Chengde Dalu Co., Ltd. Semi-Annual Report 2010
1
承 德 大 路 股 份 有 限 公 司
CHENGDE DALU CO．，LTD.
Semi-Annual Report 2010
（Full Text）
（January-June, 2010）
August, 2010
Chengde · PRCChengde Dalu Co., Ltd. Semi-Annual Report 2010
2
Contents
SectionⅠ. IMPORTANT NOTES AND PARAPHRASE------------------------------1
SectionⅡ. COMPANY PROFILE-----------------------------------------------------------1
SectionⅢ. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES
HELD BY MAIN SHAREHOLDERS------------------------------------------------------6
SectionⅣ. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR
EXECUTIVES-----------------------------------------------------------------------------------8
SectionⅤ. REPORT OF THE BOARD-----------------------------------------------------9
Section Ⅵ. SIGNIFICANT EVENTS-------------------------------------------------------12
Section Ⅶ. FINANCIAL REPORT----------------------------------------------------------17
Section Ⅷ. DOCUMENTS AVAILABLE FOR REFERENCE------------------------85Chengde Dalu Co., Ltd. Semi-Annual Report 2010
3
Section I. Important Notes and Paraphrase
Important Notes:
The Board of Directors, Supervisory Committee of Chengde Dalu 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 14th Meeting of the 4th Board of Directors examined and approved 2010 Semi-annual Report
and its summary of the Company. Except Director Mr. Zhang Guichen who didn’t attend the
meeting because of personal affairs, other 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, Mr. Wang Ansheng, Chief Financial Officer, and Mr. Liu
Fengguo Person in Charge of Accounting Institution confirm that the Financial Report of 2010
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 Dalu Co., Ltd. and its subsidiaries
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 Dalu Co., Ltd. Semi-Annual Report 2010
4
Section II. Company Profile
1. Legal Name of the Company
In Chinese: 承德大路股份有限公司
In English: CHENGDE DALU CO., LTD.
2. Legal Representative: Chen Rong
3. Secretary of Board of Directors: Han Zhigang
Contact Address: Xiabancheng Town, Chengde County, Hebei Province
Tel: 0314-3115048 Fax: 0314-3111475
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 Commercial Daily (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, (86) 314-3115049
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: ST DALU 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 (No.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:
China Securities Depository and Clearing Corporation, Ltd. Shenzhen Branch
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., Beijing
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 inChengde Dalu Co., Ltd. Semi-Annual Report 2010
5
period-end of last
year (%)
Total assets 181,980,726.18 183,328,923.59 -0.74%
Owners’ equity attributable to
shareholders of the listed company
-55,653,839.17 -51,338,938.68 -8.40%
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)
-0.08 -0.07 -14.29%
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 0.00 0.00%
Operating profit -4,767,355.11 -29,476,732.50 83.83%
Total profit -4,819,752.88 128,452,903.72 -103.75%
Net profit attributable to
shareholders of the listed company
-4,314,900.49 128,452,903.72 -103.36%
Net profit attributable to
shareholders of the listed company
after deducting non-recurring
gains and losses
-4,262,502.72 -3,315,155.20 -28.58%
Basic earnings per share
(RMB/Share)
-0.006 0.18 -103.33%
Diluted earnings per share
(RMB/Share)
-0.006 0.18 -103.33%
Return on equity (%) 8.07% -74.20% 82.27%
Net cash flow arising from
operating activities
4,609.37 235,139.48 -98.04%
Net cash flow per share arising
from operating activities
(RMB/Share)
0.00001 0.0003 -96.67%
Items of non-recurring gains and losses (Unit: RMB)
Non-recurring gains and losses Amount Note (If it is
applicable)
Net amount of other non-operating income
and expense excluded the aforementioned
items
-52,397.77 Note 14
Total -52,397.77 -
Statement of Provision for Devaluation of Assets
Decrease in this period
Items
Book balance at
the
period-beginnin
Increase
in this
period
Switching
back
Transferri
ng out
Book balance at
period-endChengde Dalu Co., Ltd. Semi-Annual Report 2010
6
g
I. Total of provision for bad
debts
64,285,296.43 64,285,296.43
II. Provision for falling price
of inventory
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
892,335,310.93 892,335,310.93
VI. Provision for devaluation
of investing property
VII. provision for devaluation
of fixed assets
35,246,816.97 35,246,816.97
VIII. Provision for devaluation
of engineering materials
IX. Provision for devaluation
of construction in progress
246,724,222.04 246,724,222.04
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
XIII. Provision for devaluation
of goodwill
XIV. Other
Total
1,238,591,646.3
7
1,238,591,646.3
7
Loss of assets depreciation (Unit: RMB)
Items
Amount occurred in
this period
Amount occurred in last
period
I. Loss of bad debts
II. Loss of inventory depreciation
III. Loss of devaluation for financial asset
available for sales
IV. Loss of devaluation of held-to-maturity
investment
215,783,493.69
V. Loss of devaluation of long-term equity
investmentChengde Dalu Co., Ltd. Semi-Annual Report 2010
7
VI. Loss of devaluation of investing property
VII. Loss of devaluation of fixed assets
VIII. Loss of devaluation of engineering
materials
IX. Loss of devaluation of construction in
progress
XI. Loss of devaluation of oil asset
XII. Loss of devaluation of intangible asset
XIII. Loss of devaluation of goodwill
XIV. Other
Total 0.00 215,783,493.69
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 Dalu Co., Ltd. Semi-Annual Report 2010
8
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
(I) Ended as June 30, 2010, the Company had totally 24,732 shareholders, including 5 of sponsors’
share and 24,727 of domestically listed foreign share.
(II) 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
24,732
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-o
wned 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
Wanf Wensheng
Circulating
B-share
1.03% 7,258,007 0 0
Peng Wei
Circulating
B-share
0.42% 2,978,525 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
shares
Zhou Haihong 22,400,000
Domestically listed foreign
shares
Qian Zhenlin 22,000,000 Domestically listed foreignChengde Dalu Co., Ltd. Semi-Annual Report 2010
9
shares
Xu Jiang 22,000,000
Domestically listed foreign
shares
Chen Yan 20,000,000
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.
2,945,164
Domestically listed foreign
shares
UBS CUSTODY SERVICES
SINGAPORE PTE.LID.
2,607,101
Domestically listed foreign
shares
Zhao Ziying 2,600,416
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 June of 2009, the Company received notice from Bankruptcy and Clearing Team of China
South Securities Co., Ltd. (Hereinafter refers to as South Securities), with the details 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 judgment 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.
.
IV. Particulars about the controlling shareholders
The controlling shareholder and actual controller of the Company remained unchanged in the report
period.Chengde Dalu Co., Ltd. Semi-Annual Report 2010
10
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.
1. On Apr 30th of 2010, as result of job change, previous chief financial officer—Mr. Ye Weijie
didn’t on this position of the Company anymore. The board of directors agreed to engage Mr. Wang
Ansheng as the person in charge of the financial of the Company who can exercise the duties of
Chief Financial Officer. Term limits lasts till the expiration of the current Board of Directors ends.
2. On Jul 15th of 2010, as result of job change, previous Secretary of the Board Mr. Chen Zhiguo
resigned to the Company. To make sure smooth processing of information disclosure, in line with
related rules of Articles of Association, through the agreement of board of directors, the Company
engaged Mr. Han Zhigang as secretary of boards. Term limits lasts till the expiration of the current
Board of Directors ends.Chengde Dalu Co., Ltd. Semi-Annual Report 2010
11
Section V. Report of the Board
I. Discussion and analysis on overall operation of the report period
In reporting period, through bankruptcy restructure of the Company, debts burden and financial risk
relieved effectively. But the capital condition of the Company is still tense. Being limited in time
and condition, the Company hasn’t recovered its main business production.
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, Dalu Qianyuan (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, bring in assets or business which
owns brilliant development potential and profitability to help the Company resume its production
and profit-making ability of main business and various businesses as soon as possible.
II. Scope and operation of main business:
1. Main business scope: knitting, weaving series, high-end suits, children's clothing line, packaging
materials, paper and paper products, production and processing of all kinds of yarn and synthetic
yarn, marketing its own products, real estate development and sales, hotel and catering industry.
2. In the report period, the Company did neither resume production, nor conduct any activities of
production and operation, so main business of the period was still loss.
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
operatio
ns
Cost of
operatio
ns
Gross
profit
ratio (%)
Increase/decr
ease in
income from
operations
year-on-year
(%)
Increase/de
crease in
cost of
operations
year-on-yea
r (%)
Increase/decr
ease in gross
profit ratio
year-on-year
(%)
Costume
manufacture
industry
- - - - - -
Cotton spin
industry
- - - - - -
Paper-making
industry
- - - - - -
Main business classified according to area Unit: RMB’0000Chengde Dalu Co., Ltd. Semi-Annual Report 2010
12
Area Income from operations
Increase/decrease in income from
operations year-on-year (%)
Domestic sales 0 -
Overseas sales - -
3. Analysis on financial condition
(1)Analysis on assets constitution Unit: RMB
Item Jun 30th, 2010 Dec 31st, 2009
Change
proporti
on （%）
Reason for change
Total assets 181,980,726.18 183,328,923.59 -0.74%
The Company stopped production
to accrue depreciation
amortization
Current assets 32,569,657.07 32,594,836.56 -0.08% -
Non-current
assets
149,411,069.11 150,734,087.03 -0.88% -
Total liabilities 223,709,780.88 220,238,225.41 1.58%
Accruing of real estate tax and
land tax
Current liability 213,111,780.85 209,640,225.38 1.66%
Accruing of real estate tax and
land tax
Owners’ equity -41,729,054.70 -36,909,301.82 -13.06%
The Company stopped production
to accrue depreciation
amortization and tax
Undistributed
profit
-1,234,736,533.71 -1,230,421,633.22 -0.35%
The Company stopped production
to accrue depreciation
amortization and tax
(2)Analysis on operation achievements Unit: RMB
Amount (RMB
Item
Jan. to June, 2010 Jan. to June, 2009
Increase /
decrease
ratio (%)
Reason for change
Operation income 0 0 - -
Operation profit -4,767,355.11 -29,476,732.50 83.83%
Devaluation loss of
accruing assets of last year
Net profit
attributable to
-4,314,900.49 128,452,903.72 -103.36% The Company stoppedChengde Dalu Co., Ltd. Semi-Annual Report 2010
13
owners of parent
company
production to accrue
depreciation amortization
and tax
Administration
expense
4,766,244.48 3,119,858.08 52.77%
Accruing of real estate tax
and land tax
Financial expense 1,110.63 15,297.12 -92.74 -
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 changes happened to profit constitution. In the report period, due to the
un-recover production of the Company, main business, its structures and profitability etc. remains
the same.
5. Other operational business activities bringing significant influence on profit in the report period
In reporting period, the Company and its subsidiary had still not restored production, and there was
no other operating activities significantly affecting the profit.
6. In the report period, no investment income contributed by share-investing company affected net
profit of the Company over 10%.
7. Problems and difficulties and solution in operation
In the report period, 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.
IV. The Company didn’t make modification for the annual operation plan.
V. In 2009, Beijing Yongtuo Certified Public Accountants issued auditor’s report with an
un-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 un-qualified
opinions with paragraph of emphasized matters provided by Beijing Yongtuo Certified Public
Accountants did exist, and it was a historical issue which won’t take real impact on production and
operation of the Company. The Company attached great importance to the events the audit report
emphasized and currently is communicating with related department, discussing solutions. As the
completion of bankruptcy and restructuring of the Company ends, the Company will gradually step
into formal trace, and the above issues will be solved one by one.Chengde Dalu Co., Ltd. Semi-Annual Report 2010
14
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 2009 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),
further perfects Articles of Association. The Company formulated and perfected Article of
Association, Discussion Regulation of Shareholders’ General Meeting, Discussion Regulation of
Board of Directors, Discussion Regulation of Supervisory Committee, Fine Working of Independent
Directors, Working Rules of Annual Report of Audit Committee, Measurement System on Incentive
and Restriction of Management, Fine Implementation of Strategy Committee of Board, Fine
Implementation of Remuneration and Assessment Committee of Board, Fine Fact of Nomination
Committee of Board, Management System of Information Disclosure and Management System of
Related Transaction etc. 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 semi-annual of 2010, the Company had neither profits distribution plan nor plan of
converting 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. There was no real execution in reporting period.
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
There was no condition of purchasing and selling assets in the Company in reporting period.
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.Chengde Dalu Co., Ltd. Semi-Annual Report 2010
15
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 capital occupancy of
related parties and 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 capital occupancy of related parties and external guarantee
behavior and thus controlled risks of capital occupancy by related parties and external guarantee, in
strict accordance to regulation of Articles of Association.
2. Till Jun 30th of 2010, no condition that related parties of the Company occupy capital of listed
companies against rules was found.
3. Till Jun. 30, 2010, 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, 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 relevant 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
2010-02-12
Security
Department
of the
Company
Phone
communication
Individual
investor
Current situation of the
Company, no offered information
2010-03-25
Security
Department
of the
Company
Phone
communication
Individual
investor
Starting work of main business,
no offered information
2010-04-12 Security
Department
Phone
communication
Individual
investor
Condition of annual audit reportChengde Dalu Co., Ltd. Semi-Annual Report 2010
16
of the
Company
2009, no offered information
2010-04-22
Security
Department
of the
Company
Phone
communication
Individual
investor
Performance of 2009,
performance report of 2009 was
offered
2010-5-17
Security
Department
of the
Company
Phone
communication
Individual
investor
Current assets of the Company,
annual report was offered
2010-5-20
Security
Department
of the
Company
Phone
communication
Individual
investor
Real estate development of the
Company, no offered information
2010-6-9
Security
Department
of the
Company
Phone
communication
Individual
investor
Production restoring condition
of the Company, no offered
information
2010-6-29
Security
Department
of the
Company
Phone
communication
Individual
investor
Current situation of the
Company, no offered information
XI. Other significant events
Because the subsidiaries of the Company - Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng
Knitwear Co., Ltd. and Chengde Banhe Chemical Simulation Textile Co., Ltd. were declared
bankruptcy, the aforesaid three companies were not in the range of consolidation statement in this
period.
XII. Index to other events
In the report period, all the notices of the Company have been published on Securities Times, Hong
Kong Commercial Daily as well as Juchao Website (http://www.cninfo.com.cn). Particulars are as
follows:
Notice
number
Notice date Notice Events Newspaper Layout
Securities Times D6
2010-001 2010-4-21
Notice on delayed disclosure of
2009 annual report
Hong Kong
Commercial Daily
A5
Securities Times D6
2010-002 2010-4-21 Express of 2009 Performance Hong Kong
Commercial Daily
A5
2010-003 2010-4-30 Notice on the 12th Meeting of the Securities Times D83Chengde Dalu Co., Ltd. Semi-Annual Report 2010
17
4th Board of Directors Hong Kong
Commercial Daily
D66
Securities Times D83
2010-004 2010-4-30
Notice on decision of the 4th
Meeting of 5th Supervisory Committee
Hong Kong
Commercial Daily
D66
Securities Times D83
2010-005 2010-4-30 Summary of 2009 Annual- Report Hong Kong
Commercial Daily
D66
Securities Times D83
2010-006 2010-4-30
Notice on Holding 2009
Shareholders’ General Meeting
Hong Kong
Commercial Daily
D66
Securities Times D83
2010-007 2010-4-30 Text of First Quarterly Report 2010 Hong Kong
Commercial Daily
D66
Securities Times C8
2010-008 2010-5-11
Notice on Abnormal Fluctuation of
Stock Exchange
Hong Kong
Commercial Daily
A5
Securities Times D3
2010-009 2010-5-27
Notice on Resolution of
Shareholders’ General Meeting 2009
Hong Kong
Commercial Daily
A15
Securities Times C12
2010-010 2010-6-1
Notice on Holding Performance
Explanation Meeting
Hong Kong
Commercial Daily
A14
Securities Times D11
2010-011 2010-7-16
Notice on Resignation of Secretary
of the Board
Hong Kong
Commercial Daily
A14
Securities Times C9
2010-012 2010-7-17
Notice on Resolution of 13th
Meeting of the 4th Board of Directors
Hong Kong
Commercial Daily
A17Chengde Dalu Co., Ltd. Semi-Annual Report 2010
18
Section VII. Financial Report (Un-audited)
Balance Sheet
Prepared by Chengde Dalu Co., Ltd. Jun. 30, 2009 Unit: RMB
Note Amount at period-end Amount at year-begin
Items
V Consolidation Parent Company Consolidation Parent Company
Current assets:
Monetary funds 1 62,865.48 21,500.44 58,256.11 16,900.44
Settlement reserve fund
Capital lend
Transaction finance
asset
Notes receivable
Accounts receivable
Accounts paid in advance
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable
Dividend receivable
Other receivables 2 20,117,165.60 44,469,012.60 20,146,954.46 44,498,801.46
Purchase restituted
finance asset
Inventories 3 11,296,098.60 11,296,098.60
Non-current asset due
within one year
Other current assets 4 1,093,527.39 1,093,527.39
Total current assets 32,569,657.07 44,490,513.04 32,594,836.56 44,515,701.90
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 2,215,729.65 630,800,001.00 2,215,729.65 630,800,001.00
Investment property
Fixed assets 7 30,267,700.14 31,279,967.32
Construction in progress 8 12,883,800.00 12,883,800.00
Engineering material
Disposal of fixed asset
Productive biological
assetChengde Dalu Co., Ltd. Semi-Annual Report 2010
19
Oil and gas asset
Intangible assets 9 25,134,531.47 25,445,282.21
Expense on Research
and Development
Goodwill
Long-term expenses to be
apportioned
Deferred income tax
asset
10 2,008,501.45 2,008,501.45 2,008,501.45 2,008,501.45
Other non-current asset 12 76,900,806.40 76,900,806.40
Total non-current asset 149,411,069.11 632,808,502.45 150,734,087.0
3
632,808,502.45
Total assets 181,980,726.18 677,299,015.49 183,328,923.5
9
677,324,204.35
Current liabilities:
Short-term loans 13 5,422,261.91 422,261.91 5,422,261.91 422,261.91
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Transaction financial
liabilities
Notes payable
Accounts payable 14 231,075.82 218,802.27 231,075.82 218,802.27
Accounts received in
advance
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 15 6,238,486.60 120,000.00 6,217,486.60 120,000.00
Taxes payable 16 7,940,152.38 -50,883.04 5,259,144.31 -34,717.11
Interest payable
Dividend payable
Other accounts payable 17 193,279,804.14 142,541,965.14 192,510,256.7
4
141,820,505.74
Reinsurance payables
Insurance contract
reserve
Security trading of
agency
Security sales of agency
Non-current liabilities
due within 1 year
Other current liabilities
Total current liabilities 213,111,780.85 143,252,146.28 209,640,225.3 142,546,852.81Chengde Dalu Co., Ltd. Semi-Annual Report 2010
20
8
Non-current liabilities:
Long-term loans
Bonds payable
Long-term account
payable
Special accounts
payable
18 10,598,000.03 98,000.03 10,598,000.03 98,000.03
Projected liabilities
Deferred income tax
liabilities
Other non-current
liabilities
Total non-current liabilities 10,598,000.03 98,000.03 10,598,000.03 98,000.03
Total liabilities 223,709,780.88 143,350,146.31 220,238,225.4
1
142,644,852.84
Owner’s equity (or
shareholders’ equity):
Paid-in capital (or share
capital)
19 706,320,000.00 706,320,000.00 706,320,000.0
0
706,320,000.00
Capital public reserve 20 395,971,144.37 394,571,587.96 395,971,144.3
7
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 risk
Retained profit 22 -1,234,736,533.
71
-643,734,268.95 -1,230,421,63
3.22
-643,003,786.62
Balance difference of
foreign currency translation
Total owner’s equity
attributable to parent
company
-55,653,839.17 533,948,869.18
-51,338,938.6
8
534,679,351.51
Minority interests 13,924,784.47 14,429,636.86
Total owner’s equity -41,729,054.70 533,948,869.18 -36,909,301.8
2
534,679,351.51
Total liabilities and owner’s
equity
181,980,726.18 677,299,015.49 183,328,923.5
9
677,324,204.35
Legal person: Chen Rong Person in charge of accounting work: Wang Ansheng
Person in charge of accounting institution: Liu Fengguo
Profit Statement
Prepared by Chengde Dalu Co., Ltd. January- June 2010 Unit: RMB
Amount in this period Amount in last period
Items NoteV
Consolidation
Parent
Company
Consolidation
Parent
Company
I. Total operating income 0.00 0.00Chengde Dalu Co., Ltd. Semi-Annual Report 2010
21
Including: Operating income 0.00 0.00
Interest income
Insurance gained
Commission charge
and commission income
II. Total operating cost 4,767,355.11 678,084.56 218,918,648.89 582,387,843.31
Including: Operating cost 0.00 0.00 0.00
Interest expense
Commission charge and
commission expense
Cash surrender value
Net amount of expense of
compensation
Reinsurance expense
Operating tax and extras
Sales expenses
Administration
expenses
23 4,766,244.48 676,964.56 3,119,858.08 1,360,207.17
Financial expenses 24 1,110.63 1,120.00 15,297.12 15,202.62
Losses of devaluation of
asset
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 “-”)
-4,767,355.11 -678,084.56 -29,476,732.50 -582,387,843.31
Add: Non-operating
income
25 -4,448.77 -4,448.77 759,561,973.45 577,298,505.71
Less: Non-operating
expense
26 47,949.00 47,949.00 601,632,337.23 542,303,684.94
Including: Disposal loss of
non-current asset
IV. Total Profit (Loss is
listed with “-”)
-4,819,752.88 -730,482.33 128,452,903.72 -547,393,022.54
Less: Income tax
expense
V. Net profit (Net loss is
listed with “-”)
-4,819,752.88 -730,482.33 128,452,903.72 -547,393,022.54
Net profit attributable to
owner’s of parent company
-4,314,900.49 -730,482.33 128,452,903.72 -547,393,022.54
Minority shareholders’ gains
and losses
-504,852.39Chengde Dalu Co., Ltd. Semi-Annual Report 2010
22
VI. Earnings per share
i. Basic earnings per share 27 -0.006 0.18
ii. Diluted earnings per share 2 7 -0.006 0.18
VII. Other consolidated
income
VIII. Total consolidated
income
-4,819,752.88 -730,482.33 128,452,903.72 -547,393,022.54
Total consolidated income
attributable to owners of
parent company
-4,314,900.49 -730,482.33 128,452,903.72 -547,393,022.54
Total consolidated income
attributable to minority
shareholders
-504,852.39
Legal person: Chen Rong Person in charge of accounting work: Wang Ansheng
Person in charge of accounting institution: Liu Fengguo
Statement of Cash Flow
Prepared by Chengde Dalu Co., Ltd. January- June 2010 Unit: RMB
Items Note V Amount in this period Amount in last period
Consolidation Parent Company Consolidation Parent Company
I. Cash flows arising from
operating activities:
Cash received from
selling commodities and
providing labor services
Net increase of
customer deposit and
interbank deposit
Net increase of loan from
central bank
Net increase of capital
borrowed from other
financial institution
Cash received from original
insurance contract fee
Net cash received
from reinsurance business
Insured savings and net
increase of investment
Net increase of disposal
of transaction financial asset
Cash received from interest,
commission charge and
commission
Net increase of capital
borrowed
Net increase of returned
business capital
Write-back of tax
receivedChengde Dalu Co., Ltd. Semi-Annual Report 2010
23
Other cash received
concerning operating
activities
29 1,210,003.50 1,209,994.13 1,574,515.00 1,574,515.00
Subtotal of cash inflow
arising from operating
activities
1,210,003.50 1,209,994.13 1,574,515.00 1,574,515.00
Cash paid for
purchasing commodities and
receiving labor service
Net increase of customer
loans and advances
Net increase of deposits in
central bank and interbank
Cash paid for original
insurance contract
compensation
Cash paid for interest,
commission charge and
commission
Cash paid for bonus
of guarantee slip
Cash paid to/for staff and
workers
151,800.00 151,800.00 891,086.00 758,344.00
Taxes paid
Other cash paid
concerning operating
activities
29 1,053,594.13 1,053,594.13 448,289.52 542,269.68
Subtotal of cash outflow
arising from operating
activities
1,205,394.13 1,205,394.13 1,339,375.52 1,300,613.68
Net cash flows arising from
operating activities
4,609.37 4,600.00 235,139.48 273,901.32
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 activitiesChengde Dalu Co., Ltd. Semi-Annual Report 2010
24
Cash paid for purchasing
fixed, intangible and other
long-term assets
5,500.00 5,500.00
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
Net cash flows arising from
investing activities
-5,500.00 -5,500.00
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
activities
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
Subtotal of cash
outflow from financing
activities
13,510.00 13,510.00
Net cash flows arising
from financing activities
-13,510.00 -13,510.00
IV. Influence on cash andChengde Dalu Co., Ltd. Semi-Annual Report 2010
25
cash equivalents due to
fluctuation in exchange rate
V. Net increase of cash and
cash equivalents
4,609.37 4,600.00 216,129.48 254,891.32
Add: Balance of cash
and cash equivalents at the
period -begin
447,257.73 365,685.40
VI. Balance of cash and cash
equivalents at the period -end
4,609.37 4,600.00 663,387.21 620,576.72
Legal person: Chen Rong Person in charge of accounting work: Wang Ansheng
Person in charge of accounting institution: Liu Fengguo26
Consolidated Statement on Changes of Owners' Equity
Prepared by Chengde Dalu Co., Ltd. 30 June 2010 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:
Treasury
Stock
Reasona
ble
reserve
Surplus
reserves
General
risk
provision
Retained
profit
Others
Minority
’s equity
Total
owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasona
ble
reserve
Surplus
reserves
General
risk
provision
Retained
profit
Others
Minority
’s equity
Total
owners’
equity
I. Balance at the end of last year
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,230,4
21,633.2
2
14,429,6
36.86
-36,909,
301.82
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,416,4
36,100.6
8
118,097.
36
-237,235
,308.78
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this
year
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,230,4
21,633.2
2
14,429,6
36.86
-36,909,
301.82
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,416,4
36,100.6
8
118,097.
36
-237,235
,308.78
III. Increase/ Decrease in this year
(Decrease is listed with "-")
-4,314,9
00.49
-504,852
.39
-4,819,7
52.88
186,014,
467.46
14,311,5
39.50
200,326,
006.96
(I) Net profit
-4,314,9
00.49
-504,852
.39
-4,819,7
52.88
186,014,
467.46
14,311,5
39.50
200,326,
006.96
(II) Other consolidated income
Subtotal of (I) and (II) -4,314,9 -504,852 -4,819,7 186,014, 14,311,5 200,326,27
00.49 .39 52.88 467.46 39.50 006.96
(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
reserve
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period28
2. Usage in the report period
IV. Balance at the end of the report
period
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,234,7
36,533.7
1
13,924,7
84.47
-41,729,
054.70
706,320,
000.00
395,971,
144.37
76,791,5
50.17
-1,230,4
21,633.2
2
14,429,6
36.86
-36,909,
301.82
Legal person: Chen Rong Person in charge of accounting work: Wang Ansheng
Person in charge of accounting institution: Liu Fengguo
Statement on Changes of Owners' Equity (Parent Company)
Prepared by Chengde Dalu Co., Ltd. 30 June 2010 Unit: RMB
Amount in this report period Amount in last year
Items
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasonable
reserve
Surplus
reserves
General
risk
provision
Retained
profit
Total
owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasonable
reserve
Surplus
reserves
General
risk
provision
Retained
profit
Total
owners’
equity
I. Balance at the end of last year
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-643,003,7
86.62
534,679,35
1.51
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
42,841,861.
08
1,220,524,9
99.21
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this
year
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-643,003,7
86.62
534,679,35
1.51
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
42,841,861.
08
1,220,524,9
99.21
III. Increase/ Decrease in this year
(Decrease is listed with "-")
-730,482.3
3
-730,482.3
3
-685,845,6
47.70
-685,845,6
47.70
(I) Net profit -730,482.3 -730,482.3 -685,845,6 -685,845,629
3 3 47.70 47.70
(II) Other consolidated income
Subtotal of (I) and (II)
-730,482.3
3
-730,482.3
3
-685,845,6
47.70
-685,845,6
47.70
(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
reserves30
4. Others
(VI) Reasonable reserve
1. Withdrawal in the report period
2. Usage in the report period
IV. Balance at the end of the report
period
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-643,734,2
68.95
533,948,86
9.18
706,320,00
0.00
394,571,58
7.96
76,791,550.
17
-643,003,7
86.62
534,679,35
1.51
Legal person: Chen Rong Person in charge of accounting work: Wang Ansheng
Person in charge of accounting institution: Liu Fengguo31
CHENGDE DALU COMPANY LIMITED
NOTES OF FINANCIAL STATEMENT
FOR THE SEMI-ANNUAL 2010
(All amounts in RMB Yuan unless otherwise stated)
I. Brief introduction of the Company
1. History evolution
Chengde Dalu Company Limited (hereinafter referred to as “the Company”) with
former name of Chengde Dixian Textile Company Limited 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.
The registration number of Corporation Legal Person of Business License was
130000400001225 issued from Industrial and Commercial Bureau of Hebei Province.
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 RMB1.00 each and
Mr. Shuxian Wang holds 85,100,000 shares.
Upon the approval document No. [2000]121 issued by the China Securities Regulatory
Commission (CSRC for short) on 29 August 2000, the Company issued 100,000,000
domestically listed foreign shares (B share for short) with a par value of RMB1.00 each
on 29 September 2000. In addition, the Company increased issuance of 15,000,000
foreign capital shares (B share) with a par value of RMB1.00 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 with par value of RMB 1.00 each amounting to
215,000,000 shares.
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 and32
58,700,000 shares were issued for Renminbi Yuan (RMB).
Upon the approval of the Ministry of Commerce on 11 March 2004, the Company
changed to foreign investment joint stock Company under the approval from Ministry
of Commerce of P.R.C.
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 bonus distribution. The bonus shares and previous
15,000,000 B-share issued for capital increased have been verified by the Zhong Lei
Certified Public Accountants Co., Ltd. with the Verification Report of Zhong Lei Yan Zi
No.[2010]10009.
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.
On 13 November 2009, approved by the Company and Board, the Company changed
the name as Chengde Dalu Co., Ltd.
2. Business scope
Except the subsidiary—Chengde Rongyida Real Estate Development Co., Ltd.
(Rongyida Company for short), the Company and other consolidated subsidiaries
(herein named the Company) principle engaged in the production of various knitwear
and synthetic silk, business of processing and selling as well as top-class coated paper,
production and selling business of liner board serials. Rongyida Company principle
engaged in the development of real estate.
II. Major accounting policy, accounting estimation and previously errors of the
Company
1. Basis of preparation of financial statement
The Company takes the sustainable operation as the basis, in according to actual
occurred transaction together base on the followed mentioned preparation basis, major
accounting policy and accounting estimation.
2. Statement on Implementation of Accounting Standard for Business Enterprises
The financial statement prepared by the Company was compliance with the Accounting
Standard for Business Enterprises—Basic Standard and Article 38 of Specific
Accounting Standard issued on 15 February 2006 form Ministry of Finance R.R.C
(Finance Ministry for short) and meet the requirement of Application Guideline of
Accounting Standard for Business Enterprise, Explanation of Accounting Standard for
Business Enterprise and relevant regulations issued later. The financial statement
represented real and completed (consolidated) financial status, (consolidated) business
results and (consolidated) cash flow of the Company.
Besides, the financial statement compliance with the relevant disclosure requirements
that is the financial statements in Preparation Rule of Information Disclosure of33
Enterprises Publicly Issuing Securities No. 15—General Rule of Financial Report (No.
15 Document for short) which have been amended in 2010.
3. Accounting period
The accounting period consisted of annual and semi-annual, the semi-annual
accounting period refers to a report period that shorter than a completed accounting
period. The company adopts Gregorian calendar, namely each 1 January to 31
December should be one fiscal year.
4. Standard Accounting Currency
The Company adopts Renminbi as the standard accounting currency. Only the
subsidiary of the Company named Gold Axe Investment Group Limited (Gold Axe for
short) adopt USD as the accounting currency.
5. Accounting Treatment Method for Business Merger under the Same Control
and not under the Same Control
The business combination under the same control: The assets and liabilities that the
combining party obtains in a business combination shall be measured on the basis of
their carrying amount in the combined party on the combining date. As for the balance
between the carrying amount of the net assets obtained by the combining party and the
carrying amount of the consideration paid by it (or the total par value of the shares
issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital
is not sufficient to be offset, the retained earnings shall be adjusted. The direct cost for
the business combination of the combining party shall, including the expenses for audit,
assessment and legal services, be recorded into the profits and losses at the current
period. Where a relationship between a parent company and a subsidiary company is
formed due to a business combination, the parent company shall, on the combining date,
prepare a consolidated balance sheet, a profit statement and a cash flow statement. In
the consolidated balance sheet, the assets and liabilities of the combined party shall be
measured pursuant to their carrying amount. If it is necessary to make an adjustment
according to the present Standard because the accounting policy adopted by the
combined party is different from that adopted by the combining party, the assets and
liabilities of the combined party (parties) shall be measured on the basis of the
post-adjustment carrying amount. The consolidated profit statement shall include the
incomes, expenses and profits of the combining party incurred from the beginning of
the current period to the combining date. The net profits of the combined party which
has been realized prior to the combination shall be reflected through an item separately
presented in the profit statement. The consolidated cash flow statement shall include the
cash flow of the parties to the combination from the beginning of the current period to
the combining date.
Business Combination Not under the Same Control: The combination costs shall be the
fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and the equity securities issued by the acquirer in exchange for the control on the
acquiree, as well as all relevant direct costs incurred to the acquirer for the business
combination shall also be recorded into the cost of business combination. The acquirer
shall, on the acquisition date, measure the assets given and liabilities incurred or
assumed by an enterprise for a business combination in light of their fair values, and
shall record the balances between them and their carrying amounts into the profits and
losses at the current period. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. The acquirer shall reexamine the measurement of the34
fair values of the identifiable assets, liabilities and contingent liabilities it obtains from
the acquiree as well as the combination costs, If, after the reexamination, the
combination costs are still less than the fair value of the identifiable net assets it obtains
from the acquiree, it shall record the balance into the profits and losses of the current
period. Where a relationship between a parent company and a subsidiary company is
formed due to a business combination, the parent company shall prepare a combined
balance sheet on the acquisition date, which shall present the identifiable assets,
liabilities and contingent liabilities acquired in the combination at their fair values.
6. Compilation of Consolidated Financial Statements
a. Determination principle of consolidated scope
The scope for the consolidated financial statements shall be confirmed based on the
principle of control. Control refers to a power that the Company can determine the
financial and operating strategy of the invested company, and can be obtained profit
from the operating activities of the invested company. The Company owned over
50%(50% excluded) of the voting rights in invested company or owned less than 50%
voting rights but has material controlling, collected into consolidated scope.
b. Accounting methods used in consolidated financial statement
Consolidated financial statement is prepared under the regulation of Accounting
Standard for Enterprise No. 33—Consolidated Financial Statement. Base on the
financial statement of the parent Company and its collected consolidated subsidiaries,
according to other information, adjusted the long-term equity investment of the
Company based on the equity method, after setting-of the equity capital investment of
the parent company and shares in owners’ equity of subsidiaries held by parent
company and significant transaction internal and internal current.
Shareholders’ equity of minority is listed under the Shareholders’ equity of minority
item in Owners’ equity in consolidated balance sheet. Gains and losses of minority
shareholders are listed under the income of minority shareholders item in net profit in
consolidated profit statement. Subsidiaries of the parent company increased by merger
under same control in report period consolidated the income, expenses and profit from
current period-begin of merger to period-end into consolidated profit statement. To
those merger under different control, consolidated the income, expenses and profit from
the day of purchased to period-end into consolidated profit statement.
If the parent company disposing a subsidiary in report period, than the income,
expenses and profit from the period-begin to disposal date collected into the
consolidated profit statement.
c. Accounting policy of subsidiaries
Controlling subsidiaries adopts the same accounting policy as the Company.
7. Recognition basis of cash and cash equivalent
Cash equivalent refers to the investment held by the Company with short term (due
within three months from day of purchased), strong liquidity and low risk of value
fluctuation that is easy to be converted into cash of known amount.35
8. Foreign Currency Transactions and Foreign Currency Statement Translation
Foreign currency transaction at initial confirmation shall translated foreign currencies
to Renminbi at the spot exchange rate on the exchange date. At the balance sheet day,
foreign currencies are translated to Renminbi at the instant exchange rate of that day,
the exchange difference caused by difference of the instant rate at that day and the rate
adopted in initial recognition, or the exchange rate adopted in previous balance sheet,
are accounted into current gains and losses. Non-monetary items of foreign currency
calculated based on historical cost shall converted at the spot exchange rate of
transaction day and changed no amount of standard currency bookkeeping.
All assets and liability items in the balance sheet are translated at eh exchange rate of
the balance sheet date; owners’ equity items except for un-distributed profit are
translated at the exchange rate of the day when they happened.
Income and expenses items in profit statement are translated at the spot exchange rate
of transaction day. The translated differences in foreign currency financial statement
shall be listed under owners’ equity items in balance sheet.
Concerning the overseas operating financial statements in the malignant fluctuation
economy, the balance sheet item used in general price index shall reiterated, the profit
statement item used in general price index shall reiterated, than converted by the spot
exchange rate at nearly balance sheet date. Concerning the overseas operating not in the
malignant fluctuation economy, stop reiterated and converted the financial statement
that haven reiterated at the stopped dated based on the price level.
Foreign currency cash flow and overseas subsidiaries’ cash flow are translated on the
spot exchange rate of the day when the cash flow was happened.
9. Financial Instruments
a. Classification of financial assets and financial liabilities
The financial assets covers the transactional financial assets, financial assets measured
at fair value and its change was recorded into current gains and losses, held-to-maturity
investment, loans, accounts receivable and financial assts available for sale etc.
financial liabilities covers transactional financial liabilities and financial liabilities that
measured at fair value and its change was recorded into current period.
b. recognition and measuring of financial instruments36
① When the Company became a party of financial instrument contract, recognized a
financial assets or financial liabilities. If the contract of obtaining the cash flow of
financial assets was terminated, the financial assets have been transferred and the
financial assets that complied with the termination condition recognized as terminated.
When the current liability of a financial liabilities have been totally/partially released,
terminated recognized wholly/partial of this financial liabilities.
② Initial recognized financial assets or financial liabilities measured on fair value.
Concerning the financial assets or financial liabilities that accounted into the current
gains and losses with their fair value changes, relevant transaction expense directly
accounted into current gains and losses; concerning other type of financial assets or
financial liabilities, relevant transaction expense accounted into initial confirmation
amount.
③The follow-up measurement on fair value is taken on the financial assets in the
Company, with no deduction of transaction expenses for the future disposal of the
financial assets; however, the following cases are not included:
The investment held due and the account receivable are measured on the actual rate and
the diluted cost;
Measured on cost are stock investment instrument of no quotation in the active market
and no reliable measurement on the fair value and the derivative financial assets hooked
with the investment instrument and settled by the payment of the stock instrument;
As for the cases as changes in the holding intention or capability, and the unreliable
measurement of the fair value, which make the financial assets are not fit to the fair
value measurement, the assets are measured on cost, which is the fair value of the assets
on the re-classification day.
④The follow-up measurement on the actual rate and diluted cost is taken on the
liabilities, but the following cases are not included:
As for the cases as changes in the holding intention or capability, and the unreliable
measurement of the fair value, which make the financial liabilities are not fit to the fair
value measurement, the assets are measured on cost, which is the fair value of the
liabilities on the re-classification day;
Measured on cost are stock investment instrument of no quotation in the active market
and no reliable measurement on the fair value and the derivative financial liabilities
hooked with the investment instrument and settled by the payment of the stock
instrument
Derivative financial liabilities that without quotation in active market and cannot be
reliably measured for their fair value and can only be settled by delivery of this option
instrument measured based on cost;
Not belongs to financial guarantee contract of financial liabilities measured by fair
value and with variations accounted into current gains and losses, or loan commitments
that for the price lower the market rate with financial liabilities measured by fair value
and with variations accounted into current gains and losses, shall measured
subsequently base on the higher amount between the followed amounts when initially
recognized:
Amount recognized based on contingency principle;
Initial recognized amount deducting the accumulated amortized balance based on the
income.
⑤ Gains and losses from variation of fair value of financial assets or financial
liabilities shall treated as followed regulation except for the hedging:37
As for the financial assets and liabilities measured on the fair value and the changes
reckoned into the current loss/gain, the profit or loss from fair value changes is
reckoned into the current loss/gain;
The profit or loss from the fair value changes of the financial assets available for sale, is
reckoned into the current loss/gain, in addition to the exchange difference from the
impairment loss and foreign currency monetary financial assets, and is transferred out
and reckoned into the current loss/gain upon the termination of the recognition of the
assets.
⑥ Reckoned into the current loss/gain are the financial assets or liabilities measured on
the diluted cost and from the termination of the recognition, actual impairment or
dilution, in addition to ones related to the hedge.
⑦ Reckoned into the current loss/gain is the balance-out result of the fair value
changes between the hedge instrument and the hedged item in the same accounting
period.
c. Recognition of fair value of financial assets and liabilities
The financial assets or financial debts that existing active market confirm its fair value
with the quoted price on active market, the quoted price on active market including
prices easy to be acquired from Exchange, broker, industry association, pricing service
organization etc. termly, which represents the price of market transaction that actually
occurred in a fair shake; the financial assets or financial debts not exist active market,
adopt value estimation skill to confirm its fair value. The value estimation skill include
refer to price used in recent market deals carried through by the parties that familiar
with situation and deal by freewill, current fair value of other financial assets or
financial debts that are essentially the same, discounted cash flow method, and option
pricing model etc.
d. Provision of financial assets
At the period-end, the check is taken on the book value of financial asset to exclusion
of tradable financial assets measured on the fair value and the changes reckoned into
the current loss/gain, preparation for assets impairment is made if there is objective
evidence to prove impairment. Upon the accrual of the impairment provision, the single
substantive account is tested singly; and as for the singly not substantive one, it is tested
in the financial assets group of the similar risk characters.
Method of accrual provision for financial assets:
①As the financial assets available for sale can be measured reliably on the fair value,
the balance of the fair value below the book value, is accrued as the impairment
provision and reckoned into the current loss/gain; as the financial assets available for
sale cannot be measured reliably on the fair value, the balance of the estimative future
cash flow (excluding the credit loss un-incurred) below the book value, is accrued as
the impairment provision and reckoned into the current loss/gain. Upon the actual
impairment of the financial assets, even though the assets recognition is not terminated,
the accumulative loss from the fall-down of the fair value directly reckoned into the
owners’ equity may be transferred out and reckoned into the current loss/gain.
② As for the investment held due, the balance of the current value of the estimative
cash flow (excluding the future credit loss un-incurred) below the book value is accrued
and reckoned into the current loss/gain.
e. Recognition and measurement of the transfer of the financial assets:
Recognition of transfer of financial assets: in the following cases, the corporation
transferred nearly all risks or compensation in the patent of the financial assets to the
transfer-in party, the transfer is recognized and the recognition of the assets terminated.38
① The financial assets are sold in with no recourse;
② Measurement of partial transfer of the financial assets: As for the partial transfer of
the financial assets, the integral book value of the transferred assets is diluted on the
respective fair value between the part of recognition termination and the part of no
recognition termination yet, and is reckoned into the current loss/gain on the difference
of book value of the part of the recognition termination and the consideration value of
the part of the recognition termination together with the corresponding part of the
recognition termination part directly reckoned into the accumulative sum of the fair
value changes of the owners’ equity previously. The corresponding part is recognized
after the dilution on the relative fair values of the recognition termination part and the
recognition non-termination part.
10. Account Receivable
(1) Confirmation and Method for Provisions for Bad Debts of Single Significant
Amount
Confirmation of single significant account
receivable:
Account receivable with single significant
amount of RMB1, 000,000 beyond was
the single significant account receivable.
A. Provisions method for bad debts of
single significant amount:
If any objective evidence shows that the
accounts receivable has been impaired, the
impairment-related losses shall be
recognized to prepare the provisions for
bad debts according to the balance
between the future present value and the
book value.
(2) Confirmation basis and provision method for single insignificant amount that is of
great risk after combined according to the credit risk features:
Confirmation basis of credit
risks feature combination:
The account receivable with single amount lower than RMB 1 million and has over
3years account ages, judgeless recoverable account receivable is the single
minor amount but with high characteristic of risk after combination.
Based on the accrual method of characteristic of credit risk: concerning the account receivable with single minor
amount but with high risk after combination, occurring impairment after impairment testing, considered the age
category as risk characteristic, based on the historical loss rate of similar age category in previous years, withdrawal39
the bad debt provision by the similar age category by combining real situation.
(3) Account age analysis method
Account Age Accrual Ratio for Account
Receivable (%)
Accrual Ratio for other
account receivables (%)
1within one
year(including 1 year)
1%-5% 1%-5%
1－2years 20% 20%
2－3 years 50% 50%
Over 3 years 100% 100%
11. Inventory
(1) Classification of inventory
The inventory of the Company refers to raw materials, accessory materials, spare parts
for maintenance, turn-over materials, product in process and manufacture products.
(2) Valuing of the delivered inventory
Weighted average method was adopted for the issued inventory.
(3) Confirmation of net realizable value for the inventory and provision for inventory
impairment
After fully clearance of inventory at period-end, taking the lower amount between the
inventory cost and net realizable value or adjusted the provision of inventory.
Products in process, commodities and selling materials etc. directly used for commodity
inventory selling. In the normal operating process, estimated sale value minors
estimated sale expense and relevant tax, recognized the net realizable value as the
result;
Concerning material inventory need processing, in the normal operating process,
estimated sales value minors estimated probability cost, estimated sale expense and
relevant tax, recognized the net realizable value as the result;
Inventory held for sales contract or labor contract, the net realizable value based on the
contract price. If the amount of inventory held more than the amount of order in
contracts, the exceeded part inventory based on the general sale price for their net
realizable value.
Withdrawal the provision of inventory at period-end based on single inventory items;
concerning the inventory with quantity and low unit-price, withdrawal the provision by
category; concerning the inventory with difficulty measurement, with same serials in
the same area and has the same final purpose, shall consolidated withdrawal provision.
The influence facts less record in inventory values have been disappeared, the minor
amount shall be recovered. And switch-back in the original accrual provision, the40
amount of witch-back accounted into current gains and losses.
(4) Rake inventory
The Company adopts the perpetual inventory system for inventories.
(5)Amortization method for the low-value consumables and wrappage
The Company adopts one-off amortization method to amortize the low-value
consumables and wrappage.
12. Long-term equity investment
The long-term equity investment in the Company is the equity investment with the
exertion of control or common control over with the other affiliated party or the
significant influence on, the invested unit, or with no control or common control over,
or significant influence on, the invested unit, and with no quotation in the active market
and no reliable fair value measurement.
(1) Recognition of initial investment cost
As for the long-term equity investment formed in the corporate consolidation, the initial
investment cost is recognized according to the following rules:
a. As for the consolidation of enterprises under the same control, taken as the initial
investment cost is the share of the book value of the owners’ equity attributable to the
consolidated party; and for the adjustment of the reserve is the difference between the
initial investment cost and the payment consideration value; and as for the reserve not
sufficient for the deduction, it is for the adjustment of the remained gain;
b. As for the consolidation not under the same control, taken as the initial investment
are assets paid, liabilities incurred or taken, and fair value of stock offering, for
obtaining the control rights over the purchased party; reckoned into the actual corporate
consolidation cost are all expenses directly related to the consolidation; reckoned into
the consolidation cost are future events of the possible influence on the consolidation
cost, stipulated in the consolidation contract or agreement, if on the purchase day, the
future events are estimated as of probable chance, and with the reliable measurement on
their influences on the consolidation cost.
In addition to the long-term stock investment formed in the corporate consolidation, the
initial investment cost of other ones is recognized according to the following rules:
①As for the long-term stock investment obtained by the cash payment, the actual
purchase price paid is taken as the initial investment cost. The initial investment cost
consists of the expenses, tax, and other necessary expenditure, directly related to
obtaining long-term stock investment. Checked individually as the account receivable is
the cash dividend included in the actual payment and announced and yet received;
②As for the long-term equity investment obtained by the stock offering, taken as the
initial investment cost is the fair value of the stock offering;
③As for the long-term equity investment invested by the investors, taken as the initial
investment cost is the value stipulated in the contract or agreement, in addition to the
unfair value in the contract or agreement;
④As for the long-term stock investment by the non-monetary transaction, the initial
cost is recognized according to Corporate Accounting Principles No. 7 – Non-monetary41
Assets Transfer;
⑤As for the long-term stock investment by the debts restructuring, the initial cost is
recognized according to Corporate Accounting Principles No. 12 –Debts Restructuring.
(2) Follow-up measurement and recognition methods for impairment
As for the long-term stock investment with the Company’s no common control over or
significant influence on the invested unit, and no quotation in the active market and no
reliable measurement on the fair value, and exercise of control over the invested unit, it
is checked on cost. The long-term investment in the subsidiaries is adjusted on equity in
the preparation of the consolidated statements.
As being checked on cost, the book value of the long-term stock investment remains
unchanged in addition to the additional investment, cash dividend or interest deserving
distribution but transferred as investment, or investment withdrawn. Taken as the
current investment return is the profit or cash dividend announced to be distributed by
the invested unit.
With the Company’s common control or significant influence on the invested unit, the
long-term stock investment may be checked on equity; as for the long-term stock
investment checked with the initial investment cost higher than the share of fair value
of the net recognizable assets held in the invested unit, the initial investment cost is not
adjusted and recognized as the business fame in preparation of the consolidated
statements; as the cost is lower than the share, the difference is reckoned into the
current loss/gain.
Upon the check on equity, and after obtaining the stock investment, the Company may
adjust the book value of the investment according to the share of the net loss/gain of the
invested unit achieved in the year and deserving enjoyment or distribution, and take it
as the current loss/gain; and as for the recognition of the share, the net loss/gain is
adjusted on the basis of the fair value of the recognizable assets (instantly the Company
obtains the investment) of the invested unit. Upon the recognition of the actual
loss/gain of the invested unit, taken as the limit is the write-down zero of the
investment book value and other long-term stock substantially composed of the net
investment in the invested unit; if the net profit in the invested unit is achieved in future
periods, and after the share of return enjoyed is above the share of the unrecognized
loss distributed, the recognition of the share of the return is recovered. The investment
book value is decreased according to the deserving part measured on the profit or cash
dividend announced to be distributed by the invited unit.
(3) Basis of recognition of common control over or significant influence on the invested
units
As for the common control stipulated in the contract over certain economic activity, if it
exists only in the case that the important financial accounting and the operation
decision-making need the unanimous agreement of the investors who share the control
right, it is regarded as the common control with the other investors over the invested
units; if having the right to take part in the corporate accounting and operation
decision-making but not the control or the common control with other parties over the
policy-making, the investing enterprises are regarded as able to exert the significant42
influence on the invested units.
(4) On the balance sheet day, as for the long-term sock investment in the cost check
method and with no quotation in the active market and no reliable fair value
measurement, recognized as the assets impairment loss is the difference between the
book value and the current value recognized according to the return rate in the similar
financial market over the future cash flow discount; as for other long-term stock
investment, they may be checked to make sure the impairment indications, and as for
the one of the impairment indication, the single assets are tested for the impairment;
and as for the business fame from the consolidation, it is tested whether there is
impairment indication or not, and if the result shows that the recoverable is below the
book value, the book value deduction is reckoned into the recoverable, and recognized
as the assets impairment loss and reckoned into the current loss/gain.
Once the impairment loss of the capital assets is recognized, it cannot be transferred
back.
13. Fixed assets
(1) Recognition conditions of fixed assets
The capital assets are houses, buildings and transportation equipment together with the
other equipment, facility, and tools related with the production and operation, of above
RMB 1,000 unit value and above 1-year service life, as well as goods not attributable to
the main operation or production ones but of above 2,000 unit value and above 2-year
service life.
Taken as the entry value is the cost of capital assets newly acquired or constructed. As
for the assets appraised in the Company’s system reform, taken as the entry value is its
appraisal value recognized by the state-owned assets regulatory departments.
(2) Depreciation method for all fixed assets
The depreciation method for capital assets is average service life one, and the
depreciation rate is recognized as follows according to its category, estimative
economic service life and estimative remnant (5% -- 10% of the original value):
Categories
years of
depreciation(years)
Scrap value rate
(%)
Annual depreciation
rate (%)
Houses and
buildings
25-year 5 3.8
Papermaking
equipment
20-year 10 4.5
Other machine
equipment
7 – 15-year 5 6.33-13.57
Transportation
equipment
5—10-year 5 9.5—19
Office
equipment
5 – 10-year 5 9.5—1943
Checked at every accounting-period-end are service life, estimative net remnant and the
depreciation method, of capital assets. If there is great difference or change between the
net estimative remnant of the life service and the depreciation method, and the previous
ones, it is adjusted respectively.
(3) Test methods for capital assets impairment and accrual methods for its provision
The capital assets are checked at the period-end, and the recoverable of the assets is
measured for the accrual of the impairment provision if there are the following cases
found out: ①The larger fall-down of the market price of the capital assets is much
higher than the estimative one due to the time lapse or the normal use and cannot be
recovered in the near future; ② There are material changes in the corporate operation
environment as technological, market, economic or law environments, or the products
market, in the current period or near future, which impact negatively on the market;③
The great period-on-period rise in the market interest probably influences the
measurement of the corporate discount rate of the capital assets and results the large
fall-down in the recoverable of the capital assets; ④ The capital assets are backward or
the entity is broken;⑤ There are material unfavorable changes in the estimative
utilization methods for the capital assets, such as the termination of the corporate plan
or the restructuring of the operation business attributable to the assets and early disposal
of the assets, and therefore the corporation is negatively impacted;⑥ Other cases
probably testify the actual impairment of the assets.
If the recoverable is lower the book value, the impairment provision of the capital
assets is accrued according to the difference of the above two, and reckoned into the
current loss/gain. The impairment provision is accrued as the single assets. Once the
impairment loss is recognized, it cannot be transferred back in the future accounting
periods.
14. Projects under construction
As for the projects under construction, the classification accounting is taken on the
established projects. Taken as the entry value of the capital assets is all actual
construction expenditure before the planned availability of the assets. As for the assets
which has reached the availability but yet done the final accounts, they are transferred
into the capital assets on the fixed value according to the projects budget, cost or the
actual cost from the day of reaching the planned availability, and the capital assets
depreciation is accrued on the corporate policies of capital assets depreciation; upon the
completion of the projects, the previous tentative estimative value is adjusted according
to the actual cost, but the accrued depreciation is not adjusted.
The difference of the recoverable below the book value is taken as the impairment
provision for the projects under construction if the projects under construction stop long
time and is not expected to restart in the forthcoming 3 years or are backward in
properties or technology and of great uncertainty as for the economic interest brought
upon the corporation or of other cases to testify fully its impairment.
15. Borrowing Costs
(1) Recognition principles on the capitalization of borrowing costs44
Capitalized and reckoned into the relevant assets cost are the corporate actual
borrowing expenses directly attributable to construction and production of assets up to
the capitalization conditions; other borrowing expenses are reckoned into the current
loss/gain on their actual sum.
Assets up to the capitalization conditions are assets such as the capital assets,
investment property and inventory assets as can reach the planned availability or
marketability only after the long-term construction or production.
As the borrowing expenses are up to all of the following conditions, the capitalization
starts:
a. There is the actual assets expenditure, which includes the expenditure in the form of
cash payment, transfer of non-cash assets or interested debt assumption for the
construction or production of the assets up to the capitalization conditions;
b. There are the actual borrowing expenses;
c. There has been the starting of the construction or production activities necessary for
the planned availability or marketability of the assets.
As the assets up to the capitalization conditions reach the availability and marketability,
the borrowing expenses stop capitalization. As part projects of the assets construction or
production are completed respectively and utilized singly, the very part of the
borrowing expenses stops capitalization.
(2) Capitalization period of borrowing expenses
The capitalization period is the period from the capitalization starting time point to the
ending point with the temporary break point excluded. As there is irregular break above
3-month, of the assets up to the capitalization conditions in its construction or
production, the assets stop the capitalization temporarily until the re-starting of the
construction.
(3) Measurement methods for the capitalization of borrowing expenses
Capitalized are the interest expenses of the specific borrowings (deducting the interest
income from the borrowing un-utilized but deposited in the bank or the investment
return from the temporary investment) and its auxiliary expenses, before the planned
availability or marketability of the assets constructed and produced up to the
capitalization conditions. Sum of the general borrowing interest to be capitalized is
measured and recognized on the accumulative assets expenditure above that of the
specific borrowing times the capitalization rate of appropriation of general borrowing
on the annual average. The capitalization rate is recognized on the average interest rate
of the general borrowing.
If the discount or premium exists in the borrowings, it is recognized on the actual rate
every accounting period, and the interest is adjusted every period.
16. Intangible assets
The intangible assets including the land use right, are valued on the actual cost price as
being obtained, and averagely diluted on the use year stipulated in the contract. At the
period-end, the book value of the intangible assets is checked and the provision for the
intangible assets is accrued on the difference between the recoverable sum and the book
value and reckoned into the current loss/gain. The provision is accrued with the single45
substantive assets as the unit. Once the assets impairment loss is recognized, it will not
be transferred back in the future accounting periods.
17. Long-term deferred expenses
Taken as the long-term deferred expenses in the Company and averagely diluted
according to the estimative benefit period of the item is the improving outlay for the
capital assets leased in by the operational lease, and all expenses actually incurred but
diluted in the Period and the future periods with 1-year-above dilution. The start-up
expenses in the preparation period are diluted into the current expenses at one time in
the operation starting month.
18. Projected liabilities
As for the current obligations from the warranty for the products quality, external
guarantees, and un-resolved lawsuits, their fulfillment probably cause the outflow of
economic interest, and the sum of those obligations is recognized as the estimative
liabilities as the sum can be measured reliably. As for the future operation loss, it is not
recognized as the projected liabilities. The estimative liabilities are measured initially
according to the best estimator of the expenditure for the fulfillment of the current
obligations, and factors are comprehensively taken into account as risks, uncertainty,
and the monetary time value related to the contingent events. As for the significant
influence of the monetary time value, the best estimator is finally recognized after the
discount of the relevant future cash flow; recognized as the interest expenses the
increased sum of the book value of the projected liabilities due to the discount
reduction with the time lapse.
On the balance sheet day, the book value of the projected liabilities is checked and
adjusted properly for the reflection to the current best estimator.
19. Income
Income recognition basis and measurement methods
a. Products sales income is recognized as up to all of the following conditions: the
Company has transferred major risks and compensation of the product patent to the
purchaser; the Company neither retains the continuous management rights usually
related to the ownership nor exerts effective control over the sold goods; the obtained
income can be measured reliably; the relevant economic interest probably flows into
the corporation; relevant cost incurred or to incur can be measured reliably;
b. Labor supply income is recognized as up to all of the following conditions: the
income can be measured reliably; relevant interest probably flows into the corporation;
the completion progress of the transaction can be measured reliably; relevant cost
incurred or to incur in the transaction can be measured reliably;
c. Income from the transfer of the assets use right: can flow into the corporation the
economic interest related to the transaction; the income can be measured reliably;
d. As the goods are sold in the after-sale repurchase, the accounts received are
recognized as the liabilities; if the repurchase price is higher than the original sales
price, the interest of the difference is accrued on time in the repurchase period and
reckoned into the financial expenses. If there is concrete evidence to show that the
after-sale repurchase is up to the recognition conditions of sales income, the income of46
goods sold are recognized by the sales price and the goods repurchased are dealt with
as goods purchased in;
e. As the goods are sold in the after-sale lease-back, and the transaction are recognized
as the operational lease, the difference is deferred between the sales price and the assets
book value and diluted for the adjustment of the lease expenses in the lease period in
the same way of the recognition of the lease expenses.
20. Deferred income tax assets/ deferred income tax liabilities
Recognition basis of deferred income tax
a. As for the deductible temporary differences between the book value of the assets and
liabilities, and with the taxable income probably obtained for balancing out the
deductible temporary differences as the limit, recognized are the deferred income assets
arising from the deductible temporary differences:
①The transaction is not enterprise consolidation;
②Upon the transaction, neither the accounting profit nor the taxable income is
influenced.
b. As the deductible temporary differences related to the investment into the
subsidiaries, affiliated enterprises or joint enterprises, are up to the following conditions,
the corresponding deferred income tax assets are recognized:
①The temporary differences are probably transferred back in the expectable future;
②In the future，probably obtained are the taxable income available for deducting the
deductible temporary differences.
c. As for the deductible loss or tax deduction able to be settled and transferred in the
future years, the corresponding deferred income assets are recognized with the future
taxable income probably obtained and available for deducting the loss and tax
deduction as the limit.
d. On the balance sheet day, the book value of the deferred income tax assets is checked,
and the sum deducted is transferred back if the sufficient taxable income cannot be
obtained.
21. Major changes in accounting policies and estimation
There are no changes in the accounting policies or estimation.
22. Other major accounting policies, estimation and methods for financial
statements
(1) Assets impairment
The assets impairment is the assets recoverable sum below than its book value. On the
financial statements day, the corporation may make judgment whether there is the
impairment indication in the assets. If there is the indication, the recoverable sum is
estimated; and if the sum is below the book value, the book value is written down into
the recoverable sum, and is recognized as the assets impairment loss and reckoned into
the current loss/gain, and the assets impairment provision is accrued. As for the
business fame and the intangible assets of uncertain service life, whether there is
impairment indication or not, the impairment test is taken every year. The impairment
test is taken on the combination between the business fame and relevant assets groups47
or portfolio of the groups. The assets accrual basis and recognition methods are as
follows of the long-term stock investment, capital assets, and projects under
construction and intangible assets:
a. On the balance sheet day, the Company makes judgment on the impairment
indication of the assets as the long-term stock investment, capital assets, projects under
construction and intangible assets. The following indications show the probable chance
of the assets impairment:
①The large fall-down of the assets market price in the current period is much higher
than the estimative one due to the time lapse or the normal use.
②There are or will be material changes in the corporate operation environments as
economic, technological and law ones or the assets market in the current or
forthcoming period, which will impact the corporation unfavorably.
③With the current improvement of the market interest rate or other market investment
return rate, influenced is the corporate measurement in the discount rate of the current
value of the assets estimative future cash flow and resulted is the large fall-down of
recoverable sum.
④It is testified that the assets has been out-of-date or its entity has been broken.
⑤The assets have been or will be stranded, terminated or disposed in advance on
schedule.
⑥The corporate inside report testifies that the assets economic performance has been
or will be lower than the expected one, such as the net cash flow created by the assets
or the operation profit (loss) achieved is much lower (higher) than the expected one.
⑦ Other indications to prove the possible assets impairment
b. As for the assets of impairment indications, its recoverable sum is estimated. The
recoverable sum is recognized as the higher one between the net of the assets fair value
less the disposal expenses, and the current value of the future cash low estimated. As
for the net of the assets fair value less the disposal expenses, and the current value of
the future cash low estimated, so far as one item is above the assets book value, there is
no occurrence of the assets impairment and need for estimation of the other item.
The net of the assets fair value less the disposal expenses is recognized on the basis of
the sales agreement price in the fair trade less the sum directly attributable to the
disposal expenses. As for the assets not in the sales agreement but in the active market,
it is recognized on the basis of its market price less the disposal expenses. The assets
market price is usually recognized on the basis of the buyer’s offering. In the case of no
sales agreement and no active assets market, and then on the basis of the best
information available, estimated is the net of the assets fair value less the disposal
expenses, which can also be estimated with the reference to the latest trade price of
similar assets in the same trade.
As for the current value of the accrued future cash flow, pursuant to the accrued future
cash flow in the continual use and the final disposal of the assets, recognized is the sum
discounted on the appropriate discounting rate. And as for the current value, should be
considered thoroughly accrued future cash flow, service life and discounting rate of the
assets.
c. The measurement result of the recoverable sum shows that as the recoverable sum of48
the assets is lower than its book value, the book value is written down into the
recoverable sum and reckoned into the current loss/gain, and the corresponding assets
impairment provision is accrued. Upon the recognition of the assets impairment loss,
the assets depreciation or dilution expenses should be adjusted correspondingly in the
future so as that the adjusted book value (net estimative remnant value deducted) is
systematically distributed in the assets remain service life. Upon the recognition of the
assets impairment loss, the loss cannot be transferred back in the future accounting
period.
d. If there is the indication to the assets impairment, the recoverable sum is estimated
on the basis of the single asset. If the recoverable sum of the single asset is impossible
to estimate, the recoverable sum of the assets group is recognized on the basis of the
assets group assets. In recognition of the assets group, the basis is whether the main
cash flow from the assets group is independent from the cash flow of other assets or
assets group; meanwhile, considered are the management methods for the production
and operation activities and decision-making methods for the assets continual use or
disposal.
(2) Staff remuneration
The staff remuneration is a variety of compensation offered for the staff supply of
service together with other relevant expenditure. The staff remuneration consists of the
staff wages, rewards, allowance & subsidy, and the social insurance expenses as that of
welfare, medical insurance, endowment insurance, unemployment insurance, job injury
and birth insurance, and the housing reserves, labor union funds & staff education funds,
non-monetary welfare and the compensation for severing the labor relations. The staff
remuneration payable is recognized as liability in the period of staff supply of service,
and reckoned into the relevant expenses or assets according to the beneficiary of the
staff service in addition to the severance of labor relations. Pursuant to relevant rules,
the insurance expenses and reserves are generally withdrawn in certain ratio and
without above the stipulated the limit, and paid to the labor and social insurance
institutions; and the corresponding expenditure is reckoned into the current production
cost or expenses.
(3) Preparation methods for consolidated financial statements
a. Recognition principles on consolidation range
The consolidation range of the consolidated financial statements is recognized on the
basis of control. The control is the right to decide the financial and operation policies of
invested units and obtain the interest from the operation activities of the invested units.
All put in the consolidation range are investment in other units accounting for above
50% (50% included) total voting assets or less than 50% yet of the control rights.
b. Accounting methods for consolidated financial statements
The consolidated financial statements are prepared upon the adjustment of long-term
stock investment in the subsidiaries, balancing out the parent company’s equity
investment and the parent company’s holding share in the subsidiaries’ owners’ equity ,
and the Company’s inside substantive transaction and inside dealing , according to rules
Corporate Accounting Principles No. 33 – Consolidated Financial Statements, based on
the financial statements of the parent company and subsidiaries included in the range,49
and according to other relevant information, and the equity law.
The minority shareholders’ equity is listed in the item of owners’ equity in consolidated
balance sheet as the “minority shareholders’ equity”. The minority shareholders’
loss/gain is listed in the item of net profit as the “minority shareholders’ return”. As for
the increase of subsidiary by the consolidation of enterprises under the same control,
put into the consolidated profit statement are the subsidiary’s income, expense and
profit from the current period-beginning of the subsidiary’s consolidation to the
Period-end. As for the increase of subsidiary by the consolidation of enterprises not
under the same control, put into the consolidated profit statement are the subsidiary’s
income, expense and profit from the purchasing day to the Period-end.
As for the disposal of the subsidiaries by the Company, put into the consolidated profit
statement are the subsidiary’s income, expense and profit from the Period-beginning to
the disposal day.
c. Accounting policies of subsidiary
Consistent with the Company’s ones are the accounting policies implemented by the
controlling subsidiary.
III. Taxes
Major taxes and tax rate applicable for the Company this year:
Tax category Tax calculation evidence Tax rate
Value added tax
17% of the taxable
sales volume deducting
current deduct-able input
tax
17%, 13%
Business tax Taxable turnover 5%
Enterprise income tax Taxable income 25%
IV. Business Combination and Consolidated Financial Statements
1. Subsidiaries
(1) Subsidiaries obtained by means of establishment or investment, etc.50
Full name Type
Registrat
ion place
Busine
ss nature
Register
ed capital
Busines
s scope
Actual
amount
subscribed
at the end
of period
Balan
ce of
other
items
actually
forming
the net
investmen
t in the
subsidiari
es
Proporti
on of shares
held (%)
Proporti
on of voting
power (%)
Consolida
ted report
statement or
not
Minor
shareholde
rs’ equity
Amou
nt for
offsetting
the gain
and loss of
minor
shareholde
rs in the
minor
shareholde
rs’ equity
Balan
ce after
that the
loss of
current
period
shared by
minor
sharehold
ers and
offset with
parent
company
owner’s
equity
exceeds
the shares
owned by
minor
sharehold
ers in the
subsidiary
at the
beginning
of period51
Hebei
Xiabanche
ng
Knitwear
Co., Ltd.
Wholly-own
ed
Chengde
Wearcloth
Manufacture
USD 4million
Manufact
ure and export
of various
knitwear
USD
4million
100% 100% No
Cheng
de Dixian
Fashion
Co., Ltd.
Wholly-own
ed
Chengde
Wearcloth
Manufacture
USD 24
million
Manufact
ure and selling
high-class
chemical
fabric fashion
and cloth
USD 24
million
100% 100% No
Cheng
de Xingye
Papermaki
ng Co.,
Ltd.
controlling Chengde
Paper
production
USD 100
million
Manufact
ure and selling
high-class
coated board
and serials of
Kraft
paperboard
USD 75
million
75% 75% Yes
RMB
13924777.
73
Cheng
de Banhe
Chemical
Simulation
Textile Co.,
Ltd.
controlling Chengde
Wearcloth
Manufacture
USD 60
million
Manufact
ure and selling
high-class
chemical
fabric fashion
and cloth
USD39
million
65% 65% No52
Gold
Axe
Investment
Group
Limited
Wholly-own
ed
Virgin Island exporting USD1.00
Liaison
of investment
and export
business
Authori
zed capital
USD 5,000,
issuing
capital
USD1.00
100% 100% Yes
Cheng
de Huaxin
Waste
Paper
Recycle
Co., ltd.
Controlling Chengde
Recycle and
processing
of wasted
paper
RMB1million
Recycle
processing and
selling of
various wasted
paper and
paper-made
products
RMB0.9
million
90% 90% Yes RMB 6.7453
Note:
25% equity of Hebei Xiabancheng Knitting Garment Co., Ltd. (hereinafter
referred to as "Xiabancheng Knitting") was held by wholly owned subsidiary of
the Company Gold Axe. Xiabancheng Knitting had declared bankruptcy on Sep
8th of 2009.
Foreign investor of Chengde Di Yin Fashion Co., Ltd. (hereinafter referred to as
"Fashion Company") Japan Yu Fat Co., Ltd. (hereinafter referred to as "Japanese
Yu-fat") and Gold Axe signed equity transfer term on Jun 25th of 2005, Japan
Yu-fat agreed to transfer 25% equity of Fashion Garment to Gold Axe, in the way
that Gold Axe offset the share transfer fees with accounts receivable over Japan
Yu-fat 50,643,321.00 yuan which previously referred to clothes accounts payable
for the Company. The Company signed transfer term about accounts receivable
with Gold Axe on Jun 25th of 2005. Accounts receivable 50,643,321.00 yuan were
transferred to Gold Axe with book value. The above equity transfer events were
approved by the board of directors of Fashion Garment. Only transfer events of
foreign investor hadn’t been approved by related department, and related change
of business process procedures have not been handled. Fashion Garment
Company had declared bankruptcy on Feb 8th of 2009.
Chengde Xingye Paper Industry Co., Ltd. (hereinafter referred to as "Xingye
Paper") was built by co-financing from the Company and Show Jubilee
International Holdings Limited of Hong Kong ("Hong Kong Jubilee Exhibition"),
and received a business license of business entity on Mar 12th of 2001. According
to joint venture agreement of both parties, the Company and Hong Kong Jubilee
Exhibition respectively invested 622,500,000.00 yuan and 207,500,000.00 yuan
which must be paid within 3 years (investing period) after joint company received
business license. Till Dec 31st of 2007, the Company and Hong Kong Jubilee
Exhibition respectively invested 622,500,000.00 yuan and 207,500,000.00 yuan to
Xingye Paper Production. Partial production lines of Xingye Paper Production
have been put into operation. Instruments value (calculated according to value of
investment agreement, having not received value confirmation of CCIB) Hong
Kong Jubilee Exhibition invested was beyond by 128,650,000.00 yuan over its
assets which should invest. On Apr 23rd of 2009, Hebei Province High People's
Court confirmed that Xingye Paper Production was fictional foreign investment
operation enterprise registered and built through previous shareholder of the
Company Wang Shuxian masqueraded the name of Hong Kong Jubilee Exhibition
via (2009) the second sentence final word of Ji Criminal No. 44 "Criminal
Ruling". Being short of capital, shareholding subsidiary of the Company Chengde
Xingye Paper Industry Co., Ltd. had totally stopped production since 2006; on
Dec 8th of 2008, Intermediate People's Court of Chengde City in Hebei Province
confirmed acceptance of bankruptcy liquidation application of Xingye Paper
Production from Chengde Yonghe Cement Co., Ltd. via (2008) Cheng Civil Break
Word No. 13 "Civil Ruling"; on Mar 11th of 2009, Intermediate People's Court of
Chengde City in Hebei Province approved settlement request of Xingye Paper
Production via (2008) Cheng Civil Break Word No. 13-2 "Civil Ruling"; on May54
10th of 2009, Intermediate People's Court of Chengde City in Hebei Province
confirmed the settlement term agreed by Xingye Paper Production and creditors
on May 8th of 2009 and stopped the settlement procedure via (2008) Cheng Civil
Break Word No. 13-3 "Civil Ruling".
Chengde Banghe Chemical Fabric Co., Ltd. (hereafter referred as Banhe Fabric)
is the joint company of the Company’s controlling subsidiary. It is registered on
29 September 2002 as a Sino-foreign operation enterprise, with the registered
capital of US$ 15 million, and the Fashion Cloth Company and the Ninhon
Yamaxita Shangji Co., Ltd. (hereafter referred as the Ninhon Yamaxita Shangji)
respective of 35% and 65% shareholding. It was approved by the Foreign Trade
Economic Cooperation Hall of Hebei Province with Ji Foreign Economy Trade
No. [2003] 37 on 24 March 2003 and increased the registered capital from US$
15 million and US$ 60 million on 7 July 2003, and in addition to the original two
parties’ increased capital and the Xitabangjion Fabric increased as the investor,
and respectively of 20% , 55%, 25% shareholding. It was approved by the
Commerce Hall of Hebei Province with Ji Foreign Economy Trade No. [2003] 37
on 31 March 2004 that the 20% shareholding in the Banghe Fabric was
transferred by the Nihon Yamaxita Shangji to the Fashion Cloth Company. After
the change, the registered capital in the Banghe remains US$ 60 million, with the
changed shareholding respectively of 40%, 35%, 25%. As ending at 31 December
2007, Banghe Fabric received the actual investment capital is RMB
394,820,975.29, with the Fashion Cloth Company’s RMB199,200,000.00 and the
Xitabangjion Fabric’s RMB114,890,975.29. All above the investment capital has
not done the capital verification procedures yet. Banghe Fabric announced to be
bankrupt on 8 February 2009.
Chengde Huaxin Wastepaper Recycling Co., Ltd. (hereafter referred as the
“Huaxin Commercial Trade Co., Ltd. of Chengde County (hereafter referred as
the “Xinye Commercial Trade”) – the Company’s controlling subsidiaries
commonly and received the business license on 17 January 2003. 90%
shareholding in the Huaxin Wastepaper is held by the Xinye Papermaking – the
Company’s controlling subsidiary. Huaxin Wastepaper has closed in 2006.
According to the Huaxin Wastepaper’s industrial and commercial information, its
minority shareholder has been changed from the Xingye Commercial Trade to the
Fashion Cloth Company. As not reporting and presenting the 2007 annual
corporate verification material, Huaxin Wastepaper has been cancelled the license
by the Administration of Industry and Commerce of Chengde Municipality on 28
April 2009.
(2) There is no obtaining of subsidiaries by the consolidation of enterprises
under the same control.
(3) Subsidiaries obtained by the consolidation of enterprises not under the same
control55
Ful
l name
of
subsidi
ary
T
ype
of
subs
idia
ry
R
egist
ered
plac
e
N
ature
of
busin
ess
Regist
ered
capital
Operat
ion scope
Actual
capital
invested
at
Period-en
d
Othe
r item
surplus
actually
composi
ng the
net
investme
nt in
subsidiar
ies
P
ropor
tion
of
share
holdi
ng
(%)
P
ropor
tion
of
vote
(%)
on
so
li
da
te
d
st
at
e
m
en
t
in
or
it
y
sh
ar
eh
ol
de
rs’
eq
ui
ty
Eatup
part
of
minorit
y
sharehol
ders’
loss in
minorit
y
sharehol
der’
equity
Balance of
the parent
shareholders’
owner’' equity
less the eat-up
part of the loss
diluted by
minority
shareholders of
the subsidiaries
in Peiod above
their equity share
at
Period-beginning
Ch
engde
Rongyi
da
Propert
y
Develo
pment
Co.,
Ltd. in
Chengd
e
County
L
imit
ed
liabi
lity
C
heng
de
City
P
ropert
y
Devel
opme
nt
RMB1
0 million
Proper
ty
developme
nt;
production
of textile
and
clothing,
import &
export of
clothing;
lease
service
RMB 1
1
00%
1
00% es
2. There is no subject for the specific purpose or the operation entity of
control rights formed by trustee operation or lease.
3. There is no incidence of consolidation of enterprises under the same
control at the Period-end.
V. Notes to the consolidated financial statements
1. Monetary funds
Amount at the end of period Amount at the beginning of period
Items
Amount
in foreign
currencies
Conversion
rate
Amount
in RMB
Amount
in foreign
currencies
Conversion
rate
Amount
in RMB
Cash: - - - - - -
RMB - - - - - -56
Bank
deposit: - - 62,865.48 - - 58,256.11
RMB - - 62,865.48 - - 58,256.11
Total - - 62,865.48 - - 58,256.11
2. Other accounts receivable
(1) Exposure of other accounts receivable by category:
Amount at the end of period Amount at the begin of period
Book balance Provision for bad debts Book balance Provision for bad debts
Category
Amount Proportion
(%)
Amount Proportion
(%)
Amount Proportion
(%)
Amount Proportion
(%)
Other
account
receivable
with single
big amount
84,366,165.76 99.96% 64,281,533.51 99.99% 84,366,165.76 99.92% 64,281,533.51 99.99%
Other
account
receivable
not with
single big
amount but
with heavy
combination
risk after
combination
by credit risk
characteristic
- - - - - - - -
Other not
important
other
accounts
receivable
36,296.27 0.04% 3,762.92 0.01% 66,085.13 0.08% 3,762.92 0.01%
Total 84,402,462.03 100.00% 64,285,296.43 100% 84,432,250.89 100.00% 64,285,296.43 100%
Note: recognized basis of single major amount of other account receivable: over
RMB 1 million.
(2) Accrual of bad debt provision of other account receivable with single major
amount or minor amount but impairment testing individually:
Content of other Book balance Amount of Accrual reasons57
account receivable bad debt proportion
Financial Office of
Xiabancheng
40,169,264.5
0
20,084,632.2
5 50%
2-3years
account age
Da Hua Paper
Industry
44,196,901.2
6
44,196,901.2
6 100%
over 3
years account
age
Total
84,366,165.7
6
64,281,533.5
1 - -
Note: other account receivable—Financial Office of Xiabancheng RMB
40,169,264.50, was the land amount for purchasing 619.81 Mu, in which 324.781
Mu have been accomplished the land-use certificated. Due to the
non-corresponding of land-use certificate and payment, all of them shall
transferred to intangible assets while finished all land-use certificated, and shall
amortized calculated based on the land-use right.
(3) There are no other account receivables in this period that have been
totally accrued of bad debt provision or have major proportion of bad debt
provision accrued but totally recover or switch-back in current period.
(4) there are no other account receivable held in shareholders with 5
%( including5%) voting rights in the period.
(5) Other account receivable with major amount mainly refers to the current
account of affiliated companies, land amount that not transferred to intangible
assts calculated temporary.
(6) Top 5 units with an amount of other account receivable:
Name
Relationship
with the company
Amount Period
Proportion
among the total
other accounts
receivable (%)
Da Hu Paper Industy
Affiliated
company 44,196,901.26
Over 3
years
52.364%
Financial Office of Xiabancheng Dominion 40,169,264.50 2-3years 47.593%
Suning Banhe Chemical Fiber
Facsimile Fabric
Affiliated
company 15,361.00
Within
1 year
0.018%
Shi Bainian Staff 14,500.00
Within
1 year
0.017%
Liu Qingmin Staff 1,557.75
Within
1 year
0.002%
Total -- 84,397,584.51 -- 99.994%
(7) Account receivable of related parties58
Name
Relationship
with the
company Amount
Proportion among the total
other accounts receivable (%)
Da Hu Paper Industy
Affiliated
company 44,196,901.26 52.36%
Suning Banhe Chemical
Fiber Facsimile Fabric
Affiliated
company 15,361.00 0.02%
Total -- 44,212,262.26 52.38%
(8) There is no securitized transaction with the object of other account
receivable in this period.
3. Inventory
Inventory classification
Amount at the end of period Amount at the beginning of period
Items
Book
balance
Depreci
ation reserve
Book
value
Book
balance
Depreci
ation reserve
Book
value
Merchan
dise
inventory - - - - - -
Raw
materials - - - - - -
Prod
ucts in
process - - - - - -
Plan
ning
develope
d
products
11,296,0
98.60
11,296,0
98.60
11,296,0
98.60
11,296,0
98.60
Tota
l
11,296,0
98.60 -
11,296,0
98.60
11,296,0
98.60 -
11,296,0
98.60
Note:
Balance of “planning developed products” refer to the land-use rights
purchased from subsidiary of the Company—Xiabancheng Knitwear, Cheng Xian
Guo Yong No.32, No.33 and No.34(2000), which has been declared bankruptcy,
and land-use rights from subsidiary of the Company – Fashion Company, Cheng
Xian Guo Yong No.173 and No.174(2000), which has been declared bankruptcy.59
The purchased land-use right accounting into book based on the bidding price, but
has not finished the transformation of property.
4. Other current assts
Items
Amount at
period-end
Amount at
period-begin
Credit purchased 1,093,527.39 1,093,527.39
Total 1,093,527.39 1,093,527.39
Note: Other current liabilities refer to the bidding credit purchased from
parent company by Rongyida Company. The book keeping value is the original
obtaining cost; including bidding price of RMB 1,197,300.00 and bidding
expense RMB 11,973.00( dealing confirmation No. Ji Sheng Pai ZiNo.1
(20090408)).
5. Investment to joint venture and affiliated companies
Inve
sted
compay
Natu
re of the
company
Re
gister
place
Le
gal
repres
entativ
e
B
usines
s
nature
Regi
ster
capital
Prop
ortion of
share
holding
(%)
Prop
ortion of
voting
rights
held (%)
Total
assts at
period-end
Total
liabilities at
period-end
Tot
al net
assts at
period-e
nd
Total
operating
income
at
period-e
nd
Net
profit at
this
period
I. Joint venture
II. Affiliated company
Suning
Banhe
Chemical
Fiber
Facsimile
Fabric
Co., Ltd
Limite
d Liability
Company
Su
ning
Hebei
Wang
Zheng
song
Manufa
cture
enterpri
se
USD
29million
20% 20%
23,456
,210.61
69,755,78
6.34
46,
299,575
.73
- -
Chengde
Beirifang
Co., Ltd
Limite
d Liability
Company
Cheng
de
Wang
Shuxia
n
Manufa
cture
enterpri
se
USD
1 million
- -
Chengde
Dahua
Paper
Industry
Co., Ltd.
Limite
d Liability
Company
Cheng
de
Shi
Bainia
n
Manufa
cture
enterpri
se
JPY6364
million
45% 45%
266,96
9,909.27
624,579.6
2
266
,345,32
9.65
- -60
The
Chengde
Dixian
Light
Track
Co., Ltd.
Limite
d Liability
Company
C
hengd
e
Wang
Huilai
Manuf
acture
enterpr
ise
USD8mil
lion
- -
Note: Suning Banhe Chemical Fiber Facsimile Fabric Co., Ltd. (hereafter referred
as the “Suning Banhe”) is set up on 7 December 2004, which is approved by the
People’s Government of Hebei Province (Provincial People’s Government
Foreign Investment Ji Chang City No. [2004] 0047), and in joint venture between
the Company and the Nehon Yamaxita Sangji, and received the Corporate
Consolidation Ji Chang No. 130900100274 business license. It is of US$ 29
million registered capital, with the Company’s investment capital of US$ 5.8
million accounting for 20% of the total. Among that, the Company’s monetary
investment is RMB 7,251,417.00, namely US$ 895,236.67; Nihon Niuseiken
Dayiben Kayisa paid for the foreign equipment disassembly fees, installation fees
and transportation fees totaled JPY 521,007,225.00, namely US$ 4,904,763.00, as
its investment capital. Nihon Yamaxita Sangji invested US$ 2.32 million in the
form of equipment supply, accounting for 80% of the total. The manufacture of
the equipment leased from the Chengde Banhe by the Suning Banhe started in
2006.
Chengde Beirifang Co., Ltd. (hereafter referred as the “Beirifang”) is a
Sino-foreign joint venture enterprise by the common investment of the Company,
Japanese Keta Nihon Honki Co., Ltd. (hereafter referred as the “Beiriben Fabric”)
and the Nihohan Yusets, and received the business license on 13 December 2002.
The Company held 50% stock in the ‘Beirifang”. As ending at 31 December 2005,
the Company has not invested actually yet, and the “Beirifang” has closed and the
business license was cancelled by the Administration of Commerce and Industry
of Chengde Municipality on 27 March 2008.
Chengde Dahua Paper Industry Co., Ltd. (hereafter referred as the “Dahua
Paper”), with the former name as Chengde Rizhi Co., Ltd., was approved by the
Chengde Commerce Bureau Chengde City Commerce Foreign Investment No.
[2004] 8. It was set up by the Company and Japanese Sexi Co., Ltd. It is of
registered capital US$ 5 million, with the Company’s investment capital of US$
2.25 million accounting for 45% of the total. The investment total of the joint
venture increased from US$ 5 milion to JPY 11 billion, with the registered total
from US$ 5 million to JPY 6.364 billion, and the Company’s investment capital
from US$ 2.25 million to JPY2.864 billion accounting for 45% of the total. On 24
June 2005, the Rebenzhizzhi singed the stock transfer contract with the Japanese
Xinseki Trade Co., Ltd. (hereafter referred as the Japanese Xinseki), and the
Ribenzhizhi transferred 55% stock to the Japanese Xinseki. The above events
were approved by the Hebei Provincial Commerce Bureau Ji Commerce Foreign
Investment No. [2005] 70. On 29 June 2005, the Company signed the transfer
agreement with the Xingye Papermaking with the transfer of 45% shareholding61
from the former one to the latter one. As ending at 31 December 2007, the
actually received investment capital by the Dahua has been RMB 266,280,320.00,
and all of the above invested-in capital has all done capital verification; and the
changes in shareholders has not finished yet. As not reporting and presenting
information of the corporate annual verification in 2007, the business license of
the Dahua Paper Making was cancelled by the Administration of Industry and
Commerce of Chengde Municipality on 28 April 2009.
The Chengde Dixian Light Track Co., Ltd. (hereafter referred as the “Light Track
Company’) was approved by the Economy and Trade Ji Cheng , and start-up by
on 27 the Company and the Nihon Xinseki commonly, and received the license
Corporate Consolidation Ji Cheng No. 000272 on 8 April 2003. It is of registered
capital of US$ 8 million, the total invested capital of US$ 17.8 million, the
Company’s taxable registered capital of US$ 6 million accounting for 75% of the
total. As ending at 31 July 2007, the Company had not invested actually; and the
Light Track had not start formally the operation and been cancelled the license by
the Administration of Industry and Commerce of Chengde Municipality on 27
March 2008.
6. Long-term equity investment62
Invested
company
Calculation
method
Initial
investment cost
Balance at
period-begin
Change of
increase/decrease
Balance at
period-end
Proportion
of share
held (%)
Proportion
of voting
right held
(%)
explanation of
non-coincidence
between the
proportion of
share held and
proportion of
voting held
Provision of
depreciation
Accrual
provision
n in this
period
Cash
bonus
in
this
period
I. Investment for affiliated companies、
Suning
Banhe Cost
46,980,000.00 46,980,000.00 46,980,000.00 20% 20% 46,980,000.00 - -
Da Hua Paper
Industry Equity
206,215,729.65 206,215,729.65 206,215,729.65 45% 45% 204,000,000.00 -
Subtotal 253,195,729.65 253,195,729.65 - 253,195,729.65 250,980,000.00 -
Fashion
Company
Cost 200,051,551.11 200,051,551.11 - 200,051,551.11 100% 0%
Declare
Bankruptcy
200,051,551.11 -
Xiabancheng
Knitting
Cost 441,303,759.82 441,303,759.82 - 441,303,759.82 100% 0%
Declare
Bankruptcy
441,303,759.82 -
Subtotal 641,355,310.93 641,355,310.93 - 641,355,310.93 641,355,310.93 -
Total 894,551,040.58 894,551,040.58 - 894,551,040.58 892,335,310.93 -63
7. Fixed assts
(1) Particular about fixed assts
Items
Book balance
at period-begin
Increase
in this period
Decrease
in this period
Book balance
at period-end
I. Total original
book value: 87,601,850.85 - - 87,601,850.85
Including: House
and buildings 76,629,147.41 - - 76,629,147.41
Machinery
equipment -
-
- 0.00
Transportation
instrument 10,802,089.94 - - 10,802,089.94
Other equipment 170,613.50 - - 170,613.50
II.Total
accumulated
depreciation: 20,960,320.52
1,012,267.18 - 21,972,587.70
Including: House
and buildings 12,677,788.63
814,655.51 - 13,492,444.14
Machinery
equipment - - - 0.00
Transportation
instrument 8,226,664.43
197,611.67 - 8,424,276.10
Other equipment 55,867.46
- - 55,867.46
III. Total net book
value of fixed
assets 66,641,530.33
-1,012,267.18 - 65,629,263.15
Including: House
and buildings 63,951,358.78
-814,655.51 - 63,136,703.27
Machinery
equipment - - - 0.00
Transportation
instrument 2,575,425.51
-197,611.67 - 2,377,813.84
Other equipment 114,746.04
- - 114,746.04
IV. Total of
depreciation
provision 35,361,563.01 - - 35,361,563.01
Including: House
and buildings 33,129,463.59 - - 33,129,463.59
Machinery
equipment - - - 0.00
Transportation
instrument 2,117,353.38 - - 2,117,353.38
Other equipment 114,746.04 - - 114,746.04
V. Total book
value of fixed
assts 31,279,967.32
-1,012,267.18 - 30,267,700.14
Including: House
and buildings 30,821,895.19
-814,655.51 - 30,007,239.68
Machinery
equipment - - - 0.0064
Transportation
instrument 458,072.13
-197,611.67 - 260,460.46
Other equipment -
- - -
(2) No fixed assets rent by means of financing lease in this year.
(3) No fixed assets held for sale at the end of year.
8. Projects under construction
(1) Particular about projects under construction
Amount at period-end Amount at period-begin
Items
Book balance
Depreciation
provision
Net value of
book
Book balance
Depreciation
provision
Net value of
book
Paper-making
projects
255,286,903.30 246,724,222.04 8,562,681.26 255,286,903.30 246,724,222.04 8,562,681.26
Thermal
power plant
4,321,118.74 - 4,321,118.74 4,321,118.74 - 4,321,118.74
Total 259,608,022.04 246,724,222.04 12,883,800.00 259,608,022.04 246,724,222.04 12,883,800.00
(2) Provision of project under construction
Items
Amount at
period-end
Increased
in this period
Decreased
in this period
Amount at
period-begin
Accrual
reasons
Paper-making
projects
246,724,222.04
- -
246,724,222.04 --
Total
246,724,222.04
- -
246,724,222.04 --
Note: due to the shortage of capital and influence of smuggling affairs, the
Company’s construction still in suspended, the equipment idle for a long time
which has not reached the use status, results in a rot on the equipment with
majority parts and losses its use value. The Company judged that the above
mention items have a low value of using and accrued relevant provision.
9. Intangible assts
Particular about intangible assts:
Items
Book balance at
period-begin
Increased in
this period
Decreased
in this period
Book balance at
period-end
I. Total original
book value 31,075,075.63 - - 31,075,075.63
Land-use right 31,075,075.63 - - 31,075,075.63
II.total
accumulated
amortized 5,629,793.42 310,750.74 - 5,940,544.16
Land-use right 5,629,793.42 310,750.74 - 5,940,544.16
III. Total net 25,445,282.21 -310,750.74 - 25,134,531.4765
book value of
intangible assts
Land-use right 25,445,282.21 -310,750.74 - 25,134,531.47
IV. Total
depreciation
provision - - - -
Land-use right - - - -
V. Total book
value of
intangible assts 25,445,282.21 -310,750.74 - 25,134,531.47
Land-use right 25,445,282.21 -310,750.74 - 25,134,531.47
10. Deferred income tax assts
Particular about deferred income tax assts
Items Amount at period-end Amount at period-begin
Deferred income tax assets:
Depreciation provision of assets 2,008,501.45 2,008,501.45
Subtotal 2,008,501.45 2,008,501.45
11. Details of depreciation provision of assets
Decrease this period
Items
Book balance
at period-begin
Increa
se this
period
Switch-ba
ck
Charge-o
ff
Book balance
at period-end
I. Bad debit
provision 64,285,296.43 64,285,296.43
II.
Impairmen
t provision
for
long-term
equity
investment
892,335,310.9
3
892,335,310.9
3
III.
Impairmen
t provision
for fixed
assets 35,246,816.97 35,246,816.97
IV.
Impairmen
t provision
for
constructio
n in
progress
246,724,222.0
4
246,724,222.0
4
Total
1,238,591,646.
37
1,238,591,646.
37
12. Other non-current assets
Items Amount at period-end Amount at period-begin
House and buildings 36,821,474.54 36,821,474.5466
Transportation instrument 21,181.31 21,181.31
Electronic equipment 38,320.79 38,320.79
Land-use right 40,019,829.77 40,019,829.77
Total 76,900,806.41 76,900,806.41
Note:
① Other non-current assets refers to the bidding assets from parent
company and subsidiaries that have been declared bankruptcy by Rongyida
Company. Among which the cost of bidding assets of parent company was
RMB18, 620,966.00(including RMB 184,366.00 bidding expense), cost of credit
mortgage from Shanghai Pudong Developmetn Bank Tianjing Branch was RMB
14,300,000.00, and cost of bankruptcy assets from Xiabancheng Knitwear was
5,730,560.16(including RMB 183,142.18 bidding expense) and cost of
bankruptcy assets from Banhe Textile was RMB 19,751,920.00(obtained from
assets transfer).
②Other non-current assets including house, buildings and transportation
instruments. The land-used right has not dealing with the property transfer
procedure.
13. Short-term loans
(1) Classification of short-term loans
Items Amount at period-end Amount at period-begin
Pledge loans
Mortgage loans
Warranty loans
Credit loans 5,422,261.91 5,422,261.91
Warranty and mortgage loans
Total 5,422,261.91 5,422,261.91
14. Accounts payable
(1) particular about accounts payable
Amount at period-end Amount at period-begin
Age
Amount
Proportion in
total amount
Amount
Proportion
in total amount
Within 1 year - - - -
1-2 years 1,629.97 0.71% 1,629.97 0.71%
2-3 years 51,223.05 22.17% 51,223.05 22.17%
Over 3 years 178,222.80 77.12% 178,222.80 77.12%
Total 231,075.82 100.00% 231,075.82 100.00%
(2) There is no such amount in period-end belongs to shareholders or related
parties who hold 5% or more than 5% voting rights.
(3) There are no major account payables with more than 1 year in the report67
period.
15. Employee salaries payable
Items Amount in
period-begin
Increases Decreases Amount in period-end
I. Wages, bonuses,
allowances and
subsidies
120,000.00 21,000.00 - 141,000.00
II. Social insurances 6,097,486.60 - - 6,097,486.60
III. Welfare of
resignation
- - - -
Total 6,217,486.60 21,000.00 - 6,238,486.60
Note: social insurances refer to the under-payment social insurance from
1999 to 2007 accrual in 2007 from Xingye Paper-making—subsidiary of the
Company. This item is not confirmed from the social insurance department.
16. Taxes payable
Items Amount in period-end Amount in period-begin
Value added tax -63,059.32 -46,893.39
Business tax - -
Enterprise income tax - -
Housing property tax 1,433,460.57 952,985.22
Individual income tax 12,176.28 12,176.28
Land-use tax 6,557,574.85 4,340,876.20
Others - -
Total 7,940,152.38 5,259,144.31
17. Other payables
(1) Particular about other payables
Amount in period-end Amount in period-begin
Aging
Amount Rate in total Amount Rate in total
Within
1 year
189,475,246.91 98.03% 188,705,699.51 98.02%
1 to 2
years
2,178,419.79 1.13% 2,178,419.79 1.13%
2 to 3
years
- - - -
Over 3
years
1,626,137.44 0.84% 1,626,137.44 0.85%
Total 193,279,804.14 100.00% 192,510,256.74 100.00%
Note: In the balance at period-end, loan balance from nature person
amounting to RMB44, 000,000.00.
(2) Particulars about other account payables belong to shareholders or related
parties who hold 5% or more than 5% voting rights.
Name Amount in period-end Amount in period-begin68
Da Hua Paper Industry 1,177,216.37 1,177,216.37
Total 1,177,216.37 1,177,216.37
(3) Other account payable with major amounts
Name Amount in period-end Natural Aging
Office of Chengde Removal
Leading Team 57,504,370.00 Loans Within I year
Bankruptcy manager of
Fashion Company 26,410,000.00 Loans Within I year
Li Yan 22,590,000.00 Loans Within I year
Bankruptcy manager of
Banhe Fabric 19,750,000.00 Loans Within I year
Financial Bureau of
Chengde County 17,349,983.30 Loans Within I year
Shanghai Mining and
Power Co., Ltd. 12,000,000.00 Loans Within I year
Bankruptcy manager of
Xiabancheng Knitting 8,760,000.00 Loans Within I year
Li Tianhong 8,000,000.00 Loans Within I year
Zhang Xiaoming 6,500,000.00 Loans Within I year
Chen Liping 5,000,000.00 Loans Within I year
High People’s Court of
Hebei Province 2,118,395.79
Penalty 1-2years
Da Hua Paper Industry 1,177,216.37
Current
account
Over 3years
Tan Liang 1,000,000.00 Loans Within I year
Qian Zhenlin 910,000.00 Loans Within I year
18. Special account payable
Item
Amount in
period-begin
Increase
this period
Decrease
this period
Amount in
period-end Notes
Environment
subsidy 10,500,000.00 10,500,000.00
Financial
Bureau of
Chengde
County 98,000.03 98,000.03
Total 10,598,000.03 10,598,000.03
Note: Environment subsidy of RMB10, 500,000.00 was the gratuitous subsidy
fund received from the Financial Bureau of Chengde County.
19. Share capital
Change of increase/decrease(+,-)
Amount at
period-begin
Newly
issued
shares
Bonus
shares
Shares
from
public
reserve
Other Subtotal
Amount at
period-end69
Total
shares 706,320,000.00 706,320,000.00
Note: after increasing the capital, the register capital was RMB38,
600,000.00, which has been verified by the verification report of PWH Yan Zi
No. 149(2003) issued by Price Water House Coopers Co., Ltd. In July 2004,
according to the approval of No.101[2004] issued by CSRC, the Company
oriented increase capital with issuing B-shares of 150,000,000 shares including
91,300,000 shares with HKD, and 58,700,000 shares with RMB. According to
the resolution of General Meeting of Shareholders’ on 8 June 2006, the
Company distributed bonus of 117,720,000 shares to all shareholders with the
ratio of every 2 shares for each 10 shares. After distribution, the register capital
amounting to RMB 706,320,000. The above mentioned event have been verified
by the verification report of No.10009 [2010] issued from Zhonglei CPA Co.,
Ltd.
20. Capital reserve
Item
Amount at
period-begin
Increase
this period
Decrease
this period
Amount at
period-end
Share premium 391,996,587.96 391,996,587.96
Provision of equity
investment 1,399,556.41 1,399,556.41
Other capital surplus 2,575,000.00 2,575,000.00
Total 395,971,144.37 395,971,144.37
21. Surplus reserve
Item
Amount at
period-begin
Increase
this period
Decrease
this period Amount at period-end
Mandatory surplus
reserve fund 76,791,550.17 76,791,550.17
Total 76,791,550.17 76,791,550.17
22. Retained profit
Item Amount
Proportion of
withdrawal or
distribution
Retained profit at last year-end before adjustment -1,230,421,633.22 --
Add: Total net profit attributable to parent company -4,314,900.49 --
Retained profit at period-end -1,234,736,533.71 --
23. Administrative expenses
Item Current period Last period
Staff salaries 172,800.00 891,086.00
Material consumption 9,398.50 54,702.00
Depreciation expense and 1,012,267.18 1,201,468.4170
production suspend loss
Service fee for agent 520,000.00 500,000.00
Tax 2,697,174.00 -
Amortization of intangible
assets 310,750.74 424,440.50
Others 43,854.06 48,161.17
Total 4,766,244.48 3,119,858.08
24. Financial expense
Category Current period Last period
Interest expense - -
Less: interest income 9.37 -
Others 1,120.00 15,297.12
Total 1,110.63 15,297.12
25. Non-operating income
Item Current period Last period
Restructuring benefits - 759,561,973.45
Others -4,448.77
Total -4,448.77 759,561,973.45
26. Non-operating expenses
Item Current period Last period
Total losses on disposal of non-current
assets -
513,192,270.51
Including: 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
Debt restructuring losses -
58,972,608.47
Expenses for fines -
29,467,458.25
Others 47,949.00 -
Total 47,949.00
601,632,337.23
27. Calculation about basic earnings per share and diluted earnings per
shares
Current period Last period
Net profit attributable to common
shareholders of the Company P0 -4,314,900.49 128,452,903.7271
Impact on potential common shares
diluted
Total shares at year-begin S0 706,320,000.00 706,320,000.00
Amount of shares increase from
public reserve or dividend
distribution S1
Amount of shares increase from
newly issued shares or liabilities
etc. Si
Amount of shares decrease from
repurchase in period Sj
Amount of decrease shares in period Sk
Amount of month in period M0
Amount of increased share months
from next month to year-end of
report period Mi 12 12
Amount of decrease share months
from next month to year-end of
report period Mj
Total share at year-end 706,320,000.00 706,320,000.00
Amount of common shares increased
by warrants, stock option and
transfer bonds Sl
Amount of month in period M0 12 12
Amount of increased share months
from next month to year-end of
report period Mk
Weighted average amount of
common shares increased by
warrants, stock option and transfer
bonds =Sl×Mk÷M0
Weighted average amount of external
issued common shares S=S0＋S1＋
Si×Mi÷M0－Sj×Mj÷M0－Sk S 706,320,000.00 706,320,000.00
Basic earnings per share =P0÷S - 0.01 0.18
Diluted earnings per share =(P0+
Impact on potential common shares
diluted)/(S+ Weighted average
amount of common shares increased
by warrants, stock option and
transfer bonds) - 0.01 0.18
28. No other consolidated income occurred in this period.
29. Notes to items of cash flows statement
(1) Other cash received from operating activities
Items Amount
Current account 1,209,994.13
Interest income 9.37
Total 1,210,003.50
(2) Other cash paid to operating-related activities72
Items Amount
Material consumption 9,398.50
Fee to agents 520,000.00
Others 43,854.06
Current account 480,341.57
Total 1,053,594.13
(3) There are no Cash received arising from other investment activities in
period.
(4) There are no Cash payables to other investment activities in period.
(5) There are no Cash received arising from other financing activities in
period.
(6) There are no Cash payables to other financing activities in period.
30. Supplemental Information for Cash Flow Statement
(1) 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 -4,819,752.88
128,452,903.72
Add: Impairment provision for assets -
215,783,493.69
Depreciation of fixed assets, consumption &
depreciation of fuel and gas, depreciation of production
materials 1,012,267.18
1,120,982.86
Amortization for intangible assets 310,750.74
505,926.05
Amortization for long-term prepayment -
2,009,612.55
Loss on disposal of fixed assets, intangible assets
and others long-term assets(Income is listed with “-“) -
68,908,616.51
Loss upon rejection of fixed assets(Income is listed
with “-“) - -
Loss on variance of fair value (Income is listed with
“-“) - -
Finance cost (Income is listed with “-“) -
13,510.00
Loss in investment(Income is listed with “-“) -
-
189,441,916.39
Decrease of deferred tax assets(Increase is listed
with “-“) - -
Liability increase of deferred tax(Decrease is listed
with “-“) - -
Decrease of inventories(Increase is listed with “-“) - -
Decrease of operating receivable account
items(Increase is listed with “-“) 29,788.86
94,220,365.48
Increase of operating payable account items
(Decrease is listed with “-“) 3,471,555.47
-
321,338,354.99
Others - -
Net cash flow from operating activities 4,609.37
235,139.4873
2. Significant investing and financing activities for
non cash items:
Liabilities capitalized - -
Convertible bonds payable mature in one year - -
Financing leased fixed assets - -
3. Net increase (decrease) for cash and cash
equivalents:
Ending balance for cash 62,865.48 663,387.21
Less: beginning balance for cash 58,256.11 447,257.73
Add: ending balance for cash equivalents - -
Less: beginning balance for cash equivalents - -
Net increase in cash and cash equivalents 4,609.37 216,129.48
(2) Constitution of cash and cash equivalent （
Item Current period Last period
I. Cash 62,865.48 58,256.11
Including: Inventory cash
Bank deposit payable at any time 62,865.48 58,256.11
Other monetary fund payable at any time
Account in central bank payable at any time
Account in interbank
Lending of interbank
II. cash equivalent
Including: Bond investment due within 3 months
III. Balance of cash and cash equivalent at period-end 62,865.48 58,256.11
31. Notes to items in Change of Owners’ Equity
There only has the change of owners’ equity from net profit, see No. 22 in
Note V
VI. Accounting treatment on assts securitization
There is no business of assets securitization in the year.
VII. Related parties and related transaction
1. Parent company of the Company
The Company has no directly controlling parent company. The related parties
with controlling relationship of the Company refer to Mr. Chen Rong
–controlling shareholder, who held 29.49% equity of the Company.
2. Subsidiaries of the Company
Na
me
Nature
of the
subsidiaries
Type
of
subsidiari
es
Re
gister
place
Lega
l
represent
ative
Busin
ess nature
Re
gister
capital
Pro
portion
of share
held (%)
Pro
portion
of voting
right held
(%)
Orga
nization
code74
Hebei
Xiaban
cheng
Knitwe
ar Co.,
Ltd.
Wholl
y-owned
Li
mited
liability
compan
y
Chengd
e
Wang
Suxian
Fashion
manufactu
re
USD 4
million
100
%
100
%
6012
6026-2
Chengd
e
Dician
Fashion
Co.,
Ltd.
Wholl
y-owned
Li
mited
liability
compan
y
Chengd
e
Wang
Suxian
Fashi
on
manufactu
re
USD 24
Million
100
%
100
%
6012
6040-6
Chengd
e Xinye
Paperm
aking
Co.,
Ltd.
Contro
lling
Li
mited
liability
compan
y
Chengd
e
Wang
Suxian
Paper
manufactu
re
USD
100
million
75% 75%
6012
5211-5
Chengd
e Banhe
Chemic
al
Simulat
ion
Textile
Co.,
Ltd.
Contro
lling
Li
mited
liability
compan
y
Chengd
e
Shanxia
Huisi
Fashion
manufactu
re
USD 60
million
65% 65%
7434
1034-2
Gold
Axe
Investm
ent
Group
Limited
Wholl
y-owned
Li
mited
liability
compan
y
Virgin
Island
expor
ting
USD1.0
0
100
%
100
%
Chengd
e
Xinhua
Recycle
Co.,
Ltd.
Contro
lling
Li
mited
liability
compan
y
Chengd
e
Xu
Sulian
recycle
and
process of
wasted
paper
RMB 1
million
90% 90%
7454
4580-5
Chengd
e
Rongyi
da Real
Estate
Develo
pmetn
Co.,
Wholl
y-owned
Li
mited
liability
compan
y
Chengd
e
Che
n Rong
devel
opment of
real estate
R
MB 10
million
100
%
100
%
6843
4235-075
3. Particular about joint venture and affiliated company
Invested
company
Type of
companies
Register
place
Legal
representatives
Company
nature
Register
capital
Proportion
of share
held (%)
Proportion
of voting
held (%)
Total asset at
period-end
total
liabilities
at period-end
total net asst
at period-end
total
operating
income
this
peiod
net
profit
this
period
related
relationship
Organization
code
I.
Affiliated
enterprise
II.ffiliated
enterprise
Suning Banhe
Simulation
Textile C.,
Ltd.
Limited
Liability
Company
Suning
Hebei
Wang Zhengsong Manufacture
USD 29
million
20% 20% 23,456,210.61 69,755,786.34 46,299,575.73 - - Affiliated
Chengde
Beirifang Co.,
Ltd.
Limited
Liability
Company
Chengde Wang Suxian Manufacture
USD 1
million
- - Affiliated
Chengde
Dahua paper
Industry
Co., ltd.
Limited
Liability
Company
Chengde Shi Bainian Manufacture
JPY6364
million
45% 45% 266,969,909.27 624,579.62 266,345,329.65 - - Affiliated 76033882-1
Chengde
Light Rail
Co.,ｌｔｄ．
Limited
Liability
Company
Chengde Wang Huilai Manufacture
USD 8
million
- - Affiliated76
4. Other related parties of the Company
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. Joint Company with 50% of equity
Dahua Paper Industry 45% of equity participation
Suning Banhe 20% of equity participation
5. Transactions of related parties
（1） related leasing
Subsidiary of the Company—Banhe Fabric, rented 215 equipment to Suning
Banhe without the leasing agreement. The Suning Banhe suspended operating due
to the smuggling and has not paid the rent yet.
6. Account of receivable and payable fro related parties
Item Related party Amount at period-end Amount at period-begin
Other account
receivable Suning Banhe 15,361.00 13,312.00
Other account
receivable
Dahua Paper
Industry 44,196,901.26 44,196,901.26
Other account
payable
Dahua Paper
Industry 1,177,216.37 1,177,216.3777
VIII. Shares paid
There are no shares paid in this period.
IX. Contingency
There are no contingency in the Company.
X. Commitments
As at the end of 30 December 2010, there exist capital commitments that
have been signed but no need to present in the financial statement:
Items Amount at period-end Amount at period-begin
Invested in joint-share
enterprise—Da Hua Paper Industry
--- ---
Invested in controlling
enterprise—Banhe Fabric
8,439,024.71 8,439,024.71
Invested in Joint venture-- － Beiri
Textile
4,035,100.00 4,035,100.00
Invested in controlling
enterprise—Light Rail Company
48,421,200.00 48,421,200.00
Total 60,895,324.71 60,895,324.71
The Company and Nippon Paper Industries Co., Ltd built a joint venture Japan
Paper Co., Ltd. with registration capital USD 5 million. According to Articles of
Association of Chengde Japan Paper Co., Ltd. and Hebei Foreign Commerce
[2004] 41 of Hebei Provincial Commerce Department which was Reply for Total
Increased Investment of Chengde Day Paper Co., Ltd. and Registration Capital,
the registration capital increased from USD 5 million to Yen 6.364 billion, and the
capital invested by the Company increased from USD 2.25 million which took
45% of registration capital. On Jun 24th of 2005, Japan Paper’s shareholder
Nippon Paper and Japan New Age signed equity transferring contract, and then
Nippon Paper transferred holding 55% equity of Japan Paper to Japan New Age.
The above matter of equity changes was approved by Hebei Foreign Commerce
[2005] 70 of Hebei Provincial Commerce Department which was Reply for
Agreeing Chengde Japan Paper Co., Ltd to Transfer Equity and Change the Name
of Company, at the same time approved Nippon Paper to change its name to
Chende Dahua Paper Co., Ltd. On Jun 29th of 2005, the Company and Xingye
Paper Production signed contract of equity transferring, the Company transferred
45% equity of Dahua Paper to Xingye Paper Production, the change of business
process is still being handled. Till Dec 31st of 2006, Xingye Paper Production had
actually invested 206,215,729.65 yuan. As 2007 annual inspection materials of
enterprise was not delivered, the business license of Dahua Paper was revoked by
Chengde Industry and Commerce Administration on Apr 28th of 2009.
Since the establishment of Beiri Textile and Light Rail Company, the Company
has no real investment, and revoking business license by Industrial and
Commerce Bureau of Chengde on 27 March 2008.
XI. Item after date of balance sheet78
There exist no items after date of balance sheet for disclosure.
XII. Other significant event s
1、 China Southern Securities Co., Ltd. (hereinafter referred to as "China
Southern Securities") and its subsidiary China Southern Securities (Hong Kong)
Limited held 108.84 million shares of the Company previously. On Jun of 2009,
China Southern Securities Bankruptcy Liquidation Group and Chengde municipal
government signed related agreement. After creditor chairman commission of
southern security approved and Shenzhen Intermediate People's Court ruled and
granted, Southern Securities Bankruptcy Liquidation Group transferred 108.84
million shares to Chengde People’s Government with HKD 76,188,000. The
Government accepted shares aiming at rescuing and promoting restructure of the
Company. According to national policy, Chengde People’s Government couldn’t
hold shares directly as the first level government. While currently domestic
institution can’t hold share B, so the Government entrusted Li Yuntian, Qian
Zhenlin, Chen Yan, Xu Jiang, Zhou Haihong, the 5 natural persons, to hold them
instead.
2 、On Jan 4th of 2008, Hebei Province Shijiazhuang Municipal People's
Procuratorate made a proceeding to the Shijiazhuang People's Court. The
indictment believed that: accused unit Chengde Di Yin Knitting & Textile Co.,
Ltd. in order to escape customer supervisory and evaded tax payable utilized
national policy of free duties for imported instruments of foreign investment
projects, built “Chengde Banhe”, ”Dixian Light Rail”, ”Xingye Paper
Production”, ”Fashion Garment Company”, ”Suning Meihua”, ”Suning Puhua”
and ”Suning Leiyi” 7 fictional foreign investment operation enterprises, cheated
and got documents for free duties for imported instruments, made false of general
trade import goods to import instruments of foreign investment projects, evaded
tax payable 68,734,451.21 yuan. His behavior has violated the "PRC Criminal
Law" the second paragraph of Article 53; it should be investigated for criminal
responsibility of smuggling ordinary goods.
On Feb 25TH OF 2009, Shijiazhuang Intermediate People's Court ruled smuggling
ordinary goods crime of accused unit Chengde Di Yin Knitting & Textile Co., Ltd.
with fine RMB 68,734,451.21 via (2008) Shi Criminal Early word the 48th
criminal judgment; Involved smuggling goods were confiscated and turned over
to state treasury. Within the statutory time limit, Wang Shuxian appealed. On Apr
23rd of 2009, Hebei Province High People's Court ruled: Dismiss the appeal and
uphold the original verdict via (2009) Ji Criminal the second Final Word No. 44
"Criminal Ruling". The ruling is the final verdict.
XIII. Notes to Parent Company’s financial statement
1. other account receivable
(1) Other account receivable classified according to categories:
Amount at period-end Amount at period-begin
Book balance Bad debt provision Book balance category Bad debt provision
Amount Proportion
%)
Amount Proportion
%)
Amount Proportion
%)
Amount Proportion
%)
other
account
receivable
64,521,111.50 99.94% 20,084,632.25 99.98% 64,521,111.50 99.90% 20,084,632.25 99.98%79
with single
major
amount
Other
account
receivable
with single
minor
amount but
with risk
after
combination
- - - - - - - -
other
account
receivable
with minor
significant
36,296.27 0.06% 3,762.92 0.02% 66,085.13 0.10% 3,762.92 0.02%
Total 64,557,407.77 100% 20,088,395.17 100.00% 64,587,196.63 100.00% 20,088,395.17 100.00%
Note: recognition of other account receivable of the single major amount:
over RMB 1 million.
(2) Bad debt provision for other account receivable with single major amount
or single minor amount but exercising impairment testing individually at
period-end:
Other account
receivable
Balance at
book
Amount of
Bad debt
Accrual
proportion reasons
Financial Office of
Xiabancheng
40,169,264.5
0
20,084,632.2
5 50%
With account
age of 2-3
years
Total
40,169,264.5
0
20,084,632.2
5 - -
(3) There is no bad debt provision that totally accrued in pre-period or with
major accrual proportion in this period, but recovered and switch-back totally in
this period.
(4) There are no other account receivables held in the shareholders with 5
%( Including 5%) voting rights held in the report period.
(5) Other account receivable with major amounts mainly is the land amount
that has not been transferred into intangible assets temporary.
(6) Top 5 in other account receivable
Name
Relationship to
the Company
Amount Term
Proportion
in total other
account
receivable (%)
Financial Office of
Xiabancheng Dominion 40,169,264.50 2-3years 62.223%
Rongyida Company Subsidiary 24,351,847.00
Within
1year 37.721%
Suning Banhe Simulation
Textile Co., Ltd.
Affiliated
company 15,361.00
Within
1year 0.024%
Shi Bainian Staff 14,500.00
Within
1year 0.022%
Liu Qingmin Staff 1,557.75
Within
1year 0.002%
Total -- 64,552,530.25 -- 99.98%80
(7) Other related account receivable
Name
Relationship
to the Company
Amount Term
Suning Banhe
Simulation Textile Co.,
Ltd.
Affiliated
company 15,361.00 0.02%
Rongyida Company Subsidiary 24,351,847.00 37.72%
Total -- 24,367,208.00 37.74%
(8) There is no securitized transaction base on the object of other account
receivable in this period.81
2. Long-term equity investment
Invested
Calculation
method
Initial
investment cost
Balance at
period-begin
Change
(=,-)
Balance at
period-end
Proportion
of share
held (%)
Proportion
of voting
held (%)
explanation on
un-coincidence
between
proportion of
share held and
proportion of
voting held
Provision
Accrual
provision
Cash
dividend
I. Investment to affiliated companies
Suning
Banhe
cost
46,980,000.00
46,980,000.00
-
46,980,000.00 20%
46,980,000.00
-
-
Subtotal
46,980,000.00
46,980,000.00
-
46,980,000.00
46,980,000.00
-
-
II. Investment to subsidiaries
Fashion
Company
cost
149,408,230.11 149,408,230.11 - 149,408,230.11 75% 0%
Declare
bankruptcy
149,408,230.11
-
Xiabancheng
Knitwear
cost
431,604,203.41 431,604,203.41 - 431,604,203.41 75% 0%
Declare
bankruptcy
431,604,203.41
-
Xingye
Papermaking
cost
622,500,000.00 622,500,000.00 - 622,500,000.00 75% 75%
Rongyida
Company
cost
1.00 - 1.00 1.00 100% 100%
Gold
Axe(Oversea
company
cost
8,300,000.00 8,300,000.00 - 8,300,000.00 100% 100%
Subtotal 1.00 -82
1,211,812,434.52 1,211,812,433.52 1,211,812,434.52 581,012,433.52
Total
1,258,792,434.52
1,258,792,433.52
1.00
1,258,792,434.52
627,992,433.52
-83
3. Supplementary information of cash flow statement
Supplemental information Current period Last period
1. Adjustments to reconcile net income to net cash provided by operating activities:
Net profit -730,482.33 -547,393,022.54
Add: Impairment provision for assets 581,012,433.52
Depreciation of fixed assets, consumption & depreciation of fuel and gas, depreciation
of production materials
Amortization for intangible assets
Amortization for long-term prepayment 2,009,612.55
Loss on disposal of fixed assets, intangible assets and others long-term assets(Income is
listed with “-“) 9,579,964.22
Loss upon rejection of fixed assets(Income is listed with “-“)
Loss on variance of fair value (Income is listed with “-“)
Finance cost (Income is listed with “-“) 13,510.00
Loss in investment(Income is listed with “-“)
Decrease of deferred tax assets(Increase is listed with “-“)
Liability increase of deferred tax(Decrease is listed with “-“)
Decrease of inventories(Increase is listed with “-“)
Decrease of operating receivable account items(Increase is listed with “-“) 29,788.86 523,283,022.62
Increase of operating payable account items (Decrease is listed with “-“) 705,293.47 - 568,231,619.05
Others
Net cash flow from operating activities 4,600.00 273,901.32
2. Significant investing and financing activities for non cash items:84
Liabilities capitalized
Convertible bonds payable mature in one year
Financing leased fixed assets
3. Net increase (decrease) for cash and cash equivalents:
Ending balance for cash 21,500.44 620,576.72
Less: beginning balance for cash 16,900.44 365,685.40
Add: ending balance for cash equivalents
Less: beginning balance for cash equivalents
Net increase in cash and cash equivalents 4,600.00 254,891.3285
4. There is no anti-direction purchase in the period-end
XIV. Supplementary information
1. Details of current non-recurring gains and losses
Items Amount
Disposal gains and losses of non-current assets -
gains and losses of debt restructure -
Other non-operating income and expense excluding the
abovementioned items -52,397.77
Total -52,397.77
2. The Company has no difference based on the CAS and IAS
(1) The net profit and net assts calculated based on CAS and on IAS are have
no difference.
(2) The Company have no other oversees Accounting Standard except for
IAS that been used in disclosure the financial report.
3. Return on equity and earnings per share
Profit in report period Weighted earnings per share
average of Return
on equity（%）
Basic earnings
per share
Diluted
earnings per
share
Net profit attributable to common
shareholders of the Company
8.07% -0.006 -0.006
Net profit attributable to common
shareholders of the Company after
deducting non-recurring gains and losses
7.97% -0.006 -0.006
Note14. Approval of Financial Statement
The Financial Statement of the Company has been approved by Board of
Directors on 22 August 2010.
Section VIII. Documents available for reference
I. Text of Semi-annual Report 2010 carrying the genuine signatures of legal
representative;
II. Text of financial report carrying the autograph and seals of legal representative,
principal86
in charge of the accounting affairs and principal in charge of the accounting
institute;
III. Original texts of all documents and announcement disclosed publicly in the
Securities Times and Hong Kong Commercial Daily in the report period;
IV. Article of Association
The abovementioned documents will provide under the requirement from
China Securities Regulatory Commission and Stock Exchange if necessary.
Board of Director of
Chengde Dalu Company Limited
24 August 2010
