HUBEI SANONDA CO., LTD. INTERIM REPORT 2010
Stock Code: 000553 (200553) Short Form of Stock: Sanonda A (B)
August 2010
Important Notes 1. The Board of Directors, the Supervisory Committee as well as directors, supervisors and senior management of Hubei Sanonda Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there was no false information or misleading statement or significant omission in this report, and will accept, individually and collectively, the responsibilities for the authenticity, accuracy and completeness of the contents of this report. 2. All directors attended the Board meeting. 3. Mr. Li Zuorong, person in charge of the Company, Mr. He Xuesong, person in charge of accounting work and accounting organization, hereby confirm that the Financial Report of Interim Report 2010 is true and complete. 4. The financial report for the first half of 2010 has not been audited.
Contents I. Company Profile------1 II. Changes in Shares and Particulars about Share Capital------3 III. Particulars about Directors, Supervisors and Senior Executives------5 IV. Report of the Board of Directors------6 V. Significant Events------8 VI. Financial Report (Un-audited) ------15 VII. Documents Available for Reference------72
I. Company Profile (I) Basic information 1. Legal name of the Company In Chinese: 湖北沙隆达股份有限公司 Abbr. in Chinese: 沙隆达 In English: HUBEI SANONDA CO., LTD. Abbr. in English: SANONDA 2. Stock Exchange Listed With: Shenzhen Stock Exchange Short Form of the Stock: Sanonda A, Sanonda B Stock Code: 000553, 200553 3. Registered Address: No. 93, Beijing East Road, Jingzhou, Hubei Office Address: No. 93, Beijing East Road, Jingzhou, Hubei Post Code: 434001 Website of the Company: http://www.sanonda.cn E-mail of the Company: sld@chemchina.com.cn 4. Legal Representative: Li Zuorong 5. Secretary of the Board of Directors: Li Zhongxi Contact Tel: 0716-8208632 Fax: 0716-8208899 E-mail: [email protected] Contact Address: No. 93, Beijing East Road, Jingzhou, Hubei Securities Affairs Representative: Liang Jiqin Tel: 0716-8208232 Fax: 0716-8208899 E-mail: [email protected] Contact Address: No. 93, Beijing East Road, Jingzhou, Hubei 6. Newspaper for Disclosing the Information Chosen by the Company: China Securities Journal, Securities Times and Ta Kung Pao Internet Web Site Designated by CSRC for Publishing the Interim Report of Company: http://www.cninfo.com.cn The Place Where the Interim Report is Prepared and Placed: Office of the Company 7. Other Relevant Information of the Company Initial registration date: Nov. 30, 1993 Initial registration organization: Hubei Province Administration Bureau for Industry and Commerce Registration date changed recently: 27 Oct. 2009 Registration code of corporate business license: 420000400004491 Organizational code: 70696228-7 Registration code of taxation: 421001706962287 Certified Public Accountants engaged by the Company: Name: Vocation International Certified Public Accountants Co., Ltd. Office Address: Room 208, Building B of Huatong Mansion, No. 19, Chegongzhuang West Road Yi, Haidian District, Beijing, PRC
(II) Main financial data and indices Unit: RMB Yuan At the end of the At the period-end of Increase/decrease compared with
report period last year the period-end of last year (%) Total assets 2,362,035,999.48 2,039,070,607.41 15.84% Owners’ equity attributable to 1,102,126,641.75 1,087,987,662.96 1.30% shareholders of the listed company Share capital 593,923,220.00 593,923,220.00 0.00% Net asset per share attributable to shareholders of the listed company 1.86 1.83 1.64% (Yuan/share) In the report period The same period of Increase/decrease year-on-year
(from Jan. to Jun.) last year (%) Total operating income 796,268,170.38 985,283,990.84 -19.18% Operating profit 20,649,366.43 58,673,360.32 -64.81% Total profit 20,921,459.07 60,297,608.06 -65.30% Net profit attributable to shareholders of 12,409,697.08 44,124,619.58 -71.88% the listed company Net profit attributable to shareholders of the listed company after deducting 15,801,149.84 44,241,366.89 -64.28% non-recurring gains and losses Basic earnings per share (Yuan/share) 0.0209 0.0743 -71.87% Diluted earnings per share (Yuan/share) 0.0209 0.0743 -71.87% Net return on equity (%) 1.13% 3.99% -2.86% Net cash flows from operating activities -93,954,493.15 59,930,108.90 Net cash flows from operating activities -0.16 0.10 per share (Yuan/share) Attached: items of non-recurring gains and losses Items Amount Note (if applicable) Gains and losses on the disposal of non-current assets 603,607.10 Other non-operating incomes and expenses besides the -331,514.46 above Fees paid by the Company to Sanonda Group Corporation and China Other items in compliance with definition of -4,850,000.00 National Agrochemical non-recurring gains and losses Corporation for their providing guarantees to the Company Impact on income tax 1,144,476.84 Impact on minority interests 41,977.76 Total -3,391,452.76 - Notes: There exists no difference between PRC GAAP and IFRS. II. Changes in Share Capital and Particulars about Share Capital (I) Statement on changes in share Shares of the Company remained unchanged in the report period. (II) Number of shareholders and shares held by them Unit: Share Total number of 80,409 (including 54,049 A-share holders) shareholders Particulars about shares held by the top ten shareholders Shares subject to Name of Nature of Shareholding Total number of Shares pledged or trading moratorium shareholder shareholders ratio (%) shares held frozen held SANONDA GROUP State-owned 20.02% 118,887,202 0 0 CORPORATION corporation STATE-OWNED ASSETS ADMINISTRATION The state 0.76% 4,489,266 0 0 BUREAU OF QICHUN COUNTY Domestic natural Huang Hua 0.53% 3,172,702 0 0 person Domestic natural Li Dongliang 0.52% 3,105,223 0 0 person Domestic natural Yuan Haixiang 0.51% 3,002,349 0 0 person Domestic natural Huang Yangsheng 0.45% 2,678,950 0 0 person JINGZHOU SHASHI Domestic DISTRICT UNION non-state-owned 0.42% 2,500,000 0 0 RURAL CREDIT corporation COOPERATION Domestic natural Luo Qian 0.41% 2,435,666 0 0 person Domestic natural Hong Qina 0.41% 2,412,494 0 0 person Domestic natural Zhou Baoping 0.38% 2,254,327 0 0 person Particulars about the top ten shareholders holding share not subject to moratorium Shares not subject to trading moratorium Name of shareholder Type of shares held by the shareholder SANONDA GROUP CORPORATION 118,887,202 RMB ordinary shares STATE-OWNED ASSETS ADMINISTRATION BUREAU OF 4,489,266 RMB ordinary shares QICHUN COUNTY Huang Hua 3,172,702 RMB ordinary shares Li Dongliang 3,105,223 RMB ordinary shares Yuan Haixiang 3,002,349 RMB ordinary shares Huang Yangsheng 2,678,950 RMB ordinary shares JINGZHOU SHASHI DISTRICT UNION RURAL CREDIT 2,500,000 RMB ordinary shares COOPERATION Luo Qian 2,435,666 RMB ordinary shares Hong Qina 2,412,494 RMB ordinary shares Zhou Baoping 2,254,327 RMB ordinary shares Explanation on The State-owned Assets Administration Bureau among the shareholder above holds shares of associated relationship the Company on behalf of the state. There exists no related-party relationship between the among the top ten controlling shareholder and other shareholders not subject to trading moratorium. And it is shareholders or unknown whether the shareholders above are acting-in-concert parties as prescribed in the acting-in-concert Administrative Methods for Acquisition of Listed Companies. (III) Number of shares held by the top ten shareholders subject to moratorium and trading moratorium Up until 18 Sept. 2009, all restricted shares of the Company had been released. (IV) The controlling shareholder and actual controller of the Company remained unchanged in the report period.
III. Particulars about Directors, Supervisors and Senior Executives (I) Changes in shares held by directors, supervisors and senior executives Shares held by directors, supervisors and senior executives remained unchanged in the report period. (II) Particulars about engagement and dismissal of directors, supervisors and senior executives On 3 Feb. 2010, the 23rd Meeting of the 5th Board of Directors was convened, at which the proposal on adding Ai Qiuhong as an independent director candidate for the 5th Board was reviewed and approved. And the said proposal was passed by voting at the 1st Provisional Shareholders’ General Meeting in 2010 convened on 26 Feb. 2010. On 26 Feb. 2010, the 1st Provisional Shareholders’ General Meeting in 2010 was convened, at which Ms. Liu Jun, Mr. Jiang Chenggang and Mr. Wu Hairong were elected as supervisors for the 6th Supervisory Committee. And Mr. Zhang Jianguo and Mr. Zhou Cheng were elected by voting as staff-representative supervisors for the 6th Supervisory Committee at the 11th Workers’ Congress held on 3 Dec. 2009.
IV. Report of the Board of Directors (I) Overall status of operating activities During the report period, the weak pesticide and chemical market continued with a serious overcapacity in the industry as a whole. As a result, it was difficult for the Company to sell products, prices of some main products dropped sharply and the overall profitability also decreased. For the report period, the Company achieved an operating income of RMB 796 million, down by 19.18% year on year; a foreign exchange income from export amounting to USD 49.16 million, representing a year-on-year drop of 15.33%; a total profit standing at RMB 20.92 million, decreasing by 65.30% on the year-on-year basis; and a net profit of RMB 12.41 million, down by 71.88% as compared with the corresponding period of last year. (II) Scope and operation of the main business 1. Scope of main business Production and sale of pesticides and chemical products 2. Main businesses classified according to industries or products Unit: RMB Ten thousand Main business classified according to industries Increase/decreas Increase/decreas Increase/decrease Operating Gross profit ratio e of operating e of operating of gross profit Industry or product Operating cost income (%) income year on cost year on year ratio year on year year (%) (%) (%) New chemical materials and special 900.41 488.86 45.71% 56.66% 53.54% 1.11% chemical products Petro-chemical industrial and refined 4,891.42 4,059.73 17.00% 53.35% 80.10% -12.33% chemical products Basic (chlor-alkali) 1,358.33 1,484.91 -9.32% chemical products Agrochemical like fertilize, pesticide, 67,153.86 57,768.38 13.98% -25.73% -22.75% -3.31% etc Total 74,304.02 63,801.88 14.13% -21.10% -17.52% -3.74% 3. Main business classified according to regions Unit: RMB Ten thousand Regions Operating income Increase/decrease of operating income compared with the last year (%) Domestic 43,286 -19.99% Overseas 31,018 -22.60% Total 74,304 -21.10% 4. Analysis on financial status Item Closing balance Opening balance Increase/decrease ratio Accounts receivable 17,189 6,586 161.01% Construction in process 40,381 28,786 40.28% Short-term borrowings 24,634 3,990 517.41% Non-current liabilities due within 1 year 16,000 9,500 68.42% Notes: ① Accounts receivable increased by 161.01% over the year-begin, which was mainly because settlement modes adopted for product exports in the report period were mostly with recourse and the settlement periods were comparatively longer; ② Construction in process increased by 40.28% over the year-begin, which was mainly due to input increase for projects such as the thermal electricity joint supply project; ③ Short-term borrowings increased by 517.41% over the year-begin, which was mainly because more capital were needed for production funds and project input; ④ Non-current liabilities due within one year increased by 68.42% over the year-begin, which was mainly due to the high-tech product export working capital borrowing of RMB 115,000,000 due within one year from the Export-Import Bank of China.
(III) Explanation on significant changes in profit breakdown and main business profitability No significant changes occurred in the main businesses and main business structure of the Company in the report period, which were pesticides, chemicals, chlor-alkali chemicals, etc.. The profitability drop was mainly due to the reason that the weak pesticide and chemical market continued with a serious overcapacity in the industry as a whole in the report period, which led to a sharp drop of prices for some main products of the Company, as well as a decrease of the overall profitability. (IV) Other business that influenced the net profit significantly In the report period, the net profit realized of the Company came from the main business and not influenced by other business. (V) Analysis on operation status and business performance of main holding companies Unit: RMB Ten thousand Registered Shareholding Total Net Operating Net Name of subsidiary Nature of business capital ratio assets assets revenue profit Sanonda (Jingzhou) Production of pesticides Pesticides and and intermediates Chemicals Co., Ltd. 3000 88.33% 5,275 408 6,139 61 Hubei Sanonda Import & Export of Foreign Trading Co., pesticides and Ltd. intermediates 1000 90.00% 15,797 1,554 11,641 -178
Hubei Sanonda Production and sales of 3000 98.50% 4,604 3,448 3,588 52 Tianmen pesticides Agrochemical Co., Ltd. Jingzhou Longhua Production and sales of Petrochemical Co., chemical products Ltd. 500 65.00% 2,986 1,461 4,891 133 Jingzhou Sanonda Research, development, Aifusi Chemical production and sales of Industry Co., Ltd. fine chemical products 600 95.10% 1,975 910 900 161
Research, development, Jingzhou Lingxiang production and sale of Chemical Co., Ltd. chemicals 1000 51.00% 4,239 785 1,358-188 (VI) Problems and difficulties met in operation During the report period, the weak pesticide and chemical market continued with a serious overcapacity in the industry as a whole. In addition, the market competition was intense. As a result, it was difficult for the Company to sell products. Some production equipments stopped working for a long period, which caused a comparatively great loss.
(VII) Investment 1. In the report period, there was no raised proceeds occurred or raised proceeds occurred in previous periods but continued to the report period. 2. Investment projects of non-raised proceeds in the report period:
Name of project Amount of project (RMB Project Income from the Ten thousand) progress project
Thermal electricity joint 31,383 88.00% Unfinished supply project
PMIDA phase Ⅱ 6,304 82.00% Unfinished
Steam tube project 1,800 100.00% As expected
Total 39,487 - -
(Ⅷ) Forecast on operating performance from the year-begin to the end of the next report period The Company forecasts that the net profit for the period from the year-begin to the end of the next report period may decline by a margin from 50% to 80%, which is mainly because the weak pesticide and chemical market may continue, which will make it difficult for the Company to sell its products and will lead to a price drop.
V. SIGNIFICANT EVENTS (I) Corporate governance In the report period, the Company kept perfecting its corporate governance structure, formulating and improving the internal management rules and regulating its operation according to the requirements of the Company Law, Securities Law, Code of Corporate Governance for Listed Companies and other relevant laws and regulations. In the report period, in order to improve operation and management level and risk prevention ability and in accordance with requirement of Public Notice on Do well in Disclosure of Annual Report and Relevant Work (document No. [2009] 34) from CSRC, the Company formulated Responsibility System on Serious Errors in Disclosure of Annual Report, Working System on Annual Report for Independent Directors, Administrative System on Report and Submitting Information to Other Units and Administrative System on Significant Capital Flow and Rules on Annual Report for Audit Commission and so on. Meanwhile, in accordance with special requirements in Guiding Opinions on Establishing the Independent Director System in Listed Companies issued by CSRC and Notice on Development of Work concerning Corporate Governance of Listed Company in 2009 released by CSRC Hubei Bureau, the Company held the 1st Provisional Shareholders’ General Meeting 2010 on 26 Feb. 2010, at which proposal on election Ai Qiuhong as independent director of the Company was reviewed and approved. Number of the independent directors reached one third of number of the Board of Directors.
(II) Profit distribution and its implementation in report period During the report period, the Company neither execute profit distribution nor transfer public reserves in share capital. In the report period, the Company will not distribute profit or transfer public reserves.
(III) There were no significant lawsuits or arbitrations in the report period, or those carried down from the previous years
(IV) In the report period, there was no assets transaction in the Company.
(V) Significant related transactions in report period (Unit: RMB Yuan) 1. Purchase and sale transaction, related transaction providing and receiving labor service Occurred amount in current Occurred amount in the same period period of last year Pricing Name of enterprise Type Content Percentage to Percentage to principle Amount the same Amount the same transaction transaction
China National Agrochemical Purchase Purchase of raw Market 43,779,916.05 10.55% 21,914,775.00 4.30% Corporation materials price
Purchase of raw Market Sanonda Group Corporation Purchase materials price 5,615,302.58 1.35% 64,428,155.10 12.64%
Jingzhou Sanonda Market Purchase Purchase of packaging Advertising Co., Ltd. price 3,244,611.79 6.05% 2,489,959.85 4.27%
Jingzhou Hengxiang Material Purchase of raw Market Purchase Trade Co., Ltd materials price 4,663,256.07 1.12% 11,509,623.40 2.26%
Jingzhou Dali Industrial Co., Market Purchase Purchase of packaging Ltd price 2,917,948.72 5.44% 4,726,520.00 8.11%
Jingzhou Fude Foods General Market Purchase Purchase of packaging Factory price 1,413,846.61 2.43%
Bluestar Environmental Purchase of raw Market Purchase Engineering Co., Ltd materials price 11,538.46 0.003%
Jingzhou Hengxiang Material Sale of chemical Market Sale Trade Co., Ltd products price 720,159.83 0.10% 129,701.56 0.01%
Hubei Jingzhou Huaxiang Sale of chemical Market Sale Chemical Co., Ltd. products price 14,749,943.74 1.99% 13,976,014.87 1.48%
Jiangsu Anpon Market Sale Sales of pesticide Electrochemical Co., Ltd price 1,882,058.23 0.25% 1,224,210.00 0.13%
2. Related-party guarantee Executio Guarantor Secured party Amount secured Start date End date n of not
Sanonda Group Corporation The Company 10,000,000.00 13 Nov. 2009 13 Nov. 2013 No
Sanonda Group Corporation The Company 20,000,000.00 1 Feb. 2010 1 Feb. 2013 No
Sanonda Group Corporation The Company 90,000,000.00 21 Apr. 2008 21 Apr. 2015 No
ChemChina Corporation The Company 217,000,000.00 28 Apr. 2008 28 Apr. 2014 No
ChemChina Corporation The Company 80,000,000.00 29 Aug. 2008 28 Aug. 2015 No
ChemChina Corporation The Company 80,000,000.00 10 Feb. 2009 9 Feb. 2016 No
ChemChina Corporation The Company 97,560,000.00 3 Feb. 2008 2 Feb. 2015 No
China National The Company 50,000,000.00 18 May 2009 18 May 2013 No Agrochemical Corporation
China National The Company 65,000,000.00 30 Jun. 2009 30 Jun. 2013 No Agrochemical Corporation
China National The Company 85,000,000.00 31 Jun. 2009 31 Jul. 2013 No Agrochemical Corporation
Guangxi Hechi Chemicals The Company 40,000,000.00 10 Feb. 2010 10 Dec. 2010 No Co., Ltd. The Company Guangxi Hechi 100,000,000.00 12 Jan. 2008 12 Jan. 2013 No Chemicals Co., Ltd.
3. Other related transactions Occurred amount in the same Occurred amount in current period period of last year Pricing Name of enterprise Type Content Percentage to Percentage to principle Amount the same Amount the same transaction transaction
Pay for guarantee Agreement Sanonda Group Corporation Guarantee 3,450,000.00 74.03% fee price 2,850,000.00 58.76%
China National Agrochemical Pay for guarantee Agreement Guarantee 1,210,000.00 25.97% Corporation fee price 2,000,000.00 41.24%
4. Accounts receivable and payable of related parties Name of project Related parties Closing amount Opening amount
Advances from customers Jingzhou Hengxiang Material Trade Co., Ltd 800.00 800.00
Accounts payable Jingzhou Hengxiang Material Trade Co., Ltd 544,448.00 157,828.70
Accounts payable Jingzhou Dali Industrial Co., Ltd 239,327.04 1,165,733.44
Accounts payable Jingzhou Fude Foods General Factory 378,516.50 378,516.50 Bluestar (Beijing) Chemical Machinery Co., Accounts payable 1,852,200.00 1,852,200.00 Ltd Accounts payable Bluestar Environmental Engineering Co., Ltd 37,300.00 378,000.00 Other accounts payable Jingzhou Sanonda Advertising Co., Ltd. 742,889.70
(VI) Important contracts and their implementation in report period 1. In the report period, there existed no such significant transaction conducted by the Company as holding in trust, contracting or leasing the assets of other companies or vice versa. Nor were there such transactions carried down from the previous periods. 2. Guarantees provided by the Company in report period Unit: RMB’0000 Yuan Guarantees provided for external parties (excluding guarantees provided for subsidiaries) Date of Implementat Date and No. of occurrence Actual Guarantee for Name of the Guarantee Type of Term of ion Relevant public (Date of amount of related parties guaranteed line guarantee guarantee accomplishe notice signing guarantee or not d or not agreement) Guangxi Hechi 22 Feb. 2008 Joint liability Chemicals Co., 10,000.00 12 Jan. 2008 10,000.00 5 years No Yes No. 2008-01 guarantee Ltd. Total external guarantees lines 0.00 Total external guarantees 0.00 examined and approved in the occurred in the reporting period reporting period (A1) (A2) Total external guarantee lines Balance of actual guarantees at examined and approved at the 0.00 10,000.00 the period end (A4) period end (A3) Guarantees provided for subsidiary companies Date of Implementat Date and No, of occurrence Actual Guarantee for Name of the Guarantee Type of Term of ion Relevant public (Date of amount of related parties guaranteed line guarantee guarantee accomplishe notice signing guarantee or not d or not agreement) Hubei Sanonda 17 Apr. 2010 Guarantee Foreign Trading 22,800.00 28 May 2010 19,800.00 1 year No Yes No. 2010-012 with liability Co., Ltd. Total guarantees lines for Total guarantees for subsidiaries subsidiaries examined and 22,800.00 occurred in the reporting period 19,800.00 approved in the reporting period (B2) (B1) Total guarantee lines for Balance of actual guarantees at subsidiaries examined and 22,800.00 19,800.00 the period end (B4) approved at the period end (B3) Total guarantees of the Company (Total of the two above) Total guarantees lines examined Total guarantees occurred in the and approved in the reporting 22,800.00 19,800.00 reporting period (A2+B2) period (A1+B1) Total guarantees lines examined Total balance of actual and approved at the report period 22,800.00 guarantees at the period end 29,800.00 (A3+B3) (A4+B4) Proportion of total actual guarantee amount (A4+B4) in net assets of the 27.04% Company Among which: Amount of guarantees provided for shareholders, actual controller and 10,000.00 other related parties (C) Amount of debt guarantees provided directly or indirectly for parties with 22,800.00 asset-liability ratio exceeding 70% (D) Proportion of total guarantee amount exceeding 50% of the Company’s 0.00 net assets (E) Total amount of the above three guarantees (C+D+E) 32,800.00 All the guarantees provided by the Company for its Explanation on possibility of taking several and joint liability involving subsidiaries were joint-liability ones, with a mutual guarantee immature guarantees of RMB 100 million for a related party of the Company—Guangxi Hechi Chemicals Co., Ltd..
3. In the report period, neither the Company entrust others with financial affairs, nor such matters carried down from the previous periods.
(VII) Implementation of commitments made In the report period or lasting to the report period, there was no commitment made or executed by the Company or shareholders holding over 5% shares of the Company.
(VIII) In the report period, there was no investment on securities.
(IX) Field visits, interviews and written inquiries received in report period Time Place Way Visitor Main discussion and materials provided Inquiring about production and operation of Individual Jan.-Jun. 2010 The Company By telephone the company, as well as disclosure of public investor notice, with no material provided.
(X) Punishment on the Company, its directors, supervisors, senior management staff, shareholders and actual controller, as well as relevant rectification In the report period, none of the Company, its directors, supervisors, senior management staff, shareholders and actual controller received investigations, administrative punishment, and criticism by circular or open criticism from CSRC or police authorities.
(XI) Explanation on other events 1. Special explanation and independent opinion of impendent directors on capital occupation by the Company’s related parties and external guarantees provided by the Company The independent directors of the Company were of the opinion that no non-operational capital occupation by the Company’s principle shareholder or other related parties in the report period. Total amount of guarantee in the report period and carried down to the report period from the previous period was RMB 328 million. Of which mutual guarantee for controlling subsidiary of the Company- Hubei Sanonda Foreign Trading Co., Ltd. Was RMB 100 million, and joint liability guarantee for related party Guangxi Hechi Chemicals Co., Ltd was RMB 228 million. The above guarantees had been reviewed and approved at the shareholders’ meeting by voting. The decision-making procedures of the Company’s external guarantees were legal, reasonable and fair, with no harm done to the interests of the Company and its shareholders, especially the minority interests. 2. On 22 Jun. 2010, the Company held the 27th Meeting of the 5th Board of Directors, at which reviewed and approved Proposal on Purchase 76.33% equity of Jingzhou Hongxiang Chemical Co., Ltd held by Sanonda Group Corporation and its controlling subsidiary company Jingzhou Hengxiang Material Trade Co., Ltd. (For details please refer to public notice with No. 2010-023 and 2010-025 published in China Securities Journal, Securities Times and Ta Kung Pao, as well as http://www.cninfo.com.cn dated 23 Jun. 2010). The above equity related to state-owned assets, and need approval from state-owned assets administration authority (actual controller of the Company is China National Agrochemical Corporation) according to relevant regulations, therefore, the share transfer has not executed materially in the report period.
(XII) Index for information disclosed in report period No. Date of Website for Public notice Newspaper for disclosure disclosure disclosure Public Notice on Resolutions of the 23rd Meeting of the 5th Board of Directors, Public China Securities Journal, 1 Notice on Routine Related Transactions and 4 Feb. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Notice on Holding the 1st Provisional Shareholders’ General Meeting 2010 Public Notice on Adding Provisional China Securities Journal, 2 Proposals for Shareholders’ General 9 Feb. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Meeting Public Notice on Resolutions of the 1st China Securities Journal, 3 Provisional Shareholders’ General Meeting 27 Feb. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao 2010 and Legal Opinion Letter Public Notice on Estimated Achievement of China Securities Journal, 4 15 Apr. 2010 www.cninfo.com.cn the 1st Quarter of 2010 Securities Times and Ta Kung Pao Public Notice on Change in Time for China Securities Journal, 5 15 Apr. 2010 www.cninfo.com.cn Disclosure of the Annual Report 2009 Securities Times and Ta Kung Pao Public Notice on Resolutions of the 24th Meeting of the 5th Board of Directors, Public China Securities Journal, 6 Notice on Related Transactions and Public 17 Apr. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Notice on Providing Guarantee for Holding Subsidiary, etc. Public Notice on Resolutions of the 1st China Securities Journal, 7 17 Apr. 2010 www.cninfo.com.cn Meeting of the 6th Supervisory Committee Securities Times and Ta Kung Pao Summary of the Annual Report 2009and China Securities Journal, 8 17 Apr. 2010 www.cninfo.com.cn relevant System concerning Annual Report Securities Times and Ta Kung Pao Public Notice on Resolutions of the 25th Meeting of the 5th Board of Directors, Notice China Securities Journal, 9 24 Apr. 2010 www.cninfo.com.cn on Holding the Annual Shareholders’ General Securities Times and Ta Kung Pao Meeting 2009 China Securities Journal, 10 The 1st Quarterly Report 2010 24 Apr. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Supplementary Public Notice on the Annual China Securities Journal, 11 26 May 2010 www.cninfo.com.cn Report 2009 Securities Times and Ta Kung Pao Public Notice on Resolutions of the Annual China Securities Journal, 12 Shareholders’ General Meeting 2009 and 29 May 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Legal Opinion Letter 13 Public Notice on Resolutions of the 26th 10 Jun. 2010 China Securities Journal, www.cninfo.com.cn Meeting of the 5th Board of Directors, Notice Securities Times and Ta Kung Pao on Holding the 2nd Provisional Shareholders’ General Meeting 2010 and Public Notice on Related Transaction concerning Providing Financial Service Suggestive Public Notice on Holding the 2nd China Securities Journal, 14 Provisional Shareholders’ General Meeting 22 Jun. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao 2010 Public Notice on Resolutions of the 27th Meeting of the 5th Board of Directors, Notice on Holding the 3rd Provisional Shareholders’ China Securities Journal, 15 23 Jun. 2010 www.cninfo.com.cn General Meeting 2010 and Public Notice on Securities Times and Ta Kung Pao Related Transaction concerning Purchase of Equity of Related Party Public Notice on Resolutions of the China Securities Journal, 15 Provisional Meeting of the 5th Board of 24 Jun. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao Directors Public Notice on Resolutions of the 2nd China Securities Journal, 16 Provisional Shareholders’ General Meeting 24 Jun. 2010 www.cninfo.com.cn Securities Times and Ta Kung Pao 2010 and Legal Opinion Letter
VI. FINANCIAL REPORT (UN-AUDITED) (I) Accounting statements Balance Sheet Prepared by Hubei Sanonda Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan Closing balance Opening balance Items Consolidation Parent company Consolidation Parent company Current assets: Monetary funds 543,482,180.87 497,093,988.89 474,460,623.29 424,584,953.40 Settlement fund reserve Dismantle fund Transaction financial asset Notes receivable 31,645,432.18 20,332,793.98 10,746,710.09 2,714,810.09 Account receivable 171,891,279.33 41,416,884.14 65,857,262.23 9,940,149.67 Account paid in advance 14,541,658.12 16,405,806.13 24,018,481.41 25,138,734.64 Premium receivables Receivables from reinsurers Reinsurance contract reserve receivables Interest receivable Dividend receivable 3,275,227.72 Other account receivable 17,691,606.45 149,846,931.94 19,220,669.32 97,072,583.33 Financial assets purchased under agreements to resell Inventories 249,665,411.95 202,682,867.05 198,762,663.23 146,279,805.97 Non-current assets due within 1 year Other current assets Total current assets 1,028,917,568.90 931,054,499.85 793,066,409.57 705,731,037.10 Non-current assets: Loans and advance Available for sale financial assets Held to maturity investments Long-term account receivable Long-term equity investment 11,378,382.63 49,533,405.95 11,378,382.63 49,533,405.95 Investing property 4,988,600.50 4,988,600.50 5,116,012.50 5,116,012.50 Fixed asset 751,964,882.28 700,583,816.22 778,661,093.09 728,578,456.14 Project in construction 403,812,783.22 395,396,885.77 287,858,631.17 281,349,294.67 Engineering material Fixed asset disposal Bearer biological asset Oil assets Intangible assets 148,472,052.36 135,006,744.09 150,488,348.86 136,774,286.23 Development expense Goodwill Long-term expense to be apportioned Deferred tax assets 12,501,729.59 10,146,664.99 12,501,729.59 10,146,664.99 Other non-current assets Total of non-current assets 1,333,118,430.58 1,295,656,117.52 1,246,004,197.84 1,211,498,120.48 Total assets 2,362,035,999.48 2,226,710,617.37 2,039,070,607.41 1,917,229,157.58 Current liabilities: Short-term borrowings 246,341,514.63 205,000,000.00 39,899,274.54 35,000,000.00 Borrowing from Central Bank Deposits and due to banks and other financial institutions Placements from banks and other financial institutions Transaction financial liabilities Notes payable 20,000,000.00 20,000,000.00 5,000,000.00 5,000,000.00 Account payable 101,836,988.84 78,556,154.63 116,941,353.00 66,229,596.12 Account received in advance 35,254,746.27 22,378,043.99 30,731,258.63 18,309,739.93 Financial assets sold under agreements to repurchase Handling charges and commission payable Employee’s compensation payable 6,103,538.57 3,149,113.09 17,231,898.45 13,295,096.69 Tax payable -11,679,001.66 -2,127,420.55 -4,458,696.03 2,208,088.91 Interest payable dividend payable 349,463.30 349,463.30 349,463.30 349,463.30 Other account payable 46,135,229.62 24,814,680.13 39,413,834.96 27,182,609.39 Due to reinsurers Insurance contract reserve Customer deposits Amount payables under security underwriting Non-current liabilities due within 1 year 160,000,000.00 160,000,000.00 95,000,000.00 95,000,000.00 Other current liabilities Total current liabilities 604,342,479.57 512,120,034.59 340,108,386.85 262,574,594.34 Non-current liabilities: Long-term borrowings 624,560,000.00 624,560,000.00 579,560,000.00 579,560,000.00 Debentures payable Long-term payables 9,840,000.00 9,840,000.00 9,840,000.00 9,840,000.00 Specific purpose account payables Provisions for contingent liabilities Deferred tax liabilities Other non-current liabilities 9,209,677.27 6,990,000.00 9,209,677.27 6,990,000.00 Total non-current liabilities 643,609,677.27 641,390,000.00 598,609,677.27 596,390,000.00 Total liabilities 1,247,952,156.84 1,153,510,034.59 938,718,064.12 858,964,594.34 Owner’s equity (or shareholders’ equity) Paid-in capital (or share capital) 593,923,220.00 593,923,220.00 593,923,220.00 593,923,220.00 Capital surplus 271,591,478.35 268,447,075.77 271,591,478.35 268,447,075.77 Less: Treasury Stock Specific reserves 22,419,101.70 14,025,023.53 20,689,819.99 13,898,173.74 Reserved fund 72,736,287.77 72,736,287.77 72,736,287.77 72,736,287.77 General risk provision Retained earnings 141,456,553.93 124,068,975.71 129,046,856.85 109,259,805.96 Foreign exchange difference Total owners' equity attributable to holding 1,102,126,641.75 1,073,200,582.78 1,087,987,662.96 1,058,264,563.24 company Minority interest 11,957,200.89 12,364,880.33 Total owner’s equity 1,114,083,842.64 1,073,200,582.78 1,100,352,543.29 1,058,264,563.24 Total liabilities and owner’s equity 2,362,035,999.48 2,226,710,617.37 2,039,070,607.41 1,917,229,157.58 Legal Representative: Li Zuorong Person in Charge of Accounting Work: He Xusong Person in Charge of Accounting Firm: He Xuesong
Income Statement Prepared by Hubei Sanonda Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan In current period The same period of last year Items Consolidation Parent company Consolidation Parent company I. Total operation income 796,268,170.38 591,856,639.00 985,283,990.84 705,509,417.65 Including: Sales income 796,268,170.38 591,856,639.00 985,283,990.84 705,509,417.65 Interest income Premium income Handling charges and commission income II. Total operation cost 775,618,803.95 573,690,008.46 930,247,286.84 657,640,802.04 Including: Cost of sales 680,370,049.06 507,925,855.72 810,536,655.99 577,862,532.97 Interest expenses Handling charges and commission expenses Surrender value Net amount of claims Net amount of insurance contract reserve withdrawn Expenditure on policy dividends Reinsurance premium expenses Taxes and associate charges 1,144,465.00 713,202.39 500,904.05 15,768.03 Selling expenses 26,647,718.10 16,282,916.09 39,341,923.32 23,491,390.74 Administrative expenses 32,526,534.32 18,618,938.83 46,739,882.33 28,194,258.22 Financial expenses 24,490,626.82 23,311,004.31 27,537,885.61 25,336,610.79 Impairment loss 10,439,410.65 6,838,091.12 5,590,035.54 2,740,241.29 Add: gain from change in fair value (“-” means 0.00 0.00 2,196,656.32 2,196,656.32 loss) Gain from investment (“-” means loss) 0.00 3,275,227.72 1,440,000.00 11,831,698.11 Including: income form investment in 0.00 0.00 affiliated enterprise and joint ventures Foreign exchange difference (“-” means loss) III. Operation profit (“-” means loss) 20,649,366.43 21,441,858.26 58,673,360.32 61,896,970.04 Add: non-operation income 846,398.70 427,402.03 2,659,803.07 103,229.34 Less: non-business expense 574,306.06 30,205.25 1,035,555.33 863,633.53 Including: loss from non-current asset disposal IV. Total profit (“-” means loss) 20,921,459.07 21,839,055.04 60,297,608.06 61,136,565.85 Less: income tax expense 8,989,587.07 7,029,885.29 15,073,885.85 12,686,216.93 V. Net profit (“-” means loss) 11,931,872.00 14,809,169.75 45,223,722.21 48,450,348.92 Attributable to owners of parent company 12,409,697.08 14,809,169.75 44,124,619.58 48,450,348.92 Minority interest -477,825.08 0.00 1,099,102.63 VI. Earnings per share (I) Basic earnings per share 0.0209 0.00 0.0743 (II) Diluted earnings per share 0.0209 0.00 0.0743 VII. Other composite income VIII. Total composite income 11,931,872.00 14,809,169.75 45,223,722.21 48,450,348.92 Attributable to owners of parent company 12,409,697.08 14,809,169.75 44,124,619.58 48,450,348.92 Minority interest -477,825.08 0.00 1,099,102.63 0.00 Legal Representative: Li Zuorong Person in Charge of Accounting Work: He Xusong Person in Charge of Accounting Firm: He Xuesong
Cash Flow Statement Prepared by Hubei Sanonda Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan In current period The same period of last year Items Consolidation Parent company Consolidation Parent company I. Cash flows from operating activities: Cash received from sale of commodities and 618,647,778.35 442,786,395.24 815,640,461.00 629,911,544.57 rendering of service Net increase of deposits from customers and due from banks Net increase of loans from the central bank Net increase of funds borrowed from other financial institutions Cash received from premium of original insurance contracts Net cash received from reinsurance business Net increase of savings of policy holders and investment fund Net increase of disposal of tradable financial assets Cash received from interest, handling charges and commissions Net increase of borrowed inter-bank funds Net increase of buy-back funds Tax refunds received 23,272,273.76 20,299,627.42 7,466,937.10 4,313,672.06 Other cash received relating to operating 26,848,146.80 13,359,810.56 22,779,215.89 27,375,736.82 activities Subtotal of cash inflows from operating 668,768,198.91 476,445,833.22 845,886,613.99 661,600,953.45 activities Cash paid for purchase of commodities and 619,408,167.39 449,480,880.80 584,292,545.59 419,080,706.47 reception of service Net increase of customer lending and advance Net increase of funds deposited in the central bank and amount due from banks Cash for paying claims of the original insurance contract Cash for paying interest, handling charges and commissions Cash for paying policy dividends Cash paid to and for employees 56,127,454.85 44,919,708.43 54,889,480.84 34,881,129.75 Various taxes paid 17,227,505.22 12,239,650.61 76,265,886.56 62,340,271.73 Other cash paid relating to operating activities 69,959,564.60 35,341,552.27 70,508,592.10 49,750,063.78 Subtotal of cash outflows from operating 762,722,692.06 541,981,792.11 785,956,505.09 566,052,171.73 activities Net cash flows from operating activities -93,954,493.15 -65,535,958.89 59,930,108.90 95,548,781.72 II. Cash Flows from investment activities: Cash received from disposal of investments 0.00 0.00 3,036,457.50 3,036,457.50 Cash received from investment income 0.00 0.00 Net cash received from disposal of fixed assets, intangible assets and other long-term 63,686.00 15,870.00 3,569,562.00 29,853.00 assets Net cash received from disposal of subsidiary 10,000,000.00 10,000,000.00 or other business units Other cash received relating to investment 238,473.04 238,473.04 120,168.76 87,561.13 activities Subtotal of cash inflows from investment 10,302,159.04 10,254,343.04 6,726,188.26 3,153,871.63 activities Cash paid to acquire fixed assets, intangible 135,623,216.11 126,002,188.60 201,634,779.90 176,882,084.58 assets and other long-term assets Cash paid for investment 0.00 0.00 15,600,000.00 Net increase of pledged loans Net cash paid to acquire subsidiaries and other business units Other cash paid relating to investment 257,074.94 257,074.94 1,661,895.27 1,462,536.37 activities Subtotal of cash outflows from investment 135,880,291.05 126,259,263.54 203,296,675.17 193,944,620.95 activities Net cash flows from investment activities -125,578,132.01 -116,004,920.50 -196,570,486.91 -190,790,749.32 III. Cash flows from financing activities: Cash received from absorbing investment 0.00 0.00 4,900,000.00 Including: Cash received by subsidiaries 0.00 0.00 4,900,000.00 from investment of minority interest Cash received from borrowings 436,293,178.92 380,000,000.00 605,945,661.86 435,000,000.00 Cash received from issuance of bonds Other cash received relating to financing 3,187,230.14 2,790,350.37 3,722,549.10 3,431,828.17 activities Subtotal of cash inflows from financing 439,480,409.06 382,790,350.37 614,568,210.96 438,431,828.17 activities Cash paid to repay loans 119,850,938.83 100,000,000.00 324,899,516.48 212,000,000.00 Cash paid for interest expenses and 23,234,524.47 21,953,592.63 52,299,175.23 48,720,492.40 distribution of dividends or profit Including: dividends or profit paid to 0.00 0.00 1,154,633.12 minority shareholders by subsidiaries Other cash payments relating to financing 7,840,763.02 6,786,842.86 6,487,606.10 5,591,432.98 activities Sub-total of cash outflows from financing 150,926,226.32 128,740,435.49 383,686,297.81 266,311,925.38 activities Net cash flows from financing activities 288,554,182.74 254,049,914.88 230,881,913.15 172,119,902.79 IV. Effect of foreign exchange rate changes on cash and cash equivalents V. Net increase in cash and cash equivalents 69,021,557.58 72,509,035.49 94,241,535.14 76,877,935.19 Add: beginning balance of cash and cash 474,460,623.29 424,584,953.40 562,832,319.76 490,154,426.30 equivalents VI. Closing balance of cash and cash equivalents 543,482,180.87 497,093,988.89 657,073,854.90 567,032,361.49 Legal Representative: Li Zuorong Person in Charge of Accounting Work: He Xusong Person in Charge of Accounting Firm: He Xuesong
Consolidated Statement of Changes in Owners’ Equity Prepared by Hubei Sanonda Co., Ltd. For the first half of 2010 Unit: (RMB) Yuan Amount for the current period Amount of the same period of last year Owners’ equity attributable to parent company Owners’ equity attributable to parent company Paid-in Paid-in Specifi Minorit Total Specifi Minorit Total Items Less: Surplus Genera Retaine capital Less: Surplus Genera Retaine capital (or Capital c y owners’ Capital c y owners’ treasur public l risk d Others (or treasur public l risk d Others share reserve reserve interest equity reserve reserve interest equity y stock reserve reserve profits share y stock reserve reserve profits capital) s s capital) I. Balance at the end of last 593,923,2 271,591, 20,689, 72,736, 129,046 12,364, 1,100,35 593,923 271,719, 16,364, 73,514, 143,035 17,829, 1,116,38 year 20.00 478.35 819.99 287.77 ,856.85 880.33 2,543.29 ,220.00 841.74 992.87 866.46 ,950.70 809.82 8,681.59 Add: change of accounting 0.00 policy Correction of errors in previous periods Others II. Balance at the beginning of 593,923,2 271,591, 20,689, 72,736, 129,046 12,364, 1,100,35 593,923 271,719, 16,364, 73,514, 143,035 17,829, 1,116,38 this year 20.00 478.35 819.99 287.77 ,856.85 880.33 2,543.29 ,220.00 841.74 992.87 866.46 ,950.70 809.82 8,681.59 III. Increase/ decrease of 1,729,2 12,409, -407,67 13,731,2 14,325, -886,32 13,438,7 amount in this year (“-” means 81.71 697.08 9.44 99.35 046.61 5.49 21.12 decrease) 12,409, -477,82 11,931,8 44,124, 1,099,1 45,223,7 (I) Net profit 697.08 5.08 72.00 619.58 02.63 22.21 (II) Other composite income 12,409, -477,82 11,931,8 44,124, 1,099,1 45,223,7 Subtotal of (I) and (II) 697.08 5.08 72.00 619.58 02.63 22.21 (III) Capital input and 1,960,0 1,960,00 reduction by owners 00.00 0.00 1,960,0 1,960,00 1. Capital input of owners 00.00 0.00 2. Amount of stock payment included in owners’ equity 3. Others -29,799, -3,945, -33,745, (IV) Profit distribution 572.97 428.12 001.09 1. Withdrawing surplus public reserve 2. Withdrawing general risk reserve 3. Distribution to owners -29,799, -3,945, -33,745,
(shareholders) 572.97 428.12 001.09 4. Others (V) Internal carrying forward of owners’ equity 1. New increase of capital (or share capital) from capital reserves 2. Converting surplus reserves to capital (or share capital) 3. Surplus reserves make up losses 4. Others 1,729,2 70,145. 1,799,42 (VI) Specific reserves 81.71 64 7.35 1. Appropriated in current 8,205,6 145,40 8,351,06 period 54.72 8.36 3.08 6,476,3 75,262. 6,551,63 2. Used in current period 73.01 72 5.73 IV. Balance at the end of this 593,923,2 271,591, 22,419, 72,736, 141,456 11,957, 1,114,08 593,923 271,719, 16,364, 73,514, 157,360 16,943, 1,129,82 period 20.00 478.35 101.70 287.77 ,553.93 200.89 3,842.64 ,220.00 841.74 992.87 866.46 ,997.31 484.33 7,402.71 Legal Representative: Li Zuorong Person in Charge of Accounting Work: He Xusong Person in Charge of Accounting Firm: He Xuesong
Statement of Changes in Owners’ Equity of Parent Company Prepared by Hubei Sanonda Co., Ltd. For the first half of 2010 Unit: (RMB) Yuan Amount for the current period Amount of the same period of last year Paid-in Less: Surplus General Total Paid-in capital Less: Surplus General Total Items Capital Specific Retained Capital Specific Retained capital (or treasury public risk owners’ (or share treasury public risk owners’ reserve reserves profit reserve reserves profit share capital) stock reserve reserve equity capital) stock reserve reserve equity I. Balance at the end of last 593,923,220. 268,447,0 13,898,17 72,736,28 109,259,8 1,058,264 268,447,0 16,364,99 73,514,86 136,824,1 1,089,074 593,923,220.00 year 00 75.77 3.74 7.77 05.96 ,563.24 75.77 2.87 6.46 91.70 ,346.80 Add: change of accounting policy Correction of errors in previous periods Others II. Balance at the beginning of 593,923,220. 268,447,0 13,898,17 72,736,28 109,259,8 1,058,264 593,923,220.00 268,447,0 16,364,99 73,514,86 136,824,1 1,089,074 this year 00 75.77 3.74 7.77 05.96 ,563.24 75.77 2.87 6.46 91.70 ,346.80 III. Increase/ decrease of 126,849.7 14,809,16 14,936,01 18,650,77 18,650,77 amount in this year (“-” means 9 9.75 9.54 5.95 5.95 decrease) 14,809,16 14,809,16 48,450,34 48,450,34 (I) Net profit 9.75 9.75 8.92 8.92 (II) Other composite income 0.00 14,809,16 14,809,16 48,450,34 48,450,34 Subtotal of (I) and (II) 9.75 9.75 8.92 8.92 (III) Capital input and 0.00 reduction by owners 1. Capital input of owners 0.00 2. Amount of stock payment 0.00 included in owners’ equity 3. Others 0.00 -29,799,5 -29,799,5 (IV) Profit distribution 0.00 72.97 72.97 1. Withdrawing surplus public 0.00 reserve 2. Withdrawing general risk 0.00 reserve 3. Distribution to owners -29,799,5 -29,799,5 0.00 (shareholders) 72.97 72.97 4. Others 0.00 (V) Internal carrying forward 0.00 of owners’ equity 1. New increase of capital (or share capital) from capital 0.00 reserves 2. Converting surplus reserves 0.00 to capital (or share capital) 3. Surplus reserves make up 0.00 losses 4. Others 0.00 126,849.7 126,849.7 (VI) Specific reserves 9 9 1. Appropriated in current 4,433,444 4,433,444 period .81 .81 4,306,595 4,306,595 2. Used in current period .02 .02 IV. Balance at the end of this 593,923,220. 268,447,0 14,025,02 72,736,28 124,068,9 1,073,200 268,447,0 16,364,99 73,514,86 155,474,9 1,107,725 593,923,220.00 period 00 75.77 3.53 7.77 75.71 ,582.78 75.77 2.87 6.46 67.65 ,122.75 Legal Representative: Li Zuorong Person in Charge of Accounting Work: He Xusong Person in Charge of Accounting Firm: He Xuesong Hubei Sanonda Co., Ltd
Notes to Financial Statements
For the First Half Year 2010
(The following amount is expressed in RMB unless otherwise special explanation)
I. Company profiles The former Hubei Sanonda Co., Ltd. (hereinafter referred to "Company" or "the Company") is state operated Hubei Sha City Pesticides Factory, which was set up in 1958. In Aug. 1992, as approved by Hubei Commission for Economic System Reformation, the original enterprise was reorganized as Hubei Sanonda Co., Ltd., which turned into the first pioneer large state-operated industry enterprise in Hubei Province. On 8 Sep. 1992, on the basis of reorganization of the former enterprise, the Company was established formally. As approved by People's Government of Hubei Province and reviewed by CSRC, 30,000,000 RMB ordinary public shares ("A shares") of the Company have been issued since Oct. to 30 Nov. 1993. On 3 Dec. 1993, shares of the Company have been listed on Shenzhen Stock Exchange. As approved by Securities Committee of the State Council with "ZF (1997) No. 23", its domestically listed foreign shares ("B shares") amounting to 100,000,000 shares have been issued at the par value of RMB 1 per share on 29 Apr. 1997 to 5 May 1997, such shares have been listed for trading on the Shenzhen Stock Exchange on 15 May 1997, and over-allotment option of 15,000,000 shares have been exercised since 15 May to 21 May 1997. The proposal on transferring capital reserve into share capital has been examined and approved at the Shareholders' General Meeting 2006 held in May 2007, which transferred capital reserve into share capital at the rate of 10 for 10, and has been implemented in July 2007. After transferring, the total share capital was RMB 593,923,220. The registration address of the Company is located at No. 93, Beijing East Road, Jingzhou, Hubei. Legal representative is Li Zuorong. Share abbreviations are Sanonda A and Sanonda B with stock code of 000553 and 200553 respectively. Parent company of the Company is Sanonda Group Corporation, as well as ChemChina Agrochemical Corporation as final parent company. Main pesticide products include orthene, paraquate, glyphosate, trichlorphon, DDVP, omethoate, triazophos, imidacloprid and carbofuran. Main chemical products include spermine, liquid caustic soda, liquefied chlorine gas and hydrochloric acid. The Company has self-operated import & export right. The Company has passed ISO9002 Quality System Certification and ISO14001 Environment Management System Certification. II. Statement for complying with the accounting standard for business enterprise The financial statements of the Company are prepared based on the following preparation basis, which are in compliance with the requirements of the accounting standard for business enterprise (promulgated by the Ministry of Finance on 15 Feb. 2006) and reflect the Company’s financial status, operating results and cash flows in true and complete. III. Preparation basis of financial statement With going-concern assumption as the basis, the Company prepares its financial statement in light of the actual transactions matters, as well as relevant provisions of the accounting standard for business enterprise promulgated by the Ministry of Finance of PRC on 15 Feb. 2006 and application guide, and the following primary accounting policies and accounting estimates. IV. Major accounting policies and accounting estimates 1. Fiscal period The Company’s fiscal year is from Jan. 1 to Dec. 31 of the Gregorian calendar. 2. Bookkeeping base currency The Company adopts Renminbi as a bookkeeping base currency. 3. Financial statement items that measurement attributes changed and measurement attributes adopted in the reporting period Measurement attributes adopted by the Company shall include historical cost, replacement cost, net realizable value, present value and fair value. The Company shall make accounting recognition, measurement and report by adopting accrual basis. Historical cost shall be adopted for measurement of financial statement items other than such items as tradable financial assets, financial assets available for sales, business combination not under the same control, nonmonetary assets exchange with commercial purpose, debts reorganization, nonmonetary assets invested by investors shall be measured by adopting fair value. 4. Recognition standard for cash equivalents In cash flow statement, cash defines cash on hand and any deposit that can be used for cover, while cash equivalents are short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible into known amount of cash and whose risks in change of value are minimal. 5. Accounting methods for foreign currency (1) As for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeeping base currency at the middle price of market exchange rate published by the People’s Bank of China on the day the transaction is occurred. Of which, as for such transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the bookkeeping base currency at actual exchange rate the transaction is occurred. (2) The Company shall, on the balance sheet date, converted the account balance of foreign currency monetary assets and liabilities into amount in its bookkeeping base currency at the middle price of market exchange rate published by the People’s Bank of China on the balance sheet date. The balance arising from the difference between amount in the bookkeeping base currency converted at exchange rate on the balance sheet date and amount in the original bookkeeping base currency shall be recorded into the exchange gains and losses. Of which, the exchange gains and losses arising from foreign currency loans related to acquisition of fixed assets shall be treated at the principle of capitalization of borrowing costs, other balance of exchange shall be measured into the financial expense of the current period. (3) The Company shall, on the balance sheet date, convert the foreign currency nonmonetary items measured at the historical cost into amount in its bookkeeping base currency at the middle price of market exchange rate published by the People’s Bank of China on the day the transaction is occurred, not changing its original bookkeeping base currency. Where the foreign nonmonetary items measured at the fair value shall be converted into amount in its bookkeeping base currency at the middle price of market exchange rate published by the People’s Bank of China on the day the fair value is recognized, the exchange gains and losses arising therefrom shall be recorded into the current period gains and losses as gains and losses on change in fair value. 6. Financial assets and financial liabilities (1) Classification of Financial assets and financial liabilities Financial assets shall be classified into the following four categories when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, including transactional financial assets and the financial assets which are measured at their fair values and of which the variation is included in the current profits and losses; (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d)financial assets available for sale. Financial liabilities shall be classified into the following two categories when they are initially recognized:(a) the financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses, including transactional financial liabilities and the designated financial liabilities which are measured at their fair values and of which the variation is included in the current profits and losses; and (b) other financial liabilities. (2) Recognition of financial assets and financial liabilities and measurement methods When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financial liability. The financial assets and financial liabilities initially recognized by the Company shall be measured at their fair values. For the financial assets and liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, the transaction expenses thereof shall be directly recorded into the profits and losses of the current period; for other categories of financial assets and financial liabilities, the transaction expenses thereof shall be included into the initially recognized amount. The Company shall make subsequent measurement on its financial assets according to their fair values, and may not deduct the transaction expenses that may occur when it disposes of the said financial asset in the future. However, those under the following circumstances shall be excluded: (a) The investments held until their maturity, loans and accounts receivable shall be measured on the basis of the post-amortization costs by adopting the actual interest rate method; (b) The equity instrument investments for which there is no quotation in the active market and whose fair value cannot be measured reliably, and the derivative financial assets which are connected with the said equity instrument and must be settled by delivering the said equity instrument shall be measured on the basis of their costs. The Company shall make subsequent measurement on its financial liabilities on the basis of the post-amortization costs by adopting the actual interest rate method, with the exception of those under the following circumstances: (a) For the financial liabilities measured at their fair values and of which the variation is recorded into the profits and losses of the current period, they shall be measured at their fair values, and none of the transaction expenses may be deducted, which may occur when the financial liabilities are settled in the future; (b) For the derivative financial liabilities, which are connected to the equity instrument for which there is no quotation in the active market and whose fair value cannot be reliably measured, and which must be settled by delivering the equity instrument, they shall be measured on the basis of their costs; (c) For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the variation thereof is recorded into the profits and losses of the current period, and for the commitments to grant loans which are not designated to be measured at the fair value and of which the variation is recorded into the profits and losses of the current period and which will enjoy an interest rate lower than that of the market, a subsequent measurement shall be made after they are initially recognized according to the higher one of the following: i. the amount as determined according to the best estimate of the necessary expenses for the performance of the current obligation.; or ii. the surplus after accumulative amortization as determined according to the effective interest method is subtracted from the initially recognized amount. (3) Recognition of transfer of financial assets Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset. If it retained nearly all of the risks and rewards related to the ownership of the financial asset, it shall continue to recognize transferred financial assets, and the consideration received shall be recognized as a financial liabilities. Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a financial asset, it shall deal with it according to the circumstances as follows, respectively: (a) If it gives up its control over the financial asset, it shall stop recognizing the financial asset; (b) If it does not give up its control over the financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly. If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following two items shall be recorded in the profits and losses of the current period: (a)The book value of the transferred financial asset; (b) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in the owner's equities. If the transfer of partial financial asset satisfies the conditions to stop the recognition, the entire book value of the transferred financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition has not been stopped, be apportioned according to their respective relative fair value, and the difference between the amounts of the following two items shall be included into the profits and losses of the current period: (a) The book value of the portion whose recognition has been stopped; (b) The sum of consideration of the portion whose recognition has been stopped, and the portion of the accumulative amount of the changes in the fair value originally recorded in the owner's equities which are corresponding to the portion whose recognition has been stopped. (4) Determination of the fair value of main financial assets and financial liabilities As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques (including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc.) to determine its fair value. As for the financial assets initially obtained or produced at source and the financial liabilities assumed, the fair value thereof shall be determined on the basis of the transaction price of the market. (5) Impairment test of financial assets and withdrawal method of impairment provision The Company shall carry out an impairment test, on the balance sheet day, on the carrying amount of the financial assets other than those measured at their fair values and of which the variation is recorded into the profits and losses of the current period. An impairment test shall be made on the financial assets with significant single amounts. With regard to the financial assets with insignificant single amounts, an independent impairment test may be included in a combination of financial assets with similar credit risk features so as to carry out an impairment-related test. Where, upon independent test, the financial asset (including those financial assets with significant single amounts and those with insignificant amounts) has not been impaired, it shall be included in a combination of financial assets with similar risk features so as to conduct another impairment test. As for a financial asset measured on the basis of post-amortization costs, where there is any objective evidence proving that such financial asset has been impaired, a loss on impairment shall be made in the light of the balance between the book value and the current value of the predicted future cash flow. Where there is a very small gap between the predicted future cash flow of a short-term account receivable item and the current value thereof, the predicted future cash flow is not required to be capitalized when determining the relevant impairment-related losses. Where an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or a derivative financial asset which is connected with the equity instrument and which must be settled by delivering the equity instrument, suffers from any impairment, the gap between the carrying amount of the equity instrument investment or the derivative financial asset and the current value of the future cash flow of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as impairment-related losses. Where the fair value of financial assets available for sales has decrease by a big margin and the expected downward trend belongs to non-transient, the losses on impairment shall be recognized, and the accumulative losses on the fair value of the owner’s equity which was directly included shall be transferred out and recorded into the impairment-related losses. (6) Termination recognition of financial liabilities Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. 7. Measurement of bad debts for accounts receivable (1) Recognition of bad debts: the accounts receivable can not be recalled in line with the legal liquidation procedure because debtor has a great bankruptcy and insolvency; or the accounts receivable indeed can not be recalled due to the death of the debtor without leaving any property or there is no person to undertake the obligation; or accounts receivable can not be recalled where the debtor failed to perform obligation overdue and there are conclusive evidences which make it clear hat the accounts receivable can not be recalled. (2) Allowance method shall be adopted by the company in the computation of the bad debts. (3) Withdrawal method of provision for bad debt and proportion: ① An independent impairment test shall be carried out on the accounts receivable with significant single amounts (the balance is over RMB 5 million) and ones with insignificant singles amounts but with significant credit risk, and the losses on impairment shall be made on the basis of the balance between the current values of the predicted future cash flow lower than book value so as to withdraw provision for bad debts. ② Other receivables other than the above two accounts receivable shall be divided into several combinations in the light of aging, and then the losses on impairment shall be made on the basis of a certain proportion of ending balance of such accounts receivable combination so as to withdraw provision for bad debts. The Company shall withdraw the provision for bad debts at a proportion of 5% of ending balance of accounts receivable for every aging and 100% of accounts receivable for aging with 5 years or over. ③ Where there are conclusive evidences shows that the accounts receivable can not be recalled, the Company shall, in accordance with administration authority, make a loss on bad debts after approval of the Shareholders’ General Meeting or the Board of Directors, so as to write off the provision for bad debts withdrawn. 8. Measurement of inventories (1) The inventories of the Company include raw materials, goods in process, merchandise on hand, consigned processing materials, goods in transit, packaging materials, low value consumables, etc. (2) The inventories shall be initially measured in light of their cost. On the date of balance sheet, the inventories shall be measured whichever is lower in accordance with the cost and the net realizable value. (3) Physical inventory at fixed periods shall be taken under perpetual inventory system. (4) A bulk chemicals raw materials, good in process and finished products shall be priced at actual cost, while cost of sending out inventories shall be carried forward at the weighted average method. Auxiliary material and packaging materials shall be priced at actual cost and be measured by adopting planned cost; the difference between the actual cost and planned cost shall be recorded into materials cost variance when measurement, which materials cost variance allocable thereto shall be calculated based on materials cost difference rate at the end of month, and the planned cost of sending out materials shall be adjusted as actual cost. Low value consumables shall be recoded at actual cost and be amortized by employing the one-off write-off method when claiming. (5) On the date of balance sheet, the inventories shall be measured whichever is lower in accordance with the cost and the net realizable value. If the cost of inventories is higher than the net realizable value, the provision for the loss on decline in value of inventories shall be made and be included in the current profits and losses. If the factors causing any write-down of the inventories have disappeared, the amount of write-down shall be resumed and be reversed from the provision for the loss on decline in value of inventories that has been made. The reverse amount shall be included in the current profits and losses. The net realizable value refers to in the daily business activity the amount after deducting the estimated cost of completion, estimated sale expense and relevant taxes from the estimated sale price of inventories. 9. Measurement of investment real estates Investment real estates of the Company include the right to use any land which has already been rented; the right to use any land which is held and prepared for transfer after appreciation; and the right to use any building which has already been rented. Investment real estates shall be recognized when it meets the following requirements simultaneously: (a) the Company can get rental income related to the investment real estates or incremental return, and (b) the cost of the investment real estates can be reliably measured. The initial measurement shall be made at its actual cost when purchase or building. The Company shall make a follow-up measurement to the investment real estates by employing the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall be made for the investment real estates in the light of the accounting policies of fixed assets and intangible assets. When the Company changed the purpose of the real estate, such as becomes to be used for its own, it shall convert the investment real estate to other assets. Measurement of impairment provision for investment real estates: on the balance sheet data, the Company shall make inspection to the investment real estates item by item; where there is any sign of impairment of the investment real estates, the recoverable amount shall be estimated in the light of the individual investment real estate item; with regard to the balance between recoverable amount lower than its book value, its provision for impairment of the investment real estate shall be withdrawn. The provision for impairment of the investment real estate shall be recognized on the basis of the balance between the book value of individual investment real estate item higher than its recoverable amount. Once any impairment provision of the investment real estate is recognized, it shall not be switched back in the future accounting periods. 10. Measurement of Fixed assets (1) The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: (a) They are held for the sake of producing commodities, rendering labor service, renting or business management; and (b) Their useful life is in excess of one fiscal year. No fixed asset may be recognized unless it simultaneously meets the conditions as follows: (a) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and (b) The cost of the fixed asset can be measured reliably. The initial measurement of a fixed asset shall be made at its cost. (2) Depreciation of fixed assets: The Company shall make depreciation for all its fixed assets. However, the fixed assets that have been fully depreciated but are still in use and the land that is separately measured and included shall be excluded. The term "depreciable amount" refers to the amount of deducting its expected net salvage value from the original price of the fixed asset to be depreciated. For a fixed asset, the provision for depreciation has been made, it shall deduct the accumulative amount of the provision for impairment of the depreciated fixed asset that has been already made shall be deducted. The "expected net salvage value" refers to the expected amount that an enterprise may obtain from the current disposal of a fixed asset after deducting the expected disposal expenses at the expiration of its expected useful life. Depreciation of fixed assets shall be made by adopting the straight-line method. categories, expected useful life, expected residual ratio and yearly depreciation:
Expected residual Categories Depreciation life Annual depreciation ratio
House & buildings 24 years 4.00% 4%
Special equipment 9 years 10.89% 2%
General-purpose equipment 18 years 5.33% 4%
Transportation vehicles 9 years 10.89% 2%
Productive fixed assets has a large amount under the production environment with a certain chemical corrosion, as a result, the residual value is the smaller. (3) Measurement of provision for fixed asset impairment: on the balance sheet data, the Company shall make inspection to the fixed assets item by item; where there is any sign of impairment of the fixed assets, the recoverable amount shall be estimated in the light of the individual fixed assets item; with regard to the balance between recoverable amount lower than its book value, its provision for the fixed assets impairment shall be withdrawn. The provision for fixed assets impairment shall be recognized on the basis of the balance between the book value of individual fixed assets item higher than its recoverable amount. Once any impairment provision of the fixed assets is recognized, it shall not be switched back in the future accounting periods. 11. Measurement of construction in progress (1) Construction in progress of the Company includes self-operating project and construction contracted. (2) Initial measurement of the construction in progress: Cost of the construction in progress shall be recognized at its actual expenses incurred. Where interest on borrowing related to the construction in progress occurred before the fixed assets reached estimated usable status, it shall be capitalized. (3) Time point of construction in progress being carried forward as fixed assets shall be recognized at the time point that the construction reaches estimated usable status. (4) Measurement of provision for impairment of construction in progress: on the balance sheet data, the Company shall make inspection to the construction in progress item by item; where there is any sign of impairment of the construction in progress, the recoverable amount shall be estimated; with regard to the balance between recoverable amount lower than its book value, its provision for the construction in progress impairment shall be withdrawn. The provision for impairment of construction in progress shall be recognized on the basis of the balance between the book value of individual construction in progress item higher than its recoverable amount. Once any impairment provision of the construction in progress is recognized, it shall not be switched back in the future accounting periods. 12. Confirmation and measurement of intangible assets (1) Initial Measurement of intangible assets The intangible assets are initially measured according to its actual cost when acquired. (2) Classification criteria for research expenditures and development expenditures of the Company’s internal research and development projects The expenditures for the Company’s internal research and development projects are classified into research expenditures and development expenditures for separate handling. The research expenditures refer to the Company’s expenses for the creative and planned investigations to acquire and understand new scientific or technological knowledge. The Company’s research expenditures for its internal research and development projects are recorded into the profit or loss for the current period. The development expenditures refer to the Company’s expenses for the application of research achievement and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. And the development expenditures are confirmed as intangible assets when they satisfied the following conditions simultaneously: 1) It is technically feasible to finish the intangible assets for use or sale; 2) It is intended to finish and use or sell the intangible assets; 3) The usefulness of methods for intangible assets to generate economic benefits is proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or that there is a potential market for the intangible assets itself or that the intangible assets will be used internally; 4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and 5) The development expenditures of the intangible assets can be reliably measured. Any other expenditure that the Company can not identify their belonging to research expenditures or development expenditures are recorded as management expenditures into the profit or loss for the current period. (3) Subsequent measurement of intangible assets ① Estimate of the service life of intangible assets As for the intangible assets that are possessed or controlled by the Company and that are derived from any contractual right or other statutory rights, their service lives do not exceed the term of the contractual right or other statutory rights; Where the contractual right or other statutory rights continue due to their renewal after expiration and it is proved that the Company does not need to pay a high cost for the renewal, the renewed period is included in the service life of the intangible assets; where the service lives of the intangible assets are not stipulated in contracts or by law, they are determined by the Company’s previous experience or professional opinions from relevant experts. After adoption of the aforesaid methods, if it is still unable to forecast the period when the intangible asset can bring economic benefits to the Company, it is regarded by the Company as an intangible assets with uncertain service life. ② Check on the service life of intangible assets The Company checks the service life of intangible assets on the balance sheet date. Where there are evidences to prove that the service life of an intangible asset is different from before, the service life of the intangible asset will be changed and treated according to accounting estimate; where there are evidences to prove that the intangible assets with uncertain service life have limited service lives, they will be estimated of their service lives, and be treated according to the handling principles for intangible assets with limited service life. ③ Amortization of intangible assets with limited service lives The Company’s intangible assets with limited service lives are amortized on a straight-line basis within their expected service lives beginning from the month of their acquisition. ④ Subsequent measurement of intangible assets with uncertain service lives Based on the relevant information available, if the service life of an intangible asset can not be reasonably estimated, the Company recognizes the intangible asset as an intangible asset with an uncertain service life. The intangible assets with uncertain service lives will not be amortized during the holding period, but the Company will conduct testing in every accounting period for the devaluation of intangible assets with uncertain service lives. (4) Withdrawal method of reserve for intangible assets impairment At the period-end, the Company checks its intangible assets item by item. Where there is a sign of asset impairment, the Company estimates the recoverable amount according to the single intangible asset. Where the recoverable amount of the asset is less than its book value, the book value is written down as the recoverable amount. The written-down amount is recognized as assets impairment loss, and the corresponding impairment reserve is withdrawn. Upon the recognition of the reserve for intangible assets impairment, it is not to be reversed in the following accounting periods. 13. Measurement of Long-term Equity Investments (1) The initial measurement of long-term equity investment: the initial cost of the long-term equity investment, which is acquired by different means, shall be ascertained in the following ways:
○1 As for the long-term equity investment acquired by merger of enterprises under the same control, the share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party, or the total face value of marketable securities issued shall be accounted into capital reserve; If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
○2 As for the long-term equity investment acquired by the merger under different control, the merger costs ascertained is regarded as the initial cost of the long-term equity investment. If the merger cost is larger than the fair value difference of the purchased party’s net identifiable assets, it will be recorded as goodwill in the consolidated financial statement; if the merger cost is smaller than the fair value difference of the purchased party’s net identifiable assets, it will be accounted into current profits and losses.
○3 Beside the aforesaid long-term equity investment acquired by enterprises merger, with regard to the long-term investment acquired by payment in cash, non-monetary assets paid, or marketable securities issued, its fair value shall be regarded as the initial cost of the long-term equity investment; the initial cost of a long-term equity investment obtained by debt rephrasing will be the fair value of shares owned after debt-for-equity swap; as for long-term equity investment invested by investors, the valued ascertained in the investment contract or agreement shall be regarded as the initial cost, but if the value ascertained in the investment contract or agreement was not fair, the fair value of investment equity would be regarded as the initial cost. The cash profit included in the actual payment or consideration, which has been announced yet not drew, shall be independently calculated as account receivables. (2) Subsequent Measurement of Long-term Equity Investments: for a long-term equity investment for which there is no offer in the active market and of which the fair value cannot be reliably measured, if the Company has not joint control or significant influence over the subsidiaries or the invested entities, the cost method shall be employed in the measurement; if the Company has joint control or significant influence over the invested entities, the equity method shall be employed. The term “joint control” refers to the control over an economic activity in accordance with the contracts and agreements. Following situations shall be considered to decide whether it is joint control:
○1 No cooperative party can singly control the production and operation activities of the joint venture.
○2 Decisions involving basic business activities of the joint venture require consensus among the cooperative parties.
○3 The cooperative parties can appoint one cooperative party by contract or agreement to conduct management over daily operation of the joint venture, but the appointed cooperative party shall exercise its administrative power within the scope of finance and business policy, which has been agreed by all cooperative parties. The term “significant influences” refers to the power to participate in making decisions on the financial and operating policies of the invested entities, but not to control or do joint control together with other parties over the formulation of these policies. As for the Company, holding directly or indirectly through subsidiaries more than 20% but less than 50% voting shares is regarded as having significant influence over the invested entities, except for the situations where there is specific evidence proving it can not participate the decision making in operation and production of the invested entities, and thus cannot exert significant influence. It’s generally considered by the Company that those entities which hold less than 20% voting shares of the invested entities have no significant influence over the invested entities except for the following situations:
○1 Having representative(s) in the Board of Directors or other similar authority of the invested entities.
○2 Participating in the process of formulating policies in the invested entities, including the formulation of dividend distribution policy etc.
○3 Having important transactions with the invested entities.
○4 Dispatching management personnel to the invested entities.
○5 Providing key technology materials to the invested entities. (3) Impairment for long-term equity investment: if there are signals for impairment, withdrawal in single items shall be conducted based on the difference between the receivable amount and the book value, so as to ascertain impairment losses. Once ascertained, the impairment for long-term equity investment will not be returned in the coming accounting period. 14. Measurement of Borrowing Cost (1) The Range of Borrowing Costs The Company’s borrowing costs include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance incurred by foreign currency borrowings etc.. (2) The Ascertain Principle of Borrowing Costs Where the borrowing costs incurred to the Company can be directly attributable to the construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. (3) The Ascertain of Capitalization Period of Borrowing Costs
○1 The Ascertain of Beginning Capitalization If the asset disbursements or the borrowing costs have already incurred, and the construction or production activities which are necessary to prepare the asset for its intended use or sale have already started, the capitalization of borrowing costs begins.
○2 The Ascertain of Suspending Capitalization Where the construction or production of asset eligible for capitalization is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. The borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the construction or production of the asset restarts. If the interruption is a necessary step for making the qualified asset under acquisition and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue.
○3 The Ascertain of Ceasing Capitalization When the asset eligible for capitalization under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. The borrowing costs incurred after the asset eligible for capitalization under acquisition and construction or production is ready for the intended use or sale shall be recognized as expenses at the incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period. (4) The Ascertain of the To-Be-Capitalized Amount of Borrowing Costs
○1 The Ascertain of the To-Be-Capitalized Amount of Borrowing Interests During the period of capitalization, the to-be-capitalized amount of interests (including the amortization of discounts or premiums) in each accounting period shall be determined according to the following provisions: A: As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization, the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment. B: Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization, the Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. C: Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be determined by the real interest rate method, and an adjustment shall be made to the amount of interests in each period. D: During the period of capitalization, the amount of interest capitalized during each accounting period shall not exceed the amount of interest actually incurred by the relevant borrowings in the current period.
○2 The Ascertain of the To-Be-Capitalized Amount of Ancillary Expense A: 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 profits and losses of the current period. B: The ancillary expenses arising from a general borrowing shall be recognized as expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses of the current period.
○3 The Ascertain of the To-Be-Capitalized Amount of Exchange Balance During the period of capitalization, the exchange balance on foreign currency borrowings shall be capitalized and shall be recorded into the cost of assets eligible for capitalization. 15. Measurement of Employee Compensation (1) The employee compensation includes: wages, bonuses, allowances and subsidies for the employees; welfare benefits for the employees; endowment insurance, medical insurance, unemployment insurance, work injury insurance, maternity insurance and other social insurances; housing accumulation fund; labor union expenditure and employee education expenses; non-monetary welfare; compensations for the cancellation of the labor relationship with the employees; and other relevant expenditures of services offered by the employees. (2) During the accounting period of an employee’s providing services to the Company, the employee compensation payable is recognized as liabilities. Except for the compensations for the cancellation of the labor relationship with the employee, the employee compensations are recorded, according to the beneficiaries of the services offered by the employee, respectively as costs of fixed assets, costs of intangible assets, product costs and service costs. Other employee compensations are directly included in the profit or loss for the current period. 16. Measurement of Government Subsidies The government subsidies pertinent to incomes are treated respectively in accordance with the circumstances as follows: 1) Those subsidies used for compensating the related future expenses or losses of the Company are recognized as deferred income and are included in the current profits and losses during the period when the relevant expenses are recognized; or 2) Those subsidies used for compensating the related expenses or losses incurred to the Company are directly included in the current profits and losses. The government subsidies pertinent to assets are recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current profits and losses. But the government subsidies measured at their nominal amount are directly included in the current profits and losses. 17. Measurement of Projected Liabilities (1) The obligation pertinent to a contingency is recognized as projected liabilities when the following conditions are satisfied simultaneously: ① That obligation is a current obligation of the Company; ② It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; and ③ The amount of the obligation can be measured in a reliable way. (2) Projected liabilities are initially measured in accordance with the best estimate of the necessary expenses for the performance of the relevant current obligation. If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate is determined in accordance with the middle estimate within the range. In other cases, the best estimate is conducted in accordance with the following situations, respectively: ① if the contingencies concern one single item, it is determined in the light of the most likely outcome. ② if the contingencies concern two or more items, the best estimate is calculated and determined in accordance with all possible outcomes and the relevant probabilities. 18. Recognition and Measurement of Revenues (1) Recognition standards for revenues from selling goods Revenues from selling goods are recognized when the following conditions are met simultaneously: 1) the significant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; 2) the Company retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; 3) the relevant amount of revenues can be measured in a reliable way; 4) the relevant economic benefits may flow into the Company; and 5) the relevant costs incurred or to be incurred can be measured in a reliable way. (2) Recognition standards of revenues from providing labor services ① Recognition standards of revenues from providing labor services on the condition that the Company can reliably estimate the outcome of a transaction concerning the labor services it provides If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor services it provides, it recognizes the revenues from providing services employing the percentage-of-completion method. And the outcome of a transaction concerning the providing of labor services can be measured in a reliable way when the following conditions are met simultaneously: 1) the amount of revenues can be measured in a reliable way; 2) the relevant economic benefits are likely to flow into the Company; 3) the schedule of completion under the transaction can be confirmed in a reliable way; and 4) the costs incurred or to be incurred in the transaction can be measured in a reliable way. ② Recognition standards of revenues from providing labor services on the condition that the Company can not reliably estimate the outcome of a transaction concerning the labor services it provides If the Company can not, on the date of the balance sheet, measure the result of a transaction concerning the providing of labor services in a reliable way, it is to be conducted in accordance with the following circumstances, respectively: A. If the cost of labor services incurred is expected to be fully compensated, the revenues from providing labor services are recognized in accordance with the amount received or expected to be received, and the cost of labor services incurred is carried forward; B. If the cost of labor services incurred is expected to be partially compensated, the revenues from providing labor services are recognized in accordance with the compensated amount, and the cost of labor services incurred is carried forward; C. If the cost of labor services incurred is expected to be fully uncompensated, the cost incurred is included in the current profits and losses, and no revenue from the providing of labor services may be recognized. ③Method of determining the stage of completion when employing the percentage-of-completion method The stage of completion is determined according to the proportion of the costs incurred against the estimated total costs. 19. Measurement of Income Tax Income tax includes the current income tax and deferred income tax. The income tax of the current period and deferred income tax shall be treated as income tax expense and shall be recorded into the profits and losses of the current period except that goodwill incurred for business combination or deferred income tax related to the transactions or events directly recorded in the owner’s equity should be recorded into the owner’s equity. The Company shall, on the balance sheet date, recognize deferred income tax in the light of temporary difference between the book amount of the assets or liabilities and its tax base by employing the balance sheet approach. (1) Recognition of deferred income tax assets As for any deductible temporary difference, deductible loss or tax deduction that can be carried forward to the next year, the Company shall recognize the corresponding deferred income tax assets arising from a deductible temporary difference, deductible loss or tax deduction to the extent that the amount of future taxable income to be offset by the deductible temporary difference, deductible loss or tax deduction to be likely obtained. The deductible temporary difference occurred during the following transactions shall not be recognized as deferred income tax assets: ① This transaction is not business combination, and at the time of transaction, the accounting profits will not be affected, nor will be the taxable amount be affected. ② Where the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises can meet the following requirements simultaneously, the Company shall recognize the corresponding deferred income tax assets: a. the temporary differences are likely to be reversed in the expected future; and b. it is likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences. (2) Recognition of deferred income tax liabilities Except for the taxable temporary differences occurred during the following transactions, the Company shall recognize the deferred income tax liabilities arising from all taxable temporary differences: ① The initial recognition of business reputation, or the initial recognition of assets or liabilities arising from the following transactions which are simultaneously featured by the following: a. the transaction is not business combination; and b. at the time of transaction, the accounting profits will not be affected, nor will the taxable amount be affected. ② As for the taxable temporary differences related to the investment of subsidiary companies, associated enterprises and joint enterprises, the Company can control the time of the reverse of temporary difference and the temporary differences are unlikely to be reversed in the excepted future. On the balance sheet date, the deferred income tax assets and deferred income tax liabilities shall be at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled, and reflect the effect of the expected asset recovery or liability settlement method on the balance sheet date on the income taxes. The book amount of deferred income tax assets shall be reexamined on the balance sheet date. If it is unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the book amount of the deferred income tax assets shall be written down. When it is probable to obtain sufficient taxable income taxes, such write-down amount shall be subsequently reversed. V. Business combination and consolidated financial statement (I) Accounting treatment for business combination under the same control and under the different control 1. Business combination under the same control As for the business combination under the same control, the assets and liabilities that the Company, as the combining party, obtains in a business combination shall be measured on the basis of their book amount in the combined party on the combining date. For long-term equity investment formed by acquisition of majority interest under the same control, its initial investment cost shall be measured on the basis of the Company’s attributable share of the carrying value of the combined party’s owner’s equity on the combining date. For details of relevant accounting treatment, please refer to Note IV. 13. The assets and liabilities that the Company obtains in a consolidation by merger under the same control shall be recorded on the basis of their original book amount in the combined party. The balance between the carrying amount of the net assets obtained by the Company and the carrying amount of the consideration paid by the Company (or the total par value of the shares issued), the capital reserve shall be adjusted. If the capital reserve is not sufficient to be offset, the retained earnings shall be adjusted. The direct cost occurred for the business combination of the Company, as the combining party, including the expenses for audit, assessment and legal services, shall be recorded into the profits and losses of the current period. The bonds issued for a business combination or the handling fees, commissions and other expenses for assuming other liabilities shall be recorded into the amount of initial measurement of the bones or other debts. The handling fees, commissions and other expenses for the issuance of equity securities for the business combination shall be credited against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall be offset. 2. Business combination not under the same control As for the business combination not under the same control, the combination costs shall be the summation of the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company in exchange for the control on the acquiree and all relevant direct costs. For long-term equity investment formed by acquisition of majority interest not under the same control, the Company shall regard cost of business combination (excluding cash dividend and profit received by the acquiree) recognized on the acquisition date as its initial investment cost against the long-term equity investment of the acquiree. The identifiable assets and liabilities of the acquiree, which meet the recognition conditions and the Company obtains in a consolidation by merger not under the same control, shall be recognized as assets and liabilities of the Company on the acquisition date in the light of the fair value. Where the Company obtains the control right or all identifiable assets and liabilities of the acquiree with non-monetary assets as the consideration, the balance between the fair value of relevant non-monetary assets on the acquisition date and its book value shall be recognized as profits and losses from disposal of assets and recorded in the consolidated income statement of the current period.
In the business combination not under the same control, the positive balance between the combination costs and the fair value of the identifiable net assets the Company obtains from the acquiree shall be recognized as business reputation. Under the consolidation of merger, the said balance shall be recognized as business reputation in the separate financial statement of parent company; while under the acquisition of majority interest, the said balance shall be listed as business reputation in the consolidated financial statement.
The balance that the combination costs are less than the fair value of the identifiable net assets the Company obtains from the acquiree shall be recorded into the profits and losses of the current period (non-operating income). Under the consolidation of merger, the said balance shall be recorded in separate income statement of parent company at the current period; while under the acquisition of majority interest, the said balance shall be recorded in the consolidated income statement of the current period. (II) Consolidated financial statement 1. Recognition principle of consolidation scope The consolidation scope of consolidated financial statements shall be determined on the basis of control. The term “control” refers to the power of the Company to govern the financial and operating policies of investee entity so as to obtain benefits from its business activities. To determine whether or not it is able to control the investee entity, one shall take into account the investee entity’s current convertible corporate bonds and current executable warrants held by the Company, as well as other potential factors relating to the voting rights. Where the Company holds half or more of the capital with voting rights of an investee entity, or holds less than 50% of the capital with voting rights of an invetee entity but owns the actual control right, such investee entities are included in the consolidation scope of consolidated financial statements. 2. Preparation of consolidated financial statement In accordance with the provision stipulated in Accounting Standard for Business Enterprise No. 33 – Consolidated Financial Statements, the consolidated financial statements shall, on the basis of the financial statements of the parent company and its subsidiaries included in the consolidation scope and other relevant information, be prepared by the parent company after the long term equity investments in the subsidiaries are adjusted through the equity method, and after equity capital investment of parent company and quota held by parent company in owner’s equity of subsidiaries, internal significant transactions and internal current within the Company are offset. (III) Subsidiaries of the Company 1. The subsidiaries obtained by the Company through establishment or investment
Name of subsidiaries Type Registration Place Business Registered Business scope Actual amount of
nature capital contribution at the
(RMB’0000) period-end Sanonda (Jingzhou) 10 Xihuan Road, Jingzhou Production of pesticide Pesticide & Chemical Holding subsidiary Manufacturing 3,000 26,500,000.00 District and intermediate Co., Ltd.
Hubei Sanonda Foreign 1 Beijing East Road, Import and export of Holding subsidiary 1,000 Trading Co., Ltd. Trading 9,000,000.00 Jingzhou pesticide and intermediate Hubei Sanonda Tianmen 179 Gudu Av., Zaoshi, Production and sale of Holding subsidiary 3,000 Agrochemical Co., Ltd. Manufacturing 18,445,023.32 Tianmen pesticide Jingzhou Longhua 95 Beijing East Road, Production and sale of Holding subsidiary 500 Petrochemicals Co., Ltd. Manufacturing 3,250,000.00 Jingzhou chemical products Jingzhou Sanonda Aifusi 93 Beijing East Road, R&D, production and sale Chemical Industry Co., Holding subsidiary Manufacturing 600 8,864,700.30 Jingzhou of fine chemical products Ltd.
Jingzhou Lingxiang Nongji Road, Yaowan Chemical Industry Co., R&D and sale of chemical Holding subsidiary Branch, Sha City Farm, Manufacturing 1,000 5,100,000.00 Ltd. products Jingzhou Development Zone
(Con.) The The Balance of parent company’s equity after Included in Other essential proportion of proportion Deductible minority deducting the difference that loss of consolidated Minority interests investment holding of voting interests minority interests exceed equity obtained statement shares rights by minority shareholders
88.33% 88.33% Yes 476,032.81
90.00% 90.00% Yes 1,554,443.30
98.50% 98.50% Yes 517,183.11
65.00% 65.00% Yes 5,115,199.50
95.10% 95.10% Yes 445,870.80
51.00% 51.00% Yes 3,848,471.37
2. The subsidiaries obtained by the Company through business combination under the same control There is no subsidiary through business combination under the same control. 3. The subsidiaries obtained by the Company through business combination not under the same control There is no subsidiary through business combination not under the same control.
(IV) In the reporting period, the consolidated scope of the Company remained unchanged.
VI. Tax 1. Income tax Income tax shall be paid in light of the amount of taxable income and tax rate applicable to the current period. Income tax rate is 25%. 2. VAT (1) VAT on sales for pesticides that are produced by the Company shall be measured at tax rate of 13%, such pesticides include orthene, paraquate, glyphosate, chlorofos, DDVP, triazophos and imidacloprid, ect. (2) VAT on sales for chemical products of the Company shall be measured at tax rate of 17%, such chemical products include spermine, liquid caustic soda, liquefied chlorine gas and hydrochloric acid. (3) VAT for export products shall be recorded in the light of the policy of “Tax exemption, tax deduction and tax rebate”. 3. Business tax Business tax shall be paid at 5% of turnover. 4. City maintenance construction tax City maintenance construction tax shall be paid at 7% or 5% of circulating tax payable of the current period. 5. Extra charges for education Extra charges for education shall be paid at 3% of circulating tax payable of the current period. 6. Housing property tax Housing property tax shall be paid at 1.2% of balance after deducting 10-30% of original value of property in lump. If there is property rental, housing property tax shall be paid at 12% of property rental.
VII. Explanation on change in accounting policies and accounting estimates and correction of prior-period accounting errors 1. Change in accounting policies The Company’s accounting policies remained unchanged in the reporting period. 2. Change in accounting estimates The Company’s accounting estimates remained unchanged in the reporting period. 3. Correction of prior-period accounting errors There exists no correction of prior-period accounting errors in the reporting period.
VIII. Notes to main items of consolidated financial statements Note: The beginning of period (opening) refers to 31 Dec. 2009, the end of period (closing) refers to 30 Jun. 2010; last period refers to Jan. to Jun. 2009, current period refers to Jan. to Jun. 2010. 1. Monetary fund (1) By categories
Closing balance Opening balance
Items Original Rate of Original Rate of RMB RMB currency exchange currency exchange
Cash 3,872.44 6,067.14
Of which: RMB 3,872.44 1.0000 3,872.44 6,067.14 1.0000 6,067.14
Bank deposit 543,478,308.43 474,454,556.15
Of which: RMB 531,019,675.55 1.0000 531,019,675.55 472,852,325.78 1.0000 472,852,325.78
USD 1,834,607.03 6.7909 12,458,632.88 234,649.01 6.8282 1,602,230.37
Other
Of which: RMB
Total 543,482,180.87 474,460,623.29
(2) With regard to monetary fund of the Company, there are no any payment mortgaged or frozen that there exists restrictions on the realization, or any payment deposited abroad or existing potential risk of collection.
(3) Closing balance of monetary fund increased by 14.55% compared with the opening balance, which was caused by increase of loans during the reporting period.
2. Notes receivable (1) By categories Type of notes Closing balance Opening balance
Bank acceptance bill 31,645,432.18 10,746,710.09
Trade acceptance draft
Total 31,645,432.18 10,746,710.09
(2) As at the period-end, the Company has no pledged notes receivable
3. Accounts receivable (1) By category Closing balance Opening balance
Provision Provision Categories Withdrawal Withdrawal Amount Proportion for bad Amount Proportion for bad proportion proportion debt debt Significant 77,325,912.30 36.92% 11,346,936.48 14.67% 22,573,314.79 22.67% 8,609,306.60 38.14% single amounts Insignificant single amounts
but with 9,833,469.11 4.70% 9,833,469.11 100.00% 10,163,469.11 10.20% 10,163,469.11 100.00% significant credit risk Other 122,258,723.54 58.38% 16,346,420.03 13.37% 66,871,717.76 67.13% 14,978,463.72 22.40% insignificant
Total 209,418,104.95 100.00% 37,526,825.62 17.92% 99,608,501.66 100.00% 33,751,239.43 33.88%
Note: Accounts receivable with insignificant single amounts but with significant credit risk is accounts receivable with larger recoverable risk recognized in accordance with collection work of the Company to debtors and daily businesses occurred, and credit of debtors.
(2) Explanation on bad debt provisions for accounts receivable with significant single amounts or insignificant but being conducted an independent impairment test on:
Contents of accounts receivable Closing balance Amount of bad Withdrawal Reasons
debt proportion
1. Significant single amounts
Goods payment receivable by Hubei Sanonda The customer has applied for bankruptcy.
Foreign Trade Corporation from its customer Possibility of recovering the account is faint and a 7,874,358.80 7,874,358.80 100.00% bad debt provision has thus been withdrawn in
full.
Goods payment receivable by Hubei Sanonda There existed abnormity in the customer’s 69,451,553.50 3,472,577.68 5.00% Foreign Trade Corporation from its customer business. A bad debt provision has thus been Contents of accounts receivable Closing balance Amount of bad Withdrawal Reasons
debt proportion
withdrawn according to policies.
2. Insignificant single amounts but being conducted an independent impairment test on
Goods payment receivable by the Company from its There has been no business contact between the domestic customer Company and the customer. And it has not been
paid after several reminders. Possibility of 8,172,080.39 8,172,080.39 100% recovering the account is estimatedly faint. And a
bad debt provision has thus been withdrawn in
full.
Goods payment receivable by Hubei Sanonda A case has been filed for the customer’s employee
Tianmen Agrochemical Co., Ltd. from its domestic running off with money. Possibility of recovering 1,661,388.72 1,661,388.72 100% customer the account is estimatedly faint. And a bad debt
provision has thus been withdrawn in full.
Total 87,159,381.41 21,180,405.59
(3) Classified according to credit risk (account aging)
Closing balance Opening balance
Aging Provision for Withdrawal Provision for Withdrawal Balance Proportion Balance Proportion bad debt proportion bad debt proportion 67,290,403.71 67.56% 3,340,914.16 4.96% Within 1 year
(including 1 year) 178,930,142.20 85.45% 8,946,507.11 5.00% 2,181,545.05 2.19% 737,929.95 33.83% 1-2 years
(including 2 years) 2,178,395.05 1.04% 737,772.45 33.87% 9,735,825.76 9.77% 9,450,329.85 97.07% 2-3 years
(including 3 years) 9,738,975.76 4.65% 9,450,487.35 97.04% 4,771,430.28 4.79% 4,671,644.57 97.91% 3-4 years
(including 4 years) 4,571,430.28 2.18% 4,471,644.57 97.82% 1,331,271.74 1.34% 1,252,395.78 94.08% 4-5 years
(including 5 years) 1,201,136.54 0.57% 1,122,389.02 93.44% 14,298,025.12 14.35% 14,298,025.12 100.00% Over 5 years 12,798,025.12 6.11% 12,798,025.12 100.00% 99,608,501.66 100.00% 33,751,239.43 33.88% Total 209,418,104.95 100.00% 37,526,825.62 17.92%
(4) Accounts receivable cancelled actually in the reporting period Caused by Reason for Name Amount Nature related-party offset transaction or not
Xinjiang Talimu Oilfield Construction 6,480.09 Payment for Irrecoverable No Engineering Co., Ltd. goods
Total 6,480.09 (5) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the accounts receivable. (6) At the end of period, the top five accounts receivable totaled RMB 52,325,186.62, including RMB 44,450,827.82 within one year, RMB 7,874,358.80 within two to three years, taking up 24.99% of total accounts receivable. (7) There is no accounts receivable due from related parties.
4. Other receivables (1) By categories
Closing balance Opening balance
Categories Provision for Withdrawal Provision for Withdrawal Amount Proportion Amount Proportion bad debt proportion bad debt proportion Significant single 12,460,716.95 52.37% 10,000,000.00 39.49% amounts Insignificant single amounts but with 82,600.00 0.35% 82,600.00 100.00% 82,600.00 0.33% 82,600.00 100.00% significant credit risk
Other insignificant 11,250,809.52 47.28% 6,019,920.02 53.51% 15,239,745.64 60.18% 6,019,076.32 39.50%
Total 23,794,126.47 100.00% 6,102,520.02 25.65% 25,322,345.64 100.00% 6,101,676.32 24.10%
Note: Accounts receivable with insignificant single amounts but with significant credit risk is accounts receivable with larger recoverable risk recognized in accordance with collection work of the Company to debtors and daily businesses occurred, and credit of debtors.
(2) Explanation on bad debt provisions for other receivables with significant single amounts or insignificant but being conducted an independent impairment test on Closing Amount of Withdrawal Contents of receivables Reasons balance bad debt proportion
1. Significant single amounts Export rebates. And no sign of Jingzhou Municipal State Taxation impairment was spotted when an 12,460,716.95 Bureau impairment test was conducted on the account. Closing Amount of Withdrawal Contents of receivables Reasons balance bad debt proportion
2. Insignificant single amounts but being conducted an independent impairment test on
82,600.00 82,600.00 100% Considering an old account age, the account is estimated to be irrecoverable. Individual arrears And a full-amount provision has thus been withdrawn. Total 12,543,316.95 82,600.00 (3) Classified by credit risk (account aging)
Closing balance Opening balance
Aging Bad debt Withdrawal Bad debt Withdrawal Balance Proportion Balance Proportion provision proportion provision proportion
Within 1 17,794,831.78 70.27% 190,590.17 1.07% year 16,311,649.93 68.54% 191,433.87 1.17% (including 1 year)
1-2 years 639,249.43 2.52% 31,962.47 5.00% (including 514,110.53 2.16% 27,918.97 5.43% 2 years)
2-3 years 202,668.80 0.80% 10,133.44 5.00% (including 286,926.30 1.21% 14,176.94 4.94% 3 years)
3-4 years 507,750.46 2.01% 29,187.53 5.75% (including 503,594.54 2.12% 29,187.53 5.80% 4 years)
4-5 years 434,434.17 1.72% 96,391.71 22.19% (including 434,434.17 1.83% 96,391.71 22.19% 5 years)
Over 5 5,743,411.00 22.68% 5,743,411.00 100.00% 5,743,411.00 24.14% 5,743,411.00 100.00% years 25,322,345.64 100.00% 6,101,676.32 24.10% Total 23,794,126.47 100.00% 6,102,520.02 25.65%
(4) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the other receivables.
(5) Top five parties in other receivables as at period-end Proportion Relation with the in total Name of party Amount Age Company other receivables
Jingzhou Municipal State Taxation Bureau Non-related party 12,460,716.95 Within 1 year 52.37%
Shantou Piyue Plastic Co., Ltd. Non-related party 3,125,000.00 Over 5 years 13.13% China Export & Credit Insurance Corporation, Wuhan Non-related party 681,410.00 Within 1 year 2.86% Branch
Hubei Jingzhou Shashi Agricultural Production Materials Non-related party 548,500.00 Within 1 year 2.31% Co., Ltd. Jingzhou Municipal Administration Bureau of Work Non-related party 300,000.00 4-5 years 1.26% Safety and Supervise
Total 17,115,626.95 71.93% (6) There are no receivables from related parties in other receivables.
5. Prepayment
(1) By aging Closing balance Opening balance
Aging Balance Proportion Bad debt Withdrawal Balance Proportion Bad debt Withdrawal provision proportion provision proportion
Within 1 year (including 1 year) 15,562,277.51 98.07% 1,172,374.15 7.53% 24,151,872.17 95.28% 1,130,716.05 4.68%
1-2 years (including 2 years) 35,896.80 0.23% 1,794.85 5.00% 926,134.95 3.65% 46,306.75 5.00% 2-3 years (including 3 years) 2,965.00 0.02% 148.25 5.00% 39,220.20 0.15% 1,961.01 5.00% Over 3 years 266,504.20 1.68% 151,668.14 56.91% 230,085.03 0.91% 149,847.13 65.13%
Total 15,867,643.51 100.00% 1,325,985.39 8.36% 25,347,312.35 100.00% 1,328,830.94 5.24%
(2) Top five entities in prepayment Name of entity Relation with Amount Age Reason for the Company unsettlement
Shaanxi Yulin Natural Gas Chemical Industry Non-related 3,169,193.60 Within 1 year Goods have Name of entity Relation with Amount Age Reason for the Company unsettlement
Co., Ltd. supplier not been received yet. Yunnan Chengjiang Zhicheng Phosphate Goods have Chemicals Co., Ltd. Non-related 2,572,800.00 Within 1 year not been supplier received yet. Shine Star (Hubei) Biological Engineering Goods have Co., Ltd. Non-related 1,298,564.40 Within 1 year not been supplier received yet. PetroChina Qinghai Oilfield Marketing Goods have Company Non-related 1,067,919.59 Within 1 year not been supplier received yet. Shannxi Xi’an Dushanzi Petro-chemical Co., Goods have Ltd. Non-related ,487557.41 Within 1 year not been supplier received yet.
Total 8,983,935.00
(3) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the prepayment.
6. Inventory (1) Classification of inventory
Closing balance Opening balance
Items Falling price Falling price Book balance Book value Book balance Book value reserve reserve
Raw materials 36,035,352.94 2,779,590.71 33,255,762.23 52,839,474.12 2,779,590.71 50,059,883.41
Goods in process 32,147,044.64 32,147,044.64 38,605,920.77 38,605,920.77
Stock commodities 190,437,630.51 17,788,350.83 172,649,279.68 118,457,217.78 13,238,476.96 105,218,740.82 Low-value consumption goods 538,018.33 538,018.33 480,198.97 480,198.97
Packaging material 2,471,651.20 213,344.22 2,258,306.98 2,176,131.09 213,344.22 1,962,786.87
Goods in transit 8,817,000.09 8,817,000.09 2,435,132.39 2,435,132.39
Total 270,446,697.71 20,781,285.76 249,665,411.95 214,994,075.12 16,231,411.89 198,762,663.23
(2) Changes of inventory in this period Items Book balance at Increase this period Decrease this period Book balance at period-begin period-end Raw materials 52,839,474.12 414,862,920.35 431,667,041.53 36,035,352.94
Goods in process 38,605,920.77 1,147,844,492.65 1,154,303,368.78 32,147,044.64
Stock commodities 118,457,217.78 812,717,173.84 740,736,761.11 190,437,630.51 Low-value consumption goods 480,198.97 474,909.12 417,089.76 538,018.33
Packaging material 2,176,131.09 53,662,606.39 53,367,086.28 2,471,651.20
Goods in transit 2,435,132.39 12,395,800.25 6,013,932.55 8,817,000.09
Total 214,994,075.12 2,441,957,902.60 2,386,505,280.01 270,446,697.71
(3) Provisions for price falling of inventory Decrease in this period
Opening Withholding Decrease due Closing Item balance in this period Reversal Write-off to other Total balance reasons Raw materials 2,779,590.71 2,779,590.71 Stock commodities 13,238,476.96 6,859,227.51 2,309,353.64 2,309,353.64 17,788,350.83 Packaging material 213,344.22 213,344.22
Total 16,231,411.89 6,859,227.51 2,309,353.64 2,309,353.64 20,781,285.76
(4) Particulars about provisions for inventory price falling Thereunder for Proportion of recovery Reason for recovery of Thereunder for withdrawing amount in this period in inventory price falling withdrawing inventory inventory price closing balance of the provision in this period price falling provision falling provision inventory item (%)
Raw materials net realizable value is lower than cost
Stock commodities net realizable value is lower than cost
Packaging materials net realizable value is lower than cost
7. Long-term equity investment (1) By specific items Increase Decrease Accounting Initial Opening book Closing book Investee entity in this in this method investment amount amount period period Increase Decrease Accounting Initial Opening book Closing book Investee entity in this in this method investment amount amount period period
Jingzhou City Commercial Bank Co., Cost 20,000,000.00 20,000,000.00 20,000,000.00 Ltd method
Jingzhou Dali Industrial Co., Ltd Cost 1,674,600.00 1,674,600.00 1,674,600.00 method
Hubei Shendian Co., Ltd. Cost 564,000.00 564,000.00 564,000.00 method
Wangda Industrial Holding Co., Ltd Cost 550,000.00 550,000.00 550,000.00 method
Guangxi Zhongding Holding Co., Cost 580,800.00 580,800.00 580,800.00 Ltd method
Total 24,809,400.00 23,369,400.00 23,369,400.00
(Con.)
Explanation on Asset disagreement Voting impairment Shareholding between Opening Closing shareholding reserve ratio in investee shareholding ratio impairment impairment Cash bonus ratio in investee withdrawn entity and voting reserve reserve entity in this shareholding ratio in period investee entity 5.15% 5.15% 11,991,017.37 11,991,017.37
33.70% 33.70%
0.60% 0.60%
2.75% 2.75%
1.41% 1.41%
Total 11,991,017.37 11,991,017.37
(2) Concerning long-term equity investments, the Company’s ability to transfer funds to investee entities is not restricted.
8. Investment real estates (1) Investment real estates measured by cost method Items Opening Increase this Decrease this Closing balance period period balance
I. Cost 6,010,000.00 6,010,000.00 Items Opening Increase this Decrease this Closing balance period period balance
House and building 6,010,000.00 6,010,000.00
II. Accumulative depreciation and amortization 893,987.50 127,412.00 1,021,399.50
House and building 893,987.50 127,412.00 1,021,399.50
III. Accumulative provision for impairment of investment real estates
House and building
IV. Total book value of investment real estate 5,116,012.50 4,988,600.50
House and building 5,116,012.50 4,988,600.50 (2) Investment real estate of the Company is Hubei Building for hiring, located in Shenzhen. The relevant property certificate is a collative warrant, part of which belongs to the Company. Currently, the Company is unable to go through formalities for changes of the collective warrant.
9. Fixed assets (1) Categories of fixed assets Items Opening balance Increase this Decrease this Closing balance period period I. Cost 1,197,194,042.69 30,804,073.20 13,830,943.49 1,214,167,172.40 326,081,232.44 Including: House and building 19,069,419.68 193,324.94 344,957,327.18 61,755,551.19 General equipment 5,380.00 401,634.09 61,359,297.10 797,101,617.87 Special equipment 11,594,074.52 12,457,444.16 796,238,248.23 12,255,641.19 Transportation vehicle 135,199.00 778,540.30 11,612,299.89 413,040,690.70 II. Total accumulative depreciation 54,434,789.69 8,207,763.59 459,267,716.80 98,164,935.24 Including: House and building 13,620,848.34 47,277.72 111,738,505.86 43,265,538.10 General equipment 1,487,943.56 314,270.28 44,439,211.38 265,157,090.66 Special equipment 38,825,442.71 7,269,399.45 296,713,133.92 6,453,126.70 Transportation vehicle 500,555.08 576,816.14 6,376,865.64 5,492,258.90 III. Total accumulative amount of provision for impairment of fixed assets 2,557,685.58 2,934,573.32 1,090,718.63 Including: House and building 1,090,718.63 Items Opening balance Increase this Decrease this Closing balance period period 82,995.62 General equipment 82,995.62 - 4,318,544.65 Special equipment 2,474,689.96 1,843,854.69
Transportation vehicle 778,661,093.09 IV. Total book value of fixed assets 751,964,882.28 226,825,578.57 Including: House and building 232,128,102.69 18,407,017.47 General equipment 16,920,085.72 527,625,982.56 Special equipment 497,681,259.62 5,802,514.49 Transportation vehicle 5,235,434.25
Note: Depreciation amount in 2009 stands at RMB 54,434,789.69, and the original price of construction in progress transferred into fixed assets in the reporting period stands at RMB 24,867,157.97.
(2) Fixed assets with unfinished property certificates Reason Time when the property certificate will be Type Original price obtained Relevant materials are being collected and the Houses and Has been put into use 116,958,457.29 Company is estimated to obtain the property buildings only for a short period certificate at the end of 2010.
10. Construction in progress
(1) Balance of construction in progress Closing amount Opening amount Items Impairment Impairment Book balance Net book value Book balance Net book value provision provision Cogeneration 313,832,490.16 313,832,490.16 198,572,300.79 198,572,300.79 project The second 63,042,533.13 63,042,533.13 54,652,984.34 54,652,984.34 phase of PMIDA Steam pipeline 9,906,565.84 9,906,565.84 project Prepayment for 4,142,356.93 4,142,356.93 5,881,264.88 5,881,264.88 contract project Acetaldehyde 7,639,782.19 7,639,782.19 5,795,073.05 5,795,073.05 Project Project on 5,231,583.54 5,231,583.54 5,119,536.88 5,119,536.88 Circuitry 110KV Closing amount Opening amount Items Impairment Impairment Book balance Net book value Book balance Net book value provision provision from old area to new area Reformation of 1,892,489.63 1,892,489.63 compressed air Improvement on 2,227,507.56 2,227,507.56 1,794,516.25 1,794,516.25 synthesizing technology of trichlorphon The 4th phase of 1,326,225.30 1,326,225.30 extension and reformation on sewage disposal Callback of 774,247.88 774,247.88 mother liquor of fine trichlorphon Extension of 545,236.46 545,236.46 8000t/a paraquat New carbofuran 517,604.98 517,604.98 517,604.98 517,604.98 0.00 project Reformation 472,029.19 472,029.19 project of acid tank in acid-base station Methyl 578,255.00 578,255.00 420,000.00 420,000.00 isocyanate and auxiliary manufacturing equipments for phosgene with 1000t/year Alinating 2,464,664.98 2,464,664.98 411,897.23 411,897.23 isocarbophos Extension and 0.00 0.00 294,263.45 294,263.45 Reformation project on T08 Jingdi steam 2,815,490.73 2,815,490.73 main special line project
Other 1,838,119.00 1,838,119.00 Total 404,330,388.20 517,604.98 403,812,783.22 288,376,236.15 517,604.98 287,858,631.17
(2) Significant changes in construction in progress
Transferring Proportion of Budgeted Opening Increase this Name of project into fixed input in amount balance period Other decrease assets this budgets period
Total 288,376,236.15 142,571,949.63 24,867,157.97 1,750,639.61
Of which: The second phase of PMIDA 77,500,000.00 54,652,984.34 8,389,548.79 81.35% Cogeneration project 360,000,000.00 198,572,300.79 115,260,189.37 87.18% Steam pipeline project 20,000,000.00 9,906,565.84 8,093,434.16 18,000,000.00 90.00%
Methanal project 20,000,000.00 5,795,073.05 1,844,709.14 38.20%
Con.: Project Capitalization of Of which: capitalization of Capitalization rate Capital Closing amount progress interest interest in 2009 of interest in 2009 resource
8,867,171.41 3,393,077.59 404,330,388.20
82% 1,420,303.24 Bank loans 63,042,533.13
88% 5,882,207.59 4.86% Bank loans 313,832,490.16
100% Self-raised
40% Self-raised 7,639,782.19
(3) Impairment provisions of construction in progress Opening Increase this Decrease this Closing Project Reason balance period period balance
New carbofuran project 517,604.98 517,604.98
Total 517,604.98 517,604.98 (4) Closing amount of construction in progress increased RMB 115,950,000 over the opening amount, mainly because of increase in cogeneration project input in the reporting period.
11. Intangible assets Increase this Decrease this Project Opening balance Closing balance period period
I. Total cost 210,591,119.53 210,591,119.53
1. Non-patent technology 9,573,700.00 9,573,700.00 Increase this Decrease this Project Opening balance Closing balance period period
2. Land use right 201,017,419.53 201,017,419.53
II. Total accumulative amortization 28,030,677.14 2,016,296.50 30,046,973.64
1. Non-patent technology 3,776,533.17 304,000.02 4,080,533.19
2. Land use right 24,254,143.97 1,712,296.48 25,966,440.45 III. Total accumulative amount of impairment provision 32,072,093.53 32,072,093.53
1. Non-patent technology 0
2. Land use right 32,072,093.53 32,072,093.53
IV. Total carrying value 150,488,348.86 148,472,052.36
1. Non-patent technology 5,797,166.83 5,493,166.81
2. Land use right 144,691,182.03 142,978,885.55
12. Deferred income tax assets (1) Recognized deferred income tax assets Items Closing balance Opening balance
Provision for assets impairment 4,399,137.65 4,399,137.65
Deductible deficit 8,102,591.94 8,102,591.94
Changes in fair value of tradable financial assets Total 12,501,729.59 12,501,729.59
(2) Details for unrecognized deferred income tax assets Items Closing balance Opening balance Deductible temporary difference 32,680,993.43 32,680,993.43 Deductible deficit 207,192.60 207,192.60 Total 32,888,186.03 32,888,186.03
(3) Deductible deficit of unrecognized deferred income tax assets will be mature in the next year Closing Opening Year Remark balance balance Deductible deficit arising from Jingzhou Lingxiang 2014 -828,770.38 Chemical Industry Co., Ltd in 2009 Total -828,770.38
(4) Temporary difference caused by temporary different assets Items Closing amount of temporary Opening amount of temporary difference difference Provision for assets impairment 17,596,550.60 17,596,550.60
Deductible deficit 32,410,367.75 32,410,367.75
Changes in fair value of tradable financial assets Total 50,006,918.35 50,006,918.35
13. Provision for assets impairment Increase this period Decrease this period Opening Closing Items Other Other balance Withdrawal Reversal Writing-off balance increase decrease 41,181,746.69 Provision for bad debts 3,788,521.58 6,480.09 8,457.15 44,955,331.03 16,231,411.89 Provision for falling 6,859,227.51 2,309,353.64 - 20,781,285.76 price of inventory 11,991,017.37 Provision for impairment of - - - 11,991,017.37 long-term equity investment 5,492,258.90 Provision for impairment of fixed - 2,557,685.58 - 2,934,573.32 assets 517,604.98 Provision for impairment of - - - 517,604.98 construction in progress 32,072,093.53 Provision for impairment of - - - 32,072,093.53 intangible assets Total 107,486,133.36 10,647,749.09 4,873,519.31 8,457.15 113,251,905.99
14. Assets with restricted ownership (1) Assets with restricted ownership Assets with restricted Opening book Increase this Decrease this Closing book ownership value period period value Assets for guarantee
1. Receivable accounts 4,899,274.54 86,442,240.09 91,341,514.63
2. Fixed assets 92,943,550.50 92,943,550.50
Total 97,842,825.04 86,442,240.09 184,285,065.13 (2) Reason for assets ownership being restricted: receivable accounts was trade financing loans from bank which was documentary L/C of opened by foreign customers, then Hubei Sanonda Foreign Trade Corporation, subsidiary of the Company, pledged right of collecting payment for goods to bank, and loans obtained by the Company through pledge of accounts receivable to ICBC Shashi Subbranch; fixed assets with restricted ownership was because the Company mortgaged 69 production lines to Industrial and Commercial Bank of China for gaining short-term loans.
15. Short-term loans (1) Category of loans Type Closing balance Opening balance
Collaterall loan 85,000,000.00 10,000,000.00
Guaranteed loan 70,000,000.00 25,000,000.00
Secured borrowings 91,341,514.63 4,899,274.54
Total 246,341,514.63 39,899,274.54
(2) There is no matured short-term loan unredeemed in the Company (3) Guaranteed loan
Units Amount Way Guarantor (object of pledge) China Construction Bank, Sanwan 85,000,000.00 Collaterall loan House and building, land Subbranch Pudong Development Bank, Wuhan 30,000,000.00 Guaranteed loan Sanonda Group Corporation Branch
Bank of Communications, Wuhan 40,000,000.00 Guaranteed loan Guangxi Hechi Chemicals Branch Co., Ltd Industrial and Commercial Bank of 50,000,000.00 Secured Accounts receivable China, Shashi Subbranch borrowings International Department of Bank of 3,590,375.10 Secured Accounts receivable China borrowings Agricultural Bank of China Jingzhou 23,531,834.42 Secured Accounts receivable Jiangjin Subbranch borrowings Bank of Communications, Wuhan 14,219,305.11 Secured Accounts receivable Branch borrowings Total 246,341,514.63 (4) Closing amount of short-term loan increased RMB 206,440,000 over the opening amount, mainly because of increase in production fund and project input needs.
16. Notes payable
Type Closing balance Opening Balance
Bank acceptance bill 20,000,000.00 5,000,000.00
Total 20,000,000.00 5,000,000.00
17. Accounts payable (1) By aging Closing balance Opening balance Aging Amount Proportion Amount Proportion
106,679,646.18 91.23% Within 1 year (including 1 92,219,025.56 90.56% year) 4,908,266.24 4.20% 1-2 years (including 2 years) 5,129,103.62 5.04% 1,584,294.76 1.35% 2-3 years (including 3 years) 777,354.54 0.76% Over 3 years 3,711,505.12 3.64% 3,769,145.82 3.22%
Total 101,836,988.84 100.00% 116,941,353.00 100.00%
(2) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the accounts payable.
(3) Accounts payable of large amount with aging over 1 year. Reason for unpaid or Repayment amount after Enterprise name Amount unsettlement balance sheet 1,542,200.00 Unsettlement because the Bluestar (Beijing) Chemical project has not finished Machinery Co., Ltd yet
(4) In accounts payable, the Company need to pay RMB 3,051,791.54 to related parties, accounting for 3% in total accounts payable.
18. Advance from customers (1) By aging Closing balance Opening balance Aging Amount Proportion Amount Proportion
Within 1 year (including 1 year) 32,380,695.01 91.85% 28,029,729.38 91.21%
1-2 years (including 2 years) 313,268.95 0.89% 590,312.70 1.92%
2-3 years (including 3 years) 592,541.75 1.68% 227,914.84 0.74%
Over 3 years 1,968,240.56 5.58% 1,883,301.71 6.13%
Total 35,254,746.27 100.00% 30,731,258.63 100.00%
(2) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the advance from customers. (3) In advance from customers, the Company received RMB 800.00 from related parties in advance, accounting for 0.002% in total advance from customers. (4) There is no large item in the advance from customers with aging over 1 year.
19. Payroll payable Items Opening balance Increase this period Payment this period Closing balance
I. Wages, bonuses, allowance and subsidies 12,288,980.00 26,885,970.60 39,174,950.60 II. Welfare expenses for the employees 4,117,207.48 3,128,690.32 988,517.16
III. Social insurances 560,000.00 9,663,429.08 10,600,456.20 -377,027.12
Of which: 1. Medical insurance 232,258.84 1,002,205.24 -769,946.40
2. Endowment insurance 8,112,112.82 8,249,928.02 -137,815.20
3. Unemployment insurance 560,000.00 712,059.28 736,432.28 535,627.00
4. Work injury insurance 488,585.14 492,073.50 -3,488.36
5. Maternity insurance 118,413.00 119,817.16 -1,404.16
IV. Housing accumulation fund 20,589.79 3,274,137.00 2,252,952.00 1,041,774.79
V. Labor union expenditure 245,457.95 391,218.14 272,519.03 364,157.06
VI. Employee education expenses 21,929.59 24,396.97 37,827.00 8,499.56 VII. Compensations for the cancellation of the labor relationship with the employees 4,094,941.12 67,200.00 67,200.00 4,094,941.12
VIII. Other 575,535.70 592,859.70 -17,324.00
Total 17,231,898.45 44,999,094.97 56,127,454.85 6,103,538.57
20. Taxes and dues payable
Taxes and dues Closing balance Opening balance
1. Corporate income tax 7,498,764.51 13,722,355.69
2. VAT -21,363,883.65 -21,328,286.43
3. Business tax 471,303.68 56,449.91
4. Tax on resources 28,550.56 28,952.66
5. Land holding tax 520,481.42 308,509.51
6. Property tax 441,822.18 301,624.41 7. Tax for maintaining and building cities 296,953.89 902,284.85
8. Educational surcharges 137,669.97 517,318.91 Taxes and dues Closing balance Opening balance
9. Individual income tax withheld and remitted 153,163.71 33,491.38
10. Others 136,172.07 998,603.08
Total -11,679,001.66 -4,458,696.03
21. Dividends payable Name of investor Closing balance Opening amount Reason for not paying dividends for more than 1 year
State-owned Assets Supervision and 224,463.30 224,463.30 Administration Commission of Qichun
Jingzhou Shashi Rural Credit Union 125,000.00 125,000.00
Total 349,463.30 349,463.30
22. Other payables (1) Listing by ages Closing balance Opening balance Aging Amount Proportion Amount Proportion 26,831,621.91 68.08% Within 1 year (including 1 year) 34,563,682.67 74.56% 4,426,377.44 11.23% 1-2 years (including 2 years) 2,635,458.35 5.79% 4,317,106.00 10.95% 2-3 years (including 3 years) 254,680.76 0.56% 3,838,729.61 9.74% Over 3 years 8,681,407.84 19.09% 39,413,834.96 100.00% Total 46,135,229.62 100.00% (2) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the other payables. (3) Among other payables, RMB 742,889.70 is that the Company should pay to related parties, accounting to 1.61% of total amount of other payables. (4) There is no large item in the other payables with aging over 1 year.
23. Non-current liabilities due within one year (1) Breakdown
Item Closing amount Opening amount
Long-term borrowings due within 160,000,000.00 95,000,000.00 one year
Total 16,000,000.00 95,000,000.00
(2) Long-term borrowings due within one year Type Closing balance Opening balance
Mortgaged borrowings
Guaranteed borrowings 160,000,000.00 95,000,000.00
Total 16,000,000.00 95,000,000.00
① Top five long-term borrowings due within one year with the largest amount
Ending Closing balance Opening balance Beginning Creditor date of Interest Foreign Interest Foreign date of loan Currency RMB Currency RMB loan rate currency rate currency
Shenzhen
Ping An 2009/4/28 2012/4/27 5.103% RMB 45,000,000.00 5.103% RMB 45,000,000.00
Bank Import and
Export
Bank of 2009/5/18 2011/5/18 3.51% RMB 50,000,000.00
China,
Hubei
Branch
Import and
Export
Bank of 2009/6/30 2011/6/30 3.51% RMB 65,000,000.00
China,
Hubei
Branch ② No long-term borrowings due within one year of the Company are overdue.
③ Guaranteed loans Way of Creditor Amount of loan Guarantor guarantee
Shenzhen Ping An Bank 45,000,000.00 Guaranteed China National Chemical loan Corporation (ChemChina)
Import and Export Bank of China, Hubei 115,000,000.00 Guaranteed China National Branch Agrochemical Corporation loan Total 160,000,000.00
24. Long-term borrowings (1) By category
Type of borrowing Closing balance Opening balance
Guaranteed loan 624,560,000.00 579,560,000.00
Total 624,560,000.00 579,560,000.00
(2) Top five long-term borrowings with the largest amount
Beginning Ending Closing balance Opening balance
Creditor date of date of Interest Foreign Interest Foreign Currency RMB Currency RMB loan loan rate currency rate currency
Jingzhou
Sanwan
Sub-branch of 2008/2/3 2013/2/2 5.76% RMB 97,560,000.00 5.76% RMB 97,560,000.00 China
Construction
Bank
Jingzhou
Sanwan
Sub-branch of 2009/2/10 2014/2/9 5.76% RMB 80,000,000.00 5.76 RMB 80,000,000.00 China
Construction
Bank
Wuhan Branch of Industrial 2008/4/21 2013/4/21 5.76% RMB 90,000,000.00 5.76% RMB 90,000,000.00
Bank Import and
Export Bank of 2009/7/31 2011/7/31 3.51% RMB 85,000,000.00 3.51% RMB 85,000,000.00 China, Hubei
Branch
Shenzhen Ping 2009/4/29 2012/4/29 4.86 RMB 172,000,000.00 4.86 RMB 32,000,000.00 An Bank
(3) Guaranteed loan
Creditor Amount Way Guarantor
Jingzhou Sanwan Sub-branch of China 257,560,000.00 Guaranteed loan China National Chemical
Construction Bank Corporation (ChemChina) 110,000,000.00 Wuhan Branch of Industrial Bank Guaranteed loan Sanonda Group Co., Ltd. Import and Export Bank of China, 85,000,000.00 Guaranteed loan China National Agrochemical Hubei Branch Corporation 172,000,000.00 Shenzhen Ping An Bank Guaranteed loan China National Chemical Creditor Amount Way Guarantor
Corporation (ChemChina) Total 624,560,000.00
(4) Long-term borrowings as at the period-end increased by 7.76% as compared with that at the period-begin, mainly because of increase in borrowing of thermal electricity joint production project.
25. Long-term payables
Type Closing balance Opening balance
Environmental protection special loan from 2,000,000.00 2,000,000.00 Jingzhou Bureau of Finance
Loan for glyphosate project 490,000.00 490,000.00
Treatment funds from Environmental 200,000.00 200,000.00 Protection Bureau of Hubei Province
Borrowing for the cooperation project with Guangzhou Chemical Industry Research 160,000.00 160,000.00 Institute
Borrowing for highly toxic pesticide production line change from Jingzhou 6,990,000.00 6,990,000.00 Bureau of Finance Total 9,840,000.00 9,840,000.00
26. Other non-current liabilities
Type Closing balance Opening balance Subsidy of treasury bonds financed projects (highly 6,990,000.00 6,990,000.00 toxic pesticide alternate projects） Appropriation to the CTC consumption elimination project of 2,219,677.27 2,219,677.27 Sanonda (Jingzhou) Pesticides and Chemicals Co., Ltd. Total 9,209,677.27 9,209,677.27
27. Share capital
Increase/decrease (+/-)
Opening New Bonus shares Bonus shares Closing Items balance shares from retained from capital Others Total balance issued profit reserve 42,712.00 42,712.00 I. Shares subject to trading moratorium
1. Shares held by the State Increase/decrease (+/-)
Opening New Bonus shares Bonus shares Closing Items balance shares from retained from capital Others Total balance issued profit reserve
2. Shares held by state-owned corporation 42,712.00 42,712.00 3. Shares held by other domestic investors
Of which: Shares held by domestic corporation 42,712.00 42,712.00 Shares held by domestic natural person
4. Shares held by other foreign investors
Of which: Shares held by foreign corporation
Shares held by foreign natural person 593,880,508.00 593,880,508.00 Ⅱ. Shares not subject to trading moratorium 363,880,508.00 363,880,508.00 1. Renminbi common shares 230,000,000.00 230,000,000.00 2. Domestically listed foreign shares
3. Overseas listed foreign shares
4. Other 593,923,220.00 593,923,220.00 Total shares
28. Special reserve Items Opening balance Increase this Decrease this Closing balance period period
Safe production fee 20,689,819.99 8,205,654.72 6,476,373.01 22,419,101.70
Total 20,689,819.99 8,205,654.72 6,476,373.01 22,419,101.70
29. Capital reserve Items Opening balance Increase this Decrease this Closing balance period period
Capital premium (Premium 264,067,481.22 264,067,481.22 on capital stock) Other 7,523,997.13 7,523,997.13
Total 271,591,478.35 271,591,478.35
30. Surplus reserve Items Opening balance Increase this Decrease this Closing balance period period
Statutory surplus reserve 68,921,202.12 68,921,202.12
Discretionary surplus 3,815,085.65 3,815,085.65 reserve
Total 72,736,287.77 72,736,287.77
31. Retained profit
Items Amount Retained profit at the end of previous year before adjustment 129,046,856.85
Adjustment: Total retained profit as at 31 December 2009 (increase “+”, decrease “-”) Retained profit at the beginning of year after adjustment 129,046,856.85
Add: Net profit attributable to owners of parent company in this 12,409,697.08 period Other increase
Less: appropriating statutory surplus reserve Appropriating discretionary surplus reserve Common share dividend payable
Dividend of common share transferred into share capital Retained profit at the period-end 141,456,553.93
32. Operating revenue and operating cost
(1) Itemize
Operating revenue Operating cost Items This period Last period This period Last period
Main operation 743,040,199.27 941,804,531.22 638,018,854.90 773,512,937.14
Other 53,227,971.11 43,479,459.62 42,351,194.16 37,023,718.85
Total 796,268,170.38 985,283,990.84 680,370,049.06 810,536,655.99
(2) Main operation (classified by industries)
Name of Income from main operation Cost of main operation Profit of main operation This period Last period This period Last period This period Last period industry
Manufacturing of
chemical raw
material and
chemicals 743,040,199.27 941,804,531.22 638,018,854.90 773,512,937.14 105,021,344.37 168,291,594.08
Total 743,040,199.27 941,804,531.22 638,018,854.90 773,512,937.14 105,021,344.37 168,291,594.08
(3) Main operation (classified by products)
Income from main operation Cost of main operation Profit of main operation Name of products This period Last period This period Last period This period Last period
New chemical materials and special chemicals 9,004,145.38 5,747,391.55 4,888,588.66 3,183,876.80 4,115,556.72 2,563,514.75
Petrochemicals and refining and chemical products 48,914,169.13 31,897,705.52 40,597,346.44 22,542,164.88 8,316,822.69 9,355,540.64
Basic (chlor-alkali) chemicals 13,583,301.73 14,849,102.40 -1,265,800.67
Agrochemicals such as chemical fertilizer and pesticide 671,538,583.03 904,159,434.15 577,683,817.40 747,786,895.46 93,854,765.63 156,372,538.69
Total 743,040,199.27 941,804,531.22 638,018,854.90 773,512,937.14 105,021,344.37 168,291,594.08 (4) Sales revenue from the top five clients of the Company is RMB 101,106,491.95 in total, accounting for 13.61% of total sales revenue. (5) Operating revenue in the reporting period has decreased by 19.18% over the last year, mainly because pesticide and chemical market remains weak, as well as over-capacity of production, resulting in a large margin drop in market price of products.
33. Business taxes and surcharges
(1) Itemize
Items This period Last period Standard
Business tax 765,108.59 120,583.48 5% of turnover
Tax on resources RMB 2/ton for liquid salt, RMB 12/ton for 443.52 solid salt Tax for maintaining 7% or 5% of circulating tax and building cities 197,843.33 252,098.97
Educational surtax 91,400.99 108,042.27 3% of circulating tax Items This period Last period Standard
Other 90,112.09 19,735.81
Total 1,144,465.00 500,904.05 (2) Business taxes and surcharges in the reporting period decreased by 49.23% over the last year, which caused by drop of operating revenue in the reporting period, resulting in falling-off of surtax.
34. Financial expense
Items This period Last period
Interest expense 20,485,595.34 21,466,709.34
Less: interest income 3,085,001.43 3,639,286.97
Exchange loss 238,344.74 163,274.63
Less: exchange gain 41,051.78 190,857.90
Other 6,892,739.95 9,738,046.51
Total 24,490,626.82 27,537,885.61
35. Loss on assets impairment
Items This period Last period
1. Loss on bad debts 3,580,183.14 4,580,867.92
2. Loss on falling price of inventory 6,859,227.51 1,009,167.62
Total 10,439,410.65 5,590,035.54
36. Income from change in fair value
Items This period Last period
Transaction financial assets 2,196,656.32
Total 2,196,656.32
37. Investment income (1) Itemize
Resource of investment income This period Last period
Income from disposal of long-term equity 1,440,000.00 investment measured at cost method
Total 1,440,000.00 Note: There exists no major limitation to repatriation of investment income.
38. Non-operating income (1) Itemize Items This period Last period
1. Subtotal of profit from disposal of non-current 825,762.70 assets 2,331,756.19
Of which: Profit from disposal of fixed assets 825,762.70 2,331,756.19
2. Other 20,636.00 328,046.88
Total 846,398.70 2,659,803.07
39. Non-operating expense (1) Itemize
Items This period Last period
1. Total loss on disposal of non-current assets 222,155.60
Of which: Loss on disposal of fixed assets 222,155.60
2. Extraordinary loss 2545.97 14,038.00
3. Other 349,604.49 1,021,517.33
Total 574,306.06 1,035,555.33
40. Income tax expense (1) Itemize
Items This period Last period
Income tax expense 8,989,587.07 15,073,885.85 Of which: Current period income tax 8,989,587.07 15,073,885.85 Deferred income tax
41. Supplementary information to cash flow statement (1) Reconciliation of net profit to net cash flows generated from operating activities
Items This period Last period 1. Reconciliation of net profit to net cash flows generated from operating activities
Net profit 11,931,872.00 45,223,722.21
Add: Provision for impairment of assets 5,765,772.63 5,590,035.54
Depreciation of fixed assets, of oil-gas assets, of productive biological assets 54,562,201.69 45,544,393.45
Amortization of intangible assets 2,016,296.50 1,683,530.76
Amortization of long-term deferred expense 14,273.21 Losses on disposal of property, plant and equipment, intangible assets and other long-term assets (gains: negative) -603,607.10 -2,331,756.19
Loss on retirement of fixed assets (gains: negative)
Losses from variation of fair value (gains: negative) -2,196,656.32 Items This period Last period
Financial cost (gains: negative) 24,490,626.82 27,537,885.61
Investment loss (gains: negative) -1,440,000.00
Decrease in deferred income tax assets (gains: negative)
Increase in deferred income tax liabilities (decrease: negative)
Decrease in inventory (gains: negative) -55,452,622.59 51,411,108.79
Decrease in accounts receivable from operating activities (gains: negative) -122,735,491.07 -104,134,875.20
Increase in payables from operating activities (decrease: negative) -13,929,542.03 -6,971,552.96
Other
Net cash flows generated from operating activities -93,954,493.15 59,930,108.90 II. Investing and financing activities that do not involving cash receipts and payment:
Conversion of debt into capital -
Convertible bond due within one year -
Fixed assets financed by finance leases -
III. Net increase in cash and cash equivalents -
Closing balance of cash 543,482,180.87 657,073,854.90
Less: Opening balance of cash 474,460,623.29 562,832,319.76
Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 69,021,557.58 94,241,535.14
IX. Related party and Related Transaction 1. Recognition standard for related parties: When a party controls, jointly controls or exercises significant influence over another party, or when two or more parties are under the control, joint control or significant influence of the same party, the affiliated party relationships are constituted.
2. Information related to parent company of the Company
Name of parent Legal Type Registration place Business scope Registered capital company representative
93 Beijing East Production and operation Sanonda Group State-owned Road, Jingzhou, Li Zuorong of pesticide and 240,661,000.00 Corporation enterprise Hubei Province chemicals products Name of parent Legal Type Registration place Business scope Registered capital company representative
Constructional China National 62 North 4th Ring State-owned engineering, mineral Agrochemical Road W., Haidian Lei Zhihong 459,710,634.02 enterprise products, fertilizer, Corporation District, Beijing chemical raw materials 9,372,817,000.00 Constructional 62 North 4th Ring ChemChina State-owned engineering, mineral Road W., Haidian Ren Jianxin Corporation enterprise products, fertilizer, District, Beijing chemical raw materials
(Con.)
Proportion of share held by Proportion of voting rights owned parent company against the by parent company against the Organization code Remark Company Company
20.02% 20.02% 178987789 Parent company
100011399 Parent company of parent company 710932515 Final controller
3. Information on subsidiaries of the Company
Name of subsidiaries Relationship Type Registration place Legal with the representative Company
Sanonda (Jingzhou) Holding State-holding Pesticide & Chemical 10 Xihuan Road, Jingzhou District Deng Guobin subsidiary enterprise Co., Ltd.
Hubei Sanonda Holding State-holding Foreign Trading Co., 1 Beijing East Road, Jingzhou Li Zuorong subsidiary enterprise Ltd. Hubei Sanonda Tianmen Holding State-holding 179 Gudu Av., Zaoshi, Tianmen Xie Chengli Agrochemical Co., subsidiary enterprise Ltd. Jingzhou Longhua Holding State-holding Petrochemicals Co., 95 Beijing East Road, Jingzhou Liu Anping subsidiary enterprise Ltd. Jingzhou Sanonda Holding State-holding 93 Beijing East Road, Jingzhou Li Zuorong Aifusi Chemical subsidiary enterprise Name of subsidiaries Relationship Type Registration place Legal with the representative Company
Industry Co., Ltd.
Jingzhou Lingxiang Nongji Road, Yaowan Branch, Sha Holding State-holding Chemical Industry City Farm, Jingzhou Development Yin Hong subsidiary enterprise Co., Ltd. Zone
(Con.)
Business scope Registered Proportion Proportion Organization capital of holding of voting code (RMB’0000) share rights
Production of pesticide and intermediate 3,000 88.33% 88.33% 181860033
Import and export of pesticide and 1,000 90.00% 90.00% 706963167 intermediate
Production and sale of pesticide 3,000 98.50% 98.50% 181851778
Production and sale of chemical products 500 65.00% 65.00% 757019360
R&D, production and sale of fine 600 95.10% 95.10% 760683174 chemical products
R&D and sale of chemical products 1,000 51.00% 51.00% 682687056
4. Information on other related parties
Name of other related parties Relationship with the Organization code Company
Jingzhou Sanonda Advertising Co., Ltd. Same parent company 706967790
Jingzhou Hengxiang Material Trade Co., Same parent company 790577401 Ltd
Jingzhou Hongxiang Chemicals Co., Ltd Same parent company 798771196
Jingzhou Fude Foods General Factory Same parent company 178960447
Jingzhou Dali Industrial Co., Ltd Joint stock company 17897655-3
Hubei Jingzhou Huaxiang Chemical Co., Affiliated enterprise of parent 73713373X Ltd. company
Guangxi Hechi Chemicals Co., Ltd Same final controller 200887558 Bluestar (Beijing) Chemical Machinery Same final controller 795955432 Co., Ltd Bluestar Environment Engineering Co.,
Ltd. Same final controller Jiangsu Anbang Electrochemical Co., 139433337 Ltd. Same final controller
5. Transaction of related parties (1) Purchase and sale transaction, related transaction providing and receiving labor service (Unit: RMB Yuan) This period Last period
Principle Percentage Percentage Name of enterprise Type Content of price Amount to the same Amount to the same transaction transaction
China National Agrochemical Purchase Purchase of raw Market Corporation materials price 43,779,916.05 10.55% 21,914,775.00 4.30% Sanonda Group Corporation Purchase Purchase of raw Market materials price 5,615,302.58 1.35% 64,428,155.10 12.64% Jingzhou Sanonda Advertising Purchase Purchase of packaging Market Co., Ltd. price 3,244,611.79 6.05% 2,489,959.85 4.27% Jingzhou Hengxiang Material Purchase Purchase of raw Market Trade Co., Ltd materials price 4,663,256.07 1.12% 11,509,623.40 2.26% Jingzhou Dali Industrial Co., Ltd Purchase Purchase of packaging Market price 2,917,948.72 5.44% 4,726,520.00 8.11% Jingzhou Fude Foods General Purchase Purchase of packaging Market Factory price 1,413,846.61 2.43%
Bluestar Environment Purchase Purchase of raw Market Engineering Co., Ltd. materials price 11,538.46 0.003% Jingzhou Hengxiang Material Sale Sale of pesticide and Market Trade Co., Ltd chemical products price 720,159.83 0.10% 129,701.56 0.01% Hubei Jingzhou Huaxiang Sale Sale of chemical Market Chemical Co., Ltd. products price 14,749,943.74 1.99% 13,976,014.87 1.48%
Jiangsu Anbang Electrochemical Sale Market Sale of pesticides Co., Ltd. price 1,882,058.23 0.25% 1,224,210.00 0.13%
(2) Related-party guarantee
Execution of Guarantor Secured party Amount secured Starting date Ending date not 10,000,000.00 2009.11.13 2012.11.13 Sanonda Group Corporation The Company No 20,000,000.00 2010.02.01 2013.02.01 Sanonda Group Corporation The Company No 90,000,000.00 2008.4.21 2015.4.21 Sanonda Group Corporation The Company No 217,000,000.00 2009.4.28 2014.4.28 ChemChina Corporation The Company No 80,000,000.00 2008.8.29 2015.8.28 ChemChina Corporation The Company No 80,000,000.00 2009.2.10 2016.2.9 ChemChina Corporation The Company No 97,560,000.00 2008.2.3 2015.2.2 ChemChina Corporation The Company No Execution of Guarantor Secured party Amount secured Starting date Ending date not 50,000,000.00 2009.5.18 2013.5.18 China National Agrochemical The Company No Corporation 65,000,000.00 2009.6.30 2013.6.30 China National Agrochemical The Company No Corporation 85,000,000.00 2009.7.31 2013.7.31 China National Agrochemical The Company No Corporation 40,000,000.00 2010.2.10 2010.12.10 Guangxi Hechi Chemicals Co., The Company No Ltd. 100,000,000.00 2008.1.12 2013.1.12 The Company Guangxi Hechi No Chemicals Co., Ltd.
(3) Other related transactions This period Last period
Principle Percentage to Percentage Name of enterprise Type Content of pricing Amount the same Amount to the same transaction transaction
Sanonda Group Guarantee Guarantee fee paid Negotiated 4,850,000.00 70.80% 3,450,000.00 74.03% Corporation prices China National Guarantee Guarantee fee paid Negotiated 2,000,000.00 29.20% 1,210,000.00 25.97% Agrochemical prices Corporation
6. Accounts receivable and payable of related parties
Name of project Related parties Closing amount Opening amount
Advances from Jingzhou Hengxiang Material Trade customers Co., Ltd 800.00 800.00
Jingzhou Hengxiang Material Trade Accounts payable Co., Ltd 544,448.00 157,828.70
Accounts payable Jingzhou Dali Industrial Co., Ltd 239,327.04 1,165,733.44
Jingzhou Fude Foods General Accounts payable Factory 378,516.50 378,516.50 Bluestar (Beijing) Chemical Accounts payable Machinery Co., Ltd 1,852,200.00 1,852,200.00 Bluestar Environment Engineering Accounts payable Co., Ltd. 37,300.00 378,000.00 Jingzhou Sanonda Advertising Co., Other payablea Ltd. 742,889.70
X. Share-based payments There are no share-based payments that need to be disclosed in the reporting period.
XI. Contingencies 1. Contingent events formed by external guarantee
Total Current status Overdue Guarantee Guarantor Secured entities guarantee Guarantee type of secured amount way amount entities
I. Guarantee for subsidiaries
The Hubei Sanonda Foreign Trading 228,000,000 Joint liability Guarantee for trade Business-as-usual Company Co., Ltd. guarantee financing loan
II. Guarantee for other entities
The Guangxi Hechi Chemicals Co., 100,000,000 Joint liability Guarantee for project Business-as-usual Company Ltd guarantee borrowing
Note: The guarantee provided for Hubei Sanonda Foreign Trading Co., Ltd. (the holding subsidiary of the Company) is that the Company provides maximum security of guaranty for its trade financing behaviors such as opening letter of credit and bill of exchange.
2. Other contingencies The Company has no other contingencies that need to be disclosed.
XII. Commitment Events The Company has no significant commitment events that need to be disclosed.
XIII. Balance-sheet-date Events The Company has no balance-sheet-date event that needs to be disclosed.
XIV. Non-monetary exchange of assets The Company has no non-monetary exchange of assets that needs to be disclosed.
XV. Debt Restructuring The Company has no debt restructuring that needs to be disclosed.
XVI. Borrowing Costs In the reporting period, the borrowing cost that was capitalized was RMB 3,393,077.59 at the capitalization rate of 4.86%.
XVII. Assets and Liabilities Measured at Fair Value The Company has no assets or liabilities measured at fair value.
XVIII. Notes to the Financial Statement of Parent Company
1. Accounts receivable (1) By category
Closing balance Opening balance
Categories Provision for Withdrawal Provision for Withdrawal Amount Proportion Amount Proportion bad debt proportion bad debt proportion Significant single amounts Insignificant single amounts but 8,172,080.39 15.50% 8,172,080.39 100.00% 8,502,080.39 39.99% 8,502,080.39 100.00% with significant credit risk Other insignificant 44,560,968.11 84.50% 3,144,083.97 7.06% 12,756,489.84 60.01% 2,816,340.17 22.08%
Total 52,733,048.50 100.00% 11,316,164.36 21.46% 21,258,570.23 100.00% 11,318,420.56 53.24%
Note: Accounts receivable with insignificant single amounts but with significant credit risk is accounts receivable with larger recoverable risk recognized in accordance with collection work of the Company to debtors and daily businesses occurred, and credit of debtors.
(2) Explanation on bad debt provisions for accounts receivable with significant single amounts or insignificant but being conducted an independent impairment test on:
Contents of accounts Closing balance Amount of bad debt Withdrawal Reasons
receivable proportion
There has been no business contact Payment for goods between parent company and the receivable by customer. And it has not been paid after parent company 8,172,080.39 8,172,080.39 100% several reminders. Possibility of from its domestic recovering the account is estimatedly customer faint. And a bad debt provision has thus been withdrawn in full.
Total 8,172,080.39 8,172,080.39
(3) Classified according to credit risk (aging analysis)
Aging Closing balance Opening balance Provision for Withdrawal Provision for Withdrawal Balance Proportion Balance Proportion bad debt proportion bad debt proportion
Within 1 year
(including
1 year) 42,477,031.09 80.54% 2,003,840.92 4.72% 9,372,552.82 44.09% 376,097.12 4.01%
1-2 years
(including
2 years) 894,701.27 1.70% 44,735.06 5.00% 894,701.27 4.21% 44,735.06 5.00%
2-3 years
(including
3 years) 968,190.45 1.84% 874,462.69 90.32% 968,190.45 4.55% 874,462.69 90.32%
3-4 years
(including
4 years) 4,429,632.68 8.40% 4,429,632.68 100.00% 4,629,632.68 21.78% 4,629,632.68 100.00%
4-5 years
(including
5 years) 1,033,748.76 1.96% 1,033,748.76 100.00% 1,163,748.76 5.47% 1,163,748.76 100.00%
Over 5 years 2,929,744.25 5.56% 2,929,744.25 100.00% 4,229,744.25 19.90% 4,229,744.25 100.00%
Total 52,733,048.50 100.00% 11,316,164.36 21.46% 21,258,570.23 100.00% 11,318,420.56 53.24% (4) The Company hasno accounts receivable cancelled actually in the reporting period. (5) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the accounts receivable. (6) At the end of period, the top five accounts receivable totaled RMB 14,062,725.37, including RMB 11,736,915.07 within one year, RMB 45,520.00 within four to five years, and RMB 2,280,290.30 over five years, taking up 26.67% of total accounts receivable.
(7) Accounts receivable form related parties at the end of period
Name of enterprise Relationship with Amount Proportion to total accounts the Company receivable
Hubei Sanonda Tianmen Subsidiary 2,169,899.18 Agrochemical Co., Ltd. 4.11% Jingzhou Sanonda Aifusi Chemical Subsidiary 230,313.51 Industry Co., Ltd. 0.44%
Total 2,400,212.69 4.55%
2. Other receivables (1) By categories
Closing balance Opening balance
Categories Provision for Withdrawal Provision for Withdrawal Amount Proportion Amount Proportion bad debt proportion bad debt proportion Significant single 142,473,847.44 92.11% 92,136,957.67 90.45% amounts Insignificant single amounts but 82,600.00 0.08% 82,600.00 100.00% 82,600.00 0.08% 82,600.00 100.00% with significant credit risk
Other insignificant 12,078,562.87 7.81% 4,705,478.37 38.96% 9,643,446.06 9.47% 4,707,820.40 48.82%
Total 154,635,010.31 100.00% 4,788,078.37 3.10% 101,863,003.73 100.00% 4,790,420.40 4.70%
(2) Explanation on bad debt provisions for other receivables with significant single amounts or insignificant but being conducted an independent impairment test on Amount of Withdrawal Contents of receivables Closing balance Reasons bad debt proportion
1. Significant single amounts
Jingzhou Lingxiang Chemical Payment for subsidiary, no impairment Industry Co., Ltd occurred when an impairment test was 37,080,213.65 made singly
Hubei Sanonda Foreign Trading Co., Payment for subsidiary, no impairment Ltd. occurred when an impairment test was 79,630,571.51 made singly
Sanonda (Jingzhou) Pesticide Payment for subsidiary, no impairment Chemical Industry Co., Ltd. occurred when an impairment test was 22,631,962.85 made singly
Jingzhou Sanonda Aifusi Chemical Payment for subsidiary, no impairment Industry Co., Ltd. occurred when an impairment test was 3,131,099.43 made singly
2. Insignificant single amounts but being conducted an independent impairment test on
Individual arrears 82,600.00 82,600.00 100% Considering an old account age, the account is estimated to be irrecoverable. And a full-amount provision has thus been
withdrawn.
Total 142,556,447.44 82,600.00
(3) Classified by credit risk (aging analysis)
Closing balance Opening balance
Aging Bad debt Withdrawal Bad debt Withdrawal Balance Proportion Balance Proportion provision proportion provision proportion
Within 1 87,444,716.22 71.67% 73,851.72 0.08% year 133,965,548.68 86.63% 180,886.96 0.14% (including 1 year)
1-2 years 17,245,679.61 14.13% 33,946.42 0.20% (including 4,146,951.78 2.68% 24,476.40 0.59% 2 years)
2-3 years 3,410,437.73 2.79% 37,027.31 1.09% (including 9,272,630.00 6.00% 8,631.50 0.09% 3 years)
3-4 years 9,358,647.54 7.67% 78,600.00 0.84% (including 2,366,133.61 1.53% 28,379.73 1.20% 4 years)
4-5 years 489,085.60 0.40% 43,829.82 8.96% (including 434,434.17 0.28% 96,391.71 22.19% 5 years)
Over 5 4,079,124.47 3.34% 4,079,124.47 100.00% 4,449,312.07 2.88% 4,449,312.07 100.00% years 122,027,691.17 100.00% 4,346,379.74 3.56% Total 154,635,010.31 100.00% 4,788,078.37 3.10%
(4) No amount due from shareholders who hold 5% or more of the voting rights of the Company is included in the other receivables.
(5) Other receivables with the larger amount at the end of reporting period
Name of enterprise Nature or content Amount
Jingzhou Lingxiang Chemical Borrowing 37,080,213.65 Industry Co., Ltd Hubei Sanonda Foreign Trading Export proceeds 79,630,571.51 Co., Ltd.
Sanonda (Jingzhou) Pesticide Borrowing 22,631,962.85 Chemical Industry Co., Ltd.
(6) Top five parties in other receivables as at period-end Proportion in Relation with Name of entity Amount Age total other the Company receivables
Jingzhou Lingxiang Chemical Subsidiary Within 1 year Industry Co., Ltd 37,080,213.65 23.98%
Hubei Sanonda Foreign Trading Co., Subsidiary Within 1 year Ltd. 79,630,571.51 51.50% Sanonda (Jingzhou) Pesticide Subsidiary Within 4 year Chemical Industry Co., Ltd. 22,631,962.85 14.64% Jingzhou Municipal State Taxation Non-related Within 1 year Bureau party 4,524,598.65 2.93% Jingzhou Sanonda Aifusi Chemical Subsidiary Within 1 year Industry Co., Ltd. 3,131,099.43 2.02%
Total 146,998,446.09 95.06%
(7) Other receivables form related parties at the end of period
Relation with Proportion in total Name of entity Amount the Company other receivables
Jingzhou Lingxiang Chemical Industry Co., Ltd Subsidiary 37,080,213.65 23.98% Hubei Sanonda Foreign Trading Co., Ltd. Subsidiary 79,630,571.51 51.50% Sanonda (Jingzhou) Pesticide Chemical Industry Co., Ltd. Subsidiary 22,631,962.85 14.64% Jingzhou Sanonda Aifusi Chemical Industry Co., Ltd. Subsidiary 3,131,099.43 2.02% Total 142,473,847.44 92.14%
3. Long-term equity investment (1) By specific items Decrease Accounting Initial Opening book Increase in Closing book Investee entity in this method investment amount this period amount period
Sanonda (Jingzhou) Pesticide Cost Chemical Industry Co., Ltd. method 24,500,000.00 26,500,000.00 26,500,000.00
Hubei Sanonda Foreign Trading Cost Co., Ltd. method 9,000,000.00 9,000,000.00 9,000,000.00 Hubei Sanonda Tianmen Cost Agrochemical Co., Ltd. method 7,245,023.32 15,745,023.32 15,745,023.32 Jingzhou Longhua Cost Petrochemicals Co., Ltd. method 3,250,000.00 3,250,000.00 3,250,000.00 Jingzhou Sanonda Aifusi Cost Chemical Industry Co., Ltd. method 3,060,000.00 3,060,000.00 3,060,000.00 Decrease Accounting Initial Opening book Increase in Closing book Investee entity in this method investment amount this period amount period
Jingzhou Lingxiang Chemical Cost Industry Co., Ltd. method 5,100,000.00 5,100,000.00 5,100,000.00
Jingzhou City Commercial Bank Cost Co., Ltd method 20,000,000.00 20,000,000.00 20,000,000.00 Jingzhou Dali Industrial Co., Ltd Cost method 1,674,600.00 1,674,600.00 1,674,600.00 Hubei Shendian Co., Ltd. Cost method 564,000.00 564,000.00 564,000.00 Wangda Industrial Holding Co., Cost Ltd method 550,000.00 550,000.00 550,000.00 Guangxi Zhongding Holding Co., Cost Ltd method 580,800.00 580,800.00 580,800.00
Total 75,524,423.32 86,024,423.32 86,024,423.32
(Con.)
Asset Proportion of Proportion of Explanation on disagreement Opening impairment Closing holding share voting rights between shareholding ratio and impairment reserve impairment Cash bonus in investee in investee voting shareholding ratio in reserve withdrawn in reserve entity entity investee entity this period 88.33% 88.33% 24,500,000.00 24,500,000.00
90.00% 90.00%
98.50% 98.50%
65.00% 65.00% 650,000.00
95.10% 95.10% 2,625,227.72 51.00% 51.00%
5.15% 5.15% 11,991,017.37 11,991,017.37
33.70% 33.70%
0.60% 0.60%
2.75% 2.75%
1.41% 1.41%
Total 36,491,017.37 36,491,017.37 3,275,227.72 (2) Concerning long-term equity investments, the Company’s ability to transfer funds to investee entities is not restricted. 4. Operating revenue and operating cost (1) Itemize
Operating revenue Operating cost Items This period Last period This period Last period
Main operation 546,982,940.41 698,156,697.45 472,222,694.06 571,710,291.09
Other 44,873,698.59 7,352,720.20 35,703,161.66 6,152,241.88
Total 591,856,639.00 705,509,417.65 507,925,855.72 577,862,532.97
(2) Main operation (classified by industries)
Operating revenue Operating cost Name of industry Operating revenue Operating cost Operating revenue Operating cost
Manufacturing of chemical raw 546,982,940.41 472,222,694.06 698,156,697.45 571,710,291.09 material and chemicals
Total 546,982,940.41 472,222,694.06 698,156,697.45 571,710,291.09
(3) Main operation (classified by products) This period Last period Name of products Operating revenue Operating cost Operating revenue Operating cost
Agrochemicals such as chemical fertilizer and 546,982,940.41 472,222,694.06 698,156,697.45 571,710,291.09 pesticide
Total 546,982,940.41 472,222,694.06 698,156,697.45 571,710,291.09 (3) Sales revenue from the top five clients of the Company is RMB 101,106,491.95 in total, accounting for 18.48% of total sales revenue.
5. Investment income (1) Itemize
Resource of investment income This period Last period
Income from long-term equity investment measured at
cost method 3,275,227.72 10,391,698.11
Income from disposal of long-term equity investment 1,440,000.00
Total 3,275,227.72 11,831,698.11
(2) Long-term equity investments measured at cost method are listed according to investees
Investee This period Last period Reason for change of increase/decrease
Hubei Sanonda Foreign Trading Co., Ltd. 10,391,698.11 Bonues dividends are not distributed in this reporting period
Jingzhou Sanonda Aifusi Chemical Bonues dividends are not distributed at the 2,625,227.72 last period Investee This period Last period Reason for change of increase/decrease
Industry Co., Ltd.
Jingzhou Longhua Petrochemicals Co., 650,000.00 Bonues dividends are not distributed at the Ltd. last period Jingzhou Tianyang Huibao Precision 1,440,000.00 Transfer at the last period Chemicals Co., Ltd
Total 3,275,227.72 11,831,698.11
XX. Supplementary Information 料
1. Return on equity (ROE) and earnings per share (EPS) (1) ROE and EPS EPS Weighted average ROE Profit as of reporting Basic Diluted period This Last This Last This Last period period period period period period
Net profit attributable to common shareholders of the Company 1.13% 3.99% 0.0209 0.0743 0.0209 0.0743
Net profit attributable to common shareholders of the Company after deduction of non-recurring profit and loss 1.44% 4.00% 0.0266 0.0745 0.0266 0.0745
(2) Explanation on counting process Items Jan. – Jun. 2010 Jan. – Jun. 2009
Net profit attributable to common shareholders of the Company 12,409,697.08 44,124,619.58 Non-recurring gains and losses attributable to parent company -3,391,452.76 -116,747.31 Net profit attributable to common shareholders of the Company after deduction of non-recurring profit and loss 15,801,149.84 44,241,366.89 Opening net assets attributable to common shareholders of the Company 1,087,987,662.96 1,098,558,871.77 Ending net assets attributable to common shareholders of the Company 1,102,126,641.75 1,112,883,918.38 Net assets attributable to common shareholders of the Company after weighted average 1,095,057,152.36 1,105,721,395.08 Number of shares 593,923,220.00 593,923,220.00
Formulas for computing various indexes are as follows: ① Weighted average ROE
Weighted average ROE＝P0/(E0＋NP÷2＋Ei×Mi÷M0– Ej×Mj÷M0±Ek×Mk÷M0)
Of which: P0 refers to Net profit attributable to common shareholders of the Company or net profit attributable to common shareholders of the Company after deducting non-recurring gains and losses; NP refers net profit attributable to common shareholders of the Company; E0 refers to opening net assets attributable to common shareholders of the Company; Ei refers to additional net assets attributable to common shareholders of the Company due to new share issuance or turning debts into shares in the report period; Ej refers to reduced net assets attributable to common shareholders of the Company due to buy-back business or cash dividends in the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the next month when net assets increased to the end of the report period; Mj refers to the number of months from the next month when net assets decreased to the end of the report period; Ek refers to change of increase/decrease of net assets due to other transaction events; Mk refers to the number of months from the next month when other net assets changed the end of the report period.
In the reporting period, for the business combination under the same control, net assets of investee party shall be made weighting from the beginning of reporting period when calculating weighted average ROE; net assets of investee party shall be made weighting from the next month after combination date when calculating weighted average ROE after deducting non-recurring gains and losses. Net profit and net assets of investee party shall be made weighting from the beginning of comparison period when calculating weighted average ROE during the comparison period; net assets of investee party shall not be made weighting (weighting being zero) when calculating weighted average ROE after deducting non-recurring gains and losses during the comparison period.
② Basic EPS
Basic EPS＝P0÷S
S＝S0＋S1＋Si×Mi÷M0– Sj×Mj÷M0-Sk
Of which: P0 refers to net profit attributable to shareholders holding ordinary shares or net profit attributable to shareholders holding ordinary shares after deducting non-recurring gains and losses; S weighted average number of ordinary shares issued out; S0 refers to total number of shares at the period-begin; S1 refers to the number of shares increased due to transferring capital reserve into share capital or dividend distribution of shares during the report period; Si refers to the number of shares increased due to issuance of new shares or debt for equity swap during the report period; Sj refers to the number of shares decreased due to stock repurchase during the report period; Sk refers to the number of split-share during the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the next month to the end of the report period for increase of shares; Mj refers to the number of months from the next month to the end of the report period for decrease of shares
③ Diluted EPS
Diluted EPS＝P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+weighted average amount of ordinary shares increased due to subscription warrant, stock options, convertible bonds, etc.)
Of which, P1 refers to net profit attributable to shareholders holding ordinary shares or net profit attributable to shareholders holding ordinary shares after deducting non-recurring gains and losses. The Company considered all influence of dilutive potential ordinary share against net profit and made adjustment according to the provisions of Accounting Standard for Business Enterprise. When the Company calculated diluted EPS, it shall consider all influence of dilutive potential ordinary share against net profit attributable to shareholders holding ordinary shares or net profit attributable to shareholders holding ordinary shares after deducting non-recurring gains and losses, till to minimum diluted EPS.
④ The Company has no dilutional potential common share but possibly having dilution in the next period.
⑤ Number of common shares outstanding or number of potential common shares remained unchanged from the balance sheet date to reporting date of approval of the financial report.
2. Non-recurring gains and losses Non-recurring gains and losses Amount Illustration
(1) Gains on disposal of non-current assets including reversal of the 603,607.10 impairment loss
(2) Government grant recognized in current year, except for those acquired in the ordinary course of business or granted continuously in certain standard quota according to relevant national laws and regulations
(3) Included in current profit and loss against the non-financial enterprises
occupation fee funds collected (4) Debt restructuring gains and losses
(5) Gains and losses on change in fair value from tradable financial assets and tradable financial liabilities, as well as investment income from disposal of tradable financial assets and tradable financial liabilities and financial assets available for sales except for effective hedging related with normal businesses of the Company (6) Other non-operating income and expense other than abovementioned -331,514.46
(7) Other non-recurring gains and losses in line with the definition of profit -4,850,000.00 Note 1 and loss items Total of non-recurring gains and losses -4,577,907.36 Non-recurring gains and losses Amount Illustration
Less: non-recurring income tax effect of gains and losses -1,144,476.84
Non-recurring gains and losses after deducting influence of income tax -3,433,430.52
Of which: Attributable to owners of parent company -3,391,452.76
Attributable to minority shareholders -41,977.76
Note 1: Other non-recurring gains and losses in line with the definition of profit and loss items include guarantee fee paid by the Company to Sanonda Group Corporation and China National Agrochemical Corporation.
XXI. Approval of Financial Report The Company’s financial report has been approved at the 2nd Session of the 6th Board of Directors of the Company on 18 August 2010. VII. Documents Available For Reference
I. Text of Interim Report 2010 and the Summary with signature of the Chairman of the Board of the Company. II. Accounting Statements carried with signatures and seals of Legal Representatives and Accounting Principal. III. The original copy of all company files and manuscript of public notices ever disclosed on China Securities Journal, Securities Times and Hong Kong Ta Kung Pao in the report period. IV. Place for reference: the office of the Company
Hubei Sanonda Co., Ltd. Chairman of the Baord: Li Zuorong 18 Aug. 2010