深圳中华自行车（集团）股份有限公司
2010 ANNUAL REPORT
IMPORTANT NOTICES:
Directors, supervisors and senior executives of the Shenzhen China Bicycle Company (Holdings)
Limited (hereinafter referred to as the Company) hereby confirm that there are no any important
omissions, fictitious statements or serious misleading information carried in this report, and shall
take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the
whole contents.
Shenzhen Pengcheng Certified Public Accountants issued auditor’s report with disclaimer of
opinions for the 2010 Financial Report of the Company. The Board of Directors of the Company
made specific explanations on the relevant matters; the Supervisory Committee of the Company
expressed definite opinions on the specific explanations by the Board of Directors. The investors
are suggested to read for details.
No director, supervisor and senior executives stated that they couldn’t ensure the correctness,
accuracy and completeness of the contents of 2010 Annual Report or have objection for this report.
Director Mr. Liu Linfeng was absent from the board meeting due to go on business outside, but
authorized to entrust Director Mr. Yang Fenbo to attend and exert voting rights on behalf;
Independent Director Ms. Zhang Xinmiao was absent from the board meeting due to other works,
but authorized to entrust Independent Director Mr. Shao Liangzhi to attend and exert voting rights
on behalf.
Chairman and Person in Charge of the Company Mr. Luo Guiyong, Person in Charge of Accounting
Works Mr. Zhang Zebing and Person in Charge of Accounting Organ Mr. Sun Longlong hereby
confirm that the Financial Report of 2010 Annual Report is true and complete.
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: Luo Guiyong
III. Secretary of the Board of Directors: Yao Zhengwang
Securities Representative: Cui Hongxia
Tel: (86) 755 –28181666
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 and Office Address: No. 3008, Buxin Road, Shenzhen, Guangdong Province,
PRC
Post Code: 518019
Office Address: Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen,
Guangdong Province, China
Post Code: 518131
The Company’s Internet Website: www.cbc.com.cn
E-mail: cbc@szcbc.com
V. Newspapers Chosen for Disclosing the Information: Securities Times and Hong Kong
Commercial Daily
Internet Website Designated for Publishing the Annual Report: www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Secretariat of the Board of Directors
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: *ST ZHONGHUA – A, *ST ZHONGHUA – B
Stock Code: 000017 for A-share, 200017 for B-share
VII. Other Information about the Company
1. Initial registered date: Aug. 24, 1984
2. Initial registered place: Buxin Road, Shenzhen
3. Registration number for business license of legal person of corporation: 440301501122085
4. Registration number of tax:
State Revenue SHEN ZI No. 440301618830452,
Land Tax SHEN ZI 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: 7/F, A Building, Union Square, No. 5022, Binghe Road, Futian District, Shenzhen,
China
Section II. Summary of Accounting Highlight and Business Highlight
I. Major profit indexes as of the year 2010
1. Major profit indexes as of the year 2010 (Unit: RMB)
Operating profit -75,353,838.00
Total profit 64,477,414.44
Net profit attributable to the shareholders of the listed
64,477,414.44
company
Net profit attributable to the shareholders of the listed
-44,590,962.46
company after deducting non-recurring gains and losses
Net cash flow arising from operating activities 6,495,860.32
2. Items of non-recurring gains and losses (Unit: RMB)
Notes
Items of non-recurring gains and losses Amount
(If applicable)
Gains and losses from the disposal of
-1,479.48 Loss form disposal of fixed assets
non-current assets
Earnings from free of interests of
Gains and losses caused by debts restructuring 138,684,786.64 Zhengda Guoli and debt composition of
Chengxingtai
Other non-operating income and expenditure
1,147,945.28
except for the aforementioned items
Influenced amount of income tax -30,762,875.54
Total 109,068,376.90
II. Major accounting data and financial indexes over the recent three year at the end of report
year
1. Main accounting data
Unit: RMB
Increase/decr
ease in this
year
2010 2009 2008
compared
with that of
last year (%)
After Before
After adjustment
adjustment adjustment
Total operating income 299,027,279.43 260,908,108.82 14.61 274,202,840.48 274,202,840.48
Total profit 64,477,414.44 -106,160,775.90 -160.74 -44,489,780.00 -44,489,780.00
Net profit
attributable to
64,477,414.44 -105,757,549.50 -160.97 -44,893,006.40 -44,893,006.40
shareholders of the
listed company
Net profit
attributable to
shareholders of the
listed company after -44,590,962.46 -115,020,042.60 -61.23 -60,660,142.06 -60,660,142.06
deducting
non-recurring gains
and losses
Net cash flow
arising from 6,495,860.32 3,920,586.97 65.69 -14,392,427.25 -14,392,427.25
operating activities
At the end of 2010 At the end of 2009 Increase/decr At the end of 2008
ease at the
end of this
year
compared
with that at
the end of
last year (%)
After
Before adjustment After adjustment
adjustment
Total assets 138,158,078.89 169,696,420.47 -18.59 190,897,705.53 190,897,705.53
Owners’ equity
attributable to
-1,756,185,442.87 -1,861,014,519.67 -5.63 -1,803,059,381.39 -1,803,059,381.39
shareholders of the
listed company
Share capital 551,347,947.00 479,433,003.00 15.00 479,433,003.00 479,433,003.00
2. Main financial indexes (Unit: RMB)
Increase/decrea
se this year
2010 2009 compared with 2008
that last year
(%)
After Before After
adjustment adjustment adjustment
Basic earnings per share
0.1169 -0.2206 -152.99 -0.0936 -0.0936
(RMB/Share)
Diluted earnings per share
0.1169 -0.2206 -152.99 -0.0936 -0.0936
(RMB/Share)
Basic earnings per share
calculated based on latest share 0.1169 -0.1925 -160.73 - -
capital(RMB/Share)
Basic earnings per share after
deducting non-recurring gains -0.0809 -0.2399 -66.28 -0.1265 -0.1265
and losses (RMB/Share)
Weighted average return on
0.00% 0.00% 0.00%
equity (%)
Weighted average return on
equity after deducting
0.00% 0.00% 0.00%
non-recurring gains and losses
(%)
Net cash flow arising from
operating activities per share 0.0118 0.01 18.00 -0.03 -0.03
(RMB/Share)
Increase/decrea
se at the end of
At the end of this year
At the end of 2009 At the end of 2008
2010 compared with
that at the end
of last year (%)
After Before After
adjustment adjustment adjustment
Net asset per share attributable to
shareholders of listed company -3.1853 -3.8817 -17.94 -3.7608 -3.7608
(RMB/Share)
3. There was no different between domestic accounting rules and foreign accounting rules.
Section III. Changes in Share Capital & Particulars about Shareholders
I. Particulars about change in share capital
(I) Change in share capital
Unit: Share
Before the change Increase/decrease of this time (+, - ) After the change
New
Bo
share Capitalizati
Proportio nus Proportio
Amount s on of public Others Subtotal Amount
n sha n
issue reserve
res
d
I. Restricted shares 186,713,192 38.94% 42,672 -30,742 11,930 186,725,122 33.87%
1. State-owned
0 0.00% 0 0.00%
shares
2. State-owned legal
16,340,000 3.41% 0 0 16,340,000 2.96%
person’s shares
3. Other domestic
95,267,002 19.87% 0 0 95,267,002 17.28%
shares
Including: Domestic
non-state-owned 95,267,002 19.87% -6,500,000 -6,500,000 88,767,002 16.10%
legal person’s shares
Domestic natural
0 0.00% 6,500,000 6,500,000 6,500,000 1.18%
person’s shares
4. Foreign shares 75,106,190 15.67% 75,106,190 13.62%
Including: Foreign
75,106,190 15.67% 75,106,190 13.62%
legal person’s shares
Foreign natural
0 0.00% 0 0.00%
person’s shares
5. Senior executives’
0 0.00% 42,672 -30,742 11,930 11,930 0.00%
shares
II. Unrestricted
292,719,811 61.06% 71,872,272 30,742 71,903,014 364,622,825 66.13%
shares
1. RMB Ordinary
76,669,125 15.99% 39,477,101 113,617 39,590,718 116,259,843 21.09%
shares
2. Domestically
215,967,811 45.05% 32,395,171 32,395,171 248,362,982 45.05%
listed foreign shares
3. Overseas listed
0 0.00% 0 0.00%
foreign shares
4. Others 82,875 0.02% -82,875 -82,875 0 0.00%
III. Total shares 479,433,003 100.00% 71,914,944 71,914,944 551,347,947 100.00%
Statement on changes of restricted shares
Unit: Share
Restr
Incre
icted
ased
share
restri
s
Restricted cted Restricted
relea Date for releasing
Name of shareholders shares at share shares at Reason for restriction
sed the restriction
year-begin s in year-end
in
curre
curre
nt
nt
year
year
Shenzhen Guocheng Energy Restriction
Investment Development 27,567,397 0 0 27,567,397 commitment of share 2011-3-17
Co., Ltd. merger reform
Restriction
27,567,397 0 0 27,567,397 commitment of share 2012-3-17
merger reform
Restriction
9,963,618 0 0 9,963,618 commitment of share 2013-3-17
merger reform
Restriction
27,567,397 0 0 27,567,397 commitment of share 2011-3-17
Hong Kong Zhuorun merger reform
Technology Co., Ltd. Restriction
16,536,849 0 0 16,536,849 commitment of share 2012-3-17
merger reform
Restriction
China Bicycle Company
(Holdings) Limited
26,000,000 0 0 26,000,000 commitment of share 2011-3-17
merger reform
Shenzhen Kangsheng Restriction
Investment Development 11,968,590 0 0 11,968,590 commitment of share 2011-3-17
Co., Ltd. merger reform
Restriction
Xinliyi Investment
11,200,000 0 0 11,200,000 commitment of share 2011-3-17
Management Co., Ltd.
merger reform
Restriction
Airline Trust and Investment
10,340,000 0 0 10,340,000 commitment of share 2011-3-17
Co., Ltd.
merger reform
Restriction
China Resources SZITIC
6,000,000 0 0 6,000,000 commitment of share 2011-3-17
Trust Co., Ltd.
merger reform
Restriction
Jingchao Investment Co.,
5,001,944 0 0 5,001,944 commitment of share 2011-3-17
Ltd.
merger reform
Restriction
Qiu Jiguang 3,500,000 0 0 3,500,000 commitment of share 2011-3-17
merger reform
Restriction
Gao Deping 2,700,000 0 0 2,700,000 commitment of share 2011-3-17
merger reform
Guangzhou Hengyong Restriction
Yingfeng Enterprise 500,000 0 0 500,000 commitment of share 2011-3-17
Development Co., Ltd. merger reform
Restriction
Gao Deping 300,000 0 0 300,000 commitment of share 2011-3-17
merger reform
Total 186,713,192 0 0 186,713,192 － －
(II) Issuance and listing of the share:
1. The Company has not issued new shares and derivative securities over the recent three years
ended the report period.
2. The Company issued 5.3 million inner employee’s shares which had been listed totally at the
issuance price of RMB 3.75 per share dated Dec. 28, 1991.
(II) About shareholders at the end of report period
1. Change on share capital in reporting period: the Company transferred capital reserve into
increased share capital and split share structure reform on Mar. 18 of 2010. Share capital increased
by 71,914,944 shares, from previous 479,433,003 shares to current 551,347,947 shares.
2. Ended Dec. 31, 2010, the Company had 35,180 shareholders in total, including 20567
shareholders of A stock and 14613 shareholders of B stock.
(II) Particulars about shares held by the top ten shareholders (Unit: Share)
Amount of Amount of
Amount of
Proport non-circulat shares Nature of
Full name of shareholders shares held
ion (%) ing shares pledged or shareholders
in year-end
held frozen
Domestic
Shenzhen Guocheng Energy Investment
65,098,412 11.81 65,098,412 0 non-state-owned
Development Co., Ltd.
legal person
Hong Kong Zhuorun Technology Co., Foreign legal
44,104,246 8.00 44,104,246 30,000,000
Ltd. person
China Bicycle Company (Holdings) Foreign legal
26,000,000 4.72 26,000,000 26,000,000
Limited person
Domestic
Shenzhen Kangsheng Investment
11,968,590 2.17 11,968,590 0 non-state-owned
Development Co., Ltd.
legal person
Domestic
Xinliyi Investment Management Co.,
11,200,000 2.03 11,200,000 0 non-state-owned
Ltd.
legal person
State-owned
Airline Trust and Investment Co., Ltd. 10,340,000 1.88 10,340,000 0
legal person
GUOTAI JUNAN Foreign legal
7,676,911 1.39 0 0
SECURITIES(HONGKONG) LIMITED person
State-owned
China Resources SZITIC Trust Co., Ltd. 6,000,000 1.09 6,000,000 0
legal person
Foreign legal
Jingchao Investment Co., Ltd. 5,001,944 0.91 5,001,944 0
person
Foreign legal
BOCI SECURITIES LIMITED 4,569,196 0.83 0 0
person
Note: Among the top ten shareholders 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; among the
other circulating shareholders, 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) Introduction of the controlling shareholder or actual controller of the Company
1. The controlling shareholder and the actual controller of the Company remained unchanged in the
report period.
2. Introduction of the controlling shareholder or actual controller of the Company
(1) Introduction to controlling shareholders: Shenzhen Guocheng Energy Investment Development
Co., Ltd.
Address: 501C Pacific Commercial Town of New Asia, No. 8 Zhonghang Road, Futian District,
Shenzhen; Legal representative: Shang Shijun; Registration capital: RMB 70 million; Operation
scope: Establishing industry (additional application for specific items); domestic commerce,
industry of supply and distribution of materials (excluded commodities which were monopolized,
under special control and sold exclusively).
The controlling shareholder of Shenzhen Guocheng Energy Investment Development Co., Ltd was
Shenzhen Guomin Investment Development Co., Ltd with holding 100% shares.
(2) Introduction to actual controller: Shenzhen Guomin Investment Development Co., Ltd.
Controlling shareholder: Zhang Yanfen with holding 44% shares, Ji Hanfei with holding 20% shares,
Huang Yinquan with holding 36% shares.
Address: Pacific Commercial Town of New Asia, Junction between Zhenzhong Road and
Zhonghang Road, Futian District, Shenzhen; Legal representative: Zhang Yanfen; Registration
capital: RMB 250 million; Operation scope: Establishing industry (additional application for
specific items); domestic commerce, industry of supply and distribution of materials (excluded
commodities which were monopolized, under special control and sold exclusively); supply and
distribution of automobiles (excluded cars); and open and manage E-Town of New Asia. Main
business: Commerce, operation and management of real-estate, and industry investment.
3. The property relationship between the actual controller and the Company was as follows:
Z h a n g Ya n f e n Ji Hanfei Huang Yinquan
44% 20% 36%
100%
Shenzhen Guomin Investment Development Co., Ltd.
100%
Shenzhen Guocheng Energy Investment Development Co., Ltd.
11.81%
Shenzhen China Bicycle Company (Holding) Limited
(IV) The top ten circulating shareholders of the Company.
Amount of
circulating
Name of shareholders shares held Types
shareholders
(share)
Domestically listed
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 7,676,911
foreign shares
Domestically listed
BOCI SECURITIES LIMITED 4,569,196
foreign shares
Domestically listed
TANG JING YUAN 2,213,175
foreign shares
Domestically listed
Shifu Securities Co., Ltd 2,199,990
foreign shares
Domestically listed
Zhang Huiling 2,036,165
foreign shares
Domestically listed
Lin Shaowei 2,018,600
foreign shares
Domestically listed
Zeng Yin 1,791,552
foreign shares
Domestically listed
Gao Lingyun 1,567,800
foreign shares
Domestically listed
Xu Wanqi 1,478,787
foreign shares
Domestically listed
Li Jinling 1,453,062
foreign shares
Section IV. Particulars about Directors, Supervisors, Senior Executives &
Employees
I. Directors, supervisors and senior executives
1. Basis information:
Shares Shares
Reason
Begin date of office End date of office held at held at
Name Title Sex Age for
term term year-be year
change
gin -end
Chairman
Luo
of the Male 48 2010-8-26 2013-8-25 0 0
Guiyou
board
Yang
Director Male 54 2010-8-26 2013-8-25 0 0 -
Fenbo
Director,
Li Hai Male 42 2010-8-26 2013-8-25 0 0
President
Director,
Zhang
financial Male 44 2010-8-26 2013-8-25 0 0 -
Zebing
controller
Yao Director,
Zhengwa Secretary Male 36 2010-8-26 2013-8-25 0 0
ng of the
board
Fema
Kong Na Director 35 2010-8-26 2013-8-25 0 0 -
le
Cao Fang Director Male 37 2010-8-26 2013-8-25 0 0 -
Zhang Independen Fema
43 2010-8-26 2013-8-25 0 0 -
Xinmiao t director le
Independen
Cui Jun Male 47 2010-8-26 2013-8-25 0 0 -
t director
Independen Fema
Li Bing 36 2010-8-26 2013-8-25 0 0 -
t director le
Chen Independen
Male 43 2010-8-26 2013-8-25 0 0 -
Shujun t director
Convener
Xiao Yan of board of Male 43 2010-8-26 2011-06-26 0 0 -
supervisors
Lan
Supervisor Male 61 2008-06-27 2011-06-26 0 0 -
Qihua
Zheng
Zhonghua Supervisor Male 49 2008-06-27 2011-06-26 10,500 11,930 -
n
Vice
Xia Bofu Male 40 2010-10-26 2013-10-25 0 0 -
President
Chairman
Wu Jun of the Male 54 2009-08-13 2010-03-31 0 0 -
board
Chairman
Li Gang of the Male 52 2010-03-31 2010-08-26 0 0 -
board
Independen
Li Chun Male 54 2007-07-31 2010-03-31 0 0 -
t director
Shao Independen
Male 47 2007-07-31 2010-08-26 0 0 -
Liangzhi t director
Wei Independen
Male 40 2007-07-31 2010-05-31 0 0 -
Chuanyi t director
Jiang General
Male 42 2007-07-31 2010-08-26 0 0 -
Houjin manager
Wang Financial
Male 39 2009-08-13 2010-08-26 0 0 -
Cheng controller
Total - - - - - 10,500 11,930 -
Note: In the report period, the on-job supervisor Zheng Zhonghuan holds 10,500 A-shares of the
Company by purchasing from the secondary market. Reason for change was that: in 2010 the
Company implemented shares reform and lifting of restriction on sales, and there was no share of
the Company held by other directors, supervisors, and senior executives in the report period.
2. Particulars about directors or supervisors holding the position in Shareholding Company
Title in
Shareholdi
Name Name of Shareholding Company Office term
ng
Company
Administration Center of Shenzhen National Vice From Apr. of 2010
Xiao
People Investment Co., Ltd General till now
Yan
Manager
3. Main work experiences of directors, supervisors and senior executives
Mr. Luo Guiyou, born in 1963, graduated from Fudan University as a bachelor majoring in history.
Once he took posts of clerk and deputy director of Social Science Academy, office director as well
as manager of personnel department and manager of training department in Ping’an Life Insurance
Guangxi Branch. And he took charge of District Manager, manager of marketing department and
associate of general manager of the 3rd business district of Ping’an Life Insurance Guangxi Branch,
as well as deputy general manager of Ping’an Life Insurance Hainan Branch. Since Mar. of 2007, he
worked in Life Insurance Holding Co., Ltd, and successively took posts of general manager of
headquarter of personal insurance business, temporary committee of operation and management
commission, associate of general manager of headquarter and committee of marketing management
commission. From Mar. of 2010 to Oct. of 2010, he was committee of marketing management
commission in planning team in Guangdong Branch of Life Insurance Holding Co., Ltd and charger
of planning team of Guangdong Branch; now he takes charge of chairman of directors and legal
representative of the Company.
Mr. Yang Fenbo, born in 1957, China senior economist with master degree of MBA and engineer,
held the position of minister of development department, concurrently minister of science and
technology department, assistant general manager, assistant to chairman, deputy chief engineer and
chief engineer at Shenzhen Lionda Group; took the chairman and concurrently general manager of
Guangdong Sunrise Holding Co., Ltd.; now, he is the chairman of Shenzhen Liona Group Co., Ltd.
Mr. Li Hai, born in 1969, graduated from Economic department of Shenzhen University in major of
accounting; he took the turns of deputy manager of finance department, chief supervisor associate
of finance department, secretary of the Board and vice president, etc. of the Company, and now is in
charge of director and vice president of the Company.
Mr. Yao Zhengwang, born in 1975, with bachelor degree of law, successively took the post of
Supervisor of Supervision Office, Deputy Manager of Sales Department, and Deputy Manager of
Legal Affairs Department of Shenzhen Guomin Investment Development Co. Ltd. and deputy
general manager of Administration Center of Compliant Wind Sensor Control. Now he is in charge
of director and secretary of the board of the Company.
Mr. Zhang Zebing, born in 1966, master of economy major, non-professional membership of China
Certified Accountants Association and accountant. He once taught in school of supply and sales
Jiangsu Xuzhou, and took posts of deputy director of accounting and finance department of South
Oil Group and settlement center of accounting and finance department in headquarter of China
Ping’an Insurance Company, ministry of finance department in Shenzhen Changyuan New Material
Co., Ltd, manager of accounting and finance department in Xinhua Life Insurance Company Branch
and senior manager of accounting and finance department in Hua’an Property Insurance Company.
Since Aug. of 2004, he acted as charger of finance department of planning team in Xinhua
Insurance Holding Company, associate of general manager of finance department in Sunshine
Insurance Group Company, general manager of Audit & Supervision Department in Life Insurance
Holding Co., Ltd. and now he is director and financial controller of the Company.
Mr. Cao Fang, born in 1974, master degree. Once he was teacher and party branch secretary of
education group of Hunan Changsha Changjun middle school, manager of team training of Ping’an
Life Insurance in Hunan and business department, item manager of reform and development center
of Ping’an Insurance Group, associate of Manager of marketing and supervision department of
Ping’an Life Insurance in Hunan and associate of general manager of Ping’an Life Insurance branch
in Guilin Center. Since May of 2007, he took post of item manager of marketing and management
department in headquarter of Life Insurance, associate of general manager of marketing and
management headquarter as well as general manager of market and business department. From Mar.
of 2010 to Oct. of 2010, he acted as member of planning team of Life Insurance Branch in
Guangdong. And now he takes charge in strategy and development center as well as item
arrangement in Life Insurance.
Ms. Kongna, born in 1976, master degree. She once acted as manager of business department in
China Life Insurance Company Branch in Shenyang, general manager of Liaoning Ruifude
Insurance Holding Co., Ltd and associates of general manager respectively of planning team and
management department of motor insurance in Yong’an Property Insurance Holding Co., Ltd.
From Sep. of 2005 to Apr. of 2010, he took post of Assistant Chief Executive in Ruifude Health
Insurance Holding Co., Ltd. From Apr. of 2010 till now, he is in charge of associate of president in
Yingkong Holding Co., Ltd.
Ms. Zhang Xinmiao, born in 1968, with bachelor degree, successively engaged legal affairs in the
First Engineering Bureau of Water Resources & Electric Power Department, Shenzhen Jinhu Law
Firm, and Guangdong Guanghe Law Firm. She obtained certification of lawyer issued by Ministry
of Justice of People’s Republic of China in 1994. From 1999 till 2008, she took the post of
partnership lawyer of Guangdong Chuangji Law Firm, and from 2008 till now, he has been the
lawyer of Guangdong Shenzhen Jinniu Certified Public Accountants Co., Ltd.
Mr. Cui Jun, born in1964, party member of CPC, doctor of engineering, master of law and a
first-grade lawyer. Once he took posts of director of the 5th session of nationwide lawyers
association, director of the 8th session of Guangdong lawyer association, vice president of the 5th
and the 6th session of Shenzhen lawyers association, committee of international business
commission of nationwide lawyers association, deputy director of law business of intellectual
property commission of Guangdong lawyers association and director of civil law business
commission of Guangdong lawyers association. And now he is director of Guangdong Xingchen
Law Firm, member of the CPPCC Shenzhen Committee, director of the 9th session of Guangdong
lawyers association, director of culture construction committee of Guangdong lawyers association,
committee of law business of intellectual property commission of nationwide lawyers association,
executive vice president of Shenzhen Patent Commission, vice president of Shenzhen promotion
commission of creative design and intellectual property, mediation expert of mediation center of
China International economy and trade arbitration commission branch in south China and arbitrator
of Shenzhen arbitration commission.
Mr. Chen Shujun, born in1968, master of the Chinese University of Hong Kong, majoring in
business administration of finance. And he is senior accountant, China Certified Accountant,
Chinese Certified Tax Agent, judicial authenticator and the first batch of senior member of
Shenzhen accountant institute. He once took post of auditor and manager of Guangzhou CPAs.
From 1998 till now he acted as executive partner of Shenzhen Guangzhou-Shenzhen CPAs, legal
representative of Guangdong Guangzhou-Shenzhen Justice and Accounting judgment institution.
And now he is in charge of director of Guangdong Certified Accountants Association and expert of
purchase center of Shenzhen Government.
Ms. Li Bing, born in 1975, bachelor of law major and lawyer. From Jul. of 1998 to Jan. of 2002 she
taught in Guizhou University; from Jan. of 2002 to Jan. of 2006 she acted as lawyer in Guangdong
Yunsheng Law Firm; from Jan. of 2006 till now, she had been in charge of lawyer of Beijing
Deheng Law Firm Branch in Shenzhen.
Mr. Su Yan, born in Sep. of 1968, bachelor of Hunan finance Academy, majoring in Economy. He
once held an office in China Agriculture Bank Branch in Hunan Yiyang, marketing and
management, human resource management, supervision and audit and group training in China
Ping’an Life Insurance Company Branch in Guangxi, as well as manager of Business department.
And he took posts of general manager in Xinhua Life Insurance Branch in Guangxi and Liuzhou
center of branch, manager of personnel in branch and general manager in branch of Yulin center. He
took charge in manager of advanced office of planning and supervision in marketing management
department in Life Insurance headquarter, and associate of general manager in Life Insurance
Branch in Henan. From Apr. of 2010 till now, he acted as deputy general manager of business
management department in Shenzhen Nation People Investment and Development Co., Ltd.
Mr. Lan Qihua, graduated from three-years regular college, has ever worked in the army, and taken
the post of director; successively took the post of Deputy Director of Supervision Office, Director
of Party Office and concurrent Secretary of Party Committee of Lionda Group Corporation, General
Manager and concurrent Secretary of Party Branch of Shenzhen Papermaking Company. He
successively took posts of supervisor and Chairman of the Trade Union of the Company; and now
he is supervisor of the Company.
Mr. Zheng Zhonghuan, engineer with bachelor degree, successively took the post in Shenzhen
Light Texile Industry Company and Shenzhen Light Industry Company; since Oct. 1985, entered
Shenzhen China Bicycle (Group) Holdings Co. Ltd. and successively took the post of Deputy
Manager, Manager of Planning Department and Manager of Material Department; now is director
and Manager of Manufacture Department of the Company.
Mr. Xia Bofu, graduated from the Central Party School with bachelor degree of law. He
successively took the post of Manager of Business Department of Shenzhen Jiabeinianhua Industry
Co. Ltd., Office Director of Shenzhen Lionda Technology Co. Ltd. and Chairman of the Board of
Shenzhen Taiyang PCCP Co. Ltd. Since Oct. 2007, he has taken the post of Vice Present of the
Company.
II. Particulars about the annual salary of directors, supervisors and senior executives
Referring to the standard of the same industry and local salary situation, the Company decided the
annual salary of the above personnel integrated the operating achievements of the Company. The
total annual remunerations of present directors, supervisors and senior executives received from the
Company were RMB 3,437,700 in 2010.
1. The Company has 4 independent directors and paid the allowance of independent director of
RMB 40,000 respectively. The Company reimbursed the expenses for business trips according to
the actual situation, which independent directors attended the Board meeting and shareholders’
general meeting.
2. Particulars about the annual salary of directors, supervisors and senior executives
Order Name Total annual remuneration
(RMB ‘0000)
1 Li Hai 74.87
2 Xia Bofu 69.15
3 Yao Zhengwang 18.56
4 Zhang Zebing 18.56
5 Zhang Miaomiao 8.00
6 Cui Jun 4.00
7 Li Bing 4.00
8 Chen Shuhua 4.00
9 Lan Qihua 15.64
10 Zheng Zhonghuan 12.86
3. Remuneration of 3 independent directors and 2 directors who leaved their posts in reporting
period:
Order Name Total annual remuneration
(RMB ‘0000)
1 Li Chun 4.00
2 Shao Liangzhi 4.00
3 Wei Chuanyi 4.00
4 Jiang Houjin 52.04
5 Wang Cheng 50.09
III. Particulars about post-leaving and engaged directors, supervisors and senior managerial
personnel:
1. Particulars about post-leaving of directors, supervisors and senior managerial personnel:
Name Original duty Reason for
post-leaving
Li Chun Independent director Resignation
Shao Liangzhi Independent director Resignation
Wei Chuanyi Independent director Resignation
Wu Jun Chairman of the boards Resignation
Li Gang Chairman of the boards Resignation
Yao Zhengwang Convener of the board of supervisors Resignation
Jiang Houjin Director, President Resignation
Wang Cheng Director, Financial Controller Resignation
Li Hai Vice President, Secretary of the Boards Resignation
2. Particulars about engagement of directors, supervisors and senior managerial personnel
(1) Mr. Ligang and Mr. cui Jun were respectively elected to be director and independent director of
the 7th session of board of directors with tenure contemporaneous with this term of the boards at the
2nd extraordinary shareholders’ general meeting held on Mar. 31 of 2010. The 19th meeting of the 7th
session of board of directors elected Mr. Ligang to be new chairman of the 7th session of board of
directors held at the same time.
(2) Ms. Kong Na and Ms. Li Bing were elected to be director and independent director of the 7th
session of board of directors with tenure contemporaneous with this term of the boards at the 19th
meeting (2009 annual) shareholders general meeting held on May 31 of 2010.
(3) Mr. Su Yan was elected to be supervisor of the 6th session of the board of supervisors with tenure
contemporaneous with the term of the board of supervisors at 2010 the 3rd extraordinary
shareholders’ general meeting held on Aug. 26 of 2010. The board of directors was changed at the
end of its office term. And the members of the 8th session of the board of directors were elected with
3 years of office term.
(4) X was elected to be the new convener of the 6th session of the board of supervisors at the 8th
meeting of the 6th session of the board of directors held on Aug. 26 of 2010.
(5) Mr. Li Hai and Mr. Zhang Zebing were respectively elected to be president and financial
controller of the Company with 3 years of office term at the 1st meeting of the 8th session of the
board of directors held on Aug. 26 of 2010. And Mr. Yao Zhengwang was appointed to be duty
agent for secretary of the boards with 3 years of office term.
(6) Mr. Xia Bofu was elected to be vice president of the Company at the 3rd meeting of the 8th
session of the boards held on Oct. 26 of 2010 with 3 years of office term.
(7) Mr. Yao Zhengwang was elected to be the secretary of the 8th session of the board of directors at
the 4th meeting (interim) of the 8th session of the board of directors held on Jan. 13 of 2011 with the
same office term with the 8th session of the boards.
IV. About staff
1. The Company has totally 84 employees at present, including:
(1) Classified according to professional/occupational composition: 24 production personnel; 12
salespersons; 16 technicians; 11 financial personnel and 21 administrative personnel.
(2) Classified according to the educational background: master degree or above: 2 persons of
Master degree, 22 persons of bachelor degree; 20 persons of junior college graduates. Proportion of
the personnel with education background of junior college or above in the whole staff: 23.8%.
2. The Company did not need to bear the expenses of retirees.
Section V. Corporate Governance Structure
I. Corporate Governance
During the report period, the Company strictly compared its actual conditions with regulations of
Company Law, Securities Law, and Code of Corporate Governance for Listed Companies and
relevant laws and rules and regulatory documents, constantly perfected its legal person
administration structure and strived to establish modern enterprise system. Convening, holding and
operating of shareholders’ general meetings, Board meetings and meetings of Supervisory
Committee were all in strict accordance with relevant regulations of Articles of Association, etc.,
safeguarding the integrated interest of the Company. Realities of legal person administration
structure were in line with provisions of regulatory documents with respect to administration of
listed companies issued by CSRC.
(I) Establishment of Internal Control System
In reporting period, the Company complied with the spirit of the Notice to Implementing Special
Activities for Basic Work of Normalized Financial Accounting Comprehensively and Deeply in
Listed Companies of Shenzhen, combined the Notice to Self-Check on Establishment and
Implementation of Long-term Mechanism for Preventing Capital Occupation, self-checked
construction of internal control of the Company, and comprehensively carded various systems. We
revised the articles of association such as internal control system, made special rules on preventing
large shareholders from capital occupation; restrained behaviors that controlling shareholders make
use of related transaction to hurt interests of the Company thus secured independence of the
Company. The Company built the Special System That Shenzhen China Bicycle (Group) Co., Ltd
Prevents Controlling Shareholders and Related Parties from Capital Occupation and revised internal
control system, enhanced audit of financial activities and rules for expenses write-off, monetary
capital and notes management, thus further constructed and perfected long-term mechanism for
capital occupation prevention.
(II) Implementation of special administration campaign during the report period
In reporting period, the Company actively conducted special activities for basic work of financial
accounting in accordance with the Notice to Special Activities for Basic Work of Normalizing
Financial Accounting Comprehensively and Deeply in Listed Companies of Shenzhen. We carefully
took motivation, self-check and rectification on basic normalization of financial accounting. On Apr.
20, the Company formulated the specific Working Norms for special activities. In accordance with
the Report of Usual Problems in Basic Work of Financial Accounting of Listed Companies in
Shenzhen, we took self-check on management and implementation of accounting personnel and
whether problems existed in formulation and implementation of financial accounting administration,
existed in usage and management of financial information system, existed in aspect of
normalization of basic work of accounting. According to significant changes on external
environment and business situation of the Company we found in current financial accounting
management, the Company revised relevant terms of administration system of financial accounting
such as the Rules for Financial Activities Audit and Expenses Write-off, the Monetary Capital and
Notes Management System, the Position System of Financial Personnel, the System for Compiling
of Main Accounting Policy, Accounting Estimation and Financial Report, the Administration
System of Loan Guarantee, the Accounting Computerization Management, Administration Norms
for Accounting Files, Administration System of Property Analysis and the Interim Measures for
Budget Management. Aimed at problems found during self-check, the Company carefully revised
the above in accordance with requirements of supervision department, submitted the Rectification
Report.
Owing to this time of special activity, the basic work of financial accounting was further improved.
Knowledge on corporate internal control was boosted thus promoted further healthy and stable
development of corporate business.
(III) In reporting period, the Company never offered non-public information for large shareholders
and actual controllers. And no other non-standard governance showed either.
II. Particulars about duty performance of independent directors
In the report period, independent directors of the Company could all earnestly take their
responsibility, actively took part in work of special committees of the board of directors, meeting of
the board of directors and general shareholders’ meeting, and expressed independent opinions on
significant events. In special governance campaign and spot inspection of Shenzhen Securities
Regulatory Bureau, they also made independent and objective judgment with their professional
knowledge, and made active contribution for the development of the Company.
In 2009, particulars about independent directors attending the Board Meeting are as follows:
Attending the
Due Presenc Absen
meeting in way Entruste
Name of the Presenc e in ce
Positions of d
directors e person (times
communication presence
(times) (times) )
(times)
Independent
Li Chun 2 1 1 0 0
director
Independent
Shao Liangzhi 8 3 3 2 0
director
Independent
Zhang Xinmiao 11 6 4 1 0
director
Independent
Wei Chuanyi 7 4 3 0 0
director
Independent
Cui Jun 9 5 3 1 0
director
Independent
Li Bing 4 3 1 0 0
director
Independent
Chen Shujun 3 2 1 0 0
director
In the report period, independent directors of the Company had no different opinions on various
proposals approved by the Board of Directors of the Company or other significant events.
III. Separation from the Controlling Company in respect of Business, Personnel, Organization
and Finance etc.
The Company totally separated its Business, Personnel, Organization and Finance etc. with majority
shareholders and related parties, and had independent and complete operation ability.
IV. Establishment and perfection of internal control system
According to regulations of Basic Standard for Enterprise Internal Control issued by Ministry of
Finance and Shenzhen Stock Exchange and Guidelines for the Internal Control of Listed Companies
issued by Shenzhen Stock Exchange, the Company established Self-estimation Report of Internal
Control of the Company (2010) (Details could be found in Juchao Website.)
Independent directors expressed opinions on Self-estimation Report of Internal Control of the
Company as follows: in 2010, according to the requirements of Guidelines for the Internal Control
of Listed Companies issued by Shenzhen Stock Exchange,, combined with problems found in
special governance campaign by CSRC, the company timely revised and perfected internal control
system, and made a total reform of the problems found in inspection and self-inspection. The
self-estimation report of internal control could truly, objectively and integrally reflect the
implementation and effect of internal control system.
The supervisory committee expressed opinions on Self-estimation Report of Internal Control of the
Company as follows: according to relevant regulations of CSRC and Shenzhen Stock Exchange,
following basic principle of internal control, combined with self actual conditions, the Company
constantly established and perfected internal control system, ensured the normal operation of the
Company, and safeguarded the assets’ safety and integrality. In 2010, there was no behavior
violating Guidelines for the Internal Control of Listed Companies. The self-estimation of internal
control comprehensively, truly and exactly reflected the actual conditions of internal control of the
Company.
V. Establishment and Implementation of Performance Evaluation and Encouragement
Mechanism and Relevant Rewarding System for Senior Executives
The Company firstly has established open and transparent performance evaluation criteria and
encouragement and restriction mechanism for directors, supervisors and managers. The engagement
of the managers conformed to the regulations of laws with openness and transparency.
Section VI. Brief Introduction to the Shareholders’ General Meeting
In the report period, the Company held Annual Shareholders’ General Meeting and two
Extraordinary Shareholders’ General Meeting. Basic information is as follows:
1. On Feb. 5 of 2010, the Company held 2010 the 1st extraordinary shareholders’ general meeting
which was published at the day on disclosure press the Company appointed.
2. On Mar. 31 of 2010, the Company held 2010 the 2nd extraordinary shareholders’ general meeting
which was published at the day on disclosure press the Company appointed.
3. On May 31 of 2010, the Company held the 19th (2009 annual) shareholders’ general meeting
which was published at the day on disclosure press the Company appointed.
4. On Aug. 26 of 2010, the Company held 2010 the 3rd extraordinary shareholders’ general meeting
which was published at the day on disclosure press the Company appointed.
5. On Oct. 8 of 2010, the Company held 2010 the 4th extraordinary shareholders’ general meeting
which was published at the day on disclosure press the Company appointed.
Section VII. Report of the Board of Directors
I. Discussion and analysis of whole operation in the report period
1. Overall operation of main business in the report period
As for domestic and global economic environment, 2010 was the most complicated year. Global
financial crisis didn’t die away. Competition in market of bicycle and electric bicycles became more
intensified. Burden of historic left debt was heavy for the Company. What’s more, the lawsuits
came constantly. Faced with such a situation, under leadership of operators and guidance of correct
decisions made by the board of directors, all the staffs actively promoted main business of electric
bicycle and bicycle, regulated operation institution, integrated human resource, dealt with lawsuit,
boost debts restructure and progress of reform of the shareholder structure. In reporting period,
basically the Company completed production and operation target the board of directors required,
accomplished implementation of reform of shareholders structure. The A stock of the Company got
resumption of trading on Mar. 18 of 2010. The Company and Shenzhen Chengxingtai Investment
Co., Ltd became reconciled, thus the Company obtained reconcile earnings and turned loss into
profit in 2010. From Jan. to Dec. of 2010, the Company realized operating income RMB 299.0273
million in whole year and net profit RMB 64.4774 million.
(1) Main business of electric vehicle and bicycle. In 2010, in order to suit the change of market
environment, the Company promoted propagandism of big brand and products in main operated
business thus improved brand influence; regulated operation strategy and actively explored new
market; combined actual market situation in eastern China and actively promoted new operation
mode; conducted R&D combining market and vigorously promoted release of new products;
strengthened quality management of products and after-service, boost service awareness and
operation strategy, thus kept stable development of business of bicycle and electric bicycle. RMB
271.7271 million was achieved in business of bicycle in the whole year.
(2) Property lease and property management business. We fully used current inventory property,
applied varieties of means for enlarging lease areas, completed lease of plants and open ground,
increased lease income, improved cash flow and economic earnings of the Company, realized RMB
2.273 million of property management revenue and RMB 25.0272 million of other business income.
At the same time, we enhanced business of property management, conducted normalization of safe
management of lease business, organized safety training on renters and sent safety propaganda
materials, and got no accidents in whole year.
2. Analysis on main business and operation of the Company
The Company is mainly engaged in the production and sales of bicycles, electric bicycles and
accessories and fittings. In the report period, the Company realized revenue from main operation
amounting to RMB 274,000,100, and profit from main operation amounting to RMB 10,127,000.
(1) Statement of main operations classified according to products
Unit: RMB’0000
Main operations classified according to industries
Increase/d
Increase/dec Increase/dec
ecrease in
Classified rease in rease in
Operating operating
according to Operating Operating operating operating
profit ratio profit
industries or income cost income over cost over
(%) ratio over
products last year last year
last year
(%) (%)
(%)
Bicycles
manufacture and 27172.71 26005.78 4.29 9.41 10.14 -12.82
sales of
accessories and
fittings
Lease Management 227.30 381.53 -67.85 5.36 12.05 17.32
Main operations classified according to products
Electric vehicle 22173.43 21277.42 4.04 10.68 11.93 -21.09
Bicycles 4901.75 4624.39 5.66 2.48 0.85 36.67
Lease Management 227.30 381.53 -67.85 5.36 12.05 17.32
(2)Particulars about main operations classified according to areas
Unit: RMB’0000
Increase/decrease in
Areas Operating income operating income over last
year (%)
Shandong 9999.36 33.44
Henan 5427.77 18.15
Jiangsu 3986.94 13.33
Hebei 2544.19 8.51
Sichuan 547.46 1.83
(3)Major suppliers and customers
In the report period, the purchasing amount of top five suppliers amounted to RMB 236,243,700,
taking 92.2% of annual purchasing amount; the sales amount to top five suppliers amounted to
RMB 225,057,300, taking 75.26% of annual sales amount.
3. Change on formation of asset and expenses of the Company in the report period.
Unit: RMB
2010 2009 Increase/ decrease
Proportion Proportion ratio in proportion
Amount in total Amount in total in total asset (%)
asset（%） asset（%）
Monetary fund 17756773.58 12.85 22,232,425.07 13.10% -1.90
Account 1732822.98 1.25 413,823.13 0.24%
receivable 414.32
Inventory 21692678.29 15.70 32,564,369.59 19.19% -18.18
Long-term equity 2619840.50 1.90 2,619,840.50 1.54%
investment 22.83
Net values of 21547992.74 15.60 23,932,824.06 14.10%
fixed asset 10.59
384217648.09 2780.96 395,326,572.8 232.96%
Short-term loan
2 1093.74
Long-term loans 706645180.86 511.48 870,518,082.1 512.99% -0.29
due within one 4
year
2010 2009 Increase/decrease
(%)
Operating expense 7394867.85 6,481,033.36 14.10
Administrative 23792819.05 25,405,353.86 -6.35
expense
Financial expense 64515016.00 93,466,133.09 -30.97
Income tax 0 0.00 0.00
Note:
(1) Operating expenses of this period increased by 14.1% compared to the same period of last year,
mainly due to that operating income increased thus operating expenses increased correspondingly.
(2) Financial expense of this period decreased by 30.97% compared to the same period of last year
mainly due to that the first half year obvious RMB appreciation led to large foreign exchange gains,
and free of interest of Zhengda Guoli as well as debt composition of Chengxingtai.
4. Changes on cash flow of the Company
Increase/de
Increase/decrea crease
Items 2010 2009
se amount proportion
(%)
Net cash flow arising from
6,495,860.32 3,920,586.97 2,575,273.35 65.69
operating activities
Net cash flow arising from
-3,471,511.81 8,225,238.57 -11,696,750.38 -142.21
investing activities
Net cash flow arising from
-7,500,000.00 --- -7,500,000.00 ---
financing activities
Note:
(1) Net cash flow arising from operating activities of this period increased RMB 2575300 compared
to the same period of last year mainly due to that operation account drawn in the report period
increased about RMB 2.5753 million in the report period.
(2) Net cash flow arising from investing activities of this period decreased RMB 11696800
compared to the same period of last year mainly due to the difference between the RMB 8 million
of investment project disposal account on Jiangxi Lihua which was taken back and the RMB 3.4
million paid for purchasing electricity equipments from China Industry Park in the report period.
(3) Net amount of cash flow arising from financing activities in this reporting period decreased
RMB 7.5 million, mainly due to that we paid RMB 14 million reconcile account for debts and loan
RMB 6.5 million to subsidiary Amini.
5. The operation and analysis to the operation and achievements of the main holding company
and shareholding companies of the Company
(1) Shenzhen Emmelle Industry Co., Ltd.: Its registered capital is RMB 2 million, with its main
business scope in establishing industry. The asset scale of the Company at year-end of 2010
amounted to RMB 2, 9354300 and the net profit in 2010 amounted to RMB-1281900.
(2) Shenzhen Anjule Property Management Co., Ltd.: Its registered capital is RMB 2 million, with
its main business scope in property management. The asset scale of the Company at year-end of
2010 amounted to RMB 2331100 and the net profit in 2010 amounted to RMB -2012300.
(3) China Bicycles (Hong Kong) Co., Ltd.: Its registered capital is HKD 5 million and its place of
registration is Hong Kong, with its main business scope in bicycle trading. The Company hasn’t any
trading business in recent years.
II. Prospect for the future development of the Company
1. The development trend in the industry of the Company and the market competitive pattern the
Company faces
The Company set foot in industry of electric bicycle since 2002. In 2007, the competition in
industry of electric bicycle and bicycle present more fury, while the uncertainty brought by the new
standard for industry of electric bicycle and the releasing time brings negative influence to sale of
electric bicycle. The industry starts to walk into the step of standardized riffle. At the same time, the
lasting sharp rise in prices for raw material results in rise in cost for manufacture and use electric
bicycle. Particularly the sharp price rise in consume fittings such as battery seriously affect the
market demand trend, even the develop potential of the whole industry of electric bicycle.
2. The challenges for future and operation plan of the Company for the next year
(1) Continuously actively coordinate shareholders and the board of directors to vigorously conduct
debts restructure, strive a substantive improvement of debts restructure of Shenzhonghua;
(2) Complete establishment of internal control system, improve operation efficiency and
performance;
(3) Ensure stable growth in main business, strengthen property lease and assets management, thus
improve overall operation earnings of the Company;
(4) Integrate human resources, realize rationalization and optimization of human resource grouping.
3. The unfavorable risk factors for the development of the Company
(1) The global financial crisis fiercely clashed domestic consumption market; lots of export-based
manufacturing enterprises of the Company transferred to domestic market, bicycle and electric
vehicle market took price as main competition method. All these factors led a complicated market
environment.
(2) Huge debt approximately approaching to RMB 2 billion is still the biggest problem for the
Company. Due to that the debts have been made for a long time, situation is complicated, and
creditors are various, it is rather difficult to deal with the debts.
Faced with the aforesaid problems, on one hand, the Company tries to expand its products sales,
especially in the production and sales of electric bicycles with high additional values; on the other
hand, the Company actively promotes the integrated restructuring of the Company, including the
debts restructuring.
III. Investment of the Company
During the report period, the Company has not raised proceeds and significant investment.
IV. Auditor’s opinion and accounting policy
1. Auditor’s opinion offered by Shenzhen Pengcheng Certified Public Accountants Co., Ltd.:
Shenzhen Pengcheng Certified Public Accountants Co., Ltd. offered 2010 Financial Report with the
disclaimer of opinion.
2. Explanations of the Board of Directors about 2010 Financial Report of the Company with the
disclaimer of opinions issued by Shenzhen Pengcheng Certified Public Accountants Co., Ltd.:
The Board of Directors agreed the 2010 Auditor’s Report offered by Shenzhen Pengcheng Certified
Public Accountants Co., Ltd. Due to that the debt restructuring work of the Company had not been
completely finished in 2010, 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.
In light of that, the Board of the Company made the following explanations:
i. 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 324,879,558.04,
and some letters were replied without confirmation on interest for the principal of loans totaling to
RMB 111,584,308.44. So it was not available to confirm influence on financial statement by
financial debt.
The Company provided explanation in Note 10 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 11 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 of
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. The company began to accrued interest till the interest-ceasing period
ended.
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.
ii. 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 119,902,328.56. Until the audit
report day, no reply has been received, so it was impossible for us 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, 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.
iii. 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.
iv. Matters on sustainable operations
Shenzhen Pengcheng Certified Public Accountants thought that, the Company’ asset could
seriously not offset the debt; 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 2010 prepared by the Company based on imagined continuous
operations was proper. Thus the Company and its largest creditor took the following measurements:
Since March 2003, the promotion on debt restructuring by the former largest creditor of the
Company-China Huarong Asset Management Corporation acquired a certain development, China
Banking Regulatory Commission and relevant departments approved to exempt and stop all the
interests of the financial debts the Company owed ended Dec.31, 2004.
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.
On Oct. 15 of 2010, the Company signed the Debts Reconcile Term with Shenzhen Chengxingtai
Investment Co., Ltd which agreed the Company should pay the compensation to Chengxingtai
Company with RMB 14 million thus settled up all the creditor’s right and debts (about RMB 150
million). The above RMB 14 million has been settled up on Nov. 30 of 2010 totally.
On Dec. 30, 2006, China Huarong Asset Management Corporation transferred its creditor right to
Shenzhen Guocheng Energy Investment Development Co., Ltd (hereinafter Guocheng Energy
Company for short). Guocheng Energy Company now was actively promoting the restructuring
works on relevant debts and got certain development. Regarding the largest shareholder and creditor
had changed and new bankruptcy law was conducted, in Jan of 2010 Guocheng Energy Company
applied to Shenzhen Intermediate People’s Court for restructuring of the Company according to the
regulations of Bankruptcy Law, with goal of resuming sustainable operating ability through
restructuring. On Dec. 28 of 2010, Shenzhen Intermediate People’s Court believed that applicants
didn’t submit materials such as solution plan both parties accepted which was formed from
settlement of tax income and creditor’s right with tax department, and then ruled that they didn’t
accept application of bankruptcy restructure Shenzhen Guochen Energy Investment and
Development Co., Ltd raised up. Besides, Guochen Energy Company agreed to stop accounting
RMB 40.35 million of loan interests in 2010. This item of interests won’t be received in future
years.
Along with the promotion of debt restructuring the main business of the Company also realized
stable development and continuously profited. Pressure of short-term payment of the Company had
largely decreased; constant operation ability got a certain improvement. The Board of Directors of
the Company thought that with constant development of the implementation of debt and assets
restructuring, the operating environment, operating situation and constant operating ability of the
Company would be improved further.
V. Routine Works of Board of Directors
(I) Board of Directors of the Company held 11 meetings in total during the report period, and
particulars about meetings and resolutions are as follows:
1. On Jan. 19 of 2010, the Company held the 17th meeting (interim) of the 7th session of the board of
directors in communication way. Relevant decisions were published on information disclosure press
the Company appointed.
2. On Mar. 12 of 2010, the Company held the 18th meeting (interim) of the 7th session of the board
of directors in communication way. Relevant decisions were published on information disclosure
press the Company appointed.
3. On Mar. 31 of 2010, the Company held the 19th meeting (interim) of the 7th session of the board
of directors in communication way. Relevant decisions were published on information disclosure
press the Company appointed.
4. On Apr. 2 of 2010, the Company held the 20th meeting (interim) of the 7th session of the board of
directors in communication way. Relevant decisions were published on information disclosure press
the Company appointed.
5. On Apr. 25 of 2010, the Company held the 21st meeting (interim) of the 7th session of the board of
directors in communication way. Relevant decisions were published on information disclosure press
the Company appointed.
6. On May 10 of 2010, the Company held the 22nd meeting (interim) of the 7th session of the board
of directors in communication way. Relevant decisions were published on information disclosure
press the Company appointed.
7. On May 28 of 2010, the Company held the 23rd meeting (interim) of the 7th session of the board
of directors in communication way. The meeting reviewed and passed the Self-Check Report of
Basic Work of Financial Accounting of Shenzhen China Bicycle (Group) Holding Co., Ltd.
8. On Aug. 9 of 2010, the Company held the 24th meeting (interim) of the 7th session of the board of
directors in communication way. Relevant decisions were published on information disclosure press
the Company appointed.
9. On Aug. 26 of 2010, the Company held the 1st meeting (interim) of the 8th session of the board of
directors in communication way. Relevant decisions were published on information disclosure press
the Company appointed.
10. On Sep. 15 of 2010, the Company held the 2nd meeting (interim) of the 8th session of the board
of directors in communication way. Relevant decisions were published on information disclosure
press the Company appointed.
11. On Oct. 26 of 2010, the Company held the 3rd meeting (interim) of the 8th session of the board
of directors in communication way. Relevant decisions were published on information disclosure
press the Company appointed.
(II) Implementation of resolutions of Shareholders’ General Meeting by the board of directors:
1. The Board of Directors strictly implemented all resolutions of Shareholders’ General Meeting in
the report period with no material warps or errors.
2. In the report period, the Company had no profit distribution plan, plan of converting public
reserve into share capital, rights offering as well as additionally equity offerings.
3. Duty performance of the special committee of the board of directors:
The Audit Committee of the Board consists of 3 directors, 2 of which are independent directors and
independent director takes the post of convener. In the report period, according to regulations of
Working Rules of Audit Committee of the Board and Working Procedure of Audit Committee for
Annual Report, the Committee periodically checked the internal audit report, financial statement
and internal control system of the Company, and earnestly performed its obligation.
In the report period, with professional knowledge and experience, the members of the Committee
examined the annual financial statement prepared by the Company. According to relevant
regulations and demands of CSRC, the Audit Committee presented two examination opinions for
the annual financial statement.
Before the certified public accountants enter for annual audit, the Audit Committee issued the first
written opinion on the un-audited financial statements: according to the 38 detailed principles of
Accounting Standard for Enterprise-Basic Standard, Accounting Standard for Enterprise
No.1-Inventory and the relevant regulation in the Company’s financial system, the Audit Committee
takes close eye on the reality and completeness of the financial statements, and on the preparation
of the statements whether they were prepared in strict accordance to the new Accounting Standard
for Enterprise and relevant regulation in the Company’s financial system. With inquiry and analysis
on the financial files, the Audit Committee holds that: the Company stipulated its rational
accounting policy and adequate accounting estimation, according to the relevant request of the new
Accounting Standard for Enterprise and taking the actual status of the Company into consideration;
the transaction records were real and complete; and the financial accounting statements prepared by
the Company really reflected the financial status of the Company till Dec 31st of 2010, and the
operation achievement and cash flow of the Company in 2010. It is agreed to take these financial
statements as basis to carry out the financial audit work of 2010.
After the CPA issued the initial audit opinion, the Audit Committee read the first audit report in time
and negotiated with the CPA. The Audit Committee and the CPA had no disputation on the
important issues concerned by the annual financial report of the Company. The financial report of
the Company complies with the Accounting Standard for Enterprise and regulations of relevant
laws. The Audit Committee agreed to take these financial statements as basis to prepare the 2010
Annual Report and its Summary, which made it available for the Company to disclose the 2010
Annual Report in time.
4. Duty performance of the Remuneration and Examination Committee of the Board:
During the report period, the Remuneration and Examination Committee of the Board examined the
remuneration policy and scheme of the directors and senior executives of the Company. It is
believed that the remuneration of the directors, supervisors and senior executives of the Company
disclosed in the V. of this report is real and accurate.
VI. Profit distribution preplan or preplan of capitalization
1. As audited by Shenzhen Pengcheng Certified Public Accountants, the losses of the Company
amounted to RMB 64,477,400 in 2010. The Company has neither dividend distribution nor share
capital conversion from capital public reserve.
2. Particulars about the cash bonus of the Company in previous three years
Unit: RMB
Net profit attributable to Ratio of net profit
Amount of cash bonus shareholders of listed attributable to shareholders
(tax included) company in consolidated of listed company in
statement of bonus year consolidated statement
2009 0.00 -105,757,549.50 0.00%
2008 0.00 -44,893,006.40 0.00%
2007 0.00 63,036,241.24 0.00%
VII. Other issues
(I) Explanation on the external guarantees of the Company, accumulative total and the current ones,
issued by the independent directors:
According to the regulations of the notice (CSRCF [2003] No.56) on Standardize Fund Exchange
Between Listed Companies and Related Parties and on Problem of External Guarantee of Listed
Companies, 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 document (SPSZSZ[2009] No.205)
issued by Shenzhen Pengcheng CPAs on Special Explanation on Fund Occupancy and Guarantee
Getting out of Line of the Controlling Shareholders and Other Related Parties of Shenzhen China
Bicycle Company (Holdings) Limited and relevant data. Here comes the detail information:
During the report period, no guarantee or guarantee out of line has been provided by the Company
for its controlling shareholders and the enterprises where they take posts. The guarantees or
guarantees out of line provided by the Company for its controlling shareholders and the enterprises
where they take posts were those happened from year 1996 to year 1999, belonging to the events
left in history. Due to that most units receiving guarantee are not able to repay, the Company treated
most guarantees as projected liabilities which amounted to RMB 179,088,442.92.
(II) Other significant events in reporting period
1. On Mar. 18 of 2010, plan for reform of shareholders structure has been implemented. A stock of
the Company got resumption of trading, thus eliminated obstacle in process of debts restructure.
2. On Jan. 14 of 2010, largest shareholder of the Company Shenzhen Guochen Energy Investment
and Development Co., Ltd submitted application to Shenzhen Intermediate People’s Court for
restructure of the Company according to the Bankruptcy Law, aiming at resuming constant
operation of the Company through the restructure. On Dec. 28 of 2010, Shenzhen Intermediate
People’s Court believed that applicants didn’t submit materials such as solution plan both parties
accepted which was formed from settlement of tax income and creditor’s right with tax department,
and then ruled that they didn’t accept application of bankruptcy restructure on the Company which
Shenzhen Guochen Energy Investment and Development Co., Ltd raised up.
3. On May 31 of 2010, largest shareholder and largest creditor of the Company Shenzhen Guochen
Energy Investment and Development Co., Ltd signed the Debts Transfer Term with Shenzhen
Zhengda Guoli Investment Co., Ltd, and then transferred the term worth USD 21.9683 million
amounting to RMB 150 million to Shenzhen Zhengda Guoli Investment Co., Ltd. After the transfer,
Shenzhen Guoshen Energy Investment and Development Co., Ltd held creditor’s right of the
Company RMB 19.3 million and USD 62.8293 million. And it was still the largest creditor of the
Company. At the same time, Shenzhen Guoshen Energy Investment and Development Co., Ltd
made commitment that transfer of partial creditor wouldn’t affect restructure of the Company.
4. On Jun. 10 of 2010, we received the Reply to Letter of Applying for Stopping Calculation of
2010 Annual Debts Interests of the Company issued by the largest shareholder and largest creditor
Shenzhen Guoshen Energy Investment and Development: agreed to stop calculating creditor’s right
of the Company RMB 9,124,618.59 and USD creditor’s right (before May 31 of 2010 USD
84,797,624.57 and since Jun. 1 of 2010 USD 62,829,259.02) 2010 annual interest in whole-year.
The above interests which were stopped calculating won’t be withdrawn in future years. The
calculation-stop of debts interests played an active role in keeping sustainable operation of the
Company.
5. On Sep. 8 of 2010, the Company received the Letter of Debts Transfer and Debts Reconcile from
the new creditor Shenzhen Chengxingtai Investment Co., Ltd. From this letter, we leaned about that
Shenzhen Zhengda Guoli Investment Co., Ltd transferred USD 21,968,365.55 of creditor’s right
(amounting about RMB 150 million) held from the Company to Shenzhen Chengxingtai Investment
Co., Ltd. and both parties had signed the Term of Creditor’s Right Transfer on Sep. 2 of 2010. After
negotiation, the Company signed the Intention Letter of Debts Reconcile with Shenzhen
Chengxingtai Investment Co., Ltd on Sep. 14. On Oct. 8 of 2010, the 4th extraordinary shareholders’
general meeting reviewed and passed the Proposal of Debts Reconcile Agreed by the Company and
Shenzhen Chengxingtai Investment Co., Ltd. The Company signed the Term of Debts Reconcile
with Chengxingtai Company on Oct. 15 of 2010 which agreed that: the Company should pay for the
compensation to Chengxingtai Company with RMB 14 million, thus settled up all the debts and
creditor’s rights of both parties (about RMB 150 million).
Section VIII. Report of Supervisory Committee
In the spirit of being responsible to shareholders and strictly according to regulations in PRC
Company Law, Securities Law and Articles of Association of the Company, the Supervisory
Committee has dutifully performed its obligations endowed by relevant laws and legislations,
carried out work positively and hard, and safeguarded the legal rights and interests of the Company
and shareholders in 2010. It has also put forward its opinions and suggestions promptly towards
significant decisions made for productions, management and investment, and supervised the
behaviors of directors and senior executives in terms of implementation of their obligations.
I. Work of the Supervisory Committee in the report period
In the report period, the Supervisory Committee of the Company held altogether 2 meetings.
1. On Apr. 25 of 2010, the Company held the 5th meeting of the 6th session of the board of
supervisors. Relevant decisions were published on information disclosure press the Company
appointed on Apr. 27.
2. On Aug. 4 of 2010, the Company held the 6th meeting of the 6th session of the board of
supervisors. Relevant decisions were published on information disclosure press the Company
appointed on Aug. 5.
3. On Aug. 9 of 2010 the 7th meeting of the 6th session of board of supervisors was held which
reviewed and passed the 2010 Semi-Annual Report.
4. On Aug. 26 of 2010, the Company held the 8th meeting of the 6th session of the board of
supervisors. Relevant decisions were published on information disclosure press the Company
appointed on Aug. 27.
5. On Oct. 26 of 2010, the Company held the 9th meeting of the 6th session of the board of
supervisors. Relevant decisions were published on information disclosure press the Company
appointed on Oct. 28.
II. Opinions on relevant issues in 2010 expressed by the Supervisory Committee
1. Operation according to law:
In accordance with relevant national laws and regulations, the Supervisory Committee has carried
out supervision work on the holding procedures of Shareholders’ General Meetings and Board
meetings, resolution, implementation of resolutions of Shareholders’ General Meetings by the
Board of Directors, performance of duties of senior executives as well as the Company’s
administration system etc.; it believes that, in 2010, the Board of Directors strictly complied with
PRC Company Law, Securities Law, Rules for Stock Listing, Articles of Association and other
relevant regulations and systems, operated in a standardized manner, worked conscientiously,
conducted business and made decisions in a scientific and reasonable way, and further improved
internal administration and internal control system; the directors and managers haven’t violated any
laws, regulations, the Articles of Association or done harm to the interests of the Company and
shareholders when performing duties.
2. Financial Inspection
In the report period, Shenzhen Pengcheng Certified Public Accountants issued auditor’s report with
disclaimer of opinion for the Financial Statement 2010 of the Company. The Financial Report of the
Company objectively and truly reflected the financial status and operation achievements of the
Company this year.
3. Use of raised funds:
The Company has not raised funds in the report period.
4. Purchases and sales of assets:
In the report period, the Company has no initiative to purchases assets: they thought the sales of
assets conformed to the laws and regulations and relevant provisions of the Company.
5. Opinions towards related transactions
Related transactions conducted by the Company are fair and square, and haven’t done harm to the
interests of the Listed Company, and there was no insider dealing.
6. Implementation on resolution of shareholders’ general meeting by the Board
Supervisors of the Company attended shareholders’ general meeting and presented each meeting of
the Board without voting rights. The Supervisory of the Company supervised implementation on
resolution of shareholders’ general meeting, and it thought that the Board earnestly implemented the
various resolutions of shareholders’ general meeting.
III. Opinion issued by the Board on the auditor’s report with disclaimer of opinion issued by
Shenzhen Pengcheng Certified Public Accountants
Shenzhen Pengcheng CPAs issued the audit report with disclaimer of opinion for 2010. The Board
had made special explanation on the events concerned by the report. The Supervisory Committee
believed that: the audit report issued by Shenzhen Pengcheng CPAs truthfully reflected the financial
condition and operation achievement of the Company; the explanation presented by the Board of
the Company on the events concerned by the audit opinion complied with the actual condition of
the Company. The Supervisory Committee would actively cooperate with the Board to carry out its
works, supervise and urge the Board to intensify power in debt restructure and try to improve the
persistent operating ability of the Company.
Section IX. Significant Events
I. Material lawsuits and arbitrations in the report period:
The details about the material lawsuits or arbitrations that occurred in the previous years are in the
Notes 12 of the Financial Statement.
II. Purchases and sales of assets of the Company in the report period
The Company had no active purchase of assets in the report period. And the sales of assets are in
item 30 of Notes 5 of the Financial Statement.
III. Significant related transactions in the report period
In the report period, there was no new significant related transaction; details about the significant
related transactions that occurred in the previous years are in the Notes X of Financial Statement.
IV. Significant Contracts and Implementation of Contracts
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 period, the Company had not entrusted financing events.
3. In the report period, the Company did not have the situations of guarantees on 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)
Com Guarante
plete e for
Date of happening Amount Guaran
Name of the Company Impl related
(Date of signing of Guarantee type tee
guaranteed emen party
agreement) guarantee term
tation (Yes or
or no)
not
4
Guangdong Sunrise Group Co., Joint months
1996-07-26 2,800.00 No No
Ltd. responsibility
月
Guangdong Sunrise Group Co., Joint 12
1999-09-30 681.83 No No
Ltd. responsibility months
Guangdong Sunrise Group Co., Joint 11
1998-04-30 260.00 No No
Ltd. responsibility months
Guangdong Sunrise Group Co., Joint 7
1997-07-30 250.00 No No
Ltd. responsibility months
Guangdong Sunrise Group Co., Joint 8
1997-06-04 300.00 No No
Ltd. responsibility months
Gintian Industry (Group) Co., Joint 6
1998-10-30 5,000.00 No No
Ltd. responsibility months
Shenzhen Tianma Cosmetics Joint 12
1994-09-30 800.00 No No
Co., Ltd. responsibility months
Total amount of guarantee in the report period 0.00
Total balance of guarantee at the end of the report period 10,091.83
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for controlling subsidiaries during the report
0.00
period
Total balance of guarantee for controlling subsidiaries at the end of the
7,817.01
report period
Total amount of guarantee of the Company (including guarantee for controlling subsidiaries)
Total amount of guarantees 17,908.84
Ratio of total guarantee to net assets of the Company -9.62%
Including:
Amount of guarantee for shareholders, actual controller and its related
0.00
parties
The debts guarantee amount provided for the guarantee of which the
17,908.84
assets-liability ratio exceeded 70% directly or indirectly
Proportion of total amount of guarantee in net assets of the Company
exceeded 50% 0.00
Total amount of the aforesaid three guarantees 17,908.84
Explanations on possibly bearing joint and several responsibilities for undue
Naught
guarantees
Note: Guangdong Sunrise Group Co., Ltd. was the shareholder of the Company, its equity was
auctioned by the court and now it is not the shareholder of the Company.
V. Commitments of the Company and the shareholders holding more than 5% equity in the
report period or lasting to the report period
The Company or the shareholders holding more than 5% equity had no commitments made in the
report period or made in previous period but carried forward to the report period that were likely to
produce significant influence on the operation achievements and financial status of the Company.
VI. Engagement and Disengagement of Certified Public Accountants of the Company
In the report period, the Company engaged Shenzhen Pengcheng Certified Public Accountants as
the auditing organ in this year with term of one year. In 2010, the Company paid auditing fee
amounting to RMB 0.5 million to Shenzhen Pengcheng Certified Public Accountants.
VII. Particulars about punishment received by the Company, the Board of Directors of the
Company and the directors from supervisory department
In the report period, the Company, the Board of Directors of the Company and the directors have
not been inspected, given administrative punishment or public criticism by CSRC, or publicly
condemned by Shenzhen Stock Exchange.
VIII. Particulars about the Company’s Reception of Investigation 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 treaty
policy is implemented, information is disclosed for appointed person or non-public significant
information is disclosed or leaked out has never happened.
Reception Reception Reception Person Main content of talk and information
date place way receipted provided
Phone Shareholders Progress of the share merger reform and
Office of the
2010 communicat of circulating the debt restructure project of the
Company
ion shares Company
Section X. Financial Report (see attachment)
Section XI. Documents Available For Reference
I. Accounting statements carrying the personal signatures and seals of legal representative, person in
charge of the accounting affairs and person in charge of the accounting department.
II. Original of Auditors’ Report carrying the seal of the Certified Public Accountants as well as
personal signatures and seals of certified public accountants.
III. Originals of all documents and public notices disclosed publicly on the newspapers as
designated by China Securities Regulatory Commission in the report period.
IV. English version of the 2010 Annual Report.
The Board of Directors of
Shenzhen China Bicycle Company (Holdings) Limited
April 27, 2011
Shenzhen China Bicycle Company (Holdings)
Limited
2010 Financial Report
Auditors’ Report
Content
Content Pages
I. Auditor’s Report 1-2
II. Audited Financial Statements
Consolidation and Balance Sheet of Parent 3-6
Company
Consolidation and Profit Statement of Parent 7-8
Company
Consolidation and Cash Flow Statement of 9-10
Parent Company
Consolidation and Changes of Shareholders' 11-14
Equity of Parent Company
III. Notes to Financial Statement 15-
Shenzhen Pengcheng CPA Co., Ltd. Tel:(0755)8373 2888
7/F, Tower A, Union Square, No. 5022, Binhe Avenue, Futian District,
Fax:((0755）8223 7549
Shenzhen, China
Auditors’ Report
Shenzhen Pengcheng GSZi [2011] No.0125
To the shareholders of Shenzhen China Bicycle Company (Holdings) Limited,
We have audited the accompanying financial statements of Shenzhen China Bicycle Company
(Holdings) Limited (“the Company”), including consolidated balance sheet of the Company and
parent company of 31 December 2010, and consolidated profit statement of the Company and
parent company, and consolidated statement on changes of shareholders’ equity of the Company
and parent company, and consolidated cash flow statement of the Company and parent company for
the year ended, and notes to the financial statements for the year ended.
I. Management's responsibility for the financial statements
It is the responsibility for the management of the Company to prepare financial statements
according to the stipulations of the business accounting rules. This responsibility includes: (1)
devising, implementing and maintaining internal control related to the preparation of the financial
statements so as to ensure that the financial statements do not contain major errors caused by
fraudulence or mistake; (2) choosing and adopting appropriate accounting policies; and (3) making
reasonable accounting estimations.
II. Proceedings which result in disclaimer of opinion
1. During the audit, we have specially implemented the audit procedures such as visit for inspection
and inquiry, focusing on the financial debts of Shenzhen China Bicycle Company (Holdings)
Limited which have expired for long time till the end of Dec 31st of 2010. Until the audit report day,
the replied letters told that a balance in interest of RMB 324,879，558.04 has been omitted by
Shenzhen China Bicycle Company (Holdings) Limited; besides, some letters were replied to show
interest on borrowing principal converting to RMB 111,584,308.44. As to the aforesaid omitted
interest balance, the Company provided explanation in Note 10.2 that when implementing the
document (YJBT (2004) No.6) released by China Committee on Bank Supervision for offering a
reference of the loan interest restructure of Shenzhen China Bicycle Company (Holdings) Limited,
the Company and some creditors had different understanding on this document, which brought the
aforesaid omission. Since the accounts had not been adjusted, we are not able to ensure the
influence of this balance to the financial statements of the Company.
2. During the audit, we have specially implemented the audit procedures such as visit for inspection
and inquiry, focusing on the tax payable of Shenzhen China Bicycle Company (Holdings) Limited
which have expired for long time till the end of Dec 31st of 2010, in want of verification that
whether the unpaid tax, tariff bond and penalty balance was totaling up to RMB 119,902,328.56 as
the Company’s book said. While until the audit report day, nothing got replied. Thus, it was
impossible for us to ensure the influence on the financial statements of the Company brought by the
uncertainty.
3. In the process of audit, the information of credit card which we received from the account bank
of the Company is not able to be checked whether contingency such as related guarantee
information accord with disclosure, for it did not be annually inspected and credit card system did
1
not upgrade related information. Therefore, we implement substitutive audit procedure of field
checking the related courts to the claims of the Company caused by external guarantee and overdue
loan. However, related courts all only make some oral explanations or provide some information
which could only be used as reference. Otherwise, we are not able to implement other efficient audit
procedure, so that we are not able to judge the integrity of the contingency disclosed in Note 11 and
the lawsuits disclosed in Note 12 of the Company and possible effects of the issues on the
Company’s financial report.
4. Refer to Note 10, until Dec. 31, 2010, total asset of Shenzhen China Bicycle Company (Holdings)
Limited was RMB 138,158,078.89; total debt was RMB 1,894,343,521.76; net asset was RMB
-1,756,185,442.87 with debts beyond assets. Net profit earned for 2010 amounting to RMB
64,477,414.44 by means of debt restructuring. For all, Shenzhen China Bicycle Company (Holdings)
Limited disclosed improving methods in Note 10.3 of financial statement, especially the largest
shareholder and creditor Shenzhen Guocheng Energy Investment Development Co., Ltd. applied to
Shenzhen Intermediate People’s Court for restructuring according to Bankruptcy Law in Jan. of
2010. In December 2010, the Shenzhen Intermediate People’s Court dismiss the application, that we
obtained no complete-ness and properly auditing evidence to guarantee whether it can improved the
sustainable operational ability for China Bicycle. Therefore, concerning the appropriate-ness of the
financial statement 2010 of China Bicycle that prepared under the sustainable hypothesis, we fail to
judge.
III. Auditing Opinion
Due to that the aforesaid events could possibly occur very significant and aboard influences, we
could not issue auditor’ opinion on the financial statement of the Company.
Shenzhen Pengcheng Certified Public China Certified
Accountants Accountant
Shenzhen P.R.C.
25 April 2011
Wei Changying
China Certified
Accountant
Lv Yali
2
Shenzhen China Bicycle Company (Holdings) Limited
2010 Financial Report
Consolidated Balance Sheet
2010-12-31
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Items Notes Amount at period-end Amount at year-begin
Current assets:
Monetary funds V.1 17,756,773.58 22,232,425.07
Settlement provisions - -
Capital lent - -
Transaction finance asset - -
Notes receivable V.2 2,619,699.00 5,800,000.00
Accounts receivable V.3 1,732,822.98 413,823.13
Accounts paid in advance V.4 213,423.41 195,298.09
Insurance receivable - -
Reinsurance receivables - -
Contract reserve of
- -
reinsurance receivable
Interest receivable - -
Dividend receivable - -
Other receivables V.5 18,085,772.89 24,221,035.93
Purchase restituted finance
-
asset
Inventories V.6 21,692,678.29 32,564,369.59
Non-current asset due within
- -
one year
Other current assets - -
Total current assets 62,101,170.15 85,426,951.81
Non-current assets:
Granted loans and advances - -
Finance asset available for
- -
sales
Held-to-maturity securities - -
Long-term account receivable - -
Long-term equity investment V.7 2,619,840.50 2,619,840.50
Investment property V.8 26,434,648.24 31,399,514.80
Fixed assets: V.9 21,547,992.74 23,932,824.06
Construction in progress - -
Engineering material - -
Disposal of fixed asset - -
Productive biological asset - -
Oil and gas asset - -
Intangible assets V.10 25,454,427.26 26,317,289.30
Expense on Research and
- -
Development
Goodwill - -
Long-term expenses to be
- -
apportioned
Deferred income tax asset - -
Other non-current asset - -
Total non-current asset 76,056,908.74 84,269,468.66
Total assets 138,158,078.89 169,696,420.47
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
3
Consolidated Balance Sheet (Con.)
2010-12-31
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Items Notes Amount at period-end Amount at year-begin
Current liabilities:
Short-term loans V.12 384,217,648.09 395,326,572.82
Loan from central bank - -
Absorbing deposit and
- -
interbank deposit
Capital borrowed - -
Transaction financial
- -
liabilities
Notes payable - -
Accounts payable V.13 125,628,122.72 125,874,371.36
Accounts received in advance V.14 16,661,602.20 23,083,981.59
Selling financial asset of
- -
repurchase
Commission charge and
- -
commission payable
Wage payable V.15 3,802,240.39 5,268,781.80
Taxes payable V.16 98,218,863.73 96,149,009.88
Interest payable V.17 213,488,233.36 165,838,645.23
Dividend payable - -
Other accounts payable V.18 165,837,025.40 168,836,440.31
Reinsurance payables - -
Insurance contract reserve - -
Security trading of agency - -
Security sales of agency - -
Non-current liabilities due
706,645,180.86 870,518,082.14
within 1 year V.19
Other current liabilities V.20 756,162.09 726,612.09
Total current liabilities 1,715,255,078.84 1,851,622,497.22
Non-current liabilities: -
Long-term loans - -
Bonds payable - -
Long-term account payable - -
Special accounts payable - -
Projected liabilities V.21 179,088,442.92 179,088,442.92
Deferred income tax liabilities - -
Other non-current liabilities - -
Total non-current liabilities 179,088,442.92 179,088,442.92
Total liabilities 1,894,343,521.76 2,030,710,940.14
Shareholders’ equity):
Paid-in capital (or share
551,347,947.00 479,433,003.00
capital) V.22
Capital public reserve V.23 427,132,693.91 458,695,975.55
Less: Inventory shares - -
Reasonable reserve - -
Surplus public reserve V.24 32,673,227.01 32,673,227.01
Provision of general risk - -
Retained profit V.25 -2,767,339,310.79 -2,831,816,725.23
Balance difference of foreign
- -
currency translation
Total shareholders’ equity
-1,756,185,442.87 -1,861,014,519.67
attributable to parent company
Minority interests - -
Total shareholders’ equity -1,756,185,442.87 -1,861,014,519.67
4
Total liabilities and shareholders’
138,158,078.89 169,696,420.47
equity
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
5
Balance Sheet of Parent Company
2010-12-31
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Assets Notes Amount at period-end Amount at year-begin
Current assets:
Monetary funds 498,624.71 365,121.06
Transaction finance asset - -
Notes receivable - -
Accounts receivable XI.1 1,384,353.23 4,840,655.31
Accounts paid in advance - -
Interest receivable - -
Dividend receivable - -
Other receivables XI.2 30,529,810.28 44,469,377.15
Inventories 14,965,196.51 20,240,562.11
Non-current asset due within
- -
one year
Other current assets - -
Total current assets 47,377,984.73 69,915,715.63
Non-current assets:
Finance asset available for
- -
sales
Held-to-maturity securities - -
Long-term account receivable - -
Long-term equity investment XI.3 2,619,840.50 2,619,840.50
Investment property 26,434,648.24 31,399,514.80
Fixed assets: 21,221,962.11 23,131,963.21
Construction in progress - -
Engineering material - -
Disposal of fixed asset - -
Productive biological asset - -
Oil and gas asset - -
Intangible assets 25,454,427.26 26,317,289.30
Expense on Research and
- -
Development
Goodwill - -
Long-term expenses to be
- -
apportioned
Deferred income tax asset - -
Other non-current asset - -
Total non-current asset 75,730,878.11 83,468,607.81
Total assets 123,108,862.84 153,384,323.44
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
6
Balance Sheet of Parent Company (Con.)
2010-12-31
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Items Notes Amount at period-end Amount at year-begin
Current liabilities:
Short-term loans 332,017,261.07 338,507,120.98
Transaction financial liabilities - -
Notes payable - -
Accounts payable 148,454,726.88 155,610,619.08
Accounts received in advance 10,664,592.85 10,664,592.85
Wage payable 2,372,320.02 4,099,102.35
Taxes payable 95,784,336.55 94,821,236.83
Interest payable 213,488,233.36 165,838,645.23
Dividend payable - -
Other accounts payable 120,844,911.76 126,959,911.53
Non-current liabilities due within 1
706,645,180.86
year 870,518,082.14
Other current liabilities 726,612.09 726,612.09
Total current liabilities 1,630,998,175.44 1,767,745,923.08
Non-current liabilities:
Long-term loans - -
Bonds payable - -
Long-term account payable - -
Special accounts payable - -
Projected liabilities 179,088,442.92 179,088,442.92
Deferred income tax liabilities - -
Other non-current liabilities - -
Total non-current liabilities 179,088,442.92 179,088,442.92
Total liabilities 1,810,086,618.36 1,946,834,366.00
Owner’s equity (or shareholders’ equity): -
Paid-in capital (or share capital) 551,347,947.00 479,433,003.00
Capital public reserve 427,132,693.91 458,695,975.55
Less: Inventory shares - -
Reasonable reserve - -
Surplus public reserve 32,673,227.01 32,673,227.01
Provision of general risk - -
Retained profit -2,698,131,623.44 -2,764,252,248.12
Total owner’s equity(or shareholders’
-1,686,977,755.52
equity) attributable to parent company -1,793,450,042.56
Total liabilities and owner’s equity(or
123,108,862.84
shareholders’ equity) 153,384,323.44
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
Consolidated Profit Statement
Year of 2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Amount in this Amount in last
Items Notes
period period
I. Total operating income 299,027,279.43 260,908,108.82
Including: Operating income V.26 299,027,279.43 260,908,108.82
Interest income - -
Insurance gained - -
7
Commission charge and commission income - -
II. Total operating cost 374,381,117.43 378,647,001.09
Including: Operating cost V.26 280,127,985.48 248,699,643.75
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 V.27 311,455.58 164,314.97
Sales expenses V.28 7,394,867.85 6,481,033.36
Administration expenses V.29 23,792,819.05 25,405,353.86
Financial expenses V.30 64,515,016.00 93,466,133.10
Losses of devaluation of asset V.31 -1,761,026.53 4,430,522.05
Add: Changing income of fair value
(Loss is listed with “-”) - -
Investment income (Loss is listed with “-”) - -
Including: Investment income on
affiliated company and joint venture - -
Exchange income (Loss is listed with “-”)
III. Operating profit (Loss is listed with “-”) -75,353,838.00 -117,738,892.27
Add: Non-operating income V.32 139,887,804.23 12,729,475.16
Less: Non-operating expense V.33 56,551.79 1,151,358.79
Including: Disposal loss of non-current asset - -
IV. Total Profit (Loss is listed with “-”) 64,477,414.44 -106,160,775.90
Less: Income tax - -
V. Net profit (Net loss is listed with “-”) 64,477,414.44 -106,160,775.90
Net profit attributable to shareholders
of parent company 64,477,414.44 -105,757,549.50
Minority shareholders’ gains and losses -403,226.40
VI. Earnings per share -
i. Basic earnings per share V.34 0.1169 -0.2206
ii. Diluted earnings per share V.34 0.1169 -0.2206
VII. Other consolidated income - -
VIII. Total consolidated income 64,477,414.44 -106,160,775.90
Total consolidated income attributable to owners
of parent company 64,477,414.44 -105,757,549.50
Total consolidated income attributable to minority
shareholders - -403,226.40
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
Profit Statement of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency:
CNY
Items Notes Amount in this period Amount in last period
I. Operating income XI.4 28,532,157.84 17,485,643.49
Less: Operating cost XI.4 16,520,738.87 11,699,612.00
Business taxes and surtax - -
Sales expenses - 262,795.77
Administration expenses 21,709,094.88 21,178,901.29
Financial expenses 66,242,149.40 94,449,263.86
8
Losses of devaluation of asset -2,197,612.45 4,430,522.05
Add: Changing income of fair value(Loss
is listed with “-”) - -
Investment income (Loss is listed with
“-”) XI.5 - -
Including: Investment income on
affiliated company and joint venture - -
II. Operating profit (Loss is listed with “-”) -73,742,212.86 -114,535,451.48
Add: Non-operating income 139,881,904.23 12,702,225.16
Less: Non-operating expense 19,066.69 1,150,488.79
Including: Disposal loss of non-current
asset - -
III. Total Profit (Loss is listed with “-”) 66,120,624.68 -102,983,715.11
Less: Income tax - -
IV. Net profit (Net loss is listed with “-”) 66,120,624.68 -102,983,715.11
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
Consolidated Cash Flow Statement
Year of 2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Amount in this Amount in last
Items Notes
period period
I. Cash flows arising from operating activities:
Cash received from selling commodities and 178,552,968.97
providing labor services 155,845,542.24
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 - -
Insured savings and net increase of
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 254,666.00 -
Other cash received concerning operating 22,290,096.28
activities V 35.（1） 20,368,255.24
Subtotal of cash inflow arising from 201,097,731.25
operating activities 176,213,797.48
Cash paid for purchasing commodities and 156,229,830.72
receiving labor service 139,060,216.75
Net increase of customer loans and advances - -
9
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 15,747,757.29 14,641,347.69
Taxes paid 4,849,679.50 4,478,878.32
Other cash paid concerning operating
17,774,603.42
activities V 35.（2） 14,112,767.75
Subtotal of cash outflow arising from
operating activities 194,601,870.93 172,293,210.51
Net cash flows arising from operating
activities 6,495,860.32 3,920,586.97
II. Cash flows arising from investing activities: -
Cash received from recovering investment - 8,000,000.00
Cash received from investment income - -
Net cash received from disposal of fixed,
intangible and other long-term assets - 550,000.00
Net cash received from disposal of
subsidiaries and other units - -
Other cash received concerning investing
activities - -
Subtotal of cash inflow from investing
activities - 8,550,000.00
Cash paid for purchasing fixed, intangible 3,471,511.81
and other long-term assets 324,761.43
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 3,471,511.81
activities 324,761.43
Net cash flows arising from investing -3,471,511.81
activities 8,225,238.57
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 6,500,000.00
activities V35.（3） -
Subtotal of cash inflow from financing 6,500,000.00
activities -
Cash paid for settling debts 14,000,000.00 -
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 14,000,000.00
activities -
10
Net cash flows arising from financing -7,500,000.00
activities -
IV. Influence on cash due to fluctuation in -
exchange rate -
V. Net increase of cash and cash equivalents -4,475,651.49 12,145,825.54
Add: Balance of cash and cash equivalents at 22,232,425.07
the period -begin 10,086,599.53
VI. Balance of cash and cash equivalents at the 17,756,773.58
period -end 22,232,425.07
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
Cash Flow Statement of Parent Company
Year of 2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY
Amount in this Amount in last
Items Notes
period period
I. Cash flows arising from operating activities:
Cash received from selling commodities and
providing labor services - 700.00
Write-back of tax received 254,666.00 -
Other cash received concerning operating activities 38,601,004.58 18,087,589.94
Subtotal of cash inflow arising from operating
activities 38,855,670.58 18,088,289.94
Cash paid for purchasing commodities and receiving
labor service - -
Cash paid to/for staff and workers 1,646,015.22 1,572,561.53
Taxes paid 2,716,046.50 2,806,433.30
Other cash paid concerning operating activities 16,909,478.19 13,743,287.94
Subtotal of cash outflow arising from operating
activities 21,271,539.91 18,122,282.77
Net cash flows arising from operating activities 17,584,130.67 -33,992.83
II. Cash flows arising from investing activities:
Cash received from recovering investment - -
Cash received from investment income - -
Net cash received from disposal of fixed,
intangible and other long-term assets - -
Net cash received from disposal of subsidiaries and
other units - -
Other cash received concerning investing activities - -
Subtotal of cash inflow from investing activities - -
Cash paid for purchasing fixed, intangible
and other long-term assets 3,450,627.02 18,330.62
Cash paid for investment - -
Net cash paid for subsidiaries and other units - -
Other cash paid concerning investing activities - -
Subtotal of cash outflow from investing activities 3,450,627.02 18,330.62
Net cash flows arising from investing activities -3,450,627.02 -18,330.62
III. Cash flows arising from financing activities - -
Cash received from absorbing investment - -
Cash received from loans - -
Other cash received concerning financing activities - -
Subtotal of cash inflow from financing activities - -
Cash paid for settling debts 14,000,000.00 -
Cash paid for dividend and profit distributing or - -
11
interest paying
Other cash paid concerning financing activities - -
Subtotal of cash outflow from financing activities 14,000,000.00 -
Net cash flows arising from financing activities -14,000,000.00 -
IV. Influence on cash due to fluctuation in exchange rate - -
V. Net increase of cash and cash equivalents 133,503.65 -52,323.45
Add: Balance of cash and cash equivalents at the
period -begin 365,121.06 417,444.51
VI. Balance of cash and cash equivalents at the
period–end 498,624.71 365,121.06
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
12
Consolidated Statement on Changes of Shareholders' Equity
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in this report period
Owners’ equity attributable to the parent company
Items Paid-up Less: Reason General Minority’s Total owners’
Capital Surplus Retained Other equity equity
capital (Share Treasury able risk
reserves reserves profit s
capital) Stock reserve provision
I. Balance at the end of the last 479,433,003. 458,695,975 32,673,227. -2,831,816,7 -1,861,014,51
year 00 .55 - - 01 - 25.23 - - 9.67
Add: Changes of accounting
policy - - - - - - - - - -
Error correction of the last period - - - - - - - - - -
Others - - - - - - - - - -
II. Balance at the beginning of 479,433,003. 458,695,975 32,673,227. -2,831,816,7 -1,861,014,51
this year 00 .55 - - 01 - 25.23 - - 9.67
III. Increase/ Decrease in this year 71,914,944.0 -31,563,281 64,477,414.4 104,829,076.
(Decrease is listed with “-”) 0 .64 - - - - 4 - - 80
64,477,414.4 64,477,414.4
(I) Net profit
- - - - - 4 - - 4
(II) Other consolidated income - - - - - - - -
64,477,414.4 64,477,414.4
Subtotal of (I) and (II)
- - - - - 4 - - 4
(III) Owners’ devoted and 40,351,662. 40,351,662.3
decreased capital - 36 - - - - - - - 6
1. Owners’ devoted capital - - - - - - - - -
2. Amount calculated into
owners’ equity paid in shares - - - - - - - - -
40,351,662. 40,351,662.3
3. Others
- 36 - - - - - - - 6
(IV) Profit distribution - - - - - - - - - -
1. Withdrawal of surplus reserves - - - - - - - - - -
2. Withdrawal of general risk
provisions - - - - - - - - - -
13
Consolidated Statement on Changes of Shareholders' Equity
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in this report period
Owners’ equity attributable to the parent company
Items Paid-up Less: Reason General Minority’s Total owners’
Capital Surplus Retained Other equity equity
capital (Share Treasury able risk
reserves reserves profit s
capital) Stock reserve provision
3. Distribution for owners
(shareholders) - - - - - - - - - -
4. Others - - - - - - - - - -
(V) Carrying forward internal 71,914,944.0 -71,914,944
owners’ equity 0 .00 - - - - - - - -
1. Capital reserves conversed to 71,914,944.0 -71,914,944
capital (share capital) 0 .00 - - - - - - - -
2. Surplus reserves conversed to
capital (share capital) - - - - - - - - - -
3. Remedying loss with surplus
reserve - - - - - - - - - -
4. Others - - - - - - - - - -
(VI) Reasonable reserve - - - - - - - - - -
1. Withdrawal in the report period - - - - - - - - - -
2. Usage in the report period - - - - - - - - - -
(VII) Other - - - - - - - - - -
551,347,947. 427,132,693
I 32,673,227. -2,767,339,3 -1,756,185,44
V. Balance at end of the period 00 .91 - - 01 - 10.79 - - 2.87
Legal representative: _____________ Person in charge of accounting works: _____________ Person in charge of accounting organ: _____________
14
Consolidated Statement on Changes of Shareholders’ Equity
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amout in the same period of last year
Owners’ equity attributable to the parent company
Items Paid-up Less: Reason General Minority’s Total owners’
Capital Surplus Retained equity equity
capital (Share Treasury able risk Others
reserves reserves profit
capital) Stock reserve provision
I. Balance at the end of the last 479,433,003. 410,893,564 32,673,22 -2,726,059,17 -1,802,656,15
year 00 .33 - - 7.01 - 5.73 - 403,226.40 4.99
Add: Changes of accounting
policy - - - - - - - - - -
Error correction of the last period - - - - - - - - - -
Others - - - - - - - - - -
II. Balance at the beginning of 479,433,003. 410,893,564 32,673,22 -2,726,059,17 -1,802,656,15
this year 00 .33 - - 7.01 - 5.73 - 403,226.40 4.99
III. Increase/ Decrease in this year 47,802,411. -105,757,549. -58,358,364.6
(Decrease is listed with “-”) - 22 - - - - 50 - -403,226.40 8
-105,757,549. -106,160,775.
(I) Net profit
- - - - - - 50 - -403,226.40 90
(II) Other consolidated income - - - - - - - - - -
-105,757,549. -106,160,775.
Subtotal of (I) and (II)
- - - - - - 50 - -403,226.40 90
(III) Owners’ devoted and 47,802,411.
47,802,411.22
decreased capital - 22 - - - - - - -
1. Owners’ devoted capital - - - - - - - - - -
2. Amount calculated into
- -
owners’ equity paid in shares - - - - - - - -
47,802,411.
3. Others 47,802,411.22
- 22 - - - - - - -
(IV) Profit distribution - - - - - - - - - -
1. Withdrawal of surplus reserves - - - - - - - - - -
2. Withdrawal of general risk
provisions - - - - - - - - - -
3. Distribution for owners
(shareholders) - - - - - - - - - -
15
Consolidated Statement on Changes of Shareholders’ Equity
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amout in the same period of last year
Owners’ equity attributable to the parent company
Items Paid-up Less: Reason General Minority’s Total owners’
Capital Surplus Retained equity equity
capital (Share Treasury able risk Others
reserves reserves profit
capital) Stock reserve provision
4. 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
reserve - - - - - - - - - -
4. Others - - - - - - - - - -
(VI) Reasonable reserve - - - - - - - - - -
1. Withdrawal in the report period - - - - - - - - - -
2. Usage in the report period - - - - - - - - - -
(VII) Other - - - - - - - - - -
I 479,433,003. 458,695,975 32,673,22 -2,831,816,72 -1,861,014,51
V. Balance at end of the period 00 .55 - - 7.01 - 5.23 - - 9.67
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
16
Statement on Changes of Shareholders’ Equity of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in this report period
Less:
Items Paid-up capital Capital Reasonable Surplus General risk Total owners’
Treasury Retained profit
(Share capital) reserves reserve reserves provision equity
Stock
32,673,227.0 -2,764,252,248. -1,793,450,042.
I. Balance at the end of the last year 479,433,003.00 458,695,975.55 - - -
1 12 56
Add: Changes of accounting policy - - - - - - - -
Error correction of the last period - - - - - - - -
Others - - - - - - - -
II. Balance at the beginning of this 32,673,227.0 -2,764,252,248. -1,793,450,042.
year 479,433,003.00 458,695,975.55 - - 1 - 12 56
III. Increase/ Decrease in this year
71,914,944.00 -31,563,281.64 - - - - 66,120,624.68 106,472,287.04
(Decrease is listed with “-”)
(I) Net profit - - - - - - 66,120,624.68 66,120,624.68
(II) Other consolidated income - - - - - - 0.00
Subtotal of (I) and (II) - - - - - - 66,120,624.68 66,120,624.68
(III) Owners’ devoted and
40,351,662.36 40,351,662.36
decreased capital - - - - - -
1. Owners’ devoted capital - - - - - - - -
2. Amount calculated into owners’
-
equity paid in shares - - - - - - -
3. Others - 40,351,662.36 - - - - - 40,351,662.36
(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
71,914,944.00 -71,914,944.00
owners’ equity - - - - - -
17
Statement on Changes of Shareholders’ Equity of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in this report period
Less:
Items Paid-up capital Capital Reasonable Surplus General risk Total owners’
Treasury Retained profit
(Share capital) reserves reserve reserves provision equity
Stock
1. Capital reserves conversed to
71,914,944.00 -71,914,944.00 -
capital (share capital) - - - - -
2. Surplus reserves conversed to
- - - - - - -
capital (share capital) -
3. Remedying loss with profit
surplus - - - - - - - -
4. Others - - - - - - - -
(VI) Reasonable reserve - - - - - - - -
1. Withdrawal in the report period - - - - - - - -
2. Usage in the report period - - - - - - - -
(VII) Other - - - - - - - -
32,673,227.0 -2,698,131,623. -1,686,977,755.
IV. Balance at period end 551,347,947.00 427,132,693.91 -
- - 1 44 52
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
Statement on Changes of Shareholders’ Equity of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in last report period
Paid-up General
Items Capital Less: Treasury Reasonable Surplus Retained Total owners’
capital (Share risk
reserves Stock reserve reserves profit equity
capital) provision
479,433,003.0 410,893,564.3 -2,661,268,53 -1,738,268,738.6
I. Balance at the end of the last year - - 32,673,227.01 -
0 3 3.01 7
Add: Changes of accounting policy - - - - -
Error correction of the last period - - - - -
18
Statement on Changes of Shareholders’ Equity of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in last report period
Paid-up General
Items Capital Less: Treasury Reasonable Surplus Retained Total owners’
capital (Share risk
reserves Stock reserve reserves profit equity
capital) provision
Others - - - - -
II. Balance at the beginning of this 479,433,003.0 410,893,564.3 -2,661,268,53 -1,738,268,738.6
year 0 3 - - 32,673,227.01 - 3.01 7
III. Increase/ Decrease in this year -102,983,715.
-55,181,303.89
(Decrease is listed with “-”) - 47,802,411.22 - - - - 11
-102,983,715.
(I) Net profit -102,983,715.11
- - - - 11
(II) Other consolidated income - - - -
-102,983,715.
Subtotal of (I) and (II) - -102,983,715.11
- - - - - 11
(III) Owners’ devoted and
decreased capital - 47,802,411.22 - - - - - 47,802,411.22
1. Owners’ devoted capital - - - -
2. Amount calculated into owners’
equity paid in shares - - - -
3. Others - 47,802,411.22 - - 47,802,411.22
(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’ equity - - - - - - - -
1. Capital reserves conversed to
capital (share capital) - - - - -
2. Surplus reserves conversed to - - - - -
19
Statement on Changes of Shareholders’ Equity of Parent Company
2010
Prepared by Shenzhen China Bicycle Company (Holdings) Limited
Unit: RMB Currency: CNY
Amount in last report period
Paid-up General
Items Capital Less: Treasury Reasonable Surplus Retained Total owners’
capital (Share risk
reserves Stock reserve reserves profit equity
capital) provision
capital (share capital)
3. Remedying loss with profit
surplus - - - - -
4. Others - - - - -
(VI) Reasonable reserve - - - - - - - -
1. Withdrawal in the report period - - - - -
2. Usage in the report period - - - - -
(VII) Other - - - - -
479,433,003.0 458,695,975.5 -2,764,252,24 -1,793,450,042.5
IV. Balance at period-end
0 5 - - 32,673,227.01 - 8.12 6
Legal representative: _____________
Person in charge of accounting works: _____________
Person in charge of accounting organ: _____________
20
Shenzhen China Bicycle Company (Holdings) Limited
Notes to Financial Statement
FY2010
I. Company Profile
1. Company History
According to the Approval Document SFBF (1991) No. 888 issued by the People’s Government of
Shenzhen, Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the
Company) was reincorporated as the company limited by shares in November 1991. On 28
December 1991, upon the Approval Document SRYFZ(1991) No. 119 issued by Shenzhen Special
Economic Zone Branch of the People’s Bank of China, the Company got listed on Shenzhen Stock
Exchange. The Company reserves the business license for the enterprise legal person (QGYSZFZ
No.101165) [the registered number has been altered as 440301501122085] with the registered
capital of RMB551, 347,947.00.
2. Business Scope and Operation
The Company belongs to the machinery manufacture industry and mainly engages in the production
and assembly of various bicycles and spare parts, components, parts, mechanical product, sport
machinery, fine chemicals, carbon fiber composites material, household electrical appliance and
affiliated components (products management by license excluded).
The Company is specialized in making the middle-top rank bicycles, the main brands are
EMMELLE and CHIMO, and various electrical bicycles.
The majority of its products were previously exported, however, the sales volume sharply declined
in recent years because of the antidumping litigation. Hence, the Company commences on the debt
reorganization and makes greater efforts to develop and research the new products, and creates a
range of electrical bicycles to occupy the domestic market.
3. Approval Issuer and Date for Financial Statement
The financial statement was deliberated and approved in the 5th meeting of the 7th Board Meeting
held on 25 April 2011.
II. Main Accounting Policy, Accounting Estimate and Errors
1. Compilation Basis of Financial Statement
The financial statement has been prepared under the Accounting Standard for Enterprise—Basic
issued on 15 February 2006 together with “Item 38”-Details of Accounting Standard, and
Application Guide of Accounting Standard for Enterprise issued subsequently, the Accounting
Standard for Enterprise—Explanation and other relevant regulations(together short for “Accounting
Standard for Enterprise”), and the regulation of Rules of Preparation on Information Disclosures for
Enterprise with Shares Listing No. 15- General Provision of Financial Report (Revised 2010) from
CSRC.
Ended as 31 December 2010, total assets of the Company amounting to RMB 138,158,078.89, the
liability were RMB 1,894,343,521.76 in total, net assets amounting to RMB -1,756,185,442.87
which seriously insolvency. Management of the Company adopts the measures listed in Note 10.3
carried in this report, along with the continuously development for debt and assets restructuring, the
business environment, business status and sustainable ability in business achieved a further
improvement, the financial statement 2010 prepared based on the sustainable business was
appropriated.
2. Announcement for Following the Enterprise Accounting Standards
The financial statement complied by the Company pursuant to the foresaid compilation basis truly
21
and fully reflects such related information as financial status as of 31 December 2010, operation
achievement and cash flows of the Company and parent company for 2010.
3. Accounting Period
The company adopts Gregorian calendar, namely each 1 January to 31 December should be one
fiscal year.
4. Standard Accounting Currency
The Company adopts Renminbi as the standard accounting currency.
5. Accounting Treatment Method for Business Combinations under the Same Control and not
under the Same Control
(1) The business combination under the same control:The assets and liabilities that the
combining party obtains in a business combination shall be measured on the basis of their carrying
amount in the combined party on the combining date. As for the balance between the carrying
amount of the net assets obtained by the combining party and the carrying amount of the
consideration paid by it (or the total par value of the shares issued), the additional paid-in capital
shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings
shall be adjusted. The direct cost for the business combination of the combining party shall,
including the expenses for audit, assessment and legal services, be recorded into the profits and
losses at the current period. Where a relationship between a parent company and a subsidiary
company is formed due to a business combination, the parent company shall, on the combining
date, prepare a consolidated balance sheet, a profit statement and a cash flow statement. In the
consolidated balance sheet, the assets and liabilities of the combined party shall be measured
pursuant to their carrying amount. If it is necessary to make an adjustment according to the present
Standard because the accounting policy adopted by the combined party is different from that
adopted by the combining party, the assets and liabilities of the combined party (parties) shall be
measured on the basis of the post-adjustment carrying amount. The consolidated profit statement
shall include the incomes, expenses and profits of the combining party incurred from the beginning
of the current period to the combining date. The net profits of the combined party which has been
realized prior to the combination shall be reflected through an item separately presented in the profit
statement. The consolidated cash flow statement shall include the cash flow of the parties to the
combination from the beginning of the current period to the combining date.
(2) Business Combination Not under the Same Control: The combination costs shall be the fair
values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity
securities issued by the acquirer in exchange for the control on the acquiree, as well as all relevant
direct costs incurred to the acquirer for the business combination shall also be recorded into the cost
of business combination. The acquirer shall, on the acquisition date, measure the assets given and
liabilities incurred or assumed by an enterprise for a business combination in light of their fair
values, and shall record the balances between them and their carrying amounts into the profits and
losses at the current period. The acquirer shall recognize the positive balance between the
combination costs and the fair value of the identifiable net assets it obtains from the acquiree as
business reputation. The acquirer shall reexamine the measurement of the fair values of the
identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the
combination costs, If, after the reexamination, the combination costs are still less than the fair value
of the identifiable net assets it obtains from the acquiree, it shall record the balance into the profits
and losses of the current period. Where a relationship between a parent company and a subsidiary
company is formed due to a business combination, the parent company shall prepare a combined
balance sheet on the acquisition date, which shall present the identifiable assets, liabilities and
contingent liabilities acquired in the combination at their fair values.
22
6. Compilation of Consolidated Financial Statements
(1) A. The scope for the consolidated financial statements shall be confirmed based on the principle
of control. The consolidated financial statements shall be compiled based on the financial
statements of the Company and all related subsidiaries incorporated into the scope of consolidated
financial statements. The long-term equity investment to the subsidiary shall be adjusted according
to the equity method, and then all related investments and transaction between the Company and
related subsidiaries in the scope of the consolidated financial statement are offset, besides, the
minority interest income and rights are consolidated.
B. In case of any inconsistency of the accounting policy between the subsidiary and the head office,
the accounting policy adopted by the head office shall prevail.
C. The consolidation for the subsidiary acquiring from the enterprise acquisition under the same
control shall be deemed that such consolidation has been occurred at the early stage of the current
period, which assets, liabilities, operation achievement and cash flow shall be incorporated into the
consolidated financial statement.
D. As for the consolidation under the same control, the net profits and loss suffered by the
reorganized party shall be recorded as the on-recurring profit and loss and independently itemized
in the financial statements.
E. As for the reorganization of non-enterprise consolidation under the same controller, the reference
profit statement shall be compiled from the beginning of the consolidation period in case that total
assets at the end of previous fiscal year, or the operating income or the total profit of the
reorganized party for the previous fiscal year reaches or exceeds 20% of the reorganizing party
before the reorganization.
F. As for the subsidiary acquiring from the enterprise acquisition not under the same control, it
requires adjusting some financial statements based on the fair value of the identified net assets on
the acquisition day when compiling the consolidated financial statements.
(2) Concerning the equity of same subsidiary buy than sell or sale than buy in successively two
fiscal years, relevant accounting treatment should be disclosed.
7. Confirmation Standard for Cash and Cash Equivalent
Cash refers to in-stock cash and bank savings which are available for payment whenever needed.
Cash equivalent refers to the investment held by the Company with short term(due within three
months since the date of purchased generally), strong liquidity and low risk of value fluctuation that
is easy to be converted into cash of known amount.
8. Foreign Currency Transactions and Foreign Currency Statement Translation
A. Foregn currency transactions
The occurred foreign currency transactions should be converted into Renminbi with taking spot
exchange rate at the transaction date as the exchange rate. The approximate spot exchange rate
refers to the exchange rate at the beginning of current month.
The Company shall, on the balance sheet date, treat the foreign currency monetary items and
foreign currency non-monetary items in accordance with the following provisions:
a. The foreign currency monetary items shall be translated at the spot exchange rate on the balance
sheet date. The balance of exchange arising from the difference between the spot exchange rate on
the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the
balance sheet date shall be recorded into the profits and losses at the current period.
b. The foreign currency non-monetary items measured at the historical cost shall still be translated
at the spot exchange rate on the transaction date, of which the amount of functional currency shall
not be changed.
c. The foreign currency non-monetary items measured at the fair value shall be translated at the spot
exchange rate on the day for the confirmation of the fair value, the balance between the Renminbi
23
and the original standards currency shall be recorded into the profits and losses at the current period
as the changes of the fair value.
B. Translation of foreign currency financial statements
When translating the financial statements on the overseas businesses, the Company shall comply
with the following provisions:
a. The asset and liability items in the balance sheets shall be translated at a spot exchange rate on
the balance sheet date. Among the owner's equity items, except the ones as "undistributed profits",
others shall be translated at the spot exchange rate at the time when they are incurred.
b. The income and expense items in the profit statements shall be translated at the spot exchange
rate of the transaction date, or at a spot exchange rate which is determined through a systematic and
reasonable method and is approximate to the spot exchange rate of the transaction date.
The balance arisen from the translation of foreign currency financial statements in compliance with
the aforesaid Items (a) and (b) shall be presented separately under the owner's equity item of the
balance sheets.
9. Financial Instruments
A. Classification of the financial instruments
The financial assets covers the financial assets measured at the fair value and its changes was
recorded into the profits and losses at the current period (including the tradable financial assets and
its changes recording into the profits and losses at the current period), held-to-maturity investment,
loan and account receivables, saleable financial assets.
B. Measurement of Financial Instruments
a. The financial assets shall be measured at the fair value at the time of initially reorganization. The
relevant expenses for the financial assets measured at the fair value and its changes recording into
the profits and losses at the current period shall be directly recorded into the profits and losses at the
current period; and the relevant expenses for other financial assets shall be recorded into the
initially confirmed amount.
b. The enterprise made subsequent measurement on its financial assets according to their fair values,
and may not deduct the transaction expenses that may occur when it disposes of the said financial
asset in the future. However, those under the following circumstances shall be excluded:
1) The investments held until their maturity, loans and accounts receivable shall be measured on the
basis of the post-amortization costs by adopting the actual interest rate method;
2) The equity instrument investments for which there is no quotation in the active market and whose
fair value cannot be measured reliably, and the derivative financial assets which are connected with
the said equity instrument and must be settled by delivering the said equity instrument shall be
measured on the basis of their costs.
C. Confirmation of financial assets’ fair value
a. As for the financial assets for which there is an active market, the quoted prices in the active
market shall be used to determine the fair values thereof;
b. Where there is no active market for financial assets, the Company adopts value appraisal
techniques to determine its fair value. The result obtained by adopting value appraisal techniques
shall be able to reflect the transaction prices that may be adopted in fair dealings on the value
appraisal day.
D. Transfer of financial assets
If the Company has transferred all or part of the risks and rewards related to the ownership of the
financial asset to the transferee, these financial assets shall be stopped recognizing, where if it
retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall not
stop recognizing these financial assets.
E. Impairment of financial assets
The Company carries out an inspection, on the balance sheet day, on the carrying amount of the
financial assets other than those measured at their fair values and of which the variation is recorded
into the profits and losses of the current period. Where there is any objective evidence proving that
24
such financial asset has been impaired, an impairment provision shall be made. The objective
evidences that can prove the impairment of a financial asset shall include:
a. A serious financial difficulty occurs to the issuer or debtor;
b. The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the
payment of interests or the principal, etc.;
c. The Company makes any concession to the debtor which is in financial difficulties due to
economic or legal factors, etc.;
d. The debtor will probably become bankrupt or carry out other financial reorganizations;
e. The financial asset can no longer continue to be traded in the active market due to serious
financial difficulties of the issuer;
f. Any seriously disadvantageous change has occurred to technical, market, economic or legal
environment, etc. wherein the debtor operates its business, which makes the investor of an equity
instrument unable to take back its investment;
g. It is impossible to identify whether the cash flow of a certain asset within a certain combination
of financial assets has decreased or not. But after making an overall appraisal according to the
public data available, it is found that the predicted future cash flow of the said combination of
financial assets has indeed decreased since it was initially recognized and such decrease can be
measured, ;
h. Where the fair value of the equity instrument investment drops significantly or not
contemporarily; and
i. Other objective evidences showing the impairment of the financial asset.
F. Measurement of impairment of financial assets
a. The impairment test is not required for the financial assets measured at the fair value and its
changes recording into the profits and losses of current period;
b. Measurement of the impairment of held-to-maturity investment: the impairment provision shall
be made according to the balance that the future cash flow shall be lower than the ending book
value;
c. Confirmation standards and provisions for bad debt of accounts receivables: An impairment test
shall be made on the financial assets with significant single amounts. If any objective evidence
shows that the accounts receivable has been impaired, the impairment-related losses shall be
recognized to prepare the provisions for bad debts according to the balance between the future
present value and the book value. With regard to the financial assets with insignificant single
amounts, if any objective evidence shows that the accounts receivable suffers no impairment, the
account age analysis method shall be adopted, and withdraw and confirm the impairment loss
according to the account age and specified ratio; With regard to the financial assets with
insignificant single amounts, an independent impairment test may be carried out, or they may be
included in a combination of financial assets with similar credit risk features so as to carry out an
impairment-related test. As for the account receivable without any impairment, after the
independent impairment test, the impairment loss shall be made according to the account age and
the ratio as stipulated.
d. Judgment of impairment of saleable financial assets: Provided that the fair value of saleable
financial asset has great depreciation, or takes into any related factors account, it shows that such
depreciation is permanent, it shall be recognized the impairment.
10. Account Receivable
(1) Confirmation and Method for Provisions for Bad Debts of Single Significant Amount
Standards for the determination on account receivable
with single significant amount based on business scale,
Determine basis or amount standards for Single
business nature and settlement status of the clients:
Significant Amount
The account receivable over RMB 5 million(including
RMB 5 million) at period-end
25
An impairment test shall be made on the financial
assets with significant single amounts. The
Withdawal method on single significant amount and impairment-related losses shall be recognized to
with bad bedt provision accrued for single item prepare the provisions for bad debts according to the
balance between the future present value and the book
value.
(2) Bad debt provision for account receivable withdrawal by combination:
Basis for combination determine: characteristic of credit risk
Item Accrued method
Age analysis method: determined the impairment losses
Age group—account receivable with same book age
and bad debt provision accrued by age and regulated
ownes similar characteristic in credit risk
withdrawal proportion of the account receivable
Adopt age analysis method for bad debt provision withdrawal in combination:
Accrued ratio for account Accrued ratio for other
Age
receivable(%) account receivable(%)
Within I year (1 year included) 0.3 0.3
1-2 years 0.3 0.3
2-3 years 0.3 0.3
Over 3 years 100 100
(3) Account receivable with minor single amount but with withdrawal bad debt provision for single item:
Reasons of withdrawal bad debt
Clearly evidence shows that the account hard to recover
provision for single item
Withdrawal method for bad debt Recognized impairment loss and accrued the bad debt provision according to
provision the balance between future cash flow on account receivable and its book value
11. Inventory
(1) Classification of inventory
The inventory of the Company refers to such seven classifications as the raw materials, product in
process, goods on hand, wrappage, low value consumables, materials for consigned processing and
goods sold.
(2)Valuing of the delivered inventory
The Company adopts the historical cost for obtaining or the planned cost to value the inventory
according to its actual situation, and weighted average method for the issued inventory.
(3) Confirmation of net realizable value for the inventory and provision for inventory impairment
The net realizable value for the inventory refers to, in the course of general operation, the estimated
amount with deducting the estimated cost, estimated sales expense and related taxes from the
estimated sales price.
Provision for inventory impairment: Based on making an overall check of the inventory at the
middle and end of the year, the Company measures the whole or partial out-of-dated inventory or
the inventory with extremely lower price according to the cost or the net realizable value, whichever
is lower; and withdraws the impairment provisions for the single inventory according to the balance
between the net realizable value and the cost and recorded into the profits and losses of current
period. In addition to the holding purpose and the price and cost fluctuation as of the balance sheet
date, the Company shall take into the future event account when confirming the net realizable value.
(4)Rake inventory
In addition to the periodic inventory system for the products, the Company adopts the perpetual
inventory system for other inventories.
(5) Amortization method for the low-value consumables and wrappage
Low-value consumables
26
The Company adopts one-off amortization method to amortize the low-value consumables
Wrappage
The Company adopts one-off amortization method to amortize the wrappage at the time of receipt.
12. Long-term equity investment
Determination of investment cost
A. Recognized investment cost by followed for the long-term equity investment fromed by
enterprise merger:
a.Merger of the units controlled by the same entity is effected through payment in cash, non-cash
asset transfer or debt transfer. On the date of the merger, the book value of the equities of the units
merged is made the initial investment costs of the long-term equipty investment. The capital surplus
is adjusted on the basis of the difference between the initial costs of long-term equity investment,
payment in cash, non-cash assets transferred and the debts. In case the capital surplus is not enough
for deducting, the retained earnings will be adjusted.
In case the units being merged through issuing equity securities, the book value of equity of units
being merged is made the initial costs of long-term equity investment on the date of merger. The
total face value of the securities issued is regarded as equity capital. The capital surplus is adjusted
on the basis of the difference between the initial costs of long-term equity investment and the facel
value of the securities issued. In case the capital surplus is not enough for deducting, the retained
earnings will be adjusted.
b. In case of merger that is not effected under the same controlling entity, the merger costs
determined by the following regulations is made the initial investment costs:
①In case the merger is effected through one-time swap, the merger cost is the the assets, debts or
equity securities paid by the purchaser on the date of merger.
②In case of a merger effected through a series of transactions, the merger cost is the total of all the
separate transactions.
③The related costs incurred by the purchaser for the merger is all charged to the current gains and
losses.
④In case the merger contract or agreement have any regulation that may influence the cost of
merger in the future, or it is predicted on the purchasing date that the merger costs will definitely be
influenced in the future, the influence is charged to the merger costs.
B.Beside the long-term equity investment produced by merger, the long-term equity investment
produced through other means shall be determined of its initial costs according to the following
regulations:
a.The initial investment costs of the long-term equity investment produced through payment in cash
is determined on the basis of the actual payment for the purchase. The initial investment cost
includes the immediately related expenses, taxe or other costs necessary for the long-term equity
investment.
b.In case of long-term equity investment produced through issuing equity securities, the fair value
of the equity securities is initial investment cost.
c.In case of input as long-term equity investment by investors, the value agreed upon in the
investment contract or agreement is the initial investment cost; but, except the case that the value is
not fair in the contract or agreement.
d.In case of long-term equity investment produced through commercially-natured non-monetary
assets transactions, the fair value of the incoming long-term equipty investment and the related
taxes is the initial investment cost. In case of long-term equity investment produced through
non-commercially-natured non-monetary assets transactions, the book value of the outgoing assets
and the related taxes is the initial investment cost.
(2)Subsequent reckoning as well as profits and loss determination method
A.Costing method is applied for the long-term equity investment in case the company has a control
over the invested unit, or, the company cann’t co-control or has no material influence on the unit
and there is no quotation on the market or the fair value is reliable.
27
The long-term equipty investment accounted by cost method is priced on the basis of the initial
investment cost. When adding or withdrawing the investment, the cost of the long-term equity
investment is adjusted.
B.Equity method is applied for the case the company can co-control or has material influence on the
invested unit.
In case the initial investment cost of the long-term equity investment is greater than fair value of the
net descinible assets that should be enjoyed from the invested unit at the time of investment, the
initial investment cost of the long-term equipty investment is not to be adjusted. In case the initial
investment cost of the long-term equity investment is less than fair value of the net descinible assets
that should be enjoyed from the invested unit at the time of investment, the difference should be
charged to the profits or loss of the term, and at the same time, the cost of long-term equity
investment should be adjusted.
After the company obtains a long-term equity investment, the investment profits or losses shall be
determined, and the book value of the lont-term equity investment shall be adjusted, according to
the sharable net profits or losses created at the invested unit. The book value of the long-term equity
investment shall be reduced according to the sharable profits or cash interests published by the
invested unit. In case the net losses of the invested unit is confirmed by the company, the book
value of the long-term equity investment and other long-term interests of the invested company can
be reduced not beyond the limit of 0, except the case where the company undertakes additional
responsibilities for loos. In case the invested unit reaps profits thereafter.
When determining the entitled share of the net profits or loss of the invested unit, the net profits or
loss of the invested unit is adjusted on the basis of the fair discernible value of various assets of the
invested unit. If the accounting policies and term of the invested unit is not the same as those of the
investing unit, those of the investing units prevail, on the basis of which, the financial statements of
the invested unit are adjusted and the investment profts or losses are determined.
C.For the long-term equity investment, the difference between the book value and actually obtained
payment shall be charged to the profits and loss of the term.
(3)The basis for the co-control over and material imfluence on the invested unit
Co-control refers to a contract-based joint control over a certain ecomomic activity, which is valid
only when unanimously agreed upon by the investors with control right to the important financial
and operation decisions for the activity.
Material influence refers to having right to take part in, but cannot control or co-control, the
financial or operation decision making processes in an enterprise.
(4)Depreciation test method and depreciation allowance
The long-term equity investment shall be checked on the date of the balance sheet to determine if
the long-term equity investment has suffered any depreciation. If there is sign of depreciation for
worsening operation of the company, then estimates shall be made of the recoverable amount. If the
estimate indicates that the recoverable amount for the long-term equity investment is lower than the
book value, then the book value is reduced to the recoverable amount, where the reduction amount
is charged to asset depreciation loss, the profits or losses of the term, and the corresponding
long-term investment depreciation allowance. Once the long-term investment depreciation loss is
determined, it will not be transferred back in the subsequent period of time.
13.Investment real estate
investment real estate refers to the real properties for the purpose of rental or value increase or both.
1. Investment real estate is measured according to the initial cost.
(1) Cost of investment real estae from purchasing, including the price of purchase, relevant taxes
and other expenditures attributable to this assets.
(2) Cost of investment real estate from self-construction, consist of the necessary expenditures that
occurred before the useful statuse that predicted.
(3) Cost of investment real estae obtained from other meas, recognized cost according to relevant
accounting standards.
28
2. Follow-up measurement
The follow-up expenses that are related to investment real estate, if the economic interests related to
the assets are is likely to inflow cost and its costs can be reliably measured, shall be included in the
cost of investment real estate; or else, reconkoned into current gains and losses while occurred.
The Company adopts cost model to have follow-up measurements on the investment real estate at
balance sheet date.
3. Depreciation and impairment provision
Found in the “Execution of depreciation and impairment provision for fixed assets” under Note(9)
carried in this report.
14.Fixed assets
(1) Fixed assets confirmation conditions
Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, and with
a service life in excess of 1 finanical year. The fixed assets shall be evaluated initially at the actual costs. Fixed
assets’ related financial benefits shall flow into the enterprise and their value can be measured.
(2) Depreciation methods for various fixed assets
Categories years of scrap value rate(%) yearly depreciation
depreciation(years) rate(%)
Housing buildings 20 10 4.5
Machines and equipment 10 10 9
Office equipment 5 10 18
Electronic equipment 5 10 18
Transportation equipment 5 10 18
Other equipment 5 10 18
(3) Depreciation test method and depreciation allowance method for fixed assets
It is necessary to judge if the fixed assets have had any depreciation on the date of the balance sheet. If their
market value goes down steadily, or technologically old or damaged, or laying idle for long time, the recoverable
amount of the fixed assets shall be estimated. If the recoverable amount is lower thant their book value, then the
book value of the fixed assets shall be reduced to the recoverable amount. The reduction shall be charged to asset
depreciation allowance and the loss and profits of the term. When the depreciation of the fixed assets is
confirmed, it will not be transferred back in the subsequent time.
(4) Determination and evaluation method for fixed assets financed by leasing
If all the risks and remunerations related to a certain fixed asset financed by leasing have been materially
transferred, the company will regard it as a case of fixed asset financed by leasing. For the assets financed by
leasing, the book value of the assets financed by leasing shall be the fair value of the assets on the date of leasing
or the lowest price for leasing, whichever is lower, plus the initial costs of the leasing project. The lowest leasing
fees is the book value of the long-term accounts payable, their difference is being regarded as fiancing costs. The
unconfirmed financing costs are amortized in the leasing term with the actual interest rate method. The
depreciation and depreciation rate shall be determined on the basis of the leasing term and the estimated scrap
value.
15. Project under Construction
A. Calculation Method of Project under Construction
The project under construction includes the preparation before execution, construction engineering, installation
work, technical modification work and big repair work during the execution, etc. It can be calculated upon the
sub-project according to the expenditure actually incurred and transferred into the fixed asset when the project
reaches the scheduled usable status. The borrowing cost (including loan interest, amortization of premium and
exchange loss or gain, etc) relevant with the project under construction can be counted into the cost of the
engineering before the relevant engineering reaches the scheduled usable status; while it can be counted into the
financial expense of the current period after the relevant engineering reaches the scheduled usable status.
B. Depreciation Reserves of Project under Construction
The project under construction shall be fully inspected on the date of Balance Sheet to judge whether there is
depreciation probably incurring on it. If so, (1) the project under construction shall be stopped for a long time and
shall not be re-started within three years upon prediction; (2) If the project under construction is out of date in its
performance and technology, and the economic benefit has great uncertainty, it can recover its amount upon
estimation. According to the calculation result of recoverable amount, if the recoverable amount of the project
under construction is lower than the carrying value, then the carrying value of the project under construction shall
be decreased to the recoverable amount. The decreased amount is defined as the loss on asset depreciation and
counted into the loss or gain of the current period. Meanwhile, corresponding depreciation reserves for the project
29
under construction shall be accrued. The depreciation loss of the project under construction shall not be
transferred back during the future accounting year once its confirmation.
16. Borrowing Costs
A. The borrowing costs incurred, which can directly belong to the purchase and production of assets in accordance
with the capitalization can be capitalized and counted into relevant capital cost; and the other borrowing costs can
be counted into the loss or gain of the current period according to the incurred amount. And the borrowing costs
can be capitalized if meeting the following conditions:
a. The asset expenditure has been incurred, which includes the paid cash used to purchase or produce the assets in
accordance with the capitalization conditions, and the expenditure incurred during transferring the non-cash assets
or bearing the debt with interest;
b. The borrowing costs has been incurred;
c. The purchase or production activities have been started, which are necessary to make the assets reach the
scheduled usable or vendible status.
B. The borrowing costs stop the capitalization when the purchased or produced assets in accordance with the
capitalization reach the scheduled usable or vendible status. And the borrowing costs incurred after the assets in
accordance with the capitalization conditions reach the scheduled usable or vendible status, are confirmed to be
the expenditures according to the incurred amount and counted into the loss or gain of the current period.
17. Intangible Assets
(1) The intangible assets refer to the identifiable and non-currency assets without physical form owned or
controlled by the enterprise, including the patents and land tenure, etc.
(2) The intangible assets are valuated according to the actual costs during the acquirement.
(3) The intangible assets, of which the service life has been defined, can be amortized with straight-line method
during the period since the usable time, and counted into the loss or gain of the current period; the intangible
assets, of which the service life has been not defined, are not amortized. The company shall check the service life
and amortization method of the intangible assets at the end of the year. If the service life and amortization are not
the same as before, then they shall be changed.
(4) Depreciation Reserves of Intangible Assets
At the end of the period, check each kind of intangible assets, which can be predicted to bring the future economic
benefits to the company, one of the following circumstances shall exist: (1) A certain intangible asset has been
replaced by other new technology, which makes the ability to create the economic benefits for the company
greatly influenced; (2) The market price of a certain intangible asset greatly decreases at the current period and
shall not restore within the residual amortization period upon prediction; (3) A certain intangible asset has
surpassed the limit of legal protection, but it remains part of use value. It can recover the amount upon estimation.
According to the calculation result of recoverable amount, if the recoverable amount is lower than the carrying
value, then the carrying value of intangible asset shall be decreased to the recoverable amount. The decreased
amount is defined as the loss on asset depreciation and counted into the loss or gain of the current period.
Meanwhile, corresponding depreciation reserves shall be accrued; (4) For a certain intangible asset, which has
incurred the depreciation reserves upon enough evidence, and if the recoverable amount is lower than the carrying
value upon estimation, the balance between them shall be accrued for depreciation reserves of intangible assets.
The depreciation loss of intangible assets shall not be transferred back during the future accounting year once its
confirmation.
18. Long-term Deferred Expenses
A. Long-term deferred expenses refer to the various expenses with the allocated time limit for the current period
and future each period over one year.
B. Long-term deferred expenses are valuated according to the actual cost during the acquirement. The promotion
expense is counted into the loss or gain of the current period when the incurrence; the decoration expense of the
operating leased fixed assets is amortized on average during the lease period; and other long-term deferred
expenses are amortized on average during the profitable period. For the long-term deferred expenses which cannot
bring predicated economic benefits during the accounting period, the company shall transfer the all amortized
values without amortization into the loss or gain of the current period.
19. Estimated Liabilities
A. The duty or the duty relevant with the matter shall be confirmed as the estimated liability, complying with the
following conditions: the duty is the current duty assumed by the company; the performance of the duty may
cause the economic benefit flows out of the enterprise; the amount of the duty can be reliably counted;
B. For all or part expenditures required for the payment of the estimated liabilities, which are expected to be
compensated by the third party, and when the compensation amount can be received only once it is basically
30
defined, then the asset can be singly confirmed. Meanwhile, the compensation amount confirmed for the asset
through the single calculation shall not surpass the corresponding carrying amount.
20. Revenue
A. Revenue of commodity sales
The enterprise has transferred the main risk and remuneration on the ownership of the commodities to the buyer;
the enterprise doesn’t reserve the continuous management right in connection with the ownership and executes
effective control on the sold commodities. The revenue amount can be reliably counted; relevant economic
interest may flow out of the enterprise; and the relevant incurred cost or cost to be incurred can be reliably
counted.
B. Revenue from labor service
For the labor service which starts and ends within the same accounting year, the revenue shall be confirmed when
it ends; if the labor service which starts and ends not in the same accounting year, the relevant revenue shall be
confirmed according to the percentage of the completion under the condition that the result to provide labor trade
can be reliably estimated.
C. Revenue from abalienating the right to use assets
The revenue from abalienating the right to use assets includes interest revenue and operating cost revenue. The
former is calculated and defined according to the time when others use the monetary fund of the company and the
actual interest rate; while the latter is calculated and defined according to the charging time and method negotiated
according to the relevant contract or agreement.
21. Government Grants
Government grants include financial allocation, financial discount, tax rebate and free assignment of non-currency
assets. The government grants received by the company and relevant with the assets are confirmed as the deferred
income, which is counted into the loss or gain of each period within the service life of the asset since it reaches the
scheduled usable stats. And the deferred income balance shall be transferred into the loss or gain of asset disposal
of the current period if it is sold, transferred, rejected or destroyed before the service life ends. The government
grants received relevant with the income and used to compensate the relevant cost or loss afterwards are
confirmed as the deferred income, which shall be counted into the loss or gain of the current period when
confirming the relevant costs; and those used to compensate the incurred relevant cost or loss shall be directly
counted into the loss or gain of the current period.
22. Deferred tax assets / deferred income tax liabilities
A.The confirmation of deferred income tax assets
a.Our company is likely to take the deductible temporary differences taxable income used to be deducted as the
limit, confirming the deferred tax asset is produced by the deductible temporary differences. However, when the
transactions possess the following characteristics at the same time, the deferred tax asset produced due to the
initial confirmation of assets or liabilities are not confirmed:
1/ the transaction is not a corporate combination;
2/ Transactions affect neither the accounting profit nor taxable income (or deductible loss).
b.Our company , subsidiaries , affiliated companies and joint venture companies invest the related deductible
temporary differences, while meeting the following conditions, confirming the corresponding deferred income tax
assets:
1/ the temporary differences in the foreseeable future is likely to be reversed;
2/ the taxable income used for deductible temporary differences is likely to be gained in the future.
c.Our company offsets the deductible losses and tax credits which can be carried forward for future years, taking
the future taxable income which can be used to deduct the deductible losses and tax credits as the limit, and
confirming the corresponding deferred income tax assets.
B.The confirmation of deferred income tax liabilities
Besides the following deferred income tax liabilities, our company confirms all deferred income tax liabilities
produced by the taxable temporary differences:
a.The initial confirmation of creditworthiness;
b.The assets or liabilities which meets the following characteristics of the transactions generated is confirmed:
1/ the transaction is not a corporate combination;
2/ Transactions affect neither the accounting profit nor taxable income (or deductible loss).
c.Our company , subsidiaries , affiliated companies and joint venture companies invest the related deductible
temporary differences, while meeting the following conditions:
1/ Investment companies can control the timing of the reversal of temporary differences;
2/ the temporary differences is unlikely to be reversed in the foreseeable future.
31
23.the main accounting policies, changes of accounting estimates
No changes on accounting policies and estimation in the period.
24. prior period correction of accounting errors
No accounting error correction is available during the period of this report
25. Other preparation method on main accounting policies, accounting estimation and fiannial statement
No other preparation for a accounting policies, accounting estimation and fiannial statement of the Company.
III. Taxes
1. Mai tax category and tax rate
Tax category Tax calculation evidence Tax rate
Sales income, and income from processing,
Value added tax maintenance, making repairs and supplying 17%
replacements, and labor service
Sales tax Taxable labor income 5%
tax for maintaining and Amount of value-added tax and sales tax
1%, 7%
building cities payable
Amount of value-added tax and sales tax
Educational surtax 3%
payable
Business income tax * Taxable income 22%
*According to the Notification on Implementing Transitional Preferable Policy about Business Income Tax [GF
(2007) No. 39] issued by the State Council on Dec. 26, 2007, the preferential policy about business income tax
enjoyed by enterprises according to original tax laws, administrative rules, and documents with effect of
administrative force shall be transited according to the following measures: Since Jan. 1, 2008, original enterprises
enjoying low tax preferential policy shall be gradually transited to legal tax rate within 5 years after the execution
of new tax law. Where, enterprises enjoying business income tax 15% shall execute the tax rate 18%, 20%, 22%,
24%, and 25% respectively in 2008, 2009, 2010, 2011, and 2012. Therefore, the business income tax executed by
the enterprise in 2010 was actually 22%.
32
IV. Business Combination and Consolidated Financial Statements
1. Subsidiaries
(1) Subsidiaries obtained by means of establishment or investment, etc.
Unit: RMB
Balance
after that
the loss
of current
period
shared by
minor
Amount sharehold
Balance
for ers and
of other
offsetting offset
items
the gain with
Actual amount actually proporti Proporti Consolida
Busine Register Minor and loss parent
Registrat Business subscribed at forming on of on of ted report
Full name Type ss ed sharehold of minor company
ion place scope the end of the net shares voting statement
nature capital ers’ equity sharehold owner’s
period investme held power or not
ers in the equity
nt in the
minor exceeds
subsidiar
sharehold the shares
ies
ers’ equity owned by
minor
sharehold
ers in the
subsidiar
y at the
beginning
of period
Shenzhen
Self-owned
Anjule Sole
Shenzhe RMB 2 realty RMB2,000,00
Realty subsidiar Realty - 100% 100% Yes - - -
n million manageme .00
Manageme y
nt
nt Co., Ltd.
China
Sole HK$ Trade and
Bicycle Hong Bicycl HKD20,000.0
subsidiar 0.02 manufactur - 100% 100% Yes - - -
(Internatio Kong e 0
y million ing
nal) Co.,
33
Ltd.
China
Controlli
Bicycle Bicycle
ng Hong Bicycl HK$ 5 HKD5,000,00 -
(Hong and parts - 99% 99% Yes - -
subsidiar Kong e million 0.00
Kong) Co., distribution
y
Ltd.
Shenzhen Controlli
Bicycle
Emmelle ng Shenzhe Bicycl RMB 2 RMB1,400,00
and parts - 70% 70% Yes -
Industry subsidiar n e million 0.00
distribution
Co., Ltd. y
34
(2) The Company has no subsidiary obtained from combination with enterprises under the same control.
(3)The Company has no subsidiary obtained from combination with enterprises not under the same control.
2. No business entity of control right formed by special purpose subject or by means of trusted business or
leasing etc.
3. No changes in the consolidation scope in the period.
4. No enterprise mergered under same control occurred in the period.
5. No enterprise mergered under different control occurred in the period.
6. No subsidiary losses in period by means of equity for sale without contol rights held.
7. No reverse purchase occurred in the period.
8. No obsorbtion emerger occurred in the period.
V. Notes to Items in Consolidated Financial Statements
1. Monetary fund
Unit: RMB Currency: CNY
Amount at the end of period Amount at the beginning of period
Amount in Amount in
Items Conversion Amount in Conversion Amount in
foreign foreign
rate RMB rate RMB
currencies currencies
Cash:
RMB 164,956.42 1.00 164,956.42 122,959.64 1.00 122,959.64
HK
Dollar 1,894.30 - 1,773.76 - - -
US - - -
Dollar 1.25 - 9.13
Subtotal - - 166,739.31 - - 122,959.64
Bank
deposit:
RMB 16,611,335.30 1.00 16,611,335.30 21,070,648.57 1.00 21,070,648.57
HK
Dollar 773,490.97 0.85 658,186.67 815,810.20 0.88 718,304.56
US
Dollar 46,927.13 6.83 320,512.30 46,927.13 6.83 320,512.30
Subtotal 17,590,034.27 22,109,465.43
Total 17,756,773.58 22,232,425.07
2. Notes receivable
(1) Classification of notes receivable
Unit: RMB Currency: CNY
Category Amount at the end of period Amount at the beginning of period
Bank acceptance 2,619,699.00 5,800,000.00
(2) Notes receivable without hypothecation of the Company at the end of period
(3) Notes with endorsement provided to other party but not post-dated of the Company at the end of period:
Unit: RMB Currency: CNY
Drawn by Date of drawal Expire date Amount Remark
Jinan YUSIGN Sales Co.,
Ltd. 2010-10-09 2011-04-09 6,217,759.00
Jinan YUSIGN Sales Co.,
Ltd. 2010-07-27 2011-01-27 5,778,101.00
Jinan YUSIGN Sales Co.,
Ltd. 2010-11-02 2011-04-28 4,000,000.00
Jinan YUSIGN Sales Co.,
Ltd. 2010-09-25 2011-03-25 3,433,808.50
35
Jinan YUSIGN Sales Co.,
Ltd. 2010-08-31 2011-02-28 3,092,163.00
22,521,831.50
3. Accounts receivable
(1) Exposure of accounts receivable by category:
Unit: RMB Currency: CNY
Amount at the end of period
Book balance Bad debt provision
Category
Proporti Proporti
Amount Amount
on(%) on(%)
Account receivable with single major amount but - - - -
withdrawal bed debt provisio for single item
Account receivable withdrawal bad debt provision by age 1,038,181,894. 1,036,449,071.
combination 70 100.00 72 99.83
Account receivable with single minor amount but
withdrawal bed debt provisio for single item - - - -
Total 1,038,181,894. 1,036,449,071.
70 100.00 72 99.83
Amount at the beginning of period
Book balance Bad debt provision
Category
Proporti Proporti
Amount Amount
on(%) on(%)
Account receivable with single major amount and - - - -
withdrawal bed debt provisio for single item
Account receivable withdrawal bad debt provision by age
combination 1,038,871,405.58 100.00 1,038,457,582.45 99.96
Account receivable with single minor amount but
withdrawal bed debt provisio for single item - - - -
Total 1,038,871,405.58 100.00 1,038,457,582.45 99.96
Interpretation to the category of accounts receivable:
According to the business scale, business nature, and customers’ settlement, etc., the account receivable with
single big amount is determined to be RMB 5 million. The account receivable with single big amount has no
depreciation reserve, and the reserve for bad and doubtful account is withdrawn with age analysis method.
(2) In combination, account receivable withdrawal bed debt procision by age analysis method:
Unit: RMB Currency: CNY
Amount at period-end Amount at period-begin
Book balance Book balance
Age Bad debt Bad debt
Amount Ratio(%) Amount Ratio(%
provision provision
)
Within
1year 1,035,032.17 0.10 - 267,076.23 0.03 -
1-2 years 98,211.62 0.01 - 146,746.90 0.01 -
Over 3years 1,037,048,650. 1,036,449,071.7
91 99.89 2 1,038,457,582.45 99.96 1,038,457,582.45
Total 1,038,181,894. 1,036,449,071.7
70 100.00 2 1,038,871,405.58 100.00 1,038,457,582.45
(3) No account receivable actually cancelled after verification in the report period.
(4) The accounts receivable at the end of the report period don’t involve with the shareholder units hodling over
5% (including 5%) voting power of the Company.
(5) Top 5 units with an amount of account receivable:
36
Unit: RMB Currency: CNY
Relationship Proportion among the
Name with the Amount Period gross accounts receivable
company (%)
Total of top 5 customers of Non-affiliated Over 3
accounts receivable customers 535,330,991.79 years 51.56
(6) No account receivable involving with affiliated parties in the report period.
(7) No account receivable with confirmation terminated at the end of the report period.
4. Advance payment
(1) Listing of advance payment by age
Unit: RMB Currency: CNY
Amount at the end of period Amount at the beginning of period
Age
Amount Proportion(%) Amount Proportion(%)
Within 1 year 23,547.00 11.03 81,383.55 41.67
1-2 years 75,961.88 35.59 113,914.54 58.33
2-3 years 113,914.53 53.38 - -
Total 213,423.41 100.00 195,298.09 100.00
(2) The advance payment in the report period doesn’t involve with the shareholder units hodling over 5%
(including 5%) voting power of the Company.
5. Other accounts receivable
(1) Exposure of other accounts receivable by category:
Unit: RMB Currency: CNY
Amount at the end of period
Book balance Bad debt provision
Category
Amount Proporti Amount Proporti
on(%) on(%)
Other account receivable with single major amount and - -
withdrawal bed debt provisio for single item - -
Other account receivable withdrawal bad debt provision
by age combination 558,537,283.06 100.00 540,451,510.17 96.76
Other account receivable with single minor amount but - -
withdrawal bed debt provisio for single item - -
Total 558,537,283.06 100.00% 540,451,510.17 96.76
Amount at the beginning of period
Book balance Bad debt provision
Category
Amount Proporti Amount Proporti
on(%) on(%)
Other account receivable with single major amount and
withdrawal bed debt provisio for single item - - - -
Other account receivable withdrawal bad debt provision
by age combination 565,349,065.19 100.00 541,128,029.26 95.72
Other account receivable with single minor amount but
withdrawal bed debt provisio for single item - - - -
Total 565,349,065.19 100.00 541,128,029.26 95.72
Interpretation to the category of other accounts receivable:
According to the business scale, business nature, and customers’ settlement, etc., the other account receivable with
single big amount is determined to be RMB 5 million. The other account receivable with single big amount has no
37
depreciation reserve, and the reserve for bad and doubtful account is withdrawn with age analysis method.
(2) In combination, other account receivable withdrawal bed debt procision by age analysis method:
Unit: RMB Currency: CNY
Amount at period-end Amount at period-begin
Book balance Book balance
Age Bad debt Bad debt
Amount Proportion(% Amount Proportion(%
provision provision
) )
Within
1year 4,709,642.47 0.84 6,375.74 6,524,227.33 1.15 39,741.46
1-2year
s 4,545,244.91 0.81 135.73 11,188.00 0.01 11,154.44
2-3year
s 2,258.00 - - 2,437,743.66 0.43 2,404,042.83
Over 549,280,137.6 540,444,998.6 556,375,906.2 538,673,090.5
3years 8 98.35 9 0 98.41 3
Total 558,537,283.0 540,451,510.1 565,349,065.1 541,128,029.2
6 100.00 7 9 100.00 6
(3) No other account receivable actually cancelled after verification in the report period.
(4) The other accounts receivable at the end of the report period don’t involve with the shareholder units hodling
over 5% (including 5%) voting power of the Company.
(5) Top 5 units with an amount of other account receivable:
Unit: RMB Currency: CNY
Proportion among
Relationship
the gross accounts
Name with the Amount Period
receivable - others
company
(%)
Total of top 5 customers of other Non-affiliated Over 3
accounts receivable customers 357,001,411.68 years 63.92
(6)No other account receivable involving with affiliated parties in the report period.
(7)No other account receivable-others with confirmation terminated at the end of the report period.
6. Inventory
(1) Inventory classification
Unit: RMB Currency: CNY
Amount at the end of period Amount at the beginning of period
Items Book balance Depreciation Book value Book balance Depreciation Book value
reserve reserve
Raw materials 54,845,278.28 43,902,968.40 10,942,309.88 226,932,646.24 206,024,947.71 20,907,698.53
Low value
and easily
wornoyut
articles 1,456,362.06 1,152,485.26 303,876.80 1,446,868.54 1,315,419.73 131,448.81
Merchandise
inventory 26,448,790.52 16,002,298.91 10,446,491.61 32,378,964.93 20,853,742.68 11,525,222.25
Total 82,750,430.86 61,057,752.57 21,692,678.29 260,758,479.71 228,194,110.12 32,564,369.59
(2) Inventory depreciation reserve
Unit: RMB Currency: CNY
Amount decrease in the current period
Inventory Opening book Closing book
withdrawn in the
category balance Carry-back Trans-sale balance
current period
43,902,968.40
Raw materials 206,024,947.71 - - 162,121,979.31
38
Low value and 1,152,485.26
easily wornoyut
articles 1,315,419.73 - - 162,934.47
Merchandise 16,002,298.91
inventory 20,853,742.68 - - 4,851,443.77
Total 228,194,110.12 - - 167,136,357.55 61,057,752.57
(3) Inventory depreciation reserve
Items Evidence for withdrawal Reason for carry-back of Proportion of carry-back amount in the
of inventory inventory depreciation current period among the closing
depreciation reserve reserve in the current period balance of the inventory
Raw materials Net realizable value is - -
below the cost.
Merchandise Net realizable value is - -
inventory below the cost.
Low value and Net realizable value is - -
easily wornoyut below the cost.
articles
A. Evidence for determing the net realizable value of the abovementioned inventory: raw materials execute
the average unit price of such materials purchased; the materials to be reported discarded after quality guarantee
period, out-of-dated, and not suitable for transformation, etc. execut the recoverable amount; finished products
execute the recent unit sales price of such products minus the direct expense and taxes possibly required for
realization.
B. The trans-sale of raw materials and merchandise inventory in the current period is for that the abovementioned
merchandise has been sold.
39
7. Long-term equity investment
Unit: RMB Currency: CNY
Interpretation depreci
to discrepancy ation
Proportion Cash
Proportion ofbetween the depreciation reserve
Accounti Initial Increase of shares dividen
Opening Closing voting powerproportion of reserve at withdr
Invested unit ng investment or held in d for
balance balance in invested shares and the end of awn at
method cost decrease invested this
units (%) voting power period the
units (%) period
in invested current
units period
Hunan Guangnan Cost 5,679,300.0
Motorcycle Co., Ltd. method 5,679,300.00 5,679,300.00 - 5,679,300.00 5.50 5.50 - 0 - -
Shenzhen Jinhuan Equity 14,883,560.0 14,883,560.0 14,883,560.0 12,263,719.
Printing Co., Ltd. method 0 0 - 0 38.00 38.00 - 50 - -
20,562,860.0 20,562,860.0 20,562,860.0 17,943,019.
Total 0 0 - 0 - - - 50 - -
The industrial and commercial registration information of Shenzhen Jinhuan Printing Co., Ltd. has been cancelled as displayed. Hong Kong Dahuan Bicycle Co., Ltd., one
of the original shareholders of the company, holds the company’s shares under our entrustment, and the actual holder is our company.
40
8. Investment real estate
Unit: RMB Currency: CNY
Opening book Increase in the Decrease in the Closing book
Items balance current period current period balance
I. Total original book value 129,872,063.32 - - 129,872,063.32
1. Houses and buildings 129,872,063.32 - - 129,872,063.32
2. Land use right - - - -
II. Total accumulated depreciation
and accumulated amortization 98,472,548.52 4,964,866.56 - 103,437,415.08
1. Houses and buildings 98,472,548.52 4,964,866.56 - 103,437,415.08
2. Land use right - - - -
III. Total net book value of
investment real estate 31,399,514.80 - - 26,434,648.24
1. Houses and buildings 31,399,514.80 - - 26,434,648.24
2. Land use right - - - -
IV. Total depreciation reserve of
investment real estate - - - -
1. Houses and buildings - - - -
2. Land use right - - - -
V. Total book value of investment
real estate 31,399,514.80 - - 26,434,648.24
1. Houses and buildings 31,399,514.80 - - 26,434,648.24
2. Land use right - - - -
(1) The depreciation amount actually accrued in the period amounting to RMB 4,964,866.56.
(2) The limit of the ownership for abovementioned investment real estate found in Note9(6).
9. Fixed assets
(1) Fixed assets
Unit: RMB Currency: CNY
Items Opening book Increase in the current period Decrease in the Closing book
balance current period balance
I. Total original book value 113,323,144.38 3,471,511.81 147,045.06 116,647,611.13
Where: Houses and buildings 109,055,011.26 - - 109,055,011.26
Machinery and equipment 842,098.00 3,400,000.00 - 4,242,098.00
Means of transport 923,478.06 - - 923,478.06
Other equipment 2,502,557.06 71,511.81 147,045.06 2,427,023.81
Accrued this
Newly added
period
II. Total accumulated
depreciation 87,305,446.09 - 5,548,063.65 145,565.58 92,707,944.16
Where: Houses and buildings 84,785,342.10 - 4,850,790.78 - 89,636,132.88
41
Items Opening book Increase in the current period Decrease in the Closing book
balance current period balance
Machinery and equipment 288,274.10 - 332,888.88 - 621,162.98
Means of transport 643,620.68 - 45,302.04 - 688,922.72
Other equipment 1,588,209.21 - 319,081.95 145,565.58 1,761,725.58
III. Total net book value of -
fixed assets 26,017,698.29 - 23,939,666.97
-
Where: Houses and buildings 24,269,669.16 - 19,418,878.38
-
Machinery and equipment 553,823.90 - 3,620,935.02
-
Means of transport 279,857.38 - 234,555.34
-
Other equipment 914,347.85 - 665,298.23
306,800.00
IV. Total depreciation reserve 2,084,874.23 - 2,391,674.23
-
Where: Houses and buildings 1,580,000.00 - 1,580,000.00
306,800.00
Machinery and equipment 120,000.00 - 426,800.00
Means of transport - - - -
-
Other equipment 384,874.23 - 384,874.23
V. Total book value of fixed -
assets 23,932,824.06 - 21,547,992.74
-
Where: Houses and buildings 22,689,669.16 - 17,838,878.38
-
Machinery and equipment 433,823.90 - 3,194,135.02
-
Means of transport 279,857.38 - 234,555.34
-
Other equipment 529,473.62 - 280,424.00
Depreciation amount in this period was RMB 5,548,063.65.
(2) Fixed assets left idle temporarily at the end of period
Unit: RMB Currency: CNY
Original book Accumulated Depreciation
Items Net book value Remark
value depreciation reserve
Houses and
buildings 34,505,947.26 28,079,214.58 - 6,426,732.68
Machinery and
equipment 252,098.00 133,962.92 - 118,135.08
Total 34,758,045.26 28,213,177.50 - 6,544,867.76
(3) No fixed assets rent by means of financing lease at the end of period.
(4) No fixed assets held for sale at the end of period.
(5) No fixed assets without handling certificate of title at the end of period.
Among the Company’s houses and buildings, except for Zhonghua Garden (originally worthy of RMB
7,226,043.16) with certificate of title handled, others have not had the ownership certificate handled. Details are:
42
Reason for failing to
Estimated time for handling the
Items handle the certificate of
certificate of title
title
Employees’ dining hall (building 10 in Formalities not
Unpredictable
Shuibei Factory Area) completed
Ice room of dining hall (building 11 in Formalities not
Unpredictable
Shuibei Factory Area) completed
Employees’ residence (1)(building 8 in Formalities not
Unpredictable
Shuibei Factory Area) completed
Employees’ residence (2) (building 9 in Formalities not
Unpredictable
Shuibei Factory Area) completed
Employees’ residence (3) (building 14 in Formalities not
Unpredictable
Shuibei Factory Area) completed
Employees’ residence (4) (building 19 in Beili Formalities not
Unpredictable
Garden) completed
Formalities not
Factory building 1 Unpredictable
completed
Formalities not
Factory building 2 Unpredictable
completed
Formalities not
Factory building 3 Unpredictable
completed
Formalities not
Factory building 4 Unpredictable
completed
Formalities not
Factory building 5 Unpredictable
completed
Formalities not
Administration building Unpredictable
completed
Formalities not
Complex building Unpredictable
completed
Formalities not
Residence building 1 Unpredictable
completed
Formalities not
Residence building 2 Unpredictable
completed
Formalities not
Residence building 3 Unpredictable
completed
Formalities not
Residence building 4 Unpredictable
completed
Formalities not
Residence building 5 Unpredictable
completed
7 Guang’ancheng, West Section, Guohuo Formalities not
Unpredictable
Road, Taijiang District, Fuzhou completed
No. 2, A, 54 Liuquan Road, Zhangdian Formalities not
Unpredictable
District, Zibo completed
Saige Garden, Huaqiang South Road, Formalities not
Unpredictable
Shenzhen completed
(6) Assets with limited ownership
1) The Company has provided guarantee for the subsidiary Hong Kong Zhonghua for the loan of USD7.5
million from China Merchants Bank. Hong Kong Zhonghua failed to pay the debt on schedule, and China
Merchants Bank brought a suit against the subsidiary to Shenzhen Intermediate People’s Court. This court
sealed up the Company’s 127,333m2 land located at Yousong Village, Longhua Town, Bao’an District and
buildings on the land.
2) The Company owed the imprest money for L/C USD500,000 and related interest, and was sued to Shenzhen
Luohu People’s Court. The court plans to auction the Company’s real estate at Saige Garden, Huaqiang South
Road, Shenzhen for repayment of debt.
10. Intangible assets
(1) Intangible assets
Unit: RMB Currency: CNY
43
Items Opening book Increase in the Decrease in the Closing book
balance current period current period balance
I. Original book valueTotal 43,143,099.08 - - 43,143,099.08
Land use right 43,143,099.08 - - 43,143,099.08
II. Total accumulated -
amortization 16,825,809.78 862,862.04 17,688,671.82
Land use right 16,825,809.78 862,862.04 - 17,688,671.82
III. Total net book value of - -
intangible assets 26,317,289.30 25,454,427.26
Land use right 26,317,289.30 - - 25,454,427.26
IV. Total depreciation reserve - - - -
Land use right - - - -
Total book value of intangible - -
assets 26,317,289.30 25,454,427.26
Land use right 26,317,289.30 - - 25,454,427.26
(1) The land use right is the 127,333m2 land located at Yousong Village, Longhua Town, Baoan District, and the
service life is from July 1, 1990 to June 30, 2040. The limitation on the ownership is as shown in the annotation
9(6).
(2) Amount amortized in the current period is RMB 862,862.04.
11. Details of asset depreciation reserve
Unit: RMB Currency: CNY
Increase in Decrease in the current period
Opening book Closing book
Items the current Carry-back Trans-sale
balance balance
period
I. Reserve for bad and 1,576,900,581.89
doubtful account 1,579,585,611.71 129,785.92 2,197,612.45 617,203.29
II. Inventory - - 61,057,752.57
depreciation reserve 228,194,110.12 167,136,357.55
III. Depreciation - - - - -
reserve of salable
financial assets
IV. Depreciation - - - - -
reserve of
held-to-maturity
investment
V. Depreciation - - -
reserve of long-term
equity investment 17,943,019.50 17,943,019.50
VI. Depreciation - - -
reserve of investment
real estate - -
VII. Depreciation 306,800.00 - -
reserve of fixed assets 2,084,874.23 2,391,674.23
VIII. Depreciation - - - - -
reserve of engineering
materials
IX. Depreciation - - - - -
reserve of engineering
under construction
X. Depreciation - - - - -
reserve of productive
biological assets
44
Increase in Decrease in the current period
Opening book Closing book
Items the current Carry-back Trans-sale
balance balance
period
Where:Depreciation - - - - -
reserve of mature
productive biological
assets
XI. Depreciation - - - - -
reserve of oil-gas
assets
XII. Depreciation - - - - -
reserve of intangible
assets
XIII. Depreciation - - - - -
reserve of business
credit
XIV. Others - - - - -
Total 1,827,807,615.56 436,585.92 2,197,612.45 167,753,560.84 1,658,293,028.19
The trans-sale of the bad debt provision refers to the bankcrapcy liquidation received from Shenzhen Qingchi
Bicycle Co., Ltd.; the carry-back amount refers to the off-set the withdrawal impairment losses with account
receivable; the trans-sale amount for depreciation provision of inventory resulted by the sales realized.
12. Short loan
(1) Classification of short loan:
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of
period
Loan on security 243,928,066.33 250,703,094.15
Credit loan 140,289,581.76 144,623,478.67
Total 384,217,648.09 395,326,572.82
(2) Short loan at term but not repaid:
Unit: RMB Currency: CNY
Reason for not Estimated date
Borrower Amount Purpose
repayment of repayment
Loan for
China Import and Export Bank production Capital shortage Unpredictable
of China 114,558,000.00 turnover
Loan for
China Cinda Assets production Capital shortage Unpredictable
Management Company 59,589,983.09 turnover
Loan for
Head Office of China production Capital shortage Unpredictable
Merchants Bank 52,200,387.02 turnover
Loan for
Dongfu Assets Management production Capital shortage Unpredictable
Company 48,546,608.56 turnover
Loan for
Oriental Assets Management production Capital shortage Unpredictable
Company 44,420,940.00 turnover
Loan for
Huizhou Oriental United production Capital shortage Unpredictable
Industry Co., Ltd. 36,148,240.78 turnover
China Merchants Bank, Luohu Loan for
Capital shortage Unpredictable
Subbranch 17,856,605.68 production
45
turnover
Loan for
production Capital shortage Unpredictable
China Everbright Bank 10,276,882.96 turnover
Loan for
China Construction Bank, production Capital shortage Unpredictable
Sichuan Mianyang Subbranch 620,000.00 turnover
Total 384,217,648.09
The abovementioned loans have been over due for many years.
46
13. Accounts payable
(1) Age of accounts payable
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
Within 1 year 12,901,430.02 14,648,872.39
1-2 years 163,405.06 122,501.80
2-3 years 122,501.80 -
Over 3 years 112,440,785.84 111,102,997.17
Total 125,628,122.72 125,874,371.36
(1) Accounts payable of over 1 year are mainly because that the Company is insolvent and has delayed the
replayment for many years.
(2)The accounts payable in the report period don’t involve with the shareholder units hodling over 5% (including
5%) voting power of the Company.
14. Account received in advance
(1) Age of account received in advance:
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
Within 1 year 5,910,048.99 12,419,388.74
1-2 years 86,960.36 -
2-3 years - -
Over 3 years 10,664,592.85 10,664,592.85
Total 16,661,602.20 23,083,981.59
(1) Big-amount items received in advance with an age of over 1 year are mainly formed accumulatively in
historical business communication.
(2) The items received in advance in the report period don’t involve with the shareholder units hodling over 5%
(including 5%) voting power of the Company.
15. Wages payable
Unit: RMB Currency: CNY
Items Opening book Increase in the Decrease in the Closing book
balance current period current period balance
I. Salary, bonus, allowance, and
subsidy 2,035,917.78 12,967,740.47 12,752,359.75 2,251,298.50
II. Employee benefit 25,906.94 191,565.30 191,565.30 25,906.94
III. Social insurance - 846,135.02 846,135.02 -
IV. Public accumulation fund for
housing construction - 60,000.00 - 60,000.00
V. Dismiss welfare 1,874,703.51 37,300.00 1,873,437.82 38,565.69
VI. Trade union outlays and
personnel education outlay 1,332,253.57 178,475.09 84,259.40 1,426,469.26
VII. Others - - - -
Total 5,268,781.80 14,281,215.88 15,747,757.29 3,802,240.39
(1) No remuneration in arrear among the employees’ remuneration payable.
(2) The trade union outlays and personnel education outlay in the current year is RMB 178,475.09; and the
compensation for cancellation of labor relationship is RMB 37,300.00.
16. Taxes payable
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
VAT 56,554,659.77 54,717,084.10
Sales tax 440,900.28 399,742.32
Business income tax 33,753,125.02 33,750,963.42
47
Items Amount at the end of period Amount at the beginning of period
Individual income tax -21,156.15 -21,156.15
Tax for maintaining and building
cities 141,302.23 -30,700.27
Housing property tax 7,303,655.67 7,305,817.27
Others 46,376.91 27,259.19
Total
98,218,863.73 96,149,009.88
The Company has owed taxes for long time, and there is the probability to make supplementary payment of
forfeit money and late fee.
17. Interest payable
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
Loan interest 213,488,233.36 165,838,645.23
18. Other account payable
(1) Age of other accounts payable:
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
Within 1 year 11,730,547.74 13,449,141.79
1-2 years 2,468,597.75 2,069,975.95
2-3 years 572,084.12 1,996,635.22
Over 3 years 151,065,795.79 151,320,687.35
Total 165,837,025.40 168,836,440.31
(2) The accounts payable-others in the report period don’t involve with the shareholder units hodling over 5%
(including 5%) voting power of the Company.
(3) Bit-amount accounts payable of over 1 year are accounts unable to pay by the Company.
19. Non-current liability due within one year
(1)
Unit: RMB Currency: CNY
Items Amount at the end of period Amount at the beginning of period
Long-term credit loans due within 870,518,082.14
one year 706,645,180.86
(2) Top five long-term loans due within 1 year
Unit: RMB Currency: CNY
Amount at the end of period
Borrower Curency Amount in foreign
Amount in RMB
currencies
Shenzhen Guosheng Energy Investment and
Development Co., Ltd. USD 62,829,259.02 416,099,333.67
Guangdong Shengrun Group Co., Ltd. RMB - 232,901,143.41
Shenzhen Guosheng Energy Investment and
Development Co., Ltd. RMB - 19,300,058.59
China Cinda Assets Management Co., Ltd. USD 2,157,395.94 14,287,786.06
Great Wall Assets Management Co., Ltd. USD 2,000,000.00 13,245,400.00
48
Amount at the end of period
Borrower Curency Amount in foreign
Amount in RMB
currencies
Total 695,833,721.73
(3) Overdue loans among the long-term loans coming due within 1 year
Unit: RMB Currency: CNY
Borrowers Amount Term exceeded
Overdue for multiple years
Guosheng Energy Investment Co., 435,399,392.26
Overdue for multiple years
Guangdong Shengrun Group 232,901,143.41
Overdue for multiple years
China Cinda Assets Management Co., 14,287,786.06
Overdue for multiple years
China Great Wall Assets Management Co., 13,245,650.00
逾期多年
Xie Lingling 6,311,100.00
逾期多年
China Oriental Assets Management Co., 3,000,000.00
逾期多年
Shenzhen Lionda Group Co., Ltd. 1,500,109.13
706,645,180.86
Total
20. Other current liabilities
Unit: RMB Currency: CNY
Items Closing book balance Opening book balance
Rent
521,639.87 521,639.87
Decoration fee
188,853.82 188,853.82
Others
45,668.40 16,118.40
Total 756,162.09 726,612.09
21. Estimated liabilities
Unit: RMB Currency: CNY
Amount at the Increase in Decrease in the Amount at the
Items beginning of the current current period end of period
period period
Loan guarantee for ZoriaPteLTd 78,087,000.00 - - 78,087,000.00
Loan guarantee for Jintian Industry (Group) - -
50,000,000.00 50,000,000.00
Co., Ltd.
Loan guarantee for Guangdong Shengrun -
Group Co., Ltd. 42,918,300.00 - 42,918,300.00
Loan guarantee for Shenzhen Tianma - -
Cosmetics Co., Ltd. 8,000,000.00 8,000,000.00
Loan guarantee for Shandong Huajiaming - -
Economic Trading Co., Ltd. 83,142.92 83,142.92
Total 179,088,442.92 - - 179,088,442.92
In 2010, Guangdong Shengrun Group Co., Ltd. exercising bankruptcy restructuring. Till en dof 31 December
2010 the company still in process of restructuring stage.
The abovementioned guarantee for other companies have been in serious insolvency or gone bankrupt.
49
22. Share capital
Unit: RMB Currency: CNY
Amount at the beginning of Amount at the end of period
Increase/ decrease (+, -)
period
Items Shares
Proporti New shares Shares Proportion(
Amount transferred for Others Subtotal Amount
on(%) issued presented %)
public reserve
I. Circulating shares with 186,838,739.0
186,713,192.00 38.94 - - 42,672.00 -30,742.00 11,930.00 33.87
limited sales conditions 0
1. Shares held by state-owned
16,340,000.00 3.41 - - - 16,340,000.00 2.96
legal person (A-share)
2.Shares held by domestic -6,500,000.
95,267,002.00 19.87 - - -6,500,000.00 88,767,002.00 16.10
corporate sponsors(A-share) 00
3. Shares held by domestic
6,500,000.0
natural person sponsors - - - - - 6,500,000.00 6,500,000.00 1.18
0
(A-share)
4. Shares held by overseas
75,106,190.00 15.66 - - - - - 75,106,190.00 13.62
corporates(B-share)
5. Shares held by senior
42,672.00 -30,742.00 11,930.00 11,930.00 0.01
executives (A-share)
II. Circulating shares without 71,903,014.0 364,622,825.0
292,719,811.00 61.06 - - 71,872,272.00 30,742.00 66.13
limited sales conditions 0 0
1. Common RMB shares listed 39,590,718.0 116,259,843.0
76,669,125.00 15.99 - - 39,477,101.00 113,617.00 21.08
at home (A-share) 0 0
2. Foreign-funded shares listed 32,395,171.0 248,362,982.0
215,967,811.00 45.05 - - 32,395,171.00 - 45.05
at home (B-share) 0 0
3. Shares held by senior
82,875.00 0.02 - - - -82,875.00 -82,875.00 - -
executives (A-share)
71,914,944.0 551,347,947.0
Total 479,433,003.00 100.00 - - 71,914,944.00 100.00
0 0
Changes of the abovementioned amount mainly becaused: the proposal of share capital increased from capital reserve orientation and share-tanding reform was approved by
the Shareholders’ General Meeting on 1 Februray 2007. the plan also obtained the approve from Ministry of Finance People’s Republic of China, SZP[2007] No. 1343 and
approved from Shenzhen Bureau of Trad and Indusrty, SMGZF[2007] No. 2257—Approval of the Increased of Total Share Capital of Shenzhen China Bicycle Holdings Co.,
Ltd. Being consented, the plan was implemented on 18 March 2010. Total share capital of the Company turns from 479,433,000 shares to 551,347,900 shares, the A-shaer
resumed for listing.
The share capital of RMB 71,914,944.00 increaed have been verified by Shenzhen Pengcheng CPA Co., Ltd. with Verification Report of SPSYZ[2010] No. 356. Registration
changes for Industy and Commerce have been done dated 16 March 2011.
50
51
23. Capital reserve
Unit: RMB Currency: CNY
Items Amount at the Increase in the Decrease in the Amount at the end
beginning of period current period current period of period
Capital premium - - - -
Other capital reserve 458,695,975.55 40,351,662.36 71,914,944.00 427,132,693.91
Where:Benefit from liability 454,687,350.58 423,124,068.94
recombination 40,351,662.36 71,914,944.00
Accounts unnecessary to 690,624.97 - - 690,624.97
pay
price difference of affiliated 3,318,000.00 - - 3,318,000.00
transactions
Total 458,695,975.55 40,351,662.36 71,914,944.00 427,132,693.91
Interpretation of capital reserve:
The amount increased in the period refers to that according to the Notification on Getting Done with the Annual
Report of Enterprises Executing Accounting Rules in 2008 [CKH (2008) No. 60] of the Ministry of Finance, the
Company’s holding shareholder Shenzhen Guosheng Energy Investment and Development Co., Ltd. exempted the
Company’s loan interest RMB 40,351,662.36 in 2010, which will be charged into the capital reserve as capital
investment. The amount decreased in the period refers to share capital converted from share-trading reform
implemented.
24. Surplus reserve
Unit: RMB Currency: CNY
Items Amount at the Increase in the current Decrease in the Amount at the end of
beginning of period period current period period
Legal surplus reserve 32,673,227.01 - - 32,673,227.01
25. Retained profit
Unit: RMB Currency: CNY
Items Amount Proportion of
withdrawal or
distribution
Undistributed profit of the previous year before adjustment -2,831,816,725.23
Total undistributed profit at the beginning of year adjusted (+,
-) -
Undistributed profit at the beginning of year after adjustment -2,831,816,725.23
Add: Net profit classed under the parent company in the
current period 64,477,414.44
Less: Withdrawal of legal surplus reserve - 10%
Withdrawal of free surplus reserve -
Withdrawal of general risk reserve -
Common stock dividend payable -
Common stock dividend transferred into share capital -
Undistributed profit at the end of period -2,767,339,310.79 -
26. Business income and business cost
(1) Business income and business cost
Unit: RMB Currency: CNY
Items Amount incurred in the current Amount incurred in the last period
period
Major business income 274,000,080.33 250,514,769.94
Other business income 25,027,199.10 10,393,338.88
Business cost 280,127,985.48 248,699,643.75
(2) Major businesses (by industry)
Unit: RMB Currency: CNY
52
Amount incurred in the current period Amount incurred in the last period
Product name
Business income Business cost Business income Business cost
Bicycle and parts
distribution 271,727,101.17 260,057,821.52 248,357,399.41 236,123,723.38
Lease management
2,272,979.16 3,815,279.81 2,157,370.53 3,405,100.30
Total
274,000,080.33 263,873,101.33 250,514,769.94 239,528,823.68
(3)Major businesses (by variety)
Unit: RMB Currency: CNY
Amount incurred in the current period Amount incurred in the last period
Product name
Business income Business cost Business income Business cost
OEM motor vehicle
221,509,693.52 212,377,298.84 198,949,497.55 188,026,049.40
OEM Bicycle
48,922,678.62 46,044,796.38 47,587,484.63 45,589,280.50
CBC motor vehicle
224,576.06 396,858.20 1,397,440.99 2,061,588.24
CBC Bicycle
94,835.90 199,131.28 246,066.63 263,884.87
Others
975,317.07 1,039,736.82 176,909.61 182,920.37
Lease management
2,272,979.16 3,815,279.81 2,157,370.53 3,405,100.30
Total
274,000,080.33 263,873,101.33 250,514,769.94 239,528,823.68
(4) Business income of the Company’s top five customers
Unit: RMB Currency: CNY
Customer name Business income Proportion among the Company’s
total business income
Customer 1 99,993,634.44 33.44
Customer 2 54,277,707.69 18.15
Customer 3 39,869,412.39 13.33
Customer 4 25,441,937.88 8.51
Customer 5 5,474,574.36 1.83
Total 225,057,266.76 75.26
27. Business tax and surcharge
Unit: RMB Currency: CNY
Amount incurred in the Amount incurred in the
Items Collection standard
current period last period
Sales tax 113,648.98 107,868.53 5%
Tax for maintaining and
building cities 114,865.88 13,860.70 1%，7%
Educational surtax 82,940.72 42,585.75 3%
Total 311,455.58 164,314.97 -
53
28. Sales expenses
Unit: RMB Currency: CNY
Amount incurred in the current Amount incurred in the last period
Items
period
Remuneration for staff 3,727,910.51 3,323,898.63
AD charge 1,476,632.56 641,540.00
Business travel 557,156.10 532,121.60
Transportation and loading charge 329,680.00 127,857.71
Sales charge 150,685.92 285,649.02
Exhibition charge 139,976.60 128,827.40
Vehicle transport 132,979.50 91,652.48
Entertainment charge 86,462.00 138,309.00
Communication charge 76,729.90 86,376.48
Market promotion 60,400.00 382,948.00
Other 656,254.76 741,853.04
Total 7,394,867.85 6,481,033.36
29. Management expenses
Unit: RMB Currency: CNY
Amount incurred in the current Amount incurred in the last period
Items
period
Salary 6,534,907.23 8,879,886.86
Charge of depreciation amortized 6,405,494.37 4,959,559.65
Maintainance charge 2,114,662.10 336,964.47
Taxes 1,829,076.74 2,008,430.90
Consultant lawyers charge 1,186,600.00 340,198.37
Entertainment charge 897,921.28 888,637.34
Auditing charge 674,254.65 500,000.00
Vehicle transport 649,604.04 589,359.94
Office charge 538,296.50 523,036.57
Charges for staff on vocation 485,082.16 538,155.39
Charge for Board of the Meeting 483,600.40 413,677.80
Utilities 320,068.46 1,004,188.94
Social insurance 309,862.40 362,845.70
Business travel charge 299,992.95 413,232.10
Consultancy charge 222,450.00 17,230.00
welfare 201,419.29 288,553.40
leasing charge 200,000.00 250,000.00
Charge for share listing 177,576.04 141,639.48
Communication charge 146,870.93 174,222.34
Compensation for dismiss 37,300.00 2,280,621.02
Other 77,779.51 494,913.59
Total 23,792,819.05 25,405,353.86
30. Fianncial expenses
Unit: RMB Currency: CNY
Amount incurred in the current Amount incurred in the last period
Items period
Interest expenditure
94,020,835.02 95,486,572.31
Less: interest income
78,334.37 83,629.13
54
Gains/losses from exchange
-29,464,021.40 -1,968,173.73
Other 36,536.75 31,363.66
Total 64,515,016.00 93,466,133.10
31. Asset depreciation loss
Unit: RMB Currency: CNY
Items Amount incurred in the current Amount incurred in the last period
period
I. Loss from doubtful accounts -2,067,826.53 1,450,617.56
II. Loss from inventory depreciation - 2,979,904.49
III. Depreciation loss of salable - -
financial assets
IV. Depreciation loss of - -
held-to-maturity investment
V. Depreciation loss of long-term -
equity investment -
VI. Depreciation loss of investment - -
real estate
VII. Depreciation loss of fixed 306,800.00 -
assets
VIII. Depreciation loss of - -
engineering materials
IX. Depreciation loss of engineering - -
under construction
X. Depreciation loss of productive - -
biological assets
XI. Depreciation loss of oil-gas - -
assets
XII. Depreciation loss of intangible - -
assets
XIII. Depreciation loss of business - -
credit
XIV. Others - -
Total -1,761,026.53 4,430,522.05
32. Non-operating income
Unit: RMB Currency: CNY
Items Amount incurred in the Amount incurred in the
current period last period
Total amount obtained from disposing noncurrent assets - 5,457,626.30
Where: Benefit from disposal of fixed assets - 5,457,626.30
Benefit from disposal of intangible assets - -
Benefit from liability recombination 138,684,786.64 -
Others 1,203,017.59 7,271,848.86
Total 139,887,804.23 12,729,475.16
The non0operating income obtained in the period mainly from the debt reconstructuring, found more details in
Note 10.1
33. Non-operating expenditure
Unit: RMB Currency: CNY
Items Amount incurred in the Amount incurred in the
current period last period
Total loss from disposal of noncurrent assets 1,479.48 966,300.00
55
Where: Loss from disposal of fixed assets 1,479.48 966,300.00
Loss from disposal of intangible assets - -
Others 55,072.31 185,058.79
Total 56,551.79 1,151,358.79
34. Calculation process of basic earning per share and diluted earning per share (eps)
Unit: RMB Currency: CNY
Amount Amount
incurred in incurred in the
Items
Calculation the current last period
process period
-105,757,549.5
Net profit classed under the Company’s common shareholders P0
64,477,414.44 0
Non-frequent gain and loss classed under the Company’s 109,068,376.9
F
common shareholders 0 9,262,493.10
Net profit classed under the Company’s common shareholders -44,590,962.4 -115,020,042.6
P0'=P0-F
after deduction of non-frequent gain and loss 6 0
Influences of diluted items on the net profit classed under the
V
Company’s common shareholders - -
Net profit classed under the Company’s common
shareholders, considering the influences of diluting potential
P1=P0+V
common shares, and making adjustments according to -105,757,549.5
Enterprise Accounting Standards and related regulations 64,477,414.44 0
Influences of diluted items on the net profit classed under the
Company’s common shareholders after deducation of V'
non-frequent gains and losses - -
Net profit classed under the Company’s common
shareholders, considering the influences of diluting potential
P1'=P0'+V'
common shares, and making adjustments according to -44,590,962.4 -115,020,042.6
Enterprise Accounting Standards and related regulations 6 0
479,433,003.0
Total shares at the beginning of period S0
0 479,433,003.00
Shares increased for increase of shares transferred from
public reserve or for share dividend distribution in the report S1
period 71,914,944.00 -
Shares increased for issuance of new shares or shares
Si
transferred from liabilities in report period - -
Shares decreased for buyback, etc. in report period Sj - -
Shares shortened in report period Sk - -
Number of months in report period M0 12 12
Accumulated number of months from the next month of share
Mi
increase to the end of report period 9 -
Accumulated number of months from the next month of share
Mj
decrease to the end of report period - -
S=S0 ＋ S1 ＋
Weighted average number of common shares issued Si×Mi
externally ÷M0–Sj×Mj÷M 551,347,947.0
0-Sk 0 479,433,003.00
Add: Weighted average number of common shares increased
in condition that the diluted potential common shares are X1
supposed transferred into issued common shares - -
Weighted average number of common shares with diluted eps 551,347,947.0
X2=S+X1
calculated 0 479,433,003.00
Where: Weighted average number of common shares
increased from transfer of conversible corporate bonds - -
56
Amount Amount
incurred in incurred in the
Items
Calculation the current last period
process period
Weighted average number of common shares increased from
equity warrant/ stock equity implementation right - -
Weighted average number of common shares increased from
buyback promise implementation - -
Basic eps classed under the Company’s common shareholders EPS0=P0÷S 0.1169 -0.2206
Basic eps classed under the Company’s common shareholders
EPS0'=P0'÷S
after deducation of non-frequent gains and losses -0.0809 -0.2399
Diluted eps classed under the Company’s common
EPS1=P1÷X2
shareholders 0.1169 -0.2206
Diluted eps classed under the Company’s common
EPS1'=P1'÷X2
shareholders after deducation of non-frequent gains and losses -0.0809 -0.2399
35. Notes to items in cash flow statement
(1) Other cash received related with business activities
Unit: RMB Currency: CNY
Items Amount incurred in the Amount incurred in the last
current period period
Rent, electric rate and water rate 17,628,981.38 9,650,000.00
Allocated claims from Qingchi 1,090,944.00 -
Parts disposal money 62,500.00 6,500,000.00
Other current accounts 3,507,670.90 4,218,255.24
Total
22,290,096.28 20,368,255.24
(2)Other cash paid related with business activities
Unit: RMB Currency: CNY
Items Amount incurred in the Amount incurred in the last
current period period
Advertising propagation and promotion, and
1,787,801.37 1,260,000.00
brand maintainance expenses
1,511,282.46 1,670,000.00
Other expenses in sales section
3,876,102.31 2,300,000.00
Water and electricity expense
Property repair, equipment maintenance and
1,800,000.00 1,100,000.00
repair fees
Listing fee, board of directors’ expense, and
expenses for office work, business traveling, 3,193,862.14 3,160,000.00
communication, and social intercourse
1,183,304.65 1,740,000.00
Consulting auditing fee
600,000.00 700,000.00
Other fees in management section
3,822,250.50 2,182,767.75
Other current accounts
57
Items Amount incurred in the Amount incurred in the last
current period period
Total
17,774,603.43 14,112,767.75
(3) Cash received from other financing activities
Unit: RMB Currency: CNY
Items Amount incurred in the Amount incurred in the last
current period period
Loan from Shenzhen Guosheng Energy
6,500,000.00 -
Investmetn Development Co., ltd.
58
36. Supplementary data of cash flow statement
(1)Supplementary data of cash flow statement
Unit: RMB Currency: CNY
Supplementary data Amount of the Amount of last
current period period
1．Cash flow for business activities transferred from net profit:
Net profit 64,477,414.44 -106,160,775.90
Add: Asset depreciation reserve -1,761,026.53 4,430,522.05
Fixed asset depreciation, oil-gas asset depletion, and productive
biological asset depreciation 10,512,930.21 6,805,739.26
Amortization of intangible assets 862,862.04 862,862.04
Amortization of long-term fees to be apportioned - -
Loss from disposal of fixed assets, intangible assets and other
long-term assets (filled with “－” for benefit) 1,479.48 -4,491,326.30
Loss from fixed assets reported discarded (filled with “－” for benefit) - -
Loss from change of fair value (filled with “－” for benefit) - -
Fincial cost (filled with “－” for benefit) 64,369,590.56 93,466,133.10
Investment loss (filled with “－” for benefit)) - -
Decrease of deferred income tax asset (filled with “－” for increase) - -
Increase of deferred income tax liability (filled with “－” fordecrease) - -
Decrease of inventory (filled with “－” for increase) 10,871,691.30 3,632,974.34
Decrease of operating items receivable (filled with “－” for increase) -17,890,583.71 -19,094,626.44
Increase of operating items payable (filled with “－” for decrease) -124,948,497.47 24,469,084.82
Others - -
Net cash flow from business activities 6,495,860.32 3,920,586.97
2．Important investment and financing activities not involving with
cash income and expenditure
Capital transferred from liability - -
Conversible corporate bonds coming due within one year - -
Fixed assets rented by financing - -
3．Net change of cash and cash equivalent: - -
Closing balance of cash 17,756,773.58 22,232,425.07
Less: Opening balance of cash 22,232,425.07 10,086,599.53
Add: Closing balance of cash equivalent - -
Less: Opening balance of cash equivalent - -
Net increase of cash and cash equivalent -4,475,651.49 12,145,825.54
(2) Composition of cash and cash equivalent
Unit: RMB Currency: CNY
Amount at the end of Amount at the beginning
Items
period of period
I. Cash 17,756,773.58 22,232,425.07
Where: Cash on hand 166,739.31 122,959.64
Bank deposit available for payment anytime 17,590,034.27 22,109,465.43
Other monteray fund available for payment - -
anytime
Due from China Central Bank for payment - -
Due from banks - -
Call loans to banks - -
II. Cash equivalent - -
Where: Bond investment coming due within 3 months - -
III. Closing balance of cash and cash equivalent 17,756,773.58 22,232,425.07
59
VI. Affiliated Parties and Affiliated Transactions
1. Shareholders controlled by the enterprise
Unit: RMB Currency: CNY
Proportion
Proportion
of voting
of shares ultimate
controlling Affiliated Enterprise Registration Legal Registered power in Organization
Business nature held in the controller of
shareholder relationship type place representative capital the code
enterprise the enterprise
enterprise
(%)
(%)
Industry,
domestic
Limited
Shenzhen commerce, Shenzhen
liability
Guosheng materials supply National
company
Energy Controlling and sale Investment
(solely Shenzhen Shang Shijun 7000 11.81 11.81 77411579-2
Investment and shareholder (excluding and
funded by
Development specially run, Development
the
Co., Ltd. controlled and Co., Ltd.
corporate)
sold
merchandises)
2. Detailed information about the Company’s subsidiaries is as shown in 1 of Annotation IV of the report.
60
3. Joint management and joint-ownership enterprises of the Company
Unit: RMB Currency: CNY
Proportion of
Proportion of Depreciation
Accounting Initial Increase/ voting power in
Invested unit Opening balance Closing balance shares in the reserve at the
method investment cost decrease the invested unit
invested unit (%) end of period
(%)
Shenzhen
Jinhuan Printing Equity method 14,883,560.00 14,883,560.00 - 14,883,560.00 38.00 38.00 12,263,719.50
Co., Ltd. *
The industrial and commercial registration information of Shenzhen Jinhuan Printing Co., Ltd. has been cancelled as displayed. Hong Kong Dahuan Bicycle Co., Ltd., one
of the original shareholders of the company, holds the company’s shares under our entrustment, and the actual holder is our company.
61
4. Accounts receivable/ accounts payable and exemption items of affiliated parties
(1) Current accounts
Unit: RMB Currency: CNY
Items Affiliated parties Amount at the end of Amount at the
period beginning of period
Other accounts Shenzhen Jinhuan Printing Board Co.,
payable Ltd. 2,616,430.50 2,616,430.50
Long-term liability
coming due within 1 Shenzhen Guosheng Energy
year Investment and Development Co., Ltd. 435,399,392.26 598,315,198.66
Shenzhen Guosheng Energy
Interest in red Investment and Development Co., Ltd. 2,948,836.74 2,161,259.22
Other account payable Shenzhen Guosheng Energy
* Investment and Development Co., Ltd. 6,500,000.00 -
In the report period, subordinate subsidiary of the Company-Shenzhen Emmelle Industry Co., Ltd. financing
RMB 6.5 million from Shenzhen Guosheng Energy Investment and Development Co., Ltd.
62
(2) Exempted items
Unit: RMB Currency: CNY
Items Affiliated parties Amount incurred in the Amount incrrued in last
current period period
Shenzhen Guosheng Energy
Financial cost Investment and Development Co., Ltd. 40,351,662.36 47,802,411.22
According to the Notification on Getting Done with the Annual Report of Enterprises Executing Accounting Rules
in 2008 [CKH (2008) No. 60] of the Ministry of Finance, the Company’s holding shareholder Shenzhen Guosheng
Energy Investment and Development Co., Ltd. exempted the Company’s loan interest RMB 40,351,662.36 in
2010, which will be charged into the capital reserve as capital investment.
VII. Contingent Items
1. Contingent liabilities formed from pending lawsuit and arbitration, and financial influences
(1) As of Dec. 31, 2010, the Company had been prosecuted by 17 financial instutions, involving total loan
principal and interest of RMB 425,460,600, USD76,852,000 and HKD 8,261,600. The abovementioned lawsuits
have mostly been resulted in the Company’s failure or been mediated. After lawsuits, partial debtors have
transferred the creditor’s right, and the principals involved in the cases are changed accordingly.
(2) As of Dec. 31, 2010, the Company had been prosecuted by 34 goods suppliers, involving total loan principal
and interest of RMB 61,200,000, HKD24,530,000 and USD3,260,000. The abovementioned lawsuits have
mostly been resulted in the Company’s failure or been mediated.
2. Contingent liabilities formed from providing liability guaranty for other units, and financial influences
Influences on the
Company’s financial state,
Items Amount involved business result and cash Nature
flow in the current period
and future periods
Loan guarantee for Guangdong Shengrun RMB36,100,000.00
(1) Guaranty
Group Co., Ltd. USD1,000,000.00
Loan guaranty for Gintian Industry (Group) RMB50,000,000.00
(2) Guaranty
Co., Ltd.
Loan guaranty for Shenzhen Tianma RMB8,000,000.00
(3) Guaranty
Cosmetics Co., Ltd.
ZoriaPteLtdc USD10,000,000.00 (4) Guaranty
Shandong Huajiaming Economic Trade Co.,
RMB83,142.92 (5) Guaranty
Ltd.
RMB94,183,142.92
Total
USD11,000,000.00
(1) The company estimated the loss based on 100% guaranteed amount. The Company is in the execution period
of bankcrptcy restructuring.
(2) The company is a listed company limited, and has been in serious insolvency. The loss is estimated as per
100% guaranteed amount.
(3) The company has gone bankrupt. The loss is estimated as per 100% guaranteed amount.
(4) The company has been in serious solvency, and is being liquidated. The loss is estimated as per 100%
guaranteed amount.
(5)The company has been in serious solvency. The loss is estimated as per 100% guaranteed amount.
VIII. Promised Items
The Company had no important promised items in the report period.
IX．Afterward Items of Balance Sheet
1. Change of the actual controller
On 3 January 2011, largest shareholder and creditors of the Company-Shenzhen Guosheng Energy Investment
Development Co., Ltd.(“Guosheng Energy” for short), controlling shareholder—Shenzhen Guomin Investment
Co., Ltd. (‘Guomin Investment” for short) entered into the Agreement of Equity Transfer with Ji Hanfei. Guomin
Investment transfer 100% equity of Guosheng Energy to Ji Hanfei with price of RMB 70 million, industry and
commerce changes have been finished. the transfer changes the actual controller of the Company. Ji Hanfei held
63
65,098,412 shares of the Company with A-stock, account 11.81 percent in total share capital of the Company after
changes.
2. Application for bankruptcy restructuring and debt transfer of Shengrun
On 23 March 2011, the Notice of Debt Transfer was received by the Company from Guangdong Shengrun Group
Holding Co., Ltd.(‘Guangdong Shengrun” for short), creditor of the Company. Guangdong Shengrun has credit of
RMB 232,801,657.06 for the Company. During the bankcruptcy restructuring of Guangdong Shengrun, manager
of the Guangdong Shengrun entrused Shenzhen Rundongfang Auction Co., Ltd. for auction on the debt. On 13
December 2010, the Shenzhen Dongtaixing Technology Co., Ltd. (“Dongtaixing” for short) was bidding the debt
in accordance with the law. On 27 January 2011, Shenzhen Intermediate People’s Court judged thecivil ruling of
(2010) SZFMQCZZ No. 5-12, the bidding was deal for the debt of Guangdong Shengrun to Dongxingtai.
On 30 March 2011, the one piece of Notification from creditor of the Company-Dongtaixing was received by the
Company: for the case of no application for bankruptcy restructuring from Shenzhen Guosheng Energy
Investmetn Co., Ltd.-largest shareholder of the Company judged from Shenzhen Intermediate People’s Court, the
documents were delivered by Dongtaixing on 17 March 2011, as second creditor, for application of bankcrptcy
restructuring for ShenChina in accordance with the law. Currently, Dongtaixing prepared for the hearing
procedures.
3. Auction for the proprietary of trademark
The auction notification was received by the Company on 1 March 2011 from Shenzhen Intermediate People’s
Court (“Shenzhen Intermediate” for short). Concerning the guarantee loans between the Luohu Sub-branch of
China Merchans Bank and the Company and Guangdong Shengrun Gourp Co., Ltd., the Shenzhen Intermediate
entrust Shenzhen Huirong Auction Co., Ltd. for bidding the 10 proprietary of trandmarks owned by the Company.
On 14 March 2011, the purchaser-Shenzhen Guosheng Energy Investment Development Co., Ltd. ownes the
abovementioned proprietary. On 31 March 2011, Shenzhen Intermediate judged that the abovementioned
trademark proprietary was transferred to Shenzhen Guosheng Energy Investment Development Co., Ltd.—the
purchaser.
X .Other important items
1. Material debt restructuring of 2010
(1) On 31 May 2010, largest shareholder of the Company, Shenzhen Guosheng Energy Investment Co.,
Ltd.(“Guosheng Energy”for short) entered into the Assignment of Obligatory Right with Shenzhen Zhengda Guoli
Investment Co., Ltd.(“ZHengda Guoli” for short). Obligatory right RMB 150 million of the Company held by
Guosheng Energy was transferred to Zhengda Guoli with price of RMB 9 million.
(2) On 2 September 2010, Zhengda Guoli entered into the Assignment of Obligatory Right with Shenzhen
Chengxingtai Investment Co., Ltd.(‘Chengxingtai” for short). Obiligatory right RMB 150 million of the Company
held by Zhengda Guoli was transferred to Chengxingtai with price of RMB 11 million.
(3) On 15 October 2010, ShenChina and Chengxingtai ageeds the Debt Settlement Agreement, ShenChina paid all
debt of Chengxingtai (including loans, interest and other relatd expense) amounting to RMB 14 million. The
abovementioned amount have been paid by the Company before 30 November 2010 in three phases.
The material debt restructing generated income of RMB138,684,786.64. Among which, RMB 3,032,735.29 of the
intereset income in debt period was relief by Zhengda Guoli; the debt settlement income betweent the Company
and Chengxingtai amounting to RMB135,652,051.35. The abovementioned restructuring income were reckoned
into gains/losses of 2010 due to the transaction parties have no related relationship.
2. Financial debt reconstructing
In accordance with YJBT [2004] No.6 Document issued by the Office of China Banking Regulatory Commission
on Jan. 7th, 2004, the Bank of China, totally 11 financial institutes agreed to stop calculating the interests as of Jan.
1st, 2002 for three years, and exempt all and any interests paypable prior to Dec. 31st, 2001, including the default
interests and compound interests. The Company will transfer all the interests payable (including the default
interests and compound interests) of RMB 357,993,665.24 prior to Dec. 31st, 2001 to “public accumulated capital”,
and the interests will be not calculated temporarily from Jan. 1st, 2002 to Dec. 31st, 2004. This term of interests
exemption shall be valid before Dec. 31st, 2004.
In 2005, China Huarong Asset Management Corporation Shenzhen Office, China Orient Asset Management Corp.
Shenzhen Office, China Cinda Asset Management Corporation Shenzhen Office and China Great Wall Asset
Management Corporation Shenzhen Office will continuous to stop calculating the interests of 2005 loans.
Whereas the term of “Stop Calculating Inerests” may cause discrepancy and General Terms on the Loan did not
64
interprate its meaning either, China Huarong Asset Management Corporation Shenzhen Office, China Orient Asset
Management Corp. Shenzhen Office, China Cinda Asset Management Corporation Shenzhen Office and China
Great Wall Asset Management Corporation Shenzhen Office all agree not to claim the Company to repay all the
interests stopped calculating herein. However, Shenzhen Development Bank requied the Company to repay all the
interests and compound interests which was stopped calculating from Jan.1st, 2002 to Dec.31, 2004. The Company
argued that the interests which were stopped calculating shall not be repaid; therefore, after the period during
which the interests is stopped calculating, the interests to be repaid shall be calculated as the normal loans, but not
the interests and compound interests stopped calculating from Jan.1st, 2002 to Dec. 31, 2004. As of Dec. 31st, 2010,
the sum of interests confirmed by creditor bank is RMB324,879,558.04 more than the interests payable of book
value, and some institutes have no reply to the confirmation of debts. In such a case, the Company thought that we
cannot decide if this part of interests can be withdrawn or repaid, thus no any financial adjustment is done till now.
2 .Instructions to Continous Operation
As of Dec.31st, 2010, China Bicycle Company Limited has a gross asset of RMB 138,158,078.89, the total debt of
RMB1,894,343，521.76, with its net asset up to RMB-1,756,185,442.87, in the state of insolvency, which thus
may cause this Company liquidate its assests and pay off the debts in the normal operations. In such a case, this
Company and its largets creditor will take the following measures:
Since March 2003 when China Huarong Asset Management Corporation, the former largest creditor of this
Company, launched the debt reconstructing and made the progress to a certain extent, China Banking Regulatory
Commission and the relevant authorities approved on the exemption and stop calculating all the interests of
financial debts incurred as of Dec. 31st, 2004.
Whereas the Company signed Settlement Agreement with International Finance Corportation on March 29th, 2007,
it is hereby agreed to settle all and any creditor’s rights and debts incurred therefore by an equivolant US dollars
for RMB 2 million, with the prinical of debts approx. USD 3.87 million and the interests payable of approx. RMB
42.78 million.
On 15 October 2010, the Company entered into the Debt Settlement Agreement with Shenzhen Chengxingtai
Investment Co., Ltd. for RMB 14 million payment as compensation to Chengxingtai Co., from the Company for
settled the all debt and liabilities of two parties(approximately RMB 150 million). The RMB 14 million have been
paid on 30 Nov. 2010 in full.
China Huarong Asset Management Corporation, on Dec. 30th, 2006, transferred its creditor’s rights to Shenzhen
Guocheng Engergy Investment & Development Corporation (hereinafter referred to as “Guocheng Energy
Corporation”) which is now performing actively the matters concerning debt reconstructing and has made the
progress to a certain extent. Whereas the largest shareholder and creditor of this Company have changed, in
January 2010, in accordance with newly-issued Law of the People's Republic of China on Enterprise Bankruptcy,
Guocheng Energy Corporation consequently claims and applys for new reconstructing of this Company to
Shenzhen Intermediate People's Court, with a view to recover and improve the ongoing operations. On 28 Dec.
2010, Shenzhen Intermediate People’s Court considered that the applicant provided no materials that recognized
by two parties with taxation dept. from tax and debt. According to the regulation of Clause VIII, Rule 1 of Clause
XII under Law of the People's Republic of China on Enterprise Bankruptcy, the court judged no application of the
bankruptcy restructuring on the Company from Shenzhen Guosheng Energy Investment Developemt Co., Ltd. In
addition, Guosheng Energy suspended for calculation the loan interest of 2010 amounting to RMB 40.3517
million, the interest shall not be recoved in subsequent years.
The main business of this Company may develop stably and realize benefits continuously while launching the
debt reconstructing. In a short term, it reduced the paying pressure greatly, and ability to continous operations has
been improved to a certain degree. The Board of the Directors thought that along with the continuous progress of
the Company debts and asset reconstructing, the operating environment, business situation and ability to
continuous operations will be bound to further improvement.
XI. Note of main item of financial statement of parent company
1. Receivable account
(1) Disclosued by category
Unit: RMB Currency: CNY
Category Amount at the end of period
65
Book balance Bad debt provision
Proporti Proporti
Amount Amount
on(%) on(%)
Account receivable with single major amount but - - - -
withdrawal bed debt provision for single item
Account receivable withdrawal bad debt provision by age 1,034,374,248. 1,032,989,895.
combination 98 100.00 75 99.87
Account receivable with single minor amount but
withdrawal bed debt provision for single item - - - -
Total 1,034,374,248. 1,032,989,895.
98 100.00 75 99.87
Amount at the beginning of period
Book balance Bad debt provision
Category
Proporti Proporti
Amount Amount
on(%) on(%)
Account receivable with single major amount but - - - -
withdrawal bed debt provision for single item
Account receivable withdrawal bad debt provision by age
combination 1,039,759,756.78 100.00 1,034,919,101.47 99.53
Account receivable with single minor amount but - - - -
withdrawal bed debt provision for single item
Total 1,039,759,756.78 100.00 1,034,919,101.47 99.53
About the categories of the accounts receivable:
Based on the size, business nature and customer settlement condition of the company, the company decides that
RMB 5 million of accounts receivable is important single sum of payment. For an account receivable without
depreciation at the end of the period, the bad debt allowance is accrued on the basis of account aging analysis
method.
(2) In combination, account receivable withdrawal bed debt provision by age analysis method:
Unit: RMB Currency: CNY
Amount at period-end Amount at period-begin
Book balance Book balance
Age Bad debt Bad debt
Amount Ratio (%) Amount Ratio
provision provision
(%)
Within
1year 77,227.48 0.01 - 3,329,011.81 0.32 -
1-2 years - - - 496,746.90 0.05 -
Over 3years 1,034,297,021. 1,032,989,895.7
50 99.99 5 1,035,933,998.07 99.63 1,034,919,101.47
Total
1,034,374,248. 1,032,989,895.7
98 100.00 5 1,039,759,756.78 100.00 1,034,919,101.47
(3) No account receivable actually cancelled after verification in the report period.
(4) The accounts receivable at the end of the report period don’t involve with the shareholder unit’s holding over
5% (including 5%) voting power of the Company.
(5) Top 5 units with an amount of account receivable:
Unit: RMB Currency: CNY
Relationship Proportion among the
Name with the Amount Period gross accounts receivable -
company others (%)
Total of top 5 customers of Non-affiliated Over 3
other accounts receivable customers 535,330,991.79 years 51.75
(6)No other account receivable involving with affiliated parties in the report period.
(7)No other account receivable-others with confirmation terminated at the end of the report period.
66
2. Other receivables
(1) disclosed by categories
Unit: RMB Currency: CNY
End of period
Book balance Provision for bad debts
Category
Amount Proporti Amount Proporti
on on
Other account receivable with single major amount and - -
withdrawal bed debt provision for single item - -
Other account receivable withdrawal bad debt provision
by age combination 557,411,339.53 100.00 526,881,529.25 94.52
Other account receivable with single minor amount but
withdrawal bed debt provision for single item - - - -
Total 557,411,339.53 100.00 526,881,529.25 94.52
Beginning of period
Book balance Provision for bad debts
Category
Amount Proporti Amount Proporti
on on
Other account receivable with single major amount and
withdrawal bed debt provision for single item - - - -
Other account receivable withdrawal bad debt provision
by age combination 571,859,828.13 100.00 527,390,450.98 92.22
Other account receivable with single minor amount but
withdrawal bed debt provision for single item - - - -
Total 571,859,828.13 100.00 527,390,450.98 92.22
Interpretation to the category of accounts receivable-others:
According to the business scale, business nature, and customers’ settlement, etc., the account receivable-other with
single big amount is determined to be RMB 5 million. The account receivable-other with single big amount has no
depreciation reserve, and the reserve for bad and doubtful account is withdrawn with age analysis method.
(2) In combination, other account receivable withdrawal bed debt provision by age analysis method:
Unit: RMB Currency: CNY
Amount at period-end Amount at period-begin
Age Book balance Bad debt Book balance Bad debt
Amount Proportion provision Amount Proportion provision
Within
1year 2,092,207.67 0.38 6,276.62 6,376,468.21 1.12 2,929.40
1-2 years 4,545,244.91 0.82 135.73 - - -
2-3 years - - - - - -
Over
3years 550,773,886.95 98.80 526,875,116.90 565,483,359.92 98.88 527,387,521.58
Total 557,411,339.53 100.00 526,881,529.25 571,859,828.13 100.00 527,390,450.98
(3) No account receivable actually cancelled after verification in the report period.
(4) The accounts receivable at the end of the report period don’t involve with the shareholder units hodling over
5% (including 5%) voting power of the Company.
(5) Top 5 units with an amount of other account receivable:
Unit: RMB Currency: CNY
Relationship Proportion among
Name with the Amount Period the total other
company accounts receivable
67
- others (%)
Total of top 5 customers of other Non-affiliated Over 3
accounts receivable customers 357,001,411.68 years 64.05
(6)No other account receivable involving with affiliated parties in the report period.
(7)No other account receivable-others with confirmation terminated at the end of the report period.
68
3. Long-term equity investment
Unit: RMB Currency: CNY
Expla
natio
n on
discr
epanc
y
betw
een
share Provi
Perc
propo sion
Shar enta
rtion for
Exam e ge of
in (asset
inatio prop votin Cas
Initial inves Depre )
n and Openin Increases a Closing ortio g h
Invested c invest ted ciation depre
calcul g balan nd decrease balanc n in right divi
ompany ment comp reserv ciatio
ating ce s e inve s in den
cost any e n of
metho sted inves d
and curre
d com ted
perce nt
pany com
ntage perio
pany
of d
votin
g
rights
in
inves
ted
comp
any
Shenzhen
EMMELL Cost
E Industry metho 1,400, 1,400,0 1,400,0 1,400,
Co.Ltd d 000.00 00.00 - 00.00 70% 70% - 000.00 - -
Shenzhen
Anju
property Cost
manageme metho 2,000, 2,000,0 2,000,0 100 100 2,000,
nt co.,ltd d 000.00 00.00 - 00.00 % % - 000.00 - -
China
Bicycle(H Cost
ong Kong) metho 5,350, 5,350,0 5,350,0 5,350,
Co.,Ltd d 000.00 00.00 - 00.00 99% 99% - 000.00 - -
China
Bicycle(In Cost
ternational metho 18,727 18,727. 18,727. 100 100 18,727
) Co.,Ltd d .60 60 - 60 % % - .60 - -
Hunan
Guangnan Cost
Motorcycl metho 5,679, 5,679,3 5,679,3 5.50 5.50 5,679,
e Co.,Ltd d 300.00 00.00 - 00.00 % % - 300.00 - -
Shenzhen Equit
Jinhuan y 14,883 12,263
Printing metho ,560.0 14,883, 14,883, 38.0 38.0 ,719.5
Co.,Ltd d 0 560.00 - 560.00 0% 0% - 0 - -
29,331 29,331, 29,331, 26,711
-- -
Total ,587.6 587.60 - 587.60 -- -- - ,747.1 -
69
0 0
70
4. Operating revenue and operating costs
(1) Operating revenue and operating costs
Unit: RMB Currency: CNY
Item Amount incurred of current period Amount incurred of last period
Income from main business 363,669.25 2,528,791.93
Income from other business 28,168,488.59 14,956,851.56
Operating cost 16,520,738.87 11,699,612.00
(2) Main business (by industy )
Unit: RMB Currency: CNY
Amount incurred of current period Amount incurred of last period
Products
Business income Business cost Business income Business cost
Sales of bicycle and
spare parts 363,669.25 363,669.25 2,528,791.93 2,528,791.93
(3) Main business (by category )
Unit: RMB Currency: CNY
Amount incurred of current period Amount incurred of last period
Products
Business income Business cost Business income Business cost
CBC electric
254,102.56 254,102.56 1,307,803.93 1,307,803.93
CBC bicycle
109,566.69 109,566.69 1,220,988.00 1,220,988.00
Total
363,669.25 363,669.25 2,528,791.93 2,528,791.93
5. Supplemental Information of cash flow statement
Unit: RMB Currency: CNY
Supplemental Information Amount of this per Amount of last per
iod iod
1． Reconciliation of net profit/(loss) to cash
flows from operating activities:
Net profit 66,120,624.68 -102,983,715.11
plus: provision for assets -2,197,612.45 4,430,522.05
Depreciation of fixed assets, oil/gas asset depletion and depreciation
of productive biological assets 10,325,494.68 6,641,391.45
Amortization of intangible assets 862,862.04 862,862.04
Amortization of long-term prepaid
expenses - -
Loss on disposal of fixed assets, intangible assets and others (ded
uct: gains)
- -4,491,326.30
Losses on disposal of fixed assets (deduct: gains)
- -
Losses on the changes in fair value
(deduct :gains) - - -
Financial expenses (deduct :gains) - 66,237,810.49 94,449,263.86
Losses arising from
investments(deduct: gains) - - -
Decrease of deferred income tax assets
(deduct : increase) - -
Increase of deferred income tax
liabilities (deduct : decrease) - - -
Decrease in inventories(deduct: increase)
5,275,365.60 6,682,348.83
71
Supplemental Information Amount of this per Amount of last per
iod iod
Decrease in operating payables (deduct:
increase) 15,999,407.38 8,015,477.05
Increase in operating payables (deduct:
decrease) -145,039,821.75 -13,640,816.70
Others - -
Net cash flows from operating activities 17,584,130.67 -33,992.83
2． Investing and financing activities that do not
concerning cash receipts and payment:
Conversion of debt into capital - -
Reclassification of convertible bonds
expiring within one year as current liability
- -
Financial leasing of fixed assets - -
3． Net change of cash and cash equivalents:
Closing balance of cash 498,624.71 365,121.06
Minus: opening balance of cash 365,121.06 417,444.51
Plus: closing balance of cash
equivalents - -
Minus: opening balance of cash
equivalents - -
Net increase of cash and cash
equivalents 133,503.65 -52,323.45
XII. Supplement information
1. List of non-recurring profit and loss
Unit: RMB Currency: CNY
Item Amount of this year Explanation
Net income on
Loss and profit on disposal of non-current assets disposal of fixed
-1,479.48 assets
Tax return or exemption from override approval or with no
-
official approval document -
The amount of the government subsidies which are
included in the current profits( which is related to
-
enterprise business, except for government subsidies
according to national stand quota or quantum) -
Paid or received payment for use of state funds recorded in
current profit and Losss -
Profits and losses arising from business combination when
the combined cost is less than the recognized fair value of
net assets of the merged company -
Loss and profit of exchange of non-monetary assets -
Loss and profit by entrusting others to invest and manage
the asset -
Allotted asset depreciation reserves incurred by occasional
cause such as natural calamities -
Gains and losses from debt restructuring Zhengda Guoli relief
the interest and
Chengxingtai
138,684,786.64 settlement the debt
Expense for enterprise reconstruction, employee
arrangement and other integration costs -
Profit and loss from transactions with obvious unfair -
72
Item Amount of this year Explanation
transaction price
Subsidiaries' year-to-date net profit/loss arising from
business combination of entities controlled by a same
company -
Profits contributed by the sold assets to the listed company
from The beginning of the year To the sale date -
Except for effective hedging business related to normal
business, held-for-trading financial asset, profit and losses
on the changes in fair value generated by transaction
financial liabilities, investment income achieved by
disposing transaction financial assets, transaction financial
liabilities and hold-to-sale financial assets -
Reversals of depreciation reserves of receivables done
depreciation test solely -
Loss and profit achieved by entrusting loans -
Profit and loss on the changes in fair value of invested real
estate after being subsequently measured with fair value
mode -
According to laws and regulations of tax and accounting,
impact of One-off adjustment of current loss and profit on
current loss and profit -
Trustee fee income generated from entrusted operation -
Other non-operating income and expenses 1,147,945.28
Other loss/profit generated by definition of other non
recurring profit and loss -
Amount influenced by income tax -30,762,875.54
Amount influenced by few shareholders’ equity(after-tax) -
Total 109,068,376.90
2. Net assets income rate and earnings per share
Earnings per share
Profit during the period of Average weight net asset
report income rate (%) Basic earnings per Dilute earnings per
share share
Net income attributed to
shareholders - 0.1169 0.1169
Net income attributed to
shareholders after deducting
net profit of recurring loss and
profit - -0.0809 -0.0809
3. Reason and explanation of unusual circumstance of items of financial statement of the company
Unit: RMB Currency: CNY
Proportion of
Change of
change in the
amount at the
beginning of
Items beginning of Explanation
period and at
period and at the
the end of
end of period
period
mainly due to the changes of settlement for sale
Note recerivable -3,180,301.00 -54.83% business
Inventory -10,871,691.30 -33.38% mainly due to the inventory reduced
Exchange profit was produced from RMB
Financial expense -28,951,117.10 -30.97% appreciation
Asset depreciation -139.75% Reduced the impairment provision that withdrawal
73
loss -6,191,548.58
Nonbusiness
income 127,158,329.07 998.93% Income from debt settlement with Chengxingtai
Nonbusiness
expenditure -1,094,807.00 -95.09% Losses from disposal of fixed assts occurred last year
Legal representative: Date:
Principal in charge of accounting: Date:
Principal of accounting organ: Date:
74
