1/130
深圳中冠纺织印染股份有限公司
Shenzhen Victor Onward Textile Industrial Co., Ltd.
2008 Annual Report
April 20092/130
Important Notes
The Board of Directors of Shenzhen Victor Onward Textile Industrial Co., Ltd. (hereinafter referred
to as the Company) and its directors individually and collectively accept responsibility for the
correctness, accuracy and completeness of the contents of this report and confirm that there are no
material omissions or errors which would render any statement misleading.
Mr. Hu Yongfeng, board chairman and General Manager, Mr.Zhang Jinliang, General Manager ,
Mr. Ren Chengzheng , Manager of Financial Dept of the Company represent and warrant the
financial report in this report is true and complete.3/130
Contents
Section 1. Company Profile
Section II. Summary of Accounting Highlights and Business Highlights
Section III Changes in Share Capital and Particulars about Shareholders
Section IV. Particulars about Directors, Supervisors, Senior Executives and Employees
Section V Administrative Structure
Section VI. Particulars about Shareholders’ General Meeting
Section VII Report of the Board of Directors
Section VIII Report of the Supervisory Committee
Section IX Important Events
Section X. Financial Report
Section X1. Documents for Reference4/130
Section I Brief Introduction of the Company
I. Brief Introduction of the Company
(I) Name of the Company in Chinese: 深圳中冠纺织印染股份有限公司
Name in English: Shenzhen Victor Onward Textile Industrial Co., Ltd.
Abbreviation of English name of the Company: VICTOR ONWARD
(II) Legal Representative: Hu Yongfeng
(III) Secretary to the Board of Directors : Chen Xing
Contact address: Room 1308, Hualian Building, No.2008 Shennan Zhong Road ,
Shenzhen
Tel：（755）83668254
Fax: (755) 83668427
E-mail: szg000018@126.com
Securities affair representative: Wu Xia
Contact address: Room 1308, Hualiang Building, No.2008 Shennan Zhong Road,
Shenzhen
Tel：（755）83667895
Fax：（755）83668427
E-mail: wuxia_08@126.com
IV. Registered address: 26 Kuipeng Road, Kuiyong Town, Longgang District, Shenzhen
Business address: 26 Kuipeng Road, Kuiyong Town, Longgang District, Shenzhen
Contact address: Room 1308, Hualiang Building, No.2008 Shennan Zhong Road,
Shenzhen
Zip Code: 518119
Website: http:// www.chinaszvo.com
E-mail：szvo@chinaszvo.com
(V) Designated newspapers for information disclosure: Securities Times and Hong
Kong Commercial Daily.
Designated website for information disclosure: http://www.cninfo.com.cn
The place for preparing and placing the annual report: Office of the board secretary of
the Company
(VI) Stock exchange for listing of the stocks of the Company: Shenzhen Stock
Exchange
Stock abbreviation: ST Shenzhen Victor Onward A, ST Shenzhen Victor Onward B
Stock code : 000018, 200018
VII. Other Relevant Information of the Company5/130
1. The date and place when and where the Company made its first registration:
The Company was first registered as Shenzhen Victor Onward Printing and Dyeing Co.,
Ltd. in Shenzhen in 1984.
The Company changed its registration and was registered as Shenzhen Victor Onward
Textile Industrial Co., Ltd. in Shenzhen in 1991.
2. Registration No. of Legal Entity Business License: 440301501131182
3. Tax Registration No.: 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 2008
Unit: RMB
Items Amount
Operating profit -26,089,064
Total profit -26,168,635
Net profit attributable to the shareholders of the listed
company -25,957,333
Net profit after deducting of non-recurring gain/loss
attributable to the shareholders of listed company -26,977,875
Cash flow generated by business operation, net 13,621,421
Difference adjustment statement of accounting staement :
Net profit Net assets
This period Same period of last
year
Balance of
period-begin Balance of period-end
Pursuant to overseas
accounting standards -25,746,704.00 -124,242,022.00 166,567,448.00 127,788,287.00
Pursuant to Chinese
accounting standards -26,057,341.00 -124,579,539.00 170,474,941.00 130,957,788.00
Subitem and total adjusted pursuant to international accounting standards:
I. Statement balance of
the Group compiled by
Chinese EAS
-26,057,341.00 -124,579,539.00 170,474,941.00 130,957,788.00
1. Switch back the part
of Hong Kong house
property assessment in
accordance with IAS
310,637.00 337,517.00 -3,907,493.00 -3,373,398.00
Accordance with IAS -25,746,704.00 -124,242,022.00 166,567,448.00 127,584,390.00
Shinewing Certified Public Accountants has audited the 2008 Accounting Statement compiled
by the Group in accordance with International Accounting Standard.
Items of deducting non-recurring gains and losses and the involved amounts are as following:6/130
Items of non-recurring gains and losses Amount Notes（if applicable）
Gains and losses of non-recurring -10,878.00
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
151,431.00
Single impairment test for impairment of receivables
transferred back to preparation 997,924.00
Other non-operating income and expenditure beside for
the above items -68,693.00
Amount of influence of minority interests -49,242.00
Total 1,020,542.00 -
2. Highlights of accounting data and financial indicators in the latest three years
Main accounting data Unit：RMB
Year 2008 Year 2007
Changed
over last
year（％）
Year 2006
Before
Adjustment After adjustment
After
adjustmen
t
Before
Adjustment
After
adjustment
Operating profit 46,881,258.00 103,568,595.00 103,568,595.00 -54.73% 243,278,584.0
0 243,278,584.00
Total profit -26,168,635.00 -124,409,530.00 -124,409,530.00 -78.97% 22,892,087.00 21,833,888.00
Net profit
attributable to
the shareholders
of the listed
company
-25,957,333.00 -116,356,882.00 -116,356,882.00 -77.69% 30,057,907.00 28,992,654.00
Net profit after
deducting of
non-recurring
gain/loss
attributable to
the shareholders
of listed
company
-26,977,875.00 -110,655,141.00 -110,655,141.00 -75.62% -48,764,043.0
0 -48,771,099.00
Cash flow
generated by
business
operation, net
13,621,421.00 8,127,432.00 8,127,432.00 67.60% 273,485.00 273,485.00
End of 2008 End of 2007
Changed
over last
year（％）
End of 2006
Before
Adjustment After adjustment
After
adjustmen
t
Before
Adjustment
After
adjustment
Gross assets 192,923,851.00 229,451,566.00 229,451,566.00 -15.92% 445,576,711.0
0 447,899,399.00
Shareholders’
equity 130,073,334.00 169,602,112.00 169,602,112.00 -23.31% 292,773,431.0
0 293,549,081.00
Capital stock 169,142,356.00 169,142,356.00 169,142,356.00 0.00% 169,142,356.0 169,142,356.007/130
0
Main Financial Indicators Unit：RMB
Year 2008 Year 2007 Changed over
last year（％） Year 2006
Before
Adjustment
After
adjustment
After
adjustment
Before
Adjustment
After
adjustment
Basic gains per
share(RMB/Share) -0.15 -0.69 -0.69 -7,826.09% 0.178 0.17
Diluted gains per
share(RMB/Share) -0.15 -0.69 -0.69 -7,826.09% 0.178 0.17
Basic earning per share
after deducting of
non-recurring
gains/losses(RMB/Sha
re)
-0.16 -0.64 -0.64 -7,538.46% -0.29 -0.25
Net income on asset,
fully diluted(%) -19.96% -68.61% -68.61% 48.65% 10.27% 9.88%
Net income on asset,
Weighted(%) -16.34% -49.00% -49.00% 32.66% 10.74% 10.00%
Net income on asset,
fully diluted and
deducted non-recurring
gain/loss(%)
-20.74% -65.24% -65.24% 44.50% -16.66% -16.61%
Net income on asset,
weighted and deducted
non-recurring
gain/loss(%)
-16.99% -46.00% -46.00% 29.01% -17.43% -15.00%
Net cash flow per
share generated by
business operation
(RMB/Share)
0.081 0.048 0.048 68.75% 0.002 0.002
End of 2008 End of 2007
Changed over
last year（％） End of 2006
Before
Adjustment
After
adjustment
After
adjustment
Before
Adjustment
After
adjustment
Net asset per share
attributable to
shareholders of the
listed
company(RMB/Share)
0.77 1.00 1.00 -23.00% 1.731 1.736
3．Attached Schedule of Profit Statement
Return on equity
% Earnings per share
Profit in the report period
Fully
diluted
Weighted
average Fully diluted Weighted
average
Net profit attributable to the
shareholders of the parent
Company
-0.19 -0.16 -0.15 -0.15
Net profit after deducting
non-recuring gains and losses -0.20 -0.17 -0.16 -0.168/130
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
Items Share
Capital Attributable
profit Other
Minor
shareholders’
equity
Total of
owners’
equity
Balance at
the
beginning of
current year
169,142,356 43,881,067 26,309,287 -89,853,184 20,122,586 872,829 170,474,941
Changed in
the current
year
-4,686,436 -25,957,333 -8,885,009 11,625 -39,517,153
Balance at
the end of
this term
169,142,356 39,194,631 26,309,287 -115,810,517 11,237,577 884,454 130,957,788
Section III. Particulars about Changes in Share Capital and Shareholders
I. The changes in share capital
(1) The changes in share capital
Unit: shares
Before this change Increase or decrease this time
(+/-)
After this change
Quantity Proportion
% Other Subtotal Quantity Proportio
n%
I. Share with
conditional
subscription
56,963,401
33.68 -8,457,118 －8,457,118 48,506,283
28.68
1.State-owned shares 0 0 0 0 0 0
2.Staee-owned legal
person shares 13,822,369 8.17 -8,457,118 -8,457,118 5,365,251 3.17
3.Other domestic
shares 43,141,032 25.51 0 0 43,141,032 25.51
Of which： 0 0
Domestic legal person
shares 43,141,032 25.51 0 0 43,141,032 25.51
Domestic natural
person shares 0 0 0 0 0 0
4.Share held by foreign
investors 0 0 0 0 0 0
Of which： 0 0 0
Foreign legal person
shares 0 0 0 0 0 0
Foreign natural
person shares 0 0 0 0 0 0
II. Shares with
unconditional
subscription
112,178,955
66.32 8,457,118 8,457,118 120,636,073
71.329/130
1.Common shares in
RMB 42,757,052 25.28 8,457,118 8,457,118 51,214,170 30.28
2.Foreign shares in
domestic market 69,421,903 41.04 0 0 69,421,903 41.04
3.Foregin shares in
overseas market 0 0 0 0 0 0
4.Other 0 0 0 0 0 0
III. Total of capital
shares 169,142,356 100.00 0 0 169,142,356 100
Note: The increase or decrease of the quantity of shares in the above table is caused by
the share holding structure reform carried out by the Company.
(2).Change in shares subject to sale restriction
(Unit :shares）
Name of the
shareholder
Conditional
shares at
beginning
of year
Released
this year
Increased
this year
Conditional
shares at
end of year
Reason of
condition
Date of
releasing
Union Holdings
Co., Ltd.
43,141,032 0 0 43,141,032
Share
structure
reform
June 16,2009
Shenzhen Textile
(Group)Holdings
Ltd
13,822,369 8,457,118 0 5,365,251
Share
structure
reform
June 16,2008
June 16,2009
Union
Development
Group Co., Ltd.
0 0 0 0
Share
structure
reform
August 28,2007
Total 56,963,401 8,457,118 0 48,506,283
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 2008, the Company had 11,324 registered shareholders in total including 5,887
shareholders of A shares and 5,437 shareholders of B shares.
2． Top 10 shareholders and top 10 holders of unconditional shares10/130
Unit：shares
Total number of shareholders 11,324
Particulars about the shareholding of the top ten shareholders
Name of the
shareholder
Nature of
sharehold
er
Share
proport
ion %
Total
shares
Increase or
decrease in
the year
Conditional
shares
Pledged or
frozen
Union Holdings Co., Ltd. Other 25.51% 43,141,032 0 43,141,032 0
STYLE-SUCCESS
LIMITED
Foreign
shares
14.46% 24,466,029 0 0 0
Shenzhen Textile
(Group)Holdings Ltd
State-owne
d shares 9.29% 15,717,860 -654,509 5,365,251 0
Union Development
Group Co., Ltd.
State-owne
d shares 3.72% 6,299,185 -84,551 0 0
Rich Crown Investment
Co., Ltd.
Foreign
shares
3.62% 6,114,556 0 0 0
Shing Ying Chieh Foreign
shares
3.04% 5,137,061 -130,500 0 0
Yang Xiaohua Other 1.39% 2,343,637 538,912 0 0
Chen Weiyu Other 0.91% 1,538,449 0 0 0
Taifook Securities
Company
Limited-Account Client
Foreign
shares
0.79% 1,337,583 -18,034 0
Yu Aijun Other 0.44% 746,471 0 0 0
Top 10 holders of unconditional shares
Name of the shareholder Unconditional shares Type of shares
STYLE-SUCCESS LIMITED 24,466,029 Foreign shares placed in domestic
exchange
Shenzhen Textile (Group)Holdings
Ltd 10,352,609 RMB Common shares
Union Development Group Co.,
Ltd. 6,299,185 RMB Common shares
Rich Crown Investment Co., Ltd. 6,114,556 Foreign shares placed in domestic
exchange
Shing Ying Chieh 5,137,061 Foreign shares placed in domestic
exchange
Yang Xiaohua 2,343,637 RMB Common shares
Chen Weiyu 1,538,449 RMB Common shares
Taifook Securities Company
Limited-Account Client 1,337,583 Foreign shares placed in domestic
exchange
Yu Aijun 746,471 RMB Common shares
Zhu Qidi 700,000 RMB Common shares
Notes to the related
relationship between the
shareholders or their
concerted action
The controlling shareholder of the above-mentioned largest
shareholder Shenzhen Union Holdings Ltd.and fifth shareholder
Rich Crown Investment Co., Ltd.. Is Union Development Group Ltd.
3. Introduction to the largest shareholder of the Company
Name of the largest shareholder of the Company: Shenzhen Union Holdings Co., Ltd.
Legal representative: Dong Binggen
Date of establishment: September 11, 1989
Business scope: Production of and dealing in various fabrics, garments chemical fibers
and textile equipment, domestic commerce, material supply and marketing (excluding
monopolized commodities), management of self-owned properties, processing with
imported materials and designs, internal introduction and foreign cooperation,
assembling with imported spare parts and cooperation in compensation trade.
Registered capital：RMB 1123.8877 million11/130
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. 23, 1983
Registered capital: RMB 90.61 million
Business scope: Production and sales of chemical, textile and garment products (the
license of product site is subject to separate application), import and export business,
contracting of project construction, import and export of necessary engineering
equipment and materials, export of labor, external investment, technical consulting
services, real estate development and sales within the scope of land use right legally
obtained, property management and lease services and sales of automobiles (including
cars).
The property right and controlling relationship between Union Development Group Ltd. and the
Company is as follows:
20.89%
31.32% 99.99%
4.13%
25.51% 3.62%
Statement of Union Group on its shareholders, shareholder structure and actual
controller:
Union Group has been a standardized limited liability company since its
establishment. Despite decentralized equity and large number of shareholders, the
department in charge of industry and state asset management department has been
incontrovertible direct administrator because they were all state-owned shareholders
Union Development Group Co.,
Union Holdings Co., Ltd.
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Rich Crown Investment Co.,
Ltd
3.72%
Hangzhou Jinjiang Group
C Ltd12/130
and engaged in the same industry before 2004. Private capital has entered since 2004
and its proportion has been unceasingly enlarged. The largest shareholder turned from
national administrative department into a state-owned enterprise, which was then
replaced by a private enterprise. The actual controller of Union Group gradually
changed. The concrete process of change is as follows:
(1) After the establishment of Union Group and before State-owned Assets
Commission under the State Council transferred 12.09% equity held by it to OCT
Group, the relationship of subordination of Union Group was definite. State
administrative agencies (Ministry of Textile Industry, China Textile Federation,
industrial commission of national enterprise and State-owned Assets Commission
under the State Council) exercised management rights. Relevant national departments
were responsible for the establishment of board of directors, appointment of
management, audit and supervision.
(2) From April 2005, OCT Group became the largest shareholder of Union
Group. The management methods adopted when State-owned Assets Commission
under the State Council conducted supervision were still adopted in some aspects. For
examples, Union Group regularly submitted financial data to state assets management
department and accepted the economy audit by the supervisory committee under the
State Council. The financial statements of OCT Group consolidated those of Union
Group. However, changes started in some aspects. The establishment of board of
directors and the appointment of management were carried out completely according
to the Articles of Association of Union Group. The shareholders' general meeting and
the board of directors independently exercised the powers assigned by laws and
regulations. The reelection of board of directors and the appointment of management
were no longer reported to relevant department for examination and approval.
(3) In 2005, Hangzhou Jinjiang Group held 20.89% equity of Union Group
through acquisition and became the largest shareholder of Union Group by replacing
OCT Group. Hangzhou Jinjiang Group and OCT Group respectively appointed one of
8 members of the fifth board of directors reelected in that year.
(4) In 2007, Union Group did not submit various financial data to OCT Group
and state-owned regulatory authority. The statements of OCT Group did not
consolidate those of Union Group. State assets supervision organ did not conduct13/130
regular economy audit of Union Group either.
(5) Though private enterprise Hangzhou Jinjiang Group is the largest shareholder,
only one of 8 members of the board of directors comes from it and it has no
substantial influence on important decisions of Union Group. Meanwhile, Hangzhou
Jinjiang Group neither participated in the daily management and operation of Union
Group, nor required submission of daily financial statements, nor consolidated
financial statements nor sent personnel to conduct economy audit
(6) Since Dong Binggen, board chairman of Union Group, held office in 1997, he
has led cadres and employees to make arduous efforts and realized growth of assets
and profit of Union Group by big margin in successive years, who has been fully
acclaimed by shareholders and enjoyed high prestige inside and outside Union Group.
From the fifth board of directors, Dong Binggen was jointly recommended by all
shareholders to enter the board of directors and was elected as board chairman. He
does not represent any shareholder. Instead, he is responsible for all shareholders.
Based on the above facts, Union Group holds the opinion that Union Group, as a
limited liability company with a history of 25 years, has formed a standardized mode
of operation according to law and business management during change of equity and
its corporate governance structure has been increasingly stable and mature. The
shareholders' meeting is the highest power organ of the Company. The board of
directors is responsible to the shareholders' meeting and exercises the right to make
decisions on important matters of Union Group according to the articles of association.
The management is responsible for daily operation management of Union Group. At
present, Union Group does not have administrative department or unit in charge. The
largest shareholder only holds 20.89% equity of Union Group. No shareholder has
absolute control over or absolute influence on the shareholders' meeting and board of
directors of Union Group and is daily operation. The mutual restriction between
shareholders of Union Group is quite apparent. Therefore, Union Group only has the
largest shareholder and does not have actual controller at present.
Enclosed: The equity structure of Union Group is as follows:
No. Name of shareholder
Amount of
capital
contribution
Proportion
of capital
contribution
Remarks14/130
(RMB’0000) (%)
1 Hangzhou Jinjiang Group Co., Ltd. 1892.812 20.8896 Private
2 OCT Group 1094.95 12.0842 State-owned
3
Zhejiang Kangrun Investment
Co.,Ltd.
926.0019 10.2196
Private
4
Shandong Garment, Footwear and
Headwear Industrial Group
569.9196 6.2898
State-owned
5
Hebei Textile Industry Supply and
Sales Company
531.48 5.8655
State-owned
6
Tianjing Textile Group( Holdings)
Company
530.00 5.8492
State-owned
7
Heilongjiang Textile Industry
Association
500.00 5.5181
State-owned
8 Sichuan Shulian Co., Ltd. 329.024 3.6312 Private
9
Hubei Textile Industry Investment
Promotion Center
300.00 3.3108
State-owned
10
Shanghai Kangrun Investment
Management Company
719.2567 7.918
Private
11 Jiangsu Textile (Group) Company 288.6723 3.1859 State-owned
12
Liaoning Textile Industry
Association
286.44 3.1612
State-owned
13 Jiangxi Textile (Group) Company 265.00 2.9246 State-owned
14 Shenzhen Textile (Group)Holdings Ltd 260.00 2.8604 State-owned
15
Xinjiang Textile Industry
Association
236.46 2.6096
State-owned
16
Beijing Textile Holdings Co.,
Ltd.
215.84 2.3820
State-owned
17
China Textile Machineay
(Group)Co., Ltd.
115.1435 1.2707
State-owned
Total 9061.00 100.00
5. Introduction to other legal person shareholders holding over 10% of total shares
(1) Style-Success Ltd.
Legal Representative: Miss Amy Wang
Date of establishment:November 199915/130
Business scope: Investment
6. The quantity of shares held by the top 10 shareholders subject to sale restriction and conditions
of sale restriction
Unit：Shares
No Name of conditions
holder
Shares with
conditioned
subscription
Date when
trading allowed
Newly added
tradable
shares
Conditions
1 Union Holdings Co.,
Ltd. 43,141,032 June 16,2009 43,141,032
36 months after the
first trading day upon
the implementation of
the plan for share
holding structure
reform
June 27,2007 8,457,118
June 16,2008 8,457,118
2 Shenzhen Textile
(Group)Holdings Ltd 22,279,487
June 16,2009 5,365,251
12months after the
first trading day upon
the implementation of
the plan for share
holding structure
reform
3 Union Development
Group Co., Ltd. 6,987,814 August 28,2007 6,987,814
12 months after the
first trading day upon
the implementation of
the plan for share
holding structure
reform
Section IV Particulars about Directors, Supervisors, Senior Executives
and Employees
I Basic information about directors, supervisors and senior executives
（1）Basic information
1.Directors, Supervisors and senior executives
Name
Se
x
Age Title Term of office
Shares held
at the
year-beginn
ing
Shares held
at the
year-end
Increase/dec
rease
amount
The total
amount of
remuneration
received from
the Company in
the report
period
Incentive
stock option
vested during
the reporting
period
Hu
Yongfeng
Ma
le
46
Board
chairman/Gen
eral Manager
2008.4-2011.4 0 0 No change 38
No
Ding Yue
Ma
le
50
Vice Board
chairman
2008.4-2011.4 0 0 No change 0
No
Zhang Mei
Fe
ma
le
33 Director 2008.4-2011.4 0 0 No change 0
No
Shu Yibo
Fe
ma
le
36
Vice Board
chairman
2008.4-2011.4 0 0 No change 0
No16/130
Feng
Junbin
Ma
le
46 Director 2008.4-2011.4 0 0 No change 0
No
Yu Ligang
Ma
le
49 Independent
director
2008.4-2011.4 0 0 No change 0
No
Shen
Songqin
Ma
le
51 Independent
director
2008.4-2011.4 0 0 No change 0
No
Wang
Tianguang
Ma
le
35 Independent
director
2008.4-2011.4 0 0 No change 0
No
Dong
Binggen
Ma
le
59
Chairman of
the
supervisory
committee
2008.4-2011.4 0 0 No change 0
No
Huang
Xiaoping
Fe
ma
le
51 Supervisor 2008.4-2011.4 0 0 No change 0
No
Pan
Weichao
Ma
le
57 Supervisor 2008.4-2011.4 0 0 No change 8.4
No
Zhang
Jinliang
Ma
le
46
Deputy
general
Manager
2008.4-2011.4 0 0 No change 15
No
Chen Xing
Ma
le
35
Director/
Board
secretary
2008.4-2011.4 0 0 No change 13.3
No
Ren
Changzhen
g
Ma
le
33
Manager of
Finance Dept
2008.4-2011.4 0 0 No change 7.3
No
Li Zhihua
Ma
le
51
Vice Board
chairman
2003.5-2008.4 0 0 No change 0
No
Song Tao
Ma
le
56
Vice Board
chairman
2003.5-2008.4 0 0 No change 0
No
Guan
Tongke
Ma
le
62 Director 2003.5-2008.4 0 0 No change 0
No
Sun
Zhiping
Ma
le
44
Director/Gen
eral Manager
2003.5-2008.4 0 0 No change 6.3
No
Mai
Jianguang
Ma
le
47 Independent
director
2003.5-2008.4 0 0 No change
HKD 30,000 No
Li Weiping
Ma
le
55 Independent
director
2003.5-2008.4 0 0 No change
HKD30,000 No
Shu Man
Fe
ma
le
39 Independent
director
2003.9-2008.4 0 0 No change
HKD 30,000 No
Gui Liping
Fe
ma
le
50 Supervisor 2003.5-2008.4 0 0 No change 0
No
Cai
Wanqing
Ma
le
58 Supervisor 2003.5-2008.4 0 0 No change 2.9
No
2. Particulars about directors and supervisors holding positions at corporate shareholders
Name Name of corporate
shareholders Position Term of office
Whether
receiving
remunerati
on or
subsidy
Dong
Binggen
Shenzhen Union Holdings
Ltd. Board chairman 2007.6-2010.6 No17/130
Dong
Binggen
Union Development Group
Co., Ltd.
Secretary of Party
committee, chairman of
board of directors and
GM
2006.9-2009.9 Yes
Ding Yue Union Development Group
Co., Ltd. Deputy general manager 2006.9-2009.9 Yes
Ding Yue Shenzhen Union Holdings
Ltd.
Chairman of the Supervisory
Committee 2007.6-2010.6 No
Hu
Yongfeng
Union Development Group
Co., Ltd. Deputy general manager 2006.9-2009.9 No
Hu
Yongfeng
Shenzhen Union Holdings
Ltd. Vice Board chairman 2007.6-2010.6 No
Huang
Xiaoping
Union Development Group
Co., Ltd.
Secretary of Party
committee, secretary of
discipline committee
2006.9-2009.9 Yes
Feng
Junbin
Shenzhen Textile(Holding)
Co., Ltd. Deputy general manage 2007.1-2010.1 Yes
Guan
Tongke
Shenzhen Textile(Holding)
Co., Ltd. Consultant 2007.1 till now No
Gui
Liping
Union Development Group
Co., Ltd.
Deputy chief accountant
and manager of Finance
Dept.
2006.9-2009.3 Yes
(II).Particulars about main work experience of present directors, supervisor and senior executives
Chairman of the Board :
Hu Yongfeng, male, with bachelor degree, was born in July 1962, Senior Engineer，
graduated from Southeast Textile Technology Institute in 1983. He is ever took the post
of section chief of state textile headquarters general office, He now serves as deputy
general manager of Union Development Group Co., Ltd. and chairman of the Board of
Union Holdings Co., Ltd., he served as chairman of the Board of the Company from
Oct., 2000 till now. He served as General manager of the Company since April 2008.
Director：
Ding Yue, male, was born in March 1958, with bachelor degree, Senior Economist,
graduated from Lanzhou University in 1983. He took the turns of deputy section chief
of personnel labor department of Textile Technology Department, section chief of
personnel labor department of textile headquarters, deputy director of personnel labor
department of textile headquarters and concurrently director of talents exchange center
of Textile Headquarters and chairman of the Board of Union Holdings Co., Ltd., He
now serves as deputy general manager of Union Development Group Co., Ltd. and
convener of the supervisory committee of Union Holdings Co., Ltd., and held the
position of director of the Company from June 2002 till now. He served as Vice
Chainman board of the Company since April 18, 2008.
Shu Yibo, Female，was born in February 1970, 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.He served as director of the
Company since April 18, 2008, He served as Vice Chairman of board of the Company July 29, 2008.18/130
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. He now serves as Deputy General manager of Finance Dept of Union
Development Group Co., Ltd, He served as Director of the Company since April 18,
2008.
Feng Junbin, male, was born in July 1962, is a junior college graduate. He has served
successively as special enterprise controller of Dapu Financial Bureau of Guangdong Province,
deputy division chief of Fengshun Financial Bureau and director of Audit Dept, Manager of
Management Dept ,Assistant General Manager, Supervisor of Shenzhen Textile (Holdings) Co., Ltd.
He now serves as Deputy General Manager of Shenzhen Textile (Holdings) Co., Ltd, He served as
director of the Company April 18, 2008.
Chen Xing, male, was born in March 1973, with doctor degree, graduated from Dongbei
University in 2000; he ever took the post of business manager of operation office of Union
Development Group Co., Ltd. and held the position of secretary of the Board of the Company from
March 2002 till now. He served as director of the company since April 18, 2008.
Independent directors:
Jin Ligang, male, was born in August 1959, graduated from Beijing Foreign Trade College in
1980. From 1981 to 1983, he majored in international economy at Rome LUISS Private University.
He once worked at North America and Oceania Department of Third Bureau of Ministry of Foreign
Trade and Economic Cooperation, who was in charge of U.S.-related affairs. He has served as
assistant of board chairman and president and office director of West Europe China Trade Center
(Hamburg, West Germany), deputy chief and chief of America and Oceania Department of Ministry
of Foreign Trade and Economic Cooperation, business counselor of Economic and Commercial
Department of Embassy in U.S. and business counselor of Economic and Business Office of
Consulate General in New York in succession. He now serves as board chairman of American Stone
Bridge International Company and director of Beijing Decision Making & Consultation Center. He
served as Independent directors of the company since April 2008.
Shen Songqin, male, was born in January 1957, has doctor's degree. In 1980, he graduated
from Hangzhou University and worked there after graduation. He studied for Master's degree at
Hangzhou University from 1985 and obtained the degree of master of Arts in 1988. He studied for
doctor's degree from 1995 and obtained the degree of doctor of literature in 1998. His dissertation
was appraised "Excellent Dissertation for Doctor's Degree in China in 2000". He now is a professor,
doctor tutor and deputy dean of Chinese Language Department of Zhejiang University. In 2006, he
was appraised as Qianjiang Scholor of Zhejiang Province (specially engaged professor). In 2007, he
was appraised as Middle-aged/Young Expert with Outstanding Contribution in Zhejiang Province".
He served as independent director of the Company since April 18, 2008.
Wang Tianguang, male, Was born in May 1973, is a certified public accountant.Lawer. He
graduated from Economic School of Beijing University. He once served as deputy chief of Listed19/130
Company Supervision Division of Shenzhen Securities Regulatory Bureau. general manager of
Shenzhen Investment Banking Dept. He now serves as Deputy General Manger of Investment Bank
Headquarters of Southwest securities Co., Ltd of Yinhe Securities.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 1967, an Economist, is a junior college
graduate,once served as policewoman of Public Security Bureau of Dan County, Hainan, chief staff
and deputy director of office, deputy chief and chief of Personnel & Labor Division and office
director of China Garment Industry Corporation, vice chairman of China Garment Association. She
now serves as deputy secretary of Party committee and secretary of discipline committee of Union
Development Group Co., Ltd. Co., Ltd. He served as Supervisor of the company since April 18,
2008.
Pan Weichao, male,Was born in August 1951, is a junior college graduate., has worked at the
Company since April 1984. He has served successively as vice chairman of labor union, supervisor
of General Affairs Dept. and chairman of labor union. Since April 18, 2008, he has served as
employee-representing supervisor of the Company.
Deputy general manager:
Zhang Jinliang, male,was born in May 1962, Senior Accountant, a senior accountant with
bachelor degree, was born in May 1962. He ever took the post of senior section chief of
Shenyang Dispatch and Shenzhen Dispatch of Audit Administration, manager of
operation department of Shenzhen Property Union Holdings Co., Ltd., deputy director
and director of auditing office of Union Development Group Co., Ltd., deputy general
manager of Shenzhen Union Holdings Co., Ltd. and general manager of Yuyao Union
Textile Co., Ltd., and he held the position of deputy general manager of the Company
from Dec 2004 till now.
Secretary of the Board of Directors:
Chen Xing (Refer to director column for details)
Manager of Finance Dept:
Ren Changzheng, male, was born in August 1975, He graduated from Guizhou Finance
University, once worked at Financial Division of Guizhou Yunman Aircraft Factory and Planning20/130
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 2008 is RMB 0.9915 million. Including,The allowance for each
independent director is HKD 30,000 (including tax) per year, the current independent
directors did not receive allowance.
（IV）Particulars about leaving post, engaging and dismissing
In the report period, the term of office of the fourth board of directors and supervisory
committee expired. The first provisional shareholders' general meeting of the Company in 2008
elected the members of new board of directors and supervisory committee. The fifth board of
directors is composed of directors Hu Yongfeng, Ding Yue ,Zhangmei, Shu Yibo,Feng Junbin and
Chen Xing and independent directors Jin Ligang ,Shen Songqin and Wang Tianguang. The fifth
supervisory committee is composed of Dong Bingen, Huang Xiaoping and Pan Weichao who is an
employee representative. In the report year, the current independent directors did not receive
allowance.
The directors of the fourth board of directors who left their post upon expiration of the term of
office include Li Zhihua, Song Tao, Guan Tongke and Sun Zhiping and independent directors Mai
Jianguang, Li Weiping and Shu Man. The supervisors of the fourth supervisory committee who left
their post upon expiration of the term of office include Gui Liping and Cai Wanqing.
On April 18, 2008, The 1st meeting of the fifth board of directors elected Mr. Hu Yongfeng as
chairman of the fifth board of directors and Mr. Ding Yue as vice board chairman. According to the
nomination by the chairman of the board of directors of the Company, Mr. Hu Yongfeng was
appointed as general manager of the Company and the appointment of Mr. Chen Xing as board
secretary was renewed. According to nomination by the general manager of the Company, the
meeting appointed Mr. Zhang Jinliang as deputy general manager of the Company and Mr. Ren
Changzheng as financial manager of the Company.
On July 29, 2008, the 3rd meeting of the fifth board of directors elected Ms Shu Yibo as vice
board chairman of the Company.
(V). Staffs:
By the end of the report period, the Company had 35 staff members in total, including 7 managerial
employees , 3 financial employees, 25 Logistics employees. The Company has provided social
insurance to its staff according to relevant regulations of the government.
Section V Administrative Structure
1.Administrative Status21/130
The Company has constantly improved its corporate administration structure, established
modern enterprise system and standardized its operation strictly according to the requirements of the
Company Law, Securities Law ,Listed Companies in China and relevant laws and regulations of
CSRC. In the report period, in accordance with relevant stipulations of listed firm
governance campaign and the on-site inspection requirement of Shenzhen Securities
Regulatory Bureau of China Securities Regulatory Commission to us, we have revised
the Articles of Association, laid down the Reception and Promotion Rules, the
Information Disclosure Management Rules, the Work Rules for General Manager,
Shares Held by Directors, Trustees and Executives and Management Rules for the
Change of Shares, further clarified the authorities of board of directors and board of
trustees, and the decision-making procedures, to ensure they are compliant to the
Principles for Listed Firm Governance.
(1). Shareholders and shareholders' general meeting: The Company convened and held
shareholders' general meeting strictly according to the requirements of Opinions on
Standardization of Shareholders' General Meeting of Listed Companies, formulated
Rules of Procedure of Shareholders' General Meeting, ensured all shareholders,
especially medium and small shareholders, enjoy equal position and can fully exercise
their own rights.
(2). Relationship between the controlling shareholder and the Company: The acts of the
controlling shareholder of the Company were standardized. It did not exceed the
authority of the shareholders' general meeting to directly or indirectly intervene with the
decision-making and operating activities of the Company. The Company is independent
from its controlling shareholder in respect of personnel, assets, finance, organ and
business. The board of directors, the supervisory committee and internal organ of the
Company are able to operate independently.
(3). Directors and the board of directors: The Company elected directors strictly
according to the director selection and appointment procedure specified in the Articles
of Association of the Company and will further perfect director selection and
appointment procedure and actively promote system 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 people.
(4). Supervisors and the supervisory committee: The number and composition of the
Supervisory Committee of the Company complied with the requirements of laws and22/130
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, reception of
shareholder and consultation. In the report period, the Company was able to truly,
accurately, completely and timely disclose relevant information according to the
provisions of laws, regulations and the Articles of Association of the Company. The
Company will continue to operate in a standardized way strictly according to the
requirements of relevant laws and regulations including the Company Law, further
perfect company administration structure and establish and improve various regulations
in light of the gap with the requirements of Standards of Administration of Listed
Companies, ensure the maximization of shareholders' interests and safeguard the lawful
rights and interests of all shareholders.
II. Information on governance activities of the company
1. Information on governance activities of the company
In accordance with the spirit in Notice on Strengthening Governance Activities of
Listed Company issued by the China Securities Regulatory Commission, the Notice on
Strengthening Governance Activities of Listed Company issued by Shenzhen Stock
Exchange and the Notice on Strengthening Governance Activities of Listed Company in
Shenzhen issued by Shenzhen Stock Supervision Bureau, and according to self
conditions, the company conducted governance and self examination. In accordance
with the spirit in China Securities Regulatory Commission (2008) File 27, the company
made one-by-one examination on the rectification by referring to the Report of Results
of Rectification on Special Governance of the Company, and made overall examination
and summary on the first step of special governance. The Information on Progress of
Rectification on July 31, 2008. So far, the company had completed the special activities
of strengthening governance.
2.According to the Notice on strengthening Management on Listed Company Offering
Non-public Information to Big Shareholders and Actual Controllers issued by Shenzhen Securities
Regulatory Commission on March 19, 2007 (SSRC Co. Zi [2007] No.11), the Supplementary Notice
on Strengthening Supervision on Governance of Offering Non-public Information to Big
Shareholders and Actual Controllers (SSRC Co. Zi [2007] No.39, hereinafter referred to as "No. 39),
the company carefully carried out self-examination, the relevant information as follows:23/130
（1） The company reported monthly financial statements which were examined by the company
chairman and signed by general manager and marked with "Internal information, confidential". The
periodic reports as follows: Quarterly statement, semi-annual statement, annual statement must be
reported after being completed in official financial report of the company, then sent to the Board of
Directors for approval.
In addition to the above situations, the company and big shareholders and actual control do not
have the situations listed as "submitting production investment plans and financial budget, accepting
appointment from big shareholders and actual controllers on directors and intermediate managers of
the company, auditing the listed company and its subsidiaries or specific projects, asset purchase of
listed company and approval of external investment and the implementation of property right
reporting rules and other governance situations.
（2）Strengthen the management of internal information, preventing internal transactions
In accordance with the requirements in File No. 39, the company had reported the Promises in
Strengthening Management of Non-public Information to Shenzhen Security Regulatory Bureau
about big shareholders and actual controller, and had informed all directors, supervisors, senior
managers about requirements from Shenzhen Security Regulatory Bureau, urged all the directors,
supervisor and senior managers to abide by the Securities Law and Measures to Disclosure of
Information of Listed Company. They must not disclose relevant information in the company or
offer relevant information to related shareholders, actual controller and other specific objects.
The governance activities on listed companies launched by China Securities Regulatory
Commission in 2007 had reached their desired purposes, and provided rare opportunity
for the company to improve governance level. The company will take this opportunity
to improve the standard operation ability and improve governance structures.
III. Particulars about duty performance of independent directors
The Company has perfected independent director system in the Articles of Association of the
Company according to Guiding Opinions on the Establishment of Independent Director System
at Listed Companies issued by CSRC. The board of directors of the Company now has three
independent directors, taking up one third of the total number of directors. These Three
independent directors have consciously performed their duties according to the principles of
good faith and diligence since they came into office. They expressed independent opinions on
important matters of the Company including external guarantees, related transactions, corporate
governance.
Independent Directors’ attendance of the Boarding meeting
Name
Times of
meeting should
attend
Attended
personally
(times)
Attended
by proxy
(times)
Absent
form
meeting
(times)
Notes
Ji Ligang 4 4 0 0
He was elected as
independent director at
the time of reelection
of board of directors in24/130
April 2008.
Shen Songqin 4 4 0 0
He was elected as
independent director at
the time of reelection
of board of directors in
April 2008.
Wang
Tianguang
4 4 0 0
He was elected as
independent director at
the time of reelection
of board of directors in
April 2008.
Mai Jianguang 1 1 0 0
His term of office
expired in April 2008.
Shu Man 1 1 0 0
His term of office
expired in April 2008.
Li Weiping 1 1 0 0
His term of office
expired in April 2008.
IV. The separation of the Company from its controlling shareholder in five respects
The Company is independent from its controlling shareholder in respect of personnel, assets, finance,
organization and business. The particulars are as follows:
1. Business: The Company has complete business and the ability of independent operation.
It is completely independent from its controlling shareholder in respect of business.
2. Personnel: The Company is independent in respect of labor, personnel and wage management.
the board chairman and general manager of the Company, received remuneration from the actual
controller, other senior executives received remuneration from the Company, who neither held
position at nor received remuneration from the controlling shareholder.
3. Assets: The Company has complete assets. Its property rights are definite and not related to its
controlling shareholder and other shareholders.
4. Organization: The Company established an organizational structure that is completely independent
of its controlling shareholder. The board of directors, the supervisory committee and internal organs
of the Company are able to operate independently.
5. Finance: The Company has independent finance. It set up independent finance department and
established independent financial accounting system. It has standardized and independent financial
and accounting system and financial control system applicable to branches and subsidiaries. The
Company independently pays taxes according to law. It opened accounts with banks independently.
The Company and its controlling shareholder do not use the same bank account.
V. Self-Appraisal of Internal Control:
(I). Overview of Internal Control
1. Update on Rules Building for Internal Control
To enhance internal control, in accordance with the provisions of the Corporate Law, the25/130
Securities Law, Stock Listing Rules for Shenzhen Stock Exchange, Guidance of Shenzhen Stock
Exchange on Internal Control of Listed Firm, other laws & regulations, we have laid down and
perfected the Articles of Association, Rules of Order for Annual Shareholder Meeting, Rules of
Order for Board of Directors, Rules of Order for Board of Trustees, Work Rules for Independent
Directors, the Information Disclosure Affairs Management Rules, other management rules and
internal control rules, which have produced apparent effects to the operation of our company.
2. Internal Audit Department for Supervision & Inspection, Work and Staffing of
Such Department
We do not have an internal audit department particularly for supervision and
inspection.
3. Our Organizational Structure for Internal Control
We exercise internal control by standardizing and effectively executing the articles
of association, and authorizing in major operation level layer by layer. The specific
measures include:
1) We have clearly stipulated the approval authorities and review procedures of the
annual shareholder meeting and the board of directors for financial guarantees, which
has effectively controlled the financial risks and credit risks of our company.
2) We have clarified the decision authorities for affiliated transactions, and demanded
stringent review and decision-making procedures to be established.
3) We have clearly stipulated the definition, procedure, authorized amount and level of
major investment, contract requirement, matters to be disclosed, etc.
4) Make analysis and judgment to major internal information, and go through relevant
procedures in case we are required to fulfill information disclosure obligation.
The parent company assigns directors and trustees to subsidiaries according to laws,
regulations and the articles of association, to influence the production & operation
activities of subsidiaries through directors and trustees, and promote the effective
execution of duties of all levels by means of professional inspection.
(II)．Key Control Activities
1. Management Update of Our Controlled Subsidiaries:26/130
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Victor Onward Printing & Dyeing (Hong Kong) Co.,
Ltd
Shenzhen Lianchang
Printing & Dyeing Co.,
Ltd
Shenzhen Nanhua
Printing & Dyeing Co.,
Ltd
Shenzhen East Asia Victor
onward Textile Printing &
Dyeing Co., Ltd
Victor Onward Digital
Printing Co., Ltd
Zhejiang Hualian
Hangzhou Bay Startup
Co., Ltd
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
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 our27/130
company and other shareholders. Review procedures, voting avoiding and other
requirements have been abided by according to relevant laws, administrative regulations,
departmental regulations, the stock listing rules, etc. Relevant responsible individuals
have fulfilled approval and report duties to affiliated transactions when they take place
to our company and controlled subsidiaries.
3. Internal Control of Financial Guarantees:
According to the Guidance of Shenzhen Stock Exchange on Internal Control of
Listed Firm, we have clearly stipulated the approval authorities, review procedures and
information disclosure requirements of the annual shareholder meeting and the board of
directors for financial guarantees, which have effectively controlled the financial risks
and credit risks of our company.
4. Internal Control of the Use of Raised Capitals:
We have made clear stipulations to the storage, approval, use, change, supervision
and other matters of the funds in strict accordance to the Stock Listing Rules
promulgated by Shenzhen Stock Exchange.
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.
6. Internal Control of Information Disclosure:
We have set up a set of effective stringent information management rule, enhanced
the management of information affairs, ensured the accuracy and confidentiality of
information, prevented information from being disclosed earlier than scheduled time,
promoted directors, trustees and executives to fulfill their duties loyally and diligently,
and guaranteed the truth, accuracy, promptness and fairness of disclosed information.
We have conducted reception, communications and other investor relation activities and
ensured the fairness of information disclosure according to the provisions of the
Guidance of Shenzhen Stock Exchange on the Fair Information Disclosure of Listed28/130
Firms, the Guidance of Shenzhen Stock Exchange on the Investor Relation Management
of Listed Firms, etc. Individuals liable to report can promptly report relevant
information to the board of directors and the secretary of board of directors. The
secretary of board of directors shall analyze and judge major internal information, and
promptly report to the board of directors of any matter whose information needs to be
disclosed, so that the board of directors to go through relevant procedures and disclose
to external entities.
(III) Problems of Our Internal Control and Corrective Actions
(1) Defects and Problems of Our Internal Control.
The Company’s printing & dyeing plant in Shenzhen ceased production,owadays,
our mission-critical production equipment and management team intend to move to
Nanjing, and we hold only 30% shares of Nanjing East Asia Textile Printing & Dyeing
Co., Ltd. We have an increasingly hollow core business.
(2) Specific Causes of Internal Control Problems, Current Situation, Corrective actions
and Measures.
The Company’s printing & dyeing plant in Shenzhen ceased production, Except that Shenzhen
East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. operated normally, daily operation
was maintained mainly by house property lease. as of December 31, 2008,The capital
construction project of Nanjing Factory was somewhat delayed and fell behind the original plan.
Corrective Actions and Measures: Due to the delay of the relocation of our printing
& 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, we have established perfect an internal control structure
and run our business in a disciplined manner according to the requirements of the29/130
Corporate Law, the Guidance on Internal Control of Listed Firms, the Stock Listing
Rules, and other laws and regulations. Our annual shareholder meeting, board of
directors, board of trustees and management have clearly stated duties and operate in a
disciplined manner. We follow the principles of truth, accuracy, completeness,
promptness and fairness in term of information disclosure. Meanwhile, in the days to
come, we will further improve and perfect corporate governance, improve rules building
and investor relation management, and expand transparency.
VI Committee of supervisers of Our Board of Trustees to the Self-Appraisal of Our
Internal Control
Opinion of committee of supervisers:
1. We have established and improved an internal control system covering the entire
production & operation process according to the relevant stipulations of China
Securities Regulatory Commission and Shenzhen Stock Exchange as well as the
specific situation of our company, to confirm every work has its rule to follow, and
form a disciplined management system. Our existing internal control rules provide
guarantee to the production & operation activities of our company.
2. We have established and improved a corporate governance structure and internal
organizational structure compliant to the requirement of modern management, and
formed a decision-making mechanism, execution mechanism and supervision
mechanism for the key activities of our internal control, and guaranteed the standardized
operation of various business activities.
3. In the report period, we have never violated the Guidance of Shenzhen Stock
Exchange on Internal Control of Listed Firms and our internal control rules. With all
mentioned above, the board of trustees deems that our 2008 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.
VIIComments of Our Independent Directors to the Self-Appraisal of Our Internal
Control
Independent director opinion:
Based on the Circular of Shenzhen Stock Exchange on Doing a Good Annual
Report Work for Listed Firms in 2007, as independent directors of the company, we
have carefully read through the 2007 Annual Internal Control Self-Appraisal Report30/130
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 2008 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 2008 Annual Internal Control Self-Appraisal Report is compliant to the
actual situation of internal control of our company.
VIII Performance Appraisal & Incentive Mechanism for Executives, Establishment and
Implementation of Relevant Rewarding Rules
We appraise the performance of executives according to relevant index and criterions,
the results of performance appraisal are recorded in the archives of executives, and are
linked to the compensations and hiring of executives.
Section VI. Particulars about Shareholders’ General Meeting
In the report period，the Company held 2nd shareholders’ general meeting. Relevant
particulars are as follows:
(1) 2007 annual shareholders' general meeting of the Company
1. Notice, convening and holding of shareholders' general meeting
The Company issued the notice of holding 2007 annual shareholders' general meeting
on April 30, 2008. 2007 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 28, 2008 as scheduled. The meeting was presided over by Mr. Hu
Yongfeng, the board chairman of the Company. 4 shareholders and shareholders' agents
attended this meeting, representing 95,738,662 shares which account for 56.6% of the
total shares of the Company. 2 shareholders holding A shares (agents) attended the
meeting, representing 65,158,077 shares which account for 65.34% of total voting
shares held by the Company's shareholders holding A shares. 2 shareholders holding B
shares (agents) attended the meeting, representing 30,580,585 shares which account for
44.04% of total voting shares held by shareholders holding B shares of the Company.31/130
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) 2007 annual work report of the board of directors of the Company.
(2) 2007 annual work report of the supervisory committee of the Company.
(3) 2007 annual report of the Company and its summary.
(4) The profit distribution preplan of the Company for 2007 and its profit
distribution policy for 2008
（5）The proposal concerning establishment of specialized committees of the board
of directors and their member composition
(6) The proposal concerning remuneration of independent directors;
(7) The proposal for renewing the engagement of Shine Wing Certified Public
Accountants as the Company's audit body for 2008;
(8) The proposal for amending part of articles of the Articles of Association of the
Company;
(9 (The proposal for revising part of provisions of Rules of Procedure of
Shareholders' General Meeting.
The announcement of the resolutions of this meeting was published on Securities
Times and Hong Kong Commercial Daily on May 29,2008.
(II) The first provisional shareholders' general meeting of the Company in 2008
1. The meeting examined and voted through the following proposals:
1. The Company issued the notice of holding the first provisional shareholders' general meeting
in 2008 on April 3, 2008. The meeting was convened by the board of directors of the Company. In
the Morning of April 18, 2008, The first provisional shareholders' general meeting of the
Company in 2008 was held in the meeting room on the 16/F of Union Building, Shennan Road
Central, Shenzhen in the morning of April 18, 2008 as scheduled. Mr. Hu Yongfeng, the chairman of
the board of directors of the Company, presided over this meeting. 5 shareholders and shareholders'
agents attended this meeting, representing 95,772,162 shares which account for 56.62% of the
total shares of the Company. 3 shareholders holding A shares (agents) attended the meeting,
representing 65,193,077 shares which account for 65.37% of total voting shares held by the
Company's shareholders holding A shares. 2 shareholders holding B shares (agents) attended the32/130
meeting, representing 30,580,585 shares which account for 44.05% of total voting shares held by
shareholders holding B shares of the Company. Chen Dong, lawyer of Guangdong Shengdian Law
Office attended and witnessed the meeting and issued legal opinion.
2. The resolutions adopted at the shareholders' general meeting and the disclosure of resolution
announcement
1. The meeting examined and voted through the following proposals:
(1) Rectification Plan of Shenzhen Victor Onward Textile Industrial Co., Ltd.;
(2) The proposal for reelecting the Fourth board of directors of the Company;
（3）The proposal for reelecting the Fourth Supervisory Committee of the Company.
The announcement of the resolutions of this meeting was published on Securities Times and
Hong Kong Commercial Daily on April 19, 2008.
VII Report of the Board of Directors
I. The discussion and analysis of operation status
The Company’s printing & dyeing plant in Shenzhen ceased production, Except that
Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is still
operating normally, other 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，as of December 31, 2008, infrasture project of
Nanjing factory is slightly delayed comparing to the original plan. the Company set up a
comtrolling enterprise “ Shenzhen East Asia Victor Onward Textile Industrial Co., Ltd.”
(hereinafter refered to as “East Asia Victor”) to connect the original printing & dyeing
business of Company.
(I) Review of the operating status of the Company in the report period
1. Overall operating status in the report period
Unit：RMB
Items Year 2008 Year 2007
Amount of
change and
percentage
Proportion of
change (%)
Operating Income 46,881,258 103,568,595 -56,687,337 -54.73%
Operating Profit -26,089,064 -112,501,891 86,412,827 -76.81%
Total Profit -26,168,635 -124,409,530 98,240,895 -78.97%
Net profit attributable
toshareholders of listed
Company
-25,957,333 -116,356,882 90,399,549 -77.69%33/130
Notes：
(1) Operating income decreased by RMB 56.69 million year on year mainly due to suspense of
printing and dyeing business by the Company and Nanhua Company, a subsidiary of the Company,
for rectification in the report year;
(2) Operating profit increased by RMB 86.41 million mainly due to decrease of relevant asset
impairment and expenses in the second year of production suspense and rectification. Assets
impairment loss, administrative expenses, investment income and financial expenses decreased by
RMB 45.91 million, RMB 25.10 million, RMB 18.75 million and RMB 7.31 million respectively;
(3) Total profit increased by RMB 98.24 million mainly for the reason mentioned in (2);
(4) The net profit for the Company increase by RMB 90.40 million year on year mainly due to the
said factors.
2. Scope of core business and its operation status
. The Company 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.
In this report period, the head office and controlled subsidiaries continued production suspense
and rectification and were mainly engaged in asset preservation, disposal of materials in stock and
lease of idle properties except that the main operation of Shenzhen East Asia Victor Onward Textile
Printing and Dyeing Co., Ltd., a subsidiary, was normally carried out.
(1).The income from main operation earned by the Company in the report period mainly includes
the income from printing and dyeing business. In the report period, the total income from main
operation was RMB 46.88 million, an decrease of 54.73% year on year. The Company realized net
profit of RMB -5.54 million.
(1) Income from and cost of core business in terms of industry are as follows:
Unit：Unit：RMB’0000
The Status of key business in terms of industry of business
On industry or
production
Income from
key business
Cost of key
business
Key business
profit ratio
（％）
Increase/decre
ase of key
business
turnover（％）
Increase/decre
ase of key
business cost
（％）
Change of key
business profit
over the same
period of last
year（％）
Fabrics bleaching,
Printing & dyeing 3,765.00 3,661.00 2.76% -62.19% -68.92% 18.30%
Lease 923.00 473.00 48.75% 2,483.83% 988.49% -413.99%
Other 0.00 0.00 0.00% -100.00% -100.00% -16.38%
Income from and cost of main operation in terms of areas are as follows:
Unit: Unit：Unit：RMB’0000
Area Income from key business Increase/decrease of income
（％）
Mainland China 1,173.00 -9.70%
Hong Kong and Overseas 3,515.00 -61.19%34/130
(2) The line of business or product whose income or profit accounts for over 10% of total income
from main operation or profit from main operation in the report period
Unit: RMB’0000
The Status of key business in terms of industry of business
On industry or
production
Income from
key business
Cost of key
business
Key business
profit ratio
（％）
Increase/decre
ase of key
business
turnover（％）
Increase/decre
ase of key
business cost
（％）
Change of key
business profit
over the same
period of last
year（％）
Fabrics bleaching,
Printing & dyeing 3,765.00 3,661.00 2.76% -62.19% -68.92% 18.30%
Lease 923.00 473.00 48.75% 2,483.83% 988.49% -413.99%
Other 0.00 0.00 0.00% -100.00% -100.00% -16.38%
(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
The Company's main products are printing and dyeing products, including various pure cotton, pure
linen, polyester-mixed cotton, linen-mixed cotton and blended high-grade fabrics. The raw materials
for the production (grey fibre, dyeing chemicals and fuel) are mainly imported. The products are
mainly exported to Hong Kong, Japan, Europe and America. Victor Onward Printing and Dyeing
(Hong Kong) Limited, a wholly-owned subsidiary of the Company, is mainly responsible for supply
of raw materials and sales of products.
3.Change in composition of the Company's assets and reasons therefor:
Unit :RMB
Items of consolidated
balance sheet Year 2008 Year 2007
Amount of
change and
percentage
Proportion
of change
(%)
Monetary fund 61,368,428 52,656,852 8,711,576 16.54%
Account receivable 2,746,095 6,134,029 -3,387,934 -55.23%
Inventories 3,510,747 11,151,708 -7,640,961 -68.52%
Long term share equity
investment 47,184,759 65,629,837 -18,445,078 -28.10%
Property investment 48,165,784 29,286,179 18,879,605 64.47%
Fixed assets 22,737,791 54,202,203 -31,464,412 -58.05%
Goodwill 3,594,648 - 3,594,648
Tax payable 4,551,693 2,447,382 2,104,311 85.98%
(1) Monetary capital increased by RMB 8.71 million and 16.54% mainly due to the Company's
house rent income and recovery of funds by disposal of inventories;
(2) Accounts receivable decreased by RMB 3.39 million and 55.23% mainly because the Company
suspended production for rectification and liquidated accounts receivable in the report year.
Shengzhong Company, a subsidiary, was deregistered and the Company made full provision for bad
debts in respect of its accounts receivable of RMB 1,719,936;
(3) Inventories decreased by RMB 7.64 million and 68.52% mainly because the Company sold
partial grey fabric at discounted price and made provision for diminution in value for gray cloth35/130
with long stock age that was not disposable according to the difference between book value and net
realizable value;
(4) Long-term equity investment decreased by RMB 18.45 million and 28.10% mainly because the
net profit of Hangzhou Bay Company was recognized on equity basis and the change of fair value
of financial assets available for sale of Hangzhou Bay Company was confirmed;
(5) Real estate for investment increased by RMB 18.88 million and 64.47% mainly because the
house property of Nanhua Company, a subsidiary of the Company, for overall lease, was accounted
for as real estate for investment instead of fixed assets;
(6) Fixed assets decreased by RMB 31.46 million and 58.05% mainly because the house property of
Nanhua Company, a subsidiary of the Company, for overall lease, was accounted for as real estate
for investment instead of fixed assets and additional provision of RMB 3.65 million for impairment
was made in the report year;
(7) Goodwill increased by RMB 3.59 million mainly because the Company acquired 7.31% equity
of Nanhua Company, a subsidiary of the Company, held by CITIC Group, at the price of RMB 2.82
million and paid commission of RMB 15,100. As at December 31, 2007, the amount of 7.31%
equity of Nanhua Company was RMB - 759,548. So goodwill of RMB 3,594,648 was generated;
(8) Taxes and levies payable increased by RMB 2.1 million and 85.98% mainly because the
Company could not process and re-export gray cloth originally imported and made provision for
value added tax and customs duties to be paid retroactively according to the requirements of the
customs after inspection.
4.Reasons for material change in the items of profit and loss statement of the
Company in the report period:
Items of profit and
loss statement Year 2008 Year 2007
Amount of
change and
percentage
Proportion
of change
(%)
Income from the
business
46,881,258.00 103,568,595 -56,687,337 -54.73%
Cost of the
business
41,341,329.00 119,387,919 -78,046,590 -65.37%
Sales expense 2,629,457.00 8,606,930 -5,977,473 -69.45%
Administrative
expense 10,098,033.00 34,992,178 -24,894,145 -71.14%
Financial expenses -353,989.00 6,951,894 -7,305,883 -105.09%
Asset impairment
loss 8,806,636.00 54,718,933 -45,912,297 -83.91%
Investment gain -10,351,600.00 8,531,392 -18,882,992 -221.34%
Non-business
expenses 79,687.00 12,002,260 -11,922,573 -99.34%
（1）Operating income and operating cost respectively decreased by RMB 56,69 million and RMB
78.05 million (54.73% and 65.37% ) year on year mainly because the Company and Nanhua
Company, a subsidiary of the Company, continued production suspense and their business further36/130
shrank in the report year;
（2）Selling expenses decreased by RMB 5.98 million and 69.45% mainly due to sharp decrease of
wage of sales personnel and sales commission with the production suspense of the Company and
reduction of business and sales personnel;
（3）Administrative expenses decreased by RMB 24.89 million and 71.14% mainly because the
Company dismissed most employees and paid dismissal wage of large amount in the previous year
and there was no such expenditure in the report year. In addition, the provision for fixed assets
depreciation was accounted for as administrative expenses after production suspense in the previous
year. In the report year, depreciation expenses decreased because sufficient provision for impairment
was made for most fixed assets;
（4）Financial expenses decreased by RMB 7.31 million and 105.09% mainly because many interest
expenses were paid for many bank loans in the previous year and the interest expenses in the report
year are the interests accrued for loans borrowed by Nanhua Company, a subsidiary of the Company,
from Union Group, which have not been paid actually;
（5）Assets impairment loss decreased by RMB 45.91 million and 83.91% mainly due to adequate
provision in the previous year and decrease of provision in the report year;
(6)Investment income decreased by RMB 18.88 million and 221.34% mainly because, Zhejiang
Union Hangzhou Bay Ventures Co., Ltd., an affiliated company of the Company, is in the stage of
real estate development and has not made profit;
(7) Non-operating expenses decreased by RMB 11.92 million and 99.34% mainly because the
caused by the Company's sales of equity of its subsidiary Weiou Peier Company and promise to
abandon the claims to Weiou Peier Company caused loss of RMB 9.7 million and production
suspense and disposal of machinery and equipment caused loss of RMB 2.26 million in the previous
year while there was no such loss in the report year.
5. Composition of the cash flow of the Company:
Year 2008
Items Amount of cash
flow
Proportion to
the net
amount of
cash flow
from similar
activities %
Proportion
of change in
cash and
cash
equivalents
%
Subtotal of cash inflows from
business activities
61,853,594.00 454.09% 100.79%
Subtotal of cash outflows
from business activitie
48,232,173.00 354.09% 78.59%
Net cash flows from
operating activities
13,621,421.00 100.00% 22.20%
Subtotal of cash inflows from
investing activities
6,606.00 -0.23% 0.01%
Subtotal of cash outflows 2,861,451.00 -100.23% 4.66%37/130
from investing activities
Net cash flows from
investing activities
-2,854,845.00 100.00% -4.65%
Subtotal of cash inflows from
financing activities
Subtotal of cash outflows of
financing activities
143,985.00 -100.00% 0.23%
Net cash flows from
financing activities
-143,985.00 100.00% -0.23%
Influence of the change of
exchange rate on cash
-1,911,015.00 -3.11% -3.11%
Change in cash and cash
equivalents
61,368,428.00 100.00% 100.00%
Items Year 2008 Year 2007
Amount of
change and
percentage
Proportion of
change (%)
Main influencing
factor
Cash received from sales
of goods or rending of
services
42,451,326 176,654,559 -134,203,233 -75.97
Continue
stopping
production for
rectification, sales
decreased
Tax returned 7,337,725 6,396,030 941,695 14.72
The export tax
returning rate
increased
Other cash received from
business operation 11,822,858 5,547,890 6,274,968 113.11 Rental income
increased
Cash paid for purchasing
of merchandise and
services
33,828,569 133,202,385 -99,373,816 -74.60
Stopped
production for
rectification this
year
Cash paid to staffs or paid
for staffs
4,155,118 28,433,553 -24,278,435 -85.39 Workers reduced
Taxes paid 2,814,600 12,520,840 -9,706,240 -77.52
Other cash paid for
business activities
7,433,886 9,573,077 -2,139,191 -22.35 Operation
activities reduced
Net cash retrieved from
disposal of fixed assets,
intangible assets, and other
long-term assets
116 12,169,848 -12,169,732 -100.00
Resulted by
disposal of fixed
assets in last year
Cash paid as investment 2,835,100 2,835,100
Accepted the
7.31% equity of
Nanhua Company
held by TITIC
Group
Cash received from
investment retrieving
1,470,000 -1,470,000 -100.00
Shenzhen Victor
Onward Textile
Industrial Co.,
Ltd. was founded
in previous year
Cash to repay debts 143,985 62,000,000 -61,856,015 -99.77 Bank loans38/130
returned in
previous year
Cash paid as dividend,
profit, or interests
2,265,015 -2,265,015 -100.00
Bank interest for
the loans in
previous year
5. 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.
6.The operating status of main controlling subsidiaries and joint ventures
Except that Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is still operating
normally,
other 5 subsidiaries controlled by the Company have stopped operation or are maintaining 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 ownerd Printing &
Dyeing Factory are continuously suspended for rectification. The Company is actively promoting the
transfer of printing and dyeing industry to inland areas.
2. Development opportunities and challenges in the future and business plan for the new year:
The Company mainly made efforts to promote the transfer of printing and dyeing industry to
inland areas.
3. The fund needed by the Company to realize the strategy of sustainable development, the plan to
use funds and fund source
Nil
4,Main risk factors and countermeasures
At present, the Company only holds 30% equity of Nanjing East Asia Textile Printing and
Dyeing Co., Ltd. The Company has faced the situation of no main operation. Due to delay of basic
construction, Nanjing Factory failed to commence production as scheduled at the end of September.
There is no sign of improvement of the Company's printing and dyeing business in the near future
and the Company is facing an operation predicament.
2. Investment in the report period
(I) There were neither funds raised in the report period nor those raised in previous periods
whose use continued in the report period.
(II) In the report period, there were no investment projects utilizing non-raised funds.
3. Notes to the unqualified auditor's report with paragraph of emphasized matters issued
by Shine Wing Certified Public Accountants for the Company's financial report for
2008.
(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 of39/130
emphasized matters for the Company's financial statements for 2008. 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 15 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 2008 and issued unqualified auditor's report with paragraph
of emphasized matters for the Company's financial statements for 2008. In accordance with No. 14
Rule for Preparation and Report of Information Disclosure by Companies Publicly Issuing Securities
- Non-standard Unqualified Audit Opinions and Treatment of Matters Involved Therein, relevant
notes are as follows:
As noticed by Shine Wing Certified Public Accountants during audit, the land of the Company for
the factory building and office building located at 26 Kuipeng Road, Baishigang, Kuichong Town,
Longgang District, Shenzhen, was leased and the lease term will expire on March 31, 2009,
According to the city planning of Shenzhen Municipal Government, printing and dyeing business for
textile industry is no longer allowed in this area.Since March 2007, Shenzhen Victor Onward Textile
Industrial Co., Ltd. stopped production and dismissed most of workers. The company currently only
had some agent import and export business and house leasing business.
Except that Shenzhen East Asia Victor Onward Textile Printing and Dyeing Co., Ltd. is still
operating normally, other 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 of emphasized matters.
This special statement is issued by us according to relevant regulations of CSRC and shall not be
used for other purpose. We and the C.P.A. who performed this service shall not bear any liability for
the consequences caused by its improper use.
(III) The opinions of the board of directors, supervisory committee and management of
the Company on this matter:
The board of directors, Supervisory Committee and managers believed that the
printing and dyeing plant of the company had stopped operation or maintained daily
operation by house leasing. The company was about to invest Nanjing East Asia Textile
Printing & Dyeing Co., Ltd., but the infrastructure projects was delayed.40/130
(IV) Extent of influence of this matter on the Company:
This matter will generate significant influence on the Company's production and
operating activities and continuous development.
(V) The possibility of eliminating this matter and its influence:
Though the transfer of printing and dyeing business has been somewhat delayed,
but the overall relocation plan of the company had not changed. It is still being
undertaken step by step, The Company can eliminate this matter and its influence to a
great extent.
(VI) The concrete measures of eliminating this matter and its influence
The Company will strengthen the management and coordination of engineering
construction and try to implement the transfer plan as soon as possible.
IV. Routine work of the board of directors
1. Board meetings and resolutions in the report period:
In the report period, the board of directors of the Company held five meetings in total.
1. In the Morning of April 1, 2008, the 25th meeting of the fourth 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 3, 2008.
2. In the Morning of April 18, 2008, the first 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 19, 2008.
3. In the Morning of April 28, 2008, the second meeting of the fifth board of
directors of the Company was held by correspondence. The announcement of the
resolutions of this meeting was published on Securities Times and Hong Kong
Commercial Daily on April 30, 2008.
4. In the Morning of July 29, 2008, the 3rd meeting of the fifth board of directors of
the Company was held by correspondence. The announcement of the resolutions of
this meeting was published on Securities Times and Hong Kong Commercial Daily
on July 31, 2008.
5. In the Morning of October 28, 2008, the 4th meeting of the fifth board of
directors of the Company was held by correspondence. The announcement of the
resolutions of this meeting was published on Securities Times and Hong Kong41/130
Commercial Daily on October 30, 2008.
(2)Implementation by the board of directors of the resolutions of the shareholders'
general meeting
The board of directors of the Company strictly implemented the resolutions of
shareholders' general meetings and the matters authorized by shareholders' general
meetings according to the provisions of the Company Law and the Articles of
Association of the Company.
1. 2007 annual shareholders' general meeting of the Company examined and
adopted the proposal for the profit distribution of the Company for 2008: The Company
is neither to distribute dividends nor capitalize capital surplus for 2008.
2. The first provisional shareholders' general meeting of the Company in 2008
adopted rectification plan and the proposal for reelecting the fourth board of directors
and supervisory committee.
（3）Performance introduced of the Special Committee of the Board of Directors
In the report period, In accordance with the Work Rules for Audit committee of the
Board of Directors, the Audit Committee of the Board of Directors conducted
supervision on audit work of the company in 2008, and on November 19, 2008,
independent directors, audit committee and the registered accountant in Xingyong
Zhonghe Accountants Firm held the meeting of communication before conducting
auditing, and determined annual audit work arrangement in 2008; the annual audit
accountants communicated the problems found in the audit; after issuing preliminary
audit views, they re-examined financial statement, and at the same time, the audit
committee summarized the audit work conducted by Xingyong Zhonghe accountants,
and advised continuing to employ Xingyoug Zhonghe Accountants Firm to conduct
audit in 2009.
4. Profit distribution preplan for 2008
As audited by Shinewing Certified Public Accountants, the total profit of the Company for 2008 is
RMB -26,168,635 , After deduction of minority gains and losses of RMB -100,008 and
income tax expenses of RMB -111,294, net profit is RMB-25,957,333,the total year-end
undistributed profit is - RMB -115, 810,517. The Company is neither to distribute profit nor to
capitalize capital surplus for the current year.
Profit Distribution Policy for 2009: Due to the demand of funds in respect of operation
and investment, the Company also will not distribute the profit and undistributed profit
for 2009. The Board of Directors determines the distribution preplan for 2009 according42/130
to the actual situations of the Company, and makes the corresponding adjustment
according to the Company’s operation development.
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 five meetings
in total.
(1)In the afternoon of April 1, 2008, the 15th meeting of the fourth supervisory
committee of the Company was held through voting by correspondence. The meeting
was presided over by Mr. Dong Binggen, the convener of the supervisory committee of
the Company. 3 supervisors were supposed to attend the meeting and 2 of them were
actually present. The meeting examined and adopted the following resolutions:
(1) Rectification Plan of Shenzhen Victor Onward Textile Industrial Co., Ltd.;
(2) The proposal for reelecting the fourth supervisor commttee of the Company;
（2）In the morning of April 18, 2008, the 1st 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 proposal
for electing Mr. Dong Binggen as chairman of the fifth supervisory committee of the Company.
（3） In the morning of April 28, 2008, the second meeting of the fifth supervisory
committee of the Company was held through voting by correspondence . The meeting
examined and adopted the following resolutions:
1. 2007 Work Report of the Company;
2. 2007 Auditor's Report of A shares and B shares of the Company ;
3. Profit Distribution Preplan of the Company for 2007 and Its Profit Distribution
Policy for 2008;
4. 2007 Annual Report and 2007 Annual Report (Summary) of the Company;
5.The proposal for retroactive adjustment of related items of balance sheet and amount at the
beginning of 2007;
6. Special Statement on Matters Involved in Unqualified Auditor's Report with Highlighted
Matter Paragraph for 2007;43/130
7. The First Quarterly Report 2008
8. The proposal for revising part of provisions of Rules of Procedure of Shareholders'
General Meeting.
（4）In the morning of July 29, 2008, the 3rd meeting of the fifth supervisory committee of the
Company was held through voting by correspondence. The meeting examined and adopted the
following resolutions: 2008 Semiannual Report of Shenzhen Victor Onward Textile Industrial Co.,
Ltd and its Summary.
（5）In the morning of october 28, 2008, the 4th meeting of the fifth supervisory
committee of the Company was held through voting by correspondence. The meeting
examined and adopted the following resolutions: The Report of Shenzhen Victor Onward
Textile Industrial Co., Ltd. for the Third Quarter of 2008.
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
20078with paragraph of emphasized matters issued by Shine Wing Certified Public Accountants
was true and gave a true view of the financial position and operating results of the Company.
3. The Company did not raise funds in the report period. The funds last raised after
listing were invested in such projects as promised in Prospectus.
4. Neither insider trading nor act that caused harm to the rights and interests of part of
shareholders or the loss of the Company's assets was found in respect of the transaction
price of the assets purchased or sold by the Company.
5. The related transactions between the Company and associated enterprises
(companies) were conducted in a fair manner and at market prices. The joint investment
made by the Company and related enterprises is in keeping with the interests of the
Company. Relevant voting procedure complied with relevant provisions of the Articles
of Association of the Company and Stock Listing Rules of Shenzhen Stock Exchange
and related directors observed the regulations on absence during vote. The related
transactions were fair and reasonable and did not harm the interests of the Company and
middle and small shareholders.44/130
6. In the report year, Shine Wing Certified Public Accountants issued unqualified
auditor's report with paragraph of emphasized matters for the Company's financial
report for 2008. Company board of supervisors that: the cost in printing & dyeing
industry is continuinghigh in Shenzhen. the printing & dyeing business of the Company
and Productions & operations are in serious difficulties and are hard to continue normal
operation. the Company controlled subsidiary Nanhua Printing & Dyeing and the
Company ownerd Printing & Dyeing Factory are continuously suspended for
rectification. As the transfer of the Company's printing and dyeing business is somewhat
delayed, the production and operating activities of the Company have been seriously
affected, In accordance with the provisions of 13.3.1 of Stock Listing Rules of
Shenzhen Stock Exchange, Shenzhen Stock Exchange carried out special treatment of
the stocks of the Company from August 27, 2007.
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.
The second provisional meeting of the fourth board of directors of Shenzhen Victor Onward
Textile Industrial Co., Ltd. was held by email. The meeting examined and adopted the resolution for
acquiring 7.31% equity of Shenzhen Nanhua Printing and Dyeing Co., Ltd. held by China
International Trust & Investment Corporation. On May 4, 2008, both parties signed equity
assignment agreement and the Company acquired 7.31% equity of Shenzhen Nanhua Printing and
Dyeing Co., Ltd. at the price of RMB 2.82 million.
III. Related transactions.
(I) Related transactions related to daily operation
1.Related leased
In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union
Group. The term of tenancy is from March 1, 2008 to February 28, 2009. The monthly rent is RMB
6800. The rent was determined according to market price.
(2) Fund transfer between the Company and related parties45/130
Related party
Amount of
period-end
Amount of
period-begin
Account receivable
Shenye Union(Hong Kong) 325,644 370,988
Other payable
Union Group 20,492,359 16,310,435
Union Property 3,473,200 3,003,528
3. Other material related transactions
No other material related transaction.
4. Significant contracts and their performance
(I) The Company did not hold in trust or contract for or lease the assets of other
companies nor did other companies hold in trust or contract for the assets of the
Company in the report period.
(2). Significant guarantee:
(A) In the report period, the Company did not provided the external guarantee mentioned in ZJF
(2003) No. 56 Document issued by CSRC. There was no significant guarantee that was provided in
previous periods but continued to be valid in the report period. The Company will actively
implement the gist of ZJF No. 56 Document strictly according to the requirements of laws and
regulations of the Company Law, the Securities Law, Stock Listing Rules and the Articles of
Association of the Company, further standardize the fund transfer between the Company and the
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 to the gist of ZJF (2003) No. 56 Document - Circular on Certain Issues Relating to
Standardization of Fund Transfer Between Listed Companies and Their Related Parties and
Guarantees Provided by Listed Companies ("the Circular") issued by CSRC, we, as the Company's
independent directors，seriously examined the status of the external guarantee provided by the
Company with practical attitude and hereby give our opinions on relevant issues:46/130
According to the result of our prudent investigation，as of December 31, 2008,the Company did not
provide guarantee to its controlling shareholder, other related parties of which the Company holds
less than 50% equity, any unincorporate entity or individual against regulations nor did the
controlling shareholder and other related parties force the Company to provide guarantee to others as
of the end of the report period. In the report period，the Company specified the examination and
approval procedure of external guarantee and the credit standards for the object of guarantee
according to the gist of the Circular, added the same to the revised Articles of Association of the
Company, strictly observed the provisions of the Articles of Association of the Company and strictly
controlled the risks of its external guarantee.
（3）The Company did not entrust others to manage its cash assets in the report period.
（4）Other significant contracts
The first provisional shareholders' general meeting of Shenzhen Victor Onward Textile
Industrial Co., Ltd. in 2007 held on April 6, 2007 adopted the proposal for increasing
capital of Nanjing East Asia Textile Printing and Dyeing Co., Ltd.
Nanjing East Asia Textile Printing and Dyeing Co., Ltd. ("Nanjing East Asia") is a
sino-foreign equity joint venture legally registered in Nanjing. The Company plans to
operate Nanjing East Asia as a joint venture through increasing share capital of Nanjing
East Asia. The Company is to increase capital of Nanjing East Asia with material
objects valued at RMB 30 million as registered capital (full payment of subscribed
registered capital is subject to the appraised value accepted by both parties), which
accounts for 30% of total registered capital. The original shareholders of Nanjing East
Asia are to invest RMB 70 million in Nanjing East Asia as registered capital (Full
payment of subscribed registered capital is subject to audited amount accepted by both
parties), which accounts for 70% of total registered capital. After completion of share
capital increase, Nanjing East Asia will be renamed as NAN JING VICTOR ONWARD
PRINTING & DYEING CO.LTD .
The said share capital increase has been approved by the department in charge of
foreign capital in Nanjing. The relevant procedures are being processed.
(5) In accordance with the notice of Shenzhen Stock Exchange about Fair Information Disclosure
of Listed Companies, the Company improved internal control system and procedure for information
disclosure and formulated reception and introduction system, information disclosure, reference and
registration system. The Company and relevant information disclosure obligors strictly
abode by the principle of fair information disclosure, neither implemented
discriminatory policy nor disclosed, revealed or divulged non-open significant
information to specific objects.
Reception Place Mode Object Discussion issue and47/130
offered information
Year 2008 Office of
board
secretar
y of the
Comapny
Telephone Individual
investor
The Company communicated
with investors in respect of
its production and
operation status, special
treatment of trading of its
stocks and its
reorganization and listened
to the opinions of
investors.
(VI)Commitment made by the Company or shareholders holding over 5% of shares
of the Company.
1.Capital commitments
1.As of December 31, 2008, Group has signed a contract but there are still
outstanding major agreement total foreign investment RMB 30 million .Specific
conditions are as follows:
Name Investment
amount
Payable
amount
of
investm
ent
Non-payable
amount of
investment
Investme
nt Period
Notes
Investment in
machinery and
equipment in
Nanjing East
asia Textiles
Co., ltd.
30 million - 30 million
Not because
of the
other
production
sites can
not be
completed
relocation
2.The Signed or is ready to carry out the contract of large contracts
As of December 31, 2008,The Group still has signed the agreement but did not pay large
amounts of letting contracts total RMB 1.71 million. Specific conditions are as follows:
Name Investment
amount
Payable
amount of
investment
Non-payab
le amount
of
Investment
Period
Notes48/130
investment
The
lelocation
of
production
equipment
as a whole
works
1,710,000 855,000 855,000
Not because of
the other
production
sites can not
be completed
relocation
3.According to the signed contract or provision to carry lease contract and financial impact.
On December 31, 2008(T), According to the signed irrevocable contract for operating lease, the
lowestrent to be paid in the future is as follow:
Period Business lease
T+1 year 371,944
T+2 years 29,862
T+3 years
Over T+3 year -
Total 401,806
2. Union Management Co., Ltd, the largest shareholder of the Company, made special commitment
during the Company’s share holding structure reform: The original non-negotiable shares shall not
be listed and sold through Shenzhen Stock Exchange within 36 months after the date of execution of
share holding structure reform. At present, 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 3
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 the49/130
Zhenzhen Exchange as a result of being identified as an inappropriate candidate.
..............................................................
(IX) Future issues of balance sheet
The land of the Company for the factory building and office building located at 26 Kuipeng
Road, Baishigang, Kuichong Town, Longgang District, Shenzhen, was leased and the lease term will
expire on March 31, 2009,The company had applied to Shenzhen Municipal Planning
Bureau for historical issue, and on January 7, 2009, approved and reviewed by
Shenzhen Municipal Planning Bureau the Coastal Branch and the company acquired the
"program plan of land for construction purposes", currently the official procedures was
undergoing.
In addition to the above matters in items after balance sheet date, this Group had no
other significant matters after the balance sheet date.
(X) Other material events
Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped
production and dismissed most of workers. The company currently only had some agent
import and export business and house leasing business.
Except that the Shenzhen Dongya Company was operating normally, the other five subsidiaries
controlled by the company had stopped the operation and were depending on house lease to maintain.
In 2007 the company intended to invest part of machineries and equipments to Nanjing Dongya
Textile Printing & Dyeing Co., Ltd. But due to the reasons of the joint venture party and the prospect
change in the industry, the investment plan was 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.
Section X Financial Report
Auditor’s report
XYZH/2008SZA1013-1
To the 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, 2008, profit statement, cash flow statement and statement of50/130
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. 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 2008, 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 15 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：
C.P.A:
Beijing Chian
April 21, 200951/130
Consolidated Balance Sheet
December 31, 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit:RMB
Assets Notes Amount of
period-end
Amount of
period-begin
Current assets：
Monetary funds VIII.1 61,368,428 52,656,852
Settlement provisions
Capital lent
Transaction finance assets VIII.2 36,687 140,423
Bill receivable VIII.3 850,000 -
Accounts receivable VIII.4 2,746,095 6,134,029
Accounts in advance VIII.5 1,815,897 54,712
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Interest receivable VIII.6 91,087 -
Dividend receivable
Other receivables VIII.7 614,673 8,860,543
Purchase restituted finance assets
Inventory VIII.8 3,510,747 11,151,708
Non-Current assets within one year
Other Current assets
Total currents assets 71,033,614 78,998,267
Non-current assets
Granted loans and advances
Finance assets available sales VIII.9 207,255 836,861
Held-to maturity securities
Long-term account receivable
Long-term equity investment VIII.10 47,184,759 65,629,837
Investment property VIII.11 48,165,784 29,286,179
Fixed assets VIII.12 22,737,791 54,202,203
Construction in progress
Engineering material
Disposal of fixed assets
Consumable biological assets
Oil and gas assets
Intangible assets VIII.13 - 498,219
Expense on research and development
Goodwill VIII.14 3,594,648 -
Long-term expenses to be apportioned
Deferred income tax assets
Other non-current assets
Total non-current assets 121,890,237 150,453,29952/130
Total assets 192,923,851 229,451,566
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Balance Sheet(Cont’d)
December 31, 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Liabilities and shareholders' equity Notes Amount of
period-end
Amount of
period-begin
Current liabilities
Short-term loan
Bill payable
Account payable VIII．16 6,175,741 4,936,984
Accounts received in advance VIII．17 5,281,103 5,833,758
Selling financial assets of repurchase
Commission charge and commission payable
Employees’ wage payable VIII．18 599,884 776,560
Tax payable VIII．19 4,551,693 2,447,382
Interest payable
Dividend payable VIII．20 1,322,737 1,404,480
Other account payable VIII．21 30,064,983 28,418,511
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Long-term liabilities due within1 year
Other current liabilities 1,137,304 1,265,701
Total current liabilities 49,133,445 45,083,376
Non-current liabilities：
Long-term loans VIII．22 1,674,164 1,928,557
Bonds payable
Long-term accounts payable VIII．23 9,232,220 9,802,757
Special accounts payable
Projected liabilities
Deferred income tax liabilities VIII．24 1,015,950 1,195,397
Other non-current liabilities VIII．25 910,284 966,538
Deferred income 12,832,618 13,893,249
Total liabilities 61,966,063 58,976,625
Owner’s equity(or shareholder’s equity)：
Share capital VIII．26 169,142,356 169,142,35653/130
Capital public reserve VIII．27 39,194,631 43,881,067
Less：Inventory shares
Surplus public reserve VIII．28 26,309,287 26,309,287
Provision of general risk
Retained profit VIII．29 -115,810,517 -89,853,184
Balance difference of foreign currency translation 11,237,577 20,122,586
Total owner’s equity attributable to parent company 130,073,334 169,602,112
Minority interests VIII．30 884,454 872,829
Total owner’s equity 130,957,788 170,474,941
Total liabilities and owner’s equity 192,923,851 229,451,566
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Profit statement
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Items Notes Report period Same period of the
previous year
I.Total business income 46,881,258 103,568,595
Incl：Business income VIII.31 46,881,258 103,568,595
Interest income
Insurance fee earned
Fee and commission received
II.Total business cost 62,315,391 224,659,687
Incl：Business cost VIII.31 41,341,329 119,387,919
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Net insurance policy reserves
Insurance policy dividend paid
Reinsurance expenses
Business tax and surcharge VIII.32 458 1,833
Sales expense VIII.33 2,629,457 8,606,930
Administrative expense VIII.34 10,098,033 34,992,178
Financial expenses VIII.35 -353,989 6,951,894
Asset impairment loss VIII.36 8,806,636 54,718,933
Add：Gains from change of fair value （“-”for loss） VIII.37 -96,798 57,809
Investment gain（“-”for loss） VIII.38 -10,351,600 8,531,392
Incl: investment gains from affiliates -10,599,828 3,331,782
Gains from currency exchange（“-”for loss）
III. Operational profit（“-”for loss） -26,089,064 -112,501,891
Add：Non-business income VIII.39 116 94,621
Less：Non business expenses VIII.40 79,687 12,002,260
Incl：Loss from disposal of non-current assets 2,258,18154/130
IV.Total profit(“-”for loss) -26,168,635 -124,409,530
Less：Income tax expenses VIII.41 -111,294 170,009
V. Net profit（“-”for net loss） -26,057,341 -124,579,539
Of which: the net profit realized by the party being
merged before the merger
Net profit attributable to the owners of parent company -25,957,333 -116,356,882
Minority shareholders’ gain & loss -100,008 -8,222,657
VI. Earnings per share：
（I）Basic earnings per share VIII.42 -0.15 -0.69
(II)Diluted earnings per share VIII.42 -0.15 -0.69
Notes: Net profit attributable to the owners of parent company+ Minority shareholders’ gain & loss =Net
profit
If there is no subsidiary newly joined in corporate merger under same control this year, then
delete "of which: the net profit realized by the party being merged before the merger"
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Cash flow statement
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Items Notes Report period Same period of the
previous year
I.Cash flows from operating activities
Cash received from sales of goods or rending of
services
42,451,326 176,654,559
Net increase of trade financial asset disposal 241,685 3,258,808
Tax returned 7,337,725 6,396,030
Other cash received from business operation VIII．43 11,822,858 5,547,890
Sub-total of cash inflow 61,853,594 191,857,287
Cash paid for purchasing of merchandise and
services
33,828,569 133,202,385
Cash paid to staffs or paid for staffs 4,155,118 28,433,553
Taxes paid 2,814,600 12,520,840
Other cash paid for business activities VIII．43 7,433,886 9,573,077
Sub-total of cash outflow from business activities 48,232,173 183,729,855
Cash flow generated by business operation, net 13,621,421 8,127,432
II.Cash flow generated by investing
Cash received from investment retrieving
Cash received as investment gains 6,490 6,918
Net cash retrieved from disposal of fixed assets,
intangible assets, and other long-term assets
116 12,169,848
Net cash received from disposal of subsidiaries or
other operational units
900,55755/130
Other investment-related cash received
Sub-total of cash inflow due to investment activities 6,606 13,077,323
Cash paid for construction of fixed assets, intangible
assets and other long-term assets
26,351 1,189,290
Cash paid as investment 2,835,100
Net cash received from subsidiaries and other
operational units
Other cash paid for investment activities
Sub-total of cash outflow due to investment activities 2,861,451 1,189,290
Net cash flow generated by investment -2,854,845 11,888,033
III.Cash flow generated by financing
Cash received as investment 1,470,000
Incl: Cash received as investment from minor
shareholders
1,470,000
Other financing –related ash received
Sub-total of cash inflow from financing activities - 1,470,000
Cash to repay debts 143,985 62,000,000
Cash paid as dividend, profit, or interests 2,265,015
Incl: Dividend and profit paid by subsidiaries to minor
shareholders
Other cash paid for financing activities
Sub-total of cash outflow due to financing activities 143,985 64,265,015
Net cash flow generated by financing -143,985 -62,795,015
IV.Influence of exchange rate alternation on cash and
cash equivalents -1,911,015 3,764,504
V.Net increase of cash and cash equivalents 8,711,576 -39,015,046
Add: balance of cash and cash equivalents at the
beginning of term 52,656,852 91,671,898
VI. Balance of cash and cash equivalents at the end of
term 61,368,428 52,656,852
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng56/130
Consolidated Statement on Change in Owners’ Equity
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.
Owner’s equity Attributable to the Parent Company
Items Share
Capital
Capital
reserves
Surplus
reserves
Attributable
profit
Different of
foreign
currency
translation
Minor
shareholders’
equity
Total of
owners’ equity
I.Balance at the end of last year 169,142,356 43,881,067 26,309,287 -89,853,184 20,122,586 872,829
170,474,941
Add: Change of accounting policy -
Correcting of previous errors -
Other
II.Balance at the beginning of current year 169,142,356 43,881,067 26,309,287 -89,853,184 20,122,586
872,829 170,474,941
III.Changed in the current year -4,686,436 - -25,957,333 -8,885,009 11,625 -39,517,153
（I） Net profit - -25,957,333 -100,008 -26,057,341
（II） Gains losses accounted into owners’
equity directly -4,686,436 - - -8,885,009 111,633 -13,459,812
1．Change in fair value of sellable financial
assets, net -580,899 -580,899
2．Influence of change in other owners’ equity
of invested enterprises on equity basis -4,160,758 -4,160,758
3．Influence of income tax related to owners’
equity items -
4．Other - 55,221 -8,885,009 111,633 -8,718,155
Total of (I) and (II) - -4,686,436 - -25,957,333 -8,885,009 11,625 -39,517,153
（III）Investment or decreasing of capital by
owners -
1.Investment by owners -
2．Amount of shares paid and accounted as
owners’ equity -
3．Other - - - - - - -
（IV）Profit allotment -
1．Providing of surplus reserves -
2.Providing of common risk provisions -57/130
3．Allotment to the owners(or shareholders) -
4．Other - - - - - - -
（V）Internal transferring of owners’ equity
1．Capitalizing of capital reserves（Or to
capital ）
2．Capitalizing of surplus reserves （Or to capital
shares）
3．Making up losses by surplus reserves
4．Other
IV.. Balance at the end of this term 169,142,356 39,194,631 26,309,287 -115,810,517 11,237,577 884,454
130,957,788
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Consolidated Statement on Change in Owners’ Equity
Year 2007
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.
Owner’s equity Attributable to the Parent Company
Items Share
Capital
Capital
reserves
Surplus
reserves
Attributable
profit
Different of foreign
currency translation
Minor
shareholders’
equity
Total of
owners’ equity
I.Balance at the end of last year 169,142,356 34,902,008 26,309,287 27,459,127 35,736,303 7,956,207
301,505,288
Add: Change of accounting policy
Correcting of previous errors
Other
II.Balance at the beginning of current
year 169,142,356 34,902,008 26,309,287 27,459,127 35,736,303 7,956,207 301,505,288
III.Changed in the current year - 8,979,059 - -117,312,311 -15,613,717 -7,083,378 -131,030,347
（I） Net profit -116,356,882 -8,222,657 -124,579,539
（II） Gains losses accounted into
owners’ equity directly - 8,979,059 - -955,429 -15,613,717 1,139,279 -6,450,808
1．Change in fair value of sellable financial
assets, net -58/130
2．Influence of change in other owners’
equity of invested enterprises on equity basis
557,907 557,907
3．Influence of income tax related to
owners’ equity items 8,421,152 8,421,152
4．Other -955,429 -15,613,717 1,139,279 -15,429,867
Total of (I) and (II) - 8,979,059 - -117,312,311 -15,613,717 -7,083,378 -131,030,347
（III）Investment or decreasing of capital by
owners
1.Investment by owners
2．Amount of shares paid and accounted as
owners’ equity
3．Other - - - - - - -
（IV）Profit allotment
1．Providing of surplus reserves
2.Providing of common risk provisions -
3．Allotment to the owners(or shareholders) -
4．Other - - - - - - -
（V）Internal transferring of owners’ equity
1．Capitalizing of capital reserves（Or to
capital ）
2．Capitalizing of surplus reserves （Or to
capital shares）
3．Making up losses by surplus reserves
4．Other
IV.. Balance at the end of this term 169,142,356 43,881,067 26,309,287 -89,853,184 20,122,586 872,829
170,474,941
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng59/130
Parent Company Balance sheet
December 31, 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Assets Notes Year-end balance Year-beginning
balance
Current asset：
Monetary fund 30,750,018 31,467,687
Trading financial assets
Bill receivable
Account receivable IX.1 714,042 5,779,780
Prepayments
Insurance receivable
Dividend receivable
Other account receivable IX.2 82,236,725 83,780,414
Inventories 2,625,685 9,351,476
Non-current asset due in 1 year
Other current asset
Total of current assets 116,326,470 130,379,357
Non-current asset
Disposable financial asset
Expired investment in possess
Long-term receivable
Long term share equity investment IX.3 39,974,858 39,438,551
Property investment 6,972,363 7,792,700
Fixed assets 18,441,088 23,501,210
Construction in progress
Engineering material
Fixed asset disposal
Production physical assets
Gas & petrol
Intangible assets
R & D petrol
Goodwill
Long-germ expenses to be amortized
Differed income tax asset
Other non-current asset
Total of non-current assets 65,388,309 70,732,461
Total of assets 181,714,779 201,111,818
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng60/130
Parent Company Balance Sheet(Cont’d)
December 31, 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd. Unit：RMB
Liabilities and shareholders' equity
Notes
Year-end
balance
Year-beginning
balance
Current liabilities
Short-term loans
Trade off financial liabilities
Bill payable
Account payable 1,867,796 2,770,633
Received in advance 2,464,838 1,718,419
Employees’ wage payable 560,676 532,758
Tax payable 3,864,340 2,321,268
Interest payable
Dividend payable
Other account payable 720,894 697,981
Non-current liability due in 1 year 0
Other current liability 1,137,304 1,180,756
Subtotal of current liability 10,615,848 9,221,815
Non-current liabilities：
Long-term loan
Bond payable
Long-term payable
Deferred income 910,284 966,538
Projected liabilities
Deferred income tax liabilities 3,519,356 3,736,846
Other non-current liabilities
Subtotal non-current liabilities 4,429,640 4,703,384
Total liabilities 15,045,488 13,925,199
Owner’s equity(or shareholder’s equity)：
Share capital 169,142,356 169,142,356
Capital public reserve 31,606,598 31,606,598
Less：Inventory shares
Surplus public reserve 26,309,287 26,309,287
Retained profit -68,418,602 -58,671,452
Balance difference of foreign currency translation 8,029,652 18,799,830
Total owner’s equity 166,669,291 187,186,619
Total liabilities and owner’s equity 181,714,779 201,111,818
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng61/130
Parent Company Profit statement
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items
Notes
Report period Same period of the
previous year
I. Operating income IX.4 20,308,550 35,373,188
Less：operating cost IX.4 20,208,219 53,160,389
Operating tax and extras
Sales expenses - 345,817
Administration expenses 6,359,263 23,959,653
Financial expenses -4,540,128 -1,149,489
Losses of devaluation of assets 8,256,535 43,443,769
Add：changing income of fair value
Investment income IX.5 241,685 4,158,808
Including：Investment income on affiliated company and
joint venture
III.Operating profit -9,733,654 -80,228,143
Add：non-operating income
- 6,053
less：non-operating expense 13,496 11,883,777
Including：disposal loss of non-current assets 2,170,205
IV. Total profit -9,747,150 -92,105,867
Less：expense of income tax
- 645,554
V. Net profit -9,747,150 -92,751,421
VI. Earnings per share
（i）basic earnings per share
（ii）Diluted earnings per share62/130
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Parent Company Cash Flow Statement
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items
Notes
Report period Same period of the
previous year
I. Cash flows arising form operating activities:
Cash received from selling commodities and providing labor
services 20,013,418 80,561,425
Net increase of disposal of transaction financial assets 241,685 3,258,808
Write-back of tax received 840,576 1,992,380
Other cash received concerning operating activities 4,283,430 1,707,413
Subtotal of cash inflow 25,379,109 87,520,026
Cash paid for purchasing commodities and receiving labor
service
16,769,837 49,604,146
Cash paid to/for staff and worker 1,964,505 15,450,483
Taxes paid 1,284,079 1,496,602
Other cash paid concerning operating activities 3,011,613 21,360,481
Subtotal of cash outflow 23,030,034 87,911,712
Net cash flows arising form operating activities 2,349,075 -391,686
II. Cash flows arising form investing activities
Cash received form recovering investment
Cash received form investment income
Net cash received form disposal of fixed , intangible
and other long-term assets
3,100,000
Net cash received from disposal of subsidiaries and
other units
900,000
Other cash received concerning investing activities
Subtotal of sash inflow - 4,000,000
Cash paid for purchasing fixed, intangible and other
long-term assets
Cash paid for investment 2,835,100 1,530,000
Net cash received from subsidiaries and other units
Other cash paid concerning investing activities
Subtotal of cash outflow 2,835,100 1,530,000
Net cash flows arising from investing activities -2,835,100 2,470,000
III. Cash flows arising from financing activities63/130
Cash received from absorbing investment
Cash received from loans
Other cash received concerning financing activities
Subtotal of cash inflow - -
Cash paid form settling debts 37,000,000
Cash paid for dividend and profit distributing or interest
paying 116,072
Other cash paid concerning financing activities
Subtotal of cash outflow - 37,116,072
Net cash flows arising from financing activities - -37,116,072
IV. Influence on cash due to fluctuation in exchange rate -231,644 -265,147
V.Net increase of cash and cash equivalents -717,669 -35,302,905
Add：Balance of cash and cash equivalents at the period
-begin 31,467,687 66,770,592
VI. balance of cash and cash equivalents at the period-end. 30,750,018 31,467,687
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng64/130
Parent Company Statement on Change in Owners’ Equity
Year 2008
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items
Share
Capital
Capital
reserves
Surplus
reserves
Attributable
profit
Other
Total of owners’
equity
I.Balance at the end of last year 169,142,356 31,606,598 26,309,287 -58,671,452 18,799,830 187,186,619
Correcting of previous errors
Other
II.Balance at the beginning of current
year
169,142,356 31,606,598 26,309,287 -58,671,452 18,799,830 187,186,619
III.Changed in the current year - - - -9,747,150 -10,770,178 -20,517,328
（I） Net profit -9,747,150 -9,747,150
（II） Gains losses accounted into
owners’ equity directly
- - - - -10,770,178 -10,770,178
1．Change in fair value of sellable financial
assets, net
2．Influence of change in other owners’
equity of invested enterprises on equity basis
3．Influence of income tax related to owners’
equity items
4．Other -10,770,178 -10,770,178
Total of (I) and (II) - - - -9,747,150 -10,770,178 -20,517,328
（III）Investment or decreasing of capital by
owners
- - - - - -
1.Investment by owners65/130
2．Amount of shares paid and accounted as
owners’ equity
3．Other
（IV）Profit allotment - - - - - -
1．Providing of surplus reserves
2．Allotment to the owners(or shareholders) -
3．Other
（V）Internal transferring of owners’ equity - - - - - -
1．Capitalizing of capital reserves（Or to
capital ）
2．Capitalizing of surplus reserves （Or to
capital shares）
3．Making up losses by surplus reserves
4．Other
IV.. Balance at the end of this term 169,142,356 31,606,598 26,309,287 -68,418,602 8,029,652 166,669,291
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng
Parent Company Statement on Change in Owners’ Equity
Year 2007
Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd Unit：RMB
Items
Share
Capital
Capital
reserves
Surplus
reserves
Attributable
profit
Other
Total of owners’
equity66/130
I.Balance at the end of last year 169,142,356 31,606,598 26,309,287 34,079,969 35,711,646 296,849,856
Correcting of previous errors
Other
II.Balance at the beginning of current
year
169,142,356 31,606,598 26,309,287 34,079,969 35,711,646 296,849,856
III.Changed in the current year - - - -92,751,421 -16,911,816 -109,663,237
（I） Net profit -92,751,421 -92,751,421
（II） Gains losses accounted into
owners’ equity directly
- - - - -16,911,816 -16,911,816
1．Change in fair value of sellable financial
assets, net
2．Influence of change in other owners’
equity of invested enterprises on equity basis
3．Influence of income tax related to owners’
equity items
4．Other -16,911,816 -16,911,816
Total of (I) and (II) - - - -92,751,421 -16,911,816 -109,663,237
（III）Investment or decreasing of capital by
owners
- - - - - -
1.Investment by owners
2．Amount of shares paid and accounted as
owners’ equity
3．Other
（IV）Profit allotment - - - - - -
1．Providing of surplus reserves
2．Allotment to the owners(or shareholders) -67/130
3．Other
（V）Internal transferring of owners’ equity - - - - - -
1．Capitalizing of capital reserves（Or to
capital ）
2．Capitalizing of surplus reserves （Or to
capital shares）
3．Making up losses by surplus reserves
4．Other
IV.. Balance at the end of this term 169,142,356 31,606,598 26,309,287 -58,671,452 18,799,830 187,186,619
Legal representative: Financial controller The person in charge of the financial
Department:
Hu Yongfeng Zhang Jinliang Ren Changzheng深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
13
Shenzhen Victor Onward Textile Industrial Co., Ltd.
Notes to the Accounting Statements
January 1,2008 to December 31,2008
(Referring to notes to consolidated financial statements unless separately stated.
Currency: RMB)
1.Basic Information of the Company
Shenzhen Victor Onward Textile Industrial Co., Ltd. (hereinafter referred to as "the
Company"), grew out of the Xingnan Printing Factory Co., Ltd, founded in 1980, was
the first wholly foreign-owned enterprise in Shenzhen. In April 1984, Xingnan Printing
Factory Co., Ltd was changed into foreign joint venture, and was renamed Shenzhen
Victor Onward Textile Industrial Co., Ltd. . On November 19, 1991, the Company was
reorganized into a joint stock limited company and renamed Shenzhen Victor Onward
Textile Industrial Co., Ltd. pursuant to the approval of Shenzhen Municipal
Government.
The domestically listed RMB ordinary shares ("A shares, Stock code: 000018" ) and
domestically listed foreign investment shares ("B shares ,stock code: 200018") issued
by the Company were listed on Shenzhen Stock Exchange in 1992.
By December 31, 2008, the total share capital was 169,142,356 million shares, of which
circulating A-share 51,214,170 million shares, limit-sale A-share 48,506,283 million
shares, circulating B-share 69,421,903 million shares, of which Union Holdings Co., Ltd.
(hereinafter referred to Union Holdings ) holding 43,141,032 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 6,299,185
shares, accounting for 3.72% 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, 2008, Victor Onward printing and dyeing (Hong Kong) Co., Ltd.
(hereinafter referred to as "Hong Kong Victor Onward"), Hong Kong Victor Onward
Digital Printing Co., Ltd. (hereinafter referred to as "Victor Onward Digital Printing"),
Shengzhong Industrial Co., Ltd. (hereinafter referred to as "Shengzhong") , Shenzhen
Vea opel Garment Co., Ltd (hereinafter referred to as "Vea opel") ,Shenzhen East Asia
Victor onward Holding (hereinafter referred to as “East Asia Company)and Shenzhen
Nanhua Printing and Dyeing as well as its wholly-funded subsidiary Nanhua Xingye
Co., Ltd (hereinafter referred to as "Nanhua Xingye") are all subsidiaries of the
Company. The Company and its subsidiaries are collectively referred to as "the Group".深圳中冠纺织印染股份有
限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
14
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
No changes in accounting policies and estimates happened this year, and no
significant pre-errors were found this year.
V. Accounting policies, accounting estimation and the method of preparing consolidated
financial statements
(1)Fiscal year
The fiscal year of the Group starts on January 1 and ends on December 31 on the
Gregorian calendar.
(2)Standard currency for book keeping
Except for Shenzhen East Asia Company and Veaopel taking RMB as the standard
currency for bookkeeping, the Company and other subsidiaries of the Group all take
HKD as the standard currency for bookkeeping.
(3) Basis for bookkeeping and costing principle
The Group's basis for bookkeeping is accrual system. Except that the financial assets for
transaction, the financial liabilities for transaction, and financial assets available for sale
are accounted by fair value, generally, account by historical cost.
(4) Cash and cash equivalents
The cash stated in cash flow statement refers to cash in hand and bank deposits usable for
payment at any time. Cash equivalent refers to the investments with holding period of less than
3 months and strong liquidity that are readily convertible to known amount of cash and subject深圳中冠纺织印
染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
15
to insignificant risk of changes in value.
(5)Foreign currency Convert
（1）Foreign currency Transactions
The foreign currency transactions the Group were accounted according to the
amount of foreign currency on the first day of the current month converting to the
amount of bookkeeping currency. On the balance sheet date, foreign currency monetary
items would be converted into RMB by using the spot exchange rate on the balance
sheet date, the conversion differences produced shall be directly included in the current
loss and gain except the exchange differences produced by foreign currency special
loans borrowed for purchasing or production of the assets which meet the capitalization
conditions. The foreign currency non-monetary items measured by fair value shall be
converted into RMB by the spot exchange rate on the fair value date, the conversion
differences produced shall be directly included in current loss and gain as fair value
changes. The foreign currency non-monetary items measured by historical costs shall be
converted by using the spot exchange rate on the transaction date, and its RMB amount
will not be changed.
（2）Foreign currency statement Convert
The financial statements of the company and the subsidiaries making HK dollars as
bookkeeping currency shall be converted into RMB. In the course of conversion, the
assets & liabilities items shall be converted by using the spot exchange rate on the
balance sheet date, the items of shareholders equity except for the retained profit shall
be converted according to the spot exchange rate, the items of incomes and expenses in
the profit statement shall be converted by the approximate exchange rate of spot
exchange rate on the transaction date. The conversion differences of foreign currency
statements produced in the above conversions shall be individually listed under the item
of shareholders equity.
The cash flow in the cash flow statement are converted by the average exchange rate of the
market rates announced in the accounting period. The influences on cash flow from the changes
of exchange rate are separately listed in cash flow statement.
6. Financial assets
(1). Classification of financial assets:
According to investment purposes and economic nature, the financial assets of the
Group can be divided into the financial assets measured by fair value and the changes
included in the current loss and gain, the expired investments held, receivables and
financial assets for sale, the four categories.
1). The financial assets measured by fair value and the changes included in the current
loss and gain: mainly refer to the financial assets for sale in short term, which shall be深圳中冠纺织印染股
份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
16
listed in balance sheet in transactional financial assets.
2). The expired investments held: refer to the non-derivative financial assets which have
fixed expire date and fixed or determined recovering amount, and the management level
has the intention or ability to hold the assets.
3). Receivables: refer to the non-derivative financial assets which have no quotation in
active market but have fixed or determined recovering amount, including notes
receivable, accounts receivable, interest receivable, dividends receivable and other
receivables.
4). Financial assets for sale: include the non-derivative financial assets which are
recognized as for sale when they are initially confirmed, and the financial assets which
are not divided into other categories.
(2) Confirmation and measurement of financial assets:
Financial assets are conducted initial confirmation by at fair value. The relevant
expenses to obtain the financial assets measured by fair value and the changes included
in the current loss and gain shall be included in the current loss and gain, the relevant
transactional expenses of other financial assets shall be the initial confirmation amount.
When the contract right of a financial asset is ended or the risk and reward of ownership
of the financial asset are transferred to the corresponding party, the confirmation of
financial assets shall be ended.
At fair value and changes in their gains and losses included in the current period of
financial assets and financial assets to be sold in accordance with the fair value of
follow-up measures; receivables and investments held to maturity using the effective
interest method to share more than the cost listed.
The changes of fair values of financial assets measured by fair value and the changes
included in the current loss and gain shall be included in the changing loss and gain of
fair value; all the interest and cash dividends obtained during the period holding the
assets shall be confirmed as investment income; upon the disposal of the assets, the
differences between the fair value and initial bookkeeping amount shall be confirmed as
investment loss and gain, and at the same time, the changing loss and gain of fair value
shall be adjusted.
The changes of fair values of financial assets for sale shall be included in equity of
shareholders; during the holding period, the interest accounted by actual interest rate
shall be included in the investment income; the cash dividends of equity tool investment
for sale shall be included in investment income upon the invested unit’s declaration of
distributing dividends; upon the disposal, the differences between the price and book
value deducting the fair value originally included in shareholders equity shall be
included in investment loss and gain.
(3). Impairment of financial assets:
Except for the financial assets measured by fair value and the changes included in深圳中冠纺织印染股份有限公
司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
17
the current loss and gain, on the financial sheet date, the Group will check the book
value of other financial assets on the balance sheet date, if there is objective evidence
showing that impairment has happened on a financial asset, provision for the
impairment shall be drown. If dramatic or non-temporary decline has happened on the
financial assets for sale, the accumulative loss originally included in shareholders equity
shall be included in the impairment loss. The equity tool investments which the
impairment loss has been confirmed and are related to the events of conformation of
impairment loss shall be included in the equity of shareholders. The impairment loss of
equity tool investments which have no quotation in the active market and the fair value
can not be reliably measured, will not be transferred back.
7. Account receivable and provisions for bad debts
The Group adopted the method of counter compensation for the possible bad debt
losses, which were drown provision for bad debt by the method of individual
recognition at period end and were included in the current loss and gain. The receivables
which were not to be recovered, after being approved by the Group, would be regarded
as bad debt loss and the provision for bed debt would be written off.
The individual amount of receivable over 1 million yuan will be recognized as a
major receivable, when there is evidence showing that the Group will not be able to
recover all the money in accordance with the original item of receivable, provision for
bad debt shall be drown according to the differences of future cash flow lower than the
book value after impairment test.
The non-significant single receivables and the receivables without impairment will be
divided into a number of combinations in accordance with credit risk characteristics.
The provision for bad debts to be drown in this year will be accounted to the actual loss
rate with the similar credit risk characteristics in the previous year and combining the
present situations to determine the ratio of provision for impairment of this year.
The Group divided the receivables which were not to be recovered with evidence
or probably not to be recovered as special asset particular asset portfolio and provision
for bad debt would be fully accounted.
The accounting ratios for provision for bad debts which were divided accounting to
account age were as follows:
Age Proportion深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
18
Winthin 1 year 3%
1-2 years 10%
2-3 years 50%
Over 3 years 100%
The Group shall make special provision for bad debts in respect of other receivables on
case-by-case basis.
8. Inventory
(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
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.深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
19
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. On the merger (purchase) date, in accordance with the merger costs as a
long-term equity investment of initial investment cost.
Apart from the long-term equity investments stated above, the long-term equity
investment obtained by cash, the initial investment obtained by cash will be determined
according to the price actually paid, initial investment costs include the direct costs, tax,
and other necessary expenses to obtaining long-term investment; the long-term equity
investment obtained by issuing equity securities, the initial investment will be
determined according to the fair value of the equity securities issued; the long-term
equity investments invested by investors, the initial investment cost shall be determined
according to contract value; the long-term equity investment obtained by debt
restructuring, non-monetary assets or other methods, the initial investment cost shall be
determined according to the relevant accounting standards.
If the subsidiary uses the cost method to account, adjustment shall be conducted
according to equity method when prepare the consolidated financial statements; the
joint venture and joint venture investment using the equity method; for the long-term
equity investments which have no control or joint control or significant influence and no
price in an active market, the method of cost shall be adopted to account; the long-term
equity investments which have no control or joint control or significant influence, there
are quotations in an active market and the fair value can be reliably measured, shall be
accounted as financial assets for sale.
When using the method of cost accounting, the long-term equity investments were深圳中冠纺织印染股份有限公司财
务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
20
priced by the initial investment costs. When the investment incomes are only limited to
the distribution amount of accumulated net profit after the unit being invested accepting
the investment, and the profit or cash dividends declared by the unit being invested will
be recovered as initial investment cost to reduce the book value of the investment.
When using the equity method accounting, the current investment gains and losses are
the share of net losses and gains to be owned or shared and achieved in the current year
by the unit being invested. When determining the share to be shared by the unit being
invested, on the basis of the fair value of the identifiable assets, according to the
accouting policy and accounting period of the Group, offsetting the internal transaction
loss and gain and the part that the equity proportion attributable to the joint enterprise
and united enterprise, and confirm the net profit of the unit being invested after profit
adjustment.
When confirming the net loss to be shared by the unit being invested, reduce the book
value of long-term equity investment and other long-term equity of the unit being
invested to zero. In addition, if the Group bears the obligation to undertake additional
loss for the units being invested, then confirm the predicted liability according to
predicted obligation and be included in the current loss and gain. The profit achieved by
the units being invested in future period, will be reconfirmed as income shares after the
Group recovered the losses not confirmed.
For the long-term equity investments on joint venture enterprises and joint owned
enterprises held before the first implementation date, if existing the debit difference
relating to the equity investment, the debit difference of equity investment, after
deducting the investment loss and gain according to the original remained period,
should be confirmed as investment gains and losses.
10. Investment real estate
The investment real estates of the Group are the rental buildings.
The investment real estates are accounted by the cost, the purchased investment real
estates include the cost of the purchase price, related taxes and fees and other expenses
which can be directly attributable to the assets; the costs of investment real estate self
constructed include the necessary expenses to construct the asset to reach the predicted
use state.
The Group adopts the cost method to conduct follow-up measurement on
investment real estates are accounted devaluations and amortized. The expected service
life, net residual rate and value depreciation rates of investment real estate are as
follows:深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
21
Type Evpected useful
life（Year）
Estinated
residual value
rate
Annual depreciation rate（%）
Real estate in
Hongkong
20-50 years
0% 2%-5%
Real estate in
China
20-30 years
10% 3%-4.5%
If the investment real estate is changed to self use, since the date of change,
investment real estate shall be converted into fixed assets or intangible assets. The
function of self-use real estate is to earn rent or capital appreciation, then since the date
of change, the fixed assets or intangible assets shall be converted into investment real
estate. When the conversion happens, the book value before the conversion will be the
book value after the conversion.
When the real estate investment is disposed or will never be used, and economic
interests can not be obtained from the disposal, the confirmation of the investment real
estate shall be terminated. The amount of the income from the sale, transfer, disposal of
the investment in real estate deducting the book value and related taxes and fees shall be
included in the current loss and gain.
11. Fixed assets
Fixed assets refer to the tangible assets which have the following characteristics at
the same time, namely, held for production of goods, providing services, leasing or
operation and management, and the life span shall not be more than a year, and the unit
value is high.
Classification of fixed assets: houses and buildings, machinery and equipments,
transportation equipments, office equipments and others.
The fixed assets shall be measured according to the actual cost to obtain them, including,
the cost of purchasing the fixed assets including the purchase price, value-added tax,
import tariffs and other related taxes, and other expenses happened to reach the
predicted use state; the cost of building the fixed assets, which are composed of the
expenses to reach the predicted use state of the assets; the fixed assets invested by
investors, the value on the contract or agreement shall be the accounting value, but if the
contract or agreement value is not fair, the fair value shall be accounted; the fixed leased
assets, the lower amount of the fair value of leased assets and the present value of the
lowest lease payment shall be as the accounting value.深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
22
Follow-up expenditures on fixed assets, including major repair expenses, expenses on updated
improvement and other, To confirm compliance with the conditions of fixed assets, it shall be
included in the cost fixed assets, the recognition of book value of replaced the part shall be
terminated; If not meeting the conditions of confirming fixed assets, they should be
included in the current period.
In addition to the fixed assets which depreciation and impairment had already fully
accounted and the lands which are separately accounted, the Group accounts
depreciation on all fixed assets. The method of average number of years will be used
when accounting depreciation which will be included in the costs and expenses of the
relevant assets. The predicted net residual rate, classified depreciation years and
depreciation rates are as follows:
No
Type Evpected useful
life（Year）
Estinated residual
value rate
Annual depreciati
on rate（%）
1
Real estate in Hong
Kong
20-50 Years
0% 2%-5%
2
Real estate in
China
20-30 years
10% 3%-4.5%
3
Machinery and
equipment
5-14 years
10% 6%-18%
4
Transportation
Equipment
4-5 years
10% 18%-22.5%
5
Office equipment
and other
5 years
10% 18%
At the end of each year, the Group shall recheck the predicted service life of fixed
assets, the predicted net residual value and depreciation method, if changes happen, then
it shall be treated as accounting estimate.
When the fixed assets were disposed, or expected to be used or the disposal can not
have economic interests, the confirmation of the fixed assets shall be terminated. The
income from the sale, transfer or damage of the fixed assets deducting the book value
and related taxes shall be included in the current loss and gain.
12. Construction in progress
The price of the construction project: determine the costs according to the actual
expenditure on the project. Measure the price of the self-operated projects according to
the direct materials, direct wages, direct construction costs; Measure the turnkey深圳中冠纺织印染股份有限公
司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
23
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 assets which meet capitalization conditions, refer to the fixed assets, investment
real estates and other inventories which are constructed for a long time (usually more
than one year) to achieve the intended use or sale of state to.
If meet the capitalization conditions or non-normal breaks occurred in the course of
production and the break time is more than three months, then the capitalization of
borrowing costs shall be suspended; when the acquisition or construction or production
meet the conditions of capitalization and achieve the predicted use or sale state, the
capitalization of borrowing costs shall be stopped.
14. Intangible assets
The intangible assets of the Group include land use rights and computer software. Including:
For the intangible assets purchased, the actual purchase price was the actual cost; For the intangible深圳
中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
24
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.
(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深圳中冠纺织印染股份有限
公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
25
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.
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深圳中冠纺织印染股
份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
26
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. Lease
At the beginning date of lease, the Group divided leasing into financing lease
and operating lease.
Financing lease essentially refers to the lease that transferred all the risks and rewards relating
to asset ownership. As the lessee, on the beginning date of lease, the Group took lower one in the
cash of the fair value and the lowest lease payment as the book-keeping value of the fixed assets
leased in by financing, and the lowest lease payment as the accounting value of the long-term
payment, and the difference between the them will be recorded as financing costs not confirmed.
Operating lease refers to the other lease apart from financing lease. As the lessee,
during the lease period, the Group included the related asset cost and current losses and
gains by the straight-line method during the lease period. The rent of the Group will be
confirmed as income during the lease period by the straight-line method.
22. Government subsidies
Government subsidies, when the Group can meet the conditions attached and can
receive, shall be confirmed. If government subsidies are monetary assets, they shall be深圳中冠纺织印染股份
有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
27
measured according to the amount received; the subsidies allocated according to rated
standards, they shall be measured according to the amount receivable. If government
subsidies are non-monetary assets, they shall be measured according to fair value; if the
fair value can not be reliably measured, they shall be measured according to nominal
amount (1 yuan).
The government subsidies relating to assets shall be recognized as deferred income, and
be averagely distributed within the service life of relevant assets, and be included in
the current loss and gain. If the government subsidies relating to income are used to
compensate the related expenses and losses, they shall be confirmed as deferred income
and be included in the current loss and gain in the period of confirming relevant
expenses. If used to compensate the relevant expenses and losses happened, they shall
be included in the current loss and gain.
23. Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities shall be confirmed
according to the difference between the tax base of assets and liabilities and their book
value (temporary differences). The loss and tax which can be offset in the future years
shall be recognized as temporary differences to determine the corresponding deferred
income tax assets. On the balance sheet date, deferred income tax assets and deferred
income tax liabilities shall be measured by the predicted application rate.
The Group shall determine the deferred income tax assets produced by the deductible
temporary differences within the amount limit of payable taxes which are likely used to
deduct the temporary differences. The book value of the recognized deferred income tax
assets shall be deducted when the deferred income tax assets produced by the deductible
temporary differences within the amount limit of payable taxes which are likely used to
deduct the temporary differences. When enough payable tax can be obtained, the
deducted amount shall be transferred back.
24.Accounting of income tax
The accounting of income tax of the Group shall use the method of debt of balance
sheet. The income tax expenses include current income tax and deferred income tax.
The current income tax and deferred income tax relating to the transactions and events
directly included in shareholders equity shall be included in shareholders equity, except
the book value of deferred income tax adjustment goodwill, the rest current income tax
and deferred income tax or income shall be included in the current loss and gain.
Current income tax cost refers to the amount of payable income tax which shall be paid
to tax department according to the current transactions and events determined according
to tax provisions; deferred income tax refers to difference between deferred income tax
balance sheet debt in accordance with the law shall be recognized deferred income tax
assets and deferred income tax liabilities in the amount originally confirmed.深圳中冠纺织印染股份有限公司财
务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
28
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.Determination of fair value of financial tools
If the financial tools exit in the active market, the fair value shall be determined according to
the price in active market. If the financial tools do not exit in the active market, the fair value shall
be determined by value estimating technologies. Value estimating technologies include the price
used in market transactions, referring the current fair value of other financial assets which are
actually the same, cash flow discount and option pricing model. When use the value estimating
technologies, the market parameters shall be used as much as possible, and the parameters which are
related to the Group will not be used.
27.Methods for compilation of consolidated financial statements
(1). Principles to determine the scope of merger:
The Group will include the subsidiaries which have actual controlling right and the
subjects which have special purpose into the scope of consolidated financial statements.
(2). Accounting methods adopted in consolidated financial statements:
The consolidated financial statements of the Group shall be compiled in accordance
with Enterprise Accounting Standards No. 33 - Consolidated Financial Statements and
the related provisions, the major internal transaction in the scope of consolidation and
transactions shall be offset. The part of shareholders equity of the subsidiary which does
not belong to the parent company, shall be individually listed as equity of minority
shareholders in the consolidated financial statement.
If the accounting policy and accounting period of the subsidiary and the company深圳中冠纺织印染股份有限公司
财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
29
are not consistent, when compile consolidated financial statement, the financial
statement of the subsidiary shall be adjusted according to the accounting policy and
accounting period of the company.
For the subsidiary obtained by corporate merger under different control, when prepare
consolidated financial statements, the individual financial statement shall be adjusted on
the basis of fair value of the net assets on the purchase day; for the subsidiary obtained
by corporate merger under same control, it will be taken as having been existed at the
year beginning, its assets, liabilities, operating results and cash flow shall be
consolidated in the financial statement according to original book value since the year
beginning of the consolidation period.
VI.Taxation
The Group is subject to the following taxes and tax rates:
1. Corporate income tax
The interest rate of corporate income tax of the company and subsidiaries in China
mainland is 15%, 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 18% in 2008. the interest rate of the income from Hong Kong of the
subsidiaries in Hong Kong is 16.5%.
2.VAT
The sales interest rate of processing income and sale income of printing products
of subsidiaries in China mainland and the company is 17%, export products will be
adopted the method of "free, credit and rebate", the tax rebate rate is 11%(January-June
2008), 13%( July-September 2008) and 14% (October-December 2008). The purchase
of raw materials such as VAT input tax paid by the amount of output tax can be offset,
the tax rate is 17%. Of which: the input tax of VAT for export products can pply for
payment of rebate. VAT taxable amount is the balance of the current output tax
offseting the current input tax.
The subsidiaries of the Company in Hong Kong do not need to pay VAT.
3. Business tax
The housing rental income of the company and Nanhua Printing & Dyeing Company深圳中冠纺织印染股份有限公司财务
报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
30
shall be applied to business tax, applicable rate 5%. The subsidiaries of the Company in
Hong Kong do not need to pay business tax.
4. City construction tax and education additional expenses
City construction tax of the Company is based on the value-added tax, business tax, applicable
interest rate 1%, the company does not need to pay education additional expenses..
The subsidiaries of the company in Hong Kong do not need to pay City construction tax
and education additional expenses, subsidiaries in mainland China, the applicable City
construction tax rate is 1%, applicable education additional tax rate of 3%.
5. Property tax
70% of the original value of property of the subsidiaries of the Company in China
mainland shall be the tax basis, applicable tax rate 1.2%, subsidiaries in Hong Kong do
not pay property taxes.深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
31
VII.Corporation Consolidation and Consolidation Financial statement
（1）Main subsidiaries
Proportion%
Name
Registration
plance
Quality
Registered
capital
Business scope
Investment
amount Direct
Indirect Vote right
Proportion%
Whether
the merger
of
statement
Notes
Hong Kong
Victor Onward
Co.
Hong Kong Trade
2,400,002
（HKD）
Purchase of raw materials,
marketing of printed and dyed
woven fabrics, investment and
holding business
2,400,002
（HKD）
100%
100% Yes 1
Victor Onward
Digital Printing Hong Kong Trade
2,000,000
（HKD）
Digital printing
1,500,000
（HKD）
75% 75% Yes 2
Victor Onward
Digital Printing Hong Kong Trade
1,000,000
（HKD）
Sales of corduroy, dyed goods
and printed cloth
1,000,000
（HKD）
100% 100% Yes 3
Nanhua
Company
Shenzhen Trade
85,494,700
（HKD）
Production and sales of printed
cloth and dyed cloth
16,874,255
HKD+2,835,100RMB
51.16% 14.62% 65.78% Yes 4
Xinye
Company
Hong Kong Trade
10,000
（HKD）
Sales of printed cloth and dyed
cloth
10,000
（HKD）
100% 100% Yes 5
Shenzhen
East Asia
Co.
Shenzhen Trade
3,000,000
(RMB)
Textilet,Printing and
dyeing industry and
Raw
materials ,Machinery
equipment and other
1,530,000
(RMB)
51%
51% Yes 6深圳中冠纺织印染股份有限公司财务报表附注
2008 年1 月1 日至2008 年12 月31 日
（本财务报表附注除特别注明外，金额单位均为人民币元）
32
fabrics33
1. The Company invested 2,400,002 Hong Kong dollars in 1984 to establish
Hong Kong Victor Onward Company in Hong Kong.
2. Digital printing company was established in April 18, 2002, registered capital 2
million Hong Kong dollars, Hong Kong Victor Onward holding 75% equity, East Asia
Development (Hong Kong) Ltd holding 25% equity.
3. Shengzhong Company was established in November 9 1993, registered capital 1
million Hong Kong dollars, Hong Kong Victor Onward holding 100% equity.
4. Nanhuan Company was established in July 21, 1988, registered capital 85.49 million Hong Kong
dollars, by December 31, 2008 the shareholding structure as follows:
Name of investor
Year-beginning
amount
Proportion% Year-end amount Proportion
CITIC Group 6,249,662.57 7.31% - -
Shenzhen Nanyou（Group）
Company 3,129,106.02 3.66% 3,129,106.02 3.66%
Shenye Union
(Hongkong)Co., Ltd. 26,127,180.32 30.56% 26,127,180.32 30.56%
The Company * 37,489,425.95 43.85% 43,739,088.52 51.16%
Hong Kong Victor Onward Co. 12,499,325.14 14.62% 12,499,325.14 14.62%
Total 85,494,700.00 100.00% 85,494,700.00 100.00%
* In may 4, 2008, The Company signed by CITIC Group share transfer agreement, the
company price 2.82 million transferee CITIC Group holds 7.31% of the Nanhua
Company of the equity, as of December 31, 2008, the Company directly held There are
the Nanhua shares increased from 43.85 % to 51.16 %.
5. Xinye Company invested HKD10,000 to establish Industry Company in Hong Kong
in December 1996. Nanhua Company Holding’s 100% of the equity.
6. Shenzhen East Asia Company was established in February 28, 2007, registered capital 3 million
yuan, the company invested 1.53 million yuan, holding 51% equity, Nanjing East Asia Textile Co.,
Ltd. invested 1.47 million yuan, holding 49% equity.
(2) Change of consolidation scope
There is no change in the consolidated financial statement of this year.
(I). Foreign currency translation
Except that Shenzhen Dongya Company has RMB as basic accounting currency, the34
company and other subsidiaries have Hong Kong dollars as basic accounting currency.
The financial statements are reflected after conversion of RMB and the foreign currency
conversion methods were described in Note V, 5, of which the spot exchange rate of HK
dollar to RMB was 0.9364 at year beginning, and the spot exchange rate at year end was
0.8819, the approximate exchange rate of the spot exchange rate uses the current
average exchange rate 0.8933.
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, 2008, "year end" means December 31, 2008, "this
year" means from January 1, 2008 to December 31, "last year" means from January 1,
2007 to December 31, the currency unit RMB.
1.Monetary Capital
Year-end balance Year-beginning balance
Items Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
Stock cash 117,278 273,448
RMB 117,028 1.0000 117,028 273,448 1.0000 273,448
HKD 283 0.8819 250
Bank deposit 51,085,519 29,113,125
RMB 24,298,396 1.0000 24,298,396 8,720,938 1.0000 8,720,938
HKD 30,342,936 0.8819 26,759,435 18,451,541 0.9364 17,278,023
USD 4,051 6.8346 27,688 426,329 7.3046 3,114,164
Other monetary
capital 10,165,631 23,270,279
RMB 10,133,914 1.0000 10,133,914 23,237,188 1.0000 23,237,188
HKD 35,964 0.8819 31,717 35,339 0.9364 33,091
Total 61,368,428 52,656,852
* 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.
2.Financial assets for transection
Item Year-end balance Year-beginning balance
Equity tool investment for
transaction. 36,687 140,423
Total 36,687 140,42335
Transactional equity tools are the shares which are to be cashed at any time purchased
by the subsidiary of the company Hong Kong Victor Onward Company, priced by fair value,
Changed income RMB 103,736, its cash has no major restrictions.
3. Bill receivable
（1）Type of Bill receivable
Type Year-end balance Year-beginning balance
Bank acceptance 850,000 -
Total 850,000 -
(1).The Group had no notes receivable for pledge.
(2) At year end, the Group had endorsed the other party the notes not due with amount of 750,000
yuan, the due time from February 18, 2009 to April 25,
4.Account receivable
（1） Age of account receivable
Year-end balance Year-beginning balance
Items
Amount Proportion%
Provision for
bad debts Amount Proportion%
Provision for
bad debts
Within
1 year 4,600,129 29.69 138,004 4,186,342 19.83 18,474
1-2
years 18,866 0.12 1,734,896 7,331,486 34.72 5,627,787
2-3
years 5,712,851 36.88 5,712,851 2,127,388 10.08 1,936,433
Over 3
years 5,160,475 33.31 5,160,475 7,468,803 35.37 7,397,296
Total 15,492,321 100.00 12,746,226 21,114,019 100.00 14,979,990
* The original value of 1-2 years of accounts receivable were less than the amount of
provision for bad debts because the subsidiary of the company Songzhong Company would be
written off, so the company accounted provision for bad debt on the accounts receivable RMB
1,719,936. The accounts receivable were offset at the merger, but the corresponding provision for
bad debts was not offset.36
(2) Risk classification of accounts receivable
Year-end balance Year-beginning balance
Book Balance
Provision
for bad
debts
Book Balance
Provision
for bad
debts
Items
Amount Proportion% Amount Amount Proportion% Amount
Receivables
with large
individual
amount. 3,749,167 24.20 4,057,382 7,217,868 34.19 3,699,398
Receivables
without large
individual
amount, but with
great risk after
combined
according to
risk
characteristics
9,126,271 58.91 8,610,337 11,651,883 55.19 11,216,798
Other minor
receivables
2,616,883 16.89 78,507 2,244,268 10.62 63,794
Total 15,492,321 100.00 12,746,226 21,114,019 100.00 14,979,990
If the individual amount is not important but accounts receivable with big amount
of credit risk identified as follows: According to the characteristics of the company, the
accounts receivable more than 1 year have higher risk to be recovered, so the individual
amount less than one million yuan with more than 1 year of accounts receivable or the
amount less than one million yuan with less than 1 year of account age, and there were
clear indications that the other party can not repaid on time, will be under the portfolio
of accounts receivable.
The accounts receivable at year end with significant single amount or the
insignificant amount which were tested separately.
Name December 31, Provision for Proportion% Age Reasons37
2008 bad debts
Shengzheng Company 1,719,936 1,719,936 100.00
1-2
Years
Insolvent
company, to be
written off
TAIYANG ENTERPRISE
CO.,LTD.
1,098,754 1,098,754 100.00
2-3
years
The unit with
insignificant amount
and account age 1-3
years
4,628,624 4,628,624 100.00
2-3
years
The company had
stopped
production, and
no business
contact for a
long time.
The unit with
insignificant amount
and account age more
than 3 years
5,160,475 5,160,475 100.00
Over 3
years
Account 100%
according to
account age
Total 12,607,789 12,607,789 100.00
（2） Full provision for bad debts had accounted in the previous years, but the
amount of accounts receivable recovered this year was RMB 919,964. The reason for
the provision for bad debts was due to a long account age, and had no business
connection for a long time, and part of funds was recovered this year. Specific
information as follows:
Items
Nature of
Accounts
Receivable
Balance of
Accounts
Receivable at
the end of
last year
The amount
recovered
this year
Guonian Textiles Co., Ltd. goods 1,239,913 617,330
Fengrun Company goods 520,314 146,761
Rotary Textiles (Int'l) Co Ltd goods 142,916 142,916
Tongzhou Huarun Textiles Co.,
Ltd. goods 9,939 9,939
TAL Apparel Ltd goods 21,879 3,018
Total 1,934,961 919,964
（3） The accounts receivable of the subsidiary of the company was RMB
2,448,426, which had been fully accounted the provision for bad account in the
previous years. Because the Huanan Company had stopped production, the above funds38
were the ending funds in a number of customers, without connection, the account age
more than 3 years, so they were written off this year with approval.
（4）In the receivables at the period end, no loans of the shareholders holding 5%
(inclusive of a 5%) or more voting right and other related units.
( 5）The amount of top five debtor was RMB 4,188,213, accounting for 27% of the total.
(6)Accounts receivable include the following foreign currency balances
Foreign goods December 31,2008 December 31,2007
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 12,223,604 0.8819 8,881,870 17,491,056 0.9364 16,378,625
USD 501,763 6.8346 3,429,349 - - -
Total 12,311,219 16,378,625
5.Prepayments
goods December 31,2008 December 31,2007
Name amount Proportion
（%）
amount Proportion
（%）
Within 1 year 1,815,897 100 54,712 100
Total 1,815,897 100 54,712 100
（1） The prepayments at year end increased RMB 1,761,185 over those in the
year beginning, with increases rate 3219%, mainly due to the subsidiary of the
prepayments of the company Shenzhen East Asia Company increased.
(2)The large prepayments at year end are as follows:
Company Name
Relation with
the Company
Amount of
loans
Time of
Loans
Causes
Anqing Dacheng Printing &
dyeing Co., Ltd.
Non-Related
parties
828,070
Within 1
year
Payments
for goods
not paid
Shenzhen Yingxingjia
Garments Co., Ltd. Non-Related
parties 302,691
Within 1
year
Payments
for goods
not paid
Total 1,130,761
Ratio to the total
prepayments
62%39
（3）In the receivables at the period end, no loans of the shareholders holding 5%
(inclusive of a 5%) or more voting right and other related units.
(4) Prepayments include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 29,900 0.8819 26,368 58,428 0.9364 54,712
Total 26,368 54,712
6. Interest receivable
Items December
31,2007
Increase decrease December
31,2008
Fixed
deposits
- 91,087 - 91,087
Total - 91,087 - 91,087
The interests receivable was the ones for the subsidiary of the company Hong Kong
Zhongguan Bank’s deposits, with principal about 20 million Hong Kong dollars, the due
dates were January 29, 2009 and February 6,2009.
7. Other receivables
（1） Account Age
Year-end balance Year-beginning balance
Items
Amount Proportion%
Provision
for bad
debts Amount Proportion%
Provision
for bad
debts
Within
1 year 207,441 4.32 - 8,820,325 87.45 -
1-2
years 3,375,113 70.32 2,519,915 26,067 0.26 26,067
2-3
years * 18,044 0.38 546,411 - - -
Over 3
years 1,199,018 24.98 1,118,617 1,239,422 12.29 1,199,204
Total 4,799,616 100.00 4,184,943 10,085,814 100.00 1,225,271
The other receivables will use the method of individual conformation to account
bad debts.
*The reason for the 2-3 years other receivables which were less than bad debts was that40
the digital printing of the subsidiary will be written off, the company accounted RMB
546,411 for the provision for bad debts, and offset the other accounts receivable and the
corresponding provision for bad debts was not offset. *
（1）Risk classification of other receivable
December 31,2008 December 31,2007
Book account
Provision for
bad debts
Book account
Provision
for bad
debts
Items
Amount Proportion% Amount Amount Proportion% Amount
Receivables
with large
individual
amount.
3,382,539 70.48 3,382,539 8,091,040 80.22 1,080,023
Receivables
without large
individual
amount, but with
great risk after
combined
according to
risk
characteristics
1,232,967 25.69 802,404 69,256 0.69 69,256
Other minor
receivables
184,110 3.83 - 1,925,518 19.09 75,992
Total 4,799,616 100.00 4,184,943 10,085,814 100.00 1,225,271
If the individual amount is not important but accounts receivable with big amount of
credit risk identified as follows: According to the characteristics of the company, the
accounts receivable more than 1 year have higher risk to be recovered, so the individual
amount less than one million yuan with more than 1 year of accounts receivable or the
amount less than one million yuan with less than 1 year of account age, and there were
clear indications that the other party can not repaid on time, will be under the portfolio
of accounts receivable.
（2）In the receivables at the period end, no loans of the shareholders holding 5%
(inclusive of a 5%) or more voting right and other related units.41
(3)The amount of top five debtor was RMB 4,341,333, accounting for 87% of the total.
(4) The balance at year end of the amount receivable in related parties was RMB
203,897, as shown in Note 12, (3).
(5) Other receivables include the following foreign currency balances
Foreign December 31,2008 December 31,2007
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 324,711.95 0.8819 286,363.00 2,007,441 0.9364 1,879,768
Total 286,363.00 1,879,768
8. Inventories and provision for impairment of inventories
（1）Inventories
Items Year-end balance Year-beginning balance
Raw materials 9,479,427 20,479,177
Work-in-process - 2,261,023
Stock 1,076,055 2,003,027
Total 10,555,482 24,743,227
The Inventories at year end decrease RMB 14,187,745, with reduction proportion
57%, because production was stopped, no longer dealing with the procurement of raw
materials and inventory stock.
（2）Provision for impairment of inventories
Items
December
31,2007
Increase in
the current
period
Decrease in
the current
period
Exchange
rate
changes
December
31,2008
Raw materials 11,854,175 1,053,023 5,454,940 -598,514 6,853,744
Work-in-process 1,280,980 - 1,186,325 -94,655 -
Stock 456,364 - 241,898 -23,475 190,991
Total 13,591,519 1,053,023 6,883,163 -716,644 7,044,735
The method for Provision for impairment of inventories , see Note V,8.42
The increase in this year was due to the raw materials with long age in the cargo of
cloth and it is difficult to deal with more than book value in accordance with the net
realizable value of the amount of provision for decline in value of preparation, this year
is to reduce the provision for decline in value this year, sales have been out of stock, so
the corresponding provision for preparation was accounted.
9. Financial assets for sale
Items Year-end balance Year-beginning balance
Equity tools for sale. 207,255 836,861
Total 207,255 836,861
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 588,408 has been included in the public capital
reserve.
10.Long-term equity investment
（1）Long-term equity investment
Items Year-end balance Year-beginning balance
The cost of long-term equity
investment accounting - -
The equity method long-term
equity investment 47,184,759 65,629,837
Total of long-term equity
investment 47,184,759 65,629,837
Less ： Long-term equity
investments for impairment -
Net value long-term equity
investment 47,184,759 65,629,837
（2） The equity method long-term equity investment
Name
Proportion
%
Vote
proportion
%
initial
amount
December
31,2007
change
Exchange
rate
change
December
31,2008
1.Zhejiang
Union Hangzhou
Bay Chuangye
Co., Ltd.
25% 25% 58,588,403 65,629,837 -14,625,316-3,819,76247,184,759
2. Shenzhen 37.5% 37.5% 1,403,456 - - - -43
Lianchang
Printing &
dyeing Co.,
Ltd.
Total 59,991,859 65,629,837 -14,625,316-3,819,76247,184,759
Zhejiang Hualian Hangzhouwan Ventures Limited (hereinafter referred to as
"Hangzhouwan Company"). The changes in this year include the loss of Hangzhouwan
Company this year RMB 10,464,557 and the fair value loss for the financial assets for
sale held by Hangzhouwan Company RMB 4,160,759.
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.
（3） Information of the units being invested.
Name Registration
Place
Quality
Total net
assets
Total
business
income
Net profit
1.Zhejiang Union
Hangzhou Bay
Chuangye Co., Ltd.
Hangzhou
Real
estate
204,018,087 1,087,855
-41,858,227
2. Shenzhen
Lianchang Printing
& dyeing Co., Ltd.
Shenzhen
Printing
& dyeing
-4,881,960 - -
Total
199,136,127 1,087,855
-41,858,227
11. Property investment
The investment in real estate companies use the cost model measures
items
Amount of
year-beginning Increase decrease
Exchange
rate
change
Amount of
year-end
Original Value 52,882,781 56,041,084 - -3,793,042 105,130,823
House, Building 52,882,781 56,041,084 -3,793,042 105,130,823
Accumulated
amortisation 23,596,602 35,190,892 - -1,822,455 56,965,039
House, Building 23,596,602 35,190,892 -1,822,455 56,965,03944
Impairment
Provision
House, Building
Book value 29,286,179 20,850,192 - -1,970,587 48,165,784
House, Building 29,286,179 20,850,192 -1,970,587 48,165,784
The increase in real estate investments were the transfer of the houses of Huanan
Printing Co. to lease, the corresponding fixed assets were adjusted as investment real
estates.
12． Fixed assets
（1） Fixed assets
Items
Amount of
year-beginning Increase decrease
Exchange
rate change
Amount of
year-end
Original
Value. 248,133,252 35,648 56,224,350 -13,704,570 178,239,980
House and
building 114,466,383 - 56,041,084 -5,946,951 52,478,348
Machine and
Equipment 116,014,128 - - -6,752,210 109,261,918
Transportation
Equipment 6,036,317 - 109,939 -334,439 5,591,939
Office equipment
and other 11,616,424 35,648 73,327 -670,970 10,907,775
Accumulated
amortisation 162,376,646 2,560,589 33,722,817 -9,035,845 122,178,573
House and
building 62,895,288 2,202,642 33,550,544 -3,260,557 28,286,829
Machine and
Equipment 87,025,524 34,648 - -5,065,469 81,994,703
Transportation
Equipment 4,719,811 254,760 98,946 -263,568 4,612,057
Office equipment
and other 7,736,023 68,539 73,327 -446,251 7,284,984
Impairment
Provision 31,554,403 3,652,340 - -1,883,127 33,323,616
House and
building 17,245,822 589,750 - -1,011,261 16,824,311
Machine and
Equipment 11,761,439 2,462,148 - -715,956 13,507,63145
Items
Amount of
year-beginning Increase decrease
Exchange
rate change
Amount of
year-end
Transportation
Equipment 2,184 - - -127 2,057
Office equipment
and other 2,544,958 600,442 - -155,783 2,989,617
Book value 54,202,203 22,737,791
House and
building 34,325,273 7,367,208
Machine and
Equipment 17,227,165 13,759,584
Transportation
Equipment 1,314,322 977,825
Office equipment
and other 1,335,443 633,174
*1 The lands of plants and offices of the company at No. 26, Kuipeng Road, Baishigang, Kuiyong
Town, Longgang, Shenzhen were obtained by leasing, lease period by March 31, 2009. The
company was processing the procedures for land use, see Notes 14.
*2 Houses building reduced due to the transfer of the house of Huanan Company to
lease, transferring from fixed assets to investment real estates.
*3 The Company shutdown for consolidation on March 2007, part of machinery and equipments
were to be used for foreign investment, so the company fully accounted provision for impairment
on residual value of housings, accounted 40% provision for impairment from the machinery and
equipments, and accounted provision for impairment from the full value of residual value of other
machinery and other equipments.
RMB 3,652,340 was accounted for the provision for devaluation for fixed assets,
causes as follows:
Items
Amount
accounted
this year
Causes
House and building 589,750
The decoration of houses and buildings set aside
the original fee of 10% of the net residual value,
and actually no non-recoverable value, fully
accounted the provision for impairment.
Machine and
Equipment—To be
investment
1,809,747
This part of the equipments were to be invested as
foreign investment, starting in September 2007 as
holding for sale of fixed assets accounting, from46
the cessation of depreciation from the month, but
postponed their investment plans, from September
2007 to the end of this year, the full provision for
impairment should be accounted.
Machine and
Equipment—other
652,401
Book value of machinery and equipment was in
accordance with the expected sale price which is
higher than the difference of the provision for
impairment.
Office equipment and
other
600,442 10% was pre-set aside for the other equipments in
which the original accounts of the ancillary
facilities no actual non-recoverable value, the full
provision for impairment was accounted.
Total 3,652,340
（2）Details of temporary idle fixed assets are as follows：
Items
Book
Original
value
Accumulated
depreciation
Impairment
provision Book Net value
House and building 48,453,887 27,384,459 16,824,311 4,245,117
Machine and
Equipment 109,261,918 81,994,703 13,507,631 13,759,584
Transportation
Equipment 3,583,634 3,243,180 - 340,454
Office equipment and
other
9,103,678 5,788,719 2,989,617 325,342
Total 170,065,803 118,212,915 30,804,075 21,048,813
The original value of the temporarily idle machinery and equipments to be invested
in Nanjing Textile Printing & dyeing Co., Ltd. was RMB 82,908,265, Accumulated
amortisation was RMB 60,270,320, Impairment Provision was RMB 10,841,830,
Book value was RMB 11,796,115.
13. Intangible assets
Items
Amount of
year-beginning Increase decrease
Exchange
rate
change
Amount of
year-end
Original Value 12,729,070 - - -740,852 11,988,218
Land use
right 11,957,977 - - -695,973 11,262,004
software 771,093 - - -44,879 726,21447
Items
Amount of
year-beginning Increase decrease
Exchange
rate
change
Amount of
year-end
Accumulated
amortisation 11,968,469 469,222 - -696,584 11,741,107
Land use
right 11,459,758 469,222 - -666,976 11,262,004
software 508,711 -29,608 479,103
Impairment
Provision 262,382 - - -15,271 247,111
Land use
right - - - - -
software 262,382 - - -15,271 247,111
Book value 498,219 - 469,222 -28,997 -
Land use
right 498,219 - 469,222 -28,997 -
software - - - - -
14. Goodwill
Items Amount of year-end Amount of
year-beginning
For the goodwill formed from
holding shares of Nanhua
Company,
3,594,648 -
Total 3,594,648 -
The company bought the 7.31% equity of Nanhua Company held by the CITIC
Group, with a price RMB 2.82 million, at the same time paid the processing fees RMB
15, 100, bought 7.31% of equity of Rianhua Company with equity amount RMB 759,
548, so it generated goodwill RMB 3,594,648.
15. Impairment of assets schedule48
Decrease in the current
period
Items
Amount
of
year-begi
nning
Accrual
amount
Switchbac
k
Other
Transfer
out
Exchange
rate
change
Amount
of
year-end
Provision for bad
debts 16,205,261 5,099,197 997,924 2,480,077 -895,288 16,931,169
Stock
Impairment
Provision 13,591,519 1,053,023 - 6,883,163 -716,644 7,044,735
Impairment of
fixed assets 31,554,403 3,652,340 - - -1,883,127 33,323,616
Impairment of
Intangible assets 262,382 - - - -15,271 247,111
Total 61,613,565 9,804,560 997,924 9,363,240 -3,510,330 57,546,631
The provision for bad debts transferred back RMB 919,964 was the accounts
receivable with provision for bad debts accounted, as shown in Note 8 (4),
Another RMB 77,960 was the provision for bad debts for other receivables
transferred back. The other transfers were that the subsidiary of the company Nanhua
Company wrote off the provision for bad debts for accounts receivable last year. The
cause for the inconsistency with Note 8(4) was due the conversion of foreign currency.
The cause for the transfer out for provision for inventory devaluation was that the
inventory with provision for impairment originally accounted transferred out the
corresponding provision for devaluation.
16. Account payable
（1）Account payable
Items Year-end balance Year-beginning balance
Total 6,175,741 4,936,984
Including：over 1 year 1,796,627 227,033
The accounts payable increased RMB 1,238,757 at the end of this year over the year
beginning, an increase of 25%, mainly due to the settlement of procurement money of
Company's subsidiary Shenzhen Dongya Company this year was not settled in time.
Accounts payable with age over one year included a number of accounts, without
single significant amount of accounts payable.
Of the prepayments at the end of period, there were none owed by corporate49
shareholders of the Company holding over 5% (including 5%) of its total shares with
voting rights.
（2）Accounts payable include the following foreign currency balances.
Foreign December 31,2008 December 31,2007
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 551,336 0.8819 486,223 757,424 0.9364 709,252
Total 486,223 709,252
17. Advanced account
（1）Advanced account
Items December 31,2008 December 31,2007
Total 5,281,103 5,833,758
Including：over 1 year 2,234,901 -
Advanced account more than 1 year was mainly the sale fund for the wasted
materials from the relocation of the company, and due to delays in the overall relocation
plan, the money paid in advance was temporarily suspended.
Of the prepayments at the end of period, there were none owed by corporate
shareholders of the Company holding over 5% (including 5%) of its total shares with
voting rights.
（2）Advanced Accounts include the following foreign currency balances.
Foreign December 31,2008 December 31,2007
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 595,522.23 0.8819 525,191 20,231 0.9364 18,944
USD 199,748.46 6.8346 1,365,201 - - -
Total 1,890,392 18,944
18. Wage payables to employees
Items
December
31,2007
Increase in
current period
Decrease in
current
period
December
31,200850
Wage (Including reward ,
allowance and subsidy) 584,656 3,222,667 3,291,599 515,724
Welfarism For employees 109,655 54,476 164,131 -
Social insurance premiums -704 794,324 793,620 -
Including :
Medical insurance premiums 1,452 54,519 55,971 -
Basic old-age insurance
premiums -2,808 699,057 696,249 -
Annuity payment - 35,448 35,448 -
Unemployment insurance
expenses 214 2,318 2,532 -
Industrial injury insurance
premiums 367 1,478 1,845 -
Childbirth insurance premiums 71 1,504 1,575 -
Housing accumulation fund 244 17,799 18,043 -
Trade union outlays and
employee education outlays 82,709 23,933 22,482 84,160
Other - 46,022 46,022 -
Total 776,560 4,953,545 5,129,517 599,884
At the period end, the company had no wages payable that belong to arrears.
19. Fees and taxes payables
Items Tax rate Year-end balance Year-beginning balance
VAT 17% 1,626,945 681,383
Business tax 5% 235,420 172,769
Enterprise income tax 18%、16.5% 1,441,086 1,027,431
Tax on city maintenance
and construction 1% 751 -127
Property tax 1.2%和12% 294,194 308,141
Individual income tax - 604
Tariff 10% 711,084 -
Stamp tax 242,213 257,181
Total 4,551,693 2,447,382
The taxes payable at the year end increased RMB 2,104,311 than the beginning of
the year, with increase proportion 86%, mainly due to imports of cloth of the Company
can no longer be re-exported, in accordance with the requirements from the customs, we
need to pay VAT and customs duties, In addition, The Company's subsidiary, Hong
Kong Zhongguan pre-paid the income tax at the end of last year, the payable income tax
had credit balance, the debit balance will result in a balance increase due to corporate
income tax.51
20. Dividend payable
Items Year-end balance Year-beginning
balance
Reasons of
arrears
State Development &
Investment Co., Ltd*2
264,547
280,896
CITIC Group*2 264,547 280,896
Shenzhen Nanyou (Group)
Company
132,274
140,448
Shenye Union（Hongkong）
Co., Ltd.
132,274
140,448
Changzhou Dongfeng
Printing and dyeing plant
*2
529,095
561,792
Capital tense
Total 1,322,737 1,404,480
*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 three companies are the former shareholders of Nanhuan Company, the
subsidiary of the company.
21. Other accounts payable
（1）Other accounts payable
Items Year-end balance Year-beginning balance
Total 30,064,983 28,418,511
Including：Over 1 year 25,582,982 22,168,622
（2）Other payables which are longer than one year mainly were the
loans borrowed by Nanhuan Company the subsidiary of the company from
related companies, which have not been paid because of capital tension.
（3）Of the Other payables at the end of period, there were none owed by corporate
shareholders of the Company holding over 5% (including 5%) of its total shares with
voting rights.
(4) Other accounts payable by aging are as follows52
Items Arrears
amount Age
Nature or
content
Union Group 20,492,359
Within 1 year or
over 3 years Between loan
Shenzhen Union property
Group Co., Ltd. 3,473,200 2-3 years Between loan
State Development & Investment
Co., Ltd 2,999,660 Over 3 years Between loan
Total 26,965,219
（5）Other payable Accounts include the following foreign currency
balances.
Year-end balance Year-beginning balance
Foreign
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 1,839,964.93 0.8819 1,622,665 2,920,295 0.9364 2,734,565
Total 1,622,665 2,734,565
22.Long-term loans
Type December 31, 2008 Decembr 31,2007
HKD 1,674,164 1,928,557
Total 1,674,164 1,928,557
.. The long-term 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, the year loan interest rate 5.1%, monthly payment HKD 12,365. As of December
31, 2008,Principal amount of HKD 1,898,360.68 (RMB 1,674,164)
23.Long-term payable
Items Time Year-end balance Year-beginning
balance
Assess the value of
assets Non-time 9,232,220 9,802,757
Total 9,232,220 9,802,757
* 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 ).53
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 December 31, 2008 Decembr 31,2007
The income tax of taxable
temporary difference.
1,015,950 1,195,397
Total 1,015,950 1,195,397
（2）THE temporary difference
Item of the taxable temporary December 31, 2008 Decembr 31,2007
Assets assessment appreciation 6,157,273 6,830,841
Total 6,157,273 6,830,841
Tax rate 16.5% 17.5%
Confirmation of the Deferred
income tax liabilities. 1,015,950 1,195,397
* 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 December
31,2007
Increase in
current period
Decrease in
current period
December
31,2008
ERP Information
construction 263,601 - 15,342 248,259
Digital printing
technology
subsidies 702,937 - 40,912 662,025
Total 966,538 - 56,254 910,284
The above funds were the special subsidies received from Shenzhen Department of
Finance in 2004 for the digital jet printing projects and for the construction of enterprise
information. The deal must be accepted by the Financial Bureau before accounting, so it
was suspended. The reduction was due to the change in exchange rates.54
26. Share capital
December 31,2007 December 31,2008
Name/Type
Amount Proportion%
Change
Amount Proportion%
.Shares w
conditional
subscription
State-owned
legal person
shares 13,822,369 8.17% -8,457,118 5,365,251 3.17%
Other domestic
shares 43,141,032 25.51% - 43,141,032 25.51%
Incl ： domestic
legal person
shares 43,141,032 25.51% - 43,141,032 25.51%
Total Shares
with conditional
subscription 56,963,401 33.68% -8,457,118 48,506,283 28.68%
Shares with
unconditional
subscription
Common shares
in RMB 42,757,052 25.28% 8,457,118 51,214,170 30.28%
Foreign shares in
domestic market 69,421,903 41.04% - 69,421,903 41.04%
Total Shares
with
unconditional
subscription 112,178,955 66.32% 8,457,118 120,636,073 71.32%
Total of capital
shares 169,142,356 100.00% - 169,142,356 100.00%
27. Capital common reserve
Items December
31,2007
Increase in
current period
Decrease in
current period
December
31,2008
Share capital
Premium 29,718,829 - - 29,718,829
Other Capital common
reserve 14,162,238 55,221
4,741,657 9,475,802
Total 43,881,067 55,221 4,741,657 39,194,63155
The capital surplus increased this year was the part which was attributable to the
change in equity in Shenzhen Dongya Company, RMB 4,160,758 reduced in this year for
the loss of fair value of financial assets for sale this year, 0 yuan was for the reduction in
other rights and interests of the joint enterprises.
28. Surplus common reserve
Items December
31,2007
Increase in
current period
Decrease in
current period
December
31,2008
Statutory Surplus
common reserve
26,309,287
- -
26,309,287
Total 26,309,287 - - 26,309,287
29. Retained profit
Items Amount Proportion（%）
Balance at the end of last period -89,853,184
Add：The beginning of the undistributed
profits adjustments -
Including：Change of accounting policy -
Correcting previous errors -
Change of consolidated scope -
Other adjustments -
Balance at the beginning of current year -89,853,184
Add:Increase Net profit at the current period -25,957,333
Less ： Withdrawing statutory surplus public
reserve
Withdrawing discretionary surplus reserve
Common stocks dividends payable
Stock dividend transferred in stock
capital
Balance at the end of current year -115,810,517
Including：Distribute cash dividend -
30. Minority shareholders equity
Name of Subsidiary Proportion% Year-end balance Year-beginning
balance
Digital printing 25% - -56
Company*
Nanhua Company* 34.22% - -
Shenzhen East Asia
Company 49%
884,454
872,829
Total 884,454 872,829
* The two subsidiaries had excess losses, because the constitution and agreement of the
company agreed that small shareholders bear the obligations of the excess losses, so the equity of
minority shareholders was reduced to zero, the excess losses were fully beard by the Company.
31. Business income, Business cost
（1）Business income,Business cost
Items In the report period The same period of
last year
Key business income 37,649,438 100,468,588
Other business income 9,231,820 3,100,007
Total 46,881,258 103,568,595
Key business cost 36,612,766 117,236,227
Other business cost 4,728,563 2,151,692
Total 41,341,329 119,387,919
（2）Type
In the report period The same period of last year
Content Business
income
Business cost
Business
income
Business cost
Cloth bleaching, printing and
dyeing 37,649,438 36,612,766 100,468,588 117,236,227
House lease 9,231,820 4,728,563 2,646,533 1,762,034
Other cost - - 453,474 389,658
Total 46,881,258 41,341,329 103,568,595 119,387,919
（3）The total sale incomes of the top five customers was RMB 22,955,956 ,
representing 61% of the main business income in this year.
（4）The operating income and operating cost in this year, reduced RMB 56,687,337
and RMB 78,046,590 over the previous year, respectively 55% and 65%, mainly due to
the Nanhuan Company continues to halt the operation of business, so the business
further declined.57
32. Business tax and supertax
Items Proportion% In the report period The same period of
last year
City Construction
Tax 1%
-
458
Education surcharge 3% 458 1,375
Total 458 1,833
33.Sale Expenses
Sales expense in this year was RMB 2,629,457, RMB 5,977,473 reduced over the last
year, with reduction proportion 69%, mainly due to lower sales, so the corresponding
sale costs decreased significantly.
34. Management expenses
The management cost in this year was RMB 10,098,033, decreased RMB 24,894,145
over the last year, decrease proportion 71%, mainly because most of the staff members
laid off last year, there were large amounts of staff severance costs, and there is no such
expenditures this year. In addition, since the production was stopped last year, fixed
assets depreciation was included in the management costs, and this year most fixed
assets were accounted provision for devaluation, so the depreciation costs reduced.
35. Financial expenses
Items In the report period The same period of
last year
Interest expenses 1,277,319 4,834,706
Less：Interest income 667,773 589,809
Add：Exchange rate loss -1,007,131 2,550,162
Add：Other expenses 43,596 156,835
Total -353,989 6,951,894
The financial cost reduced RMB 7,305,883 over last year, with reduction proportion
105%, mainly due to there were more borrowings last year, so the corresponding
interest payments increased, and interest payments this year the interests accounted
from Hualian Group by Nanhua Company, actually unpaid.
36. Asset impairment losses
Items In the report period The same period of58
last year
Bad debt losses 4,101,273 12,792,532
Inventory devaluation losses 1,053,023 8,947,576
Fixed asset impairment losses 3,652,340 32,706,860
Intangible asset impairment losses - 271,965
Total 8,806,636 54,718,933
37．Changes income in fair value /loss
Items In the report period The same period of
last year
Trading financial assets- Changes loss in
fair value
-96,798
57,809
Total -96,798 57,809
The reason for the difference for the balance change of transactional financial assets
was due to the difference in translation.
38. Investment income
(1）Investment income generated by the sources listed
Items In the report period The same period of
last year
Stock investment income 248,229 3,258,808
The amount of net increase of owner’s equity of
the invested unit adjusted at the year end. -10,599,829 3,331,782
Income from transfer of equity investment - 1,940,802
Total -10,351,600 8,531,392
* This year's money has decreased tremendously is because affiliated company
is still under exlpoitation of real estate, and still has no profit, the reason
for the difference amount 135,272 yuan from note 8 (10) of Long term share equity
investment lost is because the exchange rate for report is different.
There were no major restrictions in the investment income at the period end.
（2）Equity method
Items In the report period The same period of
last year
Total -10,599,829 3,331,782
Including：Hangzhou Bay Company -10,599,829 3,331,78259
39.Non-operating income
Items In the report period The same period of
last year
Net income disposition fixed assets 116 48,530
Other - 46,091
Total 116 94,621
40.. Non-operating expense
Items In the report period The same period of
last year
Loss disposition Non-current assets 10,994 2,258,181
Debt restructuring loss - 9,706,099
Donate expenses 19,905 -
Other 48,788 37,980
Total 79,687 12,002,260
41. Income tax expenses
Items In the report period The same period of last
year
The current income tax expense - 775,455
Deferred income tax expense -111,294 -605,446
Total -111,294 170,009
42. Calculation process for Basic gains per share and Diluted gains per shares
Items
No
In the report
period
The same
period of last
year
Net profit attributable to
shareholder of the Parent
Company
1 -25,750,800 -116,356,882
non-recurring gain/loss
attributable to the
shareholders of the Parent
Company
2 1,020,542 -5,668,14260
Items
No
In the report
period
The same
period of last
year
Attributable to the
shareholders of the Parent
Company, Net profit after
deducting of non-recurring
gain/loss\
3=1-2 -26,977,875 -110,688,740
Total of shares at
year-beginning 4
169,142,356 169,142,356
Public reserve was
transferred as capital
and share increase
from dividend
distribution（Ⅰ）
5 - -
The issuance of new
shares or increase the
number of shares and
other debt-equity swap
（Ⅱ）
6 - -
Increase in the shares
(Ⅱ)from the next month to
the end month of the
reporting period
7 - -
Shares decreased in the
reporting period due to
repurchase.
8 - -
Decrease in the shares
from the next month to the
end month of the reporting
period
9 - -
Number of months of the
reporting period
10 - -
The weighted average
number of ordinary shares
issued out.
11=4+5+6×7÷10
-8×9÷10
169,142,356 169,142,356
Basic gains per share（Ⅰ） 12=1÷11 -0.15 -0.69
Diluted gains per share
（Ⅱ） 13=3÷11
-0.16
-0.6561
Items
No
In the report
period
The same
period of last
year
The interest of ordinary
shares which was
confirmed as costs
14 - -
Conversion costs 15 - -
Income tax rate 16 18% 15%
Warrants, shares with
equity right increase
17 - -
Diluted gains per share
（Ⅰ）
18=[1+(14-15)×(1-16)]÷(11+17) -0.15 -0.69
Diluted gains per share
（Ⅱ）
19=[3+(14-15)×(1-16)]÷(11+17) -0.16 -0.65
43. Cash flow statement
（1）cash and cash equivalents
Items In the report period The same period of
last year
Cash 61,368,428 52,656,852
Including :Stock of cash 117,278 273,448
The bank deposits which can be used at any
time 51,085,519 29,113,125
The other monetary funds which can be used
at any time 10,165,631 23,270,279
The funds deposited in the central bank
which be used - -
The funds deposited in the same industry - -
The funds offered by the same industry - -
Cash equivalents - -
Including : Debt investments which will due
within three months - -
Balance of cash and cash equivalents at the
period end 61,368,428 52,656,852
Including : the restricted cash and cash
equivalents used by the parent company or
subsidiary of the Group - -
（2）Reveive/payable other /Investment/cach of financing activities62
1）Other cash received relating to financing activities
Items In the report period The same period of last
year
Rental income 9,093,398 2,646,533
Between units and individuals 45,356 2,311,548
Interest income 576,686 589,809
Deposit and Water and electricity fees 1,402,199 -
Profits tax paid in advance will have prepaid tax
returned 567,051 -
Other 138,168 -
Total 11,822,858 5,547,890
2）Other cash paid relating to operating activities
Items In the report period The same period of
last year
Sales commission - 2,193,282
Rental fee 715,743 362,021
Society fees 655,805 963,790
Between units 412,655 800,000
Transportion fees 341,584 635,377
Audit fees 624,144 1,105,630
Packing fees - 62,163
Office fees 339,075 247,536
Insurance premium 194,234 472,789
Travel fees 609,541 406,714
Telephone fees 223,003 223,024
Securities management expenses 216,911 223,969
Commodity inspection expenses - 41,259
Water and electricity fees 1,549,417 191,935
Land use expenses 96,951 223,038
Parking fees 165,654 219,082
Tariffs on trial charge 40,634 40,952
Lawyer fees 49,082 249,741
Courier charges 33,326 62,269
Advertising - 76,345
Property management fees 209,786 53,29463
Items In the report period The same period of
last year
Repair fees 168,714 -
Deposit 33,273 -
Other 754,354 718,867
Total 7,433,886 9,573,077
（3）Supplement information of Consolidated Flow Statement
Items In the report
period
The same period
of last year
1. Adjusting net profit to net cash flow in operating
activities:
Net profit -26,057,341 -124,579,539
Add： Provision for impairment of assets 8,806,636 54,718,933
Fixed assets depreciation 4,028,664 8,534,949
Amortization of intangible assets 469,222 838,806
Amortization of long-term expenses to be amortize - -
The losses on the disposal of fixed assets, intangible assets
and other long-term assets 10,878 2,209,651
Loss on retirement of fixed assets -
Loss on changes of Fair value 96,798 -57,809
Financial expenses 1,911,015 4,834,706
Investment losses 10,351,600 -8,531,392
Decrease of deferred income tax asset - -
Increase of deferred income tax liability -179,447 -351,641
Decrease in inventory 14,187,745 58,790,418
Decrease in operating receivable -4,136,161 27,400,836
Increase in operating payables 4,131,812 -15,680,486
Other -
Net cash flows from operating activities 13,621,421 8,127,432
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 61,368,428 52,656,85264
Items In the report
period
The same period
of last year
Less：Cash at the beginning of the period 52,656,852 91,671,898
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 8,711,576 -39,015,046
The financial cost due to change in exchange rate and the impact on cash and cash equivalents RMB
1,911,015, the financial cost of interest payments was the loan interest of the related parties, reflected
in
business activities.
IX. Parent company Notes of financial statements
1. Accounts receivable
(1)Account receivable age
Year-end balance Year-beginning balance
Items
Amount Proportion%
Provision
for bad debts Amount Proportion%
Provision
for bad debts
Within
1 year 736,126 5.56 22,084 2,069,986 11.51 -
1 － 2
years 1,719,937 13.00 1,719,937 7,367,587 40.97 3,909,130
2 － 3
years 5,669,146 42.85 5,669,146 1,932,265 10.74 1,733,603
Over 3
years 5,105,730 38.59 5,105,730 6,613,800 36.78 6,561,125
Total 13,230,939 100.00 12,516,897 17,983,638 100.00 12,203,858
(2) Risk classification of Account receivable
Year-end balance Year-beginning balance
Book Balance Book Balance
Items
Amount Proportion%
Provision
for bad
debts
Amount Amount Proportion%
Provision
for bad
debts
Amount
Receivables
with large
individual
amount.
4,013,720 30.34 4,013,720 9,044,094 50.29 3,699,399
Receivables
without large
individual
amount, but
8,481,093 64.10 8,481,093 8,939,544 49.71 8,504,45965
with great risk
after combined
according to
risk
characteristics
Other minor
receivables
736,126 5.56 22,084 - - -
Total 13,230,939 100.00 12,516,897 17,983,638 100.00 12,203,858
(1)The drawing methods and ratio of provision for bad debt are described in Note 8(4)
(2) The total amount of the top five accounts receivable at the period end was RMB 5,254,055 ,
accounting for 40% of the total accounts receivable.
(3) Other Account receivable include the following foreign currency balances
Foreign Year-end balance Year-beginning balance
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 12,955,677 0.8819 11,425,612 17,870,726 0.9364 16,734,148
Total 11,425,612 16,734,148
2. Other receivables
(1) Age of account receivable
December 31, 2008 December 31, 2007
Items
Amount Proportion%
Provision
for bad
debts Amount Proportion%
Provision
for bad
debts
Within
1 year 22,488,425 26.19 - 83,777,367 98.64 -
1 － 2
years 62,227,913 72.46 2,486,951 35,001 0.04 35,001
2 － 3
years 35,000 0.04 32,964 - - -
Over
3
years 1,123,919 1.31 1,118,617 1,124,061 1.32 1,121,014
Total 85,875,257 100.00 3,638,532 84,936,429 100.00 1,156,015
(2)Risk classification of other receivable
Items Year-end balance Year-beginning balance
Book Balance Provision
for bad
Book Balance Provision
for bad66
debts
debts
Amount Proportion% Amount Proportion% 比例% Amount
Receivables with
large individual
amount. 84,585,569 98.50 3,319,691 83,809,610 98.67 1,080,023
Receivables without
large individual
amount, but with
great risk after
combined according
to risk characteristics 898,054 1.04 318,841 - - -
Other minor
receivables 391,634 0.46 - 1,126,819 1.33 75,992
Total 85,875,257 100.00 3,638,532 84,936,429 100.00 1,156,015
The total amount of the top five accounts receivable at the period end was RMB 83,814,454 ,
accounting for 97 of the total accounts receivable. Mainly due to receivable of the Company
subsidiary current account.
(3) The total amount of the accounts receivable at the period end was RMB 203,897 , See Notes 12,
13.
Other Account receivable include the following foreign currency
balances
Foreign December 31, 2008 December 31, 2007
currency
Name
Original
currency
Exchange
rate
RMB
equivalent
Original
currency
Exchange
rate
RMB
equivalent
HKD 75,848,108 0.8819 66,890,447 68,779,926 0.9364 64,405,523
Total 66,890,447 64,405,523
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 39,974,858 39,438,55167
Total of long-term equity
investment 39,974,858 39,438,551
Less ： Long-term equity
investments for impairment - -
Net value long-term equity
investment 39,974,858 39,438,551
(2) （3）The method for cost
Name Proportion%
Vote
proportion%
Initial
amount
December
31, 2007
Increase/decrease
in this period
Exchange
rate
change
December
31, 2008
Dividend
The
method
for cost：
Hong Kong
Victor
Onward 100% 100% 2,411,282 24,503,501 - 1,426,144
23,077,357 -
Nanhua
Printing
and
dyeing 43.85% 43.85% 23,082,831 13,487,886 2,835,100 788,422
15,534,564 -
East
Asia 51% 51% 1,470,000 1,447,164 - 84,227
1,362,937 -
Total 26,964,113 39,438,551 2,835,100 2,298,793 39,974,858
Mainly accounts receivable from the subsidiaries.
The increase this year was due to the acquisition of minority shareholder held by
China CITIC Group 7.31% stake.
(4) Business income, Business cost
（1）Business income, , Business cost
Items December 31, 2008 December 31, 2007
Key Business income 19,313,029 34,426,195
Other business income 995,521 946,993
Total 20,308,550 35,373,18868
Key Business cost 19,836,688 52,158,843
Other business cost 371,531 1,001,546
Total 20,208,219 53,160,389
（1） Type
In the report period The same period of last year
Items Business
income
Business cost
Business
income
Business cost
Cloth bleaching, printing and
dyeing
19,313,029 19,836,688
34,426,195 52,158,843
Lease income 995,521 371,531 946,993 1,001,546
Ttal 20,308,550 20,208,219 35,373,188 53,160,389
（2） The total amount of the top five sale income at the period end
was RMB 13,407,081, accounting for 69% of the total sale income .
(5) Investment income
Items In the report period The same period of
last year
Investment income from disposal of
long-term equity investment
- 900,000
Investment income obtained from
disposal of transactional financial assets
241,685 3,258,808
Total 241,685 4,158,808
X. Contingent events
The external investment contracts and the related financial expenditures which have signed or not
yet completely fulfilled.
X1. Leasing
(1) Business in leasing assets
Type Year-end balance Year-beginning
balance
Original Value 105,130,823 52,882,781
Including ：House, Building 105,130,823 52,882,78169
Accumulated amortisation 56,965,039 23,596,602
House, Building 56,965,039 23,596,602
Impairment provision - -
House, Building - -
The book value 48,165,784 29,286,179
House, Building 48,165,784 29,286,179
(2) Significant operating lease minimum lease payments
Exchange liquidation
By December 31, 2008, The leasing of office space of the Group requires for
non-cancellable operating lease commitments in the following period as follows:
The remaining lease period
Minimum lease
payments
Within 1 year(including 1 year) 371,944
Over 1 year and within 2 years(Including 2 years) 29,862
Over 2 years and within 3 years(Including 3 years) -
Over 3 years -
Total 401,806
XII. Related party relationship and related transactions
（一） Related party relationship
1. Related party relationship
(1)The related parties with controlling relationship
Parent
company
Type
Registered
address
Legal
repres
Nature
Relations
hip
Organi
zation
Code
Union
Holding
s
Issue
company
11/F,Union
Bulding,
Shennan Zhong
Road,Shenzhe
n
Dong
Bingg
en
Production
and sale ofclothing
and textiles, and
real estate
developin
Controll
ing
sharehol
der
19247150070
Union
Group
Limited
liabilit
y Company
Union
Bulding,Shenna
n Zhong Road,
Shenzhen
Dong
Bingg
en
Import & export
business
“processing with
materials” and
processing with
imported materials
Actual
controller
190337957
(2) The registered capital of the related parties with controlling relationship
and the change thereof.
Parent company Balance in year
beginning
Increase of
this period
decrease of
this period
Balance in year
end
Union Group 90,606,000 - - 90,606,000
Union
Holdings 1,123,887,712 - - 1,123,887,712
(3) The related parties without controlling relationship
Shares amount Holding proportion% Vote proportion%
Parent
company
Amount in
year end
Amount
in year
beginning
Proportion
in year end
Proportion
in year
beginning
Proportion
in year end
Proportion
in year
beginning
Union
Group 6,299,185 6,383,736 3.72% 3.77% 3.72% 3.77%
Union
Holdings 43,141,032 43,141,032 25.51% 25.51% 25.51% 25.51%
** Union Group holds 31.32% of equity capital of Union Holdings, it controls Union Holdings, and
Union Holdings is a controlling shareholder of the company, thus Union Group is the actual
controller of the company
1.Subsidary company
The subsidiaries of the Company as described in Note 7
2.Joint venture and affiliated company.see Notes( 8)
(4) Other Related party71
Type Name
Related
transactions
The related parties controlled
the same Actual controller
Shenye Union(HongKong)Co.,
Ltd.
Current balance
The related parties controlled
the same actual controller
Shenzhen Union real estate
Group Co., Ltd.
Current balance
(5) Related transactions
1. Lease assets to the related parties
In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union
Group. The term of tenancy is from March 1, 2008 to February 28, 2009. The monthly rent is RMB
6800. The rent was determined according to market price.
2. Balance current related parties
related parties
December 31, 2008 December 31, 2007
Account receivable
account receivable 325,644 370,988
Other payable
Union Group 20,492,359 16,310,435
Shenzhen Union real estate Group Co.,
Ltd. 3,473,200 3,003,528
1. XIII. Commitment events
1. The external investment contracts and the related financial expenditures which have signed or not
yet completely fulfilled.
By December 31, 2008,The Group still has the major external investments RMB 30 million which
have signed but still not paid, as follows:
Names of
investment
projects
Contract
ual
investme
nt
amount
Prepai
d
invest
ment
amount
Unpaid
investmen
t amount
Expecte
d
investm
ent
period
Remarks72
Invest Nanjing
East Asia
Textile Co.,
Ltd with
machinery and
equipments
30 million - 30million
Unsurene
ss
Can not be
relocated
because the
fields
uncompleted
1. The big contract which has been signed or is ready to be carried out
By December 31, 2008, The Group still has big contract which has been signed but not paid, a
total of 1.71 million yuan, as follows:
Names of
investmen
t projects
Contractu
al
investmen
t amount
Prepaid
investm
ent
amount
Unpaid
investm
ent
amount
Expected
investment
period
Remarks
Relocatio
n of
productio
n
equipment
s as a
whole
1,710,000 855,000 855,000 Unsureness
Can not be
relocated
because the
fields
uncompleted
2. The lease contract which is under performance or is ready to be performed and its financial
influences
See Note 11,Leaseing .
3 Except for the events described above, By December 31, 2008,the Group has no other significant
commitment events.
XIV . Events after balance sheet date
The land for the factory building and office building located at 26 Kuipeng Road, Baishigang,
Kuichong Town, Longgang District, Shenzhen, was leased and the lease term will expire on March
31, 2009. The company had applied to Shenzhen Municipal Planning Bureau for
historical issue, and on January 7, 2009, approved and reviewed by Shenzhen Municipal
Planning Bureau the Coastal Branch and the company acquired the "program plan of
land for construction purposes", currently the official procedures was undergoing.
In addition to the above matters in items after balance sheet date, this Group had no
other significant matters after the balance sheet date.
XV. Other Significant Events73
Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and
dismissed most of workers. The company currently only had some agent import and export business
and house leasing business.
Except that the Shenzhen East Asia Company was operating normally, the other five
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.
XVI, Supplement information
1.Statement of Non-current gain and loss
In accordance with the provisions in the No. 1 Announcement on Explanation of
Information disclosure For Companies Publicly Issuing Securities - Non-business Profit
and Loss, the amount of non-business gain and loss of the company in the current period
as follows:
Items
In the report
period
The same
period of last
year
Gain/loss form disposal of non-current assets -10,878 -2,209,195
Gain/loss form Debt restructuring -9,706,099
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
151,431 3,258,808
Single impairment test for impairment of receivables transferred
back to preparation 997,924 -
Net amount of non-operating income and expense except the
aforesaid items -68,693 7,655
Other non-recurring Gains/loss items - 1,940,802
Subtotal 1,069,784 -6,708,029
Amount of influence of minority interests - -1,006,288
Total of non-recurring Gains/loss items 1,069,784 -5,701,74174
Including：attributabletocommon shareholders of the parent 1,020,542 -5,668,142
2.Net asset income rate and the income of each share
The net asset income rate and the income of each share were accounted according to the No. 9
of Information Disclosure Rules for Companies which are Publicly Listed - Net Asset Income Rate
and the Calculation and Disclosure of Each Share issued by China Securities Regulatory
Commission:
（1） Year 2008
Return on net assets（%） Earnings per share（RMB）
Profit of the report period
Fully
diluted
Weighted
average
Fully diluted
Weighted
average
Net profit attributable to the
owners of parent Company. -0.20 -0.17 -0.15 -0.15
Net profit attributable to the
owners of Parent Company
after deducting of
non-recurring gain/loss.
-0.21 -0.18 -0.16 -0.16
（2） Year 2007
Return on net assets（%） Earnings per share（RMB）
Profit of the report period Fully
diluted
Weighted
average
Fully diluted
Weighted
average
Net profit attributable to the
owners of parent Company. -0.69 -0.49 -0.69 -0.69
Net profit attributable to the
owners of Parent Company
after deducting of
non-recurring gain/loss.
-0.65 -0.47 -0.65 -0.65
XVII. 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 21,2009.
Section X1. Documents for Reference75
1.Financial statements bearing the seal and signature of legal representative, financial
controller and the person in charge of the accounting organ.
2. Original of the Auditors Report carrying the seal of PricewaterhouseCoopers
Zhongtian Certified Public Accountants and the personal signatures of the C.P.A.
3.The original of all the Company's documents and the original manuscripts of
announcements publicly disclosed on the newspapers designated by China
Securities Regulatory Commission in the report period.
The Board of Directors of Shenzhen Victor Onward Textile Industrial Co., Ltd.
April 21, 2009
