Shang Gong Group Co., Ltd.
600843
900924
Semi-Annual Report 2014
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Important Notes
1. The Board of Directors, the Board of Supervisors, and all the directors, supervisors, and senior managerss
guarantee that the contents of this semi-annual report are true, accurate, and complete, and there are no false
statements, misleading statements, or major omissions herein, otherwise they will assume the joint and several
legal responsibilities therefor.
2. All the members of the board of directors of this Company attended the meeting of the board of directors.
3. This Semi-annual financial report of the Company was not audited.
4. Zhang Min, the principal of this Company, Li Jiaming, the principal in charge of the accounting, and
GaoLili, the head of the financial department declare that this Semi-Annual Report are true, accurate, and
complete.
5. There was no occupation of fund of the Company occurred for non-operating use by holding shareholder
and the related party.
6. There was no external guarantee against the rules and regulations of the Company.
7. If the English Version of this Semi-Annual Report involves any differences from the Chinese Version,
the latter shall be effective.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Content
Part I Definition .............................................................................................................................................................. 4
Part II Company Profile ................................................................................................................................................ 5
Part III Accounting Data and Financial Index Highlights .......................................................................................... 6
Part IV Report of the Board of Directors ..................................................................................................................... 7
Part V Important Issues ............................................................................................................................................... 16
Part VI Share Change and Shareholder Status ......................................................................................................... 20
Part VII Relevant Situation about Preferred Shares................................................................................................. 25
Part VIII Directors, Supervisors and Senior Officers Status ................................................................................... 26
Part IX Fianancial Report…….………………………………………………………………………………….….27
Part X References………...…….………………………………………………………………………………….….96
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part I Definition
1. Definition
Except stated otherwise in the context hereof, the following terms shall have the following meaning:
Definitions of common terms
ShangGong Group, the Company,
means Shang Gong Group Co., Ltd.
this Company
State-owned Assets Supervision and Administration Commission
of Shanghai Pudong New Area Peoples Government, the
PDSASAC means
controlling shareholder and actual controller of Shang Gong
Group Co., Ltd.
SG Europe, ShangGong Europe means ShangGong (Europe) Holding Corp. GmbH
Duerkopp Adler Aktiengesellschaft, a German listed company
DA AG means controlled by ShangGong (Europe) Holding Corp. GmbH, the
subsidiary of Shang Gong Group Co., Ltd.
SG Butterfly, SG Butterfly
means Shanghai Shanggong Butterfly Sewing Machine Co., Ltd.
Company
DA Trading means Dürkopp Adler Trading (Shanghai) Co., Ltd.
PFAFF AG means PFAFF Industriesysteme und Maschinen Aktiengesellschaft
KSL Keilmann Sondermaschinenbau GmbH, KSE GmbH, KSA
KSL GmbH means
Verwaltungs GmbH
German KSL GmbH and its KSL Keilmann Sondermaschinenbau GmbH, KSE GmbH, KSA
means
Affililates, K GmbH Verwaltungs GmbH、KSA GmbH & Co. KG
BDO China Shu Lun Pan Certified BDO China Shu Lun Pan Certified Public Accountant LLP
means
Public Accountant LLP (special general partnership)
CSRC means China Securities Regulatory Commission
SSE means Shanghai Stock Exchange
Report Period means From January 1, 2014 to June 30, 2014
After Report Period means From July 1, 2014 to the date of releasing these Statements
Company Law means The Company Law of the Peoples Republic of China
Securities Law means The Securities Law of the Peoples Republic of China
RMB, Yuan means Renminbi, China Yuan, the legal currency of China
EUR means Currency of European Union
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part II Company Profile
1. Company Information
Company name in Chinese 上工申贝（集团）股份有限公司
Abbreviation of the Company name in Chinese 上工申贝
Company name in English Shang Gong Group Co., Ltd.
Abbreviation of the Company name in English ShangGong Group
Legal representative of the Company Zhang Min
2. Contact
Secretary of Board of Directors Representative of Securities Affairs
Name Zhang Jianguo Shen Lijie
F 12, Orient Mansion, No. 1500, Century F 12, Orient Mansion, No. 1500, Century
Address
Avenue, Pudong New Area, Shanghai Avenue, Pudong New Area, Shanghai
Telephone 021-68407515 021-68407700*1233
Fax 021-63302939 021-63302939
Email zhangjianguo@sgsbgroup.com shenlj@sgsbgroup.com
3. Company Profile
Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New
Registered Address
Area, Shanghai
Postal Code 200122
Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New
Office address
Area, Shanghai
Postal Code 200122
Website http://www.sgsbgroup.com
Email sgsb@sgsbgroup.com
4. Information Release and Lodging Address
Name of newspaper selected by the Company for Shanghai Securities News, Hong Kong Commercial
information release Daily
Website appointed by CSRC for publishing
http://www.sse.com.cn
semi-annual report
Lodging address of semi-annual report of the Company Office of board of directors of the Company
5. Introduction to Company’s Stock
Introduction to Companys Stock
Type of Abbreviation of Code of Abbreviation of Stock before
Exchange where stock is listed
Stock Stock Stock Change
A Share Shanghai Stock Exchange SGSB 600843 Shanggong Stock, Gongfeng Share
B Share Shanghai Stock Exchange Shangong B Share 900924 Gongfeng B Share
6. Registration Change of the Company in the Report Period
Registration date July 31,2014
Registration place Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai
License No. 310000400080303
Tax No. 310115132210544
Orgization No. 13221054-4
During the report period, the company completed non-public offering of stock, the companys
Registration change registered capital changed to RMB 548,589,600, refer to "Shanghai Securities News", " Hong
during report period Kong Commercial Daily" and the Shanghai Stock Exchange website Temporary Bulletin No.
2014-027 of the Company on June 11, 2014.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part III Accounting Data and Financial Index Highlights
1. Main Accounting Data and Financial Index of the Company
1.1 Main Accounting Data Unit: Yuan Currency: RMB
Increase or decrease in this
This Report Period Same period in the
Main Accounting Data Report Period over the
(from Jan. to Jun.) previous year
previous year (%)
Operating revenue 969,890,167.03 871,423,265.72 11.30
Net profit attributable to shareholders of
41,854,215.80 30,674,302.78 36.45
listed company
Net profit after deduction of
non-recurring profits and losses,
41,791,285.85 30,691,946.38 36.16
attributable to shareholders of listed
company
Net cash flows from operating activities -18,746,773.41 -31,574,376.14 NA
Increase or decrease at the
At the end of this At the end of the
end of this Report Period
Report Period previous year
over the previous year (%)
Net assets attributable to shareholders of
1,484,168,038.94 795,894,186.10 86.48
listed company
Total assets 2,682,230,955.77 2,047,916,471.17 30.97
1.2 Main Financial Index
Increase or decrease of
This Report Period Same period in the
Main Financial Index this Report Period over
(from Jan. to Jun.) previous year
the previous year (%)
Basic earnings per share (RMB/share) 0.0839 0.0683 22.84
Diluted earnings per share (RMB/share) 0.0839 0.0683 22.84
Basic earnings per share after deduction
of non-recurring profits and losses 0.0838 0.0684 22.51
(RMB/share)
Weighted average return on equity (%) 3.6846 4.2622 Decrease by 0.58%
Weighted average return on equity after
deduction of non-recurring profits and 3.6791 4.2646 Decrease by 0.59%
losses (%)
1.3 Items and Amount of Non-recurring Profits and Losses
Unit: Yuan Currency: RMB
Items of Non-recurring Profits and Losses Amount
Profits and losses from disposal of non-current assets 265,010.30
government subsidies recorded in the current profit and loss 149,000.00
Except effective hedging business relevant to the normal business of the Company, gains and
losses from changes in fair value arising from trading financial assets and trading financial
-13,426.44
liabilities, and investment income from disposal of trading financial assets, trading financial
liabilities and available-for-sale financial assets
Other non-operating income and expenditure except the above-said items -206,733.07
Impact on minority interests -103,155.71
Impact on income tax -27,765.13
Total 62,929.95
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part IV Report of the Board of Directors
1. Discussion and Analysis of the Board of Directors on the Operating Status of the Company during the
Report Period
In the first half of 2014, the overall domestic economy continued to be stable and on the up-trend, the GDP grew
7.4%, but due to the impact of the national economic structure adjustment and transformation and upgrading and
downstream of textile and apparel market decline and other factors, the sewing machinery industry continued to
show a downward trend overall.
Facing the downturn of conditions and complex market environment of sewing machinery industry, the company's
management and staff work together to actively adhere to the "science and technology leading, innovation and
development" business strategy, the overall operations of the reporting period stay healthy and stable. According
to the business plan arrangement, the company focuses on the following aspects:
A. Non-public issuance of work completed according to plan for the long-term development. It laid a solid
foundation for the company. The raising investment project is being actively promoted in accordance with the
plan, investment on PFAFF project through Shanggong Europe has completed. The integration for DA ,
PFAFF and KSL in on the way. Synergy effect has been initially come out. The company 's technology,
industry position and scale, market share and economic benefits have increased.
B. The company increases R & D investment to accelerate the transformation and upgrading of sewing products
technology development, and promotes the extension of company's products range of applications from
clothing, bags, shoes and other traditional manufacturing and auto ancillary industry to aerospace, aerospace
engineering and other emerging industries. The company increases R & D investment , to enhance the degree
of automation products , promote the transformation and upgrading and development of traditional
manufacturing industries. The company further accelerates the integration of home sewing main industry,
create synergies, improve economic efficiency, improve products and production layout adjustment,
strengthen the construction of a global sales network and information systems.
C. The company accelerates transformation and development of its non- sewing business, accelerates the
gradient transfer, enhance profitability, and achieved certain results.
In the Report Period, the operation revenue of the Company was RMB 969,890,000, increasing by 11.3% on a
year-on-year basis, wherein, the sales revenue of sewing equipment increased by 20.09%, the operating profit was
RMB 90,550,000, increased by18.72% on a year-on-year basis, the net profit attributable to shareholders of the
listed company was RMB 41,850,000, increasing by 36.45% on a year-on-year basis, and the net profit
attributable to shareholders of the listed company after deduction of non-recurring gains and losses increased by
36.16% on a year-on-year basis.
1.1 Analysis on Main Business
1.1.1 Analysis on Change of Relevant Items in Financial Statements
Unit: Yuan Currency: RMB
Amount in the same
Amount in this Increase or decrease
Items period in the previous
Report Period (%)
Report Period
Operating revenue 969,890,167.03 871,423,265.72 11.30
Operating expenses 661,303,736.20 606,814,372.70 8.98
Selling expenses 109,957,980.76 88,494,572.02 24.25
General and administration expenses 102,160,879.18 98,820,662.84 3.38
Financial expenses 10,122,179.92 10,718,964.95 -5.57
Net cash flow from operating activities -18,746,773.41 -31,574,376.14 40.63
Net cash flow from investing activities -527,878,281.68 -96,239,879.63 -448.50
Net cash flow from financing activities 570,261,489.85 89,345,710.67 538.26
Research and development expenditures 28,412,862.30 26,637,899.76 6.66
1.1.1.1 Large Change of Items in the Balance Sheet of the Company at the End of Report Period and Reasons
Unit: Yuan Currency: RMB
At the end of this At the end of Amount increase Increase or Analysis for
Items
Report Period previous year or decrease decrease (%) reasons
Notes receivable 2,307,430.01 3,320,697.28 -1,013,267.27 -30.51 Note 1
Dividend receivable 12,734,735.09 2,881,577.53 9,853,157.56 341.94 Note 2
Other receivables 41,465,146.32 60,130,306.48 -18,665,160.16 -31.04 Note 3
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Other current assets 539,034,806.53 64,405,666.67 474,629,139.86 736.94 Note 4
Project under
5,636,796.26 2,801,141.91 2,835,654.35 101.23 Note 5
construction
Short-term loans 145,303,754.54 222,299,211.73 -76,995,457.19 -34.64 Note 6
Notes payable 0.00 6,225,975.90 -6,225,975.90 -100.00 Note 7
Taxes payable 42,981,940.21 31,916,230.42 11,065,709.79 34.67 Note 8
Other current debts 503,397.29 1,623,775.74 -1,120,378.45 -69.00 Note 9
Capital reserve 945,448,784.81 397,651,623.21 547,797,161.60 137.76 Note 10
Retained earnings 38,857,646.81 -2,996,568.99 41,854,215.80 1396.74 Note 11
Note 1: mainly caused by accepting the acceptance bill in this Period.
Note 2: dividend receivable distributed by Fiji Xerox of Shanghai Limited in this Period.
Note 3: mainly caused by completing non-public stock offering of the Company and carrying forward the issuance
expense.
Note 4：mainly caused by purchasing short-term RMB structured deposit products with principal guaranteed by
bank in this Period in order to increase gains of funds.
Note 5: mainly caused by increasing investment in sewing equipment in this Period.
Note 6: mainly caused by refunding loans from domestic funds with high cost.
Note 7: mainly caused by paying the acceptance bill in this Period.
Note 8: mainly caused by balance of enterprise income tax payable at the end of this period due to profit increase
of subsidiaries in this Period.
Note 9: mainly caused by the foreign subsidiaries writing off interest and rent originally recorded in this Period.
Note 10: mainly cause by premium produced from funds raised from non-public share offering in this Period.
Note 11: caused by profit in this Period.
1.1.1.2 Large Change of Items in the Income Statement of the Company in this Report Period and Reasons
Unit: Yuan Currency: RMB
Same period in Amount Increase or Analysis
This Report
Items the previous increase or decrease for
Period
year decrease (%) reasons
Loss of asset impairment 4,810,987.05 -589,244.67 5,400,231.72 916.47 Note 1
Income from changes in fair value -13,426.44 -80,413.50 66,987.06 83.30 Note 2
Non-business income 621,043.73 441,573.12 179,470.61 40.64 Note 3
Non-business expenditure 413,766.50 316,661.06 97,105.44 30.67 Note 4
Other comprehensive income 8,184,632.48 -21,909,974.10 30,094,606.58 137.36 Note 5
Note 1: mainly caused by reversal of bad debt reserve for account receivable
Note 2: mainly caused by increasing change gain in fair value of trading financial assets on year-on-year basis
Note 3: mainly caused by increasing income from disposal of fixed assets on year-on-year basis.
Note 4: mainly caused by increasing loss from disposal of fixed assets on year-on-year basis.
Note 5: mainly caused by increasing change of fair value of available-for-sale financial assets and conversion
balance in foreign currency statements on year-on-year basis.
1.1.1.3 Large Change of Items in the Cash Flow Statement of the Company in this Report Period and Reasons
Unit: Yuan Currency: RMB
Increase
This Report Same period in Amount increase or Analysis
Items
Period the previous year or decrease decrease for reasons
(%)
Net cash flow from operating
-18,746,773.41 -31,574,376.14 12,827,602.73 40.63 Note 1
activities
Net cash flow from investing
-527,878,281.68 -96,239,879.63 -431,638,402.05 -448.50 Note 2
activities
Net cash flow from financing
570,261,489.85 89,345,710.67 480,915,779.18 538.26 Note 3
activities
Impact of change of exchange
-1,056,688.04 -9,216,787.28 8,160,099.24 88.54 Note 4
rate on cash flow
Note 1: mainly caused by increase of cash received from selling commodities and providing labor and paid to
employees paid on year-on-year basis.
Note 2: mainly caused by purchase of RMB structured deposit products of the bank in this Period and purchase of
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
100% equity of PFAFF by ShangGong Europe on year-on-year basis.
Note 3: mainly caused by receipt of funds raised from non-public stock offering and increase of net repayment
amount of the bank loans on year-on-year basis in this Period.
Note 4: mainly caused by impact of change of Euro exchange rate.
1.1.2 Others
1.1.2.1 Detailed Statement on Major Change in Profit structure and Profit Sources of the Company
In the Report Period, the main business of the Company was stable, and there was no major change in profit
structure and profit sources of the Company.
1.1.2.2 Analysis and Statement on Implementation Progress of Various Financing and Major Assets
Restructuring of the Company in the Earlier Stage
The third temporary 2013 general meeting of shareholders held by the Company on August 20, 2013, reviewed
and adopted the pre-plan of non-public share offering (A Shares). In February 28, 2014, CSRC examined and
approved the non-public share offering of the Company. This offering was completed on March 28, the actual
offering number was 99,702,823 shares, the offering price was RMB 6.73/share, the amount of raised funds was
RMB 670,999,998.79, and after deduction of offering fees of RMB 32,791,767.81, the net amount of raised funds
was RMB 638,208,230.98. After this offering, the total share capital of the Company is 548,589,600 shares, and
the lock-up period for the newly increased shares is 12 months (for details, see the Temporary Bulletin No.
2014-011 of Company).
1.1.2.3 Statement on progress of operation plan
In this Report Period, the Company actively organized to implement the annual operation plan established by the
Board of Directors at the earlier of this year, and the production and operation of Company were healthy and
steady. Without consideration of the impact of irregular factors, the operation performance basically met
expectations. The investment projects for which funds were raised were under implementation positively.
1.2 Analysis on Operation Status by Industry, Product and Region
1.2.1 Main Business Status by Industry and Product
Unit: Yuan Currency: RMB
Main Business Status by Industry
Increase or Increase or
decrease of decrease of
Gross Increase or decrease
operating operating
Operating Operating profit of gross profit rate
Industry revenue expenses
expenses expenses rate over the previous
over the over the
(%) year (%)
previous previous
year (%) year (%)
Sewing equipment 758,165,170.26 472,316,173.27 37.70 20.09 19.24 Increase 0.44%
Export trade 138,078,065.37 134,983,016.70 2.24 -13.08 -12.52 Decrease 0.62%
Office Supplies and
46,450,959.13 40,310,076.60 13.22 -11.55 -11.99 Increase 0.44%
Film Equipment
Others 2,476,013.64 637,125.76 74.27 27.88 964.80 Decrease 22.64%
Total 945,170,208.40 648,246,394.33 31.41 11.90 8.72 Increase 2.01%
1.2.2 Main Business Status by Region
Unit: Yuan Currency: RMB
Increase or decrease of operating revenue
Region Operating revenue
over the previous year (%)
Domestic 397,189,456.19 -2.95
Overseas 609,890,630.29 26.32
1.3 Analysis on Core Competitiveness
The Company is the first listed enterprise with the longest history in the domestic sewing equipment industry, and
has multiple years of experience in production of sewing equipment. The Company successfully purchased
German Dürkopp Adler AG in 2005, one of the famous sewing machine manufacturing company in the world,
which gives the Company the most advanced sewing machine manufacturing technology in the world. In 2013,
through cross-border merger and acquisition, the Company successfully controlled German PFAFF AG and
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
German KSL GmbH and its affiliates, both of which were well-established sewing equipment manufacturing
enterprises in the same industry, to make its international influence and brand recognition improve largely, and
further enhance the core competence of the Company. The core competence of the Company is mainly shown in
the following aspects:
I. Technology Advancement Advantage
German KSL GmbH, purchased by the Company, holds the leading position in CNC and robot controlled
automatic sewing technologies, and its products are not only applied in the traditional market for sewing machine
industry but also applied in some emerging fields, such as automobile, environmental protection, aeronautics and
astronautics and renewable energy, etc. In many fields, such as automobile airbags, filters protecting environment,
light carbon fiber structure for plane, etc., the sewing application technology of KSL GmbH has the absolute
competition advantage, and especially, it originally created the sewing technology for light carbon fiber and 3D
sewing automation. Technologies of KSL GmbH together with technologies of German DA AG and PFAFF AG
make the Company own the most advanced sewing technologies in the world.
II. Brand and Product Advantage
Through overseas acquisition, the Company owns some internationally well-known brands, such as “DA” and
“PFAFF” with 150 years history, and “KSL” and “Beisler” with more than 50 years history, etc., and some
famous domestic brands, such as “Butterfly” brand with more than 90 years history and “Shanggong” brand with
more than 50 years history. These brands have a high recognition and reputation in the sewing machine industry.
The products of the Company focus on smart, modularized and highly efficient automatic sewing unit and other
sewing equipment with integrated machinery and electronics, covering various advanced technologies in the field
of high-end sewing equipment, and the Company holds the leading position in the segmented market of sewing
equipment.
III. Technological Research and Development Capability
The Company highly attaches importance to the construction of technological research and development
capabilities, which have become the important force driving the development of the Company. The Company has
owned a powerful technological research and development team and had the complete and efficient scientific and
technological innovation system, the leading sewing machine design plan and the first class assessment method
for testing sewing machines in the world. Shanggong technology center domestically is the city level of research
and development center in Shanghai, and has the strong digestion and absorption and supporting development
capability.
IV. Sales Network throughout the Globe
The products of the Company are widely sold domestically, and the Company has established the relatively
perfect marketing channel and service network, and had a great number of valuable and stable high-end clients
which manufacture automobile accessories and luxuries.
V. Internationalized Operation and Management Experience
Since 2005, the Company has started to implement strategies of “going out”, and after conducting the
internationalized operation of the main business, gradually cultured an operation and management team
accumulating a great deal of experience in cross-border operation and management.
1.4 Analysis on Investment Status
1.4.1 Overall Analysis on Foreign Equity Investment
In the Report Period, the balance of long-term equity investment of the Company at the beginning was RMB
53,534,559.75, the balance at the end was RMB 53,569,069.13, and RMB 34,509.38 was increased. For details,
see Note 5 (11) of these Statements.
1.4.1.1 Securities Investment Status
Proportion
Book value in total Gains and
Initial
Shareholding at the end securities losses in
Securities Securities Abbreviation investment
No. number of Report investment the Report
type code of securities amount
(shares) Period at the end Period
(RMB)
(RMB) of Report (RMB)
Period (%)
Huaan A
1 Fund 040002 100,000.00 559,435.23 264,053.43 100.00 -13,426.44
Share
Investment in other securities held at the end /
of this Period
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Gains and losses from investment of / / / /
securities sold in the Report Period
Total 100,000.00 / 264,053.43 100% -13,426.44
1.4.1.2 Status of Holding Equity of Other Listed Companies
Unit: Yuan Currency: RMB
Holding Gains
Holding
proportion and Change of
Initial proportion Book value at
Securities Abbreviation at the Losses owners
investment at the end the end of Accounting Items Share source
code of securities beginning in interest in the
amount of Report Report Period
of Report Report Report Period
Period (%)
Period (%) Period
Corporate
Shanghai Available-for-sale
600689 1,779,800.00 <5% <5% 3,972,744.90 -1,844,724.00 shares
Sanmao financial assets
investment
Changjiang
Available-for-sale
600757 Publishing 72,085,722.82 <5% <5% 91,142,025.90 13,182,123.52 Note
financial assets
& Media
Lujia B Available-for-sale
900932 773,099.71 <5% <5% 1,113,362.70 -121,387.58 Enforcement
Shares financial assets
Total 74,638,622.53 / / 96,228,133.50 11,216,011.94 / /
Note: Shares of Changjiang Publishing & Media were transferred to the Company by bank to which interests of
Changjiang Publishing & Media were compensated in the bankruptcy and restructuring.
1.4.1.3 Status of Holding Equity of Financial Enterprises
Change
Holding of
Holding Book value Gains and
Initial proportion owners
proportion at the end of Losses in
Name of investment at the interest Accounting Share
at the end Report Report
Enterprise amount beginning in the Items source
of Report Period Period
(RMB) of Report Report
Period (%) (RMB) (RMB)
Period (%) Period
(RMB)
Long-term
Bank of Shanghai 951,400.00 <5 <5 951,400.00 177,109.68 equity Purchased
investment
Long-term
Baoding
7,500.00 <5 <5 7,500.00 equity Purchased
Investment
investment
Long-term
Shenyin&Wanguo
200,000.00 <5 <5 200,000.00 3,238.84 equity Purchased
Securities
investment
Total 1,158,900.00 / / 1,158,900.00 180,348.52 / /
Statement on equity of financial enterprises held:
While the above-said financial enterprises were founded and established, the Company subscribed to their equity,
and holds them until now.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.2 Status of Investment in Consigned Financing and Derivatives of Non-financial Companies
1.4.2.1 Consigned Financing
Unit: Ten Thousand Yuan Currency: RMB
Fund
Whether source
Amount of Whether Whether
Method of Principal Gains legal and Affiliated
Name of Starting Predicted provision affiliated lawsuit
Product type Amount Ending date determining
gains
actually actually proceedings
for transaction is
whether relations
partner date gains recovered obtained are it is hip
impairment is involved involved
involved raised
fund
Xuhui
Floating
Branch,
Linghui Wealth. gains with 3.95%-4
Bank of 5,000 2014-4-16 2014-10-16 - - Yes - No No Yes
Huideli guaranteed .06%
Communicat
principal
ions
Fumin Floating
“Wenjin” No. 2
Branch of gains with
Phase 27,000 2014-4-17 2014-10-16 4.90% - - Yes - No No Yes
the bank of guaranteed
SD21406M27
Shanghai principal
Fumin Floating
“Wenjin” No. 2
Branch of gains with
Phase 20,000 2014-4-17 2014-10-16 4.90% - - Yes - No No No
the bank of guaranteed
SD21406M27
Shanghai principal
Total / 52,000 / / / / - - / - / / / /
Aggregate principal and gains amount overdue and non-refunded (RMB) 0
With the review and approval of the twelfth meeting of the Seventh Board of Directors on April 11, 2014, it is
Statement on consigned financing resolved that idle raised funds of RMB 320 million and self-owned funds of 200 million were managed in purchasing
RMB structured deposit products of the bank with principal guaranteed.
.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.2.2 Entrusted Loans
No entrusted loans in this Report Period
1.4.2.3 Other investment in financing products and derivatives
No other investment in financing products and derivatives in this Report Period
1.4.3 Use of Raised Funds
1.4.3.1 Overall Use of Raised Funds
Unit: Yuan Currency: RMB
Raising Raising Total amount of raised funds Total amount of raised funded Total amount of raised funded not Usage and allocation of
Total amount of raised funds
year method spent in this Report Period aggregately spent spent raised funded not spent
Non-public saved in special
2014 670,999,998.79 48,035,789.91 312,316,160.83 326,323,890.39
offering account of raised funds
Total / 670,999,998.79 48,035,789.91 312,316,160.83 326,323,890.39 /
With the review and approval of the twelfth meeting of the Seventh Board of Directors on April 11, 2014, it is resolved that
part of raised funds are replaced with self-owned funds of RMB 312,316,160.83 which were invested in projects for which
Overall use statement on raised funds funds were raised in advance; meanwhile, idle raised funds of RMB 320 million were managed in purchasing RMB
structured deposit products of the bank with principal guaranteed with half-year term. For details, see Temporary Bulletin
No. 2014-017and 2014-018 of the Company.
1.4.3.2 Committed projects for which funds are raised
Unit：Ten Thousand Yuan Currency: RMB
Reason for
Amount of Investment Whether Whether Statement on change and
Whether Aggregate amount Project
Name of raised funds amount of raised scheduled Predicted Gains predicted scheduled statement on
project is of raised funds progress
committed project to be funds in this progress is gains produced gains are progress and change
changed actually invested (%)
invested Report Period met met gains not met procedures of
raised funds
PFAFF project
invested through
No 20,000 4,565 20,003 Yes 100 -80.27 Not applicable Not applicable
ShangGong
Europe
KSL and its
affiliates project
invested through No 25,000 0 10,748.5 Yes 100 -453.20 Not applicable Not applicable
ShangGong
Europe
13
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Project of
Research and
development and
production of
No 15,100 194.58 392.12 Not applicable Not applicable
automatic sewing
unit and
electronic
controlled system
Project of
developing
modern household No 5,000 44 88 Not applicable Not applicable
multi-functional
sewing machines
Project of
establishing and
perfecting internal
Enterprise No 2,000 0 0 Not applicable Not applicable
Resource
Planning (ERP)
system
Total / 67,100 4,803.58 31,231.62 / / / / / /
During the reporting period, the companys investment project by raised fund is in implementation as planned, among which the fund invested in PFAFF
project has completed. PFAFF has greatly decreased its loss, close to be breakeven, and its operating conditions continue to significantly improve; Investment
project on Keilmann and its affiliates has been done according to the plan, share purchase agreement has completed, follow-up investment and integration of
Statement on raised funds the implementation of the work is in accordance with the contractual stipulations. As KSL is project oriented, after acquired by ShangGong Europe, it
spent in committed projects increased market exploration with increasing marketing costs, and some R&D project is in the developing period, which all cause its loss during the reporting
period. At present, it is in the normal production and operation conditions. ShangGong Europe with DA, PFAFF and KSL as its subsidiaries, it continues to
promote integration, and synergy effect is preliminary appeared. The overall strength of ShangGong Europe increased, economic efficiency has increased,
with year-on-year increase of 18.36%.
14
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.3.3 Change of project for which funds are raised
No change of projects for which funds are raised in this Report Period.
1.4.4 Analysis on Main Subsidiaries and Companies of Which ShangGong Group holds shares
Unit: Yuan Currency: RMB
Company Business Registered Operating Operating
Total assets Net assets Net profit
name scope capital revenue profit
Investment in,
assets
management
ShangGong
on, and
(Europe)
production, EUR
Holding 1,466,810,774.04 511,833,285.06 618,987,520.73 87,457,475.58 60,317,590.25
processing 12,500,000
Corp.
and sales of
GmbH
industrial
sewing
equipment
Shanghai
Manufacturing
Shanggong
and sales of
Butterfly RMB 79
various 125,375,117.70 82,706,501.85 157,455,369.97 4,324,683.53 3,856,221.08
Sewing million
sewing
Machine
equipment
Co., Ltd.
Dürkopp
Sales of
Adler
various USD 6
Trading 139,397,506. 17 51,019,066.93 89,427,415.66 4,493,695.40 4,286,087.70
sewing million
(Shanghai)
equipment
Co., Ltd.
Circumstance under which the impact of investment gains from a single company of which the Company holds
shares on net profit of the Company is more than 10%
Unit: Ten Thousand Yuan Currency: RMB
Company Name Operating revenue Operating profit Net profit
Fuji Xerox of Shanghai Limited 138,707 5,347 4,167
1.4.5 Projects for which no funds are raised
No major projects for which no funds are raised in this Report Period.
2. Pre-plan of Profit Distribution and Capitalization of Capital Reserve
2.1 Implementation or Adjustment on Profit Distribution Plan Performed in the Report Period
In the Report Period, the 2013 shareholders meeting of the Company had adopted the profit distribution plan
under which the dividend was not distributed in cash, no bonus shares were allotted, and no stock capital was
capitalized, and such plan has been implemented.
2.2 Pre-plan of Profit Distribution and Capitalization of Capital Reserve to be prepared within the half
year
Whether profit is distributed or capital reserve is capitalized? No.
3. Other Issues Disclosed
3.1 Statement of the Board of Directors and the Supervision Committee on Non-standard Auditing Report
Issued by the Certified Accountants Firm
Applicable Not applicable
15
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part V Important Issues
1. Major Litigations and Arbitrations and Issues generally Questioned by Media
1.1 Litigations and Arbitrations not Disclosed in the Temporary Bulletin or with the Follow-up Progress
Unit: Yuan Currency: RMB
In the Report Period:
Predicted
Type of Amount debts or Decision
Plaintiff Party assuming
Defendant litigation Basic situation of involved in amount Progress of litigation Trial result and impact of enforcement
(Applicant joint and several litigation
(Applied) and litigation (arbitration) formed in (arbitration) litigation (arbitration) of litigation
) responsibilities (arbitration)
arbitration litigation (arbitration)
(arbitration)
Shanghai Shanghai Bankruptcy Because Shanghai Because the assets of The registered capital of The
Shanggong Shuangchongbao and Shuangchongbao the debtor, Shanghai Shuangchong Company Company is
Import and Sewing Machine liquidation Sewing Machine Co., Shuangchongbao was RMB 12 million, and handling
Export Co., Ltd. Ltd., one subsidiary Sewing Machines Co., the Company held 70% cancellation
Co., Ltd. controlled by the Ltd., were not enough equity and owned 90% procedures
Company, could not for paying off the voting of Shuangchong of business
pay off the outstanding bankruptcy expenses, Company, and its initial license and
and due debts, and was on March 3, 2014, the investment amount was taxation.
insolvent, in Company received the RMB 10,800,000.
accordance with civil ruling made by Shuangchong Company
relevant provisions of the peoples court of had been shut down since
the Bankruptcy Law of Pudong New Area, 2007, and the Company
the Peoples Republic Shanghai [(2013) Pu had drawn the impairment
of China, Shanghai Min Er (Shang) Po Zi loss for the full amount of
Shanggong Import and No. 9-7], in which it its equity investment in
Export Co., Ltd., entity decided to terminate the previous year. In the
in charge of the the bankruptcy and Report Period,
liquidation, applied for liquidation procedures Shuangchongbao
causing Shanghai of Shanghai Company was not covered
Shuangchongbao Shuangchongbao in the consolidated
Sewing Machine Co., Sewing Machines Co., statements of the
Ltd. to enter the Ltd. Company.
bankruptcy procedures
at the end of 2012.
16
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
2. Issues Relevant to Bankruptcy and Restructuring
No issues relevant to bankruptcy and restructuring in the Report Period
3. Assets Transaction and Enterprise Merger
Applicable Not applicable
4. Equity Incentive of the Company and Its Impact
Applicable Not applicable
5. Major Associated Transactions
Applicable Not applicable
5.1 Associated Transactions Relevant to Daily Operations
5.1.1 Issues already disclosed in the temporary bulletin and for which there was no progress or change in
the follow-up implementation
Summary of Issues Inquiry Index
Shanghai SGSB Electronic Co., Ltd., one wholly-owned subsidiary of The temporary bulletin No. 2014-009
the Company, sells products to Fiji Xerox of Shanghai Limited., and is disclosed by the Company on March 21,
its permanent accessory supplier, and the above-said transaction 2014, published in Shanghai Securities News
constitutes the daily associated transaction. It is estimated that in 2014, and Hong Kong Commercial Daily and
the amount of products that it will sell to Fiji Xerox is RMB 40 website of Shanghai Stock Exchange
million, and in this Report Period, the sales amount was RMB (http://www.sse.com.cn/).
18,463,600, and there was no major change.
5.2 Associated Creditor’s Rights and Debts
Except associated creditors rights and debts relevant to daily operation, there were no other associated creditors
rights and debts in the Company.
For breakdown of associated creditors rights and debts relevant to daily operation, see Note of these Statements.
6. Major Contracts and Their Performance
6.1 Trusteeship, Contracting and Lease
Applicable Not applicable
6.2 Guarantees
Applicable Not applicable
17
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Unit: Ten Thousand Yuan Currency: RMB
External Guarantee of the Company (not including guarantee for subsidiaries)
and listed company
Whether guarantee
Whether guarantee
Overdue guarantee
between guarantor
Guarantee amount
Expiration date of
counter-guarantee
Beginning date of
has been fulfilled
Whether there is
Guarantee Type
(signing date of
Guarantee Date
guarantee for
Whether it is
Relationship
relationship
Guaranteed
agreement)
is overdue
Guarantor
guarantee
guarantee
affiliates
Affiliate
amount
Shanghai
Joint
Shang Gong Pudong
Headquarters of June 9, June 9, June 8, and
Group Co., Development 7,374 No No 0 Yes No No
the Company 2012 2012 2018 several
Ltd. (Group) Co.,
liability
Ltd.
Joint
July Novem
ShangGong Wholly-owned July 30, and
Commerzbank 4,659 30, ber 29, No No 0 Yes No No
Europe subsidiary 2013 several
2013 2015
liability
Total guarantee amount at the end of Report Period (not including guarantee for subsidiaries) -4,186
Total guarantee balance at the end of Report Period (A) (not including guarantee for subsidiaries) 12,033
Guarantee of the Company for Subsidiaries
Total guarantee amount for subsidiaries at the end of Report Period 7,000
Total guarantee balance for subsidiaries at the end of Report Period (B) 18,794
Total guarantee amount of the Company (including guarantee for subsidiaries)
Total guarantee amount (A+B) 30,827
Proportion of guarantee amount in the net assets of the Company (%) 18.79
Wherein:
Amount of guarantee provided to shareholder, actual controller and their affiliates (C) 0
Amount of guarantee for debt directly or indirectly provided to guaranteed, the asset - liability ratio of
0
which is more than 70% (D)
Balance between total guarantee amount and 50% of net assets (E) 0
Total of above-said guarantees (C+D+E) 0
Statement on guarantee undue for which joint and several liability can be assumed
Statement on Guarantee:
1. In 2005, this Company issued to FAG Kugelfischer GmbH (FAG) a guarantee letter amounting to not more than
USD 5,300,000 for house lease of a subsidiary of DA AG in the USA, the subsidiary controlled by ShangGong
Europe, with a validity term from June 30, 2005, to October 31, 2015, and meanwhile, on June 30, 2005,
ShangGong Europe provided FAG with a cash pledge of EUR 635,000 with the same validity term so as to
provide the re-guarantee for transaction of house sales-leaseback between a subsidiary of DA AG in USA and
UTF Norcross L.L.C.
2. On July 30, 2013, the Company provided to ShangGong Europe a financing guarantee letter issued by Xuhui
Branch of the Bank of Communications for applying to Frankfurt Branch of the Bank of Communications for
EUR loans for current funds equivalent to not more than RMB 80 million with one years validity term, and
meanwhile, the Company provided a bond of RMB 4 million and mortgaged its industrial real estate at No. 603
Dapu Road, Shanghai, to Xuhui Branch of the Bank of Communications.
3. ShangGong Europe mortgaged 1.2 million shares of DA AG which it held to Commerzbank so that
Commerzbank issued to it a bank guarantee letter amounting EUR 5.55 million with a validity term of two years
and four months, in order to provide a guarantee for paying the purchase price to the seller who sold equity of
KeilmannSondermaschinenbau GmbH.
4. On March 25, 2014, the Company provided to ShangGong Europe a financing guarantee letter issued by the
Shanghai Branch of Commerzbank for applying to Bielefeld Branch of Commerzbank for EUR loans for current
funds equivalent to not more than RMB 58 million with one years validity term.
5. In this Report Period, this Company mortgaged 100% equity of Shanggong Butterfly, which it held, 80% equity
of Shanghai Butterfly Import and Export Co., Ltd., which was held by Shanggong Butterfly, and real estate at No.
18
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
190 Huyi Road, owned by this Company, as counter-guarantees for a loan guarantee provided by Shanghai
Pudong Development (Group) Co., Ltd., to this Company, amounting to RMB 115,600,000 with the validity term
from June 9, 2012, to June 8, 2018. By the end of June 30, 2014, this Company had withdrawn a pledge of 80%
equity of Shanghai Butterfly Import and Export Co., Ltd., the amount of counter-guarantee is decreased by RMB
41,860,000, and the actual balance of aggregate loans is RMB zero.
6.3 Other Major Contracts and Transactions
No other major contracts and transaction in this Report Period
7. Performance of Committed Issues
Applicable Not applicable
8. Engagement and Dismiss of Accountants Firm
In the Report Period, with the approval of the shareholders meeting of the Company, the Company continuously
engaged BDO China Shu Lun Pan Certified Public Accountants LLP to act as the auditor of 2014 financial
statements of the Company.
9. Punishment on and Rectification of Listed Company and Its Directors, Supervisors, Senior Officers,
Shareholders Holding over 5% shares, Actual Controller and Purchaser
In this Report Period, this Company and its directors, supervisors, senior officers, shareholders holding over 5%
shares, actual controller and purchaser were not investigated, imposed on the administrative punishment, and
criticized with a circulated notice by CSRC, and publicly censured by the stock exchange.
10. Company Governance
In the Report Period, the Company, in strict accordance with relevant provisions of laws and regulations, such as
the Company Law, the Securities Law, and the Code of Corporate Governance for Listed Companies, etc., and
relevant requirements of CSRC, established and perfected and strictly implemented the internal control system,
strengthened the inside information management, enhanced the information disclosure, gradually perfected the
corporate governance structure, and practically maintained the interests of the Company and all the shareholders.
There is no discrepancy between the governance of the Company and the requirements in the Code of Corporate
Governance for Listed Companies.
19
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VI Share Change and Shareholder Status
1. Capital Stock Change
1.1 Share Change
1.1.1 Share Change
Unit: Share
Before this change Increase/decrease(+/-) After this change
New
Proportion Allotted Capitalization of Proportion
Number shares Others Sub-total Number
(%) share capital reserve (%)
offering
1.Non-tradable shares 0 0 99,702,823 0 0 0 99,702,823 99,702,823 18.17
(1) State ownership 0 0 0 0 0 0 0 0 0
(2)Shareholding of state-owned corporate 0 0 42,302,823 0 0 0 42,302,823 42,302,823 10.46
(3)Other shareholding of domestic investors 0 0 57,400,000 0 0 0 57,400,000 57,400,000 7.71
Including: shareholding of domestic
0 0 57,400,000 0 0 0 57,400,000 57,400,000 7.71
non-state-owned corporate
Shareholding of domestic individuals 0 0 0 0 0 0 0 0 0
(4)Shareholding of foreign investors 0 0 0 0 0 0 0 0 0
Including: shareholding of foreign corporate 0 0 0 0 0 0 0 0 0
Shareholding of foreign individuals 0 0 0 0 0 0 0 0 0
2.Tradable shares 448,886,777 100 0 0 0 0 0 448,886,777 81.83
(1)Common shares in RMB 204,943,027 45.66 0 0 0 0 0 204,943,027 37.36
(2)B Share 243,943,750 54.34 0 0 0 0 0 243,943,750 44.47
(3)Foreign-invested shares listed in foreign 0 0 0 0 0 0 0 0 0
(4)Others 0 0 0 0 0 0 0 0 0
3.Total shares 448,886,777 100 99,702,823 0 0 0 99,702,823 548,589,600 100
20
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.1.2 Statement on share change
On March 28, 2014, the Company had non-publicly issued 99,702,823 A shares to seven specific objects, and
completed registration and trusteeship procedures before Shanghai Branch of China Securities Depository and
Clearing Co., Ltd. For details, see Part IV Report of Board of Directors: Analysis and Statement on
Implementation Progress of Various Financing and Major Assets Restructuring of the Company in the Earlier
Stage.
1.2 Change of non-tradable shares
Unit: Share
Non-tradable Increased
Non-tradable Non-tradable
shares non-tradable Date of
shares at the shares at the Reason for
Name of Shareholder removed in shares in the removing
beginning of end of this non-trading
the Report Report non-trading
this Period Period
Period Period
12 months of
lock-up period
China Great Wall
for object of March 28,
Asset Management 0 0 22,200,000 22,200,000
Companys 2015
Corporation
non-public
offering
12 months of
Nanjing Ruisen
lock-up period
Investment
for object of March 28,
Management 0 0 16,000,000 16,000,000
Companys 2015
Partnership (Limited
non-public
Partnership)
offering
12 months of
lock-up period
Orient Securities for object of March 28,
0 0 11,100,000 11,100,000
Company Ltd. Companys 2015
non-public
offering
12 months of
lock-up period
SAIC Finance Co., for object of March 28,
0 0 11,100,000 11,100,000
Ltd. Companys 2015
non-public
offering
Industrial Bank
Global funds - China 12 months of
Everbright Bank – lock-up period
No. 2 of additional for object of March 28,
0 0 11,100,000 11,100,000
offering (classified) Companys 2015
of assets management non-public
plan for specific offering
multiple clients
China Universal
Asset Management
12 months of
Co., Ltd. - Industrial
lock-up period
Bank Co., Ltd. –
for object of March 28,
Tianfu 0 0 9,700,000 9,700,000
Companys 2015
–Haifu-additional
non-public
offering of assets
offering
management plan of
ShuangxiShengshi 1
12 months of
SIG Asset lock-up period
March 28,
Management Co., 0 0 9,002,823 9,002,823 for object of
2015
Ltd. Companys
non-public
21
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
offering
China Universal
12 months of
Asset Management
lock-up period
Co., Ltd. – ICBC –
for object of March 28,
Foreign trade trust – 0 0 5,700,000 5,700,000
Companys 2015
Hengsheng fund trust
non-public
of additional offering
offering
portfolio
Industrial Bank Co., 12 months of
Ltd. – Xingquan lock-up period
mixed securities for object of March 28,
0 0 2,450,000 2,450,000
investment fund with Companys 2015
organic increase and non-public
flexible allocation offering
China Merchants
12 months of
Bank Co., Ltd.
lock-up period
–Xingquan securities
for object of March 28,
investment fund of 0 0 1,350,000 1,350,000
Companys 2015
light assets and share
non-public
investment type
offering
(LOF)
Total 0 0 99,702,823 99,702,823 / /
2. Shareholder Status
2.1 Shareholder Number
Total number of shareholders at the end of Report Period 46,512 (A Share: 18,088; B Share: 28,424)
Shareholding of top 10 shareholders who hold more than 5% shares of the Company
Unit: Share
Shareholding of top 10 shareholders
Increase or Shareholding Number
Shareholding Number of
Name of shareholder decrease in number at the of shares Nature of
percentage non-tradable
(full name) the Report end of this (%) pledged or shareholder
shares held
Period Period frozen
State-owned Assets Supervision
and Administration
Commission of Shanghai 0 105,395,358 19.21 0 No. State
Pudong New Area Peoples
Government
China Great Wall Asset State-owned
22,200,000 27,730,514 5.05 22,200,000 No.
Management Corporation corporate
Nanjing Ruisen Investment
Management Partnership 16,000,000 16,000,000 2.92 16,000,000 Unknown Unknown
(Limited Partnership)
Orient Securities Company Ltd. 11,100,000 11,100,000 2.02 11,100,000 Unknown Unknown
State-owned
SAIC Finance Co., Ltd. 11,100,000 11,100,000 2.02 11,100,000 Unknown
corporate
Industrial Bank Global funds -
China Everbright Bank – No. 2
11,100,000 11,100,000 2.02 11,100,000 Unknown Others
of additional offering
(classified) of assets
22
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
China Universal Asset
Management Co., Ltd. -
Industrial Bank Co., Ltd. –
9,700,000 9,700,000 1.77 9,700,000 Unknown Others
Tianfu –Haifu-additional
offering of assets management
plan of ShuangxiShengshi 1
SIG Asset Management Co., State-owned
9,002,823 9,002,823 1.64 9,002,823 Unknown
Ltd. corporate
China Universal Asset
Management Co., Ltd. – ICBC
– Foreign trade trust – 5,700,000 5,700,000 1.04 5,700,000 Unknown Others
Hengsheng fund trust of
additional offering portfolio
GUOTAI JUNAN
Foreign
SECURITIES(HONGKONG) 784,052 2,666,888 0.49 0 Unknown
corporate
LIMITED
Tradable shareholding of top 10 shareholders
Number of Share type and number
Name of shareholder
tradable shares Type Number
State-owned Assets Supervision and Administration Commission
105,395,358 A Share 105,395,358
of Shanghai Pudong New Area Peoples Government
China Great Wall Asset Management Corporation 5,530,514 A Share 5,530,514
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 2,666,888 B Share 2,666,888
SHENYIN WANGUO NOMINEES (H.K.) LTD. 2,325,028 B Share 2,325,028
Dividend insurance product of Zhongrong Life Insurance Co.,
2,036,140 A Share 2,036,140
Ltd.
Shanghai International Trust Co., Ltd. 1,965,210 A Share 1,965,210
NORGES BANK 1,742,114 B Share 1,742,114
VANGUARD TOTAL INTERNATIONAL STOCK INDEX
1,403,896 B Share 1,403,896
FUND
Shanghai Sanmao Enterprise (Group) Co., Ltd. 1,400,000 A Share 1,400,000
Yu Zhongxi 1,126,010 B Share 1,126,010
The Company did not know whether there was
Statement on affiliated relationship or concerned acts of
affiliated relationship or concerned party among
above-said shareholders
above-said shareholders.
Shareholding number and non-tradable conditions of Top 10 Non-tradable shareholders
Unit: Share
Listing transaction of
non-tradable shares
Number of
Number of
No. Name of non-tradable shareholder non-tradable Listing Non-tradable condition
tradable
shares transaction
shares newly
time
increased
12 months of lock-up period
China Great Wall Asset March 28,
1 22,200,000 0 for object of Companys
Management Corporation 2015
non-public offering
Nanjing Ruisen Investment 12 months of lock-up period
March 28,
2 Management Partnership (Limited 16,000,000 0 for object of Companys
2015
Partnership) non-public offering
12 months of lock-up period
March 28,
3 Orient Securities Company Ltd. 11,100,000 0 for object of Companys
2015
non-public offering
12 months of lock-up period
March 28,
4 SAIC Finance Co., Ltd. 11,100,000 0 for object of Companys
2015
non-public offering
23
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Industrial Bank Global funds -
China Everbright Bank – No. 2 of 12 months of lock-up period
March 28,
5 additional offering (classified) of 11,100,000 0 for object of Companys
2015
assets management plan for non-public offering
specific multiple clients
China Universal Asset
Management Co., Ltd. - Industrial
12 months of lock-up period
Bank Co., Ltd. – Tianfu March 28,
6 9,700,000 0 for object of Companys
–Haifu-additional offering of 2015
non-public offering
assets management plan of
ShuangxiShengshi 1
12 months of lock-up period
March 28,
7 SIG Asset Management Co., Ltd. 9,002,823 0 for object of Companys
2015
non-public offering
China Universal Asset
Management Co., Ltd. – ICBC – 12 months of lock-up period
March 28,
8 Foreign trade trust – Hengsheng 5,700,000 0 for object of Companys
2015
fund trust of additional offering non-public offering
portfolio
Industrial Bank Co., Ltd. –
12 months of lock-up period
Xingquan mixed securities March 28,
9 2,450,000 0 for object of Companys
investment fund with organic 2015
non-public offering
increase and flexible allocation
China Merchants Bank Co., Ltd.
12 months of lock-up period
–Xingquan securities investment March 28,
10 1,350,000 0 for object of Companys
fund of light assets and share 2015
non-public offering
investment type (LOF)
The Company did not know whether there was affiliated
Statement on affiliated relationship or concerned acts of
relationship or concerned party among above-said
above-said shareholders
shareholders.
3. Change of Controlling Shareholder or Actual Controller
Applicable Not applicable
24
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VII Relevant Situation about Preferred Shares
No issues about preferred shares in this Report Period.
25
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VIII Directors, Supervisors and Senior Officers Status
1. Shareholding Change
1.1 Shareholding Change of Current Directors, Supervisors and Senior Officers and Dismissed Directors,
Supervisors and Senior Officers in the Report Period
In this Report Period, there is no change in shareholding of directors, supervisors and senior officers of the
Company.
1.2 Equity Incentive granted to directors, supervisors and senior officers in the Report Period
Applicable Not applicable
2. Change of Directors, Supervisors and Senior Officers of the Company
Name Title Change Reason for change
Ma Minliang Director, general manager Dismissal Job change
Chairman of supervision
XieYushou Dismissal Retirement
committee
Li Jiaming Director Election Increased
Chairman of supervision
QiaoJunhai Election Increased
committee
26
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part IX Financial Report
The Financial part of 2014 semi-annual report of the Company is unaudited.
The Financial Report and Notes to the Financial Report are attached as follows.
Shang Gong Group Co., Ltd
Consolidated Statement of Financial Position
As of June 30, 2014
(Presented in RMB unless otherwise specified)
Item Ending Balance Opening Balance
Current assets:
Cash and cash equivalents 481,253,440.80 459,200,229.44
Provision for settlement
Fund for lending
Financial assets held for trading 264,053.43 277,479.87
Notes receivable 2,307,430.01 3,320,697.28
Accounts receivable 315,259,526.68 247,894,529.49
Prepayment 20,356,511.23 25,241,304.15
Insurance receivable
Accounts receivable reinsurance
Contract provision for accounts receivable reinsurance
Interest receivable
Dividends receivable 12,734,735.09 2,881,577.53
Other receivables 41,465,146.32 60,130,306.48
Financial assets purchased under resale
Inventories 479,098,229.66 405,244,436.59
Non-current assets to be expired in one year
Other current assets 539,034,806.53 64,405,666.67
Total current assets 1,891,773,879.75 1,268,596,227.50
Non-current assets:
Payment of entrustment loans and advances
Available for sale financial assets 96,228,133.50 85,012,121.56
Held-to-maturity investment
Long-term receivables
Long-term equity investment 53,569,069.13 53,534,559.75
Investment properties 118,004,100.70 121,076,399.25
Fixed assets 261,704,903.69 261,035,902.23
Construction in progress 5,636,796.26 2,801,141.91
Construction materials
Disposal of fixed assets
Consumable biological asset
Oil & gas asset
Intangible assets 78,050,268.70 83,308,929.44
R&D expense 38,313,434.99 39,082,899.68
Goodwill 98,623,362.75 98,908,849.50
Long-term unamortized expense 29,700.00 33,000.00
Deferred tax assets 40,297,306.30 34,526,440.35
Other non-current assets
Total non-current assets 790,457,076.02 779,320,243.67
Total assets 2,682,230,955.77 2,047,916,471.17
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Current liabilities:
Short-term loans 145,303,754.54 222,299,211.73
Loans from central bank
Deposits and placements
Borrowing fund
Financial liabilities held for trading
Notes payable 6,225,975.90
Accounts payable 127,447,375.28 126,210,705.10
Receipt in advance 38,655,929.18 32,726,923.09
financial assets sold for repurchase
Fee and commission payable
Employee benefit payable 51,997,344.20 49,569,216.41
Taxes payable 42,981,940.21 31,916,230.42
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 139,349,092.19 147,128,355.33
Accounts payable reinsurance
Provision for insurance contract
Acting sale of securities
Acting underwriting securities
Long-term liabilities to be expired in one year 520,000.00 520,000.00
Other current liabilities 503,397.29 1,623,775.74
Total current liabilities 547,791,651.75 619,253,212.58
Non-current liabilities:
Long-term loans 79,003,153.28 80,675,181.52
Bonds payable
Long-term payables 51,013,344.01 44,961,333.81
Specific payable
Contingent liabilities 314,578,331.68 323,783,269.17
Deferred tax liabilities 48,875,381.08 49,451,110.79
Other non-current liabilities
Total non-current liabilities 493,470,210.05 498,870,895.29
Total liabilities 1,041,261,861.80 1,118,124,107.87
Owners’ equity (or shareholder’s equity):
Paid-up capital (or share capital) 548,589,600.00 448,886,777.00
Capital reserve 945,448,784.81 397,651,623.21
Less: treasury stock
Special provision
Surplus reserve 4,546,242.52 4,546,242.52
General risk reserve
Retained earning 38,857,646.81 -2,996,568.99
Difference of foreign currency translation -53,274,235.20 -52,193,887.64
Total owners' equity attributable to parent company 1,484,168,038.94 795,894,186.10
Minority interests 156,801,055.03 133,898,177.20
Total owners' equity 1,640,969,093.97 929,792,363.30
Total liabilities and owners' equity 2,682,230,955.77 2,047,916,471.17
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
28
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Financial Position
As of June 30, 2014
(Presented in RMB unless otherwise specified)
Item Ending balance Opening balance
Current assets:
Cash and cash equivalents 79,425,124.66 92,304,869.24
Financial assets held for trading 264,053.43 277,479.87
Notes receivable 530,000.00 1,926,580.00
Accounts receivable 7,187,211.01 7,262,152.76
Prepayment 1,940,881.48 2,631,470.98
Interest receivable
Dividends receivable 12,734,735.09 2,881,577.53
Other receivables 51,641,057.21 49,056,660.77
Inventories 13,122,820.94 10,486,023.53
Non-current assets to be expired in one year
Other current assets 520,000,000.00
Total current assets 686,845,883.82 166,826,814.68
Non-current assets:
Available for sale financial assets 96,228,133.50 85,012,121.56
Held-to-maturity investment
Long-term receivables 82,785,000.00 82,785,000.00
Long-term equity investment 322,719,068.90 322,719,068.90
Investment properties 94,071,775.89 96,621,944.48
Fixed assets 31,321,345.94 32,693,404.79
Construction in progress 2,346,196.81 796,503.00
Construction materials
Disposal of fixed assets
Consumable biological asset
Oil & gas asset
Intangible assets 22,846,216.67 23,447,572.61
R&D expense
Goodwill
Long-term unamortized expense
Deferred tax assets
Other non-current assets
Total non-current assets 652,317,737.71 644,075,615.34
Total assets 1,339,163,621.53 810,902,430.02
Current liabilities:
Short-term loans 348,148.62 123,948,148.62
Financial liabilities held for trading
Notes payable
Accounts payable 11,306,815.31 12,292,012.38
Advance payment 4,684,241.71 3,650,655.07
Wages and salaries unpaid 840,000.00
Taxes payable -52,360.25 312,461.15
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 73,004,514.08 71,639,913.67
Long-term liabilities to be expired in one year 520,000.00 520,000.00
Other current liabilities
Total current liabilities 90,844,178.33 214,236,009.75
Non-current liabilities:
29
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Long-term loans 1,489,984.87 1,489,984.87
Bonds payable
Long-term accounts payable 1,611,944.32 1,611,944.32
Specific payable
Contingent liabilities
Deferred tax liabilities 1,197,067.41 1,197,067.41
Other non-current liabilities
Total non-current liabilities 4,298,996.60 4,298,996.60
Total liabilities 95,143,174.93 218,535,006.35
Owners' equity (or shareholder’s equity):
Paid-up capital (or share capital) 548,589,600.00 448,886,777.00
Capital reserve 1,025,191,302.80 475,469,882.88
Less: treasury stock
Special provision
Surplus reserve 4,546,242.52 4,546,242.52
General risk reserve
Retained earnings -334,306,698.72 -336,535,478.73
Total owners' equity( or shareholders equity) 1,244,020,446.60 592,367,423.67
Total liabilities and owners' equity 1,339,163,621.53 810,902,430.02
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
30
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Comprehensive Incomes
January – June 2014
(Presented in RMB unless otherwise specified)
Item Current Period Last Period
1. Revenues 969,890,167.03 871,423,265.72
including：Operating revenues 969,890,167.03 871,423,265.72
Interest income
Earned insurance
Fees and commission income
2. Costs 890,716,565.18 806,943,182.84
including：Operating expenses 661,303,736.20 606,814,372.70
Interest expense
Fees and commission expense
Surrender value
Net claims paid
Net reserve for Extraction of the insurance contract,
Dividend expense for insurance policy
Reinsurance costs
Sales tax and surcharges 2,360,802.07 2,683,855.00
Selling expenses 109,957,980.76 88,494,572.02
General and administration expenses 102,160,879.18 98,820,662.84
Financial expenses 10,122,179.92 10,718,964.95
Impairment 4,810,987.05 -589,244.67
Add: Net gain/(loss) from fluctuation in fair values -13,426.44 -80,413.50
Investment incomes 11,389,745.35 11,870,681.12
Including: investment income in associated and joint ventures 34,509.38 -1,156,806.53
Exchange earning(less: loss)
3. Operating profit (less: loss) 90,549,920.76 76,270,350.50
Add：Non-operating income 621,043.73 441,573.12
Less：Non-operating expense 413,766.50 316,661.06
Including：net loss in disposal of non-current assets 207,013.43 66,661.06
4. Gross profits 90,757,197.99 76,395,262.56
Less：Corporate income taxes 25,973,330.78 24,972,535.87
5. Net profits 64,783,867.21 51,422,726.69
Net profit attributable to parent company 41,854,215.80 30,674,302.78
Minority interest 22,929,651.41 20,748,423.91
6. Earning per share
（1）Basic earning per share 0.0839 0.0683
（2）Diluted earning per share 0.0839 0.0683
7. Other comprehensive income 8,184,632.48 -21,909,974.10
8. Total comprehensive income 72,968,499.69 29,512,752.59
Total comprehensive income attributable to parent company 50,065,621.86 14,817,415.60
Total comprehensive income attributable to minority interest 22,902,877.83 14,695,336.99
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
31
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Comprehensive Incomes
January – June 2014
(Presented in RMB unless otherwise specified)
Item Current Period Last Period
1. Operating revenues 27,220,004.78 69,747,644.17
Less：Operating expenses 16,793,787.06 49,958,633.47
Sales taxes and surcharges 1,861,497.46 2,281,840.37
Selling expenses 899,430.35 1,999,985.46
General and Administration expense 16,104,633.88 21,415,720.54
Financial expenses 455,939.74 2,424,750.00
Impairment 45,229.14 -942,101.96
Add: Net gains/(loss) from fluctuation in fair values -13,426.44 -47,609.50
Investment income(less: loss) 11,355,235.97 13,039,034.64
Including: investment income in associated and joint ventures
2. Operating profit 2,401,296.68 5,600,241.43
Add：Non-operating income 57,484.52 232,836.50
Less：Non-operating expense 230,001.19 293,415.57
Including：Net losses in disposal of non-current assets 23,435.69 43,415.57
3. Gross profit (less: loss) 2,228,780.01 5,539,662.36
Less：Corporate Income taxes
4. Net profit (less: loss) 2,228,780.01 5,539,662.36
5. Earning per share
(1) Basic earning per share 0.0045 0.0123
(2) Diluted earning per share 0.0045 0.0123
6. Other comprehensive incomes 11,216,011.94 -4,773,737.54
7. Total comprehensive incomes 13,444,791.95 765,924.82
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
32
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Cash Flows
January – June 2014
(Presented in RMB unless otherwise specified)
Item Current Period Last Period
1. Cash flow from operating activities:
Cash inflow from sale of goods and provision of services 1,067,420,070.74 905,527,842.18
Customer deposits and payments with the net increase placements
Net increase in loans to the Central Bank
Net increase in Borrowings to other financial institutions
Original insurance contract premiums received in cash
Net cash received reinsurance
Net increase in insured savings and investment section
Net increase in disposal of tradable financial assets
Cash inflow from interest, fees and commission
Net increase in borrowings
Net increase in repurchase business funds
Tax refunds received 34,329,916.96 27,738,858.53
Cash inflow from other operating activities 5,006,716.31 4,501,485.50
Sub-total cash inflow from operating activities 1,106,756,704.01 937,768,186.21
Cash inflow from sale of goods and provision of services 764,799,059.44 674,999,807.97
Net increase in loans and advances to customers
Net increase in deposit in central bank and interbank fund
Cash for payment of original insurance claims
Cash outflow from interest, fees and commission
Cash dividends paid to policyholders
Cash paid to and for employees 274,460,780.66 206,966,779.17
Cash paid for tax 22,911,548.63 23,532,537.46
Cash paid for other operating related activities 63,332,088.69 63,843,437.75
Sub-total cash outflow from operating activities 1,125,503,477.42 969,342,562.35
Net cash in/outflow from operating activities -18,746,773.41 -31,574,376.14
2. Net cash in/outflow generated from investment activities:
Cash inflow from taking back investment 42,067,164.04 41,869.09
Cash inflow from return on investment 652,078.41 1,720,736.00
Cash gain from disposal of fixed assets, intangible assets, and other
631,062.15 280,983.04
long-term investment
Cash inflow from disposal of subsidiaries and other operating units
Other proceeds related to investment activities
Sub-total cash inflow from investing activities 43,350,304.60 2,043,588.13
Cash paid for acquisition of fixed assets, intangible assets and other
20,219,883.21 27,766,902.96
long-term assets
Cash paid for investment 521,762,001.00
Net increase in securities in loan
Cash paid for acquisition of subsidiaries and other operating units 8.05
Cash paid for other activities related to investment 29,246,702.07 70,516,556.75
Sub-total cash outflow from investing activities 571,228,586.28 98,283,467.76
Net cash in/outflow generated from investment activities -527,878,281.68 -96,239,879.63
3. Cash flow from financing activities:
Absorption of investment 651,882,998.82
Including cash inflow from absorbing minority shareholder
investment
Borrowings raised 57,223,360.00 180,597,322.29
Cash received from issuing bonds
33
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Other cash inflow related to financing activities 712,000.00
Sub-total cash inflow from financing activities 709,818,358.82 180,597,322.29
Cash paid for debt 135,266,891.34 86,600,000.00
Dividend, interest and profit paid 3,642,978.96 4,288,651.97
Including dividend and profit paid by subsidiaries to minority
shareholder
Other cash outflow related to financing activities 646,998.67 362,959.65
Sub-total cash outflow from financing activities 139,556,868.97 91,251,611.62
Net cash in/outflow from financing activities 570,261,489.85 89,345,710.67
4. Influence of fluctuation of exchange rate -1,056,688.04 -9,216,787.28
5. Net increase/decrease in cash and cash equivalents 22,579,746.72 -47,685,332.38
Add: Beginning balance of cash and cash equivalents 446,063,638.27 461,395,048.30
6. Ending balance of cash and cash equivalents 468,643,384.99 413,709,715.92
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
34
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Consolidated Statement of Cash Flows
January – June 2014
(Presented in RMB unless otherwise specified)
Item Current Period Last Period
1. Cash flow from operating activities:
Cash inflow from sale of goods and provision of services 29,560,524.15 75,269,572.19
Tax refunds received 140,790.00
Cash inflow from other operating activities 3,649,477.90 41,925,197.08
Subtotal cash inflow from operating activities 33,210,002.05 117,335,559.27
Cash inflow from sale of goods and provision of services 14,000,266.06 45,888,228.66
Cash paid to and for employees 12,350,541.27 18,515,227.57
Cash paid for tax 2,700,231.86 5,139,769.17
Cash paid for other operating related activities 18,957,591.16 21,783,044.58
Sub-total cash outflow from operating activities 48,008,630.35 91,326,269.98
Net cash in/outflow from operating activities -14,798,628.30 26,009,289.29
2. Net cash in/outflow generated from investment activities:
Cash inflow from taking back investment
Cash inflow from return on investment 652,078.41 1,725,000.00
Cash gain from disposal of fixed assets, intangible assets, and other
93,500.00 205,000.00
long-term investment
Cash inflow from disposal of subsidiaries and other operating units
Other proceeds related to investment activities
Sub-total cash inflow from investing activities 745,578.41 1,930,000.00
Cash paid for acquisition of fixed assets, intangible assets and other
2,519,600.87 236,562.26
long-term assets
Cash paid for investment 521,762,001.00 20,000,000.00
Cash paid for acquisition of subsidiaries and other operating units
Cash paid for other activities related to investment
Sub-total cash outflow from investing activities 524,281,601.87 20,236,562.26
Net cash in/outflow generated from investment activities -523,536,023.46 -18,306,562.26
3. Cash flow from financing activities：
Absorption of investment 651,882,998.82
Borrowings raised 77,000,000.00
Cash received from issuing bonds
Other cash inflow related to financing activities
Subtotal cash inflow from financing activities 651,882,998.82 77,000,000.00
Cash paid for debt 123,600,000.00 86,600,000.00
Dividend, interest and profit paid 2,212,394.96 3,510,828.89
Other cash outflow related to financing activities 436,702.82
Subtotal cash outflow from financing activities 126,249,097.78 90,110,828.89
Net cash in/outflow from financing activities 525,633,901.04 -13,110,828.89
4. Influence of fluctuation of exchange rate -178,993.86 -1,591.97
5. Net increase/decrease in cash and cash equivalents -12,879,744.58 -5,409,693.83
Add: Beginning balance of cash and cash equivalents 88,304,869.24 43,545,254.69
6. Ending balance of cash and cash equivalents 75,425,124.66 38,135,560.86
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
35
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Changes in Equity
January – June 2014
(Presented in RMB unless otherwise specified)
Current Period
Shareholders Equity Attributable to Parent Company
Total
Less: General Minority Interests Shareholders
Special Surplus Retained
Shares Capital Reserve Treasury Risk Others Equity
Reserves Reserve Earnings
Stocks Reserves
1. Previous year ending
balance brought 448,886,777.00 397,651,623.21 4,546,242.52 -2,996,568.99 -52,193,887.64 133,898,177.20 929,792,363.30
forward
Add: accounting policy
changes
Correction of previous-period
accounting errors
Others
2. Beginning balance 448,886,777.00 397,651,623.21 4,546,242.52 -2,996,568.99 -52,193,887.64 133,898,177.20 929,792,363.30
3. Increase/decrease for
99,702,823.00 547,797,161.60 41,854,215.80 -1,080,347.56 22,902,877.83 711,176,730.67
the current period
(1) Net profit 41,854,215.80 22,929,651.41 64,783,867.21
(2) Other comprehensive
9,291,753.62 -1,080,347.56 -26,773.58 8,184,632.48
incomes
Subtotal of (1) and (2) 9,291,753.62 41,854,215.80 -1,080,347.56 22,902,877.83 72,968,499.69
(3) Investment or
99,702,823.00 538,505,407.98 638,208,230.98
disinvestment
a. Investment from
99,702,823.00 538,505,407.98 638,208,230.98
shareholders
b. Shares included in
owners' equity
c. Others
(4) Distribution
a. Surplus reserve
b. General risk reserve
c. Distribution to
shareholders
d. Others
(5) Internal transfer of
owners equity
36
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
a. Capital reserve turn to
stock equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to
recover loss
d. Others
(6) Special reserves
a. Appropriation for
current year
b. Use in current year
(7) Others
4. Ending balance 548,589,600.00 945,448,784.81 4,546,242.52 38,857,646.81 -53,274,235.20 156,801,055.03 1,640,969,093.97
Amount in last year
Shareholders Equity Attributable to Parent Company
Total
Less: General Minority Interests Shareholders
Special Surplus Retained
Shares Capital Reserve Treasury Risk Others
Reserves Reserve Earnings Equity
Stocks Reserves
1. Previous year ending
balance brought 448,886,777.00 409,073,943.83 4,546,242.52 -82,548,593.18 -50,485,077.47 134,777,594.20 864,250,886.90
forward
Add: accounting policy
-25,127,469.60 -13,532,735.20 -38,660,204.80
changes
Correction of
previous-period accounting
errors
Others
2. Beginning balance 448,886,777.00 383,946,474.23 4,546,242.52 -82,548,593.18 -50,485,077.47 121,244,859.00 825,590,682.10
3. Increase/decrease for
-6,529,466.42 30,674,302.78 -11,083,149.64 9,006,645.26 22,068,331.98
the current period
(1) Net profit 30,674,302.78 20,748,423.91 51,422,726.69
(2) Other comprehensive
-6,529,466.42 -11,083,149.64 -4,297,358.04 -21,909,974.10
incomes
Subtotal of (1) and (2) -6,529,466.42 30,674,302.78 -11,083,149.64 16,451,065.87 29,512,752.59
(3) Investment or
-7,444,420.61 -7,444,420.61
disinvestment
a. Investment from
shareholders
37
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
b. Shares included in
owners' equity
c. Others -7,444,420.61 -7,444,420.61
(4) Distribution
a. Surplus reserve
b. General risk reserve
c. Distribution to
shareholders
d. Others
(5) Internal transfer of
owners equity
a. Capital reserve turn to
stock equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to
recover loss
d. Others
(6) Special reserves
a. Appropriation for
current year
b. Use in current year
(7) Others
4. Ending balance 448,886,777.00 377,417,007.81 4,546,242.52 -51,874,290.40 -61,568,227.11 130,251,504.26 847,659,014.08
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
38
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Changes in Equity
January – June 2014
(Presented in RMB unless otherwise specified)
Current Period
Less: General
Special Total Shareholders
Shares Capital Reserve Treasury
Reserves Surplus Reserve Risk Retained Earnings
Stocks Equity
Reserves
1. Previous year ending
balance brought 448,886,777.00 475,469,882.88 4,546,242.52 -336,535,478.73 592,367,423.67
forward
Add: accounting policy
changes
Correction of
previous-period
accounting errors
Others
2. Beginning balance 448,886,777.00 475,469,882.88 4,546,242.52 -336,535,478.73 592,367,423.67
3. Increase/decrease for
99,702,823.00 549,721,419.92 2,228,780.01 651,653,022.93
the current period
(1) Net profit 2,228,780.01 2,228,780.01
(2) Other comprehensive
11,216,011.94 11,216,011.94
incomes
Subtotal of (1) and (2) 11,216,011.94 2,228,780.01 13,444,791.95
(3) Investment or
99,702,823.00 538,505,407.98 638,208,230.98
disinvestment
a. Investment from
99,702,823.00 538,505,407.98 638,208,230.98
shareholders
b. Shares included in
owners' equity
c. Others
(4) Distribution
a. Surplus reserve
b. General risk reserve
c. Distribution to
39
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
shareholders
d. Others
(5) Internal transfer of
owners equity
a. Capital reserve turn to
stock equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to
recover loss
d. Others
(6) Special reserves
a. Appropriation for
current year
b. Use in current year
(7) Others
4. Ending balance 548,589,600.00 1,025,191,302.80 4,546,242.52 -334,306,698.72 1,244,020,446.60
Amount in last year
Less: General
Special Surplus Total Shareholders
Shares Capital Reserve Treasury
Reserves Risk Retained Earnings
Stocks Reserve Equity
Reserves
1. Previous year ending
balance brought 448,886,777.00 459,527,835.03 4,546,242.52 -364,229,319.60 548,731,534.95
forward
Add: accounting policy
changes
Correction of
previous-period
accounting errors
Others
2. Beginning balance 448,886,777.00 459,527,835.03 4,546,242.52 -364,229,319.60 548,731,534.95
3. Increase/decrease for
-4,773,737.54 5,539,662.36 765,924.82
the current period
(1) Net profit 5,539,662.36 5,539,662.36
(2) Other comprehensive -4,773,737.54 -4,773,737.54
40
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
incomes
Subtotal of (1) and (2) -4,773,737.54 5,539,662.36 765,924.82
(3) Investment or
disinvestment
a. Investment from
shareholders
b. Shares included in
owners' equity
c. Others
(4) Distribution
a. Surplus reserve
b. General risk reserve
c. Distribution to
shareholders
d. Others
(5) Internal transfer of
owners equity
a. Capital reserve turn to
stock equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to
recover loss
d. Others
(6) Special reserves
a. Appropriation for
current year
b. Use in current year
(7) Others
4. Ending balance 448,886,777.00 454,754,097.49 4,546,242.52 -358,689,657.24 549,497,459.77
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
41
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Notes to Financial Statements
1. Background Information
Shang Gong Group Co., Ltd. (hereinafter referred to as “ShangGong Group”, “the Company”), joint stock limited
company with publicly issued A & B shares on Shanghai Stock Exchange, is the first listed company in the sewing
machinery sector of the Peoples Republic of China. The Company got the Corporate Business License numbered
310000400080303 authorized by local administration of industry and commerce in April, 1994. The Company,
with register capital of RMB 548,589,600., has Room A-D, 12th Floor, Orient Mansion, No.1500 Century Avenue,
Pudong New Area, Shanghai as register address and the headquarters address, and Mr. Zhang Min as legal
representative.
The Company is mainly engaged in the research and development, manufacture and sales of industrial and
household sewing machines and equipment. In the meantime, the Company has also expanded its business in
office appliances, sensitive films, international trade and logistic industries.
During recent years, the Company actively implements the internationalization strategy by cross-border mergers
and acquisitions. After the acquisition of Dürkopp Adler Aktiengesellschaft (public listed company in Germany,
hereinafter referred to as "DA AG") in 2005, the company has been availing the advanced technology of DA AG
to realize the upgrade and development of the products structure which obtained larger market share in the
high-tech sewing equipment market in Europe and America. And the company gradually moved the production of
DA AGs products which are popular in Asian market to China with purpose of satisfying the growing demand of
customers for auto-running sewing machines. The company acquired 100% shares of PFAFF Industriesysteme
und Maschinen Aktiengesellschaft ( hereinafter referred to as "PFAFF" ) in March 2013 in order to consolidate
and expand technical advantage and industry shares, and enhance marking competitiveness. In July 2013, the
company purchased 100% shares of KSL Keilmann Sondermaschinenbau GmbH (hereinafter referred to as "KSL”)
and its related companies to supplement the shortage in automatic sewing technology area, expand companys
industrial sewing machines to emerging industries, and upgrade the core competencies and sustainable
development capability. At present, the company possesses international brands including DA, PFAFF, KSL,
Beisler, etc. and registered trademarks like “Shanggong”, “Shuanggong”, “Butterfly”, “Bee” and “Flying Man”,
etc..
On February 28, 2014, as approved by China Securities Regulatory Commission (CSRC) by document
Zheng-Jian-Xu-Ke [2014] No. 237, the company was permitted to issue no more than 150,000,000 non-public
shares. The actual non-public shares issued by the company are 99,702,823. The issue price is RMB 6.73 per
share. The actual fund raised is RMB 670,999,998,79, issue expense is RMB 32,791,767,81, the net fund raised is
RMB 638,208,230.98. After the issuance, the register capital changed to RMB 548,589,600, which has been
verified by BDO China Shu Lun Pan Certified Public Accountants LLP by capital verification report
Xin-Kuai-Shi-Bao-Zi [2014] No.111126.
As at June 30, 2014, the total of shares is of 548,589,600, including 448,886,777 unconditionally tradable shares
(accounting for 81.83% of total shares) and 99,702,823 conditionally tradable shares (accounting for 18.17% of
total shares).
2. Principal accounting policies, estimations and early errors
2.1 Basis for the formulation of financial statements
Based on the sustainable operation and according to really occurred transactions and affairs, the Company adopts
“Accounting Standards for Business Enterprises-Basic Standards” and related additional regulations in the
preparation of its financial statements.
2.2 Declaration for the adoption of the Accounting Standards for Enterprises
The financial statements and annotations prepared by the Company, strictly under the guideline of “Accounting
Standards for Business Enterprises”, reflect truly and integrally the information such as financial status, business
achievements and cash flows of the Company.
2.3 Accounting Calendar
The Company adopts the Gregorian calendar and defines every accounting year as beginning at January 1 and
ending at the same December 31.
2.4 Measurement currency
The Company maintains its books and records in Renminbi (RMB).
The overseas subsidiaries of the Company adopt at their books respectively the currency adopted by the places
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where their principal operations are installed, and translate them into Renminbi on the preparation of financial
statements.
2.5 Accounting treatment of business combination under/not under the same controller
2.5.1 Under the same controller
The acquired assets and liabilities by the company through business combination are measured at their book value
with the merged parties on the date of merger. The capital surplus should be adjusted based on the difference
between the book value of net assets obtained from business combination and the book value of the paid price for
the combination (or the total nominal value of issued shares). And in case that the capital surplus was less than the
write-offs, the retained earnings should be adjusted.
All the direct costs paid by the Company for the conduct of business combination, including audit fees, appraisal
fees, legal services, etc., should be accounted into current profit and loss at the time incurred.
The fees, commission, etc., occurred during the issuance of equity securities for the business combination should
offset the premium income. In case that the premium income was less than write-downs, the retained earnings
should be recorded for reduction.
If the accounting policies adopted by the merged parties are inconsistent with those of the Company, the Company
can make adjustment in accordance with its accounting policies on the date of combination, and confirm them in
accordance with the Accounting Standards for Enterprises confirmation.
2.5.2 Not under the same controller
The company accounts the assets and liabilities paid as price for the business combination at their fair value on the
date of acquisition. The difference between the fair value and the book should be included in current profit and
loss.
The company allocates the merger costs on the date of acquisition.
The Company recognize as goodwill the difference of the combination costs more than the fair value of the
identifiable net assets obtained from the merged parties, and accounts into current profit and loss the difference of
the fair value of the identifiable net assets obtained from the merged parties than the combination costs.
All the other assets except intangible assets (not limited to the identified assets originally belonged to the merged
parties), whose economic benefits are likely to flow to the company and whose fair value can be reliably
measured, should be accounted separately at their fair value; the intangible assets whose fair value can be reliably
measured should be recognized separately as intangible assets and accounted at their fair value; all the other
liabilities except contingent liabilities, whose fulfillment is likely to lead to outflow of economic benefits of the
Company and whose fair value can be reliably measured, should be accounted separately at their fair value; the
contingent liabilities obtained from the merged parties whose fair value can be reliably measured, should be
recognized separately as liabilities and accounted at their fair value.
2.6 Preparation of the consolidated financial statements
The consolidation scope of the Company's financial statements has the real control as basis, and all subsidiaries
are included in the consolidated financial statements.
All the consolidated subsidiaries adopt the same accounting policies and accounting period. In case that the
subsidiary's accounting policies and accounting period are inconsistent with those of the Company, the
inconsistent elements should be adjusted according to the company's accounting policies and accounting period.
The Company prepares the consolidated financial statements based on the financial statements of the Company
itself and of its subsidiaries, with adoption of other relevant information, and after necessary adjustments based on
equity method.
There should be offset the influence of the internal transactions between the Company and its subsidiaries, the
subsidiaries themselves upon the consolidated balance sheet, consolidated income statement, consolidated cash
flow statement, and consolidated owner's equity sheet.
If the current-period loss for minority shareholders of the subsidiaries is more than the beginning balance of the
minority interests, the owner's equity of the Company should be offset when the Articles of Association or any
other agreements havent shown that the minority shareholders should fulfill the obligation; or the minority
shareholders should pay for the difference when the Articles of Association or any agreements share have fixed
the obligation for them.
During the report period, for those subsidiaries newly absorbed by business combination under the same controller,
the Company should adjust the beginning balance of the consolidated balance sheet; include the current-period
income, expenses and profits of the subsidiaries into the consolidated profit and loss statement; and include the
current-period cash flow of the subsidiaries into the consolidated cash flow statement.
During the report period, for those subsidiaries newly absorbed by business combination not under the same
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controller, the Company should not adjust the beginning balance of the consolidated balance sheet; include the
income, expenses and profits of the subsidiaries from the acquisition date to the period-end into the consolidated
profit and loss statement; and include the cash flow of the subsidiaries from the acquisition date to the period-end
into the consolidated cash flow statement.
During the report period, on disposal of subsidiaries, the Company should incorporate the income, expenses and
profits of the subsidiaries from the period-beginning to the disposal date into the consolidated profit and loss
statement; and incorporate the cash flow of the subsidiaries from the period-beginning to the disposal date into the
consolidated cash flow statement.
2.7 Criteria for the definition of cash and cash equivalent
For the purpose of the cash flow statement, cash represents the cash on hand and ready for payment in cash
deposits of the Company, cash equivalent comprises short-term investments with maturity within three months
that are characterized with active fluidity, easy to transfer to realizable value and less risky for value fluctuation.
2.8 Foreign currency calculation and translation of financial statements in foreign currency
2.8.1 Foreign currency calculation
Foreign currency transactions are translated into the measurement currency using the spot exchange rate
prevailing at the date of the transaction.
The balance of foreign currency monetary items is adjusted and translated into measurement currency at balance
sheet date using the spot exchange rate. Regarding the year-end differences of translation in foreign currency,
except those special borrowing accounts under the acquisition, building or production of assets to be capitalized
are capitalized and accounted into related assets cost, all the other differences are accounted into current profits
and losses. The foreign currency non-monetary items at historical cost are translated using the spot exchange rate.
And the foreign currency non-monetary items at fair value are adjusted and translated into measurement currency
at adoption date of fair value using the spot exchange rate. The difference of translation between different
currencies is accounted into current profits and losses or capital reserves.
2.8.2 Translation of financial statements in foreign currency
All the assets and liabilities items in the Balance Sheet adopt for the translation the spot exchange rate at balance
sheet date. The items under the owners equity, except the undistributed profits, are translated at their occurrence
at the spot exchange rate. The spot exchange rate at the transaction date or the exchange rate approximate to spot
rate defined by a systematic rational method should be adopted for the income/expense items, and the difference
caused by such translations should be listed separately under the owners equity in the Balance Sheet.
On disposal of overseas operations, the corresponding difference of foreign currency translation related to the
overseas operations should be moved from owners equity to current profits and losses. On partial disposal of
overseas operations, the partial proportion of difference should also be converted into current profits and losses.
2.9 Financial instruments
Financial instruments consist of financial assets, financial liabilities and equity instruments.
2.9.1 Classification of financial instruments
The Company classifies the financial assets and liabilities by their purposes: financial assets or liabilities at fair
value and accounted into current profits and losses (for example, tradable financial assets or liabilities); held to
maturity investments; loans and receivable accounts; financial assets available for sale and other financial
liabilities.
2.9.2 Definition and measurement of financial instruments
2.9.2.1 Financial assets and liabilities at fair value and accounted into current profits and losses
The fair value (after deduction of cash dividend to be distributed and bonds interest to be received) of the assets
on the acquisition should be adopted as initial recognized value, and related transaction expenses should be
accounted into current profits and losses.
The interests and cash dividend received should be recognized as investment income during the period, and the
difference of fair value between initial and spot dates should be accounted into current profits and losses at the end
of period.
On the disposal of the assets, the difference between the obtained price and the book value of investment should
be recognized as investment income, and the accumulated fair value profits and losses should be accordingly
adjusted.
2.9.2.2 Held to maturity investments
The fair value (after deduction of bond interests whose period has matured but not charged yet) plus the related
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transactions fees should be adopted as initial recognized value.
During the holding period, the interest income should be confirmed and included into investment income in
accordance with the amortized costs and the real interest rate (according to nominal interest rates if the difference
between the real interest rate and the nominal interest rate is small). The real interest rate should be determined
at the time made, and remain unchanged during the expected duration or applicable shorter period.
On disposal of these investments, the difference between the income from investment and the book value of
investment should be accounted into investment income.
2.9.2.3 Receivable accounts
The contract price charged to the buyers should be recognized as initial value for those receivable accounts which
mainly composes of the receivable creditors right caused by the sale of goods and the providing of labor services,
and receivables in other companies excluding debt instruments priced in active markets, includes but not limits in
receivable notes, receivable accounts, other receivables, prepayments and long-term receivables. If characterized
as financing activities, the initial recognition should be priced at present value.
The differences between sale value and book value should be accounted into current profits and losses on its
recovery or disposal.
2.9.2.4 Available for sale financial assets
The fair value (less than cash dividend to be distributed and bonds interest to be received) and relevant
transaction expenses of the assets on the acquisition should be adopted as initial recognized value.
The interests and cash dividend received should be recognized as investment income during the period, and the
difference of fair value between initial and spot dates should be accounted into capital reserve (other capital
reserve).
On the disposal of the assets, the difference between fair value and initial value should be recognized as
investment profits and losses, and the accumulated variance of fair value caused by the disposal should be
simultaneously moved from shareholders equity to investment profits and losses.
2.9.2.5 Other financial liabilities
The Company adopts the fair value and relevant transaction expenses as initial recognized value and takes
amortized cost for subsequent measurement.
2.9.3 Recognition and measurement of the financial assets transfer
On the transfer of financial assets, these assets should be no longer recognized if nearly all the risks and rewards
relating to the ownership have been transferred to the transferee; if in contrary cases, they should be still
recognized as financial assets of the Company.
The principle of “Substance over Form” is adopted in judging the termination or not of recognizing financial
assets. The transfer of financial assets is also divided into two cases: entire transfer and partial transfer. If the
transfer of an entire financial asset satisfies the conditions for stop recognition, the difference between the
amounts of the following 2 items shall recorded in the profits and losses of the current period:
2.9.3.1 The book value of the transferred financial asset;
2.9.3.2 The aggregate consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in the owners equities (in the event that the financial asset involved in the
transfer is a financial asset available for sale).
If the transfer of partial financial asset satisfies the conditions for stopping recognition, the carrying amount of the
entire financial asset transferred shall, between the portion whose recognition has stopped and the portion whose
recognition has not stopped (under such circumstance, the service asset retained shall be deemed as a portion
whose recognition has not stopped), be allocated at their respective relative fair value, and the difference between
the amounts of the following 2 items:
(1) The book value of the portion whose recognition has stopped;
(2) The aggregate consideration of the portion whose recognition has stopped, and the portion of the accumulative
amount of the changes in the fair value originally recorded in the owners equities which is corresponding to the
portion whose recognition has stopped (in the event that the financial asset involved in the transfer is a financial
asset available for sale).
The Company should recognize financial assets and recognize the reception of consideration as financial liabilities
in case the transfer of these financial assets doesnt satisfy the definition of termination.
2.9.4 Conditions for derecognizing financial liabilities
If the current obligations of financial liabilities has been lifted in whole or in part, then the Company should
derecognize the financial liabilities in whole or in part thereof; if the Company signs an agreement with creditors
in order to take on new ways to replace the existing financial liabilities, and the new liabilities and the existing
financial terms are substantially different, the Company should terminate recognizing the existing financial
liabilities, and begin to recognize the new financial liabilities at the same time.
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If the terms of the contract involving the existing financial liabilities have been made with substantive changes in
whole or in part, the Company should terminate recognizing the existing financial liabilities in whole or in part,
and at the same time, adopt the modified version of financial liabilities as a new one.
On derecognizing the financial liabilities in whole or in part, the difference between the book value of these
financial liabilities and the payment should be accounted into current profits and losses.
If buying back part of the financial liabilities, on the date of repurchase and in accordance with the comparative
fair value of the part to be continuously recognized and to be derecognized, the Company should allocate the
whole financial liabilities. The difference between the part assigned to the derecognized book value and the
payment (including the roll-out of non-cash assets or new financial liabilities to be assumed) should be included
into current-period profits and losses.
2.9.5 Definition of fair value of financial assets and liabilities
The Company adopts the year-end quotations in active markets as fair value of financial assets and liabilities.
2.9.6 Depreciation reserves for financial assets (excluding accounts receivable)
2.9.6.1 Depreciation reserves for financial assets available for sale
At end of report year, the accumulated loss caused by the fair value decrease should be reclassified from the
original item of owners equity and recognized as impairment loss in case the fair value of financial assets
available for sale has decreased significantly or the decrease trend is considered to be non-temporary under all the
related conditions.
2.9.6.2 Depreciation reserves for held to maturity investments
The impairment loss of held to maturity investments is calculated in the light of the treatment of accounts
receivables depreciation.
2.10 Accounts receivable
2.10.1 Recognition and accruement of provision for bad debt in accounts receivable of individually significant
amount
2.10.1.1 Recognition criteria of provision for bad debt in accounts receivable of individually significant amount
The accounts receivable of individually significant amount refer to the top five accounts receivable with
significant amount.
2.10.1.2 Accruement of provision for bad debt in accounts receivable of individually significant amount
The Company takes individual depreciation test for those significant receivable accounts, and determines the
impairment loss and makes provision for bad debts based on the difference between their future cash flow value
and book value.
The estimated future cash flow of short-term accounts receivable shouldnt be discounted at the calculation of
their impairment loss for the minor difference between their present value and future cash flow.
2.10.2 Recognition and accruement of provision for bad debt in accounts receivable of insignificant amount but
whose package is characterized as highly risky credit portfolio
2.10.2.1 Definition of highly risky credit risk portfolio
For those insignificant receivable accounts, the Company classifies them as several groups whose credit risk level
is similar to those individually tested non-depreciation accounts, and determines the impairment loss and makes
proportional provision for bad debts based on the end-of-period balance.
2.10.2.2 Accruement based on highly risky credit risk portfolio
The Company determines the following proportion of provision for bad debts based on the actual loss ratio of the
anterior-periods receivable accounts with similar credit risk, and the consideration of actual situations:
Provision proportion for accounts receivable Provision proportion for other receivables
Age
(%) (%)
Within one year 5 5
1-2 years 20 20
2-3 years 50 50
Over 3 years 100 100
2.11 Inventories
2.11.1 Classification of inventories
The inventories of the Company comprise: materials in transit, raw materials, turnover materials, inventory
products, work in progress, finished products, material in outside processing, etc.
2.11.2 Inventory pricing method on their delivery
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Inventory products are accounted with weighted average method on their delivery.
2.11.3 Determination of net realizable value of inventories and accruement of stock depreciation provision
The Company takes inventory checkup at end of each accounting period, and states or adjusts depreciation
reserves of inventories at the lower of cost or net realizable value.
During normal production, the cash realizable value of inventories directly for sale, such as products, merchants
and materials for sale is accounted by the estimated price less the estimated sales expenses and taxes. During
normal production, the cash realizable value of materials to be processed is accounted by the estimated price of
finished product less the estimated cost, sales expenses and taxes. For those inventories with purpose of
implementing sales contract or labor contract, the cash realizable value is based on the contract price; if the
inventories held more than fixed in the contract, the cash realizable value of surplus part is accounted based on the
market price.
At end of report year, the Company accrues separately the provisions for depreciation reserves of the inventories.
In case of low-cost and numerous-in-variety inventories, the Company classifies the provision for depreciation of
each kind of inventories. And the Company consolidates the provision for depreciation of those inventories related
to the production and sales of products in the same region, with the same or similar utilization and purpose, and
difficult to calculate separately.
In case the factors impacting the write-down of the inventories value disappear, the write-down amount should be
recovered and the according provision of impairment should be returned to current profits and losses.
2.11.4 Inventory system
The Company adopts perpetual inventory system to take periodic or non-periodic inventory checkup.
2.11.5 Provision for depreciation reserves of inventories
2.11.5.1 Inventory products are accounted with weighted average method on their delivery.
2.11.5.2 The amortization treatment of packing materials adopts one-off amortization method.
2.12 Long-term equity investment
2.12.1 Initial measurement
2.12.1.1 Long-term equity investment formed in the merger of enterprises
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the
book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment.
The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash
assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital
reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. All the directly
related expenses, including audit fee, appraisal fee, legal services fee etc, shall be accounted into current profits
and losses.
For the merger under different control, the merger cost should be accounted at the fair value of assets paid,
liabilities carried and equity bonds issued by the merging party at the merger date, and other direct expenses
related to the transaction. For the gradual merger realized by separate procedures, the merger cost should be the
sum of every separate transaction. In case of any future events defined in merger contract whose predictable
occurrence could influence the merger cost and the related amount could be reliably calculated at merger date,
such amount should also be included in merger cost.
2.12.1.2 Long-term equity investment by other methods
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment
contract or agreement except the unfair value stipulated in the contract or agreement.
Under the conditions that the exchange of non-monetary assets is characterized with business essence, and the fair
value of the assets received or surrendered can be accounted in a reliable way, the book value of assets received is
defined on basis of the fair value of assets surrendered, except there are conclusive evidences for the stronger
reliability of the fair value of assets received. For the exchange of those non-monetary assets not meeting the
above premises, the book value of assets surrendered and related taxes should be accounted as cost of assets
received and the profits and losses shouldnt be concluded.
The initial cost of long-term equity investment obtained by recombination of liabilities shall be accounted at fair
value.
2.12.2 Subsequent measurement and recognition of profits and losses
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
2.12.2.1 Subsequent measurement
For a long term equity investment on the subsidiary company of an investing enterprise, the investing enterprise
shall accounted by employing the cost method, and shall make an adjustment by employing the equity method
when it works out consolidated financial statements.
The cost method shall be employed when a long-term equity investment of the investing enterprise that does not
do joint control or does not have significant influences on the invested entity, and has no offer in the active market
and its fair value cannot be reliably measured.
A long-term equity investment of the investing enterprise that does joint control or significant influences over the
invested entity shall be measured by employing the equity method. If the initial cost of a long-term equity
investment is more than the investing enterprise' attributable share of the fair value of the invested entity's
identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted; if
the initial cost of a long-term equity investment is less than the investing enterprise' attributable share of the fair
value of the invested entity's identifiable net assets for the investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.
Where any change is made to the owner's equity other than the net profits and losses of the invested entity, the
book value of the long-term equity investment shall be adjusted and be included in the owner's equity, and the
capital reserves (other capital reserves) shall be accordingly adjusted, in accordance with the attributable share of
the net profits or losses of the invested entity.
2.12.2.2 Recognition of profits and losses
Under cost method, the investment income recognized by the investing enterprise shall be limited to the amount
received from the accumulative net profits that arise after the invested entity has accepted the investment. Where
the amount of profits or cash dividends obtained by the investing entity exceeds the aforesaid amount, it shall be
regarded as recovery of initial investment cost.
Under equity method, an investing enterprise shall recognize the net losses of the invested enterprise as following
process: firstly, it shall dilute the book value of the long-term equity investment; secondly, if the book value of the
long-term equity investment is insufficient to dilute, it shall dilute the book value of the long-term receivables
under the limit of other long-term rights and interests which substantially form the net investment made to the
invested entity; lastly, after the above treatments, it shall recognize the accrued liabilities according to the
responsibilities in investment contract or agreement and account them into current profits and losses.
If the invested entity realizes profits in posterior periods, the investing enterprise shall adopt the contrary process,
after the unrecognized losses, to write down the balance of the accrued liabilities, recover the book value of other
long-term rights and interests which substantially form the net investment made to the invested entity, and
recognize the investment profits.
2.12.3 Evidences for significant influences and the invested entity under joint control
Certain control is considered as joint control with other parties over the invested entity when it happens over an
economic activity in accordance with the contracts and agreements, which does not exist unless the investing
parties of the economic activity with one an assent on sharing the control power over the relevant important
financial and operating decisions. Certain case is considered as significant influences when the investing entity
owns the power to participate in making decisions on the financial and operating policies of an enterprise, but not
to control or do joint control together with other parties over the formulation of these policies.
2.12.4 Impairment testing methods and impairment accrual method
For those long-term equity investments characterized with significant impact, not quoted in active markets, and
whose fair value cant be reliably measured, the impairment loss is determined on basis of the difference between
their book value and the present value of similar financial assets whose market rate of return on future cash flows
can be discounted.
For those long-term equity investments, except the long- goodwill formed from business combination, if the
recoverable amount of the measurement results show that the recoverable amount of the long-term equity
investment below its book value, the difference will be recognized as impairment loss.
For goodwill formed by business combination, regardless of whether there is indication of impairment, there
should be conducted annual impairment testing.
The impairment loss of long-term equity investments cant be returned back after the recognition.
2.13 Investment real estate
Investment real estate refers to the real estate held with purpose of rent earning, capital gaining or both of them,
including land user which has been rented out or is held for transference after capital appreciation, and buildings
which has been rented out.
The Company adopts cost calculation mode for measurement of investment real estate. On calculating the
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depreciation, the Company adopts the same policy of fixed assets for measurement of investment real estate and
assets for rent, and the same policy of intangible assets for measurement of right of land use for rent.
On appearance of evidence for depreciation, the Company estimates the recoverable value and defines the
impairment loss when the recoverable value is lower than its book value.
The impairment loss of investment real estate cant be returned back after the recognition.
2.14 Calculation and depreciation of fixed assets
2.14.1 Definition of fixed assets
The fixed assets of the Company refer to those tangible assets with service life more than one year and related to
production, labor services, for lease or management. The Company recognizes the fixed assets when they meet the
following conditions:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
(2) The cost of the fixed asset can be measured reliably.
2.14.2 Impairment method of fixed assets
The provision for decrease in value of fixed assets is made with straight-line method, with consideration of the
category of the assets, their estimates of service life and net salvage.
The fixed assets fit-up fee eligible for capitalization should be accrued individually in straight-line method
adopting the shorter period between two fit-ups and the remaining service life.
The estimated service life and depreciation rate of fixed assets by category is as following:
Category Service year Estimated net scrap value rate Annual rate of depreciation
House and construction 5-50 0-10% 1.8% - 20%
Machinery and equipment 5-15 0-10% 6% - 20%
Motor vehicles 3-14 0-10% 6.43 % - 33.33%
Electric appliances 3-14 0-10% 6.43%-33.33%
Fixtures 5-15 -- 6.67%-20%
Others 3-14 0-10% 6.43% - 33.33%
2.14.3 Testing method and provision for depreciation of fixed assets
The Company determines whether there is evidence of impairment that may occur upon fixed assets at end of each
period.
If there is indication of impairment of fixed assets, the Company should estimate its recoverable amount. The
recoverable amount is to be determined by the higher between the net price of the fair value of fixed assets after
subtracting costs of disposal and the present value of expected future cash flows from fixed assets.
When the recoverable amount of fixed assets is below their book value, the book value of fixed assets should be
written down to its recoverable amount, and the amount of write-down should recognized as impairment loss of
fixed assets, and included into current profits and losses. At the same time, the provision for depreciation of fixed
assets should be accrued.
After the recognition of impairment losses of fixed assets, the depreciation of fixed assets for impairment should
be accordingly adjusted in future periods so that during the remaining useful life of the fixed assets, the book
value of adjusted fixed assets can be systematically amortized (less the estimated net residual value).
After the recognition, the impairment loss of fixed assets shouldnt be recovered in subsequent accounting period.
If there are indications showing that a possible impairment of fixed assets could take place, the Company should
estimate its recoverable amount based on individual fixed assets. If difficult to do so, the Company should
determine the recoverable amount of the assets group on basis of the asset groups to which the fixed assets belong.
2.15 Accounting of construction in progress
2.15.1 Category of construction in progress
The Company distinguishes the characteristics of each construction in progress in their real cost accounting.
2.15.2 Standards and conversion date from construction in progress to fixed assets
The book value of construction in progress is accounted into fixed assets at all the expenses occurred before the
build-up of such assets available for intended use. After available for intended use but before the final settlement,
the built-up fixed assets are accounted at estimated value and accrued under the depreciation policy of fixed assets
based on constructions budget, cost or real cost. After the settlement, the Company should adjust the provisional
estimate by real cost, but not the accrued.
2.15.3 Testing method and provision for depreciation of construction in progress
The Company determines whether there is evidence of impairment that may occur upon construction in progress
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
at end of each period.
If there is indication of impairment of construction in progress, the Company should estimate its recoverable
amount. The recoverable amount is to be determined by the higher between the net price of the fair value of
construction in progress after subtracting costs of disposal and the present value of expected future cash flows
from construction in progress.
When the recoverable amount of construction in progress is below their book value, the book value of
construction in progress should be written down to its recoverable amount, and the amount of write-down should
recognized as impairment loss of construction in progress, and included into current profits and losses. At the
same time, the provision for depreciation of construction in progress should be accrued.
After the recognition, the impairment loss of construction in progress shouldnt be recovered in subsequent
accounting period.
If there are indications showing that a possible impairment of certain construction in progress could take place, the
Company should estimate its recoverable amount based on individual construction. If difficult to do so, the
Company should determine the recoverable amount of the assets group on basis of the asset groups to which the
construction in progress belongs.
2.16 Capitalization of the loan fees
2.16.1 Definition of capitalization of the loan fees
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of
relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred,
and shall be recorded into the current profits and losses.
The term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate, inventories and
other assets, of which the acquisition and construction or production may take quite a long time to get ready for its
intended use or for sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements:
(1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or
interest bearing debts paid for the acquisition and construction or production activities for preparing assets
eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for its
intended use or sale have already started.
2.16.2 Capitalization period
The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the
borrowing costs, excluding the period of suspension of capitalization of the borrowing costs.
When the assets of acquisition and construction or production are available for their intended use or marketable
condition, the capitalization of loans goes to the end.
When certain part of the assets of acquisition and construction or production is separately completed and available
for its intended use, the capitalization of loans for this part of assets goes to the end.
If different parts of the assets of acquisition and construction or production are separately completed, but they
could be available for their intended use or marketable condition only after the completion of the construction in
whole, the capitalization of loans goes to the end after the whole completion.
2.16.3 Suspension of capitalization period
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the
interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.
Where the interrupted acquisition and construction or production of the qualified asset is available for intended
use or marketable condition, the capitalization of loans should reinitiate. The borrowings occurred during the
suspension period should be determined as current-period profits and losses, and the capitalization will not
reinitiate until the reactivation of the interrupted acquisition and construction or production of the qualified asset.
2.16.4 Calculation of capitalized loan fees
The to-be-capitalized amount of interests of the specially borrowed loans (minus the income of the interests
earned on the unused borrowing loans as a deposit in the bank or as a temporary investment) and the ancillary
expense incurred to the specifically borrowed loans incurred before a qualified asset under acquisition,
construction or production is ready for the intended use or sale, shall be capitalized at the incurred amount when
they are incurred.
The Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by
multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be
calculated and determined in light of the weighted average interest rate of the general borrowing.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each
accounting period shall be determined by the real interest rate method, and an adjustment shall be made to the
amount of interests in each period.
2.17 Calculation of intangible assets
2.17.1 Pricing of intangible assets
2.17.1.1 The Company accounts its intangible assets at their real acquisition cost.
The cost of outsourcing intangible assets shall include the purchase price, relevant taxes and other necessary
expenditures directly attributable to intangible assets for the expected purpose. Where the payment of purchase
price for intangible assets is delayed beyond the normal credit conditions, which is of financing intention, the cost
of intangible assets shall be determined on the basis of the current value of the purchase price.
The book value of the intangible assets acquired as debt assets through the recombination of liabilities shall be
accounted on basis of the fair value of the intangible assets, and the difference between the book value of
recombined liabilities and the fair value of debt assets should be accounted into current profits and losses.
Under the conditions that the exchange of non-monetary assets is characterized with business essence, and the fair
value of the assets received or surrendered can be accounted in a reliable way, the book value of assets received is
defined on basis of the fair value of assets surrendered, except there are conclusive evidences for the stronger
reliability of the fair value of assets received. For the exchange of those non-monetary assets not meeting the
above premises, the book value of assets surrendered and related taxes should be accounted as cost of assets
received and the profits and losses shouldnt be concluded.
The book value of the intangible assets acquired through merger of enterprises under the same control should be
accounted at the book value of the merged enterprise. The book value of the intangible assets acquired through
merger of enterprise not under the same control should be accounted at the fair value of the acquired assets.
The cost of intangible assets developed internally includes: material and labor expenses, register fee, amortization
of other patent and franchise fee, interest expense eligible for capitalization during development process, and
other direct expenses for making the intangible assets available to its intended use.
2.17.1.2 Subsequent measurement
The Company analyzes the service life of the acquired intangible assets.
For the intangible assets with limited service life, the economic benefits should be amortized with straight-line
method; for the intangible assets whose service life of economic benefits cant be predicted, the Company defines
them as intangible assets with indefinite service life and wont adopt amortization upon them.
2.17.2 Estimate of service life for the intangible assets with limited life
Classification Service life
Land use right 50 years
Brand use right 10 years
Patent and Non-patent technology 4-8 years
Computer software 3-10 years
At end of report period, the Company should recheck the service life and amortization method of the limited-life
intangible assets.
The recheck in current period shows that there is no difference in the estimate of service life and adoption of
amortization method.
2.17.3 Provision for depreciation of intangible assets
For the intangible assets with definite service life, the Company practices the impairment testing at end of period
when there is obvious indications of impairment.
For the intangible assets with uncertain service life, impairment testing should be realized at the end of each
period.
With the impairment testing, the Company estimates the recoverable amount of intangible assets. The recoverable
amount of intangible assets represents the higher between the net fair value of intangible assets less disposal fees
and the present value of estimated future cash flow of intangible assets.
When the recoverable amount of intangible assets is less than their book value, the book value of intangible assets
should be written down to its recoverable amount, and the amount of write-down is recognized as an intangible
asset impairment losses, included in current profits and losses, and the corresponding provision for depreciation
should be accrued at the same time.
After the recognition of impairment losses of intangible assets, the Company should adjust accordingly the
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
depletion or amortization costs in future periods, so that during the remaining useful life, the adjusted book value
of intangible assets (less estimated net residual value) can be systematically amortized.
The impairment losses of intangible assets will not be recovered in subsequent accounting periods after the
recognition.
If there are indications of a possible impairment of intangible assets, the company should estimate the recoverable
amount based on the individual intangible assets. In case that its difficult to estimate the recoverable amount of
the individual intangible assets, the Company determines their recoverable amount based on the assets group to
which the individual intangible assets belong.
2.17.4 Criteria for the division of research stage and development stage during internal R&D
Research stage: the stage during which original and planned investigation and research is carried out with purpose
of obtaining and understanding new scientific or technical knowledge
Development stage: the stage before the commercial production and utilization, during which the research
achievement or other knowledge is applied to a particular project or design in order to produce new or
substantially improved materials, devices, products, etc.
The expenses occurred during the research stage of internal R&D projects are accounted into current-period
profits and losses.
2.17.5 Criteria for the capitalization of R&D expenses
The expenses during the development stage of internal R&D projects are defined as intangible assets when
satisfying the following conditions:
a. The completion of such intangible assets for use or sale is technically feasible.
b. The Company has the intention to use or sell the intangible assets after their completion.
c. The method in which the intangible assets bring economic benefits shows that there exists consumption market
for the products with use of these intangible assets or the intangible assets themselves, or that they are useful
in case of internal utilization.
d. The Company has sufficient technological, financial and other resources to complete the R&D of the
intangible assets and the ability to make them available for use or sale.
e. The Company can measure in reliable way the expense of such intangible assets during the development stage.
2.18 Payment to and for staff
2.18.1 Classification of payment to and for staff
The company's payment to and for staff is composed of wages, bonuses, allowances and subsidies; employees
benefits; medical insurance, pension insurance, unemployment insurance, work injury insurance, maternity
insurance and other social insurance premiums; housing provident funds; union funds and employee education
funding; non-monetary benefits; result of the dissolution of labor relations with the staff for their compensation
(termination benefits), etc.
2.18.2 Definition and calculation of payment to and for staff
The Company treats as liabilities the payment to and for staff during the periods in which the workers provide
services, and except the compensation for lifting the labor relations, treats respectively the earning targets under
the following circumstances:
(1) that should be carried by the production of goods and labor services, accounted into production or labor
service cost;
(2) that should be carried by the construction in progress and intangible assets, accounted into cost for
construction of fixed assets or intangible assets;
(3) except the above-mentioned remuneration, directly charged into current profits and losses.
If the State has stipulations about the accrual ratio of payment to and for staff, the Company adopts these
stipulations as guideline of accrual. If the State hasnt such regulations, the Company estimates the payment to
and for staff from past experience and actual situation, in case that the real cost is more or less than the estimated
cost, the Company will supplement or return back the reserves.
If the company offers to its staff the self-owned products or housing, or rents free-of-charge the houses for its staff,
it should account respectively in accordance with the fair value of products, depreciation or rent of each house,
into self-production cost or current profits and losses dependent to the beneficial objects.
2.18.3 Termination benefits
The company should determine the payment to and for staff and account into current profits and losses according
to its formal written plan or proposal that cant be withdrawn unilaterally (including the department, quantity,
compensation standards, implementation time, etc.), in case that the Company proposes a compensation for
anticipating the termination of labor contract or encouraging the staff to voluntarily cancel the contract.
For the voluntary layoff cases, the Company should estimate the quantity of employees accepting layoffs, and
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
accrue payable for staff according to the quantity and standards of compensation and in line with the articles in
"Accounting Standards for Enterprises No. 13 --- Contingent Items".
2.19 Debt reorganization
During report period, the Company determines the debt reorganization respectively under the following
circumstances:
2.19.1 The Company accounts the difference between the book value of reorganized debts and the really payable
cash into current profits and losses in case of cash settlement of debt.
2.19.2 The Company accounts the difference between the book value of reorganized debts and the fair value of
transferred non-cash assets into current profits and losses in case of covering the debts with non-cash assets.
And the difference between fair value and book value of transferred non-cash assets also should be accounted
into current profits and losses.
2.19.3 In case of conversion of debts into capital, the Company recognizes as capital (or paid-up capital) the
total facial value of the equity converted from the abandoned claims of creditors, and the difference between
fair value of equity and capital (or paid-up capital) should be determined as capital reserves. The difference
between book value of reorganized debts and the fair value of equity should be included into current profits
and losses.
2.19.4 On modification of other conditions about debts, the Company will adopt the fair value of debts after
modification as book value of reorganized debts. The difference between the book value of reorganized debts
and the book value after the reorganization will be accounted into current profits and losses.
2.19.5 In case that the revised terms of debt is related to contingent payable, and such contingent payable meets
the conditions for confirming contingent liabilities in "Accounting Standards for Enterprises No. 13 –
Contingent Items", the Company should recognize as contingent liabilities such contingent payable. The
difference between the book value of reorganized debts and the book value after reorganization plus the sum
of contingent liabilities should be included into current profits and losses. The contingent payable refers to the
payable for the future situations whose occurrence is considered with uncertainty.
2.19.6 When the debt reorganization is carried out with a combined package of cash settlement, payment with
non-cash assets, debt to capital, and modification of debts conditions, the Company will write-off the book
value of the reorganized debts in order of cash, non-cash assets, and fair value of equity by creditors, and at
last, treat them with the revised terms of debt.
2.20 Contingent liabilities
The company recognizes as contingent liabilities those matters involving the Company in litigation, debt
guarantees, loss of contracts and reconstruction, which are likely to require the Company to deliver assets or
provide services in future, and whose amount can be reliably measured.
2.20.1 Criteria of contingent liabilities
The obligations related to contingent items are defined as contingent liabilities when satisfying the following
conditions:
This obligation means a present obligation for the Company;
The fulfillment of this obligation is likely to lead to outflow of economic benefits of the Company;
The amount of this obligation can be reliably measured.
2.20.2 Measurement of contingent liabilities
The company accounts for initial measurement of contingent liabilities the best estimated amount of expenditure
to fulfill the related current obligations.
On defining the best estimated amount, the Company considers integrally the factors of risk, uncertainty and
currency related to contingent items. For the significant influence of currencys time value, the Company
determines the best estimated amount through the discount of future cash outflows.
The best estimated amount is treated separately under the following circumstances:
There is a continuous range (or scope)of required expenditure among which the possibility for occurring different
results maintains the same, the best estimated amount should be defined by the median, which means the average
amount of upper and lower limits of the continuous range.
If it doesnt exist a continuous range (or scope), or within the continuous range the possibility for occurring
different cases result in different situations, the best estimated amount should be defined by the most possibly
occurred amount when the contingent items are related to individual project, and be defined by the combination of
different possible results and their probabilities.
2.21 Revenue recognition
2.21.1 Criteria for the time definition of income from selling goods
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the
significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the
enterprise retains neither continuous management right that usually keeps relation with the ownership nor
effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be
measured in a reliable way.
2.21.2 Basis for determining the income from transferring the right to use assets
When the economic benefits related to the transaction will be likely to flow to the Company and the income
amount can be reliably calculated. The treatment will be different in the following conditions:
2.21.2.1 The income of interests is determined on basis of the time and real interest rate of the Companys cash
funds which is utilized by other persons.
2.21.2.2 The income of royalties is determined on basis of the chargeable time and method fixed in relevant
agreement or contract.
2.21.3 Basis and method to define the progress of contracted construction on determining the income from
rendering of labor services through percentage-of-completion method
If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the
labor services it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method. An enterprise may adopt the measurement of the work completed to ascertain
the schedule of completion under the transaction concerning the providing of labor services.
The Company determines the total revenue from labor services in accordance with the received or receivable
purchase price fixed by contract or agreement, except when the price is unfair. On balance sheet date, the
Company confirms current-period labor services income according to the total revenue of labor services
multiplied by the percentage of completion and less the accumulated determined services revenues in previous
periods. At the same time, the Company confirms current-period labor services expenditure according to the total
cost of labor services multiplied by the percentage of completion and less the accumulated determined services
expenditure in previous periods.
If an enterprise cant, on the date of the balance sheet, measure the result of a transaction concerning the providing
of labor services in a reliable way, it shall be conducted in accordance with the following circumstances,
respectively:
(1) If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor
services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost
of labor services shall be carried forward at the same amount; or
(2) If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the
current profits and losses, and no revenue from the providing of labor services may be recognized.
2.22 Government subsidies
2.22.1 Divisions of government subsidies
Government subsidies refer to the monetary and non-monetary assets that the company obtains free-of-charge
from the Government. They are divided into asset-related government subsidies and benefit-related government
subsidies.
2.22.2 Treatment of government subsidies
The government subsidies related to long-term assets such as acquisition & construction of fixed assets and
intangible assets are determined as deferred income, and accounted into corresponding-period non-operating
income according to the service life of the acquisition & construction assets.
The government subsidies related to economic benefits, if for covering the relevant expenses or losses in future
periods, are determined as deferred income and accounted into current-period non-operating income; if for
covering the occurred expenses or losses in the past, are included directly into current-period non-operating
income.
2.23 Deferred income tax assets and liabilities
2.23.1 Basis for the determination of deferred income tax assets
The enterprise shall recognize the deferred income tax assets caused by deductible temporary differences under
the limits of the taxable income which is likely to obtain for deducting the deductible temporary differences.
2.23.2 Basis for the determination of deferred income tax liabilities
The Company recognizes as deferred income tax liabilities the taxable temporary differences in current and
previous periods. However, the goodwill, transactions not formed from business combination and whose
occurrence will not impact accounting profits nor the taxable income or temporary differences of deductible losses
54
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
should not be included.
2.24 Affiliated parties
The company's affiliated parties including but not limited to:
(1) The company's parent company;
(2) A subsidiary of the company;
(3) Other enterprises of the company which are controlled by the same parent company;
(4) Investors implemented common control of the company;
(5) Investors which exert significant influence on the company;
(6) The joint venture of the company, including joint venture subsidiary;
(7) Affiliated enterprises of the company, including joint ventures, a subsidiary of;
(8) The company's main individual investors and his close family members;
(9) The company or its parent company's key management personnel and his close family members;
(10) The company's main individual investors, key management personnel or his close family members of the
control, joint control of other enterprises.
2.25 Changes in accounting policies and estimates
2.25.1 Changes in accounting policies
There are no changes in accounting policies for current period.
2.25.2 Changes in accounting estimates
There are no changes in accounting estimates for current period.
2.26 Correction of accounting errors in previous periods
2.26.1 Retroactive restatement method
At the end of period, there are no accounting errors in previous periods adopting retroactive restatement method.
2.26.2 Prospective recognition method
At the end of period, there are no accounting errors in previous periods adopting prospective recognition method.
3. Taxation
Important taxes and tax rates
Type Tax bases Tax rate
V.A.T. Sales turnover 6%, 7%, 13%, 17%, 19%
Business tax Business turnover 5%, 7%
Income tax Taxable income 25%, 16%-38%
Acutally paid business tax, value-added
City maintenance and construction tax 1%, 7%
tax and consumption tax
Acutally paid business tax, value-added
Extra charge of education fund 2%, 3%
tax and consumption tax
Note: the overseas subsidiaries employ the tax rates according to their countries tax law.
4. Merger of enterprises and consolidated of financial statements
Except specially noted, the monetary unit in this chapter is RMB000.
4.1 About the subsidiaries
4.1.1 Subsidiaries acquired through foundation or investment
Invested entity
Type
Register place
Classification
Register capital
Business scope
balance
investment
Other
proportion %
Equity
Voting share %
not
Consolidated
Minority interests
minority interests
Write-down
owners equity
Write-down
Real investment at
year end
net
of
of
or
Durkopp Imp. & Wholesale, 60 100 Yes
subsidiary
Holding
Shanghai
Adler Trading Exp. of broker and
USD6,000,000
USD3,600,000
USD2,400,000
Shanghai Co. sewing Imp. &
machines Exp. of
sewing
machines
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shanghai sewing 79,000 M&E 79,000 100 100 Yes
subsidiary
ed
Wholly-own
Shanghai
6,734.2
390
Shanggong machines products
Butterfly and
Sewing instruments
Machine. Co.
Shanghai Real 13,000 Real estate 8,970 69 69 Yes
subsidiary
Holding
Shanghai
5,001.5
22.1
Suoying Real estate developme
Estate Co. developm nt
ent
ShangGong Sewing Sewing 100 100 Yes
d subsidiary
Wholly-owne
Germany
105,412.6
20,336.3
EUR12,500,000
EUR12,500,000
(Europe) machines machines,
Holding , etc. etc.
Corp. GmbH
Shanghai Electroni 20,000 sale of 20,000 100 100 Yes
d subsidiary
Wholly-owne
Shanghai
Shanggong cs production
Shen Bei of
Electronics electronic
Co.. harness etc.
Shanghai Assets 5,000 Assets 5,000 100 100 Yes
subsidiary
Wholly-owned
Shanghai
Shanggong Manage managemen
Shen Bei ment etc. t,
Assets investment
Management managemen
Co. t, company
managemen
t etc.
Shanghai Sewing 4,650 Sales of 4,650 100 100 No
subsidiary
Wholly-owned
Shanghai
Industrial machines sewing
Sewing , etc. machines
Machines and
Materials components
General Co.
Shanghai Sewing 12,000 Production 8,400 2,400 70 90 Yes
subsidiary
Holding
Shanghai
215.
Shuangchong machines and
Sewing , etc. developme
Machines Co. nt of
overlock
sewing
machines
4.1.2 Subsidiaries acquired in business combinations under the same control
Invested entity
Type
Register place
Classification
Register capital
Business scope
investment
Other
proportion %
Equity
Voting share %
not
Consolidated or
interests
Minority
interests
minority
Write-down
owners equity
Write-down of
Real investment
at year end
net
of
SMPIC Propert 8,620 Free Trade 8,620 100 100 Yes
subsidiary
ned
Wholly-ow
Shanghai
Waigaoqiao y Zone
Office Appa. manage Warehousing
Co., Ltd. ment
SMPIC Imp. Imp. & 12,000 International 12,000 100 100 Yes
subsidiary
Holding
Shanghai
& Exp. Co., exp. of trading of
Ltd. office merchants and
apparat technology
us
4.2 Changes in the consolidation of financial statements
During current period, the company added one subsidiary of fourth level in the consolidation statement, the reason
is: the company in the current period newly established PFAFF Industrial Sewing Machine Taicang Co., Ltd.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
4.3 Newly included and excluded subsidiaries in current period
Currently newly included subsidiaries, specific objects, business entities under control for entrust or rent
operation:
Net assets end of period Net profit end of period（RMB
Name
（RBM 000） 000）
PFAFF Industrial Sewing Machine Taicang Co., Ltd 1907.03 -27.56
4.4 Translation Rate of Financial Statement Prepared by Overseas Entities
The subsidiary ShangGong (Europe) Holding Corp. GmbH has Euros as the recording currency, so the Company
adopts the following currency translation and treatment method: for assets and liabilities in balance sheet, the
end-of-period exchange rate is 8.3946, and beginning-of-period rate is 8.4189; for income and costs in profit
statement, current-period exchange rate is 8.4152, and anterior-period rate is 8.0536; for all the items in owners
equity, except "undistributed profits", the exchange rate is the spot rate; and the difference of translation of
financial statements is listed separately in balance sheet.
5 Notes to Major Accounts on the Consolidated Financial Statements
(Expressed in RMB or Otherwise Specified)
5.1 Cash and Cash Equivalents
Ending Balance Opening Balance
Item Original Exchange Translated to Original Exchange Translated to
currency rate RMB currency rate RMB
Cash on hand
RMB 481,452.97 310,724.70
HKD 3,651.80 0.7937 2,898.43 2,620.49 0.7862 2,060.23
EUR 97,343.61 8.3946 817,160.67 77,422.91 8.4189 651,815.74
USD 4.00 6.1528 24.61 4.00 6.0969 24.39
Subtotal 1,301,536.68 964,625.06
Bank deposit
RMB 109,819,423.53 166,046,009.29
HKD 830,637.86 0.7937 659,277.27 325,347.52 0.7862 255,788.22
USD 215,785.65 6.1528 1,327,685.93 551,043.37 6.0969 3,359,656.34
EUR 35,575,468.27 8.3946 298,641,825.90 31,857,260.83 8.4189 268,203,093.23
Subtotal 410,448,212.63 437,864,547.08
Other monetary-funds
RMB 69,503,691.49 20,371,057.30
Subtotal 69,503,691.49 20,371,057.30
Total 481,253,440.80 459,200,229.44
Funds with limited use are shown as follows:
Item Ending Balance Opening Balance Note
Deposits as guarantees 2,748,056.26 2,754,360.99 Note 1
Certificates of term
5,861,999.55 5,670,230.18 Note 2
deposit as guarantees
Deposits as count
4,000.000.00 4,000,000.00 Note 3
guarantee
Deposits L/C guarantee 712,000.00
Total 12,610,055.81 13,136,591.17
Note 1: The deposit, amounting to EUR 327,360.00, were pledged by ShangGong (Europe) Holding Corp. GmbH
to the Commerzbank Germany, which were equivalent to RMB 2,748,056.26;.
Note 2: The term deposit, amounting to EUR 698,306.00, were pledged by the ShangGong (Europe) Holding Corp.
GmbH to the FAG Kugelfischer AG, which were equivalent to RMB 5,861,999.55;
Note 3: The deposits were pledged by Shang Gong Group Co., Ltd for financial guarantee issued by Bank of
Communications Xuhui Branch, which was used to guarantee the bank loan that ShangGong (Europe) Holding
Corp. GmbH applied in Bank of communications Frankfurt Branch;
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.2 Financial Assets Held for Trading
Ending Balance at Fair Value Opening Balance at Fair Value
Financial assets measured at fair value and
the variation included into current-period 264,053.43 277,479.87
profits and losses
Total 264,053.43 277,479.87
There are no financial assets held-for-trading with limited use.
5.3 Notes Receivable
Ending Balance Opening Balance
Bank acceptance bills 2,307,430.01 2,046,580.00
Commercial acceptance bills 1,274,117.28
Total 2,307,430.01 3,320,697.28
Notes receivable which has been mortgaged at period end: None.
Bill which has been converted to account receivables due to inability to fulfill the obligation, and bill which has
been endorsed to other party at period end but not yet due: None.
5.4 Dividends Receivable
Opening Ending Reason for
Item Increase Decrease Impairment
Balance Balance receivable
Within one year 2,881,577.53 9,869,408.00 16,250.44 12,734,735.09
Including: Shanghai Fuji
9,869,408.00 9,869,408.00
Xerox Co., Ltd
Shanghai Shenyin &
16,194.20 16,194.20
Wanguo Secutities
Shanghai Shensy Enterprises
2,865,383.33 56.24 2,865,327.09
Development Co., Ltd
Total 2,881,577.53 9869,408.00 16,250.44 12,734,735.09
5.5 Accounts Receivable
5.5.1 Accounts Receivable by Category
Ending Balance Opening balance
Carrying Amount Bad Debt Provision Carrying Amount Bad Debt Provision
RMB % RMB % RMB % RMB %
Individual item
with significant 21,112,419.00 4.73 21,112,419.00 100.00 28,051,774.80 7.48 21,173,533.50 75.48
balances
Items as a
177,024,094.47 39.63 94,012,023.29 53.11 162,868,120.35 43.40 92,779,351.80 56.97
collective group
Other insignificant
248,533,516.09 55.64 16,286,060.59 6.55 184,303,953.29 49.12 13,376,433.65 7.26
items
Total 446,670,029.56 100.00 131,410,502.88 29.42 375,223,848.44 100.00 127,329,318.95 33.93
The balance that is limited to use is RMB 11,397,566.68, which is a deposit for bankers letter of guarantee
pledged by ShangGong (Europe) Holding Corp. GmbHs subsidiary, KSL Keilmann Sondermaschinenbau GmbH
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
and its related companies.
5.5.2 Clarification for Composition of accounts receivable
Accounts receivable with significant individual amount and with individual provision for bad debt
Carrying Amount Bad Debt Provision Provision% Comments
Top 1 Customer 21,112,419.00 21,112,419.00 100.00 Impaired through individual test
Total 21,112,419.00 21,112,419.00
At the balance sheet date, the carrying amount of receivables to the ShangGong (Europe) Holding Corp. GmbH
was significant and therefore was tested and provided for individually.
Items provided for using an ageing analysis as a collective group are as follows:
Ending Balance Opening Balance
Carrying Amount Bad Debt Carrying Amount Bad Debt
RMB % Provision RMB % Provision
Within one year 82,080,528.14 46.37 4,104,026.41 69,566,351.56 42.71 3,478,317.59
1- 2 years 5,401,242.15 3.05 1,080,248.43 4,123,622.74 2.53 824,724.55
2-3 years 1,429,151.46 0.81 714,575.73 1,403,672.80 0.86 701,836.41
Over 3 years 88,113,172.72 49.77 88,113,172.72 87,774,473.25 53.90 87,774,473.25
Total 177,024,094.47 100.00 94,012,023.29 162,868,120.35 100.00 92,779,351.80
Other items which are not significant but provided for are as follows:
Bad Debt Provision
Carrying Amount Comments
Provision %
Other item (Note 1) 2,150,000.00 2,150,000.00 100.00 Impaired through individual test
Other item (Note 2) 478,353.29 478,353.29 100.00 Impaired through individual test
Other item (Note 2) 389,034.00 389,034.00 100.00 Impaired through individual test
Other item (Note 2) 150,174.00 150,174.00 100.00 Impaired through individual test
Other item (Note 3) 245,365,954.80 13,118,499.30 5.64 Impaired through individual test
Total 248,533,516.09 16,286,060.59
Note 1: The balance represents accounts receivable from Durkopp Adler Trading Shanghai Co., Ltd., and is tested
separately for impairment;
Note 2: The balance represents accounts receivable from Shanghai Shanggong Butterfly Sewing Machines Co.,
Ltd., and is tested separately for impairment;
Note 3: The balance represents accounts receivable from ShangGong (Europe) Holding Corp. GmbH and is tested
separately for impairment.
5.5.3 The accounts receivable actually written off in this report period: None.
5.5.4 Among the period-end accounts receivable, there are no obligators who holds individually 5% or more
equity of the Company.
5.5.5 Top five debtors of accounts receivable
Proportion in total
Relation with the
Entity or rank Sum Duration accounts receivable
Company
(%)
No.1 client Third party 21,112,419.00 Over 3 years 4.73
No.2 client Third party 11,530,775.39 Over 3 years 2.58
No.3 client Third party 7,480,189.67 Over 3 years 1.67
No.4 client Third party 7,410,919.46 Within 1 year 1.66
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
No.5 client Third party 7,234,606.86 Over 3 years 1.62
Total 54,768,910.38 12.26
5.5.6 Among the period-end accounts receivables, those from affiliated parties shall be seen in 6.5
5.6 Other Receivables
5.6.1 Other Receivables by Category
Ending Balance Opening Balance
Carrying Amount Bad Debt Provision Carrying Amount Bad Debt Provision
RMB % RMB % RMB % RMB %
Individual items with 24.9
25,988,473.49 36.65 10,842,551.80 41.72 42,163,292.79 47.17 10,499,267.50
significant balances 0
Items as a collective 48.4
36,501,511.16 51.47 18,608,822.27 50.98 38,747,122.27 43.35 18,757,139.71
group 1
Other insignificant
8,428,615.74 11.88 2,080.00 0.02 8,478,378.63 9.48 2,080.00 0.02
items
32.7
Total 70,918,600.39 100.00 29,453,454.07 41.53 89,388,793.69 100.00 29,258,487.21
3
5.6.2 Category Description
Other accounts receivable with significant individual amount and with individual provision for bad debt
Carrying Bad Debt Provision
Comments
Amount Provision %
Export VAT refund (Note 1) 15,145,921.69 Unimpaired through individual test
Top 3 Customer 10,842,551.80 10,842,551.80 100.00 Impaired through individual test
Total 25,988,473.49 10,842,551.80
Note: This mainly refers to the export tax rebate receivable of subsidiaries in export sales, with non-impairment in
individual testing.
Items provided for using an aging analysis as a collective group are as follows:
Ending Balance Opening Balance
Carrying Amount Bad Debt Carrying Amount Bad Debt
RMB % Provision RMB % Provision
Within one
18,541,773.60 50.80 927,088.68 20,557,701.99 53.06 1,027,885.09
year
1-2 years 265,300.42 0.73 53,060.08 487,983.14 1.26 97,596.62
2-3 years 131,527.27 0.36 65,763.64 139,558.27 0.36 69,779.13
Over 3 years 17,562,909.87 48.11 17,562,909.87 17,561,878.87 45.32 17,561,878.87
Total 36,501,511.16 100.00 18,608,822.27 38,747,122.27 100.00 18,757,139.71
Other items which are not significant but provided for are as follows:
Carrying Amount Bad Debt Provision Provision% Comments
Other insignificant
8,426,535.74 Unimpaired through individual test
items (Note 1)
Other insignificant
2,080.00 2,080.00 100 Impaired through individual test
items (Note 2)
Total 8,428,615.74 2,080.00
Note 1: The balance represents accounts receivable from ShangGong (Europe) Holding Corp. GmbH and is tested
separately for impairment;
Note 2: The balance represents accounts receivable from Shanghai Shanggong Butterfly Sewing Machines Co.,
Ltd and is tested separately for impairment;
5.6.3 The accounts receivable actually written off in this report period: None.
5.6.4 There are no receivables to shareholders or related parties who hold 5% or more voting shares at the
balance sheet date
5.6.5 Top Five Customers with the Biggest Balances
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Relationship Carrying Amount Aging % Nature
Customer A Third Party 15,145,921.69 Within 1 year 21.36 Export tax rebates
Customer B Related Party 13,988,201.28 Within 1 year and over 3 years 19.72 General receivables
Customer C Third Party 10,842,551.80 Within 1 year and over 3 years 15.29 General receivables
Customer D Third Party 1,236,788.64 Within 1 year 1.74 General receivables
Customer E Related Party 1,100,000,00 Within 1 year 1.55 General receivables
Total 42,313,463.41 59.66
5.6.6 Among the period-end other receivables, those from affiliated parties shall be seen in 6.5.
5.7 Prepayment
5.7.1 Age Analysis
Ending Balance Opening Balance
Amount % Amount %
Within one year 18,945,792.77 93.07 19,331,107.10 76.59
1-2 years 1,394,823.77 6.85 2,780,057.52 11.01
2-3 years 2,365.15 0.01 2,686,491.14 10.64
Over 3 years 13,529.54 0.07 443,648.39 1.76
Total 20,356,511.23 100.00 25,241,304.15 100.00
5.7.2 Top Five Biggest Balances
Relationship Carrying Amount Ageing Comments
Customer A Third Party 3,597,022.18 Within 1 year Goods undelivered
Customer B Third Party 1,633,496.38 Within 1 year Goods undelivered
Customer C Third Party 1,360,000.00 Within 1 year Goods undelivered
Customer D Third Party 998,019.17 Within 1 year Goods undelivered
Customer E Third Party 836,031.51 Within 1 year Goods undelivered
Total 8,424,569.24
5.7.3There are no prepayments to shareholders or related parties who hold 5% or more voting shares at the
balance sheet date.
5.8 Inventory
5.8.1Summary
Ending Balance Opening Balance
Carrying Amount Provision Carrying Value Carrying Amount Provision Carrying Value
Raw materials 225,232,121.37 45,359,537.70 179,872,583.67 190,557,234.94 45,570,635.82 144,986,599.12
Materials in
7,119,970.85 7,119,970.85 2,451,669.09 2,451,669.09
transit
Revolving
materials
Outside
processed 136,761.27 136,761.27 179,998.59 179,998.59
materials
Work-in-process 142,960,932.18 33,190,347.33 109,770,584.85 120,630,231.78 33,652,519.21 86,977,712.57
Finished goods 209,,222,645.22 29,927,207.59 179,295,437.63 198,124,163.05 30,223,158.65 167,901,004.40
Consignments 2,902,891.39 2,902,891.39 2,578,494.05 2,578,494.05
Others 2,166,889.90 2,166,889.90 2,335,848.67 2,166,889.90 168,958.77
Total 589,742,212.18 110,643,982.52 479,098,229.66 516,857,640.17 111,613,203.58 405,244,436.59
There are no inventories pledged or mortgaged at the balance sheet date.
5.8.2 Provision for Obsolescent and Slow-moving Inventories
Additions Additions
Opening
Other Other Ending Balance
Balance Reversal Write-down
Additions Additions
Raw materials 45,570,635.82 13,266.82 224,364.94 45,359,537.70
Materials in transit
Revolving
materials
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Outside
processed
materials
Work-in-process 33,652,519.21 7,994.69 470,166.57 33,190,347.33
Finished goods 30,223,158.65 500,000.00 744,803.33 51,147.73 29,927,207.59
Consignments
Others 2,166,889.90 2,166,889.90
Total 111,613,203.58 521,261.51 744,803.33 745,679.24 110,643,982.52
In the reversal of provision, RMB 279,018.91 were due to difference of translation between foreign exchange
rates of beginning and ending of the reporting period in the foreign currency financial statements of
ShangGong (Europe) Holding Corp. GmbH.
Reason for Reversal of Reversal Accounting for
Reason for Provision
Provision Total Balance of Inventory
Raw materials NRV lower than carrying value
Work-in-process NRV lower than carrying value
NRV higher than carrying
Finished goods NRV lower than carrying value 0.42%
cost after reversal
Others NRV lower than carrying value
5.9 Other Current Assets
Ending Balance Opening Balance
Investment held to maturity 12,591,900.00 54,714,010.16
Input tax to be credited 3,260,585.28 7,420,393.00
Rentals and insurance fees prepaid 3,182,321.25 2,271,263.51
Structured deposits 520,000,000.00
Total 539,034,806.53 64,405,666.67
Structured deposits are the result of cash management by the company on the temporarily idle raised fund and
self-owned fund, and were purchased from bank with guaranteed principal for period of six months.
5.10 Available-for-Sale Financial Assets
5.10.1 Fair Values
Ending Balance at Fair Value Opening Balance at Fair Value
Debentures available for sale
Equity instruments available for sale 96,228,133.50 85,012,121.56
Others
Total 96,228,133.50 85,012,121.56
5.10.2 Restricted Free Floating Shares
There are no such shares as of the balance sheet date.
5.11 Long-term Equity Investment
5.11.1 Long-term Equity Investment by Category
Ending Balance Opening Balance
Joint ventures
Affiliate 17,997,768.12 17,997,768.12
Other long-term equity investment 57,779,093.18 57,744,583.80
Subtotal 75,776,861.30 75,742,351.92
Deduct: Impairment 22,207,792.17 22,207,792.17
Total 53,569,069.13 53,534,559.75
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.11.2 Investment in Affiliates and Joint Ventures (Expressed in RMB Ten Thousand Yuan)
Total Assets at
Total Liabilities at Total Net Assets at
Investee Sharing% Voting Share% Balance Sheet Revenue Net Profits
Balance Sheet Date Balance Sheet Date
Date
Affiliate:
Changshu Qixing Elec-plating Co., Ltd. 90.00 Note 1 18.57 157.99 -139.42
Shanghai Huazhijie Plastic Co., Ltd. 25.00 Note 1 545.72 251.21 294.51
Durkopp Adler Sewing Machines suzhou
49.00 49.00 5,854.99 2,317.86 3,537.13 1,492.14 14.38
Co., Ltd
Pfaff Industrial Iberica S.A.U. 49.00 Note 2 520.47 210.71 309.76 942.42 15.44
Note 1: Changshu Qixing Elec-plating Co., Ltd.and Shanghai Huazhijie Plastic Co., Ltd.had completed the cancellation of tax registration.
Note 2: Pfaff, the subsidiary of ShangGong (Europe) Holding Corp. GmbH, does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights.
5.11.3 Details of Long-term Equity Investment
Comments where Provision Impairment
Initial Cost of Opening Increase Ending Voting
Investee Sharing Sharing Differs for Loss for This Dividends
Investment Balance /(Decrease) Balance Share%
Voting Shares Impairment Year
Changshu Qixing Elec-plating Equity
2,520,000.00 90.00 Note 4
Co., Ltd. method
Shanghai Huazhijie Plastic Co., Equity
1,766,689.38 736,283.66 736,283.66 23.04 Note 4 736,283.66
Ltd. method
Durkopp Adler Sewing Equity
23,531,957.08 17,261,484.46 34,509.38 17,295,993.84 49.00 49.00 8,671,865.28
Machines suzhou Co., Ltd method
Subtotal 27,818,646.46 17,997,768.12 34,509.38 18,032,277.50 9,408,148.94
Shanghai Xingguang Cost
308,033.99 308,033.99 308,033.99 14.30 14.30 308,033.99
Underwear (South Africa) method
Shanghai Shensi enterprises Cost
10,593,077.64 10,593,077.64 10,593,077.64 10.59 10.59
development Co., Ltd method
Wuxi Shanggong Sewing Cost
153,814.26 153,814.26 153,814.26 80.00 80.00 Note 2 153,814.26
Machines Co.,Ltd method
Shanghai Hualian Sewing Cost
400,000.00 400,000.00 400,000.00 21.74 Note 1
Machinery Co.,Ltd. method
Shanghai Fuji-Xerox Co.,Ltd. Cost 29,140,749.49 29,140,749.49 29,140,749.49 15.92 15.92 9,869,408.00
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Comments where Provision Impairment
Initial Cost of Opening Increase Ending Voting
Investee Sharing Sharing Differs for Loss for This Dividends
Investment Balance /(Decrease) Balance Share%
Voting Shares Impairment Year
method
Shanghai Shanggong Jiayuan Cost
500,000.00 500,000.00 500,000.00 12.50 12.50 500,000.00
M&E Co., Ltd. method
Shanghai Baoding Investment Cost
7,500.00 7,500.00 7,500.00 <5 <5
Co.,Ltd. method
Cost
Bank of Shanghai Co.,Ltd. 951,400.00 951,400.00 951,400.00 <5 <5 177,109.68
method
China Perfect Machinery Cost
90,000.00 90,000.00 90,000.00 <5 <5
Co.,Ltd. method
Shenyin & Wanguo Securities Cost
200,000.00 200,000.00 200,000.00 <5 <5 3,238.84
Co.,Ltd. method
Shanghai Hirose Precision Cost
2,840,376.00 30.00 Note 1 850,000.00
Industrial Co.,Ltd. method
Shanghai Industrial Sewing
Cost
Machines Materials General 4,600,000.00 4,600,000.00 4,600,000.00 100.00 100.00 Note 2 1,037,794.98
method
Co.,Ltd
Shanghai Shuangchong Sewing Cost
10,800,000.00 10,800,000.00 10,800,000.00 70.00 90.00 Note 3 10,800,000.00
Machines Co.,Ltd. method
Cost
Pfaff Industrial Iberica S.A.U. 8.42 8.42 8.42 49.00 Note 5
method
Subtotal 60,584,959.80 57,744,583.80 57,744,583.80 12,799,643.23 10,899,756.52
Total 88,403,606.26 75,742,351.92 34,509.38 75,776,861.30 22,207,792.17 10,899,756.52
Note 1: ShangGong Group does not participate in the strategic decision making of Shanghai Hualian Sewing Machinery Co.,Ltd.and Shanghai Hirose Precision Industrial
Co.,Ltd.and therefore does not exert significant influence on those companies. The investment in those companies is measured in cost methods.
Note 2：Wuxi Shanggong Sewing Machines Co.,Ltd、and Shanghai Industrial Sewing Machines Materials General Co.,Ltdhas been deregistered in the tax bureau and
provision has been made under the cost method.
Note3:Shanghai Shuangchong Sewing Machines Co.,Ltd.has applied for liquidation and has established liquidation team.
Note4: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. have completed the tax deregistration in the reporting period.
Note5: ShangGong (Europe) Holding Corp. GmbH does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights
5.11.4 There is no restriction for investees to transfer their funds to the investor.
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5.12 Investment Property
Opening Ending
Increase Decrease
Balance Balance
Initial cost 232,248,126.02 211,651.11 232,036,474.91
Plant and property 179,140,880.86 211,651.11 178,929,229.75
Land use right 50,523,752.24 50,523,752.24
Leasehold improvement 2,583,492.92 2,583,492.92
Accumulated depreciation and
102,828,613.87 3,001,714.12 116,985.42 105,713,342.57
amortization
Plant and property 91,423,666.36 2,290,259.08 116,985.42 93,596,940.02
Land use right 11,404,947.51 625,338.60 12,030,286.11
Leasehold improvement 86,116.44 86,116.44
Net book amount 129,419,512.15 -3,001,714.12 94,665.69 126,323,132.34
Plant and property 87,717,214.50 -2,290,259.08 94,665.69 85,332,289.73
Land use right 39,118,804.73 -625,338.60 38,493,466.13
Leasehold improvement 2,583,492.92 -86,116.44 2,497,376.48
Impairment 8,343,112.90 24,081.26 8,319,031.64
Plant and property 8,343,112.90 24,081.26 8,319,031.64
Land use right -
Leasehold improvement
Net book value 121,076,399.25 -3,001,714.12 70,584.43 118,004,100.70
Plant and property 79,374,101.60 -2,290,259.08 70,584.43 77,013,258.09
Land use right 39,118,804.73 -625,338.60 38,493,466.13
Leasehold improvement 2,583,492.92 -86,116.44 2,497,376.48
The depreciation and amortization expenses amounted to 3,001,714.12.
The provision of impairment decreased 24,081.26 due to difference between foreign exchange rates of beginning
and ending of the reporting period.
The investment properties, with the net book value 38,870,223.60, were pledged to bank for raising borrowings
(details please referred to below 8. Commitment).
5.13 Fixed Assets
5.13.1 Summary
Opening Balance Addition/Increase Decrease Ending Balance
Initial costs of fixed
964,701,696.95 16,970,294.15 17,276,456.09 964,395,535.01
assets
Plant and property 385,600,860.07 452,894.80 971,102.97 385,082,651.90
Machinery 311,604,680.22 11,417,096.38 4532,707.79 318,489,068.81
Vehicle 11,095,764.18 394,010.26 10,701,753.92
Electronic equipment 2,763,845.54 118,133.40 18,581.40 2,863,397.54
Leasehold improvement 253,636,546.94 4,982,169.57 11,360,053.67 247,258,662.84
Other Charge for the
Additions period
Accumulated
695,183,553.38 146,799.91 14,841,460.02 15,963,423.33 694,208,389.98
depreciation
Plant and property 211,971,370.63 129,564.07 3,486,319.92 507,623.11 215,079,631.51
Machinery 245,375,662.40 618.78 6,018,818.44 4,084,685.72 247,310,413.90
Vehicle 7,129,369.23 13,755.36 437,738.97 347,870.10 7,232,993.46
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Opening Balance Addition/Increase Decrease Ending Balance
Electronic equipment 2,315,636.94 236.70 99,593.54 16,679.72 2,398,787.46
Others 228,391,514.18 2,625.00 4,798,989.15 11,006,564.68 222,186,563.65
Net book amount 269,518,143.57 270,187,145.03
Plant and property 173,629,489.44 170,003,020.39
Machinery 66,229,017.82 71,178,654.91
Vehicle 3,966,394.95 3,468,760.46
Electronic equipment 448,208.60 464,610.08
Others 25,245,032.76 25,072,099.19
Impairment provision 8,482,241.34 8,482,241.34
Plant and property 6,118,541.16 6,118,541.16
Machinery 2,239,862.87 2,239,862.87
Vehicle 48,170.70 48,170.70
Electronic equipment 37,818.61 37,818.61
Others 37,848.00 37,848.00
Net book value 261,035,902.23 261,704,903.69
Plant and property 167,510,948.28 163,884,479.23
Machinery 63,989,154.95 68,938,792.04
Vehicle 3,918,224.25 3,420,589.76
Electronic equipment 410,389.99 426,791.47
Others 25,207,184.76 25,034,251.19
The depreciation expenses amounted to RMB 14,841,460.02
The plants and properties, with the original value RMB 982,168.20, were transferred from construction in
progress.
Some of the plants and properties were pledged to bank for raising borrowings (details please referred to below 8.
Commitment).
5.13.2 There are no idle fixed assets at the balance sheet date.
5.13.3 There are no held-for-trade fixed assets at the balance sheet date.
5.13.4 Fixed Assets Whose Ownership Certificates Have Not Been Obtained
Net Book Value Reason Estimate Date to Obtain the Certificate
Plant and property 346,163.74 Certificates are in process
Total 346,163.74
5.14 Construction In Progress
Ending Balance Opening Balance
Carrying Amount Provision Carrying Value Carrying Amount Provision Carrying Value
Sewing
equipment 2,451,314.95 2,451,314.95 1,165,354.41 1,165,354.41
project
ERPproject 839,284.50 839,284.50 839,284.50 839,284.50
Shenbei
building 2,346,196.81 2,346,196.81 796,503.00 796,503.00
decoration
Total 5,636,796.26 5,636,796.26 2,801,141.91 2,801,141.91
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Movement of Significant Construction in Progress:
In which：
Capitalized
Input Capitalized
Transfer to Accumulated Interest for
Opening to Interest for Fund Closing
Budget Increase Fixed Decrease Progress Capitalized the
Balance Budget the Resource Balance
Assets Interest Reporting
(%) Reporting
Year (%)
Year
1,165,354.41 2,271,492.38 982,168.20 3,363.64 Self- 2,451,314.95
Sewing machinery
finance
839,284.50 Self- 839,284.50
ERP project
finance
Shenbei building
decoration-household 1,275,926.00 440,000.00 440,000.00 Raised 880,000.00
multifunctional fund
sewing machine
Shenbei building air
conditioner- 1,619,318.00 356,503.00 1,109,693.81 Raised 1,466,196.81
automatic sewing fund
unit
Total 2,801,141.91 3,821,186.19 982,168.20 3,363.64 5,636,796.26
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.15 Intangible Assets
5.15.1 Summary
Opening Balance Increase Decrease Closing Balance
Initial costs 145,549,703.50 1,326,346.80 274,718.90 146,601,331.40
Land use right 32,188,256.90 32,188,256.90
Brand 20,161,268.51 20,161,268.51
Software 76,000.00 76,000.00
Patents and non-patent
86,302,143.90 1,326,346.80 257,127.92 87,371,362.78
technologies
Others 6,822,034.19 17,590.98 6,804,443.21
Accumulated amortization 62,240,774.06 6,412,505.84 102,217.20 68,551,062.70
Land use right 8,740,684.29 601,355.94 9,342,040.23
Brand 20,161,268.51 20,161,268.51
Software 29,133.21 3,799.98 32,933.19
Patents and non-patent
27,160,756.98 5,178,857.24 86,424.42 32,253,189.80
technologies
Others 6,148,931.07 628,492.68 15,792.78 6,761,630.97
Net carrying amount 83,308,929.44 -5,086,159.04 172,501.70 78,050,268.70
Land use right 23,447,572.61 -601,355.94 22,846,216.67
Brand
Software 46,866.79 -3,799.98 43,066.81
Patents and non-patent
59,141,386.92 -3,852,510.44 170,703.50 55,118,172.98
technologies
Others 673,103.12 -628,492.68 1,798.20 42,812.24
Impairment
Land use right
Brand
Software
Patents and non-patent
technologies
Others
Net carrying value 83,308,929.44 -5,086,159.04 172,501.70 78,050,268.70
Land use right 23,447,572.61 -601,355.94 22,846,216.67
Brand
Software 46,866.79 -3,799.98 43,066.81
Patents and know-how 59,141,386.92 -3,852,510.44 170,703.50 55,118,172.98
Others 673,103.12 -628,492.68 1,798.20 42,812.24
The amortization expenses amounted to RMB 6,412,505.84
The intangible assets, with the net book value RMB 4,288,096.48, were pledged to bank for raising borrowings
(details please referred to below 8. Commitment).
5.15.2 Development Costs
Transfer-out
Opening Balance Addition Ending Balance
Through Profit or Loss Recognized as Assets
Development
39,082,899.68 9,252,015.63 10,021,480.32 38,313,434.99
costs
Total 39,082,899.68 9,252,015.63 10,021,480.32 38,313,434.99
Opening and ending balances represent the development costs of ShangGong (Europe) Holding Corp. GmbH.
5.16 Goodwill
Nature Opening Balance Increase Decrease Ending Balance Impairment
PFAFF Industriesysteme
7,440,086.27 21,474.79 7,418,611.48
und Maschinen AG
KSL GmbH 62,215,050.53 179,575.21 62,035,475.32
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KSE GmbH 5,818,874.36 16,795.38 5,802,078.98
KSA GmbH 2,736,130.88 7,897.47 2,728,233.41
Beisler 24,445,768.96 12,737.60 24,458,506.56 3,819,543.00
Total 102,655,911.00 12,737.60 225,742.85 102,442,905.75 3,819,543.00
The increase and decrease mainly represents the translation differences of financial statements of ShangGong
(Europe) Holding Corp. GmbH.
5.17 Long-term Unamortized Expenses
Opening Other Ending Reasons for Other
Item Increase Amortization
Balance Decrease Balance Decrease
Mailbox
33,000.00 3,300.00 29,700.00
rental
5.18 Deferred Tax Assets And Liabilities
5.18.1 Recognized Deferred Tax Assets and Liabilities
Ending Balance Opening Balance
Deferred tax assets
Provision for impairment 9,266,540.89 3,407,604.05
Deductible losses for the tax purpose 88,879.25 87,382.12
Others-provision for pension 30,941,886.16 31,031,454.18
Subtotal 40,297,306.30 34,526,440.35
Deferred tax liabilities
Appreciation of assets evaluation 48,413,499.95 48,987,892.64
Others 461,881.13 463,218.15
Subtotal 48,875,381.08 49,451,110.79
5.18.2 Details about Taxable Differences and Deductible Differences
Item Amount
Taxable differences
Appreciation of assets evaluation 152,201,421.50
Others 1,442,026.63
Subtotal 153,643,448.13
Deductible differences
Provision for impairment 30,981,466.25
Deductible losses for the tax purpose 277,487.51
Others-provision for pension 96,602,829.10
Subtotal 127,861,782.86
5.19 Impairment
Decrease
Opening Balance Increase Ending Balance
Reversal Written-off
Bad debt provision 156,587,806.16 5,034,528.87 758,378.08 160,863,956.95
Inventory
obsolescence 111,613,203.58 521,261.51 744,803.33 745,679.24 110,643,982.52
provision
Impairment for
long-term equity 22,207,792.17 22,207,792.17
investment
Impairment for
8,343,112.90 24,081.26 8,319,031.64
investment property
Impairment for
8,482,241.34 8,482,241.34
fixed assets
Impairment for
3,747,061.50 72,481.50 3,819,543.00
goodwill
Total 310,981,217.65 5,628,271.88 744,803.33 1,528,138.58 314,336,547.62
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The written-off of bad debt provision is due to the difference between foreign exchange rates of beginning and
ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period.
Among the written-off of inventory obsolescence provision, the amount of RMB 279,018.91 is due to the
difference between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH
in this reporting period.
Among the decrease of impairment for investment property, the amount of RMB24,081.26 is due to the difference
between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH in this
reporting period.
The increase of impairment for goodwill is due to the difference between foreign exchange rates of beginning and
ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period
5.20 Short-term Loans
5.20.1 Summary
Ending Balance Opening Balance
Mortgage loans 87,872,325.92 155,351,063.11
Secured loans 57,083,280.00 66,600,000.00
Credit loans 348,148.62 348,148.62
Total 145,303,754.54 222,299,211.73
5.20.2 The Company mortgaged some assets to the banks for loan of RMB 87,872,324.92. (details referred to
below 8. Commitment).
5.20.3 The Company raised secured loans amounting to RMB 57,083,280.00 in the reporting period (details
referred to below 8. Commitment).
5.21 Notes Payable
Ending Balance Opening Balance
Commercial acceptance bills 6,225,975.90
Total 6,225,975.90
The amount due of Notes payable in the following accounting period is zero.
5.22 Accounts Payable
Ending Balance Opening Balance
Payables to suppliers 127,447,375.28 126,210,705.10
Total 127,447,375.28 126,210,705.10
There are no payables to those shareholders who hold 5% or more voting shares in ShangGong Group.
Payables to related parties at the balance sheet date are referred to below 6.5 Related Party Transactions.
There are no payables whose aging is over one year at the balance sheet date.
5.23 Receipts In Advance
Ending Balance Opening Balance
Purchase payment 38,655,929.18 32,726,923.09
Total 38,655,929.18 32,726,923.09
There are no receipts from those shareholders who hold 5% or more voting shares in ShangGong Group, nor from
related parties at the balance sheet date.
There are no payables whose aging is over one year at the balance sheet date.
5.24 Employee Benefits Payable
Opening Balance Increase Decrease Ending Balance
Salary, bonus, allowance and
49,503,198.21 213,663,395.13 211,250,992.84 51,915,600.50
subsidies
Employee welfare 529.00 46,272,515.47 46,272,515.47 529.00
Social securities 65,489.20 7,286,806.49 7,276,951.29 75,344.40
Included: Medical insurance 20,532.40 2,287,062.88 2,284,929.68 22,665.60
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Compulsory social
39,337.20 4,366,496.74 4,359,323.34 46,510.60
insurance
Annuity
Unemployment insurance 2,809.80 311,453.20 310,993.30 3,269.70
Injury insurance 936.60 126,848.77 126,819.17 966.20
Maternity insurance 1,873.20 194,944.90 194,885.80 1,932.30
Housing funds 1,347,641.50 1,347,641.50
Labor union fees 384,759.63 383,716.03 1,043.60
Staff education fees 473,871.26 469,044.56 4,826.70
Release pay 73,011.00 73,011.00
Others 18,545.40 18,545.40
Total 49,569,216.41 269,520,545.88 267,092,418.09 51,997,344.20
There are no delinquent staff pays at the balance sheet date.
5.25 Taxes Payable
Ending Balance Opening Balance
Value added tax 1,289,019.57 378,801.36
Business tax 172,065.18 72,341.42
Corporate income tax 40,793,190.35 27,685,987.47
Individual income tax 631,173.23 3,722,971.59
City construction tax 40,808.89 24,834.16
Property tax 4,214.40
Education surcharge 45,410.74 24,457.25
Riverway management charges 10,272.25 2,622.77
Total 42,981,940.21 31,916,230.42
Overseas subsidiaries adopt applicable tax rates regulated in their host countries.
5.26 Dividends Payable
Ending Balance Opening Balance Reason For Unpaid Over One Year
Light Industrial Holding Group
959,269.79 959,269.79 Unable to pay due to long ageing
Co.,Ltd
Privately-owned corporate shares 73,549.07 73,549.07 Unable to pay due to long ageing
Total 1,032,818.86 1,032,818.86
5.27 Other Payables
Ending Balance Opening Balance
Total 139,349,092.19 147,128,355.33
There are no payables to those shareholders who hold 5% or more voting shares in ShangGong Group.
Payables to related parties at the balance sheet date are referred to below 6.5 Related Party Transactions.
5.28 Contingent liabilities
Opening Balance Increase Decrease Ending Balance
Pension 315,489,788.98 8,952,981.85 306,536,807.13
Others 8,293,480.19 251,955.64 8,041,524.55
Total 323,783,269.17 9,204,937.49 314,578,331.68
Provision for pensions is charged by ShangGong (Europe) Holding Corp. GmbH, according to amended
IAS19-Employees benefits.
5.29 Non-current Liabilities Due within One Year
Item Ending Balance Opening Balance
Long-term loans due within one year 520,000.00 520,000.00
Bonds payable due within one year
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Long-term payable due within one year
Total 520,000.00 520,000.00
5.30 Other Current Liabilities
Ending Balance Opening Balance
Interest and rentals 3,397.29 1,123,775.74
Special fund for development of local brand 500,000.00 500,000.00
Total 503,397.29 1,623,775.74
The opening and closing balances of interest and rentals represent the interest and rental incomes received in
advance by ShangGong (Europe) Holding Corp. GmbH, which will be recognized in the income statement in the
following periods.
Encouraged by the circle HJXF[2012] No.765 promulgated by the Shanghai Economic Information Committee,
ShangGong Group received special fund amounting to RMB 500,000.00 regarding development of local brand in
the previous period. The fund constitutes a government grant. ShangGong Group will use the fund under the
instruction regulated by theMeasures of Speed-up of the construction of independent brands of special funds
managementand recognize the deferred revenue considering the progress of use of fund.
5.31 Long-term Loans
Ending Balance Opening Balance
Mortgage loans 77,513,168.41 79,185,196.65
Credit loans 1,489,984.87 1,489,984.87
Total 79,003,153.28 80,675,181.52
ShangGong (Europe) Holding Corp. GmbH, raised mortgage loans by pledging its own fixed assets in the
reporting period (details referred to below 8. Commitment).
5.32 Long-term Payables
Ending Balance Opening Balance
SAP franchise fee 1,281,037.95
Final payment to KSL 44,026,394.71 43,180,068.66
Other 5,705,911.35 1,781,265.15
Total 51,013,344.01 44,961,333.81
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5.33 Shares
Increase/(Decrease)
Opening Balance Ending Balance
New Issues Bonus Issues Transfer from Surplus Reserves Other Subtotal
A. Restricted shares
State-owned shares
State-owned corporate shares 42,302,823.00 42,302,823.00 42,302,823.00
Shares owned by domestic
57,400,000.00 57,400,000.00 57,400,000.00
investors
in which:
Shares owned by entities 57,400,000.00 57,400,000.00 57,400,000.00
Shares owned by individuals
Shares owned by foreign
investors
in which:
Shares owned by entities
Shares owned by individuals
Subtotal 9,702,823.00 9,702,823.00 9,702,823.00
B. Free floating shares
Ordinary shares in RMB 204,943,027.00 204,943,027.00
Floating A shares 243,943,750.00 243,943,750.00
Floating B shares
Others
Subtotal 448,886,777.00 448,886,777.00
Total 448,886,777.00 99,702,823.00 99,702,823.00 548,589,600.00
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5.34 Capital Surplus
Opening Balance Increase Decrease Ending Balance
Share premium 313,159,549.73 538,505,407.98 851,664,957.71
Changes in fair value 10,373,499.03 11,216,011.94 21,589,510.97
in which: Available for sale 10,373,499.03 11,216,011.94 21,589,510.97
financial assets
Others 74,118,574.45 1,924,258.32 72,194,316.13
Total 397,651,623.21 549,721,419.92 1,924,258.32 945,448,784.81
The increase of share premium is due to the non-public issuance of RMB ordinary shares (A Share) in the
reporting period. The quantity is 99,702,823 shares which nominal value is RMB 1. Its issue price is RMB 6.73.
The issuance expense is RMB 32,791,767.81.
5.35 Surplus Reserves
Opening Balance Increase Decrease Ending Balance
Statutory surplus reserves 2,273,121.26 2,273,121.26
Discretionary surplus reserves 2,273,121.26 2,273,121.26
Total 4,546,242.52 4,546,242.52
5.36 Retained Earnings
Balance Appropriation
Retained earnings as at December 31, 2013 -2,996,568.99
Plus: Net profit attributed to shareholders of parent company 41,854,215.80
Retained earnings as at June 30, 2014 38,857,646.81
5.37 Revenues and Costs
5.37.1 Summary
Current Period Prior Period
Sales 945,170,208.40 844,638,849.00
Other incomes 24,719,958.63 26,784,416.72
Cost of sales 661,303,736.20 606,814,372.70
5.37.2 Revenues and Costs by Industry
Current Peroid Prior Period
Sales Cost of Sales Sales Cost of Sales
Manufacturing 804,616,129.39 512,626,251.87 683,851,262.78 441,913,661.90
Trading 138,078,065.37 134,983,016.70 158,851,396.20 154,304,033.94
Others 2,476,013.64 637,125.76 1,936,190.02 59,835.46
Total 945,170,208.40 648,246,394.33 844,638,849.00 596,277,531.30
5.37.3 Revenues and Costs by Product
Current Period Prior Period
Sales Cost of Sales Sales Cost of Sales
Sewing machine 758,165,170.26 472,316,173.27 631,337,295.48 396,111,939.88
Export agent 138,078,065.37 134,983,016.70 158,851,396.20 154,304,033.94
Office supplies and Film equipment 46,450,959.13 40,310,078.60 52,513,967.30 45,801,722.02
Others 2,476,013.64 637,125.76 1,936,190.02 59,835.46
Total 945,170,208.40 648,246,394.33 844,638,849.00 596,277,531.30
5.37.4 Revenues and Costs by Region
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Current Period Prior Period
Sales Cost of Sales Sales Cost of Sales
Domestic 397,189,456.19 348,048,236.05 409,262,058.59 365,699,989.85
Abroad 609,890,630.29 362,088,036.36 482,832,208.59 278,032,959.63
Less: elimination of intra-group sales 61,909,878.08 61,909,878.08 47,455,418.18 47,455,418.18
Total 945,170,208.40 648,246,394.33 844,638,849.00 596,277,531.30
Overseas and domestics locations represent the places in which the sales offices are located.
5.37.5 Sales to the Top Five Biggest Customers
Sales % of total
Customer A 40,035,873.13 4.13
Customer B 19,447,527.20 2.01
Customer C 18,463,623.11 1.90
Customer D 18,458,374.98 1.90
Customer E 16,788,324.00 1.73
Total 113,193,722.42 11.67
5.38 Sales Tax and Surcharges
Current Period Prior Period Tax Rate
Business tax 746,354.42 831,791.05 5%、7%
City construction tax 227,719.48 338,804.24 7%、1%
Education surcharge 195,641.65 261,839.93 3%、2%
Others 1,191,086.52 1,251,419.78
Total 2,360,802.07 2,683,855.00
5.39 Selling Expenses
Current Period Prior Period
Payroll expense 50,816,387.04 38,997,353.97
Fix and after-sale service 7,051,749.67 7,355,193.11
Office expense 1,554,464.89 430,775.81
Travelling expenses 6,650,362.56 5,299,250.64
Transportation expenses 9,115,711.32 6,721,859.03
Advertising expenses 2,539,824.71 1,163,050.95
Commission 9,908,944.45 8,860,788.09
Rental 3,069,168.81 2,684,603.40
Insurance 840,634.26 666,243.76
Packing expenses 2,896.28 7,370.00
Meeting 772,388.16 680,378.97
Depreciation 409,679.11 313,575.00
Exhibition 508,986.71 611,076.12
Water and electric expenses 8,459.44 6,382.19
Unloading expenses 10,985.29 355,048.40
Sample, printing and scraps 5,103,474.71 3,512,737.02
Other 11,593,863.35 10,828,885.56
Total 109,957,980.76 88,494,572.02
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5.40 General and Administrative Expenses
Current Period Prior Period
Payroll expenses 49,473,405.36 45,032,100.33
Office expenses 1,746,903.79 1,550,214.00
Water and electric 250,481.32 341,968.61
Entertainment 873,422.13 832,521.58
Asset insurance 1,298,558.19 1,054,399.71
Meeting 177,038.43 450,955.26
Travelling 2,724,606.10 1,893,774.77
Depreciation 3,120,149.11 4,609,242.77
Fix 116,127.26 28,918.46
Transportation 462,556.21 675,019.44
Rental 3,729,543.15 3,080,491.81
Board and supervision meeting 213,738.28 86,456.47
Advisory expenses 4,866,294.61 6,537,805.81
Lawsuit 213,982.23 68,971.50
Research and development 28,412,862.30 26,637,899.76
Tax 388,121.21 330,556.99
Amortization of intangible assets 1,237,786.80 1,253,758.48
Other 2,855,302.70 4,355,607.09
Total 102,160,879.18 98,820,662.84
5.41 Finance Expenses
Current Period Prior Period
Interest expenses 11,476,827.50 9,838,114.99
Less: interest income 2,664,823.98 1,733,887.72
Exchange gains 512,275.69 1,462,778.71
Others 797,900.71 1,151,958.97
Total 10,122,179.92 10,718,964.95
5.42 Gains/(losses) From Fluctuation of Fair Value
Current Period Prior Period
Held for trading financial assets -13,426.44 -80,413.50
Held for trading financial liabilities
Investment property at fair value
Total -13,426.44 -80,413.50
5.43 Investment Incomes
5.43.1 Summary
Current Period Prior Period
Investment incomes using cost method 11,355,235.97 13,039,034.64
Investment losses using equity method 34,509.38 -1,156,806.53
Gains on disposal of long-term equity investment
Gains on Trading financial assets
Gains/(losses) on disposal of held for trading financial assets -11,546.99
Gains on disposal of available-for-sale financial assets
Total 11,389,745.35 11,870,681.12
5.43.2 Investment Incomes Using Cost Method
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Investee Current Period Prior Period Comments
Shanghai Fuji-Xerox Co.,Ltd. 9,869,408.00 11,314,034.64 Decrease in cash dividends
Shanghai Huanzhong Commercial Co., Ltd 455,479.45 875,000.00 Decrease in cash dividends
Shanghai Hirose Precision Industrial
850,000.00 850,000.00
Co.,Ltd.
Bank of Shanghai Co.,Ltd. 177,109.68 Increase in cash dividends
Shenyin & Wanguo Securities Co.,Ltd. 3,238.84 Increase in cash dividends
Total 11,355,235.97 13,039,034.64
5.43.3 Investment Incomes under Equity Method
Investee Current Period Prior Period Comments
Durkopp Adler Sewing Machines
34,509.38 -1,241,395.18 Profits incurred
Suzhou Co., Ltd
Total 34,509.38 -1,241,395.18
5.43.4 There is no significant restriction of funds remittance.
5.44 Impairment
Current Period Prior Period
Bad debt provision/(reversal) 5,034,528.87 -4,305,890.21
Inventory obsolescence provision -223,541.82 3,716,645.54
Impairment on long-term equity investment
Impairment on investment property
Impairment for fixed assets
Impairment for goodwill
Total 4,810,987.05 -589,244.67
5.45 Non-operating income
5.45.1 Summary
Current Period Prior Period Through Profit or Loss
Gains from disposal of non-current assets 472,023.73 66,039.12 472,023.73
In Which:
Gains from disposal of fixed assets 472,023.73 66,039.12 472,023.73
Gains from disposal of intangible assets
Gains from debts restructuring
Government grants 149,000.00 218,790.00 149,000.00
Penalty revenue 82,500.00
Others 20.00 74,244.00 20.00
Total 621,043.73 441,573.12 621,043.73
5.45.2 Government Grants Breakdown
Current Period Prior Period Comments
Enterprise employees training funds 140,790.00
Enterprise finance allowance funds 149,000.00 78,000.00
Total 149,000.00 218,790.00
5.46 Non-operating Expense
Current Period Prior Period Through Profit or Loss
Losses from disposal of non-current assets 207,013.43 66,661.06 207,013.43
In Which:
Losses from disposal of fixed assets 207,013.43 66,661.06 207,013.43
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Losses from disposal of intangible assets
Donation 200,000.00 250,000.00 200,000.00
In Which:
Public welfare donation 200,000.00 250,000.00 200,000.00
Penalties and fines 187.57 187.57
Compensation
Others 6,565.50 6,565.50
Total 413,766.50 316,661.06 413,766.50
5.47 Corporate Income Taxes
Current Period Prior Period
Corporate income tax expense 31,140,048.30 6,240,848.77
Deferred tax -5,166,717.52 18,731,687.10
Total 25,973,330.78 24,972,535.87
5.48 Basic Earnings Per Share (EPS) and Diluted EPS
Basic EPS
Basic EPS = P0/S
S = S0 + S1 + Si*Mi/M0 - Sj*Mj/M0 - Sk
In which:
P0 - net profits attributable to ordinary shareholders (or after deducting extraordinary profits);
S - weighted average number of ordinary shares issued;
S0 - opening shares;
S1 - additional shares due to transfer from surplus reserves or bonuses issues;
Si - additional shares due to new issues or debt for stock swap;
Sj - buy-back shares;
Sk - reverse shares;
M0 - number of months in the reporting year;
Mi - accumulated number of months since the next month shares are increased;
Mj - accumulated number of months since the next month shares are decreased.
Diluted EPS
Diluted EPS = P1/(S0 + S1 + Si*Mi/M0 - Sj*Mj/M0–Sk + stock warrants + share options + transfer from
convertible debentures)
In which:
P1 - net profits attributable to ordinary shareholders (or after deducting extraordinary profits), considering the
dilution effectto potential ordinary shares under the CAS. When the diluted EPS is calculated, effects are
considered to the net profits and weighted average shares until the diluted EPS reaches a minimum.
Calculation of Basic EPS and Diluted EPS
Basic EPS represents the consolidated profits contributed to the ordinary shareholders divided by floated
ordinary shares.
Current Period Prior Period
Consolidated profits contributed to the ordinary shareholders 41,854,215.80 30,674,302.78
Average floated ordinary shares 498,738,188.50 448,886,777.00
Basic EPS (RMB/Share) 0.0839 0.0683
The calculation of average floated ordinary shares is as follows:
Current Period Prior Period
Opening numbers of floated ordinary shares 448,886,777.00 448,886,777.00
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Add：Issued floated ordinary shares in the current year 49,851,411.50
Less：Purchase back of floated ordinary shares
Ending numbers of floated ordinary shares 498,738,188.50 448,886,777.00
Diluted EPS represents the adjusted consolidated profits contributed to the ordinary shareholders divided by
adjusted floated ordinary shares.
Current Period Prior Period
Consolidated profits contributed to the ordinary shareholders (diluted) 41,854,215.80 30,674,302.78
Average floated ordinary shares (diluted) 498,738,188.50 448,886,777.00
Diluted EPS (RMB/Share) 0.0839 0.0683
The calculation of average diluted floated ordinary shares is as follows:
Current Period Prior Period
Ending numbers of floated ordinary shares 498,738,188.50 448,886,777.00
Influence of convertible debentures
Influence of share options
Ending numbers of floated ordinary shares (diluted) 498,738,188.50 448,886,777.00
Note 1: In the reporting year, there are no those potential ordinary shares that have dilutibililty but will be
diluted in future.
Note 2: During the period between the balance sheet date and issuance date of financial statements, there are
no significant changes in numbers of floated or potential ordinary shares.
5.49 Other Comprehensive Incomes
Current Period Prior Period
A. Gains/(losses) on disposal of available for sale financial assets 11,216,011.94 -4,773,737.54
B. Interest in investees' comprehensive incomes using equity method -1,951,031.90 -6,053,086.92
Less: Transfer from the retained earnings
Subtotal -1,951,031.90 -6,053,086.92
C. Gains/(losses) on hedging
D. Translation differences of financial statements -1,080,347.56 -11,083,149.64
E. Others
Total 8,184,632.48 -21,909,974.10
5.50 Cash Flow Statements
Cash Flows Related to Operating Activities
Current Period
Receipt of receivables 2,192,892.33
Receipt of subsidies and grants 149,000.00
Receipt of interest income 2,664,823.98
Receipt of non-operating income
Other
Total 5,006,716.31
Cash Outflows Related to Operating Activities
Current Period
Settlement of payables and payment of commissions 2,151,537.15
Payment of selling expenses 36,760,316.58
Payment of general and administration expenses 23,415,581.18
Payment of non-operating expenses 206,753.07
Payment of bank charges and other expenses 797,900.71
Total 63,332,088.69
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Cash Outflows Related to Investing Activities
Current Period
Payment to the acquisition of PFAFF (Taicang) 29,246,702.07
Total 29,246,702.07
Cash Inflows Related to Financing Activities
Current Period
Release of deposits L/C guarantee 712,000.00
Total 712,000.00
Cash Outflows Related to Financing Activities
Current Period
Non-public issuing and its related expense 436,702.82
Mortgage and pledge (e.g. certificate of term deposit, security deposit) 210,295.85
Total 646,998.67
5.51 Supplementary Information of Cash Flow Statement
5.51.1 Indirect Method
Item Current Period Prior Period
Net profits converted into cash flow from operating activities
Net profits 64,783,867.21 51,422,726.69
Add:
Provision for assets impairment 4,810,987.05 -589,244.67
Depreciation of fixed assets, of oil/gas assets and productive biological
17,217,835.54 14,865,121.77
assets
Amortization of intangible assets 7,037,844.44 3,911,446.48
Amortization of long-term deferred expenses 3,300.00
Losses/(gains) on scrapping of fixed assets -265,010.30 621.94
Losses/(gains) on scrapped fixed assets
Losses/(gains) on changes in fair value 13,426.44 80,413.50
Financial expense 10,964,551.81 11,300,893.70
Investment loss/(income) -11,389,745.35 -11,870,681.12
Decrease/ (increase) in deferred income tax assets -3,153,605.22 6,678,577.23
Increase/ (decrease) in deferred income tax liabilities -575,729.71 16,545,232.18
Decrease/(increase) in inventories -72,884,572.01 -78,046,851.37
Decrease/(increase) in operational receivables -55,392,061.55 -101,301,974.35
Increase/(decrease) in operational payables 20,082,138.24 55,429,341.88
Others
Net cash flows generated from operating activities -18,746,773.41 -31,574,376.14
Investing and financing activities that do not involve cash receipts and
payments
Debt converted into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
Net increase in cash and cash equivalents
Cash at the end of the period 468,643,384.99 413,709,715.92
Less: Cash at the beginning of the period 446,063,638.27 461,395,048.30
Add: Cash equivalents at the end of the period
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents 22,579,746.72 -47,685,332.38
5.51.2 Composition of Cash and Cash Equivalents
Item Ending Balance Opening Balance
Cash 468,643,384.99 446,063,638.27
Cash on hand 1,301,536.68 964,625.06
Bank deposit immediately available for payment 397,838,156.82 437,864,547.08
Other monetary fund immediately available for payment 69,503,691.49 7,234,466.13
Cash equivalents
Ending balance of cash and cash equivalents 468,643,384.99 446,063,638.27
Cash and cash equivalents do not comprise those funds whose restricted periods are over 3 months in the parent
company or other subsidiaries in the group.
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6. Related Parties and Related-party Transactions
6.1 Holding Entity (Expressed in RMB Ten Thousand)
Registered Legal Registered Voting Ultimate Holding Organization
Item Relationship Type Business Scope Sharing%
Address Representative Capital Share% Entity Code
State-owned State-owned
Assets assets State-owned
Supervision management Assets Supervision
and under the and
Administration Holding entity Shanghai Sun Tong delegation of 19.21 19.21 Administration 00245606-0
Commission in the Shanghai Commission in
Shanghai Pudong New Shanghai Pudong
Pudong New District New District.
District. Government
6.2 Subsidiaries (Expressed in RMB Ten Thousand)
Voting Organisation
Type Registered Address Legal Representative Business Registered Capital Sharing%
Share% Code
Durkopp Adler
Limited Import and export of
Trading Shanghai Controlled Shanghai Zhang Min USD600 60.00 86.00 78627462-7
company sewing machinery
Co.,Ltd.
Shanghai
Shuangchong Limited
Controlled Shanghai Chen Changbao Sewing machinery 1,200 70.00 90.00 63132496-8
Sewing Machines company
Co.,Ltd.
Shanghai One-person
Shanggong Wholly company with
Shanghai Zhou Yongqiang Sewing machinery 7,900 100.00 100.00 74809363-0
Butterfly Sewing -owned limited
Machines Co.,Ltd liability
Shanghai Wholly Non-company Shanghai Jiang Yanhai Sewing machinery 465 100.00 100.00 13224151-9
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Industrial Sewing -owned
Machines
Materials General
Co.,Ltd
ShangGong
Wholly Limited
(Europe) Holding Germany Zhang Min Sewing machinery EUR 1,250 100.00 100.00 -
-owned company
Corp. GmbH
SMPIC Imp. & Wholly Limited
Shanghai Li Jiaming Import and export 1,200 100.00 100.00 72951976-3
Exp. Co., Ltd. -owned company
Shanghai SGSB
Wholly Limited
Asset-management Shanghai Zhang Shihe Asset management 500 100.00 100.00 56803204-8
-owned company
Co.,Ltd.
Shanghai
Shanggong
Wholly Limited
SMPIC Shanghai Wang Jie Electronic devices 2,000 100.00 100.00 06931449-7
-owned company
Electronics Co.,
Ltd.
Shanghai Fengjian Wholly Limited
Shanghai Jin Wei Property management 50 100.00 100.00 63023173-5
Property Co., Ltd. -owned company
6.3 Joint Ventures and Affiliates (Expressed in RMB Ten Thousand)
Registered Legal Registered Sharing Voting Organization
Investee Type Business Relationship
Address Representative Capital % Share% Code
Affiliate
Production of spares of
Changshu Qixing Limited
Changshu Wang Mujiong numbering and coating 280.00 90.00 Note 1 Affiliate 14204429-5
Elec-plating Co., Ltd. company
machines
Shanghai Huazhijie Plastic Limited Production of chemical
Shanghai Dai Siwei USD764 23.04 Note 1 Affiliate 60734921-7
Co., Ltd. company products
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Durkopp Adler Sewing Limited Jiangsu
Pu Weiping Sewing machines USD750 49.00 49.00 Affiliate 57141865-4
Machines Suzhou Co., Ltd company Province
Pfaff Industrial Iberica Limited Sales of industrial sewing
Spain Cornelia Mast EUR29.19 49.00 Note 2 Affiliate
S.A.U. company machines
Note 1: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. had completed the cancellation of tax registration.
Note 2: Pfaff, the subsidiary of ShangGong (Europe) Holding Corp. GmbH, does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights.
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6.4 Related Parties
Relationship Organization Code
Shanghai Hirose Precision Industrial Co.,Ltd. Investee 60742796-7
Shanghai Fuji-Xerox Co.,Ltd. Investee 60720953-X
6.5 Related Party Transactions
6.5.1 Related party transactions between those subsidiaries have been eliminated in the consolidated financial
statements.
6.5.2 Purchase/Service Received
Current Period Prior Period
Pricing
Amount % Amount %
Purchase
Durkopp Adler Sewing
of sewing Agreed-upon prices 14,298,553.25 2.21 13,775,914.16 2.27
Machines Suzhou Co., Ltd
machines
6.5.3 Sales/Service Rendered
Current Period Prior Period
Pricing
Amount % Amount %
Shanghai Fuji-Xerox Agreed-upon
Sale of goods 18,463,623.11 1.95 19,872,985.45 2.28
Co., Ltd. prices
Durkopp Adler Sewing
Agreed-upon
Machines Suzhou Co., Sale of goods 7,599,612.94 0.80 2,206,711.09 0.25
prices
Ltd
6.5.4 Receivables and Payables
Receivables from Related Parties
Ending Balance Opening Balance
Related Parties Carrying
Carrying Amount Provision Provision
Amount
Accounts
receivable
Shanghai Fuji-Xerox Co.,Ltd. 3,952,429.35 197,621.47 3,844,604.48 192,230.22
Durkopp Adler Sewing Machines Suzhou Co., Ltd 15,440,332.29 5,644,808.75 6,651,377.03 2,119,609.62
Shanghai Shuangchong Sewing Machines Co.,Ltd. 3,267,586.72 163,379.34 3,267,586.72 163,379.34
Other
receivables
Shanghai Shuangchong Sewing Machines Co.,Ltd. 13,988,201.28 1,896,111.77 13,988,201.28 1,896,111.77
Payables to Related Parties
Related Parties Ending Balance Opening Balance
Notes payable
Durkopp Adler Sewing Machines Suzhou Co., Ltd 6,225,975.90
Accounts payable
Durkopp Adler Sewing Machines Suzhou Co., Ltd 9,078,981.85 8,325,289.73
Other payables
Shanghai Industrial Sewing Machines Materials General Co.,Ltd 3,578,389.56 3,578,389.56
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
6.5.5 Rentals
Pricing Rentals
Lesser Lessee Assets Type From To
Basis Recognized
Mar Mar
ShangGong
Shanghai Hirose Precision Industrial Co., Ltd. Machinery 11 11 Agreement 250,000.00
Group
2011 2016
7. Contingencies
7.1 Unsettled Lawsuit And Arbitration And the Effect on the Financial Statements
There are no such issues in the reporting period.
7.2 Contingent Liabilities Resulting From Guarantees And Effects on Financial Statements
7.2.1 Guarantees to ShangGong (Europe) Holding Corp. GmbH as of 30 June 2014
Effect to
Guaranteed Type of Obligation
Guaranteed Company Period financial
amount (000) guarantee discharged
statements
Written Able to settle
ShangGong (Europe) 30 June 2005 to
USD 5,300 guarantee No and no adverse
Holding Corp. GmbH 31 Oct 2015
confirmation effect
Written Able to settle
Bank of Communicaitons 30 July 2013 to
RMB 80,000 guarantee No and no adverse
Xuhui Branch 29 July 2014
confirmation effect
Written Able to settle
30 July 2013 to
Commerzbank AG EUR 5,550 guarantee No and no adverse
29 Nov 2015
confirmation effect
Written Able to settle
Commerzbank AG 25 Mar 2014 to
RMB70,000 guarantee No and no adverse
Shanghai Branch 24 Mar 2015
confirmation effect
In Year 2005, the Company provided to the Kugelfischer GmbH (FAG) with a guarantee, which was limited to
USD 5.3 million, on the property rent of a subsidiary of the DA Germany Company (DA), the subsidiary of
ShangGong (Europe) Holding Corp. GmbH. The term of guarantee is from 30 June 2005 to 31 October 2015.
Moreover, the ShangGong (Europe) Holding Corp. GmbH provided FAG with a same length term guarantee on 30
June 2005. Cash amounting to EUR 635,000 was used as the mortgage. Such guarantee was provided on FAGs
re-insurance that is on DAs insurance given on a leaseback transaction between a USA subsidiary and UTF
Norcross L.L.C. Details refer to 8.1.2.
On July 30, 2013, the company used 80 million RMB as collateral for a one-year loan in euro that ShangGong
(Europe) Holding Corp. GmbH applied in Bank of Communications Frankfurt Branch, in the method of financing
guarantee issued by Bank of Communications Xuhui Branch. The borrowing limit cannot exceed the equivalent
amount of 80 million RMB. In the meanwhile, the company used 4 million RMB as security deposit and an
industrial real estate located at No. 603 Dapu Rd, Shanghai as mortgage to Bank of Communications Xuhui
Branch in exchange for the financing guarantee.
ShangGong (Europe) Holding Corp. GmbH used 1.2 million shares of Duerkopp Adler AG as collateral for 5.55
million euro bank guarantee which was issued by Commerzbank Germany. The term is two years and four months.
The purpose is to guarantee that ShangGong (Europe) Holding Corp. GmbH would pay the second-period share
purchase price to the vendor of KSL Keilmann Sondermaschinenbau GmbH.
On March 25, 2014, the company used RMB 70 million as collateral for a one-year loan in euro that ShangGong
(Europe) Holding Corp. GmbH applied in Commerzbank Germany Bielefeld Branch, in the method of financing
guarantee issued by Commerzbank Germany Shanghai Branch. The borrowing limit cannot exceed the equivalent
amount of RMB 70 million.
As of 30 June 2014, there is no cash outflow regarding such above guarantee.
8. Commitments
8.1 Significant Commitments
8.1.1 Signed Contracts/Agreements to be Complete/ Not Fully Completed
There are no such contracts in the reporting period, including investment contracts, outsourcing contracts, rental
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contracts, and merger and acquisition contracts.
8.1.2 Other Significant Commitment
8.1.2.1 Credit Loans or Mortgage Loans
Mortgages/Collaterals Purpose Principal Borrower
Rome 1201A-D, 1701-B-2, 1500,
Bank loans mortgage ShangGong Group
Century Avenue
Real estate on 603, Dapu Road Bank loans mortgage ShangGong Group
EUR ShangGong (Europe) Holding Corp.
Real estate on 603, Dapu Road Bank loans mortgage
9,000,000 GmbH
ShangGong (Europe) Holding Corp.
Bank deposit EUR 69,830,000 Security deposit
GmbH
ShangGong (Europe) Holding Corp.
Bank deposit EUR 32,720,000 Security deposit
GmbH
Account receivables valued at ShangGong (Europe) Holding Corp.
Security deposit -
EUR,35,770,000 GmbH
Fix assets valued at EURO Credit line security EUR ShangGong (Europe) Holding Corp.
1,585,360,000 deposit 10,700,000 GmbH
1.2 million shares of DA AG held
ShangGong (Europe) Holding Corp.
by ShangGong (Europe) Holding Guarantee
GmbH
Corp. GmbH
8.1.2.2 Guarantees Provided for Related Parties or Other Companies as of 30 June 2014
In the reporting period, the company provided certain assets as a counter-guarantee for the bank loans of Shanghai
Pudong Development (Group) Co., Ltd. Such assets include total shares in Shanghai Shanggong Butterfly Sewing
Machines Co., Ltd, 80% shares in Shanghai Shanggong Butterfly Import & Export Co., Ltd which was held by
Shanghai Shanggong Butterfly Sewing Machines Co., Ltd and the real estate (No. 190 Huyi Road) which is
owned by the company. The maximum guarantee line amounted to RMB 115,600,000. The term of guarantee is
from 9 June 2012 to 8 June 2018. By the balance sheet date, the company has withdrawn 80% shares in Shanghai
Shanggong Butterfly Import & Export Co., Ltd as pledge; the amount of the guarantee reduced RMB 41,860,000.
Actual accumulated loan is RMB0.
8.2 There are no any disclosures on the discharge of previous commitment.
9. Subsequent Events
9.1 Significant Subsequent Event
None
9.2 Distribution of Dividends
According to the decision in the fifteenth board meeting (7th round) on 28 August 2014, no dividends will
be distributed.
9.3 Other Events
None
10. Other Significant Issues
Assets and Liabilities at Fair Value
Fluctuation of Fair Value
Opening Attributed to Profit Ending
Attributed To Impairment
Balance or Loss for Current Balance
Equity
Period
Financial assets
Financial assets at fair
value whose fluctuation
277,479.87 -13,426.44 264,053.43
is attributed to profit or
loss for current period
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Available for sale assets 85,012,121.56 11,216,011.94 96,228,133.50
Subtotal 85,289,601.43 -13,426.44 11,216,011.94 96,492,186.93
Total 85,289,601.43 -13,426.44 11,216,011.94 96,492,186.93
Financial liabilities
11. Notes to Major Accounts on the Financial Statements of Parent Company
11.1 Accounts Receivable
11.1.1 Summary
Ending Balance Opening Balance
Carrying Amount Bad Debt Provision Carrying Amount Bad Debt Provision
% % % %
Individual
items with
significant
balances
Items as a
collective 86,951,839.24 100.00 79,764,628.23 91.73 86,965,274.21 100.00 79,703,121.45 91.65
group
Other
insignificant
items
Total 86,951,839.24 100.00 79,764,628.23 91.73 86,965,274.21 100.00 79,703,121.45 91.65
There were no individual items with significant balances at the balance sheet date.
For those items as a collective group, an aging analysis is used as follows:
Ending Balance Opening Balance
Ageing Carrying Amount Bad Debt Carrying Amount Bad Debt
% Provision % Provision
Within one year 7,251,574.67 8.34 362,578.74 7,098,343.96 8.16 354,917.20
1-2 years 351,069.22 0.40 70,213.84 563,911.70 0.65 112,782.34
2-3 years 34,719.40 0.04 17,359.70 135,193.28 0.16 67,596.64
Over 3 years 79,314,475.95 91.22 79,314,475.95 79,167,825.27 91.03 79,167,825.27
Total 86,951,839.24 100.00 79,764,628.23 86,965,274.21 100.00 79,703,121.45
There were no individual items with insignificant balances at the balance sheet date.
11.1.2 There were no write-off of accounts receivables in the reporting period.
11.1.3 There were no receivables from shareholders or related parties who hold 5% or more voting shares at the
balance sheet date.
11.1.4 Top Five Biggest Customers
Relationship Carrying Amount Ageing % of Total
Customer A Non-related party 11,530,775.39 Over three years 13.26
Customer B Non-related party 7,480,189.67 Over three years 8.60
Customer C Non-related party 7,234,606.86 Over three years 8.32
Customer D Non-related party 4,679,327.49 Over three years 5.38
Customer E Related party 3,267,586.72 Within one year 3.76
Total 34,192,486.13 39.32
11.1.5 Receivables From Related Parties
Relationship Carrying Amount % of Total
Shanghai Shuangchong Sewing Machines Co., Ltd. Subsidiary 3,267,586.72 3.76
Durkopp Adler Manufacturing (Shanghai) Co., Ltd., Sub-subsidiary 1,795,394.94 2.06
Shanghai Shanggong Butterfly Sewing Machines Co., Ltd Subsidiary 734,478.90 0.84
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11.2 Other Receivables
11.2.1 Summary
Ending Balance Opening Balance
Carrying Amount Bad Debt Provision Carrying Amount Bad Debt Provision
% % % %
Individual
items with
45,646,966.93 41.19 39,673,787.55 86.91 39,016,125.39 36.21 39,016,125.39 100.00
significant
balances
Items as a
collective 65,171,155.00 58.81 19,503,277.17 29.93 68,740,120.72 63.79 19,683,459.95 28.63
group
Other
insignificant
items
Total 110,818,121.93 100.00 59,177,064.72 53.40 107,756,246.11 100.00 58,699,585.34 54.47
Those receivables necessary to be provided for on an individual basis include：
Carrying Amount Bad Debt Provision Provision % Comment
Customer A 34,804,415.13 28,831,235.75 82.84 Impaired through individual test
Customer D 10,842,551.80 10,842,551.80 100.00 Impaired through individual test
Total 45,646,966.93 39,673,787.55
For those items as a collective group, an ageing analysis is used as follows:
Ending Balance Opening Balance
Carrying Amount Bad Debt Carrying Amount Bad Debt
% Provision % Provision
Within one year 47,835,280.62 73.40 2,391,764.04 51,403,246.34 74.79 2,570,162.32
1-2 years 263,021.87 0.41 52,604.37 257,021.87 0.37 51,404.37
2-3 years 27,887.50 0.04 13,943.75 35,918.50 0.05 17,959.25
Over 3 years 17,044,965.01 26.15 17,044,965.01 17,043,934.01 24.79 17,043,934.01
Total 65,171,155.00 100.00 19,503,277.17 68,740,120.72 100.00 19,683,459.95
There were no individual items with insignificant balances at the balance sheet date.
11.2.2 There were no receivables from shareholders or related parties who hold 5% or more voting shares at the
balance sheet date.
11.2.3
11.2.4 Top Five Biggest Customers
Relationship Carrying Amount Ageing % of Total Nature
Customer A Related party 34,804,415.13 Up to three years 31.41 General receivables
Customer B Related party 20,086,211.86 One to three years 18.13 General receivables
Customer C Related party 13,551,348.76 Within one year and over three years 12.23 General receivables
Customer D Non-related party 10,842,551.80 Over three years 9.78 General receivables
Customer E Related party 3,511,740.97 One to two year 3.17 General receivables
Total 82,784,527.55 74.72
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11.2.5 Receivables from Related Parties
Relationship Carrying Amount % of Total
Shanghai SGSB Asset-management Co.,Ltd Subsidiary 34,804,415.13 31.41
Durkopp Adler Manufacturing (Shanghai) Co., Ltd., Sub-subsidiary 20,086,211.86 18.13
Shanghai Shuangchong Sewing Machines Co.,Ltd. Subsidiary 13,551,348.76 12.23
SMPIC Imp. & Exp. Co., Ltd. Subsidiary 4,763,695.17 4.30
ShangGong (Europe) Holding Corp. GmbH. Subsidiary 3,511,740.97 3.17
Pfaff Industrial Sewing Machine Taicang Co., Ltd. Sub-subsidiary 3,500,000.00 3.16
Shanghai ButterflyImp & Exp Co., Ltd Sub-subsidiary 697,458.00 0.63
Shanghai Shanggong Imp & Exp Co., Ltd Sub-subsidiary 641,402.02 0.58
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
11.3 Long-term Equity Investment
Comments
Where
Provision Impairment
Increase Voting Sharing
Investee Initial Cost Opening Balance Ending Balance Sharing for Loss for Dividends
/(Decrease) Share% Differs
Impairment This Year
Voting
Shares
Affiliate
Changshu Qixing Elec-plating Equity
2,520,000.00 90.00 Note 1
Co., Ltd. method
Shanghai Huazhijie Plastic Co., Equity
1,766,689.38 736,283.66 736,283.66 23.04 Note 1 736,283.66
Ltd. method
Subtotal 4,286,689.38 736,283.66 736,283.66 736,283.66
Subsidiary
Durkopp Adler Trading Shanghai Cost
24,403,443.11 24,403,443.11 24,403,443.11 60.00 86.00
Co.,Ltd. method
Shanghai Industrial Sewing
Cost
Machines Materials General 4,600,000.00 4,600,000.00 4,600,000.00 100.00 100.00 1,037,794.98
method
Co.,Ltd
Shanghai Shuangchong Sewing Cost
8,400,000.00 8,400,000.00 8,400,000.00 70.00 90.00 8,400,000.00
Machines Co.,Ltd. method
Shanghai Shanggong Butterfly Cost
79,000,000.00 79,000,000.00 79,000,000.00 100.00 100.00
Sewing Machines Co.,Ltd method
ShangGong (Europe) Holding Cost
142,370,693.64 142,370,693.64 142,370,693.64 100.00 100.00
Corp. GmbH method
Cost
SMPIC Imp. & Exp. Co., Ltd. 12,000,000.00 12,000,000.00 12,000,000.00 100.00 100.00
method
Shanghai SGSB Cost
5,000,000.00 5,000,000.00 5,000,000.00 100.00 100.00 5,000,000.00
Asset-management Co.,Ltd. method
Shanghai Shanggong SMPIC Cost
20,000,000.00 20,000,000.00 20,000,000.00 100.00 100.00
Electronics Co., Ltd. method
Shanghai Fengjian Property Co., Cost
500,000.00 100.00 100.00
Ltd. method
Other Investees
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shanghai Xingguang Underwear Cost
308,033.99 308,033.99 308,033.99 14.30 14.30 308,033.99
(South Africa) method
Shanghai Shensy Enterprises Cost
10,593,077.64 10,593,077.64 10,593,077.64 10.59 10.59
Development Co., Ltd method
Wuxi Shanggong Sewing Cost
153,814.26 153,814.26 153,814.26 80.00 80.00 153,814.26
Machines Co., Ltd method
Shanghai Hualian Sewing Cost
400,000.00 400,000.00 400,000.00 21.74 Note 2
Machinery Co., Ltd. method
Cost
Shanghai Fuji-Xerox Co., Ltd. 29,140,749.49 29,140,749.49 29,140,749.49 15.92 15.92 9,869,408.00
method
Shanghai Baoding Investment Cost
7,500.00 7,500.00 7,500.00 <5 <5
Co., Ltd. method
Cost
Bank of Shanghai Co., Ltd. 951,400.00 951,400.00 951,400.00 <5 <5 177,109.68
method
China Perfect Machinery Co., Cost
90,000.00 90,000.00 90,000.00 <5 <5
Ltd. method
Shenyin & Wanguo Securities Cost
200,000.00 200,000.00 200,000.00 <5 <5 3,238.84
Co., Ltd. method
Shanghai Hirose Precision Cost
2,840,376.00 30.00 Note 2 85,000.00
Industrial Co.,Ltd. method
Subtotal 340,959,088.13 337,618,712.13 337,618,712.13 14,899,643.23 10,899,756.52
Total 345,245,777.51 338,354,995.79 338,354,995.79 15,635,926.89 10,899,756.52
Note 1: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. had completed the cancellation of tax registration.
Note2: The company does not participate into the strategic decision making of Shanghai Hualian Sewing Machinery Co., Ltd. And Shanghai Hirose Precision Industrial Co.,
Ltd. and therefore does not exert significant influences on the investees. Cost method is used to measure the investment.
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11.4 Sales and Cost of Sales
11.4.1 Summary
Current Period Prior Period
Sales 14,908,693.94 52,526,546.02
Other Incomes 12,311,310.84 17,221,098.15
Cost of Sales 16,793,787.06 49,958,633.47
Revenues and Costs by Industry
Current Period Prior Period
Sales Cost of Sales Sales Cost of Sales
Manufacturing 14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
Total 14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
11.4.2 Revenues and Costs by Product
Current Period Prior Period
Sales Cost of Sales Sales Cost of Sales
Office Supplies and
14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
Film Equipment
Total 14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
11.4.3 Revenues and Costs by Region
Current Period Prior Period
Sales Cost of Sales Sales Cost of Sales
Domestic Business 14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
Total 14,908,693.94 13,458,020.87 52,526,546.02 45,845,346.54
11.4.4 Sales to the Top Five Biggest Customers
Sales % of Total
Customer A 2,710,866.22 9.96
Customer B 1,340,100.00 4.92
Customer C 1,157,851.11 4.25
Customer D 1,125,509.00 4.13
Customer E 969,018.78 3.56
Total 7,303,345.11 26.82
11.5 Investment Incomes
11.5.1 Summary
Current Period Prior Period
Investment incomes using cost method 11,355,235.97 13,039,034.64
Gains/(losses) on disposal of long-term equity investment
Gains on trading financial assets
Gains on held for trading financial assets
Gains on disposal of Available-for-sale financial assets
Total 11,355,235.97 13,039,034.64
There is no significant restriction of funds remittance.
11.5.2 Investment Incomes Using Cost Method
Investee Current Period Prior Period Comments of Fluctuation
Shanghai Fuji-Xerox Co.,Ltd. 9,869,408.00 11,314,034.64 Decrease in dividends
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shanghai Huanzhong Commercial Co., Ltd 455,479.45 875,000.00 Decrease in dividends
Shanghai Hirose Precision Industrial Co.,Ltd. 850,000.00 850,000.00
Bank of Shanghai Co.,Ltd. 177,109.68 Increase in dividends
Senyin & Wanguo Securities Co., Ltd 3,238.84 Increase in dividends
Total 11,355,235.97 13,039,034.64
11.5.3 Investment Incomes under Equity Method
There was no investment income under equity method.
11.6 Supplementary Information of Cash Flow Statement
Current Period Prior Period
Net profits converted into cash flow from operating activities
Net profits 2,228,780.01 5,539,662.36
Add:
Provision for assets impairment 45,229.14 -942,101.96
Depreciation of fixed assets, of oil/gas assets and productive biological
3,263,761.13
assets 3,716,186.58
Amortization of intangible assets 1,226,694.54 1,242,666.22
Losses/(gains) on disposal of fixed assets -34,028.83 33,929.07
Losses/(gains) from fluctuation in fair value 13,426.44 47,609.50
Financial expense 2,385,792.31 3,512,420.86
Investment loss/(income) -11,355,235.97 -13,039,034.64
Decrease/(increase) in inventories -1,673,539.98 -2,823,915.91
Decrease/(increase) in operating receivables 2,431,879.69 8,307,960.07
Increase/(decrease) in operating payables -13,331,386.78 20,413,907.14
Net cash flows generated from operating activities -14,798,628.30 26,009,289.29
Investing and financing activities that do not involve cash receipts and
payments
Debt converted into capital
Convertible bonds to be expired within one year
Fixed assets under finance lease
Net increase in cash and cash equivalents
Cash at the end of the period 75,425,124.66 38,135,560.86
Less: Cash at the beginning of the period 88,304,869.24 43,545,254.69
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the period
Net increase in cash and cash equivalents -12,879,744.58 -5,409,693.83
12. Supplementary Information
12.1 Extraordinary Profit or Loss
Current Period Comments
Gains on disposal of non-current assets 265,010.30
Government grants through profit or loss 149,000.00
Gains on fluctuation of fair values of held for trading financial assets and
liabilities and gains on disposal of held for trading financial assets and -13,426.44
liabilities and available for sale financial assets
Other non-operating incomes and expenses, net -206,733.07
Effect on corporate tax income -27,765.13
Net effect on non-controlling interest -103,155.71
Total 62,929.95
12.2 Rate of Return on Equity (ROE) and Earnings Per Share (EPS)
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Weighted EPS
Net Profits Average ROE
Basic Diluted
(%)
Net profit attributable to ordinary shareholders 3.6846 0.0839 0.0839
Net profit attributable to common shareholders after non-current
3.6791 0.0838 0.0838
profit/loss
12.3 Abnormal Situations of Financial Statements and Explanation of Reason
Opening
Accounts Closing Balance Fluctuation% Comments
Balance
Mainly due to bill acceptance in
Notes receivable 2,307,430.01 3,320,697.28 -30.51
current period
Dividends receivable 12,734,735.09 2,881,577.53 341.94 Dividend paid by Fuji Xerox
Mainly due to decrease in stock
Other receivables 41,465,146.32 60,130,306.48 -31.04 issuance cost during the reporting
period
Mainly due to purchase short-period
structured deposits from bank with
Other current assets 539,034,806.53 64,405,666.67 736.94
guaranteed principal to increase
capital gains.
Mainly due to increase in investment
Construction in
5,636,796.26 2,801,141.91 101.23 of sewing equipment engineering
progress
during the reporting period
Mainly due to decrease in domestic
Short-term loans 145,303,754.54 222,299,211.73 -34.64 short-term loans with high capital
cost.
Commercial acceptance bills due in
Notes payable 0 6,225,975.90 -100.00
the reporting period
Mainly due to increase in EIT due to
Tax payable 42,981,940.21 31,916,230.42 34.67
more profits
Mainly due to increase in the write-off
Other current
503,397.29 1,623,775.74 -69.00 of interest and rent expense of
liabilities
overseas subsidiaries
Mainly due to premium by non-public
Capital reserve 945,448,784.81 397,651,623.21 137.76
issuance
Retained earnings 38,857,646.81 -2,996,568.99 1,396.74 Increase in profits
Mainly due to increase in bad-debt
Impairment 4,810,987.05 -589,244.67 916.47
provision for accounts receivables
Net gain/(loss) from
Mainly due to increase in fair values
fluctuation in fair -13,426.44 -80,413.50 83.30
of held-for-trading financial assets
values
Non-operating Mainly due to increase in gains on
621,043.73 441,573.12 40.64
income disposal of fixed assets
Non-operating Mainly due to increase in losses on
413,766.50 316,661.06 30.67
expenses disposal of fixed assets
Mainly due to fluctuation in fair
values of Available-for-sale financial
Other comprehensive
8,184,632.48 -21,909,974.10 137.36 assets and increase in the translation
incomes
differences of foreign currency
financial statements
13. Authorization of the Publication of Financial Statements
The above financial statements have been authorized by the fifteenth board meeting (7th round) on August 28,
2014 to be submitted to the related authorities and the public.
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Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
X. References
1. Semi-Annual Report with signature of the Chairman of BOD;
2. Financial statements signed by the legal person representative, Director in charge of accounting affairs and
chief accountant;
3. All the original documents and announcements carried in the newspaper authorized by China Securities
Regulatory Commission within report period.
Chairman of BOD: Zhang Min
Shang Gong Group Co., Ltd.
August 28, 2014
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