Shang Gong Group Co., Ltd
Semi-annual Report 2017
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 omission in this
semi-annual report, and hold both individual and joint legal liability for the authenticity, accuracy and
integrity of its contents.
2. All the directors of Shang Gong Group Co., Ltd attended the meeting of the Board of Directors.
3. The semi-annual report has not been 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, accuracy and integrity of the
attached financial report.
5. Plan of Profit Distribution or Transfer of Reserves Deliberated by the Board
During the report period, the Company did not distribute profit or convert capital reserve into share capital.
6. The Risk of Forward-looking Statements
The Company’s future plan, development strategy and other forward-looking statements in this semi-annual
report do not constitute a substantial commitment to the Company’s investors.
7. There was no occupation of fund of the Company occurred for non-operating use by holding shareholders
and its related parties.
8. There was no external guarantee against the rules and regulations of the Company.
9. Major Risk Warning
The Company has described in detail the risks faced by the Company in this semi-annual report. For details see
“Discussion and Analysis on Business Operation” and other relevant chapters in this report.
10. The English version of this semi-annual report is for reference only. In case of discrepancy between the
English version and the Chinese version, the Chinese shall prevail.
上工申贝（集团）股份有限公司
Semi-annual Report
Shang Gong Group Co., Ltd.
CONTENTS
Chapter 1 Definition ............................................................................................................................................. 2
Chapter 2 Company Profile and Main Financial Index ........................................................................................ 2
Chapter 3 Summary of Company Business .......................................................................................................... 4
Chapter 4 Discussion and Analysis on Business Operation .................................................................................. 6
Chapter 5 Important Events ................................................................................................................................ 11
Chapter 6 Status of Shareholders and Share Capital Changes of Common Stock .............................................. 15
Chapter 7 Relevant Situation about Preferred Shares ......................................................................................... 17
Chapter 8 Situation about Directors, Supervisors and Senior Managers ............................................................ 17
Chapter 9 Corporate Bonds ................................................................................................................................. 19
Chapter 10 Financial Report ............................................................................................................................... 20
Chapter 11 For Reference ................................................................................................................................... 96
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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, SGG, the
refer to Shang Gong Group Co., Ltd.
Company
PKFR refers to Shanghai Puke Flyingman Investment Co., Ltd
State-owned Assets Supervision and Administration Commission of Shanghai
Pudong SASAC refers to
Pudong New Area People's Government
ShangGong Europe, SGE refer to ShangGong (Europe) Holding Corp. GmbH
DA AG refers to Dürkopp Adler AG
PFAFF GmbH refers to PFAFF Industriesysteme und Maschinen GmbH
KSL refers to PFAFF Industriesysteme und Maschinen GmbH Zweigniederlassung KSL
STOLL KG refers to H. Stoll AG & Co. KG
DAPSH refers to DAP (Shanghai) Co., Ltd.
ShangGong GEMSY, SG
refers to ShangGong GEMSY CO., LTD.
GEMSY
SG Butterfly refers to Shanghai Shanggong & Butterfly Sewing machine Co., Ltd.
SHENSY refers to Shanghai Shensy Enterprise Development Co., Ltd.
DAP Vietnam refers to DAP Vietnam Co., Ltd.
CSRC refers to China Securities Regulatory Commission
Report period refers to From January 1, 2016 to December 31, 2016
Yuan, RMB refer to The lawful currency of the People’s Republic of China
Euro, EUR refer to The lawful currency of the European Union
Chapter 2 Company Profile and Main Financial Index
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 Zhou Yongqiang Shen Lijie
No. 1566 New Jinqiao Road, Pudong New Area, No. 1566 New Jinqiao Road, Pudong New Area,
Address
Shanghai Shanghai
Telephone 021-68407515 021-68407700-437
Fax 021-63302939 021-63302939
Email zyq@sgsbgroup.com shenlj@sgsbgroup.com
3. Basic Situation Introduction
Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue,
Registered Address of the Company
China (Shanghai) Pilot Free Trade Zone
Postal Code of Registered Address 200122
Office Address of the Company No. 1566 New Jinqiao Road, Pudong New Area, Shanghai
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Postal Code of Office Address 201206
Website http://www.sgsbgroup.com
Email 600843@sgsbgroup.com
4. Information Disclosure and Place for Consulting
Shanghai Securities News
Newspaper Selected by the Company for Information Disclosure
Hong Kong Commercial Daily
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. Company Stock
Type Stock Exchange Stock Abbreviation Stock Code
A Share Shanghai Stock Exchange SGSB 600843
B Share Shanghai Stock Exchange SGBG 900924
6. Main Accounting Data and Financial Index
6.1 Main Accounting Data
Unit: Yuan, Currency: RMB
From January 2017 to From January 2016 to
Main Accounting Data Increase/Decrease (%)
June 2017 June 2016
Operating income 1,532,562,601.12 1,359,342,529.45 12.74
Net profit attributable to shareholders of listed
125,980,892.71 101,164,717.70 24.53
company
Net profit attributable to shareholders of listed
113,282,323.52 95,925,846.84 18.09
company after non-recurrent account profit/loss
Net cash flow from operating activities -59,790,323.47 -45,943,085.71 N/A
30th June 2017 31st December 2016 Increase/Decrease (%)
Net assets attributable to shareholders of listed
2,065,224,718.29 1,916,349,381.88 7.77
company
Total assets 3,636,741,153.10 3,506,172,981.71 3.72
6.2 Main Financial Index
From January 2017 to From January 2016 to
Main Financial Index Increase/Decrease (%)
June 2017 June 2016
Basic earnings per share (yuan/share) 0.2296 0.1844 24.51
Diluted earnings per share (yuan/share) 0.2296 0.1844 24.51
Basic EPS after non-recurrent account profit/loss
0.2065 0.1749 18.07
(yuan/share)
Weighted rate of return on net assets (%) 6.3648 5.5425 Increase 0.82 percent
Weighted rate of return on net assets after
5.7232 5.2555 Increase 0.47 percent
non-recurrent account profit/loss (%)
7. Differences in Accounting Data between Domestic and Foreign Accounting Standards
Not applicable.
8. Items and Amount of Non-recurring Profit and Loss
Unit: Yuan, Currency: RMB
Item Amount
Profits and losses from disposal of non-current assets 9,747,624.59
Government subsidies recorded in the current profit and loss 2,642,975.59
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
2,403,933.60
liabilities, and investment income from disposal of trading financial assets, trading financial
liabilities and available-for-sale financial assets
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Item Amount
Other non-operating income and expenditure except the above-said items -301,892.86
Impact on minority interests -1,086,985.02
Impact on income tax -707,086.71
Total 12,698,569.19
Chapter 3 Summary of Company Business
1. The Company’s Main Business, Business Model in the Report Period and Industry Situation
During the report period, the Company's main business is sewing equipment manufacturing industry. The
Company’s business also involves knitting machine, office machinery, film materials, commerce and trade,
and logistics services. The Company produced sewing machines including industrial sewing machines,
household sewing machines and customized industrial machines for special purpose.
The Company adheres to the globalization of business, implement unified management of sales, adheres to
stratified professional multi-brand marketing strategy. The Company operates a gradient division of labour
throughout the Eurasian production base, occupying the high-end global market for sewing equipment with
leading technology. At the same time, the Company focused on creating R & D and marketing centres in
Shanghai and deepening the production base in Jiangsu and Zhejiang in China. In recent years, through the
implementation of mergers and acquisitions at home and abroad and the reorganization and integration of
subsidiaries, synergies have gradually emerged, and international business model has achieved good results.
China’s sewing machinery manufacturing industry is a branch of light industry in China. It has established the
most complete industrial system in the world, and is capable of manufacturing a full range of sewing
machinery products, including household and industrial sewing machine, embroidery machine and cutting
machine, and the related controller, motor ability and spare parts, which satisfies all kinds of social needs.
However, compared with the advanced in the world, there is still a large gap for China’s sewing machinery
manufacturing industry in independent innovation ability, industrial structure, technology, product and brand
quality and other aspects. The whole industry is big but not strong. The development of the world sewing
machinery industry started in the middle of the nineteenth Century in Europe and the United States. After 150
years of development, at present the world sewing machine industry development centre has been transferred
to the Asian region like China and Japan, and gradually formed tripartite confrontation pattern between China,
Germany and Japan.
China Sewing Machinery Association statistics show that total operating income of the industry’s top 100
backbone machine manufacturers from January to June in 2016 is 9,246 million yuan, an increase of 16.55%;
Total profit is 830 million yuan, an increase of 61.74%; Sewing machine output and sales grew by 25.36% and
20.40% respectively. In the first half of 2017, the sewing machinery industry in our country maintained a
restorative growth, showing a market trend of "booming supply and demand".
2. Description of Major Changes in the Main Assets of the Company during the Report Period
As of 30th June 2017, the amount of construction in progress is 33,559,198.84 yuan, comparing to the balance
of 20,199,928.64 yuan as of 31st December 2016, increased by 66.14%. It is mainly due to the increase of
expense in sewing equipment project and workshop reconstruction ng project of the Company's overseas
subsidiaries.
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The Company's overseas assets amounted to 1,901,371.50 yuan, accounting for 52.3% of the total assets.
The Company's overseas assets mainly come from the overseas acquisitions and business growth of
subsidiaries overseas. The Company acquired DA AG in Germany in 2005, acquired PFAFF GmbH and KSL
in Germany in 2013, and invested in STOLL KG in 2016.
3. Core Competitiveness Analysis in the Report Period
The Company is the first listed company with the longest history in the domestic sewing equipment industry,
and has more than 50-year experience in sewing equipment production. The Company controlled German DA
AG, one of the famous sewing machine manufacturing companies in the world with more than 150 years
history, PFAFF GmbH, a famous sewing equipment manufacturer with 150 years history, and PFAFF KSL
Branch, a company with the world's top sewing technology. In the report period, the Company continued to
promote the integration of global resources, and further promote the integration of SGE. The Company's core
competitiveness is further consolidated and enhanced, and the foundation for sustainable and healthy
development of the Company is further consolidated. The core competence of the Company is mainly shown
in the following aspects:
(1) Strong 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. The research and development of Industrial 4.0,
which has been developed by the R & D team, has made preliminary achievements. ShangGong Technology
Centre is the city level of research and development centre in Shanghai, and has the strong digestion and
absorption and supporting development capability.
(2) Advanced Technology Advantage
The Company has the world’s high-end intelligent and 3D sewing technology, and the Company is a global
leader in special sewing machine for medium or thick materials, garment automatic sewing unit, robot
automatic sewing technology and textile material welding technology and other fields. The 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 has the absolute competition advantage, and especially, it originally created
the sewing technology for light carbon fiber, 3D sewing automation and QONDAC 4.0 Intelligent Industrial
Sewing Network Online Production Monitoring System.
(3) Multiple Brand and Product Advantage
Through overseas acquisition, the Company owns some internationally well-known brands, such as DA,
PFAFF Industrial, KSL, Beisler, and etc., and some famous domestic brands, such as Butterfly with 98 years’
history, Bee and Flyingman, and Shanggong brand with more than 50 years’ history. In recent years, the
company is cultivating industrial machine brands, such as SG GEMSY, Mauser and so on. These brands have
a high recognition and reputation in the sewing machine industry. The products of the Company focus on
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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.
(4) Powerful Global Resource Integration Capability
The Company utilizes and develops the basis and advantages of its respective domestic and foreign
subsidiaries, implements globalization layout and integration in the production base, sales network,
procurement of raw materials, technology R&D and other aspects, implements resource sharing, has
complementary advantages and develops collaboratively.
(5) Rich 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.
Chapter 4 Discussion and Analysis on Business Operation
1. Discussion and Analysis of Operations
China's economy continued steady expansion in the first half of 2017 with GDP up 6.9 percent year on year.
The economy keeps growing at a rapid pace while manufacturing is moving towards the middle and high
levels
In the first half of 2017, China's sewing machinery industry maintained a high growth rate of recovery, the
export decline continued to narrow; economic performance improved significantly, and the industry’s steady
advancement situation was further consolidated.
In the first half of 2017, domestic sewing industry market is in recovery, so the Company vigorously improved
production capacity, promoted sales, grasped R&D, and continued to maintain a good momentum of
development. The Company has accomplished more than 50% annual tasks in the first half of 2017, and
greatly improved operating income, operating profit and other major financial indicators. During the report
period, the Company continued to grow steadily and realized operating income of 1,532 million yuan, up
12.74% year on year; operating profit was 173 million yuan, an increase of 11.65% year on year; net profit
attributable to shareholders of listed companies was 126 million yuan, an increase of 24.53% year on year; Net
profit attributable to shareholders of listed companies after deducting non-recurring gains and losses increased
by 18.09% year on year.
Influenced by the seasonal demand of downstream garment industry and the supply-side reform, in the first
half of 2017, the Company sewing equipment business at home and abroad is good. Industrial machine sales
grew 39.6% year on year; the production subsidiaries increased production efficiency to overcome the
difficulties of production capacity, the output growth of industrial machine is 23% year on year; household
machine sales increased by 31.1%, of which the Butterfly traditional household sewing machine exports grew
faster, up to 42.7%; multi-functional household sewing machine also realized 5.1% growth.
The Company's operating income in the modern service sector grew by 8.3%, and operating profit decreased
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by 38.5%. Business scale growth is mainly caused by logistics service business growth of SHENSY; operating
profit basically reached half of the budget, but growth ability is slightly insufficient.
In the report period, STOLL KG and Shanghai Fuji Xerox Co., Ltd., both invested by the Company, were in
normal operation and good efficiency.
This year is the first year after the Company fulfilled mixed ownership reform under the guidance of
state-owned enterprise reform spirit since 18th CPC National Congress. According to the 13th Five-Year Plan
and annual business plan, in the first half of 2017, the Company carried out the following key tasks:
(1) Increase R & D investment, improve core competitiveness
The Company continued to adhere to the innovation-driven development strategy, and increased R & D
investment in researching the application of industrial 4.0 in sewing equipment to improve intelligence and
network application level of sewing equipment. The Company won 2017 Texprocess Innovation Award for
“QONDAC 4.0”, which was appreciated by the industry. In China, The Company strengthened the R & D
team, improved the ability of independent innovation while accelerating the introduction and absorption of
advanced technology in Germany. The Company updated some R & D software platform, product reliability
test equipment, intelligent information data acquisition equipment and test equipment to further shorten the
new product development Cycle and improve product quality. During the report period, the Company obtained
more than ten invention patents.
(2) Optimize the global allocation of resources, vigorously develop China Manufacturing
In the first half of 2017, the Company continued to make great efforts to develop China manufacturing. With
the help of the "Eurasian linkage" strategy, the Company fully tapped the technological advantages of DA AG
and PFAFF GmbH, and promoted the development of the three major production bases in China. In the report
period, Shanghai Nanxiang Base (DA Manufacturing as main body), Zhangjiagang Base (PFAFF
Zhangjiagang as main body), and ShangGong GEMSY Taizhou Base have achieved good development. DA
Manufacturing and PFAFF Zhangjiagang ceased to lose and began to turn out a profit; operating profit of
ShangGong GEMSY increased by 1509% year on year. In order to promote the optimization of the Company’s
global resources and realize the medium and long term goals of developing China manufacturing, some
overseas advanced technologies and products are being transferred to China.
(3) Continue to promote internal integration, improve operational efficiency
In the first half of 2017, Companies continue to promote internal integration and accelerate the overall
development. During the report period, SGE and its subsidiaries further implemented the integration and
optimized the internal competition mechanism. Meanwhile, in order to enhance profitability of the parent
company and further enhance operational efficiency of the Company, related work about absorbing DAPSH
and ShangGong Butterfly was also steadily advancing. According to the needs of market-oriented
development, some departments of the Company were set up and the functions of some departments were
adjusted. In this way, the Company could enhance the sales and operation control ability of the parent
company, and create favourable conditions for improving the overall operation efficiency and profitability.
(5) Explore market mechanism, constantly improve corporate governance ability
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After completing the reform of the mixed ownership system, the Company has changed from a state-owned
enterprise to a listed company with no actual controller. Facing the new situation, development and challenge
coexist, the Company continuously improved the governance ability, further standardize the operation of the
Company, and optimize the organizational management framework. During the report period, the Company
successfully completed the re-election of directors and supervisors, and hired the management team in April.
Under the leadership of the new board of directors and senior management, the Company shall continue to
deepen reform, and actively explore the market-oriented operation mechanism, promote the transition of
operation system, and constantly perfect the effective ways for sustainable development.
2.1 Main Business Analysis
2.1.1 Analysis of Changes of Items in Financial Statement
Unit: Yuan, Currency: RMB
From 1st January 2017 From 1st January 2016 Variable
Item Reason
to 30th June 2017 to 30th June 2016 Proportion (%)
Operating income 1,532,562,601.12 1,359,342,529.45 12.74 Note 1
Operating cost 1,088,801,959.30 954,500,289.41 14.07 Note 2
Selling expenses 141,412,181.17 124,035,260.82 14.01 Note 3
General and administration expenses 143,922,099.95 131,096,375.43 9.78 Note 4
Finance expenses -6,849,775.62 10,089,517.50 -167.89 Note 5
Net cash flow from operating activities -59,790,323.47 -45,943,085.71 -30.14 Note 6
Net cash flow from investing activities -43,334,008.59 -155,320,334.25 72.10 Note 7
Net cash flow from financing activities -20,766,385.53 35,222,499.79 -158.96 Note 8
Research and development expenditures 41,659,397.60 32,046,934.73 29.99 Note 9
Impact of exchange rate changes on cash and
22,569,433.51 15,358,918.84 46.95 Note 10
cash equivalents
Note 1: Mainly caused by the increase of sewing equipment and logistics services revenue year on year.
Note 2: Mainly caused by the corresponding increase of cost resulting from the year-on-year increase of
operating income.
Note 3: Mainly caused by the corresponding increase of selling expenses resulting from the year-on-year
increase of operating income.
Note 4: Mainly caused by the increase of research and development costs year on year.
Note 5: Mainly caused by the increase of exchange gains year on year.
Note 6: Mainly caused by the increase of tax paid, the decrease of refunds of taxes and the increase of cash
paid to and for the employees.
Note 7: Mainly caused by the decrease of investment in 26% equity of STOLL KG by SGE year on year.
Note 8: Mainly caused by the increase of net repayment of bank borrowings year on year.
Note 9: Mainly caused by the increase of expenditure of R&D project expensed by SGE year on year.
Note 10: Mainly caused by euro exchange rate changes.
2.1.2 Others
2.1.2.1 A detailed Description of Significant Changes in the Composition of the Company's Profits or the
Source of Profits
Not applicable
2.1.2.2 Others
Unit: Yuan, Currency: RMB
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Operating
Gross Operating Gross Margin
Income
Industry Operating Income Operating Cost Margin Cost Increase/ Increase/ Decrease
Increase/
(%) Decrease (%) (%)
Decrease (%)
Sewing Decrease 2.43
942,089,965.90 566,795,268.81 39.84 15.25 20.11
equipment percent
Logistic Decrease 1.53
397,739,165.33 365,723,195.49 8.05 20.14 22.17
service percent
Export trade 102,816,302.72 100,045,541.14 2.69 -14.69 -15.00 Increase 0.35 percent
Office
equipment
28,080,276.16 23,384,707.01 16.72 -23.08 -24.95 Increase 2.07 percent
and film
materials
Decrease 14.24
Others 4,644,251.56 3,019,857.82 34.98 -46.86 -31.96
percent
Decrease 1.43
Total 1,475,369,961.67 1,058,968,570.27 28.22 12.26 14.54
percent
Operating Income Increase/ Decrease
Region Operating Income
(%)
Domestic 874,719,970.00 14.24
Overseas 714,871,731.60 9.02
2.2 Explanation of Significant Changes in Profit Caused by Non-main Business
Unit: Yuan, Currency: RMB
From 1st January From 1st January
Increase / Increase /
Item 2017 to 30th June 2016 to 30th June Reason
Decrease Decrease (%)
2017 2016
Taxes and surcharges 5,994,544.14 4,180,944.00 1,813,600.14 43.38 Note 1
Financial expense -6,849,775.62 10,089,517.50 -16,939,293.12 -167.89 Note 2
Assets impairment loss 4,522,446.97 -1,574,549.62 6,096,996.59 387.22 Note 3
Non-operating income 12,489,008.12 7,659,396.08 4,829,612.04 63.05 Note 4
Non-operating expense 400,300.80 3,300,707.74 -2,900,406.94 -87.87 Note 5
Net after tax of other consolidated
30,819,765.91 -21,624,435.26 52,444,201.17 242.52 Note 6
income
Note 1: Mainly caused by implementing the " Value-added Tax Accounting Regulations " (Accounting [2016]
No. 22).
Note 2: Mainly caused by the increase of exchange gains year on year.
Note 3: Mainly caused by the increase of provision for diminution in value of inventories and provision for
bad debts of accounts receivable year on year.
Note 4: Mainly caused by the increase of housing relocation compensation income year on year.
Note 5: Mainly caused by the decrease of Loss on disposal of fixed assets year on year.
Note 6: Mainly caused by the increase of profit and loss of fair value of available-for-sale financial assets and
translation balance of foreign currency financial statements year on year.
2.3 Analysis on Assets and Liabilities
Unit: Yuan, Currency: RMB
Ratio of Ratio of
Ending Ending
Ending Balance Ending Balance Increase /
Balance to Balance to
Item (30th June (31st December Decrease Reason
Total Assets Total Assets
2017) 2016) (%)
((30th June (31st December
2017) (%) 2016) (%)
Mainly due to the
Construction
33,559,198.84 0.92 20,199,928.64 0.58 66.14 increase of expense in
in progress
sewing equipment project
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and workshop
reconstruction ng project
of the Company's
overseas subsidiaries.
Mainly due to enterprise
Taxes and income tax unpaid as of
surcharges 13,263,952.53 0.36 54,740,867.60 1.56 -75.77 31st December 2016 of
payable subsidiaries overseas paid
in current period
Mainly due to the
written-off of original
Other current
437,625.10 0.01 808,706.39 0.02 -45.89 recorded interest by
liabilities
subsidiaries overseas and
rental fees.
2.4 Analysis of Investment Situation
2.4.1 General Analysis
Unit: 10,000 Yuan, Currency: RMB
Long - term equity investment in the report period 20.43
Increase / Decrease -27,211.57
Long - term equity investment in same period last year 27,232
Increase / Decrease (%) -99.92%
2.4.2 Significant Equity Investment
Not applicable.
2.4.3 Significant Non-Equity Investment
Not applicable.
2.4.4 Financial Assets at Fair Value
Unit: Yuan, Currency: RMB
Accounting
for the Profit or Changes in
Initial Book Value at
Stock Stock proportion Loss for the Owners' Equity Accounting Source of
Investment of the the End of the
code Abbreviation Report during the Item Shares
Cost company's Period
Period Report Period
equity (％)
Available
Changjiang
for sale
600757 Publishing & 72,085,722.82 0.85 76,930,048.98 -8,650,768.56 Note 1
financial
Media
assets
Available
for sale
900932 Lujia B Share 773,099.71 0.0067 2,452,704.58 79,538.23 160,344.63 Enforcement
financial
assets
Available
Shenwan & for sale
000166 200,000.00 0.0011 1,224,283.20 21,862.20 -142,104.30 Purchased
Hongyuan financial
assets
Available
Bank of for sale
601229 951,400.00 0.013 20,560,823.76 1,819,399.44 Purchased
Shanghai financial
assets
Total 74,010,222.53 - 101,167,860.52 101,400.43 -6,813,128.79 - -
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.
2.5 Significant Assets and Equity Sale
Not applicable.
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2.6 Analysis of Main Subsidiaries and Joint Stock Company
Unit: 10,000 Yuan, Currency: RMB
Registered Total Operating Operating
Company Name Business Scope Net Assets Net Profit
Capital Assets Income Profit
Investment, asset
ShangGong management, and the
EUR 12.50
(Europe) Holding production, processing 192,948.20 82,665.81 72,253.26 14,455.03 10,292.05
million
Corp. GmbH. and sale of industrial
sewing equipment
Shanghai Shensy
Enterprise
Road freight 17,882 38,666.97 24,654.33 39,773.92 682.85 681.85
Development Co.,
Ltd.
ShangGong
Production and sale of
GEMSY CO., 21,600 27,686.28 21,852.10 13,887.96 333.47 309.73
sewing equipment
LTD.
DAP (Shanghai) Sale of sewing USD 60
23,198.04 9,300.58 17,556.28 634.77 516.12
Co., Ltd. equipment million
2.7 Structured Entities Controlled by the Company
Not applicable.
3 Others
3.1 Possible Risks
(1) Industrial and market risks
Tailoring machine industry is a competitive industry, largely depending on its downstream industries such as
the weaving, costume, leather, case and bags industries. Therefore, it develops along obvious periodicity and is
highly affected by macro-economic environment. Along with increasing of the rate of tailoring machine
production to company other industries, company development may be more and more affected by overall
industrial fluctuation, which may lead to decreasing of product price, more and more fierce competition and
decreasing of product gross profit rate, all will impact company business operation in the future.
(2) Cross-country operation and integration risks
By expanding of company overseas assets and business scope, the cross-country operation brings more strict
requirements for company organization, operation mode, talents and employees skills. Also, during company
production, operation and merger of overseas affiliates, more challenges may appear due to differences of
enterprise culture, management concept, policies and company regulations.
(3) Foreign exchange risks
The book-keeping standard money for company consolidated statements is RMB, but that used for daily
business operations of SGE and SGE holding subsidiaries is Euro dollar. Therefore, the change of RMB
foreign exchange rate may have exchange risks for company future operations.
Chapter 5 Important Events
1. Shareholder’s Meeting
Session Holding Date Inquiry Index Disclosure Date of Resolutions
th
2016 Annual Shareholders’ Meeting 27 April 2017 www.sse.com.cn 28th April 2017
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Shang Gong Group Co., Ltd.
2. Profit Distribution or Capital Surplus Transferring and Increasing Proposal
Not applicable.
3. Commitment
Whether
Whether Reason for
Timely Future Plan if
Commitment There is a Failure to
Background Type Commitment Content and Fail to Fulfill
Party Time Fulfill
Strictly Commitment
Limit Commitment
Perform
Shares of SGG held by PKFR
Restricted will not be sold from 29th
PKFR Yes Yes N/A N/A
shares December 2016 to 28th
December 2017.
Shares of SGG held by PKFR
Commitment in will not be less than shares
the Statement Others PKFR held by Pudong SASAC Yes Yes N/A N/A
of Changes in From 29th December 2016 to
Equity 28th December 2017.
From 29th December 2016 to
28th December 2017, PKFR
Others PKFR or its concerned action will Yes Yes N/A N/A
purchase shares of SGG by
not less than 10 million yuan
Commitment The Company will not Plan
Related to The major asset restructuring
Others Yes Yes N/A N/A
Major Asset Company from 26th July 2016 to 25th
Restructuring January 2017
4. Appointment and Dismiss of Certified Accountant’s Firm
Not applicable.
5. Bankruptcy
Not applicable.
6. Important Lawsuit and Arbitration
(1) Lawsuit after report period
Shanghai Pacific Industrial Co., Ltd. (hereinafter referred to as “PACIFIC Shanghai”) is a Sino-foreign joint
venture established by the Company’s predecessor Shanghai Industrial Sewing Machine Corporation
(hereinafter referred to as “SISMC”) and Pacific Business Exchange CO., Ltd. (hereinafter referred to as
“PACIFIC Business”) on May 1993. SISMC invested USD 360,000 in equipment and plant, accounting for
48% of total shares; PACIFIC Business invested USD 390,000 in equipment and cash, accounting for 52% of
total shares. After the establishment of PACIFIC Shanghai, SISMC has undergone restructuring, listing and
several changes in business registration and stock ownership changes, so the name of SISMC has changed to
Shang Gong Group Co., Ltd. now. However, PACIFIC Shanghai and PACIFIC Business refused to recognize
the Company as the Chinese shareholders of PACIFIC Shanghai. Therefore, the Company filed a lawsuit,
asking the court to confirm the Company's Chinese shareholder status. On 22nd August 2017, the Company
received the civil judgment of Shanghai No.1 Intermediate People's Court. The judgment confirmed that
48% of PACIFIC Shanghai’s equity invested by SISMC amounting to USD 360,000 was owned by the
Company.
As the Company has been refused to exercise shareholder rights by PACIFIC Shanghai and PACIFIC Business
for years, the Company does not know the financial position and operation of PACIFIC Shanghai. Except the
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Shang Gong Group Co., Ltd.
48% of equity of PACIFIC Shanghai confirmed above, it is not clear how this issue would affect the Company.
As of the date of this report, the outcome of the lawsuit has not yet been implemented.
(2) Arbitration after report period
The 22nd meeting of the 7th Board of Directors of the Company examined and approved the Proposal on
Investing in STOLL KG through ShangGong Europe, and agreed that the wholly-owned subsidiary
ShangGong Europe would invest in STOLL KG to become a 26% Minority shareholders. (See bulletin No.
2015-030 released on 29th August 2015 and bulletin No. 2016-002 released on 14th January 2016 for details).
Accounting to the Contract signed on 29th August 2015 by ShangGong Europe, the calculation of share price is
based on the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that share
price will be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and
related clauses in the Contract. Now the parties have disputes on the calculation of net assets of STOLL's
audited consolidated statement in 2015 and the understanding of the relevant terms of the Contract, resulting in
a difference of approximately 4.26 million euro in the calculation of the price adjustment. ShangGong Europe
has received the Application for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited
partners of STOLL KG on 20th July 2017. ShangGong Europe will, in accordance with the terms of the
contract, settle the dispute by arbitration in accordance with German legal procedures.
As of the date of this report, the arbitration is still in progress and has significant uncertainty. The Company
has made a preliminary judgment that the matter has little impact on the Company's profit and loss. But it
might affect the Company's investment costs for STOLL KG and will not have a significant impact on the
Company.
7. Punishment on and Rectification of Listed Company and its Directors, Supervisors, Senior Managers,
Controlling Shareholders, Actual Controller and Purchaser
Not applicable.
8. Credit Status of the Company and its Controlling Shareholder and Actual Controller.
Not applicable.
9. Company Stock Right Incentives, ESPO, and Other Employee Incentives
Not applicable.
10. Major Related Party Transactions
10.1 Related Party Transactions Relevant to Daily Operations
Summary of Issues Inquiry Index
Shanghai SGSB Electronic Co., Ltd., one wholly-owned subsidiary of the
The bulletin No. 2017-008 disclosed by the
Company, sells products to Fiji Xerox of Shanghai Limited., and is its
Company on 6th April 2016, published in
permanent accessory supplier, and the above-said transaction constitutes the
Shanghai Securities News and Hong Kong
daily associated transaction. It is estimated that in 2017, the amount of products
Commercial Daily and website of Shanghai
that it will sell to Fiji Xerox is 30 million yuan, and in this report period, the
Stock Exchange.
sales amount was 12.1622 million yuan, and there was no major change.
11. Significant Contracts and Their Implementation
11.1 Trusteeship, Contracting and Lease
Not applicable.
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11.2 Guarantee
Unit: 10,000 Yuan, Currency: RMB
Company external guarantee list (excluded those for subsidiaries)
Guarantor
Overdue amounts
Expiration date
Relations of Guarantee
Overdue
Relation
If counter Guarantee
the guarantor Amount date If guarantee
Security party Start date Type guarantee for related
to listed guaranteed (agreement is done
available? party?
company signoff date)
Joint
The Commerzbank 25 March 25 March
SGG 7,000 liability No No 0 No No
Company Shanghai Branch 2014 2014
guarantee
Joint
The Commerzbank 01 July
SGG 6,430 30 June 2014 liability No No 0 No No
Company Shanghai Branch 2014
guarantee
Industrial &
19 Joint
The Commercial Bank 19 September
SGG 9,645 September liability No No 0 No No
Company of China Shanghai 2016
2016 guarantee
Hongkou Branch
Joint
The 28 August 28 August
SGG Commerzbank 8,037 liability No No 0 No No
Company 2015 2015
guarantee
21 Joint
The 21 December 21 December
SGG Commerzbank 5,845 December liability No No 0 No No
Company 2015 2020
2015 guarantee
Wholly Joint
07 January 07 January
SGE owned Commerzbank 2,009 30 July 2017 liability No No 0 No No
2016 2016
subsidiary guarantee
Wholly Joint
07 January 07 January
SGE owned Commerzbank 2,009 30 July 2018 liability No No 0 No No
2016 2016
subsidiary guarantee
Guarantee amounts spent during the report period (excluded guarantee to affiliate
0
company.
Total balance of guarantee at the end of period (affiliate companies are not quailed.)
43,036
（A）
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） 43,036
Ratio of total guarantee amounts to company net assets (%) 20.84
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）
Note 1: On 25th March 2014, the Company's wholly-owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a current fund loan of not more than the
equivalent of 58 million yuan in euro, the Shanghai Branch of the Commerzbank issued a financing guarantee
letter for the funds, and the Company issued a corporate letter of guarantee for payment of 70 million yuan as
counter guarantee for the abovementioned financing guarantee letter.
Note 2: On 30th June 2014, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a current fund loan of 8 million euro, the
Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of 8.8 million euro as counter
guarantee for the abovementioned financing guarantee letter.
Note 3: On 19th September 2016, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a short-term credit loan of 12 million euro,
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the Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of 13.20 million euro.
Note 4: On 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to the
Kaiserslautern Branch of the Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of the
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for the
abovementioned financing guarantee letter.
Note 5: On 21st December 2015, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH., applied to the Frankfurt Branch of the Commerzbank for a limit loan of 7.878 million euro so as to
pay the acquisition fee to Stoll KG. ICBC Shanghai Hongkou Branch issued a financing guarantee letter for
the funds, and the Company issued an unconditionally irrecoverable corporate letter of guarantee for self-using
fix assets where No.603 Dapu Road as counter guarantee for the abovementioned financing guarantee letter.
12 Poverty Alleviation of Listed Companies
Not applicable.
13. Convertible Corporate Bonds
Not applicable.
14. Other Important Issues
14.1 Changes in Principal Accounting Policies and Accounting Estimates
Implement the "Accounting Standards for Business Enterprises No. 16 - Government Subsidies ".
Ministry of Finance on 10th May 2017 revised the "Accounting Standards for Business Enterprises No. 16 -
Government Subsidies", which was implemented since 12th June 2017.
The main impact of implementing the standard is as follows:
The Content and Reasons of Accounting Policy Changes Item and Amount Affected
Ministry of Finance on 10th May 2017 issued the "Accounting Standards for
Business Enterprises No. 16 - Government Subsidies" (Accounting [2017] No.
15). According to the revised "Accounting Standards for Business Enterprises
The change has no significant impact on the
No. 16 - Government Subsidies", government subsidies related to the daily
Company's financial position, operating results
activities of enterprises shall be included in other income or related expenses in
and cash flow.
accordance with the essence of economic business; government grants
unrelated to the daily activities of enterprises shall be included in
non-operating income and expense.
Chapter 6 Status of Shareholders and Share Capital Changes of Common
Stock
1. Share Capital Changes of Common Stock
1.1 Share Capital Changes of Common Stock
During the report period, the total number of shares of the Company's common stock and equity structure
remain unchanged.
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1.2 Change of Non-Tradable Shares
Not applicable.
2. Securities Issuance and Listing
2.1 Securities Issuance during the Report Period
Not applicable.
2.2 Total Share and Shareholder Change and Asset and Liability Structure Change
Not applicable.
2.3 Employee Shareholding Status
No internal employee share in the report period.
3. Shareholder and Actual Controller
3.1 Total Number of Shareholders
Total number of shareholder at the end of report period 65,514 (A Share: 37,705; B Share: 27,809)
3.2 Shareholding Status of Top 10 Shareholders and Top 10 Unrestricted Shareholders
Unit: Share
Top 10 Shareholders
Increase Total Shares Pledged or
or Shares Frozen
Holding
Decrease Held at the Restricted Shareholder
Name of Shareholder Percentage
in the End of Share Status
(%) Status Amount
Report Report
Period Period
Domestic
Shanghai Puke Flyingman
789,457 60,789,457 11.08 0 Pledged 60,000,000 Non-state-owned
Investment Co., Ltd.
Legal Person
State-owned Assets Supervision
and Administration Commission
0 45,395,358 8.27 0 / State
of Shanghai Pudong New Area
People's Government
China Great Wall Asset State-owned
0 22,200,000 4.05 0 /
Management Co., Ltd. Legal Person
SHANGHAI INTERNATIONAL
State-owned
GROUP Asset Management Co., 0 10,968,033 2.00 0 /
Legal Person
Ltd.
GREAT WALL GUORONG
State-owned
INVESTMENT AND 0 4,770,654 0.87 0 /
Legal Person
MANAGEMENT CO., LTD.
SCBHK A/C KG Foreign Legal
-29,699 4,740,955 0.86 0 /
INVESTMENTS ASIA LIMITED Person
SCBHK A/C BBH S/A
VANGUARD EMERGING Foreign Legal
0 3,678,113 0.67 0 /
MARKETS STOCK INDEX Person
FUND
GUOTAI JUNAN
Foreign Legal
SECURITIES(HONGKONG) -9,479 3,125,690 0.57 0 /
Person
LIMITED
ISHARES CORE MSCI Foreign Legal
1,373,100 3,076,300 0.56 0 /
EMERGING MARKETS ETF Person
VANGUARD TOTAL
Foreign Legal
INTERNATIONAL STOCK 0 2,999,096 0.55 0 /
Person
INDEX FUND
Top 10 Unrestricted Shareholders
Name Unrestricted Shares Share Type and Amount
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Type Amount
Shanghai Puke Flyingman Investment Co., Ltd. 60,789,457 A Share 60,789,457
State-owned Assets Supervision and Administration
Commission of Shanghai Pudong New Area People's 45,395,358 A Share 45,395,358
Government
China Great Wall Asset Management Co., Ltd. 22,200,000 A Share 22,200,000
SHANGHAI INTERNATIONAL GROUP Asset
10,968,033 A Share 10,968,033
Management Co., Ltd.
GREAT WALL GUORONG INVESTMENT AND
4,770,654 A Share 4,770,654
MANAGEMENT CO., LTD.
SCBHK A/C KG INVESTMENTS ASIA LIMITED 4,740,955 B Share 4,740,955
SCBHK A/C BBH S/A VANGUARD EMERGING
3,678,113 B Share 3,678,113
MARKETS STOCK INDEX FUND
GUOTAI JUNAN SECURITIES(HONGKONG)
3,125,690 B Share 3,125,690
LIMITED
ISHARES CORE MSCI EMERGING MARKETS ETF 3,076,300 B Share 3,076,300
VANGUARD TOTAL INTERNATIONAL STOCK
2,999,096 B Share 2,999,096
INDEX FUND
GREAT WALL GUORONG INVESTMENT AND
MANAGEMENT CO., LTD. is the wholly-owned subsidiary of
Notes on Shareholder Relationship and Consistent Actions China Great Wall Asset Management Corporation.
The Company does not know the relationship and consistent of
other shareholders
The Number of Restricted Shares Held by Top Ten Shareholders and the Conditions for Sale
Not applicable.
4. Change of Controlling Shareholder and Actual Controller
Not applicable.
Chapter 7 Relevant Situation about Preferred Shares
Not applicable.
Chapter 8 Situation about Directors, Supervisors and Senior Managers
1. Changes in Shareholding
1.1 Changes in Shareholding
Unit: Share
Shares held at the Shares held at the End Change in
Name Title Reason
Beginning of Report Period of Report Period Current Period
Increase holdings in
Zhang Min Director 100,000 170,000 70,000
secondary market
Zhang Min, Chairman of the board and General Manager of the Company, purchased 10,000 A shares and
60,000 B shares of the Company in secondary market on 24th May 2017 and 25th May 2017.
1.2 Equity Incentive Granted to Directors, Supervisors, and Senior Managers in the Report Period
Not applicable.
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2. Change of Directors, Supervisors and Senior Managers
Name Title Change
Zhang Min Chairman, CEO Outgoing
Li Jiaming Director, deputy general manager Outgoing
Fang Haixiang Director, deputy general manager Outgoing
Sun Gang Director Outgoing
Bao Qi Director Outgoing
Lu Yujie Director Outgoing
Zhang Ming Independent director Outgoing
Su Yong Independent director Outgoing
He Ye Independent director Outgoing
Qiao Junhai Supervisory Board Chairman Outgoing
Ding Binhui Supervisor Outgoing
Zhuge Huiling Supervisor Outgoing
Chen Guoling Supervisor Outgoing
Xu Yuping Supervisor Outgoing
Zheng Ying Deputy general manager Outgoing
Li Xiaofeng Deputy general manager Outgoing
Zhang Jianguo Secretary of the Board Outgoing
Zhang Min Chairman Election
Zhu Xudong Director Election
Yin Qiang Director Election
Huang Yingjian Director Election
Li Wenhao Director Election
Lu Yujie Director Election
Xi Lifeng Independent director Election
Rui Meng Independent director Election
Chen Zhen Independent director Election
Qiao Junhai Supervisory Board Chairman Election
Chen Mengzhao Supervisor Election
Zhang Jianguo Supervisor Election
Zhang Min General manager Appointment
Li Jiaming Executive deputy general manager Appointment
Fang Haixiang Deputy general manager Appointment
Zheng Ying Deputy general manager Appointment
Li Xiaofeng Deputy general manager Appointment
Zhou Yongqiang Secretary of the Board Appointment
Note: The term of office of the 7th Board of Directors of the Company expires. Zhang Min, Zhu Xudong, Yin
Qiang, Huang Yingjian, Li Wenhao, Lu Yujie, Xi Lifeng, Rui Meng and Chen Zhen were elected as director of
the 8th Board of Directors in 2016 Annual Shareholders’ Meeting on 27th April 2017. Zhang Ming, Su Yong,
He Ye, Li Jiaming, Fang Haixiang, Sun Gang, Bao Qi, the directors of the 7th Board of Directors, are no
longer as the Company's 8th Board of Directors candidates due to the term of office expires, work changes and
other reasons.
The term of office of the 7th Supervisory Board of the Company expires. Qiao Junhai and Chen Mengzhao
were elected as supervisor of the 8th Supervisory Board in 2016 Annual Shareholders’ Meeting on 27th April
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2017. Zhang Jianguo was elected as supervisor in the 6th Meeting of the Second Staff Representative Meeting.
Ding Binhui, Zhuge Huiling, Chen Guoling and Xu Yuping, the supervisors of the 7th Supervisory Board were
no longer the supervisors of the Company.
The Company held the first meeting of the 8th Board of Directors on 27th April2017 to appoint Mr. Zhang Min
as the general manager of the Company and appointed Li Jiaming as executive deputy general manager of the
Company (acting as the chief financial officer), appointed Fang Haixiang, Zheng Ying and Li Xiaofeng as
Chapter 9 Corporate Bonds
Not applicable.
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Chapter 10 Financial Report
Shang Gong Group Co., Ltd.
Consolidated Statement of Financial Position
As of 30th June 2017
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 652,081,404.95 763,655,704.57
Deposit reservation for balance
Lending funds
Financial assets at fair value whose fluctuation
4,000.00
is attributed to profit or loss for current period
Derivative financial assets
Notes receivable 75,104,968.57 78,841,448.05
Accounts receivable 503,459,446.04 389,252,678.87
Prepayment 29,322,580.80 33,709,357.11
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable
Dividends receivable
Other receivables 59,598,335.06 50,885,073.48
Redemptory monetary capital for sale
Inventories 728,145,775.11 663,766,440.95
Classified as assets held for sale
Non-current assets maturing within one year
Other current assets 365,637,487.25 357,418,547.35
Total current assets 2,413,349,997.78 2,337,533,250.38
Non-current assets:
Loans and payments on behalf
Available-for-sale financial assets 130,406,117.76 137,219,246.11
Held-to-maturity investments
Long-term receivables
Long-term equity investments 281,155,293.64 253,586,574.99
Investment properties 106,017,913.45 107,616,254.96
Fixed assets 369,228,415.28 354,223,210.04
Construction in progress 33,559,198.84 20,199,928.64
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 153,676,528.99 155,237,899.69
Development expenditures 14,276,195.28 12,529,345.90
Goodwill 71,992,459.44 67,878,923.12
Long-term deferred expenses 1,005,022.99 1,084,797.97
Deferred income tax assets 62,074,009.65 59,063,549.91
Other non-current assets
Total non-current assets 1,223,391,155.32 1,168,639,731.33
Total assets 3,636,741,153.10 3,506,172,981.71
Current liabilities:
Short-term loans 366,068,180.62 351,368,604.62
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
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Item Note Ending Balance Beginning Balance
Accounts payable 172,418,174.68 174,828,356.05
Receipt in advance 30,490,939.49 36,548,091.83
Financial assets sold for repurchase
Handling charges and commissions payable
Employee benefits payable 80,155,399.79 80,928,692.78
Taxes and surcharges payable 13,263,952.53 54,740,867.60
Interest payable 2,275,506.76 2,090,565.59
Dividends payable 1,032,818.86 1,032,818.86
Other payables 184,013,438.72 193,117,136.53
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 437,625.10 808,706.39
Total current liabilities 850,156,036.55 895,463,840.25
Non-current liabilities:
Long-term loans 62,541,333.67 68,624,863.27
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 39,413,895.74 37,338,461.61
Long-term employee benefits payable 262,861,416.92 255,686,948.92
Special payables
Estimated liabilities
Deferred income 3,600,000.00 3,600,000.00
Deferred income tax liabilities 44,897,458.99 36,604,917.60
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 413,834,105.32 402,375,191.40
Total liabilities 1,263,990,141.87 1,297,839,031.65
Owners' equity
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 968,189,730.95 971,603,120.27
Less: treasury stock
Other comprehensive income -76,836,213.13 -103,144,046.15
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
General risk reserves
Undistributed profits 620,735,357.95 494,754,465.24
Total owners' equity attributable to the parent
2,065,224,718.29 1,916,349,381.88
company
Minority equity 307,526,292.94 291,984,568.18
Total owners' equity 2,372,751,011.23 2,208,333,950.06
Liabilities and owners' equity 3,636,741,153.10 3,506,172,981.71
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Financial Position
As of 30th June 2017
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 137,077,334.98 119,210,234.41
Financial assets at fair value whose fluctuation
4,000.00
is attributed to profit or loss for current period
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Item Note Ending Balance Beginning Balance
Derivative financial assets
Notes receivable 230,000.00 150,000.00
Accounts receivable 10,004,594.03 3,401,851.42
Prepayment 1,128,702.61 531,129.23
Interest receivable
Dividends receivable
Other receivables 87,362,654.66 78,393,221.55
Inventories 8,220,046.89 2,329,420.55
Classified as assets held for sale
Non-current assets maturing within one year
Other current assets 301,596,847.21 301,893,339.18
Total current assets 545,620,180.38 505,913,196.34
Non-current assets:
Available-for-sale financial assets 130,406,110.01 137,219,238.80
Held-to-maturity investments
Long-term receivables 132,939,535.85 123,602,509.87
Long-term equity investments 587,099,753.21 629,485,100.90
Investment properties 83,450,702.31 86,205,621.96
Fixed assets 11,486,168.35 11,768,787.39
Construction in progress 4,879,161.20 4,045,139.74
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 12,666,953.08 12,859,594.30
Development expenditures
Goodwill
Long-term deferred expenses 360,299.01
Deferred income tax assets 500.00
Other non-current assets
Total non-current assets 963,289,183.02 1,005,185,992.96
Total assets 1,508,909,363.40 1,511,099,189.30
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 10,637,034.84 4,014,190.85
Receipt in advance 3,128,057.71 2,694,254.66
Employee benefits payable 2,655,673.70 4,000,000.00
Taxes and surcharges payable 324,064.65 588,400.56
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 80,682,835.72 108,821,954.19
Classified as liabilities held for sale
Non-current liabilities maturing within one year
Other current liabilities
Total current liabilities 98,808,634.10 121,499,767.74
Non-current liabilities:
Long-term loans 1,489,984.87 1,489,984.87
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 1,574,312.63 1,574,312.63
Long-term employee benefits payable
Special payables
Provisions
Deferred income 1,260,000.00 1,260,000.00
Deferred income tax liabilities 1,197,067.41 1,197,067.41
Other non-current liabilities 520,000.00 520,000.00
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Shang Gong Group Co., Ltd.
Item Note Ending Balance Beginning Balance
Total non-current liabilities 6,041,364.91 6,041,364.91
Total liabilities 104,849,999.01 127,541,132.65
Owners' equity:
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 1,008,928,711.28 1,003,282,687.73
Less: treasury stock
Other comprehensive income 27,157,637.99 33,970,766.78
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
Undistributed profits -185,162,827.40 -206,831,240.38
Total owners' equity 1,404,059,364.39 1,383,558,056.65
Liabilities and owners' equity 1,508,909,363.40 1,511,099,189.30
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Consolidated Statement of Comprehensive Incomes
From 1st January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Same Period in
Item Note Current Period
Previous Year
1. Incomes 1,532,562,601.12 1,359,342,529.45
Including: operating income 1,532,562,601.12 1,359,342,529.45
Interest income
Premiums earned
Income from handling charges and commissions
2. Costs 1,377,803,455.91 1,222,327,837.54
Including: Cost of sales 1,088,801,959.30 954,500,289.41
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
taxes and surcharges 5,994,544.14 4,180,944.00
Selling expenses 141,412,181.17 124,035,260.82
General and administrative expenses 143,922,099.95 131,096,375.43
Financial expenses -6,849,775.62 10,089,517.50
Losses from asset impairment 4,522,446.97 -1,574,549.62
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 18,495,885.65 18,165,848.81
Including: income from investment in associates
11,737,352.98 11,338,598.93
and joint ventures
Foreign exchange gains ("-" for losses)
Other gains
3. Operating profits ("-" for losses) 173,255,030.86 155,180,540.72
Plus: non-operating income 12,489,008.12 7,659,396.08
Including: gains from disposal of non-current assets 9,842,841.68 2,540,561.45
Less: non-operating expenses 400,300.80 3,300,707.74
Including: losses from disposal of non-current assets 95,217.09 3,098,496.16
4. Total profits ("-" for total losses) 185,343,738.18 159,539,229.06
Less: income tax expenses 46,499,111.30 45,381,401.63
5. Net profit ("-" for net loss) 138,844,626.88 114,157,827.43
Net profit attributable to owners of the parent company 125,980,892.71 101,164,717.70
Non-controlling interests 12,863,734.17 12,993,109.73
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Shang Gong Group Co., Ltd.
6. Net of tax of other comprehensive income 30,819,765.91 -21,624,435.26
Net of tax of other comprehensive income attributable to
26,307,833.02 -23,500,674.67
owners of the 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
26,307,833.02 -23,500,674.67
gains and losses later
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
-6,813,128.79 -28,030,165.55
available-for-sale financial 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 33,120,961.81 4,529,490.88
f. Others
Net of tax of other comprehensive income attributable to
4,511,932.89 1,876,239.41
non-controlling shareholders
7. Total comprehensive incomes 169,664,392.79 92,533,392.17
Total comprehensive income attributable to owners of
152,288,725.73 77,664,043.03
the parent company
Total comprehensive income attributable to
17,375,667.06 14,869,349.14
non-controlling shareholders
8. Earnings per share
(1) Basic earnings per share 0.2296 0.1844
(2) Diluted earnings per share 0.2296 0.1844
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Comprehensive Incomes
From 1st January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Same Period in
Item Note Current Period
Previous Year
1. Operating income 46,385,796.09 18,604,456.82
Less: Operating cost 23,996,317.49 8,113,595.28
tax and surcharges 1,891,943.39 2,072,413.03
Selling expenses 2,643,464.25 258,334.34
General and Administration expenses 20,078,331.44 12,210,527.32
Finance expenses -8,681,598.18 -4,016,794.71
Impairment losses on assets 177,256.58 1,512,395.93
Plus: gains from changes in fair value ("-" for losses)
Investment income ("-" for losses) 6,106,969.93 6,827,249.88
Including: Investment income in associates and joint ventures
Other income
2. Operating profits ("-" for losses) 12,387,051.05 5,281,235.51
Plus: Non-operating income 9,481,361.93 1,451,036.51
Including: gains from disposal of non-current assets 9,449,919.98 165,136.00
Less: non-operating expenses 200,000.00 210,456.25
Including: losses from disposal of non-current assets 10,456.25
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Shang Gong Group Co., Ltd.
Same Period in
Item Note Current Period
Previous Year
3. Total profits ("-" for total losses) 21,668,412.98 6,521,815.77
Less: income tax expenses
4. Net profit ("-" for net loss) 21,668,412.98 6,521,815.77
4. Net of tax of other comprehensive income -6,813,128.79 -28,030,165.55
(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
-6,813,128.79 -28,030,165.55
and losses later
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
-6,813,128.79 -28,030,165.55
available-for-sale financial 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
f. Others
6. Total comprehensive incomes 14,855,284.19 -21,508,349.78
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
From 1st January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Same Period in
Item Note Current Period
Previous Year
1. Cash flows from operating activities:
Cash received from sale of goods and provision of
1,558,790,106.65 1,437,839,370.97
services
Net increase in customer bank deposits and placement
from banks and other 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
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Shang Gong Group Co., Ltd.
Same Period in
Item Note Current Period
Previous Year
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 23,417,955.22 30,980,782.69
Cash received from other operating activities 21,723,964.87 25,698,235.62
Sub-total of cash inflows from operating activities 1,603,932,026.74 1,494,518,389.28
Cash paid for goods purchased and services received 1,106,016,865.34 1,045,794,957.00
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 323,950,873.52 299,241,866.26
Cash paid for taxes and surcharges 101,258,510.93 76,973,192.74
Cash paid for other operating activities 132,496,100.42 118,451,458.99
Sub-total of cash outflows from operating activities 1,663,722,350.21 1,540,461,474.99
Net cash flows from operating activities -59,790,323.47 -45,943,085.71
2. Cash flows from investing activities:
Cash inflow from divestment 606,327,427.90 615,261,697.25
Cash inflow from investment incomes 801,400.43
Cash gain from disposal of fixed assets, intangible assets, and
10,661,268.33 852,535.50
other long-term investment
Cash inflow from disposal of subsidiaries and other operating
1,115,552.60
units
Cash received from other investing activities
Sub-total of cash inflows from investing activities 617,790,096.66 617,229,785.35
Cash paid for acquisition of fixed assets, intangible assets
41,015,907.75 45,556,680.50
and other long-term assets
Cash paid for investments 620,108,197.50 726,993,439.10
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 661,124,105.25 772,550,119.60
Net cash flows from investing activities -43,334,008.59 -155,320,334.25
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 330,195,595.00 206,901,370.20
Cash received from bonds issuance
Cash received from other financing activities 429,112.68 355,261.67
Sub-total of cash inflows from financing activities 330,624,707.68 207,256,631.87
Cash paid for debt repayments 341,839,165.55 166,820,569.00
Cash paid for distribution of dividends and profits or
9,551,927.66 5,213,563.08
payment of interest
Including: dividends and profits paid to non-controlling
1,833,942.30 1,814,250.00
shareholders by subsidiaries
Cash paid for other financing activities
Sub-total of cash outflows from financing activities 351,391,093.21 172,034,132.08
Net cash flows from financing activities -20,766,385.53 35,222,499.79
4. Effect of fluctuation in exchange rate on cash and cash
22,569,433.51 15,358,918.84
equivalents
5. Net increase in cash and cash equivalents -101,321,284.08 -150,682,001.33
Plus: beginning balance of cash and cash equivalents 750,357,929.63 744,700,658.82
6. Ending balance of cash and cash equivalents 649,036,645.55 594,018,657.49
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
st
From 1 January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Same Period in
Item Note Current Period
Previous Year
1. Cash flows from operating activities:
Cash received from sale of goods and provision of
50,038,010.69 17,776,248.12
services
Refunds of taxes and surcharges 29,728.60 25,900.51
Cash received from other operating activities 11,242,643.33 16,236,047.04
Sub-total of cash inflows from operating activities 61,310,382.62 34,038,195.67
Cash paid for goods purchased and services received 25,174,592.83 4,648,663.54
Cash paid to and on behalf of employees 14,056,014.14 12,105,236.53
Cash paid for taxes and surcharges 3,224,645.83 2,270,830.52
Cash paid for other operating activities 35,520,905.54 36,846,820.39
Sub-total of cash outflows from operating activities 77,976,158.34 55,871,550.98
Net cash flows from operating activities -16,665,775.72 -21,833,355.31
2. Cash flows from investing activities:
Cash inflow from divestment 526,075,598.49 615,261,697.25
Cash inflow from investment incomes 10,692,049.83
Cash gain from disposal of fixed assets, intangible
9,901,416.00
assets, and other long-term investment
Cash inflow from disposal of subsidiaries and other
1,115,552.60
operating units
Cash received from other investing activities 10,303,934.17
Sub-total of cash inflows from investing activities 556,972,998.49 616,377,249.85
Cash paid for acquisition of fixed assets, intangible
2,231,017.10 5,814,046.20
assets and other long-term assets
Cash paid for investments 520,211,083.00 593,452,430.00
Net cash paid to acquire subsidiaries and other business
units
Cash paid for other investing activities
Sub-total of cash outflows from investing activities 522,442,100.10 599,266,476.20
Net cash flows from investing activities 34,530,898.39 17,110,773.65
3. Cash flows from financing activities
Cash received from investors
Cash received from loans
Cash received from bonds issuance
Cash received from other financing activities
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
Net cash flows from financing activities
4. Effect of fluctuation in exchange rate on cash and cash
1,977.90 3,017.94
equivalents
5. Net increase in cash and cash equivalents 17,867,100.57 -4,719,563.72
Plus: beginning balance of cash and cash equivalents 119,210,234.41 114,839,269.51
6. Ending balance of cash and cash equivalents 137,077,334.98 110,119,705.79
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.
Consolidated Statement of Changes in Equity
From 1st January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Current period
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Capital Special Surplus Undistributed Minority equity
Share capital preference perpetual treasury comprehensive risk equity
Others reserves reserves reserves profits
shares bonds stock income reserves
1. Previous year ending balance
548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
brought forward
Plus: accounting policy changes 0.00
Correction of
0.00
previous-period accounting errors
Business combination
involving entities under common 0.00
control
Others 0.00
2. Beginning balance of current year 548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
3. Increase/ (decrease) for the
-3,413,389.32 26,307,833.02 125,980,892.71 15,541,724.76 164,417,061.17
current year ("-" for losses)
(1) Total comprehensive incomes 26,307,833.02 125,980,892.71 17,375,667.06 169,664,392.79
(2) Investment/ (divestment) -3,413,389.32 0.00 0.00 0.00 -3,413,389.32
a. Common shares from
0.00
shareholders
b. Investment capital from the
0.00
holders of other equity instruments
c. Amount of the share-based
payment included in the owners' 0.00
equity
d. Others -3,413,389.32 -3,413,389.32
(3) Distribution of profits -1,833,942.30 -1,833,942.30
a. Surplus reserves 0.00
b. General risk reserves 0.00
c. Distribution to owners or
-1,833,942.30 -1,833,942.30
shareholders
d. Others 0.00
(4) Internal transfer of owners'
0.00
equity
a. Capital reserve turn to stock
0.00
equity
b. Surplus reserve turn to stock
0.00
equity
c. Surplus reserve to recover loss 0.00
d. Others 0.00
(5) Special reserves 0.00
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Shang Gong Group Co., Ltd.
a. Appropriation for current year 0.00
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the current
548,589,600.00 968,189,730.95 -76,836,213.13 4,546,242.52 620,735,357.95 307,526,292.94 2,372,751,011.23
year
Same Period in Previous Year
Owners' equity attributable to the parent company
Item Other equity instruments Less: Other General Total owners'
Special Surplus Undistributed Minority equity
Share capital Capital reserves treasury comprehensive risk equity
preference perpetual reserves reserves profits
Others stock income reserves
shares bonds
1. Previous year ending
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
balance brought forward
Plus: accounting policy
0.00
changes
Correction of
previous-period accounting 0.00
errors
Business
combination involving
0.00
entities under common
control
Others 0.00
2. Beginning balance of
548,589,600.00 0.00 0.00 0.00 956,286,021.43 0.00 -85,270,897.86 0.00 4,546,242.52 0.00 350,523,121.40 275,858,665.32 2,050,532,752.81
current year
3. Increase/ (decrease) for
the current year ("-" for 0.00 0.00 0.00 0.00 11,871,558.22 0.00 -23,500,674.67 0.00 0.00 0.00 101,164,717.70 13,055,099.14 102,590,700.39
losses)
(1) Total comprehensive
-23,500,674.67 101,164,717.70 14,869,349.14 92,533,392.17
incomes
(2) Investment/
0.00 0.00 0.00 0.00 11,871,558.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 11,871,558.22
(divestment)
a. Common shares from
0.00
shareholders
b. Investment capital from
the holders of other equity 0.00
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 profits -1,814,250.00 -1,814,250.00
a. Surplus reserves 0.00
b. General risk reserves 0.00
c. Distribution to owners
-1,814,250.00 -1,814,250.00
or shareholders
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Shang Gong Group Co., Ltd.
d. Others 0.00
(4) Internal transfer of
0.00
owners' equity
a. Capital reserve turn to
0.00
stock equity
b. Surplus reserve turn to
0.00
stock equity
c. Surplus reserve to
0.00
recover loss
d. Others 0.00
(5) Special reserves 0.00
a. Appropriation for current
0.00
year
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the
548,589,600.00 0.00 0.00 0.00 968,157,579.65 0.00 -108,771,572.53 0.00 4,546,242.52 0.00 451,687,839.10 288,913,764.46 2,153,123,453.20
current year
Legal representative: Zhang Min Financial director: Li Jiaming Accounting department: Zhao Lixin
Shang Gong Group Co., Ltd.
Separate Statement of Changes in Equity
From 1st January 2017 to 30th June 2017
Unit: Yuan, Currency: RMB
Current period
Other equity instruments Less: Other
Item Special Surplus Undistributed
Share capital preference perpetual Capital reserves treasury comprehensive Total owners' equity
Others reserves reserves profits
shares bonds stock income
1. Previous year ending balance brought
548,589,600.00 1,003,282,687.73 33,970,766.78 4,546,242.52 -206,831,240.38 1,383,558,056.65
forward
Plus: accounting policy changes 0.00
Correction of previous-period
0.00
accounting errors
Others 0.00
2. Beginning balance of current year 548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 33,970,766.78 0.00 4,546,242.52 -206,831,240.38 1,383,558,056.65
3. Increase/(decrease) for the current year
0.00 0.00 0.00 0.00 5,646,023.55 0.00 -6,813,128.79 0.00 0.00 21,668,412.98 20,501,307.74
("-" for losses)
(1) Total comprehensive incomes -6,813,128.79 21,668,412.98 14,855,284.19
(2) Investment/ (divestment) 5,646,023.55 5,646,023.55
a. Common shares from shareholders 0.00
b. Investment capital from the holders of
0.00
other equity instruments
c. Amount of the share-based payment 0.00
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Shang Gong Group Co., Ltd.
included in the owners' equity
d. Others 5,646,023.55 5,646,023.55
(3) Distribution of profits 0.00
a. Surplus reserves 0.00
b. Distribution to owners or shareholders 0.00
c. Others 0.00
(4) Internal transfer of owners' equity 0.00
a. Capital reserve turn to stock equity 0.00
b. Surplus reserve turn to stock equity 0.00
c. Surplus reserve to recover loss 0.00
d. Others 0.00
(5) Special reserves 0.00
a. Appropriation for current year 0.00
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the current year 548,589,600.00 0.00 0.00 0.00 1,008,928,711.28 0.00 27,157,637.99 0.00 4,546,242.52 -185,162,827.40 1,404,059,364.39
Same Period in Previous Year
Other equity instruments Less: Other
Item Special Surplus Undistributed
Share capital preference perpetual Capital reserves treasury comprehensive Total owners' equity
Others reserves reserves profits
shares bonds stock income
1. Previous year ending balance brought
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
forward
Plus: accounting policy changes 0.00
Correction of previous-period
0.00
accounting errors
Others 0.00
2. Beginning balance of current year 548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 45,068,484.49 0.00 4,546,242.52 -232,193,721.81 1,369,293,292.93
3. Increase/(decrease) for the current year
0.00 0.00 0.00 0.00 0.00 0.00 -28,030,165.55 0.00 0.00 6,521,815.77 -21,508,349.78
("-" for losses)
(1) Total comprehensive incomes -28,030,165.55 6,521,815.77 -21,508,349.78
(2) Investment/ (divestment) 0.00
a. Common shares from shareholders 0.00
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 0.00
(3) Distribution of profits 0.00
a. Surplus reserves 0.00
b. Distribution to owners or shareholders 0.00
c. Others 0.00
(4) Internal transfer of owners' equity 0.00
a. Capital reserve turn to stock equity 0.00
b. Surplus reserve turn to stock equity 0.00
c. Surplus reserve to recover loss 0.00
d. Others 0.00
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(5) Special reserves 0.00
a. Appropriation for current year 0.00
b. Use in current year 0.00
(6) Others 0.00
4. Ending balance of the current year 548,589,600.00 0.00 0.00 0.00 1,003,282,687.73 0.00 17,038,318.94 0.00 4,546,242.52 -225,671,906.04 1,347,784,943.15
Legal representative: Zhang Min Financial director: Li Jiaming Accounting department: Zhao Lixin
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Shang Gong Group Co., Ltd.
(Amounts are expressed in RMB Yuan unless otherwise stated)
1. Company Basic Information
1.1 Company Profile
Shang Gong Group Co., Ltd., a joint stock limited company with publicly issued A & B shares on the
Shanghai Stock Exchange, is the first listed company in the sewing machinery industry of China. The
Company was incorporated in April 1994. The registration number has changed to 91310000132210544K
(Unified social credit code) in 2016. 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
yuan. The registered address is Room A-D, 12th Floor, 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. 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, 2014, CSRC 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. ([2014] 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 yuan and had been verified
by the Verification Report (PCPAR [2014] No.111126) issued by BDO CHINA Shu Lun Pan Certified Public
Accountants LLP on March 26, 2014.
On December 29, 2016, Pudong SASAC, the original controlling shareholder and actual controller of the
Company, had sold 60.00 million A shares of the Company to Shanghai Puke Flyman Investment Co., Ltd.
which is the wholly-owned subsidiary of Shanghai Pudong Science and Technology Investment Co., Ltd.
China Securities Depository and Clearing Co., Ltd. has issued a "transfer registration confirmation" on the
same day. After the transfer, PKFR held A shares accounted for 10.94% of the total share capital of the
Company, which is the largest shareholder of the Company; Pudong SASAC held A shares accounted for
8.27%, which is the second largest shareholder of the Company. After the completion of the equity transfer,
the Company has changed to a listed company with no controlling shareholder and no actual controller.
As of June 30, 2017, the Company’s total share capital was 548,589,600.00, including 548,589,600 shares with
no restrictive terms, accounting for 100.00% of the total number of shares.
The Company belongs to special equipment manufacturing industry; main operating activities of the Company
are: production and sales of sewing equipment.
According to the resolution of the 2nd meeting of the 8th board of directors, the financial statements were
approved for disclosure by all directors of the Company on August 29, 2017.
1.2 Scope of the Consolidated Financial Statements
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As at June 30, 2017, subsidiaries within the scope of the consolidated financial statements of the Company are
as follows:
Subsidiaries
1. ShangGong (Europe) Holding Corp. GmbH
2. DAP (Shanghai) Co., Ltd.
3. Shanghai 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. DAP VIETNAM CO., LTD.
9. ShangGong GEMSY CO., LTD.
10. Shanghai Shensy Enterprise Development Co., Ltd.
11. Shanghai ShangGong Financial Leasing Co., Ltd.
12. Shanghai Butterfly Import & Export Co., Ltd.
13. Shanghai ShangGong Import & Export Co., Ltd.
See “Note 6 Changes in the scope of consolidation" and “Note 7 Equity in other subjects" for details of the
scope of consolidated financial statements in the current year and the changes thereof.
2. Preparation Basis of Financial Statements
2.1 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.
2.2 Going Concern
The Company has going-concern ability within 12 months as of the end of the report period and has no matters
or situations that may lead to serious doubts about the Company's going-concern ability.
3. Principal 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.
3.1 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 Company’s financial position, operating results, cash
flows and other related information in the reporting period.
3.2 Accounting Period
The accounting year is from January 1 to December 31 in calendar year.
3.3 Operating Cycle
The Company's operating cycle is 12 months.
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3.4 Functional Currency
The Company adopts RMB as its functional currency.
3.5 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 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.
3.6 Preparation Methods of Consolidated Financial Statements
3.6.1 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.
3.6.2 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
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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 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.
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(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 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.
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(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 subsidiary’s 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.
3.7 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.
3.8 Foreign Currency Transactions and Translation of Foreign Currency Statements
3.8.1 Foreign Currency Transactions
Foreign currency transactions are, on initial recognition, translated to RMB at the spot exchange rates at 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.
3.8.2 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.
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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
period in which the disposal occurs.
3.9 Financial Instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
3.9.1 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.
3.9.2 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 creditor’s rights receivable arising from external sales of goods or rendering of service by the Company
and creditor's rights of other enterprises (excluding creditor’s 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.
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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.
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.
3.9.3 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
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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.
3.9.4 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 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.
3.9.5 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.
3.9.6 Test Method and Accounting Treatment of Depreciation of Financial Assets (excluding
Receivables)
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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.
3.10 Provision for Bad Debts of Receivables
3.10.1 Receivables that are Individually Significant but with Provision for Bad Debts Made on an
Individual Basis
Assessment basis or standard of amount individually significant: Top five biggest balance accounts.
Method of provision for bad debts of receivables that are 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 future cash flows lower than the book value and should be
included in the current profit and loss. For short-term receivables, the difference between expected future cash
flows and the present value is too small to discount the expected future cash flows when recognizing the
relevant impairment losses.
3.10.2 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
3.10.3 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.
3.11 Inventories
3.11.1 Classification of Inventories
Inventories are classified into Materials in transit, raw materials, revolving materials, stock commodities,
goods in progress, dispatched goods, material procurement, consigned processing materials, labor cost and
others.
3.11.2 Measurement Method of Dispatched Inventories
Inventories are measured with weighted average method when dispatched. The percentage matches method of
the labor cost and labor revenue. One-off amortization method is adopted for low-cost consumables when they
are consumed.
3.11.3 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.
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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.
3.11.4 Inventory System
Perpetual inventory system is adopted.
3.12 Long-term Equity Investments
3.12.1 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.
3.12.2 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.
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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.
3.12.3 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 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.
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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,
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
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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.
3.13 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 Company’s fixed assets and the same amortization policy of land use right for renting as that for the
Company’s intangible assets.
3.14 Fixed Assets
3.14.1 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.
3.14.2 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 2.00-25.00
Machinery equipment 3-15 0-10 6.00-33.33
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 6.67-20.00
Other equipment 3-14 0-10 6.43-33.33
3.15 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
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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.
3.16 Borrowing Costs
3.16.1 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.
3.16.2 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.
3.16.3 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
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assets for their intended use or sale, the capitalization of borrowing costs should 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.
3.16.4 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.
3.17 Intangible Assets
3.17.1 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.
3.17.2 Estimate of the Useful Life of the Intangible Assets with Finite Useful Lives
Item Estimated Useful Lives
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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
year end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year were
not different from those estimated before.
3.17.3 Specific Criteria Divided the Research Stage and Development Stage
Expenditure internal research and development project is divided into research expenditures and development
expenditures.
Research stage: the planned investigation and research activities to acquire and understand new scientific or
technological knowledge.
Development stage: before commercial production and use, the research findings or other knowledge are
applied in some plan or design to produce new or substantially improved materials, devices, products, etc.
3.17.4 Specific Criteria to Fulfill for Development Costs to be Capitalized
If it can be reliably estimated that future economic benefits will flow to the entity, and that the purchase and
production costs can be reliably measured, the development cost should be capitalized. The measurement of
production cost of internally generated intangible assets is based on direct cost, indirect cost and amortization.
If it can be clearly defined that newly developed products or methods are technically feasible, and that they are
intended for private use or sale, the development cost should be capitalized. The capitalized development cost
should be amortized within a product’s expected 5 to 8 years’ life cycle, using a straight-line method. If the
value in use cannot be recognized, impairment and amortization should be carried out. Research cost and the
development cost which cannot be capitalized should be expense when it occurs.
3.18 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.
At least the impairment test is conducted at the year-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
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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.
3.19 Employee Compensation
3.19.1 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.
3.19.2 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.
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.
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(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.
3.19.3 Accounting 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.
3.20 Estimated Liabilities
3.20.1 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) The 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;
(3) The amount of the obligation can be measured reliably.
3.20.2 Measurement of Estimated Liabilities
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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.
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.
3.21 Revenues
3.21.1 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.
3.21.2 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.
3.21.3 Measurement Principles and Methods of Completion Stage where Revenues from Rendering of
Labor are Recognized under Percentage-of-completion Method
The Company provides confirmation of the written income of the customer when the service income is
confirmed and issued the settlement certificate.
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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.
3.22 Government Subsidies
3.22.1 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
3.22.2 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 current profit and loss by stage;
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If government subsidies related to income are used to compensate the Company’s relevant expenses or losses
in future periods, such government subsidies should be recognized as deferred income on acquisition and be
included into the current profit and loss in the period of recognizing relevant expenses; if government
subsidies related to income are used to compensate the enterprise’s relevant expenses or losses incurred, such
government subsidies are directly included into the current profit and loss on acquisition.
3.23 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 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.
3.24 Lease
3.24.1 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 lessor 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.
(2) 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,
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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.
3.25 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.
3.26 Adjustment for Changes in Principal Accounting Policies and Accounting Estimates
3.26.1 Adjustment for Changes in Accounting Policies
Implement the "Accounting Standards for Business Enterprises No. 16 - Government Subsidies ".
Ministry of Finance on 10th May 2017 revised the "Accounting Standards for Business Enterprises No. 16 -
Government Subsidies", which was implemented since 12th June 2017.
The main impact of implementing the standard is as follows:
The Content and Reasons of Accounting Policy Changes Item and Amount Affected in the Report
Ministry of Finance on 10th May 2017 issued the "Accounting Standards for
Business Enterprises No. 16 - Government Subsidies" (Accounting [2017] No.
15). According to the revised "Accounting Standards for Business Enterprises
The change has no significant impact on the
No. 16 - Government Subsidies", government subsidies related to the daily
Company's financial position, operating results
activities of enterprises shall be included in other income or related expenses in
and cash flow.
accordance with the essence of economic business; government grants
unrelated to the daily activities of enterprises shall be included in
non-operating income and expense.
3.26.2 Adjustment for Changes in Principal Accounting Estimates
There were no changes in the accounting estimates in the current repor period.
4. Tax
Tax Type Basis of Tax Assessment Tax Rate
The output tax is calculated based on the revenue from sales of goods
3%, 5%, 6%, 7%,
and the provision of taxable labor services according to tax law, and
Value-added tax (VAT) 11%, 13%, 17%,
value added tax payable should be the balance of the output tax for
19%
the period after deducting the deductible input tax for the period.
Levied based on the taxable income (reclassified to VAT from 1st May
Business tax 5%
2016)
Enterprise income tax (EIT) Levied based on the taxable income 16%-38%, 25%
Urban maintenance and
Levied based on the actual payment of business tax and VAT. 1%, 5%, 7%
construction tax
Education surtax and local
Levied based on the actual payment of business tax and VAT. 2%, 3%
education sutax
Note: The EIT rate applicable to ShangGong Europe, a subsidiary of the Company, and its subsidiaries in the
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scope of consolidation varies in a range from16% to 38%; and the VAT rate is 19%.
5. Notes to Items of Consolidated Financial Statements
5.1 Cash and Cash Equivalents
Item Ending Balance Beginning Balance
Cash on hand 948,951.52 1,137,409.87
Bank deposit 650,110,309.40 751,831,391.58
Other monetary funds 1,022,144.03 10,686,903.12
Total 652,081,404.95 763,655,704.57
Including: total amount of cash and
342,712,838.67 463,089,363.62
cash equivalents offshore
Details of cash and cash equivalents restricted for use due to mortgage, pledge or freezing are follows:
Item Ending Balance Beginning Balance
Other guaranteed deposit (Note) 3,044,759.40 3,319,935.24
Deposit held for foreign exchange inspection 9,977,839.70
Total 3,044,759.40 13,297,774.94
Note: This item consists of the guaranteed deposit pledged by ShangGong Europe to Commerzbank Germany,
amounting to 328,737.00 euro (equivalent to 2,544,759.40 yuan); and the guarantees for crackdown on
counterfeit goods amounting to 500,000.00 yuan by the Company’s subsidiary Shanghai Butterfly Import &
Export Co., Ltd.
5.2 Financial assets at fair value whose fluctuation is attributed to profit and loss for current period
Item Ending Balance Beginning Balance
Trading financial assets 4,000.00
Of which: Debt instrument investment
Equity instrument investment 4,000.00
Derivative financial asset
Others
Financial assets measured at fair value and the
changes are recorded into current period profit or loss
Of which: Debt instrument investment
Equity instrument investment
Other financial asset
Total 4,000.00
5.3 Derivative Financial Assets
Not applicable.
5.4 Notes Receivable
5.4.1 Presentation of Notes Receivable by Category
Item Ending Balance Beginning Balance
Bank acceptance bills 51,827,634.80 51,427,934.60
Commercial acceptance bills 23,277,333.77 27,413,513.45
Total 75,104,968.57 78,841,448.05
5.4.2 Notes Receivable Pledged as at the End of Period
Not applicable.
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5.4.3 The Notes Receivable that Have Been Endorsed or Discounted at the End of the Period and Have
not yet Expired at the Balance Sheet Date
Item Ending Balance Beginning Balance
Bank acceptance bills 3,603,975.02
Commercial acceptance bills
Total 3,603,975.02
5.4.4 Notes Receivable Transferred to Accounts Receivable Due to the Issuer's Performance Failure
Not applicable.
5.5 Accounts Receivable
5.5.1 Disclosure of Accounts Receivable by Category
Ending Balance Beginning Balance
Type Book Balance Provision for Bad Debt Book Balance Provision for Bad Debt
Book Value Book Value
Amount % Amount % Amount % Amount %
Accounts receivable with significant
individual amount and provision for 99,045,728.99 16.01 19,490,244.00 19.68 79,555,484.99 69,228,371.46 13.86 18,376,602.00 26.54 50,851,769.46
bad debt is accrued separately
Accounts receivable with provision for
bad debt accrued by credit risk 153,744,026.84 24.85 77,357,351.62 50.32 76,386,675.22 124,946,418.14 25.02 73,206,008.31 58.59 51,740,409.83
characteristics of a portfolio
Accounts receivable with insignificant
individual amount but provision for 365,802,521.52 59.14 18,285,235.69 5.00 347,517,285.83 305,199,419.71 61.12 18,538,920.13 6.07 286,660,499.58
bad debt is accrued separately
Total 618,592,277.35 100.00 115,132,831.31 18.61 503,459,446.04 499,374,209.31 100.00 110,121,530.44 22.05 389,252,678.87
Accounts receivable with significant individual amount and provision for bad debt is accrued separately at the
end of the period
Accounts Ending Balance
Receivable (By Provision for Bad Proportion of
Accounts Receivable Reason for Provision
Unit) Debt Provision
Unimpaired according to the
No.1 Client 54,433,586.34
separate test
Impaired according to the
No.2 Client 19,490,244.00 19,490,244.00 100.00%
separate test
Unimpaired according to the
No.3 Client 13,205,318.40
separate test
Unimpaired according to the
No.4 Client 11,916,580.25
separate test
Total 99,045,728.99 19,490,244.00 19.68% /
Accounts receivable with provision for bad debt accrued using the aging analysis method in the portfolio
Ending Balance
Aging
Accounts Receivable Provision for Bad Debt Proportion of Provision
Within 1 year 75,911,948.96 3,795,597.44 5.00%
1-2 years 4,060,177.41 812,035.48 20.00%
2-3 years 2,044,363.55 1,022,181.78 50.00%
Over 3 years 71,727,536.92 71,727,536.92 100.00%
Total 153,744,026.84 77,357,351.62 50.32%
Accounts receivable with insignificant individual amount but provision for bad debt is accrued separately
Ending Balance
Accounts Receivable (By Unit) Accounts Provision for Bad Proportion of
Reason for Provision
Receivable Debt Provision
Other insignificant accounts Impaired according to
2,020,198.55 2,020,198.55 100.00%
receivable (Note 1) the separate test
Other insignificant accounts Impaired according to
28,297,066.02 6,936,762.57 24.51%
receivable (Note 2) the separate test
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Ending Balance
Accounts Receivable (By Unit) Accounts Provision for Bad Proportion of
Reason for Provision
Receivable Debt Provision
Other insignificant accounts Impaired according to
235,073,310.29 8,850,090.77 3.76%
receivable (Note 3) the separate test
Other insignificant accounts Unimpaired according
99,922,376.74
receivable (Note 4) to the separate test
Other insignificant accounts Impaired according to
478,183.80 478,183.80 100.00%
receivable (Note 5) the separate test
Other insignificant accounts Unimpaired according
11,386.12
receivable (Note 6) to the separate test
Total 365,802,521.52 18,285,235.69 5.00%
Note 1: It mainly represents the accounts receivable due from Shang Gong Group Co., Ltd. Shanghai Butterfly
Sewing Machines Branch, and the provision for impairment is accrued based on the separate test.
Note 2: It mainly represents the accounts receivable due from the subsidiary, DAP (Shanghai) Co., Ltd., and
the provision for impairment is accrued based on the separate test.
Note 3: It mainly represents the accounts receivable due from the subsidiary, ShangGong Europe, and the
provision for impairment is accrued based on the separate test.
Note 4: It mainly represents the accounts receivable due from the subsidiary, Shanghai Shensy Enterprise
Development Co., Ltd, and is unimpaired based on the separate test.
Note 5: It mainly represents the accounts receivable due from the subsidiary, Shanghai SMPIC Import &
Export Co., Ltd., and the provision for impairment is accrued based on the separate test.
Note 6: It mainly represents the accounts receivable due from the subsidiary, DAP Vietnam Co., Ltd., and is
unimpaired based on the separate test.
5.5.2 The Accrual, Reversal or Recovery of the Provision for Bad Debts in the Current Period
The provision for bad debts accrued in the current period is 5,439,823.58 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 1,292,372.99 yuan.
5.5.3 Actual Write-off of Accounts Receivable in the Current Period
Item Write-off Amount
The actual write-off of accounts receivable 779,410.85
The actual write-off of accounts receivable is due to the long aging of accounts receivable. All of them are
unrecoverable due to deregistration/cancellation of the client companies.
5.5.5 Top Five Accounts Receivable in Terms of their Ending Balance
Ending Balance
Company Name Proportion in Total
Accounts Receivable Accounts Receivable Provision for Bad Debt
Ratio (%)
No.1 Client 54,433,586.34 8.80
No.2 Client 19,490,244.00 3.15 19,490,244.00
No.3 Client 13,205,318.40 2.13
No.4 Client 11,916,580.25 1.93
No.5 Client 11,530,775.39 1.86 11,530,775.39
Total 110,576,504.38 17.87 31,021,019.39
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See Note 10.6 for details of accounts receivable due from related parties.
5.6 Prepayment
5.6.1 Presentation of Prepayments by Aging
Ending Balance Beginning Balance
Aging
Book Balance Proportion (%) Book Balance Proportion (%)
Within 1 year 22,034,496.71 75.15 24,955,584.89 74.03
1-2 years 6,430,368.02 21.93 7,892,719.27 23.41
2-3 years 836,031.51 2.85 839,461.69 2.49
Over 3 years 21,684.56 0.07 21,591.26 0.07
Total 29,322,580.80 100.00 33,709,357.11 100.00
5.6.2 Top Five Prepayments to Suppliers in Terms of their Ending Balance
Supplier Ending Balance Proportion in Total Ending Balance of Advances to Suppliers (%)
No.1 Supplier 6,147,650.83 20.97
No.2 Supplier 2,782,768.25 9.49
No.3 Supplier 2,683,907.54 9.15
No.4 Supplier 1,921,764.84 6.55
No.5 Supplier 744,800.00 2.54
Total 14,280,891.46 48.70
5.7 Interest Receivable
Not applicable.
5.8 Dividends Receivable
Not applicable.
5.9 Other Receivables
5.9.1 Disclosure of Other Receivables by Category
Ending Balance Beginning Balance
Type Book Balance Provision for Bad Debt Book Balance Provision for Bad Debt
Book Value Book Value
Amount % Amount % Amount % Amount %
Other
receivables
with
significant
individual
33,135,960.97 37.02 12,951,956.70 39.09 20,184,004.27 32,993,470.54 41.20 12,600,914.20 38.19 20,392,556.34
amount and
provision for
bad debt is
accrued
separately
Other
receivables
with
provision for
bad debt 25,424,207.21 28.40 16,497,784.81 64.89 8,926,422.40 19,082,416.29 23.83 16,077,736.42 84.25 3,004,679.87
accrued by
credit risk
characteristics
of a portfolio
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Other
receivables
with
insignificant
individual
30,946,536.46 34.58 458,628.07 1.48 30,487,908.39 28,014,947.49 34.97 527,110.22 1.88 27,487,837.27
amount but
provision for
bad debt is
accrued
separately
Total 89,506,704.64 100.00 29,908,369.58 33.41 59,598,335.06 80,090,834.32 100.00 29,205,760.84 36.47 50,885,073.48
Other receivables with significant individual amount and provision for bad debt is accrued separately at the
end of period
Ending Balance
Other Receivables (By Unit) Provision for Bad Proportion of
Other Receivables Reason for Provision
Debt Provision
Impaired according to the
No.1 Client 12,951,956.70 12,951,956.70 100.00
separate test
Export tax refund receivable Unimpaired according to the
8,604,004.27
(Note) separate test
Unimpaired according to the
No.3 Client 5,080,000.00
separate test
Unimpaired according to the
No.4 Client 3,500,000.00
separate test
Unimpaired according to the
No.5 Client 3,000,000.00
separate test
Total 33,135,960.97 12,951,956.70 39.09 /
Note: It mainly represents the export tax refund receivable arising from the export sale by the subsidiary, and
is unimpaired according to the separate impairment test.
Other receivables with provision for bad debt accrued using the aging analysis method in the portfolio:
Ending Balance
Aging
Other Receivables Provision for Bad Debt Proportion of Provision
Within 1 year 8,869,703.38 443,485.17 5.00%
1-2 years 509,050.29 101,810.06 20.00%
2-3 years 185,927.93 92,963.97 50.00%
Over 3 years 15,859,525.61 15,859,525.61 100.00%
Total 25,424,207.21 16,497,784.81 64.89%
Other receivables with insignificant individual amount but provision for bad debt is accrued separately at the
end of period
Content of Other
Book Balance Provision for Bad Debt Proportion of Provision (%) Reason for Provision
Receivables
Other insignificant other Unimpaired according to
3,114,512.43
receivables (Note 1) the separate test
Other insignificant other Impaired according to the
290,980.00 16,525.00 5.68%
receivables (Note 2) separate test
Other insignificant other Unimpaired according to
4,025,194.72
receivables (Note 3) the separate test
Other insignificant other Unimpaired according to
23,515,849.31 442,103.07 1.88%
receivables (Note 4) the separate test
Total 30,946,523.46 458,628.07 1.48% /
Note 1: It mainly represents the other receivables due from the subsidiary DAPSH, which is unimpaired based
on the separate test.
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Note 2: It mainly represents the other receivables due from SGG Butterfly Branch, and the provision for
impairment is accrued based on the separate test.
Note 3: It mainly represents the other receivables due from the subsidiary SGE, which is unimpaired based on
the separate test.
Note 4: It mainly represents the other receivables due from the subsidiary SHENSY, which is unimpaired
based on the separate test.
5.9.2 The Accrual, Reversal or Recovery of the Provision for Bad Debts in the Current Period
The provision for bad debts accrued in the current period is 907,334.66 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 707,460.98yuan.
5.9.3 Actual Write-off of Other Receivables in the Current Period
Not applicable.
5.9.4 Top Five Other Receivables in Terms of their Ending Balance
Proportion in the
Provision for Bad
Ending Balance of
Company Name Nature Ending Balance Aging Debt
Total Other
Ending Balance
Receivable (%)
From within 1
No.1 Client Current accounts 12,951,956.70 year to over 3 14.47 12,951,956.70
years
Export tax refund
No.2 Client 8,604,004.27 Within 1year 9.61
receivable
No.3 Client Current accounts 5,080,000.00 Within 1year 5.68
No.4 Client Current accounts 3,500,000.00 Within 1year 3.91
No.5 Client Current accounts 3,000,000.00 Within 1year 3.35
Total / 33,135,960.97 37.02 12,951,956.70
5.10 Inventories
5.10.1 Classification of Inventories
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Raw
281,255,243.96 44,534,439.68 236,720,804.28 244,335,565.64 41,630,636.86 202,704,928.78
materials
Goods in
166,512,345.19 29,223,611.68 137,288,733.51 136,310,148.14 27,492,514.68 108,817,633.46
progress
Finished
292,698,261.02 39,893,324.12 252,804,936.90 267,450,476.53 39,117,293.46 228,333,183.07
goods
Revolving
666,088.02 666,088.02 1,221,161.27 1,221,161.27
materials
Consigned
processing 776,122.66 776,122.66 603,268.15 603,268.15
materials
Goods
9,038,718.26 9,038,718.26 7,972,002.36 7,972,002.36
shipped
Material
23,730.56 23,730.56 32,250.55 32,250.55
purchase
Labor costs 90,826,640.92 90,826,640.92 114,082,013.31 114,082,013.31
Total 841,797,150.59 113,651,375.48 728,145,775.11 772,006,885.95 108,240,445.00 663,766,440.95
5.10.2 Inventory Valuation Allowance
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Increase Decrease
Beginning
Item Reversal or Ending Balance
Balance Provision Others Others
write-off
Raw materials 41,630,636.86 299,829.07 2,603,973.75 44,534,439.68
Goods in progress 27,492,514.68 1,731,097.00 29,223,611.68
Finished goods 39,117,293.46 30,948.91 1,704,349.94 907,286.63 51,981.56 39,893,324.12
Total 108,240,445.00 330,777.98 6,039,420.69 907,286.63 51,981.56 113,651,375.48
5.11 Assets Classified as Held for Sale
Not applicable
5.12 Non-Current Assets Maturing within One Year
Not applicable
5.13 Other Current Assets
Item Ending Balance Beginning Balance
Held-to-maturity investments 20,437,857.87 10,288,261.77
Input tax to be credited 7,415,580.99 11,164,758.87
Rentals and insurance fees 4,343,382.90 1,529,650.89
Overpaid enterprise income tax 999,195.60 1,946,694.20
Financial products 50,000,000.00
Structured deposit 332,000,000.00 282,000,000.00
Unamortized expense 441,469.89 489,181.62
Total 365,637,487.25 357,418,547.35
5.14 Available-for-sale Financial Assets
5.14.1 Available-for-sale Financial Assets
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Available for
sale debt
instruments
Available for
sale equity 132,104,249.67 1,698,131.91 130,406,117.76 138,917,378.02 1,698,131.91 137,219,246.11
instruments
Including:
Measured at 101,167,860.52 101,167,860.52 107,980,989.31 107,980,989.31
fair value
Measured at
cost
30,936,389.15 1,698,131.91 29,238,257.24 30,936,388.71 1,698,131.91 29,238,256.80
Total 132,104,249.67 1,698,131.91 130,406,117.76 138,917,378.02 1,698,131.91 137,219,246.11
5.14.2 Available-for-sale Financial Assets Measured at Fair Value as at 30th June 2017
Classification of available-for-sale Available-for-sale Equity Available-for-sale Debt
Total
Financial Assets Instruments Instruments
Cost of equity instruments 74,010,222.53 74,010,222.53
Fair value 101,167,860.52 101,167,860.52
Accumulated changes in fair value
27,157,637.99 27,157,637.99
included in other comprehensive income
Accrued provision for impairment
5.14.3 Available-for-sale Financial Assets Measured at Cost as at 30th June 2017
Investee Book Balance Provision for Impairment Shareholding Cash
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As at 1st Ratio in Dividend
As at 1st As at 30th As at 30th
Increase Decrease January Increase Decrease Investee (%) in Report
January 2017 June 2017 June 2017
2017 Period
Shanghai
Fuji Xerox 29,140,749.49 29,140,749.49 15.92
Co., Ltd.
Shanghai
Hirose
Precision
30.00 700,000.00
Industrial
Co., Ltd.
(Note 1)
Changshu
Qixing
90.00
Elec-plating
Co., Ltd.
Shanghai
Huazhijie
Plastic Co., 736,283.66 736,283.66 736,283.66 736,283.66 23.04
Ltd. (Note
2)
Shanghai
Xingguang
Underwear
308,033.99 308,033.99 308,033.99 308,033.99 14.30
Factory
(South
Africa)
Wuxi
Shanggong
Sewing
153,814.26 153,814.26 153,814.26 153,814.26 80.00
Machines
Co., Ltd.
(Note 3)
China
Perfect
90,000.00 90,000.00 0.0993
Machinery
Co., Ltd.
Shanghai
Baoding
7,500.00 7,500.00 0.008
Investment
Co., Ltd.
Shanghai
Shanggong
Jiarong
Sewing 500,000.00 500,000.00 500,000.00 500,000.00 12.50
Machine
Trade Co.,
Ltd.
Pfaff
Industrial
7.31 0.44 7.75 49.00
Iberica
S.A.U.
Total 30,936,388.71 0.44 30,936,389.15 1,698,131.91 1,698,131.91 700,000.00
Note 1: Shang Gong Group Co., Ltd. holds 30% shares of Shanghai Hirose Precision Industrial Co., Ltd.
According to the articles of association, the Company obtains guaranteed minimum revenue each year. In
addition, the Company 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, the Company 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.
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Note 3: Shang Gong Group Co., Ltd. holds 80.00% 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, the Company 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.
5.14.4 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 accrued as at 1 st January 2017 1,698,131.91 1,698,131.91
Provision in Report Period
Including: transfer-in from other comprehensive income
Decrease in Report Period
Including: reversal due to the subsequent increase in fair value
Balance of provision for impairment accrued as at 30th June 2017 1,698,131.91 1,698,131.91
5.15 Held-to-maturity Investments
Not applicable.
5.16 Long-term Receivables
Not applicable.
5.17 Long-term Equity Investment
Provision
Change in current period
of
Beginning Other Other Declared Ending Impairment
Investees Decrease Return on
Balance Increase in Comprehensive Changes Cash Increase in Balance Balance at
in Investment under Other
Investment Income in Dividends Investment 30th June
Investment Equity Method
Adjustment Equity or Profit 2017
1.Joint
venture
2.Joint
operation
H. Stoll
AG &
Co. KG
Subtotal 253,586,574.99 11,737,352.98 15,831,365.67 281,155,293.64
Total 253,586,574.99 11,737,352.98 15,831,365.67 281,155,293.64
1.Joint
253,586,574.99 11,737,352.98 15,831,365.67 281,155,293.64
venture
Note: The Company’s wholly-owned subsidiary, ShangGong (Europe) Holding Corp. GmbH acquired 26%
shares of H. Stoll AG & Co. KG, a German company, and became the limited partner at 1st January 2016. The
fixed amount and floating amount of share transfer is 32,250,000.90 euro in total, and shall pay in three
installments. The first installment payment amounts to 22,990,000.90 euro, and was fully paid in June 2016.
The second installment payment is 2,750,000.00 euro, which was paid in the report period.
5.18 Investment Properties
5.18.1 Investment Property Measured at Cost
Buildings and Leased Land Use Investment Real
Item Total
Constructions Rights Estate Decoration
1. Original book value
(1) Beginning balance 172,331,514.28 50,523,752.24 2,583,492.92 225,438,759.44
(2) Increase in current period 2,953,441.47 2,953,441.47
- Outsourcing
- Transfer in from inventories, fixed
assets or construction in progress
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- Increase from enterprise merger
- Exchange rate fluctuation 2,953,441.47 2,953,441.47
(3) Decrease in current period
- Disposal
- Others
(4) Ending balance 175,284,955.75 50,523,752.24 2,583,492.92 228,392,200.91
2. Accumulated depreciation and
accumulated amortization
(1) Beginning balance 94,985,462.61 15,079,319.07 516,698.76 110,581,480.44
(2) Increase in current period 3,560,967.45 552,001.62 4,112,969.07
- Amortization or accrual 2,269,029.81 552,001.62 2,821,031.43
- Exchange rate fluctuation 1,291,937.64 1,291,937.64
(3) Decrease in current period
- Disposal
- Others
(4) Ending balance 98,546,430.06 15,631,320.69 516,698.76 114,694,449.51
3. Provision for impairment
(1) Beginning balance 7,241,024.04 7,241,024.04
(2) Increase in current period 438,813.91 438,813.91
- Accrual
- Exchange rate fluctuation 438,813.91 438,813.91
(3) Decrease in current period
- Disposal
- Others
(4) Ending balance 7,679,837.95 7,679,837.95
4. Book value
(1) Book value at the end of the period 69,058,687.74 34,892,431.55 2,066,794.16 106,017,913.45
(2) Book value at the beginning of the
70,105,027.63 35,444,433.17 2,066,794.16 107,616,254.96
period
5.19 Fixed Assets
5.19.1 Fixed Assets
Buildings and Machinery Transportation Electronic Other
Item Total
Constructions Equipment Equipment Equipment Equipment
1. Original book value
(1) Beginning
419,547,363.36 338,719,085.29 14,586,332.79 4,075,854.93 241,454,532.04 1,018,383,168.41
balance
(2) Increase in
20,448,658.56 33,169,619.91 910,752.13 322,616.39 23,329,274.10 78,180,921.09
current period
- Purchase 186,376.25 10,913,154.90 910,752.13 312,731.48 6,355,499.86 18,678,514.62
- Transfer in from
construction 1,906,401.60 1,906,401.60
in progress
- Increase from
enterprise
merger
- Exchange rate
20,262,282.31 20,350,063.41 9,884.91 16,973,774.24 57,596,004.87
fluctuation
(3) Decrease in
1,386,639.30 2,032,703.48 1,232,333.80 4,912.00 3,237,020.10 7,893,608.68
current period
- Disposal or scrap 1,386,639.30 2,032,703.48 1,232,333.80 4,912.00 3,237,020.10 7,893,608.68
(4) Ending
438,609,382.62 369,856,001.72 14,264,751.12 4,393,559.32 261,546,786.04 1,088,670,480.82
balance
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2. Accumulated
depreciation
(1) Beginning
206,652,824.34 228,815,751.75 9,545,181.19 2,738,212.77 206,574,025.26 654,325,995.31
balance
(2) Increase in
17,255,088.07 24,368,868.49 561,110.30 290,456.08 20,536,560.14 63,012,083.08
current period
- Accrual 4,591,867.62 8,320,840.08 561,110.30 290,456.08 5,826,103.93 19,590,378.01
- Exchange rate 12,663,220.45 16,048,028.41 14,710,456.21 43,421,705.07
fluctuation
(3) Decrease in
1,386,639.30 2,182,514.45 1,138,632.98 4,541.79 3,017,647.39 7,729,975.91
current period
- Disposal or scrap 1,386,639.30 2,182,514.45 1,138,632.98 4,541.79 3,017,647.39 7,729,975.91
(4) Ending
222,521,273.11 251,002,105.79 8,967,658.51 3,024,127.06 224,092,938.01 709,608,102.48
balance
3. Provision for
impairment
(1) Beginning
4,913,777.92 4,832,793.00 48,170.70 37,818.61 1,402.83 9,833,963.06
balance
(2) Increase in
current period
- Accrual
(3) Decrease in
current period
- Disposal or scrap
(4) Ending
4,913,777.92 4,832,793.00 48,170.70 37,818.61 1,402.83 9,833,963.06
balance
4. Book value
(1) Book value at
211,174,331.59 114,021,102.93 5,248,921.91 1,331,613.65 37,452,445.20 369,228,415.28
the end of the period
(2) Book value at
the beginning of the 207,980,761.10 105,070,540.54 4,992,980.90 1,299,823.55 34,879,103.95 354,223,210.04
period
Note: among the above balance of fixed assets at the end of the period, the buildings and constructions of
131,486,806.05 yuan (Including 13,035,336.00 euro which is equivalent to 101,018,639.90 yuan) are used to
obtain a loan from banks; see the Note 11.1 Commitments and Contingencies for information on mortgage
loans and credit extension.
5.19.2 Idle Fixed Assets
Not applicable.
5.19.3 Fixed Assets without Certificate of Title
Reason for Failure in Completing the Formalities
Item Book Value
for Obtaining Certificates of Title
Buildings and constructions (Note 1) 1,830,787.00 Self-built housing, the certificates are in the process
Buildings and constructions (Note 2) 274,973.02 Self-built housing, the certificates are in the process
Total 2,105,760.02
Note 1: Self-built housing for the Company’s subsidiary Shanghai SGSB Asset Management Co., Ltd.
Note 2: Self-built housing, for the Company.
5.20 Construction in Progress
5.20.1 Construction in Progress
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Sewing Equipment
7,088,631.24 7,088,631.24 2,036,361.68 2,036,361.68
Engineering
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ERP project 2,492,439.78 2,492,439.78 2,130,376.16 2,130,376.16
Household
multifunctional sewing 416,692.54 416,692.54 407,258.58 407,258.58
machine
Zhangjiagang
1,970,028.88 1,970,028.88 1,207,505.00 1,207,505.00
manufacture base project
Modern logistics
1,139,656.57 1,139,656.57 258,490.56 258,490.56
management center
Nanxiang factory
300,000.00 300,000.00
reconstruction
Mold development 139,000.00 139,000.00 139,000.00 139,000.00
Exhaust project 298,345.06 298,345.06 298,345.06 298,345.06
DFT factory
19,723,659.70 19,723,659.70 13,422,591.60 13,422,591.60
reconstruction
Kingdee QR code
177,670.93 177,670.93
system project
DARO workshop
113,074.14 113,074.14
reconstruction
Total 33,559,198.84 33,559,198.84 20,199,928.64 20,199,928.64
5. 20.2 Changes in Major Construction in Progress for Current Period
Interest capitalization rate in 2016(%)
investment in project in budget (%)
Accumulated amount of interest
Proportion of the accumulated
Including: amount of interest
Construction in progress
capitalization in 2016
Amount
capitalization
Transferred Other
Budget
Beginning Increase in in Fixed decreases Ending Source of
Item Fund
balance current period Assets for in current balance
the Current period
Period
Sewing
Self-owned
Equipment 2,036,361.68 6,958,671.16 1,906,401.60 7,088,631.24
fund
Engineering
Raised
ERP project 2,130,376.16 362,063.62 2,492,439.78
fund
Household Raised
multifunctional fund/
407,258.58 9,433.96 416,692.54
sewing Self-owned
machine fund
Zhangjiagang
Self-owned
manufacture 1,207,505.00 829,842.94 67,319.06 1,970,028.88
fund
base project
Modern
logistics Self-owned
258,490.56 881,166.01 1,139,656.57
management fund
center
Nanxiang
Self-owned
factory 300,000.00 59,096.00 359,096.00
fund
reconstruction
Mold Self-owned
139,000.00 139,000.00
development fund
Exhaust Self-owned
298,345.06 298,345.06
project fund
DFT factory Self-owned
13,422,591.60 6,301,068.10 19,723,659.70
reconstruction fund
Kingdee QR
Self-owned
code system 177,670.93 177,670.93
fund
project
DARO
Self-owned
workshop 113,074.14 113,074.14
fund
reconstruction
Total 20,199,928.64 15,692,086.86 1,906,401.60 426,415.06 33,559,198.84
5.21 Project Materials
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Not applicable
5.22 Disposal of Fixed Assets
Not applicable
5.23 Productive Biological Assets
Not applicable
5.24 Oil and Gas Assets
Not applicable
5.25 Intangible Assets
5.25.1 Intangible Assets
Patent and
Land Use Trademark Computer
Item Non-patent Others Total
Right Use Right Software
Technology
1. Original book value
(1) Beginning
105,595,420.23 117,954,603.75 20,161,268.51 5,795,753.76 3,185,554.27 252,692,600.52
balance
(2) Increase in
620,000.00 10,503,853.13 11,123,853.13
current period
- Purchase 620,000.00 5,986,405.15 6,606,405.15
- Exchange rate
4,517,447.98 4,517,447.98
fluctuation
(3) Decrease in
745,505.00 745,505.00
current period
- Disposal 745,505.00 745,505.00
(4) Ending balance 106,215,420.23 127,712,951.88 20,161,268.51 5,795,753.76 3,185,554.27 263,070,948.65
2. Accumulated
amortization
(1) Beginning
8,099,502.56 61,149,940.94 20,161,268.51 5,795,753.76 2,248,235.06 97,454,700.83
balance
(2) Increase in
1,372,029.09 11,137,935.43 175,259.31 12,685,223.83
current period
- Accrual 1,372,029.09 9,915,216.50 175,259.31 11,462,504.90
- Exchange rate
1,222,718.93 1,222,718.93
fluctuation
(3) Decrease in
745,505.00 745,505.00
current period
- Disposal 745,505.00 745,505.00
(4) Ending balance 9,471,531.65 71,542,371.37 20,161,268.51 5,795,753.76 2,423,494.37 109,394,419.66
3. Provision for
impairment
(1) Beginning
balance
(2) Increase in
current period
- Accrual
(3) Decrease in
current period
- Disposal
(4) Ending balance
4. Book value
(1) Book value at
96,743,888.58 56,170,580.51 762,059.90 153,676,528.99
the end of the period
(2) Book value at
97,495,917.67 56,804,662.81 937,319.21 155,237,899.69
the beginning of the
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period
5.26 Development Expenditures
Increase in current period Decrease in current period
Beginning Internal Recognized as Transferred to
Item Ending Balance
Balance Development Others Intangible Current Profits
Expenditure Assets and Losses
Sewing
8,255,718.33 1,357,584.76 9,613,303.09
equipment
WeChat platform 887,322.98 106,245.76 993,568.74
Freight platform 3,282,264.10 283,018.86 3,565,282.96
Paper Shredder 104,040.49 104,040.49
Total 12,529,345.90 1,746,849.38 14,276,195.28
Note: The development expenditures of sewing equipment represent the development costs of ShangGong
Europe. The development expenditures of WeChat platform and Freight platform represent the development
costs of SHENSY. The development expenditures of paper shredder represent the development costs of
Shanghai SMPIC Import & Export Co., Ltd.
5.27 Goodwill
5.27.1 Book Value of Goodwill
Name of investee or Decrease in
Increase in Current Period
goodwill formation Beginning Balance Current Period Ending Balance
events Acquisition Exchange Rate Fluctuation Disposal
PFAFF GmbH 67,878,923.12 4,113,536.32 71,992,459.44
Beisler 21,289,092.48 1,290,142.08 22,579,234.56
Total 89,168,015.60 5,403,678.40 94,571,694.00
5.27.2 Provision for Impairment of Goodwill
Name of investee or Decrease in
Increase in Current Period
goodwill formation Beginning Balance Current Period Ending Balance
events Accrual Exchange Rate Fluctuation Disposal
Beisler 21,289,092.48 1,290,142.08 22,579,234.56
Total 21,289,092.48 1,290,142.08 22,579,234.56
5.28 Long-term Deferred Expenses
Beginning Increase in Amortization in Other Decreases in
Item Ending Balance
Balance Current Period Current Period Current Period
Enterprise Mailbox
19,800.00 3,850.00 15,950.00
rental expense
Online brand
340,545.43 23,473.66 317,071.77
registration fee
Landscape
183,451.50 24,460.20 158,991.30
engineering
Leasehold
136,916.67 73,037.55 57,243.31 152,710.91
improvements
Tooling cost 404,084.37 43,785.36 360,299.01
Total 1,084,797.97 73,037.55 152,812.53 1,005,022.99
Note: In current period, the amortized amount of long-term deferred expenses is 152,812.53 yuan, and it is
recorded in general and administrative expenses.
5.29 Deferred Income Tax Assets and Deferred Income Tax Liabilities
5.29.1 Deferred Income Tax Assets
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Ending balance Beginning balance
Item Deductible Temporary Deferred Income Deductible Temporary Deferred Income
Differences Tax Assets Differences Tax Assets
Provision for asset impairment 19,972,751.03 16,211,080.71
Unrealized profits of internal
7,805,980.74 7,876,034.19
transactions
Pension (Europe) 33,745,277.88 34,426,435.01
Deductible losses
Deferred income 550,000.00 550,000.00
Total 62,074,009.65 59,063,549.91
5.29.2 Deferred Income Tax Liabilities
Ending Balance Beginning Balance
Item Taxable Temporary Deferred Income Tax Taxable Temporary Deferred Income Tax
Differences Liabilities Differences Liabilities
Appreciation of assets
evaluation due to business
43,528,015.28 35,407,850.19
combinations not under
common control
Changes in fair value of
available-for-sale financial
assets
Others 1,369,443.71 1,197,067.41
Total 44,897,458.99 36,604,917.60
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.
5.30 Other Non-current Assets
Not applicable.
5.31 Short-term Loans
Item Ending Balance Beginning Balance
Mortgage loans 20,303,952.00 19,143,816.00
Guaranteed loans 345,416,080.00 331,876,640.00
Credit loans 348,148.62 348,148.62
Total 366,068,180.62 351,368,604.62
Note 1: DA AG borrowed 71,063,832.00 yuan (9,170,000.00 euros) from German Commerzbank with fixed
assets with book value of 101,018,639.90 yuan (13,035,336.00 euros) as collateral. As at 30th June 2017,
50,759,880.00 yuan (6,550,000.00 euros) was repaid. The ending balance is 20,303,952.00 yuan
(2,620,000.00euros), which belongs to short-term loans.
Note 2: The guaranteed loans which the Company's wholly-owned subsidiary ShangGong (Europe) Corp.
GmbH to borrow money from the Bielefeld Branch of Commerzbank; and the Company’s wholly-owned
subsidiary PFAFF GmbH. to borrow the money from Kaiserslautern Branch of Commerzbank, guarantees
related to the above matters refer to Note "X. commitments and matter" and "(b) Contingencies" and "Note 1,
2, 3, 4”.
Note 3: Except the guaranteed loans above; other guaranteed loans are as follows: the Company’s
wholly-owned subsidiary Shanghai Shensy Enterprise Development Co., Ltd borrowed 40,730,000.00 yuan
from China Construction Bank Shanghai Baoshan Baogang Branch, 30,000,000.00 yuan from Bank of
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Communications Shanghai Branch of Baoshan and 5,000,000.00 yuan from SPD Bank Branch of Waigaoqiao
Free Trade Zone. The guarantee company is Shanghai Shensy Kaile Internet of Things Co., Ltd.
5.32 Financial Liabilities at Fair Value whose Fluctuation is Attributed to Profit or Loss for Current
Period
Not applicable.
5.33 Notes Payable
Not applicable.
5.34 Accounts Payable
5.34.1. Presentation of Accounts Payable
Item Ending Balance Beginning Balance
Payables to suppliers 172,418,174.68 174,828,356.05
Total 172,418,174.68 174,828,356.05
5.34.2 Important Accounts Payable Aged Over 1 Year
Not applicable.
5.35 Receipt in Advance
5.35.1 Presentation of Advances from Customers
Item Ending Balance Beginning Balance
Advances on sales 30,490,939.49 36,548,091.83
Total 30,490,939.49 36,548,091.83
5.35.2 Important Receipt in Advance Aged Over 1 Year
Not applicable.
5.36 Employee Compensation Payable
5.36.1 Presentation of Employee Compensation Payable
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Short-term remuneration 60,808,833.07 299,610,929.92 302,749,741.11 57,670,021.88
Post-employment benefits -
449,954.11 7,534,787.91 6,361,287.31 1,623,454.71
defined benefit plans
Defined benefit plan maturing
19,669,905.60 10,116,503.00 8,924,485.40 20,861,923.20
within one year
Total 80,928,692.78 317,262,220.83 318,035,513.82 80,155,399.79
5.36.2 Presentation of Short-term Remuneration
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
(1) Salary, bonus, allowance and
60,360,450.15 247,862,512.61 251,622,238.57 56,600,724.19
subsidy
(2) Employee welfare 529.00 45,764,078.01 45,763,678.01 929.00
(3) Social insurance expenses 282,251.12 3,982,736.85 3,441,604.80 823,383.17
- medical insurance premium 226,607.73 3,385,590.73 2,910,105.63 702,092.83
- Work-related injury insurance
28,898.48 316,828.78 289,521.99 56,205.27
premium
- Maternity insurance premium 16,241.91 279,792.34 241,452.18 54,582.07
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- Other 10,503.00 525.00 525.00 10,503.00
(4) Housing provident funds 165,602.80 1,469,935.50 1,411,660.70 223,877.60
(5) Labor union expenditures and
531,666.95 510,559.03 21,107.92
employee education expenses
(6) Short-term paid absences
(7) short-term profit-sharing plan
Total 60,808,833.07 299,610,929.92 302,749,741.11 57,670,021.88
5.36.3 Presentation of Defined Benefit Plans
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Basic endowment insurance
424,019.08 6,854,115.53 5,726,310.60 1,551,824.01
premium
Unemployment insurance premium 25,935.03 340,672.38 294,976.71 71,630.70
Payment of annuity 340,000.00 340,000.00
Total 449,954.11 7,534,787.91 6,361,287.31 1,623,454.71
5.37 Taxes and Surcharges Payable
Item Ending Balance Beginning Balance
Value-added tax 627,982.87 5,721,081.61
Consumption tax
Business tax
Enterprise income tax 8,101,944.34 41,900,219.50
Individual income tax 4,370,499.70 6,172,515.51
Educational surtax 58,416.73 227,392.77
Urban maintenance and construction tax 84,029.32 301,166.34
Property tax 264,414.62
River management fee 402.17 29,199.23
Use tax of land 121,189.92
Stamp tax 20,677.40 3,688.10
Total 13,263,952.53 54,740,867.60
5.38 Interest Payable
Item Ending Balance Beginning Balance
Term interest on long-term borrowings
441,316.11
due in installments
Short-term loan interest payable 2,275,506.76 1,649,249.48
Total 2,275,506.76 2,090,565.59
5.39 Dividends Payable
Item Ending Balance Beginning Balance
Common stock dividend 1,032,818.86 1,032,818.86
Dividends of preferred stock / perpetual
debt classified as equity instruments
Total 1,032,818.86 1,032,818.86
Reason of unpaid dividends payable for more than 1 years: it is unable to pay because the age is too long.
5.40 Other Payables
5.40.1 Presentation of Other Payables by Nature of Accounts
Item Ending Balance Beginning Balance
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Other payables 184,013,438.72 193,117,136.53
Total 184,013,438.72 193,117,136.53
5.40.2 Important Other Payables Aged Over 1 Year
Not applicable.
5.41 Classified as Liabilities Held for Sale
Not applicable.
5.42 Non-current liabilities maturing within one year
Not applicable.
5.43 Other Current Liabilities
Item Ending Balance Beginning Balance
Short-term bonds payable
Interest and rentals 437,625.10 808,706.39
Total 437,625.10 808,706.39
5.44 Long-term Loans
Item Ending Balance Beginning Balance
Mortgage loans 61,051,348.80 67,134,878.40
Credit loans 1,489,984.87 1,489,984.87
Total 62,541,333.67 68,624,863.27
th
Note: The amount of mortgage loans at 30 June 2017 is 61,051,348.80 yuan (7,878,000.00 euros). See Note
"X. commitments and matter" and "(b) Contingencies" and "Note 5”for explanation about the relevant matters
of the mortgage loan above.
5.45 Bonds Payable
Not applicable.
5.46 Long-term Payables
Item Ending Balance Beginning Balance
STOLL stock equity transfer fee 33,831,447.47 35,881,669.86
Others 3,507,014.14 3,532,225.88
Total 37,338,461.61 39,413,895.74
5.47 Long-term Employee Compensation Payable
5.47.1 Presentation of Long-term Employee Compensation Payable
Item Ending Balance Beginning Balance
1. Post-employment benefits - net liability of
258,722,068.75 251,784,116.62
defined benefit plan
2. Dismissal welfare
3. Other long-term benefits 4,139,348.17 3,902,832.30
Total 262,861,416.92 255,686,948.92
Defined benefit plan of ShangGong (Europe) Holding Corp. GmbH, is based on supporting commitment.
The base of measuring supporting liability is on actuarial and hypothesis, not only consider known and
possessed right to draw defined benefit plan, but the increase of future payroll and defined benefit plan.
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5.47.2 Changes in Defined Benefit Plan Liabilities
Not applicable.
5.48 Special Payable
Not applicable.
5.49 Estimated Liabilities
Not applicable.
5.50 Deferred Income
Increase in Current Decrease in
Item Beginning Balance Ending Balance Reason
Period Current Period
Government subsidies 3,600,000.00 3,600,000.00
Total 3,600,000.00 3,600,000.00 /
The item of the government subsidies:
Subsidies
Subsidies Included in
Beginning Ending Asset-related /
Item Increased in Current Other Change
Balance Balance Income-related
Current periOd Non-operating
Income
Subsidies for
new product
1,260,000.00 1,260,000.00 Asset-related
development
funds
guiding funds
of developing
2,200,000.00 2,200,000.00 Asset-related
service
industry
Taizhou
science and
Technology
140,000.00 140,000.00 Asset-related
Bureau R & D
expenditure
subsidy
Total 3,600,000.00 3,600,000.00
5.51Other Non-current Liabilities
Item Ending Balance Beginning Balance
Other long-term loan 520,000.00 520,000.00
Total 520,000.00 520,000.00
5.52 Share Capital
Change in Current Period
Item Beginning Balance Ending Balance
Issuance of New Shares Others Sub-total
Total shares 548,589,600.00 548,589,600.00
5.53 Other Equity Instruments
Not applicable.
5.34 Capital Reserves
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Stock premium 851,345,853.61 851,345,853.61
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Other capital reserves 120,257,266.66 3,413,389.32 116,843,877.34
Total 971,603,120.27 3,413,389.32 968,189,730.95
5.55 Treasury Stock
Not applicable.
5.56 Other Comprehensive Income
Change in Current Period
Less:
recognized as
other
Beginning Accrual before comprehensive Less:
Item Attributable to Attributable to Ending Balance
Income tax for income for Income
Balance the Current previous years Tax
Owners of the Minority
Parent Company Shareholders
Period and transferred Expenses
in the profit or
loss for the
current year
1. Other comprehensive income that
cannot be reclassified in the loss -49,169,970.79 -49,169,970.79
and gain in the future
Including: change in
re-measurement of the net liabilities
and net assets under defined benefit -49,169,970.79 -49,169,970.79
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 loss and -53,974,075.36 26,307,833.02 26,307,833.02 4,511,932.89 -27,666,242.34
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 33,970,766.78 -6,813,128.79 -6,813,128.79 27,157,637.99
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
differences
-87,944,842.14 33,120,961.81 33,120,961.81 4,511,932.89 -54,823,880.33
Total other comprehensive income -103,144,046.15 26,307,833.02 26,307,833.02 4,511,932.89 -76,836,213.13
5.57 Special Reserve
Not applicable.
5.58 Surplus Reserves
Item Beginning Balance Increase in Current Period Decrease in Current Period Ending Balance
Statutory surplus reserves 2,273,121.26 2,273,121.26
Discretionary surplus reserves 2,273,121.26 2,273,121.26
Total 4,546,242.52 4,546,242.52
5.59 Retained Earnings
From 1st January 2017 to 30th From 1st January 2016 to 30th
Item
June 2017 June 2016
Adjustments to retained earnings as at 31st December 2016 494,754,465.24 350,523,121.40
Adjustments to total retained earnings as at 1st January 2017
("+" for increase, "-" for decrease)
Adjusted retained earnings as at 1st January 2017 494,754,465.24 350,523,121.40
Plus: net profit attributable to owners of the parent company for
125,980,892.71 101,164,717.70
current period
Less: withdrawal of statutory surplus reserves
Withdrawal of discretionary surplus reserves
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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 620,735,357.95 451,687,839.10
5.60 Operating Income and Operating Costs
From 1st January 2017 to 30th June 2017 From 1st January 2016 to 30th June 2016
Item
Income Cost Income Cost
Primary business 1,475,369,961.67 1,058,968,570.27 1,314,252,118.76 924,558,225.41
Other businesses 57,192,639.45 29,833,389.03 45,090,410.69 29,942,064.00
Total 1,532,562,601.12 1,088,801,959.30 1,359,342,529.45 954,500,289.41
5.61 Taxes and Surcharges
Item From 1st January 2017 to 30th June 2017 From 1st January 2016 to 30th June 2016
Consumption tax
Business tax 822,711.29
Urban maintenance and construction
1,544,451.83 1,061,926.25
tax
Educational surtax 1,127,628.59 798,583.35
Resource tax
Property tax 2,099,054.97
land use tax 563,526.02
Vehicle and vessel tax 659,882.73 1,497,723.11
Stamp tax
Total 5,994,544.14 4,180,944.00
5.62 Selling Expenses
From 1st January 2017 to 30th June From 1st January 2016 to 30th June
Item 2017 2016
Employee compensation 61,279,120.79 54,152,469.93
Fix and after-sale service charges 10,393,706.68 9,471,495.27
Office expenses 1,112,551.87 1,925,818.50
Travelling expenses 9,321,861.67 7,777,406.50
Transportation cost 10,512,550.73 10,013,901.46
Advertising expense 2,899,425.63 2,588,996.06
Commission 12,103,473.04 12,983,415.23
Leasing and storage charges 5,401,842.88 2,988,594.08
Insurance premium 706,961.69 626,283.69
Packing expenses 16,537.58 20,789.73
Conference fees 1,088,991.90 1,097,735.43
Depreciation costs 1,009,487.88 885,340.61
Exhibition fees 3,241,152.99 1,543,023.79
Water and electricity 34,480.83 22,560.95
Handling charges 15,411.34 13,392.08
Sample printed matter and product loss 5,033,980.47 4,975,397.89
Others 17,240,643.20 12,948,639.62
Total 141,412,181.17 124,035,260.82
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5.63 General and Administrative Expenses
From 1st January 2017 to 30th June From 1st January 2016 to 30th
Item 2017 June 2016
Employee compensation 63,094,127.39 60,728,834.32
Office expenses 3,083,576.02 3,503,878.91
Water and electricity 609,344.98 467,566.82
Entertainment expenses 2,626,271.81 1,775,131.30
Property insurance premium 1,192,827.02 1,132,959.90
Conference fees 741,776.34 441,720.48
Travelling expenses 4,188,197.13 4,103,270.72
Depreciation costs 3,479,775.53 4,339,234.24
Repair charges 432,790.41 377,155.90
Transportation cost 2,360,059.15 1,268,999.53
Rental fees 3,455,833.49 1,718,338.58
Costs of board meetings and supervisors' meetings 1,217,959.56 264,294.69
Agency fees and advisory expenses 5,537,470.16 5,695,258.76
Litigation cost 390,851.06 29,171.75
New product development expenses 45,322,190.06 35,847,223.71
Taxes and surcharges 1,231,380.14
Amortization of intangible assets 1,221,487.14 1,036,624.09
Others 4,967,562.70 7,135,331.59
Total 143,922,099.95 131,096,375.43
5.64 Financial Expenses
From 1st January 2017 to 30th June From 1st January 2016 to 30th
Item 2017 June 2016
Interest expenses 6,091,395.25 6,802,996.00
Interest income -487,251.03 -920,275.58
Gains and losses on exchange -13,178,688.63 2,500,640.84
Others 724,768.79 1,706,156.24
Total -6,849,775.62 10,089,517.50
5.65 Losses from Asset Impairment
Item From 1st January 2017 to 30th June 2017 From 1st January 2016 to 30th June 2016
Losses from bad debts 4,347,324.27 2,105,606.54
Losses from inventory impairment 175,122.70 -3,680,156.16
Total 4,522,446.97 -1,574,549.62
5.66 Gains from Changes in Fair Value
Not applicable.
5.67 Investment Income
From 1st January 2017 to 30th June
Item From 1st January 2016 to 30th June 2016
2017
Long-term equity investments measured under
11,737,352.98 11,338,598.93
equity method
Investment income from disposal of long-term
equity investment
investment income of a financial asset at its
fair value and whose changes are included in
the current profits and losses during the period
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of holding
Investment income obtained from the disposal
of financial assets at fair value and their
9,509.24
changes are included in the current profits and
losses
Investment income of the held-to-maturity
investment during the holding period
Investment income derived from
1,001,400.43 897,305.05
available-for-sale financial assets
Investment income from disposal of
715,552.60
available-for-sale financial assets
After the loss of control, the residual equity is
measured at fair value
Others 5,747,623.00 5,214,392.23
Total 18,495,885.65 18,165,848.81
5.68 Non-operating Income
From 1st January 2017 to 30th From 1st January 2016 to 30th Amount included in current
Item June 2017 June 2016 non-recurring gains and losses
Total gains from disposal of
9,842,841.68 2,540,561.45 9,842,841.68
non-current assets
Including: gains from
412,921.70 2,540,561.45 412,921.70
disposal of fixed assets
Gains on
9,429,919.98 9,429,919.98
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 2,642,975.59 4,973,690.84 2,642,975.59
Penalty revenue 4,799.00
Others 3,190.85 140,344.79 3,190.85
Total 12,489,008.12 7,659,396.08 12,489,008.12
Government subsidies included in current profit and loss
From 1st January 2017 to 30th From 1st January 2016 to 30th
Item Asset-related /Income-related
June 2017 June 2016
Financial support fund 1,380,000.00 Income-related
Workers' vocational
27,570.22 14,117.78 Income-related
training financial subsidies
Replacing business tax with
value-added tax(VAT) 25,900.51 Income-related
special subsidies
Special funds of Shanghai
industrial transformation, 500,000.00 Income-related
upgrading and development
Shanghai old public
housing management fee 102,594.49 73,672.55 Income-related
subsidies
Science and technology
1,100,000.00 Income-related
development subsidies
Exhibition subsidy 80,000.00 Income-related
Development Zone subsidy 2,510,000.00 1,800,000.00 Income-related
Other 2,810.88 Income-related
Total 2,642,975.59 4,973,690.84 /
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5.69 Non-operating Expenses
Amount Included in Current
From 1st January 2017 to 30th From 1st January 2016 to 30th
Item Non- recurring Gains and
June 2017 June 2016
Losses
Total losses from disposal
95,217.09 3,098,496.16 95,217.09
of non-current assets
Including: losses from
95,217.09 3,098,496.16 95,217.09
disposal of fixed assets
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
102,210.07 2,211.58 102,210.07
fine outlay
Extraordinary losses
Others 2,873.64 2,873.64
Total 400,300.80 3,300,707.74 400,300.80
5.70 Income Tax Expenses
Item From 1st January 2017 to 30th June 2017 From 1st January 2016 to 30th June 2016
Current income tax expenses 41,432,540.20 43,949,360.97
Deferred income tax expenses 5,066,571.10 1,432,040.66
Total 46,499,111.30 45,381,401.63
5.71 Other Comprehensive Income
See notes for details.
5.72 Items of the Statement of Cash Flows
5.72.1 Cash Received from Other Operating Activities
From 1st January 2017 to 30th June From 1st January 2016 to 30th June
Item 2017 2016
Current accounts and advances withdrawn 12,540,492.70 18,027,242.83
Special subsidies and grants 2,642,975.59 4,973,690.84
Interest income 853,706.23 1,353,725.70
Non-operating income: 278,981.82 751,209.40
Other income 5,407,808.53 592,366.85
Total 21,723,964.87 25,698,235.62
5.72.2 Cash Paid for Other Operating Activities
From 1st January 2017 to 30th June From 1st January 2016 to 30th June
Item 2017 2016
Current accounts paid 6,762,109.04 16,128,438.76
Selling expenses 58,958,164.15 50,284,745.90
General and administrative expenses 59,104,891.27 44,224,118.91
Non-operating expenses 296,919.37 272,798.76
Others 7,374,016.59 7,541,356.66
Total 132,496,100.42 118,451,458.99
5.72.3 Cash Received from Other Investing Activities
Not applicable.
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5.72.4 Cash Paid from Other Investing Activities
Not applicable.
5.72.5 Cash Received from Other Financing Activities
From 1st January 2017 to 30th June From 1st January 2016 to 30th June
Item 2017 2016
Bank deposit, security deposit and other
429,112.68 355,261.67
pledge, mortgage
Total 429,112.68 355,261.67
5.72.6 Cash Paid from Other Financing Activities
Not applicable.
5.73 Supplementary Information to the Statement of Cash Flows
5.73.1 Supplementary Information to the Statement of Cash Flows
From 1st January 2017 to 30th From 1st January 2016 to 30th
Item June 2017 June 2016
1. Net profit adjusted to cash flows from operating activities
Net profit 138,844,626.88 114,157,827.43
Plus: Provision for assets impairment 4,522,446.97 -1,574,549.62
Depreciation of fixed assets and others 22,411,409.44 20,962,740.78
Amortization of intangible assets 11,462,504.90 6,533,622.83
Amortization of long-term deferred expenses 152,812.53 34,600.20
Losses on disposal of fixed assets, intangible assets and
-9,747,624.59 547,478.46
other long-term assets ("-" for gains)
Losses on write-off of fixed assets （“-” for gains） 10,456.25
Losses from changes in fair value ("-" for gains)
Financial expenses (“-” for income) -7,087,293.38 9,303,636.84
Investments losses ("-" for gains) -18,495,885.65 -18,165,848.81
Decreases in the deferred income tax assets (“-” for
-3,010,459.74 -1,774,380.54
increases)
Increases in the deferred income tax liabilities (“-” for
8,292,541.39 5,023,538.91
decreases)
Decreases in inventories (“-” for increases) -69,790,264.64 -87,875,939.34
Decreases in operating payables (“-” for increases) -83,128,510.00 -129,324,032.36
Increases in operating payables (“-” for decreases) -54,216,627.58 36,197,763.26
Others
Net cash flows from operating activities -59,790,323.47 -45,943,085.71
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 financial lease
3. Net change in cash and cash equivalents:
Balance of cash as at 30th June 2017 649,036,645.55 594,018,657.49
st
Less: balance as at 1 January 2017 of cash 750,357,929.63 744,700,658.82
th
Plus: balance as at 30 June 2017 of cash equivalents
Less: balance as at 1st January 2017 of cash equivalents
Net increase in cash and cash equivalents -101,321,284.08 -150,682,001.33
5.74.2 Net Cash Paid to Acquire Subsidiaries for the Current Period
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Not applicable.
5.74.3 Net Cash Received from Disposal of Subsidiaries in Current Period
Not applicable.
5.74.4 Breakdowns of Cash and Cash Equivalents
From 1st January 2017 to From 1st January 2016 to
Item 30th June 2017 30th June 2016
1. Cash 649,036,645.55 750,357,929.63
Including: cash on hand 948,951.52 1,137,409.87
Unrestricted bank deposit 647,565,550.00 749,011,456.34
Other unrestricted monetary funds 522,144.03 209,063.42
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 30th June 2017 649,036,645.55 750,357,929.63
Including: cash and cash equivalents restricted for use by the
parent company or subsidiaries within the group
Note: Cash and cash equivalents restricted for use were not included in cash and cash equivalents
5.75 Monetary Items in Foreign Currency
5.75.1 Monetary Items in Foreign Currency
Ending Balance of Foreign Ending Balance of
Item Exchange Rate
Currency Conversion into RMB
Monetary funds
Including: USD 6,531,223.38 6.7744 44,245,119.69
EUR 44,992,532.82 7.7496 348,674,132.34
HKD 467,169.47 0.8679 405,456.38
SGD 71,223.10 4.9135 349,954.70
JPY 251,231.05 0.060485 15,195.71
VND 8,312,993,000.00 0.00003 249,389.79
5.75.2 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.
5.76 Government Subsidy
Amount Recognized in Current
Type Amount Item
Profits and Losses
Income-related 27,570.22 Non-operating Income 27,570.22
Income-related 102,594.49 Non-operating Income 102,594.49
Income-related 2,510,000.00 Non-operating Income 2,510,000.00
Income-related 2,810.88 Non-operating Income 2,810.88
6. Change in the Scope of Consolidation
6.1 Business Combinations not under Common Control
Not applicable.
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6.2 Business Combinations under Common Control
Not applicable.
6.3 Other Changes in the Scope of Consolidation
(1) The Company absorbed a wholly-owned subsidiary of Shanghai Shanggong Butterfly Sewing Machine Co.,
Ltd. as a branch. Shanghai Butterfly Import & Export Co., Ltd. and Shanghai ShangGong Import & Export Co.,
Ltd. are correspondingly transferred in to subsidiaries to the Company, which are included in the scope of
consolidation.
(2) The Company set up DAP Vietnam Co., Ltd. with USD 30,000.00,accounting for 100.00% of it quity. The
Company controls DAP Vietnam, so DAP Vietnam was included in the consolidation scope since the date of
its establishment.
7. Equity in Other Entities
7.1 Equity in Subsidiaries
7.1.1 The Composition of Enterprise Groups
Domicile of Shareholding
Registered Ratio (%)
Name of Subsidiary Primary Business Nature Acquisition method
Place
Operation Direct Indirect
ShangGong (Europe) Production and sales
Germany Germany 100.00 Investment
Holding Corp. GmbH of sewing machines
DAP (Shanghai) Co., Sales of sewing
Shanghai Shanghai 100.00 Investment
Ltd. machines
Sales, import and
Shanghai SMPIC Imp.
Shanghai Shanghai export of office 100.00 Investment
& Exp. Co., Ltd.
equipment
Production and sales
Shanghai SGSB
Shanghai Shanghai of electronic 100.00 Investment
Electronics Co., Ltd.
equipment
Shanghai SGSB Asset Asset and property
Shanghai Shanghai 100.00 Investment
Management Co., Ltd. management
Shanghai Fengjian Business combination
Shanghai Shanghai Property Management 100.00
Property Co., Ltd. under common control
Dürkopp Adler Sewing Business combination
Production and sales
Machines (Suzhou) Co., Suzhou Suzhou 51.00 49.00 not under common
of sewing machines
Ltd. control
ShangGong GEMSY Production and sales
Taizhou Taizhou 60.00 Investment
CO., LTD. of sewing machines
Shanghai Shensy Business combination
Enterprise Development Shanghai Shanghai Logistics, etc. 40.03 not under common
Co., Ltd. control
Shanghai ShangGong
Financial Leasing Co., Shanghai Shanghai Financial Leasing 51.00 49.00 Investment
Ltd.
Shanghai Butterfly
Import and export of Business combination
Import & Export Co., Shanghai Shanghai 100
sewing machines under common control
Ltd.
Shanghai ShangGong
Import and export of
Import & Export Co., Shanghai Shanghai 100 Investment
sewing machines
Ltd.
Sales of sewing
DAP Vietnam Co., Ltd. Vietnam Vietnam 100 Investment
machines
7.1.2 Important Non-wholly Owned Subsidiary
Profit and loss Other The dividend The minority
Minority
Name of attributable to comprehensive declared to minority shareholders
shareholders
subsidiary minority income shareholders in the Equity balance at
Shareholding%
shareholders for the attributable to current period the end of period
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current period minority
shareholders in
this period
Dürkopp Adler
6.00 7,535,738.84 4,511,932.89 1,833,942.30 72,456,776.33
AG
ShangGong
GEMSY CO., 40.00 1,238,925.83 87,408,415.81
LTD.
Shanghai
Shensy
Enterprise 59.97 4,089,069.50 147,661,100.80
Development
Co., Ltd.
7.2 Equity in Joint Operation and Joint Venture
7.2.1 Important Joint Operation and Joint Venture
Domicile of Shareholding Ratio (%) Accounting Measurement for
Name of Joint Operation Registered
Primary Business Nature Investment in Joint Operation
and Joint Venture Place Direct Indirect
Operation and Joint Venture
Computerized flat
Reutlingen, Reutlingen,
H. Stoll AG & Co. KG knitting machine 26.00 Equity method
Germany Germany
manufacturing
7.2.2 The Main Financial Information of Joint Operation and Joint Venture
Unit: 10,000 Yuan, Currency: RMB
H. Stoll AG & Co. KG Ending balance / Current period Beginning balance / Last period
Current assets 173,978.52 146,192.99
Non-current assets 27,046.10 25,725.05
Total assets 201,024.62 171,918.04
Current liabilities 61,609.32 49,572.98
Non-current liabilities 39,522.96 27,952.89
Total liabilities 101,132.28 77,525.87
The book value of equity investments in joint
28,115.53 25,358.66
operation and joint venture
The fair value of the equity investment in the joint
108,918.28 105,190.11
venture
Operating profits 5,218.54 6,501.41
8. Risks Associated with Financial Instruments
Not applicable.
9. Disclose of Fair Value
9.1 The Fair Value as at 30th June 2017 of Assets and Liabilities Measured at Fair Value
Fair value as at 30th June 2017
Item Measured at the fair
Measured at the fair Measured at the fair
value of the second Total
value of the first level value of the third level
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
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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
101,167,860.52 101,167,860.52
a. Investment in debt instruments
b. Investments in equity instruments 101,167,860.52 101,167,860.52
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 on going 101,167,860.52 101,167,860.52
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
9.2 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 30th June 2017 of available-for-sale financial assets was determined on the basis of the
closing price of Shenzhen Stock Exchange and Shanghai Stock Exchange on 30th June 2017.
9.3 Others
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.
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10. Related Party and Related Party Transaction
10.1 The Parent Company of the Company
Shanghai Puke Flyingman Investment Co., Ltd. held A shares accounted for 11.08% of the total share capital
of the Company, which is the largest shareholder of the Company; Shanghai Pudong New Area State-owned
Assets Supervision and Administration Commission held A shares accounted for 8.27%, which is the second
largest shareholder of the Company. After the completion of the equity transfer, the Company has changed to a
listed company with no controlling shareholder and no actual controller.
10.2 The Subsidiaries of the Company
See the Note 7 Equity in Other Entities for the details of subsidiaries of the Company
10.3 The Joint Operation and Joint Ventures of the Company
See the Note 7 Equity in Other Entities for the details of joint operation and joint ventures of the Company
10.4 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 Kaile Investment Management Co., Ltd. Controlled by subsidiary’s minority shareholders
Zhejiang GEMSY Electromechanical Co., Ltd. Controlled by subsidiary’s minority shareholders
Stoll Electronics Co., Ltd. Other related company
10.5 Related Party Transactions
10.5.1 Purchase and Sale of Goods, Rendering and Receipt of services
Table of purchase of goods / receipt of services
Content of Related From 1st January 2017 to 30th From 1st January 2016 to 30th
Related Party
Transaction June 2017 June 2016
Zhejiang GEMSY
Purchase of fixed assets 15,114,920.79
Electromechanical Co., Ltd.
Stoll Electronics Co., Ltd. Receiving of service 6,436,020.33 64,963.20
Table of sales of goods/rendering of services
Content of Related From 1st January 2017 to 30th From 1st January 2016 to 30th
Related Party
Transaction June 2017 June 2016
Shanghai Fuji Xerox Co., Ltd. Sales of goods 12,162,227.27 15,430,242.95
Zhejiang GEMSY
Sales of goods 140,583.32
Electromechanical Co., Ltd.
Stoll Electronics Co., Ltd. Sales of goods 293,594.29 39,230.64
10.5.2 Leasing
The Company acted as lessor
Unit: 10,000 Yuan, Currency: RMB
Name of leasee Type of leased asset Rental recognized in current period Rental recognized in last period
Shanghai Hirose
Precision Industrial Machinery equipment 25.00 25.00
Co., Ltd.
10.5.3 Other Related Transactions
Not applicable.
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10.6 Accounts Due from/to the Related Parties
10.6.1 Accounts Receivable
Ending Balance Beginning Balance
Item Related Party Provision for Bad
Book Balance Book Balance Provision for Bad Debts
Debts
Accounts Shanghai Fuji
1,798,113.75 89,905.69 2,986,768.97 149,338.45
receivable Xerox Co., Ltd.
Accounts Zhejiang GEMSY
receivable Electromechanical 112,831.24 5,641.56
Co., Ltd.
Zhejiang GEMSY
Other receivables Electromechanical 299,000.00 14,950.00
Co., Ltd.
Zhejiang GEMSY
Prepayment Electromechanical 6,147,650.83 6,874,421.03
Co., Ltd.
10.6.2 Accounts Payable
Item Related Party Ending Balance Beginning Balance
Account payables Stoll Electronics Co., Ltd. 965,239.42 750,113.09
11. Commitments or Contingencies
11.1 Major Commitment Events
Mortgage loans and credit extension
Amount of
Mortgages/Collaterals Estimated Use Borrower
Borrowing
Bank deposits of EUR 328.40
Guaranty ShangGong (Europe) Holding Corp. GmbH
thousands
Fixed assets of EUR 13,035.30 Surety margin of
EUR 2,620,000.00 ShangGong (Europe) Holding Corp. GmbH
thousands credit line
Fixed assets of EUR 30,468.20
Guaranty EUR 7,878,000.00 ShangGong (Europe) Holding Corp. GmbH
thousands
500 thousand shares of DA AG Guaranty ShangGong (Europe) Holding Corp. GmbH
Note: ShangGong (Europe) Holding Corp. GmbH uses its holding of 500 thousand shares of DA AG as
collateral to obtain two pieces of 2,750,000 euro bank letter (the guarantee period is from 7th January 2016 to
30th July 2017 and from 7th January 2016 to 30th July 2018, respectively), issued by German Commerzbank.
ShangGong (Europe) holding Corp. GmbH guarantees that it will pay the consideration of share purchase to
the seller of H. Stoll AG & Co. KG.
10. 2 Contingencies
10.2.1 The Contingent Liabilities Arising from the Provision of Debt Guarantees by the Company for its
Subsidiary, ShangGong (Europe) Holding Corp. GmbH as at 30th June 2017
Whether the
Commencement Date of Expiration Date Guarantee has
Guarantee Guarantee Amount
Guarantee of Guarantee been Fulfilled Note
or not
The equivalent of
Shanghai Branch of the Commerzbank RMB 58.00 million in 25th March 2014 No Note 1
EUR
Shanghai Branch of the Commerzbank EUR 8.00 million 1st July 2014 No Note 2
th
Shanghai Branch of the Commerzbank EUR 12.00 million 19 September 2016 No Note 3
th
Shanghai Branch of the Commerzbank EUR 10.00 million 28 August 2015 No Note 4
Industrial and Commercial bank st 21st December
Shanghai Hongkou Branch
EUR 7.878 million 21 December 2015 No Note 5
2020
Note 1: On 25th March 2014, the Company's wholly-owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a current fund loan of not more than the
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equivalent of 58 million yuan in euro, the Shanghai Branch of the Commerzbank issued a financing guarantee
letter for the funds, and the Company issued a corporate letter of guarantee for payment of 70 million yuan as
counter guarantee for the abovementioned financing guarantee letter.
Note 2: on 30th June 2014, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a current fund loan of 8 million euro, the
Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of 8.8 million euro as counter
guarantee for the abovementioned financing guarantee letter.
Note 3: on 19th September 2016, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH, applied to the Bielefeld Branch of the Commerzbank for a short-term credit loan of 12 million euro,
the Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, and the Company
issued an unconditionally irrecoverable corporate letter of guarantee for payment of 13.20 million euro.
Note 4: on 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to the
Kaiserslautern Branch of the Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of the
Commerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionally
irrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for the
abovementioned financing guarantee letter.
Note 5: on 21st December 2015, the Company's wholly owned subsidiary, ShangGong (Europe) Holding Corp.
GmbH., applied to the Frankfurt Branch of the Commerzbank for a limit loan of 7.878 million euro so as to
pay the acquisition fee to Stoll KG. ICBC Shanghai Hongkou Branch issued a financing guarantee letter for
the funds, and the Company issued an unconditionally irrecoverable corporate letter of guarantee for self-using
fix assets where No.603 Dapu Road as counter guarantee for the abovementioned financing guarantee letter.
As of 30th June 2017, there is no outflow of economic benefits arising from the above contingencies.
11.2.2 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, our 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 30th June 2018, it
has 6 months (e.g. before 31st December 2018) to request our company and Zhang Ping to repurchase the
shares which it holds in Shanghai Shensy Enterprise Development Co., Ltd.. If not, our company and Zhang
Ping will not assume the above mentioned repurchase responsibility.
As of 30th June 2017, it is uncertain that Shensy will complete IPO in the A share market by 30th June 2018.
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12. Post Balance Sheet Events
12.1 The Merger of DAP (Shanghai) Co., Ltd.
According to the decision of the Company’s 2016 Annual Shareholderss Meeting on 27th April 2017, the
Company will merge its holding subsidiary, DAP (Shanghai) Co., Ltd., and after the merger, DAPSH’s status
of independent legal entity will be cancelled by the Industrial and Commercial Administrations.
As of the date of this report, the above merger events are in process.
12.2 The Merger of Dürkopp Adler Sewing Machines Suzhou Co., Ltd.
According to the decision of the Company’s 32th Meeting of the 7th Board of Directors on 18th September
2016, the Company’s subsidiary, PFAFF Industrial Sewing Machines (Zhangjiagang) Co., Ltd. will merge the
Company’s holding subsidiary, Dürkopp Adler Sewing Machines Suzhou Co., Ltd. (hereinafter referred to as
DA Suzhou), and after the merger, DA Suzhou’s status of independent legal entity will be cancelled by the
Industrial and Commercial Administrations.
As of the date of this report, the above merger events are in process.
12.3 Lawsuit after report period
Shanghai Pacific Industrial Co., Ltd. (hereinafter referred to as “PACIFIC Shanghai”) is a Sino-foreign joint
venture established by the Company’s predecessor Shanghai Industrial Sewing Machine Corporation
(hereinafter referred to as “SISMC”) and Pacific Business Exchange CO., Ltd. (hereinafter referred to as
“PACIFIC Business”) on May 1993. SISMC invested USD 360,000 in equipment and plant, accounting for
48% of total shares; PACIFIC Business invested USD 390,000 in equipment and cash, accounting for 52% of
total shares. After the establishment of PACIFIC Shanghai, SISMC has undergone restructuring, listing and
several changes in business registration and stock ownership changes, so the name of SISMC has changed to
Shang Gong Group Co., Ltd. now. However, PACIFIC Shanghai and PACIFIC Business refused to recognize
the Company as the Chinese shareholders of PACIFIC Shanghai. Therefore, the Company filed a lawsuit,
asking the court to confirm the Company's Chinese shareholder status. On 22nd August 2017, the Company
received the civil judgment of Shanghai No.1 Intermediate People's Court. The judgment confirmed that 48%
of PACIFIC Shanghai’s equity invested by SISMC amounting to USD 360,000 was owned by the Company.
As the Company has been refused to exercise shareholder rights by PACIFIC Shanghai and PACIFIC Business
for years, the Company does not know the financial position and operation of PACIFIC Shanghai. Except the
48% of equity of PACIFIC Shanghai confirmed above, it is not clear how this issue would affect the Company.
As of the date of this report, the outcome of the lawsuit has not yet been implemented.
12.4 Arbitration after report period
The 22nd meeting of the 7th Board of Directors of the Company examined and approved the Proposal on
Investing in STOLL KG through ShangGong Europe, and agreed that the wholly-owned subsidiary
ShangGong Europe would invest in STOLL KG to become a 26% Minority shareholders. (See bulletin No.
2015-030 released on 29th August 2015 and bulletin No. 2016-002 released on 14th January 2016 for details).
Accounting to the Contract signed on 29th August 2015 by ShangGong Europe, the calculation of share price is
based on the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that share
price will be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and
related clauses in the Contract. Now the parties have disputes on the calculation of net assets of STOLL's
audited consolidated statement in 2015 and the understanding of the relevant terms of the Contract, resulting in
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a difference of approximately 4.26 million euro in the calculation of the price adjustment. ShangGong Europe
has received the Application for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited
partners of STOLL KG on 20th July 2017. ShangGong Europe will, in accordance with the terms of the
contract, settle the dispute by arbitration in accordance with German legal procedures.
As of the date of this report, the arbitration is in process.
13. Other Significant Events
On 13th December 2016, the resolution of the 34th meeting of the 7th Board of Directors approved that the
Company's joint venture H. Stoll AG & Co. KG, intend to sign a loan agreement with a syndicate consisted of
six financial institutions which include Deutsche Bank's German Business Branch, Commerzbank,
Baden-Württemberg State banks. This agreement allows H. Stoll AG & Co. KG to have access to credit line of
60 million euros in total. The subsidiary of the Company, ShangGong (Europe) Holdings Corp. GmbH, as a
limited partner of H. Stoll AG & Co. KG signed a contract with the syndicates. According to the contract, if H.
Stoll AG & Co. KG did not meet the key financial indicators agreed in the syndicated loan agreement, the
income of H. Stoll AG & Co. KG would be used to repay the syndicated loan prior to being allocated to
ShangGong (Europe) Holdings Corp. GmbH.
The board of directors of the Company has authorized the management of the subsidiary, ShangGong (Europe)
Holdings Corp. GmbH to sign the relevant agreement and to handle the relevant procedures.
14. Notes to Mains Items of the Financial Statements of the Parent Company
14.1 Accounts Receivable
14.1.1 Disclosure of Classification of Accounts Receivable
Ending Balance Beginning Balance
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
(%) (%) (%) (%)
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 69,634,149.41 97.18 59,629,555.38 85.63 10,004,594.03 59,365,318.22 100.00 55,963,466.80 94.27 3,401,851.42
with similar
risk credit
characteristics
basis
Accounts
receivables
with
insignificant
single amount 2,020,198.55 2.82 2,020,198.55 100.00 0.00
and provision
for bad debt
made on an
individual basis
Total 71,654,347.96 100.00 61,649,753.93 86.04 10,004,594.03 59,365,318.22 100.00 55,963,466.80 94.27 3,401,851.42
Accounts receivable with provision for bad debt made using the aging analysis method among the portfolios:
Ending Balance
Aging
Accounts Receivable Provision for Bad Debts Provision Ratio
Within 1 year 10,169,676.43 508,483.83 5%
1 to 2 years 91,634.09 18,326.82 20%
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2 to 3 years 540,188.32 270,094.16 50%
Over 3 years 58,832,650.57 58,832,650.57 100%
Total 69,634,149.41 59,629,555.38
14.1.2 Accounts Receivables Accrued, Reversed or Recovered in Current Period
The provision for bad debts for the current year amounted to 83,231.30 yuan; there is no provision for bad
debts recovered or reversed in the current year.
14.1.3 Accounts Receivable Actually Written off in Current Period
The write-off of receivables amounted to 779,410.85 yuan, representing those receivables with long ageing.
All of them are unrecoverable due to deregistration/cancellation of the customers.
14.1.4 Top Five Accounts Receivable by the Ending Balance of the Borrowers
Ending Balance
Company Name
Accounts Receivable Proportion in Total Accounts Receivable (%) Provision for Bad Debts
Customer A 11,530,775.39 16.09 11,530,775.39
Customer B 7,480,189.67 10.44 7,480,189.67
Customer C 4,679,327.49 6.53 4,679,327.49
Customer D 1,687,149.74 2.35 1,687,149.74
Customer E 1,286,880.42 1.80 1,286,880.42
Total 26,664,322.71 37.21 26,664,322.71
14.2 Other Receivables
14.2.1 Disclosure of Classification of Other Receivables
Ending Balance Beginning Balance
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
59,302,243.32 35.63 59,302,243.32 100.00 58,951,200.82 37.63 58,951,200.82 100.00
and provision
for bad debt
made on an
individual basis
Other
receivables with
provision for
bad debt made
on a portfolio 106,878,151.93 64.20 19,789,952.27 18.52 87,088,199.66 97,725,812.44 62.37 19,332,590.89 19.78 78,393,221.55
with similar risk
credit
characteristics
basis
Other
receivables with
insignificant
single amount
290,980.00 0.17 16,525.00 5.68 274,455.00
and provision
for bad debt
made on an
individual basis
Total 166,471,375.25 100.00 79,108,720.59 47.52 87,362,654.66 156,677,013.26 100.00 78,283,791.71 49.97 78,393,221.55
Other receivables with significant single amount and provision for bad debts made on an individual basis as at
30th June 2017
Other Receivables Ending Balance
(By Entity) Other Receivables Provision for Bad Debts Proportion of Provision Reason for Provision
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Customer A 46,350,286.62 46,350,286.62 100.00% Not expected to recover
Customer B 12,951,956.70 12,951,956.70 100.00% Not expected to recover
Total 59,302,243.32 59,302,243.32 100.00%
Other receivables with provision for bad debts made using the aging analysis method among those portfolios
Ending Balance
Aging
Other Receivables Provision for Bad Debts Proportion of Provision
Within 1 year 91,586,456.35 4,579,322.82 5.00%
1 to 2 years 95,486.10 19,097.22 20.00%
2 to 3 years 9,354.50 4,677.25 50.00%
Over 3 years 15,186,854.98 15,186,854.98 100.00%
Total 106,878,151.93 19,789,952.27 18.52%
14.2.2 Provision for Bad Debts Provided, Reversed or Recovered in Current Period
The provision for bad debts provided in the current period amounted to 755,368.25 yuan; there was 661,342.97
yuan provision for bad debts recovered or reversed in the current period.
14.2.3 Other Receivables Actually Written off in Current Period.
Not applicable.
14.2.4 Top Five Other Receivables by the Ending Balance of the Borrowers
Company Proportion in Total Ending Balance of
Nature of Fund Ending Balance Aging
Name Other Receivable (%) Provision for Bad Debts
Within 1 year or
Customer A Current accounts 47,429,654.75 28.49 46,404,255.03
over 3 years
Customer B Current accounts 40,279,132.65 Within 1 year 24.20 2,013,956.63
Customer C Current accounts 28,000,000.00 Within 1 year 16.82 1,400,000.00
Within 1 year
Customer D Current accounts 12,951,956.70 7.78 12,951,956.70
or over 3 years
Customer E Current accounts 11,572,940.88 Within 1 year 6.95 578,647.04
Total 140,233,684.98 84.24 63,348,815.40
14.3 Long-term Equity Investments
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Investments
595,732,377.30 8,632,624.09 587,099,753.21 638,117,724.99 8,632,624.09 629,485,100.90
in subsidiaries
Investments
in associates
and joint
ventures
Total 595,732,377.30 8,632,624.09 587,099,753.21 638,117,724.99 8,632,624.09 629,485,100.90
Among which, details on investments in subsidiaries
Provision for
Ending
Impairment
Increase in Current Decrease in Balance of
Investee Beginning Balance Ending Balance Provided in
Period Current Period Provision for
Current
Impairment
Period
ShangGong (Europe)
Holding Corp. 142,370,693.64 142,370,693.64
GmbH
Shanghai Shanggong 79,000,000.00 79,000,000.00
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Shang Gong Group Co., Ltd.
Butterfly Sewing
Machines Co., Ltd
(Note 1)
DAP (Shanghai) Co.,
59,425,828.73 59,425,828.73
Ltd.
Shanghai SMPIC
20,000,000.00 20,000,000.00
Electronics Co., Ltd.
Duerkopp Adler
Sewing Machines 15,685,694.98 15,685,694.98 3,132,624.09
Suzhou Co., Ltd
Shanghai SMPIC
Imp. & Exp. Co., 12,000,000.00 12,000,000.00
Ltd.
Shanghai SGSB
Asset Management 60,000,000.00 60,000,000.00 5,000,000.00
Co., Ltd.
Shanghai Fengjian
500,000.00 500,000.00 500,000.00
Property Co., Ltd.
ShangGong GEMSY
129,600,000.00 129,600,000.00
CO., LTD.
Shanghai Shensy
Enterprise
86,083,077.64 86,083,077.64
Development Co.,
Ltd.
Shanghai ShangGong
Financial Leasing 33,452,430.00 33,452,430.00
Co.,Ltd.
DAP Vietnam Co.,
204,273.00 204,273.00
Ltd. (Note 2)
Shanghai Butterfly
Import & Export Co., 22,579,133.04 22,579,133.04
Ltd. (Note 1)
Shanghai ShangGong
Import & Export Co., 13,831,246.27 13,831,246.27
Ltd. (Note 1)
Total 638,117,724.99 36,614,652.31 79,000,000 595,732,377.30 8,632,624.09
Note 1: The Company absorbed a wholly-owned subsidiary of Shanghai Shanggong Butterfly Sewing Machine
Co., Ltd. as a branch. Shanghai Butterfly Import & Export Co., Ltd. and Shanghai ShangGong Import &
Export Co., Ltd. are correspondingly transferred in to subsidiaries to the Company.
Note 2: The Company set up DAP Vietnam Co., Ltd. with USD 30,000.00, accounting for 100.00% of its
equity.
14.4 Operating Income and Operating Costs
From 1st January 2017 to 30th June 2017 From 1st January 2016 to 30th June 2016
Item
Income Cost Income Cost
Primary business 22,930,783.21 17,955,581.70 3,959,485.46 3,370,976.73
Other businesses 23,455,012.88 6,040,735.79 14,644,971.36 4,742,618.55
Total 46,385,796.09 23,996,317.49 18,604,456.82 8,113,595.28
14.5 Investment Income
From 1st January 2017 to 30th From 1st January 2016 to 30th
Item
June 2017 June 2016
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
Investment income from holding of financial assets
measured at fair value through current profit and loss
Investment income from disposal of financial assets
9,509.24
measured at fair value through current profit and loss
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Investment income from holding of available-for-sale
financial assets
Investment income from holding of available-for-sale
1,001,400.43 897,305.05
financial assets
Investment income from disposal of available-for-sale
715,552.60
financial assets
Gains from re-measurement of residual equity at fair
value after the loss of control right
Others 5,096,060.26 5,214,392.23
Total 6,106,969.93 6,827,249.88
Note: "Others" mainly refer to the gains of 980,616.42 yuan from financing product and gains of 4,115,443.84
yuan from structured deposits among other current assets.
15. Supplementary Information
15.1 Extraordinary Profit or Loss for Current Period
Item Amount Note
Profits or losses from disposal of non-current assets 9,747,624.59
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
2,642,975.59
related to the 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 company’s 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
2,403,933.60
liabilities, and investment income 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 -301,892.86
Other profits or losses which can be deemed as non-recurring profits or losses
Income tax effects -707,086.71
Minority interest effects -1,086,985.02
Total 12,698,569.19
15.2 Yield Rate of Net Assets and Earnings per Share
Profit for Current Period Yield Rate of Net Earnings Per Share (RMB/Share)
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Weighted Average
Basic Earnings Per Share Diluted Earnings Per Share
Assets (%)
Net profit attributable to ordinary
6.3648 0.2296 0.2296
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after 5.7232 0.2065 0.2065
deducting non-recurring gains and losses
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Chapter 11 For Reference
1. Financial Statements signed by the legal representative, chief accountant and accounting manager and sealed
by the Company.
2. Semi-annual report signed by legal representative and sealed by the accounting firm.
3. Original documentation and announcements about the Company, published in the newspaper appointed by
CSRC within the report year.
Shang Gong Group Co., Ltd.
Chairman of Board of Directors: Zhang Min
29th August 2017
IF THIS ENGLISH VERSION OF THIS ANNUAL REPORT INVOLVES ANY DIFFERENCES FROM
THE CHINESE VERSION, THE LATTER SHALL BE EFFECTIVE.
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