(a joint stock limited company incorporated in the People’s Republic of China) Stock Code: 0350.HK 000666.SZ Friend of Worldwide Textile Industry Pride of China Manufacturing Industry ANNUAL REPORT 2014 REPORT ANNUAL Business address of the Company: Level 7, First Shanghai Centre, 39 Liangmaqiao Road, Chaoyang District, Beijing, PRC Worldwide website: http://www.jwgf.com Telephone: 8610 84534078 / 84534079 IMPORTANT NOTES The Board of Directors, Supervisory Committee, Directors, Supervisors and senior management of Jingwei Textile Machinery Company Limited (the “Company”) undertake that there are no misrepresentation, misleading statement or material omission in this report and are jointly and severally liable for the authenticity, accuracy and completeness of the information contained in this annual report. Baker Tilly China (Special General Partnership) (the PRC Certified Public Accountants) and Baker Tilly Hong Kong Limited (Hong Kong Certified Public Accountants) have audited the financial statements of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2014 in accordance with the PRC Accounting Standards for Business Enterprises and Hong Kong Financial Reporting Standards, respectively, and have given unqualified audit opinions on both financial statements. Mr. Ye Maoxin (Chairman), Mr. Yao Yuming (Director and General Manager), Mr. Mao Faqing (Financial Controller) and Ms. An Yongzhi (Head of Finance Department) hereby confirm that the financial reports as disclosed in this annual report are true, accurate and complete. This report is prepared in both Chinese and English. Except for the financial statements prepared in accordance with Hong Kong Financial Reporting Standards, if there is any discrepancy between the two versions, the Chinese version shall prevail. JINGWEI TEXTILE MACHINERY COMPANY LIMITED • 2014 ANNUAL REPORT Contents Chapter I Company Profile 2 Chapter II Summary of Accounting Data and Financial Indicators 4 Chapter III Directors’ Report 7 Chapter IV Supervisors’ Report 29 Chapter V Significant Events 31 Chapter VI Movements in Share Capital and Information on Shareholders 42 Chapter VII Directors, Supervisors, Senior Management and Staff 50 Chapter VIII Corporate Governance 60 Chapter IX Internal Control 79 Chapter X Report of the Auditor – The PRC 81 Chapter XI Accounts Prepared in Accordance with the PRC Accounting Standards for Business Enterprises 82 Chapter XII Independent Auditor’s Report – Hong Kong 197 Chapter XIII Accounts Prepared in Accordance with Hong Kong Financial Reporting Standards 198 Chapter XIV Documents Available for Inspection 271 JINGWEI TEXTILE MACHINERY COMPANY LIMITED • 2014 ANNUAL REPORT Defi nitions Item Definition CSRC China Securities Regulatory Commission Shenzhen Stock Exchange, SSE Shenzhen Stock Exchange Company, the Company, JWTM Jingwei Textile Machinery Co., Ltd. CHG China Hengtian Group Company Limited CTMC China Textile Machinery (Group) Company Limited SASAC State-owned Assets Supervision and Administration Commission of the State Council Company Law Company Law of the People’s Republic of China Securities Law Securities Law of the People’s Republic of China China Securities Depository China Securities Depository and Clearing Corporation Limited and Clearing Corporation Board Board of Jingwei Textile Machinery Co., Ltd Shareholders’ Meeting Shareholders’ Meeting of Jingwei Textile Machinery Co., Ltd. RMB, RMB’0000, RMB 100 million Renminbi Yuan, Renminbi ’0000, Renminbi 100 million Zhongrong Trust Zhongrong International Trust Co., Ltd. CHTC Heavy Industry CHTC Heavy Industry Co., Ltd. KAMA KAMA Co., Ltd. Hi-Tech Swan Hi-Tech Swan Company Limited CHTC Helon CHTC Helon Company Limited CHTC Fong CHTC Fong’s Industries Company Limited 1 JINGWEI TEXTILE MACHINERY COMPANY LIMITED • 2014 ANNUAL REPORT Chapter I Company Profi le 1. Statutory name of the Company : 經緯紡織機械股份有限公司 Name of the Company in English : Jingwei Textile Machinery Company Limited Abbreviation of Company’s Chinese name : 經緯紡機 Abbreviation of Company’s English name : JWTM 2. Legal representative of the Company : Ye Maoxin 3. Company Secretary to the Board of Directors : Ye Xuehua Telephone : 8610 84534078-8188 E-mail address : [email protected] Stock representative : Telephone : 8610 84534078-8501 E-mail address : [email protected] Correspondence address : Level 7, First Shanghai Centre, 39 Liangmaqiao Road, Chaoyang District, Beijing, the PRC Postal Code : 100125 Facsimile no. : 8610 84534135-8501 4. Registered address of the Company : 8 Yongchangzhong Road, Beijing Economic & Technological Development Zone, Beijing, the PRC Postal Code : 100176 Business address of the Company : Level 7, First Shanghai Centre, 39 Liangmaqiao Road, Chaoyang District, Beijing, the PRC Postal Code : 100125 Worldwide website : http://www.jwgf.com E-mail address : [email protected] 5. Newspaper for corporate : Securities Times information disclosure in the PRC Websites on which the Company’s annual : http://www.cninfo.com.cn report is posted http://www.hkex.com.hk http://www.jwgf.com Place where the annual report is available : Secretariat to the Board 6. Stock Exchanges on which shares of the Company are listed and stock codes A Shares Place of listing : Shenzhen Stock Exchange Stock abbreviation : Jingwei Textile Stock code : 000666 H Shares Place of listing : The Stock Exchange of Hong Kong Limited (“Stock Exchange”) Stock abbreviation : Jingwei Textile Stock code : 0350 2 JINGWEI TEXTILE MACHINERY COMPANY LIMITED • 2014 ANNUAL REPORT Chapter I Company Profi le 7. Other relevant information of the Company (1) Incorporation and registration Date and place of incorporation of : 15 August 1995 at Taiyuan, Shanxi, the PRC the Company Dates and places of changes to : 29 March 1996 at Taiyuan, Shanxi, the PRC registration particulars 5 September 1996 at Taiyuan, Shanxi, the PRC 4 December 1996 at Taiyuan, Shanxi, the PRC 31 October 2000 at Taiyuan, Shanxi, the PRC 8 October 2003 at Beijing, the PRC 9 April 2007 at Beijing, the PRC 31 January 2013 at Beijing, the PRC Business licence registration number of : 110000450005710 enterprise legal person Tax registration certificate number : 110192110052522 Organization code : 11005252-2 (2) Auditors PRC : Baker Tilly China (Special General Partnership) Building 12, Foreign Cultural and Creative Garden, No. 19 Chegongzhuang West Road, Haidian District, Beijing, the PRC Hong Kong : Baker Tilly Hong Kong Limited 2nd Floor, 625 King’s Road, North Point, Hong Kong (3) Hong Kong legal adviser : Gallant Y. T. Ho & Co. 5th Floor, Jardine House 1 Connaught Place Central, Hong Kong (4) Registrar and transfer office for H shares : Computershare Hong Kong Investor Services Limited Shops 1712-1716 17th Floor, Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong 3 JINGWEI TEXTILE MACHINERY COMPANY LIMITED • 2014 ANNUAL REPORT Chapter II Summary of Accounting Data and Financial Indicators Section I Major accounting information and financial indicators of the past three years as at the end of the reporting period prepared in accordance with PRC Accounting Standards for Business Enterprises I. Key accounting data and financial indicators Increase/Decrease of current year over previous 2013 year (%) 2012 2014 Before adjustment After adjustment After adjustment Before adjustment After adjustment Operating income (RMB) 5,117,652,993.82 5,675,484,043.48 5,675,484,043.48 -9.83% 5,061,930,443.44 5,061,930,443.44 Net profit attributable to shareholders of the listed company (RMB) 541,838,563.07 591,778,324.35 591,778,324.35 -8.44% 430,242,760.54 430,242,760.54 Net profit after extraordinary items attributable to shareholders of the listed company (RMB) 491,074,192.61 514,961,807.95 514,961,807.95 -4.64% 292,442,675.69 292,442,675.69 Net cash flow generated from operating activities (RMB) 2,477,067,865.94 2,376,469,041.44 2,376,469,041.44 4.23% 1,791,655,058.64 1,791,655,058.64 Basic earnings per share (RMB/share) 0.77 0.84 0.84 -8.33% 0.70 0.70 Diluted earnings per share (RMB/share) 0.77 0.84 0.84 -8.33% 0.70 0.70 Weighted average net assets income rate (%) 10.12% 12.06% 12.06% Decrease of 11.71% 11.71% 1.94 percentage point Increase/Decrease of current year-end over previous End of 2013 year-end (%) End of 2012 End of 2014 Before adjustment After adjustment After adjustment Before adjustment After adjustment Total assets (RMB) 21,314,618,156.21 18,863,486,831.09 18,863,486,831.09 12.99% 15,553,487,258.76 15,553,487,258.76 Net assets attributable to shareholders of the listed company (RMB) 5,590,919,388.43 5,114,068,305.18 5,114,068,305.18 9.32% 4,702,154,830.44 4,699,708,487.69 II. Differences of accounting data under domestic and foreign accounting standards 1. Differences of net profit and net assets in the financial statements simultaneously disclosed pursuant to the international accounting standards and PRC GAAP □ Applicable √ Not applicable During the reporting period, the Company has no differences of net profit and net assets in the financial statements simultaneously disclosed pursuant to the international accounting standards and PRC GAAP. 2. Differences of net profit and net assets in the financial statements simultaneously disclosed pursuant to the foreign accounting standards and PRC GAAP Unit: RMB Net profit attributable to Net assets attributable to shareholders of the listed company shareholders of the listed company Amount at the Amount for the Amount for the Amount at the beginning current period previous period end of the period of the period According to PRC GAAP 541,838,563.07 591,778,324.35 5,590,919,388.43 5,114,068,305.18 Item and amount adjusted according to foreign accounting standards According to foreign accounting standards 546,455,442.87 596,988,228.50 5,590,919,388.43 5,114,068,305.18 3. Description of reasons for differences of accounting data under domestic and foreign accounting standards According to the Regulation of Work Safety Fee Appropriation and Occupation (Caiqi [2012] No.16) issued by Ministry of Finance and the State Administration of Work Safety, the work safety fee accrual has been applied for the Group since 2012.