Shang Gong Group Co., Ltd.
Semi-annual Report 2018
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
IMPORTANT NOTES
1. The board of directors, the board of supervisors, directors, supervisors and senior executives ofthe Company undertake that the content of the semi-annual report is true, accurate and complete, andcontains no false records, misleading statements, or major omissions, and will assume joint and severallegal liabilities arising therefrom.
2. All the directors of Shang Gong Group Co., Ltd. attended the meeting of the board of directors.3. The semi-annual report is not audited.4. Zhang Min, Chairman of the Company, Li Jiaming, the principal in charge of the accounting,and Zhao Lixin, Chief of Accounting Affairs, declare and guarantee the veracity, accuracy and integrityof the financial report in the semi-annual report.
5. Plan of profit distribution or transfer of reserves deliberated by the board
The profit distribution cannot be made in report period, neither the transferring of capital reserves intoshare capital.
6. Warning statement of forward-looking statements
The Company’s future plan, development strategy and other forward-looking statements in the report do
not constitute any material commitment of the Company to investors. Investors and relevant persons shall besufficiently mindful of risks, and undertake the difference in plans, predictions and commitments.
7. There was no occupation of fund of the Company occurred for non-operating use by holdingshareholder and its related parties.
8. There was no external guarantee against the rules and regulations of the Company.9. Major risk waringThe Company has described in detail the risks faced by the Company in this report. For details see
“Discussion and Analysis on Business Operation” and other relevant chapters in this report.
10. This report is prepared in both Chinese and English. In the case of any inconsistent
understanding between the Chinese version and the English version, the Chinese version shall prevail.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| 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 ...... 3
Chapter 4 Discussion and Analysis on the Business Operation ...... 6
Chapter 5 Important Events ...... 13Chapter 6 Changes in Shares of Common Stock and Information about Common Stock Shareholders ......... 17Chapter 7 Information about Preferred Shares ...... 18
Chapter 8 Inforamtion about Directors, Supervisors and Senior Managers ...... 19
Chapter 9 Corporate Bonds ...... 19
Chapter 10 Financial Report ...... 20
Chapter 11 Documents for Reference ...... 102
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Chapter 1 Definition
As used in this report, the following terms have the following meanings unless the context requiresotherwises:
| Definition of common terms | ||
| ShangGong Group, SGG, the Company | refer to | Shang Gong Group Co., Ltd. |
| PKFR | refers to | Shanghai Puke Flyingman Investment Co., Ltd |
| Pudong SASAC | refers to | State-owned Assets Supervision and Administration Commission of 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, STOLL | refers to | H. Stoll AG & Co. KG |
| 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 |
| SGGEMSY | refers to | Zhejiang ShangGong GEMSY CO., LTD. |
| PIZ | refers to | PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd. |
| DAMSH | refers to | Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd. |
| Richpeace | refers to | Tianjin Richpeace Computer & Machinery Co.,Ltd |
| DAPSH | refers to | DAP (China) Co., Ltd. |
| SG Butterfly | refers to | Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd. |
| SHENSY | refers to | Shanghai Shensy Enterprise Development Co., Ltd. |
| Report period, reporting period | refers to | From 1st January 2018 to 30th June 2018 |
| 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 | Zhang Min |
2. Contact information
| Secretary of Board of Directors | Representative of Securities Affairs | |
| Name | Zhou Yongqiang | Shen Lijie |
| Office address | No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai | No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai |
| Tel | 021-68407515 | 021-68407700-437 |
| Fax | 021-63302939 | 021-63302939 |
| zyq@sgsbgroup.com | shenlj@sgsbgroup.com |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
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3. Basic situation introduction
| Registered address | Room A-D, 12th Floor, Orient Mansion, No. 1500 Century Avenue, China (Shanghai) Pilot Free Trade Zone |
| Postal code of registered address | 200122 |
| Office address | No. 1566 New Jinqiao Road, Pudong New Aear, Shanghai |
| Postal code of office address | 201206 |
| Company website | http://www.sgsbgroup.com/ |
| 600843@sgsbgroup.com |
4. Place for information disclosure and consulting
| Newspaper selected by the Company for information disclosure | Shanghai Securities News; Hong Kong Commercial Daily |
| Website appointed by CSRC for publishing semi-annual report | http://www.sse.com.cn |
| Lodging address of semi-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 | 600843 |
| B Share | Shanghai Stock Exchange | SGBG | 900924 |
6. Other informationNot applicable.
7. Main accounting data and financial index7.1 Main accounting data
Unit: Yuan, Currency: RMB
| Main accounting data | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) | Increase or decrease over the same period of the previous year (%) |
| Operaing income | 1,494,794,413.27 | 1,532,562,601.12 | -2.46 |
| Net profit attributable to shareholders of listed company | 100,161,346.50 | 125,980,892.71 | -20.49 |
| Net profit attributable to shareholders of listed company after deduction of non-recurrent account profits and losses | 89,370,615.19 | 113,282,323.52 | -21.11 |
| Net cash flow from operating activities | -57,703,154.75 | -59,790,323.47 | N/A |
| 30th June 2018 | 31st December 2017 | Increase or decrease at the end of the reporting period from the end of the previous year(%) | |
| Net assets attributable to shareholders of listed company | 2,214,142,646.86 | 2,145,214,676.69 | 3.21 |
| Total assets | 3,824,540,859.31 | 3,703,515,071.60 | 3.27 |
7.2 Main financial index
| Main financial index | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) | Increase or decrease over the same period of the previous year (%) |
| Basic earnings per share (yuan/share) | 0.1826 | 0.2296 | -20.47 |
| Diluted earning per share (yuan/share) | 0.1826 | 0.2296 | -20.47 |
| Basic earnings per share after deduction of non-recurrent profits and losses (yuan/share) | 0.1629 | 0.2065 | -21.11 |
| Weighted average return on net assets (%) | 4.5625 | 6.3648 | Decrease 1.80 percent |
| Weighted average return on net assets after deduction of non-recurrent profits and losses (%) | 4.0710 | 5.7232 | Decrease 1.65 percent |
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| Shang Gong Group Co., Ltd |
8. Accounting data differences between domestic and foreign accounting standardsNot applicable.
9. Items and amount of non-recurring profit and loss
Unit: Yuan, Currency: RMB
| Item | Amount |
| Profits and losses from disposal of non-current assets | -571,141.92 |
| Government subsidies recorded in the current profit and loss | 2,636,373.56 |
| 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, and investment income from disposal of trading financial assets, trading financial liabilities and available-for-sale financial assets | 7,286,382.96 |
| Other non-operating income and expenditure except the above-said items | 2,380,381.79 |
| Impact on minority interests | -776,580.59 |
| Impact on income tax | -164,684.49 |
| Total | 10,790,731.31 |
Chapter 3 Summary of Company Business
1. The Company’s main business, business model in the report period and industry situation
During the reporting period, the Company's main business is the sewing equipment manufacturing
industry. The Company’s business also involved flat knitting machines, office machinery, logistics services
and trade. The Company's sewing equipment includes industrial sewing machines, household sewing machinesand custom-made industrial machines for special purposes.
The Company adheres to globalization of business, and implements unified management of sales ofsewing equipment. The Company adopts a gradient-based specialized multi-brand marketing strategy, andconducts gradient division management on production sites throughout Europe and Asia. The Company paysattention to collaborative research and development, and seizes the global high-end market of sewingequipment with leading technology. At the same time, the Company is cultivating the business model of
“Shanghai Manufacturing”, which means R&D and marketing in Shanghai while production in Jiangsu,
Zhejiang and other provinces.
In recent years, through the implementation of mergers and acquisitions at home and abroad and the
reorganization and integration within the Company, with the business philosophy of “market orientation andbenefit first” to manage subsidiaries in a unified manner, the synergy effect has gradually emerged and the
international business model has 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 ofsewing machinery products, including household and industrial sewing machine, embroidery machine andcutting 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
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machinery manufacturing industry in independent innovation ability, industrial structure, technology, productand brand quality and other aspects. The whole industry is big but not strong. The development of the worldsewing 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 beentransferred to the Asian region like China and Japan, and gradually formed tripartite confrontation patternbetween China, Germany and Japan.
In the first half of 2018, China's sewing machinery industry seized the opportunities of the upgradingneeds of downstream industry and the changing of domestic and foreign market structure, accelerated theadjustment of product structure, continued to increase production and quality, actively expanded theinternational market, continued to expand the scale of the industry, and continued to maintain medium and
high growth in production. The economic operation in the first half of 2018 is characterized by “stable butslower growth”. According to statistics from China Sewing Machinery Association, from January to June 2018,
the top 100 backbone machine manufacturers in the industry achieved total industrial output value of 10,126million yuan, a year-on-year increase of 23.87%, and the total amount of sewing machines produced was3,417,500 sets, a year-on-year increase of 21.70%. Among them, 2,586,000 industrial sewing machines wereproduced, a year-on-year increase of 31.81%. However, since the second quarter, the industry's domesticdemand market has been sharply reduced. The sales of sewing machinery products, especially industrialsewing machine products, have maintained double-digit growth year-on-year, but the chain growth has turnednegative. In the first half of 2018, the operating income of enterprises above designated size grew by 20.38%year-on-year; total profit increased by 9.13% year-on-year; gross profit margin was 17.87%, a decrease of0.89% year-on-year.
2. Description of major changes in main assets of the Company during the reporting period
For details of major changes in the Company's major assets in the report period, please refer to “(3)Analysis of assets and liabilities” in “Chapter 4 Disscussion and Analysis on Business Operation”.
The Company’s overseas assets amounted to 2,038.3241 million yuan, accounting for 53.3% of the total
assets.
The Company’s overseas assets mainly come from the Company’s previous overseas acquisitions and thebusiness growth of overseas subsidiaries. The Company’s wholly-owned subsidiary SGE acquired DA AG in
2005, acquired PFAFF GmbH and KSL in 2013, 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’s "Butterfly"
household sewing machine originated in 1919 and has a history of nearly 100 years.The Company controlledDA AG and PFAFF GmbH, both are famous sewing machine manufacturing companies in the world with
more than 150 years’ history, as well as PFAFF KSL Branch, which possesses the world's top sewing
technology. STOLL KG, which is invested by the Company and the Company is its biggest limited partner,also has a history of more than 140 years and possesses a leading position in the field of flat knitting machinemanufacturing technology in the global industry. In the report period, the Company focused on the main
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
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industry – sewing equipment manufacturing, continued to promote the integration of global resources, further
promote the reorganization and integration of SGE, strengthen research and development ability and increaseinvestment in research and development. The Company's core competitiveness is further consolidated andenhanced, 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 capabilityThe Company always adheres to the guidance of science and technology and develop through innovation,attaches much importance to the construction of technological research and development capabilities, whichhave become the important force driving the development of the Company. The Company has owned apowerful technological research and development team, has advanced testing methods and has strongcontinuous development capabilities of product and application technology.
. The research and development of Industrial 4.0, which has been developed by the R & D team, has madepreliminary achievements in the application of sewing equipment. ShangGong Technology Centre is the citylevel of research and development centre in Shanghai, and the technology R&D centre of SGGEMSY is alsothe provionce level of research and development centre in Zhejiang.
(2) Advanced technology advantage
The Company has the world’s high-end intelligent and 3D sewing technology of flexible material, and the
Company is a global leader in special sewing machine for medium or heavy materials, garment automaticsewing unit, robot-control automatic sewing technology and textile material welding technology and otherfields. The products are not only applied in the traditional market for sewing machine industry but also appliedin some fields, such as automobile, environmental protection, aeronautics and astronautics and renewableenergy, etc. Especially, the Company has a leaing position in sewing technology for light carbon fiber, 3Dsewing automation and QONDAC 4.0 Intelligent Industrial Sewing Network Online Production MonitoringSystem.
(3) Multiple brand and product advantageThe 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 99 years’ history, Bee, Flyingman,and Shanggong with over 50 years’ history. In recent years, the Company is cultivating industrial machine
brands, such as SGGEMSY, Mauser and so on. The Company has a full range of high-end sewing equipmentproduct chain, these brands of the Company has a high recognition and reputation in the industry. TheCompany has a group of customers with great value and stability in the field of high-end automotiveaccessories manufacturing and luxury goods manufacting.
(4) Global resource integration capabilityThe Company utilizes and develops the basis and advantages of its respective domestic and foreignsubsidiaries, implements globalization layout and integration in the production base, sales network,procurement of raw materials, technology R&D and other aspects, implements resource sharing, hascomplementary advantages and develops collaboratively. The Company not only has a wide sales network andbusiness base in China, but also has established a relatively complete marketing channel and service network
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in the world. The Company has established three sewing machine R&D and production bases in Shanghai,Zhejiang and Zhangjiagang; the Company also has five R&D and manufacturing bases in Germany, CzechRepublic and Romania.
(5) Internationalized operation and management experienceSince 2004, the Company has begun to implement an overseas merger and acquisition strategy forinternational operations. In recent years, the Company has increased the pace of overseas acquisitions andmergers, and the proportion of overseas businesses has grown. The Company's multi-year internationaloperation and management has gradually cultivated a management team with an international perspective andmultinational operating capabilities, and has accumulated rich international management experience.
Chapter 4 Discussion and Analysis on the Business Operation
1. Discussion and analysis on the business operationDuring the reporting period, the Company achieved operating income of 1.495 billion yuan, down 2.46%year-on-year, of which sewing equipment operating income was 986 million yuan, up 4.64% year-on-year. Themain reason for the slight decline in operating income was the decrease in the company's logistics servicebusiness revenue year-on-year. The Company achieved operating profit of 143 million yuan, down 23.03%year-on-year; net profit attributable to shareholders of listed companies was 100 million yuan, down 20.49%year-on-year. The main reason for the decrease in profit was the slight decrease in the gross profit margin ofsewing equipment sales and the impact of exchange losses, as well as the large consulting fees during therestructuring of the Company's overseas subsidiaries.
As one of the representative enterprises of “Made in Shanghai”, the Company has not forgotten the initial
intention of revitalizing Shanghai's old brands, seized the opportunity of the state to attach importance to thedevelopment of real economy, and vigorously developed China Manufacturing and Shanghai IntelligentManufacturing while maintaining the Company's leading technology in the global sewing industry. In June
2018, the Company was awarded the title of “Top 30 Enterprises in China's Light Industry EquipmentManufacturing Industry” and “Top Ten Enterprises in China's Sewing Machinery Industry” in 2017.
In the first half of 2018, the Company focused on the following aspects:
(1) Continue to deepen internal integration and promote mergers and acquisitions in due courseIn the first half of 2018, the Company implemented the internal asset restructuring and businessintegration of as planned. In Europe, the Company overcame difficulties and steadily promoted DAP AG'ssqueeze-out of about 6% of the minority shareholders of DA AG. In July 2018, DAP AG completed thecommercial record of the merger of DAP AG and DA AG. The legal procedures for this merger have beenbasically completed. In the first half of 2018, the Company launched the integration of PFAFF GmbH and itsKSL Branch, and has started to adjust its organization; production integration and product transfer areunderway. The goal of the integration is to promote the transformation of PFAFF GmbH to KSL technologyand products, and realize the rapid development of the Company's intelligent equipment R & D and
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manufacturing. Through the asset restructuring and business integration of SGE, the Company can make fulluse of the technology, production, procurement, sales, capital and human resources of DA AG and itssubsidiaries, PFAFF GmbH and KSL Branch to give full play to the overall advantages and enhanceprofitability. In China, the import and export business integration of Butterfly Imp. & Exp., Shanggong Imp. &Exp. and SMPIC Imp. & Exp. has been steadily advanced, and the transfer of personnel and business has beenbasically completed. In addition, with the merger of SG Butterfly and DAPSH into the parent company, theeffect of the materialized operation of the parent company has gradually emerged. The rising cost of humanresources has been digested, and the operating profit of the parent company has increased significantly.
The Company continues to take advantage of the strong acquisition and integration capabilities andtimely promote mergers and acquisitions suitable for enterprise development. The Company focused on themain business of sewing equipment manufacturing, promoted the implementation of the Company's sewingintelligent strategy, and actively prepared for the acquisition of 65% equity of Richpeace and capital increasein the first half of 2018. This acquisition will help solve the problem of the Company's relatively weak abilityto undertake KSL product technology in domestic software development and automatic sewing solutiontechnology, thereby enhancing the Company's market share in the domestic high-end special sewingequipment field, which will help improve the overall performance of the Company. Furthermore, Richpeace'sautomated cutting and embroidering equipment complements the Company's product range. Its automaticpatterning machine and other automation solutions are also an effective extension of the Company's existingbusiness. At the beginning of August 2018, the Company has completed the relevant procedures for theacquisition of the 65% equity in Richpeace, and the business collaboration has already begun.
(2) Adhere to specialized multi-brand strategy, increase product market shareThe Company will adhere to the Market-oriented, Benefit-first business philosophy, unswervinglycontinue to implement the specialized multi-brand marketing strategy, expand brand influence, and increasethe market share of each classified product.
In the first half of 2018, the Company further improved the marketing management of countries inSoutheast Asia such as Singapore, Vietnam and Indonesia, and started the official operation of salesorganizations in South Asia such as India and Bangladesh, and achieved good operating results; meanwhile,SGG and DAP AG established sales organizations in South America and Africa, gradually restored the salesshare in the South American market and consolidated the sales share in the African market. In report period,the Company continued to do a good job in domestic market sales, timely adjusted the sales organizationframework, and achieved unified management and coordinated development. The Company has activelydeveloped the Mauser brand promotion strategy for positioning mid-range products. The Mauser specialgarment machine and the Mauser industrial thick material machine series are being complemented. The
Company further improved the four automatic sample pipelines of “Two Suits Two Pants” and actively sought
to cooperate with brand clothing enterprises for customized production. Further overcome the weak marketsuch as sofas and luggage, and has made major breakthroughs. At the same time, SGG actively develop theprison market and strive to achieve sales breakthroughs in basic products. In 2018, Butterfly Branch continued
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to sell household sewing machines, actively carried out the "Butterfly" brand promotion activities, andparticipated in the EXPOSITION ON CHINA INDIGENOUS BRAND, which achieved good results.
(3) Maintain product technology leadership and strengthen manufacturing capabilitiesThe Company sticks to the technology-leading and innovative-development strategy as always. Through
integration of Made-in-China and Made-in –Germany, the Company vigorously develops Shanghai Intelligent
Manufacturing and ShangGong Creation, and accelerates the construction of production base to enhancemanufacturing ability.
The Company introduced QONDAC 4.0 to the market vigorously in the first half of 2018. And researchand develop the prototype machine of new M-type 3.0 as planned. Continuous improvement of automaticsewing units was developed as well. The Company continued to research and trial-produce the button attachingand holing machine and the sewing machine, improve the market competitiveness of shirt automatic sewingproducts, and research and manufacture front trousers sealing machine and cowboy series machines as planned.In addition, the Mauser brand basic series product design is basically completed, and the L-Type platformproject market research work is in progress.
(4) Link subsidiaries at home and abroad, consolidate the production baseIn the first half of 2018, the Company actively promoted the construction of production bases andcontinuously enhanced its manufacturing capabilities. In Europe, in order to increase the R&D investment ofautomatic and intelligent sewing equipment, solve the problem of limited production site of KSL Branch, andmaximize economic benefits, as approved by the board of directors of SGG, DAP AG invested in thedevelopment of intelligent product development centers and trial production bases in Bensheim, Germany. DAAG's expansion project at the DARO plant in Romania is under construction. As the core components willdetermine the quality level of automatic sewing units and special sewing equipment, DARO will furtherincrease production capacity and increase the self-manufacturing rate of core components. In China, theCompany completed the preparatory work for the feasibility study and analysis of the investment in theconstruction of the Taizhou Huangyan Manufacturing Base. Based on the existing industry, the Company willgraft German DA AG and PFAFF Industrial product technology, develop multi-brand and intelligent productmanufacturing, and build the Company's largest sewing machine production base in Huangyan, Taizhou. PIZactively carried out the localization of parts and components, and started the domestic collaborative processingof parts and components of DA1767 and other parts and components. By introducing technology andintegrating resources, DAMSH has tried to expand the robot control technology into the processing technologyof rigid materials and the field of automated assembly technology, laying a solid foundation for the Companyto expand its intelligent manufacturing business.
1.1 Main business analysis1.1.1 Analysis of changes of items in profit statement and cash flow statement
Unit: Yuan, Currency: RMB
| Item | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) | Increase or decrease over the same period of the previous year (%) | Reason |
| Operating income | 1,494,794,413.27 | 1,532,562,601.12 | -2.46 | Note 1 |
| Operating cost | 1,052,451,025.46 | 1,088,801,959.30 | -3.34 | Note 2 |
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| Selling expenses | 147,600,554.52 | 141,412,181.17 | 4.38 | Note 3 |
| General and administration expenses | 154,556,576.41 | 143,922,099.95 | 7.39 | Note 4 |
| Finance expenses | 12,091,231.56 | -6,849,775.62 | 276.52 | Note 5 |
| Net cash flow from operating activities | -57,703,154.75 | -59,790,323.47 | 3.49 | Note 6 |
| Net cash flow from investing activities | -78,130,173.37 | -43,334,008.59 | -80.30 | Note 7 |
| Net cash flow from financing activities | 53,164,117.81 | -20,766,385.53 | 356.01 | Note 8 |
| Research and development expenditures | 50,906,101.66 | 41,659,397.60 | 22.20 | Note 9 |
Note 1: Mainly due to the year-on-year decline in logistics service revenue.Note 2: Mainly due to the year-on-year decrease in operating income and corresponding reduction incosts.
Note 3: Mainly due to the year-on-year increase in sales expenses of overseas subsidiaries.Note 4: Mainly due to the year-on-year increase in project consulting fees and remuneration.Note 5: Mainly due to the year-on-year increase in exchange lossesr.Note 6: Mainly due to the year-on-year decrease in taxes paid and the increase in cash paid to employeesand the increase in cash paid for employees.
Note 7: Mainly due to the year-on-year increase in bank entrusted loans and expenditures in the purchaseand construction of fixed assets.
Note 8: Mainly due to the year-on-year increase in bank loans.Note 9: Mainly due to the year-on-year increase in expenditure on R&D projects by DAP AG.1.1.2 Others(1) Detailed description of major changes in the Company's profit composition or source of profitSignificant changes of items in the Company's consolidated statement of comprehensive incomes duringthe reporting period and the reasons
Unit: Yuan, Currency: RMB
| Item | Reporting period | Same period of the previous year | Increase / Decrease (Amount) | Increase / Decrease (%) | Reason |
| Financial expense | 12,091,231.56 | -6,849,775.62 | 18,941,007.18 | 276.52 | Note 1 |
| Assets impairment loss | -350,484.13 | 4,522,446.97 | -4,872,931.10 | -107.75 | Note 2 |
| Asset disposal income | -571,141.92 | 9,747,624.59 | -10,318,766.51 | -105.86 | Note 3 |
| Non-operating income | 3,355,954.72 | 105,785.34 | 3,250,169.38 | 3,072.42 | Note 4 |
| Non-operating expense | 955,572.93 | 305,083.71 | 650,489.22 | 213.22 | Note 5 |
| Net after tax of other consolidated income | -27,605,940.81 | 30,819,765.91 | -58,425,706.72 | -189.57 | Note 6 |
Note 1: Mainly due to the year-on-year increase in exchange lossesr.Note 2: Mainly due to the reversal of accounts receivable bad debt provision resulting from the receipt ofbad debt provision for accounts receivable in the report period.
Note 3: Mainly due to the year-on-year reduction of housing relocation compensation income.Note 4: Mainly due to the clearing of accounts payable unable to pay in the current period.Note 5: Mainly due to the year-on-year increase in external donations and forfeit penalty.Note 6: Mainly due to the decrease in the gains and losses from changes in fair value of available-for-salefinancial assets and the decrease in the translation differences in foreign currency financial statements.
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(2) Others
①Cash flow
Unit: Yuan, Currency: RMB
| Item | Reporting period | Same period of the previous year | Increase / Decrease (Amount) | Increase / Decrease (%) | Reason |
| Net cash flow from investing activities | -78,130,173.37 | -43,334,008.59 | -34,796,164.78 | -80.30 | Note 1 |
| Net cash flow from financing activities | 53,164,117.81 | -20,766,385.53 | 73,930,503.34 | 356.01 | Note 2 |
| Influence of fluctuation of exchange rate upon cash and cash equivalents | -5,925,323.34 | 22,569,433.51 | -28,494,756.85 | -126.25 | Note 3 |
Note 1: Mainly due to the year-on-year increase in bank entrusted loans and expenditures in the purchaseand construction of fixed assets.
Note 2: Mainly due to the year-on-year increase in bank loans.Note 3: Mainly due to the impact of changes in the exchange rate of the euro.
②Main business by industry
Unit: Yuan, Currency: RMB
Main business by industryIndustry
| Industry | Operating income | Operating cost | Gross margin (%) | Operating income increase/ decrease (%) | Operating cost increase/ decrease (%) | Gross margin increase/ decrease (%) |
| Sewing equipment | 985,774,967.92 | 605,647,768.16 | 38.56 | 4.64 | 6.85 | Decrease 1.28 percent |
| Logistic service | 362,468,133.25 | 328,405,699.46 | 9.40 | -8.87 | -10.20 | Increase 1.35 percent |
| Export trade | 71,866,470.94 | 69,998,913.72 | 2.60 | -30.10 | -30.03 | Decrease 0.09 percent |
| Office equipment and film materials | 25,407,756.35 | 22,184,504.00 | 12.69 | -9.52 | -5.13 | Decrease 4.03 percent |
| Others | 3,695,477.63 | 2,978,009.45 | 19.41 | -20.43 | -1.39 | Decrease 15.57 percent |
| Total | 1,449,212,806.09 | 1,029,214,894.79 | 28.98 | -1.77 | -2.81 | Increase 0.76 percent |
③Main business by region
Unit: Yuan, Currency: RMB
| Region | Operating income | Increase/ Decrease (%) |
| Domestic | 825,303,711.19 | -5.65 |
| Overseas | 729,241,145.97 | 2.01 |
1.2 Explanation of significant changes in profit caused by non-main businessNot applicable.
1.3 Analysis on assets and liabilities1.3.1 Analysis on assets and liabilities
Unit: Yuan, Currency: RMB
| Item | Ending balance (30th June 2018) | Ratio of Ending Balance to Total Assets (30th June 2018) (%) | Ending balance (31st December 2017) | Ratio of Ending Balance to Total Assets (31st December 2017) (%) | Increase / Decrease (%) | Reason |
| Prepayments | 25,109,489.12 | 0.66 | 64,393,627.71 | 1.74 | -61.01 | Mainly due to the land transfer |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Ending balance (30th June 2018) | Ratio of Ending Balance to Total Assets (30th June 2018) (%) | Ending balance (31st December 2017) | Ratio of Ending Balance to Total Assets (31st December 2017) (%) | Increase / Decrease (%) | Reason |
| payments prepaid by domestic subsidiaries were carried over to the “intangible assets” subject in reporting period | ||||||
| Dividends receivable | 37,322,644.64 | 0.98 | 0.00 | 0.00 | Due to the dividends distributed by STOLL KG and Shanghai Fuji Xerox Co., Ltd. | |
| Other receivable | 78,240,002.47 | 2.05 | 58,944,411.21 | 1.59 | 32.74 | Mainly due to the temporary borrowings increased by domestic subsidiaries in the current period. |
| Construction in progress | 23,656,574.34 | 0.62 | 12,665,274.09 | 0.34 | 86.78 | Mainly due to the increase in the cost of the construction of modern logistics management center project and the Czech factory workshop renovation project in current period. |
| Notes payable | 40,489,531.56 | 1.06 | 12,311,525.18 | 0.33 | 228.88 | Due to the increase of bank acceptance bills of SGGEMSY in the current period. |
| Dividends payable | 1,490,484.14 | 0.04 | 1,110,553.06 | 0.03 | 34.21 | Mainly due to the increase in interest payable on bank borrowings by the overseas subsidiaries in the report period. |
| Long-term loans | 92,374,501.87 | 2.42 | 62,956,504.27 | 1.70 | 46.73 | Due to the newly-added long-term borrowing of DAP AG borrowed from ABC Frankfurt branch. |
| Other comprehensive income | -97,564,133.00 | -2.55 | -72,163,452.90 | -1.95 | -35.20 | Mainly due to the decrease in the fair value of the available-for-sale financial assets and the decrease in the foreign currency statement translation difference |
1.3.2 Restricted major assets as of the end of the reporting periodNot applicable.1.4 Analysis of investment(1) General analysis
Unit: 10,000 Yuan, Currency: RMB
| Long - term equity investment in the report period | 2,000 |
| Increase / Decrease | 2,000 |
| Long - term equity investment in 2016 | 0 |
| Increase / Decrease (%) | / |
During the reporting period, SGG invested 20,000,000 yuan in its subsidiary DAMSH. After the capitalincrease was completed, SGG directly held 51.28% equity of DAMSH and held 48.72% equity of DAMSHthrough its wholly-owned subsidiary DAPSH.
(2) Significant equity investmentNot applicable.(3) Significant non-equity investmentNot applicable.(4) Financial assets at fair value
Unit: Yuan, Currency: RMB
| Stock code | Stock Abbreviation | Initial Investment | Accounting for the | Book Value at the End of the | Profit or Loss for the Report | Changes in Owners' Equity | Accounting Item | Source of Shares |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Cost | proportion of the company's equity (％) | Period | Period | during the Report Period | ||||
| 600757 | Changjiang Publishing & Media | 72,085,722.82 | 0.85 | 58,598,658.46 | 1,029,853.40 | -12,976,152.84 | Available for sale financial assets | Note 1 |
| 900932 | Lujia B Share | 773,099.71 | 0.01 | 2,138,690.51 | / | 5,985.65 | Enforcement | |
| 000166 | Shenwan & Hongyuan | 200,000.00 | 0.00 | 955,378.14 | / | -218,622.00 | Purchased | |
| 601229 | Bank of Shanghai | 951,400.00 | 0.01 | 16,493,738.32 | / | 1,653,560.06 | Purchased |
| Total | 74,010,222.53 | / | 78,186,465.43 | 1,029,853.40 | -11,535,229.13 | / | / |
Note: Shares of Changjiang Publishing & Media were transferred to the Company by bank to whichinterests of Changjiang Publishing & Media were compensated in the bankruptcy and restructuring.
1.5 Significant assets and equity saleNot applicable.1.6 Analysis of main subsidiaries
Unit: 10,000 Yuan, Currency: RMB
| Name | Business scope | Registered capital | Total assets | Net assets | Operating income | Operating profit | Net profit |
| DAP Industrial AG | Investment, asset management, and production, processing, and sales of industrial sewing equipment | 12.5 million euro | 198,173 | 95,767 | 73,712 | 9,191 | 6,136 |
| Shanghai Shensy Enterprise Development Co., Ltd. | Freight, Logistics services | 17,882 | 41,861 | 25,652 | 36,247 | 1,319 | 979 |
| Zhejiang ShangGong GEMSY CO., LTD. | Sewing equipment manufacturing and sales | 21,600 | 33,415 | 20,946 | 16,201 | -130 | -147 |
1.7 Structured entities controlled by the CompanyNot applicable.2. Others2.1 Warning and destription if the Company predicts that its accumulated net profit form thebeginning of the year to the end of the next reporting period may be negative or may have anysignificant change as compared with the profit in the same period of the previous.
Not applicable.2.2 Possible risks(1) Industrial and market riskThe sewing equipment industry is an industry full of market competition, with obvious periodicity, andhas strong dependence on downstream textile and garment, leather bags and other industries, and is greatlyaffected by the macroeconomic environment. Due to the large proportion of the Company's sewing equipmentindustry, the Company is more likely to be affected by the overall industry fluctuations. The Company mayface increased competition in the industry, lower gross profit margins and lower product prices.
(2) Transnational operations and integration risk
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
With the expansion of the Company's overseas assets and business scale, transnational operations putforward higher requirements for the Company's organizational structure, business model, management teamand staff. In the process of production, operation and the integration of overseas subsidiaries, the Companywill face challenges arising from differences in domestic and international policy systems, corporate cultureand management concepts.
(3) Risk of exchange rate fluctuationsThe bookkeeping base currency of the Company's consolidated statements is RMB. Domestic productexports are mostly settled in US dollars. The daily operations of the Company's subsidiary DAP AG and itsholding subsidiaries are mainly settled in foreign currencies such as the Euro. Fluctuations in the RMBexchange rate will bring certain exchanges on the future operation of the Company, resulting in assetdepreciation risk.
2.3 Others(1) Implementation of furtherintegration of SGE
At the thirty-fifth meeting of the seventh board of directors of the company, the “Proposal on FurtherIntegration of SGE” was reviewed and approved, and the plan for further integration of the company’s
wholly-owned subsidiary SGE and its subsidiaries was agreed. It includes SGE's merger with its holdingsubsidiary DA AG, squeezing out the minority shareholders holding approximately 5.99% of DA AG'sshares.(For details, please refer to Announcements 2017-029, 2018-003, 2018-005, 2018-016, 2018-020, and2018-023 disclosed by SGG on September 26, 2017, February 9, 2018, March 27, 2018, June 1, 2018, June 23,2018, and July 18, 2018.)
The matter was basically completed by the end of July 2018, and DA AG’s shares have been delisted from
the Frankfurt, Berlin and Düsseldorf stock exchanges. After the completion of the above matters, the name of
SGE was renamed to “Dürkopp Adler AG” by “DAP Industrial AG”.
Chapter 5 Important Events
1. Brief introduction of shareholder’s meeting
| Name of meeting | Date of meeting | Inquiry index of designated website for publishing resolutions | Disclosure date for publishing resolutions |
| The 2017 Annual Shareholders’ Meeting | 20th June 2018 | www.sse.com.cn | 21st June 2018 |
2. Plan of profit distribution or transfer of reserves
| Whether distribute profits or transfer reserves | No |
3. Commitment
| Background | Type | Commitment Party | Commitment Content | Commitment period | Whether There is a Time Limit | Whether Timely and Strictly Perform | Reason for Failure to Fulfill Commitment | Future Plan if Fail to Fulfill Commitment |
| Commitment in the Statement of Changes in Equity | Other | PKFR | Shares of SGG held by PKFR will not be less than shares held by Pudong SASAC From 29th December 2016 to 28th | 29th December 2016 to 28th December 2019 | Yes | Yes | N/A | N/A |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
4. Appointment and dismiss of accounting firmNot applicable.5. BankruptcyNot applicable.6. Important lawsuit and arbitrationThe 22nd meeting of the 7th Board of Directors of the Company examined and approved the Proposal onInvesting in STOLL KG through ShangGong Europe, and agreed that the wholly-owned subsidiaryShangGong 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 shareprice is based on the net assets of STOLL's audited consolidated statement in 2014, and the parties agreed thatshare price will be adjusted according to the net assets of STOLL's audited consolidated statement in 2015 andrelated clauses in the Contract. Now the parties have disputes on the calculation of net assets of STOLL'saudited consolidated statement in 2015 and the understanding of the relevant terms of the Contract, resulting ina difference of approximately 4.26 million euro in the calculation of the price adjustment. ShangGong Europehas received the Application for Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limitedpartners of STOLL KG on 20th July 2017. ShangGong Europe will, in accordance with the terms of thecontract, 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. TheCompany 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 onthe Company.
7. Punishment on and rectification of listed company and its directors, supervisors, senior managers,controlling shareholders, actual controller and purchaser
Not applicable.8. Credit status of the company and its controlling shareholder and actual controllerNot applicable.9. Company stock right incentives, espo, and other employee incentivesNot applicable.10. Major related party transactions
December 2019.
Summary of matters
| Summary of matters | Query index |
| 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 2018, the amount of products that it will sell to Fiji Xerox is 20 million yuan, and in the report period, the sales amount was 9.8061 million yuan | For details, please refer to Announcement No. 2018-009 disclosed by SGG on 17th April 2018. |
11. Significant contracts and their implementation11.1 Trusteeship, contracting and leaseNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
11.2 Guarantee
Unit: 10,000 Yuan, Currency: RMB
| 公司对外担保情况（不包括对子公司的担保） | |||||||||||||
| Guarantor | Relations of the guarantor to listed company | Security party | Amount guaranteed | Guarantee date (agreement signoff date | Start date | Expiration date | Type | If guarantee is done | Overdue | Overdue amounts | If counter guarantee available? | Guarantee for related party? | Relation |
| SGG | The Company | Commerzbank Shanghai Branch | 7,000 | 25 March 2014 | 25 March 2014 | Joint liability guarantee | No | No | 0 | No | No | ||
| SGG | The Company | Commerzbank Shanghai Branch | 6,733 | 30 June 2014 | 1 July 2014 | Joint liability guarantee | No | No | 0 | No | No | ||
| SGG | The Company | Commerzbank Shanghai Branch | 10,100 | 19 September 2016 | 19 Sept. 2016 | Joint liability guarantee | No | No | 0 | No | No | ||
| SGG | The Company | Commerzbank Shanghai Branch | 8,417 | 28 August 2015 | 28 August 2015 | Joint liability guarantee | No | No | 0 | No | No | ||
| SGG | The Company | Industrial & Commercial Bank of China Shanghai Hongkou Branch | 6,121 | 21 December 2015 | 21 Dec. 2015 | 21 Dec. 2020 | Joint liability guarantee | No | No | 0 | No | No | |
| DAP AG | Wholly owned subsidiary | Commerzbank | 2,104 | 07 January 2016 | 07 January 2016 | 30 July 2018 | Joint liability guarantee | No | No | 0 | No | No | |
| Guarantee amounts spent during the report period (excluded guarantee to affiliate company. | 0 | ||||||||||||
| Total balance of guarantee at the end of period (affiliate companies are not quailed.)（A） | 40,475 | ||||||||||||
| 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） | 40,475 | ||||||||||||
| Ratio of total guarantee amounts to company net assets (%) | 18.28 | ||||||||||||
| 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 asShangGong (Europe) Holding Corp. GmbH) , applied to the Bielefeld Branch of Commerzbank for a currentfund loan of not more than the equivalent of 58 million yuan in euro, the Shanghai Branch of Commerzbankissued a financing guarantee letter for the funds, and the Company issued a corporate letter of guarantee forpayment 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 ofCommerzbank for a current fund loan of 8 million euro, the Shanghai Branch of Commerzbank issued afinancing guarantee letter for the funds, and the Company issued an unconditionally irrecoverable corporateletter of guarantee for payment of 8.8 million euro as counter guarantee for the abovementioned financingguarantee letter.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
On 19th September 2016, the Company's wholly owned subsidiary DAP AG applied to the BielefeldBranch of Commerzbank for a short-term credit loan of 12 million euro, the Shanghai Branch ofCommerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionallyirrecoverable 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 theKaiserslautern Branch of Commerzbank for a loan of 10.00 million euro, the Shanghai Branch ofCommerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionallyirrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for theabovementioned financing guarantee letter.
On 21st December 2015, the Company's wholly owned subsidiary DAP AG applied to the FrankfurtBranch 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 anunconditionally irrecoverable corporate letter of guarantee for self-using fix assets where No.603 Dapu Roadas 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 bankguarantee issued by Commerzbank, Germany, for the period from 7th January 2016 to 30th July 2017 andfrom 7th January 2016 to 30th July 2018 respectively. It provided guarantees for DAP AG to pay equitypurchase price to German H. Stoll AG & Co. KG equity sellers.
11.3 Other significant contractsNot applicable.12. Poverty alleviation of listed companyNot applicable.13. Convertible corporate bondsNot applicable.14. Environmental informationThe Company and its subsidiaries do not belong to the key pollutant discharge units announced by theenvironmental protection department. During the report period, the Company and its subsidiaries strictlyenforced the laws and regulations concerning environmental protection, formulated strict environmentalpractices, and took corresponding measures against pollution sources. There were no violations ofenvironmental laws and regulations and pollution accidents. The Company has not been punished by theenvironmental protection department for environmental violations.
15. Other significant events15.1 The changes, causes and effects of changes in accounting policies, accounting estimates andaccounting methods compared with the previous accounting period
Not applicable.15.2 The correction of major accounting errors during the reporting periodNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
15.3 OthersIn May 2018, the Company entrusted Bank of Shanghai Co., Ltd. Fumin Branch to issue a loan of RMB53 million to Richpeace. The loan period was from May 22, 2018 to November 22, 2018, with an annualinterest rate of 4.7%. Richpeace is collateralized by the property located at No. 6 Baozhong Road, Tianjin(prescription certificate No. 124031304818, and Tianjin (2016) Baodi District No. 1001390). At the same time,all the equity of Richpeace held by Tianjin Tongshang Software Co., Ltd. and Shenzhen Yingning VentureCapital Co., Ltd. were also pledged to the Company in May 2018.
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to acquire 65% equity of Richpeace and increase its capital. The total investment is 156.137million yuan, including: equity acquisition of 136,663,800 yuan and capital increase of 19.5 million yuan. OnAugust 9, 2018, Richpeace completed the change of registration caused by the equity acquisition and obtainedthe latest business license. SGG has paid the first equity transfer price on August 15, 2018.
Chapter 6 Changes in Shares of Common Stock and Information about
Common Stock Shareholders
1. Changes in shares of common stock1.1 Changes in shares of common stockNot applicable.1.2 Change of non-tradable sharesNot applicable.2. Shareholder2.1 Total number of shareholders
| Total number of shareholder at the end of report period | 56,562 (A Share: 29,705; B Share: 26,857) |
2.2 Shareholding status of top 10 shareholders and top 10 unrestricted shareholders
Unit: Share
| Top 10 Shareholders | |||||||
| Name of Shareholder | Increase or Decrease in the Report Period | Total Shares Held at the End of Report Period | Proportion (%) | Restricted Share | Shares Pledged or Frozen | Nature of shareholders | |
| Status | Amount | ||||||
| Shanghai Puke Flyingman Investment Co., Ltd. | 0 | 60,789,457 | 11.08 | 0 | Pledged | 60,000,000 | Domestic Non-state-owned Legal Person |
| State-owned Assets Supervision and Administration Commission of Shanghai Pudong New Area People's Government | 0 | 45,395,358 | 8.27 | 0 | / | State | |
| China Great Wall Asset Management Co., Ltd. | 0 | 22,200,000 | 4.05 | 0 | / | State-owned Legal Person | |
| SHANGHAI INTERNATIONAL GROUP Asset Management Co., Ltd. | 0 | 10,968,033 | 2.00 | 0 | / | State-owned Legal Person | |
| SCBHK A/C KG INVESTMENTS ASIA LIMITED | 242,136 | 5,151,591 | 0.94 | 0 | / | Foreign Legal Person | |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| GREAT WALL GUORONG INVESTMENT AND MANAGEMENT CO., LTD. | 0 | 4,770,654 | 0.87 | 0 | / | State-owned Legal Person | |||
| ISHARES CORE MSCI EMERGING MARKETS ETF | 3,880,500 | 4,236,700 | 0.77 | 0 | / | Foreign Legal Person | |||
| Industrial and Commercial Bank of China Co., Ltd.-Hua'an Reverse Strategy Hybrid Securities Investment Fund | 3,761,900 | 3,761,900 | 0.69 | 0 | / | Other | |||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 0 | 3,678,113 | 0.67 | 0 | / | Foreign Legal Person | |||
| Zeng Weili | 3,540,091 | 3,540,091 | 0.65 | 0 | / | Domestic Natural Person | |||
| Top 10 Unrestricted Shareholders | |||||||||
| Name | Unrestricted Shares | Share Type and Amount | |||||||
| 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 Pudong New Area People's Government | 45,395,358 | A Share | 45,395,358 | ||||||
| China Great Wall Asset Management Co., Ltd. | 22,200,000 | A Share | 22,200,000 | ||||||
| SHANGHAI INTERNATIONAL GROUP Asset Management Co., Ltd. | 10,968,033 | A Share | 10,968,033 | ||||||
| SCBHK A/C KG INVESTMENTS ASIA LIMITED | 5,151,591 | B Share | 5,151,591 | ||||||
| GREAT WALL GUORONG INVESTMENT AND MANAGEMENT CO., LTD. | 4,770,654 | A Share | 4,770,654 | ||||||
| ISHARES CORE MSCI EMERGING MARKETS ETF | 4,236,700 | B Share | 4,236,700 | ||||||
| Industrial and Commercial Bank of China Co., Ltd.-Hua'an Reverse Strategy Hybrid Securities Investment Fund | 3,761,900 | A Share | 3,761,900 | ||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 3,678,113 | B Share | 3,678,113 | ||||||
| Zeng Weili | 3,540,091 | A Share | 3,540,091 | ||||||
| Notes on shareholder relationship and consistent actions: | REAT WALL GUORONG INVESTMENT AND MANAGEMENT CO., LTD. is the wholly-owned subsidiary of China Great Wall Asset Management Co., Ltd. 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.2.3 Strategic investors or general legal persons become the top 10 shareholders due to theplacement of new shares
Not applicable.3. Change of controlling shareholder and actual controllerNot applicable.
Chapter 7 Information about Preferred Shares
Not applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Chapter 8 Inforamtion about Directors, Supervisors and Senior Managers
1. Share change1.1 Share change of current and former directors, supervisors and senior managers
Unit: Share
| Name | Title | Shares Held at the Beginning of reporting period | Shares Held at the End of reporting period | Increase / Decrease during the reporting period | Reason |
| Zheng Ying | Senior manager | 21,500 | 23,500 | 2,000 | Increased holdings in the secondary market |
1.2 Equity incentive granted to directors, supervisors, and senior managers in the report periodNot applicable.2. Change of directors, supervisors and senior managers of the Company
| Name | Title | Change |
| Zheng Ying | Deputy General Manager | Outgoing |
| Li Wenhao | Director | Out going |
| Li Chen | Director | Election |
Note:
1. Ms. Zheng Ying submitted her resignation application on February 26, 2018, and no longer holds anyposition in the company and its subsidiaries.
2. Mr. Li Wenhao submitted his resignation application on April 4, 2018, and no longer serves as adirector of the Company and a member of the Strategy Committee.
3. The 2017 Annual Shareholders’ Meeting held on June 20, 2018 selected Mr. Li Chen as a director of
theCompany.
Chapter 9 Corporate Bonds
Not applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Chapter 10 Financial Report
1. Audit reportNot applicable.2. Financial statements
Shang Gong Group Co., Ltd.Consolidated Statement of Financial Position
30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Ending Balance | Beginning Balance |
| Current assets: | |||
| Cash and cash equivalents | 646,652,222.60 | 723,337,878.53 | |
| Deposit reservation for balance | |||
| Lending funds | |||
| Financial assets at fair value whose fluctuation is attributed to profit or loss for current period | |||
| Derivative financial assets | |||
| Notes receivable | 71,154,988.87 | 61,337,538.87 | |
| Accounts receivable | 526,607,735.97 | 464,759,380.20 | |
| Prepayment | 25,109,489.12 | 64,393,627.71 | |
| Premiums receivable | |||
| Reinsurance accounts receivable | |||
| Provision of cession receivable | |||
| Interest receivable | 21,645.73 | ||
| Dividends receivable | 37,322,644.64 | ||
| Other receivables | 78,240,002.47 | 58,944,411.21 | |
| Redemptory monetary capital for sale | |||
| Inventories | 792,428,800.07 | 705,141,821.59 | |
| Assets held for sale | |||
| Non-current assets maturing within one year | |||
| Other current assets | 383,988,701.58 | 366,533,356.84 | |
| Total current assets | 2,561,504,585.32 | 2,444,469,660.68 | |
| Non-current assets: | |||
| Loans and payments on behalf | |||
| Available-for-sale financial assets | 109,512,714.88 | 118,959,944.05 | |
| Held-to-maturity investments | |||
| Long-term receivables | |||
| Long-term equity investments | 253,201,385.72 | 275,799,606.70 | |
| Investment properties | 147,443,679.65 | 149,502,332.46 | |
| Fixed assets | 386,655,827.26 | 397,788,367.78 | |
| Construction in progress | 23,656,574.34 | 12,665,274.09 | |
| Project materials | |||
| Disposal of fixed assets | |||
| Productive biological assets | |||
| Oil and gas assets | |||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Ending Balance | Beginning Balance |
| Intangible assets | 186,743,200.28 | 149,988,157.46 | |
| Development expenditures | 16,810,150.46 | 16,683,772.84 | |
| Goodwill | 71,081,127.21 | 72,482,033.43 | |
| Long-term deferred expenses | 1,444,628.38 | 1,631,013.88 | |
| Deferred income tax assets | 66,486,985.81 | 63,544,908.23 | |
| Other non-current assets | |||
| Total non-current assets | 1,263,036,273.99 | 1,259,045,410.92 | |
| Total assets | 3,824,540,859.31 | 3,703,515,071.60 | |
| Current liabilities: | |||
| Short-term loans | 354,170,348.62 | 330,389,201.62 | |
| 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 | 40,489,531.56 | 12,311,525.18 | |
| Accounts payable | 203,320,210.56 | 194,031,795.38 | |
| Receipt in advance | 34,936,329.32 | 38,326,094.65 | |
| Financial assets sold for repurchase | |||
| Handling charges and commissions payable | |||
| Employee benefits payable | 78,968,315.54 | 91,112,179.00 | |
| Taxes and surcharges payable | 10,408,022.03 | 14,074,587.91 | |
| Interest payable | 1,490,484.14 | 1,110,553.06 | |
| Dividends payable | 1,032,818.86 | 1,032,818.86 | |
| Other payables | 174,677,791.04 | 193,617,747.74 | |
| 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 | 1,260,000.00 | |
| Other current liabilities | 45,909.00 | 48,330.03 | |
| Total current liabilities | 900,799,760.67 | 877,314,833.43 | |
| Non-current liabilities: | |||
| Long-term loans | 92,374,501.87 | 62,956,504.27 | |
| Bonds payable | |||
| Including: preference shares | |||
| Perpetual bond | |||
| Long-term payables | 2,982,645.99 | 3,121,893.11 | |
| Long-term employee benefits payable | 234,900,081.93 | 247,420,777.32 | |
| Special payables | |||
| Estimated liabilities | 546,461.91 | 546,461.91 | |
| Deferred income | 2,340,000.00 | 2,340,000.00 | |
| Deferred income tax liabilities | 54,798,654.66 | 52,863,141.42 | |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Ending Balance | Beginning Balance |
| Other non-current liabilities | 520,000.00 | 520,000.00 | |
| Total non-current liabilities | 388,462,346.36 | 369,768,778.03 | |
| Total liabilities | 1,289,262,107.03 | 1,247,083,611.46 | |
| Owners' equity | |||
| Share capital | 548,589,600.00 | 548,589,600.00 | |
| Other equity instruments | |||
| Including: preference shares | |||
| Perpetual bond | |||
| Capital reserves | 966,167,899.33 | 972,000,595.56 | |
| Less: treasury stock | |||
| Other comprehensive income | -97,564,133.00 | -72,163,452.90 | |
| Special reserves | |||
| Surplus reserves | 4,546,242.52 | 4,546,242.52 | |
| General risk reserves | |||
| Undistributed profits | 792,403,038.01 | 692,241,691.51 | |
| Total owners' equity attributable to the parent company | 2,214,142,646.86 | 2,145,214,676.69 | |
| Minority equity | 321,136,105.42 | 311,216,783.45 | |
| Total owners' equity | 2,535,278,752.28 | 2,456,431,460.14 | |
| Liabilities and owners' equity | 3,824,540,859.31 | 3,703,515,071.60 | |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Shang Gong Group Co., Ltd.Statement of Financial Position
30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Ending Balance | Beginning Balance |
| Current assets: | |||
| Cash and cash equivalents | 100,425,649.01 | 137,028,156.51 | |
| Financial assets at fair value whose fluctuation is attributed to profit or loss for current period | |||
| Derivative financial assets | |||
| Notes receivable | 11,112,204.19 | 18,619,880.00 | |
| Accounts receivable | 39,942,843.94 | 36,846,572.06 | |
| Prepayment | 380,597.56 | 3,488,722.53 | |
| Interest receivable | |||
| Dividends receivable | 9,949,000.00 | ||
| Other receivables | 129,928,237.91 | 107,954,125.03 | |
| Inventories | 134,102,254.13 | 114,386,355.60 | |
| Assets held for sale | |||
| Non-current assets maturing within one year | |||
| Other current assets | 325,620,952.57 | 310,981,332.13 | |
| Total current assets | 751,461,739.31 | 729,305,143.86 | |
| Non-current assets: | |||
| Available-for-sale financial assets | 109,512,714.88 | 118,959,944.05 | |
| Held-to-maturity investments | |||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Ending Balance | Beginning Balance |
| Long-term receivables | 134,908,835.57 | 135,720,449.62 | |
| Long-term equity investments | 659,310,221.03 | 639,310,221.03 | |
| Investment properties | 85,384,196.83 | 88,389,027.77 | |
| Fixed assets | 6,072,256.85 | 8,036,379.04 | |
| Construction in progress | 1,685,694.08 | 2,871,501.40 | |
| Project materials | |||
| Disposal of fixed assets | |||
| Productive biological assets | |||
| Oil and gas assets | |||
| Intangible assets | 11,098,980.59 | 11,541,893.86 | |
| Development expenditures | |||
| Goodwill | |||
| Long-term deferred expenses | 1,334,557.48 | 1,496,482.78 | |
| Deferred income tax assets | 587,977.83 | 587,977.83 | |
| Other non-current assets | |||
| Total non-current assets | 1,009,895,435.14 | 1,006,913,877.38 | |
| Total assets | 1,761,357,174.45 | 1,736,219,021.24 | |
| 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 | 143,551,161.23 | 123,067,605.01 | |
| Receipt in advance | 2,799,019.60 | 14,500,867.77 | |
| Employee benefits payable | 1,326,805.83 | 9,133,348.57 | |
| Taxes and surcharges payable | 364,948.66 | 579,085.22 | |
| Interest payable | |||
| Dividends payable | 1,032,818.86 | 1,032,818.86 | |
| Other payables | 155,151,331.38 | 153,278,589.85 | |
| Liabilities held for sale | |||
| Non-current liabilities maturing within one year | 1,260,000.00 | 1,260,000.00 | |
| Other current liabilities | |||
| Total current liabilities | 305,834,234.18 | 303,200,463.90 | |
| 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 | |||
| Deferred income tax liabilities | 1,197,067.41 | 1,197,067.41 | |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Ending Balance | Beginning Balance |
| Other non-current liabilities | 520,000.00 | 520,000.00 | |
| Total non-current liabilities | 4,781,364.91 | 4,781,364.91 | |
| Total liabilities | 310,615,599.09 | 307,981,828.81 | |
| 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 | 4,176,242.90 | 15,711,472.03 | |
| Special reserves | |||
| Surplus reserves | 4,546,242.52 | 4,546,242.52 | |
| Undistributed profits | -109,853,197.79 | -143,892,809.85 | |
| Total owners' equity | 1,450,741,575.36 | 1,428,237,192.43 | |
| Liabilities and owners' equity | 1,761,357,174.45 | 1,736,219,021.24 | |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Consolidated Statement of Comprehensive Incomes
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| 1. Incomes | 1,494,794,413.27 | 1,532,562,601.12 | |
| Including: operating income | 1,494,794,413.27 | 1,532,562,601.12 | |
| Interest income | |||
| Premiums earned | |||
| Income from handling charges and commissions | |||
| 2. Costs | 1,371,509,135.49 | 1,377,803,455.91 | |
| Including: Cost of sales | 1,052,451,025.46 | 1,088,801,959.30 | |
| 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 | 5,160,231.67 | 5,994,544.14 | |
| Selling expenses | 147,600,554.52 | 141,412,181.17 | |
| General and administrative expenses | 154,556,576.41 | 143,922,099.95 | |
| Financial expenses | 12,091,231.56 | -6,849,775.62 | |
| Losses from asset impairment | -350,484.13 | 4,522,446.97 | |
| Plus: gains from changes in fair value ("-" for losses) | |||
| Investment income ("-" for losses) | 17,485,066.32 | 18,495,885.65 | |
| Including: income from investment in associates and | -1,691,101.14 | 11,737,352.98 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| joint ventures | |||
| Gains on disposal of assets | -571,141.92 | 9,747,624.59 | |
| Foreign exchange gains ("-" for losses) | |||
| Other gains | 2,616,373.56 | 2,540,381.10 | |
| 3. Operating profits ("-" for losses) | 142,815,575.74 | 185,543,036.55 | |
| Plus: non-operating income | 3,355,954.72 | 105,785.34 | |
| Less: non-operating expenses | 955,572.93 | 305,083.71 | |
| 4. Total profits ("-" for total losses) | 145,215,957.53 | 185,343,738.18 | |
| Less: income tax expenses | 32,930,028.35 | 46,499,111.30 | |
| 5. Net profit ("-" for net loss) | 112,285,929.18 | 138,844,626.88 | |
| (1) Classified by operating sustainability | |||
| a. Net profit from continuing operations ("-" for losses) | 112,285,929.18 | 138,844,626.88 | |
| b. Net profit from discontinued operations ("-" for losses) | |||
| (2) Classified by ownership | |||
| a. Non-controlling interests | 100,161,346.50 | 125,980,892.71 | |
| b. Net profit attributable to owners of the parent company | 12,124,582.68 | 12,863,734.17 | |
| 6. Net of tax of other comprehensive income | -27,605,940.81 | 30,819,765.91 | |
| Net of tax of other comprehensive income attributable to owners of the parent company | -25,400,680.10 | 26,307,833.02 | |
| (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 equity method | |||
| (2) Other comprehensive income to be reclassified to gains and losses later | -25,400,680.10 | 26,307,833.02 | |
| 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 available-for-sale financial assets | -11,535,229.13 | -6,813,128.79 | |
| 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 | -13,865,450.97 | 33,120,961.81 | |
| f. Others | |||
| Net of tax of other comprehensive income attributable to non-controlling shareholders | -2,205,260.71 | 4,511,932.89 | |
| 7. Total comprehensive incomes | 84,679,988.37 | 169,664,392.79 | |
| Total comprehensive income attributable to owners of the parent company | 74,760,666.40 | 152,288,725.73 | |
| Total comprehensive income attributable to non-controlling shareholders | 9,919,321.97 | 17,375,667.06 | |
| 8. Earnings per share | |||
| (1) Basic earnings per share (yuan/share) | 0.1826 | 0.2296 | |
| (2) Diluted earnings per share (yuan/share) | 0.1826 | 0.2296 |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Statement of Comprehensive Incomes
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| 1. Operating income | 184,812,505.26 | 46,385,796.09 | |
| Less: Operating cost | 125,430,105.96 | 23,996,317.49 | |
| tax and surcharges | 2,284,387.24 | 1,891,943.39 | |
| Selling expenses | 18,213,101.44 | 2,643,464.25 | |
| General and Administration expenses | 25,487,850.62 | 20,078,331.44 | |
| Finance expenses | 63,811.51 | -8,681,598.18 | |
| Impairment losses on assets | 1,388,117.84 | 177,256.58 | |
| Plus: gains from changes in fair value ("-" for losses) | |||
| Investment income ("-" for losses) | 18,852,017.46 | 6,106,969.93 | |
| Including: Investment income in associates and joint ventures | |||
| Gain on disposal of assets ("-" for losses) | 1,906.38 | 9,449,919.98 | |
| Other income | 524,688.70 | 30,381.10 | |
| 2. Operating profits ("-" for losses) | 31,323,743.19 | 21,867,352.13 | |
| Plus: Non-operating income | 3,287,449.06 | 1,060.85 | |
| Less: Non-operating expenses | 571,580.19 | 200,000.00 | |
| 3. Total profits ("-" for total losses) | 34,039,612.06 | 21,668,412.98 | |
| Less: income tax expenses | |||
| 4. Net profit ("-" for net loss) | 34,039,612.06 | 21,668,412.98 | |
| a. Net profit from continuing operations ("-" for losses) | 34,039,612.06 | 21,668,412.98 | |
| b. Net profit from discontinued operations ("-" for losses) | |||
| 5. Net of tax of other comprehensive income | -11,535,229.13 | -6,813,128.79 | |
| 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 | |||
| (2) Other comprehensive income to be reclassified to gains and losses later | -11,535,229.13 | -6,813,128.79 | |
| 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 available-for-sale financial assets | -11,535,229.13 | -6,813,128.79 | |
| 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 | |||
| f. Others | |||
| 6. Total comprehensive incomes | 22,504,382.93 | 14,855,284.19 | |
| 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 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Consolidated Statement of Cash Flows
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| 1. Cash flows from operating activities: | |||
| Cash received from sale of goods and provision of services | 1,468,995,000.92 | 1,558,790,106.65 | |
| 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 | 24,524,599.65 | 23,417,955.22 | |
| Cash received from other operating activities | 20,025,299.88 | 21,723,964.87 | |
| Sub-total of cash inflows from operating activities | 1,513,544,900.45 | 1,603,932,026.74 | |
| Cash paid for goods purchased and services received | 1,000,221,408.15 | 1,106,016,865.34 | |
| 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 | 359,869,785.40 | 323,950,873.52 | |
| Cash paid for taxes and surcharges | 66,300,639.21 | 101,258,510.93 | |
| Cash paid for other operating activities | 144,856,222.44 | 132,496,100.42 | |
| Sub-total of cash outflows from operating activities | 1,571,248,055.20 | 1,663,722,350.21 | |
| Net cash flows from operating activities | -57,703,154.75 | -59,790,323.47 | |
| 2. Cash flows from investing activities: | |||
| Cash inflow from divestment | 415,980,156.89 | 606,327,427.90 | |
| Cash inflow from investment incomes | 1,290,784.50 | 801,400.43 | |
| Cash gain from disposal of fixed assets, intangible assets, and other long-term investment | 497,493.66 | 10,661,268.33 | |
| Cash inflow from disposal of subsidiaries and other operating units | |||
| Cash received from other investing activities | |||
| Sub-total of cash inflows from investing activities | 417,768,435.05 | 617,790,096.66 | |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 50,035,946.10 | 41,015,907.75 | |
| Cash paid for investments | 445,862,662.32 | 620,108,197.50 | |
| Net increase in pledge loans | |||
| Net cash paid to acquire subsidiaries and other business units | |||
| Cash paid for other investing activities |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| Sub-total of cash outflows from investing activities | 495,898,608.42 | 661,124,105.25 | |
| Net cash flows from investing activities | -78,130,173.37 | -43,334,008.59 | |
| 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 | 137,855,600.00 | 330,195,595.00 | |
| Cash received from bonds issuance | |||
| Cash received from other financing activities | 429,112.68 | ||
| Sub-total of cash inflows from financing activities | 137,855,600.00 | 330,624,707.68 | |
| Cash paid for debt repayments | 77,888,834.00 | 341,839,165.55 | |
| Cash paid for distribution of dividends and profits or payment of interest | 6,802,648.19 | 9,551,927.66 | |
| Including: dividends and profits paid to non-controlling shareholders by subsidiaries | 1,833,942.30 | ||
| Cash paid for other financing activities | |||
| Sub-total of cash outflows from financing activities | 84,691,482.19 | 351,391,093.21 | |
| Net cash flows from financing activities | 53,164,117.81 | -20,766,385.53 | |
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | -5,925,323.34 | 22,569,433.51 | |
| 5. Net increase in cash and cash equivalents | -88,594,533.65 | -101,321,284.08 | |
| Plus: beginning balance of cash and cash equivalents | 713,813,720.45 | 750,357,929.63 | |
| 6. Ending balance of cash and cash equivalents | 625,219,186.80 | 649,036,645.55 |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Statement of Cash FlowsFrom 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| 1. Cash flows from operating activities: | |||
| Cash received from sale of goods and provision of services | 197,477,098.52 | 50,038,010.69 | |
| Refunds of taxes and surcharges | 997,057.43 | 29,728.60 | |
| Cash received from other operating activities | 18,901,316.47 | 11,242,643.33 | |
| Sub-total of cash inflows from operating activities | 217,375,472.42 | 61,310,382.62 | |
| Cash paid for goods purchased and services received | 139,833,572.71 | 25,174,592.83 | |
| Cash paid to and on behalf of employees | 27,806,037.36 | 14,056,014.14 | |
| Cash paid for taxes and surcharges | 3,134,689.28 | 3,224,645.83 | |
| Cash paid for other operating activities | 53,107,805.94 | 35,520,905.54 | |
| Sub-total of cash outflows from operating activities | 223,882,105.29 | 77,976,158.34 | |
| Net cash flows from operating activities | -6,506,632.87 | -16,665,775.72 | |
| 2. Cash flows from investing activities: | |||
| Cash inflow from divestment | 376,654,041.82 | 526,075,598.49 | |
| Cash inflow from investment incomes | 1,472,034.50 | 10,692,049.83 | |
| Cash gain from disposal of fixed assets, intangible assets, and other long-term investment | 980.58 | 9,901,416.00 | |
| Cash inflow from disposal of subsidiaries and other operating units |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Note | Reporting period (from January to June 2018) | Same period of the previous year (from January to June 2017) |
| Cash received from other investing activities | 10,303,934.17 | ||
| Sub-total of cash inflows from investing activities | 378,127,056.90 | 556,972,998.49 | |
| Cash paid for acquisition of fixed assets, intangible assets and other long-term assets | 192,643.35 | 2,231,017.10 | |
| Cash paid for investments | 408,033,790.00 | 520,211,083.00 | |
| Net cash paid to acquire subsidiaries and other business units | |||
| Cash paid for other investing activities | |||
| Sub-total of cash outflows from investing activities | 408,226,433.35 | 522,442,100.10 | |
| Net cash flows from investing activities | -30,099,376.45 | 34,530,898.39 | |
| 3. Cash flows from financing activities | |||
| Cash received from investors | |||
| Cash received from loans | |||
| Cash received from bonds issuance | |||
| Cash received from other financing activities | |||
| Sub-total of cash inflows from financing 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 | |||
| 4. Effect of fluctuation in exchange rate on cash and cash equivalents | 3,501.82 | 1,977.90 | |
| 5. Net increase in cash and cash equivalents | -36,602,507.50 | 17,867,100.57 | |
| Plus: beginning balance of cash and cash equivalents | 137,028,156.51 | 119,210,234.41 | |
| 6. Ending balance of cash and cash equivalents | 100,425,649.01 | 137,077,334.98 |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Consolidated Statement of Changes in Equity
From 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Reporting period | ||||||||||||
| Owners' equity attributable to the parent company | Minority equity | Total owners' equity | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserves | Undistributed profits | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||
| 1. Previous year ending balance brought forward | 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 | ||||||
| Plus: accounting policy changes | 0.00 | ||||||||||||
| Correction of previous-period accounting errors | 0.00 | ||||||||||||
| Business combination involving entities under common control | 0.00 | ||||||||||||
| Others | 0.00 | ||||||||||||
| 2. Beginning balance of current year | 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 | ||||||
| 3. Increase/ (decrease) for the current year ("-" for losses) | -5,832,696.23 | -25,400,680.10 | 100,161,346.50 | 9,919,321.97 | 78,847,292.14 | ||||||||
| (1) Total comprehensive incomes | -25,400,680.10 | 100,161,346.50 | 9,919,321.97 | 84,679,988.37 | |||||||||
| (2) Investment/ (divestment) | -5,832,696.23 | -5,832,696.23 | |||||||||||
| a. Common shares from shareholders | 0.00 | ||||||||||||
| b. Investment capital from the holders of other equity instruments | 0.00 | ||||||||||||
| c. Amount of the share-based payment included in the owners' equity | 0.00 | ||||||||||||
| d. Others | -5,832,696.23 | -5,832,696.23 | |||||||||||
| (3) Distribution of profits | |||||||||||||
| a. Surplus reserves | |||||||||||||
| b. General risk reserves | |||||||||||||
| c. Distribution to owners or 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 | |||||||||||||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Reporting period | ||||||||||||
| Owners' equity attributable to the parent company | Minority equity | Total owners' equity | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserves | Undistributed profits | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||
| 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 | 0.00 | 0.00 | 0.00 | 966,167,899.33 | 0.00 | -97,564,133.00 | 0.00 | 4,546,242.52 | 0.00 | 792,403,038.01 | 321,136,105.42 | 2,535,278,752.28 |
| Item | Same period of the previous year | ||||||||||||
| Owners' equity attributable to the parent company | Minority equity | Total owners' equity | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserves | Undistributed profits | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||
| 1. Previous year ending balance brought forward | 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 | ||||||
| Plus: accounting policy changes | 0.00 | ||||||||||||
| Correction of previous-period accounting errors | 0.00 | ||||||||||||
| Business combination involving entities under common control | 0.00 | ||||||||||||
| Others | 0.00 | ||||||||||||
| 2. Beginning balance of current year | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 971,603,120.27 | 0.00 | -103,144,046.15 | 0.00 | 4,546,242.52 | 0.00 | 494,754,465.24 | 291,984,568.18 | 2,208,333,950.06 |
| 3. Increase/ (decrease) for the current year ("-" for losses) | 0.00 | 0.00 | 0.00 | 0.00 | -3,413,389.32 | 0.00 | 26,307,833.02 | 0.00 | 0.00 | 0.00 | 125,980,892.71 | 15,541,724.76 | 164,417,061.17 |
| (1) Total comprehensive incomes | 26,307,833.02 | 125,980,892.71 | 17,375,667.06 | 169,664,392.79 | |||||||||
| (2) Investment/ (divestment) | 0.00 | 0.00 | 0.00 | 0.00 | -3,413,389.32 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -3,413,389.32 |
| a. Common shares from shareholders | 0.00 | ||||||||||||
| b. Investment capital from the holders of other equity instruments | 0.00 | ||||||||||||
| c. Amount of the share-based payment included in the owners' | 0.00 | ||||||||||||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Same period of the previous year | ||||||||||||
| Owners' equity attributable to the parent company | Minority equity | Total owners' equity | |||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | General risk reserves | Undistributed profits | |||||
| Preference shares | Perpetual bonds | Others | |||||||||||
| equity | |||||||||||||
| d. Others | -3,413,389.32 | -3,413,389.32 | |||||||||||
| (3) Distribution of profits | -1,833,942.30 | -1,833,942.30 | |||||||||||
| a. Surplus reserves | 0.00 | ||||||||||||
| b. General risk reserves | 0.00 | ||||||||||||
| c. Distribution to owners or shareholders | -1,833,942.30 | -1,833,942.30 | |||||||||||
| d. Others | 0.00 | ||||||||||||
| (4) Internal transfer of owners' equity | 0.00 | ||||||||||||
| a. Capital reserve turn to stock equity | 0.00 | ||||||||||||
| b. Surplus reserve turn to stock equity | 0.00 | ||||||||||||
| c. Surplus reserve to recover loss | 0.00 | ||||||||||||
| d. Others | 0.00 | ||||||||||||
| (5) Special reserves | 0.00 | ||||||||||||
| a. Appropriation for current year | 0.00 | ||||||||||||
| b. Use in current year | 0.00 | ||||||||||||
| (6) Others | 0.00 | ||||||||||||
| 4. Ending balance of the current year | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 968,189,730.95 | 0.00 | -76,836,213.13 | 0.00 | 4,546,242.52 | 0.00 | 620,735,357.95 | 307,526,292.94 | 2,372,751,011.23 |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
Statement of Changes in EquityFrom 1 January 2018 to 30 June 2018
Unit: Yuan, Currency: RMB
| Item | Reporting period | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total owners' equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| 1. Previous year ending balance brought forward | 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 | |||||
| Plus: accounting policy changes | 0.00 | ||||||||||
| Correction of previous-period accounting errors | 0.00 | ||||||||||
| Others | 0.00 | ||||||||||
| 2. Beginning balance of current | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 1,003,282,687.73 | 0.00 | 15,711,472.03 | 0.00 | 4,546,242.52 | -143,892,809.85 | 1,428,237,192.43 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Reporting period | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total owners' equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| year | |||||||||||
| 3. Increase/(decrease) for the current year ("-" for losses) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | -11,535,229.13 | 0.00 | 0.00 | 34,039,612.06 | 22,504,382.93 |
| (1) Total comprehensive incomes | -11,535,229.13 | 34,039,612.06 | 22,504,382.93 | ||||||||
| (2) Investment/ (divestment) | 0.00 | ||||||||||
| a. Common shares from shareholders | 0.00 | ||||||||||
| b. Investment capital from the holders of other equity instruments | 0.00 | ||||||||||
| c. Amount of the share-based payment included in the owners' equity | 0.00 | ||||||||||
| d. Others | 0.00 | ||||||||||
| (3) Distribution of profits | 0.00 | ||||||||||
| a. Surplus reserves | 0.00 | ||||||||||
| b. Distribution to owners or shareholders | 0.00 | ||||||||||
| c. Others | 0.00 | ||||||||||
| (4) Internal transfer of owners' equity | 0.00 | ||||||||||
| a. Capital reserve turn to stock equity | 0.00 | ||||||||||
| b. Surplus reserve turn to stock equity | 0.00 | ||||||||||
| c. Surplus reserve to recover loss | 0.00 | ||||||||||
| d. Others | 0.00 | ||||||||||
| (5) Special reserves | 0.00 | ||||||||||
| a. Appropriation for current year | 0.00 | ||||||||||
| b. Use in current year | 0.00 | ||||||||||
| (6) Others | 0.00 | ||||||||||
| 4. Ending balance of the current year | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 1,003,282,687.73 | 0.00 | 4,176,242.90 | 0.00 | 4,546,242.52 | -109,853,197.79 | 1,450,741,575.36 |
| Item | Same period of the previous year | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total owners' equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| 1. Previous year ending balance brought forward | 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 | |||||
| Plus: accounting policy changes | 0.00 | ||||||||||
| Correction of previous-period accounting errors | 0.00 | ||||||||||
| Others | 0.00 | ||||||||||
| 2. Beginning balance of current | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 1,003,282,687.73 | 0.00 | 33,970,766.78 | 0.00 | 4,546,242.52 | -206,831,240.38 | 1,383,558,056.65 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Same period of the previous year | ||||||||||
| Share capital | Other equity instruments | Capital reserves | Less: treasury stock | Other comprehensive income | Special reserves | Surplus reserves | Undistributed profits | Total owners' equity | |||
| Preference shares | Perpetual bonds | Others | |||||||||
| year | |||||||||||
| 3. Increase/(decrease) for the current year ("-" for losses) | 0.00 | 0.00 | 0.00 | 0.00 | 5,646,023.55 | 0.00 | -6,813,128.79 | 0.00 | 0.00 | 21,668,412.98 | 20,501,307.74 |
| (1) Total comprehensive incomes | -6,813,128.79 | 21,668,412.98 | 14,855,284.19 | ||||||||
| (2) Investment/ (divestment) | 5,646,023.55 | 5,646,023.55 | |||||||||
| a. Common shares from shareholders | 0.00 | ||||||||||
| b. Investment capital from the holders of other equity instruments | 0.00 | ||||||||||
| c. Amount of the share-based payment included in the owners' equity | 0.00 | ||||||||||
| d. Others | 5,646,023.55 | 5,646,023.55 | |||||||||
| (3) Distribution of profits | 0.00 | ||||||||||
| a. Surplus reserves | 0.00 | ||||||||||
| b. Distribution to owners or shareholders | 0.00 | ||||||||||
| c. Others | 0.00 | ||||||||||
| (4) Internal transfer of owners' equity | 0.00 | ||||||||||
| a. Capital reserve turn to stock equity | 0.00 | ||||||||||
| b. Surplus reserve turn to stock equity | 0.00 | ||||||||||
| c. Surplus reserve to recover loss | 0.00 | ||||||||||
| d. Others | 0.00 | ||||||||||
| (5) Special reserves | 0.00 | ||||||||||
| a. Appropriation for current year | 0.00 | ||||||||||
| b. Use in current year | 0.00 | ||||||||||
| (6) Others | 0.00 | ||||||||||
| 4. Ending balance of the current year | 548,589,600.00 | 0.00 | 0.00 | 0.00 | 1,008,928,711.28 | 0.00 | 27,157,637.99 | 0.00 | 4,546,242.52 | -185,162,827.40 | 1,404,059,364.39 |
Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Zhao Lixin
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
(In the following notes, amounts are expressed in RMB yuan unless otherwise specified.)3. Company basic information3.1 Company profileShang Gong Group Co., Ltd., a joint stock limited company with publicly issued A & B shares on theShanghai Stock Exchange, is the first listed company in the sewing machinery industry of China. TheCompany 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 NewArea, Shanghai. The legal representative is Mr. Zhang Min.
On 22 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 ratioof 10 to 6 as consideration of getting tradable rights. After the above consideration of share donation, the totalnumber of shares remains unchanged, but consequently the equity structure has changed. As at 31st December2013, there were 448,886,777 shares in total.
On 28 February 2014, CSRC approved the non-public offering of A shares of the Company under theOfficial 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 was548,589,600.00. The Company handled equity registration and escrow formalities with the CSDC ShanghaiBranch; the corresponding registered capital was changed to RMB 548,589,600.00 yuan and had been verifiedby the Verification Report (PCPAR [2014] No.111126) issued by BDO CHINA Shu Lun Pan Certified PublicAccountants LLP on 26 March 2014.
On 29 December 2016, Pudong SASAC, the former controlling shareholder and former actual controllerof 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 thesame day. After the transfer, PKFR held A shares accounted for 10.94% of the total share capital of theCompany, which is the largest shareholder of the Company; Pudong SASAC held A shares accounted for8.27%, 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 31 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 theCompany are: production and sales of sewing equipment.
According to the resolution of the 7th meeting of the 8th board of directors, the financial statements wereapproved for disclosure by all directors of the Company on 29 August 2018.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
3.2 Scope of the consolidated financial statementsAs of 30 December 2018, the subsidiaries within the consolidated financial statements of the Companyare as follows:
| Name of subsidiary |
| 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. |
| 14. Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd. |
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 statements4.1 Preparation basisThe Company prepares the financial statements based on going concern, according to the transactions andevents actually occurred and in accordance with the Accounting Standards for Business Enterprises - BasicStandard and various specific accounting standards, application guidance and interpretations for accountingstandards for business enterprises and other relevant provisions (hereinafter collectively referred to as"Accounting Standards for Business Enterprises") promulgated by the Ministry of Finance and disclosureprovisions of the Rules for the Information Disclosure and Compilation of Companies Publicly IssuingSecurities No. 15 - General Rules on Financial Reports of the China Securities Regulatory Commission.
4.2 Going concernThe Company has going-concern ability for 12 months from the end of the report period and has nomatters or situations that may lead to serious doubts about the Company's going-concern ability.
5. Principal accounting policies and accounting estimatesThe following disclosure has covered the Company's specific accounting policies and accountingestimates prepared according to the actual production and operation characteristics.
5.1 Statement on compliance with Accounting Standards for Business EnterprisesThe 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.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
5.2 Accounting periodThe accounting year is from 1
st
Januaryto 31
st
December in calendar year.5.3 Operating cycleThe Company's operating cycle is 12 months.5.4 Functional currencyThe Company adopts RMB as its functional currency.5.5 Accounting treatment methods for business combinations under or not under common controlBusiness combinations under common control: Assets and liabilities acquired from business combinationsby the Company are measured at book value of assets and liabilities (including goodwill formed from thepurchase of the acquiree by the ultimate controller) in the consolidated financial statements of the ultimatecontroller. Stock premium in the capital reserve shall be adjusted according to the difference between the bookvalue of net asset acquired from the combinations and that of consideration (or total face value of the sharesissued) paid. In case the stock premium in the capital reserve is not enough, the retained earnings shall to beadjusted.
Business combinations not under common control: Assets paid for consideration and liabilities incurredor borne by the Company on the acquisition date shall be measured at their fair values. The difference betweenthe fair value and the book value should be included in the current profit and loss. The Company shallrecognize the difference of the combination costs in excess of the fair value of the identifiable net assetsacquired from the acquiree as goodwill. The Company shall include the difference of the combination costs inshort of the fair value of the identifiable net assets acquired from the acquiree in the current profit and lossafter review.
Intermediary service charges such as audit fee, legal service fee, appraisal and consultancy fee paid forbusiness combinations and other directly relevant expenses are included in the current profit and loss whenincurred; the transaction costs for the issuance of equity securities shall be used to offset equities.
5.6 Preparation methods of consolidated financial statements5.6.1 Scope of consolidationThe scope of consolidation of the Company's consolidated financial statements is recognized based on thecontrol. All subsidiaries (including the divisible part of the investee controlled by the Company) shall beincluded in the consolidated financial statements.
5.6.2 Consolidation procedureThe Company prepares consolidated financial statements based on its own financial statements andfinancial statements of its subsidiaries according to other relevant materials. When the Company prepares itsconsolidated financial statements, it shall regard the whole enterprise group as an accounting entity to reflectthe overall financial position, operating results and cash flows of the enterprise group according to therequirements for recognition, measurement and presentation of the relevant Accounting Standards for BusinessEnterprises and the unified accounting policies.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Accounting policies and accounting periods adopted by all subsidiaries included in the consolidationscope of the consolidated financial statements shall be consistent with those of the Company. If accountingpolicies and accounting periods adopted by all subsidiaries are inconsistent with those of the Company, in thepreparation of the consolidated financial statements, necessary adjustments shall be made according to theaccounting policies and accounting periods of the Company. For the subsidiaries acquired through businesscombination not under common control, adjustments to their financial statements shall be made based on thefair values of identifiable net assets on the acquisition date. For the subsidiaries acquired through businesscombination not under common control, adjustments to their financial statements shall be made based on thefair values of their assets and liabilities (including goodwill from acquisition of the subsidiaries by the ultimatecontroller) in the financial statements of the ultimate controller.
The owner's equity of subsidiaries, net profits and losses in the current period and comprehensive incomeattributable to minority shareholders in the current period shall separately presented under the item of owner'sequity of the Consolidated Statement of Financial Position, the item of net profit of the Consolidated Statementof Comprehensive Income and the item of total comprehensive income. The difference formed by the loss inthe current period shared by minority shareholders of the subsidiaries in excess of the share of minorityshareholders in the owner's equity at the beginning of the period of the subsidiaries shall be used to offset theminority equity.
(1) Increase in subsidiaries or businessIn the report period, if the Company increased subsidiaries or business from business combinations undercommon control, the beginning amount of the Consolidated Statement of Financial Position shall be adjusted;the incomes, expenses and profits from the beginning of the current period of the subsidiaries or businesscombination to the end of the report period shall be included in the Consolidated Statement of ComprehensiveIncome; cash flows from the beginning of the current period of the subsidiaries or business combination to theend of the report period shall be included in the Consolidated Statement of Cash Flows. At the same time, theCompany shall adjust the relevant items of the comparative statements and deem that the reporting entityalready exists when the ultimate controller starts its control.
If the Company controls the investee under common control from additional investments, it shall bedeemed that the parties involved in the combination have make adjustments at the current state when theultimate controller starts its control. For the equity investments held before the Company controls the acquiree,the relevant profit and loss, other comprehensive income and changes in other net assets recognized during theperiod from the later of the date when the Company obtains the original equity and the date when the acquirerand the acquiree are under common control, shall be used to offset the retained earnings at the beginning of theperiod or the current profit and loss in the period of the comparative statements.
In the report period, if the Company increased subsidiaries or business from combinations not undercommon control, the beginning amount of the Consolidated Statement of Financial Position shall not beadjusted; the incomes, expenses and profits from the subsidiaries and business from the acquisition date to theend of the report period shall be included in the Consolidated Statement of Comprehensive Income; cash flows
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
of the subsidiaries or business from the acquisition date to the end of the report period shall be included in theConsolidated Statement of Cash Flows.
If the Company controls the investee not under common control from additional investments, it shallre-measure equity of the acquiree held before the acquisition date at the fair value on the acquisition date andinclude the difference of fair value and book value in the investment income in the current period.
the relevant other comprehensive income and other changes in owner's equity shall be transferred toinvestment income in the current year which the acquisition date falls in, except for other comprehensiveincome from changes arising from re-measurement of net liabilities or net assets of defined benefit plan.
If the equity of the acquiree held before the acquisition date involves the other comprehensive income andchanges in owner's equity other than net profit and loss, other comprehensive income and profit distributionaccounted under equity method, the relevant other comprehensive income and changes in other owner's equityshall be transferred to investment income in the current period which the acquisition date falls in, except forother comprehensive income from changes arising from re-measurement of net liabilities or net assets ofdefined benefit plan.
(2) Disposal of subsidiaries or business
①General treatment methods
In the reporting period, if the Company disposed subsidiaries or business, then the incomes, expenses andprofits from the subsidiaries and business from the beginning of the year to the disposal date shall be includedin the Consolidated Income Statement; cash flows from the combinations of the subsidiaries and business fromthe 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 equityinvestments or other reasons, the remaining equity investments after the disposal will be re-measured at thefair value at the date of loss of the control. The difference of total amount of the consideration from disposal ofequities plus the fair value of the remaining equities less the shares calculated at the original shareholding ratioin net assets of the original subsidiary which are continuously calculated as of the acquisition date is includedin the investment income of the period at the loss of control. Other comprehensive income associated with theoriginal 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 yearwhen the control is lost, except for other comprehensive income from changes arising from re-measurement ofnet liabilities or net assets of defined benefit plan.
②Disposal of subsidiary by stages
Where the Company disposes the equity investments in subsidiary through multiple transactions and bystages until it loses the control, if the effect of the disposal on the terms and conditions of all transactions ofequity investments in subsidiary and economic effect meet one or more of the following circumstance, itusually 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;
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
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 controlbelong to a package deal, accounting treatment shall be made by the Company on the transactions as atransaction to dispose subsidiaries and lose the control; however, the difference between each disposal cost andnet asset share in the subsidiaries corresponding to each disposal of investments before loss of the controlshould be recognized as other comprehensive income in the consolidated financial statements and should betransferred 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 donot belong to a package deal, before the loss of the control, accounting treatment shall be made according tothe relevant policies for partial disposal of equity investments in the subsidiary without losing control; at theloss of the control, accounting treatment shall be made according to general treatment methods for disposal ofsubsidiaries.
(3) Purchase of minority interest of subsidiariesThe 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 increasedshareholding ratio shall be charged against stock premium within capital reserves in the consolidated balancesheet; when stock premium within capital reserves is insufficient to offset, the retained earnings shall beadjusted.
(4) Partial disposal of equity investments in the subsidiary without losing controlThe difference between the proceeds from partial disposal of equity investments in the subsidiary and theshare of identifiable net assets of the subsidiary attributable to the Company which are calculated continuouslyfrom the acquisition date (or the combination date) and which are corresponding to the disposal of long-termequity investments without losing control shall be charged against stock premium within capital reserves in theconsolidated balance sheet; when stock premium within capital reserves is insufficient to offset, the retainedearnings shall be adjusted.
5.7 Determination of cash and cash equivalentsIn preparing the cash flow statement, cash on hand and the unrestricted deposits of the Company arerecognized as cash. Short-term (maturing within three months as of the acquisition date) and highly liquidinvestments held by the Company that are readily convertible to known amounts of cash and which are subjectto an insignificant risk of change in value are recognized as cash equivalents.
5.8 Foreign currency transactions and translation of foreign currency statements5.8.1 Foreign currency transactionsForeign currency transactions are, on initial recognition, translated to RMB at the spot exchange rates atthe dates of the transactions.
The balance of foreign currency monetary items is adjusted and translated into functional currency atbalance sheet date using the spot exchange rate. Regarding the year-end differences of translation in foreign
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
currency, except those special borrowing accounts under the acquisition, building or production of assets to becapitalized are capitalized and accounted into related assets cost, all the other differences are accounted intocurrent profits and losses. The foreign currency non-monetary items at historical cost are translated using thespot exchange rate. And the foreign currency non-monetary items at fair value are adjusted and translated intomeasurement currency at adoption date of fair value using the spot exchange rate. The difference of translationbetween different currencies is accounted into current profits and losses or capital reserves.
5.8.2 Translation of foreign currency statementsThe 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 the transaction dates. The income and expenses of foreign operation are translated to RMB atthe spot exchange rates or the rates that approximate the spot exchange rates at the transaction dates. Theresulting 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 exchangedifferences recognized in equity which relates to that foreign operation is transferred to profit or loss in theperiod in which the disposal occurs.
5.9 Financial instrumentsFinancial instruments include financial assets, financial liabilities and equity instruments.5.9.1 Classification of financial instrumentsAt the initial recognition, financial assets and financial liabilities are classified as: financial assets orfinancial liabilities measured at fair value through current profit and loss, including financial assets or financialliabilities held for trading, and financial assets or financial liabilities that are directly to be measured at fairvalue through current profit and loss, held-to-maturity investments, accounts receivable, available-for-salefinancial assets and other financial liabilities, etc.
5.9.2Recognition basis and measurement method of financial instruments(1) Financial assets (financial liabilities) measured at fair value through current profit and lossFinancial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cashdividends 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 investmentincome. 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 asinvestment income; meanwhile, adjustment is made to gains or losses from changes in fair values.
(2) Held-to-maturity investmentsHeld-to-maturity investments are initially recorded at the sum of fair values (less the bond interest thathas 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 tothe amortized costs and effective interest rate, and included in the investment income. The effective interest
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| Shang Gong Group Co., Ltd |
rates are determined upon acquisition and remain unchanged during the expected remaining period, or ashorter period if applicable.
Difference between the proceeds and the book value of the investment is recognized as investmentincome upon disposal.
(3) Receivables
For creditor’s rights receivable arising from external sales of goods or rendering of service by theCompany and creditor's rights of other enterprises (excluding creditor’s right quoted in the active market) held
by the Company, including accounts receivable, other receivables, the initial recognition amount shall be thecontract price or agreement price receivable from the purchasing party; for those with financing nature, theyare initially recognized at their present values.
The difference between the amount received and the book value of accounts receivable is included in thecurrent profit and loss upon the recovery or disposal.
(4) Available-for-sale financial assetsAvailable-for-sale financial assets are initially recorded at the sum of fair values (deducting cashdividends 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 investmentincome. Available-for-sale financial assets are measured at fair value at the end of the year and the changes infair value are included in other comprehensive income. However, equity instrument investments that have noquoted price in the active market and of which fair values cannot be measured reliably and derivative financialassets that relate to such equity instruments and that shall be settled through the delivery of such equityinstruments shall be measured at cost.
Difference between the proceeds and the book value of the financial assets is recognized as investmentincome upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair valuewhich is originally and directly included in other comprehensive income shall be transferred out andrecognized as the current profit and loss.
(5) Other financial liabilitiesOther financial liabilities are initially recognized at fair values plus related transaction costs. Thesubsequent measurement is based on amortized costs.
5.9.3 Recognition and measurement of transfer of financial assetsUpon occurrence of transfer of a financial asset, the Company shall de-recognize the transfer of thefinancial asset if nearly all the risks and rewards associated with the ownership of the financial assets havebeen transferred to the transferee; and shall not de-recognize the transfer of the financial asset if nearly all therisks 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 abovede-recognition conditions for the financial asset. The transfer of a financial asset of the Company is classifiedinto the entire transfer and the partial transfer of financial asset. If the entire transfer of financial asset satisfies
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
the criteria for de-recognition, the difference between the amounts of the following two items shall be includedin 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).
If the partial transfer of financial asset satisfies the criteria for de-recognition, the entire book value of thetransferred financial asset shall be split into the derecognized part and recognized part according to theirrespective fair value and the difference between the amounts of the following two items shall be included incurrent 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-recognitioncorresponding to the accumulated amount of the changes in fair value originally and directly included inowners' equity (the situation where the financial asset transferred is an available-for-sale financial asset isinvolved in).
If the transfer of financial assets does not meet the de-recognition criteria, the financial assets shallcontinue to be recognized and the consideration received will be recognized as a financial liability.
5.9.4 Derecognition criteria of financial liabilitiesA financial liability shall be wholly or partly derecognized if its present obligations are wholly or partlydissolved. Where the Company enters into an agreement with a creditor so as to substitute the existingfinancial liabilities with any new financial liability, and the new financial liability is substantially differentfrom the contractual stipulations regarding the existing financial liability, it shall derecognize the existingfinancial 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 financialliability, the Company shall derecognize the existing financial liability wholly or partly, and at the same timerecognize 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 thefinancial liabilities derecognized and the consideration paid (including non-cash assets surrendered or newfinancial 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 theentire book value of financial liabilities according to the comparative fair value of the part that continues to berecognized and de-recognized part. The difference between the book value allocated to the derecognized partand the considerations paid (including non-cash assets surrendered and the new financial liabilities assumed)shall be included in the current profit and loss.
5.9.5 Determination method of fair value of financial assets and financial liabilitiesWhere there is an active market for financial instruments, the fair values shall be determined according toquoted prices in active markets. Where there is no active market, the fair values shall be determined usingreasonable valuation techniques. At the time of valuation, the Company adopted valuation techniques
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| Shang Gong Group Co., Ltd |
applicable in the current situation and supported by enough available data and other information, select inputvalues consistent with the features of assets or liabilities considered by market participants in the transactionrelated to the assets or liabilities, and give priority to using the relevant observable input values. Only when itis unable or impracticable to obtain the relevant observable input values, unobservable input values can beused.
5.9.6 Test method and accounting treatment of depreciation of financial assets (excludingreceivables)
Except for the financial assets measured at fair values through current profit and loss, the book value offinancial assets on the balance sheet date should be checked. If there is objective evidence that a financial assetis 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, orit 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 directlyincluded 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 valuesrise in the subsequent accounting period and such rise is objectively related to the matters occurring after therecognition of impairment loss, the previously recognized impairment loss shall be reversed and recorded intothe 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 equityinstruments: In general, for highly liquid equity investments that are actively traded in the market, over 50% ofthe decline is considered to be a serious fall. Criteria for "non-temporary" decline of fair value: In general, if acontinuous 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 accordancewith the measurement method of impairment loss on accounts receivable.
5.10 Provision for bad debts of receivables5.10.1 Receivables that are individually significant but with provision for bad debts made on anindividual basis
| Assessment basis or standard of amount individually significant | Top five biggest balance accounts. |
| Method of provision for bad debts of receivables 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 cash flow and its book value. And it shall be recorded into the current profit 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 | |
| Portfolio | Balances of receivables other than accounts receivable subject to provisions for bad debts on an individual basis and other receivables |
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| Shang Gong Group Co., Ltd |
| Portfolio | Aging analysis method |
Provision for bad debts made at aging analysis method in the portfolio:
| Aging | Proportion of Provision for Accounts Receivable (%) | Proportion of Provision for Other Receivables (%) |
| Within 1 year (including 1 year) | 5 | 5 |
| 1 to 2 years | 20 | 20 |
| 2 to 3 years | 50 | 50 |
| Over 3 years | 100 | 100 |
5.10.3 Receivables that are individually insignificant but with provision for bad debts made on anindividual basis
| Reason for bad debt provision provided on an individual basis | Receivables of a particular object |
| Method of provision for bad debts | 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 of expected future cash flows and its book value, which is included in the current profit or loss. |
5.11 Inventories5.11.1 Classification of inventoriesInventories are classified into Materials in transit, raw materials, revolving materials, stock commodities,goods in progress, dispatched goods, material procurement, consigned processing materials, labor cost andothers.
5.11.2 Measurement method of dispatched inventoriesInventories are measured with weighted average method when dispatched. The percentage matchesmethod of the labor cost and labor revenue. One-off amortization method is adopted for low-cost consumableswhen they are consumed.
5.11.3 Recognition basis for net realizable values of inventories of different categoriesIn normal operation process, for merchandise inventories for direct sale, including finished goods, stockcommodities and materials for sale, their net realizable values are determined at the estimated selling pricesminus the estimated selling expenses and relevant taxes and surcharges; in normal operation process, formaterial inventories that need further processing, their net realizable values are determined at the estimatedselling prices of finished goods minus estimated costs to completion, estimated selling expenses and relevanttaxes and surcharges; for inventories held to execute sales contract or service contract, their net realizablevalues are calculated on the basis of contract price. If the quantities of inventories specified in sales contractsare less than the quantities held by the Company, the net realizable value of the excess portion of inventoriesshall 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 aremade on a category basis. For inventories related to the product portfolios manufactured and sold in the samearea, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separatefrom other items for measurement purposes, the provisions for inventory depreciation reserve shall be made ona portfolio basis.
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| Shang Gong Group Co., Ltd |
Except that there is clear evidence that the market price is abnormal on the balance sheet date, the netrealizable 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 thebalance sheet date.
5.11.4 Inventory systemPerpetual inventory system is adopted.5.12 Assets held for saleNot applicable.5.13 Long-term equity investments5.13.1 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 thatshare the right of control. Where the Company and other investors exert common joint control over theinvestee 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 operatingpolicies of an enterprise, but not the power to control, or jointly control, the formulation of such policies withother parties. Where the Company is able to exert significant influence over the investee, the investee is itsassociate.
5.13.2 Recognition of initial investment costs(1) Long-term equity investments acquired from business combinationBusiness combination under common control: if the Company makes payment in cash, transfers non-cashassets or bears debts and issues equity securities as the consideration for the business combination, the bookvalue of the owner's equity of the acquiree in the consolidated financial statements of the ultimate controller isrecognized as the initial cost of the long-term equity investment on the combination date. In case the Companycan exercise control over the investee under common control for additional investment or other reasons, theinitial investment cost of long-term equity investments is recognized at the share of book value of net asset ofthe acquiree after the combination in the consolidated financial statements of the ultimate controller on thecombination date. The stock premium should be adjusted at the difference between the initial investment costof long-term equity investments on the combination date and the book value of long-term equity investmentsbefore the combination plus the book value of consideration paid for additional shares; if there is no sufficientstock premium for write-downs, the retained earnings are adjusted.
Business combination not under common control: The Company recognizes the combination costdetermined on the combination date as the initial cost of long-term equity investments. Where the Companycan 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 bookvalue of originally held equity investments plus costs of additional investments.
(2) Long-term equity investment acquired by other means
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| Shang Gong Group Co., Ltd |
For a long-term equity investment acquired through making payments in cash, its initial cost is theactually paid purchase cost.
For a long-term equity investment acquired from issuance of equity securities, its initial cost is the fairvalue of the issued equity securities.
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded outand traded in can be measured reliably, the initial cost of long-term equity investment traded in withnon-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes andsurcharges payable unless there is any conclusive evidence that the fair values of the assets traded in are morereliable; if the exchange of non-monetary assets does not meet the above criteria, the book value of the assetstraded out and the relevant taxes and surcharges payable are recognized as the initial cost of long-term equityinvestment traded in.
For a long-term equity investment acquired from debt restructuring, its initial cost is determined based onthe fair value.
5.13.3 Subsequent measurement and recognition of gains and losses(1) Long-term equity investment accounted for under the cost methodLong-term equity investments in subsidiaries are accounted for under the cost method. Except for theactual price paid for acquisition of investment or the cash dividends or profits contained in the considerationwhich have been declared but not yet distributed, the Company recognizes the investment income in thecurrent year at the cash dividends or profits declared by the investee.
(2) Long-term equity investments accounted for under the equity methodLong-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 inthe investee when the investment is made, the difference will not be adjusted to the initial cost of the long-termequity investments; if the cost of initial investment is in short of the proportion of the fair value of the netidentifiable assets in the investee when the investment is made, the difference will be included in the currentprofit and loss.
The Company shall recognize the investment income and other comprehensive income at the shares of netprofit and loss and other comprehensive income realized by the investee which the Company shall enjoy orbear and adjust the book value of long-term equity investments at the same time; the Company shall calculatethe shares according to profits or cash dividends declared by the investee and correspondingly reduce the bookvalue of long-term equity investments; the book value of long-term equity investments shall be adjustedaccording to the investee's other changes in owner's equity other than net profit and loss, other comprehensiveincome 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 profitof the investee based on the fair value of identifiable net assets of the investee upon acquisition of investmentsand according to accounting policies and accounting period of the Company. When holding the investment, theinvestee should prepare the consolidated financial statements, it shall account for the investment income based
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| Shang Gong Group Co., Ltd |
on the net profit, other comprehensive income and the changes in other owner's equity attributable to theinvestee.
When the Company recognizes its share of loss incurred to the investee, treatment shall be done infollowing 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 tothe extent of book value of other long-term equities which form net investment in the investee in substance andthe book value of long term receivables shall be reduced. Finally, after all the above treatments, if theCompany is still responsible for any additional liability in accordance with the provisions stipulated in theinvestment contracts or agreements, provisions are recognized and included into current investment lossaccording to the obligations estimated to undertake.
(3) Disposal of long-term equity investmentsFor disposal of long-term equity investment, the difference between its book value and the actual priceshall be included in the current profit and loss.
For long-term equity investments accounted for under the equity method, when the Company disposessuch investments, accounting treatment should be made to the part that is originally included in othercomprehensive income according to the corresponding proportion by using the same basis for the investee todirectly dispose the relevant assets or liabilities. Owner's equity recognized at the changes in the investee'sother owner's equity other than net profit or loss, other comprehensive income and profit distribution shall betransferred to the current profit and loss according to the proportion, except for other comprehensive incomefrom 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 equityinvestments or other reasons, the remaining equity will be changed to be accounted for according to therecognition and measurement principles of financial instruments. The difference between the fair value and thebook value on the date of the loss of joint control or significant influence should be included in the currentprofit and loss. For other comprehensive income recognized from accounting of the original equityinvestments under the equity method, accounting treatment should be made by using the same basis for theinvestee 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 whenthe 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, whenthe Company prepares the individual financial statements, where the remaining equity after the disposal canexercise joint control or significant effect on the investee, then such equity will be changed to be accounted forunder the equity method and the remaining equity is deemed to have been adjusted under the equity method onacquisition; where the remaining equity after the disposal cannot exercise joint control or significant effect onthe investee, then accounting treatment shall be changed to be made according to the relevant provisions on therecognition and measurement principles of financial instruments. The difference between the fair value and the
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
book value on the date of the loss of joint control or significant influence should be included in the currentprofit and loss.
In case the disposed equity is acquired from additional investments or other reasons, when the Companyprepares the individual financial statements, where the remaining equity after the disposal is accounted forunder the cost method or the equity method, other comprehensive income and other owner's equity recognizedfrom the accounting of equity investments held before the acquisition date under the equity method shall betransferred according to the proportion; where accounting treatment of the remaining equity after the disposalis changed to be made according to the recognition and measurement principles of financial instruments, all ofother comprehensive income and other owner's equity shall be transferred.
5.14 Investment propertyInvestment properties are properties to earn rentals or for capital appreciation or both. Examples includeland leased out under operating leases, land held for long-term capital appreciation, buildings leased out underoperating leases, (including buildings that have been constructed or developed for future lease out underoperating leases, and buildings that are being constructed or developed for future lease out under operatingleases).
The Company adopts the cost model to measure all current investment properties. The Company adoptsthe 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 theCompany’s intangible assets.
5.15 Fixed assets5.15.1 Recognition criteria for fixed assetsFixed 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 berecognized 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
| Category | Depreciation Method | Depreciation Life (years) | Residual Rate (%) | Annual Depreciation Rate (%) |
| Buildings and constructions | Straight-line method | 5-50 | 0-10 | 2.00-25.00 |
| 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 assets | Straight-line method | 5-15 | 0 | 6.67-20.00 |
| 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. Thedepreciation rates are determined according to the categories, estimated useful lives and estimated net residualrates of fixed assets. If the components of a fixed asset have different useful lives or cause economic benefit
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| Shang Gong Group Co., Ltd |
for the Company in different ways, different depreciation rate or method shall be adopted for depreciation onan individual component basis.
5.15.3 Identification basis and pricing method of financing lease fixed assetsIf one of the following conditions is stipulated in the terms of the lease agreement signed between theCompany 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 valueof the assets when the option is exercised;
(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 differentfrom 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 thepresent value of the minimum lease payments as the entry value of the leased asset, and uses the minimumlease payment as the entry value of long-term payables. The difference is as unrecognized financing fee.
5.16 Construction in progressThe book values of the construction in progress are stated at total expenditures incurred before reachingworking condition for their intended use. For construction in progress that has reached working condition forintended use but relevant budgets for the completion of projects have not been completed, the estimated valuesof project budgets, prices, or actual costs should be included in the costs of relevant fixed assets, anddepreciation should be provided according to relevant policies of the Company when working condition isreached. After the completion of budgets needed for the completion of projects, the estimated values should besubstituted by actual costs, but depreciation already provided is not adjusted.
5.17 Borrowing costs5.17.1 Recognition criteria for capitalization of borrowing costsBorrowing costs include the interest on borrowings, the amortization of discount or premium, auxiliaryexpenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and constructionor production of assets eligible for capitalization should be capitalized and recorded into asset costs; otherborrowing costs should be recognized as costs according to the amount incurred and be included into currentprofit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assetswhich may reach their intended use or sale status only after long-time acquisition and construction orproduction 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 assetstransferred or interest bearing debts undertaken for the acquisition and construction or production activities forpreparing assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
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| Shang Gong Group Co., Ltd |
(3) Purchase, construction or manufacturing activities that are necessary to prepare the asset for itsintended use or sale have already started.
5.17.2 Capitalization period of borrowing costsCapitalization period refers to the period from commencement of capitalization of borrowing costs to itscessation; period of suspension for capitalization is excluded.
When the qualified asset under acquisition and construction or production is ready for the intended use orsale, the capitalization of the borrowing costs shall be ceased.
When some projects among the acquired and constructed or produced assets eligible for capitalization arecompleted 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 completedseparately but can be used or sold only after the entire assets have been completed, capitalization ofattributable borrowing costs should cease at the completion of the entire assets.
5.17.3 Period of capitalization suspensionIf the acquisition and construction or production activities of assets eligible for capitalization areinterrupted abnormally and this condition lasts for more than three months, the capitalization of borrowingcosts should be suspended; if the interruption is necessary for the acquisition and construction or production toprepare the assets for their intended use or sale, the capitalization of borrowing costs should continue. Theborrowing costs incurred during interruption are recognized in the current profit and loss, and the capitalizationof borrowing costs continues after the restart of the acquisition and construction or production activities of theassets.
5.17.4 Capitalization rate and measurement of capitalized amounts of borrowing costsAs for special borrowings borrowed for acquiring and constructing or producing assets eligible forcapitalization, the to-be-capitalized amount shall be determined at interest expense of special borrowingactually incurred in the current period less the interest income of the borrowings unused and deposited in bankor return on temporary investment.
As for general borrowings used for acquiring and constructing or producing assets eligible forcapitalization, the to-be-capitalized amount should be calculated by multiplying the weighted average of assetdisbursements of the part of accumulated asset disbursements exceeding special borrowings by thecapitalization rate of used general borrowings. The capitalization rate is calculated by using the weightedaverage interest rate of general borrowings.
5.18 Biological assetsNot applicable.5.19 Oil and gas assetsNot applicable.5.20 Intangible assets5.20.1 Measurement of intangible assets(1) The Company initially measures intangible assets at cost on acquisition
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| Shang Gong Group Co., Ltd |
The costs of external purchase of intangible assets comprise their purchase prices, related taxes andsurcharges and any other directly attributable expenditure incurred to prepare the asset for its intended use. Ifpayments for the purchase of intangible assets are extended beyond the normal credit terms with financingnature, the costs of intangible assets are determined on the basis of present values of the purchase prices.
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 ofthe 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 canbe measured reliably, the book-entry values of intangible assets traded in are based on the fair values of theintangible assets traded out unless there is any conclusive evidence that the fair values of the assets traded inare more reliable. If the exchange of non-monetary assets does not meet the above criteria, the costs of theintangible assets traded in should be the book values of the assets traded out and relevant taxes and surchargespaid, and no profit or loss shall be recognized.
(2) Subsequent measurementThe 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 periodwhen the intangible assets generate economic benefit for enterprise; if the period when the intangible assetsgenerate economic benefit for enterprise cannot be forecasted, the intangible assets shall be deemed as thosewith 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 ateach year end.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the yearare not different from those estimated before.
5.20.3 Specific criteria divided the research stage and development stageExpenditure internal research and development project is divided into research expenditures anddevelopment expenditures.
Research stage: the planned investigation and research activities to acquire and understand new scientificor technological knowledge.
Development stage: before commercial production and use, the research findings or other knowledge areapplied 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 capitalizedIf it can be reliably estimated that future economic benefits will flow to the entity, and that the purchaseand production costs can be reliably measured, the development cost should be capitalized. The measurement
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of production cost of internally generated intangible assets is based on direct cost, indirect cost andamortization.
If it can be clearly defined that newly developed products or methods are technically feasible, and thatthey 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. Researchcost and the development cost which cannot be capitalized should be expense when it occurs.
5.21 Impairment of long-term assetsThe Company will conduct the impairment test if any evidence suggests that the long-term assets, such asthe long-term equity investment and the investment property, fixed assets, construction in progress andintangible assets, are impaired on the balance sheet date. If impairment test results indicate that the recoverableamounts of the assets are lower than their carrying amounts, the provision for impairment is made based on thedifferences which are recognized as impairment losses. The recoverable amount is the higher of the fair valueof 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 toestimate the recoverable amount of an individual asset, the Company shall estimate the recoverable amount ofthe asset portfolio that the individual asset belongs to. The asset portfolio is the minimum asset group that canindependently 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 frombusiness combinations is amortized to relevant asset groups with a reasonable method since the date ofacquisition; or amortized to relevant combination of asset groups if it is difficult to be amortized to relevantasset groups. The book value of goodwill is amortized to relevant asset groups or combinations of asset groupsaccording to the proportion of the fair value of such asset groups or combinations of asset groups in the totalfair value of relevant asset groups or combinations of asset groups. Where the fair value cannot be reliablymeasured, it should be amortized according to proportion of the book value of each asset group or combinationof 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 containinggoodwill, if any indication shows that the asset groups or combinations of asset groups related to the goodwillmay be impaired, the Company shall first conduct an impairment test on the asset groups or combinations ofasset groups not containing goodwill, calculate the recoverable amount and compare it with the relevant bookvalue to recognize the corresponding impairment loss. Then the Company shall conduct an impairment test onthe asset groups or combinations of asset groups containing goodwill, and compare the book value of theseasset 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 ofasset groups is lower than the book value thereof, the Company shall recognize the impairment loss of thegoodwill. The above impairment loss is not reversed in the future accounting period once recognized.
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5.22 Long-term deferred expensesNot applicable.5.23 Employee compensation5.23.1 Accounting treatment of short-term remunerationDuring the accounting period in which employees provide service to the Company, the short-termremuneration actually incurred is recognized as liabilities and charged to the current profit or loss or therelevant assets cost.
The medical insurance premium, work-related injury insurance premium and the housing provident fundpaid by the Company for its employees, together with the labor union expenditures and employee educationare used to calculate and determine the relevant employee compensation amount based on the prescribedaccrual 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 planThe basic endowment insurance premium and unemployment insurance premium paid by the Companyfor its employees in accordance with relevant provisions of the local government are recognized as liabilitiesand charged to the current profit or loss or the relevant assets cost, with the payable amount calculated basedon the local prescribed payment base and percentage, during the accounting period in which the employeesprovide services to the Company.
In addition to the basic endowment insurance, the Company also builds the enterprise annuity paymentsystem (supplementary pension insurance) in accordance with relevant national policies for enterprise annuitysystem. The Company pays a certain percentage of the total employee compensation to the local socialinstitution, and record the relevant expenditures into the current profit or loss or the relevant assets cost.
(2) Defined benefit planThe Company attributes the welfare obligation arising from the defined benefit plan to the period duringwhich the employees provide services, in accordance with the formula determined under the estimatedaccumulated 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 theobligation under the defined benefit plan less the deficit or surplus arising out of the fair value of the assets inrelation to the defined benefit plan. Where the defined benefit plan has any surplus, the Company willdetermine the net assets in relation to the defined benefit plan at the lower of the surplus of the defined benefitplan or the asset cap.
The obligations under the defined benefit plan, including the estimated payment obligation within 12months following the annual report period during which the employees provide service, are discounted to thepresent value at the market return of the national debt of which the term and currency match those of theobligation under the defined benefit plan on the balance sheet date, or of the high-quality corporate debt in anactive market.
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The service cost incurred by the defined benefit plan, together with the net interest on the net liability ornet asset in relation to the defined benefit plan, are charged to the current profit or loss or the relevant assetcost; the change arising from the re-measurement of the net liability or net asset in relation to the definedbenefit plan are recorded into other comprehensive income and are not reversed to the profit or loss in thesubsequent accounting period.
The gains or losses on the settlement in respect of the defined benefit plan are recognized at the differencebetween the present value and the settlement price of the obligation under the defined benefit plan on thesettlement date.
5.23.3 Accounting treatment of dismissal welfareWhere the Company cannot unilaterally withdraw the dismissal welfare offered in view of thecancellation of the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to therestructuring involving the payment of dismissal welfare (whichever is earlier), the employee compensationarising from the dismissal welfare should be recognized as the liabilities and charged to the current profit orloss.
5.24 Estimated liabilities5.24.1 Recognition criteria for estimated liabilitiesThe Company should recognize an obligation in relation to contingencies as an estimated liability, such asthe litigation, debt guarantee, loss-making contract or restructuring, when all the following conditions aresatisfied:
(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 theCompany;
(3) The amount of the obligation can be measured reliably.5.24.2 Measurement of estimated liabilitiesThe estimated liabilities of the Company are initially measured as the best estimate of expenses requiredfor the performance of relevant present obligations.
The risks, uncertainties, time value of money, and other factors relating to the contingencies. If the timevalue of money is significant, the best estimates shall be determined after discount of relevant future cashoutflows.
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 allthe outcomes within this range are equal, the best estimate shall be determined at the average amount of upperand lower limits within the range.
Given the fact that there is no continuous range (or interval) for the necessary expenses, or probabilities ofoccurrence of all the outcomes within this range are unequal despite such a range exists, in case that thecontingency involves a single item, the best estimate shall be determined at the most likely outcome; if thecontingency involves two or more items, the best estimate should be determined according to all the possibleoutcomes with their relevant probabilities.
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When all or part of the expenses necessary for the settlement of an estimated liabilities are expected to becompensated by a third party or other parties, the compensation shall be separately recognized as an asset onlywhen it is virtually certain that the compensation will be received. The amount recognized for thecompensation shall not exceed the book value of the estimated liabilities.
5.25 Share paymentNot applicable.5.26 Other financial instruments such as preferred shares and perpetual bondsNot applicable.5.27 Incomes5.27.1 Specific criteria for determining the timing of income recognition for sales of goodsThe Company will confirm that the sales income of the goods is realized when the Company hastransferred the major risks and rewards of ownership of the goods to the purchaser; the Company does notretain the right to continue management linked to ownership, nor does it have effective control over theproducts sold; the amount of income can be measured reliably; the related costs incurred or to be incurred canbe reliably measured.
The specific judgment criteria are as follows:
(1) Domestic sales: After the delivery of the goods, the Company confirms the sales income. Accordingto 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 theoutbound documents confirmed by the parties in various ways, the income is confirmed when the goods leavethe warehouse.
When the customer appoints a carrier, based on the logistics document issued by the carrier, income isrecognized when the goods are delivered to the carrier.
When the Company appoints a carrier, based on the logistics receipts signed and confirmed by thecustomer, income is recognized when the customer actually signs the receipt.
When the Company sells through the e-commerce platform, income is recognized when the electronicorder 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 willbe 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 finalcustomer confirmation is received.
(2) International sales: If choose to apply international trade terms, sale income is recognized according tothe time point of risk transfer agreed in the specific applicable international trade terms. If an unconditionalreturn period or acceptance period is agreed upon, the income recognition will be extended to theunconditional 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 varioustypes 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, accordingto the relevant agreement in the contract signed by both parties, the specific delivery obligations under eachtechnical clause are distinguished, and the corresponding income is confirmed according to the completion ofthe customer demand and the relevant confirmation documents.
5.27.2 Recognition of income from transfer of assets use rightWhen the economic benefit related to the transaction is probably to flow into the Company and therelevant income can be reliably measured, the income from transfer of the assets use right is determined asfollows:
(1) Interest income is measured based on the length of time for which the Company's monetary funds isused by others and the applicable interest rate;
(2) Royalty income is measured according to the period and method of charging as stipulated in therelevant agreements or contracts.
5.27.3 Measurement principles and methods of completion stage where revenues from rendering oflabor are recognized under percentage-of-completion method
The Company confirmed the income from the labor service when obtain the written settlementconfirmation from the customer and issue the settlement certificate.
If the outcome of transactions can be estimated reliably at the balance sheet date, income from renderingof labor service is recognized under the percentage-of-completion method. The percentage of completion isdetermined 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 therendering of labor service is recognized at the amount of multiplying the total income from the rendering oflabor service by completion progress and deducting the accumulated income from the rendering of laborservice recognized in previous accounting periods on the balance sheet date; meanwhile, the current cost oflabor service is carried forward by the amount of multiplying the total costs of the rendering of labor serviceby completion progress and deducting the accumulated cost from the rendering of labor services recognized inprevious 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 costsincurred 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 beincluded 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 recognizedwhen related services have been provided, service costs have actually occurred, and service settlementdocuments confirmed by the service recipient have been obtained.
5.28 Government grants5.28.1 Types
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Government grants refer to the monetary or non-monetary assets obtained by the Company from thegovernment for free. Government grants are classified into government grants related to assets and governmentgrants related to income.
Government grants related to assets refer to government grants obtained by the Company that are used topurchase, construct or form long-term assets, including financial allocations for purchases of fixed assets orintangible assets, and financial discounts for special loans for fixed assets. Government grants related toincome refer to government grants other than those related to assets.
The Company's specific criteria for classifying government grants as related to assets are: governmentgrants 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: governmentgrants other than those related to assets.
If the government documents do not clearly specify the target of the grant, the judgment basis ofclassifying the government grant as related to the assets or related to the income is whether it is used topurchase or construct or form long-term assets.
5.28.2 Accounting treatmentGovernment grants related to assets: write down the carrying amount of the related assets or recognizethem as deferred income. If it is recognized as deferred income, it shall be recorded into current profits andlosses in a reasonable and systematic way within the useful life of the relevant assets (related to the Company'sdaily activities, included in other income; unrelated to the Company's daily activities, included innon-operating income).
Government grants related to income: grants used to compensate for the related costs or losses of theCompany in the future period, shall be recognized as deferred income, and shall be recorded in the currentprofits and losses (related to the Company's daily activities, included in other income; unrelated to theCompany's daily activities, included in non-operating income), or be used to reduce the related costs, expensesor losses during the period for confirming the relevant costs, expenses or losses.
5.29 Deferred income tax assets and deferred income tax liabilitiesDeferred income tax assets shall be recognized for deductible temporary differences to the extent that it isprobable 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 isprobable that taxable profit will be available against which the deductible temporary differences can beutilized.
Taxable temporary differences are recognized as deferred income tax liabilities except in specialcircumstances.
Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not berecognized include: the initial recognition of goodwill; other transactions or events excluding businesscombinations, which affect neither accounting profits nor the taxable income (or deductible losses) whenoccurred.
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If the Company has the legal right of netting and intends to settle in net amount or to obtain assets anddischarge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for thecurrent 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 thecurrent period with net settlement, and deferred income tax assets and deferred income tax liabilities arerelated to the income tax which are imposed on the same taxpaying subject by the same tax collection authorityor on different tax paying subjects, but, in each important future period in connection with the reverse ofdeferred income tax assets and liabilities, the involved tax paying subject intends to balance income tax assetsand liabilities for the current period with net settlement at the time of obtaining assets and dischargingliabilities, deferred income tax assets and deferred income tax liabilities shall be presented based on the netamount after offset.
5.30 Lease5.30.1 Accounting treatment of operating lease(1) Lease fees paid by the Company for leased asset shall be amortized at straight-line method over thewhole lease period (including rent-free period) and shall be included in the current expenses. Initial direct costsrelating 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 theasset, then such expenses shall be deducted from total lease fees, and the balances shall be amortized over thelease term s and charged to the current expenses.
(2) The lease fees received for the assets acquired under lease shall be recognized as current expensesover the lease terms (including rent-free periods) on a straight-line basis. The initial direct costs related to leasetransactions 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 incomeis 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 bythe 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 thefair value of the leased assets and the present value of the minimum lease payments as the entry value of theleased assets, and uses the minimum lease payment as the entry value of the long-term payables. Thedifference is used as unrecognized financing expenses. The Company adopts the actual interest rate method toamortize 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.
(2) Assets rented out by financial lease: At the lease beginning date, the Company recognizes thefinancial lease receivables, difference between the sum of unguaranteed residual value and its current value asunrealized financing income. It is recognized as lease income in each period during which rent is received inthe future. The initial direct costs incurred by the Company in relation to the lease transaction are included in
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| Shang Gong Group Co., Ltd |
the initial measurement of the financial lease receivable, and the amount of income recognized in the leaseperiod is reduced.
5.31 Discontinued operationDiscontinued operation is the component that meets any of the following conditions, is disposed orclassified as the held-for-sale one and can be separately distinguished at the time of preparation of financialstatements:
(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 majorbusiness area;
(3) Such component is a subsidiary acquired for just re-sale.5.32 Adjustment for changes in principal accounting policies and accounting estimates5.32.1Adjustment for changes in accounting policiesNot applicable5.32.2 Adjustment for changes in principal accounting estimatesNot applicable6. Tax
| Tax type | Basis of tax assessment | Tax rate |
| Value-added tax (VAT) | Calculated based on the income from sales of goods and the provision of taxable labor services according to tax law, and value added tax payable should be the balance of the output tax for the period after deducting the deductible input tax for the period. | 3%、5%、6%、7%、10%、11%、16%、17%、19% |
| Business tax | Levied based on the taxable income (reclassified to VAT from 1st May 2016) | |
| Urban maintenance and construction tax | Levied based on the actual payment of business tax and VAT. | 1%、5%、7% |
| Enterprise income tax (EIT) | Levied based on the taxable income | 16%-38%、25% |
| Education surtax and local education sutax | Levied based on the actual payment of business tax and VAT. | 2%、3% |
Note: The EIT rate applicable to DAP AG, a subsidiary of the Company, and its subsidiaries in the scopeof consolidation varies in a range from16% to 38%; and the VAT rate is 19%.
7. Notes to items of consolidated financial statements7.1 Cash and cash equivalents
| Item | Ending Balance | Beginning Balance |
| Cash on hand | 607,616.78 | 707,925.98 |
| Bank deposit | 624,229,571.66 | 712,794,196.15 |
| Other monetary funds | 21,815,034.16 | 9,835,756.40 |
| Total | 646,652,222.60 | 723,337,878.53 |
| Including: total amount of cash and cash equivalents offshore | 319,099,196.70 | 373,357,927.57 |
其他说明
Details of cash and cash equivalents restricted for use due to mortgage, pledge or freezing are follows:
| Item | Ending Balance | Beginning Balance | Note |
| Bank Acceptance Deposit Guarantee | 20,983,035.80 | 6,539,032.60 | Note 1 |
| Deposit held for foreign exchange inspection | 2,585,125.48 | ||
| Other guaranteed deposit | 450,000.00 | 400,000.00 | Note 2 |
| Total | 21,433,035.80 | 9,524,158.08 |
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Note 1: The ending balance was the monetary fund that could not be withdrawn at any time due to theopening of bank acceptance bills by Zhejiang ShangGong GEMSY Co., Ltd., a subsidiary of the Company.
Note 3: The ending balance was a fraud guarantee for the Company's subsidiary, Shanghai ButterflyImport & Export Co., Ltd.
7.2 Financial assets at fair value whose fluctuation is attributed to profit and loss for current periodNot applicable.7.3 Derivative financial assetsNot applicable.7.4 Notes receivable7.4.1 Presentation of notes receivable by category
| Item | Ending Balance | Beginning Balance |
| Bank acceptance bills | 52,624,035.60 | 47,405,556.75 |
| Commercial acceptance bills | 18,530,953.27 | 13,931,982.12 |
| Total | 71,154,988.87 | 61,337,538.87 |
7.4.2 Notes receivable pledged as at the end of periodNot applicable.7.4.3 Notes receivable endorsed or discounted at the end of the period and have not yet expired atthe balance sheet date
| Item | Termination Amount as at 30 June 2018 | Unterminated Confirmation Amount as at 30 June 2018 |
| Bank acceptance bills | 10,807,531.96 | |
| Commercial acceptance bills | ||
| Total | 10,807,531.96 |
7.4.4 Notes receivable transferred to accounts receivable due to the issuer's performance failureNot applicable.7.5 Accounts receivable7.5.1 Disclosure of accounts receivable by category
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debt | Book Value | Book balance | Provision for bad debt | Book Value | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |||
| Accounts receivable with significant individual amount and provision for bad debt is accrued separately | 93,824,615.95 | 14.54 | 19,243,522.50 | 20.51 | 74,581,093.45 | 79,818,629.27 | 13.64 | 19,622,784.50 | 24.58 | 60,195,844.77 |
| Accounts receivable with provision for bad debt accrued by credit risk characteristics of a portfolio | 144,540,052.79 | 22.39 | 73,122,242.33 | 50.59 | 71,417,810.46 | 119,721,460.79 | 20.46 | 72,220,264.69 | 60.32 | 47,501,196.10 |
| Accounts receivable with insignificant individual amount but provision for bad debt is accrued separately | 407,077,372.30 | 63.07 | 26,468,540.24 | 6.50 | 380,608,832.06 | 385,572,745.19 | 65.90 | 28,510,405.86 | 7.39 | 357,062,339.33 |
| Total | 645,442,041.04 | 100.00 | 118,834,305.07 | 18.41 | 526,607,735.97 | 585,112,835.25 | 100.00 | 120,353,455.05 | 20.57 | 464,759,380.20 |
Accounts receivable with significant individual amount and provision for bad debt is accrued separately atthe end of the period
| Accounts receivable (By entity) | Ending balance | |||
| Accounts receivable | Provision for bad debt | Proportion of provision% | Reason for provision | |
| No.1 Client | 32,005,363.63 | Unimpaired according to the separate test | ||
| No.2 Client | 19,243,522.50 | 19,243,522.50 | 100.00 | Impaired according to the separate test |
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| No.3 Client | 15,188,120.84 | Unimpaired according to the separate test | ||
| No.4 Client | 14,667,925.50 | Unimpaired according to the separate test | ||
| No.5 Client | 12,719,683.48 | Unimpaired according to the separate test | ||
| Total | 93,824,615.95 | 19,243,522.50 | 20.51 | / |
Accounts receivable with provision for bad debt accrued using the aging analysis method in the portfolio
| Aging | Ending balance | ||
| Accounts receivable | Provision for bad debt | Proportion of provision | |
| Within 1 year | 70,323,893.08 | 3,516,194.66 | 5.00 |
| 1-2 years | 4,262,124.05 | 852,424.80 | 20.00 |
| 2-3 years | 2,400,825.59 | 1,200,412.80 | 50.00 |
| Over 3 years | 67,553,210.07 | 67,553,210.07 | 100.00 |
| Total | 144,540,052.79 | 73,122,242.33 | 50.59 |
Accounts receivable with insignificant individual amount but provision for bad debt is accrued separately
| Accounts Receivable (By Entity) | Ending Balance | |||
| Accounts Receivable | Provision for Bad Debt | Proportion of Provision% | Reason for Provision | |
| Other insignificant accounts receivable (Note 1) | 19,159,368.44 | 10,404,886.11 | 54.31 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 2) | 226,034,375.30 | 8,424,322.73 | 3.73 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 3) | 13,615,878.23 | 983,465.88 | 7.22 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 4) | 119,735,577.68 | Unimpaired according to separate test | ||
| Other insignificant accounts receivable (Note 5) | 261,219.20 | 261,219.20 | 100.00 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 6) | 11,610.00 | 11,610.00 | 100.00 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 7) | 285,616.31 | Unimpaired according to separate test | ||
| Other insignificant accounts receivable (Note 8) | 307,600.00 | Unimpaired according to separate test | ||
| Other insignificant accounts receivable (Note 9) | 5,039,543.75 | 251,977.19 | 5.00 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 10) | 16,594,700.26 | 99,176.00 | 0.60 | Impaired according to the separate test |
| Other insignificant accounts receivable (Note 11) | 6,031,883.13 | 6,031,883.13 | 100.00 | Impaired according to the separate test |
| Total | 407,077,372.30 | 26,468,540.24 | 6.50 | |
Note 1: It mainly represents the accounts receivable due from Shang Gong Group Co., Ltd., and theprovision for impairment is accrued based on separate test.
Note 2: It mainly represents the accounts receivable due from the subsidiary, DAP AG, and the provisionfor impairment is accrued based on 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 separate test.
Note 4: It mainly represents the accounts receivable due from the subsidiary, Shanghai Shensy EnterpriseDevelopment Co., Ltd, and is unimpaired based on separate test.
Note 5: 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 separate test.
Note 6: It mainly represents the accounts receivable due from Shanghai SGSB Electronics Co., Ltd., andthe provision for impairment is accrued based on separate test.
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Note 7: It mainly represents the accounts receivable due from DAP Vietnam Co., Ltd., and and isunimpaired based on separate test.
Note 8: It mainly represents the accounts receivable due from DAMSH, and and is unimpaired based onseparate test.
Note 9: It mainly represents the accounts receivable due from PIZ, and the provision for impairment isaccrued based on separate test.
Note 10: It mainly represents the accounts receivable due from SGGEMSY, and the provision forimpairment is accrued based on separate test.
Note 11: It mainly represents the accounts receivable due from SG Butterfly, and the provision forimpairment is accrued based on separate test.
7.5.2 The accrual, reversal or recovery of the provision for bad debts in the current periodThe provision for bad debts accrued in the current period is 5,739,430.83 yuan. The amount reversed orrecovered of the provision for bad debts in the current period is 7,787,922.44 yuan.
7.5.3 Accounts receivable actually write-off in the current period
| Item | Amount |
| Accounts receivable actually write-off | 3,436,227.61 |
7.5.4 Top five accounts receivable in terms of their ending balance
| Company name | Ending balance | ||
| Accounts receivable | Proportion in total accounts receivable ratio (%) | Provision for bad debt | |
| No.1 Client | 32,005,363.63 | 4.96 | |
| No.2 Client | 19,243,522.50 | 2.98 | 19,243,522.50 |
| No.3 Client | 15,188,120.84 | 2.35 | |
| No.4 Client | 14,667,925.50 | 2.28 | |
| No.5 Client | 12,719,683.48 | 1.97 | |
| Total | 93,824,615.95 | 14.54 | 19,243,522.50 |
7.6 Prepayment7.6.1 Presentation of prepayments by aging
| Aging | Ending Balance | Beginning Balance | ||
| Book Balance | Proportion (%) | Book Balance | Proportion (%) | |
| Within 1 year | 18,938,959.38 | 75.43 | 58,228,035.05 | 90.44 |
| 1-2 years | 5,242.00 | 0.02 | 9,442.01 | 0.00 |
| 2-3 years | 6,153,751.37 | 24.50 | 6,153,752.47 | 9.56 |
| Over 3 years | 11,536.37 | 0.05 | 2,398.18 | 0.00 |
| Total | 25,109,489.12 | 100.00 | 64,393,627.71 | 100.00 |
7.6.2 Top five prepayments to suppliers in terms of their ending balance
| Supplier | Ending Balance | Proportion in Total Ending Balance of Advances to Suppliers (%) |
| No.1 Supplier | 6,147,650.83 | 24.48 |
| No.2 Supplier | 3,676,882.99 | 14.64 |
| No.3 Supplier | 2,000,000.00 | 7.97 |
| No.4 Supplier | 1,414,872.75 | 5.63 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| No.5 Supplier | 1,154,533.00 | 4.60 |
| Total | 14,393,939.57 | 57.32 |
7.7 Interest receivable
| Item | Ending Balance | Beginning Balance |
| Fixed deposit | 21,645.73 | |
| Total | 21,645.73 |
7.8 Dividends receivable
| Investee | Ending Balance | Beginning Balance |
| Shanghai Fuji Xerox Co., Ltd. | 9,949,000.00 | |
| H. Stoll AG & Co. KG | 27,373,644.64 | |
| Total | 37,322,644.64 |
7.9 Other receivables7.9.1 Disclosure of other receivables by category
| Type | Ending Balance | Beginning Balance | ||||||||
| Book Balance | Provision for Bad Debt | Book Value | Book Balance | Provision for Bad Debt | Book Value | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |||
| Other receivables with significant individual amount and provision for bad debt is accrued separately | 55,150,317.72 | 50.33 | 13,651,280.20 | 24.75 | 41,499,037.52 | 30,666,334.88 | 33.51 | 13,304,781.50 | 43.39 | 17,361,553.38 |
| Other receivables with provision for bad debt accrued by credit risk characteristics of a portfolio | 23,629,081.18 | 21.57 | 16,849,284.10 | 71.31 | 6,779,797.08 | 24,977,450.21 | 27.29 | 16,622,435.95 | 66.55 | 8,355,014.26 |
| Other receivables with insignificant individual amount but provision for bad debt is accrued separately | 30,787,853.38 | 28.10 | 826,685.51 | 2.69 | 29,961,167.87 | 35,869,414.39 | 39.20 | 2,641,570.82 | 7.36 | 33,227,843.57 |
| Total | 109,567,252.28 | 100.00 | 31,327,249.81 | 28.59 | 78,240,002.47 | 91,513,199.48 | 100.00 | 32,568,788.27 | 35.59 | 58,944,411.21 |
Other receivables with significant individual amount and provision for bad debt is accrued separately atthe end of period
| Other Receivables (By Entity) | Ending Balance | |||
| Other receivables | Provision for bad debt | Proportion of provision | Reason for Provision | |
| No.1 Client | 24,213,732.50 | Unimpaired according to the separate test | ||
| No.2 Client | 13,651,280.20 | 13,651,280.20 | 100.00 | Impaired according to the separate test |
| No.3 Client (Note) | 10,785,305.02 | Unimpaired according to the separate test | ||
| No.4 Client | 3,500,000.00 | Unimpaired according to the separate test | ||
| No.5 Client | 3,000,000.00 | Unimpaired according to the separate test | ||
| Total | 55,150,317.72 | 13,651,280.20 | 24.75 | / |
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:
| Aging | Ending Balance | ||
| Other receivables | Provision for bad debt | Proportion of provision% | |
| Within 1 year | 6,531,177.64 | 326,558.88 | 5.00% |
| 1-2 years | 352,923.20 | 70,584.64 | 20.00% |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| 2-3 years | 585,679.52 | 292,839.76 | 50.00% |
| Over 3 years | 16,159,300.82 | 16,159,300.82 | 100.00% |
| Total | 23,629,081.18 | 16,849,284.10 | 71.31 |
Other receivable with insignificant individual amount but provision for bad debt is accrued separately atthe end of period
| Book balance | Provision for bad debt | Proportion of provision (%) | Reason for provision | |
| Other insignificant other receivables (Note 1) | 1,123,511.90 | 19,335.00 | 0.47 | Impaired according to the separate test |
| Other insignificant other receivables (Note 2) | 353,051.55 | Unimpaired according to the separate test | ||
| Other insignificant other receivables (Note 3) | 2,629,049.41 | Impaired according to the separate test | ||
| Other insignificant other receivables (Note 4) | 25,021,160.96 | 757,350.51 | 3.03 | Impaired according to the separate test |
| Other insignificant other receivables (Note 5) | 1,202,841.13 | Unimpaired according to the separate test | ||
| Other insignificant other receivables (Note 6) | 96,746.78 | Impaired according to the separate test | ||
| Other insignificant other receivables (Note 7) | 18,228.07 | Unimpaired according to the separate test | ||
| Other insignificant other receivables (Note 8) | 293,263.58 | Impaired according to the separate test | ||
| Other insignificant other receivables (Note 9) | 50,000.00 | 50,000.00 | 100.00 | Impaired according to the separate test |
| Total | 30,787,853.38 | 826,685.51 | 2.69 |
Note 1: It mainly represents the other receivables of SGG, and the provision for impairment is accruedbased on the separate test.
Note 2: It mainly represents the other receivablesof DAPSH, which is unimpaired based on the separatetest.
Note 3: It mainly represents the other receivablesof DAP AG, which is unimpaired based on the separatetest.
Note 4: It mainly represents the other receivables of SHENSY, and the provision for impairment isaccrued based on the separate test.
Note 5: It mainly represents the other receivablesof SGGEMSY, which is unimpaired based on theseparate test.
Note 6: It mainly represents the other receivablesof DAP Vietnam Co., Ltd., which is unimpaired basedon the separate test.
Note 7: It mainly represents the other receivablesof ShangGong Sewing Machine (Zhejiang) Co., Ltd.,which is unimpaired based on the separate test.
Note 8: It mainly represents the other receivablesof Shanghai ShangGong Asset Management Co., Ltd.,which is unimpaired based on the separate test.
Note 9: It mainly represents the other receivables of Shanghai SGSB Electronics Co., Ltd., and theprovision for impairment is accrued based on the separate test.
7.9.2 The accrual, reversal or recovery of the provision for bad debts in the current periodThe provision for bad debts accrued in the current period is 1,677,260.40 yuan. The amount reversed orrecovered of the provision for bad debts in the current period is 38,095.00 yuan.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
7.9.3 Other receivables actually write-off in the current period
| Item | Amount |
| Other receivables actually write-off | 534,288.45 |
7.9.4 Top five other receivables in terms of their ending balance
| Company name | Nature | Ending balance | Aging | Proportion in the ending balance of total other receivable (%) | Provision for bad debt ending balance |
| No.1 Client | Current accounts | 24,213,732.50 | Within 1year | 22.10 | |
| No.2 Client | Current accounts | 13,651,280.20 | From within 1year to over 3 years | 12.46 | 13,651,280.20 |
| No.3 Client | Export tax refund receivable | 10,785,305.02 | Within 1year | 9.84 | |
| No.4 Client | Current accounts | 3,500,000.00 | Within 1year | 3.19 | |
| No.5 Client | Current accounts | 3,000,000.00 | Within 1year | 2.74 | |
| Total | / | 55,150,317.72 | 50.33 | 13,651,280.20 |
7.9.5 Receivables involving government grantsNot applicable.7.9.6 Other receivables derecognized due to the transfer of financial assetsNot applicable.7.9.7 Amount of assets and liabilities transferred from other receivables and continue to be involvedNot applicable.7.10 Inventories7.10.1 Classification of inventories
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Raw materials | 301,357,553.44 | 50,711,796.95 | 250,645,756.49 | 285,435,138.31 | 52,813,472.76 | 232,621,665.55 |
| Goods in progress | 174,185,839.20 | 27,956,246.49 | 146,229,592.71 | 153,406,126.71 | 28,555,276.42 | 124,850,850.29 |
| Finished goods | 318,688,609.66 | 37,963,289.59 | 280,725,320.07 | 283,033,493.86 | 39,909,017.40 | 243,124,476.46 |
| Revolving materials | 864,868.58 | 864,868.58 | 1,427,640.89 | 1,427,640.89 | ||
| Consigned processing materials | 2,533,368.32 | 2,533,368.32 | 3,273,904.32 | 3,273,904.32 | ||
| Dispatched goods | 17,990,212.66 | 17,990,212.66 | 20,569,892.77 | 20,569,892.77 | ||
| Labor costs | 93,439,681.24 | 93,439,681.24 | 79,273,391.31 | 79,273,391.31 | ||
| Total | 909,060,133.10 | 116,631,333.03 | 792,428,800.07 | 826,419,588.17 | 121,277,766.58 | 705,141,821.59 |
7.10.2 Inventory depreciation reserve
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance | ||
| Provision | Others | Reversal or write-off | Others | |||
| Raw materials | 52,813,472.76 | 2,101,675.81 | 50,711,796.95 | |||
| Goods in progress | 28,555,276.42 | 599,029.93 | 27,956,246.49 | |||
| Finished goods | 39,909,017.40 | 226,353.29 | 197,763.14 | 1,974,317.96 | 37,963,289.59 | |
| Total | 121,277,766.58 | 226,353.29 | 2,898,468.88 | 1,974,317.96 | 116,631,333.03 | |
7.10.3 Explanation of the amount of capitalization of borrowing costs in the ending balance ofinventory
Not applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
7.11 Assets held for saleNot applicable.7.12 Non-current assets maturing within one yearNot applicable.7.13 Other current assets
| Item | Ending balance | Beginning balance |
| Input tax to be credited | 31,109,538.78 | 31,638,470.24 |
| Rentals and insurance fees | 4,540,107.68 | 1,592,432.66 |
| Overpaid enterprise income tax | 339,055.12 | 902,284.30 |
| Financial products | 20,000,000.00 | |
| Structured deposit | 275,000,000.00 | 332,000,000.00 |
| Unamortized expense | 400,169.64 | |
| Entrusted Loan | 53,000,000.00 | |
| Total | 383,988,701.58 | 366,533,356.84 |
Note: The entrusted loan is a loan that the company entrusted the Bank of Shanghai Co., Ltd. FuminSub-branch to Richpeace.
7.14 Available-for-sale financial assets7.14.1 Available-for-sale financial assets
| Item | Ending Balance | Beginning Balance | ||||
| Book Balance | Provision for Impairment | Book Value | Book Balance | Provision for Impairment | Book Value | |
| Available for sale debt instruments | ||||||
| Available for sale equity instruments | 111,210,846.79 | 1,698,131.91 | 109,512,714.88 | 120,658,075.96 | 1,698,131.91 | 118,959,944.05 |
| Including: Measured at fair value | 78,186,465.43 | 78,186,465.43 | 89,721,694.56 | 89,721,694.56 | ||
| Measured at cost | 33,024,381.36 | 1,698,131.91 | 31,326,249.45 | 30,936,381.40 | 1,698,131.91 | 29,238,249.49 |
| Total | 111,210,846.79 | 1,698,131.91 | 109,512,714.88 | 120,658,075.96 | 1,698,131.91 | 118,959,944.05 |
Available-for-sale financial assets measured at fair value as at the end of report period:
| Classification of available-for-sale Financial Assets | Available-for-sale Equity Instruments | Available-for-sale Debt Instruments | Total |
| Cost of equity instruments | 74,010,222.53 | 74,010,222.53 | |
| Fair value | 78,186,465.43 | 78,186,465.43 | |
| Accumulated changes in fair value included in other comprehensive income | 4,176,242.90 | 4,176,242.90 | |
| Accrued provision for impairment |
7.14.2 Available-for-sale financial assets measured atcost at the end of report period
| Investee | Book balance | Provision for impairment | Shareholding ratio in investee (%) | Cash dividend in report period | ||||||
| Beginning balance | + | - | Ending balance | Beginning balance | + | - | Ending balance | |||
| Shanghai Fuji Xerox Co., Ltd. | 29,140,749.49 | 29,140,749.49 | 15.92 | 9,949,000.00 | ||||||
| Shanghai Hirose Precision Industrial Co., Ltd. (Note 1) | 30.00 | 900,000.00 | ||||||||
| Changshu Qixing Elec-plating Co., Ltd. | 90.00 | |||||||||
| Shanghai Huazhijie Plastic Co., Ltd. (Note 2) | 736,283.66 | 736,283.66 | 736,283.66 | 736,283.66 | 23.04 | |||||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Investee | Book balance | Provision for impairment | Shareholding ratio in investee (%) | Cash dividend in report period | ||||||
| Beginning balance | + | - | Ending balance | Beginning balance | + | - | Ending balance | |||
| Shanghai Xingguang Underwear Factory (South Africa) | 308,033.99 | 308,033.99 | 308,033.99 | 308,033.99 | 14.30 | |||||
| Wuxi Shanggong Sewing Machines Co., Ltd. (Note 3) | 153,814.26 | 153,814.26 | 153,814.26 | 153,814.26 | 80.00 | |||||
| China Perfect Machinery Co., Ltd. | 90,000.00 | 90,000.00 | 0.0993 | |||||||
| Shanghai Baoding Investment Co., Ltd. | 7,500.00 | 7,500.00 | 0.008 | |||||||
| Shanghai Shanggong Jiarong Sewing Machine Trade Co., Ltd. | 500,000.00 | 500,000.00 | 500,000.00 | 500,000.00 | 12.50 | |||||
| Shanghai Pacific Industrial Co., Ltd. (Note 4) | 2,087,999.96 | 2,087,999.96 | 48.00 | |||||||
| Total | 30,936,381.40 | 2,087,999.96 | 33,024,381.36 | 1,698,131.91 | 1,698,131.91 | 10,849,000.00 | ||||
Note 1: SGG holds 30% shares of Shanghai Hirose Precision Industrial Co., Ltd. According to the articlesof association, the Company obtains guaranteed minimum revenue each year. In addition, the Company doesnot participate in the decision-making process of daily operations, and does not have significant influence onthe invested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of ShanghaiHirose Precision Industrial Co., Ltd.
Note 2: SGG holds 23.04% shares of Shanghai Huazhijie Plastic Co., Ltd. According to the articles ofassociation, SGG does not have facto control over the invested enterprise. In addition, the Company does notparticipate in the decision-making process of daily operations, and does not have significant influence on theinvested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of ShanghaiHuazhijie Plastic Co., Ltd.
Note 3: SGG holds 80.00% shares of Wuxi Shanggong Sewing Machines Co., Ltd. According to thearticles of association, SGG does not have facto control over the invested enterprise. In addition, the Companydoes not participate in the decision-making process of daily operations, and does not have significant influenceon the invested enterprise. Therefore, it adopts cost accounting to measure its revenue from its shares of WuxiShanggong Sewing Machines Co., Ltd.
Note 4: SGG holds 48.00% shares of Shanghai Pacific Industrial Co., Ltd. SGG does not participate in thedecision-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 Pacific Industrial Co.,Ltd.
7.14.3 Changes in available-for-sale financial assets in current period
| Classification of Available-for-sale Financial Assets | Available-for-sale Equity Instruments | Available-for-sale Debt Instruments | Total |
| Balance of provision for impairment accrued as at 1 January 2018 | 1,698,131.91 | 1,698,131.91 | |
| Provision in Report Period | |||
| Including: transfer-in from other comprehensive income | |||
| Decrease in Report Period | |||
| Including: reversal due to the subsequent increase in |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| fair value | |||
| Balance of provision for impairment accrued as at 30 June 2018 | 1,698,131.91 | 1,698,131.91 |
7.15 Held-to-maturity investmentsNot applicable.7.16 Long-term receivablesNot applicable.7.17 Long-term equity investment
| Investees | Beginning Balance | Change in current period | Ending Balance | Ending Balance of Provision of Impairment | |||||||
| Increase in Investment | Decrease in Investment | Return on Investment under Equity Method | Other Comprehensive Income Adjustment | Other Changes in Equity | Declared Cash Dividends or Profit | Other | Increase in Investment | ||||
| Joint operation | |||||||||||
| H. Stoll AG & Co. KG | 275,799,606.70 | -1,691,101.14 | 15,587,523.17 | -5,319,596.67 | 253,201,385.72 | ||||||
| Subtotal | 275,799,606.70 | -1,691,101.14 | 15,587,523.17 | -5,319,596.67 | 253,201,385.72 | ||||||
| Total | 275,799,606.70 | -1,691,101.14 | 15,587,523.17 | -5,319,596.67 | 253,201,385.72 | ||||||
7.18 Investment propertiesInvestment property measured at cost
| Item | Buildings and Constructions | Leased Land Use Rights | Investment Real Estate Decoration | Total |
| 1. Original book value | ||||
| (1) Beginning balance | 226,181,075.92 | 50,523,752.24 | 2,583,492.92 | 279,288,321.08 |
| (2) Increase in current period | 2,257,192.50 | 2,257,192.50 | ||
| ① Outsourcing | 2,257,192.50 | 2,257,192.50 | ||
| ②Transfer in from inventories, fixed assets or construction in progress | ||||
| ③ Increase by corporate combination | ||||
| (3) Decrease in current period | 1,748,829.60 | 1,748,829.60 | ||
| ① Disposal | ||||
| ② Others | ||||
| ③ Exchange rate fluctuation | 1,748,829.60 | 1,748,829.60 | ||
| (4) Ending balance | 226,689,438.82 | 50,523,752.24 | 2,583,492.92 | 279,796,683.98 |
| 2. Accumulated depreciation and accumulated amortization | ||||
| (1) Beginning balance | 105,181,671.01 | 16,183,322.31 | 688,931.76 | 122,053,925.08 |
| (2) Increase in current period | 2,266,441.82 | 552,001.62 | 252,499.28 | 3,070,942.72 |
| ①Amortization or accrual | 2,266,441.82 | 552,001.62 | 252,499.28 | 3,070,942.72 |
| (3) Decrease in current period | 354,484.51 | 354,484.51 | ||
| ① Disposal | ||||
| ② Others | ||||
| ③ Exchange rate fluctuation | 354,484.51 | 354,484.51 | ||
| (4) Ending balance | 107,093,628.32 | 16,735,323.93 | 941,431.04 | 124,770,383.29 |
| 3. Provision for impairment | ||||
| (1) Beginning balance | 7,732,063.54 | 7,732,063.54 | ||
| (2) Increase in current period | 81,186.01 | 81,186.01 | ||
| ①Accrual | 81,186.01 | 81,186.01 | ||
| (3) Decrease in current period | 230,628.51 | 230,628.51 | ||
| ① Disposal |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| ② Others | ||||
| ③ Exchange rate fluctuation | 230,628.51 | 230,628.51 | ||
| (4) Ending balance | 7,582,621.04 | 7,582,621.04 | ||
| 4. Book value | ||||
| (1) Book value at the end of the period | 112,013,189.46 | 33,788,428.31 | 1,642,061.88 | 147,443,679.65 |
| (2) Book value at the beginning of the period | 113,267,341.37 | 34,340,429.93 | 1,894,561.16 | 149,502,332.46 |
7.19 Fixed assets7.19.1 Fixed assets
| Item | Buildings and Constructions | Machinery Equipment | Transportation Equipment | Electronic Equipment | Other Equipment | Total |
| 1. Original book value | ||||||
| (1) Beginning 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) Increase in current period | 665,680.50 | 8,746,480.52 | 457,746.67 | 173,931.72 | 10,816,088.00 | 20,859,927.41 |
| ① Purchase | 489,696.00 | 8,746,480.52 | 457,746.67 | 164,046.81 | 10,816,088.00 | 20,674,058.00 |
| ② Transfer from construction in progress | 175,984.50 | 175,984.50 | ||||
| ③ Increase by corporate combination | ||||||
| ④Exchange rate fluctuation | 9,884.91 | 9,884.91 | ||||
| (3) Decrease in current period | 9,337,713.11 | 18,049,772.71 | 130,687.09 | 244,299.70 | 8,573,582.19 | 36,336,054.80 |
| ①Disposal or scrap | 1,334,825.00 | 7,994,397.05 | 130,687.09 | 244,299.70 | 1,723,785.18 | 11,427,994.02 |
| ②Exchange rate fluctuation | 8,002,888.11 | 10,055,375.66 | 6,849,797.01 | 24,908,060.78 | ||
| (4).Ending Balance | 440,519,161.91 | 382,582,213.64 | 15,262,751.52 | 3,846,599.75 | 282,845,091.98 | 1,125,055,818.80 |
| 2. Accumulated depreciation | ||||||
| (1) Beginning 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 |
| (2) Increase in current period | 4,664,501.54 | 8,749,489.73 | 804,691.85 | 343,840.48 | 7,692,988.94 | 22,255,512.54 |
| ①Accrual | 4,664,501.54 | 8,749,489.73 | 804,691.85 | 343,840.48 | 7,692,988.94 | 22,255,512.54 |
| ②Exchange rate fluctuation | ||||||
| (3) Decrease in current period | 5,762,995.99 | 12,705,285.07 | 92,468.63 | 212,772.85 | 7,706,130.94 | 26,479,653.48 |
| ①Disposal or scrap | 1,025,915.06 | 5,673,168.65 | 92,468.63 | 212,772.85 | 1,651,711.00 | 8,656,036.19 |
| ②Exchange rate fluctuation | 4,737,080.93 | 7,032,116.42 | 6,054,419.94 | 17,823,617.29 | ||
| (4) Ending balance | 225,547,915.82 | 257,318,444.86 | 8,678,051.76 | 2,798,394.70 | 231,915,557.23 | 726,258,364.37 |
| 3. Provision for impairment | ||||||
| (1) Beginning balance | 4,913,777.92 | 7,232,165.07 | 75,908.67 | 37,818.61 | 1,402.83 | 12,261,073.10 |
| (2) Increase in current period | ||||||
| ①Accrual | ||||||
| (3) Decrease in current period | 119,445.93 | 119,445.93 | ||||
| ① Disposal or scrap | 119,445.93 | 119,445.93 | ||||
| (4) Ending balance | 4,913,777.92 | 7,112,719.14 | 75,908.67 | 37,818.61 | 1,402.83 | 12,141,627.17 |
| 4. Book value | ||||||
| (1) Book value at the end of the period | 210,057,468.17 | 118,151,049.64 | 6,508,791.09 | 1,010,386.44 | 50,928,131.92 | 386,655,827.26 |
| (2) Book value at the | 217,631,006.33 | 123,379,100.56 | 6,893,954.73 | 1,211,822.05 | 48,672,484.11 | 397,788,367.78 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
7.19.2 Idle fixed assetsNot applicable.7.19.3 Fixed assets leased through financial lease
beginning of the period
Item
| Item | Book value | Accumulated depreciation | Impairment | Book value |
| Transportation Equipment | 1,276,282.05 | 261,248.39 | 1,015,033.66 | |
| Total | 1,276,282.05 | 261,248.39 | 1,015,033.66 |
7.19.4 Fixed assets leased out through operating leasesNot applicable.7.19.5 Fixed assets without certificate of title
| Item | Book value | Reason for failure in completing the formalities for obtaining certificates of title |
| Buildings and constructions (Note 1) | 1,755,677.80 | Self-built housing, the certificates are in the process |
| Buildings and constructions (Note 2) | 63,486.74 | 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.7.20 Construction in progress
7.20.1 Construction in progress
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Sewing Equipment Engineering | 7,944,603.26 | 7,944,603.26 | 4,347,153.83 | 4,347,153.83 | ||
| ERP project | 471,415.10 | 471,415.10 | ||||
| Household multifunctional sewing machine | 1,214,278.98 | 1,214,278.98 | 1,025,599.74 | 1,025,599.74 | ||
| Zhangjiagang manufacture base project | 1,845,901.66 | 1,845,901.66 | ||||
| Modern logistics management center | 12,145,141.67 | 12,145,141.67 | 4,858,082.75 | 4,858,082.75 | ||
| Huangyan factory reconstruction | 201,496.64 | 201,496.64 | ||||
| Czech workshop reconstruction | 1,493,472.01 | 1,493,472.01 | 402,369.43 | 402,369.43 | ||
| Kingdee QR code system project | 186,166.68 | 186,166.68 | 186,166.68 | 186,166.68 | ||
| Total | 23,656,574.34 | 23,656,574.34 | 12,665,274.09 | 12,665,274.09 | ||
7.20.2 Changes in major construction in progress for current period
| Item | Budget | Beginning balance | Increase in current period | Amount Transferred in Fixed Assets for the Current Period | Other decreases in current period | Ending balance | Proportion of the accumulated investment in project in budget (%) | Construction in progress | Accumulated amount of interest capitalization | Including: amount of interest capitalization in 2017 | Interest capitalization rate in 2017(%) | Source of Fund |
| Sewing Equipment Engineering | 4,347,153.83 | 3,773,433.93 | 175,984.50 | 7,944,603.26 | Self-owned fund | |||||||
| ERP project (Note) | 471,415.10 | 471,415.10 | Raised fund | |||||||||
| Household multifunctional sewing machine | 1,025,599.74 | 188,679.24 | 1,214,278.98 | Self-owned fund | ||||||||
| Zhangjiagang manufacture base project | 1,845,901.66 | 1,845,901.66 | Self-owned fund |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Budget | Beginning balance | Increase in current period | Amount Transferred in Fixed Assets for the Current Period | Other decreases in current period | Ending balance | Proportion of the accumulated investment in project in budget (%) | Construction in progress | Accumulated amount of interest capitalization | Including: amount of interest capitalization in 2017 | Interest capitalization rate in 2017(%) | Source of Fund |
| Modern logistics management center | 4,858,082.75 | 7,287,058.92 | 12,145,141.67 | Self-owned fund | ||||||||
| Huangyan factory reconstruction | 201,496.64 | 201,496.64 | Self-owned fund | |||||||||
| Kingdee QR code system project | 186,166.68 | 186,166.68 | Self-owned fund | |||||||||
| Czech workshop reconstruction | 402,369.43 | 1,091,102.58 | 1,493,472.01 | Self-owned fund | ||||||||
| Total | 12,665,274.09 | 13,013,186.41 | 175,984.50 | 1,845,901.66 | 23,656,574.34 | / |
Note: The second phase of ERP project7.20.3 Provision for impairment of construction in progress in the current periodNot applicable.7.21 Project materialsNot applicable.7.22 Disposal of fixed assetsNot applicable.7.23 Productive biological assetsNot applicable.7.24 Oil and gas assetsNot applicable.7.25 Intangible assets7.25.1 Intangible assets
| Item | Land Use Right | Patent and Non-patent Technology | Trademark Use Right | Computer Software | Others | Total |
| 1. Original book value | ||||||
| (1) Beginning balance | 101,054,020.23 | 134,827,412.78 | 20,161,268.51 | 5,273,690.04 | 6,187,223.90 | 267,503,615.46 |
| (2) Increase in current period | 37,499,895.00 | 14,247,590.00 | 0.00 | 0.00 | 0.00 | 51,747,485.00 |
| ① Purchase | 37,499,895.00 | 1,709,710.80 | 39,209,605.80 | |||
| ②Transfer from construction in progress/ development expenditure | 12,537,879.20 | 12,537,879.20 | ||||
| ③Exchange rate fluctuation | ||||||
| (3) Decrease in current period | 4,044,335.93 | 4,044,335.93 | ||||
| ① Disposal | ||||||
| ②Exchange rate fluctuation | 4,044,335.93 | 4,044,335.93 | ||||
| (4) .Ending Balance | 138,553,915.23 | 145,030,666.85 | 20,161,268.51 | 5,273,690.04 | 6,187,223.90 | 315,206,764.53 |
| 2. Accumulated amortization | ||||||
| (1) Beginning balance | 9,445,749.34 | 79,996,390.86 | 20,161,268.51 | 1,724,825.39 | 6,187,223.90 | 117,515,458.00 |
| (2) Increase in current period | 1,333,445.98 | 9,300,372.48 | 0.00 | 500,231.93 | 0.00 | 11,134,050.39 |
| ① Accrual | 1,333,445.98 | 9,300,372.48 | 500,231.93 | 11,134,050.39 | ||
| (3) Decrease in current period | 185,944.14 | 185,944.14 | ||||
| ① Disposal |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Land Use Right | Patent and Non-patent Technology | Trademark Use Right | Computer Software | Others | Total |
| ② Exchange rate fluctuation | 185,944.14 | 185,944.14 | ||||
| 4.Ending Balance | 10,779,195.32 | 89,110,819.20 | 20,161,268.51 | 2,225,057.32 | 6,187,223.90 | 128,463,564.25 |
| 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. Book value | ||||||
| (1) Book value at the end of the period | 127,774,719.91 | 55,919,847.65 | 3,048,632.72 | 186,743,200.28 | ||
| (2) Book value at the beginning of the period | 91,608,270.89 | 54,831,021.92 | 3,548,864.65 | 149,988,157.46 |
At the end of the period, the intangible assets formed through internal research and development of thecompany accounted for 6.71% of the balance of intangible assets.
7.25.2 Land use right without certificate of titleNot applicable.7.26 Development Expenditures
| Item | Beginning Balance | Increase in current period | Decrease in current period | Ending Balance | ||
| Internal Development Expenditure | Others | Recognized as Intangible Assets | Transferred to Current Profits and Losses | |||
| Sewing equipment | 11,968,675.38 | 12,664,256.82 | 12,537,879.20 | 12,095,053.00 | ||
| Freight platform | 3,615,282.96 | 3,615,282.96 | ||||
| WeChat platform | 1,099,814.50 | 1,099,814.50 | ||||
| Total | 16,683,772.84 | 12,664,256.82 | 12,537,879.20 | 16,810,150.46 | ||
7.27 Goodwill7.27.1 Book value of goodwill
| Name of investee or goodwill formation events | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance | ||
| Acquisition | Others | Disposal | Exchange Rate Fluctuation | |||
| PFAFF GmbH | 72,482,033.43 | 1,400,906.22 | 71,081,127.21 | |||
| Beisler | 22,732,781.28 | 439,370.88 | 22,293,410.40 | |||
| Total | 95,214,814.71 | 1,840,277.10 | 93,374,537.61 | |||
7.27.2 Provision for impairment of goodwill
| Name of investee or goodwill formation events | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance | ||
| Acquisition | Others | Disposal | Exchange Rate Fluctuation | |||
| Beisler | 22,732,781.28 | 439,370.88 | 22,293,410.40 | |||
| Total | 22,732,781.28 | 439,370.88 | 22,293,410.40 | |||
7.28 Long-term deferred expenses
| Item | Beginning Balance | Increase in Current Period | Amortization in Current Period | Other Decreases in Current Period | Ending Balance |
| Enterprise Mailbox rental expense | 142,249.20 | 3,300.00 | 129,049.20 | 9,900.00 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Online brand registration fee | 486,727.12 | 19,716.90 | 187,464.45 | 279,545.77 | |
| Landscape engineering | 134,531.10 | 24,460.20 | 110,070.90 | ||
| Tooling cost | 743,589.75 | 316,513.65 | 120,708.42 | 939,394.98 | |
| Leasehold improvements | 123,916.71 | 18,199.98 | 105,716.73 | ||
| Total | 1,631,013.88 | 316,513.65 | 186,385.50 | 316,513.65 | 1,444,628.38 |
Note: In current period, the amortized amount of long-term deferred expenses is 186,385.50 yuan, whichis recorded in general and administrative expenses.
7.29 Deferred income tax assets / deferred income tax liabilities7.29.1 Deferred income tax assets without offset
| Item | Ending balance | Beginning balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Long-term assets | 7,585,901.32 | 353,743.29 | ||
| Inventories | 20,792,206.45 | 19,654,766.53 | ||
| Receivables | 2,604,410.62 | 1,885,764.75 | ||
| Other liabilities | 4,176,672.81 | 3,796,682.43 | ||
| Unrealized profits from internal transactions | 11,066,767.51 | 11,066,767.51 | ||
| Pension (Europe) | 30,814,948.31 | 34,005,022.74 | ||
| Deferred income | 550,000.00 | 550,000.00 | ||
| Estimated liabilities | 136,615.48 | 136,615.48 | ||
| Offset number | -11,240,536.69 | -7,904,454.50 | ||
| Total | 66,486,985.81 | 63,544,908.23 | ||
7.29.2 Deferred income tax liabilities
| Item | Ending balance | Beginning balance | ||
| Taxable temporary differences | Deferred income tax liabilities | Taxable temporary differences | Deferred income tax liabilities | |
| Long-term assets | 57,240,132.93 | 49,472,348.52 | ||
| Inventories | 437,604.05 | 446,228.60 | ||
| Receivables | 5,249,536.68 | 6,146,045.08 | ||
| Other liabilities | 3,111,913.33 | 4,702,973.72 | ||
| Offset number | -11,240,532.33 | -7,904,454.50 | ||
| Total | 54,798,654.66 | 52,863,141.42 | ||
7.30 Other non-current assetsNot applicable.7.31 Short-term loans
| Item | Ending balance | Beginning balance |
| Mortgage loans | 10,221,013.00 | |
| Guaranteed loans | 353,822,200.00 | 319,820,040.00 |
| Credit loans | 348,148.62 | 348,148.62 |
| Total | 354,170,348.62 | 330,389,201.62 |
Note 1: The guaranteed loans are: the funds amounted to 205,060,200.00 yuan (26,800,000.00 euros)borrowed by DAP AG from the Bielefeld Branch of Commerzbank; and funds amounted to 61,212,000.00
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
yuan (8,000,000.00 euros) borrowed by PFAFF GmbH from Kaiserslautern Branch of Commerzbank.Guarantees related to the above matters refer to Note 14.2.
Note 2: Except the guaranteed loans above; other guaranteed loans are as follows: SHENSY borrowed15,000,000.00 yuan from Bank of Shanghai Fumin Branch; SHENSY borrowed 30,000,000.00 yuan fromChina Construction Bank Shanghai Baoshan Baogang Branch, 28,000,000.00 yuan from Bank ofCommunications Shanghai Branch of Baoshan. The guarantee company is Shanghai Shensy Kaile Internet ofThings Co., Ltd.
7.32 Financial liabilities measured at fair value through profit or loss for the current periodNot applicable.7.33 Derivative financial liabilitiesNot applicable.7.34 Notes payableNot applicable.7.35 Accounts payable
| Item | Ending Balance | Beginning Balance |
| Payables to suppliers | 203,320,210.56 | 194,031,795.38 |
| Total | 203,320,210.56 | 194,031,795.38 |
7.36 Receipt in advance
| Item | Ending Balance | Beginning Balance |
| Advances on sales | 34,936,329.32 | 38,326,094.65 |
| Total | 34,936,329.32 | 38,326,094.65 |
7.37 Employee compensation payable7.37.1 Employee compensation payable
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Short-term remuneration | 70,429,400.35 | 311,321,764.46 | 323,651,259.57 | 58,099,905.24 |
| Post-employment benefits - defined benefit plans | 591,856.15 | 6,890,465.75 | 6,445,016.60 | 1,037,305.30 |
| Dismissal welfare | ||||
| Defined benefit plan maturing within one year | 20,090,922.50 | 19,831,105.00 | 20,090,922.50 | 19,831,105.00 |
| Total | 91,112,179.00 | 338,043,335.21 | 350,187,198.67 | 78,968,315.54 |
7.37.2 Short-term remuneration
| Item | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance |
| (1) Salary, bonus, allowance and subsidy | 69,704,983.42 | 245,188,227.88 | 258,130,757.94 | 56,762,453.36 |
| (2) Employee welfare | 8,639.56 | 60,007,529.04 | 60,002,191.84 | 13,976.76 |
| (3) Social insurance expenses | 490,969.52 | 3,868,691.46 | 3,628,187.11 | 731,473.87 |
| Including: medical insurance premium | 342,596.18 | 3,180,774.14 | 2,978,844.59 | 544,525.73 |
| Work-related injury insurance premium | 37,465.61 | 299,857.36 | 289,339.40 | 47,983.57 |
| Maternity insurance premium | 20,885.53 | 288,091.07 | 264,948.23 | 44,028.37 |
| Other | 90,022.20 | 99,968.89 | 95,054.89 | 94,936.20 |
| (4) Housing provident funds | 160,871.34 | 1,723,306.00 | 1,458,392.10 | 425,785.24 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance |
| (5) Labor union expenditures and employee education expenses | 63,936.51 | 534,010.08 | 431,730.58 | 166,216.01 |
| (6) Short-term paid absences | ||||
| (7) short-term profit-sharing plan | ||||
| Total | 70,429,400.35 | 311,321,764.46 | 323,651,259.57 | 58,099,905.24 |
7.37.3 Defined contribution plan
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Basic endowment insurance premium | 574,972.14 | 6,700,673.78 | 6,280,238.08 | 995,407.84 |
| Unemployment insurance premium | 16,884.01 | 189,791.97 | 164,778.52 | 41,897.46 |
| Payment of annuity | ||||
| Total | 591,856.15 | 6,890,465.75 | 6,445,016.60 | 1,037,305.30 |
7.38 Taxes and surcharges payable
| Item | Ending balance | Beginning balance |
| Value-added tax | 3,537,447.13 | 4,454,097.17 |
| Enterprise income tax | 2,967,674.60 | 3,646,204.96 |
| Individual income tax | 3,342,181.47 | 5,613,216.71 |
| Urban maintenance and construction tax | 154,606.52 | 186,230.26 |
| Educational surtax | 170,421.11 | 168,142.01 |
| Use tax of land | 231,028.00 | |
| Stamp tax | 4,663.20 | 6,696.80 |
| Total | 10,408,022.03 | 14,074,587.91 |
7.39 Interest Payable
| Item | Ending balance | Beginning balance |
| Term interest on long-term borrowings due in installments | 454,600.48 | 471,243.32 |
| Short-term loan interest payable | 1,035,883.66 | 639,309.74 |
| Total | 1,490,484.14 | 1,110,553.06 |
7.40 Dividends payable
| 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 |
| Total | 1,032,818.86 | 1,032,818.86 |
7.41 Other payables
| Item | Ending balance | Beginning balance |
| Other payables | 174,677,791.04 | 193,617,747.74 |
| Total | 174,677,791.04 | 193,617,747.74 |
7.42 Liabilities held for saleNot applicable.7.43 Non-current liabilities maturing within 1 year
| Item | Ending balance | Beginning balance |
| Deferred income due within one year | 1,260,000.00 | 1,260,000.00 |
| Total | 1,260,000.00 | 1,260,000.00 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
7.44 Other current liabilities
| Item | Ending balance | Beginning balance |
| Short-term bond payable | ||
| Interest and rentals | 45,909.00 | 48,330.03 |
| Total | 45,909.00 | 48,330.03 |
7.45 Long-term loans
| Item | Ending balance | Beginning balance |
| Mortgage loans | 60,278,517.00 | 61,466,519.40 |
| Credit loans | 32,095,984.87 | 1,489,984.87 |
| Total | 92,374,501.87 | 62,956,504.27 |
Note 1: The amount of mortgage loans at the end of report period is 60,278,517.00 yuan (7,938,398.00euros). The relevant matters of the mortgage loan above see Note 14.2.
Note 2: The amount of credit loans at the end of report period is 30,606,000.00 yuan (4,000,000.00 euros),which is lent by DAP AG from Agricultural Bank of China Co., Ltd. Frankfurt Branch.
7.46 Bonds payableNot applicable.7.47 Long-term payables
| Item | Beginning balance | Ending balance |
| Financing lease payments payable | 960,531.14 | 679,488.44 |
| Less: Unconfirmed financing charges | 79,007.64 | 39,349.69 |
| Others | 2,240,369.61 | 2,342,507.24 |
| Total | 3,121,893.11 | 2,982,645.99 |
7.48 Long-term employee compensation payable
| Item | Ending balance | Beginning balance |
| 1. Post-employment benefits - net liability of defined benefit plan | 231,071,533.86 | 243,516,774.09 |
| 2. Dismissal welfare | ||
| 3. Other long-term benefits | 3,828,548.07 | 3,904,003.23 |
| Total | 234,900,081.93 | 247,420,777.32 |
Note: 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 andpossessed right to draw defined benefit plan, but the increase of future payroll and defined benefit plan.
7.49 Special payableNot applicable.7.50 Estimated liabilities
| Item | Beginning Balance | Ending Balance | Reason |
| Pending litigation | 546,461.91 | 546,461.91 | Expected compensation expenses |
| Total | 546,461.91 | 546,461.91 | / |
7.51 Deferred income
| Item | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance | Reason |
| Government grants | 2,340,000.00 | 2,340,000.00 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Total | 2,340,000.00 | 2,340,000.00 | / |
Projects that involve government grants:
| Item | Beginning Balance | Subsidies Increased in Current period | Subsidies Included in Current Non-operating Income | Other Change | Ending Balance | Asset-related / Income-related |
| Guiding funds of developing service industry | 2,200,000.00 | 2,200,000.00 | Asset-related | |||
| Taizhou science and Technology Bureau R & D expenditure subsidy | 140,000.00 | 140,000.00 | Income-related | |||
| Total | 2,340,000.00 | 2,340,000.00 | / |
7.52 Other non-current liabilities
| 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
| Beginning Balance | Change in Current Period（+/-） | Ending Balance | |||
| Issuance of New Shares | Others | Sub-total | |||
| Total shares | 548,589,600.00 | 548,589,600.00 | |||
7.54 Other equity instrumentsNot applicable.7.55 Capital reserves
| Item | Beginning Balance | Increase in Current Period | Decrease in Current Period | Ending Balance |
| Stock premium | 851,345,853.61 | 851,345,853.61 | ||
| Other capital reserves | 120,654,741.95 | 5,832,696.23 | 114,822,045.72 | |
| Total | 972,000,595.56 | 5,832,696.23 | 966,167,899.33 |
7.56 Treasury stockNot applicable.7.57 Other Comprehensive Income
| Item | Beginning Balance | Change in Current Period | Ending Balance | ||||
| Accrual before Income tax for the Current Period | Less: recognized as other comprehensive income for previous years and transferred in the profit or loss for the current year | Less: Income Tax Expenses | Attributable to Owners of the Parent Company | Attributable to Minority Shareholders | |||
| 1. Other comprehensive income that cannot be reclassified in the loss and gain in the future | -43,487,893.99 | -43,487,893.99 | |||||
| Including: change in re-measurement of the net liabilities and net assets under defined benefit plan | -43,487,893.99 | -43,487,893.99 | |||||
| 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 reclassified in the loss and gain in the future | -28,675,558.91 | -25,400,680.10 | -25,400,680.10 | -2,205,260.71 | -54,076,239.01 | ||
| Including: a share in other | |||||||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Beginning Balance | Change in Current Period | Ending Balance | ||||
| Accrual before Income tax for the Current Period | Less: recognized as other comprehensive income for previous years and transferred in the profit or loss for the current year | Less: Income Tax Expenses | Attributable to Owners of the Parent Company | Attributable to Minority Shareholders | |||
| comprehensive income of investee that will be reclassified in the loss and gain under the equity method | |||||||
| Losses and gains on the change in fair value of available-for-sale financial assets | 15,711,472.03 | -11,535,229.13 | -11,535,229.13 | 4,176,242.90 | |||
| 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 | -44,387,030.94 | -13,865,450.97 | -13,865,450.97 | -2,205,260.71 | -58,252,481.91 | ||
| Total other comprehensive income | -72,163,452.90 | -25,400,680.10 | -25,400,680.10 | -2,205,260.71 | -97,564,133.00 | ||
7.58 Special reserveNot applicable.7.59 Surplus reserves
| Item | Beginning balance | Increase in current period | Decrease in current period | Ending balance |
| Statutory surplus reserves | 2,273,121.26 | 2,273,121.26 | ||
| Discretionary surplus reserves | 2,273,121.26 | 2,273,121.26 | ||
| Total | 4,546,242.52 | 4,546,242.52 |
7.60 Undistributed profits
| Item | Reporting period | Same period of the previous year |
| Adjustments to undistributed profits as at December 31, 2017 | 692,241,691.51 | 494,754,465.24 |
| Adjustments to total undistributed profits as at January 1, 2018 ("+" for increase, "-" for decrease) | ||
| Adjusted undistributed profits as at January 1, 2018 | 692,241,691.51 | 494,754,465.24 |
| Plus: net profit attributable to owners of the parent company for current period | 100,161,346.50 | 125,980,892.71 |
| Less: withdrawal of statutory surplus reserves | ||
| Withdrawal of discretionary surplus reserves | ||
| Withdrawal of general risk reserves | ||
| Ordinary share dividends payable | ||
| Ordinary share dividend transferred to share capital (paid-in capital) | ||
| Adjustments to undistributed profits as at June 30, 2018 | 792,403,038.01 | 620,735,357.95 |
7.61 Operating income and operating costs
| Item | Reporting period | Same period of the previous year | ||
| Income | Cost | Income | Cost | |
| Main business | 1,449,212,806.09 | 1,029,214,894.79 | 1,475,369,961.67 | 1,058,968,570.27 |
| Other businesses | 45,581,607.18 | 23,236,130.67 | 57,192,639.45 | 29,833,389.03 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Total | 1,494,794,413.27 | 1,052,451,025.46 | 1,532,562,601.12 | 1,088,801,959.30 |
7.62 Taxes and surcharges
| Item | Reporting period | Same period of the previous year |
| Urban maintenance and construction tax | 806,953.97 | 1,544,451.83 |
| Educational surtax | 718,049.63 | 1,127,628.59 |
| Property tax | 2,215,365.99 | 2,099,054.97 |
| land use tax | 958,617.88 | 563,526.02 |
| Vehicle and vessel tax | 16,544.80 | 14,736.70 |
| Stamp tax | 444,355.20 | 372,161.70 |
| Other | 344.20 | 272,984.33 |
| Total | 5,160,231.67 | 5,994,544.14 |
7.63 Selling expenses
| Item | Reporting period | Same period of the previous year |
| Employee compensation | 68,477,738.65 | 61,279,120.79 |
| Fix and after-sale service charges | 11,855,231.61 | 10,393,706.68 |
| Office expenses | 411,478.32 | 748,646.43 |
| Travelling expenses | 9,834,477.29 | 9,321,861.67 |
| Transportation cost | 12,094,658.88 | 10,512,550.73 |
| Advertising expense | 2,394,034.63 | 2,899,425.63 |
| Commission | 11,350,261.62 | 12,103,473.04 |
| Leasing and storage charges | 3,982,825.41 | 5,401,842.88 |
| Insurance premium | 328,652.94 | 706,961.69 |
| Conference fees | 118,897.55 | 1,088,991.90 |
| Depreciation costs | 1,211,664.30 | 1,009,487.88 |
| Exhibition fees | 1,585,467.46 | 3,241,152.99 |
| Sample printed matter and product loss | 5,905,187.62 | 5,033,980.47 |
| Entertainment expenses | 757,129.82 | 363,905.44 |
| Other | 17,292,848.42 | 17,307,072.95 |
| Total | 147,600,554.52 | 141,412,181.17 |
7.64 General and administrative expenses
| Item | Reporting period | Same period of the previous year |
| Employee compensation | 69,551,075.61 | 63,094,127.39 |
| Office expenses | 1,947,623.71 | 3,083,576.02 |
| Water and electricity | 571,118.40 | 609,344.98 |
| Entertainment expenses | 3,324,228.18 | 2,626,271.81 |
| Property insurance premium | 1,172,655.05 | 1,192,827.02 |
| Conference fees | 130,873.98 | 741,776.34 |
| Travelling expenses | 3,880,277.57 | 4,188,197.13 |
| Depreciation costs | 4,242,979.64 | 3,479,775.53 |
| Repair charges | 242,365.23 | 432,790.41 |
| Transportation cost | 776,519.62 | 2,360,059.15 |
| Rental fees | 5,210,376.21 | 3,455,833.49 |
| Costs of board meetings and supervisors' meetings | 251,601.17 | 1,217,959.56 |
| Agency fees and advisory expenses | 10,898,525.41 | 5,537,470.16 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Litigation cost | 485,226.44 | 390,851.06 |
| New product development expenses | 46,213,646.73 | 45,322,190.06 |
| Amortization of intangible assets | 708,107.57 | 1,068,674.61 |
| Amortization of long-term deferred expenses | 186,385.50 | 152,812.53 |
| Other | 4,762,990.39 | 4,967,562.70 |
| Total | 154,556,576.41 | 143,922,099.95 |
7.65 Financial expenses
| Item | Reporting period | Same period of the previous year |
| Interest expenses | 6,107,454.56 | 6,091,395.25 |
| Less: Interest income | -2,498,914.91 | -487,251.03 |
| Gains and losses on exchange | 7,052,428.53 | -13,178,688.63 |
| Others | 1,430,263.38 | 724,768.79 |
| Total | 12,091,231.56 | -6,849,775.62 |
7.66 Losses from asset impairment
| Item | Reporting period | Same period of the previous year |
| Losses from bad debts | -409,326.21 | 4,347,324.27 |
| Losses from inventory impairment | 58,842.08 | 175,122.70 |
| Total | -350,484.13 | 4,522,446.97 |
7.67 Gains from changes in fair valueNot applicable.7.68 Investment income
| Item | Reporting period | Same period of the previous year |
| Long-term equity investments measured under equity method | -1,691,101.14 | 11,737,352.98 |
| Investment income from disposal of long-term equity investment | ||
| investment income of a financial asset at its fair value and whose changes are included in the current profits and losses during the period of holding | ||
| Investment income obtained from the disposal of financial assets at fair value and their changes are included in the current profits and losses | 26,338.67 | 9,509.24 |
| Investment income of the held-to-maturity investment during the holding period | ||
| Investment income derived from available-for-sale financial assets | 11,889,784.50 | 1,001,400.43 |
| Investment income from disposal of available-for-sale financial assets | ||
| After the loss of control, the residual equity is measured at fair value | ||
| Others | 7,260,044.29 | 5,747,623.00 |
| Total | 17,485,066.32 | 18,495,885.65 |
7.69 Gains on disposal of assets
| Item | Reporting period | Same period of the previous year |
| Fixed assets | -571,141.92 | 9,747,624.59 |
| Total | -571,141.92 | 9,747,624.59 |
7.70 Other gains
| Item | Reporting period | Same period of the previous year |
| Financial support fund | 466,000.00 | |
| Unemployment insurance subsidies | 46,700.00 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Innovation Drives Industry Transformation and Upgrade Assessment Award | 80,000.00 | |
| Property tax return | 717,178.80 | |
| Qiantang Economic Development Zone Subsidy | 1,250,000.00 | 2,510,000.00 |
| Comprehensive Bonded Area Management Committee Subsidy | 44,000.00 | |
| Other | 12,494.76 | 30,381.10 |
| Total | 2,616,373.56 | 2,540,381.10 |
7.71 Non-operating incomeNon-operating income
| Item | Reporting period | Same period of the previous year | Amount included in current non-recurring gains and losses |
| Government grants | 20,000.00 | 102,594.49 | 20,000.00 |
| Unpayable payables | 398,451.43 | 398,451.43 | |
| Other | 2,937,503.29 | 3,190.85 | 2,937,503.29 |
| Total | 3,355,954.72 | 105,785.34 | 3,355,954.72 |
Government grants included in current profit and loss
| Item | Reporting period | Same period of the previous year | Asset-related /Income-related |
| Financial support fund | 466,000.00 | Income-related | |
| Unemployment insurance subsidies | 46,700.00 | Income-related | |
| Innovation Drives Industry Transformation and Upgrade Assessment Award | 80,000.00 | Income-related | |
| Innovation Award of Science and Technology Bureau of Jiaojiang District, Taizhou City | 20,000.00 | Income-related | |
| Property tax return | 717,178.80 | Income-related | |
| Qiantang Economic Development Zone Subsidy | 1,250,000.00 | 2,510,000.00 | Income-related |
| Comprehensive Bonded Area Management Committee Subsidy | 44,000.00 | Income-related | |
| Financial subsidies for employee vocational training | 11,988.70 | 27,570.22 | Income-related |
| Shanghai old public housing management fee subsidies | 102,594.49 | Income-related | |
| Other | 506.06 | 2,810.88 | Income-related |
| Total | 2,636,373.56 | 2,642,975.59 | / |
7.72 Non-operating expenses
| Item | Reporting period | Same period of the previous year | Amount Included in Current Non- recurring Gains and Losses |
| Donations made | 651,000.00 | 200,000.00 | 651,000.00 |
| Amercement and overdue fine outlay | 217,621.81 | 102,210.07 | 217,621.81 |
| Others | 86,951.12 | 2,873.64 | 86,951.12 |
| Total | 955,572.93 | 305,083.71 | 955,572.93 |
7.73 Income tax expenses
| Item | Reporting period | Same period of the previous year |
| Current income tax expenses | 31,390,146.67 | 41,432,540.20 |
| Deferred income tax expenses | 1,539,881.68 | 5,066,571.10 |
| Total | 32,930,028.35 | 46,499,111.30 |
7.74 Other comprehensive incomeSee notes for details.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
7.75 Items of the statement of cash flows7.75.1 Cash received from other operating activities
| Item | Reporting period | Same period of the previous year |
| Current accounts and advances withdrawn | 14,390,620.52 | 12,540,492.70 |
| Special subsidies and grants | 2,636,373.56 | 2,642,975.59 |
| Interest income | 1,914,330.36 | 853,706.23 |
| Non-operating income: | 49,158.26 | 278,981.82 |
| Other | 1,034,817.18 | 5,407,808.53 |
| Total | 20,025,299.88 | 21,723,964.87 |
7.75.2 Cash paid for other operating activities
| Item | Reporting period | Same period of the previous year |
| Current accounts paid | 30,750,544.80 | 6,762,109.04 |
| Selling expenses | 50,045,373.71 | 58,958,164.15 |
| General and administrative expenses | 56,975,876.20 | 59,104,891.27 |
| Non-operating expenses | 766,673.43 | 296,919.37 |
| Others | 6,317,754.30 | 7,374,016.59 |
| Total | 144,856,222.44 | 132,496,100.42 |
7.75.3 Cash received from other investing activitiesNot applicable.7.75.4 Cash paid from other investing activitiesNot applicable.7.75.5 Cash received from other financing activities
| Item | Reporting period | Same period of the previous year |
| Bank deposit, security deposit and other pledge, mortgage | 429,112.68 | |
| Total | 429,112.68 |
7.75.6 Cash paid from other financing activitiesNot applicable.7.76 Supplementary information to the statement of cash flows7.76.1 Supplementary information to the statement of cash flows
| Supplementary Information | Reporting period | Same period of the previous year |
| 1. Net profit adjusted to cash flows from operating activities | ||
| Net profit | 112,285,929.18 | 138,844,626.88 |
| Plus: Provision for assets impairment | -350,484.13 | 4,522,446.97 |
| Depreciation of fixed assets and others | 25,407,641.27 | 22,411,409.44 |
| Amortization of intangible assets | 11,134,050.39 | 11,462,504.90 |
| Amortization of long-term deferred expenses | 186,385.50 | 152,812.53 |
| Losses on disposal of fixed assets, intangible assets and other long-term assets ("-" for gains) | 571,141.92 | -9,747,624.59 |
| Losses on write-off of fixed assets （“-” for gains） | ||
| Losses from changes in fair value ("-" for gains) | ||
| Financial expenses (“-” for income) | 13,159,883.09 | -7,087,293.38 |
| Investments losses ("-" for gains) | -17,485,066.32 | -18,495,885.65 |
| Decreases in the deferred income tax assets (“-” for increases) | -2,942,077.58 | -3,010,459.74 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Supplementary Information | Reporting period | Same period of the previous year |
| Increases in the deferred income tax liabilities (“-” for decreases) | 1,935,513.24 | 8,292,541.39 |
| Decreases in inventories (“-” for increases) | -82,640,544.93 | -69,790,264.64 |
| Decreases in operating payables (“-” for increases) | -105,872,538.02 | -83,128,510.00 |
| Increases in operating payables (“-” for decreases) | -13,092,988.36 | -54,216,627.58 |
| Others | ||
| Net cash flows from operating activities | -57,703,154.75 | -59,790,323.47 |
| 2. Significant investment and financing activities involving no cash receipts and payments | ||
| Conversion of debt into capital | ||
| Convertible corporate bonds maturing within one year | ||
| Fixed assets acquired under financial lease | ||
| 3. Net change in cash and cash equivalents: | ||
| Ending balance of cash | 625,219,186.80 | 649,036,645.55 |
| Less: beginning balance of cash | 713,813,720.45 | 750,357,929.63 |
| Plus: ending balance of cash equivalents | ||
| Less: beginning balance of cash equivalents | ||
| Net increase in cash and cash equivalents | -88,594,533.65 | -101,321,284.08 |
7.76.2 Net cash paid to acquire subsidiaries during the current periodNot applicable.7.76.3 Net cash received from disposal of subsidiaries during the current periodNot applicable.7.76.4 Composition of cash and cash equivalents
| Item | Ending balance | Beginning balance |
| 1. Cash | 625,219,186.80 | 713,813,720.45 |
| Including: cash on hand | 607,616.78 | 707,925.98 |
| Unrestricted bank deposit | 624,229,571.66 | 712,794,196.15 |
| Other unrestricted monetary funds | 381,998.36 | 311,598.32 |
| Deposit in central bank available for payment | ||
| Deposits with banks and other financial institutions | ||
| Loans from banks and other financial institutions | ||
| 2. Cash equivalents | ||
| Including: bond investments maturing within three months | ||
| 3. Balance of cash and cash equivalents as at 30th June 2018 | 625,219,186.80 | 713,813,720.45 |
| Including: cash and cash equivalents restricted for use by the parent company or subsidiaries within the group |
7.77 Notes of items in Statement of Changes in EquityNot applicable.7.78 Assets with restricted ownership or use rights
Unit: 10,000 Yuan, Currency: RMB
| Item | Book value at the end of period | Restricted reasons |
| Monetary funds | 2,143.30 | Bank acceptance money deposit and foreign exchange funds to be verified |
| Notes receivable |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Book value at the end of period | Restricted reasons |
| Inventary | ||
| Fixed assets | 9,828.04 | Bank loan guarantee |
| Intangible assets | ||
| Investment property | 2,832.74 | Financing Bond Guarantee |
| Long-term equity investment | 4,607.61 | Equity purchase price guarantee |
| Total | 19,411.69 | / |
Note: Book value of long-term equity investment at the end of period was 50 million shares of DA AG7.79 Monetary items in foreign currency7.79.1 Monetary items in foreign currency
| Item | Ending balance of foreign currency | Exchange rate | Ending balance of conversion into RMB |
| Monetary funds | |||
| Including: USD | 6,306,655.76 | 6.6166 | 41,728,618.53 |
| EUR | 40,553,602.43 | 7.6515 | 310,295,888.99 |
| HKD | 459,386.82 | 0.8431 | 387,309.03 |
| SGD | 1,932,805.81 | 4.8386 | 9,352,074.19 |
| VND | 2,911,637,000.00 | 0.00003 | 87,349.11 |
7.79.2 Description of overseas operating entitiesThe domicile of primary operation of the Company's subsidiary, DAP Industrial AG, is in Germany, withEuro as functional currency for it is the applicable currency for the operation region.
The domicile of primary operation of the Company's subsidiary, DAP Vietnam Co., Ltd., is in Vietnam,with VND as functional currency for it is the applicable currency for the operation region.
7.80 HedgingNot applicable.7.81 Government grants
| Type | Amount | Item | Amount recognized in current profits and losses |
| Financial support fund | 466,000.00 | Other income | 466,000.00 |
| Unemployment insurance subsidies | 46,700.00 | Other income | 46,700.00 |
| Innovation Drives Industry Transformation and Upgrade Assessment Award | 80,000.00 | Other income | 80,000.00 |
| Innovation Award of Science and Technology Bureau of Jiaojiang District, Taizhou City | 20,000.00 | Non-operating income | 20,000.00 |
| Property tax return | 717,178.80 | Other income | 717,178.80 |
| Qiantang Economic Development Zone Subsidy | 1,250,000.00 | Other income | 1,250,000.00 |
| Comprehensive Bonded Area Management Committee Subsidy | 44,000.00 | Other income | 44,000.00 |
| Financial subsidies for employee vocational training | 11,988.70 | Other income | 11,988.70 |
| Other | 506.06 | Other income | 506.06 |
| Total | 2,636,373.56 | 2,636,373.56 |
7.82 OthersNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
8. Change in the scope of consolidation8.1 Business combinations not under common controlNot applicable.8.2 Business combinations under common controlNot applicable.8.3 Reverse purchaseNot applicable.8.4 Disposal of subsidiariesNot applicable.8.5 Changes in consolidation scope with other reasonsDuring the reporting period, the Company invested RMB 20 million to increase the capital of DAMSH,with a shareholding ratio of 51.28%. The chairman, general manager and chief financial officer are alldispatched by the Company to directly manage the business. DAMSH is included in the direct consolidationscope of the Company from the date of completion of the capital increase.
9. Equity in other entities9.1 Equity in subsidiaries9.1.1 Composition of enterprise groups
| Name of Subsidiary | Domicile of Primary Operation | Registered Place | Business Nature | Shareholding Ratio (%) | Acquisition method | |
| Direct | Indirect | |||||
| Shanghai Shanggong & Butterfly Sewing Machine Co., Ltd. | Shanghai | Shanghai | Production and sales of sewing machines | 100.00 | Investment | |
| DAP (Shanghai) Co., Ltd. | Shanghai | Shanghai | Sales of sewing machines | 100.00 | Investment | |
| Shanghai SMPIC Imp. & Exp. Co., Ltd. | Shanghai | Shanghai | Sales, import and export of office equipment | 100.00 | Investment | |
| Shanghai SGSB Electronics Co., Ltd. | Shanghai | Shanghai | Production and sales of electronic equipment | 100.00 | Investment | |
| Shanghai SGSB Asset Management Co., Ltd. | Shanghai | Shanghai | Asset and property management | 100.00 | Investment | |
| Shanghai Fengjian Property Co., Ltd. | Shanghai | Shanghai | Property Management | 100.00 | Business combination under common control | |
| DAP Industrial AG | Germany | Germany | Production and sales of sewing machines | 100.00 | Investment | |
| Zhejiang ShangGong GEMSY CO., LTD. | Taizhou | Taizhou | Production and sales of sewing machines | 60.00 | Investment | |
| Shanghai Shensy Enterprise Development Co., Ltd. | Shanghai | Shanghai | Logistics, etc. | 40.03 | Business combination not under common control | |
| Shanghai ShangGong Financial Leasing Co., Ltd. | Shanghai | Shanghai | Financial Leasing | 51.00 | 49.00 | Investment |
| PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd. | Zhangjiagang | Zhangjiagang | Production and sales of sewing machines | 30.25 | 69.75 | Note |
| DAP Vietnam Co., Ltd. | Vietnam | Vietnam | Sales of sewing machines | 100.00 | Investment | |
| ShangGong Sewing Equipment (Zhejiang) Co., Ltd. | Zhejiang | Zhejiang | Production and sales of sewing machines | 100.00 | Investment | |
| Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd. | Shanghai | Shanghai | Production and sales of sewing machines | 51.28 | 48.72 | Investment |
Note: As the Company directly manages the business activities of PIZ, PIZ included in the scope ofconsolidation from the date of the merger.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
9.1.2 Important non-wholly owned subsidiary
| Name of subsidiary | Minority shareholders Shareholding% | Profit and loss attributable to minority shareholders for the current period | Other comprehensive income attributable to minority shareholders in this period | The dividend declared to minority shareholders in the current period |
| Dürkopp Adler AG | 6.00 | 6,844,016.46 | 83,814,383.37 | |
| Zhejiang ShangGong GEMSY CO., LTD. | 40.00 | -588,153.70 | 83,749,285.76 | |
| Shanghai Shensy Enterprise Development Co., Ltd. | 59.97 | 5,868,719.92 | 153,572,436.29 |
9.1.3 Major restrictions on the use of group assets and liquidation of group debtNot applicable.9.1.4 Financial support or other support provided to structured entities included in the scope ofconsolidated financial statements
Not applicable.9.2 Equity in joint operation and joint venture9.2.1 Important joint operation and joint venture
| Name of Joint Operation and Joint Venture | Domicile of Primary Operation | Registered Place | Business Nature | Shareholding Ratio (%) | Accounting Measurement for Investment in Joint Operation and Joint Venture | |
| Direct | Indirect | |||||
| H. Stoll AG & Co. KG | Reutlingen, Germany | Reutlingen, Germany | Computerized flat knitting machine manufacturing | 26.00 | Equity method | |
9.2.2 Main financial information of joint operation and joint venture
Unit: 10,000 Yuan, Currency: RMB
| H. Stoll AG & Co. KG | Ending balance / Current period | Beginning balance / Same period of the previous year |
| Current assets | 150,122.43 | 168,299.51 |
| Non-current assets | 31,141.61 | 26,033.15 |
| Total assets | 181,264.04 | 194,332.66 |
| Current liabilities | 50,040.81 | 57,559.13 |
| Non-current liabilities | 33,131.00 | 33,250.28 |
| Total liabilities | 83,171.81 | 90,809.41 |
| The book value of equity investments in joint operation and joint venture | 26,613.24 | 27,579.96 |
| Operating income | 82,096.92 | 108,918.28 |
| Net profit | 76.52 | 5,218.24 |
9.2.3 Description of major restrictions on the ability of a joint venture or an associate to transferfunds to the company
Not applicable.9.2.4 Excessive losses incurred by joint ventures or associatesNot applicable.9.2.5 Unconfirmed commitments related to investment in joint venturesNot applicable.9.2.6 Contingent liabilities related to investments in joint ventures or associatesNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
9.3 Important common managementNot applicable.9.4 Equity in structured entities not included in the scope of consolidated financial statementsNot applicable.10. Risks related to financial instrumentsThe Company faces various financial risks in the course of its operations: credit risk, market risk andliquidity risk. The Board of Directors of the Company is fully responsible for the determination of riskmanagement objectives and policies, and assumes ultimate responsibility for risk management objectives andpolicies. The Board of Directors reviews the effectiveness of the implemented procedures and the rationality ofrisk management objectives and policies through monthly reports submitted by the heads of functionaldepartments and subsidiaries. The Company's internal audit department will audit the risk managementpolicies and procedures and report the findings to the audit committee.
The overall goal of the Company's risk management is to formulate a risk management policy thatminimizes risks without excessively affecting the Company's competitiveness and resilience.
10.1 Credit riskCredit risk refers to the risk that one party to a financial instrument fails to perform its obligations andcauses financial losses to the other. The Company's credit risk is mainly related to accounts receivable.
(1) Accounts ReceivableThe accounts receivable of the Company are mainly exposed to the credit risk of customers caused bycredit sales. Before opening up new customers and signing new framework contracts, the Company willevaluate new customers' credit risks, including external credit ratings and, in some cases, bank creditcertificates (when this information is available).
For the sewing machine business and export trading business, the Company sets a credit limit for eachcustomer, which is the maximum amount that does not require additional approval. For sales that exceed thecredit limit, the Company only sells it on the premise of additional approval. Otherwise, it must demand that itpay the corresponding amount in advance. For customers who have not completed payment in a timely manneron the previous credit sale, the Company will no longer accept new product orders before recovering accountsreceivable.
For the logistics business, the Company only deals with customers that have been approved and have agood reputation and have a certain scale. After the credit period expires, the Company will perform variousforms of collection for customers who have not paid on time. Due to the high dispersion of customers in thelogistics business, there is no significant concentration of credit risk.
As of the end of the report period, the top five customers' accounts receivable of the Company accountedfor 15.62% of the ending balance, and the Company did not have significant credit risk.
(2) Other ReceivablesThe Company's other receivables mainly include export tax refund receivables, various types of depositsand deposits. The Company manages and monitors this type of payments together with related economicactivities to ensure that the Company does not have significant bad debt risks.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
10.2 Market riskThe market risk of financial instruments refers to the risk that the fair value or future cash flow offinancial instruments fluctuates due to changes in market prices, including exchange rate risk, interest rate riskand other price risks.
(1) Interest Rate RiskInterest rate risk refers to the risk that the fair value or future cash flow of a financial instrument willfluctuate due to changes in market interest rates. The interest rate risk that the Company may face is mainlyderived from bank loans that carry interest at floating rates.
As of 30 June 2018, the Company’s short-term bank loans with Euribor as benchmark interest rate totaled
34.80 million euros, and long-term loans with Euribor as benchmark interest rate totaled 11.878 million euros.Supposing that other variables remain unchanged, a 50% benchmark change in interest rates would have nosignificant impact on the Company's current profit or loss and shareholders' equity.
(2) Exchange Rate RiskExchange rate risk refers to the risk of loss due to exchange rate changes. The foreign exchange risk ofthe Company mainly includes the risk associated with the monetary assets and liabilities formed by theCompany and its subsidiaries and overseas customers through the settlement of non-standard currencies, aswell as the risk of translation differences in foreign currency statements. The former risk affects the currentperiod profit and loss, and the latter risk affects owner's equity (other comprehensive income).
See Note 7.77 for details of monetary items in foreign currency as of 30 June 2018.Exchange rate risk sensitivity analysis:
With the other variables unchanged, the pre-tax impact of reasonable changes in exchange rates on thecurrent profit or loss and owner's equity is as follows:
| Item | Exchange rate changes | Reporting period | Same period of the previous year | ||
| Impact on current profits and losses | Impact on owner's equity | Impact on current profits and losses | Impact on owner's equity | ||
| Foreign currency statement conversion | 10% appreciation of RMB | 6,146,172.97 | 95,841,411.32 | 10,300,943.11 | 83,066,369.13 |
| Foreign currency statement conversion | 10% depreciation of RMB | -6,146,172.97 | -95,841,411.32 | -10,300,943.11 | -83,066,369.13 |
| Foreign Currency Items | 10% appreciation of RMB | 7,693,309.93 | 7,693,309.93 | 6,813,799.33 | 6,813,799.33 |
| Foreign Currency Items | 10% depreciation of RMB | -7,693,309.93 | -7,693,309.93 | -6,813,799.33 | -6,813,799.33 |
(3) Other Price RisksThe Company holds equity investments in other listed companies. The management of the Company
believes that the market price risks faced by these investment activities are acceptable. The listed company’s
equity investment held by the Company is listed as follows:
| Item | Ending Balance | Beginning Balance |
| Available-for-sale financial assets and trading financial assets | 78,186,465.43 | 89,721,694.56 |
If all other variables remain unchanged, if the value of the equity instrument increases or decreases by20%, the Company will increase or decrease the other comprehensive income by 14,802,044.51 yuan (31
st
December 2017: Others Comprehensive income of 15,711,472.03 yuan). The management of the Company
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
believes that 20% reasonably reflects the reasonable range of possible changes in the value of equityinstruments in the next year.
10.3 Liquidity riskLiquidity risk refers to the risk of shortage of funds when performing obligations settled by way ofdelivery of cash or other financial assets. The Company's policy is to ensure that it has sufficient cash to repaythe debts due. Liquidity risk is centrally controlled by the Company's financial department. By monitoring cashbalances, marketable securities that can be realised at any time, and rolling forecasts of cash flows for the next12 months, the financial department ensures that the Company has sufficient funds to repay debts under allreasonably foreseen circumstances.
The Company's external sources of funds mainly include bank loans. As of 30 June 2018, the Company'sunused bank loan quota was 10.75 million euros (is equivalent to 82.2536 million yuan at the end of the period)and 300.00 million yuan. The Company's own funds are relatively abundant and liquidity risk is relativelysmall.
11. Disclose of fair value11.1 The fair value at end of current period of assets and liabilities measured at fair value
| Item | Fair value at the end of reporting period | |||
| Measured at the fair value of the first level | Measured at the fair value of the second level | Measured at the fair value of the third level | Total | |
| 1. Measurement at fair value based on going concern | ||||
| (1) Financial assets measured at fair value through current profit and loss | ||||
| A. Financial assets held for trading | ||||
| a. Investment in debt instruments | ||||
| b. Investments in equity instruments | ||||
| c. Derivative financial assets | ||||
| B. Financial assets designated to be measured at fair value through current profit and loss | ||||
| a. Investment in debt instruments | ||||
| b. investments in equity instruments | ||||
| (2) Available-for-sale financial assets | 78,186,465.43 | 78,186,465.43 | ||
| a. Investment in debt instruments | ||||
| b. Investments in equity instruments | 78,186,465.43 | 78,186,465.43 | ||
| c. Others | ||||
| (3) Investment property | ||||
| A. Use right of leased land | ||||
| B. Leased buildings | ||||
| C. Land use right held for transfer upon appreciation | ||||
| (4) Biological assets | ||||
| A. Consumable biological assets | ||||
| B. Productive biological assets | ||||
| Total amount of assets measured at fair value based on going concern | 78,186,465.43 | 78,186,465.43 | ||
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Fair value at the end of reporting period | |||
| Measured at the fair value of the first level | Measured at the fair value of the second level | Measured at the fair value of the third level | Total | |
| (5) Financial liabilities held for trading | ||||
| Including: issued bonds held for trading | ||||
| Derivative financial liabilities | ||||
| Others | ||||
| (6) Designated financial liabilities measured at fair value through current profit and loss | ||||
| Total amount of liabilities measured at fair value based on going concern | ||||
| 2. Measurement at fair value based on going concern | ||||
| (1) Assets held for sale | ||||
| Total amount of assets measured at fair value not based on going concern | ||||
| Total amount of liabilities measured at fair value not based on going concern | ||||
11.2 Basis for determination of market price for measurement of fair value of the first level basedon going concern and not based on going concern
The fair value at end of reporting period of available-for-sale financial assets was determined on the basisof the closing price of Shenzhen Stock Exchange and Shanghai Stock Exchange on the last trading day in June2018.
12. Related party and related party transaction12.1 The parent company of the CompanyThe Company is a listed company with no controlling shareholder and no actual controller.12.2 The subsidiaries of the CompanySee the Note 9 Equity in Other Entities for the details.12.3 The joint operation and joint ventures of the CompanyNot applicable.12.4 Other related parties
| Name of Other Related Parties | Relationship with the Company |
| Shanghai Hirose Precision Industrial Co., Ltd. | Investee |
| Shanghai Fuji Xerox Co., Ltd. | Investee |
| Shanghai Kaile Investment Management Co., Ltd. | Subsidiary’s minority shareholders |
| Zhejiang GEMSY Electromechanical Co., Ltd. | Subsidiary’s minority shareholders |
| Stoll Electronics Co., Ltd. | Other related party |
12.5 Related transactions12.5.1 Related transactions for purchase and sale of goods, receiving and rendering of servicesTable of purchase of goods / receipt of services
| Related Party | Content of Related Transaction | Reporting period | Same period of the previous year |
| Stoll Electronics Co., Ltd. | Purchase of goods / Receiving of service | 10,978,177.50 | 6,436,020.33 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Table of sales of goods /rendering of services
| Related Party | Content of Related Transaction | Reporting period | Same period of the previous year |
| Shanghai Fuji Xerox Co., Ltd. | Sales of goods | 9,806,140.15 | 12,162,227.27 |
| Stoll Electronics Co., Ltd. | Sales of goods | 454,513.14 | 293,594.29 |
12.5.2 Associated trusteeship/contracting and entrusted management/outsourcingNot applicable.12.5.3 Related leaseThe Company acted as lessor:
Unit: 10,000 Yuan, Currency: RMB
| Name of leasee | Type of leased asset | Rental recognized in report period | Rental recognized in last period |
| Shanghai Hirose Precision Industrial Co., Ltd. | Machinery equipment | 25.00 | 25.00 |
12.5.4 Related guaranteesNot applicable.12.5.5 Related party funds lendingNot applicable.12.5.6 Related party assets transfer and debt reorganizationNot applicable.12.5.7 Compensation for key managersNot applicable.12.6 Receivables and payables from related parties12.6.1 Receivables
| Item | Related party | Ending balance | Beginning balance | ||
| Book balance | Provision for bad debts | Book balance | Provision for bad debts | ||
| Accounts receivable | Shanghai Fuji Xerox Co., Ltd. | 1,999,860.81 | 99,993.04 | 2,365,537.24 | 118,276.86 |
| Stoll Electronics Co., Ltd. | 49,745.00 | ||||
| Prepayment | Zhejiang GEMSY Electromechanical Co., Ltd. | 6,147,650.83 | 6,147,650.83 | ||
| Dividends receivable | Shanghai Fuji Xerox Co., Ltd. | 9,949,000.00 | |||
| Dividends receivable | H. Stoll AG & Co. KG | 27,373,644.64 | |||
| Other receivables | Zhejiang GEMSY Electromechanical Co., Ltd. | 701,761.69 | 617,279.69 | ||
12.6.2 Payables
| Item | Related party | Ending balance | Beginning balance |
| Account payables | Stoll Electronics Co., Ltd. | 2,418,441.66 | 1,630,680.70 |
12.7 Related party commitmentsNot applicable.13. Share paymentNot applicable.14. Commitments and contingencies14.1 Important commitmentsNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
14.2 Contingencies14.2.1 Important contingent events at the balance sheet date(1) Contingent liabilities formed by debt guarantees provided by the Company for its subsidiary DAP AGas of 30 June 2018
| Guarantee | Guarantee Amount | Commencement Date of Guarantee | Expiration Date of Guarantee | Whether the Guarantee has been Fulfilled or not | Note |
| Shanghai Branch of the Commerzbank | The equivalent of RMB 58.00 million in EUR | 25th March 2014 | No | Note 1 | |
| Shanghai Branch of the Commerzbank | EUR 8.00 million | 1st July 2014 | No | Note 2 | |
| Shanghai Branch of the Commerzbank | EUR 12.00 million | 19th September 2016 | No | Note 3 | |
| Shanghai Branch of the Commerzbank | EUR 10.00 million | 28th August 2015 | No | Note 4 | |
| Industrial and Commercial bank Shanghai Hongkou Branch | EUR 7.878 million | 21st December 2015 | 21st December 2020 | No | Note 5 |
Note 1: On 25th March 2014, the Company's wholly-owned subsidiary, DAP Industrial AG, applied tothe Bielefeld Branch of the Commerzbank for a current fund loan of not more than the equivalent of 58 millionyuan in euro, the Shanghai Branch of the Commerzbank issued a financing guarantee letter for the funds, andthe Company issued a corporate letter of guarantee for payment of 70 million yuan as counter guarantee for theabovementioned financing guarantee letter.
Note 2: on 30th June 2014, the Company's wholly owned subsidiary, DAP Industrial AG, applied to theBielefeld Branch of the Commerzbank for a current fund loan of 8 million euro, the Shanghai Branch of theCommerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionallyirrecoverable corporate letter of guarantee for payment of 8.8 million euro as counter guarantee for theabovementioned financing guarantee letter.
Note 3: on 19th September 2016, the Company's wholly owned subsidiary, DAP Industrial AG, applied tothe Bielefeld Branch of the Commerzbank for a short-term credit loan of 12 million euro, the Shanghai Branchof the Commerzbank issued a financing guarantee letter for the funds, and the Company issued anunconditionally irrecoverable corporate letter of guarantee for payment of 13.20 million euro.
Note 4: on 28th August 2015, the Company's wholly owned subsidiary, PFAFF GmbH, applied to theKaiserslautern Branch of the Commerzbank for a loan of 10.00 million euro, the Shanghai Branch of theCommerzbank issued a financing guarantee letter for the funds, and the Company issued an unconditionallyirrecoverable corporate letter of guarantee for payment of 11.00 million euro as counter guarantee for theabovementioned financing guarantee letter.
Note 5: on 21st December 2015, the Company's wholly owned subsidiary, DAP Industrial AG, applied tothe Frankfurt Branch of ICBC for a loan of no more than 7.878 million euro so as to pay the acquisition fee toStoll KG. ICBC Shanghai Hongkou Branch issued a financing guarantee letter for the funds, and the Companyissued an unconditionally irrecoverable corporate letter of guarantee for self-using fix assets where No.603Dapu Road as counter guarantee for the abovementioned financing guarantee letter.
As of 30 June 2018, there is no outflow of economic benefits arising from the above contingencies.(2) The Agreement to Increase Capital to Shanghai Shensy Enterprise Development Co., Ltd.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
According to the capital increase agreement of Shanghai Shensy Enterprise Development Co., Ltd., by 30June 2018, if SHENSY has not realized IPO and listed independently in A shares market, the persons acting inconcert, Shanghai Pudong New Industrial Investment Co., Ltd., will be entitled to require the Company andanother shareholder, Zhang Ping, to repurchase all or some of the shares that Shanghai Pudong New IndustrialInvestment Co., Ltd. holds in cash, within 3 months after it requests in writing. And assist it in the approvalprocess of State-owned Assets Supervision and Administration Commission, commercial registration, etc. Perthe agreement, the Company and Zhang Ping will respectively assume 50% of the above mentioned amount,and the Company bears unconditional joint responsibility to repurchase the shares that Shanghai Pudong NewIndustrial Investment Co., Ltd. holds.
If Shanghai Pudong New Industrial Investment Co., Ltd. has not listed in A shares market by 30 June2018, it has 6 months (e.g. before 31 December 2018) to request our company and Zhang Ping to repurchasethe shares which it holds in Shanghai Shensy Enterprise Development Co., Ltd.. If not, our company andZhang Ping will not assume the above mentioned repurchase responsibility.
As of 30 June 2018, SHENSY has failed to complete its IPO and be listed on the A-shares independently.Shanghai Pudong New Industrial Investment Co., Ltd. has already formally notified the Company to fulfill theagreement to repurchase all the shares held by Shanghai Pudong New Industrial Investment Co., Ltd.
(3) Arbitration on investment of 26% equity in H. Stoll AG & Co. KGAccounting to the Contract signed on 29th August 2015 by SGE, the calculation of share price is based onthe net assets of STOLL's audited consolidated statement in 2014, and the parties agreed that share price willbe adjusted according to the net assets of STOLL's audited consolidated statement in 2015 and related clausesin the Contract. Now the parties have disputes on the calculation of net assets of STOLL's audited consolidatedstatement in 2015 and the understanding of the relevant terms of the Contract, resulting in a difference ofapproximately 4.26 million euro in the calculation of the price adjustment. SGE has received the Applicationfor Arbitration submitted by Michael Stoll, Corinna Stoll and other 10 limited partners of STOLL KG on 20July 2017. SGE will, in accordance with the terms of the contract, settle the dispute by arbitration inaccordance with German legal procedures.
As of the date of this report, the arbitration is in process and with great uncertainty.(4) Controversial litigation with Shanghai Card Line World Supply Chain Management Co., Ltd.
(hereinafter refer to as “KXTX”)
The Company’S wholly-owned subsidiary, Shanghai Shensy Kaile Things Network Co., Ltd., had a
dispute with KXTX during the current period. The case has been publicly heard by the People's Court ofPudong New Area, Shanghai and the first-instance judgment was issued on 7 September 2017 with the (2017)civil judgment No. Hu0115 Minchu18286. Shanghai Shensy Kaile Things Network Co., Ltd. is required to paya total of 1,186,599.88 yuan for the transportation fee of KXTX based on the judgment.
Shanghai Shensy Kaile Things Network Co., Ltd. has filed an appeal on 25 September 2017. As of 30June 2018, the court has not made a second-instance judgment. Shanghai Shensy Kaile Things Network Co.,Ltd. has provided corresponding estimated liabilities according to the judgment of the first instance.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
15. Post balance sheet event15.1 Important non-adjusting eventsNot applicable.15.2 Profit distribution
According to the resolution of the Company’s 7th Meeting of the 8th Board of Directors on 29 August
2018, no dividends of the first half of 2018 will be distributed.
15.3 Sales returnNot applicable.15.4 Others(1) 500,000 shares mortgage of DA AGDAP AG pledges 500 million shares of DA AG held by DAP AG to obtain a 2.75 million euro bankguarantee issued by Commerzbank, Germany, for the period from 7 January 2016 to 30 July 2017 and from 7January 2016 to 30 July 2018 respectively. It provided guarantees for DAP AG to pay equity purchase price toGerman H. Stoll AG & Co. KG equity sellers. As of 30 June 2017, DAP AG has paid the third equity purchaseprice. The 500,000 shares of DA AG were released from mortgage on 26 July 2018.
(2) DAP AG merges its holding subsidiary DA AGDAP AG, a wholly-owned subsidiary of SGG, merges its holding subsidiary DA AG, squeezing out theminority shareholders holding approximately 5.99% shares of DA AG. This matter was recorded on July 2018in the District Court of Bielefeld, Germany. And DA AG has completed the trading of its shares on theFrankfurt, Berlin and Düsseldorf stock exchanges at the end of July 2018.
(3) SGG acquire 65% equity of Richpeace and capital increase of Richpeace
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to acquire 65% equity of Richpeace and increase its capital. The total investment is 156.137million yuan, including: equity acquisition of 136,663,800 yuan and capital increase of 19.5 million yuan. Thematter is in progress.
(4) Investment and construction of Taizhou Manufacturing Base
Reviewed and approved by the Company’s 6th meeting of the 8th Board of Directors held on July 31,
2018, it is agreed to invest to construct manufacturing base in Huangyan District, Taizhou, Zhejiang. The totalinvestment is 154 million yuan, including: purchase of land use right and related tax and expenses of 37million yuan and construction of plant and supporting facilities of 117 million yuan. The source of funds isself-owned funds. The undertaking unit of this project is the Company's wholly-owned subsidiary ShangGongSewing Machine (Zhejiang) Co., Ltd.
16. Other significant events16.1 Correction of previous accounting errorsNot applicable.16.2 Debt reorganizationNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
16.3 Asset replacementNot applicable.16.4 Annuity planNot applicable.16.5 Discontinued operationsNot applicable.16.6 Division information16.6.1 Basis for determining the report divisionAccording to the Company's development strategy, four report divisions are identified according to thenature of the business: sewing equipment, logistics services, export trade and other business segments. Each ofthe Company's reporting segments offers different products and services.
16.6.2 Report division’s financial information
| Item | Sewing equipment division | Logistics service division | Export trade division | Other business segments | Offset between divisions | Total |
| 1. Operating income | 1,243,429,826.77 | 362,468,133.25 | 68,834,028.31 | 56,221,864.47 | 236,159,439.53 | 1,494,794,413.27 |
| Including: External transaction income | 1,013,250,015.18 | 362,468,133.25 | 68,834,028.31 | 50,242,236.53 | 1,494,794,413.27 | |
| Inter-segment transaction income | 230,179,811.59 | - | - | 5,979,627.94 | 236,159,439.53 | |
| 2. Investment income from associates and joint ventures | -1,232,754.40 | - | - | - | 458,346.74 | -1,691,101.14 |
| asset impairment losses | -187,737.85 | -278,617.45 | -117,160.01 | -19,942.47 | -252,973.65 | -350,484.13 |
| 4. Depreciation and amortization | 30,246,257.57 | 1,205,635.93 | 5,415.30 | 5,270,768.36 | 36,728,077.16 | |
| 5. Total profit | 110,582,259.24 | 13,047,783.86 | -80,874.94 | 11,237,651.22 | -8,028,756.36 | 142,815,575.74 |
| 6. Income tax expenses | 30,480,024.94 | 3,261,690.94 | - | 57,487.94 | 869,175.47 | 32,930,028.35 |
| 7. Net profit | 82,502,616.09 | 9,786,092.92 | -80,874.94 | 11,180,163.28 | -8,897,931.83 | 112,285,929.18 |
| 8. Total assets | 3,697,502,543.60 | 418,613,690.46 | 30,534,425.72 | 989,987,043.06 | 1,312,096,843.53 | 3,824,540,859.31 |
| 9. Total liabilities | 1,599,929,613.50 | 162,096,929.35 | 22,465,178.07 | 142,802,158.78 | 638,031,772.67 | 1,289,262,107.03 |
| 10. Other important non-cash items |
16.7 Other significant eventsNot applicable.17. Notes to mains items of the financial statements of the parent company17.1 Accounts receivable17.1.1 Disclosure of classification of accounts receivable
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debts | Book value | Book balance | Provision for bad debts | Book value | |||||
| Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | Amount | Proportion (%) | |||
| Accounts receivable with significant single amount and provision for bad debt made on an individual basis | 9,823,991.89 | 8.78 | 5,385,491.84 | 54.82 | 4,438,500.05 | 15,115,630.80 | 13.88 | 5,561,028.32 | 36.79 | 9,554,602.48 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Accounts receivable with provision for bad debt made on a portfolio with similar risk credit characteristics basis | 88,866,687.61 | 79.46 | 61,497,260.66 | 69.20 | 27,369,426.95 | 80,650,765.60 | 74.09 | 61,342,035.96 | 76.06 | 19,308,729.64 |
| Accounts receivables with insignificant single amount and provision for bad debt made on an individual basis | 13,154,311.21 | 11.76 | 5,019,394.27 | 38.16 | 8,134,916.94 | 13,092,694.77 | 12.03 | 5,109,454.83 | 39.03 | 7,983,239.94 |
| Total | 111,844,990.71 | 100.00 | 71,902,146.77 | 64.29 | 39,942,843.94 | 108,859,091.17 | 100.00 | 72,012,519.11 | 66.15 | 36,846,572.06 |
Accounts receivable with significant single amount and provision for bad debts made on an individualbasis at the end of report period
| Accounts receivable (By entity) | Ending balance | |||
| Accounts receivable | Provision for bad debts | Provision ratio | Reason for provision | |
| Customer C | 5,713,872.47 | 5,179,985.87 | 90.66 | Impairment was occurred on a separate test. |
| Customer E | 4,110,119.42 | 205,505.97 | 5.00 | Impairment was occurred on a separate test. |
| Total | 9,823,991.89 | 5,385,491.84 | 54.82 | / |
Accounts receivable with provision for bad debt made using the aging analysis method among theportfolios
| Aging | Ending balance | ||
| Accounts receivable | Provision for bad debts | Provision ratio | |
| Within 1 year | 26,034,904.42 | 1,301,745.23 | 5% |
| 1 to 2 years | 3,043,895.14 | 608,779.03 | 20% |
| 2 to 3 years | 402,303.31 | 201,151.66 | 50% |
| Over 3 years | 59,385,584.74 | 59,385,584.74 | 100% |
| Total | 88,866,687.61 | 61,497,260.66 | 69.20 |
17.1.2 Bad debt provision recovered or reversed in report periodThe amount of provision for bad debts was 1,526,013.93 yuan in current period; the amount of bad debtprovision recovered or reversed in the current period was 137,896.09 yuan.
17.1.3 Accounts receivable actually written off in current period
| Item | Write-off amount |
| Accounts receivable actually written off | 3,436,227.61 |
17.1.4 Top five accounts receivable by the ending balance of the borrowers
| Company name | Ending balance | ||
| Accounts receivable | Proportion in total accounts receivable (%) | Provision for bad debts | |
| Customer A | 11,530,775.39 | 10.31 | 11,530,775.39 |
| Customer B | 7,480,189.67 | 6.69 | 7,480,189.67 |
| Customer C | 5,713,872.47 | 5.11 | 5,179,985.87 |
| Customer D | 4,679,327.49 | 4.18 | 4,679,327.49 |
| Customer E | 4,110,119.42 | 3.67 | 205,505.97 |
| Total | 33,514,284.44 | 29.96 | 29,075,784.39 |
17.1.5 Receivables derecognized due to transfer of financial assetsNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
17.1.6 Transfer of accounts receivable and continued involvement in the formation of assets,liabilities
Not applicable.17.2 Other receivables17.2.1 Disclosure of classification of other receivables
| Type | Ending balance | Beginning balance | ||||||||
| Book balance | Provision for bad debts | Book Value | Book balance | Provision for bad debts | Book Value | |||||
| Amount | % | Amount | % | Amount | % | Amount | % | |||
| Other receivables with significant single amount and provision for bad debt made on an individual basis | 62,643,254.90 | 29.34 | 61,720,677.84 | 98.53 | 922,577.06 | 61,325,622.45 | 32.26 | 61,325,622.45 | 100.00 | |
| Other receivables with provision for bad debt made on a portfolio with similar risk credit characteristics basis | 144,429,440.88 | 67.63 | 21,875,233.92 | 15.15 | 122,554,206.96 | 125,819,372.64 | 66.20 | 20,769,399.12 | 16.51 | 105,049,973.52 |
| Other receivables with insignificant single amount and provision for bad debt made on an individual basis | 6,470,788.89 | 3.03 | 19,335.00 | 0.30 | 6,451,453.89 | 2,925,886.51 | 1.54 | 21,735.00 | 0.74 | 2,904,151.51 |
| Total | 213,543,484.67 | 100.00 | 83,615,246.76 | 39.16 | 129,928,237.91 | 190,070,881.60 | 100.00 | 82,116,756.57 | 43.20 | 107,954,125.03 |
Other receivables with significant single amount and provision for bad debts made on an individual basisat the end of report period
| Other receivables (By entity) | Ending Balance | |||
| Other receivables | Provision for bad debts | Proportion of provision (%) | Reason for provision | |
| Customer B | 48,991,974.70 | 48,069,397.64 | 98.12 | Unexpected to recover |
| Customer E | 13,651,280.20 | 13,651,280.20 | 100.00 | Unexpected to recover |
| Total | 62,643,254.90 | 61,720,677.84 | 98.53 | / |
Other receivables with provision for bad debts made using the aging analysis method among thoseportfolios
| Aging | Ending Balance | ||
| Other Receivables | Provision for Bad Debts | Proportion of Provision (%) | |
| Within 1 year | 128,847,914.69 | 6,442,395.73 | 5.00 |
| 1 to 2 years | 185,800.00 | 37,160.00 | 20.00 |
| 2 to 3 years | 96.00 | 48.00 | 50.00 |
| Over 3 years | 15,395,630.19 | 15,395,630.19 | 100.00 |
| Total | 144,429,440.88 | 21,875,233.92 | 15.15 |
17.2.2 Withdrawal, recovery or reversal of provision for bad debtThe provision for bad debts in current period was 1,498,490.19 yuan, and the amount of provision for baddebt recovered or reversed this period was0 yuan.
17.2.3 Other receivables actually written off in current period
| Item | Write off amount |
| Other receivables actually written off | 534,288.45 |
17.2.4 Other receivables classified by nature of paymentNot applicable.17.2.5 Top five other receivables by the ending balance of the borrowers
| Company name | Nature of fund | Ending balance | Aging | Proportion in total other receivable (%) | Ending balance of provision for bad debts |
| Customer A | Current accounts | 58,701,194.06 | Within 1 year | 27.49 | 2,935,059.70 |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Customer B | Current accounts | 48,991,974.70 | From within 1 year to over 3 years | 22.94 | 48,069,397.64 |
| Customer C | Current accounts | 31,755,000.00 | Within 1 year | 14.87 | 1,587,750.00 |
| Customer D | Current accounts | 20,181,250.00 | Within 1 year | 9.45 | 1,009,062.50 |
| Customer E | Current accounts | 13,651,280.20 | From within 1 year to over 3 years | 6.39 | 13,651,280.20 |
| Total | / | 173,280,698.96 | 81.14 | 67,252,550.04 |
17.2.6 Receivables involving government grantsNot applicable.17.2.7 Other receivables derecognized due to the transfer of financial assetsNot applicable.17.2.8 Transfer of other receivables and continued involvement in the formation of assets, liabilitiesNot applicable.17.3 Long-term equity investments
| Item | Ending balance | Beginning balance | ||||
| Book balance | Provision for impairment | Book value | Book balance | Provision for impairment | Book value | |
| Investment in subsidiaries | 664,810,221.03 | 5,500,000.00 | 659,310,221.03 | 644,810,221.03 | 5,500,000.00 | 639,310,221.03 |
| Investment in associates and joint ventures | ||||||
| Total | 664,810,221.03 | 5,500,000.00 | 659,310,221.03 | 644,810,221.03 | 5,500,000.00 | 639,310,221.03 |
(1) Investment in subsidiaries
| Name | Beginning balance | Increase in current period | Decrease in current period | Ending balance | Provision for impairment provided in current period | Ending balance of provision for impairment |
| Shanghai Shanggong Butterfly Sewing Machines Co., Ltd | 79,000,000.00 | 79,000,000.00 | ||||
| DAP Industrial AG | 142,370,693.64 | 142,370,693.64 | ||||
| DAP (Shanghai) Co., Ltd. | 59,046,675.86 | 59,046,675.86 | ||||
| Shanghai SGSB Electronics Co., Ltd | 20,000,000.00 | 20,000,000.00 | ||||
| Shanghai SMPIC Imp. & Exp. Co., Ltd. | 12,000,000.00 | 12,000,000.00 | ||||
| Shanghai SGSB Asset Management Co., Ltd. | 60,000,000.00 | 60,000,000.00 | 5,000,000.00 | |||
| Shanghai Fengjian Property Co., Ltd. | 500,000.00 | 500,000.00 | 500,000.00 | |||
| Zhejiang ShangGong GEMSY CO., LTD. | 129,600,000.00 | 129,600,000.00 | ||||
| Shanghai Shensy Enterprise Development Co., Ltd. | 86,083,077.64 | 86,083,077.64 | ||||
| Shanghai ShangGong Financial Leasing Co.,Ltd. | 33,452,430.00 | 33,452,430.00 | ||||
| PFAFF Industrial Sewing Machine (Zhangjiagang) Co., Ltd. | 12,553,070.89 | 12,553,070.89 | ||||
| DAP Vietnam Co., Ltd. | 204,273.00 | 204,273.00 | ||||
| ShangGong Sewing Equipment (Zhejiang) Co., Ltd. | 10,000,000.00 | 10,000,000.00 | ||||
| Dürkopp Adler Industrial Manufacturing (Shanghai) Co., Ltd. (Note) | 20,000,000.00 | 20,000,000.00 | ||||
| Total | 644,810,221.03 | 20,000,000.00 | 664,810,221.03 | 5,500,000.00 |
Note: SGG increase the capital of DAMSH with RMB 20,000,000 yuan in report period, which held
51.28% of equity of DAMSH. DAMSH became the subsidiary of the Company from the Company’s
third-level subsidiary.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
(2) Investment in associates and joint venturesNot applicable.17.4 Operating income and operating costs
| Item | Reporting period | Same period of the previous year | ||
| Income | Cost | Income | Cost | |
| Main Business | 161,971,986.03 | 119,608,864.69 | 22,930,783.21 | 17,955,581.70 |
| Other Business | 22,840,519.23 | 5,821,241.27 | 23,455,012.88 | 6,040,735.79 |
| Total | 184,812,505.26 | 125,430,105.96 | 46,385,796.09 | 23,996,317.49 |
17.5 Investment income
| Item | Reporting period | Same period of the previous year |
| Long-term equity investment measured at cost method | ||
| Long-term equity investment measured at equity method | ||
| Investment income from disposal of long-term equity investments | ||
| Investment income from holding of financial assets measured at fair value through current profit and loss | ||
| Investment income from disposal of financial assets measured at fair value through current profit and loss | 26,338.67 | 9,509.24 |
| Investment income from holding of available-for-sale financial assets | ||
| Investment income from holding of available-for-sale financial assets | 11,889,784.50 | 1,001,400.43 |
| Investment income from disposal of available-for-sale financial assets | ||
| Gains from re-measurement of residual equity at fair value after the loss of control right | ||
| Others | 6,935,894.29 | 5,096,060.26 |
| Total | 18,852,017.46 | 6,106,969.93 |
18. Supplementary information18.1 Extraordinary profit or loss for current period
| Item | Amount | Note |
| Profits or losses from disposal of non-current assets | -571,141.92 | |
| Tax returns, deduction and exemption approved beyond the authority or without official approval documents | ||
| Government grants included in current profits and losses (except for government grants closely related to the enterprise business, obtained by quota or quantity at unified state standards) | 2,636,373.56 | |
| Payment for use of state funds received from non-financial institutions recorded in current profits and losses | ||
| Gains from the difference between the investment costs of acquisition of subsidiaries, associates and joint ventures and share in the net fair value of the identifiable assets of the investee when investing | ||
| Gains or losses from non-monetary asset exchange | ||
| Gains or losses from entrusting the investments or management of asset | ||
| Impairment provision for force majeure such as natural calamities | ||
| Gains or losses from debt restructuring | ||
| Restructure expenses, such as the compensation for employee relocation and integration costs | ||
| Gains or losses from transactions with obvious unfair transaction price | ||
| Year-to-date net profits or losses of subsidiaries arising from business combinations under common control | ||
| Profits or losses arising from contingencies not related to the company’s normal business | ||
| Except for effective hedging business related to the normal business of the company, profits or losses from fair value changes in held-for-trading financial assets and held-for-trading financial liabilities, and investment income from disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets | 7,286,382.96 | |
| Reversal of the impairment provision for receivables subject to separate impairment test | ||
| Profits or losses from entrusted loans |
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
| Item | Amount | Note |
| Profits or losses from fair value changes in investment property subsequently calculated with the fair value mode | ||
| Impacts of one-time adjusting the current profits or losses in accordance with requirements of tax and accounting laws and regulations on the current profits and losses | ||
| Custodian income from entrusted management | ||
| Other non-operating income and expenditure except for the above items | 2,380,381.79 | |
| Other profits or losses which can be deemed as non-recurring profits or losses | ||
| Income tax effects | -164,684.49 | |
| Minority interest effects | -776,580.59 | |
| Total | 10,790,731.31 |
18.2 Return on equity and earnings per share
| Profit in Report Period | Weighted average return on equity (%) | Earnings per share | |
| Basic earnings per share | Diluted earnings per share | ||
| Net profit attributable to common shareholders of the company | 4.5625 | 0.1826 | 0.1826 |
| Net profit attributable to common shareholders of the company after deducting non-recurring gains and losses | 4.0710 | 0.1629 | 0.1629 |
18.3 Differences in accounting data under domestic and overseas accounting standardsNot applicable.
| 上工申贝（集团）股份有限公司 | Semi-annual Report 2018 | |
| Shang Gong Group Co., Ltd |
Chapter 11 Documents for Reference
| Documents for reference | Fiancial statements signed and sealed by the chairman of the Company, the principal in charge of accounting and the Chief of Accounting Affairs. |
| The oringinals of all the Company’s documents and announcements publicly disclosed on the website designated by China Securities Regulatory Commission in the report period. |
Shang Gong Group Co., Ltd.Chairman of Board of Directors: Zhang Min
th
August 2018