深圳中冠纺织印染股份有限公司
Shenzhen Victor Onward Textile Industrial Co., Ltd.
2010 Annual Report
April 2011
1/135 1
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.
Shinewing Certified Public Accountants audited the Financial Report of the Company
and issued the standard unqualified Auditor’s Report.
Mr. Hu Yongfeng, board chairman and General Manager, Mr.Zhang Jinliang, Deputy 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.
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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 staff
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 Inspection
3/135 3
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 : Zhang Jinliang
Contact address: Room 1308, Hualian Building, No.2008 Shennan Zhong Road ,
Shenzhen
Tel：（755）83668425
Fax: (755) 83668427
E-mail: zhangjl@udcgroup.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:
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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.: 440301618801483
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 2010
Unit：RMB
Items Amount
Operating profit 2,328,181
Total profit 2,326,231
Net profit attributable to the shareholders of the listed company 4,102,924
Net profit after deducting of non-recurring gain/loss attributable to
3,864,424
the shareholders of listed company
Cash flow generated by business operation, net 237,582
Difference between IFRS and PRC GAAP :
Unit:RMB
Net profit attributable to shareholders of Owners’ equity attributable to
listed Company shareholders of listed company
Amount in current Amount at the Amount at the
Amount in last period
period priod-end period-begin
Pursuant to overseas
4,220,760 12,210,638 135,858,634 135,622,260
accounting standards
Pursuant to Chinese
4,102,924 12,090,678 142,929,499 143,058,948
accounting standards
Subitem and total adjusted pursuant to international accounting standards::
Total of differences
between the IAS and
117,836 119,960 -7,070,865 -7,436,688
domestic accounting
standard
Statement on
differences between
117,836 119,960 -7,070,865 -7,436,688
the IAS and Domestic
accounting Standard
Explanation on
The influence of appreciation through appraisal of workshop and 2 parking spaces in
difference between
Hong Kong in 1992.
IFRS and PRC GAAP
Items of deducting non-recurring gains and losses and the involved amounts are as following:
5/135 5
Unit:RMB
Items of non-recurring gains and losses Amount Notes（if applicable）
Gains and losses of non-recurring -39,237
Except the effective hedge business 257,537
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
38,860
Other non-operating income and
expenditure beside for the above items
257,160
Subtotal
-18,660
Amount of influence of minority interests
（After tax）
Total 238,500
2. Highlights of accounting data and financial indicators in the latest three years
Main accounting data Unit：RMB
Changed over last year
2010 2009 2008
（％）
Operating profit 9,351,110 27,517,759 -66.02% 46,881,258
Total profit 2,326,231 11,667,821 -80.06% -26,168,635
Net profit
attributable to the
4,102,924 12,090,678 -66.07% -25,957,333
shareholders of the
listed company
Net profit after
deducting of
non-recurring
gain/loss 3,864,424 11,810,122 -67.28% -26,771,342
attributable to the
shareholders of
listed company
Cash flow
generated by
237,582 -866,440 -127.42% 13,621,421
business operation,
net
Changed over last year
End of 2010 End of 2009 （％）
End of 2008
Gross Assets 195,732,419 201,318,234 -2.77% 192,923,851
Shareholders’
equity attributable
142,929,499 143,058,948 -0.09% 130,073,334
to shareholders of
the listed company
Capital stock 169,142,356 169,142,356 0.00% 169,142,356
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Main Financial Indicators Unit：RMB
Changed over last
2010 2009 2008
year（％）
Basic gains per
0.02 0.07 -71.43% -0.15
share(RMB/Share)
Diluted gains per
0.02 0.07 -71.43% -0.15
share(RMB/Share)
Basic earning per share after
deducting of non-recurring 0.02 0.07 -71.43% -0.16
gains/losses(RMB/Share)
Net income on asset,
2.80% 8.90% -6.10% -16.34%
Weighted(%)
Net income on asset,
weighted and deducted 2.64% 8.69% -6.05% -16.99%
non-recurring gain/loss(%)
Net cash flow per share
generated by business 0.001 -0.005 -120.00% 0.081
operation (RMB/Share)
Changed over last
End of 2010 End of 2009 year（％）
End of 2008
Net asset per share
attributable to
0.85 0.85 0.00% 0.77
shareholders of the listed
company(RMB/Share)
3. Return Ratio and Earnings per share
Earnings per share
Return Ratio on Net asset,
Profit in the report peirod Basic gains per Diluted gains per
Weighted(%)
share share
Net profit attributable to the
shareholders of the parent 0.03 0.02 0.02
Company
Net profit after deducting
non-recuring gains and losses 0.03 0.02 0.02
attributable to the shareholders
4. Particulars about Changes in Shareholders' Equity in the Report Period
Unit：（RMB）
Owner’s equity Attributable to the Parent Company Minor Total of
Items Share Capital Surplus Attributable shareholders’ owners’
Other equity equity
Capital reserves reserves profit
Balance at the
beginning of 169,142,356 39,297,104 26,704,791 -102,767,941 10,682,638 508,088 143,567,036
current year
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Changed in 575,430 4,102,924 -4,807,803 -1,819,683 -1,949,132
the current
year
Balance at the
end of this 169,142,356 39,872,534 26,704,791 -98,665,017 5874835 -1,311,595 141,617,904
term
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 0 0 0 0 0 0
subscription
1.State-owned shares 0 0 0 0 0 0
2.Staee-owned legal
0 0 0 0 0 0
person shares
3.Other domestic
0 0 0 0 0 0
shares
Of which：
Domestic legal person
0 0 0 0 0 0
shares
Domestic natural
0 0 0 0 0 0
person shares
4.Share held by
0 0 0 0 0 0
foreign investors
Of which：
Foreign legal person
0 0 0 0 0 0
shares
Foreign natural person
0 0 0 0 0 0
shares
II. Shares with
unconditional 169,142,356 100 0 0 169,142,356 100
subscription
1.Common shares in
99,720,453 58.96 0 0 99,720,453 58.96
RMB
2.Foreign shares in
69,421,903 41.04 0 0 69,421,903 41.04
domestic market
3.Foregin shares in
0 0 0 0 0 0
overseas market
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4.Other 0 0 0 0 0 0
III. Total of capital
169,142,356 100 0 0 169,142,356 100
shares
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 11,637 registered shareholders in total including
7,005 shareholders of A shares and 4,632 shareholders of B shares.
2．At the end of 2010,,Top 10 shareholders and top 10 holders of unconditional shares
Unit：Shares
Total number of shareholders 11,637
Particulars about the shareholding of the top ten shareholders
Increase or
Name of the Nature of Share Total Conditional Pledged
decrease in
shareholder shareholder proportion % shares the year shares or frozen
Domestic
Union Holdings Co.,
non-state-owned 25.51% 43,141,032 0 0 0
Ltd.
legal person
STYLE-SUCCESS Foreign
14.46% 24,466,029 0 0 0
LIMITED shareholder
Shenzhen Textile
State-owned
(Group)Holdings 5.76% 9,739,594 -1,566,068 0 0
shareholder
Ltd
Rich Crown Foreign
3.62% 6,114,556 0 0 0
Investment Co., Ltd. shareholder
Union Development
Other 3.44% 5,821,089 0 0 0
Group Co., Ltd.
BOCI SECURITIES Foreign
1.49% 2,528,567 0 0 Unknown
MITED shareholder
Foreign
Shing Ying Chieh 1.00% 1,698,982 -1,797,737 0 Unknown
shareholder
Li Min Other 0.98% 1,650,000 0 0 Unknown
Liuzhou Jiali Real
estate
Other 0.76% 1,280,100 0 0 Unknown
Development Co.,
ltd.
Shanghai Hongkong Foreign
0.58% 979,986 0 0 Unknown
Wanguo Securities shareholder
Top 10 holders of unconditional shares
Unconditional
Name of the shareholder Type of shares
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 9,739,594 RMB Common shares
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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
BOCI SECURITIES MITED 2,528,567 Foreign shares placed in domestic exchange
Shing Ying Chieh 1,698,982 Foreign shares placed in domestic exchange
Li Min 1,650,000 RMB Common shares
Liuzhou Jiali Real estate Development
1,280,100 RMB Common shares
Co., ltd.
Shanghai HongkongWanguo Securities 979,986 Foreign shares placed in domestic exchange
Notes to the related relationship The controlling shareholder of the above-mentioned largest
between the shareholders or their shareholder Shenzhen Union Holdings Ltd.and fourth shareholder
concerted action 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 system
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 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).
5.The property right and controlling relationship between Union Development Group
Ltd. and the Company is as follows:
Hangzhou Jinjiang Group
Co., Ltd.
20.89%
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Union Development Group
Co.,Ltd.
31.32% 99.99%
3.44%
Union Holdings Co., Ltd. Rich Crown Investment Co.,
Ltd.
25.51% 3.62%
Shenzhen Victor Onward Textile Industrial Co., Ltd.
6.Statement of Union Group on its shareholders, shareholder structure and actual
controller:
Throughout the years, due to constant reform of economic management system and
quick development of socialist market economy, the Group has experienced
management mechanism 's adjustment and equity structure change for many times. In
1993 when the State Council carried out structural reform, Ministry of Textile Industry
was dissolved and China Textile Federation was established. The Group's relationship
of subordination continued. After China Textile Federation was dissolved in 1998, the
Group was put under the supervision of Central Enterprise Industrial Committee. In
2003, State-owned Assets Supervision and Administration Commission of the State
Council was established. In April 2005, The Group became one of the enterprises under
its supervision. State-owned Assets Supervision and Administration Commission of the
State Council transferred 12.09% state-owned equity of Union Group to OCT Group
Company and authorized OCT Group Company to perform the capital contributor's
responsibilities on behalf of 12.09% state-owned equity. OCT Group Company became
the largest shareholder of Union Group.
Union Group has been engaged in textile and garment industry for long term. Due
to fierce market competition, state-owned capital has left or is leaving textile and
garment industry. The provincial management mechanism to which the Group's
shareholders are subject has also undergone great change. From 2004, some
shareholders of the Group as promoters began to assign shares of Union Group in
11/135 11
succession according to the change of situation and their own conditions. Some private
enterprises became the shareholders of Union Group. By November 2005, Hangzhou
Jinjiang Group Co., Ltd. acquired 20.89% equity of Union Group and became the
largest shareholder. OCT Group became the second largest shareholder.
(1) At present, Union Group has 16 corporate shareholders. The particulars are as
follows:
Proportion of Remarks
Amount of capital
capital
No. Name of shareholder contribution
contribution
(RMB’0000)
(%)
1 Hangzhou Jinjiang Group Co., Ltd. 1,892.8120 20.8896 Private
2 OCT Group 1,094.9500 12.0842 State-owned
3 Henan Fuxin Investment Co., Ltd. 984.2567 10.8600 Private
4 Xian International Intrust Co., Ltd. 926.0019 10.2196 State-owned
5 Shandong Textile Industrial Association 569.9196 6.2898 State-owned
6 Hebei National assets Holding Co., Ltd. 531.4800 5.8655 State-owned
7 Zhejiang Zhengcai Industry Co.,Ltd. 530.0000 5.8492 Private
8 Heilongjiang Textile Industry Association 500.0000 5.5181 State-owned
9 Sichuan Shulian Co., Ltd. 329.0240 3.6312 Private
Hebei Textile Industry Association State-owned
10 300.0000 3.3108
Secretariat
11 Jiangsu Textile (Group) Company 288.6723 3.1859 State-owned
12 Liaoning Textile Industry Association 286.4400 3.1612 State-owned
13 Shenzhen Textile (Group)Holdings Ltd 260.0000 2.8694 State-owned
14 Xinjiang Textile Industry Association 236.4600 2.6096 State-owned
15 Beijing Textile Holdings Co., Ltd. 215.8400 2.3820 State-owned
16 China Textile Machineay (Group)Co., Ltd. 115.1435 1.2707 State-owned
Total 9061.00 100.00
(2) Composition of board members of Union Group
According to the Articles of Association of Union Group, the directors shall be
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appointed by the corporate shareholders that contribute capital of more than RMB 5
million (not including RMB 5 million) and be elected by the shareholders' meeting. The
board of directors shall be composed of 7 to 11 members. The current sixth board of
directors was elected in October 2008. It has 7 members, including 5 members coming
from corporate shareholders, 1 member jointly recommended by shareholders and 1
independent director. The particulars are as follows:
No Name of shareholder Directors appointed Remarks
1 Hangzhou Jinjiang Group Co., Ltd. 1 person/Dou Baibing
2 OCT Group 1 person /Wang Xiaowen
3 Shandong Textile Industrial Association 1 person/Xia Zhilin
4 Hebei National assets Holding Co., Ltd. 1 person /Gao Jianru
Original
5 Tianjing Tianfang Investment Co.,Ltd. 1 person/Liu Baogen Shareholder
representative
Connon
6 Dong Binggen
recommended
Indepenment
7 Long Xingping
Director
(3) Description of the actual controllers
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 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,
13/135 13
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 1 member 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) From the fifth board of directors, Dong Binggen was jointly recommended by all
14/135 14
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 28 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 Group is quite apparent. Therefore, Union Group only has the largest
shareholder and does not have actual controller at present.
7. 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
Section IV Particulars about Directors, Supervisors, Senior Executives
and Employees
I Basic information about directors, supervisors and senior executives and Staff
（1）Basic information
1.In formation for the change of share holding and salary of directors, supervisors and
executives and staff
Increase/dec The total Incentive
Shares rease amount of stock option
held at Shares held amount remuneration
vested during
Name Sex Age Title Term of office the at the received from
year-beg year-end the Company in the reporting
inning the report period
period
15/135 15
(RMB’0000)
Board
Ma chairman/G
Hu Yongfeng 48 2008.4-2011.4 0 0 38
le eneral
Manager
Ma Vice Board
Ding Yue 52 2008.4-2011.4 0 0 0
le chairman
Fe
Vice Board
Shu Yibo ma 38 2008.4-2011.4 0 0 0
chairman
le
Fe
Zhang Mei ma 35 Director 2008.4-2011.4 0 0 0
le
Ma
Feng Junbin 48 Director 2008.4-2011.4 0 0 0
le
Ma Independent
Jin Ligang 51 2008.4-2011.4 0 0 5
le director
Ma Independent
Shen Songqin 53 2008.4-2011.4 0 0 5
le director
Wang Ma Independent
37 2008.4-2011.4 0 0 5
Tianguang le director
Chairman of
Dong Ma the
61 2008.4-2011.4 0 0 0
Binggen le supervisory
committee
Fe
Huang
ma 53 Supervisor 2008.4-2011.4 0 0 0
Xiaoping
le
Ma
Pan Weichao 59 Supervisor 2008.4-2011.4 0 0 9
le
Deputy
Zhang Ma
48 general 2008.4-2011.4 0 0 15
Jinliang le
Manager
Ren Ma Board 2010.12 to till
48 0 0 0
Changzheng le secretary now
The
outgoing
Ma
Chen Xin 37 director/ 2008.4-2010.6 0 0 6.5
le
Board
secretary
Manager of
Ren Ma
35 Finance 2008.4-2011.4 0 0 9
Changzheng le
Dept
Notes：The period of remuneration receipt by Chen Xing, a director and board secretary who has left
his post, is from January 2010 to June 2010.
2. Particulars about directors and supervisors holding positions at corporate shareholders
Whether
Name of corporate receiving
Name Position Term of office
shareholders remuneration
or subsidy
Dongbingge Shenzhen Union Holdings
Board chairman 2007.6-till now No
n Ltd.
16/135 16
Secretary of Party
Dong Union Development Group committee, chairman of
2008.10- till now Yes
Binggen Co., Ltd. board of directors and
President
Union Development Group
Ding Yue Vice President 2008.10-till now Yes
Co., Ltd.
Shenzhen Union Holdings Convener of the
Ding Yue 2007.6- till now No
Ltd. Supervisory Committee
Hu Union Development Group
Vice President 2008.10-till now No
Yongfeng Co., Ltd.
Hu Shenzhen Union Holdings
Vice Board chairman 2007.6- till now No
Yongfeng Ltd.
Secretary of Party
Huang Union Development Group
committee, secretary of 2008.10-till now Yes
Xiaoping Co., Ltd.
discipline committee
Huang Shenzhen Union Holdings
Director 2007.6- till now No
Xiaoping Ltd.
Shenzhen Textile(Holding)
Feng Junbin Deputy general manager 2007.1- till now Yes
Co., Ltd.
Union Development Group
Zhang Mei Manager of Finance Dept. 2008.10-till now Yes
Co., Ltd.
Shenzhen Union Holdings
Zhang Mei Director 2009.5- till now No
Ltd.
(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 Vice
President of Union Development Group Co., Ltd. and Vice 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 Vice President of Union Development Group Co., Ltd. and convener of the
supervisory committee of Union Holdings Co., Ltd., He served as 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 of the board , General Manager of Manqi Industry Co.,
Ltd.,Chairman of board of Manqi Investment Development Co., Ltd.She served as director of the
Company since April 18, 2008, He served as Vice Chairman of board of the Company July 29, 2008.
17/135 17
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 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 , He now
serves as Deputy 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 to June
2010, He served as director of the company from April 18, 2008 to June 28, 2010. a director and
board secretary of the Company resigned from the position of director and board
secretary for personal reasons on June 28, 2010.
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
18/135 18
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.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. she 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, Manager of
General Affairs Dept. and chairman of labor union. He now serves as Manager of affairs Dept of the
Company, he has served as employee-representing supervisor of the Company Since April 18, 2008.
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
19/135 19
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
since December 2004, He served as director of the company since December 27, 2010.
Secretary of the Board of Directors:
Zhang Jinliang (Refer to Deputy General Manager column for details)
Manager of Finance Dept:
Ren Changzheng, male, was born in August 1975, In 1997,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 2010 is RMB 0.925 million. Including,The allowance for each
independent director is RMB 50,000 (including tax) per year.
（IV）Particulars about leaving post, engaging and dismissing
1. Mr. Chen Xing, a director and board secretary of the Company resigned from the
position of director and board secretary for personal reasons on June 28, 2010.
2.After Resolution by the 14th meeting of the fifth board of directors, Zhang Jinliang
was elected as Secretary to the board of directors of the Company on December 27,
2010..
The resolutions of the meetings were disclosed on Securities Times ,Hong Kong
Commercial Daily and www.cninfo.com.cn respectively on June 29, 2010 and
December 28, 2010.
II.. Staffs:
By the end of the report period, the Company had 30 staff members in total, including 6
managerial employees , 3 financial employees, 21 Logistics employees. The Company
has provided social insurance to its staff according to relevant regulations of the
government.
Section V Administrative Structure
20/135 20
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 ,
Regulations on Management of External Information Users ,the Management System
for Financial Accounting Related Personnel and Related Parties and the Regulations of
Shenzhen Printing and Dyeing Co., Ltd. on Preventing Fund Occupation by Controlling
Shareholder and Related Parties 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
21/135 21
of Association of the Company and will further perfect director selection and
appointment procedure and actively promote system of 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 peoples.
(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. 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
22/135 22
expressed independent opinions on important matters of the Company including
external guarantees, related transactions, corporate governance.
Independent Directors’ attendance of the Boarding meeting
Times of Attended Absent form
Attended by
Name meeting personally meeting Notes
proxy (times)
should attend (times) (times)
Jin Ligang 9 9 0 0
Shen Songqin 9 9 0 0
Wang
9 9 0 0
Tianguang
III. 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.
IV. Self-Appraisal of Internal Control:
According to the requirements of relevant regulations such as the Basic Standards for
Enterprise Internal Control jointly issued by the Ministry of Finance and China
Securities Regulatory Commission and the Guidelines for Listed Company Internal
23/135 23
Control issued by Shenzhen Stock Exchange, Shenzhen Victor Onward Textile
Industrial Co., Ltd. combined its own characteristics and actual situation, conducted
internal control self-assessment 2010 and formed the internal control self-assessment
report.
(I). Overview of Internal Control
1. Update on Rules Building for Internal Control
According to relevant regulations of the Company Law and the Securities Law,
company had stipulated and gradually developed management rules and internal control
systems such as the Articles of Association, Rules of Order for Annual Shareholder
Meeting, Rules of Order for Board of Directors, Rules of Order for supervisory
committee, Work Rules for Independent Directors, the Annual Report Working
System for Independent Director, the Working Instructions for Audit Committee,the
Working Instruction for Strategies Committee,the Working Instruction for Nominations
Committee,the Working Instructions for Salary and Appraisal Committee , Detailed
Working Rules of General Manager , the Management System for Financial
Accounting , Internal Audit Management System， Regulations on Registration of
Persons Knowing Insider Information and Special Regulations on Management of
High-risk Investmen other management rules and internal control rules etc. which
basically covered the main part of company’s operation and management activities and
they have stronger practicability. The establishment and implementation of these
systems improved company’s operation & management level and the ability to guard
against risks.
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.
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
24/135 24
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.
4. The performance and achievements of company on internal control development in
2010
In order to further improve standardized operation level on company’s annual
information disclosure and strengthen periodic report, the preparing & reviewing on
important matters and the management on company’s external information user during
disclosure period, Company established the Accountability System for Annual Report
Disclosure Major Errors and the Management system for external information user
according to the requirement of China Securities Regulatory Commission and relevant
laws and rules. It defined the accountability of person in charge of annual report
information disclosure and the management on external information user. At the same
time, in order to standardize the behavior of financial administrator & accounting
organization administrator and strengthen the financial supervision, company stipulated
the Management System for Financial Accounting Related Personnel based on relevant
laws & rules and it further defined the duty and authority of relevant people.
On April 2010, Based on the requirement of Notice of carrying out special
campaign on standardizing accounting basic work fully and deeply in Shenzhen
jurisdiction area issued by Shenzhen securities regulatory bureau, company made the
work program for this special campaign and organized & carried out special campaign
on financing and accounting basic work in whole company wide, the audit committee
25/135 25
conducted inspection and provided guidance to the operation status of campaign.
Through this special campaign, it further standardized financial & accounting basic
works and improved standardized operation level of company’s finance & accounting.
On October 2010, Based on the requirement of Notice of carrying out
self-examination on the establishment & implementation of long term effective
mechanism for preventing fund occupation (Shenzhen Security Bureau [2010] No.59),
company actively carried out related self-examination works and further improved the
long term effective mechanism for preventing fund occupation by going over
company’s related regulations and rules, also conducted audit one by one on the fund
occupation & capital transactions status of majority shareholder and its related parties
since 2010. According to self-examination result, company’s long term effective
mechanism for preventing fund occupation basically meet the requirement of notice, it
was not found in company that fund was occupied by majority shareholder and its
related parties.
(II)Key Control Activities
1. Management Update of Our Controlled Subsidiaries:
To standardize the relations with controlled subsidiaries, enhance the support, guidance
and 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
26/135 26
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. in the report period, No event was found in
our company that fund occupied by controlling shareholder and its related parties for
non-operating purpose.
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. In the report period, The company has no external
Guarantees.
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. In the report period,The company not raises funds..
5. Internal Control of Major Investment:
According to requirements of the Stock Listing Rules, Guidance on Internal
Control of Listed Firms 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. In the
report period, The company has no significant investment matters.
6. Internal Control of Information Disclosure:
We have set up a set of effective stringent information management rule, enhanced
27/135 27
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 delay to move to
Nanjing, 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, Five
subsidiaries controlled by the Company stopped the operation of relevant printing and
dyeing business due to the production suspense of printing and dyeing mill and most of
them maintained their daily operation by house property lease.The Company’s printing &
dyeing plant in Shenzhen ceased production, Due to the reason on the side of the other party of joint
venture and change of industry prospect，as of December 31, 2010, Capital Increasing of the
joint venture project had not been completed,The capital construction of Nanjing
Factory has still not satisfied the conditions for equipment installation so that the joint
venture project can not be completed after much delay. Shenzhen East Asia Textile
Printing and Dyeing Co., Ltd., a subsidiary established by the Company in Shenzhen to
undertake the Company's original printing and dyeing business, stopped its operating
28/135 28
activities because the joint venture factory in Nanjing failed to start operation as
schedule so that there was no business for undertaking.
Corrective Actions and Measures: Due to the delay of the relocation of our printing &
dyeing 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. 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, Based on the requirements of , and The fundamental norms of enterprise’s internal control,
company established quite perfect internal control structure and conducted standardized
operation. 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. The internal control system can provide institutional guarantee
to company’s normal operation & risk control. At the same time, in the later work,
company will further improve the management level of company and make it perfect,
strengthen & improve the construction of internal control system and enhance internal
control execution.
Company has not recruited external audit institution for giving opinions on
company’s internal control self-examination report yet.
V 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
29/135 29
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 2010 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.
VI.Comments 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 2010, as independent directors of the company, we
have carefully read through the 2010 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 2010 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 2010 Annual Internal Control Self-Appraisal Report is compliant to the
actual situation of internal control of our company.
VII 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
30/135 30
linked to the compensations and hiring of executives.
Section VI. Particulars about Shareholders’ General Meeting
In the report period，the Company held 1 shareholders’ general meeting. Relevant
particulars are as follows:
(1) 2009 annual shareholders' general meeting of the Company
1. Notice, convening and holding of shareholders' general meeting
The Company issued the notice of holding 2009 annual shareholders' general meeting
on April 7, 2010. 2009 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 12, 2010 s scheduled. The meeting was presided over by Mr. Hu
Yongfeng, the board chairman of the Company. 5 hareholders and shareholders' agents
attended this meeting, representing 90,225,600 shares which account for 53.34% of the
total shares of the Company. 2 shareholders holding A shares (agents) attended the
meeting, representing 59,145,015 shares which account for 59.31% of total voting
shares held by the Company's shareholders holding A shares. 3 shareholders holding B
shares (agents) attended the meeting, representing 31,080,585 shares which account for
44.77% 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) 2009 annual work report of the board of directors of the Company.
(2) 2009 annual work report of the supervisory committee of the Company.
(3) 2009 annual report of the Company and its summary.
(4) The profit distribution preplan of the Company for 2009
（5）The proposal for renewing the engagement of Shine Wing Certified Public
Accountants as the Company's audit body for 2010;
The announcement of the resolutions of this meeting was published on Securities
Times and Hong Kong Commercial Daily on May 13,2010.
VII Report of the Board of Directors
I. The discussion and analysis of operation status
31/135 31
The Company’s printing & dyeing plant in Shenzhen ceased production, Five
subsidiaries controlled by the Company stopped the operation of relevant printing and
dyeing business due to the production suspense of printing and dyeing mill and most of
them maintained their 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, 2010, Capital Increasing of the joint venture project
had not been completed,The capital construction of Nanjing Factory has still not
satisfied the conditions for equipment installation so that the joint venture project can
not be completed after much delay. Shenzhen East Asia Textile Printing and Dyeing Co.,
Ltd., a subsidiary established by the Company in Shenzhen to undertake the Company's
original printing and dyeing business, stopped its operating activities because the joint
venture factory in Nanjing failed to start operation as schedule so that there was no
business for undertaking. The main source of the profit made by the Company in the
report year is the income from its investment in Zhejiang Union Hangzhou Bay
Ventures Co., Ltd.
(I) Review of the operating status of the Company in the report period
1. Overall operating status in the report period
Unit：RMB
Amount of
Proportion of
Items 2010 2009 change and change (%)
percentage
Operating Income 9,351,110 27,517,759 -18,166,649 -66.02
Operating Profit 2,328,181 11,905,069 -9,576,888 -80.44
Total profit 2,326,231 11,667,821 -9,341,590 -80.06
Net profit attributable to
shareholders of listed 4,102,924 12,090,678 -7,987,754 -66.07
Company
Notes：
(1) Operating income decreased by RMB 18.16 million year on year mainly
because the printing and dyeing business of the Company was not recovered;
(2) Operating profit decreased by RMB 9.57 million mainly because the key
business of the Company was not recovered, the earnings of Zhejiang Union Hangzhou
Bay Ventures Co., Ltd., an affiliated company, decreased by 47.20% year on year to
32/135 32
RMB 45.05 million and Shenzhen East Asia Victor Onward Textile Printing and
Dyeing Co., Ltd., a controlled subsidiary, suffered loss of RMB 3.5 million;
(3)Total profit decreased by RMB 93.4 million mainly for the reason mentioned in (2);
(4) The net profit attributable to shareholders of listed Company increase by RMB 7.98 million
year on year mainly due to the said factors.
2. Scope of key business and its operation status
Scope of key business :Production and sales of textile products, necessary raw
materials, auxiliary materials, various fabrics and garments and provision of relevant
services.
In report period, the controlled subsidiaries continued production suspense and
rectification and were mainly engaged in asset preservation and lease of idle properties
except that the main operation.
(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 9.35 million, an decrease of 66.2%
year on year. The Company realized net profit of RMB 2.32 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
Change of
Increase/dec
Key Increase/dec key business
Income rease of key
On industry or Cost of key business rease of key profit over
from key business
production business profit ratio business the same
business turnover
（％） cost（％） period of last
（％）
year（％）
Fabrics bleaching,
66.67 -94.93 -98.17 59.39
Printing & dyeing 96 32
Lease 839 400 52.32 -2.10 -20.79 11.25
Income from and cost of main operation in terms of areas are as follows:
Unit: RMB’0000
Increase/decrease of income
Area Income from key business
（％）
Mainland China 766 -51.58
Hong Kong and Overseas 169 -85.55
(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
33/135 33
The Status of key business in terms of industry of business
Change of
Increase/dec
Key Increase/dec key business
Income rease of key
On industry or Cost of key business rease of key profit over
from key business
production business profit ratio business the same
business turnover
（％） cost（％） period of last
（％）
year（％）
Fabrics bleaching,
66.67 -94.93 -98.17 59.39
Printing & dyeing 96 32
Lease 839 400 52.32 -2.10 -20.79 11.25
(3). The profit structure and key business structure in the report period did not change
much compared with the previous report period.
(4).Major Suppliers and Customers
At present, the Company is mainly engaged in renting property. The tenants in
Shenzhen are its main customers.
3.Change in composition of the Company's assets and reasons therefore:
Unit:RMB’0000
Amount of
Items of consolidated
2010 2009 change and Proportion of change (%)
balance sheet
percentage
Monetary fund 5178 5,610 -432 -7.70
Account receivable 58 239 -181 -75.73
Prepayments 2 94 -92 -97.87
Other receivable 17 122 -105 -86.07
Inventories 42 85 -43 -50.59
Disposable financial
87 30 57 190.00
asset
Long term share
7719 6842 877 12.82
equity investment
Property investment 3967 4444 -477 -10.73
Account payable 271 455 -184 -40.44
Minority interests d -131 50 -181 -362.00
(1) Monetary capital decreased by 4.32 million and 7.70% mainly because Nanhua
Company, a subsidiary, paid loan principal of RMB 3 million to Shenzhen Union
Property Group Co., Ltd., a related party;
(2) Accounts receivable, payment in advance, other receivables and advance
collections respectively decreased by RMB 1.81 million, RMB 0.92 million, RMB 1.05
million and RMB 1.84 million mainly because East Asia Victor Onward Company, a
subsidiary, settled current accounts;
(3) Inventories decreased by RMB 0.43 million and 50.59% mainly because East Asia
Victor Onward Company, a subsidiary, disposed of inventories;
34/135 34
(4) Financial assets available for sale increased by RMB 0.57 million due to the rise in
trading price of the stocks of Hong Kong Exchange;
(5) Long-term equity investment increased by RMB 8.77 million and 12.82% mainly
because the real estate project of Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an
affiliated company, made profit;
(6) Real estate for investment decreased by RMB 4.77 million and 10.73% mainly due
to depreciation of house properties;
(7) Minority interests decreased by RMB 1.81 million and 40.44% mainly because
Nanhua Company and Shenzhen East Asia, two subsidiaries of the Company, suffered
excess loss. According to No. 4 Interpretation of Accounting Standards for Business
Enterprises, where the loss for current period shared by minority shareholders of a
subsidiary exceeds the owner's equity enjoyed by them in this subsidiary at the
beginning of period in consolidated financial statements, the difference shall write off
minority interests. Whether the Articles of Association of the Company or an
agreement defines the obligation of minority shareholders for excess loss or not, excess
loss shall write off minority interests, i.e., minority interests will be negative when the
subsidiary suffering excess loss is included for statement consolidation. However, the
minority shareholders of Nanhua Company were declared bankrupt and suffered
compulsory liquidation in 2000. No retroaction can be conducted. Therefore, the
minority shareholders of Nanhua Company shall no longer bear losses.
4.Reasons for material change in the items of profit and loss statement of the Company
in the report period:
Unit ：RMB’0000
Amount of
Items of profit and loss
statement
2010 2009 change and Proportion of change (%)
percentage
Business income 935 2,752 -1,817 -66.02
Business cost 432 2,262 -1,830 -80.90
Sales expense 68 226 -158 -69.91
Administrative
886 798 88 11.03
expense
Financial expenses 65 80 -15 -18.75
Asset impairment loss 401 362 39 10.77
Investment gain 1152 2,163 -1,011 -46.74
Non-business income 3 55 -52 -94.55
Non business expenses 4 79 -75 -94.94
35/135 35
（1）Business income and Business cost respectively decreased by RMB 18.17 Million
and RMB 18.30 million ( 66.02%, 80.90% )year on year mainly because the printing
and dyeing business of the Company was not recovered;
（2）Sales expenses decreased by RMB 1.58 million and 69.91% mainly due to further
deterioration of business and decrease of all expenses in the report year;
（3）Administrative expenses increased by RMB 0.88 million and 11.03%, mainly due
to different classification of administrative expenses and taxes of Nanhua Company, a
subsidiary, as compared with the previous year;
（4）Financial expenses decreased by RMB 0.15 million and 18.75% mainly due to
decrease of loans of Nanhua Company, a subsidiary;
（5）Assets impairment loss increased by RMB 0.39 million mainly due to provision for
impairment caused by liquidation of current accounts and inventories after East Asia
Victor Onward Company, a subsidiary, suspended its business for rectification;
（6）Investment income decreased by RMB 10.11 million and 46.74% mainly because
the earnings of Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated
company, i.e., RMB 45.05 million, decreased by 47.20% year on year;
（7）Non-operating income increased by RMB 0.52 million mainly because Hong Kong
Victor Onward, a subsidiary of the Company, received the refund of taxes and levies in
the report year;
（8）Non-operating expenses increased by RMB 0.75 million 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
2010 Proportion to
the net
amount of
Items Amount of cash cash flow Proportion of
flow from similar change in cash and
activities % cash equivalents %
Subtotal of cash inflows from
business activities 1451 6308.70% -335.88%
Subtotal of cash outflows from
business activities 1428 6208.70% -330.56%
Net cash flows from operating
activities 23 100.00% -5.32%
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Subtotal of cash inflows from
investing activities 35 129.63% -8.10%
Subtotal of cash outflows from
investing activities 8 29.63% -1.85%
Net cash flows from investing
activities 27 100.00% -6.25%
Subtotal of cash inflows from
financing activities
Subtotal of cash outflows of
financing activities 308 100.00% -71.30%
Net cash flows from financing
activities -308 100.00% 71.30%
Influence of the change of
exchange rate on cash -174 100.00% 40.28%
Change in cash and cash
equivalents -432 100.00% 100.00%
Amount
of change Proportion of Proportion of
Items 2010 2009
and change (%) change (%)
percentage
Influence
stopping
Cash received from
production for
sales of goods or 932 2,292 -1,360 -59.34
rectification,
rending of services Business
decreased
Influence
stopping
production for
Tax returned 18 195 -177 -90.77
rectification,
Business
decreased
Influence
stopping
Other cash received
production for
from business 501 1,226 -725 -59.14
rectification,
operation Business
decreased
Influence
Cash paid for stopping
purchasing of production for
250 2,283 -2,033 -89.05
merchandise and rectification,
services Business
decreased
Cash paid to staffs or
paid for staffs
361 432 -71 -16.44 Staff reduce
37/135 37
Influence
stopping
production for
Taxes paid 189 241 -52 -21.58
rectification,
Business
decreased
Other cash paid for Current
626 871 -245 -28.13
business activities account
Net cash retrieved
from purchasing of
Factory land
fixed assets, 8 283 -275 -97.17
intangible assets, and use rights
other long-term assets
Accepted the
3.66% equity of
Cash paid as
0 141 -141 Nanhua Company
investment held by Shenzhen
Nanyou (Group)
Loan principal
Cash to repay debts 308 0 308
payments
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
Five subsidiaries controlled by the Company stopped the operation of relevant printing
and dyeing business due to the production suspense of printing and dyeing mill and
most of them maintained their daily operation by house property lease.
(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. most of them maintained
their daily operation by house property lease.
2. Development opportunities and challenges in the future and business plan for the new
year:
The board of directors of company is positively studying the future development of
company to enhance company's sustainable operating ability.
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 has faced the situation of no main operation. While, the
funds of original shareholder of Nanjin factory is not available in time, project schedule
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was always delayed , till now, the joint venture factory in Nanjin is not ready for
equipment installation, it is unable to start production as per schedule, There is no sign
of improvement for company’s dyeing business in short term, the operation is facing
difficulties.
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. Particulars about the cash bonus of the Company in previous three years
The Company did not distribute dividends in the previous three years.
4. 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 2010
(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 2010 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 2010. 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, Since March 2007,
Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and dismissed
most of workers. The company currently only had house leasing business.
Except that Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is
still operating normally, other 5 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
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of 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. Due to the reason on the side of the change of industry prospect, Capital
Increasing of the joint venture project had not been completed.
(IV) Extent of influence of this matter on the Company:
This event greatly impacted the production & operation activities and sustainable
development of company, it made company had the situation of implementing other
special treatment which was stipulated in Shenzhen Stock Exchange Listing Rules , the
stock of our company had been implemented for other special treatment.
(V) The possibility of eliminating this matter and its influence:
Though the transfer of printing and dyeing business has been somewhat delayed,The
board of directors of company is positively studying the future development of company
to enhance company's sustainable operating ability.
(VI) The concrete measures of eliminating this matter and its influence
Company is communicating with joint venture partner and trying to minimize the losses
and settle this joint venture project issue properly.
V. 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 9 meetings in total.
1. In the Morning of April 7, 2010, the 9th 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 9, 2010.
2. In the Morning of April 26, 2010, the 10th 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 April 28, 2010.
3. In the Morning of May 28, 2010, the 11th 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
40/135 40
Commercial Daily on May 28, 2010.
4. In the Morning of August 19, 2010, the 12th 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 21, 2010.
5. In the Morning of October 25, 2010, the 13th 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 October 26, 2010.
6. In the morning of October 25, 2010,the Special meeting of the fifth board of director
of the company was held through voting by correspondence.、The meeting examined
and adopted the Rectification Report of Shenzhen Printing and Dyeing Co., Ltd. on
Standardization of Basic Financial and Accounting Work and Self-inspection Report of
Shenzhen Printing and Dyeing Co., Ltd. on the Status of Establishment and
Implementation of Long-acting Mechanism of Prevention of Fund Occupation.
7.In the morning of November 8, 2010,the Special meeting of the fifth board of director
of the company was held through voting by correspondence. The meeting examined and
adopted the Management System for Financial Accounting Related Personnel .
8. In the morning of November 12, 2010,the Special meeting of the fifth board of
director of the company was held through voting by correspondence. The meeting
examined and adopted the Regulations of Shenzhen Printing and Dyeing Co., Ltd. on
Preventing Fund Occupation by Controlling Shareholder.
9.In the Morning of December 27, 2010, the 14th 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 December 28, 2010.
(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.
2009 annual shareholders' general meeting of the Company examined and adopted
41/135 41
the proposal for the profit distribution of the Company for 2010: The Company is
neither to distribute dividends nor capitalize capital surplus for 2010.
（3）Performance introduced of the Special Committee of the Board of Directors
The audit committee of company’s board of directors consisted of three directors
and two of them are independent directors, the convener is acted by independent
director. In the report period, According to the requirements of China Securities
Regulatory Commission and Shenzhen Stock Exchange and the rules of The working
regulations for audit committee of the board of directors, audit committee performed the
following duties based on the principle of due diligence during the reporting period.
1.April 19,2010, The meeting examined and adopted the Financial and accounting
basis of the work program of work of special events .
2.May 28,2010，The Meeting examined and adopted Financial and accounting
activities of self-examination based on the work of the special report.
3.October 25, 2010,The Meeting examined and adopted the specificationbased on
the work of rectification of the financial accounting report.
(4) Debriefing work plan of aduiting
On December 27, 2010，Audit committee reviewed company’s financial report
auditing work plan 2010 and debriefed the ―Analysis on the business activities of
Shenzhen Victor Onward Textile Industrial Co., Ltd. in 2010‖ presented by financial
department of Shenzhen Victor Onward Textile Industrial Co., Ltd., audit committee
agreed the financial report audit work plan 2010 submitted by company.
(5). Reviewing financial statement of company
Audit committee gave the opinion to unaudited financial statements at the second
meeting before annual report and thought that the financial statement 2010 prepared by
company basically reflected the assets status and business performance of company.
Audit committee agreed to conduct annual finance report audit work based on it and
request company’s financial department provide positive cooperation, and coordinate
this audit work, strengthen communication and contact, promptly inform audit
committee about the issues found in auditing works and audit progress
(6).Supervising and urging audit works of accounting firm
The member of audit committee had conducted communication with accounting
firm many times and asked for the information of audit progress. Audit committee
carefully reviewed the initial audit report issued by annual CPA at the third meeting
before annual report. By referring to part of their working paper and verifying related
situation, audit committee thought that this initial audit report was prepared according to
new edition of accounting standard. Basically, it truly and fairly reflected company’s
financial situation on Dec. 31st, 2010 and business performance and cash flow in 2010.
There is no objection on the initial audit report issued by annual audit CPA.
(7). Opinions about accounting firm
Audit committee think that ShineWing accounting firm strictly followed the
regulations of audit laws and rules and started and completed company’s annual audit
2010, the audit time is sufficient, audit personnel have high professional quality, strong
practice ability and risk awareness. Their audit conclusion truly reflected the actual
situation of company. Audit committee proposed to recruit ShineWing accounting firm
42/135 42
continuously as the audit institution for annual audit 2011.
(4). Profit distribution preplan for 2010
As audited by Shinewing Certified Public Accountants, the total profit of the Company
for 2010 is RMB 2,326,231 , After deduction of minority gains and losses of
RMB-1,731,989 and income tax expenses of RMB-44,704, net profit is
RMB4,102,924,the total year-end undistributed profit is - RMB -98,665,017. The Company is
neither to distribute profit nor to capitalize capital surplus for the current year.
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 5 meetings in total.
(1) In the morning of April 7, 2010, the 8th 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. 2009 Work Report of the Company;
2. 2009 Auditor's Report of the Company ;
3. Profit Distribution Preplan of the Company for 2009
4. 2009 Annual Report and 2009 Annual Report (Summary) of the Company;
5. Special Statement on Matters Involved in Unqualified Auditor's Report with
Highlighted Matter Paragraph for 2009;
6. Report on Self-evaluation on Internal Control of Shenzhen Victor Onward Textile
Industrial Co., Ltd. in 2009;
（II）In the Morning of April 26, 2010, the 9th meeting of the fifth supervisory
committee of the company was held through voting by correspondence. The meeting
examined and adopted the following resolutions: The First Quarterly Report 2010.
（III）In the Morning of August 19, 2010, the 10th meeting of the fifth supervisory
committee of the company was held through voting by correspondence. The meeting
examined and adopted the following resolutions:The semiannual report 2010 and its
43/135 43
Summary.
（IV）In the Morning of October 25, 2010, the 11th meeting of the fifth supervisory
committee of the company was held through voting by correspondence. The meeting
examined and adopted the following resolutions::The Third Quarterly Report 2010.
（V）In the Morning of October 25, 2010, the meeting of the fifth supervisory
committee of the company was held through voting by correspondence. The meeting
examined and adopted the following resolutions::Self-inspection Report of Shenzhen
Victor Onward Textile Industrial Co., Ltd. on the Status of Establishment and
Implementation of Long-acting Mechanism of Prevention of Fund Occupation.
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 managers 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.
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 2010. Company board of supervisors that: the cost in printing & dyeing
industry is continuing high in Shenzhen. the printing & dyeing business of the Company
44/135 44
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.
7. The current internal control system of company is relative perfect, reasonable and
effective in general, company’s Self-assessment report for internal control 2010
objectively and truly reflected the establishment, development and implementation of
company internal control system.
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.
III. Related transactions.
(I) Related transactions related to daily operation
1.Related leased
Not applicable
(2) Fund transfer between the Company and related parties( Unit:RMB)
Amount of Amount of
Related party
period-end period-begin
Account receivable
Shenye Union(Hong Kong) 314,198 325,127
Other receivable
Union Group 22,564,462 21,566,542
Union Property 699,258 3,671,008
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
45/135 45
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. There was no
significant guarantee that was provided in previous periods but continued to be valid in the report
period. The Company will 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 controlling
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 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, 2010,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
46/135 46
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 .
As the funding of investment counterpart is not available in time, it caused the delay of
project schedule and the increasing investment project has not been finished by now. It
has been delayed for three years and many factors had changed comparing with the
original factors, a lot of things had changed such as local investment environment,
financing environment and environmental requirement etc. which increased the
difficulty to the starting of joint venture investment project. It also caused a lot of loss
for the long time idle of factory machine and equipment. The expense for restarting
equipment will be increased greatly and all of them make the difficulties to the
completion of joint venture investment project. Company is keeping communication
with joint venture partner and trying to reduce the loss to the uttermost level & solve
this joint venture project issue properly.
(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 significant information to specific objects.
Reception Place Mode Object Discussion issue and offered
information
Office of Telephone Individual The Company
board investor communicated with
investors in respect of its
2010 secretary of production and operation
the status and its reorganization
and listened to the opinions
Comapny of investors.
(VI) In the report period, Commitment made by the Company or shareholders holding
over 5% of shares of the Company.
1.Significant commitments
The external investment contract and the related financial expenses signed haven’t
been executed or fully performed
47/135 47
As of December 31, 2010, 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 Payabl Non-payabl Investme Notes
amount e e amount of nt Period
amoun investment
t of
invest
ment
Investment in Not because of
machinery and the other
equipment in production sites
30 million - 30 million Uncertain
Nanjing East asia can not be
Textiles Co., ltd. completed
relocation
2.The Signed or is ready to carry out the contract of large contracts
As of December 31, 2010,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 Payable Non-paya Investment Notes
amount amount of ble Period
investment amount of
investmen
t
The lelocation Not because of the
of production other production
equipment as 1,710,000 855,000 855,000 Uncertain sites can not be
a whole works completed
relocation
2.In addition to these commitments ，as of December 31, 2010,The Group has no other
significant commitments.
（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 reformhares were all unfrozen in 2009.
The promise made by Union Holdings Co., Ltd., the largest shareholder(43,141,032
shares) of the Company, in the share holding structure reform of the Company: If it sells
48/135 48
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 5
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.
(IX) Future issues of balance sheet
This Group had no other significant matters after the balance sheet date.
(X) Other material events
As shown in the auditor's report, the net profit of the Company for 2009 is RMB
11,667,821 and the net profit for the shareholders of the Company is RMB 12,090,678.
According to relevant provisions of Stock Listing Rules of Shenzhen Stock Exchange,
the circumstance for giving caution of delisting risk of A shares and B shares of the
Company has disappeared. After approval by Shenzhen Stock Exchange, the caution of
delisting risk of the stocks of the Company was cancelled from May 31, 2010. However,
the key business of the Company has not recovered. The circumstance for other special
treatment specified in Stock Listing Rules of Shenzhen Stock Exchange still exists.
49/135 49
Other special treatment continued for the trading of the stocks of the Company.
Section X Financial Report
Auditor’s report
XYZH/2010SZA1030
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, 2010, 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 and 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.
50/135 50
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 2010, 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：
Zhang WeiJian
C.P.A：
Xia Wei
Beijing China April 27, 2011
Shenzhen Victor Onward Textile Industrial Co., Ltd.
51/135 51
Balance Sheet
December 31, 2010
(Unit:RMB)
December 31, 2010 December 31, 2009
Parent Parent
Consolidated Consolidated
Assets company company
Monetary fund 51,786,613 23,577,186 56,105,626 24,960,502
Trading financial 77,235 85,725
assets 77,235 171,221
Bill receivable
Account receivable 586,576 2,398,250 488,528
Prepayments 23,225 942,126
Interest receivable 6,646 5,480
Other account 75,638,428 81,416,712
receivable 175,951 1,227,246
Inventories 429,613 429,612 856,553 444,557
Non-current asset due
in 1 year
Other current asset
Total of current assets 53,085,859 99,722,461 61,706,502 107,396,024
Non-current assets：
Disposable financial
asset 874,427 309,399
Expired investment
in possess
Long-term account
receivable
Long-term equity
investment 77,199,476 38,613,199 68,427,751 41,317,197
Investment property 39,679,004 6,019,483 44,445,185 6,595,088
Fixed assets 17,492,132 14,313,935 18,772,745 14,867,709
Construction in
progress
Engineering
material
Disposal of fixed
assets
Intangible assets 2,049,023 2,049,023 2,117,958 2,117,958
Expense on research
and development
Goodwill 5,352,498 5,538,694
Long-term expenses
to be apportioned
Deferred income tax
assets
Other non-current
assets
Total
non-current assets 142,646,560 60,995,640 139,611,732 64,897,952
52/135 52
Total assets 195,732,419 160,718,101 201,318,234 172,293,976
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
53/135 53
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Balance Sheet(Cont’d)
December 31, 2010
(Unit:RMB)
December 31, 2010 December 31, 2009
Liabilities and
shareholders’ equity Parent
Consolidated Parent company Consolidated
company
Current liabilities
Short-term loan
Trade off financial
liabilities
Bill payable
Account payable 3,353,297 115,281 4,101,084 1,793,753
Prepayment 2,718,175 1,939,819 4,555,433 3,448,961
Employees’ wage
payable 620,363 579,911 559,967 559,967
Tax payable 2,914,867 1,723,217 2,519,063 1,192,456
Dividend payable 1,276,241 1,320,637
Other account payable 29,974,945 651,133 30,926,067 652,984
Non-current liability due
in 1 year
Other current liability 1,228,163 1,185,618 1,139,376 1,139,376
Total of current liability 42,086,051 6,194,979 45,121,627 8,787,497
Non-current liabilities：
Long-term loan 1,350,126 1,534,300
Long-term payable 8,907,695 9,217,564
Differed income
Expected liabilities
Differed income tax
liability 892,357 4,211,921 968,868 4,294,606
Other non-current
liabilities 878,286 878,286 908,839 908,839
Total of non-current
liabilities 12,028,464 5,090,207 12,629,571 5,203,445
Total of liability 54,114,515 11,285,186 57,751,198 13,990,942
Owners’ equity
Share capital 169,142,356 169,142,356 169,142,356 169,142,356
Capital reserves 39,872,534 31,606,598 39,297,104 31,606,598
Less：Shares in stock
Surplus reserves 26,704,791 26,309,287 26,704,791 26,309,287
Common risk provision
Undistributed profit -98,665,017 -80,137,758 -102,767,941 -76,527,638
Different of foreign
5,874,835 2,512,432
currency translation 10,682,638 7,772,431
54/135 54
Total of owner’s equity
belong to the parent
company 142,929,499 149,432,915 143,058,948 158,303,034
Minor shareholders’
-1,311,595
equity 508,088
Total of owners’ equity 141,617,904 149,432,915 143,567,036 158,303,034
Total of liabilities and
owners’ equity 195,732,419 160,718,101 201,318,234 172,293,976
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
55/135 55
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Profit statement
(Unit:RMB)
Year 2010 Year 2009
Items
Consolidated The Company Consolidated The Company
I. Total operating income 9,351,110 1,315,850 27,517,759 12,161,743
Including：Operating income 9,351,110 1,315,850 27,517,759 12,161,743
II. Total operating cost 18,546,449 5,081,502 37,293,220 19,095,176
Including：operating cost 4,323,089 -45,739 22,624,986 11,514,289
Business tax and surcharge 540
Sales expense 687,772 2,267,860
Administrative expense 8,868,792 5,218,289 7,977,421 5,049,672
Financial expenses 652,427 -2,773,710 802,606 -1,075,506
Asset impairment loss 4,014,369 2,682,662 3,619,807 3,606,721
Add：Gains from change of fair
48,912
value （―-‖for loss）
Investment gain（―-‖for loss） 11,523,520 257,537 21,631,618 290,960
Incl: investment gains from affiliates 11,264,659 21,337,265
III. Operational profit（―-‖for loss） 2,328,181 -3,508,115 11,905,069 -6,642,473
Add：Non-business income 38,382 189 552,940 24,248
Less：Non business expenses 40,332 39,434 790,188 709,264
Incl：Loss from disposal of 39,237 5,983 13,693 5,983
non-current assets
IV.Total profit(―-‖for loss) 2,326,231 -3,547,360 11,667,821 -7,327,489
Less：Income tax expenses -44,704 62,760 -45,510 781,547
V. Net profit（―-‖for net loss） 2,370,935 -3,610,120 11,713,331 -8,109,036
Net profit attributable to the owners of
4,102,924 12,090,678
parent company
Minority shareholders’ gain & loss -1,731,989 -377,347
VI. Earnings per share：
（I）Basic earnings per share 0.02 0.07
(II)Diluted earnings per share 0.02 0.07
VII. Other comprehensive income -4,320,067 -5,259,999 -451,485 -257,221
VIII. Total comprehensive income -1,949,132 -8,870,119 11,261,846 -8,366,257
Total comprehensive income attributable
-129,449 11,638,212
to the owner of the parent company
Total comprehensive income
-1,819,683 -376,366
attributable minority shareholders
Legal representative: Financial controller The person in charge of the financial
56/135 56
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Cash flow statement
Year 2010
(Unit:RMB)
Report period Same period of the previous year
Consolidate Parent Parent
Consolidated
Items d company company
I.Cash flows from operating
activities
Cash received from sales of
9,321,851 1,916,761 22,924,742 12,978,391
goods or rending of services
Net increase of trade
269,610 269,610
financial asset disposal
Tax returned 185,563 104,485 1,950,227 797,227
Other cash received from
5,010,985 3,803,329 12,255,169 3,155,976
business operation
Sub-total of cash inflow 14,518,399 5,824,575 37,399,748 17,201,204
Cash paid for purchasing of
2,508,670 1,035,551 22,837,806 13,184,921
merchandise and services
Cash paid to staffs or paid
3,612,910 2,237,620 4,317,377 2,346,409
for staffs
Taxes paid 1,898,137 850,110 2,405,719 827,766
Other cash paid for business
6,261,100 2,466,390 8,705,286 2,493,330
activities
Sub-total of cash outflow
14,280,817 6,589,671 38,266,188 18,852,426
from business activities
Cash flow generated by
237,582 -765,096 -866,440 -1,651,222
business operation, net
II.Cash flow generated by
investing
Cash received from
81,386
investment retrieving
Cash received as investment
260,948 257,537 3,044
gains
Net cash retrieved from
disposal of fixed assets,
9,669 9,669 65,749 56,583
intangible assets, and other
long-term assets
Net cash received from
disposal of subsidiaries or other
operational units
Other investment-related
57/135 57
cash received
Sub-total of cash inflow due
352,003 267,206 68,793 56,583
to investment activities
Cash paid for construction of
fixed assets, intangible
83,200 55,788 2,830,657 2,744,201
assets and other long-term
assets
Cash paid as investment 1,407,076 1,407,076
Net cash received from
subsidiaries and other
operational units
Other cash paid for
investment activities
Sub-total of cash outflow
83,200 55,788 4,237,733 4,151,277
due to investment activities
Net cash flow generated by
268,803 211,418 -4,168,940 -4,094,694
investment
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Cash flow statement(Cont’d)
Year 2010
(Unit:RMB)
Same period of the previous
Report period
year
Parent Parent
Consolidated Consolidated
Items company company
III.Cash flow generated by
financing
Cash received as
investment
Incl: Cash received as
investment from minor
shareholders
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 3,084,542 137,332
58/135 58
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
3,084,542 0 137,332 0
due to financing activities
Net cash flow generated by
-3,084,542 0 -137,332 0
financing
IV.Influence of exchange
rate alternation on cash and -1,740,856 -829,638 -90,090 -43,600
cash equivalents
V.Net increase of cash and
-4,319,013 -1,383,316 -5,262,802 -5,789,516
cash equivalents
Add: balance of cash and
cash equivalents at the 56,105,626 24,960,502 61,368,428 30,750,018
beginning of term
VI. Balance of cash and cash
equivalents at the end of 51,786,613 23,577,186 56,105,626 24,960,502
term
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Consolidated Statement on Change in Owners’ Equity
Year 2010
(Unit:RMB)
Amount of the Current term
Owner’s equity Attributable to the Parent Company
Items
Less: Minor Total of
Common
Share Capital Shares Specialized Surplus Attributable shareholders’ owners’
risk Other
Capital reserves in reserve reserves profit equity equity
provision
stock
I.Balance at the 16914235
39297104 0 0 26704791 0 (102767941) 10682638 508088 143567036
end of last year 6
Add: Change of
0
accounting policy
Correcting of
0
previous errors
Other 0
II.Balance at the
16914235
beginning of 39297104 0 0 26704791 0 (102767941) 10682638 508088 143567036
6
current year
III.Changed in the
0 575430 0 0 0 0 4102924 (4807803) (1819683) (1949132)
current year
（I） Net profit 4102924 (1731989) 2370935
（II）Other 575430 (4807803) (87694) (4320067)
misc.income
59/135 59
Total of (I) and
0 575430 0 0 0 0 4102924 (4807803) (1819683) (1949132)
(II)
(III) Investment
or decreasing of
0 0 0 0 0 0 0 0 0 0
capital by
owners
1. Capital
inputted by 0
owners
2．Amount of
shares paid and
accounted as 0
owners’
equity
3. Other 0
（IV）Profit 0 0 0 0 0 0 0 0 0 0
allotment
1.Providing of
0 0
surplus reserves
2．Common risk 0
provision
3. Allotment to
the owners (or 0
shareholders)
4. Other 0
(V) Internal
transferring of 0 0 0 0 0 0 0 0 0 0
owners’ equity
Capitalizing of
capital reserves
0
(or to capital
shares)
1.Capitalizing of
surplus reserves
0
(or to capital
shares)
3．Making up
losses by surplus 0
reserves.
4. Other 0
(VI) Special
0 0 0 0 0 0 0 0 0 0
reserves
1. Provided this
0
year
2．Used this term 0
IV. Balance at the 16914235
39872534 0 0 26704791 0 (98665017) 5874835 (1311595) 141617904
end of this term 6
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd.
60/135 60
Consolidated Statement on Change in Owners’ Equity(Cont’d)
Year 2010
(Unit:RMB)
Amount of the previous term
Owner’s equity Attributable to the Parent Company
Com Minor
Total of
Items Less: Speciali mon sharehold
Share Capital Surplus Attributable owners’
Shares zed risk Other ers’
Capital reserves reserves profit equity
in stock reserve prov equity
ision
I.Balance at the end of 169142356 39194631 0 0 26309287 0 (115810517) 11237577 884454 130957788
last year
Add: Change of 0
accounting policy
Correcting of previous 0
errors
Other 0
II.Balance at the
beginning of current 169142356 39194631 0 0 26309287 0 (115810517) 11237577 884454 130957788
year
III.Changed in the 0 102473 0 0 395504 0 13042576 (554939) (376366) 12609248
current year
（I） Net profit 12090678 (377347) 11713331
（II）Other misc.income 102473 (554939) 981 (451485)
Total of (I) and (II) 0 102473 0 0 0 0 12090678 (554939) (376366) 11261846
(III) Investment or
decreasing of capital by 0 0 0 0 0 0 1347402 0 0 1347402
owners
1. Capital inputted by
0
owners
2．Amount of shares paid
and accounted as 0
owners’ equity
3. Other 1347402 1347402
（IV）Profit allotment 0 0 0 0 395504 0 (395504) 0 0 0
1.Providing of surplus 395504 (395504) 0
reserves
2．Common risk 0
provision
3. Allotment to the 0
owners (or shareholders)
4. Other 0
(V) Internal
transferring of owners’ 0 0 0 0 0 0 0 0 0 0
equity
Capitalizing of capital
reserves (or to capital 0
shares)
1.Capitalizing of surplus
reserves 0
(or to capital shares)
3．Making up losses by 0
surplus reserves.
4. Other 0
61/135 61
(VI) Special reserves 0 0 0 0 0 0 0 0 0 0
1. Provided this year 0
2．Used this term 0
IV. Balance at the end of 169142356 39297104 0 0 26704791 0 (102767941) 10682638 508088 143567036
this term
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd
Parent Company Statement on Change in Owners’ Equity
Year 2010
(Unit:RMB)
Amount of the Current term
Less: Different
Common Total of
Items Share Capital Shares Specialized Surplus Attributable of foreign
risk owners’
Capital reserves in reserve reserves profit currency
provision equity
stock translation
I.Balance at the end of 169142356 31606598 0 0 26309287 0 (76527638) 7772431 158303034
last year
Add: Change of 0
accounting policy
Correcting of previous 0
errors
Other 0
II.Balance at the
beginning of current 169142356 31606598 0 0 26309287 0 (76527638) 7772431 158303034
year
III.Changed in the 0 0 0 0 0 0 (3610120) (5259999) (8870119)
current year
（I） Net profit (3610120) (3610120)
（II）Other (5259999) (5259999)
misc.income
Total of (I) and (II) 0 0 0 0 0 0 (3610120) (5259999) (8870119)
(III) Investment or
decreasing of capital by 0 0 0 0 0 0 0 0 0
owners
1. Capital inputted by 0
owners
2．Amount of shares
paid and accounted as 0
owners’ equity
3. Other 0
（IV）Profit 0 0 0 0 0 0 0 0 0
allotment
1.Providing of 0
surplus reserves
2．Common risk 0
provision
62/135 62
3. Allotment to the
owners (or 0
shareholders)
4. Other 0
(V) Internal
transferring of owners’ 0 0 0 0 0 0 0 0 0
equity
Capitalizing of capital
reserves (or to capital 0
shares)
1.Capitalizing of
surplus reserves 0
(or to capital shares)
3．Making up losses by 0
surplus reserves.
4. Other 0
(VI) Special reserves 0 0 0 0 0 0 0 0 0
1. Provided this year 0
2．Used this term 0
IV. Balance at the end 169142356 31606598 0 0 26309287 0 (80137758) 2512432 149432915
of this term
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Shenzhen Victor Onward Textile Industrial Co., Ltd
Parent Company Statement on Change in Owners’ Equity
Year 2010
(Unit:RMB)
Amount of the previous term
Less: Different
Items
Common Total of
Share Capital Shares Specialized Surplus Attributable of foreign
risk owners’
Capital reserves in reserve reserves profit currency
provision equity
stock translation
I.Balance at the end of last 169142356 31606598 26309287 (68418602) 8029652 166669291
year
Add: Change of accounting
policy
Correcting of previous
errors
Other
II.Balance at the beginning of 169142356 31606598 26309287 (68418602) 8029652 166669291
current year
III.Changed in the current (8109036) (257221) (8366257)
year
（I） Net profit (8109036) (8109036)
（II）Other misc.income (257221) (257221)
Total of (I) and (II) (8109036) (257221) (8366257)
(III) Investment or
63/135 63
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)
(1)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
169142356 31606598 26309287 (76527638) 7772431 158303034
term
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
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.
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By December 31, 2010, 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-shares3,141,032 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, 2010, 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
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
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
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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
（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 and Financial Liabilities
(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.
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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.
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.
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
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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.
(1) Financial Liabilities
The financial liabilities of our Group shall be classified into the financial liabilities or other ones which are
measured at their fair values and the variation of which is recorded into the profits and losses of the current
period when they are initially recognized.
The financial liabilities, which are measured at their fair values and the variation of which is recorded into
the profits and losses of the current period, including transactional financial liabilities and the financial
liabilities designated which are measured at their fair values and variation of which is recorded into the
profits and losses of the current period when they are initially recognized, shall be made subsequent
measurement on its financial assets according to their fair values, and the profits and losses arising from the
change in the fair value and the dividends and interests expenses related to the financial liability shall be
recorded into the profits and losses of the current period.
The subsequent measurement shall be made on the basis of the post-amortization costs by adopting the actual
interest rate method for other financial liabilities.
(1) The determination method for fair value of financial assets and financial liabilities
If there is active market for a financial instrument, the quoted prices in the active market shall be used to
determine the fair values thereof. In the active market, the quoted prices of our Group for the financial assets
it holds or the financial liabilities it plans to assume shall be the present actual offer for the corresponding fair
values of assets or liabilities, while the quoted prices of our Group for the financial assets it plans to acquire
or the financial liabilities it has assumed shall be the available charge for the corresponding fair values of
assets or liabilities. Where there is no available offer or charge for a financial asset or financial liability, but
there is no any significant change to the economic environment after the latest transaction day, we shall adopt
the market quoted price of the latest transaction to determine the fair value of the said financial asset or
financial liability.
Where there is no active market for a financial instrument, we shall adopt value appraisal techniques to
determine its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who
are familiar with the condition, in the latest market transaction upon their own free will, the current fair value
obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization
method and the option pricing model, etc.
7.Account receivable and provisions for bad debts
The Group will recognize the following cases as the determination standard of loss on bad debts for accounts
receivable: the debt or others can't be repaid in the foreseeable period, e.g. the debtor units have been closed,
revocation, bankruptcy, insolvent, severe insufficient cash flow or the occurrence of natural disasters; the
repayment obligations are delayed and failed to be performed beyond 3-year by the debt entities; there are
other absolute evidences proving that unable to be collected or little possibility.
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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.
（1）Accounts receivable with material specific amount and specific provisioned bad bebt preparation.
Judgment criteria or amount standard of Account receivable with special account receivable
material specific amount or amount exceeding RMB 1 million is viewed as material
criterial accounts receivable.
Provision method with material specific Provision Had debt preparation in accordance with
amount and provision of specific bad the difference of present value of future cash flow
debt preparation below the book value .
(2)The accounts receivable of bad debt provisions made by Group
Determine the basis of Group
Group of account age The Group is classified by the credit risk features
basised on the account age of receivables
Group of affiliated party The Group is classified by the credit risk features
based on the relations of account receivables and
transaction objects.
Deposit Group The Group is classified by the credit risk features
basised on the account age of receivables .
The withdrawing method of bad debt reserves carried by Group.
Group of account age The provisions for bad debts withdrawn by the analysis
method of account age
Group of affiliated party Generally without the provisions for bad debts.
Group of account age Generally without the provisions for bad debts.
1）Provision proportion of bad debt preparation of accounts receivable adopting aging
analysis method：
Age Proportion
Within 1 year 3%
1-2 years 10%
2-3 years 50%
Over 3 years 100%
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2）The accounts receivable of bad debt provisions withdrawn by adopting other methods：
Special relationship between the related party
and the Group (such as joint ventures,
Related party Group associates, etc.), there is a little balance
between the predicted future cash flow and the
carrying amount.
Including the rent deposit, purchase deposit and
reserve deposit, etc., but without great
Deposit Group individual amount and the bad debt reserves
withdrawn by combination are difficult to
reflect the accounts receivable of risk features.
（3）Account receivable with non-material specific amount but specific bad debt preparation
Accounts receivable with non-material specific
Reason of specific bad debt preparation amount and being not able to relent its risk character
provison by provisioning bad debt preparation in accordance
with portfoio
Bad debt preparation will be provisioned inaccordance
Provision method of bad debt preparation with the difference of present value of its future cash
flow below its book value.
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.
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
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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
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.
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.
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 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.
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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.Additional investment to recover the cost of
long-term equity 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.
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.
The Group shall adopt the cost method to calculate for those invested units that never
have the jointed control or significant impacts due to the investment reduced, and a
long-term equity investment for which there is no quoted price in the active market and
whose fair value cannot be reliably measured; Also, the cost method shall be adopted to
calculate for the long-term equity investment able to be implemented and controlled to
the invested units due to the investment supplemented; Moreover, the equity method
shall be adopted to account for performing the jointed control or significant impacts to
the invested units but no control formed due to the investment supplemented, or without
control to the invested units but able to implement the long-term equity investment of
jointed control or major impacts to the invested units due to disposing of the investment.
The gap between the carrying amount and actual payment gained in disposal of the
long-term equity investment will be recorded into the investment interest of the current
period. Using the equity method for calculating the long-term equity investment which
is recorded into the owner's equity due to other changes except for the net profits or
losses of the invested units, the initial parts recorded into the owner's equity shall be
transferred into the investment returns of the current period when disposal of the
investment.
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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 Estinated Annual depreciation rate（%）
life（Year） residual value
rate
Real estate in 20-50 years
Hongkong 0% 2%-5%
Real estate in 20-30 years
China 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
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.
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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:
Type Evpected useful Estinated residual Annual depreciatio
No life（Year） value rate n rate（%）
Real estate in Hong 20-50 years
1 Kong 0% 2%-5%
Real estate in 20-30 years
2 China 10% 3%-4.5%
Machinery and 5-14 years
3 equipment 10% 6%-18%
Transportation 4-5 years
4 Equipment 10% 18%-22.5%
Office equipment and 5 years
5 other 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
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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
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 capitalization rate shall be calculated and determined in the light of the
general borrowing and weighted average interest rate.
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
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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
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,
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.
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(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
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.
If decide to relieve the labor relationships with employee before the employment
contracts become mature, or encourage workers to voluntarily accept the compensation
proposal due to redundancy, while the Group has have a formal plan for termination of
labor relationship or have proposed the voluntary redundancy scheme which will be
77/135 77
implemented, and the Group is unable to unilaterally withdraw the plan on the
cancellation of labor relationship or the layoff proposal, the anticipated debts, confirmed
to be caused by the compensation due to relieve of labor relationships with workers,
shall be recorded into the profits and losses of the current period.
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
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. 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
78/135 78
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.
22. 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
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.
23. 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.
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.
79/135 79
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.
26.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.
（1） 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,
80/135 80
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.
V. Changes in accounting policies and estimates
1.Changes in accounting policies and estimates
According to the provisions of ―Accounting Standards Interpretation for Enterprises No.
4‖ (Finance [2010] 15) that ―in the consolidated financial statements, if the current
losses burdened by the minority shareholders of subsidiary company exceed the portion
shared in the owner’s equity by the minority shareholders at the beginning of the
subsidiary, the balance shall reduce the equity of minority shareholders. Which will be
traced to adjust except the impracticable if the minority shareholders haven’t disposed
as per above provision before the interpretation is released.‖ in 2010, the Group changes
the excess deficit of minority shareholder of the subsidiary burdened by parent company
into that burdened by the minority shareholder of the subsidiary. But the subsidiary
company – South China Company whose minority shareholders has declared bankrupt
in 2000 and have compulsory liquidation which can’t be taken back, so the minority
shareholders of South China Company no longer bear the losses.
2. Changes and impact of the accounting estimation
The Group has no changes in accounting estimation this year.
3..Correction of accounting errors from previous term
There is no correction of the accourting error from previous term in the report period.
VI.Taxation
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]
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 22% in 2010. 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 16% (2010). 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.
81/135 81
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% in January -November, the company does not need to pay
education additional expenses.. According to the relevant provisions of ―Provisional
Regulations of the People's Republic of China on City Maintenance and Construction
Tax‖ and ―State Council, Circular on Unification of the Systems of Urban Maintenance
and Construction Tax and Education Supplementary Tax for Domestic Enterprises and
Individuals and For Foreign-invested Enterprises and Foreigners‖ (Guofa [2010] No.
35), the City Maintenance and Construction Tax is as per 7% actual amount of value
added tax, consumption tax and business tax paid by taxpayers in Shenzhen since
December 1, 2010. Also, the Education Supplementary Tax will be begin to be paid
since December 2010. applicable interest rate 3%.
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% and 7%, 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 1.2% ,Rental property to real estate
tax based on rental income,applicable tax rate 12%, subsidiaries in Hong Kong do not
pay property taxes.
82/135 82
VII.Corporation Consolidation and Consolidation Financial statement
（1）Subsidiaries
Proportion% Whether
Registration Registered Vote right the
Name Quality Business scope Investment amount Notes
plance capital Direct Indirect Proportion% merger of
statement
Hong Kong Purchase of raw materials, marketing
2,400,002 2,400,002
Victor Onward HongKong Trade of printed and dyed woven fabrics, 100% 100% Yes 1
（HKD） investment and holding business （HKD）
Co.
Shenzhong 1,000,000 Sales of Corduroy, dyed cloth 1,000,000
Hongkong Trade and printed cloth 100% 100% Yes 2
Company （HKD） （HKD）
Nanhua 85,494,700 Production and sales of printed cloth HKD 16,874,255
Company
Shenzhen Production and dyed cloth 54.82% 14.62% 69.44% Yes 3
（HKD） +RMB 4,240,100
Xinye 10,000 10,000
Company
Hongkong Trade Sales of printed cloth and dyed cloth 100% 100% Yes 4
（HKD） （HKD）
Textilet,Printing and dyeing
Shenzhen East 3,000,000 industry and Raw 1,530,000
Asia Co.
Shenzhen Trade materials ,Machinery 51% 51% Yes 5
(RMB) (RMB)
equipment and other fabrics
83/135 83
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, 2010 the shareholding structure as follows:
Year-beginning
Name of investor Proportion% Year-end amount Proportion
amount
Shenye Union (Hongkong)Co.,
Ltd. 26,127,180.32 30.56% 26,127,180.32 30.56%
The Company * 46,868,194.54 54.82% 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%
4. Xingye 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)The changes of consolidated scope
No changes of consolidated scope happened during the current period.
(3) 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 IV, 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 0.8509 the approximate
exchange rate of the spot exchange rate uses the current average exchange rate 0.8657.
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, 2010, "year end" means December 31, 2010, "this year" means
from January 1, 2010 to December 31, "last year" means from January 1, 2009 to December 31,
the currency unit RMB.
1. Monetary Capital
84/135
Year-end balance Year-beginning balance
Items Original Exchange RMB Original Exchange RMB
currency rate equivalent currency rate equivalent
Stock cash 91,999 182,181
RMB 81,570 1.0000 81,570 173,224 1.0000 173,224
HKD 12,256 0.8509 10,429 10,173 0.8805 8,957
Bank
deposit 46,026,397 45,493,122
RMB 20,478,001 1.0000 20,478,001 19,948,646 1.0000 19,948,646
HKD 28,692,137 0.8509 24,414,139 29,004,367 0.8805 25,538,345
USD 171,268 6.6227 1,134,257 898 6.8282 6,131
Other
monetary
capital 5,668,217 10,430,323
RMB 5,668,217 1.0000 5,668,217 10,395,615 1.0000 10,395,615
HKD - - 39,419 0.8805 34,708
Total — — 51,786,613 — — 56,105,626
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
（1） Financial assets for transection
Item Year-end balance Year-beginning balance
Equity tool investment for 77,235 171,221
transaction.
Total 77,235 171,221
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, its cash has no
major restrictions.
3.Account receivable
85/135
(1)Categories of account receivable
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
Account
receivable
with
significant
specific
amount 5,334,174 36.47 4,747,598 89.00 4,014,942 26.41 3,998,082 99.58
that were
provisioned
had debt
preparation
separately
- - - -
Aging
6,280,260 41.32 3,956,455 63.00
group
account
receivable
that were 9,293,828 63.53 9,293,828 100.00 4,905,430 32.27 4,847,845 98.83
not
significant
86/135
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
but have
been
provisioned
bad debt
preparation
separately
Total 14,628,002 100 14,041,426 86.86 15,200,632 100 12,802,382 84.22
87/135
1） Account receivable with significant specific amount that were provisioned had debt preparation
separately
Provision Reason of
Name Book balance Bad debts
proportion% provision
Victor Onward Aging long
Textile (HK)Co., 1,606,281 852,616 53.08
Ltd.
Shenzhen
Jinrongyuan
Enterprise 1,514,739 22,350 1.48 -
Development Co.,
Ltd.
Carnival Index
International Ltd
1,153,023 1,153,023 100.00 Aging long
TAI YANG Aging long
ENTERPRISE 1,060,131 1,060,131 100.00
CO.,LTD.
Shenzhong The company ins
Enterprise - 1,659,478 N/A olvent, to be c
Co.,Ltd.
anceled
Total 5,334,174 4,747,598 89.00 —
*Shengzhong Company, a subsidiary of the Company, was planned to be deregistered. The
Company made full provision for bad debts in respect of the accounts of RMB 1,659,478
receivable from this company. On consolidation, these accounts receivable were eliminated, but
corresponding provision for bad debts was not eliminated.
2） As of December 31, 2010, account receivable that were not significant but have been
provisioned bad debt preparation separately
Provision Reason of
Name Book balance Bad debts
proportion% provision
VEGA GARMENT CO.,LTD 770,071 770,071 100.00 Aging long
Fly Dragon International 601,975 601,975 100.00 Aging long
Grateful Textiles Co.,Ltd 594,760 594,760 100.00 Aging long
World Fabrica (Int'l) Ltd 488,190 488,190 100.00 Aging long
Shenzhen Fangzhou Textile Aging long
468,486 468,486 100.00
Co., Ltd.
Ezhou Xiangya Garments Aging long
368,929 368,929 100.00
Co., Ltd.
Tak Shing Buying Office Led 350,039 350,039 100.00 Aging long
Starline Textile CO.Ltd. 348,708 348,708 100.00 Aging long
U.D.C. (H.K.) Co.,Ltd 314,198 314,198 100.00 Aging long
Panther Fabric Ltd. 309,721 309,721 100.00 Aging long
Other (Total 110) 4,678,751 4,678,751 100.00 Aging long
88/135
Provision Reason of
Name Book balance Bad debts
proportion% provision
Total 9,293,828 9,293,828 100.00
(2)Of the account receivables 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 Amount Percentage of
Age account
receivable(%)
the company
Victor Onward Textile Non-Related
parties 1,606,281 1-2 years 10.98
(HK)Co., Ltd.
Shenzhen Jinrongyuan Non-Related
Within 1
Enterprise Development Co., parties 1,514,739 year
10.36
Ltd.
Over
Carnival Index International Non-Related 1,153,023 3 7.88
Ltd parties years
Non-Related Over 3 y
TAIYANGENTERPRISECO.,LTD. parties
1,060,131 ears
7.25
Non-Related Over 3
VEGA GARMENT CO.,LTD parties
770,071 years
5.26
Total 6,104,245 41.73
(4)About the account receivable from the related parties
Relation with this
Name Amount Proportion(%)
company
The related parties
controlled the same
Shenye Union（HK）Co., Ltd. Actual controller 314,198 2.15
(5)Accounts receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
currency Original Exchange RMB Original Exchange RMB
Name currency rate equivalent currency rate equivalent
HKD 11,038,875 0.8509 9,392,979 10,399,223 0.8805 9,156,516
USD 405,753 6.6227 2,687,180 587,260 6.8282 4,009,929
Total 12,080,159 13,166,445
4. Prepayments
（1） Aging
Year-end balance Year-beginning balance
Items
amount Proportion amount Proportion
89/135
（%） （%）
Within 1 year 22,832 98.31 942,126 100
1－2 years 393 1.69
Total 23,225 100.00 942,126 100
（2） Prepayments main unit
Relation with
Company Name Amount Age Causes
the Company
Insurance Non-Related Within 1 Payments for goods
16,742
premium parties year not paid
Vehicle license Non-Related Within 1 Payments for goods
2,941
fees parties year not paid
Business Non-Related Payments for goods
2,329
Register fees parties 1-2 years not paid
Non-Related Within 1 Payments for goods
1,213
Other parties years not paid
Total 23,225
(3) Of the Prepayment 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)Prepayments Year-end balance Year-beginning balance
include the
following
foreign
currency
balances
Foreign
Currency of Original Exchange RMB Original Exchange RMB
Name currency rate equivalent currency rate equivalent
HKD 27,295 0.8509 23,225 24,307 0.8805 21,402
Total 23,225 21,402
5. Interest receivable
Items Year-beginning Increase in Decrease in Exchange Year-end
balance the current the current rate balance
period period Differences
Interest on 22,935 21,584 -185 6,646
Fixed deposits 5,480
Total 5,480 22,935 21,584 -185 6,646
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.
90/135
6. Other receivables
（1） Categories of other receivable
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
Other
receivable
with
significant
specific
amount that 3,376,237 73.57 3,376,237 100.00 3,382,210 69.52 3,382,210 100.00
were
provisioned
bed debt
preparation
separately
Other
accounts that
were
provisioned - - - - 1,168,889 24.02 256,083 21.91
bad debt
preparation
in
91/135
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
accordance
with agin
Group
Deposit
175,951 3.83 - -
Group
Other
receivable
that were not
significant
but have
1,036,996 22.60 1,036,996 100.00 314,440 6.46 - -
been
provisioned
had debt
preparation
separately
Totla 4,589,184 100.00 4,413,233 96.17 4,865,539 100.00 3,638,293 74.78
92/135
1） Other ts receivable with significant specific amount that were provisioned had debt preparation
separately
Provision Reason of
Name Book balance Bad debts
proportion% provision
Nanjing East Asia 1,321,309 1,321,309 100.00 Aging long
CCB.Guangdong Aging long
Shunde Branch 1,079,962 1,079,962 100.00
Changzhou Dongfeng Aging long
Textile Printing & dyeing 974,966 974,966 100.00
Equipment Co., Ltd.
Total 3,376,237 3,376,237 -
2） Group-Deposit Group
Provision
Name Book balance Bad debts Reason of provision
proportion%
RECOVERABLECLIENT 28,327 - -
Huachuang Room 1802 24,649 - -
CRE18050（DD18JUN96） 7,964 - -
Customs bond of Deposit, No provision
Shenzhen & 7,989 - - for bad debts
Hongkongcar car
Rent deposit 37,440 - -
Other 69,582 - -
Total 175,951 -
3） As of December 31, 2010, account receivable that were not significant but have
been provisioned bad debt preparation separately
Book Provision Reason of
Name Bad debts
balance proportion% provision
HongKong Victor Onward 728,362 728,362 100.00 Aging long
Shanghai Huayinke Industry 100.00
Co., Ltd. 179,994 179,994 Aging long
Shenzhen Environmental 100.00
Management System 34,999 34,999 Aging long
Certification Center
Shenzhen Huaxinfeng 100.00
Industrial Co., Ltd. 33,103 33,103 Aging long
Shenzhen Design Institute of 100.00
Ministry of Machinery Industry 29,999 29,999 Aging long
Shanghai Branch
State Revenue 100.00
Bureau.Shenzhen Refund 12,107 12,107 Aging long
Branch
93/135
Book Provision Reason of
Name Bad debts
balance proportion% provision
Other (Total 13) 18,432 18,432 100.00 Aging long
Total 1,036,996 1,036,996 - -
(2)Of the Other account receivable 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 Other account receivable
Relation with Account Proportion(%)
Name Amount Content
the company Age
Nanjing East Asia Non-Related Over 3
1,321,309 28.79 货款
C parties years
CCB.Guangdong Non-Related Over 3
1,079,962 23.53 货款
Shunde Branch parties years
Changzhou
Dongfeng
Textile Printing Non-Related Over 3
974,966 21.25 货款
& dyeing parties years
Equipment Co.,
Ltd.
Non-Related Over 3
HongKong Victor 728,362 15.87 货款
Onward
parties years
Shanghai
Huayinke Non-Related Over 3
179,993 3.92 货款
Industry Co., parties years
Ltd.
Total 4,284,592 93.36
(4)Other receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
Currency of Original Exchange RMB Original Exchange RMB
Name currency rate equivalent currency rate equivalent
HKD 1,219,263 0.8509 1,037,471 1,202,955 0.8805 1,059,202
Totla 1,037,471 1,059,202
7.Inventory
（1）Inventory types
94/135
Year-end balance Year-beginning balance
Book Provision for Book value Book Provision Book
Items
balance bad debts balance for bad value
debts
Raw
materials 2,131,413 1,701,800 429,613 2,205,557 1,761,000 444,557
Stock
goods 644,622 644,622 - 602,685 190,689 411,996
Total 2,776,035 2,346,422 429,613 2,808,242 1,951,689 856,553
The Company has been out of production, the closing inventories shall be written down after deducting the full
amount provisions except the preservation materials.
(2)Provision for impairment of inventories
Decrease in the current
Increase in Exchange
Year-beginning period Year-end
Items the current rate
balance Transferred Reselling balance
period changes
back
Raw
materials 1,761,000 - - - -59,200 1,701,800
Stock
goods 190,689 460,344 - - -6,411 644,622
Total 1,951,689 460,344 - - -65,611 2,346,422
8.Financial assets for sale
（1） Financial assets for sale
Items Year-beginning balance (Fair Year-end balance (Fair
value ) value )
Equity tools for sale. 874,427 309,399
Total 874,427 309,399
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 575,430 has been included in the public capital reserve.
9.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 77,199,476 68,427,751
95/135
Items Year-end balance Year-beginning balance
equity investment
Total of long-term equity
investment 77,199,476 68,427,751
Less ： Long-term equity
investments for impairment
Net value long-term equity
investment 77,199,476 68,427,751
96/135
(2)The equity method long-term equity investment
Cash
Holdings Vote
Investment Exchange rate Year-end dividend
Name Proportion proportion change
Cost Amount of change balance at this
（%） （%）
year-beginning year
1.Zhejiang Union
Hangzhou Bay 25% 25% 58,588,403 68,427,751 11,264,659 -2,492,934 77,199,476
Chuangye Co., Ltd. -
2. Shenzhen -
Lianchang Printing & 37.5% 37.5% 1,403,456
dyeing Co., Ltd. - - - -
Total 59,991,859 68,427,751 11,264,659 -2,492,934 77,199,476 -
Zhejiang Union Hangzhou bay chuangye Co., Ltd. (hereinafter named―Hangzhoubay‖) current change including current profit confirmed by equity method is
RMB11,264,659.
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.
97/135
(3)The investment in the Enterprise
Total Total
Holdings Vote Total assets Net asset Net profit
Liabilities Business
Name Proportion proportion at the end total at the at this
at the end income tat
（%） （%） year end year year
year this year
Zhejiang
Union
Hangzhou
Bay 25% 25% 1,245,881,632 911,455,849 334,425,783 398,235,214 45,058,637
Chuangye
Co.,
Ltd.
10.Property investment
The investment in real estate companies use the cost model measures
Decrease Exchange
Increase in in Year-end
Amount of current period current rate
balance
Items year-beginning period changed
Original Value 104,963,930 282,227 - -3,528,600 101,717,557
House, Building 104,963,930 282,227 - -3,528,600 101,717,557
Accumulated
60,518,745 3,554,283 - -2,034,475 62,038,553
amortisation
3,554,283 - -2,034,475 62,038,553
House, Building 60,518,745
-3,272,056 - -1,494,125 39,679,004
Book Net value 44,445,185
-3,272,056 - -1,494,125 39,679,004
House, Building 44,445,185
- - -
Impairment Provision - -
- - -
House, Building - -
-3,272,056 - -1,494,125 39,679,004
Book value 44,445,185
-3,272,056 - -1,494,125 39,679,004
House, Building 44,445,185
11.Fixed assets
(1)Breakdown of Fixed assets
98/135
Increase in Decrease Exchange
Year-end
Amount of current in current rate
period period balance
Items year-beginning changed
Original Value. 175,761,050 26,943 772,975 -5,896,980 169,118,038
House and building 52,395,040 - 282,227 -1,761,377 50,351,436
Machine and
107,859,002 - - -3,625,925 104,233,077
Equipment
Transportation
5,076,849 - - -161,727 4,915,122
Equipment
Office equipment
10,430,159 26,943 490,748 -347,951 9,618,403
and other
Accumulated
121,008,010 288,271 413,296 -4,061,940 116,821,045
amortisation
House and building 28,385,708 106,302 - -954,250 27,537,760
Machine and
81,466,110 - - -2,738,668 78,727,442
Equipment
Transportation
4,231,260 149,952 - -137,614 4,243,598
Equipment
Office equipment
6,924,932 32,017 413,296 -231,408 6,312,245
and other
Impairment
35,980,295 62,902 28,777 -1,209,559 34,804,861
Provision
House and building 16,797,603 - - -564,689 16,232,914
Machine and
16,243,493 - - -546,062 15,697,431
Equipment
Transportation
2,053 48,385 - -69 50,369
Equipment
Office equipment
2,937,146 14,517 28,777 -98,739 2,824,147
and other
Book value 18,772,745 -324,230 330,902 -625,481 17,492,132
House and building 7,211,729 -106,302 282,227 -242,437 6,580,763
Machine and
10,149,399 - - -341,195 9,808,204
Equipment
Transportation
843,536 -198,337 - -24,045 621,154
Equipment
Office equipment
568,081 -19,591 48,675 -17,804 482,011
and other
(2)Details of temporary idle fixed assets are as follows：
Book
Items Original Accumulated Impairment
value depreciation provision Book Net value
House and building 46,750,666 26,421,837 16,232,914 4,095,915
Machine and
Equipment 103,907,781 78,570,651 14,946,352 10,390,778
99/135
Transportation
Equipment 3,127,179 2,814,427 - 312,752
Office equipment and
other 7,917,664 5,079,866 2,628,473 209,325
Total 161,703,290 112,886,781 33,807,739 15,008,770
* The original value of the temporarily idle machinery and equipments to be invested in
Nanjing Textile Printing & dyeing Co., Ltd. was RMB 79,993,926, Accumulated amortisation
was RMB58,151,735, Impairment Provision was 13,842,798 , Book value was RMB
7,999,393.
12.Intangible assets
Decrease in Exchange
Increase in Year-end
Amount of current period
current rate
period balance
Items year-beginning changed
Original Value 14,087,145 54,835 - -472,455 13,669,525
Land use right 13,362,084 54,835 - -448,080 12,968,839
software 725,061 - - -24,375 700,686
Accumulated
11,722,468 53,686 - -394,077 11,382,077
amortisation
Land use right 11,244,126 53,686 - -377,997 10,919,815
software 478,342 - - -16,080 462,262
Book Net value 2,364,677 1,149 - -78,378 2,287,448
Land use right 2,117,958 1,149 - -70,084 2,049,023
software 246,719 - - -8,294 238,425
Impairment
246,719 - - -8,294 238,425
Provision
Land use right - - - - -
software 246,719 - - -8,294 238,425
Book value 2,117,958 - - -70,084 2,049,023
Land use right 2,117,958 - - -70,084 2,049,023
software - - -
- -
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.
Increase in accumulated amortization, Amortization RMB53,686 in this year.
100/135
13. Goodwill
Increase Decrease Exchange
Year-beginning in in Year-end Impairment
Items current current rate
balance period balance in year end
period changed
For the
goodwill
formed from
holding shares
of Nanhua
Company, 5,538,694 - - -186,196 5,352,498
Total 5,538,694 - - -186,196 5,352,498
Nanhua Printing and Dyeing Company has also been discontinued, whose daily operations
maintained rely on the rental housing. Although South China Company has a negative net asset,
the company has a vast piece of land and property in Shenzhen city. And the historical cost of
assets recorded into account basis will changed, which will be appreciated in value greatly once
assessed, we believe that there is no value-reduced of the investment, so the goodwill is not
impaired.
14.Impairment of assets schedule
Decrea
se in
Amount of
Accrual the Exchange rate Amount of
Items year-beginn
amount current change year-end
ing
period
Switch
back
Provision for bad
16,440,675 2,469,152 - -455,168 18,454,659
debts
Stock
Impairment 1,951,689 460,344 - -65,611 2,346,422
Provision
Impairment of 35,980,295 62,902 28,777 -1,209,559 34,804,861
fixed assets
Inta
Impairment of 246,719 - - -8,294 238,425
Intangible assets
Total 54,619,378 2,992,398 28,777 -1,738,632 55,844,367
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
101/135
year.
15.Account payable
(1)Account payable
Items Year-end balance Year-beginning balance
Total 3,353,297 4,101,084
Including：over 1 year 332,468 1,666,895
Accounts payable with age over one year included a number of accounts, without single
significant amount of accounts payable.
(2)Of the account payable 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)Accounts payable include the following foreign currency balances.
Name of Year-end balance Year-beginning balance
Foreign
Original Exchange RMB Original Exchange RMB
Currency currency rate equivalent currency rate equivalent
HKD 324,942 0.8509 276,493 381,108 0.8805 335,565
Total 276,493 335,565
16.Advanced account
(1)Advanced account
Items Year-end balance Year-beginning balance
Total 2,718,175 4,555,433
Including：over 1 year 2,718,175 2,008,639
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.
（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）Advanced Accounts include the following foreign currency balances.
Name of Year-end balance Year-beginning balance
Foreig
n Original Exchange RMB Original Exchange RMB
Currency currency rate equivalent currency rate equivalent
102/135
HKD 2,339,945 0.8509 1,991,059 2,082,474 0.8805 1,833,618
USD 101,903 6.6227 674,873 101,072 6.8282 690,140
Total 2,665,932 2,523,758
17.Wage payables to employees
Year-begin Decrease in Exchange
Increase in Year-end
Items ning current period
current rate
period balance
balance changed
Wage (Including reward ,
allowance and subsidy) 475,806 2,001,280 1,959,859 -15,996 501,231
Welfarism For employees - - - - -
Social insurance premiums - 333,611 333,611 - -
Including :
Medical insurance premiums - 57,808 57,808 - -
Basic old-age insurance
premiums - 261,844 261,844 - -
Unemployment insurance
expenses - 5,891 5,891 - -
Industrial injury insurance
premiums - 2,561 2,561 - -
Childbirth insurance
premiums - 5,507 5,507 - -
Housing accumulation fund - - - - -
Trade union outlays and
employee education outlays 84,161 34,607 -3,193 -2,829 119,132
Other - - - - -
Total 559,967 2,369,498 2,290,277 -18,825 620,363
At the period end, the company had no wages payable that belong to arrears.，The compensation balance
payable of employee at the end of year will be expected to be paid in May 2011.
18.Fees and taxes payables
Items Year-end balance Year-beginning balance
VAT 821,067 230,032
Business tax 237,054 315,712
Enterprise income tax 1,273,207 1,435,616
Tax on city maintenance and
construction 1,224 1,557
Property tax 283,975 293,854
Individual income tax 98 464
Stamp tax 233,699 241,828
103/135
Items Year-end balance Year-beginning balance
Educational surcharge 200 -
Total 2,914,867 2,519,063
19.Dividend payable
Items Year-end Year-beginning
balance balance Reasons of arrears
State Development &
255,248
Investment Co., Ltd*2 264,127
CITIC Group *2 255,248 264,127
Shenzhen Nanyou (Group)
127,624
Company*2 132,064
Capital tense*1
Shenye Union（Hongkong）Co.,
127,624
Ltd. 132,064
Changzhou Dongfeng Printing
510,497
and dyeing plant *2 528,255
Total 1,276,241 1,320,637
*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.
20.Other accounts payable
(1)Other accounts payable
Items Year-end balance Year-beginning balance
Total 29,974,945 30,926,067
Including：Over 1 year 29,626,008 24,607,655
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.
(2) 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.
(3)Other payable payable by large in year end year
Items Amount Age Nature or content
Gao Minping 153,995 1-2 years Deposit
Room 760 Cargo Floor（#HKS
255,270 Within 1 year Deposit
PINNERS-760）
104/135
Items Amount Age Nature or content
State Development &
2,999,894 Over 3 years Loans
Investment Co., Ltd
Union Group 22,564,462 Over 3 years Loans
Jinrongyuan Company-Deposit 1,019,964 2-3 years Deposit
Total 26,993,585
(4)Other payable Accounts include the following foreign currency balances.
Name of Year-end balance Year-beginning balance
Foreign Original Exchange RMB Original Exchange RMB
currency
currency rate equivalent currency rate equivalent
HKD 923,050 0.8509 785,423 914,342 0.8805 805,078
Total 785,423 805,078
21.Other current liabilities
Items Year-end balance Year-beginning balance
Sewage charges 62,598 62,601
Audit fees 1,076,785 987,963
Land use fees 87,997 88,002
Securities management Fees 783 810
Total 1,228,163 1,139,376
22.Long-term borrowing
(1)Classification of long-term borrowing
Type Year-end balance Year-beginning balance
Impawn borrowing 1,350,126 1,534,300
Total 1,350,126 1,534,300
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,
2010,Principal amount of HKD 1,586,703.88 (RMB1,350,126)
23.Long-term payable
Unit Time Year-beginning Interest Interest Year-end Borrowing
balance rate（%） balance condition
Assess the Non-time 9,217,564 - - 8,907,695 -
value of
assets
Total 9,217,564 - - 8,907,695 -
105/135
* 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 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. 892,357 968,868
Total 892,357 968,868
（2）The temporary difference
Item of the taxable temporary Year-end balance Year-beginning balance
Assets assessment appreciation 5,408,224 5,871,927
Total 5,408,224 5,871,927
Tax rate 16.5% 16.5%
Confirmation of the Deferred
income tax liabilities. 892,357 968,868
* 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-end balance Year-beginning balance
ERP Information construction 239,532 247,865
Technology subsidies 638,754 660,974
Total 878,286 908,839
（1）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
106/135
information. The deal must be accepted by the Financial Bureau before accounting, so it was
suspended. The reduction was due to the change in exchange rates.
26.Share capital
Name/Type Year-beginning balance Change Year-end balance
Amount Proportion% Amount Amount Proportion%
Restricted shares
Common shares in
RMB 99,720,453 58.96 - 99,720,453 58.96
Foreign shares in
domestic market 69,421,903 41.04 - 69,421,903 41.04
Total restricted
shares 169,142,356 100.00 - 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 Increase in Decrease in Year-end
current period current period
balance balance
Share capital 29,718,829 - 29,718,829
Premium -
Other Capital common 575,430 10,153,705
reserve 9,578,275 -
Total 39,297,104 575,430 - 39,872,534
Current increment in capital surplus came from current fair value gain of finance assets available for
sale.
28.Surplus common reserve
Items Year-beginning Increase in Decrease in Year-end
current period current period
balance balance
Statutory Surplus
26,704,791 26,704,791
common reserve
Total 26,704,791 26,704,791
29.Retained profit
Items Amount Proportion（%）
Balance at the end of last period -102,767,941
Add： The beginning of the undistributed
profits adjustments
107/135
Items Amount Proportion（%）
Including：Change of accounting policy
Correcting previous errors
Change of consolidated scope
Other adjustments
Balance at the beginning of current year -102,767,941
Add ： The net profit due to the 4,102,924
shareholders of the parent company in the
year
Less ： Withdrawing statutory surplus public
reserve
Withdrawing discretionary surplus reserve
Withdrawing Ordinary risk allowance
Common stocks dividends payable
Stock dividend transferred in stock capital
Balance at the end of current year -98,665,017
30.Minority shareholders equity
Name of Subsidiary Proportion% Year-beginning
Year-end amount
balance
Nanhua Company* 30.56
Shenzhen East Asia -1,311,595 508,088
Company 49.00
Total -1,311,595 508,088
Nanhua Company and Shenzhen East Asia, two subsidiaries of the Company, suffered excess
loss. According to No. 4 Interpretation of Accounting Standards for Business Enterprises, where
the loss for current period shared by minority shareholders of a subsidiary exceeds the owner's
equity enjoyed by them in this subsidiary at the beginning of period in consolidated financial
statements, the difference shall write off minority interests. Whether the Articles of Association
of the Company or an agreement defines the obligation of minority shareholders for excess loss
or not, excess loss shall write off minority interests, i.e., minority interests will be negative when
the subsidiary suffering excess loss is included for statement consolidation. However, the
minority shareholders of Nanhua Company were declared bankrupt and suffered compulsory
liquidation in 2000. No retroaction can be conducted. Therefore, the minority shareholders of
Nanhua Company shall no longer bear losses.
108/135
31. Business income,Business cost
Items Amount of current Amount of Previous
period period
Key business income 961,014 18,950,518
Other business income 8,390,096 8,567,241
Total 9,351,110 27,517,759
Key business cost 317,033 17,570,851
Other business cost 4,006,056 5,054,135
Total 4,323,089 22,624,986
(1)Key buiness—Product
Amount of current period Amount of Previous period
Name Business Business
Business cost Business cost
income income
Cloth bleaching, printing and 317,033
961,014
dyeing 18,950,518 17,570,851
Rent 8,390,096 4,006,056 8,567,241 5,054,135
Total 9,351,110 4,323,089 27,517,759 22,624,986
The total sale incomes of the top five customers was RMB7,510,296.65 , representing
80.31% of the main business income in this year.
The operating income and operating cost in this year, reduced RMB 18,166,649 and RMB 18,578,870 over the
previous year, respectively 66.02% and 82.12%, mainly due to the Nanhuan Company continues to halt the
operation of business, so the business further declined. the parent company has no longer distributed the import
and export business in 2010, and the revenues and costs have fallen sharply.
a) Revenue from main business status of top tive clients
Name of customer Business Revenues Proportion to revenue from main
business（%）
Shenzhen Finance sources 4,882,548.00 52.21
Development Co., Ltd.
SCS EXPRESS 952,270.00 10.18
Nanjing Qingtian Xinxin Clothing 672,478.63 7.19
CVA holdings 566,687.22 6.06
Shenzhen Nanshan Saint Laurent 436,312.80 4.67
Wedding Photography
Total 7,510,296.65 80.31
32.Business tax and supertax
Items Amount of Amount of Calculation and payment
current period Previous period criteria
Education surcharge - 540 3%
109/135
Items Amount of Amount of Calculation and payment
current period Previous period criteria
Total - 540
33.Sale expenses
Items Amount of current Amount of
period Previous period
Office fees 37,934 76,156
Travel fees 26,682 161,348
Telephone and fax fees 18,743 43,192
Welfare 11,882 62,570
Miscellaneous 750 35,069
Wage 372,116 838,989
Society fees 2,510 89,146
Transportion fees 5,000 25,900
Other 5,027 100,064
Car costs 8,777 64,170
Staff insurance 6,860 81,474
Dormitory fees 5,000 29,000
Sample fees - 51,676
Business insurance - 18,297
Transportation costs 15,752 88,988
Depreciation 69,300 69,300
Rental fee 20,929 401,398
Pay commission 80,510 31,123
Total 687,772 2,267,860
34.Management expenses
Items Amount of current Amount of
period Previous period
Telephone fees 69,300 61,204
Taxes paid 1,510,239 817,311
Insurance premium 336,928 347,144
Travel fees 114,479 98,643
Vehicle fuel 250,008 245,378
Property management fees 52,307 57,902
Board fees 260,786 410,694
Welfare 145,142 121,577
Union funds 35,209 35,094
110/135
Items Amount of current Amount of
period Previous period
Wage 2,416,195 2,455,433
Society fees 477,292 549,425
Tolls 11,349 12,679
Lawyer fees 87,322 56,419
Social insurance 252,371 171,257
Audit fees 393,303 303,448
Water and electricity fees 919,151 740,678
Parking fees 16,814 20,491
Amortization of intangible assets 54,620 18,507
Repair fees 108,996 99,010
Transportion fees 1,346 1,909
Depreciation 223,396 273,643
Securities management expenses 439,111 150,708
Rental fee 226,397 228,661
Dormitory fees 46,779 97,938
Office fees 185,312 207,296
Staff training fees - 7,191
Other 234,640 387,781
Total 8,868,792 7,977,421
35.Financial expenses
Items Amount of current Amount of
period Previous period
Interest expenses 808,011 1,255,262
Less：Interest income 243,326 509,684
Add：Exchange rate loss 74,237 31,294
Add：Other expenses 13,505 25,734
Total 652,427 802,606
36.Asset impairment losses
Items Amount of current Amount of
period Previous period
Bad debt losses 3,491,123 116,902
Inventory devaluation losses 460,344 -
Fixed asset impairment losses 62,902 3,502,905
111/135
Items Amount of current Amount of
period Previous period
Total 4,014,369 3,619,807
37.Changes income in fair value /loss
Items Amount of Amount of
current period Previous period
Trading financial assets- 48,912
Total 48,912
38.Investment income
(1）Investment income generated by the sources listed
Items Amount of current Amount of
period Previous period
Disposal trading financial assets to achieve return 11,264,659 21,337,265
investment
Income from transfer of equity investment 258,861 294,353
Total 11,523,520 21,631,618
There were no major restrictions in the investment income at the period end.
(2)Equity method
Items Amount of Amount of reason
current period Previous
period
Total 11,264,659 21,337,265
Including: Hangzhou 11,264,659 21,337,265 Affiliated company Hangzhou Bay
Bay Company
has less profit of RMB 40,290,422
than last year
39.Non-operating income
(1)Non-operating income
Items Amount of Amount of Amount of non-current gains &
current Previous loss in this year
period period
Net income disposition fixed 107,013
assets
Including ： Income 107,013
disposition fixed assets
Other 38,382 445,927 38,382
112/135
Items Amount of Amount of Amount of non-current gains &
current Previous loss in this year
period period
Totla 38,382 552,940 38,382
* The accounts payable are paid less which is consulted by the other subsidiary company of Shenzhen East
Asia and the creditors, the balance that deducted the court trial costs will be recorded the non-operating
income.
40.Non-operating expense
Items Amount of Amount of Amount of non-current gains & loss in
current period Previous this year
period
Loss disposition Non-current 39,237 13,693 39,237
assets
39,237 13,693 39,237
Including: loss on disposal of
fixed assets
Other 1,095 776,495 1,095
Total 40,332 790,188 40,332
* The penalty of custom and the fines of personal income tax delayed to repay by the other subsidiary
company of Shenzhen East Asia South China Company.
41.Income tax expenses
(1)Income tax expenses
Items Amount of current Amount of
period Previous period
The current income tax expense
Deferred income tax expense -44,704 -45,510
Total -44,704 -45,510
42.Calculation process for Basic gains per share and Diluted gains per shares
Amount of Amount of
Items No current period Previous
period
Net profit attributable
to shareholder of the 1 12,090,678
4,102,924
Parent Company
Non-recurring 2 238,500 280,556
113/135
Amount of Amount of
Items No current period Previous
period
gain/loss
attributable to the
shareholders of the
Parent Company
Attributable to the
shareholders of the
Parent Company, Net
3=1-2 3,864,424 11,810,122
profit after deducting
of non-recurring
gain/loss
Total of shares at
169,142,356 169,142,356
year-beginning 4
Public reserve was
transferred as capital
and share increase 5 - -
from dividend
distribution（Ⅰ）
The issuance of new
shares or increase the
number of shares and 6 - -
other debt-equity
swap（Ⅱ）
ncrease in the shares
(Ⅱ)from the next
month to the end 7 - -
month of the
reporting period
Shares decreased in
the reporting period 8 - -
due to repurchase.
Decrease in the
shares from the next
month to the end 9 - -
month of the
reporting period
114/135
Amount of Amount of
Items No current period Previous
period
Share number
decrease for 10 - -
shares deduction
Number of months of
11 - -
the reporting period
The weighted
average number of 12=4+5+6×7÷11
169,142,356 169,142,356
ordinary shares -8×9÷11-10
issued out.
Basic gains per share 0.02 0.07
（Ⅰ） 13=1÷12
Diluted gains per 0.02 0.07
share（Ⅱ） 14=3÷12
The interest of
ordinary shares
15 - -
which was confirmed
as costs
Conversion costs 16 - -
Income tax rate 17 22% 20%
Warrants, shares with
18 - -
equity right increase
Diluted gains per 0.02 0.07
19=[1+(15-16)×(1-17)]÷(12+18)
share（Ⅰ）
Diluted gains per
19=[3+(15-16)×(1-17)]÷(12+18) 0.02 0.07
share（Ⅱ）
43.Other comprehensive income
Items Amount of Amount of
current period Previous period
1．Loss amount producted by sellable financial assets 575,430 102,473
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 575,430 102,473
2．The enjoyed share in other comprehensive incomeofother -
115/135
Items Amount of Amount of
current period Previous period
invested unit according to equity method
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 -
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 former period
Transferred to the adjustment of initial confirmation amount of -
items at hedged period
Subtotal -
4．Translating difference in foreign currency financial reports -4,895,497 -553,958
Less：Net amount that transferred into profitandloss at current
period in disposed overseas business
Subtotal -4,895,497 -553,958
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 -4,320,067 -451,485
44.Cash flow statement
(1)Other cash received relating to financing activities
a.Other cash received relating to financing activities
Items Amount of current period
Rental income 1,144,777
Between units and individuals 1,105,957
Interest income 1,212,088
Deposit and Water and electricity fees 1,390,704
116/135
Items Amount of current period
Profits tax paid in advance will have prepaid tax returned 157,459
Other 5,010,985
Total
b.Other cash paid relating to operating activities
Items Amount of current period
Rental fee 384,984
Society fees 425,242
Between units 982,700
Transportion fees 146,239
Audit fees 409,662
Office fees 608,440
Insurance premium 37,467
Travel fees 290,533
Telephone fees 54,784
Securities management expenses 439,111
Water and electricity fees 1,878,640
Parking fees 50,960
Tariffs on trial charge 7,116
Lawyer fees 52,137
Property management fees 235,936
Repair fees 102,680
Deposit 29,661
Board fees 8,393
Other 116,415
Total 6,261,100
b) Supplement information of Consolidated Flow Statement
Items Amount of Amount of
current period Previous period
1. Adjusting net profit to net cash flow in operating activities:
Net profit 2,370,935 11,713,331
Add： Provision for impairment of assets 4,014,369 -1,466,672
Fixed assets depreciation 3,842,554 4,000,658
Amortization of intangible assets 53,686
Amortization of long-term expenses to be amortize
117/135
Items Amount of Amount of
current period Previous period
The losses on the disposal of fixed assets, intangible assets and 39,237
93,320
other long-term assets
Loss on retirement of fixed assets
Loss on changes of Fair value -48,912
Financial expenses 1,740,856 90,090
Investment losses -11,523,520 -21,337,265
Decrease of deferred income tax asset
Increase of deferred income tax liability -76,511 -47,082
Decrease in inventory 426,940 7,747,240
Decrease in operating receivable 2,228,442 1,544,650
Increase in operating payables -2,527,146 -3,155,798
Other -352,260
Net cash flows from operating activities 237,582 -866,440
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 51,786,613 56,105,626
Less：Cash at the beginning of the period 56,105,626 61,368,428
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 -4,319,013 -5,262,802
The financial cost due to change in exchange rate and the impact on cash and cash equivalents
RMB 1,740,856, the financial cost of interest payments was the loan interest of the related
parties, reflected in business activities.
(3) Cash and cash equivalents
Items Amount of Amount of
current Previous
period period
51,786,613 56,105,626
I. Cash
91,999 182,181
Of which: Cash in stock
46,026,397
Bank savings could be used at any time 45,493,122
118/135
Items Amount of Amount of
current Previous
period period
5,668,217
Other monetary capital could be used at any time 10,430,323
- -
Usable money in Central Bank
- -
Money saved in associated financial bodies
- -
Money from associated financial bodies
- -
II. Cash equivalents
- -
Of which: bond investment which will due in three months
51,786,613 56,105,626
III. Balance of cash and cash equivalents at the period end
Of which:：Parent company or subsidiary of the Group - -
using restricted cash and cash equivalents
IX. Related party relationship and related transactions
(I) Related party relationship
1. The related parties with controlling relationship
(1)The related parties with controlling relationship
Legal
Parent Registered Organizati
Type Nature representa on Code
company address
tive
11/F,Union Production
Union Issue company Bulding, and sale ofclothing Dong
192471500
Holdings Shennan Zhong and textiles, and real Binggen
Road,Shenzhen estate developin
Import & export
Union
Limited business ―processing
Union Bulding,Shennan Dong
liability with materials‖ and 190337957
Group Zhong Road, Binggen
Company processing with
Shenzhen
imported materials
(2)The registered capital of the related parties with controlling relationship and the change thereof.
119/135
Parent company Balance in year Increase of this Decrease of Balance in year
beginning period - this period - end
Union Group 90,606,000 90,606,000
Union 1,123,887,712 - - 1,123,887,712
Holdings
(3)The related parties without controlling relationship
Shares amount Holding proportion%
Amount in Amount Amount in Amount
Parent company year end in year year end in year
beginning beginning
Union Group* 5,821,089 5,821,089 3.44% 3.44%
Union 43,141,032 43,141,032 25.51% 25.51%
Holdings
* 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
2.Subsidary
The subsidiaries of the Company as described in Note VII
3.Joint venture and affiliated company.
Joint venture and affiliated company ,see Notes VIII,9
4. Other Related party
Related
Organization
Type Name transactions
Code
The related parties -
Current balance
controlled the same Actual
controller Shenye Union（HK）Co., Ltd.
The related parties 192199105
Current balance
controlled the same Shenzhen Union Property
Actual controller Group Co., Ltd.
(2) 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. * The original lease contract agreement still
continues down to the expiration of the contract , without signing a new lease contract.
120/135
(3) Balance current related parties
Related parties Year-end balance Year-beginning balance
Account receivable
Shenye Union（HK）Co., Ltd. 314,198 325,127
Other payable
Union Group 22,564,462 21,566,542
Shenzhen Union Property Group Co., Ltd. 699,258 3,671,008
X.Subsequent events
As of December 31, 2010，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, 2010,The Group still has the major external investments RMB 30 million
which have signed but still not paid, as follows:
Name of investment Contractual Prepaid Unpaid Expected Remarks
projects investment investme investment investment
amount nt amount period
amount
Invest Nanjing East Can not be
Asia Textile Co., Ltd Unsurenes relocated because
30 million - 30 million
with machinery and s the fields
equipments uncompleted
4) The big contract which has been signed or is ready to be carried out
By December 31, 2010, The Group still has big contract which has been signed but not paid, a total of
1.71 million yuan, as follows:
Name of Contractual Prepaid Unpaid Expected Remarks
investment investment investment investment investment
projects amount amount amount period
Elocation of Can not be
production relocated because
1,710,000 855,000 855,000 Unsureness
equipments as the fields
a whole uncompleted
4. Except for the events described above, By December 31, 2010,the Group has no other significant
commitment events.
XII . Events after balance sheet date
121/135
The Group had no other significant matters after the balance sheet date.
XIII. Other Significant Events
1.Lease
(1) Business in leasing assets (The lessor under operating leases)
Year-end balance Year-beginning
Type balance
Cost 101,717,557 104,963,930
House, Building 101,717,557 104,963,930
Accumulated amortisation 62,038,553 60,518,745
House, Building 62,038,553 60,518,745
Impairment provision - -
House, Building - -
The book value 39,679,004 44,445,185
House, Building 39,679,004 44,445,185
2.Items related to measurement of fair value.
Item Amount at Provision Amount
Gains and Accumulative
the for at the end
beginning losses from change of fair impairment of period
of period made in
change of value
current
fair value in accounted for period
current as rights and
period interests
Financial assets
1. Financial assets 5 77,235
calculated according to 171,221
fair value whose change is
accounted for as profits or
losses for current period
Trading financial assets 575,430 874,427
309,399
Subtotal of financial 480,620 575,430 951,662
assets
3.Foreign financial assets and foreign financial liability
122/135
Item Amount at Provision Amount
Gains and Accumulative
the for at the end
beginning losses from change of fair impairment of period
of period made in
change of value
current
fair value in accounted for period
current as rights and
period interests
Financial assets
1. Financial assets 5
calculated according to 171,221
fair value whose change is
accounted for as profits or
losses for current period
Trading financial assets 575,430 874,427
309,399
Subtotal of financial 480,620 575,430 874,427
assets
4.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 house leasing business.
5 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. Notes of main items of parent company’s financial statements
1. Account receivable
123/135
（1） Categories of account receivable
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
Account
receivable with
significant
specific amount
3,872,632 31.60 3,872,632 100 3,998,082 30.54 3,998,082 100.00
that were
provisioned had
debt preparation
separately
Aging group - - 4,252,089 32.49 3,763,561 88.51
- -
account
receivable that
were not
significant but
8,384,444 68.40 8,384,444 100 4,839,106 36.97 4,839,106 100.00
have been
provisioned bad
debt preparation
separately
Total 12,257,076 100 12,257,076 100 13,089,277 100 12,600,749 96.27
124/135
1） Account receivable with significant specific amount that were provisioned had
debt preparation separately
Provision
Name Book balance Bad debts Reason of provision
proportion%
Carnival Index International
1,153,023 1,153,023 100.00 Aging long
Ltd
TAI YANG ENTERPRISE
1,060,131 1,060,131 100.00 Aging long
CO.,LTD.
Shenzhong Enterprise The company insolven
1,659,478 1,659,478 100.00
Co.,Ltd. t, to be canceled
Total 3,872,632 3,872,632 100.00 -
2） As of December 31, 2010, account receivable that were not significant but have been
provisioned bad debt preparation separately
Book Provision Reason of
Name Bad debts
balance proportion% provision
Fly Dragon International 601,975 601,975 100.00 Aging long
Grateful Textiles Co.,Ltd 594,760 594,760 100.00 Aging long
World Fabrica (Int'l) Ltd 488,190 488,190 100.00 Aging long
Shenzhen Fangzhou Textile Aging long
468,486 468,486 100.00
Co., Ltd.
Ezhou Xiangya Garments Aging long
368,929 368,929 100.00
Co., Ltd.
Tak Shing Buying Office Led 350,039 350,039 100.00 Aging long
Starline Textile CO.Ltd. 348,708 348,708 100.00 Aging long
U.D.C. (H.K.) Co.,Ltd 314,198 314,198 100.00 Aging long
Panther Fabric Ltd. 309,721 309,721 100.00 Aging long
Changshu Jiangsu Garments Aging long
283,529 283,529 100.00
Import & Export Co., Ltd.
Other (Total 109) 4,255,909 4,255,909 100.00 Aging long
Other 8,384,444 8,384,444 100.00
(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 Amount Fixed year Percentage of
the company account receivable
Shenzhong Enterprise Over 3
Subsidiary 1,659,478 years
13.54
Co.,Ltd.
Carnival Index International Non-Related Over 3
Ltd parties
1,153,023 years
9.41
Non-Related Over 3
TAIYANGENTERPRISECO.,LTD. parties
1,060,131 years
8.65
125/135
Unit name Relation with Amount Fixed year Percentage of
the company account receivable
Non-Related Over 3
parties
601,975 years
4.91
Fly Dragon International
Non-Related Over 3
parties
594,760 years
4.85
Grateful Textiles Co.,Ltd
Total 5,069,367 41.36
(4)About the account receivable from the related parties
Relation
Name with this Amount Proportion(%)
company
Shenzhong Enterprise Co.,Ltd. Subsidiary 1,659,478 13.54
Shenzhen East Asia Victor Onward
Textile Printing & dyeing Subsidiary 64,021 0.52
The related
parties
controlled
the same
Actual
Shenye Union（HK）Co., Ltd. controller 314,198 2.56
Total 2,037,697 16.62
(5)Balance of foreign currency in account receivable
Year-end balance Year-beginning balance
Foreign
Original Exchange Amount in Original Exchange Amount in
currency
currency rate RMB currency rate RMB
HKD 11,038,875 0.8509 9,392,979 12,929,509 0.8805 11,384,433
Total 9,392,979 11,384,433
126/135
2. Other receivables
(1)Categories of other receivable
Year-end balance Year-beginning balance
Type Book Balance Provision for bad debts Book Balance Provision for bad debts
Amount Proportion% Amount Proportion% Amount Proportion% Amount Proportion%
Other receivable with
significant specific
amount that were 78,976,883 98.09 3,376,237 4.27 83,970,412 98.72 3,382,210 4.03
provisioned bed debt
preparation separately
Other accounts that
were provisioned bad
debt preparation in - - - - 1,071,219 1.26 256,083 23.91
accordance with agin
Group
Deposit Group 37,782 0.05 - -
Other receivable that
were not significant but
have been provisioned 1,497,823 1.86 1,497,823 100.00 13,374 0.02 - -
had debt preparation
separately
Totla 80,512,488 100 4,874,060 6.05 85,055,005 100 3,638,293 4.28
127/135
1） Other ts receivable with significant specific amount that were provisioned had debt preparation
separately
Provision Reason of
Name Book balance Bad debts
proportion% provision
HongKong Victor
Onward
62,601,105 - -
Shenzhen East
Asia Victor Onward 12,999,541 - -
Textile Printing &
dyeing
Nanjing East Asia 1,321,309 1,321,309 100.00 Aging long
CCB.Guangdong
1,079,962 1,079,962 100.00 Aging long
Shunde Branch
Changzhou
Dongfeng Textile 974,966 974,966 100.00
Printing & dyeing
Aging long
Equipment Co., Ltd.
Total 78,976,883 3,376,237 4.27 —
2） Group –Deposit Group
Book Provision Reason of
Name Bad debts
balance proportion% provision
Dang Zewen 5,000 - -
Jiang Guangbin 2,000 - - Deposit, N
Huanggang Endorsement
1,481 - - o provision
of deposit
Shenzhen Port for bad d
Administration Service 1,361 - -
Centre ebts
Other 27,940 - -
Total 37,782 - -
3） As of December 31, 2010, Other receivable that were not significant but have been
provisioned bad debt preparation separately
Name Book balance Amount Proportion % Reason
HongKong Victor
728,362 728,362 100.00 Aging long
Onward
Shenzhen East
Asia Victor Onward 513,480
Textile Printing &
513,480 100.00 Aging long
dyeing
Shanghai Aging long
Huayinke Trade 179,994 179,994 100.00
Industry Co., Ltd.
Shenzhen Aging long
Environmental
34,999 34,999 100.00
Management
System
128/135
Name Book balance Amount Proportion % Reason
Certification
Center
Shenzhen Design Aging long
Institute of
Ministry of
29,999 29,999 100.00
Machinery
Industry Shanghai
Branch
Other 10,989 10,989 100.00 Aging long
Total 1,497,823 1,497,823 100 -
（2） As of Decrember 31,2010，In the balance of accounts payable, there were no payables to
shareholders holding 5.00% (including 5.00%) or more of the voting right of the Company;
(3) The front 5 units’ information of Other account receivable
Proportion(%)
Unit name Relation Amount
Account
with the Content
Age
company
Over 3
HongKong Victor Onward 77.75
62,601,105
Subsidiary years Business
Shenzhen Nanhua 1-2 yea
Printing & dyeing Co., 16.15
12,999,542
Ltd. Subsidiary rs Business
Non-Related Over 3 Payment for
Nanjing East Asia years 1.64
1,321,309
parties goods
CCB.Guangdong Non-Related Over 3 Payment for
years 1.34
Shunde Branch 1,079,962
parties goods
Changzhou Dongfeng Non-Related Over 3 Payment for
Textile Printing & dyeing years 1.21
974,966
Equipment Co., Ltd. parties goods
Total 78,976,884
98.09
(4) Account receivable from Related affiliated parties
Name Relation with the company Amount Proportion(%)
HongKong Victor Onward Subsidiary 62,601,105 77.75
Shenzhen East Asia Victor
Onward Textile Printing & Subsidiary 513,480 0.64
dyeing Company
Shenzhen Nanhua Printing
Subsidiary 12,999,542 16.15
& dyeing Company
Total 76,114,127 94.54
(5)Other receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
129/135
Currency Original Exchange RMB Original Exchange RMB
of Name currency rate equivalent currency rate equivalent
HKD 79,822,967 0.8509 67,921,362 75,915,125 0.8805 66,843,268
Total 67,921,362 66,843,268
3. Long-term equity investment
(1) Long-term equity investment
Items Year-end balance Year-beginning balance
The cost of long-term equity
investment accounting 39,928,226. 41,317,197
Total of long-term equity
investment 39,928,226 41,317,197
Less ： Long-term equity
investments for impairment 1,315,027
Net value long-term equity
investment 38,613,199 41,317,197
(2)The cost method and equity method long-term equity investment
Cash
dividend
Vote Initial Year-beginning Exchange Year-end
Name Proportion % change of the
proportion % amount balance rate change balance
current
period
The cost
method
22,266,157
HongKong
Victor Onward 100 100 2,411,282 23,040,722 -774,565
16,347,042
Nanhua
Printing &
dyeing 54.82 54.82 23,082,831 16,915,702 -568,660
1,315,027
Shenzhen
East Asia 51 51 1,470,000 1,360,773 -45,746
39,928,226
Total 26,964,113 41,317,197 -1,388,971
(3)Provision for impairment on long-term equity investment
Name of invested
Year-beginning Increasein the Decrease in the Year-end
company
balance current period current period balance
Shenzhen East Asia 1,315,027 1,315,027
130/135
4. Business income,Business cost
Items Amount of current Amount of Previous
period period
Key business income 70,200 11,281,450
Other business income 1,245,650 880,293
Total 1,315,850 12,161,743
Key business cost -519,626 11,074,256
Other business cost 473,887 440,033
Total -45,739 11,514,289
（1） Key business-product
Amount of current period Amount of Previous period
Name of product
Revenue Cost Revenue Cost
Cloth bleaching, printing and
70,200 -519,626 11,281,450 11,074,256
dyeing
House lease 1,245,650 473,887 880,293 440,033
Total 1,315,850 -45,739 12,161,743 11,514,289
（2） Top five customers
Name Revenue Percentage of total business income
（%）
Shenzhen Nanshan Saint Laurent
Wedding Photography
436,313 33.16
Lin Daozheng 93,496 7.11
Shenzhen Xiesheng Transport Co.,
77,913 5.92
Ltd.
Shenzhen Taihe Mechanical &
51,942 3.95
electrical equipment Co., ltd.
Chen Shen 25,971 1.97
Total 685,635 52.11
5.Investment revenue
（1） Investment revenue Source
Items Amount of current Amount of
period Previous period
Disposal trading financial assets to achieve return 257,537 290,960
investment
Total 257,537 290,960
The was no severs constrict on the collection of the investment earings.
131/135
6.Cash flow statement Supplementary Information of the parent company
Items Amount of Amount of
current period Previous
period
I. Adjusting net profit to cash flow from operating activities
-3,610,120 -8,109,036
Net profit
2,682,662 3,606,721
Add : Impairment loss provision of assets
Depreciation of fixed assets, oil and gas assets and
366,046 372,642
consumablebiological assets
Amortization of intanglble assets 54,620 -
- -
Amortization of long-term deferred expenses
39,237 -23,818
Loss on disposal of non-current assets
- -
Loss from fixed assets discard
- -
Loss of fair value fluctuation on assets
829,638 43,600
Financial cost
-257,537 -290,960
Loss on investment
- -
Decrease of deferred income tax assets
-82,685 775,250
Increase of deferred income tax assets
Decrease of inventories 14,945 2,181,128
Decrease of operating receivable 4,374,718 1,045,527
Increase of operating receivables -3,669,313 -1,830,423
Other -1,507,307 578,147
Net cash flows arising from operating activities -765,096 -1,651,222
II. Significant investment and financing activities that withoutcash flows
Liability transfer to capital
Convertible corporate bond due within 1 year
Finance leased fixed assets
III. Net increase of cash and cash equivalents
23,577,186 24,960,502
Ending balance of cash
24,960,502 30,750,018
Less: Beginning balance of cash
132/135
Items Amount of Amount of
current period Previous
period
Add: Ending balance of cash
Less: Beginning balance of cash equivalents
Net increase of cash and cash equivalents -1,383,316 -5,789,516
XV. Supplementary Information
1. Non–operating gain and loss statement of this year
Items Amount of Amount of Notes
current period Previous
period
-39,237 93,320
Gain/loss form disposal of non-current assets
Tax rebate or derate approved by goingbeyond
the authority . Tax rebate or derate without
official approval document. Incidental tax
rebate or derate.
Govemment Grants accrued into current profit
& loss
List into ― the fund occupation expensecharged
on non-financial enterprise‖, subordinate to the
accounting items ― Gurrent profit & loss‖
Earning arising from identifiable fairvalue of net
assets of investees, which should be enjoyed
when costs (which are obtained by the
enterprise) invested in subsidiary companies,
pool companies and joint ventures, is less than
the obtained investment
Non-currency asset exchange profit & loss
Profit & loss arising from entrusting thethird
party to invest or manage assets
Provision for asset impairment withdrawndue to
force majeure (e.g.natural disaster)
Profit & loss arising from debt recombination
Expenses for enterprise recombination
133/135
Items Amount of Amount of Notes
current period Previous
period
Profit & loss that exceed the fair value,arising
from transaction with unfair transaction price
Net profit & loss during term
beginningtomerger date of the subsidiaries
arising form business merger under same
control
Profit & loss arising from the probableevents
irrelevant to normal operating business of the
company
257,537 343,265
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
172,943
Single impairment test for impairment of
receivables transferred back to preparation
Profit & loss obtained from loan for outwards
entrust
Profit & loss arising from change of fairvalue of
investment-based real estate where subsequent
Measurement is conducted by using the fair
value mode
Impact on the current profit & loss causedby
one-off adjustment conducted on the current
profit & loss according to requirements
stipulated by taxation /accounting laws and
regulations
Entrusting earning arising from the entrusted
operation.
134/135
Items Amount of Amount of Notes
current period Previous
period
38,860 -330,568
Except the above items, other non-operating
eqarning and expenditure
Other profit & loss items confirming
tothedefinition of nonrecurring profit & loss
257,160 278,960
Subtotal
Amount of influence of income tax
-18,660 -1,596
Amount of influence of minority interests
Total 238,500 280,556
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 Diluted gains per
share share
Net profit attributable to
shareholder of parent 0.03 0.02 0.02
company
Net profit attributable to the
parent company
0.03 0.02 0.02
shareholders after deducting
of non-recurring gain/loss.
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 27,2011.
135/135
