深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Shenzhen China Bicycle Company (Holdings) Limited ANNUAL REPORT 2013 April 2014 1 深圳中华自行车(集团)股份有限公司 2013 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. Except the following director, other directors are attended the Board Meeting for Quarterly Report deliberation in person. Name of director not Title of director not Reasons for absent Trustee attended in person attended in person Kong Na Director Due to work Yang Fenbo The Company has no plan of cash bonus, dividends and capitalizing of reserves either. Luo Guiyou, Principal of the Company, Li Hai, person in charger of accounting works and Sun Longlong, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2013 Annual Report is authentic, accurate and complete. Concerning the unqualified auditor’s report with explanatory paragraph issued by Ruihua Certified Public Accountant (LLP) for the financial report 2013 of the Company, board of the directors and supervisory committee are well-explained for relevant events, investors are advice to pay attention on reading. 2 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Contents Annual Report 2013 ............................................................................................................................. Section I Important Notice, Contents and Paraphrase .................................................................... Section II Company Profile ................................................................................................................. Section III Accounting data and summary of finnaical indexes ...................................................... Section IV Report of the Board of Directors ..................................................................................... Section V Important Events ................................................................................................................ Section VI Changes in shares and particular about shareholders................................................... Section VII Particulars about Directors, Supervisors,Senior Executives and Employees ............ Section VIII Corporate Governance .................................................................................................. Section IX Internal Control ................................................................................................................ Section X Financial Report ................................................................................................................. Section XI Documents available for reference .................................................................................. 3 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Paraphrase Items Refers to Contents Company, The Company, the Group Refers to SHENZHEN CHINA BICYCLE COMPANY(HOLDINGS) LIMITED 4 深圳中华自行车(集团)股份有限公司 2013 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 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 518020 Offices add. Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen Codes for office add. 518131 Company’s Internet Web Site www.cbc.com.cn E-mail dmc@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 Tel. 0755-28181666 0755-28181666 Fax. 0755-28181009 0755-28181009 E-mail dmc@szcbc.com dmc@szcbc.com III. Information disclosure and preparation place Newspaper appointed for information disclosure Securities Times; Hong Kong Commercial Daily 5 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Website for annual report publish appointed by Juchao Website (www.cninfo.com.cn) CSRC Secretariat of the Board of CBC, located in Zhonghua Industrial Park, Yousong Preparation place for annual report Industrial Zone, Longhua District, Shenzhen 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 Development Co., Ltd. via the “Equity Transfer Agreement” signed, and first majority Previous changes for controlling of the Company comes to Guosheng Energy. Guosheng Energy is the wholly-owned shareholders (if applicable) 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 Company. 6 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 V. Other relevant information CPA engaged by the Company Name of CPA Ruihua Certified Public Accountant (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 Name of sponsor Offices add. for sponsor Name of sponsor deputy Continuous supervision period 15F, Tower B, Jiangsu Building, Zhongshan Securities Co., Ltd. Yitian Rd., Futian District, Cui Lei 2013 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 2013 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 2013 2012 2011 (%) Operating income (RMB) 271,111,736.07 292,827,026.55 -7.42% 321,043,570.34 Net profit attributable to shareholders of the listed 1,575,223,894.89 -52,443,234.29 -3,103.67% 39,720,901.46 company(RMB) Net profit attributable to shareholders of the listed company -760,014.40 -55,517,844.94 -98.63% -12,879,894.99 after deducting non-recurring gains and losses(RMB) Net cash flow arising from -28,210,167.86 -7,026,573.55 301.48% 348,907.64 operating activities(RMB) Basic earnings per share 2.857 -0.0951 -3,104.21% 0.072 (RMB/Share) Diluted earnings per share 2.857 -0.0951 -3,104.21% 0.072 (RMB/Share) Weighted average ROE(%) 0% 0% 0% 0% Changes over end of End of 2013 End of 2012 End of 2011 last year (%) Total assets (RMB) 151,511,429.85 162,649,076.30 -6.85% 135,746,630.93 Net assets attributable to shareholder of listed company 7,003,335.40 -1,709,451,256.41 -100.41% -1,682,839,667.48 (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) In RMB Net profit attributable to shareholders of listed Net assets attributable to shareholders of listed 8 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 company company Amount at Amount in this period Amount in last period Amount at period-end period-begin Chinese GAAP 1,575,223,894.89 -52,443,234.29 7,003,335.40 -1,709,451,256.41 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) In 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 1,575,223,894.89 -52,443,234.29 7,003,335.40 -1,709,451,256.41 Items and amount adjusted by foreign accounting rules 3. Reasons for the differences of accounting data under accounting rules in and out of China III. Items and amounts of extraordinary profit (gains)/loss In RMB Item Amount in 2013 Amount in 2012 Amount in 2011 Note Gains/losses from the disposal of non-current asset (including the write-off 1,611,690,513.84 14,781,833.16 that accrued for impairment of assets) Gains/losses from debt reorganization 49,295,755.59 Reorganization expenses, such as expenditure for allocation of employees and -65,565,704.23 integration fee Other non-operating income and expenditure 27,177.40 3,074,610.65 49,869,741.11 except for the aforementioned items Other loss/profit qualified definition of 72,934,048.27 4,560,000.00 extraordinary profit and loss Less: Impact on income tax 92,393,298.62 16,610,777.82 Impact on minority shareholders’ equity 4,582.96 (post-tax) Total 1,575,983,909.29 3,074,610.65 52,600,796.45 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies 9 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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 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 2013 年度报告全文 Section IV. Report of the Board of Directors I. Introduction The new delisting system of listed company issued by the Stock Exchange in June 2012 confronted CBC with a serious risk of delisting. In October 2012, Shenzhen China Bicycle Company entered the restructuring procedure. In October 2013, the restructuring plan of Shenzhen China Bicycle Company was passed and approved, and Shenzhen Intermediate People’s Court rendered a ruling of the completion of the implementation of the restructuring plan of Shenzhen China Bicycle Company and the conclusion of its bankruptcy procedure on 27 December 2013, followed by the resumption of trading of its A share and B share on 31 December of the same year. Despite the tough domestic and international macroeconomic situation in 2013, the Company has encountered trials and hardships and made significant achievements while continuously promoting the restructuring. Coupled with a difficult situation of continuously rising material cost, manufacturing cost and financing cost, the bicycle industry as a conventional manufacturing field recorded a decline in the market turnover. Due to the low entry threshold and numerous manufacturers, the competition in the market is extremely fierce and the business environment is bad. However, with the development of China’s social economy and the change of people’s living concept, the increased awareness of green commuting, leisure and exercises creates structural development opportunity for bicycle industry. Against the above-mentioned special background, the restructuring of the Company has made remarkable accomplishments and maintained overall steady development in operating business in 2013 in the joint efforts of the government, court, administrator, shareholders, creditors and the Company, especially by the hard effort of the Board, management level and all staff. Through increased market development, adjustment of product structure, and strict control of costs and expenses, the bicycle segment recorded a slight decline in operating revenue as compared to last year while the overall gross operating profit remained unchanged, achieving a benign business operation. The steady development of operating business has supported the restructuring of the Company. II. Main business analysis 1. Introduction 2013 (in ten thousand 2012 (in ten thousand y-o-y changes Reasons for chanegs Item Yuan) Yuan) Operation income 27111.17 29282.70 -7.41% Sales declined Operation cost 24322.56 26306.51 -7.54% Sales declined Sales expenses 672.34 702.01 -4.23% Administration expenses 8581.51 2514.44 241.29% Reorganization expenses increased Financial expenses -129.94 5113.78 -102.54% Borrowings settlement form reorganization decreased 11 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Investment gains 7293.40 - Disposal of subsidiary from reorganization Non-operation income 194555.55 321.37 60439% Income from reorganization assets disposal and debt reorganization Non-operation expenditure 28449.51 13.91 204425% Accrual liability withdrawal Net profit 157585.88 -5212.66 Losses 3123% Income from reorganization assets disposal and debt reorganization Net profit attributable to 157522.39 -5244.32 Losses 3104% Income from reorganization assets parent company disposal and debt reorganization Net cash flow from operation -2821.01 -702.66 301.47% Reorganization fee paid activities Net cash flow from 165371.92 -12.47 Cash in-flow from reorganization of investment activities assets disposal Net cash flow from financing -165107.02 3500.00 Cash out-flow from settlement of activities reorganization debts In October 2012, Shenzhen Intermediate People’s Court rendered a ruling of the Company’s restructuring. During the period of restructuring in 2013, based on the passing of the Company’s draft restructuring plan and the associated adjustment program of investors’ interests on the creditors meeting and investors meeting, Shenzhen Intermediate People’s Court ruled to approve the Company’s restructuring plan. With disposal of assets and liquidation of debts in the course of restructuring, substantial amount of proceeds arose from such disposal and liquidation. Review and summarization on the progress of development strategy and operation plan disclosed in previous period during the reporting period Nil 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 2013 2012 Increase/decrease y-o-y (%) Sales volume 33.96 36.58 -7.16 Production volume 33.46 37.16 -9.96 Stock volume 0.60 2.68 -77.61 Whether income from physical sales larger than income from labors or not 12 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 □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) 205,810,690.34 Proportion in total annual sales volume for top five clients 75.91% (%) Information of top five clients of the Company √ Applicable □ Not applicable Serial Name Sales (RMB) Proportion in total annual sales (%) 1 Client 1 86,501,222.99 31.91% 2 Client 2 51,154,386.11 18.87% 3 Client 3 42,570,605.62 15.7% 4 Client 4 15,603,168.74 5.76% 5 Client 5 9,981,306.88 3.68% Total -- 205,810,690.34 75.91% 3. Cost Industry classification In RMB 2013 2012 Industry Y-o-y changes Item Ratio in operation Ratio in operation classification Amount Amount (%) cost (%) cost (%) Bicycles manufacture and sales of 231,878,075.06 98.84% 251,645,509.84 98.01% 0.84% accessories and fittings Lease 2,712,219.43 1.16% 5,122,133.15 1.99% -0.84% Management Product classification In RMB 2013 2012 Product Y-o-y changes Item Ratio in operation Ratio in operation classification Amount Amount (%) cost (%) cost (%) OEM EV 173,522,086.39 73.97% 199,445,532.80 77.68% -3.71% OEM bicycle 57,050,201.15 24.32% 49,016,414.60 19.09% 5.23% 13 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 CBC bicycle 25,279.96 0.01% 157,125.83 0.06% -0.05% Other 1,280,507.56 0.55% 3,026,436.61 1.18% -0.63% Lease 2,712,219.43 1.16% 5,122,133.15 1.99% -0.84% Management Notes Nil Main suppliers of the Company Total purchase amount from top five suppliers (RMB) 235,941,329.90 Proportion in total annual purchase amount for top five 272,995,044.74% 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 Supplier 1 103,696,977.60 37.98% 2 Supplier 2 74,086,668.60 27.14% 3 Supplier 3 26,025,366.00 9.53% 4 Supplier 4 16,428,482.70 6.02% 5 Supplier 5 15,703,835.00 5.75% Total -- 235,941,329.90 86.43% 4. Expenses Administration expenses increased 241.29% y-o-y during the reporting period, mainly becasue reorganization expenses increased; Financial expenses decreased 102.54% y-o-y during the reporting period, mainly becasue borrowings settlement form reorganization decreased; Income tax expenses amounting to RMB 93 million in the reporting period, mainly becasue income tax expenses arising from profit increased due to the disposal of reorganization and assets 5. Cash flow In RMB Item 2013 2012 Y-o-y changes (%) Subtotal of cash in-flow from 184,060,170.56 209,862,967.20 -12.3% operation activity Subtotal of cash out-flow from 212,270,338.42 216,889,540.75 -2.13% operation activity 14 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Net cash flow from operation -28,210,167.86 -7,026,573.55 301.47% activity Subtotal of cash in-flow from 1,660,347,221.12 100% investment activity Subtotal of cash out-flow from 6,628,008.22 124,666.98 5,216.57% investment activity Net cash flow from investment 1,653,719,212.90 -124,666.98 1,326,609.4% activity Subtotal of cash in-flow from 5,390,399.73 35,000,000.00 -84.6% financing activity Subtotal of cash out-flow from 1,656,460,634.04 100% financing activity Net cash flow from financing -1,651,070,234.31 35,000,000.00 -4,817.34% activity Net increased amount of cash -25,561,189.27 27,848,759.47 -191.79% and cash equivalent Reasons for y-o-y relevant data with over 30% changes √ Applicable □ Not applicable Major changes in net cash flow from operation activity mainly because reorganization expenses paid during reorganization phase; Major changes in net cash flow from investment activity mainly due to the cash receivedfrom reorganization assets disposal; Major changes in net cash flow from financing activity mainly due to the cash paid for discharge of claims in reorganization. Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company √ Applicable □ Not applicable In the reporting period, cash flow from operation activity of the Company shows major differences with the net profit for the Year, mainly because major non-operation revenue arising from the reorganization and assets disposal in the Period, which is the net profit resouce, meanwhile, as for the cash in-flow from assets disposal, reckoned into cash flow of investment activity without included in the cash flow of operation activity, than significant differences resulted. III. Composition of main business In 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 244,489,081.79 231,878,075.06 5.16% -7.99% -7.86% -0.14% sales of 15 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 accessories and fittings Lease 2,768,340.14 2,712,219.43 2.03% 15.42% -47.05% 115.58% Management According to products OEM EV 185,317,419.20 173,522,086.39 6.36% -11.96% -13% 1.11% OEM bicycle 58,193,514.66 57,050,201.15 1.96% 12.22% 16.39% -3.51% CBC bicycle 60,784.64 25,279.96 58.41% -55.77% -83.91% 72.75% Other 917,363.29 1,280,507.56 -39.59% -71.58% -57.69% -45.81% Lease 2,768,340.14 2,712,219.43 2.03% 15.42% -47.05% 115.58% Management According to region Domestic 271,111,736.07 243,225,629.45 10.29% -7.42% -7.54% 0.12% 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 In RMB End of 2013 End of 2012 Ratio Ratio in total Ratio in total changes Notes of major changes Amount Amount assets (%) assets (%) (%) Discharge of claims in reorganization Monetary fund 26,834,171.59 17.71% 52,395,360.86 32.21% -14.5% and reorganization fee paid Account 7,060,251.28 4.66% 6,002,162.94 3.69% 0.97% No significant change receivable Inventory from subsidiary EMMELLE Inventory 4,545,116.43 3% 17,612,197.85 10.83% -7.83% declined Investment real Assets disposal from reorganization 0% 21,395,176.24 13.15% -13.15% estate decreased Long-term equity Assets disposal from reorganization 0% 2,619,840.50 1.61% -1.61% investment decreased Assets disposal from reorganization Fix assets 227,824.37 0.15% 12,970,199.73 7.97% -7.82% decreased Construction in 0% 0% 0% Without occurrence progress Note receivable 0.00 0% 1,627,810.00 1% -1% Closing note receivable from Emmelle 16 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 decreased, subsidiary of the Company Closing prepayment from Emmelle Prepayment 177,636.49 0.12% 829,956.13 0.51% -0.39% decreased, subsidiary of the Company 107,395,429.6 Receivable from administrator Other receivables 70.88% 23,467,668.87 14.43% 56.45% 9 increased Assets disposal from reorganization Intangible assets 5,271,000.00 3.48% 23,728,703.18 14.59% -11.11% decreased 2. Major changes of liability In RMB 2013 2012 Ratio Ratio in total Ratio in total changes Notes of major changes Amount Amount assets (%) assets (%) (%) Debts settlement from reorganization Short-term loans 0% 355,796,107.93 218.75% -218.75% decreased Long-term loans 0% 0% 0% Without occurrence Debts settlement from reorganization Account payables 9,935,720.73 6.56% 118,475,773.47 72.84% -66.28% decreased Account received Debts settlement from reorganization 3,627,323.31 2.39% 13,660,199.55 8.4% -6% in advance decreased Debts settlement from reorganization Wages payable 1,516,624.17 1% 3,983,845.52 2.45% -1.45% decreased Debts settlement from reorganization Interest payable 0.00 0% 230,575,685.75 141.76% -141.76% decreased Debts settlement from reorganization Other payables 34,954,734.89 23.07% 431,275,594.67 265.16% -242.09% decreased Non-current Debts settlement from reorganization liability due 0.00 0% 453,747,741.58 278.97% -278.97% decreased within one year Other current Debts settlement from reorganization 0.00 0% 2,331,150.07 1.43% -1.43% liability decreased Debts settlement from reorganization Accrual liability 0.00 0% 166,212,952.92 102.19% -102.19% decreased 3. Assets and liabilities measured by fair value In RMB Amount at the Changes of fair Accumulative Devaluation of Amount of Amount of sale Amount in the Items beginning value changes of fair withdrawing in purchase in the in the period end of period period gains/losses in value reckoned the period period 17 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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 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 0.00 0.00 financial asset 3.Financial assets available 0.00 0.00 0.00 0.00 0.00 0.00 0.00 for sales Subtotal of 0.00 0.00 0.00 0.00 0.00 0.00 0.00 financial assets Investment 0.00 0.00 0.00 0.00 0.00 property Productive biological 0.00 0.00 0.00 0.00 0.00 assets Others 0.00 0.00 0.00 0.00 0.00 0.00 Aforementione 0.00 0.00 0.00 0.00 0.00 0.00 0.00 d total Financial 0.00 0.00 0.00 0.00 0.00 0.00 0.00 liabilities Whether the attribute of the company’s major assets measurement has a lot changes in the reporting □ Yes √ No V. Analysis of core competence Despite the fierce market competition in the bicycle industry as a conventional industry, the increased awareness of green commuting, leisure and exercises as a result of the development of China’s social economy and the change of people’s living concept creates structural development opportunity for the bicycle industry. The Company will continue to do better in various aspects of operation such as market development, product development and quality management so as to maintain and improve the Company’s ability to continue as a going concern before the restructuring. On the other side, the Company has set out the condition of introduction of investors in the 18 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 restructuring plan with expectation to restore its ability to continue as a going concern and its continuous profitability through the restructuring of assets. VI. Investment analysis 1. The Company has no foreign investment and raised fund in reporting period 2. Main subsidiaries and stock-jointly companies Particular about main subsidiaries and stock-jointly companies In RMB Main Company Register Operating Operating Type Industries products or Total assets Net Assets Net profit name capital revenue profit service Shenzhen Sales of Emmelle 37,764,826. 2,318,125.9 246,343,829 2,707,701.7 2,116,217.1 Subsidiary Bicycle bicycles and 2000000 Industry 59 3 .03 0 1 accessories Co., Ltd. Notes of main subsidiaries and stock-jointly companies Particular about subsidiaries obtained or disposed in report period □ Applicable √ Not applicable VII. Prediction of business performance from January –March 2014 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason □ Applicable √ Not applicable VIII. Special purpose vehicle controlled by the Company Nil IX. Prospects on future development 1. Development trend of the industry the Company operates in and market competition pattern it deals with: The Company has been engaging in the electric bicycle business since 2002. After going through the rapid development in the past few years, the electric bicycle industry has witnessed obvious stagnation since 2007. The short supply of batteries as the main component of electrical machine caused by the enhanced management of rare earth industry and battery industry in 2011 has constrained, to some extent, the manufacturing of electric bicycle industry. The new standard of electric bicycle industry and the uncertainty of its launch time have also caused a negative impact on the selling of electric bicycles. Meanwhile, the electric bicycle industry as a conventional 19 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 manufacturing field is expected to remain in a hard situation with rising material cost, manufacturing cost and financing cost. Due to the low entry threshold and numerous manufacturers, the market competition is extremely fierce. However, with the development of China’s social economy and the change of people’s living concept, the increased awareness of green commuting, leisure and exercises creates structural development opportunity for bicycle industry. 2. Future development opportunity and new yearly business plan of the Company: The fierce market competition creates structural development opportunity for the industry. At the end of 2013, the Company completed the implementation of its restructuring plan and concluded its bankruptcy procedure, thereby improving the legal environment its business faces with. The business plan of the Company for 2014 is: (1) to continuously promote restructuring while in active cooperation with shareholders and the Board. (2) to further promote the construction of internal control system and improve the operating efficiency and results. (3) to reform and perfect the internal operating mechanism. (4) to follow closey the top-tier clients and focus on the exploration of second-tier clients to actively promote the downward stretch of the construction of its distribution network terminals. (5) to continuously promote the regional market operation in associated market. (6) to further explore new market and support new client business. (7) to adopt multi-mode operation and explore new operating mode as the strategy of promoting medium-to-high end bicycles. (8) to put more efforts on the publicity and promotion of products. (9) to enhance the development of medium-to-high end bikes, folding bikes and lithium batteries electric bikes, and enhance the development and promotion of medium-to-high end auxiliary parts. (10) to strictly implement the entry and exit mechanism of OEM factories and suppliers and perform strict quality management and control, and carry out staff supplement and training as planned. (11) to enhance team building and integrate human resources to motivate the staff. 3. Risk factors adverse to the Company’s development: The tough international economic situation has a deep impact on the domestic consumption market where significant amount of export-oriented manufacturing enterprises has shifted. The bicycle and electric bicycle market is facing a complex environment that price war is a major competition means. Since the domestic economy is at the structural adjustment stage, coupled with a difficult situation of continuously rising material cost, manufacturing cost and financing cost, the bicycle industry as a conventional manufacturing field recorded a decline in the market turnover. Due to the low entry threshold and numerous manufacturers, the competition in the market is extremely fierce. To solve the above problems, the Company will on one hand strive to expand the main business while ensuring its sustainable and stable development, especially the manufacturing and selling of electric bicycles and medium-to-high end bicycles, and will on the other hand actively promote the restructuring. X. Explanation on “Modified Auditor’s Report” from the Board and Supervisory Committee On 11th, May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy 20 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of CBC closed down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. The Company will continue to carry out vary related works actively and promote the reorganization work with all efforts. XI. Explanation on changes in aspect of accounting policy, accounting estimation and calculation method, compare with last year’s financial report On 27 December 2013, the Civil Ruling Paper (2012) Shen Zhong Fa Po Zi No. 30-10, issued from Shenzhen Intermediate People’s Court judging that reorganization plan of the Company was completed and closed the bankruptcy procedures for the Company. According to the regulations of reorganization plan, the equity of Shenzhen Anjule Property Management Co., Ltd., China Bicycle (International) Co., Ltd. and China Bicycle (Hong Kong) Co., Ltd. owned by the Company are considered as the non-major assets in bankruptcy reorganization, and will dispose by the administrator pursuant to the law and distribute to creditors. In the reporting period, the above mentioned three subsidiaries are no longer included in consolidation scope. XII. Explanation on major accounting error correction that needs retroactive re-statement in reporting period Nil 21 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 XIII. Explanation on changes of consolidation range, compare with last year’s financial report On 27 December 2013, the Civil Ruling Paper (2012) Shen Zhong Fa Po Zi No. 30-10, issued from Shenzhen Intermediate People’s Court judging that reorganization plan of the Company was completed and closed the bankruptcy procedures for the Company. According to the regulations of reorganization plan, the equity of Shenzhen Anjule Property Management Co., Ltd., China Bicycle (International) Co., Ltd. and China Bicycle (Hong Kong) Co., Ltd. owned by the Company are considered as the non-major assets in bankruptcy reorganization, and will dispose by the administrator pursuant to the law and distribute to creditors. In the reporting period, the above mentioned three subsidiaries are no longer included in consolidation scope. XIV. Profit and dividend distribution Establishment, implementation or adjustment of profit distribution policy especially the cash dividend policy during the reporting period □ Applicable √ Not applicable The profit distribution plan and capitalization of capital reserve plan of the Company for the last three years (reporting period included) Nil Cash dividend in latest three years In 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 (%) 2013 0.00 1,575,223,894.89 0% 2012 0.00 -52,443,234.29 0% 2011 0.00 39,720,901.46 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 XV. Plan of profit distribution and capital reserve capitalizing in the reporting There is no plan of profit distribution or capital reserve capitalizing in the reporting. XVI. Social responsibility Not applicable. 1. The listed company and subsidiaries is in the range of heavy pollution industry that regulated by State environment protection departments 22 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 □Yes √ No □Not applicable 2. The listed company and subsidiaries owes other major social safety issues □Yes √ No □Not applicable Problems and rectification 3. Administrative penalty occurred in reporting period □Yes √ No □Not applicable XVII. In the report period, reception of research, communication and interview Contents discussed and material Time Place Way Type Reception provided Office of the Telephone Circulation Progress of reorganization and 2013 Individual Company communication shareholder reforming 23 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Section V. Important Events I. Significant lawsuits and arbitrations of the Company √ Applicable □ Not applicable General Amount progress of information of involved (10 Accrual liability lawsuits Trial results and Execution of Disclosure Disclosure lawsuits thousand resulted (Y/N) (arbitrations influence judgment date index (arbitrations) Yuan) ) Securities Times, Hong Bankruptcy Kong reorganization of N Closed Closed Completed 2013-12-27 Commercial the Company Daily and Juchao Website II. Question from media □ Applicable √ Not applicable No universal questioned by media in reporting period III. Non-operational fund occupation from controlling shareholders and its related party In 10 thousand Yuan New Total Payment Shareholder Payment Payment Hold-up Opening amount amount pay Closing time s or related Cause way amount time amount occupied in back in amount predicted party predicted predicted Period Period (Month) Total 0 0 0 0 -- 0 -- Ratio of total amount at Period-end in 0% latest audited net assets (%) IV. Bankruptcy reorganization On 11 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 12 October 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. Then Shenzhen Municipal 24 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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. In July 2013, the Company filed the draft restructuring plan to Shenzhen Intermediate People’s Court and the creditors meeting, and put forward the associated adjustment program of investors’ interests to the investors meeting. After the creditors meeting and investors meeting voted through the draft restructuring plan and the associated adjustment program of investors’ interests, Shenzhen Intermediate People’s Court ruled on 5 November 2013 to approve the Company’s restructuring plan, and the Company entered the implementation stage of the restructuring plan. Based on the disposal of assets, transfer of shares and liquidation of debts, Shenzhen Intermediate People’s Court ruled according to law on 27 December 2013 that the implementation of the restructuring plan had been completed and its bankruptcy procedure had been concluded. The administator was retained to take care of the unfinished matters in restructuring. V. Transaction in assets No assets acquisition/sales and enterprise combined in reporting period VI. Implementation and its influence of equity incentive The Company has no equity incentive in reporting period VII. Material related transaction 1.The Company had no related transaction with daily operation concerned, related transaction arising from assets acquisition and sold, material related transaction of jointly foreign investment, and has no non-operational contact of related liability and debts in the reporting period. 2. Other material related transaction On 23 December 2013, in line with the cash donation agreement signed between the Company and Shenzhen Guocheng Energy Investment Development Co., Ltd. (Guocheng Energy), Guocheng Energy voluntary donates RMB 5.3904 million to the Company for discharge creditors with equal assets of 70 percent equity of EMMELLE Company held by the Company, seven trademarks owned by CBC and office electronic equipment of routine operations replaced. Disclosure information for material related transaction temporary disclosed Temporary notice Dated disclosed Website for disclosure Risk Warning Notice and Execution Progress 2013-12-27 Juchao Website of Reorganization Plan VIII. Significant contracts and its implementation 1. There is no entrust, contract or leasing in the reporting period 2. There is no particular about the external guarantee in the reporting period 25 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 IX. Implementation of commitments Commitments made by the Company or shareholders holding above 5% shares of the Company in reporting period or occurring in the previous period but extending to reporting period Commitment Dated for Commitment Commitments Contents Implementation party commitment term The original non-circulated shares are not Shenzhen available for trading or transfer in 12 months since Reform implemented; after the aforesaid Guosheng Share Merger period expired, original shareholders with over Obey the Energy 5% of non-circulated shares held can list the 2006-12-29 Reform share on Shenzhen Stock Exchange; the commitments Development proportion of sold shares should be over 5% Co., Ltd within 12 months and no more 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 Yes or not Detail reasons for un-complement and - further plan (if applicable ) X. Appointment and non-reappointment (dismissal) of CPA Accounting firm appointed Name of domestic accounting firm Ruihua Certified Public Accountant (LLP) Remuneration for domestic accounting firm (in 10 50 thousand Yuan) Continuous life of auditing service for foreign 2 26 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 accounting firm Name of domestic CPA Chen Songbo, Ren Weixing Whether re-appointed accounting firms in this period or not □ Yes √ No Appointment of internal control auditing accounting firm, financial consultant or sponsor □ Applicable √ Not applicable XI. Explanation from Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” from the CPA Financial report 2013 of the Company was audited by Ruihua Certified Public Accountant (LLP) with unqualified auditor’s report with explanatory paragraph issued. In line with regulation of “Rules of Shenzhen Stock Exchange for the Listing of Stocks”, board of directors makes specify explanation on the events involved in the audit report. Independent directors agree the specific explanation on the events involved in the audit report from the Board. XII. Penalty and rectification In reporting period, directors, supervisors and senior executives did not received punishments from the supervision department. Directors, supervisors, senior executives and shareholders (with 50 percent shares held) are not suspected of being involved in trading stock of the Company against the regulation. XIII. Other material events On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guocheng Energy Investment 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 Guocheng 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 enter bankrptcy reorganziation, in line with relevnat regulation of “Enterprise Bankruptcy Law of the People’s Republic of China”, administrator initiate registartion of claim filling and examination exercise. On 11 December 2012, the first meeting of creditors of reorganization case was held under the host of Shenzhen Intermediate People’s Court. As required by law, the Company has formulated the draft restructuring plan and filed it to Shenzhen Intermediate People’s Court and the creditors meeting within the legal time limit. On 31 July 2013, the Company received from the court the ruling on the confirmation of creditor’s right and made a public announcement. Afterwards, the second creditors meeting and investors meeting regarding the restructuring of Shenzhen China Bicycle Company were convened at the No. 1 tribunal of Shenzhen Intermediate People’s Court in the morning and afternoon on 22 August 2013, respectively, on which the draft restructuring plan of Shenzhen China Bicycle Company and the associated adjustment program of investors’ interests have been considered and voted, where the network voting was also available for investors meeting. Since 27 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 some creditors were not authorized to vote on the creditors meeting at the time when they attended the meeting, upon approval, the voting time limit of ordinary creditors was stretched to 3 pm sharp on 10 September 2013. The tax debt group voted through the draft restructuring plan, but the ordinary debt group voted otherwise, and the investors meeting voted through the draft restructuring plan-associated adjustment program of investors’ interests. To fully safeguard the interests of creditors, pursuant to the relevant regulations of the Enterprise Bankruptcy Law, the ordinary debt group voted a second time on the draft restructuring plan and the cut-off time was 3 pm sharp on 15 October 2013. Upon voting, the ordinary debt group passed the draft restructuring plan. In view of the passing of the draft restructuring plan by the ordinary debt group and tax debt group and the passing of the adjustment program of investors’ interests by investors group, the Company filed a timely application according to law to Shenzhen Intermediate People’s Court to rule the approval of the restructuring plan. Also, the administrator of the Company initiated the disposal of assets according to the division of responsibilities approved by the court so as to accelerate the progress of the disposal of assets and the subsequent liquidation of debts involved in the restructuring. On 16 October 2013, the land use right with an area of 127, 000 sq.m. and buildings and structures thereon located at Zhonghua Industrial Park, Longhua of Shenzhen owned by the Company, which was put up for auction by Shenzhen Land & Real Estate Exchange Center, was successfully bid by Shenzhen Municipal Land Reserve Center at hammer price of RMB1.607 billion. A judge of the Civil Ruling Paper (2012) Shen Zhong Fa Po Zi No.30-6 issued by Shenzhen Shenzhen Intermediate People’s Court on 5 November 2013 was: I. approved the “Reorganization Plan of Shenzhen China Bicycle Company (Holdings) Limited”; II. Terminated the reorganization procedures of Shenzhen China Bicycle Company (Holdings) Limited. As at 25 December 2013, the Company and the administrator have completed the transfer and assignment of shares. According to the Civil Ruling issued by Shenzhen Intermediate People’s Court ((2012) Shen Zhong Fa Po Zi No. 30-10) on 27 December 2013, it is ruled that the implementation of the Company’s restructuring plan has been confirmed to be completed and its bankruptcy procedure has been concluded. As stipulated by Rule 13.2.7 of Rules Governing the Listing of Stocks (Revision in 2012), upon application of the Company, Shenzhen Stock Exchange has approved the resumption of trading of its shares upon the opening in the morning of 31 December 2013. XIV. Important events of subsidiary On 27 December 2013, the Civil Ruling Paper (2012) Shen Zhong Fa Po Zi No. 30-10, issued from Shenzhen Intermediate People’s Court judging that reorganization plan of the Company was completed and closed the bankruptcy procedures for the Company. According to the regulations of reorganization plan, the equity of Shenzhen Anjule Property Management Co., Ltd., China Bicycle (International) Co., Ltd. and China Bicycle (Hong Kong) Co., Ltd. owned by the Company are considered as the non-major assets in bankruptcy reorganization, and will dispose by the administrator pursuant to the law and distribute to creditors. In the reporting period, the above mentioned three subsidiaries are no longer included in consolidation scope. 28 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Shares In share 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 37,542,58 -37,531,22 -37,531,22 I. Restricted shares 6.81% 11,362 0% 7 5 5 1. State-owned shares 0 0% 0 0 0 0% 2. State-owned legal 0 0% 0 0 0 0% person’s shares 37,542,58 -37,531,22 -37,531,22 3. Other domestic shares 6.81% 11,362 0% 7 5 5 Including: Domestic legal 37,531,01 -37,531,01 -37,531,01 6.81% 0 0% person’s shares 5 5 5 Domestic natural person’s 11,572 0% -210 -210 11,362 0% shares 4. Foreign shares 0 0% 0 0 0 0% Including: Foreign legal 0 0% 0 0 0 0% person’s shares Foreign natural person’s 0 0% 0 0 0 0% shares 513,805,3 37,531,22 37,531,22 551,336,5 II. Unrestricted shares 93.19% 100% 60 5 5 85 265,445,0 37,531,01 37,531,01 302,976,0 1. RMB Ordinary shares 43.14% 54.95% 03 5 5 18 2. Domestically listed 248,360,3 248,360,3 45.05% 210 210 45.05% foreign shares 57 57 3. Overseas listed foreign 0 0% 0 0 0 0% shares 4. Others 0 0% 0 0 0 0% 551,347,9 551,347,9 III. Total shares 100% 0 0 100% 47 47 II. Security offering and listing 1. There is no security offering in latest three years ended reporting period 29 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 2. Explanation on changes of total shares, shareholders structure and assets & liability structures There is no change in total shares or shareholders structure in the reporting period. 3. Current shares held by internal staffs There is no share held by internal staffs in the reporting period. III. Particulars about shareholder and actual controller of the Company 1. Amount of shareholders of the Company and particulars about shares holding In share Total shareholders ended as the 5th trading day Total shareholders at period-end 34,993 33,177 before annual report disclosed Shares held above 5% by shareholders or top ten shareholders Total Number of share pledged/frozen sharehold Amount Amount of Changes Proportion ers at of restrict un-restrict Full name of Nature of of shares in report Shareholders shareholder shares shares held (%) the end of State of share Amount period report held held period Shenzhen Guocheng Energy Domestic 63,508,74 65,098,41 Investment non-State-owned 11.52% 1589665 0 0 7 2 Development legal person Co., Ltd. Zhuorun Foreign legal 39,693,82 39,693,82 Technology Co., 7.2% 4410424 0 0 person 2 2 Ltd. Domestic nature Zeng Ying 1.15% 6,342,717 551540 0 6,342,717 person Shenzhen Kangsheng Domestic Investment non-State-owned 0.99% 5,494,700 477800 0 5,494,700 0 Development legal person Co., Ltd. Specific account of property Domestic disposition for non-State-owned 0.97% 5,326,807 5,326,807 0 5,326,807 0 bankruptcy legal person enterprise of CBC Jingchao Foreign legal Investment Co., 0.83% 4,601,789 400155 4,601,789 person Ltd. 30 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Specific account of property Domestic disposition for non-State-owned 0.77% 4,230,337 4,230,337 0 4,230,337 0 bankruptcy legal person enterprise of CBC Domestic nature Li Huili 0.71% 3,891,124 3891124 0 3,891,124 0 person Domestic nature Xu Hongbo 0.44% 2,451,919 2,451,919 0 2,451,919 0 person Domestic nature Li Gaofeng 0.38% 2,109,782 183459 0 2,109,782 0 person Strategy investors or general corporate comes to top 10 N/A shareholders by rights issued (if applicable) (see note 3) Li Huili, the spouse of actual controller Ji Hanfei, holding B-share of the Company on behalf Explanation on associated of Shenzhen Guocheng Energy Investment Development Co., Ltd., beyond that, the Company relationship among the aforesaid has no idea of whether other circulated shareholders belong to concerted action persons ruled shareholders in the Administration Norms for Information Disclosure of Change on Shareholding of Shareholders of Listed Companies. Particular about top ten shareholders with un-restrict shares held Type of shares Shareholders’ name Amount of un-restricted shares held at period-end Type Amount Shenzhen Guocheng Energy RMB common 63,508,747 63,508,747 Investment Development Co., Ltd. shares RMB common Zhuorun Technology Co., Ltd. 39,693,822 39,693,822 shares Domestically Zeng Ying 6,342,717 listed foreign 6,342,717 shares Shenzhen Kangsheng Investment RMB common 5,494,700 5,494,700 Development Co., Ltd. shares Specific account of property RMB common disposition for bankruptcy enterprise 5,326,807 5,326,807 shares of CBC RMB common Jingchao Investment Co., Ltd. 4,601,789 4,601,789 shares Specific account of property Domestically 4,230,337 4,230,337 disposition for bankruptcy enterprise listed foreign 31 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 of CBC shares Domestically Li Huili 3,891,124 listed foreign 3,891,124 shares Domestically Xu Hongbo 2,451,919 listed foreign 2,451,919 shares Domestically Li Gaofeng 2,109,782 listed foreign 2,109,782 shares Expiation on associated relationship Li Huili, the spouse of actual controller Ji Hanfei, holding B-share of the Company on behalf or consistent actors within the top 10 of Shenzhen Guocheng Energy Investment Development Co., Ltd., beyond that, the Company un-restrict shareholders and between has no idea of whether other circulated shareholders belong to concerted action persons ruled top 10 un-restrict shareholders and in the Administration Norms for Information Disclosure of Change on Shareholding of top 10 shareholders Shareholders of Listed Companies. Whether has a buy-back agreement dealing in reporting period □Yes √No 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 70,000,000 6 sale (excluding Co., Ltd. specially run, controlled and sold merchandises) Operation result, financial status, cash flow and future N/A development strategy 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 32 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 □ Applicable √Not applicable 3. Actual controller of the Company Nature person Whether obtained right of residence of other countries Actual controller Nationality or regions or not Ji Hanfei P.R.C No Profession and title in latest five years Legal person of Shenzhen Guocheng Energy Investment 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., 11.52% Shenzhen China Bicycle Company (Holding) Limited Actual controller controlling the Company by means of entrust or other assets management □ Applicable √Not applicable 33 深圳中华自行车(集团)股份有限公司 2013 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 2013-09-2 2016-09-2 Luo of the M 51 0 0 0 0 Guiyou in office 6 5 board Yang Currently 2013-09-2 2016-09-2 Director M 57 0 0 0 0 Fenbo in office 6 5 Director, Currently 2013-09-2 2016-09-2 Li Hai M 45 0 0 0 0 President in office 6 5 Yao Currently 2013-09-2 2016-09-2 Zhengwan Director M 39 0 0 0 0 g in office 6 5 Currently 2013-09-2 2016-09-2 Cao Fang Director M 40 0 0 0 0 in office 6 5 Currently 2013-09-2 2016-09-2 Kong Na Director F 37 0 0 0 0 in office 6 5 Independe Currently 2013-09-2 2016-09-2 Cui Jun M 50 0 0 0 0 nt director in office 6 5 Chen Independe Currently 2013-09-2 2016-09-2 M 45 0 0 0 0 Shujun nt director in office 6 5 Independe Currently 2013-09-2 2016-09-2 Li Bing F 38 0 0 0 0 nt director in office 6 5 Convener of Currently 2011-06-2 2014-06-2 Xiao Yan M 45 0 0 0 0 supervisor in office 7 6 s Zheng Currently 2011-06-2 2014-06-2 Zhonghua Supervisor M 51 11,930 0 2,983 8,947 n in office 7 6 Tao Staff Currently 2011-06-0 2014-06-2 M 60 3,500 0 1,085 2,415 Hualiang Supervisor in office 7 6 34 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Sun Secretary Currently 2013-09-2 2016-09-2 M 40 0 0 0 0 Longlong of Board in office 6 5 Zhang Director, Office 2010-08-2 2013-09-2 M 47 0 0 0 0 Zebing CFO leaving 6 6 Vice Office 2010-10-2 2013-10-2 Xia Bofu M 43 0 0 0 0 President leaving 6 5 Total -- -- -- -- -- -- 15,430 0 4,068 11,362 II. Post-holding Major working experience of directors, supervisors and senior executive at the present in latest five years 1. 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. 2. 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. 3. 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. 4. 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. 5. 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 35 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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 since March 2012. 6. 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. 7. 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 and the 9th 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, director of civil law business commission of Guangdong lawyers association and director of culture construction committee of Guangdong lawyers association.And now he is director of Guangdong Xingchen Law Firm, member of the CPPCC Shenzhen Committee, 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, arbitrator of mediation center of south China International economy and trade arbitration commission, mediation expert of mediation center and arbitrator of Shenzhen arbitration commission. 8. 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 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. Now he serves as the legislative consultants of standing committee of Guangdong Province 12th session of the National People’s Congress, member of a council of Guangdong Institute of Certified Public Accountants, assessment experts of Shenzhen Municipal Government Procurement Center, assessment experts of Shenzhen Municipal Science & Technology Comminittee of Experts and the first batch of senior member of Accounting Society of Shenzhen. 9. 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. 10. Mr. Xiao Yan, born in 1968, owes a bachelor of economics of Hunan Institute of Economics and Finance. He 36 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 workes in Sino Life Insurance Co., Ltd. since October 2006, he successively served as senior manager of enterprise supervision of the marketing management department in Sino-Life, GM assistant of Henan Branch of Sino-Life; serves as deputy GM of management center of Shenzhen Guomin Investment Development Co., Ltd. since April 2014. 11. 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. 12. Mr. Tao Hualiang, born in 1954, graduated from Northwestern Polytechnic University, an engineer. He 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. 13. 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. 14. 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. he has taken the post of Vice Present of the Company from October 2007 to September 2013. 15. 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. he served as director and CFO of the Company from August 2010 to September 2013. Post-holding in shareholder’s unit √ Applicable □ Not applicable 37 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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 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 Cui Jun Guangdong Xingchen Laws Firm Director 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 remuneration of directors, According to relevant rules of the Article of Association, the general meeting of shareholders decides supervisors, senior remuneration of directors and supervisors. The Board of Directors decides senior management’s. management Confirmation basis of The Company refers to the position rank and comprehensive industry level. And then general meeting of remuneration of directors, shareholders approves compensation standard and allowance of independent directors. According to the supervisors and senior "Interim Measures to Annual Performance Assessment of Executives" and performance evaluation management standards the Company issues annual performance salary. Actual payment of The Company strictly paid remuneration of directors, supervisors and senior management accordingly 38 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 remuneration of directors, with decision procedure and confirmation basis. Total payment for remuneration of directors, supervisors and senior supervisors and supervisors amounted to RMB 2,164,100 from January to December in 2013. 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 46 70.25 0 70.25 President office Zheng Currently in Supervisor M 52 17.42 0 17.42 Zhonghuan office Staff Currently in Tao Hualiang M 60 1.54 0 1.54 Supervisor office Secretary of Currently in Sun Longlong M 40 29.16 0 29.16 Board office Independent Currently in Cui Jun M 50 4 0 4 director office Independent Currently in Chen Shujun M 46 4 0 4 director office Independent Currently in Li Bing F 38 4 0 4 director office Independent Zhang Xinmiao F 46 Office leaving 4 0 4 director Zhang Zebing Director, CFO M 47 Office leaving 41.02 0 41.02 Xia Bofu Vice President M 43 Office leaving 41.02 0 41.02 Total -- -- -- -- 216.41 0 216.41 Delegated equity incentive for directors, supervisors and senior executives in reporting period □ Applicable √ Not applicable IV. Changes of directors, supervisors and senior executives Name Title Type Date Reasons Leaving Expiration of the term of the Board Zhang Zebing Director 2013-09-26 end-of-tour transition Independent Zhang Xinmiao Leaving 2013-09-26 Expiration of the term of the Board director 39 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 end-of-tour transition Leaving Zhang Zebing CFO 2013-09-25 Senior executive leaving end-of-tour end-of-tour Leaving Xia Bofu Vice President 2013-10-26 Senior executive leaving end-of-tour end-of-tour V. Changes of core technology team or key technicians in reporting period (not including directors, supervisors and senior executives) Nil VI. Particulars of workforce 1. The Company has totally 48 employees at present (16 people in HQ and 32 people in subsidiary EMMELLE included), including: Classified according to professional/occupational composition: 13 production personnel; 9 salespersons; 8 technicians; 6 financial personnel and 12 administrative personnel; Classified according to the educational background: master degree or above: 20 persons of bachelor degree; 15 persons of junior college graduates. Proportion of the personnel with education background of junior college or above in the whole staff: 72.91%. 2. The Company did not need to bear the expenses of retirees. 3. Other personnel: 0 people 40 深圳中华自行车(集团)股份有限公司 2013 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. The “Proposal of Amemdment for Article of Association” was deliberated and approved by 1st extraordinary general meeting of 2013 held on 26 September 2013, members of the board change to 9 people from original 11 people, and general election for the Board completed. 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 ”Work Report from the Board for year of 2012”, ”Work Report from Supervisory nd 22 Meeting of Committee for year Annual of 2012” , ”Financial Securities Times, Deliberated and Shareholders’ 2013-05-17 Results for year of 2013-05-18 Hong Kong approved one by one General Meeting for 2012” , “Profit Commercial Daily year of 2012 Distribution Plan of 2012”, ”Annual Report of 2012 and Summary”, ”Rewa rds of 2012 for Management Team” 41 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 2. Extraordinary shareholders’ general meeting in the report period Name of meeting Session of meeting Date Situation Date of disclosure Index of disclosure motion ”proposal of part of the clause of ‘article of association’ First Extraordinary revised”, “Election Securities Times, Shareholders’ Deliberated and 2013-09-26 of director and 2013-09-27 Hong Kong General Meeting of approved one by one independent Commercial Daily 2013 th directors for 9 session of the Board” Second “Re-engagement of Extraordinary Securities Times, Ruihua Certified Deliberated and Shareholders’ 2013-12-26 2013-12-27 Hong Kong Public Accountant approved General Meeting of Commercial Daily (LLP) “ 2013 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 meeting Times of Times of Name of independent Times of Times of the Meeting for supposed to attending by entrusted director Presence Absence the second time attend in the communication presence in a row or not report period Cui Jun 6 3 3 0 0 No Li Bing 6 2 3 1 0 No Chen Shujun 6 3 3 0 0 No Zhang Xinmiao 3 1 1 1 0 No Times presented in shareholders’ general meeting by independent 3 directors 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 42 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 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 There is no independent directors’ explanation 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 2012 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. VII. Horizontal competition Not applicable VIII. 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. 43 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 Section IX. Internal control I. Construction of internal control During the reporting period, the Company has kept improving and standardizing its internal control organizational structure strictly in compliance with the Securities Law, the Company Law and the applicable laws and regulations in respect of the governance of listed companies by CSRC, in order to ensure the standardized operation of the Company’s shareholders’ meeting, the Board and the Board of Supervisors, and safeguard the interests of the Company and Investors. In October 2012, Shenzhen Intermediate People’s Court took up according to law the bankruptcy and restructuring application filed by creditor. Since then, the Company has entered bankruptcy and restructuring procedures and carried out the self-management under the supervision of administrator. Based on the existing internal control construction and implementation, the Company has newly-added the internal control rules on the administrator’s supervision, including seal management, appointment and management of source bank account, capital budget, contract management and invoice management, and implemented accordingly. During the period from October 2012 to December 2013, the Company has kept pushing forward the restructuring. Upon the voting on and passing of the draft restructuring plan and the associated adjustment program on investors’ interests on the creditors meeting and investors meeting, Shenzhen Intermediate People’s Court ruled to approve the Company’s restructuring plan in November 2013. With the completion of the implementation of the Company’s restructuring plan, disposal of major assets, transfer of shares and liquidation of debts, Shenzhen Intermediate People’s Court ruled on 27 December 2013 that the implementation of the Company’s restructuring plan has been completed and its bankruptcy procedure has been concluded. After the completion of the implementation of the restructuring plan, with retention of its bicycle business, the Company may apply its internal control standardization to its headquarters and EMMELLE Company and prepare the consolidated financial statements of its headquarters and EMMELLE Company 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 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 significant deficiencies in the internal control have been identified during the reporting period. 1. The existing internal control management system of the Company complies with the national laws, regulations and regulatory requirements; 2. The internal control system, which has been basically established and effectively implemented, plays a good management and control role in each 44 深圳中华自行车(集团)股份有限公司 2013 年度报告全文 department, business aspects and key control areas such as sales and collection, and is in a position to effectively ensure the truthfulness and completeness of financial information, protect the safety of the Company’s assets and prevent cheating; 3. The internal control system of the Company is capable of effectively ensuring the sustainable and stable development of its business and protecting the shareholders’ interests. Date of self-evaluation report of 2014-04-28 internal control disclosed (full-text) Index of self-evaluation report of Self-evaluation report of internal control for year of 2013, Juchao Website internal control disclosed(full-text) V. Audit report of internal control □ Applicable √ Not applicable 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. 45 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Section X. Financial Report I. Audit report Type of audit opinion Unqualified auditor’s report with explanatory paragraph Signing date of audit report 2014-04-24 Name of audit institute Ruihua Certified Public Accountant (LLP) Document serial of audit report Ruihua Shen Zi [2014] No. 48030069 Name of CPA Chen Songbo, Ren Weixing Auditor’s Report Ruihua Shen Zi [2014] No. 48030069 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 2013, and profit statement for year of 2013, 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 these financial statements based on our audit. We performed our audit in accordance with Chinese Certified Public Accountants' Auditing Standards. Those standards require us to comply with professional ethics, and to plan and perform our audit so as to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of the financial statements. The selective audit procedures depend on auditor's judgment, including the evaluation of the risk of material misstatement of the consolidated financial statements due to frauds or errors. When evaluating risk, we consider internal control related to financial statements, in order to design auditing procedures, but not for the purpose of expressing an opinion on the internal control's effectiveness. An audit also includes assessing the appropriateness of the accounting policies adopted and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that we have obtained sufficient and appropriate audit evidences to provide a basis for our audit 15 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 opinion. III. Auditing opinion In our opinion, in all material aspects, CBC’s financial statements have been prepared in accordance with the Enterprises Accounting Standards and Enterprises Accounting System, and they fairly present the financial status of the consolidated and parent company’s as of December 31, 2013, and its operation results and cash flows for the year ended. IV. Emphasis of Matter We bring to the attention of the users of the financial statements, as stated in note XII. 2 of the financial statements under the name of CBC, China Bicycle Company has completed implementation of the restructuring plan dated 27 December 2013 and terminate the bankruptcy proceedings, in which the condition of introduction of investors has been set out with a view to restoring its ability to continue as a going concern and its sustainable profitability through asset restructuring. Up to the reporting date of auditing, the Company has not introduced any investor, but retained the business of bicycles so as to maintain its ability to continue as a going concern before the injection of assets by investors. Therefore, there is uncertainty in the ability of China Bicycle Company to continue as a going concern, and it is stressed that the published opinions on auditing will not be impacted by the subject matter. II. Financial statement Unit in note of financial statement refers to CNY: RMB (Yuan) 1. Consolidated Balance Sheet Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item Amount at period-end Amount at period-begin Current assets: Monetary funds 26,834,171.59 52,395,360.86 Settlement provisions Capital lent Transaction finance asset Notes receivable 1,627,810.00 Accounts receivable 7,060,251.28 6,002,162.94 Accounts paid in advance 177,636.49 829,956.13 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable Dividend receivable Other receivables 107,395,429.69 23,467,668.87 16 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Purchase restituted finance asset Inventories 4,545,116.43 17,612,197.85 Non-current asset due within one year Other current assets Total current assets 146,012,605.48 101,935,156.65 Non-current assets: Granted loans and advances Finance asset available for sales Held-to-maturity investment Long-term account receivable Long-term equity investment 2,619,840.50 Investment property 21,395,176.24 Fixed assets 227,824.37 12,970,199.73 Construction in progress Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 5,271,000.00 23,728,703.18 Expense on Research and Development Goodwill Long-term expenses to be apportioned Deferred income tax asset Other non-current asset Total non-current asset 5,498,824.37 60,713,919.65 Total assets 151,511,429.85 162,649,076.30 Current liabilities: Short-term loans 355,796,107.93 Loan from central bank Absorbing deposit and interbank deposit Capital borrowed Transaction financial liabilities Notes payable Accounts payable 9,935,720.73 118,475,773.47 Accounts received in advance 3,627,323.31 13,660,199.55 Selling financial asset of repurchase 17 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Commission charge and commission payable Wage payable 1,516,624.17 3,983,845.52 Taxes payable 93,778,253.57 95,980,708.60 Interest payable 230,575,685.75 Dividend payable Other accounts payable 34,954,734.89 431,275,594.67 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Non-current liabilities due within 1 453,747,741.58 year Other current liabilities 2,331,150.07 Total current liabilities 143,812,656.67 1,705,826,807.14 Non-current liabilities: Long-term loans Bonds payable Long-term account payable Special accounts payable Projected liabilities 166,212,952.92 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 166,212,952.92 Total liabilities 143,812,656.67 1,872,039,760.06 Owner’s equity (or shareholders’ equity): Paid-in capital (or share capital) 551,347,947.00 551,347,947.00 Capital public reserve 627,819,910.12 486,589,213.20 Less: Inventory shares Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,204,837,748.73 -2,780,061,643.62 Balance difference of foreign currency translation Total owner’s equity attributable to 7,003,335.40 -1,709,451,256.41 parent company Minority interests 695,437.78 60,572.65 Total owner’s equity ( or shareholders’ 7,698,773.18 -1,709,390,683.76 equity) 18 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Total liabilities and owner’s equity( or 151,511,429.85 162,649,076.30 shareholders’ equity) Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 2. Balance Sheet of Parent Company Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item Closing balance Opening balance Current assets: Monetary funds 1,080,836.82 31,432,888.50 Transaction finance asset Notes receivable Accounts receivable 245,382.00 1,014,896.60 Accounts paid in advance Interest receivable Dividend receivable Other receivables 116,990,372.76 52,910,895.39 Inventories 9,779,439.79 Non-current asset due within one year Other current assets Total current assets 118,316,591.58 95,138,120.28 Non-current assets: Finance asset available for sales Held-to-maturity investment Long-term account receivable Long-term equity investment 10,379.73 2,619,840.50 Investment property 21,395,176.24 Fixed assets 109,020.00 12,676,971.13 Construction in progress Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 5,271,000.00 23,728,703.18 Expense on Research and Development Goodwill 19 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Long-term expenses to be apportioned Deferred income tax asset Other non-current asset Total non-current asset 5,390,399.73 60,420,691.05 Total assets 123,706,991.31 155,558,811.33 Current liabilities: Short-term loans 320,902,551.61 Transaction financial liabilities Notes payable Accounts payable 124,098,936.31 Accounts received in advance 10,664,592.85 Wage payable 6,847.09 2,151,710.33 Taxes payable 92,205,392.56 94,891,954.20 Interest payable 230,575,685.75 Dividend payable Other accounts payable 26,103,724.68 386,975,286.77 Non-current liabilities due within 1 453,747,741.58 year Other current liabilities 2,320,660.19 Total current liabilities 118,315,964.33 1,626,329,119.59 Non-current liabilities: Long-term loans Bonds payable Long-term account payable Special accounts payable Projected liabilities 166,212,952.92 Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 166,212,952.92 Total liabilities 118,315,964.33 1,792,542,072.51 Owner’s equity (or shareholders’ equity): Paid-in capital (or share capital) 551,347,947.00 551,347,947.00 Capital public reserve 627,819,910.12 486,589,213.20 Less: Inventory shares Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk 20 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Retained profit -1,206,450,057.15 -2,707,593,648.39 Balance difference of foreign currency translation Total owner’s equity ( or shareholders’ 5,391,026.98 -1,636,983,261.18 equity) Total liabilities and owner’s equity( or 123,706,991.31 155,558,811.33 shareholders’ equity) Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 3. Consolidated Profit Statement Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item This Period Last Period I. Total operating income 271,111,736.07 292,827,026.55 Including: Operating income 271,111,736.07 292,827,026.55 Interest income Insurance gained Commission charge and commission income II. Total operating cost 336,247,395.00 348,028,256.85 Including: Operating cost 243,225,629.45 263,065,095.40 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 1,745,928.88 1,561,946.86 Sales expenses 6,723,428.32 7,020,092.18 Administration expenses 85,815,079.74 25,144,366.61 Financial expenses -1,299,434.00 51,137,831.55 Losses of devaluation of asset 36,762.61 98,924.25 Add: Changing income of fair value(Loss is listed with “-”) 21 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Investment income (Loss is listed 72,934,048.27 with “-”) Including: Investment income on affiliated company and joint venture Exchange income (Loss is listed with “-”) III. Operating profit (Loss is listed 7,798,389.34 -55,201,230.30 with “-”) Add: Non-operating income 1,945,555,480.90 3,213,710.66 Less: Non-operating expense 284,495,050.48 139,100.01 Including: Disposal loss of 45,935.56 non-current asset IV. Total Profit (Loss is listed with 1,668,858,819.76 -52,126,619.65 “-”) Less: Income tax expense 93,000,059.74 V. Net profit (Net loss is listed with “-”) 1,575,858,760.02 -52,126,619.65 Including: Net profit of combined party realized before combination Net profit attributable to owner’s of 1,575,223,894.89 -52,443,234.29 parent company Minority shareholders’ gains and 634,865.13 316,614.64 losses VI. Earnings per share -- -- i. Basic earnings per share 2.857 -0.0951 ii. Diluted earnings per share 2.857 -0.0951 VII. Other consolidated income VIII. Total consolidated income 1,575,858,760.02 -52,126,619.65 Total consolidated income attributable to owners of parent 1,575,223,894.89 -52,443,234.29 company Total consolidated income 634,865.13 316,614.64 attributable to minority shareholders Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 4. Profit Statement of Parent Company Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item This Period Last Period I. Operating income 26,304,548.63 27,283,076.87 22 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Less: Operating cost 9,061,591.72 6,452,604.88 Operating tax and extras 1,230,470.42 1,255,694.75 Sales expenses Administration expenses 84,590,538.81 21,036,780.80 Financial expenses -1,069,788.29 51,617,771.59 Losses of devaluation of asset -280,017.51 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed with “-”) Including: Investment income on affiliated company and joint venture II. Operating profit (Loss is listed -67,508,264.03 -52,799,757.64 with “-”) Add: Non-operating income 1,945,490,380.90 3,203,710.66 Less: Non-operating expense 284,450,319.19 100,662.00 Including: Disposal loss of non-current asset III. Total Profit (Loss is listed with 1,593,531,797.68 -49,696,708.98 “-”) Less: Income tax expense 92,388,206.44 IV. Net profit (Net loss is listed with 1,501,143,591.24 -49,696,708.98 “-”) V. Earnings per share -- -- i. Basic earnings per share 2.7227 -0.0901 ii. Diluted earnings per share 2.7227 -0.0901 VI. Other consolidated income VII. Total consolidated income 1,501,143,591.24 -49,696,708.98 Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 5. Consolidated Cash Flow Statement Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item This Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 152,281,740.80 184,252,248.85 services 23 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Net increase of disposal of transaction financial asset Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received Other cash received concerning 31,778,429.76 25,610,718.35 operating activities Subtotal of cash inflow arising from 184,060,170.56 209,862,967.20 operating activities Cash paid for purchasing commodities and receiving labor 133,314,908.16 171,655,875.98 service 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 40,519,453.59 17,357,721.19 Taxes paid 5,431,161.32 8,980,409.64 Other cash paid concerning 33,004,815.35 18,895,533.94 operating activities Subtotal of cash outflow arising from 212,270,338.42 216,889,540.75 operating activities 24 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Net cash flows arising from operating -28,210,167.86 -7,026,573.55 activities 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 1,660,347,221.12 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 1,660,347,221.12 activities Cash paid for purchasing fixed, 5,384,449.06 124,666.98 intangible and other long-term assets Cash paid for investment 10,379.73 Net increase of mortgaged loans Net cash received from subsidiaries and other units Other cash paid concerning 1,233,179.43 investing activities Subtotal of cash outflow from investing 6,628,008.22 124,666.98 activities Net cash flows arising from investing 1,653,719,212.90 -124,666.98 activities III. Cash flows arising from financing activities Cash received from absorbing investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans Cash received from issuing bonds Other cash received concerning 5,390,399.73 35,000,000.00 financing activities Subtotal of cash inflow from financing 5,390,399.73 35,000,000.00 activities Cash paid for settling debts 1,621,460,634.04 25 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Cash paid for dividend and profit distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 35,000,000.00 financing activities Subtotal of cash outflow from financing 1,656,460,634.04 activities Net cash flows arising from financing -1,651,070,234.31 35,000,000.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -25,561,189.27 27,848,759.47 equivalents Add: Balance of cash and cash 52,395,360.86 24,546,601.39 equivalents at the period -begin VI. Balance of cash and cash 26,834,171.59 52,395,360.86 equivalents at the period -end Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 6. Cash Flow Statement of Parent Company Prepared by Shenzhen China Bicycle Company (Holdings) Limited In RMB Item This Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 9,015.00 services Write-back of tax received Other cash received concerning 34,909,756.83 18,759,873.33 operating activities Subtotal of cash inflow arising from 34,909,756.83 18,768,888.33 operating activities Cash paid for purchasing commodities and receiving labor service Cash paid to/for staff and workers 35,209,438.17 6,059,802.69 Taxes paid 2,667,326.25 3,910,353.69 26 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Other cash paid concerning 31,239,631.17 12,924,408.58 operating activities Subtotal of cash outflow arising from 69,116,395.59 22,894,564.96 operating activities Net cash flows arising from operating -34,206,638.76 -4,125,676.63 activities 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 1,660,315,221.12 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 1,660,315,221.12 activities Cash paid for purchasing fixed, 5,380,020.00 2,717.95 intangible and other long-term assets Cash paid for investment 10,379.73 Net cash received from subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing 5,390,399.73 2,717.95 activities Net cash flows arising from investing 1,654,924,821.39 -2,717.95 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans Cash received from issuing bonds Other cash received concerning 5,390,399.73 35,000,000.00 financing activities Subtotal of cash inflow from financing 5,390,399.73 35,000,000.00 activities Cash paid for settling debts 1,621,460,634.04 27 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Cash paid for dividend and profit distributing or interest paying Other cash paid concerning 35,000,000.00 financing activities Subtotal of cash outflow from financing 1,656,460,634.04 activities Net cash flows arising from financing -1,651,070,234.31 35,000,000.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -30,352,051.68 30,871,605.42 equivalents Add: Balance of cash and cash 31,432,888.50 561,283.08 equivalents at the period -begin VI. Balance of cash and cash 1,080,836.82 31,432,888.50 equivalents at the period -end Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 7. Statement of Changes in Owners’ Equity (Consolidated) Prepared by Shenzhen China Bicycle Company (Holdings) Limited This Period In RMB This Period Owners’ equity attributable to parent company Paid-up Provisio Minor Total Item Less: Reasona capital( Capital Surplus n of Retaine sharehold owners’ inventor ble Other or share reserves reserves general d profit ers’ equity equity y shares reserve capital) risk -2,780,0 I. Balance at the end of last 551,347 486,589, 32,673, -1,709,390, 61,643.6 60,572.65 year ,947.00 213.20 227.01 683.76 2 Add: Change of accounting policy Correcting of previous errors Other -2,780,0 II. Balance at the beginning of 551,347 486,589, 32,673, -1,709,390, 61,643.6 60,572.65 current year ,947.00 213.20 227.01 683.76 2 III. Changed in current 141,230, 1,575,22 634,865.1 1,717,089, term(Loss is listed with “-”) 696.92 3,894.89 3 456.94 28 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 1,575,22 634,865.1 1,575,858, (I) Net profit 3,894.89 3 760.02 (II) Other consolidated income 1,575,22 634,865.1 1,575,858, Subtotal of (I) and (II) 3,894.89 3 760.02 (III) Owners’ input and 141,230, 141,230,69 withdraw of share capital 696.92 6.92 1. Capital input by owners 2. Share payment accounted into owners’ equity 141,230, 141,230,69 3. Others 696.92 6.92 (IV) Profit distribution 1. Providing of surplus reserves 2. Common risk provision 3. Dividend to owners’(or shareholders) 4. Others (V) Internal settlement of owners’ equity 1. Capital reserves transferred to share capital 2. Surplus reserves transferred to share capital 3. Making up losses by surplus reserves 4. Others (VI) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VII) Other -1,204,8 IV. Balance at the end of this 551,347 627,819, 32,673, 695,437.7 7,698,773. 37,748.7 term ,947.00 910.12 227.01 8 18 3 Last year In RMB Last year Owners’ equity attributable to parent company Paid-up Provisio Minor Total Item Less: Reasona capital( Capital Surplus n of Retaine sharehold owners’ inventor ble Other or share reserves reserves general d profit ers’ equity equity y shares reserve capital) risk I. Balance at the end of last 551,347 460,757, 32,673, -2,727,6 -1,682,839, year ,947.00 567.84 227.01 18,409.3 667.48 29 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 3 Add: retroactive adjustment arising from enterprise combination under same control Add: Change of accounting policy Correcting of previous errors Other -2,727,6 II. Balance at the beginning of 551,347 460,757, 32,673, -1,682,839, 18,409.3 current year ,947.00 567.84 227.01 667.48 3 III. Changed in current 25,831,6 -52,443, -26,551,01 60,572.65 term(Loss is listed with “-”) 45.36 234.29 6.28 -52,443, 316,614.6 -52,126,61 (I) Net profit 234.29 4 9.65 (II) Other consolidated income 25,831,6 -52,443, 316,614.6 -52,126,61 Subtotal of (I) and (II) 45.36 234.29 4 9.65 (III) Owners’ input and 25,831,6 25,831,645 withdraw of share capital 45.36 .36 1. Capital input by owners 2. Share payment accounted into owners’ equity 25,831,6 25,831,645 3. Others 45.36 .36 (IV) Profit distribution 1. Providing of surplus reserves 2. Common risk provision 3. Dividend to owners’(or shareholders) 4. Others (V) Internal settlement of owners’ equity 1. Capital reserves transferred to share capital 2. Surplus reserves transferred to share capital 3. Making up losses by surplus reserves 4. Others (VI) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VII) Other -256,041. -256,041.9 30 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 99 9 -2,780,0 IV. Balance at the end of this 551,347 486,589, 32,673, -1,709,390, 61,643.6 60,572.65 term ,947.00 213.20 227.01 683.76 2 Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong 8. Statement of Changes in Owners’ Equity (Parent Company) Prepared by Shenzhen China Bicycle Company (Holdings) Limited This Period In RMB This Period Paid-up Less: Provision Total Item capital(or Capital Reasonable Surplus Retained inventory of general owners’ share reserves reserve reserves profit shares risk equity capital) 551,347,94 486,589,21 32,673,227 -2,707,593, -1,636,983, I. Balance at the end of last year 7.00 3.20 .01 648.39 261.18 Plus: Change of accounting policy Correcting of previous errors Other II. Balance at the beginning of 551,347,94 486,589,21 32,673,227 -2,707,593, -1,636,983, current year 7.00 3.20 .01 648.39 261.18 III. Changed in current 141,230,69 1,501,143, 1,642,374, term(Loss is listed with “-”) 6.92 591.24 288.16 1,501,143, 1,501,143, (I) Net profit 591.24 591.24 (II) Other consolidated income 1,501,143, 1,501,143, Subtotal of (I) and (II) 591.24 591.24 (III) Owners’ input and withdraw 141,230,69 141,230,69 of share capital 6.92 6.92 1. Capital input by owners 2. Share payment accounted into owners’ equity 141,230,69 141,230,69 3. Others 6.92 6.92 (IV) Profit distribution 1. Providing of surplus reserves 2. Common risk provision 31 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 3. Dividend to owners’(or shareholders) 4. Others (V) Internal settlement of owners’ equity 1. Capital reserves transferred to share capital 2. Surplus reserves transferred to share capital 3. Making up losses by surplus reserves 4. Others (VI) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VII) Other IV. Balance at the end of this 551,347,94 627,819,91 32,673,227 -1,206,450, 5,391,026. term 7.00 0.12 .01 057.15 98 Last year In RMB Last year Paid-up Less: Provision Total Item capital(or Capital Reasonabl Surplus Retained inventory of general owners’ share reserves e reserve reserves profit shares risk equity capital) 551,347,94 460,757,56 32,673,227 -2,657,896, -1,613,118, I. Balance at the end of last year 7.00 7.84 .01 939.41 197.56 Add: Change of accounting policy Correcting of previous errors Other II. Balance at the beginning of 551,347,94 460,757,56 32,673,227 -2,657,896, -1,613,118, current year 7.00 7.84 .01 939.41 197.56 III. Changed in current term(Loss 25,831,645 -49,696,70 -23,865,06 is listed with “-”) .36 8.98 3.62 -49,696,70 -49,696,70 (I) Net profit 8.98 8.98 (II) Other consolidated income -49,696,70 -49,696,70 Subtotal of (I) and (II) 8.98 8.98 (III) Owners’ input and withdraw 25,831,645 25,831,645 of share capital .36 .36 1. Capital input by owners 2. Share payment accounted 32 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 into owners’ equity 25,831,645 25,831,645 3. Others .36 .36 (IV) Profit distribution 1. Providing of surplus reserves 2. Common risk provision 3. Dividend to owners’(or shareholders) 4. Others (V) Internal settlement of owners’ equity 1. Capital reserves transferred to share capital 2. Surplus reserves transferred to share capital 3. Making up losses by surplus reserves 4. Others (VI) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VII) Other IV. Balance at the end of this 551,347,94 486,589,21 32,673,227 -2,707,593, -1,636,983, term 7.00 3.20 .01 648.39 261.18 Legal Representative: Luo Guiyou Person in charge of Accounting Works: Li Hai Person in charge of Accounting Institution: Sun Longlong Shenzhen China Bicycle Company (Holdings) Limited Notes to Financial Statement 2013 (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, 33 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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. 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 issued by Financial Department on 15 February 2006 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 to prepare financial statements. Accounting records of the Company is based on accrual basis in line with relevant regulations of Accounting Standards for Enterprise. Except for some financial instruments, the financial statement is calculated based on historical cost. III. 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, operation achievement and cash flows. IV. Main Accounting Policy and Accounting Estimate 1. Accounting Period The company adopts Gregorian calendar as accounting period, namely form each 1 January to 31 December. 2. Standard Accounting Currency The Company adopts Renminbi as the standard accounting currency. 3. Accounting Treatment Method for Business Combinations Business combination is the transaction or events that two or two above independent enterprises combined as a reporting entity. Business combination including enterprise combined under the same control and business combined under different 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 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. 34 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 (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. 4. 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. 5. 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. 6. Foreign currency business and foreign currency statement translation (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 35 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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”. 7. 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 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 36 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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: 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: 37 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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 sale shall be written back through equity while not through profit and losses if the value of such equity instrument increases. 8. Account Receivable Account receivable including accounts receivable and other receivables etc. 38 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 (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 Determine basis or amount standards for Single Significant settlement status of the clients: 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 similar characteristic in credit risk proportion 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 9. 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, wrap page, 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 39 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Company measures the whole or partial out-of-dated inventory or the inventory with extremely lower price according to the cost or the net realizable value, whichever is lower; and withdraws the impairment provisions for the single inventory according to the balance between the net realizable value and the cost and recorded into the profits and losses of current period. In addition to the holding purpose and the price and cost fluctuation as of the balance sheet date, the Company shall take into the future event account when confirming the net realizable value. (4)Rake inventory In addition to the periodic inventory system for the products, the Company adopts the perpetual inventory system for other inventories. (5) Amortization method for the low-value consumables and wrappage 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. 10. 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: 40 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 ① If the initial investment cost of long term equity investment is greater than the share of fair value of 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 41 深圳中华自行车(集团)股份有限公司 2013 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 IV. 17. 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 IV. 7 (5). 11. 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 IV -17 for the accrual method for assets impairment 12. 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 IV-17. (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. 42 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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. (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. 13. 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 occurrences 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 IV.17. 14. 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. 43 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 (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. 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 multiplies 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. 15. 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 44 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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 IV. 17. 16. 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 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. 17. Assets impairment of non-financial non-current assets 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 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. 45 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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. 18. 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. 19. 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. 46 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 20. 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 is 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 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. 21. 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. 47 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 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. 22. 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 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 present 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. 23. 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. 48 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Other non current assets such as intangible assets satisfying condition of held-for-sale are treated by reference to the above principles. 24. 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. 25. 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. 26.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. 27. Prior period correction of accounting errors No accounting error correction is available during the period of this report. 28. Significant accounting judgments and estimates In the process of applying the accounting policies, due to the inherent uncertainties of the operating activities, the Company is required to judge, estimate and assume the book value of the report items that cannot be measured accurately. These judgments, estimates and assumptions are made on the basis of the historical experience of the Company's management and by considering other relevant factors. These judgments, estimates and assumptions shall affect the reported amounts of the incomes, expenses, assets and liabilities, the date of the balance sheet, and the disclosure of the liabilities. However, the results caused by the uncertainties of the estimation may result in major adjustments to the book amount of the assets or liabilities to be affected in the future. The Company has continuously evaluated the adopted significant accounting estimates and critical assumptions based on the historical experience and other factors, including the reasonable expectations to the future events. V. Taxes Mai tax category and tax rate Tax category Tax calculation evidence Tax rate Sales income, and income from processing, Value added tax maintenance, making repairs and supplying replacements, and labor service 17% Sales tax Taxable labor income 5% Tax for maintaining and building Amount of value-added tax and sales tax payable cities 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% 49 深圳中华自行车(集团)股份有限公司 2013 年度财务报表附注 Tax category Tax calculation evidence Tax rate Business income tax Taxable income 25% 50 2013 年度财务报表附注 VI. Business Combination and Consolidated Financial Statements 1. Subsidiaries (1) Subsidiaries obtained by means of establishment or investment, etc. Balance of other Legal items actually Registrati Registered Type of the Organization Full name Type Natureofbusiness Business scope representat forming the net on place capital enterprise code ive investment in the subsidiaries RMB 2 Bicycle and parts distribution Limited Shenzhen Emmelle Industry Co., Controlling Shenzhen Ltd. subsidiary million Liability Li Hai 72617897-5 - Company (Contd) The balance after the parent company’s Amount in minority owner’s equity writing down the excess Proportion of interest used for of the current loss undertaken by Proportion of Consolidated report Full name shares held Minority’s equity writing down minority shareholders of the subsidiary Notes voting power (%) statement or not (%) minority gain and over the share enjoyed by minority loss shareholders in the original owner’s equity of the subsidiary Shenzhen Emmelle Industry Co., Ltd. 70 70 Yea - - - (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. 37 2. No business entity of control right formed by special purpose subject or by means of trusted business or leasing etc. 3. Explanation on changes of consolidation scope On 27 December 2013, the Civil Ruling Paper (2012) Shen Zhong Fa Po Zi No. 30-10, issued from Shenzhen Intermediate People’s Court judging that reorganization plan of the Company was completed and closed the bankruptcy procedures for the Company. According to the regulations of reorganization plan, the equity of Shenzhen Anjule Property Management Co., Ltd., China Bicycle (International) Co., Ltd. and China Bicycle (Hong Kong) Co., Ltd. owned by the Company are considered as the non-major assets in bankruptcy reorganization, and will dispose by the administrator pursuant to the law and distribute to creditors. In the reporting period, the above mentioned three subsidiaries are no longer included in consolidation scope. 4. Entity newly included in consolidation scope and entity excluded in consolidation scope in the Period (1) Entity newly included in consolidation scope and entity excluded in consolidation scope in the Year ①The Company have no new subsidiary, special-purpose entity and operation entity with controlling rights formed through entrust operation or leasing included in consolidation scope in the Year ②Companies, special-purpose entity and operation entity with controlling rights formed through entrust operation or leasing excluded in consolidation scope in the Year Net profit from year-begin to disposal Name Net assets on disposal date date Shenzhen Anjule Realty Management Co., Ltd. -21,591,569.52 -315,008.40 China Bicycle (International) Co., Ltd. -728,155.35 -11,205.99 China Bicycle (Hong Kong) Co., Ltd. -49,061,100.78 -8,882.21 5. No enterprise mergered under same control occurred in the period. 6. No enterprise mergered under different control occurred in the period. 7. No subsidiary losses in period by means of equity for sale without control rights held. VII. Notes to Items in Consolidated Financial Statements Unless otherwise state in the follow (including main item notes in financial statement) annotations, year beginning refers to 1 January 2013 while year-end refers to 31 December 2013 1. Monetary fund Items Amount at the end of year Amount at the beginning of year Original currency Conversi Amount in Original currency Conversi Amount in RMB on rate RMB on rate amount amount Cash on hand: -RMB 48,495.10 1.00 48,495.10 112,771.51 1.00 112,771.51 43 -HKD 1,894.30 0.7862 1,489.36 1,894.30 0.81085 1,535.97 -USD 1.25 6.0969 7.62 1.25 6.2855 7.86 Bank deposit: -RMB 26,784,179.51 1.00 26,784,179.51 51,704,996.49 1.00 51,704,996.49 -HKD 710,426.13 6.28550 576,049.03 Total 26,834,171.59 52,395,360.86 44 2. Notes receivable (1) Classification of notes receivable Amount at the end of Amount at the beginning Category year of year Bank acceptance bill 1,627,810.00 Business acceptance bill Total 1,627,810.00 (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. 2013-07-16 2014-01-16 4,000,000.00 - Henan Daming Electric Bicycle Sales Co., Ltd. 2013-08-30 2014-02-28 4,000,000.00 - Xi’an Beilin Fuxin Electric Car After-Sale Service Department 2013-10-29 2014-04-29 4,000,000.00 - Jinan YUSIGN Sales Co., Ltd. 2013-09-05 2014-03-05 3,900,000.00 - Henan Daming Electric Bicycle Sales Co., Ltd. 2013-11-13 2014-05-13 3,100,000.00 - Total 19,000,000.00 Statement: amount of notes with endorsement provided to other party but not post-dated of the Company in the year was RMB 74,914,022.92. 3. Accounts receivable (1) Exposure of accounts receivable by category: Amount at the end of year 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 8,346,657.41 100.00 1,286,406.13 15.41 Account receivable with single minor amount but withdrawal bed debt provision for single item Total 8,346,657.41 100.00 1,286,406.13 15.41 (Contd) Category Amount at the begin of year Book balance Bad debt provision 45 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 1,042,707,561.67 100.00 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 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 year-end Balance at year-begin Age Book balance Book balance Bad debt Bad debt provision Ratio Amount Ratio (%) Amount provision (%) Within 1year 6,996,424.26 83.82 20,989.27 5,740,904.91 0.55 17,222.72 1-2 years 59,730.00 0.72 179.19 240,247.48 0.02 720.74 2-3 years 25,341.50 0.30 76.02 39,071.22 0.01 117.21 Over 3years 1,265,161.65 15.16 1,265,161.65 1,036,687,338.06 99.42 1,036,687,338.06 Total 8,346,657.41 100.00 1,286,406.13 1,042,707,561.67 100.00 1,036,705,398.73 (3)The accounts receivable at the report period don’t involve with the shareholder units holding over 5% (including 5%) voting power of the Company. (4) Top 5 units with an amount of account receivable Proportion among Relationship with the gross Name Amount Period the company accounts receivable (%) Customer I Non-affiliated customers 2,539,315.15 With 1 year 30.42 Customer II Non-affiliated customers 1,573,116.00 With 1 year 18.85 Customer III Non-affiliated 1,264,992.96 With 1 year 15.16 46 customers Customer IV Non-affiliated customers 486,006.60 With 1 year 5.82 Customer V Non-affiliated customers 457,042.70 With 1 year 5.48 Total 6,320,473.41 75.73 (5) No account receivable involving with affiliated parties in the report period. (6) No account receivable with confirmation terminated in the report period. 4. Advance payment (1) Listing of advance payment by age: Amount at the end of year Amount at the beginning of year Age Amount Proportion (%) Amount Proportion (%) 1-2 years 3,748.01 2.11 460,658.05 55.50 2-3 years 173,888.48 97.89 369,298.08 44.50 Total 177,636.49 100.00 829,956.13 100.00 (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 year Category Book balance Bad debt provision Amount Proportio Amount Proportion n (%) (%) 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 107,821,659.25 100.00 426,229.56 2.76 Other account receivable with single minor amount but withdrawal bed debt provision for single item Total 100.00 107,821,659.25 426,229.56 2.76 (Contd) 47 Balance at the begin of year Category Book balance Bad debt provision Amount Proportio Amount Proportion n (%) (%) 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 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: Amount at period-end Amount at period-begin Age Book balance Book balance Bad debt Bad debt Amount Proportio provision Amount Proportion provision n (%) (%) Within 1year 107,372,923.73 99.58 261.54 470,811.60 0.08 1,419.08 1-2years 0 - 22,923,284.64 4.12 68,719.86 2-3years 22,836.00 0.02 68.50 144,144.00 0.03 432.43 Over 3years 425,899.52 0.40 425,899.52 533,136,718.34 95.77 533,136,718.34 Total 107,821,659.25 100.00 426,229.56 556,674,958.58 100.00 533,207,289.71 (3) 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. (4) Top 5 units with an amount of other account receivable: Proportion among Relationship with the gross accounts Name Amount Period the company receivable - others (%) Administrator Non-related party 107,285,746.44 With 1 year 99.50 Total 107,285,746.44 99.50 6. Inventory (1) Inventory classification Amount at the end of year Items Book balance Depreciation reserve Book value 48 Amount at the end of year Items Book balance Depreciation reserve Book value Raw materials 10,580.00 10,580.00 Low value and easily worn-out articles 4,534,536.43 4,534,536.43 Merchandise inventory Total 4,545,116.43 4,545,116.43 (Contd) Amount at the begin of year Items Book balance Depreciation reserve Book value Raw materials 41,879,466.18 35,572,510.46 6,306,955.72 Low value and easily worn-out articles 24,498,798.60 13,626,271.72 10,872,526.88 Merchandise inventory 432,715.25 - 432,715.25 Total 66,810,980.03 49,198,782.18 17,612,197.85 (2) Changes of inventory depreciation reserve Amount Decrease in the current period Amount at the Amount at the end of Inventory category withdrawn in the beginning of year Carry-back Trans-sale year current period Raw materials 35,572,510.46 35,572,510.46 Merchandise inventory 13,626,271.72 13,626,271.72 Total 49,198,782.18 49,198,782.18 7. Long-term equity investment (1) Category of long-term equity investment Item Amount at year-begin Increase in the year Decrease in the year Amount at year-end Other equity investment 14,883,560.00 14,883,560.00 Less: impairment of long-term equity investment 12,263,719.50 12,263,719.50 Total 2,619,840.50 2,619,840.50 49 (2) Details of long-term equity investment Accountin Amount at Increase or Amount at Invested unit Investment cost g method year-begin decrease year-end Shenzhen Jinhuan Printing Co., Equity Ltd. * 14,883,560.00 14,883,560.00 -14,883,560.00 method Total 14,883,560.00 14,883,560.00 -14,883,560.00 (Contd) Interpretation to Proportion of Proportion of discrepancy Depreciation Cash shares held in voting power in between the Depreciation reserve withdrawn dividend Invested unit invested units invested units proportion of shares reserve at the current for this (%) (%) and voting power in period period invested units Shenzhen Jinhuan Printing Co., Ltd. * - - 12,263,719.50 -12,263,719.50 Total - - 12,263,719.50 -12,263,719.50 8. Investment real estate Investment real estate measured at cost Amount at year-begi Increase in the current Decrease in the Items n period current period Amount at year-end I. Total original value 129,872,063.32 129,872,063.32 Houses and buildings 129,872,063.32 129,872,063.32 Land use right - II. Total accumulated depreciation and accumulated amortization 108,476,887.08 970,746.60 109,447,633.68 Houses and buildings 108,476,887.08 970,746.60 109,447,633.68 Land use right - III. Total depreciation reserve Houses and buildings Land use right - VI. Total book value 21,395,176.24 Houses and buildings 21,395,176.24 50 Amount at year-begi Increase in the current Decrease in the Items n period current period Amount at year-end Land use right - Note: Depreciation and amortization in the Year was RMB 970,746.60. Explanation on investment real estate: decrease of investment real estate in the Period mainly due to the assets disposal by bankruptcy reorganization. 9. Fixed assets (1) Fixed assets Amount at year-b Decrease in the Amount at Items egin Increase in the current period current period year-end I. Total original book value 109,973,366.12 480,229.06 109,282,142.55 1,171,452.63 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 1,037,978.06 447,978.06 590,000.00 Electronic and other equipment 1,638,710.62 480,229.06 1,537,487.05 581,452.63 II. Accumulated Accrued this Newly added period depreciation Total accumulated depreciation 94,611,492.16 366,780.00 641,274.11 94,675,918.01 943,628.26 Including: Houses and buildings 91,380,925.10 227,290.16 91,608,215.26 - Machinery and equipment 1,278,540.74 324,794.90 1,603,335.64 - Means of transport 885,410.91 60,235.12 393,934.10 551,711.93 Electronic and other equipment 1,066,615.41 366,780.00 28,953.93 1,070,433.01 391,916.33 III. Total net book value 15,361,873.96 227,824.37 Including: Houses and buildings 11,673,654.34 Machinery and equipment 2,963,557.26 Means of transport 152,567.15 38,288.07 Electronic and other equipment 572,095.21 189,536.30 51 Amount at year-b Decrease in the Amount at Items egin Increase in the current period current period year-end IV. Total depreciation 2,391,674.23 2,391,674.23 reserve Including: Houses and buildings 1,580,000.00 1,580,000.00 Machinery and equipment 426,800.00 426,800.00 Means of transport - - Electronic and other equipment 384,874.23 384,874.23 V. Total book value 12,970,199.73 227,824.37 Including: Houses and buildings 10,093,654.34 Machinery and equipment 2,536,757.26 Means of transport 152,567.15 38,288.07 Electronic and other equipment 187,220.98 189,536.30 Note: Depreciation in the Year was RMB 641,274.11. (2) No asset with restricted ownership at the end of period (3) No fixed assets left idle temporarily at the end of period 10. Intangible assets (1) Intangible assets Increase in the current Decrease in the current Items Amount at year-begin period period Amount at year-end I. Original book value Total 43,143,099.08 5,271,000.00 43,143,099.08 5,271,000.00 Land use right 43,143,099.08 43,143,099.08 Trademark 5,271,000.00 5,271,000.00 II. Total accumulated amortization 19,414,395.90 862,862.04 20,277,257.94 Land use right 19,414,395.90 862,862.04 20,277,257.94 Trademark III.Total depreciation reserve Land use right 52 Trademark VI. Total book value 23,728,703.18 5,271,000.00 Land use right 23,728,703.18 Trademark 5,271,000.00 Note: Amount amortized in the current period is RMB 862,862.04. Trademark in the Period increased mainly due to the cash equivalents free of paid to creditor for replaced from majority shareholder Guocheng Energy. (2) No intangible asset with restricted ownership at the end of period 11. Details of asset depreciation reserve Decrease in the current period Amount at Accrued this Carry-bac Trans-sale Amount at Items year-begin period k year-end I. Reserve for bad and doubtful account 1,569,912,688.44 36,762.61 1,568,236,815.36 1,712,635.69 II. Inventory depreciation reserve 49,198,782.18 49,198,782.18 III. Impairment provision for financial assets available for sale IV. Impairment provision for investment held-to-maturity V. Depreciation reserve of held-to-maturity investment 12,263,719.50 12,263,719.50 VI. Impairment provision for investment real estate VII. Depreciation reserve of salable financial assets 2,391,674.23 2,391,674.23 VIII. Impairment provision for engineering materials IX. Impairment provision for construction in process X. Impairment provision for productive biological assets Including: Impairment provision for mature productive biological assets XI. Impairment provision for oil & gas asserts 53 Decrease in the current period Amount at Accrued this Carry-bac Trans-sale Amount at Items year-begin period k year-end XII. Impairment provision for intangible assets XIII. Impairment provision for goodwill XVI.Other Total 1,633,766,864.35 36,762.61 1,632,090,991.27 1,712,635.69 12. Short-term loan (1) Classification of short –term loan: Items Amount at the end of year Amount at the beginning of year Loan on security 223,574,555.28 Credit loan 132,221,552.65 Total 355,796,107.93 13. Accounts payable (1) Details of accounts payable Items Amount at the end of year Amount at the beginning of year Within 1 year 9,679,002.89 12,482,380.28 1-2 years 256,717.84 243,077.59 2-3 years Over 3 years 105,750,315.60 Total 9,935,720.73 118,475,773.47 (2)The accounts payable in the report period don’t involve with the shareholder units or amount of related party holding over 5% (including 5%) voting power of the Company. 14. Account received in advance (1) Details of account received in advance: Items Amount at the end of year Amount at the beginning of year Within 1 year 3,066,936.72 2,447,643.11 1-2 years 58,373.00 547,963.59 2-3 years 502,013.59 54 Over 3 years 10,664,592.85 Total 3,627,323.31 13,660,199.55 (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. 15. Wages payable Amount at year-be Increase in the Decrease in the Items gin current period current period Amount at year-end I. Salary, bonus, allowance, and subsidy 2,566,412.52 8,491,103.17 9,770,833.69 1,286,682.00 II. Employee benefit 167,553.99 167,553.99 III. Social insurance 437,880.37 437,880.37 IV. Public accumulation fund for housing construction 206,855.70 206,855.70 V. Dismiss welfare 1,417,433.00 109,184.46 1,296,675.29 229,942.17 VI. Trade union outlays and personnel education outlay 31,625,387.26 31,625,387.26 Total 3,983,845.52 41,037,964.95 43,505,186.30 1,516,624.17 Note: Dismiss welfare refers to the economic compensation for employees due to bankruptcy reorganization 16. Taxes payable Items Amount at the end of year Amount at the beginning of year Sales tax 67,744.68 451,932.63 VAT 596,142.27 54,432,329.55 Business income tax 93,002,221.34 33,753,125.02 Tax for maintaining and building cities 15,383.51 15,992.02 Extra charges of education funds 6,169.20 13,633.51 Individual income tax 31,172.70 14,851.01 Embankment charge 6,297.08 5,202.22 Housing property tax 53,122.79 7,293,642.64 Total 93,778,253.57 95,980,708.60 55 17. Interest payable Items Amount at the end of year Amount at the beginning of year Loan interest 230,575,685.75 Total 230,575,685.75 18. Other account payable (1) Details of other accounts payable Items Amount at the end of year Amount at the beginning of year Within 1 year 26,451,724.68 48,393,010.94 1-2 years 8,503,010.21 11,905,625.18 2-3 years 2,793,311.04 Over 3 years 368,183,647.51 Total 34,954,734.89 431,275,594.67 (2) Operational loan without interest RMB 6.5 million payable to shareholder Guocheng Energy Co., Ltd., a unit holding over 5% (including 5%) voting power of the Company. (3) Other payable with major amount over one year account age mainly refers to the operational interest-free loans RMB 6.5 million payable to Guocheng Energy Company and the quality guarantee received from suppliers (4) Explanation on other payable with major amount Name of the creditor Amount at year-end Nature or content Administrator and common benefits debt 26,103,724.68 Common benefits debt and others Guocheng Energy 6,500,000.00 loan without interest Total 32,603,724.68 19. Non-current liability due within one year Details of non-current liability due within one year Items Amount at the end of year Amount at the beginning of year Long-term loans due within one year 453,747,741.58 20. Other current liabilities Items Amount at the end of year Amount at the beginning of year Rent 521,639.87 Decoration fee 188,853.82 Others 1,620,656.38 56 Total 2,331,150.07 21. Accrued liabilities Amount at year-be Increase in the Decrease in the Amount at Items gin current period current period year-end 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 57 2013 年度财务报表附注 22. Share capital Amount at year-begin Increase/ decrease (+, -) Amount at year-end Shares Item New shares Shares transferred Amount Ratio issued presented Other Subtotal Amount Ratio of public reserve I. Restricted shares 1. State-owned shares - - - - - - - - - 2. State-owned legal person’s - - - - - - - - 3. Other domestic shares 37,531,015.00 - - - - -37,531,015.00 -37,531,015.00 - - Including: Domestic non-state-owned legal 37,531,015.00 - - - - -37,531,015.00 -37,531,015.00 - - person’s shares Domestic natural person’s - - - - - - - shares 4. Foreign shares - - - - - - - Including: Foreign legal person’s shares - - - - - - - Foreign natural person’s shares - - - - - 5. Senior executives’ shares 11,572.00 -210.00 -210.00 11,362.00 37,542,587.00 - - - -37,531,225.00 -37,531,225.00 11,362.00 - Total restricted shares II. Unrestricted shares 67 2013 年度财务报表附注 Amount at year-begin Increase/ decrease (+, -) Amount at year-end Shares Item New shares Shares transferred Amount Ratio issued presented Other Subtotal Amount Ratio of public reserve 1. RMB Ordinary shares 265,445,003.00 - - - 37,531,015.00 37,531,015.00 302,976,018.00 - 2. Domestically listed foreign shares (B share) 248,360,357.00 - - - - 210.00 210.00 248,360,567.00 - 3. Overseas listed foreign shares - - - - - 4. Others - - - - - - - 513,805,360.00 - - - - 37,531,225.00 37,531,225.00 551,336,585.00 - Total unrestricted shares 551,347,947.00 - - - - - - 551,347,947.00 - III Total shares 68 2013 年度财务报表附注 23. Capital reserve Increase in the current Decrease in the current Items Amount at year-begin period period Amount at year-end Capital (share)premium - - - - Other capital reserve 486,589,213.20 141,230,696.92 627,819,910.12 Including: Benefit from liability recombination 482,580,588.23 482,580,588.23 Other 4,008,624.97 141,230,696.92 145,239,321.89 Total 486,589,213.20 141,230,696.92 627,819,910.12 Explanation on capital reserve: Increased in the Period mainly due to the shares assignment RMB 135,840,297.18 paid for creditors from all shareholders and RMB 5,390,399.74 donated by majority shareholder Guocheng Energy 24. Surplus reserve Increase in the current Decrease in the current Items Amount at year-begin period period Amount at year-end 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 (1) Changes of retained profit Proportion of withdrawal Items Amount at this year Amount at last year or distribution (%) Undistributed profit of the previous year before adjustment -2,780,061,643.62 -2,727,618,409.33 - Total adjusted amount of retained profit at beginning of the Year (increased with +, decreased wit h-) - - Undistributed profit at the beginning of year in -2,780,061,643.62 -2,727,618,409.33 - 69 2013 年度财务报表附注 Proportion of withdrawal Items Amount at this year Amount at last year or distribution (%) the year after adjustment Add: Net profit classed under the parent company shareholders in the current period 1,575,223,894.89 -52,443,234.29 - Surplus reserves cover the deficit - - Other transfer-in - - Less: Withdrawal of legal surplus reserve - 10 Withdrawal of free surplus reserve - - Common stock dividend payable - - Common stock dividend transferred into share capital - - Others - Undistributed profit at the end of year -1,204,837,748.73 -2,780,061,643.62 26. Business income and business cost (1) Business income and business cost Items Amount at this year Amount at last year Major business income 247,257,421.93 268,120,962.51 Other business income 23,854,314.14 24,706,064.04 Total business income 271,111,736.07 292,827,026.55 Major business cost 234,590,294.49 256,767,642.99 Other business cost 8,635,334.96 6,297,452.41 Total business cost 243,225,629.45 263,065,095.40 70 2013 年度财务报表附注 (2) Major businesses (by industry) Amount at this year Amount at last year Items Business income Business cost Business income Business cost Bicycle and parts distribution 244,489,081.79 231,878,075.06 265,722,390.44 251,645,509.84 Lease management 2,768,340.14 2,712,219.43 2,398,572.07 5,122,133.15 Total 247,257,421.93 234,590,294.49 268,120,962.51 256,767,642.99 (3)Major businesses (by variety) Amount at this year Amount at last year Name Business income Business cost Business income Business cost OEM motor vehicle 185,317,419.20 173,522,086.39 210,501,591.13 199,445,532.80 OEM Bicycle 58,193,514.66 57,050,201.15 51,856,029.98 49,016,414.60 CBC Bicycle 60,784.64 25,279.96 137,418.98 157,125.83 Others 917,363.29 1,280,507.56 3,227,350.35 3,026,436.61 Lease management 2,768,340.14 2,712,219.43 2,398,572.07 5,122,133.15 Total 247,257,421.93 234,590,294.49 268,120,962.51 256,767,642.99 (4) Main Business (by areas) In RMB Areas Amount at this year Amount at last year Business income Business cost Business income Business cost Shenzhen 4,749,881.14 4,434,223.71 2,398,572.07 5,122,133.15 Non-local 242,507,540.79 230,156,070.78 265,722,390.44 251,645,509.84 Total 247,257,421.93 234,590,294.49 268,120,962.51 256,767,642.99 (5) Business income of the Company’s top five customers Period Total business income of the Company’s Proportion among the business income in 71 2013 年度财务报表附注 top five customers the same period (%) 205,810,690.34 2013 75.91 2012 232,180,069.80 79.34 27. Business tax and surcharge Items Amount at this year Amount at last year Sales tax 1,317,642.75 1,210,412.15 Tax for building cities 239,184.73 205,061.94 Educational surtax 189,101.40 146,472.77 Total 1,745,928.88 1,561,946.86 Note: taxation standards for vary business tax and surcharge found more in V. Tax 28. Sales expenses Items Amount at this year Amount at last year salary 3,420,253.11 4,380,392.34 Market promotion 1,258,938.01 249,816.85 AD charge 454,160.00 904,000.00 Business travel 443,084.40 530,194.10 Other 1,146,992.80 955,688.89 Total 6,723,428.32 7,020,092.18 29. Management expenses Items Amount at this year Amount at last year Salary 6,397,040.34 7,086,918.55 Charge of depreciation amortized 1,505,441.25 3,193,573.07 Reforming cost 70,732,704.23 4,687,208.05 Taxes 1,260,217.97 1,910,817.20 Entertainment charge 784,633.00 1,136,827.50 Charge for share listed 913,717.19 467,448.22 Other 4,221,325.76 6,661,574.02 72 2013 年度财务报表附注 Items Amount at this year Amount at last year Total 85,815,079.74 25,144,366.61 30. Financial expenses Items Amount at this year Amount at last year Interest expenditure - 48,407,705.61 Less: interest income 1,353,603.77 225,219.87 Gains/losses from exchange 12,474.33 2,907,691.69 Other 41,695.44 47,654.12 Total -1,299,434.00 51,137,831.55 31. Asset depreciation loss Items Amount at this year Amount at last year Loss from doubtful accounts 36,762.61 98,924.25 Loss from inventory depreciation Depreciation loss of salable financial assets Depreciation loss of held-to-maturity investment Depreciation loss of long-term equity investment - - Depreciation loss of investment real estate - - Depreciation loss of fixed assets - - Depreciation loss of engineering materials - - Depreciation loss of engineering under construction - - Depreciation loss of productive biological assets - - Depreciation loss of oil-gas assets - - 73 2013 年度财务报表附注 Items Amount at this year Amount at last year Depreciation loss of intangible assets - - Depreciation loss of business credit - - Others - - Total 36,762.61 98,924.25 32. Investment income Details of investment income Items Amount at this year Amount at last year Long-term equity investment income calculated by cost Long-term equity investment income calculated by equity Investment income from disposal of long-term equity 72,934,048.27 investment Investment income obtained during the transactional financial assets held Investment income obtained during held-to-maturity investment held Investment income obtained during financial assets available for sales held Investment income obtained from disposal of transactional financial assets Investment income obtained from disposal of held-to-maturity investment Investment income obtained from disposal of financial assets available for sale etc. Other Total 72,934,048.27 33. Non-operating income Amount included in the Items Amount at this year Amount at last year current non-recurring profit and loss Amount obtained from disposing non-current 74 2013 年度财务报表附注 1,611,736,449.40 1,611,736,449.40 assets Benefit from debt recombination 333,713,048.78 333,713,048.78 Non-monetary assets exchange gains Donations accepted Government subsidies Fine and penalty income Others 105,982.72 3,213,710.66 105,982.72 Total 1,945,555,480.90 3,213,710.66 1,945,555,480.90 34. Non-operating expenditure Amount included in the Items Amount at this year Amount at last year current non-recurring profit and loss Total loss from disposal of non-current assets 45,935.56 45,935.56 Including: Loss from disposal of fixed assets 45,935.56 45,935.56 Loss from disposal of intangible assets Accrued liability 284,397,067.92 284,397,067.92 Donations to external Fine and overdue fine Others 52,047.00 139,100.01 52,047.00 Total 284,495,050.48 139,100.01 284,495,050.48 35. Income tax expenses Items Amount at this year Amount at last year 93,000,059.74 Current income tax calculated by tax law and relevant 75 2013 年度财务报表附注 regulations Adjustment of deferred income tax 93,000,059.74 Total 36. Basic earning per share and diluted earning per share The basic earnings per share are the results to divide the current net profits belonging to the Company’s common stock holders by the weighted average of the issued common stock. The number of newly issued ordinary shares should be calculated and determined issued from the receivable consideration day (It is generally the issue date of the stock) in accordance with the specific terms of the contract. The numerator of the diluted earnings per share should belong to the current net profits of the Company’s ordinary shareholders, which is confirmed after adjusting the following factors: (1) the interests of dilutive potential ordinary shares that have been confirmed as the expenses; (2) the earnings or costs generated when converting the diluted potential ordinary shares; and (3) the impact of above adjustments to the related income taxes. The denominator of the diluted earnings per share is equal to the sum of below two items: (1) the weighted average of the ordinary shares that the parent company has issued in the basic earnings per share; and (2) the weighted average of the ordinary shares increased by converting the assumed dilutive potential ordinary shares into the ordinary share. When calculating the weighted average of the ordinary shares increased by converting the diluted potential ordinary shares into the issued ordinary shares, assume the previously issued dilutive potential ordinary shares are converted at the beginning of the year; and assume the dilutive potential ordinary shares issued in the current year are converted on the issue date. (1) Basic EPS and diluted EPS Amount at this year Amount at last year Profit in the reporting period Basic earning per diluted earning per Basic earning per diluted earning per share share share share Net profit classed under the Company’s common shareholders 2.8570 2.8570 -0.0951 -0.0951 Net profit classed under the -0.0014 -0.0014 -0.1007 -0.1007 76 2013 年度财务报表附注 Company’s common shareholders after deduction of non-frequent gain and loss (2)Calculation process of earning per share and diluted earning per share The Company has no potential ordinary shares possessing dilution in the Period, thus, diluted EPS equals to basic EPS ①Current net profit attributable to common shareholders in calculation of basic EPS: Items Amount at this year Amount at last year Net profit attributable to common shareholders 1,575,223,894.89 -52,443,234.29 Including: net profit attributable to on-going operation 1,575,223,894.89 -52,443,234.29 Net profit attributable to discontinuing operation Net profit attributable to common shareholders after deduction of non-recurring gains/losses -760,014.40 -55,517,844.94 Including: net profit attributable to on-going operation -760,014.40 -55,517,844.94 Net profit attributable to discontinuing operation ②Denominator is the weighted common shares issued in calculation of the basic EPS: Items Amount at this year Amount at last year Number of common shares outstanding at year-beginning 551,347,947.00 551,347,947.00 Add: Weighted common shares outstanding in the Year Less: Weighted common shares buy-back in the Year Number of common shares outstanding at year-end 551,347,947.00 551,347,947.00 37. Notes to items in cash flow statement (1) Other cash received related with business activities Items Amount at this year Amount at last year Rent, electric rate and water rate 23,856,389.01 23,515,168.25 77 2013 年度财务报表附注 Items Amount at this year Amount at last year Other current accounts 7,922,040.75 2,095,550.10 Total 31,778,429.76 25,610,718.35 (2)Other cash paid related with business activities Items Amount at this year Amount at last year Water and electricity expense 5,385,307.52 5,907,879.94 Restructuring costs 14,444,965.40 4,687,208.05 Expenses from AD promotion activities in market sales phase 3,271,397.32 2,611,520.37 Management expenses of listed fee, board of director’s expenses and office expenses etc. 5,085,457.84 4,623,159.95 Expenses for property maintenance 2,650,243.01 533,988.50 Other current accounts 2,167,444.26 531,777.13 Total 33,004,815.35 18,895,533.94 (3) Cash paid related for other investment activities Items Amount at this year Amount at last year Cash decreased from disposal of subsidiary 1,233,179.43 Total 1,233,179.43 (4) Cash received from other financing activities Items Amount at this year Amount at last year Donation replacement amount received from Shenzhen Guocheng Energy Investment Development Co., Ltd. 5,390,399.73 Loan from Shenzhen Guocheng Energy Investment 35,000,000.00 78 2013 年度财务报表附注 Items Amount at this year Amount at last year Development Co., ltd. Total 5,390,399.73 35,000,000.00 (5) Cash paid related for other financing activities Items Amount at this year Amount at last year Loans paid to Shenzhen Guocheng Energy Investment Development Co., Ltd. 35,000,000.00 Total 35,000,000.00 38. Supplementary data of cash flow statement (1)Supplementary data of cash flow statement Items Amount at this year Amount at last year ①Cash flow for business activities transferred from net profit: Net profit 1,575,858,760.02 -52,126,619.65 Add: Asset depreciation reserve 36,762.61 98,924.25 Fixed asset depreciation, oil-gas asset depletion, and productive biological asset depreciation 1,627,072.67 3,785,277.00 Amortization of intangible assets 862,862.04 862,862.04 Amortization of long-term fees to be apportioned - Loss from disposal of fixed assets, intangible assets and other long-term assets (filled with “-” for benefit) -1,611,690,513.84 - Loss from fixed assets reported discarded (filled with “-” for benefit) - Loss from change of fair value (filled with “-” for benefit) Finical cost (filled with “-” for benefit) 25,831,645.36 79 2013 年度财务报表附注 Items Amount at this year Amount at last year Investment loss (filled with “-” for benefit)) -72,934,048.27 - 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) 13,067,081.42 -3,301,769.57 Decrease of operating items receivable (filled with “-” for increase) 8,054,676.92 -2,206,224.77 Increase of operating items payable (filled with “-” for decrease) 56,907,178.57 20,029,331.79 Others - Net cash flow from business activities -28,210,167.86 -7,026,573.55 ②Important 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 ③Net change of cash and cash equivalent: Balance at year-end of cash 26,834,171.59 52,395,360.86 Less: Balance at year-begin of cash 52,395,360.86 24,546,601.39 Add: Balance at year-end of cash equivalent - Less: Balance at year-begin of cash equivalent - Net increase of cash and cash equivalent -25,561,189.27 27,848,759.47 (2) Composition of cash and cash equivalent Items Amount at the end of year Amount at the beginning of year 80 2013 年度财务报表附注 Items Amount at the end of year Amount at the beginning of year ①Cash 26,834,171.59 52,395,360.86 Including: Cash on hand 49,992.08 114,315.34 Bank deposit available for payment anytime 26,784,179.51 52,281,045.52 Other monetary fund available for payment anytime Due from China Central Bank for payment Due from banks Call loans to banks ②Cash equivalent Including: Bond investment coming due within 3 months ① Balance at year-end of cash and cash equivalent 26,834,171.59 52,395,360.86 VIII. Related parties and related transactions 1. Parent company of the Company Parent company Relationship Type Register place Legal Rep. Business nature Shenzhen Guocheng Controlling LLC Shenzhen Ji Hanfei Investment Energy Investment shareholder (wholly-owned industrial, Development Co., Ltd. legal corporation) domestic business and material supply and marketing industry (excluding the monopolized commodity under special control) (Cont.) 81 2013 年度财务报表附注 Ratio of shareholding Ratio of voting rights Ultimate Parent company Register place holds in the enterprise hold in the enterprise controller of the Organization code (%) (%) enterprise Shenzhen Guocheng RMB 70 million 11.52 11.52 Ji Hanfei 77411579-2 Energy Investment Development Co., Ltd. 2. Subsidiary of the Company Found more in 1. Subsidiary in VI. 3. Related-party transaction (1) Donations received On 23 December 2013, in line with the cash donation agreement signed between the Company and Shenzhen Guocheng Energy Investment Development Co., Ltd. (Guocheng Energy), Guocheng Energy voluntary donates RMB 5.3904 million to the Company for discharge creditors with equal assets of 70 percent equity of EMMELLE Company held by the Company, seven trademarks owned by CBC and office electronic equipment of routine operations replaced. (2) Remuneration for key managements (directors, supervisors and senior executives) Section of annual remuneration Current Year Last Year Total Including: (numbers in every amount section) [RMB 0.2 million above] [under RMB 0.1 million] 4. Account payable/receivable to/from related parties Account payable to related parties Related parties Item Closing amount Opening amount Shenzhen Guocheng Energy Investment Development Co., Ltd. Other payables 6,500,000.00 6,500,000.00 IX. Contingency The Company has no major contingencies need to disclosed up to 31st December 2013 X. Commitments The Company has no major commitments need to disclosed up to 31st December 2013 82 2013 年度财务报表附注 XI. Events after balance sheet date 1. On December 27, 2013, the company completed the reorganization plan and terminated the bankruptcy proceedings, and the manager took charge of the unaccomplished matter of the reorganization program. In March, 2014, the manager disposed the remainder of the non-essential assets of the reorganization, and the funds obtained from the disposition will be used to pay off the creditors. 2. The impact generated by implementing the accounting standard newly issued or revised by the Ministry of Finance from 1st, July, 2014 In the beginning of 2014, the Ministry of Finance issued the "Accounting Standards for Business Enterprises No. 39 - Fair Value Measurement", "Accounting Standards for Business Enterprises No. 30 - Presentation of Financial Statements (revision 2014)”, "Accounting Standards for Business Enterprises No. 9 - Employee Remuneration (Revision 2014)", "Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements (Revision 2014)”, "Accounting Standards for Business Enterprises No. 40 - Jointly Venture Arrangement", "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments (Revision 2014) " and "Accounting Standards for Business Enterprises No. 41 - Interests Disclosure in Other Entities" respectively based on Cai Kuai [2014] No. 6, 7, 8, 10, 11, 14, 16, which are required to be implemented in all the enterprises which carry out the Accounting Standards for Business Enterprises from 1st, July, 2014, and encourage the companies listed overseas to perform in advance. Since July 1st, 2014, the Company will start to implement the above-mentioned criteria and change the relevant accounting policies in accordance with the provisions of the above-mentioned criteria. The followings are the main contents of the changes in accounting policies: ①Accounting Standards for Business Enterprises No. 9 - Employee Remuneration (Revision 2014)" completely specified the accounting treatment of post-employment benefits; the post-employment benefit plans are classified as defined contribution plans and defined benefit plans. The defined contribution plans are the post-employment benefit plans that the enterprises no longer assume the obligation after paying the fixed charges to the separate funds; the defined benefit plans are the post-employment benefit plans except the defined contribution plans. The enterprises shall confirm the amounts to be paid as the liabilities by calculating based on the defined contribution plans when the employees provide services for the enterprises, and reckon it in the current profit and loss or the associated asset costs; for the defined benefit plans, the enterprises should calculate the obligations generated by the defined benefit plans by adopting the unit method for the expected cumulative benefits and in accordance with the appropriate assumptions, attribute them to the time that the employees provide services according to the formula determined by the defined benefit plans, and reckon them in the current profit and loss, while the net indebtedness or the changes generated by the net indebtedness by re-calculating the defined benefit plans shall be reckoned in other consolidated income. In addition, the revised criteria also enriched the accounting treatment standards for the short-term remuneration, replenished the accounting treatment provisions for the dismission welfare, and introduced other benefits for the permanent staff so as to completely standardize the accounting treatment of employees’ benefits. ② "Accounting Standards for Business Enterprises No. 30 - Presentation of Financial Statements (revision 2014)” further standardizes the presentation of the financial statements, and completely revised the going concern assessment, the normal operating cycle, and the replenishment for the notes and disclosure contents, and defines the "The further information of profit statement of which the costs are classified in accordance with the nature" as a mandatory disclosure. The standard requires to divide the other consolidated incomes into two categories in the statements of other consolidated incomes: (1) The follow-up projects will not be reclassified to the profits or losses; (2) The follow-up projects may be reclassified to the profits or losses when meet the specified conditions. ③The consolidation scope of the consolidated financial statements should be confirmed on the basis of control in accordance with 83 2013 年度财务报表附注 "Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements (Revision 2014)”. The standard establishes a single model to determine the existence of control, and specifies the three elements required to form the control to the investees: (1) possesses the power over the investees; (2) enjoys the changeable returns by participating in the relevant activities of the investees; (3) be capable of utilizing the power over the investees to affects its return amount. On this basis, this standard gives more guidelines for judging the control power than the one. In accordance with the provisions of this standard, the management of the Company needs to use the significant judgments to determine the control power over the investees. ④"Accounting Standards for Business Enterprises No. 40 - Jointly Venture Arrangement" standardizes the affirmation, classification and accounting of one arrangement to the joint control with two or more participants. The joint venture arrangements are classified as pooling of interests and cooperative enterprises in accordance with the rights and obligations of the joint venture parties. The joint operations refer to the joint venture arrangements that the joint venture parties enjoy the underlying assets and assume the relevant liabilities. The cooperative enterprises refer to the joint venture arrangements that the joint venture parties only enjoy the rights of the net assets of this arrangement. This standard requires the joint venture parties to calculate the investments of the cooperative enterprises by using the equity method, and affirm the assets (including the share of any assets held jointly), its liabilities (including the share of any liabilities incurred jointly), the incomes (including the share of the incomes generated by the selling and output of the joint operations, and the expenses (including the share of the expenses occurred during the joint operations). ⑤ "Accounting Standards for Business Enterprises No. 39 - Fair Value Measurement" standardizes the definition of fair value, specifies the method of fair value measurement, and divides the fair value measurement into three levels in accordance with the input value used by the fair value measurement, and makes detailed requirements to the disclosure of relevant information of the fair value measurement. However, this standard does not change the requirements of other accounting standards about when the fair value measurement should be used. ⑥The standard scope of "Accounting Standards for Business Enterprises No. 2 - Long-term Equity Investments (Revision 2014)" has been reduced compared with the original standards, which only specifies the recognition and measurement of the long-term equity investments in the subsidiaries, cooperative enterprises, and joint ventures. The long-term equity investments that the investors do not have control, joint control or significant influence to the invested units shall belong to the standard scope of the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of the Financial Instruments". It also introduces a number of other important changes, including emphasizing that the "book value" followed by the financial accounting of long-term equity investments formed by business merger under the same control refers to the share of the book value of the combined party’s equities in the consolidated financial statement of the final control party"; clarify the other changes of the owner's equities except for the net profits and losses, other comprehensive incomes and profit distribution of the investors to the invested units, adjusts the book value of the long-term equity investments and reckons in the owners' equities; adjusts the joint requirements for converting the accounting methods; adds the management to investments on the joint ventures; introduces the option to the fair value measurement of the joint venture investments held by the subordinate investors. ⑦ "Accounting Standards for Business Enterprises No. 41 - Interests Disclosure in Other Entities" is appropriate for the disclosure of interests in the subsidiaries, joint arrangements, joint ventures and the structuring entities not included in the consolidated financial statements. The standard requires to disclose the significant judgments and assumptions of the control of implementation, joint control or significant influence to other entities, and the changes to these judgments and assumptions; and respectively specifies the detailed requirements to the disclosure about the interests in the subsidiaries, the interests in the joint arrangements or joint ventures, and the interests in the structuring entities not included in the consolidated financial statements. The information disclosed according to the requirements of this standard shall help the users of the financial statements to evaluate the interests’ nature of the Company in other entities and the relevant risks, as well as the impacts of these interests on the Company's financial condition, business performance and cash flows. After this standard goes into effect, the information disclosed before the implementation date of this standard in the Company's comparative financial statements shall be adjusted in accordance with the provisions of this standard (Except for the disclosure of the structuring entities not included in the consolidated financial statements). 84 2013 年度财务报表附注 XII. Explanation on other major events 1. Bankruptcy reorganization (1) Application and acceptance of bankruptcy reorganization On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guocheng Energy Investment 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 Guocheng 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. (2) Declaration and confirmation of the claims On July 17th, 2013, the Shenzhen Intermediate People's Court issued (2012) Shen Zhong Fa Po Zi No.30-4 “Civil Ruling Paper”, which confirmed the claims of 48 creditors, the total amount of the claims is 1,663,681,044.97 Yuan, including 1 claim paid for the employees with amount of 10,175,420.00 Yuan, 3 claims for tax payment with amount of 92,075,600.05 Yuan, and 47 ordinary claims with amount of 1,561,430,024.92 Yuan. On December 23rd, 2013, Shenzhen Intermediate People's Court issued (2012) Shen Zhong Fa Po Zi No.30-9 “Civil Ruling Paper”, which supplemented and confirmed five claims; the total amount of the claims is 232,801,657.06 Yuan. Until the end of the reporting period, the amount of confirmed claims has reached 2,217,034,809.27 Yuan, including priority claims of 102,251,020.05 Yuan, ordinary claims of 1,794,231,681.98 Yuan, and estimated claims of 320,552,107.24 Yuan. (3) The main contents and the implementation of the reorganization plan On November 5th, 2013, Shenzhen Intermediate People's Court issued (2012) Shen Zhong Fa Po Zi No.30-6 “Civil Ruling Paper”, which approved the reorganization plan of Shenzhen China Bicycle Company (Holdings) Co., Ltd. and terminated the bankruptcy proceedings, and the Company enters the execution phase of reorganization plan. The main contents of the reorganization plan are as follows: A, The management plan According to the actual situation of the company, the management plan consists of three parts, the first is to dispose the existing prime assets, the second is to reserve the operational production to maintain the sustainable operation ability, and the third is to introduce the recombination party and inject good quality assets. a, Disposal of prime assets 1) On August 15th, 2013, Guangdong Yingna Auction Trade Co., Ltd. (hereinafter referred to as" Yingna Auction Trade ") has sold 22 machines and equipments of CBC by auction, with starting price at 14,183.33 Yuan and the transaction price at 26,000 Yuan, the buyer is Li Ronghua. The buyer has concluded and signed the sales confirmation with Yingna Auction Trade at the auction site and 85 2013 年度财务报表附注 has paid off the transaction amount within the stipulated time. 2) On August 15th, 2013, Yingna Auction Trade has sold two housing estates of Sichuan Branch Company of CBC by auction, with starting price at 1,547,021 Yuan and the transaction price at 1,810,000 Yuan, the buyer is Tang Jun. The buyer has concluded and signed the sales confirmation with Yingna Auction Trade at the auction site and has paid off the transaction amount within the stipulated time. This matter has been judged and affirmed by Shenzhen Intermediate People's Court (2012) Shen Zhong Fa Po Zi No. 30-5 Civil Ruling Paper. 3) On October 16th, 2013, Shenzhen Land & Real Estate Exchange Center (hereinafter referred to as "Exchange Center") has sold the land usage right of No. 08210004 of Longhua Industrial Park and the above-ground structures by public auction, with starting price at 467,567,073 Yuan and the transaction price at 1,607,560,000 Yuan, the buyer is Shenzhen Municipal Land Reserve Center. The buyer has concluded and signed the sales confirmation with the trading center at the auction site and has paid off the transaction amount within the stipulated time. This matter has been judged and affirmed by Shenzhen Intermediate People's Court (2012) Shen Zhong Fa Po Zi No. 30-8 Civil Ruling Paper. 4) On October 18th, 2013, the trading center has sold the first floor from room 102 to 106 of Zhonghua Garden building & podium by auction, with starting price at 17,821,593.6 Yuan and the transaction price at 18,020,000 Yuan, the buyer is Guo Yinhuan. The buyer has concluded and signed the sales confirmation with the trading center at the auction site and has paid off the transaction amount within the stipulated time. This matter has been judged and affirmed by Shenzhen Intermediate People's Court (2012) Shen Zhong Fa Po Zi No. 30-7 Civil Ruling Paper. On November 22nd, 2013, the trading center has sold the third floor from room 301 to 308 of Zhonghua Garden building & podium by auction, with starting price at 9,320,917.12 Yuan and the transaction price at 12,400,000 Yuan, the buyer is Deng Shaojun. The buyer has concluded and signed the sales confirmation with the trading center at the auction site and has paid off the transaction amount within the stipulated time. On December 13th, 2013, the trading center has sold the second floor from room 201 to 208 of Zhonghua Garden building & podium by auction, with starting price at 20,499,221.12 Yuan and the transaction price at 20,499,221.12 Yuan, the buyer is Shenzhen Chengde Investments Co., Ltd. The buyer has concluded and signed the sales confirmation with the trading center at the auction site and has paid off the transaction amount within the stipulated time. b, Reserve the business assets To keep the company’s sustainable operation ability and maintain the creditor's interests before the reorganization party inject any assets, the reorganization plan stipulates that the Company reserve 70% stock rights of Shenzhen Emmelle Industry Co., Ltd. (hereinafter referred to as "Emmelle"), seven trademarks held by CBC, and the necessary office electronic equipments for daily operations. The estimated value of these retained assets is 5,390,399.73 Yuan, the major shareholder Guocheng Energy shall provide cash with the equal amount to pay off the creditors. On December 23rd, 2013, Guocheng Energy has paid the above-mentioned funds of 5,390,399.73 Yuan to the Company, and CBC has paid these funds to the bank account of the manager on December 24th, which have been used to pay off the creditors. c, Introduce the recombination party and inject the assets with high quality The company doesn’t have the reorganization party at the moment, the future recombination party of the company must meet the following requirements: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. B, The adjustment to the investors’ interests In order to reflect the principles that the stakeholders share responsibility for the losses on debt restructuring, all shareholders of CBC release 8% of their shares for free. Thereinto, the largest shareholder Guocheng Energy and the second largest shareholder Zhuorun Company increased the shares to be released freely by 2% to 10% for the liquidation of the debts. The above-mentioned released 86 2013 年度财务报表附注 shares shall be calculated by the delisting price of CBC on 12th, November, 2012 (A stock is 4.19 Yuan per share, B stock is HK $ 1.56 per share), which can increase the amortization rate of common claims by 6.31%. According to the reorganization plan, the company shall pay off the debts by transferring the shares of the shareholders, planning to totally transfer 46,279,200 shares of the company’s stock, which takes the proportion of 8.39% of the total stock. Thereinto, the shareholders of A stock totally transferred 26,416,801 shares with transfer price at 4.19 Yuan per share; the shareholders of B stock totally transferred 19,862,399 shares with transfer price at 1.56 HKD per share, B stock is calculated at 0.8118 which is the middle rate between HKD and RMB on the delisting date, totally pay off the debts of 135,840,297.18 Yuan. On 25th, December, 2013, the registered company has transferred the company’s stock of 21,221,900 shares to the creditors who have provided the correct security account, which takes the proportion of 3.85% of the total stock. Thereinto, 14,571,689 shares of A stock, 6,650,211 shares of B stock, and the unpaid 10,485,611 shares are deposited to the special account of Shenzhen China Bicycle Company (Holdings) Co., Ltd. for disposing the property of bankruptcy and supervised by the manager. C. The project for paying off the debts 1)The employees’ claims The employees’ claims paid by the major shareholder –Guocheng Energy and the relevant unpaid social insurance expenditures shall be paid off by cash within six months since the date that the reorganization plan is approved. 2)Tax debt The tax debt shall be paid off by cash within six months since the date the reorganization plan is approved. 3)The ordinary debt The ordinary debt paid by liquidating the assets shall be paid off by cash within six months since the date the reorganization plan is approved. The shares released by the contributors shall be allocated to the ordinary creditors within six months since the date the reorganization plan is approved. Each ordinary debt of 100 Yuan shall get 1.23 share of A stock and 0.94 share of B stock of CBC. The creditors who don’t accept the stock or cannot accept the stock in accordance with relevant regulations shall be paid off by the administrator based on the average price of the liquidation after the stock of the company resuming trading. The relevant taxes and dues of stock realization shall be assumed by the creditors, and the administrator doesn’t accept the delegation of the creditors about liquidating the stock. Up to the end of the reporting period, the administrator has totally allocated cash of 1,099,995,488.93 Yuan. Thereinto, the employees’ claims of 10,175,420 Yuan was paid off by cash; the tax debt of 92,075,600.05 Yuan was paid off by cash; the ordinary debt of 1,794,231,681.98 Yuan was paid by cash based on 47.18% of the debt amount, totally allocated cash of 846,509,579.71 Yuan, and plus 1.23 share of A stock and 0.94 share of B stock of CBC per ordinary debt of 100 Yuan (totally allocated 22,073,258 shares of A stock and 16,851,721 shares of B stock of CBC), the compensation rate of the ordinary debt this time is 53.52%; the anticipated claims of 320,552,107.24 Yuan shall be deposited the quota in accordance with the compensation rate of the ordinary debt, including capital of 151,234,889.17 Yuan, A stock of 3,943,543 shares, and B stock of 3,010,678 shares. The surplus undistributed cash shall be deposited to the special account and managed by the administrator. (4) The reorganization costs and the commonly benefited debts A. The costs during the reorganization totally are 75,419,900 Yuan, including the economy compensation for the employees of 31,521,700 Yuan, the social insurance fee of 5,167,000 Yuan, the remuneration for the administrator of 12.5 million Yuan, the costs for law, finance, and tax advisor for reorganization of 18,276,000 Yuan (estimated), the lawsuit execution fee for reorganization of 7,530,000 Yuan, and costs for the administrator’s daily duties of 425,200 Yuan. 87 2013 年度财务报表附注 B. Commonly benefited debts: it is reserved until 31st, December, 2014 in the reorganization plan, if the recombination party implements the reorganization before this date, the company shall add the commonly benefited debts to the allocation of the creditors. The operating costs predicted by the administrator sum to 16,589,500 Yuan. (5) The reorganization plan has been implemented On 27th, December, 2013, Shenzhen Intermediate People's Court issued (2012) Shen Zhong Fa Po Zi No.30-10 “Civil Ruling Paper”, ruled that the reorganization plan of the Company has been implemented and the bankruptcy proceedings of the Company have been terminated. To clarify the responsibilities between the administrator and the company after the bankruptcy proceedings being terminated and ensure the follow-up work of the reorganization to be launched effectively, the administrator consigned the th “Memorandum of Handover” with the company on 20 , January, 2014. Except for the relevant assets reserved for maintaining the company’s sustainable operation ability before the recombination party injecting assets, the non-essential assets haven’t been disposed would be disposed by the administrator, and the obtained funds would be distributed to the creditors; the reorganization plan would keep the allocations reserved for the anticipated creditor's rights in the administrator’s account, and the administrator is responsible to allocate to the declared and confirmed creditors. 2. Sustainable operation On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guocheng 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 Guocheng 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. Subsequently, 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. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of CBC closed down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. 88 2013 年度财务报表附注 XIII. Note of main item of financial statement of parent company: 1. Account receivables (1) Disclosed by category Closing amount 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 245,382.00 combination 100.00 Account receivable with single minor amount but withdrawal bed debt provision for single item Total 245,382.00 100.00 (Cont.) Opening amount 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 1,034,297,021.5 1,033,282,124.9 combination 0 100.00 0 99.90 Account receivable with single minor amount but withdrawal bed debt provision for single item - - - - 89 2013 年度财务报表附注 Opening amount Category Book balance Bad debt provision Proportion Proportion Amount Amount (%) (%) 1,034,297,021.5 1,033,282,124.9 Total 0 100.00 0 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: Closing amount Opening amount Age Book balance Bad debt Book balance Bad debt Proportion Proportion Amount Amount (%) provision (%) provision Within 1year 245,382.00 100.00 - - - - 1-2 years - - - - - - 2-3 years - - - - - - Over 3 years 1,034,297,021.50 100.00 1,033,282,124.90 Total 245,382.00 100.00 1,034,297,021.50 100.00 1,033,282,124.90 (3) 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. 2. Other receivables (1) Disclosed by categories Closing amount Category Book balance Bad debt provision Amount Proportion Amount Proportion (%) (%) Other account receivable with single major amount and 90 2013 年度财务报表附注 withdrawal bed debt provision for single item Other account receivable withdrawal bad debt provision by combination 116,990,372.76 100.00 Other account receivable with single minor amount but withdrawal bed debt provision for single item Total 116,990,372.76 100.00 (Cont.) Opening amount 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 Account receivable withdrawal bad debt provision by 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 Explanation on the category of other accounts receivable: 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: Balance at period-end Balance at period-begin Age Book balance Bad debt Book balance Bad debt Amount Proportion Amount Proportion (%) provision (%) provision 91 2013 年度财务报表附注 Balance at period-end Balance at period-begin Age Book balance Bad debt Book balance Bad debt Amount Proportion Amount Proportion (%) provision (%) provision Within 1year 116,990,372.76 100.00- 13,154,669.62 2.30 742.45 1-2 years 25,594,082.01 4.48 68,701.35 2-3 years 144,144.00 0.03 432.43 Over 3years 532,095,882.51 93.19 518,008,006.52 Total 116,990,372.76 100.00- 570,988,778.14 100.00 518,077,882.75 (3) The other 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. (4) Top 5 units with an amount of other account receivable: Proportion among the Relationship with the Name Amount Period total other accounts company receivable - others (%) Non-affiliated Administrator company 107,285,746.44 Within 1year 91.70 Related company 9,704,626.32 EMMELLE Within 1year 8.30 Total 116,990,372.76 100 3. Long-term equity investment (1) Category of long-term equity investment Amount at year-begi Increase in the Decrease in the Amount at Items n current period current period year-end Investment for subsidiary 8,768,727.60 10,379.73 8,768,727.60 10,379.73 Other equity investment 14,883,560.00 14,883,560.00 Less: Impairment provision of 21,032,447.10 21,032,447.10 92 2013 年度财务报表附注 Amount at year-begi Increase in the Decrease in the Amount at Items n current period current period year-end long-term equity investment Total 2,619,840.50 10,379.73 2,619,840.50 10,379.73 (2) Details of long-term equity investment Calculating Investment Increases and decr Invested company Opening amount Closing amount method cost eases Shenzhen EMMELLE Industrial Co.,Ltd Cost method 1,400,000.00 1,400,000.00 -1,389,620.27 10,379.73 Shenzhen Anjule Property Management Co.,Ltd Cost method 2,000,000.00 2,000,000.00 -2,000,000.00 China Bicycle(Hong Kong) Co.,Ltd Cost method 5,350,000.00 5,350,000.00 -5,350,000.00 China Bicycle(International) Co.,Ltd Cost method 18,727.60 18,727.60 -18,727.60 Equity Shenzhen Jinhuan Printing Co.,Ltd method 14,883,560.00 14,883,560.00 -14,883,560.00 Total 23,652,287.60 23,652,287.60 -23,641,907.87 10,379.73 (Cont.) Explanation on discrepancy between share Provision Share Percentage of proportion in for (asset) proportion voting rights in invested Depreciation depreciati in invested Cash dividend Invested company invested company and reserve on of company company (%) percentage of current (%) voting rights in period invested company Shenzhen EMMELLE Industrial Co.,Ltd 70% 70% 93 2013 年度财务报表附注 Explanation on discrepancy between share Provision Share Percentage of proportion in for (asset) proportion voting rights in invested Depreciation depreciati in invested Cash dividend Invested company invested company and reserve on of company company (%) percentage of current (%) voting rights in period invested company Shenzhen Anjule Property Management Co.,Ltd China Bicycle(Hong Kong) Co.,Ltd China Bicycle(International) Co.,Ltd Shenzhen Jinhuan Printing Co.,Ltd Total (3) Impairment provision of long-term equity investment Amount at year-beg Increase in the Decrease in the Items in current period current period Amount at year-end Shenzhen EMMELLE Industrial Co.,Ltd 1,400,000.00 1,400,000.00 Shenzhen Anjule Property Management Co.,Ltd 2,000,000.00 2,000,000.00 China Bicycle(Hong Kong) Co.,Ltd 5,350,000.00 5,350,000.00 China Bicycle(International) Co.,Ltd 18,727.60 18,727.60 Shenzhen Jinhuan Printing Co.,Ltd 12,263,719.50 12,263,719.50 Total 21,032,447.10 21,032,447.10 4. Operating revenue and operating costs (1) Operating revenue, operation cost 94 2013 年度财务报表附注 Item Current Year Previous Year Main business revenue 475,138.46 313,551.29 Other business revenue 25,829,410.17 26,969,525.58 Total business revenue 26,304,548.63 27,283,076.87 Main business cost 427,068.73 294,714.52 Other business cost 8,634,522.99 6,157,890.36 Total business cost 9,061,591.72 6,452,604.88 (2) Main business (by industry) Current Year Previous Year Products Operating revenue operation cost Operating revenue operation cost Sales of bicycle 475,138.46 427,068.73 313,551.29 294,714.52 5. Supplemental Information of cash flow statement Items Amount at this year Amount at last year (1) Reconciliation of net profit/(loss) to cash flows from operating activities: Net profit 1,501,143,591.24 -49,696,708.98 Add: provision for assets - -280,017.51 Depreciation of fixed assets, oil & gas loss and productive biological assets 1,551,785.59 3,599,508.18 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 (income with “-“) -1,611,693,386.81 Losses on abandon of fixed assets (income with “-“) 95 2013 年度财务报表附注 Items Amount at this year Amount at last year Losses on the changes in fair value (income with “-“) Financial expenses (income with “-“) 25,831,645.36 Losses arising from investments(income with “-“) Decrease of deferred income tax assets (increase listed with “-“) Increase of deferred income tax liabilities (decrease listed with “-“) Decrease in inventories (increase listed with “-“) 9,779,439.79 -164,222.22 Decrease in operating receivables (increase listed with “-“) 29,078,243.67 -7,543,740.87 Increase in operating payables (decrease listed with “-“) 35,070,825.72 23,264,997.37 Others - Net cash flows from operating activities -34,206,638.76 -4,125,676.63 (2) major investing and financing activities that do not concerning cash receipts and payment: Conversion of debt into capital Convertible corporate bonds expiring within one year Financial leasing of fixed assets (3) Net changes of cash and cash equivalents Closing balance of cash 1,080,836.82 31,432,888.50 Less: opening balance of cash 31,432,888.50 561,283.08 Add: Closing balance of cash equivalent - - Less: Opening balance of cash equivalent - - Net increase of cash and cash equivalents -30,352,051.68 30,871,605.42 96 2013 年度财务报表附注 XIV. Supplement information 1. Non-recurring gains and losses Items Amount at this year Amount at last year Loss and profit on disposal of non-current assets 1,611,690,513.84 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 49,295,755.59 Expense for enterprise reconstruction, employee arrangement and other integration costs -65,565,704.23 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 97 2013 年度财务报表附注 Items Amount at this year Amount at last year 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 27,177.40 3,074,610.65 Other loss/profit qualified definition of other non recurring profit and loss 72,934,048.27 Subtotal 1,668,381,790.87 3,074,610.65 Impact on income tax -92,393,298.62 Impact on minority interest (after-tax) -4,582.96 1,575,983,909.29 Total 3,074,610.65 Note: “+” stands income increased while “-“stands losses in numbers of non-recurring gains/losses Confirm of the non-recurring gains/losses in the Company was performed in line with the regulations of Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss (Zheng Jian Hui Notice [2008] No.43) 2. Return on equity and earnings per share Earnings per share (RMB/Share) Profit during the period of report Weight average ROE Basic EPS Dilute EPS Net profit attributed to common shareholders - 2.8570 2.8570 Net profit attributed to common shareholders after deducting net profit of recurring loss and profit - -0.0014 -0.0014 (2) Calculation of basic EPS and diluted EPS found in VII. 46 3. Reason and explanation on abnormal changes in items of consolidated financial statement Item Amount changes Changes ratio (%) Explanation Monetary fund -25,561,189.27 -48.79 Discharge of claims in reorganization and reorganization 98 2013 年度财务报表附注 Item Amount changes Changes ratio (%) Explanation fee paid Note receivables at end of the Period from subsidiary Notes receivable -1,627,810.00 -100.00 EMMELLE decreased Account paid in advance at end of the Period from Account paid in advance -652,319.64 -78.60 subsidiary EMMELLE decreased Other receivables 83,927,760.82 357.63 Receivables from administrators increased Inventory -13,067,081.42 -74.19 Assets disposal from reorganization decreased Long-term equity investment -2,619,840.50 -100.00 Assets disposal from reorganization decreased Investment real estate -21,395,176.24 -100.00 Assets disposal from reorganization decreased Fixed assets -12,742,375.36 -98.24 Assets disposal from reorganization decreased Intangible assets -18,457,703.18 -77.79 Assets disposal from reorganization decreased Short-term loans -355,796,107.93 -100.00 Debts settlement from reorganization decreased Account payables -108,540,052.74 -91.61 Debts settlement from reorganization decreased Account received in advance -10,032,876.24 -73.45 Debts settlement from reorganization decreased Wages payable -2,467,221.35 -61.93 Debts settlement from reorganization decreased Interest payable -230,575,685.75 -100.00 Debts settlement from reorganization decreased Other payables -396,320,859.78 -91.90 Debts settlement from reorganization decreased Non-current liability due within one year -453,747,741.58 -100.00 Debts settlement from reorganization decreased Other current liability -2,331,150.07 -100.00 Debts settlement from reorganization decreased 99 2013 年度财务报表附注 Item Amount changes Changes ratio (%) Explanation Accrual liability -166,212,952.92 -100.00 Debts settlement from reorganization decreased Administration expenses 60,670,713.13 241.29 Reorganization expenses increased Financial expenses -52,437,265.55 -102.54 Borrowings settlement form reorganization decreased Investment income 72,934,048.28 Disposal of subsidiary from reorganization Income from reorganization assets disposal and debt Non-operation revenue 1,942,341,770.24 60,439.22 reorganization Non-operation expenditures 284,355,950.47 204,425.54 Accrual liability withdrawal Income tax expenses arising from profit increased due to Income tax expenses 93,000,059.74 the disposal of reorganization and assets Section XI. Documents available for reference 1. Accounting statement carrying the signatures and seals of the legal representative, person in charge of accounting and person in charge of accounting organ; 2. Original audit report with seal of the accounting firm and signature and seal of CPAs; 3. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaper designated by CSRC in the report period; 4. English version of the Annual Report 2013 100