GUANGDONG RIEYS GROUP COMPANY LTD.
SEMI-ANNUAL REPORT 2012
I. Important Notes
The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives of Guangdong
Rieys Group Company Ltd. (hereinafter referred to as “the Company”) warrant that this report does not contain
any false information, misleading statement or material omission and will take individual and/or joint liabilities
for the factuality, accuracy and completeness of this report.
All other directors than the following ones attended in person the board session for reviewing the semi-annual
report.
Reason for not attending the
Name of director Office title Name of proxy
session in person
Chen Honghai Director For the reason of his work shujianlong
dinglihong Director For the reason of his work liuyong
chenxuewen Director For the reason of his work caishaohe
The company principal, the person-in-charge of the accounting work and the chief of the accounting division
(head of accounting) hereby ensure that the financial report enclosed in this report is factual and complete.
English translation for reference only. Should there be any discrepancy between the two versions, the Chinese
version shall prevail.
II. Company Profile
（I）Basic information
A-share code 000168 B-share code 200168
A-share abbreviation B-share abbreviation ST Rieys B
Stock exchange listed with Shenzhen Stock Exchange
Legal Chinese name of the
广东雷伊（集团）股份有限公司
Company
Abbr. of the legal Chinese
雷伊
name of the Company
Legal English name of the
GUANGDONG RIEYS GROUP COMPANY LTD
Company
Abbr. of the legal English
Rieys
name of the Company
Legal representative of the
Chen Hongcheng
Company
Registered address Meixin Industrial Park of Jun Bu Town, Puning, Guangdong
Postal code for the registered
515300
address
Room 4003-4008, 40/F International Chamber of Commerce Tower, No. 3 Fuhua Road, Futian
Office address
District, Shenzhen
Postal code for the office
518001
address
Internet website of the
http://www.rieys.com
Company
Email address rieys@live.cn
1
（II）For contact
Company Secretary Securities Affairs Representative
Name Xu Wei No one for now
Room 4003-4008, 40/F International Room 4003-4008, 40/F International
Contact address Chamber of Commerce Tower， No. 3 Chamber of Commerce Tower， No. 3
Fuhua Road, Futian District, Shenzhen Fuhua Road, Futian District, Shenzhen
Tel. 0755-82250045 0755-82250045
Fax 0755-82251182 0755-82251182
E-mail xw@200168.com xw@200168.com
（III）About information disclosure and where the semi-annual report is placed
Newspapers designated by the Company for
Securities Times, Hongkong Ta Kung Pao
information disclosure
Internet website designated by CSRC for
http://www.cninfo.com.cn
disclosing the semi-annual report
Room 4003-4008, 40/F International Chamber of Commerce Tower， No. 3 Fuhua
Where the semi-annual report is placed
Road, Futian District, Shenzhen
III. Financial and Business Highlights
（I）Major accounting data and financial indexes
Any retrospective adjustment in previous financial statements?
□Yes √No □ Inapplicable
Major accounting data
Major accounting data Reporting period (Jan.-Jun.) Same period of last year Increase/decrease (%)
Gross operating revenues (RMB Yuan) 7,617,917.19 46,761,330.11 -83.71%
Operating profit (RMB Yuan) -14,191,827.75 -1,447,888.63 880.17%
Total profit (RMB Yuan) -14,248,606.05 -3,245,754.32 338.99%
Net profit attributable to shareholders of
-13,570,192.44 -4,433,879.82 206.56%
the Company (RMB Yuan)
Net profit attributable to shareholders of
the Company after deducting non-recurring -13,521,248.24 -14,295,604.90 -5.42%
gains and losses (RMB Yuan)
Net cash flow from operating activities
12,681,286.44 21,934,225.27 -42.18%
(RMB Yuan)
As at the end of this
As at the end of last year Increase/decrease (%)
reporting period
Total assets (RMB Yuan) 585,528,029.93 537,999,020.83 8.83%
Owners’ equity attributable to shareholders
315,975,884.98 329,546,077.42 -4.12%
of the Company (RMB Yuan)
Share capital (share) 318,600,000.00 318,600,000.00 0%
Major financial indexes
Major financial indexes Reporting period (Jan.-Jun.) Same period of last year Increase/decrease (%)
Basic EPS (RMB Yuan/share) -0.04 -0.01 300%
Diluted EPS (RMB Yuan/share) -0.04 -0.01 300%
Basic EPS after deducting non-recurring
-0.04 -0.04 0%
gains and losses (RMB Yuan/share)
Fully diluted ROE（%） -4.29% -1.46% -2.83%
2
Weighted average ROE（%） -4.2% -1.45% -2.75%
Fully diluted ROE after deducting
-4.28% -4.17% -0.11%
non-recurring gains and losses（%）
Weighted average ROE after deducting
-4.19% -4.67% 0.48%
non-recurring gains and losses（%）
Net cash flow per share from operating
0.0398 0.0688 -42.15%
activities (RMB Yuan/share)
As at the end of this
As at the end of last year Increase/decrease (%)
reporting period
Net assets per share attributable to
shareholders of the Company (RMB 0.99 1.03 -3.88%
Yuan/share)
Liability/asset ratio（%） 45% 38% 7%
Notes to major accounting data and financial indexes before the end of this reporting period (please write an adjustment note if
there’s any retrospective adjustment)
（II）Accounting data differences under the domestic and overseas accounting standards
1. Net profit and net asset differences between financial reports disclosed according to the international and
Chinese accounting standards respectively
□Applicable √Inapplicable
2. Net profit and net asset differences between financial reports disclosed according to the overseas and
Chinese accounting standards respectively
□Applicable √Inapplicable
3. Specific items involving significant difference
Involved provisions of
Items involving significant
Amount (RMB Yuan) Reason for the difference international and/or overseas
difference
accounting standards
4. Notes to accounting data differences under the domestic and overseas accounting standards
（III）Items of non-recurring gains and losses
√Applicable □Inapplicable
Items Amount (RMB Yuan) Notes
Gains and losses on disposal of non-current assets
Tax rebate, reduction or exemption due to un-authorized
approval or the lack of formal approval documents
Government grants recognized in the current year, except
for those acquired in the ordinary course of business or
granted at certain quotas or amounts according to the
country’s unified standards
Capital occupation fees received from non-financial
enterprises that are included in current gains and losses
Gains generated when the investment costs of the
Company’s acquiring subsidiaries, associates and joint
ventures are less than the fair value of identifiable net assets
in the investees attributable to the Company in the
3
acquisition of the investments
Exchange gains and losses of non-monetary assets
Gains and losses through entrusting others to invest or
manage assets
Various asset impairment provisions due to acts of God such
as natural disasters
Gains and losses on debt restructuring
Enterprise reorganization expenses, such as expenses on
employee settlement and integration
Gains and losses on the parts exceeding the fair value when
prices of transactions become unfair
Net current gains and losses from the period-begin to the
combination date of subsidiaries due to business
combinations under the same control
Gains and losses on contingent matters which are irrelevant
to the normal operation of the Company
Gains and losses on fair value changes of transactional
financial assets and liabilities, and investment gains on
disposal of transactional financial assets and liabilities and
available-for-sale financial assets, except for the effective
hedging business related to the Company’s normal operation
Reversal of impairment provisions for accounts receivable
which are separately tested for impairment signs
Gains and losses on entrustment loans from external parties
Gains and losses on fair value changes of investing
properties for which the fair value method is adopted for
subsequent measurement
Current gain and loss effect due to a just-for-once
adjustment to current gains and losses according to
requirements of taxation and accounting laws and
regulations
Custodian fee income from entrusted operations with the
Company
Other non-operating incomes and expenses besides the
-56,778.30
items above
Other gain and loss items that meet the definition of
non-recurring gains and losses
Gains and losses on fair value changes of transactional
3,404.00
financial assets held
Income tax -4,512.09
Net profit -48,862.21
Minority shareholder income 81.99
Total -48,944.20 --
Explanation given by the Company to “other gain and loss items that meet the definition of non-recurring gains and losses” and when
it recognizes a non-recurring gain and loss item as a recurring one according to the nature and features of its ordinary business
Amount involved (RMB
Item Notes
Yuan)
4
IV. Changes in Share Capital and Particulars about Shareholders
（I）Changes in share capital
1. Statement of changes of shares
□Applicable √Inapplicable
2. Changes of shares subject to trading moratorium
□Applicable √Inapplicable
（II）Issuance and listing of securities
1. Securities issues in the previous three years
□Applicable √Inapplicable
2. Changes of the Company’s share number and structure, as well as the corresponding changes in its
asset-liability structure
□Applicable √Inapplicable
3. Existing employee shares
□Applicable √Inapplicable
（III）Shareholders and actual controller
1. Total number of shareholders at the end of the reporting period
The Company had 14312 shareholders in total at the end of the reporting period.
2. Shareholding of the top ten shareholders
Particulars about shares held by the top ten shareholders holding tradable shares
√Applicable □Inapplicable
Total number of shareholders 14312
Particulars about shares held by the top ten shareholders
Shareholdin Number of Pledged or frozen shares
Name of shareholder (full Nature of Total shares held
g percentage non-tradable Status of Number of
name) shareholder at the period-end
(%) shares held shares shares
PUNING
Domestic
SHENGHENGCHANG 117,855,000.0
non-state-owned 36.99% 117,855,000.00
TRADE DEVELOPMENT 0
corporation
CO., LTD
SHENZHEN RISHENG Domestic
CHUANGYUAN ASSET non-state-owned 10.68% 34,020,000.00 34,020,000.00
MANAGEMENT CO., LTD. corporation
Domestic
SHANTOU LIANHUA
non-state-owned 3.81% 12,150,000.00 12,150,000.00
INDUSTRIAL CO., LTD.
corporation
Domestic natural
SU YOUHE 4.54% 7,023,955.00 0.00
person
SHANGHAI HONG KONG
INTERNATIONAL Foreign corporation 1.31% 2,026,069.00 0.00
SECURITIES LIMITED
5
Domestic natural
ZHENG SUXIAN 1.04% 1,600,000.00 0.00
person
Domestic natural
LUO DONG HUI 0.93% 1,441,200.00 0.00
person
Domestic natural
XU HAI 0.87% 1,350,400.00 0.00
person
Domestic natural
NGAI KWOK PAN 0.74% 1,145,816.00 0.00
person
Domestic natural
CAI HANCHUAN 0.68% 1,046,135.00 0.00
person
Particulars about shares held by the top ten shareholders holding tradable shares
√Applicable □Inapplicable
Number of tradable shares Type and number of shares
Name of shareholder
held Type Number
SU YOUHE 7,023,955.00 B-shares 7,023,955.00
SHANGHAI HONG KONG
2,026,069.00 B-shares 2,026,069.00
INTERNATIONAL SECURITIES LIMITED
ZHENG SUXIAN 1,600,000.00 B-shares 1,600,000.00
LUO DONG HUI 1,441,200.00 B-shares 1,441,200.00
XU HAI 1,350,400.00 B-shares 1,350,400.00
NGAI KWOK PAN 1,145,816.00 B-shares 1,145,816.00
CAI HANCHUAN 1,046,135.00 B-shares 1,046,135.00
CHEN JIANSHENG 1,017,797.00 B-shares 1,017,797.00
GU KUNYI 969,440.00 B-shares 969,440.00
KE ZHONGFENG 828,800.00 B-shares 828,800.00
There existed related-party relationship among Puning Shenghengchang Trade
Explanation on associated relationship or/and
Development Co., Ltd., Shenzhen Risheng Chuangyuan Asset Management Co.,
persons acting in concert among the
Ltd. and Shantou Lianhua Industrial Co., Ltd.. Whether there existed
above-mentioned shareholders
related-party relationship among other shareholders is unknown.
3. Controlling shareholder and actual controller
（1）Change of the controlling shareholder and actual controller
□Applicable √Inapplicable
（2）Particulars about the controlling shareholder and actual controller
Is there a new actual controller?
□ Yes √ No □ Inapplicable
Name of the actual controller Chen Hongcheng
Type of the actual controller Individual
Notes: Chen Hongcheng, the actual controller, born in 1958, with bachelor degree. Now he is the standing commissar of political
consultative conference of Puning, the special commissar of political consultative conference of Guangdong Province, Vice Chairman
of Costume Association of Guangdong Province and Vice Chairman of Costume Association of Shenzhen City, as well as the director
of Puning Shenghengchang Trade Development Co., Ltd. for a term. He has ever been the deputy of the National People’s Congress
of Jieyang City and Guangdong Province.
（3）Illustration on the relationship between the Company and its actual controller.
6
Chen Hongcheng Chen Honghai
70% 30%
Puning Shenghengchang Trade Development
Co., Ltd.
36.99%
The Company
（4）The actual controller controls the Company via trust or other ways of asset management.
□Applicable √Inapplicable
4. Other corporate shareholders with a shareholding over 10%
√Applicable □Inapplicable
Registere
Legal Incorporated Main operating business or
Name of corporate shareholder d capital Currency
representative date management activities
(’0000)
Invest and initiate industries (the
detailed project till further
declared); domestic commerce,
material supply and marketing
industry (excluding monopoly
commodities); investment
Shenzhen Risheng Chuangyuan Asset
Ma Chanying 8 Sept. 2000 consultation and information 25,00 CNY
Management Co., Ltd.
consultation (excluding projects
limited by laws and
administration regulations;
certification shall be gained for
the above mentioned limited
projects).
Notes
（IV）Convertible corporate bonds
□Applicable √Inapplicable
V. Directors, Supervisors and Senior Management
7
（I）Shareholding changes of directors, supervisors and senior management
Receive
Number of Number of payment
Of which: Number of
Beginning Ending date Number of shares shares Number of from
number of stock options Reason for
Name Office term Gender Age date of the of the office shares held at increased in decreased in shares held at shareholder
restricted held at change
office term term period-begin reporting reporting period-end units or other
shares held period-end
period period related-party
units or not?
Chen
Chairman Male 54 28 Dec. 2009 27 Dec. 2012 0 0 0 0 0 0 No
Hongcheng
Vice
Ding Lihong Male 41 28 Dec. 2009 27 Dec. 2012 0 0 0 0 0 Yes
chairman
Chen 0 0 0 0 0 0 0
Director Male 57 28 Dec. 2009 27 Dec. 2012 Yes
Honghai
Chen 0 0 0 0 0 0 0
Director Female 32 28 Dec. 2009 27 Dec. 2012 Yes
Xuewen
Independent 0 0 0 0 0 0 0
Liu Yong Male 35 28 Dec. 2009 27 Dec. 2012 No
director
Independent 0 0 0 0 0 0 0
Su Jianlong Male 48 28 Dec. 2009 27 Dec. 2012 No
director
Independent 0 0 0 0 0 0 0
Cai Shaohe Male 51 28 Dec. 2009 27 Dec. 2012 No
director
Chairman of 0 0 0 0 0 0 0
Yan Mingfei the Male 44 28 Dec. 2009 27 Dec. 2012 No
Supervisory
8
Committee
Huang 0 0 0 0 0 0 0
Supervisor Female 46 28 Dec. 2009 27 Dec. 2012 No
Yanfang
30 Sept. 0 0 0 0 0 0 0
Li Ning Supervisor Male 43 27 Dec. 2012 No
2011
Zhou Yuhua CFO Male 44 28 Nov. 2011 27 Dec. 2012 0 0 0 0 0 0 0 No
Company 0 0 0 0 0 0 0
Xu Wei Male 35 11 Dec. 2009 27 Dec. 2012 No
secretary
Total -- -- -- -- -- 0 0 0 0 0 0 0 --
Equity incentives granted to directors, supervisors and senior management during the reporting period
□Applicable √Inapplicable
9
（II）Post-holding particulars
Post-holding in shareholders units
√Applicable □Inapplicable
Name of the
Position in
person holding Receives payment
the Beginning date Ending date of
any post in any Name of the shareholder unit from the shareholder
shareholder of office term office term
shareholder unit?
unit
unit
Puning Shenghengchang Trade
Chen Honghai Director Yes
Development Co., Ltd.
Shenzhen Risheng Chuangyuan Asset
Ding Lihong Director Yes
Management Co., Ltd.
Shenzhen Risheng Chuangyuan Asset
Chen Xuewen Director Yes
Management Co., Ltd.
Notes to
post-holding in
shareholder
units
Post-holding in other units
√Applicable □Inapplicable
Name of the
person holding Position in Beginning date Ending date of Receives payment
Name of other unit
any post in other unit of office term office term from other unit?
other units
Shenzhen Pinghai Certified Public
Liu Yong Partner Yes
Accountants
Shenzhen China Energy Conservation and Chairman of
Su Jianlong Yes
Environmental Protection Co., Ltd. the Board
Superintende
Cai Shaohe Chenghai Auditor’ Firm Yes
nt
Notes to
post-holding in
other units
（III）Remuneration for directors, supervisors and senior management
Decision-making
In accordance with the Articles of Association, the remuneration of the directors and supervisors are
procedure for the
determined by the Shareholders’ General Meeting of the Company; while the remuneration of the senior
remuneration of directors,
management are determined by the Shareholders’ General Meeting, the Board of Directors and relevant
supervisors and senior
remuneration systems.
management
Basis for determining the In accordance with the proposal on Formulation of Remuneration of Senior Executives examined and
remuneration of directors, passed at the 1st Session of the 2nd Board of Director for Year 2002 and Proposal on Adjusting Allowance
10
supervisors and senior of Directors, Independent Director and Supervisors examined and passed at 2007 Annual Shareholder’
management General Meeting, directors and independent directors of the Company drew their annual allowance of
RMB 50,000 (tax included) respectively from the Company; supervisors of the Company received the
annual allowance of RMB 15,000 (tax included) respectively. The Company reimbursed the reasonable
charges according to the actual situation which independent directors attended the Board sessions,
shareholders’ general meetings or exercise their functions and powers in accordance with the relevant
laws and regulations and Articles of Association.
Actual payment of the
remuneration of directors,
Paid monthly.
supervisors and senior
management
（IV）Change of directors, supervisors and senior management
Name Position Way of change Date of change Reason for change
（V）Employees
Number of on-job employees 156.00
Number of retired employees for whom the Company shall bear
0.00
expenses
Function structure
Type of function Number of personnel
Production 72.00
Sale 14.00
Technical 30.00
Financial 12.00
Administration 28.00
Level of education
Level of education Number of personnel
Master degree 2.00
University 33.00
Junior college 40.00
High school and below 81.00
VI. Report of the Board of Directors
（I）Discussion and analysis by the management
For the reporting period, the Company achieved operating revenue of RMB 7.62 million, down
83.71% as compared with RMB 46.76 million at the same period of last year; operating profit of
RMB -14.19 million, up 880.17% over RMB -1.45 million from a year earlier; and net profit
11
attributable to the Company of RMB -13.57 million, up 206.06% over RMB -4.43 million at the
same period of last year. The operating revenue, operating cost, operating expense, operating profit
and net profit attributable to owners of the Company changed over last year mainly because the
Company was going to shift to single real estate business, so the Company continued to cut down
the garment business in the reporting period and focused on real estate development with its
resources; however, although the real estate projects have been put on advance sale, but they
haven’t reached settlement yet.
The closing balance of monetary funds was RMB 4.39 million, up 174.42% over the opening
balance of RMB 1.60 million, which was mainly due to the increase of income from advance sale of
real estate projects. The closing balance of accounts receivable was RMB 8.51 million, down
39.04% over the opening balance of RMB 13.97 million, which was mainly because the Company
collected back some garment payments. The closing balance of accounts payable was RMB 8.43
million, down 21.63% over the opening balance of RMB 10.75 million, which was mainly because
the Company paid for some credit purchases. The closing balance of other payables was RMB 6.35
million, down 90.10% over the opening balance of RMB 64.12 million, which was mainly because
the Company repaid borrowings of RMB 48.41 million to related parties. The closing balance of
accounts received in advance was RMB 141 million, up 880.06% over the opening balance of RMB
14.39 million, which was mainly due to the increase of income from advance sale of real estate
projects.
During the reporting period, the Company continued to work on development of the Shangdi
Central Project in Puning and the project went on well. Some houses were expected to be available
for hand-over by the end of 2012 and the corresponding sales income would be recognized. At the
same time, the Company proactively talked with the lending banks so as to deal with the overdue
loans properly. For the reporting period, the Company accumulatively repaid loan principals and
interest of RMB 9.50 million to the Guangzhou branch of Everbright Bank. These overdue loans
were expected to come to a settlement by the end of the year.
Is the Company’s actual business performance 20% lower or higher than any earning forecast or business plan for the report period
which has been publicly disclosed earlier?
□Applicable □No √Inapplicable
1. Main business lines and their operating results
（1）Main business lines classified by industries and products
Unit: RMB Yuan
Increase/decrease Increase/decrease
Increase/decrease
of operating of gross profit
of operating cost
Operating Gross profit rate revenue rate compared
Industry/product Operating cost compared with
revenue (%) compared with with the same
the same period
the same period period last year
last year (%)
last year (%) (%)
Industries
Manufacture 7617917.19 5242728.04 31.18 -81.06 -84.89 11.42
Trade
Products
12
Garments 7617917.19 5242728.04 31.18 -81.06 -84.89 11.42
（2）Main business lines classified by regions
Unit: RMB Yuan
Increase/decrease compared with the same
Region Operating revenue
period last year (%)
Garments for export 2815199.68 -93.49
Garments for domestic sale 4802717.51 -14.20
Subtotal 7617917.19 -84.41
Internal counteraction of purchase and sale -100.00
Total 7617917.19 -83.40
（3）Reasons for any significant change in main business and its structure
□Applicable √Inapplicable
（4）Reasons of significant changes in profitability of main business (gross profit rate) compared with that
in the last year
□Applicable √Inapplicable
（5）Analysis on reasons of significant changes in profit breakdown compared with the last year
□Applicable √Inapplicable
（6）Business nature, main products/services and net profit of joint ventures contributing over 10% to the
Company’s net profit
□Applicable √Inapplicable
（7）Problems and difficulties in operation
1. The Board of Directors has noticed that the controlling result appears and the controlling scope will further expand with the
elaboration and implementation of national controlling measures on housing price. Therefore, the Company will accelerate the
development of real estate and take effective measures to counter any new changes.
2. The capital issue is still the biggest problem for the Company’s development. Under the circumstances of tight macro capital,
especially the controlling policies on real estate sector, the Company temporarily has not any direct or indirect financing channel.
Therefore, the Company will take effective measures to expand the financing channels.
3. The foundation of the real estate business lies in its land resource reserves available for constant development. Although the
Company has actively expanded its projects over the past few years, the Company has no other land reserves except the Shangdi
13
Central in Puning. Therefore, the Company will accelerate to explore projects so as to complete the subsequent land reserves in the
next half year of 2012..
2. Internal control rules relevant to the measurement of fair value
□Applicable √Inapplicable
3. Foreign-currency financial assets and liabilities held
□Applicable √Inapplicable
（II）Investments
1. General utilization of the raised funds
□Applicable √Inapplicable
14
2. Projects promised to be invested with raised funds
□Applicable √Inapplicable
15
3. Change of projects invested with raised funds
□Applicable √Inapplicable
4. Significant projects invested with non-raised funds
□Applicable √Inapplicable
（III）Revision of the Board of Directors’ business plan for the second half of the year
□Applicable √Inapplicable
（IV）Business performance estimate for Jan.-Sept. 2012
Warnings of estimated possible losses or major changes of the accumulative net profit achieved during the period from the
beginning of the year to the end of the next report period compared with the same period of last year, as well as the reasons
√Applicable □Inapplicable
Business performance forecast: Loss
Type of the business performance forecast data
√Exact number □Interval number
From the year-begin to the end Same period of
+/-（%）
of the next reporting period last year
Estimated cumulative net loss：
loss：about 2000wanyuan □ --√ Up □ Down 92.12%
profit (RMB Ten thousand) 1041wanyuan
Basic EPS (RMB Yuan/share) loss：about0.06yuan loss：0.02yuan □ -- √Up □ Down 200%
Notes to the business
performance forecast
（V）Explanation of the Board of Directors on “Non-standard Auditing Report” issued
by the CPA firm for the report period
□Applicable √Inapplicable
（VI）Explanation of the Board of Directors on changes and solutions of the issues
involved in the “Non-standard Auditing Report” issued by the CPA firm for last year
√Applicable □Inapplicable
ASIA (Group) Accounting Firm issued an unqualified audit report with pinpointed matters for the 2011
Annual Financial Report of the Company. The said pinpointed matters were stated as, “In the year 2011,
the net profit attributable to owners of the Company stood at RMB 21,385,000 and at RMB -18,335,500
after deducting non-recurring gains and losses. In 2010, the main business scope of the Company was
transformed from garments to both garments and real estate development, and it planned to withdraw from
the garment industry step by step. Despite a series of improvement measures taken by the Company, there
still existed uncertainty about the going-concern ability of the Company.
16
The Board of Directors believes that the recent loss of the Company is mainly due to the fact that the real
estate projects that the Company has obtained advance sale permits for have not been completed and
reached settlement, and that the Company is cutting down the garment business step by step in order to
ensure resources for real estate projects. According to the Company’s estimation, some of its real estate
projects will be completed and reach settlement to generate gains by the end of the year. During the
reporting period, the Company continued to enhance development and sale of its real estate projects and
reached a strategic cooperation agreement with China Construction Bank. At the same time, it proactively
and properly dealt with the overdue loans with other banks. Upon adjustments of recent years, the quality
of the Company’s business and assets has improved greatly and the Company has now great ability for
sustained operation.
（VII）State the discussion results of the Board of Directors on the reasons and
influence of the Company’s accounting policy and estimate alterations or significant
accounting error correction
□Applicable √Inapplicable
（VIII）Formulation and execution of the Company’s cash dividend policy
In order to standardize the dividends distribution of the Company and advance it to establish scientific, sustainable and stable
dividends distribution system, the 3rd Session of the 5th Board of Directors of the Company reviewed and approved the
revision of partial articles about profits distribution policies in the original Articles of Association in accordance with the
Circular on Further Implementing Regulations for Dividends Distribution of Listed Companies (Guang-Dong-Zheng-Jian
[2012] No. 91) issued by Guangdong CSRC and Circular on Further Implementing Issues about Cash Dividends Distribution
of Listed Companies issued by CSRC, which make detailed regulations on principle, detailed policies, review procedures of
profits distribution policies, and changes in profits distribution policies as well as using principles of retained profits, etc..
（IX）Pre-plan for profit distribution or turning capital reserve into share capital
□Applicable √Inapplicable
（X）The accumulative retained profit as at the end of 2011 is a positive number but the
Company has not put forward a cash dividend pre-plan.
□Applicable √Inapplicable
（XI）Other matters that need to be disclosed
（XII）The Company’s liabilities, credit changes and future cash arrangements for
debt-clearing (Only listed companies with convertible corporate bonds are required to
fill the table below.)
□Applicable √Inapplicable
17
VII. Significant Events
（I）Corporate governance
In accordance with the Code of Corporate Governance of Listed Companies and other
relevant regulations issued by CSRC, the Company constructs and gradually perfects the
governance structures of Shareholders’ General Meeting, Board of Directors and Supervisory
Committee, and the actual situation on corporate governance of the Company is basically in
line with the requirements of Code of Corporate Governance of Listed Companies and other
regulations.
In the future, the Company will make corporate governance as an important basic work to
enhance its competitiveness, and constantly perfect its modern enterprise system.
（II）Execution of the plans for profit distribution, turning capital reserve into share
capital or new share issuance which had been made in the previous period and were
carried out in the report period
□Applicable √Inapplicable
18
(III) Significant litigations and arbitrations
□Applicable √Inapplicable
The Company was not involved in any significant lawsuit or arbitration during the reporting period.
19
(IV) Bankruptcy or reorganization events
□Applicable √Inapplicable
(V) Holding equity of other listed companies and joint financial enterprises
1. Securities investment
√Applicable □Inapplicable
Proportion in
Number of
Initial Closing the total Gain/loss in
shares held at
Serial Variety of Code of Abbr. of investment carrying closing the reporting
the
No. securities securities securities amount amount securities period (RMB
period-end
(RMB Yuan) (RMB Yuan) investment Yuan)
(Share)
amount (%)
Huazhi
1 Stock 000607 20239.00 3700 15984.00 100% 3404.00
Holding
Other securities investments held at the period-end 0.00 -- 0.00 0% 0.00
Gain/loss on selling securities in the reporting period -- -- -- -- 0.00
Total 20239.00 -- 15984.00 100% 3404.00
Disclosure date of the board announcement of securities
investment approval
Disclosure date of the general meeting announcement of
securities investment approval
Notes to securities investment:
For the purpose of increasing the utilization efficiency of idle funds, the Company made decisions and approved
securities investments according to specified management power and procedures at all tiers. Profit from these
investments was limited because the investment amounts were small, so it would not have major impact on the
business performance of the Company for the reporting period.
2. Holding equity of other listed companies
□Applicable √Inapplicable
Notes to holding equity of other listed companies:
3. Holding equity of non-listed financial enterprises
□Applicable √Inapplicable
Notes to holding equity of non-listed financial enterprises
20
4. Trading stocks of other listed companies
□Applicable √Inapplicable
Notes to trading stocks of other listed companies:
(VI) Assets transaction events
21
1. Purchase of assets
□Applicable √Inapplicable
Notes to purchase of assets:
2. Sale of assets
□Applicable √Inapplicable
Notes to sale of assets:
3. Exchange of assets
□Applicable √Inapplicable
Notes to exchange of assets
22
4. Business combination
□Applicable √Inapplicable
5. Progress of these events after the publication of the assets reorganization report or public notices on the
purchases or sales of assets, as well as the influences of these events on the operation results and financial
status of the Company in the reporting period
□Applicable √Inapplicable
(VII) Explanation on shareholding increase scheme during the reporting period proposed or
implemented by the principal shareholders and act-in-concert persons
□Applicable √Inapplicable
(VIII) Implementation situation and influence of equity incentive plan of the Company
□Applicable √Inapplicable
(IX) Significant related-party transactions
23
1. Related-party transactions relevant to routine operation
□Applicable √Inapplicable
2. Related-party transactions regarding purchase and sale of assets
□Applicable √Inapplicable
3. Significant related-party transitions with joint investments
□Applicable √Inapplicable
4. Significant credits and liabilities with related parties
□Applicable √Inapplicable
Capital occupation during the reporting period and debt-clearing progress
□Applicable √Inapplicable
The accountability plan forward by the Board of Directors when the Company had not completed collecting the capital occupied for non-operating purposes by the end of the reporting period
□Applicable √Inapplicable
24
5. Other significant related-party transactions
Naught
(X) Significant contracts and execution
1. The trust, contract and lease whose profits reaching more than 10% (including 10%) of the total profits
of the Company in the reporting period
(1) Status of trust
□Applicable √Inapplicable
(2) Status of contracting
□Applicable √Inapplicable
(3) Status of leasing
□Applicable √Inapplicable
2. Guarantees provided by the Company
□Applicable √Inapplicable
25
3. Entrusted financial management
□Applicable √Inapplicable
26
4. Performance of significant contracts relevant to routine operation
□Applicable √Inapplicable
5. Other significant contracts
□Applicable √Inapplicable
(XI) Explanation on issuing corporate bonds
□Applicable √Inapplicable
(XII) Performance of commitments
1. Commitments made by the Company or shareholders holding over 5% of the Company’s shares in the
reporting period, or such commitments carried down into the reporting period
□Applicable √Inapplicable
2. The Company’s assets or projects exist profitable prediction and the reporting period is in such
prediction period, it states the profits from the assets or projects reaching original prediction and relevant
reasons
□Applicable √Inapplicable
(XIII) Items of other comprehensive income
Unit: RMB Yuan
Items Jan.-Jun. 2012 Jan.-Jun. 2011
1. Profits/(losses) from available-for-sale financial assets 0.00 0.00
Less: Effects on income tax generating from available-for-sale
0.00 0.00
financial assets
Net amount transferred into profit and loss in the current period that
0.00 0.00
recognized into other comprehensive income in prior period
Subtotal 0.00 0.00
2. Interests in the investee entities’ other comprehensive income as per
0.00 0.00
equity method
Less: Effects on income tax generating from the interests in the
0.00 0.00
investee entities’ other comprehensive income as per equity method
Net amount transferred into profit and loss in the current period that
0.00 0.00
recognized into other comprehensive income in prior period
Subtotal 0.00 0.00
27
3. Profits/(losses) from cash flow hedging instrument 0.00 0.00
Less: Effects on income tax generating from cash flow hedging
0.00 0.00
instrument
Net amount transferred into profit and loss in the current period that
0.00 0.00
recognized into other comprehensive income in prior period
The adjustment value that is the converted initial recognition amount of
0.00 0.00
arbitrage project
Subtotal 0.00 0.00
4. Converted amount of foreign currency financial statements 0.00 0.00
Less: Net value of disposal of oversea operations that recognized into
0.00 0.00
current profit and loss
Subtotal 0.00 0.00
5. Other 0.00 0.00
Less: Effects on income tax generating from the others that included
0.00 0.00
into other comprehensive income
Net amount transferred into profit and loss in the current period that
0.00 0.00
recognized into other comprehensive income in prior period
Subtotal 0.00 0.00
Total 0.00 0.00
(XIV) Particulars about researches, visits and interviews received in this reporting period
Main discussion and
Time of reception Place of reception Way of reception Visitor type Visitor materials provided by the
Company
Debt reorganization
4 Jan. 2012 Company Office By phone Individual Investor
progress
Debt reorganization
5 Jan. 2012 Company Office By phone Individual Investor
progress
Is the Company able to
15 Mar. 2012 Company Office By phone Individual Investor
get rid of “ST” this year?
Time for annual report
13 Apr. 2012 Company Office By phone Individual Investor
disclosure
The Company’s operation
18 May 2012 Company Office By phone Individual Investor
status
(XV) Particulars about engagement and disengagement of CPAs firm
Has this semi-annual report been audited?
□ Yes √ No □ Inapplicable
Has the CPAs firm been changed?
28
□ Yes √ No □ Inapplicable
(XVI) Particulars about punishment and rectification order received by the Company, its
directors, supervisors, senior executives, shareholders, actual controller and acquirer
□Applicable √Inapplicable
(XVII) Explanation on other significant events
□Applicable √Inapplicable
(XVIII) Particulars about significant changes in the profitability, asset status and credit status
of the Company’s convertible bonds guarantor
(Only listed companies which issue convertible corporate bonds are required to fill the form below.)
□Applicable √Inapplicable
(XIX) Index for information disclosure
Internet website for disclosing
Newspapers for disclosing
Event Publishing date information and the searching
information and relevant page
approach
Announcement on the Procedure http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 6 Jan. 2012
of Debt Restructuring n/companyinfo.html
Announcement on the Correction
http://www.cninfo.com.cn/informatio
of Business Performance Securities Times, Ta Kung Pao 6 Jan. 2012
n/companyinfo.html
Forecast
Announcement on Canceling http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 11 Jan. 2012
Hypothecation of Stocks n/companyinfo.html
Announcement on Signing http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 10 Mar. 2012
Strategic Cooperation Contract n/companyinfo.html
Announcement on Resolutions of
http://www.cninfo.com.cn/informatio
the First Session of the Fifth Securities Times, Ta Kung Pao 31 Mar. 2012
n/companyinfo.html
Board of Directors
Preliminary Earnings Estimate http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 14 Apr. 2012
for 2011 n/companyinfo.html
Business Performance Forecast http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 14 Apr. 2012
for the First Quarterly of 2012 n/companyinfo.html
Independent Opinions of http://www.cninfo.com.cn/informatio
Only published on the internet 18 Apr. 2012
Independent Directors n/companyinfo.html
Work Report of Independent http://www.cninfo.com.cn/informatio
Only published on the internet 18 Apr. 2012
Directors (by Liu Yong, Su n/companyinfo.html
29
Jianlong and Cai Shaohe)
Self-appraisal Report of Internal http://www.cninfo.com.cn/informatio
Only published on the internet 18 Apr. 2012
Control for 2011 n/companyinfo.html
http://www.cninfo.com.cn/informatio
Summary of Annual Report 2011 Securities Times, Ta Kung Pao 18 Apr. 2012
n/companyinfo.html
Specific Notes on Unqualified
http://www.cninfo.com.cn/informatio
Opinions on Auditors’ Report for Only published on the internet 18 Apr. 2012
n/companyinfo.html
Annual Financial Statement 2011
Announcement on Putting
http://www.cninfo.com.cn/informatio
Forward Publishing the First Securities Times, Ta Kung Pao 18 Apr. 2012
n/companyinfo.html
Quarterly Report of 2012
Registration and Management
http://www.cninfo.com.cn/informatio
System for Persons with Inside Only published on the internet 18 Apr. 2012
n/companyinfo.html
Information
Specific Notes on Auditors’
http://www.cninfo.com.cn/informatio
Report with Unqualified Only published on the internet 18 Apr. 2012
n/companyinfo.html
Opinions
Specific Notes on Capital
Occupation by Controlling http://www.cninfo.com.cn/informatio
Only published on the internet 18 Apr. 2012
Shareholders and Other Related n/companyinfo.html
Parties
Interim Business Performance http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 18 Apr. 2012
Forecast 2012 n/companyinfo.html
http://www.cninfo.com.cn/informatio
Annual Auditors’ Report 2011 Only published on the internet 18 Apr. 2012
n/companyinfo.html
http://www.cninfo.com.cn/informatio
Annual Report 2011 Securities Times 18 Apr. 2012
n/companyinfo.html
Annual Report 2011 (English http://www.cninfo.com.cn/informatio
Ta Kung Pao 18 Apr. 2012
Version) n/companyinfo.html
Full Text of the First Quarterly http://www.cninfo.com.cn/informatio
Securities Times 18 Apr. 2012
Report 2012 n/companyinfo.html
Abstract of the First Quarterly http://www.cninfo.com.cn/informatio
Securities Times 18 Apr. 2012
Report 2012 n/companyinfo.html
Full Text of the First Quarterly http://www.cninfo.com.cn/informatio
Ta Kung Pao 18 Apr. 2012
Report (English Version) n/companyinfo.html
Announcement of the
Resolutions of the Second http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 18 Apr. 2012
Session of the Fifth Board of n/companyinfo.html
Directors 2012
30
Announcement of the
Resolutions of the First Session http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 18 Apr. 2012
of the Fifth Supervisory n/companyinfo.html
Committee 2012
Work System for Secretary to the http://www.cninfo.com.cn/informatio
Only published on the internet 18 Apr. 2012
Board of Directors n/companyinfo.html
Notice on Convening 2011
Annual Shareholders’ General http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 18 Apr. 2012
Meeting by the Board of n/companyinfo.html
Directors
Announcement on Abnormal http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 25 Apr. 2012
Fluctuations of Stock Price n/companyinfo.html
Announcement on Abnormal http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 4 May 2012
Fluctuations of Stock Price n/companyinfo.html
http://www.cninfo.com.cn/informatio
Articles of Association Only published on the internet 11 May 2012
n/companyinfo.html
Legal Opinions on Annual http://www.cninfo.com.cn/informatio
Only published on the internet 11 May 2012
Shareholders’ General Meeting n/companyinfo.html
Announcement on Resolutions of
http://www.cninfo.com.cn/informatio
Annual Shareholders’ General Securities Times, Ta Kung Pao 11 May 2012
n/companyinfo.html
Meeting 2011
Management System on http://www.cninfo.com.cn/informatio
Only published on the internet 27 Jun. 2012
Dividends n/companyinfo.html
The Shareholders’ Return Plan of
the Company for the Next. Three Only published on the internet 27 Jun. 2012 27 Jun. 2012
Years (From 2012 to 2014)
Announcement on Resolutions of
http://www.cninfo.com.cn/informatio
the Third Session of the Fifth Securities Times, Ta Kung Pao 27 Jun. 2012
n/companyinfo.html
Board of Directors 2012
Announcement on Resolutions of
http://www.cninfo.com.cn/informatio
the Forth Session of the Fifth Securities Times, Ta Kung Pao 28 Jul. 2012
n/companyinfo.html
Board of Directors 2012
Notice on Convening the First
Special Shareholders’ General http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 28 Jul. 2012
Meeting 2012 by the Board of n/companyinfo.html
Directors
http://www.cninfo.com.cn/informatio
Announcement on Suspension Securities Times, Ta Kung Pao 31 Jul. 2012
n/companyinfo.html
Announcement on Suspension http://www.cninfo.com.cn/informatio
Securities Times, Ta Kung Pao 7 Aug. 2012
for Preparing Significant Matters n/companyinfo.html
31
VIII. Financial Report
(I) Auditor’s report
Has this semi-annual report been audited?
□ Yes √ No □ Inapplicable
(II) Financial statements
Consolidated statements or not?
√Yes □No □ Inapplicable
The monetary unit in the financial statements of the financial report is RMB Yuan if not specified otherwise.
Monetary unit of notes to financial statements: RMB Yuan
1. Consolidated balance sheet
Prepared by Guangdong Rieys Group Company Ltd.
Unit: RMB Yuan
Item Note 30 Jun. 2012 31 Dec. 2011
Current Assets:
Monetary funds 4,392,797.84 1,600,749.63
Settlement reserves
Intra-group lendings
Transactional financial assets 15,984.00 12,580.00
Notes receivable
Accounts receivable 8,514,217.76 13,966,563.54
Accounts paid in advance 86,047,152.76 75,651,517.03
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable
Dividend receivable
Other accounts receivable 16,650,325.96 26,986,296.29
Financial assets purchased under
agreements to resell
Inventories 341,218,663.08 289,509,255.07
Non-current assets due within 1
year
Other current assets
32
Total current assets 456,839,141.40 407726961.56
Non-current assets:
Loans by mandate and advances
granted
Available-for-sale financial assets
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing property
Fixed assets 90,412,640.98 92,277,519.10
Construction in progress
Engineering materials 54,526.00 54,526.00
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 28,056,771.45 28,393,365.57
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 9,537,830.10 8,919,528.60
Other non-current assets 627,120.00 627,120.00
Total of non-current assets 128,688,888.53 130,272,059.27
Total assets 585,528,029.93 537,999,020.83
Current liabilities:
Short-term borrowings 64,199,960.00 73,699,960.00
Borrowings from Central Bank
Customer bank deposits and due
to banks and other financial
institutions
Intra-group borrowings
Transactional financial liabilities
Notes payable
Accounts payable 8,428,601.72 10,754,430.15
Accounts received in advance 141,061,418.59 14,393,199.24
Financial assets sold for
33
repurchase
Handling charges and
commissions payable
Employee’s compensation
669,654.17 769,812.94
payable
Tax payable 4,330,635.87 4,404,960.44
Interest payable 40,081,175.19 35,818,609.17
Dividend payable
Other accounts payable 6,345,103.48 64,116,263.43
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting
of securities
Non-current liabilities due within
1 year
Other current liabilities
Total current liabilities 265,116,549.02 203,957,235.37
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Specific payables
Estimated liabilities
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 265,116,549.02 203,957,235.37
Owners’ equity (or shareholders’
equity)
Paid-up capital (or share capital) 318,600,000.00 318,600,000.00
Capital reserves 52,129,496.58 52,129,496.58
Less: Treasury stock
Specific reserves
Surplus reserves 86,036,260.20 86,036,260.20
34
Provisions for general risks
Retained profits -140,789,871.80 -127,219,679.36
Foreign exchange difference
Total equity attributable to owners
315,975,884.98 329,546,077.42
of the Company
Minority interests 4,435,595.93 4,495,708.04
Total owners’ (or shareholders’)
320,411,480.91 334,041,785.46
equity
Total liabilities and owners’ (or
585,528,029.93 537,999,020.83
shareholders’) equity
Legal representative: Chen Hongcheng Person-in-charge of the accounting work: Zhou Yuhua
Chief of the accounting division:
2. Balance sheet of the Company
Unit: RMB Yuan
Item Note 30 Jun. 2012 31 Dec. 2011
Current Assets:
Monetary funds 707,181.42 1,338,922.68
Transactional financial assets 15,984.00 12,580.00
Notes receivable
Accounts receivable
Accounts paid in advance
Interest receivable
Dividend receivable
Other accounts receivable 122,010,425.16 139,930,122.27
Inventories
Non-current assets due within 1
year
Other current assets
Total current assets 122,733,590.58 141,281,624.95
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investments
Long-term accounts receivable
35
Long-term equity investment 243,312,508.68 243,312,508.68
Investing property
Fixed assets 85,362,959.96 87,099,643.70
Construction in progress
Engineering materials 54,526.00 54,526.00
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 28,056,771.45 28,393,365.57
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets 2,424,916.73 2,390,839.13
Other non-current assets
Total of non-current assets 359,211,682.82 361,250,883.08
Total assets 481,945,273.40 502,532,508.03
Current liabilities:
Short-term borrowings 49,199,960.00 58,699,960.00
Transactional financial liabilities
Notes payable
Accounts payable 19,442.64 19,442.64
Accounts received in advance
Employee’s compensation
177,099.53 160,277.69
payable
Tax payable 648,374.91 1,476,139.73
Interest payable 31,491,507.59 28,205,955.32
Dividend payable
Other accounts payable 168,002,243.10 173,882,257.74
Non-current liabilities due within
1 year
Other current liabilities
Total current liabilities 249,538,627.77 262,444,033.12
Non-current liabilities:
Long-term borrowings
Bonds payable
36
Long-term payables
Specific payables
Estimated liabilities
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 249,538,627.77 262,444,033.12
Owners’ equity (or shareholders’
equity)
Paid-up capital (or share capital) 318,600,000.00 318,600,000.00
Capital reserves 52,129,496.58 52,129,496.58
Less: Treasury stock
Specific reserves
Surplus reserves 86,036,260.20 86,036,260.20
Retained profits
Foreign exchange difference -224,359,111.15 -216,677,281.87
Total owners’ (or shareholders’)
equity
Total liabilities and owners’ (or
232,406,645.63 240,088,474.91
shareholders’) equity
Current Assets: 481,945,273.40 502,532,508.03
3 Consolidated income statement
Unit: RMB Yuan
Item Note Jan.-Jun. 2012 Jan.-Jun. 2011
I. Total operating revenues 7,617,917.19 46,761,330.11
Including: Sales income 7,617,917.19 46,761,330.11
Interest income
Premium income
Handling charge and
commission income
II. Total operating cost 21,813,148.94 56,285,422.77
Including: Cost of sales 5,242,728.04 37,676,616.91
Interest expenses
Handling charge and
37
commission expenses
Surrenders
Net claims paid
Net amount withdrawn for
the insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
Taxes and associate charges 51,215.21
Selling and distribution
757,544.50 4,362,334.90
expenses
Administrative expenses 9,118,311.22 11,963,129.37
Financial expenses 4,228,100.01 9,416,432.67
Asset impairment loss 2,466,465.17 -7,184,306.29
Add: Gain/(loss) from change in fair
3,404.00 -92,647.52
value (“-” means loss)
Gain/(loss) from investment
8,168,851.55
(“-” means loss)
Including: share of profits in
associates and joint ventures
Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss) -14,191,827.75 -1,447,888.63
Add: non-operating income 1,401.20 72,669.46
Less: non-operating expense 58,179.50 1,870,535.15
Including: loss from non-current
asset disposal
IV. Total profit (“-” means loss) -14,248,606.05 -3,245,754.32
Less: Income tax expense -618,301.50 1,744,300.21
V. Net profit (“-” means loss) -13,630,304.55 -4,990,054.53
Including: Net profit achieved
by combined parties before the
combinations
Attributable to owners of the
-13,570,192.44 -4,433,879.82
Company
Minority shareholders’ income -60,112.11 -556,174.71
VI. Earnings per share -- --
38
(I) Basic earnings per share -0.04 -0.01
(II) Diluted earnings per share -0.04 -0.01
Ⅶ. Other comprehensive incomes
Ⅷ. Total comprehensive incomes -13,630,304.55 -4,990,054.53
Attributable to owners of the
-13,570,192.44 -4,433,879.82
Company
Attributable to minority
-60,112.11 -556,174.71
shareholders
Where business mergers under the same control occurred in this report period, the net profit achieved by the merged parties before
the business mergers was RMB0.
Legal representative: Chen Hongcheng Person-in-charge of the accounting work: Zhou Yuhua
Chief of the accounting division:
4. Income statement of the Company
Unit: RMB Yuan
Item Note Jan.-Jun. 2012 Jan.-Jun. 2011
I. Total sales 860,000.00
Less: cost of sales 800,527.98
Business taxes and surcharges
Distribution expenses 80,000.00
Administrative expenses 4,249,607.81 5,292,367.60
Financial costs 3,293,889.61 6,763,717.48
Impairment loss 136,310.38 -278,492.29
Add: gain/(loss) from change in fair
3,404.00 -61,863.00
value (“-” means loss)
Gain/(loss) from investment (“-”
69,647.12
means loss)
Including: income form investment
on associates and joint ventures
II. Business profit (“-” means loss) -7,676,403.80 -11,790,336.65
Add: non-business income 496.92 20,195.45
Less: non-business expense 40,000.00 672,517.17
Including: loss from non-current
asset disposal
III. Total profit (“-” means loss) -7,715,906.88 -12,442,658.37
39
Less: income tax expense -34,077.60 2,722,427.84
IV. Net profit (“-” means loss) -7,681,829.28 -15,165,086.21
V. Earnings per share -- --
(I) Basic earnings per share -0.02 -0.05
(II) Diluted earnings per share -0.02 -0.05
VI. Other comprehensive income
VII. Total comprehensive income -7,681,829.28 -15,165,086.21
5. Consolidated cash flow statement
Unit: RMB Yuan
Item Jan.-Jun. 2012 Jan.-Jun. 2011
I. Cash flows from operating activities:
Cash received from sale of
140,845,788.66 67,771,192.12
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the central
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of tradable
financial assets
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 3,000,000.00 3,186,428.37
Other cash received relating to
8,071,501.00 49,006,525.69
operating activities
40
Subtotal of cash inflows from operating
151,917,289.66 119,964,146.18
activities
Cash paid for goods and services 68,389,373.16 64,949,089.65
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original
insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 3,853,324.47 8,417,833.35
Various taxes paid 1,656,666.51 2,339,987.17
Other cash payment relating to
65,336,639.08 22,323,010.74
operating activities
Subtotal of cash outflows from
139,236,003.22 98,029,920.91
operating activities
Net cash flows from operating activities 12,681,286.44 21,934,225.27
II. Cash flows from investing activities:
Cash received from withdrawal of
5,000,000.00
investments
Cash received from return on
investments
Net cash received from disposal of
fixed assets, intangible assets and other 143,130.00 52,000.00
long-term assets
Net cash received from disposal of
1.00
subsidiaries or other business units
Other cash received relating to
108,547.06
investing activities
Subtotal of cash inflows from
143,130.00 5,160,548.06
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 532,368.23 1,922,931.00
assets
Cash paid for investment 5,733,379.63
41
Net increase of pledged loans
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
174,067.95
investing activities
Subtotal of cash outflows from
532,368.23 7,830,378.58
investing activities
Net cash flows from investing activities -389,238.23 -2,669,830.52
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Including: Cash received from
minority shareholder investments by
subsidiaries
Cash received from borrowings
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
activities
Repayment of borrowings 9,500,000.00 44,000,040.00
Cash paid for interest expenses and
844,000.00
distribution of dividends or profit
Including: dividends or profit paid
by subsidiaries to minority shareholders
Other cash payments relating to
financing activities
Sub-total of cash outflows from
9,500,000.00 44,844,040.00
financing activities
Net cash flows from financing activities -9,500,000.00 -44,844,040.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
2,792,048.21 -25,579,645.25
equivalents
Add: Opening balance of cash and
1,600,749.63 30,095,398.06
cash equivalents
42
VI. Closing balance of cash and cash
4,392,797.84 4,515,752.81
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item Jan.-Jun. 2012 Jan.-Jun. 2011
I. Cash flows from operating activities:
Cash received from sale of
26,000.00
commodities and rendering of service
Tax refunds received
Other cash received relating to
19,581,502.09 19,993,386.44
operating activities
Subtotal of cash inflows from operating
19,581,502.09 20,019,386.44
activities
Cash paid for goods and services
Cash paid to and for employees 782,113.11 604,983.20
Various taxes paid 845,890.48 863,525.80
Other cash payment relating to
9,085,239.76 781,866.54
operating activities
Subtotal of cash outflows from
10,713,243.35 2,250,375.54
operating activities
Net cash flows from operating activities 8,868,258.74 17,769,010.90
II. Cash flows from investing activities:
Cash received from retraction of
5,000,000.00
investments
Cash received from return on
investments
Net cash received from disposal of
fixed assets, intangible assets and other 52,000.00
long-term assets
Net cash received from disposal of
1.00
subsidiaries or other business units
Other cash received relating to
69,647.12
investing activities
Subtotal of cash inflows from
5,121,648.12
investing activities
Cash paid to acquire fixed assets, 630,000.00
43
intangible assets and other long-term
assets
Cash paid for investment 2,884,671.88
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
3,514,671.88
investing activities
Net cash flows from investing activities 1,606,976.24
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings
Cash received from bonds issued
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
activities
Repayment of borrowings 9,500,000.00 44,000,040.00
Cash paid for interest expenses and
844,000.00
distribution of dividends or profit
Other cash payments relating to
financing activities
Sub-total of cash outflows from
9,500,000.00 44,844,040.00
financing activities
Net cash flows from financing activities -9,500,000.00 -44,844,040.00
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
-631,741.26 -25,468,052.86
equivalents
Add: Opening balance of cash and
1,338,922.68 28,150,078.47
cash equivalents
VI. Closing balance of cash and cash
707,181.42 2,682,025.61
equivalents
44
7. Consolidated statement of changes in owners’ equity
Reporting period
Unit: RMB Yuan
Reporting period
Equity attributable to owners of the Company
Paid-up
Total
Item capital Minority
Less: General
Capital Specific Surplus Retaine owners’
(or treasury risk Others interests
reserve reserve reserve d profit equity
share stock reserve
capital)
I. Balance at the end of the 318,600 52,129,4 86,036, -127,21 4,495,708 334,041,78
previous year ,000.00 96.58 260.20 9,679.36 .04 5.46
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 318,600 52,129,4 86,036, -127219 4,495,708 334,041,78
the year ,000.00 96.58 260.20 679.36 .04 5.46
III. Increase/ decrease of
-13,570, -60,112.1 -13,630,30
amount in the year (“-” means
192.44 1 4.55
decrease)
-13,570, -60,112.1 -13,630,30
(I) Net profit
192.44 1 4.55
(II) Other comprehensive
incomes
-13,570, -60,112.1 -13,630,30
Subtotal of (I) and (II)
192.44 1 4.55
(III) Capital paid in and
reduced by owners
1. Capital paid in by
owners
2. Amounts of share-based
payments recognized in
owners’ equity
3. Others
(IV) Profit distribution
1. Appropriations to
45
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
owners (or shareholders)
4. Other
(V) Internal carry-forward of
owners’ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the
period
2. Used in the period
(Ⅶ) Other
318,600 52,129,4 86,036, -140,78 4,435,595 320,411,48
IV. Closing balance
,000.00 96.58 260.20 9,871.80 .93 0.91
Last year
Unit: RMB Yuan
Last year
Equity attributable to owners of the Company
Paid-up
Total
Item Minority
capital Less: General
Capital Specific Surplus Retaine owners’
(or treasury risk Others interests
reserve reserve reserve d profit equity
share stock reserve
capital)
I. Balance at the end of the 318,600 52,129,4 86,036, -148,60 3,837,843 311,998,88
previous year ,000 96.58 260.20 4,711.83 .82 8.77
Add: retrospective
adjustments due to business
combinations under the same
46
control
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 318,600 52,129,4 86,036, -148,60 3,837,843 311,998,88
the year ,000.00 96.58 260.20 4,711.83 .82 8.77
III. Increase/ decrease of
21,385,0 657,864.2 22,042,896
amount in the year (“-” means
32.47 2 .69
decrease)
21,385,0 -578,286. 20,806,745
(I) Net profit
32.47 68 .79
(II) Other comprehensive
incomes
21,385,0
Subtotal of (I) and (II)
32.47
(III) Capital paid in and 1,236,150 1,236,150.
reduced by owners .90 90
1. Capital paid in by 1,312,142 1,312,142.
owners .43 43
2. Amounts of share-based
payments recognized in
owners’ equity
-75,991.5
3. Others -75,991.53
3
(IV) Profit distribution
1. Appropriations to
surplus reserves
2. Appropriations to
general risk provisions
3. Appropriations to
owners (or shareholders)
4. Other
(V) Internal carry-forward of
owners’ equity
1. New increase of capital
(or share capital) from capital
public reserves
47
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the
period
2. Used in the period
(Ⅶ) Other
318,600 52,129,4 86,036, -127,21 4,495,708 334,041,78
IV. Closing balance
,000.00 96.58 260.20 9,679.36 .04 5.46
8. Statement of changes in owners’ equity of the Company
Reporting period
Unit: RMB Yuan
Reporting period
Paid-up
Less: General Total
Item capital (or Capital Specific Surplus Retained
treasury risk owners’
share reserve reserve reserve profit
stock reserve equity
capital)
I. Balance at the end of the 318,600,00 52,129,496 86,036,260 -216,677,2 240088474
previous year 0 .58 .20 81.87 .91
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 318,600,00 52,129,496 86,036,260 -216,677,2 240,088,47
the year 0.00 .58 .20 81.87 4.91
III. Increase/ decrease of amount -7,681,829. -7,681,829.
in the year (“-” means decrease) 28 28
-7,681,829. -7,681,829.
(I) Net profit
28 28
(II) Other comprehensive
incomes
Subtotal of (I) and (II) -7,681,829. -7,681,829.
48
28 28
(III) Capital paid in and
reduced by owners
1. Capital paid in by owners
2. Amounts of share-based
payments recognized in owners’
equity
3. Others
(IV) Profit distribution
1. Appropriations to surplus
reserves
2. Appropriations to general
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(V) Internal carry-forward of
owners’ equity
1. New increase of capital
(or share capital) from capital
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
(Ⅶ) Other
318,600,00 52,129,496 86,036,260 -224,359,1 232,406,64
IV. Closing balance
0.00 .58 .20 11.15 5.63
Last year
Unit: RMB Yuan
Last year
Item Paid-up Capital Less: Specific Surplus General Retained Total
capital (or reserve treasury reserve reserve risk profit owners’
49
share stock reserve equity
capital)
I. Balance at the end of the 318,600,00 52,129,495 86,036,260 -227,633,2 229,132,50
previous year 0 .58 .20 53.11 3.67
Add: change of accounting
policy
Correction of errors in
previous periods
Other
II. Balance at the beginning of 318,600,00 52,129,496 86,036,260 -227,633,2 229,132,50
the year 0.00 .58 .20 53.11 3.67
III. Increase/ decrease of amount 10,955,971 10,955,971
in the year (“-” means decrease) .24 .24
10,955,971 10,955,971
(I) Net profit
.24 .24
(II) Other comprehensive
incomes
10,955,971 10,955,971
Subtotal of (I) and (II)
.24 .20
(III) Capital paid in and
reduced by owners
1. Capital paid in by owners
2. Amounts of share-based
payments recognized in owners’
equity
3. Others
(IV) Profit distribution
1. Appropriations to surplus
reserves
2. Appropriations to general
risk provisions
3. Appropriations to owners
(or shareholders)
4. Other
(V) Internal carry-forward of
owners’ equity
1. New increase of capital
(or share capital) from capital
50
public reserves
2. New increase of capital
(or share capital) from surplus
reserves
3. Surplus reserves for
making up losses
4. Other
(Ⅵ) Specific reserve
1. Withdrawn for the period
2. Used in the period
(Ⅶ) Other
318,600,00 52,129,496 86,036,260 -216,677,2 240,088,47
IV. Closing balance
0.00 .58 .20 81.87 4.91
51
GUANGDONG RIEYS GROUP COMPANY LTD
For the Six Months Ended 30 June 2012
Notes to the Financial Statements
(English Translation for Reference Only)
I. General information
Guangdong Rieys Group Company Ltd. (hereinafter referred to as “the Company”) is a listed company established
by five enterprises including Puning Haicheng Industrial Co., Ltd (In January 28, 2010 this company was renamed
as Puning Shenghengchang Trade Development Co., Ltd.), an original sino-foreign cooperated enterprise of
Hongxing Company. Under approval of Guangdong Economic System Reform Committee (1997) No. 113 on
November 17, 1997 after joint stock system restructure based on Puning Hongxing Textile and Apparel Production
Factory Co., Ltd., which originally was a sino-foreign joint venture. The registered capital of the Company is RMB
80,000,000 when established, which was divided into 80,000,000 shares of RMB1.00 each.
In March 1999, with the approval of the Shareholders’ General Meeting, the Company declared a Bonus Issue of 3.5
shares per 10 shares based on the total number of shares accrued in the register as at December 31, 1998 (80 million
shares), making the registered capital increased to 108,000,000 shares.
The Company issued 60,000,000 shares of foreign invested stock domestically listed (“Stock B”) for foreign
investors on October 17, 2000, and issued 9,000,000 shares of Stock B for exercise of over-allotment options during
the period from October 27 to November 22, 2000 in accordance with approval of ZJFXZ (2000) No. 133 issued by
China Securities Regulatory Commission on September 29, 2000. The registered capital of the Company increased
to RMB 177,000,000 after issuance of Stock B, which was divided into 177,000,000 shares of RMB1.00 each. The
registered capital of the Company increased to 318,600,000 after years of bonus distribution and transfer increase in
paid-in capital, which was divided into 318,600,000 shares of RMB1.00 each.
As at December 31, 2011, the Company’s total share capital was 318,600,000 shares, including 164,025,000
non-tradable legal shares (representing 51.48% of total shares and 154,575,000 domestic listed foreign shares (stock
B) (representing 48.52% of total shares).
The Company and its subsidiaries (hereinafter referred to as “the Group”)’s main scopes of business are
manufacture, process and sales of various kinds of clothes including suit, fashion clothing, uniform, and knit goods,
sales of industrial material for production, hardware, chemical product, daily necessities, furniture, arts and crafts
and agricultural product and etc. (excluding commodities for exclusive sales, special control or monopolization) and
development and operation of real estates and various kinds of investment.
II. Principal accounting policies and estimates and previous errors
(1) Basis for the preparation
The consolidated financial statements of the Company and its subsidiaries are prepared based on assumption of the
Company’s continuing operations, according to transactions and events actually occurred, and based on the
following preparation basis, important accounting policies and accounting estimates.
(2) Statement of complying with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of "Accounting Standards for Business
52
Enterprises - Basic Standards" issued by the Ministry of Finance on February 15, 2006 and 38 special accounting
standards, as well as application guidance of the accounting standards for business enterprise, interpretation of the
accounting standards for business enterprise and other relevant regulations (hereafter referred as “Accounting
Standard for Business Enterprise”), and truly and completely reflect the financial conditions, operation results and
cash flow of the Company.
In addition, the Group's financial statements also comply with the disclosure requirements on financial statements
and notes thereof in “Compilation Rules for Information Disclosures by Companies That Offer Securities to the
Public No.15 - General Provisions for Financial Reports” (hereinafter referred to as "the No. 15 ") amended by
China Securities Regulatory Commission (hereinafter referred to as "SFC") in 2010.
(3) Fiscal year
The fiscal year of the Company is the solar calendar year, which is from January 1 to December 31.
(4) Recording currency
Recording currency is RMB.
(5) Accounting treatment for business combinations under the common control and not under the common
control
1. Business combination under the common control
Business combination under the common control refers to that parties involved in the merger are subject to the
ultimate control of the same party or same multi parties before & after the merger and such control is not temporary.
Assets and liabilities acquired by merging parties in a business combination are measured at the book value of the
combined parties at the merge date. Upon any difference between book value of net assets obtained by merging
parties and book value the merging price they pay (or the aggregate nominal amount of issued shares), it should
adjust the capital surplus (share premium), and if capital surplus (share premium) isn’t sufficient to dilute, then
adjust retained earnings. Merger date refers the date that the merging parties actually gain the control of the
combined parties.
2. Business combination not under the common control
Business combination not under the common control refers to that parties involved in the merger are not subject to
the ultimate control of the same party or same multi parties before & after the merger.
Costs of the combination paid by the purchasers are the sum of assets paid to obtain the control of the combined
parties, liabilities incurred or assumed, the fair value of equity securities issued at the purchase date, and various
direct costs occurred in the business combination. The difference between the fair value of its assets paid and the
book value thereof is accrued to current profit or loss. Purchase date refers to the date that the purchasers actually
gain the control of the purchased parties.
The purchasers allocate the costs of combination on the purchase date, and confirm the fair values of identifiable
assets, liabilities and contingent liabilities of the purchased parties they obtain. The difference that costs of
combination exceed the fair value of identifiable assets of the purchased parties obtained in the merger will be
recognized as goodwill; the difference that costs of combination are less than the fair value of identifiable assets of
the purchased parties obtained in the merger will be accrued in current profit or loss.
(6) Preparation of the consolidated financial statements
The combined scope of consolidated financial statements includes the Company and its subsidiaries. Subsidiary’s
operating results and financial position are included in the consolidated financial statements from the controlled date
53
until the end date.
As for subsidiary obtained by the Company through business combination under the common control, in the
preparation of current consolidated financial statements, it will be deemed that the combined subsidiary is
incorporated into the consolidation scope when the ultimate controlling party of the Company implements the
control right, and the beginning balance of consolidated financial statements and comparative statements will be
adjusted accordantly.
As for subsidiary obtained by the Company through business combination not under the common control, in the
preparation of current consolidated financial statements, the financial statements of such subsidiary will be adjusted
based on the fair value of the identifiable assets and liabilities determined at the purchase date, and since the
purchase date, the consolidated subsidiary will be incorporated into the consolidation scope.
If the accounting period or accounting policy adopted by subsidiary and parent company are not consistent, a
necessary adjustment shall be made to the financial statements of subsidiary in accordance with the accounting
period or accounting policy of parent company when the consolidated financial statements are prepared. All major
transactions, balances and unrealized profit or loss among enterprises within the consolidation scope will be offset
in the preparation of consolidated financial statements.
Interests and income attributable to minority shareholders of subsidiary will be listed separately respectively under
the Shareholders’ Equity in the Consolidated Balance Sheet and under the Net Profit in the Consolidated Income
Statement.
If the losses attributable to the minority shareholders exceed the share of minority shareholders enjoyed in the
ownership interest of the subsidiary, in addition to the part that the minority shareholders have the obligation and the
ability to take, the balance will offset against the shareholders’ equity of parent company. If the subsidiary makes a
profit subsequently, before making up the loss attributed to relevant minority shareholders beard by shareholders’
equity of parent company, all the profits are attributable to shareholders’ equity of parent company.
(7) Confirmation standard for cash and cash equivalent
In preparing the cash flow statement, the cash equivalents of the Company include the investments with short period
(it usually expires within three months from the purchase date), characteristics of high liquidity, easy conversion to
certain amount of cash and little risk of value change.
(8) Transactions of foreign currencies and conversion of financial statements in foreign currencies
1. Foreign currency transactions are converted into RMB for recording purpose at the exchange rate on the first day
of the period when the transaction occurs.
Adjustments are made to foreign currency accounts in accordance with the exchange rate prevailing on the balance
sheet date. Value of non currency item accrued at fair value by foreign currency is adjusted in accordance with the
exchange rate prevailing on fair value confirm date. Conversion differences arising from those specific borrowings
are to be capitalized as part of the cost of the construction in progress in the period before the fixed assets being
acquired and constructed has not yet reached working condition for its intended use. Conversion differences arising
from other accounts are charged to financial expenses.
2. In balance sheet, assets and liabilities items are converted into RMB at the exchange rate prevailing on the
consolidated balance sheet date. Owner’s equity items (excluding undistributed profit item) are converted into RMB
at the exchange rate when the transaction occurs. In income statement, revenue and expenses items are accrued by
the proper method and the approximate rate when the transaction occurs. Translation difference occurred for above
reason is disclosed in the consolidated balance sheet as a separate item.
54
(9) Financial instruments
1. Classification of financial instruments
Based on the purposes of obtaining the financial assets and assuming the liabilities, the Company’s management
classifies the financial instruments into: the financial assets or financial liabilities that are calculated in the fair
values and whose changes are accrued to current profit or loss, including trading financial assets or financial
liabilities, and those directly designated to be calculated in the fair values and whose changes are accrued to current
profit or loss; the held-to-maturity investments; loans and receivables; available-for-sale financial assets; and other
financial liabilities, etc.
2. Confirmation basis and measurement of financial instruments
(1) The financial assets (or financial liabilities) that are calculated in the fair values and whose changes are accrued
to current profit or loss
The fair values (excluding cash dividends that have been declared but have not been distributed and bond interests
that have exceeded the expiry dates but have not been drawn) are deemed as the initial confirmation amount on
acquisition. Relevant transaction expenses are charged to profit or loss of the period.
The interests or cash dividends obtained during the holding period are recognized as investment income. Change of
fair values is charged to profit or loss of the period at the year end.
Difference between the fair value and initial book value is recognized as investment income upon disposal.
Adjustment is made to gain or loss from changes in fair values.
(2) Held-to-maturity investments
The sum of fair values (excluding bond interests that have exceeded the expiry dates and have not been drawn) and
relevant transaction expenses are deemed as the initial confirmation amount.
During the holding period, interest income is recognized as investment income based on the amortized cost and
actual interest rate (if the difference between the actual interest rate and the nominal interest rate is tiny, calculation
is based on the nominal interest rate). The actual interest rates are determined upon acquisition and remain
unchanged during the expected holding period or a shorter period applicable.
Difference between the amount received and book value of the investment is charged to investment income upon
disposal.
If the Company sells or re-classifies a large amount of held to maturity investments prior to maturity (large amount
refers to the total amount relative to such investments prior to the sale or re-classification), then the Company will
re-classify the rest of such type of investment as financial assets available for sale, and the Company will not
re-classify any financial assets as held to maturity in the current accounting period or following two full fiscal years,
but the following is excepted: the sale date or re-classification date is near to the maturity or redemption date of such
investment (such as three months before maturity), and the market interest rate changes have no significant effect on
the fair value of the investment; all the initial principal of such investment is nearly recovered according to the
periodic payments or early repayment under the contract, resell or re-classify the remaining; sale or re-classification
is caused by independent matters the Company can’t control, not expected to recur and difficult to predict
reasonably.
(3) Receivables and loans
Receivables primarily are the amount receivable formed from sales of goods or service provision of the Company
and other claims, which initial recognition amount will be confirmed according to the contract or agreement price
receivable from the purchasers. For recovery or disposal of loans and receivables, the difference between the price
obtained and the book value of loans and receivables is charged to current profit or loss.
Loans are mainly loans issued by financial companies. For loans issued by financial institutions according to the
current market conditions, the initial recognition amount will be confirmed according to the principal of loans issued
55
and related transaction expenses. Interest income recognized during the holding period of the loan will be calculated
at the actual rate. Real interest rate will be determined upon obtaining loans, and will be unchanged within the
expected duration of the loan or applicable shorter period. If the difference between real interest rate and the contract
interest rate is small, then the income will be calculated at the contract interest rate.
(4) Available-for-sale financial assets
The sum of fair values (excluding cash dividends that have been declared but have not been distributed and bond
interests that have exceeded the expiry dates but have not been drawn) and relevant transaction expenses is deemed
as the initial confirmation amount.
The interests and cash dividends generated during the holding period are accrued to investment income. At year end,
available-for-sale financial assets are calculated in the fair values and the changes in fair values are accrued to the
capital reserves (other capital reserves).
Difference between the amount received and the book value of the financial assets is recognized as investment gain
or loss upon disposal. At the same time, the accumulated changes in fair value previously recognized in the owners’
equity are transferred into investment gain or loss.
(5) Other financial liabilities
The sum of fair values and relevant transaction expenses is deemed as the initial confirmation amount. The
subsequent calculation adopts the amortized cost method. Method for determining fair value: directly refer to
quotations in active markets (or using valuation techniques, etc.).(For using valuation techniques, it should disclose
relevant valuation assumptions in accordance with various types of financial assets or financial liabilities, including
prepayment rates, expected credit loss rate, interest rate or discount rate.)
3. Confirmation and measurement of transform of financial assets
The Company should terminate recognizing these financial assets when the transform occurs and almost all risk and
return of the financial assets ownership have been transferred to the transferee; The Company should not terminate
recognizing this financial assets if almost all risk and return of the financial assets ownership have been remained.
Essence is more important than form when judging whether the transform meets the requirements of the financial
assets termination recognition conditions mentioned above. The Company divides the transform of financial assets
into entire transfer and partial transfer.
(1) If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following two items shall be recorded in current profit or loss:
①The book value of the transferred financial asset;
②The sum of consideration received from the transfer, and the accumulative amount of the changes in the fair
values originally recorded in the owners’ equities (in the case that the financial asset involved in the transfer is an
available-for-sale financial asset).
(2) For partial transfers of financial assets that meet the recognition conditions of termination in recognition, the
book value of the whole financial assets are spitted into the derecognized portion and the exderecognised portion
according to their respective relative fair values (under this situation, the retained service assets are deemed as a part
of the exterminated financial assets), and the difference between the following two items shall be recorded in the
current profit or loss:
①Book value of the derecognized portion;
②The sum of the consideration of the derecognized portion and the accumulated changes in fair value previously
recognized in the owners’ equity related to the derecognized portion (in the case that the assets transferred are
available-for-sale financial assets).
For transfers of financial assets that do not meet the conditions of termination in recognition, the financial assets
remain recognition and the consideration received is recognized as financial liabilities.
56
(3) Derecognized financial liabilities
If the existing obligations of financial liabilities have been discharged in whole or in part, then the Company will
derecognize such financial liability or part thereof.
If all or part of the financial liabilities is derecognized, the difference between the book value of the derecognized
financial liabilities and payment will be charged into current profit or loss.
4. Confirmation of fair values of financial assets and financial liabilities
For financial assets or financial liabilities measured at fair value by the Company, the Company will use all or part
of the quotations in the market (or use valuation techniques) as their fair values.
(1) Impairment of available-for-sale financial assets:
If at the year end the fair values of the available-for-sale financial assets decline significantly, or the trend of the
decline is expected to be non-temporary after consideration of all relevant factors, the assets are deemed impaired
and impairment loss is recognized together with the amount transferred from the accumulated decreases in fair
values previously recognized in the owners’ equity.
(2) Impairment of held-to-maturity financial assets and loans:
For held-to-maturity investments and loans, if there is objective evidence on the incidence of impairment, then the
impairment loss will be calculated and recognized according to the difference between the book value and the
present value of estimated future cash flows.
(10) Receivables
If there is objective evidence at the year end to indicate that impairment exists in accounts receivable (including
accounts receivable, notes receivable, other receivables, long-term receivables, etc.), their carrying amount should
be decreasingly recorded as recoverable amount. The decreased amount should be recognized as impairment loss of
assets and be recorded into current profit or loss.
Prepayment’s risk characteristics are subject to the nature of prepayment, if the prepayment is for the purchase of
goods or equipment, then before the agreed delivery date, or not settled but delivered, no provision for bad debts; if
the other party of the contract fails to deliver and overdue more than one year after the contract data, provision for
bad debts will be made according to the risk characteristics of receivables. For prepayment paid for the construction
project, if not fully pay the whole price and the ownership of the construction project is expected to be obtained, no
provision for bad debts.
For intra-group receivables, provision for bad debts will be made according to expected bad debt losses may occur.
Conduct impairment testing separately on accounts receivable with relatively higher individual price at end of the
period. If there is objective evidence to indicate that impairment exists, recognize impairment loss and provide for
bad and doubtful debts in accordance with the difference between its future cash flow and carrying amount.
Individual material receivables are the top five largest receivables or sum of receivables which account for 10% of
ending balance of accounts receivable.
For individual receivables not material at end of the period, the Company can conduct impairment testing separately;
for receivables without impairment through separate testing (including receivables material and not material), the
Company will categorize them into the receivables groups with similar risk factors, and assigns a certain percentage
of the end of the period balance of the receivable groups to determine the impairment loss and make provision for
bad debts.
Except the receivables provided impairment loss separately, the Company set the provision rate in accordance with
the actual loss percentage of the same or similar credit risk group by aging divided in the previous years and the real
circs as follows:
Age Appropriation proportion of
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receivables (%)
Within 1 year 2%
1 to 2 years 10%
2 to 3 years 50%
Over 3 years 80%
(11) Inventory
1. Inventory classification
Inventory is classified to:
(1) Real estate development products: completed development products, development products in construction, and
products to be developed.
(2) Non-real estate products: raw materials, products in production, stock merchandise, delivery commodity,
commission processing materials, etc.
2. Inventory valuation
Inventories are valued at the lower of cost and net realizable value.
Real estate development product costs include land cost, construction costs and other costs. Borrowing costs meet
the capitalization conditions are also included in real estate development product costs.
Non-real estate development product costs include purchase cost, process cost and other costs.
The inventory is calculated using weighted average method when delivered.
3. Confirmation of net realizable value of inventory and Recording method of provision for inventory devaluation
At the end of the year, after overall check of the inventory, draw or adjust provision for inventory devaluation
according to the lower of the cost of inventory and net realizable values of inventory.
In normal operation process, net realizable values of commodities inventories for direct sales including finished
goods, commodities and materials for sales are determined by the estimated selling prices minus the estimated
selling expenses and relevant taxes and fees; In normal operation process, net realizable values of materials that
need further processing are determined by the estimated selling prices of the finished goods minus estimated cost to
completion, estimated selling expenses and relevant taxes. For the inventory held to implement sales contract or
work contract, its net realizable value is calculated on the basis of contract price. For the balance of inventory
beyond the amount of the sales contract, its net realizable value is calculated on the basis of general selling price.
Provision for inventory devaluation is provided for based on individual inventory item at end of the period. For
inventory that has large quantity and low unit price, the provision for inventory devaluation is provided for based on
categories of the inventory. For inventory related to the products manufactured and sold in the same district, with
same or similar use or purpose, and difficult to account for separately from other items, the provision for inventory
devaluation is provided for on a consolidated basis.
When the factors that influence the decreased bookkeeping of inventory value have disappeared, switch back from
the provision for inventory devaluation amount that previously appropriated and the amount that switched back is
charged to profit or loss of current period.
4. System of stock inventories
Perpetual inventory system is applied.
5. Amortization for low cost and short lived articles and package materials
For low cost and short lived articles, use step-amortization method；
For package materials, use lump-sum amortization method.
(12) Long-term Equity Investment
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1. Confirmation of initial investment cost
(1) Long-term equity investment caused by the enterprise merger
In case the long-term equity investment are made to obtain the equities of the enterprises under the common control
and the Company pays the cash, transfers the non-cash assets or bears the liabilities as the consideration for the
merger, the book value share on the merging date to obtain the owners’ equities of the merging party will be deemed
as the initial investment cost of long-term equity investment. The difference between the initial investment cost of
long-term equity investment and paid cash, transferred non-cash assets and book values of liabilities will be
supplemented by the capital reserve; in case the capital reserve is not enough, the remaining gains will be adjusted.
In case the Company issues the equity securities as the merger consideration, the book value share on the merging
date to obtain the owners’ equities of the merging party will be deemed as the initial investment cost of long-term
equity investment. If the book value amount of the issued shares is deemed as the capital, the difference between the
initial investment cost of long-term equity investment and the book value amount of the issued shares will be
supplemented by the capital reserve; in case the capital reserve is not enough, the remaining gains will be adjusted.
All direct expenses related to the enterprise merger, including the auditing expense, evaluation expense, legal
service expense, etc will be accrued to the current profit or loss.
In case the long-term equity investment are made to obtain the equities of the merging enterprises which are not
under the common control, the consolidation cost determined according to ‘Accounting Standard for Business
Enterprises No. 20 – Business Combinations’ on the purchase date will be deemed as the initial investment cost.
(2) Other types of long-term equity investment
In case the long-term equity investment is made by cash payment, the actual payment amount will be deemed as the
initial investment cost.
In case the long-term equity investment is made by issuing the equity securities, the fair values of issued equity
securities will be deemed as the initial investment cost.
For the long-term equity investment made by the investors, the values agreed in the investment contracts or
agreements (deducting the cash dividends or profits that have been declared but have not been dismissed) will be
deemed as the initial investment cost, except that the contracts or agreements provide that the values are not fair.
In case the long-term equity investment is made by exchanging the non-currency assets, and this exchange has the
commercial substance and the fair values of exchanged assets can be reliably calculated, the fair values of assets
surrendered will be deemed as the initial investment cost, unless there is conclusive evidence that the fair values of
assets received are more reliable; for exchange of non-currency assets that do not satisfy the above conditions, the
sum of book value of assets surrendered and relevant taxes payable will be deemed as the initial investment cost.
In case the long-term equity investment is made by the mode of liability restructure, the fair values of the obtained
equities will be deemed as the initial investment cost.
2. Judgment criteria of joint control and significant influence in the invested companies
If, in accordance with provisions in the contracts, the Company enjoys joint control over certain economic activities
only when taking part in significant financial and operational decisions with investors in need of share of control
who unanimously agree, the Company is deemed to enjoy joint control with other parties over the invested
companies. If the Company is authorized to take part in decision making with regard to the financial and operational
policies, but is unable to control or control jointly with other parties over the invested company, the Company is
deemed to be able to exercise significant influence over the invested companies.
3. Subsequent measurement and profit & loss recognition
When the Company is able to exercise significant influence or joint control, the difference of cost of initial
investment in excess of the proportion of the fair value of the net identifiable assets in the invested companies is not
adjusted against the initial cost of long-term equity investment. The difference of cost of initial investment in short
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of the proportion of the fair value of the net identifiable assets in the invested companies is charged into the current
profit or loss statement. .
The Company’s long-term equity investments in subsidiaries are accounted for by the cost method and adjusted
according to the equity method when preparing consolidated financial statements. When the Company has neither
joint control nor significant influence in the invested companies, there is no quotation available on the active market,
and the fair value of the investment cannot be reliably measured, the long-term equity investment is accounted for
under the cost method.
When the Company has joint control or significant influence over the invested companies, the long-term equity
investment is accounted for under the equity method.
For profit or loss of internal transactions occurred among the Company and joint ventures, the proportion
attributable to the Company will be calculated according to shareholdings and offset in the application of equity
method.
Recognition of share of losses of the invested companies under the equity method is treated in the following steps:
First, reduce the book value of the long-term equity investment. Second, when the book value is insufficient to cover
the share of losses, investment losses are recognized up to a limit of book values of other long-term equity which
form net investment in substance by reducing the book value of long term receivables, etc. Finally, after all the
above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions
stipulated in the investment contracts or agreements, estimated liabilities are recognized and charged into current
investment loss according to the liabilities estimated.
If the invested company achieve profit in subsequent periods, the treatment is in the reversed steps described above
after deduction of any unrecognized investment losses, i.e., reduce book value of estimated liabilities recognized,
restore book values of other long-term equity which form net investment in substance, and in long-term equity
investment, and recognize investment income at the same time.
Treatment of other equity changes except for net profit or loss in the invested companies: For other equity changes
except for net profit or loss in the invested companies, if the proportion of investments remain unchanged, the
Company calculates the proportion it shall enjoy or bear and adjust book value of long-term equity investment, and
increase or decrease capital reserves – other capital reserves at the same time.
4. Impairment testing and impairment provision methods
(1) In case the cost method is used to calculate the long-term equity investments which are not quoted in the active
market or whose fair values cannot be reliably calculated, the depreciation loss will be determined based on the
difference between the book values and current values determined by the discounting of future cash flow in line with
the current market return rate of similar financial assets.
(2) For other long-term equity investments, in case the calculation results of receivable amounts indicate that the
receivable amount of this long-term equity investment is less than their book values, the difference will be
confirmed as the asset depreciation losses.
Once the depreciation loss of long-term equity investment is confirmed, they will not be reversed.
(13) Investment properties
Investment properties refer to properties held to earn rentals or for capital appreciation, or both, including leased
land use right and those held and ready to transfer after value added, and leased buildings.
The Company uses the cost model to measure existing investment properties. For investment properties and rental
assets measured at the cost model, they will be implemented the same depreciation policy similar to fixed assets,
land use right for rental will be implemented the same amortization policy to intangible assets; for those with the
indication of impairment, the recoverable amount can only be estimated, and if recoverable amount is lower than its
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book value, the corresponding impairment loss should be confirmed.
(14) Fixed assets
1. Recognition standard of fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of services, for rental to others, or for
administrative purposes; they have useful lives over one fiscal year. And they shall be recognized only when both of
the following conditions are satisfied:
(1) It is probable that economic benefits associated with the assets will flow to the enterprise; and
(2) The cost of the fixed assets can be measured reliably.
2. Initial measurement of fixed assets
Fixed assets are recorded at the actual cost on acquisition.
(1) The cost of fixed assets purchased includes purchase price, related tax, transportation expenses, loading and
uploading expenses, installment expenses and specialist service expenses attributable to the assets that arise before
the assets are completed and put into use.
(2) Where payment for the purchase price of a fixed asset is deferred beyond normal credit terms, such that the
arrangement is in substance of a financing nature, the cost of the fixed asset shall be determined based on the present
value of the purchase price, The difference between the purchase price and its present value shall be recognized in
profit or loss over the period of credit. The cost of a self-constructed fixed asset comprises those expenditures
necessarily incurred for bringing the asset to working condition for its intended use.
(3) For fixed assets formed through obtaining them by the debtor paying for debt in debt restructure, recognize its
recording value as fair value of the fixed assets, and record the difference between the carrying amounts of debt
restructure and the fixed assets used for paying debt into current profit or loss.
(4) In the circumstance of the non monetary assets exchange has commercial nature and fair value of surrendered or
received assets can be measured reliably, recording value of received assets should be recognized as fair value of
surrendered assets unless there is clear evidence to indicate that fair value of received assets is more reliable; for non
monetary assets exchange which doesn’t meet the requirement of premise mentioned above, cost of received assets
should be recognized as carrying amount and related tax expenses payable of surrendered assets and should not be
recognized as profit or loss.
(5) Recording value of fixed assets obtained by absorbing and consolidated by enterprise under the common control
should be recognized as carrying amount of the consolidated party; recording value of fixed assets obtained by
absorbing and consolidated by enterprise under different control should be recognized as fair value.
(6) Recording value of financing leasehold should be recognized as fair value of leasing assets and present value of
lowest leasing payment when leasing occurs whichever is lower.
3. Depreciation method of fixed assets
Depreciation of fixed assets is provided for on a straight-line basis, the depreciation rate is recognized in accordance
with category, estimated useful life and estimated residual rate of fixed assets.
Fixed assets renovations expenses that meet the criteria of capitalization are depreciated on an individual basis over
the interval of two renovations or remaining useful life of the fixed assets, whichever is shorter (2-5 years).
For fixed assets leased through finance lease, if it can reasonably determine that the ownership of the leased assets
will be obtained when the lease period expires, provision for depreciation will be made in useful life of leased assets;
if it can’t reasonably determine that the ownership of the leased assets will be obtained when the lease period expires,
provision for depreciation will be made in the lease period and useful life of leased assets, whichever is shorter.
Fixed assets renovations expenses that meet the criteria of capitalization are averagely amortized according to the
period between the two renovations, remaining lease period and the useful life of fixed assets, whichever is short.
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Estimated useful life and annual depreciation rate of fixed assets by categories are as follows:
Category Estimated useful life (year) Estimated net residual value rate (%) Annual depreciation rate (%)
Buildings and
35 5% 2.71%
constructions
Machinery
10 5% 9.50%
equipment
Transportation
8 5% 11.88%
equipment
Office equipment
5 5% 19.00%
and others
(15) Construction in progress
1. Classification of construction in progress
The Construction in progress will be calculated based on the classification of proposed projects.
2. Transfer time of construction in progress to fixed assets
For the construction in progress, all expenses occurring before they are ready for the use will be the book values as
the fixed assets. In case the construction in progress has been ready for use but the final accounts for completion
have not been handled, from the date when such projects has been ready for use, the Company will evaluate the
values and determine the costs based on the project budgets, prices or actual costs of projects, etc and the
depreciation amount will also be withdrawn; when the final accounts for completion are handled, the Company will
adjust the originally evaluated values subject to the actual costs, but will not adjust the withdrawn depreciation
amount.
(16) Borrowing expenses
1. Confirmation principle of capitalization of borrowing expenses
In case the borrowing expenses occurring in the Company may directly be attributable to the construction and
productions of assets complying with the capitalization conditions, they will be capitalized and accrued to the
relevant capital costs; other borrowing expenses will be confirmed as the expenses based on the actual amount at the
time of occurrence and accrued to the current profit or loss.
The assets complying with the capitalization conditions mean the assets such as fixed assets, investment real estates
and inventory, etc that need a long time of construction and production activities before they are ready for use or for
sales.
The borrowing expenses begin to be capitalized under the following circumstances:
(1) The asset payment have been made which include the payment such as the paid cashes, transferred non-currency
assets or borne liabilities with the interests to construct or produce the assets complying with the capitalization
conditions;
(2) The borrowing expenses have occurred;
(3) The necessary construction or production activities to make the assets ready for use or sales have been launched.
In case during the construction or production period the assets complying with the capitalization conditions are
abnormally suspended and the suspension period exceeds 3 months continuously, the capitalization of borrowing
expenses will also be suspended.
The capitalization of borrowing expenses for the assets that have been constructed or produced and are ready for use
or sales will be stopped.
When parts of the purchased assets or assets whose production satisfies the capitalization conditions are completed
respectively and can be used individually, the capitalization of the borrowing expenses of these parts will be
stopped.
2. Capitalization period of borrowing expenses
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The capitalization period means the period from the moment that the borrowing expenses start to be capitalized to
the moment that the capitalization is stopped, which does not include the period that the capitalization of borrowing
expenses is suspended.
3. Calculation method about capitalization amount of borrowing expenses
The interest expenses for special loans (after the deduction of interest income generated by the unused loan capitals
or the investment return obtained from the temporary investments) and auxiliary expenses will be capitalized before
the assets complying with the capitalization conditions are ready for the expected use or sales.
The interest amount of general loans to be capitalized will be determined by multiplying the weighted average
amount of the asset payment by which the accumulated assets exceed the special loans with the capitalization rate of
general loans. The capitalization rate will be determined based on the weighted average interest rate of general
loans.
In case the loans have the discounts or premiums, the Company will adjust the interest amount in each period based
on the amortized discount and premium amount in each accounting period in accordance with the actual interest rate
method.
(17) Accounting method of intangible assets
1. Calculation method of intangible assets
When acquiring, the intangible assets are generally recorded according to actual cost.
(1) For those the price of intangible assets deferred paid exceed normal credit condition so substantively has
financing character, the cost of intangible assets is confirmed on the basis of present value of purchasing price.
(2)For fixed assets formed through obtaining them by the debtor paying for debt in debt restructure, recognize its
recording value as fair value of the fixed assets, and record the difference between the carrying amounts of debt
restructure and the fixed assets used for paying debt into current profit or loss; in the circumstance of the non
monetary assets exchange has commercial nature and fair value of surrendered or received assets can be measured
reliably, recording value of received assets should be recognized as fair value of surrendered assets unless there is
clear evidence to indicate that fair value of received assets is more reliable; for non monetary assets exchange which
doesn’t meet the requirement of premise mentioned above, cost of received assets should be recognized as carrying
amount and related tax expenses payable of surrendered assets and should not be recognized as profit or loss.
(3) Recording value of fixed assets obtained by absorbing and consolidated by enterprise under the common control
should be recognized as carrying amount of the consolidated party; recording value of fixed assets obtained by
absorbing and consolidated by enterprise under different control should be recognized as fair value.
2. Useful life and amortization of intangible assets
(1) Estimation of useful life for intangible assets with finite useful life:
At end of each year, the Company will recheck the useful life of intangible assets with the definite useful life
and amortization method will be rechecked.
According to the re-check, the useful life and amortization method of the intangible assets at the end of the year
are not different from those estimated before.
(2) Amortization of intangible assets:
In case their useful life is limited, the intangible assets are amortized evenly over the period in which they
produce economic profit for the Company; in case it is impossible to evaluate the useful life when the intangible
assets bring the benefits to enterprises, it will be deemed that the useful life of such intangible assets is uncertain and
amortization is not applicable.
(18) Amortization method and term of long-term expenses to be amortized
Long-term expenses to be amortized will be averagely amortized in the benefit period, including:
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1. Prepaid rentals for operating leased fixed assets will be averagely amortized according to the term stipulated
in the lease contract.
2. Fixed assets improvement expenses for operating leased fixed assets will be averagely amortized according
to the remaining lease period and the useful life of leased assets, whichever is shorter.
(19) Impairment of fixed assets, construction in progress, intangible assets, goodwill and other
long-term non-financial assets
For long-term non-financial assets such as fixed assets, construction in progress, intangibles, etc, the Company
assesses whether signs of possible impairment exist at end of each year. Impairment tests are performed on goodwill
arises from business combinations and intangibles with uncertain useful life regardless of whether signs of possible
impairment exist.
For assets with signs of impairment, recoverable amounts are estimated:
(1) When there are signs of possible impairment on assets, the Company estimates the recoverable amount of
the assets on an individual basis.
(2) If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine
the recoverable amount of the asset group to which the asset belongs.
(3) Recoverable amounts are determined as the fair value of the assets after netting off costs of disposal, and the
current value of projected future cash flows generated by the assets, whichever is higher.
When the recoverable amount of an asset is lower than the book value of the asset, the book value of the asset
is reduced to its recoverable amount. The amount reduced is recognized as impairment loss on assets in the current
profit or loss statement, and provision for impairment loss on assets is recorded at the same time.
Future depreciation or amortization of assets is adjusted after recognition of impairment loss so that the
adjusted book value of the assets (less estimated residual value) is amortized systematically over their remaining
useful life.
Impairment loss on long-term non-financial assets such as fixed assets, construction in progress, intangibles,
etc shall not be reversed once recognized.
(20) Estimated liabilities
1. Recognizing principles:
When businesses related to external security, pending litigation or arbitration, product quality assurance,
retrenchment plan, contract of loss, reconstruction obligation, disposing obligation of fixed assets and other
contingencies satisfy all the following conditions, the Company will recognize them as liabilities:
(1) The obligation is the present obligation of the Company;
(2) The performance of such obligation is likely to lead to an outflow of economic benefits;
(3) The amount of the obligation can be reliably measured.
2. Measurement methods
Estimated liabilities shall be initially measured according to the best estimated amount required to be paid
when current obligations are fulfilled.
When determining the best estimated amount, it should take full consideration of the risks, uncertainties and
time value of money related to contingencies.
Best estimated amount is handled under the following circumstances:
(1) if the amount required is in a continuous range, and the likelihood of various outcomes within the scope is
same, then the estimated amount is determined according to the median of the range, that is the average amount of
upper and lower caps.
(2) if the amount required isn’t in a continuous range, or there isn‘t such a continuous range but the likelihood
of various outcomes within the scope isn’t same, such as the contingency involves a single item, then the best
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estimated amount is determined in accordance with the amount with most likelihood; if the contingency involves
several items, then the best estimated amount is determined according to various possible outcomes and associated
probabilities.
If expenses required to settle all or part of estimated debt are expected to be compensated by a third party, then
the amount of compensation will be separately recognized as an asset upon basically being identified to be received,
and the amount of compensation recognized will not exceed the book value of projected liabilities.
(21) Income
1. Sale of goods
Revenue from the sale of goods is recognized when the enterprise has transferred to the buyer the significant
risks and rewards of ownership of the goods; the enterprise retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the goods sold; it is probable that the economic
benefits associated with the transaction will flow to the enterprise; and the relevant amount of revenue and costs can
be measured reliably.
Real estate sales will be confirmed the realization of revenue thereof upon the complete and acceptance of real
estate, meeting the delivery terms of sales contract, and obtaining the proof of payment made by the purchasers
according to the agreement under the contract on delivering real estate (usually after receiving the first phase of
sales contract payment and confirming the payment arrangements of the remaining).
2. Rendering of service
In case on the preparation date of balance sheet the results about service transaction can be reliably evaluated,
the labor income will be confirmed by the completion percentage method. The completed percentage of service
transactions is determined by the measurement of finished work (or the proportion of services performed to date to
the total services to be performed, or the proportion of costs incurred to date to the estimated total costs).
The Company will determine the total amount of rendering of service based on the prices in contracts and
agreements that have been received or will be receivable, except that such prices are not fair. On the balance sheet
date, the current labor incomes will be determined based on the amount after the total labor income amount
multiplied by the completion progress deducts the accumulated labors in the past accounting periods. At the same
time, the current labor incomes will be carried forward based on the amount after the estimated total labor cost
multiplied by the completion progress deducts the accumulated labors in the past accounting periods.
In case the service transaction results on the preparation date of balance sheet cannot be reliably evaluated, they
will be determined in the following methods:
(1) In case the service costs that have occurred can be compensated, the service income will be confirmed
based on such service costs and the same amounts will be settled as the service costs.
(2) In case the service costs that have occurred cannot be compensated, such service costs will be accrued to the
current profit or loss and will not be confirmed as the service costs.
3. Use right of transferred assets
In case the economic benefits related to the transaction will probably flow into the enterprise and the income
amounts can be reliably calculated, the Company will determine the income amount about use right of transferred
assets by the following means:
(1) The interest income amount will be calculated and determined based on the use time of currency capital
from the Company by others and actual interest rate.
(2) The income amount of use expenses will be calculated and determined subject to the charging time and
method agreed in the relevant contracts and agreements.
4. Government grants
Government grants refer to monetary assets or non-monetary assets obtained free by a company from the
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government, but not include the capital invested by government as a business owner. Government grants are
classified to government grants related to assets and government grants related to income.
Government grants will be recognized upon meeting both of the following two conditions:
(1) The company can meet the conditions attached to government grants;
(2) The company can receive government grants.
Government grants related to assets are recognized as deferred income and are averagely distributed in the life
of relevant assets, and recorded to current profit or loss. Government grants related to income are handled under the
following circumstances:
(1) If such grants are used to compensate for relevant costs and losses of the company during later periods, they
will be recognized as deferred income and recorded to current profit or loss upon recognizing related costs;
(2) If such grants are used to compensate for relevant costs and losses occurred of the company, they will be
directly through current profit or loss.
(22) Deferred income tax assets / deferred income tax liabilities
Corporate income tax will be calculated by liability method of the balance sheet.
The company’s tax base will be determined upon the company obtains the assets or liabilities; on the balance
sheet date, take the balance sheet as the basis, and if the book value of related assets or liabilities are different to the
tax bases provided by tax laws, it will calculate and confirm the deferred income tax assets or deferred income tax
liabilities occurred in accordance with the provisions of tax laws, which effect will be included in current income tax
expense.
The company is subject to the limit of the amount of taxable income likely to be used to offset temporary
difference, thus confirms the deferred income tax asset produced by the deductible temporary difference.
In addition to the cases specified under income guidelines that no need to confirm the deferred income tax
liabilities, the company should recognize related deferred income tax liabilities for all taxable temporary
differences.
(23) Operating lease and finance lease
If the terms of the lease will be transferred to the lessee substantially together with all the risks and rewards
related to the ownership of leased assets, then the lease is a finance lease, and other lease is operating lease.
1. The Company is as lessor
In finance lease, at the lease beginning date, the Company takes the minimum lease receipt and the initial direct
costs as the entry value of finance lease receivable, and records the unguaranteed residual value; and the difference
between the sum of minimum lease receipt, initial direct costs and unguaranteed residual value and its present value
is recognized as unrealized finance income. For unrealized finance income each period during the lease term, it will
use the effective interest method to confirm the current financing income.
For rent in operating lease, the Company will use the straight-line method to recognize profit or loss in each
period during the lease term. Initial direct costs occurred will be through current profit or loss.
2. The Company is as lessee
In finance lease, at the lease beginning date, the Company will take the lower of the fair value of the leased
assets and the present value of minimum lease payment as the entry value of leased assets, and take the minimum
lease payment as the entry value of long-term payables, and their difference will be as unrecognized finance cost.
Initial direct costs are included in the value of leased assets. For unrecognized finance income each period during
the lease term, it will use the effective interest method to confirm the current financing cost.
The Company uses depreciation policy consistent with its own fixed assets to make provision for depreciation
of leased assets.
For rent in operating leases, the Company will use the straight-line method to record it into the cost of relevant
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assets or current profit or loss in each period during the lease term; and initial direct costs occurred will be through
current profit or loss.
Rent in operating leases will be recorded into the cost of relevant assets or current profit or loss in each period
during the lease term.
(24) Changes of key accounting polices, accounting estimates and previous errors
There are no changes of key accounting polices, accounting estimates and correction of material accounting
errors and relevant effects in current reporting period.
III. Taxation
(1) Main type of tax and tax rate of the Company
Type of tax Tax rate Taxable basis
VAT 17% Revenue of product
Business tax 5% Rental income
Enterprise income tax 25％ Taxable income
1. The Company implements the uniform tax rebate policy of export, i.e. the export is exempt from VAT and
the input-VAT of goods is refunded with refund rate according to relevant rules before export in accordance with the
requirements of tax law.
2. Since 1 Jan. 2008, other subsidiaries of the Company has adopted the applicable income tax rate of 25%,
except for those company established in the below-mentioned districts.
Companies established in Shenzhen Special Economic Zone are entitled to preferential enterprise income tax
policy during five-year transitional period, i.e. since 1 Jan. 2008, applicable enterprise income tax rate of 18%, 20%,
22%, 24% and 25% are adopted from 2008 to 2012 respectively.
Companies established in Hong Kong SAR are entitled to a profits tax rate of 16.5%.
IV. Business combination and the consolidated financial statements
The Company adopts the Accounting Policies for Business Enterprises No. 33 – Consolidated Financial
Statements issued in Feb. 2006. All subsidiaries under the Company’s control and main body with special objectives
are included in the scope of consolidation.
The consolidated financial statements are prepared by the parent company based on the individual financial
statements of the parent company as well as the subsidiaries included in the scope of consolidation, with reference
made to other relevant information and after adjustment to the long-term investments in subsidiaries’ equity under
equity method. The internal equity investment and the owner’s equity of subsidiaries, internal investment income
and profit distribution of subsidiaries, internal transactions, internal claims and liabilities will be offset upon
consolidation.
The accounting policies adopted by subsidiary and parent company are consistent. (If they are not consistent, a
necessary adjustment shall be made to the financial statements of subsidiary in accordance with the accounting
policy of parent company when the consolidated financial statements are prepared.)
Unless otherwise specified, the unit of data listed in this section is RMB10,000.
(1) Status of subsidiaries
1. Subsidiaries obtained through the establishment or investment
67
Balance of
Actual net
Place of Registered investment investment Shareholding Votin
Typ Scope of Consolidate
Name Registratio Nature capital (10 as at period in s g
e business d or not
n thousand) end(10 subsidiarie (%) (%)
thousand) s in
substance
Investmen
Shenzhen
t and
Rieys Co.,
Shenzhen Trading 5000 import & 4500 90 90 Yes
Industrial Co., Ltd.
export
Ltd.
trading
Productio
Puning Tianhe n and sales
Garment of clothes
Co., Manufactur 6510(HKD 6510(HKD
Manufacturin Puning and 100 100 Yes
Ltd. e ) )
g Factory Co., knitting
Ltd. colorized
cloth
2. Subsidiaries obtained through business consolidation not under common control
Balance of
net
Actual
Registered investment
Typ Place of Scope of investment Shareholdings Voting Consolidated
Name Nature capital (10 in
e Registration business as at (%) (%) or not
thousand) subsidiaries
period end
in
substance
Tianrui (HK)
Co.,
Trading Co., Hong Kong Trading 1(USD) Trading 1(USD) 100 100 Yes
Ltd.
Ltd.
Property
Puning
development
Hengda Real
Co., Property (operate
Estate Puning 2600 14660 100 100 Yes
Ltd. development with valid
Developmen
qualification
t Co., Ltd.
certificate)
3. Minority shareholders’ equity and gains & losses of minority shareholders
68
Balance of the owner's equity of
parent company after deducting
the share of current losses of
Gains & losses of
Minority minority shareholders over the Method to obtain
Name of subsidiaries minority
shareholders’ equity share of owner’s equity enjoyed subsidiary
shareholders
by such minority shareholders in
the subsidiary in the period
beginning
Shenzhen Rieys Industrial Co., Ltd. 4,435,595.93 -60,112.10 Invest to establish
(2) Subjects newly included in current scope of consolidation and subjects no longer included in current scope of
consolidation
1. Subsidiaries, subjects with special purposes and business entities which controlling right is formed by
entrusted operation or lease newly included in current scope of consolidation
Naught
2. Subsidiaries, subjects with special purposes and business entities which controlling right is formed by
entrusted operation or lease no longer included in current scope of consolidation
Naught
3. Business combination not under common control occurred over the current period
Naught
4. Subsidiaries reduced by sale of equity without controlling right over the current period
Naught
V. Notes to the items of consolidated financial statement
(1) Monetary funds
Closing balance Opening balance
Item
Exchange Equivalent to Exchange
Foreign currency Foreign currency Equivalent to RMB
rate RMB rate
Cash
RMB 994,916.36 1.0000 994,916.36 126,305.73 1.0000 126,305.73
USD 1.00 6.3249 6.32 1.00 6.3009 6.30
HKD 168.70 0.81522 137.53 168.70 0.8107 136.77
Subtotal 995,060.21 126,448.80
Bank
deposits
RMB 3,360,616.00 1.0000 3,360,616.00 1446,153.03 1.0000 1,446,153.03
USD 50.38 6.3249 318.65 90.87 6.3009 572.56
HKD 42,362.99 0.81522 34,534.66 31,222.41 0.8107 25,312.01
Subtotal 3,395,469.31 1,472,037.60
Other
currency
69
funds
RMB 2,268.32 1.0000 2,268.32 2,263.23 1.0000 2,263.23
Subtotal 2,268.32 2,263.23
Total 4,392,797.84 1,600,749.63
Note: The number of monetary funds at period-end is nore than the period-begin by RMB2,792,048.21, representing
a change ratio of 174.42％, the reasons for the change is due to receiving the prepayment of houses.
(2) Accounts receivable
1. Disclosure of accounts receivable by category
Closing balance Opening balance
Category Book balance Provision for bad debts Book balance Provision for bad debts
Percent Percent Percent Percent
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable
with significant 10,274,455.72 35.64 10,274,455.72 50.57 10,253,738.28 28.97 10,253,738.28 47.85
individual amount
Accounts receivable
with insignificant
individual amount but
in high risk portfolio 18,555,822.44 64.36 10,041,604.68 49.43 25,142,569.43 71.03 11,176,005.89 52.15
after grouping by
credit risk
characteristics
Other accounts
receivable not
significant
Total 28,830,278.16 100.00 20,316,060.40 100.00 35,396,307.71 100.00 21,429,744.17 100.00
2. Provision for bad debts of accounts receivable with significant individual amount or with insignificant individual
amount but tested for impairment separately at year end
(1) Accounts receivable with significant individual amount
Provision
Content of accounts receivable Book balance Bad debts Reasons
ratio
Victoria International(USA) INC 5,459,821.10 5,459,821.10 100% * Note
Estimated to be irrecoverable
Hongkong Jinhua Trading Company 4,224,304.63 4,224,304.63 100%
for long age
Estimated to be irrecoverable
Guangzhou Chen Shunqin 335,904.80 335,904.80 100%
for long age
Shenzhen ITAT International Premier Brand Estimated to be irrecoverable
206,357.74 206,357.74 100%
Membership Store for long age
Estimated to be irrecoverable
Ningbo Industrial and Commercial Bureau 26,354.45 26,354.45 100%
for long age
70
Estimated to be irrecoverable
Beijing Capital Airport 21,713.00 21,713.00 100%
for long age
Total 10,274,455.72 10,274,455.72
Note: Because the Company’s core customer named Victoria International (USA) INC had applied for
bankrupt thus significantly affected the operation of the Company, after the analysis of assessing the possibility of
their bad debts, the amount of provision for bad debts was 100% with the wariness principle.
(2)Accounts receivable with insignificant individual amount but in high risk portfolio after grouping by credit
risk characteristics
Closing balance Opening balance
Age Book balance Provision for bad Book balance Provision for bad
Amount % debts Amount % debts
Within 1 year 8,203,998.95 44.21 164,079.98 13,506,106.80 53.72 270,122.14
1-2 years 398,455.53 2.15 39,845.55 397,530.20 1.58 39,753.02
2-3 years
Over 3 years 9,953,367.96 53.64 9,837,679.15 11,238,932.43 44.70 10,866,130.73
Total 18,555,822.44 100.00 10,041,604.68 25,142,569.43 100.00 11,176,005.89
3. There aren’t shareholders accounts holding more than 5% (including 5%) of the Company’s voting shares in
current accounts receivable;
4. Top 5 units in outstanding amount of accounts receivable
Relationship with the Percent in total accounts
Name of unit Amount Age
Company receivable
Victoria International(USA) INC. Customer 5,459,821.10 Over 3 years 18.94
Huang Donglai Customer 5,163,378.50 Within 1 year 17.91
Hongkong Jinhua Trading Company Customer 4,224,304.63 Over 3 years 14.65
Brendwood International Corp. Customer 2,854,819.45 Over 3 years 9.90
Jinjing International Co., Ltd. Customer 2,544,982.60 Over 3 years 8.83
Total 20,247,306.28 70.23
(3) Other receivables
1. Disclosure of other receivables by category
Closing balance Opening balance
Category Book balance Provision for bad debts Book balance Provision for bad debts
Amount % Amount % Amount % Amount %
Other receivables with
significant individual 4,306,435.56 4,306,435.56 19.00 4,306,435.56 9.52 4,306,435.56 23.59
amount
71
Other receivables with
insignificant individual
amount but in high risk
34,204,639.36 17,554,313.40 77.47 40,135,689.92 88.71 13,149,393.63 72.03
portfolio after grouping
by credit risk
characteristics
Other accounts
receivable not 800,000.00 800,000.00 3.53 800,000.00 1.77 800,000.00 4.38
significant
Total 39,311,074.92 100.00 22,660,748.96 100.00 45,242,125.48 100.00 18,255,829.19 100.00
2. Other receivables with insignificant individual amount but in high risk portfolio after grouping by credit risk
characteristics
Closing balance Opening balance
Age Book balance Provision for bad Book balance Provision for bad
Amount % debts Amount % debts
Within 1 year 9,466,853.10 27.68% 189,337.06 16,485,264.97 41.07% 329,705.30
1-2 years 2,957,950.80 8.65% 295,795.08 7,078,773.64 17.64% 1,493,605.37
2-3 years 4,900,407.76 14.33% 2,450,203.80 6,951,837.36 17.32%2 3,475,918.68
Over 3 years 16,879,427.70 49.34% 14,618,977.38 9,619,813.95 23.97% 7,850,164.28
Total 34,204,639.36 100.00% 17,554,313.40 40,135,689.92 100.00% 13,149,393.63
3. There isn’t shareholders overdue payment holding more than 5% (including 5%) of the Company’s voting
shares in current other receivables
4. Top 5 in outstanding amount of other receivables in period end
Percent
in total
Relationship with
Name of unit Amount Age other
the Company
receivabl
e
1,800,200.0
Puning Huafengqiang Trade Co., Ltd. Supplier 1-2 years 4.58%
0
1,717,106.0
Puning Shenglilai Sewing Machine Co., Ltd. Supplier 2-3 years 4.37%
0
The leasor of 1,276,000.0 Within 1
Puning Rieys Paper Industrial Co., Ltd.. 3.25%
factory 0 year
1,170,000.0
Puning Zhongxinglian Textile Co., Ltd. Supplier 1-2 years 2.98%
0
STRICKWELT INTERNATIONAL TRADING (SHANGHAI) CO., 1,000,000.0
Supplier Over 3 years 2.54%
LTD. 0
Total 6,963,306.0 17.71%
72
0
(4) Prepayment
1. Aging analysis
Closing balance Opening balance
Age
Amount % Amount %
Within 1 year 82,966,568.76 96.42% 73,641,517.03 97.34%
1-2 years 3,080.584.00 3.58% 2,010,000.00 2.66%
2-3 years
Over 3 years
Total 86,047,152.76 100.00% 75,651,517.03 100.00%
2. Top 5 units in prepayment
Relationship with the
Name of unit Amount Year Pending reasons
Company
In the period of
Guangsha Construction Group Co., Ltd.
Builder 65,094,767.96 2011 construction
(Shenzhen Branch)
contract execution
Shenzhen Pengji Property Management In the period of
Supplier 5,000,000.00 2012
Service Co., Ltd. contract execution
In the period of
Hitachi Elevator (China) Co.,Ltd. Supplier 4,998,704.00 2011
contract execution
In the period of
Shenzhen Jinju Fire Fighting Electrical and
Builder 2,610,000.00 2011 construction
Mechanical Engineering Co., Ltd.
contract execution
In the period of
Puning Jinhaohui Trading Co., Ltd. Supplier 2,200,000.00 2012
contract execution
Total 79,903,471.96
3. During the reporting period, there was no prepayment due from shareholders who hold 5% or more of the
voting rights of the Company.
(5) Inventories and provisions for impairment in value of inventory
1. Classification of inventory
Closing balance Opening balance
Items
Book balance Provision for impairment Book balance Provision for impairment
Raw materials 238,604.00 47,720.80 1,633,596.00 723,540.76
73
Goods in stock 1,654,780.91 651,441.21 913,254.63 773,977.35
Products in progress 17,156.52 1,245,439.22
Goods delivered 1,739,916.13
Developed Product in progress 340,007,283.66 285,474,567.20
Total 341,917,825.09 699,162.01 291,006,773.18 1,497,518.11
2. Provision for impairment in value of inventory
Book balance at Provision at Decrease at current period Book balance at
Category
period-begin current period Reversal Other decrease period-end
Raw materials 723,540.76 675,819.96 47,720.80
Goods in stock 773,977.35 122,536.14 651,441.21
Total 1,497,518.11 798,356.10 699,162.01
Note: For other decrease in the current provision for impairment in value of inventory, it is caused by that the
Company sells the goods in stock.
(6) Original cost of fixed assets and accumulated depreciation
1. Original cost of fixed assets
Category Opening amount Increase this period Decrease this period Closing amount
Buildings and constructions 119,088,227.16 119,088,227.16
Machinery equipment
2,540,931.00 2,540,931.00
Transportation equipment
6,184,899.10 525,268.23 793,632.00 5,916,535.33
Office equipment and others
1,392,320.58 7,100.00 1,399,420.58
Total 129,206,377.84 532,368.23 793,632.00 128,945,114.07
Note: (1) Original cost of fixed assets disposed in the current period is RMB 793,632.00;
（2）Original cost of fixed assets under mortgage or guarantee at the period end is RMB 59,869,418.09,
please see note 8 (1) for details.
2. Accumulated depreciation
Category Opening amount Increase this period Decrease this period Closing amount
Buildings and constructions 32,016,820.06 1,753,976.40 22,564.26 33,748,232.20
Machinery equipment 1,703,186.40 75,918.96 1,779,105.36
Transportation equipment 2,676,754.24 320,991.60 647,936.85 2,349,808.99
Office equipment and others 532,098.04 123,228.50 655,326.54
Total 36,928,858.74 2,274,115.46 670,501.11 38,532,473.09
3. Provision for impairment losses on fixed assets
Naught
74
4. Carrying amount of fixed assets
Category Opening amount Increase this period Decrease this period Closing amount
Buildings and constructions 87,071,407.10 -1,753,976.40 -22,564.26 85,339,994.96
Machinery equipment 837,744.60 -75,918.96 761,825.64
Transportation equipment 3,508,144.86 204,276.63 145,695.15 3,566,726.34
Office equipment and others 860,222.54 -116,128.50 744,094.04
Total 92,277,519.10 -1,741,747.23 123,130.89 90,412,640.98
5. Mortgaged or guaranteed fixed assets
Accumulated
Category Original book value Net book value
depreciation
Buildings and constructions 40,281,405.99 14,340,502.55 25,940,902.44
Machinery equipment
19,588,012.10 18,608,611.49 970,400.61
Total 59,869,418.09 32,949,114.04 26,920,304.05
(7) Project materials
Opening amount Closing amount
Increase this Decrease
Category Provision for Provision for
Book balance period this period Book balance
impairment impairment
Gravel 54,526.00 54,526.00
Total 54,526.00 54,526.00
(8) Intangible assets
1. Original cost of intangible assets
Original cost at Original cost at
Item
period beginning Increase this period Decrease this period period end
Land use right 33,659,416.00 33,659,416.00
Computer software 373,115.00 373,115.00
Total 34,032,531.00 34,032,531.00
Of which: (1) Original cost of intangible assets of RMB 13,863,200.00 is used as a mortgage or guarantee for the
loan of RMB 40 million from China Everbright Bank, Guangzhou Branch, the maturity date is September 27, 2009.
2. Accumulated amortization
Items Opening amount Amortization this period Decrease this period Closing amount
Land use right 5,266,050.43 336,594.12 5,602,644.55
Computer software 373,115.00 373,115.00
Total 5,639,165.43 336,594.12 5,975,759.55
3. Carrying amount of intangible assets
75
Decrease this
Items Opening amount Closing amount
Increase this period period
Land use right 28,393,365.57 -336,594.12 28,056,771.45
Computer software
Total 28,393,365.57 -336,594.12 28,056,771.45
(9) Deferred income tax assets
1. Recognized deferred income tax assets
Items Opening amount Increase this period Decrease this period Closing amount
Provision for
8,919,528.60 1,127,998.98 509,697.48 9,537,830.10
impairment of assets
Initial expenditure
Deductible loss
Subtotal 8,919,528.60 1,127,998.98 509,697.48 9,537,830.10
2. Unrecognized deferred income tax assets
Items Closing amount Opening amount
Deductible temporary difference 0.00 0.00
Total 0.00 0.00
3. Temporary differences corresponding to assets or liabilities causing temporary differences
Item Amount of temporary differences
Loss remediable
Provision for impairment 38,151,320.40
Total 38,151,320.40
(10) Details of provision for asset impairment
Opening book Increase this Decrease this period Closing book
Items
balance period Reversal Written off balance
1. Provision for bad debts 39,685,573.36 4,537,367.09 1,246,131.09 42,976,809.36
Of which: Accounts
21,429,744.17 132,447.32 1,246,131.09 20,316,060.40
receivable
Other receivables 18,255,829.19 4,404,919.77 22,660,748.96
2. Provisions for impairment in
1,497,518.11 798,356.10 699,162.01
value of inventory
Total 41,183,091.47 4,537,367.09 1,246,131.09 798,356.10 43,675,971.37
(11) Short-term loan
76
1. Short-term loan
Items Closing balance Opening balance
Credit loan
Pledged loan 26,599,960.00 36,099,960.00
Mortgaged loan
Secured loan 37,600,000.00 37,600,000.00
Total 64,199,960.00 73,699,960.00
Notes: Please see Note 6(4) for details on relevant pledge, mortgage and security.
2. Expired but unpaid short-term loans:
Remark
(repaid after
Overdue Expected
Unit Amount Interest rate Purpose statement
reason repay date
date should
be specified)
Puning Association of Borrow the
Financial
Country Credit Union 5,000,000.00 8.49600% new to pay the
difficulty
Liusha West Union old
Puning Association of Borrow the
Financial
Country Credit Union 6,000,000.00 11.20500% new to pay the
difficulty
Liusha West Union old
Puning Association of Borrow the
Assets
Country Credit Union 22,600,000.00 10.80000% new to pay the
restructuring
Liusha West Union old
Puning Association of Borrow the
Financial
Country Credit Union 15,000,000.00 10.80000% new to pay the
difficulty
Liusha West Union old
Borrow the
China Everbright Bank, Financial
15,599,960.00 12.32550% new to pay the
Guangzhou Branch difficulty
old
Total 64,199,960.00
Note: (1) The Company paid back the loan principal totaling RMB 9.5 million to China Everbright Bank,
Guangzhou Branch in the reporting period. As of 30 June 2012, the Company remained a loan balance of
RMB15,599,960 in China Everbright Bank, Guangzhou Branch. All loans of the Company are overdue in the
reporting day;
(2) As of 30 June 2012, the Company remained a loan balance of RMB 48.6 million in Puning Association of
Country Credit Union Liusha West Union, all of which are overdue in the reporting day;
(3) As of the closing date of the financial report, the overdue loans above haven’t been sued over by the bank for
payment.
(12) Accounts payable
Closing balance Opening balance
Items
Amount ％ Amount ％
Within 1 year 7,442,813.63 88.30% 10,191,972.06 94.77%
1-2 years 509,258.00 6.04% 444,281.74 4.13%
77
2-3 years 276,362.51 3.28% 20,567.65 0.19%
Over 3 years 200,167.58 2.38% 97,608.70 0.91%
Total 8,428,601.72 100.00% 10,754,430.15 100.00%
1. There is no accounts payable due to shareholders who has more than 5% (including 5%) voting shares of the
Company in closing balance.
2. There is no accounts payable due to related parties in closing balance.
3. Accounts payable at year-end decrease by RMB 2,325,828.43 compared with period-begin, representing a
decrease of 21.63%, the reason is: Puning Tianhe Garment Manufacturing Factory Co., Ltd. paid back suppliers’
payment for goods.
(13) Advances from customers
Closing balance Opening balance
Aging
Amount ％ Amount ％
Within 1 year 140,936,314.35 99.91% 14,353,378.00 99.72%
1-2 years 85,283.00 0.06%
2-3 years
Over 3 years 39,821.24 0.03% 39,821.24 0.28%
Total 141,061,418.59 100.00% 14,393,199.24 100.00%
1. There is no advance from customers due to shareholder who has more than 5% (including 5%) voting shares of
the Company in closing balance.
2. There is no advance from customers due to related parties in closing balance.
(14) Other accounts payable
Items Closing balance Opening balance
Within 1 year 4,279,254.98 62,144,224.59
1-2 years 1,330,000.00 790,825.00
2-3 years 235,825.00 850,979.54
Over 3 years 500,023.50 330,234.30
Total 6,345,103.48 64,116,263.43
1. There is no other accounts payable due to shareholder who has more than 5% (including 5%) voting shares of
the Company in closing balance.
2. For closing balance of related parties payment, please see to Note 6 (4)3 for details.
3. Closing balance of other accounts payable decreases RMB 57,771,159.95 than opening balance, with a change
rate of 90.10%, for the reason of paying back capital of related party.
(15) Payroll payable
78
Decrease in the reporting period Closing
Opening Increase this
Item Paid in the book
book balance period Other decrease
reporting period balance
1. Salaries and wages,
bonus, allowance and 665,978.15 2,831,011.06 2,920,097.82 576,891.39
subsidies
2. Employee welfare 103,834.79 425,909.88 436,981.89 92,762.78
3. Social insurance 147,051.85 147,051.85
4. Housing welfare fund 33,116.40 33,116.40
5. Union welfare fund and
employee education fund
Total 769,812.94 3,437,089.19 3,537,247.96 669,654.17
Note: In accordance with social insurance policy specified by local government, the Company has gradually
improved the specific policies and payment standards of social insurance with consideration of practical
conditions of the Company.
(16) Taxes and surcharges payable
Applied statutory
Items Closing balance Opening balance
tax rate
VAT 258,568.20 -1,055,675.43 17%
Business Tax 334,224.09 334,224.09 5%
City Construction &
-218,821.70 197,012.43 5%、3%
education surcharges
Enterprise Income Tax 3,635,935.17 3,770,853.31 25%
Individual income tax 126,540.09 126,311.01
Real estate tax 173,187.71 761,246.32 1.20%
Stamp tax -1,914.30 0.00
RMB 6 yuan/squre meter,
Land use tax 22,770.00 262,890.0
RMB 9 yuan/square meter
Embankment protection costs,
146.61 8,098.71
etc.
Total 4,330,635.87 4,404,960.44
(17) Interest payable
Items Closing balance Opening balance
Short-term loan interest 40,081,175.19 35,818,609.17
Total 40,081,175.19 35,818,609.17
Note: (1) Interest payable is loan interest overdue to financial institutions, the year and amount increase RMB
4,262,566.02 than the year-begin, representing an increase ratio of 11.90%, the reason for the change is: the
unpaid interest of period end overdue loans increase.
79
(2) Please see Note 5(13) for overdue interest of the Company.
(18) Share capital
Increase(+) decrease(－)
Share
capital
Opening New by Closing
Item Percent Bonus Percent
amount shares transfer Other Subtotal amount
shares
issue of
capital
reserve
I. Unlisted
shares in 164,025,000 51.48% 164,025,000 51.48%
circulation
1. Sponsor’s
164,025,000 51.48% 164,025,000 51.48%
shares
Including:
shares held
by the State
Shares held
by domestic 164,025,000 51.48% 164,025,000 51.48%
legal person
Shares held
by foreign
legal person
2. Raised
legal person
shares
3. Employee
shares
4. Preferred
stock or other
II. Listed
shares in 154,575,000 48.52% 154,575,000 48.52%
circulation
1. RMB
ordinary
shares
2. Domestic
listed foreign 154,575,000 48.52% 154,575,000 48.52%
shares
3. Overseas
listed foreign
shares
80
4. Other
III. Total
318,600,000 100.00% 318,600,000 100.00%
shares
(19) Capital reserve
Increase in Decrease in current
Item Opening amount Closing amount
current period period
Share capital premium 52,129,496.58 52,129,496.58
Total 52,129,496.58 52,129,496.58
(20) Surplus reserve
Increase in Decrease in current
Item Opening amount Closing amount
current period period
Statutory Surplus Reserves 49,036,260.20 49,036,260.20
Discretionary surplus reserves 37,000,000.00 37,000,000.00
Total 86,036,260.20 86,036,260.20
(21) Retained profit
Withdrawal or
Item Amount
distribution ratio
Undistributed profit at the end of previous year before
-127,219,679.36
adjustment
Total undistributed profit at beginning of adjustment
year (add +, less-)
Adjusted undistributed profit at year beginning -127,219,679.36
Increase： Net profit attributable to owner of parent
-13,570,192.44
company this year
Less: Appropriating statutory surplus reserve
Appropriating discretionary surplus reserve
Appropriating general risk reserve
Common stock dividend payable
Common stock dividend transferred as share
capital
Retained profit at period end -140,789,871.80
(22) Operating revenue and operating cost
1. Operating revenue
Item Occurred in current period Occurred in previous period
Income from main operations 7,617,917.19 45,901,330.11
81
Other operation income 860,000.00
Cost of main operations 5,242,728.04 36,876,088.93
Other operation cost 800,527.98
2. Main operations (by industry)
Occurred in current period Occurred in previous period
Industry
Operating revenue Operating cost Operating revenue Operating cost
Industry 7,617,917.19 5,242,728.04 40,213,136.18 34,688,558.44
Commerce 8,665,642.39 5,164,978.95
Total 7,617,917.19 5,242,728.04 48,878,778.57 39,853,537.39
Internal offset and
-2,977,448.46 -2,977,448.46
deduction
Total 7,617,917.19 5,242,728.04 45,901,330.11 36,876,088.93
3. Main operations (by region)
Current period Previous year
Region
Operating revenue Operating cost Operating revenue Operating cost
Export sales of clothes 2,815,199.68 3,001,269.15 43,281,396.53 37,670,146.99
Domestic sales of
4,802,717.51 2,241,458.89 5,597,382.04 2,183,390.40
clothes
Subtotal 7,617,917.19 5,242,728.04 48,878,778.57 39,853,537.39
Internal offset and
-2,977,448.46 -2,977,448.46
deduction
Total 7,617,917.19 5,242,728.04 45,901,330.11 36,876,088.93
4. The total sales to Top 5 customers of the Company amounted to RMB 7,617,917.19, accounting for 100% of
total revenue of the Company in current period.
Percent in total operating revenue
Name of customer Operating revenue
of the Company (%)
Huang Donglai 4,554,169.65 59.78
KEENZONE LIMITED 1,558,329.73 20.46
HONOURLINK 1,256,869.95 16.50
Xu Zejia 248,547.86 3.26
Total 7,617,917.19 100.00
(23) Operating revenue and surcharges
82
Occurred in current Occurred in previous
Item Accounting standard
period period
Urban construction and
34,958.44 5%
maintenance tax
Education expenses and
15,468.59 7%、5%
surcharges
Others 788.18 3%、2%
Total 51,215.21
(24) Financial expense
Item Occurred in current period Occurred in previous period
Interest expenses 4,262,566.02 8,262,191.25
Less: Interest income 2,927.43 21,904.17
Exchange loss 1,087,258.12
Less: Exchange gain 54,799.14
Other 23,260.56 88,887.47
Total 4,228,100.01 9,416,432.67
Note: Financial expenses down by RMB 5,188,332.66 than that of last year, with a change of 55.10%, for the
reason of the loan interest decreased as the Company repaid loan.
(25) Investment income
Occurred in current Occurred in previous
Items
period period
Long-term equity investment income recognized with cost
method
Long-term equity investment income recognized with equity
method
Investment income generated from disposal of long-term 8,060,304.49
equity investments
Investment income generated from holding of trading
financial assets
Investment income generated during the investment return
achieved from investments held to maturity
Investment income generated from holding financial assets
available for sale
Investment income generated from disposal of trading 108,547.06
financial assets
Investment income generated from investment held to
maturity
Other
Total 8,168,851.55
83
(26) Impairment loss on assets
Occurred in current Occurred in previous
Items
period period
1. Loss on bad debts 3,264,821.27 -7,184,306.29
2. Loss on falling price of inventory -798,356.10
3. Impairment loss on financial assets available for sale
4. Impairment loss on investment held to maturity
5. Impairment loss on long-term equity investment
6. Impairment loss on investment property
7. Impairment loss on fixed assets
8. Other
Total 2,466,465.17 -7,184,306.29
(27) Non-operating revenue
Items Occurred in current period Occurred in previous period
1. Total gain on disposal of
869.85
non-current assets
Of which: gain on disposal of
869.85
fixed assets
Gain on disposal of
intangible assets
2. Gain on debt restructuring
3. Profits of non-monetary assets
exchanged
4. Donations
5. Government grants 32,674.00
6. Other 531.35 39,995.46
Total 1,401.20 72,669.46
(28) Non-operating expenses
Items Occurred in current period Occurred in previous period
1. Total loss on disposal of non-current assets 1,173,554.55
Of which: loss on disposal of fixed assets 1,173,554.55
Loss on disposal of intangible assets
84
2. Loss on debt restructuring
3. Loss of non-monetary assets exchanged
4. Donation expenses 40,000.00 670,000.00
5. Settlement loss
6. Surcharge expenditures 18,179.50 26,897.15
7. Other 83.45
Total 58,179.50 1,870,535.15
(29) Income tax expenses
Items Occurred in current period Occurred in previous period
Income tax for current period calculated by tax law
and relevant regulations
Deferred income tax adjustment -618,301.50 1,744,300.21
Total -618,301.50 1,744,300.21
(30) Calculation of ROE, basic earnings per share and diluted earnings per share
EPS
Profit of the reporting period Weighted average ROE
Basic EPS Diluted EPS
Net profit attributable to ordinary -0.0429 -0.04 -0.04
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after -0.0428 -0.04 -0.04
deducting non-recurring gain or loss
The above data is calculated using the following formulae:
Weighted average return on net asset
Weighted average return on net asset = P0/(E0＋NP÷2＋Ei×Mi÷M0– Ej×Mj÷M0±Ek×Mk÷M0)
Where: P0 is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary
shareholders of the Company after deducting non-recurring gain or loss; E0 is the year beginning equity
attributable to ordinary shareholders of the Company; Ei is increased equity attributable to ordinary shareholders
of the Company which arises from new issuance of shares or conversion of debt instruments to stocks in the
reporting period; Ej is reduced equity attributable to ordinary shareholders of the Company due to stock
repurchase or cash dividend in the reporting period; M0 is the number of months of the reporting period; Mi is the
number of accumulative months from the next month that equity is increased to the end of the reporting period; Mj
is the number of months from the next month that equity is decreased to the end of the reporting period; Ek is the
change of equity resulting from other transactions or events and attributable to ordinary shareholders; Mk is the
number of accumulative months from the next month that other change of equity occurs to the end of the reporting
period.
Basic earnings per share
85
Basic earnings per share = P0÷S
S= S0＋S1＋Si×Mi÷M0– Sj×Mj÷M0-Sk
Where: P0 is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary
shareholders of the Company after deducting non-recurring gain or loss; S is weighted average number of
ordinary shares outstanding; S0 is the total number of shares at the beginning of the year; S1 is the number of
increased shares as a result of capitalization of reserves or scrip dividend during the reporting period; Si is the
number of increased shares as a result of new issuance of shares or conversion of debt instruments to stocks
during the reporting period; Sj is the number of reduced shares as a result of stock repurchase; Sk is the number of
consolidated shares in the reporting period; M0 is the number of months of the reporting period; Mi is the number
of accumulative months from the next month that the number of shares is increased to the end of the reporting
period; Mj is the number of accumulative months from the next month that the number of shares is decreased to
the end of the reporting period.
(If the Company have any dilutive potential ordinary shares , they should be adjusted respectively and attributable to net
profit of reporting period of ordinary shareholders and weighted average common shares outstanding, and by
which calculate the diluted earnings per share)
Diluted earnings per share = P1/(S0 ＋S1 ＋Si×Mi÷M0–Sj×Mj÷M0–Sk+weighted average number of increased
ordinary shares arising from warrants, stock options and convertible debts)
Where: P1 is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary
shareholders of the Company after deducting non-recurring gain or loss, and after the consideration of the effects
of dilutive potential ordinary shares, make adjustment according to relevant provisions of “Accounting Standards
of Enterprises”.
In calculating the diluted earnings per share, the Company has taken into consideration the effects of all dilutive
potential ordinary shares on net profit attributable to the Company's common shareholders or net profit
attributable to the Company's common shareholders after deducting non-recurring profit or loss as well as
weighted average number of shares, until the diluted earnings per share reach the lowest amount.
(1) During period from balance sheet date to the date approved to issue the financial report, if the occurred stock
dividend, reserve capitalization, share split or share consolidation impact the number of outstanding ordinary
shares or potential common shares but without influent the amount of owner's equity, it should recalculate the
earnings per share each comparative period at adjusted number of shares.
(2) If business combination under the common control occurred during the reporting period, and the merging
parties issue new shares as the price in the merger date, when calculate basic earnings per share for the reporting
period, such new shares should be treated as outstanding common shares issued at the beginning of merge (weight
average by weight of 1).When calculating of basic earnings per share during the comparison period, such shares
should be treated as outstanding common shares issued at the beginning of comparison period. When calculating
the earnings per share after deducting non-recurring profit or loss at the end of reporting period, the new shares
issued by the merging parties on the merger date will be weighted from the month next to the combined date.
When calculating the earnings per share after deducting non-recurring profit or loss during the comparison period,
86
the new shares issued by the merging parties on the merger date will not be weighted (the weight is 0).For the
occurrence of business combination under the common control at the reporting period, and the merging parties
issue new shares as the price in the merger date, when calculating the diluted earnings per share in the reporting
period and comparison period, it should be treated according to the principles on calculation of basic earnings per
share.
(3) In the reporting period, if the company realizes the unlisted companies to list indirectly through share issue to
purchase assets or other means and which composing a reverse purchase, then when calculating earnings per share
of the reporting period:
Weighted average number of ordinary shares in reporting period ＝ weighted average number in the month from
reporting period beginning to purchase date ＋ weighted average number from the next month to purchase date
to the end of the reporting period
Weighted average number in the month from reporting period beginning to purchase date ＝ weighted average
number of purchaser (subsidiary in law) × exchange ratio in Purchase Agreement × number of cumulative months
from year beginning to purchase date ÷ number of months of reporting period
Weighted average number in the next month to purchase date to reporting period end ＝ weighted average
number of acquiree (parent company in law) × number of cumulative months from the next month to purchase
date to reporting period end ÷ number of months of reporting period
In the reporting period, if the company realizes the unlisted companies to list indirectly through share issue to
purchase assets or other means, then when calculating earnings per share of the comparison period:
Weighted average number of common shares in comparison period ＝ Purchaser (subsidiary in law) × exchange
ratio in Purchase Agreement
(31) Notes to cash flow statement
1. Other cash received relevant to operating activities
Item Amount
Other loans received 8,071,501.00
Interest income received
Other
Total 8,071,501.00
2. Other cash paid relevant to operating activities
Item Amount
Other current payments paid 61,367,357.56
Audit and other intermediary fees paid 275,000.00
Fees relevant to operating activities paid 3,694,281.52
Total 65,336,639.08
(32) Supplementary information for cash flow statement
87
1. Supplementary information for cash flow statement
Amount in current Amount in previous
Supplemental information
period period
1. Reconciliation of net profit to net cash flows generated
from operating activities
Net profit -13,630,304.55 -4,990,054.53
Add: Provision for assets impairment 2,466,465.17 -7,184,306.29
Depreciation of fixed assets, of oil-gas assets, of
2,517,371.53 3,543,484.57
productive biological assets
Amortization of intangible assets 336,594.12 751,766.52
Amortization of long-term deferred expense 45,360.00
Losses on disposal of property, plant and equipment,
-869.85 -8,060,304.49
intangible assets and other long-term assets (gains: negative)
Loss on retirement of fixed assets (gains: negative) 1,173,554.55
Losses from variation of fair value (gains: negative) -3,404.00 92,647.52
Financial cost (gains: negative) 4,262,566.02 8,262,191.25
Investment loss (gains: negative) -108,547.06
Decrease in deferred income tax assets (gains: negative) -848,574.63 1,744,300.21
Increase in deferred income tax liabilities (decrease:
negative)
Decrease in inventory (gains: negative) -50,911,052.00 -42,277,264.96
Decrease in accounts receivable from operating
2,095,747.00 33,368,885.72
activities (gains: negative)
Increase in payables from operating activities (decrease:
66,396,747.63 35,572,512.26
negative)
Other
Net cash flows generated from operating activities 12,681,286.44 21,934,225.27
2. Significant investing and financing activities that do not
involving cash receipts and payment:
Conversion of debt into capital
Convertible bond due within one year
Fixed assets financed by finance leases
3.Change on cash and cash equivalents:
4,392,797.84 4,515,752.81
Closing balance of cash
1,600,749.63 30,095,398.06
Less: Opening balance of cash
Closing balance of cash equivalents
Less: Opening balance of cash equivalents
88
2,792,048.21 -25,579,645.25
Net increase in cash and cash equivalents
2. Relevant information on acquiring or disposing subsidiaries and other business entities
Amount in current Amount in previous
Items
period period
I. Acquisition of subsidiaries and other business entities
1. Price for acquisition of subsidiaries and other business
entities
2. Cash and cash equivalents paid for acquisition of
subsidiaries and other business entities
Less: Cash and cash equivalents held by subsidiaries and
other business entities
3. Net cash paid for acquisition of subsidiaries and other
business entities
4.Net assets of subsidiaries acquired
Current assets
Non-current assets
Current liabilities
Non-current liabilities
II. Disposal of subsidiaries and other business entities：
1. Price for disposal of subsidiaries and other business
1.00
entities
2. Cash and cash equivalents received from disposal of
1.00
subsidiaries and other business entities
Less: cash and cash equivalents held by subsidiaries and
174,067.95
other business entities
3. Net cash received from disposal of subsidiaries and other
1.00
business entities
4. Net assets of subsidiaries disposed -9,372,445.92
Current assets 17,331,307.57
Non-current assets 1,860,083.59
Current liabilities 28,563,837.08
Non-current liabilities
3. Composition of cash and cash equivalents
Amount in current Amount in previous
Items
period period
II. Cash 4,392,797.84 4,515,752.81
Of which: Cash in hand 995,060.21 1,705,287.34
Bank deposit available to pay at any time 3,395,469.31 2,806,586.20
Other money funds available to pay at any time 2,268.32 3,879.27
89
II. Cash equivalents
Of which： Bonds maturing within 3 months
III. Ending balance of cash and cash equivalents 4,392,797.84 4,515,752.81
Of which: cash and cash equivalents restricted to use for parent
company or subsidiaries within the Group
VI. Related parties and related parties transaction
(1) Parent company of the Company
Proportion Proportions
of parent of parent
Legal company’s company’s Ultimate
Relatio Registered Business Registere controller Organizati
Name Type represe shareholding voting
nship address Nature d Capital
ntative to the right to the of the on Code
Company
Company Company
（%） （%）
Puning
No. 212,
Shenghengc Build 46, Ma Chen
Parent Limited Tradin 741222
hang Trade Qiao Guan Chanyi 9800 36.99% 36.99% Hongch
compa
liability Village, Liu g 32-1
Developmen ny ng eng
Sha North
t Co., Ltd. Street, Puning
Note: Puning Shenghengchang Trade Development Co., Ltd., Shenzhen Rishen Investment Co., Ltd. and Shantou
Lianhua Industrial Co., Ltd. are controlled by the same family, which belong to action-in-concert promulgated by
Measures for the Administration of Disclosure of Information on the Change of Shareholdings in Listed
Companies.
(2) Subsidiaries of the Company
For the Company's subsidiaries, please refer to Note 4 (1) "Subsidiaries".
(3) Other related parties of the Company
Name of entities Relationship with the Company
Shareholder holding 10.68% stake of the Company, affiliate
Shenzhen Rishen Investment Co., Ltd.
controlled under Chen Hongcheng’s family
Shareholder holding 3.81% stake of the Company, affiliate
Shantou Lianhua Industrial Co., Ltd.
controlled under Chen Hongcheng’s family
Shanghai Hong Yi Property Limited Affiliate controlled under Chen Hongcheng’s family
Chen Xuewen, Ma Chanying Direct relatives of Cheng Hongcheng
Chen Meixiang Direct relatives of Cheng Hongcheng
Vice-Board chairman of the Company, relative of Cheng
Ding Lihong
Hongcheng
(4) Related parties transactions
1. Related party transactions of purchase and sale of goods, provide and receive services
For subsidiaries having controlling relationship and have been included in the scope of our consolidated financial
statements, the sales and procurement and other transactions among them as well as the parent company's sales
90
and procurement and other transactions have been offset, not detailed, and no related party transactions with other
related parties.
2. Guarantee of related parties
Guarantee has
Loan balance Maturity
been fully
Guarantee Secured party Bank issuing loan (RMB10 date of
performed or
thousand) guarantee
not
Guangdong Rieys Puning Association of
Puning Shenghengchang Trade Oct. 25,
(Group) Company Country Credit Union 2260 No
Development Co., Ltd. 2009
Limited Liusha West Union
Chen Hongcheng, Chen
Xuewen, Ding Lihong,
Dongguan Jinjing Textile Co.,
Ltd., Puning Shenghengchang
Trade Development Co., Ltd.,
Guangdong Rieys
Puning Tianhe Garment China Everbright Bank, Sep. 27,
(Group) Company 1560 No
Manufacturing Factory Co., Ltd., Guangzhou Branch 2009
Limited
Shantou Lianhua Industrial Co.,
Ltd., Shenzhen Rieys Industrial
Co., Ltd., Shenzhen Rishen
Investment Co., Ltd., Shanghai
Hong Yi Property Limited
Puning Tianhe
Puning Association of
Puning Shenghengchang Trade Garment
Country Credit Union 1000 Jan. 5, 2010 No
Development Co., Ltd. Manufacturing
Liusha West Union
Factory Co., Ltd.
Puning Tianhe
Puning Association of
Puning Shenghengchang Trade Garment Apr. 10,
Country Credit Union 500 No
Development Co., Ltd. Manufacturing 2010
Liusha West Union
Factory Co., Ltd.
*1 As mentioned in Note 5 (7) (9), the Company took factory dormitory, machinery & equipment and land use
right as collateral, meanwhile Ma Chanying took the two sets of properties in its name as collateral, in order to
obtain the above bank loans for the Company.
3. Accounts receivable and payable among related parties
Closing amount Opening amount
Name of project
(RMB10 thousand) (RMB10 thousand)
Other payables:
Shenzhen Risheng Chuangyuan Asset
4,840.66
Management Co., Ltd.
Chen Xuewen 863.00
Total 5,703.66
VII. Contingencies
No contingencies of the Company need to be disclosed.
VIII. Commitments
(1) Assets mortgage
1. The Company mortgaged its real estate to obtain RMB6,000,000 borrowing from Puning Association of
Country Credit Union Liusha West Union. The maturity date is December 1, 2008;
2. The Company mortgaged its real estate to obtain RMB5,000,000 borrowing from Puning Rural Credit Union
91
West Liusha Branch. The maturity date is January 20, 2009;
3. The Company mortgaged its dormitory, machinery and equipment as well as land use right, in order to obtain
RMB40 million borrowing from China Everbright Bank, Guangzhou Branch. The maturity date is September 27,
2009. Please see Note 6 (4) 2 for details.
The original carrying value of the fixed assets and intangible assets mentioned in the aforesaid 1-3 points was
RMB 73,732,618.09, and all of which were overdue.
IX. Post-balance-sheet events
The Company doesn’t have post-balance-sheet events to publish.
X. Notes to financial statements of parent company
(1) Accounts receivable
1. Constitution of accounts receivable
Closing balance Opening balance
Category Book balance Provision for bad debts Book balance Provision for bad debts
Proportion Proportion Proportion Proportion
Amount Amount Amount Amount
(%) (%) (%) (%)
Accounts receivable
with significant
individual amount
Individually
insignificant
accounts receivable
but in high risk 4,224,304.63 91.67 4,224,304.63 91.67 4,224,304.63 91.67 4,224,304.63 91.67
portfolio after
grouping by credit
risk characteristics
Other insignificant
383,972.25 8.33 383,972.25 8.33 383,972.25 8.33 383,972.25 8.33
accounts receivable
Total 4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00
2. Provision for bad debts of closing accounts receivable that is of individually significant or insignificant amount
but tested for impairment individually
Bad debts
Content of accounts receivable Book balance Provision ratio Reasons
amount
Long-term credit, the
Beijing Capital Airport 21,713.00 21,713.00 100%
balance is controversial
Ningbo Industrial and Long-term credit, the
26,354.45 26,354.45 100%
Commercial Bureau balance is controversial
Long-term credit, the
Guangzhou Chen Shunqin 335,904.80 335,904.80 100%
balance is controversial
92
Total 383,972.25 383,972.25
3. Individually insignificant accounts receivable but in high risk portfolio after grouping by credit risk
characteristics:
Closing balance Opening balance
Aging Book balance Provision for Book balance Provision for
Amount Proportion bad debts Amount Proportion bad debts
Within 1 year
1-2 years
2-3 years
Over 3 years 4,224,304.63 100% 4,224,304.63 4,224,304.63 100% 4,224,304.63
Total 4,224,304.63 100% 4,224,304.63 4,224,304.63 100% 4,224,304.63
4. Top 5 units in outstanding amount of accounts receivable
Relationship
Proportion in total
Name of unit with the Amount Aging
accounts receivable
Company
Hongkong Jinhua Trading
Client 4,224,304.63 Over 3 years 91.67%
Company
Guangzhou Chen Shunqin Client 335,904.80 Over 3 years 7.29%
Ningbo Industrial and
Client 26,354.45 Over 3 years 0.57%
Commercial Bureau
Beijing Capital Airport Client 21,713.00 Over 3 years 0.47%
Total 4,608,276.88 100.00%
(2) Other receivables
1. Constitution of other receivables
Closing balance Opening balance
Category Book balance Provision for bad debts Book balance Provision for bad debts
Proporti Proporti Proport Propor
Amount on Amount on Amount ion Amount tion
(%) (%) (%) (%)
Other
accounts
receivable
with 120,259,946.67 94.61 137,930,803.36 95.20
significant
individual
amount
Other
3,035,132.95 2.39 1,284,654.46 25.23 3,147,662.99 2.17 1,148,344.08 23.18
individually
93
insignificant
accounts
receivable
but in high
risk portfolio
after
grouping by
credit risk
characteristic
s
Added other
insignificant
3,806,735.56 3.00 3,806,735.56 74.77 3,806,735.56 2.63 3,806,735.56 76.82
accounts
receivable
Total 127,101,815.18 100.00 5,091,390.02 100.00 144,885,201.91 100.00 4,955,079.64 100.00
2. Provision for bad debts of closing other accounts receivable that is of individually significant or insignificant
amount but tested for impairment individually
Provision
Content of other receivables Book balance Bad debts Reasons
ratio
100.00%
Export tax rebates receivable 2,331,608.20 2,331,608.20
Shenzhen Zhao Tong Investment Co.,
100.00%
Ltd. 500,000.00 500,000.00
Lin Jialin 100.00%
300,000.00 300,000.00
Qi Xing Construction Materials
Distribution Shop, Bao'an District of 100.00%
Shenzhen 200,000.00 200,000.00
Shenzhen Jin Ming Ren Information
100.00%
Consulting Company 200,000.00 200,000.00
Zong Tongquan 100.00%
100,000.00 100,000.00
Chengde Xingye Paper Production
100.00%
Co., Ltd. 89,229.41 89,229.41
100.00%
Puning Weililai Textile Co., Ltd 50,000.00 50,000.00
Changsha Guanyuan Garments Co.,
100.00%
Ltd 12,150.00 12,150.00
Changsha Hat Factory 100.00%
10,542.95 10,542.95
100.00%
Cai Weixian 9,500.00 9,500.00
100.00%
Chen Hanbiao 3,600.00 3,600.00
Shenzhen Youtianda Industry CO.,
100.00%
Ltd. 105.00 105.00
Total 3,806,735.56 3,806,735.56 100.00%
3. Individually insignificant other accounts receivable but in high risk portfolio after grouping by credit risk
characteristics:
Closing balance Opening balance
Aging
Book balance Provision for Book balance Provision for
94
Proportion bad debts Proportion bad debts
Amount Amount
(%) (%)
Within 1 year 617,367.52 20.34% 12,347.35 1,558,717.44 49.52% 31,174.35
1-2 years 867,738.96 28.59% 86,773.90 211,732.36 6.73% 21,173.24
2-3 years 181,626.56 5.98% 90,813.28 19,246.86 0.61% 9,623.43
Over 3 years 1,368,399.91 45.09% 1,094,719.93 1,357,966.33 43.14% 1,086,373.06
Total 3,035,132.95 100.00% 1,284,654.46 3,147,662.99 100.00% 1,148,344.08
4. Top 5 in outstanding amount of other receivables in period-end
Proportion in total
Relationship with
Name of unit Amount Aging other receivable
the Company
(%)
Puning Rieys Paper Industrial Within 1
Client 1,276,000.00 1.00
Co., Ltd. year
Shenzhen Zhao Tong Investment
Client 600,000.00 Over 3 years 0.47
Co., Ltd.
Within 1
Huang Donglai Client 300,000.00 0.24
year
Lin Guilin Client 300,000.00 Over 3 years 0.24
Shenzhen Jin Ming Ren
Client 200,000.00 Over 3 years 0.16
Information Consulting Company
Total 2,676,000.00 2.11
(3) Long-term equity investments
Stake Voting
Change Differenc
Audit Balance at year in the in the
Investee Initial investment Opening balance (increase or e
method end investe investee
decrease) statement
e (%) (%)
Shenzhen
Rieys Cost
45,000,000.00 45,000,000.00 45,000,000.00 90 90
Industrial method
Co., Ltd.
Puning
Tianhe
Garment Subsidiar
Cost
Manufact 51,712,500.42 51,712,500.42 51,712,500.42 75 100 y holds
method
uring 25%
Factory
Co., Ltd.
Tianrui
(HK) Cost
8.26 8.26 8.26 100 100
Trading method
Co., Ltd.
Puning
Hengda Cost
146,600,000.00 146,600,000.00 146,600,000.00 100 100
Real method
Estate
95
Developm
ent Co.,
Ltd.
(4) Operating revenue and operating cost
Items Occurred in current period Occurred in previous period
Operating revenue 0.00 860,000.00
Operating cost 0.00 800,527.98
Operating profit 0.00 59,472.02
Note: Operating revenue of this period decreased by RMB 860,000.00 over previous period, for the reason of the
parent company hasn’t engaged in entity production and operation, and transferred to the mode of group
management.
(5) Investment income
Occurred in current Occurred in previous
Name of investee
period period
Long-term equity investment income recognized with cost
method
Long-term equity investment income recognized with
equity method
Investment income generated from disposal of long-term
equity investments
Investment income generated from holding of trading
120,369.70
financial assets
Investment income generated during the investment return
achieved from investments held to maturity
Investment income generated from holding financial assets
available for sale
Investment income generated from disposal of trading
financial assets
Investment income generated from investment held to
maturity
Investment income generated from financial assets
available for sale
Other
Total 120,369.70
(6) Supplementary information for cash flow statement
Amount in current Amount in previous
Supplementary information
period period
1. Reconciliation of net profit to net cash flows generated
from operating activities:
Net profit -7,681,829.28 10,955,971.24
96
Add: Provision for impairment of assets 136,310.38 41,174.16
Depreciation of fixed assets, of oil-gas assets, of
1,751,726.58 4,033,204.64
productive biological assets
Amortization of intangible assets 336,594.12 893,606.44
Amortization of long-term deferred expense
Losses on disposal of property, plant and equipment,
578,733.69
intangible assets and other long-term assets (gains: negative)
Loss on retirement of fixed assets (gains: negative)
Losses from variation of fair value (gains: negative) -3,404.00 7,659.00
Financial cost (gains: negative) 3,285,552.27 20,495,371.41
Investment loss (gains: negative) -120,369.70
Decrease in deferred income tax assets (gains: negative) -1,597,704.71 -2,657,976.98
Increase in deferred income tax liabilities (decrease:
negative)
Decrease in inventory (gains: negative)
Decrease in accounts receivable from operating activities
19,331,971.00 -32,494,259.64
(gains: negative)
Increase in payables from operating activities (decrease:
-6,690,957.62 51,491,070.32
negative)
Other -43,656,604.10
Net cash flows generated from operating activities 8,868,258.74 9,567,580.48
2. Investing and financing activities that do not involving
cash receipts and payment:
Conversion of debt into capital
Convertible bond due within one year
Fixed assets financed by finance leases
3. Net increase in cash and cash equivalents:
Closing balance of cash 707,181.42 1,338,922.68
Less: Opening balance of cash 1,338,922.68 28,150,078.47
Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -631,741.26 -26,811,155.79
97
XI. Supplementary information
(1) List of current non-recurring gains or losses
Items of non-recurring gains or losses Amount Remark
1. Profit or loss from disposal of non-current assets,
including written-off parts made the provision for asset
impairment;
2. Ultra vires approval, or without official approval
documents, or occasional tax return or relief;
3. Government subsidies through current profit or loss,
but are closely related to normal operations of the
Company, in line with national policies and regulations.
Except government subsidies continued to enjoy
according to certain standard amount or quantities;
4. Funds occupation fee through current profit or loss
collected from non-financial enterprises;
5. The investment cost for the Company to obtain
subsidiaries and joint ventures is less than the revenue
generated from fair value of the identifiable net assets of
investee when obtaining investment;
6. Non-monetary assets exchange profit or loss;
7. Profit or loss from entrusting others to invest or
manage assets;
8. Various provision for impairment of assets made due to
force majeure, such as natural disasters;
9. Debt restructuring gains and losses;
10. Corporate restructuring costs, such as the employees
placement expenses, integration costs, etc.;
11. Profit or loss over the part of fair value generated by
transactions with obviously unfair trading price;
12. Current net profit or loss generated by subsidiary
from business combination under the common control
from year-begin to the merge date;
13. Profit or loss generated by contingencies not related
to the Company's normal business;
14. In addition to effective hedging business related to
the normal operations of the Company, profit or loss
from changes in fair values of financial assets held for
trading and trading financial liabilities, as well as 3,404.00
investment income from the disposal of trading financial
assets, trading financial liabilities and financial assets
available for sale; There was change on fair value of stocks
15. Reversal of provision for impairment of receivables
through individual impairment test
16. Profit or loss from entrusted external loans;
17. Profit or loss generated from changes in fair value of
investment property that using fair value method for
subsequent measurement;
18. According to tax, accountancy law and other
regulations, the effect of one-time adjustment on
current profit or loss which made on current profit or loss
98
according to tax, accountancy law and other regulations;
19. Commission Income obtained from commission
operation;
20. Other non-operating income and expenditure in
-56,778.30
addition to the above items; Various penalty, overdue fine, etc.
21. Other profit or loss items meet the definition of
non-recurring gains and losses.
Subtotal -53,374.30
Income tax expense should be deducted from
-4,512.09
aforementioned non-recurring gains and losses
Profit or loss of minority shareholders in consolidated
81.99
financial statement
Total -48,944.20
(2) Return on net assets and earnings per share
EPS
Weighted average
Profit in reporting period
return on net assets
Basic EPS Diluted EPS
Net profit attributable to common
-0.0330 -0.02 -0.02
shareholders of the Company
Net profit attributable to common
shareholders of the Company after 0.0332 -0.02 -0.02
deducting non-recurring gains and losses
(3) The anomalies in the Company’s financial statements and the reasons
Item Variation amount Variation rate Remark
Monetary capital 2,792,048.21 174.42 Recovery of loans and come-and-go money
Advance the collection of loans and recovered
Accounts receivable -5,447,602.21 -39.00
overdue loans
Other receivables -10,335,970.33 -38.30 Advance the collection of come-and-go money
Short-term loans -9,500,000.00 -12.89 Paid the loan of China Everrbright Bank
Accounts payable -2,325,828.43 -21.63 Cleared payment for goods
Other payables -57,771,159.95 -90.10 Paid related parties borrowings
Operating revenue -39,143,412.92 -83.71 Export sales was reduced
Operating cost -32,433,888.87 -86.08 Export sales was reduced
Operating expenses -3,604,790.40 -82.63 Export sales was reduced
Financial expense -5,188,332.66 -55.10 Paid bank loans and reduced profit expenses
Assets impairment loss 9,646,027.89 -134.27 Reduced bad debts impairment
Income generated from transfer of Shenzhen
Investment income -8,168,851.55 -100.00
Missk Fashion Co., Ltd.
99
XII. Approval and disclosure of financial statements
The financial statements have been approved by the Board to disclose on 14 Aug. 2012.
[The understanding on this English text of the Report should be subject to the Chinese text.]
Guangdong Rieys Group Company Ltd.
14 Aug. 2012
100
