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SST中华: 2007年年度报告摘要英文版（修订稿）
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
SHENZHEN CHINA BICYCLE COMPANY （HOLDINGS ）
LIMITED
SUMMARY OF ANNUAL REPORT 2007
§1 Important notice
1.1 Board of Directors and Supervisory Committee of Shenzhen China Bicycle Company (Holdings)
Limited (hereinafter referred to as the Company) and its directors, supervisors and senior executives
hereby confirm that there are no any fictitious records, misleading statements, or important
omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the
reality, accuracy and completion of the contents. The summary of annual report 2007 is abstracted
from the whole annual report; the investors are suggested to read the full text of annual report to
understand more details.
1.2 No directors, supervisors or senior executives stated that they couldn’t ensure the reality,
accuracy and completion of the contents of the Annual Report or have objection for this report.
1.3
Name of absent Name of
Reasons for not attending the Board meeting
directors entrustee
Shi Zhanxiong Due to business outside Liu Linfeng
Li Chun Due to work Zhang Xinmiao
1.4 Shenzhen Pengcheng Certified Public Accountants issued auditor’s report with disclaimer of
opinions for the Company.
1.5 Person in Charge of the Company Mr. Shang Shijun, Person in Charge of Accounting Works Mr.
Ye Qing and Person in Charge of Accounting Institution (Accounting Officer) Ms. He Yili hereby
confirm that the Financial Report of 2007 Annual Report is true and complete.
§2 Company Profile
2.1 General information
Short form of the stock SST ZHONGHUA , ST ZHONGHUA – B
Stock code 000017, 200017
Listed stock exchange Shenzhen Stock Exchange
Registered address No. 3008, Buxin Road, Shenzhen
Post code of registered address 519019
Office address Zhonghua Industrial Park, Yousong Industrial Zone, Longhua, Shenzhen
Post code of office address 518131
Internet web site of the
www.cbc.com.cn
Company
E-mail cbc@cbc.com.cn
2.2 Contact person and method:
Secretary of the Board Authorized Representative of Stock Affairs
Name Li Hai Cui Hongxia
Contact address No. 3008, Buxin Road, Shenzhen No. 3008, Buxin Road, Shenzhen
Tel 0755-28181666，25516998 0755-28181569，25516998
1
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Fax 0755-28181009，25516620 0755-28181009，25516620
E-mail dmc@szcbc.com dmc@szcbc.com
§3. Summary of Accounting Data and Financial Indexes
3.1 Major accounting data
Unit: RMB
Increase/decre
2007 2006 ase in this year 2005
compared with
last year (%)
After Before
Before adjustment After adjustment After adjustment
adjustment adjustment
Operating income 234,601,314.71 219,673,260.11 232,525,287.59 0.89% 164,222,481.91 164,222,481.91
Total profit 72,885,796.46 -12,024,258.74 -12,012,582.39 -706.75% 3,326,148.84 917,998.70
Net profit
attributable to
shareholders of 63,036,241.24 -9,648,015.34 -12,012,582.39 -624.75% 3,738,730.58 3,738,730.58
the listed
company
Net profit
attributable to
shareholders of
the listed
-6,276,043.85 -9,681,664.56 -12,046,231.61 -47.90% -9,520,236.83 -9,520,236.83
company after
deducting
non-recurring
gains and losses
Net cash flow
arising from
-2,591,980.11 -9,953,587.30 -8,950,557.42 -71.04% 22,377,763.45 22,377,763.45
operating
activities
Increase/decre
ase at the end
At the end of 2007 At the end of 2006 of this year At the end of 2005
compared with
that at the end
of last year (%)
After Before
Before adjustment After adjustment After adjustment
adjustment adjustment
Total assets 214,381,530.57 267,021,538.95 282,611,118.07 -24.14% 328,877,255.90 305,007,790.40
Owners’
-1,816,023,549.0
equity(Sharehol -1,784,339,460.68 -1,863,530,511.45 -1,847,375,701.92 -3.41% 0 -1,852,427,758.00
ders’ equity)
3.2 Main financial indexes
Unit: RMB
Increase/decr
2007 2006 ease in this 2005
year
2
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
compared
with last year
(%)
After Before
Before adjustment After adjustment After adjustment
adjustment adjustment
Basic earnings 0.13148 -0.0201 -0.02508 0.0078 0.0078
per share
Diluted
earnings per 0.13148 -0.0201 -0.02508 0.0078 0.0078
share
Basic earnings
per share after
deducting -0.0131 -0.0202 -0.0251 -0.0199 -0.0199
non-recurring
gains and losses
Fully diluted
return on equity
Weighted
average return
on equity
Fully diluted
return on equity
after deducting
non-recurring
gains and losses
Weighted
average return
on equity
after deducting
non-recurring
gains and losses
Net cash flow
arising from
operating -0.0054 -0.0208 -0.0187 0.0467 0.0467
activities per
share
Increase/decr
ease at the
end of this
At the end of 2007 At the end of 2006 year At the end of 2005
compared
with that at
the end of
last year (%)
After Before
Before adjustment After adjustment After adjustment
adjustment adjustment
Net asset per
share attributable
-3.72 -3.89 -3.85 -3.36% -3.79 -3.86
to shareholders of
listed company
Items of non-recurring gains and losses
√Applicable □Inapplicable
3
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Unit: RMB
Items of non-recurring gains and losses Amount
Disposal profit and loss on non-current assets 757,452.53
Debt restructuring expense 68,568,701.43
Others -13,868.87
Total 69,312,285.09
Items measured by adopting fair value
□Applicable √Inapplicable
3.3 Differences between CAS and IAS:
√Applicable □Inapplicable
Unit: RMB
CAS IAS
Net profit 62,974,630.60 62,974,630.60
Net asset -1,784,339,460.68 -1,784,339,460.68
Explanations
No differences
on difference
§4. Changes in Share Capital and Particulars about Shareholders
4.1 Statement of change in share capital
Unit: Share
Before the Change Increase/Decrease in the Change (+, -) After the Change
New Capitalization Proportio
Proportio Bonus Subt
Amount n share shares of public Other otal Amount n
issued reserve
I. Unlisted shares 186,713,192 38.94% 186,713,192 38.94%
1. Sponsors’ shares 186,713,192 38.94% 186,713,192 38.94%
Including:
State-owned share
Domestic legal
111,607,002 23.28% 111,607,002 23.28%
person share
Foreign legal person
75,106,190 15.67% 75,106,190 15.67%
share
Other
2. Raised legal
person’s shares
3. Inner employees’
shares
4. Preference shares
4
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
or others
II. Listed shares 292,719,811 61.06% 292,719,811 61.06%
1. RMB ordinary
76,752,000 16.01% 76,752,000 16.01%
shares
2. Domestically
215,967,811 45.05% 215,967,811 45.05%
listed foreign shares
3. Overseas listed
foreign capital share
4. Other
III. Total shares 479,433,003 100.00% 479,433,003 100.00%
4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of unrestricted
shares
Unit: Share
Total shareholders 33,824
Particulars about shares held by the top ten shareholders
Proportio Total
Name of shareholders Nature of n of number of Non-circulating Pledged or frozen
shareholders shares shares held shares
shares held
held
Shenzhen Guocheng Energy
Other 13.58% 65,098,412 65,098,412 0
Investment Development Co., Ltd.
Hong Kong Zhuorun Technology Foreign-funded
9.20% 44,104,246 44,104,246 40,000,000
Co., Ltd. shareholder
Hong Kong (Link) Bicycles Foreign-funded
5.42% 26,000,000 26,000,000 26,000,000
Limited shareholder
Shenzhen Kangsheng Investment
Other 2.50% 11,968,590 11,968,590 0
Development Co., Ltd.
State-owned
Xinliyi Investment Management
legal 2.34% 11,200,000 11,200,000 0
Co., Ltd.
shareholder
State-owned
Airline Trust and Investment Co.,
Ltd. legal 2.16% 10,340,000 10,340,000 10,340,000
shareholder
Shenzhen New Land Tool
Other 2.06% 9,857,556 0 0
Consultants PTE. LTD
Shenzhen International Trust &
Other 1.25% 6,000,000 6,000,000 0
Investment Co., Ltd.
Foreign-funded
Jingchao Investment Co., Ltd. 1.04% 5,001,944 5,001,944 5,001,944
shareholder
Shanghai Yanxin Industrial
Other 0.73% 3,500,000 3,500,000 0
Investment Co., Ltd.
Particulars about shares held the top ten circulating shareholders
Shareholders’ name Circulated shares held Type
Shenzhen New Land Tool Consultants PTE. 9,857,556 RMB common share
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
LTD
Xiao lizhu 3,431,320 Domestically listed foreign shares
Zhang Huiling 2,232,373 Domestically listed foreign shares
TANG JING YUAN 1,924,500 Domestically listed foreign shares
ABN AMRO BANK NV 1,792,400 Domestically listed foreign shares
Jiang Lan 1,213,000 Domestically listed foreign shares
Li Jinling 1,181,802 Domestically listed foreign shares
Cao Pingwei 1,157,600 Domestically listed foreign shares
Zhang Genyou 1,059,204 Domestically listed foreign shares
Zhu Juan 1,005,500 Domestically listed foreign shares
There exists no associated relationship among the top ten shareholders, the Company was
Explanation on associated
unaware of whether there existed any associated relationship among the top ten
relationship among the top
ten shareholders or shareholders and whether there existed consistent actionist among other circulating
consistent action shareholders regulated in the Management Measure of Information Disclosure on Change
of Shareholding for Listed Companies
4.3 Particulars about controlling shareholders and actual controller of the Company
4.3.1 Particulars about change in controlling shareholders and actual controller of the Company
√Applicable □Inapplicable
Name of new controlling Shenzhen Guocheng Energy Investment Development Co., Ltd.
shareholder
Date of changing new controlling
April 30, 2007
shareholder
Date of disclosure on changing new
May 1, 2007
controlling shareholder
Newspapers for disclosure on
changing new controlling Securities Times, Hong Kong Wen Wei Po
shareholder
Name of new actual controller Shenzhen Guomin Investment Development Co., Ltd.
Date of changing new actual
Nov.13, 2006
controller
Date of disclosure on changing new
Nov.17, 2006
actual controller
Newspapers for disclosure on
Securities Times, Hong Kong Wen Wei Po
changing new actual controller
4.3.2 Introduction of especial situation for controlling shareholder and other actual controller
i. Introduction to controlling shareholders: Shenzhen Guocheng Energy Investment Development
Co., Ltd.
Address: 501C Pacific Commercial Town of New Asia, No. 8 Zhonghang Road, Futian District,
Shenzhen.
6
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Legal representative: Shang Shijun
Registeration capital: RMB 70 million
Operation scope: Establishing industry (additional application for specific items); domestic
commerce, industry of supply and distribution of materials (excluded commodities which were
monoplized, under special control and sold exclusively).
The controlling shareholder of Shenzhen Guocheng Energy Investment Development Co., Ltd was
Shenzhen Guomin Investment Development Co., Ltd with holding 100% shares.
ii. Introduction to actual controller: Shenzhen Guomin Investment Development Co., Ltd.
Controlling shareholder: Zhang Yanfen with holding 44% shares, Chen Linsheng with holding 20%
shares; Ji Hanfei with holding 20% shares, Huang Yinquan with holding 16% shares.
Address: Pacific Commercial Town of New Asia, Junction between Zhenzhong Road and Zhonghang
Road, Futian District, Shenzhen; Legal representative: Zhang Yanfen; Registeration capital: RMB
250 million; Operation scope: Establishing industry (additional application for specific items);
domestic commerce, industry of supply and distribution of materials (excluded commoditie which
were monoplized, under special control and sold exclusively); supply and distribution of automobiles
(excluded cars); and open and manage E-Town of New Asia. Main business: Commerce, operation
and management of real-estate, and industry investment.
4. 3. 3 Property right and controlling relationships between the actual controller of the Company
and the Company is as follows:
Zhang Yanfen Ji Hanfei Chen Linsheng Huang Yinquan
44% 20% 20% 16%
100%
Shenzhen Guomin Investment Development Co., Ltd.
100%
Shenzhen Guocheng Energy Investment Development Co., Ltd.
13.58%
Shenzhen China Bicycle Company (Holding) Limited
§5. Particulars about Directors, Supervisors, Senior Executives
5.1 Particulars about changes in shares and remunerations held by directors, supervisors and senior
executives
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Total Incentive equity Draw
bestowed in the report the
remunera
tion drew period remuner
Share Share ation
Beginni Terminat s held s held Reas from the Share Amo Share from
ng date ing date on of Company s mark
Names Titles Sex Age of office of office at the at the chan in the availa unt Exer et other
year- year-e exerci sharehol
term term begin nd ge report ble sed cise price der units
period for alread price in or
(RMB’00 exerci report associate
00) sing y -end s
Shang Chairman of
Male 44 2007.07 2010.07 0 0 0.00 0 0 0.00 0.00 Yes
Shijun the Board
Yang
Director Male 50 2007.07 2010.07 0 0 0.00 0 0 0.00 0.00 Yes
Fenbo
Jiang
Director Male 38 2007.07 2010.07 0 0 18.85 0 0 0.00 0.00 No
Houjin
Li Ronghui Director Male 36 2007.07 2010.07 0 0 0.00 0 0 0.00 0.00 Yes
Zhang
Director Male 32 2007.07 2010.07 0 0 0.00 0 0 0.00 0.00 Yes
Xiang
Liu
Director Male 50 2007.07 2010.07 0 0 0.00 0 0 0.00 0.00 Yes
Linfeng
Shi
75,00 75,00
Director Male 63 2007.07 2010.07 0.00 0 0 0.00 0.00 Yes
Zhanxiong 0 0
Li Chun Independent Male 50 2007.07 2010.07 0 0 4.00 0 0 0.00 0.00 No
Director
Shao
Independent Male 43 2007.07 2010.07 0 0 4.00 0 0 0.00 0.00 No
Liangzhi Director
Zhang
Independent Female 39 2007.07 2010.07 0 0 4.00 0 0 0.00 0.00 No
Qingmiao Director
Wei
Independent Male 36 2007.07 2010.07 0 0 4.00 0 0 0.00 0.00 No
Chuanyi Director
Yao
Supervisor Male 32 2007.05 2008.06 0 0 0.00 0 0 0.00 0.00 Yes
Zhengwang
Lan Qihua Supervisor Male 57 2005.06 2008.06 0 0 12.42 0 0 0.00 0.00 No
Zheng
10,50 10,50
Supervisor Male 45 2007.07 2008.06 8.41 0 0 0.00 0.00 No
Zhonghuan 0 0
Ye Qing General Male 45 2007.09 2010.09 0 0 37.18 0 0 0.00 0.00 No
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Manager
Deputy
Li Hai General Male 38 2007.09 2010.09 0 0 28.58 0 0 0.00 0.00 No
Manager
Chief
He Yili Female 35 2007.09 2010.09 0 0 26.49 0 0 0.00 0.00 No
Accountant
Deputy
Xia Bofu General Male 37 2007.09 2010.09 0 0 4.41 0 0 0.00 0.00 No
Manager
Deputy
Hu Eryi General Female 43 2005.09 2007.10 0 0 22.03 0 0 0.00 0.00 No
Manager
85,50 85,50
Total - - - - - - 174.37 0 0 - - -
0 0
Stocks option of the Company held by the aforementioned executives and the amount of restricted
shares bestowed
□Applicable √Inapplicable
§6. Report of the Board of Directors
6.1 Discussion and analysis to the whole operation
In the report period, confronting with more furious competition, superfluous production ability trend,
standard reshuffle market environment, in order to adjust to change of market environment, the
Company enlarged change of operation model which means increasing OEM market share, thus
originally realizing cost decrease and closing to market. Under leading of board of directors as well
as operation group, all staff made effort to expand business and develop main business of electric
bicycle, thus making stable increase of its main business. From Jan. to Dec. of 2007, the Company
realized operation income of RMB 234,601,300, 0.91% higher than the same time of last year.
During the report period, the Company made comparatively big progress in the restructure of the
Company’s external debt through active communication and negotiation with its creditors: as to the
debt with the principal being USD 3.87 million and the accrued interest RMB 42,780,000 that the
Company owned to the International Finance Corporation, by friend negotiation between the two
parties, the Company and International Finance Corporation signed Reconciliation Agreement dated
Mar 29th of 2007, which stipulated that all the credit and liability would be settled with US dollars
equivalent to RMB 2 million. The Company has already remitted the aforesaid amount to the
appointed account of International Finance Corporation on Apr 4th of 2007. According to the
regulation of Accounting Standard for Enterprise No.12-Debt Restructuring, the conclusion of the
above reconciliation agreement will bring profit from debt restructure of RMB 68, 568,700. The
Company turns to make profit in 2007, realizing the net profit of RMB 63, 066,200.
In the report period, the Company made effort to promote Share Merger Reform. Proposal of Share
Merger Reform was passed on shareholders’ general meeting on Share Merger Reform of A Share
Market held on Feb.1, 2007, and it got approval from Ministry of Commerce, PRC No.1343 [2007]
and Approval of Adding Total Capital Shares of Shenzhen China Bicycle (Holdings) Co., Ltd from
Shenzhen Commerce and Industry Bureau SCS No2257[2007]. According to Working Guidelines on
Share Merger Reform for Listed Companies, related Share Merger Reform procedures are under
9
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
dealing in China Security Registration Settlement Co., Ltd.
6.2 Statement of main operations classified according to industries or products
Unit: RMB’0000
Main operations classified according to industries
Increase/decre
Increase/decre Increase/decrea
ase in income
ase in cost of se in gross
Classified according to Income from Cost of Gross profit from
operations profit ratio
industries or products operations operations ratio (%) operations over the last over the last
over the last
year (%) year (%)
year (%)
Manufacturing of bicycles 22,284.00 21,043.00 5.57% 4.05% 4.11% -0.05%
Main operations classified according to products
Bicycles 22,284.00 21,043.00 5.57% 4.05% 4.11% -0.05%
6.3 Particulars about main operations classified according to areas
Unit: RMB’0000
Increase/decrease in income
Areas Income from operations from operations over the same
period of last year (%)
Shandong 5,938.00 0.82%
Henan 5,302.00 13.41%
Hebei 2,892.00 -18.78%
Jiangsu 2,928.00 26.26%
6.4 Application of the raised proceeds
□Applicable √Inapplicable
Particulars about the changed projects
□Applicable √Inapplicable
6.5 Application of the proceeds not raised through shares offering
□Applicable √Inapplicable
6.6 Explanation of the Board of Directors on the “Qualified Opinion” made by the CPAs
√Applicable □Inapplicable
Explanations of the Board of Directors about 2007 audit report of the Company with disclaimer of
opinions issued by Shenzhen Pengcheng Certified Public Accountants:
The Board of Directors agreed the audit report on A-shares offered by Shenzhen Pengcheng Certified
Public Accountants.
Due to that the debt restructure work of the Company had not been finally finished in 2007, so risk of
bearing huge debt still remained with many significant uncertainties. The CPAs was not able to offer
opinion on the financial debt, tax payable, contingent proceedings, lawsuits and sustainable
operation.
For so, the Board of the Company made explanation as follows:
I. Financial debt
Shenzhen Pengcheng CPAs held that the replied letters from the financial creditors for the inquiry
10
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
showed a balance of RMB 591,837,892.0 in interest; some letters were replied with uncertain on the
debt whose interest withdrawal from its book value was RMB 19,640,522.48; those unreplied letters
were sent to ensure the debt whose interest on principal withdrawal from its book value was RMB
24,765,110.54. These made it impossible to ensure the influence received by the financial statements
of the Company brought by the amount of financial debt.
The Company provided explanation in Note 13.1 for details of interest confirmation balance: when
some creditors implemented the document ((2004) No.6) released by China Committee on Bank
Supervision, they had different understanding on this document with the Company. The document
noticed that: Bank of China and other 10 financial organizations stop calculating the interest of the
st
Company for 3 years since Jan 1 of 2002 and at the same time, exempt all the interest payable of the
st
Company (including penalty interest and compound interest) occurred before Dec 31 of 2001.
Some assets management companies and banks considered that the Company was expected to return
the interest exempted and stop-calculated and some assets management companies had not confirmed
the proceeding of interest calculation. The Company had transferred all the interest of loans payable
st
occurred before Dec 31 of 2001, RMB 357,993,665.24, (including penalty interest and compound
st
interest) to capital public reserve. Interest was stopped with calculation from Jan 1 of 2002 to Dec
31st of 2004. The exempt term was due on Dec 31st of 2004. The Company held it was not necessary
for him to return the interest exempted and stop-calculated, so when the term was due, the Company
started to withdraw interest according to normal loan for those interests which needed to be returned.
st st
The stop-calculated interest and compound interest from Jan 1 of 2002 to Dec 31 of 2004 was not
accrued. For whether to return the interest or not, negotiation was still being made.
Besides, the financial debt of the Company was formed in history which had occurred for a long time
and the amount of period –end had not changed for years. Body qualification of some creditors had
been transferred and the particular personnel for handling had also changed, so the creditors needed
time to check clearly the amount of creditor and debt of both involved parties and that was why some
creditors had not replied the letters to confirm.
The Company would continuously advance the account-check work with the relevant creditors of
financial debt, trying as soon as possible to check clearly the interest on principal of the financial
debt. Once progress is made, relevant information would be disclosed according to relevant
regulation.
II. Issues on tax payable
Shenzhen Pengcheng Certified Public Accountants Firm Co., Ltd. thought that, in the audit process
implemented audit procedures including inspection and inquiry, inquired book tax amount payable,
custom guarantee and penalty balance totally were RMB 118,571,072.71, which all did not receive
letters from tax department; otherwise found the Company was not able to receive reliable evidence
of loss amounts which could be used as offset of profit before tax in later years affirmed by tax
department, and deferred income tax assets RMB 9,849,555.22 were affirmed at the beginning of
2007 and switched back in 2007 in accordance with new Accounting Standards; for these
undetermined issues, we are not able to ensure the effects on the Company’s financial report.
1. Issues on not replying to tax payable
Due to the Company’s tax payable was formed in the past, which had a long time, there was no
newly increased tax payable in the report period, forming reasons were complex, personnel of
specific affairs had changed, and tax department needed time to check clear the debts rights and
amounts of both sides, therefore, we are not able to receive confirmation letter of tax department. The
Company will continue to follow up the work of checking account of tax department, check clear the
amount of tax payable as soon as possible, and will disclose information according to the
requirements of relevant regulations if there is some progress.
2. Issues on estimating and switching back deferred income tax
According to new Accounting Standards, considering possible realization of debt restructuring
11
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
income of International Finance Corporation and possible affirmation of bad account loss of 2006 by
tax department, the Company estimated the deferred income tax assets RMB 9,849,555.22.
In 2006, Board of Directors and Shareholders’ General Meeting passed to verify the bad debt loss
RMB 604,594,981.22 of amount payable of Hong Kong Link Bicycles Co., Ltd. which was
bankrupted and liquidated in Hong Kong Court in 1998. In Apr., 2007, the Company applied to tax
department to take the bad debt loss RMB 604,594,981.22 of amount payable of Hong Kong Link
Bicycles Co., Ltd. as loss in 2006, which could be offset by annual tax payable income, and tax
department thought that they needed more related bankruptcy and liquidation information of Hong
Kong Court. According to liquidation progress report of Hong Kong Deloitte Certified Public
Accountants- the liquidation institution appointed by Hong Kong Court, the assets will be distributed
to liquidate with the proportion of 0.15%, and will offer liquidation report in May, 2008. The
Company thought that the amount payable was not able to be called back and the bad debt loss
accord with relevant regulations of listing in loss of 2006, therefore, according to new Accounting
Standards, the Company affirmed deferred income tax assets in the beginning of 2007, and after
realize debt restructuring of International Finance Corporation, switched back the deferred income
tax assets in 2007. The Company will supply relevant information as soon as possible to get approval
of relevant affairs of tax department.
3. Contingent events and lawsuits
Shenzhen Pengcheng Certified Public Accountants believed that non correspondent loan card
information for system updating and other seasons; during the auditing, lawsuit caused by external
guarantee and delayed debt implemented court involved substitute site checking audit procedure,
thus not getting identified documents from relevant courts. And the hard implemented other effective
auditing procedure made us unable to judge the disclosed contingent events and lawsuits’ impacts on
its financial statement.
The historically formed loan and guarantee lawsuit had rather long time; in the report period there
had no newly added undisclosed guarantee events and lawsuits; parts of courts changed and specific
responsible people also altered; the court needs time to check details and amount of the case, so the
court didn’t write back for ensuring. The Company will continue following up the check work by
certified public accountants with related courts, and check involved contingent events as well as
lawsuits as soon as possible. If there is any progress, information disclosure will be made to
requirements of relevant regulations.
4. Matters on continuous operations
Shenzhen Pengcheng Certified Public Accountants thought that, the Company’ asset could seriously
not offset the debt; the measures on the reconciliation procedure of the bankruptcy to settle the debts
had no material progress and could not be able to get adequate and proper audit evidence to confirm
it could effectively improve the continuous operations of the Company; thus, we could not judge
whether the financial report 2007 was proper compiled based on continuous operations of the
Company.
Since March 2003, the promotion on debt restructuring by the former largest creditor China
Huarong Asset Management Corporation was acquiring breakthrough development, the Plan on
Reorganization of Shenzhen China Bicycle Company (Holdings) Limited has obtained the approval
from relevant department such as China Banking Regulatory Commission, in which all the interests
of the financial debts the Company owed ended Dec.30, 2004 were exempted and stopped
calculation, and it was under the stage of implementation.
The Company and International Finance Corporation signed Reconciled Agreement on Mar 29th of
2007, in which it was agreed to settle all the credits and liabilities between the two parties with USD
equivalent to RMB 2 million. The liabilities amount was consisted of a principal approximately
amounting to USD 3.87 million and an accrued interest approximately amounting to RMB 4.278
million. The two biggest creditors of the Company-Shenzhen Guocheng Energy Investment
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Development Co., Ltd and Guangdong Sunrise Group Co., Ltd agreed to stop recording the debt
interest of the Company occurred in the whole year of 2007, with the interest amounts which had
been stopped recorded being RMB 5.476 million and RMB 1.485 million respectively. These
interests also won’t be collected any longer in the following years.
Beside progress is made in debt restructure, the Company also makes continuous growth in its main
operation and the main operation continues to make profit. Pressure of the Company for short-term
payment has been sharply brought down; the lasting operation ability has been improved
comparatively.
On Dec. 30, 2006, China Huarong Asset Management Corporation transferred its owned debt to
Shenzhen Guocheng Energy Investment Development Co., Ltd., after the changes of biggest creditor,
the former biggest creditor China Huarong Asset Management Corporation applied to Shenzhen
Intermediate People’ Court for bankruptcy on August 1, 2005, planned to settle the debts of the
Company completely through bankruptcy and reform measures; the new creditor Shenzhen
Guocheng Energy Investment Development Co., Ltd. was responsible for promoting the restructuring
works on relevant debts and reorganization, and speeded up making scheme of debt restructuring and
got certain development.
The board of directors thought with the development of debt and asset reorganizations of the
Company and the unceasingly growth of the achievements of the Company, the operation
environment and operation status would surely be further improved for the Company. And the
continuous operations would be further improved.
6.7 The preplan of profit distribution and capitalization of capital public reserve of the Board of
Directors
□Applicable √Inapplicable
The Company didn’t appropriate share distribution preplan though the Company achieved the profit
in the report period
□Applicable √Inapplicable
§7 Significant Events
7.1 Purchase of assets
□Applicable √Inapplicable
7.2 Sales of assets
□Applicable √Inapplicable
Influences on the business continuity and stability of management of the Company by the matters
7.1 and 7.2 concerned
7.3 Significant guarantees
√Applicable □Inapplicable
Unit: RMB’0000
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Complete Guarantee
Name of the Company Date of happening Amount Guarante Impleme for related
(Date of signing of Guarantee type
guaranteed e term ntation or party (Yes or
agreement) guarantee
not no)
13
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Guangdong Sunrise Group Joint
June 20, 1996 614.20 6 months No No
Co., Ltd. responsibility
Guangdong Sunrise Group Joint
July 26, 2006 2,800.00 4 months No No
Co., Ltd. responsibility
Guangdong Sunrise Group Joint
Sep. 30, 1999 830.00 1 year No No
Co., Ltd. responsibility
Guangdong Sunrise Group Joint 11
Apr. 30, 1998 260.00 No No
Co., Ltd. responsibility months
Guangdong Sunrise Group Joint
July 30, 1997 250.00 7 months No No
Co., Ltd. responsibility
Guangdong Sunrise Group Joint
June 4, 1997 300.00 8 months No No
Co., Ltd. responsibility
Gintian Industry (Group) Co., Joint
Oct. 30, 1998 5,000.00 6 months No No
Ltd. responsibility
Shenzhen Tianma Cosmetics Joint
Sep. 30, 1994 800.00 1 year No No
Co., Ltd. responsibility
Total amount of guarantee in the report period 0.00
Total balance of guarantee at the end of the report
10,854.20
period(A)
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for
controlling subsidiaries during the 0.00
report period
Total balance of guarantee for
controlling subsidiaries at the end of 8,351.89
the report period(B)
Total amount of guarantee of the Company (including guarantee for controlling subsidiaries)
Total amount of guarantees(A+B) 19,206.09
Ratio of total guarantee to net assets of
0.00%
the Company
Including:
Amount of guarantee for shareholders,
actual controller and its related 0.00
parties(C)
The debts guarantee amount provided
for the guarantee of which the
19,206.09
assets-liability ratio exceeded 70%
directly or indirectly(D)
Proportion of total amount of
guarantee in net assets of the Company 19,206.09
exceeded 50%(E)
Total amount of the aforesaid three
38,412.18
guarantees*(C+D+E)
7.4 Significant related transaction
7.4.1 Related transaction connected to operations
□Applicable √ Inapplicable
7.4.2 Related credits and liabilities current
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√Applicable □Inapplicable
Unit: RMB’0000
Sell product and supply labor force to Purchase and accept labor force from
the related parties related parties
Related party Proportion in the Proportion in the
Transaction amount amount of the same Transaction amount amount of the same
transaction transaction
Diamond
0.00 17,421.99 0.00 0.00
Back(HongKong)Co.Ltd
Zhigao Resource International
0.00 35,018.34 0.00 0.00
Co., Ltd.
Hong Kong Huajiaming Industry
0.00 0.00 0.00 1,022.84
Trade Co., Ltd.
Shenzhen Canghai Industrial
0.00 0.00 0.00 18.94
Co., Ltd.
Shenzhen Danxia Bicycle
0.00 0.00 0.00 42.96
Accessory Co., Ltd.
Jiangsu Huaiyin Huayu Bicycle
0.00 0.00 0.00 496.53
Accessory Factory Co., Ltd.
Shantou Economic Special Zone
0.00 0.00 0.00 688.74
Dapeng Industrial Co., Ltd.
China Complex Material
0.00 6,054.17 0.00 0.00
Products (Shenzhen) Co., Ltd.
Shenzhen Huajiaming Industry
0.00 2,654.10 0.00 0.00
Trade Development Co., Ltd.
Shenzhen Guocheng Energy
Investment Development Co., 0.00 0.00 0.00 70,021.85
Ltd.
Shenzhen Jinhuan Printing
0.00 0.00 0.00 60.00
Format Co., Ltd.
Daming International Co., Ltd. 0.00 0.00 0.00 1,083.44
Zhigao International Machinery
0.00 0.00 0.00 2,180.59
Co., Ltd.
Total 0.00 61,148.60 0.00 75,615.89
Of which: the transaction amount of the related transaction that the Company sells product and
supplies labor force to its holding shareholders and subsidiaries is RMB 0.00and the balance is
RMB611,486,000 in this report period.
7.4.3 Occupation and its progress of paying off on the fund in year 2007
□Applicable √Inapplicable
Occupation of newly increased fund during the year 2007
□Applicable √Inapplicable
Reasons, measures of paying off debts adopted and plan for responsibility ascertainment in case of
listed companies’ failure to complete paying off the occupied non-operating fund at the end of 2007
□Applicable √Inapplicable
7.5 Entrusted assets management
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□ Applicable √Inapplicable
7.6 Implementation of commitments
√Applicable □ Inapplicable
In the report period, the Company tried to promote the works on share merger reform, the share
merger reform scheme of the Company was examined and approved in Shareholders’ Meeting of
A-share Market on Share Merger Reform dated Feb.1, 2007, and has obtained the Reply of
SZPi[2007] No. 1343 from Ministry of Commerce and the Reply of SMGZFu[2007] No.2257on
Increasing the Total Shares of Shenzhen China Bicycle Company (Holdings) Limited from Shenzhen
Trade and Industry Bureau, in which agreed the share merger reform scheme of the Company
examined and approved in Shareholders’ Meeting dated Feb.1, 2007. In accordance with Guidelines
on Practice and Operations of Share Merger Reform of the Listed Companies; the relevant
procedures on Share Merger Reform of the Company was under the progress in Shenzhen Company
of China Securities Depository and Clearing Corporation Limited.
7.7 Significant lawsuit and arbitrations
□ Applicable √Inapplicable
7.8 Other significant events and analysis on their influences and solutions
7.8.1 Particulars about securities investment
□Applicable √Inapplicable
7.8.2 Equity of other listed companies held
□Applicable √Inapplicable
7.8.3 Equity of non-listed financial enterprises
□Applicable √Inapplicable
7.8.4 Particulars about the purchases and selling on equity of other listed company
□Applicable √Inapplicable
§8. Report of the Supervisory Committee
√Applicable □Inapplicable
Opinions on explanations on disclaimer of opinion in 2007 issued by Shenzhen Pengcheng CPAs
from the Supervisory Committee
Shenzhen Pengcheng CPAs issued the audit report with disclaimer of opinion for 2007. The Board
had made special explanation on the events concerned by the report. The Supervisory Committee
believed that: the audit report issued by Shenzhen Pengcheng CPAs truthfully reflected the financial
condition and operation achievement of the Company; the explanation presented by the Board of the
Company on the events concerned by the audit opinion complied with the actual condition of the
Company. The Supervisory Committee would actively cooperate with the Board to carry out its
works, supervise and urge the Board to intensify power in debt restructure and try to improve the
persistent operating ability of the Company.
§9. Financial Report
9.1 Auditor’s opinions
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Auditor’s report Disclaimer of opinions
Text of Auditor’s Report
Auditors’ report
SPSGSZi[2008]No. 107
To the shareholders of Shenzhen China Bicycle Company (Holdings) Limited,
We have audited the accompanying financial statements of Shenzhen China Bicycle Company
(Holdings) Limited (“the Company”), including consolidated balance sheet of the Company of 31
December 2007, and consolidated profit statement of the Company, and consolidated statement on
changes of shareholders’ equity of the Company, and consolidated cash flow statement of the
Company for the year ended, and notes to the financial statements for the year ended.
I. Management's responsibility for the financial statements
It is the responsibility for the management of the Company to prepare financial statements according
to the stipulations of the business accounting rules. This responsibility includes: (1) devising,
implementing and maintaining internal control related to the preparation of the financial statements
so as to ensure that the financial statements do not contain major errors caused by fraudulence or
mistake; (2) choosing and adopting appropriate accounting policies; and (3) making reasonable
accounting estimations.
II. Proceedings which result in disclaimer of opinion
We noticed that:
1. During the audit, we have specially implemented the audit procedures such as visit for inspection
and inquiry, focusing on the financial debts of Shenzhen China Bicycle Company (Holdings) Limited
which have expired for long time till the end of Dec 31st of 2007. Until the audit report day, the
replied letters told that a balance in interest of RMB 591,837,892.02 has been omitted by Shenzhen
China Bicycle Company (Holdings) Limited; besides, some letters were replied to show uncertain on
the total owed interest converting to RMB 19,640,522.48 just as the Company’s book said; to the
un-replied letters, the total owed interest on principal was converted into RMB 24,765,110.54 as the
Company’s book said. As to the aforesaid omitted interest balance, the Company provided
explanation in Note 14.1 that when implementing the document (YJBT (2004) No.6) released by
China Committee on Bank Supervision for offering a reference of the loan interest restructure of
Shenzhen China Bicycle Company (Holdings) Limited, the Company and some creditors had
different understanding on this document, which brought the aforesaid omission. Since the accounts
had not been adjusted, we are not able to ensure the influence of this balance to the financial
statements of the Company.
2. During the audit, we have specially implemented the audit procedures such as visit for inspection
and inquiry, focusing on the tax payable of Shenzhen China Bicycle Company (Holdings) Limited
which have expired for long time till the end of Dec 31st of 2007, in want of verification that whether
the unpaid tax, tariff bond and amercement balance was totaling up to RMB 118,571,072.71 as the
Company’s book said. While until the audit report day, nothing got replied. Besides, we also found
that Shenzhen China Bicycle Company (Holdings) Limited had not obtained reliable evidence that
tax department had confirmed the loss limit of the Company till the year-begin of 2007 which could
be made up with the profit (before taxed) created in future years, while the Company still confirmed
the limit at the year-begin of 2007 and turned back deferred income tax assets of RMB 9,849,555.22
for 2007 according to the new Accounting Standard. Thus, it was impossible for us to ensure the
influence on the financial statements of the Company brought by the uncertainty.
3．In the process of audit, the information of credit card which we received from the account bank of
Zhonghua Bicycles Co. Ltd. is not able to be checked whether contingency such as related guarantee
information accord with disclosure, for it did not be annually inspected and credit card system did not
upgrade related information. Therefore, we implement substitutive audit procedure of field checking
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
the related courts to the claims of Zhonghua Bicycles Co. Ltd. caused by external guarantee and
overdue loan. However, related courts all only make some oral explanations or provide some
information which could only be used as reference. Otherwise, we are not able to implement other
efficient audit procedure, so that we are not able to judge the integrity of the contingency disclosed in
Note 11 and the claims disclosed in Note 12 of Zhonghua Bicycles Co. Ltd. and possible effects of
the issues on the Company’s financial report.
4. Refer to Note 15, until Dec. 31, 2007, total asset of Shenzhen China Bicycle Company (Holdings)
Limited was RMB 214.38 million; total debt was RMB 1,998,720,000; net asset was
RMB-1,784,340,000 with debts beyond assets. Shenzhen China Bicycle Company (Holdings)
Limited disclosed improving methods in Note 15 of financial statement, however, the main
measurement adopted till 2006, that planed to accomplish the debt restructure of Shenzhen China
Bicycle Company (Holdings) Limited through reconciled procedure of bankruptcy has not made any
practical progress from 2007 to the audit report day of 2008,thus making us unable to get complete
and appropriate auditing evidence to identify whether it can improve continuous operation ability for
Shenzhen China Bicycle Company (Holdings) Limited effectively. Therefore, we can not judge
whether the 2007 financial statement which was made under continuous operation assumption of
Shenzhen China Bicycle Company (Holdings) Limited is appropriate or not.
III. Auditing Opinion
Due to that the aforesaid events could possibly occur very significant and aboard influences, we
could not issue auditor’ opinion on the financial statement of the Company.
Shenzhen Pengcheng Certified Public Accountants
China Accountant: Li Hailin
China Accountant: Li Zehao
April 25, 2008
9.2 Financial statement
9.2.1 Balance Sheet
Prepared by Shenzhen China Bicycle Company (Holdings) Limited December 31, 2007 Unit: RMB
Amount at period-end Amount at period-begin
Items
Merger Parent Company Merger Parent Company
Current assets:
Monetary funds 14,062,198.43 477,660.27 16,982,883.27 504,436.50
Settlement provisions
Capital lent
Transaction finance
asset
Notes receivable 1,673,960.00
Accounts receivable 482,050.51 144,678,350.46 10,684,966.02 190,887,836.94
Accounts paid in
1,304,193.48 117,100.00 2,406,516.88 1,641,102.08
advance
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable
Other receivables 20,774,519.57 66,544,849.86 13,814,016.03 26,274,597.75
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Purchase restituted
finance asset
Inventories 41,116,795.51 33,892,709.90 43,709,649.82 38,635,307.97
Non-current asset due
within one year
Other current assets
Total current assets 79,413,717.50 245,710,670.49 87,598,032.02 257,943,281.24
Non-current assets:
Granted loans and
advances
Finance asset available
for sales
Held-to-maturity
securities
Long-term account
receivable
Long-term equity
27,406,483.51 27,406,483.51 28,563,096.50 28,563,096.50
investment
Investment property 10,956,836.08 10,956,836.08 11,602,410.75 11,602,410.75
Fixed assets: 68,561,480.10 67,962,140.33 80,182,046.09 79,378,262.13
Construction in progress
Engineering material
Disposal of fixed asset 35,910,102.07 35,910,102.07
Consumable biological
asset
Oil and gas asset
Intangible assets 28,043,013.38 28,043,013.38 28,905,875.42 28,905,875.42
Expense on Research
and Development
Goodwill
Long-term expenses to
be apportioned
Deferred income tax
9,849,555.22 9,849,555.22
asset
Other non-current asset
Total non-current asset 134,967,813.07 134,368,473.30 195,013,086.05 194,209,302.09
Total assets 214,381,530.57 380,079,143.79 282,611,118.07 452,152,583.33
Current liabilities:
Short-term loans 418,165,449.05 353,451,323.08 438,825,765.41 369,338,359.02
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Transaction financial
liabilities
Notes payable
Accounts payable 135,329,891.70 338,652,954.48 144,593,261.31 360,599,834.28
Accounts received in
18,086,124.15 14,605,306.04 1,591,292.38 1,591,292.38
advance
Selling financial asset of
repurchase
Commission charge and
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
commission payable
Wage payable 1,392,052.21 1,250,670.90 1,822,548.73 1,559,302.89
Taxes payable 95,460,222.24 94,178,777.08 94,570,414.38 93,854,457.12
Interest payable
Other accounts payable 167,601,705.14 131,309,401.97 166,558,359.08 119,120,001.91
Reinsurance payables
Insurance contract
reserve
Security trading of
agency
Security sales of agency
Long-term liabilities
915,134,453.92 915,134,453.92 1,027,960,035.56 1,027,960,035.56
due within 1 year
Other current liabilities 86,109,949.92 86,097,636.52 92,188,218.48 92,885,770.17
Total current liabilities 1,837,279,848.33 1,934,680,523.99 1,968,109,895.33 2,066,909,053.33
Non-current liabilities:
Long-term loans
Bonds payable
Long-term account
payable
Special accounts
payable
Projected liabilities 161,441,142.92 161,441,142.92 161,876,924.66 161,876,924.66
Deferred income tax
liabilities
Other non-current
liabilities
Total non-current liabilities 161,441,142.92 161,441,142.92 161,876,924.66 161,876,924.66
Total liabilities 1,998,720,991.25 2,096,121,666.91 2,129,986,819.99 2,228,785,977.99
Owner’s equity (or
shareholders’ equity):
Paid-in capital (or share
479,433,003.00 479,433,003.00 479,433,003.00 479,433,003.00
capital)
Capital public reserve 362,027,636.64 362,027,636.64 362,027,636.64 362,027,636.64
Less: Inventory shares
Surplus public reserve 32,673,227.01 32,673,227.01 32,673,227.01 32,673,227.01
Provision of general risk
Retained profit -2,658,473,327.33 -2,590,176,389.77 -2,721,509,568.57 -2,650,767,261.31
Balance difference of
foreign currency translation
Total owner’s equity
attributable to parent -1,784,339,460.68 -1,716,042,523.12 -1,847,375,701.92 -1,776,633,394.66
company
Minority interests
Total owner’s equity -1,784,339,460.68 -1,716,042,523.12 -1,847,375,701.92 -1,776,633,394.66
Total liabilities and owner’s
214,381,530.57 380,079,143.79 282,611,118.07 452,152,583.33
equity
9.2.2 Profit Statement
Prepared by Shenzhen China Bicycle Company (Holdings) Limited January-December, 2007 Unit: RMB
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
This period Same period of last year
Items
Merger Parent Company Merger Parent Company
I. Total operating income 234,601,314.71 22,683,649.92 232,525,287.59 36,818,191.13
Including: Operating income 234,601,314.71 22,683,649.92 232,525,287.59 36,818,191.13
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 229,691,189.35 20,384,490.69 243,397,959.60 41,030,508.50
Including: Operating cost 230,244,832.81 24,154,789.84 224,910,013.85 36,888,095.55
Interest expense
Commission charge and
commission expense
Cash surrender value
Net amount of expense
of compensation
Net amount of
withdrawal of insurance
contract reserve
Bonus expense of
guarantee slip
Reinsurance expense
Operating tax and extras 175,378.59 880.36 255,622.71 5,510.77
Sales expenses 5,542,241.79 1,393,554.08 6,742,974.66 1,768,339.08
Administration
16,217,410.39 12,771,829.00 16,813,215.11 10,520,106.11
expenses
Financial expenses -34,285,597.04 -29,733,485.40 -14,465,143.27 -14,292,785.12
Losses of devaluation of
11,796,922.81 11,796,922.81 9,141,276.54 6,141,242.11
asset
Add: Changing income
of fair value(Loss is listed
with “-”)
Investment income
-1,336,613.99 -1,156,612.99 -1,173,559.60 -5,476,716.41
(Loss is listed with “-”)
Including: Investment
income on affiliated
company and joint venture
Exchange income (Loss
is listed with “-”)
III. Operating profit (Loss
3,573,511.37 1,142,546.24 -12,046,231.61 -9,689,033.78
is listed with “-”)
Add: Non-operating
71,247,901.44 71,233,496.87 135,901.58 126,164.08
income
Less: Non-operating
1,935,616.35 1,935,616.35 102,252.36 85,145.64
expense
Including: Disposal loss
of non-current asset
IV. Total Profit (Loss is
72,885,796.46 70,440,426.76 -12,012,582.39 -9,648,015.34
listed with “-”)
Less: Income tax 9,849,555.22 9,849,555.22
V. Net profit (Net loss is
63,036,241.24 60,590,871.54 -12,012,582.39 -9,648,015.34
listed with “-”)
Net profit attributable to 63,036,241.24 60,590,871.54 -12,012,582.39 -9,648,015.34
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owner’s equity of parent
company
Minority shareholders’
gains and losses
VI. Earnings per share
i. Basic earnings per share 0.13135 -0.02508
ii. Diluted earnings per share 0.13135 -0.02508
9.2.3 Cash Flow Statement
Prepared by Shenzhen China Bicycle Company (Holdings) Limited January-December, 2007 Unit: RMB
This period Same period of last year
Items
Merger Parent Company Merger Parent Company
I. Cash flows arising from
operating activities:
Cash received from
selling commodities and 161,272,081.30 20,891,671.25 163,498,443.54 15,173,429.00
providing labor services
Net increase of
customer deposit and
interbank deposit
Net increase of loan
from central bank
Net increase of capital
borrowed from other
financial institution
Cash received from
original insurance contract
fee
Net cash received from
reinsurance business
Insured savings and net
increase of investment
Net increase of disposal
of transaction financial asset
Cash received from
interest, commission charge
and commission
Net increase of capital
borrowed
Net increase of returned
business capital
Write-back of tax
received
Other cash received
concerning operating 7,009,777.82 31,549,664.93
activities
Subtotal of cash inflow
arising from operating 161,272,081.30 20,891,671.25 170,508,221.36 46,723,093.93
activities
Cash paid for
purchasing commodities and 131,243,202.76 7,196,032.27 149,346,224.98 9,751,762.65
receiving labor service
Net increase of
customer loans and advances
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Net increase of deposits
in central bank and interbank
Cash paid for original
insurance contract
compensation
Cash paid for interest,
commission charge and
commission
Cash paid for bonus of
guarantee slip
Cash paid to/for staff
18,456,590.20 3,688,775.28 15,945,592.40 3,063,397.94
and workers
Taxes paid 4,132,851.41 2,299,281.44 3,206,915.85 1,124,532.09
Other cash paid
concerning operating 10,031,417.04 7,597,313.04 10,960,045.55 33,364,129.92
activities
Subtotal of cash outflow
arising from operating 163,864,061.41 20,781,402.03 179,458,778.78 47,303,822.60
activities
Net cash flows arising
-2,591,980.11 110,269.22 -8,950,557.42 -580,728.67
from operating activities
II. Cash flows arising from
investing activities:
Cash received from
recovering investment
Cash received from
investment income
Net cash received from
disposal of fixed, intangible 187,507.00 187,507.00 195,080.00 195,080.00
and other long-term assets
Net cash received from
disposal of subsidiaries and
other units
Other cash received
concerning investing
activities
Subtotal of cash inflow
187,507.00 187,507.00 195,080.00 195,080.00
from investing activities
Cash paid for
purchasing fixed, intangible 284,539.46 259,315.46 253,025.05 231,064.00
and other long-term assets
Cash paid for
investment
Net increase of
mortgaged loans
Net cash received from
180,000.00
subsidiaries and other units
Other cash paid
concerning investing
activities
Subtotal of cash outflow
464,539.46 259,315.46 253,025.05 231,064.00
from investing activities
Net cash flows arising
-277,032.46 -71,808.46 -57,945.05 -35,984.00
from investing activities
III. Cash flows arising from
financing activities
23
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
Cash received from
absorbing investment
Including: Cash
received from absorbing
minority shareholders’
investment by subsidiaries
Cash received from
loans
Cash received from
issuing bonds
Other cash received
concerning financing
activities
Subtotal of cash inflow
from financing activities
Cash paid for settling
debts
Cash paid for dividend
and profit distributing or
interest paying
Including: Dividend and
profit of minority
shareholder paid by
subsidiaries
Other cash paid
concerning financing
activities
Subtotal of cash outflow
from financing activities
Net cash flows arising
from financing activities
IV. Influence on cash due to
-51,672.27 -65,236.99 -255.04
fluctuation in exchange rate
V. Net increase of cash and
-2,920,684.84 -26,776.23 -9,008,757.51 -616,712.67
cash equivalents
Add: Balance of cash
and cash equivalents at the 16,982,883.27 504,436.50 25,991,640.78 1,121,149.17
period -begin
VI. Balance of cash and cash
14,062,198.43 477,660.27 16,982,883.27 504,436.50
equivalents at the period -end
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
9.2.4 Statement on Changes of Owners' Equity
Prepared by Shenzhen China Bicycle Company (Holdings) Limited Dec.31, 2007 Unit: RMB
Amount in this report period Amount in last year
Owners' equity belonged to the parent company Owners' equity belonged to the parent company
Minorit Total Paid-up General Minorit Total
Items Paid-up General Less:
capital Capital Less: Surplus risk Retaine y owners’ capital Capital Surplus risk Retaine y owners’
Treasur Others Treasur Others
(Share reserves y Stock reserves provisio d profit interest equity (Share reserves reserves provisio d profit interest equity
capital) n y Stock
capital) n
-2,660,5 -1,786,4 -2,658,1 -1,784,0
I. Balance at the end of the last 479,433, 362,027, 32,673,2 479,433, 362,027, 32,673,2
98,088.9 64,222.2 79,348.0 45,481.3
year 003.00 636.64 27.01 003.00 636.64 27.01
3 8 4 9
Add: Changes of accounting
policy
Error correction of the last 7,229,27 7,229,27
period 4.45 4.45
-2,660,5 -1,786,4 -2,650,9 -1,776,8
II. Balance at the beginning of 479,433, 362,027, 32,673,2 479,433, 362,027, 32,673,2
98,088.9 64,222.2 50,073.5 16,206.9
this year 003.00 636.64 27.01 003.00 636.64 27.01
3 8 9 4
III. Increase/ Decrease in this
60,572,1 60,572,1 -9,648,0 -9,648,0
year (Decrease is listed
43.94 43.94 15.34 15.34
with'"-")
60,572,1 60,572,1 -9,648,0 -9,648,0
(I) Net profit
43.94 43.94 15.34 15.34
(II) Profits and losses
calculating into owners' equity
25
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
1. Net changing amount of fair
value of financial assets
available for sale
2. Effect of changes of other
owners' equity of invested
units under equity method
3.Effect of income tax related
to owners' equity
4. Others
60,572,1 60,572,1 -9,648,0 -9,648,0
Total of (I)and (II)
43.94 43.94 15.34 15.34
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
(IV) Profit distribution
1. Withdrawal of surplus
reserves
2. Withdrawal of general risk
provisions
3.Distribution for owners
(shareholders)
4.Others
(V) Carrying forward internal
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SHENZHEN CHINA BICYCLE COMPANY（HOLDINGS）LIMITED SUMMARY OF ANNUAL REPORT 2007
owners' equity
1.Capital reserves conversed
to capital (share capital)
2. Surplus reserves conversed
to capital (share capital)
3.Remedying loss with profit
surplus
4.Others
-2,600,0 -1,725,8 -2,660,5 -1,786,4
IV. Balance at the end of this 479,433, 362,027, 32,673,2 479,433, 362,027, 32,673,2
25,944.9 92,078.3 98,088.9 64,222.2
report period 003.00 636.64 27.01 003.00 636.64 27.01
9 4 3 8
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深圳中华自行车(集团)股份有限公司2007 年年度报告摘要
9.3 Explanation on changes of accounting policy, accounting estimation and settlement method
compared with the latest annual report
√Applicable □Inapplicable
The Company has started to implement the Accounting Standard for Enterprise (2006) since Jan 1st
of 2007; and the change and influence of the main accounting policy is as follows:
1. According to the regulation of Accounting Standard for Enterprise No.2-Long Term Equity
Investment, the long term equity investment conducted over the subsidiaries is calculated by cost
method and equity method is applied for preparing the consolidated financial statements. As to the
long term equity investments calculated by equity method before Jan 1st of 2007, the Company takes
st
their book values as the recognized cost of Jan 1 of 2007.
2. According to the regulation of Accounting Standard for Enterprise No.3-Real Estate Investment,
the Company would choose cost measure pattern to calculate the investment real estate. This change
in accounting policy has not brought affect to the losses of year-begin and previous years.
3. According to the regulation of Accounting Standard for Enterprise No.18-Income Tax, the
accounting calculation method for income tax of the Company would be changed to balance sheet
debt method from the original tax payable method. On Jan 1st of 2007, as to the income tax affect of
the temporary difference formed by the difference in the book value and taxation basis of assets and
liabilities, the Company adjusted the relevant items in the 2006 Comparative Financial Statements by
retroactive adjustment.
9.4 Contents, correct amount, reason and its influence of significant accounting errors
√Applicable □Inapplicable
When preparing the 2007 financial statements, during the procedure of clearing up the exchange accounts,
the Company found it had omitted an amount of previous income of RMB 7,229,274.45. The relevant
accounting error correction had been made as follows:
1. Clear up and verify the Accounting Receivable- Accounting Receivable for 2005 of the controlling
subsidiary of the Company-Shenzhen Emmelle Industry Co., Ltd. With its account charged to accounts of its
filiale and its dealers, after consolidation, the credit balance is RMB 4,736,994.02 (including the balance of
debit RMB 3,545,347.30 and RMB 8,282,341.32 for the balance of credit). Due to that this balance comes
from the sales amount for buying-out inventory for operation disposal and the return amount for normal sales
after the buy-out collected by Shenzhen Emmelle Industry Co., Ltd on behalf of the Company, when dealing
with the accounts work, the Company made a mistake in charging to account stated, then that is why the
Company has omitted the amount of confirmed income.
As for this error, retroactive adjustment has been made as follows, meanwhile, the 2006 comparative
financial statement has been adjusted:
The Company adjusted to increase accounts receivable- Shenzhen Emmelle Industry Co., Ltd with RMB
4,736,994.02, meanwhile, increase undistributed profit of year-begin with RMB 4,041,830.03 and RMB
695,163.99 for tax payable; Shenzhen Emmelle Industry Co., Ltd adjusted to increase accounts receivable-
accounts receivable for 2005 with RMB 4,736,994.02, correspondingly decrease accounts
receivable-Shenzhen China Bicycle Company (Holdings) Limited with RMB 4,736,994.02.
Clear up and verify the balance of accrued expense of the controlling subsidiary of the Company-Shenzhen
Emmelle Industry Co., Ltd with RMB 3,356,971.48 and find that this balance comes from the fee for brand
using occurred in previous years while the Company didn’t collect, among which RMB 588,264.10 was
omitted to collect in 2003 and RMB 2,768,707.38 for 2004.
As for this error, retroactive adjustment has been made as follows, meanwhile, the 2006 comparative
financial statement has been adjusted:
The Company adjusted to increase other accounts receivable- Shenzhen Emmelle Industry Co., Ltd with
RMB 3,356,971.48, meanwhile, increase undistributed profit of year-begin with RMB 3,187,444.42 and
RMB 169,527.06 for tax payable; Shenzhen Emmelle Industry Co., Ltd adjusted to increase other accounts
28
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深圳中华自行车(集团)股份有限公司2007 年年度报告摘要
payable- Shenzhen China Bicycle Company (Holdings) Limited with RMB 3,356,971.48, correspondingly
decrease accrued expense with RMB 3,356,971.48.
Shenzhen Pengcheng CPAs issued special report for the above errors correction.
9.5 Explanation on change of consolidated scope compared with the latest annual report
√Applicable □Inapplicable
Before year 2006, because China International Company was in the shutout status and in losses for
successive years, the net asset was minus; it was not brought into the consolidated scope based on old
accounting standards. Pursuant to the regulations of new accounting standards, the Company brought
China International Company into the consolidation scope and took retroactive to adjust the amount
in period-begin, the retained profit as Jan.1, 2007 was decreased amounting to RMB 924,020.14.
SHENZHEN CHINA BICYCLE COMPANY （HOLDING） LIMITED
Notes of Financial Statement
For Year 2007
Otherwise stated, all amounts are stated in RMB Yuan.
Annotation 1. COMPANY PROFILE
Approved by Shenzhen People’s Government—ShenFuBanFu (1991) No 888, the Company was
restructured to be a stock company limited. On Dec. 28, 1991, approved by the People’s Bank of
China—Shenzhen Special Economic Zone Branch (ShenRenYinFu Zi (1991) No. 119), the
Company was listed with Shenzhen Stock Exchange. The corporate business license was QGYSZF
Zi No. 101165, with a registered capital of RMB 479,433,003.00.
The Company was engaged in machine manufacturing industry. The main operations include:
producing and assembling types of bicycles, the parts, fittings, mechanical products, sports
instrument, fining chemicals, carbon-fiber compound materials, household electronic appliances
and the fittings.
Prime products are: Emmelle bicycle, Chimo bicycle, Diamondback bicycle and electric bicycle.
Brief on production and management: The Company produces medium and top grade bicycles,
mainly for exporting. Influenced by antidumping lawsuits in recent years; the sales volume slided
down. The Company focuses on debts restructure as well as products research and development.
The Company has developed series of electric bicycle, and has been working to exploit domestic
market. Main businesses continue to make positive profit in the year.
Annotation 2. Compiling basis of financial statement
Compilation of financial statement of the company is based on continuous business according to
actual trade based on continuous operations and actual occurred transactions and matters, and in
according to the original Accounting Standards for Business Enterprises promulgated before Feb.15,
2006 and original Accounting System for Business Enterprises (hereinafter refers to Original
Accounting Standards and Systems for Business Enterprises) promulgated on Dec.29, 2000 by
Ministry of Finance. Since Jan.1, 2007, the Company implemented Accounting Standards for
Business Enterprises (hereinafter refers to Accounting Standards for Business Enterprises)
promulgated in Feb.15, 2006 by Ministry of Finance. The financial statement was the first financial
statement compiled based on Accounting Standards for Business Enterprises.
29
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深圳中华自行车(集团)股份有限公司2007 年年度报告摘要
While compiling the financial statements, the comparative data between the period-begin amount in
balance sheet and the same period of last year in profit sheet were taken retroactive adjustment
according to the relevant regulations on 5th to the 19th item in Accounting Standard for Business
Enterprises No. 38 - First time adoption of Accounting Standards for Business Enterprises and
Information Disclosure Standard Interlocution No.7 of Companies Publicly Issuing
Securities---Comparison on Compilation and Disclosure of Financial Accounting Information
During the Transition Period of New and Former Accounting Standards and relisted based on
Accounting Standards for Business Enterprises.
The financial statement of the Company compiled based on the aforesaid compilation basis
conformed to the requirements of Accounting Standards for Business Enterprises; reflected the
financial status of the Company as of Dec.31, 2007 truly and completely and the operation results
and cash flow of year 2007
Annotation 3. Approving and delivering person of financial report and the approving and
delivering date of financial report.
The financial report of the Company was approved and delivered by the 5th meeting of 7th the board
of directors dated.
Annotation 4. Compilation method of main accounting policy, accounting estimate and consolidated
financial statement.
1. Accounting policy
Accounting policy of the company complies to "Enterprise Accounting Standard 2006" and
application guidance issued by Ministry of Finance People's Republic of China as 【 2006 】3 of
accounting and financial.
2. Fiscal year
It shall adopt calendar year, namely, one calendar year means period from January 1th to December,
31st.
3. Recording currency
RMB is used as the recording currency.
4. Foundation to charge to an account and price-calculating principle
Foundation to charge to financial accounting is accrual basis. Price-calculating principle of every
asset (except other price-calculating principles or required by "Enterprise Accounting Standard")
refers to historical cost when obtaining.
5. Foreign-currency business, translation and accounting methods of foreign currency statement.
Foreign currency payment shall be translated into recording currency amount by adopting spot
exchange rates issued by People's Bank of China during initial confirmation.
Treatments of foreign currency cash items and foreign currency non-cash items on balance sheet
date are as follows：
1）Foreign currency cash items shall be translated by spot exchange rates on balance sheet date.
Exchange differences caused by difference of spot exchange rates of balance sheet date and that
during initial confirmation or that of former balance sheet date is accounted for current gains or
losses.
2）Foreign currency non-cash items measured by historical cost can be translated by exchange rates
of transaction date without changing recording currency amount.
3）Foreign currency non-cash items measured by fair value are translated by exchange rates on fair
value confirmation date. Difference of translated recording currency amount and original carrying
amount is accounted for current gains or losses as variation treatment of fair value.
4 ）Exchange gains or losses caused by debts with regard to construction of fixed assets shall be
handled according to capitalization principle of borrowing expenses. Exchange gains or losses with
regard to development of real estate shall be capitalized before completion of real estate.
30
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深圳中华自行车(集团)股份有限公司2007 年年度报告摘要
6. Defined standard of cash equivalent
The company uses investment with short holding period (generally refers to three months form
procurement date), strong liquidity, eligibility to convert into cash of known amount and very small
value variation risk as cash equivalent during preparation of cash flow statement.
7. Translation method of financial instruments
Financial instruments of the company include financial assets and financial debts.
1）Accounting for financial assets：
--- Confirmation standard of fair value of financial assets
Confirmation standard of fair value of financial assets of the company is as follows：
A. Price of balance sheet date is used as fair value if there are financial assets in active market.
B. Fair value is confirmed by present value calculated by appropriate discount rate (current bank
loan rate is generally used as discount rate) according to future cash flow if there are no financial
assets in active market.
Classification of financial assets
Financial assets of the company are classified as follows：
A. Financial assets measured by fair value and whose variation is accounted for current gains or
losses （including tradable financial assets and financial assets measured by fair value and whose
variation is accounted for current gains or losses）；
B. Holding or due investment；
C. Receivable accounts；
D. Financial assets can be sold
Measurement of financial assets
A. Initially confirmed financial assets shall be measured by fair value