure the shareholders are able to execute their legal rights.
5) In the report term, the Board of Directors and the Supervisory Committee have been executing
their duties strictly according to the law and regulations. Convening and holding of the board
meetings and the Supervisory Committee meetings were carried out with the legal procedures.
Both of the Board and the Committee have been executing their duties diligently, and defending
the legal interests of the Company and the whole shareholders. The Company had never provided
the main shareholder or the substantial controller of the Company any unreleased information in
the year of 2010.
6) Summary of the administrative improvement operation
In the report term, according to the “Circular about the administrative improvement operation in
PLCs” issued by China Securities Regulatory Commission, the Company has accomplished all of
the reforming processes before June 2008. No retained problems to be handled in the report term.
7) No trade competition or related transactions occurred due to company reconstruction in the
report term.
2. Performance of the Independent Directors
There are totally 3 independent directors of the Company, which exceeds 1/3 of the total number
of directors. During the report term, the independent directors were performing their duties
earnestly and independently, and exactly according with the terms of the “Article of Association”,
“Rules of the Board of Directors”, and “Rules for the Independent Directors”. They issued
independent opinions on significant issues of the Company, and performed consultancy functions
as independent directors should have done.
Independent directors’ presenting of board meetings in the report term:
Name of Times of board Presented Entrusted Absented Note
Independent meetings to personally proxies to
Director present (times) present
(times)
Dong Likun 10 8 2 - Asked for leaving due
business engagement
Guo Jinlong 10 10 0 -
Shao Hanqing 10 10 0 -
The independent directors didn’t raise any demurral on the proposals adopted by the Board of
Directors and Shareholders’ Meeting, not other events of the Company during the report term.
3. The Company is completely separated from the controlling shareholder in
aspects of businesses, personnel, assets, organizations, and accounting. The
Company has its own completed businesses and capacity of independent business
operation.
In the aspect of business: the company has its own purchasing, production, sales, and customer
service system which performing independently. There is not any material related transactions
occurred with the controlling shareholders.
In personnel: The labor management, personnel and salary management are operated
independently from the controlling shareholder. The senior managements take salaries from the
Company and none of them takes senior management position in the controlling party.
In assets: The company owns its production, supplementary production system and accessory
equipments independently, and possesses its own industrial properties, non-patent technologies,
and trademark.
In organization: The production and business operation, executive management, and department
setting are completely independent from the controlling shareholder. No situation of combined
office exists. The Company adjusts its organizing structure only for its own practical requirement
of development and management.
In accounting: The company has its own independent accounting and auditing division,
established independent and completed accounting system and management rules, has its own
bank account, and exercise its liability of taxation independently.
4. Assessment and motivation system of the senior management
The Company adopts a salary system for senior management formed by basic salary and floating
salary based upon assessment of their achievement. In accordance with “The detailed assessment
rules of target management for the supervisory and service departments of year 2010” and “The
detailed assessment rules for subsidiaries of year 2010”, the senior management are assessed on
their capability of innovation, basic quality, performance, accomplishment of profit and account
collecting goals. The results of assessment form the foundation of floating salary or penalty.
VI. Particulars about the Shareholders’ Meeting
The Company held 2 shareholders’ meetings in the report term. The followings are the details:
I. Calling of Shareholders’ Annual Meeting 2009
The Company announced the convening of the Shareholders’ Annual Meeting 2009 and the
agendas on February 27, 2010 issues of Securities Times, China Securities Daily, Shanghai
Securities Times and Hong Kong Commercial Daily. The meeting was held in the multi-function
hall at the 1st floor of Fangda Building on March 22, 2010. The resolutions were published on
March 23, 2009 issues of Securities Times, China Securities Daily, Shanghai Securities Times and
Hong Kong Commercial Daily.
II. Calling of the 1st provisional shareholders’ meeting 2010
The Company announced calling of the 1st Provisional Shareholders’ Meeting 2010 and the
agendas on November 24, 2010 issues of Securities Times, China Securities Daily, Shanghai
Securities Times and Hong Kong Commercial Daily. The meeting was held in the multi-function
hall at the 1st floor of Fangda Building on December 10, 2010. The resolutions were published on
August 18, 2009 issues of Securities Times, China Securities Daily, Shanghai Securities Times and
Hong Kong Commercial Daily.
VII. Report of the Board of Directors
1. Business review of the report term
(1) General business situation
In the report term, the Company has been seizing the great opportunities brought by national
policies on energy saving and environmental protection industry, kept exploring the direction of
creative development. As result, the Company’s products in this area have been enhanced. In the
report term, the Company has realized historical business turnover of RMB1.162 billion, an
increase of 27.27% over last year; net profit of RMB55.0634 million, and growth of 24.99% over
last year. New orders were amounted to RMB1.552 billion. As of the end of report term, the
Company has reserved orders up to RMB1.1745 billion, which was 101% of the turnover in 2010,
increased by 24.75% over the beginning of year. These have laid a solid foundation for the
business development in 2011.
(2) Main business operations
Our business include new-type building materials, composite materials, metal wares, metal frames,
environmental equipment and apparatus, fire fighting equipment, optical-mechanical-electrical
integrated products, polymer materials and their products, fine chemical products, mechanical
equipment, optical materials and devices, electronic displayer, audio-visual device, transport
facilities, metro platform screen doors, a variety of HAVC equipment, water supply and drainage
equipment, central air-conditioner and their parts and components, semiconductors and their
components. Integrated circuits, lighting products and equipment, solar-energy products and their
R&D. design, production. construction, sales and after-sales service ,property management,
property leasing and parking-lot service.
1) Sales of curtain wall and materials realized significant growth
In the report term, the Company kept enhance its strategic target in expanding of energy-saving
curtain wall and materials, moving toward the high-end products of environmental protection.
Depending on the core technical advantages, the Company has been consolidating its current
market and exploring the markets in Bohai Seashore Area and Yangtzi River Delta Area. As result,
the Company has achieved great increase in amount of orders.
In the report term, the Company has won in multiple bidding competitions including Shenyang
Xingmo’er, Xi’an Gardening Fair, China Asean (Liuzhou) Industrial Products Trade Center,
Dalian Wanda House, Sanya Phoenix Island, and Shenzhen Jianli Construction, amounted to
RMB1.1759 billion, both production volume and sales volume have reached the highest record of
the Company. Sales income of curtain wall products was RMB956.2659 million, a 20.15% of
growth over last year. As of the end of report term, the Company has reserved orders amounted up
to RMB816 million. Along with the rapid growth of the whole industry, curtain wall products will
contribute greater profitability to the Company. In the report term, the Company has received
overseas orders amounted to USD13.046 million.
2) Great effort has been paid on exploring of railroad product market
Following with the development of railroad transportation in developed cities of the country, the
railroad has been helping to pull the economic growth. PSD system is one of the important parts of
metro system. As the leading enterprise in this area of the country, the Company has been further
consolidating its advantages in technologies, reputation, and marketing force. With its own core
technologies, the PSD products of the Company have won in bidding competition for the metro
projects of Xi’an and Dalian.
The PSD project orders have entered the peak period of engineering in the report term. The
projects of Shenyang Metro Line 1, Nanjing Metro Line 1, Shenzhen Metro Line 1 extension,
Shenzhen Metro Line 2, and Shenzhen Metro Line 4 were carried forward smoothly. Among them,
the PSD systems of Nanjing Metro Line 1, Shenzhen Metro Line 2, and Shenyang Metro Line 1
have been completed and put into operation. All of them were working well and received high
comments and multiple awards from the owners. In the report term, the sales income of railroad
products was RMB150.9017 million, a 106.62% of increase over last year. The Company was
holding both leading places in technologies and market competition, and will realize rapid growth
along with the development of domestic municipal railroad transportation.
The Company set its foot in the area of railroad products manufacturing since 1999, and has been
the earliest enterprise in this area. Great investments have been made in term of manpower, capital,
and assets. After years of development, the Company is now holding the core technologies of PSD
system, among them are 197 patents, including 45 invention patents, count for over half of this
area in the whole country, and 4 copyright patents. Meanwhile the Company thinks highly
protection of intelligence properties. In the report term, the Company sued to Guangzhou Middle
Court against Panasonic Electronics (China) Co., Ltd. for its illegal adoption of two patent
technologies. And claiming for terminating of the illegal adoption and RMB10 million of
compensation.
3) Accelerate the development of LED industry
In the report term, to further improve the industrial chain and expanding of LED production, the
Company has completed the construction of production base of Shenyang Fangda Semiconductor
Lighting Co., Ltd. Shifting of the semiconductor lighting industry from Shenzhen to Shenyang has
been accomplished. Up to then, the Company has formed a completed industrial chain covering
external products, chips, encapsulation, mounting products and engineering projects. The whole
chain has been put into operation and achieved great productivity and quality. This is the brand
new start point of the Company in the semiconductor lighting industry. As one of the newest fruit,
the high-power-low-attenuation LED products has been the leading technologies in the area,
which means greatly in increasing the quality of the chips, LED, and engineering lighting projects.
4) Successful private offering of new A shares
The Company’s development capability in energy-saving curtain wall and PSD was enhanced
continuously, which lead to great increasing of orders and market share. However the conflict
between productivity and increasing orders was becoming more severe. To solve the problem, the
Company successfully issued 47.9452 million A shares to particular subscribers privately and
raised RMB349.99996 million of proceed, which will be used to enlarge the productivities of
energy-saving curtain wall and PSD.
5) In the report term, the Company has won multiple awards including the “Top 100 enterprise of
Shenzhen”, “The top 100 competitors of PLCs”, “The top 500 construction material
manufacturers”, “The top 100 manufacturers of Guangdong 2010”, “Demonstrative Enterprises of
Guangdong”, and “Best enterprise in manpower legislation 2010”. Fangda Decoration – one of the
fully-owned subsidiaries of the Company, was certified national high-tech enterprise. Up to then,
all of the subsidiaries of the Company have been certified national high-tech enterprises. Multiple
high-end products of Fangda New Material (Jiangxi) Co., Ltd. have been certified for Green
Construction Product. The new inpatient building of Hubei Hospital of Cancer, to which Fangda
New Materials (Jiangxi) Co., Ltd. provided internal and external decoration aluminum sheet, has
won Luban Award, the highest award of the country in architecture.
6) Undertaking social responsibilities
Along with the prosperity of industrial development, the Company has been undertaking social
responsibilities. In the report term, the Company has paid RMB59.03 million of taxes, which was
a 15% of increase over last year, made donation of RMB200 thousand to Yushu Qinghai – the
county attacked by major earthquake this year. Meanwhile ,the Company has been think highly the
legal rights of the employees according to the Law of Labor.
Products taking over 10% of the turnover or gross profit are curtain wall and railroad products. In
the report term, the Company has overcome the major influences brought by financial crisis and
macro adjustment of the country, none of them has made major impact on the Company’s financial
situation and business operation, so in the predictable future. The Company made no prediction or
commitment on the profitability of future.
During the report period, the distribution of major business turnover and profit in term of
industries, product categories, and territories were as follows:
In RMB0’000
Segments on industries
Change of
On industry or Operation Gross profit Change of cost Gross profit ration
Turnover income over last
product cost ratio (%) over last year % increased/decreased
year %
Metal
95,626.59 79,557.49 16.80% 20.15% 21.19% -0.71%
production
Railroad
15,090.17 12,941.96 14.24% 106.62% 113.92% -2.92%
industry
Segments on products
Glass wall
76,351.68 63,922.94 16.28% 18.04% 17.58% 0.33%
products
Aluminum
19,274.91 15,634.55 18.89% 29.33% 38.61% -5.43%
products
Railroad
15,090.17 12,941.96 14.24% 106.62% 113.92% -2.92%
products
Regions Turnover Change of income over last year %
Domestic 106,108.10 31.05%
Overseas 5,455.46 -19.38%
Total 111,563.56 27.16%
We purchased from the top 5 suppliers at the amount of RMB196.4414 million, which is 22.67%
of the yearly purchase total amount; we got the total sales of RMB364.6674 million accounts for
31.39% in the main business income.
(3) Capital structure in the report term
At the end of report term, the Company has total assets of RMB1.99116 billion, including
RMB396.67 million of receivable account takes 19.92% of the total assets, RMB280.29 million of
inventory account for 14.08% of total assets, investment property of RMB271.23 million account
for 13.62%, fixed asset of RMB240.55 million account for 12.08% of total asset, construction in
process of RMB56.76 million account for 2.85% of total asset, and short-term borrowings of
RMB397 million account for 19.94% of total asset. No long-term borrowings.
In the report term, the Company uses fair value in accounting of investment properties, sellable
financial assets, and hedging contracts. Recognition of investment property fair value was on the
“Property Evaluation Report” 深同诚评字（2011A）01YQC 第 002 号 issued by Shenzhen
Tongzhicheng Property Real Estate Consulting Co., Ltd. Recognition of sellable financial assets
was on closing quotation at the end of report term, and calculated according to the “Formula of
Fair Value of Shares with Definite Locking Period and Issued Privately”. Hedging contracts are
measured at settlement price at end of report term.
In the report term, the operational expenses and administration expenses has increased by 34.5%
and 37.46% respectively, which was caused by increasing of manpower and expanding of Fangda
Decoration, and founding of branches in Beijing and Shanghai. Financial expenses has not
changed significantly. Income tax expenses has increased by 137%, which was caused by (1)
increasing of profit; (2) fluctuation of investment property fair value.
(4) Composition of cash flow in the report term
In the report term, the net cash flow from business operation was RMB-31.1873 million, which
was caused by increasing of purchase orders, prepayment for materials and overdue of some
project payments. Net cash flow from investment was RMB-54.0975 million, which was caused
by purchasing of land using right in Dongguan and investment on construction of production base
in Shenyang. Net cash flow from financing was RMB343.4309 million, which was caused by
private issuing of A shares.
(5) The business status and performance analysis of the major subsidiaries of our company.
& joint-stock companies.
By December 31,2010, we wholly own 7 subsidiary enterprises, they are Shenzhen Fangda
Decoration Engineering Co., Ltd, Jiangxi Fangda New-type Aluminum Co., Ltd., Shenzhen
Fangda Yide New Material Co., Ltd., Jiangxi Fangda Aluminum Industry Co., Ltd., Hong Kong
Junjia Groups Co, Ltd., Dongguan Fangda New Materials Co., Ltd., and a holding subsidiary, that
is Shenyang Fangda semiconductor lighting Co,. Ltd.
Shenzhen Fangda Decoration Engineering Co. Ltd is one of the largest manufacturers in curtain
walls which is specialized in the design, manufacture and installation of curtain walls and indoor
& outdoor windows and doors, also specialized in the design and manufacture of furniture.
Shenzhen Fangda Automation Systems Co., Ltd is the 1st in the country and 3rd in the world
manufacturer specialized in the development, manufacture and installation of platform screen
doors.
Fangda New Materials (Jiangxi) Co,. Ltd and Shenzhen Fangda Yidexin new material Co., Ltd are
specialized in the manufacture and sales of aluminum sheet, clad aluminum and other new-type
building materials, which is the largest in the country.
Shenyang Fangda semiconductor lighting Co,. Ltd is specialized in the R&D, manufacture and
sales of GAN-based integrated circuit and their parts and components which are the middle or
finished products.
Dongguan Fangda New Materials Co., Ltd. is mainly engaged in designing, manufacturing, and
installation of multiple types of curtain walls, glass walls, doors and windows, fences, and interior
roof; power supply and air-conditioning system designing and installation. At present the company
is under construction.
(6) Particulars about the special projects under the Company’s control
There is no such special projects.
2. Prospectus and business plan for 2011
In year 2011, the Company will carry on the steady growth achieved in 2010 by further expanding
technical innovation, enhance curtain wall business and aluminum material business. The leading
position of PSD business will be consolidated and extend to overseas market. The Company will
do its best to keep it at the high-end of LED industry and concentrate on combination of LED
engineering and curtain wall engineering. Meanwhile the Company will further improve its
management system and increase business efficiency.
In year 2011, the Company will further consolidate its advantages in market reputation and
marketing force. Construction of production bases in Dongguan and Nanchang will be accelerated
to support rapid growth of the Company’s productivity. Issuing of short-term bonds will be pushed
forward to satisfy the needs of current capital and lower financial costs. The internal controlling
system will be enhanced to catch up with the development of securities market. An incentive
manpower management system will be established to let the employees progress along with the
Company. Intelligent property protection will be further enhanced. The IT system will be further
improved to support high efficiency management. A better enterprise culture will let the
employees more fit into the enterprise.
Capital needs and application plan
The capital demand for production expanding projects of energy-saving curtain wall and PV
curtain wall and PSD products will be RMB190 million. The Company still need RMB400 million
to satisfy the need of working capital, which was planned to be supported by bank loans.
3. Investment in the report term
(1) Application of fund raised
Application of Proceeds from Share Placing
In RMB Yuan
Total of proceeds 33,658.69 Total of proceeds invested this year 2,571.17
Total of proceeds changed to other use in the report term 0.00
Accumulated proceeds changed to other use 0.00 Total of proceeds invested 2,571.17
% of accumulated proceeds changed to other use 0.00%
If investment Investment Date when
Total of Total Accumulated progress at end
Project promised to be project changed the project Profit Major
proceeds to investment Invested investment at of report Gains as
invested by the (including become realized change in
be invested after this year end of report expected?
proceeds partially term(%)(3)＝ useable as this year feasibility?
as proposed adjustment term (2)
change) (2)/(1) proposed
Project set by the
prospectus
Energy-saving curtain
wall and PV curtain
No 21,000.00 21,000.00 2,200.73 2,200.73 10.48% Dec 31 2011 0.00 Yes No
wall production
expanding project
Expanding of PSD
No 12,658.69 12,658.69 370.44 370.44 2.93% Dec 31 2011 0.00 Yes No
project
Subtotal of investment
- 33,658.69 33,658.69 2,571.17 2,571.17 - - 0.00 - -
promised
Investment project of
premium surplus
Not
Not applicable No 0.00 0.00 0.00 0.00 0.00% 0.00 No
applicable
Repaying of bank
- - - - -
loans (if any)
Used as current capital
- - - - -
(if any)
Subtotal of premium
- 0.00 0.00 0.00 0.00 - - 0.00 - -
proceeds
Total - 33,658.69 33,658.69 2,571.17 2,571.17 - - 0.00 - -
Reason or situation
that not on schedule None
(on specific project)
Statement on major
None
change in feasibility
Amount, usage and
progress of premium Not applicable
surplus
Applicable
Change of location of
According to the needs of business development, and approved by the 24th meeting of the 5th term of Board, the location of energy saving
project to invest
curtain wall and PV wall project was changed from Nanchang to Dongguan Guangdong.
Adjustment on
implementation of Not applicable
project invested
Applicable
Pre-investment and On September 30, 2010, it was decided to use the raised capital to replace RMB4,347,753.09 of investment made previously by Fangda
replacement by
Automatic (1,403,503.00) and Fangda Decoration (4,347,753.09). This has been verified by CPA with report 天健正信审（2010）专字第
proceeds
020722 号.
Applicable
Idle proceed used as
Since Sept. 28, 2010, the Company decided to use RMB30 million of proceeds to support working capital. On September 30, 2010, RMB20
working capital
million was paid to Fangda Decoration, and RMB10 million to Fangda Automatic. Both were not over six months.
Surplus of investment
Not applicable
and causation
Application plan of
retained fund from Will be used in production expanding of energy-saving curtain wall and PSD project.
financing
Problem or situation
in using of proceeds None
and disclosing
(2) Non- raising -fund investment
Shenyang Fangda Semiconductor Lighting Co., Ltd. was founded by the Company and Shenyang
Hunan New Area State-asset Administration Co., Ltd. At present the company has been partially put
into production. And investment of RMB62.63 million has been input.
On November 12, 2010, one of the subsidiaries of the Company won in bidding competition for the
using right of land located in Dongguan Songshanhu North Industrial Town (宗地编号 2010T107 号)
with RMB40.01 million. This land will be used to construct production base of the Company.
4. Change in accounting policies, accounting estimations, or the correction of the
previous important mistakes
None of change in accounting policies, accounting estimations, or the correction of the previous
important mistakes occurred in the report term.
5. Disclosing of internal controlling system related to measuring of fair value, and
relative information
On April 17, 2009, the Company produced “Internal controlling system on measuring of fair value”,
which was aiming to regular the recognition basis and process in measuring of fair value of
investment properties, shares of other PLCs, and so others.
Subjects related to measuring of fair value: In RMB Yuan
Accumulative Impairment
Gain/loss from
change in fair value provisions Amount at end
Items Initial amount change of fair
accounted into provided in the of term
value in the term
equities current term
Financial assets:
Incld. 1. Financial assets
accounted at fair value
and changes accounted
into current gain/loss
account
Incld: Derivate
financial assets
2. Sellable financial
7,520,445.42 -3,173,445.42 4,347,000.00
assets
Subtotal of financial
7,520,445.42 -3,173,445.42 0.00 4,347,000.00
assets
Financial liabilities
Investment properties 259,497,678.80 13,921,217.90 271,226,332.73
Production physical
assets
Others
Total 270,333,199.22 10,606,142.90 -3,173,445.42 275,573,332.73
6. Foreign currency financial assets in possession
At end of report term, the Company was holding RMB31,195,215.28 of receivable account in foreign
currency.
7. Influence on profitability by the changes in the financial instruments for
measuring fair value and the changes in the fair value of investment property:
In the report term, change of fair value of investment property has increased the profit by
RMB10,591,618.604, change of sellable financial assets and hedging contracts in fair values made no
impact on the profit.
8 Ascenda (Beijing)Certified Public accountants audited the Financial Report of
20109 year and issued the standard audit report without classified opinions.
9. Routine works of the Board
(1) Board meetings and resolutions
1) The 13th meeting of the 5th term of Board was held on January 12, 2010 by telecommunication.
The resolutions were published by Securities Times, China Securities Journal, Shanghai Securities
Daily and Hong Kong Commercial Daily dated January 19, 2010.
2) The 14th meeting of the 5th term of Board of Directors was held in the afternoon of February 10,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by February 12, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
3) The 15th meeting of the 5th term of Board of Directors was held in the afternoon of February 25,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by February 27, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
4) The 16th meeting of the 5th term of Board of Directors was held in the morning of March 19, 2010
in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were published
by March 20, 2010 issues of Securities Times, China Securities Journal, Shanghai Securities Daily and
Hong Kong Commercial Daily.
5) The 17th meeting of the 5th term of Board of Directors was held in the afternoon of April 22, 2010
in the meeting room on the 5th floor of Fanda Technologies Building. The 1st Quarterly Report 2010
was examined and passed at the meeting.
6) The 18th meeting of the 5th term of Board of Directors was held on May 17, 2010 by
telecommunication voting. The “Self-investigation Report on Fundamental Accounting Works” was
examined and adopted.
7) The 19th meeting of the 5th term of Board was held on June 28, 2010 by telecommunication. The
resolutions adopted were: (1) The proposal to setup special bank accounts in China Construction
Bank OCT branch and CITIC Bank Jinshan Branch for proceeds from share issuing. (2) The proposal
on engaging of “The 3rd party supervisory agreement on proceeds from private issuing of A shares”
with above banks and Zhongshan Securities Co., Ltd.- the sponsor of share placing.
8) The 20th meeting of the 5th term of Board of Directors was held in the afternoon of August 5, 2010
in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were published
by August 10, 2010 issues of Securities Times, China Securities Journal, Shanghai Securities Daily
and Hong Kong Commercial Daily.
9) The 21th meeting of the 5th term of Board of Directors was held in the afternoon of August 17,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by August 19, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
10) The 22nd meeting of the 5th term of Board was held on September 17, 2010 by
telecommunication. The resolutions were published by Securities Times, China Securities Journal,
Shanghai Securities Daily and Hong Kong Commercial Daily dated September 29, 2010.
11) The 23rd meeting of the 5th term of Board of Directors was held in the afternoon of October 21,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by October 23, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
12) The 24th meeting of the 5th term of Board of Directors was held in the afternoon of November 22,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by November 24, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
13) The 25th meeting of the 5th term of Board of Directors was held in the afternoon of December 23,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by December 25, 2010 issues of Securities Times, China Securities Journal, Shanghai
Securities Daily and Hong Kong Commercial Daily.
14) The 26th meeting of the 5th term of Board of Directors was held in the afternoon of December 29,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The “Improving plan on
problems discovered by Shenzhen Securities Regulatory Office” was adopted at the meeting.
(2) Executing of the resolutions of Shareholders’ General Meeting by the Board of Directors
As authorized by the Shareholders’ General Meeting, the following jobs have been done:
1) The private placing of A shares was accomplished;
2) The capitalizing of capital reserves for year 2009 was accomplished;
3) The proposal of relocating the energy-saving curtain wall and PV curtain wall expanding project
and adding of new operation entity was accomplished;
4) To sign the contract about applying for general credit limits and credit guarantee with the bank;
(3) General report on the performance of the audit committee that subordinate to the board of
directors
Auditing Committee established under the Board performs auditing works of the Company, supervise
execution of internal controlling system, obtain financial information and business operation in
accordance with the “Rules of Auditing Committee” established by the Company.
According to the requirement of document 深证局发【2010】109 号文 issued by Shenzhen Securities
Regulatory Office, the Company has produced working plan for first stage (self-inspection stage),
self-inspection report, and improving report for the 2nd stage (improving stage).
Auditing Committee sent two letters, since the date of annual report had been decided, to discus and
decide the timetable with the CPA. The Committee examined the financial statements prepared by the
Company before the CPA, and provided written opinions on the business operation reflected in the
financial statement. In the auditing process, the Committee keeps communicate with the CPA, and sent
another letter to make sure the Auditing Report will be provided on schedule. The Committee
examined the Financial Statement again after the CPA provided primary opinions, listened to the
report on major problems discovered in the auditing process, and basically accepted the opinions.
Upon providing of final opinion by the CPA, the Auditing Committee submitted to the Board the
voting result on the Financial Statement and the Report on Auditing Process by the CPA of the Year,
accepted the Financial Statement 2010, and deems that the CPA has fulfilled the missions entrusted by
the Company and auditing works on the Financial Statement 2010. The Committee recommend the
Board and the Shareholders’ Annual Meeting to extend the service of Ascenda Certified Public
Accountants to the year 2011.
(4) General report of the Development Strategy Committee
The Development Strategy Committee provided opinions on the business target and plan of year 2010,
and performed inspection on the business operation of the year. The Committee deems that the
Company has basically achieved the target of 2010 set previously, and laid a good foundation for
future development.
The business plan and target set by the executives of the Company are to the consent of the
Development Strategy Committee. They are deemed as ensuring the health growth of the Company.
(5) Report of the Remuneration and Assessment Committee
Basing on the “Rules of Remuneration and Assessment Committee”, the Remuneration and
Assessment Committee subordinate to the Board had listened to the company’s main financial index
and the performance of the operation objectiveness in 2010 and also find out director, senior
executives performance. They think director and senior executive industrious, fulfill their duty well
and in aid of the achievement of company’ operation objectiveness. The wage information disclosed in
2010 Annual Report are complying with the salary scheme.
10. Dividend distribution plan or capitalizing of common reserves
According to the Auditors’ Report issued by Ascenda Certified Public Accountants, the Company has
realized net profit attributable to the owners of the parent company of RMB55,063,374.25 in year
2010. As of the end of report term, the consolidated retained profit attributable to the parent company
was RMB153,115,142.18. The parent company has realized the net profit of RMB44,747,971.25,
surplus reserves was provided at RMB4,474,797.13, and the retained profit at the end of report term
was RMB170,506,646.52. No profit distribution will be carried out for 2010 and all of the profits will
be reserved for business expanding in 2011.
The Company plans to capitalize the capital common reserves to the whole shareholders. As of
December 31st 2010, the balance of capital reserves was audited to RMB295,033,359.54 and surplus
reserves was RMB17,834,977.97. While RMB252,303,302 of capital reserves will be capitalized to
capital shares. On the base of total capital shares amounted 504,606,604, 5 new shares will be added
upon each 10 shares. Namely 5 new shares to each 10 A-shares, totally 140,319,572 shares are about
to be added; and 5 new shares to each 10 B-shares, totally 111,983,730 are about to be added. The
capital shares of the Company will become 756,909,906 after the capitalization.
This profit distribution plan is subject to approval of the Shareholders’ Annual Meeting 2010.
Dividend distribution of the latest three years
In RMB Yuan
Percentage in net profit
Net profit attributable to the
Cash dividend (tax attributable to owners of the Distributable profit of
owners of the PLC in the
included) PLC in the consolidated the year
consolidated statement
statement
2009 0 44,052,511.46 0 57,181,879.02
Year 2008 0 23,260,881.91 0 -20,153,902.80
year 2007 0 24,386,023.62 0 -3,393,994.68
Dividend accumulated in the
latest three years over the 0.00%
average annual net profit (%)
No cash dividend proposal was raised though the Company is making profit for the report term.
√ applicable □ not applicable
Reason for making profit but not have any
Plan for the profit not distributed
dividend plan
Reserved all for expanding in 2011 Used for business expanding 2011
11. Statement of the Board on responsibilities on internal control
The Board of Directors thinks that the Company has established mature internal controlling system
with considering of interior environment, risk evaluation, controlling operation, information and
communication, and internal inspection, which have basically covered company management,
financial management, information safety, and administration on subsidiaries. The system has been
working effectively. Thus the Board of Directors deems that no major weakness in designing and
executing of the internal controlling system. However the Board will further improve the operation
flow, enhance training scheme and monitoring on operation of the system.
12. Executing of information insider administration regulations
According to the requirement of Shenzhen Stock Exchange and China Securities Regulatory
Commission Shenzhen Office, the Company has already established “Information insider registration
criteria”, and “External information user regulations”, and executed strictly.
In the report term, the Company has not found any behavior conducted by information insiders such as
illegal trading of the Company’s shares before releasing of major information which may influence the
share prices. No investigation or instruction received from regulatory authorities on this issue.
13. The Company hasn’t changed the official information disclosure presses and the
website in the report term.
VIII. Report of the Supervisory Committee
1. Meetings held in the report term, and the resolutions
(1) The 8h meeting of the 5th term of Supervisory Committee was held in the afternoon of Feb 25,
2010 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were
published by Feb 27 2010 issues of Securities Times, China Securities Daily, Shanghai Securities
Daily and Hong Kong Commercial Daily.
(2) The 9th meeting of the 5th term of Supervisory Committee was held in the morning of April 22,
2010 in the meeting room on the 5th floor of Fanda Technologies Building. The 1st Quarterly Report
2010 was examined and passed at the meeting.
(3) The 10th meeting of the 5th term of Supervisory Committee was held in the afternoon of August
17 2010 in the meeting room on the 5th floor of Fanda Technologies Building. The Interim Report
2010 and the summary were examined at the meeting.
(4) The 11th meeting of the 5th Supervisory Committee was held in the afternoon of October 21, 2010
in the meeting room at the 5th floor of Fangda Technologies Building. The 3rd Quarterly Report 2010
was examined on the meeting.
(5) The 12th meeting of the 4th Supervisory Committee was held in the afternoon of December 29,
2010 in the meeting room at the 5th floor of Fangda Technologies Building. The improving plan on
problems discovered by routine investigation by Shenzhen Securities Regulatory Office..
2. The Supervisory Committee issues the independent opinion on the following
issues:
(1) The Company has already established a mature internal control system and has been improving it
constantly. The procedure of decision-making was in conformity with Company Law and Articles of
Association of the Company. The directors and senior executives had no actions of breaking national
laws and regulations and Articles of Association or damaging the interest of the Company when they
performed their duties.
(2) The Company has found the Information Disclosure System and was implemented strictly
according to the rules.
(3) Ascenda Certified Public Accountants issued standard auditing report without qualified opinion for
the financial report of 2010. The financial report is frankly reflecting the financial situation and
business performance of the Company.
(4) The investment projects were the same with those promised in “Private share placing of A shares
in 2009” at private issuing of A shares.
(5) Asset purchasing or selling were on rational prices, and no under table transactions were conducted.
No operation was done harming the shareholders’ interests or cause losses of the Company’s capital.
(6) All of the related transactions in the report term were related to daily operation of the Company
and made no impairment on the benefit of the Company or shareholders.
3. The Committee examined the Self-assessment Report on Internal Controlling and
held no disagreeing opinion.
IX. Significant Events
1. Significant lawsuit or arbitration issue in the report term
1. On March 31, 2010, the Company sued to the Middle Court of Guangzhou claiming for protection
of the Company’s two patent rights violated by Panasonic Electronics (China) Ltd. in proceeding of
PSD system of Guangzhou Metro. The claiming was to stop the violating activity and compensation of
RMB10 million. This cash was accepted by the court and waiting for trial.
2. In 2010, Wang Weihong sued to Chongqing Middle Court claiming for the project payment of
RMB1707, this case was not opened for trial yet and under paperwork.
2. No bankruptcy or restructuring issue happened in the report term
3. Holding of other PLCs’ equities and trading of other PLCs’ shares
(1) Holding of other PLCs’ equities and participating in commercial banks, securities dealers,
insurance companies, trust companies, and future.
In RMB
Gain/loss of Change of
Stock Initial Share Book value at Accounting Source
Stock ID the report owners’ equity
Code investment portion the end of term subject of shares
term in the report term
ST Debt
Disposable
600800 Magnetic 4,850,000.00 0.11% 4,347,000.00 0.00 584,519.45 paid in
financial asset
Card kind
Total 4,850,000.00 - 4,347,000.00 0.00 584,519.45 - -
(2) Trading of shares of other PLCs
Name of Amount of shares Shares bought Amount at
Shares sould in Capital Investment
shares at beginning of in the report the end of
the report term used income gained
term term term
Sihuan
971,989 0 971,989 0 0 3,176,516.97
Biology
4. Asset acquiring or selling nor takeover or merger events.
(1) In the report term, the Company conducted neither asset acquiring or selling nor takeover or
(2) Disposal of asset in the report term
Profit
contributed
by the sold
Gain/loss
assets from Debt &
from Related Completely Relationship
The other Assets Date of the Pricing credit
Price disposal transaction transferred with the
party of trade disposed disposal beginning policy transferred
of the or not or not other party
of year or not
asset
until the
day of
being sold
Nanchang
High-Tech Land of
Jan 18, market Not
Zone Fangda 3,060.00 0.00 989.00 No Yes No
2010 price applicable
Administration Aluminum
Committee
5. No share option incentive program was implemented in the report term
6. Related transactions in the report term:
(1) Particulars about the related parites
Name of the parties Relation with the Company Organization code
Shenzhen Fangda Special Supervisor Song Wenqing once
Decoration Engineering Co., was director of this company
Ltd. (former Shenzhen Fangda (Mr. Song has resigned from the 19229492-X
Special Structure Co., Ltd.) position thus no relationship exist
(Fangda Special Decoration) as of date of this report.)
Song Wenqing Supervisor of the Company
(2) Outsourced works
Pricing
Name of the Name of the Category of asset to Commence Termination Contract amount
basis of
employer contractor be offered date Date (RMB0’000)
contracting
Date of
Fangda Completion Agreement
Song Wenqing Project contracting winning in 772.94
Decoration of project price
bidding
Date of
Fangda Fangda Special Completion Agreement
Project contracting winning in 2,323.08
Decoration Decoration of project price
bidding
7. Material contracts and guarantees
(1) The Company has never been involved in such events as keeping as custodian, contracted or leased
any other company’s assets and vice versa in the report period or extended from the previous years.
(2) The Company conducted no illegal guarantee issues other than providing guarantee to the fully
owned and controlled subsidiaries. The details are as the followings:
External Guarantee (Exclude controlled subsidiaries)
Date and
Actual date of
Ref. of the Actual
Guarantee Amount of occurring Type of Completed Related party
announceme amount of Term
provided to the guarantee (signing date guarantee or not or not
nt about the guarantee
of agreements
guarantee
Total of external guarantee actually occurred in the report
Total of external guarantee approved in the report term (A1) 0.00 0.00
term (A2)
Total of external guarantee approved as of end of report term Total of external guarantee actually occurred as of end of
0.00 0.00
(A3) report term (A4)
Guarantee provided to controlled subsidiaries
Date and Ref. of
Actual date of
the Actual
Guarantee Amount of occurring Type of Completed Related party
announcement amount of Term
provided to the guarantee (signing date guarantee or not or not
about the guarantee
of agreements
guarantee
since engage
"2010-2-12
Fangda Joint of contract to
Announcement 20,000.00 Jun 29, 2010 12,358.00 No No
Decoration liabilities 2 years upon
No. 2010-06
due of debt
since engage
"2010-2-12
Fangda Joint of contract to
Announcement 12,000.00 Feb 10 2010 7,806.00 No No
Decoration liabilities 2 years upon
No. 2010-07
due of debt
since engage
"2010-2-12
Fangda Joint of contract to
Announcement 25,000.00 Jun 30 2010 8,701.00 No No
Automatic liabilities 2 years upon
No. 2010-08
due of debt
since engage
"2010-2-12
Fangda Joint of contract to
Announcement 6,000.00 Nov 03 2010 3,981.00 No No
Automatic liabilities 2 years upon
No. 2010-09
due of debt
since engage
"2010-2-12
Fangda New Joint of contract to
Announcement 5,000.00 Jun 13, 2010 5,000.00 No No
Materials liabilities 2 years upon
No. 2010-10
due of debt
since engage
"2010-2-12
Fangda New Joint of contract to
Announcement 5,800.00 Jun 25, 2010 4,430.00 No No
Materials liabilities 2 years upon
No. 2010-11
due of debt
since engage
"2010-2-12
Fangda New Joint of contract to
Announcement 2,700.00 Sept 29 2010 2,700.00 No No
Materials liabilities 2 years upon
No. 2010-12
due of debt
Fangda since engage
August19, 2010
Decoration, Joint of contract to
Announcement 10,000.00 Sept 06 2010 1,652.00 No No
Fangda liabilities 2 years upon
No. 2010-27
Automatic due of debt
Total of guarantee to subsidiaries approved in Total of guarantee to subsidiaries actually
86,500.00 56,140.53
the report term (B1) occurred in the report term (B2)
Total of guarantee to subsidiaries approved as of Total of balance of guarantee actually provided
86,500.00 46,629.00
the report term (B3) to the subsidiaries as of end of report term (B4)
Total of guarantee provided by the Company (i.e. total of the above two items)
Total of guarantee approved in the report term Total of guarantee occurred in the report term
86,500.00 56,140.53
(A1+B1) (A2+B2)
Total of guarantee approved as of end of report term Total of guarantee occurred as of the end of report
86,500.00 46,629.00
(A3+B3) term
Percentage of the total guarantee occurred (A4+B4) on net asset of the Company 46.17%
In which:
Guarantees provided to the shareholders, substantial controllers and the related parties (C) 0.00
Guarantee provided directly or indirectly to objects with over 70% of liability on asset ratio (D) 0.00
Amount of guarantee over 50% of the net asset (E) 0.00
Total of the above 3 * (C+D+E) 0.00
Statement on the possible joint liabilities on the guarantees not due yet None
(3) No cash asset trusted to other parties or consigned loans occurred in the report term.
(4) Other major contracts:
a. Shenyhang Xingmo’er Shopping Mall was on schedule according to the contract.
b. Shenzhen Jiali Construction Plaza curtain wall project was on schedule.
c. China Asean (Liuzhou) Industrial Product Trade Center curtain wall project was on schedule.
d. Sanya Phoenix Island Recreation Center curtain wall construction of block 1, 2, 3 and 4 were on
schedule.
e. Shenzhen Metro Line 2 PSD system has been completed and put into operation.
8. Engaging and dismissing of CPAs.
As approved by the 15th meeting of the 5th term of Board and the Shareholders’ Meeting 2009,
Ascenda Certified Public Accountants was engaged as the auditing body of year 2010.
This is the 2nd time Ascenda Certified Public Accountants provides auditing service to the Company.
The reward is RMB900 thousand.
9. No capital adoption or repaying by the controlling shareholder or related parties
occurred in the report term, Ascenda CPA has provided special statement on this
issue.
10. No motivating share bonus scheme was implemented, promoted, or terminated
in the report term.
11. In the report term, none of the directors, supervisors, executives, shareholders,
substantial dominators, buyer of the Company was investigated by relative
departments, executed by legal & discipline departments, delivered to legal
departments, appeared for crime, investigated or punished by China Securities
Regulatory Commission, restricted to security market, criticized publicly, regarded
as improper person, punished by other executive departments, or publicly
condemned by the Stock Exchange.
12. No invalid trading of the Company’s shares by any of the directors, supervisors,
executives or shareholders holding 5% or over of the Company’s shares.
13. Reception of investigation and visiting: N/A
14. Material events judged by the Board of Directors or according to Article 67 of
Securities Law, and Article 17 of “Information Disclosure Criteria of PLCs (Trial)”
(1) On March 30, 2010, the Company released the announcement on capitalizing of capital reserves on
China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong Kong Commercial
Daily.
(2) On April 13, 2010, the Company released the announcement on contracting of multiple projects
including Sanya Phoenix Island International Recreation Center, China ASEAN Industrial Product
Trading Center (Liu Zhou), and Shenyang Xin-Mo-Er Shopping Mall on China Securities Journal,
Shanghai Securities Daily, Securities Times, and Hong Kong Commercial Daily.
(3) On May 19, 2010, the Company released the announcement on contracting of Shenzhen Jiali
Construction Plaza Phase II, and Shenzhen Baishida Plaza Phase II for curtain wall engineering on
China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong Kong Commercial
Daily.
(4) On July 14, 2010, the Company released announcement regarding private issuing of A shares in
2009 on China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong Kong
Commercial Daily.
(5) On September 14, the Company released contracting of PSD system of Xi’an Metro Line 1 Phase I
together with Xi’an Aviation Group on China Securities Journal, Shanghai Securities Daily, Securities
Times, and Hong Kong Commercial Daily.
(6) On November 16, 2010, the Company released the announcement on acquiring of land using rights
of the land located in Dongguan Songshanhu on China Securities Journal, Shanghai Securities Daily,
Securities Times, and Hong Kong Commercial Daily.
(7) The 24th meeting of the 5th term of Board adopted the proposal on relocating of energy-saving
and PV curtain wall production base and adding of executing entity. The resolutions was released on
China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong Kong Commercial
Daily dated November 24, 2010.
(8) On December 15, 2010, the Company released announcement on engaging of contracts for Section
I of PSD system of Dalian Metro, single aluminum sheet supplying contract to Prince Norah
University Town with Gulf Company UAE, and Fanshi Yifang Building developed by Cixi Fanshi
Property Co., Ltd. on China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong
Kong Commercial Daily.
(9) On December 30, 2010, the Company released the announcement on the progress of lawsuit
against Panasonic on China Securities Journal, Shanghai Securities Daily, Securities Times, and Hong
Kong Commercial Daily.
15. Derivate instruments
Derivate investment instruments
Statement on analysing and controlling of risks The Company adopts aluminum future contract in domestic future
with derivate investment in the report term
market to avoid material price fluctuation risks. The Company has
(including but not limited to market risks,
established “Regulations of Hedging Instrument of China Fangda Group
liquidity risks, credit risks, operation risks, and
Co., Ltd.” 方（发）[2010]03 号, and implemented strictly.
legal risks.
Change of derivate instrument market price or Derivate instrument fair value is at quotation opened in the future
fair value, information disclosing on the fair contract market, along with retrospective evaluation process, all of the
value, relative estimation and setting of indexes hedging are highly effective.
Statement on major alternation in accounting
polices and accounting basis on derivate No major change happened
instruments comparing with last year
Hedging instruments are used strictly according to relative
Particular comments of the independent
regulations, and only used to secure the raw materials needed by the
directors, sponsors, or financial consultants on
Company. It is not manipulation of future contracts, thus effectively
investment of derivate instruments and risk
reduced the risks. This will benefit the steady development of the
controlling
Company.
Derivate instruments in stock at end of report term
In RMB
Category of Amount of the contract Amount Gain/loss in the report Percentage of value of contracts
contracts at beginning of term of the term on net asset at end of report
contract at term %
end of
term
Shanghai 22,928,770.00 0.00 -2,816,014.00 0.00%
Aluminum
Total 22,928,770.00 0.00 -2,816,014.00 0.00%
X. Financial Report
1. Auditors’ Report
Ascenda Certified Public Accountants issued standard Auditors’ Report without qualified opinion on
the Company’s Financial Report 2010. (Attached hereafter)
2. Financial Statements (Attached)
3. Notes to Financial Statements (enclosed)
XI. Documents For Reference
1. The original of Annual Report 2010 carrying the signature and seal of the Legal Representative (in
both Chinese and English);
2. Financial Statement carrying the signatures and seals of legal representative and financial officer;
3. Original copy of the Auditors’ Report under the seal of the CPA and signed by and under the seal of
certified accountants.
4. Originals of all documents and manuscripts of Public Notices of the Company disclosed in public in
the newspapers as designated by China Securities Regulatory Commission.
Legal representative: Mr. Xiong Jianming
The Board of Directors of
China Fangda Group Co., Ltd.
March 2, 2011
