CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
承 德 帝 贤 针 纺 股 份 有 限 公 司
CHENGDE DIXIAN TEXTILE CO．，LTD.
Semi-Annual Report 2009
（Full Text）
（Jan.-Jun., 2009）
August, 2009
Chengde · PRCChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
2
Contents
Section Ⅰ. IMPORTANT NOTES AND PARAPHRASE-----------------------------------------------------3
Section Ⅱ. COMPANY PROFILE---------------------------------------------------------------------------------4
Section Ⅲ. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY
MAIN SHAREHOLDERS--------------------------------------------------------------------------------------------8
Section Ⅳ. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR
EXECUTIVES---------------------------------------------------------------------------------------------------------10
Section Ⅴ. DISCUSSION AND ANALYSIS OF THE MANAGEMENT---------------------------------11
Section Ⅵ. SIGNIFICANT EVENTS-----------------------------------------------------------------------------15
Section Ⅶ. FINANCIAL REPORT-------------------------------------------------------------------------------21
Section Ⅷ. DOCUMENTS AVAILABLE FOR REFERENCE---------------------------------------------76Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Section I. Important Notes and Paraphrase
Important Notes:
The Board of Directors, Supervisory Committee of Chengde Dixian Textile Co., Ltd. (hereinafter
referred to as the Company) and its directors, supervisors and senior executives confirm that there are no
material omissions or errors which would render any statement misleading and individually and
collectively accept responsibility for the correctness, accuracy and completeness of the contents of this
report.
The 8th Meeting of the 4th Board of Director examined and approved 2009 Semi-annual Report and its
summary of the Company. All the directors attended the meetings of Board of Directors. No director,
supervisor and senior executive stated that he (she) couldn’t ensure the correctness, accuracy and
completeness of the contents of the Semi-annual Report or have objection to this report.
Mr. Chen Rong, Chairman of the Board of the Company, Mr. Ye Weijie, Chief Financial Officer, and Mr.
Wang Ansheng Person in Charge of Accounting Organ confirm that the Financial Report of 2009
Semi-annual Report is authentic and complete.
The semi-annual financial report is not audited.
Paraphrase:
Unless otherwise stated, the following words and expressions have the following meanings:
Company/the Company: Chengde Dixian Textile Co., Ltd.
Rongyida Company: Chengde Rongyida Real Estate Development Co., Ltd.
Fashion Company: Chengde Dixian Fashion Co., Ltd.
Xiabancheng Company: Hebei Xiabancheng Knitwear Co., Ltd.
Xingye Papermaking Company: Chengde Xingye Papermaking Co., Ltd.
Dahua Paper: Chengde Dahua Paper Co., Ltd.
Chengde Banhe Company: Chengde Banhe Chemical Simulation Textile Co., Ltd.
Suning Banhe Company: Suning Banhe Simulation Textile Co., Ltd.
RMB: Renminbi
Note: The report is prepared in bilingual versions using Chinese and English respectively, in the event of
any discrepancy in understanding the two aforementioned versions, the Chinese version shall prevail.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Section II. Company Profile
1. Legal Name of the Company
In Chinese: 承德帝贤针纺股份有限公司
In English: CHENGDE DIXIAN TEXTILE CO., LTD.
2. Legal Representative: Chen Rong
3. Secretary of Board of Directors: Chen Zhiguo
Contact Address: Xiabancheng Town, Chengde County, Hebei Province
Tel: (86) 314- 3115048 Fax: (86) 314-3111475
E-mail: gzc958@sohu.com
Authorized Representative in Charge of Securities Affairs: Han Zhigang
Contact Address: Xiabancheng Town, Chengde County, Hebei Province
Tel: (86) 314-3115049 Fax: (86) 314-3111475
E-mail: hzg18632@126.com
4. Registered Address: Xiabancheng Town, Chengde County, Hebei Province
Office Address: Xiabancheng Town, Chengde County, Hebei Provice
Post Code: 067400
Company’s Internet Web Site: http://www.dxtex.com
E-mail: dxgs-9@heinfo.net
5. Newspapers Chosen for Disclosing the Information of the Company: Securities Times (domestic) and
Hong Kong Wen Wei Po (overseas)
Internet Web Site for Publishing the Annual Report: http://www.cninfo.com.cn
The Place Where the Annual Report is Prepared and Placed: Securities Department of the Company
Contact Tel: (86) 314-3115048, 3115049
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: ST DIXIAN B
Stock Code: 200160
7. Other Relevant Information of the Company
Initial registered date: Nov. 3, 1999
Registered date after change: Mar. 31, 2004
Registered address: Industry and Commerce Administration Bureau of Hebei Province (316#, Tiyu
South Street, Shijiazhuang, Hebei Province)
Registered number for business license of the Company: 1300001001372 1/1
Registered number of taxation of the Company: 130821106576876
Custodian agent of the non-circulating shares of the Company:
Shenzhen Branch of China Securities Depository and Clearing Corporation, Ltd.
Name of lawyer firm engaged by the Company: Beijing Jin Cheng Tongda Lawyer Firm
Office address: 11/F, Huaxia Bank, No. 22, Jian Guo Men Nei Ave., BeijingChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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II. Major accounting data and financial indexes
Unit: RMB
At the end of this
report period
At the period-end
of last year
Increase/decrease at the end of
this report period compared
with that in period-end of last
year (%)
Total assets 361,197,697.49 598,681,950.83 -39.67%
Owners’ equity attributable to shareholders of the
listed company
-108,900,502.42 -237,353,406.14 54.12%
Share capital 706,320,000.00 706,320,000.00 0.00%
Net assets per share attributable to shareholders of
the listed company(RMB/Share)
-0.15 -0.34 55.88%
This report period
(Jan. to Jun.)
The same period
of last year
Increase/decrease in this report
period year-on-year (%)
Total operating income 0.00 5,601,048.71 -100.00%
Operating profit -29,476,732.50 -43,219,769.38 31.80%
Total profit 128,452,903.72 -43,225,014.38 397.17%
Net profit attributable to shareholders of the listed
company
128,452,903.72 -43,225,014.38 397.17%
Net profit attributable to shareholders of the listed
company after deducting non-recurring gains and
losses
-3,315,155.20 -43,219,769.38 92.33%
Basic earnings per share (RMB/Share) 0.18 -0.06 400%
Diluted earnings per share (RMB/Share) 0.18 -0.06 400%
Return on equity (%) -117.95% 13.80% -131.75%
Net cash flow arising from operating activities 235,139.48 743,127.63 -68.36%
Net cash flow per share arising from operating
activities (RMB/Share)
0.0003 0.001 -70.00%
Items of non-recurring gains and losses(Unit: RMB)
Non-recurring gains and losses Amount
1. Gains/losses from the disposal of non-current asset -
(1) Net gains/losses from the disposal of fixed assets -13,365,132.26
(2) Net gains/losses from the disposal of intangible assets -26,077,076.00
Net amount of gains/losses from the disposal of non-current
asset
-39,442,208.26
2. Provision for impairment of long-term investment -215,783,493.69Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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3. Penalty expenditure -29,467,458.25
4. Reorganization expense -58,792,608.47
5. Reorganization gains 759,561,973.45
6. Losses from the disposal of other assets -473,750,062.25
7. Investment income 189,441,916.39
8. Net amount of other non-operating income and expense
excluded the aforementioned items
-
(1) Non-operating income -
(2) Less: Non-operating expense -
Net amount of non-operating income and expense -
Total non-recurring gains/losses before deducting income tax 131,768,058.92
Less: Influenced amount of income tax -
Total non-recurring gains/losses after deducting income tax 131,768,058.92
Less: Influenced amount of minority shareholders’ interests
Total non-recurring gains/losses after deducting income tax 131,768,058.92
Statement of Provision for Devaluation of Assets
Prepared by Chengde Dixian Textile Co., Ltd. Jan.-June, 2009 Unit: RMB
Decrease in this period
Book amount at
period-end
Items
Balance at
year-begin
Withdrawing
amount in this
period
Switching
back
Transferring out Total
I. Total of provision for bad
debts
344,856,543.47 276,502,771.55 68,353,771.92
II. Provision for falling price
of inventory
5,996,046.09 5,996,046.09
III. Provision for devaluation
of financial asset available
for sales
IV. Provision for devaluation
of held-to-maturity
investment
V. Provision for devaluation
of long-term equity
155,980,000.00 215,783,493.69 371,763,493.69Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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investment
VI. Provision for devaluation
of investing property
VII. provision for
devaluation of fixed assets
1,055,353,263.38
1,019,991,700.3
7
35,361,563.01
VIII. Provision for
devaluation of engineering
materials
IX. Provision for devaluation
of construction in progress
490,841,949.37 101,081,859.87 389,760,089.50
X. Provision for devaluation
of productive biological asset
Including: Provision for
devaluation of mature
productive biological asset
XI. Provision for devaluation
of oil asset
XII. Provision for
devaluation of intangible
asset
19,670,971.87 19,670,971.87
XIII. Provision for
devaluation of goodwill
XIV. Other
Total 2,072,698,774.18 215,783,493.69
1,417,247,303.6
6
871,234,964.21
III. Difference in CAS and IAS
There remained no differences in net profit in this period and no differences in net assets ended as report
period calculated based on the CAS and the IAS.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Section III. Changes in Share Capital and Particulars about Shares Held by Main
Shareholders
I. Particulars about changes in share capital
In the report period, the Company’s total shares and share structure remained unchanged.
II. Particulars about shareholders
1. Ended as June 30, 2009, the Company had totally 23,288 shareholders, including 5 of sponsors’ share
and 23,283 of domestically listed foreign share.
2. Particulars about the shares held by the top ten shareholders and the top ten shareholders of tradable
share as follows:
Unit: Share
Total number of
shareholders
23,288
Particulars about shares held by the top ten shareholders
Name of shareholders
Nature of
shareholders
Proportion of
share held
Total number
of share held
Number of unlisted
share held
Number of share
pledged or frozen
Chen Rong
Domestic
natural person
29.49% 208,324,800 208,324,800 0
Li Tianyun
Circulating
B-share
3.18% 22,440,000 0 0
Zhou Haihong
Circulating
B-share
3.17% 22,400,000 0 0
Qian Zhenlin
Circulating
B-share
3.11% 22,000,000 0 0
Xu Jiang
Circulating
B-share
3.11% 22,000,000 0 0
Chen Yan
Circulating
B-share
2.83% 20,000,000 0 0
Chengde North Industrial
Corporation
Domestic
non-state-own
ed legal
person
2.62% 18,517,651 18,517,651 0
Wang Zhengsong
Domestic
natural person
1.89% 13,327,891 13,327,891 0
GUOTAI JUNAN
SECURITIES(HONGKO
NG)LIMITED
Circulating
B-share
1.36% 9,609,072 0 0
SBCI FINANCE ASIA
LID A/C SBC
HONGKONG
Circulating
B-share
1.20% 8,494,363 0 0
Particulars about shares held by the top ten shareholders of tradable share
Name of shareholders Number of tradable share held Type of share
Li Tianyun 22,440,000 Domestically listed foreign sharesChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Zhou Haihong 22,400,000 Domestically listed foreign shares
Qian Zhenlin 22,000,000 Domestically listed foreign shares
Xu Jiang 22,000,000 Domestically listed foreign shares
Chen Yan 20,000,000 Domestically listed foreign shares
GUOTAI JUNAN
SECURITIES(HONGKONG)LIMITED
9,609,072 Domestically listed foreign shares
SBCI FINANCE ASIA LID A/C SBC
HONGKONG
8,494,363 Domestically listed foreign shares
Wang Wensheng 7,258,007 Domestically listed foreign shares
Peng Wei 2,978,525 Domestically listed foreign shares
Shanghai Wanguo (Hong Kong) Securities
Co., Ltd.
2,681,024 Domestically listed foreign shares
Explanation on associated
relationship among the
aforesaid shareholders
Among the top ten shareholders, except for that 5 natural persons of Li Tianyun, Zhou
Haihong, Qian Zhenlin, Xu Jiang and Che Yan holds the shares of the Company on
behalf of Chengde Municipal Government and become Act in Concert; the Company is
unknown whether there exists associated relationship or belongs to the consistent actor
regulated by the Management Measure of Information Disclosure on Change of
Shareholding for Listed Company among the other shareholders.
III. In the report period, the Company receive notice from Bankruptcy and Clearing Team of China
South Securities Co., Ltd. (Hereinafter refers to as South Securities), with the detailes as the followings:
Bankruptcy and Clearing Team of South Securities singed relevant agreement with Chengde Municipal
Government, with the voting approval of Creditors’ Chairman Committee of South Securities and
judgement of Shenzhen Intermediate People’s Court, Bankruptcy and Clearing Team of South Securities
transferred its holding 108,840,000 shares of the Company into Chengde Municipal Government with
price of HKD 76,188,000. The purpose for shares acceptance of Chengde Municipal Government is to
help and save Dixian Company and promote the reognization of Dixian Company. In accordance with
the present national policy, as the local first level government, Chengde Municipal Government could
not hold the shares directly; and dometic institution could not hold the shares either pursuant to present
state policy on B shares; thus, Chengde Municipal Government especially entrusted 5 natural persons of
Li Tianyun, Qian Zhenlin, Che Yan, Xu Jiang and Zhou Haihong, to hold the shares instead. After the
transfer, South Securities did not hold the shares of the Company any longer.
The shares holding instead were generally managed by Chengde Municipal Government and performed
the information disclosure obligation as the single investor. According to the relevant provision of
Securities Law, the shares could not be sold within 6 months after the accomplishment of ownership
transfer, or else the income of selling shares would be owned by the Company. 6 months after the
accomplishment of ownership transfer, Chengde Municipal Government would reduce to hold directly
or transfer the shares of Dixian Company again in accordance with the actual condition of Dixian
Company and on the premise of accomplishing to help and save Dixian Company.
IV. Particulars about the controlling shareholders
The controlling shareholder and actural controller of the Company remained unchanged in the report
period.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Section IV. Particulars about Directors, Supervisors and Senior Executives
I. Alteration in shares held by directors, supervisors and senior executives of the Company:
No directors, supervisors and senior executives of the Company hold shares of the Company except for
Mr. Chen Rong, Chairman of the Board. During the report period, no alteration happened to shares
(non-circulating) held by Chen Rong.
II. In the report period, the Company has neither newly engaged nor dismissed directors, supervisors and
senior executives.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Section V. Disscussion and Analysis of the Management
I. Discussion and analysis on overall operation of the report period
In the report period, the Company actively practiced bankruptcy reforming plan which progressed
successfully and got practical progress; it accomplished works for cashing assets and discharging debts,
which effectively relieved the Company from debt burden and financial risk. However, limited in time
and condition, the Company didn’t still recover operation.
As the Company finished bankruptcy reforming, its financial condition got improved. Input with assets
of Chengde Rongyida Real Estate Development Co., Ltd. provided favorable condition for the Company
to recover its main business ability. Besides, the two projects, Dalu Commercial Center (development
for commercial shops along street) and Dalu Fazenda (commercial residence), developed by the
wholly-owned subsidiary-Rongyida Company at the initial phase have been started for implementation,
which laid foundation for the Company to gradually resume its production operation.
The Company would continue to seek for powerful strategic investors and cooperative partners to
integrate its assets and business and inject capital to the Company, to help the Company resume its
profit-making ability of main business and various businesses as soon as possible.
II. Scope and operation of main business;
1. In the report period, on the basis of original operation scope, the Company added development and
sales of real estate.
In the report period, the Company did neither resume production, nor conduct any production operation
activity, so main business of the period was still loss. However, due to bankruptcy reforming of the
Company, bankruptcy declaration of its subsidiaries-Xiabancheng Company, Fashion Company and
Chengde Banhe Company, and reconciliation reached between Xingye Paper Making Company and its
creditors, which all yielded comparative big gains and losses, the Company realized net profit of RMB
128 million in the first half year of 2009, while no corresponding cash flow-in was brought to the
Company.
2. Main business classified according to industry and area
Unit: RMB’0000
Main business classified according to industry
Classified according
to industries or
products
Income
from
operation
s
Cost of
operation
s
Gross
profit
ratio (%)
Increase/decrea
se in income
from
operations
year-on-year
(%)
Increase/decr
ease in cost
of operations
year-on-year
(%)
Increase/decrease in gross
profit ratio year-on-year
(%)
Costume manufacture
industry
- - - -100% -100% -100%
Cotton spin industry - - - -100% -100% -100%
Paper-making
industry
- - - -100% -100% -100%
Main business classified according to area
Unit: RMB’0000Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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Area Income from operations
Increase/decrease in income from operations
year-on-year (%)
Domestic sales 0 -100%
Overseas sales - -
3. Analysis on financial condition
(1)Analysis on assets constitution
Unit: RMB
Item Jun 30th, 2009 Dec 31st, 2008
Change
proportion
（%）
Reason for change
Total assets 361,197,697.49 598,681,950.83 -39.67% Due to the disposal of assets
Current assets 64,624,946.92 139,879,200.97 -53.80% Due to the disposal of assets
Non-current assets 296,572,750.57 458,802,749.86 -35.36% Due to the disposal of assets
Total liabilities 469,980,102.55 835,917,259.61 -43.78% Due to pay off liabilities
Current liability 361,813,706.73 718,697,845.79 -49.66% Due to pay off liabilities
Owners’ equity -108,782,405.06 -237,235,308.78 54.15%
Due to realize income of
reorganization
Undistributed profit -1,287,983,196.96 -1,416,436,100.68 9.07%
Due to realize income of
reorganization
(2)Analysis on operation achievements
Unit: RMB
Amount (RMB)
Item Jan. to June,
2009
Jan. to June,
2008
Increase /
decrease
ratio (%)
Reason for change
Operation income 0 5,601,048.71 -100%
Because fully stopped production
in the report period
Operation profit -29,476,732.50 -43,219,769.38 31.8%
Because fully stopped production
in the report period
Net profit attributable to owners
of parent company
128,452,903.72 -43,225,014.38 397.17% Due to realize income ofChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
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reorganization
Administration expense 3,119,858.08 21,504,930.07 -85.49%
Because fully stopped production
in the report period, the disposal
of fixed assets and decrease in
depreciation reckoned into
administrative expense
Financial expense 15,297.12 25,680,390.66 -99.94%
Because fully stopped production
in the report period,and decrease
in business.
4. Explanation for alteration in profit constitution, main business and its structure, profit-making ability
of main business of the Company in the report period:
Due to that the Company conducted no production operation, bankruptcy reforming of the Company,
bankruptcy declaration of its subsidiaries-Xiabancheng Company, Fashion Company and Chengde
Banhe Company, and reconciliation reached between Xingye Paper Making Company and its creditors,
comparatively big changes happened to profit constitution, main business and its structure,
profit-making ability of main business of the Company in the report period.
5. Other operational business activities bringing significant influence on profit in the report period
Gains and losses with great amount occurred from bankruptcy reforming of the Company, bankruptcy
declaration of its subsidiaries and reconciliation reached with creditors, made the Company realize net
profit of RMB 128 million in the first half year of 2009.
6. In the report period, no investment income contributed by share-investing company influenced net
profit of the Company over 10%.
7. Problems & difficulties and solution in operation
In the report period, the Company gained practical progress in bankruptcy reforming, accomplished
assets-cashing and debt-discharging, which effectively released the Company from debt burden and
financial risk. However, the Company was still in shortage of capital and its production hadn’t been
resumed yet. As assets was input by Rongyida Company, it would turn to better for the Company. The
Company would continue to seek for powerful strategic investors and cooperative partners to integrate
its assets and business and inject capital to the Company, to help the Company resume its profit-making
ability of main business
III. Investment in the report period
1. In the report period, the Company neither raised proceeds, nor did it use proceeds raised in previous
periods.
2. Projects invested with non-raised proceeds.
In the report period, there was no project invested with non-raised proceeds.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
14
IV. The Company didn’t make modification for the annual operation plan.
V. In 2008, Beijing Yongtuo Certified Public Accountants issued auditor’s report with qualified opinions
and paragraph of emphasized matters since they audited the financial report of the Company. The board
of directors thought that, the proceedings involved in qualified opinions with paragraph of emphasized
matters provided by Beijing Yongtuo Certified Public Accountants did exist, with complex reasons,
including the following main reasons: 1. due to the capital chain was split, the Company completely
stopped production and all workers took holidays; 2. due to the Company was suspected in smuggling
common cargos, many previous key managers were arrested, and operation management was
significantly affected; 3. a majority of financial accounts, voucher and file data were detained by
Shijiazhuang Customs Anti-smuggling Bureau without return till now, therefore, the Company could not
provide complete and specified relevant information and data for accountants; 4. the Company was in
the process of bankruptcy reforming, and found the physical assets could not accorded with the financial
data in the procedure of liquidation. The board of directors attached importance to the emphasized issues
and qualified matters in the audit report, and thought that the Company could eliminate unfavorable
effect of the above matters. With changes of large shareholders and present of new management team,
the Company would gradually perfect internal control system, strengthen internal management and
improve the level of finance staff. With the finality of the custom case and accomplishment of
bankruptcy reforming, the Company would continue to make assets reorganization, resume and improve
sustainable operation ability, the Company would gradually went into the right path. The Board held that
matters emphasized and qualified opinions involved in 2008 auditor’s report would be all eliminated or
get corresponding solution in year 2009.Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
15
Section VI. Significant Events
I. Corporation governance
Strictly according to the requirements in Company Law, Securities Law, Governance Rules of Listed
Companies, Listed Rules of Stock in Shenzhen Stock Exchange and other relevant laws and regulations,
the Company continuously improved the legal person governance structure of the Company, established
modern enterprise system and standardized the operation of the Company. In the report period, in
accordance with the regulations of Notice on Doing Well the 2008 Annual Report Work of Listed
Company issued by Shenzhen Stock Exchange and Decision on Revising Several Regulations of Cash
distribution of Listed Company issued by CSRC (CSRC [2008] No.57), the Company further perfect
Articles of Association and established regulations and systems including Working Rules of Independent
Directors and Working Rules of Annual Report of Audit Committee. The actual governance condition of
the Company basically accorded with the requirement of Governance Rules of Listed Companies.
II. Implementation of profit distribution plan and circumstances of equity incentive mechanism:
1. There was no profit distribution plan which was made in the previous period and implemented in the
report period, plan of converting the public reserve capital into share capital or plan of issuing new
shares.
In the first half year of 2009, the Company would neither distribute profits nor convert pubic reserve
into share capital.
2. The Company did not implemented equity incentive mechanism.
III. Significant lawsuit and arbitration:
On Feb. 25, 2009, Shijiazhuang Intermediate People’s Court made a sentence that the Company had the
crime of smuggling general cargo, which would be fined RMB 68,734,451.21, and the general cargo
involved in the case would be confiscated into state treasury. In the legal time limit, Wang Shuxian
appealed. On Apr. 23, 2009, Hebei high People’s Court made a Written Verdict of Crime (2009) JXEZZ
No.44, which judged that: rejected the appeal and kept the original sentence. And the judgment was the
final verdict.
The Company thought that the aforementioned results had no material influence on reorganization of the
Company.
The Company had no equity of other listed company, joint stock business bank, securities company,
issuance company, trust company and futures company.
IV. The purchase and sales of assets in the report period
In the report period, according to draft plan of bankruptcy restructuring, the Company made disposal of
assets which could be sold for cash, and paid off all debts.
On Jul. 27, 2009, shareholders of Chengde Rongyida Real Estate Development Co., Ltd. – Mr. Wang Fei
and Ms. Chen Liping signed equity transfer contract with large shareholder – Mr. Chen Rong, which
agreed that 90% and 10% equity of Chengde Rongyida Real Estate Development Co., Ltd. respectively
held by Mr. Wang Fei and Miss Chen Liping were transferred to Mr. Chen Rong with RMB 9 million
and 1 million. On the same day, Mr. Chen Rong transferred 100% equity of Rongyida to the Company
with RMB 1, after which, Rongyida became the wholly-owned subsidiary of the Company. Before that,
Rongyida gained all assets of the Company’ bankruptcy restructuring and subsidiary’s bankruptcy
through public action. The assets input of Rongyida provided favorable conditions for the Company toChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
16
resume production and operation ability.
V. Related transactions of the Company in the report period
There was no significant related transaction of the Company in the report period.
VI. Significant contract and implementation
(1) In the report period, the Company had no significant transaction, entrustment, contract or leasing
proceeding of other companies, nor vice versa matters.
(2) In the report period, the Company had no significant guarantee contract.
(3) In the report period, the Company did not entrust others to manage cash assets.
VII. Special explanation and independent opinion issued by independent directors on capital occupancy
and external guarantee of related parties of the Company
Following the spirits of Concerning Some Issues on Regulating the Funds between Listed Companies
and Associated Parties and Listed Companies’ Provision of Guaranty to Other Parties (No. 56 [2003]
promulgated by CSRS on Standardizing External Guarantee of Listed Company, as independent
directors of the Company, we made careful inspection on the external guarantee executed according to
the aforementioned regulation and presented the following explanation on relevant problems, with an
attitude of earnest and responsibility:
1. The Company standardized the external guarantee behavior and thus controlled risks of external
guarantee, in strict accordance to regulation of Articles of Association.
2. Till Jun. 30, 2009, the Company has never provided guarantee for shareholder, actual controller and
its related party, any non legal person unit and individual; controlling shareholder and other related party
neither forced the Company to provide guarantee for others.
VIII. The Company or the shareholders holding over 5% of total shares had no commitment issues that
had important influence on the operating results and financial situation of the Company in the report
period or lasting to the report period.
IX. In the report period, Shijiazhuang Intermediate People’s Court judged that the Company had the
crime of smuggling general cargo, which would be fined RMB 68,734,451.21, and the general cargo
involved in the case would be confiscated into state treasury; some former directors and senior
executives would be investigated into criminal responsibility. The present directors, supervisors, senior
executives, shareholders, actual controllers and purchaser of the Company had never be investigated by
authorized department, received compulsory measure from judicial department, be sent to judicial
department or be investigated into criminal responsibility; also never received investigation,
administrative punishment or criticism through public notice from China Securities Regulatory
Commission, nor had they been condemned by the stock exchange in public either.
X. Particulars about the Company’s Reception of Investigations and Interviews:
In accordance with the principles of just, fair and publicity, to further regulate the behaviors of
information disclosure for the listed companies and ensure justice for information disclosure, the
Company received the research and media interviews in standardized way according to the regulations
of Guideline on Fair Information Disclosure for Listed Companies promulgated by Shenzhen Stock
Exchange. In the report period, the Company received visits and telephone communication from its
investors for many times; the Company received them and replies strictly in accordance with relevantChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
17
regulations; there occurred no such situations as selectively and privately reveal or leak non-public
significant information to specific parties; and all these assure the fairness of information disclosure of
the Company.
Reception date Reception place
Way of
reception
Reception
person
Discussion issue and offered
information
Jan.19, 2009
Security Department of
the Company
Phone
communication
Individual
investor
Development of restructuring; materials
were not supplied.
Mar. 2, 2009
Security Department of
the Company
Phone
communication
Individual
investor
Judgment of the involved case; materials
were not supplied.
Mar. 10, 2009
Security Department of
the Company
Phone
communication
Individual
investor
Particulars about the action for selling
parts of assets of the Company and
subsidiary.
May 11, 2009
Security Department of
the Company
Phone
communication
Individual
investor
The present assets of the Company;
annual report was supplied.
May 20, 2009
Security Department of
the Company
Phone
communication
Individual
investor
The present status of the Company;
materials were not supplied.
Jun.20, 2009
Security Department of
the Company
Phone
communication
Individual
investor
Development of the case; materials were
not supplied.
XI. Other significant events
1. Upon the approval document No.[2004]101 issued by the China Securities Regulatory Commission in
July 2004, the Company increases of its capital by issuing 150,000,000 B shares, in which 91,300,000
shares were issued for Hong Kong dollars and 58,700,000 shares were issued for Renminbi Yuan (RMB).
The issuance of B shares has not been authorized by the China Administration of Foreign Exchange
department, and has not verified by PRC certified public accountants and the procedures for the change
of business registration were not carried out completely. According to the resolution of general meeting
of shareholders on Jun. 8, 2006, the Company distributed share bonus 117,720,000 shares to all
shareholders at the rate of two shares given per ten shares. The registered capital of the Company was
increased to RMB 706,320,000 after share bonus distribution. Influenced by the aforementioned factors,
the procedures for the change of business registration were not carried out completely.
2. In Nov. 2008, Hebei Chengde Xingchen Construction Engineering Co., Ltd. submitted application of
bankruptcy restructuring of the Company to Hebei Chengde Intermediate People’s Court with the reason
that the Company did not implement the payment obligation in the court’s sentence, and the financial
and operation condition of the Company was deteriorated without ability of paying off. On Nov. 10,
2008, Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No. 9, which accepted to
deal with bankruptcy restructuring of the Company.
On Dec. 30, 2008, Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No. 9-1,
which decided the following creditor’s rights: (1) 6 units had priority creditor’s right, with total amount
of RMB 844,157,605.65; (2) total 3 tax institutions with tax amount of RMB 15,372,537.49; (3) 131
units had common creditor’s right, with total amount of RMB 552,326,118.84. On the same day,
Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No. 9-2, which approved
Restructuring Program (Draft) of Dixian Textile Co., Ltd. and terminated reform procedure of Chengde
Dixian Textile Co., Ltd.
According to Restructuring Program (Draft), the Company made disposal of assets for turning into cashChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
18
which could be sold for cash, and paid reform expenses and all debts.
On Apr. 27, 2009, Hebei Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No.
9-5, which confirmed that the implementation of paying off debts in Restructuring Program was
completed.
3. On Dec. 8, 2008, Hebei Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No.
10, No.11, No.12 and No.13, which judged that: (1) accepted the application of Sun Weishan making
bankruptcy liquidation of Chengde Banhe Chemical Simulation Textile Co., Ltd.; (2) accepted
application of Chengde Xinda Energy-saving Electronic Equipment Co., Ltd. making bankruptcy
liquidation of Chengde Dixian Fashion Co., Ltd.; (3) accepted application of Anxin Hongda Plastic
Factory making bankruptcy liquidation of Hebei Xiabancheng Knitwear Co., Ltd.; (4) accepted
application of Chengde Yonghe Cement Co., Ltd. making bankruptcy liquidation of Chengde Xingye
Papermaking Co., Ltd.
On Feb. 8, 2009, Hebei Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No.
10-1, No. 11-1 and No. 12-1, which judged that: (1) declared that the original controlling subsidiary of
the Company - Chengde Banhe Chemical Simulation Textile Co., Ltd. was bankrupted; (2) declared that
original subsidiary which the Company held 75% equity - Chengde Dixian Fashion Co., Ltd. was
bankrupted; (3) declared that original wholly-owned subsidiary of the Company - Hebei Xiabancheng
Knitwear Co., Ltd. was bankrupted.
On Feb. 21, 2009, Hebei Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No.
13-1, which confirmed the debt amount of Xingye Papermaking Co., Ltd. On Mar. 31, 2009, Hebei
Chengde Intermediate People’s Court made Civil Verdict (2008) CMPZ No. 13-2, which approved the
reconciling application of Xingye Papermaking Co., Ltd. On Jun. 12, 2009, the Company received Civil
Verdict (2008) CMPZ No. 13-3 made by Hebei Chengde Intermediate People’s Court, which confirmed
that Xingye Papermaking Co., Ltd and its creditor reached a reconciling agreement on May 8, 2009 and
terminated reconciling procedure.
4. In the report period, because the subsidiaries - Xiabancheng Knitwear Co., Ltd., Dixian Fashion Co.,
Ltd. and Banhe Chemical Simulation Textile Co., Ltd. was bankrupted, the aforesaid three companies
was not in the range of consolidation statement in this period.
5. Approved by Shenzhen Stock exchange, the delisting risk warning of the Company’s stock was
removed on Jul. 7, 2009, and the stock would be implemented other special treatment.
6. On Jun. 25, 2009, the Company held the Annual Shareholders General Meeting 2008, which
discussed and approved that the Company’ name would be changed from Chengde Dixian Textile Co.,
Ltd. to Chengde Dalu Co., Ltd. The business registration change procedure was in process.
XII. Index to other events
In the report period, all the notices of the Company have been published on Securities Times, Hong
Kong Wen Wei Po as well as Juchao Website (http://www.cninfo.com.cn). Particulars are as follows:
Notice
number
Notice
date
Notice Events Newspaper Layout
Securities Time A11
2009-001 Jan. 7, 2009
Notice on Abnormal Fluctuation of Stock
Exchange Wen Wei Po A2
Securities Time A20
2009-002 Jan. 9, 2009
Notice on the Resolution of the 1st
Extraordinary Shareholders General Meeting
2009
Wen Wei Po B14
2009-003 Jan. 23, 2009 Notice on the Resolution of the 5th meeting of Securities Time A33Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
19
the 4th Board of Directors Wen Wei Po B2
Securities Time A33
2009-004 Jan. 23, 2009
Suggestive Notice on Uncertainty of 2008
Annual Performance
Wen Wei
Po
A17
Securities Time A6
2009-005 Feb. 19, 2009
Notice on Subsidiary’s Declaration of
Bankruptcy Wen Wei Po B7
Securities Time A4
2009-006 Feb. 28, 2009 Notice on Judgment of Significant Lawsuit
Wen Wei Po A22
Securities Time A4
2009-007 Feb.28, 2009
Notice on Holding Public Action for Selling
Assets of the Company and Subsidiary Wen Wei Po A22
Securities Time A17
2009-008 Mar. 7, 2009
Notice on Action Result and Holding the
Second Public Action Wen Wei Po B2
Securities Time A24
2009-009 Mar. 17, 2009
Notice on Action Result and Holding the Third
Public Action Wen Wei Po B5
Securities Time A46
2009-010 Mar. 24, 2009
Notice on Action Result and Holding the
Fourth Public Action Wen Wei Po A30
Securities Time A15
2009-011 Mar. 31, 2009
Notice on Action Result and Holding the Fifth
Public Action Wen Wei Po B1
Securities Time A84
2009-012 Apr. 8, 2009 Notice on Action Result of Subsidiary’s Assets
Wen Wei Po B7
Securities Time B75
2009-013 Apr. 9, 2009
Notice on Action Result of Parts of the
Company’s Assets Wen Wei Po A14
Securities Time A45
2009-014 Apr. 10, 2009 Notice on Abnormal Fluctuation
Wen Wei Po A18
Securities Time B66
2009-015 Apr. 20, 2009
Notice on Public Sales of Parts of the
Company’s Assets and Exempting of Parts of
Debts Wen Wei Po B2
Securities Time A32
2009-016 Apr. 22, 2009 Notice on Abnormal Fluctuation
Wen Wei Po B3
Securities Time C9
2009-017 Apr. 22, 2009
Notice on Delay of Disclosing Annual Report
2008 Wen Wei Po B3
Securities Time B104
2009-018 Apr. 23, 2009
Notice on Paying off Parts of Debts according
to Restructuring Program Wen Wei Po B3
Securities Time A38
2009-019 Apr. 24, 2009 Notice on Judgment of Significant lawsuit
Wen Wei Po B8
Securities Time D159
2009-020 Apr. 28, 2009 Notice on Significant Lawsuit
Wen Wei Po A33
Securities Time D119
2009-021 Apr. 30, 2009
Notice on the Resolution of the 6th Meeting of
the 4th Board of Directors Wen Wei Po A34
Securities Time D74
2009-022 Apr. 30, 2009
Notice on the Resolution of the 2nd Meeting of
the 4th Supervisory Committee Wen Wei Po A34Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
20
Securities Time D74
2009-023 Apr. 30, 2009 Summary of the Annual Report 2008
Wen Wei Po A32
Securities Time D74
2009-024 Jun. 10, 2009
Notice on Holding the General Shareholders
Meeting 2008 Wen Wei Po A34
Securities Time D74
2009-025 Apr. 30, 2009 Summary of the 1st Quarterly Report 2009
Wen Wei Po A33
Securities Time A27
2009-026 May 4, 2009
Notice on Revising Information of the 1st
Quarterly Report 2009 Wen Wei Po B2
Securities Time A15
2009-027 Jun. 13, 2009
Notice on the Controlling Subsidiary and
Creditor Reaching Reconciling Agreement Wen Wei Po B5
Securities Time D8
2009-028 Jun. 22, 2009 Suggestive Notice
Wen Wei Po B11
Securities Time D8
2009-029 Jun. 22, 2009
Simplified Statement of Equity Change of
Bankruptcy and Clearing Team of Southern
Securities Co., Ltd.
Wen Wei Po B11
Securities Time D8
2009-030 Jun. 22, 2009
Simplified Statement of Equity Change of 5
natural Persons Including Li Tianyuan Wen Wei Po B11
Securities Time C8
2009-031 Jun. 26, 2009
Notice on the Resolution of Shareholders’
General Meeting 2008 Wen Wei Po B9Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
21
Section VII. Financial Report (Un-audited)
Balance Sheet
Prepared by Chengde Dixian Textile Co.，Ltd Jun. 30, 2009 Unit: RMB
Amount at period-end Amount at year-begin
Items Note
Consolidation
Parent
Company
Consolidation Parent Company
Current assets:
Monetary funds 1 663,387.21 620,576.72 447,257.73 365,685.40
Transaction finance asset
Notes receivable
Accounts receivable 2 1,234,022.85 6,314,628.93 12,231,947.36
Accounts paid in advance 3 7,279,722.72 6,412,464.44 68,630,272.88 92,842,017.50
Interest receivable
Dividend receivable
Other receivables 4 55,431,236.18 45,363,894.42 64,109,210.96 450,923,188.75
Purchase restituted finance
asset
Inventories 5 16,577.96 377,830.47
Non-current asset due
within one year
Other current assets
Total current assets 64,624,946.92 52,396,935.58 139,879,200.97 556,362,839.01
Non-current assets:
Granted loans and advances
Finance asset available for
sales
Held-to-maturity investment
Long-term account
receivable
Long-term equity
investment
6 97,215,729.65 630,800,000.00 97,215,729.65 1,211,812,433.52
Investment property
Fixed assets 7 27,281,592.65 124,093,126.16 16,175,897.23
Construction in progress 8 12,883,800.00 12,883,800.00
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 9 27,886,126.94 91,294,980.17 7,990,608.73
Expense on Research and
Development
Goodwill
Long-term expenses to be 2,009,612.55 2,009,612.55Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
22
apportioned
Deferred income tax asset 10 131,305,501.33 131,305,501.33 131,305,501.33 131,305,501.33
Other non-current asset
Total non-current asset 296,572,750.57 762,105,501.33 458,802,749.86 1,369,294,053.36
Total assets 361,197,697.49 814,502,436.91 598,681,950.83 1,925,656,892.37
Current liabilities:
Short-term loans 11 5,422,261.91 422,261.91 257,110,082.88 650,705.60
Transaction financial
liabilities
Notes payable
Accounts payable 12 313,868.31 299,490.67 40,929,519.04 34,436,425.01
Accounts received in
advance
13 710,994.16 721,601.25 8,607.09
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 14 6,151,855.55 27,658,657.03 17,897,697.28
Taxes payable 15 -29,597.83 -29,597.83 64,981,574.02 15,372,537.49
Interest payable 270,261,883.18 165,267,072.66
Dividend payable
Other accounts payable 16 349,244,324.63 138,461,909.67 57,034,528.39 469,229,434.21
Non-current liabilities due
within 1 year
Other current liabilities
Total current liabilities 361,813,706.73 139,154,064.42 718,697,845.79 702,862,479.34
Non-current liabilities:
Long-term loans
Bonds payable
Long-term account payable 17 95,450,000.00 95,450,000.00
Special accounts payable 18 10,598,000.03 98,000.03 19,651,018.03 151,018.03
Projected liabilities 2,118,395.79 2,118,395.79 2,118,395.79 2,118,395.79
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 108,166,395.82 2,216,395.82 117,219,413.82 2,269,413.82
Total liabilities 469,980,102.55 141,370,460.24 835,917,259.61 705,131,893.16
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share
capital)
19 706,320,000.00 706,320,000.00 706,320,000.00 706,320,000.00
Capital public reserve 20 395,971,144.37 394,571,587.96 395,971,144.37 394,571,587.96
Less: Inventory shares
Reasonable reserve
Surplus public reserve 21 76,791,550.17 76,791,550.17 76,791,550.17 76,791,550.17
Provision of general riskChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
23
Retained profit 22 -1,287,983,196.96 -504,551,161.46 -1,416,436,100.68 42,841,861.08
Balance difference of
foreign currency translation
Total owner’s equity attributable
to parent company
-108,900,502.42 673,131,976.67 -237,353,406.14 1,220,524,999.21
Minority interests 118,097.36 118,097.36
Total owner’s equity -108,782,405.06 673,131,976.67 -237,235,308.78 1,220,524,999.21
Total liabilities and owner’s
equity
361,197,697.49 814,502,436.91 598,681,950.83 1,925,656,892.37
Profit Statement
Prepared by Chengde Dixian Textile Co., Ltd. Jan.-Jun., 2009 Unit: RMB
Amount in this period Amount in last period
Items Notes
Consolidation
Parent
Company
Consolidation
Parent
Company
I. Total operating income 23 5,601,048.71 705.13
Including: Operating income 5,601,048.71 705.13
Interest income
II. Total operating cost 23 218,918,648.89 582,387,843.31 48,820,818.09 43,095,037.43
Including: Operating cost 1,364,997.36 283.72
Interest expense
Operating tax and extras
Sales expenses 500.00 500
Administration expenses 24 3,119,858.08 1,360,207.17 21,504,930.07 20,918,463.05
Financial expenses 25 15,297.12 15,202.62 25,680,390.66 22,175,790.66
Losses of devaluation of
asset
26
215,783,493.69 581,012,433.52
Add: Changing income of
fair value(Loss is listed with
“-”)
Investment income (Loss
is listed with “-”)
189,441,916.39
Including: Investment
income on affiliated company
and joint venture
Exchange income (Loss is
listed with “-”)
III. Operating profit (Loss is
listed with “-”)
-29,476,732.50 -582,387,843.31 -43,219,769.38 -43,094,332.3
Add: Non-operating
income
27
759,561,973.45 577,298,505.71 -3,900.00 -3,900.00
Less: Non-operating
expense
27
601,632,337.23 542,303,684.94 1,345.00 1,345.00
Including: Disposal loss ofChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
24
non-current asset
IV. Total Profit (Loss is listed
with “-”)
128,452,903.72 -547,393,022.54 -43,225,014.38 -43,099,577.3
Less: Income tax expense
V. Net profit (Net loss is listed
with “-”)
128,452,903.72 -547,393,022.54 -43,225,014.38 -43,099,577.3
Net profit attributable to
owner’s of parent company
128,452,903.72 -43,225,014.38 -43,099,577.3
Minority shareholders’
gains and losses
VI. Earnings per share
i. Basic earnings per share 0.18 -0.06
ii. Diluted earnings per share 0.18 -0.06
Statement of Cash Flow
Prepared by Chengde Dixian Textile Co., Ltd. Jan.-Jun., 2009 Unit: RMB
Amount in this period Amount in last period
Items Notes
Consolidation
Parent
Company
Consolidation Parent Company
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor
services
6,798,448.00 825.00
Net increase of capital borrowed
from other financial institution
Cash received from original
insurance contract fee
Write-back of tax received
Other cash received concerning
operating activities
28 1,574,515.00 1,574,515.00 450,733.44 6,302,560.00
Subtotal of cash inflow arising
from operating activities
1,574,515.00 1,574,515.00 7,249,181.44 6,303,385.00
Cash paid for purchasing
commodities and receiving labor
service
40,544.86 20,544.86
Cash paid for interest,
commission charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 28 891,086.00 758,344.00 2,415,302.66 2,277,272.66
Taxes paid 398,245.78 19,971.81
Other cash paid concerning 448,289.52 542,269.68 3,651,960.51 3,605,467.67Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
25
operating activities
Subtotal of cash outflow arising
from operating activities
1,339,375.52 1,300,613.68 6,506,053.81 5,923,257.00
Net cash flows arising from
operating activities
235,139.48 273,901.32 743,127.63 380,128.00
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
income
Net cash received from disposal
of fixed, intangible and other long-term
assets
Net cash received from disposal
of subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from
investing activities
Cash paid for purchasing fixed,
intangible and other long-term assets
5,500.00 5,500.00 3,400.00 3,400.00
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units
Other cash paid concerning
investing activities
Subtotal of cash outflow from
investing activities
5,500.00 5,500.00 3,400.00 3,400.00
Net cash flows arising from
investing activities
-5,500.00 -5,500.00 -3,400.00 -3,400.00
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
Cash received from loans
Cash received from issuing bonds
Other cash received concerning
financing activitiesChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
26
Subtotal of cash inflow from
financing activities
Cash paid for settling debts
Cash paid for dividend and profit
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
financing activities
13,510.00 13,510.00 40,717.20 40,717.20
Subtotal of cash outflow from
financing activities
13,510.00 13,510.00 40,717.20 40,717.20
Net cash flows arising from
financing activities
-13,510.00 -13,510.00 -40,717.20 -40,717.20
IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate
V. Net increase of cash and cash
equivalents
216,129.48 254,891.32 699,010.43 336,010.80
Add: Balance of cash and cash
equivalents at the period -begin
447,257.73 365,685.40 6,316,017.15 3,250,011.31
VI. Balance of cash and cash
equivalents at the period -end
29
663,387.21 620,576.72 7,015,027.58 3,586,022.11Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
27
Statement on Changes of Owners' Equity (Consolidated)
Prepared by Chengde Dixian Textile Co., Ltd June 30, 2009 Unit: RMB
Amount in this report period Amount in last year
Owners' equity attributable to the parent company Owners' equity attributable to the parent company
Items Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasu
ry
Stock
Reaso
nable
reserv
e
Surplus
reserves
Genera
l risk
provisi
on
Retained
profit
Oth
ers
Minorit
y’s
equity
Total
owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Les
s:
Tre
asu
ry
Sto
ck
Rea
sona
ble
rese
rve
Surplus
reserves
Gener
al risk
provisi
on
Retained
profit
Ot
he
rs
Minority’s
equity
Total
owners’
equity
I. Balance at the
end of last year
706,320,0
00.00
395,971,1
44.37
76,791,
550.17
-1,416,436,
100.68
118,09
7.36
-237,235,
308.78
706,320,
000.00
395,971,1
44.37
76,791,55
0.17
-1,592,83
9,281.27
21,598,7
43.39
-392,15
7,843.3
4
Add: Changes of
accounting
policy
Error correction
of the last period
Others
II. Balance at the
beginning of this
year
706,320,0
00.00
395,971,1
44.37
76,791,
550.17
-1,416,436,
100.68
118,09
7.36
-237,235,
308.78
706,320,
000.00
395,971,1
44.37
76,791,55
0.17
-1,592,83
9,281.27
21,598,7
43.39
-392,15
7,843.3
4
III. Increase/
Decrease in this
year (Decrease is
listed with "-")
128,452,903
.72
128,452,9
03.72
176,403,1
80.59
-21,480,
646.03
154,922
,534.56
(I) Net profit
128,452,903
.72
128,452,9
03.72
176,403,1
80.59
-21,480,
646.03
154,922
,534.56
(II) Profits and
losses calculating
into owners'
equity
1. Net changing
amount of fair
value of financial
assets available
for sale
2. Effect of
changes of other
owners' equity of
invested units
under equity
methodChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
28
3. Effect of
income tax
related to owners'
equity
4. Others
Subtotal of (I)
and (II)
128,452,903
.72
128,452,9
03.72
176,403,1
80.59
-21,480,
646.03
154,922
,534.56
(III) Owners'
devoted and
decreased capital
1. Owners'
devoted capital
2. Amount
calculated into
owners' equity
paid in shares
3. Others
(IV) Profit
distribution
1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provisions
3. Distribution
for owners
(shareholders)
4. Others
(V) Carrying
forward internal
owners' equity
1. Capital
reserves
conversed to
capital (share
capital)
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with
surplus reserveChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
29
4. Others
IV. Balance at
the end of the
report period
706,320,0
00.00
395,971,1
44.37
76,791,
550.17
-1,287,983,
196.96
118,09
7.36
-108,782,
405.06
706,320,
000.00
395,971,1
44.37
76,791,55
0.17
-1,416,43
6,100.68
118,097.
36
-237,23
5,308.7
8
Statement on Changes of Owners' Equity (Parent Company)
Prepared by Chengde Dixian Textile Co., Ltd. June 30, 2009 Unit: RMB
Amount in this report period Amount in last year
Items
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treas
ury
Stock
Reas
onab
le
reser
ve
Surplus
reserves
Retained
profit
Total owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treas
ury
Stock
Rea
son
able
rese
rve
Surplus
reserves
Retained
profit
Total owners’
equity
I. Balance at the end of last year 706,320,000.0
0
394,571,58
7.96
76,791,550
.17
42,841,861
.08 1,220,524,999.21
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-757,188,195.
67 420,494,942.46
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this
year
706,320,000.0
0
394,571,58
7.96
76,791,550
.17
42,841,861
.08
1,220,524,999.21
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-757,188,195.
67
420,494,942.46
III. Increase/ Decrease in this year
(Decrease is listed with "-")
-547,393,0
22.54
-547,393,022.54
800,030,056.7
5
800,030,056.75
(I) Net profit
-547,393,0
22.54 -547,393,022.54
800,030,056.7
5 800,030,056.75
(II) Profits and losses calculating into
owners' equity
1. Net changing amount of fair value
of financial assets available for sale
2. Effect of changes of other owners'
equity of invested units under equity
methodChengde Dixian Textile Co., Ltd. Semi-annual Report 2009
30
3. Effect of income tax related to
owners' equity
4. Others
Subtotal of (I) and (II)
800,030,056.7
5
800,030,056.75
(III) Owners' devoted and decreased
capital
1. Owners' devoted capital
2. Amount calculated into owners'
equity paid in shares
3. Others
(IV) Profit distribution
1. Withdrawal of surplus reserves
2. Distribution for owners
(shareholders)
3. Others
(V) Carrying forward internal owners'
equity
1. Capital reserves conversed to capital
(share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserves
4. Others
IV. Balance at the end of the report
period
706,320,000.0
0
394,571,58
7.96
76,791,550
.17
-504,551,1
61.46 673,131,976.67
706,320,00
0.00
394,571,58
7.96
76,791,550.
17 42,841,861.08
1,220,524,999.2
1Chengde Dixian Textile Co., Ltd. Semi-annual Report 2009
31
Supplementary:
Statement of Provision for Devaluation of Assets
Prepared by Chengde Dixian Textile Co., Ltd. Jan.-June, 2009 Unit: RMB
Decrease in this period
Book amount at
period-end
Items
Balance at
year-begin
Withdrawing
amount in this
period Switching
back
Transferring out Total
I. Total of provision for bad
debts
344,856,543.47 276,502,771.55 68,353,771.92
II. Provision for falling price
of inventory
5,996,046.09 5,996,046.09
III. Provision for devaluation
of financial asset available
for sales
IV. Provision for devaluation
of held-to-maturity
investment
V. Provision for devaluation
of long-term equity
investment
155,980,000.00 215,783,493.69 371,763,493.69
VI. Provision for
devaluation of investing
property
VII. provision for
devaluation of fixed assets
1,055,353,263.38 1,019,991,700.37 35,361,563.01
VIII. Provision for
devaluation of engineering
materials
IX. Provision for
devaluation of construction
in progress
490,841,949.37 101,081,859.87 389,760,089.50
X. Provision for devaluation
of productive biological
asset
Including: Provision for
devaluation of mature
productive biological asset
XI. Provision for
devaluation of oil asset
XII. Provision for
devaluation of intangible
asset
19,670,971.87 19,670,971.87
XIII. Provision for
devaluation of goodwill
XIV. Other
Total 2,072,698,774.18 215,783,493.69 1,417,247,303.66 871,234,964.21CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
32
CHENGDE DIXIAN TEXTILE COMPANY LIMITED
NOTES OF FINANCIAL STATEMENT
FOR THE SEMIANNUAL YEAR 2009
(All amounts in RMB Yuan unless otherwise stated)
1. BRIEF INTRODUCTION OF THE COMPANY
Chengde Dixian Textile Company Limited (hereinafter referred to as “the Company”) is established
in the People’s Republic of China as a jointly stock Company as approved by People’s Government
of Hebei Province (JI GU BAN (1999) No. 36) dated on 3 November 1999. There are five
promoters of the Company, which are Mr. Shuxian Wang, North Industry Co., Ltd., Longfeng
Cosmetic Co., Ltd., Red Star Plastic Product Co., Ltd. and Mr. Zhengsong Wang respectively. The
initial registered capital of the Company was RMB 100,000,000 representing 100,000,000 shares
with a par value of RMB1 each and Mr. Shuxian Wang holds 85,100,000 shares.
Upon the approval document No.[2000]121 issued by the China Securities Regulatory Commission
on 29 August 2000, the Company issued 100,000,000 foreign capital shares (B share) with a par
value of RMB1 each. In addition, the Company increased issuance of 15,000,000 foreign capital
shares (B share) with a par value of RMB1 each between 29 September and 29 October 2000. The
Company’s B shares listed in Shenzhen Stock Exchange. The registered capital of the Company
after the issue of B shares was increased to RMB 215,000,000.
According to the resolution of general meeting of shareholders on 12 March 2002, the Company
distributed share bonus 43,000,000 shares to all shareholders at the rate of two shares given per ten
shares and used capital reserves to into capital as 107,500,000 shares to all shareholders at the rate
of five shares given per ten shares. The registered capital of the Company was increased to RMB
365,500,000 after share bonus distribution and turning.
According to the resolution of general meeting of shareholders on 22 July 2003, the Company
distributed share bonus 73,100,000 shares to all shareholders at the rate of two shares given per ten
shares. The registered capital of the Company was increased to RMB 438,600,000 after share bonus
distribution.
Upon the approval document No.[2004]101 issued by the China Securities Regulatory Commission
in July 2004, the Company increases of its capital by issuing 150,000,000 B shares, in which
91,300,000 shares were issued for Hong Kong dollars and 58,700,000 shares were issued for
Renminbi Yuan (RMB). The issuance of Renminbi shares has not been authorized by the China
Administration of Foreign Exchange department, and has not verified by PRC certified public
accountants and the procedures for the change of business registration were not carried out
completely.
Upon the approval of the Ministry of Commerce on 11 March 2004, the Company changed to
foreign investment joint stock Company and obtained the business license form Hebei Province
Administration for Industry and Commerce on 31 March 2004.
According to the resolution of general meeting of shareholders on 8 June 2006, the Company
distributed share bonus 117,720,000 shares to all shareholders at the rate of two shares given per ten
shares. The registered capital of the Company was increased to RMB 706,320,000 after share bonusCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
33
distribution. The issuance of mentioned above shares has not been verified by PRC certified public
accountants and the procedures for the change of business registration were not carried out
completely. The Company and its subsidiaries (hereafter referred to as the “Company”) are
principally engaged in the production and sale of clothes, synthetic fibers and a variety of paper
products.
Intermediate People's Court of Shenzhen determined that promoter share of 112,324,800 shares held
by Shuxian Wang should be compensate for Chen Rong in the price of RMB 45,491,544 in 2008.
And at the same year, Intermediate People's Court of Dalian determined that promoter share of
96,000,000 shares held by Shuxian Wang should be compensate for Rong Chen in the price of RMB
38,880,000.
2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The Company takes the sustainable operation as the basis, in according to actual occurred transation
and matters and in accordance with the requirements of China Accounting Standards for Business
Enterprises—Basic Standard and other various accounting standards to confirm and measure.
According to China Accounting Standards for Business Enterprise, estimation and assumptions are
the requirement when preparing financial statements, which will affect the disclosure of assets,
liabilities and the contingent liabilities as of balance sheet date and the income and expense of
report period.
3. CONSOLIDATION FINANCIAL STATEMENTS
(1) Holding subsidiaries
Century Win International Holding Ltd. (Century Win International), a Company incorporated in
Hong Kong, entered into an equity joint venture agreement with the Company to set up Xingye
Papermaking in 2001 and obtained the business license on 12 March 2001. According to the equity
Name of holding
subsidiaries
Place of
registration
Business nature
Registered
capital
Investment
amount
Shares
hold
directly
Shares
hold
indirectl
y
Voting
right
Subsidiaries formed by merger of
nonenterprise
Xingye Papermaking
Co., Ltd. (Xingye
Papermaking)
Chengde
Production and sale of various
kind of paper products like
high-grade copper plate paper
and kraft kinerpaper
USD100,0
00,000
USD75,000,000 75% - 75%
Huaxin Waste Paper
Collection Co., Ltd.
(Huaxin Waste Paper)
Chengde
Collection, process and sales
of waster paper and
paper-making products
RMB1,00
0,000
RMB900,000 - 100% 100%
Gold Axe
British
Virgin
Islands
Investment holding
and liaison of export business
USD1
Authorize
capital
100% - 100%CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
34
joint venture agreement, the Company and Century Win International had paid in capital of
approximately RMB 622,500,000 and RMB 207,500,000 respectively, and the registered capital
would be contributed in full by both sides within three years from the business license date of
Xingye Papermaking (the ‘Investment Period’). Up to the 31 December 2007, the Company and
Century Win International had fully paid the capital of RMB 622,500,000 and RMB 207,500,000
respectively. Some of the production lines were in operation since 2002. Due to the shortage of fund,
it fully was stopped production since 2006.
On Dec. 8, 2008, Hebei Chengde Intermediate People’s Court ruled with (2008) CMPZ No. 10
Civil Verdict: accepted the case for the applicant Chengde Yonghe Cement Co., Ltd. applying for
the bankruptcy of Chengde Xingye Papermaking Co., Ltd.
On Feb. 21, 2009, Hebei Chengde Intermediate People’s Court judged and confirmed the debts
amount owed by Chengde Xingye Papermaking Co., Ltd. with (2008) CMPZ No. 13-1 Civil Verdict.
On March 31, 2009, Hebei Chengde Intermediate People’s Court judged and approved the request
of reconciliation of Chengde Xingye Papermaking Co., Ltd. with with (2008) CMPZ No. 13-2 Civil
Verdict.
Huaxin Waste Paper is a subsidiary of the Company invested by Xingye Papermaking and XinYe
Commerce & Trade Co., Ltd., and obtained the business license on 17 January 2003. Xingye
Papermaking holds 90% equity of Huaxin Waste Paper. No business operations were transacted of
Huaxin Waste Paper during the year of 2006.
On Feb. 8, 2009, Hebei Chengde Intermediate People’s Court made judgement to declare the
bankruptcies of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd.,
Chengde Banhe Chemical Simulation Textile Co., Ltd. The aforementioned three companies were
not brought into the consolidated statement of the Company.
(2) Associated Company
Name of associated Company
Place of
registation
legal
representative
Registered
capital
Investment
amount
Shares
hold
Business nature
Chengde Beirifang Co., Ltd. Chengde Shuxian Wang USD1,000,000 USD500,000 -
Production and sale of stretch
yarn
Dahua Paper Industry Co., Ltd. Chengde Shuxian Wang
JPY6,364,000,
000
JPY2,864,000,
000
45%
Production and sale of
various kind of high-grade
paper and plate(exclude
newsprint paper)
Suning Banhe Fibre Textile Co.,
Ltd.
Suning Zhengsong Wang
USD
29,000,000
USD5,800,00
0
20%
Production and sale of
high-grade chemical fiber
fabrics
Dixian Light Rail Co., Ltd. Chengde Huilai Wang
USD
8,000,000
USD6,000,00
0
-
Construction of light rail and
transportation
Chengde Beirifang Co., Ltd. is a joint venture Company invested by Japan Beirifang Co., Ltd., Y’S
Corporation Co., Ltd. and the Company and obtained the business license on 12 March 2002. The
Company holds 50% equity of Chengde Beirifang Co., Ltd. but no capital contributed actually as to
31 December 2005. No business operations were transacted of Chengde Beirifang Co., Ltd. during
the year of 2005. On 27 March 2008, its license has been withdrawn by Chengde Industrial and
Commercial Bureau.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
35
Dahua Paper Industry Co., Ltd. was found as a joint venture Company invested by Nippon Paper
Industries Co. and the Company on 19 April 2004. The registered capital was USD5,000,000, of
which the Company invested USD2,250,000 accounting for 45％ equity.
Upon approval coded Ji Shang Wai Zi Zi [2004]No.41 issued by the Hebei Province Ministry of
Commerce, Dahua Paper Industry Co., Ltd. has increased the total investment from USD5,000,000
to JPY11,000,000,000 and the registered capital increased to JPY6,364,000,000. The investment of
the Company has increased to JPY2,864,000,000, accounting for 45% equity.
On 24 June 2005, Nippon Paper Industries Co. and Japan New Century Co. have agreed the
share-transfer contract, which indicated that Nippon Paper Industries Co. transferred 55％ equity of
Dahua Paper Industry Co., Ltd. to Japan New Century Co.. The above alteration has approved by
the Hebei Province Ministry of Commerce. Dahua Paper Industry Co., Ltd. obtained new business
license due to rename.
On 29 June 2005, the Company agreed the share-transfer contract and transferred 45% equity of
Dahua Paper Industry Co., Ltd. to Xinye Papermaking Co., Ltd.
As to 31 December 2007, Dahua Paper Industry Co., Ltd. has obtained investment of RMB
266,280,320.00. However, the above capital is unverified and the procedure on changes of
shareholder is unfinished.
Suning Banhe Fibre Textile Co., Ltd. was invested by Yamashita Shoji Co., Ltd. and the Company
on 7 November 2004 with the approval of Hebei Provincial Government of No. SWZJCSZ(2004)
0047, and obtained the business license with No. QHJCZZ 130900100274. The registered capital
was USD29,000,000, of which the Company invested USD5,800,000 accounting for 20% equity, in
which the Company invested with monetary fund of RMB 7,251,417.00 with converting into USD
895,236.67, on behalf of the Company, Japan New Century Co., Ltd. paid expense of equipment
disassembly, installation expense and transportation expense for Suning Banhe totaled upto
Janpanese YEN 521,007,225.00 with converting into USD 4,904,763.33 as the investment capital of
the Company; Yamashita Shoji Co., Ltd. invested USD 23,200,000.00 with equipment accounted
for 80% of the registered capital. Suning Banhe Fibre Textile Co., Ltd. leased equipments form
Chengde Banhe Fibre Textile Co., Ltd. to operate from the year of 2006.
Dixian Light Rail Co., Ltd. was invested by Japan New Century Co. and the Company on 8 April
2003. The registered capital was USD8,000,000 and total investment was USD17,800,000. The
Company invested paid-in capital as USD600,000, accounting for 75％ of total equity.
As to 31 December 2007, the Company has not contributed any actual capital to Dixian Light Rail
Co., Ltd. and Dixian Light Rail Co., Ltd. has not come into operation. Its business license has been
withdrawn by Chengde Industrial and Commerce Bureau on 27 March 2008.
(3) Minority shareholder’s equities：
Subsidiary name Minority shareholder’s equity
Xingye Papermaking Co., Ltd. 118,097.36
Total 118,097.36
4. MAJOR ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND
CONSOLIDATED FINANCIAL STATEMENTSCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
36
(1) Accounting policies
The accounting policies adopted by the Company are in accordance with the China Accounting
Standards for Business Enterprises (2006) issued by the Ministry of Finance.
(2) Accounting period
The accounting year of the Company is from January 1 to December 31.
(3) Recording currency
Except for Gold Axe Investment Group Limited, the recording currency of the Company is the
RMB (Yuan), the statutory currency of the People’s Republic of China. The recording currency of
the Gold Axe Investment Group Limited is US dollars.
(4) Basis of accounting and measurement
The Company follows the accrual basis of accounting. Assets are initially recorded at actual costs.
If at any time the provision for impairment made, the Company and subsidiaries are in accordance
with the CAS (2006).
(5) Cash and cash equivalents
The cash equivalents refers to short-term (matured within three months from the purchased date)
and highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value.
(6) Translation for foreign currency transactions and financial statement
The foreign currency transaction should be converted into market exchange rates on the day in
which the transaction took place when initially recorded. Foreign currency items should be
converted into RMB at market exchange rates on balance sheet date. The differences raised from
the translation between market exchange rates on balance sheet date and the initial confirmation
value or the previous balance sheet date should be calculated into the current profits and losses. The
foreign non-currency items which recorded in historical cost adopted the market exchange rates on
the day in which the transaction took place.
For balance sheet, all items related to assets and liabilities should be converted into RMB at the
market exchange rates on balance sheet date. All owner's equity except for undistributed profits
should be converted into RMB at market exchange rates on the day in which the transactions took
place.
For the income statement, items related to revenues and expenses should converted into RMB at
market exchange rates on the day in which the transactions took place. The translation difference
should be presented in the owner’s equity in the balance sheet.
For the Companies that operate in the foreign badness inflation economy situation, all items of
balance sheet should be restated as normal price index, all items of income statement should be
restated as movements of normal price first and then translated into RMB at the market exchange
rates on the date that most close to the balance sheet date. Restate of the financial statements should
cease when the foreign operation out of inflation situation, and the statements should be converted
as the price on the date of which the restate stopped.
For the cash flow statement, foreign currency cash flow items and cash flow items of foreign
subsidiaries should converted into RMB at market exchange rates on the day in which they took
place.
(7) Financial assets and liabilities
a. Classification of financial assets and liabilities
Financial assets comprise transaction financial assets, financial assets measured with fair value andCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
37
their changes calculated into the current profits and losses, held-to-maturity investment, loans and
receivables, available-for-sale financial assets etc. Financial liabilities comprise transaction
financial liabilities, financial liabilities measured with fair value and their changes calculated into
the current profits and losses.
b. The principle and the methods of measurement for financial tools
①Confirmation a financial asset or financial liability when the Company involved in a contract.
When the rights of the contract for charging cash flow of a financial asset terminate or nearly all
risks and remunerations thereon ownership are transferred, the Company terminates confirming the
financial asset. Confirmation of all or partial of the financial liability should be terminated when all
or partial current obligations of the financial liability terminated.
②After initial confirmation, financial assets and financial liabilities are measured with fair value.
For financial assets or financial liabilities measured with fair value and their changes calculated into
the current profits and losses, the relevant transaction expenses are directly calculated into the
current profits and losses; for other kinds of financial assets and financial liabilities, the relevant
transaction expenses are calculated into initial confirmation amount.
③After initial confirmation, financial assets of the Company are measured with fair value
subsequently and does not deduct the transaction expenses possibly occurring when such financial
assets will be disposed in the future. However, the following items excluded:
Held-to-maturity investment and receivable accounts are measured with amortized costs according
to actual interest rate method;
The equity tool investment that has no quotation in active market and which fair value cannot be
reliably measured are measured according to costs after initial confirmation;
When financial assets are not able to be measured with fair value due to the held intention or ability
of the Company changed or the fair value cannot be measured reliably, the Company converts the
fair value to cost measurement. The cost should be the fair value of the financial assets on the day
which they are re-classified.
④The Company adopts amortized costs for subsequent measurement of liabilities according to
actual interest rate method except the following:
After initial confirmation, the financial liabilities measured with fair value and their changes
calculated into the current profits and losses are measured with fair value, and do not deduct the
transaction expenses possibly occurring when such financial liabilities will be disposed in the
future;
When financial liabilities are not able to be measured with fair value due to the held intention or
ability of the Company changed or the fair value cannot be measured reliably, the Company
converts the fair value to cost measurement. The cost should be the fair value of the financial
liabilities on the day which they are re-classified;
Derivative financial liabilities related with the equity tool investment that has no quotation in active
market and which fair value cannot be reliably measured are measured according to costs after
initial confirmation;
Financial guarantee contract of financial liabilities which do not belong to kinds of the financial
liabilities that measured with fair value and their changes calculated into current profits and losses,
or loan undertaking not measured with fair value and their changes calculated into current profits
and losses and moreover loaned with a rate that lower than the market rate, should be subsequent
measured with the larger amount of the following two:CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
38
a)Amount according to the rule of contingent events;
b)Balance amount that arises from the initial confirmation amounts deducting the accumulated
amortized amounts that in accordance with rules of confirmation for revenues。
⑤Except that related with hedging, profit or loss occurring from fair value change of financial
assets or liabilities should be treated as flowing ruled:
Gain or loss arising from fair value change for the financial assets or liabilities which measured
with fair value and changes of fair value calculated into current profits and losses should be
calculated into current profits and losses;
Gain or loss resulting from fair value change of available for sale financial assets should be
calculated into capital reserve after deducting total differences from impairment loss and foreign
currency financial assets exchange. The amount should be transferred out to current profits and
losses when the financial assets terminated to confirm..
⑥Except that related with hedging, gain or loss arising when the financial assets or liabilities which
measured with amortization cost terminated to confirm or impairment or amortization should
calculated into current profits and losses.
⑦Amortization from fair value exchange of hedging tools and items hedged, which at the same
accounting period, should be calculated into current profits and losses.
c. Confirmation of fair value
The Company uses the quotation in active market to confirm the fair values of financial assets or
financial liabilities in active market. The quotation of the financial assets held by the Company or
the financial liabilities that the Company intends to undertake is the current offer; the quotation of
the financial assets that the Company intends to purchase or the financial liabilities that the
Company has undertaken is the current price.
If any financial tool has no active market, its fair value is confirmed with value estimation
technology. The value estimation methods include reference to the closing cost of market
transaction made recently by parties who are willing to transact, or reference to current market
quotation of other financial tools that are essentially same. The Company takes the value estimation
value of regular evaluation and tests its validity.
d. Provisions for devalue of financial assets
At end of the period, the Company checks book value of financial assets excluding financial assets
which measured with fair value and changes of which calculated into current profits and losses.
Impairment provision should be made if impersonality evidence obtained to verify the impairment
of the assets. Single significant amount assets should be test impairment singly. And single amount
assets that do not significant should be test in the financial assets group which have the similar
credit risk characterizers.
Main methods to calculate impairment provision for financial assets are as flowing:
①Financial assts that can be measured with fair value reliably should be made impairment
provision in light of amounts from book value minus fair value and calculated into current profits
and losses. For financial assets that can not be measured with fair value reliably, provision should
be made in the light of amounts from book value minus current value of projected future cash
flow( excluding credit loss has not happened yet) and calculated into current profits and losses. For
impairment of available for sale financial assets, accumulated losses that calculated into owners’
equity due to decrease of fair value when happening, should be transferred out to current profits and
losses.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
39
②For held-to-maturity investment, impairment provision should be calculated in the amount from
book value minus current value of projected future cash flow( excluding credit loss has not
happened yet) and entered into current profits and losses.
(8) Conversion of Financial assets:
Recognition of financial assets conversion: Recognition of the financial assets should be terminated
when the Company converts out nearly all related risks and rewards in light with the flowing
situations:
①Selling the financial assets without recourse;
②For financial assets that partially conversed, book value of the unitary financial assets should be
allocated between the terminated recognition parts and the rest in light with fair value of their own
respectively. Differences between book value of the termination recognition parts and relevant
receivables together with accumulated amounts from fair value change should be calculated into
current profits and losses.
(9) Provisions for bad accounts：
The bad debt is recognized when the bad debt is determined as such when the debtor is bankrupt or
dead, and the proceeds from the bankrupt’s estates or the decreased property are unable to cover the
debt; or the debtor fails to repay the overdue debt for more than three years with plain evidences
to indicate his inability to do so.
The Company adopts allowance method to calculate possible bad debts. A general provision for the
remaining receivables (both accounts receivable and other receivables) is made based on the ageing
of receivables, at the following percentages:
Aging of receivables Percentage of provision for bad accounts
Within 1 year 1%-5%
Between 1 and 2 year 20%
Between 2 and 3 year 50%
Over 3 year 100%
Based on an assessment of the recoverability of accounts receivable, specific provisions are applied
to accounts receivable where events or changes in circumstances indicate that the balances may not
be collectible. The specific provisions should be recorded in impairment loss for assets in current
period.（10）Inventories
a) Inventories mainly include raw material, auxiliary materials, repair parts, low cost consumables,
packing material, goods in stock, goods in process, finished goods.
b) Inventories are accounted for initial cost when purchased and entered into storage, and using
weighted average accounting method when issued. At the end of the year, inventories are presented
at the lower side between cost and net realizable value (NRV).
c) Perpetual inventory system is applied to inventories.
d) Low cost consumables are recorded using immediately write-off method when issued.
e) On the basis of stocktaking at the end of each year, for any inventory is physical damage, part or
entire obsolescence or its sales price fall below its cost, which results the cost of the inventory is
lower than its net realizable value (the “NRV”), a provision for impairment of inventory should be
made.
f) The provision for impairment equals to the difference between cost and NRV for individual item.
NRV is the estimated selling price in the ordinary course of business, less the estimated costs toCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
40
completion and the estimated costs necessary to conclude the sale.
(11) Long-term equity investment
Long- term equity investments of the Company are referred to the equity tools of which the
Company do have control on or control with other joint entities and have significant influence or do
not do control and joint control or have significant influence and have not offer in active market ,
fair value cannot be reliably measured.
The initial cost of the long-term equity investment formed in the merger of an enterprise shall be
ascertained in accordance with the following provisions:
a) For the merger of enterprises under the same control, regarding the share of the book value of the
owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the payment in cash,
non-cash assets transferred as well as the book value of the debts borne by the merging party shall
offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings
shall be adjusted.
b) For the merger of enterprises under the same control, if the consideration of the merging
enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the
date of merger, regard the share of the book value of the owner's equity of the merged enterprise as
the initial cost of the long-term equity investment. The difference between the initial cost of the
long-term equity investment and the payment in cash, non-cash assets transferred as well as the
book value of the debts borne by the merging party shall offset against the capital reserve. If the
capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration
of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the
share of the book value of the owner's equity of the merged enterprise as the initial cost of the
long-term equity investment. The total face value of the stocks issued shall be regarded as the
capital stock, while the difference between the initial cost of the long-term equity investment and
total face value of the shares issued shall offset against the capital reserve. If the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted.
Besides the long-term equity investments formed by the merger of enterprises, the initial cost of a
long-term equity investment obtained by other means shall be ascertained in accordance with the
provisions as follows:
①The initial cost of a long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid. The initial cost consists of the expenses directly relevant to the
obtainment of the long-term equity investment, taxes and other necessary expenses;
②The initial cost of a long-term equity investment obtained on the basis of issuing equity
securities shall be the fair value of the equity securities issued;
③The initial cost of a long-term equity investment of an investor shall be the value stipulated in the
investment contract or agreement except the unfair value stipulated in the contract or agreement;
④The initial cost of a long-term investment obtained by the exchange of non-monetary assets shall
be ascertained in accordance with the Accounting Standards for Enterprises No. 7 – Exchange of
Non-monetary Assets;
⑤The initial cost of a long-term equity investment obtained by recombination of liabilities shall be
ascertained in accordance with Accounting Standards for Enterprises No. 12 – Debt Restructuring.
A long-term equity investment of the Company that does not do joint control or does not have
significant influences on the invested entity, and has no offer in the active market and its fair valueCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
41
cannot be reliably measured. The Company shall accounted by the cost method, and shall make an
adjustment by the equity method when it works out consolidated financial statements.
The price of a long-term equity investment measured by the cost method shall be included at its
initial investment cost. If there are additional investments or disinvestments, the cost of the
long-term equity investment shall be adjusted. The dividends or profits declared to distribute by
the invested entity shall be recognized as the current investment income.
A long-term equity investment of the Company that does joint control or significant influences over
the invested entity shall be measured by the equity method.
If the initial cost of a long-term equity investment that measured by equity method is more than
the Company’s attributable share of the fair value of the invested entity's identifiable net assets for
the investment, the initial cost of the long-term equity investment may not be adjusted. If the
initial cost of a long-term equity investment is less than the investing enterprise' attributable share
of the fair value of the invested entity's identifiable net assets for the investment, the difference
shall be included in the current profits and losses and the cost of the long-term equity investment
shall be adjusted simultaneously.
After the Company obtains a long-term equity investment, it shall, in accordance with the
attributable share of the net profits or losses of the invested entity, recognize the investment
profits or losses and adjust the book value of the long-term equity investment. The investing
enterprise shall, in the light of the profits or cash dividends declared to distribute by the invested
entity, calculate the proportion it shall obtain, and shall reduce the book value of the long-term
equity investment correspondingly.
The impairment of a long-term equity investment which is measured by cost method for which
there is no offer in the active market and of which the fair value cannot be reliably measured, its
impairment shall be disposed in accordance the difference between the book value and the current
value of the expected future cash flow which similar to financial assets rates of market return. The
impairment of any other long-term equity investment measured with cost method should be
calculated into current profits and losses.
Once impairment of long-term equity investment invalidated, it cannot be transferred back.
(12) Fixed assets and accumulated depreciation:
Fixed assets include buildings and plant, machinery and equipment, motor vehicles and other
equipments used in production or rendering of services, which par value is over RMB1,000.00 and
with useful life for more than one year. For those non-manufacturing or non-operating equipments
which par value is over RMB2, 000.00 and with useful life for more than two years is also defined
as fixed assets. Fixed assets purchased or constructed by the Company are recorded at actual cost as
carrying amount. For the fixed assets obtained from the Company restructuring, the carrying
amounts should be recognized based on an assessment of national assets management departments.
Fixed assets are depreciated using the straight-line method to write off the cost of the assets to their
estimated residual values over their estimated useful lives. The estimated residual value of fixed
assets is recognized base on different categories of fixed assets, distributed basically from 5% to
10% of its original costs. The annual depreciation rate of fixed assets and estimated useful lives are
as follows:
Category
Estimated
residual
value
Estimated useful lives
Annual
depreciation rateCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
42
Buildings and plant-cost 5% 25 years 3.80%
Papermaking equipment 10% 20 years 4.50%
Other machinery equipment 5% 7—15 years 6.33%-13.57%
Motor vehicles 5% 5—10 years 9.5%—19%
Office equipments 5% 5—10 years 9.5%—19%
Fixed assets are presented at the lower side between carrying amount and net realizable value
(NRV).If at any time the recoverable amount has declined below the carrying amount due to
continuous decline of market price, negative change in technology, physical damage and
obsolescence, then impairment has occurred. The provision for impairment of individual fixed
assets equals to the differences between the recoverable amount and the carrying amount of that
fixed assets. Impairment losses can not be reversed in subsequent periods.
(13)Construction in progress
Construction in progress is recorded as actual cost. Borrowing costs on specific borrowings for
financing the construction are capitalized as part of the cost of the fixed assets until the assets are
ready for their intended use. Construction in progress is transferred to fixed assets and depreciation
commences when the asset are ready for their intended use.
At each period end, for those construction in process is suspended (whatever due to the negative
change in technology or worse economic performance) and there is estimation that the construction
will not be re-activated in the next three years, a provision for impairment should be made for
individual construction project. The provision for impairment equals to the differences between the
recoverable amount and the carrying amount. Impairment losses can not be reversed in subsequent
periods.
(14) Intangible assets
Intangible assets represent land use right, which is recorded at acquired cost and amortized using
the straight-line basis over the estimated useful lives. At the end of the year, the intangible assets
should be computed based on the lower side between carrying amount and recoverable amount. If
the carrying amount is higher than the net realizable value, a provision for impairment of intangible
assets is to be computed. Impairment losses can not be reversed in subsequent periods.
(15) Long-term prepaid expenses
Long-term prepaid expenses include the improvement of business lease fixed assets and other
long-term prepayments that should be amortized for more than 1 year and are presented at cost net
of accumulated amortization. Expenses occurred during the opening period, which should be
recorded as expenses at the month when it begins business operating.
(16)Impairment of assets:
The term "impairment of assets" refers to that the recoverable amount of assets is lower than its
carrying value. An enterprise shall, on the day of balance sheet, make a judgment on whether there
is any sign of possible assets impairment. No matter whether there is any sign of possible assets
impairment, the business reputation formed by the merger of enterprises and intangible assets
with uncertain service lives shall be subject to impairment test every year. The impairment basis and
methods of long term equity investment, fixed assets, construction in progress and intangible assets
etc. are listed as flowing:
a. There may be an impairment of assets when one of the following signs occurs:
①The current market price of assets falls, and its decrease is obviously higher than the expected
drop over time or due to the normal use;CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
43
② The economic, technological or legal environment in which the enterprise operates, or the
market where the assets is situated will have any significant change in the current period or in the
near future, which will cause adverse impact on the enterprise;
③ The market interest rate or any other market investment return rate has risen in the current
period, and thus the discount rate of the enterprise for calculating the expected future cash flow of
the assets will be affected, which will result in great decline of the recoverable amount of the assets;
④Any evidence shows that the assets have become obsolete or have been damaged substantially;
⑤The assets have been or will be left unused, or terminated for use, or disposed ahead of schedule;
⑥Any evidence in the internal report of the enterprise shows that the economic performance of the
assets have been or will be lower than the expected performance, for example, the net cash flow
created by assets or the operating profit (or loss) realized is lower (higher) than the excepted amount,
etc.; and
⑦ Other evidence indicates that the impairment of assets has probably occurred.
b. Where any evidence shows that there is possible assets impairment, the recoverable amount of
the assets shall be estimated. The recoverable amount shall be determined in light of the higher one
of the net amount of the fair value of the assets minus the disposal expenses and the current value of
the expected future cash flow of the assets. When either of the net amount of the fair value of an
asset minus the disposal expenses or the current value of the expected future cash flow of the asset
exceeds the carrying value of the asset, it shows that no asset impairment has occurred, and it does
not need to estimate another amount of the asset.
The net amount of the fair value of an asset minus the disposal expenses shall be determined in
light of the amount of the basis of the price as stipulated in the sales agreement in the fair
transaction minus the disposal expenses directly attributable to the asset. Where there is no sales
agreement but there is an active market of assets, the net amount of the fair value of an asset minus
the disposal expenses shall be determined in light of the amount of the market price of the asset
minus the disposal expenses. Generally the market price of the asset shall be determined
according to the price bidden by the buyer of the asset. Where there is no sales agreement and no
active market of assets, the net amount of estimated fair value of an asset minus the disposal
expenses shall be estimated in light of the best information available. The said net amount may be
estimated by reference to the latest transaction prices or results of similar assets among the
counterparts. Where the net amount of the fair value of an asset minus the disposal expenses
cannot be estimated reliably according to the provisions as described above, the enterprise shall
regard the current value of the expected future cash flow of the asset as the recoverable amount of
the asset.
The current value of the expected future cash flow of an asset shall be determined by the discounted
cash with an appropriate discount rate, on the basis of the expected future cash flow generated
during the continuous use or final disposal of an asset. To predict the current value of the future
cash flow, the enterprise shall take into comprehensive consideration the expected future cash
flow, service life, discount rate, and other factors.
c. Where the measurement result of the recoverable amount indicates that an asset's recoverable
amount is lower than its carrying value, the carrying value of the asset shall be recorded down to the
recoverable amount, and the reduced amount shall be recognized as the loss of asset impairment and
be recorded as the profit or loss for the current period. Simultaneously, a provision for the asset
impairment shall be made accordingly. After the loss of asset impairment has been recognized, theCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
44
depreciation or amortization expenses of the impaired asset shall be adjusted accordingly in the
future periods so as to amortize the post-adjustment carrying value of the asset systematically
(deducting the expected net salvage value). Once any loss of asset impairment is recognized, it
shall not be switched back in the future accounting periods.
d. Where there is any evidence indicating a possible impairment of assets, the enterprise shall, on
the basis of single item assets, estimate the recoverable amount. Where it is difficult to do so, it
shall determine the recoverable amount of the group assets on the basis of the asset group to
which the asset belongs. The recognition of an asset group shall base on whether the main cash
inflow generated by the asset group is independent of those generated by other assets or other group
assets. Simultaneously, when recognizing an asset group, the enterprise shall take into
consideration how its managers manage the production and business activities (for example,
according to the production lines, business varieties or according to the regions or areas), and the
ways of decision-making for the continuous use or disposal of the assets, etc.
(17) Borrowing expenses
The borrowing expenses, which are incurred by the Company and can be directly listed into
purchase, construction or production of the assets in accordance with capitalized conditions, are
capitalized and calculated into the costs of relevant assets. Except the above borrowing expenses,
other borrowing expenses are confirmed as financial expenses at the current period of their
occurrence. In the period of capitalization, the Company confirms the amount of interest
capitalization in each accounting period according to the following method (including amortization
of discounting price or premium price):
. For special loans borrowed for purchase, construction or production of the assets in accordance
with capitalized conditions, the Company confirms them with the amount of the interest expenses of
special loans calculated according to actual interest rate of the current period, minus the interest
incomes from the not used loan capital that is deposited into bank, or minus the investment earnings
acquired from temporary investment.
. For the common borrowing occupied for purchasing, constructing or producing the assets in
accordance with capitalized conditions, the Company calculates and confirms the interest amount of
common borrowings that shall be capitalized, according to the weighted average of capital
expenditures of the part that the accumulative asset expenditures exceed the special borrowings,
multiplied capitalization rate of the occupied common borrowings. Capitalization rate is confirmed
according to the weighted average actual interest rate of common borrowings.
When the Company is confirming the actual interest rate of borrowings, the Company discounts the
future cash flow of borrowings in the anticipated existence term or any applicable shorter term, as
the interest rate used for the current carrying amount of the borrowing.
Capitalization term refers to the term from capitalization of borrowing expenses to closing of
capitalization, exclusive of the term that the borrowing expenses suspend capitalization. When
capital expenditures and borrowing expenses have occurred, and the purchase, construction or
production activities necessary for making assets reach the scheduled usable or available-for-sale
status have commenced, capitalization of the borrowing expenses starts. When assets purchased,
constructed or produced in accordance with capitalized conditions reach the scheduled usable or
available-for-sale status, capitalization of borrowing expenses stops. If the assets in accordance with
capitalized conditions generate non-normal interruption in the course of purchase, construction or
production, and the interruption time exceeds three months, the Company temporarily stopsCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
45
capitalization of borrowing expenses.
(18) Employee’s salaries and wages
The employees’ salaries and wages are various remunerations paid by the Company for employees’
services and other relevant expenditures. Except dismissal welfare, the Company confirms the
payable employees’ salaries and wages as liability in the period that the employees provide their
services, and correspondingly increase asset costs or current expenses.
According to relevant regulations of China, the employees of the Company have participated in
social basic endowment insurance implemented by the local labor and social security department.
The Company pays endowment insurance to the local social basic endowment insurance institution
according to payment amount and ratio of social basic endowment insurance locally regulated. The
social basic endowment insurance above paid is calculated into the current profits and losses
according to accrual basis. When employees have retired, local labor and social security department
is liable to pay social basic retirement pension to the retired employees. The Company has no other
payment obligations.
Besides retirement welfare, the Company pays house accumulation fund and basic hospitalization
insurance, unemployment insurance, employment injury insurance and birth insurance for in-service
employees according to relevant laws, regulations and policies. The Company pays house
accumulation fund and the above social insurances according to certain proportion of employee’s
salary on monthly basis, and calculates into capital costs or the current profits and losses according
to accrual basis.
(19) Revenue recognition :
Revenue from the sale of goods is recognized when the significant risks and rewards of ownership
of the goods are transferred to the buyer; the transfer of control and ownership of the goods sold
which normally takes place upon delivery of goods; and the amount of revenue and cost relating to
the goods can be measured reliably.
Revenue from providing service is recognized when the income, relating cost and extent of
performance can be reliably measured and a presumption of cash inflow exists and cost relating to
the service can be measured reliably.
Revenue from transferring using right of assets is recognized when the relevant economic benefits
are likely to flow into the Company and the amount of revenues can be measured in reliable way.
(20) Deferred tax:
Deferred income tax assets and deferred income tax liabilities are confirmed respectively according
to the deductible temporary difference and taxable temporary difference. Temporary difference
refers to the difference between the book value of assets or liabilities and their taxation basis,
including the deductible losses and taxation setoff that can be carried forward in the subsequent
years. The confirmation of deferred income tax assets is limited to the amount of taxable incomes
that is likely obtained for deducting the deductible temporary difference.
If it is not a transaction of corporate merger, accounting profits or taxable amount of incomes is not
affected when the transaction occurs (or can deduct the losses), the temporary difference generating
in this transaction will not generate deferred income taxes. The temporary difference caused by the
initial confirmation of goodwill will not generate relevant deferred income taxes.
On the balance sheet date, the Company measures the book value of the deferred income tax assets
and liabilities according to the anticipated realization or settlement manner of deferred income tax
assets and liabilities, the provisions of taxation laws issued, and the tax rate applicable to theCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
46
anticipated period of recovering the assets or discharging the liabilities.
(21) Income tax
The Company calculates the income tax using balance sheet liability method. The current income
taxes are the anticipated payable income taxes calculated according to the tax rates as regulated in
taxation laws on the amount of taxable incomes, plus any modification of income taxes payable in
the previous years.
(22) Corporate merger
a) Corporate merger under the same control
If enterprises that participate in merger are under the final control by the same party or unchanged
several parties before and after merger and such control is not temporary, it is the corporate merger
under the same control. The assets and liabilities obtained by the merging party under merger are
measured according to the book value on the merged party on the merger date. The difference
between the book value of the net assets obtained and the book value of consolidated consideration
paid (or the total face value of the issued shares) is modified in the premium price of stock equity
(or premium price of capital) in the capital reserves; if the premium price of stock equity (or
premium price of capital) in the capital reserves is not sufficient for write-off, the earning retained is
modified. The merger date is the date when the merging party actually acquires the control rights to
the merged party.
b) Corporate merger not under the same control
If the parties that participate in merger are not under the final control by the same party or the same
several parties, it is the corporate merger not under the same control. The merger costs paid by the
Company are the sum of the assets paid for the control rights to the merged party, liabilities occur or
are undertaken, the fair value of the issued equity securities on the purchase date and direct
expenses occurring in corporate merger. The difference between the fair value and book value of the
paid assets is calculated into the current profits and losses. The purchase date is the date when the
Company actually obtains the control rights to the purchased party. The Company distributes the
merger costs on the purchase date to confirm the fair value of recognizable assets, liabilities and
contingent liabilities of the purchased party.
When the merger costs are larger than the fair value of recognizable net assets of the purchased
party obtained from merger, the difference is confirmed as goodwill.
When the merger costs are less than the fair value of recognizable net assets of the purchased party
obtained from merger, the difference is calculated into the current profits and losses.
(23) Basis of financial statements consolidation
a) The scope of consolidation
The consolidated scope of the consolidated financial statements includes the Company and the
subsidiaries under control of the Company. Control refers to which is entitled to decide the financial
and management policies of a Company and by which interest can be obtained from the operation
activities of the Company. The operation results and financial status of the subsidiaries under
control are contained in the consolidated financial statements from control starting date to control
closing date.
b) Accounting method of consolidated financial statements
For any subsidiary acquired by the Company through corporate merger under the same control,
when the consolidated financial statements for the current period are being prepared, it is deemed
that the merged subsidiaries are entered into the merger scope of the Company when the finalCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
47
control party of the Company starts to perform control to it, and the number at the beginning of the
period in the consolidated financial statements and previous comparison statement are made
corresponding modification. While the Company is preparing the consolidated financial statements,
the assets and liabilities of the merged subsidiary and their book values are combined into the
consolidated balance sheet of the Company and the operation results of the merged subsidiary are
combined into the consolidated profit statement of the Company since the final control party of the
Company starts to perform control.
For any subsidiary acquired by the Company through corporate merger not under the same control,
when the consolidated financial statements for the current period are being prepared, the financial
statements of the subsidiary are modified on the basis of recognizable assets, fair values of
liabilities as confirmed on the purchase date, and the assets, liabilities and operation results of the
purchased subsidiary are combined into the financial statements of the Company as of the purchase
date.
c) The accounting policy of each holding subsidiary is in accordance with the Company.
5. TAXATION
The types of taxes applicable to the Company include value added tax (VAT), business tax, tax for
maintaining and building cities, education supplementary tax and enterprise income tax.
Items of taxation Tax base Tax rate
Value added tax
17% taxable amount of sales income deducted
the input tax deductible in current period
17%, 13%
Enterprise income tax Taxable amount of income 25%
6. NOTES TO SIGNIFICANT MATTERS OF FINANCIAL STATEMENTS (unless otherwise
stated, following data is provided after consolidated)
Note1. Monetary fund
Category Currency Amount in period-end Amount in period-begin
Cash RMB 254,891.32 12,639.38
Deposit at bank RMB 408,495.89 434,618.35
Other monetary fund RMB - -
Total 663,387.21 447,257.73
Note 2. Accounts receivable
After consolidated, the accounts receivable are listed below:CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
48
On April 8, 2009, the Company auctioned partial assets kinds of creditors’ rights (including
accounts receivable, accounts paid in advance, other receivables of the Company) to Chengde
Rongyida Real Estate Development Co., Ltd., making the accounts receivable of the Company
decreased.
There is no such amount in period-end belongs to shareholders who hold 5% or more than 5%
voting rights.
a) Closing balance of accounts receivable analyzed based on risk combination are presented as
below:
The category of individual accounts with large amount is defined the single amount of receivable
over RMB 1,000,000. After assessing of the recoverability of accounts receivable, details of single
accounts receivable with large amounts and bad debt provision are listed as follows:
Name of Company Amount in period-end Bad debt provision Age of account
Langfang Office 1,504,236.40 1,504,236.40 Over 3 years
Qingdao Tengfa packing
materials Co., Ltd.
1,109,966.37 1,109,966.37 Over 3 years
Jingjin Office (from 1
Feburary)
1,020,959.19 1,020,959.19 Over 3 years
Total 3,635,161.96 3,635,161.96
The category of single accounts without large amount but with major risk after integrated into credit
risk combination is defined base on the characteristics of the Company, the aging of debts over
three years are with high risk to recoverable. According to that, the accounts with single amount
lower than RMB 1,000,000 and aging over three years are classified into the category. In the
category with large amounts and bad debt provision are listed as follows:
Name of Company Amount in period-end Bad debt provision Age of account
Amount in period-end Amount in period-begin
Item
Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
1. Individual accounts with
large amount
3,635,161.9
6
22.23% 3,635,161.96 131,055,106.54 92.05% 126,545,785.40
2. Individual accounts without
large amount but with major
risk after integrated into credit
risk combination
5,260,868.8
7
10.08% 5,260,868.87 5,550,166.48 3.90% 5,550,166.48
3. Others with small amount 2,465,127.6
6
67.69% 1,231,104.81 5,767,250.56 4.05% 3,961,942.77
Total 11,361,158.
49
100% 10,127,135.64 142,372,523.58 100% 136,057,894.65
Total for top 5 Companies
4,790,665.2
4
42.17%
4,790,665.24
111,308,146.47 78.18% 111,308,146.47CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
49
Shandong Qingzhou Qinglong
Paper Carton Factory
591,966.96 591,966.96 Over 3 years
Langfang Office (since Feb. 1) 563,536.32 563,536.32 Over 3 years
Shandong Jimo Yuanjian
Plastic Products Company
519,578.66 519,578.66 Over 3 years
Total 1,675,081.94 1,675,081.94
b) Closing balance of accounts receivable analyzed based on aging are listed as below:
Amount in period-end Amount in period-begin
Age of account
Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
Within 1 year - - - - - -
1 to 2 years - - - 4,576,303.95 3.21% 2,431,813.73
2 to 3 years 2,465,127.66 22% 1,231,104.81 120,625,300.71 84.73% 116,455,592.00
Over 3 years 8,896,030.83 78% 8,896,030.83 17,170,918.92 12.06% 17,170,488.92
Total 11,361,158.49 100% 10,127,135.64 142,372,523.58 100% 136,057,894.65
Details of the parent company amount for accounts receivable as follows:
a)Closing balance of accounts receivable analyzed based on risk combination are presented as
below:
Amount in period-end Amount in period-begin
Item Amount
Rate
in
total
Bad debt
provision
Amount
Rate in
total
Bad debt
provision
1. Individual accounts with large
amount
- - - 134,571,285.86 97.40% 122,910,623.44
2. Individual accounts without large
amount but with major risk after
integrated into credit risk
combination
- - - 1,055,500.36 0.76% 1,055,500.36
3. Others with small amount - - - 2,535,920.15 1.84% 1,964,635.21
Total - - - 138,162,706.37 100% 125,930,759.01
Total for top 5 Companies - - - 111,308,146.47 80.56% 111,308,146.47CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
50
b)Closing balance of accounts receivable analyzed based on aging are listed as below:
Amount in period-end Amount in period-begin
Age of
account Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
Within 1 year - - - - - -
1 to 2 years - - - 11,356,021.34 8.22% 2,367,204.27
2 to 3 years - - - 117,751,184.67 85.23% 114,508,054.38
Over 3 years - - - 9,055,500.36 6.55% 9,055,500.36
Total - - - 138,162,706.37 100% 125,930,759.01
On April 8, 2009, the Company auctioned partial assets kinds of creditors’ rights (including
accounts receivable, accounts paid in advance, other receivables of the Company) to Chengde
Rongyida Real Estate Development Co., Ltd. , making the amount of accounts receivable of parent
company was 0.
Note 3. Account paid in advance
Amount in period-end Amount in period-begin
Age of account
Amount Rate in total Amount Rate in total
Within 1 year - - - -
1 to 2 years - - 1,030,133.15 1.50%
2 to 3 years 1,030,133.15 14.15% 3,716,189.37 5.42%
Over 3 years 6,249,589.57 85.85% 63,883,950.36 93.08%
Total 7,279,722.72 100% 68,630,272.88 100%
On April 8, 2009, the Company auctioned partial assets kinds of creditors’ rights (including
accounts receivable, accounts paid in advance, other receivables of the Company) to Chengde
Rongyida Real Estate Development Co., Ltd. , making accounts paid in advance of the Company
decreased .
Note 4. Other receivables
After consolidated, the other receivables are listed below：
a)Closing balance of other receivables analyzed based on risk combination are presented as below:
Amount in period-end Amount in period-begin
Item
Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
1. Individual
accounts with
large amount
40,238,824.97 35.40% 8,048,392.67 264,785,242.70 97.02% 206,254,716.37CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
51
2. Individual
accounts without
large amount but
with major risk
after integrated
into credit risk
combination
46,429,579.38 40.85% 46,429,579.38 978,940.30 0.36% 978,940.30
3. Others with
small amount
26,989,468.11 23.75% 3,748,664.23 7,143,676.78 2.62% 1,564,992.15
Total 113,657,872.46 100% 58,226,636.28 272,907,859.78 100% 208,798,648.82
Total for top 5
Companies
42,958,442.05 44.95% 42,958,442.05 136,200,994.68 49.91% 92,048,566.53
The category of individual accounts with large amount is defined the single amount of receivable
over RMB 1,000,000. After special assumed and confirmed as account receivable with single large
amounts.
The category of single accounts without large amount but with major risk after integrated into credit
risk combination is defined base on the characteristics of the Company, the aging of debts over
three years and debts of those Companies wich were cancelled of business licenses are with high
risk to recoverable. According to that, the accounts with single amount lower than RMB 1,000,000
and aging over three years are classified into the category.
b)Closing balance of other receivables analyzed based on aging are listed as below:
Amount in period-end Amount in period-begin
Age of account
Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
Within 1 year 25,588,380.92 22.51% 3,048,120.63 5,757,232.17 2.11% 3,048,120.63
1 to 2 years 40,238,824.97 35.40% 8,048,392.67 69,221,055.59 25.36% 15,681,068.53
2 to 3 years 1,401,087.19 1.23% 700,543.60 74,735,051.30 27.39% 66,874,938.94
Over 3 years 46,429,579.38 40.85% 46,429,579.38 123,194,520.72 45.14% 123,194,520.72
Total 113,657,872.46 100% 58,226,636.28 272,907,859.78 100.00
%
208,798,648.82
On April 8, 2009, the Company auctioned partial assets kinds of creditors’ rights (including
accounts receivable, accounts paid in advance, other receivables of the Company) to Chengde
Rongyida Real Estate Development Co., Ltd., making the change of other receivables of the
Company decreased.
There is no such amount in period-end belongs to shareholders who hold 5% or more than 5%
voting rights.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
52
Details of the parent company amount for other receivables as follows:
a)Closing balance of other receivables analyzed based on risk combination are presented as below:
Amount in period-end Amount in period-begin
Item
Amount Rate in
total
Provision for
bad debt
Amount Rate in
total
Provision for bad
debt
1. Individual
accounts with
large amount
40,238,824.97 68.02% 8,048,392.67 604,182,639.89 98.84% 158,066,671.52
2. Individual
accounts
without large
amount but
with major
risk after
integrated
into credit
risk
4,825,895.97 8.16% 4,125,352.38 978,940.30 0.16% 978,940.30
3. Others with
small amount
14,096,894.37 23.83% 1,623,975.84 6,118,110.30 1.00% 1,310,889.92
Total 59,161,615.31 100% 13,797,720.89 611,279,690.49 100% 160,356,501.74
Total for top
5 Companies
57,374,805.45
136,200,994.68 23.50% 92,048,566.53
The category of individual accounts with large amount is defined the single amount of receivable
over RMB 1,000,000. After special assumed and confirmed as other receivables with single large
amounts.
The category of single accounts without large amount but with major risk after integrated into credit
risk combination is defined base on the characteristics of the Company, the aging of debts over
three years and debts of those Companies wich were cancelled of business licenses are with high
risk to recoverable. According to that, the accounts with single amount lower than RMB 1,000,000
and aging over three years are classified into the category.
There is no such amount in period-end belongs to shareholders who hold 5% or more than 5%
voting rights.
b)Closing balance of other receivables analyzed based on aging are listed as below:
Age of account Amount in period-end Amount in period-beginCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
53
Amount
Rate in
total
Provision for
bad debt
Amount
Rate in
total
Provision for
bad debt
Within 1 year 14,096,894.37 23.83% 1,623,975.84
34,461,955.24
5.64%
1 to 2 years 40,238,824.97 68.02% 8,048,392.67 51,210.13
97,273,662.14
15.91
%
13,830,658.96
2 to 3 years 1,401,087.19 2.37% 700,543.60
350,355,528.57
57.32
%
66,092,560.53
Over 3 years 3,424,808.78 5.79% 3,424,808.78
129,188,544.54
21.13
%
80,382,072.12
Total 59,161,615.31 100% 13,797,720.89 611,279,690.49 100% 160,356,501.74
Note 5. Inventories and devaluation provision
a)Balance of inventories are listed as below：
Amount in period-end Amount in period-begin
Item
Book balance Book value Book balance Book value
Goods in stock 3,747,675.15 13,291.44 3,754,396.56 20,012.85
Raw material 1,844,501.69 3,286.52 1,844,501.69 3,286.52
Goods in process 420,447.21 - 774,978.31 354,531.10
Commission
processing material
- - - -
Turnover materials - - - -
Self-made goods in
process
- - - -
Total 6,012,624.05 16,577.96 6,373,876.56 377,830.47
b)The devaluation provision for inventories is analyzed as follows:
Decreases
Item
Amount in
period-begin
Increases
Transferred
back due to
goods value
rises
Transferred
out due to
other reason
Total
Amount in
period-end
Goods in stock 3,734,383.71 - - - - 3,734,383.71
Raw material 1,841,215.17 - - - - 1,841,215.17
Goods in process 420,447.21 - - - - 420,447.21
Commission
processing material
- - - - - -CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
54
Total 5,996,046.09 - - - - 5,996,046.09
On February 8, 2009, Chengde Intermediate People’s Court in Hebei Province judged and declared
the bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd. Due to that the inventories of three
bankrupted companies above were not brought into consolidation of the Company, the inventories
of the Company decreased.
Note 6. Long-term equity investments
After consolidated, Long-term equity investments are listed below:
Amount in period-end Amount in period-begin
Item
Book balance
Impairment
provision Book value Book balance
Impairment
provision Book value
Long-term
equity
investment
Including:
Investment in
previous
subsidiaries
215,783,493.69 215,783,493.69 - - - -
Investment in
affiliated
Companies
253,195,729.65 155,980,000.00 97,215,729.65 253,195,729.65 155,980,000.00 97,215,729.65
Other equity
investment
- - - - - -
Total 468,979,223.34 371,763,493.69 97,215,729.65 253,195,729.65 155,980,000.00 97,215,729.65
On Dec. 8, 2008, according to the Civil Verdict of (2008) Cheng Min Po Zi No. 10, No. 11, No. 12
and No. 13. Chengde Intermediate People’s Court of Hebei Province judged that it would accept
and hear the case of bankrupted liquidation of Chengde Banhe Chemical Simulation Textile Co.,
Ltd., Chengde Dixian Fashion Co., Ltd. and Hebei Xiabancheng Knitwear Co., Ltd. and Chengde
Xingye Papermaking Co., Ltd.
On February 8, 2009, according to the Civil Verdict of (2008) Cheng Min Po Zi No. 10-1, No. 11-1
and No. 12-1. Chengde Intermediate People’s Court of Hebei Province declared the bankruptcy of
Chengde Banhe Chemical Simulation Textile Co., Ltd., Chengde Dixian Fashion Co., Ltd. and
Hebei Xiabancheng Knitwear Co., Ltd.
On February 21, 2009, according to the Civil Verdict of (2008) Cheng Min Po Zi No. 13-1.
Chengde Intermediate People’s Court of Hebei Province confirmed the liability amounts of XingyeCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
55
Papermaking. On March 31, 2009, according to the Civil Verdict of (2008) Cheng Min Po Zi No.
13-2. Chengde Intermediate People’s Court of Hebei Province approved request of reconciliation of
Chengde Xingye Papermaking Co., Ltd..
Thus, the three bankrupted companies were not brought into consilidation of the Company, and
impairment provision had been withdrawn for the long term equity investment of the bankrupted
companies.
Investment in affiliated Company as follows:
Company invested
Rate in
registered
capital of
invested
Company
Initial
investment
cost
Invest
ment
super-a
ddition
Addition or
decrease of
current
period
equities
Cash
dividends
Accumulate
d increase
or decrease
Balance in
period-end
Dahua Paper Industry
Co., Ltd.
45%
206,215,729.6
5
- - - - 206,215,729.65
Suning Banhe Fibre 20% 46,980,000.00 - - - - 46,980,000.00
Dixian Light Rail Co.,
Ltd.
75% - - - - - -
Chengde Beirifang
Co., Ltd.
50% - - - - - -
Total 253,195,729.6
5
- - - - 253,195,729.65
Owing to the importation equipments of Banhe Fibre Textile Co., Ltd. were sealed up by CIQ for
more than two years and piled up on the open air, the Company made the provision for long-term
equity investment of RMB 46,980,000.00 in 2006 because the equipments were scraped.
Xingye Papermaking had made the provision for long-term equity investment to Dahua Paper
Industry of RMB 9,000,000.00 in 2006. As year 2008, Xinye Papermaking made the provision for
the investment of 100,000,000.00 in reason for Dahua Paper Industry Co., Ltd. project stopped to
construct for several years and its financial volumes were detained.
Details of the parent company amount for the long-term equity investment as follows:CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
56
Amount in period-end Amount in period-begin
Item
Book balance
Impairment
provision
Book value Book balance
Impairment
provision
Book value
Long-term
equity
investment
Including:
Investment in
subsidiaries
630,800,000.00 - 630,800,000.00 1,211,812,433.52 - 1,211,812,433.52
Investment in
Previous
subsidiaries
581,012,433.52 581,012,433.52 - - - -
Investment in
affiliated
Companies
46,980,000.00 46,980,000.00 - 46,980,000.00 46,980,000.00 -
Other equity
investment
- - - - - -
Total 1,258,792,433.52 627,992,433.52 630,800,000.00 1,258,792,433.52 46,980,000.00 1,211,812,433.52
On February 8, 2009, Chengde Intermediate People’s Court of Hebei Province declared the
bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd.; and the three bankrupted companies were
not brought into consolidation of the Company, thus, the long term investment impairment
provision had been withdrawn for the long term equity investment of the bankrupted companies by
full amount.
a. Investment in affiliated Company as follows:
Company
invested
Rate in
registered
capital of
invested
Company
Initial investment cost
Investment
super-additi
on
Addition
or
decrease
of
current
period
equities
Cash
dividends
Accumul
ated
increase
or
decrease
Amount in
period-end
Suning Banhe
Chemical
Simulation
20% 46,980,000.00 - - - - 46,980,000.00
b. Investment in subsidiaries as follows:CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
57
Company
invested
Rate in
registered
capital of
invested
Company
Initial
investment
cost
Amount in
period-begin
Increases
Decrease
s
Amount in
period-end
Xingye
Papermaking
75%
622,500,000.0
0
622,500,000.00 - - 622,500,000.00
Gold Axe(abroad
Company） 100% 8,300,000.00 8,300,000.00 - - 8,300,000.00
Total 630,800,000.0
0
630,800,000.00 - - 630,800,000.00
Note 7. Fixed assets and accumulated depreciation
Original value of
fixed asset
Amount in
period-begin
Increases Decreases
Amount in
period-end
Houses & Buildings 256,653,223.06 - 185,034,717.50 71,618,505.56
Machinery
equipment 1,391,877,261.16 -
1,391,877,261.1
6
-
Transportation
equipmentt
11,010,889.94 - 208,800.00 10,802,089.94
others 1,331,563.19 - 1,160,949.69 170,613.50
Total 1,660,872,937.35 - 1,578,281,728.3
5
82,591,209.00
Accumulated
depreciation
Amount in
period-begin
Increases Decreases
Amount in
period-end
Houses & Buildings 73,992,122.99 1,020,450.66 63,148,895.78 11,863,677.87
Machinery
equipment
398,685,619.02 - 398,685,619.02 -
Transportation
equipment 7,932,635.27 176,585.97 80,713.23 8,028,508.01
others 816,170.53
4,431.78
764,734.85 55,867.46
Total 481,426,547.81
1,201,468.41
462,679,962.88 19,948,053.34
Transferred back
Impairment
provision
Amount in
period-begin
Increases
Transferred
back due to
assets value
rise
Transferred out
due to other
reason
Amount in
period-end
Houses & Buildings 113,471,701.28 - - 80,088,601.01 33,383,100.27CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
58
Machinery
equipment 939,719,162.04 - - 939,719,162.04 -
Transportation
equipment and
others
2,162,400.06 - -
183,937.32
1,978,462.74
Total 1,055,353,263.38 - - 1,019,991,700.3
7
35,361,563.01
Net amount 124,093,126.16 27,281,592.65
On February 8, 2009, Chengde Intermediate People’s Court in Hebei Province judged and declared
the bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd. Due to that the fixed assets of three
bankrupted companies above were not brought into consolidation of the Company, the fixed assets
of the Company decreased.
On December 30, 2008, Chengde Intermediate People’s Court in Hebei Province ruled on approval
of the Restructuring Program (Draft)of Chengde Dixian Textile Company Limited. According to the
arrangement of Restructuring Program (Draft), Chengde Intermediate People’s Court in Hebei
Province auctioned the mortgages to settle bank loan of the Company. Most of the mortgage were
fixed assets, so they decreased.
On February 25, 2009, according to SHI XING CHU ZI (2008) No. 48 criminal verdict, Chengde
Intermediate People’s Court in Hebei Province sentenced the defendant Chengde Dixian Textile
Company Limited committed a crime of smuggling general cargo, imposing a fine RMB
68,734,451.21 and the smuggling cargo were handed into state treasury ; On April 23, 2009,
according to theCriminal Judge Letter of (2009) JI XING ER ZHONG ZI No. 44, High People’s
Court in Hebei province rejected the appeal and upheld verdict. This was final judgement. Fixed
asset decreased after fine of the smuggling goods.
Note 8. Construction in progress
Name of
project
Budget
amount
Amount in
period-begin
Increase
s
Transferre
d to fixed
assets
Other decreases
Amount in
period-end
Banhe Fibre
Textile
40,000,0
00
83,643,453.05 - - 66,757,891.98 16,885,561.07
Papermaking
project
1,000,00
0,000
335,720,225.63 - - - 335,720,225.63
Thermal
power stations
20,000,0
00
7,329,176.55 - - - 7,329,176.55
Chemical
fiber plant
180,000,
000
66,167,154.98 - - 34,323,967.89 31,843,187.09CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
59
Others - 10,865,739.16 - - - 10,865,739.16
Total 503,725,749.37 - - 101,081,859.87 402,643,889.50
Impairment
for CIP
490,841,949.37 - -
101,081,859.87
389,760,089.50
Net value 12,883,800.00 - - - 12,883,800.00
Note 9. Intangible assets
Item
Amount in
period-begin
Increases Decreases
Amount in
period-end
1.Total of original price 125,581,008.13 - 92,445,260.67 33,135,747.46
Financial software - - - -
Patent technology - - - -
Land use rights 125,581,008.13 - 92,445,260.67 33,135,747.46
2.Total of accumulated
amortization
14,615,056.09 424,440.50 9,789,876.07 5,249,620.52
Financial software - - - -
Patent technology - - - -
Land use rights 14,615,056.09 424,440.50 9,789,876.07 5,249,620.52
3.Total of impairment 19,670,971.87 19,670,971.87 -
Financial software - - - -
Patent technology - - - -
Land use rights 19,670,971.87 - 19,670,971.87 -
4.Total of book value 91,294,980.17 27,886,126.94
On December 30, 2008, Chengde Intermediate People’s Court in Hebei Province ruled on approval
of the Restructuring Program (Draft) of Chengde Dixian Textile Company Limited. According to
the arrangement of 《Restructuring Program (Draft)》, Chengde Intermediate People’s Court in
Hebei Province auctioned the pledged intangible assets to settle bank loan of the Company, so the
intangible assets decreased.
On February 8, 2009, Chengde Intermediate People’s Court in Hebei Province judged and declared
the bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd. Due to that the intangible assets of three
bankrupted companies above were not brought into consolidation of the Company, the intangible
assets decreased.
Note 10. Deferred income tax asset
Items that result in temporary differences Amount in period-end Amount in period-beginCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
60
Impairment provision for fixed assets 23,974,719.28 23,974,719.28
Impairment provision for construction in
progress
35,758,966.87 35,758,966.87
Bad debit provision for account receivables 40,089,125.44 40,089,125.44
Bad debit provision for other receivables 31,482,689.74 31,482,689.74
Total 131,305,501.33 131,305,501.33
Note 11. Short-term loans
Type of loan Amount in period-end Amount in period-begin
Credit loan 5,422,261.91 5,650,705.60
Mortgage loan - 120,920,000.00
Guaranteed loan - -
Guaranteed and mortgage loan - 130,539,377.28
Total 5,422,261.91 257,110,082.88
On Dec. 30, 2008, Chengde Intermediate People’s Court of Hebei Province confirmed the liability
amounts of the Company and approved the restructuring program of the Company respectively
according to the Civil Verdict of (2008)Cheng Min Po Zi 9-1 and the Civil Verdict of (2008)Cheng
Min Po Zi.9-2. The Company returned most of short loans and confirmed restructuring benefits and
decreased the amounts of relevant short-term loans.
Note 12. Accounts payable
Amount in period-end Amount in period-begin
Age of account
Amount Rate in total Amount Rate in total
Within 1 year - - 800,000.00 1.95%
1 to 2 years - - 2,155,651.17 5.27%
2 to 3 years - - 2,273,085.99 5.55%
Over 3 years 313,868.31 100% 35,700,781.88 87.23%
Total 313,868.31 100% 40,929,519.04 100%
On Dec. 30, 2008, Chengde Intermediate People’s Court of Hebei Province confirmed the liability
amounts of the Company and approved the restructuring program of the Company respectively
according to the Civil Verdict of (2008)Cheng Min Po Zi 9-1 and the Civil Verdict of (2008)Cheng
Min Po Zi.9-2. The Company returned most of accounts payable and confirmed restructuring
benefits and decreased the amounts of relevant accounts payable.
There is no such amount in period-end belongs to shareholders who hold 5% or more than 5%
voting rights.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
61
Note 13. Accounts receive in advance
Amount in period-end Amount in period-begin
Age of account
Amount Rate in total Amount Rate in total
Within 1 year - - - -
1 to 2 years 192,174.87 27.03% 202,781.96 28.10%
2 to 3 years 151,532.95 21.31% 151,532.95 21.00%
Over 3 years 367,286.34 51.66% 367,286.34 50.90%
Total 710,994.16 100& 721,601.25 100%
There is no such amount in period-end belongs to shareholders who hold 5% or more than 5%
voting rights.
Note 14. Employee salaries payable
Item Amount in
period-begin
Increases Decreases
Amount in
period-end
1.Wages,bonuses,allowances
and subsidies
54,368.95 891,086.00 891,086.00 54,368.95
2.Welfare expenses - - - -
3.Social insurances 20,828,128.08 - 14,730,641.48 6,097,486.60
4.Housing accumulation fund - - - -
5.Labor union expenditures
and employee education
expenses
- - - -
6.Non-monetary welfare - - - -
7.Compensations for the
cancellation of the labor
relationship
6,776,160.00 - 6,776,160.00 -
8.Other - - - -
Total 27,658,657.03 891,086.00 22,397,887.48 6,151,855.55
On Dec. 30, 2008, Chengde Intermediate People’s Court of Hebei Province confirmed the liability
amounts of the Company and approved the restructuring program of the Company respectively
according to the Civil Verdict of (2008)Cheng Min Po Zi 9-1 and the Civil Verdict of (2008)Cheng
Min Po Zi.9-2. The Company paid employee of RMB 17,897,697.28, including Social insurance
payable and economical compensation.
On February 8, 2009, Chengde Intermediate People’s Court in Hebei Province judged and declared
the bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd. Due to that the employee salaries payable of
three bankrupted companies above were not brought into consolidation of the Company, theCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
62
employee salaries payable decreased.
Note 15. Taxes payable
Items of taxation Amount in period-end Amount in period-begin
Value added tax -29,597.83 43,075,086.52
Business tax - 125,249.50
Enterprise income tax - 8,593,107.08
Housing property tax - 2,959,338.13
Individual income tax - 692,285.76
Education supplementary tax - -
Tenure tax - 6,253,566.94
Others - 3,282,940.09
Total -29,597.83 64,981,574.02
On Dec. 30, 2008, Chengde Intermediate People’s Court of Hebei Province confirmed the liability
amounts of the Company and approved the restructuring program of the Company respectively
according to the Civil Verdict of (2008)Cheng Min Po Zi 9-1 and the Civil Verdict of (2008)Cheng
Min Po Zi.9-2. The Company paid taxes payable of RMB 15,372,537.49
On February 8, 2009, Chengde Intermediate People’s Court in Hebei Province judged and declared
the bankruptcy of Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and
Chengde Banhe Chemical Simulation Textile Co., Ltd. Due to that the taxes payable of three
bankrupted companies above were not brought into consolidation of the Company, the taxes
payable decreased.
Note 16. Other payables
Closing balance Opening balance
Aging
Amount Rate in total Amount Rate in total
Within 1 year 292,209,796.24 83.67% 8,383,047.08 14.70%
1 to 2 years 8,383,047.08 2.40% 21,274,179.05 37.30%
2 to 3 years 21,274,179.05 6.09% 22,284,526.94 39.07%
Over 3 years 27,377,302.26 7.84% 5,092,775.32 8.93%
Total 349,244,324.63 100% 57,034,528.39 100%
Chengde Intermediate People’s Court of Hebei Province confirmed the liability amounts of the
Company and approved the Restructuring Program (Draft) of the Company respectively according
to the Civil Verdict of (2008) Cheng Min Po Zi 9-1 and 9-2 on December 30, 2008. The bankruptcy
admistrator of the Company raised capital to pay the major portion of the debt of the Company on
this basis, thus forming new other payables of the Company.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
63
On February 8, 2009, Chengde Intermediate People’s Court of Hebei Province made a judgement
that Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and Chengde Banhe
Chemical Simulation Textile Co., Ltd. have been declared bankrupt. The other payables of the
above three companies were no longer brought into consolidated scope of the Company made the
amount of other payables of the Company changed.
There is no such amount belongs to shareholders who hold 5% or more than 5% voting rights.
Note 17. Long-term payables
Item Closing balance Opening balance
Equipment payment premium-
Century Win International
Holding Co., Ltd.
95,450,000.00 95,450,000.00
Total 95,450,000.00 95,450,000.00
The long-term payables of the Company was mainly payables to related party of RMB
95,450,000.00 due to the value of machinery invested to Xingye Papermaking Co., Ltd. by Century
Win International Holding Co., Ltd. higher than the capital subject to be invested.
Note 18. Special account payable
Item Closing balance Opening balance
Subsidy of environmental protection 10,500,000.00 10,500,000.00
special loan of Finance Bureau 98,000.03 9,151,018.03
Total 10,598,000.03 19,651,018.03
The subsidy of environmental protection of RMB 10,500,000.00 is the volunteer allowance from
Chengde Finance Bureau.
On February 8, 2009, Chengde Intermediate People’s Court of Hebei Province made a judgement
that Chengde Banhe Chemical Simulation Textile Co., Ltd. has been declared bankrupt. The special
account payable RMB 9,000,000 of the company was no longer brought into consolidated scope of
the Company, thus the special account payable of the Company decreased.
Chengde Intermediate People’s Court of Hebei Province confirmed the liability amounts of the
Company and approved the Restructuring Program (Draft) of the Company respectively according
to the Civil Verdict of (2008) Cheng Min Po Zi 9-1 and 9-2 on December 30, 2008. The Company
confirmed the amount of new special accounts payable accordingly.
Note 19. Paid-in capital
Item Opening balance Increase Decrease Closing balance
Capital stock structure
(1) Shares not traded
a) Founders’ shares 244,800,000.00 - - 244,800,000.00
In which:
State held shares - - - -CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
64
Domestic legal person held shares 23,147,309.00 - - 23,147,309.00
b) Legal person share recruitment - - - -
c) Internal staff held shares - - - -
Natural person 221,652,691.00 - - 221,652,691.00
Total of shares not traded 244,800,000.00 - - 244,800,000.00
(2) Shares traded
a) RMB common shares - - - -
b) Foreign currency shares domestic listed 461,520,000.00 - - 461,520,000.00
c) Foreign currency shares overseas listed - - - -
d) Others - - - -
Total of shares traded 461,520,000.00 - - 461,520,000.00
(3) Total of shares 706,320,000.00 - - 706,320,000.00
Note 1: The registered capital of the Company before capital increase is RMB 438,600,000.00,
which has been verified by PriceWaterhouseCoopers Certified Public Accountants and reported in
the Capital Verification Report coded Pu Hua Yong Dao Yan Zi [2003]149.
Note 2: Upon the approval document No.[2004]101 issued by the China Securities Regulatory
Commission in July 2004, the Company increases of its capital by issuing 150,000,000 B shares, in
which 91,300,000 shares were issued for Hong Kong dollars and 58,700,000 shares were issued for
Renminbi Yuan (RMB). The issuance of Renminbi shares has not been authorized by the China
Administration of Foreign Exchange department, and has not verified by PRC certified public
accountants and the procedures for the change of business registration were not carried out
completely.
Note 3: According to the resolution of shareholders general meeting on 8 June 2006, the Company
distributed share bonus 117,720,000 shares to all shareholders at the rate of two shares given per ten
shares. The registered capital of the Company was increased to RMB 706,320,000 after share bonus
distribution. The issuance of mentioned above shares has not been verified by PRC certified public
accountants and the procedures for the change of business registration were not carried out
completely.
Note 20. Capital reserve
Item Opening balance Increase Decrease Closing balance
Share premium 391,996,587.96 - - 391,996,587.96
Equity rights
investment provision
1,399,556.41 - - 1,399,556.41
Other capital surplus 2,575,000.00 - - 2,575,000.00
Total 395,971,144.37 - - 395,971,144.37CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
65
Note 21. Surplus reserve
Item Opening balance Increase Decrease Closing balance
Mandatory surplus
reserve fund 76,791,550.17 - 76,791,550.17
Random surplus
reserve fund - - - -
Total 76,791,550.17 - - 76,791,550.17
Note 22. Retained Earnings
Item Closing balance Opening balance
Retained Earnings at beginning of the
year
-1,416,436,100.68 -1,592,839,281.27
Add: Total net profit attributable to
parent company
128,452,903.72 176,403,180.59
Less: Mandatory surplus reserve fund
accrued
- -
Ordinary shares dividends
converted to shares
- -
Closing balance at the year-end -1,287,983,196.96 -1,416,436,100.68
Note 23. Operating income and operating cost
(1) Details of operating income and cost are listed as follows:
Current period Last period
Item
Revenue Cost Revenue Cost
1.Main business income - - 5,601,048.71 8,529,666.81
2.Other business income - - - -
Total - - 5,601,048.71 8,529,666.81
(2) Regional indicators of main business:
Current period Last period
Region
Revenue Cost Revenue Cost
Domestic sales - - 5,601,048.71 8,529,666.81
Overseas sales - - - -
Total - - 5,601,048.71 8,529,666.81
Note 24. Administrative expenses
Item Current period Last period
Staff salaries 891,086.00 1,590,991.00
Material consumption 54,702.00 148,386.88CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
66
Depreciation expense and
production suspend loss
1,201,468.41 41,141,382.34
Electricity charge 33,518.71 179,167.52
Social insurance - 474,953.62
Service fee for agent 500,000.00 198,500.00
Business entertainment 3,814.00 928,027.40
Tax -- 1,440.00
Amortization of intangible assets 424,440.50 373,348.69
Others 10,828.46 627,208.19
Total 3,119,858.08 45,663,405.64
Note 25. Financial expense
Item Current period Last period
Interest expense - 25,678,073.46
Less: interest income - -
Exchange loss - -
Less: Exchange gain - -
Others 15,297.12 2,317.20
Total 15,297.12 25,680,390.66
Note 26. Asset Impairment loss
Item Current period Last period
Bad debt loss - -
Inventory impairment loss - -
Fixed asset impairment loss - -
Construction in progress impairment loss - -
Long-term investment impairment loss 215,783,493.69 -
Intangible asset impairment loss - -
Total 215,783,493.69 -
Note 27. Investment income
Item Current period Last period
Investment income 189,441,916.39 -
Total 189,441,916.39 -
On February 8, 2009, Chengde Intermediate People’s Court of Hebei Province made a judgement
that Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and Chengde BanheCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
67
Chemical Simulation Textile Co., Ltd. have been declared bankrupt. The above three bankrupt
companies were no longer brought into consolidated scope of the Company and the excess deficit of
the original subsidiaries in the consolidated statement removed from the consolidated scope made
an increase of RMB 189,441,916.39 in consolidated profit in the report period.
Note 28. Non-operating income and expenses
(1) Non-operating income
Item Current period Last period
Net income from fines - -
Restructuring benefits 759,561,973.45 -
Others - -3,900.00
Fixed asset inventory surplus - -
Total 759,561,973.45 -3,900.00
(2) Non-operating expenses
Item Current period Last period
Losses on disposal of fixed assets 13,365,132.26 -
Losses on disposal of intangible
assets
26,077,076.00 -
Losses on disposal of other assets 473,750,062.25 -
Expenses for fines 29,467,458.25 1,345.00
Restructuring losses 58,972,608.47 -
Others -
Total 601,632,337.23 1,345.00
Chengde Intermediate People’s Court of Hebei Province confirmed the liability amounts of the
Company and approved the Restructuring Program (Draft) of the Company respectively according
to the Civil Verdict of (2008) Cheng Min Po Zi 9-1 and 9-2 on December 30, 2008. Chengde
Intermediate People’s Court of Hebei Province confirmed the liability amounts of the subsidiary
Xingye Papermaking Co., Ltd. according to the Civil Verdict of (2008) Cheng Min Po Zi 13-1 on
February 21, 2009. Chengde Intermediate People’s Court of Hebei Province approved the
pacificatory claim of Xingye Papermaking Co., Ltd. according to the Civil Verdict of (2008) Cheng
Min Po Zi 13-2 on March 31, 2009. On the basis, the Company paid the debts, confirmed
restructuring benefits RMB 759,561,973.45 and also confirmed restructuring losses RMB
58,972,608.47 for disposal of credit of the above three bankrupt companies.
Chengde Intermediate People’s Court of Hebei Province ruled on approval of the Restructuring
Program (Draft) of the Company on December 30, 2008. According to the arrangements in
Restructuring Program (Draft), Chengde Intermediate People’s Court of Hebei Province auctioned
off the collateral etc. to settle debts of the Company. Disposal losses amounted to RMB
513,192,270.51 resulting from disposing fixed assets, intangible assets and other assets.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
68
As at 25 February 2009, according to (2008) Shi Xing Chu Zi No. 48 verdict, Chengde
Intermediate People’s Court of Hebei Province sentenced the defendant Chengde Dixian Textile
Company Limited committed a crime of smuggling the general cargo, imposing a fine of RMB
68,734,451.21 and the smuggling of goods that involved in should be confiscated and turned over to
the state treasury. The Court rejected the appeal and sustain the original judgment according to
Criminal Judge Letter of (2009) Ji Xing Er Zhong Zi No. 44. The ruling was the final order.
Therefore, the losses on penalty and confiscation amounted to RMB 29,467,458.25.
Note 29. Other cash concerning operating activities
(1) Other cash received from operating activities
Item Current period Last period
Current accounts 1,555,818.00 -
Financial allocation - -
Interest income - -
Others 18,697.00 450,733.44
Total 1,574,515.00 450,733.44
(2) Other cash paid for operating activities
Item Current period Last period
Current accounts 500,000.00
Repairing fees 2,962.00 129,862.44
Material consumption 48,151.00 148,386.88
Charge for water and electricity 254,089.20 179,167.52
Travel expenses 37,019.20 369,164.07
Personal loans 26,000.00 1,240,000.00
Bank charges - -
Office expenses 11,156.68 73,775.60
Transport charges - -
Business entertainment 3,814.00 200,800.00
Service fee for agent - 600,000.00
Other cash payment 65,097.44 210,804.00
Total 448,289.52 3,651,960.51
Note 30. Cash and cash equivalent
Item Current period Last period
1. Cash 663,387.21 7,015,027.58
Include: cash on hand 254,891.32 1,102,631.76CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
69
Bank deposit available for use in
payment any time 408,495.89 5,318,826.66
Other monetary fund available for
use in payment any time
- 593,569.16
2. Cash equivalent - -
Include: Bond investment matured in three
months
- -
3. Closing balance of cash and cash equivalent 663,387.21 7,015,027.58
7. SUPPLEMENTAL INFORMATION FOR CASH FLOW STATEMENT
Supplemental information Current period Last period
1. Adjustments to reconcile net income to net cash
provided by operating activities:
Net profit 128,452,903.72 -67,383,489.95
Impairment provision for assets 215,783,493.69 -
Depreciation of fixed assets, consumption &
depreciation of fuel and gas, depreciation of production
materials
1,120,982.86 40,768,173.82
Amortization for intangible assets 505,926.05 987,437.83
Amortization for long-term prepayment 2,009,612.55 24,163.68
Loss on disposal of fixed assets, intangible assets and
others long-term assets
68,908,616.51 -
Loss upon rejection of fixed assets - -
Loss on variance of fair value - -
Finance cost 13,510.00 22,135,073.46
Income on investment -189,441,916.39 -
Decrease of deferred tax assets - -
Liability increase of deferred tax - -
Decrease of inventories - 1,614,941.97
Decrease of operating receivable account items 94,220,365.48 5,273,756.50
Increase of operating payable account items -321,338,354.99 -2,676,929.68
Others - -
Total 235,139.48 743,127.63
2. Significant investing and financing activities for non
cash items:
-
Liabilities capitalized - -
Convertible bonds payable mature in one year - -
Financing leased fixed assets - -CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
70
3. Net increase (decrease) for cash and cash equivalents: -
Ending balance for cash 663,387.21 7,015,027.58
Decrease: beginning balance for cash 447,257.73 6,316,017.15
Increase: ending balance for cash equivalents - -
Decrease: beginning balance for cash equivalents - -
Net increase in cash and cash equivalents 216,129.48 699,010.43
8. NON-RECURRING GAINS AND LOSSES
Nature or content Current period Last period
1. Losses/gains on disposal of non-current assets -
(1) net losses/profist on disposal of fixed-assets -13,365,132.26 -
(2) net losses/profits on disposal of intangible assets
-26,077,076.00 -
Net losses/profits on disposal of non-current assets -39,442,208.26 -
2. Long-term investment loss provisions -215,783,493.69 -
3. Expenses for fines -29,467,458.25 -
4. Restructuring losses -58,792,608.47 -
5. Restructuring benefits 759,561,973.45 -
6. Losses on disposal of other assets -473,750,062.25
7. Investment income 189,441,916.39
8. Net losses/profits from other non-operating items - -5,245.00
(1) non-operating income - -3,900.00
(2) decrease: non-operating expense - 1,345.00
Net of non-operating income and expenses - -5,245.00
Total of non-recurring losses/profits before deduction of
income tax
131,768,058.92 -5,245.00
Decrease: amount of income tax - -
Total of non-recurring losses/profits after deduction of
income tax
131,768,058.92 -5,245.00
Decrease: amount of minority interest -
Total of non-recurring losses/profits after deduction of
minority interest
131,768,058.92 -5,245.00
9. THE RELATIONSHIP OF THE RELATED PARTIES AND TRANSACTIONS
(I) Relationship of related parties
(1) The related parties existing controlling relationshipCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
71
The related party exisiting controlling relationship with the Company is the controlled shareholder
Mr. Chen Rong, who holds 29.49% shares of the Company.
(2) Registered capital of the related parties existing controlling relationship and the changes
Opening balance Increase Decrease Closing balance
Name of
related
parties Amount
Rate in
total
Amount
Rate in
total
Amount
Rate in
total
Amount
Rate in
total
Chen Rong 208,324,800.00 29.49% - - - - 208,324,800.00 29.49%
(3) Other related parties
Name of related parties Relationship with the Company
Japan New Century Co., Ltd.
Shareholder of holding subsidiary’s
associated Company
Century Win International Holding Co., Ltd. Shareholder of subsidiary
Chengde Beirifang Co., Ltd.
Associated Company with 50% of
equity
Dahua Paper Industry Co., Ltd. 45% of equity participation
Suning Banhe Fibre Textile Co., Ltd. 20% of equity participation
(II) Transactions of related parties
(1) Sales
No sales business of related parties occurred in this period.
(2) Equipments leased
The subsidiary of the Company, Chengde Banhe Chemical Simulation Textile Co., Ltd.. leased 215
sets of machines to Suning Banhe Chemical Simulation Textile Co., Ltd. without lease contracts in
the year of 2006. However, due to the smuggling case, the production of Suning Banhe Simulation
Textile Co., Ltd. was not start up and the equipments rent expenses were unpaid.
(III) The balance of current account of related parties
Item Name of related parties Content Closing Balance Opening balance
Other
receivables
receivables
Suning Banhe Chemical
Simulation Textile Co.,
Ltd.
Pay for another project
payment
4,685,985.28 4,685,985.28
Dahua Papermaking
Pay for another current
account
44,182,431.26 44,182,431.26
Other payables Dahua Papermaking Current account 58,360,818.27 58,360,818.27
Long-term
payables
Century Win International
Holding Co., Ltd.
Equipment payment
premium
95,450,000.00 95,450,000.00
10. RETURN ON EQUITYCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
72
Return on equity
Profit in the report period Fully diluted Weighted average
Current
period
Last
period
Current
period
Last
period
Net profit for shareholders of common shares -117.95% 13.80% -74.20% 14.83%
Net profit for shareholders of common shares
after deduccting of non-recurring gains/losses
3.04% 13.80% 1.91% 14.83%
11. EARNINGS PER SHARE
Earnings per share
Profit in the report period
Basic earnings per share Diluted earnings per share
Current
period
Last period
Current
period
Last period
Net profit for shareholders of common shares 0.18 -0.06 0.18 -0.06
Net profit for shareholders of common shares
after deduccting of non-recurring gains/losses
-0.005 -0.06 -0.005 -0.06
Item Current period Last period
Calculation for basic and diluted earning per share
(1) Numerator:
Net profit after income tax 128,452,903.72 -62,351,766.33
Adjustment: preferred stock dividends and other
instruments
Profit/loss for parent Company’s common stock
shareholders in basic earnings per share calculation
128,452,903.72 -62,351,766.33
Adjustment:
Dividends and interests related with diluted potential
common stock
The change of profit or expense generated from the
transfer of diluted potential common stock
Profit/loss for common stock shareholders of parent
Company in diluted
128,452,903.72 -62,351,766.33
(2) Denominator:
Weighted average for offering common stock in current
year in basic earnings
706,320,000.00 706,320,000.00
Add: weighted average when all diluted potential
common stocks transfer to common stock
Weighted average for currently offering common stock
in diluted earnings per
706,320,000.00 706,320,000.00
(3) Earnings per share:CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
73
Basic earnings per share:
Net profit for Company’s common stock shareholders 0.18 -0.09
Net profit for Company’s common stock shareholders
after deduction of non-operating items
-0.005 -0.09
Diluted earnings per share:
Net profit for Company’s common stock shareholders 0.18 -0.09
Net profit for Company’s common stock shareholders
after deduction of non-operating items
-0.005 -0.09
12. NON-ADJUSTMENT MATTERS AFTER THE BALANCE SHEET DATE
On Jul. 27, 2009, shareholders of Chengde Rongyida Real Estate Development Co., Ltd. – Mr.
Wang Fei and Ms. Chen Liping signed equity transfer contract with large shareholder – Mr. Chen
Rong, which agreed that 90% and 10% equity of Chengde Rongyida Real Estate Development Co.,
Ltd. respectively held by Mr. Wang Fei and Miss Chen Liping were transferred to Mr. Chen Rong
with RMB 9 million and 1 million. On the same day, Mr. Chen Rong transferred 100% equity of
Rongyida to the Company with RMB 1, after which, Rongyida became the wholly-owned
subsidiary of the Company.
13. OTHER SIGNIFICANT EVENTS
(1) On Jan. 4 of 2008, Shijiazhuang People’s Procuratorate of Hebei Province sued to the
Shijiangzhuang Immediate People’s Court for the following reasons: in order to avoid supervision
from custom and escape from tax paying, and taking use of the tax-free policy released by the state
for imported equipments introduced by foreign investors, Chengde Dixian Textile Company
Limited, the defendant, set up 7 falsehood foreign investment Companies, including “Chengde
Banhe Chemical Simulation Textile Co., Ltd.”, “Dixian Light Rail”, “Xingye Papermaking”,
“Dixian Fashion”, “Suning Meihua”, “Suning Puhua” and “Suning Leiyi” to cheat for tax-free
documents for imported equipments, and thus escaped tax of RMB 68,734,451.21 by pretending
common import goods to foreign investment import equipments. The above action offended No.
153, Clause 2 of Criminal Law of China, and the Company should be asked for criminal
responsibility for smuggling common goods.
On 25 February 2009, Shijiangzhuang Immediate People’s Court sentenced Chengde Dixian Textile
Company Limited criminal of smuggling common goods and fined RMB 68,734,451.21 by issuing
SXCZi No.48 (2008) criminal verdict. All relevant goods should be confiscated and handed in state
treasury. Wang Shuxian made appeal during the legal period. On Apr. 23 of 2009, Heibei High
Peoples’ Court rejected the appeal and sustain the original judgment according to criminal verdict of
(2009) JXEr ZZi No. 44. The ruling was the final order.
(2) Due to the Company’ s non-fulfillment of the paying obligation judged by the court and
worsening financial and operation condition which made the Company not able to discharge debts,
Chengde Xingcheng Building Project Co., Ltd appealed to Chengde Intermediate Peoples’ Court for
bankruptcy reforming of the Company in November 2008. On 10 November 2008, Chengde
Intermediate People’s Court of Hebei province accepted the application by issuing CMPZi No.9
(2008) civil verdict.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
74
On 30 December 2008, Chengde Intermediate People’s Court of Hebei province validated the
following creditors’ rights by issuing CMPZi No.9-1 (2008) civil verdict: 1) 6 prior creditors’ right
amounting to RMB 844,157,605.65; 2) tax of RMB 15,372,537.49 for 3 taxation offices; 3) 131
common creditors’ rights amounting to RMB 552,326,118.84. On the same day, Chengde
Intermediate People’s Court of Hebei province judged and approved the Restructuring Program
(Draft) of the Company and terminated its reforming procedure by issuing CMPZi No.9-2 (2008)
civil verdict.
According to the Restructuring Program (Draft), the Company cashed assets which were available
for cashing, and paid off reforming expense and various creditors’ right.
On Apr 27th of 2009, the above court issued CMPZi No.9-5 (2008) civil verdict, confirming that
debt reimbursement in the reforming plan had been already completely executed by the Company.
(3) On Dec. 8th of 2008, Chengde Intermediate People’s Court issued CMPZi (2008) No.10, No.11,
No.12, No.13 civil verdicts, respectively judging that: 1) the application of bankruptcy liquidation
for Chengde Banhe Chemical Simulation Textile Co., Ltd. applied by Sun Weishan was accepted; 2)
the application of bankruptcy liquidation for Chengde Dixian Fashion Co., Ltd. applied by Chengde
Xinda Energy Saving Wiring Factory was accepted; 3)the application of bankruptcy liquidation for
Hebei Xiabancheng KnitwearCo., Ltd applied by Anxin Hongda Plastic Factory was accepted; 4)
the application of bankruptcy liquidation for Chengde Xingye Papermaking Co., Ltd. applied by
Chengde Yonghe Cement Co., Ltd. was accepted.
On Feb. 8th of 2009, Chengde Intermediate People’s Court issued CMPZi (2008) No.10-1, No.11-1,
No.12-1 civil verdicts, respectively judging that: 1) declaring bankruptcy of Chengde Banhe
Chemical Simulation Textile Co., Ltd, share-join company of original controlling subsidiary of the
Company; 2) declaring bankruptcy of Chengde Dixian Fashion Co., Ltd., original subsidiary of the
Company whose 75% shares were held by the Company; 3) declaring bankruptcy of Hebei
Xiabancheng Knitwear Co., Ltd., original wholly-owned subsidiary of the Company.
On Feb. 21st of 2009, Chengde Intermediate People’s Court issued CMPZi (2008) No.13-1 civil
verdict to confirm the debt amount of Xingye Papermaking Company. And on Mar 31st of 2009,
Chengde Intermediate People’s Court issued CMPZi (2008) No.13-2 civil verdict to approve the
reconciliation request from Xingye Papermaking Company.
(4) In the report period, the Company received notice from the bankruptcy settlement group of
China Southern Securities Co., Ltd. (referred to Southern Securities later), informing that relevant
agreement had been reached between the settlement team and Peoples’ Government of Chengde city.
With voting for approval from Chairman Committee of Southern Securities’ creditors, and approval
from verdict issued by Shenzhen Intermediate Peoples’ Court, the settlement team of Southern
Securities had already transferred 108.84 million shares of the Company held by Southern
Securities to Peoples’ Government of Chengde city with price of 76,188,000 HK dollar. The aim for
Peoples’ Government of Chengde to take over the above shares was to save Dixian Company and
promote reforming of the Company. However, according to the present national policy, as a level-I
government, Peoples’ Government of Chengde was not allowed to directly hold shares. Meanwhile,
according to the present policy stipulated for B shares, domestic institution was also not allowed to
hold B shares. Therefore, Peoples’ Government of Chengde specially entrusted 5 natural persons to
hold the shares on behalf of it, and here are the 5 persons: Li Tianyun, Qian Zhenlin, Chen Yan, XuCHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
75
Jiang as well as Zhou Haihong. After the transfer, Southern Securities didn’t hold shares of the
Company any longer. Shares held by the above 5 natural persons are listed as follows:
Name of opener Shares held (share) Proportion taking in the total shares issued
by listed company
Li Tianyun 22,440,000 3.18%
Qian Zhenlin 22,000,000 3.11%
Chen Yan 20,000,000 2.83%
Xu Jiang 22,000,000 3.11%
Zhou Haihong 22,400,000 3.18%
Total 108,840,000 15.41%
The shares were under unified management of Peoples’ Government of Chengde city, and
information disclosure obligation was implemented according to single investor. According to
related regulation of Securities Laws, the transferred shares would not be sold out within 6 months
since owner registration was finished, otherwise, all income occurred from the transaction would
belong to the Company. After the aforesaid 6 months, as for the shares of the Company held by the
government, Peoples’ Government of Chengde would directly reduce holding or make transfer
again with the premise of saving Dixian Company, according to the actual condition of the
Company.
14. THE APPROVAL OF FINANCIAL STATEMENTS
The financial statement of the Company obtained approval from the Board dated Aug. 27th of 2009.CHENGDE DIXIAN TEXTILE CO．，LTD. Semi-Annual Report 2009
76
Section XIII. Documents for Reference
I. Text of Semi-annual Report carrying with signature of legal representative of the Company;
II. Accounting statements carrying with signature and seals of principle of the Company, person in
charge of the financial affairs and person in charge of accounting institution;
III. Originals of all documents and manuscripts of Public Notices of the Company publicly
disclosed on Securities Times and Hong Kong Wen Wei Po.
IV. Text of the Article of Association
The Company will provide timely the above documents for reference provided that China Securities
Regulatory Commission or Stock Exchange demands or shareholders requires according to the
regulations and Articles of Association.
Board of the Directors of
Chengde Dixian Textile Co., Ltd.
August 27, 2009
