深 圳 赛 格 股 份 有 限 公 司
SHENZHEN SEG CO., LTD.
二○○九年半年度报告
SEMI-ANNUAL REPORT 2009
IMPORTANT NOTICE
The Board of Directors and Supervisory Committee of Shenzhen SEG Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents.
Chairman of the Company Mr. Zhang Weimin, Deputy General Manager and Person in Charge of Financial Affairs Mr. Li Lifu and Director of Financial Department Mr. Ying Huadong hereby confirm that the financial report enclosed in this semi-annual report is true and complete.
The semi-annual financial report of the Company has not been audited.
This report was prepared in both Chinese and English. Should there be any difference in interpretation between the two versions, the Chinese version shall prevail.
Information Disclosure Date: August 22, 2009
0CONTENTS
PARAPHRASE------------------------------------------------------------------------------------------------1
I. COMPANY PROFILE------------------------------------------------------------------------------------2
II. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY MAIN SHAREHOLDERS-----------------------------------------------------------------------------------5
III. PARTICULARS ABOUT DIRECTORS, SUPERVISORS, SENIOR EXECUTIVES----10
IV. REPORT OF BOARD OF DIRECTORS ----------------------------------------------------------11
V. SIGNIFICANT EVENTS-------------------------------------------------------------------------------24
VI. FINANCIAL REPORT (UN-AUDITED) ----------------------------------------------------------39
VII. DOCUMENTS AVAILABLE FOR REFERENCE----------------------------------------------39
1PARAPHRASE
Unless carried in the report, the following abbreviations possess the meanings as follows:
Color picture tube: color cathode ray tube used for color television
Glass shell: glass bulb of vacuum display devices, including screen and cone
SZGZW: State-owned Assets Supervision and Administration Commission of Shenzhen Municipal Government
Shenzhen Securities Regulatory Bureau: Shenzhen Securities Regulatory Bureau of China Securities Regulatory Commission
The Company, Company: Shenzhen SEG Co., Ltd.
SEG Group: Shenzhen SEG Group Co., LTD.
Guangzhou Fodak: Guangzhou Fodak Enterprise Group Co., Ltd.
SEG Zhongdian: Shenzhen SEG Zhongdian Corlor Display Devices Co., Ltd.
SEG SAMSUNG: Shenzhen SEG SAMSUNG Glass Co., Ltd.
SEG Storage and Transportation: Shenzhen SEG Storage and Transportation Co., Ltd.
SEG GPS: Shenzhen SEG GPS Scientific Navigations Co., Ltd.
SEG Communications: Shenzhen SEG Communications Co., Ltd.
SEG Baohua: Shenzhen SEG Baohua Enterprise Development Co., Ltd.
SEG Network: Shenzhen SEG Network and Information Co., Ltd.
ST Dasheng: Shenzhen SEG Dasheng Co., Ltd.
Xi’an SEG: Xi’an SEG Electron Market Co., Ltd.
Chongqing SEG: Chongqing SEG Electron Market Co., Ltd.
Suzhou SEG: Suzhou SEG Electron Market Management Co., Ltd.
Shanghai SEG: Shanghai SEG Electron Market Management Co., Ltd.
Changsha Xinxing: Changsha Xinxing Development Co., Ltd.
Except for the specific explanations, the monetary amount quoted in the report is RMB.
2I. COMPANY PROFILE
(I) Company information
1. Legal name of the Company
In Chinese: 深圳赛格股份有限公司
In English: SHENZHEN SEG CO., LTD.
2. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: A-share SHEN SEG Stock Code: 000058
B-share SHEN SEG-B 200058
3. Registered/Office Address: 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Post Code: 518028
The Company’s Internet Website: http://www.segcl.com.cn
E-mail: seggf@segcl.com.cn
4. Legal Representative: Zhang Weimin
5. Secretary of the Board of Directors: Zheng Dan
Representative of Securities Affairs: Fan Chonglan
Contact Address: 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Tel: (86) 755-8374 7939
Fax: (86) 755-8397 5237
E-mail: segcl@segcl.com.cn
6. Newspapers Chosen for Disclosing Information of the Company:
China Securities Journal, Securities Times and Hong Kong Wen Wei Po
Internet Website Designated by CSRC for Publishing the Semi-annual Report: http://www.cninfo.com.cn (the website of Ju Chao Zixun)
The Place Where the Semi-annual Report is Prepared and Placed:
Secretariat of Board of Directors, 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
7. Other Relevant Information:
Initial registration date: July 16, 1996
Initial registration place: 16/F, Baohua Tech. Bldg., Huaqiang Road (N), Futian District, Shenzhen
The registration date after the latest change: Sep. 27, 2006
Registered capital changed: RMB 784,799,010
Paid-in capital changed: RMB 784,799,010
Registration code of enterprise legal person’s business license: 440301103573251
Registration code of taxation: 440301279253776 (National Tax)
3440304279253776 (Local Tax)
(II) Major financial data and indexes
Unit: RMB
Items
At the end of this report period
At the period-end of last year
Increase/decrease at the end of this report period compared with that of last year (%)
Total assets
1,465,432,656.47
1,579,346,581.33
-7.21%
Owners’ equity ( or Shareholders’ equity)
1,136,530,935.67
1,297,772,121.85
-12.42%
Net assets per share
1.4482
1.6536
-12.42%
This report period
(Jan. to Jun.)
The same period of last year
Increase/decrease in this report period year-on-year (%)
Operating profit
-140,670,155.49
35,538,464.66
--
Total profit
-138,740,902.33
38,755,157.07
--
Net profit attributable to parent company
-146,083,519.02
28,701,388.64
--
Net profit after deducting non-recurring gains and losses
-197,745,812.20
25,871,254.17
--
Basic earnings per share
-0.186
0.037
--
Diluted earnings per share
-0.186
0.037
--
Return on equity
-12.85%
2.245%
-15.10%
Net cash flow arising from operating activities
22,313,372.91
31,854,672.67
-29.95%
Net cash flow arising from operating activities per share
0.0284
0.0406
-30.05%
Items of non-recurring gains and losses deducted and amounts:
√Applicable □Inapplicable
Unit: RMB
Items of non-recurring gains and losses
Amount
Gains and losses from the disposal of non-current asset,including the offset part which were withdrawn provision for asset impairment
58,256,138.47
Reversal of provisions for impairment of account receivable which is made singly impairment test
3,900,000.00
4Other non-operating income and expense excluded the aforementioned business
1,856,084.36
Influences on minority shareholders’ gains/losses
81,298.04
Impact on income tax
-12,431,227.69
Total
51,662,293.18
Item of measurement on fair value
√Applicable □Inapplicable
Unit: RMB
Item
Amount in period-begin
Amount in period-end
Changes in current period
Influences on current gains and losses
Influences on current equity
Financial asset available for sales
3,430,544.62
2,975,270.22
-455,274.4
1,837,604.13
-291,723.79
Supplementary statement to profit statement
Return on equity
Earnings per share
Profit in the report period
Fully diluted
Weighted average
Basic earnings per share
Diluted earnings per share
Net profit attributable to common shareholders
-12.85%
-12.00%
-0.1861
-0.1861
Net profit attributable to common shareholders after deducting the non-recurring losses and gains
-15.26%
-14.25%
-0.2210
-0.2210
(III)The explanation on the difference as calculated based on CAS and IAS
The 2009 Smi-annual Financial Report of the Company prepared based on CAS and IAS respectively; the net profit in the report period had no differences, and net asset ended the report period also had no differences.
5II. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY MAIN SHAREHOLDERS
(I) Particulars about changes in share capital
1. Changes of share structure due to the releasing trade for shares with restricted conditions in Share Merger Reform in the report period are as the followings:
Statement of Change in Shares
Before the change
Increase/decrease of the change(+, -)
After the change
Amount
Proportion
New shares offering
Bonus share
Capitalization of Public reserve
Other
Subtotal
Amount
Proportion
I. Restricted shares
210,416,596
26.81%
0
0
0
-210,381,132
-210,381,132
35,464
0.001%
1. State-owned shares
0
0.00%
0
0
0
0
0
0
0.00%
2. State-owned legal person’s shares
158,879,766
20.24%
-158,879,766
-158,879,766
0
0.00%
3. Other domestic shares
51,488,332
6.56%
0
0
0
-51,488,332
-51,488,332
0
0.00%
Including: Domestic non-state-owned legal person’s shares
51,488,332
6.56%
0
0
0
-51,488,332
-51,488,332
0
0.00%
Domestic natural person’s shares
0
0.00%
0
0
0
0
0
0
0.00%
4. Foreign shares
0
0.00%
0
0
0
0
0
0
0.00%
Including: Foreign legal person’s shares
0
0.00%
0
0
0
0
0
0.00%
Foreign natural person’s shares
0
0.00%
0
0
0
0
0
0
0.00%
5. Senior
48,498
0.01%
0
0
0
-13,034
-13,034
35,464
0.01%
6executives’ shares
II. Unrestricted shares
574,382,414
73.19%
0
0
0
210,381,132
210,381,132
784,763,546
99.999%
1. RMB Ordinary shares
327,921,096
41.78%
0
0
0
210,381,132
210,381,132
538,302,228
68.59%
2.Domestically listed foreign shares
246,461,318
31.40%
0
0
0
0
0
246,461,318
31.40%
3. Overseas listed foreign shares
0
0.00%
0
0
0
0
0
0
0.00%
4. Others
0
0.00%
0
0
0
0
0
0
0.00%
III. Total shares
784,799,010
100.00%
0
0
0
0
0
784,799,010
100.00%
Note: 1. In the report period, the first largest shareholder of the Company SEG Group and the second largest shareholder of the Company Guangzhou Fodak both took the procedures of releasing trade for shares with restricted conditions; the released shares were 210,368,098 which accounted for 26.81% in the total shares of the Company;
2. According to the regulations in Rules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of Listed Companies and the Changes Thereof promulgated by CSRC, the shares of the Company held by directors, supervisors and senior executives were released restricted sales in the proportion of 25 percent of the numbers they held. The released shares this time amounted to 13,034 shares.
(II) Total shareholders at the end of the report period
Based on shareholder’s beadroll of the Company provided by China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, ended June 30, 2009, the Company has 56,418 shareholders in total, including 38,820 shareholders of A-share and 17,598 shareholders of B-share.
(III) Particulars on shares held by top ten shareholders (based on the data supplied by China Securities Depository and Clearing Co., Ltd. Shenzhen Branch)
Particulars on shares held by top ten shareholders
No.
Name
Shares held at period-end (Share)
Share Proportion (%)
Nature of shareholder
Amount of restricted shares held
Amount of shares pledged or frozen
1
SHENZHEN SEG GROUP CO., LTD.
237,359,666
30.24
State-owned
0
83,679,833 shares 7legal person’s share
were pledged and frozen, 19,250,000 shares were judicially frozen
2
GUANGZHOU FODAK ENTERPRISE GROUP CO., LTD.
49,661,432
6.32
Domestic non-state-owned legal person
0
9,664,763 shares were pledged and frozen, at the same time the flowing shares were judicially frozen
3
Taifook Securities Company LIMITED-Account Client
5,550,303
0.71
Foreign legal person
0
4
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED
2,865,982
0.37
Foreign legal person
0
5
PENG SHENG WEN
2,836,162
0.36
Domestic natural person
0
6
SHANGHAI QILE ECONOMIC AND TRADE CO., LTD.
2,804,330
0.36
Domestic non-state-owned legal person
0
7
XU XIN HU
2,800,118
0.36
Foreign natural person
0
8
HAN JIA YIN
2,739,277
0.35
Domestic natural person
0
9
HU XIAO FENG
2,319,888
0.30
Foreign natural person
0
10
QIN YU YAN
2,152,037
0.27
Foreign natural person
0
Particulars on shares held by top ten shareholders of unrestricted shares
No.
Name
Shares held at period-end (Share)
Share proportion
(%)
Nature of shareholders
1
SHENZHEN SEG GROUP CO., LTD.
237,359,666
30.24
RMB ordinary share (A share)
82
GUANGZHOU FODAK ENTERPRISE GROUP CO., LTD.
49,661,432
6.32
RMB ordinary share (A share)
3
Taifook Securities Company LIMITED-Account Client
5,550,303
0.71
Domestically listed foreign shareholder (B share)
4
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED
2,865,982
0.37
Domestically listed foreign shareholder (B share)
5
PENG SHENG WEN
2,836,162
0.36
RMB ordinary share (A share)
6
SHANGHAI QILE ECONOMIC AND TRADE CO., LTD.
2,804,330
0.36
RMB ordinary share (A share)
7
XU XIN HU
2,800,118
0.36
Domestically listed foreign shareholder (B share)
8
HAN JIA YIN
2,739,277
0.35
RMB ordinary share (A share)
9
HU XIAO FENG
2,319,888
0.30
Domestically listed foreign shareholder (B share)
10
QIN YU YAN
2,152,037
0.27
Domestically listed foreign shareholder (B share)
Explanation on affiliated relation and consistent action of the aforementioned shareholders
1. China Securities Registration and Clearing Co., Ltd. Shenzhen Branch provided the name lists and the holding shares situation of the aforementioned top ten shareholders and top ten shareholders of unrestricted shares.
2. Among the top ten shareholders as listed above, there existed no associated relationship between Shenzhen SEG Group Co., Ltd. (hereinafter referred to as SEG Group) and other shareholders, and they were not consistent actionists according to Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. It was unknown whether the top 10 shareholders had affiliated relations or belonged to consistent actionist.
3. It was unclear whether there was affiliated relation among the top ten shareholders of unrestricted shares or were consistent actionists.
(IV) In the report period, the first largest shareholder of the Company remained unchanged, is still Shenzhen SEG Group Co., Ltd.
(V) Amount of shares held by top ten shareholders of restricted shares and the restrictions
Amount of shares held by top ten shareholders of restricted shares and the restrictions
9Unit: Share
No.
Name of shareholders of restricted shares
Among of restricted shares held
Time when shares can be listed
Among of newly added shares that can be listed
Restrictions
1
SHENZHEN SEG GROUP CO., LTD.
198,119,716
June 25, 2009
158,879,766
2
GUANGZHOU FODAK ENTERPRISE GROUP CO., LTD.
90,728,282
June 25, 2009
51,488,332
Original non-tradable A shares were not allowed to be traded or transferred within 12 months from the day of implementation of the Share Merger Reform; After the aforementioned time limitation was due, expired, if shareholders of original non-tradable shares with a stake over 5% were to sell the original non-tradable shares through listing in stock exchange, the sales volume should be no more than 5% of the total of the Company within 12 month and no more than 10% within 24 months. 10III. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES
(I) In the report period, no changes occur in shares held by the Company’s directors, supervisors and senior executives.
Former Supervisor Mr. Xu Changhui resigned his posts of Supervisors of the Company on Aug. 4, 2008, read the Notice on Resignation of Supervisor published on Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website dated August 5, 2008 for details. In accordance with relevant regulation, his holding shares of the Company (13,034 shares) could not be sold or purchased within 6 months after he resigned. Till Feb. 4, 2009, the resignation period has expired 6 months, and his holding shares of the Company has been released the restriction.
Ended the report period, except that Ms. Zheng Dan, deputy general manager and concurrently secretary of the Board and Mr. Jiang Yigang, independent director of the Company held the shares of the Company; other directors, supervisors and senior executives did not hold the shares of the Company.
Name
Office title
Shares held at the period-begin
Amont of change
Shares held at the period-end
Reason of change
Zheng Dan
Deputy General Manager, Secretary of the Board
35,586
0
35,586
Inapplicable
Jiang Yigang
Independent Director
11,700
0
11,700
Inapplicable
(II) In the report period, the changes in shares held by directors, supervisors, and senior executives of the Company.
In the report period, former Supervisor Mr. Yang Bo resigned his posts of Supervisors of the Company on March 18, 2009, read the Notice on Resignation of Supervisor published on Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website dated March 19 2009 or details.
In the report period, there were no changes in directors and senior executives of the Company. 11IV. REPORT OF BOARD OF DIRECTORS
I. Analysis on financial condition and operation achievement of the report period
In the report period, the Company realized operation income of RMB 138.82 million, 6.04% down year-on-year; and respectively realized total profit and net profit of RMB -138.74 million and RMB -143.13 million. Decline of operation income year-on-year mainly resulted from transferring equities of SEG Communication and Chongqing SEG.; the great decline of total profit and net profit year-on-year in this report period mainly resulted from the huge loss of the invested company-SEG Samsung whose 22.45% equities were held by the Company.
1. Change in total assets and shareholders’ equity
Item
Jun. 30, 2009
Dec. 31, 2008
Change
Total assets
1,465,432,656.47
1,579,346,581.33
-7.21%
Account receivable
15,772,104.62
37,054,146.68
-57.43%
Long-term equity investment
314,577,719.19
558,731,067.54
-43.70%
Fixed assets
203,635,304.99
58,590,599.71
247.56%
Goodwill
9,986,646.66
-
-
Account payable
19,809,471.16
31,292,433.86
-36.70%
Total equity attributable to owners of parent company
1,136,530,935.67
1,297,772,121.85
-12.42%
Reason for change:
○1Total assets: decreased by 7.21% over end of last year, mainly due to SEG Samsung invested by the Company and calculated according to equity method received a huge loss of RMB 0.97 billion in this report period, thus decreased long-term equity investment of the Company.
○2Account receivable: decreased by 57.43% over end of last year, mainly due to the Company had not taken SEG Communications into consolidation scope in this report period, thus decreased account receivable of SEG Communications with RMB 25.39 million.
○3Long-term equity investment: decreased by 43.70% over end of last year, mainly due to SEG Samsung invested by the Company and calculated according to equity method received a huge loss of RMB 0.97 billion in this report period, thus decreased long-term equity investment of the Company.
○4Fixed assets: increased by 247.56% over end of last year, mainly due to the change of consolidation scope, that the Company started to merger Changsha Xinxing and increased the property held by Changsha Xinxing-houses and buildings with original value amounting to RMB 0.153 billion.
○5Goodwill: it occurred when the Company purchased Changsha Xinxing (holding 46% shares), 12and mainly referred to the balance between the investment cost and fair value proportion of recognizable assets of Changsha Xinxing .
○6Account payable: decreased by 36.70% over end of last year, mainly due to the Company had not taken SEG Communications into consolidation scope in this report period, thus decreased total account payable.
○7Equity attributable to owners of parent company: decreased by 12.42% over end of last year, mainly due to SEG Samsung invested by the Company and calculated according to equity method received a huge loss in this report period.
2. Change in operation achievement
Item
Jan. to June, 2009
Jan. to June, 2008
Change
Reason for change
Operation income
137,882,485.07
146,747,331.66
-6.04%
Compared to the same period of last year, the Company had already transferred equities of SEG Network, SEG Communications and Chongqing SEG. Enterprises for consolidation decreased, thus operation income decreased; however, the purchased Changsha Xinxing did not yield income yet.
Operation cost
78,631,266.50
80,073,350.64
-1.80%
The same as above
Sales expense
1,353,048.92
5,567,161.75
-75.70%
The same as above
Administration expense
16,241,868.85
23,862,807.32
-31.94%
(1) The same as above;
(2)The company strictly saved cost and controlled expense
Financial expense
-6,226,108.02
3,332,498.78
-286.83%
(1) All bank loans were returned in this period, thus no interest expenditure occurred; (2) Part bank deposits turned to save in fixed terms, thus interest income was obtained.
Investment income
-186,150,878.70
7,807,137.11
-2484.37%
SEG Samsung invested by the Company and calculated according to equity method
13received a huge loss of RMB 0.97 billion in this report period
Operation profit
-140,670,155.49
35,538,464.66
-495.83%
The same as above
Total profit
-138,740,902.33
38,755,157.07
-457.99%
The same as above
Net profit
-143,126,887.91
32,074,695.46
-546.23%
The same as above
Net profit attributable to owners of parent company
-146,083,519.02
28,701,388.64
-608.98%
The same as above
Net increase of cash and cash equivalent
963,867.26
166,270,575.28
-99.42%
The Company received an amount of RMB 184.51 million in the same period of last year for transferring equity of SEG Zhongdian at end of 2007, while no such income was received in this period
II. Operation in the report period
The business scope of the Company included: domestic commerce, supply & sales of materials (not including commodities for special operation, control and sales); set up industrials (detailed items shall be particularly applied and declared.), consultation for economic information. Property lease: real estate agency; establish SEG special electron market (license for special market should be particularly applied and declared).
In main business;
1. Operation and management of electron market
In the report period, the competition in domestic electron market presented to be furious day by day. Through innovation in operation and service, and strengthening in management, the Company kept stable growth in operation business of electron market, for the electron markets established by the Company all made profit. The lease rate of the commercial shops in Shenzhen SEG electron market directly operated by the Company always kept over 98%. Total operation income realized by the market amounted to RMB 47.07 million, 3.35% up year-on-year; and the profit realized was RMB 27.57 million.
2. Tax-free storage and overseas transportation
In the report period, affected by the global financial crisis, the export business in Pearl River delta shrank a lot. The business of tax-free storage and overseas transportation engaged by SEG Storage and TransportationCompany whose 95% equities were controlled by the Company was affected
14greatly. In the report period, the company decreased by 6.92% in operation income year-on-year; meanwhile, with the advantage of tax reform of the state and through further reinforcing cost management, the company realized total profit of RMB 5.34 million in the report period, 51.27% up year-on-year,
3. Property operation and management
During the report period, SEG Baohua (66.58 % equities were held by the Company) which was engaged in property operation and management operated stably. It always kept a comparatively high lease rate for its properties. Operation income fluctuated a little bit over the same period of last year. The total profit amounted to RMB 7.44 million, 8.14% up year-on-year.
In the report period, the property lease directly operated by the head office of the Company realized operation income of RMB 5.6 million and total profit of RMB 3.87 million.
4. Communications and networks
Due to that the Company had already finished equity transfer of SEG Network in October of 2008 and May of 2009 for SEG Communications, thus, the Company retreated from the business of communications and networks, so the operation income from this business decreased by 95% over the same period of last year.
(II)Main business classified according to industries or products
Unit: RMB’0000
Main business classified according to industries or products
Classified according to industry or products
Operating revenue
Operating cost
Gross profit ratio %
Increase/decrease in operating revenue year-on-year %
Increase/decrease in operating cost year-on-year%
Increase/decrease in gross profit ratio year-on-year%
Operation business of electron market, and property lease
10,496.78
5,322.52
49.29%
1.44%
13.90%
-10.11%
Tax-free storage and overseas transportation business
3,249.71
2,536.81
21.94%
-6.92%
-10.22%
15.03%
Communications and networks business
41.77
3.80
90.91%
-95.00%
-99.25%
132.22%
15Total
13,788.25
7,863.13
42.97%
-6.04%
-1.80%
-5.42%
Main business classified according to areas
Unit: RMB’0000
Area
Operating revenue
Increase/decrease in operating revenue year-on-year %
Shenzhen
9,917.41
-12.21%
Xi’an
1,195.13
21.43%
Chongqing
199.16
-49.44%
Suzhou
943.32
56.13%
Overseas
1,533.23
9.81%
Total
13,788.25
-6.04%
Due to that the equities of Chongqing SEG was transferred out by the Company in May 2009, so the income from main operations of the Company in Chongqing region only included the income of Chongqing SEG made from Jan. to April of year 2009. Compared to the same period of last year, income from this area declined greatly.
(III)Explanation for material changes in main business and its structure, profit-making ability of main business, as well as profit constitution in this report period
1. During the report period, no material change happened to main business and its structure over the same period of last year.
2. During the report period, no material change happened to profit-making ability of main business over the same period of last year.
3. Analysis on reason for material change in profit constitution year-on-year
Jan. to June, 2009
Jan. to June, 2008
Item
Amount
Proportion taken in total profit (%)
Amount
Proportion taken in total profit (%)
Change
(%)
Operation income
137,882,485.07
-99.38%
146,747,331.66
378.65%
-6.04%
Operation cost
78,631,266.50
-56.67%
80,073,350.64
206.61%
-1.80%
Sales expense
1,353,048.92
-0.98%
5,567,161.75
14.36%
-75.70%
Administration expense
16,241,868.85
-11.71%
23,862,807.32
61.57%
-31.94%
16Financial expense
-6,226,108.02
4.49%
3,332,498.78
8.60%
-286.83%
Investment income
-186,150,878.70
134.17%
7,807,137.11
20.14%
-2484.37%
Operation profit
-140,670,155.49
101.39%
35,538,464.66
91.70%
-495.83%
Total profit
-138,740,902.33
100.00%
38,755,157.07
100.00%
-457.99%
Net profit
-143,126,887.91
103.16%
32,074,695.46
82.76%
-546.23%
Net profit attributable to owners of parent company
-146,083,519.02
105.29%
28,701,388.64
74.06%
-608.98%
The following reasons accounted for the material change in profit constitution of the Company over the same period of last year:
SEG Samsung, 22.45 percent shares held by the Company, made a loss of RMB 0.97 billion in this period, while the net profit it realized in the same period of last year was RMB 13.91 million, so investment income of the Company greatly shrank year-on-year, which correspondingly cut down greatly the operation profit and total profit of the Company.
(IV)Other operation activity which occurred significant influence upon profit of the Company in the period
1. On Oct. 22nd, 2009, the Company discussed and approved the proposal on Transferring 97.70% Equities of Shenzhen SEG Communications Co., Ltd. in the 4th meeting of the 4th board of directors. It was approved for the Company to conduct the above transfer in Shenzhen Assets and Equity Exchange by public hanging; meanwhile, 2.30% equities of SEG Communications held by SEG Industrial whose 91.79% equities were held by the Company were also hanging out for transfer. The transfer price was expected not less than RMB 16,507,300, the appraisal value of the net assets of SEG Communications (the benchmark day for appraisal was Sep. 30th, 2008). After the transfer procedure of Shenzhen Assets and Equity Exchange for public hanging, Shenzhen HYT Science & Technology Co., Ltd finally got this transfer with RMB 40 million. On Mar. 19 of 2009, the two parties related to this equity transfer signed Property Exchange Contract for this transfer, and on Mar. 26 of 2009, the Company received the account. On May 7 of 2009, the Company received relevant information about accomplishment of business registration alteration procedure for SEG Communications. After this transfer, there was no relationship between the Company and SEG Communications in equity, debt and creditor’s right any longer. ththth
Due to this trade, parent company increased investment income with RMB 11.94 million in 2009; investment income in 2009 consolidated statement increased with RMB 37 million; after deduction of the tax needed for this trade, the net profit of 2009 attributable to listed company increased with RMB 33.6 million.
For this event, the Company has disclosed it on Securities Times, China Securities Journal, Hong 17Kong Wen Wei Po and Juchao website respectively dated Oct. 24 of 2008, Mar. 17, Mar. 25, Mar. 28 and May 8 of 2009. ththththth
2. According to the Share Merger Reform Prospectus of SEG Samsung, the Company and SEG Storage and Transportationcould respectively apply for release for their holdings of shares of SEG Samsung since Jan. 14 of 2009, including th44,833,573 shares for the Company (account for 5% of the total shares of SEG Samsung), and 555,750 shares for SEG Storage and Transportation (account for 0.06% of the total shares of SEG Samsung). Relevant procedure for releasing restriction has been finished on Mar. 4th of 2009.
By approval from the State-owned Assets Supervision and Administration Commission of Shenzhen, and from the Shareholders’ General Meeting of the Company, the Company sold 8,462,783 shares of SEG Samsung in Shenzhen Stock Exchange by its competitive transaction system from 14th to 18th of May, 2009. These shares almost accounted for 0.94% of the total shares of SEG Samsung. On Apr. 29th of 2009, SEG Transportation and Storage, whose 95% equities were held by the Company, sold 555,750 shares of SEG Samsung in Shenzhen Stock Exchange by its competitive transaction system. These shares almost accounted for 0.06% of the total shares of SEG Samsung.
Through selling shares of SEG Samsung, the Company realized investment income with RMB 16.5 million.
For this event, the Company has disclosed it on Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao website dated May 20 of 2009. th
(V) Share-joining companies whose investment income takes more than 10% proportion of net assets
1. SEG Samsung, whose 22.45% equities are held by the Company, is mainly engaged in production and sales of CPT Glass shell, with the registered capital of RMB 785.97 million and total assets of RMB 1,857,131,900 till the end of the report period. In the report period, the Company stopped to operate some product line (details could be found in Notice No. [2009-18] on May 14, 2009 and Notice No. [2009-28] on July 2, 2009), whereas the actual condition of the Company, according to relevant regulations of withdrawing provision for impairment in Accounting Standard for Business Enterprise, the Company withdrew provision for impairment of the aforesaid product lines which were stopped to operation and product equipments which were still working, therefore, the Company had loss of RMB 0.97 billion in the report period.
2. SEG GPS, whose 35% equities are held by the Company, is mainly engaged in production of GPS products of SEG and service business of its operating network, with the registered capital of
18RMB 60 million and total assets of RMB 21.7 million till the end of the report period. In the report period, the company realized sales income of RMB 96.37 million, 2.65% up over the same period of last year; realized net profit of RMB 7.47 million, 1.41% down over the same period of last year.
3. Shanghai SEG, whose 35% equities are held by the Company, is mainly engaged in the operation and management of professional electron market, with the registered capital of RMB 5 million and total asset RMB 38.87 million till the end of the report period. In the report period, this company operation income amounting to RMB 18.06 million, 3.87% down over the same period of last year; realized net profit of RMB 3.79 million, 7.23% down over the same period of last year.
(VI) Problems and difficulties in operation
1. Because the competition of electron market industry is increasingly fierce and the influence of financial crisis was still not eliminated, the business of electron market of the Company still faced a great operation pressure.
2. The great loss of SEG Samsung in the report period brought a great negative influence upon operation performance of the Company for the first half year of 2009.
3. Transportation industry has a great dependence on external factors such as the national policy. The appreciation of RMB and the shrinking of export business in Pearl River Delta caused certain decrease in operating income of bonded storage and overseas transportation.
III. Business prospect and operation plan for the next half year
In the next half year, the Company would continue to try hard to complete each work according to the annual operation plan of 2009 disclosed in Annual Report 2008.
(I) Business development plan in the next half year:
1. The Company would continue to intensify innovation and promotion for operation pattern of electron market business, enlarge chain operation of electron market business, and promote strategic expansion of electron market business and try to cultivate new profit growth points of the Company.
According to the development plan for making experiment and promotion of new operation mode of electron market in 2009, and with approval from the board of directors of the Company, the subsidiary Shenzhen SEG Industrial Investment Co., Ltd. (hereinafter refer to as SEG Industrial) – whose 91.79% equities are held by the Company planned to open Buy-it Store with area of 1,350 square meters on the 3rd Floor, Phase II in SEG Electron Market in North Huangqiang Road in Shenzhen. It adopts the mode of Self-support + Joint operation, is mainly engaged in wholesale 19and retail of computer products and fittings, mobile telephone communication equipment, digital products and office products and maintainance service of computer products. The implementation of Buy-it Store would gradually realize unified image, operation, cash receiving, delivering and after service of self-support business in SEG Electron Market, and would improve the core competition of SEG Electron Market brand by building national purchase and logistics platform and after service platform. In the next half year, the Company would further perfect and promote the chains operation mode of Buy-it Store.
2. The Company would try its best to actively promote the construction of Changsha Project and try to start business as soon as possible.
3. The company would continue to strengthen the adjustment of present industry, and earnestly complete relevant equity transfer of enterprises the Company invested which was disclosed in 2008.
4. The Company would continue to promote the construction of online trading platform of SEG Electron Market.
(II) Risk factors:
With the influence of factors such as increasingly fierce competition, the operation cost of each business of the Company presented a rising trend; main business income of the Company even faced the risk of descending possibly. At the same time, because the change in market of traditional display products was comparatively big, the industry received a serious impact. It was available to predict that the traditional display manufacture of SEG Samusng was not easy to recover completely in future, which brought comparatively great uncertainty to the Company for its operation performance.
(III) Counter measures:
1. Continues to strengthen management, completely promote cost project and broaden income sources and reduce expenditure.
2. Besides doing well in management innovation of present electron market business, also actively do well the work of making experiment and promotion of new operation mode.
3. Further strengthens the talent training, and constantly cultivates talent and management team who satisfied the demand of strategic expansion and upgrade.
4. Fully exerts the function of domestic and foreign shareholders, and together do well the work of industry structure adjustment of the invested enterprise-SEG Samsung.
IV. Investment
(I) In the report period, the Company raised no proceeds and there existed no such situation that
20the application of proceeds raised through share offering before the report period continued to the report period.
(II) Through the approval of the 24th extraordinary meeting of the 4th board of directors held on February 26, 2009, the Company signed Equity Transfer Agreement (hereinafter refer to as Agreement) with Shenzhen Jintai Hengye Investment Development Co., Ltd. (hereinafter refer to as Jintai Hengye Company). The Company purchased 46% equities of Changsha Xinxing held by Jintai Hengye Company with the price of RMB 69 million, and the core property of Changsha Xinxing – Xinxing Hotel was used to open electron market and do relevant business of matching service, which was totally entrusted the Company to manage. Details could be found in Resolution Notice of the 24th Extraordinary Meeting of the 4th Board of Directors and the First Quarterly Report 2009 published in Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website dated February 28, 2009 and April 24, 2009.
Till the end of the report period, the Company has paid all equity transfer payment of totally RMB 69 million to Shenzhen Jintai Hengye Investment Development Co., Ltd., and completed matters about transferring 46% equities of Changsha Xinxing. At present, the Company is rebuilding Changsha Xinxing Hotel, and matters about openning electron market and matching service business was in process. Rebuilding structure design of the project, public bidding invitation of project inspection and decoration design, and old decoration dismantling of the 1st to 3rd floor of the property have completed ended the disclosure day for this report. The investment invitation and propagandizing work are being fully carried out..
V. It was expected that until the next report period, the net profit attributable to parent company was RMB -192 million to RMB -259 million. The main reason of loss was that SEG Samsung invested by the Company was expected to have a loss of RMB 1.2 billion to RMB 1.5 billion calculated on equity method. The specified financial data will be disclosed in the Third Quarterly Report.
VI. Explanations on adopting the measurement mode of fair value.
According to Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the Company listed the holding stocks of ST Dasheng and Xinjiang Friendship Group Co., Ltd. as financial assets available for sale, taking the closing price of the stock at securities market on date of balance sheet as basis and calculating the stocks according to the fair value measurement. For details, please read the relevant content in Section V. Significant Events.
21SECTION V. SIGNIFICANT EVENTS
I. Corporation governance
In the report period, according to the requirements of laws and regulations of Company Law, Securities Law, and Code of Corporate Governance for Listed Companies, the Articles of Association and other requirements of laws and regulations of governance of the listed companies, the Company consistently perfected its governance structure and standardized the operation. But there are still some proceedings in the Company as follows:
(I) Controlling shareholders manage the Company according to the Property Right Representatives System. As to the controlling shareholder SEG Group Co. Ltd. is the state-controlled enterprises in Shenzhen, and Shenzhen State-owned Assets Supervision and Administration Commission is the controlling shareholder of SEG Group Co. Ltd. the controlling shareholder of the Company, the Property Right Representatives System of state-owned assets management should be implemented according to Shenzhen state-owned assets management methods.
22(II) In the aspect of personnel check, the controlling shareholder of the Company – SEG Group made annual performance check of senior executives according to the completion of annual operation index and other index.
(III) Particulars about offering undisclosed information to large shareholders and actual controllers
The Company report unopened information to large shareholders and actual controllers according to the Property Right Representatives System and the requirements of state statistic department. According to the requirements of state-owned assets supervision department, the situation of reporting monthly financial reports to controlling shareholders and actual controllers and reporting important issues to controlling shareholders and actual controllers before public disclosure exists at present. The Company put in Report of Listed Company Offering Unopened Information to Large Shareholders and Actual Controllers and Commitment Letter on Oct. 18, 2007 to Shenzhen Securities Regulatory Bureau; SEG Group Co. Ltd. certificated enhancing the Management of Undisclosed information Commitment Letter to Shenzhen Securities Regulatory Bureau. At the same time, the Company has established and implemented Insiders of Inside Information Record System of Shenzhen SEG Co. Ltd. and Insiders of Inside Information Secret System of Shenzhen SEG Co. Ltd., and will regularly record the report information of unopened information to Shenzhen Security Regulatory Office each month. On July 15, 2009, the management group and all employees of head office signed Confidentiality Agreement with the Company one by one, which made clear of their confidential responsibility for the Company’s business secretary and undisclosed information. The specific undisclosed information that the Company offers to large shareholders and actual controllers was as follows:
No.
Parties of delivering information
The relationship between the parties of delivering information and listed company
Information sort
Deliver procedure
Deliver date or period
Proof of delivering information
Approval procedure
1
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
Report On Main Financial Index Of Shenzhen
Compiled by financial personnel of the investment enterprise and
Each month
State Council GZW Document(GZTPJ
[2003] No.23）
Agreed by the board of directors
23State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
City-Owned Enterprises
head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration after the examination of leader of financial department
Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
2
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Periodic expense statement of enterprise(including details on sales expense, administration expense and financial expense)
Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration after the examination of leader of financial department
Each month
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
3
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Implementation statement on budget of monthly expenses
Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration
Each month
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
24SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
4
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Budget Statement of Monthly Cash Flow
Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration
Each month
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
5
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Deposit and loan of the Company
Compiled by financial personnel of the Company and delivered through information system of state-owned asset administration
Each month
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
6
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal
Actual controller
Quarterly Statement of Non-operating Profit and Loss of Shenzhen City-Owned Enterprises
Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration
Each quarter
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
25Government
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
7
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Statement of Holding Equities of Listed Company in the Second Quarter of Shenzhen City-Owned Enterprises
Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration
Each quarter
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
8
State-Owned Assets Supervision And Administration Commission Of Shenzhen Municipal Government
Actual controller
Statement of Investment Real Estate in the Second Quarter of Shenzhen City-Owned Enterprises
Starting delivery since June of 2009. Compiled by financial personnel of the investment enterprise and head office of the Company, made statement and consolidated, delivered through information system of state-owned asset administration
Each quarter
State Council GZW Document(GZTPJ
[2003] No.23）Notice on Relevant Matters on Monthly Enterprise Financial Report Compiled and Reported by GZW Supervision And Administration Enterprise
Agreed by the board of directors
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
9
State-Owned Assets Supervision And Administration Commission
Actual controller
Statement of State-owned Assets in 2008
Compiled by 2008 statement managing software and delivered by e-mail after examination of relevant leaders of the Company.
February of 2009
YGZTP[2008] No.185
Agreed by the board of directors
26Of Shenzhen Municipal Government
10
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
Monthly consolidated statement(including balance statement, profit statement, cash flow statement, notes to statement compilation and report on financial analysis)
Monthly print, signature and seals, then delivered; in addition, delivered quarterly through the information system of state-owned asset management, and started to deliver by internet since July of 2008.
Each month
Notice on Delivering monthly Report of Shenzhen SEG Group Co., Ltd.
Agreed by the board of directors
11
SHENZHEN SEG GROUP CO., LTD.
Controlling shareholder
(30.24%)
Statistics report/monthly report and annual report of electron information industry
Seal of the Company
Each month and each year
The Statistics Law of the People's Republic of China, Article 3: State organs, public organizations, enterprises, institutions, and self-employed industrialists and businessmen that are under statistical investigation shall, in accordance with the provisions of this Law and State regulations, provide truthful statistical data. They may not make false entries or conceal statistical
Agreed by the board of directors
27data, and they may not refuse to submit statistical reports or report statistical data belatedly. Falsification of or tampering with statistical data shall be prohibited. Autonomous mass organizations at the grass-roots level and citizens shall have the duty to provide truthful information needed for State statistical investigations.
II. Particulars about execution of profits distribution during the report period
1. Approved by the examination and approval of the 14th (2008) Shareholders’ General Meeting on May 6, 2009, the plan on profit distribution of the Company of 2008 was: The Company, on the radix of present total share of 784,799,010, planned to distribute cash bonus of RMB 0.20 per 10 shares to all its shareholders (including tax, and the Company would actually distribute RMB 0.18 per 10 shares to individual shareholders, investment fund and overseas qualified institutions after deducting tax. B share was not deducted tax for the moment.). The cash bonus for shareholders of B shares was paid in HKD as the middle Exchange rate of RMB and HKD (HKD 1= RMB 0.8804) publicized on the first working day (May 7, 2009) after the resolution date of Shareholders’ General Meeting by People’s Bank of China. To other non-resident enterprises, the Company did not pay income tax for them, which should be paid by the taxpayer in income occurring place. The Company had no plan of converting capital reserve into share capital.
The Company implemented the aforesaid preplan on June 23, 2009. Details could be found in Notice on Execution of 2008 Profits Distribution, which was published in the Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website on June 16, 2009.
282. The Company would not distribute profit, convert capital reserve into share capital in interim of 2009.
III. Significant lawsuits and arbitrations during the report period
1. As the information the Company disclosed in 2008 Annual Report, that the Company indicted defendant Shenzhen SEG Commercial Machine Co., Ltd (here referred to as Commercial Machine Co., Ltd) and Li Zhongda about the loan and guarantee contract dissension case, the case is still in enforcement at present, with the object executed RMB 2,819,996.61, including the principal RMB 1,967,152, the interest RMB 733,233.39, and the overdue interest RMB 104, 864.72. The opposite party should bear RMB 14,746.50, which is the expense for the first trial. On February 17, 2009, the Company received the account of RMB 609,693.29 through China Everbright Bank from Shenzhen Futian District People's Court, which was the repayment the defendants SEG Commercial Machine Co., Ltd and Li Zhongda owned to the Company. After the Company received the account, the account receivable from SEG Commercial Machine Co., Ltd and Li Zhongda owned to the Company was reduced. At present, the Company is negotiating with SEG Commercial Machine Co., Ltd and Li Zhongda on reconciliation affairs.
2. The case that prosecutor Zhao Shishun appealed Equity Infringement Case of Equity Transfer disclosed in the 2008 Annual Report [Case No.: No. (2006) 1625 of Shenzhen Futian Civil Court 2 initial letter], the object involved amounted to RMB 4.33 million. On Feb.5, 2007, the court judged the Company to pay back the prosecutor with RMB 2.16 million (interest not included) and case accepting and hearing expense RMB 27,882, and turned down other appealing requests from prosecutor. This has been disclosed on China Securities Journal, Securities Times, Hong Kong Wen Wei Po and http://www.cninfo.com.cn dated March 9, 2007. The involved two parties in this case all appealed after the judgment. Shenzhen Intermediate People's Court made out a final adjudication (No. 950 Civil Verdict of Civil 2 final letter (2007) from Shenzhen Intermediate People's Court) as follows: the No. 6 Clause in original judgment was cancelled that the third party Shenzhen SEG Industrial Investment Co., Ltd. bearing the joint payment liabilities as to the afore-mentioned debts for the Company and other clauses maintained pervious judgment; the Company should pay the RMB 2.16 million in (excluding the interest) and the plaintiffcompensationcase acceptance fees for the first and second trial RMB 122,928. Zhao Shishun applied for execution and filing [(2008) No. 04308 of Shenzhen Futian Civil Court execution letter] on July 6, 2009, and applied for revocation of the case on July 10, 2009. On Aug. 14th of 2009, the Company reached reconciliation with Zhao Shishun, and signed Reconciliation Agreement. Till then, the case was executed completely.
3. On April 30, 2007, the Company received Equity Infringement Case of Equity Transfer [Case No. : (2007) No.962 of Shenzhen Futian Civil Court 2 initial letter] which involved RMB 0.48 million target appealed by Zhu Xiaoliang. The relevant matter was disclosed by the Company in its 2007 Annual Report. The Company received the first instance Civil Verdict from Futian District People’s Court on October 31, 2007, which declared that this case was pertinent to the above Equity Infringement Case of Equity Transfer. But the first instance of the case of Zhao Shishun has not gone into effect, because the Shenzhen Intermediate Civil Court has not made the second judgment for the appeal of involved two parties yet, the court made the judgment that this case was in suspension. Zhu Xiaoliang withdrew the prosecution on July 10, 2009. On Aug. 14th of 2009, the Company reached reconciliation with Zhu Xiaoliang, and signed Reconciliation Agreement. Till then, the case was executed completely.
4. As for the lawsuit on guarantee for expired loan amounting to RMB 10 million of ST Dasheng from Shenzhen Development Bank disclosed in the 2007 Annual Report, the Company reached
29Excuting Reconciliation Agreement with ST Dasheng and Guangzhou Borong Investment Co., Ltd. through presidence and mediation by the court on October 13, 2009. Details refer to Notice on Progress of Significant Lawsuits of Shenzhen SEG Co., Ltd. published on China Securities Journal, Securities Times, Hong Kong Wen Wei Po and http://www.cninfo.com.cn dated November 7, 2008. Until the end of the report period, the Company has received repayment RMB 7.5 million from ST Dasheng and the balance would continue to execute according to Executing Reconciliation Agreement.
IV. Purchase, sale of material assets and assets restructure and its progress
(I) The Company invested RMB 69 million to purchase 46% equities of Changsha Xinxing Company held by Shenzhen Jintai Hengye Investment Development Co., Ltd. Details would be found in the IX Investment which belongs to Section IV Report of Board of Directors.
(II) Selling 97.70% equities of SEG Communications
Details would be found in (IV) Other operation activity which occurred significant influence upon profit of the Company in the period of -----II The operation of the Company in the report period which belongs to Section IV Report of Board of Directors.
(III) Selling 50% equities of Chongqing SEG
On January 22, 2009, the meeting of the Board of Directors discussed and approved the Company to transfer 50% equities of Chongqing SEG Electron Market Co., Ltd. held by the Company by public hanging in Shenzhen Assets and Equity Exchange which is sanctioned by SZGZW, with transferring price not less than net asset amounting to RMB 2,697,400 of Chongqing SEG after appaisal (appaisal benchmark date was December 31, 2008). After the transferring procedure with public hanging in Shenzhen Assets and Equity Exchange, 50% equities of Chongqing SEG finally were purchased by Chongqing Atlantic Industrial Co., Ltd. with the price of RMB 3,236,880.00. The Company signed relevant Property Exchange Contract with the transferee and went through the relevant procedure on April 27, 2009. On May 7 of 2009, business registration alteration procedure for Chongqing SEG was accomplished. After this transfer, there was no relationship between the Company and Chongqing SEG in equity, debt and creditor’s right any longer. th
This transfer would increase the investment income of the parent company RMB 1,736,880 and the investment icome of RMB 1,049,880 in the consolidated statement of 2009.
Details of the aforesaid matters were diclosed in Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website respectively on January 23, 2009, April 29, 2009 and May 8, 2009.
(IV) Selling 22.5% equities of SEG GPS
On December 9, 2008, the 22nd extraordinary meeting of the 4th Board of Directors discussed and approved Proposal on Reducing 22.5% Equities Holding of Shenzhen SEG GPS Scientific Navigations Co., Ltd., and agreed the Company to transfer 22.5% equities of SEG GPS held by the Company by public hanging in Shenzhen Assets and Equity Exchange, with transferring price not less than net asset of SEG GPS after appraisal (appraisal benchmark date was October 31, 2008). Relevant details could be found in resolution Notice of the 22nd Extraordinary Meeting of the 4th Board of Directors of Shenzhen SEG Co., Ltd. in Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Website on December 12, 2008. Till the date of disclosing the report, the aforesaid equities are implementing the procedure of public hanging in Shenzhen Assets and Equity Exchange.
V. Significant related transactions
(I) In the report period, the Company has made no significant related transactions on purchase or
30sale of goods or offering labor service.
(II) In the report period, the Company signed Property Leasing Contract with Shenzhen SEG Group Co., Ltd. with the approval of Board of Directors of the Company. The Company rented partial property of the 8th floor of SEG Square from SEG Group as warehouse for the traders of the electron market, and paid rent fee RMB 240,000 as the Contract.
Unit: RMB
Name of related party
Jan.-Jun., 2009
Shenzhen SEG Group Co., Ltd.
240,000.00
(III) In the report period, the Company has not involved in any related transactions concerning the purchase or sale of assets.
(IV)Credit, liabilities or guarantees between the Company and related parties
1. Credit and liability relations with related parties
Statement on Fund Occupancy of Contolling Shareholders and
Other Related Parties of the Company In Semi-annual 2009
Unit: RMB
Name of the related parties
The relationship between the related parties and listed company
Items of accounting statement
Balance at period-begin
Occurred amount of debtor
Occurred amount of lender
Balance at period-end
Withdrawal of bad debt reserve
Occupation way and reason
Way of repaying
Whether belonging to illegal fund occupation forbidden by No.56 document or not
Nature of occupation
A
B
C
D
E
F
G
H
I
J
K
L
Shenzhen SEG Property Management Co., Ltd.
Subsidiary of shareholders
Other account receivable
21,600.00
21,000.00
600.00
Deposit
----
No
Operation occupation
Shenzhen SEG Orient Industrial Development Co., Ltd.
Affiliated company
Other account receivable
443,910.00
443,910.00
90,000.00
Current account
----
No
Operation occupation
Shenzhen SEG Group Co., Ltd.
Controlling shareholder
Other account receivable
80,000.00
80,000.00
Deposit
----
No
Operation occupation
31Total
545,510.00
0.00
21,000.00
524,510.00
90,000.00
The balance of other accounts receivable of the Company collected from SEG Group and its subsidiaries, is the deposit for leasing the property of SEG Group conducted by the branch of electron market of the Company.
2. In the report period, the Company had no guarantee with related parties.
VI. Important contracts and implementation
(I) In the report period, the Company had no significant custody, contract or leasing on other company’s assets nor other company had significant custody, contract or leasing on the Company’s assets.
(II) In the report period, the Company had no entrusted financing.
(III) Significant guarantee contracts
In the report period, no related guarantees occurred to the Company, and ended the report period, the balance of the external guarantee (including guarantees for controlling subsidiaries) of the Company was zero.
External guarantees of the Company (excluding guarantees for controlling subsidiaries)
Name of the Company guaranteed
Date of happening (Date of signing agreement)
Amount of guarantee
Guarantee type
Guarantee term
Complete
Implementation or not
Guarantee for related party (Yes or not)
Naught
Total amount of guarantees in the report period
0.00
Total balance of guarantees at report period-end（A）
0.00
Guarantees for controlling subsidiaries
Total amount of guarantees for controlling subsidiaries in the report period
0
Total balance of guarantees for controlling subsidiaries at report period-end（B）
0
Total amount of guarantees of the Company (including guarantees for controlling subsidiaries)
Total amount of guarantees（A+B）
0
Proportion of total guarantees to net assets
0%
Including:
Amount for shareholders, actual controller and other related parties（C）
0
Liability guarantee direct or indirect for guarantees which assets liability rate exceeding 70%（D）
0
Amount of total guarantee exceeding 50% of net assets（E）
0
Total of the aforementioned three items*（C+D+E）
0
VII. Implementation of the commitments made by shareholder holding more than 5% equities of the Company in the report period.
(I) Article 5 of the Equity Transfer Agreement which the Company had signed with SEG Group at the time of the Company’s listing stipulated: SEG Group permits the Company, as well as
32subsidiaries of the Company and affiliated companies to use the 8 registered trademarks that SEG Group has presently registered at the State Trademark Office; it also permits the Company to take the aforesaid trademarks and symbols that are similar to these marks as the symbol of the Company, as well as to use the aforesaid symbols or symbols that are similar to these symbols during the operation process; the Company doesn’t have to pay SEG Group any fee for the use of the aforesaid trademarks or symbols. In the report period, this commitment was still executed according to the commitment.
(II) According to the problem of “Your company’s existing same industry competition in the electronic market business with SEG Group” appointed by Shenzhen Securities Regulatory Bureau in 2007 at the spot investigation of the Company, the Company received SEG Group’s Consent Letter on Sep.14, 2007, with the content as follows: Our company’s familiar business in electronic market of Shenzhen with Shenzhen SEG Group Co. Ltd. occurred on the basis of historical reasons and had objective market developing background. Our Group promised that we will not have business single in the same city with Shenzhen SEG. The matter has been disclosed on China Securities, Securities Times, Hong Kong Wen Wei Po and http://www.cninfo.com.cn dated Sep. 18, 2007. In the report period, SEG Group implemented the above commitment.
(III) According to Guiding Opinion on Share Merger Reform of Listed Companies co-promulgated by State Council and other four ministries and commissions, Measures for the Administration of the Share Merger Reform of Listed Companies issued by China Securities Regulatory Commission and other relative law and regulations, the Company has implemented Share Merger Reform on Jun 14th of 2006. Shareholders of non-tradable A-shares committed in Prospectus of Share Merger Reform of Shenzhen SEG Co., Ltd: Shareholders of non-tradable A shares make relative legal commitments in accordance with Measures for the Administration of the Share Merger Reform of Listed Companies and implement the commitments. The commitments are: not trading or transferring shares within 12 months from the day of implementation of the reform; after the aforementioned time limitation was due, expired, if shareholders of original non-tradable A shares with a stake over 5% were to sell the original non-tradable A shares through listing in stock exchange, the sales volume should be no more than 5% of the total of the Company within 12 months and no more than 10% within 24 months.
In the report period, the first largest shareholder SEG Group and the second largest shareholder Guangzhou Fodak made related releasing restriction procedure of restricted tradable shares at China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. The A-shares with restricted conditions which could be listed for trade actually this time were 210,368,098 shares which accounted for 26.81% of the total shares of the Company, and date for releasing restriction was on June 25th of 2009. Guangzhou Fodak reduced the holdings of 1,826,900 shares from June 25, 2009 to June 30, 2009. Until the report period end, the original non-circulating shareholders involved in this share merger reform all implemented their commitments.
(IV) On Oct. 18th of 2007, SEG Group, the first largest shareholder of the Company, issued Commitment Letter on Strengthening Management over Non-public Information to the Company and Shenzhen Securities Regulatory Bureau, in which it was promised that our company would establish and perfect the internal control management over the acquired non-public information of listed companies; supervise the relevant information insider in our company and the actual controllers of the company not to buy the securities of your company taking advantage of the non-public information of your company; not suggest others to trade the securities of your company; not to leak the non-public information of your company and offer the list of insider in our company and actual controllers of our company knowing the non-public information of your company and your company could hand this name list to Shenzhen Securities Regulatory Bureau and Shenzhen Stock Exchange for records. During the report period, SEG Group implements its
33commitments.
VIII. Special explanation and independent opinion issued by independent directors on capital occupancy and external guarantee of related parties of the Company
As independent directors of the Company, followed the spirit of seeking truth from the fact, we made inspection on capital current and external guarantee between related parties and the Company. The details are as follows:
No controlling shareholder and other related parties non-operationally occupied the capital of the Company in the report period; no guarantee was provided for controlling shareholder, other related parties, as well as for any non-legal unit or individual.
No external guarantee has been occurred during the report period and the balance of the external guarantee was zero.
IX. SEG Samsung whose 22.45% equities are held by the Company realized net profit attributable to the parent company up to RMB -970 million after audit in the first half year and net profit of the Company influenced by SEG Samsung in the first half year amounted to RMB -222.91 million. Meanwhile, the certified public accountants engaged by SEG Samsung issued auditors’ report with disclaimer of opinion for the Semi-annual Financial Report.
X. No commitment for restricted shares has been added in 2009 by the shareholders holding more than 5% equities of the Company.
XI. Statement for investigation, communication, interview or other activities
Reception date
Reception place
Way of reception
Object received
Discussion issue and offered information
April 17, 2009
The Company
Communication on phone
Shareholder
Asked the date of submitting application on cancellingother special treatment of the Company’s stock in Stock Exchange, and its progress
April 22, 2009
The Company
Communication on phone
Shareholder
Asked the date of submitting application on cancelling other special treatment of the Company’s stock in Stock Exchange, and its progress
April 23, 2009
The Company
Communication on phone
Shareholder
Progress of transferring equity of SEG GPS held by the Company
April 29, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
May 4, 2009
The Company
Communication on phone
Shareholder
Theme of the shareholders’ general meeting of the Company
May 15, 2009
The Company
Communication on
Shareholder
Progress of applying for
34phone
cancelling other special treatment of the Company’s stock in Stock Exchange
May 20, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
May 22, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
May 27, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange in stock exchange of the Company
June 1, 2009
The Company
Communication on phone
Shareholder
Basic information of the Company
June 5, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
June 10, 2009
The Company
Communication on phone
Shareholder
Basic information of the Company
June 17, 2009
The Company
Communication on phone
Shareholder
Basic information of the Company
June 19, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
June 26, 2009
The Company
Communication on phone
Shareholder
Progress of applying for cancelling other specialtreatment of the Company’s stock in Stock Exchange
XII. During the report period, the Company, together with its Board, directors, supervisors, and senior executives all received no inspection, administrative punishment and criticism by circulating a public notice from CSRC, and public condemn from Stock Exchange.
XIII. Other significant proceedings
(I) Equity of other listed companies held by the Company
√Applicable □Inapplicable
35Unit: RMB
Stock code
Short form of the stock
Initial investment amount
Proportion in equity of the Company
Book value at period-end
Gains and losses in report period
Changes on owners’ equity in the report period
000068
SEG Samsung
215,695,992.36
22.45%
267,195,519.10
-240,363,287.93
-240,363,287.93
000007
ST Dasheng
470,000.00
0.25%
3,120,800.00
1,837,604.13
1,543,720.24
600778
Friendship Group
90,405.00
0.04%
325,489.78
202,681.22
Total
216,256,397.36
270,641,808.88
-238,525,683.80
-238,616,886.47
Note: the first releasing time for the restricted tradable shares of SEG Samsung held by the Company is March 4th of 2009. In the report period, the Company sold 530,000 shares of ST Dasheng and 8,969,653 shares of SEG Samsung.
(II) Securities investment of the Company
√Applicable □Inapplicable
(III) Content Index for the Information of the Company Disclosed in 2009
Disclosure date
Content of disclosure
Press and internet website for publication
Jan. 10, 2009
A Brief Equity Change Report of Guangzhou Fodak Enterprise Group Co., Ltd.
Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Web http://www.cninfo.com.cn
Jan. 10, 2009
Notice on Reducing the Holdings of Shares by the 2nd Largest Shareholder
Ditto
Jan. 23, 2009
Resolution of the 23rd Temporary Meeting of the 4th Board of Directors
Ditto
Feb. 28, 2009
Resolution of the 24th Temporary Meeting of the 4th Board of Directors
Ditto
Mar. 5, 2009
Notice on Joint Stock Ventures Assessed asNational High-tech Enterprise
and Relevant Issues
Ditto
Mar. 17, 2009
Suggestive Notice on Bid Result of Equity Transfer of Shenzhen
SEG Communication Co., Ltd.
Ditto
Mar. 19, 2009
Notice on Resignation of Supervisor
Ditto
Mar. 25, 2009
Notice on Progress of Equity Transfer of Shenzhen SEG Communication Co., Ltd.
Ditto
Mar. 28, 2009
Notice on Progress of Equity Transfer of Shenzhen SEG Communication Co., Ltd.
Ditto
Mar. 28, 2009
Notice on Clarification
Ditto
April 14, 2009
Notice on Abnormal Fluctuation of Stock
Ditto
April 15, 2009
Resolution of the 5th Meeting of the 4th Supervisory Committee
Ditto
April 15, 2009
Report on Self-evaluation of Internal Control of 2008
Ditto
36April 15, 2009
Resolution of the 5th Meeting of the 4th Board of Directors
Ditto
April 15, 2009
Notice on Forecast on Daily Operating Related Transaction of 2009
Ditto
April 15, 2009
Notice on Holding the 14th Shareholders’ General Meeting (year of 2008)
Ditto
April 15, 2009
The 2008 Annual Report Summary
Ditto
April 15, 2009
The Full Text of 2008 Annual Report
Juchao Web http://www.cninfo.com.cn
April 23, 2009
Notice on Abnormal Fluctuation of Stock
Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Web http://www.cninfo.com.cn
April 24, 2009
The Full Text of the 1st Quarterly Report of 2009
Ditto
April 24, 2009
The Full Text of the 1st Quarterly Report of 2009
Juchao Web http://www.cninfo.com.cn
April 24, 2009
Notice on Performance Forecast of the Company for
1st Half Year of 2009
Securities Times, China Securities Journal, Hong Kong Wen Wei Po and Juchao Web http://www.cninfo.com.cn
April 29, 2009
Suggestive Notice on Bid Result of Equity Transfer of
Chongqing SEG Electron Market Co., Ltd.
Ditto
May 7, 2009
Legal Advice on the 2008 Shareholders’ General Meeting
Ditto
May 7, 2009
Resolution of the 14th Shareholders’ General Meeting (year of 2008)
Ditto
May 8, 2009
Notice on Accomplishement of Equity Transfer of
Chongqing SEG Electron Market Co., Ltd.
Ditto
May 8, 2009
Notice on Accomplishement of Equity Transfer of
Shenzhen SEG Communication Co., Ltd.
Ditto
May 9, 2009
Notice on Rectification
Ditto
May 16, 2009
Notice on Progress of Applying for Cancelling Other Special Treatment of
the Company’ Stock in in Stock Exchange
Ditto
May 19, 2009
Notice on Clarification
Ditto
37May 20, 2009
Notice on Selling Tradeable Shares with Unrestricted Condition of SEG Samsung
Ditto
June 1, 2009
Notice on Progress of Applying for Cancelling Other Special Treatment of
the Company’ Stock in in Stock Exchange
Ditto
June 4, 2009
Suggestive Notice on Rectification of the 1st Quarterly Report and Modification
of Performance Forecast of the Company for 1st Half Year of 2009
Ditto
June 6, 2009
Resolution of the 26rth Temporary Meeting of the 4th Board of Directors
Ditto
June 6, 2009
Notice on Modification of Performance Forecast of the Company for
1st Half Year of 2009
Ditto
June 16, 2009
Notice on Implemention of Profit Distribution 2008
Ditto
June 23, 2009
Suggestive Notice on Releasing Restricted Shares with Restricted Condition
in the Share Merger Reform
Ditto
June 29, 2009
Notice on Canceling Other Special Treatment of the
Company’s Stock in Stock Exchange
Ditto
38VI. FINANCIAL REPORT (UN-AUDITED)
Balance Sheet
Prepared by: Shenzhen SEG Co., Ltd June 30, 2009 Unit: (RMB) Yuan
Ending balance
Beginning balance
Assets
Merge
Parent company
Merge
Parent Company
Current assets:
Monetary funds
404,216,700.25
320,994,327.28
404,242,883.22
298,174,785.87
Settlement reserves
Lendings to Banks and Other Financial Institutions
Trading financial assets
Notes receivable
Accounts receivable
15,772,104.62
50,893.00
37,054,146.68
114,405.00
Advance to supplier
18,980,643.10
17,057,981.59
103,686.00
Premiums receivable
Reinsurance receivable
Provisions for receivable reinsurance contract
Interests receivable
Dividend receivable
2,101,338.41
6,020,888.90
9,003,495.72
Other receivables
21,866,378.76
5,709,337.66
15,254,619.90
5,126,240.74
Buying back the sale of financial assets
Inventory
1,633,009.60
5,516,156.86
Non-current assets (expire in a year)
Other current assets
Total current assets
464,570,174.74
332,775,446.84
479,125,788.25
312,522,613.33
current assets:
Loans and prepayments in advance
Available-for-sale financial assets
2,975,270.22
2,582,044.38
3,430,544.62
3,240,000.00
Held-to-maturity investment
Long term receivables
Long-term equity investment
314,577,719.19
495,675,218.23
558,731,067.54
699,626,421.58
Investment property
450,838,693.48
353,915,429.99
458,389,203.22
359,248,359.77
Fixed assets
203,635,304.99
23,829,119.68
58,590,599.71
24,141,470.09
Construction in progress
1,320,625.80
109,000.00
944,020.90
144,020.90
39Ending balance Beginning balance
Assets
Merge Parent company Merge Parent Company
Engineer material
Disposal of fixed assets
Productive biological assets
Oil and gas properties
Intangible assets
569,831.43
495,769.32
696,404.07
603,250.98
Development expenditures
Goodwill
9,986,646.66
Long-term prepaid expense
9,758,487.63
991,371.64
10,446,371.09
289,203.75
Deferred income tax assets
7,199,902.33
5,805,052.39
8,992,581.93
6,417,052.39
Other non-current assets
Total non-current assets
1,000,862,481.73
883,403,005.63
1,100,220,793.08
1,093,709,779.46
Total Assets
1,465,432,656.47
1,216,178,452.47
1,579,346,581.33
1,406,232,392.79
Superintendent: Zhang Weimin, Chief Accounting Manager: Li Lifu, Accounting Department Manager: Ying Huadong
Ending balance
Beginning balance
Liabilities and Owner's Equity
Merge
Parent Company
Merge
Parent Company
Current liabilities:
Short-term loans
1,750,000.00
Borrowing from the central bank
Deposit taking and interbank placement
Borrowing from banks and other financial institutions
Trading financial liabilities
Notes payable
Accounts payable
19,809,471.16
1,878,105.20
31,292,433.86
1,807,725.20
Unearned revenue
82,567,167.23
48,393,031.05
115,518,738.97
66,715,671.72
Financial assets sold for repurchase
Service charges and commission payable
Accrued payroll
1,453,820.64
30,166.40
6,163,381.62
4,470,461.55
Tax payable
513,545.39
1,851,258.42
10,550,796.11
7,117,965.59
Interests payable
Dividends payable
1,047,031.93
854,903.47
153,403.29
Other payables
99,933,870.34
37,178,119.93
83,079,536.95
34,036,324.33
Reinsurance payable
Insurance contract reserves
Acting sale of securities
40Ending balance Beginning balance
Liabilities and Owner's Equity
Merge Parent Company Merge Parent Company
Acting underwriter of securities
Non-current liabilities (expire in a year)
Other current liabilities
Total current liabilities
205,324,906.69
89,330,681.00
249,209,790.98
114,301,551.68
Non-current liabilities:
Long-term loans
Bonds payable
Long-term payables
Special payables
Anticipation liabilities
2,728,268.64
2,728,268.64
3,038,218.64
2,728,268.64
Deferred income tax liabilities
23,620,999.50
403,028.26
293,041.01
270,243.20
Other non-current liabilities
Total non-current liabilities
26,349,268.14
3,131,296.90
3,331,259.65
2,998,511.84
Total liabilities
231,674,174.83
92,461,977.90
252,541,050.63
117,300,063.52
Owners' equity (or shareholders' equity)
Paid-in capital (or capital stock)
784,799,010.00
784,799,010.00
784,799,010.00
784,799,010.00
Capital reserves
351,793,168.03
347,999,002.15
351,257,039.42
347,597,818.69
Less: treasury stock
Surplus reserves
102,912,835.67
102,912,835.67
102,912,835.67
102,912,835.67
General risk reserves
Undistributed profit
-102,423,364.77
-111,994,373.25
59,356,134.45
53,622,664.91
Converted difference in Foreign Currency Statements
-550,713.26
-552,897.69
Total owner's equity attributable to the parent company
1,136,530,935.67
1,297,772,121.85
Minority interest
97,227,545.97
29,033,408.85
Total owner’s equity
1,233,758,481.64
1,123,716,474.57
1,326,805,530.70
1,288,932,329.27
Total liabilities and owner's equity
1,465,432,656.47
1,216,178,452.47
1,579,346,581.33
1,406,232,392.79
Superintendent: Zhang Weimin, Chief Accounting Manager: Li Lifu, Accounting Department Manager: Ying Huadong
Income Statement
Prepared by: Shenzhen SEG Co., Ltd January-June, 2009 Unit: (RMB) Yuan
Accrual in the period
Amount incurred in the same period of previous year
Item
Merge
Parent Company
Merge
Parent Company
I. Revenues
137,882,485.07
54,278,634.05
146,747,331.66
50,508,228.43
Operating revenues
137,882,485.07
54,278,634.05
146,747,331.66
50,508,228.43
41Amount incurred in the same period of previous year
Accrual in the period
Item
Merge
Parent Company
Merge
Parent Company
Interest income
Premium earned
Service charges and commission income
II. Cost of revenues
92,401,761.86
22,786,140.09
119,016,004.11
34,622,893.14
Including: operating cost
78,631,266.50
20,303,203.74
80,073,350.64
21,909,383.96
Interest payment
Service charges and commission payment
Surrender value
Net compensation expenses
Net withdrawal of the Insurance contract reserves
Policy dividend expense
Reinsurance expenses
Business tax and surtax
6,355,985.61
3,111,659.92
5,549,049.83
1,896,091.77
Selling expenses
1,353,048.92
5,567,161.75
Administrative expenses
16,241,868.85
8,804,377.41
23,862,807.32
8,808,936.21
Financial expenses
-6,226,108.02
-5,533,100.98
3,332,498.78
2,008,481.20
Loss on asset impairment
-3,954,300.00
-3,900,000.00
631,135.79
Add: profit on change of fair value (loss will be marked with "-")
Equity earnings (loss will be marked with "-")
-186,150,878.70
-182,437,588.32
7,807,137.11
20,505,927.60
In which: equity earnings in the joint ventures and associated enterprises
-214,081,672.20
-214,081,672.20
7,807,137.11
20,505,927.60
Exchange gain (loss will be marked with "-")
III. Operating Profit (loss will be marked with “-“)
-140,670,155.49
-150,945,094.36
35,538,464.66
36,391,262.89
Add: non-operating income
2,039,063.07
1,636,036.40
3,509,124.88
10,929.79
Less: Non Business Expenses
109,809.91
612,000.00
292,432.47
Including: loss on disposal of non-current assets
IV. Income before inocome tax (loss will be marked with “-“)
-138,740,902.33
-149,921,057.96
38,755,157.07
36,402,192.68
Less: income tax
4,385,985.58
6,680,461.61
3,689,469.10
IV. Net income (net loss will be marked with “-“)
-143,126,887.91
-149,921,057.96
32,074,695.46
32,712,723.58
Net income attributable to the owner of the parent company
-146,083,519.02
-149,921,057.96
28,701,388.64
32,712,723.58
42Amount incurred in the same period of previous year
Accrual in the period
Item
Merge
Parent Company
Merge
Parent Company
Minority interest
2,956,631.11
3,373,306.82
Earnings per share
Basic earnings per share
-0.1861
-0.1910
0.0366
0.0417
Diluted earnings per share
-0.1861
-0.1910
0.0366
0.0417
Superintendent: Zhang Weimin, Chief Accounting Manager: Li Lifu, Accounting Department Manager: Ying Huadong
Cash Flow Statement
Prepared by: Shenzhen SEG Co., Ltd January-June, 2009 Unit: (RMB) Yuan
Amount in the period
Amount in the same period in previous year
Item
Merge
Parent Company
Merge
Parent Company
1. Cash Flows from Operating Activities
Cash received from sales of goods or rendering services
148,836,562.69
40,672,087.76
178,440,643.86
43,791,012.64
Net increase on customer’s deposit and interbank placement
Net increase on borrowings from the central bank
Net increase on borrowings from other financial institutions
Premium in cash received of the direct insurance contract
Net cash received for reinsurance business
Net increase on insured deposit and invested capital
Net increase on disposal of trading financial assets
Cash received on interest, service charge and commission
Net increase on borrowings
Net increase on repurchase fund
Refund of taxes and levies
Other cash received relating to operating activities
84,028,548.49
58,845,676.61
67,869,281.78
56,971,202.24
Sub-total of cash inflows
232,865,111.18
99,517,764.37
246,309,925.64
100,762,214.88
Cash paid for goods and services
69,625,154.99
3,868,260.60
66,816,136.09
12,564,373.03
Net increase on customer lending and advances
Net increase on deposits in the central bank and interbanks
43Amount in the period Amount in the same period in previous year
Item
Merge Parent Company Merge Parent Company
Compensation in cash against the direct insurance contract
Cash paid for interests, service charge and commission
Cash paid for policy dividends
Cash paid to and on behalf of employees
21,383,962.20
11,975,128.65
19,509,085.97
7,674,460.58
Payments of all types of taxes
47,206,886.40
32,107,827.45
61,054,092.18
48,792,164.90
Other cash paid relating to operating activities
72,335,734.68
37,078,268.86
67,075,938.73
31,992,718.14
Sub-total of cash outflows
210,551,738.27
85,029,485.56
214,455,252.97
101,023,716.65
Net Cash flow arising from operating activities
22,313,372.91
14,488,278.81
31,854,672.67
-261,501.77
2. Cash Flows from Investing Activities
Cash received from return of investments
38,645,705.01
38,075,705.01
184,510,000.00
184,510,000.00
Cash received from distribution of dividends or profits
5,606,656.24
16,657,645.49
8,462,236.78
20,709,404.69
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
209,500.00
0.00
3,084,571.99
Net cash received on disposal of the subsidiary
24,511,448.87
38,280,000.00
34,814.40
Other cash received relating to investing activities
0.00
0.00
Sub-total of cash inflows
68,973,310.12
93,013,350.50
196,091,623.17
205,219,404.69
Cash paid to acquire fixed assets, intangible assets and other long-term assets
1,746,785.46
439,410.00
2,148,879.37
92,765.00
Investment in cash
0.00
69,000,000.00
Net increase of pledged loans
0.00
0.00
Net cash paid by subsidiary company and other business entities
67,801,287.47
0.00
Other cash paid relating to operating activities
2,228,261.00
0.00
6,108,315.04
6,108,315.04
Sub-total of cash outflows
71,776,333.93
69,439,410.00
8,257,194.41
6,201,080.04
Net cash flows from investing activities
-2,803,023.81
23,573,940.50
187,834,428.76
199,018,324.65
3. Cash Flows from Financing Activities:
Cash received from investment
In which: cash received by subsidiary ompany from minority shareholders
Loans in cash
60,000,000.00
60,000,000.00
Bonds in cash
4445
Amount in the period Amount in the same period in previous year
Item
Merge Parent Company Merge Parent Company
Cash received relating to other financing activities
386,539.46
359,282.33
Sub-total of cash inflows relating to financing activities
60,386,539.46
60,359,282.33
Cash paid for repayments of debt
60,293.72
0.00
95,000,000.00
85,000,000.00
Cash paid for interest payments and distribution of dividends or profits
18,487,494.04
15,242,627.67
18,783,131.93
16,309,676.99
In which: dividend and profit paid by subsidiary company to minority shareholders
Cash payments relating to other financing activities
Sub-total of cash outflows relating to financing activities
18,547,787.76
15,242,627.67
113,783,131.93
101,309,676.99
Net cash flows from financing activities
-18,547,787.76
-15,242,627.67
-53,396,592.47
-40,950,394.66
4. Effect of foreign exchange rate Changes on cash and cash equivalents
1,305.92
0.00
-21,933.68
5. Net Increase in cash and cash Equivalents
963,867.26
22,819,591.64
166,270,575.28
157,806,428.22
Add: Beginning balance of cash and cash equivalents
400,172,059.09
298,174,735.64
261,303,787.50
159,993,220.40
6. Ending balance of cash and cash equivalents
401,135,926.35
320,994,327.28
427,574,362.78
317,799,648.62
Superintendent: Zhang Weimin, Chief Accounting Manager: Li Lifu, Accounting Department Manager: Ying HuadongStatement of Changes in Equity
Prepared by: Shenzhen SEG Co., Ltd January-June 2009 Unit: (RMB) Yuan
Amount of the period
Amount of the same period in previous year
Owner’s equity attributable to the parent company
Owner’s equity attributable to the parent company
Equity of minority shareholders
Owner’s equity in total
Item
Paid-in Capital (or stock)
Capital Reserves
Less: inventory stock
Surplus Reserves
General Risk Reserves
Undistributed Profit
Others
Equity of minority shareholders
Owner’s equity in total
Paid-in Capital (or stock)
Capital Reserves
Less: inventory stock
Surplus Reserves
I. General Risk Reserves
Undistributed Profit
Others
1. Closing balance of the previous year
784,799,010.00
351,257,039.42
102,912,835.67
59,356,134.45
-552,897.69
29,033,408.85
1,326,805,530.70
784,799,010.00
355,198,960.77
110,434,502.35
23,205,681.06
-822,553.81
30,958,932.54
1,303,774,532.91
Add: accounting policy changes
-
Correction of errors in the prior period
-
2. Opening balance of the current period
784,799,010.00
351,257,039.42
-
102,912,835.67
-
59,356,134.45
-552,897.69
29,033,408.85
1,326,805,530.70
784,799,010.00
355,198,960.77
110,434,502.35
23,205,681.06
-822,553.81
30,958,932.54
1,303,774,532.91
3. Amount of increase/decrease of the current period (decrease will be marked with "-")
-
536,128.61
-
-
-
-161,779,499.22
2,184.43
68,194,137.11
-93,047,049.06
-275,918.49
5,713,996.72
-137,620.47
463,850.92
5,764,308.68
(I) Net income
-
-146,083,519.02
2,956,631.11
-143,126,887.91
28,701,388.64
586,140.88
29,287,529.52
(II) Gain and loss directly recorded into owner’s equity
-
536,128.61
-
-
-
-
2,184.43
69,344,281.29
69,882,594.33
-275,918.49
-137,620.47
-122,289.96
-535,828.92
1. Change of fair value of available-for-sale financial assets
-158,938.73
67,736.06
-91,202.67
-275,918.49
-122,289.96
-398,208.45
2. Effect of change of other owners’ equity under the Equity Law
-
3. Effect of income tax relating to the items of owner’s equity
-132,785.06
-132,785.06
4. Others
827,852.40
2,184.43
69,276,545.23
70,106,582.06
-137,620.47
-137,620.47
Subtotal of preceding (1) & (2)
-
536,128.61
-
-
-
-146,083,519.02
2,184.43
72,300,912.40
-73,244,293.57
-275,918.49
28,701,388.64
-137,620.47
463,850.92
28,751,700.60
4647
- - - - - - - -
(3) Owner’s capital investment and impairment
-
1. Owner’s capital investment
-
2. Amount of share-based payment accounted into the owner’s equity
-
3 Others
-
Profit distribution
-
-
-
-
-
-15,695,980.20
-
-4,106,775.28
-19,802,755.48
-22,987,391.92
-22,987,391.92
1. Withdrawal of surplus reserves
2. Withdrawal of general risk reserves
-
3. Distribution to owners (or shareholders)
-
-15,695,980.20
-4,106,775.28
-19,802,755.48
-22,656,618.35
-22,656,618.35
4. Others
-
-330,773.57
-330,773.57
(5) Internal carry forward of owner’s equity
-
1. Capital reserves used for capital (or stock) increase
-
2. Surplus reserves used for capital (or stock) increase
-
3. Surplus reserves used for making up losses
-
4. Others
-
4. Closing balance of the current period
784,799,010.00
351,793,168.03
-
102,912,835.67
-
-102,423,364.77
-550,713.26
97,227,545.97
1,233,758,481.64
784,799,010.00
354,923,042.28
110,434,502.35
28,919,677.78
-960,174.28
31,422,783.46
1,309,538,841.5948
Shenzhen SEG Co., Ltd
Disclosure Notes to the Mid-year Financial Statements of 2009
Unit: RMB Yuan
I. Company Profile
Shenzhen SEG Co., Ltd. (hereinafter referred to as “Company” or "the Company") was incorporated under the Company Law of the People’s Republic of China on July 16, 1996 through public offering with Shenzhen SEG Group Co., Ltd. as the sole initiator upon the approval of relevant authorities of Shenzhen Municipality and the State. The Company was granted with a Business License for Enterprise Legal Person Shen Si Zi No. N16886 with a registration number of 4403011014290. And upon the approval of the securities administration departments of Shenzhen Municipality and the State, the Company’s B share and A share started to be listed and traded on Shenzhen Stock Exchange respectively in July and December 1996. Profession of this company falls into the leasing and commercial service industry.
On June 7, 2006, a resolution was adopted at the general meeting of shareholders on the share merger reform of the Company. According to the plan on the fixed conversion of capital reserves into increase of capital share, the Company distributed such converted and increased capital share to the tradable A share shareholders. Such shareholders obtained 4.6445 shares of converted and increased capital share for each 10 shares, which totaled 40,233,322 shares of converted and increased capital share. As a result, relevant non-tradable A shares were also authorized to be listed and circulated. Among the converted and increased capital share obtained by the tradable A share shareholders, 6,997,054 shares were received due to the company's share capital expansion and the rest of 33,236,268 shares were the consideration paid to the tradable A share shareholders by non-tradable A share shareholders under fixed arrangements. Up to June 14, 2006, the total capital share of the company amounts to 784,799,010 shares, including 411,538,380 restricted shares, accounting for 52.44% of the total, and 373,260,630 unrestricted shares, accounting for 47.56% of the totalAmong the converted and increased capital share obtained by the tradable A share shareholders, 6,997,054 shares were received due to the company's share capital expansion and the rest of 33,236,268 shares were the consideration paid to the tradable A share shareholders by non-tradable A share shareholders under fixed arrangements. Up to June 14, 2006, the total capital share of the company amounts to 784,799,010 shares, including 411,538,380 restricted shares, accounting for 52.44% of the total, and 373,260,630 unrestricted shares, accounting for 47.56% of the total
Up to June 30, 2009, the total capital share issued by the company amounts to 784,799,01049
shares, and the company’s registered capital amounts to 784,799,010 RMB.
Business Scope: domestic commerce, goods supply and sale, excluding commodities under special operation, control and sale, engaging in other industries as may be applied for specific projects, and economic information consultancy. Tenancy: estate agent and setting up of SEG electronics market. The license for professional market is separately applied for.
Registered Address: 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Form of Incorporation: Company limited by shares
Address of Headquarters: 31/F, Tower A, Qunxing Plaza, Huaqiang Road (N), Futian District, Shenzhen
Name of Parent Company: Shenzhen SEG Co., Ltd.
Name of Supreme Group Parent Company: Shenzhen SEG Group Co., Ltd.
Financial Statement Publication Approver: Board of directors
Financial Statement Publication and Approval Date: August 22, 2009.
II. Basis of Preparation for the Financial Statement and Declaration for Compliance with the Accounting Standard of Business Enterprises
The financial statement is prepared by recognizing and measuring the transactions and matters that have actually occurred in accordance with the Basic Standard of Accounting Standards for Business Enterprises and other provisions therein on the basis of a going-concern principle.
In compliance with requirements of the Accounting Standards for Business Enterprises, the financial statements prepared by the Company truthfully and completely reflect relevant information on the financial position, operating results, changes of shareholders’ equity and cash flows of the Company.
III. Main Accounting Policies, Accounting Estimates and Errors in the Prior Period
(I) Accounting period
A fiscal year lasts from January 1 to December 31 of the Gregorian Calendar.
(II) Recording currency
RMB is the recording currency of the financial statements of the Company.
The currency in the primary economic environment where the overseas subsidiary operates is the recording currency, which will be converted into RMB in the financial statements.
(III) Measurement attributes
Generally the Company adopts the historical cost method in the measurement of the items in the accounting statements. Where the amount of some particular accounting elements in question can50
be obtained and measured reliably, such accounting elements will be measured at replacement cost, realizable net value, current value and fair value.
No change has occurred to the measurement attributes to the items in the financial statements.
(IV) Standards for the recognition of cash equivalents
In the preparation of the cash flow statements, the investments that meet the four conditions of shorter term (to be mature within 3 months from the date of purchase), strong liquidity, easiness in converting into known cash, very small risk of value fluctuation were defined as cash equivalents.
(V) Accounting method of foreign currency businesses
The foreign currency businesses are recorded into the accounts after relevant amounts are translated into RMB according to the current exchange rate at the date of transaction.
The balance of foreign currency monetary items is translated at the spot exchange rate on the balance sheet date. Exchange differences are recorded in the current profits and losses, except that the exchange differences arising from the foreign currency borrowings relating to the acquisition of capitalization-compliant assets are dealt with on the principle of capitalization. The foreign currency non-monetary items measured by historical-cost are still translated at the spot exchange rate on the transaction day, unchanging the recording currency amount. The foreign non-monetary items measured at the fair value are translated at the spot exchange rate on the date of fair value determination. Exchange differences arising in these cases are included in the current profits and losses or capital reserves.
(VI) Translation method of financial statements in foreign currency
The assets and liabilities items in the balance sheet are translated according to the current exchange rate on the balance sheet date. The owners’ equity items other than “retained profits” should be translated according to the current exchange rate at the time when incurred.
The income and expense items in the income statement should be translated according to the approximate current exchange rate on the date of transaction. The translation difference in the financial statements in foreign currency should be listed separately under the owners’ equity items in the balance sheet.
With regard to the disposal of overseas operation, the translation difference in the financial statements in foreign currency listed in the owner’s equity item of the balance sheet shall be changed over to the item of current profits and losses disposal; as to the partial disposal of overseas operation, the translation difference computed in the financial statements in foreign currency for the disposed portion shall be changed over to the disposal of current losses and profits.
(VII) Accounting methods of financial assets and liabilities
1. Classification for financial assets and liabilities51
According to the purposes of the obtainment and holding of financial assets and the taking over of financial debts, the management classify them as follows: financial assets or liabilities measured at the fair value whose changes should be recorded in the current gains and losses, including transaction monetary assets or liabilities; held-to-maturity investment; accounts receivable; available-for-sale financial assets; other financial liabilities.
2. Methods for the recognition and measurement of financial assets and liabilities
(1) Financial assets (liabilities) measured at the fair value with changes recorded in the current gains and losses
The fair value (deducting the cash dividends declared but not yet distributed or the bond dividends at the due date for interest payment but not yet received) should be taken as the initial confirmation amount at the time of obtainment. Relevant transaction expenses should be recorded in the current gains and losses.
The interests and cash dividends obtained at the time of holding should be recognized as investment income. The changes of fair value should be recorded in the current gains and losses at the end of the period.
At the time of disposal, the difference between the fair value and the initial recorded amount in the account should be recognized as investment income and the gains and losses from the change of fair value should be adjusted at the same time.
(2) Held-to-maturity investment
The sum of fair value (deducting the bond interests at the due date of interest payment but not yet received) and relevant transaction expenses should be taken as the initial recognition amount at the time of obtainment.
During the time of holding, the interests income should be calculated and recognized in accordance with the amortized cost and the actual interest rates (and where the actual interest rates only have slight differences with the denomination interest rate) and recorded as investment income. The actual interest rate should be determined and set at the time of obtainment and remain unchanged within the anticipated existence period or a shorter period applicable.
At the time of disposal, the difference between the obtained price money and the book value of such investment should be recorded as investment income.
(3) Accounts receivable
For the accounts receivable formed from the commodities sold or labor services provided by the Company and those of other enterprises held by the company other than the priced debt instruments on active markets, including accounts receivable, notes receivable, advance to supplier, other accounts receivable, long-term accounts receivable, the price money in contracts or agreements of the purchaser should be taken as the amount of initial recognition.
At the time of collection or disposal, the difference between the obtained price money and the52
book value of such accounts receivable should be recorded into current gains and losses.
(4) Available-for-sale finance asset
The sum of the fair value (with the cash dividends declared but not yet distributed or the bond dividends not yet received with the interest payment period expired deducted) and relevant transaction expenses should be taken as the initial recognition amount at the time of obtainment.
The interests or cash dividends obtained during the time of holding should be recognized as investment income. Such assets should be measured according to fair value at the end of the period and the changes of fair value should be recorded as capital public reserve (other capital public reserve).
At the time of disposal, the difference between the price money obtained and the book value of such financial assets should be recorded as investment gains and losses. At the same time, the amount of the disposed part of the assets originally recorded in the accumulative amount of the changes in the fair value of owners’ equity should be transferred and recorded as investment gains and losses.
(5) Other financial liabilities
The sum of the fair value of such assets and relevant transaction expenses should be taken as initial confirmation amount. The amortized cost should be adopted in the following measurement.
3. Recognition basis and measurement method of financial assets transfer
In the case of the transfer of the financial assets of the Company, if almost all the risks and returns in the ownership rights of the financial assets are transferred to the assignee, the recognition of such financial assets should be terminated, and if almost all the risks and returns in the ownership rights of such financial assets are retained, the recognition of such financial assets should not be terminated.
In the judgment whether a financial assets transfer meets the above conditions to terminate its confirmation, the principle of attaching more importance to substance than form should be adopted. The Company divides financial assets transfer into complete and partial transfer of financial assets. Where the complete transfer of financial assets meets the conditions of recognition of termination, the difference of the following two amounts should be recorded as current gains and losses.
(1) The book value of the transferred financial assets;
(2) The sum of the consideration received due to transfer and the accumulated amount of the changes in fair value originally recorded in owners’ equity (involving the situation when the transferred financial assets are the salable financial assets ).
Where the partial transfer of financial assets meets the conditions to terminate the confirmation, the book value of the entire transferred financial assets should be allocated between the part with53
its confirmation terminated and the part with its confirmation not yet terminated in proportion to their respective fair value and the difference of the following two amounts should be recorded in the current gains and losses:
(1) Book value of the part with its confirmation terminated;
(2) The sum of the consideration of the part with its confirmation terminated and the part of the accumulated amount of the changes in fair value originally recorded in owners’ equity corresponding to the part with its confirmation terminated (involving the situation when the transferred financial assets are the salable financial assets).
Where the financial assets transfer does not meet the conditions to terminate confirmation, the confirmation of such financial assets should be continued. The received consideration should be confirmed as a financial liability.
4. Methods for the determination of the fair value of financial assets and liabilities
The prices on the active market should be referred to with respect to both the financial assets and liabilities of the Company measured by fair value.
5. Impairment provisions of financial assets
(1) Impairment provisions of salable financial assets:
If the fair value of the salable financial assets sees a large decrease at the end of the year or it is anticipated that such decrease tendency is not provisional upon the comprehensive analysis of various relevant factors, then it can be determined that impairment occurred to such assets. All the accumulative losses formed from the decrease of the fair value originally directly recorded as owners’ equity should be transferred out and relevant impairment loss confirmed.
(2) Impairment provision of held-to-maturity securities
The measurement of the impairment loss of held-to-maturity securities should be processed with reference to the method for the measurement of the impairment loss of accounts receivable.
(VIII) Recognition standards and accrual method of bad debt provisions for accounts receivable
If objective evidences show impairment of the accounts receivable at the end of period, the book value of accounts receivable will be reduced to the recoverable amount and the reduced amount is recognized as asset impairment loss and counted to the profit and loss of the period. The amount of recoverable accounts receivable is determined by discounting the original rate to its future cash flow (exclusive of not yet happening credit loss) and taking into account the value of relevant sureties (deducting the estimated expense of disposal).
The original actual interest rate is an actual interest rate determined through calculation at the original time of recognition of the receivables.
In determining the impairment loss of short-term receivables, the estimated future cash flow shall not be discounted because of the slight difference between the estimated future cash flow and its54
present value.
At the end of the period, separate impairment tests will be conducted on individual accounts receivable of significant amounts. If there are objective evidences proving that such accounts receivable suffer impairment, impairment losses should be recognized and bad debt provision be accrued, according to the difference of the current value of their future cash flow lower than their book value.
The individual accounts receivable of significant amounts refer to accounts receivable of the five largest balances or the sum of amounts that take up over 10% of the total accounts receivable balance.
Accounts receivable with non-significant individual amounts at the end of the period are included in a combination of accounts receivable of similar credit risk for impairment testing. Unimpaired accounts receivable are tested separately (including individual accounts receivable of both significant and non-significant amounts) and then included in a combination of accounts receivable of similar credit risk for impairment testing.
Except for the accounts receivable with impairment provisions accrued separately, the Company determines the following proportions for the accrual of bad debt provisions with the current conditions taken into account and on the basis of the actual loss rate of the combinations of similar credit risk characteristics that are divided by the account age segments and are similar or identical to those in the previous years:
Account age of accounts receivable
Proportions of accrual
Within 1 year
0%
1-2 years
5%
2-3 years
10%
Above 3 years
20%
(IX) Accounting method of inventory
1. Classification of inventory
Inventory is classified as follows: goods on route, raw materials, circulating materials, in-stock goods, goods in process, delivered goods, consigned processing materials and consumable biological assets.
2. Pricing method of delivered inventory
(1) The pricing of the inventory should be made according to the weighted average method at the time of delivery.
(2) Amortization method of circulating materials
For low value consumables, one-off amortization method should be adopted.55
For packaging materials, one-off amortization method should be adopted
3. Inventory taking system
The perpetual inventory method is adopted in the stock inventory.
4. Accrual method of inventory decline provision
After a complete counting and examination of the inventory at the end of the period, the inventory decline provision should be accrued or adjusted according to the lower of the inventory cost and net realizable value.
The net realizable value of the goods inventory directly for sale such as finished products, goods and materials for sale should be determined in regular production and operation according to the amount of the estimated sale price of such inventory less estimated sale expenses and relevant taxes. That of the material inventory to be processed should be determined in regular production and operation according to the estimated sale price of the finished products produced less estimated sale expenses and relevant taxes. That of the inventory held for the performance of sale or service contracts should be calculated on the basis of the contract price. Where the quantity of the inventory is more than the quantity ordered in the sale contract, the net realizable value of the surplus of such inventory should be calculated on the basis of the general sale price.
At the end of the period, inventory decline provision should be accrued according to individual inventory item. However, that of the inventory of large quantity and low unit price should be accrued according to the types of the inventory. For the inventory involving the product series produced and sold in the same region, having identical or similar final use or purpose, and being difficult to be separated from other items for measurement, relevant inventory decline provision should be accrued in a combined manner.
Where the factors previously causing the recording of the reduction of inventory value stop to exist, the reduced amount should be restored and transferred back from the amount of the originally accrued inventory decline provision. The transferred amount should be recorded as current gains and losses.
(X) Accounting of long-term equity investment
1. Initial measurement
(1) Long-term equity investment formed from enterprise merger
In the merger of the enterprises under the control of the same entity, if the Company pays cash, transfers non-monetary assets or bears debts, and issues equity securities, as the consideration of the merger, the book value of the share of the owners’ equity obtained from the merged party on the date of merger should be taken as initial investment cost of the long-term equity investment. The capital reserves are adjusted according to the difference between the initial investment cost of the long-term equity investment and payment of the merger consideration. If the capital reserves are insufficient for the offset, the retained profit is adjusted. Direct expenses incurred by56
the merger, including audit fee, evaluation fee, and legal service fee paid for the merger, are counted to the profit and loss of the period when incurred.
In the case of merger of companies not under the same control, the merger cost is assets spent by the purchaser, liabilities incurred or assumed by the purchaser, and the fair value of issued equity securities, for acquisition of the control of the purchased party on the day of purchase, as well as all direct expensed incurred by the merger. A merger realized by multiple exchanges, the merger cost is the sum of the cost of each exchange. Where the merger contract stipulates future matters that may influence the merger cost, if the future matters are estimated to happen probably and the amount of influenced merger cost can be reliably measured on the day of purchase, such influence is also counted to the merger cost.
(2) Long-term equity investment obtained from other ways
The purchase price money actually paid should be taken as the initial investment cost of the long-term equity investment obtained by paying cash.
The fair value of the issued equity securities should be taken as the initial investment cost of the long-term equity investment obtained from issuing equity securities.
The value agreed in investment contracts or agreements (with the cash dividends declared but not yet distributed or profits deducted) of the long-term equity investment given by the investors should be taken as initial investment cost, unless the value agreed in investment contracts or agreements is not fair value.
Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the assets received and given out in the exchange can be measured reliably, the initial investment cost of the long-term equity investment received in non-monetary assets exchange should be determined on the basis of the fair value of the assets given out, unless there are definite evidences that the fair value of the received assets is more reliable. For the non-monetary assets exchange that do not meet the above premises, the book value of the received assets and relevant taxes payable should be taken as the cost of the long-term equity investment.
The initial investment cost of the long-term equity investment obtained through debt restructuring should be determined according to its fair value.
2. Basis that the invested organizations are under common control or significant influence
The common control over a certain economic activity as agreed in a contract exists only with the unanimous agreement of the investors who need to share the controlling powers in the important financial and operation decisions related to such economic activity and such investors should be deemed as exercising joint control with other parities over the invested organization. If an investor has the power to participate in the decision making of the financial and operation matters of an enterprise but cannot control or jointly control with other parties the formation of57
such policies, then such investor should be deemed as being able to exercising significant influence over the invested organizations.
3. Subsequent measurement and income recognition
When the Company can exercise significant influence on or joint control over the invested organizations, if the initial investment cost is larger than the investment, the Company should enjoy the difference with the due share of the fair value of the discernible net assets of the invested organizations and the initial investment cost of the long-term equity investment should not be adjusted, if the initial investment cost is smaller than the investment, the Company should enjoy the difference with the due share of the fair value of the discernible net assets of the invested organizations and such difference should be recorded as current gains and losses
The accounting of the long-term equity investment of the Company into the subsidiaries should be done according to the cost method. Such investment should be adjusted according to the equity method in the preparation of consolidated financial statements.
The accounting of the long-term equity investment that does not involve the joint control over or significant influence on the invested organizations, that does not have quoted prices on active market, and whose fair value cannot be reliably measured should be done according to the cost method.
The accounting of the long-term equity investment that involves the joint control over or significant influence on the invested organizations should be done according to the equity method.
The confirmation of investment income by the Company under the cost method should only be limited to the distributed amount of the accumulative net profits generated after the invested organizations have received investments. The part exceeding the above amounts in the obtained profits or cash dividends should be taken as the recovery of initial investment cost.
Where the Company confirms the due share of the losses incurred by the invested organizations under the equity method, the following sequence should be followed: First, the book value of the long-term equity investment should be offset. Second, if the book value of the long-term equity investment is not sufficient for the offsetting, the investment loss should continue to be confirmed within the limit of the book value of other long-term equity that practically constitutes net investments into the invested organization and the book values of long-term accounts receivable and others should be offset. Finally, if the enterprise still bears additional obligations as agreed in the investment contract or agreement after the above processing, liabilities should be confirmed according to the anticipated obligations to be borne and recorded as current investment loss.
Where the invested organizations realize profits in the later periods, the Company should make accounting treatment in the reversed sequence against the above after deducting the shared loss58
not yet confirmed, reduce the book balance of the confirmed anticipated liabilities, restore other long-term equity that practically constitutes net investments into the invested organizations and the book value of the long-term equity investment, and confirm investment income at the same time.
In the accounting treatment of the changes in owners' equity other than net gains and losses of the invested organizations, the book value of the long-term equity investment should be adjusted and the capital public reserve (other capital public reserve) added or decreased with respect to the part of the changes in owners’ equity other than net gains and losses of the invested organizations that the Company should enjoy or bear according to the proportion of shareholding under the circumstance that the proportions of shareholding remain unchanged.
(XI) Type and measurement of investment property
Investment property refers to the property held for earning rental or increasing the value of capital, including the right to use of the rented land, the right to use of the land held for transfer after the value increases, and the rented building.
The investment property presently held by the Company should be measured in a cost mode. The depreciation policy of the assets for rent - a type of investment property measured according to the cost mode should be the same as that of the fixed assets of the Company. The amortization policy of the rented land use right should be the same as that of intangible assets. Where there are indications of impairment, the recoverable amount of these should be estimated. If the recoverable amount is lower than the book value, the corresponding impairment loss should be confirmed.
(XII) Pricing of fixed assets and its depreciation method
1. Conditions on recognition of fixed assets
Fixed assets refer to the tangible assets held for the purpose of the manufacture of commodities, provision of labor services, lease or operation and management with a term of use exceeding one fiscal year. The confirmation of fixed assets can be made only when all the following conditions are satisfied:
(1) Where the economic interests related to such fixed assets are likely to flow into the company;
(2) Where the cost of such fixed assets can be measured reliably.
2. Classification of fixed assets
The fixed assets can be classified into: houses and buildings, machinery and equipment, transportation equipment, electronic equipment and other equipment
3. Initial measurement of fixed assets
The initial measurement of fixed assets should be conducted according to the actual cost at the time of obtainment.
The cost of the fixed assets purchased from outside should be determined according to purchase59
price, relevant taxes and the traffic expenses, handling expenses, installation expenses and the service fees of special personnel attributable to such assets and incurred before the fixed assets reach the desired usable status.
Where the price money of the purchased fixed assets is paid on a deferred basis within a term exceeding regular credit conditions and actually of a financing nature, the cost of the fixed assets should be determined on the basis of the current value of the price money in purchase.
The cost of the self-built fixed assets should be composed of the necessary construction expenditure incurred before the assets reach the desired usable status.
The recorded value in the account of the fixed assets obtained from debtors for the repayment of debts in debt restructuring should be determined on the basis of the fair value of the fixed assets. The difference between the book value of debt restructuring and the fair value of the fixed assets used for the repayment of debts should be recorded as current gains and losses.
Under the premises that the non-monetary assets exchange is of commercial nature and that the fair value of the assets received and given out in the exchange can be measured reliably, the recorded value of the received fixed assets in the account should be determined on the basis of the fair value of the assets given out, unless there are definite evidence proving that the fair value of the received assets is more reliable. For non-monetary assets exchanges that do not meet the above premises, the book value of the received assets and relevant taxes payable should be taken as the cost of the fixed assets and no gains and losses should be confirmed.
The recorded value in the account of the fixed assets obtained by the merger of the enterprises under the control of the same entity should be determined according to the book value of the merged party. The recorded value in the account of the fixed assets obtained by the merger of the enterprises under the control of different entities should be determined according to the fair value.
The recorded value of the fixed assets obtained by financing lease in the account should be the lower of the fair value of the leased assets on the lease date and the current value of the minimum lease payments.
4. Accrual method of fix assets depreciation
The fixed assets depreciation should be accrued according to the straight line method and the depreciation rate should be determined according to the type of fixed assets, anticipated service life and anticipated net residual value rate.
For the fixed assets leased by financing lease, if it can be reasonably determined that the ownership right of the leased assets will be obtained upon the expiration of the lease term, depreciation should be accrued within the remaining service life of the leased assets; and if it cannot be reasonably so determined, depreciation should be accrued during the shorter one of the lease term and the remaining service life of the leased assets.60
The anticipated service life and annual depreciation rate of various fixed assets are as follows:
Type of fixed assets
Estimated service life
Anticipated net residual value rate
Annual depreciation rate
Houses and buildings
20-40 years
5%
4.75-2.375%
Machinery equipment
5-10 years
5%
19.00-9.00%
Electronic equipment
5-10 years
5%
19.00-9.00%
Fixed assets obtained by financing lease
5-10 years
5%
19.00-9.00%
Transportation equipment
5-10 years
5%
19.00-9.00%
Other equipment
10 years
5%
9.50%
(XIII) Accounting of construction-in-progress
1. Type of construction in progress
The accounting of construction-in-progress should be made according to the classification of the projects determined in project establishment.
2. Standards and time points for the construction-in-progress being carried forward to fixed assets
All expenditures incurred to the construction-in-progress before the constructed assets reach the desired usable status are recorded as the value of such fixed assets. Where a fixed asset under construction has reached the anticipated usable status but relevant completion final settlement has not yet been completed, such construction in progress should be transferred into fixed assets on the basis of an estimated value, according to the construction budget, construction cost or actual engineering cost, and from the date when such construction-in-progress reaches the anticipated usable status with the fixed assets depreciation accrued according to the fixed assets depreciation policy of the Company. Upon the completion of the completion final settlement, the original estimated value should be adjusted according to the actual cost but the depreciation value originally accrued will not be adjusted.
(XIV) Accounting method of intangible assets
1. Pricing method of intangible assets
Initial measurement of such assets is per cost.
The cost of the intangible assets purchased from outside includes purchase price money, relevant taxes and other expenses incurred due to putting such assets to the anticipated use that can be directly attributed to such assets. Where the price money of the purchased intangible assets is paid on a deferred basis within a term exceeding regular credit conditions and actually of a financing nature, the cost of the intangible assets should be determined on the basis of the current61
value of the price money in purchase.
The recorded value in the account of the fixed assets obtained from debtors for the repayment of debts in debt restructuring should be determined on the basis of the fair value of the fixed assets. The difference between the book value of debt restructuring and the fair value of the fixed assets used for the repayment of debts should be recorded as current gains and losses.
Under the premises that the an exchange of non-monetary assets is of commercial nature and that the fair value of the assets received and given out in the exchange can be measured reliably, the initial investment cost of the long-term equity investment received in non-monetary assets exchange should be determined on the basis of the fair value of the assets given out, unless there are definite evidences that the fair value of the received assets is more reliable. For the non-monetary assets exchange that do not meet the above premises, the book value of the received assets and relevant taxes payable should be taken as the cost of the long-term equity investment.
The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the control of the same entity should be determined according to the book value of the merged party. The recorded value in the account of the intangible assets obtained by the merger of the enterprises under the control of different entities should be determined according to the fair value.
2. Service life and amortization of intangible assets
(1) The conditions on the estimation of the service life of the intangible assets with limited service life:
Item
Estimated service life
Basis
Land-use right
50 years
Beneficiary period
Municipal supporting facilities
10 years
Beneficiary period
Patent right
10 years
Beneficiary period
LAN firewall series
5 years
Beneficiary period
Gaiwei multimedia depression
5 years
Beneficiary period
Non-patent technology
7-10 years
Beneficiary period
At the end of each period, the service life and amortization method of the intangible assets with limited service life should be reviewed.
At the end of each year, the service life and amortization method of the intangible assets with limited service life should be reviewed.
(2) Amortization of intangible assets
The intangible assets with limited service life should be amortized according to the straight line method within the period that such assets bring economic benefits to the enterprise. Where the62
period cannot be anticipated in which such intangible assets bring economic interests to the enterprise, such intangible assets should be deemed as having indeterminate service life and no amortization will be made.
(3) Accounting of expenditure on internal R&D projects
Expenditures on internal R&D projects at the research stage are counted into the profit and loss of the current period when incurred.
Expenditures on internal R&D projects at the development stage are recognized as intangible assets when all the following conditions are met:
(i) The completion of such intangible assets makes it usable or its sale technically feasible.
(ii) There is an intention to complete such intangible assets and use or sell it.
(iii) The way that the intangible assets generate economic interests can prove that the product using such intangible assets or the intangible assets itself have market. If the intangible assets are to be used internally, its usefulness should be proved.
(iv) The Company has sufficient technical and financial resources and other resources to support the completion of the development of such intangible assets and the capacities to use or sell such intangible assets.
(v) The expenditure attributed to the development stage of such intangible assets can be reliably measured.
(XV) Amortization method and term of long-term expenses to be apportioned
The long-term expenses to be apportioned should be averaged and amortized in the benefit period. Among these:
1. The rental paid in advance for operating leased fixed assets should be averaged and amortized in accordance with the term provided in the lease contract or other reasonable ways.
2. The expenditure on the improvement of operating leased fixed assets should be averaged and amortized according to the shorter one of the remaining part of the lease term and the remaining service life.
(XVI) Impairment of main assets other than inventory, investment property and financial assets
1. Long-term equity investment
For the long-term equity investment that does not have price quotations on active market, whose fair value cannot be reliably measured, and the accounting of which is conducted with cost method, its impairment loss is determined by the difference between its book value and the current value determined through discounting the future cash flow according to the current market return rate of similar financial assets
If the measurement results of the recoverable amount of other long-term equity investments63
indicate that such recoverable amount is lower than the book value of such investments, then the difference between the two should be confirmed as impairment loss.
Once the impairment loss of long term equity investment is confirmed, such loss will not be transferred back.
2. Long-term non-financial assets such as fixed assets, construction in progress, intangible asset and goodwill
The Company judges at the end of the period whether there are indications of possible impairment of relevant long-term non-financial assets such as fixed assets, construction in progress and intangible assets.
Impairment tests will be conducted each year on the goodwill formed through merger of enterprises and the intangible assets with indeterminate service life whether there are indications of impairment or not.
Where there are indications of impairment on some assets, the recoverable amount of such assets should be estimated. The recoverable amount may be determined according to the higher one of the net value of the fair value of the assets less the disposal expenses and the current value of the anticipated future cash flow of the assets.
Where the recoverable amount of an asset is lower than its book value, the book value of the asset is reduced to the recoverable value and the reduced amount is recognized as capital impairment loss and counted to the profit and loss of the period. Meanwhile, appropriate asset impairment provisions are accrued accordingly.
After the confirmation of assets impairment loss, corresponding adjustments should be made in the future periods on the depreciation or amortized expenses of the impaired assets so that the adjusted book value of such assets (with the anticipated net residual value deducted) can be amortized systematically within the remaining service life.
Once the impairment loss of long-term equity investment is confirmed, such loss will not be carried back.
Where there are indications of possible impairment of one asset, the Company will estimate its recoverable amount on the basis of the individual asset. Where it is hard for the Company to estimate the recoverable amount of the individual asset, the Company determines the recoverable amount of the asset group where the asset belongs.
(XVII) Capitalization of borrowing costs
1. Confirmation principle of borrowing costs capitalization
Where the borrowing costs incurred by the Company can be directly attributable to the purchase, building or production of the assets that meet the conditions of capitalization, such assets should be capitalized and recorded as relevant assets cost. Other borrowing costs should be confirmed as expenses according to the incurred amount at the time of incurrence and recorded as current64
gains and losses.
The assets that meet the conditions of capitalization refer to the assets such as fixed assets, investment property and inventory that can reach the anticipated usable or salable status only after a considerable time of purchase, building or production activities.
The borrowing costs may be capitalized when all of the following conditions are met:
(1) The assets expenditure has already incurred, including that incurred in the form of cash payment, non-monetary assets transfer or bearing of debts with interests for the purchase, building or production of the assets that meet the conditions of capitalization.
(2) The borrowing costs have already been incurred.
(3) The construction or production activities necessary for putting the assets into a usable or salable status have already started.
Where abnormal discontinuation has occurred in the purchase, building or production of the assets that meet the conditions of capitalization and the time of discontinuation exceeds three months consecutively, the capitalization of the borrowing costs should be suspended.
Where the purchase, building or production of the assets that meet the conditions of capitalization has put such assets into the anticipated usable or salable status, the capitalization of the borrowing costs should be stopped.
Where part of the projects in the purchase, building or production of the assets that meet the conditions of capitalization have been completed and reached the anticipated usable or salable status, the capitalization of the borrowing costs of such part of the assets should be stopped.
2. Capitalization term of borrowing costs
The capitalization term refers to the period between the start time point and the end time port of the capitalization of the borrowing costs, excluding the period in which the capitalization is suspended.
3. Calculation method of the amount of borrowing costs capitalization
The interest expenses of special loans (with the interest income of the unused borrowed funds deposited in the bank or the investment income obtained from temporary investment deducted) and relevant auxiliary expenses should be capitalized before the assets that meet the conditions of capitalization, purchased, built or produced with such loans, reach the anticipated usable or salable status.
The amount of the interests of common loans that should be capitalized should be calculated and determined by the weighted average of the accumulative parts of the assets expenditure exceeding special loans multiplied by the capitalization rate of common loans. The capitalization rate should be determined according to the weighted average interest rate of common loans.
Where the loans involve discount or premium, the amount of discount or premium to be amortized in each accounting period should be determined in accordance with the actual interest65
rate method and the amount of interests of each period should also be adjusted.
(XVIII) Share payment
1. Types of share payment
The payment of employees’ shares settled with equity should be recorded as costs and expenses and capital public reserve (other capital public reserves) according to the fair value of the equity instruments on the grant date and the subsequent changes of the fair value will not be recognized. No adjustments will be made to the recognized costs and expenses and total owners' equity after the option becomes exercisable. The share capital and share capital premium should be confirmed according to the conditions of the exercise of the options and the capital public reserve confirmed during the vesting period (other capital public reserve) should be carried forward. Among these, for the share payment in exchange for the employees' services, relevant assets costs and the current expenses should be included in relevant asset cost or expenses of the current period and counted to capital public reserves (other capital public reserves), on each balance sheet date within the vesting period, on the basis of the best estimation of the number of exercisable equity instruments and according to the fair value of the equity instruments on the grant date. The share payment in exchange for the service of other parties should be measured according to the fair value of the service exchanged from other parties. If such fair value cannot be measured reliably but the fair value of the equity instruments can be measured reliably, then the above share payment should be measured according to the fair value of the equity instruments on the date of service obtainment and recorded as relevant assets cost or expense and as other capital public reserve in the capital public reserve.
For the share payment involving employees settled in cash, measurement should be made once again on the fair value of the equity instruments on each balance sheet date to determine costs and expenses and wage payable. On each balance sheet date within the vesting period, measurement should be made according to the fair value of the liabilities borne as calculated and determined on the basis of the share or other equity instruments and on the basis of the best estimation of the number of exercisable equity instruments. The results should be recorded as relevant assets costs or expenses and as wage payable. No cost expenses will be recognized after the option becomes exercisable. The fair value of the wage payable should be re-measured and the changes of such fair value should be recorded as gains and losses from changes of fair value.
2. Method for recognition of fair value
Where the equity instruments such as granted option have active market, the fair value of such instruments should be recognized according to the quoted prices on the active market. Where the equity instruments such as granted option do not have active market, the fair value of such instruments should be determined according to the Black-Scholes Option Pricing Model. At least the following factors should be considered in the selection of the option pricing model: a.66
exercise price of option, b. validity of option, c. current price of share subject matter, d. anticipated fluctuation rate of share price, e. anticipated dividend of share, f. risk-free rate of interest within the validity of option, and g. share payment in graded vesting.
3. Basis for the recognition of the best estimation of the exercisable equity instruments
On each balance sheet date in the vesting period, the Company should make the best estimation on the basis of the latest subsequent information on the changes of the number of the employees with exercisable option and adjust the number of the exercisable equity instruments. On the vesting date, the ultimate number of the anticipated exercisable equity instruments should be consistent with the actual quantity of the exercisable options.
The accumulative amount of the cost expenses to be confirmed in the current period should be calculated on the basis of the fair value of the above equity instruments and the anticipated exercisable equity instruments. Such amount deducted by the accumulative confirmed amount in the last period should be taken as the amount of cost expenses to be confirmed in the current period.
(XIX) Principle for recognition of income
1. Sale of commodities
The realization of the income from the sale of commodities should be confirmed when the Company has already transferred the main risks and consideration in the ownership right of the commodities to the purchaser, the Company has not retained any further management right connected to the ownership right nor implement effective control over the sold commodities, the amount of the revenue can be reliably measured, relevant economic interests are likely to flow into the enterprise, and relevant costs incurred or to be incurred can be measured reliably.
2. Provision of labor services
Where the results of the labor services provided on the balance sheet date can be estimated reliably, the income from the provision of labor services should be confirmed with the percentage of completion method. The progress of the labor services provision should be determined on the basis of the measurement results of the completed work, or the proportion of the provided labor services to the total volume of the labor services to be provided, or the proportion of the cost incurred to the total cost, according to the actual conditions.
The total amount of the income from provision of labor services should be determined according to the price money received or receivable of relevant contract or agreement, unless the price money received or receivable of relevant contract or agreement is unfair. The labor services income of the current period should be confirmed on the balance sheet date according to the resulted amount of the total amount of income from provision of labor services times the completion percentage and deducted by the accumulative amount of the confirmed income from provision of labor services in previous accounting periods. At the same time, the labor cost of the67
current period should be carried forward according to the estimated total cost of the provision of labor services times the completion percentage and deducted by the accumulative amount of the confirmed labor cost in previous accounting periods.
Where the results of the provision of labor services on the balance sheet date cannot be estimated reliably, such results should be processed respectively according to the following conditions:
(1) Where it is estimated that the labor services cost incurred can be met, the income from provision of labor services is recognized according to the amount of the labor services cost incurred and the same amount should be transferred into labor cost.
(2) Where it is estimated that the labor services cost incurred cannot be met, the labor services cost incurred will be recorded as current gains and losses and no income is confirmed.
3. Transfer of asset-use right
The Company is very likely to get economic benefits from such transfer. Where the amount of gain can be reliably measured, the amount of income from the transfer of asset-use right is determined as follows:
(1) The amount of interest income should be determined according to the time and actual interest rate of other people using the monetary fund of the enterprise.
(2) The amount of the income from use fee should be determined in accordance with the time and method of charges as agreed in relevant contract or agreement.
(XX) Basis for the recognition of deferred income tax assets
The Company confirms the deferred incomes tax assets generated from deductible temporary difference.
IV. Taxes
(I) Main tax types and tax rates imposed on the Company
Tax category
Tax rate
note
Value-added tax
17%
Operating tax
3%, 5%
Enterprise income tax
20%, 16.5%, 25%
Urban maintenance and construction tax
1%, 7%
Education surtax
3%
The enterprise income tax rate applicable to the Xi’an SEG Electronics Market Co., Ltd., a subsidiary of the Company, was 25% and that of city maintenance and construction tax was 7%.
The enterprise income tax rate applicable to the Suzhou SEG Electronics Market Co., Ltd., a subsidiary of the Company, was 25% and that of city maintenance and construction tax was 7%.68
The enterprise income tax rate of the SEG (Hong Kong) Storage and Transportation Co., Ltd., a subsidiary indirectly controlled by the Company, was 16.5%.
Except for the above companies, the income tax rate applicable to all the rest companies was 20% and the city maintenance and construction tax rate was 1%.
(II) Tax deduction and exemption
None.
V. Consolidated Financial Statements
The Accounting Standard for Business Enterprises No. 33 - Consolidated financial statements promulgated in February 2006 should apply with respect to the consolidated financial statements. All subsidiaries controlled by the Company are covered by the consolidated financial statements.
The consolidate statements are based on the individual statements of the parent company and all subsidiaries covered compiled by the parent company with reference to other relevant information after the long-term equity investment to subsidiaries is adjusted in the equity method. The consolidation offsets internal equity investment and owners' equities of subsidiaries, internal investment gain and profit distribution of subsidiaries, internal transactions, and internal creditors' right and debt.
The excess of the consolidation cost over the fair value share of recognizable net assets of the purchased party gained in the consolidation is recognized as trade credit. The shortage of the consolidation cost under the fair value share of recognizable net assets of the purchased party gained in the consolidation is counted to the profit and loss of the current period.
The accounting policies adopted by subsidiaries are consistent with the parent company.
Unless particularly noted, the measurement unit of the amounts in the data listed in this section is RMB Yuan.
(I) Information of subsidiaries
1. Subsidiaries acquired through the merger of enterprises under the control of the same entity
Full name of invested organization
Type of subsidiary
Place of registration
Nature of business
Registered capital
Business scope
Actual investment of the Company at the end of the year
Percentage of total shares held by the Company
Percentage of total votes held by the Company
Consolidate statements?69
Shenzhen SEG Baohua Electronics Co., Ltd
Controlled subsidiary
Shenzhen
(4)Service industry
3,080.88
Property lease and property management
20,51.25
66.58%
66.58%
Yes
Shenzhen SEG Storage and Transportation Co., Ltd.
Controlled subsidiary
Shenzhen
(4)Service industry
6,600
Overseas transportation and bonded storage
6,572.91
99.59%
99.59%
Yes
Shenzhen SEG Industrial Investment Co., Ltd
Controlled subsidiary
Shenzhen
Investment
2,550
Industrial investment and domestic commerce
2,378.00
91.79%
91.79%
Yes
Shenzhen SEG Communication Co., Ltd.
Controlled subsidiary
Shenzhen
Communication electronics
3,000
Manufacturing of telecommunication equipments
2. Subsidiaries acquired through the merger of enterprises not under the control of the same entity
Full name of invested organization
Type of subsidiary
Place of registration
Nature of business
Registered capital
Business scope
Actual investment of the Company at the end of the year
Percentage of total shares held by the Company
Percentage of total votes held by the Company
Consolidate statements?
Changsha Xinxing Development Co., Ltd
Controlled subsidiary
Changsha
(4)Service industry
3,500.00
Domestic commerce and material trading
6,900.0
46.00%
46.00%
Yes
3. Subsidiaries not acquired through enterprise merger70
Full name of invested organization
Type of subsidiary
Nature of business
Registered capital
Business scope
Actual investment of the Company at the end of the year
Balance of the net actual investment in subsidiaries
Percentage of total shares held by the Company
Percentage of total votes held by the Company
Consolidate statements?
Xi’an SEG Electronics Market Co., Ltd
Controlled subsidiary
Xi’an
300
Domestic commerce and material trading
195.00
195.00
65.00%
65.00%
Yes
Chongqing SEG Electronics Market Co., Ltd
Controlled subsidiary
Chongqing
300
Domestic commerce and material trading
150.00
150.00
50.00%
50.00%
Yes
Shenzhen SEG Electronics Market Management Co., Ltd
Controlled subsidiary
Shenzhen
300
Domestic commerce and material trading
210.00
210.00
70.00%
70.00%
Yes
Suzhou SEG Electronics Market Co., Ltd
Controlled subsidiary
Suzhou
300
Domestic commerce and material trading
135.00
135.00
45.00%
45.00%
Yes
(II) Changes of subsidiaries in the period
1. New subsidiaries acquired through merger of enterprises under the control of the same entity
There are no new subsidiaries acquired through the merger of enterprises under the control of the same entity in the period of report.
2. New subsidiaries acquired through purchase of equities of enterprises not under the same control71
Name of subsidiary
Date of purchase
Recognition of the date of purchase
Determination of fair value
Remark
Changsha Xinxing Development Co., Ltd
March 20, 2009
Date of change of industrial and commercial registration
Determination by negotiation between both parties based on the audited price
3. Reduced subsidiaries due to sale of equities not under the same control in the period
Name of subsidiary
Date of sale
Recognition of the date of sale
Determination of fair value
Remark
Chongqing SEG Electronics Market Co., Ltd
May 7, 2009
Date of change of industrial and commercial registration
Public listed exchange
Shenzhen SEG Communication Co., Ltd.
May 7, 2009
Date of change of industrial and commercial registration
Public listed exchange
(III) Subsidiaries included in consolidation scope of which the parent company only possesses half or less than half of the votes and reasons of inclusion
There are no such subsidiaries in the period.
(IV) Invested units of which the parent company possesses over half of the votes yet fails to control, and relevant reasons
There are no such invested units in the period of reporting.
(V) Changes of the consolidation scope in the period
1. Two subsidiaries cease to be included in the consolidation in the period because of the following reason:
The Company signed an Equity Exchange Agreement with Shenzhen HYT Science&Technology Co., Ltd. On March 19, 2009 with respect to the transfer of equities. Shenzhen HYT Science&Technology Co., Ltd. bought 100% equities of SEG Communications at RMB40 million, where RMB39.08 million for 97.70% equity shares of SEG Communications held by the Company and RMB0.92 million for 2.30% equity shares of SEG Communications held by SEG Industrial Investment. The industrial and commercial registration of such equity transfer was completed on May 7, 2009.
The Company transferred all investments to Chongqing SEG Electronics Market Co., Ltd. In the period and sold 50.00% equity shares to Chongqing Atlantic Industrial Co., Ltd. at72
RMB3,236,880. The industrial and commercial registration of such equity transfer was completed on May 7, 2009.
2. Information of subsidiaries no longer included in the consolidation in the period
Name of subsidiary
Percentage of total shares held by the Company
Net asset at period beginning
Net asset at the date of disposal
Net profit from period beginning to the date of disposal
Remark
Chongqing SEG Electronics Market Co., Ltd
50%
4,374,063.87
3,932,861.94
-441,201.93
Shenzhen SEG Communication Co., Ltd.
100%
3,140,678.66
2,998,025.07
-142,653.59
3. There was 1 consolidation unit increased in this period: the Company invested RMB 69 million to purchase 46% equities of Changsha Xinxing Development Co., Ltd. The Company had over half voting right in the board of directors, so the company was brought into the consolidation scope in the report period.
(VI) Conditions in which the capacities of the subsidiaries to transfer funds were strictly restricted
There were no conditions in which the capacities of the subsidiaries to transfer funds were strictly restricted in the report period.
(VII) Business nature and activities of the special purpose entities included into the consolidation scope as subsidiaries
There were no special purpose entities who were included in the consolidation as subsidiaries of the Company.
(VIII) Special purpose entities that were not included in the consolidation scope and would no longer be included in the consolidation scope
There were no special purpose entities that were not included in the consolidation scope and would no longer be included in the consolidation scope within the report period.
VI. Notes on the Main Items of the Consolidated Financial Statements
(Unless otherwise stated, the amounts hereinafter are measured in RMB Yuan.)
(I) Monetary funds
Ending amount
Beginning amount
Item
Amount in foreign currency
Discount rate
Amount in RMB
Amount in foreign currency
Discount rate
Amount in RMB
Cash73
Ending amount Beginning amount
Item Amount in
foreign currency
Discount
rate
Amount in RMB
Amount in
foreign
currency
Discount
rate
Amount in RMB
RMB
485,888.09
1,421,151.20
US$
148,984.04
0.88
130,440.56
3,430.00
6.83
24,930.96
HK$
2,981.76
6.83
20,365.45
51,401.97
0.89
45,803.35
JPY
211.00
0.07
14.77
211.00
0.08
15.96
Bank deposit
RMB
0.00
398,876,866.18
397,852,445.56
US$
49,637.47
6.83
339,106.80
43,775.28
6.83
339,262.84
HK$
4,547,293.64
0.88
4,001,618.40
511,743.41
0.89
488,398.99
Other monetary fund
RMB
362,400.00
4,070,874.36
US$
Total
404,216,700.25
404,242,883.22
Including: US$
52,619.23
6.83
359,472.25
47,205.28
6.83
364,193.80
JPY
211.00
0.07
14.77
211.00
0.08
15.96
HK$
4,696,277.68
0.88
4,132,058.96
563,145.38
0.89
534,202.34
Where, restricted monetary funds are detailed as follows:
Ending amount
Beginning amount
Cash for investment
L/C deposit
Bank acceptance deposit
Other deposits
362,400.00
4,070,824.13
Deposits abroad
Total
362,400.00
4,070,824.13
Where, other monetary funds is RMB3,708,424.13 less from the beginning of the period, mainly attributable to the decrease of RMB3,080,824.13 engineering deposit of Shenzhen SEG Communication Co., Ltd.
(II) Accounts receivable
1. The composition of accounts receivable74
Ending amount
Beginning amount
Account age
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Within 1 year (including 1 year)
15,766,826.45
66.50%
0.00
0.00%
30,513,232.62
65.11%
0.00%
1-2 years (including 2 years)
5,555.97
0.02%
277.80
5.00%
5,462,201.49
11.66%
273,110.08
5.00%
2-3 years (including 3 years)
0.00
943,490.49
2.01%
94,349.05
10.00%
Above 3 years
7,937,897.42
33.48%
7,937,897.42
100.00%
9,946,248.93
21.22%
9,443,567.72
94.95%
Total
23,710,279.84
100.00%
7,938,175.22
33.48%
46,865,173.53
100.00%
9,811,026.85
20.93%
Ending amount
Beginning amount
Type
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
1. Accounts of significant individual amounts with separately accrued bad debt provision
2,160,725.63
9.11%
2,160,725.63
100.00%
3,490,725.63
7.45%
3,490,725.63
100.00%
2. Accounts of non-significant individual amounts with separately accrued bad debt provision
5,777,171.79
24.37%
5,777,171.79
100.00%
5,777,171.79
12.33%
5,777,171.79
100.00%75
3. Other groups classified as having similar credit risk
15,772,382.42
66.52%
277.80
0.00%
37,597,276.11
80.22%
543,129.43
1.44%
Where: accounts of significant individual amounts
31,693,048.21
67.62%
280,049.42
0.88%
Accounts of non-significant individual amounts
15,772,382.42
66.52%
277.80
0.00%
5,904,227.90
12.60%
263,080.01
4.46%
Where: accounts of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked
Total
23,710,279.84
100.00%
7,938,175.22
33.48%
46,865,173.53
100.00%
9,811,026.85
20.93%
2. Changes in bad debt provisions for accounts receivable
Decrease in the period
Beginning book balance
Accrual of the period
Write back
Write off
Ending book balance
January-June, 2009
9,811,026.85
1,872,851.63
7,938,175.22
3. Accounts receivable of significant individual amounts with separately accrued bad debt provisions
Ranking of significant individual accounts
Amount
Percentage of provision
Reason
No.1: Shuangxionghui Company
2,160,725.63
100.00%
Long aged and uncollectible
4. There are no accounts of non-significant individual amounts but belonging to a group of76
accounts of similar credit risk which is highly risked in the period.
5. There are no accounts receivable for which total or a large proportion of bad debts provision was accrued in previous periods and which were all or partly collected in the period.
6. There are no accounts receivable that were written off in the period.
7. The accounts receivable at the end of the period include no accounts payable by shareholders that hold more than 5% (inclusive) of the voting shares of the Company.
8. Top five accounts among ending accounts receivable
Ranking of debtors
Relationship with the Company
Amount
Account age
Percentage in the total amount of accounts receivable
No.1: Schenker China Ltd. Shenzhen Branch
Nonaffiliated
5,791,196.13
Within 1 year
24.42%
No.2: Shenzhen Shuangxionghui Industrial Co., Ltd.
Nonaffiliated
2,163,725.63
Above 3 years
9.13%
No.3: HON HAI PRECISION IND CO.LTD
Nonaffiliated
1,625,472.36
Within 1 year
6.86%
No.4: Shenzhen Youhe-Daotong Industrial Co., Ltd.
Nonaffiliated
1,584,267.61
Within 1 year
6.68%
No.5: RICOH INTERNATIONAL LOGISTICS (H.K) CO.,LTD
Nonaffiliated
1,136,165.42
Within 1 year
4.79%
9. There are no trade arrangements at the end of the period for asset securitization with accounts receivable as the subject asset.
10. There are no financial instruments that are subjects of securitization and do not meet the condition of termination at the end of the period.
The ending amount of accounts receivable declined by RMB23,154,893.69, a fall of 49.41% from the beginning amount. Such fall is because the balance sheet of the sold Shenzhen SEG Communication Co., Ltd. was no longer included in the consolidation in the period so that the consolidated accounts receivable was down by RMB25,393,418.74.
(III) Advance to suppliers
1. Analysis on the account ages
Ending amount
Beginning amount
Account age
Amount
Percentage in the total amount
Amount
Percentage in the total amount
Within 1 year (including 1 year)
18,980,643.10
100%
11,998,640.69
70.34%77
1-2 years (including 2 years)
5,059,340.90
29.66%
2-3 years (including 3 years)
Above 3 years
Total
18,980,643.10
100%
17,057,981.59
100.00%
2. There is no significant advance to suppliers aged above 1 year in the period.
3. Advance to suppliers of relatively large amount at the period end
Ending amount
Beginning amount
Name of company
Amount
Percentage (%)
Amount
Percentage (%)
Xi'an Hi-tech West Industrial Development Co., Ltd.
10,000,000.00
52.69%
10,000,000.00
58.62%
Tonmac International Electronics (Suzhou) Co., Ltd
7,207,000.00
37.97%
5,000,000.00
29.31%
(2) Receivers of advance to suppliers
Name of company
Relationship with the Company
Amount
Due time
Reason of payment
Xi'an Hi-tech West Industrial Development Co., Ltd.
Partner
10,000,000.00
2008
Advance rental
Tonmac International Electronics (Suzhou) Co., Ltd
Partner
7,207,000.00
2009
Advance rental
Total
17,207,000.00
4. Among the ending advance to suppliers, no amounts are payable to shareholders that hold over 5% (including 5%) of the voting shares of the Company.
(VI) Dividend receivable
Item
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Reason for failure to collect
Indications of impairment
1. Dividend receivable aged within 1 year
2,101,338.41
2,101,338.41
None.
2. Dividend receivable aged over 1 year78
Item
Beginning
amount
Increase in
the period
Decrease in
the period
Ending
amount
Reason for
failure to
collect
Indications
of
impairment
Total
2,101,338.41
2,101,338.41
The dividend receivable at the end of the period is increased by RMB2,101,338.41, up 100.00% from the beginning of the period. The reason for such increase is that the equity-held Shanghai SEG Electronics Market Management Co., Ltd. announced to distribute cash dividend of 2008.
(V) Other accounts receivable
1. The composition of other accounts receivable
Ending amount
Beginning amount
Account age
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Within 1 year (including 1 year)
2,008,821.72
3.55%
-
0.00%
5,670,534.01
10.50%
0.00%
1-2 years (including 2 years)
14,543,025.65
25.70%
17,723.72
0.12%
5,535,627.31
10.25%
41,900.73
0.76%
2-3 years (including 3 years)
3,946,461.52
6.97%
561,658.85
14.23%
685,808.45
1.27%
70,743.44
10.32%
Above 3 years
36,083,232.90
63.77%
34,135,780.46
94.60%
42,092,062.76
77.97%
38,616,768.46
91.74%
Total
56,581,541.79
100.00%
34,715,163.03
60.41%
53,984,032.53
100.00%
38,729,412.63
71.74%
Ending amount
Beginning amount
Type
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision79
1. Accounts of significant individual amounts with separately accrued bad debt provision
23,463,731.77
41.47%
23,463,731.77
100.00%
28,708,732.44
53.18%
28,708,732.44
100.00%
2. Accounts of non-significant individual amounts with separately accrued bad debt provision
8,619,400.12
15.23%
8,619,400.12
100.00%
8,627,486.12
15.98%
8,627,486.12
100.00%
3. Other groups of accounts of similar credit risk
24,498,409.90
43.30%
2,632,031.14
10.74%
16,647,813.97
30.84%
1,393,194.07
8.37%
Where: accounts of significant individual amounts
23,854,292.08
42.16%
2,610,255.45
10.94%
14,431,208.63
26.73%
1,324,669.78
9.18%
Accounts of non-significant individual amounts
644,117.82
1.14%
21,775.69
3.38%
2,216,605.34
4.11%
68,524.29
3.09%
Total
56,581,541.79
100.00%
34,715,163.03
61.35%
53,984,032.53
100.00%
38,729,412.63
71.74%
2. Changes in bad debt provisions for other accounts receivable
Decrease in the period
Beginning book balance
Accrual in the period
Write back
Write off
Ending book balance
January-June, 2009
38,729,412.63
3,954,300.00
59,949.60
34,715,163.0380
3. Accounts of significant individual amounts with separately accrued bad debt provision
Other receivables
Book Balance
Percentage of accrual
Amount of bad debt provision
Reason
No.1: Yangjiang Yuntong Grease Co., Ltd.
8,530,276.35
100.00%
8,530,276.35
Long aged and uncollectible
Shenzhen Lianjing Trade Co., Ltd.
5,697,287.51
100.00%
5,697,287.51
Long aged and uncollectible
Yunsen Trading Co.
1,668,343.74
100.00%
1,668,343.74
Long aged and uncollectible
China Unicom (Jiangsu)
3,092,011.09
100.00%
3,092,011.09
Long aged and uncollectible
4. There are no other accounts receivable of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked at the end of the period.
5. There are no other accounts receivable at the end of the period for which total or a large proportion of bad debts provision was accrued in previous periods and which were all or partly collected in the period.
6. Among other accounts receivable at the end of the period, units that hold above 5% (inclusive) of the voting shares of the Company are listed in Note VIII.
7. Other accounts receivable attributable to affiliated accounts at the end of the period are detailed in Note VIII.
8. Top 5 accounts receivable at the end of the pweriod
Ranking of debtors
Relationship with the Company
Nature or Content
Amount receivable
Account age
Percentage in the total amount of other accounts receivable
Yangjiang Yuntong Grease Co., Ltd
Current account
8,530,276.35
Above 3 years
15.08%
Shenzhen Lianjing Trade Co., Ltd.
Current account
5,697,287.51
Above 3 years
10.07%
Tonmac International Electronics (Suzhou) Co., Ltd
Deposit, electricity charges and advance rental
4,509,556.00
1-2 years
7.97%
Shenzhen Top Industry Co., Ltd.
Current account
3,281,387.96
Above 3 years
5.80%81
SEG Commercial Company
Current account
2,205,839.39
Above 3 years
3.90%
(VI) Inventories and provision for obsolete stocks
Ending amount
Beginning amount
Item
Book balance
Provision for obsolete stocks
Book balance
Provision for obsolete stocks
Raw materials
149,854.06
2,967,777.44
749,065.97
Low-cost consumables
68,432.05
115,202.50
Goods in production
2,657,672.60
Finished products (Inventories)
1,474,629.23
59,905.74
678,083.69
179,537.36
Others
26,023.96
Total
1,692,915.34
59,905.74
6,444,760.19
928,603.33
There are no inventories used as surety and no inventories of which the ownership right is restricted at the end of the period.
1. Provision for obsolete stocks
Decrease in the period
Item
Beginning book balance
Accrual in the period
Write back
Write off
Ending book balance
Raw materials
749,065.97
749,065.97
Low-cost consumables
Goods in production
Finished products (Inventories)
179,537.36
119,631.62
59,905.74
Others
Total
928,603.33
868,697.59
59,905.74
The amount of inventories at the end of the period is decreased by RMB4,751,844.85, down 73.73% from the beginning of the period. The reason for this fall is that the balance sheet of the sold subsidiary Shenzhen SEG Communication Co., Ltd. was no longer consolidated in the balance sheet of the Company so that raw material and finished products of SEG Communications are not counted due to the change in the consolidation of scope.
(VII) Financial assets available for sale
1. Composition82
Item
Ending fair value
Beginning fair value
1. Bonds available for sale
2. Equity instruments available for sale
2,975,270.22
3,430,544.62
Including: Restricted shares available for sale
Non-restricted shares available for sale
2,975,270.22
3,430,544.62
(3)Others
Total
2,975,270.22
3,430,544.62
(VIII) Long-term equity investment
Ending amount
Beginning amount
Name of the invested company
Book balance
Impairment provision
Book balance
Impairment provision
Shenzhen SEG Samsung Co., Ltd.
267,195,519.10
507,558,807.03
Nanjing Commercial Building Co., Ltd.
280,000.00
280,000.00
Shenzhen Tianji Optoelectronic Technology Industrial Co.
105,000.00
105,000.00
105,000.00
105,000.00
Anshan No.1 Department Store Co., Ltd.
15,000.00
15,000.00
Shenzhen SEG GPS Scientific Navigations Co., Ltd
41,533,982.96
43,332,929.26
Shenzhen SEG Telecom Equipment Co., Ltd
3,679,217.22
3,679,217.22
3,679,217.22
3,679,217.22
Shanghai SEG Electronics Market Management Co., Ltd
5,553,217.13
6,326,533.75
Shenzhen SEG Marketing Co., Ltd
1,900,000.00
682,202.50
Total
318,361,936.41
3,784,217.22
563,197,487.26
4,466,419.72
1. Main information about the invested companies
Name of the invested company
Place of registration
Nature of business
Shareholding radio
Voting ratio in the invested company
Total ending net assets
Total operating income of the period
Net profit of the period83
Shenzhen SEG Samsung Co., Ltd.
Shenzhen
CPT and glass shell production and operation
22.45%
22.45%
931,578,828.43
327,926,341.85
-969,712,624.34
Shenzhen SEG GPS Scientific Navigations Co., Ltd
Shenzhen
Navigation equipment
35%
35%
108,804,959.29
96,367,091.43
6,860,153.44
Shenzhen SEG Marketing Co., Ltd
Shenzhen
Domestic commerce and material trading
19%
19%
Shanghai SEG Electronics Market Management Co., Ltd
Shanghai
Domestic commerce and material trading
35%
35%
15,867,394.29
18,062,454.95
3,794,347.96
2. Long-term equity investment calculated as per cost
Name of the invested company
Initial amount
Beginning book balance
Change in investment in the period
Ending book balance
Impairment provision
Shenzhen SEG Marketing Co., Ltd
1,900,000.00
1,900,000.00
-1,900,000.00
Shenzhen SEG Telecom Equipment Co., Ltd
3,679,217.22
3,679,217.22
3,679,217.22
3,679,217.22
Nanjing Commercial Building Co., Ltd.
280,000.00
280,000.00
280,000.00
-
Anshan No.1 Department Store Co., Ltd.
15,000.00
15,000.00
15,000.00
-
Shenzhen Tianji Optoelectronic Technology Industrial Co.
105,000.00
105,000.00
105,000.00
105,000.00
Total
5,979,217.22
5,979,217.22
-1,900,000.00
4,079,217.22
3,784,217.22
3. Long-term equity investment calculated as per equity
Name of the invested
Initial amount
Beginning
Equity change in the year
Ending balance84
company
balance
Total
Where: bonus in cash
Shenzhen SEG Orient Industrial Co., Ltd
400,000.00
0.00
0.00
Shenzhen SEG Samsung Co., Ltd.
225,279,600.15
507,558,807.03
-240,363,287.93
267,195,519.10
Shenzhen SEG GPS Scientific Navigations Co., Ltd
23,170,900.00
43,332,929.26
-1,798,946.30
-4,200,000.00
41,533,982.96
Shanghai SEG Electronics Market Management Co., Ltd
1,750,000.00
6,326,533.75
-773,316.62
-2,101,338.41
5,553,217.13
Total
250,600,500.15
557,218,270.04
-242,935,550.85
-6,301,338.41
314,282,719.19
Note: The investment gain of Shenzhen SEG Samsung Co., Ltd. from January to June in 2009 is calculated on the basis of the weighed shareholding percentage.
4. Provision for impairment of long-term equity investment
Name of the invested company
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Reason for accrual
Shenzhen SEG Telecom Equipment Co., Ltd
3,679,217.22
3,679,217.22
The business license has been revoked
Shenzhen SEG Marketing Co., Ltd
682,202.50
682,202.50
Shenzhen Tianji Optoelectronic Technology Industrial Co.
105,000.00
105,000.00
Operating loss
Total
4,466,419.72
682,202.50
3,784,217.22
(IX) Investment property
Increase in the period
Decrease in the period
Item
Beginning balance
Purchase
Transfer from real estate or inventory of self use
Depreciation or amortization in the period
Disposal
Changed to real estate for self use
Ending balance
1. Total of original price
590,866,358.49
590,866,358.49
(1) Houses and buildings
575,654,257.65
575,654,257.6585
Increase in the period Decrease in the period
Item
Beginning
balance Purchase
Transfer from
real estate or
inventory of
self use
Depreciation
or amortization
in the period
Disposal
Changed to
real estate
for self use
Ending balance
(2) Land-use right
15,212,100.84
15,212,100.84
2. Accumulated depreciation or accumulated amortization in total
129,359,522.15
7,550,509.74
136,910,031.89
(1) Houses and buildings
126,306,764.63
7,420,242.90
133,727,007.53
(2) Land-use right
3,052,757.52
130,266.84
3,183,024.36
3. Total accumulated Provision for impairment of investment property
3,117,633.12
3,117,633.12
(1) Houses and buildings
0.00
(2) Land-use right
3,117,633.12
3,117,633.12
4. Total book value of investment property
458,389,203.22
7,550,509.74
450,838,693.48
(1) Houses and buildings
449,347,493.02
7,420,242.90
441,927,250.12
(2) Land-use right
9,041,710.20
130,266.84
8,911,443.36
The mortgage of investment properties is detailed in Note X.
(X) Original price and accumulated depreciation of fixed assets
1. Original price of fixed assets
Category
Beginning balance
Increase in the period
Decrease in the period
Ending balance
Houses and buildings
58,428,750.28
152,551,454.30
6,529,252.30
204,450,952.28
Machinery equipment
34,368,889.20
577,300.00
0.00
34,946,189.20
Electronic equipment
12,998,562.89
1,156,434.07
5,487,207.40
8,667,789.56
Transportation equipment
47,000,570.57
829,300.00
3,867,068.00
43,962,802.57
Other equipment
3,300,532.14
35,319.78
2,785,212.20
550,639.72
Fixed assets obtained by financing lease
Fitment of fixed assets86
Category
Beginning
balance
Increase in the
period
Decrease in the
period
Ending balance
Expenditure on improvement of fixed assets obtained by financing lease
Total
156,097,305.08
155,149,808.15
18,668,739.90
292,578,373.33
2. Accumulated depreciation
Category
Beginning balance
Increase in the period
Accrual in the period
Decrease in the period
Ending balance
Houses and buildings
27,165,584.27
1,315,434.88
3,882,587.92
23,855,052.70
Machinery equipment
24,253,891.80
473,298.00
960,302.64
0.00
27,635,808.07
Electronic equipment
12,594,322.61
250,034.80
570,253.53
3,458,832.61
7,562,003.06
Transportation equipment
27,056,567.84
1,932,309.36
2,887,105.52
28,896,459.32
Other equipment
2,395,181.77
57,142.52
423,251.39
409,126.45
Fixed assets obtained by financing lease
Fitment of fixed assets
Expenditure on improvement of fixed assets obtained by financing lease
-
Total
93,465,548.29
723,332.80
4,835,442.93
10,651,777.44
88,358,449.60
3. Provision for impairment of fixed assets
Category
Beginning balance
Increase in the period
Decrease in the period
Ending balance
Reason for accrual87
Houses and buildings
1,843,252.49
1,258,633.75
584,618.74
Machinery equipment
Electronic equipment
1,981,969.34
1,981,969.34
Transportation equipment
51,775.31
51,775.31
Other equipment
178,256.92
178,256.92
Fixed assets obtained by financing lease
Fitment of fixed assets
Expenditure on improvement of fixed assets obtained by financing lease
Total
4,055,254.06
3,470,635.32
584,618.74
The measured fair value is lower than the book value and the Company accrues provision for impairment of fixed assets according to the difference from the book value.
4. Book value of fixed assets
Category
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Houses and buildings
30,163,292.05
149,847,988.79
180,011,280.84
Machinery equipment
8,166,681.77
---
856,300.64
7,310,381.13
Electronic equipment
816,046.21
289,740.29
1,105,786.50
Transportation equipment
17,097,539.78
2,031,196.53
15,066,343.25
Other equipment
2,347,039.90
2,205,526.63
141,513.27
Fixed assets obtained by financing lease
Fitment of fixed assets
Expenditure on improvement of fixed assets obtained by financing lease
Total
58,590,599.71
150,137,729.08
5,093,023.80
203,635,304.99
Note: The mortgage of fixed assets is detailed in Note IX and Note X.
(XI) Construction-in-progress88
Ending amount
Beginning amount
Item
Book balance
Impairment provision
Book value
Book balance
Impairment provision
Book value
Reengineering of Huaqiang section
800,000.00
800,000.00
800,000.00
800,000.00
Switching system project
144,020.90
144,020.90
Information based office system phase 3
109,000.00
109,000.00
Renovation of elevators in Storage and Transportation Building
76,400.00
76,400.00
Changsha SEG Square
335,225.80
335,225.80
Total
1,320,625.80
1,320,625.80
944,020.90
944,020.90
1. Changes in construction in progress
Decrease in the period
Project name
Beginning amount
Increase in the period
Transferred to fixed assets
Other
Ending amount
Source of funding
Reengineering of Huaqiang section
800,000.00
800,000.00
Self-arranged
Switching system project
144,020.90
76,970.00
94,270.90
126,720.00
Self-arranged
Information based office system phase 3
109,000.00
109,000.00
Self-arranged
Renovation of elevators in Storage and Transportation Building
76,400.00
76,400.00
Self-arranged
Changsha SEG Square
335,225.80
335,225.80
Self-arranged
Total
944,020.90
597,595.80
94,270.90
126,720.00
1,320,625.80
2. Increase of construction in progress in the period does not include expenses on capitalized borrowing.
3. It is checked at the end of the period that no projects under construction are suspended for a long time and no construction in progress is obsolete in performance or technology with great uncertainty in the estimated economic benefits. Therefore, it is unnecessary to accrue89
any provision for impairment.
(XII) Intangible Assets
Item
Beginning amount
Increase in the period
Decrease in the period
Ending amount
I. Total of original price
1,628,584.00
1,628,584.00
1. UFIDA software
406,484.00
406,484.00
2. KOA software
555,300.00
555,300.00
3. Information based office system phase 2
507,200.00
507,200.00
4. Others
159,600.00
159,600.00
II. Total accumulated amortization
932,179.93
126,572.64
1,058,752.57
1. UFIDA software
389,713.09
12,062.66
401,775.75
2. KOA software
374,579.96
55,530.00
430,109.96
3. Information based office system phase 2
101,440.00
50,720.00
152,160.00
4. Others
66,446.88
8,259.98
74,706.86
III. Total accumulated provision for impairment of intangible assets
1. UFIDA software
2. KOA software
3. Information based office system phase 2
4. Others
IV. Book value of intangible assets
696,404.07
126,572.64
569,831.43
1. UFIDA software
16,770.91
12,062.66
4,708.25
2. KOA software
180,720.04
55,530.00
125,190.04
3. Information based office system phase 2
405,760.00
50,720.00
355,040.00
4. Others
93,153.12
8,259.98
84,893.1490
(XIII) Long-term prepaid expenses
Item
Ending amount
Beginning amount
Expense on equipment improvement
4,188,304.90
4,300,383.69
Improvement of fire-fighting equipment
332,125.30
404,544.28
Land price for Baohua building Block B and market supporting fee
2,135,416.79
464,221.01
Other long-term prepaid expenses
3,102,640.64
5,277,222.11
Total
9,758,487.63
10,446,371.09
(XIV) Deferred income tax assets and liabilities
1. Recognized deferred income tax assets
Item
Ending amount
Beginning amount
From bad debt
5,554,186.87
7,173,126.95
From inventory price drop
11,981.15
185,720.67
From impairment of long-term equity investment
893,283.94
893,283.94
From impairment of fixed assets
116,923.75
116,923.75
From impairment of investment property
623,526.62
623,526.62
Total
7,199,902.33
8,992,581.93
Interim difference attributable to asset or balance items
Item
Interim difference
1. Bad debt provision for accounts receivable
27,770,934.35
2. Provision for obsolete stocks
59,905.74
3. Impairment of long-term equity investment
4,466,419.70
4. Provision for impairment of fixed assets
584,618.75
5. Provision for impairment of investment property
3,117,633.10
Total
35,999,511.64
2. Recognized deferred income tax liabilities
Item
Ending amount
Beginning amount
1. From bad debts
4,772.68
4,772.68
2. From financial assets available for sale
421,053.39
288,268.33
3. From difference between consolidated fair value and book value
23,195,173.4391
Total
23,620,999.50
293,041.01
Interim difference attributable to asset or balance items
Item
Interim difference
1. Bad debt provision for accounts receivable
17,451.31
2. Change in fair value of financial assets available for sale
2,105,266.96
3. Difference between consolidated fair value and book value
92,780,693.72
Total
94,903,411.99
(XV) Provision for impairment of assets
Decrease in the period
Item
Beginning book balance
Accrual in the period
Write back
Write off
Ending book balance
1. Bad debt provision
48,540,439.48
3,954,300.00
1,932,801.23
42,653,338.25
2. Provision for obsolete stocks
928,603.33
868,697.59
59,905.74
3. Provision for impairment of financial assets available for sale
-
4. Provision for impairment of held-to-maturity securities
-
5. Provision for impairment of long-term equity investment
4,466,419.72
682,202.50
3,784,217.22
6. Provision for impairment of investment property
3,117,633.12
3,117,633.12
7. Provision for impairment of fixed assets
4,055,254.06
3,470,635.32
584,618.74
8. Provision for impairment of engineering materials
9. Provision for impairment of construction-in-progress
10. Provision for impairment of productive biological assets
Including: Provision for impairment of mature productive biological assets
11. Provision for impairment of oil and gas assets92
Decrease in the period
Item
Beginning
book balance
Accrual in
the period Write back Write off
Ending book
balance
12. Provision for impairment of intangible assets
Total
61,108,349.71
3,954,300.00
6,954,336.64
50,199,713.07
(XVI) Short-term loan
1. Short-term loan
Loan type
Ending amount
Beginning amount
Credit loan
Mortgage loan
1,750,000.00
Secured loan
Total
1,750,000.00
(XVII) Accounts payable
Account age
Ending amount
Beginning amount
Within 1 year
3,350,611.49
11,248,531.49
1-2 years
1,898,604.81
16,643,631.25
2-3 years
116,200.00
3,127,807.32
Above 3 years
14,444,054.86
272,463.80
Total
19,809,471.16
31,292,433.86
1 Among the ending balance, no amounts are payable to shareholders that hold over 5% (including 5%) of the voting shares of the Company.
2. Among the ending balance, no amounts are payable to affiliated companies.
3. The accounts payable at the end of the period is decreased by RMB11,482,962.70, down 36.70% from the beginning of the period. The main reason for such fall is the change in the consolidation scope. Shenzhen SEG Communication Co., Ltd. is no longer included in the consolidated statements and as a result, RMB26,414,227.37 is not counted. In addition, due to the inclusion of Changsha Xinxing Development Ltd., RMB14,444,054.86 is added to the accounts payable.
(XVIII) Unearned revenue
Account age
Ending amount
Beginning amount
Within 1 year
66,240,889.81
112,794,823.8193
1-2 years
2,412,391.22
2,573,174.50
2-3 years
13,682,779.80
150,740.66
Above 3 years
231,106.40
Total
82,567,167.23
115,518,738.97
1. Among the ending balance, no unearned revenue are from shareholders that hold over 5% (including 5%) of the voting shares of the Company.
2. Among the ending balance, no unearned revenue are received from affiliated companies.
3. The ending balance of unearned revenue is decreased by RMB 32,951,571.74, down 28.25% from the beginning amount. The reason for such fall is that advance rental from the electronics market was duly recognized as revenue of the Company. Also, due the change of the consolidation scope, RMB11,473,960.66 advance receipts of Shenzhen SEG Communication Co., Ltd. and Chongqing SEG Electronics Market Co., Ltd. are not counted relative to the beginning of the period.
(XIV) Accrued payroll
1. Accrued payroll
Item
Beginning amount
Increase in the period
Payment in the period
Ending amount
1. Wage, bonus, allowance, and subsidy
2,635,148.48
8,708,687.41
10,172,307.70
1,171,528.19
2. Benefits of employees
584,397.93
583,632.72
765.21
3. Social insurance premiums
6,028.64
698,075.85
697,072.65
7,031.84
4. Housing fund
49,320.00
49,320.00
5. Labor union expenditure
174,541.12
229,328.28
161,203.41
242,665.99
6. Non-monetary benefits
7. Compensation due to termination of labor contract
2,667,620.81
2,667,620.81
8. Others
680,042.57
648,213.16
31,829.41
Total
6,163,381.62
10,269,809.47
14,979,370.45
1,453,820.64
2. The balance of wages payable includes no arrears or pays linked with the profit.
(XX) Taxes payable
Item
Ending amount
Beginning amount
Taxation standard
Operating tax
-2,275,516.30
-366,945.95
3%, 5%
Value-added tax
111,642.24
2,252,084.38
17%
Enterprise income tax
1,014,807.94
7,884,297.55
16.5%, 20%, 25%94
Item Ending amount Beginning amount Taxation standard
Housing property tax
952,326.59
290,935.65
Urban maintenance and construction tax
-45,798.98
-40,139.04
1%, 7%
Education surtax
-24,589.06
90,665.46
3%
Withholding and payment of individual income tax
720,799.55
337,010.47
Authorized tax collection
6,502.94
Stamp tax and water fund
53,370.47
102,887.59
Others
Total
513,545.39
10,550,796.11
(XXI) Dividend payable
Name or type of investor
Ending amount
Reason
SEG Computer Co.
189,090.00
Payment not yet made
SEG Group Service Co.
108,900.00
Payment not yet made
Nanjing Commercial Building
168,300.00
Payment not yet made
Hangzhou Shenzhou Real Estate
118,800.00
Payment not yet made
CECT Shenzhen
158,400.00
Payment not yet made
Individuals
150,138.64
Payment not yet made
Others
153,403.29
Payment not yet made
Total
1,047,031.93
(XXII) Other accounts payable
Item
Ending amount
Beginning amount
Within 1 year
49,875,437.00
39,878,490.36
1-2 years
19,877,090.92
39,688,262.21
2-3 years
20,690,544.81
950,468.03
Above 3 years
9,490,797.61
2,562,316.35
Total
99,933,870.34
83,079,536.95
Including: Accrued expenses
7,811,998.45
2,599,222.93
1. Among the ending balance, no amounts are payable to shareholders that hold over 5% (including 5%) of the voting shares of the Company.
2. Among the ending balance, no amounts are payable to affiliated companies.95
3. Other large accounts payable aged above 1 year
Name of company
Amount
Reason
Comprehensive deposit
18,748,056.06
Undue
Note on the other large accounts payable aged above 1 year: none.
4. Other large accounts payable
Item
Amount
Nature or Content
Site security
5,891,084.53
Earnest money
Property security
2,913,594.15
Earnest money
Comprehensive deposit
21,531,397.86
Deposit
(XXIII) Predicted liabilities
Item
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Remark
Unsettled lawsuit
2,728,268.64
2,728,268.64
Unsettled lawsuit
Product quality guarantee
309,950.00
309,950.00
Product quality guarantee
Total
3,038,218.64
309,950.00
2,728,268.64
Note: Details of unsettled lawsuits are given in Note IX "Contingencies".
(XXIV) Capital stock
Registered issues and paid-in capital of the Company are as follows:
Ending amount
Beginning amount
Shares
Amount
Shares
Amount
Capital stock
784,799,010.00
784,799,010.00
784,799,010.00
784,799,010.00
Changes in the capital stock of the Company in the period are as follows:
Beginning amount
Change in the period
Ending amount
Item
Amount
Percentage (%)
Increase in the period
Decrease in the period
Amount
Percentage (%)
1. Restricted shares
210,416,596.00
26.81%
210,381,132.00
35,464.00.00
0.01%
(1) State-held shares
(2) Shares held by state-owned legal persons
158,879,766.00
20.24%
158,879,766.0096
Beginning amount Change in the period Ending amount
Item
Amount
Percentage
(%)
Increase in
the period
Decrease in the
period
Amount
Percentage
(%)
(3) Other shares held by domestic capital
51,488,332.00
6.56%
51,488,332.00
Including: Shares held by domestic non-state-owned legal persons
51,488,332.00
6.56%
51,488,332.00
Shares held by domestic natural persons
(4) Shares held by foreign capital
Including: Shares held by foreign legal persons
Shares held by foreign natural persons
(5) Shares held by senior management
48,498.00
0.01%
13,034.00
35,464.00
0.01%
2. Non-restricted shares
574,382,414.00
73.19%
210,381,132
784,763,546.00
99.99%
(1) RMB common shares (A Share)
327,921,096.00
41.78%
210,381,132
538,302,228.00
68.59%
(2)Domestically listed foreign shares (B Share)
246,461,318.00
31.40%
246,461,318.00
31.40%
(3) Overseas listed foreign shares (H Share)
(4) Others
3. Total shares
784,799,010.00
100.00%
210,381,132
210,381,132.00
784,799,010.00
100.00%
1. In the period, both the largest shareholder of the Company SEG Group and the second largest shareholder of the Company Guangzhou Fuda went through the procedures of releasing the trading restriction of shares. 210,368,098 shares were released from trading restrictions in the period, accounting for 26.81% of the total capital stock of the Company.
2. In the period, according to provisions of the Rules on the Management of Shares Held by the Directors, Supervisors and Senior Management Officers of Listed Companies and the Changes Thereof prescribed by the China Securities Regulatory Commission, a regulated portion of the shares of the Company held by Directors, Supervisors and Senior Management Officers of the Company were released from trading restrictions. In this period,97
the total shares released from trading restrictions are 13,034 shares.
(XXV) Capital reserve
Item
Beginning amount
Increase in the period
Decrease in the period
Ending amount
1. Capital surplus (stock surplus)
(1) Invested capital
325,329,854.26
325,329,854.26
(2) Influence of merger of enterprises under common control
-
Subtotal
325,329,854.26
325,329,854.26
2. Other capital reserve
(1) Change in owners equity of invested units other than net profit and loss
24,492,556.75
24,492,556.75
(2) Gain or loss induced by change in fair value of financial assets available for sales
1,434,628.41
291,723.79
1,142,904.62
(3) Others
827,852.40
827,852.40
Subtotal
25,927,185.16
827,852.40
291,723.79
26,463,313.77
Total
351,257,039.42
827,852.40
291,723.79
351,793,168.03
(XXVI) Surplus reserve
Item
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Statutory surplus reserve
102,912,835.67
102,912,835.67
Free surplus reserve
Total
102,912,835.67
102,912,835.67
According to the Company Law and the Articles of Association of the Company, 10% of the net profit is withheld as legal surplus public reserve of the Company.
(XXVII) Undistributed profit
Item
Amount
Accrual/Distribution Rate
Ending balance of previous year
59,356,134.45
Plus: change in accounting policies
Correction of error in the prior period
Opening balance of the period
59,356,134.45
Plus: net profit attributable to the parent company in the period
-146,083,519.0298
Less: Accrual of statutory surplus reserve
Accrual of free surplus reserve
Accrual of bonus and welfare reserve
Common share dividends payable
15,695,980.20
Common share dividends converted to capital stock
Add: other transfer-in
Surplus reserve offset loss
Ending balance
-102,423,364.77
(XXVIII) Operating revenues and costs
Amount incurred in the period
Amount incurred in the prior period
Item
Revenues
Costs
Revenues
Costs
Main operation
137,882,485.07
78,631,266.50
146,747,331.66
80,073,035.64
Other operations
Total
137,882,485.07
78,631,266.50
146,747,331.66
80,073,035.64
1. Main operating revenues and costs listed by business type
Amount incurred in the period
Amount incurred in the prior period
Item
Main operating revenues
Main operating costs
Main operating revenues
Main operating costs
(1) Industry
(2) Commerce
(3) Real estate
(4) Tourism and food Service industry
137,882,485.07
78,631,266.50
146,747,331.66
80,073,035.64
Subtotal
137,882,485.07
78,631,266.50
146,747,331.66
80,073,035.64
Counteracted among various operations in the company
Total
137,882,485.07
78,631,266.50
146,747,331.66
80,073,035.64
2. Main operating revenues and costs listed by region
Item
Amount incurred in the period
Amount incurred in the prior period99
Main operating revenues
Main operating costs
Main operating revenues
Main operating costs
China
122,550,146.40
132,784,671.71
63,710,906.94
66,326,185.57
Overseas
15,332,338.67
13,962,659.95
14,920,359.56
13,746,850.07
Total
137,882,485.07
146,747,331.66
78,631,266.50
80,073,035.64
3. Main operating revenues from top 5 customers of the Company
Customer name or ranking
Main operating revenues
Percentage in total main operating revenues of the Company
Schenker China Ltd. Shenzhen Branch
7,366,711.32
5.34%
RICOHINTERNATIONALLOGISTICS(H.K)CO.,LTD
5,107,405.01
3.70%
HONHAIPRECISIONINDCO.LTD
3,843,083.63
2.79%
NIPPONEXPRESS(H.K)CO.,LTD
2,199,736.05
1.60%
Shenzhen Youhe-Daotong Industrial Co., Ltd.
1,929,230.51
1.40%
Total
20,446,166.52
14.83%
(XXIX) Operating tax and extras
Item
Taxation standard
Amount incurred in the period
Amount incurred in the prior period
Operating tax
5%
6,017,264.69
4,963,488.15
Urban construction tax
1%, 7%
142,553.15
115,012.48
Consumption tax
0.00
-
Education surtax
3%
195,804.02
161,513.74
Others
363.75
309,035.46
Total
6,355,985.61
5,549,049.83
(XXX) Financial expenses
Item
Amount incurred in the period
Amount incurred in the prior period
Interest payment
2,491,457.58
Less: Interest income
6,288,341.04
625,859.93
Loss on exchange
24,177.64
1,782,394.81100
Item
Amount incurred in the
period
Amount incurred in the
prior period
Profit on exchange
388,566.36
Others
38,055.38
73,072.68
Total
-6,226,108.02
3,332,498.78
The financial expenses incurred in the period is decreased by RMB9,558,606.80 from the prior period. The reason for such decrease is that interest was received from time deposit of the Company in the period and the Company paid off all bank loans in the period so that the interest payments were down.
(XXXI) Loss on impairment of asset
Item
Amount incurred in the period
Amount incurred in the prior period
1. Loss on bad debt
-3,954,300.00
631,135.79
2. Loss on obsolete stocks
3. Loss on impairment of financial assets available for sale
4. Loss on impairment of held-to-maturity securities
5. Loss on impairment of long-term equity investment
6. Loss on impairment of investment property
7. Loss on impairment of fixed assets
8. Loss on impairment of engineering materials
9. Loss on impairment of construction in progress
10. Loss on impairment of productive biological assets
11. Loss on impairment of oil and gas assets
12. Loss on impairment of intangible assets
13. Loss on goodwill impairment
14. Others
Total
-3,954,300.00
631,135.79
The loss on impairment of assets in the period is decreased by RMB199,776,852.59 from the prior period mainly for the reason that the Company sold equities of Shenzhen SEG CECT Color Display Parts Ltd. at the end of the prior period.
(XXXII) Investment income
Name of invested project or company
Amount incurred in the period
Amount incurred in previous year101
I. Income on investment in financial assets
1,837,604.13
II. Income on equity investment
-187,988,482.83
7,807,137.11
1. Cost based accounting and recognition
2. Equity method accounting and recognition
-214,081,672.20
7,807,137.11
3. Disposal of investment income
26,093,189.37
Total
-186,150,878.70
7,807,137.11
The income on investment incurred in the period is decreased by RMB193,958,015.81 from the prior period for the reason that the equity based SEG Samsung Ltd. suffered a loss of RMB969,712,624.34 so that the income of the Company on investment is down RMB217,746,218.31.
(XXXIII) Non-operating income
Item
Amount incurred in the period
Amount incurred in previous year
1. Total gain on disposal of non-current assets
83,409.60
2,094,790.12
Including: Gain on disposal of fixed assets
83,409.60
2,094,790.12
Gain on disposal of intangible assets
2. Gain on exchange of non-monetary assets
3. Gain on debt restructuring
4. Government subsidies
5. Inventory surplus
3,396.16
6. Gain on donation
7. Others
1,952,257.31
1,414,334.76
Total
2,039,063.07
3,509,124.88
The non-operating income incurred in the period is decreased by RMB1,470,061.81, down 41.89% from the prior period for the reason that the Company received gain on the disposal of non-operating properties in the last period and received no such gain in the current period.
(XXXIV) Non-operating expense
Item
Amount incurred in the period
Amount incurred in the prior period
1. Total loss on disposal of non-current assets
93,650.40
292,432.47
Including: Loss on disposal of fixed assets
93,650.40
292,432.47
Loss on disposal of intangible assets
2. Loss on exchange of non-monetary assets
3. Loss on debt restructuring102
Item
Amount incurred in the
period
Amount incurred in the
prior period
4. Charitable donation expenses
5. Loss on bad debt
6. Loss of inventory
7. Others
16,159.51
Total
109,809.91
292,432.47
(XXXV) Income tax expense
Item
Amount incurred in the period
Amount incurred in the prior period
Income tax expense in the period
3,678,108.04
6,680,461.61
Deferred income tax expense
707,877.54
Total
4,385,985.58
6,680,461.61
(XXXVI) Notes on cash flow statement
1. Other cash received concerning operating activities
Item
Amount incurred in the period
Interest income
6,288,341.04
Non-operating income
1,785,438.11
Current account
75,954,769.34
Total
84,028,548.49
2. Other cash paid relating to operating activities
Item
Amount incurred in the period
Non-operating expenses
16,159.51
Cash expenses
21,076,332.94
Current account
51,243,242.23
Total
72,335,734.68
3. Other cash paid relating to financing activities: none.
4. Supplementary information to cash flow statement
Item
Amount incurred in the period
Amount incurred in the last period103
Item
Amount incurred in the
period
Amount incurred in the
last period
1. Reconciliation of net income to operating cash flow
Net income
-143,126,887.91
28,701,388.64
Add: Provision for impairment of assets
-3,954,300.00
631,135.79
Depreciation of fixed assets, oil & gas assets and productive biological assets
12,463,043.77
5,903,867.99
Amortization of intangible assets
512,585.09
154,101.58
Amortization of long-term prepaid expenses
2,149,463.95
2,241,655.98
Loss on disposal of fixed assets, intangible assets, and other long-term assets (Gain will be marked with "-")
169,830.14
-3,084,571.99
Loss on retirement of fixed asset (Gain will be marked with "-")
10,240.80
Loss on change of fair value (Gain will be marked with "-")
0.00
139,494.51
Financial expenses (Gain will be marked with "-")
3,332,498.78
Loss on investment (Gain will be marked with "-")
140,670,155.48
-7,807,137.11
Decrease of deferred income tax assets (Gain will be marked with "-")
1,792,679.60
---
Increase of deferred income tax liabilities (Decrease will be marked with "-")
-150,634.88
---
Decrease of inventories (Increase will be marked with "-")
-1,159,096.37
-1,928,336.66
Decrease of operating accounts receivable (Increase will be marked with "-")
36,395,829.55
13,406,882.82
Increase of operating accounts payable (Decrease will be marked with "-")
-26,090,815.56
-9,836,307.66
Others
2,631,279.25
Net Cash flow arising from operating activities
22,313,372.91
31,854,672.67
2. Significant investing and financing activities that do not involve cash receipts and payments
Debt converted to capital
Convertible bonds due within one year
Fixed assets obtained by financing lease
3. Net change in cash and cash equivalents104
Item
Amount incurred in the
period
Amount incurred in the
last period
Cash at the end of the period
401,135,926.35
427,574,362.78
Less: cash at the beginning of the period
400,172,059.09
261,303,787.50
Add: cash equivalents at the end of the period
Less: Cash equivalents at beginning of the period
Net Increase in cash and cash equivalents
963,867.26
166,270,575.28
5. The composition of cash and cash equivalents
Item
Ending amount
Beginning amount
1. Cash
401,135,926.35
400,172,059.09
Including: Cash on hand
636,708.86
1,491,901.47
Back deposit available for payment at any time
400,499,217.49
398,680,107.39
Other monetary funds available for payment at any time
50.23
Cash deposited with the central bank available for payment
Deposit in other banks
Loan from other banks
2. Cash equivalents
Including: Bond investment due within 3 months
3. Ending balance of cash and cash equivalents
401,135,926.35
400,172,059.09
Including: Cash and cash equivalents of restricted use of the parent company and subsidiaries of the group
VI. Notes on main items in the financial statements of the parent company
(I) Accounts receivable
1. The composition of accounts receivable
Ending amount
Beginning amount
Account age
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Within 1 year (including 1 year)
50,893.00
0.87%
114,405.00
1.94%105
1-2 years (including 2 years)
2-3 years (including 3 years)
Above 3 years
5,777,171.79
99.13%
5,777,171.79
100.00%
5,777,171.79
98.06%
5,777,171.79
100.00%
Total
5,828,064.79
100.00%
5,777,171.79
99.13%
5,891,576.79
100.00%
5,777,171.79
98.06%
Bad debt provision
Bad debt provision
Percentage of bad debt provision
1. Accounts of significant individual amounts with separately accrued bad debt provision
2. Accounts of non-significant individual amounts with separately accrued bad debt provision
5,777,171.79
99.13%
5,777,171.79
100.00%
5,777,171.79
98.06%
5,777,171.79
100.00%
3. Other groups of accounts with similar credit risk
50,893.00
0.87%
114,405.00
1.94%
Where: Accounts of significant individual amounts
Accounts of non-significant individual amounts
50,893.00
0.87%
114,405.00
1.94%106
Ending amount Beginning amount
Type Book
Balance
Percentage
in the total
amount
Bad debt
provision
Percentage
of bad debt
provision
Book
Balance
Percentage
in the total
amount
Bad debt
provision
Percentage
of bad debt
provision
Where: accounts of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked
Total
5,828,064.79
100.00%
5,777,171.79
99.13%
5,891,576.79
100.00%
5,777,171.79
98.06%
2. Changes in bad debt provisions for accounts receivable
Decrease in the period
Beginning book balance
Accrual in the period
Write back
Write off
Ending book balance
January-June, 2009
5,777,171.79
5,777,171.79
3. Accounts receivable of significant or non-significant individual amounts with separately accrued bad debt provision
Item
Book Balance
Percentage of accrual
Amount of bad debt provision
Reason
Shenzhen Liyuanshun Industrial Co.
1,906,865.35
100.00%
1,906,865.35
Long age
Shanghai SEG Tianci Industrial (Group) Co., Ltd
899,000.00
100.00%
899,000.00
Long age
Zhejiang Financial Information
786,000.00
100.00%
786,000.00
Long age
Sichuan Huiyuan Electronic Ltd.
480,000.00
100.00%
480,000.00
Long age
Shenzhen Wal-Mart Pearl Department Store Ltd.
198,348.57
100.00%
198,348.57
Long age
4. There are no accounts of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked in the period.
5. There are no accounts receivable for which total or a large proportion of bad debt provision was accrued in previous periods and which were all or partly collected in the period.107
6. There are no accounts receivable that were written off in the period.
7. No accounts receivable at the end of the period are attributable to units that hold above 5% (inclusive) of the voting shares of the Company.
8. No receivables from affiliated parties in accounts receivable at the end of period.
9. Top five owing companies by amounts in accounts receivable at the end of period
Accounts receivable
Book balance
Percentage of accrual
Amount of bad debt provision
Reason
Shenzhen Liyuanshun Industrial Co.
1,906,865.35
100.00%
1,906,865.35
Long age
Shanghai Tianci Industrial (Group) Co., Ltd.
899,000.00
100.00%
899,000.00
Long age
Zhejiang Financial Information
786,000.00
100.00%
786,000.00
Long age
Sichuan Huiyuan Electronic Ltd.
480,000.00
100.00%
480,000.00
Long age
Shenzhen Wal-Mart Pearl Department Store Ltd.
198,348.57
100.00%
198,348.57
Long age
(II) Other receivables
1. The composition of other receivables
Ending amount
Beginning amount
Account age
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Within 1 year (including 1 year)
2,712,842.64
8.03%
-
0.00%
1,750,992.49
4.72%
0.00%
1-2 years (including 2 years)
63,772.10
0.17%
3,188.61
5.00%
2-3 years (including 3 years)
10,000.00
0.03%
10,000.00
100.00%
129,053.04
0.35%
12,905.30
10.00%
Above 3 years
31,075,366.34
91.94%
28,078,871.32
90.36%
35,171,294.43
94.76%
31,972,777.41
90.91%
Total
33,798,208.98
100.00%
28,088,871.32
83.11%
37,115,112.06
100.00%
31,988,871.32
86.19%108
Ending amount
Beginning amount
Type
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
Book Balance
Percentage in the total amount
Bad debt provision
Percentage of bad debt provision
1. Accounts of significant individual amounts with separately accrued bad debt provision
18,247,391.97
53.99%
18,247,391.97
100.00%
22,147,391.97
59.67%
22,147,391.97
100.00%
2. Accounts of non-significant individual amounts with separately accrued bad debt provision
8,618,400.12
25.50%
8,618,400.12
100.00%
8,618,400.12
23.22%
8,618,400.12
100.00%
3. Other groups of accounts with similar credit risk
6,932,416.89
20.51%
1,223,079.23
17.64%
6,349,319.97
17.11%
1,223,079.23
19.26%
Where: Accounts of significant individual amounts
6,701,290.39
19.83%
1,197,275.43
17.87%
6,178,151.79
16.65%
1,204,705.60
19.50%
Accounts of non-significant individual amounts
231,126.50
0.68%
25,803.80
11.16%
171,168.18
0.46%
18,373.63
10.73%109
Ending amount Beginning amount
Type
Book Balance
Percentage
in the total
amount
Bad debt
provision
Percentage
of bad debt
provision
Book Balance
Percentage
in the total
amount
Bad debt
provision
Percentage
of bad debt
provision
Where: accounts of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked
---
---
---
---
Total
33,798,208.98
100.00%
28,088,871.32
83.11%
37,115,112.06
100.00%
31,988,871.32
86.19%
2. Changes in bad debt provisions for other receivable
Decrease in the period
Beginning book balance
Accrual in the period
Write back
Write off
Ending book balance
January-June, 2009
31,988,871.32
3,900,000.00
28,088,871.32
3. Other receivables of significant or non-significant amounts but separately accrued provision
Other receivables
Book balance
Percentage of accrual
Amount of bad debt provision
Reason
Shenzhen Top Industry Co., Ltd.
3,281,387.96
100.00%
3,281,387.96
Uncollectible
Shenzhen Shoujia Industrial Development Co., Ltd.
1,611,184.04
100.00%
1,611,184.04
Uncollectible
Shenzhen Lianjing Trade Co., Ltd.
5,697,287.51
100.00%
5,697,287.51
Uncollectible
Shenzhen Jimeng Industrial Co.
1,358,912.37
100.00%
1,358,912.37
Uncollectible
Yangjiang Yuntong Grease Co., Ltd
8,530,276.35
100.00%
8,530,276.35
Uncollectible
Yunsen Trading Co.
1,668,343.74
100.00%
1,668,343.74
Uncollectible
China Unicom Jiangsu Branch
3,092,011.09
100.00%
3,092,011.09
Uncollectible
4. At the end of period, there are no other accounts receivable of non-significant individual amounts but belonging to a group of accounts of similar credit risk which is highly risked.110
5. There are no other accounts receivable at the end of the period for which total or a large proportion of bad debts provision was accrued in previous periods and which were all or partly collected in the period.
6. Among other accounts receivable at the end of the period, units that hold above 5% (inclusive) of the voting shares of the Company are listed in Note VIII.
7. Other accounts receivable attributable to affiliated accounts at the end of the period are detailed in Note VIII.
8. Top five owing companies by amount in other accounts receivable at the end of period
Ranking of debtors
Relationship with the Company
Nature or content
Amount receivable
Account age
Percentage in the total amount of other accounts receivable
Yangjiang Yuntong Grease Co., Ltd
Nonaffiliated
Current account
8,530,276.35
Above 3 years
25.24%
Shenzhen Lianjing Trade Co., Ltd.
Nonaffiliated
Current account
5,697,287.51
Above 3 years
16.86%
Shenzhen Top Industry Co., Ltd.
Nonaffiliated
Current account
3,281,387.96
Above 3 years
9.71%
China Unicom Jiangsu Branch
Nonaffiliated
Current account
3,092,011.09
Above 3 years
9.15%
Shenzhen SEG Business Machinery Co., Ltd
Nonaffiliated
Current account
2,815,532.68
1-2 years, 2-3 years, and above 3 years
8.33%
(III) Long-term equity investment
Ending amount
Beginning amount
Name of the invested company
Book Balance
Impairment provision
Book Balance
Impairment provision
Shenzhen SEG Baohua Electronics Co., Ltd
20,512,499.04
20,512,499.04
Shenzhen SEG Storage and Transportation Co., Ltd.
62,700,000.00
62,700,000.00
Shenzhen SEG Communication Co., Ltd.
0.00
28,060,000.00
Shenzhen SEG Marketing Co., Ltd
1,900,000.00
682,202.50111
Ending amount Beginning amount
Name of the invested company
Book Balance
Impairment
provision
Book Balance
Impairment
provision
Shenzhen SEG Industrial Investment Co., Ltd
23,780,000.00
23,780,000.00
Shenzhen SEG Orient Industrial Co., Ltd
0.00
Shenzhen SEG Samsung Co., Ltd.
267,195,519.10
506,796,662.03
Shenzhen SEG Telecom Equipment Co., Ltd
2,979,217.22
2,979,217.22
2,979,217.22
2,979,217.22
Shenzhen SEG GPS Scientific Navigations Co., Ltd
41,533,982.96
43,332,929.26
Shanghai SEG Electronics Market Management Co., Ltd
5,553,217.13
6,326,533.75
Chongqing SEG Electronics Market Co., Ltd
1,500,000.00
Shenzhen SEG Electronics Market Management Co., Ltd
2,100,000.00
2,100,000.00
Suzhou SEG Electronics Market Co., Ltd
1,350,000.00
1,350,000.00
Xi’an SEG Electronics Market Co., Ltd
1,950,000.00
1,950,000.00
Changsha Xinxing Development Co., Ltd
69,000,000.00
Total
498,654,435.45
2,979,217.22
703,287,841.30
3,661,419.72
1. Main information of the invested companies
Name of invested company
Place of registration
Nature of business
Shareholding radio
Voting ratio in the invested company
Total ending net assets
Total operating income of the period
Net profits of the period
Shenzhen SEG Baohua Electronics Co., Ltd
Shenzhen
Property lease and property management
66.58
66.58
54,533,259.54
20,388,509.60
5,946,504.55112
Name of
invested
company
Place of
registration
Nature of business
Shareholding
radio
Voting
ratio in the
invested
company
Total ending
net assets
Total operating
income of the
period
Net profits of
the period
Shenzhen SEG Storage and Transportation Co., Ltd.
Shenzhen
Overseas transportation and bonded storage
95
95
89,874,459.35
32,497,070.06
4,315,804.52
Shenzhen SEG Industrial Investment Co., Ltd
Shenzhen
Investment in industrial and commercial businesses,
91.79
91.79
22,054,798.81
748,489.07
1,262,487.84
Shenzhen SEG Communication Co., Ltd.
Shenzhen
Manufacturing of telecommunication equipments
97.7
97.7
417,652.80
Shenzhen SEG Orient Industrial Co., Ltd
Shenzhen
Domestic commerce and material trading
20
20
Xi’an SEG Electronics Market Co., Ltd
Xi’an
Domestic commerce and material trading
65
65
4,950,775.43
11,951,303.76
1,851,852.66
Chongqing SEG Electronics Market Co., Ltd
Chongqing
Domestic commerce and material trading
50
50
1,991,584.00
Shenzhen SEG Electronics Market Management Co., Ltd
Shenzhen
Domestic commerce and material trading
70
70
5,660,793.54
6,176,041.60
577,050.55
Suzhou SEG Electronics Market Co., Ltd
Suzhou
Domestic commerce and material trading
45
45
4,535,917.55
9,433,200.13
1,188,594.66
Shenzhen SEG Marketing Co., Ltd
Shenzhen
Domestic commerce and material trading
19
19113
Name of
invested
company
Place of
registration
Nature of business
Shareholding
radio
Voting
ratio in the
invested
company
Total ending
net assets
Total operating
income of the
period
Net profits of
the period
Shenzhen SEG Samsung Co., Ltd.
Shenzhen
CPT and glass shell production and operation
22.45
22.45
931,578,828.43
327,926,341.85
-969,712,624.34
Shenzhen SEG GPS Scientific Navigations Co., Ltd
Shenzhen
Navigation equipment
35
35
108,804,959.29
96,367,091.43
6,860,153.44
Shanghai SEG Electronics Market Management Co., Ltd
Shanghai
Domestic commerce and material trading
35
35
15,867,394.29
18,062,454.95
3,794,347.96
Changsha Xinxing Development Co., Ltd
Changsha
Domestic commerce and material trading
46
46
127,128,738.55
-
-1,161,160.02
2. Long-term equity investment accounted at cost
Name of the invested company
Initial amount
Beginning book balance
Change in investment in the period
Ending book balance
Impairment provision
Shenzhen SEG Marketing Co., Ltd
1,900,000.00
1,900,000.00
Shenzhen SEG Baohua Electronics Co., Ltd
18,742,808.93
20,512,499.04
20,512,499.04
Shenzhen SEG Storage and Transportation Co., Ltd.
62,700,000.00
62,700,000.00
62,700,000.00
Shenzhen SEG Communication Co., Ltd.
28,060,000.00
28,060,000.00
-28,060,000.00
Shenzhen SEG Industrial Investment Co., Ltd
23,780,000.00
23,780,000.00
23,780,000.00114
Name of the invested
company
Initial amount
Beginning book
balance
Change in
investment in
the period
Ending book
balance
Impairment
provision
Shenzhen SEG Telecom Equipment Co., Ltd
6,942,530.00
2,979,217.22
2,979,217.22
2,979,217.22
Chongqing SEG Electronics Market Co., Ltd
1,500,000.00
1,500,000.00
-1,500,000.00
Shenzhen SEG Electronics Market Management Co., Ltd
2,100,000.00
2,100,000.00
2,100,000.00
Suzhou SEG Electronics Market Co., Ltd
1,350,000.00
1,350,000.00
1,350,000.00
Xi’an SEG Electronics Market Co., Ltd
1,950,000.00
1,950,000.00
1,950,000.00
Changsha Xinxing Development Co., Ltd
69,000,000.00
69,000,000.00
69,000,000.00
Total
218,025,338.93
146,831,716.26
39,440,000.00
184,371,716.26
2,979,217.22
3. Long-term equity investment accounted at equity
Equity change in the period
Name of the invested company
Initial amount
Beginning balance
Total
Where: bonus in cash
Ending balance
I. Affiliated companies
Shenzhen SEG Orient Industrial Co., Ltd
400,000.00
-
Shenzhen SEG Samsung Co., Ltd.
224,709,600.15
506,796,662.03
-239,601,142.93
267,195,519.10
Shenzhen SEG GPS Scientific Navigations Co., Ltd
23,170,900.00
43,332,929.26
-1,798,946.30
-4,200,000.00
41,533,982.96
Shanghai SEG Electronics Market Management Co., Ltd
1,750,000.00
6,326,533.75
-773,316.62
-2,101,338.41
5,553,217.13
Total
250,030,500.15
556,456,125.04
-242,173,405.85
-6,301,338.41
314,282,719.19115
4. Provision for impairment of long-term equity investment
Name of the invested company
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Reason for accrual
Shenzhen SEG Telecom Equipment Co., Ltd
2,979,217.22
2,979,217.22
The business license has been revoked
Shenzhen SEG Marketing Co., Ltd
682,202.50
682,202.50
Total
3,661,419.72
682,202.50
2,979,217.22
(IV) Operating revenues and costs
Amount incurred in the period
Amount incurred in the prior period
Item
Income
Cost
Income
Cost
Main operation
54,278,634.05
20,303,203.74
50,508,228.43
21,909,383.96
Other operations
Total
54,278,634.05
20,303,203.74
50,508,228.43
21,909,383.96
1. Main operating revenues and costs by business type
Amount incurred in the period
Amount incurred in the prior period
Item
Main operating income
Main operating cost
Main operating income
Main operating cost
(1) Industry
(2) Commerce
(3) Real estate
(4) Tourism and food service industry
54,278,634.05
20,303,203.74
50,508,228.43
21,909,383.96
Total
54,278,634.05
20,303,203.74
50,508,228.43
21,909,383.96
(V) Investment income
Name of the project or invested company
Amount incurred in the period
Amount incurred in the prior period
I. Income on investment in financial assets
1,837,604.13
II. Income on equity investment
-184,275,192.44
20,505,927.60
1. Cost based accounting and recognition
7,186,964.71
-116
2. Equity based accounting and recognition
-214,081,672.20
20,505,927.60
3. Income on disposal of investment
22,619,515.05
Total
-182,437,588.32
20,505,927.60
1. There are no significant limits on the remittance of investment income of the Company.
VIII. Relationships Between Affiliates and Affiliated Transactions
(I) Conditions of the controlling affiliate
(I) Controlling affiliate
The affiliate controlling the Company
Name of company
Registered address
Main operation
Relationship with the Company
Nature of business
Legal representative
Organization code
Shenzhen SEG Group
Shenzhen
Electronics products
Shareholder
State-owned
Guo Yonggang
19218093-0
Shenzhen SEG Group holds 30.24% of the Company’s shares and 30.24% of its voting rights. Shenzhen SEG Group is the largest shareholder of the Company and the ultimate controller of the Company.
Refer to Note V for the affiliates controlled by the Company.
2. Registered capital of the controlling affiliate and relevant changes (unit: RMB yuan):
Name of company
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Shenzhen SEG Group
1,355,420,000.00
1,355,420,000.00
3. Number of shares held by the controlling affiliate and relevant changes (unit: RMB yuan):
Beginning amount
Increase in the period
Decrease in the period
Ending amount
Name of company
Amount
%
Amount
%
Amount
%
Amount
%
Shenzhen SEG Group
237,359,666.00
30.24
237,359,666.00
30.24
4. Conditions of the non-controlling affiliates
Name of company
Relationship with the Company
Guangzhou Fodak Group Co., Ltd.
The second largest shareholder
Shenzhen SEG Samsung Co., Ltd.
Affiliated company
Shenzhen SEG Orient Industrial Development Co., Ltd.
Affiliated company117
Name of company Relationship with the Company
Shenzhen SEG Square Investment & Development Co., Ltd.
Subsidiary of controlling shareholders
Shenzhen SEG Property Development Co., Ltd.
Subsidiary of controlling shareholders
(II) Affiliated Transactions
1. Procurement
The Company did not make any purchase from affiliated parties in the current period and the same period in the previous year.
2. Lease
(1) Payment of rental
Name of the affiliate
January-June, 2009
January-June, 2008
Shenzhen SEG Group
240,000.00
240,000.00
The Company leases an area of 809.26 square meters located at the eighth floor of SEG Square owned by SEG Group as the warehouse and pays the amount of rent set out in the Property Lease Contract concluded with Shenzhen SEG Group.
3. Provision of labor services
The Company did not receive any labor service from affiliated parties in the period and the same period in the previous year. The Company did not provide labor service to affiliated parties either.
(III) Balance of accounts receivable from and accounts payable to affiliates
Amount
Item
2009-6-30
2008-12-31
Accounts receivable
Shenzhen SEG Group
-
-
Other receivables
Shenzhen SEG Property Development Co., Ltd.
600.00
21,600.00
Shenzhen SEG Orient Industrial Development Co., Ltd.
443,910.00
443,910.00
Shenzhen SEG Group
80,000.00
80,000.00
Other payables
Shenzhen SEG Property Development Co., Ltd.
-
-
Note on affiliated indemnity:
The Company has no affiliated indemnity that needs clarification.
IX. Contingencies118
(I) Contingent liabilities as a result of unsettled litigation or arbitration
(1) The Company provided Shenzhen SEG Dasheng Ltd. (SEG Dasheng hereinafter) with guarantee for borrowing RMB10 million from the Futian Office of Development Bank due March 25, 2004. Guangzhou Borong Investment Ltd. (Guangzhou Borong hereinafter) provided counter-guarantee for the Company. When the loan expired, the Company performed the liabilities of guarantee and paid the basis and interest of the loan as well as the legal costs, altogether RMB10,194,2000. The Company brought an action to Shenzhen Intermediate People's Court on August 2004. At the end of August 2004, the court sealed up all 4,020.6226 legal person shares of Shenzhen Dasheng held by Guangzhou Borong and pledged with Communication Bank Shenzhen Caitian Branch. In November 2004, after mediation by court, the Company entered into a settlement agreement with SEG Dasheng and Guangzhou Borong that SEG Dasheng and Guangzhou Borong repay the above amount and interest thereon in installments before May 25, 2005. Because SEG Dasheng did not act as per the settlement agreement, the Company applies to Shenzhen Intermediate People's Court for enforcement in January 2005.
On October 13, 2008, under the mediation of the court, the Company, SEG Dasheng and Guangzhou Borong entered into an Execution Settlement Agreement as follows:
A. Payment liabilities not yet performed by SEG Dasheng and Guangzhou Borong as determined by the No.484 civil settlement letter of civil court 2 of Shenzhen Intermediate People's Court include: basis (including litigation fee, attachment fee and evaluation fee) RMB8,930,000 and delay penalty RMB4,530,000 (by August 31, 2008).
B. SEG Dasheng and Guangzhou Borong agreed to pay the Company RMB10,000,000 duly in adequate amounts according to the following installment arrangements:
a. SEG Dasheng and Guangzhou Borong pay RMB3,500,000 to the Company before October 15, 2008.
b. The rest RMB6,500,000 shall be paid by SEG Dasheng and Guangzhou Borong in equal installments for 13 continuous months beginning November 2008 and the time and amount of monthly payment is: RMB500,000 before the end of a month.
C. The Company agrees, if SEG Dasheng and Guangzhou Borong repay the RMB1,000,000 duly according to Clause B in adequate amounts, the Company shall waive other interests and the execution of the case shall terminate.
D. If SEG Dasheng fails to pay any installment duly or in adequate amount when performing the installment liabilities stipulated in Clause B, the Agreement shall terminate automatically and the Company's promise to waive other interests shall lose effect, and SEG Daheng shall pay the Company the basis and delay penalty stipulated in Clause A (till all liabilities are discharged). The Notice of Haifeng Court confirmed the above agreement and confirmed that SEG Dasheng119
had paid the first RMB3,500,000 as agreed, and demand SEG Daheng to perform the Execution Settlement Agreement and make duly payments to the Company.
Up to the end of the period, the Company had received RMB7,500,000 from SEG Dasheng and the rest amount due will be paid according to the Execution Settlement Agreement.
(2) The tort in equity transfer sued by Zhao Shishun against the Company (2006 SZ Futian Court Civil 2 Pre No.1625) concerned a subject amount of RMB4,330,000. On February 5, 2007, the court judged that the Company pay RMB2,160,000 (exclusive of interest) to the prosecutor and pay the litigation fee RMB27,882. The court ignored other requests of the prosecutor. Both parties of the case made appeals. On March 17, 2009, Shenzhen Intermediate People's Court made a final verdict (2007 SZ Intermediate Civil 2 Final No. 950) to discharge the clause that "the third person Shenzhen SEG Industrial Investment Co., Ltd. assumes joint and several liabilities for said debt of Shenzhen SEG Co., Ltd." and the original judgment concerning other items was affirmed. The final verdict ruled that the Company pay RMB2,160,000 (exclusive of interest) to the prosecutor and pay the costs of the first and second hearings amounted to RMB122,928. Zhao Shishun applied to the court for execution on July 6, 2009 (2009 SZ Futian Exe No.04308) and applied to the court for cancellation of the case on July 10, 2009. At present, the Company is negotiating with Zhao Shishun for a settlement.
(3) The Company received a notice of tort in equity transfer prosecuted by Zhu Xiaoliang against the Company on April 30, 2007. The subject amount was about RMB480,00. The Company received the Civil Verdict of Futian People's Court after the first hearing on October 31, 2007. The verdict stated that the hearing of the subject case be terminated because the case was connected with the tort case sued by Zhao Shishun of which the judgment after the first hearing was not yet effective since both parties had made an appeal to Shenzhen Intermediate People's Court and a second judgment was not yet made. Zhu Xiaoliang withdrew the accusation on July 10, 2009. At present, the Company is negotiating with Zhu Xiaoliang for a settlement. For the above matters, the Company accrued RMB2,728,268.64 as provision for the estimated liabilities arising from the equity transfer dispute.
The Company started an action against Shenzhen SEG Business Machinery Co., Ltd. (the accused No.1) Li Zhongda (the accused No.2) on a borrowing dispute amounting to about RMB2,840,000 on June 25, 2007. The first court session was opened on August 3, 2007. Now the case is still under legal enforcement of execution. The subject amount for execution is RMB2,819,996.61, including basis RMB1,967,152 and interest RMB733,233.39. The interest on arrears was RMB104,864.72 and the accused shall pay RMB14,746.50 litigation fee for the first hearing. The Company received RMB609,693.29 transferred by Shenzhen Futian People's Court from the Everbright Bank of China on February 17, 2009. The money was a repayment to the Company from the accused SEG Business Machinery and Li Zhongda. After receipt of the120
money, the receivables of the Company from the accused SEG Business Machinery and Li Zhongda were reduced by an equal amount. At present, the Company was negotiating with SEG Business Machinery and Li Zhongda on settlement matters.
X. Commitments
Mortgaged assets
The Company signed a Maximum Mortgage Contract with CITIC Bank Shenzhen Branch, numbered 2007 SZ Bank Max Mortgage No.001, on May 16, 2007 and obtained a maximum loan of RMB120,000,000. The estate under mortgage was the second floor the SEQ Square. By December 31, 2008, the original value of the estate under mortgage was RMB212,648,630.00, the accumulated depreciation was RMB40,352,124.76, and the net value was RMB172,296,505.24. The mortgage period was from May 16, 2007 to May 16, 2012. This loan was not used during the period.
XI. Matters after the Date of Balance Sheet
The Company has no matters to disclose after the date of balance sheet.
XII. Other Matters
The Company has no other matters for disclosure.
XIII. Supplementary Information
(I) Non-recurring gains and losses in current year attributable to common shareholders (“+” for gain and “-” for loss)
Breakdown item
Amount
(I) Gain on disposal of non-current assets, including the offset of accrued provision for impairment of assets
27,839,254.66
(II) Tax refund, reduction or exemption upon approval exceeding authorized limits or without formal documents, or contingencies
(III) Government subsidies counted to the gain and loss of the current period other than those closely related to normal operations of the Company and granted continuously in a certain standard quota or amount according to applicable state policies
(IV) Fund appropriation charges for non-financial entities included in current gains and losses121
Breakdown item Amount
(V) Gain when the investment cost for acquiring a subsidiary, affiliated company or joint venture is below the entitled fair value of the recognizable net assets of the invested company
(VI) Gains and losses on exchange of non-monetary assets
(VII) Gains and losses on investment or asset management entrusted to another person
(VIII) Provision for assets impairment withheld for Force Majeure such as a natual disaster
(IX) Gains and losses from debt restructurings
(X) Expenditures for corporate restructuring, such as expensesfor relocation of employees and consolidation
(XI) Gains and losses on unfairly priced transactions in which the transaction value exceeds its fair value
(XII) Net current gains and losses of the subsidiaries in the period from the beginning to the date of merger under the same control
(XIII) Gains and losses on predicted liabilities outside the main operation of the Company
(XIV) Gains and losses on the change of fair value of held tradable financial assets and tradable financial liabilities other than effective hedges related to the normal operation of the Company and investment income on disposal of tradable financial assets, tradable financial liabilities and financial assets available for sale
(XV) Write-back of provision for impairment of accounts receivable for which separate impairment testing is conducted
3,900,000.00
(XVI) Gain and loss on outside consignment loans
---
(XVII) Gain and loss on change of fair value of investment properties measured in the fair value
---
(XVIII) Effect of one-off adjustment to gain and loss of the period according to applicable taxation and accounting laws and regulations on the gain and loss of the period
---
(XIX) Income on custodian fee for entrusted operation
---
(XIV) Other non-operating revenues and expense except the items mentioned above
1,856,084.36
(XV) Other gains and losses compliant with the definition of non-recurring gains and losses122
Breakdown item Amount
(XII) Amount affected by gains and losses of minority shareholders
81,298.04
(XVI) Amount affected by income tax
-6,364,111.00
Total
27,312,526.06
(II) Return on equity and earnings per share
Return on equity
Earnings per share
Profit in report period
Fully diluted
Weighted average
Basic earnings per share
Diluted earnings per share
Net profit attributable to common shareholders of the Company
-12.85%
-12.00%
-0.1861
-0.1861
Net profit attributable to common shareholders of the Company after deducting the non-recurring losses and gains
-15.26%
-14.25%
-0.2210
-0.2210
1. Calculation
The data mentioned above is from calculation based on the following formulas:
Fully diluted return on equity (ROE)
Fully diluted ROE = P ÷ E
Here, P refers to the net profit attributable to common shareholders of the Company or the net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses. The “net profit attributable to common shareholders of the Company” does not include the amount of the minority shareholders’ gains and losses. Calculation of the “net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses” is based on the consolidated net profit after deducting the minority shareholders’ gains and losses, with the deduction of the non-recurring gains and losses of the parent company (including the amount affected by income tax) and the deduction of the share of the subsidiaries’ non-recurring gains and losses (including the amount affected by income tax) attributable to the common shareholders of the parent company. The “ending net assets attributable to common shareholders of the Company” do not include the amount of minority interests.
Weighted average ROE
Weighted average ROE = P/(E0 + NP ÷ 2 + Ei x Mi ÷ M0 – Ej x Mj ÷ M0 刡 Ek x Mk ÷ M0)
Here, P refers to the net profit attributable to common shareholders of the Company or the net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses. NP refers to the net profit attributable to common shareholders of the Company. EO refers to the year-beginning net assets attributable to common shareholders of the Company. Ei123
refers to the net assets increased because of issuance of new stocks or conversion of debts into stocks in the report period and attributable to common shareholders of the Company. Ej refers to the net assets decreased because of repurchase or distribution of cash dividends in the report period and attributable to common shareholders of the Company. MO refers to the number of the months in the report period. Mi refers to the number of the months in the period from the month following the one when net assets increase to the ending month of the report period. Mj refers to the number of the months in the period from the month following the one when net assets decrease to the year-end month of the report period. Ek refers to increases or decreases of net assets caused by other transactions or events. Mk refers to the number of the months in the period from the month following the one when net assets increase or decrease to the ending month of the report period.
Basic earnings per share
Basic earnings per share = P ÷ S
S = S0 + S1 + Si x Mi ÷ M0 - Sj x Mj ÷ M0 - Sk
Here, P refers to the net profit attributable to common shareholders of the Company or the net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses. S refers to the weighted average of the common shares issued. SO refers to the total number of the shares at the year-beginning. S1 refers to the number of shares increased because of capitalization of public reserve or distribution of dividends in the report period. Si refers to number of shares increased because of issuance of new stocks or conversion of debts into stocks in the report period. Sj refers to the number of shares decreased because of repurchase in the report period. Sk refers to the number of shares shrunk in the report period. MO refers to the number of the months in the report period. Mi refers to the number of the months in the period from the month following the one when the number of shares increases to the ending month of the report period. Mj refers to the number of the months in the period from the month following the one when the number of shares decreases to the ending month of the report period.
Diluted earnings per share
Diluted earnings per share = [P + (Interests of the diluted latent common shares determined to be expenses – Conversion expenses) × (1 – Income tax rate)]/(S0 + S1 + Si × Mi ÷ M0 – Sj × Mj ÷ M0 – Sk + Weighted average of increased common shares attributed to share warrants, share options and convertible bonds)
Here, P refers to the net profit attributable to common shareholders of the Company or the net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses. When calculating the diluted earnings per share, the Company has considered the influence of all diluted latent common shares, so the diluted earnings per share is set at the minimum value.124
2. There is no latent common share in the period that cannot be diluted in the current period but may probably be diluted in future periods.
3. There is no significant change in the number of common shares issued or latent common shares of the Company during the period from the balance sheet date to the date when the financial report is approved to be issued.
XIV. Approval for issuance of the financial statements
The financial statements have been approved by all directors (the board of directors) of the Company to be issued on Aug. 19, 2009.
Shenzhen SEG Co., Ltd
August 22, 2009125
VII. DOCUMENTS AVAILABLE FOR REFERENCE
(I)The Semi-annual Report with the signature of Chairman of the Board of the Company;
(II)Text of the Financial Report with the signatures and seals of the legal representative, the person in charge of finance and the financial officer of the Company;
(III)All the Company’s public notices and documents (texts or originals) ever disclosed in the newspapers designated by CSRC in the report period.
Board of Directors of
Shenzhen SEG Co., Ltd
Signature of Chairman of the Board: Zhang Weimin
August 22, 2009
