深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Shenzhen China Bicycle Company (Holdings) Limited ANNUAL REPORT 2012 April 2013 1 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section I. Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Luo Guiyou, Principal of the Company, Zhang Zebing, person in charger of accounting works and Sun Longlong, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2012 Annual Report is authentic, accurate and complete. Other directors attended the board meeting on auditing the report except for the following directors: Position of absent Reason for absence Entrusted Name of absent director director Kong Na Director On business Yang Fenbo Cao Fang Director On business Li Hai Li Bing Independent Director Personal reason Zhang Xinmiao The Company has no plan of cash bonus, dividends and capitalizing of reserves either. 2 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Paraphrase Items Refers to Contents Company, The Company, the Group Refers to SHENZHEN CHINA BICYCLE COMPANY(HOLDINGS) LIMITED 3 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Indication of major risks I.On 24 October 2012, a “Civil Ruling Paper” (2012) Shen Zhong Fa Po Zi No. 30-1 was ruled by Shenzhen Intermediate People’s Court for reorganization of the Company since 25 October 2012; King & Wood Mallesons (Shenzhen) and Shenzhen Zhengyuan Liquidation Co., Ltd. was appointed as administrator for the Company. In accordance with regulation of article 13.2.7 of Rules Governing the Listing of Stock on Shenzhen Stock Exchange, the stock of the Company suspended since 13 November 2012, resumption should apply to Shenzhen Stock Exchange by the Company till the reorganization plan was ruled by Shenzhen Intermediate People’s Court. Vary reorganization works still in process recently. During reorganization, the Company has suspended risk due to regulation of Listing Rules, or has risks of declared bankrupt liquidation due to the reasons regulated pursuit to Enterprise Bankruptcy Law of the People’s Republic of China; if the Company declared bankrupt liquidation, stock of the Company will at risk of de-listing. Majority investors are advice to exercise rational investment with risks attention. II. Owing to the negative amount of audited closing net assets for year of 2012, accounting statement of the Company was issued an audit report with disclaimer of opinion, in accordance with relevant regulations of Rules Governing the Listing of Stocks on Shenzhen Stock Exchange (Revised in 2012), the Company will has warning of delisting risk implemented. Since bankruptcy reorganization implemented from 25 October 2012 ruled by Shenzhen Intermediate People’s Court, stock of the Company was implemented risk warning and suspended, therefore the Company continues to implemented warning of delisting risk. If the audited net assets at period-end for year of 2013 continues to be negative, or the audit report continues to be issued with disclaimer of opinion or adverse opinion, the stock of the Company will suspend according to the Rules Governing the Listing of Stocks on Shenzhen Stock Exchange. 4 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section II Company profile I. Company information *ST ZHONGHUA – A, Short form of the stock Stock code 000017, 200017 *ST ZHONGHUA – B Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 深圳中华自行车(集团)股份有限公司 Chinese) Short form of the Company 深中华 (in Chinese) Foreign name of the SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED Company(if applicable) Short form of foreign name of CBC the Company(if applicable) Legal representative Luo Guiyou Registrations add. No. 3008, Buxin Rd., Shenzhen, Guangdong Province Code for registrations add 518019 Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen, Guangdong Province, Offices add. China Codes for office add. 518131 Company’s Internet Web Site www.cbc.com.cn E-mail cbc@szcbc.com II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Sun Longlong Cui Hongxia Zhonghua Industrial Park, Yousong Zhonghua Industrial Park, Yousong Contact add. Industrial Zone, Longhua, Shenzhen, Industrial Zone, Longhua, Shenzhen, Guangdong Province, China Guangdong Province, China Tel. 0755-28181666 0755-28181666 Fax. 0755-28181009 0755-28181009 E-mail dmc@szcbc.com dmc@szcbc.com 5 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 III. Information disclosure and preparation place Newspaper appointed for information disclosure Securities Times; Hong Kong Commercial Daily Website for annual report publish appointed by Juchao Website : www.cninfo.com.cn CSRC Preparation place for annual report Secretariat of the Board of Directors IV. Registration changes of the Company Registration NO. for No. of taxation Date for registration Place for registration enterprise legal Organization code registration license State Revenue Shen Zi No.: Shenzhen, QGYSZF Zi No. 440301618830452; Initial registration 1984-08-24 61883045-2 Guangdong Province 101165 Shen Local Tax Deng Zi No.: 440303618830452 State Revenue Shen Zi No.: Registration at end Shenzhen, 440301618830452; 2012-12-31 440301501122085 61883045-2 of report period Guangdong Province Shen Local Tax Deng Zi No.: 440303618830452 Changes of main business since listing (if No changes applicable) 1. In March 1992, the Stock of the Company was listed in Shenzhen Stock Exchange, and 23.28% equity of the Company was held by Shenzhen Lionda Holding Co., Ltd. and Hong Kong Dahuan Bicycle Co., Ltd respectively. 2. In March 2002, legal shares 13.58% A-stock of the Company was obtained by China Huarong Asset Management Co., Ltd. through court auction, and became the first majority shareholder of the Company. 3. On 13 November 2006, the 65,098,412 legal shears of CBC held by Huarong Company was acquired by Shenzhen Guosheng Energy Investment Previous changes for controlling Development Co., Ltd. via the “Equity Transfer Agreement” signed, and first majority shareholders (if applicable) of the Company comes to Guosheng Energy. Guosheng Energy is the wholly-owned subsidiary of National Investment, actual controller was Zhang Yanfeng. 4. In January 2011, controlling shareholder of Shenzhen Guosheng Energy Investment Development Co., Ltd.—Shenzhen National Investment Development Co., Ltd. entered into equity transfer agreement with Mr. Ji Hanfei, 100% equity of Guosheng Energy was transfer to Mr. Ji Hanfei with price of 70 million. Shenzhen Guocheng Energy Investment Development Co., Ltd. Shenzhen Guosheng Energy Investment Development Co., Ltd. holds 65,098,412 A-stock of the Company with 11.81% in total share capital of the 6 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Company. V. Other relevant information CPA engaged by the Company Name of CPA Crowe Horwath China CPA (LLP) Offices add. for CPA 4/F, Tower 2, No.16 XiSihuanZhongLu, Haidian District, Beijing, P.R.C Signing Accountants Chen Songbo, Ren Weixing Sponsor engaged by the Company for performing continuous supervision duties in reporting period √ Applicable □ Not applicable Continuous supervision Name of sponsor Offices add. for sponsor Name of sponsor deputy period 15F, Tower B, Jiangsu Building, Yitian Rd., Zhongshan Securities Co., Ltd. Cui Lei 2012 Futian District, Shenzhen, P.R.C Financial consultant engaged by the Company for performing continuous supervision duties in reporting period □ Applicable √ Not applicable 7 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section III. Accounting data and summary of financial indexes I. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not □Yes √□ No Changes over last year 2012 2011 2010 (%) Operating income (RMB) 292,827,026.55 321,043,570.34 -8.79% 299,027,279.43 Net profit attributable to shareholders of the listed -52,443,234.29 39,720,901.46 -232.03% 64,477,414.44 company(RMB) Net profit attributable to shareholders of the listed company -55,517,844.94 -12,879,894.99 331.04% -44,590,962.46 after deducting non-recurring gains and losses(RMB) Net cash flow arising from -7,026,573.55 348,907.64 -2,113.88% 6,495,860.32 operating activities(RMB) Basic earnings per share -0.0951 0.072 -232.08% 0.1169 (RMB/Share) Diluted earnings per share -0.0951 0.072 -232.08% 0.1169 (RMB/Share) Changes over end of End of 2012 End of 2011 End of 2010 last year (%) Total assets (RMB) 162,649,076.30 135,746,630.93 19.82% 138,158,078.89 Net assets attributable to shareholder of listed company (Owners’ equity attributable to -1,709,451,256.41 -1,682,839,667.48 1.58% -1,756,185,442.87 shareholder of listed company ) (RMB) II. Difference of the accounting data under accounting rules in and out of China 1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) Unit: RMB 8 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Net profit attributable to shareholders of listed Net assets attributable to shareholders of listed company company Amount at Amount in this period Amount in last period Amount at period-end period-begin Chinese GAAP -52,443,234.29 39,720,901.46 -1,709,451,256.41 -1,682,839,667.48 Items and amount adjusted by IAS 2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) Unit: RMB Net profit attributable to shareholders of listed Net assets attributable to shareholders of listed company company Amount at Amount in this period Amount in last period Amount at period-end period-begin Chinese GAAP -52,443,234.29 39,720,901.46 -1,709,451,256.41 -1,682,839,667.48 Items and amount adjusted by foreign accounting rules Nil 3. Reasons for the differences of accounting data under accounting rules in and out of China Nil III. Items and amounts of extraordinary profit (gains)/loss Unit: RMB Item Amount in 2012 Amount in 2011 Amount in 2010 Note Gains/losses from the disposal of non-current asset (including the write-off 14,781,833.16 -1,479.48 that accrued for impairment of assets) Gains/losses from debt reorganization 138,684,786.64 Other non-operating income and expenditure 3,074,610.65 49,869,741.11 1,147,945.28 except for the aforementioned items Other loss/profit qualified definition of 4,560,000.00 extraordinary profit and loss Impact on income tax 16,610,777.82 30,762,875.54 Total 3,074,610.65 52,600,796.45 109,068,376.90 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their 9 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not applicable 10 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section IV. Report of the Board of Directors I. Introduction In 2012, continuously influenced by the debt crisis in Europe and America, international economic situation kept being complicated and severe, domestic macro-control measures were incessant, the overall level of price of commodities kept rising, household consumption custom tended to be prudent, and the manufacturing industry was affected a lot. Also, the market competition became even fiercer, and the business environment of the Company was very bad. In October of 2012, the court ruled the Company to enter the reorganization procedures. Under the above-mentioned special operation background, the Company has operated in order, and the operating business of the Company has overall kept stable development via the endeavor of the board of directors, management team and the staff; under the circumstance that the operating income has slightly declined compared to the last year, the gross operating profits have stably increased by adjusting the product structure, strictly controlling the costs and expenses. The stable development of the operating business has supported the advance of the reorganization of the Company, and the reorganization is under way now. II. Main business analysis 1. Introduction 2012 (in ten 2011 (in ten y-o-y Reasons for chanegs Item thousand yuan) thousand yuan) changes Operation income 29,282.70 32,104.36 -8.79% Sales of bicycle declined Operation cost 26,428.12 29,744.83 -11.15% Sales of bicycle declined Sales expenses 702.01 729.75 -3.80% same as last year with little down Administration expenses 2,514.44 2,183.67 15.15% Reorganization expenses Financial expenses 5,113.78 2,361.90 116.51% The Company has more foreign currency debts, major exchange gains from obviously appreciation of the Renminbi; RMB exchange rate steadily in this year overall Investment gains 456.00 Gains of disposal of equity of Guangnan Motorcycle last year, no such investment items in this year Non-operation income 321.37 6,492.18 -95.05% Shenzhen Municipal Intermediate People's Court ruled the corporation reorganization plan of Sunrise Company was completed in 2011, the Company reduced the original accrued debt of 34.89 million yuan and estimated liabilities of 12.88 million yuan, reckoned in the non-operating income, and the Court sold the Company’s house property at Huaqiangnan and produced non-operating income of 13.17 11 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 million yuan. But the non-operating income was less in 2012. Net profit -5,212.66 3,972.09 -231.23% More exchange gains and non-operation income obtained in last year Net profit attributable to parent -5,244.32 3,972.09 -232.03% More exchange gains and non-operation company income obtained in last year Net cash flow from operation -702.66 34.89 -2113.93% Reorganization expenses paid in this year activities Net cash flow from investment -12.46 644.09 -101.93% Investment received from disposal of equity of activities Guangnan Motorcycle in last year Net cash flow from financing 3500.00 0 Reorganization start-up capital was paid in activities advance from Guosheng Energy Company in this year Review and summarization on the progress of development strategy and operation plan disclosed in previous period during the reporting period The Company always devotes to the bankruptcy reorganization and achieves major progress in year of 2012; Shenzhen Intermediate People’s Court has officially accepted the case and exercise into reorganization procedures. Reasons for difference of actual operation performance has 20% lower or higher than profit forecast of the Year disclosed □ Applicable √ Not applicable 2. Revenue Explanation Industries Item 2012 2011 Increase/decrease y-o-y (%) Sales volume 365,800 392,300 -6.76% Bicycle, electric bicycle Production volume 371,600 377,000 -1.43% Stock volume 26,800 21,000 27.62% Whether income from physical sales larger than income from labors or not □Yes √No Material orders in hands □ Applicable √ Not applicable Material changes or adjustment for products or services of the Company in reporting period □ Applicable √ Not applicable Major sales of the Company Total top five clients in sales (RMB) 232,180,069.80 Proportion in total annual sales volume for top five clients 79.34% (%) Information of top five clients of the Company √ Applicable □ Not applicable 12 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Serial Name Sales (RMB) Proportion in total annual sales (%) 1 Client 1 118,060,432.20 40.34% 2 Client 2 42,615,351.90 14.56% 3 Client 3 28,697,459.00 9.81% 4 Client 4 25,983,096.20 8.88% 5 Client 5 16,823,730.50 5.75% Total —— 232,180,069.80 79.34% 3. Cost Industry classification Unit: RMB 2012 2011 Industry Y-o-y changes Item Ratio in operation Ratio in operation classification Amount Amount (%) cost (%) cost (%) Bicycles Bicycles manufacture and manufacture and sales of sales of 251,645,509.84 98.01% 282,052,578.77 98.49% 0.48% accessories and accessories and fittings fittings Lease Lease 5,122,133.15 1.99% 4,320,717.13 1.51% -0.48% Management Management Product classification Unit: RMB 2012 2011 Product Y-o-y changes Item Ratio in operation Ratio in operation classification Amount Amount (%) cost (%) cost (%) OEM EV OEM EV 199,445,532.80 77.68% 226,119,813.08 78.96% -1.28% OEM bicycle OEM bicycle 49,016,414.60 19.09% 49,331,916.01 17.23% 1.86% CBC EV CBC EV 0% 1,009.04 0% 0% CBC bicycle CBC bicycle 157,125.83 0.06% 118,576.45 0.04% 0.02% Other Other 3,026,436.61 1.18% 6,481,264.19 2.26% -1.08% Lease Lease 5,122,133.15 1.99% 4,320,717.13 1.51% 0.49% Management Management Note: main business of the Company –bicycle, adopts business mode of OEM, no differentiate items of raw materials, salary, depreciation and energy ect Main suppliers of the Company 13 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Total purchase amount from top five suppliers (RMB) 230,265,378.89 Proportion in total annual purchase amount for top five 90.18% suppliers (%) Information of top five suppliers of the Company √ Applicable □ Not applicable Proportion in total annual sum of purchase Serial Name Sum of purchase (RMB) (%) 1 Client 1 118,284,017.26 46.32% 2 Client 2 55,034,524.44 21.55% 3 Client 3 23,806,312.82 9.32% 4 Client 4 17,058,826.50 6.68% 5 Client 5 16,081,697.86 6.3% Total —— 230,265,378.89 90.18% 4. Expenses During the report period, the changes of selling expenses and administration expenses of the Company haven’t reached 30% on a year-on-year basis, but the financial expenses have increased by 116.51% on a year-on-year basis, which were mainly because the Company had the large amount of foreign currency liabilities, and the large amount of exchange gains generated from the obvious appreciation of RMB to foreign currencies in 2011 deducted the financial expenses of the current year, but the RMB exchange rate was stable in 2012. 5. Cash flow Unit: RMB Item 2012 2011 Y-o-y changes (%) Subtotal of cash in-flow from 209,862,967.20 219,700,186.79 -4.48% operation activity Subtotal of cash out-flow from 216,889,540.75 219,351,279.15 -1.12% operation activity Net cash flow from operation -7,026,573.55 348,907.64 -2,113.88% activity Subtotal of cash in-flow from 6,577,500.00 -100% investment activity Subtotal of cash out-flow from 124,666.98 136,579.83 -8.72% investment activity Net cash flow from investment -124,666.98 6,440,920.17 -101.94% 14 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 activity Subtotal of cash in-flow from 35,000,000.00 financing activity Net cash flow from financing 35,000,000.00 activity Net increased amount of cash 27,848,759.47 6,789,827.81 310.15% and cash equivalent Reasons for y-o-y relevant data with over 30% changes √ Applicable □ Not applicable The reason why the net cash flow generated by the operating activities reduced by 2,113.88% compared to the previous year was because the company paid reorganization expenses in this year. The reason why the cash inflow generated by investment activities reduced by 100% compared to the previous year was because the Company disposed the stock rights of Konan Motor and took back the investments in last year. The reason why the net cash flow generated by investment activities reduced by 101.94% compared to the previous year was because the Company disposed the stock rights of Konan Motor and took back the investments in last year. The net cash flow generated by financial activities was 35 million yuan, but no amount occurred compared to last year, it was because Guosheng Energy Company paid the start-up capital for reforming in this year. The reason why the net increase of cash and cash equivalents increased by 310.15% compared to the last year was because Guosheng Energy Company paid the start-up capital for reforming in this year and the Company also paid reforming expenses. Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company √ Applicable □ Not applicable Supplementary information Amount in this period Amount at last period 1.Net profit adjusted to cash flow of operation activities: Net profit -52,126,619.65 39,720,901.46 Add: assets impairment losses 98,924.25 -271,217.92 Depreciation of fixed assets, consumption of oil assets and depreciation 3,785,277.00 8,501,135.08 of productive biology assets Amortization of intangible assets 862,862.04 862,862.04 Amortization of long-term deferred expenses - - Loss from disposal of fixed assets, intangible assets and other long-term - -14,781,833.16 assets(gain is listed with “-”) Loss of disposing fixed assets(gain is listed with “-”) - - Loss from change of fair value(gain is listed with “-”) - - Financial expenses (gain is listed with “-”) 25,831,645.36 23,665,689.88 15 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Investment loss (gain is listed with “-”) - -4,560,000.00 Decrease of deferred income tax asset( (increase is listed with “-”) - - Increase of deferred income tax liability (decrease is listed with “-”) - - Decrease of inventory (increase is listed with “-”) -3,301,769.57 35,083,214.07 Decrease of operating receivable accounts (increase is listed with “-”) -2,206,224.77 1,267,177.57 Increase of operating payable accounts (decrease is listed with “-”) 20,029,331.79 -41,368,614.15 Others - -47,770,407.23 Net cash flow arising from operating activities -7,026,573.55 348,907.64 2.Material investment and financing not involved in cash flow: Liabilities converted to capital - - Convertible bond expire in 1 year - - Fixed assets leased through financing - - 3.Net change of cash and cash equivalents: Balance of cash at period end 52,395,360.86 24,546,601.39 Less: Balance of cash at year-begin 24,546,601.39 17,756,773.58 Plus: Balance of cash equivalents at the period end - - Less: Balance of cash equivalent at year-begin - - Net increasing of cash and cash equivalents 27,848,759.47 6,789,827.81 III. Composition of main business Unit: RMB Increase/decrease Increase/decrease Increase/decrease Operating Gross profit ratio of operating Operating cost of operating cost of gross profit revenue (%) revenue y-o-y y-o-y (%) ratio y-o-y (%) (%) According to industries Bicycles manufacture and sales of 265,722,390.44 251,645,509.84 5.3% -10.23% -10.78% 0.58% accessories and fittings Lease 2,398,572.07 5,122,133.15 -113.55% -2.46% 18.55% -37.84% Management According to products OEM EV 210,501,591.13 199,445,532.80 5.25% -10.99% -11.8% 0.86% 16 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 OEM bicycle 51,856,029.98 49,016,414.60 5.48% -1.68% -0.64% -0.99% CBC EV -6.3% CBC bicycle 137,418.98 157,125.83 -14.34% 17.96% 32.51% -12.55% Other 3,227,350.35 3,026,436.61 6.23% -51.47% -53.3% 3.68% Lease 2,398,572.07 5,122,133.15 -113.55% -2.46% 18.55% -37.84% Management According to region Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest one year’s scope of period-end □ Applicable √ Not applicable IV. Assets and liability analysis 1. Major changes of assets Unit: RMB End of 2012 End of 2011 Ratio Ratio in total Ratio in total changes Notes of major changes Amount Amount assets (%) assets (%) (%) Reorganization capital was paid in Monetary fund 52,395,360.86 32.21% 24,546,601.39 18.08% 14.13% advance from Guosheng Energy Company Account Closing receivable from Emmelle 6,002,162.94 3.69% 3,869,919.58 2.85% 0.84% receivable increased, subsidiary of the Company Inventory 17,612,197.85 10.83% 14,310,428.28 10.54% 0.29% Investment real 21,395,176.24 13.15% 22,763,296.78 16.77% -3.62% estate Long-term equity 2,619,840.50 1.61% 2,619,840.50 1.93% -0.32% investment Fix assets 12,970,199.73 7.97% 15,262,689.21 11.24% -3.27% Closing note receivable from Emmelle Note receivable 1,627,810.00 1% 1,000,000.00 0.74% 0.26% increased, subsidiary of the Company Closing prepayment from Emmelle Prepayment 829,956.13 0.51% 1,588,743.08 1.17% -0.66% decreased, subsidiary of the Company 2. Major changes of liability Unit: RMB 2012 2011 Ratio Notes of major changes 17 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Ratio in total Ratio in total changes Amount Amount assets (%) assets (%) (%) Short-term Total assets increased, than the ratio 355,796,107.93 218.75% 359,993,573.29 265.2% -46.45% loans declined 3. Assets and liabilities measured by fair value Unit: RMB Changes of fair Accumulative Amount at the Devaluation of Amount of value changes of fair Amount of sale Amount in the Items beginning withdrawing in purchase in the gains/losses in value reckoned in the period end of period period the period period this period into equity Financial assets 1.Financial assets measured by fair value, and its changes are reckoned in 0.00 0.00 0.00 0.00 0.00 current gains/losses(no t including derivative financial asset) 2.Derivative 0.00 0.00 0.00 0.00 0.00 financial asset 3.Financial assets available 0.00 0.00 0.00 0.00 0.00 for sales Subtotal of 0.00 0.00 0.00 0.00 0.00 financial assets Investment 0.00 0.00 0.00 property Productive biological 0.00 0.00 0.00 assets Others 0.00 0.00 0.00 0.00 0.00 Aforementione 0.00 0.00 0.00 0.00 0.00 d total Financial 0.00 0.00 0.00 0.00 0.00 liabilities 18 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Whether the attribute of the company’s major assets measurement has a lot changes in the reporting □ Yes √ No V. Investment analysis 1. Main subsidiaries and stock-jointly companies Particular about main subsidiaries and stock-jointly companies Main Operating Operating Company Register Total assets Net Assets Net profit Type Industries products or revenue profit name capital (RMB) (RMB) (RMB) service (RMB) (RMB) Shenzhen An Jule Property Property RMB 2 -21,281,690 2,398,572.0 -3,821,28 Property Subsidiary managemen managemen 996,481.92 -3,821,281.71 million .52 7 1.71 Managemen t t t Co., Ltd. China Trading and Bicycle HK$ 0.02 -11,733.3 Subsidiary Bicycle manufactur 565,493.40 -739,399.91 0.00 -11,733.39 (Internation million 9 e al) Co., Ltd. China Sales of Bicycle bicycles HK$ 5 15,496,178. -50,588,239 101,192.0 (Hong Subsidiary Bicycle 19,829.55 101,192.03 and million 40 .35 3 Kong) Co., accessories Ltd. Shenzhen Sales of Emmelle bicycles RMB 2 36,420,021. 267,821,15 1,083,820 Subsidiary Bicycle 201,908.82 1,055,382.12 Industry and million 94 9.15 .13 Co., Ltd. accessories Notes of main subsidiaries and stock-jointly companies Two companies in H.K are closed down for many years without actual business, mainly refers to the exchange gains/losses and expenses for company duration Particular about subsidiaries obtained or disposed in report period □ Applicable √ Not applicable VI. Prospects on future development (I) growing trend of the industry and the market competition pattern the Company is confronting The Company has entered into the electric bicycle business scope since 2002. After the rapid development in a few years ago, the growth of electric bicycle industry has obviously stagnated since 2007. As the rare earth 19 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 industry and battery industry strengthen the management, the supply for main parts such as motor and battery becomes tense, which restricts the production of electric bicycle industry, moreover, the uncertainties of new standards and its launch time of electric bicycle industry make some negative effects on the marketing of electric bicycles. Meanwhile, the international and domestic prices of raw materials keep rising resulting in the high rising of manufacturing costs and use costs, which seriously influences the market demand trend even the development potential of the electric bicycle industry, and the industrial competition becomes fiercer. (II) Future development opportunities and new annual business plan 1. Sell 0.21 million electric bicycles; sell 0.15 million bicycles. To ensure the realization of the targets, the Company divides the annual targets into every distributor and every regional manager, adopts manager responsibility system, requires the manager to follow month by month, and carries out rolling assessment. 2. Adjust the business strategy, move the core of business team further forward, take roots in front line of business, timely communicate with clients information by face, strengthen the details management, start with the detailed work, including propaganda, sales promotion, order, purchase, selling, shipment, calculation, and after-sale service. 3. To ensure the realization of the targets, while closely following the first group (Shandong, Henan, Hebei, Jiangsu), focus on the expansion of the second group including Yunnan, Sichuan, Guangxi and Xinjiang, and urge them to prolong the network terminal construction. We not only need to actively follow and give pressure, but need to adjust and directly adopt flat sales mode to strengthen the network construction. Furthermore, give proper policy supports to the increase of branch for encouraging, such as rent subsidies of the new branches. 4. Positively explore new markets, focus on Guangdong, and follow the markets in remote and border areas and newly-developed markets. 5. Continue to carry forward the work to enter and be stationed in the supermarket in East China markets. That is focusing on Jiangsu and Shanghai, forge the Big East China area by taking Shanghai, Jiangsu, Zhejiang and Anhui as the economic circle, unify the market operation, and gradually explore a new management concept. 6. Strengthen the follow-up of group purchase orders by cooperating with the government purchasing information center. 7. To solve the ordering difficulties of small and medium-sized customers, intend to re-explore the transit warehouse operation mode so as to better gradually advance the new thought of flattening network construction operation to some markets. 8. Based on the expanding strategy of medium and high-grade bicycles, adopt network marketing, club popularization and e-commerce online sales to explore a operation mode of focusing on product and brand promotion. 9. Strengthen the propaganda and popularization of the products. In 2013, except for advertising on TV, focus on utilizing club platform and network club to organize some special competitions for brand promotion. Make propaganda leaflet, poster and small flags for the new products according to the release of new products. Furthermore, publicize and promote the brand via some bicycle competitions (such as Tour of Qinghai Lake race and Tour of Hainan race). Especially strengthen the cooperation with Qinghai Athletic Committee, and explore new thought for brand promotion. 10. Further strengthen the after-sale services, and well complete the transformation of services. 11. During the reforming, continue to do a good job in leasing, strengthen the rent collection, and strive to reach 100% rent collection ratio. 12. Strengthen the assets management, maintain the assets safety, highlight the safety management of rental 20 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 property, avoid occurring safety responsibility safety accidents, eradicate potential safety hazard, and ensure the normal operation of leasing business 2013 is a key year for the company’s reforming; the company will positively boost the reforming and strive to develop the operation business by following the work division confirmed by the court and cooperating with the custodian and other parties. VII. Explanation of the Board of Directors on the “Qualified Opinion” of the report made by the CPAs Financial Report of the Company for year of 2012 was audited by Crowe Horwath China CPA (LLP) with disclaimer of opinion issued. In according to regulation of Rules Governing the Listing of Stocks on Shenzhen Stock Exchange, the specific explanations with events involved in audit report from the Board are: Disclaimer of opinion from CPA: 1. CBC started reforming on 25th, Oct., 2012, tax administration, customs, finance, guarantees, suppliers, and other creditors have declared financial claims to the custodian, up to the audit report date, the financial claims declaration has amounted to RMB 3,453,252,904.97 yuan, the total amount of financial claims that the custodian has confirmed and enrolled in The Form of Claims was 1,875,616,630.22 yuan, above-mentioned financial claims declared by the creditors are different from the accounting and haven’t been ruled by the court, Crowe Horwath China CPAs cannot confirm its effects on financial statements of China Bicycle Company. 2. Refer to the statement in Note X.: ended as 31 December 2012, total assets of CBC was 162,649,076.30 yuan, total liability was 1,872,039,760.06 yuan while net assets was -1,709,390,683.76 yuan for serious insolvency resulted with vary huge over due debts, taxes and lawsuit debts arising from external guarantee and overdue debts; Being application from first majority shareholder and largest creditor of CBC, Shenzhen Guosheng Energy Investment Development Co., Ltd, CBC was ruled to reorganize since 25 October 2012 by Shenzhen Intermediate People’s Court. As to the end of audit reporting date, CBC still in process of reorganization without judge from Shenzhen Intermediate People’s Court, Crowe Horwath China is unable to obtained complete-ness and properly auditing evidence to guarantee whether it can improve the sustainable operational ability for China Bicycle. Therefore, Crowe Horwath China fail to judge the appropriate-ness of the financial statement 2012 of CBC that prepared under the sustainable hypothesis. Specific explanation from the Board: On 11th, May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. In late October, 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) 21 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd. as the custodians of the Company. At the same time, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. After the Company entered bankruptcy reorganization procedures, in accordance with the relevant regulations of Enterprise Bankruptcy Law of the People's Republic of China, the custodians started creditor's rights declaring registration and examination, and the first meeting of creditors of the Company’s reorganization case was presided over by Shenzhen Municipal Intermediate People's Court and convoked on 11th, Dec., 2012. At present, the reforming is being advanced, the Company will solve the debt crisis via the reforming, introduce strong recombination party, and transfuse high quality assets so as to recover the Company’s sustainable operation ability and profitability and realize benign development of the Company. VIII. Profit and dividend distribution Establishment, implementation or adjustment of profit distribution policy especially the cash dividend policy during the reporting period To further complete and consummate the dividend policy and supervision mechanism of Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as “Company”) and positively return to the shareholders, in accordance with the provisions and spirit of “Notice to further implement the cash dividends in listed company” of China Securities Regulatory Commission and “Notification about seriously implementing the notification to further implement the issues related to cash dividends in listed companies” (Shenzhen Securities Bureau Zi No.[2012]43) issued by Shenzhen Securities Regulatory Bureau and the provisions of relevant system of the articles of association, the Company convoked the thirteenth (interim) meeting of the eighth board of directors on 30th, Jul., 2012, which considered and passed the motions about amending the articles of association and the rules of procedures of the stockholders’ meeting, and special report on shareholders’ return plan, and relevant contents of shareholders’ return plan in the next three years (2012-2014), the independent directors made independent opinions which have been considered and adopted by the first extraordinary general meeting of 2012 convoked on 15th, Aug., 2012. The Company has implemented the profit distribution policy by strictly following the “Articles of Association”, the establishment and implementation of cash dividend policy of the Company meet the requirements of the provisions of “Articles of Association” and the resolutions of shareholders' meeting, the Company thinks highly of the reasonable requests opinions of investors especially for the medium and small investors, the shareholder return plan established with comprehensive consideration of the profitability of main business and capital and debt condition of the company, sustainable development, shareholder return, external financing environment has met the requirements of shareholders’ reasonable return on investment and the company’s demands for long-term development and improved the completion of dividend decision and supervision mechanism of the company. Profits distribution plan and plan of converting capital reserve funds into capital stock during the report period meet the relevant provisions of the articles of association. 22 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 The profit distribution plan and capitalization of capital reserve plan of the Company for the last three years (reporting period included) The Company has no bonus distributed and no capitalization of reserve in latest three years (reporting period included) either Cash dividend in latest three years Unit: RMB Net profit attributable to Ratio in net profit attributable to Amount for cash bonus (tax shareholders of listed company shareholders of listed company Year for bonus shares included) in consolidation statement for contained in consolidation bonus year statement (%) 2012 0.00 -52,443,234.29 0% 2011 0.00 39,720,901.46 0% 2010 0.00 64,477,414.44 0% The Company gains profits in reporting period and the retained profit of parent company is positive but no plan of cash dividend proposed □ Applicable √ Not applicable IX. In the report period, reception of research, communication and interview Contents discussed and Time Place Way Type Reception material provided Telephone Office of the Circulation Influence on the Company from 1 April 2012 to 31 July 2012 communicati Individual Company shareholder delisting provision on Telephone 3 January 2012 to 31 December Office of the Circulation Progress of reorganization and communicati Individual 2012 Company shareholder reforming on 23 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section V. Important Events I. Significant lawsuits and arbitrations of the Company □ Applicable √ Not applicable No lawsuit or arbitration of the company in the annual. Questioned from media □ Applicable √ Not applicable No media questioned for the Company in reporting period II. Bankruptcy reorganization On 11th, May, 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. On 24th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd. as the custodians of the Company. On the same day, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. After the Company entered bankruptcy reorganization procedures, in accordance with the relevant regulations of Enterprise Bankruptcy Law of the People's Republic of China, the custodians started creditor's rights declaring registration and examination, and the first meeting of creditors of the Company’s reorganization case was presided over by Shenzhen Municipal Intermediate People's Court and convoked on 11th, Dec., 2012. At present, the reforming is being advanced. In the course of reforming, the Company exists the risks of being suspended according to the regulations of “Listing Rules”, or being declared bankruptcy liquidation in accordance with the regulations of “Enterprise Bankruptcy Law of the People's Republic of China” (Reforming plan failed); if the Company is declared bankruptcy liquidation, the stock of the Company will face the risk of being delisted. After entering bankruptcy reorganization procedures, under the supervision of court and custodians, the Company always positively prepares the establishment of reforming plan draft. On 29th, Oct., 2012, Supreme People's Court promulgated Colloquia Summary About Hearing Bankruptcy Reorganization Cases of Listed Companies”, raised high demands for the debtor’s management plan included in reforming plan draft, especially for the administrative approval related to the acquisition and reorganization, the Company should engage relevant organization to establish data in accordance with the requirements of securities regulatory institution to serve as the necessary 24 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 documents for reforming plan draft and management plan. Our company concentrates the recent work on the argumentation of above-mentioned items, especially on the selection of the reorganization party and the design of acquisition and reorganization program. Except confirming the debtor’s management plan, the reforming plan draft should confirm assets and liabilities on the reforming acceptance date, i.e. 12th, Oct., 2012, and those data depend on asset appraisal result and review result of creditor's rights. Up to middle April of 2013, asset appraisal result and review result of creditor's rights haven’t been completed yet, the Company has communicated with the custodian, and submitted the custodian to coordinate asset evaluation agency to confirm the asset appraisal result, complete the investigation of creditor's rights and apply for the court ruling confirmation. In accordance with the provisions of Article 79 (2) of Enterprise Bankruptcy Law of the People's Republic of China, if the debtor cannot submit reforming plan draft to People's Court and meeting of creditors within six months since the People's Court rules the date of reforming, People's Court can rule to postpone three months if the debtor makes request and has just causes. As the court ruled to reform Shenzhen China Bicycle (Group) Co., Ltd. since 25th, Oct., 2012, the Company estimates that it cannot formally submit reforming plan draft before 24th, Apr., 2013, and submits extension request to Shenzhen Municipal Intermediate People's Court. On 22nd, Apr., 2013, the Company has received (2012) Shenzhen Intermediate Court Po Zi No. 30-3 civil ruling of Shenzhen Municipal Intermediate People's Court, which rules that the submission date of reforming plan draft delays to 25th, Jul., 2013. At present, the establishment of reforming plan draft is underway. III. Significant contracts and its implementation 1. Guarantees In ten thousand yuan Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Guarante Related Actual date of Complete e for Announcem happening Name of the Guarantee Actual Guarantee Guarantee implemen related ent (Date of Company guaranteed limit guarantee limit type term tation or party disclosure signing not (Yes or date agreement) no) Guangdong Sunrise Joint liability 1996-07-26 1,960 1996-07-26 1,960 4 months No No Group Co., Ltd. assurance Guangdong Sunrise Joint liability 1999-09-30 477.28 1999-09-30 477.28 12 months No No Group Co., Ltd. assurance Guangdong Sunrise Joint liability 1998-04-30 182 1998-04-30 182 11 months No No Group Co., Ltd. assurance Guangdong Sunrise Joint liability 1997-07-30 175 1997-07-30 175 7 months No No Group Co., Ltd. assurance Guangdong Sunrise Joint liability 1997-06-04 210 1997-06-04 210 8 months No No Group Co., Ltd. assurance 25 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Gintian Industry Joint liability 1998-10-30 5,000 1998-10-30 5,000 6 months No No (Group) Co., Ltd. assurance Shenzhen Tianma Joint liability 1994-09-30 800 1994-09-30 800 12 months No No Cosmetics Co., Ltd. assurance Total actual occurred external Total approving external 0 guarantee in report period 0 guarantee in report period (A1) (A2) Total actual balance of Total approved external guarantee 0 external guarantee at the end 8,804.29 at the end of report period ( A3) of report period (A4) Guarantee of the Company for the subsidiaries Guarante Related Actual date of Complete e for Announcem happening Name of the Guarantee Actual Guarantee Guarantee implemen related ent (Date of Company guaranteed limit guarantee limit type term tation or party disclosure signing not (Yes or date agreement) no) Shandong Huajiaming Joint liability 1997-09-03 8.31 1997-09-03 8.31 4 months No No Economic and Trade assurance Co., Ltd. Joint liability Zoria Pte Ltd 1996-03-25 7,808.7 1996-03-25 7,808.7 9 months No No assurance Total amount of approving Total amount of actual guarantee for subsidiaries in occurred guarantee for 0 0 report period (B1) subsidiaries in report period (B2) Total amount of approved Total balance of actual guarantee for subsidiaries at the guarantee for subsidiaries at 0 7,817.01 end of reporting period (B3) the end of reporting period (B4) Total amount of guarantee of the Company( total of two abovementioned guarantee) Total amount of approving Total amount of actual guarantee in report period 0 occurred guarantee in report 0 (A1+B1) period (A2+B2) Total amount of approved Total balance of actual guarantee at the end of report 0 guarantee at the end of report 16,621.3 period (A3+B3) period (A4+B4) The proportion of the total amount of actually guarantee in the -9.72% net assets of the Company(that is A4+ B4) Including: Amount of guarantee for shareholders, actual controller and its 0 related parties(C) The debts guarantee amount provided for the guaranteed parties 16,621.3 whose assets-liability ratio exceed 70% directly or indirectly(D) Proportion of total amount of guarantee in net assets of the 0 Company exceed 50%(E) Total amount of the aforesaid three guarantees(C+D+E) 16,621.3 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees 26 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Explanations on external guarantee against regulated N/A procedures IV. Implementation of commitments 1. Commitments from the Company or shareholders (with over 5% shares held) in or continued to reporting period Dated for Commitment Commitment Implementa Commitments Contents commitme party term tion nt Shenzhen The original non-circulated shares are not available for Guosheng trading or transfer in 12 months Energy since Reform implemented; after the aforesaid period expired, Obey the Development original shareholders with over Share Merger Reform 2006-12-29 commitmen Co., Ltd,; 5% of non-circulated shares held can list the share on Shenzhen ts Zhuorun Stock Exchange; the proportion Technology of sold shares should be over 5% within 12 months and no more Co., Ltd. 10% deal in 24 months. Commitments in report of acquisition or equity change Commitments in assets reorganization Commitments in initial public offering or refinancing other commitments to minority shareholders of the Company Completed on time or not Yes Whether made a promise to horizontal competition and related transactions that No resulted or not V. Appointment and non-reappointment (dismissal) of CPA Accounting firm appointed Name of domestic accounting firm Crowe Horwath China CPA (LLP) Remuneration for domestic accounting firm (in 10 50 thousand yuan) Continuous life of auditing service for foreign 1 accounting firm Name of domestic CPA Chen Songbo, Ren Weixing Whether re-appointed accounting firms in this period or not 27 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 √Yes □No Whether re-appointed accounting firms in auditing period or not □ Yes √ No Completed approval procedures while change accounting firms √ Yes □ No Explanation on re-appointment and changes of accounting firms As Shenzhen Pengcheng Certified Public Accountants Co., Ltd. has merged with Crowe Horwath China CPAs (LLP) and uses the name and brand of Crowe Horwath China CPAs. Meanwhile, as the Crowe Horwath China CPAs possesses 1. Professional qualification related to securities and futures; 2. Good reputation, and no significant audit quality problems and bad records occurred in the enterprise auditing services; 3. Standard and perfect control system for service quality and risk control system, and sound internal fundamental management system; the Company decides to engage Crowe Horwath China CPAs (LLP) as the audit institution as per the proposal of audit committee of the board, and the employment term is one year, which is considered and adopted by The Second Extraordinary General Meeting in 2012 convoked on 27th, Dec., 2012. Appointment of internal control auditing accounting firm, financial consultant or sponsor □ Applicable √ Not applicable VI. Explanation from Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” from the CPA Financial Report of the Company for year of 2012 was audited by Crowe Horwath China CPA (LLP) with disclaimer of opinion issued. In according to regulation of Rules Governing the Listing of Stocks on Shenzhen Stock Exchange, the specific explanations with events involved in audit report are express by the Board, specific explanation on the agreement on the above said specific explanations: Disclaimer of opinion from CPA: 1. CBC started reforming on 25th, October 2012, tax administration, customs, finance, guarantees, suppliers, and other creditors have declared financial claims to the custodian, up to the audit report date, the financial claims declaration has amounted to RMB 3,453,252,904.97 yuan, the total amount of financial claims that the custodian has confirmed and enrolled in The Form of Claims was 1,875,616,630.22 yuan, above-mentioned financial claims declared by the creditors are different from the accounting and haven’t been ruled by the court, Crowe Horwath China CPAs cannot confirm its effects on financial statements of China Bicycle Company. They considers that: on 11th, May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. In late October, 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd. as the custodians of the Company. At the same 28 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 time, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. After the Company entered bankruptcy reorganization procedures, in accordance with the relevant regulations of Enterprise Bankruptcy Law of the People's Republic of China, the custodians started creditor's rights declaring registration and examination, and the first meeting of creditors of the Company’s reorganization case was presided over by Shenzhen Municipal Intermediate People's Court and convoked on 11th, Dec., 2012. At present, the reforming is being advanced, the Company will solve the debt crisis via the reforming, introduce strong recombination party, and transfuse high quality assets so as to recover the Company’s sustainable operation ability and profitability and realize benign development of the Company. VII. Other material events On 24 October 2012, a “Civil Ruling Paper” (2012) Shen Zhong Fa Po Zi No. 30-1 was ruled by Shenzhen Intermediate People’s Court for reorganization of the Company since 25 October 2012; King & Wood Mallesons (Shenzhen) and Shenzhen Zhengyuan Liquidation Co., Ltd. was appointed as administrator for the Company. In accordance with regulation of article 13.2.7 of Rules Governing the Listing of Stock on Shenzhen Stock Exchange, the stock of the Company suspended since 13 November 2012, and resumption should apply to Shenzhen Stock Exchange by the Company till the reorganization plan was ruled by Shenzhen Intermediate People’s Court. Vary reorganization works still in process recently. During reorganization, the Company has suspended risk due to regulation of Listing Rules, or has risks of declared bankrupt liquidation due to the reasons regulated pursuit to Enterprise Bankruptcy Law of the People’s Republic of China; if the Company declared bankrupt liquidation, stock of the Company will at risk of de-listing. Majority investors are advice to exercise rational investment with risks attention. 29 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Shares Before the Change Increase/Decrease in the Change (+, -) After the Change Capitalizat New Proportion Bonus ion of Proportio Amount shares Others Subtotal Amount (%) shares public n (%) issued reserve 109,214,2 -71,671,64 -71,671,64 37,542,58 I. Restricted shares 19.81% 0 0 0 6.81% 30 3 3 7 1、State-owned shares 0 0% 0 0 0 0 0 0 0% 2. State-owned legal 0 0% 0 0 0 0 0 0 0% person’s shares 65,098,41 -27,567,39 -27,567,39 37,531,01 3. Other domestic shares 11.81% 0 0 0 6.81% 2 7 7 5 Including: Domestic legal 65,098,41 -27,567,39 -27,567,39 37,531,01 11.81% 0 0 0 6.81% person’s shares 2 7 7 5 Domestic natural person’s 0 0% 0 0 0 0 0 0 0% shares 44,104,24 -44,104,24 -44,104,24 4. Foreign shares 8% 0 0 0 0 0% 6 6 6 Including: Foreign legal 44,104,24 -44,104,24 -44,104,24 8% 0 0 0 0 0% person’s shares 6 6 6 Foreign natural person’s 0 0% 0 0 0 0 0 0 0% shares 5. Senior executives’ 11,572 0% 0 0 0 0 0 11,572 0% shares 442,133,7 71,671,64 71,671,64 513,805,3 II. Unrestricted shares 80.19% 0 0 0 93.19% 17 3 3 60 193,773,3 71,671,64 71,671,64 265,445,0 1. RMB Ordinary shares 35.14% 0 0 0 48.14% 60 3 3 03 2. Domestically listed 248,360,3 248,360,3 45.05% 0 0 0 0 0 45.05% foreign shares 57 57 3. Overseas listed foreign 0 0% 0 0 0 0 0 0 0% shares 4. Others 0 0% 0 0 0 0 0 0 0% 551,347,9 551,347,9 III. Total shares 100% 0 0 0 0 0 100% 47 47 Reasons for share changed Restricted stocks 44,104,246 shares of the Company has been release for listing dated 18 May 2012, a 8% in total share capital of the 30 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Company, Restricted stocks 27,567,397 shares of the Company has been release for listing dated 29 Jun 2012, a 5% in total share capital of the Company Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changed Nil Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators Nil II. Particulars about shareholder and actual controller of the Company 1. Amount of shareholders of the Company and particulars about shares holding Unit: Share Total shareholders in reporting Total shareholders ended as the 5th trading day before 34,430 34,430 period annual report disclosed Top ten shareholders (including shares held above 5% by shareholders) Total Number of share Changes Amount of Amount of Proportion shareholders at pledged/frozen Full name of Nature of of shares in report restrict un-restrict shares Shareholders shareholder the end of held (%) State of period shares held held Amount report period share Shenzhen Guocheng Domestic Energy Investment non-State-ow 11.81% 65,098,412 37,531,015 27,567,397 0 Development Co., ned legal Ltd. person Zhuorun Technology Foreign legal 8% 44,104,246 0 44,104,246 0 Co., Ltd. person Domestic Zeng Ying 1.25% 6,894,257 0 6,894,257 0 nature person Shenzhen Kangsheng Domestic Investment non-State-ow 1.08% 5,972,500 0 5,972,500 0 Development Co., ned legal Ltd. person Jingchao Investment Foreign legal 0.91% 5,001,944 0 5,001,944 0 Co., Ltd. person Domestic Li Gaofeng 0.42% 2,293,241 0 2,293,241 0 nature person 31 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Domestic Wang Haoyu 0.4% 2,221,933 0 2,221,933 0 nature person Foreign nature TANG JING YUAN 0.4% 2,213,175 0 2,213,175 0 person GUOTAI JUNAN Foreign legal SECURITIES(HON 0.4% 2,208,017 0 2,208,017 0 person GKONG) LIMITED Domestic Liu Xiuhuang 0.37% 2,061,707 0 2,061,707 0 nature person Strategy investors or general corporate comes to top 10 N/A shareholders by rights issued (if applicable) Among the top ten shareholders the Company was unaware of whether there existed Explanation on associated associated relationship or whether there existed consistent actionist regulated in the relationship among the aforesaid Management Measure of Information Disclosure on Change of Shareholding for Listed shareholders Companies Particular about top ten shareholders with un-restrict shares held Amount of un-restricted shares held at Type of shares Shareholders’ name year-end (Note 4) Type Amount RMB common Zhuorun Technology Co., Ltd. 44,104,246 44,104,246 shares Shenzhen Guocheng Energy Investment RMB common 27,567,397 27,567,397 Development Co., Ltd. shares Domestically Zeng Ying 6,894,257 listed foreign 6,894,257 shares Shenzhen Kangsheng Investment Development RMB common 5,972,500 5,972,500 Co., Ltd. shares RMB common Jingchao Investment Co., Ltd. 5,001,944 5,001,944 shares Domestically Li Gaofeng 2,293,241 listed foreign 2,293,241 shares RMB common Wang Haoyu 2,221,933 shares Domestically TANG JING YUAN 2,213,175 listed foreign 2,213,175 shares 32 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Domestically GUOTAI JUNAN SECURITIES(HONGKONG) 2,208,017 listed foreign 2,208,017 LIMITED shares Domestically Liu Xiuhuang 2,061,707 listed foreign 2,061,707 shares Expiation on associated relationship or Among the top ten shareholders the Company was unaware of whether there consistent actors within the top 10 un-restrict existed associated relationship or whether there existed consistent actionist shareholders and between top 10 un-restrict regulated in the Management Measure of Information Disclosure on Change of shareholders and top 10 shareholders Shareholding for Listed Companies Explanation on shareholders participate in N/A securities margin trading (if applicable) 2. Controlling shareholder of the Company Corporation Legal Date Controlling shareholder rep./person in Organization code Register capital Main business established charge of unit Industry development, domestic commerce, Shenzhen Guocheng Energy 2005-04-2 materials supply and Investment Development Ji Hanfei 440301105151303 RMB 70 million 6 sale (excluding Co., Ltd. specially run, controlled and sold merchandises) Equity of other domestic/foreign listed company with share controlling and share N/A participation by controlling shareholder in reporting period Changes of controlling shareholder in reporting period □ Applicable □Not applicable 3. Actual controller of the Company Nature person Whether obtained right of residence of other countries or Actual controller Nationality regions or not Ji Hanfei P.R.C No 33 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Legal person, executive director and GM of Shenzhen Guocheng Energy Investment Profession and title in latest five years Development Co., Ltd. Listed company in and out of China N/A controlled in past decades Changes of actual controllers reporting period □ Applicable √ Not applicable Property right and controlling relationship between the actual controller and the Company is as follow: Ji Hanfei 100% Shenzhen Guocheng Energy Investment Development Co., 11.81% Shenzhen China Bicycle Company (Holding) Limited 34 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section VII. Particulars about Directors, Supervisors and Senior Executives and Employees I. Changes of shares held by directors, supervisors and senior executives Increasing Decreasing Shares Shares shares held shares held Working Start dated End date held at held at Title Sex Age of office of office in this in this Name status period-beg period-end term term period period in (Share) (Share) (Share) (Share) Chairman Currently 2010-08-2 2013-08-2 Luo of the M 49 0 0 0 0 Guiyou in office 6 5 board Yang Currently 2010-08-2 2013-08-2 Director M 55 0 0 0 0 Fenbo in office 6 5 Director, Currently 2010-08-2 2013-08-2 Li Hai M 43 0 0 0 0 President in office 6 5 Yao Currently 2010-08-2 2013-08-2 Zhengwan Director M 37 0 0 0 0 g in office 6 5 Zhang Director, Currently 2010-08-2 2013-08-2 M 46 0 0 0 0 Zebing CFO in office 6 5 Currently 2010-08-2 2013-08-2 Cao Fang Director M 38 0 0 0 0 in office 6 5 Currently 2010-08-2 2013-08-2 Kong Na Director F 36 0 0 0 0 in office 6 5 Independe Currently 2010-08-2 2013-08-2 Cui Jun M 48 0 0 0 0 nt director in office 6 5 Chen Independe Currently 2010-08-2 2013-08-2 M 44 0 0 0 0 Shujun nt director in office 6 5 Zhang Independe Currently 2010-08-2 2013-08-2 F 44 0 0 0 0 Xinmiao nt director in office 6 5 Independe Currently 2010-08-2 2013-08-2 Li Bing F 37 0 0 0 0 nt director in office 6 5 Convener of Currently 2011-06-2 2014-06-2 Xiao Yan M 44 0 0 0 0 supervisor in office 7 6 s 35 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Zheng Currently 2011-06-2 2014-06-2 Zhonghua Supervisor M 50 11,930 0 0 11,930 n in office 7 6 Tao Staff Currently 2011-06-0 2014-06-2 M 58 3,500 0 0 3,500 Hualiang Supervisor in office 7 6 Vice Currently 2010-10-2 2013-10-2 Xia Bofu M 42 0 0 0 0 President in office 6 5 Sun Secretary Currently 2012-05-1 2013-08-2 M 39 0 0 0 0 Longlong of Board in office 7 5 Total -- -- -- -- -- -- 15,430 0 0 15,430 II. Post-holding Major working experience of directors, supervisors and senior executive at the present in latest five years Mr. Luo Guiyou, born in 1963, graduated from Fudan University as a bachelor majoring in history. 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 the Board 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 Risk Control, as well as director, secretary of the Board and convener of supervisory committee of CBC; now he serves as director of the Company. Mr. Zhang Zebing, born in 1966, master of economy major, non-professional membership of China Certified Accountants Association and accountant. 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 CFO of the Company. Mr. Cao Fang, born in 1974, master degree; 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, he acted as member of planning team of Life Insurance Branch in Guangdong. And subsequently served in strategy and development center, Office of the Chairman, Supervision office; he serves as deputy GM of Shanghai Branch of Life Insurance 36 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 since March 2012 Ms. Kong Na, born in 1976, master degree; 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, master of international accountant from City University of Hong Kong and he owes a university degree from law school of Tsinghua University. And he is senior accountant, China Certified Accountant, Chinese Certified Tax Agent, judicial authenticator and owes professional qualification of state laws; he was the director of Guangdong Certified Accountants Association, expert of purchase center of Shenzhen Government 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. 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. Xiao Yan, born in Sep. of 1968, bachelor of Hunan finance Academy, majoring in Economy; he took charge in manager of advanced office of planning and supervision in marketing management department in Life Insurance headquarters since October 2006, 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. Zheng Zhonghuan, born in 1962, 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. Tao Hualiang, born in 1954, graduated from Northwestern Polytechnic University, an engineer. He 37 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 successively served as dispatcher of welding plant of the Company, deputy director of pipe workshop, director of general assembly shop, committee of party committee of Longhua 2# plant, manager assistant of enterprise management department, deputy GM of financial & accounting dept. of bicycle division, deputy director of office and director of comprehensive office of the Group; now he serves as commissioner of the party group, deputy secretary of party committee and person in charge of works for the Group. Mr. Xia Bofu, born in 1970, 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. Mr. Sun Longlong, born in 1973, graduated from Shanghai University of Finance and Economics in 1995 with a bachelor degree, a bachelor of Economics. He successively worked as financial affairs in Shenzhen Qiongjiao Industry Co., Ltd. and Shenzhen Solar Pipe Co., Ltd., he worked in the Company since May 1999, and successively served as deputy Manager, Manager of financial department, manager of comprehensive management department, manager of enterprise management department, now he serves as secretary of the Board and manager of financial department of the Company. Post-holding in shareholder’s unit √ Applicable □ Not applicable Weather receiving Start dated of End date of Name Name of shareholder’s units Position remuneration from office term office term shareholder’s units Yao Shenzhen Guocheng Energy Investment Supervisor 2006-10-09 Yes Zhengwang Development Co., Ltd. Shenzhen Guocheng Energy Investment Xiao Yan Development Co., Ltd. Post-holding in other unit √ Applicable □ Not applicable Start dated of End date of Weather receiving Name Name of other units Position office term office term remuneration from other units Shenzhen Fude Real Estate Investment Luo Guiyou GM 2012-06-04 2015-06-01 Yes Development Co., Ltd. Cao Fang Shanghai Branch of Life Insurance Deputy GM 2012-03-01 Yes Yang Fenbo Shenzhen Lionda Group Co., Ltd. Chairman 2009-10-12 Yes Non-staff Yang Fenbo Fawer Auto Parts Co., ltd. 2013-03-25 2016-03-24 Yes supervisor President Kong Na Yingkong Holding Co., Ltd. 2010-04-01 Yes assistant 38 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Cui Jun Guangdong Xingchen Laws Firm Director Yes Zhang Xinmiao Guangdong Shen Jinniu Laws Firm Attorney 2008-01-01 Yes Managing Chen Shujun Shenzhen Guangshen CPA 1998-01-01 Yes partner Li Bing Beijing Deheng (Shenzhen) Law Firm Attorney 2006-01-02 Yes III. Remuneration for directors, supervisors and senior executives Decision-making procedures, determination bases and actual payment of remunerations of directors, supervisors and senior management Decision procedure of According to relevant rules of the Article of Association, the general meeting of remuneration of shareholders decides remuneration of directors and supervisors. The Board of Directors directors, supervisors, decides senior management’s. senior management Confirmation basis of The Company refers to the position rank and comprehensive industry level. And then remuneration of general meeting of shareholders approves compensation standard and allowance of directors, supervisors independent directors. According to the "Interim Measures to Annual Performance and senior Assessment of Executives" and performance evaluation standards the Company issues management annual performance salary. Actual payment of The Company strictly paid remuneration of directors, supervisors and senior management remuneration of accordingly with decision procedure and confirmation basis. Total payment for directors, supervisors remuneration of directors, supervisors and supervisors amounted to RMB 2,946,300 and senior during last whole year. management Remuneration for directors, supervisors and senior executives in reporting period In ten thousand yuan Total Total Remuneration remuneration Post-holding remuneration actually Name Title Sex Age obtained from status obtained from obtained at shareholder’s the Company period-end unit Director, Currently in Li Hai M 44 82.4 0 82.4 President office Currently in Zhang Zebing Director, CFO M 46 64.15 0 64.15 office Currently in Xia Bofu Vice President M 42 64.15 0 64.15 office Zheng Currently in Supervisor M 50 20.05 0 20.05 Zhonghuan office Tao Hualiang Staff M 58 Currently in 20.15 0 20.15 39 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Supervisor office Secretary of Currently in Sun Longlong M 39 27.73 0 27.73 Board office Independent Currently in Zhang Xinmiao F 45 4 0 4 director office Independent Currently in Li Bing F 37 4 0 4 director office Independent Currently in Chen Shujun M 45 4 0 4 director office Independent Currently in Cui Jun M 49 4 0 4 director office Total -- -- -- -- 294.63 0 294.63 Delegated equity incentive for directors, supervisors and senior executives in reporting period □ Applicable √ Not applicable IV. Particulars of workforce 1. The Company has totally 79 employees at present, including: (1) Classified according to professional/occupational composition: 8 production personnel; 12 salespersons; 30 technicians; 10 financial personnel and 19 administrative personnel. (2) Classified according to the educational background: master degree or above: 2 persons of Master degree, 24 persons of bachelor degree; 19 persons of junior college graduates. Proportion of the personnel with education background of junior college or above in the whole staff: 57%. 2. The Company did not need to bear the expenses of retirees. 3. Other personnel: 27 persons 40 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section VIII. Corporate governance I. Brief introduction of corporate governance During the reporting period, the Company was strictly in accordance with the "Company Law", "Securities Law" as well as "Listing Corporation Management Standards" and other relevant laws, regulations and normative documents. We combined the actual situation, constantly improved the corporate governance structure, and strived to build a modern enterprise system. Operation, assembling and holding of general meeting of shareholders, the Board of Directors and board of supervisors were strictly with relevant rules of procedure. Thus we protected interests of the Company. The actual situation of corporate governance structure was in accordance with the release of normative documents about the listing Corporation management rules from China Securities Regulatory Commission. In reporting period, the Company complied with relevant requires of China Securities Regulatory Commission, revised relevant terms about cash dividend shown in Article of Association. While the Company modified relevant terms of Procedure Rules of General Meeting of Shareholders, which was approved in the 1st extraordinary shareholders’ meeting 2012 held in Aug. 15 of 2012. Is there any difference between corporate governance and the requirements of the Company Law and relevant regulations of the CSRC □ Yes √ No There is no difference between corporate governance and the requirements of the Company Law and relevant regulations of the CSRC Progress of the special activity for corporate governance, establishment and implementation of insider information registration management system The Company established Registration Management of Inside Information Insiders. It clearly defined scope of inside information and insiders, ruled approval, registration and confidentiality mechanism about inside information. During reporting period, no supervision and punishment acted from supervision department. And in reporting period, actual controllers of the Company never offered unreleased information or any other non-normalized act. II. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Annual Shareholders’ General Meeting in the report period Name of meeting Session of meeting Date Situation Date of disclosure Index of disclosure motion 21st Meeting of ”Work Report from Annual the Board for year of Securities Times, Deliberated and Shareholders’ 2012-05-25 2011”,”Work Report 2012-05-26 Hong Kong approved one by one General Meeting for from Supervisory Commercial Daily year of 2011 Committee for year 41 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 of 2011”, ”Financial Results for year of” Profit Distribution Plan of 2011”, ”Annual Report of 2011 and Summary”, ”Withdra wal of Specific fund of the Board of 2012”,”Rewards of 2011 for Management Team” 2. Extraordinary shareholders’ general meeting in the report period Name of meeting Session of meeting Date Situation Date of disclosure Index of disclosure motion ”Shareholders Return in Later Three Years (2012-2014)”, First Extraordinary “Amendment on Securities Times, Shareholders’ relevant provision in Deliberated and 2012-08-15 2012-08-16 Hong Kong General Meeting of ‘Article of approved one by one Commercial Daily 2012 Association’”, “Amendment on relevant provision in ‘Discussion Rules for the Board’” Second Extraordinary ”Re-engagement of Securities Times, Deliberated and Shareholders’ 2012-12-27 Crowe Horwath 2012-12-28 Hong Kong approved General Meeting of China CPA (LLP)” Commercial Daily 2012 III. Responsibility performance of independent directors in report period 1. The attending of independent directors to Board meetings and shareholders’ general meeting The attending of independent directors Times of Board Whether absent Times of Times of Name of independent meeting Times of Times of the Meeting for attending by entrusted director supposed to Presence Absence the second time communication presence attend in the in a row or not 42 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 report period Zhang Xinmiao 7 1 5 1 0 No Cui Jun 7 2 5 0 0 No Chen Shujun 7 2 5 0 0 No Li Bing 7 2 5 0 0 No Explanation of absent the Board Meeting for the second time in a row Nil 2. Objection for relevant events from independent directors Whether independent directors come up with objection about company’s relevant matters or not □ Yes √ No Independent directors has no objections for relevant events in reporting period 3. Other explanation about responsibility performance of independent directors Whether the opinions from independent directors have been adopted or not □ Yes √ No Independent directors’ explanation on adoption or not adoption of relevant recommendations of the Company IV. Performance of subordinate committees of the Board in reporting period Board of directors set up audit commission and remuneration and appraisal commission taking responsibility based on Governance Rules of Listed Company, Article of Association as well as Procedure Rules of Board of Directors and other duties and rights various departments endowed. As for compiling and audit on annual financial report were checked and communicated by Audit commission in accordance with rules of Working Procedure of Annual Report of Audit Commission. and they submitted decision to board of directors for approval. While the remuneration and appraisal commission took appraisal on operation members in 2011 annual work and rose up annual reward plan according to Interim Rules to Rewarding Senior Management for Annual Performance. V. Works from Supervisory Committee Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee □ Yes √ No Supervisory committee has no objection about supervision events in reporting period VI. Independence of the Company in aspect of business, personnel, assets, institute and finance relative to its controlling shareholder The Company separate business, personnel, assets, institute and finance with largest shareholder or other related parties, owes independent and completed self-operation ability 43 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 VII. Appraisal and incentive mechanism for senior executives The Company initially established the standard and incentive mechanism for open and transparent performance evaluation on directors, supervisors and management layer. The appointment of senior management staff was open and transparent, in accordance with provisions of the law. During the reporting period, the Company convened twenty-first (2011 Annual) General Meeting of shareholders in May 25, 2012, and deliberated and passed the "Bill for 2011 Annual Award to Management Team of the Company. 44 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section IX. Internal control I. Construction of internal control According to the "Basic Norms of Internal Control" and its supporting guidelines and other relevant requirements, the Company in the last year has set up three organization structure for the implementation of internal control standards, including a leading group, working group and business group, selected Beijing Tech Development Co. Ltd. (hereinafter referred to as "Smart Dot Company") as implementation consultant for standardization of internal control in our company. In the consultant's advice, we defined the scope of implementation as the group headquarters, Shenzhen Ammine Industrial Co., Ltd. (hereinafter referred to as “Ammine Company") and Shenzhen Anjun Leye Property Management Limited (hereinafter referred to as the "Anjunle Company"). The financial report consolidation scope includes the above three companies within scope of internal control implementation, as well as the "Chinese Bicycle (International) Co., Ltd." and "Chinese Bicycle (Hong Kong) Co., ltd.". Scope of internal control implementation comprises 100% income of business activities. 13 internal control key business processes including sales and receivables management cover those important trading activities with more than 10% of assets and 30% of net assets and net profit. And business activities with more than 95% of net profit shown in consolidated statements are included. In the consultant's assistance, the working group of internal control implementation and the business group respectively cleaned up their own system, combed the business process, defined risk control point and control deficiencies, thus completed the risk matrix. Subsequently, the project team developed a rectification plan. Various departments took business optimization about related problems and defects, improved the company level and operational level system of internal control. While the audit department conducted follow-up inspections on rectification, and took compliance test and through test of internal control on main business control point, and urged rectification on problem found. By the end of 2011, the Company established the internal control standard system meeting the basic requirements. In 2012, the Company continued to perfect the system of internal control process, revised the personnel, financial, business and other system process, and has formed a system of manual finishing, procedure manuals, brand operation manual, leasing operations manual, financial reporting manual and other control documents. And we took regular and irregular examination and evaluation on main business processes and the implementation of internal control system, timely put forward suggestions, thus improved the relevant policies and procedures. In October of 2012, Shenzhen People's Court accepted application for bankruptcy reorganization of proposed admissibility. From then on the Company entered bankruptcy reorganization, and conducted self management under the supervision of managers. Based on the original construction and implementation of internal control, the new managers supervises internal control rules, including the seal, bank account, the specified source management the source of bank account management, capital budget, contract management, invoice management regulations and implements them. II. Statement of the Board on responsibility of internal control Board of Directors promised that there’s no false, misleading statement or major leaking. All the disclosed information was real, accurate and complete. III. Bases for construction of financial report internal control 45 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 The Company has established a perfect financial management system, including financial management and accounting management covering calculation, account dealing, budget management, cost control, capital management and other relevant rules and regulations. During the reporting period, the Company conducted regular or irregular inspection and evaluation on main business processes and internal control system, finding no significant defects in internal control of reporting financial. IV. Self-evaluation report of internal control Details of major defects in self-evaluation report that found in reporting period No major defects been found in internal control in reporting period Date of self-evaluation report of internal 2013-04-27 control disclosed (full-text) Index of self-evaluation report of internal Found more details in “Self-evaluation report of internal control of Shenzhen China control disclosed(full-text) Bicycle Company (Holdings) Limited ” published on Juchao Website V. Audit report of internal control □ Applicable √ Not applicable Whether modified audit opinions carried out for the audit report of internal control from CPA or not □ Yes √ No Whether audit report of internal control, issued by CPA, is in agreement with self-evaluation report, issued by the Board √ Yes □ No VI. Establishment and enforcement of Accountability Mechanism for Major Errors in Annual Report In order to strengthen the Company's financial accountability mechanisms, to further improve the internal management system, after the seventh session of the twenty-first meeting of the board of directors, the Company formulated the "Accountability System on Major Error Made in Information Disclosure” and strictly implemented it. During the reporting period, the Company did never correct significant accounting error, supplement major information omissions and revise performance pre-notice etc. 46 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Section X. Financial Report I. Audit report Type of audit opinion Disclaimer of opinion Signing date of audit report 2013-04-25 Name of audit institute Crowe Horwath China CPA (LLP) Document serial of audit report Crowe Horwath Shen Zi [2013] No.: 827A0048 Auditor’s Report To all shareholders of Shenzhen China Bicycle Company (Holdings) Limited We have audited the Companying consolidated and parent Company’s financial statements of Shenzhen China Bicycle Company (Holdings) Limited (“CBC”), including balance sheet of 31 December 2012, and profit statement, and cash flow statement, and statement on changes of shareholders’ equity for the year ended, and notes to the financial statements for the year ended. I. Management’s responsibility for the financial statements Management of the Company is responsible for prepare and present financial statement of the Company, which including: (1) Prepare financial statements with fair presentation in line with Accounting Standards for Business Enterprises; (2) Designing, executed and maintaining necessary internal control in order to prevent fundamental miscarrying in financial statement from fraudulent or errors. II. Auditor's responsibility Our responsibility is to express an audit opinion on the financial statement based on auditing regulated in Auditing Rules for Chinese CPA. However, concerning the items described in “III. Disclaimer of Opinion Items”, we obtained no auditing evidence, totally and appropriated, for expressing the audit opinions. III. Disclaimer of Opinion Items 1. CBC started reforming on 25th, Oct., 2012, tax administration, customs, finance, guarantees, suppliers, and other creditors have declared financial claims to the custodian, up to the audit report date, the financial claims declaration has amounted to RMB 3,453,252,904.97 yuan, the total amount of financial claims that the custodian has confirmed and enrolled in The Form of Claims was 1,875,616,630.22 yuan, above-mentioned financial claims declared by the creditors are different from the accounting and haven’t been ruled by the court, Crowe Horwath China CPAs cannot confirm its effects on financial statements of China Bicycle Company. 2. Refer to the statement in Note X.: ended as 31 December 2012, total assets of CBC was 162,649,076.30 yuan, total liability was 1,872,039,760.06 yuan while net assets was -1,709,390,683.76 yuan for serious insolvency resulted with vary huge over due debts, taxes and lawsuit debts arising from external guarantee and overdue debts; Being application from first majority shareholder and largest creditor of CBC, Shenzhen Guosheng Energy Investment Development Co., Ltd, CBC was ruled to reorganize since 25 October 2012 by Shenzhen Intermediate People’s Court. As to the end of audit reporting date, CBC still in process of reorganization without judge from Shenzhen Intermediate People’s Court, we are unable to obtained complete-ness and properly auditing evidence to guarantee whether it can improve the sustainable operational ability for China Bicycle. Therefore, concerning the appropriate-ness of the financial statement 2012 of CBC that prepared under the sustainable hypothesis, we fail to judge. IV. Declaimer of Opinion Concerning the importance of presentation in “III. Disclaimer of Opinion Items”, we obtained no auditing evidence, totally and appropriated, for expressing the audit opinions. Thus, we express no auditing opinion on financial statement under the name of Shenzhen China Bicycle Company (Holdings) Limited. 2 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 II. Finacnial statement Unit in note of financial statement refers to CNY: RMB (Yuan) Shenzhen China Bicycle Company (Holdings) Limited Financial Statement Consolidated Balance Sheet 2012-12-31 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 52,395,360.86 24,546,601.39 V.1 Settlement provisions - - Capital lent - - Transaction finance asset - - Notes receivable V.2 1,627,810.00 1,000,000.00 Accounts receivable V.3 6,002,162.94 3,869,919.58 Accounts paid in advance V.4 829,956.13 1,588,743.08 Insurance receivable - - Reinsurance receivables - - Contract reserve of reinsurance - - Interest receivable - - Dividend receivable - - Other receivables V.5 23,467,668.87 25,193,546.89 Purchase restituted finance asset - - Inventories V.6 17,612,197.85 14,310,428.28 Non-current asset due within one - - Other current assets - - Total current assets 101,935,156.65 70,509,239.22 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 21,395,176.24 22,763,296.78 Fixed assets: V.9 12,970,199.73 15,262,689.21 Construction in progress - - Engineering material - - Disposal of fixed asset - - Productive biological asset - - 3 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Oil and gas asset - - Intangible assets V.10 23,728,703.18 24,591,565.22 Expense on Research and - - Goodwill - - Long-term expenses to be - - Deferred income tax asset - - Other non-current asset - - Total non-current asset 60,713,919.65 65,237,391.71 Total assets 162,649,076.30 135,746,630.93 Consolidated Balance Sheet (Contd) 2012-12-31 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.12 355,796,107.93 359,993,573.29 Loan from central bank - - Absorbing deposit and interbank deposit - - Capital borrowed - - Transaction financial liabilities - - Notes payable - - Accounts payable V.13 118,475,773.47 116,792,484.21 Accounts received in advance V.14 13,660,199.55 15,817,538.51 Selling financial asset of repurchase - - Commission charge and commission - - Wage payable V.15 3,983,845.52 4,093,942.70 Taxes payable V.16 95,980,708.60 98,407,104.67 Interest payable V.17 230,575,685.75 207,999,625.50 Dividend payable - - Other accounts payable V.18 431,275,594.67 394,804,850.78 Reinsurance payables - - Insurance contract reserve - - Security trading of agency - - Security sales of agency - - Non-current liabilities due within 1 year V.19 453,747,741.58 452,026,831.88 Other current liabilities V.20 2,331,150.07 2,437,393.95 Total current liabilities 1,705,826,807.14 1,652,373,345.49 Non-current liabilities: Long-term loans - - Bonds payable - - Long-term account payable - - Special accounts payable - - Accrual liabilities V.21 166,212,952.92 166,212,952.92 Deferred income tax liabilities - - Other non-current liabilities - - Total non-current liabilities 166,212,952.92 166,212,952.92 Total liabilities 1,872,039,760.06 1,818,586,298.41 Shareholders’ equity): Paid-in capital (or share capital) V.22 551,347,947.00 551,347,947.00 Capital public reserve V.23 486,589,213.20 460,757,567.84 Less: Inventory shares - - Reasonable reserve - - Surplus public reserve V.24 32,673,227.01 32,673,227.01 4 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Provision of general risk - - Retained profit V.25 -2,780,061,643.62 -2,727,618,409.33 Balance difference of foreign currency - - Total shareholders’ equity attributable to parent -1,709,451,256.41 -1,682,839,667.48 Minority interests 60,572.65 - Total shareholders’ equity -1,709,390,683.76 -1,682,839,667.48 Total liabilities and shareholders’ equity 162,649,076.30 135,746,630.93 Balance Sheet of Parent Company 2012-12-31 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Item Notes Amount at period-end Amount at year-begin Current assets: Monetary funds 31,432,888.50 561,283.08 Transaction finance asset - - Notes receivable - - Accounts receivable 1,014,896.60 XI. 1 1,014,896.60 Accounts paid in advance - - Interest receivable - - Dividend receivable - - Other receivables 52,910,895.39 XI.2 46,917,137.01 Inventories 9,779,439.79 9,943,662.01 Non-current asset due within one year - - Other current assets - - Total current assets 95,138,120.28 58,436,978.70 Non-current assets: Finance asset available for sales - - Held-to-maturity securities - - Long-term account receivable - - Long-term equity investment 2,619,840.50 XI.3 2,619,840.50 Investment property 21,395,176.24 22,763,296.78 Fixed assets: 12,676,971.13 14,905,640.82 Construction in progress - - Engineering material - - Disposal of fixed asset - - Productive biological asset - - Oil and gas asset - - Intangible assets 23,728,703.18 24,591,565.22 Expense on Research and Development - - Goodwill - - Long-term expenses to be apportioned - - Deferred income tax asset - - Other non-current asset - - 5 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Total non-current asset 60,420,691.05 64,880,343.32 Total assets 155,558,811.33 123,317,322.02 Balance Sheet of Parent Company (Contd) 2012-12-31 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 320,902,551.61 321,902,898.37 Transaction financial liabilities - - Notes payable - - Accounts payable 124,098,936.31 126,706,858.84 Accounts received in advance 10,664,592.85 10,664,592.85 Wage payable 2,151,710.33 2,418,776.27 Taxes payable 94,891,954.20 95,009,521.54 Interest payable 230,575,685.75 207,999,625.50 Dividend payable - - Other accounts payable 386,975,286.77 351,172,801.22 Non-current liabilities due within 1 year 453,747,741.58 452,026,831.88 Other current liabilities 2,320,660.19 2,320,660.19 Total current liabilities 1,626,329,119.59 1,570,222,566.66 Non-current liabilities: Long-term loans - - Bonds payable - - Long-term account payable - - Special accounts payable - - Accrual liabilities 166,212,952.92 166,212,952.92 Deferred income tax liabilities - - Other non-current liabilities - - Total non-current liabilities 166,212,952.92 166,212,952.92 Total liabilities 1,792,542,072.51 1,736,435,519.58 Owner’s equity (or shareholders’ equity): Paid-in capital (or share capital) 551,347,947.00 551,347,947.00 Capital public reserve 486,589,213.20 460,757,567.84 Less: Inventory shares - - 6 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Reasonable reserve - - Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk - - Retained profit -2,707,593,648.39 -2,657,896,939.41 Total owner’s equity(or shareholders’ equity) attributable to parent company -1,636,983,261.18 -1,613,118,197.56 Total liabilities and owner’s equity(or shareholders’ equity) 155,558,811.33 123,317,322.02 Consolidated Profit Statement 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Items Notes Amount in this period Amount in last period I. Total operating income 292,827,026.55 321,043,570.34 Including: Operating income V.26 292,827,026.55 321,043,570.34 Interest income - Insurance gained - Commission charge and commission income - II. Total operating cost 348,028,256.85 350,534,243.15 Including: Operating cost V.26 264,281,195.19 297,448,254.06 Interest expense - Commission charge and commission expense - Cash surrender value - Net amount of expense of compensation - Net amount of withdrawal of - Bonus expense of guarantee slip - Reinsurance expense - Operating tax and extras V.27 345,847.07 603,970.92 Sales expenses V.28 7,020,092.18 7,297,537.55 Administration expenses V.29 25,144,366.61 21,836,655.24 Financial expenses V.30 51,137,831.55 23,619,043.30 Losses of devaluation of asset V.31 98,924.25 -271,217.92 Add: Changing income of fair value - Investment income (Loss is listed with “-”) 4,560,000.00 Including: Investment income on - Exchange income (Loss is listed with “-”) - III. Operating profit (Loss is listed with “-”) -55,201,230.30 -24,930,672.81 Add: Non-operating income V.32 3,213,710.66 64,921,817.27 Less: Non-operating expense V.33 139,100.01 270,243.00 Including: Disposal loss of non-current asset - IV. Total Profit (Loss is listed with “-”) -52,126,619.65 39,720,901.46 Less: Income tax - V. Net profit (Net loss is listed with “-”) -52,126,619.65 39,720,901.46 Net profit attributable to shareholders -52,443,234.29 39,720,901.46 Minority shareholders’ gains and losses 316,614.64 - VI. Earnings per share - i. Basic earnings per share V.34 -0.0951 0.0720 ii. Diluted earnings per share V.34 -0.0951 0.0720 VII. Other consolidated income - 7 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 VIII. Total consolidated income -52,126,619.65 39,720,901.46 Total consolidated income attributable to owners of parent -52,443,234.29 39,720,901.46 Total consolidated income attributable to minority 316,614.64 - Profit Statement of Parent Company 2012 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 27,283,076.87 28,577,538.32 Less: Operating cost XI.4 7,708,299.63 13,822,797.20 Business taxes and surtax - - Sales expenses - - Administration expenses 21,036,780.80 19,353,562.21 Financial expenses 51,617,771.59 26,267,688.54 Losses of devaluation of asset -280,017.51 -1,926,719.39 Add: Changing income of fair value(Loss is listed with “-”) - - Investment income (Loss is listed with “-”) - 4,560,000.00 Including: Investment income on affiliated company and joint venture - - II. Operating profit (Loss is listed with “-”) -52,799,757.64 -24,379,790.24 Add: Non-operating income 3,203,710.66 64,884,717.27 Less: Non-operating expense 100,662.00 270,243.00 Including: Disposal loss of non-current asset - - III. Total Profit (Loss is listed with “-”) -49,696,708.98 40,234,684.03 Less: Income tax - - IV. Net profit (Net loss is listed with “-”) -49,696,708.98 40,234,684.03 8 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Consolidated Cash Flow Statement 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Items Notes Amount in this Amount in last I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 192,678,564.98 services 184,252,248.85 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 - - Net increase of capital borrowed - - Net increase of returned business capital - - Write-back of tax received - - Other cash received concerning operating activities V 35、(1) 25,610,718.35 27 021 621 81 Subtotal of cash inflow arising from operating activities 209,862,967.20 219 700 186 79 Cash paid for purchasing commodities and receiving labor 171,655,875.98 178 176 217 18 Net increase of customer loans and advances - - Net increase of deposits in central bank and interbank - - Cash paid for original insurance contract compensation - - Cash paid for interest, commission charge and commission - - Cash paid for bonus of guarantee slip - - Cash paid to/for staff and workers 17,357,721.19 14 107 936 61 Taxes paid 8,980,409.64 8 623 563 12 Other cash paid concerning operating activities 18,443,562.24 V.35(2) 18,895,533.94 Subtotal of cash outflow arising from operating activities 216,889,540.75 219 351 279 15 Net cash flows arising from operating activities -7,026,573.55 348 907 64 II. Cash flows arising from investing activities: Cash received from recovering investment - 4 560 000 00 Cash received from investment income - - Net cash received from disposal of fixed, intangible and other 2 017 500 00 Net cash received from disposal of subsidiaries and other - - Other cash received concerning investing activities - - Subtotal of cash inflow from investing activities - 6 577 500 00 Cash paid for purchasing fixed, intangible and other 124,666.98 136 579 83 Cash paid for investment - - Net increase of mortgaged loans - - Net cash received from subsidiaries and other units - - Other cash paid concerning investing activities - - Subtotal of cash outflow from investing activities 124,666.98 136 579 83 Net cash flows arising from investing activities -124,666.98 6 440 920 17 III. Cash flows arising from financing activities Cash received from absorbing investment - - Including: Cash received from absorbing minority - - Cash received from loans - - Cash received from issuing bonds - - Other cash received concerning financing activities V 35、(3) 35,000,000.00 - Subtotal of cash inflow from financing activities 35,000,000.00 - Cash paid for settling debts - - Cash paid for dividend and profit distributing or interest - - Including: Dividend and profit of minority shareholder paid - - Other cash paid concerning financing activities - - Subtotal of cash outflow from financing activities - - Net cash flows arising from financing activities 35,000,000.00 - IV. Influence on cash due to fluctuation in exchange rate - - V. Net increase of cash and cash equivalents 27,848,759.47 6 789 827 81 Add: Balance of cash and cash equivalents at the period 24,546,601.39 17 756 773 58 VI. Balance of cash and cash equivalents at the period -end 52,395,360.86 24 546 601 39 9 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Cash Flow Statement of Parent Company 2012 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 9,015.00 9,450.00 Write-back of tax received - Other cash received concerning operating activities 18,759,873.33 22,442,656.09 Subtotal of cash inflow arising from operating activities 18,768,888.33 22,452,106.09 Cash paid for purchasing commodities and receiving labor service 160,000.00 Cash paid to/for staff and workers 6,059,802.69 6,510,771.79 Taxes paid 3,910,353.69 4,668,195.69 Other cash paid concerning operating activities 12,924,408.58 11,026,378.53 Subtotal of cash outflow arising from operating activities 22,894,564.96 22,365,346.01 Net cash flows arising from operating activities -4,125,676.63 86,760.08 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 2,717.95 24,101.71 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 2,717.95 24,101.71 Net cash flows arising from investing activities -2,717.95 -24,101.71 III. Cash flows arising from financing activities Cash received from absorbing investment - Cash received from loans - Other cash received concerning financing activities 35,000,000.00 - Subtotal of cash inflow from financing activities 35,000,000.00 - Cash paid for settling debts - Cash paid for dividend and profit distributing or interest paying - 10 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Other cash paid concerning financing activities - Subtotal of cash outflow from financing activities - Net cash flows arising from financing activities 35,000,000.00 - IV. Influence on cash due to fluctuation in exchange rate - V. Net increase of cash and cash equivalents 30,871,605.42 62,658.37 Add: Balance of cash and cash equivalents at the period -begin 561,283.08 498,624.71 VI. Balance of cash and cash equivalents at the period–end 31,432,888.50 561,283.08 11 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Consolidated Statement on Changes of Shareholders' Equity 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Amount in this report period Items Owners’ equity attributable to the parent company Minority’s Total owners’ Paid-up capital Capital Less: Reasona Surplus General risk Retained profit Others equity equity I. Balance at the end of the last year 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,727,618,409.33 - - -1,682,839,667.48 Add: Changes of accounting policy - - - - - - - - - - Error correction of the last period - - - - - - - - - - Others - - - - - - - - - - II. Balance at the beginning of this year 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,727,618,409.33 - - -1,682,839,667.48 III. Increase/ Decrease in this year - 25,831,645.36 - - - - -52,443,234.29 - 60,572.65 -26,551,016.28 (I) Net profit - - - - - - -52,443,234.29 - 316,614.64 -52,126,619.65 (II) Other consolidated income - - - - - - - - - - Subtotal of (I) and (II) - - - - - - -52,443,234.29 - 316,614.64 -52,126,619.65 (III) Owners’ devoted and decreased - 25,831,645.36 - - - - - - - 25,831,645.36 1. Owners’ devoted capital - - - - - - - - - - 2. Amount calculated into owners’ - - - - - - - - - - 3. Others - 25,831,645.36 - - - - - - 25,831,645.36 (IV) Profit distribution - - - - - - - - - - 1. Withdrawal of surplus reserves - - - - - - - - - - 2. Withdrawal of general risk - - - - - - - - - - 3. Distribution for owners - - - - - - - - - - 4. Others - - - - - - - - - - (V) Carrying forward internal owners’ - - - - - - - - - - 1. Capital reserves conversed to capital - - - - - - - - - - 2. Surplus reserves conversed to 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 - - - - - - - - -256,041.99 -256,041.99 IV. Balance at end of the period 551,347,947.00 486,589,213.20 - - 32,673,227.01 - -2,780,061,643.62 - 60,572.65 -1,709,390,683.76 12 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Consolidated Statement on Changes of Shareholders' Equity 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Amount of last year Owners’ equity attributable to the parent company Items Minority’s Total owners’ Less: Reasona Paid-up capital Capital Surplus General risk equity equity Treasury ble Retained profit Others (Share capital) reserves reserves provision Stock reserve I. Balance at the end of the last year 551,347,947.00 427,132,693.91 - - 32,673,227.01 - -2,767,339,310.79 - - -1,756,185,442.87 Add: Changes of accounting policy - - - - - - - - - - Error correction of the last period - - - - - - - - - - Others - - - - - - - - - - II. Balance at the beginning of this year 551,347,947.00 427,132,693.91 - - 32,673,227.01 - -2,767,339,310.79 - - -1,756,185,442.87 III. Increase/ Decrease in this year 33,624,873.93 39,720,901.46 73,345,775.39 (Decrease is listed with “-”) - - - - - (I) Net profit - - - - - - 39,720,901.46 - - 39,720,901.46 (II) Other consolidated income - - - - - - - - - Subtotal of (I) and (II) - - - - - - 39,720,901.46 - - 39,720,901.46 (III) Owners’ devoted and decreased - 33,624,873.93 - - - - 33,624,873.93 capital 1. Owners’ devoted capital - - - - - - - - - - 2. Amount calculated into owners’ equity paid in shares - - - - - - - - - - 3. Others - 33,624,873.93 - - - - - - - 33,624,873.93 (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) - - - - - - - - - - 13 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Amount of last year Owners’ equity attributable to the parent company Items Minority’s Total owners’ Less: Reasona Paid-up capital Capital Surplus General risk equity equity Treasury ble Retained profit Others (Share capital) reserves reserves provision Stock reserve 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 - - - - - - - - - - IV. Balance at end of the period 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,727,618,409.33 - - -1,682,839,667.48 Statement on Changes of Shareholders’ Equity of Parent Company 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Items Amount in this report period Paid-up capital Capital reserves Less: Treasury Reasonable Surplus reserves General risk Retained profit Total owners’ I. Balance at the end of the last year 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,657,896,939.41 -1,613,118,197.56 Add: Changes of accounting policy - - - - - - - - Error correction of the last period - - - - - - - - Others - - - - - - - - II. Balance at the beginning of this year 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,657,896,939.41 -1,613,118,197.56 III. Increase/ Decrease in this year - 25,831,645.36 - - - - -49,696,708.98 -23,865,063.62 (I) Net profit - - - - - - -49,696,708.98 -49,696,708.98 (II) Other consolidated income - - - - - - - - Subtotal of (I) and (II) - - - - - - -49,696,708.98 -49,696,708.98 (III) Owners’ devoted and decreased - 25,831,645.36 - - - - - 25,831,645.36 1. Owners’ devoted capital - - - - - - - - 2. Amount calculated into owners’ equity - - - - - - - - 3. Others - 25,831,645.36 - - - - - 25,831,645.36 (IV) Profit distribution - - - - - - - - 14 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Items Amount in this report period Paid-up capital Capital reserves Less: Treasury Reasonable Surplus reserves General risk Retained profit Total owners’ 1. Withdrawal of surplus reserves - - - - - - - - 2. Withdrawal of general risk provisions - - - - - - - - 3. Distribution for owners (shareholders) - - - - - - - - 4. Others - - - - - - - - (V) Carrying forward internal owners’ - - - - - - - - 1. Capital reserves conversed to capital - - - - - - - - 2. Surplus reserves conversed to 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 - - - - - - - - IV. Balance at period end 551,347,947.00 486,589,213.20 32,673,227.01 -2,707,593,648.39 -1,636,983,261.18 Statement on Changes of Shareholders’ Equity of Parent Company 2012 Prepared by Shenzhen China Bicycle Company (Holdings) Limited Unit: RMB Currency: CNY Amount of last year Item Paid-up capital Less: Treasury Reasonable General risk Total owners’ Capital reserves Surplus reserves Retained profit (Share capital) Stock reserve provision equity I. Balance at the end of the last year 551,347,947.00 427,132,693.91 - - 32,673,227.01 - -2,698,131,623.44 -1,686,977,755.52 Add: Changes of accounting policy - - - - - - - - Error correction of the last period - - - - - - - - Others - - - - - - - - II. Balance at the beginning of this year 551,347,947.00 427,132,693.91 - - 32,673,227.01 - -2,698,131,623.44 -1,686,977,755.52 III. Increase/ Decrease in this year (Decrease is listed with “-”) 33,624,873.93 40,234,684.03 73,859,557.96 - - - - - (I) Net profit - - - - - - 40,234,684.03 40,234,684.03 (II) Other consolidated income - - - - - - - - Subtotal of (I) and (II) - - - - - - 40,234,684.03 40,234,684.03 15 深圳中华自行车(集团)股份有限公司 2012 年度报告全文 Amount of last year Item Paid-up capital Less: Treasury Reasonable General risk Total owners’ Capital reserves Surplus reserves Retained profit (Share capital) Stock reserve provision equity (III) Owners’ devoted and decreased capital 33,624,873.93 33,624,873.93 - - - - - - 1. Owners’ devoted capital - - - - - - - - 2. Amount calculated into owners’ equity paid in shares - - - - - - - - 3. Others - 33,624,873.93 - - - - - 33,624,873.93 (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 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 - - - - - - - - IV. Balance at period end 551,347,947.00 460,757,567.84 - - 32,673,227.01 - -2,657,896,939.41 -1,613,118,197.56 16 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Shenzhen China Bicycle Company (Holdings) Limited Notes to Financial Statement Year of 2012 (Expressed in Renminbi (CNY) unless otherwise stated) I. Company Profile (I)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. (II) 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 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. II. Main Accounting Policy, Accounting Estimate and Errors 1. Compilation Basis of Financial Statement The Company proceed on continue operating as a premise, according to the actual occurred transactions and events, based on Accounting Standard for Enterprise—Basic and “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”) to prepare financial statements. 2. Announcement for Following the Enterprise Accounting Standards The financial statement complied by the Company pursuant to the foresaid compilation basis truly and fully reflects such related information as financial status as of 31 December 2012, operation achievement and cash flows of the Company and parent company for 2012. 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 Company conducts accounting treatment for the business combination under the same control under equity method. The assets and liabilities that acquired by the acquirer in a business combination shall be measured on the basis of their original carrying amount in the acquiree on the acquisition date, except for the necessary adjustment made for different accounting policies. As for the difference between the carrying value of the combination consideration (or the total par value of the shares issued) and the carrying value of the net assets acquired through the business combination is used to adjust the capital reserve. In case that the capital reserve is 15 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 insufficient to off set, then retained earnings shall be adjusted. The intermediate expenses occurred by the Company as combining party for the business combination (including the expenses for audit, legal services, appraisal consultant and other related administrative expenses), shall be recorded into the profits and losses at the current period. Bonds issued for business combination or fees or commissions paid for assuming other liabilities shall be recorded in the initial measurement amount of the bonds issued and other liabilities. Fees or commissions occurred by issuance of equity securities shall be used to reduce the premium income of equity securities. In case that the premium income is insufficient to offset, then retained earnings shall be off set. (2) The business combination not under the same control The Company conducts accounting treatment for the business combination not under the same control under purchase method. The combination cost represents the fair value of the cash or non-cash assets paid, liabilities assumed and equity securities issued by the Company for acquiring the control over the acquiree. The intermediate expenses occurred by the Company as acquirer for the business combination (including the expenses for audit, legal services, appraisal consultant and other related administrative expenses), shall be recorded into the profits and losses at the current period. The transaction expense of the equity securities or debt securities issued by the Company as combination consideration shall be recorded in the initial recognition amount of equity securities or debt securities. The combination cost confirmed as at the acquisition date shall be deemed as the initial investment cost of the long term equity investment acquired from the business combination not under the same control. The Company realizes and measures the identified assets and liabilities acquired from the combination not under the same control at their fair value as of the acquisition date. If the combination cost is greater than the fair value of the net identifiable assets of the acquiree acquired through combination, then the relevant difference shall be confirmed as goodwill. If the combination cost is less than such fair value, then the relevant difference shall be recorded in current profits and losses after review. 6. Compilation of Consolidated Financial Statements (1)Confirmation bases for consolidation scope Based on control, the Company takes the Company and all of its subsidiaries into the consolidation scope of financial report. As for the subsidiaries increased through business combination under the same control during the reporting period, the Company consolidates such subsidiaries from the very beginning for reporting of financial statement to the end of the reporting period. As for the subsidiaries increased through business combination not under the same control during the reporting period, the Company consolidates such subsidiaries from the acquisition date to the end of the reporting period. As for the subsidiaries reduced due to disposal during the reporting period, the Company stops consolidation of such subsidiaries since the disposal date. (2)Preparation method of consolidated financial statement The consolidated financial statements are prepared by the Company based on the individual financial statement of the Company and subsidiaries by reference to other related information after adjustment to the long term equity investments of the subsidiaries at equity method. When preparing consolidated financial statements, the Company makes necessary adjustments to the financial statements of subsidiaries which have different accounting policies and accounting periods according to the unified requirements of the Company. The internal transactions or issues and internal liabilities between the subsidiaries within consolidation scope are written off. The shareholders equity of subsidiaries not attributable to the parents shall be separately listed under the item of shareholder equity as minority equity in consolidated financial statement. Where the current losses shared by minority shareholders of subsidiary exceed the owners equity of such subsidiary shared by minority shareholders as at the year begin, the balance shall be used to off set minority equity. 7. Determination standards for cash equivalents When preparing cash flow statement, the Company determines such investments with the following four conditions including short terms (matured within 3 months since the acquisition date), high liquidity, easy to convert to cash with known amount as well as minor value change risks as cash equivalents. 8. Foreign currency business and foreign currency statement translation 16 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 (1)Foreign currency business The foreign currency business shall be translated to the functional currency amount at the spot exchange rate on the transaction date. As at the balance sheet date, items denominated in foreign currency are translated under the spot rate of the balance sheet date or exchange rate approximate to the spot rate. The translation differences arising from the difference between the spot rate of the balance sheet date and the spot rate of the initial realization date or the previous balance sheet date is recorded in finance expense; foreign non-monetary items measured at historical cost are still translated at the spot rate of the transaction date; foreign non-monetary items measured at fair value are translated at the spot rate of the date when fair value is determined. The difference between the functional currency amount after translation and the original functional currency amount is recorded in current profits and losses as income from change of fair value, while the translation differences related to foreign non-monetary items available for sale shall be recorded in capital reserve. (2)foreign currency statement translation When translating the foreign currency financial statements of the overseas subsidiaries by the Company, the assets and liabilities items in the balance sheet are translated at the spot rate of the balance sheet date. As for shareholders’ equity items, items are translated at the spot rate of the occurrence date other than the item of “undistributed profit”; in income statement, income and expense items are translated at the spot rate of the transaction occurrence date or the exchange rate approximate to the spot rate; in cash flow statement, all items are translated at the spot rate of the cash flow occurrence date or the exchange rate approximate to the spot rate. The affect amount on cash from change of exchange rate is used as an adjustment item which is separately listed in the cash flow statement as “affect of cash and cash equivalents from change of exchange rate”. Since foreign currency financial statement translation would occur differences, such differences are separately listed in the shareholders’ equity in consolidated balance sheet as “foreign currency statement translation difference”. 9. Financial instruments Financial instrument represent such contract pursuant to which financial assets are formed for an enterprise and financial liabilities or equity instruments are formed for other entities. (1)realization and de-realization of financial assets and financial liabilities The Company realizes financial assets or financial liabilities when it becomes a party to financial instrument contract. Financial assets are de-realized when any of the following conditions is satisfied: ① contract right to receive cash flow from such financial assets terminates; ② such financial asset has been transferred and complies with the derealization condition in respect of financial assets transfer. Where the prevailing obligations of the financial liabilities are released in whole or in part, the financial liabilities shall be de-realized or only part of it. (2) classification and measurement of financial assets and financial liabilities Financial assets and financial liabilities of the Company are divided into the following 5 groups at the initial recognition: financial assets and financial liabilities at fair value through current profits and losses, held-to-maturity investment, account receivables, financial assets available for sale and other financial liabilities. financial assets and financial liabilities are measured at fair value at initial recognition. As for financial assets and financial liabilities at fair value through current profits and losses, the related transaction expenses are recorded in current profits and losses directly, and the related transaction expenses of other financial assets and financial liabilities are recorded in their initial recognition amounts. ①financial assets and financial liabilities at fair value through current profits and losses 17 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Financial assets and financial liabilities at fair value through current profits and losses comprise of transactional financial assets or financial liabilities and those which are directly designated as financial assets and financial liabilities at fair value through current profits and losses. transactional financial assets mainly represent the stocks, bonds, funds and derivatives not use as effective hedge instrument held for disposal in a short term or financial liabilities assumed due to recent repurchase. Those which are directly designated as financial assets and financial liabilities at fair value through current profits and losses are mainly designated by the Company based on the requirements for risk management and strategy investment. This kind of financial assets and financial liabilities are subsequently measured at fair value. In addition to be used as effective hedge instruments, all realized and unrealized profits and losses of this kind of financial assets and financial liabilities are recorded in current profits and losses. ②held-to-maturity investment Held-to-maturity investment represents the non derivative financial assets such as fixed rate national bunds or floating rate corporate bunds which have fixed expiration date, fixed or determinable recoverable amount and for which the Company has definite plan and ability to hold until maturity. During the holding period, the Company measures the held-to-maturity investments at effective interest method under amortized cost. Gains or losses arising from impairment, amortization or derealization of held-to-maturity investment shall be recorded in current profits and losses. When disposing held-to-maturity investment, the difference between the amount received from such disposal and the carrying value of such investment shall be recorded in investment income. ③account receivables Account receivables represent the creditor’s right such as account receivables formed from sales of goods and provision of labor services, including account receivables, other receivables and long term receivables, etc. Account receivables are initially measured at the contract or agreement amount receivable from the purchaser, and are measured at the effective interest method under amortized cost during the holding period. When recovered or disposed, the difference between the amount received and the carrying value of the account receivables shall be recorded in current profit and loss. ④financial assets available for sale Financial assets available for sale represent the non-derivative financial assets designated as available for sale at initial recognition and those financial assets other than the aforesaid three kinds of financial assets. As for this kind of financial assets, the Company conducts subsequent measurement at fair value, whose depreciation and premium is amortized at effective interest method and which is realized as interest income. Except for impairment loss and exchange difference of foreign monetary financial assets which are realized as current profit and loss, change of fair value of financial assets available for sale shall be realized as a separate part of capital reserve until such financial assets are de-realized or impaired, and the accumulative gains or losses realized in capital reserve previously shall be transferred to current profit and loss. Dividends or interest income relate to financial assets available for sale shall be recorded in current profit and loss. ⑤other financial liabilities Other financial liabilities represent those which are not grouped at fair value through profit and loss. The Company measures other liabilities at amortized cost or cost. Gains or losses arising from other financial liabilities upon amortization and derealization shall be recorded in current profit and loss. (3)transfer of financial assets ①The Company would de-realizes such financial assets in case that it transfers nearly all the risks and remunerations entitled to the ownership of the financial assets to the transferee or it neither transfer nor retain nearly all the risks and remunerations entitled to the ownership of the financial assets while gives up the control over such financial assets. ②If the derealization conditions are met in respect of whole transfer of financial assets, then the difference between the followings shall be recorded in current profit and loss: 18 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 A. Carrying value of the assets transferred; B. The sum between the consideration received for transfer and accumulative fair value change which shall be recorded in owners’ equity directly. ③If the derealization conditions are met in respect of transfer of part of financial assets, the whole carrying value of the assets transferred shall be allocated to the realized part and de-realized part based on the respective fair values. And the differences between the two amounts shall be recorded in current profit and loss: A. Carrying value of the de-realized part; B.The sum between the consideration for the de-realized part and the accumulative fair value change corresponding to the de-realized part which was previously recorded in owners’ equity directly. ④If transfer of financial assets don’t meet condition for de-realization, the financial assets shall be continually realized. The consideration received shall be confirmed as financial liabilities. ⑤as for the transfer of financial assets at constant involvement method, the Company realizes financial assets and meanwhile financial liabilities based on the degree of the involvement. (4)determination of fair value of financial assets and financial liabilities ①fair value of financial assets or financial liabilities which have active market is determined based on the quotation in the active market; ②as for financial instruments which have no active market, the Company determines its fair value by evaluation technology. (5)impairment test for financial assets (excluding account receivables) The Company reviews the carrying value of financial assets (excluding account receivables) as at balance sheet date. If there is objective evidence showing impairment occurs, it shall provide impairment reserve. ①held-to-maturity investment Impairment losses are calculated based on the difference between the carrying value and the present value of predicted future cash flow. For details, please refer to the measurement treatment for impairment losses of account receivables. If there is objective evidence showing the value of financial assets has been recovered which is related objectively to the issues occurred after recognition of such losses (such as enhancement of the credit rating of debtor), the impairment losses previously realized shall be written back and recorded in current profit and losses. However, the carrying value after such written-back shall not exceed the amortized cost of the financial assets as at the written-back date assuming no impairment reserve is provided. ②financial assets available for sale If there is objective evidence showing fair value of financial assets available for sale decreases greatly, and it is predicted that the decline trend is not temporary, the financial assets is deemed to be impaired and impairment loss shall be realized. If financial assets available for sale experience impairment, the Company shall take out the accumulative losses arising from decrease of fair value which was directly recorded in owners’ equity previously to record in impairment losses when realizing impairment losses. The accumulative losses taken out equal to the initial acquisition cost of the financial assets available for sale less the principal recovered and amortized amount, prevailing fair value and impairment losses previously recorded in profit and loss. As for the debt instruments for which impairment losses have been realized, if its fair value increases in subsequent accounting periods which is objectively related to the issues occurred after the realization of previous impairment losses, the previously realized impairment losses shall be written back and recorded in current profits and losses. The impairment losses occurred by investment of equity instruments available for 19 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 sale shall be written back through equity while not through profit and losses if the value of such equity instrument increases. 10. Account Receivable (1) Account Receivable Withdrawal method on single significant amount and with bad debt provision accrued for single item Standards for the determination on account receivable with single significant amount based on business scale, business nature and settlement status of the clients: Determine basis or amount standards for Single Significant Amount The account receivable over RMB 5 million(including RMB 5 million) at period-end An impairment test shall be made on the financial assets with significant single amounts. The impairment-related losses shall Withdrawal method on single significant amount and with be recognized to prepare the provisions for bad debts according bad debt provision accrued for single item 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 and bad Age group—account receivable with same book age owns debt provision accrued by age and regulated withdrawal proportion similar characteristic in credit risk of the account receivable Adopt age analysis method for bad debt provision withdrawal in combination: Accrued ratio for other account receivable Age Accrued ratio for 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 the balance provision 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 20 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 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 The Company adopts one-off amortization method to amortize the low-value consumables. The Company adopts one-off amortization method to amortize the wrappage at the time of receipt. 12. Long-term equity investment (1)Determination of investment cost ①long term equity investment acquired through business combination under the same control As for the long term equity investment acquired through business combination under the same control, share of the carrying value of net assets of the acquiree as at the combination date adjusted according to the accounting policies of the Company is deemed as the initial investment cost. ②long term equity investment acquired through business combination not under the same control As for the long term equity investment acquired through business combination not under the same control, combination cost determined on the acquisition date shall be deemed as initial investment cost. In case that business combination not under the same control is realized through several transactions step by step, the sum between the carrying value of the equity investment held in the acquiree before the acquisition date and the new investment cost as at the acquisition date shall be deemed as initial investment cost. ③long term equity investment acquired by other means As for the long term equity investment by cash payment, the purchase amount actually paid shall be deemed as initial investment cost. As for the long term equity investment by issuance of equity securities, the fair value of the equity securities issued (excluding the declared while not granted cash dividends or profits received from investee) shall be deemed as initial investment cost. As for the long term equity investment made by investor, the value as agreed by investment contract or agreement shall be deemed as initial investment cost, provided that the value as agreed by contract or agreement shall be fair. With the preceding conditions that non-monetary assets exchange has business nature and the fair value of assets exchanged in or out can be measured reliably, the initial investment cost of the long term equity investment acquired through non-monetary assets exchange is determined based on the fair value of the assets exchanged out, unless there is definite evidence showing the fair value of the assets exchanged in is more reliable. Non-monetary assets exchange not satisfying such preceding conditions, the carrying value of assets exchanged out and relevant tax payables are deemed as initial investment cost of the long term equity investment acquired. As for long term equity investment acquired through debt reorganization, its initial investment cost is determined based on fair value. (2)Subsequent reckoning as well as profits and loss determination method Investments in subsidiaries and long term equity investment in investee which the Company has no common control or significant influences and no quotation in active market and for which the fair value can’t be measured reliably are calculated at cost method. Long term equity investment in investee which the Company has common control or significant influences is calculated at equity method. When calculating long term equity investment at equity method: ① If the initial investment cost of long term equity investment is greater than the share of fair value of 21 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 the net identifiable assets of investee upon investment, the initial investment cost of long term equity investment shall not be adjusted; If the initial investment cost of long term equity investment is lesser than the share of fair value of the net identifiable assets of investee upon investment, the difference shall be recorded in current profit and loss and meanwhile cost of long term equity investment shall be adjusted. ② Upon acquisition of long term equity investment, the Company shall confirm investment profit or loss and adjust the carrying value of long term equity investment based on the proportion of the net profit and loss realized by the investee it shall share or assume. Confirmation for the proportion of the net profit and loss realized by the investee it shall share or assume is based on the fair value of the various identifiable assets of the investee upon acquisition of the investment with offset of the unrealized profit and loss of the internal transactions with associates and joint ventures attributable to the Company based on its shareholding proportion (if the unrealized internal transaction loss belongs to assets impairment loss, it shall confirm in full) and adjustment to the net profit of the investee under the accounting policies and accounting periods of the Company. ③confirmation of net loss in investee shall be within the limit of zero of the carrying value of long term equity investment and other long term equity which substantially constitutes net investment in investee, while except for the obligations to assume additional losses as agreed in contract or agreement. If investee realizes net profit in future, the Company would resume confirmation of income shares after the compensation of unrealized loss shares with its income shares. ④carrying value of long term equity investment shall be offset accordingly with the attributable profit or cash dividends declared by investee. ⑤as for other changes in owners’ equity (other than net profit and loss) of the investee, the Company calculates the part it should share or assume according to the shareholding proportion provided that such proportion remains unchanged, adjusts carrying value of the long term equity investment and increases or decreases capital reserve accordingly. If the investee is still an associate or joint venture of the Company after reduction of the shareholding proportion, the Company will continue to calculate the remaining investment at equity method, and carry forward the gains or losses previously realized in other comprehensive income (capital reserve) to current profit and loss at the same proportion as it disposes the investment. If the investee is still an associate or joint venture of the Company after increase of the shareholding proportion, the Company will continue to calculate the investment at equity method under the new shareholding proportion. On the new investment date, the difference between the new investment cost and the share of fair value of net identifiable assets of investee as calculated under the new shareholding proportion shall be treated according to the aforesaid principle; the difference between the original carrying value of the long term equity investment upon acquisition of new investment and the share of fair value of net identifiable assets of investee as calculated at the shareholding proportion (namely the shareholding proportion after investment increase less the new additional shareholding proportion) shall be used to adjust the carrying value of long term equity investment and capital reserve. (3)The basis for the co-control over and material influence on the invested unit ① Judgment for common control Common control means any joint venture party can not control the production and operation of the joint venture separately, and decision involving the basic operation activity of the joint venture requires unanimous consent from all the joint venture parties. ② Judgment for significant influence Significant influences represent an entity is entitled to the decision making in respect of the financial and operational policies of an enterprise, while it is not entitled to control the establishment of these policies separately or with other parties. In case that the Company holds, directly or indirectly by subsidiary, more than 20% (20% included) while less than 50% voting shares of an investee, it is deemed to have significant influences over the investee unless there is obvious evidence showing that the Company can’t participate in the production and operation decision making thus no significant influence can be formed in such situation. In case that the Company holds less than 20% (20% excluded)voting shares of investee, it is deemed to have no significant influences over the investee, unless there is obvious evidence showing the Company can participate in the production and operation decision making of the investee thus significant influence can be formed in such situation. (4)Depreciation test method and depreciation allowance 22 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 As for the long term equity investment in subsidiaries, joint ventures and associates, the Company provides impairment reserve according to the method as described in Note II. 25. As for the long term equity investment by which the Company has no common control or significant influence over the investee, and where there is no quotation in active market and whose fair value can not be measured reliably, the Company provides asset impairment reserve according to the method as described in Note II. 9(5). 13. Investment real estate Investment real estate refers to the real properties for the purpose of rental or value increase or both. Investment real estate of the Company including rented land use right, land use right on hand and ready for transfer after appreciation and rented buildings. The Company initiated the investment real estate on the cost while obtained, and accrual depreciation or amortization by period based on relevant regulation of fixed assets or intangible assets. For the investment real estate adopting subsequent measures for cost mode, found Note (II) -25 for the accrual method for assets impairment 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 financial year. Fixed assets shall be confirmed when meet the following conditions: ①Fixed assets’ related financial benefits shall flow into the Company; ②Their value can be measured. (2) Depreciation methods for various fixed assets Depreciation of fixed assets is provided under straight-line method. Fixed assets start to provide depreciation when it reaches the condition for planned use, and stop provision of depreciation upon de-realization or classification to non-current assets held for sale (other than the fixed assets which are provided with depreciation in full and for continued use and the land accounted in separate calculation). Without consideration of impairment reserve, the Company determines the annual depreciation rates of various fixed assets as follows based on the category of fixed assets, predicted use life and predicted residual value: Categories Years of depreciation(years) Scrap value rate (%) Yearly depreciation 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 Depreciation allowance method for fixed assets of the Company was been shown on Note II,25. (4) Determination and evaluation method for fixed assets financed by leasing The lesser of the fair value of leased assets and present value of the minimum lease payment is taken as the accounting value of the leased assets on the starting date of the lease. As for the fixed assets leased under financing lease, if it is reasonable to confirm that the Company can acquire the ownership of the leased assets upon expiration of the lease term, the Company provides depreciation of the leased assets within the useful period; if the ownership can not be confirmed, depreciation shall be provided at the lesser of the lease term and the useful period of the leased assets. 23 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 (5) Other notes ①at the end of each year, the Company reviews the use life, predicted net residual value and depreciation method of fixed assets. In case of any difference between the predicted use life and the previously estimated one, the Company would adjust the use life of fixed assets; In case of any difference between the predicted net residual value and the previously estimated one, the Company would adjust the predicted net residual value. ②as for the repair expenses occurred by fixed assets, if confirmation conditions for fixed assets are satisfied, the expenses shall be recorded in fixed asset cost; and if the conditions are not satisfied, it shall be recorded in cost and expense of the current period when it occurs. ③fixed assets decoration expenses satisfying capitalization condition: provide depreciation under straight line method during the period of the lesser of the gap period between two decorations and use life of fixed assets. 15. Project under Construction (1)calculation of construction in progress The construction in progress is measured based on actual cost and calculated based on different projects. (2)timing for construction in progress being carried forward to fixed assets When construction in progress reaches condition for planned use, it shall be carried forward to fixed assets based on all actual occurrence of expenditures for calculation. If construction in progress reaches condition for planned use while completion settlement has not been proceeded, it shall be transferred to fixed assets at the estimated value based on project budget, construction fee or actual cost since the date when condition for planned use is reached. Meanwhile, the Company would provide fixed assets depreciation according to its depreciation policies. After proceed of such completion settlement, the Company would adjust the previously estimated value based on actual cost, with no adjustment to the previous provision of depreciation. (3)impairment reserve for construction in progress Provision method for impairment reserve for construction in progress is set out in Note II.25. 16. Borrowing Costs (1)confirmation of capitalization of borrowing expenses Assets qualifying for capitalization represent those fixed assets, investment property and inventory which require quite a long time of purchase or production activities to reach the conditions for planned use or be ready for sale. Borrowing expenses include borrowing interests, amortization of discount or premium, auxiliary expenses and exchange difference arising from foreign currency borrowings. The borrowing expenses of the Company which can be directly attributable to the purchase or production of the assets qualifying for capitalization shall be capitalized and recorded in related assets cost; other borrowing expenses are confirmed as expenses upon occurrence according to the occurrence amount and recorded in current profit and loss. Borrowing expenses start to capitalize when the following conditions are met: ①assets expenditures, which include the expenditures occurred for purchasing or producing assets qualifying for capitalization through payment of cash, transfer of non cash assets or assuming interest debts, have occurred; ②borrowing expenses have occurred; ③purchase or production activity for reach of the conditions for planned use or ready for sale has occurred. (2)capitalization period of borrowing expense Borrowing expenses occurred for purchasing or producing assets qualifying for capitalization shall be recorded in cost of the assets when the assets reach conditions for planned use or be ready for sale; and the borrowing expenses occurred after the assets reach conditions for planned use or be ready for sale shall be recorded in current profit and loss. If abnormal interruption occurs during the purchasing or producing assets qualifying for capitalization and the interruption lasts over 3 months consecutively, the borrowing expenses shall stop capitalization temporarily. If part items are completed and available for use separately when purchasing or producing assets qualifying for capitalization, such part of assets shall stop capitalization in respect of their borrowing expenses. (3)determination method of the capitalized amount of borrowing expenses The Company calculates the capitalized amount of borrowing expenses per quarter. 24 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Interest expenses (after deduction of the interest income obtained from the unused borrowing capitals as saved in bank or investment income obtained from temporary investment) and auxiliary expenses of special borrowings are capitalized when the assets qualifying for conditions purchased or produced reach conditions for planned use or be ready for sale. The interest of general borrowings which should be capitalized is calculated based on the weighted average number of the capital expenditure that the accumulative assets expenditure exceeding special borrowings multiply the capitalization rate taken in general borrowings. Capitalization rate is calculated based on the weighted average interest rate of general borrowings. For discount or premium of borrowings, the Company determines the discount or premium amount that shall be amortized in each accounting period under effective interest method and adjusts the interest amount for each period. During the capitalization period, the exchange difference of principals and interests of foreign currency special borrowing shall be capitalized and recorded in the cost of the assets qualifying for capitalization. 17. Intangible Assets (1)initial measurement of intangible assets The intangible assets of the Company are initially measured at effective cost. In case that the payment for purchasing intangible assets defers out of the normal credit conditions and is of financing substantially, cost of the intangible assets is the present value of the purchase payment. As for the intangible assets acquired from debtor in debt reorganization to settle debt, the accounting value is determined based on the fair value of such intangible assets. With the preceding conditions that non-monetary assets exchange has business nature and the fair value of assets exchanged in or out can be measured reliably, the accounting value of the intangible assets exchanged in through non-monetary assets exchange is determined based on the fair value of the assets exchanged out, unless there is definite evidence showing the fair value of the assets exchanged in is more reliable. Non-monetary assets exchange not satisfying such preceding conditions, the carrying value of assets exchanged out and relevant tax payables are deemed as cost of the intangible assets exchanged in without confirmation of profit and loss. (2)subsequent measurement of intangible assets ①useful life of intangible assets The Company analyzes and judges the use life of the intangible assets upon acquisition. If the use life of intangible assets is definite, the Company estimates the term of such use life or quantity of measurement unit such as production capacity that constitutes use life. For intangible assets for which the term to bring economic benefit to the Company is unpredictable, the assets are deemed as those with indefinite use life. ②amortization of intangible assets Intangibles assets with definite use life is amortized under straight line method within the predicted use life since the month where it is acquired; intangibles assets with indefinite use life is not amortized and need impairment test at period end. The Company reviews the use life and amortization method of intangibles assets and makes necessary adjustments at least at the end of each year. ③in case that the Company predicts that intangible assets are impossible to bring economic benefit in future at period end, the carrying value of the intangibles assets shall be transferred to current profit and loss in full. ④impairment of intangible assets The provision method of impairment reserve for intangible assets is set out in Note II. 25. 18. Long-term Deferred Expenses Long term unamortized expenses represent the occurred expenses which should be shared by the current period and future periods with term than one year. The long term unamortized expenses are averagely amortized during the benefit period, among which: (1) Rental prepaid for operation lease for fixed assets shall be averagely amortized within the term as provided in the lease contract. (2) Improvement expenditure of the fixed assets leased through operation lease shall be averagely amortized within the lesser of the remaining lease term and the useful life of the leased assets. (3) As for fixed assets leased through financing lease, the decoration expenses qualifying for capitalization shall be averagely amortized within the lesser of the gap period between two decorations, the remaining lease term 25 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 and the useful life of the fixed assets. As for the long term unamortized expenses items which would not benefit the future accounting periods, the amortized value shall be recorded in current profit and loss in full. 19. Accrued Liabilities (1)the performance of the present obligations arising from pending lawsuits, product quality guarantee, loss contract and disposal obligations of oil and gas assets may lead to outflow of economic benefits. If the obligations can be measured reliably, it shall be confirmed as predicted liabilities. (2) predicted liabilities are measured initially based on the best estimate for the expenditures required for performance of relevant present obligations with considerations of factors such as risks related to contingent issues, uncertainty and monetary time value. If the influence of monetary time value is significant, the best estimate is determined with discount of the relevant future cash outflow. (3)oil and gas assets disposal obligations satisfying confirmation condition for predicted liabilities are confirmed as predicted liabilities and record the original value of the relevant oil and gas assets. The amount equals to the present value of the predicted future expenditure occurred according to the local conditions and relevant requirements. (4)as for those not satisfying confirmation condition for predicted liabilities, the expenditures occurred for dismantle, relocation and premise clearance upon disposal shall be recorded in current profit and loss as clearance expenses when actually occur. 20. Revenue (1)goods sales Income from goods sales are realized when the following conditions are met: the major risks and remuneration entitled to the ownership of goods are transferred to buyer; neither retain the continued management right generally related to ownership, nor exercise effective control over the sold products; the relevant economic benefits are probable to flow into the Company; the relevant income and costs can be measured reliably. (2)provision of labor service If the result of labor service transaction provided on balance sheet date can be measured reliably, the result shall be confirmed under completion percentage method. The total income from provision of labor services is determined based on the contract or agreement amount received or receivable from the acceptor of labor services, provided that such contract or agreement amount received or receivable shall be fair. If the result of labor service transaction provided on balance sheet date can not be measured reliably, then it shall proceed as follows: ①if the occurred labor service cost can be compensated, the Company would confirm labor service provision income based on the occurred labor service cost and carry forward the same to labor service cost. ②if the occurred labor service cost can not be compensated, the Company would record the occurred labor service cost in current profit and loss without confirmation of labor service provision income. (3)transfer of assets use right In case that the economic benefits related to transactions are probable to flow into the Company and amount of income can be measured reliably, the income from transfer of asset use right is determined as follows: ①interest income shall be determined based on the time used by others for use of the monetary capital of the Company and effective interest rate. ②use fee income shall be determined based on the charge time and method as agreed by the relevant contract or agreement. 21. Government Grants Government grants comprise of those related to assets and those related to income. (1)confirmation and measurement of government grants Government grants are realized where the conditions enclosed with the government grants are satisfied and the same can be received. If government grants are monetary assets, they shall be measured based on the amount received or receivable; If government grants are not monetary assets, they shall be measured at fair value; if fair value can not determined reliably, they shall be measured at nominal amount. (2)accounting treatment for government grants Government grants related to assets are realized as deferred income and allocated averagely in the use life of the relevant assets which shall be recorded in current profit and loss. Government grants measured at nominal amount are recorded in current profit and loss directly. Government grants related to income which are used to make up for the relevant expenses and losses in future periods are realized as deferred income and recorded in current profit and loss in the period when related 26 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 expenses are realized; those which are used to make up for the relevant occurred expenses or losses shall be recorded in current profit and loss directly. 22. Deferred tax assets / deferred income tax liabilities According to the temporary differences between the carrying value of assets and liabilities as at the balance sheet date and tax bases, the Company realizes deferred income tax under balance sheet debt method. Except for the goodwill adjustment arising from business combination or deferred income tax related to the transactions or issues which should be recorded in owners’ equity directly are recorded in owners’ equity, deferred income tax shall be recorded in current profit and loss as income tax expense. The taxable temporary difference shall confirm the relevant deferred income tax liabilities, unless such difference occurs in the following transactions: (1)initial confirmation of goodwill, or initial confirmation of the assets or liabilities occurred in the transactions with the following characteristics: the transaction is not business combination, and the occurrence of which neither affect accounting profit nor taxable income; (2)initial confirmation of the assets or liabilities occurred in the transactions with the following characteristics: the transaction is not business combination, and the occurrence of which neither affect accounting profit nor taxable income; (3)as for the taxable temporary differences related to investments in subsidiaries, joint venture and associates, the time for transferring back the temporary difference is under control and it is probable that the temporary difference will not transfer back in foreseeable future. As for the deductible losses and tax deduction which can be used to deduct temporary difference and carried forward in future years, the Company takes the future taxable income which can be obtained and used to deduct deductible temporary difference, deductible losses and tax deduction as the limit to realize the arising deferred income tax assets, unless such deductible temporary difference occurs in the following transactions: (1)the transaction is not business combination, and the occurrence of which neither affect accounting profit nor taxable income; (2)as for deductible temporary difference related to investments in subsidiaries, joint venture and associates, the Company realizes the underlying deferred income tax assets when the following conditions are satisfied: temporary difference is probable to transfer back in foreseeable future, and it is probable to obtain such taxable income to offset deductible temporary differences. On balance sheet date, as for deferred income tax assets and deferred income tax liabilities, the Company measures the assets and liabilities at the tax rate applicable in the period when the assets are recovered or the liabilities are settled. Meanwhile, the measurements shall reflect the income tax effects from the methods of recovering assets or settling liabilities as at balance sheet date. The Company reviews carrying value of deferred income tax assets on balance sheet date. If it is not probable to obtain sufficient taxable income in future periods to offset the benefits of deferred income tax assets, the carrying value of deferred income tax assets shall be reduced, with the reduction amount recorded in current income tax expenses. As for the deferred income tax assets previously recorded in owners’ equity upon realization, the reduction amount shall also be recorded in owners’ equity. When it is probable to obtain sufficient taxable income tax, the reduced carrying value of deferred income tax assets can be resumed. 23 . operation lease and financing lease The Company groups the lease by which all the risks and remunerations related to ownership of assets are transferred substantially as financing lease, and others are operation lease. (1)operation lease ①the lease payment paid for leasing assets is amortized under straight line method in the entire lease period without deduction of lease-for-free period, and is recorded in current expenses. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses. If asset leaser assumes the lease related expenses which shall be assumed by the Company, the Company shall deduct such expenses from the total rental and amortize based on the deducted rental expenses during the lease period and record in current expenses. ②the lease fee collected by the Company for assets lease is amortized under straight line method in the entire 27 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 lease period without deduction of lease-for-free period, and is realize as lease income. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses; for significant amount, it shall be capitalized and recorded in current income in phases under the same basis as realization of lease income in the entire lease period. If the Company assumes the lease related expenses which shall be assumed by the lessee, the Company shall deduct such expenses from the total rental income and allocate based on the deducted rental expenses during the lease period. (2)accounting treatment for financing lease ①assets leased by financing lease: the Company accounts the leased assets at the lower of the fair value of leased assets and present value of the minimum lease payment on the inception date of the lease, and the minimum lease payment is deemed as the accounting value of long term account payables, and the difference is taken as unrealized financing expenses. The Company amortizes the unrealized financing expenses at effective interest rate method in the asset lease period and records in finance expenses. ②assets leased out by financing lease: on the inception date of the lease, the Company realizes the difference between the sum of financing lease account receivables and unguaranteed remaining value and its precent value as unrealized financing income which is conformed as lease income in future periods involving lease. The initial direct expenses occurred by the Company related to lease transaction shall be recorded in the initial measurement of financing lease account receivables. And income realized in lease period shall be reduced accordingly. 24. Assets held for sale Non current assets satisfying the following conditions are grouped as assets held for sale: I. The Company has made resolution in respect of the disposal of the non current assets; II. The Company has entered into irrecoverable transfer agreement with transfee; III. The transfer would be completed within one year. As for fixed assets held for sale, the Company shall adjust the predicted net residual value of the fixed assets to make the predicted net residual value of fixed assets reflect the fair value less disposal expenses, while not exceeding the original carrying value of the fixed assets when condition of held-for-sale is satisfied. The difference between the original carrying value and the adjusted predicted net residual value shall be recorded in current profit and loss as asset impairment. Other non current assets such as intangible assets satisfying condition of held-for-sale are treated by reference to the above principles. 25. Assets impairment Assets impairment in respect of the long term equity investment in subsidiaries, associates and joint ventures, investment property which is subsequently measured under cost model, fixed assets, construction in progress, productive biological assets, intangible assets, goodwill, proven oil natural gas mining equity and well and related equipments (other than inventory, investment property measured under fair value model, deferred income tax assets, financial assets) is determined as follows: (1)the Company judges on balance sheet date whether there exist indication for impairment of assets. If such indication exists, the Company would estimate its recoverable amount and conduct impairment test. As for the goodwill arising from business combination, intangible assets with indefinite use life and intangible assets for which the condition for planned use is not satisfied, whether h\there is impairment indication, impairment test shall be conducted every year. (2)recoverable amount is determined at the higher of the asset fair value less disposal expenses and the present value of the assets predicted future cash flow. The Company estimates the recoverable amount based on single asset. If it is hard to estimate the recoverable amount of single asset, the Company estimates the recoverable amount of the assets group where such single asset belongs to. (3)determination of assets group is based on whether the major cash inflow from one asset group is independent from the cash inflow from other assets or assets group. When the recoverable amount of assets or assets group is 28 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 lesser than its carrying value, the Company would reduce the carrying value to recoverable amount, with the reduced amount recorded in current profit and loss, and asset impairment reserve shall be provided accordingly. (4)in respect of impairment test of goodwill, carrying value of the goodwill arising from business combination shall be allocated to assets group under reasonable method since the acquisition date; if its is hard to allocate to related asset group, it shall be allocated to the relevant asset group combination. The relevant asset group or asset group combination represents that which can benefit from the synergy effects of business combination and which is not larger than the reporting segment of the Company. In impairment test, if these exist impairment indication in asset group or asset group combination related to goodwill, impairment test shall be firstly made in respect of the asset group or asset group combination without inclusion of goodwill, thus to calculate the recoverable amount and realize the relevant impairment losses. Later, impairment test shall be made in respect of the asset group or asset group combination with inclusion of goodwill, and make comparison between its carrying value and recoverable amount. If the recoverable amount is lesser than its carrying value, the Company shall realize impairment losses of goodwill. (5)once realized, asset impairment losses would not be transferred back in future account periods. 26. Staff remuneration Staff salary, bonus, allowance, subsidy, welfare, social insurance and housing fund are realized in the accounting period when employees provide services. As for those matured after one year from balance sheet date, if the discounted effect amount is significant, it shall be listed with its present value. 27. Material accounting judgment and estimation The Company continues to assess the material accounting estimation and key assumptions adopted by reference to historical experiences and other factors including the reasonable expectation for future issues. 28.The main accounting policies, changes of accounting estimates (1) Changes of accounting policies No changes on accounting policies. (2) Changes of accounting estimates No changes on accounting estimates. 29. Prior period correction of accounting errors No accounting error correction is available during the period of this report. 30. Other preparation method on main accounting policies, accounting estimation and finial statement No other preparation for accounting policies, accounting estimation and finial statement of the Company. III. Taxes Mai tax category and tax rate: Tax category Tax calculation evidence Tax rate Sales income, and income from processing, maintenance, Value added tax making repairs and supplying replacements, and labor 17% service Sales tax Taxable labor income 5% Tax for maintaining and Amount of value-added tax and sales tax payable building cities 1%、7% Educational surtax Amount of value-added tax and sales tax payable 3% Local educational surtax Amount of value-added tax and sales tax payable 2% Property tax 70% of the original value of the property 1.2% 29 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Business income tax Taxable income 25% IV. Business Combination and Consolidated Financial Statements 1. Subsidiaries (1) Subsidiaries obtained by means of establishment or investment, etc. 30 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Balance of other Legal items actually Consolidat Proportion Proportion Registration Registered ed report Full name Type representati Business scope forming the net of shares of voting place statement capital held (%) power (%) or not ve investment in the subsidiaries Wholly-own Yes Shenzhen Anjule Realty RMB 2 Self-owned realty ed Shenzhen Management Co., Ltd. million Li Hai management - 100 100 subsidiary Wholly-own Yes China Bicycle (International) Co., HK$ 0.02 ed Hong Kong Trade and manufacturing Ltd. million - 100 100 subsidiary China Bicycle (Hong Kong) Co., Controlling HK$ 5 Bicycle and parts Yes Hong Kong - Ltd. subsidiary million distribution 99 99 Shenzhen Emmelle Industry Co., Controlling RMB 2 Bicycle and parts Yes Shenzhen Li Hai - Ltd. subsidiary million distribution 70 70 (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. 31 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 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 control rights held. 7. No reverse purchase occurred in the period. 8. No absorption merger occurred in the period. V. Notes to Items in Consolidated Financial Statements 1. Monetary fund Items Amount at the end of period Amount at the beginning of period Original Original Conversi Conversion Amount in RMB Amount in RMB currency on rate currency rate amount amount Cash: - RMB 112,771.51 1.00 112,771.51 69,024.09 1.00 69,024.09 HK Dollar 1,894.30 0.81085 1,535.97 1,894.27 0.8107 1,535.68 US Dollar 1.25 6.28550 7.86 1.25 6.3009 7.88 Subtotal 114,315.34 70,567.65 Bank deposit: RMB 51,704,996.49 1.00 51,704,996.49 23,876,073.90 1.00 23,876,073.90 HK Dollar 710,426.13 6.28550 576,049.03 740,051.61 0.8107 599,959.84 Subtotal 52,281,045.52 24,476,033.74 Total 52,395,360.86 24,546,601.39 2. Notes receivable (1) Classification of notes receivable 32 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Category Amount at the end of period Amount at the beginning of period Bank acceptance bill 1,627,810.00 1,000,000.00 (2) Notes with endorsement provided to other party but not post-dated of the Company of five top clients at the end of period: Drawn by Date of drawl Expire date Amount Remark Henan Daming Electric Bicycle Sales Co., Ltd. 2012-09-26 2013-03-26 6,000,000.00 Jinan YUSIGN Sales Co., Ltd. 2012-07-03 2013-01-03 5,000,000.00 Jinan YUSIGN Sales Co., Ltd. 2012-09-13 2013-03-13 5,000,000.00 Jinan YUSIGN Sales Co., Ltd. 2012-10-24 2013-04-24 5,000,000.00 Jinan YUSIGN Sales Co., Ltd. 2012-08-30 2013-02-28 4,133,880.80 Total 25,133,880.80 Statement: amount of notes with endorsement provided to other party but not post-dated of the Company in the year was RMB 73,031,779.62. 3. Accounts receivable (1) Exposure of accounts receivable by category: Amount at the end of period Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) Account receivable with single major amount but withdrawal bed debt provision for single item Account receivable withdrawal bad debt provision by age combination 1,042,707,561.67 100.00 1,036,705,398.73 99.42 Account receivable with single minor amount but withdrawal bed debt provision for single item Total 1,042,707,561.67 100.00 1,036,705,398.73 99.42 Amount at the beginning of period Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) Account receivable with single major amount and withdrawal bed debt provision for single item Account receivable withdrawal bad debt provision by age combination 1,040,566,658.76 100.00 1,036,696,739.18 99.63 33 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Amount at the beginning of period Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) Account receivable with single minor amount but withdrawal bed debt provision for single item Total 1,040,566,658.76 100.00 1,036,696,739.18 99.63 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 provision by age analysis method: Balance at period-end Balance at period-begin Age Book balance Book balance Bad debt Bad debt provision Ratio Amount Ratio (%) Amount provision (%) Within 1year 5,740,904.91 0.55 17,222.72 3,728,460.55 0.36 11,185.38 1-2 years 240,247.48 0.02 720.74 151,262.72 0.01 453.79 2-3 years 39,071.22 0.01 117.21 1,841.00 0.00 5.52 Over 3years 1,036,687,338.06 99.42 1,036,687,338.06 1,036,685,094.49 99.63 1,036,685,094.49 Total 1,042,707,561.67 100.00 1,036,705,398.73 1,040,566,658.76 100.00 1,036,696,739.18 (3) No account receivable actually cancelled after verification in the report period. (4)The accounts receivable at the report period don’t involve with the shareholder units holding over 5% (including 5%) voting power of the Company. (5) Top 5 units with an amount of account receivable Proportion among Relationship with Name Amount Period the gross accounts the company receivable (%) Customer I Non-affiliated customers 174,219,907.69 Over 3 years 16.71 Customer II Non-affiliated customers 140,887,132.85 Over 3 years 13.51 Customer III Non-affiliated customers 97,930,571.16 Over 3 years 9.39 Customer IV Non-affiliated customers 69,887,060.40 Over 3 years 6.70 34 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Customer V Non-affiliated customers 52,406,319.69 Over 3 years 5.03 Total 535,330,991.79 51.34 (6) No account receivable involving with affiliated parties in the report period. (7) No account receivable with confirmation terminated in the report period. 4. Advance payment (1) Listing of advance payment by age: Balance at the end of period Balance at the beginning of period Age Amount Proportion (%) Amount Proportion (%) Within 1 year 460,658.05 55.50 1,398,866.67 88.05 1-2 years 369,298.08 44.50 - - 2-3 years - - 189,876.41 11.95 Total 829,956.13 100.00 1,588,743.08 100.00 (2) The advance payment in the report period doesn’t involve with the shareholder units holding over 5% (including 5%) voting power of the Company. 5. Other accounts receivable (1) Exposure of other accounts receivable by category: Balance at the end of period Category Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 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 556,674,958.58 100.00 533,207,289.71 95.78 Other account receivable with single minor amount but withdrawal bed debt provision for single item Total 556,674,958.58 100.00 533,207,289.71 95.78 Balance at the beginning of period Category Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) 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 558,308,659.77 100.00 533,115,112.88 95.49 35 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Balance at the beginning of period Category Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) Other account receivable with single minor amount but withdrawal bed debt provision for single item - - - - Total 558,308,659.77 100.00 533,115,112.88 95.49 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 depreciation reserve, and the reserve for bad and doubtful account is withdrawn with age analysis method. (2) Exposure of other accounts receivable by age: Balance at period-end Balance at period-begin Age Book balance Book balance Bad debt Bad debt Amount Proportio provision Amount Proportion provision n (%) (%) Within 1year 470,811.60 0.08 1,419.08 25,077,859.28 4.49 75,226.82 1-2years 22,923,284.64 4.12 68,719.86 146,244.00 0.03 438.73 2-3years 144,144.00 0.03 432.43 45,244.91 0.01 135.73 Over 3years 533,136,718.34 95.77 533,136,718.34 533,039,311.58 95.47 533,039,311.59 Total 556,674,958.58 100.00 533,207,289.71 558,308,659.77 100.00 533,115,112.88 (3) No other account receivable actually cancelled after verification in the report period. (4) The other accounts receivable in the report period don’t involve with the shareholder units holding over 5% (including 5%) voting power of the Company. (5) Top 5 units with an amount of other account receivable: Proportion among Relationship with the gross accounts Name Amount Period the company receivable - others (%) Customer I Non-affiliated customers 220,038,935.10 Over 3 years 39.53 Customer II Non-affiliated customers 60,359,041.39 Over 3 years 10.84 Customer III Non-affiliated customers 30,059,193.03 Over 3 years 5.40 Customer IV Non-affiliated customers 25,902,462.08 Over 3 years 4.65 36 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Customer V Non-affiliated customers 20,531,780.08 Over 3 years 3.69 Total 356,891,411.68 64.11 (6)No other account receivable involving with affiliated parties in the report period. (7)No other account receivable-others with confirmation terminated in the report period. 6. Inventory (1) Inventory classification Balance at the end of period Balance at the beginning of period Items Book balance Depreciation Book value Book balance Depreciation Book value reserve reserve Raw materials 41,879,466.18 35,572,510.46 6,306,955.72 41,891,048.28 35,572,510.46 6,318,537.82 Low value and easily worn-out articles 24,498,798.60 13,626,271.72 10,872,526.88 21,279,324.73 13,719,674.52 7,559,650.21 Merchandis e inventory 432,715.25 - 432,715.25 432,240.25 - 432,240.25 Total 66,810,980.03 49,198,782.18 17,612,197.85 63,602,613.26 49,292,184.98 14,310,428.28 (2) Inventory depreciation reserve Amount withdrawn Decrease in the current period Inventory Balance at the Balance at the end in the current category beginning of year Carry-back Trans-sale of year period Raw materials 35,572,510.46 35,572,510.46 Merchandise inventory 13,719,674.52 93,402.80 13,626,271.72 Total 49,292,184.98 93,402.80 49,198,782.18 Statement: Trans-sale of merchandise inventory in the current period is for that the abovementioned merchandise has been sold. 37 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 7. Long-term equity investment Interpretation to Depreciation Proportion of Proportion of discrepancy between Cash Initial reserve Accounting Opening Increase or shares held in voting power in the proportion of Depreciation dividend Invested unit investment Closing balance withdrawn at method balance decrease invested units invested units shares and voting reserve for this cost the current (%) (%) power in invested period period units Shenzhen Jinhuan Printing Co., Equity Ltd. * 14,883,560.00 14,883,560.00 14,883,560.00 38.00 38.00 - 12,263,719.50 method Total 14,883,560.00 14,883,560.00 14,883,560.00 38.00 38.00 - 12,263,719.50 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. 38 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 39 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 8. Investment real estate Investment real estate measured at cost 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 107,108,766.54 1,368,120.54 108,476,887.08 1. Houses and buildings 107,108,766.54 1,368,120.54 108,476,887.08 2. Land use right - III. Total net book value of investment real estate 22,763,296.78 21,395,176.24 1. Houses and buildings 22,763,296.78 21,395,176.24 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 22,763,296.78 21,395,176.24 1. Houses and buildings 22,763,296.78 21,395,176.24 2. Land use right Statement of investment real estate: (1) The depreciation amount actually accrued in the period amounting to RMB 1,368,120.54. (2) The limit of the ownership for abovementioned investment real estate found in Note9 (7). 9. Fixed assets (1) Fixed assets Items Balance at the Increase in the current period Decrease in the Balance at the period-begin current period period-end I. Total original book value 109,852,879.14 124,666.98 4,180.00 109,973,366.12 Including: Houses and buildings 103,054,579.44 - 103,054,579.44 Machinery and equipment 4,242,098.00 - 4,242,098.00 Means of transport 923,478.06 114,500.00 1,037,978.06 40 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Items Balance at the Increase in the current period Decrease in the Balance at the period-begin current period period-end Other equipment 1,632,723.64 10,166.98 4,180.00 1,638,710.62 Accrued this Newly added period II. Total accumulated depreciation 92,198,515.70 2,637,883.51 224,907.05 94,611,492.16 Including: Houses and buildings 89,271,358.26 2,109,566.84 91,380,925.10 Machinery and equipment 949,851.86 328,688.88 1,278,540.74 Means of transport 734,224.76 151,186.15 885,410.91 Other equipment 1,243,080.82 48,441.64 224,907.05 1,066,615.41 III. Total net book value of fixed assets 17,654,363.44 15,361,873.96 Including: Houses and buildings 13,783,221.18 11,673,654.34 Machinery and equipment 3,292,246.14 2,963,557.26 Means of transport 189,253.30 152,567.15 Other equipment 389,642.82 572,095.21 IV. Total depreciation reserve 2,391,674.23 2,391,674.23 Including: Houses and buildings 1,580,000.00 1,580,000.00 Machinery and equipment 426,800.00 - 426,800.00 Means of transport - - - Other equipment 384,874.23 384,874.23 V. Total book value of fixed assets 15,262,689.21 12,970,199.73 Including: Houses and buildings 12,203,221.18 10,093,654.34 Machinery and equipment 2,865,446.14 2,536,757.26 Means of transport 189,253.30 152,567.15 Other equipment 4,768.59 187,220.98 (2) Fixed assets left idle temporarily at the end of period Original book Accumulated Depreciation Items Net book value Remark value depreciation reserve 41 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Original book Accumulated Depreciation Items Net book value Remark value depreciation reserve Machinery and equipment 252,098.00 179,340.56 - 72,757.44 - Total 252,098.00 179,340.56 - 72,757.44 (3) No fixed assets rent by means of financing lease at the end of period. (4) No fixed assets rent out by means of operating lease at the end of period. (5) No fixed assets held for sale at the end of period. (6) 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: Reason for failing to handle Estimated time for handling the Items the certificate of title certificate of title Employees’ dining hall (building 10 in Shuibei Formalities not completed Unpredictable Factory Area) Ice room of dining hall (building 11 in Shuibei Formalities not completed Unpredictable Factory Area) Employees’ residence (1)(building 8 in Shuibei Formalities not completed Unpredictable Factory Area) Employees’ residence (2) (building 9 in Shuibei Formalities not completed Unpredictable Factory Area) Employees’ residence (3) (building 14 in Shuibei Formalities not completed Unpredictable Factory Area) Employees’ residence (4) (building 19 in Beili Formalities not completed Unpredictable Garden) Factory building 1 Formalities not completed Unpredictable Factory building 2 Formalities not completed Unpredictable Factory building 3 Formalities not completed Unpredictable Factory building 4 Formalities not completed Unpredictable Factory building 5 Formalities not completed Unpredictable Administration building Formalities not completed Unpredictable Complex building Formalities not completed Unpredictable Residence building 1 Formalities not completed Unpredictable Residence building 2 Formalities not completed Unpredictable Residence building 3 Formalities not completed Unpredictable Residence building 4 Formalities not completed Unpredictable Residence building 5 Formalities not completed Unpredictable No. 7 Guang’ancheng, West Section, Guohuo Road, Formalities not completed Unpredictable Taijiang District, Fuzhou (7) Assets with restricted ownership at the end of period The Company provided guarantee for the subsidiary, Hong Kong China Bicycle, to loan USD 7.5 million from China Merchants Bank, but Hong Kong China Bicycle failed to repay the matured debts, and sued to Shenzhen Municipal Intermediate People's Court by China Merchants Bank, Shenzhen Municipal Intermediate People's Court sealed up 127,333 square meters land and its above-ground buildings of the Company at Yousong Village, Longhua Town, Bao’an District. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application of Shenzhen Guosheng Energy Investment and Development Co., Ltd. to reorganize Shenzhen China Bicycle Company (Holdings) Limited according to law. Since the date of accepting the reorganization case, the preservative measures to property of Shenzhen China Bicycle should be removed according to the law, the executive routine should be suspended according to the law, and its property is not 42 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 allowed to be sealed up, detained, frozen, or disposed before agreed by Shenzhen Municipal Intermediate People's Court. 10. Intangible assets Balance at the Increase in the Decrease in the Balance at the Items period-begin current period current period period-end I. Original book value Total 43,143,099.08 43,143,099.08 Land use right 43,143,099.08 43,143,099.08 II. Total accumulated amortization 18,551,533.86 862,862.04 19,414,395.90 Land use right 18,551,533.86 862,862.04 19,414,395.90 III. Total net book value of intangible assets 24,591,565.22 23,728,703.18 Land use right 24,591,565.22 23,728,703.18 IV. Total depreciation reserve Land use right V. Total book value of intangible assets 24,591,565.22 23,728,703.18 Land use right 24,591,565.22 23,728,703.18 (1) The land use right is the 127,333m2 land located at Yousong Village, Longhua Town, Bao’an District, and the service life is from July 1, 1990 to 30 June 2040. The limitation on the ownership is as shown in the annotation 9(7). (2) Amount amortized in the current period is RMB 862,862.04. 11. Details of asset depreciation reserve Balance at the Increase in the Decrease in the current period Balance at the Items period-begin current period Carry-back Trans-sale period-end I. Reserve for bad and doubtful account 1,569,811,852.06 98,924.25 - -1,912.13 1,569,912,688.44 II. Inventory depreciation reserve 49,292,184.98 - - 93,402.80 49,198,782.18 III. Depreciation reserve of salable financial assets 2,391,674.23 - - - 2,391,674.23 IV. Depreciation reserve of held-to-maturity investment 12,263,719.50 - - - 12,263,719.50 Total 1,633,759,430.77 98,924.25 - 91,490.67 1,633,766,864.35 12. Short-term loan (1) Classification of short –term loan: Items Balance at the end of period Balance at the beginning of period Loan on security 223,574,555.28 226,490,599.93 Credit loan 132,221,552.65 133,502,973.36 43 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Total 355,796,107.93 359,993,573.29 (2) Short-term loan at term but not repaid: Reason for not Estimated date of Borrower Amount Purpose repayment repayment China Import and Export Bank of Loan for production Capital shortage Unpredictable China 114,558,000.00 turnover China Cinda Assets Management Loan for production Capital shortage Unpredictable Company 56,923,923.61 turnover Loan for production Head Office of China Merchants Bank Capital shortage Unpredictable 34,893,556.32 turnover Oriental Assets Management Loan for production Capital shortage Unpredictable Company 89,035,110.36 turnover Huizhou Oriental United Industry Co., Loan for production Capital shortage Unpredictable Ltd. 34,709,926.52 turnover China Merchants Bank, Luohu Sub Loan for production Capital shortage Unpredictable branch 15,238,496.53 turnover Loan for production China Everbright Bank Capital shortage Unpredictable 9,817,094.59 turnover China Construction Bank, Sichuan Loan for production Capital shortage Unpredictable Mianyang Sub branch 620,000.00 turnover Total 355,796,107.93 The abovementioned loans have been over due for many years. 13. Accounts payable (1) Age of accounts payable Items Balance at the end of period Balance at the beginning of period Within 1 year 12,482,380.28 10,937,978.14 1-2 years 243,077.59 168,382.59 2-3 years - - Over 3 years 105,750,315.60 105,686,123.48 Total 118,475,773.47 116,792,484.21 (2)The accounts payable in the report period don’t involve with the shareholder units holding over 5% (including 5%) voting power of the Company. (3) Accounts payable of over 1 year is mainly because that the Company is insolvent and has delayed the repayment for many years. 14. Account received in advance (1) Age of account received in advance: Items Balance at the end of period Balance at the beginning of period Within 1 year 2,447,643.11 5,005,965.77 1-2 years 547,963.59 60,019.53 2-3 years - 86,960.36 44 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Over 3 years 10,664,592.85 10,664,592.85 Total 13,660,199.55 15,817,538.51 (2)The items received in advance in the report period don’t involve with the shareholder units or related party holding over 5% (including 5%) voting power of the Company. (2)Big-amount items received in advance with an age of over 1 year are mainly formed accumulatively in historical business communication. 15. Wages payable Opening book Increase in the Decrease in the Closing book Items balance current period current period balance I. Salary, bonus, allowance, and subsidy 2,477,215.44 14,347,552.59 14,258,355.51 2,566,412.52 II. Employee benefit - 493,539.26 493,539.26 - III. Social insurance - 946,254.90 946,254.90 - IV. Public accumulation fund for housing construction - 696,171.45 696,171.45 - V. Dismiss welfare 1,578,161.57 199,729.16 360,457.73 1,417,433.00 VI. Trade union outlays and personnel education outlay 38,565.69 683,424.78 721,990.47 - Total 4,093,942.70 17,366,672.14 17,476,769.32 3,983,845.52 16. Taxes payable Items Balance at the end of period Balance at the beginning of period VAT 54,432,329.55 56,549,886.85 Sales tax 451,932.63 445,392.77 Business income tax 33,753,125.02 33,753,125.02 Individual income tax 14,851.01 72,539.08 Tax for maintaining and building cities 15,992.02 160,272.72 Housing property tax 7,293,642.64 7,303,655.67 Others 18,835.73 122,232.56 Total 95,980,708.60 98,407,104.67 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 Items Amount at the end of period Amount at the beginning of period 45 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Loan interest 230,575,685.75 207,999,625.50 Total 230,575,685.75 207,999,625.50 18. Other account payable (1) Age of other accounts payable Items Balance at the end of period Balance at the beginning of period Within 1 year 48,393,010.94 9,063,330.27 1-2 years 11,905,625.18 10,682,662.94 2-3 years 2,793,311.04 2,344,854.69 Over 3 years 368,183,647.51 372,714,002.88 Total 431,275,594.67 394,804,850.78 (2) Operational loan without interest RMB 6.5 million payable to shareholder Guosheng Energy Co., Ltd., a unit holding over 5% (including 5%) voting power of the Company, reorganization case advance loan RMB 35 million, amounting to RMB 41.5 million in totals. (3) Major amount accounts payable of over 1 year is accounts unable to pay by the Company. 19. Non-current liability due within one year (1) Items Balance at the end of period Balance at the beginning of period Long-term loans due within one year 453,747,741.58 452,026,831.88 (2) Long-term loans due within one year A. Top five long-term loans due within 1 year Amount at the end of period Borrower Currency Amount in foreign Amount in RMB currencies Shenzhen Guosheng Energy Investment and Development Co., Ltd. USD 62,829,259.02 397,483,024.21 Shenzhen Guosheng Energy Investment and Development Co., Ltd. RMB - 19,300,058.59 China Cinda Assets Management Co., Ltd. USD 2,157,395.94 13,648,549.65 China Great Wall Assets Management Co., Ltd. USD 2,000,000.00 12,653,050.00 Xie Linging USD 500,000.00 3,163,200.00 Total 446,247,882.45 B. Overdue loans among the long-term loans coming due within 1 year Borrowers Amount Term overdue 46 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Borrowers Amount Term overdue Shenzhen Guosheng Energy Investment and Overdue for multiple years Development Co., Ltd. 416,783,082.80 China Cinda Assets Management Co., 13,648,549.65 Overdue for multiple years China Great Wall Assets Management Co., 12,653,050.00 Overdue for multiple years Xie Lingling 6,162,950.00 Overdue for multiple years China Oriental Assets Management Co., 3,000,000.00 Overdue for multiple years Shenzhen Lionda Group Co., Ltd. 1,500,109.13 Overdue for multiple years Total 453,747,741.58 20. Other current liabilities Items Balance at the end of period Balance at the beginning of period Rent 521,639.87 521,639.87 Decoration fee 188,853.82 188,853.82 Others 1,620,656.38 1,726,900.26 Total 2,331,150.07 2,437,393.95 21. Accrued liabilities Amount at the Increase in the Decrease in the Amount at the end Items beginning of period current period current period of period Loan guarantee for Zoria Pte LTD 78,087,000.00 - - 78,087,000.00 Loan guarantee for Jintian Industry (Group) Co., Ltd. 50,000,000.00 - - 50,000,000.00 Loan guarantee for Guangdong Shengrun Group Co., Ltd. 30,042,810.00 - - 30,042,810.00 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 166,212,952.92 - - 166,212,952.92 In above-mentioned guaranteed companies, except the companies have withdrawn estimated liabilities to assume the liability for loan guarantee of Guangdong Sunrise Holdings Co., Ltd.( hereinafter referred to as Sunrise Company) but the creditor hasn’t got liquidation after Sunrise Company implemented the reforming plan, other companies have been seriously insolvent or closed down. 22. Share capital Type of share Balance at the Increase/ decrease (+, -) Balance at the New Shares period-begin shares presen period-end issued ted Others Subtotal Public 47 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 reserve Shares transferr ed Restricted shares 109,214,230.00 - - - -71,671,643.00 -71,671,643.00 37,542,587.00 1. Shares held by state-owned legal person - - -- - - - - 2.Shares held by domestic corporate sponsors 65,098,412.00 - - - -27,567,397.00 -27,567,397.00 37,531,015.00 3. Shares held by domestic natural person sponsors - - - - - - - 4. Shares held by overseas corporate 44,104,246.00 - - - -44,104,246.00 -44,104,246.00 - 5. Shares held by senior executives 11,572.00 - - - - - 11,572.00 Non-restricted 442,133,717.00 shares - - - 71,671,643.00 71,671,643.00 513,805,360.00 1. Common RMB shares listed at home (A-share) 193,773,360.00 - - - 71,671,643.00 71,671,643.00 265,445,003.00 2. Foreign-funded shares listed at home (B-share) 248,360,357.00 - - - - - 248,360,357.00 Total amount of 551,347,947.00 shares - - - - - 551,347,947.00 Changes in this period mainly due to the restricted shares of share merger reform have un-lock for trading in this period. 23. Capital reserve Balance at the Increase in the current Decrease in the current Balance at the end of Items beginning of period period period period Capital (share)premium - - - - Other capital reserve 460,757,567.84 25,831,645.36 - 486,589,213.20 Including: Benefit from liability recombination 456,748,942.87 25,831,645.36 - 482,580,588.23 Accounts unnecessary to pay 690,624.97 - - 690,624.97 price difference of affiliated transactions 3,318,000.00 - - 3,318,000.00 48 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Total 460,757,567.84 25,831,645.36 - 486,589,213.20 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 25,831,645.36 in 2012, which will be charged into the capital reserve as capital investment. 24. Surplus reserve Balance at the Increase in the current Decrease in the current Balance at the end of Items beginning of period period period period Statutory surplus reserve 32,673,227.01 32,673,227.01 Discretionary surplus reserve Total 32,673,227.01 32,673,227.01 25. Retained profit Items Proportion of withdrawal or Amount at the period Amount at last period distribution Undistributed profit of the previous year - -2,727,618,409.33 -2,767,339,310.79 Add: Adjustment amount of undistributed profit at the beginning of year - - - Undistributed profit at the beginning of year -2,767,339,310.79 in the period - -2,727,618,409.33 Add: Net profit classed under the parent company shareholders in the current period - -52,443,234.29 39,720,901.46 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 - - - 49 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Items Proportion of withdrawal or Amount at the period Amount at last period distribution Others - - - Undistributed profit at the end of period - -2,780,061,643.62 -2,727,618,409.33 26. Business income and business cost (1) Business income Items Amount incurred in the current period Amount incurred in the last period Major business income 268,120,962.51 298,465,730.36 Other business income 24,706,064.04 22,577,839.98 Total 292,827,026.55 321,043,570.34 Major business cost 256,767,642.99 286,373,295.90 Other business cost 7,513,552.20 11,074,958.16 Total 264,281,195.19 297,448,254.06 (2) Major businesses (by industry) 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 265,722,390.44 251,645,509.84 296,006,720.56 282,052,578.77 Lease management 2,398,572.07 5,122,133.15 2,459,009.80 4,320,717.13 Total 268,120,962.51 256,767,642.99 298,465,730.36 286,373,295.90 (3)Major businesses (by variety) 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 210,501,591.13 199,445,532.80 236,496,027.77 226,119,813.08 OEM Bicycle 51,856,029.98 49,016,414.60 52,742,757.72 49,331,916.01 CBC motor vehicle - - 1,076.92 1,009.04 CBC Bicycle 137,418.98 157,125.83 116,491.48 118,576.45 Others 3,227,350.35 3,026,436.61 6,650,366.67 6,481,264.19 50 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Lease management 2,398,572.07 5,122,133.15 2,459,009.80 4,320,717.13 Total 268,120,962.51 256,767,642.99 298,465,730.36 286,373,295.90 (4) Business income of the Company’s top five customers Proportion among the Company’s total Customer name Amount incurred in the current period business income Customer 1 118,060,432.20 40.34 Customer 2 42,615,351.90 14.56 Customer 3 28,697,459.00 9.81 Customer 4 25,983,096.20 8.88 Customer 5 16,823,730.50 5.75 Total 232,180,069.80 79.34 27. Business tax and surcharge Amount incurred in the Amount incurred in the last Items Collection standard current period period Sales tax 119,928.60 122,950.51 5% Tax for building cities 131,886.83 287,638.23 7% Educational surtax 94,031.64 193,382.18 5% Total 345,847.07 603,970.92 28. Sales expenses Items Amount incurred in the current period Amount incurred in the last period Total 7,020,092.18 7,297,537.55 Including: Remuneration for staff 4,380,392.34 4,633,393.71 AD charge 904,000.00 285,456.00 Business travel 530,194.10 510,002.40 Transportation and loading charge 368,164.87 275,208.26 Market promotion 249,816.85 300,000.00 29. Management expenses Items Amount incurred in the current period Amount incurred in the last period Total 25,144,366.61 21,836,655.24 51 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Including: Salary 7,086,918.55 7,297,489.22 Charge of depreciation amortized 3,193,573.07 5,688,356.86 Taxes 1,910,817.20 1,926,995.45 Entertainment charge 1,136,827.50 1,046,061.96 Charge for Board of the Meeting 935,577.56 811,255.11 Reforming cost 4,687,208.05 30. Financial expenses Items Amount incurred in the current period Amount incurred in the last period Interest expenditure 48,407,705.61 62,931,696.95 Less: interest income 225,219.87 89,639.63 Gains/losses from exchange 2,907,691.69 -39,266,007.07 Other 47,654.12 42,993.05 Total 51,137,831.55 23,619,043.30 31. Asset depreciation loss Items Amount incurred in the current period Amount incurred in the last period I. Loss from doubtful accounts 98,924.25 -4,441,046.80 II. Loss from inventory depreciation 4,169,828.88 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 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 - - 52 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Items Amount incurred in the current period Amount incurred in the last period XII. Depreciation loss of intangible assets - - XIII. Depreciation loss of business credit - - XIV. Others - - Total 98,924.25 -271,217.92 32. Non-operating income Items Amount incurred in Amount incurred in the current period the last period Amount included in the current non-recurring profit and loss Total amount obtained from disposing non-current assets 14,979,508.16 Including: Benefit from disposal of fixed assets 14,979,508.16 Benefit from disposal of intangible assets - Benefit from debt recombination - Non-monetary assets exchange gains Donations accepted Government subsidies Compensation income Fine and penalty income Others 3,213,710.66 49,942,309.11 Total 3,213,710.66 64,921,817.27 Non-operating income of current period – others mainly refer to the liquidation payment of 3,103,150.08 yuan of Hong Kong Dahuan which is withdrawn in the way that Hong Kong Dahuan substituted Hong Kong China Bicycle to repay the loans of China Merchants Bank. 33. Non-operating expenditure Amount incurred in Amount incurred in Amount included in the current Items the current period the last period non-recurring profit and loss Total loss from disposal of non-current assets Including: Loss from disposal of fixed assets 197,675.00 Loss from disposal of intangible assets - 53 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Loss form debt restructuring Donations to external Fine and overdue fine Others 139,100.01 72,568.00 Total 139,100.01 270,243.00 34. Calculation process of basic earning per share and diluted earning per share Amount at the Amount at last period Items period Net profit classed under the Company’s common shareholders in the reporting P1 -52,443,234.29 39,720,901.46 Non-frequent gain and loss classed under the Company’s common shareholders in the reporting F 3,074,610.65 52,600,796.45 Net profit classed under the Company’s common shareholders after deduction of non-frequent gain and loss P2=P1-F in the reporting -55,517,844.94 -12,879,894.99 Influences of diluted items on the net profit classed under P3 - - the Company’s common shareholders Influences of diluted items on the net profit classed under the Company’s common shareholders after deduction of P4 - - non-frequent gains and losses Total shares at the beginning of year S0 551,347,947.00- 551,347,947.00- Shares increased for increase of shares transferred from public reserve or for share dividend distribution in the S1 - - report period Shares increased for issuance of new shares or shares Si - - transferred from liabilities in report period Accumulated number of months from the next month of Mi - - share increase to the end of report period Shares decreased for buyback, etc. in report period Sj - - Accumulated number of months from the next month of Mj - - share decrease to the end of report period 54 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Shares shortened in report period Sk - - Number of months in report period M0 12 12 Weighted average number of common shares issued S=S0+S1+Si*Mi/ externally 551,347,947.00- 551,347,947.00 M0-Sj*Mj/M0-Sk Add: Weighted average number of common shares increased in condition that the diluted potential common X1 - - shares are supposed transferred into issued common shares Weighted average number of common shares with diluted eps calculated X2=S+X1 551,347,947.00- 551,347,947.00 Including: Weighted average number of common shares increased from transfer of convertible corporate bonds - - 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 Y1=P1/S -0.0951 0.0720 Basic eps classed under the Company’s common shareholders after deduction of non-frequent gains and Y2=P2/S losses -0.1007 -0.0234 Diluted eps classed under the Company’s common shareholders Y3=(P1+P3)/X2 -0.0951 0.0720 Diluted eps classed under the Company’s common shareholders after deduction of non-frequent gains and Y4=(P2+P4)/X2 losses -0.1007 -0.0234 35. Notes to items in cash flow statement (1) Other cash received related with business activities Items Amount at the current period Amount at last period Rent, electric rate and water rate 23,515,168.25 22,673,502.55 Other current accounts 2,095,550.10 4,348,119.26 Total 25,610,718.35 27,021,621.81 (2)Other cash paid related with business activities Items Amount at the current period Amount at last period Advertising propagation and promotion, and brand maintenance expenses 1,153,816.85 1,247,668.23 Other expenses in sales section 1,457,703.52 1,764,205.00 Water and electricity expense 5,907,879.94 5,176,121.00 Property repair, equipment maintenance and repair fees 533,988.50 461,885.52 55 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Listing fee, board of directors’ expense, and expenses for office work, business traveling, communication, and social intercourse 3,866,660.93 3,968,211.06 Consulting auditing fee 681,683.00 1,368,200.00 Other fees in management section 74,816.02 41,967.72 Other current accounts 531,777.13 4,415,303.71 Restructuring costs 4,687,208.05 Total 18,895,533.94 18,443,562.24 (3) Cash received from other financing activities Items Amount at the current period Amount at last period Loan from Shenzhen Guosheng Energy Investment Development Co., ltd. 35,000,000.00 - Total 35,000,000.00 - *That is the reorganization case adcance loan RMB 35 million. 36. Supplementary data of cash flow statement (1)Supplementary data of cash flow statement Amount of the current Supplementary data Amount of last period period 1.Cash flow for business activities transferred from net profit: Net profit -52,126,619.65 39,720,901.46 Add: Asset depreciation reserve 98,924.25 -271,217.92 Fixed asset depreciation, oil-gas asset depletion, and productive biological asset depreciation 3,785,277.00 8,501,135.08 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) - -14,781,833.16 Loss from fixed assets reported discarded (filled with “-” for benefit) - - Loss from change of fair value (filled with “-” for benefit) - - 56 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Amount of the current Supplementary data Amount of last period period Finical cost (filled with “-” for benefit) 25,831,645.36 23,665,689.88 Investment loss (filled with “-” for benefit)) - -4,560,000.00 Decrease of deferred income tax asset (filled with “-” for increase) - - Increase of deferred income tax liability (filled with “ - ” for decrease) - - Decrease of inventory (filled with “-” for increase) -3,301,769.57 35,083,214.07 Decrease of operating items receivable (filled with “-” for increase) -2,206,224.77 1,267,177.57 Increase of operating items payable (filled with “-” for decrease) 20,029,331.79 -41,368,614.15 Others - -47,770,407.23 Net cash flow from business activities -7,026,573.55 348,907.64 2.Important investment and financing activities not involving with cash income and expenditure Capital transferred from liability - - Convertible corporate bonds coming due within one year - - Fixed assets rented by financing - - 3.Net change of cash and cash equivalent: Closing balance of cash 52,395,360.86 24,546,601.39 Less: Opening balance of cash 24,546,601.39 17,756,773.58 Add: Closing balance of cash equivalent - - Less: Opening balance of cash equivalent - - Net increase of cash and cash equivalent 27,848,759.47 6,789,827.81 (2) Composition of cash and cash equivalent Balance at the end of Balance at the beginning Items period of period I. Cash 52,395,360.86 24,546,601.39 Including: Cash on hand 114,315.34 70,567.65 57 深圳中华自行车(集团)有限公司 2012 年度财务报表附注 Balance at the end of Balance at the beginning Items period of period Bank deposit available for payment anytime 52,281,045.52 24,476,033.74 Other monetary fund available for payment anytime - - Due from China Central Bank for payment - - Due from banks - - Call loans to banks - - II. Cash equivalent - - Including: Bond investment coming due within 3 months - - III. Closing balance of cash and cash equivalent 52,395,360.86 24,546,601.39 VI. Affiliated Parties and Affiliated Transactions 1.The parent company Re gi Affili str Legal Proportion of Proportion of ultimate ated Enter ati repre Busines Registered shares held in voting power controller Organizatio Name relati prise on senta s nature capital the enterprise in the of the n code onshi type pl tive (%) enterprise (%) enterprise p ac e Shenzh Limit Industry 7000 11.81 11.81 77411579-2 en ed , Guoshe liabilit domesti ng y c Energy comp commer Investm any ce, ent and Cont (solel material Develo rollin y Sh s supply g Ji pment funde en and sale share Hanf Ji Hanfei Co., holde d by zh (excludi ei Ltd. r the en ng corpor speciall ate) y run, controll ed and sold merchan dises) 2. Detailed information about the Company’s subsidiaries is as shown in 1 of Annotation IV of the report. 58 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 3. Joint management and joint-ownership enterprises of the Company Increa Proportion of Proportion of Account Initial Depreciation Opening se/ Closing shares in the voting power in Invested unit ing investment reserve at the balance decrea balance invested unit the invested unit method cost end of period se (%) (%) Shenzhen Jinhuan Equity Printing Co., method 14,883,560.00 14,883,560.00 - 14,883,560.00 38.00 38.00 12,263,719.50 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. 4. Related transactions Interest exemption Items Affiliated parties Amount in this period Amount in last period Financial expenses Shenzhen Guosheng Energy Investment and Development Co., Ltd. 25,831,645.36 33,624,873.93 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 25,831,645.36 in 2012, which will be charged into the capital reserve as capital investment. 5. Accounts receivable/ accounts payable of affiliated parties Accounts payable of affiliated parties At the beginning of At the end of period period Affiliated parties Item Book balance Book balance Other accounts payable Shenzhen Jinhuan Printing Board Co., Ltd. 2,616,430.50 2,616,430.50 Shenzhen Guosheng Energy Investment and Long-term liability Development Co., Ltd. coming due within 1 year 416,783,082.80 415,180,936.70 Shenzhen Guosheng Energy Investment and Interest in red Development Co., Ltd. 4,353,349.98 3,736,414.26 Shenzhen Guosheng Energy Investment and Other account payable * Development Co., Ltd. 41,500,000.00 6,500,000.00 Among other account payable*, Shenzhen Guosheng Energy Investment and Development Co., Ltd. paid reorganization case advance loan RMB 35 million to the manager in the reporting. VII. Contingent Items 1. Contingent liabilities formed from pending lawsuit and arbitration and financial influences (1) As of Dec. 31, 2012, the Company had been prosecuted by 17 financial organs, involving total loan principal and interest of RMB 411.6367 million, USD76.9355 million and HKD 8.2616 million. 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, 2012, the Company had been prosecuted by 34 goods suppliers, involving total amount of RMB 71.1824 million, HKD24.534 million and USD 2.8006 million. The abovementioned lawsuits have mostly been resulted in the Company’s failure or been mediated. 59 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 2. Contingent liabilities formed from providing liability guaranty for other units, and financial influences Influences on the Company’s financial state, business result Items Amount involved Nature and cash flow in the current period and future periods Loan guarantee for Guangdong Shengrun Group RMB25,270,000.00 (1) Guaranty Co., Ltd. USD700,000.00 Loan guaranty for Gintian Industry (Group) Co., Ltd. (2) Guaranty RMB50,000,000.00 Loan guaranty for Shenzhen Tianma Cosmetics Co., Ltd. (3) Guaranty RMB8,000,000.00 ZoriaPteLtdc (4) Guaranty USD10,000,000.00 Shandong Huajiaming Economic Trade Co., (5) Guaranty Ltd. RMB83,142.92 RMB83,353,142.92 Total USD10,700,000.00 (1) In April 2011, reorganization plan of Sunrise Company was ruled completed by Shenzhen Intermediate [(2010) Shenzhen Intermediate Law Civil Qi Reorganization Zi. No. 5-16”Civil Order”] . According to the statement carried in reorganization plan of Sunrise Company, page 12, which approved by Shenzhen Intermediate “......based on the above said discount method for calculation, ordinary creditor should earned 27.89% liquidation rate in case of share settlement, 2.16% liquidation rate obtained plus monetary liquidation and ordinary creditor obtained 30.05% liquidation rate in totall......”. According to the reorganization plan, 30% of the predicted losses in guarantee amount for Sunrise were written off. 70% of the guarantee amount at period-end was accrued for losses. (2) The company has been delisted, 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. Commitment Items The Company had no important committment items in the report period. IX.Events occurring after the Balance Sheet date (1)After the company entered the reorganization process, the managers developed investigation work of creditor’s rights of employee, which had requested court approval that the company paid employee labor creditor’s right RMR 28.37 million in February –April, 2003. (2) Creditor’s rights declaring The first meeting of creditors of the Company has been convoked at the conference hall of the fourth floor of Bus Building near Shenzhen Municipal Intermediate People's Court on 11th, Dec., 2012, up to 1st, Apr., 2013, the custodians of the Company have totally accepted 58 creditor's rights declaring cases, the total creditor's rights declaration amounts to RMB 3,453,252,904.97 yuan. Combine the custodians of the Company’s financial claim examination before the first meeting of creditors, reexamination to the objections, and the examination to the replenishment of financial claim declaration, 53 cases have been confirmed and enrolled in “The Form of Debt” by the custodians of the Company, the total amount of confirmed financial claim is 1,875,616,630.22 yuan. 60 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 X. Other significant events 1. Bankruptcy reorganization (1) Application and acceptance of bankruptcy reorganization On 11th, May, 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. On 24th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd. as the custodians of the Company. On the same day, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. After the Company entered bankruptcy reorganization procedures, in accordance with the relevant regulations of Enterprise Bankruptcy Law of the People's Republic of China, the custodians started creditor's rights declaring registration and examination, and the first meeting of creditors of the Company’s reorganization case was presided over by Shenzhen Municipal Intermediate People's Court and convoked on 11th, Dec., 2012. At present, the reforming is being advanced. In the course of reforming, the Company exists the risks of being suspended according to the regulations of “Listing Rules”, or being declared bankruptcy liquidation in accordance with the regulations of “Enterprise Bankruptcy Law of the People's Republic of China” (Reforming plan failed); if the Company is declared bankruptcy liquidation, the stock of the Company will face the risk of being delisted. (2) Establishment of reforming plan draft After entering bankruptcy reorganization procedures, under the supervision of court and custodians, the Company always positively prepares the establishment of reforming plan draft. On 29th, Oct., 2012, Supreme People's Court promulgated Colloquia Summary About Hearing Bankruptcy Reorganization Cases of Listed Companies”, raised high demands for the debtor’s management plan included in reforming plan draft, especially for the administrative approval related to the acquisition and reorganization, the Company should engage relevant organization to establish data in accordance with the requirements of securities regulatory institution to serve as the necessary documents for reforming plan draft and management plan. Our company concentrates the recent work on the argumentation of above-mentioned items, especially on the selection of the reorganization party and the design of acquisition and reorganization program. Except confirming the debtor’s management plan, the reforming plan draft should confirm assets and liabilities on the reforming acceptance date, i.e. 12th, Oct., 2012, and those data depend on asset appraisal result and review result of creditor's rights. Up to middle April of 2013, asset appraisal result and review result of creditor's rights haven’t been completed yet, the Company has communicated with the custodian, and submitted the custodian to coordinate asset evaluation agency to confirm the asset appraisal result, complete the investigation of creditor's rights and apply for the court ruling confirmation. In accordance with the provisions of Article 79 (2) of Enterprise Bankruptcy Law of the People's Republic of China, if the debtor cannot submit reforming plan draft to People's Court and meeting of creditors within six months since the People's Court rules the date of reforming, People's Court can rule to postpone three months if the debtor makes request and has just causes. As the court ruled to reform Shenzhen China Bicycle (Group) Co., Ltd. since 25th, Oct., 2012, the Company estimates that it cannot formally submit reforming plan draft before 24th, Apr., 2013, and submits extension request to Shenzhen Municipal Intermediate People's Court. On 22nd, Apr., 2013, the Company has received (2012) Shenzhen Intermediate Court Po Zi No. 30-3 civil ruling of Shenzhen Municipal Intermediate People's Court, which rules that the submission date of reforming plan draft delays to 25th, Jul., 2013. At present, the establishment of reforming plan draft is underway. 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 payable 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 interest’s exemption shall be valid before Dec. 31st, 2004. In 2005, China Huarong Asset Management Corporation Shenzhen Office, China Orient Asset Management Corp. 61 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 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 Interests” may cause discrepancy and General Terms on the Loan did not interpreted 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 required 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. The Company takes opinions as the un-calculated interest are not return, therefore, when the un-calculated period expired, payable interest should calculate on normal loans, and the intestate and compound interest stop calculated from 1 January 2002 to 31 December 2004 are not accrued. Considering that the company had reformed since October 25, 2012, the relevant creditor had declared the creditor’s right, the specific amount needed to be audited by managers and declared to court to judge. As of the report date, the court has not yet ruled. 3. The sustainable operation On 11th, May, 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. In late October, 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen Zhengyuan Liquidation Affairs Co., Ltd. as the custodians of the Company. At the same time, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. After the Company entered bankruptcy reorganization procedures, in accordance with the relevant regulations of Enterprise Bankruptcy Law of the People's Republic of China, the custodians started creditor's rights declaring registration and examination, and the first meeting of creditors of the Company’s reorganization case was presided over by Shenzhen Municipal Intermediate People's Court and convoked on 11th, Dec., 2012. At present, the reforming is being advanced, the Company will solve the debt crisis via the reforming, introduce strong recombination party, and transfuse high quality assets so as to recover the Company’s sustainable operation ability and profitability and realize benign development of the Company. XI. Note of main item of financial statement of parent company: 1. Receivable account (1) Disclosed by category Balance at the end of period Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) Account receivable with single major amount but withdrawal bed debt provision for single item Account receivable withdrawal bad debt provision by age combination 1,034,297,021.50 100.00 1,033,282,124.90 99.90 Account receivable with single minor amount but withdrawal bed debt provision for single item Total 1,034,297,021.50 100.00 1,033,282,124.90 99.90 62 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Balance at the beginning of period Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) Account receivable with single major amount but withdrawal bed debt provision for single item Account receivable withdrawal bad debt provision by age combination 1,034,297,021.50 100.00 1,033,282,124.90 99.90 Account receivable with single minor amount but withdrawal bed debt provision for single item Total 1,034,297,021.50 100.00 1,033,282,124.90 99.90 Explanation of 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: Balance at period-end Balance at period-begin Age Book balance Bad debt Book balance Bad debt Amount Ratio (%) provision Amount Ratio (%) provision Within 1year 1-2 years 2-3 years Over 3 years 1,034,297,021.50 100.00 1,033,282,124.90 1,034,297,021.50 100.00 1,033,282,124.90 Total 1,034,297,021.50 100.00 1,033,282,124.90 1,034,297,021.50 100.00 1,033,282,124.90 (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: Relationship Proportion among the gross Name with the Amount Period accounts receivable - others (%) company Customer I Non-affiliated customers 174,219,907.69 Over 3 years 16.84 Customer II Non-affiliated customers 140,887,132.85 Over 3 years 13.62 Customer III Non-affiliated 97,930,571.16 Over 3 years 9.47 63 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 customers Customer IV Non-affiliated customers 69,887,060.40 Over 3 years 6.76 Customer V Non-affiliated customers 52,406,319.69 Over 3 years 5.07 Total 535,330,991.79 51.76 (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. 2. Other receivables (1) Disclosed by categories Balance at period-end Category Book balance Provision for bad debts Amount Proportion Amount Proportion (%) (%) 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 570,988,778.14 100.00 518,077,882.75 90.73 Other account receivable with single minor amount but withdrawal bed debt provision for single item Total 570,988,778.14 100.00 518,077,882.75 90.73 Balance at period-begin Category Book balance Provision for bad debts Amount Proportion Amount Proportion (%) (%) 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 565,275,037.27 100.00 518,357,900.26 91.70 Other account receivable with single minor amount but withdrawal bed debt provision for single item Total 565,275,037.27 100.00 518,357,900.26 91.70 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: Age Balance at period-end Balance at period-begin Book balance Bad debt Book balance Bad debt ii ii 64 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Amount Proportion Amount Proportion (%) (%) Within 1year 13,154,669.62 2.30 742.45 36,632,067.72 6.48 74,688.47 1-2 years 25,594,082.01 4.48 68,701.35 431,331.22 0.08 432.43 2-3 years 144,144.00 0.03 432.43 45,244.91 0.01 135.73 Over 3years 532,095,882.51 93.19 518,008,006.52 528,166,393.42 93.43 518,282,643.63 Total 570,988,778.14 100.00 518,077,882.75 565,275,037.27 100.00 518,357,900.26 (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 holding over 5% (including 5%) voting power of the Company. (5) Top 5 units with an amount of other account receivable: Proportion among the Relationship with Name Amount Period total other accounts the company receivable - others (%) Customer I Non-affiliated Over 3 customers 220,038,935.10 years 38.54 Customer II Non-affiliated Over 3 customers 60,359,041.39 years 10.57 Customer III Non-affiliated Over 3 customers 30,059,193.03 years 5.26 Customer IV Non-affiliated Over 3 customers 25,902,462.08 years 4.53 Customer V Non-affiliated Over 3 customers 20,531,780.08 years 3.60 Total 356,891,411.68 62.50 (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. 65 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 66 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 3. Long-term equity investment Explanation on discrepancy Percentag Provisio Examin Share between share e of n for ation proportion proportion in Initial Increases voting (asset) and Opening balan Closing balan in invested Depreciation Cash Invested company investment and decrea rights in deprecia calculati ce ce invested company and reserve dividend cost ses invested tion of ng company percentage of company current method (%) voting rights in (%) period invested company Shenzhen EMMELLE Industry Cost Co.,Ltd method 1,400,000.00 1,400,000.00 - 1,400,000.00 70% 70% - 1,400,000.00 Shenzhen Anju property Cost management Co.,Ltd method 2,000,000.00 2,000,000.00 - 2,000,000.00 100% 100% - 2,000,000.00 China Bicycle(Hong Kong) Cost Co.,Ltd method 5,350,000.00 5,350,000.00 - 5,350,000.00 99% 99% - 5,350,000.00 China Bicycle(International) Cost Co.,Ltd method 18,727.60 18,727.60 - 18,727.60 100% 100% - 18,727.60 Shenzhen Jinhuan Printing Cost Co.,Ltd method 14,883,560.00 14,883,560.00 - 14,883,560.00 38.00% 38.00% - 12,263,719.50 Total 23,652,287.60 23,652,287.60 23,652,287.60 21,032,447.10 - 67 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 4. Operating revenue and operating costs (1) Operating revenue: Item Amount incurred of current period Amount incurred of last period Main business income 313,551.29 2,913,427.30 Other business income 26,969,525.58 25,664,111.02 Total 27,283,076.87 28,577,538.32 Main business cost 294,714.52 2,827,957.15 Other business cost 7,413,585.11 10,994,840.05 Total 7,708,299.63 13,822,797.20 (2) Main business (by industry) Amount incurred of current period Amount incurred of last period Products Business income Business cost Business income Business cost Sales of bicycle 313,551.29 294,714.52 2,913,427.30 2,827,957.15 (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 - - - - CBC bicycle 313,551.29 294,714.52 135,649.58 135,649.58 OEM bicycle 2,777,777.72 2,692,307.57 Total 313,551.29 294,714.52 2,913,427.30 2,827,957.15 5. Supplemental Information of cash flow statement (1)Supplemental Information of cash flow statement Supplemental Information Amount of this period Amount of last period 1. Reconciliation of net profit/(loss) to cash flows from operating activities: Net profit -49,696,708.98 40,234,684.03 plus: provision for assets -280,017.51 -1,926,719.39 68 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Supplemental Information Amount of this period Amount of last period Depreciation of fixed assets 3,599,508.18 8,419,674.72 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 (deduct: gains) -14,781,833.16 Losses on disposal of fixed assets (deduct: gains) - Losses on the changes in fair value (deduct :gains) - - Financial expenses (deduct :gains) - 25,831,645.36 26,259,541.82 Losses arising from investments(deduct: gains) - -4,560,000.00 Decrease of deferred income tax assets (deduct : increase) - Increase of deferred income tax liabilities (deduct : decrease) - - Decrease in inventories(deduct: increase) -164,222.22 32,722,498.56 Decrease in operating payables (deduct: increase) -7,543,740.87 -4,000,102.22 Increase in operating payables (deduct: decrease) 23,264,997.37 -35,373,439.09 Others -47,770,407.23 Net cash flows from operating activities -4,125,676.63 86,760.08 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 31,432,888.50 561,283.08 69 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Supplemental Information Amount of this period Amount of last period Minus: opening balance of cash 561,283.08 498,624.71 Plus: closing balance of cash equivalents - Minus: opening balance of cash equivalents - Net increase of cash and cash equivalents 30,871,605.42 62,658.37 (2) Composition of cash and cash equivalent Items Amount at the period Amount at last period I. Cash 31,432,888.50 561,283.08 Including: Cash on hand 49,924.54 22,807.61 Bank deposit available for payment anytime 31,382,963.96 538,475.47 Other monetary fund available for payment anytime Due from China Central Bank for payment - - Due from banks - - Call loans to banks - - II. Cash equivalent - - Including: Bond investment coming due within 3 months - - III. Closing balance of cash and cash equivalent 31,432,888.50 561,283.08 XII. Supplement information 1. List of non-recurring profit and loss Amount at the Amount at last Item period period Loss and profit on disposal of non-current assets - 14,781,833.16 70 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Amount at the Amount at last Item period period 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 Loss - - 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 - - Expense for enterprise reconstruction, employee arrangement and other integration costs - - Profit and loss from transactions with obvious unfair 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 3,074,610.65 49,869,741.11 71 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Amount at the Amount at last Item period period Other loss/profit qualified definition of other non recurring profit and loss - 4,560,000.00 Total amount of non-recurring profit and loss 3,074,610.65 69,211,574.27 Less: non-recurring profit and loss of income tax effect 16,610,777.82 Net amount of non-recurring profit and loss 3,074,610.65 52,600,796.45 Less: net effect of non-recurring profit and loss attributable to minority shareholders Non-recurring profit and loss attributable to ordinary shares shareholders of the 3,074,610.65 52,600,796.45 company 2. Return on equity and earnings per share Earnings per share Profit during the period of report Average weight ROE (%) Average weight Dilute earnings per share Net income attributed to shareholders - -0.0951 -0.0951 Net income attributed to shareholders after deducting net profit of recurring loss and profit - -0.1007 -0.1007 3. Reason and explanation of unusual circumstance of items of financial statement of the company Variable The changed proportion of amount of ending Item ending balance Explanation balance and and initial initial balance balance (%) It is mainly the reforming fund loans paid by Guosheng Monetary capital 27,848,759.47 113.45 Energy Company The notes receivable at the end of period of subsidiary Notes receivable 627,810.00 62.78 -Emmelle increased The accounts receivable at the end of period of subsidiary Net accounts receivable 2,132,243.36 55.10 -Emmelle increased The advance payment at the end of period of subsidiary Advance payment -758,786.95 -47.76 -Emmelle decreased The obvious appreciation of RMB in 2011 produced large amount of exchange gains, while the RMB Financial expenses 27,518,788.25 116.51 exchange rate in 2012 was stable. Obtained investment income from disposing of Kymco Investment income -4,560,000.00 -100.00 stock rights in 2011, while there was no investment 72 深圳中华自行车(集团)股份有限公司 2012 年度财务报表附注 Variable The changed proportion of amount of ending Item ending balance Explanation balance and and initial initial balance balance (%) project to dispose in 2012. Shenzhen Municipal Intermediate People's Court ruled the corporation reorganization plan of Sunrise Company was completed in 2011, the Company reduced the original accrued debt of 34.89 million yuan and estimated liabilities of 12.88 million yuan, reckoned in the non-operating income, and the Court sold the Company’s house property at Huaqiangnan and produced non-operating income of 13.17 million yuan. But the non-operating income was less in 2012. Non-operating income -61,708,106.61 -95.05 XIII. The approval of financial statement The Company’s financial statement and financial statement note were approved to report for public by the 17th meeting of the 8th board of directors held on April 25, 2013 of the Company. Legal representative: Date: Principal in charge of accounting: Date: Principal of accounting organ: Date: Shenzhen China Bicycle Company (Holdings) Limited April 25,2013 73