深圳中华自行车（集团）股份有限公司
Shenzhen China Bicycle Company (Holdings) Limited
Semi-Annual Report 2009
August 13, 20091
Important Notice
The directors, supervisors and senior executives of Shenzhen China Bicycle Company (Holdings)
Limited (hereinafter referred to as the Company) hereby confirm that there are no important
omissions, fictitious statements or serious misleading information carried in this report, and shall
take all responsibilities, individually and jointly, for the authenticity, accuracy and completeness of
the whole contents.
The 2009 semi-annual financial report of the Company has not been audited, and the investors are
suggested to read carefully.
No director declares that he or she could not assure the authenticity, accuracy and completeness of
the semi-annual report, or holds different opinions.
Chairman and Person in Charge of the Company Mr. Wu Jun, Person in Charge of Accounting
Works Mr. Wang Cheng and Person in Charge of Accounting Institution Mr. Sun Longlong hereby
assure that the financial report enclosed in the semi-annual report is true and complete.
CONTENTS
SECTION I. COMPANY PROFILE --------------------------------------------------------------------------3
SECTION II. MAIN FINANCIAL DATA AND BUSINESS INDEXES--------------------------------4
SECTION III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT
SHAREHOLDERS----------------------------------------------------------------------------------------------6
SECTION IV. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR
EXECUTIVES---------------------------------------------------------------------------------------------------7
SECTION V. REPORT OF THE BOARD-------------------------------------------------------------------9
SECTION VI. SIGNIFICANT EVENTS-------------------------------------------------------------------14
SECTION VII. FINANCIAL REPORT----------------------------------------------------------------------18
SECTION VIII. DOCUMENTS AVAILABLE FOR REFERENCE-------------------------------------182
SECTION I. COMPANY PROFILE
I. Legal Name of the Company
In Chinese: 深圳中华自行车（集团）股份有限公司
In English: SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED
Short form of English Name: CBC
II. Legal Representative: Shang Shijun
III. Secretary of the Board: Li Hai
Representative of Securities Affairs: Cui Hongxia
Tel.: (86) 755 – 28181666, 25516998
Contact Address: Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen,
Guangdong Province, China
Fax: (86) 755 - 28181009
E-mail: dmc@szcbc.com
IV. Registered Address: No. 3008, Buxin Road, Shenzhen, Guangdong Province, China
Postcode: 518019
Office Address: Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen,
Guangdong Province, China
Postcode: 518131
Internet Website: www.cbc.com.cn
E-mail: cbc@szcbc.com
V. Newspapers Chosen for Disclosing Information: Securities Times and Hong Kong Wen Wei Po
Internet Website Designated for Publishing the Semi-annual Report:
http://www.cninfo.com.cn
Place Where the Semi-annual Report Is Prepared and Placed: Secretariat of the Board of the
Company, Yousong Industrial Zone, Longhua, Shenzhen
VI. Stock Exchange Listed with, Short Form of the Stock and Stock Code:
Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: SST ZHONGHUA - A, ST ZHONGHUA - B
Stock Code: 000017/A-stock, 200017/B-stock
VII. Other Relevant Information:
1. Date of the First Registration: August 24, 1984
2. Place: Buxin Road, Shenzhen
3. Registration No. of the Business License of Incorporated Enterprise: QGYSZZ No. 101165
4. Tax Registration No.: GSSZ No. 440301618830452,
SDSDZ No. 440303618830452
5. Name and office address of the Certified Public Accountants engaged by the Company:
Shenzhen Pengcheng Certified Public Accountants Co., Ltd.
Office Address: 5/F, Baofeng Building, No. 2006 South Dongmen Road, Shenzhen3
SECTION II. MAIN FINANCIAL DATA AND BUSINESS INDEXES
(I) Major accounting data and financial indexes in the report period
(Unit: RMB)
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
in period-end of last
year (%)
Total assets 190,150,317.40 190,897,705.53 -0.39%
Owners’ equity attributable to shareholders of
the listed company -1,835,483,874.45 -1,803,059,381.39 1.80%
Share capital 479,433,003.00 479,433,003.00 0.00%
Net assets per share attributable to
shareholders of the listed
company(RMB/Share)
-3.8284 -3.7608 1.80%
This report period
(Jan. to Jun.)
The same period of
last year
Increase/decrease in
this report period
year-on-year (%)
Total operating income 112,494,583.85 111,109,918.15 1.25%
Operating profit -56,735,729.52 -11,846,915.08 378.91%
Total profit -56,402,631.25 -4,286,665.48 1,215.77%
Net profit attributable to shareholders of the
listed company -56,332,908.69 -4,615,635.71 1,120.48%
Net profit attributable to shareholders of the
listed company after deducting non-recurring
gains and losses
-56,666,006.96 -12,175,885.31 365.40%
Basic earnings per share (RMB/Share) -0.1175 -0.0096 1,123.96%
Diluted earnings per share (RMB/Share) -0.1175 -0.0096 1,123.96%
Return on equity (%) - - -
Net cash flow arising from operating
activities 753,569.02 -6,185,663.33 -112.18%
Net cash flow per share arising from
operating activities (RMB/Share) 0.0016 -0.0129 -112.18%
(II) Items of non-recurring gains and losses:
(Unit: RMB)
Non-recurring gains and losses: Jan to Jun, 2009
The same
period of
last year
1. Gains and losses from disposal of non-current asset 218,726.57 7,633,441.94
2. Any tax refund or exemption illegally approved or without supporting
documents in writing ---
3.Governmental subsidy reckoned into current gains and losses ---
4. Income deriving from use by non-financial entities of an enterprise’s
own fund ---
5. Gains and losses caused by that the merger cost of merger enterprise
is smaller than the fair recognizable fair value of net asset enjoyable by
the merger unit when taking merger
---
6. Exchanging gains and losses of non-currency assets ---4
7. Gains and losses of entrusted investment ---
8. Accrual of provisions for asset impairment due to natural disasters
and other majure ---
9. Gains and losses caused by debts reorganization
10. Expenses caused by enterprises reconstruction ---
11. Profit/loss attributable to unfair portion of the value resulting from
unfair priced transactions ---
12. Current net gains and losses during period-begin to merger date of
subsidiaries caused by merger of enterprises under the common control ---
13. Gains and losses caused by projected liabilities irrelevant to main
operations of the Company ---
14. Net amount of other non-operating income and cost excluded the
aforesaid items 128,593.36 -39,322.93
15. Other -14,221.66 -33,869.41
Total 333,098.27 7,560,249.60
(III) Indexes calculated in accordance with Regulations on the Information Disclosure of
Companies Publicly Issuing Shares (No. 9) are as follows:
Return on equity (%) Earnings per share (RMB)
Profit index Fully diluted
Weighted
average
Fully diluted
Weighted
average
Operating profit --- --- -0.1183 -0.1183
Net profit --- --- -0.1175 -0.1175
Net profit after deducting
non-recurring gains and losses --- --- -0.1182 -0.1182
(IV) Adjustment statement on difference in net assets calculated in accordance with CAS and IAS
respectively in the report period
(Unit: RMB)
Net assets
as of Jun. 30, 2009
Net assets
as of Jun. 30, 2008
IAS -1,835,483,874.45 -1,788,955,096.39
CAS -1,835,483,874.45 -1,788,955,096.39
There is no difference between the net assets attributable to parent company which were
respectively confirmed on Jun 30th of 2009 and Jun 30th of 2008 according to CAS and IAS.5
SECTION III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT
SHAREHOLDERS
(I) Particulars about changes in share capital:
Share capital of the Company remains unchanged in the report period.
(II) Particulars about shares held by the top ten shareholders and the top ten circulating shareholders at
the end of this report period:
Unit: Share
Total shareholders 33,452
Particulars about shares held by the top ten shareholders
Full name of shareholders Nature of
shareholders
Proportio
n of
shares
held
Total
amount of
shares held
Amount of
non-circulat
ing shares
held
Amount of
shares
pledged or
frozen
Shenzhen Guocheng Energy Investment
Development Co., Ltd.
Domestic
non-state-owned
legal person
13.58% 65,098,412 65,098,412 0
Hong Kong Zhuorun Technology Co.,
Ltd.
Foreign legal
person 9.20% 44,104,246 44,104,246 40,000,000
HONGKONG（LINK） BICYCLES
LIMITED
Foreign legal
person 5.42% 26,000,000 26,000,000 26,000,000
Shenzhen Kangsheng Investment
Development Co., Ltd.
Domestic
non-state-owned
legal person
2.50% 11,968,590 11,968,590 0
Xinliyi Investment Management Co., Ltd.
Domestic
non-state-owned
legal person
2.34% 11,200,000 11,200,000 0
Airline Trust and Investment Co., Ltd. State-owned legal
person 2.16% 10,340,000 10,340,000 0
Shenzhen New Land Tool Consultants
PTE. LTD
Domestic
non-state-owned
legal person
2.06% 9,857,556 9,857,556 0
China Resources SZITIC Trust Co., Ltd. State-owned legal
person 1.25% 6,000,000 6,000,000 0
Jingchao Investment Co., Ltd. Foreign legal
person 1.04% 5,001,944 5,001,944 0
Shanghai Yanxin Industrial Investment
Co., Ltd.
Domestic
non-state-owned
legal person
0.73% 3,500,000 3,500,000 0
Particulars about shares held the top ten circulating shareholders
Full name of shareholders Total circulating shares held Type of shares
Shenzhen New Land Tool Consultants
PTE. LTD. 9,857,556 Domestically listed foreign
shares
Zhang Huiling 2,071,372 Domestically listed foreign
shares
TANG JING YUAN 1,924,500 Domestically listed foreign
shares
Lu Huazhong 1,547,000 Domestically listed foreign
shares
Li Jinling 1,225,702 Domestically listed foreign
shares
Jiang Lan 1,215,800 Domestically listed foreign6
shares
Xiao Lizhu 1,127,649 Domestically listed foreign
shares
Wang Zuoguang 1,025,700 Domestically listed foreign
shares
Liu Baohua 1,000,000 Domestically listed foreign
shares
Wei guobin 902,000 Domestically listed foreign
shares
Explanation on associated
relationship among the top
ten shareholders or
consistent action
Among the top ten shareholders of circulation share, the Company was unaware of
whether there existed associated relationship or whether there existed consistent
actionist regulated in the Management Measure of Information Disclosure on
Change of Shareholding for Listed Companies.
(III) In the report period, the Company’s controlling shareholder and actual controller have not
changed.7
SECTION IV. PARTICULARS ABOUT DIRECTORS, SUPERVISORS, SENIOR
EXECUTIVES AND EMPLOYEES
(I) In the report period, the Company’s shares held by directors, supervisors and senior executives
of the Company remained unchanged.
(II) In the report period, particulars about new engagement or dismission of the Company’s
directors, supervisors and senior executives
In the report period, according to the nomination of Hong Kong (Link) Bicycles Limited (already
renamed as China Bicycle (Group) Co., Ltd.), the shareholder of the Company, and with
examination and approval from the 18th Shareholders’ General Meeting (for 2008) held on Jun 30th
of 2009, Mr. Guan Yueyu was elected as director of the 7th board of directors. His term was the
same as this session of board of directors.8
SECTION V. REPORT OF THE BOARD
(I)Discussion and analysis on the general operation of the Company during the report period:
No change happened to the main business and the industry that the Company belonged to during the
report period.
The global financial crisis broke out at the end of 2008 really brought comparatively big negative
influences on domestic industry economy, trade export, occupation-taking, and consumption market
as well as consumption anticipation. Much more, this influence would be across the 2009 for a
whole year. At the other side, the Company still faced the griming operation environment that debt
restructuring hadn’t received practical progress and Share Merger Reform kept no moving in the
first half year of 2009. Under such situation, the operation group of the Company guided all
employees to actively adjust operation strategy and product structure, greatly develop the main
business-electronic bicycle, strengthen construction of network and service of after-sales, and to
consummate service system; meanwhile, it reinforced product R&D and rationally positioned
manufacture bases, to realize general stable growth of main business operation.
In terms of property lease and management: the Company reasonably integrated the manufacture
bases in head office and Longhua, adopted various measures to clear off inventory materials, to
make sure that it could be furthest leased out. Through this, the cash flow and economic benefit of
the Company were improved.
From January to June of 2009, the Company realized operation income of RMB 112,494,600,
1.25% up over the same period of last year; a loss of RMB 56,332,900 for net profit.
(II)Financial index of the report period compared to that of the same period of last year:
1. Operation achievements:
Financial index Amount (RMB) Increase or
decrease
Jan. to June, 2009 Jan. to June, 2008
Operation income 112,494,583.85 111,109,918.15 1.25%
Operation profit -56,735,729.52 -11,846,915.08 378.91%
Net profit -56,332,908.69 -4,615,635.71 1,120.48%
Net increase of cash and cash
equivalent 9,264,271.23 4,200,999.54 120.53%
2. Financial condition:
Item Amount (RMB) Increase or
decrease
Jan. to June, 2009 Jan. to June, 2008
Current assets 100,508,702.74 84,693,878.60 18.67%
Total assets 190,150,317.40 210,914,847.68 -9.84%
Current liability 1,841,166,703.09 1,838,099,830.92 0.17%
Shareholders’ equity -1,835,150,370.61 -1,788,626,126.16 2.60%
Explanation: particulars and reasons for the great changes in main accounting statement items and
financial index of the Company
Monetary capital: 91.85% up over period-begin, mainly due to that the Company received refund
for investment project in Jiangxi Lihua;
Notes receivable: 31.62% up over period-begin, mainly due to that Emmelle Company newly9
received drafts in this report period;
Account receivable: 196.96% up over period-begin, mainly due to operation business;
Others receivable: 29.83% down over period-begin, mainly due to that the Company received
refund for investment project in Jiangxi Lihua;
Account received in advance: 42.87% up over period-begin, mainly due to the new accounts
received in advance by Emmelle Company for its sales in this report period;
Other current liabilities: 20.11% up over period-begin, mainly due to interest was withdrew in the
report period;
Capital reserve: 5.82% up over period-begin, mainly due to that the interests exempted by
Guosheng Company in this report period was recorded into capital reserve;
Sales expense: 36.69% up over the same period of last year, mainly due to increase of sales expense
of Emmelle Company;
Administration expense: 34.34% down over the same period of last year, mainly due to that
compensation for economic dismission occurred in the same period of last year;
Financial expense: 681.42% up over the same period of last year, mainly due to that exchange rate
for RMB was comparatively stable for this report period, while big amount of exchange income
occurred in the same period of last year due to the appreciation of RMB;
Assets depreciation loss: 161.33% down over the same period of last year, mainly due to that the
Company received tender account for bankruptcy of Hong Kong Link in this report period, while
inventory depreciation loss was withdrew in the same period of last year;
Investment income: 100% down over the same period of last year, mainly due to that as for Jiangxi
Lihua, it had be transferred to other account receivable from long-term equity investment in 2008,
so it couldn’t yield investment income in this report period;
Non-operating income: 95.61% down over the same period of last year, mainly due to that the
Company disposed Beijing property in the same period of last year, while no such assets disposal
happened in this report period;
Non-operating expenditure: 95.94% down over the same period of last year, mainly due to that the
Company disposed Beijing property and handed relevant tax in the same period of last year, while
no such assets disposal and no such expenditure happened in this report period;
Net profit: as for the loss of net profit, it received an increase of 1,215.77% over the same period of
last year, mainly due to that exchange rate for RMB was comparatively stable for this report period,
while big amount of exchange income occurred in the same period of last year due to the
appreciation of RMB;
Net profit attributable to shareholders of parent company: 1,120.48% up over the same period of
last year, mainly due to that exchange rate for RMB was comparatively stable for this report period,
while big amount of exchange income occurred in the same period of last year due to the
appreciation of RMB.
3. Operation of main business:
During the report period, the main business and the industry that the Company belonged to didn’t
changed. In the first half year of 2009, the main business was operated stably. From Jan. to June, the
Company realized main business income of RMB 108,502,500, 2.38% up over the same period of
last year; and realized net profit of RMB -56,332,900.
(1)Main business classified according to industries and products
Unit: RMB’0000
Main business classified according to industries
Classified according
to industries or
products
Operating
revenue
Operating
cost
Gross profit
ratio %
Increase/decre
ase in
Increase/decre
ase in
Increase/decrea
se in gross10
operating
income
year-on-year
%
operating cost
year-on-year%
profit ratio
year-on-year%
Bicycles and fittings 10,743.32 10,163.86 5.39% 2.49% -0.52% 2.86%
Property management 106.93 189.58 -77.29% -7.51% 21.12% -41.91%
Main business classified according to products
Bicycles and fittings 10,743.32 10,163.86 5.39% 2.49% -0.52% 2.86%
Property management 106.93 189.58 -77.29% -7.51% 21.12% -41.91%
Among which: the related transaction that the listed company sold products and provided labor
service to its controlling shareholders and their subsidiaries in the report period totaled to RMB 0.
(2)Main business classified according to areas
Unit: RMB’0000
Area Operating revenue Increase/decrease in operating
revenue year-on-year %
Shandong 3,232.62 6.94%
Henan 2,759.45 8.93%
Hebei 1,469.46 3.00%
Jiangsu 1,277.19 8.20%
Shanxi 224.54 -34.63%
4. Problems and difficulties in operation and relevant solving scheme:
(1) Problems and difficulties in operation mainly showed up in the following aspects:
a. The financial crisis accelerated industry integrity, market competition became incandesced, and
especially that the furious competition in price directly brought down economic benefit of the
industry.
b. At present, the Company has not practically started works for debt restructuring and debt
reconciliation, tax-owing problems formed in history is still serious and no material improvement
was made in share merger. Due to the prominent debt and heavy interest burden, the Company was
in a serious situation where the value of all of its possessions was not equal to the value of its debts.
In the report period, many creditors had appealed the courts to make compulsory execution of the
Company’s assets.
c. The overstocked fittings took an area of 40,000 kilometers of the workshop, so it should be
cleaned off and prepare for lease.
(2)Solving scheme:
For the above problems, at one side, the Company took consideration of the market, reinforced
development and quality management for the upgrade product-lithium electric bicycle and
high-level bicycles, tried the best to develop production and sales of main products, kept stable
growth of main business; at the other side, the Company actively responded to various lawsuits and
obtained approval for suspension of execution of lawsuits since it appealed to the court for that
suspension; meanwhile, the Company accelerated disposal for historical-left problems, such as
cancellation of branch, to clear off barriers for its further step in promoting the integrated
restructuring which included the debt restructuring.
(III)Investment in the report period:
During the report period, the Company conducted no investment, nor investment which lasted to the
report period from the previous periods; the Company didn’t raised proceeds, nor proceeds which11
were raised in previous periods lasted to this report period.
(IV)Working plan for the later half year for the board of directors:
1. Further promote reform in mechanism and management, and fully improve operation
management level;
2. Actively respond to the influence over market resulted by the financial crisis, the Company
would strengthen development and sales for products, and strive to accomplish the sales task for the
whole year;
3. Assist with the shareholders with holding foreign shares of the Company and strive to promote
Share Merger Reform;
4. Enhance cashing of some property and stock materials in other places to effectively improve
economic benefit of stock assets;
5. Pour more efforts in write-off and settlement of the branches and underling companies;
6. Fully assist with the Company to actively promote restructuring in debt and assets, striving for
practical progress made in restructuring.
(V)Forecast and explanation for profit made from the end of this report period to end of the next
report period:
Due to that the Company is still in period of debt restructuring and thus many uncertainties exist, it
is not able for the Board to make accurate forecast on the general performance of the 3rd quarter of
2009.
(VI)Explanation presented by the Board for change and treatment of the matters involved in the
Non-standard Report issued by CPAs for last year:
Shenzhen Pengcheng Certified Public Accountants Co., Ltd. issued audit report with disclaimer of
opinions for the 2008 Financial Report of the Company. Due to that the debt reorganization work of
the Company had not been completely finished in 2008, so risk of bearing huge debt still remained
with many significant uncertainties. The CPAs was not able to offer opinion on the financial debt,
tax payable, contingent proceedings, lawsuits and sustainable operation.
Explanation presented by the Board for change and treatment of the matters involved in the
Non-standard Report issued by CPAs for last year is as follows:
1. Financial debt
Shenzhen Pengcheng CPAs held that: the letters replied from the financial creditors for the inquiry
showed that the Company missed to record an interest balance totaling to RMB 265,875,786.92,
and some letters were replied without confirmation on interest for the principal of loans totaling to
RMB 114,558,000.00, and principal of loans which haven’t been replied totaled to RMB
194,255,951.99, so it was not available to confirm influence on financial statement by financial
debt.
The Company provided explanation in Note 13.1, Financial Statement for 2008, for details of
interest confirmation balance: when some creditors implemented the document ((2004) No.6)
released by China Committee on Bank Supervision, they had different understanding on this
document with the Company. The document noticed that: Bank of China and other 10 financial
organizations stop calculating the interest of the Company for 3 years since Jan 1st of 2002 and at
the same time, exempt all the interest payable of the Company (including penalty interest and
compound interest) occurred before Dec 31st of 2001.
Some assets management companies and banks considered that the Company was expected to
return the interest exempted and stop-calculated, and some assets management companies had not
confirmed the proceeding of interest calculation. The Company had transferred all the interest of
loans payable owed before Dec 31st of 2001, RMB 357,993,665.24, (including penalty interest and
compound interest) to capital public reserve. Interest was stopped with calculation from Jan 1st of12
2002 to Dec 31st of 2004. The exempt term was due on Dec 31st of 2004. The Company held it was
not necessary for him to return the interest exempted and stop-calculated, so when the term was due,
the Company started to withdraw interest according to normal loan for those interests which needed
to be returned. The stop-calculated interest and compound interest from Jan 1st of 2002 to Dec 31st
of 2004 was not accrued.
Besides, the financial debt of the Company was formed in history which had occurred for a long
time and the amount of period–end had not changed for years. Body qualification of some creditors
had been transferred and the particular personnel for handling had also changed, so the creditors
needed time to check clearly the amount of creditor and debt of both involved parties and that was
why some creditors had not replied the letters to confirm.
The Company would continuously advance the account-check work with the relevant creditors of
financial debt, trying as soon as possible to check clearly the interest on principal of the financial
debt. Once progress is made, relevant information would be disclosed according to relevant
regulation.
2. Issues on tax payable
Shenzhen Pengcheng Certified Public Accountants Co., Ltd. thought that: in the audit process, the
CPAs implemented audit procedures including inspection and inquiry, inquiring book tax amount
payable, custom guarantee and penalty balance totaling to RMB 118,292,319.46. No reply has been
received, so it was impossible for the CPAs to confirm the influence on financial statement of the
Company.
Due to the Company’s tax payable was formed in the past, which had a long time, there was no
newly-increased tax payable in the report period, forming reasons were complex, personnel of
specific affairs had changed, and tax department needed time to check clear the debts rights and
amounts of both sides, therefore, we are not able to receive confirmation letter from tax department.
According to the regulations in Administration of Tax Collection regulated by the State, it is
possible to repay the penalties and overdue fine. The Company will continue to follow up the work
of checking account of tax department, check clear the amount of tax payable as soon as possible,
and will disclose information according to the requirements of relevant regulations if there is some
progress.
3. Contingent events and lawsuits
Shenzhen Pengcheng Certified Public Accountants believed that: card information for loans of the
Company was not accordant because of system updating and other seasons; during the auditing, the
CPAs made field verification in relevant courts involved in lawsuits for external guarantee and
overdue loans of the Company as substitute audit procedure, while no confirmation document had
been obtained from the relevant courts. Besides, due to that it was hard to implement other effective
audit procedures, it was unable for us to judge whether the Company had disclosed complete
contingent events and lawsuits, and impacts on its financial statement.
The historically formed loan and guarantee lawsuit had existed rather long time; in the report period,
there was no newly-added undisclosed guarantee events and lawsuits; part courts in charge of those
lawsuits changed, and specific responsible people also altered; the court needs time to check details
and amount of the case, so the court didn’t write back for confirmation. The Company will continue
follow up the check work by certified public accountants with related courts, and checks clear the
contingent events and lawsuits as soon as possible. If there is any progress, information disclosure
will be made according to requirements of relevant regulations.
4. Matters on sustainable operations
Shenzhen Pengcheng Certified Public Accountants thought that, the Company’ asset could
seriously not offset the debt; the measures on the reconciliation procedure of the bankruptcy to13
settle the debts had no material progress and could not be able to get adequate and proper audit
evidence to confirm it could effectively improve the continuous operations of the Company; thus,
we could not judge whether the financial report 2008 prepared by the Company based on imagined
continuous operations was proper.
Since March 2003, the promotion on debt restructuring by the former largest creditor of the
Company-China Huarong Asset Management Corporation acquired breakthrough development, the
Plan on Reorganization of Shenzhen China Bicycle Company (Holdings) Limited has obtained the
approval from relevant department such as China Banking Regulatory Commission, in which all the
interests of the financial debts the Company owed ended Dec. 31, 2004 were exempted and stopped
interest calculation , and it was under the stage of implementation.
The Company and International Finance Corporation signed Reconciled Agreement on Mar 29th of
2007, in which it was agreed to settle all the credits and liabilities between the two parties with
USD equivalent to RMB 2 million. The liabilities amount was consisted of principal approximately
amounting to USD 3.87 million and an accrued interest approximately amounting to RMB 42.78
million. The two largest creditors of the Company-Shenzhen Guosheng Energy Investment
Development Co., Ltd. and Guangdong Sunrise Holdings Co., Ltd. agreed to stop calculation of
interest of consolidated loan of RMB 69,558,600 for the whole year of 2007, and RMB 66,226,800
for 2008. The interest would also not be collected in future. The largest creditor of the
Company-Shenzhen Guosheng Energy Investment Development Co., Ltd. agreed to stop
calculation of interest of loan of RMB 9,124,600 and loan of USD 84,797,600 for the whole year of
2009. The interest would also not be collected in future.
Besides progress was made in debt restructure, the Company also made continuous growth in its
main operation and the main operation continued to make profit. Payment pressure of the Company
in short-term has been sharply brought down; the sustainable operation ability has been improved
comparatively.
On Dec. 30, 2006, China Huarong Asset Management Corporation transferred its creditor right to
Shenzhen Guosheng Energy Investment Development Co., Ltd. After the change of the largest
creditor, the former largest creditor China Huarong Asset Management Corporation applied to
Shenzhen Intermediate People’ Court for bankruptcy of the Company on August 1, 2005, planning
to settle the debts of the Company completely through bankruptcy and reform measures; the new
creditor Shenzhen Guosheng Energy Investment Development Co., Ltd. was responsible for
promoting the restructuring works on relevant debts and reorganization, and it was speeding up
making scheme for debt restructuring and has got certain progress.
Meanwhile, big shareholders, relevant creditors and senior executives of the Company are actively
seeking for support from government and tax department for solving history debts in debt
restructuring.
The Board of the Company believed that: as the debt and asset restructure of the Company
continuously made progress, together with the continuous growth of the Company’s performance,
its operation environment, operation status and sustainable operation ability would be improved
further.14
SECTION VI. SIGNIFICANT EVENTS
(I) Corporation governance
In the report period, the Company strictly conformed to regulations of standard documents such as
Company Law, Securities Law, the laws and codes of CSRC and Shenzhen Stock Exchange and
relevant regulations, perfected the corporation governance structure continuously. The works of
shareholders’ general meeting, the board of directors, supervisory committee and management
group all operated strictly according to the requests of the foresaid documents and each bylaws of
the Company. The actual conditions about corporate governance of the Company accorded with the
requests of relevant standard documents on governance of listed company promulgaged by CSRC.
In order to further standardize the operation, the Company made an overall arrangement and
revising of Articles of Association, Rules of Procedure for General Shareholders’ Meeting, Rules of
Procedure for the Board of Directors, Rules of Procedure for the Supervisory Committee and
System of Independent Directors according to the requirement of relevant regulations promulgaged
by CSRC.
(II) In the report period, the Company did not distribute profit, nor had plans of transferring the
public reserve capital into share capital.
(III) In the report period, the Company had no material lawsuits and arbitrations.
(IV) In the report period, the Company had no purchase, sales and disposal of significant assets.
(V) Significant related transactions in the report period:
In the report period, the Company had no new significant related transactions; details about
significant related transactions happened in the past years are in the notes 10: Relationship of
related parities and its transaction
(VI) Significant contracts in the report period:
1. In the report period, the Company had not entrusted, contracted or leased the assets of other
companies, nor had other companies entrusted, contracted or leased the assets of listed companies.
2. In the report year, the Company had no entrusted financing.
3. In the report period, the Company had not provided guarantees for controlling subsidiary, the
guaranteed occurred in previous years were as follows:
Unit: RMB’0000
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Name of the
Company
guaranteed
Name of the Company
guaranteed
Name of
the
Company
guaranteed
Name of the
Company
guaranteed
Name of
the
Company
guaranteed
Name of
the
Company
guaranteed
Name of
the
Company
guaranteed
Guangdong Sunrise
Group Co., Ltd. June 20, 1996 504.55
Joint
responsibility 6 months No No
Guangdong Sunrise
Group Co., Ltd. July 26, 1996 2,800.00
Joint
responsibility 4 months No No
Guangdong Sunrise
Group Co., Ltd. Sep. 30, 1999 681.83
Joint
responsibility 12 months No No
Guangdong Sunrise
Group Co., Ltd. Apr. 30, 1998 260.00
Joint
responsibility 11 months No No
Guangdong Sunrise July 30, 1997 250.00 Joint 7 months No No15
Group Co., Ltd. responsibility
Guangdong Sunrise
Group Co., Ltd. June 4, 1997 300.00
Joint
responsibility 8 months No No
Gintian Industry
(Group) Co., Ltd. Oct. 30, 1998 5,000.00
Joint
responsibility 6 months No No
Shenzhen Tianma
Cosmetics Co., Ltd. Sep. 30, 1994 800.00
Joint
responsibility 12 months No No
Total amount of guarantee in the report period 0.00
Total balance of guarantee at the end of the report
period 10,596.38
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for
controlling subsidiaries during the report
period
0.00
Total balance of guarantee for
controlling subsidiaries at the end of the
report period
7,817.02
Total amount of guarantee of the Company (including guarantee for controlling subsidiaries)
Total amount of guarantees 18,413.40
Ratio of total guarantee to net assets of
the Company -10.21%
Including:
Amount of guarantee for shareholders,
actual controller and its associated
parties
0.00
The debts guarantee amount provided
for the guarantee of which the
assets-liability ratio exceeded 70%
directly or indirectly
18,413.40
Proportion of total amount of guarantee
in net assets of the Company exceeded
50%
18,413.40
Total amount of the aforesaid three
guarantees 36,826.80
Explanations on possibly bearing joint
and several liquidating responsibilities
for undue guarantees
Naught
Note: Guangdong Sunrise Group Co., Ltd. was once the shareholder of the Company. For its
equities were auctioned by the court, now it is not the shareholder of the Company.
4. Explanation on the external guarantees of the Company, accumulative total and the current ones,
issued by the independent directors:
According to the regulations of Concerning Some Issues on Regulating the Funds between Listed
Companies and Associated Parties and Listed Companies’ Provision of Guaranty to Other Parties
(No. 56 [2003] promulgated by CSRS) as the independent directors of Shenzhen China Bicycle
Company (Holdings) Limited, we made inspection on the accumulative and current external
guarantees of the Company and also on the guarantee getting out of line, together according to the
Special Explanation on Fund Occupancy and Guarantee Getting out of Line of the Controlling
Shareholders and Other Associated parties of Shenzhen China Bicycle Company (Holdings)
Limited issued by Shenzhen Pengcheng CPAs (No. 205 SPSGZZ [2009]) and relevant data. Here
comes the detail explanation:
During the report period, no guarantee or guarantee out of line has been provided by the Company16
for its controlling shareholders and the subordinate enterprises. The guarantee or guarantee out of
line provided by the Company for its controlling shareholders and the subordinate enterprises were
those happened from 1996 to 1999, belonging to the events left in history. Due to that most
guaranteed parities were not able to repay, the Company treated most guarantees as the projected
liabilities which amounted to RMB 184,133,984.92.
Independent Directors: Li Chun, Shao Liangzhi, Zhang Xinmiao, Wei Chuanyi
(VII) Particulars about the Company’s reception of investigation, communication and interview
In accordance with the requirements of Guidance for Fair Information Disclosure for Listed
Companies of Shenzhen Stock Exchange, the Company earnestly implements the System of
Reception and Popularization. The Company and relevant personnel in charge of information
disclosure strictly follow the principle of fair information disclosure. Situation that different
treatment policy is not implemented; non-public significant information is not disclosed, revealed or
leakout out for appointed person.
Date Place Way The received
parties Contents discussed and materials supplied
Jan.-Jun.,
2009
Office of the
Company
Phone
communication
Tradable
shareholder
Progresses of Share Merger Reform and debts
restructuring of the Company17
SECTION VII. FINANCIAL REPORT
(Attached)
SECTION VIII. DOCUMENTS AVAILABLE FOR REFERENCE
1. Text of Semi-annual Report 2009 carrying the personal signatures of legal representative.
2. Text of financial report carrying the signatures and seals of legal representative, principal in
charge of the accounting affairs and principal in charge of the accounting institute;
3. Original texts of all documents and notices disclosed publicly in the newspapers designated by
China Securities Regulatory Commission in the report period;
4. English version of the 2009 Semi-annual Report.
Chairman of the Board:
Board of Directors of
Shenzhen China Bicycle Company (Holdings) Limited
August 13, 200918
Shenzhen China Bicycle Company (Holdings) Limited
Semi-Annual Financial Report for Year 2009
(Un-audited)
Content Pages
I. Accounting statement
Balance Sheet 19-20
Profit Statement 21
Cash Flow Statement 22-23
Statement on Changes of owners’ Equity 24-28
II. Notes to accounting statement 29-7519
Balance Sheet
Prepared by Shenzhen China Bicycle Company (Holdings) Limited June 30, 2009 Unit: RMB
Items MeArmgeoru n t at pPerairoedn-te Cndo mpany MeArgmeor u nt at perPioadr-ebnet gCino mpany
Current assets:
Monetary funds 19,350,870.76 413,653.88 10,086,599.53 417,444.51
Settlement provisions
Capital lent
Transaction finance asset
Notes receivable 7,119,177.00 5,408,792.00
Accounts receivable 1,143,405.51 138,096,336.45 385,033.41 136,120,228.45
Accounts paid in advance 482,806.08 504,440.40
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable
Other receivables 29,606,742.39 51,422,147.96 42,193,937.90 87,659,723.49
Purchase restituted finance
asset
Inventories 42,805,701.00 25,691,296.43 36,197,343.93 26,922,910.94
Non-current asset due
within one year
Other current assets
Total current assets 100,508,702.74 215,623,434.72 94,776,147.17 251,120,307.39
Non-current assets:
Granted loans and advances
Finance asset available for
sales
Held-to-maturity
investment
Long-term account
receivable
Long-term equity
investment 2,619,840.50 2,619,840.50 2,619,840.50 2,619,840.50
Investment property 9,988,474.06 9,988,474.06 10,311,261.40 10,311,261.40
Fixed assets 50,284,579.78 49,674,225.38 56,010,305.12 55,334,097.37
Construction in progress
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 26,748,720.32 26,748,720.32 27,180,151.34 27,180,151.34
Expense on Research and
Development
Goodwill
Long-term expenses to be
apportioned
Deferred income tax asset
Other non-current asset
Total non-current asset 89,641,614.66 89,031,260.26 96,121,558.36 95,445,350.61
Total assets 190,150,317.40 304,654,694.98 190,897,705.53 346,565,658.00
Current liabilities:
Short-term loans 399,551,503.18 338,628,113.67 399,661,355.35 338,713,085.9020
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Transaction financial
liabilities
Notes payable
Accounts payable 135,035,592.14 294,751,039.04 130,714,884.86 324,940,555.98
Accounts received in
advance 30,478,401.63 14,605,306.04 21,333,035.66 14,605,306.04
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 1,580,769.82 1,444,837.18 1,686,297.83 1,550,365.19
Taxes payable 94,645,350.51 94,160,637.53 95,399,029.08 94,220,632.13
Interest payable
Other accounts payable 164,177,338.26 130,401,031.73 168,604,764.50 134,698,784.49
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Non-current liabilities due
within 1 year 872,849,065.72 872,849,065.72 873,090,594.28 873,090,594.28
Other current liabilities 142,848,681.83 142,804,212.07 118,929,914.04 118,881,087.74
Total current liabilities 1,841,166,703.09 1,889,644,242.98 1,809,419,875.60 1,900,700,411.75
Non-current liabilities:
Long-term loans
Bonds payable
Long-term account payable
Special accounts payable
Projected liabilities 184,133,984.92 184,133,984.92 184,133,984.92 184,133,984.92
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 184,133,984.92 184,133,984.92 184,133,984.92 184,133,984.92
Total liabilities 2,025,300,688.01 2,073,778,227.90 1,993,553,860.52 2,084,834,396.67
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share
capital) 479,433,003.00 479,433,003.00 479,433,003.00 479,433,003.00
Capital public reserve 434,801,979.96 434,801,979.96 410,893,564.33 410,893,564.33
Less: Inventory shares
Surplus public reserve 32,673,227.01 32,673,227.01 32,673,227.01 32,673,227.01
Provision of general risk
Retained profit -2,782,392,084.42 -2,716,031,742.89 -2,726,059,175.73 -2,661,268,533.01
Balance difference of
foreign currency translation
Total owner’s equity attributable
to parent company -1,835,483,874.45 -1,769,123,532.92 -1,803,059,381.39 -1,738,268,738.67
Minority interests 333,503.84 0.00 403,226.40
Total owner’s equity -1,835,150,370.61 -1,769,123,532.92 -1,802,656,154.99 -1,738,268,738.67
Total liabilities and owner’s
equity 190,150,317.40 304,654,694.98 190,897,705.53 346,565,658.0021
Profit Statement
Prepared by Shenzhen China Bicycle Company (Holdings) Limited January-June, 2009 Unit: RMB
Amount in this period Amount in the same period of last
Items year
Merger Parent
Company Merger Parent
Company
I. Total operating income 112,494,583.85 6,937,308.60 111,109,918.15 10,407,975.69
Including: Operating income 112,494,583.85 6,937,308.60 111,109,918.15 10,407,975.69
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 169,230,313.37 62,033,616.75 122,334,310.63 26,474,147.33
Including: Operating cost 106,593,086.70 3,974,352.73 107,134,404.03 10,071,763.63
Interest expense
Commission charge and
commission expense
Cash surrender value
Net amount of expense of
compensation
Net amount of withdrawal of
insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras 71,335.20 0.00 88,423.82 84.83
Sales expenses 2,684,550.07 242,795.77 1,963,943.81 355,680.10
Administration expenses 13,170,221.92 11,078,381.49 20,057,572.33 19,136,897.19
Financial expenses 47,481,613.43 47,508,580.71 -8,166,429.57 -4,346,674.63
Losses of devaluation of asset -770,493.95 -770,493.95 1,256,396.21 1,256,396.21
Add: Changing income of fair
value(Loss is listed with “-”)
Investment income (Loss is
listed with “-”) -622,522.60 -622,522.60
Including: Investment income
on affiliated company and joint
venture
Exchange income (Loss is listed
with “-”)
III. Operating profit (Loss is listed
with “-”) -56,735,729.52 -55,096,308.15 -11,846,915.08 -16,688,694.24
Add: Non-operating income 347,319.93 347,319.93 7,910,464.46 7,887,299.46
Less: Non-operating expense 14,221.66 14,221.66 350,214.86 131,502.93
Including: Disposal loss of
non-current asset 18,300.00 0.00
IV. Total Profit (Loss is listed with
“-”) -56,402,631.25 -54,763,209.88 -4,286,665.48 -8,932,897.71
Less: Income tax expense 0.00 0.00 0.00 0.00
V. Net profit (Net loss is listed with
“-”) -56,402,631.25 -54,763,209.88 -4,286,665.48 -8,932,897.71
Net profit attributable to
owner’s of parent company -56,332,908.69 -54,763,209.88 -4,615,635.71 -8,932,897.71
Minority shareholders’ gains and
losses -69,722.56 0.00 328,970.23 0.0022
VI. Earnings per share
i. Basic earnings per share -0.1175 -0.0096
ii. Diluted earnings per share -0.1175 -0.0096
Cash Flow Statement
Prepared by Shenzhen China Bicycle Company (Holdings) Limited January-June, 2009 Unit: RMB
Amount in this period Amount in the same period of
Items last period
Merger Parent
Company Merger Parent
Company
I. Cash flows arising from operating activities:
Cash received from selling commodities and
providing labor services
71,289,969.3
4 0.00 82,404,686.93 6,318,365.75
Net increase of customer deposit and
interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other
financial institution
Cash received from original insurance
contract fee
Net cash received from reinsurance business
Net increase of insured savings and
investment
Net increase of disposal of transaction
financial asset
Cash received from interest, commission
charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received
Other cash received concerning operating
activities 5,979,012.67 8,803,805.33 2,777,163.76 4,001,491.34
Subtotal of cash inflow arising from
operating activities
77,268,982.0
1 8,803,805.33 85,181,850.69 10,319,857.09
Cash paid for purchasing commodities and
receiving labor service
60,326,101.3
9 0.00 66,735,699.57 1,433,399.55
Net increase of customer loans and advances
Net increase of deposits in central bank and
interbank
Cash paid for original insurance contract
compensation
Cash paid for interest, commission charge
and commission
Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers 7,809,094.78 886,540.42 14,441,210.71 1,469,877.21
Taxes paid 2,363,221.09 1,410,843.29 2,751,409.74 1,622,913.34
Other cash paid concerning operating
activities 6,016,995.73 6,496,280.63 7,439,194.00 5,745,697.58
Subtotal of cash outflow arising from
operating activities
76,515,412.9
9 8,793,664.34 91,367,514.02 10,271,887.68
Net cash flows arising from operating
activities 753,569.02 10,140.99 -6,185,663.33 47,969.41
II. Cash flows arising from investing activities:
Cash received from recovering investment23
Cash received from investment income
Net cash received from disposal of fixed,
intangible and other long-term assets 550,000.00 10,444,667.52 105,942.92
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning investing
activities 8,000,000.00
Subtotal of cash inflow from investing
activities 8,550,000.00 10,444,667.52 105,942.92
Cash paid for purchasing fixed, intangible
and other long-term assets 39,287.43 13,931.62 56,788.00 45,388.00
Cash paid for investment
Net increase of mortgaged loans
Net cash received from subsidiaries and other
units
Other cash paid concerning investing
activities
Subtotal of cash outflow from investing
activities 39,287.43 13,931.62 56,788.00 45,388.00
Net cash flows arising from investing
activities 8,510,712.57 -13,931.62 10,387,879.52 60,554.92
III. Cash flows arising from financing activities
Cash received from absorbing investment
Including: Cash received from absorbing
minority shareholders’ investment by subsidiaries
Cash received from loans
Cash received from issuing bonds
Other cash received concerning financing
activities
Subtotal of cash inflow from financing
activities
Cash paid for settling debts
Cash paid for dividend and profit distributing
or interest paying
Including: Dividend and profit of minority
shareholder paid by subsidiaries
Other cash paid concerning financing
activities
Subtotal of cash outflow from financing
activities
Net cash flows arising from financing
activities
IV. Influence on cash and cash equivalents due to
fluctuation in exchange rate -10.36 -1,216.65
V. Net increase of cash and cash equivalents 9,264,271.23 -3,790.63 4,200,999.54 108,524.33
Add: Balance of cash and cash equivalents at
the period -begin
10,086,599.5
3 417,444.51 14,062,198.43 477,660.27
VI. Balance of cash and cash equivalents at the
period -end
19,350,870.7
6 413,653.88 18,263,197.97 586,184.6024
Statement on Changes of Owners' Equity
Prepared by Shenzhen China Bicycle Company (Holdings) Limited June 30, 2009 Unit: RMB
Amount in this report period Amount in last year
Owners' equity attributable to the parent company Owners' equity attributable to the parent company
Items Paid-up
capital (Share
capital)
Capital
reserves
Less:
Treasury
Stock
Surplus
reserves
General
risk
provision
Retained
profit
Others
Minority
interest
Total
owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Surplus
reserves
General
risk
provision
Retained
profit
Others
Minority
interest
Total
owners’
equity
I. Balance at the end of
last year
479,433,
003.00
410,
893,564.33
32,673,
227.01
-2,726
059,175.73
403,
226.40
-1,802,656,
154.99
479,433,
003.00
362,027,
636.64
32,673,
227.01
-2,681,
166,169.33
-1,807,
032,302.68
Add: Changes of
accounting policy
Error correction of the
last period
II. Balance at the
beginning of this year
479,
433,003.00
410,
893,564.33
32,673,
227.01
-2,726,
059,175.73
403,
226.40
-1,802,656,
154.99
479,
433,003.00
362,027,
636.64
32,673,
227.01
-2,681,
166,169.33
-1,807,
032,302.68
III. Increase/ Decrease in
this year (Decrease is
listed with'"-")
23,908,415.63
-56,332,
908.69
-69,
722.56
-32,494,
215.62
48,865,
927.69
-44,893,
006.40
403,
226.40
4,376,
147.69
(I) Net profit
-56,332,
908.69
-69,
722.56
-56,402,
631.25
-44,893,
006.40
403,
226.40
-44,489,7
80.00
(II) Profits and losses
calculating into owners'
equity
23,908,
415.63
23,908
415.63
48,865,927.69
48,865,
927.69
1. Net changing amount
of fair value of financial
assets available for sale25
2. Effect of changes of
other owners' equity of
invested units under
equity method
3. Effect of income tax
related to owners' equity
4. Others
23,908,
415.63
23,908,
415.63
48,865,927.69
48,865,
927.69
Subtotal of (I)and (II)
23,908,
415.63
-56,332,
908.69
-69,722.56
-32,494,
215.62
48,865,927.69
-44,893,
006.40
403,
226.40
4,376,
147.69
(III) Owners' devoted
and decreased capital
1. Owners' devoted
capital
2. Amount calculated
into owners' equity paid
in shares
3. Others
(IV) Profit distribution
1. Withdrawal of surplus
reserves
2. Withdrawal of general
risk provisions
3. Distribution for
owners (shareholders)
4. Others
(V) Carrying forward
internal owners' equity26
1. Capital reserves
conversed to capital
(share capital)
2. Surplus reserves
conversed to capital
(share capital)
3. Remedying loss with
surplus reserve
4. Others
IV. Balance at the end of
the report period
479,
433,003.00
434,801,
979.96
32,673
,227.01
-2,782,392,
084.42
333,
503.84
-1,835,150,
370.61
479,
433,003.00
410,893,
564.33
32,673
,227.01
-2,726,
059,175.73
403,
226.40
-1,802,656,
154.99
Statement on Changes of Owners' Equity of Parent Company
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Semi-Annual of 2009 Unit: RMB
Amount in this report period Amount in last year
Items
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasonable
reserve
Surplus
reserves
Retained
profit
Total owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasonable
reserve
Surplus
reserves
Retained
profit
Total owners’
equity
I. Balance at the end of last year
479,433,003.
00
410,893,564.
33
32,673,227.0
1
-2,661,268,5
33.01
-1,738,268,73
8.67
479,433,003.
00
362,027,636.
64
32,673,227.0
1
-2,612,869,2
31.77
-1,738,735,36
5.12
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this
year
479,433,003.
00
410,893,564.
33
32,673,227.0
1
-2,661,268,5
33.01
-1,738,268,73
8.67
479,433,003.
00
362,027,636.
64
32,673,227.0
1
-2,612,869,2
31.77
-1,738,735,36
5.1227
III. Increase/ Decrease in this year
(Decrease is listed with "-")
23,908,415.6
3
-54,763,209.
88
-30,854,794.2
5
48,865,927.6
9
-48,399,301.
24
466,626.45
(I) Net profit
-54,763,209.
88
-54,763,209.8
8
-48,399,301.
24
-48,399,301.2
4
(II) Profits and losses calculating
into owners' equity
23,908,415.6
3
23,908,415.63
48,865,927.6
9
48,865,927.69
1. Net changing amount of fair
value of financial assets available
for sale
2. Effect of changes of other
owners' equity of invested units
under equity method
3. Effect of income tax related to
owners' equity
4. Others
23,908,415.6
3
23,908,415.63
48,865,927.6
9
48,865,927.69
Subtotal of (I) and (II)
23,908,415.6
3
-54,763,209.
88
-30,854,794.2
5
48,865,927.6
9
-48,399,301.
24
466,626.45
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into owners'
equity paid in shares
3. Others
(IV) Profit distribution
1. Withdrawal of surplus reserves
2. Distribution for owners
(shareholders)28
3. Others
(V) Carrying forward internal
owners' equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserves
4. Others
IV. Balance at the end of the report
period
479,433,003.
00
434,801,979.
96
32,673,227.0
1
-2,716,031,7
42.89
-1,769,123,53
2.92
479,433,003.
00
410,893,564.
33
32,673,227.0
1
-2,661,268,5
33.01
-1,738,268,73
8.6729
Shenzhen China Bicycle Company （Holding） Limited
Notes to Financial Statement
For Jan.-June, 2009
Otherwise stated, all amounts are stated in RMB Yuan.
Note 1. Company profile
Approved by Shenzhen People’s Government—ShenFuBanFu (1991) No 888, the Company
was restructured to be a stock company limited. On Dec. 28, 1991, approved by the People’s
Bank of China—Shenzhen Special Economic Zone Branch (ShenRenYinFu Zi (1991) No.
119), the Company was listed with Shenzhen Stock Exchange. The corporate business license
was QGYSZF Zi No. 101165, with a registered capital of RMB 479,433,003.00.
The Company was engaged in machine manufacturing industry. The main operations include:
producing and assembling types of bicycles, the parts, fittings, mechanical products, sports
instrument, fining chemicals, carbon-fiber compound materials, household electronic
appliances and the fittings. Prime products are: Emmelle bicycle, Chimo bicycle, electric
bicycle.
Brief on production and management: The Company produces medium and top grade bicycles,
mainly for exporting in early years. Influenced by antidumping lawsuits in recent years; the
sales volume slided down. The Company focuses on debts restructure as well as products
research and development in business. The Company has developed series of electric bicycle,
and has been working to exploit domestic market.
Note 2. Compiling basis of financial statement
Compilation of financial statement of the company is based on continuous business according
to actual trade based on continuous operations and actual occurred transactions and matters,
and in according to the original Accounting Standards for Business Enterprises promulgated
before Feb. 15, 2006 and original Accounting System for Business Enterprises (hereinafter
refers to Original Accounting Standards and Systems for Business Enterprises) promulgated
on Dec. 29, 2000 by Ministry of Finance. Since Jan.1, 2007, the Company implemented
Accounting Standards for Business Enterprises (hereinafter refers to Accounting Standards for
Business Enterprises) promulgated in Feb. 15, 2006 by Ministry of Finance. The financial
statement was the first financial statement compiled based on Accounting Standards for
Business Enterprises.
The financial statement of the Company compiled based on the aforesaid compilation basis
conformed to the requirements of Accounting Standards for Business Enterprises; reflected
the financial status of the Company as of June 30, 2009 truly and completely and the
operation results and cash flow of first half year of 2009.
Note 3. Approving and delivering person of financial report and the approving and30
delivering date of financial report.
The financial report of the Company was approved and delivered by the 13th meeting
(temporary) of 7th the Board of Directors dated August 13, 2009.
Note 4. Compilation method of main accounting policy, accounting estimate and
consolidated financial statement.
1. Accounting policy
Accounting policy and its application guidance of the company complies to Accounting
Standards for Business Enterprises 2006 and application guidance issued by Ministry of
Finance People's Republic of China as【2006】No. 3.
2. Fiscal year
It shall adopt calendar year, namely, one calendar year means period from January 1st to
December, 31st.
3. Recording currency
RMB is used as the recording currency.
4. Foundation to charge to an account and price-calculating principle
Foundation to charge to financial accounting is accrual basis. Price-calculating principle of
every asset (except other price-calculating principles or required by "Enterprise Accounting
Standard") refers to historical cost when obtaining.
5. Foreign-currency business, translation and accounting methods of foreign currency
statement.
Foreign currency payment shall be translated into recording currency amount by adopting
spot exchange rates issued by People's Bank of China during initial confirmation.
Treatments of foreign currency cash items and foreign currency non-cash items on balance
sheet date are as follows：
1）Foreign currency cash items shall be translated by spot exchange rates on balance sheet
date. Exchange differences caused by difference of spot exchange rates of balance sheet date
and that during initial confirmation or that of former balance sheet date is accounted for
current gains or losses.
2）Foreign currency non-cash items measured by historical cost can be translated by exchange
rates of transaction date without changing recording currency amount.
3）Foreign currency non-cash items measured by fair value are translated by exchange rates on
fair value confirmation date. Difference of translated recording currency amount and original
carrying amount is accounted for current gains or losses as variation treatment of fair value.
4）Exchange gains or losses caused by debts with regard to construction of fixed assets shall
be handled according to capitalization principle of borrowing expenses. Exchange gains or
losses with regard to development of real estate shall be capitalized before completion of real
estate.
6. Defined standard of cash equivalent
The company uses investment with short holding period (generally refers to three months
form procurement date), strong liquidity, eligibility to convert into cash of known amount and
very small value variation risk as cash equivalent during preparation of cash flow statement.
7. Translation method of financial instruments
Financial instruments of the company include financial assets and financial debts.31
1）Accounting for financial assets：
--- Confirmation standard of fair value of financial assets
Confirmation standard of fair value of financial assets of the company is as follows：
A. Price of balance sheet date is used as fair value if there are financial assets in active
market.
B. Fair value is confirmed by present value calculated by appropriate discount rate (current
bank loan rate is generally used as discount rate) according to future cash flow if there are no
financial assets in active market.
Classification of financial assets
Financial assets of the company are classified as follows：
A. Financial assets measured by fair value and whose variation is accounted for current gains
or losses（including tradable financial assets and financial assets measured by fair value and
whose variation is accounted for current gains or losses）；
B. Holding or due investment；
C. Receivable accounts；
D. Financial assets can be sold
Measurement of financial assets
A. Initially confirmed financial assets shall be measured by fair value. Relevant transaction
expenses of financial assets which are measured by fair value and whose variation is
accounted for current gains or losses shall be accounted for current gains or losses directly；
Relevant transaction expenses of other kinds of financial assets shall be accounted for initial
confirmation amount.
B. The company will measure financial assets consequently according to fair value without
deducting possible transaction expenses during future financial assets treatment. However,
following conditions are not included：
① Holding or due investment and receivable accounts shall be measured according to
amortized cost by practical rate method；
② Equity instrument investment which has no active market or no quotation in active market
and whose fair value can not be measured and derivative financial assets which link to equity
instruments and shall be settled by delivery of equity instruments shall be measured by cost.
C. Difference of reclassified fair value of financial assets and cost of book value due to
classification change of financial assets caused by business holding purpose change shall be
accounted for capital reserves. It shall be accounted for current gains or losses when
confirmation is terminated or value is depreciated.
Depreciation of financial assets
Carry out depreciation test of book value of financial assets except those which shall be
measured by fair value and whose variation is accounted for current gains or losses on
balance sheet date. Objective evidences show that when financial assets depreciate, the
difference of expected cash flow present value of financial assets and book value shall be
reserved and accounted for current gains or losses.
Objective evidences of depreciation of financial assets shall include following contents：
A. Issue party or debtor has serious financial difficulties；
B. Debtor has breached contract clauses, such as breach or exceeding the time limit to pay for
interests or corpus；32
C. The company concedes to debtor who has difficulty by considering economical or legal
factors；
D. Debtor may have bankruptcy or other financial reorganizations because of uncertainty of
continuous business；
E. The company's financial assets can not continue to trade in active market because of
serious financial difficulty of issue party；
F. The company can not recover investment cost because of serious disadvantageous changes
of technical, market, economical and legal environment of debtor；
G. Fair value of equity instrument investment falls seriously or non-provisionally；
H. Although we can not determine whether cash flow of a certain asset of financial asset
combination decreases or not, the company discover that expected future cash flow since
initial confirmation of the group of financial assets has decreased and it can be measured after
overall evaluation according to open data.
I. Other objective evidences which can show depreciation of financial assets.
Measurement of depreciation loss of financial assets
A. Financial assets measured by fair value and whose variation is accounted for current gains
or losses need no depreciation testing；
B. Measurement of depreciation loss of holding or due investment：The difference of expected
future cash flow present value and book value at the end of period shall be reserved and
accounted for current gains or losses；
C. Measurement of depreciation loss of receivable accounts：The company shall adopt
allowance method of bad debt loss for translation, carry out depreciation test of receivable
accounts and prepare for reserve in bad debt on balance sheet date.
① Carry out depreciation test of receivable accounts with large amount individually. If
objective evidences show that the value has depreciated, the company will confirm
depreciation loss and prepare for reserve in bad debt according to difference of future cash
flow present value and book value.
② Reserve 3‰ of sum of receivable accounts at the end of year and other receivable
accounts as for receivable accounts with not large amount and un-predicated receivable
accounts after individual test. Preparation of bad debt reservation is accounted for current
management expenses.
③ Reserve 100% of bad debts after individual confirmation of bad debts.
Confirmation standard of bad debts of the company is as follows：① Property of debtor can
not be recovered after payment due to bankruptcy or death；② Debtor can not pay for due
debts with obvious evidence.
D. Depreciation judgment of financial assets that can be sold：The financial assets can be
thought to depreciate if fair value of the financial asset decreases continuously and
non-provisionally.
Gains or losses caused by variation of fair value of financial assets shall be handled according
to following stipulations：
A. Gains or losses caused by variation of fair value of financial assets measured by fair value
and whose variation is accounted for current gains or losses shall be accounted for current
gains or losses.
B. Gains or losses caused by variation of fair value of saleable financial assets can be33
accounted for owners equity directly except exchange rate difference caused by depreciation
loss and foreign currency cash financial assets. They shall be accounted for current gains or
losses when financial assets are transferred confirmation termination.
C. Exchange rate difference caused by saleable foreign currency cash financial assets shall be
accounted for current gains or losses. Interests of saleable financial assets calculated by actual
rate method shall be accounted for current gains or losses；Cash dividends of saleable equity
instrument investment shall be accounted for current gains or losses during announcement of
dividends issuing of invested unit.
2）Accounting of financial debts
Financial debts are divided to following two categories：
A. Financial debts measured by fair value and whose variation is accounted for current debts
include transaction financial debts and financial debts measured by fair value and whose
variation is accounted for current gains or losses.
B. Other financial debts.
Relevant transaction expenses of financial debts which are measured by fair value and whose
variation is accounted for current gains or losses shall be accounted for current gains or losses
directly；Relevant transaction expenses of other kinds of financial debts shall be accounted for
initial confirmation amount.
Consequent measurement of financial debts shall be handled according to following
principle：
A. Financial debts measured by fair value and whose variation is accounted for current gains
or losses shall be measured by fair value.
B. Equity instrument which has no active market or no quotation in active market and whose
fair value can not be measured and derivative financial debts which link to equity instruments
and shall be settled by delivery of equity instruments shall be measured by cost.
Financial debts measured by fair value and whose variation is accounted for current debts
shall be accounted for current gains or losses.
Difference of book value of confirmation termination and paid consideration during complete
or partial confirmation termination of financial debts shall be accounted for current gains or
losses.
8, Accounting method of stock in trade
Stock in trade shall be divided into raw material, products in the process, commodity stocks,
low-value consumption goods, etc.
Procurement and warehousing of every kind of stocks in trade shall be valuated according to
actual cost. Cost of holding inventory includes procurement cost, processing cost and other
expenses which belong to cost of holding inventory and disbursement which meets
capitalization conditions of borrowing costs. Stock quantity shall be determined by perpetual
inventory system. It shall be valuated by weighed average method when the stock quantity is
issuing.
Low-value consumption goods shall adopt one-off amortization method.
Prepare for inventory falling price reserves of goods at the end of period whose costs are
unexpected to recover for damaged stocks, completely or partially worn stocks or those whose
sale prices are less than costs on basis of wall-to-wall inventory of stock-in-trade. Define
inventory falling price reserves according to difference of cost of single stock item and net34
realizable value and it shall be accounted for current gains or losses.
9, Translation method of long-term investment on stocks
Long-term dividend investment reflects that of subsidiary company, consortium and joint
venture held by the company. In the meanwhile, it includes equity investment of invested unit
without control, common control or important influence, quotation in active market and
measurement of fair value.
The company will calculate long-term dividend investment caused by enterprise combination
and that except for enterprise combination. Calculation is divided into four phases including
initial cost confirmation, consequent measurement, income and settlement.
Confirmation of initial investment cost：
(1) Initial investment cost of long-term dividend investment of the company caused by
enterprise combination form is determined according to following methods：
A. Long-term dividend investment caused by enterprise combination under the same control
① Unify accounting policy and accounting period of combined party first under premise to
adhere to significance principle.
② Obtained share of book value of owners’ equity of combined party on combination date
shall be thought as initial investment cost of long-term dividend investment when the
company adopts methods of payment in cash, conversion of non-cash capital or obligation
incurred as combined consideration. Adjust capital reserves--stock premium of the company
according to difference of initial investment cost and paid cash, transferred non-cash capital
and book value of undertaken debts；Adjust reinvested earnings when amount of stock
premium is insufficient.
③ The company will use equity securities as combined consideration. Aggregate nominal
amount of shares shall be used as capital stock. Adjust capital reserves--stock premium
according to difference of initial investment cost of long-term dividend investment and
aggregate nominal amount of shares；Adjust reinvested earnings when amount of stock
premium is insufficient.
④ Every direct relevant expense during combination, including auditing expense paid for
enterprise combination, evaluation expense, legal service expense and so on shall be
accounted for current gains or losses during occurrence.
⑤ Securities issued for enterprise combination or commission charges, brokerage expenses
and so on paid for other debts shall be accounted for issued securities and initial measurement
amount of other debts.
⑥ Commission charges, brokerage expenses and so on caused by issuing of equity securities
during enterprise combination shall offset gain on disposal of assets. Offset capital reserves,
surplus reserves, and undistributed profit sequentially if gain on disposal of assets is
insufficient.
B. Long-term dividend investment caused by enterprise combination under different control
① Combination cost of one-off enterprise combinations of capital, occurred or undertaken
debts paid for control rights of purchased party on procurement date of the company and fair
value of issued equity securities. Difference of fair value and book value shall be accounted
for current gains or losses.
② Combination cost of enterprise combinations by multiple transactions and step-by-step
dividend obtainment is sum of every transaction cost.35
③ Every direct relevant expense of the company during enterprise combination shall be
accounted for enterprise combination cost.
④ If expected future items may occur on procurement date and the influence amount of
combination cost can be measured under promise of future items that may influence
combination cost in combination contract or agreement, it shall be accounted for combination
cost.
⑤ The company will confirm difference of procurement cost and fair value of recognizable
capital of combined party obtained in combination as commercial goodwill；Commercial
goodwill after initial confirmation shall be measured by difference of cost and aggregate
depreciation. Difference of procurement cost and fair value of recognizable net capital of
combined party obtained in combination shall be accounted for current gains or losses.
Fair value of recognizable net capital of combined party refers to difference of fair value of
recognizable capital of combined party obtained in combination and debts or fair value with
debts.
The company will confirm every item of recognizable capital, debt of combined party which
meets following conditions individually：
① The Company will confirm individually and measure according to fair value if economical
interests of other assets (not limited to original assets confirmed by combined party) besides
intangible assets of combined party during combination may flow into the company with
reliable measurement.
Intangible assets obtained in combination and whose fair value can be reliably measured can
be confirmed as intangible assets and measured according to fair value.
② Other debts whose implementation of relevant obligations may lead economical interests
flow out of the company with reliable measurement of fair value besides existing debts
obtained by combined party during combination shall be confirmed individually and
measured according to fair value.
If combined party may have debts obtained in combination with reliable measurement of fair
value, it shall be confirmed individually and measured according to fair value.
(2) Long-term dividend investment obtained out of enterprise combination shall enter in an
account during obtainment according to initial investment cost. Initial investment method
shall be defined according to following methods：
A. Long-term dividend investment purchased in cash shall be used as initial investment cost
according to total price of actual payment (including relevant expenses such as paid taxation,
commission charges).
B. Long-term dividend investment obtained by issuing equity securities shall be used as initial
investment cost according to fair value of issuing of equity securities.
C. Long-term dividend investment paid by investor shall be used as initial investment cost
according to value stipulated by investment contract or agreement except unfair value
stipulated by contract or agreement.
D. Long-term dividend investment obtained by debtor by way of payment of debts of
non-cash capital or that converted by receivable creditor's rights shall be used as initial
investment cost according to fair value and receivable relevant expenses of taxation.
E. If transaction of conversion from non-cash trade to long-term dividend investment has
commercial essence, converted long-term dividend investment shall be used as initial36
investment cost according to fair value and receivable relevant expenses of taxation；If the
transaction has no commercial essence, sum of book value caused by capital conversion by
invested long-term dividend investment and receivable relevant expenses of taxation shall be
used as initial investment cost.
Price of actual payment includes announced but not drawn cash dividend. Difference of price
of actual payment and announced but not drawn cash dividend shall be used as initial
investment cost.
Consequent measurement of long-term dividend investment
Consequent measurement of long-term dividend investment of the company shall be
calculated by cost method and equity method.
The company's investment to subsidiary company and long-term dividend investment which
has no common control or significant influence to invested unit, quotation in active market
and reliable measurement of fair value shall be calculated by cost method. Adjust cost of
long-term dividend investment calculated by cost method during super addition or recovery of
investment.
The company will calculate joint venture which has common control to invested unit and
consortium which has significant influence to invested unit by equity method.
Confirmation method of long-term dividend investment gains
Confirm gains of enterprises which are calculated by cost method when invested unit declares
to issue cash dividend but the investment income is limited to obtained quota of aggregate net
profit of invested unit after receiving investment. If obtained cash dividend declared by
invested unit exceeds above amount, the surplus shall be used as offset of initial investment
cost to offset book valve of investment.
As for enterprises which are calculated by equity method, net gains or losses after receiving
stock rights of invested unit shall be thought as the foundation. It is required to confirm
investment gains and adjust book value of long-term dividend investment at the end of every
accounting period according to net profit or share of net loss of invested unit that the company
shall share or undertake. The company shall decrease book value of long-term dividend
investment correspondingly according to calculated profit or cash dividend declared by
invested unit.
Disposal of long-term dividend investment
Difference of book value of investment and actually obtained price during disposal of equity
investment shall be used as current investment gains.
10, Investment real estate
1) Definition of investment real estate
Investment real estate of the company refers to real estate whose purpose includes
rental-earning, capital appreciation or both.
2) Scope of investment real estate
Investment real estate of the company includes leased building.
3) Investment real estate of the company shall be measured by cost mode.
Measure, calculate and deduct depreciation charge or amortize investment real estate under
cost mode according to regulations of "Accounting Standard for Business Enterprises No.
4-Fixed assets" and "Accounting Standard for Business Enterprises No. 6- Intangible assets"；
Handle depreciation according to regulations of "Accounting Standard for Business37
Enterprises No. 8-Impairment of assets".
11. Valuation and depreciation methods of fixed assets
Fixed assets refer to the tangible assets held for commodity production, labor service, lease,
operation or management and with a use term of over 1 fiscal year. The related economic
interest to the fixed assets is likely to flow into the company and the cost of it can be
measured reliably.
1) Fixed assets of the company shall be initially measured according to the cost.
The fixed assets include purchasing price, related taxes, and other expenditures that could be
directly included in this assets and is used before making fixed assets in the usable condition,
such as transportation fees, loading and unloading fees, service charge of career men,
estimated discarding expense and etc.
As to the fixed assets which are bought at a total price, according to the fair value proportion
of every fixed asset, we distribute the total cost and fix their cost.
The cost of the self-built fixed asset is composed of the expenses needed in constructing
before the expected applicable state.
The loan cost expenditure which accords with the capitalization requirements is recorded in
fixed asset cost.
As to the fixed asset of which deferred payment is made under the abnormal credit condition,
the fixed asset cost is measured on the basis of the present value of the purchasing price. The
margin between the actual price and the present value of purchasing price, except the part
which is capitalized according to China Accounting Standard No.17—loan cost, shall be
recorded in current profit and losses.
2) If the follow-up expenditures related to fixed assets are proved to make economic interests
which are going to flow to the enterprise and the cost can be measured reliably, then it should
be capitalized.
3) At least, the service life, the estimated residual value and the depreciation method of the
fixed asset should be checked at the end of the year, and discover: if the expected service life
is discrepant to the initial, adjust the service life of the fixed asset, if the estimated residual
value is discrepant to the initial, adjust it, and if the expected achieving method of the
economic interest related to the fixed asset is changed greatly, the depreciation method of the
fixed asset should be changed.
4) The changes to the service life, estimated residual value and the depreciation method of the
fixed asset should be dealt as accounting estimate change.
5) The depreciation of fixed assets adopts the straight-line method to set the average, and
according to the original value of various fixed assets and the expected service life of fixed
assets minus residual value ratio (10% of the original) to set the depreciation rate, the year
assorted depreciation rate as follows:
Sort of the asset Service life Year depreciation ratio
Houses and buildings 20 years 4.5%
Machinery equipment 10 years 9%
Office equipment 5 years 18%
Electronic equipment 5 years 18%
Transportation instrument 5 years 18%38
Other equipment 5 years 18%
6) If the following occur, on the date of balance sheet, the fixed asset should be measured
according to the lesser one between the book value and the recoverable amount, and withdraw
preparation of fixed asset measurement to the margin when the recoverable amount is less
than the book value:
A. It is proved that the asset is outdated or its entity is ruined,
B. The asset has been or will be left unused, ended to use, or planed to be dealt with in
advance,
C. The enterprise interior report shows that the economic performance of the asset is or will
be less than expected,
D. Other evidence shows that the asset may have been under devaluating.
After the recognition to the loss of asset devaluation, adjust the depreciation expense with
asset devaluation to depreciate the asset after deducting the asset devaluation in the rest
service life of the asset.
7) It shouldn’t be conversed in the future accounting period after the recognition of the asset
devaluation loss.
12. Measurement method of construction in progress
The construction in progress is recorded in book according to the actual expenditure of each
construction. When the built asset is in the expected applicable state, transfer to the fixed
assets according to the final accounts of the construction, construction budget, cost or the
actual cost measurement of the construction.
Before the fixed assets achieve the expected applicable state, the loan cost which accords with
the capitalization requirements and foreign currency conversion margin should be recorded in
construction cost, and after that they should be recorded in current financial expense.
On the date of balance sheet, for the construction in progress which is proved to have been
devaluated or stopped construction and estimated that it will not be reconstructed within three
years, the recoverable value should be estimated, and withdraw devaluation preparation
according to the margin when the recoverable amount is less than the book value.
13. Measurement method to loan cost
Loan costs refer to the interest, amortization of overate or discount price （including
commission charge and so on）and difference of currency exchange caused by borrowing.
1) Capitalization requirements, if the following three requirements are all achieved, the loan
cost before the fixed asset constructed achieving the expected applicable state should be
capitalized.
(1) The capital expenditure has been materialized
(2) The loan cost has been materialized
(3)The needed purchasing and construction activities for making the asset achieve the
expected applicable state have already started
2) Recognition to the capitalization amount
(1) The special loan borrowed for constructing or producing asset which accords with the
capitalization requirements is recognized with the actually materialized interest expense of the
special loan minus the interest income of the unused loan deposited in bank or the investing
profit from application to the temporary investment.
(2) For the general loan used to construct or produce asset which accords with the39
capitalization requirements, the company calculate the interest amount which should be
capitalized of the general loan by multiplying the weighted average of the asset expenditure
which is the exceeded part of the accumulated asset expenditure comparing with the special
loan to the capital ratio of the general loan used. The capital ratio is calculated according to
the weighted interest rate of the general loan.
(3) If the discount or premium occurred to the loan, confirm the amortization value of every
accounting period and adjust the interest amount of every period according to the actual
interest rate.
(4) During the capitalization, the exchange margin of the principal and interest of the foreign
currency special loan should be capitalized and recorded in the asset cost which accords with
the capitalization requirement.
(5) As to The auxiliary expense of the loan, if it is materialized before the constructed asset,
accordant to the capitalization requirement, achieving the expected applicable state or salable
sate, it should be capitalized while materializing according to the materialized amount and
recorded in the asset cost accordant to the capitalization requirements. If it is materialized
before the constructed asset, accordant to the capitalization requirement, achieving the
expected applicable state or salable sate, it should be recognized as expense while
materializing according to the materialized amount and recorded in the current profit and
losses.
(6) Capitalization of loan costs will be stopped when abnormal suspension occurs to assets
accordant to capitalization period while purchasing or construction goes on continuously for 3
months. The loan cost during suspension will be determined as expenses and recorded in
current profit and losses until the constructing activity of assets restarted.
14. Valuation and amortization method of intangible assets
1) For the intangible asset purchased or obtained through legal procedures, it should be
recorded according to the actual price. For the accepted intangible asset as investment, it
should be recorded to the contract or recognized measurement. For the intangible asset
developed by ourselves, all the expenditures during researching should be recognized as
expense and recorded in current profit and losses, and the expenditures during researching
shall be capitalized if it accords with the following requirements:
(1) It is technically feasible to finish the intangible asset to make it able to be used or sold
(2) There is an intention to complete the intangible asset to use or sell
(3) The intangible asset can bring about economic benefit
(4) Having enough technical, financial and other resources to support to complete the
development of the intangible asset and capable of using or selling it
(5) The expenditure to the developing period of the intangible asset can be measured reliably
2) For the intangible asset of which the service life can be recognized, amortize with the
straight-line method within its validity period.
3) For the intangible asset of which the service life can not be recognized, it will not be
amortized within the holding period.
4) On the date of balance sheet, the intangible asset should be measured according to the
lesser one between the book value and the recoverable amount, and withdraw devaluation
preparation to the margin when the recoverable amount is less than the book value. Check the
service life and amortization method of the intangible asset of which the service life is limited40
to ensure whether the service life and amortization method of the intangible asset should be
changed or not. For the one need to be re-estimated, change the amortization time limit and
method.
After the recognition to the devaluation losses of the intangible asset, adjust the amortization
expense of the devaluated intangible asset in the future, and amortize according to the book
value after deducting the asset devaluation.
It should not be conversed in the future accounting period after the recognition to the
intangible asset devaluation.
15. The measurement method of long-term unamortized expenses
1) Organization costs: gather the organization costs in the long-term unamortized expenses
when they occur, and recorded in the current profit and losses completely in the first monthly
when the company begins to operate.
2) Long-term unamortized expenses: evaluate according to the actual materialized amount, if
there is definite beneficial period, amortize according to the beneficial period, and if there is
no beneficial period, amortize averagely in five years.
3) Fitment cost: amortize according to the beneficial period and the shorter fixed number of
year of two fitments, usually the amortization is less than 5years.
16. Recognition principle of anticipated liabilities
If the duty related to the contingent items accords with all the following requirements, it
should be recognized as liability:
1) The duty is the current duty of the company
2) The execution of the duty may cause outflow of economic interest from the company
3) The duty can be measured reliably
17. Revenue Recognition
1) The recognition principle and method of product selling income
(1) The product selling income of the company shall be recognized when it meets all the
following requirements:
A. the main risk and reward of the product property have been transferred to the purchasers
B. the company has not retained the continued management authority usually related to the
property or control effectively the products sold.
C. the income can be measured reliably
D. the related economic interest is likely to flow into the company
E. the related cost materialized or going to be materialized can be measured reliably
(2) The company confirms the amount of product selling income according to the contract or
negotiated price received or going to be received from the purchasers except the unfair
contract or negotiated price received or going to be received.
(3) The deferred method is applied to the collection of the contract or negotiated price, and the
product selling amount is recognized according to the fair value of the receivable contract or
negotiated price. The margin between the contract or negotiated price and their fair value
should be amortized with the effective interest method during the period of contract or
agreement and recorded in the current profit and losses.
(4) If the contract or agreement signed by the company with others includes both products
selling and rendering of service which can be distinguished and measured separately, product
selling should be dealt with as product selling, and the rendering of service should be dealt41
with as rendering of service.
(5) If the product selling and rendering of service cannot be distinguished or cannot be
measured separately though distinguished, both of them should be dealt with as product
selling.
(6) If the product recognized as product selling income is returned back, counteract the
current product selling income while occurring.
2) Rental income
The rental date set in the contract or agreement signed by the company and the leaser is taken
as the beginning to confirm rental income, and the amount is amortized monthly to confirm
the rental income.
3) The usufruct income of the released assets will be recognized only when it meets all the
following requirements: the related economic interest is likely to flow into the company and
the income can be valuated reliably.
The usufruct income of the released assets is recognized according to the following operations:
interest income, recognized according to the time and effective interest rate of the capital used
by others, other charges income, recognized by the charging time and method of related
contract and agreement.
4) Rendering of service: the construction started and finished in the same year, when the
service has been provided, and the charge or the charge proof has been collected, the service
income should be recognized, if the beginning and ending of the service belongs to different
accounting year, and the result to the rendering of service can be valuated reliably, the related
service income should be recognized according to the percentage of completion on the date of
balance sheet. The detailed disposal is as follows:
(1) If the result to the rendering of service can be valuated reliably on the date of balance
sheet, the service income should be recognized according to the percentage of completion.
The total income of rendering of service should be recognized according to the received or to
be received contract or agreement price.
(2) On the date of balance sheet, the current service income should be recognized by
multiplying the total service income to the completion rate of progress and deducting the
accumulated service income recognized in the former accounting period. At the same time,
carry forward the current service cost by multiplying the estimated total service cost to the
completion rate of progress and deducting the accumulated service cost recognized in the
former accounting period.
(3) If the result to the rendering of service cannot be valuated reliably on the date of balance
sheet, deal separately according to the following conditions: for the materialized service cost
which is estimated to be compensated, confirm the service cost according to the materialized
service cost, and carry forward the service cost with the same value, for the materialized
service cost which is estimated not to be compensated, record the materialized service cost in
current profit and losses, and do not confirm the service income.
5) Property management income, when the property management service is provided, the
related economic interest can flow into the company and the related cost can be measured
reliably, the property management income should be recognized.
18. Measurement method to employees’ payment
1) Recognition and measurement to employee’s payment42
All kinds of payments to the employees for the service they provided should be measured as
employees’ payment in the company.
For measurement to the accrued wages, if the withdraw basis and withdraw proportion have
been regulated by the nation, withdraw according to the national standard. If there is no
definite withdraw basis and proportion, estimate the current accrued wages rationally
according to the related payment system. If the current actual amount is more than the
estimated amount, compensate the accrued wages. If the current actual amount is less than the
estimated amount, withdraw the exceeded accrued wages.
As to the accrued wages of which the validity is over one year after the date of balance sheet
with the service provided by employees, record the discount value of the accrued wages in the
related asset cost or current profit and losses by taking the corresponding bank lending rate as
discounting rate.
For the non-currency welfare to which the beneficiary cannot be recognized, record it directly
in the current profit and losses and accrued wages.
2) The dismissed welfare is recorded in the current management cost, and the accrued wages
is recognized.
For the planed dismissing, follow the dismissing planed item, estimate and confirm rationally
the accrued wages result from dismissing welfare. The quantity of the employees planned to
be dismissed according to the planning item and each of their dismissing compensation is
withdrawn as accrued wages and recorded in accrued wages.
For the case which the material dismissing is finished within a year and the payment time is
over a year, record the discount value as the accrued wages by taking the corresponding bank
lending rate as discounting rate.
3) Recognition and measurement to the retiring welfare
If there is a retiring welfare system in the company, follow the standard of the system, record
the discount value as the accrued wages in the current profit and losses by taking the
corresponding bank lending rate as discounting rate.
19. Measurement method of liabilities restructuring
1) Measurement method of debt restructuring
If the liabilities conditions are changed, take the fair value after the liabilities conditions are
changed as the recorded value of the liabilities after restructuring. For the margin between the
book value and the recorded value of the restructured liabilities, if the anticipated liabilities is
involved, the margin between the recorded value of the liabilities after restructuring and the
anticipated liabilities value should be recorded in current profit and losses.
If the liabilities restructuring is carried out by combining the method of discharging with cash,
discharging with non-cash assets, forwarding the liabilities to assets, changing other liabilities
conditions, counteract the book value of the restructured liabilities and the margin between
the book value and recorded value of the restructured liabilities with the cash paid, the fair
value of the transferred non-cash asset and the fair value taking shares in turn. If the
anticipated liabilities are involved, the margin between the recorded value of the liabilities
after restructuring and the anticipated liabilities value should be recorded in current profit and
losses.
In accordance with the regulations on Notice of Well Implementing Accounting Standards for
Business Enterprise on the Works of 2008 Annual Report by the Letter No. CK [2008]60 from43
Ministry of Finance: “ if accepting the direct or indirect donations from the controlling
shareholders or the subsidiaries of the controlling shareholder, judge the capitalization input
on enterprise belonging to controlling shareholders from the economic substances which
should be the Equity Transaction, and relevant income should be recorded in owners’
equity(capital public reserve).”
2) Measurement method of credit restructuring
If the credit of the company is discharged with cash, record the margin between the book
balance of the restructured credit and the cash received in the current profit and losses. If the
credit has been withdrawn devaluation preparation, first counteract the devaluation
preparation with the margin, for the part of the devaluation preparation which is deficient in
counteracting; record it in the current profit and losses.
For the discharging with non-cash assets, record the fair value of the received non-cash assets
in book, and record the margin between the book balance of the restructured credit and the
fair value of the received non-cash asset in current profit and losses after deducting the
withdrawn devaluation preparation.
For the credit forwarded to assets, confirm the fair value taking shares as the investment to
debtors. For the margin between the book balance of the restructured credit and the air value
of the share, if the devaluation preparation to the credit has been already withdrawn, first
counteract the devaluation preparation with the margin, for the part of the devaluation
preparation which is deficient in counteracting; record it in the current profit and losses.
If the credit is discharged by combining the method of discharging with cash, discharging
with non-cash assets, forwarding the liabilities to assets, changing other liabilities conditions,
counteract the book balance of the restructured credit and the margin between the book
balance and the fair value of the share with the cash paid, the fair value of the received
non-cash asset and the fair value taking shares in turn. If the devaluation preparation to the
credit has been already withdrawn, first counteract the devaluation preparation with the
margin, for the part of the devaluation preparation which is deficient in counteracting; record
it in the current profit and losses.
20. Accounting method to income tax
The balance sheet liability method is applied to the accounting of the income tax expense
1) On the date of balance sheet, according to the discrepancy between tax law and accounting,
it should be divided to taxable temporary discrepancy and counteractable temporary
discrepancy and recognized as deferred income tax asset and deferred income tax liabilities
separately, and measured with anticipated taxable (or given back) income tax value according
to the tax law.
If the effective tax rate is changed, reevaluate the recognized deferred income tax asset and
deferred income tax liabilities with the new tax rate, and record the influenced value in the
income tax expense corresponding to the tax rate changes. Record the income tax caused by
enterprise combination and the exchanges occurs directly in owner’s equity in current income.
On the date of balance sheet, check the book value of the deferred income tax asset. If it is
proved that in the future there may be no sufficient taxable income to counteract the deferred
income tax asset, deduct the book value of the deferred income tax asset according to the
discrepancy between them.
2) Recognition to the deferred income tax asset44
(1) The company recognizes the deferred income tax asset result from the counteractable
temporary discrepancy in the limit of the taxable income which is likely to be obtained to
counteract the counteractable temporary discrepancy. However, the deferred income tax asset
which own the following features and result from the initial recognition to assets and
liabilities in exchanging should not be recognized.
A. the exchange is not enterprise combination
B. while exchanging, neither the accounting profit nor the taxable income is influenced (or the
loss can be counteracted)
(2) For the counteractable temporary discrepancy related to investment to subsidiary
companies, affiliated companies and joint ventures, if it meets all the following requirements,
the company recognizes the corresponding deferred income tax asset:
A. the temporary discrepancy is likely to be conversed in the foreseeable feature
B. the taxable income is likely to be obtained to counteract the temporary discrepancy in the
future
3) Recognition to deferred income tax liabilities
The company recognizes all the deferred income tax liabilities result from taxable temporary
discrepancy except the deferred income tax liabilities result from the following conditions:
(1) Initial recognition to goodwill
(2) The initial recognition of asset or liability caused by exchanges owning all the following
features:
A. the exchange is not enterprise combination
B. while exchanging, neither the accounting profit nor the taxable income is influenced (or the
loss can be counteracted)
(3) For the counteractable temporary discrepancy related to investment to subsidiary
companies, affiliated companies and joint ventures, if it meets all the following requirements,
the company recognizes the corresponding deferred income tax liabilities:
A. the investing company has the ability to control the conversing time of the temporary
discrepancy
B. it is likely that the temporary discrepancy in the foreseeable will not be conversed
4) Measurement to income tax expenses
The company records the current income tax and deferred income tax in the current profit and
losses as income tax expenses income, except the income tax result from the following cases:
(1) Enterprise combination
(2) The exchanges or items directly recognized in the owner’s equity
21. Preparation method for consolidated accounting statements
The principle to consolidate accounting statements: consolidate the accounting statements of
the invested companies of which more than 50% of its voting capital are belong to parent
company or the subsidiary companies to which parent company has the actual control power
though no more than 50% of its voting capital are belongs to parent company.
The method is to take the accounting statements of the parent company and the included
subsidiary companies as basis, prepare according to other related data after adjusting the
long-term investment on shares from the parent company to the subsidiary companies
according to the equity law. While consolidating, counteracting the interior exchanges
between the parent company and the subsidiary companies or among the subsidiary45
companies such as important investment, exchange, stock, purchase and sell and unfulfilled
profit, and calculate the minority shareholders’ equity.
The parent company is to prepare the consolidated accounting statement.
Note 5: Accounting policies, accounting estimation changes, accounting mistakes
corrections and the influence of changes to the range of the consolidated accounting
statement
1. Changes on accounting policies and accounting estimation.
In the report period, there were no changes on accounting policies and accounting estimation
of the Company.
2. Corrections on accounting mistakes.
In the report period, there were no corrections on accounting mistakes of the Company.
3. Changes to the range of the consolidated accounting statement.
In the report period, the Company had no changes to the range of the consolidated accounting
statement
Note 6: Tax
The main taxes adopted by the Company include: VAT, business tax, city construction and
maintenance tax, extra charges for education, enterprise income tax, property tax and tenure
tax, etc.
The respective tax rate of the turnover tax is: 17% for VAT, 5% for business tax, 1% for the
city construction and maintenance tax, 3% for the extra charges for education.
The tax rate of enterprise income tax is 20%. Property tax and tenure tax both takes the
property and land of the Company as the tax-calculating basis.
Note 7: Controlled subsidiaries and associated enterprises
1. Controlled subsidiaries
Name of controlled
subsidiaries
Registered
capital
Business
scope
Investment
amount
Share-holding
proportion
Consolidated
or not
China Bicycle (Hong Kong)
Co., Ltd.
HK$ 5
million
Distribution of
bicycle and parts 5,350,000.00 99% Yes
Shenzhen Anjule Property
Management Co., Ltd.
RMB 2
million
Self-owned
property
management
2,000,000.00 100% Yes
Shenzhen Emmelle Industry
Co., Ltd.
RMB 2
million
Distribution of
bicycle and parts 1,400,000.00 70% Yes
China Bicycle HK$ 20,000 Trade and 20,000.00 100% Yes46
Name of controlled
subsidiaries
Registered
capital
Business
scope
Investment
amount
Share-holding
proportion
Consolidated
or not
(International) Co., Ltd. manufacture
2. Associated enterprises
Name of associated
enterprises
Registered
capital
Business scope
Investment
amount
Share
proportion
Hunan KYMCO
Motorcycle Co., Ltd.
USD 29.5 mil
lion
Manufacture of motorcycle
and fitting parts of engine,
etc.
5,679,300.00 5.5%
Shenzhen Golden Ring
Printing Co., Ltd.
USD 3.7
million
Produce Positive plate and
sensitive developer, etc.
14,883,560.00 38%
Chengdu Emmelle
Technology Co., Ltd. RMB 600,000
Software and hardware;
machining, assembly,
distribution and technical
consultation of electric
bicycle and other legal
program
180,000.00 30%
Note 8: Notes to the main items presented in the financial statements (unless otherwise
specified, the data below is consolidation data)
1. Monetary fund
June 30, 2009 Dec. 31, 2008
Item Currency Original
currency
Converted to
RMB
Original
currency
Converted to
RMB
Cash RMB 54,454.61 54,454.61 76,329.51 76,329.51
HK dollar 1,894.27 1,773.76 1,894.30 1,666.98
US dollar 1.25 9.13 1.20 8.20
Subtotal 56,237.50 78,004.69
Bank deposit RMB 18,229,056.24 18,229,056.24 9,651,336.60 9,651,336.60
HK dollar 829,401.36 745,064.72 41,756.67 36,745.87
US dollar 46,927.13 320,512.30 46,927.14 320,512.3747
June 30, 2009 Dec. 31, 2008
Item Currency Original
currency
Converted to
RMB
Original
currency
Converted to
RMB
Subtotal 19,294,633.26 10,008,594.84
Other
monetary fund RMB - -
Total 19,350,870.76 10,086,599.53
2. Note receivable
Note type June 30, 2009 Dec. 31, 2008
Bank acceptance bill 7,119,177.00 5,408,792.00
Total 7,119,177.00 5,408,792.00
List as follows based on clients:
Name of client Face amount
Reason for
formation
Expiry date
Shenzhen Huaqiang Supply Chain 336,260.00 Sale 2009.12.20
Jinan Yuxintai Sales Co., Ltd. 5,830,000.00 Sale 2009.12.15
Zhengzhou Daming Technology and
Trade Co., Ltd. 952,917.00 Sale 2009.12.15
Total 7,119,177.00
3. Account receivable
Age of the June 30, 2009
account Amount Proportion Bad debt reserve Net amount
Within one year 944,098.91 0.09% 944,098.91
1-2 years 120,518.46 0.01% 95.85 120,422.61
2-3 years - 0.00% - -
Over 3 years 1,041,135,045.16 99.90% 1,041,056,161.17 78,883.99
Total 1,042,199,662.53 100.00% 1,041,056,257.02 1,143,405.5148
Age of the Dec. 31, 2008
account Amount Proportion Bad debt reserve Net amount
Within one year 185,726.81 0.02% - 185,726.81
1-2 years 120,518.46 0.01% 95.85 120,422.61
2-3 years - 0.00% - -
Over 3 years 1,041,135,045.16 99.97% 1,041,056,161.17 78,883.99
Total 1,041,441,290.43 100.00% 1,041,056,257.02 385,033.41
(1) Risk analysis for the account receivable at the end of the period
June 30, 2009
Age of the account
Amount Proportion Bad debt reserve Net amount
Account receivable with single
big amount 904,866,318.70 86.82% 904,866,318.70 -
Account receivable with no single
big amount but with big risk after
combined according to the
characteristics of credit risk
136,268,726.46 13.08% 136,189,842.47 78,883.99
Other accounts receivable without
single big amount 1,064,617.37 0.10% 95.85 1,064,521.52
Total 1,042,199,662.53 100.00% 1,041,056,257.02 1,143,405.51
The standard for account receivable with single big amount of the Company was set as RMB
5 million according to the business scale and business nature of the Company and settlement
performance of clients.
(2) The balance at the end of the period does not include the account receivable of
shareholders holding 5% (5% included) or above shares with voting rights of the Company.
(3) Total amount of the top five in the balance at the end of the period was RMB
492,884,806.45, accounting for 47.29% of the total amount of account receivable.
(4) At the end of the report period, the Company withdrew bad debt reserve of RMB
1,040,652,456.59 in sum amount for account receivable, taking 99.85% of the total account
receivable.
4. Account paid in advance
Structure of age of the June 30, 2009 Dec. 31, 2008
account Amount Proportion Amount Proportion
Within 1 year (1 year
included) 482,806.08 100.00% 494,714.35 98.07%
1 year to 2 years (2 years
9,726.05 1.93%49
included)
2 years to 3 years (3 years
included) - -
Over 3 years
- -
Total 482,806.08 100.00% 504,440.40 100.00%
The balance at the end of the period does not include the account paid in advance to
shareholders holding 5% (5% included) or above shares with voting rights of the Company.
5. Other account receivable
Age of the June 30, 2009
account Amount Proportion Bad debt reserve Net amount
Within 1 year (1
year included) 21,527,052.13 3.78% 9,111,049.38 12,416,002.75
1 year to 2 years
(2 years included) 3,401,632.04 0.60% 10,118.71 3,391,513.33
2 years to 3 years
(3 years included) 95,212.35 0.01% 285.64 94,926.71
Over 3 years
544,940,183.33 95.61% 531,235,883.73 13,704,299.60
Total 569,964,079.85 100.00% 540,357,337.46 29,606,742.39
Age of the Dec. 31, 2008
account Amount Proportion Bad debt reserve Net amount
Within 1 year (1
year included) 34,114,247.64 5.86% 9,111,049.38 25,003,198.26
1 year to 2 years
(2 years included) 3,401,632.04 0.58% 10,118.71 3,391,513.33
2 years to 3 years
(3 years included) 95,212.35 0.02% 285.64 94,926.71
Over 3 years
544,940,183.33 93.54% 531,235,883.73 13,704,299.60
Total 582,551,275.36 100.00% 540,357,337.46 42,193,937.90
(1) Risk analysis for other account receivable at the end of the period:
June 30, 2009
Age of the account
Amount Proportion Bad debt reserve Net amount
Other account receivable with
single big amount 488,957,953.05 85.79% 471,086,344.75 17,871,608.3050
Other account receivable without
single big amount but with big risk
after combined according to the
characteristics of credit risk
60,149,538.98 10.55% 60,149,538.98 -
Other accounts receivable without
single big amount 20,856,587.82 3.66% 9,121,453.73 11,735,134.09
Total 569,964,079.85 100.00% 540,357,337.46 29,606,742.39
The standard for other account receivable with single big amount of the Company was set as
RMB 5 million according to the business scale and business nature of the Company and
settlement performance of clients.
(2) Total amount of the top five in the balance at the end of the period was RMB
357,711,532.44, accounting for 62.76% of the total amount of other account receivable.
(3) At the end of the report period, the Company withdrew bad debt reserve of RMB
531,221,136.55 in sum amount for other account receivable, taking 93.20% of the total
account receivable.
(4)Other account receivable received an decrease in period-end over that in period-begin,
which was mainly due to that equity of Jiangxi Lihua Industrial Co., Ltd. had been transferred
by Hong Kong Dahuan Group Co., Ltd., thus the Company transferred equity of Jiangxi
Lihua into other account receivable in 2008 and received the accounts of investment repaid by
Hong Kong Dahuan Group Co., Ltd. in the report period.
6. Inventory and inventory devaluation provision
(1) The changes to inventory are listed as follows:
Type Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Raw material 224,880,191.93 447,352.83 224,432,839.10
Low-value consumables 1,445,384.54 1,445,384.54
Self-manufactured
half-finished products 3,034,097.72 3,034,097.72
Goods in stock 34,974,596.20 108,853,998.47 102,863,562.60 40,965,032.07
Total of balance of
inventory 264,334,270.39 269,877,353.43
Less: provision for
devaluation 228,136,926.46 1,065,274.03 227,071,652.43
Total of net inventory 36,197,343.93 42,805,701.00
(2) Changes to inventory devaluation provision are listed as follows:
Type Dec. 31, 2008 Increase of the Decrease of the current June 30, 200951
period
current period Switching
back
Written-off
Raw material 200,433,947.23 200,433,947.23
Low-value
consumables 1,315,419.73 1,315,419.73
Self-manufactured
half-finished
products 2,611,095.99 2,611,095.99
Finished products 23,776,463.51 1,065,274.03 22,711,189.48
Total 228,136,926.46 1,065,274.03 227,071,652.43
The basis for confirmation of the inventory above being converted into realizable net value is:
the raw material is converted according to the average unit price of the latest purchase; the
material which is out of expiration period, outdated, or unsuitable for transformation and
awaiting scrap is converted according to the recoverable amount; finished products is
converted according to the unit price of the latest sale minus the direct expense and tax that
may be necessary for conversion.
7. Long-term equity investment
(1) The long-term equity investment is listed as follows:
Item Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Long-term equity
investment 20,562,860.00 20,562,860.00
Minus: devaluation
provision 17,943,019.50 17,943,019.50
Net amount of
long-term equity
investment
2,619,840.50 - - 2,619,840.50
Balance as of period-end was the liquidation balance of Shenzhen Golden Ring Printing Co.,
Ltd. which had been revoked with its industrial and commercial registration information.
(2) Long-term equity investment
a. Other equity investment calculated through cost method
Name of
company
invested
Investmen
t time
limit
Proportion
in the
registered
capital of
the
Initial
investment
cost
Dec. 31,
2008
Increase of
the current
period
Decrease of
the current
period
June 30,
200952
company
invested
Hunan KN
Motorcycle
Co., Ltd.
50 years 5.50% 5,679,300.00 5,679,300.00 - - 5,679,300.00
b. Other equity investment calculated through equity method
Name of company
invested
Investmen
t time
limit
Proportion
in the
registered
capital of
the
company
invested
Initial
investmen
t cost
Dec. 31,
2008
Equity
adjustmen
t during
the current
period
Other
increase/d
ecrease of
the current
period
Accumula
tive equity
adjustmen
t
June 30,
2009
Shenzhen Golden
Ring Printing Co.,
Ltd.
20 years 38%
14,883,56
0.00
14,883,56
0.00
14,883,56
0.00
Chengdu Emmelle
Technology Co.,
Ltd.
30%
180,000.0
0
-180,000.0
0
Total
15,063,56
0.00
14,883,56
0.00
-180,000.0
0
14,883,56
0.00
It is showed that registered industrial and commercial information of Shenzhen Golden Ring
Printing CO., Ltd. has been already revoked, and its actual owner is the Company, for its
shareholder-Hong Kong Link Bicycle Co., Ltd. was only entrusted by the Company to hold
shares of Golden Ring on behalf of the Company.
(3) Changes to devalue provision
Name of the company invested Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Hunan KN Motorcycle Co., Ltd. 5,679,300.00 5,679,300.00
Shenzhen Golden Ring Printing
Co., Ltd. 12,263,719.50 12,263,719.50
Total 17,943,019.50 17,943,019.50
8. Investment real estate53
Item Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
1. Total original price 14,346,102.94 - - 14,346,102.94
1) Houses, buildings 14,346,102.94 - - 14,346,102.94
2) Land-use right - - - -
2. Total accumulative
depreciation and accumulative
amortization
4,034,841.54 322,787.34 - 4,357,628.88
1) Houses, buildings 4,034,841.54 322,787.34 - 4,357,628.88
2) Land-use right - - - -
3. Total devaluation provision
amount - - - -
1) Houses, buildings - - - -
2) Land-use right - - - -
4. Total book value 10,311,261.40 - - 9,988,474.06
1) Houses, buildings 10,311,261.40 - - 9,988,474.06
2) Land-use right
The Company adopts cost method for the subsequent calculation of investment real estate.
9. Fixed assets and accumulated depreciation
Type Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Original value of fixed assets
Houses and buildings 228,892,424.90 708,606.26 228,183,818.64
Machinery equipments 1,027,429.00 1,027,429.00
Transport equipments 759,769.00 759,769.00
Other equipments 2,354,061.30 39,287.43 2,393,348.73
Total 233,033,684.20 232,364,365.3754
Type Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Accumulative depreciation
Houses and buildings 172,120,960.02 5,164,637.72 377,332.83 176,908,264.91
Machinery equipments 653,891.55 168,665.88 822,557.43
Transport equipments 656,615.89 656,615.89
Other equipments 1,507,037.39 100,435.74 1,607,473.13
Total 174,938,504.85 179,994,911.36
Devaluation provision 2,084,874.23 2,084,874.23
Net amount of fixed assets 56,010,305.12 50,284,579.78
(1) Original value decreased RMB 669,318.83 in period-end over that in period-begin, which
was mainly due to sell No. 24 property in Zhaojiaping, Changsha of Hunan with original
value of RMB 708,606.26 in this report period.
(2) Among the houses and buildings of the Company, except house property certificate was
transacted for China Garden (original value of RMB 7,226,043.16), property right certificates
haven’t been transacted for others.
(3) Details for restriction upon property could be found in Note 12.
10. Intangible asset
Item
Original
value
Obtaining
method
Accumulated
amortization
amount
Dec. 31,
2008
Increase
of the
current
period
Amortization
of the
current
period
June 30,
2009
Periods left
for
amortization
Land-use
right
43,143,099.08 Purchase-in 16,394,378.76 27,180,151.34 - 431,431.02 26,748,720.32 31
The land-use right refers to the 127,333 square meters land in Yousong Village, Longhua
Town, Bao’an District, Shenzhen, and the usage term is from July 1st, 1990 to June 30th, 2040.
Details for restriction upon property could be found in Note 12.
11. Assets devalue provision
Item Dec. 31, 2008
Increase of
the current
period
The amount
turned back
in the
The amount
written off in
the current
June 30, 200955
current
period
period
1. Bad debt reserve 1,581,413,594.48 1,581,413,594.48
Inc: accounts receivable 1,041,056,257.02 1,041,056,257.02
Other accounts receivable 540,357,337.46 540,357,337.46
2. Inventory devaluation
provision 228,136,926.46 1,065,274.03 227,071,652.43
Inc: raw material 200,433,947.23 200,433,947.23
Low-value consumables 1,315,419.73 1,315,419.73
Self-manufactured
half-finished products 2,611,095.99 2,611,095.99
Goods in stock 23,776,463.51 1,065,274.03 22,711,189.48
3. Devaluation provision
for long-term investment
17,943,019.50 17,943,019.50
4. Devaluation provision
of fixed assets 2,084,874.23 2,084,874.23
Total 1,829,578,414.67 1,065,274.03 1,828,513,140.64
12. Assets with restricted ownership
Asset kind Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
1. House and
building/intangible assets * 230,684,010.96 --- --- 230,684,010.96
Inc: house and buildings 187,540,911.88 --- --- 187,540,911.88
Intangible assets 43,143,099.08 --- --- 43,143,099.08
2. Houses and buildings ** 4,768,111.78 --- --- 4,768,111.78
Total 461,368,021.92 --- --- 461,368,021.92
Values of the assets with restricted ownership listed above are all their book original values.
* The Company had guaranteed for USD 7.5 million loan of the subsidiary China Bicycle
(Hong Kong) Co., Ltd. which borrowed from China Merchants bank. Since China Bicycle
(Hong Kong) Co., Ltd could not pay off the loan after the expiration period, the Company was
accused in Shenzhen Intermediate People’s Court by China Merchants Bank. The Court had
seized the 127,333 square meters land in Yousong Village, Longhua Town, Bao’an District,56
Shenzhen and buildings on the ground.
**The Company was accused in Shenzhen Luohu Court for the arrearage of USd 500,000
advance for letter of credit and interest. The court intended to auction the Company’s house
property in SEG Park, South Huaqiang Road, Shenzhen to pay the arrearage.
13. Short-term loans
(1) Listed according to loan types
June 30, 2009 Dec. 31, 2008
Loan type Currency Original
currency
Converted to
RMB
Original
currency
Converted to RMB
Credit RMB - 620,000.00 - 620,000.00
USD 21,089,522.66 144,081,509.86 21,089,522.66 144,041,439.77
Subtotal 144,701,509.86 144,661,439.77
Guarantee RMB - 123,058,000.00 - 123,057,930.00
HKD 8,000,000.00 7,052,240.00 8,000,000.00 7,040,000.00
USD 18,248,139.39 124,739,753.32 18,248,139.39 124,901,985.58
Subtotal 254,849,993.32 254,999,915.58
Total 399,551,503.18 399,661,355.35
(2) Listed according to financial institution
Loan institution Loan amount Loan application Overdue reason
Prospective date for
loan repayment
China Orient Asset
Management Corporation 95,791,854.58
Loan for turnover
of production Fund shortage Unpredictable
China Cinda Asset
Management Corporation 58,337,594.10
Loan for turnover
of production Fund shortage Unpredictable
Huizhou Orient Union
Industrials Co., Ltd.
37,163,749.84
Loan for turnover
of production Fund shortage Unpredictable
The Export-Import Bank
of China
114,558,000.00
Loan for turnover
of production Fund shortage Unpredictable
China Merchants Bank,
Luohu Branch 18,420,665.96
Loan for turnover
of production Fund shortage Unpredictable
China Everbright Bank 13,736,249.19
Loan for turnover
of production Fund shortage Unpredictable57
China Merchants Bank
Head Office
60,923,389.51
Loan for turnover
of production Fund shortage Unpredictable
China Construction Bank,
Sichuan Mianyang
Branch
620,000.00
Loan for turnover
of production Fund shortage Unpredictable
Total 399,551,503.18
(3)The aforesaid loans were all overdue for many years
14. Accounts payable
Item June 30, 2009 Dec. 31, 2008
Accounts payable 135,035,592.14 130,714,884.86
The accounts payable do not include the arrearage to shareholders holding 5% (5% included)
or above shares with voting rights of the Company.
15. Account received in advance
Item June 30, 2009 Dec. 31, 2008
Account received in
advance 30,478,401.63 21,333,035.66
The accounts received in advance do not include the account received in advance from
shareholders holding 5% (5% included) or above shares with voting rights of the Company.
16. Wages payable
Item June 30, 2009 Dec. 31, 2008
1 Wage 606,482.30 606,482.30
2 Bonus - -
3 Allowance - -
4 Subsidy - -
5 Employees’ welfare expenses - -
6 Social insurance expense - -
7 Housing fund - -
8 Trade union funds 867,879.08 901,777.77
9 Employee education fund - -58
Item June 30, 2009 Dec. 31, 2008
10 Non-monetary welfare - -
11 Dismission welfare 106,408.44 178,037.76
12
Share-based payment settled in
cash - -
Total 1,580,769.82 1,686,297.83
The Company reduced staff for sake of economic consideration according to Labor Contract
Law in 2008, and paid retire compensation of RMB 11,452,225.33, and still has RMB
106,408.44 left to pay.
17. Tax payable
Tax type June 30, 2009 Dec. 31, 2008
Enterprise income tax 33,753,125.02 33,753,125.02
VAT 53,371,655.37 53,948,342.26
Business tax 383,436.01 399,505.63
Housing property tax 7,303,655.67 7,303,655.67
City construction and
maintenance tax -11,153.32 -10,992.63
Withheld individual income tax -181,886.56 -21,125.19
Others 26,518.32 26,518.32
Total 94,645,350.51 95,399,029.08
For the Company has owed tax for a long time, it is possible for it to pay relevant fines and
late fee.
18. Other accounts payable
Item June 30, 2009 Dec. 31, 2008
Other accounts payable 164,177,338.26 168,604,764.50
The other accounts payable does not include the arrearage to shareholders holding 5% (5%
included) or above shares with voting rights of the Company.
19. Long-term liabilities due in 1 year
June 30, 2009 Dec. 31, 2008
Loan institution Currency Original
currency
Converted to
RMB
Original
currency
Converted to
RMB
China Everbright Bank USD 2,157,395.94 14,739,113.31 2,157,395.94 14,744,938.2859
June 30, 2009 Dec. 31, 2008
Loan institution Currency Original
currency
Converted to
RMB
Original
currency
Converted to
RMB
Shenzhen Guocheng
Energy Investment
Development Co., Ltd.
USD
84,797,624.5
7
579,328,891.28
84,797,624.5
7
579,557,844.87
Shenzhen Guocheng
Energy Investment
Development Co., Ltd.
RMB - 19,300,058.59 - 19,300,058.59
Guangdong Sunrise
Holdings Co., Ltd.
RMB - 232,801,657.06 - 232,801,657.06
Guangdong Sunrise
Holdings Co., Ltd.
USD 204,847.86 1,599,595.48 204,847.86 1,599,595.48
China Orient Asset
Management Corporation
RMB - 3,000,000.00 - 3,000,000.00
China Industrial and
Commercial Bank,
Suzhou Branch
RMB - 2,000,000.00 - 2,000,000.00
Great Wall Asset
Management Corporation
USD 2,500,000.00 17,079,750.00 2,500,000.00 17,086,500.00
Great Wall Asset
Management Corporation
RMB - 3,000,000.00 - 3,000,000.00
Total 872,849,065.72 873,090,594.28
The aforesaid loans were all overdue for many years.
20. Other current liabilities
Item June 30, 2009 Dec. 31, 2008 Reason for balance
Loan interest 142,804,212.07 118,881,087.74 Unpaid
Others 44,469.76 48,826.30
Total 142,848,681.83 118,929,914.04
21. Projected liabilities
Item June 30, 2009 Dec. 31, 2008 Reason for withdraw
Loan guarantee for ZoriaPteLTd
78,087,000.00 78,087,000.00
The company guaranteed has
gone into serious insolvency.60
Loan guarantee for Gintian Industry
(Group) Co., Ltd. 50,000,000.00 50,000,000.00
The company guaranteed has
gone into serious insolvency.
Loan guarantee for Guangdong
Sunrise Group Co., Ltd. 47,963,842.00 47,963,842.00
The company guaranteed has
gone into serious insolvency.
Loan guarantee for Shenzhen Tianma
Cosmetics Co., Ltd. 8,000,000.00 8,000,000.00
The company guaranteed has
gone bankrupt.
Loan guarantee for Shandong
Huajiaming Trading Co., Ltd. 83,142.92 83,142.92
The company guaranteed has
gone into serious insolvency.
Total
184,133,984.92 184,133,984.92
Details of reason for withdrawal could be found in Note 11.
22. Capital stock
Dec. 31, 2008 Increase/decrease of the current year(＋, －) June 30, 2009
Item
Quantity Proportion
Bonus
share
Converted
from public
reserve
Equity
incentive
others Subtotal
Quantity Proportion
1. Shares with limited
sales condition 186,713,203 38.94% --- --- --- --- --- 186,713,203 38.94%
1) Shares held by state
legal person --- --- --- --- --- --- --- --- ---
2) Other domestic
capital shares 111,607,000 23.28% --- --- --- --- --- 111,607,000 23.31%
Including: shares held
by domestic legal
person
--- --- --- --- --- --- --- --- ---
Shares held by
domestic non-state
legal person
111,607,000 --- --- --- --- --- --- 111,607,000 ---
3) Others
75,106,203 15.67% --- --- --- --- --- 75,106,203 15.67%
Including: shares held
by foreign legal person 75,106,203 --- --- --- --- --- --- 75,106,203 ---
2. Shares with no
limited sales condition 292,719,800 61.06% --- --- --- --- --- 292,719,800 61.06%
Domestically listed
RMB ordinary share 76,752,000 16.01% --- --- --- --- --- 76,752,000 16.01%
Domestically listed
foreign capital shares 215,967,800 45.05% --- --- --- --- --- 215,967,800 45.05%
3. Total share amount
479,433,003 100.00% --- --- --- --- --- 479,433,003 100.00%
The capital stock of the Company has been verified with No (96) YANZIZI. 076 Capital
Verification Report issued by Shenzhen Accountant Office.61
23. Capital reserves
Item Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Other capital reserve 410,893,564.33 23,908,415.63 - 434,801,979.96
Including: return from
debt restructuring 406,884,939.36 23,908,415.63 - 430,793,354.99
Account need not to be
paid 690,624.97 - - 690,624.97
Price difference of related
transactions 3,318,000.00 - - 3,318,000.00
Total 410,893,564.33 23,908,415.63 - 434,801,979.96
In accordance with the regulations on Notice of Well Implementing Accounting Standards for
Business Enterprise on the Works of 2008 Annual Report by the Letter No. CK [2008]60 from
Ministry of Finance, the controlling shareholder of the Company- Shenzhen Guocheng
Energy Investment Development Co., Ltd. exempted loan interest for the year of 2009, with a
total amount of RMB 23,908,415.63 in the first-half year of 2009, as capital input which was
then recorded into capital reserve.
24. Surplus reserves
Item Dec. 31, 2008
Increase of the
current period
Decrease of the
current period June 30, 2009
Statutory surplus
reserve 32,673,227.01 --- --- 32,673,227.01
25. Undistributed profit
Item June 30, 2009 Dec. 31, 2008
Undistributed profit at the
beginning of the period -2,726,059,175.73 -2,681,166,169.33
Net profit -56,332,908.69 -44,893,006.40
Minus: withdraw statutory
surplus reserve - -
Withdraw statutory common
welfare reserve - -
Ordinary shares dividends payable - -
Profit converted to capital stock - -
Other conversion - -
Undistributed profit at the end of
the period -2,782,392,084.42 -2,726,059,175.7362
26. Operating income and cost
Jan. to Jun., 2009 The same period of last year
Classification of
business items
Operating
income
Operating cost
Operating
income
Operating cost
Main business:
Sales of bicycles and
fitting parts
107,433,173.33 101,638,588.94 104,825,978.33 102,170,819.03
Property management 1,069,290.52 1,895,757.49 1,156,083.43 1,565,158.68
Subtotal 108,502,463.85 103,534,346.43 105,982,061.76 103,735,977.71
Other business:
Fixed assets rental
income
3,007,739.45 2,268,834.30 3,229,025.96 2,134,050.24
Water and power
charge
512,790.07 358,187.78 675,186.92 615,517.40
Sales of materials 356,036.63 323,389.13 1,223,643.51 648,858.68
Others 115,553.85 108,329.06
Subtotal 3,992,120.00 3,058,740.27 5,127,856.39 3,398,426.32
Total 112,494,583.85 106,593,086.70 111,109,918.15 107,134,404.03
27. Business tax and extras
Tax type
Jan. to Jun.,
2009
The same period
of last year
Calculation and payment
standard
Business tax 53,464.53 60,460.87 Rental income*5%
City construction and
maintenance tax
4,467.67 6,969.53
Amount of turnover
tax*1%
Extra charges for
education
13,403.00 20,993.42
Total 71,335.20 88,423.82
28. Financial expenses
Type Jan. to Jun., 2009
The same period of
last year
Interest expense 47,806,709.96 49,399,280.04
Minus: interest income 19,078.10 34,081.57
Minus: exchange gains 326,570.79 57,537,032.28
Others 20,552.36 5,404.24
Total 47,481,613.43 -8,166,429.57
The financial expenses increased RMB 55,648,043.00 this year compared to that of the same
period of last year. The main reason was that the exchange rate was stable in the report period,63
whereas Reminbi appreciation occurred in the same period of last year, thus a large amount of
exchange income arising from the foreign currency debt of the Company.
29. Asset impairment loss
Type Jan. to Jun., 2009
The same period
of last year
Bad debt loss -770,493.95
Inventory devaluation loss 1,256,396.21
Long-term equity
investment devaluation loss
Total -770,493.95 1,256,396.21
30. Investment income
Item Jan. to Jun., 2009
The same period
of last year
Gains and loss adjustment
calculated through equity
method
-622,522.60
Total
-622,522.60
There is no investment income in this period because Jiangxi Lihua has been transferred from
the item of long-term investment to the item of other accounts receivable in the year of 2008.
31. Non-operating income
Item Jan. to Jun., 2009
The same period
of last year
Gains from disposal of
non-current assets 218,726.57 7,651,741.94
Profit from debt restructuring
Others 128,593.36 258,722.52
Total 347,319.93 7,910,464.46
In this period, the Company disposed two floors of the real estate located in No. 24
Zhaojiaping, Changsha, Hunan Province, with a total transfer price of RMB 550,000.00. The
original value of the property is RMB 708,606.26 and the disposal income is RMB
218,726.57 after withdrawing the depreciation RMB 377,332.83.
32. Non-operating expenditure
Item Jan. to Jun., 2009 The same period64
of last year
Loss from disposal of
non-current assets 18,300.00
Commonweal donation
Loss on fixed assets
inventory shorts
Amercement expense 200.00 39,322.93
Others 14,021.66 292,591.93
Total 14,221.66 350,214.86
33. Income tax
Item Jan. to Jun., 2009
The same period of
last year
Income tax expense
of the current period -- --
Deferred income tax
expense -- --
Total
-- --
34. Other paid cash related with operation activities
All paid for periodic expenses in cash.
Note 9. Notes to main items of the financial statement of parent company
1. Accounts receivable
June 30, 2009
Age of the
account Amount Proportion
Provision for bad
debt
Net amount
Within 1 year 2,472,854.90 0.21% - 2,472,854.90
1 year to 2 years 31,950.00 0.00% 95.85 31,854.15
2 years to 3 years - - - -
Over 3 years 1,172,776,011.87 99.79% 1,037,184,384.47 135,591,627.40
Total 1,175,280,816.77 100% 1,037,184,480.32 138,096,336.45
Dec. 31, 2008
Age of the
account Amount Proportion
Provision for bad
debt
Net amount
Within 1 year 496,746.90 0.04% - 496,746.9065
1 year to 2 years 31,950.00 0.00% 95.85 31,854.15
2 years to 3 years - - - -
Over 3 years 1,172,776,011.87 99.96% 1,037,184,384.47 135,591,627.40
Total 1,173,304,708.77 100% 1,037,184,480.32 136,120,228.45
(1) The balance at the end of the period does not include the account receivable of
shareholders holding 5% (5% included) or above shares with voting rights of the Company.
(2) Total amount of the top five in the balance at the end of the period is RMB 492,884,806.45,
accounting for 41.94% of the total amount of account receivable.
2. Other accounts receivable
June 30, 2009
Age of the
account Amount Proportion
Provision for bad
debt
Net amount
Within 1 year 34,697,074.14 6.02% 9,110,223.51 25,586,850.63
1 year to 2 years 1,175,870.02 0.20% 3,527.61 1,172,342.41
2 years to 3 years - - - -
Over 3 years 540,919,148.13 93.78% 516,256,193.21 24,662,954.92
Total 576,792,092.29 100% 525,369,944.33 51,422,147.96
Dec. 31, 2008
Age of the
account Amount Proportion
Provision for bad
debt
Net amount
Within 1 year 40,722,758.73 6.64% 9,110,223.51 31,612,535.22
1 year to 2 years 1,175,870.02 0.19% 3,527.61 1,172,342.41
2 years to 3 years - - - -
Over 3 years 571,131,039.07 93.17% 516,256,193.21 54,874,845.86
Total 613,029,667.82 100% 525,369,944.33 87,659,723.49
(1) The balance at the end of the period does not include the account receivable of
shareholders holding 5% (5% included) or above shares with voting rights of the Company.
(2) Total amount of the top five in the balance at the end of the period is RMB 357,711,532.44,
accounting for 62.02% of the total amount of other accounts receivable.
3. Long-term investment
(1) The long-term equity investment is listed as follows:
Item Dec. 31, 2008
Increase of the
current period
Decrease of the
current period June 30, 2009
Long-term equity
investment 29,331,587.60 29,331,587.60
Minus: devaluation
provision 26,711,747.10 26,711,747.10
Net amount of long-term
equity investment 2,619,840.50 --- --- 2,619,840.50
The balance at period-end was the liquidation balance of Shenzhen Golden Ring Printing Co.,66
Ltd. which was revoked with industrial and commercial registration.
(2) Long-term equity investment
a. Other equity investment calculated through cost method
Name of company
invested
Investme
nt time
limit
Proportion
in the
registered
capital of
the
company
invested
Initial
investment
cost
Dec. 31,
2008
Increase of
the current
period
Decrease of
the current
period
June 30, 2009
Shenzhen Emmelle
Industry Co., Ltd.
70% 1,400,000.00 1,400,000.00 - - 1,400,000.00
Shenzhen Anjule
Property
Management Co.,
Ltd.
100% 2,000,000.00 2,000,000.00 - - 2,000,000.00
China Bicycle
(Hong Kong) Co.,
Ltd.
100% 5,350,000.00 5,350,000.00 - - 5,350,000.00
China Bicycle
(International) Co.,
Ltd.
100% 18,727.60 18,727.60 - - 18,727.60
Hunan KN
Motorcycle Co.,
Ltd.
50 years 5.50% 5,679,300.00 5,679,300.00 - - 5,679,300.00
Subtotal
14,448,027.60
14,448,027.6
0
- -
14,448,027.6
0
b. Other equity investment calculated through equity method
Name of
company
invested
Investment
time limit
Proportion
in the
registered
capital of
the
company
invested
Initial
investment
cost
Dec. 31,
2008
Equity
adjustment
during the
current
period
Other
increase/d
ecrease of
the current
period
Accumulati
ve equity
adjustment
June 30,
2009
Shenzhen
Golden Ring
Printing Co.,
Ltd. 20 years 38%
14,883,560
.00
14,883,56
0.00
14,883,56
0.00
Total
14,883,560
.00
14,883,56
0.00
14,883,56
0.0067
Shenzhen Golden Ring Printing Co., Ltd. was revoked enterprise industrial and commercial
registration; the original shareholder - Hong Kong (Link) Bicycles Limited was entrusted to
hold its shares by the Company, so the actual owner was the Company.
c. Changes of devaluation provision
Name of the company invested Dec. 31, 2008
Increase of the
current period
Decrease of the
current period
June 30, 2009
Shenzhen Emmelle Industry
Co., Ltd.
1,400,000.00 - - 1,400,000.00
Shenzhen Anjule Property
Management Co., Ltd.
2,000,000.00 - - 2,000,000.00
China Bicycle (Hong Kong)
Co., Ltd.
5,350,000.00 - - 5,350,000.00
China Bicycle (International)
Co., Ltd.
18,727.60 - - 18,727.60
Hunan KN Motorcycle Co.,
Ltd.
5,679,300.00 - - 5,679,300.00
Shenzhen Golden Ring
Printing Co., Ltd.
12,263,719.50 - - 12,263,719.50
Total 26,711,747.10 - - 26,711,747.10
4. Main business income and cost
Item Jan. to Jun., 2009
The same period
of last year
Main business income 915,612.46 3,253,410.68
Main business cost 915,612.46 6,682,883.96
Gross profit from main
business 0.00 -3,429,473.28
5. Investment income
Item Jan. to Jun., 2009
The same period of
last year
Withdrawal of provision for
long-term investment impairment
Gains and loss adjustment calculated
through equity method
--- -622,522.60
Total --- -622,522.60
There is no investment income in this period because Jiangxi Lihua has been transferred from
the item of long-term investment to the item of other accounts receivable in the year of 2008.
Note 10: Affiliated party relationships and the transactions among them
1. Relationship between associated parties68
(1) Related companies with controlling relationship
Name of related
company
Enterprise
type
Legal
represe
ntative
Registered
capital
Business scope
Shares or
equity held
Relationship with
the Company
Shenzhen
Guocheng Energy
Investment
Development Co.,
Ltd.
Limited
liability
company
(legal
person sole
proprietors
hip)
Shang
Shijun
￥70000,00
0
Set up industry,
domestic business,
material supply and
marketing of
materials (excluding
exclusive, controlled
and monopoly
commodity)
13.58%
Controlling
shareholder
(2) Related companies with no controlling relationship
Name of related company Relationship with the Company
Shenzhen Golden Ring Printing Co., Ltd. Affiliated company
According to the resolution of the 5th meeting of the 7th Board of Directors on April 25, 2008,
the Company cancelled investment to affiliated companies which was revoked with industrial
and commercial registration. The following companies would have no related relationship
with the Company any more.
Names of companies The original relationship
Shenzhen Danxia Bicycle Parts Co., Ltd. Affiliated company
Shenzhen Canghai Industry Co., Ltd. Affiliated company
Jiangsu Huaiyin Huayu Bicycle Parts Manufacturer
Co., Ltd.
Affiliated company
Yangzhou Xinghua Bicycle Material Co., Ltd. Affiliated company
Shantou S.E.Z. Dapeng Industry Co., Ltd. Affiliated company
Director Shi Zhangxiong resigned his post of director of the Company in the year of 2008, so
the following companies would have no related relationship with the Company any more.
Names of companies The original relationship
Daming International Co., Ltd
The director of the Company was General Manager
of this company
DiamondBack（Hong Kong）Co., Ltd.
The director of the Company was General Manager
of this company
Zhigao International mechanical Co., Ltd.
The director of the Company was General Manager
of this company69
Zhigao Resource international Co., Ltd.
The director of the Company was General Manager
of this company
China Composite Material (Shenzhen) Co., Ltd.
The director of the Company was Chairman of the
Board of this company
Hong Kong Huajiaming Industrial Trading Industry
Co., Ltd
The director of the Company was Chairman of the
Board of this company
2. Dealings of related companies
Item Name of related company
Economic
content
June 30, 2009 Dec. 31, 2008
Long-term
liability due
in 1 year
Shenzhen Guocheng Energy
Investment Development Co.,
Ltd.
Principal
sum of
loan
598,628,949.87 598,857,903.46
Subtotal
598,628,949.87 598,857,903.46
Other
current
liabilities
Shenzhen Guocheng Energy
Investment Development Co.,
Ltd.
Interest
of loan
1,767,470.46 1,373,681.70
1,767,470.46 1,373,681.70
Other
Account
payable
Shenzhen Golden Ring Printing
Co., Ltd.
2,769,840.50 2,769,840.50
Subtotal 2,769,840.50 2,769,840.50
3. Transaction of associated parties
The shareholder and loaner of the Company - Shenzhen Guocheng Energy Investment
Development Co., Ltd. agreed to stop calculating a large portion of interest of the loan in
2009, which was totally RMB 23,908,415.63 in the first-half of the year, and withdrawing
interest amounting to RMB 393,788.76. Moreover, exchange income of RMB 228,953.59 has
been obtained for the principal of USD 84,797,624.57 of Guosheng Company has been
adjusted according to the exchange rate on June 30, 2009 in the report period.
Note 11: Contingency
Item Amount involved
Influence on the company’s
financial situation, operating
results and cash flow during
the current period and in the
future
Nature
Loan guarantee for Guangdong Sunrise RMB36,100,000.00 * Guarantee70
Holdings Co., Ltd.
USD1,740,000.00
Loan guarantee for Gintian Industry
(Group) Co., Ltd. RMB50,000,000.00 ** Guarantee
Loan guarantee for Shenzhen Tianma
Cosmetics Co., Ltd. RMB8,000,000.00 *** Guarantee
ZoriaPteLtdc USD10,000,000.00 **** Guarantee
Shandong Huajiaming Trading Co.,
Ltd. RMB83,142.92 ***** Guarantee
Total RMB94,183,142.92
USD11,740,000.00
* 100% of the guarantee amount for the company is predicted for loss, equal to RMB
47,963,842.00.
** The company is a listed limited company, and has gone into serious insolvency. Therefore,
the total guarantee amount is predicted for loss.
*** The company is closed down. Therefore, the total guarantee amount is predicted for loss.
**** The company has gone into serious insolvency, and is under liquidation now. Therefore,
the total guarantee amount is predicted for loss.
***** This company has gone into serious insolvency. Therefore, the total guarantee amount
is predicted for loss.
Note 12: Lawsuit
1. Till Jun. 30, 2009, the Company has been claimed by 16 financial organs for failure of
repaying the overdue loan with principal and interest of RMB 408,555,000, USD 90,660,100
and HKD 8,261,600. Most of the law suits have been judged and the Company has been
defeated or mediated.
2. Till Jun. 30, 2008, the Company has been claimed by 29 suppliers with amount of RMB
30,580,800, HKD 17,650,800 and USD 1,668,500. Most of the lawsuits have been judged and
the Company has been defeated.
3. In 2008, due to contract disputation, the Company was appealed to Shenzhen Luohu People
Court by Shenzhen Caopu Dushucun Industry Co., Ltd., and the court judged that the
Company should pay rent of RMB 1.4 million and relevant interests. To the rent, the
Company has withdrawn in advance in the past years.
Note 13: Interpretation for important issues
1. Financial Debt Restructuring Issues
In accordance with the document YJBT[2004] No.6 issued by China Banking Regulatory
Commission, General Offices on Jan.7, 2004, 11 financial organs including BOC stopped
collecting interest of load of the Company for 3 years since Jan.1, 2002 and exempted from
all interest in red (including default interest and Compound Interest) made by the Company
before Dec.31, 2001. The Company has made all interest payable (including default interest
and Compound Interest), namely, RMB 357,993,665.24 into "capital reserve" and stopped to71
deduct interest for the period between Jan.1, 2002 and Dec.31, 2004. The exemption expires
on Dec.31, 2004.
In 2005, China Huarong Asset Management Corporation, Shenzhen office, China Orient Asset
Management Corporation, Shenzhen office, China Xinda Asset Management Corporation,
Shenzhen office, China Great Wall Asset management Corporation, Shenzhen office gave up
the annual interest for 2005.
For the ambiguity made by “stop to collect interest”, General Rules on Loan has not
interpreted it. For this reason, China Huarong Asset Management Corporation, Shenzhen
office, China Orient Asset Management Corporation, Shenzhen office, China Xinda Asset
Management, Shenzhen office and Great Wall Asset management corporation, Shenzhen
office did not claimed for the interest. Yet, Shenzhen Development Bank Claimed for the
interest and compound interest for the period between Jan.1, 2002 and Dec.31, 2004. The
Company holds the idea that it needs not to pay the interest stopped to calculate and has not
deducts the interest and compound interest during the period between Jan.1, 2002 and Dec. 31,
2004. Till Dec. 31, 2008, the interest amount confirmed by debtor bank was more than the
book interest payable of the Company with the amount of RMB 265,875,786.92, and there
were some other institutions who did not confirm the loan interests. The Company thought the
differences between the interests withdrew or not, returned or not; thus, no financial
adjustment was made.
2. Capital reserve transferring to capital stock and Share Merger Reform
According to the resolution of capital reserve to convert share capital voted through by the
corporate shareholder meeting on Feb.1, 2007, the Company makes share capital conversion
of 39,519,800 to circulating A shares shareholder and the Non- floating stock obtained the
floating right. The B shares shareholder was added 1.5 shares to each 10 shares and
32,395,200 shares were issued. Among the converted shares to the A shares shareholder,
deducting the 11,512,800 shares gained for the share capital expansion, the 28,007,000 shares
are quid pro quo shares arranged to A shares shareholder from the non floating share
shareholder. After conversion, the shareholding equity increases to 551,348,000 shares and
the floating A shares increased to 116,271,800 from 76,752,000, among which 28,007,000
shares are consideration shares. According to Share Merger Reform Memoranda No.
2—Information Release (1) the quid pro quo arrangement rate is 28,007,000÷88, 264, 8 00=
0.3173 with converted A shares share capital (88,264,800 shares) as base. Therefore, in the
conversion, the floating A shares shareholder obtained 3.173 shares for each 10 shares.
The Share Merger Reform of the Company has obtained the Reply of SZPi [2007] No. 1343
from Ministry of Commerce and the Reply of SMGZFu[2007] No.2257on Increasing the
Total Shares of Shenzhen China Bicycle Company (Holdings) Limited from Shenzhen Trade
and Industry Bureau, in which agreed the share merger reform scheme of the Company
examined and approved in Shareholders’ Meeting dated Feb.1, 2007. In accordance with
Guidelines on Practice and Operations of Share Merger Reform of the Listed Companies; the
relevant procedures on Share Merger Reform of the Company was under the progress in
Shenzhen Company of China Securities Depository and Clearing Corporation Limited.
Note 14: Explanation for sustained operation72
Till Jun. 30, 2009, the total asset of the Company was RMB 190,150,317.40, and the total
liability was RMB 2,025,300,688.01 with net assets of RMB -1,835,150,370.61. The
Company was in insolvency and it may fail to liquidate assets to clear off debts during the
normal operation. Therefore, the Company and the original first creditor adopted the measures
as follows:
Since March of 2002, the first creditor of the Company, China Huarong Asset Management
Corporation made breakthrough advance on the debt restructuring. Shenzhen China
Restructuring Scheme has approved by the China Banking Regulatory Commission. The
monetary liability of the company before Dec. 31, 2004 has been exempted, which was in the
process of gradual implementation.
China Huarong Asset Management Corporation and Shenzhen Julongsheng Industrial
Development Co., Ltd, Shenzhen Guosheng Energy Investment Development Co., Ltd.
agreed and signed Letter of Agreement on Nov. 13, 2006. Guosheng Energy accepted
65,098,412 A shares of corporate share from Huarong Corporation. The ownership right was
transferred on Apr. 30, 2007. Shenzhen Guosheng Energy Investment Development Co., Ltd.
became the biggest shareholder and biggest creditor of the Company and was promoting
relevant works about the debt restructuring issues.
The Company is making debt restructuring scheme and has made certain progress. The
Company signed Reconciliation Agreement with International Finance Corporation on Mar.
29, 2007. Both parties agreed to settle all right of credit and liability between the two parties
by paying the amount equivalent to RMB 2 million. The debt amount was about USD 3.87
million and about RMB 42.78 million. The two biggest creditors of the Company –Shenzhen
Guosheng Energy Investment Development Co., Ltd. and Guangdong Sunrise Holdings Co.,
Ltd. agreed to stop to calculate all the interests in 2007 and 2008, and never to collect interest
in following years. Shenzhen Guosheng Energy Investment Development Co., Ltd. agreed to
stop to calculate a majority of the interests in 2009.
While making progress of liability restructuring, the main businesses of the company
increased great and made profit. In this sense, the payment pressure for the company in the
short term greatly reduced and the sustained operation improved.
With restructuring of the debt and assets of the Company and the development of the
company, the business environment and operation status would improve further.
Note 15: Supplementary information
1. Detailed statement of non-recurring profit and loss items
Detailed Item Jan.- Jun.,
2009
The same period
of last year
1.Disposal profit and loss on non-current assets 218,726.57 7,633,441.94
2. Tax refund and exemption approved by exceeding authority
or without formal document of approval --- ---
3. government subsidy recorded into the current gains and
losses --- ---
4. Capital occupation received from non- financial enterprises --- ---73
Detailed Item Jan.- Jun.,
2009
The same period
of last year
and recorded into the current gains and losses
5. Profit and loss resulting from the discrepancy between
enterprise combination cost and the fair value of the
identifiable net assets of the combined enterprise
--- ---
6. Profit and loss on exchange of non-monetary assets --- ---
7. Profit and loss on entrusted investment --- ---
8. Assets devalue provisions withdrawn for force majeure,
such as natural disaster --- ---
9. Debt restructuring expense
10. Enterprise restructuring expense --- ---
11. Profit and loss exceeding fair value, resulting from unfair
transactions --- ---
12. Net profit and loss of the current period from the
beginning of the subsidiary to combination date, resulting
from enterprise combination under the common control --- ---
13. Profit and loss on predicted liabilities unrelated to main
business of the Company --- ---
14. Net amount of other non-operating income and expense
except the above items 128,593.36 -39,322.93
15. Others
-14,221.66 -33,869.41
Total
333,098.27 7,560,249.60
Minus: corresponding income tax of non-recurring profit and
loss --- ---
Minus: the part shared by minority shareholders
--- ---
Net profit influenced by non-recurring profit and loss 333,098.27 7,560,249.60
Net profit on the statement
-56,402,631.25 -4,286,665.48
Minus: profit and loss of minority shareholders
-69,722.56 328,970.23
Net profit attributable to shareholders of parent company -56,332,908.69 -4,615,635.71
The ratio of non-recurring profit and loss to net profit
attributable to shareholders of parent company in the same
period -0.59% -163.80%
Net profit attributable to shareholders of parent company
after deducting non-recurring profit and loss -56,666,006.96 -12,175,885.3174
2. Return on equity and earnings per share
Return on equity
Earnings per share (RMB
Yuan/share)
Period
Financial index
Fully
diluted
Weighted
average
Basic
earnings
per share
Diluted
earnings
per share
Net profit attributable to
Jan.-Jun., common shareholders --- --- -0.1175 -0.1175
2009
Net profit attributable to
common shareholders after
deducting non-recurring
profit and loss
--- --- -0.1182 -0.1182
Net profit attributable to
The same common shareholders --- --- -0.0096 -0.0096
period of
last year
Net profit attributable to
common shareholders after
deducting non-recurring
profit and loss
--- --- -0.0254 -0.0254
Item Jan.-Jun., 2009
The same period
of last year
Calculation of basic earnings per share and diluted
earnings per share
1. Numerator
Net profit after tax -56,332,908.69 -4,615,635.71
Adjust: preference share dividend and influence of other
instruments
Profit and loss attributable to common shareholders of
parent company, in the calculation of basic earnings per
share
-56,332,908.69 -4,615,635.71
Adjustment:
Dividend and interest related to diluted potential common
share
Changes to income or expense, caused by converting
diluted potential common share
Profit and loss attributable to common shareholders of
parent company, in the calculation of diluted earnings per
share
-56,332,908.69 -4,615,635.71
2. Denominator75
Weight average of common shares issued externally during
the current period, in the calculation of basic earnings per
share
479,433,003.00 479,433,003.00
Plus: the weighted average while all diluted potential
common shares are converted into common shares --- ---
Weight average of common shares issued externally during
the current period, in the calculation of diluted earnings per
share
479,433,003.00 479,433,003.00
3. Earnings per share
Basic earnings per share -0.1175 -0.0096
Diluted earnings per share -0.1175 -0.0096
The Company and notes to consolidated financial statement as Jan.-Jun., 2009 are compiled
according to Accounting Standards for Business Enterprises No.1 to No.37 promulgated by
the State.
Legal Representative of the Company:
Person in Charge of Accounting Works:
Person in Charge of Accounting Institution:
Date: August 13, 2009
