Chengde Dalu Co., Ltd. Semi-Annual Report 2011
承承承 德德德 大大大 路路路 股股股 份份份 有有有 限限限 公公公 司司司
CHENGDE DALU CO ．，LTD.
Semi-Annual Report 2011
(Full Text)
(January-June, 2011)
August, 2011 China · Chengde · PRC
1 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Contents
Section I. Important Notes and Paraphrase …………………………………………3
Section II. Company Profile…………………………………………………………...4
Section III. Changes in Share Capital and Particulars about Shares Held by Main Shareholders …………………………………………………………………………...7
Section IV. Particulars about Directors, Supervisors and Senior Executives………8
Section V. Report of the Board ………………………………………………………..9
Section VI. Significant Events………………………………………………………..11
Section VII. Financial Report ……………………………………………………….17
Section VIII. Documents Available for Reference …………………………………55
2 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
Section I. Important Notes and Paraphrase Important Notes: The Board of Directors, Supervisory Committee of Chengde Dalu Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives confirm that there are no material omissions or errors which would render any statement misleading and individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report.
The 22 nd Meeting of the 4 th Session of the Board examined and approved 2011 Semi-annual Report and its summary of the Company. All the directors, supervisors and senior executive attended the meetings of Board of Directors. No director, supervisor and senior executive stated that he (she) couldn’t ensure the correctness, accuracy and completeness of the contents of the Semi-annual Report or have objection to this report.
Mr. Yan Qizhong, Chairman of the Board, Mr. Wang Ansheng, Chief Financial Officer, and Mr. Liu Fengguo Person in Charge of Accounting Institution confirm that the Financial Report of 2011 Semi-annual Report is authentic and complete.
The semi-annual financial report is not audited.
Note: The report is prepared in bilingual versions using Chinese and English respectively, in the event of any discrepancy in understanding the two aforementioned versions, the Chinese version shall prevail.
3 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
Section II. Company Profile I. Legal Name of the Company In Chinese: 承德大路股份有限公司 In English: CHENGDE DALU CO., LTD.
II. Legal Representative: Yan Qizhong
III. Secretary of Board of Directors: Han Zhigang Contact Address: Xiabancheng Town, Chengde County, Hebei Province Tel: 0314 — 3115048 3115049 Fax: 0314 —3111475 E-mail: [email protected]
IV. Registered Address: Xiabancheng Town, Chengde County, Hebei Province Office Address: Xiabancheng Town, Chengde County, Hebei Province Post Code: 067400 Company’s Internet Web Site: http://www.dxtex.com E-mail: [email protected]
V. Newspapers Chosen for Disclosing the Information of the Company: Securities Times (Domestic) and Hong Kong Commercial Daily (overseas) Internet Web Site for Publishing the Annual Report: http://www.cninfo.com.cn The Place Where the Annual Report is Prepared and Placed: Securities Department of the Company Contact Tel: (86) 314-3115048, (86) 314-3115049
VI. Stock Exchange Listed with: Shenzhen Stock Exchange Short Form of the Stock: ST DALU B Stock Code: 200160
VII. Other Relevant Information of the Company Initial registered date: Nov. 3, 1999 Registered date after change: Mar. 31, 2004 Registered address: Industry and Commerce Administration Bureau of Hebei Province (No.316, Tiyu South Street, Shijiazhuang, Hebei Province) Registered number for business license of the Company: 1300001001372 1/1 Registered number of taxation of the Company: 130821106576876 Custodian agent of the non-circulating shares of the Company: China Securities Depository and Clearing Corporation, Ltd. Shenzhen Branch Name of lawyer firm engaged by the Company: Beijing Jincheng & Tongda Law Firm Office address: 11/F, Huaxia Bank, No. 22, Jian Guo Men Nei Ave., Beijing
II. Major accounting data and financial indexes (Unit: RMB) Increase/decrease at the At the end of At the end of this report period this report period-end of compared with that in period last year period-end of last year (%) Total assets(RMB) 205,673,247.12 199,976,147.64 2.85% Owners’ equity attributable to shareholder s of the listed -31,594,292.82 -27,525,241.03 -14.78% company(RMB) 4 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Share capital(Share) 706,320,000.00 706,320,000.00 0.00% Net assets per share attributable to shareholders of the listed -0.045 -0.039 -15.38% company(RMB/Share) This report The same Increase/decrease in this period period of last report period year-on-year (Jan. to Jun.) year (%) Total operating income(RMB) 21,250.00 0.00 100.00% Operating profit (RMB) -5,254,012.57 -4,767,355.11 -10.21% Total profit(RMB) -4,385,273.08 -4,819,752.88 9.01% Net profit attributable to shareholders -4,069,051.79 -4,314,900.49 5.70% of the listed company(RMB) Net profit attributable to shareholders of the listed company after deducting -4,937,791.28 -4,262,502.72 -15.84% non-recurring gains and losses(RMB) Basic earnings per share (RMB/Share) -0.006 -0.006 0.00% Diluted earnings per share -0.006 -0.006 0.00% (RMB/Share) Weighted average return on equity (%) - - 0.00% Weighted average return on equity after deducting non-recurring gains - - 0.00% and losses (%) Net cash flow arising from operating -20,647,074.69 4,609.37 -448,037.02% activities(RMB) Net cash flow per share arising from -0.029 0.00001 -290,100.00% operating activities (RMB/Share)
Items of non-recurring gains and losses (Unit: RMB) Note (If it is Non-recurring gains and losses Amount applicable) Gains and loss from disposal of non-current asset 970,161.00 - Net amount of other non-operating income and -101,421.51 - expense excluded the aforementioned items Total 868,739.49 -
Statement of Provision for Devaluation of Assets Book Decrease in this period balance at Increase in Book balance Items the Switching Transferring this period at period-end period-begin back out ning I. Total of provision for bad 44,360,872.5 44,360,872.5
debts 9 9 II. Provision for falling price
of inventory III. Provision for devaluation of financial asset available for sales IV. Provision for devaluation
of held-to-maturity investment V. Provision for devaluation 892,335,310. 892,335,310.
5 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 of long-term e quity 93 93 investment VI. Provision for devaluation
of investing property VII. provision for devaluation 35,361,563.0 35,361,563.0
of fixed assets 1 1 VIII. Provision for devaluation of engineering materials IX. Provision for devaluation 252,886,204. 252,886,204.
of construction in progress 04 04 X. Provision for devaluation
of productive biological asset Including: Provision for devaluation of mature productive biological asset XI. Provision for dev aluation
of oil asset XII. Provision for devaluation
of intangible asset XIII. Provision for
devaluation of goodwill XIV. Other 1,224,943,95 1,224,943,95 Total 0.57 0.57
Loss of assets depreciation (Unit: RMB) Amount occurred in this Amount occurred in last Items period period I. Loss of bad debts II. Loss of inventory depreciation III. Loss of devaluation for financial asset
available for sales IV. Loss of devaluation of held-to-maturity
investment V. Loss of devaluation of long-term equity
investment VI. Loss of devaluation of investing
property VII. Loss of devaluation of fixed assets VIII. Loss of devaluation of engineering
materials IX. Loss of devaluation of construction in
progress X. Provision for devaluation of productive
biological asset XI. Loss of devaluation of oil asset XII. Loss of devaluation of intangible asset XIII. Loss of devaluation of goodwill XIV. Other Total 0.00 0.00
6 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 III. Difference in CAS and IAS There remained no differences in net profit in this period and no differences in net assets ended as report period calculated based on the CAS and the IAS.
Section III. Changes in Share Capital and Particulars about Shares held by Main Shareholders
I. Particulars about changes in share capital In the report period, the Company’s total shares and share structure remained unchanged.
II. Particulars about shareholders (I) Ended as June 30, 2011, the Company had totally 23,008 shareholders, including 5 of sponsors’ share and 23,003 of domestically listed foreign share. (II) Particulars about the shares held by the top ten shareholders and the top ten shareholders of tradable share as follows:
Total number of 23,008 shareholders Particulars about shares held by the top ten shareholders Total Number of Nature of Proportion Number of share Name of shareholders number of unlisted share shareholders of share held pledged or frozen share held held Domestic Chen Rong natural 29.49% 208,324,800 208,324,800 person GUOTAI JUNAN Foreign SECURITIES(HONG 8.43% 59,530,549 0 legal person KONG)LIMITED Domestic Chengde North non-state-o 2.62% 18,517,651 18,517,651 Industrial Corporation wned legal person Circulating Xu Jiang 2.34% 16,556,900 0 B-share Circulating Chen Yan 2.21% 15,613,200 0 B-share Domestic Wang Zhengsong natural 1.89% 13,327,891 13,327,891 person Circulating Zhou Haihong 1.62% 11,430,000 B-share Circulating Wang Wensheng 1.03% 7,258,007 0 B-share Circulating Peng Wei 0.42% 2,978,525 0 B-share Circulating Zhao Ziying 0.37% 2,600,416 0 B-share Particulars about shares held by the top ten shareholders of tradable share Name of shareholders Number of tradable share held Type of share GUOTAI JUNAN 59,530,549 Domestically listed foreign 7 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 SECURITIES(HONGKONG)LIMIT shares ED Domestically listed foreign Xu Jiang 16,556,900 shares Domestically listed foreign Chen Yan 15,613,200 shares Domestically listed foreign Zhou Haihong 11,430,000 shares Domestically listed foreign Wang Wensheng 7,258,007 shares Domestically listed foreign Peng Wei 2,978,525 shares Domestically listed foreign Zhao Ziying 2,600,416 shares Shanghai Wanguo (Hong Kong) Domestically listed foreign 1,875,224 Securities Co., Ltd. shares Domestically listed foreign Li Siquan 1,649,633 shares Domestically listed foreign Qiu Hongmin 1,592,600 shares Major shareholder had no related relationship with other shareholders, and it didn’t belong to concerted action people ruled in Administration Method of Explanation on Information Disclosure about Change on Shareholding of Listed Companies. associated relationship The Company is unknown whether there exists associated relationship or among the aforesaid belongs to the consistent actor regulated by the Management Measure of shareholders Information Disclosure on Change of Shareholding for Listed Company among the other shareholders.
III. In the report period, controlling shareholder and actual controller of the Company had changed In reporting period, no change took place on controlling shareholder of the Company. On Jun. 7 of 2011, the previous actual controller Mr. Chenrong resigned to board of directors due to personal reason. Nominated by board of directors, Mr. Yan Qizhong was elected as director and president of the Company, becoming the actual controller. The change had been disclosed on Securities Times and Hong Kong Commercial Daily on July 1 of 2011.
Section IV. Particulars about Directors, Supervisors and Senior Executives
I. Alteration in shares held by directors, supervisors and senior executives of the Company: No directors, supervisors and senior executives of the Company hold shares of the Company. During the report period, no alteration happened to shares (non-circulating) held by major shareholder Chen Rong.
II. Change and new engagement or dismission on directors, supervisors and senior executive in reporting period 1. Mr. Chenrong submitted resignation to board of directors on Jun. 7 of 2011 thus resigned posts of director and president. Based on demands of governance and production and operation, board of directors elected Mr. Yan Qizhong as director and president of the Company with the same office term with the 4 th session board of directors. 2. On Jun. 27 of 2011 the Company received written resignation from general manager Mr. 8 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Hao Bin. Mr. Hao Bin resigned post of general manager due to individual reason, and won’t take any post in the Company. Based on relevant rules of Article of Association, Mr. Hao Bin’s resignation took effect once it reached board of directors. For ensuring normal operation of the Company, director Mr. Chen Jie host daily work of the Company before we elect new general manager.
Section V. Report of the Board
I. Discussion and analysis on overall operation of the report period In the 1 st half year of 2011, hard-working board of directors and managerial led staffs to overcome difficulties thus construction of the initial phase (Dalu Ganyuan) of commercial and residential items of wholly-owned subsidiary Chengde County Rongyida Real Estate Development Company started, and opened sale in Aug. of 2011, thus laid foundation for gradual resume of production and operation of the Company. The Company realized RMB 21250.00 of operating income, RMB -4,385,273.08 of profit, RMB -4,069,051.79 of net profit attributable to shareholders of listed companies and RMB -0.006 of earnings per share. II. Scope and operation of main business: 1. Main business scope: knitting, weaving series, high-end suits, children's clothing line, packaging materials, paper and paper products, production and processing of all kinds of yarn and synthetic yarn, marketing its own products, real estate development and sales, hotel and catering industry. 2. In the report period, the Company did neither resume production, nor conduct any activities of production and operation, so main business of the period was still loss.
2. Main business classified according to industry and area Unit: RMB’0000 Main business classified according to industry Increase/decr Increase/de Increase/decr Classified Income ease in crease in Cost of Gross ease in gross according to from income from cost of operatio profit profit ratio industries or operatio operations operations ns ratio (%) year-on-year products ns year-on-year year-on-yea (%) (%) r (%) Costume ------manufacture industry Cotton spin ------industry Paper-making ------industry
Main business classified according to area Unit: RMB’0000 Increase/decrease in income from Area Income from operations operations year-on-year (%) Domestic sales 0 - Overseas sales 0 - 3. Analysis on financial condition (1)Analysis on assets constitution Unit: RMB Change Item 2011-6-30 2010-12-31 Reason for change proportion 9 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 （%） Total assets 205,673,247.12 199,976,147.64 2.85% Due to borrowings Current 86,502,484.41 79,128,550.82 9.32% Due to borrowings assets Due to depreciation Non-current 119,170,762.71 120,847,596.82 -1.39% accrued and assets amortization Total 234,717,923.80 224,632,050.60 4.49% Due to borrowings liabilities Current 217,721,923.77 207,636,050.57 4.86% Due to borrowings liability Owners’ Due to losses of this -29,044,676.68 -24,655,902.96 -17.80% equity year Undistributed Due to losses of this -1,265,471,286.09 -1,261,402,234.30 -0.32% profit year
(2)Analysis on operation achievements Unit: RMB Amount (RMB) Increase Reason Item Jan. to Jun of / decrease for change 2011 ratio (%) Operation 21,250.00 0 - - income Due to depreciation Operation -5,254,012.5 -4,767,355.1 -10.21% accrued, profit 7 1 amortization and tax Net profit Due to attributable to -4,069,051.7 -4,314,900.4 increase of 5.70% owners of parent 9 9 non-operatin company g income Due to depreciation Administratio 5,260,118.42 4,766,244.48 10.36% accrued, n expense amortization and tax Due to Financial 336.60 increase of 4,848.99 1,110.63 expense % banking handling fees 4. Explanation for alteration in profit constitution, main business and its structure, profit-making ability of main business of the Company in the report period: In the report period, due to the un-recover production of the Company, main business, its structures and profitability etc. remains the same. 5. Other operational business activities bringing significant influence on profit in the report period In reporting period, the Company resumed production and operation of main business. While the construction of commercial and residential item of its wholly-owned subsidiary namely Chengde County Rongyida Real Estate Development Co., Ltd had been started. Construction period will last for a year. 6. In the report period, no investment income contributed by share-investing company 10 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 affected net profit of the Company over 10%. 7. Problems and difficulties and solution in operation In the report period, the Company was still in shortage of capital and its production hadn’t been resumed yet. As assets was input by Rongyida Company, it would turn to better for the Company. The Company would continue to seek for powerful strategic investors and cooperative partners to integrate its assets and business and inject capital to the Company, to help the Company resume its profit-making ability of main business
III. Investment in the report period 1. In the report period, the Company neither raised proceeds, nor did it use proceeds raised in previous periods. 2. Projects invested with non-raised proceeds. In the report period, there was no project invested with non-raised proceeds.
IV. The Company didn’t make modification for the annual operation plan. V. In 2010, Crowe Horwath Certified Public Accountants issued auditor’s report with an un-qualified opinions and paragraph of emphasized matters since they audited the financial report of the Company. The board of directors thought that, the concerned proceedings did exist, and it was a historical issue which won’t take real impact on production and operation of the Company. The Company attached great importance to the events the audit report emphasized and currently is communicating with related department, discussing solutions. As the completion of bankruptcy and restructuring of the Company ends, the Company will gradually step into formal trace, and the above issues will be solved one by one.
Section VI. Significant Events
I. Corporation governance In reporting period, the Company successively perfected governance structure of legal person and internal control system based on relevant rules issued by CSRC and Shenzhen Stock Exchange as well as requirements of promotion of governance. Key controlling activities conformed to requirements of relevant laws, rules and supervision department, which were not against Governance Rules of Listed Companies and relevant internal control system. In the following working, the Company will regard governance as important basic working for improving competitiveness and constantly complete modern corporation system of the Company.
II. Implementation of profit distribution plan and circumstances of equity incentive mechanism: 1. There was no profit distribution plan which was made in the previous period and implemented in the report period, plan of converting the public reserve capital into share capital or plan of issuing new shares. In the semi-annual of 2011, the Company had neither profits distribution plan nor plan of converting pubic reserve into share capital. 2. The Company did not implemented equity incentive mechanism.
III. Significant lawsuit and arbitration: On Apr. 17 of 2011, Chengde Medium People’s Court accepted Ms. Wang Shuxian’s accuse about creditor’s right of Chengde Dalu Co., Ltd. On Apr. 27, the Company received documents such as Appear Notice and Civil Ruling Notice from Hebei Chengde Medium People’s Court. The case hasn’t been put on trial, so the Company couldn’t judge the possible influence for the moment. The Company will actively respond to the case, protect legal 11 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 interest of the Company and shareholders. The Company will timely disclose the above proceedings.
IV. There was no condition of purchasing and selling assets in the Company in reporting period.
V. Related transactions of the Company in the report period There was no significant related transaction of the Company in the report period.
VI. Significant contract and implementation (1) In the report period, the Company had no significant transaction, entrustment, contract or leasing proceeding of other companies, nor vice versa matters. (2) In the report period, the Company had no significant guarantee contract. (3) In the report period, the Company did not entrust others to manage cash assets.
VII. Special explanation and independent opinion issued by independent directors on capital occupancy and external guarantee of related parties of the Company Following the spirits of Concerning Some Issues on Regulating the Funds between Listed Companies and Associated Parties and Listed Companies’ Provision of Guaranty to Other Parties (No. 56 [2003] promulgated by CSRS on Standardizing External Guarantee of Listed Company, as independent directors of the Company, we made careful inspection on the capital occupancy of related parties and external guarantee executed according to the aforementioned regulation and presented the following explanation on relevant problems, with an attitude of earnest and responsibility: 1. The Company standardized the capital occupancy of related parties and external guarantee behavior and thus controlled risks of capital occupancy by related parties and external guarantee, in strict accordance to regulation of Articles of Association. 2. Till Jun 30 th of 2011, no condition that related parties of the Company occupy capital of listed companies against rules was found. 3. Till Jun. 30, 2011, the Company has never provided guarantee for shareholder, actual controller and its related party, any non legal person unit and individual; controlling shareholder and other related party neither forced the Company to provide guarantee for others.
VIII. The Company or the shareholders holding over 5% of total shares had no commitment issues that had important influence on the operating results and financial situation of the Company in the report period or lasting to the report period.
IX. In the report period, the present directors, supervisors, senior executives, shareholders, actual controllers and purchaser of the Company had never be investigated by authorized department, received compulsory measure from judicial department, be sent to judicial department or be investigated into criminal responsibility; also never received investigation, administrative punishment or criticism through public notice from China Securities Regulatory Commission, nor had they been condemned by the stock exchange in public either.
X. Particulars about the Company’s Reception of Investigations and Interviews: In accordance with the principles of just, fair and publicity, to further regulate the behaviors of information disclosure for the listed companies and ensure justice for information disclosure, the Company received the research and media interviews in standardized way according to the regulations of Guideline on Fair Information Disclosure for Listed Companies promulgated by Shenzhen Stock Exchange. In the report period, the Company 12 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 received visits and telephone communication from its investors for many times; the Company received them and replies strictly in accordance with relevant regulations; there occurred no such situations as selectively and privately reveal or leak non-public significant information to specific parties; and all these assure the fairness of information disclosure of the Company. Reception Way of Reception Discussion issue and offered Reception date place reception person information Security Phone Department Individual Particulars about shareholders’ meeting, 2011-1-13 communicati of the investor offering notice about decision on Company Security Phone Department Individual Performance of 2010, performance 2011-1-26 communicati of the investor report was offered on Company Security Phone Department Individual Current situation of the Company, no 2011-2-19 communicati of the investor offered information on Company Security Phone Department Individual Construction of item of the Company, 2011-3-16 communicati of the investor offering no material on Company Security Phone Department Individual Current situation of the Company, no 2011-4-7 communicati of the investor offered information on Company Security Phone Department Individual Real est ate development of the 2011-4-15 communicati of the investor Company, no offered information on Company Security Phone Department Individual 2011-4-21 communicati Significant lawsuit, offering no material of the investor on Company Security Phone Department Individ ual Current situation of the Company, no 2011-4-27 communicati of the investor offered information on Company Security Phone Department Individual 2011-5-5 communicati Significant lawsuit, offering no material of the investor on Company Security Phone Department Individual Production restoring condition of the 2011-5-10 communicati of the investor Company, no offered information on Company Security Phone Department Individual Real estate development of the 2011-5-16 communicati of the investor Company, no offered information on Company Security Phone Individual Real estate development of the 2011-5-20 Department communicati investor Company, no offered information 13 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 of the on Company Security Phone Department Individual Current situation of the Company , no 2011-6-8 communicati of the investor offered information on Company Security Phone Department Individual Construction of item of the Company, 2011-6-17 communicati of the investor offering no material on Company Security Phone Department Individual Current situation of the Company, no 2011-6-29 communicati of the investor offered information on Company
XI. Other significant events 1. Because the subsidiaries of the Company - Chengde Dixian Fashion Co., Ltd., Hebei Xiabancheng Knitwear Co., Ltd. and Chengde Banhe Chemical Simulation Textile Co., Ltd. were declared bankruptcy, the aforesaid three companies were not in the range of consolidation statement in this period. 2. In this reporting period, the Company didn’t signed significant contract ruled in No. 6 Working Guidance for Information Disclosure of Listed Companies: Significant Contract. 3. The Company had no equity of other listed companies, share participating commercial bank, Security Company, insurance company, trust companies, futures companies and other financial enterprises. 4. Special statement and independent opinion of independent directors over occupation of related parties and external guarantee Based on Notice to 2011 Semi-Annual Report of Listed Companies, as independent director of the Company, we carefully read relevant material offered by the Company, and carefully reviewed and supervised capital occupation of related parties and external guarantee. We are issuing the following opinions as for relevant events: in reporting period, the Company strictly standardized capital contact with controlling shareholders and other related parties, controlled external guarantee risk. There existed no illegal capital occupation of controlling shareholder and other related parties as well as external guarantee. The illegal capital occupation was ruled by Notice to Normalizing Capital Contact between Listed Companies and Related Parties and External Guarantee of Listed Companies (ZJF[2003] No. 56) issued by CSRC. And there existed no ones extending from previous periods.
XII. Index to other events In the report period, all the notices of the Company have been published on Securities Times, Hong Kong Commercial Daily as well as Juchao Website (http://www.cninfo.com.cn). Particulars are as follows: Notice number Notice date Notice Events
Notice to decisions made on 2011 the 1 st 2011-001 2011-01-11 extraordinary general shareholders’ meeting
Position Paper on 2011 the 1 st extraordinary 2011-01-11 shareholders’ meeting 2011-002 2011-01-24 Notice to 2010 Annual Performance
14 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
2011-003 2011-03-30 Reference Notice
2011-03-30 Simplified Notice to Equity Transfer Notice to Decision Made On the 19 th Meeting of 2011-004 2011-04-27 the 4 th Session of Board of Directors of Chengde Dalu Co., Ltd
Notice to decision made on the 8 th meeting of the 2011-005 2011-04-27 4th session of board of supervisors
2011-006 2011-04-27 Summary of 2010 annual report
Notice to Chengde Dalu Co., Ltd holding 2010 2011-007 2011-04-27 annual shareholders’ meeting
2011-008 2011-04-27 Text of 2011 the 1 st seasonal report
Notice to board of directors backward and 2011-009 2011-04-27 adjusting 2009 annual accounting statement
Special statement of board of directors on 2011-04-27 non-standardized unqualified audit opinion and concerning events Special statement of board of supervisors on 2011-04-27 audit opinion and concerning opinion of 2010 annual report Report on work of 2010 annual independent 2011-04-27 directors (Liu Wei) Report on work of 2010 annual independent 2011-04-27 directors (Li Min)
Special statement of independent directors and 2011-04-27 independent opinion
Special statement on 2010 annual financial report 2011-04-27 issued unqualified audit report with stressed phases Special statement on 2010 annual correction over 2011-04-27 errors in prior period of Chengde Dalu Co., Ltd
Full text of 2011 annual the 1 st seasonal report 2011-04-27 (English Version)
15 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 2011-04-27 Full text of 2011 the 1 st seasonal report
2011-04-27 2010 annual report (English Version)
2011-04-27 2010 annual report 2011-04-27 Self-estimation on 2010 annual internal control Special statement on 2010 annual capital 2011-04-27 occupation of controlling shareholder and other related parties 2011-04-27 2010 annual audit report Notice to openness of initial item of 2011-010 2011-04-29 wholly-owned subsidiary Chengde County Rongyida Real Estate Development Co., Ltd
2011-011 2011-04-29 Significant lawsuit notice
Notice to website explanation meeting on 2010 2011-012 2011-05-20 annual performance
Notice to decision made on 2010 annual 2011-013 2011-05-27 shareholders’ meeting
Legal position letter to 2010 annual 2011-05-27 shareholders’ meeting
Notice to decisions made on the 20 th meeting of 2011-014 2011-06-15 the 4 th session of board of directors
Notice to holding 2011 the 2 nd extraordinary 2011-015 2011-06-15 shareholders’ meeting
2011-016 2011-06-28 Notice to resignation of general manager
16 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Section VII. Financial Report (Un-audited) Balance Sheet Prepared by Chengde Dalu Co., Ltd. Jun. 30, 2011 Unit: RMB Amount at period-end Amount at year-begin Items Consolidation Parent Company Consolidation Parent Company Current assets: Monetary funds 759,615.12 33,384.90 9,723,008.25 37,197.70 Settlement reserve fund Capital lend Transaction finance
asset Notes receivable Accounts receivable Accounts paid in advance 21,049,996.25 20,084,632.25 20,084,632.25 20,084,632.25 Insurance receivable Reinsurance receivables Contract reserve of
reinsurance receivable Interest receivable Dividend receivable Other receivables 43,240,790.54 303,956.24 30,485,301.52 278,347.22 Purchase restituted
finance asset Inventories 20,358,555.11 17,742,081.41 Non-current asset due
within one year Other current assets 1,093,527.39 1,093,527.39 Total current assets 86,502,484.41 20,421,973.39 79,128,550.82 20,400,177.17 Non-current assets: Granted loans and
advances Finance asset available
for sales Held-to-maturity
investment Long-term account
receivable Long-term equity 2,215,729.65 58,925,880.26 2,215,729.65 58,925,880.26 investment Investment property Fixed assets 61,287,246.12 62,653,329.49 Construction in progress 6,721,818.00 6,721,818.00 Engineering material Disposal of fixed asset Productive biological
asset Oil and gas asset Intangible assets 24,513,029.99 24,823,780.73 Expense on Research
and Development Goodwill Long-term expenses to be
apportioned Deferred income tax
asset
17 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Other non-current asset 24,432,938.95 24,432,938.95 Total non-current asset 119,170,762.71 58,925,880.26 120,847,596.82 58,925,880.26 Total assets 205,673,247.12 79,347,853.65 199,976,147.64 79,326,057.43 Current liabilities: Short-term loans 422,261.91 422,261.91 422,261.91 422,261.91 Loan from central bank Absorbing deposit and
interbank deposit Capital borrowed Transaction financial
liabilities Notes payable Accounts payable 231,075.82 218,802.27 231,075.82 218,802.27 Accounts received in
advance Selling financial asset of
repurchase Commission charge and
commission payable Wage payable 6,355,286.60 257,800.00 6,395,486.60 277,000.00 Taxes payable 71,298,709.59 -79,544.47 72,070,571.83 -62,298.33 Interest payable Dividend payable Other accounts payable 139,414,589.85 117,885,867.41 128,516,654.41 117,654,080.62 Reinsurance payables Insurance contract
reserve Security trading of
agency Security sales of agency Non-current liabilities
due within 1 year Other current liabilities Total current liabilities 217,721,923.77 118,705,187.12 207,636,050.57 118,509,846.47 Non-current liabilities: Long-term loans 6,398,000.00 6,398,000.00 Bonds payable Long-term account
payable Special accounts 10,598,000.03 98,000.03 10,598,000.03 98,000.03 payable Projected liabilities Deferred income tax
liabilities Other non-current
liabilities Total non-current liabilities 16,996,000.03 98,000.03 16,996,000.03 98,000.03 Total liabilities 234,717,923.80 118,803,187.15 224,632,050.60 118,607,846.50 Owner’s equity (or
shareholders’ equity): Paid-in capital (or share 706,320,000.00 706,320,000.00 706,320,000.00 706,320,000.00 capital) Capital public reserve 450,765,443.10 449,365,886.69 450,765,443.10 449,365,886.69 Less: Inventory shares Reasonable reserve
18 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Surplus public reserve 76,791,550.17 76,791,550.17 76,791,550.17 76,791,550.17 Provision of general risk -1,265,471,286.0 -1,271,932,770.3 -1,261,402,234.3 Retained profit -1,271,759,225.93 9 6 0 Balance difference of
foreign currency translation Total owner’s equity attribut able to parent -31,594,292.82 -39,455,333.50 -27,525,241.03 -39,281,789.07 company Minority interests 2,549,616.14 2,869,338.07 Total owner’s equity -29,044,676.68 -39,455,333.50 -24,655,902.96 -39,281,789.07 Total liabilities and owner’s 205,673,247.12 79,347,853.65 199,976,147.64 79,326,057.43 equity Legal person: Yan Qizhong Person in charge of accounting work: Wang Ansheng Person in charge of accounting institution: Liu Fengguo
Profit Statement Prepared by Chengde Dalu Co., Ltd. January- June 2011 Unit: RMB Amount in this period Amount in last period Items Parent Parent Consolidation Consolidation Company Company I. Total operating income 21,250.00 0.00 0.00 Including: Operating income 21,250.00 0.00 Interest income Insurance gained Commission charge and
commission income II. Total operating cost 5,275,262.57 171,272.92 4,767,355.11 678,084.56 Including: Operating cost 0.00 0.00 0.00 Interest expense Commission charge and
commission expense Cash surrender value Net amount of expense of
compensation Net amount of withdrawal of
insurance contract reserve Bonus expense of guarantee
slip Reinsurance expense Operating tax and extras 10,295.16 Sales expenses Administration expenses 5,260,118.42 171,257.42 4,766,244.48 676,964.56 Financial expenses 4,848.99 15.50 1,110.63 1,120.00 Losses of devaluation of asset Add: Changing income of fair
value(Loss is listed with “-”) Investment income (Loss is listed
with “-”) Including: Investment income on affiliated company and joint venture Exchange income (Loss is listed
with “-”) III. Operating profit (Loss is -5,254,012.57 -171,272.92 -4,767,355.11 -678,084.56 listed with “-”) Add: Non-operating income 1,021,011.00 -4,448.77 -4,448.77
19 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Less: Non-operating expense 152,271.51 2,271.51 47,949.00 47,949.00 Including: Disposal loss of
non-current asset IV. Total Profit (Loss is listed -4,385,273.08 -173,544.43 -4,819,752.88 -730,482.33 with “-”) Less: Income tax expense 3,500.64 V. Net profit (Net loss is listed with -4,388,773.72 -173,544.43 -4,819,752.88 -730,482.33 “-”) Net profit attributable to -4,069,051.79 -173,544.43 -4,314,900.49 -730,482.33 owner’s of parent company Minority shareholders’ gains and -319,721.93 -504,852.39 losses VI. Earnings per share i. Basic earnings per share -0.006 -0.006 ii. Diluted earnings per share -0.006 -0.006 VII. Other consolidated income VIII. Total consolidated income -4,388,773.72 -173,544.43 -4,819,752.88 -730,482.33 Total consolidated income attributable to owners of parent -4,069,051.79 -173,544.43 -4,314,900.49 -730,482.33 company Total consolidated income attributable to minority -319,721.93 -504,852.39 shareholders Legal person: Yan Qizhong Person in charge of accounting work: Wang Ansheng Person in charge of accounting institution: Liu Fengguo
Statement of Cash Flow Prepared by Chengde Dalu Co., Ltd. January- June 2011 Unit: RMB Amount in this period Amount in last period Items Parent Parent Consolidation Consolidation Company Company I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Insured savings and net increase of investment Net increase of disposal of transaction financial asset Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received Other cash received concerning operating 2,292,951.24 337,509.50 1,210,003.50 1,209,994.13 activities
20 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Subtotal of cash inflow arising from 2,292,951.24 337,509.50 1,210,003.50 1,209,994.13 operating activities Cash paid for purchasing commodities 1,751,364.70 and receiving labor service Net increase of customer loans and advances Net increase of deposits in central b ank and interbank Cash paid for original insurance contract compensation Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 280,550.00 93,600.00 151,800.00 151,800.00 Taxes paid 3,465,899.30 Other cash paid concerning operating 17,442,211.93 247,722.30 1,053,594.13 1,053,594.13 activities Subtotal of cash outflow arising from 22,940,025.93 341,322.30 1,205,394.13 1,205,394.13 operating activities Net cash flows arising from operating -20,647,074.69 -3,812.80 4,609.37 4,600.00 activities II. Cash flows arising from investing activities: ： Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, 967,298.00 intangible and other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 967,298.00 activities Cash paid for purchasing fixed, intangible and other long-term assets Cash paid for investment Net increase of mortgaged loans Net cash received from subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing activities Net cash flows arising from investing 967,298.00 activities III. Cash flows arising from financing activities Cash received from absorbing investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans 13,000,000.00
21 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing 13,000,000.00 activities Cash paid for settling debts 2,283,616.44 Cash paid for dividend and profit distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning financing activities Subtotal of cash outflow from financing 2,283,616.44 activities Net cash flows arising from financing 10,716,383.56 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash equivalents -8,963,393.13 -3,812.80 4,609.37 4,600.00 Add: Balance of cash and cash 9,723,008.25 37,197.70 58,256.11 16,900.44 equivalents at the period -begin VI. Balance of cash and cash equivalents at 759,615.12 33,384.90 62,865.48 21,500.44 the period -end Legal person: Yan Qizhong Person in charge of accounting work: Wang Ansheng Person in charge of accounting institution: Liu Fengguo
22 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
Consolidated Statement on Changes of Owners' Equity Prepared by Chengde Dalu Co., Ltd. Semi-annual 2011 Unit: RMB Amount in this report period Amount in last year Owners' equity attributable to the parent company Owners' equity attributable to the parent company Less Less Gene Gene Items Paid-up : Reaso Minorit Total Paid-up : Reaso Minorit Total ral ral capital Capital Trea nable Surplus Retained Oth y’s owners’ capital Capital Trea nable Surplus Retained Oth y’s owners’ risk risk (Share reserves sury reserv reserves profit ers equity equity (Share reserves sury reserv reserves profit ers equity equity provi provi capital) Stoc e capital) Stoc e sion sion k k I. Balance at the 706,320, 450,765, 76,791, -1,261,40 2,869,3 -24,655, 706,320, 395,971, 76,791, -1,230,42 14,429,6 -36,909, end of 000.00 443.10 550.17 2,234.30 38.07 902.96 000.00 144.37 550.17 1,633.22 36.86 301.82 last year Add: Change s of account ing policy Error correcti 54,794,2 -32,685,5 -12,758, 9,350,62 on of 98.73 29.13 140.50 9.10 the last period Others II. Balance at the 706,320, 450,765, 76,791, -1,261,40 2,869,3 -24,655, 706,320, 450,765, 76,791, -1,263,10 1,671,49 -27,558, beginni 000.00 443.10 550.17 2,234.30 38.07 902.96 000.00 443.10 550.17 7,162.35 6.36 672.72 ng of this year
23 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
III. Increase / Decreas e in this -4,069,05 -319,7 -4,388,7 1,704,928. 1,197,84 2,902,76 year 1.79 21.93 73.72 05 1.71 9.76 (Decrea se is listed with "-") (I) Net -4,069,05 -319,7 -4,388,7 1,704,928. 1,197,84 2,902,76 profit 1.79 21.93 73.72 05 1.71 9.76 (II) Other consoli dated income
Subtota -4,069,05 -319,7 -4,388,7 1,704,928. 1,197,84 2,902,76 l of (I) 1.79 21.93 73.72 05 1.71 9.76 and (II) (III) Owners' devoted and decreas ed capital 1. Owners' devoted capital 2. Amount calculat ed into
24 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 owners' equity paid in shares 3.
Others (IV) Profit distribu tion 1. Withdra wal of surplus reserves 2. Withdra wal of general risk provisio ns 3. Distribu tion for owners (shareh olders) 4.
Others (V) Carryin g forward internal owners' equity
25 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
1. Capital reserves convers ed to capital (share capital) 2. Surplus reserves convers ed to capital (share capital) 3. Remedy ing loss with surplus reserve 4.
Others (VI) Reason able reserve 1. Withdra wal in the report period 2. Usage in the
26 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 report period (VII)
Other IV. Balanc e at the 706,320, 450,765, 76,791, -1,265,47 2,549,6 -29,044, 706,320, 450,765, 76,791, -1,261,40 2,869,33 -24,655, end of 000.00 443.10 550.17 1,286.09 16.14 676.68 000.00 443.10 550.17 2,234.30 8.07 902.96 the report period Legal person: Yan Qizhong Person in charge of accounting work: Wang Ansheng Person in charge of accounting institution: Liu Fengguo
Statement on Changes of Owners' Equity (Parent Company) Prepared by Chengde Dalu Co., Ltd. Semi-annual 2011 Unit: RMB Amount in this report period Amount in last year Paid-up Less: Gener Paid-up Less: Gener Items Reason Total Reason Total capital Capital Treas Surplus al risk Retained capital Capital Treas Surplus al risk Retained able owners’ able owners’ (Share reserves ury reserves provis profit (Share reserves ury reserves provis profit reserve equity reserve equity capital) Stock ion capital) Stock ion I. Balance 706,320,0 449,365,8 76,791,55 -1,271,759,2 -39,281,7 706,320,0 394,571,5 76,791,55 -643,003,78 534,679,35 at the end 00.00 86.69 0.17 25.93 89.07 00.00 87.96 0.17 6.62 1.51 of last year Add: Changes of accountin g policy Error correctio 54,794,29 -626,558,52 -571,764,2 n of the 8.73 5.13 26.40 last
27 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 period
Others II. Balance at the 706,320,0 449,365,8 76,791,55 -1,271,759,2 -39,281,7 706,320,0 449,365,8 76,791,55 -1,269,562,3 -37,084,87 beginnin 00.00 86.69 0.17 25.93 89.07 00.00 86.69 0.17 11.75 4.89 g of this year III. Increase/ Decrease in this -173,544. -2,196,914.1 -2,196,914 -173,544.43 year 43 8 .18 (Decreas e is listed with "-") (I) Net -173,544. -2,196,914.1 -2,196,914 -173,544.43 profit 43 8 .18 (II) Other consolida ted income Subtotal -173,544. -2,196,914.1 -2,196,914 of (I) and -173,544.43 43 8 .18 (II) (III) Owners' devoted and decreased capital 1. Owners' devoted
28 Chengde Dalu Co., Ltd. Semi-Annual Report 2011 capital
2. Amount calculate d into owners' equity paid in shares 3. Others (IV) Profit distributi on 1. Withdra wal of surplus reserves 2. Withdra wal of general risk provision s 3. Distributi on for owners (sharehol ders) 4. Others
29 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
(V) Carrying forward internal owners' equity 1. Capital reserves converse d to capital (share capital) 2. Surplus reserves converse d to capital (share capital) 3. Remedyi ng loss with surplus reserves 4. Others (VI) Reasonab le reserve 1. Withdra wal in the report period
30 Chengde Dalu Co., Ltd. Semi-Annual Report 2011
2. Usage in the report period (VII)
Other IV. Balance at the end 706,320,0 449,365,8 76,791,55 -1,271,932,7 -39,455,3 706,320,0 449,365,8 76,791,55 -1,271,759,2 -39,281,78 of the 00.00 86.69 0.17 70.36 33.50 00.00 86.69 0.17 25.93 9.07 report period Legal person: Yan Qizhong Person in charge of accounting work: Wang Ansheng Person in charge of accounting institution: Liu Fengguo
31 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 CHENGDE DALU COMPANY LIMITED NOTES OF FINANCIAL STATEMENT FOR THE SEMI-ANNUAL 2011
I. Brief introduction of the Company 1. History evolution The former of Chengde Dalu Company Limited (hereinafter referred to as “the Company”) is Chengde Dixian Textile Company Limited (hereinafter referred to as “Dixian Company”), which was established in the People’s Republic of China as a joint stock Company approved by People’s Government of Hebei Province (JI GU BAN(1999) No. 36) dated on 3 November 1999. There are five promoters of the Company, which are Mr. Shuxian Wang, North Industry Co., Ltd., Longfeng Cosmetic Co., Ltd., Red Star Plastic Product Co., Ltd. and Mr. Zhengsong Wang respectively. The initial registered capital of the Company is RMB 100,000,000 representing 100,000,000 shares with a par value of RMB 1 each, in which Mr. Shuxian Wang holds 85,100,000 shares. On 13 November 2009, the company was changed into the name of Chengde Dalu company Limited upon agreement of the board.
Upon the approval document No. [2000]121 issued by the China Securities Regulatory Commission (CSRC for short) on 29 August 2000, the Company issued 100,000,000 domestically listed foreign shares (B share for short) with a par value of RMB1.00 each on 29 September 2000. In addition, the Company increased issuance of 15,000,000 foreign capital shares (B share) with a par value of RMB1.00 each between 29 September and 29 October 2000. The Company’s B shares listed in Shenzhen Stock Exchange. The registered capital of the Company after the issue of B shares was increased to RMB 215,000,000 with par value of RMB 1.00 each amounting to 215,000,000 shares.
According to the resolution of general meeting of shareholders on 12 March 2002, the Company distributed share bonus 43,000,000 shares to all shareholders at the rate of two shares given per ten shares and used capital reserves to into capital as 107,500,000 shares to all shareholders at the rate of five shares given per ten shares. The registered capital of the Company was increased to RMB 365,500,000 after share bonus distribution and turning.
According to the resolution of general meeting of shareholders on 22 July 2003, the Company distributed share bonus 73,100,000 shares to all shareholders at the rate of two shares given per ten shares. The registered capital of the Company was increased to RMB 438,600,000 after share bonus distribution.
On 11 March 2004, being approved by Ministry of Commerce of the state, the Company changed its nature as limited company for foreign investment. Upon the approval document No.[2004]101 issued by the China Securities Regulatory Commission in July 2004, the Company increases of its capital by issuing 150,000,000 B shares, in which 91,300,000 shares were issued for Hong Kong dollars and 58,700,000 shares were issued for Renminbi Yuan (RMB).
According to the resolution of general meeting of shareholders on 8 June 2006, the
11 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Company distributed share bonus 117,720,000 shares to all shareholders at the rate of two shares given per ten shares.
On 4 August 2008, the Intermediate People's Court of Shenzhen determined that promoter share of 112,324,800 shares held by Shuxian Wang should be compensate for Chen Rong in the price of RMB 45,491,544. And in the same year, Intermediate People's Court of Dalian determined that promoter share of 96,000,000 shares held by Shuxian Wang should be compensate for Rong Chen in the price of RMB 38,880,000 on August 15. On November 11, 2009, Hebei provincial department of commerce issued ‘the reply of the approval on the capital increase, the change of shareholders and the Company’s name of Chengde Di Xian knitting Co., Ltd.’ with JZSWZZ (2009) No. 143, which approved the Company to reissue 150,000,000 foreign shares listed within the P.R.C in the year of 2004, and distribute share’s dividends by 2 shares per 10 shares in the year of 2006, and change the shareholder of 208,324,800 shares from Wang Shuxian to Chen Rong, and change the Company’s name as Chengde Dalu Co., Ltd.
After increase of the shares and distribution, the Company's equity amounted to 706.32 million shares and the registered capital is RMB 706.32 million which was verified by Zhong Lei accounting firm as Zhong Lei Yan Zi (2010) No.10009 issued on June 24, 2010.
On June 28, 2010, the Company renewed the Legal Representative’s Operating License issued by Hebei Industrial and Commercial Administrative Bureau as No. 130000400001225; residence as Chengde County, Hebei Province town; Chen becomes the legal representative; registered capital as well as paid-in capital of 706.32 million Yuan; the type of company is limited liability company(Sino-foreign joint venture and listed).
2.Significant event In October 2008, Chengde Xingcheng Building Project Co., Ltd, the creditor of the Company, submitted its restructuring plan to Chengde Intermediate People's Court (“Court”) of Hebei province, the court accepted the application on 10 December 2008 and approved on 10 November 2008. On 30 December 2008, the Court approved the company’s Restructuring Program and terminated restructuring procedures. On 27 April 2009 Chengde Intermediate People’s Court of Hebei Province confirmed the restructuring planning had been finished
3.Scope of operation The company mainly engaged in producing, processing and selling knitwear series, woven fabric series, superior quality suits, children's garments series, packaging materials, paper and paper products, all kinds of yarn paper and synthetic fiber. The company and its subsidiaries import raw materials of knitwear, woven fabric, and other raw materials and ancillary materials needed for production, as well as equipments and spare parts used for production. Chengde Rongyida Real Estate Development Co., Ltd, subsidiary of the Company, mainly engaged in the development of real estate.
II. Major accounting policy, accounting estimation and previously errors of the Company 1. Preparation basis for financial statement On the basis of sustainable operation, the Company recognized, measured and prepared the financial statement by actually transaction and events that in accordance 12 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 with Accounting Standard for Enterprises.
2. Statement on Implementation of Accounting Standard for Business Enterprises The financial statement prepared by the Company was stratified the requirement of Accounting Standard for Enterprises and presented real and completed information of financial status, performance results, changes of shareholders’ equity and cash flow of the Company.
3. Accounting period The company adopts Gregorian calendar, namely each 1 January to 31 December should be one fiscal year. This period refer to January 1, 2011 to June 30, 2011.
4. Standard Accounting Currency Renminbi (RMB) is the currency for book keeping of the Company.
5. Preparation for consolidated financial statement Consolidation scope of the Company was based on the controlling, all subsidiary were consolidated into the consolidation financial statement of the Company. The accounting policy and accounting period that adopted by subsidiaries, that in consolidation scope, should be in accordance with the Company. If there has difference between the subsidiary and the Company in aspect of accounting policy and period, necessary adjustment should be carry out while consolidated the financial statement. Consolidation financial statement was base on the financial statement of the Company and subsidiaries respectively. The Company prepared the financial statement by other relevant information and adjusted the long-term equity investment for subsidiaries. The influences on consolidated balance sheet, consolidated profit statement, consolidated cash flow statement and consolidated changes on owners’ equity from internal transaction between the Company and its subsidiaries/subsidiaries should be off-set while consolidated the financial statement. Balance between the current deficit shared by minority shareholders of the subsidiary and quotation shared by minority shareholders in owners’ equity of period-begin, write off the equity of minority shareholders’.
6. Confirmation Standard for Cash and Cash Equivalent While preparing cash flow statement of the Company, investment that qualified the followed conditions at same time should be recognized as cash equivalent: short-term (undue within three months since purchased day); highly liquidation; easily convert to known amount of cash and minor risk of value fluctuation. Equity investment was not recognized as cash equivalent.
7. Foreign Currency Transactions and Foreign Currency Statement Translation (1) Confirmation of the exchange rate for foreign transaction and its accounting treatment The foreign currency transaction should used the spot rate on the day in which the transaction took place when initially recognized by book keeping currency conversion; Foreign currency investment that received by investors should be converted by spot rate of transaction day. On balance sheet day, treatment should be took by followed situations: ①Item of foreign currency monetary: Converted by spot rate of the balance sheet date. Exchange differences between the spot rate on balance sheet dated and initially
13 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 confirmation or previously spot rate of the balance sheet dated, should reckoned into financial expenses. ②Item of non-monetary foreign currency measured by historic cost: calculated by spot rate of the dated transaction occurred, changed no book keeping currency on balance sheet date. ③Item of non-monetary foreign currency measured by fair value: calculated by spot rate of the dated fair value confirmed. The amount difference between the converted book keeping currency and original book keeping currency should reckoned into current gains/losses for treatment of changes in fair value. If the exchange difference was formed by item of non-monetary foreign currency available for sale, then reckoned into capital reserve. (2) Converted method of the foreign currency at balance sheet date and accounting treatment of statement conversion for foreign currency Item of asset and liability that contained in balance sheet should be converted by spot rate of the balance sheet date. Among owners’ equity, except item of “Retained profit”, others should converted by spot rate while occurred. The income and cost items in the profit statement should be converted by spot rate of the date transaction occurred. (3) As for conversion differences of foreign currency statement, should be listed independently as “conversion differences of foreign currency statement” contained in “Owners’ equity” of Consolidated balance sheet while prepared the consolidated financial statement.
8. Financial Instruments (1) Classification, reorganization basis and measurement of financial instruments ①Classification: Financial instrument is the contract which forming an enterprise's financial assets and other units' financial liability or equity instrument, including: financial assets, financial liabilities and equity instrument. The Company's financial assets and financial liabilities comprise financial assets or liabilities measured with fair value and their changes calculated into the current gains and losses, held-to-maturity investment, account receivables and financial assets available for sale. ②Reorganization basis and measurement A. Financial assets or liabilities measured with fair value and their changes calculated into the current gains and losses Reorganization basis: this kind of financial assets or liabilities comprise transaction financial assets or liability, directly designated financial assets or liabilities measured with fair value and their changes calculated into the current profits and losses. Transactional financial assets or liability mainly refers to stocks, bonds, funds held for sale recently and derivatives instrument not as effective hedging instruments or financial liabilities beared by repurchased recently; Directly designated financial assets or liabilities measured with fair value and their changes calculated into the current gains and losses, mainly refers to designation based on risk management and strategic investment needs. Measurement: Financial assets or liabilities measured with fair value and their changes calculated into the current gains and losses when acquiring recognize fair value as the initial amount (deducting declared but unpaid cash dividends or to pay interest on the bonds but not yet received). During the holding period, interest or cash dividends will be recognized as investment income, fair value's changes are directly calculated into the current gains and losses at the balance sheet date. When such financial assets will be disposed in the future, the difference between fair value and initial amount will be recognized as investment income, at the same time adjusting 14 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 changes in fair value.
B. Held-to-maturity investment Reorganization basis: Fixed rate bonds, floating rate corporate bonds and other non-derivative financial assets the Company has the positive intention and ability to hold to maturity which has fixed dates, fixed and determinable payments. Measurement: Fair value and the relevant transaction expenses are recognized as the initial amount when acquiring (deducting interest on the bonds but not yet received). The Company adopts amortized costs for subsequent measurement and calculates interest income recorded in investment income according to actual interest rate (If there is no big difference between the actual interest rate and coupon rate, according to coupon rate). Actual interest rate is determined when Obtaining, it will keep unchanged in the expected duration or a shorter period. When disposing or recovering, the difference of acquiring amount and book value will be recognized as investment income. C. Accounts receivables Reorganization basis: Accounts receivables formed by companies selling goods or providing services recognize the initial amount according to the buyer's contract or agreement. Measurement: The Company adopts amortized costs for subsequent measurement according to actual interest rate method. The difference of acquiring amount and book value of accounts receivables will be recognized as current gains and losses while recovered or disposed the account receivables. D. Financial assets available for sale Reorganization basis: The financial assets not classified as financial assets measured with fair value and their changes calculated into the current gains and losses, held-to-maturity investment, account receivable and financial assets. Measurement: Fair value and the relevant transaction expenses are recognized as the initial amount when acquiring (deducting declared but unpaid cash dividends or to pay interest on the bonds but not yet received). During the holding period, interest or cash dividends will be recognized as investment income, fair value's changes are directly calculated into capital reserve (other capital reserves) at the balance sheet date. When such financial assets will be disposed in the future, the difference between book value and acquiring amount will be recognized as investment income, meanwhile, accumulated amounts from fair value change with corresponding disposing part will be transferred out to investment income. (2) Reorganization basis and measurement of switching financial assets Recognition of the financial assets should be terminated when the Company converts out nearly all related risks and rewards, or the company neither converts nor keeps all related risks and rewards but loses control. If barely all risk and rewards of the ownership of financial assets have been transferred to the party of turn-in while switching the financial assets, financial assets should terminated recognizing; if barely all risk and rewards of the ownership of financial assets were contained by then not to terminate the recognizing. As for abovementioned termination conditions qualified, judgment should base on the principle of material superior to form. Switching financial assets classified to wholly assets transfer and partial assets transfer. For financial assets that totally conversed, if it meets the requirements of termination recognition, then the difference of the two items below should be calculated into current gains and losses: (1) Book value of the conversed financial assets; (2) Sum of the consideration value received and accumulated amount (for financial assets switch as the financial assets available for sale) of fair value changes that 15 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 reckoned into owners’ equity directly originally. For financial assets that partially conversed, if it meets the requirements of termination recognition, then book value of the conversed financial assets should be allocated between the terminated recognition parts and the rest in light with fair value of their own respectively, and the difference of the two amounts below should be calculated into current gains and losses. (1) Book value of the parts that terminated recognition; (2) Sum of the consideration value of the parts that terminated received and accumulated amount (for financial assets switch as the financial assets available for sale) of fair value changes on the parts that terminated, reckoned into owners’ equity directly originally. As for switch financial assts met no qualification of termination, recognized financial assets continuously and recognized the consideration as financial liability. (3) Termination condition for financial liability When all or partial current obligations of the financial liability terminated, the company should terminate confirming all or partial of the financial liability. (4) Reorganization of fair value for financial assets and financial liability ①If it exists the active market about financial assets and liabilities, then using the quotation in active market to determine the fair value; ②If it does not have active market, the company uses value estimation to confirm the fair value.
9. Account receivable (1) Account receivable of single major amount and withdrawal bad debt provision singly: Recognized basis or amount standard for Over one million yuan (including one million yuan) single major amount Impairment test was conducting on account receivable with Accrual method for single major amount by the Company. If there has objective single major amount evidence of impairment occurred, recognized impairment and withdrawal bad losses based on difference between the current value of future debt provision singly cash flow and its book value, and accrual bad debt provision correspondingly.
(2) Account receivable with bad debt provision withdrawal by combination: Except for those account receivable that withdrawal bad debt provision independently and within the consolidated scope, account age was recognized as the characteristic of portfolio credit risk by the Company. On the basis of actual loss rate of account receivable listed in the category by age, determined proportion of bad bet provision withdrawal by current situation, and accrual bad debt provision.
Detail withdrawal proportion for bad debt provision by varies age; Withdrawal proportion Withdrawal proportion Age for account receivable for other account (%) receivable (%) Within one year (one year 1.00-5.00 1.00-5.00 included) 1－2 years 20.00 20.00 2－3 years 50.00 20.00 Over 3 years 100.00 100.00
16 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011
(3) Account receivable of single minor amount but withdrawal bad debt provision singly As for those account receivables that have objective evidence of Reasons for impairment and with minor single amount but with obviously withdrawal characteristic in portfolio credit, bad debt provision withdrawal by age analysis e reflected no actual situation. Impairment testing was conducted by the Company, recognized Withdrawal impairment losses by the differences between current value of method for bad future cash flow and its book value, and supplemented accrual debt provision relevant bad debt provision base on the bad debt provision that withdrawal by age.
10. Inventory (1) Classification of inventory Inventories mainly include raw material, auxiliary materials, repair parts, low cost consumables, packing material, goods in stock, and goods in process, finished goods, development cost, and products to be developed and so on. Development costs include land cost, construction cost and other cost, which cost in the construction of real estate development projects. Products to be developed are land to be purchased and prepared for real estate development projects.
(2) The measurement of sending inventories Weighted average accounting method is used when issued in the end of each month.
(3) Recognized basis for net realizable value of inventory and withdrawal method for inventory devalue provision Provision for inventories should be accrued and adjusted according to the lower of cost and net realizable value after checking thoroughly at balance sheet date. The net realizable value of the finished goods, merchandise and hold for sell materials which will be sold directly is the estimated selling price in the ordinary course of business less the estimated selling expenses and the taxes necessary to make the sale. The net realizable value of the processing material is the estimated selling price in the ordinary course of business less the estimated costs before finished and the estimated selling expenses and the taxes necessary to make the sale. As for inventories holding for selling contract and service contract, its net realizable value should be measured according the contract price. If the holding quantity is over the contract needed, the surplus should be measured based on selling price instead of contract; If no selling contract (not including the materials for sale), the net realizable value of inventories should be measured based on ordinary selling price (that is market sales price); materials for sales, usually, measured based on market price. On balance sheet date, withdrawal inventory devalue provision on single inventory items; as for those inventory with major quantity and lower unit price, withdrawal inventory devalue provision by category; as for those inventory that related with the serials products produced and sales in same areas and owes same or similar ultimate usage means or purpose, hard to measured by separated with other items, then consolidated for inventory devalue provision withdrawal. If the influence resulted in provision for impairment disappeared, the write-down amount should be reversed and profit recognized accordingly.
The inventory system Perpetual inventory system is applied to inventories. 17 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011
(4) Amortization method for low-value easily consumption products and package materials Low-value easily consumption products are recorded using immediately write-off method when issued. Package materials are recorded using immediately write-off method when issued.
11. Long-term equity investment 1. Recognition of investment cost (1) Long-term equity investment acquired by enterprise consolidation under same control Equity combination method was adopted for recognized the consolidation cost while enterprise consolidated under same control. If the consideration of the merging enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. (2) Long-term equity investment acquired by enterprise consolidation under different control Purchased method was adopted for recognized the consolidation cost while enterprise consolidated under different control. And recognized consolidated cost as initial investment cost for long-term equity investment. The costs for business combination include the fair values on the acquisition date of cash or non-cash assets, issued or assumed debts, issued equity securities, as well as the summation directly related expenses incurred during business combination, but exclude agent’s expenses of audit, legal service and valuation consulting, etc. and other related management expenses incurred as acquirer for business combination. 2. Follow-up measurement and recognition for gains/losses (1) Follow-up measurement The Company shall be accounted by the cost method, and shall make an adjustment by the equity method when it works out consolidated financial statements. (2) Recognition for gains/losses On basis of cost method, except for the amount actually paid while acquired investment or cash bonus or profit announced without paid that contained in consideration, the Company recognized investment income by the cash bonus or profit that shared in invested units announced with paid. 3. Method of impairment test and accrual method for impairment provision Except for goodwill that formed by enterprise consolidation, other long-term equity investment with impairment evidence been found, if the recovable amount lower its book value, then the difference will recognized as impairment losses. Once the impairment loss of the long-term equity investment is recognized, it cannot be transferred back.
13. Fixed assets (1) Recognition conditions of fixed assets Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, and with a service life in excess of one financial year. Fixed assets should recognized while qualified the followed conditions: 1)Fixed assets’ related financial benefits shall flow into the enterprise; ； 2) The cost of the fixed assets can be measured reliably. As for repair charges of fixed assets, reckoned into cost of fixed assts while qualified recognition condition; as for those failure qualification of recognition conditions, reckoned into current cost and expenses while occurred. 18 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 (2) Depreciation method for all fixed assets Depreciation of fixed asset should withdrawal by category of average service life method. In according to the category of fixed assets, predicted the service life and net scrap value rate for determined the depreciation rate for fixed assets. Withdrawal depreciation in later month while acquired the fixed assets (excluding the fixed assts that fully withdrawal but used continuously and lands accounted in book independently). Details of depreciation terms and yearly depreciation rate: Yearly Depreciation Scrap value rate Categories depreciation rate term(Year) (%) (%) Houses and buildings 25.00 5.00 3.80 Papermaking equipment 20.00 10.00 4.50 Other machinery 7.00-15.00 6.33-13.57 5.00 equipment Transport equipment 5.00-10.00 5.00 9.50-19.00 Office equipments 5.00-10.00 5.00 9.50-19.00
(3) Impairment test methods for fixed assets and accrual methods for its impairment provision On balance sheet date, the Company makes a judgment on whether there is any sign of possible assets impairment and an estimate of the recoverable amount of assets to estimate the recoverable amount. If the recoverable amount is less than the fair value, the net amount of the fair value of an asset minus the recoverable amount shall be recorded into the current profits and losses and confirm the impairment loss simultaneously. The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of the assets minus the disposal expenses and the current value of the expected future cash flow of the assets. Where there is any evidence indicating a possible impairment of assets, the enterprise shall, on the basis of single item assets, estimate the recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of the group assets on the basis of the asset group to which the asset belongs. Impairment losses can not be reversed in subsequent periods once been withdrawal.
13. Construction in progress (1) Calculation method for construction in progress Construction in progress was measured by actual cost and calculated by categories of projects. (2) Time to transfer to fixed asset All expenditures that actually occurred should be transfer in fixed assts for calculation while the construction in progress reached its predicted service condition. As for those construction in progress with predicted service condition approached without acceptance settlement handle, transfer in fixed assets by estimated value in according to project budget, project cost or actual cost of the projects etc., Withdrawal depreciation for fixed assets by depreciation policy of the Company. After project acceptance for settlement, adjusted original estimated value by actual cost but adjusted no original withdrawal depreciation amount. (3) Depreciation provision of construction in progress On balance sheet date, the Company makes a judgment on whether there is any sign of possible assets impairment and an estimate of the recoverable amount of assets to estimate the recoverable amount. If the recoverable amount is less than the fair value, the net amount of the fair value of an asset minus the recoverable amount shall be 19 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 recorded into the current profits and losses and confirm the impairment loss simultaneously. The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of the assets minus the disposal expenses and the current value of the expected future cash flow of the assets. Impairment losses can not be reversed in subsequent periods once accrual.
14. Borrowing costs (1) Recognition principles on the capitalization of borrowing costs Assets up to the capitalization conditions are assets such as the capital assets, investment property and inventory assets as can reach the planned availability or marketability only after the long-term construction or production. The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. Where the borrowing costs incurred to an enterprise can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current gains and losses. As the borrowing expenses are up to all of the following conditions, the capitalization starts: 1) There is the actual assets expenditure, which includes the expenditure in the form of cash payment, transfer of non-cash assets or interested debt assumption for the construction or production of the assets up to the capitalization conditions; 2) There are the actual borrowing expenses; 3) There has been the starting of the construction or production activities necessary for the planned availability or marketability of the assets. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. 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. (2) Capitalization period of borrowing costs For the ancillary expense incurred to a specifically borrowed loan, those incurred before a qualified asset under acquisition, construction or production is ready for the intended use or sale shall be capitalized at the incurred amount when they are incurred, and shall be recorded into the costs of the asset eligible for capitalization; those incurred after a qualified asset under acquisition and construction or production is ready for the intended use or sale shall be recognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded into the gains and losses of the current period. Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. When partial of the qualified asset under acquisition and construction or production is ready for the intended use or sale independently, the capitalization of the borrowing costs shall be ceased. (3) Confirmation methods for the capitalization of borrowing costs The Company calculates the amount of the capitalized borrowing costs every season. Capitalized are the interest expenses of the specific borrowings (deducting the interest income from the borrowing un-utilized but deposited in the bank or the investment return from the temporary investment) and its auxiliary expenses, before the planned availability or marketability of the assets constructed and produced up to the capitalization conditions. 20 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Interest amount of ordinary borrowings that should capitalized was recognized by the result of weighted average amount of assets expenditure (part of the accumulated assets expenditure exceeded specific borrowings) multiple by capitalization rate of ordinary borrowings that occupied. Capitalization rate will calculated by average rate of the ordinary borrowings.
15. Intangible assets (1) Initial measurement of intangible assets The intangible assets are initially measured at actual cost by the Company. If price of intangible assets beyond the normal conditions of payment credit, essentially it is financing. The cost of the intangible assets is the present value of the purchase price. (2) Subsequent measurement of intangible assets 1) Service life of intangible assets The Company analysis its service life when intangible assets obtained, if the service life has a limit, the Company estimates the service life or the measurement like the production which consist of the service life of the assets. If the service life is unexpected, the Company defines it as indefinite useful life intangible assets. 2) Amortization of intangible assets For intangible assets with a limited service life, we amortize in the straight-line method within the expected service life since the month it acquired. For those uncertain service life intangible assets, we will perform the impairment test in the end of the term. The Company reviews the life service time and method of amortization in the end of the year, and adjusts when needed. 3) Impairment of intangible assets If there is strong evidence show any sign of possible assets impairment, we perform impairment test on balance sheet date and estimate the recoverable amount. If recoverable amount is less than book value, the carrying value of intangible assets will be reduced to recoverable amount .The reduced amount will be calculated in the current profits and losses, meanwhile, accrual the provision for impairment of corresponding intangible assets. For intangible assets of uncertain service life, we will perform the impairment test every year whether it shows any sign of assets impairment.
16. Long-term expenses to be amortized Long-term expenses to be amortized refers to the vary expenses that have been occurred but should be beared in this period and subsequent period with over one year. Long-term expenses to be amortized will average amortized within the benefit period.
17. Projected liability Recognized projected liability while amount of obligation should measured liable, formed by pending action, guarantee for product’s quality, deficit contract and dispose obligation of assets of oil & gas, its economy benefit probably out-flow. Initially measured projected liability in accordance with the favorable estimated amount that expenses for relevant reality obligations. Meanwhile, take consideration of the risks of contingency, uncertainty and time value of the currency. For those major influences of time value of currency, confirmed the favorable estimate amount by converted relevant cash out-flows.
21 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 18. Revenue (1) revenue should recognized for qualified the followed conditions at one time for revenue of goods selling Main risk and rewards of the ownership of the goods have been transfer to purchaser; neither sustainable management rights retained that related with the ownership nor effective control on good that sales out; relevant economy benefits probably flow into the Company; relevant revenue and cost should be measure reliable. (2) recognized the revenue of labor provided externally On balance sheet date, if the performance of labor provided transaction can estimated reliable, then recognized revenue by method of percentage-of-completion. Completion progress confirmed by followed actual conditions: ① The measurement of the work completed; ② The proportion of the labor services provided against the total labor services to be provided; ③ The proportion of the costs incurred against the estimated total costs. The Company shall ascertain the total revenue from the providing of labor services in accordance with the received or to-be-received price of the party that receives the labor services as stipulated in the contract or agreement, unless the received or to-be-received price as stipulated in the contract or agreement is unfair. The Company shall, on the date of the balance sheet, ascertain the current revenue from providing labor services in accordance with the amount of multiplying the total amount of revenues from providing labor services by the schedule of completion then deducting the accumulative revenues from the providing of labor services that have been recognized in the previous accounting periods. (3) Use right of assets transfer Confirmed revenue amount of use right of assets transfer by followed conditions when the relevant economic benefits are likely to flow into the Company and the amount of revenues can be measured in reliable way: ① The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual interest rate; ② The amount of royalty revenue should be measured and confirmed in accordance with the period and method of charging as stipulated in the relevant contract or agreement.
19. Deferred income tax assets/ deferred income tax liabilities Calculation of the income tax should adopt the Liability Law of balance sheet. Taxation basis should recognized while acquired the assets and liability by the Company; On balance sheet date, based on balance sheet statement, if there shows difference between the book value of relevant assets /liabilities and taxation basis regulated by tax law, calculated deferred income tax assets or deferred income tax liability and reckoned its influences amount into current income tax expenses. Recognized deferred income tax assets arising from deductible temporary differences with limit of taxable income tax that deducted by deductible temporary differences, which was probably required by the Company. Except for those conditions without deferred income tax liability recognized regulated in income tax rules, all taxable temporary difference should be recognized as relevant deferred income tax liability by the Company.
20. Changes of Main Accounting Policies, Accounting Estimates No changes of main accounting policies and accounting estimation in this period.
22 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 III. Taxes 1. Taxes and tax rates Tax category Tax calculation evidence Tax rate % Taxable VAT; original value of the 17 VAT transferred fixed assets Half of 4%
Business tax Taxable business tax 5 City maintenance Taxable turn-over tax 5 construction tax Taxable amount; 15% of Enterprise income tax 25 the taxable income
2. Other explanation Enterprise income tax of Chengde Rongyida Real Estate Development Co., Ltd., subsidiary of the Company, was collected by appraisal with 15% of the taxable income for collection.
IV. Business Combination and Consolidated Financial Statements 1. Subsidiaries (1) Subsidiaries obtained by means of establishment or investment, etc. Actual Regi Busine Registere Business investment Full name Type stration ss nature d capital scope amount at place period-end Chengd Manufacture and Controlli Chengde Xingye e City, Productio selling high-class ng US$ 250 US$ 75 Papermaking Hebei n of paper coated board and subsidiar million million Co., Ltd. Provinc industry serials of Kraft y e paperboard Wholly-o Gold Axe British Investment and wned Investment Virgin Export US$ 1 liaison of export US$ 1 subsidiar Group Limited Islands business y Chengd Hebei Wholly-o e City, Manufact Manufacture and Xiabancheng wned US$ 4 Hebei ure of export of various US$ 4 million Knitwear Co., subsidiar million Provinc clothing knitwear Ltd. y e Chengd Wholly-o Manufacture and e City, Manufact Chengde Dixian wned US$ 24 selling high-class US$ 24 Hebei ure of Fashion Co., Ltd. subsidiar million chemical fabric million Provinc clothing y fashion and cloth e Recycle Chengd Controlli processing and Chengde Huaxin e City, Recycle ng RMB one selling of various RMB 0.9 Waste Paper Hebei of discard subsidiar million wasted paper and million Recycle Co., ltd. Provinc paper y paper-made e products Continue
23 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Balance of Amount for Prop Cons other items Prop offsetting the gain ortion of olidated Minor actually ortion of and loss of minor Full name voting report shareholders’ forming the net shares shareholders in the power statemen equity investment in held (%) minor shareholders’ (%) t or not the subsidiaries equity Chengde Xingye Papermaking 75.00 75.00 Yes 2,549,609.40 Co., Ltd. Gold Axe Investment 100.00 100.00 Yes Group Limited Hebei Xiabancheng 100.00 Not Knitwear Co., Ltd. Chengde Dixian 100.00 Not Fashion Co., Ltd. Chengde Huaxin Waste Paper 90.00 90.00 Yes 6.74 Recycle Co., ltd. Explanation on subsidiaries: ①Hebei Xiabancheng Knitwear Co., Ltd. went bankrupt according to the Cheng Min Po Zi (2008)No.12-1 court ruling issued by Chengde intermediate people's court in Hebei province dated 2nd August 2009; ②Chengde Dixian Fashion Co., Ltd. went bankrupt according to the Cheng Min Po Zi (2008) No. 11-1court ruling issued by Chengde intermediate people's court in Hebei province dated 8 th February 2009; ③Chengde Xingye Papermaking Co., Ltd., a joint venture that invested by the Company and Zhanxi International (Hong Kong) Holding Co., Ltd. (“Hong Kong Zhanxi”). The registered capital is US$ 250 million, and the paid-in capital is US$ 100 million by the end of the report period. 40% of the paid-in capital came from shareholders’ contribution, in which US$ 75 million (75% of the equity) from the Company and US$ 25 million (25% of the equity) from Hong Kong Zhanxi. According to the article of “Approval about the capital increase of Chengde Dexing Paper Industrial Co., Ltd” WaiJingZi Er Han [2001] No.969 issued by the People's Republic of China on foreign trade and economic cooperation on 28 th Oct. 2002, it stipulated that the registered capital raised from US$ 0.1 billion to US$ 0.25 billion and the new registered capital should be paid within 3 years since the change of the business license which agreed in the agreement & the company articles. Chengde Xingye Papermaking Co., Ltd. failed to pay the above registered capital within the stipulated time. Affected by the smuggling case of the major shareholder WANG SHU XIAN and senior executives, Chengde Xingye Paper Industrial Co., Ltd had been stopped operating since Dec. 2006, so that the company suffered very hard operational losses. The Chengde intermediate people's court in Hebei province acknowledged the receipt of the bankruptcy request from the said company on 11th Mar 2009 via the court ruling of（2008 ）Cheng Min Po Zi No.13 and the mediation request was approved by the Court via （2008 ）Min Po Zi No. 13-2 on 11th Mar. 2009. On 10th May 2009, the Chengde intermediate people's court in Hebei province ended the mediation program by acknowledging the agreement between the creditors and Chende paper manufacturing co, Ltd which was signed on 8th May 2009 via （2008 ）Min Po Zi No. 13-3. According to the ruling of Hebei senior People's Court (2009) Ji Xing Er Zhong Zi 44 of 23 April 2009, Chengde Xingye Papermaking Co., Ltd was adjudicated a deceptive foreign- invested enterprise which was established by the original shareholder of the Company Wangsuxian in the name of Century Win International Holding Co., Ltd.
24 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 ④Chengde Industrial and Commercial Bureau withdrawn the license of Chengde Huaxin waste paper collection Co., Ltd on 28 April 2009 according to the ChengGongShang (2009) No.73 Document, which due to not submitting the annual inspection material of 2007. Till end of 30 June 2011, liquidation procedures have not been completed. (2) Subsidiaries obtained by the consolidation of enterprises not under the same control Registe Type Regi Actual capital Full name of Nature red of stered Business scope invested at subsidiary of business capital(RM subsidiary place Period-end B’0000) Property Chengde Chengd development; Rongyida Wholly-o e City, Property production of Property wned Hebei Developm 1,000 textile and 1.00 Development subsidiar Provinc ent clothing, import & Co., Ltd. in y e export of clothing; Chengde County lease service Continue Other item Amount for Cons surplus Prop offsetting the gain Prop olidated Minor Full name of actually ortion of and loss of minor ortion of report shareholders’ subsidiary composing the sharehol shareholders in the vote (%) statemen equity net investment ding (%) minor shareholders’ t or not in subsidiaries equity Chengde Rongyida Property 100.00 100.00 Yes Development Co., Ltd. in Chengde County 2. Consolidation scope of the Company has no changes in this report period.
V. Notes to the consolidated financial statements (The Beginning balance is the balance on the date of 1 st Jan. 2011, the closing balance is the balance on the date of 30 Jun. 2011; the current period is from Jan. to Jun. of the year of 2011, the preceding period is from Jan. to Jun. the year of 2010)
1. Monetary funds Amount at the end of period Amount at the beginning of period Items Amount Amount in foreign Conversion Amount in foreign Conversion Amount currencies rate in RMB currencies rate in RMB Cash: 146,057.01 61,415.17 RMB 146,057.01 61,415.17 Bank 613,558.11 9,661,593.08 deposit RMB 575,144.36 9,622,371.45 USD 5,314.53 6.4716 34,393.51 5,314.53 6.6227 35,196.54 EUR 105.82 9.3612 990.60 105.82 8.8065 931.90 HKD 2,862.32 0.8316 2,380.31 2,862.32 0.85093 2,435.63 JPY 8,092.00 0.080243 649.33 8,092.00 0.08126 657.56 Total 759,615.12 9,723,008.25 25 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011
2. Other accounts receivable (1) Exposure of other accounts receivable by category: Amount at the end of period
Category Book balance Provision for bad debts Amount Proportion Amount Proportion (%) (%) OR with individual significant amount and individual accrual 44,196,901.26 50.45% 44,196,901.26 100.00% for bad debt provision OR with accrual for bad debt 43,404,761.87 49.55% 163,971.33 0.38% provision in combination OR with no individual significant amount but requires - - - - accrual for bad debt provision Total 87,601,663.13 - 44,360,872.59 -
Table continued Amount at the begin of period Book balance Provision for bad debts Category Amount Proportion Amount Proportion (%) (%) OR with individual significant amount and individual accrual 71,950,477.96 96.13 44,210,063.38 61.45 for bad debt provision OR with accrual for bad debt 2,895,696.15 3.87 150,809.21 5.21 provision in combination OR with no individual significant amount but requires - - - - accrual for bad debt provision Total 74,846,174.11 - 44,360,872.59 -
In the combination, OR with accrual for bad debt provision using aging analysis method: Closing balance Beginning balance Book balance Book balance Duration of the accounts Bad debt Rate in Bad debt Rate in Amount provision Amount total provision total (%) (%) Less than one 43,370,714.72 99.92 156,244.57 2,861,649.00 98.82 143,082.45 year 1-2 years 30,989.40 0.07 6,197.88 30,989.40 1.07 6,197.88 2-3 years 3,057.75 0.01 1,528.88 3,057.75 0.11 1,528.88 Over 3 years ------3-4 years ------4-5 years ------Over 5 years ------Total 43,404,761.87 100.00 163,971.33 2,895,696.15 100.00 150,809.21 (2) there are no other account receivable held in shareholders with 5 %( including5%) voting rights in the period. (3) Top 5 units with an amount of other account receivable:
Relationship Proportion Name Amount Period with the company among the total other accounts 26 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 receivable (%)
Affiliated 44,196,901.26 Over 3 years 50.45 1 company Within 1 2 Un-related party 27,490,334.30 31.38 year Within 1 3 Un-related party 12,600,000.00 14.38 year Within 1 4 Un-related party 2,859,600.00 3.26 year 5 Affiliated company 15,361.00 1-2 years 0.02
Total 87,162,196.56 99.50
(4) Account receivable of related parties Proportion among the Relationship Name total other accounts with the company Amount receivable (%) Chengde Dahua Paper Co., Ltd Affiliated company 44,196,901.26 50.45 Suning Banhe Chemical Fiber Affiliated 15,361.00 0.02 Facsimile Fabric company
Total -- 44,212,262.26 50.47
3. Prepaid accounts (1) Prepaid accounts listed on aging basis Closing balance Beginning balance Duration Amount Rate in total (%) Amount Rate in total (%)
Less than one year 965,364.00 4.59 - -
1-2 years - - - -
2-3 years - - - -
Over 3 years 20,084,632.25 95.41 20,084,632.25 100.00
Total 21,049,996.25 100.00 20,084,632.25 100.00
(2) Top five of prepayments Name of the Relationship with Reason of not Amount Duration company the Company clearing Accounts for purchasing land 1 non-affiliated party 20,084,632.25 Over 3 years (license had not been handled) 2 non-affiliated party 505,700.00 Within 1 year Prepaid project fees
3 non-affiliated party 356,364.00 Within 1 year Prepaid project fees
4 non-affiliated party 103,300.00 Within 1 year Prepaid project fees
Total 21,049,996.25
(3) There is no such amount belongs to shareholders who hold 5% or more than 5% voting rights.
27 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 4. Inventory
Amount at the end of period Amount at the beginning of period Items Book Depreciation Book Book Depreciation Book balance reserve value balance reserve value Development 9,390,562.26 - 9,390,562.26 6,774,088.56 - 6,774,088.56 cost Planning developed 10,967,992.85 - 10,967,992.85 10,967,992.85 - 10,967,992.85 products
Total 20,358,555.11 - 20,358,555.11 17,742,081.41 - 17,742,081.41
5. Other current assts Items Amount at period-end Amount at period-begin
Credit purchased 1,093,527.39 1,093,527.39
Total 1,093,527.39 1,093,527.39
Notes to other current assets: Other current asset is the auction right of credit purchased by Rongyida Co., Ltd. when Ronyida did not become the subsidiary the Company.
6. Investment to affiliated companies Tot al Proportio operatin Ne Proporti Total n of voting Total assts at Total net assts g t profit Invested company on of share liabilities at rights held period-end at period-end income at this holding (%) period-end (%) at period period-e nd Suning Banhe Chemical Fiber 20.00 20.00 ----- Facsimile Fabric Co., Ltd Chengde Dahua Paper Industry Co., 45.00 45.00 266,969,909.27 624,579.62 266,345,329.65 - - Ltd.
Note to the investment to the associates: The Company accrual provision for long-term investment to Suning Banhe Fiber Textile Co., Ltd. wholly in year 2006 for Suning Banhe Fiber Textile has stopped operation for several years due to the key involved in the crime. The Company did not obtain the 2011 financial statements of Suning Banhe Fiber Co., Ltd. Chengde Dahua Paper Industry Co., Ltd. (“Dahua Paper”) was invested by the Company and Japan paper industry Co., Ltd. (“Japan Paper”) with original registered capital of USD 500million. After equity transferring and capital increasing, Dahua Paper has registered capital of JPY 6,364.00million，including JPY 2,864.00million from Chengde Xingye paper producing Co., Ltd. and JPY 3,500.00million from Japan new century Co., Ltd. However, the above new capital is unverified and the procedure on changes of shareholder hasn’t been finished. Chengde Industrial and Commercial Bureau withdrew the license of Dahua Paper Industry Co., Ltd on 28 April 2009 according to the ChengGongShang (2009) No.75 Document, which due to not submitting the annual inspection material of 2007. 28 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011
7. Long-term equity investment Chang Calculat e of Balance at Balance at Invested company ion Investment cost increa period-begin period-end method se/dec rease
Suning Banhe Cost 46,980,000.00 46,980,000.00 46,980,000.00
Da Hua Paper Industry Equity 206,215,729.65 206,215,729.65 206,215,729.65 Hebei Province Xiaban Cost 441,303,759.82 441,303,759.82 441,303,759.82 City Fabric method Chengde Dixian Fashion Cost 200,051,551.11 200,051,551.11 200,051,551.11 Company method Total 894,551,040.58 894,551,040.58
Table continued Cas explanation of Accru h Proporti Proportion non-coincidence al bon on of of voting between the proportion Provision of provisi us Invested company share right held of share held and depreciation on n in in held (%) (%) proportion of voting this this held period peri od Suning Banhe Fiber 20.00 20.00 46,980,000.00 Chengde Dahua Paper 45.00 45.00 204,000,000.00 Industry Co., Ltd. Hebei Province Xiaban Bankrupt but within 100.00 441,303,759.82 City Fabric liquidation Chengde Dixian Bankrupt but within 75.00 200,051,551.11 Fashion Company liquidation Total 892,335,310.93
8. Fixed assts Particular about fixed assts Book Book balance at Accruing Decrease balance at Items period-begin in this period in this period period-end I. Total original book value: 122,328,400.59 - - 122,328,400.59 Including: House and buildings 111,296,195.05 - - 111,296,195.05 Machinery equipment - - - Transportation instrument 10,823,271.25 - - 10,823,271.25 Office equipment 208,934.29 - - 208,934.29 II. Total accumulated 24,313,508.09 1,366,083.37 - 25,679,591.46 depreciation: Including: House and buildings 15,623,357.96 1,352,172.31 - 16,975,530.27 Machinery equipment - - - - Transportation instrument 8,627,001.72 10,270.58 - 8,637,272.30 Office equipment 63,148.41 3,640.48 - 66,788.89 III. Total net book value of 98,014,892.50 - 96,648,809.13 fixed assets -
29 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Including: House and buildings 95,672,837.09 - - 94,320,664.78 Machinery equipment - - - - Transportation instrument 2,196,269.53 - - 2,185,998.95 Office equipment 145,785.88 - - 142,145.40 IV. Total of depreciation 35,361,563.01 - - 35,361,563.01 provision Including: House and buildings 33,129,463.59 - - 33,129,463.59 Machinery equipment - - - - Transpor tation instrument 2,117,353.38 - - 2,117,353.38 Office equipment 114,746.04 - - 114,746.04 V. Total book value of fixed 62,653,329.49 - 61,287,246.12 assts - Including: House and buildings 62,543,373.50 - - 61,191,201.19 Machinery equipment - - - - Transportation instrument 78,916.15 - - 68,645.57 Office equipment 31,039.84 - - 27,399.36 The depreciation accrued is RMB 1,366,083.37 for the current period
9. Projects under construction (1) Particular about projects under construction Amount at period-end Amount at period-begin Items Depreciation Net value of Depreciation Net value of Book balance Book balance provision book provision book Paper-making 242,855,959.62 238,027,341.62 4,828,618.00 242,855,959.62 238,027,341.62 4,828,618.00 projects Thermal power 16,752,062.42 14,858,862.42 1,893,200.00 16,752,062.42 14,858,862.42 1,893,200.00 plant Total 259,608,022.04 252,886,204.04 6,721,818 .00 259,608,022.04 252,886,204.04 6,721,818 .00
(2) Change on items of projects in construction No change on projects in construction occurred in this year. (3) Provision of project under construction Increased in Decreased in Amount at period-end Items Amount at period-end this period this period Paper-making projects 238,027,341.62 - - 238,027,341.62 Thermal power 14,858,862.42 - - 14,858,862.42 stations
Total 252,886,204.04 - - 252,886,204.04
10. Intangible assts Book balance at Increased Decreased Book balance Items period-begin in this period in this period at period-end
I. Total original book value 31,075,075.63 - - 31,075,075.63
Land-use right 31,075,075.63 - - 31,075,075.63
II.total accumulated amortized 6,251,294.90 310,750.74 - 6,562,045.64
30 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Book balance at Increased Decreased Book balance Items period-begin in this period in this period at period-end
Land-use right 6,251,294.90 310,750.74 - 6,562,045.64 III. Total net book value of intangible 24,823,780.73 - 310,750.74 24,513,029.99 assts
Land-use right 24,823,780.73 - 310,750.74 24,513,029.99
IV. Total depreciation provision - - - -
Land-use right - - - - V. Total book value of intangible 24,823,780.73 - - 24,513,029.99 assts
Land-use right 24,823,780.73 - - 24,513,029.99
The amortization for the current period is RMB 310,750.74.
11. Details of depreciation provision of assets Book Decrease this period Increase Book balance at Items balance at this period period-end period-begin Switch-back Charge-off I. Bad debit 44,360,872.59 - - - 44,360,872.59 provision II. Impairment provision for 892,335,310.93 - - - 892,335,310.93 long-term equity investment III. Impairment provision 35,361,563.01 - - - 35,361,563.01 for fixed assets IV. Impairment provision 252,886,204.04 - - - 252,886,204.04 for construction in progress
Total 1,224,943,950.57 - - - 1,224,943,950.57
12. Other non-current assets Items Amount at period-end Amount at period-begin
House and buildings 779,288.19 779,288.19
Land-use right 23,653,650 .76 23,653,650.76
Total 24,432,938.95 24,432,938.95
13. Short-term loans (1) Classification of short-term loans Items Amount at period-end Amount at period-begin
31 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Credit loans 422,261.91 422,261.91
Total 422,261.91 422,261.91
(2) Notes to short-term loans: The Company borrowed several loan from Chengde County Treasure Bureau which was exceeded the time limit for many years. The original principal is the amount of 21,113,095.50, the loan now need to be refunded is the amount of 422,261.91 according to the confirmed ratio of proportion of liquidity of 2%
14. Accounts payable (1) Particular about accounts payable Item Amount at period-end Amount at period-begin
Within 1 year
Over 1 year 231,075.82 231,075.82 Total 231,075.82 231,075.82 (2) There is no such amount in period-end belongs to shareholders or related parties who hold 5% or more than 5% voting rights.
15. Employee salaries payable Amount in Amount in Items Increases Decreases period-begin period-end I. Wages, bonuses, allowances and 298,000.00 - 40,200.00 257,800.00 subsidies II. Social insurances 6,097,486.60 - - 6,097,486.60
Total 6,395,486.60 - 40,200.00 6,355,286.60
16. Taxes payable Items Amount in period-end Amount in period-begin
Value added tax -108,454.22 -52,298.55
Business tax 2,593,200.25 4,133,293.90
Enterprise income tax 55,498,566.41 56,842,147.94
Urban maintenance and construction tax - 225,914.67
Housing property tax 2,373,740.13 1,913,935.91
Land-use tax 10,929,481.11 8,753,776.49
Others 12,175.91 253,801.47 Total 71,298,709.59 72,070,571.83
17. Other payables (1) Particular about other payables Amount in Item Amount in period-end period-begin
32 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Within 1 year 42,917,668.29 30,019,732.85
Over 1 year 96,496,921.56 98,496,921.56
Total 139,414,589.85 128,516,654.41
(2) Principle amount of other receivables with age over one year Name of the company Closing balance Reason for not being paid
Trustee in Bankruptcy of Fashion Company 26,410,000.00 Not due
Trustee in Bankruptcy of Banhe Fiber 19,750,000.00 Not due
Li Yan 14,090,000.00 Loan not due
Shanghai mineral energy electric 12,000,000.00 Loan not due
Trustee in Bankruptcy of Xiaban City Fiber 8,760,000.00 Not due
Zhang Xiao Ming 6,500,000.00 Loan not due
Chen Li Ping 5,000,000.00 Loan not due
Tan Liang 1,000,000.00 Loan not due
(3) Other account payable with major amounts Name of company Closing balance Nature or Content
Chengde county Bureau social insurance 17,897,697.28 Incomings and outgoings
Qian Zhenlin 13,000,000.00 Incomings and outgoings
Chengde county treasury payment center 6,000,000.00 Incomings and outgoings
18. Long term loan Item Closing balance Beginning balance
Credit loan 6,398,000.00 6,398,000.00
Total 6,398,000.00 6,398,000.00
19. Special account payable Amount in Increase Decrease Amount Item Notes period-begin this period this period in period-end Project of paper producing , water saving and resource 7,500,000.00 - - 7,500,000.00 JCJ[2005] No. 280 utilization comprehensively Resource utilization comprehensively demonstration project 3,000,000.00 - - 3,000,000.00 CCJ[2004] No. 134 of waste paper recycling industry chain Financial Bureau of 98,000.03 - - 98,000.03 Chengde County
Total 10,598,000.03 - - 10,598,000.03
33 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 20. Share capital Change of increase/decrease(+,-) Amount at Shares Amount at Newly period-begin Bonus from period-end issued Other Subtotal shares public shares reserve Total 706,320,000.00 - - - - - 706,320,000.00 shares
21. Capital reserve Amount at Increase this Decrease this Amount at Item period-begin period period period-end Share premium 391,996,587.96 - - 391,996,587.96
Other capital surplus 58,768,855.14 - - 58,768,855.14
Total 450,765,443.10 - - 450,765,443.10
22. Surplus reserve Amount at Increase this Decrease this Amount at Item period-begin period period period-end 76,791,550.17 - - 76,791,550.17 Mandatory surplus reserve fund 76,791,550.17 - - 76,791,550.17 Total
23. Retained profit Proportion of withdrawal or Item Amount distribution Retained profit at year-begin -1,261,402,234.30
Add: net profit attributable to owners of parent company -4,069,051.79
Less: withdrawal of legal surplus capital reserve -
withdrawal of any surplus capital reserve - Retained profit at period-end -1,265,471,286.09
24. Operating Revenue (1) Operating revenue Item Current period Preceding period
Main business income - -
Other business income 21,250.00 -
operating cost - -
Total 21,250.00 -
25. Business tax and surcharges Item Current period Preceding period Project payment standard
Business tax 8,261.25 - 5% of the taxable turnover
Urban maintenance and construction 1,016.95 - 5% of the business tax 34 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 tax
Education surtax 610.18 - 3% of the business tax
Local Education surtax 406.78 - 2% of the business tax
Total 10,295.16 -
26. Administrative expenses Item Current period Last period
Staff wages and salaries 251,850.00 172,800.00
Tax 2,697,487.30 2,697,174.00
Depreciation expense 1,676,593.78 1,012,267.18
Service fee for agent 4,000.00 520,000.00
Amortization of intangible assets 310,750.74 310,750.74
Business entertainment 24,165.47 -
Others 295,271.13 53,252.56
Total 5,260,118.42 4,766,244.48
27. Financial expense Category Current period Last period
Interest expense 5,716.37 0.00
Less: interest income 1,706.01 9.37
Others 838.63 1,120.00
Total 4,848.99 1,110.63
28. Non-operating income and expenses (1) Non-operating income Item Current period Last period Gains and losses from disposal of non-current assets 970,161.00 - Others 50,850.00 -4,448.77 Total 1,021,011.00 -4,448.77
(2) Non-operating expenses Item Current period Last period losses on disposal of non-current assets - -
Others 152,271.51 47,949.00
Total 152,271.51 47,949.00
29. Income tax Item Current period Preceding period
Tax calculated for the current period 3,500.64 -
35 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Deferred taxes - -
Total 3,500.64 -
30. Calculation about basic earnings per share and diluted earnings per shares (1) Basic earnings per share =P0÷S
S= S 0＋S1＋Si×M i÷M 0– S j×M j÷M 0-Sk
Among which: P 0: Net profit attributable to common shareholder of the Company or net profit attributable to common shareholder of the Company after deducting non-recurring gains/losses; S: Weighted average number of common shares that issued; S 0: total shares of period-begin; S 1: Amount of shares increase from public reserve or dividend distribution; Si: Amount of shares increase from newly issued shares or liabilities etc.; S j: Amount of shares decrease from repurchase in period; Sk: Amount of decrease shares in period; M0: Amount of month in period; Mi: Number of months from the next month to the end of the reporting period for increase of shares; Mj: Number of months from the next month to the end of the reporting period for decrease of shares. (2) Diluted earnings per share =P1/(S0 ＋S1 ＋Si×Mi÷M0–Sj×Mj÷M0–Sk+The weighted average amount of ordinary shares increased due to warrant, share option, convertible bonds) Among which: P1: Net profit attributable to common shareholder of the Company or net profit attributable to common shareholder of the Company after deducting non-recurring gains/losses. Take the influence of diluted potential shares into consideration and adjusted by relevant regulation of “Accounting Rules for Enterprise”; Concerning the calculation of diluted EPS, effects from all diluted potential shares on net profit attributable to common shareholder of the Company/ net profit attributable to common shareholder of the Company after deducting non-recurring gains/losses and weighted average numbers should take into consideration. Reckoned the diluted EPS in order by dilute level until the diluted EPS reached its minimum number. (3) Calculating method code Item Current period Last period Net profit attributable to common shareholders of the P0 -4,069,051.79 -4,314,900.49 Company Net profit attributable to common shareholders of the P0 Company after deduction of the non-recurring losses -4,937,791.28 -4,262,502.72 and gains S0 Total shares at period-begin 706,320,000.00 706,320,000.00 Amount of shares increase from public reserve or S1 - - dividend distribution Amount of shares increase from newly issued shares Si - or liabilities etc. Number of months from the next month to the end of Mi - - the reporting period for increase of shares Sj Amount of shares decrease from repurchase in period - - Number of months from the next month to the end of Mj - - the reporting period for decrease of shares Sk Amount of decrease shares in period - -
M0 Amount of month in period 6 6 The weighted average amount of ordinary shares S 706,320,000.00 706,320,000.00 outstanding Basic earnings per share - 0.006 - 0.006 Basic earnings per share after deduction of the - 0.007 - 0.006 non-recurring losses and gains Net profit attributable to common shareholders after P1 considering the influence of diluted potential common - - stock The weighted average amount of influence of diluted S1 - - potential common stock
36 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Diluted earnings per share - 0.006 - 0.006 Diluted earnings per share after deduction of the - 0.007 - 0.006 non-recurring losses and gains
31. Notes to items of cash flows statement (1) Other cash received from operating activities Items Amount
Received contact accounts 1,296,858.24
Income from lease and scraps 988,548.00
Interest income 7,545.00
total 2,292,951.24
(2) Other cash paid to operating-related activities Items Amount
Payment for contact accounts 17,118,775.33
Expenses 323,436.60 Total 17,442,211.93
32. Supplemental Information for Cash Flow Statement (1) Supplemental Information for Cash Flow Statement: Supplemental information Current period Last period 1. Adjustments to reconcile net income to net cash provided by
operating activities:
Net profit -4,388,773.72 -4,819,752.88
Add: Impairment provision for assets - - Depreciation of fixed assets, consumption & depreciation of fuel and 1,366,083.37 1,012,267.18 gas, depreciation of production materials
Amortization for intangible assets 310,750.74 310,750.74
Amortization for long-term prepayment - - Loss on disposal of fixed assets, intangible assets and others long-term - 967,298.00 - assets(Income is listed with “-“)
Loss upon rejection of fixed assets(Income is listed with “-“) - -
Loss on variance of fair value (Income is listed with “-“) - -
Finance cost (Income is listed with “-“) - -
Loss in investment(Income is listed with “-“) - -
Decrease of deferred tax assets(Increase is listed with “-“) - -
Liability increase of deferred tax(Decrease is listed with “-“) - -
Decrease of inventories(Increase is listed with “-“) - 2,616,473.70 - Decrease of operating receivable account items(Increase is listed with - 13,720,853.02 29,788.86 “-“)
37 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Supplemental information Current period Last period Increase of operating payable account items (Decrease is listed with - 630,510.36 3,471,555.47 “-“)
Others - -
Net cash flow from operating activities - 20,647,074.69 4,609.37
2. Significant investing and financing activities for non cash items:
Liabilities capitalized - -
Convertible bonds payable mature in one year - -
Financing leased fixed assets - -
3. Net increase (decrease) for cash and cash equivalents:
Ending balance for cash 759,615.12 62,865.48
Less: beginning balance for cash 9,723,008.25 58,256.11
Add: ending balance for cash equivalents - -
Less: beginning balance for cash equivalents - -
Net increase in cash and cash equivalents - 8,963,393.13 4,609.37
(2) Constitution of cash and cash equivalent Item Current period Last period
I. Cash 759,615.12 9,723,008.25
Including: Inventory cash 146,057.01 61,415.17
Bank deposit payable at any time 613,558.11 9,661,593.08
Other monetary fund payable at any time - -
II. cash equivalent - -
Including: Bond investment due within 3 months - -
III. Balance of cash and cash equivalent at period-end 759,615.12 9,723,008.25
VI. Related parties and related transaction 1. Parent company of the Company The Company has no directly controlling parent company. The related parties with controlling relationship of the Company refer to Mr. Chen Rong who held 29.49% equity of the Company.
2. Subsidiaries of the Company Nature of Type of Register Legal Business Name the subsidiaries place representative nature subsidiaries Chengde Rongyida Real Wholly Limited Chengde city Real Estate Rong Chen Estate owned liability Hebei province development development Chengde Chengde Xingye Limited Paper Holding country Hebei Shuxian Wang liability Paper Industry province producing
38 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Nature of Type of Register Legal Business Name the subsidiaries place representative nature subsidiaries Gold Axe Wholly Limited British Virgin Investment Group Export liability Island Limited owned Chengde Hebei Xiaban City Wholly Limited Clothing country Hebei Shuxian Textile liability producing owned province Chengde Chengde Dixian Wholly Limited Clothes country Hebei Shuxian fashion liability producing owned province Chengde Huaxin Chengde Limited Waste paper waste paper Holding country Hebei Sulian Xu liability collection province recycling
Table continued Proportion Register Proportion Organization Name of voting right capital of share held (%) code held (%) Chengde Rongyida RMB Real Estate 68434235-0 10,000,000.00 development Chengde Xingye US$250,000,000.00 75.00 75.00 60125211-5 Paper Industry Gold Axe Investment Group US$ 1 100.00 100.00 Limited Hebei Xiaban City US$ 4,000,000.00 100.00 60126026-2 Textile Chengde Dixian US$ 24,000,000.00 100.00 60126040-6 fashion Chengde Huaxin RMB 1,000,000.00 90.00 90.00 74544580-5 waste paper collection
3. Particular about joint venture and affiliated company Proport Legal ion of Type of Register Company Register Proportion of Invested company representati share companies place nature capital voting held (%) ves held (%) Suning Banhe Limited Suning Wang Clothes US$ Simulation Textile C., Liability 20.00 20.00 Hebei Zhengsong manufacture 29,000,000.00 Ltd. Company Limited Chengde Dahua paper Paper JPY6,364,000, Liability Chengde Shi Bainian 45.00 45.00 Industry Co., ltd. manufacture 000.00 Company
Table Continued Total Relate Total Net Total asset at Total net asst at operating d Organizatio Company invested liabilities at profit this period-end period-end income this relatio n code period-end period peiod nship Affilia Suning Banhe Fiber ted Co., Ltd. Comp any Chengde Dahua 266,969,909.27 624,579.62 266,345,329.65 Affilia 76033882-1 Paper Co., Ltd. ted 39 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Comp any
4. Account of receivable and payable fro related parties (1) Receivables from related parties Amount at Amount at Item Related party period-end period-begin Other account Chengde Dahua Paper Co., Ltd. 44,196,901.26 44,196,901.26 receivable Other account Suning Banhe Fiber Co., Ltd. 15,361.00 15,361.00 receivable Total 44,212,262.26 44,212,262.26
(2) Payables of listed companies from related parties Item Related parties Closing balance Opening balance Other payables Rong Chen - 481,980.00
VII. Contingency As of December 31, 2011 ，the company has no other major contingency which need to be disclosed.
VIII. Commitments Chengde Xingye Papermaking Co., Ltd. has the registered capital of USD 250,000,000.00, within which USD 187500000.00 (75%) committed by the Company. According to the article of “Approval about the capital increase of Chengde Dexing Paper Industrial Co., Ltd” with WaiJingZi Er Han [2001] No.969 issued by the ministry of foreign trade and economic cooperation of the People's Republic of China on 28th Oct 2002, the Company should pay the increased capital within 3 years since the change of the business license which agreed in the agreement & the company articles. As of the date of the report , the paid-in capital is the amount of RMB 622,500,000.00 （US$75,000,000.00 ），which accounts for 40% of the registered capital 。 Except the matter stated above ，there is no other major commitment need to be disclosed.
IX. Item after date of balance sheet There exist no items after date of balance sheet for disclosure.
X. Other significant event s Since the bankrupt reorganization in April 2009, except for the subsidiary Chengde Rongyida Real Estate Development Co., Ltd, other company which undertakes the business of textile and fashion has not yet started the business. Currently the focus of the company is real estate development and the first project for Chengde Rongyida Real Estate Development Co., Ltd is real estate development for Neighborhood of DaLuQianYuan. The acreage which was used for this project was 30.7443 units. Till Jun. 30 of 2011, the construction had been started.
XI. Notes to Parent Company’s financial statement 1. Other account receivable (1) Other account receivable classified according to categories: category Amount at period-end
Book balance Bad debt provision
40 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Proportion Proportion Amount Amount %) %) OR with individual significant amount and individual accrual for - - - - bad debt provision OR with accrual for bad debt 324,947.57 100.00 20,991.33 0.065 provision in combination OR with no individual significant amount but requires - - - - accrual for bad debt provision Total 324,947.57 100.00 20,991.33 0.065
Table Continued Amount at period-begin Book balance Bad debt provision category Proportion Proportion Amount Amount %) %) OR with individual significant amount and individual accrual for - - - - bad debt provision
OR with accrual for bad debt 299,338.55 100.00 20,991.33 7.01 provision in combination OR with no individual significant amount but requires - - - - accrual for bad debt provision Total 299,338.55 100.00 20,991.33 7.01
In the combination, OR with accrual for bad debt provision using aging analysis method: Closing balance Opening balance Book balance Book balance Duration of the accounts Amount Bad debt Amount Rate in Bad debt Rate in provision total provision total (%) (%) Less than one year 290,900.42 89.52 13,264.57 265,291.40 88.63 13,264.57 1-2 years 30,989.40 9.54 6,197.88 30,989.40 10.35 6,197.88 2-3 years 3,057.75 0.94 1,528.88 3,057.75 1.02 1,528.88 Over 3 years ------3-4 years ------4-5 years ------Over 5 years ------Total 324,947.57 100 20,991.33 299,338.55 100 20,991.33 (2) There are no other account receivables held in the shareholders with 5 %( Including 5%) voting rights held in the report period.
2. Long-term equity investment Calculat Chan Initial investment Balance at Invested ion ge Balance at period-end cost period-begin method (=,-) Chengde Rongyida real estate Cost 53,114,299.73 53,114,299.73 53,114,299.73 development Co., method Ltd
41 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Calculat Chan Initial investment Balance at Invested ion ge Balance at period-end cost period-begin method (=,-) Chengde Xingye Cost 622,500,000.00 622,500,000.00 622,500,000.00 paper Co., Ltd method Gold Axe Cost Investment Group 8,300,000.00 8,300,000.00 8,300,000.00 method Limited Hebei Province Cost Xiaban City Fabric 431,604,203.41 431,604,203.41 431,604,203.41 method Co., Ltd. Chengde Dixian Cost 149,408,230.11 149,408,230.11 149,408,230.11 fashion Co., Ltd method Suning Banhe Fiber Equity 46,980,000.00 46,980,000.00 46,980,000.00 Co., Ltd. method Total 1,311,906,733.25 1,311,906,733.25
Table Continued explanation on un-coincidence Ca Accru Proportio Proportion between sh al Invested n of share of voting proportion of Provision div provisi held (%) held (%) share held and ide on proportion of nd voting held Chengde Rongyida real estate development Co., 100.00 100.00 Ltd Chengde Xingye paper 75.00 75.00 616,688,419.47 Co., Ltd Gold Axe Investment 100.00 100.00 8,300,000.00 Group Limited Hebei Province Xiaban 100.00 Bankrupt 431,604,203.41 City Fabric Co., Ltd. Chengde Dixian fashion 75.00 Bankrupt 149,408,230.11 Co., Ltd Suning Banhe Fiber 20.00 20.00 46,980,000.00 Co., Ltd. Total 1,252,980,852.99
3. Supplementary information of cash flow statement Supplemental information Current period Last period 1. Adjustments to reconcile net income to net cash provided by
operating activities:
Net profit -173,544.43 -730,482.33
Add: Impairment provision for assets - - Depreciation of fixed assets, consumption & depreciation of fuel and gas, - - depreciation of production materials
Amortization for intangible assets - -
Amortization for long-term prepayment - - Loss on disposal of fixed assets, intangible assets and others long-term - - assets(Income is listed with “-“)
Loss upon rejection of fixed assets(Income is listed with “-“) - - 42 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011 Supplemental information Current period Last period
Loss on variance of fair value (Income is listed with “-“) - -
Finance cost (Income is listed with “-“) - -
Loss in investment(Income is listed with “-“) - -
Decrease of deferred tax assets(Increase is listed with “-“) - -
Liability increase of deferred tax(Decrease is listed with “-“) - -
Decrease of inventories(Increase is listed with “-“) - -
Decrease of operating receivable account items(Increase is listed with “-“) -25,609.02 29,788.86
Increase of operating payable account items (Decrease is listed with “-“) 195,340.65 705,293.47
Others - -
Net cash flow from operating activities -3,812.80 4,600.00
2. Significant investing and financing activities for non cash items:
Liabilities capitalized - -
Convertible bonds payable mature in one year - -
Financing leased fixed assets - -
3. Net increase (decrease) for cash and cash equivalents:
Ending balance for cash 33,384.90 21,500.44
Less: beginning balance for cash 37,197.70 16,900.44
Add: ending balance for cash equivalents - -
Less: beginning balance for cash equivalents - -
Net increase in cash and cash equivalents -3,812.80 4,600.00
XII. Supplementary information 1. Details of current non-recurring gains and losses Items Amount
Disposal gains and losses of non-current assets 970,161.00 Other non-operating income and expense excluding the -101,421.51 abovementioned items Total 868,739.49
2. Return on equity and earnings per share
Weighted earnings per share average of Profit in report period Basic Return on equity Diluted earnings per （%） earnings per share share Net profit attributable to common - -0.006 -0.006 shareholders of the Company Net profit attributable to common shareholders of the Company after deducting - -0.007 -0.007 non-recurring gains and losses
43 Chengde Dalu Company Limited Financial Report of Semi-Annual 2011
3. The explanation of abnormal circumstance and reasons of items in major accounting report (1) Monetary capital: the one of Jun. of 2011 decreased by RMB - 8,963,393.13 over period-begin with 92.19 percents, mainly due to subsidiary Chengde County Rongyida Real Estate Development Co., Ltd paid projects fees for development items. (2) Prepaid accounts: the one of Jun. of 2011 increased by RMB 965,364.00 over period-begin with 4.81 percents, mainly due to subsidiary Chengde County Rongyida Real Estate Development Co., Ltd paid part of projects fees for development items. (3) Other receivables: the one of Jun. of 2011 increased by RMB 12,755,489.02 over period-begin, mainly due to subsidiary Chengde County Rongyida Real Estate Development Co., Ltd paid deposit for development items. (4) Inventory: the one of Jun. of 2011 increased by RMB 2,616,473.70 over period-begin with 14.75 percents, mainly due to subsidiary Chengde County Rongyida Real Estate Development Co., Ltd paid projects fees for development items. (5) Other payables: the one of Jun. of 2011 increased by RMB 10,897,935.44 with 8.48 percents, mainly due to the Company newly increased part of loan.
XIII .Approval for issuance of financial statements These financial statements have been approved by all directors (the board of directors) of the Company to be issued on August 28, 2011.
Section VIII. Documents available for reference I. Text of Semi-annual Report 2011 carrying the genuine signatures of legal representative;
II. Text of financial report carrying the autograph and seals of legal representative, principal in charge of the accounting affairs and principal in charge of the accounting institute;
III. Original texts of all documents and announcement disclosed publicly in the Securities Times and Hong Kong Commercial Daily in the report period;
IV. Article of Association
The abovementioned documents will provide under the requirement from China Securities Regulatory Commission and Stock Exchange if necessary.
Board of Directors of Chengde Dalu Company Limited 28 August 2011
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