Stock Code: 600843 900924 Stock Abbreviation: SGSB SGBG
Shang Gong Group Co., Ltd.
Annual Report 2017
IMPORTANT NOTES
1. The board of directors, the board of supervisors, and all the directors, supervisors, and senior
managers guarantee that there are no false statement, vital misunderstandings or important omissions
in this report, and hold both individual and joint liability for the authenticity, accuracy and integrity of
its contents.
2. All the directors of Shang Gong Group Co., Ltd. Attended the meeting of the board of directors.
3. BDO China Shu Lun Pan Certified Public Accountants LLP. provided a standard unqualified opinion
audit report for the Company.
4. Zhang Min, Chairman of the Company, Li Jiaming, the principal in charge of the accounting, and
Zhao Lixin, Chief of Accounting Affairs, make the pledge for the authenticity, accuracy and integrity of
the attached financial report.
5. Plan of Profit Distribution or Transfer of Reserves Deliberated by the Board
Audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the Company achieved the
consolidated net profit of 212,652,989.02 yuan in 2017, of which, the net profit attributable to parent company
owners is 197,487,226.27 yuan.
According to the provisions in the Articles of Association, before withdrawing the legal accumulation fund, the
Company should first cover the deficit with the profit of the year. As the profit of the year failed to make up
the deficit of previous years, the Company did not draw the legal accumulation fund. The current-period net
profit of the parent company is 62,938,430.53 yuan; the undistributed profits at the beginning of 2017 are
-206,831,240.38 yuan; thus the practical profit available for distribution is -143,892,809.85 yuan at the end of
2017. As the parent company’s profit available for distribution is negative, the profit distribution cannot be
made in 2017, neither the transferring of capital reserves into share capital.
6. The Risk of Forward-looking Statements
The Company’s future plan, development strategy and other forward-looking statements in this annual report
do not constitute a substantial commitment to the Company’s investors.
7. There was no occupation of fund of the Company occurred for non-operating use by holding
shareholder and its related parties.
8. There was no external guarantee against the rules and regulations of the Company.
9. Major Risk Waring
The Company has described in detail the risks faced by the Company in this annual report. For details see
―Discussion and Analysis on Business Operation‖ and other relevant chapters in this annual report
10. If the English Version of this Annual Report involves any differences from the Chinese Version, the
latter shall be effective.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Table of Contents
CHAPTER 1 DEFINITION ................................................................................................................................. 1
CHAPTER 2 COMPANY PROFILE AND MAIN FINANCIAL INDEX ................................................................. 1
CHAPTER 3 SUMMARY OF COMPANY BUSINESS .......................................................................................... 4
CHAPTER 4 DISCUSSION AND ANALYSIS ON BUSINESS OPERATION ......................................................... 6
CHAPTER 5 IMPORTANT EVENTS ................................................................................................................ 19
CHAPTER 6 STATUS OF SHAREHOLDERS AND SHARE CAPITAL CHANGES OF COMMON STOCK .......... 27
CHAPTER 7 RELEVANT SITUATION ABOUT PREFERRED SHARES ................................................... 30
CHAPTER 8 SITUATION ABOUT DIRECTORS, SUPERVISORS, SENIOR MANAGERS AND EMPLOYEES... 31
CHAPTER 9 CORPORATE GOVERNANCE ...................................................................................................... 41
CHAPTER 10 RELEVANT SITUATION ABOUT CORPORATE BONDS .......................................................... 45
CHAPTER 11 FINANCIAL REPORT ................................................................................................................ 46
CHAPTER 12 DOCUMENTS FOR REFERENCE ............................................................................................ 140
II
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
CHAPTER 1 DEFINITION
As used in this Report, the following terms have the following meanings unless the context requires
otherwises:
Definition of common terms
ShangGong Group, SGG, the
refer to Shang Gong Group Co., Ltd.
Company
PKFR refers to Shanghai Puke Flyingman Investment Co., Ltd
State-owned Assets Supervision and Administration Commission of
Pudong SASAC refers to
Shanghai Pudong New Aear People’s Government
DAP AG, SGE refer to DAP Industrial AG, former ShangGong (Europe) Holding Corp. GmbH
DA AG refers to Dürkopp Adler AG
PFAFF GmbH refers to PFAFF Industriesystemeund Maschinen GmbH
KSL refers to PFAFF Industriesystemeund Maschinen GmbH Zweigniederlassung KSL
STOLL KG refers to H. Stoll AG & Co. KG
DAPSH refers to DAP (Shanghai) Co., Ltd.
SG Butterfly refers to Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd.
SGGEMSY refers to Zhejiang ShangGong GEMSY CO., LTD.
ISMB refers to Shang Gong Group Co., Ltd. Industrial Sewing Machine Branch
Butterfly Branch refers to Shang Gong Group Co., Ltd. Shanghai Butterfly Sewing Machine Branch
PIZ refers to PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd.
SHENSY refers to Shanghai Shensy Enterprise Development Co., Ltd.
Report period refers to From 1st January 2017 to 31st December 2017
Yuan, RMB refer to The lawful currency of the People’s Republic of China
Euro, EUR refer to The lawful currency of the European Union
CHAPTER 2 COMPANY PROFILE AND MAIN FINANCIAL INDEX
1. Company information
Company name in Chinese 上工申贝（集团）股份有限公司
Abbreviation of the Company name in Chinese 上工申贝
Compay name in English Shang Gong Group Co., Ltd.
Abbreviation of the Company name in English ShangGong Group
Legal representative 张敏
2. Contact information
Secretary of Board of Directors Representative of Securities Affairs
Name Zhou Yongqiang Shen Lijie
No. 1566 New Jinqiao Road, Pudong New Aear, No. 1566 New Jinqiao Road, Pudong New Aear,
Address
Shanghai Shanghai
Telephone 021-68407515 021-68407700-437
Fax 021-63302939 021-63302939
Email zyq@sgsbgroup.com shenlj@sgsbgroup.com
3. Basic situation introduction
Room A-D, 12th Floor, Orient Mansion, No. 1500 Century Avenue, China
Registered address
(Shanghai) Pilot Free Trade Zone
Postal code of registered address
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Office address No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai
Postal code of office address
Company website http://www.sgsbgroup.com/
Email 600843@sgsbgroup.com
4. Information disclosure and place for consulting
Newspaper selected by the Company for information disclosure Shanghai Securities News; Hong Kong Commercial Daily
Website appointed by CSRC for publishing annual report http://www.sgsbgroup.com/
Lodging address of annual report of the Company Office of the Company
5. Corporate stock
Type Stock exchange Stock abbreviation Stock code
A Share Shanghai Stock Exchange SGSB
B Share Shanghai Stock Exchange SGBG
6. Other information
Name BDO China Shu Lun Pan Certified Public Accountants LLP.
Accounting firm Sixth Floor, New Huangpu Financial Plaza, No. 61 East Nanjing Road,
appointed by the Address
Shanghai
Company (Domestic) Signing accountant's
Li Ping, Zhang Yongmei
name
7. Main accounting data and financial index in the last three years
7.1 Main accounting data
Unit: Yuan, Currency: RMB
Year-on-year
Main accounting data 2017 2016
increase/decrease (%)
Operaing income 3,064,971,500.79 2,759,855,136.98 11.06 2,314,039,610.25
Net profit attributable to
shareholders of listed 197,487,226.27 144,231,343.84 36.92 157,417,087.48
company
Net profit attributable to
shareholders of listed
company after 154,753,519.99 117,425,853.16 31.79 133,835,486.09
non-recurrent account
profit/loss
Net cash flow from
117,335,869.17 99,056,912.42 18.45 50,886,863.54
operating activities
Year-on-year
31st December 2017 31st December 2016 31st December 2015
increase/decrease (%)
Net assets attributable to
shareholders of listed 2,145,214,676.69 1,916,349,381.88 11.94 1,774,674,087.49
company
Total assets 3,703,515,071.60 3,506,172,981.71 5.63 3,146,701,717.06
7.2 Main financial index
Year-on-year
Main financial index 2017 2016
increase/decrease (%)
Basic earnings per share (yuan/share) 0.3600 0.2629 36.93 0.2869
Diluted earning per share (yuan/share) 0.3600 0.2629 36.93 0.2869
Basic EPS after non-recurrent account profit/loss
0.2821 0.2141 31.76 0.2440
(yuan/share)
Weighted rate of return on net assets (%) 9.8004 7.8098 increase 1.99 percent 9.3992
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Year-on-year
Main financial index 2017 2016
increase/decrease (%)
Weighted rate of return on net assets after
7.6797 6.3584 increase 1.32 percent 7.9912
non-recurrent account profit/loss (%)
8. Accounting Data Differences between Domestic and Foreign Accounting Standards
8.1 Net profit and Net Assets Attributable to Shareholders of Listed Company Disclosed in Accordance
with International Accounting Standards and in Accordance with Chinese Accounting Standards in the
Financial Reports
Not applicable.
8.2 Net profit and Net Assets Attributable to Shareholders of Listed Company Disclosed in Accordance
with Foreign Accounting Standards and in Accordance with Chinese Accounting Standards in the
Financial Reports
Not applicable.
8.3 Explanation of Differences between Chinese Accounting Standards and Foreign Accounting
Standards
Not applicable.
9. Main Accounting Data of Each Quarter in Report Period
Unit: Yuan, Currency: RMB
The first quarter The second quarter The third quarter The forth quarter
(from January to (from April to (from July to (from Octember to
March) June) September) December)
Operaing income 725,887,035.25 806,675,565.87 741,145,533.86 791,263,365.81
Net profit attributable to shareholders
60,369,659.24 65,611,233.47 63,509,988.61 7,996,344.95
of listed company
Net profit attributable to shareholders
of listed company after non-recurrent 49,359,866.36 63,922,457.16 50,389,388.41 -8,918,191.94
account profit/loss
Net cash flow from operating
-41,055,836.13 -18,734,487.34 58,711,268.22 118,414,924.42
activities
9. Items and Amount of Non-recurring Profit and Loss
Unit: Yuan, Currency: RMB
Item 2017 Note 2016
Profits and losses from disposal of non-current
23,553,109.03 3,529,785.81 5,380,014.25
assets
Government subsidies recorded in the current
11,861,884.98 11,190,319.23 6,668,426.57
profit and loss
Except effective hedging business relevant to the
normal business of the Company, gains and losses
from changes in fair value arising from trading
financial assets and trading financial liabilities, 10,553,231.30 4,708,383.25 9,448,774.70
and investment income from disposal of trading
financial assets, trading financial liabilities and
available-for-sale financial assets
Other non-operating income and expenditure
5,690,312.52 17,172,464.17 6,472,839.74
except the above-said items
Impact on minority interests -5,345,419.70 -6,050,593.20 -2,612,504.42
Impact on income tax -3,576,783.35 -3,744,868.58 -1,775,949.45
Total 42,733,706.28 26,805,490.68 23,581,601.39
10. Items for Adopting Fair Value Measurement
Unit: Yuan, Currency: RMB
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Influence on current
Item Opening balance Ending balance Current change
profit
Trading financial assets 4,000.00 0.00 -4,000.00 16,690.26
Available-for-sale financial
107,980,989.31 89,721,694.56 -18,259,294.75 1,018,849.13
assets
Total 107,984,989.31 89,721,694.56 -18,263,294.75 1,035,539.39
CHAPTER 3 SUMMARY OF COMPANY BUSINESS
1. The Company’s main business, business model in the report period and industry situation
During the report period, the Company's main business is sewing equipment manufacturing industry. The
Company’s business involves sewing equipment, office machinery, film materials, commerce and trade, and
logistics services.
The Company adheres to globalization of business, and implements unified management of sales. The
Company adopts a gradient-based specialized multi-brand marketing strategy, and conducts gradient division
management on production sites throughout Europe and Asia, leading the global high-end market for sewing
equipment with advanced technology. At the same time, the Company is cultivating the business model –
―R&D and Marketing in Shanghai, Production in Jiangsu and Zhejiang‖. In recent years, through the
implementation of mergers and acquisitions at home and abroad as well as internal restructuring and
integration of the Company, the synergies gradually emerged, and the international business model achieved
good results.
China’s sewing machinery manufacturing industry is a branch of light industry in China. It has established the
most complete industrial system in the world, and is capable of manufacturing a full range of sewing
machinery products, including household and industrial sewing machine, embroidery machine and cutting
machine, and the related controller, motor ability and spare parts, which satisfies all kinds of social needs.
However, compared with the advanced in the world, there is still a large gap for China’s sewing machinery
manufacturing industry in independent innovation ability, industrial structure, technology, product and brand
quality and other aspects. The whole industry is big but not strong. The development of the world sewing
machinery industry started in the middle of the nineteenth Century in Europe and the United States. After 100
years of development, at present the world sewing machine industry development center has been transferred
to the Asian region like China and Japan, and gradually formed tripartite confrontation pattern between China,
Germany and Japan.
In 2017, the development trend of the economic operation of the sewing machinery industry in China was
good. In particular, the production and sales of ordinary products showed a recovering growth trend, and the
corporate profits continued to improve. According to statistics from China Sewing Machinery Association, in
2017, the top 100 backbone machine manufacturers in the industry achieved total industrial output value of
18.838 billion yuan, a year-on-year increase of 27.71%, and the total amount of sewing machines produced
was 6,129,800, a year-on-year increase of 23.86%. Among them, 4,321,800 industrial sewing machines were
produced, a year-on-year increase of 32.47%. The industry's top 100 had accumulated a total of 19.967 billion
yuan in operating income, an increase of 18.84% year-on-year, and accumulated sales of 6,606,600 sewing
machines, a year-on-year increase of 19.53%. In 2017, the operating income of enterprises above designated
size grew by 21.47% year-on-year; total profit increased by 29.09% year-on-year; gross profit margin was
16.78%, an increase of 5.22% year-on-year.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
2. Description of major changes in the main assets of the company during the report period
For details of the major changes in the Company's major assets during the report period, please refer to ―(3)
Analysis of Assets and Liabilities‖ in ―CHAPTER 4 DISSCUSSION AND ANALYSISI ON BUSINESS
OPERATION‖.
The Company’s overseas assets amounted to 1,958.19 million yuan, accounting for 52.87% of the total assets.
The Company’s overseas assets mainly come from the Company’s previous overseas acquisitions and the
business growth of overseas subsidiaries. The Company’s wholly-owned subsidiary DAP AG acquired DA
AG in 2005, acquired PFAFF GmbH and KSL in 2017, and invested in STOLL KG in 2016.
3. Core Competitiveness Analysis in the Report Period
The Company is the first listed company with the longest history in the domestic sewing equipment industry,
and has more than 50-year experience in sewing equipment production. The Company controlled German DA
AG, one of the famous sewing machine manufacturing companies in the world with more than 150 years
history, PFAFF GmbH, a famous sewing equipment manufacturer with 150 years history, and PFAFF KSL
Branch, a company with the world's top sewing technology. In the report period, the Company continued to
promote the integration of global resources, and further promote the integration of SGE. The Company's core
competitiveness is further consolidated and enhanced, and the foundation for sustainable and healthy
development of the Company is further consolidated. The core competence of the Company is mainly shown
in the following aspects:
(1) Strong Technological Research and Development Capability
The Company highly attaches importance to the construction of technological research and development
capabilities, which have become the important force driving the development of the Company. The Company
has owned a powerful technological research and development team and had the complete and efficient
scientific and technological innovation system, the leading sewing machine design plan and the first class
assessment method for testing sewing machines in the world. The research and development of Industrial 4.0,
which has been developed by the R & D team, has made preliminary achievements. ShangGong Technology
Centre is the city level of research and development centre in Shanghai, and has the strong digestion and
absorption and supporting development capability.
(2) Advanced Technology Advantage
The Company has the world’s high-end intelligent and 3D sewing technology, and the Company is a global
leader in special sewing machine for medium or thick materials, garment automatic sewing unit, robot
automatic sewing technology and textile material welding technology and other fields. The products are not
only applied in the traditional market for sewing machine industry but also applied in some emerging fields,
such as automobile, environmental protection, aeronautics and astronautics and renewable energy, etc. In many
fields, such as automobile airbags, filters protecting environment, light carbon fiber structure for plane, etc.,
the sewing application technology has the absolute competition advantage, and especially, it originally created
the sewing technology for light carbon fiber, 3D sewing automation and QONDAC 4.0 Intelligent Industrial
Sewing Network Online Production Monitoring System.
(3) Multiple Brand and Product Advantage
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Through overseas acquisition, the Company owns some internationally well-known brands, such as DA,
PFAFF Industrial, KSL, Beisler, and etc., and some famous domestic brands, such as Butterfly with 98 years’
history, Bee and Flyingman, and Shanggong brand with more than 50 years’ history. In recent years, the
company is cultivating industrial machine brands, such as SG GEMSY, Mauser and so on. These brands have
a high recognition and reputation in the sewing machine industry. The products of the Company focus on
smart, modularized and highly efficient automatic sewing unit and other sewing equipment with integrated
machinery and electronics, covering various advanced technologies in the field of high-end sewing equipment,
and the Company holds the leading position in the segmented market of sewing equipment.
(4) Powerful Global Resource Integration Capability
The Company utilizes and develops the basis and advantages of its respective domestic and foreign
subsidiaries, implements globalization layout and integration in the production base, sales network,
procurement of raw materials, technology R&D and other aspects, implements resource sharing, has
complementary advantages and develops collaboratively.
(5) Rich Internationalized Operation and Management Experience
Since 2005, the Company has begun to implement an overseas merger and acquisition strategy for
international operations. In recent years, the Company has increased the pace of overseas acquisitions and
mergers, and the proportion of overseas businesses has grown. The Company's multi-year international
operation and management has gradually cultivated a management team with an international perspective and
multinational operating capabilities, and has accumulated rich international management experience.
CHAPTER 4 DISCUSSION AND ANALYSIS ON BUSINESS OPERATION
1. Discussion and analysis of operations
From the perspective of the world economy in 2017, despite the existence of uncertainties such as the rise of
trade protectionism and trade frictions, the world economic recovery trend is relatively clear, and it shows a
trend of full recovery of advanced economies and emerging economies. From the domestic point of view,
China's economic development has entered a new era. China's economy has shifted from a high-speed growth
stage to a high-quality development stage. In 2017, China’s economy achieved rapid growth, with a GDP
growth rate of 6.9%. China’s economy is better than expected, and the structure has shown encouraging
changes. China's industrial production rebounded obviously and the manufacturing industry continued to
boom.
In 2017, it was the first year that the Company implemented mixed ownership reform. The Company adheres
to the business philosophy of Market-oriented and Benefit-first, and focuses on the entity management of the
Company's headquarter, and strives to promote the transformation of the mechanism. With the Company's
unified platform marketing as the starting point, it vigorously expands its market share; with the cooperation of
the Sino-European team as the starting point, efforts are made to improve the Company’s ability of intelligent
manufacture. Promoting development through reforms, focusing on research and development to help sales,
the Company has achieved gratifying results in all its work. The Company won the \"Top 30 Enterprises in
Light Industry Equipment Manufacturing Industry in China\" and \"Top 100 Enterprises with Chinese Light
Industry Special Ability\" in 2017.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
The Company carried out the following key tasks in 2017:
(1) Increase investment in R&D and promote technological improvement and innovation
In 2017, the Company further increased R & D investment, developed products in the direction of automation,
modularization and intellectualization, and actively promoted technological innovation.
In 2017, the technology center strengthened the technology management and development project
management, and participated in the technology development of domestic and foreign subsidiaries. The
technology center has developed the software development platform and completed the development and
design of the related software module with DA AG, DAMSH and PIZ. In addition, the technology center was
rated as \"good\" in the biennial evaluation of Shanghai Municipal Enterprise Technology Center.
The Company completed the design and development of 755 automatic bag opening machine, 670 and 680
sewing shoulder & sleeve lining machine and 1767 thick material machine and brought them to market. The
Company completed the research and development of jeans machine series like 3819 and 3840, as well as the
production in Kaiserslautern. The Company also completed some product updates and new product
development, such as 5480 Crossline (for airbag areas), 3819 curved jeans machine (patent) etc.
The Company fastened on product development, continuously improved the shirt processing automation
product structure, promoted product development and prototype installation of the shirt sleeve fork machine,
automatic shirt bag machine, automatic joint machine installation, displayed several prototypes in CISMA
2017 and received good reviews from customers and experts. The Company also completed the Mauser
591/574 straight drive one shoe machine development, reduced the cost under the premise of keeping the parts,
products of high quality. The development of Mauser 591-af /2AF automatic feeding shoe machine was also
finished. In the field of shoe machine, it achieved automatic 3D sewing and improved the production
efficiency of customers. Furthermore, the Company continued to develop new product development in 2017,
promote product integration and improvement, completed the development of the prototype of 84x0/87x0
series double needle machine. The trial production of semi-micro oil electromagnet model of 8958 semi-micro
oil computer stepping track control flat sewing machine has completed and exhibited in the CISMA 2017
exhibition and has begun to implement small batch production; The computerized stepper motor has also
completed the prototype trial. The 1900E integrated electronic socket machine, 5500/5600E seamless sewing
machine has also finished the prototype trial system and entered the small batch production stage.
In 2017, the Company tested and analyzed the JX550-W sewing machine, and then optimized the design
according to the market feedback information. In addition, the development of the second phase of sewing
embroidery home APP is in an orderly process, with 85% of the APP front-end program development and 70%
of the background control system, and the work of UE&UI on the WEB and WeChat is progressing steadily.
(2) Seize the opportunity of industry recovery and actively expand market share
In 2017, the Company continued to implement a specialized multi-brand marketing strategy, actively expanded
brand influence, and strived to increase the market share of various classified products and improve the
Company's profitability. In 2017, the Company won the title of ―Excellent Enterprise in Brand Cultivation in
Shanghai‖.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Thep Company and its subsidiaries did a good job in exhibiting at the German Texprocess exhibition and the
2017 China International Sewing Equipment Exhibition (CISMA 2017). The QONDAC NETWORKS
production monitoring system (QONDAC 4.0) exhibited by DA AG won the Texprocess 2017 Innovation
Award and the CISMA 2017 smart sewing demonstration product. During the exhibition, the Company
displayed a variety of exhibits such as automatic sewing equipment assembly lines of suits and 3D robotic
sewing units, which won wide acclaim from the industry. With the help of the exhibition, the Company
demonstrated its technical strength, strengthened the promotion of corporate image and brand, and improved
the confidence of customers and distributors.
In accordance with the Company's unified strategic plan, the Company continued to implement the unified and
coordinated management of the DAP sales platform and achieved encouraging business results. In 2017, DA
AG continued to maintain a high market share of mid- to high-end customers in medium-heavy sewing units,
and achieved good sales performance in sewing processing equipment and parts related to garment processing.
PFAFF's new orders exceeded the budget, and the business maintained a sustained and good momentum of
growth.
DAPSH continued to strengthen its marketing capabilities in 2017 and established branches in Wuhan, Fujian,
Changchun, Vietnam, and Indonesia to be closer to the market. In the area of heavy sewing units, a large
customer visit mechanism was initially established, and maintenance and technical training were strengthened.
DAPSH has initially completed the site decoration layout of the \"Two Suits Two Pants\" automated sample
pipelines. SGGEMSY actively promoted cooperation with DAP sales platform in 2017 and explored emerging
markets such as Southeast Asia to find new sales growth points. At the same time, it further explored domestic
sales channels, expanded the product's popularity, introduced Shanggong brand, and introduced new agents.
Sales of household sewing machines such as Butterfly and Bee rose steadily in 2017. The Butterfly Branch
launched a demo version of the Homeland Embroidery II during the CISMA 2017 exhibition and gained good
market feedback. Meanwhile, Butterfly Branch strengthened quality tracking and improved the quality of
household sewing machines, which lay a foundation for the expansion of export sales after the market
rebounded.
(3) Accelerate the consolidation and reorganization of enterprises and continue to promote mergers and
acquisitions
In 2017, the Company continued to take advantage of its strong acquisition, merger and integration capabilities,
and promoted mergers, acquisitions, mergers and restructurings in line with the Group's long-term
development strategy.
In order to further integrate the resources and optimize the configuration, the Company's Board of Directors
approved to implement further integration and reorganization of SGE (now renamed DAP Industrial AG,
hereinafter referred to as ―DAP AG‖) and its subsidiaries. DAP AG has issued an official notice to DA AG
and its minority shareholders. DAP AG will initiate the merger of the DA AG in accordance with the relevant
regulations of the German \"Corporate Reorganization Law\" and the \"Stock Corporation Law\", squeezing out
Minority shareholders holding about 5.99% of the shares of DA AG. Through this integration, DAP AG will
be the main entity in Europe to implement an integrated operation. It helps reduce the hierarchical
relationships among subsidiaries, rationalize the division of R&D, production, and sales of subordinate
companies, and minimize waste of resources. It also helps make real use of the advantages of each subsidiary,
create a synergy effect and improve economic efficiency.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
The parent company of the Group initially completed the merger of DAPSH and SG Butterfly in 2017.
Shanghai Butterfly Sewing Machine Branch (hereinafter referred to as ―Butterfly Branch‖) has officially
started operations in 2017; the business of DAPSH was incorporated into the Group’s Industrial Sewing
Machine Branch (hereinafter referred to as ―ISMB‖) in July 2017. The tax and business registration
cancellations of DAPSH and SG Butterfly are proceeding in an orderly manner. Through this merger, ISMB
directly manages the sales in China and Southeast Asia. The Butterfly Branch is directly responsible for
domestic and overseas marketing of household sewing machine. The parent company of the Group has realized
direct control of sales and became a profit center. and a solid step was taken.to solve the longtime problem that
the Company's undistributed profits were negative and it was impossible to pay dividends.
In 2017, the Company actively explored to enhance the design and manufacturing capability of domestic
automation equipment through further mergers and acquisitions, thus effectively solving the problem that the
design and manufacturing capacity of KSL could not meet the demand of the market. Through the search for
goals and contacts in the domestic automation control system and other fields, the Company has completed the
preliminary preparation for the acquisition of Shanghai Junjii Machinery and Equipment Manufacturing Co.,
Ltd. which possesses robot application technology. In addition, the company has also completed the
establishment of a wholly-owned subsidiary ShangGong Sewing Machine (Zhejiang) Co., Ltd. in Huangyan
District, Taizhou, Zhejiang, as well as the preparation work of building a sewing machine production base in
the mold town of Huangyan.
(4) Strengthen the construction of talent team and promote the transformation of operation mechanism.
After completing the reform of the mixed ownership system, the Company timely promotes the transformation
of operation mechanism. The Company optimizes its organizational structure and improves its efficiency
through streamlining and adjustment of management institutions. In 2017, the Company amended some rules
and regulations of the Company to be more consistent with the actual situation. Furthermore, the Company
adjusted the corporate governance structure according to the new shareholder structure, successfully completed
the election of the eighth session of the board of directors and the board of supervisors, and produced a new
management team.
According to the requirements of marketization and centralized management, the Company hired relevant
agencies to make its remuneration system more consistent with the principle of human resource marketization.
In 2017, the Company continued to strengthen the construction of young cadres and ensure the sustainable
development of the Company. On the basis of the pilot project in 2016, the Company continued to carry out
the training of young cadres in 2017, and focused on the training of sewing machine products, manufacturing
technology, marketing and enterprise management, so as to improve the management ability of young cadres.
(5) Improve the internal management and control system and improve the operational efficiency
In 2017, the Company continued to promote the standardization construction of the internal control system of
the Group and various branches and subsidiaries. Part of the group system was sorted out, modified and added
and the department's responsibilities were improved according to the changes. The Company strengthened the
audit of the project cost and subsidiaries and other special audit work, and completed the economic
responsibility audit with the Pudong New Area Audit Bureau.
In 2017, the Company continued to carry out the implementation and management of the annual
comprehensive budget and capital arrangement and fund coordination work; straightened out the financial
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
management line, actively cleaned up the dull assets, improved the efficiency of capital use and ensured the
improvement of asset quality.
The Company organized a monthly \"conference about production, marketing and research of Group's main
business\" of main domestic companies, completed the statistical analysis of production, sales and stock in the
Group, solved the existing problems in time, and improved the operating efficiency.
In 2017, the Company steadily promoted the ISO9001 certification work to further improve the quality
management system and product and operation quality. The first draft of the management manual has been
completed. SGGEMSY finished ISO9000 and ISO18000 certification in the year.
In 2017, the Company and Asset Management Company continued their work on safety production,
environmental protection, internal prevention and stability of letters and visits, further implemented the fire
safety and stability responsibility system, established a safety precaution and warning mechanism to prevent
all kinds of emergencies and maintain the stability of the enterprise.
2. Main Operating Conditions in the Report Period
Although the Company's sewing equipment business is still facing fierce competition in the high-end market,
the Company continues to implement a technology leadership strategy and strives to expand its market share.
During the report period, the Company achieved operating income of 3.06 billion yuan, an increase of 11.06%
year-on-year, of which sewing equipment revenue rose 18.21% year-on-year; operating profit of 290 million
yuan, an increase of 34.3% (compared with the same caliber); net profit attributable to shareholders of listed
company of 200 million yuan, an increase of 36.92%.
2.1 Main Business Analysis
Analysis of changes of items in profit statement and cash flow statement
Unit: Yuan, Currency: RMB
Item 2017 2016 Variable Proportion (%)
Operating income 3,064,971,500.79 2,759,855,136.98 11.06
Operating cost 2,245,537,329.26 2,037,344,042.71 10.22
Selling expenses 284,810,887.21 246,840,318.90 15.38
General and administration expenses 291,371,664.10 284,156,361.47 2.54
Finance expenses -5,263,527.90 15,536,094.51 -133.88
Net cash flow from operating activities 117,335,869.17 99,056,912.42 18.45
Net cash flow from investing activities -119,869,574.99 -197,170,890.70 39.21
Net cash flow from financing activities -60,325,135.90 92,632,916.77 -165.12
Research and development expenditures 100,310,911.45 72,071,861.66 39.18
2.1.1 Analysis on Income and Cost
During the report period, the Company achieved operating income of 3.06 billion yuan, a year-on-year
increase of 11.06%, mainly due to a year-on-year increase of 18.21% in sales of sewing equipment; and an
increase of 10.36% in logistics service.
(1) Status by Industry and Region
Unit: Yuan, Currency: RMB
Main Business by Industry
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Operating
Operating
Gross Cost Gross Margin
Income
Industry Operating Income Operating Cost Margin Increase/ Increase/
Increase/
(%) Decrease Decrease (%)
Decrease (%)
(%)
Decrease 1.23
Sewing equipment 1,939,678,508.96 1,223,415,011.24 36.93 18.21 20.57
percent
Increase 0.03
Logistic service 768,874,679.88 714,752,388.59 7.04 10.36 10.33
percent
Decrease 0.42
Export trade 198,240,193.62 195,004,666.92 1.63 -18.50 -18.15
percent
Office equipment Increase 0.78
56,414,112.89 49,534,400.49 12.20 -18.34 -19.05
and film materials percent
Decrease 19.81
Others 10,187,600.00 8,320,443.37 18.33 -42.64 -24.27
percent
Increase 0.27
Total 2,973,395,095.35 2,191,026,910.61 26.31 11.46 11.05
percent
Main Business by Region
Operating
Gross Operating Gross Margin
Income
Region Operating Income Operating Cost Margin Cost Increase/ Increase/
Increase/
(%) Decrease (%) Decrease (%)
Decrease (%)
Decrease 0.36
Domestic 1,591,137,513.79 1,420,238,426.22 10.74 12.03 12.48
percent
Increase 2.79
Overseas 1,482,153,698.60 870,684,601.43 41.26 6.20 1.39
percent
(2) Analysis on Production and Sales
Increase/ Decrease Sales Increase/ Inventory
Production Sales in Production over Decrease over the Increase/ Decrease
Major Product Inventory
Output Volume the Previous Year Previous Year over the Previous
(%) (%) Year (%)
Industrial sewing
equipment 186,967 180,827 31,835 41% 35% 24%
(domestic)
Industrial sewing
25,582 25,584 135 66% 67% -1%
equipment (OEM)
Industrial sewing
30,740 36,662 -1% 4%
equipment (overseas)
Household sewing
208,355 210,386 495 5% 7% -80%
machine (OEM)
Household
multi-function
99,587 93,067 20,463 8% 10% 47%
sewing machine
(OEM)
Note: Driven by the boom of industry's \"supply and demand, the Group's production and sales of industrial
machines in 2017 both achieved a growth of over 30%, of which domestic industrial machine output increased
by 41% year-on-year, and sales volume increased by 35% year-on-year. The output of SGE decreased slightly
from 2016, but its sales increased by 4% year-on-year. In terms of household sewing machine, the output and
sales volume increased by 6% and 8% respectively. In order to deal with the sales season in the first quarter,
the Group increased its inventory.
(3) Cost Analysis
Unit: Yuan, Currency: RMB
By Industry
Current Previous The amount of the
Sum in Current Period Sum in Previous Period current period
By Industry Cost Item
Period Proportion Period Proportion compared with the
(%) (%) same period last
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
year
Material 774,957,920.33 35.37 612,926,016.65 31.07 26.44
Labor 296,611,105.46 13.54 269,272,327.15 13.65 10.15
Sewing Depreciation 38,158,659.16 1.74 38,451,209.91 1.95 -0.76
equipment Manufacture
113,687,326.29 5.19 94,076,957.37 4.77 20.85
cost
Subtotal 1,223,415,011.24 55.84 1,014,726,511.08 51.43 20.57
Logistics Logistics
714,752,388.59 32.62 647,853,075.73 32.84 10.33
service cost
Export trade 195,004,666.92 8.90 238,246,303.92 12.08 -18.15
Material 37,664,031.50 1.72 46,931,017.30 2.38 -19.75
Office Labor 7,587,657.23 0.35 9,393,336.37 0.48 -19.22
equipment Depreciation 338,835.76 0.02 599,745.82 0.03 -43.50
and film Manufacture
materials 3,943,876.00 0.18 4,269,708.91 0.37 -7.63
cost
Subtotal 49,534,400.49 2.26 61,193,808.40 3.10 -19.05
Others 8,320,443.37 0.38 10,987,197.25 0.56 -24.27
(4) Main Suppliers and Main Costumers
The sales of top five customers are 450.11 million yuan, accounting for 14.69% of the total annual sales.
The top five suppliers’ purchase amount is 121.57 million yuan, accounting for 6.21% of the total annual
purchase.
2.1.2 Expense
Unit: Yuan, Currency: RMB
Item 2017 2016 Increase / decrease (%)
Sales expense 284,810,887.21 246,840,318.90 15.38
General and administration
291,371,664.10 284,156,361.47 2.54
expense
Financial expense -5,263,527.90 15,536,094.51 -133.88
Income tax expense 82,928,869.66 71,680,360.28 15.69
Note 1: The financial expenses decreased by 133.88% year-on-year, mainly due to the year-on-year increase in
interest income and exchange gains.
2.1.3 R & D Investment
Unit: Yuan, Currency: RMB
R & D investment capitalized in the report period 84,246,214.91
R & D investment expensing in the report period 16,064,696.54
Total 100,310,911.45
Total R & D investment in proportion to operating income
3.27
(%)
Proportion of R & D investment capitalized（%） 16.01
2.1.4 Cash Flow
Unit: Yuan, Currency: RMB
Item 2017 2016 Increase / Decrease (%) Reason
Net cash flow from operating activities 117,335,869.17 99,056,912.42 18.45
Net cash flow from investing activities -119,869,574.99 -197,170,890.70 39.21 Note 1
Net cash flow from financing activities -60,325,135.90 92,632,916.77 -165.12 Note 2
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Influence of fluctuation of exchange rate
26,314,632.54 11,138,332.32 136.25 Note 3
upon cash and cash equivalents
Note 1: Mainly due to the comprehensive impact of the year-on-year decrease in investment of the 26%
equity of STOLL KG paid.
Note 2: Mainly due to the combined effect of increased net repayments of bank borrowings.
Note 3: Mainly due to the impact of changes in the euro exchange rate.
2.2 Explanation of Significant Changes in Profit Caused by Non-main Business
Unit: Yuan, Currency: RMB
Increase /
Item 2017 20156 Reason
Decrease (%)
Taxes and surcharges 13,445,563.98 9,646,577.26 39.38 Note 1
Financial expense -5,263,527.90 15,536,094.51 -133.88 Note 2
Assets impairment loss 26,197,662.78 17,021,526.97 53.91 Note 3
Asset disposal income 23,963,103.89 3,529,785.81 578.88 Note 4
Other income 11,713,174.75 0.00 Note 5
Non-operating income 9,192,748.08 29,173,966.17 -68.49 Note 6
Non-operating expense 3,766,348.69 731,182.77 415.10 Note 7
Net after tax of other consolidated
36,930,889.17 -17,277,343.80 313.75 Note 8
income
Note 1: Mainly caused by the implementation of Value-Added Tax Accounting Regulations (Accounting
[2016]22) by the Company.
Note 2: Mainly due to the year-on-year increase in interest income and exchange gains.
Note 3: Mainly due to the year-on-year increase in inventory depreciation reserves and provision for accounts
receivable for bad debts
Note 4: Mainly due to the increase in house relocation compensation income.
Note 5: Due to the Company's implementation of the \"Accounting Standards for Business Enterprises No. 16 -
Government Grants\" (Cai Kuai [2017] No. 15), government grants related to daily activities are included in the
\"other income\", the comparative statement does not adjust.
Note 6: Mainly due to the Company's implementation of the \"Accounting Standards for Business Enterprises
No. 16 - Government Grants\" (Cai Kuai [2017] No. 15) and the reduction of payables unable to be paid .
Note 7: Mainly due to the increase in penalties.
Note 8: Mainly due to the increase in the foreign currency statement translation difference as well as the
change in the net assets of the European subsidiaries that remeasured the defined benefit plan.
2.3 Analysis on Assets and Liabilities
Unit: Yuan, Currency: RMB
Ratio of Ending Ratio of Ending
Ending Balance Balance tor Ending Balance Balance tor
Increase /
Item (31st December Total Assets (31st December Total Assets Reason
Decrease (%)
2017) (31st December 2016) (31st December
2017) (%) 2016) (%)
Prepayments 64,393,627.71 1.74 33,709,357.11 0.96 91.05 Note 1
Investment
149,502,332.46 4.04 107,616,254.96 3.07 38.92 Note 2
property
Construction in
12,665,274.09 0.34 20,199,928.64 0.58 -37.30 Note 3
progress
Development
16,683,772.84 0.45 12,529,345.90 0.36 33.16 Note 4
expenditure
Long term
1,631,013.88 0.04 1,084,797.97 0.03 50.35 Note 5
deferred expenses
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Notes payable 12,311,525.18 0.33 0.00 0.00 Note 6
Taxes payable 14,074,587.91 0.38 54,740,867.60 1.56 -74.29 Note 7
Interest payable 1,110,553.06 0.03 2,090,565.59 0.06 -46.88 Note 8
Other current
48,330.03 0.001 808,706.39 0.02 -94.02 Note 9
liabilities
Long term
3,121,893.11 0.08 37,338,461.61 1.06 -91.64 Note 10
payables
Deferred income 2,340,000.00 0.06 3,600,000.00 0.10 -35.00 Note 11
Deferred income
52,863,141.42 1.43 36,604,917.60 1.04 44.42 Note 12
tax liabilities
Other
comprehensive -72,163,452.90 -1.95 -103,144,046.15 -2.94 30.04 Note 13
income
Undistributed
692,241,691.51 18.69 494,754,465.24 14.11 39.92 Note 14
profit
Note 1: Mainly due to the advance payment of land received by domestic subsidiaries.
Note 2: Mainly due to the completion of the acceptance check of the overseas subsidiaries' transformation of
the rental production and logistics halls.
Note 3: Mainly due to the completion of the construction projects carried forward due to the current period.
Note 4: Due to the increase in self-developed electronic controllers and new sewing equipment developed by
overseas subsidiaries.
Note 5: Mainly due to the increase in the mold costs in current period.
Note 6: Due to the increase in bank acceptance bills of SGGEMSY.
Note 7: Mainly due to the fact that the Company’s overseas subsidiaries paid the enterprise income tax that
was not paid at the end of 2016 in current period.
Note 8: Mainly due to the fact that the Company’s overseas subsidiaries paid bank loan interest during the
current period.
Note 9: Mainly caused by the interest and rentals recorded by the overseas subsidiaries of the Company in the
current period.
Note 10: Mainly due to the fact that according to the contract of investing in STOLL KG, the second payment
for the purchase in current period and the investment payable in 2018 are adjusted to ―other payables‖.
Note 11: Mainly due to the fact that the Company's new product development fund subsidy accepted by the
government in 2018 has been adjusted to ―other non-current liabilities due within one year‖.
Note 12: Mainly due to the increase in taxable temporary differences of the Company's overseas subsidiaries
during the current period.
Note 13: Mainly due to the increase in the difference in the foreign currency statement translation in current
period.
Note 14: Caused by the Company's current profit.
2.4 Analysis of Operational Information in the Industry
Please refer to Chapter 3 for details.
2.5 Analysis of Investment Situation
2.5.1 General Analysis
Unit: 10,000 Yuan, Currency: RMB
Long - term equity investment in the report period 1,020
Increase / Decrease -24,339
Long - term equity investment in 2016 25,359
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Increase / Decrease (%) -95.98
2.5.2 Significant Equity Investment
Not applicable.
2.5.3 Significant Non-Equity Investment
Not applicable.
2.5.4 Financial Assets at Fair Value
Unit: Yuan, Currency: RMB
Accounting
for the Changes in
Initial proportion Book Value at Profit or Loss
Stock Stock Owners' Equity Accounting Source of
Investment the End of the for the Report
code Abbreviation of the during the Report Item Shares
Cost company's Period Period
Period
equity (％)
Available
Changjiang
for sale
600757 Publishing & 72,085,722.82 0.85 71,574,811.30 514,926.70 -14,006,006.24 financial
Note 1
Media
assets
Available
Lujia B for sale
900932 Share 773,099.71 0.0067 2,132,704.86 79,538.23 -159,655.10 financial
Enforcement
assets
Available
Shenwan & for sale
000166 Hongyuan 200,000.00 0.0011 1,174,000.14 21,862.20 -192,387.36 financial
Purchased
assets
Available
Bank of for sale
601229 Shanghai 951,400.00 0.013 14,840,178.26 402,522.00 -3,901,246.06 financial
Purchased
assets
Total 74,010,222.53 - 89,721,694.56 1,018,849.13 -18,259,294.76 - -
Note 1: Shares of Changjiang Publishing & Media were transferred to the Company by bank to which interests
of Changjiang Publishing & Media were compensated in the bankruptcy and restructuring.
2.6 Significant Assets and Equity Sale
Not applicable.
2.7 Analysis of Main Subsidiaries and Joint Stock Company
Unit: 10,000 Yuan, Currency: RMB
Registered Total Operating Operating
Name Business Scope Net assets Net profit
capital assets income profit
Investment, asset
management, and
12.5 million
DAP Industrial AG production, processing, 195,819 91,918 148,366 25,306 18,051
euro
and sales of industrial
sewing equipment
Shanghai Shensy
Enterprise
Freight, Logistics services 17,882 36,601 24,673 76,887 1,027
Development Co.,
Ltd.
Zhejiang
ShangGong Sewing equipment
21,600 28,377 21,093 27,906 -736 -450
GEMSY CO., manufacturing and sales
LTD.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
3 Discussion and Analysis on the Future Development of the Company
3.1 Industry Structure and Trends
In recent years, with the deep integration of the new generation of information technology and manufacturing,
information and communication technology, intelligent control technology, networking, big data and other
new technologies have been rapidly applied in the sewing machinery industry. Sewing machinery products are
rapidly upgraded in the direction of smart, and the corresponding production methods are also continuously
advanced. Based on the physical information system, the innovation of ―Sewing Equipment + Internet‖ is now
leading the continuous expansion of sewing machinery industry and the downstream industry in the business
model, product areas and product value chain system. Industry development focus and growth point constantly
change. Global sewing machinery industry is faced with the task of transformation and upgrading, its
developing pattern is facing a major adjustment.
At present the world sewing machine industry development center has already formed tripartite confrontation
pattern between China, Germany and Japan. With the adjustment of the global industrial competition, China’s
sewing machinery industry is facing great challenges. To maintain the industrial advantages, sewing
machinery companies in Europe and the United States take advantage of technology and brand, adhere to the
high-end market, and take the road of international brand management. Japan’s sewing machinery industry is
accelerating the layout of the international industry, strengthening the integration and complementation of
resources. On the one hand, in order to consolidate the high-end market advantages, Japan’s sewing machinery
companies make use of China's advanced manufacturing resources, and continue to shift the production of
high-end products to China. On the other hand, Japan’s sewing machinery companies accelerate the transfer of
low-end products to the lower-cost countries in Southeast Asia to compete with the sewing machinery
companies in China. Therefore, China’s sewing machinery industry faces the ―two way extrusion‖ of
developed countries such as Europe, Japan and the developing countries in Southeast Asia.
3.2 Company Development Strategy
In 2018, it is a very crucial year for the development of ShangGong Group. We will remain true to our original
aspiration of revitalizing old Shanghai brand, look forward to the future of Made in China in light industry,
develop unshakeable confidence, and keep going. We must seize the opportunity of the government attaches
importance to the development of the real economy. While maintaining the leading position in the sewing
industry, we must strengthen the manufacturing in China and complete the business objectives set by the board
of directors.
Main tasks of operation in 2018:
(1) Continue to deepen the reform and integration; Promote mergers and acquisitions timely
After the completion of the mixed ownership system reform, the Company should steadily promote the
conversion of corporate mechanisms and improve efficiency constantly. In 2018, the Company shall further
deepen the market-oriented reform of listed company, continue to deepen the mechanism reform of
convergence of interests of the Company’s management and shareholders on the basis of the current practice,
explore the shareholding of the managers, so as to inject vitality into the operation of the listed company and
enhance the economic benefits of the enterprise.
The Company shall implement the internal integration as planned, and push forward the mandatory exclusion
of minority shareholders holding 6% shares of DA AG. In this way the Company could fully utilize the
technology, production, procurement, sales, capital and human resources of DA AG and its subsidiaries,
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
PFAFF GmbH and KSL, and enhance the overall profitability. In China, the Company shall continue to do the
subsequent cancellation work in the absorption of DAPSH and SG Butterfly by the parent company of the
Group. Steadily promote the import and export business integration of Butterfly Imp. & Exp., SG Imp. & Exp.
and SMPIC Imp. & Exp..
In 2018, the Company will continue to take advantage of its acquisition and integration capabilities and timely
promote mergers and acquisitions that are suitable for the development of the Company. The Company will
focus on related areas such as jacquard machines, embroidery machines, cutting beds and sewing workstations,
as well as intelligent manufacturing and other related fields, supplement product structure through further
acquisition to gradually form a complete industrial chain of products research and development, production
and sales with the sewing equipment as the mainstay. In the meantime, the Company will continue to seek to
expand business in the rapidly developing market of China's aerospace industry, especially commercial aircraft,
so as to achieve greater development in business.
(2) Adhere to the specialized multi-brand strategy; Improve product market share
The Company should adhere to the Market-oriented, Benefit-first business philosophy, unswervingly continue
to promote specialized multi-brand marketing strategy to expand brand influence and improve the market share
of various products.
According to the Company's global marketing unified management strategy, the Asian-African market will be
managed mainly by ISMB. The European and American markets will be managed mainly by DAP AG, and the
South Asian, South American and North African markets will be managed collaboratively by ISMB and DAP
AG. In 2018, DAP AG will be dedicated to establishing DAP Russia, establishing DAP India and DAP
Bangladesh with ISMB, and establishing DAP Brazil and other sales companies.
ISMB will do a good job in the domestic market sales, timely adjust the sales organization framework, achieve
unified management and coordinated development, and strictly implement regional sales. ISMB will set up
offices in Henan, Hebei, Shandong and Yunnan provinces to strengthen sales, further improve four \"Two Suits
Two Pants\" automated sample pipelines. Further strengthen and improve the customer visit mechanism, further
overcome weak markets such as sofa and luggage. Meanwhile ISMB should closely develop the prison market
and achieve sales breakthroughs in basic products. In 2018, the Butterfly Branch continued to do a good job in
sales of household multi-function sewing machines, and actively carried out activities such as ―Butterfly‖
brand advertising and promotion, and completed each year’s ―Butterfly Cup‖ Grand Prix.
(3) Maintain product technology leadership and enhance the ability to create of ShangGong Group
The Company will, as always, stick to the technology-leading and innovative-development strategy. Through
integration of Made-in-China and Made-in-Germany, the Company will vigorously develop Shanghai
Intelligent Manufacturing and ShangGong Creation, and promote the long-term, stable and healthy
development of ShangGong Group.
The Company will introduce QONDAC to the market in time and complete the research and development of
prototype machine of new M-type. Continuous improvement of the automatic sewing unit should be developed
as well. The Company will introduce and apply new electric control \"SGE Compact\" and QONDAC, and
complete the research and development of chain stitch product system 5600, as well as the new shoe products
791 and 1791. The Company wil well research and trial-produce the button attaching and holing machine and
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
the sewing machine, successfully research and manufacture front trousers sealing machine and cowboy series
machines, improve the market competitiveness of shirt automatic sewing products. The Company will
complete the small batch trial production of short line head shoe machine and the pattern sewing machine
based on the extended Powerline, 8303i welding machine. Further reduce the cost of 1767, Powerline ECO
and Mauser 591. Ensure the smooth operation of the parts processing workshop, achieve stable quality and
competitive advantage of cost. Continue to improve the supply situation of parts and materials to meet the
needs of business growth. Improve production site management, further improve production efficiency,
stabilize and improve product quality. Meanwhile, do a good job in the research and development of new
products, and continue to promote the integration and improvement of the products. In addition, the Group’s
Technical Center will carry out the project of \"Flat Sewing Machine Platform Design\" and develop basic series
product of Mauser Special brand.
(4) Continue to manage internal control and constantly improve operational efficiency
In 2018, the Company will continue to improve the internal control system of the Company and its subsidiaries.
Continue to rectify the internal control re-evaluation tests and defects in 2017 and organize, supervise and
improve the standardization of the internal control of the Company. Strengthen auditing of project cost and
circular audit of controlling subsidiaries and other special audits.
Continue to carry out the implementation and management of the annual comprehensive budget of the Group,
do well the fund arrangement and fund coordination work within the Group, do well the early warning work of
financial risks, and realize the early-warning management of major financial risks.
Continue to do a good job in the ISO9001 quality management system, and further adjust the program after the
absorption of SG Butterfly and DAPSH. Complete the work of ISO9001 revision certification, further improve
the quality management system, and improve product quality as well as enterprise operation quality. Moreover,
we should strengthen the quality control of the licensed production products, formulate production process
documents and implement them, so that we could ensure the quality of licensed products, maintain brand
reputation and improve customer satisfaction.
Continue to do a good job in work safety, environmental protection, internal prevention and petition stability.
We should further implement the responsibility system for fire safety and stability, and establish a safety
precaution and early warning mechanism to prevent all kinds of emergencies and maintain the stability of
enterprises.
3.3 Business plan
Operating income: 3.3 billion yuan; operating profit: 340 million yuan; net asset yield: not less than 10%;
accounts receivable turnover rate: 7.6; inventory turnover rate: 3.1.
3.4 Possible Risks
(1) Industrial and market risks
Tailoring machine industry is a competitive industry, largely depending on its downstream industries such as
the weaving, costume, leather, case and bags industries. Therefore, it develops along obvious periodicity and is
highly affected by macro-economic environment. Along with increasing of the rate of tailoring machine
production to company other industries, company development may be more and more affected by overall
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
industrial fluctuation, which may lead to decreasing of product price, more and more fierce competition and
decreasing of product gross profit rate, all will impact company business operation in the future.
(2) Cross-country operation and integration risks
By expanding of company overseas assets and business scope, the cross-country operation brings more strict
requirements for company organization, operation mode, talents and employees skills. Also, during company
production, operation and merger of overseas affiliates, more challenges may appear due to differences of
enterprise culture, management concept, policies and company regulations.
(3) Foreign exchange risks
The book-keeping standard money for company consolidated statements is RMB, but that used for daily
business operations of SGE and SGE holding subsidiaries is Euro dollar. Therefore, the change of RMB
foreign exchange rate may have exchange risks for company future operations.
CHAPTER 5 IMPORTANT EVENTS
1. Profit Distribution or Capital Surplus Transferring and Increasing Proposal
1.1 The Formulation, Implementation and Adjustment of Cash Dividend Policy
According to the No.[2013] 43 of Notice on No. 3 Guidance of Cash Dividend Distribution Affairs for Listed
Companies issued by CSRC, combined with the Company’s situations, the Company has made clear cash
dividend distribution policies and its mechanism of decision and adjustment.
During the report period, the Company strictly complied with the dividend distribution policies stipulated in the
Article of Association. Approved by 2016Annual Shareholders’ Meeting, the profit distribution do not be made
in 2015, neither the transferring of capital reserves into share capital. The proposal of 2015 has been
implemented.
Audited by BDO China Shu Lun Pan Certified Public Accountants LLP., the Company achieved the
consolidated net profit of 212,652,989.02 yuan in 2017, of which, the net profit attributable to parent company
owners is 197,487,226.27 yuan.
According to the provisions in the Articles of Association, before withdrawing the legal accumulation fund, the
Company should first cover the deficit with the profit of the year. As the profit of the year failed to make up
the deficit of previous years, the Company did not draw the legal accumulation fund. The current-period net
profit of the parent company is 62,938,430.53 yuan; the undistributed profits at the beginning of 2017 are
-206,831,240.38 yuan; thus the practical profit available for distribution is -143,892,809.85 yuan at the end of
2017. As the parent company’s profit available for distribution is negative, the profit distribution cannot be
made in 2017, neither the transferring of capital reserves into share capital.
1.2 Company Profit Distribution Proposal in Recent Three Years (Including the Report Period) , Capital
Surplus Transferring to Increase Capital Stock Proposal
Unit: Yuan, Currency: RMB
Number Of Number Of Number Of Number of Net Profit Listed in Rate to the Net
Year Bonus Shares Dividends Shares Cash Dividend the Dividend Profit in the
Per 10 (Taxes Converted By (Taxes Annual Consolidated
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Common Included) Per Capital Included) Consolidated Statement Belongs
Shares (Share) 10 Common Reserve Per Statement Belongs to Stockholders of
Shares (Yuan) 10 Common to Stockholders of Public Company
Shares(Share) Public Company (%)
2017 0 0 0 0 197,487,226.27
2016 0 0 0 0 144,231,343.84
2015 0 0 0 0 157,417,087.48
1.3 Cash Offer to Repurchase Shares Included in the Cash Dividend
Not applicable.
2. Commitment
Whether Whether Reason for Future Plan if
There is a Timely Failure to Fail to Fulfill
Commitment Commitment
Background Type Commitment Content Time and Fulfill Commitment
Party period
Limit Strictly Commitment
Perform
Shares of SGG held by
PKFR will not be sold 29th December
Restricted
PKFR from 29th December 2016 to 28th Yes Yes N/A N/A
shares
2016 to 28th December December 2017
2017.
Shares of SGG held by
PKFR will not be less
Commitment 29th December
than shares held by
in the Other PKFR 2016 to 28th Yes Yes N/A N/A
Pudong SASAC From
Statement of December 2017
29th December 2016 to
Changes in
28th December 2017.
Equity
From 29th December
2016 to 28th December
2017, PKFR or its 29th December
Other PKFR concerned action will 2016 to 28th Yes Yes N/A N/A
purchase shares of SGG December 2017
by not less than 10
million yuan
3. There was no occupation of fund of the Company occurred for non-operating use by holding
shareholder and its related parties.
4. Description of \"Non-Standard Opinion Audit Report\" Released by the Accounting Firm
Not applicable.
5. Analysis of the Company’s Change of Accounting Policy
(1) Reasons for Changes in Accounting Policies
On 28th April 2017, the Ministry of Finance issued a revised version of the \"Accounting Standards for
Business Enterprises No. 42 - Non-current Assets for Sale, Disposal Group, and Termination of Operations\"
(Cai Kuai [2017] No. 13) (hereinafter referred to as \"Revised Standard No. 42\").
On 10th May 2017, the Ministry of Finance issued a revised version of the \"Accounting Standards for Business
Enterprises No. 16 - Government Subsidies\" (Cai Kuai [2017] No. 15) (hereinafter referred to as \"Revised
Standard No. 16\").
On 25th December 2017, the Ministry of Finance issued a revised version of the \"General Enterprise Financial
Statement Format\" (Cai Kuai [2017] No. 30) (hereinafter referred to as the \"Revised Report Format\").
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
According to the requirements of the Ministry of Finance, Revised Standard No. 42 shall be implemented as of
28th May 2017; Revised Standard No. 16 shall be implemented as of 12th June 2017; non-financial enterprises
that require the implementation of Accounting Standards for Business Enterprises should follow the revised
format of the report. The Accounting Standards for Business Enterprises and the above requirements prepare
financial statements for the 2017 and subsequent periods. The Revised Report Format requires that
non-financial companies that implement the Accounting Standards for Business Enterprises should prepare
financial statements for 2017 and subsequent periods in accordance with the Accounting Standards for
Business Enterprises and the above requirements.
(2) Impact of Changes in Accounting Policies on the Company
①Changes in accounting policy for non-current assets held for sale
According to Revised Standard No. 42, on the day of implementation, non-current assets held for sale, disposal
groups and termination of operations shall be handled in accordance with future applicable laws. Changes in
this accounting policy do not involve retrospective adjustments in previous years and have no significant
impact on the Company's financial position, operating results and cash flows.
② Changes in accounting policy for government grants
According to Revised Standard No. 16, the Company shall adopt the future applicable law for government
grants existing on 1st January 2017, and adjust the new government subsidies between 1st January 2017 and the
date of implementation of the new government grants policy in accordance with the policy.
On the implementation of Revised Standard No. 16, the Company will include government grants related to
daily activities of the Company in accordance with the nature of the economic business into other income or
offset relevant cost expenses. The \"other income\" items are separately presented on the \"operating profit\" item
in the income statement. Government grants included in other income are reflected in this item; government
grants unrelated to daily activities are included in non-operating income. The Company's specific adjustments
are as follows: The Company reduced its non-operating income in 2017 by 11,713,174.75 yuan, and increased
other income by 11,713,174.75 yuan. Changes in this accounting policy do not involve retrospective
adjustments in previous years and have no significant impact on the Company's financial position, operating
results and cash flows.
③Change of financial statement format
According to Revised Report Format, the Company's 2017 annual report was prepared to implement the
―Notice of the Ministry of Finance on Revising the Format of Financial Statements for General Enterprises‖
(Cai Kuai [2017] No. 30). Gains and losses on the disposal of current assets and non-monetary assets exchange
gains and losses formerly listed in non-operating income and non-operating expenses are changed to be listed
in gains on disposal of assets. The Company's specific adjustments are as follows: the Company increased the
asset disposal income of 2017 by 23,634,800.73 yuan, and reduced non-operating income of 2017 by
23,634,800.73 yuan.
6. Appointment and Dismiss of Certified Accountant’s Firm
Unit: 10,000 Yuan, Currency: RMB
Name BDO China Shu Lun Pan Certified Public Accountants LLP
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Payment
Audit period 11 years
Name Payment
Certified accountant’s firm for internal control audit BDO China Shu Lun Pan Certified Public Accountants LLP 40
7. Risk of Suspension of Listing
Not applicable.
8. Termination of Listing and Reasons
Not applicable.
9. Bankruptcy
Not applicable.
10. Important Lawsuit and Arbitration
(1) Lawsuit
Shanghai Pacific Industrial Co., Ltd. (hereinafter referred to as ―PACIFIC Shanghai‖) is a Sino-foreign joint
venture established by the Company’s predecessor Shanghai Industrial Sewing Machine Corporation
(hereinafter referred to as ―SISMC‖) and Pacific Business Exchange CO., Ltd. (hereinafter referred to as
―PACIFIC Business‖) on May 1993. SISMC invested USD 360,000 in equipment and plant, accounting for
48% of total shares; PACIFIC Business invested USD 390,000 in equipment and cash, accounting for 52% of
total shares. After the establishment of PACIFIC Shanghai, SISMC has undergone restructuring, listing and
several changes in business registration and stock ownership changes, so the name of SISMC has changed to
Shang Gong Group Co., Ltd. now. However, PACIFIC Shanghai and PACIFIC Business refused to recognize
the Company as the Chinese shareholders of PACIFIC Shanghai. Therefore, the Company filed a lawsuit,
asking the court to confirm the Company's Chinese shareholder status.
On August 2017, the Company received the civil judgment of Shanghai No.1 Intermediate People's Court. The
judgment confirmed that 48% of PACIFIC Shanghai’s equity invested by SISMC amounting to USD 360,000
was owned by the Company. In November 2017, the Company applied to the court for enforcement of the
judgment. On 23rd February 2018, the Company completed the change of industrial and commercial
information and began to enjoy the corresponding shareholder rights and interests.
(2) Arbitration
The 22nd meeting of the 7th Board of Directors of the Company examined and approved the Proposal on
Investing in STOLL KG through ShangGong Europe, and agreed that the wholly-owned subsidiary
ShangGong Europe would invest in STOLL KG to become a 26% Minority shareholders. (See bulletin No.
2015-030 released on 29th August 2015 and bulletin No. 2016-002 released on 14th January 2016 for details).
Accounting to the Contract signed on 29th August 2015 by ShangGong Europe, the calculation of share price
is based on the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that share
price will be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and
related clauses in the Contract. Now the parties have disputes on the calculation of net assets of STOLL's
audited consolidated statement in 2015 and the understanding of the relevant terms of the Contract, resulting in
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
a difference of approximately 4.26 million euro in the calculation of the price adjustment. ShangGong Europe
has received the Application for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited
partners of STOLL KG on 20th July 2017. ShangGong Europe will, in accordance with the terms of the
contract, settle the dispute by arbitration in accordance with German legal procedures.
As of the date of this report, the arbitration is still in progress and has significant uncertainty. The Company
has made a preliminary judgment that the matter has little impact on the Company's profit and loss. But it
might affect the Company's investment costs for STOLL KG and will not have a significant impact on the
Company.
11. Punishment on and Rectification of Listed Company and its Directors, Supervisors, Senior Managers,
Controlling Shareholders, Actual Controller and Purchaser
Not applicable.
12. Credit Status of the Company and its Controlling Shareholder and Actual Controller
Not applicable.
13. Company Stock Right Incentives, ESPO, and Other Employee Incentives
Not applicable.
14. Major Related Party Transactions
14.1 Related Party Transactions Relevant to Daily Operations
Shanghai SGSB Electronic Co., Ltd., a wholly-owned subsidiary of the Company, sells products to Fiji Xerox
of Shanghai Limited., and is its permanent accessory supplier. The above-said transaction constitutes the daily
associated transaction. It is estimated that in 2017, the amount of products that it will sell to Fiji Xerox is 30
million yuan, and in the report period, the sales amount was 21.61 million yuan, decreased by 27.97%. it is
mainly due to the year-on-year decrease in the sales volume of Shanghai Fuji Xerox Co., Ltd. and the
adjustment of production models.
15. Significant Contracts and Their Implementation
15.1 Trusteeship, Contracting and Lease
Not applicable.
15.2 Guarantee
Unit: 10,000 Yuan, Currency: RMB
Company external guarantee list (excluded those for subsidiaries)
Relations If
Guarantee counter
of the Amount
Overdue
Overdue
amounts
Relation
date Start Expirati If Guarantee
guarante
Guarantor guarantor Security party guarante Type guarantee e
for related
(agreement date on date is done party?
to listed ed available
signoff date
company ?
Joint
The Commerzbank 25 March 25 March
SGG 7,000 liability No No 0 No No
Company Shanghai Branch 2014 2014 guarantee
Joint
The Commerzbank 01 July
SGG 6,866 30 June 2014 liability No No 0 No No
Company Shanghai Branch 2014 guarantee
19 Joint
The Commerzbank 19 September
SGG 10,299 Septemb liability No No 0 No No
Company Shanghai Branch 2016 guarantee
er 2016
28 Joint
The Commerzbank 28 August
SGG 8,583 August liability No No 0 No No
Company Shanghai Branch 2015 guarantee
Industrial & 21 21 Joint
The 21 December
SGG Commercial 6,242 Decembe Decembe liability No No 0 No No
Company
Bank of China r 2015 r 2020 guarantee
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Shanghai
Hongkou Branch
Wholly 07 Joint
07 January 30 July
SGE owned Commerzbank 2,146 January liability No No 0 No No
2016 2017 guarantee
subsidiary
Wholly 07 Joint
07 January 30 July
SGE owned Commerzbank 2,146 January liability No No 0 No No
2016 2018 guarantee
subsidiary
Guarantee amounts spent during the report period (excluded guarantee to
-2,146
affiliate company.
Total balance of guarantee at the end of period (affiliate companies are not
41,136
quailed.)（A）
Guarantee of company to affiliates
Total guarantee amounts of subsidiaries in the report period
Total balance of guarantee to subsidiaries at the end of report period (B)
Company total guarantee amounts (including those to subsidiaries)
Total guarantee amounts（A+B） 41,136
Ratio of total guarantee amounts to company net assets (%) 19.18
In which:
Guarantee amounts provided to stockholders, actual controller and affiliated
parties (C)
Guarantee amounts directly or indirectly provided for liabilities of guarantor
whose assets liabilities ratio is higher than 70%（D）
Differences of total guarantee amounts exceeds 50% of the net assets（E）
Total guarantee amounts of the above-mentioned three items （C+D+E）
On 25th March 2014, the Company's wholly-owned subsidiary, DAP Industrial AG (Formerly known as
ShangGong (Europe) Holding Corp. GmbH) , applied to the Bielefeld Branch of the Commerzbank for a
current fund loan of not more than the equivalent of 58 million yuan in euro, the Shanghai Branch of the
Commerzbank issued a financing guarantee letter for the funds, and the Company issued a corporate letter of
guarantee for payment of 70 million yuan as counter guarantee for the abovementioned financing guarantee
letter.
On 30th June 2014, the Company's wholly owned subsidiary DAP AG applied to the Bielefeld Branch of the
Commerzbank for a current fund loan of 8 million euro, the Shanghai Branch of the Commerzbank issued a
financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable corporate
letter of guarantee for payment of 8.8 million euro as counter guarantee for the abovementioned financing
guarantee letter.
On 19th September 2016, the Company's wholly owned subsidiary DAP AG applied to the Bielefeld Branch of
the Commerzbank for a short-term credit loan of 12 million euro, the Shanghai Branch of the Commerzbank
issued a financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable
corporate letter of guarantee for payment of 13.20 million euro.
On 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to the Kaiserslautern
Branch of the Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of the Commerzbank
issued a financing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable
corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for the abovementioned
financing guarantee letter.
On 21st December 2015, the Company's wholly owned subsidiary DAP AG applied to the Frankfurt Branch of
the Commerzbank for a limit loan of 7.878 million euro so as to pay the acquisition fee to Stoll KG. ICBC
Shanghai Hongkou Branch issued a financing guarantee letter for the funds, and the Company issued an
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
unconditionally irrecoverable corporate letter of guarantee for self-using fix assets where No.603 Dapu Road
as counter guarantee for the abovementioned financing guarantee letter.
DAP AG pledges 500 million shares of DA AG held by DAP AG to obtain a 2.75 million euro bank guarantee
issued by Commerzbank, Germany, for the period from 7th January 2016 to 30th July 2017 and from 7th
January 2016 to 30th July 2018 respectively. It provided guarantees for DAP AG to pay equity purchase price
to German H. Stoll AG & Co. KG equity sellers.
15.3 Cash Asset Management
15.3.1 Entrusted Financing
Unit: 10,000 Yuan, Currency: RMB
Type Resource Total amount Amount unexpired Amount overdue
Structured deposits Idle raised funds 11,000 11,000
Structured deposits Idle self-owned funds 22,200 22,200
With the review and approval of the 35th meeting of the Seventh Board of Directors on 31st March 2017, it is
resolved that idle raised funds of 110 million yuan and self-owned funds of 222 million yuan were managed in
purchasing RMB financial products of the bank with principal guaranteed.
Whether
Method of Annualized Gains legal
Name of Starting Fund
Product name Amount Ending date determining rate of actually proceed- Provision
partner date resource
gains return obtained ings are
involved
Communi- Floating
cations Yuntong Wealth Rizengli gains with
2,500 2016/9/9 2017/1/24 Raised 2.95% 27.69 Yes
Xuhui S guaranteed
Branch principal
Communi- Floating
cations Yuntong Wealth Rizengli gains with
2,500 2016/9/9 2017/1/24 Self-owned 2.95% 27.69 Yes
Xuhui S guaranteed
Branch principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,000 2016/9/22 2017/3/23 Self-owned 2.92% 116.48 Yes
SD21606M049B guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 1,200 2016/11/15 2017/2/14 Self-owned 3.15% 9.42 Yes
SD21603M078A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,800 2016/11/15 2017/2/14 Raised 3.15% 69.11 Yes
SD21603M078A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 10,200 2016/11/29 2017/2/28 Self-owned 3.20% 81.38 Yes
SD21603M084A guaranteed
Branch
principal
Communi- Guarantee
cations Yuntong Wealth Rizengli gains with
2,500 2017/1/25 2017/4/24 Raised 3.50% 21.34 Yes
Xuhui 89 Day guaranteed
Branch principal
Communi- Guarantee
cations Yuntong Wealth Rizengli gains with
2,500 2017/1/25 2017/4/24 Self-owned 3.50% 21.34 Yes
Xuhui 89 Day guaranteed
Branch principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 1,500 2017/2/16 2017/5/18 Self-owned 3.75% 14.02 Yes
SD21703M009A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,500 2017/2/16 2017/5/18 Raised 3.75% 79.47 Yes
SD21703M009A guaranteed
Branch
principal
BOS Wenjin‖ No. 2 10,200 2017/3/2 2017/6/1 Self-owned Floating 3.85% 97.91 Yes
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Whether
Method of Annualized Gains legal
Name of Starting Fund
Product name Amount Ending date determining rate of actually proceed- Provision
partner date resource
gains return obtained ings are
involved
Fumin SD21703M013B gains with
Branch guaranteed
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,000 2017/3/28 2017/7/3 Self-owned 3.98% 84.62 Yes
SD21703M023A guaranteed
Branch
principal
BOS
Wenjin‖ No. 2 保本保收益
Fumin 2,500 2017/4/27 2017/7/27 Raised 4.05% 25.24 Yes
Branch
SD21703M035A 型
BOS
Wenjin‖ No. 2 保本保收益
Fumin 2,500 2017/4/27 2017/7/27 Self-owned 4.05% 25.24 Yes
Branch
SD21703M035A 型
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 1,500 2017/5/23 2017/8/22 Self-owned 4.10% 15.33 Yes
SD21703M044A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,500 2017/5/23 2017/8/22 Raised 4.10% 86.89 Yes
SD21703M044A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 10,200 2017/6/6 2017/12/5 Self-owned 4.10% 208.53 Yes
SD21706M032A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 8,000 2017/7/6 2018/1/4 Self-owned 4.20% Yes
SD21706M041B guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 2,500 2017/8/1 2018/1/30 Self-owned 4.35% Yes
SD21706M051B guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 2,500 2017/8/1 2018/1/30 Raised 4.35% Yes
SD21706M051B guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 5,000 2017/8/24 2017/11/23 Raised 4.35% 54.23 Yes
SD21703M075C guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 1,500 2017/8/24 2017/11/23 Self-owned 4.35% 16.27 Yes
SD21703M075C guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 2,000 2017/8/31 2017/11/30 Raised 4.35% 21.69 Yes
SD21703M077A guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 6,500 2017/11/28 2018/5/29 Raised 4.30% Yes
SD21706M091B guaranteed
Branch
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 1,500 2017/11/28 2018/5/29 Self-owned 4.30% Yes
SD21706M091B guaranteed
Branch
principal
BOS
Floating
Fumin Wenjin‖ No. 2 gains with
Branch 2,000 2017/12/7 2018/3/8 Raised 4.40% Yes
SD21703M114B guaranteed
principal
Floating
BOS
Wenjin‖ No. 2 gains with
Fumin 10,200 2017/12/7 2018/6/7 Self-owned 4.30% Yes
SD21706M094B guaranteed
Branch
principal
Note: The principal of this structured deposit product is invested in fixed-income instruments and deposits
above the investment level that are circulated between banks or exchanges, including but not limited to bonds,
repurchases, lending, deposits, cash, interbank borrowings, insurance debt investment plans, etc. , to obtain
gains during holding.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
15.3.2 Entrusted Loan
Not applicable.
16. Situations of Company Performing Social Liabilities Actively
16.1 Poverty Alleviation of Listed Companies
Not applicable.
16.2 Social Responsibility
The Company insists on complying with laws and regulations as the Company’s basic operation principle, and
focuses on mutual development of economic benefits and social benefits. In 2017, the Company seriously
complied with national laws, regulations and policies, operated business by legal requirements, paid taxes
actively, controlled product qualities, given more employment chances, actively participated in charity
donation and volunteer activities in Pudong New Area, supported development of local economy, and never
behaved to destroy social economic development or environment protection.
16.3Environmental Information
The Company and its subsidiaries do not belong to the key pollutant discharge units announced by the
environmental protection department. During the report period, the Company and its subsidiaries strictly
enforced the laws and regulations concerning environmental protection, formulated strict environmental
practices, and took corresponding measures against pollution sources. There were no violations of
environmental laws and regulations and pollution accidents. The Company has not been punished by the
environmental protection department for environmental violations.
17. Convertible corporate bonds
Not applicable.
CHAPTER 6 STATUS OF SHAREHOLDERS AND SHARE CAPITAL
CHANGES OF COMMON STOCK
1. Share capital changes of common stock
1.1 Share capital changes of common stock
During the report period, the total number of shares of the Company's common stock and equity structure
remain unchanged.
1.2 Change of non-tradable shares
Not applicable.
2. Securities issuance and listing
2.1 Securities issuance during the report period
Not applicable.
2.2 Total share and shareholder change and asset and liability structure change
Not applicable.
2.3 Employee shareholding status
No internal employee share in the report period.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
3. Shareholder and Actual Controller
3.1 Total number of shareholders
Total number of shareholder at the end of report period 62,078 (A Share: 34,736; B Share: 27,342)
Total number of shareholder as of 31st March 2018 60,452 (A Share: 33,278; B Share: 27,174)
3.2 Shareholding status of top 10 shareholders and top 10 unrestricted shareholders
Unit: Share
Top 10 Shareholders
Increase or Total Shares Held Shares Pledged or
Percentage Restricted Frozen Shareholder
Name of Shareholder Decrease in the at the End of
(%) Share Status
Report Period Report Period Status Amount
Domestic
Shanghai Puke Flyingman
789,457 60,789,457 11.08 0 Pledged 60,000,000 Non-state-owned
Investment Co., Ltd.
Legal Person
State-owned Assets Supervision
and Administration Commission
0 45,395,358 8.27 0 / State
of Shanghai Pudong New Area
People's Government
China Great Wall Asset State-owned
0 22,200,000 4.05 0 /
Management Co., Ltd. Legal Person
SHANGHAI INTERNATIONAL
State-owned
GROUP Asset Management Co., 0 10,968,033 2.00 0 /
Legal Person
Ltd.
SCBHK A/C KG INVESTMENTS Foreign Legal
318,500 4,909,455 0.89 0 /
ASIA LIMITED Person
GREAT WALL GUORONG
State-owned
INVESTMENT AND 0 4,770,654 0.87 0 /
Legal Person
MANAGEMENT CO., LTD.
VANGUARD EMERGING Foreign Legal
3,678,113 3,678,113 0.67 0 /
MARKETS STOCK INDEX FUND Person
ISHARES CORE MSCI Foreign Legal
1,859,000 3,562,200 0.65 0 /
EMERGING MARKETS ETF Person
GUOTAI JUNAN
Foreign Legal
SECURITIES(HONGKONG) -124,679 3,010,490 0.55 0 /
Person
LIMITED
VANGUARD TOTAL
Foreign Legal
INTERNATIONAL STOCK 0 2,999,096 0.55 0 /
Person
INDEX FUND
Top 10 Unrestricted Shareholders
Share Type and Amount
Name Unrestricted Shares
Type Amount
Shanghai Puke Flyingman Investment Co., Ltd. 60,789,457 A Share 60,789,457
State-owned Assets Supervision and
Administration Commission of Shanghai 45,395,358 A Share 45,395,358
Pudong New Area People's Government
China Great Wall Asset Management Co., Ltd. 22,200,000 A Share 22,200,000
SHANGHAI INTERNATIONAL GROUP Asset
10,968,033 A Share 10,968,033
Management Co., Ltd.
SCBHK A/C KG INVESTMENTS ASIA LIMITED 4,909,455 B Share 4,909,455
GREAT WALL GUORONG INVESTMENT AND
4,770,654 A Share 4,770,654
MANAGEMENT CO., LTD.
VANGUARD EMERGING MARKETS STOCK
3,678,113 B Share 3,678,113
INDEX FUND
ISHARES CORE MSCI EMERGING MARKETS
3,562,200 B Share 3,562,200
ETF
GUOTAI JUNAN SECURITIES(HONGKONG)
3,010,490 B Share 3,010,490
LIMITED
VANGUARD TOTAL INTERNATIONAL STOCK
2,999,096 B Share 2,999,096
INDEX FUND
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
GREAT WALL GUORONG INVESTMENT AND MANAGEMENT CO.,
LTD. is the wholly-owned subsidiary of China Great Wall Asset Management
Notes on Shareholder Relationship and
Corporation.
Consistent Actions
The Company does not know the relationship and consistent of other
shareholders
The Number of Restricted Shares Held by Top Ten Shareholders and the Conditions for Sale:
Not applicable.
4. Controlling Shareholder and Actual Controller
4.1 Controlling Shareholder
4.1.1 Legal Person
Not applicable.
4.1.2 Natural person
Not applicable.
4.1.3 Special Explanation for the Absence of Controlling Shareholder of the Company
As a result of the relatively low proportion of the shares held by PKFR and Pudong SASAC, both held no
more than 30% and their shareholding ratio is closer, no shareholder could control the Company separately;
the Company is a listed company with no controlling shareholder and no actual controller.
4.1.4 Index and Date of Change of Controlling Shareholder during the Report Period
Not applicable.
4.1.5 The Property and Control Relationship between the Company and the Controlling Shareholder
Not applicable.
4.2 Actual Controller
4.2.1 Legal Person
Not applicable.
4.2.2 Natural Person
Not applicable.
4.2.3 Special Explanation for the Absence of Controlling Shareholder of the Company
As a result of the relatively low proportion of the shares held by PKFR and Pudong SASAC, both held no
more than 30% and their shareholding ratio is closer, no shareholder could control the Company separately;
the Company is a listed company with no controlling shareholder and no actual controller.
4.2.4 Index and Date of Change of Actual Controller during the Report Period
Not applicable.
4.2.5 The Property and Control Relationship between the Company and the Actual Controller
Not applicable.
4.3 Other Introduction about Controlling Shareholder and Actual Controller
Not applicable.
5. Other Shareholders (Legal Person) Holding More than Ten Percent
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Unit: 10,000 Yuan, Currency: RMB
Legal Date of Enterprise Unified Social Registered
Name Main Business
Representative Establishment Credit Code Capital
Shanghai Puke Industrial investment,
Flyingman Zhu Xudong June 16, 2016 91310115MA1K3D9W81 28,512 investment management,
Investment Co., Ltd investment consulting
6. Description of the Limit of Share Reduction
Not applicable.
CHAPTER 7 RELEVANT SITUATION ABOUT PREFERRED SHARES
Not applicable.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
CHAPTER 8 SITUATION ABOUT DIRECTORS, SUPERVISORS, SENIOR MANAGERS AND EMPLOYEES
1. Share Change and Compensation
1.1 Share Change and Compensation of Current and Former Directors, Supervisors and Senior Managers
Unit: Share
Pre Tax
Compensation
Shares Held at Shares Held at Compensation
Reason for the Payable in the
Name Title) Gender Age Starting Date Ending Date the Beginning the End of the Increase/ Decrease Payable by
Change Report Period
of the Year Year Related Parties
(Unit: 10,000
yuan)
Chairman 30 July 2004 26 April 2020
Increased holdings
CEO 30 July 2004 27 April 2017
Zhang Min Male 55 100,000 170,000 70,000 in the secondary 118.3 No
General
27 April 2017 26 April 2020 market
Manager
Zhu Xudong Director Male 53 27 April 2017 26 April 2020 Yes
Yin Qiang Director Male 39 27 April 2017 26 April 2020 Yes
Huang
Director Female 41 27 April 2017 26 April 2020 Yes
Yingjian
Li Wenhao Director Male 35 27 April 2017 04 April 2018 No
Lu Yujie Director Male 48 30 June 2009 26 April 2020 1.19 Yes
Independent
Xi Lifeng Male 51 27 April 2017 26 April 2020 7.5 No
Director
Independent
Rui Meng Male 50 27 April 2017 26 April 2020 7.5 Yes
Director
Independent
Chen Zhen Male 43 27 April 2017 26 April 2020 7.5 Yes
Director
Superisory
Qiao Junhai Board Male 60 28 April 2014 26 April 2020 No
Chairman
Chen
Supervisor Male 40 27 April 2017 26 April 2020 Yes
Mengzhao
Supervisor 27 April 2017 26 April 2020
Zhang
Secretary of Male 58 25 August 51.9 No
Jianguo 06 April 2017
the Board
Director 28 April 2014 27 April 2017
Deputy
Li Jiaming Male 57 89.77 No
General 18 April 2008 26 April 2020
Manager
Fang Director Male 51 27 December 27 April 2017 82 No
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Haixiang
Deputy
General 18 April 2008 26 April 2020
Manager
Deputy
27 October 26 February
Zheng Ying General Female 53 21,500 21,500 No
2008 2018
Manager
Deputy
27 December
Li Xiaofeng General Male 43 26 April 2020 84.8 No
Manager
Zhou Secretary of
Male 55 27 April 2017 26 April 2020 50 No
Yongqiang the Board
Sun Gang Director Male 53 28 May 2010 27 April 2017 1.19 No
27 December
Bao Qi Director Female 41 27 April 2017 1.19 No
Independent
Zhang Ming Male 59 30 June 2009 27 April 2017 3.33 Yes
Director
Independent
Su Yong Male 62 30 June 2009 27 April 2017 3.33 No
Director
Independent 27 December
He Ye Female 54 27 April 2017 No
Director
27 December
Ding Binhui Supervisor Male 53 27 April 2017 No
Zhuge 27 December
Supervisor Female 49 27 April 2017 45.38 No
Huiling
Chen 09 December
Supervisor Female 55 27 April 2017 12,645 12,645 51.22 No
Guoling
27 December
Xu Yuping Supervisor Male 55 27 April 2017 32.47 No
Total / / / / / 134,145 204,145 70,000 / 638.57 /
Name Main work experience
He has a bachelor degree in engineering from Shanghai Jiao Tong University, an EMBA from China Europe International Business School, a professor-level senior engineer, a
national model worker, and a national outstanding entrepreneur from 2015 to 2016. He took part in the work in July 1983. He used to be the engineer of the introduction office., the
deputy section chief of the quality control department, the chief section of the supply section, the director of the full quality office, the chief of the financial section, the head of the
Zhang Min investment and development section, and general manager of Shanghai Refrigerator Compressor Co., Ltd. Assistant; General Manager of Shanghai Zanussi Electric Machinery Co.,
Ltd.; Deputy Party Secretary, Vice Chairman and General Manager, Chairman of Shanghai SMPIC Office Machinery Co., Ltd.; Chairman and CEO of ShangGong Group Co., Ltd.
Since April 2017, he has served as chairman of the eighth Board of Directors and the General Manager of SGG. Now he is concurrently the vice chairman of China National Light
Industry Council and vice chairman of the China Sewing Machinery Association.
Zhu Xudong He has a doctor degree from Tongji University, a EMBA from China Europe International Business School, senior engineer. He used to be Assistant Engineer of Aeronautics and
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Aircraft Design Institute of Ministry of Transportation, Chief Staff Officer and Assistant to the Director of Urban Construction Bureau of Pudong New Area, Deputy Director and
Chief Engineer of Pudong New Area Municipal Construction Construction Administration, General Manager of Pudong New Area Construction and Management Co., Ltd., Deputy
Director of the Planning and Development Bureau of Pudong New Area, Secretary of Science and Technology Bureau of Pudong New Area, Secretary of the Party Group (Director
of Intellectual Property Office and Director of the Information Commission), Director of Science and Technology Committee of Pudong New Area, Party Secretary and First
Vice-President and Party Secretary of the Pudong New Area Science and Technology Association. He is currently the chairman and president of Shanghai Pudong Science and
Technology Investment Co., Ltd., and serves as the board chairman of Shanghai Wanye Enterprise Co., Ltd. and the director of Shanghai Xinmei Real Estate Co., Ltd. Since April
2017, he has served as a director of the eighth Board of Directors of the Company.
He holds a master's degree in financial investment from the School of Management of the University of Rotterdam in Netherlands, and is a first-tier financial analyst. He used to be
a programmer in the financial software development department of the Shanghai Institute of Computing Technology; a staff member of the Investment Banking Department and the
Investment Finance Department of Pudong Development Group Finance Co., Ltd.; a director of the Office of Pudong Public Rental Housing Company; an assistant to the director of
Yin Qiang
office of Pudong Development Group Co., Ltd.; assistant director (Presiding) of Pudong SASAC. He is currently the general manager of the investment management department of
Shanghai Pudong Investment Holdings Co., Ltd. and chairman of Shanghai Shine-link International Logistics Co., Ltd.. Since April 2017, he has served as a director of the eighth
Board of Directors of the Company.
She graduated from the University of Braunschweig in Germany with a master's degree and is an economist. She used to be a project consultant of Desun Trading & Consulting
GmbH, a researcher at Fuka Economic Forecasting Institute, investment staff and employee director of Shanghai Digital Industry (Group) Co., Ltd., assistant director of the
Huang
property rights section of Pudong SASAC; Deputy Manager of the Equity Management Department of Shanghai Pudong Investment Holding (Group) Co., Ltd. (Presiding), Legal
Yingjian
Representative of Shanghai Pudong Asset Management Co., Ltd., Director of Shanghai Digital Industry Group Co., Ltd. Since April 2017,s he has served as a director of the eighth
Board of Directors of the Company.
Graduate degree, Chartered Financial Analyst (CFA Level 2). He used to be project manager of China Electronics Basic Products and Equipment Company; Portfolio analyst of
USS Funds; and investment manager of China Huarong Asset Management Corporation. He is currently the senior manager of China Great Wall Asset Management Co., Ltd. in the
Li Wenhao
Investment Banking Division (Great Wall Guorong Investment Management Co., Ltd.). From April 2017 to April 2018, he served as a director of the eighth Board of Directors of
the Company.
Fudan University Master of Business Administration, Senior Economist. Previously worked at Shanghai Metro Corporation; once served as head of the investment bank of
Shanghai International Trust & Investment Corporation; project manager of Financial Advisory Department, manager of Investment Banking Department and financial manager of
Lu Yujie Shanghai International Group Asset Management Co., Ltd.; operations director, financial director, and investment director of asset management of hanghai International Group
Asset Management Co., Ltd. Currently he is deputy general manager of Shanghai International Group Asset Management Co., Ltd. Since April 2017, he has served as a director of
the eighth Board of Directors of the Company.
He is a senior professor in Shanghai Jiao Tong University. He received his Ph.D. from Shanghai Jiaotong University in 1995. Since September 1995, he has taught at Shanghai Jiao
Tong University and served as vice president and dean of School of Mechanical and Power Engineering of Shanghai Jiao Tong University. Currently He serves as Vice President of
Shanghai Jiao Tong University and Dean of Gas Turbine Research Institute, Executive Deputy Dean of China Institute of Quality Development, and Deputy Director of the
Xi Lifeng
Machinery Engineering Professional Steering Committee of the Ministry of Education, founded Fellow of International Engineering Asset Management Society, Standing Director
of China Quality Association, and deputy chief editor of \"Industrial Engineering and Management\" journal. Since April 2017, he has served as an independent director of the eighth
Board of Directors of the Company.
He holds a Ph.D. in Finance from University of Houston. He is also professionally designated as Certified Financial Analyst (CFA) and Financial Risk Manager (FRM). He used to
be a tenured Professor at Chinese University of Hong Kong. He was the Programme Director of Executive Master of Professional Accountancy which is a joint programme between
the CUHK and Shanghai National Institute of Accounting. He was a deputy director of the Center for Institutions and Governance and a senior research fellow of Institute of
Economics and Finance. He also serves as an independent director forMidea Group Co., Ltd., COSCO Shipping Energy Transportation Co., Ltd. and Shanghai Winner Information
Rui Meng Technology Co., Inc. He is a Member of American Finance Association, Financial Management Association, American Accounting Association, Hong Kong Securities Institute. He
was a former member of the Panel of Examiners of the Securities Industry Examination of the Hong Kong Stock Exchange and a former member of the Advisory Board of the
Business Valuation Forum in Hong Kong. He was a visiting financial economist at Shanghai Stock Exchange, research fellow at Hong Kong Institute for Monetary Research and
research fellow at Asian Development Bank Institute. He was also a vice president of Hong Kong Financial Engineering Association. Since April 2017, he has served as an
independent director of the eighth Board of Directors of the Company.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Bachelor of law. Chinese practicing lawyers. Since 1999, He has worked as a lawyer and partner in Llinks Law Offices. Since April 2017, he has served as an independent director
Chen Zhen
of the eighth Board of Directors of the Company.
Serve in the army from December 1976 to April 2005, former deputy commander. Former director and secretary of party committee of Shanghai Nanhui District Sports Bureau,
vice secretary and secretary-general of Nanhui District Politics and Law Committee, director of Nanhui District Comprehensive Management of Public. Former Party Committee
Qiao Junhai
Secretary of Pudong New Area Politics and Law Committee, vice director of Comprehensive Management of Social Security Committee Office, member of Pudong New Area
Commission for Discipline Inspection. From April 28, 2014, he served as the Supervisory Board Chairman of the Company.
Bachelor of Engineering, Bachelor of Law, Lawyer. He used to be a layer at Shanghai Allbright Law Offices and Shanghai HIWAYS Law Firm. He joined Shanghai Pudong
Chen Science & Technology Investment Co., Ltd. in 2011 and has served as Senior Legal Manager of the Legal Department and Deputy General Manager of the Legal Department;
Mengzhao currently serves as Legal Director of Shanghai Pudong Science & Technology Investment Co., Ltd., and Director of Shanghai Wanye Enterprise Co., Ltd., Director of Shanghai
Xinmei Real Estate Co., Ltd. Since April 2017, he has served as a supervisor of the Company's eighth Supervisory Board.
University degree, senior engineer. He once served at Shanghai Washing Machine Third Factory and was the Chief of the Production Unit and Technical Unit; Deputy Chief of the
Technical Department and the Workshop Director of Shanghai Washing Machine Factory; Director of the Enterprise Management Department, the Director of the Technology
Zhang Development Department and the Deputy General Manager of Shanghai Shui Xian Electric Appliance Co., Ltd.; Chief engineer and deputy general manager of Shanghai SMPIC
Jianguo Office Machinery Co., Ltd., party secretary and deputy general manager of Shanghai Fuji Xerox Co., Ltd., secretary of the board of directors of ShangGong Group Co., Ltd. Now he
is the deputy party secretary of the Company and the chairman of the labor union. Since April 2017, he has served as the supervisor of the eighth Supervisory Board of the
company.
He holds a bachelor's degree in science from Fudan University and is a professor-level senior engineer. Former R&D Director, Deputy General Manager of Shanghai SMPIC Office
Li Jiaming Equipment Co., Ltd., Site Manager of SMPIC Photosensitive Materials Factory, General Manager and Party Secretary of Shanghai Machinery Co., Ltd.; Director and deputy
general manager of ShangGong Group Co., Ltd.. Since April 2008, he served as Deputy General Manager of the Company.
Fang Master of Engineering, Senior Engineer. Former Deputy General Manager and Chief Engineer of Shanghai Xiechang Feiren Co., Ltd.; former director of the Company. Since April
Haixiang 2017, he served as Deputy General Manager of the Company.
Master of Engineering, Senior Engineer. She used to served as a translator and head of sales department of Shanghai Refrigerator Compressor Co., Ltd., executive manager of
Shanghai Zanussi Electric Machinery Co., Ltd., assistant to general manager, sales and operations manager of Shanghai Philips Electronic Components Co., Ltd., Assistant to the
Zheng Ying general manager of Shanghai SMPIC Office Machinery Co., Ltd., party secretary and deputy general manager of Shanghai Fuji Xerox Copier Co., Ltd.; From November 2004 to
February 2018, she was sent by the Company to serve as the executive director of SGE and the executive director of DA AG. From October 2008 to April 2017, she served as
Deputy General Manager of the Company.
EMBA from China Europe International Business School, MBA from Shanghai University of Finance and Economics, Senior Economist. Former general manager Assistant of the
Li Xiaofeng Company, general manager of Shanghai Import & Export Co., general manager of Shanghai Shanggong Butterfly Sewing Machine Co., Ltd., currently general manager of DAPSH.
Since December 2012, he served as the Company’s deputy general manager.
Bachelor degree. He used to be the person in charge of the financial unit of Shanghai No. 3 National Instrument Factory, the deputy section chief of the financial department of
Shanghai Refrigerator Compressor Co., Ltd., and the financial affairs representative of Shanghai Highly (Group) Co., Ltd. Since March 2006, he has worked at ShangGong Group
Zhou
Co., Ltd. and used to serve as the deputy director of the office, securities affairs representative, secretary of the supervisory board, and director of the office. From May 2014 to
Yongqiang
December 2016, he served as General Manager of SG Butterfly. Since January 2017, he has served as the office director of the Company Since April 2017, he has served as
Secretary of the Board of the Company.
Note:The term of office of the 7th Board of Directors of the Company expires. Zhang Min, Zhu Xudong, Yin Qiang, Huang Yingjian, Li Wenhao, Lu Yujie, Xi Lifeng,
Rui Meng and Chen Zhen were elected as director of the 8th Board of Directors in 2016 Annual Shareholders’ Meeting on 27th April 2017. Zhang Ming, Su Yong, He
Ye, Li Jiaming, Fang Haixiang, Sun Gang, Bao Qi, the directors of the 7th Board of Directors, are no longer as the Company's 8th Board of Directors candidates due to
the term of office expires, work changes and other reasons.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
The term of office of the 7th Supervisory Board of the Company expires. Qiao Junhai and Chen Mengzhao were elected as supervisor of the 8th Supervisory Board in
2016 Annual Shareholders’ Meeting on 27th April 2017. Zhang Jianguo was elected as supervisor in the 6th Meeting of the Second Staff Representative Meeting.
Ding Binhui, Zhuge Huiling, Chen Guoling and Xu Yuping, the supervisors of the 7th Supervisory Board were no longer the supervisors of the Company.
The Company held the first meeting of the 8th Board of Directors on 27th April2017 to appoint Mr. Zhang Min as the general manager of the Company and appointed
Li Jiaming as executive deputy general manager of the Company (acting as the chief financial officer), appointed Fang Haixiang, Zheng Ying and Li Xiaofeng as
deputy general manager of the Company, and appointed Zhou Yongqiuang as the Board Secretary.
During the report period, Ms. Zheng Ying, Deputy General Manager of the Company, worked in Germany. She received her salary from the oversea subsidiary, not
from Company’s Headquarter.
Ms Zheng Ying submitted her application for resignation on 26th February 2018 and no longer held any position in the Company and its subsidiaries. Mr. Li Wenhao
submitted his resignation application on 4th April 2018 and no longer serves as a director of the Company and a member of the Strategy Committee.
1.2 Equity Incentive Granted to Directors, Supervisors, and Senior Managers in the Report Period
Not applicable.
2. Current and Former Director, Supervisor and Senior Manager’s Employment
2.1 Employment with Shareholders
Name Shareholder Title Starting date Ending date
Zhu Xudong PKFR Executive Director, Legal Representative June 2016
Assistant Director of Planning and
Yin Qiang Pudong SASAC April 2016 31 December 2017
Development
Huang Yingjian Pudong SASAC Assistant Director February 2013
China Great Wall Asset Management Co., Ltd
Senior Manager of Investment Banking
Li Wenhao GREAT WALL GUORONG INVESTMENT AND September 2011
Division
MANAGEMENT CO., LTD.
SHANGHAI INTERNATIONAL GROUP Asset Management
Lu Yujie Deputy general manager May 2015
Co., Ltd.
Chen Mengzhao PKFR Supervisor June 2016
Party Committee Secretary and general
Sun Gang China Great Wall Asset Management Co., Ltd May 2016 April 2017
manager of Guizhou Office
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Name Shareholder Title Starting date Ending date
Sun Gang China Great Wall Asset Management Co., Ltd Manager of Investment Banking Division April 2017
Professional Supervisor of Supervisors
Ding Binhui Pudong SASAC August 2009
Center
2.2 Employment with Other Institutions
Name Company Name Title Starting From End Date
China Sewing Machinery Association Deputy Director 26 September 2011
Zhang Min
China Light Industry Federation Deputy Director 21 June 2016
Shanghai Pudong Science and Technology
Chairman, General Manager February 2012
Investment Co., Ltd.
Zhu Xudong SHANGHAI WANYE ENTERPRISES CO.,LTD Director 18 December 2016
Shanghai Xinmei Real Estate Co.,Ltd. Director 16 November 2016
Deputy Manager of Investment Management
Shanghai Pudong Investment Holdings Co., Ltd. April 2016 31 December 2017
Department (Presiding work)
Manager of Investment Management
Yin Qiang Shanghai Pudong Investment Holdings Co., Ltd. January 2018
Department
Shanghai Shine-link International Logistics Co.,
Chairman June 2016
Ltd.
Deputy Manager of Equity Management
Shanghai Pudong Investment Holdings Co., Ltd. January 2016
Department (Presiding work)
Huang Yingjian SHANGHAI DIGITAL INDUSTRY (GROUP)
Director August 2014
CO., LTD.
Shanghai Pudong Asset Management Co., Ltd. Legal Representative February 2016
Shanghai International Group Asset Operation Co.,
Executive Director March 2009
Ltd.
KINGBURG INDUSTRY INVESTMENT FUND
Director December 2015
AMANAGEMENT CO., LTD.
SHANGHAI KINGBURG INVESTMENT
Chairman December 2014 December 2017
Lu Yujie MANAGEMENT CO., LTD
Shanghai Real Power Capital Management Co., Ltd. Director June 2014
Shanghai Baoding Investment Co., Ltd. Director June 2014
LONGJIANG BANK CO., LTD. Director July 2015
ALL IN PAY NETWORK SERVICES CO., LTD. Supervisor August 2014
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Name Company Name Title Starting From End Date
COSCO Shipping Energy Transportation Co., Ltd. Independent Director June 2015
Rui Meng Shanghai Winner Information Technology Co., Inc. Independent Director December 2015
Midea Group Co., Ltd. Independent Director December 2015
Llinks Law Offices Lawyer, Partner January 1999
China Lonking Holdings Co., Ltd. Independent Director October 2014
Chen Zhen Shanghai Flyco Electrical Appliance Co., Ltd. Independent Director August 2014
Asia Cuanon Technology (Shanghai) Co., Ltd. Independent Director May 2014
Chengdu Nibirutech Inc Independent Director July 2014
Shanghai Pudong Science and Technology
Legal Director January 2011
Investment Co., Ltd.
Chen Mengzhao SHANGHAI WANYE ENTERPRISES CO.,LTD Director December 2015
Shanghai Xinmei Real Estate Co.,Ltd. Director November 2016
Li Jiaming Shanghai Fuji Xerox Co., Ltd. Deputy Chairman June 2014
Shanghai Jinqiao Export Processing Zone
Independent Director 02 June 2011
Development Co., Ltd.
Zhang Ming Wuxi Commercial Mansion Grand Orient Co., Ltd. Independent Director 20 May 2015
Haitong Securities Co., Ltd. Independent Director 12 June 2016
Shanghai Pudong Development Bank Co., Ltd. Independent Director 29 April 2016
MAANSHAN IRON & STEEL COMPANY
Su Yong Independent Supervisor September 2011 30 November 2017
LIMITED
China Sewing Machinery Association Chairman 26 September 2011
He Ye
China Light Industry Federation Deputy Director 21 June 2016
3. Compensation for Director, Supervisor and Senior Managers
Decision Making Procedure for Director, Supervisor and
Apply the regulation on Officers’ Salary in Senior Management Personnel Remuneration Management Regulation
Officer Compensation
Implement according to Senior Management Personnel Remuneration Management Regulation and other corporate internal
Basis for Director, Supervisor and Officer Compensation
control system
Compensation will be paid according to KPI, according to independent director compensation standard and procedure approved
Director, Supervisor and Officer Compensation Payable
by the shareholder general meeting.
Total Compensation at End of Reporting Period for Director,
RMB 6.3857 million yuan, before tax
Supervisor and Officer
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
4. Change of Directors, Supervisors and Senior Managers of the Company
Name Title Change Reason
Zhang Min Chairman, CEO Outgoing Term expires
Li Jiaming Director, Deputy General Manager Outgoing Term expires
Fang Haixiang Director, Deputy General Manager Outgoing Term expires
Sun Gang Director Outgoing Term expires
Bao Qi Director Outgoing Term expires
Lu Yujie Director Outgoing Term expires
Zhang Ming Independent Director Outgoing Term expires
Su Yong Independent Director Outgoing Term expires
He Ye Independent Director Outgoing Resignation
Qiao Junhai Chairman of the Supervisory Board Outgoing Term expires
Ding Binhui Supervisor Outgoing Term expires
Zhuge Huiling Supervisor Outgoing Term expires
Chen Guoling Supervisor Outgoing Term expires
Xu Yuping Supervisor Outgoing Term expires
Zheng Ying Deputy General Manager Outgoing Term expires
Li Xiaofeng Deputy General Manager Outgoing Term expires
Zhang Jianguo Secretary of the Board Outgoing Resignation
Zhang Min Chairman Election Election
Zhu Xudong Director Election Election
Yin Qiang Director Election Election
Huang Yingjian Director Election Election
Li Wenhao Director Election Election
Lu Yujie Director Election Election
Xi Lifeng Independent Director Election Election
Rui Meng Independent Director Election Election
Chen Zhen Independent Director Election Election
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Name Title Change Reason
Qiao Junhai Chairman of the Supervisory Board Election Election
Chen Mengzhao Supervisor Election Election
Zhang Jianguo Supervisor Election Election
Zhang Min General Manager Appointment Appointment
Li Jiaming Executive Deputy General Manager Appointment Appointment
Fang Haixiang Deputy General Manager Appointment Appointment
Zheng Ying Deputy General Manager Appointment Appointment
Li Xiaofeng Deputy General Manager Appointment Appointment
Zhou Yongqiang Secretary of the Board Appointment Appointment
5. Punishment by the Securities Regulatory Authorities in Last Three Years
Not applicable.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
6. Staff Condition of Parent Company and Major Subsidiaries
6.1 Staff Condition
Population of serving staff in parent company
Population of serving staff in major subsidiary companies 3,024
Total population of serving staff 3,195
Population of retired staff who have to undertake expense
in parent company and major subsidiary companies
Professional Composition
Type of Professional Composition Population of Professional Composition
Production Staff 2,086
Sales Personnel
Technician
Financial Staff
Administrative Staff
Total 3,195
Education
Type of Educational Degree Population
Postgraduate, undergraduate and above
Junior college 1,092
Junior college and below 1,578
Total 3,195
6.2 Compensation Policy
During the report period, the Company has formulated the Employee Performance Assessment and Salary
Management Method in the Department. The staff salary is implemented strictly according to stipulated
policies.
6.3 Training Plan
The Company adopts flexible and diverse training methods, and does a good job of on-the-job training,
professional qualification training, and continuing education. It focused on strengthening the construction of
young cadres in 2017 to ensure the Company's sustainable development in the future. In order to build a
working platform for young cadres to learn, exchange, and practice, and to create a good environment for
young cadres to speed up their growth, the Company takes training, grassroots exercise, rotation, and detention
as an important means of cultivating and selecting young cadres. Based on the pilot work in 2016, the
Company continued to expand the work of training junior employees at the grassroots level within the Group
in 2017 and concentrate on product technology and management knowledge. In the second half of 2017, the
Company began to arrange monthly training for young cadres. The training covers business management,
marketing, sewing machine product technology, manufacturing technology and financial management. By the
end of the year, it has completed four phases and 216 employees participated the intraining sessions. In
addition, in order to make young cadres be more familiar with the operation of the Company an d improve
management ability, the Company sent someyoung cadres to work in the subsidiaries like SGGEMSY and
DAMSH.
6.4 Outsourcing
Not applicable.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
CHAPTER 9 CORPORATE GOVERNANCE
1. Illustration of Corporate Governance and Related Situation
During the report period, the Company has continuously improved the corporate governance structure and
regulated the Company operation in strict accordance with laws and regulations including the Corporate Law,
Securities Law and Code of Corporate Governance for Listed Companies, and the requirement of China
Securities Regulatory Commission, Shanghai Stock Exchange and other regulators. At present, the Company
has formed the legal governance structure with distinct rights and liabilities, each performing its own functions,
effective balance, scientific decisions and coordinating operation. The corporate government complies with the
requirement of relevant laws and regulations, and there is no rectification within a limited time required by any
supervision department. The stockholders’ meeting, board of directors and board of supervisors fulfill their
own duties and operate in a standard way to practically guarantee the interest of vast investors and the
company.
(1) Shareholders and Shareholders’ Meeting
The Company holds shareholders’ meeting in strict accordance with the laws and regulations including the
Corporate Law, Listing Rule of Shanghai Stock Exchange, and the requirement of the Articles of Association
and Procedure Rules of Shareholders’ Meeting to ensure that all the shareholders can enjoy equal status and
rights. Meanwhile, lawyers are invited to attend the shareholders’ meeting and confirm and witness the
convention procedure, deliberation matters and attendees’ identities. The meeting minutes should be complete
to guarantee the legitimacy and effectiveness of the shareholders’ meeting.
(2) Controlling Shareholders and Companies
The Company possesses independent business and management abilities. Both the Company and controlling
shareholders can realize ―five independences‖ in terms of staff, asset, finance, organization and business. The
board of directors, board of supervisions and internal organizations can operate independently. The Company’s
major decisions are made by the shareholders meeting according to the law. The controlling shareholders
exercise shareholders’ rights by law without the behavior of interfering with the Company’s decision and
operating activities directly or indirectly exceeding the shareholders’ meeting. The Company has no related
transaction with controlling shareholders.
(3) Directors and Board of Directors
The Company has formulated the Procedure Rules of the Board of Directors according to the stipulation of the
Corporate Law and Articles of Association. The directors’ qualification and electoral procedure comply with
the stipulation of relevant laws and regulations. All the directors strictly abide by the directors’ declaration and
promise that they have made, fulfill the rights and obligations endowed by the Articles of Association
earnestly, and perform their duties loyally, diligently and sincerely.
The Company’s independent directors shouldn’t be less than 1/3 of total directors. During the report period,
they have attended the board meeting carefully, delivered their professional opinions on major issues including
periodic reports, related party transactions and external securities, and played a positive role in the scientific
decisions of the board of directors and the healthy development of the company.
(4) Supervisors and Board of Supervisors
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
The Company elects supervisors in strict accordance with the selection procedure of the Corporate Law and
Articles of Association. The Company’s board of supervisors consists of five supervisors, including two staff
representatives. Population and staff composition comply with the requirement of laws and regulations. All the
supervisors can carefully fulfill the obligations according to the Procedure Rule of the Board of Supervisors.
Driven by the responsibility for all the shareholders, especially minority shareholders, supervisors fulfill
responsibilities carefully, according to the Procedure Rules of the Board of Supervisors, supervise the
Company’s finance, the legitimacy and compliance of directors and senior executives in fulfilling their duties.
(5) Information Disclosure and Transparency
The Company appoints the secretary of the board to be responsible for the Company’s information disclosure,
receiving investors visit and consultation, and designates Shanghai Securities News and Hong Kong
Commercial Daily to disclose the Company’s information. The Company strictly abides relevant stipulations
of information disclosure, effectively prevents selective information disclosure and occurrence of insider
trading, and makes everything in a just, impartial and open way. The Company can disclose relevant
information truly, accurately, completely and timely according to relevant stipulations of laws, regulations and
the Articles of Association to ensure that all the shareholders have the equal opportunity to gain information.
During the report period, the Company has revised the Information Disclosure Affairs Management System in
order to enhance the internal control and further stipulate the Company’s information disclosure affairs
management according to the stipulation of the Shanghai Stock Exchange on implementing direct business in
information disclosure.
(6) About Investors’ Relation and Related Interest Parties
The Company further enhances the channel to communicate with investors, fully respects and maintains the
legitimate interest of related interest parties realizes the balance of the interest of shareholders, staff and
society, commonly promotes the sustainable and healthy development of the company according to the
Investor Relations Management. A specially-assigned person in the Company’s board office is responsible for
receiving investors’ incoming calls, letters, visits and questions, and replies them by instant answers, relying
letters or emails.
In order to regulate the Company’s insider information management, enhance the privacy of inside information
and maintain information disclosure fairness, the Company formulates and strictly executes the Inside
Information and Insiders Management System according to laws and regulations of the Corporate Law,
Securities Law, Administrative Measures on Information Disclosure by Listed Companies, Stock Listing Rule
of Shanghai Stock Exchange, relevant stipulations of the Articles of Association and the actual condition of the
company. The Company’s inside information management will be under the centralized leadership and
management of the board of directors to guarantee that the information insiders files are true, accurate and
complete. The chairman will become the major person in charge. The secretary of the board organizes the
implementation and is responsible for registering and filling information insiders. The board of supervisors
supervises the management system implementation of information insiders.
During the report period, the Company has strictly implemented the registration management system of inside
information and normalized information transfer process. During the regular report and temporary
announcement disclosure period, the company has strictly controlled insiders range for private information,
organized to fill in the Information Insider Registration Form, and truly and completely recorded the list of all
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
the information insiders before the information above were public, and the time when insiders knew the inside
information, etc.
During the report period, the Company’s directors, supervisors, senior executives and other relevant staff have
strictly abided by the management system of information insiders. No information insider has been discovered
to utilize inside information to buy and sell Company’s stocks, and no information insider has been
investigated by the supervision department for being suspected of being involved in inside information trade.
During the report period, the Company has revised the Articles of Association, Rules for the Shareholders'
Meetings, and various regulations and systems to further perfect the corporate governance and normalize
operation.
During the report period, the Company has formulated the Information Disclosure Pending and Exemption
Management Rules, Rules of the Company’s Shares and its Changes Held by Directors, Supervisors and
Senior Management, revised the Articles of Association, Board Meeting Rules, Working Principles of the
General Manager, the Implementation Rules of the Strategy Committee of the Company's Board of Directors,
the Work System of the Secretary of the Board of Directors, and the Regulation for Project Investment. The
Company further improved corporate governance and standardized operations.
There is no significant difference between the Company’s corporate governance and the requirements of
relevant provisions released by CSRC.
2. Brief Introduction of Shareholder’s Meeting
Inquiry Index of Designated Disclosure Date for
Name of Meeting Date of Meeting
Website for Publishing Resolutions Publishing Resolutions
The 2016 Annual Shareholders’ Meeting 27th April 2017 www.sse.com.cn 27th April 2017
3. Duty Fulfillment of Directors
3.1 Attendance of Directors in Board Meeting and Shareholders Meeting
Attendance in
Attendance in Shareholders’ Meeting Shareholders’
Whether Meeting
Name Independent Whether two times
By Attendance in
Director Scheduled Personal By in a row did not
Telecommuni- Absent Shareholders’
Meeting Attendance Proxy personally attend
cation Meeting
the meeting
Zhang
No 5 5 3 0 0 No
Min
Zhu
No 3 3 2 0 0 No
Xudong
Yin
No 3 3 2 0 0 No
Qiang
Huang
No 3 3 2 0 0 No
Yingjian
Li
No 3 3 3 0 0 No
Wenhao
Lu Yujie No 5 5 4 0 0 No
Xi Lifeng Yes 3 3 2 0 0 No
Rui Meng Yes 3 3 2 0 0 No
Chen
Yes 3 3 2 0 0 No
Zhen
Li
No 2 2 1 0 0 No
Jiaming
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Attendance in
Attendance in Shareholders’ Meeting Shareholders’
Whether Meeting
Name Independent Whether two times
By Attendance in
Director Scheduled Personal By in a row did not
Telecommuni- Absent Shareholders’
Meeting Attendance Proxy personally attend
cation Meeting
the meeting
Fang
No 2 2 1 0 0 No
Haixiang
Sun Gang No 2 2 1 0 0 No
Bao Qi No 2 2 1 0 0 No
Zhang
Yes 2 2 1 0 0 No
Ming
Su Yong Yes 2 2 1 0 0 No
He Ye Yes 2 2 1 0 0 No
Number of Board Meetings Held During the Year
Including on-site meeting
meetings by telecommunication
On-site with telecommunication meeting
3.2 Independent Directors’ Objection against Significant Events of the Company
Not applicable.
4. Important Opinions and Recommendations of the Special Committees under the Board during
Report Period
Not applicable.
5. Explanation by Supervisory Board on the Risks of the Company
Not applicable.
6. Explanation on Structural Independence of the Company on Business, Personnel, Assets,
Organization and Finance from the Holding Shareholder
Not applicable.
7. Appraisal and Incentive System for Senior Managers
To be the top in the global sewing industry, the Company realized the market-oriented reform of mixed
ownership in 2017. The management team of ShangGong Group unswervingly implements the business
strategy of \"Technology Leading, Innovation and Development\" and is committed to maintaining a global
leading position in the high-end sewing industry. But this market position requires scientific capital, talent, and
mechanisms to maintain and develop. The Company must comprehensively upgrade and optimize the talent
management mechanism and platform so as to achieve a professional and market-oriented human resources
strategy and meet the needs of future development. Therefore, it is imperative to establish market-based
compensation and performance appraisal mechanisms for senior management team. The PwC consulting team
conducted on-site investigations and in-depth interviews in the Company, and conducted benchmarking
against listed companies of similar dimensions and types. In terms of compensation of senior managers, the
Company has drawbacks such as a large gap between the salary level and the market, and a low correlation
between actual income and performance. Performance appraisal indicators also lack job orientation and are
difficult to act as incentive mechanisms. Therefore, it is suggested to systematically revise the compensation
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
and performance plan of the senior managers, optimize the compensation philosophy, compensation system,
salary level, and performance appraisal. And an optimization program has been formed.
The remuneration of senior managers in 2017 is linked to the completion of the Company's business objectives,
individual work performance, and the completion of key tasks. The Remuneration and Appraisal Committee of
the Board of Directors determines the evaluation of senior managers based on the completion status of the
Company's business indicators in 2017 and the fulfillment of responsibilities of each senior manager.
8. Self-evaluation Report of Internal Control
There were not factors which have influence on evaluation conclusion of effectiveness of internal control from
the benchmark date of self-evaluation report of internal control to issuance date of self-evaluation report of
internal control. For details of self-evaluation report of internal control, please see the complete report released
in the website of Shanghai Stock Exchange.
9. Internal Control Audit Report
Appointed by the Company, BDO conducted an audit on the effectiveness of internal control of financial
statements, and issued a standard audit report for internal control without reserved opinions. For details of
audit report for internal control, please see the complete report released in the website of Shanghai Stock
Exchange.
CHAPTER 10 RELEVANT SITUATION ABOUT CORPORATE BONDS
Not applicable.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
CHAPTER 11 FINANCIAL REPORT
1. Audit Report
XinKuaiShiBaoZi[2018]No.ZA12084
To all the shareholders of Shang Gong Group Co., Ltd.:
1. Audit Opinion
We have audited the financial statements of Shang Gong Group Co., Ltd. (hereinafter referred to as ―the
Company‖), including the consolidated statement of financial position and statement of financial position as of
31st December 2017, consolidated statement of comprehensive income and statement of comprehensive
income, consolidated statement of cash flows and statement of cash flows, consolidated statement of changes
in equity and statement of changes in equity and notes to the financial statements for the Year 2017.
In our opinion, the accompanying financial statements are prepared in all material respects in accordance with
the Accounting Standards for Business Enterprises and fairly reflect the consolidated financial position and the
parent company’s financial position as of 31st December 2017 and the consolidated and the Company’s
operating results and cash flows for the Year 2017.
2. Basis of Forming Audit Opinion
We performed the audit in accordance with the Chinese Certified Public Accountants Auditing Standards. The
―CPA's Responsibility for Auditing Financial Statements‖ section of the audit report further elaborated our
responsibilities under these guidelines. According to the Code of Ethics of Chinese Certified Public
Accountants, we are independent of the Company and perform other professional ethics duties. We believe
that the audit evidence we have obtained is sufficient and appropriate to provide a basis for issuing an audit
opinion.
3. Key Audit Matters
The key audit matters are the matters that we believe are most important for the audit of the current financial
statements based on professional judgment. The response to these matters is based on the audit of the financial
statements as a whole and the formation of an audit opinion. We do not comment on these matters separately.
We confirm that the following matters are key audit matters that need to be communicated in the audit report.
Key audit matter How is this matter handled in the audit
(1) Impairment of inventory
As of December 31, 2017, the book balance of the Company's ① Understand and evaluate the design and operation
inventory was 826,419,588.17 yuan, and the inventory effectiveness of key internal controls related to the provision
depreciation reserve amount was 121,277,766.58 yuan. In this of inventory impairment by your Company's management.
period, inventory price loss occurred at 9,538,291.98 yuan. The
Company's inventory is measured at the lower of cost and net ②Carry out the inventory monitoring process, check the
realizable value. The finished product is based on the estimated quantity and status of the inventory. Carry out a major
selling price of the inventory minus the estimated sales inspection of the long-age inventory, and analyze the
expenses and related taxes and fees to determine its net adequacy of the depreciation reserve for the inventory with
realizable value. The net realizable value of inventory which indications of impairment.
needs to be processed, in the normal production and operation
process, is determined by the estimated selling price of the ③Check the changes in the inventory depreciation reserve
finished product produced minus the estimated cost, estimated provision of the Company in previous years and analyze the
selling expenses, and related taxes and fees that will be incurred rationality of inventory depreciation reserve changes.
when the finished product is completed. The service cost is
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
determined by the settlement unit price and the carrier amount
confirmed by both parties of the service. Determining the net ④ Acquire the Company's inventory depreciation reserve
realisable value of inventory involves the use of significant calculation table, review the net realizable value of inventory
accounting estimates and judgments by the management, and and the amount of provision for impairment of inventory, and
the provision for inventory devaluation reserve is of importance check the estimated selling price, settlement unit price, and
for the consolidated financial statements. Therefore, we sales expense when the management determines the net
recognize the provision for inventory devaluation reserve as a realizable value with the actual amount incurred. In this way
key audit matter. to assess whether management's judgment in determining the
net realizable value of inventory is reasonable.
Please refer to Note 5 (12) for the details of the relevant
accounting policies for the provision for inventory devaluation
reserve, and Notes 7 (10) for details of the provision for
inventory devaluation reserv.
(2) Impairment of goodwill
As of December 31, 2017, the book value of goodwill of the ①Understand the historical performance and development
Company was 95,214,814.71 yuan, and the amount of goodwill plan of the acquired subsidiary, as well as the development
impairment provision was 2,732,781.28 yuan. No provision for trend of the industry.
impairment of goodwill was made in this period. The ②Understand and evaluate how the Company's management
Company's management performs impairment test on goodwill utilizes the work of assessment experts. Assess the rationality
at the end of each year and adjusts the book value of goodwill of the valuation method chosen by the management and the
based on the results of the impairment test. The impairment test key assumptions adopted.
of goodwill involves management's use of significant ③Review the rationality of the estimated cash flow and the
accounting estimates and judgements, which mainly includes discount rate adopted, and compare and analyze the historical
estimates of the subsidiary's estimated future cash flows and data of the relevant subsidiaries.
discount rates. The provision for impairment of goodwill is
④Review the calculation accuracy of the impairment test of
significant for the consolidated financial statements. Therefore,
goodwill.
we recognize the provision for impairment of goodwill as a key
audit matter.
Please refer to Note 5 (22) for the details of the relevant
accounting policies for the provision for impairment of
goodwill. Refer to Note 7 (27) for the details of the provision
for impairment of goodwill,
4. Other information
The management of the Company (hereinafter referred to as ―management‖) is responsible for other
information. Other information includes information contained in the Annual Report 2017, but exclude
financial statements and our audit report.
Our audit opinion on financial statements does not contain any other information, nor do we publish any form
of forensic conclusion on other information.
In combination with our audit of financial statements, our responsibility is to read other information. In the
process, it is important to consider whether other information is in significant disagreement with the financial
statements or what we know in the process of auditing, or if there seems to be a material misstatement.
Based on the work we have performed, if we determine that there is a material misstatement of other
information, we should report that fact. In this regard, we have nothing to report.
5. Responsibility of the management and the governance for financial statements
The management is responsible for preparing financial statements in accordance with the requirements of the
Accounting Standards for Business Enterprises to enable them to achieve fair reflection. And design,
implement and maintain necessary internal controls so that there are no material misstatements due to fraud or
errors in the financial statements.
In preparing the financial statements, the management is responsible for assessing the Company's continuing
operations capabilities, disclosing issues related to going-concern (if applicable), and applying the
going-concern assumption unless the plan is to liquidate, terminate operations or have no other realistic
options.
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Annual Report 2017
Shang Gong Group Co., Ltd
The governance layer is responsible for overseeing the Company's financial reporting process.
6. Auditors’ responsibilities
Our objective is to obtain reasonable assurance as to whether the entire financial statements are free from
material misstatement due to fraud or error and to issue an audit report containing audit opinion. Reasonable
assurance is a high level of assurance, but it does not guarantee that an audit performed in accordance with
auditing standards can always be discovered when a material misstatement exists. Misstatement may be caused
by fraud or mistakes, and if a reasonable expectation of misstatement alone or aggregated may affect the
economic decision made by users of financial statements based on the financial statements, the misstatement is
generally considered to be material.
In the process of auditing in accordance with auditing standards, we use professional judgment and maintain
professional suspicion. At the same time, we also perform the following tasks:
(1) Identify and assess risks of material misstatement of financial statements due to fraud or errors, design and
implement audit procedures to address these risks, and obtain adequate and appropriate audit evidence as a
basis for issuing audit opinions. Since fraud may involve collusion, falsification, intentional omissions,
misrepresentation or override of internal controls, the risk of failing to detect a material misstatement due to
fraud is higher than the risk of failing to detect a material misstatement due to an error.
(2) Understand the internal control related to auditing to design appropriate auditing procedures, but the
purpose is not to express opinions on the effectiveness of internal control.
(3) Evaluate the appropriateness of accounting policies used by the management and the reasonableness of
accounting estimates and related disclosures.
(4) Conclusions are reached on the appropriateness of management's use of going-concern. At the same time,
according to the audit evidence obtained, reach conclusions on whether there are significant uncertainties in
the matters or circumstances that have major doubts about the Company's ability to continue to operate. If we
conclude that there are significant uncertainties, the auditing standards require us to request the users of the
report to pay attention to the relevant disclosures in the financial statements in the audit report; if the disclosure
is insufficient, we should publish non-unqualified opinions. Our conclusions are based on the information
available as of the date of the audit report. However, future events or circumstances may prevent the Company
from continuing to operate.
(5) Evaluate the overall presentation, structure, and content (including disclosures) of the financial statements
and evaluate whether the financial statements fairly reflect the relevant transactions and events.
(6) Obtain sufficient and appropriate audit evidence on the financial information of entities or business
activities in the Company to express an opinion on the financial statements. We are responsible for directing,
supervising and executing group audits and assume full responsibility for audit opinions.
We communicate with the governance on planned audit scope, timing, and major audit findings, including
communication of the internal control deficiencies that we identified during the audit.
We also provide a statement to the governance on compliance with ethical requirements related to
independence, and communicate with the governance on all relationships and other matters that may
reasonably be considered to affect our independence, as well as related preventive measures (if applicable).
From matters communicated with the governance, we determine which items are most important for the audit
of financial statements for current period and thus constitute the key audit matters. We describe these matters
in our audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases,
if it is reasonably expected that the negative consequences of communicating something in the audit report will
outweigh the benefits in the public interest, we determine that the matter should not be communicated in the
audit report.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
BDO China Shu Lun Pan Certified Public Accountant of China: Li Ping
Certified Public Accountants LLP (Project Partner)
Certified Public Accountant of China: Li Yue
Shanghai China 13th April 2018
2. Financial Statement
Shang Gong Group Co., Ltd.
Consolidated Statement of Financial Position
As of 31st December 2017
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 723,337,878.53 763,655,704.57
Deposit reservation for balance
Lending funds
Financial assets at fair value whose fluctuation
4,000.00
is attributed to profit or loss for current period
Derivative financial assets
Notes receivable 61,337,538.87 78,841,448.05
Accounts receivable 464,759,380.20 389,252,678.87
Prepayment 64,393,627.71 33,709,357.11
Premiums receivable
Reinsurance accounts receivable
Provision of cession receivable
Interest receivable 21,645.73
Dividends receivable
Other receivables 58,944,411.21 50,885,073.48
Redemptory monetary capital for sale
Inventories 705,141,821.59 663,766,440.95
Assets held for sale
Non-current assets maturing within one year
Other current assets 366,533,356.84 357,418,547.35
Total current assets 2,444,469,660.68 2,337,533,250.38
Non-current assets:
Loans and payments on behalf
Available-for-sale financial assets 118,959,944.05 137,219,246.11
Held-to-maturity investments
Long-term receivables
Long-term equity investments 275,799,606.70 253,586,574.99
Investment properties 149,502,332.46 107,616,254.96
Fixed assets 397,788,367.78 354,223,210.04
Construction in progress 12,665,274.09 20,199,928.64
Project materials
Disposal of fixed assets
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Annual Report 2017
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Productive biological assets
Oil and gas assets
Intangible assets 149,988,157.46 155,237,899.69
Development expenditures 16,683,772.84 12,529,345.90
Goodwill 72,482,033.43 67,878,923.12
Long-term deferred expenses 1,631,013.88 1,084,797.97
Deferred income tax assets 63,544,908.23 59,063,549.91
Other non-current assets
Total non-current assets 1,259,045,410.92 1,168,639,731.33
Total assets 3,703,515,071.60 3,506,172,981.71
Current liabilities:
Short-term loans 330,389,201.62 351,368,604.62
Borrowings from central bank
Deposits from customers and interbank
Borrowings from banks and other financial
institutions
Financial liabilities at fair value whose
fluctuation is attributed to profit or loss for current
period
Derivative financial liabilities
Notes payable 12,311,525.18
Accounts payable 194,031,795.38 174,828,356.05
Receipt in advance 38,326,094.65 36,548,091.83
Financial assets sold for repurchase
Handling charges and commissions payable
Employee benefits payable 91,112,179.00 80,928,692.78
Taxes and surcharges payable 14,074,587.91 54,740,867.60
Interest payable 1,110,553.06 2,090,565.59
Dividends payable 1,032,818.86 1,032,818.86
Other payables 193,617,747.74 193,117,136.53
Reinsurance accounts payable
Provision for insurance contracts
Acting trading securities
Acting underwriting securities
Liabilities held for sale
Non-current liabilities maturing within one year 1,260,000.00
Other current liabilities 48,330.03 808,706.39
Total current liabilities 877,314,833.43 895,463,840.25
Non-current liabilities:
Long-term loans 62,956,504.27 68,624,863.27
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 3,121,893.11 37,338,461.61
Long-term employee benefits payable 247,420,777.32 255,686,948.92
Special payables
Estimated liabilities 546,461.91
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Deferred income 2,340,000.00 3,600,000.00
Deferred income tax liabilities 52,863,141.42 36,604,917.60
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 369,768,778.03 402,375,191.40
Total liabilities 1,247,083,611.46 1,297,839,031.65
Owners' equity
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 972,000,595.56 971,603,120.27
Less: treasury stock
Other comprehensive income -72,163,452.90 -103,144,046.15
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
General risk reserves
Undistributed profits 692,241,691.51 494,754,465.24
Total owners' equity attributable to the parent
2,145,214,676.69 1,916,349,381.88
company
Minority equity 311,216,783.45 291,984,568.18
Total owners' equity 2,456,431,460.14 2,208,333,950.06
Liabilities and owners' equity 3,703,515,071.60 3,506,172,981.71
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Financial Position
As of 31st December 2017
Unit: Yuan, Currency: RMB
Item Note Ending Balance Beginning Balance
Current assets:
Cash and cash equivalents 137,028,156.51 119,210,234.41
Financial assets at fair value whose fluctuation
4,000.00
is attributed to profit or loss for current period
Derivative financial assets
Notes receivable 18,619,880.00 150,000.00
Accounts receivable 36,846,572.06 3,401,851.42
Prepayment 3,488,722.53 531,129.23
Interest receivable
Dividends receivable
Other receivables 107,954,125.03 78,393,221.55
Inventories 114,386,355.60 2,329,420.55
Assets held for sale
Non-current assets maturing within one year
Other current assets 310,981,332.13 301,893,339.18
Total current assets 729,305,143.86 505,913,196.34
Non-current assets:
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Annual Report 2017
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Available-for-sale financial assets 118,959,944.05 137,219,238.80
Held-to-maturity investments
Long-term receivables 135,720,449.62 123,602,509.87
Long-term equity investments 639,310,221.03 629,485,100.90
Investment properties 88,389,027.77 86,205,621.96
Fixed assets 8,036,379.04 11,768,787.39
Construction in progress 2,871,501.40 4,045,139.74
Project materials
Disposal of fixed assets
Productive biological assets
Oil and gas assets
Intangible assets 11,541,893.86 12,859,594.30
Development expenditures
Goodwill
Long-term deferred expenses 1,496,482.78
Deferred income tax assets 587,977.83
Other non-current assets
Total non-current assets 1,006,913,877.38 1,005,185,992.96
Total assets 1,736,219,021.24 1,511,099,189.30
Current liabilities:
Short-term loans 348,148.62 348,148.62
Financial liabilities at fair value whose
fluctuation is attributed to profit or loss for current
period
Derivative financial liabilities
Notes payable
Accounts payable 123,067,605.01 4,014,190.85
Receipt in advance 14,500,867.77 2,694,254.66
Employee benefits payable 9,133,348.57 4,000,000.00
Taxes and surcharges payable 579,085.22 588,400.56
Interest payable
Dividends payable 1,032,818.86 1,032,818.86
Other payables 153,278,589.85 108,821,954.19
Liabilities held for sale
Non-current liabilities maturing within one year 1,260,000.00
Other current liabilities
Total current liabilities 303,200,463.90 121,499,767.74
Non-current liabilities:
Long-term loans 1,489,984.87 1,489,984.87
Bonds payable
Including: preference shares
Perpetual bond
Long-term payables 1,574,312.63 1,574,312.63
Long-term employee benefits payable
Special payables
Provisions
Deferred income 1,260,000.00
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Annual Report 2017
Shang Gong Group Co., Ltd
Item Note Ending Balance Beginning Balance
Deferred income tax liabilities 1,197,067.41 1,197,067.41
Other non-current liabilities 520,000.00 520,000.00
Total non-current liabilities 4,781,364.91 6,041,364.91
Total liabilities 307,981,828.81 127,541,132.65
Owners' equity:
Share capital 548,589,600.00 548,589,600.00
Other equity instruments
Including: preference shares
Perpetual bond
Capital reserves 1,003,282,687.73 1,003,282,687.73
Less: treasury stock
Other comprehensive income 15,711,472.03 33,970,766.78
Special reserves
Surplus reserves 4,546,242.52 4,546,242.52
Undistributed profits -143,892,809.85 -206,831,240.38
Total owners' equity 1,428,237,192.43 1,383,558,056.65
Liabilities and owners' equity 1,736,219,021.24 1,511,099,189.30
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Consolidated Statement of Comprehensive Incomes
From 1st January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Item Note 2017
1. Incomes 3,064,971,500.79 2,759,855,136.98
Including: operating income 3,064,971,500.79 2,759,855,136.98
Interest income
Premiums earned
Income from handling charges and
commissions
2. Costs 2,856,099,579.43 2,610,544,921.82
Including: Cost of sales 2,245,537,329.26 2,037,344,042.71
Interest expenses
Handling charges and commissions expenses
Surrender value
Net amount of compensation payout
Net amount withdrawn for insurance contract
reserves
Policy dividend payment
Reinsurance costs
taxes and surcharges 13,445,563.98 9,646,577.26
Selling expenses 284,810,887.21 246,840,318.90
General and administrative expenses 291,371,664.10 284,156,361.47
Financial expenses -5,263,527.90 15,536,094.51
Losses from asset impairment 26,197,662.78 17,021,526.97
Plus: gains from changes in fair value (\"-\" for
losses)
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Annual Report 2017
Shang Gong Group Co., Ltd
Item Note 2017
Investment income (\"-\" for losses) 45,607,259.29 51,962,911.52
Including: income from investment in
17,990,723.92 17,937,107.88
associates and joint ventures
Gains on disposal of assets 23,963,103.89 3,529,785.81
Foreign exchange gains (\"-\" for losses)
Other gains 11,713,174.75
3. Operating profits (\"-\" for losses) 290,155,459.29 204,802,912.49
Plus: non-operating income 9,192,748.08 29,173,966.17
Less: non-operating expenses 3,766,348.69 731,182.77
4. Total profits (\"-\" for total losses) 295,581,858.68 233,245,695.89
Less: income tax expenses 82,928,869.66 71,680,360.28
5. Net profit (\"-\" for net loss) 212,652,989.02 161,565,335.61
(1) Classified by operating sustainability
a. Net profit from continuing operations (\"-\" for
212,652,989.02 161,565,335.61
losses)
b. Net profit from discontinued operations (\"-\"
for losses)
(2) Classified by ownership
a. Non-controlling interests 15,165,762.75 17,333,991.77
b. Net profit attributable to owners of the parent
197,487,226.27 144,231,343.84
company
6. Net of tax of other comprehensive income 36,930,889.17 -17,277,343.80
Net of tax of other comprehensive income
30,980,593.25 -17,873,148.29
attributable to owners of the parent company
(1) Other comprehensive income can't be
5,682,076.80 -12,495,261.60
reclassified to gains and losses later
a. Changes in net liabilities or assets due to the
5,682,076.80 -12,495,261.60
remeasurement and redefinition of the benefit plan
b. The shares in other comprehensive income of
the investee that can't be reclassified to gains and losses
under the equity method
(2) Other comprehensive income to be reclassified
25,298,516.45 -5,377,886.69
to gains and losses later
a. The shares in other comprehensive income of
the investee that can be reclassified to gains and losses
under the equity method
b. Gains and losses from changes in fair value of
-18,259,294.75 -11,097,717.71
available-for-sale financial assets
c. Gains and losses from the reclassification of
the held-to-maturity investment to held-for-sale financial
assets
d. The effective portion of the gains and losses
from cash flow hedging
e. Translation differences of financial statements 43,557,811.20 5,719,831.02
f. Others
Net of tax of other comprehensive income
5,950,295.92 595,804.49
attributable to non-controlling shareholders
7. Total comprehensive incomes 249,583,878.19 144,287,991.81
Total comprehensive income attributable to owners
228,467,819.52 126,358,195.55
of the parent company
Total comprehensive income attributable to
21,116,058.67 17,929,796.26
non-controlling shareholders
8. Earnings per share
(1) Basic earnings per share (yuan/share) 0.3600 0.2629
(2) Diluted earnings per share (yuan/share) 0.3600 0.2629
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd.
Statement of Comprehensive Incomes
From 1st January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Item Note 2017
1. Operating income 207,618,193.06 35,625,008.15
Less: Operating cost 139,483,153.60 19,862,743.87
tax and surcharges 4,092,703.92 3,573,897.61
Selling expenses 24,026,800.66 666,232.68
General and Administration expenses 47,668,731.87 34,763,998.55
Finance expenses -20,567,218.74 -5,612,406.59
Impairment losses on assets 6,083,598.81 7,646,657.27
Plus: gains from changes in fair value (\"-\" for losses)
Investment income (\"-\" for losses) 30,708,465.14 33,758,732.27
Including: Investment income in associates and
joint ventures
Gain on disposal of assets (\"-\" for losses) 21,997,891.55 4,125,932.15
Other income 1,873,821.10
2. Operating profits (\"-\" for losses) 61,410,600.73 12,608,549.18
Plus: Non-operating income 1,196,634.66 13,011,328.64
Less: Non-operating expenses 256,782.69 257,396.39
3. Total profits (\"-\" for total losses) 62,350,452.70 25,362,481.43
Less: income tax expenses -587,977.83
4. Net profit (\"-\" for net loss) 62,938,430.53 25,362,481.43
a. Net profit from continuing operations (\"-\" for losses) 62,938,430.53 25,362,481.43
b. Net profit from discontinued operations (\"-\" for losses)
5. Net of tax of other comprehensive income -18,259,294.75 -11,097,717.71
Net of tax of other comprehensive income attributable to
owners of the parent company
(1) Other comprehensive income can't be reclassified to
gains and losses later
a. Changes in net liabilities or assets due to the
remeasurement and redefinition of the benefit plan
b. The shares in other comprehensive income of the
investee that can't be reclassified to gains and losses under the -18,259,294.75 -11,097,717.71
equity method
(2) Other comprehensive income to be reclassified to
gains and losses later
a. The shares in other comprehensive income of the
investee that can be reclassified to gains and losses under the -18,259,294.75 -11,097,717.71
equity method
b. Gains and losses from changes in fair value of
available-for-sale financial assets
c. Gains and losses from the reclassification of the
held-to-maturity investment to held-for-sale financial assets
d. The effective portion of the gains and losses from
cash flow hedging
e. Translation differences of financial statements
6. Total comprehensive incomes 44,679,135.78 14,264,763.72
7. Earnings per share
(1) Basic earnings per share (yuan/share)
(2) Diluted earnings per share (yuan/share)
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd.
Consolidated Statement of Cash Flows
From 1st January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Item Note 2017
1. Cash flows from operating activities:
Cash received from sale of goods and
3,164,760,853.53 2,861,454,370.86
provision of services
Net increase in customer bank deposits and
placement from banks and other financial
institutions
Net increase in borrowings from central bank
Net increase in loans from other financial
institutions
Premiums received from original insurance
contracts
Net cash received from reinsurance business
Net increase in deposits and investments
from policyholders
Net increase from disposal of financial assets
at fair value whose fluctuation is attributed to
profit or loss for current period
Cash received from interest, handling
charges and commissions
Net increase in loans from banks and other
financial institutions
Net capital increase in repurchase business
Refunds of taxes and surcharges 43,906,468.45 69,330,555.14
Cash received from other operating activities 50,445,946.85 38,699,965.56
Sub-total of cash inflows from operating activities 3,259,113,268.83 2,969,484,891.56
Cash paid for goods purchased and services
2,017,747,474.86 1,924,760,971.83
received
Net increase in loans and advances to
customers
Net increase in deposits in central bank and
other banks and financial institutions
Cash paid for original insurance contract
claims
Cash paid for interests, handling charges and
commissions
Cash paid for policy dividends
Cash paid to and on behalf of employees 658,533,406.62 604,502,319.23
Cash paid for taxes and surcharges 185,158,629.33 130,590,650.51
Cash paid for other operating activities 280,337,888.85 210,574,037.57
Sub-total of cash outflows from operating
3,141,777,399.66 2,870,427,979.14
activities
Net cash flows from operating activities 117,335,869.17 99,056,912.42
2. Cash flows from investing activities:
Cash inflow from divestment 1,012,030,235.06 984,900,686.67
Cash inflow from investment incomes 16,326,012.85 22,987,656.97
Cash gain from disposal of fixed assets, intangible
36,421,255.81 7,982,714.60
assets, and other long-term investment
Cash inflow from disposal of subsidiaries and
other operating units
Cash received from other investing activities
Sub-total of cash inflows from investing activities 1,064,777,503.72 1,015,871,058.24
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Item Note 2017
Cash paid for acquisition of fixed assets,
158,264,625.96 88,210,551.07
intangible assets and other long-term assets
Cash paid for investments 1,005,380,152.75 956,336,856.38
Net increase in pledge loans
Net cash paid to acquire subsidiaries and other
21,002,300.00 168,494,541.49
business units
Cash paid for other investing activities
Sub-total of cash outflows from investing
1,184,647,078.71 1,213,041,948.94
activities
Net cash flows from investing activities -119,869,574.99 -197,170,890.70
3. Cash flows from financing activities
Cash received from investors
Including: cash received by subsidiaries from
investments by non-controlling shareholders
Cash received from loans 224,230,000.00 609,186,272.20
Cash received from bonds issuance
Cash received from other financing activities 3,897,697.51 25,402,158.23
Sub-total of cash inflows from financing activities 228,127,697.51 634,588,430.43
Cash paid for debt repayments 273,539,464.00 531,799,099.38
Cash paid for distribution of dividends and profits
14,913,369.41 10,156,414.28
or payment of interest
Including: dividends and profits paid to
1,883,843.40 1,803,893.40
non-controlling shareholders by subsidiaries
Cash paid for other financing activities
Sub-total of cash outflows from financing
288,452,833.41 541,955,513.66
activities
Net cash flows from financing activities -60,325,135.90 92,632,916.77
4. Effect of fluctuation in exchange rate on cash
26,314,632.54 11,138,332.32
and cash equivalents
5. Net increase in cash and cash equivalents -36,544,209.18 5,657,270.81
Plus: beginning balance of cash and cash
750,357,929.63 744,700,658.82
equivalents
6. Ending balance of cash and cash equivalents 713,813,720.45 750,357,929.63
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.
Statement of Cash Flows
st
From 1 January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Item Note 2017
1. Cash flows from operating activities:
Cash received from sale of goods and
229,795,360.70 38,220,460.65
provision of services
Refunds of taxes and surcharges
Cash received from other operating
63,397,907.63 32,211,185.98
activities
Sub-total of cash inflows from operating
293,193,268.33 70,431,646.63
activities
Cash paid for goods purchased and services
156,824,506.55 10,605,180.10
received
Cash paid to and on behalf of employees 36,908,166.30 22,440,142.31
Cash paid for taxes and surcharges 7,411,003.59 4,185,014.48
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Item Note 2017
Cash paid for other operating activities 117,490,277.69 60,374,841.77
Sub-total of cash outflows from operating
318,633,954.13 97,605,178.66
activities
Net cash flows from operating activities -25,440,685.80 -27,173,532.03
2. Cash flows from investing activities:
Cash inflow from divestment 932,849,014.15 940,633,615.30
Cash inflow from investment incomes 21,090,100.93 22,987,656.97
Cash gain from disposal of fixed assets,
intangible assets, and other long-term 23,855,652.27 3,977,441.76
investment
Cash inflow from disposal of subsidiaries
and other operating units
Cash received from other investing
activities
Sub-total of cash inflows from investing activities 977,794,767.35 967,598,714.03
Cash paid for acquisition of fixed assets,
4,925,918.01 17,323,229.55
intangible assets and other long-term assets
Cash paid for investments 929,584,425.75 943,745,370.00
Net cash paid to acquire subsidiaries and
other business units
Cash paid for other investing activities
Sub-total of cash outflows from investing
934,510,343.76 961,068,599.55
activities
Net cash flows from investing activities 43,284,423.59 6,530,114.48
3. Cash flows from financing activities
Cash received from investors
Cash received from loans
Cash received from bonds issuance
Cash received from other financing
25,000,000.00
activities
Sub-total of cash inflows from financing
25,000,000.00
activities
Cash paid for debt repayments
Cash paid for distribution of dividends and
profits or payment of interest
Cash paid for other financing activities
Sub-total of cash outflows from financing
activities
Net cash flows from financing activities 25,000,000.00
4. Effect of fluctuation in exchange rate on
-25,815.69 14,382.45
cash and cash equivalents
5. Net increase in cash and cash equivalents 17,817,922.10 4,370,964.90
Plus: beginning balance of cash and cash
119,210,234.41 114,839,269.51
equivalents
6. Ending balance of cash and cash equivalents 137,028,156.51 119,210,234.41
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd.
Consolidated Statement of Changes in Equity
From 1st January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Current period
Owners' equity attributable to the parent company
Item Minority Total owners'
Other equity instruments Less: Other General
Capital Special Surplus Undistributed equity equity
Share capital Preference Perpetual treasury comprehensive risk
Others reserves reserves reserves profits
shares bonds stock income reserves
1. Previous year ending balance
548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
brought forward
Plus: accounting policy
changes
Correction of
previous-period accounting
errors
Business combination
involving entities under
common control
Others
2. Beginning balance of current
548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
year
3. Increase/ (decrease) for the
397,475.29 30,980,593.25 197,487,226.27 19,232,215.27 248,097,510.08
current year (\"-\" for losses)
(1) Total comprehensive
30,980,593.25 197,487,226.27 21,116,058.67 249,583,878.19
incomes
(2) Investment/ (divestment) 397,475.29 397,475.29
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity
instruments
c. Amount of the share-based
payment included in the
owners' equity
d. Others 397,475.29 397,475.29
(3) Distribution of profits -1,883,843.40 -1,883,843.40
a. Surplus reserves
b. General risk reserves
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
c. Distribution to owners or
-1,883,843.40 -1,883,843.40
shareholders
d. Others
(4) Internal transfer of owners'
equity
a. Capital reserve turn to stock
equity
b. Surplus reserve turn to stock
equity
c. Surplus reserve to recover
loss
d. Others
(5) Special reserves
a. Appropriation for current
year
b. Use in current year
(6) Others
4. Ending balance of the current
548,589,600.00 972,000,595.56 -72,163,452.90 4,546,242.52 692,241,691.51 311,216,783.45 2,456,431,460.14
year
Same Period in Previous Year
Owners' equity attributable to the parent company
Item Less: Other General Minority Total owners'
Other equity instruments Capital Special Surplus Undistributed
treasury comprehensive risk equity equity
Share capital Preference Perpetual reserves reserves reserves profits
Others stock income reserves
shares bonds
1. Previous year ending balance
548,589,600.00 956,286,021.43 -85,270,897.86 4,546,242.52 350,523,121.40 275,858,665.32 2,050,532,752.81
brought forward
Plus: accounting policy
changes
Correction of
previous-period accounting
errors
Business combination
involving entities under
common control
Others
2. Beginning balance of current
548,589,600.00 956,286,021.43 -85,270,897.86 4,546,242.52 350,523,121.40 275,858,665.32 2,050,532,752.81
year
3. Increase/ (decrease) for the
15,317,098.84 -17,873,148.29 144,231,343.84 16,125,902.86 157,801,197.25
current year (\"-\" for losses)
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
(1) Total comprehensive
-17,873,148.29 144,231,343.84 17,929,796.26 144,287,991.81
incomes
(2) Investment/ (divestment) 15,317,098.84 15,317,098.84
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity
instruments
c. Amount of the share-based
payment included in the
owners' equity
d. Others 15,317,098.84 15,317,098.84
(3) Distribution of profits -1,803,893.40 -1,803,893.40
a. Surplus reserves
b. General risk reserves
c. Distribution to owners or
-1,803,893.40 -1,803,893.40
shareholders
d. Others
(4) Internal transfer of owners'
equity
a. Capital reserve turn to stock
equity
b. Surplus reserve turn to
stock equity
c. Surplus reserve to recover
loss
d. Others
(5) Special reserves
a. Appropriation for current
year
b. Use in current year
(6) Others
4. Ending balance of the current
548,589,600.00 971,603,120.27 -103,144,046.15 4,546,242.52 494,754,465.24 291,984,568.18 2,208,333,950.06
year
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Shang Gong Group Co., Ltd.
Statement of Changes in Equity
From 1st January 2017 to 31st December 2017
Unit: Yuan, Currency: RMB
Current period
Item Other equity instruments Other
Less: treasury Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves comprehensive
Others stock reserves reserves profits equity
shares bonds income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 33,970,766.78 4,546,242.52 -206,831,240.38 1,383,558,056.65
brought forward
Plus: accounting policy changes
Correction of
previous-period accounting errors
Others
2. Beginning balance of current year 548,589,600.00 1,003,282,687.73 33,970,766.78 4,546,242.52 -206,831,240.38 1,383,558,056.65
3. Increase/(decrease) for the
-18,259,294.75 62,938,430.53 44,679,135.78
current year (\"-\" for losses)
(1) Total comprehensive incomes -18,259,294.75 62,938,430.53 44,679,135.78
(2) Investment/ (divestment)
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity instruments
c. Amount of the share-based
payment included in the owners'
equity
d. Others
(3) Distribution of profits
a. Surplus reserves
b. Distribution to owners or
shareholders
c. Others
(4) Internal transfer of owners'
equity
a. Capital reserve turn to stock
equity
b. Surplus reserve turn to stock
equity
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
c. Surplus reserve to recover loss
d. Others
(5) Special reserves
a. Appropriation for current year
b. Use in current year
(6) Others
4. Ending balance of the current
548,589,600.00 1,003,282,687.73 15,711,472.03 4,546,242.52 -143,892,809.85 1,428,237,192.43
year
Current period
Item Other equity instruments Other
Less: treasury Special Surplus Undistributed Total owners'
Share capital Preference Perpetual Capital reserves comprehensive
Others stock reserves reserves profits equity
shares bonds income
1. Previous year ending balance
548,589,600.00 1,003,282,687.73 45,068,484.49 4,546,242.52 -232,193,721.81 1,369,293,292.93
brought forward
Plus: accounting policy changes
Correction of previous-period
accounting errors
Others
2. Beginning balance of current year 548,589,600.00 1,003,282,687.73 45,068,484.49 4,546,242.52 -232,193,721.81 1,369,293,292.93
3. Increase/(decrease) for the current
-11,097,717.71 25,362,481.43 14,264,763.72
year (\"-\" for losses)
(1) Total comprehensive incomes -11,097,717.71 25,362,481.43 14,264,763.72
(2) Investment/ (divestment)
a. Common shares from
shareholders
b. Investment capital from the
holders of other equity instruments
c. Amount of the share-based
payment included in the owners'
equity
d. Others
(3) Distribution of profits
a. Surplus reserves
b. Distribution to owners or
shareholders
c. Others
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
(4) Internal transfer of owners'
equity
a. Capital reserve turn to stock
equity
b. Surplus reserve turn to stock
equity
c. Surplus reserve to recover loss
d. Others
(5) Special reserves
a. Appropriation for current year
b. Use in current year
(6) Others
4. Ending balance of the current year 548,589,600.00 1,003,282,687.73 33,970,766.78 4,546,242.52 -206,831,240.38 1,383,558,056.65
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
3. Company Basic Information
3.1 Company Profile
Shang Gong Group Co., Ltd., a joint stock limited company with publicly issued A & B shares on the
Shanghai Stock Exchange, is the first listed company in the sewing machinery industry of China. The
Company was incorporated in April 1994. The registration number has changed to 91310000132210544K
(Unified social credit code) in 2016. The organizational form of the Company is a joint stock limited company
(a Sino-foreign joint venture and a listed company) and the registered capital amounts to 548,589,600.00 yuan.
The registered address is Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, China
(Shanghai) Pilot Free Trade Zone and the head office is located in No. 1566 New Jinqiao Road, Pudong New
Area, Shanghai. The legal representative is Mr. Zhang Min.
On 22nd May 2006, it was decided on the General Meeting on equity division reform by the Company that: the
non-tradable equity stockholders pay partially their shares to all the tradable equity shareholders at a ratio of
10 to 6 as consideration of getting tradable rights. After the above consideration of share donation, the total
number of shares remains unchanged, but consequently the equity structure has changed. As at 31st December
2013, there were 448,886,777 shares in total.
On 28th February 2014, CSRC approved the non-public offering of A shares of the Company under the
Official Reply to the Approval of Non-public Offering of Shares of Shang Gong Group Co., Ltd. ([2014] No.
237). The number of shares issued was 99,702,823.00 and the total number of share capital after the issue was
548,589,600.00. The Company handled equity registration and escrow formalities with the CSDC Shanghai
Branch; the corresponding registered capital was changed to RMB 548,589,600.00 yuan and had been verified
by the Verification Report (PCPAR [2014] No.111126) issued by BDO CHINA Shu Lun Pan Certified Public
Accountants LLP on 26th March 2014.
On 29th December 2016, Pudong SASAC, the original controlling shareholder and actual controller of the
Company, had sold 60.00 million A shares of the Company to Shanghai Puke Flyman Investment Co., Ltd.
which is the wholly-owned subsidiary of Shanghai Pudong Science and Technology Investment Co., Ltd.
China Securities Depository and Clearing Co., Ltd. has issued a \"transfer registration confirmation\" on the
same day. After the transfer, PKFR held A shares accounted for 10.94% of the total share capital of the
Company, which is the largest shareholder of the Company; Pudong SASAC held A shares accounted for
8.27%, which is the second largest shareholder of the Company. After the completion of the equity transfer,
the Company has changed to a listed company with no controlling shareholder and no actual controller.
As of 31st December 2017, the Company’s total share capital was 548,589,600.00, including 548,589,600
shares with no restrictive terms, accounting for 100.00% of the total number of shares.
The Company belongs to special equipment manufacturing industry; main operating activities of the Company
are: production and sales of sewing equipment.
According to the resolution of the 4th meeting of the 8th board of directors, the financial statements were
approved for disclosure by all directors of the Company on 13th April 2018.
1.2 Scope of the Consolidated Financial Statements
As of December 31, 2017, the subsidiaries within the consolidated financial statements of the Company are as
follows:
Name of subsidiary
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
1. Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd.
2. DAP (Shanghai) Co., Ltd.
3. Shanghai SMPIC IMPORT & EXPORT CO., LTD.
4. Shanghai SGSB Electronics Co., Ltd.
5. Shanghai SGSB Asset Management Co., Ltd.
6. Shanghai Sewing Construction Property Co., Ltd.
7. DAP Industrial AG
8. Zhejiang ShangGong GEMSY Co., Ltd.
9. Shanghai Shensy Enterprise Development Co., Ltd.
10. Shanghai ShangGong Financial Leasing Co., Ltd.
11. PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd.
12. DAP (Vietnam) Co., Ltd.
13. ShangGong Sewing Equipment (Zhejiang) Co., Ltd.
Note: In 2017, ShangGong (Europe) Holding Corp. GmbH, the Company’s subsidiary, was renamed DAP
Industrial AG
See ―Note 8 Changes in the scope of consolidation\" and ―Note 9 Equity in other subjects\" for details of the
scope of consolidated financial statements in the current year and the changes thereof.
4. Preparation Basis of Financial Statements
4.1 Preparation Basis
The Company prepares the financial statements based on going concern, according to the transactions and
events actually occurred and in accordance with the Accounting Standards for Business Enterprises - Basic
Standard and various specific accounting standards, application guidance and interpretations for accounting
standards for business enterprises and other relevant provisions (hereinafter collectively referred to as
\"Accounting Standards for Business Enterprises\") promulgated by the Ministry of Finance and disclosure
provisions of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing
Securities No. 15 - General Rules on Financial Reports of the China Securities Regulatory Commission.
4.2 Going Concern
The Company has going-concern ability within 12 months as of the end of the report period and has no matters
or situations that may lead to serious doubts about the Company's going-concern ability.
5. Principal Accounting Policies and Accounting Estimates
The following disclosure has covered the Company's specific accounting policies and accounting estimates
prepared according to the actual production and operation characteristics.
5.1 Statement on Compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for
Business Enterprises and truly and completely reflect the Company’s financial position, operating results, cash
flows and other related information in the report period.
5.2 Accounting Period
The accounting year is from 1st Januaryto 31st December in calendar year.
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5.3 Operating Cycle
The Company's operating cycle is 12 months.
5.4 Functional Currency
The Company adopts RMB as its functional currency.
5.5 Accounting Treatment Methods of Business Combinations under Common Control and not under
Common Control
Business combinations under common control: Assets and liabilities acquired from business combinations by
the Company are measured at book value of assets and liabilities (including goodwill formed from the
purchase of the acquiree by the ultimate controller) in the consolidated financial statements of the ultimate
controller. Stock premium in the capital reserve should be adjusted according to the difference between the
book value of net asset acquired from the combinations and that of consideration (or total face value of the
shares issued) paid. In case the stock premium in the capital reserve is not enough, the retained earnings need
to be adjusted.
Business combinations not under common control: Assets paid for consideration and liabilities incurred or
borne by the Company on the acquisition date shall be measured at their fair values. The difference between
the fair value and the book value should be included in the current profit and loss. The Company shall
recognize the difference of the combination costs in excess of the fair value of the identifiable net assets
acquired from the acquiree as goodwill. The Company shall include the difference of the combination costs in
short of the fair value of the identifiable net assets acquired from the acquiree in the current profit and loss
after review.
Intermediary service charges such as audit fee, legal service fee, appraisal and consultancy fee paid for
business combinations and other directly relevant expenses are included in the current profit and loss when
incurred; the transaction costs for the issuance of equity securities shall be used to offset equities.
5.6 Preparation Methods of Consolidated Financial Statements
5.6.1 Scope of Consolidation
The scope of consolidation of the Company's consolidated financial statements is recognized based on the
control. All subsidiaries (including the divisible part of the investee controlled by the Company) should be
included in the consolidated financial statements.
5.6.2 Consolidation Procedure
The Company prepares consolidated financial statements based on its own financial statements and financial
statements of its subsidiaries according to other relevant materials. When the Company prepares its
consolidated financial statements, it shall regard the whole enterprise group as an accounting entity to reflect
the overall financial position, operating results and cash flows of the enterprise group according to the
requirements for recognition, measurement and presentation of the relevant Accounting Standards for Business
Enterprises and the uniform accounting policies.
Accounting policies and accounting periods adopted by all subsidiaries included in the consolidation scope of
the consolidated financial statements should be consistent with those of the Company. If accounting policies
and accounting periods adopted by all subsidiaries are inconsistent with those of the Company, in the
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preparation of the consolidated financial statements, necessary adjustments shall be made according to the
accounting policies and accounting periods of the Company. For the subsidiaries acquired through business
combination not under common control, adjustments to their financial statements shall be made based on the
fair values of net identifiable assets on the acquisition date. For the subsidiaries acquired through business
combination not under common control, adjustments to their financial statements shall be made based on the
fair values of their assets and liabilities (including goodwill from acquisition of the subsidiaries by the ultimate
controller) in the financial statements of the ultimate controller.
The share of owner's equity, net profits and losses in the current year and comprehensive income in the current
year of subsidiaries attributable to minority shareholders should separately presented under the item of owner's
equity of the Consolidated Balance Sheet, the item of net profit of the Consolidated Income Statement and the
item of total comprehensive income. The difference formed by the loss in the current year shared by minority
shareholders of the subsidiaries in excess of the share of minority shareholders in the owner's equity at the
beginning of the year of the subsidiaries should be used to offset the minority equity.
(1) Increase in subsidiaries or business
In the reporting period, if the Company increased subsidiaries or business from business combinations under
common control, then the beginning amount of the Consolidated Balance Sheet should be adjusted; the
incomes, expenses and profits from the combinations of the subsidiaries and business from the beginning of
the current year to the end of the reporting period shall be included in the Consolidated Income Statement;
cash flows from the combinations of the subsidiaries and business from the beginning of the current year to the
end of the reporting period shall be included in the Consolidated Cash Flow Statement. At the same time, the
Company should adjust the relevant items of the comparative statements and deem that the reporting entity
already exists when the ultimate controller starts its control.
Where the Company can control the investee under common control from additional investments, it should
deem that parties involved in the combination have make adjustments at the current state when the ultimate
controller starts its control. Equity investments held before the Company controls the acquiree, the relevant
profit and loss recognized during the period from the later of the date when the Company obtains the original
equity and the date when the acquirer and the acquiree are under common control, other comprehensive
income and changes in other net assets shall be used to offset the retained earnings at the beginning of the year
or the current profit and loss in the period of the comparative statements.
In the reporting period, if the Company increased subsidiaries or business from business combinations not
under common control, then the beginning amount of the Consolidated Balance Sheet should not be adjusted;
the incomes, expenses and profits from the subsidiaries and business from the acquisition date to the end of the
reporting period shall be included in the Consolidated Income Statement; cash flows from the subsidiaries and
business from the acquisition date to the end of the reporting period shall be included in the Consolidated Cash
Flow Statement.
Where the Company can control the investee not under common control from additional investments, it shall
re-measure equity of the acquiree held before the acquisition date at the fair value of such equity on the
acquisition date and include the difference of the fair value and book value in the investment income in the
current year. Where equity of the acquiree held before the acquisition date involves in other comprehensive
income accounted for under equity method and other changes in owner's equity other than net profit and loss,
other comprehensive income and profit distribution, the relevant other comprehensive income and other
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changes in owner's equity shall be transferred to investment income in the current year which the acquisition
date falls in, except for other comprehensive income from changes arising from re-measurement of net
liabilities or net assets of defined benefit plan.
(2) Disposal of subsidiaries or business
a. General treatment methods
In the reporting period, if the Company disposed subsidiaries or business, then the incomes, expenses and
profits from the subsidiaries and business from the beginning of the year to the disposal date shall be included
in the Consolidated Income Statement; cash flows from the combinations of the subsidiaries and business from
the beginning of the year to the disposal date shall be included in the Consolidated Cash Flow Statement.
When the Company losses the control over the original subsidiary due to disposal of partial equity investments
or other reasons, the remaining equity investments after the disposal will be re-measured at the fair value at the
date of loss of the control. The difference of total amount of the consideration from disposal of equities plus
the fair value of the remaining equities less the shares calculated at the original shareholding ratio in net assets
of the original subsidiary which are continuously calculated as of the acquisition date is included in the
investment income of the period at the loss of control. Other comprehensive income associated with the
original equity investments of the subsidiary and other changes in owner's equity other than net profit and loss,
other comprehensive income and profit distribution are transferred into investment income in the current year
when the control is lost, except for other comprehensive income from changes arising from re-measurement of
net liabilities or net assets of defined benefit plan.
b. Disposal of subsidiary by stages
Where the Company disposes the equity investments in subsidiary through multiple transactions and by stages
until it loses the control, if the effect of the disposal on the terms and conditions of all transactions of equity
investments in subsidiary and economic effect meet one or more of the following circumstance, it usually
indicates that the multiple transactions should be accounted for as a package deal:
i. These transactions are concluded at the same time or under the consideration of mutual effect;
ii. These transactions as a whole can reach a complete business results;
iii. The occurrence of a transaction depends on the occurrence of at least one other transaction;
ⅳ. A single transaction is uneconomical but it is economical when considered together with other transactions.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control belong to
a package deal, accounting treatment shall be made by the Company on the transactions as a transaction to
dispose subsidiaries and lose the control; however, the difference between each disposal cost and net asset
share in the subsidiaries corresponding to each disposal of investments before loss of the control should be
recognized as other comprehensive income in the consolidated financial statements and should be transferred
into the current profit or loss at the loss of the control.
Where various transactions of disposal of equity investments in subsidiaries until loss of the control do not
belong to a package deal, before the loss of the control, accounting treatment shall be made according to the
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relevant policies for partial disposal of equity investments in the subsidiary without losing control; at the loss
of the control, accounting treatment shall be made according to general treatment methods for disposal of
subsidiaries.
(3) Purchase of minority interest of subsidiaries
The difference between long-term equity investments newly acquired by the Company through purchase of
minority interest and the subsidiary’s identifiable net assets attributable to the Company calculated
continuously from the acquisition date (or the combination date) in accordance with the newly increased
shareholding ratio shall be charged against stock premium within capital reserves in the consolidated balance
sheet; when stock premium within capital reserves is insufficient to offset, the retained earnings shall be
adjusted.
(4) Partial disposal of equity investments in the subsidiary without losing control
The difference between the proceeds from partial disposal of equity investments in the subsidiary and the share
of identifiable net assets of the subsidiary attributable to the Company which are calculated continuously from
the acquisition date (or the combination date) and which are corresponding to the disposal of long-term equity
investments without losing control shall be charged against stock premium within capital reserves in the
consolidated balance sheet; when stock premium within capital reserves is insufficient to offset, the retained
earnings shall be adjusted.
5.7 Determination of Cash and Cash Equivalents
In preparing the cash flow statement, cash on hand and the unrestricted deposits of the Company are
recognized as cash. Short-term (maturing within three months as of the acquisition date) and highly liquid
investments held by the Company that are readily convertible to known amounts of cash and which are subject
to an insignificant risk of change in value are recognized as cash equivalents.
5.8 Foreign Currency Transactions and Translation of Foreign Currency Statements
5.8.1 Foreign Currency Transactions
Foreign currency transactions are, on initial recognition, translated to RMB at the spot exchange rates at the
dates of the transactions.
The balance of foreign currency monetary items is adjusted and translated into functional currency at balance
sheet date using the spot exchange rate. Regarding the year-end differences of translation in foreign currency,
except those special borrowing accounts under the acquisition, building or production of assets to be
capitalized are capitalized and accounted into related assets cost, all the other differences are accounted into
current profits and losses. The foreign currency non-monetary items at historical cost are translated using the
spot exchange rate. And the foreign currency non-monetary items at fair value are adjusted and translated into
measurement currency at adoption date of fair value using the spot exchange rate. The difference of translation
between different currencies is accounted into current profits and losses or capital reserves.
5.8.2 Translation of Foreign Currency Statements
The assets and liabilities of foreign operation are translated to RMB at the spot exchange rate at the balance
sheet date. The equity items, excluding ―Retained earning‖, are translated to RMB at the spot exchange rates at
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the transaction dates. The income and expenses of foreign operation are translated to RMB at the spot
exchange rates or the rates that approximate the spot exchange rates at the transaction dates. The resulting
exchange differences are recognized in a separate component of equity.
Upon entire/partial disposal of a foreign operation, the entire/partial cumulative amount of the exchange
differences recognized in equity which relates to that foreign operation is transferred to profit or loss in the
period in which the disposal occurs.
5.9 Financial Instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
5.9.1 Classification of Financial Instruments
At the initial recognition, financial assets and financial liabilities are classified as: financial assets or financial
liabilities measured at fair value through current profit and loss, including financial assets or financial
liabilities held for trading, and financial assets or financial liabilities that are directly to be measured at fair
value through current profit and loss, held-to-maturity investments, accounts receivable, available-for-sale
financial assets and other financial liabilities, etc.
5.9.2 Recognition Basis and Measurement Method of Financial Instruments
(1) Financial assets (financial liabilities) measured at fair value through current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash
dividends that have been declared but not distributed and bond interest that has matured but not been drawn).
Relevant transaction expenses are included in the current profit and loss.
The interest or cash dividends to be received during the holding period are recognized as investment income.
Change in fair values is included in the current profit and loss at the end of the period.
Upon the disposal, difference between the fair value and the initial book-entry value is recognized as
investment income; meanwhile, adjustment is made to gains or losses from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at the sum of fair values (less the bond interest that has
matured but not been drawn) and relevant transaction expenses when acquired.
During the period of holding the investment, the interest income is calculated and recognized according to the
amortized costs and effective interest rate, and included in the investment income. The effective interest rates
are determined upon acquisition and remain unchanged during the expected remaining period, or a shorter
period if applicable.
Difference between the proceeds and the book value of the investment is recognized as investment income
upon disposal.
(3) Receivables
For creditor’s rights receivable arising from external sales of goods or rendering of service by the Company
and creditor's rights of other enterprises (excluding creditor’s right quoted in the active market) held by the
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Company, including accounts receivable, other receivables, the initial recognition amount shall be the contract
price or agreement price receivable from the purchasing party; for those with financing nature, they are
initially recognized at their present values.
The difference between the amount received and the book value of accounts receivable is included in the
current profit and loss upon the recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash dividends that
have been declared but not distributed and bond interest that have matured but not been drawn) and relevant
transaction costs when acquired.
The interest or cash dividends to be received during the holding period is or are recognized as investment
income. Available-for-sale financial assets are measured at fair value at the end of the year and the changes in
fair value are included in other comprehensive income. However, equity instrument investments that have no
quoted price in the active market and of which fair values cannot be measured reliably and derivative financial
assets that relate to such equity instruments and that shall be settled through the delivery of such equity
instruments shall be measured at cost.
Difference between the proceeds and the book value of the financial assets is recognized as investment income
upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair value which is
originally and directly included in other comprehensive income shall be transferred out and recognized as the
current profit and loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at fair values plus related transaction costs. The subsequent
measurement is based on amortized costs.
5.9.3 Recognition and Measurement of Transfer of Financial Assets
Upon occurrence of transfer of a financial asset, the Company shall de-recognize the transfer of the financial
asset if nearly all the risks and rewards associated with the ownership of the financial assets have been
transferred to the transferee; and shall not de-recognize the transfer of the financial asset if nearly all the risks
and rewards associated with the ownership of the financial assets are retained.
The principle of substance over form is adopted to determine whether a financial asset meets the above
de-recognition conditions for the financial asset. The transfer of a financial asset of the Company is classified
into the entire transfer and the partial transfer of financial asset. If the entire transfer of financial asset satisfies
the criteria for de-recognition, the difference between the amounts of the following two items shall be included
in the current profit and loss:
(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the accumulated amount of the changes in fair
value originally and directly included in shareholders’ equity (the situation where the financial asset
transferred is an available-for-sale financial asset is involved in).
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If the partial transfer of financial asset satisfies the criteria for de-recognition, the entire book value of the
transferred financial asset shall be split into the derecognized part and recognized part according to their
respective fair value and the difference between the amounts of the following two items shall be included in
current profit and loss:
(1) The book value of derecognized part;
(2) The sum of the consideration for the derecognized part and the portion of de-recognition corresponding to
the accumulated amount of the changes in fair value originally and directly included in owners' equity (the
situation where the financial asset transferred is an available-for-sale financial asset is involved in).
If the transfer of financial assets does not meet the de-recognition criteria, the financial assets shall continue to
be recognized and the consideration received will be recognized as a financial liability.
3.9.4 Derecognition Criteria of Financial Liabilities
A financial liability shall be wholly or partly derecognized if its present obligations are wholly or partly
dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing
financial liabilities with any new financial liability, and the new financial liability is substantially different
from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing
financial liability, and shall at the same time recognize new financial liability.
Where substantial revisions are made to some or all of the contractual stipulations of the existing financial
liability, the Company shall derecognize the existing financial liability wholly or partly, and at the same time
recognize the financial liability with revised contractual stipulations as a new financial liability.
Upon whole or partial derecognition of financial liabilities, the difference between the book value of the
financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new
financial liabilities assumed) shall be included in the current profit and loss.
Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the entire
book value of financial liabilities according to the comparative fair value of the part that continues to be
recognized and de-recognized part. The difference between the book value allocated to the derecognized part
and the considerations paid (including non-cash assets surrendered and the new financial liabilities assumed)
shall be included in the current profit and loss.
3.9.5 Determination Method of Fair Value of Financial Assets and Financial Liabilities
Where there is an active market for financial instruments, the fair values shall be determined according to
quoted prices in active markets. Where there is no active market, the fair values shall be determined using
reasonable valuation techniques. At the time of valuation, the Company adopted valuation techniques
applicable in the current situation and supported by enough available data and other information, select input
values consistent with the features of assets or liabilities considered by market participants in the transaction
related to the assets or liabilities, and give priority to using the relevant observable input values. Only when it
is unable or impracticable to obtain the relevant observable input values, unobservable input values can be
used.
3.9.6 Test Method and Accounting Treatment of Depreciation of Financial Assets (excluding
Receivables)
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Except for the financial assets measured at fair values through current profit and loss, the book value of
financial assets on the balance sheet date should be checked. If there is objective evidence that a financial asset
is impaired, provision for impairment shall be made.
(1) Provision for impairment of available-for-sale financial assets:
If the fair value of available-for-sale financial assets has significantly declined at the end of the period, or it is
expected that the trend of decrease in value is non-temporary after considering of various relevant factors, the
impairment shall be recognized, and accumulated losses from decreases in fair value originally and directly
included in owners' equity shall be all transferred out and recognized as impairment loss.
For available-for-sale debt instruments whose impairment losses have been recognized, if their fair values rise
in the subsequent accounting period and such rise is objectively related to the matters occurring after the
recognition of impairment loss, the previously recognized impairment loss shall be reversed and recorded into
the current profit and loss.
Impairment losses on available-for-sale equity instruments should not be reversed through profit and loss.
Criteria of the Company for \"serious\" decline of fair value of investments in available-for-sale equity
instruments: In general, for highly liquid equity investments that are actively traded in the market, over 50% of
the decline is considered to be a serious fall. Criteria for \"non-temporary\" decline of fair value: In general, if a
continuous decline lasts for more than six months, it is considered as \"non-temporary decline.\"
(2) Provision for impairment of held-to-maturity investments:
Measurement of provision for impairment loss on held-to-maturity investments is treated in accordance with
the measurement method of impairment loss on accounts receivable.
5.10 Provision for Bad Debts of Receivables
5.10.1 Receivables that are Individually Significant but with Provision for Bad Debts Made on an
Individual Basis
Assessment basis or standard of amount
Top five biggest balance accounts.
individually significant
An impairment test shall be separately made. Provision for bad debts shall be
accrued based on the difference between the present value of estimated future
Method of provision for bad debts of cash flow and its book value. And it shall be recorded into the current profit
receivables individually significant and loss. If the difference between expected future cash flow of short-term
receivables and its present value is very small, it does not discount its expected
future cash flows when determining the relevant impairment losses.
5.10.2 Provision for Bad Debts of Receivables Made on Credit Risk Characteristics Portfolio Basis
Methods of provision for bad debts made on credit risk characteristics portfolio basis
Balances of receivables other than accounts receivable subject to provisions for bad debts on an
Portfolio
individual basis and other receivables
Methods of provision for bad debts made on the basis of portfolio
Portfolio Aging analysis method
Provision for bad debts made at aging analysis method in the portfolio:
Proportion of Provision for Accounts Proportion of Provision for Other
Aging
Receivable (%) Receivables (%)
Within 1 year (including 1 year) 5
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Proportion of Provision for Accounts Proportion of Provision for Other
Aging
Receivable (%) Receivables (%)
1 to 2 years 20
2 to 3 years 50
Over 3 years 100
5.10.3 Receivables that are Individually Insignificant but with Provision for Bad Debts Made on an
Individual Basis
Reason for bad debt provision
Receivables of a particular object
provided on an individual basis
An impairment test shall be separately made. If there is objective evidence that it has been
impaired, provision for bad debts is made based on the difference between the present value
Method of provision for bad debts
of expected future cash flows and its book value, which is included in the current profit or
loss.
5.11 Inventories
5.11.1 Classification of Inventories
Inventories are classified into Materials in transit, raw materials, revolving materials, stock commodities,
goods in progress, dispatched goods, material procurement, consigned processing materials, labor cost and
others.
5.11.2 Measurement Method of Dispatched Inventories
Inventories are measured with weighted average method when dispatched. The percentage matches method of
the labor cost and labor revenue. One-off amortization method is adopted for low-cost consumables when they
are consumed.
5.11.3 Recognition Basis for Net Realizable Values of Inventories of Different Categories
In normal operation process, for merchandise inventories for direct sale, including finished goods, stock
commodities and materials for sale, their net realizable values are determined at the estimated selling prices
minus the estimated selling expenses and relevant taxes and surcharges; in normal operation process, for
material inventories that need further processing, their net realizable values are determined at the estimated
selling prices of finished goods minus estimated costs to completion, estimated selling expenses and relevant
taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable
values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts
are less than the quantities held by the Company, the net realizable value of the excess portion of inventories
shall be based on general selling prices.
At the end of the period, provisions for inventory depreciation reserve are made on an individual basis. For
inventories with large quantity and low unit price, the provisions for inventory depreciation reserve are made
on a category basis. For inventories related to the product portfolios manufactured and sold in the same area,
and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate from
other items for measurement purposes, the provisions for inventory depreciation reserve shall be made on a
portfolio basis.
Except that there is clear evidence that the market price is abnormal on the balance sheet date, the net
realizable value of inventory items shall be recognized at the market price on the balance sheet date.
Net realizable value of inventory items at the end of the year is recognized at the market price on the balance
sheet date.
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5.11.4 Inventory System
Perpetual inventory system is adopted.
5.12 Assets held for sale
Not applicable.
5.13 Long-term Equity Investments
5.13.1 Criteria for Judgment of Common Control and Significant Influence
The term ―common control‖ refers to the sharing of control over an arrangement in accordance with the
relevant agreement, and related activities of the arrangement must be unanimously agreed by the parties that
share the right of control. Where the Company and other investors exert common joint control over the
investee and have rights over the net assets of the investee, the investee is a joint venture of the Company.
Significant influence refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with
other parties. Where the Company is able to exert significant influence over the investee, the investee is its
associate.
5.13.2 Recognition of Initial Investment Costs
(1) Long-term equity investments acquired from business combination
Business combination under common control: if the Company makes payment in cash, transfers non-cash
assets or bears debts and issues equity securities as the consideration for the business combination, the book
value of the owner's equity of the acquiree in the consolidated financial statements of the ultimate controller is
recognized as the initial cost of the long-term equity investment on the combination date. In case the Company
can exercise control over the investee under common control for additional investment or other reasons, the
initial investment cost of long-term equity investments is recognized at the share of book value of net asset of
the acquiree after the combination in the consolidated financial statements of the ultimate controller on the
combination date. The stock premium should be adjusted at the difference between the initial investment cost
of long-term equity investments on the combination date and the book value of long-term equity investments
before the combination plus the book value of consideration paid for additional shares; if there is no sufficient
stock premium for write-downs, the retained earnings are adjusted.
Business combination not under common control: The Company recognizes the combination cost determined
on the combination date as the initial cost of long-term equity investments. Where the Company can exercise
control over the investee not under common control for additional investments or other reasons, the initial
investment cost changed to be accounted for under the cost method should be recognized at the book value of
originally held equity investments plus costs of additional investments.
(2) Long-term equity investment acquired by other means
For a long-term equity investment acquired through making payments in cash, its initial cost is the actually
paid purchase cost.
For a long-term equity investment acquired from issuance of equity securities, its initial cost is the fair value of
the issued equity securities.
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If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out and
traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary
assets are determined based on the fair values of the assets traded out and the relevant taxes and surcharges
payable unless there is any conclusive evidence that the fair values of the assets traded in are more reliable; if
the exchange of non-monetary assets does not meet the above criteria, the book value of the assets traded out
and the relevant taxes and surcharges payable are recognized as the initial cost of long-term equity investment
traded in.
For a long-term equity investment acquired from debt restructuring, its initial cost is determined based on the
fair value.
5.13.3 Subsequent Measurement and Recognition of Gains and Losses
(1) Long-term equity investment accounted for under the cost method
Long-term equity investments in subsidiaries are accounted for under the cost method. Except for the actual
price paid for acquisition of investment or the cash dividends or profits contained in the consideration which
have been declared but not yet distributed, the Company recognizes the investment income in the current year
at the cash dividends or profits declared by the investee.
(2) Long-term equity investments accounted for under the equity method
Long-term equity investments in associates and joint ventures are accounted for under the equity method. If
the cost of initial investment is in excess of the proportion of the fair value of the net identifiable assets in the
investee when the investment is made, the difference will not be adjusted to the initial cost of the long-term
equity investments; if the cost of initial investment is in short of the proportion of the fair value of the net
identifiable assets in the investee when the investment is made, the difference will be included in the current
profit and loss.
The Company shall recognize the investment income and other comprehensive income at the shares of net
profit and loss and other comprehensive income realized by the investee which the Company shall enjoy or
bear and adjust the book value of long-term equity investments at the same time; the Company shall calculate
the shares according to profits or cash dividends declared by the investee and correspondingly reduce the book
value of long-term equity investments; the book value of long-term equity investments shall be adjusted
according to the investee's other changes in owner's equity other than net profit and loss, other comprehensive
income and profit distribution, which should be included in owner's equity.
The share of the investee's net profit or loss should be recognized after adjustments are made to net profit of
the investee based on the fair value of identifiable net assets of the investee upon acquisition of investments
and according to accounting policies and accounting period of the Company. When holding the investment, the
investee should prepare the consolidated financial statements, it shall account for the investment income based
on the net profit, other comprehensive income and the changes in other owner's equity attributable to the
investee.
When the Company recognizes its share of loss incurred to the investee, treatment shall be done in following
sequence: firstly, the book value of the long-term equity investment shall be reduced. Secondly, where the
book value thereof is insufficient to cover the share of losses, investment losses are recognized to the extent of
book value of other long-term equities which form net investment in the investee in substance and the book
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value of long term receivables shall be reduced. Finally, after all the above treatments, if the Company is still
responsible for any additional liability in accordance with the provisions stipulated in the investment contracts
or agreements, provisions are recognized and included into current investment loss according to the obligations
estimated to undertake.
(3) Disposal of long-term equity investments
For disposal of long-term equity investment, the difference between its book value and the actual price shall be
included in the current profit and loss.
For long-term equity investments accounted for under the equity method, when the Company disposes such
investments, accounting treatment should be made to the part that is originally included in other
comprehensive income according to the corresponding proportion by using the same basis for the investee to
directly dispose the relevant assets or liabilities. Owner's equity recognized at the changes in the investee's
other owner's equity other than net profit or loss, other comprehensive income and profit distribution shall be
transferred to the current profit and loss according to the proportion, except for other comprehensive income
from changes arising from re-measurement of net liabilities or net assets of defined benefit plan.
In case the joint control or significant influence over the investee is lost for disposing part of equity
investments or other reasons, the remaining equity will be changed to be accounted for according to the
recognition and measurement principles of financial instruments. The difference between the fair value and the
book value on the date of the loss of joint control or significant influence should be included in the current
profit and loss. For other comprehensive income recognized from accounting of the original equity
investments under the equity method, accounting treatment should be made by using the same basis for the
investee to directly dispose the relevant assets or liabilities when the equity method is no longer adopted.
Owner's equity recognized from the investee's changes in other owner's equity other than net profit or loss,
other comprehensive income and profit distribution should all transferred to the current profit and loss when
the equity method confirmed is no longer adopted.
In case the control over the investee is lost for disposing part of equity investments or other reasons, when the
Company prepares the individual financial statements, where the remaining equity after the disposal can
exercise joint control or significant effect on the investee, then such equity will be changed to be accounted for
under the equity method and the remaining equity is deemed to have been adjusted under the equity method on
acquisition; where the remaining equity after the disposal cannot exercise joint control or significant effect on
the investee, then accounting treatment shall be changed to be made according to the relevant provisions on the
recognition and measurement principles of financial instruments. The difference between the fair value and the
book value on the date of the loss of joint control or significant influence should be included in the current
profit and loss.
In case the disposed equity is acquired from additional investments or other reasons, when the Company
prepares the individual financial statements, where the remaining equity after the disposal is accounted for
under the cost method or the equity method, other comprehensive income and other owner's equity recognized
from the accounting of equity investments held before the acquisition date under the equity method shall be
transferred according to the proportion; where accounting treatment of the remaining equity after the disposal
is changed to be made according to the recognition and measurement principles of financial instruments, all of
other comprehensive income and other owner's equity shall be transferred.
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5.14 Investment Property
Investment properties are properties to earn rentals or for capital appreciation or both. Examples include land
leased out under operating leases, land held for long-term capital appreciation, buildings leased out under
operating leases, (including buildings that have been constructed or developed for future lease out under
operating leases, and buildings that are being constructed or developed for future lease out under operating
leases).
The Company adopts the cost model to measure all current investment properties. The Company adopts the
same depreciation policy for the investment property measured at cost model - building for renting as that for
the Company’s fixed assets and the same amortization policy of land use right for renting as that for the
Company’s intangible assets.
5.15 Fixed Assets
5.15.1 Recognition Criteria for Fixed Assets
Fixed assets refer to tangible assets held for the purpose of producing commodities, providing services, renting
or business management with useful lives exceeding one accounting year. Fixed assets will only be recognized
when all the following criteria are satisfied:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and
(2) The costs of the fixed asset can be measured reliably.
5.15.2 Depreciation Method
Depreciation Depreciation Life Residual Rate Annual Depreciation Rate
Category
Method (years) (%) (%)
Buildings and
Straight-line method 5-50 0-10 2.00-25.00
constructions
Machinery equipment Straight-line method 3-15 0-10 6.00-33.33
Transportation equipment Straight-line method 3-14 0-10 6.43-33.33
Electronic equipment Straight-line method 3-14 0-10 6.43-33.33
Renovations of fixed
Straight-line method 5-15 0 6.67-20.00
assets
Other equipment Straight-line method 3-14 0-10 6.43-33.33
Depreciation of fixed assets is provided on a category basis using the straight-line method. The depreciation
rates are determined according to the categories, estimated useful lives and estimated net residual rates of fixed
assets. If the components of a fixed asset have different useful lives or cause economic benefit for the
Company in different ways, different depreciation rate or method shall be adopted for depreciation on an
individual component basis.
5.15.3 Identification Basis and Pricing Method of Financing Lease Fixed Assets
If one of the following conditions is stipulated in the terms of the lease agreement signed between the
Company and the lessor, it is recognized as a leased asset under finance:
(1) The ownership of the leased assets after the lease expires belongs to the Company;
(2) The Company has the option to purchase assets. The purchase price is much lower than the fair value of the
assets when the option is exercised;
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(3) The lease period accounts for the majority of the useful life of the leased asset;
(4) The present value of the minimum lease payment on the lease start date is not significantly different from
the fair value of the asset.
At the beginning of the lease, the Company uses the lower of the fair value of the leased asset and the present
value of the minimum lease payments as the entry value of the leased asset, and uses the minimum lease
payment as the entry value of long-term payables. The difference is as unrecognized financing fee.
5.16 Construction in Progress
The book values of the construction in progress are stated at total expenditures incurred before reaching
working condition for their intended use. For construction in progress that has reached working condition for
intended use but relevant budgets for the completion of projects have not been completed, the estimated values
of project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, and
depreciation should be provided according to relevant policies of the Company when working condition is
reached. After the completion of budgets needed for the completion of projects, the estimated values should be
substituted by actual costs, but depreciation already provided is not adjusted.
5.17 Borrowing Costs
5.17.1 Recognition Criteria for Capitalization of Borrowing Costs
Borrowing costs include the interest on borrowings, the amortization of discount or premium, auxiliary
expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction or
production of assets eligible for capitalization should be capitalized and recorded into asset costs; other
borrowing costs should be recognized as costs according to the amount incurred and be included into current
profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets which
may reach their intended use or sale status only after long-time acquisition and construction or production
activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) The asset disbursements have already incurred, which shall include the cash paid, non-cash assets
transferred or interest bearing debts undertaken for the acquisition and construction or production activities for
preparing assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) Purchase, construction or manufacturing activities that are necessary to prepare the asset for its intended
use or sale have already started.
5.17.2 Capitalization Period of Borrowing Costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its
cessation; period of suspension for capitalization is excluded.
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When the qualified asset under acquisition and construction or production is ready for the intended use or sale,
the capitalization of the borrowing costs shall be ceased.
When some projects among the acquired and constructed or produced assets eligible for capitalization are
completed and can be used separately, the capitalization of borrowing costs of such projects should be ceased.
Where construction for each part of assets purchased, constructed or manufactured has been completed
separately but can be used or sold only after the entire assets have been completed, capitalization of
attributable borrowing costs should cease at the completion of the entire assets.
5.17.3 Period of Capitalization Suspension
If the acquisition and construction or production activities of assets eligible for capitalization are interrupted
abnormally and this condition lasts for more than three months, the capitalization of borrowing costs should be
suspended; if the interruption is necessary for the acquisition and construction or production to prepare the
assets for their intended use or sale, the capitalization of borrowing costs should continue. The borrowing costs
incurred during interruption are recognized in the current profit and loss, and the capitalization of borrowing
costs continues after the restart of the acquisition and construction or production activities of the assets.
5.17.4 Capitalization Rate and Measurement of Capitalized Amounts of Borrowing Costs
As for special borrowings borrowed for acquiring and constructing or producing assets eligible for
capitalization, the to-be-capitalized amount shall be determined at interest expense of special borrowing
actually incurred in the current period less the interest income of the borrowings unused and deposited in bank
or return on temporary investment.
As for general borrowings used for acquiring and constructing or producing assets eligible for capitalization,
the to-be-capitalized amount should be calculated by multiplying the weighted average of asset disbursements
of the part of accumulated asset disbursements exceeding special borrowings by the capitalization rate of used
general borrowings. The capitalization rate is calculated by using the weighted average interest rate of general
borrowings.
5.18 Biological Assets
Not applicable.
5.19 Oil and Gas Assets
Not applicable.
5.20 Intangible Assets
5.20.1 Measurement of Intangible Assets
(1) The Company initially measures intangible assets at cost on acquisition
The costs of external purchase of intangible assets comprise their purchase prices, related taxes and surcharges
and any other directly attributable expenditure incurred to prepare the asset for its intended use. If payments
for the purchase of intangible assets are extended beyond the normal credit terms with financing nature, the
costs of intangible assets are determined on the basis of present values of the purchase prices.
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For intangible assets obtained from debtors in settlement of his liabilities in case of debt restructuring, they
should be initially stated at their fair values. Differences between the book values and the fair values of the
intangible assets are charged to profit or loss for the current period.
If the exchange of non-monetary assets has commercial substance, and the fair values of these assets can be
measured reliably, the book-entry values of intangible assets traded in are based on the fair values of the
intangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded in
are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of the
intangible assets traded in should be the book values of the assets traded out and relevant taxes and surcharges
paid, and no profit or loss shall be recognized.
(2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
As for intangible assets with limited useful life, straight-line amortization method is adopted in the period
when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets
generate economic benefit for enterprise cannot be forecasted, the intangible assets shall be deemed as those
with indefinite useful life and shall not be amortized.
5.20.2 Estimate of the Useful Life of the Intangible Assets with Finite Useful Lives
Item Estimated Useful Lives
Land use right 50 years
Right to use trade mark 10 years
Patent and non-patent technology 4-8 years
Computer software 3-10 years
The useful lives and amortization methods of intangible assets with limited useful lives are reviewed at each
year end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year are not
different from those estimated before.
5.20.3 Specific Criteria Divided the Research Stage and Development Stage
Expenditure internal research and development project is divided into research expenditures and development
expenditures.
Research stage: the planned investigation and research activities to acquire and understand new scientific or
technological knowledge.
Development stage: before commercial production and use, the research findings or other knowledge are
applied in some plan or design to produce new or substantially improved materials, devices, products, etc.
5.20.4 Specific Criteria to Fulfill for Development Costs to be Capitalized
If it can be reliably estimated that future economic benefits will flow to the entity, and that the purchase and
production costs can be reliably measured, the development cost should be capitalized. The measurement of
production cost of internally generated intangible assets is based on direct cost, indirect cost and amortization.
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If it can be clearly defined that newly developed products or methods are technically feasible, and that they are
intended for private use or sale, the development cost should be capitalized. The capitalized development cost
should be amortized within a product’s expected 5 to 8 years’ life cycle, using a straight-line method. If the
value in use cannot be recognized, impairment and amortization should be carried out. Research cost and the
development cost which cannot be capitalized should be expense when it occurs.
5.21 Impairment of Long-term Assets
The Company will conduct the impairment test if any evidence suggests that the long-term assets, such as the
long-term equity investment and the investment property, fixed assets, construction in progress and intangible
assets, are impaired on the balance sheet date. If impairment test results indicate that the recoverable amounts
of the assets are lower than their carrying amounts, the provision for impairment is made based on the
differences which are recognized as impairment losses. The recoverable amount is the higher of the fair value
of the asset minus the disposal expenses and the present value of the estimated future cash flow of the asset.
The provision for assets impairment is calculated and recognized by the individual asset. If it is difficult to
estimate the recoverable amount of an individual asset, the Company shall estimate the recoverable amount of
the asset portfolio that the individual asset belongs to. The asset portfolio is the minimum asset group that can
independently generate the cash inflow.
Goodwill is tested for impairment at least at the end of each year.
The Company conducts an impairment test for the goodwill. The book value of goodwill arising from business
combinations is amortized to relevant asset groups with a reasonable method since the date of acquisition; or
amortized to relevant combination of asset groups if it is difficult to be amortized to relevant asset groups. The
book value of goodwill is amortized to relevant asset groups or combinations of asset groups according to the
proportion of the fair value of such asset groups or combinations of asset groups in the total fair value of
relevant asset groups or combinations of asset groups. Where the fair value cannot be reliably measured, it
should be amortized according to proportion of the book value of each asset group or combination of asset
group in the total book value of relevant asset groups or combinations of asset groups.
When making an impairment test on the relevant asset groups or combination of asset groups containing
goodwill, if any indication shows that the asset groups or combinations of asset groups related to the goodwill
may be impaired, the Company shall first conduct an impairment test on the asset groups or combinations of
asset groups not containing goodwill, calculate the recoverable amount and compare it with the relevant book
value to recognize the corresponding impairment loss. Then the Company shall conduct an impairment test on
the asset groups or combinations of asset groups containing goodwill, and compare the book value of these
asset groups or combinations of asset groups (including the book value of the goodwill apportioned thereto)
with the recoverable amount. Where the recoverable amount of the relevant asset groups or combinations of
asset groups is lower than the book value thereof, the Company shall recognize the impairment loss of the
goodwill. The above impairment loss is not reversed in the future accounting period once recognized.
5.22 Long-term Deferred Expenses
Not applicable.
5.23 Employee Compensation
5.23.1 Accounting Treatment of Short-term Remuneration
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Shang Gong Group Co., Ltd
During the accounting period in which employees provide service to the Company, the short-term
remuneration actually incurred is recognized as liabilities and charged to the current profit or loss or the
relevant assets cost.
The medical insurance premium, work-related injury insurance premium and the housing provident fund paid
by the Company for its employees, together with the labor union expenditures and employee education are
used to calculate and determine the relevant employee compensation amount based on the prescribed accrual
basis and accrual proportion.
The non-monetary benefits for employees that can be measured reliably are measured at fair value.
5.23.2 Accounting Treatment of Benefits Paid after Departure
(1) Defined withdrawal plan
The basic endowment insurance premium and unemployment insurance premium paid by the Company for its
employees in accordance with relevant provisions of the local government are recognized as liabilities and
charged to the current profit or loss or the relevant assets cost, with the payable amount calculated based on the
local prescribed payment base and percentage, during the accounting period in which the employees provide
services to the Company.
In addition to the basic endowment insurance, the Company also builds the enterprise annuity payment system
(supplementary pension insurance) in accordance with relevant national policies for enterprise annuity system.
The Company pays a certain percentage of the total employee compensation to the local social institution, and
record the relevant expenditures into the current profit or loss or the relevant assets cost.
(2) Defined benefit plan
The Company attributes the welfare obligation arising from the defined benefit plan to the period during which
the employees provide services, in accordance with the formula determined under the estimated accumulated
welfare unit method, and records the same into the current profit or loss or the relevant asset cost.
A net liability or net asset in relation to the defined benefit plan is recognized at the present value of the
obligation under the defined benefit plan less the deficit or surplus arising out of the fair value of the assets in
relation to the defined benefit plan. Where the defined benefit plan has any surplus, the Company will
determine the net assets in relation to the defined benefit plan at the lower of the surplus of the defined benefit
plan or the asset cap.
The obligations under the defined benefit plan, including the estimated payment obligation within 12 months
following the annual report period during which the employees provide service, are discounted to the present
value at the market return of the national debt of which the term and currency match those of the obligation
under the defined benefit plan on the balance sheet date, or of the high-quality corporate debt in an active
market.
The service cost incurred by the defined benefit plan, together with the net interest on the net liability or net
asset in relation to the defined benefit plan, are charged to the current profit or loss or the relevant asset cost;
the change arising from the re-measurement of the net liability or net asset in relation to the defined benefit
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plan are recorded into other comprehensive income and are not reversed to the profit or loss in the subsequent
accounting period.
The gains or losses on the settlement in respect of the defined benefit plan are recognized at the difference
between the present value and the settlement price of the obligation under the defined benefit plan on the
settlement date.
5.23.3 Accounting Treatment of Dismissal Welfare
Where the Company cannot unilaterally withdraw the dismissal welfare offered in view of the cancellation of
the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the restructuring
involving the payment of dismissal welfare (whichever is earlier), the employee compensation arising from the
dismissal welfare should be recognized as the liabilities and charged to the current profit or loss.
5.24 Estimated Liabilities
5.24.1 Recognition Criteria for Estimated Liabilities
The Company should recognize an obligation in relation to contingencies as an estimated liability, such as the
litigation, debt guarantee, loss-making contract or restructuring, when all the following conditions are
satisfied:
(1) The obligation is a present obligation of the Company;
(2) The performance of such obligation is likely to result in outflow of economic benefits from the Company;
(3) The amount of the obligation can be measured reliably.
5.24.2 Measurement of Estimated Liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required for
the performance of relevant present obligations.
The risks, uncertainties, time value of money, and other factors relating to the contingencies. If the time value
of money is significant, the best estimates shall be determined after discount of relevant future cash outflows.
The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all the
outcomes within this range are equal, the best estimate shall be determined at the average amount of upper and
lower limits within the range.
Given the fact that there is no continuous range (or interval) for the necessary expenses, or probabilities of
occurrence of all the outcomes within this range are unequal despite such a range exists, in case that the
contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the
contingency involves two or more items, the best estimate should be determined according to all the possible
outcomes with their relevant probabilities.
When all or part of the expenses necessary for the settlement of an estimated liabilities are expected to be
compensated by a third party or other parties, the compensation shall be separately recognized as an asset only
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when it is virtually certain that the compensation will be received. The amount recognized for the
compensation shall not exceed the book value of the estimated liabilities.
5.25 Share Payment
Not applicable.
5.26 Other Financial Instruments such as Preferred Shares and Perpetual Bonds
Not applicable.
5.27 Incomes
5.27.1 Specific Criteria for Determining the Timing of Income Recognition for Sales of Goods
The Company will confirm that the sales income of the goods is realized when the Company has transferred
the major risks and rewards of ownership of the goods to the purchaser; the Company does not retain the right
to continue management linked to ownership, nor does it have effective control over the products sold; the
amount of income can be measured reliably; the related costs incurred or to be incurred can be reliably
measured.
The specific judgment criteria are as follows:
(1) Domestic sales: After the delivery of the goods, the Company confirms the sales income. According to the
delivery method agreed in the sales order, the detailed standards for income recognition are:
When the customer goes directly to the warehouse of the Company to pick up goods, based on the outbound
documents confirmed by the parties in various ways, the income is confirmed when the goods leave the
warehouse.
When the customer appoints a carrier, based on the logistics document issued by the carrier, income is
recognized when the goods are delivered to the carrier.
When the Company appoints a carrier, based on the logistics receipts signed and confirmed by the customer,
income is recognized when the customer actually signs the receipt.
When the Company sells through the e-commerce platform, income is recognized when the electronic order
received by the customer to confirm the receipt or the e-commerce receipt period expires.
If an unconditional return period or acceptance period has been agreed upon, the income recognition will be
delayed to the expiry of unconditional return periodor acceptance period.
For sales on behalf of distributors, the income is recognized when the dealership list with the final customer
confirmation is received.
(2) International sales: If choose to apply international trade terms, sale income is recognized according to the
time point of risk transfer agreed in the specific applicable international trade terms. If an unconditional return
period or acceptance period is agreed upon, the income recognition will be extended to the unconditional
return period or the acceptance period after meeting the applicable trade term risk transfer point. If no
international trade terms have been selected, the Company will recognize income after obtaining various types
of risk transfer documents according to the agreed delivery method and the time of risk transfer.
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(3) Sales of specialized sewing machine: As the customer has deeply customized the machine, according to the
relevant agreement in the contract signed by both parties, the specific delivery obligations under each technical
clause are distinguished, and the corresponding income is confirmed according to the completion of the
customer demand and the relevant confirmation documents.
5.27.2 Recognition of Income from Transfer of Assets Use Right
When the economic benefit related to the transaction is probably to flow into the Company and the relevant
income can be reliably measured, the income from transfer of the assets use right is determined as follows:
(1) Interest income is measured based on the length of time for which the Company's monetary funds is used
by others and the applicable interest rate;
(2) Royalty income is measured according to the period and method of charging as stipulated in the relevant
agreements or contracts.
5.27.3 Measurement Principles and Methods of Completion Stage where Revenues from Rendering of
Labor are Recognized under Percentage-of-completion Method
The Company confirmed the income from the labor service when obtain the written settlement confirmation
from the customer and issue the settlement certificate.
If the outcome of transactions can be estimated reliably at the balance sheet date, income from rendering of
labor service is recognized under the percentage-of-completion method. The percentage of completion is
determined by measurement of completed work as a percentage of total estimated costs.
Income from rendering of labor service is determined by prices stated in the contracts or agreements, whether
already received or to be received, unless such relevant prices are unfair. The current income from the
rendering of labor service is recognized at the amount of multiplying the total income from the rendering of
labor service by completion progress and deducting the accumulated income from the rendering of labor
service recognized in previous accounting periods on the balance sheet date; meanwhile, the current cost of
labor service is carried forward by the amount of multiplying the total costs of the rendering of labor service
by completion progress and deducting the accumulated cost from the rendering of labor services recognized in
previous accounting periods.
When the outcome of transactions involving the rendering of services cannot be estimated reliably, income is
recognized and measured at the balance sheet date as follows:
(1) If the service costs incurred are expected to be fully recoverable, the amounts equal to the labor costs
incurred shall be recognized as incomes and the equivalent amounts of labor costs shall be carried forward;
(2) If the service costs incurred are not expected to be fully recoverable, the labor costs incurred shall be
included in the current profit and loss, with no income from the rending of labor services not recognized.
The Company's income from logistics service and sewing equipment maintenance services is recognized when
related services have been provided, service costs have actually occurred, and service settlement documents
confirmed by the service recipient have been obtained.
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Shang Gong Group Co., Ltd
5.28 Government Grants
5.28.1 Types
Government grants refer to the monetary or non-monetary assets obtained by the Company from the
government for free. Government grants are classified into government grants related to assets and government
grants related to income.
Government grants related to assets refer to government grants obtained by the Company that are used to
purchase, construct or form long-term assets, including financial allocations for purchases of fixed assets or
intangible assets, and financial discounts for special loans for fixed assets. Government grants related to
income refer to government grants other than those related to assets.
The Company's specific criteria for classifying government grants as related to assets are: government grants
obtained by the Company that are used to purchase, construct or form long-term assets.
The Company's specific criteria for classifying government grants as related to income are: government grants
other than those related to assets.
If the government documents do not clearly specify the target of the grant, the judgment basis of classifying
the government grant as related to the assets or related to the income is whether it is used to purchase or
construct or form long-term assets.
5.28.2 Accounting Treatment
Government grants related to assets: write down the carrying amount of the related assets or recognize them as
deferred income. If it is recognized as deferred income, it shall be recorded into current profits and losses in a
reasonable and systematic way within the useful life of the relevant assets (related to the Company's daily
activities, included in other income; unrelated to the Company's daily activities, included in non-operating
income).
Government grants related to income: grants used to compensate for the related costs or losses of the Company
in the future period, shall be recognized as deferred income, and shall be recorded in the current profits and
losses (related to the Company's daily activities, included in other income; unrelated to the Company's daily
activities, included in non-operating income), or be used to reduce the related costs, expenses or losses during
the period for confirming the relevant costs, expenses or losses.
5.29 Deferred Income Tax Assets and Deferred Income Tax Liabilities
Deferred income tax assets shall be recognized for deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be utilized.
Deferred income tax assets should be recognized for deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences can be
utilized.
Taxable temporary differences are recognized as deferred income tax liabilities except in special
circumstances.
Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not be
recognized include: the initial recognition of goodwill; other transactions or events excluding business
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combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when
occurred.
If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and
discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the
current period shall be presented based on the net amount after offset.
When the Company has the legal rights to balance income tax assets and income tax liabilities for the current
period with net settlement, and deferred income tax assets and deferred income tax liabilities are related to the
income tax which are imposed on the same taxpaying subject by the same tax collection authority or on
different tax paying subjects, but, in each important future period in connection with the reverse of deferred
income tax assets and liabilities, the involved tax paying subject intends to balance income tax assets and
liabilities for the current period with net settlement at the time of obtaining assets and discharging liabilities,
deferred income tax assets and deferred income tax liabilities shall be presented based on the net amount after
offset.
5.30 Lease
5.30.1 Accounting Treatment of Operating Lease
(1) Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the whole
lease period (including rent-free period) and shall be included in the current expenses. Initial direct costs
relating to lease transactions incurred by the Company shall be recognized as the current expenses.
If the expense related to the lease which shall be paid by the Company is assumed by the lessor of the asset,
then such expenses shall be deducted from total lease fees, and the balances shall be amortized over the lease
term s and charged to the current expenses.
(2) The lease fees received for the assets acquired under lease shall be recognized as current expenses over the
lease terms (including rent-free periods) on a straight-line basis. The initial direct costs related to lease
transactions paid by the Company, included in the current expenses; if a larger amount is to be capitalized,
according to confirm the same basis throughout the period of the lease installments related to the lease income
is recognized in profit gains.
If expenses relating to leases which should be borne by the lessee of the assets are paid by the Company, they
shall be deducted from the total lease income and the balances shall be amortized over the lease terms by the
Company.
5.30.2 Accounting Treatment of Financial Lease
(1) Assets rented in by financial lease: At the beginning of the lease, the Company uses the lower of the fair
value of the leased assets and the present value of the minimum lease payments as the entry value of the leased
assets, and uses the minimum lease payment as the entry value of the long-term payables. The difference is
used as unrecognized financing expenses. The Company adopts the actual interest rate method to amortize the
unrecognized financing expenses during the asset lease period and count it into financial expenses. The initial
direct costs incurred by the company are included in the value of the leased assets.
(1) Assets rented out by financial lease: At the lease beginning date, the Company recognizes the financial
lease receivables, difference between the sum of unguaranteed residual value and its current value as
unrealized financing income. It is recognized as lease income in each period during which rent is received in
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
the future. The initial direct costs incurred by the Company in relation to the lease transaction are included in
the initial measurement of the financial lease receivable, and the amount of income recognized in the lease
period is reduced.
5.31 Discontinued Operation
Discontinued operation is the component that meets any of the following conditions, is disposed or classified
as the held-for-sale one and can be separately distinguished at the time of preparation of financial statements:
(1) Such component represents an independent primary business or a major business area;
(2) Such component is part of the disposition plan for an independent primary business or a major business
area;
(3) Such component is a subsidiary acquired for just re-sale.
5.32 Adjustment for Changes in Principal Accounting Policies and Accounting Estimates
5.32.1Adjustment for Changes in Accounting Policies
Approval
The Content and Reasons of Accounting Policy Changes Item and Amount Affected
Procedure
The amount of net profit for continuing
(1) \"Net profit from continuing operations\" and \"net profit operations for the current year was
from discontinued operations \" are listed in the income 212,652,989.02 yuan; and the amount of net
statement. Comparison data is adjusted accordingly. profit for discontinued operations was 0.00
yuan for the current year.
(2) Some government grants related to assets offset the book
N/A
value of related assets. Comparison data is not adjusted.
(3) Some government grants related to income have reduced
the related costs and expenses. Comparison data is not The Fourth N/A
adjusted. Session of the
Eighth Board
(4) Government grants related to the company's daily
of Directors Non-operating income decreased by
activities are included in other income and are no longer
11,713,174.75 yuan and was reclassified to
included in non-operating income. Comparison data is not
other income.
adjusted.
(5) Added \"gains on disposal of assets\" in the income
statement, and reclassified some of the profit and loss of Non-operating income decreased by
asset disposal originally listed as \"non-operating income\" to 23,963,103.89 yuan and was reclassified to
the \"gains on disposal of asset\". Comparison data is adjusted asset disposal income.
accordingly。
On 28th April 2017, the Ministry of Finance issued a revised version of the \"Accounting Standards for
Business Enterprises No. 42 - Non-current Assets for Sale, Disposal Group, and Termination of Operations\"
(Cai Kuai [2017] No. 13) (hereinafter referred to as \"Revised Standard No. 42\").
On 10th May 2017, the Ministry of Finance issued a revised version of the \"Accounting Standards for Business
Enterprises No. 16 - Government Subsidies\" (Cai Kuai [2017] No. 15) (hereinafter referred to as \"Revised
Standard No. 16\").
On 25th December 2017, the Ministry of Finance issued a revised version of the \"General Enterprise Financial
Statement Format\" (Cai Kuai [2017] No. 30) (hereinafter referred to as the \"Revised Report Format\").
According to the requirements of the Ministry of Finance, Revised Standard No. 42 shall be implemented as of
28th May 2017; Revised Standard No. 16 shall be implemented as of 12th June 2017; non-financial enterprises
that require the implementation of Accounting Standards for Business Enterprises should follow the revised
format of the report. The Accounting Standards for Business Enterprises and the above requirements prepare
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
financial statements for the 2017 and subsequent periods. The Revised Report Format requires that
non-financial companies that implement the Accounting Standards for Business Enterprises should prepare
financial statements for 2017 and subsequent periods in accordance with the Accounting Standards for
Business Enterprises and the above requirements.
5.32.2 Adjustment for Changes in Principal Accounting Estimates
Not applicable
6. Tax
Tax Type Basis of Tax Assessment Tax Rate
Calculated based on the income from sales of goods and the provision of
Value-added tax taxable labor services according to tax law, and value added tax payable 3%、5%、6%、7%、11%、
(VAT) should be the balance of the output tax for the period after deducting the 13%、17%、19%
deductible input tax for the period.
Levied based on the taxable income (reclassified to VAT from 1 st May
Business tax 5%
2016)
Urban maintenance
Levied based on the actual payment of business tax and VAT. 1%、5%、7%
and construction tax
Enterprise income tax
Levied based on the taxable income 16%-38%、25%
(EIT)
Education surtax and
Levied based on the actual payment of business tax and VAT. 2%、3%
local education sutax
Note: The EIT rate applicable to DAP AG, a subsidiary of the Company, and its subsidiaries in the scope of
consolidation varies in a range from16% to 38%; and the VAT rate is 19%.
7. Notes to Items of Consolidated Financial Statements
7.1 Cash and Cash Equivalents
Unit: Yuan, Currency: RMB
Item Ending Balance Beginning Balance
Cash on hand 707,925.98 1,137,409.87
Bank deposit 712,794,196.15 751,831,391.58
Other monetary funds 9,835,756.40 10,686,903.12
Total 723,337,878.53 763,655,704.57
Including: total amount of cash and cash equivalents offshore 373,357,927.57 463,089,363.62
Details of cash and cash equivalents restricted for use due to mortgage, pledge or freezing are follows:
Unit: Yuan, Currency: RMB
Item Ending Balance Beginning Balance Note
Bank Acceptance Deposit Guarantee 6,539,032.60 Note 1
Deposit held for foreign exchange inspection 2,585,125.48 9,977,839.70 Note 2
Other guaranteed deposit 400,000.00 3,319,935.24 Note 3
Total 9,524,158.08 13,297,774.94
Note 1: The ending balance was the monetary fund that could not be withdrawn at any time due to the opening
of bank acceptance bills by Zhejiang ShangGong GEMSY Co., Ltd., a subsidiary of the Company.
Note 2: The ending balance was the retained funds obtained by the Company's subsidiary Shanghai Butterfly
Import & Export Co., Ltd. in the import and export trade that have not been transferred to the general trading
accounts and have not been reviewed by the competent foreign exchange authorities.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Note 3: The ending balance was a fraud guarantee for the Company's subsidiary, Shanghai Butterfly Import &
Export Co., Ltd.
7.2 Financial Assets at Fair Value whose Fluctuation is Attributed to Profit and Loss for Current Period
Unit: Yuan, Currency: RMB
Item Ending Balance Beginning Balance
Trading financial assets 4,000.00
Of which: Debt instrument investment
Equity instrument investment 4,000.00
Derivative financial asset
Others
Financial assets measured at fair value and
the changes are recorded into current
period profit or loss
Of which: Debt instrument investment
Equity instrument investment
Other financial asset
Total 4,000.00
7.3 Derivative Financial Assets
Not applicable.
7.4 Notes Receivable
7.4.1 Presentation of Notes Receivable by Category
Unit: Yuan, Currency: RMB
Item Ending Balance Beginning Balance
Bank acceptance bills 47,405,556.75 51,427,934.60
Commercial acceptance bills 13,931,982.12 27,413,513.45
Total 61,337,538.87 78,841,448.05
7.4.2 Notes Receivable Pledged as at the End of Period
Not applicable.
7.4.3 Notes Receivable Endorsed or Discounted at the End of the Period and Have not yet Expired at the
Balance Sheet Date
Unit: Yuan, Currency: RMB
Termination Amount as at 31st December Unterminated Confirmation Amount as at
Item
2017 31st December 2017
Bank acceptance bills 8,960,630.50
Commercial acceptance bills
Total 8,960,630.50
7.4.4 Notes Receivable Transferred to Accounts Receivable Due to the Issuer's Performance Failure
Not applicable.
7.5 Accounts Receivable
7.5.1 Disclosure of Accounts Receivable by Category
Unit: Yuan, Currency: RMB
Type Ending Balance Beginning Balance
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Book Balance Provision for Bad Debt Book Balance Provision for Bad Debt
Book Value Book Value
Amount % Amount % Amount % Amount %
Accounts receivable
with significant
individual amount
and provision for bad
79,818,629.27 13.64 19,622,784.50 24.58 60,195,844.77 69,228,371.46 13.86 18,376,602.00 26.54 50,851,769.46
debt is accrued
separately
Accounts receivable
with provision for
bad debt accrued by
credit risk
119,721,460.79 20.46 72,220,264.69 60.32 47,501,196.10 124,946,418.14 25.02 73,206,008.31 58.59 51,740,409.83
characteristics of a
portfolio
Accounts receivable
with insignificant
individual amount
but provision for bad
385,572,745.19 65.90 28,510,405.86 7.39 357,062,339.33 305,199,419.71 61.12 18,538,920.13 6.07 286,660,499.58
debt is accrued
separately
Total 585,112,835.25 100.00 120,353,455.05 20.57 464,759,380.20 499,374,209.31 100.00 110,121,530.44 22.05 389,252,678.87
Accounts receivable with significant individual amount and provision for bad debt is accrued separately at the
end of the period
Unit: Yuan, Currency: RMB
Accounts Ending Balance
Receivable (By Provision for Bad Proportion of
Entity) Accounts Receivable Reason for Provision
Debt Provision
No.1 Client 41,751,207.57 Unimpaired according to the separate test
No.2 Client 19,622,784.50 19,622,784.50 100.00 Impaired according to the separate test
No.4 Client 9,745,072.70 Unimpaired according to the separate test
No.5 Client 8,699,564.50 Unimpaired according to the separate test
Total 79,818,629.27 19,622,784.50 24.58
Accounts receivable with provision for bad debt accrued using the aging analysis method in the portfolio
Unit: Yuan, Currency: RMB.
Ending Balance
Aging
Accounts Receivable Provision for Bad Debt Proportion of Provision
Within 1 year 45,299,416.78 2,264,970.84 5.00
1-2 years 3,688,485.16 737,697.03 20.00
2-3 years 3,031,924.08 1,515,962.05 50.00
Over 3 years 67,701,634.77 67,701,634.77 100.00
Total 119,721,460.79 72,220,264.69
Accounts receivable with insignificant individual amount but provision for bad debt is accrued separately
Unit: Yuan, Currency: RMB.
Ending Balance
Accounts Receivable (By Entity) Accounts Provision for Bad Proportion of
Reason for Provision
Receivable Debt Provision
Other insignificant accounts Impaired according to the
20,647,948.45 10,670,483.15 51.68
receivable (Note 1) separate test
Other insignificant accounts Impaired according to the
6,031,883.13 6,031,883.13 100.00
receivable (Note 2) separate test
Other insignificant accounts Impaired according to the
15,563,578.80 1,160,999.34 7.46
receivable (Note 3) separate test
Other insignificant accounts Impaired according to the
1,144,337.06 1,144,337.06 100.00
receivable (Note 4) separate test
Other insignificant accounts Impaired according to the
11,610.00 11,610.00 100.00
receivable (Note 5) separate test
Other insignificant accounts Impaired according to the
223,997,532.39 8,709,984.40 3.89
receivable (Note 6) separate test
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Ending Balance
Accounts Receivable (By Entity) Accounts Provision for Bad Proportion of
Reason for Provision
Receivable Debt Provision
Other insignificant accounts Impaired according to the
8,016,249.56 781,108.78 9.74
receivable (Note 7) separate test
Other insignificant accounts Unimpaired according to the
109,953,389.35
receivable (Note 8) separate test
Other insignificant accounts Unimpaired according to the
195,309.60
receivable (Note 9) separate test
Other insignificant accounts Unimpaired according to the
10,906.85
receivable (Note 10) separate test
Total 385,572,745.19 28,510,405.86 7.39
Note 1: It mainly represents the accounts receivable due from Shang Gong Group Co., Ltd., and the provision
for impairment is accrued based on the separate test.
Note 2: It mainly represents the accounts receivable due from SG Butterfly, and the provision for impairment
is accrued based on the separate test.
Note 3: It mainly represents the accounts receivable due from the subsidiary, DAP (Shanghai) Co., Ltd., and
the provision for impairment is accrued based on the separate test.
Note 4: It mainly represents the accounts receivable due from the subsidiary, Shanghai SMPIC Import &
Export Co., Ltd., and the provision for impairment is accrued based on the separate test.
Note 5: It mainly represents the accounts receivable due from Shanghai SGSB Electronics Co., Ltd., and the
provision for impairment is accrued based on the separate test.
Note 6: It mainly represents the accounts receivable due from the subsidiary, DAP AG, and the provision for
impairment is accrued based on the separate test.
Note 7: It mainly represents the accounts receivable due from SGGEMSY, and the provision for impairment is
accrued based on the separate test.
Note 8: It mainly represents the accounts receivable due from the subsidiary, Shanghai Shensy Enterprise
Development Co., Ltd, and is unimpaired based on the separate test.
Note 9: It mainly represents the accounts receivable due from PIZ, and is unimpaired based on the separate
test.
Note 10: It mainly represents the accounts receivable due from DAP Vietnam Co., Ltd., and the provision for
impairment is accrued based on the separate test.
7.5.2 The Accrual, Reversal or Recovery of the Provision for Bad Debts in the Current Period
The provision for bad debts accrued in the current period is 12,471,244.93 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 1,637,011.43 yuan.
7.5.3 Accounts Receivable Actually Write-off in the Current Period
Unit: Yuan, Currency: RMB.
Item Amount
Accounts receivable actually write-off 2,529,111.33
7.5.4 Top Five Accounts Receivable in Terms of their Ending Balance
Unit: Yuan, Currency: RMB.
Ending Balance
Company Name Proportion in Total Accounts Receivable Provision for Bad
Accounts Receivable
Ratio (%) Debt
No.1 Client 41,751,207.57 7.14
No.2 Client 19,622,784.50 3.35 19,622,784.50
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Ending Balance
Company Name Proportion in Total Accounts Receivable Provision for Bad
Accounts Receivable
Ratio (%) Debt
No.3 Client 11,530,775.39 1.97 11,530,775.39
No.4 Client 9,745,072.70 1.67
No.5 Client 8,699,564.50 1.49
Total 91,349,404.66 15.62 31,153,559.89
See Note 12.6 for details of accounts receivable due from related parties.
7.6 Prepayment
7.6.1Presentation of Prepayments by Aging
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Aging
Book Balance Proportion (%) Book Balance Proportion (%)
Within 1 year 58,228,035.05 90.44 24,955,584.89 74.03
1-2 years 9,442.01 0.00 7,892,719.27 23.41
2-3 years 6,153,752.47 9.56 839,461.69 2.49
Over 3 years 2,398.18 0.00 21,591.26 0.07
Total 64,393,627.71 100.00 33,709,357.11 100.00
7.6.2 Top Five Prepayments to Suppliers in Terms of their Ending Balance
Unit: Yuan, Currency: RMB.
Proportion in Total Ending Balance of Advances to
Supplier Ending Balance
Suppliers (%)
No.1 Supplier 36,390,000.00 56.51
No.2 Supplier 6,147,650.83 9.55
No.3 Supplier 3,819,458.22 5.93
No.4 Supplier 2,885,842.02 4.48
No.5 Supplier 1,821,397.40 2.83
Total 51,064,348.47 79.30
7.6.3 For the arrearage of related parties in the prepayments at the end of the period, please refer to
Note 12.6 Receivables and payables due from related parties.
7.7 Interest Receivable
7.7.1 Classification of Interest Receivable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Fixed deposit 21,645.73
Total 21,645.73
7.7.2 Significant Overdue Interest
Not applicable.
7.8 Dividends Receivable
Not applicable.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
7.9 Other Receivables
7.9.1 Disclosure of Other Receivables by Category
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Type Book Balance Provision for Bad Debt Book Balance Provision for Bad Debt
Book Value Book Value
Amount % Amount % Amount % Amount %
Other receivables
with significant
individual amount
30,666,334.88 33.51 13,304,781.50 43.39 17,361,553.38 32,993,470.54 41.20 12,600,914.20 38.19 20,392,556.34
and provision for
bad debt is accrued
separately
Other receivables
with provision for
bad debt accrued by
24,977,450.21 27.29 16,622,435.95 66.55 8,355,014.26 19,082,416.29 23.83 16,077,736.42 84.25 3,004,679.87
credit risk
characteristics of a
portfolio
Other receivables
with insignificant
individual amount
35,869,414.39 39.20 2,641,570.82 7.36 33,227,843.57 28,014,947.49 34.97 527,110.22 1.88 27,487,837.27
but provision for
bad debt is accrued
separately
Total 91,513,199.48 100.00 32,568,788.27 35.59 58,944,411.21 80,090,834.32 100.00 29,205,760.84 36.47 50,885,073.48
Other receivables with significant individual amount and provision for bad debt is accrued separately at the
end of period
Unit: Yuan, Currency: RMB.
Ending Balance
Other Receivables (By
Entity) Provision for Bad Proportion of
Other Receivables Reason for Provision
Debt Provision
Impaired according to the
No.1 Client 13,304,781.50 13,304,781.50 100.00
separate test
Export tax refund receivable Unimpaired according to the
8,121,553.38
(Note) separate test
Unimpaired according to the
No.3 Client 3,500,000.00
separate test
Unimpaired according to the
No.4 Client 3,000,000.00
separate test
Unimpaired according to the
No.5 Client 2,740,000.00
separate test
Total 30,666,334.88 13,304,781.50 43.39
Note: It mainly represents the export tax refund receivable arising from the export sale by the subsidiary, and
is unimpaired according to the separate impairment test.
Other receivables with provision for bad debt accrued using the aging analysis method in the portfolio:
Unit: Yuan, Currency: RMB.
Ending Balance
Aging
Other Receivables Provision for Bad Debt Proportion of Provision%
Within 1 year 8,034,184.02 401,709.20 5.00
1-2 years 667,040.40 133,408.08 20.00
2-3 years 377,814.25 188,907.13 50.00
Over 3 years 15,898,411.54 15,898,411.54 100.00
Total 24,977,450.21 16,622,435.95 66.55
Other receivable with insignificant individual amount but provision for bad debt is accrued separately at the
end of period
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Unit: Yuan, Currency: RMB.
Other Receivables (By Ending Balance
Entity) Book Balance Provision for Bad Debt Proportion of Provision (%) Reason for Provision
Other insignificant other Impaired according to the
1,647,874.55 21,735.00 1.32
receivables (Note 1) separate test
Other insignificant other Impaired according to the
2,181,041.30 1,780,485.31 81.63
receivables (Note 2) separate test
Other insignificant other Unimpaired according to
346,704.55
receivables (Note 3) the separate test
Other insignificant other Impaired according to the
50,000.00 50,000.00 100.00
receivables (Note 4) separate test
Other insignificant other Unimpaired according to
28,574.10
receivables (Note 5) the separate test
Other insignificant other Unimpaired according to
10,688,388.20
receivables (Note 6) the separate test
Other insignificant other Impaired according to the
20,915,202.57 789,350.51 3.77
receivables (Note 7) separate test
Other insignificant other Unimpaired according to
1,484.95
receivables (Note 8) the separate test
Other insignificant other Unimpaired according to
10,144.17
receivables (Note 9) the separate test
Total 35,869,414.39 2,641,570.82 7.36
Note 1: It mainly represents the other receivables of SGG, and the provision for impairment is accrued based
on the separate test.
Note 2: It mainly represents the other receivablesof SG Butterfly, and the provision for impairment is accrued
based on the separate test.
Note 3: It mainly represents the other receivablesof DAPSH, which is unimpaired based on the separate test.
Note 4: It mainly represents the other receivables of Shanghai SGSB Electronics Co., Ltd., and the provision
for impairment is accrued based on the separate test.
Note 5: It mainly represents the other receivablesof Shanghai ShangGong Asset Management Co., Ltd., which
is unimpaired based on the separate test.
Note 6: It mainly represents the other receivablesof DAP AG, which is unimpaired based on the separate test.
Note 7: It mainly represents the other receivables of SHENSY, and the provision for impairment is accrued
based on the separate test.
Note 8: It mainly represents the other receivablesof PIZ, which is unimpaired based on the separate test.
Note 9: It mainly represents the other receivablesof DAP Vietnam Co., Ltd., which is unimpaired based on the
separate test.
7.9.2 The Accrual, Reversal or Recovery of the Provision for Bad Debts in the Current Period
The provision for bad debts accrued in the current period is 3,504,981.96 yuan. The amount reversed or
recovered of the provision for bad debts in the current period is 83,517.20 yuan.
7.9.3 Other Receivables Actually Write-off in the Current Period
Unit: Yuan, Currency: RMB.
Item Amount
Other receivables actually write-off 106,718.01
7.9.4 Top Five Other Receivables in Terms of their Ending Balance
Unit: Yuan, Currency: RMB.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Proportion in the
Provision for Bad
Ending Balance of
Company Name Nature Ending Balance Aging Debt
Total Other Receivable
Ending Balance
(%)
From within
No.1 Client Current accounts 13,304,781.50 1year to over 3 14.54 13,304,781.50
years
Export tax
No.2 Client refund 8,121,553.38 Within 1year 8.87
receivable
No.3 Client Current accounts 3,500,000.00 Within 1year 3.82
No.4 Client Current accounts 3,000,000.00 Within 1year 3.28
No.5 Client Current accounts 2,740,000.00 Within 1year 3.00
Total 30,666,334.88 33.51 13,304,781.50
7.9.5 Receivables Involving Government Grants
Not applicable.
7.9.6 Other Receivables Derecognized due to the Transfer of Financial Assets
Not applicable.
7.9.7 Amount of Assets and Liabilities Transferred from Other Receivables and Continue to be Involved
Not applicable.
7.9.8 For details of the arrears of related parties in other receivables at the end of the period, please
refer to Note12.6 Receivables and payables of related parties.
7.10 Inventories
7.10.1 Classification of Inventories
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Raw
285,435,138.31 52,813,472.76 232,621,665.55 244,335,565.64 41,630,636.86 202,704,928.78
materials
Goods in
153,406,126.71 28,555,276.42 124,850,850.29 136,310,148.14 27,492,514.68 108,817,633.46
progress
Finished
283,033,493.86 39,909,017.40 243,124,476.46 267,450,476.53 39,117,293.46 228,333,183.07
goods
Revolving
1,427,640.89 1,427,640.89 1,221,161.27 1,221,161.27
materials
Dispatched
20,569,892.77 20,569,892.77 7,972,002.36 7,972,002.36
goods
Material
32,250.55 32,250.55
purchase
Labor costs 79,273,391.31 79,273,391.31 114,082,013.31 114,082,013.31
Consigned
processing 3,273,904.32 3,273,904.32 603,268.15 603,268.15
materials
合计 826,419,588.17 121,277,766.58 705,141,821.59 772,006,885.95 108,240,445.00 663,766,440.95
7.10.2 Inventory Depreciation Reserve.
Unit: Yuan, Currency: RMB.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Increase in Current Period Decrease in Current Period
Item Beginning Balance Reversal or Ending Balance
Provision Others Others
write-off
Raw
41,630,636.86 8,400,620.91 4,458,446.12 1,676,231.13 52,813,472.76
materials
Goods in
27,492,514.68 362,221.36 1,826,791.10 1,126,250.72 28,555,276.42
progress
Finished
39,117,293.46 4,391,909.51 2,083,801.36 5,460,116.02 223,870.91 39,909,017.40
goods
Total 108,240,445.00 13,154,751.78 8,369,038.58 8,262,597.87 223,870.91 121,277,766.58
7.10.3 Explanation of the Amount of Capitalization of Borrowing Costs in the Ending Balance of
Inventory
Not applicable.
7.11 Assets Held for Sale
Not applicable.
7.12 Non-Current Assets Maturing within One Year
Not applicable.
7.13 Other Current Assets
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Held-to-maturity investments 10,288,261.77
Input tax to be credited 31,638,470.24 11,164,758.87
Rentals and insurance fees 1,592,432.66 1,529,650.89
Overpaid enterprise income tax 902,284.30 1,946,694.20
Financial products 50,000,000.00
Structured deposit 332,000,000.00 282,000,000.00
Unamortized expense 400,169.64 489,181.62
Total 366,533,356.84 357,418,547.35
7.14 Available-for-sale Financial Assets
7.14.1 Available-for-sale Financial Assets
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Available for
sale debt
instruments
Available for
sale equity 120,658,075.96 1,698,131.91 118,959,944.05 138,917,378.02 1,698,131.91 137,219,246.11
instruments
Including:
Measured at 89,721,694.56 89,721,694.56 107,980,989.31 107,980,989.31
fair value
Measured at
30,936,381.40 1,698,131.91 29,238,249.49 30,936,388.71 1,698,131.91 29,238,256.80
cost
Total 120,658,075.96 1,698,131.91 118,959,944.05 138,917,378.02 1,698,131.91 137,219,246.11
7.14.2 Available-for-sale Financial Assets Measured at Fair Value as at the End of Report Period
Unit: Yuan, Currency: RMB.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Classification of available-for-sale Available-for-sale Equity Available-for-sale Debt
Total
Financial Assets Instruments Instruments
Cost of equity instruments 74,010,222.53 74,010,222.53
Fair value 89,721,694.56 89,721,694.56
Accumulated changes in fair value
15,711,472.03 15,711,472.03
included in other comprehensive income
Accrued provision for impairment
7.14.3 Available-for-sale Financial Assets Measured at the End of Report Period
Unit: Yuan, Currency: RMB.
Book Balance Provision for Impairment Shareholding
Cash Dividend
Investee Beginning Ending Beginning Ending Ratio in
+ - + - in Report Period
Balance Balance Balance Balance Investee (%)
Shanghai Fuji
29,140,749.49 29,140,749.49 15.92 14,326,560.00
Xerox Co., Ltd.
Shanghai Hirose
Precision Industrial 30.00 900,000.00
Co., Ltd. (Note 1)
Changshu Qixing
Elec-plating Co., 90.00
Ltd.
Shanghai Huazhijie
Plastic Co., Ltd. 736,283.66 736,283.66 736,283.66 736,283.66 23.04
(Note 2)
Shanghai
Xingguang
308,033.99 308,033.99 308,033.99 308,033.99 14.30
Underwear Factory
(South Africa)
Wuxi Shanggong
Sewing Machines 153,814.26 153,814.26 153,814.26 153,814.26 80.00
Co., Ltd. (Note 3)
China Perfect
Machinery Co., 90,000.00 90,000.00 0.099
Ltd.
Shanghai Baoding
Investment Co., 7,500.00 7,500.00 0.008 4,428.27
Ltd.
Shanghai
Shanggong Jiarong
500,000.00 500,000.00 500,000.00 500,000.00 12.50
Sewing Machine
Trade Co., Ltd.
Pfaff Industrial
7.31 7.31
Iberica S.A.U.
Total 30,936,388.71 7.31 30,936,381.40 1,698,131.91 1,698,131.91 15,230,988.27
Note 1: Shang Gong Group Co., Ltd. holds 30% shares of Shanghai Hirose Precision Industrial Co., Ltd.
According to the articles of association, the Company obtains guaranteed minimum revenue each year. In
addition, the Company does not participate in the decision-making process of daily operations, and does not
have significant influence on the invested enterprise. Therefore, it adopts cost accounting to measure its
revenue from its shares of Shanghai Hirose Precision Industrial Co., Ltd.
Note 2: Shang Gong Group Co., Ltd. holds 23.04% shares of Shanghai Huazhijie Plastic Co., Ltd. According
to the articles of association, Shang Gong Group Co., Ltd. does not have facto control over the invested
enterprise. In addition, the Company does not participate in the decision-making process of daily operations,
and does not have significant influence on the invested enterprise. Therefore, it adopts cost accounting to
measure its revenue from its shares of Shanghai Huazhijie Plastic Co., Ltd.
Note 3: Shang Gong Group Co., Ltd. holds 80.00% shares of Wuxi Shanggong Sewing Machines Co., Ltd.
According to the articles of association, Shang Gong Group Co., Ltd. does not have facto control over the
invested enterprise. In addition, the Company does not participate in the decision-making process of daily
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
operations, and does not have significant influence on the invested enterprise. Therefore, it adopts cost
accounting to measure its revenue from its shares of Wuxi Shanggong Sewing Machines Co., Ltd.
7.14.4 Changes in Available-for-sale Financial Assets in Current Period
Unit: Yuan, Currency: RMB.
Classification of Available-for-sale Available-for-sale Equity Available-for-sale Debt
Total
Financial Assets Instruments Instruments
Balance of provision for impairment
1,698,131.91 1,698,131.91
accrued as at 1st January 2017
Provision in Report Period
Including: transfer-in from other
comprehensive income
Decrease in Report Period
Including: reversal due to the
subsequent increase in fair value
Balance of provision for impairment
1,698,131.91 1,698,131.91
accrued as at 31st December 2017
7.15 Held-to-maturity Investments
Not applicable.
7.16 Long-term Receivables
Not applicable.
7.17 Long-term Equity Investment
Unit: Yuan, Currency: RMB.
Change in current period
Ending
Other Changes
Decrease in
Investment
Investment
Increase in
Beginning Return on Other Declared Ending Balance of
in Equity
Investees
Balance Investment Comprehensive Cash Balance Provision of
Other
under Equity Income Dividends Impairment
Method Adjustment or Profit
Joint operation
H. Stoll
AG & Co. 253,586,574.99 17,990,723.92 4,222,307.79 275,799,606.70
KG
Subtotal 253,586,574.99 17,990,723.92 4,222,307.79 275,799,606.70
Total 253,586,574.99 17,990,723.92 4,222,307.79 275,799,606.70
7.18 Investment Properties
7.18 Investment Property Measured at Cost
Unit: Yuan, Currency: RMB.
Investment
Buildings and Leased Land Use
Item Real Estate Total
Constructions Rights
Decoration
1. Original book value
(1) Beginning balance 172,331,514.28 50,523,752.24 2,583,492.92 225,438,759.44
(2) Increase in current period 53,849,561.64 53,849,561.64
① Outsourcing 6,241,840.00 6,241,840.00
② Transfer in from inventories, fixed
44,302,775.29 44,302,775.29
assets or construction in progress
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Investment
Buildings and Leased Land Use
Item Real Estate Total
Constructions Rights
Decoration
③ Exchange rate fluctuation 3,304,946.35 3,304,946.35
(3) Decrease in current period
① Disposal
(4) Ending balance 226,181,075.92 50,523,752.24 2,583,492.92 279,288,321.08
2. Accumulated depreciation and
accumulated amortization
(1) Beginning balance 94,985,462.61 15,079,319.07 516,698.76 110,581,480.44
(2) Increase in current period 10,196,208.40 1,104,003.24 172,233.00 11,472,444.64
①Amortization or accrual 4,617,383.79 1,104,003.24 172,233.00 5,893,620.03
②Transfer from fixed assets 4,133,126.55 4,133,126.55
③Exchange rate fluctuation 1,445,698.06 1,445,698.06
(3) Decrease in current period
①Disposal
(4) Ending balance 105,181,671.01 16,183,322.31 688,931.76 122,053,925.08
3. Provision for impairment
(1) Beginning balance 7,241,024.04 7,241,024.04
(2) Increase in current period 491,039.50 491,039.50
①Accrual
②Exchange rate fluctuation 491,039.50 491,039.50
(3) Decrease in current period
①Disposal
②Others
(4) Ending balance 7,732,063.54 7,732,063.54
4. Book value
(1) Book value at the end of the period 113,267,341.37 34,340,429.93 1,894,561.16 149,502,332.46
(2) Book value at the beginning of the
70,105,027.63 35,444,433.17 2,066,794.16 107,616,254.96
period
7.19 Fixed Assets
7.19.1 Fixed Assets
Unit: Yuan, Currency: RMB.
Buildings and Machinery Transportation Electronic Other
Item Total
Constructions Equipment Equipment Equipment Equipment
1. Original book value
(1) Beginning balance 419,547,363.36 338,719,085.29 14,586,332.79 4,075,854.93 241,454,532.04 1,018,383,168.41
(2) Increase in current period 39,005,899.29 59,587,121.74 3,847,053.59 757,898.09 44,770,885.11 147,968,857.82
① Purchase 18,429,470.61 39,253,443.18 3,847,053.59 741,226.62 29,066,280.98 91,337,474.98
② Transfer from
1,878,878.86 1,878,878.86
construction in progress
③Exchange rate
20,576,428.68 18,454,799.70 16,671.47 15,704,604.13 54,752,503.98
fluctuation
(3) Decrease in current
9,362,068.13 6,420,701.20 3,497,694.44 916,785.29 5,622,830.98 25,820,080.04
period
①Disposal or scrap 2,464,139.30 6,420,701.20 3,497,694.44 905,049.53 5,607,800.78 18,895,385.25
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
②Transfer to investment
6,897,928.83 6,897,928.83
property
③Exchange rate
11,735.76 15,030.20 26,765.96
fluctuation
4.Ending Balance 449,191,194.52 391,885,505.83 14,935,691.94 3,916,967.73 280,602,586.17 1,140,531,946.19
2. Accumulated depreciation
(1) Beginning balance 206,652,824.34 228,815,751.75 9,545,181.21 2,738,212.75 206,574,025.26 654,325,995.31
(2) Increase in current period 24,894,664.58 37,571,158.96 1,477,891.20 743,207.89 30,665,231.18 95,352,153.81
①Accrual 11,919,501.58 24,335,858.46 1,477,891.20 738,248.61 17,035,512.68 55,507,012.53
②Exchange rate
12,975,163.00 13,235,300.50 4,959.28 13,629,718.50 39,845,141.28
fluctuation
(3) Decrease in current
4,901,078.65 5,112,670.51 3,057,243.87 814,093.57 5,310,557.21 19,195,643.81
period
①Disposal or scrap 2,175,185.37 5,112,670.51 3,057,243.87 802,758.63 5,297,150.16 16,445,008.54
②Transfer to investment
2,725,893.28 2,725,893.28
property
③Exchange rate
11,334.94 13,407.05 24,741.99
fluctuation
(4) Ending balance 226,646,410.27 261,274,240.20 7,965,828.54 2,667,327.07 231,928,699.23 730,482,505.31
3. Provision for impairment
(1) Beginning balance 4,913,777.92 4,832,793.00 48,170.70 37,818.61 1,402.83 9,833,963.06
(2) Increase in current period 2,399,372.07 27,737.97 2,427,110.04
①Accrual 2,399,372.07 27,737.97 2,427,110.04
②Exchange rate
fluctuation
(3) Decrease in current
period
① Disposal or scrap
(4) Ending balance 4,913,777.92 7,232,165.07 75,908.67 37,818.61 1,402.83 12,261,073.10
4. Book value
(1) Book value at the end of
217,631,006.33 123,379,100.56 6,893,954.73 1,211,822.05 48,672,484.11 397,788,367.78
the period
(2) Book value at the
207,980,761.10 105,070,540.54 4,992,980.88 1,299,823.57 34,879,103.95 354,223,210.04
beginning of the period
Note: For details of restricted conditions such as fixed asset mortgages, see ―Note 7.76‖ and ―Note14.2‖.
7.19.2 Idle Fixed Assets
Not applicable
7.19.3 Fixed Assets Leased through Financial Lease
Unit: Yuan, Currency: RMB.
Accumulated
Item Book value Impairment Book value
depreciation
Transportation
1,276,282.05 126,472.91 1,149,809.14
Equipment
Total 1,276,282.05 126,472.91 1,149,809.14
7.19.4 Fixed Assets without Certificate of Title
Unit: Yuan, Currency: RMB.
Reason for Failure in Completing the Formalities for
Item Book Value
Obtaining Certificates of Title
Buildings and constructions (Note 1) 1,793,232.40 Self-built housing, the certificates are in the process
Buildings and constructions (Note 2) 317,117.24 Self-built housing, the certificates are in the process
Note 1: Self-built housing for the Company’s subsidiary Shanghai SGSB Asset Management Co., Ltd.
Note 2: Self-built housing, for the Company.
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
7.20 Construction in Progress
7.20.1 Construction in Progress
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Item Provision for Provision for
Book Balance Book Value Book Balance Book Value
Impairment Impairment
Sewing
Equipment 4,347,153.83 4,347,153.83 2,036,361.68 2,036,361.68
Engineering
ERP project 2,130,376.16 2,130,376.16
Household
multifunctional
1,025,599.74 1,025,599.74 407,258.58 407,258.58
sewing
machine
Zhangjiagang
manufacture 1,845,901.66 1,845,901.66 1,207,505.00 1,207,505.00
base project
Modern
logistics
4,858,082.75 4,858,082.75 258,490.56 258,490.56
management
center
Nanxiang
factory 300,000.00 300,000.00
reconstruction
Mold
139,000.00 139,000.00
development
Exhaust
298,345.06 298,345.06
project
DFT workshop
13,422,591.60 13,422,591.60
renovation
DARO
workshop 402,369.43 402,369.43
reconstruction
Kingdee QR
code system 186,166.68 186,166.68
project
Total 12,665,274.09 12,665,274.09 20,199,928.64 20,199,928.64
7.20.2 Changes in Major Construction in Progress for Current Period
Unit: Yuan, Currency: RMB.
Proportion
for the Current
Transferred in
capitalization
capitalization
capitalization
Accumulated
Construction
Fixed Assets
in progress
Other of the
Including:
amount of
amount of
2017(%)
Amount
in 2017
Increase in
Interest
interest
interest
Budget
Period
rate in
Beginning decreases in Ending accumulated Source of
Item current
balance current balance investment Fund
period
period in project in
budget (%)
Sewing
Equipment Self-own
2,036,361.68 3,868,616.55 1,557,824.40 4,347,153.83
Engineerin ed fund
g
ERP Raised
2,130,376.16 722,927.42 2,853,303.58
project fund
Household
multifuncti
Self-own
onal 407,258.58 618,341.16 1,025,599.74
ed fund
sewing
machine
Zhangjiaga
ng
Self-own
manufactu 1,207,505.00 1,314,335.51 675,938.85 1,845,901.66
ed fund
re base
project
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Modern
logistics Self-own
258,490.56 4,599,592.19 4,858,082.75
manageme ed fund
nt center
Nanxiang
factory Self-own
300,000.00 300,000.00
reconstruct ed fund
ion
Mold
Self-own
developme 139,000.00 139,000.00
ed fund
nt
Exhaust Self-own
298,345.06 22,709.40 321,054.46
project ed fund
DFT
Self-own
workshop 13,422,591.60 18,802,254.86 32,224,846.46
ed fund
renovation
Kingdee
QR code Self-own
186,166.68 186,166.68
system ed fund
project
DARO
workshop Self-own
402,369.43 402,369.43
reconstruct ed fund
ion
Total 20,199,928.64 30,537,313.20 1,878,878.86 36,193,088.89 12,665,274.09 /
Note 1: The first phase of ERP project has been completed and accepted in the current period and transferred
to intangible assets.
Note 2: DFT workshop renovation project has been completed in the current period and transferred to
investment real estate.
7.21 Project Materials
Not applicable
7.22 Disposal of Fixed Assets
Not applicable
7.23 Productive Biological Assets
Not applicable
7.24 Oil and Gas Assets
Not applicable
7.25 Intangible Assets
7.25.1 Intangible Assets
Unit: Yuan, Currency: RMB.
Patent and
Land Use Trademark Computer
Item Non-patent Others Total
Right Use Right Software
Technology
1. Original book value
(1) Beginning
105,595,420.23 20,161,268.51 3,185,554.27 117,954,603.75 5,795,753.76 252,692,600.52
balance
(2) Increase in
638,600.00 3,410,387.06 17,918,317.23 391,470.14 22,358,774.43
current period
① Purchase 638,600.00 551,930.69 1,420,519.20 2,611,049.89
② Transfer
from construction in 2,853,303.58 12,433,361.60 15,286,665.18
progress/development
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Patent and
Land Use Trademark Computer
Item Non-patent Others Total
Right Use Right Software
Technology
expenditure
③ Exchange
5,152.79 4,064,436.43 391,470.14 4,461,059.36
rate fluctuation
(3) Decrease in
5,180,000.00 1,322,251.29 1,045,508.20 7,547,759.49
current period
① Disposal 1,322,251.29 1,045,508.20 2,367,759.49
② Transfer to
5,180,000.00 5,180,000.00
investment property
4.Ending Balance 101,054,020.23 20,161,268.51 5,273,690.04 134,827,412.78 6,187,223.90 267,503,615.46
2. Accumulated
amortization
(1) Beginning
8,099,502.56 20,161,268.51 2,248,235.06 61,149,940.94 5,795,753.76 97,454,700.83
balance
(2) Increase in
2,753,480.05 798,841.62 20,371,805.30 391,470.14 24,315,597.11
current period
① Accrual 2,753,480.05 793,921.96 20,371,805.30 23,919,207.31
② Exchange
4,919.66 391,470.14 396,389.80
rate fluctuation
(3) Decrease in
1,407,233.27 1,322,251.29 1,525,355.38 4,254,839.94
current period
① Disposal 1,322,251.29 1,322,251.29
② Exchange
1,525,355.38 1,525,355.38
rate fluctuation
③ Transfer to
1,407,233.27 1,407,233.27
investment property
4.Ending Balance 9,445,749.34 20,161,268.51 1,724,825.39 79,996,390.86 6,187,223.90 117,515,458.00
3. Provision for
impairment
(1) Beginning
balance
(2) Increase in
current period
① Accrual
(3) Decrease in
current period
① Disposal
4.Ending Balance
(4) Ending
balance
4. Book value 91,608,270.89 3,548,864.65 54,831,021.92 149,988,157.46
(1) Book value at
97,495,917.67 937,319.21 56,804,662.81 155,237,899.69
the end of the period
At the end of the period, the ratio of intangible assets formed by internal R&D to the balance of intangible
assets was 4.65%.
7.26 Development Expenditures
Unit: Yuan, Currency: RMB.
Increase in current period Decrease in current period
Beginning Internal Recognized Transferred to Ending
Item
Balance Development Others as Intangible Current Profits and Balance
Expenditure Assets Losses
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Sewing
8,255,718.33 16,146,318.65 12,433,361.60 11,968,675.38
equipment
WeChat
887,322.98 212,491.52 1,099,814.50
platform
Freight
3,282,264.10 333,018.86 3,615,282.96
platform
Paper
104,040.49 104,040.49
Shredder
Total 12,529,345.90 16,691,829.03 12,433,361.60 104,040.49 16,683,772.84
Note: The development expenditures of sewing equipment represent the development costs of DAP AG. The
development expenditures of WeChat platform and Freight platform represent the development costs of
SHENSY. The development expenditures of paper shredder represent the development costs of Shanghai
SMPIC Import & Export Co., Ltd.
7.27 Goodwill
7.27.1 Book Value of Goodwill
Unit: Yuan, Currency: RMB.
Name of investee or Increase in Current Period Decrease in Current Period
Beginning
goodwill formation Exchange Rate Ending Balance
Balance Acquisition Disposal
events Fluctuation
PFAFF GmbH 67,878,923.12 4,603,110.31 72,482,033.43
Beisler 21,289,092.48 1,443,688.80 22,732,781.28
Total 89,168,015.60 6,046,799.11 95,214,814.71
7.27.2 Provision for Impairment of Goodwill
Unit: Yuan, Currency: RMB.
Decrease in Current
Name of investee or Increase in Current Period
Period
goodwill formation Beginning Balance Ending Balance
Exchange Rate
events Acquisition Disposal
Fluctuation
Beisler 21,289,092.48 1,443,688.80 22,732,781.28
Total 21,289,092.48 1,443,688.80 22,732,781.28
7.28 Long-term Deferred Expenses
Unit: Yuan, Currency: RMB.
Beginning Increase in Amortization in Other Decreases Ending
Item
Balance Current Period Current Period in Current Period Balance
Enterprise Mailbox rental
19,800.00 168,756.72 46,307.52 142,249.20
expense
Online brand registration fee 340,545.43 235,327.65 89,145.96 486,727.12
Landscape engineering 183,451.50 48,920.40 134,531.10
Leasehold improvements 136,916.67 27,000.00 39,999.96 123,916.71
Tooling cost 404,084.37 365,146.40 25,641.02 743,589.75
Total 1,084,797.97 796,230.77 250,014.86 1,631,013.88
Note: In current period, the amortized amount of long-term deferred expenses is 250,014.86 yuan, and it is
recorded in general and administrative expenses.
7.29 Deferred Income Tax Assets / Deferred Income Tax Liabilities
7.29.1 Deferred Income Tax Assets
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Item
Deductible Deferred Income Tax Deductible Deferred Income Tax
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Temporary Assets Temporary Assets
Differences Differences
Provision for asset impairment 17,786,502.50 16,211,080.71
Unrealized profits of internal
11,066,767.51 7,876,034.19
transactions
Pension (Europe)
Deductible losses 34,005,022.74 34,426,435.01
Deferred income 550,000.00 550,000.00
Estimated liabilities 136,615.48
Total 63,544,908.23 59,063,549.91
7.29.2 Deferred Income Tax Liabilities
Unit: Yuan, Currency: RMB.
Ending Balance Beginning Balance
Item
Taxable Temporary Deferred Income Taxable Temporary Deferred Income Tax
Differences Tax Liabilities Differences Liabilities
Appreciation of assets
evaluation due to
business combinations 51,666,074.01 35,407,850.19
not under common
control
Changes in fair value of
available-for-sale
financial assets
Others 1,197,067.41 1,197,067.41
Total 52,863,141.42 36,604,917.60
7.30 Other Non-current Assets
Not applicable.
7.31 Short-term Loans
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Mortgage loans 10,221,013.00 19,143,816.00
Guaranteed loans 319,820,040.00 331,876,640.00
Credit loans 348,148.62 348,148.62
Total 330,389,201.62 351,368,604.62
Note 1: DA AG borrowed 65,062,984.00 yuan (9,170,000.00 euros) from German Commerzbank with fixed
assets of which book value is 100,977,815.86 yuan (12,942,057.58 euros) as collateral. As at 31st December
2017, 54,841,971.00 yuan (7,860,000.00 euros) was repaid. The ending balance is 10,221,013.00 yuan
(1,310,000.00 euros).
Note 2: The guaranteed loans are: the funds amounted to 209,101,640.00 yuan (26,800,000.00 euros)
borrowed by the Company's wholly-owned subsidiary DAP AG from the Bielefeld Branch of Commerzbank;
and funds amounted to 209,101,640.00 yuan (26,800,000.00 euros) borrowed by the Company’s
wholly-owned subsidiary PFAFF GmbH from Kaiserslautern Branch of Commerzbank. Guarantees related to
the above matters refer to Note 14.2.
Note 3: Except the guaranteed loans above; other guaranteed loans are as follows: Shanghai Shensy Enterprise
Development Co., Ltd borrowed 20,300,000.00 yuan from China Construction Bank Shanghai Baoshan
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Baogang Branch, 28,000,000.00 yuan from Bank of Communications Shanghai Branch of Baoshan. The
guarantee company is Shanghai Shensy Kaile Internet of Things Co., Ltd.
7.32 Financial Liabilities Measured at Fair Value through Profit or Loss for the Current Period
Not applicable.
7.33 Derivative Financial Liabilities
Not applicable.
7.34 Notes payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Bank acceptance bill 12,311,525.18
Total 12,311,525.18
7.35 Accounts Payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Payables to suppliers 194,031,795.38 174,828,356.05
Total 194,031,795.38 174,828,356.05
7.36 Receipt in Advance
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Advances on sales 38,326,094.65 36,548,091.83
Total 38,326,094.65 36,548,091.83
7.37 Employee Compensation Payable
7.37.1 Presentation of Employee Compensation Payable
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Short-term remuneration 60,808,833.07 631,603,294.34 621,982,727.06 70,429,400.35
Post-employment benefits -
449,954.11 16,663,826.10 16,521,924.06 591,856.15
defined benefit plans
Dismissal welfare 59,200.00 59,200.00
Defined benefit plan maturing
19,669,905.60 20,090,922.50 19,669,905.60 20,090,922.50
within one year
Total 80,928,692.78 668,417,242.94 658,233,756.72 91,112,179.00
7.37.2 Presentation of Short-term Remuneration
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
(1) Salary, bonus, allowance and
60,360,450.15 499,117,379.12 489,772,845.85 69,704,983.42
subsidy
(2) Employee welfare 529.00 118,513,662.23 118,505,551.67 8,639.56
(3) Social insurance expenses 282,251.12 9,322,869.86 9,114,151.46 490,969.52
Including: medical insurance
226,607.73 7,645,820.39 7,529,831.94 342,596.18
premium
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Work-related injury insurance
28,898.48 669,735.76 661,168.63 37,465.61
premium
Maternity insurance premium 16,241.91 651,092.51 646,448.89 20,885.53
Other 10,503.00 356,221.20 276,702.00 90,022.20
(4) Housing provident funds 165,602.80 3,389,128.14 3,393,859.60 160,871.34
(5) Labor union expenditures and
1,260,254.99 1,196,318.48 63,936.51
employee education expenses
(6) Short-term paid absences
(7) short-term profit-sharing plan
Total 60,808,833.07 631,603,294.34 621,982,727.06 70,429,400.35
7.37.3 Presentation of Defined Benefit Plans
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Basic endowment insurance
424,019.08 15,070,473.10 14,919,520.04 574,972.14
premium
Unemployment insurance
25,935.03 593,329.28 602,380.30 16,884.01
premium
Payment of annuity 1,000,023.72 1,000,023.72
Total 449,954.11 16,663,826.10 16,521,924.06 591,856.15
7.38 Taxes and Surcharges Payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Value-added tax 4,454,097.17 5,721,081.61
Enterprise income tax 3,646,204.96 41,900,219.50
Individual income tax 5,613,216.71 6,172,515.51
Urban maintenance and construction tax 186,230.26 301,166.34
Property tax 264,414.62
Educational surtax 168,142.01 227,392.77
River management fee 29,199.23
Use tax of land 121,189.92
Stamp tax 6,696.80 3,688.10
Total 14,074,587.91 54,740,867.60
7.39 Interest Payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Term interest on long-term borrowings due in installments 471,243.32 441,316.11
Short-term loan interest payable 639,309.74 1,649,249.48
Total 1,110,553.06 2,090,565.59
7.40 Dividends Payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Light Industrial Holding Group Co., Ltd 959,269.79 959,269.79
Privately-owned corporate shares 73,549.07 73,549.07
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Total 1,032,818.86 1,032,818.86
7.41 Other Payables
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Other payables 193,617,747.74 193,117,136.53
7.42 Liabilities held for sale
Not applicable.
7.43 Deferred Income Due within One Year
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Deferred income due within one year 1,260,000.00
Total 1,260,000.00
Note: The deferred income due within one year is a government subsidy project that will undergo acceptance
in 2018.
7.44 Other Current Liabilities
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Interest and rentals 48,330.03 808,706.39
Total 48,330.03 808,706.39
7.45 Long-term Loans
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Mortgage loans 61,466,519.40 67,134,878.40
Credit loans 1,489,984.87 1,489,984.87
Total 62,956,504.27 68,624,863.27
Note1: The amount of (7,938,398.00 euros) mortgage loans at 31st December 2017 is 61,937,762.72 yuan. The
relevant matters of the mortgage loan above see Note 14.2.
7.46 Bonds Payable
Not applicable.
7.47 Long-term Payables
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
STOLL stock equity transfer fee 33,831,447.47
Others 2,240,369.61 3,507,014.14
Financing lease payments payable 960,531.14
Less: Unconfirmed financing charges 79,007.64
Total 3,121,893.11 37,338,461.61
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
7.48 Long-term Employee Compensation Payable
7.48.1 Presentation of Long-term Employee Compensation Payable
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
1. Post-employment benefits - net liability
243,516,774.09 251,784,116.62
of defined benefit plan
2. Dismissal welfare
3. Other long-term benefits 3,904,003.23 3,902,832.30
Total 247,420,777.32 255,686,948.92
7.48.2 Changes in Defined Benefit Plan Liabilities
(1) Present value of defined benefit plan liabilities
Unit: Yuan, Currency: RMB.
Item 2017
1．Beginning Balance 271,454,022.22 259,067,109.76
2．Defined benefit cost included in P&L 4,971,817.2 6,034,976.7
（1）Cost in current period 1,038,659.20 931,278.30
（2）Cost in prior period
（3）Gain (+) / Loss (-)
（4）Net Interests 3,933,158.00 5,103,698.40
3．Defined benefit cost included in OCI -8,798,054.4 19,268,031.6
（1）Actuarial gain (+) / loss (-) -8,798,054.40 19,268,031.60
4．Other changes -4,020,088.43 -12,916,095.84
（1）Payment in settlement
（2）Benefit paid -21,872,940.80 -20,693,443.80
（3）Changes in exchange rate 17,852,852.37 7,777,347.96
5．Ending Balance 263,607,696.59 271,454,022.22
(2) Defined benefit plan of DAP AG is based on supporting commitment.
The base of measuring supporting liability is on actuarial and hypothesis, not only consider known and
possessed right to draw defined benefit plan, but the increase of future payroll and defined benefit plan. By the
end of 2017, the weighted average period of defined benefit plan liability is 10.28 year. (10.36 year by the end
of 2016). Assumed payment of defined benefit plan in 2018 is the same as in 2017.
(3) Significant Actuarial Assumptions:
The method used to calculate pension obligations is actuarial. The computation basis includes life expectancy,
developed rate, changes in pension, and developed payroll trends.
In 2017, actuarial assumptions are below, compared with 2016
Item 2017
Actuaria rate 1.70% 1.45%
Rate of payroll increase 2.00% 2.00%
Rate of pension increase 1.50% 1.50%
(4) Sensitivity analysis
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
On 31st December 2017, sensitivity analysis was executed based on rational judgment possible changes in
assumptions. Other assumptions remain unchanged.
Item PV of defined benefit plan liability increase PV of defined benefit plan liability decrease
Discount rate (changed by 0.5%) 13,701,136.80 -12,502,096.40
Increase in payroll (changed by
404,771.60 -389,497.20
0.5%)
Increase in pension (changed by
11,707,827.60 -10,905,921.60
0.5%)
Life expectancy (changed by 1
22,147,880.00 —
year)
The sensitivity analysis above may not reflect the actual change of present value of defined benefit plan.
7.49 Special Payable
Not applicable.
7.50 Estimated Liabilities
Unit: Yuan, Currency: RMB.
Item Beginning Balance Ending Balance Reason
Expected compensation
Pending litigation 546,461.91
expenses
Total 546,461.91 /
7.51 Deferred Income
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in
Item Beginning Balance Ending Balance Reason
Period Current Period
Government grants 3,600,000.00 1,260,000.00 2,340,000.00
Total 3,600,000.00 1,260,000.00 2,340,000.00 /
Projects that involve government grants:
Unit: Yuan, Currency: RMB.
Subsidies
Subsidies
Included in
Beginning Increased in Ending Asset-related /
Item Current Other Change
Balance Current Balance Income-related
Non-operating
period
Income
Subsidies for new
1,260,000.00
product 1,260,000.00 Income-related
development funds
guiding funds of
developing service 2,200,000.00 2,200,000.00 Asset-related
industry
Taizhou science and
Technology Bureau
140,000.00 140,000.00 Income-related
R & D expenditure
subsidy
Total 3,600,000.00 1,260,000.00 2,340,000.00 /
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
7.52 Other Non-current Liabilities
Unit: Yuan, Currency: RMB.
Item Ending Balance Beginning Balance
Other long-term loan 520,000.00 520,000.00
Total 520,000.00 520,000.00
7.53 Share Capital
Unit: Yuan, Currency: RMB.
Change in Current Period（+/-）
Beginning Balance Ending Balance
Issuance of New Shares Others Sub-total
Total shares 548,589,600.00 548,589,600.00
7.54 Other Equity Instruments
Not applicable.
7.55 Capital Reserves
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Stock premium 851,345,853.61 851,345,853.61
Other capital reserves 120,257,266.66 397,475.29 120,654,741.95
Total 971,603,120.27 397,475.29 972,000,595.56
7.56 Treasury Stock
Not applicable.
7.57 Other Comprehensive Income
Unit: Yuan, Currency: RMB.
Change in Current Period
Less: recognized as
other
Beginning comprehensive Ending
Item Accrual before Attributable to Attributable to
Balance income for Less: Income Balance
Income tax for the Owners of the Minority
previous years and Tax Expenses
Current Period Parent Company Shareholders
transferred in the
profit or loss for
the current year
1. Other
comprehensive
income that cannot be -49,169,970.79 8,286,362.00 2,604,285.20 5,682,076.80 343,674.00 -43,487,893.99
reclassified in the loss
and gain in the future
Including: change in
re-measurement of the
net liabilities and net -49,169,970.79 8,286,362.00 2,604,285.20 5,682,076.80 343,674.00 -43,487,893.99
assets under defined
benefit plan
A share in other
comprehensive
income of investee
that cannot be
reclassified in the
losses and gains under
the equity method
2. Other
comprehensive
income that will be -53,974,075.36 25,298,516.45 25,298,516.45 5,606,621.92 -28,675,558.91
reclassified in the loss
and gain in the future
Including: a share in
other comprehensive
income of investee
that will be
reclassified in the
loss and gain under
the equity method
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Losses and gains on
the change in fair
value of 33,970,766.78 -18,259,294.75 -18,259,294.75 15,711,472.03
available-for-sale
financial assets
Held-to-maturity
investments
reclassified as losses
and gains on
available-for-sale
financial assets
Effective portion of
losses and gains on
cash flow hedges
Foreign currency
translation differences
-87,944,842.14 43,557,811.20 43,557,811.20 5,606,621.92 -44,387,030.94
Total other
comprehensive -103,144,046.15 33,584,878.45 2,604,285.20 30,980,593.25 5,950,295.92 -72,163,452.90
income
7.58 Special Reserve
Not applicable.
7. 59 Surplus Reserves
Unit: Yuan, Currency: RMB.
Increase in Current Decrease in Current
Item Beginning Balance Ending Balance
Period Period
Statutory surplus
2,273,121.26 2,273,121.26
reserves
Discretionary surplus
2,273,121.26 2,273,121.26
reserves
Total 4,546,242.52 4,546,242.52
7.60 Retained Earnings
Unit: Yuan, Currency: RMB.
Item 2017
Adjustments to retained earnings as at
494,754,465.24 350,523,121.40
December 31, 2016
Adjustments to total retained earnings as at
January 1, 2017 (\"+\" for increase, \"-\" for
decrease)
Adjusted retained earnings as at January 1, 2017 494,754,465.24 350,523,121.40
Plus: net profit attributable to owners of the
197,487,226.27 144,231,343.84
parent company for 2017
Less: withdrawal of statutory surplus reserves
Withdrawal of discretionary surplus reserves
Withdrawal of general risk reserves in 2017
Ordinary share dividends payable
Ordinary share dividend transferred to share
capital (paid-in capital)
Adjustments to retained earnings as at
692,241,691.51 494,754,465.24
December 31, 2017
7.61 Operating Income and Operating Costs
Unit: Yuan, Currency: RMB.
2017
Item
Income Cost Income Cost
Main business 2,973,395,095.35 2,191,026,910.61 2,667,640,604.13 1,973,006,896.38
Other businesses 91,576,405.44 54,510,418.65 92,214,532.85 64,337,146.33
Total 3,064,971,500.79 2,245,537,329.26 2,759,855,136.98 2,037,344,042.71
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
7.62 Taxes and Surcharges
Unit: Yuan, Currency: RMB.
Item 2017
Consumption tax
Business tax 786,921.23
Urban maintenance and construction tax 3,841,225.33 2,184,946.31
Educational surtax 2,851,563.83 1,645,996.37
Resource tax
Property tax 4,557,720.89 3,371,024.49
land use tax 1,206,499.65 921,590.00
Vehicle and vessel tax 29,173.45 15,749.00
Stamp tax 794,782.50 461,736.44
Other 164,598.33 258,613.42
Total 13,445,563.98 9,646,577.26
7.63 Selling Expenses
Unit: Yuan, Currency: RMB.
Item 2017
Employee compensation 127,100,318.51 110,465,795.57
Fix and after-sale service charges 16,883,164.44 17,671,290.99
Office expenses 1,636,944.60 1,500,776.07
Travelling expenses 19,339,407.84 15,269,611.85
Transportation cost 23,818,035.11 20,672,105.74
Advertising expense 5,448,163.62 3,880,845.81
Commission 32,259,945.51 30,827,727.63
Leasing and storage charges 9,715,517.43 5,810,727.46
Insurance premium 1,305,233.66 1,116,520.51
Conference fees 1,420,907.90 1,734,678.36
Depreciation costs 2,112,145.96 1,801,274.49
Exhibition fees 6,697,223.82 1,993,478.12
Sample printed matter and product loss 11,978,393.15 10,131,407.47
Entertainment expenses 594,503.68 400,375.64
E-commerce service fee 226,972.23 1,408,135.92
Entertainment expenses 25,116.43 18,986.93
Other 24,248,893.32 22,136,580.34
Total 284,810,887.21 246,840,318.90
7.64 General and Administrative Expenses
Unit: Yuan, Currency: RMB.
Item 2017
Employee compensation 142,665,436.43 132,919,579.03
Office expenses 9,234,901.56 10,179,594.34
Water and electricity 1,134,181.97 1,058,233.35
Entertainment expenses 5,630,236.43 4,507,195.41
Property insurance premium 1,892,141.80 2,163,291.56
Conference fees 1,248,356.45 988,892.40
Travelling expenses 9,345,153.24 10,256,106.62
上工申贝（集团）股份有限公司
Annual Report 2017
Shang Gong Group Co., Ltd
Item 2017
Depreciation costs 7,842,008.99 8,297,542.45
Repair charges 1,682,156.57 1,350,753.40
Transportation cost 1,624,137.32 1,942,276.13
Rental fees 4,955,542.72 7,498,641.99
Costs of board meetings and supervisors' meetings 523,146.21 437,325.77
Agency fees and advisory expenses 13,263,611.48 15,075,759.60
Litigation
