Shang Gong Group Co., Ltd.
Semi-Annual Report 2016
上工申贝（集团）股份有限公司
Important Notes
Shang Gong Group Co., Ltd
Important Notes
1. The Board of Directors, the Board of Supervisors, and all the directors, supervisors, and senior managers
guarantee that there are no false statement, vital misunderstandings or important omissions in this report,
and hold both individual and joint liability for the authenticity, accuracy and integrity of its contents.
2. All the members of the Board of Directors attended the Board Meeting of Shang Gong Group Co., Ltd.
3. This semi-annual financial report of the Company was not audited.
4. Zhang Min, Chairman of the Company, Li Jiaming, the principal in charge of the accounting, and Zhao
Lixin, Chief of Accounting Affairs, make the pledge for the authenticity and integrity of the attached
financial statements.
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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CONTENTS
Chapter 1 Definition ........................................................................................................................................ 4
Chapter 2 Company Profile ............................................................................................................................. 5
Chapter 3 Accounting Data and Financial Index Highlights ........................................................................... 6
Chapter 4 Report by the Board of Directors.................................................................................................... 7
Chapter 5 Important Events........................................................................................................................... 19
Chapter 6 Changes in Share Capital and Shareholder Status ........................................................................ 22
Chapter 7 Relevant Situation about Preferred Shares ................................................................................... 23
Chapter 8 Director, Supervisor, Officer and Employee Status ...................................................................... 23
Chapter 9 Relevant Situation about Corporate Bond .................................................................................... 23
Chapter 10 Financial Report ......................................................................................................................... 24
Chapter 11 For References ............................................................................................................................ 85
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上工申贝（集团）股份有限公司
Definition
Shang Gong Group Co., Ltd
Chapter 1 Definition
As used in this Report, the following terms have the following meanings unless the context requires
otherwise:
Definition of common terms
ShangGong Group, the
Refer to Shang Gong Group Co., Ltd
Company
Shanghai Pudong New Area State-owned Assets Supervision and
Pudong SASAC Refers to
Administration Commission, the main shareholder and actual controller
ShangGong Europe, SGE Refer to ShangGong (Europe) Holding Corp. GmbH
Dürkopp Adler AG, a German listed company, ShangGong Europe holding
DA AG Refers to
approx. 94.01% of its stock rights
PFAFF GmbH Refers to PFAFF Industriesysteme und Maschinen GmbH
KSL GmbH Refers to KSL Keilmann Sondermaschinenbau GmbH
KSL and its affiliated KSL Keilmann Sondermaschinenbau GmbH, KSE GmbH,
Refer to
companies KSA Verwaltungs GmbH, and KSA GmbH & Co. KG
DAP Shanghai Refers to DAP (Shanghai) Co., Ltd
SHENSY Refers to Shanghai Shensy Enterprise Development Co., Ltd
Shanggong Butterfly Refers to Shanghai Shanggong Butterfly Sewing Machine Co., Ltd.
SG & GEMSY Refers to Zhejiang SG & GEMSY Sewing Technology Co., Ltd.
Stoll KG Refers to H. Stoll AG & KG
CSRC Refers to China Securities Regulatory Commission
SSE Refers to Shanghai Stock Exchange
Report Period Refers to From January1, 2016 to June 30,2016
Articles of Association Refers to The Articles of Association of Shang Gong Group Co., Ltd.
Company Law Refers to Company Law of the Peoples Republic of China
Securities Law Refers to Securities Law of the Peoples Republic of China
RMB Refers to The lawful currency of China
EUR Refers to The lawful currency of the European Union
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上工申贝（集团）股份有限公司
Company Profile
Shang Gong Group Co., Ltd
Chapter 2 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 information
Secretary of Board of Directors Representative of Securities Affairs
Name Zhang Jianguo Shen Lijie
Address No.1566 New Jinqiao Road, Pudong New Area, Shanghai No.1566 New Jinqiao Road, Pudong New Area, Shanghai
Telephone 021-68407515 021-68407700
Fax 021-63302939 021-63302939
Email zhangjianguo@sgsbgroup.com shenlj@sgsbgroup.com
3. Basic situation introduction
Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue,
Registered Address
China (Shanghai) Pilot Free Trade Zone
Postal Code of Registered Address 200122
Office address No.1566 New Jinqiao Road, Pudong New Area, Shanghai
Postal Code of Office address 201206
Website http://www.sgsbgroup.com
Email sgsb@sgsbgroup.com
4. Information disclosure and place for consulting
Name of newspaper selected by the Company for information
Shanghai Securities News; Hong Kong Commercial Daily
release
Website appointed by CSRC for publishing semi-annual report http://www.sse.com.cn
Lodging address of semi-annual report of the Company Office of the Company
5. Corporate stock
Introduction to Companys Stock
Type of Stock Stock Exchange Stock Abbreviation Stock Code Stock Abbreviation before Change
A Share Shanghai Stock Exchange SGSB 600843
B Share Shanghai Stock Exchange SGBG 900924
6. Registration modification information
Registration date April 13, 2016
Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, China (Shanghai)
Registration place
Pilot Free Trade Zone
Enterprise unified social credit code 91310000132210544K
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上工申贝（集团）股份有限公司
Accounting Data and Financial Index Highlights
Shang Gong Group Co., Ltd
Chapter 3 Accounting Data and Financial Index Highlights
1. The Company’s main accounting data and financial index
(1) Main accounting data
Unit: Yuan, Currency: RMB
Increase or decrease in
This Report Period Same period in the
Main accounting data this Report Period over the
(from January to June) previous year
previous year (%)
Operating income 1,359,342,529.45 1,039,062,089.09 30.82
Net profit attributed to shareholders 101,164,717.70 100,341,086.85 0.82
Net profit attributed to shareholders after
95,925,846.84 90,696,688.83 5.77
non-recurrent account profit/loss
Net cash flow from operating activities -45,943,085.71 -8,407,210.31 Inapplicable
Increase or decrease at the
At the end of this Report At the end of the
end of this Report Period
Period previous year
over the previous year (%)
Net assets attributed to shareholders 1,864,209,688.74 1,774,674,087.49 5.05
Total assets 3,409,534,677.67 3,146,701,717.06 8.35
(2) Main financial data
Increase or decrease in
This Report Period Same period in the this Report Period over
Main financial data
(from January to June) previous year the same period in the
previous year (%)
Basic earnings per share (yuan/share) 0.1844 0.1829 0.82
Diluted earnings per share (yuan/share) 0.1844 0.1829 0.82
Basic EPS after non-recurrent account profit/loss
0.1749 0.1653 5.81
(yuan/share)
Weighted rate of return on net assets (%) 5.5425 6.0951 Decrease 0.55 percent
Weighted average return on net assets after
5.2555 5.5093 Decrease 0.25 percent
non-recurrent account profit/loss (%)
2. Items and amount of non-recurring profit and loss
Unit: Yuan, Currency: RMB
Items and amount of non-recurring profit and loss Amount
Profits and losses from disposal of non-current assets -557,934.71
Government subsidies recorded in the current profit and loss 4,973,690.84
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 liabilities, and investment income 2,956,194.83
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 -57,067.79
Impact on minority interests -1,350,348.82
Impact on income tax -725,663.49
Total 5,238,870.86
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上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
Chapter 4 Report by the Board of Directors
1. Discussion and analysis by the Board regarding the operation of the Company during report
period
In the first half of 2016, the international environment is still complicated and grim. The world economic
recovery is less than expected. Influenced by events such as Brexit, the uncertainty of the world economy is
increasing. From a domestic perspective, Chinas economy continues to maintain the overall-smooth,
steady-progress development trend in the first half of 2016. China's economy is at a critical stage of
structural adjustment, transformation and upgrading, the labor pains continue in the adjustment.
In the first half of 2016, the domestic and international market growth momentum of Chinas sewing
machinery industry is weak. The production and sales continued to decline, and revenue declined slightly.
Export was in modest recovery while innovation and upgrading was accelerating. The sales of smart
products were great. And some efficiency indicators increased as well. In general, the economic downturn
of the industry has slowed down. The industry economy maintains stable and may have hit bottom. Data
from the National Bureau of Statistics show that the industrial added value of enterprises above designated
size in China's sewing machinery industry increased by 3% in the first half of 2016, three percentage points
lower than the national industrial added value growth rate over the same period. According to the China
Sewing Machinery Association, from January to June 2016, the production of sewing machine of top 100
enterprises in the industry is 23.574 million sets, reduced by 13.11% comparing to the first half of 2015; the
sales volume is 24.876 million sets, decreased by 13.78; sales income realized is RMB 8,211 million,
declined by 3.37%.
In this context, with the effort of the Companys managers and staff, in the Report Period, ShangGong
Group realized operating income of RMB 1,359.34 million, rose by 30.82%; the Company realized
operating profit of RMB 155.18 million, increased by 12.35%; net profit attributable to shareholders of the
listed company totaled RMB 101.16 million, increased by 0.82%; net profit attributable to shareholders of
the listed company after deducting non-recurring gains and losses increased by 5.77. Subsidiaries at home
and abroad of the Company operated stably in the Report Period.
According to the operating plan of 2016, the Company mainly implemented the following work:
(1) Actively explore the market reform, seek opportunities for industrial chain expansion
In the first half of 2016, the Company actively explored the market reform measures and sought
opportunities to expand the company's industry. In the Report Period, the Company provided support to
Pudong SASAC, the controlling shareholder/actual controller of the Company, on transferring shares of the
Company. Up to now, this issue is still in process. Moreover in the first half of 2016, the Companys stock
was suspended from trading due to planning major asset reorganization. The Company put much effort on
the reorganization about overseas asset merger and acquisition. The Company carried out multi round
negotiations with the parties to the transaction, but failed to reach an agreement on key provisions within
the prescribed time. Finally, the Company's board of directors terminated the reorganization.
(2) Build domestic manufacturing bases, develop made-in-China ability
In order to achieve the Companys strategic objectives -- accelerate domestic manufacturing base
construction during the 13th five-year plan, in the Report Period, the Company completed the
reorganization of DA Suzhou and PFAFF Taicang, and relocated to Zhangjiagang base. The Company is
making effort to build the Zhangjiagang base into a thick-material machine production base. In addition,
through several months of running after establishment, SG & GEMSY has basically been on the right track.
In the Report Period, SG & GEMSY realized operating income of approx. RMB 92.52 million, and
achieved a little profit.
(3) Continue to promote internal integration, enhance the profitability of the parent company
In the Report Period, the Company continued to promote internal integration. According to changes in the
market, the Company has made adjustments to the organization and other aspects. In order to integrate the
Company's resources, reduce management costs, improve operational efficiency, the Company began to
carry out the merger of SG Butterfly, the Companys wholly-owned subsidiary. It is of benefit to optimize
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上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
the management structure of the Company. In this way the parent company will have profitable business in
China, directly control sales, and become a profit centre. It helps to solve the problem that the parent
company cannot distribute profit for a long time as the undistributed profit is negative, so that the Company
could better return the shareholders of the listed company.
1.1 Analysis on main business
1.1.1 Analysis on Change of Relevant Items in Financial Statements
Unit: Yuan, Currency: RMB
Item Current period Previous period Variable proportion (%)
Operating income 1,359,342,529.45 1,039,062,089.09 30.82
Operating cost 954,500,289.41 701,662,230.84 36.03
Sales expenses 124,035,260.82 113,957,035.76 8.84
Administration expense 131,096,375.43 100,450,384.67 30.51
Financial expenses 10,089,517.50 4,949,996.23 103.83
Net cash flow from operating activities -45,943,085.71 -8,407,210.31 -446.47
Net cash flow from investing activities -155,320,334.25 145,227,247.78 -206.95
Net cash flow from financing activities 35,222,499.79 -93,121,196.84 137.82
Research and development expenditures 32,046,934.73 22,386,716.12 43.15
Reasons for changes in operating income: mainly caused by the increase of enterprises and months
incorporated into the scope of consolidation comparing to the same period last year.
Reasons for changes in operating cost: mainly caused by the increase of enterprises and months
incorporated into the scope of consolidation comparing to the same period last year.
Reasons for changes in sales expenses: mainly caused by the increase of sales expenses led by the increase
of sales revenue of SGE comparing to the same period last year.
Reasons for changes in administration expense: mainly caused by the increase of enterprises and months
incorporated into the scope of consolidation comparing to the same period last year.
Reasons for changes in financial expenses: mainly caused by the increase of exchange loss comparing to
the same period last year.
Reasons for changes in net cash flow from operating activities: mainly caused by business model
characteristics and market share expansion by the holding subsidiaries in China in the Report Period.
Reasons for changes in net cash flow from investing activities: mainly caused by investing in 26% equity of
Stoll KG by SGE and the decrease of cash received from disposal of fixed assets comparing to the same
period last year.
Reasons for changes in net cash flow from financing activities: mainly caused by the increase of bank loan
and the decrease of cash paid in dividend distribution.
Reasons for changes in research and development expenditures: mainly caused by the increase of R&D
expenditures spent in automatic sewing unit by SGE.
(1) Large change of items in the balance sheet of the Company at the end of Report Period and reasons
Unit: Yuan, Currency: RMB
Increase/decrease
Item June 30, 2016 December 31, 2015 Increase/decrease Reason
(%)
Prepayments 39,544,224.85 27,058,587.15 12,485,637.70 46.14 Note 1
Long-term equity
249,884,481.94 - 249,884,481.94 Inapplicable Note 2
investments
Construction in
32,542,606.21 24,088,386.74 8,454,219.47 35.10 Note 3
process
Long-term deferred
888,271.73 579,474.57 308,797.16 53.29 Note 4
expenses
Other current
863,079.88 319,502.32 543,577.56 170.13 Note 5
liabilities
Long-term loan 79,353,328.43 29,374,120.87 49,979,207.56 170.15 Note 6
Long-term accounts
74,338,217.87 4,724,683.15 69,613,534.72 1473.40 Note 7
payable
Note 1: Mainly caused by prepayment increase of SHENSY in Report Period.
Note 2: Caused by investing in 26% equity of Stoll KG by ShangGong Europe in the Report Period.
Note 3: Mainly caused by the increase of investment in sewing equipment project and manufacturing base
construction.
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Report by the Board of Directors
Shang Gong Group Co., Ltd
Note 4: Mainly caused by the increase of cost of moulds of subsidiaries in the Report Period.
Note 5: Mainly caused by the increase of interest and rental fees of subsidiaries overseas in the Report
Period.
Note 6: Mainly caused by the increase of long-term loan of SGE in the Report Period.
Note 7: Mainly caused by the increase of unpaid balance payment according to the agreement of investing
in Stoll KG through SGE in the Report Period.
(2) Large change of items in the income statement of the Company in Report Period and reasons
Unit: Yuan, Currency: RMB
Same period in the Increase/
Item Report period Increase/decrease Reason
previous year decrease (%)
Operating income 1,359,342,529.45 1,039,062,089.09 320,280,440.36 30.82 Note 1
Operating cost 954,500,289.41 701,662,230.84 252,838,058.57 36.03 Note 2
Business taxes and surcharges 4,180,944.00 3,119,612.56 1,061,331.44 34.02 Note 3
General and administration expense 131,096,375.43 100,450,384.67 30,645,990.76 30.51 Note 4
Financial expenses 10,089,517.50 4,949,996.23 5,139,521.27 103.83 Note 5
Losses from asset impairment -1,574,549.62 -2,815,816.88 1,241,267.26 44.08 Note 6
non-operating expenses 3,300,707.74 334,406.84 2,966,300.90 887.03 Note 7
Minority interest 12,993,109.73 9,471,015.73 3,522,094.00 37.19 Note 8
Net of tax of other comprehensive
-21,624,435.26 22,964,056.08 -44,588,491.34 -194.17 Note 9
income
Note 1: Mainly caused by the increase of enterprises and months incorporated into the scope of
consolidation comparing to the same period last year.
Note 2: Mainly caused by the increase of enterprises and months incorporated into the scope of
consolidation comparing to the same period last year.
Note 3: Mainly caused by the increase of enterprises and months incorporated into the scope of
consolidation comparing to the same period last year.
Note 4: Mainly caused by the increase of enterprises and months incorporated into the scope of
consolidation comparing to the same period last year.
Note 5: Mainly caused by the increase of exchange loss comparing to the same period last year.
Note 6: Mainly caused by increase of provision for bad debts of accounts receivable and he decrease of
Provisions for decline in inventory.
Note 7: Mainly caused by the increase of loss on disposal of fixed assets.
Note 8: Mainly caused by the change of consolidation period of SHENSY which was incorporated into the
scope of consolidation in May 2015.
Note 9: Mainly caused by the decrease of changes in the fair value of available-for-sale financial assets and
the increase of translation difference of foreign currency financial statements comparing to the same period
last year.
(3) Large change of items in the statement of cash flows of the Company in Report Period and reasons
Unit: Yuan, Currency: RMB
Same period in the Increase/decrease
Item Report period Increase/decrease Reason
previous year (%)
Net cash flows from
-45,943,085.71 -8,407,210.31 -37,535,875.40 -446.47 Note 1
operating activities
Net cash flows from
-155,320,334.25 145,227,247.78 -300,547,582.03 -206.95 Note 2
investing activities
Net cash flows from
35,222,499.79 -93,121,196.84 128,343,696.63 137.82 Note 3
financing activities
Effect of fluctuation in
exchange rate on cash 15,358,918.84 -24,238,194.98 39,597,113.82 163.37 Note 4
and cash equivalents
Note 1: Mainly caused by business model characteristics and market share expansion by the holding
subsidiaries in China in the Report Period.
Note 2: Mainly caused by investing in 26% equity of Stoll KG by SGE and the decrease of cash received
from disposal of fixed assets comparing to the same period last year.
Note 3: Mainly caused by the increase of bank loan and the decrease of cash paid in dividend distribution.
Note 4: Mainly caused by the change of euro exchange rate.
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上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
1.1.2 Others
(1) Detailed description of major changes of profit composition or profit source
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.
(2) Analysis and description on the earlier-stage implementation progress of various financing and major
asset restructuring events of the Company.
The 2013 third temporary 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, 2014, the actual offering amount was 99,702,823 shares, the offering price was RMB 6.73
Yuan/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. Refer to Special report on
the storage and actual use of the funds raised (From January 1, 2016 to June 30, 2016) which is published
on Shanghai Stock Exchange Website for details.
(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.
1.2 Analysis on operation by industry, products or region
1.2.1 Principal operating activities by industry
Unit: Yuan, Currency: RMB
Main business by industries
Operating
Operating cost Gross margin
Gross margin income
Industry Operating income Operating cost Increase/ Increase/
(%) Increase/
decrease (%) decrease (%)
decrease (%)
Sewing Increase 0.64
817,409,862.43 471,904,502.94 42.27 14.50 13.25
equipment percent
Logistics Decrease 3.69
331,071,742.92 299,358,373.64 9.58 223.15 236.88
service percent
Increase 0.8
Export trade 120,525,022.03 117,698,791.94 2.34 -15.28 -15.97
percent
Office
Decrease 1.28
Equipment and 36,505,321.97 31,158,290.55 14.65 -22.87 -21.69
percent
film material
Decrease 10.49
Others 8,740,169.41 4,438,266.34 49.22 37.02 72.71
percent
Decrease 2.39
Total 1,314,252,118.76 924,558,225.41 29.65 29.83 34.39
percent
1.2.2 Principal operating activities by regions.
Unit: Yuan, Currency: RMB
Increase / decrease of operating income over
Region Operating revenue
the previous year (%)
Domestic 765,711,781.25 47.03
Overseas 655,747,866.63 11.28
1.3 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 DA AG in 2005, one of the famous sewing machine manufacturing
companies 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 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
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Report by the Board of Directors
Shang Gong Group Co., Ltd
the Company. In the Report Period, the Company invested in Stoll KG which expand the Companys
industrial chain and supplement the Companys business and product. Meanwhile, the Company invested in
SG & GEMSY in China. The manufacturing capacity is enhanced in China. During the report period, the
Company started the merger of SG Butterfly, a wholly owned subsidiary of the Company, which will
improve the Company's management efficiency, reduce the management level, and optimize the Company's
management organization. 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.
During the Report Period, the Company continued to promote the integration of global resources and
accelerate the construction of manufacturing base in China. The Companys core competitiveness kept on
strengthening.
1.4 Investment by the Company
1.4.1 Analysis on the equity investment
Unit: 10,000 Yuan, Currency: RMB
Amount of long-term equity investment in the Report Period 27,232
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Report by the Board of Directors
Shang Gong Group Co., Ltd
Increase or decrease on the amount of long-term equity investment 19,683
Amount of long-term equity investment in the same period of previous year 7,549
Increase or decrease proportion 260.74%
Status of invested company:
Name Main business Proportion in the invested company
Shanghai SGSB The Company holds 51% equity directly; DA AG,
Finance Lease Co., Finance lease holding subsidiary of the Companys wholly-owned
Ltd subsidiary ShangGong Europe, holds 49% equity.
Production, distribution and planning of electronically and
H. Stoll AG & Co. ShangGong Europe, a wholly-owned subsidiary of the
mechanically controlled, fully automatic flat knitting
KG Company, holds 26% equity of Stoll KG
machines, including related services and financing
(1) Investment in stock exchange
Not applicable.
(2) Stock equity of other listed companies held by the Company
Unit: Yuan, Currency: RMB
Proportion
Change in
Initial in the Period-end Origin of
Code Entity Profit /loss shareholder Account title
investment invested book value equity
equity
company
Changjiang
Available-for-sale
600757 Publishing 72,085,722.82 <5 86,404,700.26 -26,673,203.06 Note 1
financial assets
& Media
Lujia B Available-for-sale
900932 773,099.71 <5 2,330,508.98 47,305.05 -984,495.90 Enforcement
Shares financial assets
Shenwan & Available-for-sale
000166 200,000.00 <5 1,361,932.22 -372,466.60 Note 2
Hongyuan financial assets
Total 73,058,822.53 / 90,097,141.46 47,305.05 -28,030,165.56 / /
Note 1: 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.
Note 2: While Shenwan & Hongyuan was founded and established, the Company subscribed to its equity,
and now it is untradeable.
(3) Stock equity of non-listed financial institutions held by the Company
Proportion
Change in
Initial Quantity in the Period-end Origin of
Company Profit/loss shareholder Account title
investment of shares invested book value equity
equity
company
Bank of Available-for-sale
951,400.00 <5 <5 951,400.00 Purchased
Shanghai financial assets
Baoding Available-for-sale
7,500.00 <5 <5 7,500.00 Purchased
Investment financial assets
Total 958,900.00 / / 958,900.00 / /
Note: While the above-said financial enterprises were founded and established, the Company subscribed to
their equity, and holds them until now.
12 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
1.4.2 Status of investment in entrusted financing and derivatives of non-financial companies
(1) Entrusted Financing
Unit: 10,000 Yuan, Currency: RMB
Whether
Amount of Whether
Method of Principal Gains legal Whether Fund source and
Starting Predicted provision affiliated Affiliated
Name of partner Product name Amount Ending date determining actually actually proceedings lawsuit is whether it is
date gains for transaction relationship
gains recovered obtained are involved raised fund
impairment is involved
involved
Bank of Shanghai
Guarantee
Bank of “Winner” Currency and
gains with
Shanghai Fumin Bond Series (intravenous 5,000 2015/11/2 2016/2/3 3.70% 5,000 47.14 Yes 0 No No Yes
guaranteed
Branch Drip into Gold) Financial
principal
Product (WG15154S)
Bank of Shanghai
Guarantee
Bank of “Winner” Currency and
gains with
Shanghai Fumin Bond Series (intravenous 7,000 2015/11/2 2016/2/3 3.70% 7,000 65.99 Yes 0 No No No
guaranteed
Branch Drip into Gold) Financial
principal
Product (WG15154S)
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 5,000 2015/11/11 2016/2/5 3.50% 5,000 41.23 Yes 0 No No Yes
86 days guaranteed
Xuhui Branch
principal
Bank of Shanghai
Guarantee
Bank of “Winner” Currency and
gains with
Shanghai Fumin Bond Series (intravenous 6,000 2015/11/18 2016/2/17 3.60% 6,000 53.85 Yes 0 No No No
guaranteed
Branch Drip into Gold) Financial
principal
Product (WG15M03043)
Xiamen Floating
International Win Step-by-step phase gains with
7,000 2015/12/11 2016/3/11 3.72% 7,000 65.82 Yes 0 No No No
Bank Shanghai 152001 guaranteed
Branch principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 4,000 2015/12/15 2016/3/14 3.50% 4,000 34.52 Yes 0 No No Yes
90 days guaranteed
Xuhui Branch
principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 1,000 2015/12/15 2016/3/14 3.50% 1,000 8.63 Yes 0 No No No
90 days guaranteed
Xuhui Branch
principal
Bank of Shanghai
Guarantee
Bank of “Winner” Currency and
gains with
Shanghai Fumin Bond Series (intravenous 5,000 2016/2/4 2016/5/5 3.18% 5,000 39.64 Yes 0 No No Yes
guaranteed
Branch Drip into Gold) Financial
principal
Product (WG16017S)
Bank of Bank of Shanghai Guarantee
6,000 2016/2/4 2016/5/5 3.18% 6,000 47.57 Yes 0 No No No
Shanghai Fumin “Winner” Currency and gains with
13 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
Branch Bond Series (intravenous guaranteed
Drip into Gold) Financial principal
Product (WG16017S)
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 5,000 2016/2/6 2016/5/4 3.20% 5,000.00 38.58 Yes 0 No No Yes
88 days guaranteed
Xuhui Branch
principal
Bank of Shanghai
Guarantee
Bank of “Winner” Currency and
gains with
Shanghai Fumin Bond Series (intravenous 5,000 2016/2/22 2016/5/23 3.20% 5,000 39.89 Yes 0 No No No
guaranteed
Branch Drip into Gold) Financial
principal
Product (WG16018S)
Floating
Bank of
“Wenjin” No. 2 gains with
Shanghai Fumin 7,500 2016/3/15 2016/9/13 3.20% Yes 0 No No No
SD21606M018A guaranteed
Branch
principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 2,500 2016/3/17 2016/6/13 3.20% 2,500 19.29 Yes 0 No No Yes
88 days guaranteed
Xuhui Branch
principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 2,500 2016/3/17 2016/6/13 3.20% 2,500 19.29 Yes 0 No No No
88 days guaranteed
Xuhui Branch
principal
Floating
Bank of
“Wenjin” No. 2 gains with
Shanghai Fumin 8,300 2016/5/10 2016/11/10 3.08% Yes 0 No No Yes
SD21606M031A guaranteed
Branch
principal
Floating
Bank of
“Wenjin” No. 2 gains with
Shanghai Fumin 1,200 2016/5/10 2016/11/10 3.08% Yes 0 No No No
SD21606M031A guaranteed
Branch
principal
Floating
Bank of
“Wenjin” No. 2 gains with
Shanghai Fumin 8,000 2016/5/26 2016/11/24 3.00% Yes 0 No No No
SD21606M034B guaranteed
Branch
principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 2,500 2016/6/14 2016/9/9 3.00% Yes 0 No No Yes
87 days guaranteed
Xuhui Branch
principal
Guarantee
Bank of
Yuntong Wealth Rizengli gains with
Communications 2,500 2016/6/14 2016/9/9 3.00% Yes 0 No No No
87 days guaranteed
Xuhui Branch
principal
Total / 91,000 / / / 61,000 521.44 / / / / /
14 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
Aggregate principal and gains amount overdue and non-refunded (RMB) 0
st
With the review and approval of the 21 meeting of the Seventh Board of Directors on April 28, 2015, it is
resolved that idle raised funds of RMB 250 million and self-owned funds of 250 million were managed in
purchasing RMB financial products of the bank with principal guaranteed. With the review and approval of
Statement on consigned financing
the 26th meeting of the Seventh Board of Directors on March 18, 2016, it is resolved that idle raised funds of
RMB 130 million and self-owned funds of 250 million were managed in purchasing RMB financial products
of the bank with principal guaranteed.
(2) Entrusted loan
Applicable Not applicable
(3) Other investment in financing products and derivatives
Applicable Not applicable
15 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
1.4.3 Use of Raised Funds
(1) Overall Use of Raised Funds
Unit: Yuan, Currency: RMB
Total amount of Total amount of Total amount of
Raising Total amount of Usage and allocation of
Raising method raised funds spent in raised funded raised funded not
year raised funds raised funded not spent
this Report Period aggregately spent spent
saved in special account of
Non-public
2014 670,999,998.79 25,408,947.73 135,491,773.14 raised funds, continue to
525,738,978.95
offering
use in the committed project
Total / 670,999,998.79 25,408,947.73 525,738,978.95 135,491,773.14 /
As at June 30, 2016, the balance of Companys raised funds is RMB 135,491,773.14 (including interests). Total
Overall use statement on
amount of raised funded aggregately spent is RMB 525,738,978.95. Approved by the Board, idle raised funds of
raised funds
RMB 130 million were managed in purchasing RMB financial products with principal guaranteed.
(2) Committed projects for which funds are raised
Unit：10,000 Yuan, Currency: RMB
Reason for
Investment Statement
Project progress
Predicted gains
Amount Aggregate change and
Whether amount of Whether Whether on
Name of of raised amount of statement
project raised funds scheduled Gains predicted scheduled
(%)
committed funds to raised funds on change
is in this progress produced gains are progress
project be actually procedures
changed Report is met met and gains
invested invested of raised
Period not met
funds
PFAFF project
and KSL and its
affiliates
-657.65
project invested Yes 45,000 0 34,502.63 Note 2
through
(Note 1)
ShangGong
Europe
Project of
Research and
development
and production
of automatic Yes 15,100 982.25 3,177.63 Note 2
sewing unit and
electronic
controlled
system
Project of
developing
modern
household Yes 5,000 0 238.06 Note 2
multi-functional
sewing
machines
Project of
establishing and
perfecting
internal
Yes 2,000 58.64 255.58 Note 2
Enterprise
Resource
Planning (ERP)
system
Total / 67,100 1,040.89 38,173.90 / / / / / /
Statement on raised funds spent in Refer to Special report on the storage and actual use of the funds raised (From 01/01/2016 to
committed projects 30/06/2016) which is published on Shanghai Stock Exchange Website for details.
Note 1: main reasons which influenced the gains produced are:
① Focusing on the overall efficiency, the Company has integrated the subsidiaries of ShangGong Europe
adjusted the division of each subsidiary, and developed coordinately, after the acquisition of PFAFF GmbH
and KSL GmbH by ShangGong Europe. Through integration after the acquisition, the economic efficiency
has greatly improved. In the Report Period, the operating profit of ShangGong Europe is RMB 126 million,
increased by 14.27 comparing to the first half of 2015.
② PFAFF Taicang, a wholly-owned subsidiary of PFAFF GmbH, relocated to Zhangjiagang in the Report
Period. Its operation was influenced and some expenses, such as relocation cost and personnel placement
fee, were generated which caused the poor earnings in the Report Period.
Note 2: the First temporary shareholders meeting in 2015 has approved the change of project for which
funds are raised. Refer to Temporary bulletin No. 2015-036 released on September 30, 2015 by the
Company for details.
16 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
(2) Change of project for which funds are raised
Unit：10,000 Yuan, Currency: RMB
Total amount of raised funds to be invested in the project after the change 16,759.31
Amount
of raised Investment Aggregate Statement
funds to amount of amount of Whether Whether on
Project
Corresponding be raised raised scheduled Predicted Gains Project predicted scheduled
name after
original project invested in funds in funds progress gains produced schedule gains are progress
the change
the project this Report actually is met met and gains
after the Period invested not met
change
PFAFF project
and KSL and its
Invest in
affiliates project
SG & 15,259.31 0 12,900.00 19.37
invested through
GEMSY
ShangGong
Europe
Project of
establishing and
Supplement perfecting
working internal
1,500.00 1,500.00 1,500.00 Inapplicable
capital Enterprise
permanently Resource
Planning (ERP)
system
Total / 16,759.31 1,500 14,400.00 / / / / /
Note: the First temporary shareholders meeting in 2015 has approved the change of project for which
funds are raised.
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 12.5
1,755,505,356.14 669,557,352.17 663,330,748.41 126,013,662.46 85,383,661.07
Holding Corp. processing and million
GmbH sales of
industrial
sewing
equipment
Shanghai Road freight
Shensy transportation, RMB
Enterprise distribution, 178.82 377,336,635.29 240,706,483.69 331,071,742.92 8,179,921.52 8,342,057.90
Development warehousing million
Co., Ltd services etc.
Zhejiang SG &
Manufacturing
GEMSY
and sales of RMB 216
Sewing 261,465,995.43 215,051,373.08 92,515,943.23 207,286.67 193,662.48
various sewing million
Technology
equipment
Co., Ltd
DAP Sales of
USD 6
(Shanghai) various sewing 190,938,025.47 83,721,658.64 148,519,677.58 11,271,987.95 9,465,388.39
million
Co., Ltd. equipment
Shanghai
Shanggong Manufacturing
Butterfly and sales of RMB 79
105,292,618.13 79,216,486.44 76,007,809.10 270,200.73 557,177.11
Sewing various sewing million
Machine Co., equipment
Ltd.
1.4.5 Utility of non-collected funds
Unit：10,000 Yuan, Currency: RMB
Amount invested in Accumulated actual Project
Name Amount Schedule
the Report Period investment amount return
Invest in Stoll KG EUR 28.50 million Completed 23,887 23,887 1,134
17 / 85
上工申贝（集团）股份有限公司
Report by the Board of Directors
Shang Gong Group Co., Ltd
through SGE
Total EUR 28.50 million / 23,887 23,887 /
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 2015 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 Warning and description for forecasting the cumulative net profit from January 1,2016 to
December 31, 2016 may be negative or have a significant change over the same period of previous
year
Applicable Not applicable
3.2 Statement of the Board of Directors and the Supervision Committee on Non-standard Auditing
Report Issued by the Certified Accountants Firm
Applicable Not applicable
18 / 85
上工申贝（集团）股份有限公司
Important Events
Shang Gong Group Co., Ltd
Chapter 5 Important Events
1. Major litigations and arbitrations and issues generally questioned by media
Applicable Not applicable
2. Issues relevant to bankruptcy and restructuring
Applicable Not applicable
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
5.1 Associated Transactions Relevant to Daily Operations
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
The bulletin No. 2016-015 disclosed by the
Company, sells products to Fiji Xerox of Shanghai Limited., and is its permanent
Company on March 22, 2016, published in Shanghai
accessory supplier, and the above-said transaction constitutes the daily associated
Securities News and Hong Kong Commercial Daily
transaction. It is estimated that in 2016, the amount of products that it will sell to
and website of Shanghai Stock Exchange
Fiji Xerox is RMB 33 million, and in this report period, the sales amount was RMB
(http://www.sse.com.cn/).
15.43 million, and there was no major change.
6. Major contracts and their performance
6.1 Trusteeship, contracting and lease
Applicable Not applicable
6.2 Guarantee
Unit: 10,000 Yuan, Currency: RMB
Company external guarantee list (excluded those for subsidiaries)
Relations of Guarantee If If
Guarantee If Guarantee If it is
the guarantor Amount date Guarantee Type of guarantee counter- Guarantee
Guarantor Security party expiration guarantee overdue affiliate
to public guaranteed (agreement starting date guarantee is guarantee relation
date is done amounts guarantee?
company sign-off date) overdue available?
Commerzbank Joint
ShangGong The March 25, March 25,
Shanghai 7,000 liability No No 0 No No No
Group Company 2014 2014
Branch guarantee
Commerzbank Joint
ShangGong The June 30, July 1,
Shanghai 6,490 liability No No 0 No No No
Group Company 2014 2014
Branch guarantee
Commerzbank Joint
ShangGong The October October
Shanghai 10,244 liability No No 0 No No No
Group Company 8, 2015 8, 2015
Branch guarantee
Commerzbank Joint
ShangGong The August August
Shanghai 8,113 liability No No 0 No No No
Group Company 28, 2015 28, 2015
Branch guarantee
Industrial &
Commercial
Joint
ShangGong The Bank of China December December December
5,900 liability No No 0 No No No
Group Company Shanghai 21, 2015 21, 2015 21, 2020
guarantee
Hongkou
Branch
Subsidiary Joint
ShangGong January 7, January 7, July 30,
of sole Commerzbank 2,028 liability No No 0 No No No
Europe 2016 2016 2017
investment guarantee
ShangGong Subsidiary Commerzbank 2,028 January 7, January 7, July 30, Joint No No 0 No No No
19 / 85
上工申贝（集团）股份有限公司
Important Events
Shang Gong Group Co., Ltd
Europe of sole 2016 2016 2018 liability
investment guarantee
Guarantee amounts spent during the report period (excluded guarantee to affiliate company. 4,056
Total balance of guarantee at the end of period (affiliate companies are not quailed.)（A） 41,803
Guarantee of company to affiliates
Total guarantee amounts of subsidiaries in the report period 0
Total balance of guarantee to subsidiaries at the end of report period (B) 0
Company total guarantee amounts (including those to subsidiaries)
Total guarantee amounts（A+B） 41,803
Ratio of total guarantee amounts to company net assets (%) 19.42
In which:
Guarantee amounts provided to stockholders, actual controller and affiliated parties (C)
Guarantee amounts directly or indirectly provided for liabilities of guarantor whose assets
liabilities ratio is higher than 70%（D）
Differences of total guarantee amounts exceeds 50% of the net assets（E）
Total guarantee amounts of the above-mentioned three items （C+D+E）
Statement on Guarantee:
1. On March 25, 2014, ShangGong Europe, the Companys wholly owned subsidiary, applied to the
Bielefeld Branch of Commerzbank for current funds loan equivalent to not more than RMB 58 million, the
Shanghai Branch of Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of RMB 70 million as
counter guarantee for the abovementioned financing guarantee letter.
2. On June 30, 2014, ShangGong Europe, the Company's wholly owned subsidiary, applied to the Bielefeld
Branch of Commerzbank for a current fund loan of EUR 8 million, the Shanghai Branch of Commerzbank
issued a financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable
corporate letter of guarantee for payment of EUR 8.8 million as counter guarantee for the abovementioned
financing guarantee letter.
3. On October 8, 2015, ShangGong Europe, the Company's wholly owned subsidiary, applied to the
Bielefeld Branch of Commerzbank for a short-term loan line of EUR 12 million, the Shanghai Branch of
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of EUR 10.5 million as counter guarantee for the
abovementioned financing guarantee letter.
4. On August 28, 2015, PFAFF GmbH, the Company's wholly owned subsidiary, applied to the Bielefeld
Branch of Commerzbank for a loan of EUR 10 million, the Shanghai Branch of Commerzbank issued a
financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable corporate
letter of guarantee for payment of EUR 11 million as counter guarantee for the abovementioned financing
guarantee letter.
5. On December 21, 2015, ShangGong Europe, the Company's wholly owned subsidiary, applied to the
Industrial & Commercial Bank of China Frankfurt Branch for a loan of EUR 7.878 million to pay for 26%
equity of Stoll KG. Industrial & Commercial Bank of China Shanghai Hongkou Branch issued a financing
guarantee letter for the funds, and the Company mortgaged real estate in No.603 Dapu Road, Shanghai for
the abovementioned counter guarantee.
6. ShangGong Europe mortgaged 500,000 shares of DA AG held by ShangGong Europe for two bank
guarantee letters of EUR 2.75 million issued by Commerzbank to guarantee the money paid by ShangGong
Europe to the seller of Stoll KG shares. The time limit of the two letters is from January 1, 2016 to July 30,
2017 and from January 1, 2016 to July 30, 2018.
7. Performance of committed issues
Whether
Whether
Background of Type of Commitment timely and
Content Time limit there is a
commitment commitment party strictly
time limit
perform
Commitments Others The Company The Company will not plan major From July Yes Yes
20 / 85
上工申贝（集团）股份有限公司
Important Events
Shang Gong Group Co., Ltd
related to major asset restructuring from July 26, 26, 2016 to
asset 2016 to January 25, 2017. January
restructuring 25,2017
From July 10, 2016 to January 10, From July
Other Non-tradable 2016, Pudong SASAC will not sell 10, 2016 to
Pudong SASAC Yes Yes
commitment shares the Companys shares in the January 10,
secondary market. 2016
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
financial statements and internal control of the Company for 2016.
9. Punishment on and rectification of listed company and its directors, supervisors, senior officers,
shareholders holding over 5% shares, actual controller and purchaser
Applicable Not applicable
10. Convertible bonds
Applicable Not applicable
11. 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.
12. Notes of other important issues
Applicable Not applicable
21 / 85
上工申贝（集团）股份有限公司 Director, Supervisor, Officer and
Shang Gong Group Co., Ltd Employee Status
Chapter 6 Changes in Share Capital and Shareholder Status
1. Capital Stock Change
1.1 Share Change
During the reporting period, the total number of shares of the Company and the capital structure has not
changed.
1.2 Change of non-tradable shares
Applicable Not applicable
2. Shareholder Status
(1) Total number of shareholders
Total Number of Shareholder at the End of Reporting Period 60,473 (A share: 31,487; B share: 29,986)
(2) Shareholding status of top 10 shareholders and top 10 unrestricted shareholders
Unit: Share
Top 10 Shareholders
Changes in Holding Shares
Total Shares Restricted
Shareholder Description Report Percentage pledged or Shareholder Status
Held Share
Period (%) frozen
Shanghai Pudong New Area
State-owned Assets Supervision and 0 105,395,358 19.21% 0 No State
Administration Commission
China Great Wall Asset Management State-owned legal
0 22,200,000 4.05% 0 No
Corporation person
SHANGHAI INTERNATIONAL State-owned legal
0 10,968,033 2.00% 0 No
GROUP Asset Management Co., Ltd. person
SCBHK A/C KG INVESTMENTS
-13,500 4,839,543 0.88% 0 No Foreign legal person
ASIA LIMITED
Wuhu Changyuan Private Equity Fund
0 4,770,654 0.87% 0 No Unknown
(limited partnership)
GUOTAI JUNAN SECURITIES
73,000 3,352,701 0.61% 0 No Foreign legal person
(HONGKONG) LIMITED
Lianxun securities - Everbright Bank –
Lianxun securities Lianxin No. 1 0 2,870,011 0.52% 0 No Unknown
Collective asset management plan
China Minsheng Trust Co., Ltd.-
Minsheng trust value selection first 0 2,800,000 0.51% 0 No Unknown
phase Securities investment trust
VANGUARD TOTAL
INTERNATIONAL STOCK INDEX 0 2,545,396 0.46% 0 No Foreign legal person
FUND
Bank of China- ChinaAMC Return
-164,600 1,935,400 0.35% 0 No Unknown
Fund
Top 10 Unrestricted Shareholder
Share type and amount
Name of Shareholders Unrestricted Shares
Type Amount
Shanghai Pudong New Area State-owned Assets Supervision and
105,395,358 A share 105,395,358
Administration Commission
China Great Wall Asset Management Corporation 22,200,000 A share 22,200,000
SHANGHAI INTERNATIONAL GROUP Asset Management Co., Ltd. 10,968,033 A share 10,968,033
SCBHK A/C KG INVESTMENTS ASIA LIMITED 4,839,543 B share 4,839,543
Wuhu Changyuan Private Equity Fund (limited partnership) 4,770,654 A share 4,770,654
GUOTAI JUNAN SECURITIES (HONGKONG) LIMITED 3,352,701 B share 3,352,701
22 / 85
上工申贝（集团）股份有限公司 Director, Supervisor, Officer and
Shang Gong Group Co., Ltd Employee Status
Lianxun securities - Everbright Bank – Lianxun securities Lianxin No. 1
2,870,011 A share 2,870,011
Collective asset management plan
China Minsheng Trust Co., Ltd.- Minsheng trust value selection first
2,800,000 A share 2,800,000
phase Securities investment trust
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 2,545,396 B share 2,545,396
Bank of China- ChinaAMC Return Fund 1,935,400 A share 1,935,400
Relationship between the above shareholders is not known to
Shareholder Relationship and Consistent Actions Notes
the Company
3. Change of Controlling Shareholder or Actual Controller
Applicable Not applicable
4. Others
Pudong SASAC, controlling shareholder/actual controller of the Company, signed the Share Transfer
Agreement on Transferring 60 Million A Shares of Shang Gong Group Co., Ltd with Shanghai Puke Feiren
Investment Co., Ltd.(hereinafter refers to Puke), a wholly-owned subsidiary of Shanghai Pudong Science
and Technology Investment Co., Ltd on June 29, 2016. This issue has to be approved by the SASAC before
implementation. If this issue is successfully implemented, Puke will hold 60 million shares (approximately
10.94%) of ShangGong Group, and Pudong SASAC will hold 45,395,358 shares (approximately 8.27%).
As of the date of this report, this issue is still in progress.
Chapter 7 Relevant Situation about Preferred Shares
Applicable Not applicable
Chapter 8 Director, Supervisor, Officer and Employee Status
1. Shareholding change
1.1 Shareholding change of current and dismissed directors, supervisors and senior officers in the
report period
Applicable Not applicable
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
Applicable Not applicable
Chapter 9 Relevant Situation about Corporate Bond
Applicable Not applicable
23 / 85
上工申贝（集团）股份有限公司
Financial Report
Shang Gong Group Co., Ltd
Chapter 10 Financial Report
1. Audit report
Applicable Not applicable
2. Financial statements
Shang Gong Group Co., Ltd.
Consolidated Statement of Financial Position
As of June 30, 2016
Unit: Yuan, Currency: RMB
Beginning
Item Notes Ending Balance
Balance
Current assets:
Cash and cash equivalents 622,651,976.73 773,572,182.69
Deposit reservation for balance
Lending funds
Financial assets at fair value whose fluctuation is attributed to profit or loss for
current period
Derivative financial assets
Notes receivable 64,943,408.89 63,502,861.92
Accounts receivable 476,437,506.33 373,164,448.57
Prepayment 39,544,224.85 27,058,587.15
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable
Dividends receivable
Other receivables 69,502,755.50 62,684,178.64
Redemptory monetary capital for sale
Inventories 672,194,832.53 581,295,155.15
Classified as assets held for sale
Non-current assets maturing within one year
Other current assets 326,124,977.49 373,659,277.60
Total current assets 2,271,399,682.32 2,254,936,691.72
Non-current assets:
Loans and payments on behalf
Available-for-sale financial assets 120,286,798.34 148,716,963.61
Held-to-maturity investments
Long-term receivables
Long-term equity investments 249,884,481.94
Investment properties 104,036,347.57 105,831,480.56
Fixed assets 354,979,546.62 336,334,409.01
Construction in progress 32,542,606.21 24,088,386.74
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 123,361,882.60 127,464,082.18
Development expenditures 36,142,745.88 37,111,588.93
Goodwill 68,512,489.47 65,913,195.29
Long-term deferred expenses 888,271.73 579,474.57
Deferred income tax assets 47,499,824.99 45,725,444.45
Other non-current assets
Total non-current assets 1,138,134,995.35 891,765,025.34
Total assets 3,409,534,677.67 3,146,701,717.06
Current liabilities:
Short-term loans 304,419,881.79 300,547,829.62
Borrowings from central bank
Deposits from customers and interbank
Borrowings from banks and other financial institutions
Financial liabilities at fair value whose fluctuation is attributed to profit or loss for
current period
Derivative financial liabilities
Notes payable
Accounts payable 198,360,365.50 161,024,708.59
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Financial Report
Shang Gong Group Co., Ltd
Beginning
Item Notes Ending Balance
Balance
Receipt in advance 26,996,952.71 25,598,146.20
Financial assets sold for repurchase
Handling charges and commissions payable
Employee benefits payable 74,562,963.51 78,096,683.38
Taxes and surcharges payable 42,780,692.23 49,065,663.29
Interest payable 60,512.50 88,934.73
Dividends payable 1,032,818.86 1,032,818.86
Other payables 171,914,739.75 171,163,174.57
Reinsurance accounts payable
Provision for insurance contracts
Acting trading securities
Acting underwriting securities
Classified as liabilities held for sale
Non-current liabilities maturing within one year
Other current liabilities 863,079.88 319,502.32
Total current liabilities 820,992,006.73 786,937,461.56
Non-current liabilities:
Long-term loans 79,353,328.43 29,374,120.87
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 74,338,217.87 4,724,683.15
Long-term employee benefits payable 241,047,861.38 239,476,427.52
Special payables
Estimated liabilities
Deferred income
Deferred income tax liabilities 40,159,810.06 35,136,271.15
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 435,419,217.74 309,231,502.69
Total liabilities 1,256,411,224.47 1,096,168,964.25
Owners' equity
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 968,157,579.65 956,286,021.43
Less: treasury stock
Other comprehensive income -108,771,572.53 -85,270,897.86
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
General risk reserves
Undistributed profits 451,687,839.10 350,523,121.40
Total owners' equity attributable to the parent company 1,864,209,688.74 1,774,674,087.49
Minority equity 288,913,764.46 275,858,665.32
Total owners' equity 2,153,123,453.20 2,050,532,752.81
Liabilities and owners' equity 3,409,534,677.67 3,146,701,717.06
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Financial Position
As of June 30, 2016
Unit: Yuan, Currency: RMB
Beginning
Item Notes Ending Balance
Balance
Current assets:
Cash and cash equivalents 135,119,705.79 139,839,269.51
Financial assets at fair value whose fluctuation is attributed to profit or loss for
current period
Derivative financial assets
Notes receivable 200,000.00 210,000.00
Accounts receivable 3,070,224.21 2,768,214.13
Prepayment 1,377,755.47 532,941.05
Interest receivable
Dividends receivable
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Financial Report
Shang Gong Group Co., Ltd
Beginning
Item Notes Ending Balance
Balance
Other receivables 79,636,633.16 58,219,199.88
Inventories 3,713,966.03 4,310,781.84
Classified as assets held for sale
Non-current assets maturing within one year
Other current assets 301,727,424.64 351,766,361.4
Total current assets 524,845,709.30 557,646,767.81
Non-current assets:
Available-for-sale financial assets 120,286,790.96 148,716,956.51
Held-to-maturity investments
Long-term receivables 122,990,482.62 116,625,633.32
Long-term equity investments 597,595,339.37 564,142,909.37
Investment properties 83,671,988.55 86,239,724.61
Fixed assets 17,758,871.17 18,441,058.74
Construction in progress 7,016,581.62 4,740,428.42
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 13,053,736.78 13,245,172.99
Development expenditures
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets 962,373,791.07 952,151,883.96
Total assets 1,487,219,500.37 1,509,798,651.77
Current liabilities:
Short-term loans 348,148.62 348,148.62
Financial liabilities at fair value whose fluctuation is attributed to profit or loss for
current period
Derivative financial liabilities
Notes payable
Accounts payable 17,461,378.45 20,234,518.45
Receipt in advance 2,623,429.85 2,993,707.32
Employee benefits payable 4,000,000.00
Taxes and surcharges payable 96,185.71 50,849.35
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 113,053,599.13 107,026,319.64
Classified as liabilities held for sale
Non-current liabilities maturing within one year
Other current liabilities
Total current liabilities 134,615,560.62 135,686,362.24
Non-current liabilities:
Long-term loans 1,489,984.87 1,489,984.87
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 1,611,944.32 1,611,944.32
Long-term employee benefits payable
Special payables
Provisions
Deferred income
Deferred income tax liabilities 1,197,067.41 1,197,067.41
Other non-current liabilities 520,000.00 520,000
Total non-current liabilities 4,818,996.60 4,818,996.60
Total liabilities 139,434,557.22 140,505,358.84
Owners' equity
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 1,003,282,687.73 1,003,282,687.73
Less: treasury stock
Other comprehensive income 17,038,318.94 45,068,484.49
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
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Financial Report
Shang Gong Group Co., Ltd
Beginning
Item Notes Ending Balance
Balance
Undistributed profits -225,671,906.04 -232,193,721.81
Total owners' equity 1,347,784,943.15 1,369,293,292.93
Liabilities and owners' equity 1,487,219,500.37 1,509,798,651.77
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd
Consolidated Statement of Comprehensive Incomes
January – June 2016
Unit: Yuan, Currency: RMB
Same Period in
Item Notes Current Period
Previous Year
1. Incomes 1,359,342,529.45 1,039,062,089.09
Including: operating income 1,359,342,529.45 1,039,062,089.09
Interest income
Premiums earned
Income from handling charges and commissions
2. Costs 1,222,327,837.54 921,323,443.18
Including: Cost of sales 954,500,289.41 701,662,230.84
Interest expenses
Handling charges and commissions expenses
Surrender value
Net amount of compensation payout
Net amount withdrawn for insurance contract reserves
Policy dividend payment
Reinsurance costs
Business taxes and surcharges 4,180,944.00 3,119,612.56
Selling expenses 124,035,260.82 113,957,035.76
General and administrative expenses 131,096,375.43 100,450,384.67
Financial expenses 10,089,517.50 4,949,996.23
Losses from asset impairment -1,574,549.62 -2,815,816.88
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 18,165,848.81 20,386,398.17
Including: income from investment in associates and joint ventures 11,338,598.93
Foreign exchange gains ("-" for losses)
3. Operating profits ("-" for losses) 155,180,540.72 138,125,044.08
Plus: non-operating income 7,659,396.08 7,858,279.71
Including: gains from disposal of non-current assets 2,540,561.45 311,518.30
Less: non-operating expenses 3,300,707.74 334,406.84
Including: losses from disposal of non-current assets 3,098,496.16 113,231.77
4. Total profits ("-" for total losses) 159,539,229.06 145,648,916.95
Less: income tax expenses 45,381,401.63 35,836,814.37
5. Net profit ("-" for net loss) 114,157,827.43 109,812,102.58
Net profit attributable to owners of the parent company 101,164,717.70 100,341,086.85
Non-controlling interests 12,993,109.73 9,471,015.73
6. Net of tax of other comprehensive income -21,624,435.26 22,964,056.08
Net of tax of other comprehensive income attributable to owners of the
-23,500,674.67 28,780,026.28
parent company
(1) Other comprehensive income can't be reclassified to gains and losses later
a. Changes in net liabilities or assets due to the remeasurement and redefinition of
the benefit plan
b. The shares in other comprehensive income of the investee that can't be
reclassified to gains and losses under the equity method
(2) Other comprehensive income to be reclassified to gains and losses later -23,500,674.67 28,780,026.28
a. The shares in other comprehensive income of the investee that can be
reclassified to gains and losses under the equity method
b. Gains and losses from changes in fair value of available-for-sale financial
-28,030,165.55 58,379,704.76
assets
c. Gains and losses from the reclassification of the held-to-maturity investment to
held-for-sale financial assets
d. The effective portion of the gains and losses from cash flow hedging
e. Translation differences of financial statements 4,529,490.88 -29,599,678.48
f. Others
Net of tax of other comprehensive income attributable to non-controlling
1,876,239.41 -5,815,970.20
shareholders
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Shang Gong Group Co., Ltd
Same Period in
Item Notes Current Period
Previous Year
7. Total comprehensive incomes 92,533,392.17 132,776,158.66
Total comprehensive income attributable to owners of the parent company 77,664,043.03 129,121,113.13
Total comprehensive income attributable to non-controlling shareholders 14,869,349.14 3,655,045.53
8. Earnings per share:
(1) Basic earnings per share 0.1844 0.1829
(2) Diluted earnings per share 0.1844 0.1829
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd
Statement of Comprehensive Incomes
January – June 2016
Unit: Yuan, Currency: RMB
Same Period in
Item Notes Current Period
Previous Year
1. Operating income 18,604,456.82 21,274,614.98
Less: Operating cost 8,113,595.28 11,805,326.85
Sales tax and surcharges 2,072,413.03 1,926,102.87
Selling expenses 258,334.34 787,037.72
General and Administration expenses 12,210,527.32 17,034,717.65
Finance expenses -4,016,794.71 3,591,492.67
Impairment losses on assets 1,512,395.93 -2,828,510.44
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 6,827,249.88 17,630,536.99
Including: Investment income in associates and joint ventures
2. Operating profits ("-" for losses) 5,281,235.51 6,588,984.65
Plus: Non-operating income 1,451,036.51 6,539,135.00
Including: gains from disposal of non-current assets 165,136.00
Less: non-operating expenses 210,456.25 263,536.40
Including: losses from disposal of non-current assets 10,456.25 63,536.40
3. Total profits ("-" for total losses) 6,521,815.77 12,864,583.25
Less: income tax expenses
4. Net profit ("-" for net loss) 6,521,815.77 12,864,583.25
4. Net of tax of other comprehensive income -28,030,165.55 58,379,704.76
(1) Other comprehensive income can't be reclassified to gains and losses later
a. Changes in net liabilities or assets due to the remeasurement and redefinition of
the benefit plan
b. The shares in other comprehensive income of the investee that can't be
reclassified to gains and losses under the equity method
(2) Other comprehensive income to be reclassified to gains and losses later -28,030,165.55 58,379,704.76
a. The shares in other comprehensive income of the investee that can be reclassified
to gains and losses under the equity method
b. Gains and losses from changes in fair value of available-for-sale financial assets -28,030,165.55 58,379,704.76
c. Gains and losses from the reclassification of the held-to-maturity investment to
held-for-sale financial assets
d. The effective portion of the gains and losses from cash flow hedging
e. Translation differences of financial statements
f. Others
6. Total comprehensive incomes -21,508,349.78 71,244,288.01
7. Earnings per share:
(1) Basic earnings per share
(2) Diluted earnings per share
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd
Consolidated Statement of Cash Flows
January – June 2016
Unit: Yuan, Currency: RMB
Same Period in
Item Notes Current Period
Previous Year
1. Cash flows from operating activities:
Cash received from sale of goods and provision of services 1,437,839,370.97 1,234,634,702.28
Net increase in customer bank deposits and placement from banks and other
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Shang Gong Group Co., Ltd
Same Period in
Item Notes Current Period
Previous Year
financial institutions
Net increase in borrowings from central bank
Net increase in loans from other financial institutions
Premiums received from original insurance contracts
Net cash received from reinsurance business
Net increase in deposits and investments from policyholders
Net increase from disposal of financial assets at fair value whose fluctuation
is attributed to profit or loss for current period
Cash received from interest, handling charges and commissions
Net increase in loans from banks and other financial institutions
Net capital increase in repurchase business
Refunds of taxes and surcharges 30,980,782.69 31,554,998.72
Cash received from other operating activities 25,698,235.62 13,776,580.70
Sub-total of cash inflows from operating activities 1,494,518,389.28 1,279,966,281.70
Cash paid for goods purchased and services received 1,045,794,957.00 902,022,241.32
Net increase in loans and advances to customers
Net increase in deposits in central bank and other banks and financial
institutions
Cash paid for original insurance contract claims
Cash paid for interests, handling charges and commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 299,241,866.26 256,898,952.41
Cash paid for taxes and surcharges 76,973,192.74 50,044,465.42
Cash paid for other operating activities 118,451,458.99 79,407,832.86
Sub-total of cash outflows from operating activities 1,540,461,474.99 1,288,373,492.01
Net cash flows from operating activities -45,943,085.71 -8,407,210.31
2. Cash flows from investing activities:
Cash inflow from divestment 615,261,697.25 532,350,218.55
Cash inflow from investment incomes 7,295,645.53
Cash gain from disposal of fixed assets, intangible assets, and other long-term
852,535.50 66,610,149.60
investment
Cash inflow from disposal of subsidiaries and other operating units 1,115,552.60
Cash received from other investing activities 60,250,855.95
Sub-total of cash inflows from investing activities 617,229,785.35 666,506,869.63
Cash paid for acquisition of fixed assets, intangible assets and other long-term
45,556,680.50 41,279,621.85
assets
Cash paid for investments 726,993,439.10 480,000,000.00
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other business units
Cash paid for other investing activities
Sub-total of cash outflows from investing activities 772,550,119.60 521,279,621.85
Net cash flows from investing activities -155,320,334.25 145,227,247.78
3. Cash flows from financing activities
Cash received from investors
Including: cash received by subsidiaries from investments by non-controlling
shareholders
Cash received from loans 206,901,370.20 9,000,000.00
Cash received from bonds issuance
Cash received from other financing activities 355,261.67 4,333,644.42
Sub-total of cash inflows from financing activities 207,256,631.87 13,333,644.42
Cash paid for debt repayments 166,820,569.00 58,869,017.00
Cash paid for distribution of dividends and profits or payment of interest 5,213,563.08 47,308,375.12
Including: dividends and profits paid to non-controlling shareholders by
subsidiaries
Cash paid for other financing activities 277,449.14
Sub-total of cash outflows from financing activities 172,034,132.08 106,454,841.26
Net cash flows from financing activities 35,222,499.79 -93,121,196.84
4. Effect of fluctuation in exchange rate on cash and cash equivalents 15,358,918.84 -24,238,194.98
5. Net increase in cash and cash equivalents -150,682,001.33 19,460,645.65
Plus: beginning balance of cash and cash equivalents 744,700,658.82 581,848,889.10
6. Ending balance of cash and cash equivalents 594,018,657.49 601,309,534.75
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
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Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd
Statement of Cash Flows
January – June 2016
Unit: Yuan, Currency: RMB
Same Period in
Item Notes Current Period
Previous Period
1. Cash flows from operating activities:
Cash received from sale of goods and provision of services 17,776,248.12 22,927,787.45
Refunds of taxes and surcharges 25,900.51 1,613,100.00
Cash received from other operating activities 16,236,047.04 8,050,784.30
Sub-total of cash inflows from operating activities 34,038,195.67 32,591,671.75
Cash paid for goods purchased and services received 4,648,663.54 14,543,225.30
Cash paid to and on behalf of employees 12,105,236.53 12,817,937.00
Cash paid for taxes and surcharges 2,270,830.52 3,237,488.41
Cash paid for other operating activities 36,846,820.39 22,554,986.49
Sub-total of cash outflows from operating activities 55,871,550.98 53,153,637.20
Net cash flows from operating activities -21,833,355.31 -20,561,965.45
2. Cash flows from investing activities:
Cash inflow from divestment 615,261,697.25 532,350,218.55
Cash inflow from investment incomes 7,295,645.53
Cash gain from disposal of fixed assets, intangible assets, and other long-term
66,044,064.00
investment
Cash inflow from disposal of subsidiaries and other operating units 1,115,552.6
Cash received from other investing activities
Sub-total of cash inflows from investing activities 616,377,249.85 605,689,928.08
Cash paid for acquisition of fixed assets, intangible assets and other
5,814,046.20 11,229,154.40
long-term assets
Cash paid for investments 593,452,430.00
Net cash paid to acquire subsidiaries and other business units 555,490,000.00
Cash paid for other investing activities
Sub-total of cash outflows from investing activities 599,266,476.20 566,719,154.40
Net cash flows from investing activities 17,110,773.65 38,970,773.68
3. Cash flows from financing activities
Cash received from investors
Cash received from loans
Cash received from bonds issuance 4,333,644.42
Cash received from other financing activities 0.00 4,333,644.42
Sub-total of cash inflows from financing activities
Cash paid for debt repayments
Cash paid for distribution of dividends and profits or payment of interest
Cash paid for other financing activities
Sub-total of cash outflows from financing activities 4,333,644.42
Net cash flows from financing activities 3,017.94 -36.11
4. Effect of fluctuation in exchange rate on cash and cash equivalents -4,719,563.72 22,742,416.54
5. Net increase in cash and cash equivalents 114,839,269.51 150,504,700.28
Plus: beginning balance of cash and cash equivalents 110,119,705.79 173,247,116.82
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
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上工申贝（集团）股份有限公司
Financial Report
Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd
Consolidated Statement of Changes in Equity
January – June 2016
Unit: Yuan, Currency: RMB
Current period
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Special Surplus Undistributed Minority equity
Share capital Preference Perpetual Capital reserves treasury comprehensive risk equity
Others reserves reserves profits
shares bond stock income reserves
1. Previous year ending
balance brought 548,589,600.00 956,286,021.43 -85,270,897.86 4,546,242.52 350,523,121.40 275,858,665.32 2,050,532,752.81
forward
Plus: accounting
policy changes
Correction of
previous-period
accounting errors
Business
combination involving
entities under common
control
Others
2. Beginning balance of
548,589,600.00 956,286,021.43 -85,270,897.86 4,546,242.52 350,523,121.40 275,858,665.32 2,050,532,752.81
current year
3. Increase/(decrease)
for the current year ("-" 11,871,558.22 -23,500,674.67 101,164,717.70 13,055,099.14 102,590,700.39
for losses)
(1) Total
-23,500,674.67 101,164,717.70 14,869,349.14 92,533,392.17
comprehensive incomes
(2)
11,871,558.22 0.00 11,871,558.22
Investment/(divestment)
a. Common shares
0.00
from shareholders
b. Investment capital
from the holders of 0.00
other equity instruments
c. Amount of the
share-based payment
0.00
included in the owners'
equity
d. Others 11,871,558.22 11,871,558.22
(3) Distribution of
-1,814,250.00 -1,814,250.00
profits
a. Surplus reserves
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Shang Gong Group Co., Ltd
b. General risk
reserves
c. Distribution to
owners or shareholders
d. Others -1,814,250 -1,814,250.00
(4) 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
(5) Special reserves
a. Appropriation for
current year
b. Use in current year
(6) Others
4. Ending balance of the
548,589,600.00 968,157,579.65 -108,771,572.53 4,546,242.52 451,687,839.10 288,913,764.46 2,153,123,453.20
current year
Previous period
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Special Surplus Undistributed Minority equity
Share capital Preference Perpetual Capital reserves treasury comprehensive risk equity
Others reserves reserves profits
shares bond stock income reserves
1. Previous year ending
balance brought 548,589,600.00 949,310,284.01 -99,466,982.70 4,546,242.52 193,106,033.92 40,079,662.83 1,636,164,840.58
forward
Plus: accounting
policy changes
Correction of
previous-period
accounting errors
Business
combination involving
entities under common
control
Others
2. Beginning balance of
548,589,600.00 949,310,284.01 -99,466,982.70 4,546,242.52 193,106,033.92 40,079,662.83 1,636,164,840.58
current year
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Shang Gong Group Co., Ltd
3. Increase/(decrease)
for the current year ("-" 8,303,849.03 28,780,026.28 100,341,086.85 139,685,751.08 277,110,713.24
for losses)
(1) Total
28,780,026.28 100,341,086.85 3,655,045.53 132,776,158.66
comprehensive incomes
(2)
8,303,849.03 136,030,705.55 144,334,554.58
Investment/(divestment)
a. Common shares
from shareholders
b. Investment capital
from the holders of
other equity instruments
c. Amount of the
share-based payment
included in the owners'
equity
d. Others 8,303,849.03 136,030,705.55 144,334,554.58
(3) Distribution of
profits
a. Surplus reserves
b. General risk
reserves
c. Distribution to
owners or shareholders
d. Others
(4) 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
(5) Special reserves
a. Appropriation for
current period
b. Use in current period
(6) Others
4. Ending balance of
548,589,600.00 957,614,133.04 -70,686,956.42 4,546,242.52 293,447,120.77 179,765,413.91 1,913,275,553.82
current period
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
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Shang Gong Group Co., Ltd
Consolidated Statement of Changes in Equity
January – June 2016
Unit: Yuan, Currency: RMB
Current period
Item Other equity instruments Less: Other
Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bond stock income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 45,068,484.49 4,546,242.52 -232,193,721.81 1,369,293,292.93
brought forward
Plus: accounting policy
changes
Correction of
previous-period accounting
errors
Others
2. Beginning balance of current
548,589,600.00 1,003,282,687.73 45,068,484.49 4,546,242.52 -232,193,721.81 1,369,293,292.93
year
3. Increase/(decrease) for the
-28,030,165.55 6,521,815.77 -21,508,349.78
current year ("-" for losses)
(1) Total comprehensive
-28,030,165.55 6,521,815.77 -21,508,349.78
incomes
(2) Investment/(divestment)
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity
instruments
c. Amount of the share-based
payment included in the owners'
equity
d. Others
(3) Distribution of profits
a. Surplus reserves
b. Distribution to owners or
shareholders
c. Others
(4) Internal transfer of owners'
equity
a. Capital reserve turn to stock
equity
b. Surplus reserve turn to stock
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equity
c. Surplus reserve to recover
loss
d. Others
(5) Special reserves
a. Appropriation for current
period
b. Use in current period
(6) Others
4. Ending balance of the current
548,589,600.00 1,003,282,687.73 17,038,318.94 4,546,242.52 -225,671,906.04 1,347,784,943.15
period
Previous period
Item Other equity instruments Less: Other
Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves treasury comprehensive
Others reserves reserves profits equity
shares bond stock income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 16,789,785.05 4,546,242.52 -237,700,994.08 1,335,507,321.22
brought forward
Plus: accounting policy
changes
Correction of
previous-period accounting
errors
Others
2. Beginning balance of current
548,589,600.00 1,003,282,687.73 16,789,785.05 4,546,242.52 -237,700,994.08 1,335,507,321.22
year
3. Increase/(decrease) for the
58,379,704.76 12,864,583.25 71,244,288.01
current year ("-" for losses)
(1) Total comprehensive
58,379,704.76 12,864,583.25 71,244,288.01
incomes
(2) Investment/(divestment)
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity
instruments
c. Amount of the share-based
payment included in the
owners' equity
d. Others
(3) Distribution of profits
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a. Surplus reserves
b. Distribution to owners or
shareholders
c. Others
(4) 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
(5) Special reserves
a. Appropriation for current
period
b. Use in current period
(6) Others
4. Ending balance of the
548,589,600.00 1,003,282,687.73 75,169,489.81 4,546,242.52 -224,836,410.83 1,406,751,609.23
current period
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
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Notes to the Financial Statements
(Amounts are expressed in RMB unless otherwise stated)
3. Basic information of the Company
3.1 Company Profile
Shang Gong Group Co., Ltd., a joint stock limited company which publicly issued A & B shares on
Shanghai Stock Exchange, is the first listed company in the sewing machinery industry of China. The
Company was incorporated in April 1994. The enterprise unified social credit code is
91310000132210544K. The organizational form of the Company is a joint stock limited company (a
Sino-foreign joint venture and a listed company) and the registered capital amounts to RMB
548,589,600.00. The registered address is Room A-D, Floor 12, Orient Mansion, No. 1500 Century Avenue,
China (Shanghai) Pilot Free Trade Zone and the head office is located in No. 1566 New Jinqiao Road,
Pudong New Area, Shanghai, China. The legal representative is Mr. Zhang Min.
On May 22, 2006, it was decided on the General Meeting on equity division reform by the Company that:
the non-tradable equity stockholders pay partially their shares to all the tradable equity shareholders at a
ratio of 10 to 6 as consideration of getting tradable rights. After the above consideration of share donation,
the total number of shares remains unchanged, but consequently the equity structure has changed. As at
December 31, 2013, there were 448,886,777 shares in total.
On February 28, 2015, the China Securities Regulatory Commission approved the non-public offering of A
shares of the Company under the Official Reply to the Approval of Non-public Offering of Shares of Shang
Gong Group Co., Ltd. ([2015] No. 237). The number of shares issued was 99,702,823.00 and the total
number of share capital after the issue was 548,589,600.00. The Company handled equity registration and
escrow formalities with the CSDC Shanghai Branch; the corresponding registered capital was changed to
RMB 548,589,600.00 and had been verified by the Verification Report (PCPAR [2015] No.111126) issued
by BDO China Shu Lun Pan Certified Public Accountants LLP on March 26, 2015.
As at June 30, 2016, the total number of share capital is 548,589,600.00, 100% of which are shares without
restrictive conditions for sales.
The Company belongs to special equipment manufacturing industry; main operating activities of the
Company are: production and sales of sewing equipment.
The Company's parent company is Shang Gong Group Co., Ltd. and its actual controller is Shanghai
Pudong New Area State-owned Assets Supervision and Administration Commission.
This financial report has been approved by the 31st meeting of the seventh board of directors on August 29,
2016.
3.2 Scope of consolidated financial statements
As of June 30, 2016, subsidiaries within the scope of the consolidated financial statements of the Company
are as follows:
Subsidiaries
1. Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd.
2. DAP (Shanghai) Co., Ltd.
3. SMPIC IMPORT & EXPORT CO.,LTD.
4. Shanghai SGSB Electronics Co., Ltd.
5. Shanghai SGSB Asset Management Co., Ltd.
6. Shanghai Sewing Construction Property Co., Ltd.
7. Dürkopp Adler Sewing Equipment (Suzhou) Co., Ltd.
8. ShangGong (Europe) Holding Corp. GmbH
9. Zhejiang SG & GEMSY Sewing Technology Co., Ltd.
10. Shanghai Shensy Enterprise Development Co., Ltd
11. Shanghai SGSB Finance Lease Co., Ltd.
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See “Note 10 Changes in the scope of consolidation" and “Note 9 Equity in other subjects" for details of
the scope of consolidated financial statements in the current year and the changes thereof.
4. Preparation basis of financial statements
4.1 Preparation basis
The Company prepares the financial statements based on going concern, according to the transactions and
events actually occurred and in accordance with the Accounting Standards for Business Enterprises - Basic
Standard and various specific accounting standards, application guidance and interpretations for accounting
standards for business enterprises and other relevant provisions (hereinafter collectively referred to as
"Accounting Standards for Business Enterprises") promulgated by the Ministry of Finance and disclosure
provisions of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing
Securities No. 15 - General Rules on Financial Reports of the China Securities Regulatory Commission.
4.2 Going concern
The Company has going-concern ability within 12 months as of the end of the reporting period and has no
matters or situations that may lead to serious doubts about the Company's going-concern ability.
5. Principal accounting policies and accounting estimates
Notes to specific accounting policies and accounting estimates:
The following disclosure has covered the Company's specific accounting policies and accounting estimates
prepared according to the actual production and operation characteristics.
5.1 Statement on compliance with accounting standards for business enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for
Business Enterprises, and truly and completely reflect the Companys financial position, operating results,
cash flows and other related information in the reporting period.
5.2 Accounting period
The accounting year is from January 1 to December 31 in calendar year.
5.3 Operating cycle
The Company's operating cycle is 12 months.
5.4 Functional currency
The Company adopts RMB as its functional currency.
5.5 Accounting treatment methods of business combinations under common control and not under
common control
Business combinations under common control: Assets and liabilities acquired from business combinations
by the Company are measured at book value of assets and liabilities (including goodwill formed from the
purchase of the acquiree by the ultimate controller) in the consolidated financial statements of the ultimate
controller. Stock premium in the capital reserve should be adjusted according to the difference between the
book value of net asset acquired from the combinations and that of consideration (or total face value of the
shares issued) paid. In case the stock premium in the capital reserve is not enough, the retained earnings
need to be adjusted.
Business combinations not under common control: Assets paid for consideration and liabilities incurred or
borne by the Company on the acquisition date shall be measured at their fair values. The difference
between the fair value and the book value should be included in the current profit and loss. The Company
shall recognize the difference of the combination costs in excess of the fair value of the identifiable net
assets acquired from the acquiree as goodwill. The Company shall include the difference of the
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combination costs in short of the fair value of the identifiable net assets acquired from the acquiree in the
current profit and loss after review.
Intermediary service charges such as audit fee, legal service fee, appraisal and consultancy fee paid for
business combinations and other directly relevant expenses are included in the current profit and loss when
incurred; the transaction costs for the issuance of equity securities shall be used to offset equities.
5.6 Preparation methods of consolidated financial statements
5.6.1 Scope of consolidation
The scope of consolidation of the Company's consolidated financial statements is recognized based on the
control. All subsidiaries (including the divisible part of the investee controlled by the Company) should be
included in the consolidated financial statements.
5.6.2 Consolidation procedure
The Company prepares consolidated financial statements based on its own financial statements and
financial statements of its subsidiaries according to other relevant materials. When the Company prepares
its consolidated financial statements, it shall regard the whole enterprise group as an accounting entity to
reflect the overall financial position, operating results and cash flows of the enterprise group according to
the requirements for recognition, measurement and presentation of the relevant Accounting Standards for
Business Enterprises and the uniform accounting policies.
Accounting policies and accounting periods adopted by all subsidiaries included in the consolidation scope
of the consolidated financial statements should be consistent with those of the Company. If accounting
policies and accounting periods adopted by all subsidiaries are inconsistent with those of the Company, in
the preparation of the consolidated financial statements, necessary adjustments shall be made according to
the accounting policies and accounting periods of the Company. For the subsidiaries acquired through
business combination not under common control, adjustments to their financial statements shall be made
based on the fair values of net identifiable assets on the acquisition date. For the subsidiaries acquired
through business combination not under common control, adjustments to their financial statements shall be
made based on the fair values of their assets and liabilities (including goodwill from acquisition of the
subsidiaries by the ultimate controller) in the financial statements of the ultimate controller.
The share of owner's equity, net profits and losses in the current year and comprehensive income in the
current year of subsidiaries attributable to minority shareholders should separately presented under the item
of owner's equity of the Consolidated Balance Sheet, the item of net profit of the Consolidated Income
Statement and the item of total comprehensive income. The difference formed by the loss in the current
year shared by minority shareholders of the subsidiaries in excess of the share of minority shareholders in
the owner's equity at the beginning of the year of the subsidiaries should be used to offset the minority
equity.
(1) Increase in subsidiaries or business
In the reporting period, if the Company increased subsidiaries or business from business combinations
under common control, then the beginning amount of the Consolidated Balance Sheet should be adjusted;
the incomes, expenses and profits from the combinations of the subsidiaries and business from the
beginning of the current year to the end of the reporting period shall be included in the Consolidated
Income Statement; cash flows from the combinations of the subsidiaries and business from the beginning of
the current year to the end of the reporting period shall be included in the Consolidated Cash Flow
Statement. At the same time, the Company should adjust the relevant items of the comparative statements
and deem that the reporting entity already exists when the ultimate controller starts its control.
Where the Company can control the investee under common control from additional investments, it should
deem that parties involved in the combination have make adjustments at the current state when the ultimate
controller starts its control. Equity investments held before the Company controls the acquiree, the relevant
profit and loss recognized during the period from the later of the date when the Company obtains the
original equity and the date when the acquirer and the acquiree are under common control, other
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comprehensive income and changes in other net assets shall be used to offset the retained earnings at the
beginning of the year or the current profit and loss in the period of the comparative statements.
In the reporting period, if the Company increased subsidiaries or business from business combinations not
under common control, then the beginning amount of the Consolidated Balance Sheet should not be
adjusted; the incomes, expenses and profits from the subsidiaries and business from the acquisition date to
the end of the reporting period shall be included in the Consolidated Income Statement; cash flows from the
subsidiaries and business from the acquisition date to the end of the reporting period shall be included in
the Consolidated Cash Flow Statement.
Where the Company can control the investee not under common control from additional investments, it
shall re-measure equity of the acquiree held before the acquisition date at the fair value of such equity on
the acquisition date and include the difference of the fair value and book value in the investment income in
the current year. Where equity of the acquiree held before the acquisition date involves in other
comprehensive income accounted for under equity method and other changes in owner's equity other than
net profit and loss, other comprehensive income and profit distribution, the relevant other comprehensive
income and other changes in owner's equity shall be transferred to investment income in the current year
which the acquisition date falls in, except for other comprehensive income from changes arising from
re-measurement of net liabilities or net assets of defined benefit plan.
(2) Disposal of subsidiaries or business
a. General treatment methods
In the reporting period, if the Company disposed subsidiaries or business, then the incomes, expenses and
profits from the subsidiaries and business from the beginning of the year to the disposal date shall be
included in the Consolidated Income Statement; cash flows from the combinations of the subsidiaries and
business from the beginning of the year to the disposal date shall be included in the Consolidated Cash
Flow Statement.
When the Company losses the control over the original subsidiary due to disposal of partial equity
investments or other reasons, the remaining equity investments after the disposal will be re-measured at the
fair value at the date of loss of the control. The difference of total amount of the consideration from
disposal of equities plus the fair value of the remaining equities less the shares calculated at the original
shareholding ratio in net assets of the original subsidiary which are continuously calculated as of the
acquisition date is included in the investment income of the period at the loss of control. Other
comprehensive income associated with the original equity investments of the subsidiary and other changes
in owner's equity other than net profit and loss, other comprehensive income and profit distribution are
transferred into investment income in the current year when the control is lost, except for other
comprehensive income from changes arising from re-measurement of net liabilities or net assets of defined
benefit plan.
b. Disposal of subsidiary by stages
Where the Company disposes the equity investments in subsidiary through multiple transactions and by
stages until it loses the control, if the effect of the disposal on the terms and conditions of all transactions of
equity investments in subsidiary and economic effect meet one or more of the following circumstance, it
usually indicates that the multiple transactions should be accounted for as a package deal:
i. These transactions are concluded at the same time or under the consideration of mutual effect;
ii. These transactions as a whole can reach a complete business results;
iii. The occurrence of a transaction depends on the occurrence of at least one other transaction;
iV. A single transaction is uneconomical but it is economical when considered together with other
transactions.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control belong
to a package deal, accounting treatment shall be made by the Company on the transactions as a transaction
to dispose subsidiaries and lose the control; however, the difference between each disposal cost and net
asset share in the subsidiaries corresponding to each disposal of investments before loss of the control
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should be recognized as other comprehensive income in the consolidated financial statements and should
be transferred into the current profit or loss at the loss of the control.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control do not
belong to a package deal, before the loss of the control, accounting treatment shall be made according to
the relevant policies for partial disposal of equity investments in the subsidiary without losing control; at
the loss of the control, accounting treatment shall be made according to general treatment methods for
disposal of subsidiaries.
(3) Purchase of minority interest of subsidiaries
The difference between long-term equity investments newly acquired by the Company through purchase of
minority interest and the subsidiarys identifiable net assets attributable to the Company calculated
continuously from the acquisition date (or the combination date) in accordance with the newly increased
shareholding ratio shall be charged against stock premium within capital reserves in the consolidated
balance sheet; when stock premium within capital reserves is insufficient to offset, the retained earnings
shall be adjusted.
(4) Partial disposal of equity investments in the subsidiary without losing control
The difference between the proceeds from partial disposal of equity investments in the subsidiary and the
share of identifiable net assets of the subsidiary attributable to the Company which are calculated
continuously from the acquisition date (or the combination date) and which are corresponding to the
disposal of long-term equity investments without losing control shall be charged against stock premium
within capital reserves in the consolidated balance sheet; when stock premium within capital reserves is
insufficient to offset, the retained earnings shall be adjusted.
5.7 Cash and cash equivalents
In preparing the cash flow statement, cash on hand and the unrestricted deposits of the Company are
recognized as cash. Short-term (maturing within three months as of the acquisition date) and highly liquid
investments held by the Company that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of change in value are recognized as cash equivalents.
5.8 Foreign currency transactions and translation of foreign currency statements
5.8.1 Foreign currency transactions
Foreign currency transactions are, on initial recognition, translated to RMB at the spot exchange ratesat the
dates of the transactions.
The balance of foreign currency monetary items is adjusted and translated into functional 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.
5.8.2 Translation of foreign currency statements
The assets and liabilities of foreign operation are translated to RMB at the spot exchange rate at the balance
sheet date. The equity items, excluding “Retained earning”, are translated to RMB at the spot exchange
rates at the transaction dates. The income and expenses of foreign operation are translated to RMB at the
spot exchange rates or the rates that approximate the spot exchange rates at the transaction dates. The
resulting exchange differences are recognized in a separate component of equity.
Upon entire/partial disposal of a foreign operation, the entire/partial cumulative amount of the exchange
differences recognized in equity which relates to that foreign operation is transferred to profit or loss in the
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period in which the disposal occurs.
5.9 Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
5.9.1 Classification of financial instruments
At the initial recognition, financial assets and financial liabilities are classified as: financial assets or
financial liabilities measured at fair value through current profit and loss, including financial assets or
financial liabilities held for trading, and financial assets or financial liabilities that are directly to be
measured at fair value through current profit and loss, held-to-maturity investments, accounts receivable,
available-for-sale financial assets and other financial liabilities, etc.
5.9.2 Recognition basis and measurement method of financial instruments
(1) Financial assets (financial liabilities) measured at fair value through current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash
dividends that have been declared but not distributed and bond interest that has matured but not been
drawn). Relevant transaction expenses are included in the current profit and loss.
The interest or cash dividends to be received during the holding period is or are recognized as investment
income. Change in fair values is included in the current profit and loss at the end of the period.
Upon the disposal, difference between the fair value and the initial book-entry value is recognized as
investment income; meanwhile, adjustment is made to gains or losses from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at the sum of fair values (less the bond interest that has
matured but not been drawn) and relevant transaction expenses when acquired.
During the period of holding the investment, the interest income is calculated and recognized according to
the amortized costs and effective interest rate, and included in the investment income. The effective interest
rates are determined upon acquisition and remain unchanged during the expected remaining period, or a
shorter period if applicable.
Difference between the proceeds and the book value of the investment is recognized as investment income
upon disposal.
(3) Receivables
For creditors rights receivable arising from external sales of goods or rendering of service by the Company
and creditor's rights of other enterprises (excluding creditors right quoted in the active market) held by the
Company, including accounts receivable, other receivables, the initial recognition amount shall be the
contract price or agreement price receivable from the purchasing party; for those with financing nature,
they are initially recognized at their present values.
The difference between the amount received and the book value of accounts receivable is included in the
current profit and loss upon the recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash dividends
that have been declared but not distributed and bond interest that have matured but not been drawn) and
relevant transaction costs when acquired.
The interest or cash dividends to be received during the holding period is or are recognized as investment
income. Available-for-sale financial assets are measured at fair value at the end of the year and the changes
in fair value are included in other comprehensive income. However, equity instrument investments that
have no quoted price in the active market and of which fair values cannot be measured reliably and
derivative financial assets that relate to such equity instruments and that shall be settled through the
delivery of such equity instruments shall be measured at cost.
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Difference between the proceeds and the book value of the financial assets is recognized as investment
income upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair
value which is originally and directly included in other comprehensive income shall be transferred out and
recognized as the current profit and loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at fair values plus related transaction costs. The
subsequent measurement is based on amortized costs.
5.9.3 Recognition and measurement of transfer of financial assets
Upon occurrence of transfer of a financial asset, the Company shall de-recognize the transfer of the
financial asset if nearly all the risks and rewards associated with the ownership of the financial assets have
been transferred to the transferee; and shall not de-recognize the transfer of the financial asset if nearly all
the risks and rewards associated with the ownership of the financial assets are retained.
The principle of substance over form is adopted to determine whether a financial asset meets the above
de-recognition conditions for the financial asset. The transfer of a financial asset of the Company is
classified into the entire transfer and the partial transfer of financial asset. If the entire transfer of financial
asset satisfies the criteria for de-recognition, the difference between the amounts of the following two items
shall be included in the current profit and loss:
(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the accumulated amount of the changes in
fair value originally and directly included in shareholders equity (the situation where the financial asset
transferred is an available-for-sale financial asset is involved in).
If the partial transfer of financial asset satisfies the criteria for de-recognition, the entire book value of the
transferred financial asset shall be split into the derecognized part and recognized part according to their
respective fair value and the difference between the amounts of the following two items shall be included in
the current profit and loss:
(1) The book value of derecognized part;
(2) The sum of the consideration for the derecognized part and the portion of de-recognition corresponding
to the accumulated amount of the changes in fair value originally and directly included in owners' equity
(the situation where the financial asset transferred is an available-for-sale financial asset is involved in).
If the transfer of financial assets does not meet the de-recognition criteria, the financial assets shall continue
to be recognized and the consideration received will be recognized as a financial liability.
5.9.4 Derecognition criteria of financial liabilities
A financial liability shall be wholly or partly derecognized if its present obligations are wholly or partly
dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing
financial liabilities with any new financial liability, and the new financial liability is substantially different
from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing
financial liability, and shall at the same time recognize new financial liability.
Where substantial revisions are made to some or all of the contractual stipulations of the existing financial
liability, the Company shall derecognize the existing financial liability wholly or partly, and at the same
time recognize the financial liability with revised contractual stipulations as a new financial liability.
Upon whole or partial derecognition of financial liabilities, the difference between the book value of the
financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new
financial liabilities assumed) shall be included in the current profit and loss.
Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the
entire book value of financial liabilities according to the comparative fair value of the part that continues to
be recognized and de-recognized part. The difference between the book value allocated to the derecognized
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part and the considerations paid (including non-cash assets surrendered and the new financial liabilities
assumed) shall be included in the current profit and loss.
5.9.5 Determination method of fair value of financial assets and financial liabilities
Where there is an active market for financial instruments, the fair values shall be determined according to
quoted prices in active markets. Where there is no active market, the fair values shall be determined using
reasonable valuation techniques. At the time of valuation, the Company adopted valuation techniques
applicable in the current situation and supported by enough available data and other information, select
input values consistent with the features of assets or liabilities considered by market participants in the
transaction related to the assets or liabilities, and give priority to using the relevant observable input values.
Only when it is unable or impracticable to obtain the relevant observable input values, unobservable input
values can be used.
5.9.6 Test method and accounting treatment of depreciation of financial assets (excluding receivables)
Except for the financial assets measured at fair values through current profit and loss, the book value of
financial assets on the balance sheet date should be checked. If there is objective evidence that a financial
asset is impaired, provision for impairment shall be made.
(1) Provision for impairment of available-for-sale financial assets:
If the fair value of available-for-sale financial assets has significantly declined at the end of the period, or it
is expected that the trend of decrease in value is non-temporary after considering of various relevant factors,
the impairment shall be recognized, and accumulated losses from decreases in fair value originally and
directly included in owners' equity shall be all transferred out and recognized as impairment loss.
For available-for-sale debt instruments whose impairment losses have been recognized, if their fair values
rise in the subsequent accounting period and such rise is objectively related to the matters occurring after
the recognition of impairment loss, the previously recognized impairment loss shall be reversed and
recorded into the current profit and loss.
Impairment losses on available-for-sale equity instruments should not be reversed through profit and loss.
Criteria of the Company for "serious" decline of fair value of investments in available-for-sale equity
instruments: In general, for highly liquid equity investments that are actively traded in the market, over
50% of the decline is considered to be a serious fall. Criteria for "non-temporary" decline of fair value: In
general, if a continuous decline lasts for more than six months, it is considered as "non-temporary decline."
(2) Provision for impairment of held-to-maturity investments:
Measurement of provision for impairment loss on held-to-maturity investments is treated in accordance
with the measurement method of impairment loss on accounts receivable.
5.10 Provision for bad debts of receivables
5.10.1 Receivables that are individually significant but with provision for bad debts made on an individual
basis:
Assessment basis or standard of
Top five biggest balance accounts
amount individually significant
An impairment test shall be separately made and provision for bad debts shall
be made according to the difference between the present value of estimated
Method of provision for bad
future cash flows lower than the book value and should be included in the
debts of receivables that are
current profit and loss. For short-term receivables, the difference between
individually significant
expected future cash flows and the present value is too small to discount the
expected future cash flows when recognizing the relevant impairment losses.
5.10.2 Provision for bad debts of receivables made on credit risk characteristics portfolio basis:
Methods of provision for bad debts made on credit risk characteristics portfolio basis
Balances of receivables other than accounts receivable subject to provisions for bad debts on an
Portfolio
individual basis and other receivables
Methods of provision for bad debts made on the basis of portfolio
Portfolio Aging analysis method
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Provision for bad debts made at aging analysis method in the portfolio:
Proportion of provision for accounts Proportion of provision for other
Aging
receivable (%) receivables (%)
Within 1 year (including 1 year) 5 5
1 to 2 years 20 20
2 to 3 years 50 50
Over 3 years 100 100
5.10.3 Receivables that are individually insignificant but with provision for bad debts made on an
individual basis:
Reason for bad debt provision provided on an individual basis: Receivables of a particular object.
Method of provision for bad debts: An impairment test should be separately made. When there is objective
evidence suggesting that receivables are impaired, provision for bad debts shall be made at the difference of
present value of estimated future cash flows in short of their book values and should be included in the
current profit and loss.
5.11 Inventories
5.11.1 Classification of inventories
Inventories are classified into Materials in transit, raw materials, revolving materials, stock commodities,
goods in progress, dispatched goods, consigned processing materials and others.
5.11.2 Measurement method of dispatched inventories
Inventories are measured with weighted average method when dispatched.
5.11.3 Recognition basis for net realizable values of inventories of different categories
In normal operation process, for merchandise inventories for direct sale, including finished goods, stock
commodities and materials for sale, their net realizable values are determined at the estimated selling prices
minus the estimated selling expenses and relevant taxes and surcharges; in normal operation process, for
material inventories that need further processing, their net realizable values are determined at the estimated
selling prices of finished goods minus estimated costs to completion, estimated selling expenses and
relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their net
realizable values are calculated on the basis of contract price. If the quantities of inventories specified in
sales contracts are less than the quantities held by the Company, the net realizable value of the excess
portion of inventories shall be based on general selling prices.
At the end of the period, provisions for inventory depreciation reserve are made on an individual basis. For
inventories with large quantity and low unit price, the provisions for inventory depreciation reserve are
made on a category basis. For inventories related to the product portfolios manufactured and sold in the
same area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to
separate from other items for measurement purposes, the provisions for inventory depreciation reserve shall
be made on a portfolio basis.
Except that there is clear evidence that the market price is abnormal on the balance sheet date, the net
realizable value of inventory items shall be recognized at the market price on the balance sheet date.
Net realizable value of inventory items at the end of the year is recognized at the market price on the
balance sheet date.
5.11.4 Inventory system
Perpetual inventory system is adopted.
5.11.5 Amortization method of low-cost consumables and packaging materials
(1) one-off amortization method is adopted for low-cost consumables;
(2) one-off amortization method is adopted for packaging materials.
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5.12 Long-term Equity Investments
5.12.1 Criteria for judgment of common control and significant influence
The term common control refers to the joint control, according to the relevant provisions, over an
arrangement, of which the relevant activities should be agreed and decided by the participants that share the
control. Where the Company and other investors exert common joint control over the investee and the
Company is entitled to net assets of the investee, the investee is the joint venture of the Company.
Significant influence refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies
with other parties. Where the Company is able to exert significant influence over the investee, the investee
is its associate.
5.12.2 Recognition of initial investment costs
(1) Long-term equity investments acquired from business combination
Business combination under common control: if the Company makes payment in cash, transfers non-cash
assets or bears debts and issues equity securities as the consideration for the business combination, the book
value of the owner's equity of the acquiree in the consolidated financial statements of the ultimate
controller is recognized as the initial cost of the long-term equity investment on the combination date. In
case the Company can exercise control over the investee under common control for additional investment
or other reasons, the initial investment cost of long-term equity investments is recognized at the share of
book value of net asset of the acquiree after the combination in the consolidated financial statements of the
ultimate controller on the combination date. The stock premium should be adjusted at the difference
between the initial investment cost of long-term equity investments on the combination date and the book
value of long-term equity investments before the combination plus the book value of consideration paid for
additional shares; if there is no sufficient stock premium for write-downs, the retained earnings are
adjusted.
Business combination not under common control: The Company recognizes the combination cost
determined on the combination date as the initial cost of long-term equity investments. Where the
Company can exercise control over the investee not under common control for additional investments or
other reasons, the initial investment cost changed to be accounted for under the cost method should be
recognized at the book value of originally held equity investments plus costs of additional investments.
(2) Long-term equity investment acquired by other means
For a long-term equity investment acquired through making payments in cash, its initial cost is the actually
paid purchase cost.
For a long-term equity investment acquired from issuance of equity securities, its initial cost is the fair
value of the issued equity securities.
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out
and traded in can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes
and surcharges payable unless there is any conclusive evidence that the fair values of the assets traded in
are more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value
of the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost of
long-term equity investment traded in.
For a long-term equity investment acquired from debt restructuring, its initial cost is determined based on
the fair value.
5.12.3 Subsequent measurement and recognition of gains and losses
(1) Long-term equity investment accounted for under the cost method
Long-term equity investments in subsidiaries are accounted for under the cost method. Except for the actual
price paid for acquisition of investment or the cash dividends or profits contained in the consideration
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which have been declared but not yet distributed, the Company recognizes the investment income in the
current year at the cash dividends or profits declared by the investee.
(2) Long-term equity investments accounted for under the equity method
Long-term equity investments in associates and joint ventures are accounted for under the equity method. If
the cost of initial investment is in excess of the proportion of the fair value of the net identifiable assets in
the investee when the investment is made, the difference will not be adjusted to the initial cost of the
long-term equity investments; if the cost of initial investment is in short of the proportion of the fair value
of the net identifiable assets in the investee when the investment is made, the difference will be included in
the current profit and loss.
The Company shall recognize the investment income and other comprehensive income at the shares of net
profit and loss and other comprehensive income realized by the investee which the Company shall enjoy or
bear and adjust the book value of long-term equity investments at the same time; the Company shall
calculate the shares according to profits or cash dividends declared by the investee and correspondingly
reduce the book value of long-term equity investments; the book value of long-term equity investments
shall be adjusted according to the investee's other changes in owner's equity other than net profit and loss,
other comprehensive income and profit distribution, which should be included in owner's equity.
The share of the investee's net profit or loss should be recognized after adjustments are made to net profit
of the investee based on the fair value of identifiable net assets of the investee upon acquisition of
investments and according to accounting policies and accounting period of the Company. When holding the
investment, the investee should prepare the consolidated financial statements, it shall account for the
investment income based on the net profit, other comprehensive income and the changes in other owner's
equity attributable to the investee.
When the Company recognizes its share of loss incurred to the investee, treatment shall be done in
following sequence: firstly, the book value of the long-term equity investment shall be reduced. Secondly,
where the book value thereof is insufficient to cover the share of losses, investment losses are recognized to
the extent of book value of other long-term equities which form net investment in the investee in substance
and the book value of long term receivables shall be reduced. Finally, after all the above treatments, if the
Company is still responsible for any additional liability in accordance with the provisions stipulated in the
investment contracts or agreements, provisions are recognized and included into current investment loss
according to the obligations estimated to undertake.
(3) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between its book value and the actual price
shall be included in the current profit and loss.
For long-term equity investments accounted for under the equity method, when the Company disposes such
investments, accounting treatment should be made to the part that is originally included in other
comprehensive income according to the corresponding proportion by using the same basis for the investee
to directly dispose the relevant assets or liabilities. Owner's equity recognized at the changes in the
investee's other owner's equity other than net profit or loss, other comprehensive income and profit
distribution shall be transferred to the current profit and loss according to the proportion, except for other
comprehensive income from changes arising from re-measurement of net liabilities or net assets of defined
benefit plan.
In case the joint control or significant influence over the investee is lost for disposing part of equity
investments or other reasons, the remaining equity will be changed to be accounted for according to the
recognition and measurement principles of financial instruments. The difference between the fair value and
the book value on the date of the loss of joint control or significant influence should be included in the
current profit and loss. For other comprehensive income recognized from accounting of the original equity
investments under the equity method, accounting treatment should be made by using the same basis for the
investee to directly dispose the relevant assets or liabilities when the equity method is no longer adopted.
Owner's equity recognized from the investee's changes in other owner's equity other than net profit or loss,
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other comprehensive income and profit distribution should all transferred to the current profit and loss
when the equity method confirmed is no longer adopted.
In case the control over the investee is lost for disposing part of equity investments or other reasons, when
the Company prepares the individual financial statements, where the remaining equity after the disposal can
exercise joint control or significant effect on the investee, then such equity will be changed to be accounted
for under the equity method and the remaining equity is deemed to have been adjusted under the equity
method on acquisition; where the remaining equity after the disposal cannot exercise joint control or
significant effect on the investee, then accounting treatment shall be changed to be made according to the
relevant provisions on the recognition and measurement principles of financial instruments. The difference
between the fair value and the book value on the date of the loss of joint control or significant influence
should be included in the current profit and loss.
In case the disposed equity is acquired from additional investments or other reasons, when the Company
prepares the individual financial statements, where the remaining equity after the disposal is accounted for
under the cost method or the equity method, other comprehensive income and other owner's equity
recognized from the accounting of equity investments held before the acquisition date under the equity
method shall be transferred according to the proportion; where accounting treatment of the remaining
equity after the disposal is changed to be made according to the recognition and measurement principles of
financial instruments, all of other comprehensive income and other owner's equity shall be transferred.
5.13 Investment property
Investment properties are properties to earn rentals or for capital appreciation or both. Examples include
land leased out under operating leases, land held for long-term capital appreciation, buildings leased out
under operating leases, (including buildings that have been constructed or developed for future lease out
under operating leases, and buildings that are being constructed or developed for future lease out under
operating leases).
The Company adopts the cost model to measure all current investment properties. The Company adopts the
same depreciation policy for the investment property measured at cost model - building for renting as that
for the Companys fixed assets and the same amortization policy of land use right for renting as that for the
Companys intangible assets.
5.14 Fixed assets
5.14.1 Recognition criteria for fixed assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providing services,
renting or business management with useful lives exceeding one accounting year. Fixed assets will only be
recognized when all the following criteria are satisfied:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and
(2) the costs of the fixed asset can be measured reliably.
5.14.2 Depreciation method
Depreciation of fixed assets is provided on a category basis using the straight-line method. The
depreciation rates are determined according to the categories, estimated useful lives and estimated net
residual rates of fixed assets. If the components of a fixed asset have different useful lives or cause
economic benefit for the Company in different ways, different depreciation rate or method shall be adopted
for depreciation on an individual component basis.
Depreciation of fixed assets, depreciation period, residual rate and annual depreciation rates are as follows:
Category Depreciation life (years) Residual rate (%) Annual depreciation rate (%)
Buildings and constructions 5-50 0-10 1.8-20
Machinery equipment 5-15 0-10 6-20
Transportation equipment 3-14 0-10 6.43-33.33
Electronic equipment 3-14 0-10 6.43-33.33
Renovations of fixed assets 5-15 0 6.67-20
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Other equipment 3-14 0-10 6.43-33.33
5.15 Construction in progress
The book values of the construction in progress are stated at total expenditures incurred before reaching
working condition for their intended use. For construction in progress that has reached working condition
for intended use but relevant budgets for the completion of projects have not been completed, the estimated
values of project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and
depreciation should be provided according to relevant policies of the Company when working condition is
reached. After the completion of budgets needed for the completion of projects, the estimated values should
be substituted by actual costs, but depreciation already provided is not adjusted.
5.16 Borrowing costs
5.16.1 Recognition criteria for capitalization of borrowing costs
Borrowing costs include the interest on borrowings, the amortization of discount or premium, auxiliary
expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction
or production of assets eligible for capitalization should be capitalized and recorded into asset costs; other
borrowing costs should be recognized as costs according to the amount incurred and be included into
current profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets
which may reach their intended use or sale status only after long-time acquisition and construction or
production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) the asset disbursements have already incurred, which shall include the cash paid, non-cash assets
transferred or interest bearing debts undertaken for the acquisition and construction or production activities
for preparing assets eligible for capitalization;
(2) the borrowing costs has already incurred; and
(3) Purchase, construction or manufacturing activities that are necessary to prepare the asset for its intended
use or sale have already started.
5.16.2 Capitalization period of borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its
cessation; period of suspension for capitalization is excluded.
When the qualified asset under acquisition and construction or production is ready for the intended use or
sale, the capitalization of the borrowing costs shall be ceased.
When some projects among the acquired and constructed or produced assets eligible for capitalization are
completed and can be used separately, the capitalization of borrowing costs of such projects should be
ceased.
Where construction for each part of assets purchased, constructed or manufactured has been completed
separately but can be used or sold only after the entire assets have been completed, capitalization of
attributable borrowing costs should cease at the completion of the entire assets.
5.16.3 Period of capitalization suspension
If the acquisition and construction or production activities of assets eligible for capitalization are
interrupted abnormally and this condition lasts for more than three months, the capitalization of borrowing
costs should be suspended; if the interruption is necessary for the acquisition and construction or
production to prepare the assets for their intended use or sale, the capitalization of borrowing costs should
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continue. The borrowing costs incurred during interruption are recognized in the current profit and loss, and
the capitalization of borrowing costs continues after the restart of the acquisition and construction or
production activities of the assets.
5.16.4 Capitalization rate and measurement of capitalized amounts of borrowing costs
As for special borrowings borrowed for acquiring and constructing or producing assets eligible for
capitalization, the to-be-capitalized amount shall be determined at interest expense of special borrowing
actually incurred in the current period less the interest income of the borrowings unused and deposited in
bank or return on temporary investment.
As for general borrowings used for acquiring and constructing or producing assets eligible for
capitalization, the to-be-capitalized amount should be calculated by multiplying the weighted average of
asset disbursements of the part of accumulated asset disbursements exceeding special borrowings by the
capitalization rate of used general borrowings. The capitalization rate is calculated by using the weighted
average interest rate of general borrowings.
5.17 Intangible assets
5.17.1 Measurement of intangible assets
(1) The Company initially measures intangible assets at cost on acquisition; The costs of external purchase
of intangible assets comprise their purchase prices, related taxes and surcharges and any other directly
attributable expenditure incurred to prepare the asset for its intended use. If payments for the purchase of
intangible assets are extended beyond the normal credit terms with financing nature, the costs of intangible
assets are determined on the basis of present values of the purchase prices.
For intangible assets obtained from debtors in settlement of his liabilities in case of debt restructuring, they
should be initially stated at their fair values. Differences between the book values and the fair values of the
intangible assets are charged to profit or loss for the current period.
If the exchange of non-monetary assets has commercial substance, and the fair values of these assets can be
measured reliably, the book-entry values of intangible assets traded in are based on the fair values of the
intangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded
in are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of
the intangible assets traded in should be the book values of the assets traded out and relevant taxes and
surcharges paid, and no profit or loss shall be recognized.
(2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
As for intangible assets with limited useful life, straight-line amortization method is adopted in the period
when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets
generate economic benefit for enterprise cannot be forecasted, the intangible assets shall be deemed as
those with indefinite useful life and shall not be amortized.
5.17.2 Estimate of the useful life of the Intangible assets with finite useful lives:
Item Estimated useful lives
Land use right 50 years
Right to use trade mark 10 years
Patent and non-patent technology 4-8 years
Computer software 3-10 years
The useful lives and amortization methods of intangible assets with limited useful lives are reviewed at
each period end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of this period
were not different from those estimated before.
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5.18 Impairment of long-term assets
The Company will conduct the impairment test if any evidence suggests that the long assets, such as the
long-term equity investment and the investment property, fixed assets, construction in progress and
intangible assets, are impaired on the balance sheet date. If impairment test results indicate that the
recoverable amounts of the assets are lower than their carrying amounts, the provision for impairment is
made based on the differences which are recognized as impairment losses. The recoverable amounts of
intangible assets are the higher of their fair values less costs to sell and the present values of the future cash
flows expected to be derived from the assets. The provision for assets impairment is calculated and
recognized by the individual asset. If it is difficult to estimate the intangible amount of an individual asset,
the Company shall estimate the recoverable amount of the asset portfolio that the individual asset belongs
to. The asset portfolio is the minimum asset group that can independently generate the cash inflow.
The impairment test is at least conducted at the period-end in respect of the goodwill.
The Company conducts an impairment test for the goodwill. The book value of goodwill arising from
business combinations is amortized to relevant asset groups with a reasonable method since the date of
acquisition; or amortized to relevant combination of asset groups if it is difficult to be amortized to relevant
asset groups. The book value of goodwill is amortized to relevant asset groups or combinations of asset
groups according to the proportion of the fair value of such asset groups or combinations of asset groups in
the total fair value of relevant asset groups or combinations of asset groups. Where the fair value cannot be
reliably measured, it should be amortized according to proportion of the book value of each asset group or
combination of asset group in the total book value of relevant asset groups or combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containing
goodwill, if any indication shows that the asset groups or combinations of asset groups related to the
goodwill may be impaired, the Company shall first conduct an impairment test on the asset groups or
combinations of asset groups not containing goodwill, calculate the recoverable amount and compare it
with the relevant book value to recognize the corresponding impairment loss. Then the Company shall
conduct an impairment test on the asset groups or combinations of asset groups containing goodwill, and
compare the book value of these asset groups or combinations of asset groups (including the book value of
the goodwill apportioned thereto) with the recoverable amount. Where the recoverable amount of the
relevant asset groups or combinations of asset groups is lower than the book value thereof, the Company
shall recognize the impairment loss of the goodwill.
The above impairment loss is not reversed in the future accounting period once recognized.
5.19 Employee compensation
5.19.1 Accounting treatment of short-term remuneration
During the accounting period in which employees provide service to the Company, the short-term
remuneration actually incurred is recognized as liabilities and charged to the current profit or loss or the
relevant assets cost.
The medical insurance premium, work-related injury insurance premium and the housing provident fund
paid by the Company for its employees, together with the labor union expenditures and employee education
are used to calculate and determine the relevant employee compensation amount based on the prescribed
accrual basis and accrual proportion.
The non-monetary benefits for employees that can be measured reliably are measured at fair value.
5.19.2 Accounting treatment of benefits paid after departure
(1) Defined withdrawal plan
The basic endowment insurance premium and unemployment insurance premium paid by the Company for
its employees in accordance with relevant provisions of the local government are recognized as liabilities
and charged to the current profit or loss or the relevant assets cost, with the payable amount calculated
based on the local prescribed payment base and percentage, during the accounting period in which the
employees provide services to the Company.
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In addition to the basic endowment insurance, the Company also builds the enterprise annuity payment
system (supplementary pension insurance) in accordance with relevant national policies for enterprise
annuity system. The Company pays a certain percentage of the total employee compensation to the local
social institution, and record the relevant expenditures into the current profit or loss or the relevant assets
cost.
(2) Defined benefit plan
The Company attributes the welfare obligation arising from the defined benefit plan to the period during
which the employees provide services, in accordance with the formula determined under the estimated
accumulated welfare unit method, and records the same into the current profit or loss or the relevant asset
cost.
A net liability or net asset in relation to the defined benefit plan is recognized at the present value of the
obligation under the defined benefit plan less the deficit or surplus arising out of the fair value of the assets
in relation to the defined benefit plan. Where the defined benefit plan has any surplus, the Company will
determine the net assets in relation to the defined benefit plan at the lower of the surplus of the defined
benefit plan or the asset cap.
The obligations under the defined benefit plan, including the estimated payment obligation within 12
months following the annual report period during which the employees provide service, are discounted to
the present value at the market return of the national debt of which the term and currency match those of
the obligation under the defined benefit plan on the balance sheet date, or of the high-quality corporate debt
in an active market.
The service cost incurred by the defined benefit plan, together with the net interest on the net liability or net
asset in relation to the defined benefit plan, are charged to the current profit or loss or the relevant asset cost;
the change arising from the re-measurement of the net liability or net asset in relation to the defined benefit
plan are recorded into other comprehensive income and are not reversed to the profit or loss in the
subsequent accounting period.
The gains or losses on the settlement in respect of the defined benefit plan are recognized at the difference
between the present value and the settlement price of the obligation under the defined benefit plan on the
settlement date.
5.19.3Accounting treatment of dismissal welfare
Where the Company cannot unilaterally withdraw the dismissal welfare offered in view of the cancellation
of the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the restructuring
involving the payment of dismissal welfare (whichever is earlier), the employee compensation arising from
the dismissal welfare should be recognized as the liabilities and charged to the current profit or loss.
5.20 Estimated liabilities
5.20.1 Recognition criteria for estimated liabilities
The Company should recognize an obligation in relation to contingencies as an estimated liability, such as
the litigation, debt guarantee, loss-making contract or restructuring, when all the following conditions are
satisfied:
(1) That obligation is a present obligation of the Company;
(2) The performance of such obligation is likely to result in outflow of economic benefits from the
Company; and the amount of the obligation can be measured reliably.
5.20.2 Measurement of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required for
the performance of relevant present obligations. the risks, uncertainties, time value of money, and other
factors relating to the contingencies. If the time value of money is significant, the best estimates shall be
determined after discount of relevant future cash outflows.
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The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all
the outcomes within this range are equal, the best estimate shall be determined at the average amount of
upper and lower limits within the range.
Given the fact that there is no continuous range (or interval) for the necessary expenses, or probabilities of
occurrence of all the outcomes within this range are unequal despite such a range exists, in case that the
contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the
contingency involves two or more items, the best estimate should be determined according to all the
possible outcomes with their relevant probabilities.
When all or part of the expenses necessary for the settlement of an estimated liabilities are expected to be
compensated by a third party or other parties, the compensation shall be separately recognized as an asset
only when it is virtually certain that the compensation will be received. The amount recognized for the
compensation shall not exceed the book value of the estimated liabilities.
5.21 Revenues
5.21.1 Timing for recognition of revenues from sales of goods
Revenues from sales of goods are recognized when the Company has transferred to the buyer the
significant risks and rewards of ownership of the goods; the Company retains neither continuous
management rights associated with ownership of the goods sold nor effective control over the goods sold;
the relevant amount of revenue can be measured reliably; it is highly likely that the economic benefits
associated with the transaction will flow into the Company; and the relevant amount of cost incurred or to
be incurred can be measured reliably.
5.21.2 Recognition of the revenues from transfer of assets use right
When the economic benefit related to the transaction is probably to flow into the Company and the relevant
revenue can be reliably measured, the revenue from transfer of the assets use right is determined as follows:
(1) measured based on the length of time for which the Company's monetary funds is used by others and
the applicable interest rate; or
(2) amount of royalties revenues, which shall be measured according to the period and method of charging
as stipulated in the relevant agreements or contracts.
5.21.3 Measurement principles and methods of completion stage where revenues from rendering of labor
are recognized under percentage-of-completion method
If the outcome of transactions can be estimated reliably at the balance sheet date, revenues from rendering
of labor services are recognized under the percentage-of-completion method. The percentage of completion
is determined by measurement of completed work as a percentage of total estimated costs.
Revenues from rendering of labor services are determined by prices stated in the contracts or agreements,
whether already received or to be received, unless such relevant prices are unfair. The current revenue from
the rendering of labor services is recognized at the amount of multiplying the total revenue from the
rendering of labor services by completion progress and deducting the accumulated revenue from the
rendering of labor services recognized in previous accounting periods on the balance sheet date; meanwhile,
the current cost of labor services is carried forward by the amount of multiplying the total costs of the
rendering of labor services by completion progress and deducting the accumulated revenue from the
rendering of labor services recognized in previous accounting periods.
When the outcome of transactions involving the rendering of services cannot be estimated reliably,
revenues shall be recognized and measured at the balance sheet date as follows:
(1) If the service costs incurred are expected to be fully recoverable, the amounts equal to the labor costs
incurred shall be recognized as revenues and the equivalent amounts of labor costs shall be carried forward;
(2) If the service costs incurred are not expected to be fully recoverable, the labor costs incurred shall be
included in the current profit and loss, with no revenue from the rending of labor services not recognized.
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5.22 Government subsidies
5.22.1 Types
Government grants refer to the monetary or non-monetary assets obtained by the Company from the
government for free. Government subsidies are classified into government subsidies related to assets and
government subsidies related to income.
Government grants relating to purchase or construction of long-term assets, such as fixed assets and
intangible assets, etc., shall be recognized as deferred income and amortized over the useful lives of assets
constructed or purchased and charged to non-operating income by stage. Government subsidies related to
income refer to those other than the government subsidies related to assets.
The Company divides the government subsidies into those related to assets according to the following
specific standards: the government subsidies acquired by the Company to acquire, construct or otherwise
form the long-term assets;
The Company divides the government subsidies into those related to income according to the following
specific standards: the government subsidies other than those related to assets;
If the targets of subsidies are not specified in the government documents, the basis for the Company to
determine the classification of the subsidies related to assets or income is: Whether such government
subsidies are used to acquire, construct or otherwise form the long-term assets
5.22.2 Accounting treatment
Government subsidies relating to assets shall be recognized as deferred income and amortized over the
useful lives of assets constructed or purchased and charged to non-operating income by stage;
If government subsidies related to income are used to compensate the Companys relevant expenses or
losses in future periods, such government subsidies should be recognized as deferred income on acquisition
and be included into the current non-operating income in the period of recognizing relevant expenses; if
government subsidies related to income are used to compensate the enterprises relevant expenses or losses
incurred, such government subsidies are directly included into the current non-operating income on
acquisition.
5.23 Deferred income tax assets and deferred income tax liabilities
Deferred income tax assets shall be recognized for deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be
utilized. Deferred income tax assets should be recognized for deductible temporary differences to the extent
that it is probable that taxable profit will be available against which the deductible temporary differences
can be utilized.
Taxable temporary differences are recognized as deferred income tax liabilities except in special
circumstances.
Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not be
recognized include: the initial recognition of goodwill; other transactions or events excluding business
combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when
occurred.
If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and
discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the
current period shall be presented based on the net amount after offset.
When the Company has the legal rights to balance income tax assets and income tax liabilities for the
current period with net settlement, and deferred income tax assets and deferred income tax liabilities are
related to the income tax which are imposed on the same taxpaying subject by the same tax collection
authority or on different tax paying subjects, but, in each important future period in connection with the
reverse of deferred income tax assets and liabilities, the involved tax paying subject intends to balance
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income tax assets and liabilities for the current period with net settlement at the time of obtaining assets and
discharging liabilities, deferred income tax assets and deferred income tax liabilities shall be presented
based on the net amount after offset.
5.24 Lease
5.24.1 Accounting Treatment of operating lease
(1) Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the
whole lease period (including rent-free period) and shall be included in the current expenses. Initial direct
costs relating to lease transactions incurred by the Company shall be recognized as the current expenses.
If the expense related to the lease which shall be paid by the Company is assumed by the lesser of the asset,
then such expenses shall be deducted from total lease fees, and the balances shall be amortized over the
lease term s and charged to the current expenses.
The lease fees received for the assets acquired under lease shall be recognized as current expenses over the
lease terms (including rent-free periods) on a straight-line basis. The initial direct costs related to lease
transactions paid by the Company, included in the current expenses; if a larger amount is to be capitalized,
according to confirm the same basis throughout the period of the lease installments related to the lease
income is recognized in profit gains.
If expenses relating to leases which should be borne by the lessee of the assets are paid by the Company,
they shall be deducted from the total lease income and the balances shall be amortized over the lease terms
by the Company.
5.25 Discontinued operation
Discontinued operation is the component that meets any of the following conditions, is disposed or
classified as the held-for-sale one and can be separately distinguished at the time of preparation of financial
statements:
(1) Such component represents an independent primary business or a major business area;
(2) Such component is part of the disposition plan for an independent primary business or a major business
area;
(3) Such component is a subsidiary acquired for just re-sale.
5.26 Adjustment for changes in principal accounting policies and accounting estimates
5.26.1 Adjustment for changes in accounting policies
There were no changes in the accounting policies in the current reporting period.
5.26.2 Adjustment for changes in principal accounting estimates
There were no changes in the accounting estimates in the current reporting period.
6. Tax
6.1 Main taxes and tax rates applicable to the company
Tax type Basis of tax assessment Tax rate
The output tax is calculated based on the revenue from sales of goods 3%, 5%, 6%,
and the provision of taxable labor services according to tax law, and 7%, 11%,
Value-added tax (VAT)
value added tax payable should be the balance of the output tax for 13%, 17%,
the period after deducting the deductible input tax for the period. 19%
Business tax Levied based on the taxable income 5%, 7%
16%-38%,
Enterprise income tax Levied based on the taxable income
25%
Urban maintenance Levied based on the actual payment of business tax, VAT and
1%, 5%, 7%
and construction tax consumption tax
Education surtax and Levied based on the actual payment of business tax, VAT and
2%, 3%
local education surtax consumption tax
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Note: The tax rate applicable to ShangGong Europe, a subsidiary of the Company, and other companies in
the scope of consolidation of ShangGong Europe varies in a range from 16% to 38%. The VAT rate is
19%.
7. Notes to the items of consolidated financial statements
7.1 Cash and cash equivalents
Unit: Yuan, Currency: RMB
Item Ending balance Beginning balance
Cash on hand 924,344.07 1,454,927.52
Bank deposit 617,499,047.28 759,297,757.06
Other cash and cash equivalents 4,228,585.38 12,819,498.11
Total 622,651,976.73 773,572,182.69
Including: Total amount abroad deposit 285,291,459.58 445,777,843.66
Details of cash and cash equivalents restricted for use due to mortgage, pledge or freezing are as follows:
Unit: Yuan, Currency: RMB
Item Ending balance Beginning balance Remark
L/C deposit 788,000.00 744,130.00 Note 1
Fixed term deposit used for guarantee 25,000,000.00 25,000,000.00 Note 2
Security deposit 2,845,319.24 3,127,393.87 Note 3
Total 28,633,319.24 28,871,523.87
Note 1: This item is the deposit of Shanghai SMPIC IMPORT & EXPORT CO., LTD. which was used to
open a letter of credit in China Construction Bank Shanghai Forth Branch.
Note 2: The counter guarantee provided by the Company for Commerzbank AG Shanghai Branch by
means of pledge of fixed-term deposit, amounting to RMB 25,000,000.00, to acquire the working capital
borrowed from Commerzbank AG Bielefeld Branch to ShangGong Europe, the subsidiary of the Company.
Note 3: The deposit, amounting to EUR 385,806.00, were pledged by ShangGong Europe to Commerzbank,
which were equivalent to RMB 2,845,319.24.
7.2 Notes receivable
7.2.1 Presentation of notes receivable by category
Item Ending balance Beginning balance
Bank acceptance bills 52,979,580.91 48,897,695.47
Commercial acceptance bills 11,963,827.98 14,605,166.45
Total 64,943,408.89 63,502,861.92
7.2.2 Notes that were endorsed by the Company to other companies but did not come due as at the end of
the period: None.
7.2.3 Notes receivable pledged as at the end of period: None.
7.2.4 Notes receivable transferred to accounts receivable due to the issuer's performance failure: None.
7.3 Accounts receivable
7.3.1 Disclosure of accounts receivable by category
Ending balance Beginning balance
Provision for bad
Type Book balance Provision for bad debt Book balance
Book value debt Book value
Amount % Amount % Amount % Amount %
Accounts
receivable with
significant
single amount 97,364,555.51 16.61 18,548,125.00 19.05 78,816,430.51 59,416,103.38 12.38 17,844,428.00 30.03 41,571,675.38
and individual
provision for
bad debts
Accounts
159,585,575.18 27.22 82,819,197.71 51.90 76,766,377.47 139,096,685.51 28.97 74,788,750.49 53.77 64,307,935.02
receivable with
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provision for
bad debts
accrued by
credit risk
features
portfolio:
Accounts
receivable with
individually
insignificant
329,236,381.88 56.17 8,381,683.53 2.55 320,854,698.35 281,547,899.02 58.65 14,263,060.85 5.07 267,284,838.17
amount and
individual
provision for
bad debt
Total 586,186,512.57 / 109,749,006.24 / 476,437,506.33 480,060,687.91 / 106,896,239.34 / 373,164,448.57
Note: EUR 1,062,078.78 (equivalent to RMB 7,832,831.00) of the ending balance of accounts receivable
was restricted, which was the deposit for the letter of guarantee from Deutsche Bank by PFAFF GmbH, the
subsidiary of ShangGong Europe by virtue of the accounts receivable.
Accounts receivable with individually significant amount and individual provision for bad debt as at the
end of period
Ending balance
Accounts receivable
(by unit) Provision for bad Proportion of
Accounts receivable Reason for provision
debt provision
No.1 38,671,763.10 Unimpaired according to the separate test
No.2 18,548,125.00 18,548,125.00 100.00% Impaired according to the separate test
No.3 16,135,148.34 Unimpaired according to the separate test
No.4 12,065,500.00 Unimpaired according to the separate test
No.5 11,944,019.07 Unimpaired according to the separate test
Total 97,364,555.51 18,548,125.00 / /
Bad-debt provision made under the aging analysis method in the portfolio:
Ending balance
Aging
Accounts receivable Provision for bad debt Proportion of provision
Within 1 year 74,593,326.91 3,729,666.39 5.00%
1-2 years 5,688,177.86 1,137,635.58 20.00%
2-3 years 2,704,349.36 1,352,174.69 50.00%
Over 3 years 76,599,721.05 76,599,721.05 100.00%
Total 159,585,575.18 82,819,197.71
Accounts receivable with individually insignificant amount and individual provision for bad debt as at the
end of period:
Accounts Ending balance
receivable (by unit) Accounts receivable Provision for bad debt Proportion of provision Reason for provision
Other insignificant
accounts receivable 2,020,198.55 2,020,198.55 100% Impaired according to the separate test
(Note 1)
Other insignificant
accounts receivable 9,356,189.83 Unimpaired according to the separate test
(Note 2)
Other insignificant
accounts receivable 203,209,795.76 6,361,484.98 3.13% Impaired according to the separate test
(Note 3)
Other insignificant
accounts receivable 108,922,529.09 Unimpaired according to the separate test
(Note 4)
Other insignificant
accounts receivable 5,727,668.65 Unimpaired according to the separate test
(Note 5)
Total 329,236,381.88 8,381,683.53 2.55% /
Note 1: It represents the accounts receivable of the subsidiary Shanggong Butterfly Sewing Machines Co.,
Ltd., for which the provision for impairment is made based on the separate test.
Note 2: It represents the accounts receivable of the subsidiary DAP (Shanghai) Co., Ltd., for which the
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provision for impairment is not made based on the separate test.
Note 3: It represents the accounts receivable of the subsidiary ShangGong Europe, for which the provision
for impairment is made based on the separate test.
Note 4: It represents the accounts receivable of the subsidiary Shanghai Shensy Enterprise Development
Co., Ltd., for which the provision for impairment is not made based on the separate test.
Note 5: It represents the accounts receivable of the subsidiary Zhejiang SG & GEMSY Sewing Technology
Co., Ltd., for which the provision for impairment is not made based on the separate test.
7.3.2 Provision for bad debts and their reversal or recovery in the current period
The provision for bad debts in the current period had an amount of RMB 4,615,836.21; provision for bad
debts that was reversed or recovered had an amount of RMB 2,996,948.61.
7.3.3 Actual write-off of accounts receivable in the current period
None.
7.3.4 No amount was due from shareholders with 5% or more of voting shares of the Company among the
accounts receivables as at the end of period.
7.3.5 Top five accounts receivable in terms of their ending balance
Ending balance
Company name
Accounts receivable Proportion in total accounts receivable ratio (%) Provision for bad debt
No.1 38,671,763.10 6.60
No.2 18,548,125.00 3.16 18,548,125.00
No.3 16,135,148.34 2.75
No.4 12,065,500.00 2.06
No.5 11,944,019.07 2.04
Total 97,364,555.51 16.61 18,548,125.00
7.3.6 See Note 11.5 for details of accounts receivable due from related parties.
7.4 Prepayment
7.4.1 Presentation of prepayments by aging
Ending balance Beginning balance
Aging
Book balance Proportion (%) Book balance Proportion (%)
Within 1 year 35,974,195.74 90.97 24,526,404.72 90.64
1-2 years 1,112,482.44 2.81 1,330,069.97 4.92
2-3 years 1,255,037.36 3.18 56,999.54 0.21
Over 3 years 1,202,509.31 3.04 1,145,112.92 4.23
Total 39,544,224.85 100.00 27,058,587.15 100.00
7.4.2 Top five advances to suppliers in terms of their ending balance
Supplier Ending balance Proportion in total ending balance of advances to suppliers (%)
No.1 3,193,979.94 8.08
No.2 1,862,615.84 4.71
No.3 1,793,000.00 4.53
No.4 1,699,261.12 4.30
No.5 1,600,288.91 4.05
Total 10,149,145.81 25.67
7.4.3 Provision for bad debts and their reversal or recovery in the current period
None.
7.4.4 No amount was due from shareholders with 5% or more of voting shares of the Company among the
advances to suppliers as at the end of period.
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7.5 Interests receivable
Applicable Not applicable
7.6 Dividends receivable
Applicable Not applicable
7.7 Other receivables
7.7.1 Classified disclosure of other receivables
Ending balance Beginning balance
Provision for bad Provision for bad
Type Book balance Book balance
debt Book value debt Book value
Amount % Amount % Amount %) Amount %
Other receivables with
individually significant
37,634,183.42 38.16 12,235,166.60 32.51 25,399,016.82 39,127,176.28 42.80 11,881,666.00 30.27 27,245,510.28
amount and individual
provision for bad debts
Other receivables with
provision for bad debts
25,213,097.32 25.57 16,882,224.85 66.96 8,330,872.47 24,148,336.32 26.42 16,797,190.17 69.56 7,351,146.15
accrued by credit risk
features portfolio:
Other receivables with
individually
insignificant amount 35,774,946.21 36.27 2,080.00 0.01 35,772,866.21 28,139,602.21 30.78 52,080.00 0.19 28,087,522.21
and individual
provision for bad debt
Total 98,622,226.95 / 29,119,471.45 / 69,502,755.50 91,415,114.81 / 28,730,936.17 / 62,684,178.64
Other receivable with individually significant amount and individual provision for bad debt as at the end of
period
Other receivable (by Ending balance
unit) Other receivables Provision for bad debt Proportion of provision Reason for provision
No.1 customer 12,235,166.60 12,235,166.60 100% Impaired according to the separate test
Export tax refund
12,069,016.82 Unimpaired according to the separate test
receivable (Note 1)
No.3 customer 5,000,000.00 Unimpaired according to the separate test
No.4 customer 4,830,000.00 Unimpaired according to the separate test
No.5 customer 3,500,000.00 Unimpaired according to the separate test
Total 37,634,183.42 12,235,166.60 / /
Note 1: It represents the export tax refund receivable arising from the export sale by the subsidiary, which
was unimpaired according to the separate impairment test.
Other receivables for which bad-debt provision is made under the aging analysis method in the portfolio:
Ending balance
Aging
Other receivables Provision for bad debt Proportion of provision
Within 1 year 5,667,579.90 283,378.99 5.00%
1-2 years 3,578,752.19 715,750.44 20.00%
2-3 years 167,339.62 83,669.81 50.00%
Over 3 years 15,799,425.61 15,799,425.61 100.00%
Total 25,213,097.32 16,882,224.85
Other receivables with individually insignificant amount and individual provision for bad debt at the end of
period
Content of other
Book balance Provision for bad debt Proportion of provision (%) Reason for provision
receivables
Other insignificant
2,080,923.76 Unimpaired according to the separate test
receivables (Note 1)
Other insignificant
2,080.00 2,080.00 100.00 Impaired according to the separate test
receivables (Note 2)
Other insignificant
5,682,497.11 Unimpaired according to the separate test
receivables (Note 3)
Other insignificant
227,522.23 Unimpaired according to the separate test
receivables (Note 4)
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Other insignificant
27,781,923.11 Unimpaired according to the separate test
receivables (Note 5)
Total 35,774,946.21 2,080.00 0.005
Note 1: It represents the other receivable of the subsidiary DAP (Shanghai) Co., Ltd., which was
unimpaired according to the separate test.
Note 2: It represents the other receivable of the subsidiary Shanggong Butterfly Sewing Machines Co., Ltd.,
for which the provision for impairment is made based on the separate test.
Note 3: It represents the other receivable of ShangGong Europe, which was unimpaired according to the
separate test.
Note 4: It represents the other receivable of the subsidiary SG & GEMSY, which was unimpaired according
to the separate test.
Note 5: It represents the other receivable of the subsidiary Shanghai Shensy Enterprise Development Co.,
Ltd, which was unimpaired according to the separate test.
7.7.2 Provision for bad debts and their reversal or recovery in the current period
The provision for bad debts in the current period had an amount of RMB 516,751.79; provision for bad
debts that was reversed or recovered had an amount of RMB 30,032.85.
7.7.3 Actual write-off of other receivable in the current period
None.
7.7.4 Top five other receivables in terms of their ending balance
Proportion in the ending
Provision for bad debt
Company name Nature Ending balance Aging balance of total other
Ending balance
receivable (%)
From within 1
No.1 Current account 12,235,166.60 year to over 3 18.35
year
Export tax refund
No.2 12,069,016.82 Within 1 year 10.83 11,537,041.00
receivable
No.3 Current account 5,000,000.00 Within 1 year 1.26 1,343,094.74
No.4 Current account 4,830,000.00 Within 1 year 0.89 948,662.60
No.5 Current account 3,500,000.00 Within 1 year 0.76 40,549.12
Total / 37,634,183.42 / 32.09 13,869,347.46
7.7.5 No amount was due from shareholders with 5% or more of voting shares of the Company among the
other receivables as at the end of period.
7.8 Inventories
7.8.1 Classification of inventories
Balance as at June 30, 2016 Balance as at January 1, 2016
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Raw materials 264,115,651.87 40,603,962.40 223,511,689.47 238,545,363.19 43,490,629.95 195,054,733.24
Goods in process 158,316,261.23 29,044,550.34 129,271,710.89 136,221,003.08 28,022,238.05 108,198,765.03
Finished goods 260,540,200.90 34,576,049.87 225,964,151.03 225,253,531.44 33,480,586.14 191,772,945.30
Revolving materials 2,226,523.33 2,226,523.33 4,677,820.47 2,254,846.51 2,422,973.96
Consigned
processing 1,155,462.49 1,155,462.49 1,806,944.86 1,806,944.86
materials
Material purchase 99,865.26 99,865.26 87,404.47 87,404.47
Cost of service 69,695,279.58 69,695,279.58 68,499,972.56 68,499,972.56
Goods in transit 20,270,150.48 20,270,150.48 13,451,415.73 13,451,415.73
Others 2,166,889.90 2,166,889.90 2,166,889.90 2,166,889.90
Total 778,586,285.04 106,391,452.51 672,194,832.53 690,710,345.70 109,415,190.55 581,295,155.15
7.8.2 Inventory provision
Item Balance as at Increase in current period Decrease in current period Balance as at June
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January 1, 2016 Reversal 30, 2016
Provision Others Others
or write-off
Raw materials 43,490,629.95 1,628,124.01 4,514,791.56 40,603,962.40
Goods in process 28,022,238.05 1,034,610.73 12,298.44 29,044,550.34
Finished goods 33,480,586.14 800,000.00 893,191.93 597,728.20 34,576,049.87
Revolving materials 2,254,846.51 2,254,846.51
Others 2,166,889.90 2,166,889.90
Total 109,415,190.55 800,000.00 3,555,926.67 7,379,664.71 106,391,452.51
7.9 Other current assets
Item Ending Balance Beginning Balance
Held-to-maturity investments 10,564,041.89 10,163,252.89
Input tax to be credited 12,731,587.50 11,845,579.89
Rentals and insurance fees 2,829,348.10 1,638,714.56
Overpaid enterprise income tax 11,730.26
Financial products 145,000,000.00 280,000,000.00
Structured deposit 155,000,000.00 70,000,000.00
Total 326,124,977.49 373,659,277.60
7.10 Available-for-sale financial assets
7.10.1 Available-for-sale financial assets
Ending Balance Beginning Balance
Item Provision for
Book balance Provision for impairment Book value Book balance Book value
impairment
Available for sale
debt instruments
Available for sale
120,286,798.34 120,286,798.34 150,415,095.52 1,698,131.91 148,716,963.61
equity instruments
Including:
Measured at fair 90,097,141.47 90,097,141.47 118,127,307.02 118,127,307.02
value
Measured at cost 30,189,656.87 30,189,656.87 32,287,788.50 1,698,131.91 30,589,656.59
Total 120,286,798.34 120,286,798.34 150,415,095.52 1,698,131.91 148,716,963.61
7.10.2 Available-for-sale financial assets measured at fair value as at June 30, 2016
Available-for-sale Available-for-sale
Classification of available-for-sale financial assets Total
equity instruments debt instruments
Cost of equity instruments 73,058,822.53 73,058,822.53
Fair value 90,097,141.47 90,097,141.47
Changes in fair value accumulated included in other comprehensive
17,038,318.94 17,038,318.94
income
Provision for impairment provided
7.10.3 Available-for-sale financial assets measured at cost as at June 30, 2016
Book balance Provision for impairment
Increase Increase Shareholdin Cash dividend
Investee Decrease g ratio in in current
As at January 1, in Decrease in As at June 30, As at January in As at June 30,
in current investee (%) period
2016 current current period 2016 1, 2016 current 2016
period
period period
Shanghai Fuji
29,140,749.49 29,140,749.49 15.92
Xerox Co., Ltd.
Shanghai Hirose
Precision Industrial 30.00 850,000.00
Co., Ltd. (Note 1)
Bank of Shanghai
951,400.00 951,400.00 <5
Co., Ltd.
Changshu Qixing
Elec-plating Co., 90.00
Ltd.
Shanghai Huazhijie
Plastic Co., Ltd. 736,283.66 736,283.66 736,283.66 736,283.66 23.04
(Note 2)
Shanghai Hualian
Sewing Machinery 400,000.00 400,000.00
Co., Ltd. (Note 3)
Shanghai
308,033.99 308,033.99 308,033.99 308,033.99 14.30
Xingguang
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Book balance Provision for impairment
Increase Increase Shareholdin Cash dividend
Investee Decrease g ratio in in current
As at January 1, in Decrease in As at June 30, As at January in As at June 30,
in current investee (%) period
2016 current current period 2016 1, 2016 current 2016
period
period period
Underwear (South
Africa)
Wuxi Shanggong
Sewing Machines 153,814.26 153,814.26 153,814.26 153,814.26 80.00
Co., Ltd (Note 4)
China Perfect
Machinery Co., 90,000.00 90,000.00 <5
Ltd.
Shanghai Baoding
Investment Co., 7,500.00 7,500.00 <5
Ltd.
Shanghai
Shanggong Jiarong
500,000.00 500,000.00 500,000.00 500,000.00 12.50
Sewing Machine
Trade Co., Ltd.
Pfaff Industrial
7.10 0.28 7.38 49.00
Iberica S.A.U.
Total 32,287,788.50 0.28 400,000 31,887,788.78 1,698,131.91 1,698,131.91 /
Note 1: Shang Gong Group Co., Ltd. holds 30% shares of Shanghai Hirose Precision Industrial Co., Ltd.
According to the articles of association, Shang Gong Group Co., Ltd. obtains guaranteed minimum revenue
each year. In addition, it does not participate in the decision-making process of daily operations, and does
not have significant influence on the invested enterprise. Therefore, it adopts cost accounting to measure its
revenue from its shares of Shanghai Hirose Precision Industrial Co., Ltd.
Note 2: Shang Gong Group Co., Ltd. holds 23.04% shares of Shanghai Huazhijie Plastic Co., Ltd.
According to the articles of association, Shang Gong Group Co., Ltd. does not have facto control over the
invested enterprise. In addition, it does not participate in the decision-making process of daily operations,
and does not have significant influence on the invested enterprise. Therefore, it adopts cost accounting to
measure its revenue from its shares of Shanghai Huazhijie Plastic Co., Ltd.
Note 3: Shanghai Hualian Sewing Machinery Co., Ltd. has been liquidated and closed in the Report Period.
Note 4: Shang Gong Group Co., Ltd. holds 80% shares of Wuxi Shanggong Sewing Machines Co., Ltd.
According to the articles of association, Shang Gong Group Co., Ltd. does not have facto control over the
invested enterprise. In addition, it does not participate in the decision-making process of daily operations,
and does not have significant influence on the invested enterprise. Therefore, it adopts cost accounting to
measure its revenue from its shares of Wuxi Shanggong Sewing Machines Co., Ltd.
7.10.4 Changes in available-for-sale financial assets for this year
Available-for-sale Available-for-sale
Classification of available-for-sale financial assets Total
equity instruments debt instruments
Balance of provision for impairment provided as at January 1, 2016 1,698,131.91 1,698,131.91
Provision in current period
Including: transfer-in from other comprehensive income
Decrease in current period
Including: reversal due to the increase in post balance sheet fair value
Balance of provision for impairment provided as at June 30, 2016 1,698,131.91 1,698,131.91
7.11 Long-term equity investment
Increase/decrease in the Report Period
End balance of
provision for
cash dividends
impairment
Declaration of
disinvestment
Investment
Provision for
impairment
Other
or profits
Open profit and loss Other Ending
Others
Investee Additional comprehensive
balance recognized changes Balance
investment income
under the equity in equity
adjustment
method
1. Joint
operation
Subtotal
2. Joint
venture
H.Stoll 238,872,154.81 11,338,598.93 -326,271.80 249,884,481.94
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AG &
Co. KG
Subtotal 238,872,154.81 11,338,598.93 -326,271.80 249,884,481.94
Total 238,872,154.81 11,338,598.93 -326,271.80 249,884,481.94
Note: In the Report Period, ShangGong Europe, wholly-owned subsidiary of the Company, invested in
German H.Stoll AG & Co. KG. ShangGong Europe became a limited partner which holds 26% equity of
Stoll KG.
7.12 Investment properties
Investment property measured at cost
Item Use right of leased land Leasehold improvement Buildings and constructions Total
1. Total original book value
(1) Balance as at January 1, 2016 151,624,469.83 50,523,752.24 2,583,492.92 204,731,714.99
(2) Increase in current period 1,866,244.17 1,866,244.17
- Outsourcing
- Inventories \ fixed assets \
transfer-in from construction in
progress
- Increase due to business
combinations
- Exchange rate fluctuation 1,866,244.17 1,866,244.17
(3) Decrease in current period
- Reclassification to fixed assets
- Others
(4) Balance as at June 30, 2016 153,490,714.00 50,523,752.24 2,583,492.92 206,597,959.16
2. Total accumulated depreciation
and accumulated amortization
(1) Balance as at January 1, 2016 77,618,137.89 13,906,301.91 344,465.76 91,868,905.56
(2) Increase in current period 2,678,194.35 586,508.58 119,393.00 3,384,095.93
- Provision or amortization 1,861,834.48 586,508.58 119,393.00 2,567,736.06
- Exchange rate fluctuation 816,359.87 816,359.87
(3) Decrease in current period
- Reclassification to fixed assets
- Others
(4) Balance as at June 30, 2016 80,296,332.24 14,492,810.49 463,858.76 95,253,001.49
3. Provision for impairment
(1) Balance as at January 1, 2015 7,031,328.87 7,031,328.87
(2) Increase in current period 277,281.23 277,281.23
- Provision
- Exchange rate fluctuation 277,281.23 277,281.23
(3) Decrease in current period
- Disposal
- Others
(4) Balance as at June 30, 2016 7,308,610.10 7,308,610.10
4. Book value
(1) Book value as at June 30, 2016 65,885,771.66 36,030,941.75 2,119,634.16 104,036,347.57
(2) Book value as at January 1, 2016 66,975,003.07 36,617,450.33 2,239,027.16 105,831,480.56
7.13 Fixed assets
Buildings and Machinery Transportation Electronic
Item Other equipment Total
constructions equipment equipment equipment
1. Total original book value
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(1) Balance as at January 1, 2016 427,577,258.71 308,851,865.56 15,621,511.70 4,118,493.33 222,468,855.52 978,637,984.82
(2) Increase in current period 11,486,058.32 35,995,051.14 186,741.88 215,201.35 14,735,333.87 62,618,386.56
- Acquisition 154,875.00 25,178,648.58 186,741.88 215,201.35 5,368,398.15 31,103,864.96
- Transfer-in from construction in
1,821,625.00 1,351,589.45 3,173,214.45
progress
- Reclassification from Investment
11,331,183.32 8,994,777.56 8,008,508.66 28,334,469.54
properties
-Increase due to business
6,837.61 6,837.61
combinations
(3) Decrease in current period 12,180.00 12,458,956.94 465,934.00 188,544.92 1,878,315.42 15,003,931.28
- Disposal or write-off 12,180.00 11,212,396.49 465,934.00 188,544.92 1,878,315.42 13,757,370.83
- Exchange rate fluctuation 1,246,560.45 1,246,560.45
1,026,252,440.
(4) Balance as at June 30, 2016 439,051,137.03 332,387,959.76 15,342,319.58 4,145,149.76 235,325,873.97
10
2. Total accumulated depreciation
(1) Balance as at January 1, 2016 204,574,789.41 224,080,185.14 9,061,909.59 2,409,658.56 194,074,594.83 634,201,137.53
(2) Increase in current period 11,839,904.40 14,181,725.64 697,036.73 432,373.88 12,240,244.36 39,391,285.01
- Provision 4,789,987.90 7,408,165.64 697,036.71 427,400.94 5,072,413.53 18,395,004.72
- Reclassification from Investment
7,049,916.50 6,773,560.00 4,972.94 7,161,177.68 20,989,627.12
properties
- Increase due to business
0 0.02 6,653.15 6,653.17
combinations
(3) Decrease in current period 3,403.40 7,713,589.35 240,925.00 139,400.08 1,795,213.06 9,892,530.89
- Disposal or write-off 3,403.40 7,697,117.61 240,925.00 139,400.08 1,795,213.06 9,876,059.15
- Exchange rate fluctuation 16,471.74 16,471.74
(4) Balance as at June 30, 2016 216,411,290.41 230,548,321.43 9,518,021.32 2,702,632.36 204,519,626.13 663,699,891.65
3. Provision for impairment
(1) Balance as at January 1, 2016 4,913,777.92 3,024,604.52 48,170.70 59,705.35 56,179.79 8,102,438.28
(2) Increase in current period
- Provision
(3) Decrease in current period 529,436.45 529,436.45
- Disposal or write-off 529,436.45 529,436.45
(4) Balance as at June 30, 2016 4,913,777.92 2,495,168.07 48,170.70 59,705.35 56,179.79 7,573,001.83
4. Book value
(1)Book value as at June 30,
217,726,068.70 99,344,470.26 5,776,127.56 1,382,812.05 30,750,068.05 354,979,546.62
2016
(2) Book value as at January 1,
218,088,691.38 81,747,075.90 6,511,431.41 1,649,129.42 28,338,080.90 336,334,409.01
2016
Note: among the above balance of fixed assets as at June 30, 2016, the buildings and constructions of RMB
130,223,047.59 (of which the euro is EUR 13,231,136.00, equivalent to RMB 97,579,628) are used to
obtain a loan from banks; see the Note 12.1 Commitments and Contingencies for information on mortgage
loans and credit extension.
7.13.2 There were no idle fixed assets as at June 30, 2016.
7.13.3 There were no held-for-sale fixed assets as at June 30, 2016.
7.13.4 There were no fixed assets without certificate of title as at June 30, 2016.
Reason for failure in completing the Expected date of completion of the formalities
Item Book value
formalities for obtaining certificates of title for obtaining the certificates of title
Buildings and Self-built housing, the certificates are in the
1,905,896.20
constructions (Note 1) process
Buildings and Self-built housing, the certificates are in the
298,703.26
constructions (Note 2) process
Total 2,204,599.46
Note1: Self-built housing of Shanghai SGSB Asset Management Co., Ltd.
Note2: Self-built housing of the Company.
7.14 Construction in progress
7.14.1 Construction in progress
Item Balance as at June 30, 2016 Balance as at January 1, 2016
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Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Sewing Equipment Engineering 9,325,034.67 9,325,034.67 3,917,373.59 3,917,373.59
Sewing unit and electric control 2,846,940.28 2,846,940.28 2,856,279.73 2,856,279.73
ERP project 1,974,852.20 1,974,852.20 1,629,852.20 1,629,852.20
Shenbei building decoration - Household
370,466.13 370,466.13 280,881.22 280,881.22
multi-functional sewing machine
Jinyuan Building project 236,388.53 236,388.53
SG & GEMSY equipment engineering 596,744.64 596,744.64
Nanxiang factory construction 397,674.76 397,674.76
Zhangjiagang base project 2,244,505.00 2,244,505.00 854,000.00 854,000.00
Modern logistics management center 14,550,000.00 14,550,000.00 14,550,000.00 14,550,000.00
Total 32,542,606.21 32,542,606.21 24,088,386.74 24,088,386.74
7.14.2 Major changes in construction in progress for the current period
Other decreases in current
Construction in progress
Proportion of Including:
Amount the Accumulated amount of Interest
period
Balance as at Increase transferred in the Balance as at June accumulated amount of interest capitalization Source
Project Name Budget
January 1, 2016 in current period fixed assets for 30, 2016 investment in interest capitalization rate in current of fund
the current period project in capitalization in current period (%)
budget (%) period
Sewing Self-
Equipment 3,917,373.59 8,571,536.08 3,163,875.00 9,325,034.67 owned
Engineering fund
Sewing unit and Raised
2,856,279.73 9,339.45 2,846,940.28
electric control fund
Raised
ERP project 5,000,000.00 1,629,852.20 345,000.00 1,974,852.20
fund
Shenbei building
decoration -
Raised
Household 280,881.22 89,584.91 370,466.13
fund
multi-functional
sewing machine
Self-
Jinyuan Building
236,388.53 236,388.53 owned
project
fund
SG & GEMSY Self-
equipment 596,744.64 596,744.64 owned
engineering fund
Self-
Nanxiang factory
397,674.76 397,674.76 owned
construction
fund
Self-
Zhangjiagang base
854,000.00 1,390,505.00 2,244,505.00 owned
project
fund
Modern logistics Self-
management 14,550,000.00 14,550,000.00 owned
center fund
Total 24,088,386.74 11,627,433.92 3,173,214.45 32,542,606.21
Note: Amount increased in current period of modern logistics management center project is caused by
Shanghai Shensy Enterprise Development Co., Ltd incorporated into the scope of consolidation.
7.15 Intangible assets
Right to use of Computer
Item Land use right Patent Others Total
trademarks software
1. Original book value
(1) Balance as at
90,660,420.23 79,375,268.18 20,161,268.51 3,082,118.91 5,627,912.64 198,906,988.47
January 1, 2016
(2) Increase in current
3,925,356.82 44,085.47 463,689.49 4,433,131.78
period
- Acquisition 840,750.00 44,085.47 22,905.66 907,741.13
- Exchange rate
3,084,606.82 221,937.36 3,306,544.18
fluctuation
- Others 218,846.47 218,846.47
(3) Decrease in current
218,846.47 218,846.47
period
- Disposal
- Others 218,846.47 218,846.47
(4) Balance as at June
90,660,420.23 83,300,625.00 20,161,268.51 2,907,357.91 6,091,602.13 203,121,273.78
30, 2016
2. Total accumulated
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Right to use of Computer
Item Land use right Patent Others Total
trademarks software
depreciation
(1) Balance as at
5,589,786.23 38,236,901.39 20,161,268.51 1,827,037.52 5,627,912.64 71,442,906.29
January 1, 2016
(2) Increase in current
1,214,880.03 6,716,163.70 158,032.63 355,969.61 8,445,045.97
period
- Provision 1,214,880.03 5,155,239.00 158,032.63 5,471.17 6,533,622.83
- Exchange rate
1,560,924.70 221,937.36 1,782,862.06
fluctuation
- Others 128,561.08 128,561.08
(3) Decrease in
128,561.08 128,561.08
current period
- Disposal
- Others 128,561.08 128,561.08
(4) Balance as at June
6,804,666.26 44,953,065.09 20,161,268.51 1,856,509.07 5,983,882.25 79,759,391.18
30, 2016
3. Provision for
impairment
(1) Balance as at
January 1, 2016
(2) Increase in current
period
- Provision
(3) Decrease in
current period
- Disposal
(4) Balance as at June
30, 2016
4. Book value
(1) Book value as at
83,855,753.97 38,347,559.91 1,050,848.84 107,719.88 123,361,882.60
June 30, 2016
(2) Book value as at
85,070,634.00 41,138,366.79 1,255,081.39 127,464,082.18
January 1, 2016
7.16 Development expenditures
Transfer-out in current period
Increase in current period
Recognized (4) Balance as
Balance as at Included in
Item Internal as at June 30,
January 1, 2016 the current
development others intangible 2016
profit and loss
expenditure assets
WeChat platform 374,528.29 56,603.77 431,132.06
Freight platform 1,203,773.57 467,924.52 1,671,698.09
Sewing equipment 35,533,287.07 1,757,752.63 2,899,768.85 6,173,892.82 34,016,915.73
New type paper shredder 23,000.00 23,000.00
Total 37,111,588.93 2,305,280.92 2,899,768.85 6,173,892.82 36,142,745.88
Note: Balances as at January 1, 2016 and June 30, 2016 of WeChat and Freight platform represent the
development costs of Shanghai Shensy Enterprise Development Co., Ltd. Balances as at January 1, 2016
and June 30, 2016 of sewing equipment represent the development costs of ShangGong (Europe) Holding
Corp. GmbH. Balances as at January 1, 2016 and June 30, 2016 of New type paper shredder represent the
development costs of Shanghai SMPIC IMPORT & EXPORT CO., LTD.
7.17 Goodwill
7.17.1 Book value of goodwill
Decrease in
Increase in current period
current period
Name of investee or goodwill Balance as at Balance as at June
Formation due to
formation events January 1, 2016 Exchange rate 30, 2016
business Disposal
fluctuation
combinations
PFAFF Industriesysteme und
65,913,195.29 2,599,294.18 68,512,489.47
Maschinen GmbH
Beisler 20,672,574.72 815,225.28 21,487,800.00
Total 86,585,770.01 3,414,519.46 90,000,289.47
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7.17.2 Provision for impairment of goodwill
Decrease in current
Increase in current period
Name of investee or goodwill Balance as at period Balance as at
formation events January 1, 2016 Exchange rate June 30, 2016
Provision Disposal
fluctuation
Beisler 20,672,574.72 815,225.28 21,487,800.00
Total 20,672,574.72 815,225.28 21,487,800.00
7.18 Long-term deferred expenses
Balance as at Increase in Amortization in Other decreases in
Item Balance as at June 30, 2016
January 1, 2016 current period current period current period
Mailbox rental 26,400.00 3,300.00 23,100.00
Network brand
320,702.67 16,980.00 303,722.67
registration fee
Landscape
232,371.90 24,460.20 207,911.70
Engineering
Warehouse
90,000.00 90,000.00
decoration
Monitoring
65,000.00 65,000.00
equipment
Cost of the tool
198,537.36 198,537.36
and moulds
Total 579,474.57 353,537.36 44,740.20 888,271.73
7.19 Deferred income tax assets / deferred income tax liabilities
7.19.1 Deferred income tax assets
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Provision for asset impairment 12,428,197.96 9,183,493.71
Unrealized profits of internal transactions 6,273,401.51 6,301,546.87
Deductible losses 305,975.02 305,975.02
Pension (Europe) 28,492,250.50 29,934,428.85
Total 47,499,824.99 45,725,444.45
7.19.2 Deferred income tax liabilities
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Appreciation of assets evaluation due to business
34,063,027.99 31,520,487.16
combinations not under common control
Others 6,096,782.07 3,615,783.99
Total 40,159,810.06 35,136,271.15
Appreciation of assets evaluation due to business combinations not under common control is formed
mainly due to the acquisition of subsidiaries overseas by ShangGong Europe.
7.20 Short-term loans
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Mortgage loans 19,322,500.00 18,589,424.00
Guaranteed loans 283,977,123.99 271,341,134.57
Credit loans 1,120,257.80 10,617,271.05
Total 304,419,881.79 300,547,829.62
Note 1: DA AG, the subsidiary of ShangGong Europe, raised loans from Commerzbank by pledging fixed
assets amounting to RMB 97,579,628.00 (EUR 13,231,136.00). RMB 19,322,500.00 (EUR 2,620,000.00)
of the loans belongs to short-term loan, and RMB 19,322,500.00 (EUR 2,620,000.00) belongs to long-term
loan.
Note 2: ShangGong Europe and PFAFF GmbH raised guaranteed loans from Commerzbank Bielefeld
Branch. (Details referred to below 10. Commitment) Shanghai Shensy Enterprise Development Co., Ltd
raised guaranteed loans amounting to RMB 27,900,000.00 from China Construction Bank Shanghai
Baoshan Branch, RMB 10,000,000.00 from Bank of Communications Shanghai Baoshan Branch, RMB
5,000,000.00 from Shanghai Pudong Development Bank Waigaoqiao Branch and RMB 5,000,000.00 from
Bank of Shanghai Fumin Branch, which was guaranteed by its subsidiary Shanghai Shensy Keller
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Network Co., Ltd.
7.21 Accounts payable
7.21.1. Presentation of accounts payable
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Payables to suppliers 198,360,365.50 161,024,708.59
Total 198,360,365.50 161,024,708.59
7.21.2 No amount was due to shareholders holding more than 5% (inclusive) voting shares of the Company
among amounts as at June 30, 2016.
7.21.3 Please refer to the Note 9.6 for details on amounts due to related parties among accounts payable as
at June 30, 2016.
7.21.4 There were no accounts payable with aging of more than one year and large amount among amounts
as at June 30, 2016.
7.22 Receipt in advance
7.22.1 Presentation of advances from customers
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Advances on sales 26,996,952.71 25,598,146.20
Total 26,996,952.71 25,598,146.20
7.22.2 There were no advances from shareholders holding more than 5% (inclusive) voting shares of the
Company among amounts as at June 30, 2016.
7.22.3 There were no advances from related parties among amounts as at June 30, 2016.
7.22.4. There were no advances from customers with aging of more than one year and large amount among
amounts as at June 30, 2016.
7.23 Employee compensation payable
7.23.1 Presentation of employee compensation payable
Increase in current Decrease in current
Item Balance as at January 1, 2016 Balance as at June 30, 2016
period period
Short-term
56,177,117.00 277,967,868.85 283,082,021.74 51,062,964.11
remuneration
Post-employment
benefits - defined 427,882.72 6,821,486.40 5,902,458.81 1,346,910.31
benefit plans
Dismissal welfare 418,939.66 2,164,604.62 2,334,205.19 249,339.09
Defined benefit plan
maturing within one 21,072,744.00 8,754,186.52 7,923,180.52 21,903,750.00
year
Total 78,096,683.38 295,708,146.39 299,241,866.26 74,562,963.51
Note: the defined benefit plan maturing within one year refers to the employee compensation payable
relating to ShangGong Europe.
7.23.2 Presentation of short-term remuneration
Balance as at Increase in Decrease in Balance as at June
Item
January 1, 2016 current period current period 30, 2016
(1) Salary, bonus, allowance and subsidy 55,728,197.76 228,953,081.45 234,553,884.89 50,127,394.32
(2) Employee welfare 88,691.79 43,145,660.35 43,233,823.14 529.00
(3) Social insurance expenses 246,872.69 3,741,234.40 3,327,468.82 660,638.27
Including: medical insurance premium 206,709.03 3,231,234.99 2,864,763.29 573,180.73
Work-related injury insurance premium 18,345.57 278,477.15 251,522.70 45,300.02
Maternity insurance premium 21,818.09 231,522.26 211,182.83 42,157.52
(4) Housing provident funds 110,220.80 1,626,581.90 1,475,309.90 261,492.80
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(5)Labor union expenditures and employee education
3,133.96 501,310.75 491,534.99 12,909.72
expenses
(6) Short-term paid absences
(7) short-term profit-sharing plan
Total 56,177,117.00 277,967,868.85 283,082,021.74 51,062,964.11
7.23.3 Presentation of defined benefit plans
Balance as at January 1, Increase in current Decrease in current Balance as at June 30,
Item
2016 period period 2016
Basic endowment
393,324.08 6,103,304.22 5,234,352.44 1,262,275.86
insurance premium
Unemployment insurance
34,558.64 336,137.06 341,227.85 29,467.85
premium
Payment of annuity 382,045.12 326,878.52 55,166.60
Total 427,882.72 6,821,486.40 5,902,458.81 1,346,910.31
7.24 Taxes and surcharges payable
Tax and surcharge items Balance as at June 30, 2016 Balance as at January 1, 2016
Value-added tax 717,120.20 1,627,575.29
Business tax 35,790.06 47,864.23
Enterprise income tax 40,864,534.31 42,415,008.13
Individual income tax 979,883.06 4,473,566.06
Urban maintenance and construction tax 85,659.88 88,576.02
Property tax 179,294.70
Educational surtax 72,433.32 73,626.10
River management fee 12,574.25 14,725.17
Water conservancy construction fund 12,697.15 24,237.67
Land use tax 121,189.92
Total 42,780,692.23 49,065,663.29
Overseas subsidiaries were subject to the statutory tax rates in accordance with the corresponding countries'
tax law.
7.25 Interest payable
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Interest on short-term borrowings 60,512.50 88,934.73
7.26 Dividends payable
Balance as at January 1, Reasons for failure to pay
Company name Balance as at June 30, 2016
2016 for more than one year
Light Industrial Holding Group Co., Ltd 959,269.79 959,269.79 long aging, unable to pay
Privately-owned corporate shares 73,549.07 73,549.07 long aging, unable to pay
Total 1,032,818.86 1,032,818.86
7.27 Other payables
7.27.1 Presentation of other payables by nature of accounts
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Other payables: 171,914,739.75 171,163,174.57
7.28 Non-current liabilities maturing within one year
Not applicable.
7.29 Other current liabilities
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Interest and rentals 698,703.22 319,502.32
Accrued exhibitions fee - Electricity fees 164,376.66
Total 863,079.88 319,502.32
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7.30 Long-term loans
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Mortgage loans 77,863,343.56 27,884,136.00
Credit loans 1,489,984.87 1,489,984.87
Total 79,353,328.43 29,374,120.87
Note: see Note 1 of Note 7.20 Short-term Loans for details on disclosed mortgage assets.
7.31 Long-term payables
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Others 74,338,217.87 4,724,683.15
Total 74,338,217.87 4,724,683.15
Note: Balance as at June 30, 2016 of Others includes final payment of acquiring H.Stoll AG & Co. KG
amounting to RMB 69,253,194.94.
7.32 Long-term employee compensation payable
7.32.1 Presentation of long-term employee compensation payable
Item Balance as at June 30, 2016 Balance as at January 1, 2016
1. Post-employment benefits - net liability of defined benefit plan 239,507,354.34 237,994,365.76
2. Dismissal welfare
3. Other long-term benefits 1,540,507.04 1,482,061.76
Total 241,047,861.38 239,476,427.52
Note: Defined benefit plan of ShangGong Europe is based on supporting commitment. The base of
measuring supporting liability is on insurance actuarial approach and hypothesis, not only consider known
and possessed right to draw defined benefit plan, but the increase of future payroll and defined benefit plan.
7.33 Other non-current liabilities
Item Balance as at June 30, 2016 Balance as at January 1, 2016
Other non-current liabilities 520,000.00 520,000.00
Total 520,000.00 520,000.00
7.34 Share capital
Increase (+) and decrease (-) for the current year
Item Balance as at January 1, 2016 Balance as at June 30, 2016
Issuance of new shares Others Sub-total
Total shares 548,589,600.00 548,589,600.00
7.35 Capital reserves
Decrease in current Balance as at June 30,
Item Balance as at January 1, 2016 Increase in current period
period 2016
Stock premium 851,345,853.61 851,345,853.61
Other capital reserves 104,940,167.82 11,871,558.22 116,811,726.04
Total 956,286,021.43 11,871,558.22 968,157,579.65
Note: Changes in capital reserve of subsidiaries within the combination scope were the reason for the
increase in other capital reserves.
7.36 Other comprehensive income
Current Period
Less: recognized
as other
Balance as at comprehensive Less: Balance as at June
Item Accrual before Attributable to Attributable to
January 1, 2016 income for income 30, 2016
income tax for the owners of the minority
previous years and tax
current period parent company shareholders
transferred in the expenses
profit or loss for
the current period
1. Other comprehensive income -36,674,709.19 -36,674,709.19
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that cannot be reclassified in the
loss and gain in the future
Including: change in
re-measurement of the net
-36,674,709.19 -36,674,709.19
liabilities and net assets under
defined benefit plan
A share in other comprehensive
income of investee that cannot be
reclassified in the losses and
gains under the equity method
2. Other comprehensive income
that will be reclassified in the -48,596,188.67 -21,624,435.26 -23,500,674.67 1,876,239.41 -72,096,863.34
loss and gain in the future
Including: a share in other
comprehensive income of
investee that will be reclassified
in the loss and gain under the
equity method
Losses and gains on the change
in fair value of available-for-sale 45,068,484.49 -28,030,165.55 -28,030,165.55 17,038,318.94
financial assets
Held-to-maturity investments
reclassified as losses and gains
on available-for-sale financial
assets
Effective portion of losses and
gains on cash flow hedges
Foreign currency translation
-93,664,673.16 6,405,730.29 4,529,490.88 1,876,239.41 -89,135,182.28
differences
Total other comprehensive
-85,270,897.86 -21,624,435.26 -23,500,674.67 1,876,239.41 -108,771,572.53
income
Note: The amounts above are other comprehensive income attributable to parent company.
7.37 Surplus reserves
Balance as at January 1, Increase in current Decrease in current Balance as at June 30,
Item
2016 period period 2016
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
7.38 Retained earnings
Item Current period Previous period
Adjustments to retained earnings as at December 31, 2015 350,523,121.40 193,106,033.92
Adjustments to total retained earnings as at January 1, 2016 ("+" for
increase, "-" for decrease)
Adjusted retained earnings as at January 1, 2016 350,523,121.40 193,106,033.92
Plus: net profit attributable to owners of the parent company for current
101,164,717.70 100,341,086.85
period
Less: withdrawal of statutory surplus reserves
Withdrawal of discretionary surplus reserves
Withdrawal of general risk reserves in current period
Ordinary share dividends payable
Ordinary share dividend transferred to share capital (paid-in capital)
Other transfer-out 451,687,839.10 293,447,120.77
Adjustments to retained earnings as at June 30, 2016 350,523,121.40 193,106,033.92
7.39 Operating income and operating costs
Current period Previous period
Item
Income Cost Income Cost
Primary business 1,314,252,118.76 924,558,225.41 1,012,319,769.02 687,978,806.08
Other businesses 45,090,410.69 29,942,064.00 26,742,320.07 13,683,424.76
Total 1,359,342,529.45 954,500,289.41 1,039,062,089.09 701,662,230.84
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7.40 Business taxes and surcharges
Item Current period Previous period
Business tax 822,711.29 1,038,198.21
Urban maintenance and construction tax 1,061,926.25 499,872.67
Educational surtax 798,583.35 378,953.28
Others 1,497,723.11 1,202,588.40
Total 4,180,944.00 3,119,612.56
7.41 Selling expenses
Item Current period Previous period
Employee compensation 54,152,469.93 46,923,736.41
Fix and after-sale service charges 9,471,495.27 7,883,535.51
Office expenses 1,925,818.50 1,348,806.64
Travelling expenses 7,777,406.50 7,323,743.45
Transportation cost 10,013,901.46 8,443,184.44
Advertising expense 2,588,996.06 2,786,858.53
Commission 12,983,415.23 9,389,082.61
Leasing and storage charges 2,988,594.08 4,283,239.87
Insurance premium 626,283.69 792,832.13
Packing expenses 20,789.73 9,561.71
Conference fees 1,097,735.43 751,926.35
Depreciation costs 885,340.61 363,048.58
Exhibition fees 1,543,023.79 3,020,714.30
Utility bills 22,560.95 6,557.49
Loading and unloading expenses 13,392.08 11,224.44
Samples, printing materials and scraps 4,975,397.89 4,399,830.64
Others 12,948,639.62 16,219,152.66
Total 124,035,260.82 113,957,035.76
7.42 General and administrative expenses
Item Current period Previous period
Employee compensation 60,728,834.32 52,268,080.59
Office expenses 3,503,878.91 1,655,571.01
Utility bills 467,566.82 398,877.76
Entertainment expenses 1,775,131.30 1,139,269.11
Property insurance premium 1,132,959.90 1,377,864.09
Conference fees 441,720.48 150,853.00
Travelling expenses 4,103,270.72 2,742,430.88
Depreciation costs 4,339,234.24 2,745,058.93
Repair charges 377,155.90 323,339.46
Transportation cost 1,268,999.53 628,854.29
Rental fees 1,718,338.58 1,635,198.11
Costs of borad meetings and supervisors' meetings 264,294.69 256,714.36
Agency fees and advisory expenses 5,695,258.76 5,241,031.04
Litigation cost 29,171.75 109,352.82
New product development expenses 35,847,223.71 22,386,716.12
Taxes and surcharges 1,231,380.14 325,579.36
Amortization of intangible assets 1,036,624.09 828,200.88
Others 7,135,331.59 6,237,392.86
Total 131,096,375.43 100,450,384.67
7.43 Financial expenses
Type Current period Previous period
Interest expenses 6,802,996.00 6,379,828.00
Less: interest income -920,275.58 -814,788.26
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Gains and losses on exchange 2,500,640.84 -2,356,547.53
Others 1,706,156.24 1,741,504.02
Total 10,089,517.50 4,949,996.23
7.44 Losses from asset impairment
Item Current period Previous period
Losses from bad debts 2,105,606.54 -4,235,208.57
Losses from inventory impairment -3,680,156.16 1,419,391.69
Losses from long-term investment impairment
Losses on impairment of goodwill
Total -1,574,549.62 -2,815,816.88
7.45 Investment income
Item Current period Previous period
Long-term equity investments measured under equity method 11,338,598.93
Investment income from disposal of long-term equity investments
Investment income from financial assets measured at fair value through
current profit and loss during the
Investment income from disposal of financial assets measured at fair value
through current profit and loss
1,071,204.85
Investment income from holding of held-to-maturity investments
Investment income from holding of available-for-sale financial assets 897,305.05 5,280,318.44
Investment income from disposal of available-for-sale financial assets 715,552.60
Gains from re-measurement of residual equity at fair value after the loss of
control right
Others 5,214,392.23 14,034,874.88
Total 18,165,848.81 20,386,398.17
Note: "others" mainly refer to the gains of RMB 11,279,013.70 from finance products among other current
assets and the investment income of RMB 2,755,861.18 from business combination not under common
control.
7.46 Non-operating income
Amounts included in the
Item Current period Previous period non-recurrent profit and loss
for the current period
Total gains from disposal of non-current assets 2,540,561.45 311,518.30 2,540,561.45
Including: gains from disposal of fixed assets 2,540,561.45 311,518.30 2,540,561.45
Gains on disposal of intangible assets
Gains from debt restructuring
Gains from exchange of non-monetary assets/Gains
from transaction of non-currency assets
Donation accepted
Government subsidies 4,973,690.84 1,639,575.49 3,173,690.84
Penalty revenue 4,799.00 100.00 4,799.00
Others 140,344.79 5,907,085.92 1,940,344.79
Total 7,659,396.08 7,858,279.71 7,659,396.08
Government subsidies included in current profit and loss
Asset-related /
Item Current period Previous period
income-related
Governmental financial subsidies from Pudong New Area 1,260,000.00 399,000.00 Income-related
Enterprise staff vocational training financial subsidies from Pudong New
14,117.78 Income-related
Area
Special funds of Shanghai Municipality for overseas investment cooperation 1,220,100.00 Income-related
Special subsidiary for replacing business tax with value-added tax 25,900.51 Income-related
Funds of Shanghai Hongkou District Finance Bureau of Shanghai
120,000.00 Income-related
Municipality for Supporting the Development of Enterprises
Special funds of industrial transformation and upgrading in Shanghai 500,000.00 Income-related
Subsidies for dying out of yellow-label cars 10,000.00 Income-related
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Subsidies for Management of Old Public Houses in Shanghai Municipality 73,672.55 10,475.49 Income-related
Finance of science and technology development 1,100,000.00 Income-related
Exhibition subsidies 80,000.00 Income-related
Sitang Economic Development Zone subsidies 1,800,000.00 Income-related
Total 4,973,690.84 1,639,575.49
7.47 Non-operating expenses
Amounts included in the
Item Current period Previous period non-recurrent profit and
loss for the current year
Total losses from disposal of non-current assets 3,098,496.16 113,231.77 3,098,496.16
Including: losses from disposal of fixed assets 3,098,496.16 113,231.77 3,098,496.16
Losses from disposal of intangible assets
Losses from debt restructuring
Losses from exchange of non-monetary assets
Donations made 200,000.00 200,000.00 200,000.00
Amercement and overdue fine outlay 2,211.58 16,175.07 2,211.58
Others 5,000.00
Total 3,300,707.74 334,406.84 3,300,707.74
7.48 Income tax expenses
Item Current period Previous period
Current income tax calculated according to the tax law and relevant
43,949,360.97 37,361,247.95
provisions
Deferred income tax expenses 1,432,040.66 -1,524,433.58
Total 45,381,401.63 35,836,814.37
7.49 Items of statement of cash flows
7.49.1 Cash received from other operating activities
Item Current period Previous period
Current accounts and advances withdrawn 18,027,242.83 12,961,792.44
Special subsidies and grants 4,973,690.84
Interest income 1,353,725.70 814,788.26
Non-operating income 751,209.40
Other income 592,366.85
Total 25,698,235.62 13,776,580.70
7.49.2 Cash paid for other operating activities
Item Current period Previous period
Current accounts paid 16,128,438.76 7,861,986.09
Selling expenses 50,284,745.90 43,331,239.23
General and administrative expenses 44,224,118.91 26,251,928.45
Non-operating expenses 272,798.76 221,175.07
Bank charges and other expenses 7,541,356.66 1,741,504.02
Total 118,451,458.99 79,407,832.86
7.49.3 Cash received for other investing activities
Item Current period Previous period
Cash and cash equivalents received at combining date 60,250,855.95
Total 60,250,855.95
7.49.4 Cash received from other financing activities
Item Current period Previous period
Cash allocation of Shanghai Huayuan Enterprise Development Co., Ltds
4,333,644.42
bankruptcy reorganization
Mortgage and pledge (e.g. certificate of term deposit, security deposit) 355,261.67
Total 355,261.67 4,333,644.42
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7.49.5 Cash paid for other financing activities
Item Current period Previous period
Directiaonal seasoned offering and the relevant expenses
Mortgage and pledge (e.g. certificate of term deposit, security deposit) 277,449.14
Capital reduction of minority shareholder
Total 277,449.14
7.50 Supplementary information to statement of cash flows
7.50.1 Supplementary information to the statement of cash flows
Supplementary information: Current period Previous period
1. Net profit adjusted to cash flows from operating activities
Net profit 114,157,827.43 109,812,102.58
Plus: provision for assets impairment -1,574,549.62 -2,815,816.88
Depreciation of fixed assets and others 20,962,740.78 15,434,126.76
Amortization of intangible assets 6,533,622.83 5,037,831.04
Amortization of long-term deferred expenses 34,600.20 3,300.00
Losses on disposal of fixed assets, intangible assets and other long-term
547,478.46 -261,822.93
assets ("-" for gains)
Losses on write-off of fixed assets （“-” for gains） 10,456.25 63,536.40
Losses from changes in fair value ("-" for gains)
Financial expenses (“-” for income) 9,303,636.84 9,545,162.26
Investments losses ("-" for gains) -18,165,848.81 -20,386,398.17
Decreases in the deferred income tax assets (“-” for increases) -1,774,380.54 -89,496.38
Increases in the deferred income tax liabilities (“-” for decreases) 5,023,538.91 -2,334,944.47
Decreases in inventories (“-” for increases) -87,875,939.34 -11,958,536.78
Decreases in operating payables (“-” for increases) -129,324,032.36 -65,699,090.99
Increases in operating payables (“-” for decreases) 36,197,763.26 -44,757,162.75
Others
Net cash flows from operating activities -45,943,085.71 -8,407,210.31
2. Significant investment and financing activities involving no cash
receipts and payments
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets acquired under finance lease
3. Net change in cash and cash equivalents:
Balance of cash as at June 30, 2016 594,018,657.49 601,309,534.75
Less: balance as at January 1, 2016 of cash 744,700,658.82 581,848,889.10
Plus: balance as at June 30, 2016 of cash equivalents
Less: balance as at January 1, 2016 of cash equivalents
Net increase in cash and cash equivalents -150,682,001.33 19,460,645.65
7.50.2 Composition of cash and cash equivalents
Item Balance as at June 30, 2016 Balance as at January 1, 2016
1. Cash 594,018,657.49 744,700,658.82
Including: cash on hand 924,344.07 1,454,927.52
Unrestricted bank deposit 592,499,047.28 731,170,363.19
Other unrestricted monetary funds 595,266.14 12,075,368.11
Deposit in central bank available for payment
Deposits with banks and other financial institutions
Loans from banks and other financial institutions
2. Cash equivalents
Including: bond investments maturing within three months
3. Balance of cash and cash equivalents as at June 30, 2016 594,018,657.49 744,700,658.82
Including: cash and cash equivalents restricted for use by the parent
company or subsidiaries within the group
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Note: Cash and cash equivalents restricted for use for more than three months by the parent company or
subsidiaries within the group were not included in cash and cash equivalents
7.51 Monetary items denominated in foreign currency
7.51.1 Monetary items denominated in foreign currency
Balance in foreign currency as at
Item Exchange rate Balance in RMB as at June 30, 2016
June 30, 2016
Cash and cash equivalents
Including: USD 5,915,147.91 6.6312 39,224,528.84
EUR 40,336,028.71 7.3750 297,478,211.71
HKD 3,788,802.41 0.8547 3,238,289.42
JPY 213,023.99 0.064491 13,738.13
SGD 137,479.97 4.9239 676,937.63
7.51.2 Description of overseas operating entities
The domicile of primary operation of the Company's subsidiary, ShangGong (Europe) Holding Corp.
GmbH is in Germany, with Euro as functional currency for it is the applicable currency for the operation
region.
8. Change in the scope of consolidation
8.1 Change in the scope of consolidation for other reasons
On June 22, 2016, the Company and DA AG jointly funded Shanghai SGSB Finance Leasing Co., Ltd. The
Company invested USD $5.1 million which holds 51.00% of equity; DA AG invested USD $4.9 million
which holds 49.00% of equity. Shanghai SGSB Finance Leasing Co., Ltd. was incorporated into the
Company's scope of consolidation from the date of its establishment.
9. Equity in other entities
9.1 Equity in subsidiaries
Domicile of Shareholding ratio
Registered (%) Way of
Name of subsidiary primary Business nature
place acquisition
operation Direct Indirect
Shanghai Shanggong Butterfly Production and sales of
Shanghai Shanghai 100.00 Investment
Sewing Machines Co., Ltd sewing machines
Dürkopp PFAFF Trade
Shanghai Shanghai Sales of sewing machines 60.00 40.00 Investment
(Shanghai) Co., Ltd.
Shanghai SMPIC IMPORT &
Shanghai Shanghai Sales of office equipment 100.00 Investment
EXPORT Co., Ltd.
Shanghai Shanggong SMPIC Production and sales of
Shanghai Shanghai 100.00 Investment
Electronics Co., Ltd. electronic equipment
Shanghai SGSB Asset Asset and property
Shanghai Shanghai 100.00 Investment
Management Co., Ltd. management
Business
Shanghai Fengjian Property combination
Shanghai Shanghai Property Management 100.00
Co., Ltd. under common
control
Business
combination
Dürkopp Adler Sewing Production and sales of
Suzhou Suzhou 51.00 49.00 not under
Equipment (Suzhou) Co., Ltd. sewing machines
common
control
ShangGong (Europe) Holding Production and sales of
Europe Europe 100.00 Investment
Corp. GmbH sewing machines
Zhejiang SG & GEMSY
Taizhou Taizhou Sewing equipment, etc. 60.00 Investment
Sewing Technology Co., Ltd
Business
combination
Shanghai Shensy Enterprise
Shanghai Shanghai Road freight transportation 40.03 not under
Development Co., Ltd
common
control
Shanghai SGSB Finance
Shanghai Shanghai Finance lease 51.00 49.0 Investment
Leasing Co., Ltd.
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10. Disclose of fair value
The input value used for measuring fair value is divided into three levels:
- The input value of the first level is the unadjusted quotation of similar assets and liabilities that can be
obtained in an active market on the measurement date.
- The input value of second level is the directly and indirectly observable input value of the relevant
assets or liabilities other than the input value of the first level.
- The input value of the third level is the unobservable input value of the relevant assets or liabilities.
The level of the result of measurement of fair value is the lowest level that the input value which is
significantly meaningful for the overall measurement of fair value belongs to.
10.1 The fair value as at June 30, 2016 of assets and liabilities measured at fair value
Fair value as at June 30, 2016
Item Measured at the fair Measured at the Measured at the
value of the first fair value of the fair value of the Total
level second level third level
1. Measurement at fair value based on going concern
(1) Financial assets measured at fair value through
current profit and loss
A. Financial assets held for trading
a. Investment in debt instruments
b. Investments in equity instruments
c. Derivative financial assets
B. Financial assets designated to be measured at fair
value through current profit and loss
a. Investment in debt instruments
b. investments in equity instruments
(2) Available-for-sale financial assets 90,097,141.47 90,097,141.47
a. Investment in debt instruments
b. Investments in equity instruments 90,097,141.47 90,097,141.47
c. Others
(3) Investment property
A. Use right of leased land
B. Leased buildings
C. Land use right held for transfer upon appreciation
Total amount of assets measured at fair value based
90,097,141.47 90,097,141.47
on going concern
(4) Financial liabilities held for trading
Including: issued bonds held for trading
Derivative financial liabilities
Others
(5) Designated financial liabilities measured at fair value
through current profit and loss
Total amount of liabilities measured at fair value
based on going concern
2. Measurement at fair value based on going concern
(1) Assets held for trading
Total amount of assets measured at fair value not
based on going concern
Total amount of liabilities measured at fair value not
based on going concern
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10.2 Basis for determination of market price for measurement of fair value of the first level based on
going concern and not based on going concern.
The fair value as at June 30, 2016 of available-for-sale financial assets was determined on the basis of the
closing price of Shanghai Securities Exchange on June 30, 2016.
11. Related party and related party transaction
11.1 The parent company of the Company
Shareholding ratio Voting ratio in
Registere Business Registered
Name of the parent company in the Company the Company
d place nature capital
(%) (%)
Shanghai Pudong New Area State-owned Assets
Shanghai State-owned 19.21 19.21
Supervision and Administration Commission
Notes to the parent company of the Company:
The parent company of the Company is the Shanghai Pudong New Area State-owned Assets Supervision
and Administration Commission, which specializes in managing the state-owned assets of Pudong New
Area under the authorization of the Pudong New Area People's Government of Shanghai Municipality;
The ultimate controller of the Company is Shanghai Pudong New Area State-owned Assets Supervision and
Administration Commission.
11.2 The subsidiaries of the Company
See the Note 11 Equity in Other Entities for the details of subsidiaries of the Company
11.3 Other related parties of the Company
Name of other related parties Relationship with the Company
Shanghai Hirose Precision Industrial Co., Ltd. Investee
Shanghai Fuji Xerox Co., Ltd. Investee
Shanghai Keller Investment Management Co., Ltd Minority shareholders
Zhejiang GEMSY Electromechanical Co., Ltd. Minority shareholders
11.4 Related party transactions
(1) Purchase and sale of goods, and rendering and receipt of services
Table of purchase of goods / receipt of services
Related party Content of related transaction Current period Last period
Zhejiang GEMSY Electromechanical Co., Ltd. Purchase of fixed assets 15,114,920.79
Table of sales of goods/rendering of services
Related party Content of related transaction Current period Last period
Shanghai Fuji Xerox Co., Ltd. Sales of goods 15,430,242.95 20,235,928.65
Zhejiang GEMSY Electromechanical Co., Ltd. Sales of goods 140,583.32
(2) Leasing
The Company acted as lessor:
(Monetary unit: RMB10,000)
Name of leasee Type of leased asset Rental recognized in current period Rental recognized in last period
Shanghai Hirose Precision
Machinery equipment 25.00 50.00
Industrial Co., Ltd.
(3) Other related transactions
None.
11.5 Accounts due from/to the related parties
11.5.1 Accounts receivable
Balance as at June 30, 2016 Balance as at January 1, 2016
Item Related party
Book balance Provision for Book balance Provision for
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bad debts bad debts
Accounts
Shanghai Fuji Xerox Co., Ltd. 3,009,056.38 150,452.82 3,413,421.14 170,671.06
receivable
Accounts
Zhejiang GEMSY Electromechanical Co., Ltd. 164,392.49
receivable
Other
Zhejiang GEMSY Electromechanical Co., Ltd. 268.00 481,669.48
receivables
Prepayments Zhejiang GEMSY Electromechanical Co., Ltd. 89,765.74 7,366,357.64
11.5.2 Accounts payable
Item Related party Balance as at June 30, 2016 Balance as at January 1, 2016
Zhejiang GEMSY
Other payable 76,418.73 814,068.18
Electromechanical Co., Ltd.
Shanghai Keller Investment
Other payable 900,000.00
Management Co., Ltd
Zhejiang GEMSY
Receipt in advance 90.00
Electromechanical Co., Ltd.
12. Commitments or Contingencies
12.1 Major Commitment Events
12.1.1 Mortgage loans and credit extension
Amount of
Mortgages/Collaterals Estimated use Borrower
borrowing
Bank deposits of RMB 2,500,000,000.00 Guaranty ShangGong (Europe) Holding Corp. GmbH
Bank deposits of EUR 38,580,000.00 Surety margin ShangGong (Europe) Holding Corp. GmbH
Accounts receivable of EUR 106,210
Surety margin ShangGong (Europe) Holding Corp. GmbH
thousand
Surety margin of credit
Fixed assets of EUR 1,323,110 thousand EUR 5,240,000.00 ShangGong (Europe) Holding Corp. GmbH
line
Fixed assets of EUR 3,264,340 thousand Guaranty EUR 7,878,000.00 ShangGong (Europe) Holding Corp. GmbH
500,000 shares of DA AG held by
Guaranty ShangGong (Europe) Holding Corp. GmbH
ShangGong (Europe)Holding Corp. GmbH
12. 2 Contingencies
12.2.1 Major contingencies on the balance sheet date:
The contingent liabilities arising from the provision of debt guarantees by the Company for its subsidiary,
ShangGong (Europe) Holding Corp. GmbH as at June 30, 2016 (Monetary unit: 10'000)
Commencement date Expiration date of Whether the guarantee
Guarantee Guarantee amount Remark
of guarantee guarantee has been fulfilled or not
Commerzbank Shanghai The equivalent of RMB 58
March 25, 2014 No Note 1
Branch million in EUR
Commerzbank Shanghai
EUR 800 July 1, 2014 No Note 2
Branch
Commerzbank Shanghai
EUR 1,200 October 8, 2015 No Note 3
Branch
Commerzbank Shanghai
EUR 1,000 August 28, 2015 No Note 4
Branch
Industrial & Commercial
December 21,
Bank of China Shanghai EUR 787.8 December 21, 2015 No Note 5
2020
Hongkou Branch
Commerzbank EUR 275 January 7, 2016 July 30, 2017 No Note 6
Commerzbank EUR 275 January 7, 2016 July 30, 2018 No Note 7
1. On March 25, 2014, ShangGong Europe, the Companys wholly owned subsidiary, applied to the
Bielefeld Branch of Commerzbank for current funds loan equivalent to not more than RMB 58 million, the
Shanghai Branch of Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of RMB 70 million as
counter guarantee for the abovementioned financing guarantee letter.
2. On June 30, 2014, ShangGong Europe, the Company's wholly owned subsidiary, applied to the Bielefeld
Branch of Commerzbank for a current fund loan of EUR 8 million, the Shanghai Branch of Commerzbank
issued a financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable
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corporate letter of guarantee for payment of EUR 8.8 million as counter guarantee for the abovementioned
financing guarantee letter.
3. On October 8, 2015, ShangGong Europe, the Company's wholly owned subsidiary, applied to the
Bielefeld Branch of Commerzbank for a short-term loan line of EUR 12 million, the Shanghai Branch of
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of EUR 10.5 million as counter guarantee for the
abovementioned financing guarantee letter.
4. On August 28, 2015, PFAFF GmbH, the Company's wholly owned subsidiary, applied to the Bielefeld
Branch of Commerzbank for a loan of EUR 10 million, the Shanghai Branch of Commerzbank issued a
financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable corporate
letter of guarantee for payment of EUR 11 million as counter guarantee for the abovementioned financing
guarantee letter.
5. On December 21, 2015, ShangGong Europe, the Company's wholly owned subsidiary, applied to the
Industrial & Commercial Bank of China Frankfurt Branch for a loan of EUR 7.878 million to pay for 26%
equity of Stoll KG. Industrial & Commercial Bank of China Shanghai Hongkou Branch issued a financing
guarantee letter for the funds, and the Company mortgaged real estate in No.603 Dapu Road, Shanghai for
the abovementioned counter guarantee.
6. ShangGong Europe mortgaged 500,000 shares of DA AG held by ShangGong Europe for two bank
guarantee letters of EUR 2.75 million issued by Commerzbank to guarantee the money paid by ShangGong
Europe to the seller of Stoll KG shares. The time limit of the two letters is from January 1, 2016 to July 30,
2017 and from January 1, 2016 to July 30, 2018.
As of June 30, 2016, there is no flow-out of economic benefits occurred in the Company due to the above
guarantee events.
12.2.1 The agreement to increase capital to Shanghai Shensy Enterprise Development Co., Ltd.
According to our new capital increase agreement with Shanghai Shensy Enterprise Development Co., Ltd.,
by June 30, 2018, if SHENSY has not realized IPO and listed independently in A shares market, the persons
acting in concert, Shanghai Pudong new Industrial Investment Co., Ltd., will be entitled to require our
company and another shareholder, Zhang Ping, to repurchase all or some of the shares that Shanghai
Pudong New Industrial Investment Co., Ltd. holds in cash, within 3 months after it requests in writing. And
we should assist it in the approval process of state-owned Assets Supervision and Administration
Commission, commercial registration, etc. Per the agreement, the Company and Zhang Ping will assume
50% of the above mentioned amount, respectively, and our company bears unconditional joint
responsibility to repurchase the shares that Shanghai Pudong New Industrial Investment Co., Ltd. holds.
If Shanghai Pudong new Industrial Investment Co., Ltd. has not listed in A shares market by June 30, 2018,
it has 6 months (e.g. before December 31, 2018) to request our company and Zhang Ping to repurchase the
shares which it holds in Shanghai Shensy Enterprise Development Co., Ltd.. If not, the Company and
Zhang Ping will not assume the above mentioned repurchase responsibility.
13. Post balance sheet events
13.1 Profit distribution
According to the decision in the 31st board meeting (7th round) on 29 August, 2016, no dividends will be
distributed.
13.2 Notes to other post balance sheet events
Pudong SASAC, controlling shareholder/actual controller of the Company, signed the Share Transfer
Agreement on Transferring 60 Million A Shares of Shang Gong Group Co., Ltd with Shanghai Puke Feiren
Investment Co., Ltd.(hereinafter refers to Puke), a wholly-owned subsidiary of Shanghai Pudong Science
and Technology Investment Co., Ltd on June 29, 2016. This issue has to be approved by the SASAC before
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Financial Report
Shang Gong Group Co., Ltd
implementation. If this issue is successfully implemented, Puke will be the largest shareholder of
ShangGong Group, and Pudong SASAC will second largest shareholder.
14. Other significant events
None.
15. Notes to mains items of the financial statements of parent company:
15.1 Accounts receivable
15.1.1 Disclosure of classification of accounts receivable
Balance as at June 30, 2016 Balance as at January 1, 2016
Type Book balance Provision for bad debts Book balance Provision for bad debts
Book value Book value
Amount % Amount % Amount % Amount %
Accounts
receivable with
significant
single amount
and provision
for bad debt
made on an
individual basis
Accounts
receivable with
provision for
bad debt made
on a portfolio 62,540,289.10 100.00 59,470,064.89 95.09 3,070,224.21 62,209,774.91 100.00 59,441,560.78 95.55 2,768,214.13
with similar risk
credit
characteristics
basis
Accounts
receivables with
insignificant
single amount
and provision
for bad debt
made on an
individual basis
Total 62,540,289.10 / 59,470,064.89 / 3,070,224.21 62,209,774.91 / 59,441,560.78 / 2,768,214.13
Accounts receivable with provision for bad debt made using the aging analysis method among the
portfolios:
Balance as at June 30, 2016
Aging
Accounts receivable Provision for bad debts Provision ratio
Within 1 year 3,007,662.68 150,383.14 5%
1 to 2 years 261,593.40 52,318.68 20%
2 to 3 years 7,339.90 3,669.95 50%
Over 3 years 59,263,693.12 59,263,693.12 100%
Total 62,540,289.10 59,470,064.89
15.1.2 Accounts receivables provided, reversed or recovered in the report year.
The provision for bad debts for the current period amounted to RMB 28,504.11; the provision for bad debts
recovered or reversed in the current period amounted to RMB 4,586.14.
15.1.3 Accounts receivable actually written off for the current year
None
15.1.4 Top five accounts receivable by the balance as at June 30, 2016 of the borrowers
Balance as at June 30, 2016
Company name Proportion in total accounts
Accounts receivable Provision for bad debts
receivable (%)
Customer A 11,530,775.39 18.44 11,530,775.39
Customer B 7,480,189.67 11.96 7,480,189.67
Customer C 4,679,327.49 7.48 4,679,327.49
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Shang Gong Group Co., Ltd
Balance as at June 30, 2016
Company name Proportion in total accounts
Accounts receivable Provision for bad debts
receivable (%)
Customer D 2,254,884.41 3.61 112,744.22
Customer E 1,687,149.74 2.70 1,687,149.74
Total 27,632,326.70 44.19 25,490,186.51
15.2 Other Receivables
15.2.1 Disclosure of classification of other receivables
Balance as at June 30, 2016 Balance as at January 1, 2016
Type Book balance Provision for bad debts Book balance Provision for bad debts
Proportion Proportion Book value Proportion Proportion Book value
Amount Amount Amount Amount
(%) (%) (%) (%)
Other receivables
with significant
single amount
and provision for 56,281,351.71 36.24 56,281,351.71 100.00 55,927,851.11 42.24 55,927,851.11 100.00
bad debt made on
an individual
basis
Other receivables
with provision
for bad debt
made on a
99,036,615.66 63.76 19,399,982.50 19.59 79,636,633.16 76,488,791.16 57.76 18,269,591.28 23.89 58,219,199.88
portfolio with
similar risk credit
characteristics
basis
Other receivables
with insignificant
single amount
and provision for
bad debt made on
an individual
basis
Total 155,317,967.37 / 75,681,334.21 / 79,636,633.16 132,416,642.27 / 74,197,442.39 / 58,219,199.88
Other receivables with significant single amount and provision for bad debts made on an individual basis as
at June 30, 2016:
Balance as at June 30, 2016
Other receivables (by entity): Other
Provision for bad debts Proportion of Provision Reason for provision
receivables
Shanghai SGSB
44,046,185.11 44,046,185.11 100.00% Not expected to recover
Asset-management Co.,Ltd.
Shanghai Xinxing Sewing Plant 12,235,166.60 12,235,166.60 100.00% Not expected to recover
Total 56,281,351.71 56,281,351.71 / /
Other receivables with provision for bad debts made using the aging analysis method among those
portfolios:
Balance as at June 30, 2016
Aging
Other receivables Provision for bad debts Proportion of Provision
Within 1 year 83,792,270.74 4,189,613.54 5.00%
1 to 2 years 42,469.94 8,493.99 20.00%
2 to 3 years 50.00%
Over 3 years 15,201,874.98 15,201,874.98 100.00%
Total 99,036,615.66 19,399,982.51
15.2.2 Provision for bad debts provided, reversed or recovered in the report year.
The provision for bad debts provided in the current period amounted to RMB 1,488,477.96; the provision
for bad debts recovered or reversed in the current period amounted to RMB 0.
15.2.3 Other receivables actually written off during the Reporting Period.
None.
15.2.4 Top five other receivables by the balance as at June 30, 2016 of the borrowers
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Proportion in total other
Balance of provision
Company Balance as at June receivables (%)
Nature of fund Aging for bad debts as at
name 30, 2016 Proportion in total accounts
June 30, 2016
receivable (%)
From within 1
Customer A Current accounts 47,294,601.70 year to over 3 30.45 44,208,605.94
years
Customer B Current accounts 28,449,125.00 Within 1 year 18.31 1,422,456.25
Customer C Current accounts 24,300,388.97 Within 1 year 15.65 1,215,019.45
Customer D Current accounts 15,568,502.38 Within 1 year 10.02 778,425.12
Customer E Current accounts 12,235,166.60 Over 3 years 7.88 12,235,166.60
Total 127,847,784.65 82.31 59,859,673.36
15.3 Long-term Equity Investments
Balance as at June 30, 2016 Balance as at January 1, 2016
Item Provision for Provision for
Book balance Book value Book balance Book value
impairment impairment
Investments in
602,595,339.37 5,000,000.00 597,595,339.37 569,142,909.37 5,000,000.00 564,142,909.37
subsidiaries
Investments in associates
and joint ventures
Total 602,595,339.37 5,000,000.00 597,595,339.37 569,142,909.37 5,000,000.00 564,142,909.37
Among which, details on investments in subsidiaries
Provision for
Decrease Balance of
Balance as at impairment
Increase in in Balance as at provision for
Investee January 1, provided in
current period current June 30, 2016 impairment as
2016 the current
period at June 30, 2016
period
ShangGong (Europe) Holding
142,370,693.64 142,370,693.64
Corp. GmbH
Shanghai Shanggong Butterfly
79,000,000.00 79,000,000.00
Sewing Machines Co., Ltd
DAP (Shanghai) Co., Ltd. 24,403,443.11 24,403,443.11
Shanghai Shanggong SMPIC
20,000,000.00 20,000,000.00
Electronics Co., Ltd.
Dürkopp Adler Sewing Machines
15,685,694.98 15,685,694.98
Suzhou Co., Ltd
SMPIC Imp. & Exp. Co., Ltd. 12,000,000.00 12,000,000.00
Shanghai SGSB Asset
60,000,000.00 60,000,000.00 5,000,000.00
management Co., Ltd.
Shanghai Fengjian Property Co.,
Ltd.
Zhejiang SG & GEMSY Sewing
129,600,000.00 129,600,000.00
Technology Co., Ltd
Shanghai Shensy Enterprise
86,083,077.64 86,083,077.64
Development Co., Ltd
Shanghai SGSB Finance Lease
33,452,430.00 33,452,430.00
Co., Ltd
Total 569,142,909.37 33,452,430.00 602,595,339.37 5,000,000.00
15.4 Operating Income and Operating Costs
Current period Last period
Item
Income Cost Income Cost
Primary business 3,959,485.46 3,370,976.73 8,128,090.32 6,926,976.34
Other businesses 14,644,971.36 4,742,618.55 13,146,524.66 4,878,350.51
Total 18,604,456.82 8,113,595.28 21,274,614.98 11,805,326.85
15.5 Investment Income
Item Current period Last period
Long-term equity investment measured at cost method
Long-term equity investment measured at equity method
Investment income from disposal of long-term equity investments
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Shang Gong Group Co., Ltd
Item Current period Last period
Investment income from holding of financial assets measured at fair value through
current profit and loss
Investment income from disposal of financial assets measured at fair value through
1,071,204.85
current profit and loss
Investment income from holding of available-for-sale financial assets
Investment income from holding of available-for-sale financial assets 897,305.05 5,280,318.44
Investment income from disposal of available-for-sale financial assets 715,552.60
Gains from re-measurement of residual equity at fair value after the loss of control right
Others 5,214,392.23 11,279,013.70
Total 6,827,249.88 17,630,536.99
Note: "others" mainly refer to the gains of RMB 4,556,158.90 from financial products and RMB
658,233.33 from structured deposit among other current assets.
16. Supplementary Information
16.1 Extraordinary Profit or Loss for the Current Period
Item Amount
Profits or losses from disposal of non-current assets -557,934.71
Tax returns, deduction and exemption approved beyond the authority or without official approval documents
Government grants included in current profits and losses (except for government grants closely related to the
4,973,690.84
enterprise business, obtained by quota or quantity at unified state standards)
Payment for use of state funds received from non-financial institutions recorded in current profits and losses
Gains from the difference between the investment costs of acquisition of subsidiaries, associates and joint
ventures and share in the net fair value of the identifiable assets of the investee when investing
Gains or losses from non-monetary asset exchange
Gains or losses from entrusting the investments or management of asset
Impairment provision for force majeure such as natural calamities
Gains or losses from debt restructuring
Restructure expenses, such as the compensation for employee relocation and integration costs
Gains or losses from transactions with obvious unfair transaction price
Year-to-date net profits or losses of subsidiaries arising from business combinations under common control
Profits or losses arising from contingencies not related to the companys normal business
Except for effective hedging business related to the normal business of the company, profits or losses from fair
value changes in held-for-trading financial assets and held-for-trading financial liabilities, and investment income
2,956,194.83
from disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale
financial assets
Reversal of the impairment provision for receivables subject to separate impairment test
Profits or losses from entrusted loans
Profits or losses from fair value changes in investment property subsequently calculated with the fair value mode
Impacts of one-time adjusting the current profits or losses in accordance with requirements of tax and accounting
laws and regulations on the current profits and losses
Custodian income from entrusted management
Other non-operating income and expenditure except for the above items -57,067.79
Other profits or losses which can be deemed as non-recurring profits or losses
Income tax effects -725,663.49
Minority interest effects -1,350,348.82
Total 5,238,870.86
14.2 Yield Rate of Net Assets and Earnings Per Share:
Yield rate of net weighted Earnings per share (RMB/share)
Profit for the current year
average assets (%) Basic earnings per share Diluted earnings per share
Net profit attributable to ordinary
5.5425 0.1844 0.1844
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after 5.2555 0.1749 0.1749
deducting non-recurring gains and losses
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上工申贝（集团）股份有限公司
For References
Shang Gong Group Co., Ltd
Chapter 11 For References
1. Semi-Annual Report signed by the legal representative and sealed by the Company;
2. Financial statements signed by the legal representative, Director in charge of accounting affairs and
chief accountant;
3. Original documentation and announcements about the Company, published in the newspaper appointed
by China Securities Regulatory Commission within the report period.
Shang Gong Group Co., Ltd.
Chairman of Board of Directors: Zhang Min
August 29, 2016
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