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深圳中冠纺织印染股份有限公司
Shenzhen Victor Onward Textile Industrial Co., Ltd.
2009 Annual Report
April 20102/125
Important Notes
The Board of Directors of the Company hereby guarantees that there are no misstatement, misleading representation or
important omissions in this report and shall assume joint and several liability for the authenticity, accuracy and
completeness of the contents hereof.
Mr. Hu Yongfeng, board chairman and General Manager, Mr.Zhang Jinliang, General Manager , Mr. Ren Chengzheng ,
Manager of Financial Dept of the Company represent and warrant the financial report in this report is true and
complete.3/125
Contents
Section 1. Brief Introduction of the Company
Section II. Summary of Accounting Highlights and Business Highlights
Section III Changes in Share Capital and Particulars about Shareholders
Section IV. Particulars about Directors, Supervisors, Senior Executives and Employees
Section V Administrative Structure
Section VI. Particulars about Shareholders’ General Meeting
Section VII Report of the Board of Directors
Section VIII Report of the Supervisory Committee
Section IX Important Events
Section X. Financial Report
Section X1. .List of Documents Available for Inspection4/125
Section I Brief Introduction of the Company
(I) Name of the Company in Chinese: 深圳中冠纺织印染股份有限公司
Name in English:Shenzhen Victor Onward Textile Industrial Co., Ltd.
Abbreviation of English name of the Company: VICTOR ONWARD
(II) Legal Representative: Hu Yongfeng
(III) Secretary to the Board of Directors : Chen Xing
Contact address: Room 1308, Hualian Building, No.2008 Shennan Zhong Road , Shenzhen
Tel：（755）83668254
Fax: (755) 83668427
E-mail: szg000018@126.com
Securities affair representative: Wu Xia
Contact address: Room 1308, Hualiang Building, No.2008 Shennan Zhong Road, Shenzhen
Tel：（755）83667895
Fax：（755）83668427
E-mail: wuxia_08@126.com
IV. Registered address: 26 Kuipeng Road, Kuiyong Town, Longgang District, Shenzhen
Business address: 26 Kuipeng Road, Kuiyong Town, Longgang District, Shenzhen
Contact address: Room 1308, Hualiang Building, No.2008 Shennan Zhong Road, Shenzhen
Zip Code: 518119
Website: http:// www.chinaszvo.com
E-mail：szvo@chinaszvo.com
(V) Designated newspapers for information disclosure: Securities Times and Hong Kong Commercial
Daily.
Designated website for information disclosure: http://www.cninfo.com.cn
The place for preparing and placing the annual report: Office of the board secretary of the Company
(VI) Stock exchange for listing of the stocks of the Company: Shenzhen Stock Exchange
Stock abbreviation: *ST Shenzhen Victor Onward A, *ST Shenzhen Victor Onward B
Stock code : 000018, 200018
VII. Other Relevant Information of the Company
1. The date and place when and where the Company made its first registration:
The Company was first registered as Shenzhen Victor Onward Printing and Dyeing Co., Ltd. in
Shenzhen in 1984.
The Company changed its registration and was registered as Shenzhen Victor Onward Textile Industrial
Co., Ltd. in Shenzhen in 1991.
2. Registration No. of Legal Entity Business License: 440301501131182
3. Tax Registration No.: 4403016188014835/125
4. The name and business address of the Certified Public Accountants engaged by the Company
Name: Shinewing Certified Public Accountants
Address:Room 4001A,Lianhe Plaza, Futian District, Shenzhen, China
Section II. Summary of Accounting Highlights and Business Highlights
I. Main Profit Indicators of 2009
Unit：RMB
Items Amount
Operating profit 11,905,069
Total profit 11,667,821
Net profit attributable to the shareholders of the listed company 12,090,678
Net profit after deducting of non-recurring gain/loss attributable to
the shareholders of listed company 11,810,122
Cash flow generated by business operation, net -866,440
Difference between IFRS and PRC GAAP :
Unit:RMB
Net profit attributable to shareholders of
listed Company
Owers’ equ8ity attributable to shareholders
Amount in current of listed company
period Amount in last period Amount at the
priod-end
Amount at the
period-begin
Pursuant to overseas
accounting standards 12,210,638 -25,835,740 135,622,260 122,504,780
Pursuant to Chinese
accounting standards 12,090,678 -25,957,3330 143,058,948 130,073,334
Subitem and total adjusted pursuant to international accounting standards::
Total of differences
between the IAS and
domestic accounting
standard
119,960 121,593 -7,436,688 -7,568,554
Statement on
differences between
the IAS and Domestic
accounting Standard
119,960 121,593 -7,436,688 -7,568,554
Explanation on
difference between
IFRS and PRC GAAP
The influence of appreciation through appraisal of workshop and 2 parking
spaces in Hong Kong in 1992.
Items of deducting non-recurring gains and losses and the involved amounts are as following: RMB
Items of non-recurring gains and losses Amount Notes（if applicable）
Gains and losses of non-recurring 93,320
Except the effective hedge business related to the normal
operation business of the Company, the profit and loss in the
changes of fair values caused by the holding of tradable
financial assets and tradable financial liabilities as well as
the investment returns in disposal of tradable financial
assets, tradable financial liabilities and saleable financial
assets
343,2656/125
Single impairment test for impairment of receivables
transferred back to preparation 172,943
Other non-operating income and expenditure beside for
the above items -330,568
Amount of influence of minority interests 1,596
Total 280,556 -
2. Highlights of accounting data and financial indicators in the latest three years
Main accounting data Unit：RMB
2009 2008
Changed
over last
year（％）
2007
Before
Adjustment After adjustment
After
adjustmen
t
Before
Adjustment
After
adjustment
Operating profit 27,517,759 46,881,258 46,881,258 -41.30% 103,568,595 103,568,595
Total profit 11,667,821 -26,168,635 -26,168,635 -144.58% -124,409,530 -124,409,530
Net profit
attributable to
the shareholders
of the listed
company
12,090,678 -25,957,333 -25,957,333 -146.57% -116,356,882 -116,356,882
Net profit after
deducting of
non-recurring
gain/loss
attributable to
the shareholders
of listed
company
11,810,122 -26,771,342 -26,771,342 -144.11% -110,655,141 -110,655,141
Cash flow
generated by
business
operation, net
-866,440 13,621,421 13,621,421 -106.36% 8,127,432 8,127,432
End of 2009 End of 2008
Changed
over last
year（％）
End of 2007
Before
Adjustment After adjustment
After
adjustmen
t
Before
Adjustment
After
adjustment
Gross Assets 201,318,234 192,923,851 192,923,851 4.35% 229,451,566 229,451,566
Shareholders’
equity
attributable to
shareholders of
the listed
company
143,058,948 130,073,334 130,073,334 9.98% 169,602,112 169,602,112
Capital stock 169,142,356 169,142,356 169,142,356 0.00% 169,142,356 169,142,356
Main Financial Indicators Unit：RMB
2009 2008 Changed over
last year（％） 2007
Before
Adjustment
After
adjustment
After
adjustment
Before
Adjustment
After
adjustment7/125
Basic gains per
share(RMB/Share) 0.07 -0.15 -0.15 -146.66% -0.69 -0.69
Diluted gains per
share(RMB/Share) 0.07 -0.15 -0.15 -146.66% -0.69 -0.69
The new earnings
pershare
capital(RMB/Share)
0.07 - - - - -
Basic earning per share
after deducting of
non-recurring
gains/losses(RMB/Sha
re)
0.07 -0.16 -0.16 -143.75% -0.64 -0.64
Net income on asset,
Weighted(%) 8.90% -16.34% -16.34% 25.24% -49.00% -49.00%
Net income on asset,
weighted and deducted
non-recurring
gain/loss(%)
8.69% -16.99% -16.99% 25.68% -46.00% -46.00%
Net cash flow per
share generated by
business operation
(RMB/Share)
-0.005 0.081 0.081 -106.17% 0.048 0.048
End of 2009 End of 2008
Changed over
last year（％）
End of 2007
Before
Adjustment
After
adjustment
After
adjustment
Before
Adjustment
After
adjustment
Net asset per share
attributable to
shareholders of the
listed
company(RMB/Share)
0.85 0.77 0.77 10.39% 1.00 1.00
1. Return Ratio and Earnings per share
Earnings per share
Profit in the report peirod
Return Ratio on Net asset,
Weighted(%)
Basic gains per
share
Diluted gains per
share
Net profit attributable to the
shareholders of the parent
Company
8.90% 0.07 0.07
Net profit after deducting
non-recuring gains and losses
attributable to the shareholders
8.69% 0.07 0.07
4. Particulars about Changes in Shareholders' Equity in the Report Period
Unit：（RMB）
Owner’s equity Attributable to the Parent Company
Items Share
Capital
Capital
reserves
Surplus
reserves
Attributable
profit Other
Minor
shareholders’
equity
Total of
owners’
equity
Balance
at the
beginning
169,142,356 39,194,631 26,309,287 -115,810,517 11,237,577 884,454 130,957,7888/125
of current
year
Changed
in the
current
year
102,473 395,504 13,042,576 -554,939 -376,366 12,609,248
Balance
at the end
of this
term
169,142,356 39,297,104 26,704,791 -102,767,941 10,682,638 508,088 143,567,036
Section III. Particulars about Changes in Share Capital and Shareholders
I. The changes in share capital
(1) The changes in share capital
Unit: shares
Year-beginning Increase or decrease this time
(+/-)
Year-end
Quantity Proportion
% Other Subtotal Quantity Proportion%
I. Share with
conditional
subscription
48,506,283
28.68 -48,506,283 -48,506,283 0
0
1.State-owned shares 0 0 0 0 0 0
2.Staee-owned legal
person shares 5,365,251 3.17 -5,365,251 -5,365,251 0 0
3.Other domestic
shares 43,141,032 25.51 -43,141,032 -43,141,032 0 0
Of which：
Domestic legal person
shares 43,141,032 25.51 -43,141,032 -43,141,032 0 0
Domestic natural
person shares 0 0 0 0 0 0
4.Share held by foreign
investors 0 0 0 0 0 0
Of which：
Foreign legal person
shares 0 0 0 0 0 0
Foreign natural person
shares 0 0 0 0 0 0
II. Shares with
unconditional
subscription
120,636,073
71.32 48,506,283 48,506,283
169,142,3
56 100
1.Common shares in
RMB 51,214,170 30.28 48,506,283 48,506,283
99,720,45
3 58.96
2.Foreign shares in
domestic market 69,421,903 41.04 0 0
69,421,90
3
41.04
3.Foregin shares in
overseas market 0 0 0 0 0 09/125
4.Other 0 0 0 0 0 0
III. Total of capital
shares 169,142,356 100.00 0 0
169,142,3
56 100
Notes：The sale restriction of all restricted A shares held by relevant original shareholders holding
non-negotiable shares in A share market including Union Holding Co., Ltd. and Shenzhen Textile
(Group) Holding Co., Ltd. after share holding structu re reform was cancelled on June 29,
2009. .(Announcement No.: 2009-0537)
2.Change in shares subject to sale restriction
(Unit :shares）
Name of the
shareholder
Conditional
shares at
beginning
of year
Released this
year
Increased
this year
Conditional
shares at
end of year
Reason of
condition
Date of releasing
Union Holdings
Co., Ltd.
43,141,032 43,141,032 0 0
Share
structure
reform
June 16, 2009
Shenzhen Textile
(Group)Holdings
Ltd
5,365,251 5,365,251 0 0
Share
structure
reform
June 16,2009
Total 48,506,283 48,506,283 0 0
II. Share issue and listing
(1) The Company has never issued shares or derived securities within the previous three years as of the end of the
report period.
（2） The total number of the shares of and its structure of the Company remained unchanged within the previous three
year by the end of the report period.
III．Introduction to shareholders
1. Total number of shareholders at the end of the period:
At the end of 2009, the Company had 13,952 registered shareholders in total including 8,981 shareholders of A shares
and 4,971 shareholders of B shares.
2．At the end of 2009,,Top 10 shareholders and top 10 holders of unconditional shares
Unit：Shares
Total number of
shareholders
13,952
Particulars about the shareholding of the top ten shareholders
Name of the
shareholder Nature of shareholder
Share
prop
ortio
n %
Total
shares
Increase or
decrease in
the year
Conditio
nal
shares
Pledged or
frozen
Union Holdings Co., Other 25.51 43,141,032 0 0 010/125
Ltd. %
STYLE-SUCCESS
LIMITED Foreign shareholder 14.46
% 24,466,029 0 0 0
Shenzhen Textile
(Group)Holdings Ltd
State-owned
shareholder
6.68
% 11,305,662 -4,412,198 0 0
Rich Crown
Investment Co., Ltd. Foreign shareholder 3.62
% 6,114,556 0 0 0
Union Development
Group Co., Ltd.
State-owned
shareholder
3.44
% 5,821,089 -478,096 0 0
Shing Ying Chieh Foreign shareholder 2.07
% 3,496,719 -1,640,342 0 N/A
Bo Haowen Foreign shareholder 0.59
% 1,000,000 0 0 N/A
Liu Yue Foreign shareholder 0.52
% 883,356 0 0 N/A
Lian Xiuzhen Other 0.47
% 790,219 0 0 N/A
Shi Huirong Other 0.45
% 762,003 0 0 N/A
Top 10 holders of unconditional shares
Name of the shareholder Unconditional shares Type of shares
Union Holdings Co., Ltd. 43,141,032 RMB Common shares
STYLE-SUCCESS
LIMITED 24,466,029 Foreign shares placed in domestic
exchange
Shenzhen Textile
(Group)Holdings Ltd 11,305,662 RMB Common shares
Rich Crown Investment Co.,
Ltd. 6,114,556 Foreign shares placed in domestic
exchange
Union Development Group
Co., Ltd. 5,821,089 RMB Common shares
Shing Ying Chieh 3,496,719 Foreign shares placed in domestic
exchange
Bo Haowen 1,000,000 Foreign shares placed in domestic
exchange
Liu Yue 883,356 Foreign shares placed in domestic
exchange
Lian Xiuzhen 790,219 RMB Common shares
Shi Huirong 762,003 RMB Common shares
Notes to the related
relationship between the
shareholders or their
concerted action
The controlling shareholder of the above-mentioned largest shareholder Shenzhen
Union Holdings Ltd.and fourth shareholder Rich Crown Investment Co., Ltd.. Is Union
Development Group Ltd.
3. Introduction to the largest shareholder of the Company
Name of the largest shareholder of the Company: Shenzhen Union Holdings Co., Ltd.
Legal representative: Dong Binggen
Date of establishment: September 11, 1989
Business scope: Production of and dealing in various fabrics, garments chemical fibers and textile
equipment, domestic commerce, material supply and marketing (excluding monopolized commodities),
management of self-owned properties, processing with imported materials and designs, internal
introduction and foreign cooperation, assembling with imported spare parts and cooperation in
compensation trade.
Registered capital：RMB 1123.8877 million
Nature of enterprise: Share-holding system11/125
Registered address: Shenzhen
4. Particulars about the actual controller of the Company
In the report period, the actual controller of the Company remains unchanged.
Name of the actual controller: Union Development Group Co., Ltd.
Legal representative: Dong Binggen
Date of establishment: August. 23, 1983
Registered capital：RMB 90.61 million
Business scope: Production and sales of chemical, textile and garment products (the license of product
site is subject to separate application), import and export business, contracting of project construction,
import and export of necessary engineering equipment and materials, export of labor, external
investment, technical consulting services, real estate development and sales within the scope of land use
right legally obtained, property management and lease services and sales of automobiles (including
cars).
The property right and controlling relationship between Union Development Group Ltd. and the Company is as
follows:
20.89%
31.32% 99.99%
3.44%
25.51% 3.62%
Statement of Union Group on its shareholders, shareholder structure and actual controller:
Union Group has been a standardized limited liability company since its establishment. Despite
decentralized equity and large number of shareholders, the department in charge of industry and state
asset management department has been incontrovertible direct administrator because they were all
Union Development Group
Union Holdings Co., Ltd.
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Rich Crown Investment Co.,
Ltd
Hangzhou Jinjiang Group
C Ltd12/125
state-owned shareholders and engaged in the same industry before 2004. Private capital has entered
since 2004 and its proportion has been unceasingly enlarged. The largest shareholder turned from
national administrative department into a state-owned enterprise, which was then replaced by a private
enterprise. The actual controller of Union Group gradually changed. The concrete process of change is
as follows:
(1) After the establishment of Union Group and before State-owned Assets Commission under
the State Council transferred 12.09% equity held by it to OCT Group, the relationship of subordination
of Union Group was definite. State administrative agencies (Ministry of Textile Industry, China
Textile Federation, industrial commission of national enterprise and State-owned Assets Commission
under the State Council) exercised management rights. Relevant national departments were
responsible for the establishment of board of directors, appointment of management, audit and
supervision.
(2) From April 2005, OCT Group became the largest shareholder of Union Group. The
management methods adopted when State-owned Assets Commission under the State Council
conducted supervision were still adopted in some aspects. For examples, Union Group regularly
submitted financial data to state assets management department and accepted the economy audit by the
supervisory committee under the State Council. The financial statements of OCT Group consolidated
those of Union Group. However, changes started in some aspects. The establishment of board of
directors and the appointment of management were carried out completely according to the Articles of
Association of Union Group. The shareholders' general meeting and the board of directors
independently exercised the powers assigned by laws and regulations. The reelection of board of
directors and the appointment of management were no longer reported to relevant department for
examination and approval.
(3) In 2005, Hangzhou Jinjiang Group held 20.89% equity of Union Group through acquisition
and became the largest shareholder of Union Group by replacing OCT Group. Hangzhou Jinjiang
Group and OCT Group respectively appointed one of 8 members of the fifth board of directors
reelected in that year.
(4) In 2007, Union Group did not submit various financial data to OCT Group and state-owned
regulatory authority. The statements of OCT Group did not consolidate those of Union Group. State
assets supervision organ did not conduct regular economy audit of Union Group either.
(5) Though private enterprise Hangzhou Jinjiang Group is the largest shareholder, only one of 813/125
members of the board of directors comes from it and it has no substantial influence on important
decisions of Union Group. Meanwhile, Hangzhou Jinjiang Group neither participated in the daily
management and operation of Union Group, nor required submission of daily financial statements, nor
consolidated financial statements nor sent personnel to conduct economy audit
(6) Since Dong Binggen, board chairman of Union Group, held office in 1997, he has led cadres
and employees to make arduous efforts and realized growth of assets and profit of Union Group by big
margin in successive years, who has been fully acclaimed by shareholders and enjoyed high prestige
inside and outside Union Group. From the fifth board of directors, Dong Binggen was jointly
recommended by all shareholders to enter the board of directors and was elected as board chairman.
He does not represent any shareholder. Instead, he is responsible for all shareholders.
Based on the above facts, Union Group holds the opinion that Union Group, as a limited liability
company with a history of 27 years, has formed a standardized mode of operation according to law
and business management during change of equity and its corporate governance structure has been
increasingly stable and mature. The shareholders' meeting is the highest power organ of the Company.
The board of directors is responsible to the shareholders' meeting and exercises the right to make
decisions on important matters of Union Group according to the articles of association. The
management is responsible for daily operation management of Union Group. At present, Union Group
does not have administrative department or unit in charge. The largest shareholder only holds 20.89%
equity of Union Group. No shareholder has absolute control over or absolute influence on the
shareholders' meeting and board of directors of Union Group and is daily operation. The mutual
restriction between shareholders of Union Group is quite apparent. Therefore, Union Group only has
the largest shareholder and does not have actual controller at present.
Enclosed: The equity structure of Union Group is as follows: (As of December 31, 2009)
No. Name of shareholder
Amount of capital
contribution
(RMB’0000)
Proportion of
capital
contribution (%)
Remarks
1 Hangzhou Jinjiang Group Co., Ltd. 1892.812 20.8896 Private
2 OCT Group 1094.95 12.0842 State-owned
3
Shanghai Kangrun Investment Management
Co.,Ltd.
984.2567 10.86
Private
4 Zhejiang Kangrui Investment Co.,Ltd. 926.0019 10.2196 Private14/125
5
Shandong Garment, Footwear and
Headwear Industrial Group
569.9196 6.2898
State-owned
6 Hebei National assets Holding Co., ltd. 531.48 5.8655 State-owned
7 Zhejiang Zhengcai Industry Co.,Ltd. 530.00 5.8492 Private
8 Heilongjiang Textile Industry Association 500.00 5.5181 State-owned
9 Sichuan Shulian Co., Ltd. 329.024 3.6312 Private
10
Hubei Textile Industry Investment
Promotion Center
300.00 3.3108
State-owned
11 Jiangsu Textile (Group) Company 288.6723 3.1859 State-owned
12 Liaoning Textile Industry Association 286.44 3.1612 State-owned
13 Shenzhen Textile (Group)Holdings Ltd 260.00 2.8694 State-owned
14 Xinjiang Textile Industry Association 236.46 2.6096 State-owned
15 Beijing Textile Holdings Co., Ltd. 215.84 2.3820 State-owned
16 China Textile Machineay (Group)Co., Ltd. 115.1435 1.2707 State-owned
Total 9061.00 100.00
5. Introduction to other legal person shareholders holding over 10% of total shares
(1) Style-Success Ltd.
Legal Representative: Miss Amy Wang
Date of establishment:November 1999
Business scope: Investment
6. The quantity of shares held by the top 10 shareholders subject to sale restriction and conditions of sale restriction
Unit：Shares
No. Name of conditions
holder
Shares with
conditioned
subscription
Date when
trading allowed
Newly added
tradable
shares
Conditions
1 Union Holdings Co.,
Ltd. 43,141,032 Jume 16, 2009 43,141,032
36 months after the
first trading day upon
the implementation of
the plan for share
holding structure
reform
June 27,2007 8,457,118
June 16, 2008 8,457,118
2 Shenzhen Textile
(Group)Holdings Ltd
22,279,487
June 16, 2009 5,365,251
12months after the
first trading day upon
the implementation of
the plan for share
holding structure
reform
3 Union Development
Group Co., Ltd.
6,987,814 August 28, 2007 6,987,814
12 months after the
first trading day upon
the implementation of15/125
the plan for share
holding structure
reform
Section IV Particulars about Directors, Supervisors, Senior Executives
and Employees
I Basic information about directors, supervisors and senior executives
（1）Basic information
1.Directors, Supervisors and senior executives
Name Sex Age Title Term of office
Shares held
at the
year-beginn
ing
Shares held
at the
year-end
Increase/dec
rease
amount
The total
amount of
remuneration
received from
the Company in
the report
period
Incentive
stock option
vested during
the reporting
period
Hu Yongfeng Male 47
Board
chairman/Gen
eral Manager
2008.4-2011.4 0 0 No change 38
No
Ding Yue Male 51
Vice Board
chairman
2008.4-2011.4 0 0 No change 0
No
Shu Yibo
Fema
le
37
Vice Board
chairman
2008.4-2011.4 0 0 No change 0
No
Zhang Mei
Fema
le
34 Director 2008.4-2011.4 0 0 No change 0
No
Feng Junbin Male 47 Director 2008.4-2011.4 0 0 No change 0 No
Jin Ligang Male 50 Independent
director
2008.4-2011.4 0 0 No change 5
No
Shen
Songqin
Male 52 Independent
director
2008.4-2011.4 0 0 No change 5
No
Wang
Tianguang
Male 36 Independent
director
2008.4-2011.4 0 0 No change 5
No
Dong
Binggen
Male 60
Chairman of
the
supervisory
committee
2008.4-2011.4 0 0 No change 0
No
Huang
Xiaoping
Fema
le
52 Supervisor 2008.4-2011.4 0 0 No change 0
No
Pan Weichao Male 58 Supervisor 2008.4-2011.4 0 0 No change 8.4 No
Zhang
Jinliang
Male 47
Deputy
general
Manager
2008.4-2011.4 0 0 No change 15
No
Chen Xing Male 36
Director/
Board
secretary
2008.4-2011.4 0 0 No change 13.3
No
Ren
Changzheng
Male 34
Manager of
Finance Dept
2008.4-2011.4 0 0 No change 7.3
No
2. Particulars about directors and supervisors holding positions at corporate shareholders
Name Name of corporate Position Term of office Whether16/125
shareholders receiving
remunerati
on or
subsidy
Dongbingg
en
Shenzhen Union Holdings
Ltd. Board chairman 2007.6- till Now No
Dong
Binggen
Union Development Group
Co., Ltd.
Secretary of Party
committee, chairman of
board of directors and GM
2008.10- till Now Yes
Ding Yue Union Development Group
Co., Ltd. Deputy President 2008.10- till Now Yes
Ding Yue Shenzhen Union Holdings
Ltd.
Convener of the
Supervisory Committee 2007.6- till Now No
Hu
Yongfeng
Union Development Group
Co., Ltd. Deputy President 2008.10- till Now No
Hu
Yongfeng
Shenzhen Union Holdings
Ltd. Vice Board chairman 2007.6- till Now No
Huang
Xiaoping
Union Development Group
Co., Ltd.
Secretary of Party
committee, secretary of
discipline committee
2008.10- till Now Yes
Huang
Xiaoping
Shenzhen Union Holdings
Ltd. Director 2007.6- till Now No
Feng
Junbin
Shenzhen Textile(Holding)
Co., Ltd. Deputy general manager 2007.1- till Now Yes
Zhang Mei Union Development Group
Co., Ltd.
Deputy manager of
Finance Dept. 2008.10- till Now Yes
Zhang Mei Shenzhen Union Holdings
Ltd. Director 2009.5- till Now No
(II).Particulars about main work experience of present directors, supervisor and senior executives
Chairman of the Board :
Hu Yongfeng, male, with bachelor degree, was born in July 1962, Senior Engineer，graduated from
Southeast Textile Technology Institute in 1983. He is ever took the post of section chief of state textile
headquarters general office, He now serves as deputy general manager of Union Development Group
Co., Ltd. and chairman of the Board of Union Holdings Co., Ltd., he served as chairman of the Board of
the Company from Oct., 2000 till now. He served as General manager of the Company since April 2008.
Director：
Ding Yue, male, was born in March 1958, with bachelor degree, Senior Economist,
graduated from Lanzhou University in 1983. He took the turns of deputy section chief of personnel
labor department of Textile Technology Department, section chief of personnel labor department of
textile headquarters, deputy director of personnel labor department of textile headquarters and
concurrently director of talents exchange center of Textile Headquarters and chairman of the Board of
Union Holdings Co., Ltd., He now serves as deputy general manager of Union Development Group Co.,
Ltd. and convener of the supervisory committee of Union Holdings Co., Ltd., and held the position of
director of the Company from June 2002 till now. He served as Vice Chainman board of the Company
since April 18, 2008.
Shu Yibo, Female，was born in February 1972, who is studying for EMBA. ,ever took the post of Manager of Sale of
Manqi Industry Co., Ltd., Director of Manqi Investment Development Co., Ltd..He is now in charge of Chairman of17/125
the board , General Manager of Manqi Industry Co., Ltd.,Chairman of board of Manqi Investment Development Co.,
Ltd.He served as director of the Company since April 18, 2008, He served as Vice Chairman of board of the Company
July 29, 2008.
Zhang Mei, female,was born in February 1975, is a certified public accountant with Master's
degree, She once worked at Financial Division of China Garment Corporation. she now serves as
Deputy General manager of Finance Dept of Union Development Group Co., Ltd, She served as
Director of the Company since April 18, 2008.
Feng Junbin, male, was born in July 1962, is a junior college graduate. He has served successively as special
enterprise controller of Dapu Financial Bureau of Guangdong Province, deputy division chief of Fengshun Financial
Bureau and director of Audit Dept, Manager of Management Dept ,Assistant General Manager, Supervisor of Shenzhen
Textile (Holdings) Co., Ltd. He now serves as Deputy General Manager of Shenzhen Textile (Holdings) Co., Ltd, He
served as director of the Company April 18, 2008.
Chen Xing, male, was born in March 1973, with doctor degree, graduated from Dongbei University in 2000; he
ever took the post of business manager of operation office of Union Development Group Co., Ltd. and held the position
of secretary of the Board of the Company from March 2002 till now. He served as director of the company since April
18, 2008.
Independent directors:
Jin Ligang, male, was born in August 1959, graduated from Beijing Foreign Trade College in 1980. From 1981
to 1983, he majored in international economy at Rome LUISS Private University. He once worked at North America
and Oceania Department of Third Bureau of Ministry of Foreign Trade and Economic Cooperation, who was in charge
of U.S.-related affairs. He has served as assistant of board chairman and president and office director of West Europe
China Trade Center (Hamburg, West Germany), deputy chief and chief of America and Oceania Department of
Ministry of Foreign Trade and Economic Cooperation, business counselor of Economic and Commercial Department
of Embassy in U.S. and business counselor of Economic and Business Office of Consulate General in New York in
succession. He now serves as board chairman of American Stone Bridge International Company and director of Beijing
Decision Making & Consultation Center. He served as Independent directors of the company since April 2008.
Shen Songqin, male, was born in January 1957, has doctor's degree. In 1980, he graduated from Hangzhou
University and worked there after graduation. He studied for Master's degree at Hangzhou University from 1985 and
obtained the degree of master of Arts in 1988. He studied for doctor's degree from 1995 and obtained the degree of
doctor of literature in 1998. His dissertation was appraised "Excellent Dissertation for Doctor's Degree in China in
2000". He now is a professor, doctor tutor and deputy dean of Chinese Language Department of Zhejiang University. In
2006, he was appraised as Qianjiang Scholor of Zhejiang Province (specially engaged professor). In 2007, he was
appraised as Middle-aged/Young Expert with Outstanding Contribution in Zhejiang Province". He served as
independent director of the Company since April 18, 2008.
Wang Tianguang, male, Was born in May 1973, is a certified public accountant. He graduated from Economic
Management School of Qinghua University. He once served as chief staff of Listed Company Supervision Division of
Shenzhen Securities Regulatory Bureau, general manager of Shenzhen Investment Banking Dept. of Yinhe Securities.18/125
He now serves as Deputy General Manager of Southwest securities Co., Ltd, Investment Bank,He
served as Independent direstor of the company since April 18, 2008.
Supervisors:
Dong Binggen, male, Was born in July 1949, an engineer, with bachelor degree, graduated from East China Textile
Technology Institute in 1977. He ever took the post of deputy president of Zhejiang Silk Technology Institute, general
manager of China Clothes Headquarters and board chairperson of China Clothes Association, etc.; he is now in charge
of secretary of Party Committee, chairman of the board and general manager of Shenzhen Union Development Group
Co., Ltd. and chairman of the Board of Shenzhen Union Holdings Co., Ltd., He served as Charnman and held the
position of Chairman of the Supervisory Committee of the Company from June 2002 till now.
Huang Xiaoping, female, Was born in January 1957, an Economist, is a junior college graduate,once served as
policewoman of Public Security Bureau of Dan County, Hainan, chief staff and deputy director of office, deputy chief
and chief of Personnel & Labor Division and office director of China Garment Industry Corporation, vice chairman of
China Garment Association. She now serves as deputy secretary of Party committee and secretary of discipline
committee of Union Development Group Co., Ltd. Co., Ltd. He served as Supervisor of the company since April 18,
2008.
Pan Weichao, male,Was born in August 1951, is a junior college graduate., has worked at the Company since
April 1984. He has served successively as vice chairman of labor union, supervisor of General Affairs Dept. and
chairman of labor union. Since April 18, 2008, he has served as employee-representing supervisor of the Company.
Deputy general manager:
Zhang Jinliang, male,was born in May 1962, Senior Accountant, a senior accountant with bachelor degree,
was born in May 1962. He ever took the post of senior section chief of Shenyang Dispatch and
Shenzhen Dispatch of Audit Administration, manager of operation department of Shenzhen Property
Union Holdings Co., Ltd., deputy director and director of auditing office of Union Development Group
Co., Ltd., deputy general manager of Shenzhen Union Holdings Co., Ltd. and general manager of Yuyao
Union Textile Co., Ltd., and he held the position of deputy general manager of the Company from Dec
2004 till now.
Secretary of the Board of Directors:
Chen Xing (Refer to director column for details)
Manager of Finance Dept:
Ren Changzheng, male, was born in August 1975, He graduated from Guizhou Finance University, once worked
at Financial Division of Guizhou Yunman Aircraft Factory and Planning and Finance Division of Union Development
Group Co., Ltd. He now serves as Manager of Finance Dept of the Company.
（III）Annual remuneration
The total amount of annual remuneration of directors, supervisors and senior executives in 2009 is
RMB 0.97 million. Including,The allowance for each independent director is HKD 50,000 (including
tax) per year, the current independent directors did not receive allowance.
（IV）Particulars about leaving post, engaging and dismissing19/125
No.
(V). Staffs:
By the end of the report period, the Company had 33 staff members in total, including 7 managerial employees , 3
financial employees, 23 Logistics employees. The Company has provided social insurance to its staff according to
relevant regulations of the government.
Section V Administrative Structure
1.Administrative Status
The Company has constantly improved its corporate governance structure，established modern
enterprise system and standardized its operation strictly according to the requirements of the Company
Law， Securities Law，Stock Listing Rules of Shenzhen Stock Exchange, Guidelines for Governance of
Listed Companies and relevant laws and regulations of CSRC. In accordance with relevant regulations
on special activities of governance of listed companies and requirements of CSRC Shenzhen Securities
Administration, the Company revised the Articles of Association of the Company, formulated a series of
internal management regulations including Regulations on Reception and Promotion, Regulations on
Management of Information Disclosure, Detailed Working Rules of General Manager, Regulations on
Management of Shares of the Company Held by Directors, Supervisors and Senior Executives and
Change of Such Shares, Regulations on Engagement of Certified Public Accountants, Special
Regulations on Management of High-risk Investmen and Regulations on Registration of Persons
Knowing Insider Information and further defined the authority of each department. The Company also
formulated Regulations on Ascertaining Responsibilities for Material Errors in Disclosure of
Information in Annual Report and Regulations on Management of External Information Users as
required by CSRC.
(1). Shareholders and shareholders' general meeting: The Company convened and held shareholders'
general meeting strictly according to the requirements of Opinions on Standardization of Shareholders'
General Meeting of Listed Companies, formulated Rules of Procedure of Shareholders' General Meeting,
ensured all shareholders, especially medium and small shareholders, enjoy equal position and can fully
exercise their own rights.
(2). Relationship between the controlling shareholder and the Company: The acts of the controlling
shareholder of the Company were standardized. It did not exceed the authority of the shareholders'
general meeting to directly or indirectly intervene with the decision-making and operating activities of
the Company. The Company is independent from its controlling shareholder in respect of personnel,
assets, finance, organ and business. The board of directors, the supervisory committee and internal organ
of the Company are able to operate independently.
(3). Directors and the board of directors: The Company elected directors strictly according to the
director selection and appointment procedure specified in the Articles of Association of the Company
and will further perfect director selection and appointment procedure and actively promote system of20/125
cumulative voting. The member composition of the board of directors of the Company complied with
the requirements of laws and regulations. The board of directors of the Company formulated Rules of
Procedure of the Board of Directors. Directors of the Company were able to attend board meetings and
shareholders' general meetings with responsible attitude, actively participate in relevant training, get
familiar with relevant laws and regulations and understand the rights, obligations and responsibilities of
director. The Company has established independent director system according to Guiding Opinions on
the Establishment of Independent Director System at Listed Companies issued by CSRC. The numbers
of independent directors are 3 people.
(4). Supervisors and the supervisory committee: The number and composition of the Supervisory
Committee of the Company complied with the requirements of laws and regulations. The Supervisory
Committee of the Company formulated the Rules of Procedure of the Supervisory Committee. The
supervisors of the Company were able to perform their duties seriously, take the attitude of being
responsible for all shareholders and supervise the legality and regulation conformity of the Company's
finance and the duty performance of the directors, managers and other senior executives of the
Company.
(5). Performance evaluation and encouragement and regulating mechanism The Company established
the system of subsidy for independent directors and directors and remuneration for senior executives.
The Company will further improve and perfect overall remuneration system, establish fair and
transparent performance appraisal standard and stimulation and restriction mechanism for directors,
supervisors and executives.
(6). Interested parties: The Company was able to fully respect and safeguard the legal rights and
interests of the interested parties including banks, other creditors, employees and consumers and
promote its sustained and healthy development together with interested parties.
(7).Information disclosure and transparency: The Company designated the secretary to the board of
directors to be responsible for information disclosure, Regulations on Management of Information
Disclosure ,Regulations on Management of External Information Users and reception of shareholder and
consultation. In the report period, the Company was able to truly, accurately, completely and timely
disclose relevant information according to the provisions of laws, regulations and the Articles of
Association of the Company. The Company will continue to operate in a standardized way strictly
according to the requirements of relevant laws and regulations including the Company Law, further
perfect company administration structure and establish and improve various regulations in light of the
gap with the requirements of Standards of Administration of Listed Companies, ensure the maximization
of shareholders' interests and safeguard the lawful rights and interests of all shareholders.
II. Information on governance activities of the company
1. Information on governance activities of the company
In accordance with the spirit in Notice on Strengthening Governance Activities of Listed Company
issued by the China Securities Regulatory Commission, the Notice on Strengthening Governance
Activities of Listed Company issued by Shenzhen Stock Exchange and the Notice on Strengthening
Governance Activities of Listed Company in Shenzhen issued by Shenzhen Stock Supervision Bureau,
and according to self conditions, the company conducted governance and self examination. In
accordance with the spirit in China Securities Regulatory Commission (2008) File 27, the company
made one-by-one examination on the rectification by referring to the Report of Results of Rectification
on Special Governance of the Company, all the rectification completed by the end of july 2008 .21/125
2.According to the Notice on strengthening Management on Listed Company Offering Non-public Information to
Big Shareholders and Actual Controllers issued by Shenzhen Securities Regulatory Commission on March 19, 2007
(SSRC Co. Zi [2007] No.11), the Supplementary Notice on Strengthening Supervision on Governance of Offering
Non-public Information to Big Shareholders and Actual Controllers (SSRC Co. Zi [2007] No.39, hereinafter referred to
as "No. 39), the company carefully carried out self-examination, the relevant information as follows:
（1） The company reported monthly financial statements which were examined by the company chairman and
signed by general manager and marked with "Internal information, confidential". The periodic reports as follows:
Quarterly statement, semi-annual statement, annual statement must be reported after being completed in official
financial report of the company, then sent to the Board of Directors for approval.
In addition to the above situations, the company and big shareholders and actual control do not have the situations
listed as "submitting production investment plans and financial budget, accepting appointment from big shareholders
and actual controllers on directors and intermediate managers of the company, auditing the listed company and its
subsidiaries or specific projects, asset purchase of listed company and approval of external investment and the
implementation of property right reporting rules and other governance situations.
（2）Strengthen the management of internal information, preventing internal transactions
In accordance with the requirements in File No. 39, the company had reported the Promises in Strengthening
Management of Non-public Information to Shenzhen Security Regulatory Bureau about big shareholders and actual
controller, and had informed all directors, supervisors, senior managers about requirements from Shenzhen Security
Regulatory Bureau, urged all the directors, supervisor and senior managers to abide by the Securities Law and
Measures to Disclosure of Information of Listed Company. They must not disclose relevant information in the
company or offer relevant information to related shareholders, actual controller and other specific objects.
The governance activities on listed companies launched by China Securities Regulatory Commission in
2007 had reached their desired purposes, and provided rare opportunity for the company to improve
governance level. The company will take this opportunity to improve the standard operation ability and
improve governance structures.
III. Particulars about duty performance of independent directors
The Company has perfected independent director system in the Articles of Association of the Company according
to Guiding Opinions on the Establishment of Independent Director System at Listed Companies issued by CSRC.
The board of directors of the Company now has three independent directors, taking up one third of the total
number of directors. These Three independent directors have consciously performed their duties according to the
principles of good faith and diligence since they came into office. They expressed independent opinions on
important matters of the Company including external guarantees, related transactions, corporate governance.
Independent Directors’ attendance of the Boarding meeting
Name
Times of
meeting should
attend
Attended
personally
(times)
Attended
by proxy
(times)
Absent
form
meeting
(times)
Notes
Jin Ligang 4 3 1 0
Asked for leaving due
business engagement
Shen Songqin 4 4 0 0
Wang
Tianguang
4 4 0 022/125
IV. The separation of the Company from its controlling shareholder in five respects
The Company is independent from its controlling shareholder in respect of personnel, assets, finance, organization and
business. The particulars are as follows:
1. Business: The Company has complete business and the ability of independent operation.
It is completely independent from its controlling shareholder in respect of business.
2. Personnel: The Company is independent in respect of labor, personnel and wage management. Except that Mr. Hu
Yongfeng, the board chairman and general manager of the Company, received remuneration from the actual controller,
other senior executives received remuneration from the Company, who neither held position at nor received
remuneration from the controlling shareholder.
3. Assets: The Company has complete assets. Its property rights are definite and not related to its controlling
shareholder and other shareholders.
4. Organization: The Company established an organizational structure that is completely independent of its controlling
shareholder. The board of directors, the supervisory committee and internal organs of the Company are able to operate
independently.
5. Finance: The Company has independent finance. It set up independent finance department and established
independent financial accounting system. It has standardized and independent financial and accounting system and
financial control system applicable to branches and subsidiaries. The Company independently pays taxes according to
law. It opened accounts with banks independently. The Company and its controlling shareholder do not use the same
bank account.
V. Self-Appraisal of Internal Control:
(I). Overview of Internal Control
1. Update on Rules Building for Internal Control
To enhance internal control, in accordance with the provisions of the Corporate Law, the Securities Law, Stock
Listing Rules for Shenzhen Stock Exchange, Guidance of Shenzhen Stock Exchange on Internal Control of Listed Firm,
other laws & regulations, we have laid down and perfected the Articles of Association, Rules of Order for Annual
Shareholder Meeting, Rules of Order for Board of Directors, Rules of Order for Board of Trustees, Work Rules for
Independent Directors, the Information Disclosure Affairs Management Rules, Regulations on Engagement of
Certified Public Accountants, Regulations on Registration of Persons Knowing Insider Information and
Special Regulations on Management of High-risk Investmen other management rules and internal control rules,
which have produced apparent effects to the operation of our company.
2. Internal Audit Department for Supervision & Inspection, Work and Staffing of Such
Department
The Company established internal audit division in Finance Dept., which is directly responsible to
the board of directors for inspecting and supervising the status of the Company's internal control,
regularly checking the defects of the Company's internal control, appraising the effect and efficiency of
internal control, timely making suggestions on improvement and strengthening supervision and audit of
internal operation.23/125
3. Our Organizational Structure for Internal Control
The Company established internal control organization composed of the shareholders'general
meeting, the board of directors, the supervisory committee, the management and functional departments,
set up internal management organs, designed work division, defined responsibilities and authority and
assigned rights and responsibilities to each responsible department according to actual situation,
characteristics of business and requirements of relevant internal control. The board of directors of the
Company is composed of 9 directors including three independent directors, one board chairman and two
vice board chairmen. The supervisory committee is composed of 3 supervisors including one chairman
of the supervisory committee and one employee-representing supervisor.
We exercise internal control by standardizing and effectively executing the articles of association,
and authorizing in major operation level layer by layer. The specific measures include:
1) We have clearly stipulated the approval authorities and review procedures of the annual shareholder
meeting and the board of directors for financial guarantees, which has effectively controlled the
financial risks and credit risks of our company.
2) We have clarified the decision authorities for affiliated transactions, and demanded stringent review
and decision-making procedures to be established.
3) We have clearly stipulated the definition, procedure, authorized amount and level of major
investment, contract requirement, matters to be disclosed, etc.
4) Make analysis and judgment to major internal information, and go through relevant procedures in
case we are required to fulfill information disclosure obligation.
The parent company assigns directors and trustees to subsidiaries according to laws, regulations and
the articles of association, to influence the production & operation activities of subsidiaries through
directors and trustees, and promote the effective execution of duties of all levels by means of
professional inspection.
(II)．Key Control Activities
1. Management Update of Our Controlled Subsidiaries:
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Victor Onward Printing & Dyeing (Hong Kong) Co.,
Ltd
Shenzhen Lianchang
Printing & Dyeing Co.,
Ltd
Shenzhen Nanhua
Printing & Dyeing Co.,
Ltd
Shenzhen East Asia Victor
onward Textile Printing &
Dyeing Co., Ltd
Zhejiang Hualian
Hangzhou Bay Startup
Co., Ltd
To standardize the relations with controlled subsidiaries, enhance the support, guidance and24/125
management to controlled subsidiaries, promote controlled subsidiaries to run according to modern
enterprise rule, and further perfect corporate governance structure:
(1) Supervise various controlled subsidiaries to establish relevant operation plans and risk management
procedures.
(2) Enhance the performance appraisal of various controlled subsidiaries.
(3) Various controlled subsidiaries execute necessary internal control self-inspections according to their
operation natures.
2. Internal Control of Affiliated Transactions:
We manage affiliated transactions in which we are involved in strict accordance to the management
rules for affiliated transactions provided in the Internal Control Guidance for Listed Firms and the Stock
Listing Rules promulgated by Shenzhen Stock Exchange, our Articles of Association and our
Management Methods for Affiliated Transaction. The articles of association provides that the board of
directors determines relevant affiliated transactions of our company within the power scope authorized
in the annual shareholder meeting; the board of directors determines the decision authority of affiliated
transactions and requires stringent review and decision-making procedures to be established. Our
Management Methods for Affiliated Transaction have made specific stipulations to the affiliated
individuals, affiliated relations, conditions, decision-making procedures and disclosure of affiliated
transactions. Affiliated transactions of our company taking place in the report period are compliant to
the principles of honesty, equality, self-willingness, fairness, openness, and do not harm the interests of
our company and other shareholders. Review procedures, voting avoiding and other requirements have
been abided by according to relevant laws, administrative regulations, departmental regulations, the
stock listing rules, etc. Relevant responsible individuals have fulfilled approval and report duties to
affiliated transactions when they take place to our company and controlled subsidiaries.
3. Internal Control of Financial Guarantees:
According to the Guidance of Shenzhen Stock Exchange on Internal Control of Listed Firm, we
have clearly stipulated the approval authorities, review procedures and information disclosure
requirements of the annual shareholder meeting and the board of directors for financial guarantees,
which have effectively controlled the financial risks and credit risks of our company.
4. Internal Control of the Use of Raised Capitals:
The Company formulated the Regulations on Management of IPO Proceeds of the Company to
clarify fund depositing, fund use and the examination and approval, change and supervision of fund use.
5. Internal Control of Major Investment:
According to requirements of the Stock Listing Rules, Guidance on Internal Control of Listed Firms25/125
and other statutes, we have clearly stipulated the definition, procedure, authorized amount and level for major
investment, contract requirement, disclosure matters, etc. The articles of association have clarified the approval
authorities relevant review procedures of the annual shareholder meeting and the board of directors for major
investment. Compared against the relevant provisions of the Guidance of Shenzhen Stock Exchange on Internal Control
of Listed Firms, we have exercised stringent, adequate and effective internal control to investment, and have never
violated the Guidance on Internal Control of Listed Firms, Stock Listing Rules, etc.
6. Internal Control of Information Disclosure:
We have set up a set of effective stringent information management rule, enhanced the
management of information affairs, ensured the accuracy and confidentiality of information, prevented
information from being disclosed earlier than scheduled time, promoted directors, trustees and
executives to fulfill their duties loyally and diligently, and guaranteed the truth, accuracy, promptness
and fairness of disclosed information. We have conducted reception, communications and other investor
relation activities and ensured the fairness of information disclosure according to the provisions of the
Guidance of Shenzhen Stock Exchange on the Fair Information Disclosure of Listed Firms, the
Guidance of Shenzhen Stock Exchange on the Investor Relation Management of Listed Firms, etc.
Individuals liable to report can promptly report relevant information to the board of directors and the
secretary of board of directors. The secretary of board of directors shall analyze and judge major internal
information, and promptly report to the board of directors of any matter whose information needs to be
disclosed, so that the board of directors to go through relevant procedures and disclose to external
entities.
(III) Problems of Our Internal Control and Corrective Actions
(1) Defects and Problems of Our Internal Control.
The Company’s printing & dyeing plant in Shenzhen ceased production,owadays, our
mission-critical production equipment and management team intend to move to Nanjing, and we hold
only 30% shares of Nanjing East Asia Textile Printing & Dyeing Co., Ltd. We have an increasingly
hollow core business.
(2) Specific Causes of Internal Control Problems, Current Situation, Corrective actions and Measures.
The Company’s printing & dyeing plant in Shenzhen ceased production, Except that Shenzhen East Asia Victor
Onward Textile Printing and Dyeing Co., Ltd. operated normally, daily operation was maintained mainly by house
property lease. as of December 31, 2009,The capital construction project of Nanjing Factory was somewhat delayed
and fell behind the original plan.
Corrective Actions and Measures: Due to the delay of the relocation of our printing & dyeing26/125
business, our production & operation activities are seriously influenced and may not restore to normality
within 3 months. Pursuant to the provision of Shenzhen Stock Exchange Stock Listing Rules, Article
13.3.1, Shenzhen Stock Exchange exercised other special treatment to our stocks since August 27th,
2007. Special treatment was given to the trading of the stocks of the Company to warn about the risk of
delisting on April 24, 2009.
This accident has major influence to the production & operation activities and sustainable growth
of our company. To guarantee the stable operation and sustainable growth of our company, we will
enhance the coordination of engineering project, and try to implement the relocation plan as soon as
possible.
(3) Overall Appraisal to Our Internal Control.
With all mentioned above, we have established perfect an internal control structure and run our
business in a disciplined manner according to the requirements of the Corporate Law, the Guidance on
Internal Control of Listed Firms, the Stock Listing Rules, and other laws and regulations. Our annual
shareholder meeting, board of directors, board of trustees and management have clearly stated duties
and operate in a disciplined manner. We follow the principles of truth, accuracy, completeness,
promptness and fairness in term of information disclosure. Meanwhile, in the days to come, we will
further improve and perfect corporate governance, improve rules building and investor relation
management, and expand transparency.
VI Committee of supervisers of Our Board of Trustees to the Self-Appraisal of Our Internal Control
Opinion of committee of supervisers:
1. We have established and improved an internal control system covering the entire production &
operation process according to the relevant stipulations of China Securities Regulatory Commission and
Shenzhen Stock Exchange as well as the specific situation of our company, to confirm every work has
its rule to follow, and form a disciplined management system. Our existing internal control rules provide
guarantee to the production & operation activities of our company.
2. We have established and improved a corporate governance structure and internal organizational
structure compliant to the requirement of modern management, and formed a decision-making
mechanism, execution mechanism and supervision mechanism for the key activities of our internal
control, and guaranteed the standardized operation of various business activities.
3. In the report period, we have never violated the Guidance of Shenzhen Stock Exchange on
Internal Control of Listed Firms and our internal control rules. With all mentioned above, the board of
trustees deems that our 2009 Annual Internal Control Self-Appraisal Report has comprehensively and
objectively reflected the actual situation of internal control in our company, can show us areas to be
improved, has proposed corrective actions, and we agree with it.27/125
VIIComments of Our Independent Directors to the Self-Appraisal of Our Internal Control
Independent director opinion:
Based on the Circular of Shenzhen Stock Exchange on Doing a Good Annual Report Work for
Listed Firms in 2009, as independent directors of the company, we have carefully read through the 2009
Annual Internal Control Self-Appraisal Report submitted by the board of directors, talked to the
management and relevant departments, referred to the management rules of the company, and now make
following comments based on our independent stance:
1. The internal control rules of the company are compliant to relevant national regulations and the
requirements of securities regulatory authority, and fit for the actual situation of production and
operation of the company.
2. The internal control measures of the company have played good roles in the various processes
and links of the company management.
3. The 2009 Annual Internal Control Self-Appraisal Report has comparatively objectively reflected
the true situation of internal control, is comparatively comprehensive in summarizing the internal
control, and is comparatively clear in areas of internal control to be improved.
4. The 2009 Annual Internal Control Self-Appraisal Report is compliant to the actual situation of
internal control of our company.
VIII Performance Appraisal & Incentive Mechanism for Executives, Establishment and Implementation
of Relevant Rewarding Rules
We appraise the performance of executives according to relevant index and criterions, the results of
performance appraisal are recorded in the archives of executives, and are linked to the compensations
and hiring of executives.
Section VI. Particulars about Shareholders’ General Meeting
In the report period，the Company held 2nd shareholders’ general meeting. Relevant particulars are as
follows:
(1) 2008 annual shareholders' general meeting of the Company
1. Notice, convening and holding of shareholders' general meeting
The Company issued the notice of holding 2007 annual shareholders' general meeting on April 23, 2009.
2008 annual shareholders' general meeting of the Company was held in the meeting room on the 16/F of
Union Building, Shennan Road Central, Shenzhen in the morning of May 15, 2009 as scheduled. The
meeting was presided over by Mr. Hu Yongfeng, the board chairman of the Company. 4 shareholders
and shareholders' agents attended this meeting, representing 93,356,972 shares which account for
55.19% of the total shares of the Company. 2 shareholders holding A shares (agents) attended the
meeting, representing 62,776,387 shares which account for 62.95% of total voting shares held by the
Company's shareholders holding A shares. 2 shareholders holding B shares (agents) attended the28/125
meeting, representing 30,580,585 shares which account for 44.05% of total voting shares held by
shareholders holding B shares of the Company. Chen Dong, lawyer of Guangdong Shengdian Law
Office attended and witnessed the meeting and issued legal opinion.
2. The resolutions adopted at the shareholders' general meeting and the disclosure of resolution
announcement
The meeting examined and voted through the following proposals:
(1) 2008 annual work report of the board of directors of the Company.
(2) 2008 annual work report of the supervisory committee of the Company.
(3) 2008 annual report of the Company and its summary.
(4) The profit distribution preplan of the Company for 2008
（5）The proposal for renewing the engagement of Shine Wing Certified Public Accountants as the
Company's audit body for 2009;
(6) The proposal for amending part of articles of the Articles of Association of the Company;
（7）The proposal for revising Working Rules of Audit Committee of the Board of Directors.
The announcement of the resolutions of this meeting was published on Securities Times and Hong
Kong Commercial Daily on May 18,2009.
(II) The first provisional shareholders' general meeting of the Company in 2009
1. The meeting examined and voted through the following proposals:
1. The Company issued the notice of holding the first provisional shareholders' general meeting in 2009 on
October 12, 2009. The meeting was convened by the board of directors of the Company. The first provisional
shareholders' general meeting of the Company in 2009 was held in the meeting room on the 16/F of Union Building,
Shennan Road Central, Shenzhen in the morning of October 29, 2009 as scheduled. Mr. Hu Yongfeng, the chairman of
the board of directors of the Company, presided over this meeting. 5 shareholders and shareholders' agents attended this
meeting, representing 90,848,468 shares which account for 53.71% of the total shares of the Company. 3
shareholders holding A shares (agents) attended the meeting, representing 60,267,883 shares which account for
60.44% of total voting shares held by the Company's shareholders holding A shares. 2 shareholders holding B shares
(agents) attended the meeting, representing 30,580,585 shares which account for 44.05% of total voting shares held
by shareholders holding B shares of the Company. Chen Dong, lawyer of Guangdong Shengdian Law Office attended
and witnessed the meeting and issued legal opinion.
2. The resolutions adopted at the shareholders' general meeting and the disclosure of resolution announcement
The meeting examined and voted through the following proposals:
（1）Revision of Regulations on Engagement of Certified Public Accountants for Shenzhen Victor
Onward Textile Industrial Co., Ltd.
The announcement of the resolutions of this meeting was published on Securities Times and Hong Kong29/125
Commercial Daily on October 30, 2009.
VII Report of the Board of Directors
I. The discussion and analysis of operation status
The Company’s printing & dyeing plant in Shenzhen ceased production, Except that Shenzhen East Asia
Victor Onward Textile Printing and Dyeing Co., Ltd. is still operating normally, other 4 subsidiaries
controlled by the Company have stopped operation or are maintaining daily operation by house property
lease.
.It plans to invest in Nanjing East Asia Textile Printing and Dyeing Co., Ltd. with part of machinery
and equipment in 2007, Due to the reason on the side of the other party of joint venture and change of industry
prospect，as of December 31, 2009, infrasture project of Nanjing factory is slightly delayed comparing to
the original plan. the Company set up a controlling enterprise “ Shenzhen East Asia Victor Onward
Textile Industrial Co., Ltd.” (hereinafter refered to as “East Asia Victor”) to connect the original
printing & dyeing business of Company.
(I) Review of the operating status of the Company in the report period
1. Overall operating status in the report period
Unit：RMB
Items 2009 2008
Amount of
change and
percentage
Proportion of
change (%)
Operating Income 27,517,759 46,881,258 -19,363,499 -41.30%
Operating Profit 11,905,069 -26,089,064 37,994,133 -145.63%
Total Profit 11,667,821 -26,168,635 37,836,456 -144.59%
Net profit attributable
toshareholders of listed
Company
12,090,678 -25,957,333 38,048,011 -146.58%
Notes：
(1) Operating income decreased by RMB 56.69 million year on year mainly due to suspense of printing and
dyeing business by the Company and Nanhua Company, a subsidiary of the Company, for rectification in the report
year;
⑵Operating profit indreased by RMB 37.99 million year on year mainly because the real estate
project of Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated company, accomplished
profit;
(3) Total profit increased by RMB 37。84 million mainly for the reason mentioned in (2);
(4) The net profit for the Company increase by RMB 38.05 million year on year mainly due to the said factors.30/125
2. Scope of core business and its operation status
Production and sales of textile products, necessary raw materials, auxiliary materials, various
fabrics and garments and provision of relevant services.
In this report period, the head office and controlled subsidiaries continued production suspense and rectification
and were mainly engaged in asset preservation, disposal of materials in stock and lease of idle properties except that the
main operation of Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd., a subsidiary, was normally
carried out.
(1).The income from main operation earned by the Company in the report period mainly includes the income from
printing and dyeing business. In the report period, the total income from main operation was RMB 27.52 million, an
decrease of 41.30.73% year on year. The Company realized net profit of RMB 4.89 million.
(1) Income from and cost of core business in terms of industry are as follows:
Unit：RMB’0000
The Status of key business in terms of industry of business
On industry or
production
Income from
key business
Cost of key
business
Key business
profit ratio
（％）
Increase/decre
ase of key
business
turnover（％）
Increase/decre
ase of key
business cost
（％）
Change of key
business profit
over the same
period of last
year（％）
Fabrics bleaching,
Printing & dyeing 1,895 1,757 7.28% -49.67% -52.01% 4.53%
Lease 857 505 41.07% -7.20% 6.89% -7.77%
Income from and cost of main operation in terms of areas are as follows:
Unit: RMB’0000
Area Income from key business Increase/decrease of income
（％）
Mainland China 1,582 -54.99%
Hong Kong and Overseas 1,170 -0.26%
(2) The line of business or product whose income or profit accounts for over 10% of total income from main operation
or profit from main operation in the report period
Unit:RMB’0000
The Status of key business in terms of industry of business
On industry or
production
Income from
key business
Cost of key
business
Key business
profit ratio
（％）
Increase/decre
ase of key
business
turnover（％）
Increase/decre
ase of key
business cost
（％）
Change of key
business profit
over the same
period of last
year（％）
Fabrics bleaching,
Printing & dyeing 1,895 1,757 7.28% -49.67% -52.01% 4.53%
Lease 857 505 41.07% -7.20% 6.89% -7.77%
Other
(3). The profit structure and key business structure in the report period did not change much compared with the31/125
previous report period.
(4).Major Suppliers and Customers
The Company's main products are printing and dyeing products, including various pure cotton, pure linen,
polyester-mixed cotton, linen-mixed cotton and blended high-grade fabrics. The raw materials for the production (grey
fiber, dyeing chemicals and fuel) are mainly imported. The products are mainly exported to Hong Kong, Japan, Europe
and America. Victor Onward Printing and Dyeing (Hong Kong) Limited, a wholly-owned subsidiary of the Company,
is mainly responsible for supply of raw materials and sales of products.
3.Change in composition of the Company's assets and reasons therefore:
Unit :RMB’0000
Items of consolidated
balance sheet 2009 2008
Amount of
change and
percentage
Proportion of
change (%)
Monetary fund 5,611 6,137 -526 -8.57%
Inventories 86 351 -265 -75.50%
Long term share equity
investment 6,843 4,718 2,125 45.04%
Fixed assets 1,877 2,274 -397 -17.46%
Intangible assets 212 212
Goodwill 554 359 195 54.32%
Account payable 410 618 -208 -33.66%
Tax payable 252 455 -203 -44.62%
（1）(1) Monetary capital decreased by RMB 5.26 million and 8.57% mainly due to expenditure on
obtaining real estate title certificate and retroactive payment of customs duties and value added tax for
historic import of grey fabric;
(2) Inventories decreased by RMB 2.65 million and 75.50% mainly because the Company sold Stock grey fabric at
discounted price ;
（3）Long-term equity investment increased by RMB 21.25 million and 45.04% mainly because the
real estate project of Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated company,
accomplished profit;
（4）Fixed assets decreased by RMB 3.97 million and 17.46% mainly because the Company made full
provision of RMB 3.5 million for impairment of machinery and equipment to be used for investment
after deduction of residual value;
（5）Intangible assets increased by RMB 2.12 million due to the property right and land use fee of part
of lot located at 26 Kuipeng Road, Kuiyong Subdistrict, Longgang District, Shenzhen;
（6）Goodwill increased by RMB 1,944,046 because the Company acquired 3.66% equity of Nanhua
Company, a subsidiary of the Company, held by Shenzhen Nanyou (Group) Company at the price of32/125
RMB 1.4 million and paid handling charge of RMB 5000 in the report year. On the day of acquisition,
the amount of 3.66% equity of Nanhua Company was RMB - 539,046;
（7）Accounts payable decreased by RMB 2.08 million and 33.66% mainly because the Company and
its subsidiaries continued to suspend production and their business further deteriorated;
（8）Taxes and levies payable Decreased by RMB 2.03 million and 44.62% mainly because the Company could not
process and re-export gray cloth originally imported and made provision for value added tax and customs duties to be
paid retroactively according to the requirements of the customs after inspection.
4.Reasons for material change in the items of profit and loss statement of the Company in the report period:
Unit ：RMB’0000
Items of profit and
loss statement 2009 2008
Amount of
change and
percentage
Proportion of
change (%)
Income from the
business
2,752 4,688 -1,936 -41.30%
Cost of the
business
2,262 4,134 -1,872 -45.28%
Administrative
expense 798 1,010 -212 -20.99%
Financial
expenses 80 -35 115 -328.57%
Asset impairment
loss 362 881 -519 -58.91%
Investment gain 2,163 -1,035 3,198 -308.99%
Non-business
Income 55 55
Non-business
expenses 79 8 71 887.50%
（1）Operating income and operating cost respectively decreased by RMB 19.36 million and RMB 18.72 million
(41.30% and 45.28% ) year on year mainly because the Company and Nanhua Company, a subsidiary of the Company,
continued production suspense and their business further shrank in the report year;
（2）Administrative expenses decreased by RMB 2.12 million and 20.99% mainly due to further
deterioration of business and decrease of all expenses in the report year;
（3）Financial expenses increased by RMB 1.15 million mainly because the accrued interests of loans
raised by Nanhua Company, a subsidiary of the Company, from Union Group, were not paid yet;
（4）Assets impairment loss decreased by RMB 5.19 million and 83.91% mainly due to adequate
provision in the previous year and decrease of provision in the report year;
（5）Investment income increased by RMB 31.98 million mainly because the real estate project of
Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated company, accomplished profit;33/125
（6）Non-operating income increased by RMB 0.55 million mainly because Hong Kong Victor Onward,
a subsidiary of the Company, received the refund of taxes and levies in the report year;
（7）Non-operating expenses increased by RMB 0.71 million and 887.50% mainly due to payment of
fine for delayed payment when applying for real estate title certificate for the old land of Victor Onward
Factory of the Company.
5. Composition of the cash flow of the Company:
Unit:RMB’0000
2009
Items Amount of cash
flow
Proportion to
the net
amount of
cash flow
from similar
activities %
Proportion
of change in
cash and
cash
equivalents
%
Subtotal of cash inflows from
business activities 3,740 -4298.85% -711.03%
Subtotal of cash outflows from
business activities 3,827 -4398.85% -727.57%
Net cash flows from operating
activities -87 100.00% 16.54%
Subtotal of cash inflows from
investing activities 7 -1.68% -1.33%
Subtotal of cash outflows from
investing activities 423 -101.68% -80.42%
Net cash flows from investing
activities -416 100.00% 79.09%
Subtotal of cash inflows from
financing activities 0.00%
Subtotal of cash outflows of
financing activities 14 -100.00% -2.66%
Net cash flows from financing
activities -14 100.00% 2.66%
Influence of the change of
exchange rate on cash -9 100.00% 1.71%
Change in cash and cash
equivalents -526 100.00% 100.00%
Items 2009 2008
Amount of
change and
percentage
Proportion of
change (%)
Proportion of
change (%)
Cash received from
sales of goods or
rending of services
2,292 4,245 -1,953 -46.01%
Influence stopping
production for
rectification,34/125
Business
decreased
Tax returned 195 734 -539 -73.43%
Influence stopping
production for
rectification,
Business
decreased
Other cash received
from business
operation
1,226 1,182 44 3.72% Rental income
Cash paid for
purchasing of
merchandise and
services
2,283 3,383 -1,100 -32.52%
Influence stopping
production for
rectification,
Business
decreased
Cash paid to staffs or
paid for staffs
432 416 16 3.85% Staff reduce
Taxes paid 241 281 -40 -14.23%
Influence stopping
production for
rectification,
Business
decreased
Other cash paid for
business activities
871 743 128 17.23% Current
account
Net cash retrieved
from purchasing of
fixed assets, intangible
assets, and other
long-term assets
283 3 280 Factory land
use rights
Cash paid as
investment 141 284 -143 -50.35%
Accepted the
3.66% equity of
Nanhua Company
held by Shenzhen
Nanyou (Group)
6. Status of equipment utilization of the Company:
The Company suspended production for rectification in February 2007 and plans to relocate factory. Its
equipment has been in idle status.
7.The operating status of main controlling subsidiaries and joint ventures
Except that Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is still operating normally, other 4 subsidiaries
controlled by the Company have stopped operation or are maintaining daily operation by house property lease.
8. Particulars about the cash bonus of the Company in previous three years
The Company did not distribute dividends in the previous three years.
(II) Forecast of the Company's future development
1. The development trend of the industry the Company is engaged in and the situation of market
competition confronted by the Company
The Company controlled subsidiary Nanhua Printing & Dyeing and the Company owned Printing & Dyeing Factory
are continuously suspended for rectification. The Company is actively promoting the transfer of printing and dyeing
industry to inland areas.35/125
2. Development opportunities and challenges in the future and business plan for the new year:
The Company mainly made efforts to promote the transfer of printing and dyeing industry to inland areas.
3. The fund needed by the Company to realize the strategy of sustainable development, the plan to use funds and fund
source
Nil
4,Main risk factors and countermeasures
At present, the Company only holds 30% equity of Nanjing East Asia Textile Printing and Dyeing Co., Ltd. The
Company has faced the situation of no main operation. Due to delay of basic construction, Nanjing Factory failed to
commence production as scheduled at the end of September. There is no sign of improvement of the Company's
printing and dyeing business in the near future and the Company is facing an operation predicament.
2. Investment in the report period
(I) There were neither funds raised in the report period nor those raised in previous periods whose use continued in
the report period.
(II) In the report period, there were investment projects utilizing non-raised funds:No
3. Notes to the unqualified auditor's report with paragraph of emphasized matters issued by Shine Wing
Certified Public Accountants for the Company's financial report for 2009
(I) Basic information about the matters involved in non-standard unqualified audit opinions:
Shine Wing Certified Public Accountants issued unqualified auditor's report with paragraph of emphasized matters
for the Company's financial statements for 2009 Basic information of emphasized matters: Since March 2007,
Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and dismissed most of workers. And most
subsidiaries of the company had stopped production and it maintained daily operation by house leasing. Shenzhen
Victor Onward Textile Industrial Co., Ltd. had disclosed its improvement measures in Note 13 of Financial Statement,
but its sustainable operation ability is still uncertain. This paragraph does not affect audit opinions that have been
given.
(II) Basic opinions of certified public accountants on such matter:
Shine Wing Certified Public Accountants accepted entrustment, completed the audit of the financial statements of
the Company for 2009 and issued unqualified auditor's report with paragraph of emphasized matters for the Company's
financial statements for 2008. In accordance with No. 14 Rule for Preparation and Report of Information Disclosure by
Companies Publicly Issuing Securities - Non-standard Unqualified Audit Opinions and Treatment of Matters Involved
Therein, relevant notes are as follows:
As noticed by Shine Wing Certified Public Accountants during audit, printing and dyeing business for textile industry
is no longer allowed in this area.Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped
production and dismissed most of workers. The company currently only had some agent import and export business
and house leasing business.
Except that Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is still operating normally, other 4
subsidiaries controlled by the Company have stopped operation or are maintaining daily operation by house property
lease. It plans to invest in Nanjing East Asia Textile Printing and Dyeing Co., Ltd. with part of machinery and
equipment in 2007, Due to the reason on the side of the other party of joint venture and change of industry prospect.
we believe that the sustainable operation ability of Shenzhen Victor Onward Textile Industrial Co., Ltd. is still
uncertain, so I emphasized the situation in the audit reports and issued unqualified auditor's report with paragraph of36/125
emphasized matters. The matters involved in highlighted statement did not apparently violate Accounting
Standards for Business Enterprises and regulations on relevant information disclosure standardization.
This special statement is issued by us according to relevant regulations of CSRC and shall not be used for other
purpose. We and the C.P.A. who performed this service shall not bear any liability for the consequences caused by its
improper use.
(III) The opinions of the board of directors, supervisory committee and management of the Company on
this matter:
The board of directors, Supervisory Committee and managers believed that the printing and dyeing
plant of the company had stopped operation or maintained daily operation by house leasing. The
company was about to invest Nanjing East Asia Textile Printing & Dyeing Co., Ltd., but the
infrastructure projects was delayed.
(IV) Extent of influence of this matter on the Company:
This matter will generate significant influence on the Company's production and operating activities and
continuous development.
(V) The possibility of eliminating this matter and its influence:
Though the transfer of printing and dyeing business has been somewhat delayed, but the overall
relocation plan of the company had not changed. It is still being undertaken step by step, The Company
can eliminate this matter and its influence to a great extent.
(VI) The concrete measures of eliminating this matter and its influence
The Company will strengthen the management and coordination of engineering construction and try
to implement the transfer plan as soon as possible.
IV. Routine work of the board of directors
1. Board meetings and resolutions in the report period:
In the report period, the board of directors of the Company held four meetings in total.
1. In the Morning of April 21, 2009, the 5th meeting of the fifth board of directors of the Company
was held in the meeting room on the 16/F of Union Building , Shennan Road Central, Shenzhen.
The announcement of the resolutions of this meeting was published on Securities Times and Hong
Kong Commercial Daily on April 23, 2009.
2. In the Morning of August 17, 2009, the 6th meeting of the fifth board of directors of the
Company was held through voting by correspondence. The announcement of the resolutions of this
meeting was published on Securities Times and Hong Kong Commercial Daily on August 19 2009.
3. In the Morning of October 12, 2009, the 7th meeting of the fifth board of directors of the37/125
Company was held through voting by correspondence. The announcement of the resolutions of this
meeting was published on Securities Times and Hong Kong Commercial Daily on October 13,
2009.
4. In the Morning of October 29, 2009, the 8th meeting of the fifth board of directors of the
Company was held by correspondence. The announcement of the resolutions of this meeting was
published on Securities Times and Hong Kong Commercial Daily on October 30, 2009.
(2)Implementation by the board of directors of the resolutions of the shareholders' general meeting
The board of directors of the Company strictly implemented the resolutions of shareholders'
general meetings and the matters authorized by shareholders' general meetings according to the
provisions of the Company Law and the Articles of Association of the Company.
1. 2008 annual shareholders' general meeting of the Company examined and adopted the proposal
for the profit distribution of the Company for 2009: The Company is neither to distribute dividends nor
capitalize capital surplus for 2009.
2. 1. The first provisional shareholders'general meeting of the Company in 2009 adopted the Proposal
Concerning the Regulations on Engagement of Certified Public Accountants for Shenzhen Victor
Onward Textile Industrial Co., Ltd.
（3）Performance introduced of the Special Committee of the Board of Directors
In the report period, In accordance with the Work Rules for Audit committee of the Board of
Directors, the Audit Committee of the Board of Directors conducted supervision on audit work of the
company in 2009, and on December 24, 2009, independent directors, audit committee and the registered
accountant in Xingyong Zhonghe Accountants Firm held the meeting of communication before
conducting auditing, and determined annual audit work arrangement in 2009; the annual audit
accountants communicated the problems found in the audit; after issuing preliminary audit views, they
re-examined financial statement, and at the same time, the audit committee summarized the audit work
conducted by Xingyong Zhonghe accountants, and advised continuing to employ Xingyoug Zhonghe
Accountants Firm to conduct audit in 2010.
4. Profit distribution preplan for 2009
As audited by Shinewing Certified Public Accountants, the total profit of the Company for 2009 is RMB 11,667,821 ,
After deduction of minority gains and losses of RMB -377,347 and income tax expenses of RMB
-45,510, net profit is RMB12,090,678, will be used to make up its previous loss，the total year-end
undistributed profit is - RMB -102,767,941. The Company is neither to distribute profit nor to capitalize capital
surplus for the current year.38/125
Section VIII Report of the Supervisory Committee
I. The meetings of the supervisory committee
In the report period，the supervisory committee of the Company held three meetings in total.
(1) In the morning of April 21, 2009, the 5th meeting of the fifth supervisory committee of Shenzhen Victor
Onward Textile Industrial Co., Ltd. was held on 16/F of Union Building, Shennan Road Central, Shenzhen. The
meeting examined and adopted the following resolutions:
1. 2008 Work Report of the Company;
2. 2008 Auditor's Report of A shares and B shares of the Company ;
3. Profit Distribution Preplan of the Company for 2008 and Its Profit Distribution Policy for 2009;
4. 2008 Annual Report and 2008 Annual Report (Summary) of the Company;
5. Special Statement on Matters Involved in Unqualified Auditor's Report with Highlighted Matter Paragraph for 2008;
6. The Proposal for Applying to Shenzhen Stock Exchange for Special Treatment of the Company's
Stocks to Warn about Risks of Delisting;
7. Report on Self-evaluation on Internal Control of Shenzhen Victor Onward Textile Industrial Co., Ltd.
in 2008;
8. The First Quarterly Report 2009.
（II）In the morning of August 17, 2009, the 5th meeting of the fifth supervisory committee of the Company was held
through voting by correspondence. The meeting examined and adopted the following resolutions: 2009 Semiannual
Report of Shenzhen Victor Onward Textile Industrial Co., Ltd and its Summary.
（III）In the morning of October 29,2009, the 4th meeting of the fifth supervisory committee of the
Company was held through voting by correspondence. The meeting examined and adopted the following
resolutions: The Report of Shenzhen Victor Onward Textile Industrial Co., Ltd. for the Third Quarter of
2009.
II. In the report period，the supervisory committee seriously performed its duties and expressed
independent opinions in respect of the following matters:
1. The operation of the Company according to law.
In the report period, the Company operated strictly according to Company Law, Securities law and the
Articles of Association of the Company and other relevant laws and regulations. The Company's
procedure of decision was legal and its internal control system was sound. The directors and managers39/125
of the Company all did their duties during their work and none of their acts were found to violate the
laws, regulations and the Articles of Association or harm the Company's interests.
2. Inspection of the financial status of the Company.
The Supervisory Committee carefully checked and examined the financial data of the Company including the financial
report of the Company for 2008 audited by Shine Wing Certified Public Accountants and held the opinion that the
unqualified auditor's report of the Company for 2008 with paragraph of emphasized matters issued by Shine Wing
Certified Public Accountants was true and gave a true view of the financial position and operating results of the
Company.
3. The Company did not raise funds in the report period. The funds last raised after listing were
invested in such projects as promised in Prospectus.
4. Neither insider trading nor act that caused harm to the rights and interests of part of shareholders or
the loss of the Company's assets was found in respect of the transaction price of the assets purchased or
sold by the Company.
5. The related transactions between the Company and associated enterprises (companies) were
conducted in a fair manner and at market prices. The joint investment made by the Company and related
enterprises is in keeping with the interests of the Company. Relevant voting procedure complied with
relevant provisions of the Articles of Association of the Company and Stock Listing Rules of Shenzhen
Stock Exchange and related directors observed the regulations on absence during vote. The related
transactions were fair and reasonable and did not harm the interests of the Company and middle and
small shareholders.
6. In the report year, Shine Wing Certified Public Accountants issued unqualified auditor's report with
paragraph of emphasized matters for the Company's financial report for 2008. Company board of
supervisors that: the cost in printing & dyeing industry is continuing high in Shenzhen. the printing &
dyeing business of the Company and Productions & operations are in serious difficulties and are hard to
continue normal operation. the Company controlled subsidiary Nanhua Printing & Dyeing and the
Company ownerd Printing & Dyeing Factory are continuously suspended for rectification. As the
transfer of the Company's printing and dyeing business is somewhat delayed, the production and
operating activities of the Company have been seriously affected, In accordance with the provisions of
13.3.1 of Stock Listing Rules of Shenzhen Stock Exchange, Shenzhen Stock Exchange carried out
special treatment of the stocks of the Company from August 27, 2007. Special treatment was given to
the trading of the stocks of the Company to warn about the risk of delisting on April 24, 2009.
Section IX Important Events
I. The Company did not get involved in any material lawsuit or arbitration in the report period.
II. The acquisition and disposal of assets and merger by absorption in which the Company was
involved in the report period.
On June 19, 2009，The special resolution of the board of directors of Shenzhen Victor Onward Textile40/125
Industrial Co., Ltd.: The meeting examined and adopted the resolution for Acquiring 3.66 Equity of
Shenzhen Nanyou Development & Construction Co., Ltd. On August 24, 2009, both parties signed
equity assignment agreement and the Company purchased 3.66% equity of Nanhua Company, a
subsidiary at the price of RMB 1.4 million.
III. Related transactions.
(I) Related transactions related to daily operation
1.Related leased
In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union Group. The term of
tenancy is from January 1, 2009 to May 31,2009. The monthly rent is RMB 6800. The rent was determined according
to market price.
In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union Group. The term of
tenancy is from March 1, 2009 to December 31, 2009. The monthly rent is RMB 6800. The rent was determined
according to market price.
(2) Fund transfer between the Company and related parties( Unit:RMB)
Related party
Amount of
period-end
Amount of
period-begin
Account receivable
Shenye Union(Hong Kong) 325,127 325,644
Other receivable
Union Group 21,566,542 20,492,359
Union Property 3,671,008 3,473,200
3. Other material related transactions
No other material related transaction.
4. Significant contracts and their performance
(I) The Company did not hold in trust or contract for or lease the assets of other companies nor did other
companies nor did other companies hold in trust or contract for the assets of the Company in the report
period.
(2). Significant guarantee:
(A) In the report period, the Company did not provided the external guarantee mentioned in ZJF (2003) No. 56
Document issued by CSRC. There was no significant guarantee that was provided in previous periods but continued to
be valid in the report period. The Company will actively implement the gist of ZJF No. 56 Document strictly according
to the requirements of laws and regulations of the Company Law, the Securities Law, Stock Listing Rules and the
Articles of Association of the Company, further standardize the fund transfer between the Company and the controlling41/125
shareholder and other related parties, lower operation risk and protect the legitimate rights and interests of investors.
(B) The special statement and independent opinions of the independent directors on the external guarantee of the
Company.
According to the gist of ZJF (2003) No. 56 Document - Circular on Certain Issues Relating to Standardization of
Fund Transfer Between Listed Companies and Their Related Parties and Guarantees Provided by Listed Companies
("the Circular") issued by CSRC, we, as the Company's independent directors，seriously examined the status of the
external guarantee provided by the Company with practical attitude and hereby give our opinions on relevant issues:
According to the result of our prudent investigation，as of December 31, 2009,the Company did not provide guarantee
to its controlling shareholder, other related parties of which the Company holds less than 50% equity, any
unincorporate entity or individual against regulations nor did the controlling shareholder and other related parties force
the Company to provide guarantee to others as of the end of the report period. In the report period，the Company
specified the examination and approval procedure of external guarantee and the credit standards for the object of
guarantee according to the gist of the Circular, added the same to the revised Articles of Association of the Company,
strictly observed the provisions of the Articles of Association of the Company and strictly controlled the risks of its
external guarantee.
（3）The Company did not entrust others to manage its cash assets in the report period.
（4）Other significant contracts
The first provisional shareholders' general meeting of Shenzhen Victor Onward Textile Industrial Co.,
Ltd. in 2007 held on April 6, 2007 adopted the proposal for increasing capital of Nanjing East Asia
Textile Printing and Dyeing Co., Ltd.
Nanjing East Asia Textile Printing and Dyeing Co., Ltd. ("Nanjing East Asia") is a sino-foreign equity
joint venture legally registered in Nanjing. The Company plans to operate Nanjing East Asia as a joint
venture through increasing share capital of Nanjing East Asia. The Company is to increase capital of
Nanjing East Asia with material objects valued at RMB 30 million as registered capital (full payment of
subscribed registered capital is subject to the appraised value accepted by both parties), which accounts
for 30% of total registered capital. The original shareholders of Nanjing East Asia are to invest RMB 70
million in Nanjing East Asia as registered capital (Full payment of subscribed registered capital is
subject to audited amount accepted by both parties), which accounts for 70% of total registered capital.
After completion of share capital increase, Nanjing East Asia will be renamed as NAN JING VICTOR
ONWARD PRINTING & DYEING CO.,LTD .
The said share capital increase has been approved by the department in charge of foreign capital in
Nanjing. The relevant procedures are being processed.
(5) In accordance with the notice of Shenzhen Stock Exchange about Fair Information Disclosure of Listed
Companies, the Company improved internal control system and procedure for information disclosure and formulated
reception and introduction system, information disclosure, reference and registration system. The Company and
relevant information disclosure obligors strictly abode by the principle of fair information disclosure,
neither implemented discriminatory policy nor disclosed, revealed or divulged non-open significant42/125
information to specific objects.
Reception Place Mode Object Discussion issue and offered
information
2009 Office of
board
secretary
of the
Comapny
Telephone Individual
investor
The Company communicated with
investors in respect of its production
and operation status, special treatment
of trading of its stocks and its
reorganization and listened to the
opinions of investors.
(VI)Commitment made by the Company or shareholders holding over 5% of shares of the Company.
1.Capital commitments
1.As of December 31, 2009, Group has signed a contract but there are still outstanding major agreement total
foreign investment RMB 30 million .Specific conditions are as follows:
Name Investment
amount
Payable
amount
of
investm
ent
Non-payable
amount of
investment
Investme
nt Period
Notes
Investment in
machinery and
equipment in
Nanjing East asia
Textiles Co., ltd.
30 million - 30 million
Not because
of the other
production
sites can not
be completed
relocation
2.The Signed or is ready to carry out the contract of large contracts
As of December 31, 2009,The Group still has signed the agreement but did not pay large amounts of letting
contracts total RMB 1.71 million. Specific conditions are as follows:
Name Investment
amount
Payable
amount of
investment
Non-payab
le amount
of
investment
Investment
Period
Notes
The
lelocation of
production
equipment as
a whole
works
1,710,000 855,000 855,000
Not because of the
other production
sites can not be
completed
relocation
3.According to the signed contract or provision to carry lease contract and financial impact.
On December 31, 2009(T), According to the signed irrevocable contract for operating lease, the lowestrent to be43/125
paid in the future is as follow:
Period Business lease
Within 1 year（Including 1 year） 29,862
Over 1 year and Within 2 years（Including 2
years） -
Over 2 years and within 3 years（Including 3
years） -
Over 3 years -
Total 29,862
（II）Unfreezing of restricted shares held after share holding structure reform in the report period
The restricted A shares held by relevant shareholders holding non-negotiable shares in A share market
after the share holding structure reform ( 43,141,032 shares held by Union Holdings Co., Ltd. and
5,365,251 shares held by Shenzhen Textile (Holdings) Co., Ltd. were all unfrozen on June 29, 2009.
The promise made by Union Holdings Co., Ltd., the largest shareholder of the Company, in the share
holding structure reform of the Company: If it sells the unfrozen negotiable shares of the Company held
by it through the trading system of Shenzhen Stock Exchange six months after unfreezing of shares and
sells 5% or more than 5% of total shares within six months from the first sale, it shall strictly meet the
requirements of relevant laws, regulations and rules and timely notify the Company to make
announcement about share sales. The content of disclosure: The quantity of shares to be sold, the
planned time of sale, the range of selling price and reason for selling and other information required by
Shenzhen Stock Exchange. this commitment is under fulfillment.
(VII)Engagement and ismission of Certified public Accountants
In the report period, The Company still engaged Shine Wing Certified Public Accountants to do
the auditing work .The annual auditing fees totaled RMB 0.30 million, Shine Wing Certified Public
Accountants has providing auditing service for 4 years for the Company in succession.
(VIII) Punishment to the Company , its Directors, Supervisors and senior Managment and rectification
in the reporting period.
In the report period, none of the Company, its Directors,Supervisors, senior Management ,
Shareholders or actual controllers was subject to investigation by cometent authorities, enforcement
measures by judicial and regulatory authorities, transfer to judicial departments or prosecution for
criminal liability, inspection or administrative punishment by CSRC, non-admission to securities
market, or punishment by other administrative departments or public condemnation by the Zhenzhen
Exchange as a result of being identified as an inappropriate candidate.44/125
(IX) Future issues of balance sheet
This Group had no other significant matters after the balance sheet date.
(X) Other material events
Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and
dismissed most of workers. The company currently only had some agent import and export business and
house leasing business.
Except that the Shenzhen Dongya Company was operating normally, the other subsidiaries controlled by the company
had stopped the operation and were depending on house lease to maintain. In 2007 the company intended to invest part
of machineries and equipments to Nanjing Dongya Textile Printing & Dyeing Co., Ltd. But due to the reasons of the
joint venture party and the prospect change in the industry, the investment plan was continually delayed.
The company mainly made efforts to promote the transfer of printing and dyeing mill project, the company will
strengthen construction direction coordination work，in order to carry out the transfer project as soon as possible.
The land for the factory building and office building of the Company located at 26 Kuipeng Road,
Baishigang, Kuiyong Town, Longgang District, Shenzhen (with area of about 98000 square meters and
floorage of about 48000 square meters) was obtained through lease. The lease term expires on March 31,
2009. The Company applied to Shenzhen Planning Bureau for handling this left-over problem. On
January 7, 2009, Binhai Sub-bureau of Shenzhen Planning Bureau gave approval and the Company
obtained the scheme drawing for construction land. On December 2, 2009, Shenzhen Real Estate Title
Registration Center published an announcement of initial registration of real estate in Shenzhen (Deng
Zi No. 20090297) on Shenzhen Commercial Daily and clarified the preliminary examination result
about the land covering area of 48058.19 square meters. Real estate title deed was issued to the
Company 30 days after the announcement. This land was planned for industrial use. The land
application procedure for the remaining houses on Kuiyong factory site in Longgang District (land area
of about 50000 square meters and floorage of about 25000 square meters) is still awaiting handling by
relevant governmental department.
Section X Financial Report
Auditor’s report
XYZH/2009SZA1030-1
To All shareholders of Shenzhen Victor onward Textile Industrial Co., Ltd.：
We audited accompanying consolidated financial statements and financial statements of the parent
company of Shenzhen Victor Onward Textile Industrial Co., Ltd.(hereinafter referred to as "the
Company"), including balance sheet as at December 31, 2009, profit statement, cash flow
statement and statement of changes in shareholders' equity for the year then ended and the notes to
financial statements.
I. Management’s responsibility for the financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with international Financial Reporting Standards. This responsibility includes: designing, implementing and45/125
maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
polices; and making accounting estimates that are reasonable in the circumstances.
II. Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to report
our opinion solely to you, as a body, and for no other purpose. We conducted our audit in accordance with International
Standards on Auditing, Those standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, In making
those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
III. Opinion
In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as
of 31 December 2009, and of its profit and cash flows for the year then ended in accordance with International
Financial Reporting Standard.
IV. Matters emphasized
We remind the users of financial statements to pay attention to the fact that the Company stopped production and
dismissed most of workers since March 2007. And most subsidiaries of the company had stopped
production and it maintained daily operation by house leasing. Shenzhen Victor Onward Textile
Industrial Co., Ltd. had disclosed its improvement measures in Note 13 of Financial Statement, but its
sustainable operation ability is still uncertain. This paragraph does not affect audit opinions that have
been given.
Shine Wing Certified public Accountants
C.P.A：Guo Jinlong
C.P.A：Xia Wei
Beijing China
April 7, 2010
Consolidated Balance Sheet46/125
December 31, 2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Items Notems Amount of period-end Amount of period-begin
Current assets：
Monetary funds VIII,1 56,105,626 61,368,428
Settlement provisions
Capital lent
Transaction finance assets VIII,2 171,221 36,687
Bill receivable VIII,3 - 850,000
Accounts receivable VIII,4 2,398,250 2,746,095
Prepayments VIII,5 942,126 1,815,897
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Interest receivable VIII,6 5,480 91,087
Dividend receivable
Other receivables VIII,7 1,227,246 614,673
Purchase restituted finance assets
Inventory VIII,8 856,553 3,510,747
Non-Current assets within one year
Other Current assets
Total currents assets 61,706,502 71,033,614
Non-current assets
Granted loans and advances
Finance assets available sales VIII,9 309,399 207,255
Held-to maturity securities
Long-term account receivable
Long-term equity investment VIII,10 68,427,751 47,184,759
Investment property VIII,11 44,445,185 48,165,784
Fixed assets VIII,12 18,772,745 22,737,791
Construction in progress
Engineering material
Disposal of fixed assets
Consumable biological assets
Oil and gas assets
Intangible assets VIII,13 2,117,958 -
Expense on research and development
Goodwill VIII,14 5,538,694 3,594,648
Long-term expenses to be apportioned
Deferred income tax assets
Other non-current assets
Total non-current assets 139,611,732 121,890,237
Total assets 201,318,234 192,923,851
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng47/125
Consolidated Balance Sheet(Cont’d)
December 31, 2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Items Notes Amount of period-endAmount of period-begin
Current liabilities
Short-term loan
Loan from Central Bank
Deposit received and hold for others
Call loan received
Trade off financial liabilities
Bill payable
Account payable VIII,15 4,101,084 6,175,741
Prepayment VIII,16 4,555,433 5,281,103
Selling of repurchased financial assets
Fees and commissions receivable
Employees’ wage payable VIII,18 559,967 599,884
Tax payable VIII,19 2,519,063 4,551,693
Interest payable
Dividend payable VIII,20 1,320,637 1,322,737
Other account payable VIII,21 30,926,067 30,064,983
Reinsurance fee payable
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Non-current liability due in 1 year
Other current liability 1,139,376 1,137,304
Total of current liability 45,121,627 49,133,445
Non-current liabilities：
Long-term loan VIII,22 1,534,300 1,674,164
Bond payable
Long-term payable VIII,23 9,217,564 9,232,220
Special payable
Expected liabilities
Differed income tax liability VIII,24 968,868 1,015,950
Other non-current liabilities VIII,25 908,839 910,284
Total of non-current liabilities 12,629,571 12,832,618
Total of liability 57,751,198 61,966,063
Owners’ equity
Share capital VIII,26 169,142,356 169,142,356
Capital reserves VIII,27 39,297,104 39,194,631
Less：Shares in stock
Special reserves
Surplus reserves VIII,28 26,704,791 26,309,287
Common risk provision48/125
Undistributed profit VIII,29 -102,767,941 -115,810,517
Different of foreign currency translation 10,682,638 11,237,577
Total of owner’s equity belong to the parent company 143,058,948 130,073,334
Minor shareholders’ equity VIII,30 508,088 884,454
Total of owners’ equity 143,567,036 130,957,788
Total of liabilities and owners’ equity 201,318,234 192,923,851
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Profit statement
2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co.,
Ltd. Unit ：RMB
Items s Notes Report period Same period of the
previous year
I.Total business income 27,517,759 46,881,258
Incl：Business income VIII,31 27,517,759 46,881,258
Interest income
Insurance fee earned
Fee and commission received
II.Total business cost 37,293,220 62,521,924
Incl：Business cost VIII,31 22,624,986 41,341,329
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Net insurance policy reserves
Insurance policy dividend paid
Reinsurance expenses
Business tax and surcharge VIII,32 540 458
Sales expense 2,267,860 2,629,457
Administrative expense VIII,33 7,977,421 10,098,033
Financial expenses VIII,34 802,606 -353,989
Asset impairment loss VIII,35 3,619,807 8,806,636
Add：Gains from change of fair value （“-”for
loss）
VIII,36 48,912 -96,798
Investment gain（“-”for loss） VIII,37 21,631,618 -10,351,600
Incl: investment gains from affiliates 21,337,265 -10,599,828
Gains from currency exchange（“-”for loss）
III. Operational profit（“-”for loss） 11,905,069 -26,089,064
Add：Non-business income VIII,38 552,940 116
Less：Non business expenses VIII,39 790,188 79,687
Incl：Loss from disposal of non-current
assets
13,693 10,994
IV.Total profit(“-”for loss) 11,667,821 -26,168,63549/125
Less：Income tax expenses VIII,40 -45,510 -111,294
V. Net profit（“-”for net loss） 11,713,331 -26,057,341
Of which: the net profit realized by the
party being merged before the merger
12,090,678 -25,957,333
Net profit attributable to the owners of parent
company -377,347 -100,008
Minority shareholders’ gain & loss — —
VI. Earnings per share： VIII,41 0.07 -0.15
（I）Basic earnings per share VIII,41 0.07 -0.15
(II)Diluted earnings per share VIII,42 -451,485 -13,459,812
VII. Other comprehensive income 11,261,846 -39,517,153
VIII. Total comprehensive income 11,638,212 -39,528,778
Total comprehensive income attributable to the
owner of the parent company -376,366 11,625
Total comprehensive income attributable minority shareholders
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Cash flow statement
2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit ：RMB
Items Notes Report period
Same
period of
the
previous
year
I.Cash flows from operating activities
Cash received from sales of goods or rending of services 22,924,742
42,451,32
6
Net increase of customer deposits and capital kept for brother
company
Net increase of loans from central bank
Net increase of inter-bank loans from other financial bodies
Cash received against original insurance contract
Net cash received from reinsurance business
Net increase of client deposit and investment
Net increase of trade financial asset disposal 269,610
241,685
Cash received as interest, processing fee and commission
Net increase of inter-bank fund received
Net increase of repurchasing business
Tax returned 1,950,22750/125
7,337,725
Other cash received from business operation
VIII,4
3
12,255,169
11,822,85
8
Sub-total of cash inflow 37,399,748 61,853,594
Cash paid for purchasing of merchandise and services 22,837,806
33,828,569
Net increase of client trade and advance
Net increase of savings n central bank and brother company
Cash paid for original contract claim
Cash paid for interest, processing fee and commission
Cash paid for policy dividend
Cash paid to staffs or paid for staffs 4,317,377
4,155,118
Taxes paid 2,405,719
2,814,600
Other cash paid for business activities
VIII,4
4 8,705,286
7,433,886
Sub-total of cash outflow from business activities 38,266,188 48,232,173
Cash flow generated by business operation, net -866,440 13,621,421
II.Cash flow generated by investing
Cash received from investment retrieving
Cash received as investment gains 3,044
6,490
Net cash retrieved from disposal of fixed assets, intangible assets, and
other long-term assets 65,749
116
Net cash received from disposal of subsidiaries or other operational units
Other investment-related cash received
Sub-total of cash inflow due to investment activities 68,793 6,606
Cash paid for construction of fixed assets, intangible assets and other
long-term assets 2,830,657
26,351
Cash paid as investment 1,407,076
2,835,100
Net increase of loan against pledge
Net cash received from subsidiaries and other operational units
Other cash paid for investment activities
Sub-total of cash outflow due to investment activities 4,237,733 2,861,451
Net cash flow generated by investment -4,168,940 -2,854,84
5
III.Cash flow generated by financing
Cash received as investment
Incl: Cash received as investment from minor shareholders51/125
Cash received as loans
Cash received from bond placing
Other financing –related ash received
Sub-total of cash inflow from financing activities -
-
Cash to repay debts 137,332
143,985
Cash paid as dividend, profit, or interests
Incl: Dividend and profit paid by subsidiaries to minor shareholders
Other cash paid for financing activities
Sub-total of cash outflow due to financing activities 137,332 143,985
Net cash flow generated by financing -137,332 -143,985
IV.Influence of exchange rate alternation on cash and cash equivalents -90,090
-1,911,01
5
V.Net increase of cash and cash equivalents -5,262,802
8,711,576
Add: balance of cash and cash equivalents at the beginning of term 61,368,428
52,656,85
2
VI. Balance of cash and cash equivalents at the end of term 56,105,626 61,368,42
8
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng52/125
Consolidated Statement on Change in Owners’ Equity
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. 2009 Unit：RMB
Amount of the Current term
Owner’s equity Attributable to the Parent Company
Items
Share Capital Capital
reserves
Less:
Shares
in
stock
Specialized
reserve Surplus reserves
Common
risk
provision
Attributable
profit Other
Minor
shareholders’
equity
Total of
owners’ equity
I.Balance at the end of last year 169,142,356 39,194,631 - - 26,309,287 - -115,810,517 11,237,577 884,454 130,957,788
Add: Change of accounting policy -
Correcting of previous errors -
Other -
II.Balance at the beginning of current year 169,142,356 39,194,631 - - 26,309,287 - -115,810,517 11,237,577 884,454 130,957,788
III.Changed in the current year - 102,473 - - 395,504 - 13,042,576 -554,939 -376,366 12,609,248
（I） Net profit 12,090,678 -377,347 11,713,331
（II）Other misc.income 102,473 -554,939 981 -451,485
Total of (I) and (II) - 102,473 - - - - 12,090,678 -554,939 -376,366 11,261,846
(III) Investment or decreasing of capital by
owners - - - - - - 1,347,402 - - 1,347,402
1. Capital inputted by owners -
2．Amount of shares paid and accounted as
owners’ equity -
3. Other 1,347,402 1,347,402
（IV）Profit allotment - - - - 395,504 - -395,504 - - -
1.Providing of surplus reserves 395,504 -395,504 -
2．Common risk provision -
3. Allotment to the owners (or shareholders) -
4. Other -
(V) Internal transferring of owners’ equity - - - - - - - - - -
Capitalizing of capital reserves
(or to capital shares) -
2. Capitalizing of surplus reserves
(or to capital shares) -
3．Making up losses by surplus reserves. -
4. Other -53/125
(VI) Special reserves - - - - - - - - - -
1. Provided this year -
2．Used this term -
IV. Balance at the end of this term 169,142,356 39,297,104 - - 26,704,791 - -102,767,941 10,682,638 508,088 143,567,036
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Statement on Change in Owners’ Equity(Cont’d)
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. 2009 Unit：RMB
Amount of the previous term
Owner’s equity Attributable to the Parent Company
Items
Share Capital Capital
reserves
Less:
Shares
in stock
Specialized
reserve
Surplus
reserves
Common
risk
provision
Attributable
profit Other
Minor
shareholders’
equity
Total of owners’
equity
I.Balance at the end of last year 169,142,356 43,881,067 - 26,309,287 -89,853,184 20,122,586 872,829 170,474,941
Add: Change of accounting policy -
Correcting of previous errors -
Other -
II.Balance at the beginning of current year 169,142,356 43,881,067 - - 26,309,287 - -89,853,184 20,122,586 872,829 170,474,941
III.Changed in the current year - -4,686,436 - - - - -25,957,333 -8,885,009 11,625 -39,517,153
（I） Net profit -25,957,333 -100,008 -26,057,341
（II）Other misc.income -4,686,436 -8,885,009 111,633 -13,459,812
Total of (I) and (II) - -4,686,436 - - - - -25,957,333 -8,885,009 11,625 -39,517,153
(III) Investment or decreasing of capital by
owners - - - - - - - - - -
1. Capital inputted by owners -
2．Amount of shares paid and accounted as
owners’ equity -
3. Other -
（IV）Profit allotment - - - - - - - - - -
1.Providing of surplus reserves -
2．Common risk provision -
3. Allotment to the owners (or shareholders) -54/125
4. Other -
(V) Internal transferring of owners’ equity - - - - - - - - - -
Capitalizing of capital reserves
(or to capital shares) -
3. Capitalizing of surplus reserves
(or to capital shares) -
3．Making up losses by surplus reserves. -
4. Other -
(VI) Special reserves - - - - - - - - - -
1. Provided this year -
2．Used this term -
IV. Balance at the end of this term 169,142,356 39,194,631 - - 26,309,287 - -115,810,517 11,237,577 884,454 130,957,788
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng55/125
Parent Company Balance sheet
December 31, 2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit ：RMB
Assets Notes Year-end balance Year-beginning balance
Current asset：
Monetary fund 24,960,502 30,750,018
Trading financial assets 85,725 -
Bill receivable
Account receivable XIV,1 488,528 714,042
Prepayments
Insurance receivable
Dividend receivable
Other account receivable XIV,2 81,416,712 82,236,725
Inventories 444,557 2,625,685
Non-current asset due in 1 year
Other current asset
Total of current assets 107,396,024 116,326,470
Non-current asset
Disposable financial asset
Expired investment in possess
Long-term receivable
Long term share equity investment XIV,3 41,317,197 39,974,858
Property investment 6,595,088 6,972,363
Fixed assets 14,867,709 18,441,088
Construction in progress
Engineering material
Fixed asset disposal
Production physical assets
Gas & petrol
Intangible assets 2,117,958 -
R & D petrol
Goodwill
Long-germ expenses to be amortized
Differed income tax asset
Other non-current asset
Total of non-current assets 64,897,952 65,388,309
Total of assets 172,293,976 181,714,779
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Parent Company Balance Sheet(Cont’d)56/125
December 31, 2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit ：RMB
Items Notes Year-end balance Year-beginning balance
Current liabilities
Short-term loans
Trade off financial liabilities
Bill payable
Account payable 1,793,753 1,867,796
Received in advance 3,448,961 2,464,838
Employees’ wage payable 559,967 560,676
Tax payable 1,192,456 3,864,340
Interest payable
Dividend payable
Other account payable 652,984 720,894
Non-current liability due in 1 year
Other current liability 1,139,376 1,137,304
Total of current liability 8,787,497 10,615,848
Non-current liabilities：
Long-term loan
Bond payable
Long-term payable
Deferred income 908,839 910,284
Special payable
Projected liabilities
Deferred income tax liabilities 4,294,606 3,519,356
Other non-current liabilities
Total non-current liabilities 5,203,445 4,429,640
Total liabilities 13,990,942 15,045,488
Owners’ equity
Share capital 169,142,356 169,142,356
Capital reserves 31,606,598 31,606,598
Less：Shares in stock
Special reserves
Surplus reserves 26,309,287 26,309,287
Common risk provision
Undistributed profit -76,527,638 -68,418,602
Different of foreign currency translation 7,772,431 8,029,652
Total of owner’s equity 158,303,034 166,669,291
Total of liabilities and owners’ equity 172,293,976 181,714,779
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng57/125
Parent Company Profit statement
2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items Notes Report period
Same period
of the
previous year
I. Operating income XIV,4 12,161,743
20,308,550
Less：operating cost XIV,4 11,514,289
20,208,219
Operating tax and extras
Sales expenses
Administration expenses 5,049,672
6,359,263
Financial expenses -1,075,506
-4,540,128
Losses of devaluation of assets 3,606,721
8,256,535
Add：changing income of fair value
Investment income XIV,5 290,960
241,685
Including：Investment income on affiliated company and joint
venture
III.Operating profit -6,642,473
-9,733,654
Add：non-operating income 24,248
less：non-operating expense 709,264
13,496
Including：disposal loss of non-current assets 5,983
-
IV. Total profit -7,327,489
-9,747,150
Less：expense of income tax 781,547
-
V. Net profit -8,109,036
-9,747,150
VI. Earnings per share — —
（i）basic earnings per share
（ii）Diluted earnings per share
VII. Other comprehensive income -257,221
-10,770,178
VIII. Total comprehensive income -8,366,257
-20,517,328
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng58/125
Parent Company Cash Flow Statement
2009
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items Notes Report period Same period of the
previous year
I. Cash flows arising form operating activities:
Cash received from selling commodities and providing labor
services
12,978,391
20,013,418
Net increase of disposal of transaction financial assets
269,610
241,685
Write-back of tax received
797,227
840,576
Other cash received concerning operating activities
3,155,976
4,283,430
Subtotal of cash inflow 17,201,204 25,379,109
Cash paid for purchasing commodities and receiving labor
service
13,184,921
16,769,837
Cash paid to/for staff and worker
2,346,409
1,964,505
Taxes paid
827,766
1,284,079
Other cash paid concerning operating activities
2,493,330
3,011,613
Subtotal of cash outflow 18,852,426 23,030,034
Net cash flows arising form operating activities -1,651,222 2,349,075
II. Cash flows arising form investing activities
Cash received form recovering investment
Cash received form investment income
Net cash received form disposal of fixed , intangible and
other long-term assets
56,583
Net cash received from disposal of subsidiaries and
other units
Other cash received concerning investing activities
Subtotal of sash inflow 56,583 -
Cash paid for purchasing fixed, intangible and other
long-term assets
2,744,201
-
Cash paid for investment
1,407,076
2,835,100
Net cash received from subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow 4,151,277 2,835,100
Net cash flows arising from investing activities -4,094,694 -2,835,100
III. Cash flows arising from financing activities
Cash received from absorbing investment
Cash received from loans
Other cash received concerning financing activities59/125
Subtotal of cash inflow - -
Cash paid form settling debts
Cash paid for dividend and profit distributing or interest paying
Other cash paid concerning financing activities
Subtotal of cash outflow - -
Net cash flows arising from financing activities - -
IV. Influence on cash due to fluctuation in exchange rate -43,600 -231,644
V.Net increase of cash and cash equivalents -5,789,516 -717,669
Add：Balance of cash and cash equivalents at the period
-begin
30,750,018
31,467,687
VI. balance of cash and cash equivalents at the period-end. 24,960,502 30,750,018
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng60/125
Parent Company Statement on Change in Owners’ Equity
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd 2009 Unit：RMB
Amount of the Current term
Items Share CapitalCapital reservesLess: Shares in
stock
Specialized
reserve
Surplus
reserves
Common
risk
provision
Attributable
profit
Different of foreign
currency translation
Total of
owners’ equity
I.Balance at the end of last year 169,142,356 31,606,598 - - 26,309,287 - -68,418,602 8,029,652 166,669,291
Add: Change of accounting policy -
Correcting of previous errors -
Other -
II.Balance at the beginning of current year 169,142,356 31,606,598 - - 26,309,287 - -68,418,602 8,029,652 166,669,291
III.Changed in the current year - - - - - - -8,109,036 -257,221 -8,366,257
（I） Net profit -8,109,036 -8,109,036
（II）Other misc.income -257,221 -257,221
Total of (I) and (II) - - - - - - -8,109,036 -257,221 -8,366,257
(III) Investment or decreasing of capital by
owners - - - - - - - - -
1. Capital inputted by owners -
2．Amount of shares paid and accounted as
owners’ equity -
3. Other -
（IV）Profit allotment - - - - - - - - -
1.Providing of surplus reserves -
2．Common risk provision -
3. Allotment to the owners (or shareholders) -
4. Other -
(V) Internal transferring of owners’ equity - - - - - - - - -
Capitalizing of capital reserves
(or to capital shares) -
4. Capitalizing of surplus reserves
(or to capital shares) -
3．Making up losses by surplus reserves. -
4. Other -
(VI) Special reserves - - - - - - - - -
1. Provided this year -61/125
2．Used this term -
IV. Balance at the end of this term 169,142,356 31,606,598 - - 26,309,287 - -76,527,638 7,772,431 158,303,034
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Parent Company Statement on Change in Owners’ Equity（Cont’d）
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd 2009 Unit：RMB
Amount of the previous term
Items
Share Capital Capital
reserves
Less:
Shares
in
stock
Speci
alize
d
reser
ve
Surplus
reserves
Common
risk
provision
Attributable
profit
Different of
foreign
currency
translation
Total of
owners’ equity
I.Balance at the end of last year 169,142,356 31,606,598 26,309,287 -58,671,452 18,799,830 187,186,619
Add: Change of accounting policy -
Correcting of previous errors -
Other -
II.Balance at the beginning of current year 169,142,356 31,606,598 - - 26,309,287 - -58,671,452 18,799,830 187,186,619
III.Changed in the current year - - - - - - -9,747,150 -10,770,178 -20,517,328
（I） Net profit -9,747,150 -9,747,150
（II）Other misc.income -10,770,178 -10,770,178
Total of (I) and (II) - - - - - - -9,747,150 -10,770,178 -20,517,328
(III) Investment or decreasing of capital by
owners - - - - - - - -
1. Capital inputted by owners -
2．Amount of shares paid and accounted as
owners’ equity -
3. Other -
（IV）Profit allotment - - - - - - - -
1.Providing of surplus reserves -
2．Common risk provision -
3. Allotment to the owners (or shareholders) -
4. Other -
(V) Internal transferring of owners’ equity - - - - - - - -62/125
Capitalizing of capital reserves
(or to capital shares) -
5. Capitalizing of surplus reserves
(or to capital shares) -
3．Making up losses by surplus reserves. -
4. Other -
(VI) Special reserves - - - - - - - -
1. Provided this year -
2．Used this term -
IV. Balance at the end of this term 169,142,356 31,606,598 - - 26,309,287 - -68,418,602 8,029,652 166,669,291
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
63/125
1.Basic Information of the Company
Shenzhen Victor Onward Textile Industrial Co., Ltd. (hereinafter referred to as "the
Company"), grew out of the Xingnan Printing Factory Co., Ltd, founded in 1980, was
the first wholly foreign-owned enterprise in Shenzhen. In April 1984, Xingnan Printing
Factory Co., Ltd was changed into foreign joint venture, and was renamed Shenzhen
Victor Onward Textile Industrial Co., Ltd. . On November 19, 1991, the Company was
reorganized into a joint stock limited company and renamed Shenzhen Victor Onward
Textile Industrial Co., Ltd. pursuant to the approval of Shenzhen Municipal
Government.
The domestically listed RMB ordinary shares ("A shares, Stock code: 000018" ) and
domestically listed foreign investment shares ("B shares ,stock code: 200018") issued
by the Company were listed on Shenzhen Stock Exchange in 1992.
By December 31, 2009, the total share capital was 169,142,356 million shares, of which
circulating A-share 99,720,453 shares, circulating B-share 69,421,903. of which Union
Holdings Co., Ltd. (hereinafter referred to Union Holdings ) holding limit-sale A-share
69,421,903 shares, accounting for 25.51% of the total equity, is the controlling
shareholder of the company, Union Development Group Co., Ltd. (hereinafter referred
to Union Group)holding circulating A –share 5,821,089 shares, accounting for 3.44% of
the total equity, Union Group holds 31.32% of equity of Hualian Holdings and has the
right to control Union Holdings, thus Union Group is the actual controller of the
Company.
By December 31, 2009, Victor Onward printing and dyeing (Hong Kong) Co., Ltd.
(hereinafter referred to as "Hong Kong Victor Onward"), Hong Kong Victor Onward
Digital Printing Co., Ltd. (hereinafter referred to as "Victor Onward Digital Printing"),
Shengzhong Industrial Co., Ltd. (hereinafter referred to as "Shengzhong") , Shenzhen
Vea opel Garment Co., Ltd (hereinafter referred to as "Vea opel") ,Shenzhen East Asia
Victor onward Holding (hereinafter referred to as “East Asia Company)and Shenzhen
Nanhua Printing and Dyeing as well as its wholly-funded subsidiary Nanhua Xingye
Co., Ltd (hereinafter referred to as "Nanhua Xingye") are all subsidiaries of the
Company. The Company and its subsidiaries are collectively referred to as "the Group".
The Group is mainly engaged in the production and processing (printing and dyeing) and sales of
various high-grade fabrics of pure cotton, pure linen, polyester-mixed cotton, linen cotton and mixed
fiber and finished garments. Registered address: 26 Kuipeng Road, Kuiyong Town,
Longgang District, Shenzhen Legal Representative: Hu Yongfeng
II. Basis for the preparation of financial statements深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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The financial statements was prepared on the basis of the Group's continuous operation.
III.Complying with the statements in Accounting Standards for Business Enterprises
The financial statements of the Group comply with the requirements of Accounting
Standards for Business Enterprises, truly reflect the integrity of the financial situation,
operating results and cash flows, and other relevant information of the company.
IV. Accounting policies, accounting estimation and the method of preparing consolidated
financial statements
V. Accounting policies, accounting estimation and the method of preparing consolidated
financial statements
(1)Fiscal year
The fiscal year of the Group starts on January 1 and ends on December 31 on the
Gregorian calendar.
(2)Standard currency for book keeping
Except for Shenzhen East Asia Company and Veaopel taking RMB as the standard
currency for bookkeeping, the Company and other subsidiaries of the Group all take
HKD as the standard currency for bookkeeping.
(3) Basis for bookkeeping and costing principle
The Group's basis for bookkeeping is accrual system. Except that the financial assets for
transaction, the financial liabilities for transaction, and financial assets available for sale
are accounted by fair value, generally, account by historical cost.
(4) Cash and cash equivalents
The cash stated in cash flow statement refers to cash in hand and bank deposits usable for
payment at any time. Cash equivalent refers to the investments with holding period of less than
3 months and strong liquidity that are readily convertible to known amount of cash and subject
to insignificant risk of changes in value.
(5)Foreign currency Convert
（1）Foreign currency Transactions
The foreign currency transactions the Group were accounted according to the amount of foreign currency on
the first day of the current month converting to the amount of bookkeeping currency. On the balance sheet
date, foreign currency monetary items would be converted into RMB by using the spot exchange rate on the
balance sheet date, the conversion differences produced shall be directly included in the current loss and gain
except the exchange differences produced by foreign currency special loans borrowed for purchasing or
production of the assets which meet the capitalization conditions. The foreign currency non-monetary items
measured by fair value shall be converted into RMB by the spot exchange rate on the fair value date, the
conversion differences produced shall be directly included in current loss and gain as fair value changes. The深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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foreign currency non-monetary items measured by historical costs shall be converted by using the spot
exchange rate on the transaction date, and its RMB amount will not be changed.
（2）Foreign currency statement Convert
The financial statements of the company and the subsidiaries making HK dollars as
bookkeeping currency shall be converted into RMB. In the course of conversion, the assets &
liabilities items shall be converted by using the spot exchange rate on the balance sheet date,
the items of shareholders equity except for the retained profit shall be converted according to
the spot exchange rate, the items of incomes and expenses in the profit statement shall be
converted by the approximate exchange rate of spot exchange rate on the transaction date. The
conversion differences of foreign currency statements produced in the above conversions shall
be individually listed under the item of shareholders equity.
The cash flow in the cash flow statement are converted by the average exchange rate of the
market rates announced in the accounting period. The influences on cash flow from the changes
of exchange rate are separately listed in cash flow statement.
6. Financial assets
(1). Classification of financial assets:
According to investment purposes and economic nature, the financial assets of the Group can
be divided into the financial assets measured by fair value and the changes included in the
current loss and gain, the expired investments held, receivables and financial assets for sale, the
four categories.
1). The financial assets measured by fair value and the changes included in the current loss and gain: mainly
refer to the financial assets for sale in short term, which shall be listed in balance sheet in transactional
financial assets.
2). The expired investments held: refer to the non-derivative financial assets which have fixed expire date and
fixed or determined recovering amount, and the management level has the intention or ability to hold the
assets.
3). Receivables: refer to the non-derivative financial assets which have no quotation in active market but
have fixed or determined recovering amount, including notes receivable, accounts receivable, interest
receivable, dividends receivable and other receivables.
4). Financial assets for sale: include the non-derivative financial assets which are recognized as for sale when
they are initially confirmed, and the financial assets which are not divided into other categories.
(2) Confirmation and measurement of financial assets:深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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Financial assets are conducted initial confirmation by at fair value. The relevant
expenses to obtain the financial assets measured by fair value and the changes included
in the current loss and gain shall be included in the current loss and gain, the relevant
transactional expenses of other financial assets shall be the initial confirmation amount.
When the contract right of a financial asset is ended or the risk and reward of ownership
of the financial asset are transferred to the corresponding party, the confirmation of
financial assets shall be ended.
At fair value and changes in their gains and losses included in the current period of
financial assets and financial assets to be sold in accordance with the fair value of
follow-up measures; receivables and investments held to maturity using the effective
interest method to share more than the cost listed.
The changes of fair values of financial assets measured by fair value and the changes
included in the current loss and gain shall be included in the changing loss and gain of
fair value; all the interest and cash dividends obtained during the period holding the
assets shall be confirmed as investment income; upon the disposal of the assets, the
differences between the fair value and initial bookkeeping amount shall be confirmed as
investment loss and gain, and at the same time, the changing loss and gain of fair value
shall be adjusted.
The changes of fair values of financial assets for sale shall be included in equity of
shareholders; during the holding period, the interest accounted by actual interest rate
shall be included in the investment income; the cash dividends of equity tool investment
for sale shall be included in investment income upon the invested unit’s declaration of
distributing dividends; upon the disposal, the differences between the price and book
value deducting the fair value originally included in shareholders equity shall be
included in investment loss and gain.
(3). Impairment of financial assets:
Except for the financial assets measured by fair value and the changes included in
the current loss and gain, on the financial sheet date, the Group will check the book
value of other financial assets on the balance sheet date, if there is objective evidence
showing that impairment has happened on a financial asset, provision for the
impairment shall be drown. If dramatic or non-temporary decline has happened on the
financial assets for sale, the accumulative loss originally included in shareholders equity
shall be included in the impairment loss. The equity tool investments which the
impairment loss has been confirmed and are related to the events of conformation of
impairment loss shall be included in the equity of shareholders. The impairment loss of
equity tool investments which have no quotation in the active market and the fair value
can not be reliably measured, will not be transferred back.
7. Account receivable and provisions for bad debts深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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The Group adopted the method of counter compensation for the possible bad debt
losses, which were drown provision for bad debt by the method of individual
recognition at period end and were included in the current loss and gain. The receivables
which were not to be recovered, after being approved by the Group, would be regarded
as bad debt loss and the provision for bed debt would be written off.
The individual amount of receivable over 1 million yuan will be recognized as a
major receivable, when there is evidence showing that the Group will not be able to
recover all the money in accordance with the original item of receivable, provision for
bad debt shall be drown according to the differences of future cash flow lower than the
book value after impairment test.
The non-significant single receivables and the receivables without impairment will
be divided into a number of combinations in accordance with credit risk characteristics.
The provision for bad debts to be drown in this year will be accounted to the actual loss
rate with the similar credit risk characteristics in the previous year and combining the
present situations to determine the ratio of provision for impairment of this year.
The Group divided the receivables which were not to be recovered with evidence
or probably not to be recovered as special asset particular asset portfolio and provision
for bad debt would be fully accounted.
The accounting ratios for provision for bad debts which were divided accounting to
account age were as follows:
Age Proportion
Within 1 year 3%
1-2 years 10%
2-3 years 50%
Over 3 years 100%
The Group shall make special provision for bad debts in respect of other receivables on
case-by-case basis.
8. Inventories
(1)The inventories of the Company include raw materials, work-in-process, finished
products, low-value and easily-worn articles and packing articles and are stated at the
lower of cost and net realizable value.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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Perpetual inventory system was implemented for inventory, the inventory would be
priced according to actual cost; upon receiving or sending inventory, weighted average
method would be used. The low value consumable products would be amortized by
method of one-time writing off.
The inventory at year end can be priced by depending on which is lower between cost
and realizable net value if the inventory were damaged or full or partly unused or the
sale price lower than cost and other reasons. The provision for devaluation of finished
products and big raw materials shall be drown according to the difference which the
cost of individual inventory item higher than the realizable net value; other raw
materials with large quantity and low unit price shall be drown provision for devaluation
according to categories.
Goods in stock, products in production and other materials directly for the sale, the
amount of the realizable net value shall be determined according to the estimated sale
price deducting the estimated sale expenses and relevant taxes; the amount of realizable
value of material inventory for production shall be determined according to the
estimated sale value of finished products deducting the estimated cost which will
happen before the completion and estimated sale cost and relevant taxes. The inventory
holding for the implementation of sale contract or service contract, the realizable net
value shall be accounted on the basis of contract price; if the quantity of inventory held
by enterprise is bigger than the quantity ordered in the sale contract, the realizable net
value of the excess inventory shall be accounted on the basis of general sale price.
9.Long-term equity investment
1. Long-term equity investment
Long-term equity investments mainly include the equity investments which are held by
the Group and the ones that the units being invested can be controlled or jointly
controlled, or the equity investments which have not quotation in active market and the
fair value can not be reliably measured.
Joint control refers to the control that common control on some economic activities
according to contract. The references for the determination of common control are the
business activities which any operating party can not be controlled independently; the
decisions relating to basic operating activities of the joint venture enterprise are to be
agreed by all joint parties.
Significant impact refers to having the right to participate in decision making on
financial and operating policies of the units being invested but can not control or jointly
control the making of these policies. The determining reference of significant impact is
to own 20% (inclusive) or more but less than 50% of the voting shares directly owned
by the Group or owned through subsidiaries, unless there is clear evidence that under
that circumstance the production operating decision can not be participated and no
major influence will formed.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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The long-term equity investments obtained through merger of companies under same
control the merger were the owner's equity book value of the shares as a long-term
equity investment of initial investment cost. The long-term equity investments obtained
through merger of companies under different control shall make the fair value which
made on the merger (purchase) to pay the control of the assets or liabilities as the
merger cost. On the merger (purchase) date, in accordance with the merger costs as a
long-term equity investment of initial investment cost.
Apart from the long-term equity investments stated above, the long-term equity
investment obtained by cash, the initial investment obtained by cash will be determined
according to the price actually paid, initial investment costs include the direct costs, tax,
and other necessary expenses to obtaining long-term investment; the long-term equity
investment obtained by issuing equity securities, the initial investment will be
determined according to the fair value of the equity securities issued; the long-term
equity investments invested by investors, the initial investment cost shall be determined
according to contract value; the long-term equity investment obtained by debt
restructuring, non-monetary assets or other methods, the initial investment cost shall be
determined according to the relevant accounting standards.
If the subsidiary uses the cost method to account, adjustment shall be conducted
according to equity method when prepare the consolidated financial statements; the
joint venture and joint venture investment using the equity method; for the long-term
equity investments which have no control or joint control or significant influence and no
price in an active market, the method of cost shall be adopted to account; the long-term
equity investments which have no control or joint control or significant influence, there
are quotations in an active market and the fair value can be reliably measured, shall be
accounted as financial assets for sale.
When using the method of cost accounting, the long-term equity investments were
priced by the initial investment costs. When the investment incomes are only limited to
the distribution amount of accumulated net profit after the unit being invested accepting
the investment, and the profit or cash dividends declared by the unit being invested will
be recovered as initial investment cost to reduce the book value of the investment.
When using the equity method accounting, the current investment gains and losses are
the share of net losses and gains to be owned or shared and achieved in the current year
by the unit being invested. When determining the share to be shared by the unit being
invested, on the basis of the fair value of the identifiable assets, according to the
accouting policy and accounting period of the Group, offsetting the internal transaction
loss and gain and the part that the equity proportion attributable to the joint enterprise
and united enterprise, and confirm the net profit of the unit being invested after profit
adjustment.
When confirming the net loss to be shared by the unit being invested, reduce the book
value of long-term equity investment and other long-term equity of the unit being
invested to zero. In addition, if the Group bears the obligation to undertake additional深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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loss for the units being invested, then confirm the predicted liability according to
predicted obligation and be included in the current loss and gain. The profit achieved by
the units being invested in future period, will be reconfirmed as income shares after the
Group recovered the losses not confirmed.
For the long-term equity investments on joint venture enterprises and joint owned
enterprises held before the first implementation date, if existing the debit difference
relating to the equity investment, the debit difference of equity investment, after
deducting the investment loss and gain according to the original remained period,
should be confirmed as investment gains and losses.
10. Investment real estate
The investment real estates of the Group are the rental buildings.
The investment real estates are accounted by the cost, the purchased investment real
estates include the cost of the purchase price, related taxes and fees and other expenses
which can be directly attributable to the assets; the costs of investment real estate self
constructed include the necessary expenses to construct the asset to reach the predicted
use state.
The Group adopts the cost method to conduct follow-up measurement on investment
real estates are accounted devaluations and amortized. The expected service life, net
residual rate and value depreciation rates of investment real estate are as follows:
Type Evpected useful
life（Year）
Estinated
residual value
rate
Annual depreciation rate（%）
Real estate in
Hongkong
20-50 years
0% 2%-5%
Real estate in
China
20-30 years
10% 3%-4.5%
If the investment real estate is changed to self use, since the date of change,
investment real estate shall be converted into fixed assets or intangible assets. The
function of self-use real estate is to earn rent or capital appreciation, then since the date
of change, the fixed assets or intangible assets shall be converted into investment real
estate. When the conversion happens, the book value before the conversion will be the
book value after the conversion.
When the real estate investment is disposed or will never be used, and economic
interests can not be obtained from the disposal, the confirmation of the investment real
estate shall be terminated. The amount of the income from the sale, transfer, disposal of深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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the investment in real estate deducting the book value and related taxes and fees shall be
included in the current loss and gain.
11. Fixed assets
Fixed assets refer to the tangible assets which have the following characteristics at
the same time, namely, held for production of goods, providing services, leasing or
operation and management, and the life span shall not be more than a year, and the unit
value is high.
Classification of fixed assets: houses and buildings, machinery and equipments,
transportation equipments, office equipments and others.
The fixed assets shall be measured according to the actual cost to obtain them, including,
the cost of purchasing the fixed assets including the purchase price, value-added tax,
import tariffs and other related taxes, and other expenses happened to reach the
predicted use state; the cost of building the fixed assets, which are composed of the
expenses to reach the predicted use state of the assets; the fixed assets invested by
investors, the value on the contract or agreement shall be the accounting value, but if the
contract or agreement value is not fair, the fair value shall be accounted; the fixed leased
assets, the lower amount of the fair value of leased assets and the present value of the
lowest lease payment shall be as the accounting value.
Follow-up expenditures on fixed assets, including major repair expenses, expenses on updated
improvement and other, To confirm compliance with the conditions of fixed assets, it shall be
included in the cost fixed assets, the recognition of book value of replaced the part shall be
terminated; If not meeting the conditions of confirming fixed assets, they should be
included in the current period.
In addition to the fixed assets which depreciation and impairment had already fully
accounted and the lands which are separately accounted, the Group accounts
depreciation on all fixed assets. The method of average number of years will be used
when accounting depreciation which will be included in the costs and expenses of the
relevant assets. The predicted net residual rate, classified depreciation years and
depreciation rates are as follows:
No
Type Evpected useful
life（Year）
Estinated residual
value rate
Annual depreciatio
n rate（%）
1
Real estate in Hong
Kong
20-50 years
0% 2%-5%
2 Real estate in 20-30 years 10% 3%-4.5%深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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China
3
Machinery and
equipment
5-14 years
10% 6%-18%
4
Transportation
Equipment
4-5 years
10% 18%-22.5%
5
Office equipment and
other
5 years
10% 18%
At the end of each year, the Group shall recheck the predicted service life of fixed
assets, the predicted net residual value and depreciation method, if changes happen, then
it shall be treated as accounting estimate.
When the fixed assets were disposed, or expected to be used or the disposal can not
have economic interests, the confirmation of the fixed assets shall be terminated. The
income from the sale, transfer or damage of the fixed assets deducting the book value
and related taxes shall be included in the current loss and gain.
12. Construction in progress
The price of the construction project: determine the costs according to the actual
expenditure on the project. Measure the price of the self-operated projects according to
the direct materials, direct wages, direct construction costs; Measure the turnkey
projects according to the price should be paid on the project; measure the project of
equipment installation according to the value, of the equipment, installation costs, and
the expenditures on the trial operation to determine the project costs. The costs of
projects under construction also include the cost of borrowing to be capitalized and
exchange gain and loss.
The time for the construction project converted to the fixed assets: the fixed assets of the company
reached the predicted state, according to the budget of the project, construction cost or the actual cost
of the project, transfer the fixed assets according to the predicted price, account the depreciation
from the next month on. Upon finishing the procedures, make relevant adjustment.
13.Borrowing costs
Borrowing costs include interest on borrowings, amortization of discount or premium,
as well as the supporting costs and exchange difference due to foreign currency
borrowing. The borrowing costs which can be directly attributed to capitalized condition,
and taken place in the capital expenditure, borrowing costs have taken place, in order to
meet the assets available for sale or purchase of the necessary state of construction or
production activities, the capitalization begins; when the construction or purchase of the
conditions of production in line with the capital assets reached the sale state, the
capitalization should stop. And the rest borrowing costs should be recognized as深圳中冠纺织印染股份有限公司财务报表附注
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expenses in the current period.
The expenses on interests for the specialized loan happened in current period
deducting the interest income from the bank or the investment income from temporary
investment should be capitalized; the general assets of the borrower in accordance with
the cumulative excess of expenditure over the assets of the specialized part of the
borrower multiplied by the weighted average expenditure occupied by the weighted
average borrowings to determine the amount of capitalization, until the restart of
construction or purchase of assets.
The assets which meet capitalization conditions, refer to the fixed assets, investment
real estates and other inventories which are constructed for a long time (usually more
than one year) to achieve the intended use or sale of state to.
If meet the capitalization conditions or non-normal breaks occurred in the course of
production and the break time is more than three months, then the capitalization of
borrowing costs shall be suspended; when the acquisition or construction or production
meet the conditions of capitalization and achieve the predicted use or sale state, the
capitalization of borrowing costs shall be stopped.
14. Intangible assets
The intangible assets of the Group include land use rights and computer software. Including:
For the intangible assets purchased, the actual purchase price was the actual cost; For the intangible
assets invested by investors, The actual cost of intangible assets invested by investors, shall be
determined according to the contract or agreement value, but if the contract or agreement values are
not fair, the actual costs shall be determined according to the fair value.
Since the date of selling land use rights, they are amortized according to the years
sold; patent technology, non-patent technology and other intangible assets are amortized
in accordance with the expected number of years, the benefited years specified in the
contract and the effective length according to law. The amount to be amortized will be
included in the related asset costs and current loss and gain according to the benefited
targets.
The predicted service life of the intangible assets and amortization methods should
be rechecked and adjusted at the end of each year. Recheck the intangible assets with
uncertain service life in each accounting period should be rechecked, if there is evidence
showing that the service life of the intangible asset is limited, then estimate its service
life and amortized it within the predicted service life.
15. Impairment in non-financial assets
The Group conducts inspection on long-term equity investments, fixed assets,
construction in progress, intangible assets with limited service life on every balance
sheet date. when exist the following signs showing that the assets may have impairment,深圳中冠纺织印染股份有限公司财务报表附注
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the Group will conduct impairment test. The intangible assets without certain service
life, whether it has impairment signs, impairment tests shall be conducted at the end of
each year. If the recoverable amount of single asset can not be tested, it shall be tested
on the basis of the asset group the asset belong to or the asset combination.
After the impairment test, if the book value of the asset exceeds its recoverable amount,
the deficiency is recognized as the impairment loss, upon the confirmation of the above
assets, they will not be transferred back in the following accounting period. The
recoverable amount of the asset refer to the net amount of the fair value of the asset
deducting disposal cost of assets and the present value of the expected future cash
flows.
The signs of impairment as follows:
(1). Current market value of assets decreased significantly, the decline is significantly
higher than the decline due to time passage or normal use.
(2) The economic, technical or legal environment of the company and the market of the
assets will have significant change in the current period or in the near future, therefore
negative impact on the enterprise.
(3) Market interest rates or other market return rate of investment in the current period
have been increased, thus affecting the discount rate of the predicted cash flow, and
resulting in the significant reduction in the amount of recoverable assets.
(4) There is evidence showing that the assets were actually obsolete or damaged.
(5). The assets have been or will be idle, ended the use or disposed in advance.
(6). There are evidences of internal report showing that the economic performance of
the assets has been lower than or less than what expected, such as the net cash flow
created by assets or the operating profits (or losses) realized are far below (or above)the
expected amount.
(7). Other signs showing the assets may have or have had impairment.
16.Goodwill
Goodwill refers to the difference of equity investment under the control of the same cost
or merger of enterprises should enjoy more than the cost or a merger of the investment
was the purchase of flats or net assets in order to obtain.
The goodwill related to subsidiaries shall be individually listed in the consolidated
financial statements, the goodwill related to joint companies and associated companies
shall be included in the book value of long-term equity investments.
17.Long-term amortized expenses
The long-term expenses of the Group to be amortized refer to all the expenses
already paid but should be undertaken in the current period or in the coming period with
amortization period more than 1 year (not including 1 year), the expenses will be深圳中冠纺织印染股份有限公司财务报表附注
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amortized averagely in the benefit period. If the long-term prepaid expenses can not
benefit from subsequent accounting period, then all amortization value of the project not
amortized should be transferred to the current loss and gain.
18. Employee’s salary
During the accounting period, workers’ salary shall be recognized as liability, and
be included in relevant cost and expenses according to the beneficiary target of the
service provided by workers, and shall be included in the relevant cost and expenses.
The compensations for the cancelation of workers’ labor relationship shall be included
in the current loss and gain.
Including wages, bonuses, allowances and subsidies, welfares, social insurance and
housing accumulation fund, union fee and workers’ education fund, and other related
expenses related to obtain services provided by employees.
19. Predicted liabilities
When the external security, commercial acceptance bill discount, pending
litigation or arbitration, product quality assurance or business related matters subject to
the following conditions at the same time, the Group will identify it as liabilities: the
obligation is a present obligation of the Group; the enforcement of the obligation is
likely to lead to the outflow of economic benefits; the amount of the obligation can be
measured reliably.
Predicted liabilities shall be conducted initial measurement according to the best estimates of
related existing liabilities, and comprehensively consider risks, uncertainties and the time value of
money and other factors relating to contingent events. Time value of money has the greatest
influence, the best estimates shall be determined by future cash outflow. On the balance sheet,
recheck the book value of predicted liabilities, adjust the book value to reflect the current best
estimates if there are any changes.
20. Principle for confirmation of income
The Group's revenues mainly include: incomes from sales of goods and transferring
assets use right. The principle of income confirmation is as follows:
When the Group had transferred the ownership of the risks and rewards of the
commodities to the buyer, the Group does not keep the management right relating to
ownership and does not implement effective control on the commodities sold out, the深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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income amount can be reliably measured, and the related economic benefit will possibly
flow into the enterprise, and when the related costs may happen or had happened can be
measured reliably, the realization of the commodity sold out should be confirmed.
The economic interests relating to transaction can flow into the company, and the
relevant incomes and costs can be reliably measured, the sales income of transferring
assets use right shall be confirmed.
21. Lease
At the beginning date of lease, the Group divided leasing into financing lease
and operating lease.
Financing lease essentially refers to the lease that transferred all the risks and rewards relating
to asset ownership. As the lessee, on the beginning date of lease, the Group took lower one in the
cash of the fair value and the lowest lease payment as the book-keeping value of the fixed assets
leased in by financing, and the lowest lease payment as the accounting value of the long-term
payment, and the difference between the them will be recorded as financing costs not confirmed.
Operating lease refers to the other lease apart from financing lease. As the lessee,
during the lease period, the Group included the related asset cost and current losses and
gains by the straight-line method during the lease period. The rent of the Group will be
confirmed as income during the lease period by the straight-line method.
22. Government subsidies
Government subsidies, when the Group can meet the conditions attached and can
receive, shall be confirmed. If government subsidies are monetary assets, they shall be
measured according to the amount received; the subsidies allocated according to rated
standards, they shall be measured according to the amount receivable. If government
subsidies are non-monetary assets, they shall be measured according to fair value; if the
fair value can not be reliably measured, they shall be measured according to nominal
amount (1 yuan).
The government subsidies relating to assets shall be recognized as deferred income, and
be averagely distributed within the service life of relevant assets, and be included in
the current loss and gain. If the government subsidies relating to income are used to
compensate the related expenses and losses, they shall be confirmed as deferred income
and be included in the current loss and gain in the period of confirming relevant
expenses. If used to compensate the relevant expenses and losses happened, they shall
be included in the current loss and gain.
23. Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities shall be confirmed
according to the difference between the tax base of assets and liabilities and their book
value (temporary differences). The loss and tax which can be offset in the future years
shall be recognized as temporary differences to determine the corresponding deferred深圳中冠纺织印染股份有限公司财务报表附注
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income tax assets. On the balance sheet date, deferred income tax assets and deferred
income tax liabilities shall be measured by the predicted application rate.
The Group shall determine the deferred income tax assets produced by the deductible
temporary differences within the amount limit of payable taxes which are likely used to
deduct the temporary differences. The book value of the recognized deferred income tax
assets shall be deducted when the deferred income tax assets produced by the deductible
temporary differences within the amount limit of payable taxes which are likely used to
deduct the temporary differences. When enough payable tax can be obtained, the
deducted amount shall be transferred back.
24.Accounting of income tax
The accounting of income tax of the Group shall use the method of debt of balance
sheet. The income tax expenses include current income tax and deferred income tax.
The current income tax and deferred income tax relating to the transactions and events
directly included in shareholders equity shall be included in shareholders equity, except
the book value of deferred income tax adjustment goodwill, the rest current income tax
and deferred income tax or income shall be included in the current loss and gain.
Current income tax cost refers to the amount of payable income tax which shall be paid
to tax department according to the current transactions and events determined according
to tax provisions; deferred income tax refers to difference between deferred income tax
balance sheet debt in accordance with the law shall be recognized deferred income tax
assets and deferred income tax liabilities in the amount originally confirmed.
25.Corporate consolidation
Corporate consolidation refers to two or more separate companies merge and form a transaction
or event of report subject. The consolidation day or purchase day or the consolidation date of
obtaining the assets or liabilities, shall be confirmed as the date of obtaining the control right of the
party being merged or purchased.
The corporate consolidation under same control: the assets and liabilities obtained
by the consolidation party in the merger shall be measured according to the book
value of merged party on the consolidation day. The difference between the book
value of net assets obtained by the consolidation party and the book value of the
consolidation price paid, the capital public reserve shall be adjusted; if the capital
public reserve is not enough to be deducted, the retained earnings shall be adjusted.
The corporate consolidation under different control: the consolidation cost is the fair
value of equity stocks issued and the assets and debts paid to obtain the control right of
the purchased party on the purchase day. The difference between the consolidation cost
and fair value of recognizable net asset, shall be confirmed as goodwill; if the
consolidation cost is smaller than the fair value of recognizable net asset of the
purchased party, the difference shall be included in current loss and gain upon
confirmation.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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26.Determination of fair value of financial tools
If the financial tools exit in the active market, the fair value shall be determined according to
the price in active market. If the financial tools do not exit in the active market, the fair value shall
be determined by value estimating technologies. Value estimating technologies include the price
used in market transactions, referring the current fair value of other financial assets which are
actually the same, cash flow discount and option pricing model. When use the value estimating
technologies, the market parameters shall be used as much as possible, and the parameters which are
related to the Group will not be used.
27.Methods for compilation of consolidated financial statements
(1). Principles to determine the scope of merger:
The Group will include the subsidiaries which have actual controlling right and the
subjects which have special purpose into the scope of consolidated financial statements.
(2). Accounting methods adopted in consolidated financial statements:
The consolidated financial statements of the Group shall be compiled in accordance
with Enterprise Accounting Standards No. 33 - Consolidated Financial Statements and
the related provisions, the major internal transaction in the scope of consolidation and
transactions shall be offset. The part of shareholders equity of the subsidiary which does
not belong to the parent company, shall be individually listed as equity of minority
shareholders in the consolidated financial statement.
If the accounting policy and accounting period of the subsidiary and the company
are not consistent, when compile consolidated financial statement, the financial
statement of the subsidiary shall be adjusted according to the accounting policy and
accounting period of the company.
For the subsidiary obtained by corporate merger under different control, when prepare consolidated
financial statements, the individual financial statement shall be adjusted on the basis of fair value of
the net assets on the purchase day; for the subsidiary obtained by corporate merger under same
control, it will be taken as having been existed at the year beginning, its assets, liabilities, operating
results and cash flow shall be consolidated in the financial statement according to original book
value since the year beginning of the consolidation period.
VI.Taxation
The Group is subject to the following taxes and tax rates:
1. Corporate income tax
The interest rate of corporate income tax of the company and subsidiaries in China
mainland is 25%, according to the State Council on December 26, 2007, of the [2007]深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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No. 39 Notice on the Implementation of Enterprise Income Tax Preferential Policies for
the Transition, the enterprise income tax rate of the Company and the subsidiaries in
China mainland gradually transited from 15% to 25%, the company implement the
transition rate of 20% in 2008. the interest rate of the income from Hong Kong of the
subsidiaries in Hong Kong is 16.5%.
2.VAT
The sales interest rate of processing income and sale income of printing products
of subsidiaries in China mainland and the company is 17%, export products will be
adopted the method of "free, credit and rebate", the tax rebate rate is
14%(January-March 2009), 16%( April–December 2009) and 14% (October-December
2008). The purchase of raw materials such as VAT input tax paid by the amount of
output tax can be offset, the tax rate is 17%. Of which: the input tax of VAT for export
products can pply for payment of rebate. VAT taxable amount is the balance of the
current output tax offseting the current input tax.
The subsidiaries of the Company in Hong Kong do not need to pay VAT.
3. Business tax
The housing rental income of the company and Nanhua Printing & Dyeing Company
shall be applied to business tax, applicable rate 5%. The subsidiaries of the Company in
Hong Kong do not need to pay business tax.
4. City construction tax and education additional expenses
City construction tax of the Company is based on the value-added tax, business tax, applicable
interest rate 1%, the company does not need to pay education additional expenses..
The subsidiaries of the company in Hong Kong do not need to pay City construction tax
and education additional expenses, subsidiaries in mainland China, the applicable City
construction tax rate is 1%, applicable education additional tax rate of 3%.
5. Property tax
70% of the original value of property of the subsidiaries of the Company in China
mainland shall be the tax basis, applicable tax rate 12%, subsidiaries in Hong Kong do
not pay property taxes.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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VII.Corporation Consolidation and Consolidation Financial statement
（1）Subsidiaries
Proportion%
Name
Registration
plance
Quality
Registered
capital
Business scope
Investment
amount Direct
Indirect Vote right
Proportion%
Whether
the merger
of
statement
Notes
Hong Kong
Victor Onward
Co.
HongKong Trade
2,400,002
（HKD）
Purchase of raw materials,
marketing of printed and dyed
woven fabrics, investment and
holding business
2,400,002
（HKD）
100%
100% Yes 1
盛中公司 Hongkong Trade 1,000,000
（HKD）
Sales of Corduroy, dyed
cloth and printed cloth
1,000,000
（HKD）
100% 100% Yes 2
Nanhua
Company Shenzhen Production 85,494,700
（HKD）
Production and sales of printed
cloth and dyed cloth
HKD 16,874,255
+RMB 4,240,100
54.82% 14.62% 69.44% Yes 3
Xinye
Company Hongkong Trade 10,000
（HKD）
Sales of printed cloth and dyed
cloth
10,000
（HKD）
100% 100% Yes 4
Shenzhen East
Asia Co. Shenzhen Trade 3,000,000
(RMB)
Textilet,Printing and
dyeing industry and
Raw materials ,Machinery
equipment and other
fabrics
1,530,000
(RMB)
51%
51% Yes 5深圳中冠纺织印染股份有限公司财务报表附注
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1.The Company invested HKD 2,400,002 in 1984 to establish Hong Kong Victor Onward Company in Hong
Kong.
2. Shengzhong Company was established in November 9 1993, registered capital 1 million Hong Kong dollars, Hong
Kong Victor Onward holding 100% equity.
3. Nanhuan Company was established in July 21, 1988, registered capital 85.49 million Hong Kong dollars, by December
31, 2009 the shareholding structure as follows:
Name of investor
Year-beginning
amount
Proportion% Year-end amount Proportion
Shenzhen Nanyou (Group)
Company 3,129,106.02 3.66% - -
Shenye Union
(Hongkong)Co., Ltd. 26,127,180.32 30.56% 26,127,180.32 30.56%
The Company * 43,739,088.52 51.16% 46,868,194.54 54.82%
Hong Kong Victor Onward Company 12,499,325.14 14.62% 12,499,325.14 14.62%
Total 85,494,700.00 100.00% 85,494,700.00 100.00%
* In August 4, 2009, The Company signed by Shenzhen Nanyou (Group) Company share transfer
agreement, the company price 1.40 million transferee Shenzhen Nanyou (Group) Company holds 3.66% of
the Nanhua Company of the equity, as of December 31, 2009, the Company directly held There are the
Nanhua shares increased from 51.16 % to 54.82 %.
4. Xinye Company invested HKD10,000 to establish Industry Company in Hong Kong in December 1996.
Nanhua Company Holding’s 100% of the equity.
5. Shenzhen East Asia Company was established in February 28, 2007, registered capital 3 million yuan, the company
invested 1.53 million yuan, holding 51% equity, Nanjing East Asia Textile Co., Ltd. invested 1.47 million yuan, holding
49% equity.
(2) Change of consolidation scope
1. The subsidiaries falling out of consolidation scope in the report period.
Company
name
The reason for
falling out of
consolidation scope
Shareholding
ratio (%)
Net assets
on the
disposal day
Net profit for
the period
from year
beginning to
the disposal
day
Digital
printing
company
The company was
deregistered.
75 -529,259.28
-深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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Company
name
The reason for
falling out of
consolidation scope
Shareholding
ratio (%)
Net assets
on the
disposal day
Net profit for
the period
from year
beginning to
the disposal
day
Elimination on consolidation
-1,814,156
-
consolidation 1,347,402 -
* Digital printing company was established in April 18, 2002, registered capital 2 million Hong Kong
dollars, Hong Kong Victor Onward holding 75% equity, ATEX DEVELOPMENT (HONG KONG) LTD holding 25%
equity.
Digital Printing Company was officially deregistered on July 3, 2009. As the balance sheet of Digital
Printing Company was not consolidated at the end of year, the year-end consolidated net assets of the
Group increased by RMB 1,347,402, including undistributed profit of RMB 1,347,402. （described in Note
VIII, 29）
(I). Foreign currency translation
Except that Shenzhen East Asia Company Company has RMB as basic accounting currency, the company
and other subsidiaries have Hong Kong dollars as basic accounting currency. The financial statements are
reflected after conversion of RMB and the foreign currency conversion methods were described in Note V,
5, of which the spot exchange rate of HK dollar to RMB was 0.8819 at year beginning, and the spot
exchange rate at year end was 0.8805, the approximate exchange rate of the spot exchange rate uses the
current average exchange rate 0.8813.
VIII. Notes to the main items of consolidated financial statements and the Company's financial statements
The following financial statements disclosed below, except where indicated otherwise, "year beginning"
means January 1, 2009, "year end" means December 31, 2009, "this year" means from January 1, 2009 to
December 31, "last year" means from January 1, 2008 to December 31, the currency unit RMB.
1.Monetary Capital
Year-end balance Year-beginning balance
Items Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
Stock cash 182,181 117,278
RMB 173,224 1.0000 173,224 117,028 1.0000 117,028
HKD 10,173 0.8805 8,957 283 0.8819 250深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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Bank deposit 45,493,122 51,085,519
RMB 19,948,646 1.0000 19,948,646 24,298,396 1.0000 24,298,396
HKD 29,004,367 0.8805 25,538,345 30,342,936 0.8819 26,759,435
USD 898 6.8282 6,131 4,051 6.8346 27,688
Other monetary
capital 10,430,323 10,165,631
RMB 10,395,615 1.0000 10,395,615 10,133,914 1.0000 10,133,914
HKD 39,419 0.8805 34,708 35,964 0.8819 31,717
Total 56,105,626 61,368,428
* Funds in other currencies (RMB) mainly kept in the securities of the Group companies for the purchase of
new shares issued by drawing lots of money does not exist at the end of restrictions on the use of monetary funds.
2.Financial assets for transection
Item Year-end balance Year-beginning balance
Equity tool investment for
transaction. 171,221 36,687
Total 171,221 36,687
Transactional equity tools are the shares which are to be cashed at any time purchased by the subsidiary of
the company Hong Kong Victor Onward Company, priced by fair value, Changed income RMB 48,912, its
cash has no major restrictions.
3. Bill receivable
（1）Type of Bill receivable
Type Year-end balance Year-beginning balance
Bank acceptance - 850,000
Total - 850,000
(1).The Group had no notes receivable for pledge.
（1）The year-beginning bills receivable of the Group were all cashed in the report year. There was no
balance of bills receivable at the end of year.
4.Account receivable
(1) Risk classification of accounts receivable深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
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Year-end balance Year-beginning balance
Book Balance
Provision
for bad
debts
Book Balance
Provision
for bad
debts
Items
Amount
Proport
ion% Amount Amount
Propor
tion% Amount
Receivables with
large individual
amount. 4,014,942 26.41 3,998,082 3,749,167 24.20 4,057,382
Receivables without
large individual
amount, but with
great risk after
combined according
to risk characteristics
6,280,260 41.32 3,956,455 7,114,532 45.92 4,060,222
Other minor
receivables
4,905,430 32.27 4,847,845 4,628,622 29.88 4,628,622
Total 15,200,632 100.00 12,802,382 15,492,321 100.00 12,746,226
1）The accounts receivable at year end with significant single amount or the insignificant amount
which were tested separately.
Name
December
31, 2009
Provision for
bad debts
Proportion%
Age
Reasons
Victor Textile (Hong
Kong) Ltd 1,724,799 - - Within 1
year
Shenzhen Co., Ltd. - 1,707,939 2-3 years
Insolvent
company,
to be
written off
Carnival Index
International Ltd 1,193,133 1,193,133 100% Over 3
years
TAI YANG ENTERPRISE
CO., LTD. 1,097,010 1,097,010 100% Over 3
years
Other minor receivables 4,905,430 4,847,845 99.83%
Over 3
years
the
company
had stopped
production,
and no
business
contact for
a long time.
Total 8,920,372 8,845,927 99.83%
* Shengzhong Company, a subsidiary of the Company, was planned to be deregistered. The Company深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
85/125
made full provision for bad debts in respect of the accounts of RMB 1,707,939 receivable from this
company. On consolidation, these accounts receivable were eliminated, but corresponding provision for
bad debts was not eliminated.
2）If the individual amount is not important but accounts receivable with big amount of credit risk
identified
Year-end balance Year-beginning balance
Items
Amount Proportion%
Provision
for bad
debts Amount Proportion%
Provision
for bad
debts
Within 1
year 1,331,322 21.20 39,939 3,144,744 44.20 94,342
1-2 years 1,147,136 18.26 114,714 4,342 0.06 434
2-3 years - - - - - -
Over 3
years 3,801,802 60.54 3,801,802 3,965,446 55.74 3,965,446
Total 6,280,260 100.00 3,956,455 7,114,532 100.00 4,060,222
（1） Amount of provision for bad debts written back:
Debtor
Balance
of
accounts
receivable
Proportion
of
provision
Amount
of
provision
for bad
debts
Amount
written
back in
the
report
year
Originally
estimated
provision for
bad debts and
reason for
writeback in the
report year
Linfone
Co.,Ltd. 204,805 100% 204,805 172,943
There were no
business
transactions for a
long term. After
pressing for
repayment, part
of accounts
receivable were
recovered in the
report year.
Total 204,805 100% 204,805 172,943 —深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
86/125
（2） The accounts receivable of the subsidiary of the company was RMB 40,610, which had been
fully accounted the provision for bad account in the previous years. Because the Digital printing company
had stopped production, the above funds were the ending funds in a number of customers, without
connection, the account age more than 3 years, so they were written off this year with approval.
（3）In the receivables at the period end, no loans of the shareholders holding 5% (inclusive of a 5%)
or more voting right and other related units.
The front 5 units’ information of account receivable
Unit name Relation with
the company
Amount Fixed year
Percentage of
account
receivable
Carnival Index International Ltd
Non-Related
parties 1,193,133
Over 3
years 7.85%
Shenzhen Jinrongyuan Development
Co., Ltd.
Non-Related
parties 703,555
Within 1
year 4.63%
VEGA GARMENT CO., Ltd
Non-Related
parties 655,886 1-2 years 4.31%
Victor Textile (Hong Kong) Ltd
Non-Related
parties 1,724,799
Within 1
year 11.35%
Tai Yang Enterprise Co.,Ltd Non-Related
parties
1,097,010
2-3
year,Over
3 years
7.22%
Total 5,374,383 35.36%
(4)Accounts receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 10,399,223 0.8805 9,156,516 12,223,604 0.8819 8,881,870
USD 587,260 6.8282 4,009,929 501,763 6.8346 3,429,349
Total 13,166,445 12,311,219
5. Prepayments
Year-end balance Year-beginning balance
Items amount Proportion
（%）
amount Proportion
（%）
Within 1 year 942,126 100 1,815,897 100深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
87/125
Total 942,126 1,815,897 100
（1） The prepayments at year end decreased RMB 873,771 over those in the year beginning, with
increases rate 48.12%, mainly due to the subsidiary of the prepayments of the company Shenzhen East Asia
Company decreased.
(2)The large prepayments at year end are as follows:
Company Name
Relation with
the Company
Amount of
loans
Time of
Loans
Causes
Anqing Dacheng Printing &
dyeing Co., Ltd. Non-Related
parties 478,142
Within 1
year
Payments
for goods
not paid
Guangxin(Changzhou)Textile
Company Non-Related
parties 225,948
Within 1
year
Payments
for goods
not paid
Total 704,090
Ratio to the total prepayments 74.73%
（2）In the receivables at the period end, no loans of the shareholders holding 5% (inclusive of a 5%)
or more voting right and other related units.
(4) Prepayments include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
Currency of
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 24,307 0.8805 21,402 29,900 0.8819 26,368
Total 21,402 26,368
6. Interest receivable
Items Year-beginning
balance
Increase in the
current period
Decrease in the
current period
Year-end
balance
Fixed deposits 91,087 5,480 91,087 5,480
Total 91,087 5,480 91,087 5,480深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
88/125
The interests receivable was the ones for the subsidiary of the company Hong Kong Victor Onward Bank’s
deposits, with principal about 20 million Hong Kong dollars, the due dates were January 28, 2010.
7. Other receivables
（1）Risk classification of other receivable
Year-end balance Year-beginning balance
Book account
Provision for
bad debts
Book account
Provision for
bad debts
Items
Amount Proportion% Amount Amount Proportion% Amount
Receivables
with large
individual
amount.
3,382,210 69.52 3,382,210 3,382,539 70.48 3,382,539
Receivables
without large
individual
amount, but with
great risk after
combined
according to
risk
characteristics
1,168,889 24.02 256,083 1,232,967 25.69 802,404
Other minor
receivables
314,440 6.46 - 184,110 3.83 -
Total 4,865,539 100.00 3,638,293 4,799,616 100.00 4,184,943
Other receivables adopted specific identification method on the provision for bad debts.
(1) Of the prepayments at the end of period, there were none owed by corporate shareholders of the
Company holding over 5% (including 5%) of its total shares with voting rights.
（1） Other receivables actually written off in the report year
Company name
Nature of other
receivables
Amount
written
off
Reason for
writeoff
Whether
generated from
related
transactions
Digital Printing Operation-related 546,039 Deregistration No深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
89/125
Company name
Nature of other
receivables
Amount
written
off
Reason for
writeoff
Whether
generated from
related
transactions
Company current accounts of the company
Total 546,039
(2) The front 5 units’ information of Other account receivable
Name
Relation
with the
company
Amount
Account
Age
Proportion
(%) Content
Nanjing East Asia C Non-Relat
ed parties 1,327,251 2-3 years
27.28% Business
CCB.Guangdong
Shunde Branch
Non-Relat
ed parties 1,080,025
Over 3
years
22.20% Business
Changzhou
Dongfeng Textile
Printing & dyeing
Equipment Co., Ltd.
Non-Relat
ed parties 975,022 2-3 years
20.04% Business
Shanghai Huayinke
Industry Co., Ltd.
Non-Relat
ed parties 180,004 2-3 years
3.70% Business
Shenzhen
Huaxinfeng Industry
Co., Ltd.
Non-Relat
ed parties 77,414 2-3 years
1.59% Business
Totla 3,639,716
Ending balance exclude accounts receivable from related parties.
（2） Other receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
Currency of
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 1,202,955 0.8805 1,059,202 324,711.95 0.8819 286,363.00
Totla 1,059,202 286,363.00
（2）Inventory深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
90/125
（1）Inventory types
Year-end balance Year-beginning balance
Items
Book
balance
Provision
for bad
debts
Book
value
Book
balance
Provision
for bad
debts
Book value
Raw
materials 2,205,557 1,761,000 444,557 9,479,427 6,853,744 2,625,683
Stock
goods 602,685 190,689 411,996 1,076,055 190,991 885,064
Total 2,808,242 1,951,689 856,553 10,555,482 7,044,735 3,510,747
The Inventories at year end decrease RMB 7,747,240, with reduction proportion 73.39%, because
production was stopped, no longer dealing with the procurement of raw materials and inventory stock.
(1) Provision for impairment of inventories
Decrease in the current
period
Items
Year-beginning
balance
Increase
in the
current
period
Transferred
back
Reselling
Exchange
rate
changes
Year-end
balance
Raw
materials 6,853,744 - 5,086,479 - -6,265 1,761,000
Stock
goods 190,991 - - - -302 190,689
Total 7,044,735 - 5,086,479 - -6,567 1,951,689
The method for Provision for impairment of inventories , see Note V,8.
This year is to reduce the provision for decline in value this year, sales have been out of stock, so the
corresponding provision for preparation was accounted.
9. Financial assets for sale
Items Year-beginning balance (Fair Year-end balance (Fair深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
91/125
value ) value )
Equity tools for sale. 309,399 207,255
Total 309,399 207,255
The equity tools for sale are the shares held by the subsidiary of the company Hong Kong Victor Onward , because they are
not to be cashed in a short term, so they are classified in this item, the change of fair value in the current period RMB
102,473 has been included in the public capital reserve.
10.Long-term equity investment
（1）Long-term equity investment
Items Year-end balance Year-beginning balance
The cost of long-term equity
investment accounting - -
The equity method long-term
equity investment 68,427,751 47,184,759
Total of long-term equity
investment 68,427,751 47,184,759
Less ： Long-term equity
investments for impairment - -
Net value long-term equity
investment 68,427,751 47,184,759
(1) The equity method long-term equity investment
Name
Proportion
%
Vote
proportion
%
Initial
amount
Year-beginning
balance
change
Exchange
rate
change
Year-end
balance
1.Zhejiang Union
Hangzhou Bay
Chuangye Co.,
Ltd.
25% 25% 58,588,403 47,184,759 21,337,265 -94,27368,427,751
2. Shenzhen
Lianchang
Printing & dyeing
Co., Ltd.
37.5% 37.5% 1,403,456 - - - -
Total 59,991,859 47,184,759 21,337,265 -94,273 68,427,751深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
92/125
Zhejiang Union Hangzhou bay chuangye Co., Ltd. (hereinafter named“Hangzhoubay”) current change including
current profit confirmed by equity method is RMB21,337,265.
Shenzhen Lianchang Printing & Dyeing Co. Ltd. was in loss for many years, its net assets were negative, the operation of
the company has stopped, the balance of long-term equity investment has been adjusted to zero.
（2）The investment in the Enterprise
Name Registration
place
Property
Net asset at
end period
Total
income
Net profit at
the period
1.Zhejiang Union
Hangzhou Bay Chuangye
Co., Ltd.
Hangzhou
Real
estate 289,367,146 386,165,476 85,349,059
2. Shenzhen Lianchang
Printing & dyeing Co.,
Ltd.
Shenzhen
Printing
and
dyeing
-4,881,960 - -
Total 284,485,186 386,165,476 85,349,059
11. Property investment
The investment in real estate companies use the cost model measures
items
Amount of
year-beginning Increase decrease
Exchange
rate
change
Amount of
year-end
Original Value 105,130,823 - - -166,893 104,963,930
House, Building 105,130,823 - - -166,893 104,963,930
Accumulated
amortisation 56,965,039 3,647,448 - -93,742 60,518,745
House, Building 56,965,039 3,647,448 - -93,742 60,518,745
Book Net value 48,165,784 44,445,185
House, Building 48,165,784 44,445,185
Impairment Provision - -
House, Building - -
Book value 48,165,784 44,445,185
House, Building 48,165,784 44,445,185
12． Fixed assets
(1)Fixed assets深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
93/125
Items
Amount of
year-beginning Increase decrease
Exchange
rate change
Amount of
year-end
Original Value. 178,239,980 87,822 2,286,343
-280,409 175,761,050
House and building 52,478,348 - - -83,308 52,395,040
Machine and
Equipment 109,261,918 - 1,230,581 -172,335 107,859,002
Transportation
Equipment 5,591,939 83,327 590,422 -7,995 5,076,849
Office equipment
and other 10,907,775 4,495 465,340 -16,771 10,430,159
Accumulated
amortisation 122,178,573 353,210 1,330,942 -192,831 121,008,010
House and building 28,286,829 143,917 -45,038 28,385,708
Machine and
Equipment 81,994,703 - 398,612 -129,803 81,466,288
Transportation
Equipment 4,612,057 164,393 538,393 -6,797 4,231,260
Office equipment
and other 7,284,984 44,900 393,937 -11,193 6,924,754
Impairment
Provision 33,323,616 3,502,905 790,863 -55,363 35,980,295
House and building 16,824,311 - -26,708
16,797,603
Machine and
Equipment 13,507,631 3,502,905 743,094 -23,949 16,243,493
Transportation
Equipment 2,057 - -4 2,053
Office equipment
and other 2,989,617 - 47,769 -4,702 2,937,146
Impairment
Provision 22,737,791 18,772,745
House and building 7,367,208 7,211,729
Machine and
Equipment 13,759,584 10,149,221
Transportation
Equipment 977,825 843,536
Office equipment
and other 633,174 568,259
The Company shutdown for consolidation on March 2007, part of machinery and equipments were to be used for
foreign investment, so the company fully accounted provision for impairment on residual value of housings, accounted
provision for impairment from the machinery and equipments, and accounted provision for impairment from the full value
of residual value of other machinery and other equipments.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
94/125
RMB 3,502,905 was accounted for the provision for devaluation for fixed assets, causes as follows:
Items
Amount
accounted
this year
Causes
Machine and
Equipment—To be
investment
3,502,905
This part of the equipments were to be
invested as foreign investment, starting in
September 2007 as holding for sale of fixed assets
accounting, and accounted provision for impairment
from the full value of residual value.
Total 3,502,905
（2）Details of temporary idle fixed assets are as follows：
Items
Book
Original
value
Accumulated
depreciation
Impairment
provision Book Net value
House and building 48,376,967 27,322,964 16,797,603 4,256,400
Machine and
Equipment 107,522,224 81,302,431 16,243,493 9,976,300
Transportation
Equipment 3,235,963 2,912,367 - 323,596
Office equipment and
other 8,690,513 5,487,019 2,937,146 266,348
Total 167,825,667 117,024,781 35,978,242 14,822,644
* The original value of the temporarily idle machinery and equipments to be invested in Nanjing
Textile Printing & dyeing Co., Ltd. was RMB 82, 776,650, Accumulated amortisation was RMB
60,174,642, Impairment Provision was RMB 14,324,343 , Book value was RMB 8,277,665.
13. Intangible assets深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
95/125
The real estate title certificate issued by Shenzhen Land Resource and House Property Administration
for part of the land for the factory building and office building of the Company located at 26 Kuipeng Road,
Baishigang, Kuiyong Town, Longgang District, Shenzhen was obtained on January 18, 2010. The valid
term is from March 5, 1999 to March 4, 2049. RMB 2.11 million paid for land was transferred into
intangible assets - land use right.
14. Goodwill
Items Amount of year-end Amount of
year-beginning
Items
Amount of
year-beginning Increase decrease
Exchange
rate change
Amount of
year-end
Original Value 11,988,218 2,117,910 - -18,983 14,087,145
Land use right 11,262,004 2,117,910 - -17,830 13,362,084
software 726,214 - - -1,153 725,061
Accumulated
amortisation 11,741,107 - - -18,639 11,722,468
Land use right 11,262,004 - - -17,878 11,244,126
software 479,103 - - -761 478,342
Book Net value 247,111 2,364,677
Land use right - 2,117,958
software 247,111 246,719
Impairment
Provision 247,111 - - -392 246,719
Land use right - - - - -
software 247,111 - - -392 246,719
Book value - 2,117,958
Land use right - 2,117,958
software - -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
96/125
For the goodwill formed from
holding shares of Nanhua
Company,
5,538,694 3,594,648
Total 5,538,694 3,594,648
The company bought the 3.66% equity of Nanhua Company held by the Shenzhen Nanyou (Group)
Company, with a price RMB 1.40 million, at the same time paid the processing fees RMB 15,000, bought
73.66% of equity of Rianhua Company with equity amount RMB -539,046, so it generated goodwill
Increased RMB 1,944,046.
15. Impairment of assets schedule
Decrease in the current
period
Items
Amount
of
year-begi
nning
Accrual
amount
Switchbac
k
Other
Transfer
out
Exchan
ge rate
change
Amount of
year-end
Provision for bad
debts 16,931,169 289,845 172,943 586,649 -20,747 16,440,675
Stock
Impairment
Provision 7,044,735 - - 5,086,479 -6,567 1,951,689
Impairment of
fixed assets 33,323,616 3,502,905 - 790,863 -55,363 35,980,295
Impairment of
Intangible assets 247,111 - - - -392 246,719
Total 57,546,631 3,792,750 172,943 6,463,991 -83,069 54,619,378
The provision for bad debts transferred back RMB 172,943 was the accounts receivable with provision
for bad debts accounted, as shown in Note 8 (4),The other transfers were that the subsidiary of the
company Nanhua Company wrote off the provision for bad debts for accounts receivable last year. The
cause for the inconsistency with Note 8(4) was due the conversion of foreign currency.
The cause for the transfer out for provision for inventory devaluation was that the inventory with
provision for impairment originally accounted transferred out the corresponding provision for devaluation.
Provision for impairment of fixed assets was transferred out because Digital Printing Company, a
subsidiary of the Company, was deregistered and all its fixed assets were disposed in the report year.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
97/125
16. Account payable
（1）Account payable
Items Year-end balance Year-beginning balance
Total 4,101,084 6,175,741
Including：over 1 year 1,666,895 1,796,627
Year-end balance of accounts payable decreased by RMB 2,074,657 and 34% over year-beginning
balance mainly because the Company and its subsidiaries continued to suspend production and their
business further deteriorated.
Accounts payable with age over one year included a number of accounts, without single significant
amount of accounts payable.
Of the prepayments at the end of period, there were none owed by corporate shareholders of the Company
holding over 5% (including 5%) of its total shares with voting rights.
（2）Accounts payable include the following foreign currency balances.
Foreign Year-end balance Year-beginning balance
Currency
of
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 381,108 0.8805 335,565 551,336 0.8819 486,223
Total 335,565 486,223
17. Advanced account
（1）Advanced account
Items Year-end balance Year-beginning balance
Total 4,555,433 5,281,103
Including：over 1 year 2,008,639 2,234,901
Advanced account more than 1 year was mainly the sale fund for the wasted materials from the
relocation of the company, and due to delays in the overall relocation plan, the money paid in advance was
temporarily suspended.
Of the prepayments at the end of period, there were none owed by corporate shareholders of the Company
holding over 5% (including 5%) of its total shares with voting rights.
（2）Advanced Accounts include the following foreign currency balances.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
98/125
Foreign Year-end balance Year-beginning balance
Currency
of
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 2,082,474 0.8805 1,833,618 595,522 0.8819 525,191
USD 101,072 6.8282 690,140 199,748 6.8346 1,365,201
Total 2,523,758 1,890,392
18. Wage payables to employees
Items
Year-beginn
ing balance
Increase in
current period
Decrease in
current
period
Year-end
balance
Wage (Including reward ,
allowance and subsidy) 515,724 3,424,991 3,464,909 475,806
Welfarism For employees - 81,957 81,957 -
Social insurance premiums - 297,722 297,722 -
Including :
Medical insurance premiums - 86,127 86,127 -
Basic old-age insurance
premiums - 182,886 182,886 -
Annuity payment - - - -
Unemployment insurance
expenses - 8,038 8,038 -
Industrial injury insurance
premiums - 14,929 14,929 -
Childbirth insurance premiums - 5,742 5,742 -
Housing accumulation fund - - - -
Trade union outlays and
employee education outlays 84,160 35,094 35,093 84,161
Other - - - -
Total 599,884 3,839,764 3,879,681 559,967
At the period end, the company had no wages payable that belong to arrears.
19. Fees and taxes payables
Items Year-end balance Year-beginning balance
VAT 230,032 1,626,945
Business tax 315,712 235,420
Enterprise income tax 1,435,616 1,441,086
Tax on city maintenance and
construction 1,557 751深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
99/125
Property tax 293,854 294,194
Individual income tax 464 -
Tariff - 711,084
Stamp tax 241,828 242,213
Total 2,519,063 4,551,693
20. Dividend payable
Items Year-end balance Year-beginning
balance
Reasons of
arrears
State Development &
Investment Co., Ltd*2 264,127 264,547
CITIC Group*2 264,127 264,547
Shenzhen Nanyou (Group)
Company*2 132,064 132,274
Shenye Union（Hongkong）
Co., Ltd. 132,064 132,274
Changzhou Dongfeng
Printing and dyeing plant *2 528,255 529,095
Capital tense*1
Total 1,320,637 1,322,737
*1 The above payable dividends were the payable dividends of Nanhua Company, a subsidiary of the company, the change
in balance mainly due to the change of exchange rate. Because Nanhuan Company’s capital was more tension and the
shareholders did not ask for the fund, the payable dividends have not been paid. The payable dividends reduced at the end
of the period mainly due to the change of exchange rate.
*2 The above four companies are the former shareholders of Nanhuan Company, the subsidiary of the company.
21. Other accounts payable
（1）Other accounts payable
Items Year-end balance Year-beginning balance
Total 30,926,067 30,064,983
Including：Over 1 year 24,607,655 25,582,982
（2）Other payables which are longer than one year mainly were the loans borrowed by Nanhuan Company the
subsidiary of the company from related companies, which have not been paid because of capital tension.
（3）Of the Other payables at the end of period, there were none owed by corporate shareholders of the
Company holding over 5% (including 5%) of its total shares with voting rights.
(4) Other accounts payable by aging are as follows深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
100/125
Items Arrears
amount Age
Nature or
content
Shenzhen Union property Group
Co., Ltd. 3,670,940
Within 1 year or Over 3
years Current Loans
Union Group 21,566,172
Within 1 year or Over 3
years Current Loans
State Development & Investment
Co., Ltd 3,000,000 Over 3 years Current Loans
Total 28,237,112
（5）Other payable Accounts include the following foreign currency balances.
Year-end balance Year-beginning balance
Foreign
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 914,342 0.8805 805,078 1,839,964 0.8819 1,622,665
Total 805,078 1,622,665
22.Long-term borrowing
Type Year-end balance Year-beginning balance
Impawn borrowing 1,534,300 1,674,164
Total 1,534,300 1,674,164
.. The borrowing was the installment payment for the housing in Hong Kong bought by the subsidiary of the
company Xingye Company, the mortgage article was the house purchased. The installment payment was HKD
2,366,000 , which paid in 240 month, As of December 31, 2009,Principal amount of HKD 1,742,532
(RMB 1,534,300)
23.Long-term payable
Items Time Year-end balance Year-beginning
balance
Assess the value of
assets Non-time 9,217,564 9,232,220
Total 9,217,564 9,232,220
* The company was authorized by People's Bank of China when it was reorganized into joint-stock company, the
revaluation of the assets of the revaluation gain attributable to the restructuring of the Company before the shareholder.
The asset was re-assessed on January 31, 1992, which generated about 14,754,000 HKD revaluation gain, recorded on深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
101/125
account as long-term payable subject, part of them have been used to offset the bad debts prior to listing (about 4,285,000
HKD ). The shareholders before the reorganization have agreed not to require the company to pay such amounts with cash,
to offset each other when purchase stocks of the company in the future, the decrease of long-term payables mainly due to
the change of exchange rate.
24. Deferred income tax liabilities
（1）The confirmed Deferred income tax liabilities
Items Year-end balance Year-beginning balance
The income tax of taxable temporary
difference. 968,868 1,015,950
Total 968,868 1,015,950
（2）THE temporary difference
Items Year-end balance Year-beginning balance
Item of the taxable temporary 5,871,927 6,157,273
Assets assessment appreciation 5,871,927 6,157,273
Total 16.5% 16.5%
Tax rate 968,868 1,015,950
Confirmation of the Deferred income tax
liabilities.
* When the company was reorganized into joint-stock company, the company was approved by the People's Bank of
China, the added value of the assets of the subsidiary of the company Hong Kong Victor Onward Company, according to
Hong Kong Standards, can not be adjusted, and was not to be deducted when accounting the income tax, resulting in the
differences in net value of fixed assets and accounting basis. *
25.Other non-current liabilities
Items Year-beginning
balance
Increase in
current period
Decrease in
current period
Year-end
balance
ERP Information
construction 248,259 - 394 247,865
Digital printing
technology
subsidies 662,025 - 1,051 660,974
Total 910,284 - 1,445 908,839
The above funds were the special subsidies received from Shenzhen Department of Finance in 2004 for the
digital jet printing projects and for the construction of enterprise information. The deal must be accepted by
the Financial Bureau before accounting, so it was suspended. The reduction was due to the change in深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
102/125
exchange rates.
26. Share capital
Name/Type Year-beginning balance Year-end balance
Amount Proportion%
Change
Amount Proportion%
.Shares w
conditional
subscription
State-owned
legal person
shares 5,365,251 3.17% -5,365,251 - -
Other domestic
shares 43,141,032 25.51% -43,141,032 - -
Incl：domestic
legal person
shares 43,141,032 25.51% -43,141,032 - -
Total Shares
with
conditional
subscription 48,506,283 28.68% -48,506,283 - -
Shares with
unconditional
subscription
Common
shares in RMB 51,214,170 30.28% 48,506,283 99,720,453 58.96%
Foreign shares
in domestic
market 69,421,903 41.04% - 69,421,903 41.04%
Total Shares
with
unconditional
subscription 120,636,073 71.32% 48,506,283 169,142,356 100.00%
Total of capital
shares 169,142,356 100.00% - 169,142,356 100.00%
27. Capital common reserve
Items Year-beginning
balance
Increase in
current period
Decrease in
current period
Year-end
balance深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
103/125
Share capital
Premium
29,718,829 - - 29,718,829
Other Capital common
reserve 9,475,802
102,473
- 9,578,275
Total 39,194,631 102,473 - 39,297,104
Current increment in capital surplus came from current fair value gain of finance assets available for sale.
28. Surplus common reserve
Items Year-beginning
balance
Increase in
current period
Decrease in
current period
Year-end
balance
Statutory Surplus
common reserve
26,309,287
395,504
-
26,704,791
Total 26,309,287 395,504 - 26,704,791
The surplus reserve increased in the report year is the part of surplus reserve for the Group
appropriated by Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated company of the Group, in
the report year.
29. Retained profit
Items Amount Proportion（%）
Balance at the end of last period -115,810,517
Add：The beginning of the undistributed
profits adjustments -
Including：Change of accounting policy -
Correcting previous errors -
Change of consolidated scope -
Other adjustments -
Balance at the beginning of current year -115,810,517
Add:Increase Net profit at the current period 12,090,678
Less ： Withdrawing statutory surplus public
reserve 1,347,402
Withdrawing discretionary surplus reserve 395,504
Common stocks dividends payable -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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Stock dividend transferred in stock capital -
Balance at the end of current year -
Including：Distribute cash dividend -102,767,941
* Other adjustment factors: Increase of undistributed profit resulted from the deregistration of Digital Printing, a
subsidiary of the Company, and the change of consolidation scope. （described in Note VII, 2）
30. Minority shareholders equity
Name of Subsidiary Proportion%
Year-end amount
Year-beginning
balance
Nanhua Company* 30.56% - -
Shenzhen East Asia
Company 49%
508,088 884,454
Total 508,088 884,454
* The two subsidiaries had excess losses, because the constitution and agreement of the company agreed that small
shareholders bear the obligations of the excess losses, so the equity of minority shareholders was reduced to zero, the
excess losses were fully beard by the Company.
31. Business income, Business cost
（1）Business income,Business cost
Items In the report period The same period of
last year
Key business income 18,950,518 37,649,438
Other business income 8,567,241 9,231,820
Total 27,517,759 46,881,258
Key business cost 17,570,851 36,612,766
Other business cost 5,054,135 4,728,563
Total 22,624,986 41,341,329
（2）Type
In the report period The same period of last year
Content Business
income
Business cost
Business
income
Business cost
Cloth bleaching, printing and
dyeing 18,950,518 17,570,851 37,649,438 36,612,766深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
105/125
House lease 8,567,241 5,054,135 9,231,820 4,728,563
Other Business - - - -
Total 27,517,759 22,624,986 46,881,258 41,341,329
（3）The total sale incomes of the top five customers was RMB 10,774,800 , representing 56.88% of
the main business income in this year.
（4）The operating income and operating cost in this year, reduced RMB 19,363,49 and RMB
18,716,343 over the previous year, respectively 41.30% and 45.27%, mainly due to the Nanhuan Company
continues to halt the operation of business, so the business further declined.
32. Business tax and supertax
Items Proportion% In the report period The same period of
last year
Education surcharge 3% 540 458
Total 540 458
33. Management expenses
The management cost in this year was RMB 7,977,421, decreased RMB 2,120,612 over the last year,
decrease proportion 21%, mainly due to the Nanhuan Company continues to halt the operation of business,
so the expenses decreased significantly.
34. Financial expenses
Items In the report period The same period of
last year
Interest expenses 1,255,262 1,277,319
Less：Interest income 509,684 667,773
Add：Exchange rate loss 31,294 -1,007,131
Add：Other expenses 25,734 43,596
Total 802,606 -353,989
35. Asset impairment losses
Items In the report period The same period of
last year
Bad debt losses 116,902 4,101,273
Inventory devaluation losses - 1,053,023
Fixed asset impairment losses 3,502,905 3,652,340
Total 3,619,807 8,806,636深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
106/125
36．Changes income in fair value /loss
Items In the report period The same period of
last year
Trading financial assets- 48,912 -96,798
Total 48,912 -96,798
36. Investment income
(1）Investment income generated by the sources listed
Items In the report period The same period of
last year
Disposal trading financial assets to achieve
return investment 294,353 248,229
Income from transfer of equity investment 21,337,265 -10,599,829
Total 21,631,618 -10,351,600
* The amount for the report year increased by big margin over that for the previous year because the
real estate project of an affiliated company, made profit.
There were no major restrictions in the investment income at the period end.
（2）Equity method
Items In the report period The same period of
last year
Total 21,337,265 -10,599,829
Including：Hangzhou Bay Company 21,337,265 -10,599,829
37.Non-operating income
Items In the report period The same period of
last year
Net income disposition fixed assets 107,013 116
Including：Income disposition fixed
assets 107,013 116
Other 445,927 -
Totla 552,940 116
* Other amount is the refund of taxes and levies received by Hong Kong Victor Onward, a subsidiary
of the Company.
38.. Non-operating expense深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
107/125
Items In the report period The same period of
last year
Loss disposition Non-current assets 13,693 10,994
Donate expenses - 19,905
Other 776,495 48,788
Total 790,188 79,687
* Other amount is the fine for delayed payment for land paid by the Compnay in the report year.
39. Income tax expenses
Items In the report period The same period of last
year
The current income tax expense - -
Deferred income tax expense -45,510 -111,294
Total -45,510 -111,294
40. Calculation process for Basic gains per share and Diluted gains per shares
Items
No
In the report
period
The same
period of last
year
Net profit attributable
to shareholder of the
Parent Company
1 12,090,678 -25,957,333
non-recurring
gain/loss
attributable to the
shareholders of the
Parent Company
2 280,556 1,020,542
Attributable to the
shareholders of the
Parent Company, Net
profit after deducting
of non-recurring
gain/loss
3=1-2 11,810,122 -26,977,875
Total of shares at
year-beginning 4
169,142,356 169,142,356
Public reserve was 5 - -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
108/125
Items
No
In the report
period
The same
period of last
year
transferred as capital
and share increase
from dividend
distribution（Ⅰ）
The issuance of new
shares or increase the
number of shares and
other debt-equity
swap（Ⅱ）
6 - -
Increase in the shares
(Ⅱ)from the next
month to the end
month of the
reporting period
7 - -
Shares decreased in
the reporting period
due to repurchase.
8 - -
Decrease in the
shares from the next
month to the end
month of the
reporting period
9 - -
Number of months of
the reporting period
10 - -
The weighted
average number of
ordinary shares
issued out.
11=4+5+6×7÷10
-8×9÷10
169,142,356 169,142,356
Basic gains per share
（Ⅰ） 12=1÷11
0.07 -0.15
Diluted gains per
share（Ⅱ） 13=3÷11
0.07 -0.16
The interest of
ordinary shares
which was confirmed
14 - -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
109/125
Items
No
In the report
period
The same
period of last
year
as costs
Conversion costs 15 - -
Income tax rate 16 20% 18%
Warrants, shares with
equity right increase
17 - -
Diluted gains per
share（Ⅰ）
18=[1+(14-15)×(1-16)]÷(11+17) 0.07 -0.15
Diluted gains per
share（Ⅱ）
19=[3+(14-15)×(1-16)]÷(11+17) 0.07 -0.16
41.Other comprehensive income
Items Amount of
current
period
Amount of
previous period
1．Loss amount producted by sellable financial assets 102,473 -580,899
Less：Income tax infection producted by sellablefinancial
assets
- -
Net amount transferred into profit and loss at current priod
that reckoned into other comprehersive income at former
period
- -
Subtotal 102,473 -580,899
2．The enjoyed share in other comprehensive incomeofother
invested unit according to equity method
- -4,105,537
Less：Income tax infection producted from theenjoyed
shre in other comprehensive income of other invested unit
according to equity method
- -
Net amount transferred into profit and loss at current period
that reckoned into other comprehersive income at former
priod
- -
Subtotal - -4,105,537
3．Benefit (Or loss) amount producted from cash flow
Less：Income tax infection produced from cash flowhedging
instruments
Net amount transferred into profit and loss at current
period that reckoned into other comprehensive income at深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
110/125
Items Amount of
current
period
Amount of
previous period
former period
Transferred to the adjustment of initial confirmation
amount of items at hedged period
Subtotal
4．Translating difference in foreign currency financial reports -553,958 -8,773,376
Less ：Net amount that transferred into profitandloss at
current period in disposed overseas business
- -
Subtotal -553,958 -8,773,376
5．Other - -
Less ： Taxation infection arising from reckoning other
comprehensive income
- -
Net amount transferred into profit and loss at current period
that reckoned into other comprehensive income at former
period.
- -
Subtotal - -
Total -451,485 -13,459,812
42. Cash flow statement
（1）cash and cash equivalents
Items Amount of current
period
Amount of previous
period
Cash 56,105,626 61,368,428
Including :Stock of cash 182,181 117,278
The bank deposits which can be used at any
time 45,493,122 51,085,519
The other monetary funds which can be used
at any time 10,430,323 10,165,631
The funds deposited in the central bank
which be used - -
The funds deposited in the same industry - -
The funds offered by the same industry - -
Cash equivalents - -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
111/125
Items Amount of current
period
Amount of previous
period
Including : Debt investments which will due
within three months - -
Balance of cash and cash equivalents at the
period end 56,105,626 61,368,428
Including : the restricted cash and cash
equivalents used by the parent company or
subsidiary of the Group - -
（2）Reveive/payable other /Investment/cach of financing activities
1）Other cash received relating to financing activities
Items Amount of current
period
Amount of previous
period
Rental income 8,224,914 9,093,398
Between units and individuals 2,503,550 45,356
Interest income 536,131 576,686
Deposit and Water and electricity fees 940,773 1,402,199
Profits tax paid in advance will have prepaid tax
returned - 567,051
Other 49,801 138,168
Total 12,255,169 11,822,858
2）Other cash paid relating to operating activities
Items Amount of current
period
Amount of previous
period
Rental fee 670,790 715,743
Society fees 675,516 655,805
Between units 2,382,493 412,655
Transportion fees 306,655 341,584
Audit fees 534,380 624,144
Office fees 301,580 339,075
Insurance premium 147,876 194,234
Travel fees 250,213 609,541
Telephone fees 156,310 223,003
Securities management expenses 150,708 216,911深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
112/125
Items Amount of current
period
Amount of previous
period
Commodity inspection expenses 177,025 -
Water and electricity fees 1,777,530 1,549,417
Land use expenses 110,068 96,951
Parking fees 113,906 165,654
Tariffs on trial charge 64,062 40,634
Lawyer fees 50,074 49,082
Courier charges - 33,326
Advertising 22,068 -
Property management fees 140,200 209,786
Repair fees 246,365 168,714
Deposit 227,174 33,273
Other 200,293 754,354
Total 8,705,286 7,433,886
（3）Supplement information of Consolidated Flow Statement
Items Amount of
current
period
Amount of
previous period
1. Adjusting net profit to net cash flow in operating
activities:
Net profit 11,713,331 -26,057,341
Add： Provision for impairment of assets -1,466,672 8,806,636
Fixed assets depreciation 4,000,658 4,028,664
Amortization of intangible assets - 469,222
Amortization of long-term expenses to be amortize - -
The losses on the disposal of fixed assets, intangible assets
and other long-term assets
93,320 10,878
Loss on retirement of fixed assets
Loss on changes of Fair value -48,912 96,798
Financial expenses 90,090 1,911,015
Investment losses -21,337,265 10,351,600
Decrease of deferred income tax asset -
Increase of deferred income tax liability -47,082 -179,447深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
113/125
Items Amount of
current
period
Amount of
previous period
Decrease in inventory 7,747,240 14,187,745
Decrease in operating receivable 1,544,650 -4,136,161
Increase in operating payables -3,155,798 4,131,812
Other
Net cash flows from operating activities -866,440 13,621,421
2.Investing and financing activities that do not involve cash
receipts and payments
Conversion of debt into capital - -
Convertible bonds to be expired within one year - -
Fixed assets under financial lease - -
3.Net increase in cash and cash equivalents
Cash at the end of the period 56,105,626 61,368,428
Less：Cash at the beginning of the period 61,368,428 52,656,852
Add: Cash equivalents at the end of the period - -
Less：Cash equivalents at the beginning of the period - -
Net increase in cash and cash equivalents -5,262,802 8,711,576
* The financial cost due to change in exchange rate and the impact on cash and cash equivalents RMB 90,090, the financial
cost of interest payments was the loan interest of the related parties, reflected in business activities.
IX. Related party relationship and related transactions
(I) Related party relationship
(1)The related parties with controlling relationship
Parent
company
Type
Registered
address
Legal
represe
Nature
Relations
hip
Organi
zation
Code
Union
Holding
Issue
company
11/F,Union
Bulding,
Dong
Bingge
Production
and sale
Controll
ing
192471500
Union
Group
Limited
liabilit
Union
Bulding,Shenna
Dong
Bingge
Import & export
business
Actual
controller
190337957
(2) The registered capital of the related parties with controlling relationship and the change
thereof.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
114/125
Parent company Balance in year
beginning
Increase of this
period
Decrease of this
period
Balance in year
end
Union Group 90,606,000 - - 90,606,000
Union
Holdings 1,123,887,712 - - 1,123,887,712
(3) The related parties without controlling relationship
Shares amount Holding proportion% Vote proportion%
Parent company Amount in
year end
Amount
in year
beginning
Proportion in
year end
Proportion in
year
beginning
Proportion in
year end
Proportion in
year
beginning
Union Group* 5,821,089 6,299,185 3.44% 3.72% 3.44% 3.72%
Union
Holdings 43,141,032 43,141,032 25.51% 25.51% 25.51% 25.51%
* Union Group holds 31.32% of equity capital of Union Holdings, it controls Union Holdings, and Union Holdings is a
controlling shareholder of the company, thus Union Group is the actual controller of the company
1.Subsidary company
The subsidiaries of the Company as described in Note VII
2.Joint venture and affiliated company.
Joint venture and affiliated company ,see Notes VIII,10
(4) Other Related party
Name Type
Related
transactions
Shenye Union（HK）Co., Ltd.
The related parties controlled
the same Actual controller
Current balance
Shenzhen Union Property
Group Co., Ltd.
The related parties controlled
the same Actual controller
Current balance
(5) Related transactions
1. Lease assets to the related parties
In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union Group. The term of
tenancy is from January 1, 2009 to May 31, 2009. The monthly rent is RMB 6800. The rent was determined according to
market price.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
115/125
2. Balance current related parties
Related parties Year-end balance Year-beginning balance
Account receivable
Shenye Union（HK）Co., Ltd. 325,127 325,644
Other payable
Union Group 21,566,542 20,492,359
Shenzhen Union Property Group Co.,
Ltd. 3,671,008 3,473,200
X.Subsequent events
As of December 31, 2009，The company has no forrned form other Importance events.
XI.Commitment events
1. The external investment contracts and the related financial expenditures which have signed or not yet completely
fulfilled.
By December 31, 2009,The Group still has the major external investments RMB 30 million which have signed but still not
paid, as follows:
Names of
investment
projects
Contract
ual
investme
nt
amount
Prepai
d
invest
ment
amount
Unpaid
investmen
t amount
Expecte
d
investm
ent
period
Remarks
Invest Nanjing
East Asia
Textile Co.,
Ltd with
machinery and
equipments
30 million - 30 million
Unsurene
ss
Can not be
relocated
because the
fields
uncompleted
1. The big contract which has been signed or is ready to be carried out
By December 31, 20089 The Group still has big contract which has been signed but not paid, a total of 1.71 million
yuan, as follows:
Names of
investmen
t projects
Contractu
al
investmen
t amount
Prepaid
investm
ent
amount
Unpaid
investm
ent
amount
Expected
investment
period
Remarks深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
116/125
elocation
of
productio
n
equipment
s as a
whole
1,710,000 855,000 855,000 Unsureness
Can not be
relocated
because the
fields
uncompleted
Except for the events described above, By December 31, 2009,the Group has no other significant commitment events.
XII . Events after balance sheet date
The Group had no other significant matters after the balance sheet date.
XIII. Other Significant Events
1.Lease
(1) Business in leasing assets
Type
Year-end balance Year-beginning
balance
Cost 104,963,930 105,130,823
House, Building 104,963,930 105,130,823
Accumulated amortisation 60,518,745 56,965,039
House, Building 60,518,745 56,965,039
Impairment provision - -
House, Building - -
The book value 44,445,185 48,165,784
House, Building 44,445,185 48,165,784
(2) Significant operating lease minimum lease payments
By December 31, 2009, The leasing of office space of the Group requires for non-cancellable operating
lease commitments in the following period as follows:
The remaining lease period
Minimum lease
payments
Within 1 year(including 1 year) 29,862
Over 1 year and within 2 years(Including 2 years) -
Over 2 years and within 3 years(Including 3 years) -深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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Over 3 years -
Total 29,862
1.Other Significant Events
Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and dismissed most of
workers. The company currently only had some agent import and export business and house leasing business.
Except that the Shenzhen East Asia Company was operating normally, the other 4 subsidiaries controlled
by the company had stopped the operation and were depending on house lease to maintain. In 2007 the
company intended to invest part of machineries and equipments to Nanjing East Asia Textile Printing &
Dyeing Co., Ltd. But due to the reasons of the joint venture party and the prospect change in the industry,
the investment plan was delayed.
The company mainly made efforts to promote the transfer of printing and dyeing mill project, the company will
strengthen construction direction coordination work，in order to carry out the transfer project as soon as possible.
XIV. Parent company Notes of financial statements
1. Accounts receivable
(1) Risk classification of Account receivable
Year-end balance Year-beginning balance
Items Book Balance Book Balance
Amount Proportion%
Provision for
bad debts
Amount Proportion%
Provision for
bad debts
Receivables
with large
individual
amount.
3,998,082 30.54 3,998,082
4,013,720
30.34 4,013,720
Receivables
without large
individual
amount, but
with great
risk after
combined
according to
risk
characteristics
4,252,089 32.49 3,763,561 4,646,827 35.12 3,932,785
Other minor
receivables
4,839,106 36.97 4,839,106 4,570,392 34.54 4,570,392
Total 13,089,277 100.00 12,600,749 13,230,939 100.00 12,516,897深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
118/125
1）The accounts receivable at year end with significant single amount or the insignificant amount
which were tested separately.
Name
Book
balance
Amount of
bad debts
Proportion Cause
Shenzhong Enterprise
Co.,Ltd. 1,707,939 1,707,939
100%
Insolvent
company, to be
written off
Carnival Index
International Ltd
1,193,133 1,193,133 100%
TAI YANG ENTERPRISECO.,
LTD.
1,097,010 1,097,010 100%
Other 4,839,106 4,839,106 100%
The company had
stopped
production, and
no business
contact for a
long time.
Total 8,837,188 8,837,188 100.00%
2）If the individual amount is not important but accounts receivable with big amount of credit risk
identified
Year-end balance Year-beginning balance
Items
Amount Proportion%
Provision
for bad
debts Amount Proportion%
Provision
for bad
debts
Within 1
year 315,737 7.43 9,472 736,126 15.84 22,084
1-2 years 202,515 4.76 20,252 - - -
2-3 years - - - - - -
Over 3
years 3,733,837 87.81 3,733,837 3,910,701 84.16 3,910,701
Total 4,252,089 100.00 3,763,561 4,646,827 100.00 3,932,785
(2)Amount of provision for bad debts written back:
Debtor
Balance
of
accounts
receivable
Proportion
of
provision
Amount
of
provision
for bad
debts
Amount
written
back in
the
report
year
Originally
estimated
provision for
bad debts and
reason for
writeback in the
report year
Linfone 204,805 100% 204,805 172,943 There were no深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
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Debtor
Balance
of
accounts
receivable
Proportion
of
provision
Amount
of
provision
for bad
debts
Amount
written
back in
the
report
year
Originally
estimated
provision for
bad debts and
reason for
writeback in the
report year
Co.,Ltd. business
transactions for a
long term. After
pressing for
repayment, part
of accounts
receivable were
recovered in the
report year.
Total 204,805 100% 204,805 172,943 —
(2) Of the prepayments at the end of period, there were none owed by corporate shareholders of the
Company holding over 5% (including 5%) of its total shares with voting rights.
(3) The front 5 units’ information of account receivable
Unit name Relation with
the company
Amount Fixed year
Percentage of account
receivable
Shenzhong Enterprise
Co.,Ltd. Subsidiary 1,707,939 2-3 years 13.12
Carnival Index
International Ltd
Non-Related
parties
1,193,133
Over 3
years
9.12
Fly Dragon International
Non-Related
parties 622,916
Over 4
years 4.76
Grateful Textiles Co.,Ltd
Non-Related
parties 615,449
Over 5
years 4.70
TAI YANG ENTERPRISECO., LTD.
Non-Related
parties 1,097,010
Over 6
years 8.38
Total 5,236,447
(4)Accounts receivable include the following foreign currency balances
Name Relation with the company Amount Proportion(%)
Shenzhen East Asia Victor Subsidiary 63,984 0.49深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
120/125
Name Relation with the company Amount Proportion(%)
Onward Textile Printing & dyeing
Shengzhong Enterprise Co.,
Ltd. Subsidiary 1,707,939 13.05
Shenye Union（HK）Co., Ltd.
The related parties
controlled the same
Actual controller 325,127 2.48
Total 2,097,050 16.02
(5)Account receivable include the following foreign currency balances
Year-end ba Foreign lance Year-beginning balance
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 12,929,509 0.8805 11,384,433 12,955,677 0.8819 11,425,612
Total 11,384,433 11,425,612
(6). Other accounts receivable
（1）Risk classification of accounts receivable
Year-end balance Year-beginning balance
Book Balance
Provision
for bad
debts
Book Balance
Provision
for bad
debts
Items
Amount Proportion% Amount Amount Proportion% Amount
Receivables
with large
individual
amount. 83,970,412 98.72 3,382,210 84,585,569 98.50 3,319,691
Receivables
without large
individual
amount, but
with great risk
after combined
according to
risk
characteristics
1,071,219 1.26 256,083 898,054 1.04 318,841深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
121/125
Other minor
receivables
13,374 0.02 - 391,634 0.46 -
Total 85,055,005 100.00 3,638,293 85,875,257 100.00 3,638,532
(2) The front 5 units’ information of Other account receivable
Name
Relation with
the company
Amount
Account
Age
Proportion(%)
Content
HongKong Victor
Onward Subsidiary 65,912,682
1-2 yea
rs
77.49
Business
Shenzhen East
Asia Victor
Onward Textile
Printing & dyeing
Company
Subsidiary 13,000,295
2-3 yea
rs
15.28
Business
Shenzhen
East Asia
Victor Onward
Textile Printing &
dyeing Company
Subsidiary 1,675,137
2-3 yea
rs
1.97
Business
Nanjing East
Asia
Non-Related
parties 1,327,251
2-3 yea
rs
1.56
Business
CCB.Guangdong
Shunde
Branch
Non-Related
parties
1,080,025
Over 3
years
1.27
Business
Total 82,995,390 97.57
(1) Ending balance exclude accounts receivable from related parties.
(2)Other receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
Currency of
Name Original currency
Exchange
rate RMB equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 75,915,124.57 0.8805 66,843,267.18 75,848,108 0.8819 66,890,447
Total 66,843,267.18 66,890,447
10.Long-term equity investment
（1）Long-term equity investment
Items Year-end balance Year-beginning balance
The cost of long-term equity
investment accounting 41,317,197 39,974,858深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
122/125
Total of long-term equity
investment 41,317,197 39,974,858
Less ： Long-term equity
investments for impairment - -
Net value long-term equity
investment 41,317,197 39,974,858
(1) The cost method long-term equity investment
Name
Proportion
%
Vote
proportion
%
Initial
amount
Year-beginning
balance
change
Exchange
rate
change
Year-end
balance
Cost method:
HongKong
Victor
Onward 100 100 2,411,282 23,077,357 - -36,635 23,040,722
Nanhua
Printing &
dyeing 54.82 54.82 23,082,831 15,534,564 1,405,000 -23,862 16,915,702
Shenzhen
East Asia 51 51 1,470,000 1,362,937 - -2,164 1,360,773
Total 26,964,113 39,974,858 1,405,000 -62,661 41,317,197
The increase in the report year is the acquisition of 3.66% equity held by Shenzhen Nanyou (Group)
Co., a minority shareholder of Nanhua Company.
4. Business income, Business cost
（1）Business income,Business cost
Items Amount of current
period
Amount of previous
period
Key business income 11,281,450 19,313,029
Other business income 880,293 995,521
Total 12,161,743 20,308,550
Key business cost 11,074,256 19,836,688
Other business cost 440,033 371,531深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
123/125
Total 11,514,289 20,208,219
（1） Type
In the report period The same period of last year
Content Business
income
Business cost
Business
income
Business cost
Cloth bleaching, printing and
dyeing
11,281,450 11,074,256 19,313,029 19,836,688
House lease 880,293 440,033 995,521 371,531
Total 12,161,743 11,514,289 20,308,550 20,208,219
（3）The total sale incomes of the top five customers was RMB 10,798,599 , representing 95% of the
main business income in this year.
5. Investment income
(1）Investment income generated by the sources listed
Items In the report period The same period of
last year
Disposal trading financial assets to
achieve return investment - -
Income from transfer of equity investment 290,960 241,685
Total 290,960 241,685
XV. Supplement information
1.Statement of Non-current gain and loss
Items
In the report
period
The same
period of last
year
Gain/loss form disposal of non-current assets 93,320 -10,878
Gain/loss form Debt restructuring
Except the effective hedge business related to the normal operation business of the
Company, the profit and loss in the changes of fair values caused by the holding of
tradable financial assets and tradable financial liabilities as well as the investment
returns in disposal of tradable financial assets, tradable financial liabilities and saleable
343,265 151,431深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
124/125
Items
In the report
period
The same
period of last
year
financial assets
Single impairment test for impairment of receivables transferred back to preparation 172,943 997,924
Net amount of non-operating income and expense except the aforesaid items -330,568 -68,693
Other non-recurring Gains/loss items - -
Subtotal 278,960 1,069,784
Amount of influence of minority interests - -
Total of non-recurring Gains/loss items 278,960 1,069,784
Including：attributabletocommon shareholders of the parent 280,556 1,020,542
2.Return on net assets and earnings per share
Earnings per share（RMB）
Profit of the report
period
Return on net assets .
Weighted（%） Basic earnings per
share
Diluted gains per
share
Net profit attributable to
the owners of Company. 8.90% 0.07 0.07
Net profit attributable to
the owners of
Company after
deducting of
non-recurring
gain/loss.
8.69% 0.07 0.07
XVI. The approval of financial reports
The report of the financial statements was approved by all directors of the board of directors of the
Company on April 7,2010.
Section X1. Documents for Reference
1.Financial statements bearing the seal and signature of legal representative, financial controller and the
person in charge of the accounting organ.
2. Original of the Auditors Report carrying the seal of PricewaterhouseCoopers Zhongtian Certified Public
Accountants and the personal signatures of the C.P.A.深圳中冠纺织印染股份有限公司财务报表附注
2009 年1 月1 日至2009 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
125/125
3.The original of all the Company's documents and the original manuscripts of announcements publicly
disclosed on the newspapers designated by China Securities Regulatory Commission in the report
period.
The Board of Directors of Shenzhen Victor Onward Textile Industrial Co., Ltd.
April 7, 2010
