上工申贝(600843)2005年年度报告

上工申贝（集团）股份有限公司 600843 900924 2005 年年度报告 上工申贝（集团）股份有限公司 2005 年年度报告 目录 一、重要提示 ......................................................................... 2 二、公司基本情况简介 ................................................................. 2 三、会计数据和业务数据摘要 ........................................................... 3 四、股本变动及股东情况 ............................................................... 5 五、董事、监事和高级管理人员 ......................................................... 8 六、公司治理结构 .................................................................... 11 七、股东大会情况简介 ................................................................ 13 八、董事会报告 ...................................................................... 13 九、监事会报告 ...................................................................... 23 十、重要事项 ........................................................................ 24 十一、财务会计报告 .................................................................. 28 十二、备查文件目录 .................................................................. 66 1 上工申贝（集团）股份有限公司 2005 年年度报告 一、重要提示 1、本公司董事会、监事会及董事、监事、高级管理人员保证本报告所载资料不存在 任何虚假记载、误导性陈述或者重大遗漏，并对其内容的真实性、准确性和完整性承担 个别及连带责任。 2、公司全体董事出席董事会会议。 3、公司董事长兼 CEO 张敏先生、副董事长兼 CFO 马民良先生、会计机构负责人徐晓 晖女士声明：保证本年度报告中财务报告的真实、完整。 二、公司基本情况简介 1、公司法定中文名称：上工申贝（集团）股份有限公司 公司法定中文名称缩写：上工申贝 公司英文名称：SGSB GROUP CO.,LTD. 公司英文名称缩写：SGSB 2、公司法定代表人：张敏 3、公司董事会秘书：张一枫 联系地址：上海市浦东新区世纪大道 1500 号东方大厦 12 楼 电话：021-68407515 传真：021-63302939 E-mail：zyf@sgsbgroup.com 公司证券事务代表：顾根荣 联系地址：上海市浦东新区世纪大道 1500 号东方大厦 12 楼 电话：021-68407700-728 传真：021-63302939 E-mail：ggr@sgsbgroup.com 4、公司注册地址：上海市浦东新区罗山路 1201 号 公司办公地址：上海市浦东新区世纪大道 1500 号东方大厦 12 楼 邮政编码：200122 公司国际互联网网址：http://www.sgsbgroup.com 公司电子信箱：sgsb@sgsbgroup.com 5、公司信息披露报纸名称：《上海证券报》 香港《商报》 登载公司年度报告的中国证监会指定国际互联网网址：http://www.sse.com.cn 公司年度报告备置地点：公司办公室 6、公司 A 股上市交易所：上海证券交易所 公司 A 股简称：上工申贝 公司 A 股代码：600843 公司 B 股上市交易所：上海证券交易所 公司 B 股简称：上工 B 股 公司 B 股代码：900924 7、其他有关资料 公司首次注册登记日期：1993 年 12 月 16 日 公司首次注册登记地点：上海市工商行政管理局 公司变更注册登记日期：2005 年 2 月 7 日 2 上工申贝（集团）股份有限公司 2005 年年度报告 公司变更注册登记地点：上海市工商行政管理局 公司法人营业执照注册号：企股沪总字第 019029 号 公司税务登记号码：国税沪字 310115132210544 公司聘请的境内会计师事务所名称：上海众华沪银会计师事务所有限公司 公司聘请的境内会计师事务所办公地址：上海市延安东路 550 号海洋大厦 12 楼 公司聘请的境外会计师事务所名称：德豪国际会计师事务所 公司聘请的境外会计师事务所办公地址：上海市延安东路 550 号海洋大厦 12 楼 公司其他基本情况：法律顾问：上海市震旦律师事务所 办公地址：上海市四川北路 1688 号 16 楼 三、会计数据和业务数据摘要 （一）本报告期主要财务数据 单位:元 币种:人民币 项目 金额 利润总额 -289,084,643.38 净利润 -276,608,231.59 扣除非经常性损益后的净利润 -279,084,646.94 主营业务利润 261,947,618.13 其他业务利润 1,234,590.63 营业利润 -309,405,158.40 投资收益 17,022,028.38 补贴收入 3,129.00 营业外收支净额 3,295,357.64 经营活动产生的现金流量净额 39,377,776.83 现金及现金等价物净增加额 -67,409,614.84 （二）国内外会计准则差异 单位:千元 币种:人民币 净利润 股东权益 项目 本期数 上期数 期初数 期末数 按中国会计制度 -276,608 3,768 857,321 565,890 按国际会计准则调整项目： 补充投资确认损失 -2,853 14 冲销长期待摊费用（老干部费 2,115 -2,115 -2,115 用） 剔除与联营方交易未实现利润 241 150 -393 -152 按国际会计准则 -277,105 1,817 854,813 565,738 （三）扣除非经常性损益项目和金额 单位:元 币种:人民币 非经常性损益项目 金额 处置长期股权投资产生的损益 25,304.71 处置固定资产产生的损益 2,448,716.95 政府补贴及税收返还、减免 2,393.69 合计 2,476,415.35 3 上工申贝（集团）股份有限公司 2005 年年度报告 （四）报告期末公司前三年主要会计数据和财务指标 单位:元 币种:人民币 本年比上年增 项目 2005 年 2004 年 2003 年 减(%) 主营业务收入 1,482,659,146.38 996,246,688.32 48.82 866,789,366.22 利润总额 -289,084,643.38 23,511,143.30 -1,329.56 20,031,894.08 净利润 -276,608,231.59 3,767,743.02 -7,441.48 14,595,602.55 扣除非经常性损益的净利润 -279,084,646.94 -77,943,352.45 -258.06 -49,891,385.47 每股收益(全面摊薄) -0.6162 0.0084 -7,435.71 0.0374 每股收益(加权平均) -0.6162 0.0084 -7,435.71 0.0489 减少 49.3197 净资产收益率（全面摊薄）（%） -48.8802 0.4395 1.7104 个百分点 扣除非经常性损益的净利润为基础计算 减少 40.2285 -49.32 -9.0915 -5.8465 的净资产收益率（全面摊薄）（%） 个百分点 扣除非经常性损益后净利润的每股收益 减少 0.4481 个 -0.6217 -0.1736 -0.1278 （全面摊薄） 百分点 扣除非经常性损益后净利润的每股收益 减少 0.4481 个 -0.6217 -0.1736 -0.1670 （加权平均） 百分点 减少 38.8941 净资产收益率（加权平均）（%） -38.4537 0.4404 2.6202 个百分点 扣除非经常性损益的净利润的净资产收 减少 29.6878 -38.798 -9.1102 -9.0626 益率（加权平均）（%） 个百分点 经营活动产生的现金流量净额 39,377,776.83 15,917,342.47 147.39 -41,963,006.97 每股经营活动产生的现金流量净额 0.0877 0.0355 147.04 -0.1075 本年末比上年 2005 年末 2004 年末 2003 年末 末增减(%) 总资产 2,442,150,302.38 1,786,734,577.34 36.68 1,755,205,977.66 股东权益（不含少数股东权益） 565,889,885.70 857,321,016.76 -33.99 853,350,255.63 每股净资产 1.2607 1.9099 -33.99 2.1862 调整后的每股净资产 1.1691 1.8955 -38.32 2.1612 （五）按中国证监会发布的《公开发行证券公司信息披露编报规则》第 9 号的要求计算 的净资产收益率及每股收益 单位:元 币种:人民币 净资产收益率（%） 每股收益 报告期利润 全面摊薄 加权平均 全面摊薄 加权平均 主营业务利润 46.29 36.42 0.58 0.58 营业利润 -54.68 -43.01 -0.69 -0.69 净利润 -48.88 -38.45 -0.62 -0.62 扣除非经常性损益后的净利润 -49.32 -38.80 -0.62 -0.62 （六）报告期内股东权益变动情况及变化原因 单位:元 币种:人民币 项目 股本 资本公积 盈余公积 法定公益金 未分配利润 股东权益合计 期初 448,886,777.00 383,614,665.68 24,620,633.62 10,717,606.50 510,825.49 857,321,016.76 数 本期 175,211.70 1,466,638.11 630,614.07 -13,668,146.39 增加 本期 85,591.66 42,795.83 277,989,278.04 277,762,984.67 减少 期末 448,886,777.00 383,789,877.38 26,001,680.07 11,305,424.74 -277,478,452.55 565,889,885.70 数 4 上工申贝（集团）股份有限公司 2005 年年度报告 1)、资本公积变动原因：子公司债务重组所致 2)、盈余公积变动原因：增加数系当年提取数，减少数系合并范围减少转出 3)、法定公益金变动原因：增加数系当年提取数，减少数系合并范围减少转出 4)、未分配利润变动原因：当年亏损所致 四、股本变动及股东情况 （一）股本变动情况 1、股份变动情况表 单位:股 本次变动前 本次变动增减（＋，－） 本次变动后 比例 发行 公积金 比例 数量 送股 其他 小计 数量 (%) 新股 转股 (%) 一、未上市流通股份 1、发起人股份 - - - - 其中： 国家持有股份 143,467,721 31.96 143,467,721 31.96 境内法人持有股份 23,651,804 5.27 23,651,804 5.27 境外法人持有股份 其他 2、募集法人股份 17,192,500 3.83 17,192,500 3.83 3、内部职工股 4、优先股或其他 未上市流通股份合计 184,312,025 41.06 184,312,025 41.06 二、已上市流通股份 1、人民币普通股 20,631,002 4.60 20,631,002 4.60 2、境内上市的外资股 243,943,750 54.34 243,943,750 54.34 3、境外上市的外资股 4、其他 已上市流通股份合计 264,574,752 58.94 264,574,752 58.94 三、股份总数 448,886,777 100 448,886,777 100 2、股票发行与上市情况 (1) 前三年历次股票发行情况 单位:股 币种:人民币 获准上市 交易终止日 种类 发行日期 发行价格（元） 发行数量 上市日期 交易数量 期 B股 2003-11-07 3.54/0.428 美元 100,000,000 2004-05-13 100,000,000 (2)公司股份总数及结构的变动情况 报告期内，公司原第一大股东上海轻工控股（集团）公司将其所持本公司 118,496,754 股国家股（占公司总股本 26.4%）无偿划转给上海市浦东新区国有资产管理 办公室，该划转股份性质仍为国家股。 (3) 现存的内部职工股情况 本报告期末公司无内部职工股。 5 上工申贝（集团）股份有限公司 2005 年年度报告 （二）股东情况 1、股东数量和持股情况 单位:股 报告期末股东总数 29,674 户,其中 A 股股东 11,445 户,B 股股东 18,229 户。 前十名股东持股情况 质押或 股东性 持股比 持有非流通 冻结的 股东名称 持股总数 年度内增减 股份类别 质 例(%) 股数量 股份数 量 上海市浦东新区国有资产 国有 26.40 118,496,754 118,496,754 未流通 118,496,754 管理办公室 股东 上海国际信托投资有限公 法人 5.27 23,651,804 未流通 23,651,804 司 股东 HONOUR FORCE 外资 4.61 20,712,467 已流通 INVESTMENTS LTD. 股东 国有 中国东方资产管理公司 3.38 15,185,651 未流通 15,185,651 股东 MAIN FORCE ASSETS 外资 2.82 12,650,000 已流通 LIMITED 股东 外资 MESABI ASSETS LIMITED 2.69 12,075,000 已流通 股东 上海实业资产管理有限公 外资 2.38 10,695,000 已流通 司（香港） 股东 国有 中国长城资产管理公司 2.18 9,785,316 未流通 9,785,316 股东 NORMAL WIN ASSETS 外资 1.90 8,513,762 -1,392,763 已流通 LIMITED 股东 法人 中国银行上海市分行 1.41 6,309,648 未流通 6,309,648 股东 前十名流通股股东持股情况 股东名称 持有流通股数量 股份种类 HONOUR FORCE INVESTMENTS LTD. 20,712,467 境内上市外资股 MAIN FORCE ASSETS LIMITED 12,650,000 境内上市外资股 MESABI ASSETS LIMITED 12,075,000 境内上市外资股 上海实业资产管理有限公司（香港） 10,695,000 境内上市外资股 NORMAL WIN ASSETS LIMITED 8,513,762 境内上市外资股 SHENYIN WANGUO NOMINEES(H.K)LTD. 5,188,177 境内上市外资股 威亚国际实业有限公司 3,997,018 境内上市外资股 NAITO SECURITIES CO.,LTD 3,137,061 境内上市外资股 王金凌 2,200,000 境内上市外资股 胡云菁 1,984,672 境内上市外资股 上述股东关联 未知前十名流通股股东之间是否存在关联关系或一致行动人的情况。 关系或一致行 未知前十名流通股股东与前十名股东之间是否存在关联关系。 动关系的说明 6 上工申贝（集团）股份有限公司 2005 年年度报告 2、控股股东及实际控制人简介 （1）控股股东情况 控股股东名称：上海市浦东新区国有资产管理办公室 成立日期：1996 年 09 月 主要经营业务或管理活动：受上海市浦东新区人民政府委托，专司浦东新区国有资 产管理。 （2）控股股东及实际控制人变更情况 新控股股东名称: 上海市浦东新区国有资产管理办公室 负责人: 傅红岩 控股股东发生变更的日期:2005 年 12 月 23 日 披露控股股东发生变更相关信息的指定报纸: 《上海证券报》和香港《商报》 披露控股股东发生变更相关信息的日期: 2005 年 12 月 31 日 根据上海市委、市政府“市区联手，抓大放小”推进国资国企改革的精神，原公司 控股股东上海轻工控股（集团）公司将其所持有本公司全部国家股 118,496,754 股无偿 划转给上海市浦东新区国有资产管理办公室，双方于 2005 年 12 月 23 日通过中国证券登 记结算有限责任公司上海分公司完成了股权过户手续。 （3）公司与实际控制人之间的产权及控制关系的方框图 上海市浦东新区国有资产管理办公室 26．40％ 上工申贝（集团）股份有限公司 3、其他持股在百分之十以上的法人股东 截至本报告期末公司无其他持股在百分之十以上的法人股东。 7 上工申贝（集团）股份有限公司 2005 年年度报告 五、董事、监事和高级管理人员 （一）董事、监事、高级管理人员情况 单位:股 币种:人民币 报告期 是否在股 内从公 东单位或 性 年 任期起 任期终 年初持股 年末持股 股份增 变动 司领取 其他关联 姓名 职务 别 龄 始日期 止日期 数 数 减数 原因 的报酬 单位领取 总额(万 报酬 元) 二级 董事 2004- 2006- 11,508 39,300 27,792 张敏 男 43 市场 31.62 否 长、CEO 07-30 05-20 (B) (B) (B) 买入 副董事 2004- 2006- 马民良 男 49 3,450 3,450 0 25.23 否 长、CFO 07-30 05-20 执行董 事、总 2003- 2006- 王立喜 男 46 3,968 3,968 0 25.52 否 经理、 05-20 05-20 COO 执行董 2003- 2006- 张宗明 女 48 661 661 0 7.86 否 事 05-20 05-20 独立董 2003- 2006- 费方域 男 57 3,439 3,439 0 6.00 否 事 05-20 05-20 独立董 2003- 2006- 刘向东 男 55 0 0 0 6.00 否 事 05-20 05-20 独立董 2003- 2006- 刘仁德 男 60 0 0 0 6.00 否 事 05-20 05-20 独立董 2004- 2006- 王志乐 男 57 0 0 0 6.00 否 事 11-12 05-20 2003- 2006- 贾春荣 董事 男 57 0 0 0 0.72 是 05-20 05-20 2003- 2006- 沈逸波 董事 男 40 0 0 0 0.72 是 05-20 05-20 监事会 2004- 2006- 何忠源 男 57 6,745 6,745 0 14.69 否 主席 11-12 05-20 2003- 2006- 诸葛惠玲 监事 女 37 0 0 0 8.02 否 05-20 05-20 2004- 2006- 王杰 监事 男 46 0 0 0 6.34 否 11-12 05-20 副总经 2003- 2006- 张恒亮 理、总 男 59 6,083 6,083 0 10.22 否 05-20 05-20 工程师 副总经 2004- 2006- 陈明其 男 51 1,984 1,984 0 9.52 否 理 06-24 05-20 副总经 2003- 2006- 陈长保 男 50 0 0 0 10.12 否 理 05-20 05-20 副总经 2005- 2006- 徐伟堃 男 50 0 0 0 7.81 否 理 01-21 05-20 财务负 2003- 2006- 徐晓晖 女 52 0 0 0 8.28 否 责人 05-20 05-20 董事会 2003- 2006- 张一枫 男 55 3,161 3,161 0 8.28 否 秘书 05-20 05-20 11,508 39,390 (B) (B) 27,792 合计 / / / / / / 198.95 29,491 29,491 (B) (A) (A) 8 上工申贝（集团）股份有限公司 2005 年年度报告 董事、监事、高级管理人员最近 5 年的主要工作经历： (1)张敏，曾任上海冰箱压缩机股份有限公司总经理助理；上海扎努西电气机械有限 公司总经理；上海申贝办公机械有限公司党委副书记、总经理、副董事长、董事长。现 任本公司党委书记、董事长兼 CEO。 (2)马民良，曾任上海梅林正广和（集团）有限公司党委书记、总经理；上海轻工装 备（集团）有限公司党委书记、副总经理；上海申贝办公机械有限公司党委书记、副总 经理、总经理。现任本公司副董事长兼 CFO。 (3)王立喜，曾任本公司副总经理、党委副书记兼工会主席；上海轻工控股（集团） 公司工会副主席。现任本公司执行董事、总经理兼 COO。 (4)张宗明，曾任上海江湾机械厂党委书记、副厂长；本公司工业缝纫机总厂党委书 记；公司党委副书记、纪委书记。现任本公司执行董事。 (5)费方域，曾任上海财经大学金融学院教授，博士生导师。现任上海交通大学安泰 管理学院教授、博士生导师。本公司独立董事。 (6)刘向东，曾任中国工商银行上海市分行副行长、中国工商银行总行投资银行部总 经理。现任正大国际财务有限公司总裁。本公司独立董事。 (7)刘仁德，2001 年至今,一直担任上海东亚会计师事务所有限公司党支部书记、副 主任会计师。2003 年 5 月起担任本公司独立董事。 (8)王志乐，曾任中国人民大学讲师、副教授。现任商务部研究院跨国公司研究中心 主任，中国集团公司促进会副会长、中国投资协会外资投资委员会副会长，中国经济体 制改革研究会特约研究员，南开大学跨国公司研究中心兼职教授。本公司独立董事。 (9)贾春荣，曾任上投投资管理有限公司副总经理,现任上投投资管理有限公司总经 理、董事长。本公司董事。 (10)沈逸波，曾任中国长城资产管理公司上海办事处综合管理部副处长、债权管理 部副处长、处长。现任中国长城资产管理公司上海办事处资产经营一部处长。本公司董 事。 (11)何忠源，曾任本公司副董事长。现任公司监事会主席，上海永久股份有限公司 董事。 (12)诸葛惠玲，曾任本公司团委书记、工会副主席、主席。现任本公司党委副书 记、监事。 (13)王杰，曾任上海新沪玻璃厂副厂长，上海申贝办公机械有限公司财务部副经理, 本公司财务审计部副经理。现任本公司审计室副主任、本公司监事。 (14)张恒亮，2001 年至今，一直担任本公司副总经理、总工程师。 (15)陈明其，曾任上海轻工控股（集团）公司经济运行部副经理、本公司董事。现 任本公司副总经理。 (16)陈长保，曾任本公司党委副书记、纪委书记。现任本公司副总经理。 (17)徐伟堃，曾任上海轻工控股（集团）公司劳动保障部主任科员、副经理；上海 申贝办公机械有限公司副总经理。现任本公司副总经理。 (18)徐晓晖，曾任本公司资产管理办公室副主任、财务审计部经理。现任本公司财 务部经理。 (19)张一枫，曾任本公司资产管理办公室主任、董事会办公室主任。现任本公司董 事会秘书。 9 上工申贝（集团）股份有限公司 2005 年年度报告 （二）在股东单位任职情况 是否领取报酬 姓名 股东单位名称 担任的职务 任期起始日期 任期终止日期 津贴 上海市上投投资管理 贾春荣 总经理 2003-08-01 是 有限公司 中国长城资产管理公 是 沈逸波 司上海办事处资产经 处长 2001-02-01 营一部 在其他单位任职情况 是否领取报 姓名 其他单位名称 担任的职务 任期起始日期 任期终止日期 酬津贴 上海第一医药股份有 刘向东 独立董事 是 限公司 中国石化上海石油化 刘向东 独立监事 否 工股份有限公司 东风电子科技股份有 费方域 独立董事 是 限公司 上海三毛企业（集 费方域 独立董事 是 团）股份有限公司 中国纺织机械股份有 费方域 独立董事 是 限公司 金杯汽车股份有限公 费方域 独立董事 是 司 王志乐 中国海洋石油总公司 高级顾问 是 北京新世纪跨国公司 王志乐 所长 是 研究所 上海海立（集团）股 贾春荣 董事 否 份有限公司 上海联华合纤股份有 贾春荣 董事 否 限公司 上海绅士汽车商城有 贾春荣 董事长 否 限公司 北京华南大厦有限公 贾春荣 董事 否 司 上海永久股份有限公 何忠源 董事 否 司 （三）董事、监事、高级管理人员报酬情况 1、董事、监事、高级管理人员报酬的决策程序：独立董事报酬由股东大会决定。其他人 员报酬经公司薪酬与考核委员会确认。 2、董事、监事、高级管理人员报酬确定依据：公司实行基薪和加薪结合生产经营量化指 标绩效挂钩的方法，考核发放。 3、不在公司领取报酬津贴的董事、监事情况 不在公司领取报酬津贴的董事、监事的姓名 是否在股东单位或其他关联单位领取报酬津贴 贾春荣 是 沈逸波 是 10 上工申贝（集团）股份有限公司 2005 年年度报告 （四）公司董事监事高级管理人员变动情况 本报告期内，经四届十七次董事会议审议通过，同意总经理王立喜先生提名，聘任 徐伟堃先生为公司副总经理。 （五）公司员工情况 截至报告期末，公司在册员工总数为 3,213 人，除各种原因离岗外，实际在岗人数 为 2,228 人。全公司现有离退休人员 5,272 人，需承担费用的离退休职工为 0 人。 员工的结构如下： 1、专业构成情况 专业构成的类别 专业构成的人数 生产人员 1,377 销售人员 152 工程技术人员 149 财务人员 82 其他人员 468 2、教育程度情况 教育程度的类别 教育程度的人数 研究生及本科生 91 大专 304 中专 230 高中及以下 1,603 六、公司治理结构 （一）公司治理的情况 公司按照《公司法》、《证券法》、《上市公司治理准则》和相关法律法规的要 求，不断完善公司法人治理结构、规范公司运作。报告期内，根据中国证监会发布的 《关于督促上市公司修改公司章程的通知》，公司对《章程》、《股东大会议事规 则》、《董事会议事规则》、《独立董事工作制度》作了相应的修改和补充，进一步依 法加强对公司各项工作的规范运作。 1.关于股东与股东大会：公司能够确保所有股东，特别是中小股东，充分行使自己 的权利，通过电话，传真，电子信箱、网站及不定期组织交流活动等方式，建立起与股 东保持有效沟通的渠道；公司严格按照股东大会规范意见，召集、召开股东大会，会议 召开的时间和会场的选择上有利于让尽可能多的股东参加会议，行使表决权。 2.关于控股股东与上市公司的关系：控股股东能够自觉规范自己的行为，对上市公 司的决策和经营活动没有进行直接或间接地干预；公司和控股股东在人员、资产、财 务、机构和业务方面做到“分开”和“独立”，公司董事会、监事会和内部组织机构能 独立运作。 3.关于董事与董事会：公司董事和独立董事人数符合有关法律法规要求，全体董事 能够以勤勉负责的态度出席董事会议和股东大会，对公司的高层管理人士变动、互为担 保、关联交易等事项发表专业性意见，切实维护了公司的整体利益和中小股东的合法权 11 上工申贝（集团）股份有限公司 2005 年年度报告 益；董事会下设的战略、审计、提名、薪酬与考核专门委员会分别制定了实施细则并能 按规定开展工作。 4.关于监事与监事会：公司监事会的人数和结构符合法律、法规要求，全体监事能 够认真履行职责，对公司重大事项和公司董事、总经理、其他高级管理人员履行职责的 合法、合规性进行监督，对生产经营、财务活动能经常进行分析，并提出有益的建议， 维护了公司和股东的合法利益。 5.关于绩效评价与激励约束机制：公司经营管理人员的聘任程序符合法律、法规及 公司《章程》的规定；高级经营管理人员定期向董事会报告工作，向职工代表大会述职 并接受评议；公司对各级经营管理者制定了绩效考核和激励机制，以发挥其主观能动 性，努力提高经营管理水平。 6.关于利益相关者：公司重视自己的社会责任，能够尽最大的努力尊重和维护银行 及其他债权人、职工、消费者、供应商、社区等利益相关者的合法权利，以求共同推进 公司持续、健康地发展。 7.关于信息披露与透明度：公司指定董事会秘书负责信息披露工作，接待股东来访 和咨询；公司按照《上海证券交易所股票上市规则》、公司《章程》以及《公司信息披 露制度》的规定，真实、准确、完整、及时地披露有关信息，并确保所有股东有平等的 机会获得有关信息。 2006 年，公司将根据新修订的《公司法》、《证券法》等有关法律、法规的要求， 修订公司的有关制度，以进一步完善公司的治理结构，切实维护全体股东的利益。 （二）独立董事履行职责情况 1、独立董事参加董事会的出席情况 独立董事姓名 本年应参加董事会次数 亲自出席（次） 委托出席（次） 缺席（次） 备注 刘向东 8 8 费方域 8 8 刘仁德 8 8 王志乐 8 6 1 1 报告期内，公司独立董事按照《独立董事工作制度》等法规要求，勤勉尽责，积极 关心公司的经济运行情况，对公司控股股东及其他关联方占用资金和对外担保情况的专 项说明等事宜发表了独立意见，促进了董事会决策的科学性和客观性，维护了公司的整 体利益和中小股东的合法权益。 2、独立董事对公司有关事项提出异议的情况 报告期内，公司独立董事未对公司本年度的董事会议案及其他非董事会议案提出异 议。 （三）公司相对于控股股东在业务、人员、资产、机构、财务等方面的独立情况 1)、业务方面：公司拥有独立的原辅材料采购系统、生产系统和销售系统，完全具 有独立自主的经营能力，与控股股东之间无同业竞争。 2)、人员方面：公司建立了独立的劳动、人事及工资管理体系，公司的高级管理人 员均在本公司领取报酬，未在股东（实际控制人）单位担任重要职务。 12 上工申贝（集团）股份有限公司 2005 年年度报告 3)、资产方面：公司拥有独立的资产，无公司资产被控股股东占有的情况。 4)、机构方面：公司从实际出发，设置了独立的办事机构，不存在与控股股东合署 办公的情况。 5)、财务方面：公司设有独立的财务部门，具有独立的会计核算体系和财务管理制 度。公司开设独立的银行帐户，独立纳税，并能够独立作出财务决策，根据经营的需要 决定资金调拨事宜。 （四）高级管理人员的考评及激励情况 公司制定了相关的激励制度，对高管人员的绩效评价由公司人事部门进行考核和测 评，年末由薪酬委员会综合评定，并确定报酬情况。 公司拟从实际出发，进一步修订和完善对全体高级管理人员的激励制度。 七、股东大会情况简介 年度股东大会情况 公司于 2005 年 6 月 9 日召开 2004 年度股东大会，决议公告刊登在 2005 年 6 月 10 日的《上海证券报》、香港《商报》。 八、董事会报告 （一）管理层讨论与分析 公司的经营范围:本公司属缝制设备制造行业，以生产、销售工业用缝制设备为主， 主要产品有平缝、包缝、套结、钉扣、锁眼、双针、多针、链缝、绷缝等其他特种工业 缝纫机及零部件。 报告期内公司经营情况的回顾 1、公司报告期内总体经营情况 报告期内，公司实现主营业务收入 148,265.91 万元，同比增长 48.82%；实现主营 业务利润 26,194.76 万元，同比增长 134.33%：实现净利润-27,660.82 万元，同比下降 7,441.48%。 因公司在报告期内，完成收购德国杜可普·阿德勒股份公司（DA 公司）股权，成为 其控股股东，同时对公司在国内的缝制设备制造基地进行调整，导致利润构成及来源发 生较大变动。 全年公司产品出口创汇 6,481.3 万美元，同比增长 28.7%（不计 DA 公司产品）。 （1）实现内部整合，确立集团业务构架 公司按照经营集约化的要求，确立了新的业务结构：以缝制设备为主营核心业务、 推进欧亚联动双品牌战略；实现工业机、家用机和零部件三个板块的同步发展；依托办 公设备、影像器材、新材料和国际贸易业务等四个方面的投资收益，为公司提供有效支 撑。 （2）完成海外并购，初试跨国经营 根据德国相关法律制订了收购方案，公司通过全资子公司上工（欧洲）控股有限责 任公司持有 DA 公司 89.932%的股份；同时在 DA 公司采取一系列措施，保持 DA 公司管理 层的相对稳定，建立经营层的激励和约束机制，对 DA 公司的经营目标包括压缩库存、加 速资金流转、降本扭亏提出了明确的要求，并通过监事会进行系统检查和评析。2005 年 DA 公司通过中德员工共同努力，实现了扭亏为盈的目标。 13 上工申贝（集团）股份有限公司 2005 年年度报告 （3）综合利用资源，争取协同效应 在稳步实施“走出去”同时，公司稳妥地做好“引进来”工作。为充分利用 DA 公司 的技术和品牌资源、提升品质、增加品种、扩大市场份额、快速提高公司缝制设备主业 的核心竞争力，公司正在筹建合资销售公司和合资生产公司。合资销售公司计划发展为 DA 品牌产品亚洲区域的唯一分销公司；合资生产公司将成为 DA 高档品牌、高端技术与 本土化低成本生产的重要基地。由 DA 监制的上工牌 GC8900 系列高速平缝机已在试销， 由公司以定牌形式生产的 DA7700 系列高速包缝机、全部引进 DA 技术生产的 DA267 型中 厚料机和双方共同开发的 DA281 型微油润滑高速平缝机正分别进入批试和样试阶段。 （4）以发展促调整，以调整求发展 在确立高端缝制设备为公司核心主业的同时，根据“突出主业、淡出副业、进退有 序、效益优先”的原则，公司积极推出调整改革措施：对低端缝制产品采用 OEM 形式生 产；对生产低档产品的设备作为与民营企业合作的投资；对富余人员继续执行分流政 策；对与主业关联度不大的参股控股公司按市场化方式运作，以保证公司资源得到充分 利用。 2、主营业务分行业或分产品构成情况 单位：万元 币种：人民币 分行业 主营业务收入 占主营业务收 主营业务利润 占主营业务利润 入比例（％） 比例（％） 缝制及物料传送设备 110,915 74.80 24,204 92.06 出口代理 20,775 14.01 872 3.32 办公机械 10,057 6.78 460 1.75 胶片业务 5,059 3.41 331 1.26 其他 1,460 0.98 423 1.61 收入合计 148,266 100 26,290 100 3、主营业务分地区情况表 单位:万元 币种:人民币 占主营业务收入 占主营业务利润 地区 主营业务收入 主营业务利润 比例(％) 比例（％） 境内 27,718 18 .69 526 2.00 境外 120,548 81.31 25,764 98.00 4、占主营业务收入或主营业务利润总额 10%以上的主要产品 单位:万元 币种:人民币 主营业务 主营业务 主营业务 主营业务收入 主营业务成本 主营业务利润率比上 分行业或分产品 收入 成本 利润率(%) 比上年增减(%) 比上年增减(%) 年增减(%) 缝制及物料传送设备 110,915 86,711 21.82 136.59 108.18 增加 10.67 个百分点 外贸商品 20,775 19,903 4.20 1.25 -3.00 增加 1.2 个百分点 14 上工申贝（集团）股份有限公司 2005 年年度报告 5、各种主要产品的产销数量和市场占有率情况 报告期内，公司生产和销售各类缝纫机分别为 251,335 台和 254,731 台，其中：工 业机产量和销量分别为 62,465 台和 68,329 台（包含德国 DA 公司 2005 年下半年生产和 销售的数量）；公司生产和销售各类家用缝纫机为 188,870 台和 186,402 台。 2005 年公司缝制设备工业缝纫机普通产品市场占有率低于 3%，DA 公司生产的高端 产品在市场上具有绝对优势地位。 6、主要供应商、客户情况 单位：万元 币种：人民币 前五名供应商采购金额合计 18,051.84 占采购总额比重（％） 16.29 前五名销售客户销售金额合计 13,678 占销售总额比重（％） 9 7、报告期公司财务状况说明 （1）报告期公司资产构成同比发生重大变动的说明 报告期末公司资产总额 244,215 万元，比上年度增加 65,542 万元，增幅为 36.68%；负债总额 180,555 万元，比上年度增加 92,825 万元，增幅为 105.81%，股东权 益总额 56,589 万元，比上年度减少 29,142 万元，降幅为 33.99%。 资产构成同比发生重大变动的项目主要是： 短期投资：同比减少 97.23%，主要原因是原委托国债投资的款项本期全部由本公司 第一大股东上海市浦东新区国有资产管理办公室划入所致； 应收票据：同比增加 921.72%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 应收账款：同比增加 115.80%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 其他应收款：同比减少 62.69%，主要原因是本公司下属子公司上海申贝办公机械有 限公司本年度收回了上期末应收的大额股权转让款以及地块补偿款所致； 预付账款：同比增加 157.70%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 应收补贴款：同比减少 51.70%，主要原因是本公司本年度收到了部分出口退税款所 致； 存货：同比增加 133.61%，主要原因是本公司本年度新增控股子公司上工（欧洲） 控股有限责任公司所致； 待摊费用：同比增加 515.36%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 固定资产净额：同比增加 73.21%，主要原因是本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致； 在建工程：同比减少 40.5%，主要原因是本期内项目竣工转入固定资产所致； 长期待摊费：同比减少 97.50%，主要原因是本年度收回了原支付的离休老干部费用 所致； 递延税款借项：同比增加 100%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 预收帐款：同比增加 181.70%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 15 上工申贝（集团）股份有限公司 2005 年年度报告 应付福利费：同比增加 6561.99%，主要原因是本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致； 应交税金：同比减少 132.89%，主要原因是减少去年同期非经营性收益的应交所得税 所致； 其他应付款：同比增加 142.62%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 长期应付款：同比增加 469.71 倍，主要原因是本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致； 递延税款贷项：同比增加 204.36 倍，主要原因是本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致。 （2）报告期公司主要财务数据同比发生重大变化的说明（单位：元） 2005 年 2004 年 增减金额 增减比例 主营业务 261,947,618.13 111,787,205.82 150,160,412.31 134.33% 利润 营业费用 148,862,316.29 36,496,343.49 112,365,972.80 307.88% 管理费用 368,747,264.65 157,151,050.82 211,596,213.83 134.65% 财务费用 54,977,786.22 27,658,171.10 27,319,615.12 98.78% 补贴收入 3,129.00 1,748,184.00 -1,745,055.00 -99.82% 所得税 -10,598.554.71 13,029,329.67 -23,627,884.38 -181,34% 净利润 -276,608,231.59 3,767,743.02 -280,375,974.61 -7,441.48% 主营业务利润：同比增加 134.33%，主要原因是本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致，其产品毛利率为 34.96%； 营业费用：同比增加 307.88%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司所致； 管理费用：同比增加 134.65%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司的费用所致； 财务费用：同比增加 98.78%，主要原因是本公司本年度新增控股子公司上工（欧 洲）控股有限责任公司对 FAG 公司原股东贷款所承担的利息支出以及汇兑损失所致； 补贴收入：同比减少 99.82%，主要原因是财政补贴政策变动所致； 净利润：同比减少 7441.48%，主要原因如下： 1、由于增加上工欧洲公司 7-12 月的合并报表，增加净利润 461 万元； 2、由于公司完成了收购 DA 公司股权和目前市场对产品需求的变化，致使公司产品结构 发生较大变化，对当年损益产生以下几方面的影响： 1）部分产品的产销量和售价有所变动，导致母公司产品销售毛利的大幅下降，同比影响 主营业务利润 2,997 万元； 2）处置调整产品的呆滞库存材料，同比影响利润 1,653 万元； 3）由于产品结构的调整，为加快对库存老产品的处置以及相应的应收账款催收力度，同 时考虑应收款的回收率，故本期增加计提资产减值准备计 6,777 万元； 3、由于公司产品结构的调整，由此调整公司员工人数，同比增加人员补偿费 4,310 万 元； 16 上工申贝（集团）股份有限公司 2005 年年度报告 4、同比增加为收购 DA 公司股权所发生的费用 1,250 万元； 5、由于美元汇率变化，同比影响利润 890 万元； 6、同比减少股权转让、债券投资收益 6,427 万元 7、同比减少财政补贴收入 174 万元； 8、同比减少土地补偿收益 2,948 万元； 9、营业外支出中同比减少固定资产减值准备转回 628 万元。 （3）报告期公司现金流量构成情况，同比发生重大变动情况、及与报告期净利润存 在重大差异的原因说明 项目 2005 年 2004 年 增减额 增减％ 经营活动产生的现 39,377,776.83 15,917,342.47 23,460,434.36 147.39 金流量净额 投资活动产生的现 105,870,901.14 5,823,903.39 100,046,997.75 1,717.87 金流量净额 筹资活动产生的现 -208,991,651.68 -110,934,430.64 -98,057,221.04 -88.39 金流量净额 汇率变动对现金的 -3,666,641.13 -451,581.84 -3,215,059.29 -711.95 影响 现金及现金等价物 -67,409,614.84 -89,644,766.62 22,235,151.78 24.80 净增加额 1)经营活动产生的现金流量净额同比增加主要是本报告期公司所属全资子公司上工（欧 洲）控股有限责任公司主营业务毛利增加所致。 2)投资活动产生的现金流量净额，同比增加主要是本公司下属子公司上海申贝办公机械 有限公司收回上期末应收的股权转让款和地块补偿费 4,900 万元；收到上海市浦东新区 国有资产管理办公室划入的委托国债投资款 2,830 万元以及同比增加投资收益款所致。 3)筹资活动产生的现金流量净额同比减少，主要是本报告期上工（欧洲）控股有限责任 公司根据收购协议支付 DA 公司原股东贷款 9,084 万元；减少银行借款 8,100 万元；利息 支出所致。 8、对公司设备利用情况、订单的获取情况、产品的销售或积压情况、主要技术人员变动 情况等与公司经营相关的重要信息的讨论与分析 报告期内，公司主要生产设备运行良好，无重大设备、安全事故发生，设备完好 率、设备完全运行考核指标均达到公司制定的考核标准。 公司实行以销定产，通过召开订货会、通过经销商与广大用户保持密切联系，取得 订单，组织生产。鉴于公司产品品种较多，加工周期较长，公司保持了一定的库存。同 时，因公司吸收 DA 公司的技术，产品正在向中、高端转移，原先的库存正在加速处置。 公司主要技术人员（特别是德国 DA 公司的主要技术人才）在各自的岗位上能履行职 责，无重大变动情况。 17 上工申贝（集团）股份有限公司 2005 年年度报告 9、主要控股公司及参股公司的经营情况及业绩分析 （1） 主要控股、参股公司的经营情况及业绩 公司名称 业务 主要产品或服 注册资本 资产规模 净利润 性质 务 上海富士施乐有限公司 生产 复印机生产及 18,287.9 73,666.7 7,594.3 销售 上海新沪玻璃厂 生产 玻璃制品生产 1,820.5 15,128.8 147.00 及销售 上海富华轻机有限公司 贸易 缝制设备销售 576 845.4 -26.9 上海工业缝纫机物产总公司 贸易 缝制设备销售 465 421.5 -34.5 上海永德经济发展有限公司 贸易 机电设备及配 200 346.1 -47.3 件销售 （2）单个控股子公司的净利润或单个参股公司的投资收益对公司净利润影响达到 10%以 上。 公司名称 主营业务收入 主营业务利润 净利润 上海富士施乐有限公司 233,078 万元 171,145 万元 7,594 万元 （二）对公司未来发展的展望 1、分析所处行业的发展趋势及公司面临的市场竞争格局等相关变化趋势以及对公司可能 的影响程度。 缝制机械产业（以缝纫设备为主，包括裁剪、粘合、整烫、专用工具和设备以及服 装企业吊挂系统和辅助装置）是支撑我国服装、皮革、鞋帽、装饰、家具等相关工业的 发展和提高全民生活水平、推进全社会实现小康的重要产业，在国民经济中占有一定地 位。 据中国缝制机械协会资料显示：国际缝制机械的品种约有 6,000 多种，我国生产的 缝制机械品种约 1,500 多种，常规生产的品种约 600—700 种。随着高新技术的出现，为 缝制机械设备开发提供了机遇，前景十分广阔。 国际上缝纫机及零部件制造主要集中在日本、德国、韩国和台湾地区。随着产业结 构重心向中国转移，至 2004 年末，我国缝纫机制造企业约 670 家，已占世界企业数的 80%以上；缝纫机产量已占世界总产量（2,100-2,200 万台）的 50%以上，其中外资在我 国以独资、合资形式生产整机的企业达 80 多家，其产量、品种、技术、出口等均在行业 中有重要地位。 2004 年，我国共出口缝纫机 1,100 多万台，其中家用机约 900 万台，工业机 220 多 万台，出口地区依次为东南亚、南美、欧洲、北美、非洲；进口缝纫机 35 万台，其中家 用机 12 万台，工业机 23 万台，进口国家和地区主要来自日本、韩国、台湾地区、德 国、意大利和美国。 近几年，国内普通家用机制造呈现平缓下降趋势，多功能家用机产量占世界产量 50%，基本上全部出口，受纺织、服装、皮革、鞋业等出口量大幅增长影响，中低档工业 缝纫机产量也有较大幅度增长。国际上缝纫机制造业未来发展趋势是进一步提升和拓展 高新技术（数字、电脑控制、传感系统、模糊控制、激光、遥感技术等）在缝纫机制造 领域的开拓和应用。预计“十一·五”期间，工业缝纫机产量仍将呈现较大幅度上升趋 势，如机电一体化产品将以 30—40%增长，特种缝纫机的市场需求更大。未来发展要求 18 上工申贝（集团）股份有限公司 2005 年年度报告 缝纫机制造企业调整产品结构，提高产品档次，从数量型增长向效益、质量、品种型方 向发展。 2、未来公司发展机遇和挑战、发展战略等以及各项业务的发展规划 （1）机遇 1）中国缝制机械行业“十一·五”规划明确指出，中国缝制机械工业应尽快走上一条 “科技含量高、经济效益好、资源消耗低、环境污染少、人力资源得到充分发挥”的新 型工业化之路，使我国成为世界缝制机械制造强国。 2）上海在加快发展先进制造业，振兴装备制造业、应用高新技术和先进适用技术改造提 升传统工业方面，具有良好的基础和独特的优势。 3）公司已完成了收购国际一流的著名缝制设备企业——DA 公司的法定程序，获得了世 界顶级的工业缝纫机设备制造技术、国际一流的品牌和全球高端产品的市场，有利于大 幅度提升国内缝制设备制造技术水平。 4）国家关于搞好资本市场和提高上市公司质量的决心，使公司面临前所未有的良好环境 和广阔的运作空间，公司股权分置改革方案的实施，将有效地改善公司的资产质量，促 进公司良性发展。 （2）挑战 1）缝制设备产品市场竞争激烈，主导产品价格下降，盈利空间十分有限。 2）缝纫机主要原材料生铁、钢材和能源的价格呈现上涨趋势，加上公司历史上形成的人 员偏多等因素，使得成本与费用居高不下。 3）对海外投资项目的实施，及国内生产基地的战略性调整，形成对人力资源需求的压 力。 4）人民币汇率的变动，不利于缝制设备产品在国际市场上的竞争。 （3）发展战略 公司完成了对德国 DA 公司股权并购，确立了以缝制设备为主营核心业务，公司争取 在跨国经营上走出一条成功之路，通过对欧亚两地缝制设备的业务整合，进一步提升企 业自主创新和自我发展的能力，将公司建设成为国际缝制设备行业中具有一流技术水准 和国际著名品牌并能引领世界缝制设备发展的优秀企业。 （4）各业务的发展规划 1）缝制设备制造核心业务 目前分国内和国外二部分，国内部分以工业机分公司和家用机分公司分别开展工业 机、家用机生产和销售业务，零件分公司开展零部件生产和销售；国外部分以德国 DA 公 司及其子公司生产和销售中、高端缝制设备。 ①工业缝制设备方面，抓好协同效应，求领先 要以国际化的视野、战略投资者的思维，通过向市场提供高品质、多品种、适应客 户多层次需求的产品，提高“DA”和“上工”品牌在国内外的声誉，保持缝制设备销售 额位于世界前三名。要进一步提高德国 DA 公司高端产品的产销规模和经营业绩；要建立 国内一流的合资生产公司和销售公司，通过引入、消化、吸收 DA 公司的先进技术，提升 公司缝制设备中、高端产品质量；要对现有低端缝制产品通过寻求机制、体制创新实现 多元化、民营化及向低成本地区梯度转移或采用 OEM 等生产化方式，参与市场竞争。 19 上工申贝（集团）股份有限公司 2005 年年度报告 ②家用缝制设备业务方面，通过升级换代，寻发展 要通过技术创新提高家用缝制设备的产品档次，以全新的产品和技术、全新的消费 理念拓展家用缝纫机业务；要把发展多功能家用缝纫机和电脑绣花机作为主攻方向，加 强与国际厂商合作，进一步塑造“蝴蝶”品牌；要利用上工（欧洲）控股有限责任公司 平台，开拓欧洲市场，同时积极培育国内先进的家用缝纫机市场，以重振上海家用缝制 设备的雄风。 ③零部件制造业务方面，开发高端零件，创效益 要坚持面向市场，自主开发，按照“多品种、小批量、高精度、快交货”要求组织 配套加工生产；要全力推进 DA 和上工产品的高端零部件开发和生产，实现为 DA 公司提 供合格零部件，以降低 DA 公司产品制造成本，实现全公司效益最大化目标。 2）现代办公设备和数码影像业务等 要树立企业“一盘棋”的思想，深化投资主体多元化的改革，追求利润最大化。 ①现代办公设备以扩大与外资厂商合资、合作发展为主，努力增加投资收益。 ②影像产业采用“引进来”谋发展 在保持传统感光材料市场占有率前提下，创造条件扩大与海外厂商的合作生产，积 极拓展数码感光材料市场；利用企业现有的设备，通过自行研发和合作研发数码影像产 品，改变产品的单一结构。 ③国际贸易实现“走出去”争市场 要利用现有的海外平台，进一步拓宽对外贸易渠道，努力提高公司产品在国际市场 上的占有率。 ④其他业务方面贯彻“一盘棋”思想保全局 对非公司核心业务以及非盈利小企业，将按“关、停、并、转、退，以关为主”的 原则，实现转制转型和退出市场策略，努力盘活公司存量资产，提高公司的整体运行质 量。 3、新年度经营计划 2006 年公司将以加强欧亚两地业务整合，实现协同效应为目的，重点抓好以下几方 面工作： （1）进一步采取措施，稳定 DA 公司的生产和销售。要努力加强 DA 公司全球销售网络建 设，在巩固欧美市场基础上，抓好适应亚洲市场的产品开发，增加 DA 品牌产品的销售 额。 （2）抓紧国内合资生产和销售企业的组建，使其成为公司主业做强的依托和平台。今年 计划完成 GC8900、DA7700、DA267 和 DA281 等 4 只机种的批量生产任务；同时整合亚洲 市场的销售资源，在销售增量的基础上，实现降本增效。 （3）对公司原有的业务进行重组，实现调整改革有成效。家用机分公司要加强电脑多功 能机的研究开发，对适应国际市场需求的电脑绣花机在稳定质量前提下，扩大批量生 产；对连年亏损的工业机分公司进行改革，部分适应市场需要的机种转入合资企业生 产，低端产品向低成本地区转移或实现民营化改制；零部件制造分公司重点转向为 DA 产 品配套高精度零部件，以特色和高品质取信用户，扩大销售；申贝公司要从实际出发， 对办公设备、感光材料和电子线束等各门类产品按市场要求，转变生产方式，分别做大 做精，大力减少费用支出，增加盈利。 20 上工申贝（集团）股份有限公司 2005 年年度报告 （4）加强企业集中管理，确保公司有效资源用于公司主业发展。各企业都要严格执行目 标预算，保证企业处于受控状态，对非盈利的小企业，有步骤地实施改制，以减少企业 “出血点”。 4、公司为实现发展战略所需的资金需求及使用计划、以及资金来源情况 2006 年公司对欧亚两地资源整合所需资金部分来自于以前年度定向增发 B 股所募集 的资金，部分通过自筹或贷款方式解决；公司原有业务重组所需资金通过存量资产变现 予以解决。 5、对公司未来发展战略和经营目标的实现产生不利影响的所有风险因素以及已(或拟)采 取的对策和措施 （1）业务经营风险 在缝制设备行业中，国外厂商由于技术、资金方面的优势，在高档产品市场具有较 强的竞争实力，国内厂商竞争主要集中在成本和价格方面，公司面临着与同行业其他企 业的激烈竞争，导致经营成果出现连续多年下降现象。 本公司已通过国际购并成为德国 DA 公司的控股股东，拥有了国际化的品牌、一流的 制造技术、全球化的销售网络，公司可通过引进 DA 公司的先进技术和管理经验，提升企 业的竞争实力，使公司的综合能力能够排名世界同行前列。 （2）资源整合风险 国际资源整合不良是收购失败的主要原因，跨国收购完成后，对目标公司能否有效 整合将会影响预期规模经济和协同效应。 公司正在采取多项整合措施，如促进双方管理层的沟通、了解和信任，加强互访和 企业文化、技术交流，开展贸易合作、质量提升、零件配套、新品开发等生产经营合 作；对 DA 公司的市场和销售网络进行优化重组，在中国上海建立合资贸易公司和生产企 业，以降低产品成本，提高销售利润率等，同时通过实施利用 DA 公司技术建设高档缝制 产品项目，提高公司原有产品的质量和技术水平，提升公司经营业绩。 （3）境外投资风险 中德两国存在文化、国情、制度等方面的差异，公司如何加强对 DA 公司的控制与管 理，确保所有管理、技术、生产人员的稳定，调动其生产积极性以及协调好与 DA 公司组 织的关系，是公司面临的新课题。 公司贯彻“以人为本”的原则，通过修订 DA 公司章程，改组 DA 公司监事会确保对 DA 公司重大决策方面的有效控制权；建立科学合理的业绩评估体系和激励机制，实现经 营者责、权、利统一；加强人员交流和信息沟通，缩小文化差异，构筑共同的价值理 念。 （4）汇率风险 DA 公司的生产经营活动均在境外进行，本公司出口业务量占销售收入比重较高，因 此，公司面临外汇汇率波动带来的风险。 对此，公司将组织有关人员重点关注，采取一些必要的保值手段，合理运用外汇金 融工具来规避和降低项目投资和产品经营中可能存在的外汇风险。 21 上工申贝（集团）股份有限公司 2005 年年度报告 （三）公司投资情况 1、募集资金使用情况 单位:万元 币种:人民币 本年度已使用募集资金总额 15,336.4 募集资金总额 32,264 已累计使用募集资金总额 16,195.2 项目 本年度 是否已 项目建 可行 实现的 是否 变更项 原计划 实际投 成时间 是否符 性是 本年度投 累计已投 收益 符合 承诺项目 目（含 投入总 资进度 或预计 合计划 否发 入金额 入金额 （以利 预计 部分变 额 （％） 建成时 进度 生重 润总额 收益 更） 间 大变 计算） 化 收购 DA 公 2005- 否 20,096 14,201.5 15,060.3 － 461.63 是 是 否 司项目 07-01 利用德国 DA 公司技 术建设电 否 19,500 1,134.9 1,134.9 － － － 是 － － 脑特种工 业缝纫机 项目 合计 － 39,596 15,336.4 16,195.2 未达到计 划进度和 预算收益 － 的说明(分 具体项目) 变更原因 及变更程 序说明 － （分具体 项目） 根据公司与德国 FAG 公司签署的股份转让协议，公司履行了全部义务，2005 年 7 月 1 日，公司全资子公司上工（欧洲）控股有限责任公司和 FAG 公司在德国办理了 DA 公司 94.98%股份交接手续。 利用德国 DA 公司技术建设电脑特种工业缝纫机项目是公司落实欧亚两地业务整合计 划的重要内容。公司正在利用 DA 公司技术对适合我国和亚洲地区的部分产品开展研发， 并组织当地化生产，以尽快将四类产品推向市场。 2、非募集资金项目情况 报告期内，公司无非募集资金投资项目。 22 上工申贝（集团）股份有限公司 2005 年年度报告 (四）董事会日常工作情况 1、董事会会议情况及决议内容 （1）公司于 2005 年 1 月 21 日召开四届十七次董事会会议，决议公告刊登在 2005 年 1 月 25 日的《上海证券报》、香港《商报》。 （2）公司于 2005 年 4 月 25 日召开四届十八次董事会会议，决议公告刊登在 2005 年 4 月 27 日的《上海证券报》、香港《商报》。 （3）公司于 2005 年 4 月 28 日以通讯方式召开董事会临时会议，审议公司 2005 年第 1 季度报告。 （4）公司于 2005 年 7 月 7 日召开四届十九次董事会会议，决议公告刊登在 2005 年 7 月 8 日的《上海证券报》、香港《商报》。 （5）公司于 2005 年 7 月 21 日召开四届二十次董事会会议，决议公告刊登在 2005 年 7 月 23 日的《上海证券报》、香港《商报》。 （6）公司于 2005 年 8 月 18 日召开四届二十一次董事会会议，决议公告刊登在 2005 年 8 月 20 日的《上海证券报》、香港《商报》。 （7）公司于 2005 年 10 月 27 日召开四届二十二次董事会会议，审议公司 2005 年第 3 季度报告、关于合资组建杜克普爱华制造（上海）有限公司项目部分内容调整的情况 报告、公司所属工业机分公司实施调整改革的报告。 （8）公司于 2005 年 12 月 28 日召开四届二十三次董事会会议，审议通过了《上工申 贝（集团）股份有限公司关于中国证监会上海监管局巡检发现问题的整改报告》。 2、董事会对股东大会决议的执行情况 报告期内，公司董事会全面落实股东大会通过的决议，就公司更名、经营范围调整 等事项办理了相关手续。 （五）利润分配或资本公积金转增预案 经上海众华沪银会计师事务所有限公司按中国会计制度审计，2005 年度公司实现合 并净利润为-276,608,231.59 元（德豪国际会计师事务所按国际会计制度审计净利润为- 277,105 千元），母公司净利润为-269,277,598.54 元。 由于本年度发生亏损，公司不提取法定公积金，当年可供分配利润与 2004 年未分配 利润 510,825.49 元相加，2005 年末未分配利润为-277,478,452.55 元，因此，2005 年 度不进行利润分配，也不进行资本公积金转增股本。 九、监事会报告 （一）监事会的工作情况 报告期内，监事会共召开了 6 次会议。 1.2005 年 1 月 21 日，公司监事会召开四届十四次会议，审议通过了公司 2005 年度财务 预算、公司管理机构调整的方案、公司高级管理人员职务变动的议案。 2.2005 年 4 月 25 日，公司监事会召开四届十五次会议，审议通过了公司 2004 年度监事 会工作报告、关于对 2003 年度会计报表差错追溯调整的议案、关于国债投资处理情况的 议案、总经理工作报告、财务工作报告、利润分配预案、支付会计师事务所 2004 年度审 计报酬的议案、2004 年度报告和年报摘要、关于修改《公司章程》的议案、关于修改 《股东大会议事规则》的议案。 23 上工申贝（集团）股份有限公司 2005 年年度报告 3.2005 年 4 月 28 日，公司监事会召开四届十六次会议，审议通过了公司 2005 年第一季 度报告。 4.2005 年 8 月 18 日，公司监事会召开四届十七次会议，审议通过了公司 2005 年半年度 报告及摘要、关于合资组建杜克普爱华制造《上海）有限公司（暂定名）的议案、关于 合资组建杜克普爱华贸易（上海）有限公司的议案、关于公司控股子公司上海蝴蝶进出 口有限公司与上海飞人进出口有限公司合并的议案。 5.2005 年 10 月 27 日，公司监事会召开四届十八次会议，审议通过了公司 2005 年第三 季度报告。 6.2005 年 12 月 28 日，公司监事会召开四届十九次会议，审议通过了《上工申贝（集 团）股份有限公司关于中国证监会上海监管局巡检发现问题的整改报告》。 （二）监事会对公司依法运作情况的独立意见 公司董事会能够按照《公司法》、《证券法》以及公司《章程》规范运作，认真执 行股东大会的各项决议，公司的各项决策能按合法程序进行，公司董事和高级管理人员 能履行诚信和勤勉义务，认真履行自己的职责，未发现有违反国家法律法规、公司《章 程》及损害公司利益的行为。 （三）监事会对检查公司财务情况的独立意见 公司 2005 年度财务报告严格按照国家财政法规和中国证监会的相关规定进行编制， 经上海众华沪银会计师事务所有限公司审核验证，在所有重大方面均能客观、真实、公 允地反映公司 2005 年度的财务状况和经营成果。 （四）监事会对公司最近一次募集资金实际投入情况的独立意见 公司募集资金使用程序合法，实际投入项目和承诺投入项目一致。 （五）监事会对公司收购出售资产情况的独立意见 公司收购、出售资产时，交易价格合理，未发现有内幕交易及损害公司和股东权益 的情况。 十、重要事项 （一）重大诉讼仲裁事项 1.本年度公司无重大诉讼、仲裁事项。 2.以前年度发生持续至报告期的重大诉讼、仲裁事项进展情况： 本公司于 2004 年出资 3,000 万元投资国债被质押诉德恒证券有限公司一案，经法院审 理后判决胜诉；2004 年 11 月法院裁定民事判决书中止执行；公司根据中国证监会规 定，向中国华融资产管理公司德恒证券有限公司托管经营组办理了债权申报登记手续， 对经确认的债权，将按国家有关法律、法规和政策予以偿付（详见 2004 年度报告），截 至本报告日，仍未得知明确的偿付方案。 为支持公司的正常运营，公司大股东上海市浦东新区国有资产管理办公室（下称区国 资办）承诺对该笔投资发生的损失予以补偿，2005 年 12 月 31 日，本公司已正式收到区 24 上工申贝（集团）股份有限公司 2005 年年度报告 国资办划入的国债投资款项 2,830 万元（公司投资国债 3,000 万元，投资初期已收回 170 万元）。 （二）报告期内公司收购及出售资产、吸收合并事项 1、出售股权情况 公司四届十九次董事会议批准公司全资子公司上工（欧洲）控股有限责任公司（下 称上工欧洲公司）将其所持德国 DA 公司 7,788,540 股（占 DA 公司总股份 94.98%）中的 401,800 股（占 DA 公司总股份 4.9％）和 16,400 股（占 DA 公司总股份 0.2%）分别转让 给上海国际（欧洲）集团公司和 Fact Verwaltungs-und Beratung sgesellschaft mbH 公司，转让价格为 4.9 万欧元和 0.2 万欧元。本次股权转让是在即将实施要约收购前采 取的措施，其重要目的是为了保留 DA 公司作为所在国上市公司的地位，本次股权转让 后，上工欧洲公司持有 DA 公司股份为 7,370,340 股（占 DA 公司总股份 89.88%）。 2、收购股权情况 根据德国证券法规，公司全资子公司上工欧洲公司于 2005 年 8 月 11 日至 9 月 9 日 向 DA 公司小股东发出要约收购，依据普华永道对 DA 公司作的价值评估，收购价格为每 股 1.41 欧元，截至要约收购日止，总计收购到 DA 公司股份 4,083 股，至此，上工欧洲 公司持有 DA 公司股份为 7,374,423 股，占 DA 公司总股份 89.932％。 （三）报告期内公司重大关联交易事项 1、资产、股权转让的重大关联交易 本年度公司无资产、股权转让的重大关联交易。 2、关联债权债务事项 单位:万元 币种:人民币 向关联方提供资金 关联方向上市公司提供资金 关联方 关联关系 发生额 余额 发生额 余额 上海上工华莘精密机械有限公司 受托管理 1,028 0 1,028 0 上海上工针业有限公司 受托管理 2,652 0 4,084 128 合计 / 3,680 5,112 （四）托管情况 本年度公司无托管事项。 （五）承包情况 本年度公司无承包事项 （六）租赁情况 本年度公司无租赁事项。 25 上工申贝（集团）股份有限公司 2005 年年度报告 （七）担保情况 单位:万元 币种:人民币 公司对外担保情况（不包括对控股子公司的担保） 担保类 担保是否已 是否为关联 担保对象 发生日期 担保金额 担保期限 型 经履行完毕 方担保 上海华源企 连带责 2004-11-11～ 业发展股份 2004-11-11 3,000 否 否 任担保 2005-11-09 有限公司 上海华源企 连带责 2005-03-29～ 业发展股份 2005-03-29 1,000 否 否 任担保 2005-09-29 有限公司 上海华源企 连带责 2005-05-27～ 业发展股份 2005-05-27 1,000 否 否 任担保 2006-05-23 有限公司 上海华源企 连带责 2005-06-13～ 业发展股份 2005-06-13 1,000 否 否 任担保 2005-09-29 有限公司 上海华源企 连带责 2005-06-06～ 业发展股份 2005-06-06 3,000 否 否 任担保 2006-06-01 有限公司 上海华源企 连带责 2005-07-14～ 业发展股份 2005-07-14 3,000 否 否 任担保 2006-07-04 有限公司 上海华源企 连带责 2005-07-29～ 业发展股份 2005-07-29 1,900 否 否 任担保 2006-02-26 有限公司 上海上工针 连带责 2005-11-22～ 2005-11-22 500 否 否 业有限公司 任担保 2006-01-18 报告期内担保发生额合计 11,400 报告期末担保余额合计 14,400 公司对控股子公司的担保情况 报告期内对控股子公司担保发生额合计 35,624 报告期末对控股子公司担保余额合计 35,624 公司担保总额情况（包括对控股子公司的担保） 担保总额 50,024 担保总额占公司净资产的比例(%) 88.40 其中： 为股东、实际控制人及其关联方提供担保的金额 0 直接或间接为资产负债率超过 70％的被担保对象 29,374 提供的债务担保金额 担保总额超过净资产 50％部分的金额 0 上述三项担保金额合计 29,374 1、根据公司与德国 FAG 公司签署的关于 DA 公司 94.98%股份转让协议的有关条款： （1）2005 年 6 月 30 日由公司在德国的全资子公司上工（欧洲）控股有限公司（下称 “上工欧洲”）向 FAG 公司支付了股份对价 949,821 欧元和首期股东贷款转让价款 800 万欧元，并于 2005 年 8 月 3 日支付了第 2 期股东贷款 1,482,436.84 欧元，剩余股东贷 款约 2,704 万欧元继续由上工欧洲按 6%年利率自 2005 年 6 月 30 日后第二周年日开始分 26 上工申贝（集团）股份有限公司 2005 年年度报告 九年等额支付并从 2005 年 6 月 30 日开始，每年支付一次利息。公司为上工欧洲支付剩 余股东贷款承担不高于 1,250 万欧元的连带担保责任。 （2）上海银行为 DA 公司提供 900 万欧元信贷额度和担保额度的担保，担保项涉及金额 为 900 万欧元，受益人为西德意志银行，债务期限为 1 年，公司为此向上海银行提供反 担保，反担保期限、金额与上海银行提供的担保相同，同时公司以拥有的两处房产和 3,000 万元人民币作为反担保抵（质）押。国家外汇管理局上海市分局于 2005 年 4 月 30 日对此出具了批复（上海汇复[2005]25 号）。截止 2005 年 12 月 31 日，DA 公司并未向 西德意志银行申请取得上述反担保涉及的借款。 （3）公司为 DA 公司在美国子公司的房屋租赁向 FAG 公司出具了金额不超过 530 万美元 的担保函，有效期从 2005 年 6 月 30 日至 2015 年 10 月 31 日，同时上工（欧洲）控股有 限责任公司于 2005 年 6 月 30 日向 FAG 公司提供了 62.2 万欧元（有效期同样至 2015 年 10 月 31 日）的现金质押，以对 FAG 为 DA 美国子公司与 UTF NorcrossL.L.C.之间房屋出 售及回租交易中的担保责任提供担保。 2、公司与上海华源企业发展股份有限公司（下称华源发展），签订了互为对方向银 行贷款提供担保的协议，至报告期末，公司为“华源发展”共提供七笔担保，担保总金 额为 13,900 万元，其中三笔已逾期，逾期金额为 5,000 万元，公司已对上述担保办理了 反担保手续，同时“华源发展”及其母公司对逾期担保事项采取积极的措施，以尽快消 除风险因素。 （八）委托理财情况 本年度公司无委托理财事项 （九）其他重大合同 本年度公司无其他重大合同。 （十）公司或持有 5％以上股东承诺事项的履行情况 公司已向持有 5％以上的非流通股股东发出了关于公司股权分置改革计划安排的书 面问讯函，并收到回函表示，积极支持公司的股权分置改革工作，公司国有股东将加强 与相关非流通股东之间的协商，争取于 2006 年 6 月底前完成公司的股改工作。截至本报 告发布之日，公司股改工作已经启动。 （十一）聘任、解聘会计师事务所情况 报告期内，公司未改聘会计师事务所，公司仍聘任上海众华沪银会计师事务所有限 公司为公司的境内审计机构，截至本报告期末，该会计师事务所已为本公司提供了 12 年 审计服务。 本年度公司支付给上海众华沪银会计师事务所有限公司的财务审计费用为 46 万元 （上年度支付的审计费用为 46 万元），其他专项审计费用 0.5 万元，承担审计期内差旅 费 1.38 万元（上年度为 0.74 万元）。 公司仍聘任德豪国际会计师事务所（BDO International）为公司的境外审计机构， 截至本报告期末，该会计师事务所已为本公司提供了 3 年审计服务。 本年度公司支付德豪国际会计师事务所的财务审计费用为 50 万元（上年度支付的审 计费用为 50 万元），审计期间未承担差旅费用。 27 上工申贝（集团）股份有限公司 2005 年年度报告 （十二）公司、董事会、董事受处罚及整改情况 本报告期内，公司、公司董事会及董事均未受中国证监会稽查、行政处罚、通报批 评及上海证券交易所的公开谴责。 2005 年 9 月 7 日至 9 月 13 日，中国证监会上海监管局对本公司作了巡回检查，并出 具了《监管函》,公司就此事召开董事会议，审议通过了公司《关于中国证监会上海监管 局巡检发现问题的整改报告》。 （十三）其它重大事项 根据本公司与德国 FAG Kuge Lfischer AG（下称“FAG 公司”）就本公司收购 FAG 公司控股子公司 DA 公司签订的《股权买卖协议》规定，交易完成的重要条件是本公司需 要完成为 DA 公司在美国的子公司的房屋租赁合同提供 530 万美元的履约担保和为 DA 公 司提供 500 万欧元的授信额度和 400 万欧元的业务担保，报告期内，本公司已履行了上 述义务。2005 年 7 月 1 日，公司全资子公司上工欧洲公司已成为 DA 公司的控股股东 （截至报告期末，持股比例为 89.932％）。 十一、财务会计报告 （一）审计报告 沪众会字（2006）第 0285 号 上工申贝（集团）股份有限公司全体股东： 我们审计了后附的上工申贝（集团）股份有限公司(以下简称“上工申贝公 司”)2005 年 12 月 31 日的资产负债表和合并资产负债表、2005 年度的利润及利润分配 表和合并利润及利润分配表，以及现金流量表和合并现金流量表。这些会计报表的编制 是上工申贝公司管理当局的责任，我们的责任是在实施审计工作的基础上对这些会计报 表发表意见。 我们按照中国注册会计师独立审计准则计划和实施审计工作，以合理确信会计报表 是否不存在重大错报。审计工作包括在抽查的基础上检查支持会计报表金额和披露的证 据，评价管理当局在编制会计报表时采用的会计政策和作出的重大会计估计，以及评价 会计报表的整体反映。我们相信，我们的审计工作为发表意见提供了合理的基础。 我们认为，上述会计报表符合国家颁布的企业会计准则和《企业会计制度》的规 定，在所有重大方面公允反映了 上工申贝公司 2005 年 12 月 31 日的财务状况以及 2005 年度的经营成果和现金流量。 上海众华沪银会计师事务所有限公司 中国注册会计师 刘万椿 中国注册会计师 周正云 中国，上海 二〇〇六年四月二十日 28 上工申贝（集团）股份有限公司 2005 年年度报告 （二）财务报表 资产负债表 2005 年 12 月 31 日 编制单位:上工申贝（集团）股份有限公司 单位:元 币种:人民币 附注 合并 母公司 项目 合并 母公司 期末数 期初数 期末数 期初数 资产： 流动资产： 货币资金 478,555,903.19 545,965,518.03 274,321,581.47 325,701,535.51 短期投资 821,924.05 29,687,059.43 395,182.33 28,698,982.61 应收票据 26,334,081.46 2,577,432.58 552,274.50 840,000.00 应收股利 327,102.05 68,109.70 5,094,498.42 4,436,795.87 应收利息 72,642.87 应收账款 390,593,524.60 180,997,765.43 54,478,181.27 111,469,669.70 其他应收款 44,879,526.01 120,276,478.60 40,573,193.76 46,531,450.52 预付账款 19,245,185.58 7,468,201.86 901,622.61 1,947,039.99 应收补贴款 1,242,765.36 2,573,254.21 存货 476,503,092.49 203,972,040.44 73,053,450.19 138,639,753.53 待摊费用 1,295,532.62 210,533.86 一年内到期的长期债权投资 其他流动资产 流动资产合计 1,439,871,280.28 1,093,796,394.14 449,369,984.55 658,265,227.73 长期投资： 长期股权投资 173,064,880.77 196,954,396.29 625,588,824.27 528,810,520.82 长期债权投资 1,055,000.00 1,000,000.00 长期投资合计 173,064,880.77 198,009,396.29 625,588,824.27 529,810,520.82 其中：合并价差(贷差以“-”号表示， 63,354,512.19 73,690,206.73 合并报表填列) 其中：股权投资差额(贷差以“-”号表 63,354,512.19 73,690,206.73 示，合并报表填列) 固定资产： 固定资产原价 1,590,190,739.54 700,921,038.74 556,448,165.82 555,776,592.33 减：累计折旧 1,025,168,528.71 342,895,348.89 314,547,460.17 292,906,159.99 固定资产净值 565,022,210.83 358,025,689.85 241,900,705.65 262,870,432.34 减：固定资产减值准备 75,238,065.48 75,262,191.48 75,111,879.85 75,111,879.85 固定资产净额 489,784,145.35 282,763,498.37 166,788,825.80 187,758,552.49 工程物资 在建工程 5,026,956.00 8,448,983.17 1,342,557.50 固定资产清理 固定资产合计 494,811,101.35 291,212,481.54 166,788,825.80 189,101,109.99 无形资产及其他资产： 无形资产 252,896,132.18 198,072,003.20 114,640,169.19 110,176,733.07 长期待摊费用 141,136.41 5,644,302.17 4,680,000.00 其他长期资产 无形资产及其他资产合计 253,037,268.59 203,716,305.37 114,640,169.19 114,856,733.07 递延税项： 递延税款借项 81,365,771.39 29 上工申贝（集团）股份有限公司 2005 年年度报告 资产总计 2,442,150,302.38 1,786,734,577.34 1,356,387,803.81 1,492,033,591.61 负债及股东权益： 流动负债： 短期借款 520,415,905.72 601,510,000.00 369,770,000.00 465,020,000.00 应付票据 220,000.00 610,000.00 220,000.00 610,000.00 应付账款 207,789,162.37 164,705,128.04 81,390,154.68 83,866,218.62 预收账款 40,569,303.72 14,401,387.23 14,128,642.96 2,163,352.10 应付工资 15,568,104.51 7,030,945.01 应付福利费 32,986,414.58 495,143.76 应付股利 2,939,137.92 3,354,912.62 1,532,818.86 1,532,818.86 应交税金 -899,955.00 2,735,880.09 207,127.54 -212,108.93 其他应交款 48,529.58 54,050.43 1,436.43 169.23 其他应付款 186,419,987.87 76,835,512.84 301,112,727.94 81,945,704.49 预提费用 462,402.50 230,225.89 19,845.00 预计负债 递延收益 967,012.76 一年内到期的长期负债 400,000.00 400,000.00 400,000.00 400,000.00 其他流动负债 流动负债合计 1,007,886,006.53 872,363,185.91 768,782,753.41 635,326,154.37 长期负债： 长期借款 1,609,984.87 2,109,984.87 应付债券 长期应付款 765,815,894.79 1,626,944.32 1,474,782.00 1,474,782.00 专项应付款 其他长期负债 长期负债合计 767,425,879.66 3,736,929.19 1,474,782.00 1,474,782.00 递延税项： 递延税款贷项 30,238,603.13 1,197,067.41 负债合计 1,805,550,489.32 877,297,182.51 770,257,535.41 636,800,936.37 少数股东权益(合并报表填列) 70,709,927.36 52,116,378.07 所有者权益（或股东权益）： 实收资本（或股本） 448,886,777.00 448,886,777.00 448,886,777.00 448,886,777.00 减：已归还投资 实收资本（或股本）净额 资本公积 383,789,877.38 383,614,665.68 383,789,877.38 383,614,665.68 盈余公积 26,001,680.07 24,620,633.62 4,546,242.52 4,546,242.52 其中：法定公益金 11,305,424.74 10,717,606.50 2,273,121.26 2,273,121.26 未分配利润 -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 拟分配现金股利 外币报表折算差额(合并报表填列) -12,145,043.64 减：未确认投资损失(合并报表填列) 3,164,952.56 311,885.03 所有者权益（或股东权益）合计 565,889,885.70 857,321,016.76 586,130,268.40 855,232,655.24 负债和所有者权益（或股东权益）总计 2,442,150,302.38 1,786,734,577.34 1,356,387,803.81 1,492,033,591.61 公司法定代表人:张敏 主管会计工作负责人:马民良 会计机构负责人:徐晓晖 30 上工申贝（集团）股份有限公司 2005 年年度报告 利润及利润分配表 2005 年 1-12 月 编制单位:上工申贝（集团）股份有限公司 单位:元 币种:人民币 附注 合并 母公司 项目 合并 母公司 本期数 上年同期数 本期数 上年同期数 一、主营业务收入 1,482,659,146.38 996,246,688.32 101,531,138.28 159,280,966.67 减：主营业务成本 1,219,764,073.92 882,059,263.40 112,962,718.77 140,742,918.78 主营业务税金及附加 947,454.33 2,400,219.10 二、主营业务利润（亏损以“-”号填列） 261,947,618.13 111,787,205.82 -11,431,580.49 18,538,047.89 加：其他业务利润（亏损以“-”号填列） 1,234,590.63 17,758,328.09 -11,418,723.77 5,431,428.77 减: 营业费用 148,862,316.29 36,496,343.49 11,489,927.08 6,546,019.34 管理费用 368,747,264.65 157,151,050.82 195,550,349.89 56,447,442.88 财务费用 54,977,786.22 27,658,171.10 31,956,349.06 19,808,711.82 三、营业利润（亏损以“-”号填列） -309,405,158.40 -91,760,031.50 -261,846,930.29 -58,832,697.38 加：投资收益（损失以“-”号填列） 17,022,028.38 74,250,899.99 -7,658,653.46 56,031,748.00 补贴收入 3,129.00 1,748,184.00 23,156.00 营业外收入 5,395,209.24 33,712,084.27 291,809.69 242,220.61 减：营业外支出 2,099,851.60 -5,560,006.54 63,824.48 -5,763,975.27 四、利润总额（亏损总额以“-”号填列） -289,084,643.38 23,511,143.30 -269,277,598.54 3,228,402.50 减：所得税 -10,598,554.71 13,029,329.67 减：少数股东损益 1,287,095.48 6,700,052.63 加：未确认投资损失(合并报表填列) 3,164,952.56 -14,017.98 五、净利润（亏损以“-”号填列） -276,608,231.59 3,767,743.02 -269,277,598.54 3,228,402.50 加：年初未分配利润 510,825.49 7,073,237.47 18,184,970.04 15,602,248.04 其他转入 77,032.50 1,158,003.22 六、可供分配的利润 -276,020,373.60 11,998,983.71 -251,092,628.50 18,830,650.54 减：提取法定盈余公积 779,267.83 7,342,037.09 322,840.25 提取法定公益金 678,811.12 4,146,121.13 322,840.25 提取职工奖励及福利基金(合并报表填列) 提取储备基金 提取企业发展基金 利润归还投资 七、可供股东分配的利润 -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 减：应付优先股股利 提取任意盈余公积 应付普通股股利 转作股本的普通股股利 八、未分配利润(未弥补亏损以“-”号填列) -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 补充资料： 1.出售、处置部门或被投资单位所得收益 2.自然灾害发生的损失 3.会计政策变更增加(或减少)利润总额 4.会计估计变更增加(或减少)利润总额 5.债务重组损失 6.其他 公司法定代表人:张敏 主管会计工作负责人:马民良 会计机构负责人:徐晓晖 31 上工申贝（集团）股份有限公司 2005 年年度报告 现金流量表 2005 年 1-12 月 编制单位:上工申贝（集团）股份有限公司 单位:元 币种:人民币 附注 本期数 项目 合并 母公司 合并数 母公司数 一、经营活动产生的现金流量： 销售商品、提供劳务收到的现金 1,603,403,417.05 167,298,967.01 收到的税费返还 60,313,813.70 222,850.05 收到的其他与经营活动有关的现金 12,659,678.06 261,439,957.40 经营活动现金流入小计 1,676,376,908.81 428,961,774.46 购买商品、接受劳务支付的现金 1,138,892,839.83 150,088,685.84 支付给职工以及为职工支付的现金 315,701,688.26 43,276,706.14 支付的各项税费 32,583,811.59 7,018,719.38 支付的其他与经营活动有关的现金 149,820,792.30 84,220,060.53 经营活动现金流出小计 1,636,999,131.98 284,604,171.89 经营活动现金流量净额 39,377,776.83 144,357,602.57 二、投资活动产生的现金流量： 收回投资所收到的现金 70,560,286.12 29,950,000.00 其中：出售子公司收到的现金 取得投资收益所收到的现金 27,685,728.84 2,575,937.58 处置固定资产、无形资产和其他长期资产而 25,380,823.04 5,187,264.00 收回的现金 收到的其他与投资活动有关的现金 投资活动现金流入小计 123,626,838.00 37,713,201.58 购建固定资产、无形资产和其他长期资产所 28,377,416.66 202,943.46 支付的现金 投资所支付的现金 -10,621,479.80 108,432,772.14 支付的其他与投资活动有关的现金 投资活动现金流出小计 17,755,936.86 108,635,715.60 投资活动产生的现金流量净额 105,870,901.14 -70,922,514.02 三、筹资活动产生的现金流量： 吸收投资所收到的现金 其中：子公司吸收少数股东权益性投资收到 的现金 借款所收到的现金 705,525,905.72 549,220,000.00 收到的其他与筹资活动有关的现金 筹资活动现金流入小计 705,525,905.72 549,220,000.00 偿还债务所支付的现金 875,542,900.20 644,470,000.00 分配股利、利润或偿付利息所支付的现金 38,974,657.20 26,092,653.58 其中：支付少数股东的股利 1,333,795.48 支付的其他与筹资活动有关的现金 其中：子公司依法减资支付给少数股东的现 金 32 上工申贝（集团）股份有限公司 2005 年年度报告 筹资活动现金流出小计 914,517,557.40 670,562,653.58 筹资活动产生的现金流量净额 -208,991,651.68 -121,342,653.58 四、汇率变动对现金的影响 -3,666,641.13 -3,472,389.01 五、现金及现金等价物净增加额 -67,409,614.84 -51,379,954.04 补充材料 1、将净利润调节为经营活动现金流量： 净利润 -276,608,231.59 -269,277,598.54 加：少数股东损益(亏损以“-”号填列) 1,287,095.48 减：未确认的投资损失 3,164,952.56 加：计提的资产减值准备 102,771,913.23 69,386,793.83 固定资产折旧 61,952,656.83 23,566,358.93 无形资产摊销 14,970,073.92 4,043,337.48 长期待摊费用摊销 10,936,361.80 待摊费用减少（减：增加） -1,084,998.76 预提费用增加（减：减少） 234,610.37 19,845.00 处理固定资产、无形资产和其他长期资产的 88,213.06 -112,405.09 损失(减:收益) 固定资产报废损失 财务费用 49,864,445.59 26,084,645.25 投资损失（减：收益） -16,945,563.97 7,702,000.58 递延税款贷项（减：借项） -32,570,980.00 存货的减少（减：增加） 65,820,049.54 45,137,172.16 经营性应收项目的减少(减：增加) -462,792,771.14 32,589,823.36 经营性应付项目的增加(减：减少) 524,619,855.03 205,217,629.61 其他(预计负债的增加) 经营活动产生的现金流量净额 39,377,776.83 144,357,602.57 2．不涉及现金收支的投资和筹资活动： 债务转为资本 一年内到期的可转换公司债券 融资租入固定资产 3、现金及现金等价物净增加情况： 现金的期末余额 478,555,903.19 274,321,581.47 减：现金的期初余额 545,965,518.03 325,701,535.51 加：现金等价物的期末余额 减：现金等价物的期初余额 现金及现金等价物净增加额 -67,409,614.84 -51,379,954.04 公司法定代表人:张敏 主管会计工作负责人:马民良 会计机构负责人:徐晓晖 33 上工申贝（集团）股份有限公司 2005 年年度报告 合并资产减值准备明细表 2005 年度 编制单位:上工申贝（集团）股份有限公司 单位:元 币种:人民币 本年减少数 因 资 其 产 他 价 行 本年 原 项目 年初余额 值 年末余额 次 增加数 因 合计 回 转 升 出 转 数 回 数 一、坏账准备合计 1 72,955,716.94 90,945,866.98 / / 9,595,010.41 154,306,573.51 其中：应收账款 2 48,218,348.16 80,714,684.48 / / 3,410,263.34 125,522,769.30 其他应收款 3 24,737,368.78 10,231,182.50 / / 6,184,747.07 28,783,804.21 二、短期投资跌价准备 4 23,560.57 -8,122.90 15,437.67 合计 其中：股票投资 5 23,560.57 -8,122.90 15,437.67 债券投资 6 三、存货跌价准备合计 7 33,753,271.17 116,564,259.92 150,317,531.09 其中：库存商品 8 18,665,086.36 39,951,575.15 58,616,661.51 原材料 9 13,433,690.53 41,011,479.44 54,445,169.97 四、长期投资减值准备 10 1,837,414.48 99.92 8,489.07 1,829,025.33 合计 其中：长期股权投资 11 1,837,414.48 99.92 8,489.07 1,829,025.33 长期债权投资 12 五、固定资产减值准备 13 75,262,191.48 24,126.00 75,238,065.48 合计 其中：房屋、建筑物 14 4,913,777.92 4,913,777.92 机器设备 15 70,348,413.56 24,126.00 70,324,287.56 六、无形资产减值准备 16 合计 其中：专利权 17 商标权 18 七、在建工程减值准备 19 182,014.30 182,014.30 合计 八、委托贷款减值准备 20 合计 九、总 计 21 183,832,154.64 207,684,118.22 9,627,625.48 381,888,647.38 公司法定代表人:张敏 主管会计工作负责人:马民良 会计机构负责人:徐晓晖 34 上工申贝（集团）股份有限公司 2005 年年度报告 母公司资产减值准备明细表 2005 年度 编制单位:上工申贝（集团）股份有限公司 单位:元 币种:人民币 本年减少数 因 资 其 产 他 价 行 本年 原 项目 年初余额 值 年末余额 次 增加数 因 合计 回 转 升 出 转 数 回 数 一、坏账准备合计 1 33,961,130.36 47,444,309.43 / / 9,124,791.67 72,280,648.12 其中：应收账款 2 18,909,799.05 38,116,937.21 / / 2,887,883.18 54,138,853.08 其他应收款 3 15,051,331.31 9,327,372.22 / / 6,236,908.49 18,141,795.04 二、短期投资跌价准备 4 11,637.39 3,800.28 15,437.67 合计 其中：股票投资 5 11,637.39 3,800.28 15,437.67 债券投资 6 三、存货跌价准备合计 7 26,486,536.69 23,347,331.11 49,833,867.80 其中：库存商品 8 13,187,094.75 16,914,121.75 30,101,216.50 原材料 9 12,580,032.37 -447,471.59 12,132,560.78 四、长期投资减值准备 10 1,828,925.41 99.92 1,829,025.33 合计 其中：长期股权投资 11 1,828,925.41 99.92 1,829,025.33 长期债权投资 12 五、固定资产减值准备 13 75,111,879.85 75,111,879.85 合计 其中：房屋、建筑物 14 4,913,777.92 4,913,777.92 机器设备 15 70,198,101.93 70,198,101.93 六、无形资产减值准备 16 合计 其中：专利权 17 商标权 18 七、在建工程减值准备 19 合计 八、委托贷款减值准备 20 合计 九、总 计 21 137,400,109.70 70,795,540.74 9,124,791.67 199,070,858.77 公司法定代表人:张敏 主管会计工作负责人:马民良 会计机构负责人:徐晓晖 35 上工申贝（集团）股份有限公司 2005 年年度报告 （三）附注 1. 公司基本情况 上工申贝（集团）股份有限公司（以下简称“本公司”）为境内公开发行 A、B 股股 票并在上海证券交易所上市的股份有限公司，是中国缝制设备行业第一家上市公司。本 公司于 1994 年 4 月注册成立，取得由政府工商行政管理部门颁发的《企业法人营业执 照》。 本公司的注册资本为人民币 448,886,777 元，注册地址为中国上海市浦东新区罗山 路 1201 号，法定代表人为张敏先生。本公司以生产、销售工业用缝制设备为主，主要产 品有平缝、包缝、套结、钉扣、锁眼、双针、多针、链缝、绷缝及其他特种工业缝纫机 共 10 个大类，21 个系列，100 多个品种，主要产品以“上工牌”、“双工牌”、“蝴蝶 牌”、“蜜蜂牌”、“飞人牌”为注册商标。本公司近年来积极进行新型缝纫设备的开 发、研制，尤其是 2005 年中成功地并购德国 Dürkopp Adler AG 股份有限公司（一家注 册在德国的上市公司，下称“德国 DA 公司”）后，本公司正在利用德国 DA 公司的先进 技术，对现有产品和新产品实施进一步升级、开发，并逐步将适应于亚洲市场的 DA 产品 转移到中国生产，以适应用户对自动化缝制设备日益增长的需求。 同时，本公司的经营范围近年来不断扩展，由缝制设备的产销拓展到物料传输、办 公机械、影像器材的产销、商贸物流等多个领域。 2. 主要会计政策和会计估计 2.1 会计制度 本公司执行企业会计准则和《企业会计制度》及其补充规定。 2.2 会计年度 本公司的会计期间采用公历制，即自日历１月１日至１２月３１日为一个会计年 度。 2.3 记账本位币 本公司以人民币为记账本位币。 2.4 记账基础和计价原则 本公司以权责发生制为记账基础,以实际成本为计价原则。各项财产在取得时按实际 成本计量，其后如果发生减值，按企业会计制度规定计提相应的减值准备。 2.5 外币业务核算方法 本公司对发生的外币业务，以业务发生当日的汇率（指由中国人民银行公布的外币 市场汇价中间价，下同）将外币折算成人民币记账；期末对外币货币性资产与负债账户 的外币余额按期末日汇率进行调整，调整后的人民币金额与原账面金额之间的差额作为 汇兑损益，除与购建固定资产有关的专用借款产生的汇兑损益，在该资产达到预定可使 用状态前予以资本化、计入资产成本外，属于筹建期间发生的汇兑损益于发生时计入长 36 上工申贝（集团）股份有限公司 2005 年年度报告 期待摊费用、并于本公司开始生产经营的当月一次计入损益；属于正常生产经营期间发 生的汇兑损益，则直接计入当期损益。 2.6 现金等价物的确定标准 本公司将持有的期限短(一般是指从购买日起三个月内到期)、流动性强、易于转换 为已知金额现金、价值变动风险很小的投资列作现金等价物。 2.7 短期投资核算方法 2.7.1 本公司的短期投资系一年内可以和准备变现的股票、基金、债券和其他投 资，按取得时实际支付的全部价款扣除其中包含的已宣告但尚未领取的现金股利或利息 入账。短期投资持有期间所收到的股利或利息等冲减投资成本；处置时按实际收到的价 款扣除账面成本后的差额确认为投资收益或损失，计入当期损益。 2.7.2 期末本公司对短期投资按成本与市价孰低计量，采用单项比较法对市价低于 成本的差额，计提短期投资跌价准备，并计入当期损益。 2.8 坏账核算方法 2.8.1 本公司对坏账损失采用备抵法核算，期末对应收款项（包括应收账款和其他 应收款）按账龄分析法计提坏账准备，并计入当期损益。期末除对确信可以完全收回的 应收款项不计提坏账准备、对有证据表明已难以收回的应收款项加大计提比例直至全额 计提坏账准备外，均按应收款项各级账龄的余额和下列比例计提坏账准备： 账龄 计提比例 1 年以内 5% 1－2 年 20% 2－3 年 50% 3 年以上 100% 2.8.2 本公司确认坏账的标准为：当债务人破产或者死亡，以其破产财产或者遗产 清偿后，仍然无法收回时；或当债务人逾期未履行其清偿责任，且具有明显特征表明无 法收回时，经公司董事会批准确认为坏账损失，冲销原提取的坏账准备；坏账准备不足 冲销的差额，计入当期损益。 2.9 存货核算方法 2.9.1 本公司的存货主要包括原材料、在产品、库存商品、委托加工物资、包装物 和低值易耗品等。存货购建时按实际成本入账，发出时以加权平均法计价，包装物、低 值易耗品在领用时按一次摊销法摊销。 2.9.2 期末本公司对存货按成本与可变现净值孰低计量，按单个存货项目的可变现 净值低于成本的差额，分项计提存货跌价准备，并计入当期损益。 2.10 长期投资核算方法 2.10.1 本公司的长期股权投资系持有期限超过一年的权益性投资，包括股票投资 和其它股权投资等，按投资取得时实际支付的价款扣除其中包含的已宣告但尚未领取的 现金股利后的金额或换出的非现金资产的账面价值加上应支付的相关税费后的价值入 37 上工申贝（集团）股份有限公司 2005 年年度报告 账。长期股权投资凡对被投资单位具有控制、共同控制或重大影响（通常指占被投资单 位有表决权资本总额 20%或 20%以上，或虽不足 20%但有重大影响）的，采用权益法核 算；反之，则采用成本法核算。采用权益法核算的长期股权投资，其取得时的成本与本 公司在该被投资单位所有者权益中所占份额的差额，当前者大于后者时，作为股权投资 差额，分十年平均摊销，列入各摊销期的损益；当前者小于后者时，作为资本公积。 （形成于 2003 年 3 月 17 日之前的上述差额，均作为股权投资差额，分十年平均摊 销。）本公司对股权转让业务，以被转让的股权的所有权上的风险和报酬实质上已经转 移给购买方、并且相关的经济利益很可能流入企业为标志，按实际处置的全部价款扣除 相关税费与该处置股权的账面价值后的差额，确认为股权转让损益。 2.10.2 本公司的长期债权投资系持有期限超过一年的债权性投资，包括债券投资 和其它债权投资等，按取得时的实际成本入账。长期债券投资实际成本与债券面值的差 额作为债券溢价或折价，长期债券投资按期计息，同时按直线法在债券存续期间内摊销 溢价或折价，计入各期损益。 2.10.3 期末对长期投资按账面价值与可收回金额孰低计量，对单项投资由于市价 持续下跌或被投资单位经营状况恶化等原因导致其可收回金额低于账面价值的差额，分 项提取长期投资减值准备，并计入当期损益。 2.11 固定资产计价和折旧方法 2.11.1 本公司的固定资产是指使用期限超过一年，单位价值在人民币 2,000 元以 上，为生产商品、提供劳务、出租或经营管理而持有的有形资产。固定资产以取得时的 实际成本为原价入账，以年限平均法计提折旧。在无需计提减值准备的情况下，按固定 资产的类别、估计的经济使用年限和预计的净残值（原价的 4%或 10%）分别确定折旧年 限和年折旧率如下： 折旧年限 年折旧率 房屋及建筑物 20-50 1.92%-4.5% 机器设备 5-15 6.4%-19.2% 运输设备 5-10 9.6%-19.2% 办公及其他设备 5-10 9.6%-19.2% 在需要计提减值准备的情况下，按单项固定资产扣除减值准备后的账面净额和剩余 折旧年限，分项确定并计提各期折旧。 2.11.2 期末本公司对固定资产按账面价值与可收回金额孰低计量，对单项资产由 于市价持续下跌、技术陈旧、损坏或长期闲置等原因，导致其可收回金额低于账面价值 的差额，分项提取固定资产减值准备，并计入当期损益。 2.12 在建工程核算方法 2.12.1 本公司的在建工程按工程项目分别核算，以实际发生的全部支出入账，并 在工程达到预定可使用状态时，按工程全部成本结转固定资产。与购建在建工程直接相 关的借款利息支出和外币折算差额等借款费用，在工程项目达到预定可使用状态前予以 资本化，计入工程成本；在工程项目达到预定可使用状态后，计入当期损益。 2.12.2 期末本公司对在建工程按账面价值与可收回金额孰低计量，对单项资产可 收回金额低于账面价值的差额，分项提取在建工程减值准备，并计入当期损益。 38 上工申贝（集团）股份有限公司 2005 年年度报告 2.13 无形资产计价和摊销方法 2.13.1 本公司的无形资产是指为生产商品、提供劳务、出租或经营管理而持有的 没有实物形态的非货币性长期资产，主要包括土地使用权、商标使用权、专利权、专有 技术、开发成本等。无形资产按取得时的实际成本入账，在其预计使用期限内分期平均 摊销，计入各摊销期损益。 2.13.2 期末本公司对无形资产按账面价值与可收回金额孰低计量，按单项资产预 计可收回金额低于其账面价值的差额，分项提取无形资产减值准备，并计入当期损益。 2.14 长期待摊费用和摊销方法 本公司的长期待摊费用是指已经支出、但将于正常生产经营后摊销或摊销期超过一 年的各项费用，主要包括开办费、装修费、受益期超过一年的租金等。长期待摊费用除 开办费在开始生产经营当月一次计入损益外，均在各项目的预计受益期间内平均摊销， 计入各摊销期的损益。 2.15 预计负债 当与或有事项相关的义务同时符合以下条件时，本公司将其确认为预计负债：(1)该 义务是本公司承担的现时义务；(2)该义务的履行很可能导致经济利益流出本公司；(3) 本公司对该义务的金额能够可靠地计量。 2.16 借款费用 本公司的借款费用是指因借款而发生的利息、折价或溢价的摊销、外币借款汇兑差 额、以及借款手续费等辅助费用。属于发生的与固定资产购建有关的专门借款的借款费 用，在固定资产达到预定可使用状态前按规定应予以资本化的，计入固定资产成本；固 定资产达到预定可使用状态后发生的专门借款费用以及其他按规定不能予以资本化的各 种借款的借款费用，属于筹建期间的，计入长期待摊费用，并于本公司开始正常生产经 营的当月一次计入损益；属于生产经营期间的，计入财务费用，列作当期损益。 2.17 收入确认原则 2.17.1 本公司的商品销售在商品所有权上的主要风险和报酬已转移给买方，本公 司不再对该商品实施继续管理权和实际控制权，与交易相关的经济利益很可能流入企 业，并且与销售该商品相关的收入和成本能够可靠地计量时，确认营业收入的实现。 2.17.2 本公司提供的劳务在同一会计年度开始并完成的，在劳务已经提供，收到 价款或取得收取价款的证据时，确认营业收入的实现；劳务的开始和完成分属不同会计 年度的，在劳务合同的总收入、劳务的完成程度能够可靠地确定，与交易相关的价款能 够流入，已经发生的成本和为完成劳务将要发生的成本能够可靠地计量时，按完工百分 比法确认营业收入的实现；长期合同工程在合同结果已经能够合理地预见时，按结账时 已完成工程进度的百分比法确认营业收入的实现。 2.17.3 本公司让渡资产使用权取得的利息收入和使用费收入，在与交易相关的经 济利益能够流入企业，且收入的金额能够可靠地计量时，确认收入的实现。 39 上工申贝（集团）股份有限公司 2005 年年度报告 2.18 所得税的会计核算方法 本公司所得税的会计核算采用应付税款法，列于利润表上的所得税费用系以会计利 润经就税法规定的纳税调整后的应纳税所得额和当期适用之税率计算的当期应纳所得税 额。 合并报表范围内本公司之下属公司德国 DA 公司的所得税会计核算采用资产负债表债 务法，列于利润表上的所得税费用系以会计利润经就纳税永久性差异调整和当期适用之 税率计算的金额；纳税时间性差异影响的金额已列入资产负债表的递延税款项目中。 2.19 合并会计报表的编制方法 2.19.1 合并范围的确定原则：本公司根据国家财政部印发的有关文件的规定，对 拥有控制权的子公司及拥有共同控制权的合营公司，除已关停并转、宣告清理或破产、 准备近期售出而短期持有等特殊情况以及对合并而言影响微小者外，均纳入合并会计报 表范围。 2.19.2 合并会计报表的方法：本公司的合并会计报表系以母公司和纳入合并范围 的各下属公司的会计报表以及其它有关资料为依据，在对各公司之间的投资、所有重大 交易、往来及结余款项作出抵销后，合并各项目数额编制而成。少数股东所占的权益和 损益，作为单独项目列示于合并会计报表内。对合营公司的会计报表采用比例合并法合 并。 2.19.3 报告期内购买、出售子公司的处理：本公司对报告期内购买的子公司，将 其自购买日起至报告期末日止的相关收入、成本、利润纳入合并利润表；对报告期内出 售的子公司，将其自报告期初日起至出售日止的相关收入、成本、利润纳入合并利润 表。本公司对报告期内购买、出售的子公司，在期末编制合并资产负债表时，不调整合 并资产负债表的期初数。 本报告期内购买、出售子公司的情况详见本会计报表附注 5.42。 3．税（费）项 3.1 增值税 本公司按产销商品或提供劳务的增值额计缴增值税，主要商品和劳务的增值税率为 17%。 3.2 营业税 本公司按应税营业收入的 5%计缴营业税。 3.3 所得税 本公司按应纳税所得额和当期适用之税率计缴所得税，2005 年度的所得税税率为 15%（2004 年度：15%）。 3.4 城市维护建设税 本公司按当期应交流转税的 7%计缴城市维护建设税。 3.5 教育费附加 本公司按当期应交流转税的 3%计缴教育费附加。 40 上工申贝（集团）股份有限公司 2005 年年度报告 4. 控股子公司及合营企业 注册资本 投资额 序号 子公司及合营企业全称 (万元) 经营范围 (万元) 占股比例 1 上海上工进出口有限公司 3,200 机电设备、仪表仪器等进出口 2,880 90% 2 上海飞人进出口有限公司 1,000 缝纫设备及其他机电产品的进出口 800 80% 3 上海双重包缝机有限公司 1,200 生产、开发、销售包缝机 840 70% 4 上海工缝房地产发展有限公司 500 房地产开发、销售咨询、物业管理 450 90% 5 上海上原科技开发有限公司 600 新型缝制设备设计、开发 420 70% 6 上海四方同济净水有限公司 697 饮用水生产、销售及相关技术开发 638 91.5% 7 上海上工佳荣衣车有限公司 400 缝纫机及配件的销售.装配加工 220 55% 8 上海上工方天机械有限公司 300 工业缝纫机及其配件的生产和销售 180 60% 9 上海上工兴达衣车机械有限公司 310 曲折缝系列工业缝纫机的生产.销售 210 67.74% 10 上海蝴蝶进出口有限公司 1,000 各类缝制设备.机电产品等进出口 800 80% 11 上海上工松达机械有限公司 300 生产、销售缝纫设备及配件 195 65% 12 上海上工佳源机电有限公司 300 生产、销售缝纫设备及配件 201 67% 13 上海上工资产经营发展有限公司 3,000 实业投资﹑管理咨询等 2,700 90% 14 上海申贝办公机械有限公司 12,500 办公机械设备的生产和销售 11,250 90% 15 上工（欧洲）控股有限责任公司 EUR1,000 投资、资产管理以及生产、加工、 EUR1,000 100% 销售工业缝纫设备 16 上海宝灵工程设备成套有限公司 55 机电设备、五金交电、汽配等 49.5 90% 17 上海永德经济发展有限公司 200 机电设备、家用电器等销售 160 80% 18 上海富华轻机有限公司 USD100 生产销售服装机械、贸易代理 $55 55% 19 上海工业缝纫机物产总公司 460 缝制设备零件、金属材料及汽配等 460 100% 20 南通上工缝纫机有限公司 80 缝制设备及零件等 52 65% 21 无锡上工缝纫机有限公司 50 缝制设备及零件等 40 80% 22 上海上工企业管理有限公司 100 企业管理.生产销售缝制设备零部件 90 90% 上述第 1-15 家子公司已纳入合并会计报表范围；第 16-21 家子公司由于资产规模和 损益金额对本公司整体影响较小，故未纳入合并范围；第 22 家子公司因报告期内已经进 行清算，故未纳入合并会计报表范围。 与上期合并范围相比较，本期合并范围增加了一个子公司上工（欧洲）控股有限责 任公司，减少了一个子公司上海上工企业管理有限公司。 本公司下属全资子公司上工（欧洲）控股有限责任公司（下称“上工（欧洲）公 司”）本年度开始纳入合并报表范围内；由于 2005 年 6 月 30 日上工（欧洲）公司完成 了收购德国 DA 公司的各项程序，故自 2005 年 7 月 1 日后的德国 DA 公司的会计报表也相 应纳入上工（欧洲）公司的合并范围，因此导致本公司合并报表的本期相关项目数额与 上期数额比较有大幅增长。 5. 会计报表主要项目的注释 (注：以下内容所涉的金额单位为人民币元；除非特别说明，均系对合并会计报表中 主要项目的说明。) 41 上工申贝（集团）股份有限公司 2005 年年度报告 5.1 货币资金 项 目 期末数 期初数 原 币 (折合)人民币 原 币 (折合)人民币 现金： 欧 元 34,165.78 327,297.92 - - 人民币 474,382.46 294,606.52 现金小计 801,680.38 294,606.52 银行存款: 美 元 16,273,355.39 131,329,232.66 33,655,073.61 278,547,217.77 日 元 5,239,719.93 360,052.59 5,239,715.93 417,611.75 欧 元 11,356,518.22 108,792,037.59 - - 人民币 205,385,588.28 253,121,081.99 银行存款小计 445,866,911.12 532,085,911.51 其他货币资金 31,887,311.69 13,585,000.00 478,555,903.19 545,965,518.03 上述货币资金期末数中,含 1,581.5 万美元的银行存款（均系定期存单，期限截至 2006 年 12 月 22 日止）已经作为质押物，向银行取得了 11,450 万元的短期借款；含 3,000 万元的其他货币资金系存于银行的保证金，用于对银行为德国 DA 公司提供 900 万 欧元融资性保函的反担保；含 188.7 万元系出口信用证保证金。 5.2 短期投资 期末数 期初数 账面余额 跌价准备 账面净额 账面余额 跌价准备 账面净额 委托国债投资 - - - 28,300,000.00 - 28,300,000.00 基金投资 626,741.72 15,437.67 611,304.05 1,200,000.00 23,560.57 1,176,439.43 债券投资 210,620.00 210,620.00 210,620.00 - 210,620.00 - 837,361.72 15,437.67 821,924.05 29,710,620.00 23,560.57 29,687,059.43 上述短期投资期末数比期初数减少 97%，主要系期初委托国债投资已于本期收回所 致。 5.3 应收票据 期末数 期初数 银行承兑汇票 902,274.50 2,020,000.00 商业承兑汇票 25,431,806.96 557,432.58 26,334,081.46 2,577,432.58 42 上工申贝（集团）股份有限公司 2005 年年度报告 上述应收票据期末数比期初数增加 9.2 倍，主要系本公司本年度新增控股子公司上 工（欧洲）控股有限责任公司所致。 5.4 应收账款 5.4.1 合并数 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 401,753,549.98 77.84 44,368,907.33 145,288,966.98 63.39 7,243,721.52 1-2 年 46,771,576.98 9.06 20,110,605.09 40,991,440.58 17.88 6,355,389.10 2-3 年 27,926,037.35 5.41 21,378,127.29 12,897,847.19 5.63 5,186,129.37 3 年以上 39,665,129.59 7.69 39,665,129.59 30,037,858.84 13.10 29,433,108.17 合计 516,116,293.90 100.00 125,522,769.30 229,216,113.59 100.00 48,218,348.16 净额 390,593,524.60 180,997,765.43 5.4.2 母公司 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 30,788,898.22 28.35 1,539,444.92 91,254,766.39 69.99 4,562,738.33 1-2 年 38,647,438.88 35.58 18,017,613.67 22,423,822.22 17.20 2,641,865.43 2-3 年 22,843,759.94 21.03 18,244,857.18 6,256,279.90 4.80 1,865,345.72 3 年以上 16,336,937.31 15.04 16,336,937.31 10,444,600.24 8.01 9,839,849.57 合计 108,617,034.35 100.00 54,138,853.08 130,379,468.75 100.00 18,909,799.05 净额 54,478,181.27 111,469,669.70 上述应收账款合并期末数中，无持有本公司 5%(含 5%)以上表决权股份的股东单位欠 款。 上述应收账款合并期末数中，有 6,905,905.72 元的应收帐款已经作为质押标的，向 银行取得了同等数额的短期借款。 上述应收账款合并期末数比期初数增长 1.2 倍，主要系由于本年度本公司新增控股 子公司上工（欧洲）控股有限责任公司所致。 上述应收账款合并期末数中前五名金额合计为 118,305,864.95 元，占应收账款合并 期末数的 23%；应收账款母公司期末数中前五名金额合计为 33,330,595.73 元，占应收 账款母公司期末数的 31%。 43 上工申贝（集团）股份有限公司 2005 年年度报告 5.5 其他应收款 5.5.1 合并数 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 39,674,728.64 53.86 892,967.56 108,087,702.67 74.54 4,717,110.69 1-2 年 6,865,313.94 9.32 1,519,048.39 15,294,194.51 12.26 2,400,386.09 2-3 年 6,018,249.19 8.17 5,266,749.81 5,524,156.40 2.09 1,512,078.20 3 年以上 21,105,038.45 28.65 21,105,038.45 16,107,793.80 11.11 16,107,793.80 合计 73,663,330.22 100.00 28,783,804.21 145,013,847.38 100.00 24,737,368.78 净额 44,879,526.01 120,276,478.60 5.5.2 母公司 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 41,327,568.81 70.39 2,066,378.51 39,470,550.68 64.09 1,973,527.54 1-2 年 1,370,912.72 2.33 274,182.54 6,334,466.76 14.35 608,560.53 2-3 年 430,546.57 0.73 215,273.29 4,117,042.29 2.62 808,521.14 3 年以上 15,585,960.70 26.55 15,585,960.70 11,660,722.10 18.94 11,660,722.10 合计 58,714,988.80 100.00 18,141,795.04 61,582,781.83 100.00 15,051,331.31 净额 40,573,193.76 46,531,450.52 上述其他应收款合并期末数中，无持有本公司 5%(含 5%)以上表决权股份的股东单位 欠款。 上述其他应收款合并期末数中，含有对应收关联方的款项共计 3,437,066.51 元，详 见本会计报表附注 6.4。 上述其他应收款合并期末数比期初数减少 63%，主要系由于本期本公司下属子公司 上海申贝办公机械有限公司收回了上期末应收的大额股权转让款以及地块补偿款所致。 上述其他应收款合并期末数中前五名金额合计为 19,454,999.06 元，占合并其他应 收款期末数的 26%；其他应收款母公司期末数中前五名金额合计为 38,251,589.85 元， 占母公司其他应收款期末数的 65%。 44 上工申贝（集团）股份有限公司 2005 年年度报告 5.6 预付账款 账 龄 期末数 期初数 账面余额 比例(%) 账面余额 比例(%) 1 年以内 19,137,794.06 99.44 7,249,337.36 97.07 1-2 年 60,266.95 0.31 60,239.72 0.81 2-3 年 5,832.41 0.03 77,724.76 1.04 3 年以上 41,292.16 0.22 80,900.02 1.08 19,245,185.58 100.00 7,468,201.86 100.00 上述预付账款期末数中，无持本公司 5%(含 5%)以上股份的股东单位的款项。 5.7 应收补贴款 期末数 期初数 出口退税 1,242,765.36 2,573,254.21 上述期末数比期初数减少 52%，主要系本公司本期收到了上期部分出口退税款所致。 5.8 存货 期末数 期初数 项 目 账面余额 跌价准备 账面余额 跌价准备 原材料 216,388,183.65 54,445,169.97 47,182,781.34 13,010,803.46 在产品 152,430,570.87 36,292,462.87 28,549,262.84 1,460,687.31 库存商品 115,344,734.60 31,041,647.47 24,089,822.13 3,109,639.89 产成品 138,244,132.45 27,575,014.04 133,550,915.52 16,022,203.32 委托加工物资 1,766,670.58 963,236.74 2,059,344.66 149,937.19 低值易耗品 2,646,331.43 - 2,293,185.12 - 合计 626,820,623.58 150,317,531.09 237,725,311.61 33,753,271.17 净额 476,503,092.49 203,972,040.44 上述存货期末数比期初数增加 1.3 倍，主要系本公司本年度新增控股子公司上工 （欧洲）控股有限责任公司所致。 5.9 待摊费用 项 目 期末数 期初数 租金 177,310.00 140,460.00 保险费 1,118,222.62 43,258.86 其他 - 26,815.00 1,295,532.62 210,533.86 45 上工申贝（集团）股份有限公司 2005 年年度报告 上述待摊费用期末数比期初数增加 5.2 倍，主要系本公司本年度新增控股子公司上 工（欧洲）控股有限责任公司所致。 5.10 长期股权投资 5.10.1 合并数 期末数 期初数 账面余额 减值准备 账面净额 账面余额 减值准备 账面净额 股票投资 28,119,679.40 - 28,119,679.40 28,118,559.40 - 28,118,559.40 对控股、联营 及其他企业投资 83,419,714.51 1,829,025.33 81,590,689.18 96,983,044.64 1,837,414.48 95,145,630.16 合并价差 63,354,512.19 - 63,354,512.19 73,690,206.73 - 73,690,206.73 174,893,906.10 1,829,025.33 173,064,880.77 198,791,810.77 1,837,414.48 196,954,396.29 （1）股票投资 期末数 股票名称 股份类别 股数 占股比例 账面余额 减值准备 期末净额 G 永久 法人股 4,450,500 and Internet login designated by China Securities Regulatory Committee to carry the Company’s Annual Report: http://www.sse.com.cn Place for consulting the Company’s Annual Report: General Office of the Company 6. Authorized stock exchange for A shares: Shanghai Stock Exchange A shares stock-code 600843, abbreviated as SGSB Authorized stock exchange for B shares: Shanghai Stock Exchange B shares stock-code 900924, abbreviated as SGC 7. Other information: First-time register date: December 16, 1993 Register institution: Shanghai Municipal Industrial and Commercial Admin. Latest register variation date: February 7, 2005 Latest variation institution: Shanghai Municipal Industrial and Commercial Admin. Business license registration code: QGHZZ019029 Tax registration code: GSHZ31011532210544 Domestic auditor: Shanghai Zhonghua Certified Public Accountants Office address: 12F, 550 Yan’an Road (E), Shanghai International auditor: BDO International Certified Public Accountants Office address: 12F, 550 Yan’an Road (E), Shanghai Advisor on legal affairs: Shanghai Zhendan Law Office Office address: 16/F, 1688 Sichuan Road (N), Shanghai Chapter III. Financial and Business Highlights 1. Business highlights during the report year: RMB’ Total profit -289,084,643.38 Net profit -276,608,231.59 Net profit after non-recurrent account profit/loss -279,084,646.94 Principal operating profit 261,947,618.13 Other operating profit 1,234,590.63 Administrative profit -309,405,158.40 Investment income 17,022,028.38 Subsidies 3,129.00 Non-operating net balance of payment 3,295,357.64 Net cash flows generated from business operations 39,377,776.83 Net increase in cash and cash equivalents -67,409,614.84 2. The impact of IFRS adjustments on the PRC Statutory Financial Statements as following: RMB’000 Net profit Shareholders’ equity Current term Anterior term Beginning sum Ending sum As per the PRC statutory financial statements -276,608 3,768 857,321 565,890 IFRS adjustments: - Recognized loss -2,853 14 - Write off of long-term deferred expenses 2,115 -2,115 -2,115 - Elimination of unrealized gains/loss on transaction to associates 241 150 -393 -152 As restated after IFRS adjustments -277,105 1,817 854,813 565,738 3. Deducted terms of non-recurrent account profit/loss: RMB’ Non-recurrent account profit/loss Sum Profit/loss from disposal of long-term stock-right investment 25,304.71 Profit/loss from disposal of fixed assets 2,448,716.95 Government subsidies and tax refund/exemption 2,393.69 Total 2,476,415.35 4. The Company’s main accounting data and financial index in the last three years (combined statements): RMB’ Item 2005 2004 Increase/ 2003 Decrease (%) Principal operating income 1,482,659,146.38 996,246,688.32 48.82 866,798,366.22 Total profit -289,084,643.38 23,511,143.30 -1329.56 20,031,894.08 Net profit -276,608,231.59 3,767,743.02 -7,441.48 14,595,602.55 Net profit after non-recurrent -279,084,646.94 -77,943,352.45 -258.06 -49,891,385.47 account profit/loss Earning per share (diluted) -0.6162 0.0084 -7,435.71 0.0374 Earning per share (weighted) -0.6162 0.0084 -7,435.71 0.0489 Return on net assets (diluted, %) 49.3197 percentage -48.8802 0.4395 1.7104 reduction Return on net assets after 40.2285 percentage non-recurrent account profit/loss -49.32 -9.0915 reduction -5.8465 (diluted, %) Net cash flows generated from 147.39 39,377,776.83 15,917,342.47 -41,963,006.97 operating activities Net cash flows per share 147.04 generated from operating 0.0877 0.0355 -0.1075 activities EPS after non-recurrent account 0.4481 percentage -0.6217 -0.1736 -0.1278 profit/loss (diluted) reduction EPS after non-recurrent account 0.4481 percentage -0.6217 -0.1736 -0.1670 profit/loss (weighted) reduction Return on net assets (weighted, %) 38.8941 percentage -38.4537 0.4404 2.6512 reduction Return on net assets (weighted 29.6878 percentage average after non-recurrent -38.798 -9.1102 reduction -9.0626 gain/loss, %) As of Dec. 31, As of Dec. 31, 2004 Increase/ As of Dec. 31, 2003 2005 Decrease (%) Total assets 2,442,150,302.38 1,786,734,577.34 36.68 1,755,205,977.66 Shareholders’ equity (minority 565,889,885.70 857,321,016.76 -33.99 853,350,255.63 interest excluded) Net assets value per share 1.2607 1.9099 -33.99 2.1862 Adjusted net assets value per 1.1691 1.8955 -38.32 2.1612 share 5. Return on net assets and earning per share (calculated following the Circular No.9 by China Securities Regulatory Committee titled “Rules of Information Disclosure for Public Listed Companies”) RMB’ Item Return on Net Assets (%) Earning per Share (RMB) Diluted Weighted Diluted Weighted Principal operating profit 46.29 36.42 0.58 0.58 Administrative profit -54.68 -43.01 -0.69 -0.69 Net profit -48.88 -38.45 -0.62 -0.62 Net profit after non-recurrent Account -49.32 -38.80 -0.62 -0.62 profit/loss 6. Changes in shareholders’ equity: RMB’ Item Share Capital Capital Reserve Statutory Surplus Statutory Public Profits Total Reserve Fund Welfare Fund Undistributed Shareholders’ Equity Opening amount 448,886,777.00 383,614,665.68 24,620,633.62 10,717,606.50 510,825.49 857,321,016.76 Current increase 175,211.70 1,466,638.11 630,614.07 -13,668,146.39 Current decrease 85,591.66 42,795.83 277,989,278.04 277,762,984.67 Ending amount 448,886,777.00 383,789,877.38 26,001,680.07 11,305,424.74 -277,478,452.55 565,889,885.70 Reasons of these changes: 1. Capital reserve: increase for the liabilities’ restructure of the subsidiary undertakings. 2. Statutory surplus: increase for current-year appropriation and decrease for transfer-out due from reduction of consolidation of entities 3. Statutory public welfare: increase for current-year appropriation and decrease for transfer-out due from reduction of consolidation of entities 4. Undistributed profits: decrease for current-year loss. Chapter IV. Variation of Share Capital and Information about Shareholders 1. Variation of share capital: (1) Changes in share capital (as of December 31, 2005): Before current variation Increase/decrease in the report period After current variation Ration Bonus Shares Additional Other Total shares shares by issuance public reserve Sum Propor- Sum Propor- tion (%) tion (%) 1. Non-floating shares 1) Founders’ shares Including: State-owned 143,467,721 31.96 143,467,721 31.96 shares Shares owned by 23,651,804 5.27 23,651,804 5.27 domestic legal persons Shares owned by foreign legal persons Other shares 2) Collected legal 17,192,500 3.83 17,192,500 3.83 person shares 3) Shares for staff 4) Preference or other shares Total 184,312,025 41.06 184,312,025 41.06 non-floating shares 2. Floating shares 1) Floating A 20,631,002 4.60 20,631,002 4.60 shares 2) B shares 243,943,750 54.34 243,943,750 54.34 3) B shares issued abroad 4) Others Total floating 264,574,752 58.94 264,574,752 58.94 shares 3. Total equities 448,886,777 100 448,886,777 100 (2) Information about stock issuance and IPO: ① Stock issuance and IPO during the last three year Classification Issuance date Issuance price per Volume of IPO date Authorized Closing date of (dd/mm/yyyy) share (RMB) shares (dd/mm/yyyy) volume of IPO IPO B shares 07/11/2003 3.54 / US$ 0.428 100,000,000 13/05/2004 100,000,000 ② Variation of the Company’s share capital and equity structure During the report year, Shanghai Light Industry Holding (Group) Company, the Company’s No.1 shareholder, transferred gratuitously its holding 118,496,754 state-owned shares (26.40% of the Company’s total share capital) to Shanghai Pudong New Area State-owned Assets Management Office. These shares are still characterized as state-owned. ③ Information about the staff shares The Company hasn’t issued any staff shares until the end of the report year. 2. Information about shareholders: (1) End-of-year quantity of shareholders and distribution of stock right: As of December 31, 2005, the number of SGSB’s registered shareholders totaled 30,557, among whom 11,240 were A stock shareholders and 19,317 as B stock shareholders. End-of-year quantity of 29,674 shareholders, among whom 11,445 are classified as A stock shareholders and 18.229 as B stock sharehodlers shareholders. Top 10 shareholders Shareholder Shareholder Proportion Quantity of Increase Category Quantity of Quantity status (%) shares /decrease non-floating in pawn during report shares or frozen year Shanghai Pudong New State-owned 26.40 118,496,754 +118,496,754 Non-floating 118,496,754 Area State-owned Assets shareholder Management Office Shanghai International Domestic 5.27 23,651,804 Non-floating 23,651,804 Trust and Investment legal person Company shareholder Honour Force Foreign 4.61 20,712,467 Floating Investments Ltd. investor China Orient Assets State-owned 3.38 15,185,651 Non-floating 15,185,651 Management Co., Ltd. shareholder Main Force Assets Foreign 2.82 12,650,000 Floating Limited investor Mesabi Assets Limited Foreign 2.69 12,075,000 Floating investor Shanghai Industrial Foreign 2.38 10,695,000 Floating Assets Management Co., investor Ltd. (HK) China Great Wall Assets State-owned 2.18 9,785,316 Non-floating 9,785,316 Management Co., Ltd. shareholder Normal Win Assets Foreign 1.90 8,513,762 -1,392,763 Floating Limited investor Bank of China Shanghai Domestic 1.41 6,309,648 Non-floating 6,309,648 Branch legal person shareholder Top 10 floating stock shareholders Shareholder Quantity of shares Classification Honour Force Investments Ltd. 20,712,467 B shares Main Force Assets Limited 12,650,000 B shares Mesabi Assets Limited 12,075,000 B shares Shanghai Industrial Assets Management Co., Ltd. (HK) 10,695,000 B shares Normal Win Assets Limited 8,513,762 B shares Shenyin Wanguo Nominees (H.K.) Ltd. 5,188,177 B shares Weiya International Industrial Co., Ltd. 3,997,018 B shares Naito Securities Co., Ltd. 3,137,061 B shares Wang Jinling 2,200,000 B shares Hu Yunjing 1,984,672 B shares Explanation for affiliated transaction relationship or It remains unknown to the Company if there exists any affiliated transaction concerted-action relationship between the main relationship or concerted-party relationship between SGSB’s top ten floating shareholders shareholders. It remains unknown to the Company if there exists any affiliated transaction relationship between SGSB’s top ten floating shareholders and top ten shareholders. (2) Profile of the holding shareholder and real controller of the Company: ① Profile of the holding shareholder Organization: Shanghai Pudong New Area State-owned Assets Management Office Representative: Fu Hongyan Date of foundation: September, 1996 Principal business or administration activities: especially engaged in the administration of state-owned assets in Pudong New Area, entrusted by Shanghai Pudong New Area People’s Government. ② Change of the holding shareholder and real controller of the Company New holding shareholder: Shanghai Pudong New Area State-owned Assets Management Office Representative: Fu Hongyan Date of change: December 23, 2005 Designated newspapers announcing the change of the holding shareholder: and Date of announcement: December 31, 2005 According to the principle “Combining the efforts of both municipality and district governments, seizing the administration of large-scaled enterprises and liberalizing medium & small-scaled companies” set down by Shanghai Municipal CCP Committee and Government, Shanghai Light Industry Holding Group Company has transferred gratuitously all the SGSB’s stock right it held to Shanghai Pudong New Area State-owned Assets Management Office. On December 23, 2005, both sides completed the transfer register through China Securities Depository and Clearing Co., Ltd. ③ Relationship of the Company and its real controller: Shanghai Pudong New Area State-owned Assets Management Office 26.40% SGSB Group Co., Ltd. (3) Other legal-person stock shareholders who take singly more than 10% equity of the Company: At the end of the report year, none of other legal-person stock shareholders took singly more than 10% stock right of the Company. Chapter V. Information about Directors, Supervisors and Senior Managerial Team 1. Managerial team of the Company (1) Brief information about Directors, Supervisors and senior managers Payment Total from salary sharehold Name Position Sex Age Term of office Quantity of holding shares from the ers or Company relevant (RMB’) parties Beginning Closing Year- Year- Increase Variation begin end decrease cause No date date Buying Zhang Chairman 11,508 39,300 27,792 M 43 30/07/2004 20/05/2006 from open 316,200 No Min & CEO B shares B shares B shares exchange Vice-Chair Ma man & M 49 30/07/2004 20/05/2006 3,450 3,450 252,300 No Minliang CFO Executive Director Wang General M 46 20/05/2003 20/05/2006 3,968 3,968 255,200 No Lixi Manager COO Zhang Executive F 48 20/05/2003 20/05/2006 661 661 78,600 No Zongming Director Fei Indep. M 57 20/05/2003 20/05/2006 3,439 3,439 60,000 No Fangyu Director Liu Xiang Indep. M 55 20/05/2003 20/05/2006 0 0 60,000 No dong Director Liu Indep. M 60 20/05/2003 20/05/2006 0 0 60,000 No Rende Director Wang Indep. M 57 12/11/2004 20/05/2006 0 0 60,000 No Zhile Director Jia Director M 57 20/05/2003 20/05/2006 0 0 7,200 Yes Chunrong Shen Director M 40 20/05/2003 20/05/2006 0 0 7,200 Yes Yibo He Zhong Supervisory M 57 12/11/2004 20/05/2006 6,745 6,745 146,900 No yuan Chairman Zhuge Supervisor F 37 20/05/2003 20/05/2006 0 0 80,200 No Huiling Wang Jie Supervisor M 46 12/11/2004 20/05/2006 0 0 63,400 No Zhang Deputy Heng GM, Chief M 59 20/05/2003 20/05/2006 6,083 6,083 102,200 No liang Engineer Deputy Chen General M 51 24/06/2004 20/05/2006 1,984 1,984 95,200 No Mingqi Manager Deputy Chen General M 50 20/05/2003 20/05/2006 0 0 101,200 No Changbao Manager Deputy Xu General M 50 21/01/2005 20/05/2006 0 0 78,100 No Weikun Manager Xu Chief F 52 20/05/2003 20/05/2006 0 0 82,800 No Xiaohui Accountant Zhang Secretary M 55 20/05/2003 20/05/2006 3,161 3,161 82,800 No Yifeng of BOD 11,508 39,300 B shares B shares 27,792 Total - - - - - - 1,989,500 29,491 29,491 B shares A shares A shares (2) Main experience of the Directors, Supervisors and senior managers during the last 5 years: ① Zhang Min, successively held the posts of Assistant to General Manager in Shanghai Refrigerator Compressor Co., Ltd., General Manager of Shanghai Zunussi Electromeccanica Co., Ltd., Deputy Secretary of CCP Committee, General Manager, Vice Chairman and Chairman of BOD of Shanghai SMPIC Corporation. Currently as Secretary of CCP Committee, Chairman of BOD and CEO of SGSB. ② Ma Minliang, successively assumed the offices of Secretary of CCP Committee and General Manager of Shanghai Maling Acualius Co., Ltd., Secretary of CCP Committee and Deputy General Manager of Shanghai Light Industries Equipment Co., Ltd. since December 2001, Secretary of CCP Committee, Deputy General Manager and General Manager of SMPIC Corporation since July 2003. Now he assumes office as Vice Chairman of BOD and CFO of SGSB. ③ Wang Lixi, once assumed the offices of Deputy General Manager, Vice Secretary of CCP Committee and Chairman of Labour Union of the Company, Vice Chairman of Labour Union of Shanghai Light Industries Holding Group. Currently as Executive Director of BOD, General Manager and COO of SGSB. ④ Zhang Zongming, successively as CCP Secretary and Deputy Director of Shanghai Jiangwan Machinery Factory, Secretary of CCP Committee in the subsidiary undertaking Shanghai Industrial Sewing Machines General Factory, Vice Secretary of CCP Committee and Secretary of Discipline Inspection Committee of the Company. Actually he assumes office as Executive Director of BOD of SGSB. ⑤ Fei Fangyu, once appointed as Professor and Tutor of Doctor in the Institute of Finance of Shanghai University of Finance & Economics. Actually he is titled as Director Professor and Tutor of Doctor in Aetna School of Management of Shanghai Jiaotong University, and elected as Independent Director of SGSB. ⑥ Liu Xiangdong, once as Vice President of ICBC Shanghai Branch and General Director of ICBC Investment Banking Department. Now he assumes office of President of Chia Tai International Financing Co., Ltd. and Independent Director of SGSB. ⑦ Liu Rende, took the seat of CCP Committee Secretary and Vice Chief Accountant of Shanghai East Asia Certificated Public Accountants since the year 2001, and elected as Independent Director of SGSB in May 2003. ⑧ Wang Zhile, once as Docent and Associate Professor of Renmin University of China. Actually he is appointed as Director of Transnational Corporations Studies Center of the Research Institute of the Ministry of Commerce. Besides the position of Independent Director of SGSB, he also takes the positions of Vice Chairman of China Group Companies Promotion Association, Vice Chairman of Foreign Investment Committee of IAC (Investment Association of China), Invited Researcher of China Society of Economic Reform and Part-time Professor of the Multinational Companies Study Center of Nankai University. ⑨ Jia Chunrong, once as Deputy General Manager of Shangtou Investment Management Co., Ltd. Now he assumes office of General Manager and Chairman of BOD of Shangtou Investment Management Co., Ltd. and Director of SGSB. ⑩ Shen Yibo, once as Vice Director of General Admin. Dept., Vice Director and Director of Creditor Rights Dept. of China Great Wall Assets Management Corporation Shanghai Branch. Now he has been appointed as Director of Assets Operation No.1 Division of the same company and Director of SGSB. □ He Zhongyuan, once as Vice Chairman of BOD of the Company, and currently elected as Chairman of Board of Supervisors of SGSB and Director of Shanghai Forever Co., Ltd. □ Zhuge Huiling, once appointed as Secretary of Communist Youth League, Vice Chairwoman and Chairwoman of the Labour Union of the Company. Now she is elected as Vice Secretary of CCP Committee and Supervisor of SGSB. □ Wang Jie, once as Vice Director of Shanghai Xinhu Glass Factory, Vice Director of Financing Dept. of Shanghai SMPIC Corporation and Vice Director of Financing & Audit Dept. of the Company. Currently he is designated as Vice Director of Audit Department and Supervisor of the Company. □ Zhang Hengliang, seats Deputy General Manager and Chief Engineer of SGSB since the year 2001. □ Chen Mingqi, once as Vice Director of Economic Operation Dept. of Shanghai Light Industry Holding (Group) Company and member of BOD of the Company. Now he is designated as Deputy General Manager of SGSB. □ Chen Changbao, once designated as Vice Secretary of CCP Committee and Secretary of Discipline Committee of the Company. Now he takes the seat of Deputy General Manager of the Company. □ Xu Weikun, once as Chief and Vice Director of Labor Security Dept. of Shanghai Light Industry Holding Company, Deputy General Manager of Shanghai SMPIC Corporation, and currently designated as Deputy General Manager of the Company. □ Xu Xiaohui, once as Vice Director of Assets Management Office of the Company, Head of Financing Dept. of the Company, and currently as Director of Financing Department of SGSB. □ Zhang Yifeng, once as Director of Assets Management Office and Head of BOD General Office. Currently he assumes office of Secretary to BOD of SGSB. 2. Concurrent posts of above-mentioned senior officials in shareholders and other non-shareholder units: Name Shareholder Position Term of Office Subsidy paid Beginning date Closing date or not Jia Chunrong Shanghai Shangtou Investment General Manager 01/08/2003 Yes Management Co. Shen Yibo China Great Wall Assets Director, Assets Operation 01/02/2001 Yes Management Co. Shanghai Branch No1. Division Name Unit Concurrent Post Beginning date Closing date of Compensation and of the post the post subsidies paid or not Shanghai No.1 Pharmaceutics Independent Yes Co., Ltd. Director Liu Xiangdong SINOPEC Shanghai Independent No Petrochemical Co., Ltd. Supervisor Dongfeng Electronic Technology Independent Yes Co., Ltd. Director Shanghai Sanmao Enterprise Independent Yes Group Co., Ltd. Director Fei Fangyu China Textile Machinery Co., Independent Yes Ltd. Director Jinbei Automotive Co., Ltd. Independent Yes Director China National Offshore Oil Senior Consultant Yes Corporation Wang Zhile Beijing New Century Transnational Companies Studies Center Shanghai Highly Group Co., Ltd. Director No Shanghai Lian Hua Fiber Co., Director No Ltd. Jia Chunrong Shanghai Shenshi Auto. Director No Commercial City Co. Beijing Southern China Mansion Director No Co., Ltd. He Zhongyuan Shanghai Forever Co., Ltd. Director No 3. Annual compensation of the managerial personnel (1) Decision-making procedures for compensation of Directors, Supervisors and senior Managers: the compensation of Independent Directors is decided by the General Meeting of Shareholders and the compensation of other senior Directors and executives has been approved by the Compensation & Appraisal Committee of the Company. (2) The wage and welfare system for senior managers is a combination of the basic salary, the bonus and the premium directly linked with target-oriented performance appraisal in business operations. (3) Directors who don’t get compensation from the Company: Directors and Supervisors who don’t get payment from the Company Paid by shareholder or other related units Jia Chunrong Yes Shen Yibo Yes 4. Position variation and rotation of Directors, Supervisors and Managers during the report year During the report year, the 17th meeting of the Fourth BOD considered and approved the nomination of the General Manager Wang Lixi, to designate Mr. Xu Weikun as Deputy General Manager of the Company. 5. Staff profile of the Company At the end of 2005, 3,213 employees were listed in SGSB’s employment register, among whom, 2,228 persons are actually working at their positions. Besides, the Company takes a total number of 5,272 retired persons, whose pension and medical costs are covered by social pension security system. The profession and education-level structure of the staff shows as following: (1) Profession structure of the staff Profession division Number of employees Manufacture 1,377 Sales 152 Engineering 149 Financing 82 Others 468 (2) Education structure of the staff Education level Number of employees Postgraduate & bachelor 91 Junior college 304 Technical & senior high school 230 Below senior high school 1,603 Chapter VI. Administration Structure of the Company 1. Overview of the Company’s actual administrative structure SGSB Co., Ltd. optimizes the administrative structure and regularizes its business operations in the light of the principles stipulated in , , and related norms and regulations. During the report year, the Company has settled amendments and supplements respectively to its , , and , in line with the regulations set in by China Securities Regulatory Commission. These measures make it possible for the Company to strengthen the normalization and standardization of its operations. (1) About shareholders and General Meetings of Shareholders: The Company can ensure the equal interests of all the shareholders, especially the medium & minor ones. Through telephone, facsimile, email, website and organizing irregular activities, the Company has established a bridge for effective communication with the shareholders. The Company convenes all its General Meetings of Shareholders in line with the requirements of , and chooses appropriate venue and time for the General Meetings so that as more as possible shareholders could attend the meetings and exercise their right to vote. (2) Relationship between the holding shareholder and the Company: The holding shareholder regularizes conscientiously its conducts and doesn’t intervene directly or indirectly in the decisions and operations of the Company. SGSB Co., Ltd. is independent and separated from the holding shareholder in terms of personnel, assets, financing, organization and business. The Company’s Board of Directors, Board of Supervisors, and other internal units can play independently their functions. (3) About Directors and the Board of Directors: The number of Directors and Independent Directors in the BOD accords with the related laws and regulations. All the Directors stand diligent and responsible on attending the sessions of BOD and General Meetings of Shareholders, express their professional opinions on the Company’s high-level personnel rotation, mutual-guaranty cases and affiliated transactions, and have safeguarded the overall interests of the Company and the medium and minor shareholders. The affiliated specialized committees to the BOD, respectively in charge of strategy-making, audit, nomination, compensation and personnel valuation, have elaborated their own detailed implementation rules and exercise their functions in line. (4) About the Supervisors and the Board of Supervisors: The number of Supervisors and the structure of the Board of Supervisors accord with the related laws and regulations. All the Supervisors run consciously their duties. By supervising the significant affairs of the Company and the legitimacy and regularity of which the Directors, Managers and other senior executives carry out their responsibilities, analysing regularly the business and financing activities and putting forward constructive proposals, the Board of Supervisors soundly safeguard the legitimate interests of the Company and its shareholders. (5) About the performance appraisal, incentive and monitoring mechanism: The procedures through which the Company engages its executives accord with the related laws, regulations and the . The senior executives regularly report their work to the Board of Directors, to the Congress of Employees, and put themselves under the appraisal of the latter. The Company elaborated mechanism of performance appraisal and incentives for executives of all levels, with purpose of pushing them to play their initiative and elevate their management profile. (6) About interested parties: For the sustainable, healthy and stable development of the Company, SGSB Group Co., Ltd. pays much attention to keep its social responsibilities, soundly respects and protects the legitimate rights and interests of the banks and creditors, employees, consumers, suppliers, community and other interested parties. (7) About information disclosure and transparency: The Company appoints the Secretary to BOD to disclose the information, receive the shareholders and answer their consultations. The Company guarantees the authenticity, accuracy, integrity and on-time of information disclosure in line with the , and , and ensures that all the shareholders have equal opportunity to obtain related information. In 2006, the Company will amend related systems according to the newly revised , , and other regulations, so as to optimize the administrative structure and safeguard practically the overall interests of all the shareholders. 2. Fulfillment of duties of Independent Directors (1) Attendance records of Independent Directors in BOD meetings: Name Scheduled meetings Personal attendances Entrusted attendances Absences Note Liu Xiangdong 8 8 Fei Fangyu 8 8 Liu Rende 8 8 Wang Zhile 8 6 1 1 During the report year, under the orientation of , the Independent Directors fulfill their duties with honesty and diligence, inspect zealously the business operations of the Company, express independent opinions on the significant events such as employment of fund of the holding shareholder and other relative parties, and the specific explications on external guaranty, impulse the scientific and objective characters of decision-making and protect the overall interests of the Company and legitimate rights of the medium and minor shareholders. (2) Independent Directors’ objection against significant events of the Company: During the report term, the Independent Directors haven’t expressed any objection against the proposals launched by the BOD or other non-BOD units. 3. Structural independence of the Company (1) In respect to its business, SGSB Co., Ltd. runs independently the productive, auxiliary manufacture, accessories, purchasing and sales chains. The business structure of the Company is integrated, independent and without any conflict or repetition to that of the holding shareholder. (2) Concerning personnel and compensation administration, the Company runs independent labor & personnel management structure and wage system. All the senior managers get salary from the Company, and none of them holds administrative positions in the holding shareholder (or the real controller). (3) In respect to the assets, the Company owns independently and exclusively all the assets, and the holding shareholder doesn’t occupy any assets of the Company. (4) Regarding institutional system, the Company has established an organic structure totally independent from its holding shareholder and owns independent office location. (5) Besides, the Company has independent accounting sector, and has established accounting and financing administration system as well. SGSB Co., Ltd. has also opened its own banking account and pay taxes in conformity with legal provisions. The Company makes independent financing decisions and allocates its financial resources according to the necessity of business. 4. Appraisal and incentive system for senior executives The Company has elaborated incentive policies for senior executives. The Company’s HR department regularly examines and appraises the performance of all high-level managers, and the compensation & examination committee realizes annual comprehensive appraisal and determines the compensation of every manager at year-end. Proceeding from actual conditions, SGSB Co., Ltd. also plans to optimize the compensation and appraisal system, and revise the incentive system for senior executives. Chapter VII. Brief Information about Shareholders’ General Meetings 2005 Annual General Meeting of Shareholders On June 9, 2005, the Company convened its 2004 Annual General Meeting of Shareholders. The resolution announcement was carried in and dated June 10, 2005. Chapter VIII. Report by the Board of Directors 1. Management discussion and analysis Business fields of the Company: The Company is mainly engaged in production and sale of sewing machines (the main products’ line consist of lockstitch, over-lock, interlock, button attaching, double-needle, multi-needle, eyelet buttonholing, zipper-lock and embroidery sewing machines), special-purposed sewing equipments and components. Retrospect and analysis of the overall business operation during the report period: (1) The overall business performance of the Company during the report year During the report period, the Company realized a principal operating income of RMB 1,482,659,100, an increase of 48.82%; a principal operating profit of RMB 261,947,600, an increase of 134.33%; and a net profit of RMB –276,608,200, 7,441.48% less than that of the anterior period. The sources and structure of profit have changed a lot due to the factors that, during the report year, the Company became the holding shareholder of Durkopp Adler AG after the acquisition, and adjusted the sewing machinery manufacture bases in the country. During 2005, the Company realized an export amounting to $64,813,000 dollars, an increase of 28.7% (DA’s contribution exclusive). 1) Realizing internal integrity and establishing business framework for the Group Oriented by the target of business intensification, the Company has defined its new business structure, which is to make sewing machinery its core business, push forward the strategy of Double-Trademarks in Europe and Asia, and realize the simultaneous development of industrial sewing machinery, household sewing machines and spare parts. Besides, the Company hopes that the investment earning in the sectors of office equipments, video equipments, new materials and international trade could offer effective support to its sustainable development. 2) Accomplishing the overseas M&A and attempting transnational business The Company elaborated its acquisition proposal in accordance with related German laws and regulations, and held 89.932% equity of Durkopp Adler AG through its wholly-owned subsidiary Shanggong (Europe) Holding Co., Ltd. After the transaction, the Company took a series of measures to maintain the stability of DA’s management team, make clear requirements for DA’s business highlights such as inventory control, cash turnover speed-up, cost control and loss reduction, and fulfill systematic inspection and appraisal through the Board of Supervisors. In 2005, through the endeavors of Chinese and Germany staff, Durkopp Adler AG realized the target turning loss into profits. 3) Making comprehensive use of resources and wining over concerted effects Parallel to the march towards overseas market, the Company also promoted steadily the work to absorb and utilize foreign resources. With purpose of using the technology and trademark resources of Durkopp Adler AG to elevate the quality, diversify the production, expand the market share and enhance the core competitivity in the sewing machinery sector, the Company is preparing to establish a joint-venture sales company and a joint-venture manufacture unit. The joint-venture sales company is to be developed as the unique distribution center of DA products in Asia, while the joint-venture manufacture unit will turn into an important base combining the high-grade trademark and technology of DA with low-cost local production. Shanggong GC8900 high-speed lockstitch sewing machines, manufactured under supervision of DA, is in trial sale. The OEM DA7700 high-speed overlock sewing machines, the technology-imported DA267 heavy-duty lockstitch sewing machines, and the co-developed DA281 high-speed micro-oil lubrication lockstitch sewing machines, are respectively under batch trial and model trial. 4) Promoting adjustment with development and achieving development by adjustment While making high-rank sewing machinery production its core business, the Company actively advances the structural adjustment and reform under the strategy of “stressing core business, quitting from sidelines, adjusting in proper order, and taking efficiency as priority”. The Company adopts OEM in the production of low-grade sewing machines, takes low-grade production equipments as investment in the cooperation with private enterprises, disperses surplus human resources, and manages the non-core business subsidiary and associated undertakings by marketing operations, so as to assure the full utilization of its resources. (2) Composition of principal operations, by sectors and products RMB’000 Sector Principal operating income Proportion (%) Principal operating profit Proportion (%) Sewing machines and 1,109,150 74.80 242,040 92.06 material conveyers International trade 207,750 14.01 8,720 3.32 Office appliances 100,570 6.78 4,600 1.75 Film business 50,590 3.41 3,310 1.26 Others 14,600 0.98 4,230 1.61 Total 1,482,660 100 262,900 100 (3) Composition of principal operations, by regions RMB’000 Region Principal operating income Proportion (%) Principal operating profit Proportion (%) Domestic 277,180 18.69 5,260 2.00 Overseas 1,205,480 81.31 257,640 98.00 (4) Main products that contribute singly 10% or more to the principal operating income or principal operating profit: RMB’000 Sector/product Principal Principal Profit Profit increase Cost increase Profit margin operating operating cost margin /decrease (%) /decrease (%) increase/decrease income (%) percentage points Sewing machinery, 1,109,150 867,110 21.82 136.59 108.18 11.8 percentages spare parts and increase material conveyers International trade 207,750 199,030 4.20 1.25 -3.00 1.20 percentage increase (5) The production/sales quantity and the market share of main products During the report period, the Company manufactured and sold different types of sewing machine amounting respectively to 251,335 and 254,731 units, among which, the production and sale volume of industrial sewing machines numbered 62,465 and 68,329 units (including the contribution of Durkopp Adler AG), and the household units amounted respectively to 188,870 and 186,402 units. In 2005, the market share of the Company’s common sewing machines was less than 3%, but the high-rank products of Durkopp Adler AG are overwhelmingly dominant in the market. (6) Main suppliers and customers RMB’000 Purchase from top 5 suppliers 180,518.4 Proportion in total purchase volume 16.29% Sale to top 5 customers 136,780 Proportion in total sales volume 9% (7) Explanation on the financial status during the report year 1) Significant changes of assets’ composition during the report year At the end of the report year, the assets of the Company totaled RMB 2,442,150,000, an increase of RMB 655,420,000 and 36.68%; the total liabilities amounted to RMB 1,805,550,000, an increase of RMB 928,250,000 and 105.81%; and the shareholders’ equity amounted to RMB 565,890,000, a decrease of RMB 291,420,000 and 33.99%. The significant changes of assets’ composition mainly occurred in the following items: - short-term investment: a decrease of 97.23%, mainly due to the current-term appropriation from the holding shareholder Shanghai Pudong New Area State-owned Assets Management Office covering the entrusted investment in national bonds; - bills receivable: an increase of 921.72%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - accounts receivable: an increase of 115.80%, mainly attributed to the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - other receivables: a decrease of 62.69%, mainly due to the current-term reception of the anterior-period receivable stock-right transfer payment and land-right compensatory payment by SMPIC Corporation; - prepayments: an increase of 157.70%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - subsidy receivable: a decrease of 51.70%, mainly attributed to the partial reception of export rebate in current year; - inventories: an increase of 133.61%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - deferred expenses: an increase of 515.36%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - fixed assets (net): an increase of 73.21%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - construction in progress: a decrease of 40.5%, mainly due to the transfer-in of the concluded construction to fixed assets; - long-term deferred expenses: a decrease of 97.50%, mainly due to the current-year refund of expenses for retired cadres; - deferred taxation, debit: an increase of 100%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - advanced receipts: an increase of 181.70%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - welfare payable: an increase of 6561.99%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - tax payable: a decrease of 132.89%, mainly attributed to the decrease of income tax payable of non-operating profit; - other payables: an increase of 142.62%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - long-term payable: an increase of 469.71 times, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - deferred taxation, credit: an increase of 204.36 times, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.. 2) Explanation on the financial highlights’ significant changes RMB’ Item Year 2005 Year 2004 Increase/decrease Increase/ decrease (%) Principal operating profit 261,947,618.13 111,787,205.82 150,160,412.31 134.33 Operating expense 148,862,316.29 36,496,343.49 112,365,972.80 307.88 Administrative expenses 368,747,264.65 157,151,050.82 211,596,213.83 134.65 Financial expenses 54,977,786.22 27,658,171.10 27,319,615.12 98.78 Subsidies 3,129.00 1,748,184.00 -1,745,055.00 -99.82 Income tax -10,598,554.71 13,029,329.67 -23,627,884.38 -181.34 Net profit -276,608,231.59 3,767,743.02 -280,375,974.61 -7441.48 - principal operating profit: an increase of 134.33%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd., whose rate of gross margin reached 34.96%; - operating expenses: an increase of 307.88%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - administrative expenses: an increase of 134.65%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - financial expenses: an increase of 98.78%, mainly caused by the newly established subsidiary Shanggong (Europe) Holding Co., Ltd.; - subsidies: an increase of 99.82%, mainly due to the decrease of export rebate and subsidies from the government; - net profit: a decrease of 7441.48%, mainly due to the following factors: A. the adoption of Shanggong (Europe) Holding Co., Ltd. into the consolidated statements contributed an increase of RMB 4,610,000; B. the equity acquisition of Durkopp Adler AG and the changes of the market’s demands for its products makes the Company adjust significantly its production structure, and affects the current-term profit/loss as following: a. the fluctuation of sales volume and price of some products made the gross margin of the parent company drop down, and resulted in the decrease of the principal operating profit by RMB 29,970,000; b. the disposal of overstocking and sluggish materials affected the profit by RMB 29,970,000; c. the provision of assets devaluation increased by RMB 67,770,000, for adjusting the production structure, accelerating the disposal of stocking products and pressing the payment of accounts receivable; C. the production adjustment also caused a personnel adjustment, and resulted in an increase of compensation for discharged staff by RMB 43,100,000; D. the equity acquisition of Durkopp Adler AG increased the cost by RMB 12,500,000; E. the fluctuation of USD exchange rate affected the profit by RMB 8,900,000; F. the income from equity transfer and investment in bonds decreased by RMB 64,270,000; G. the financial subsidies decreased by RMB 1,740,000; H. the compensation for land decreased by RMB 29,480,000; I. the non-operating cost decreased and resulted in a charge back of provision for assets devaluation of RMB 6,280,000. 3) Explanation on the composition of cash flow, significant changes and significant difference from net profit during the report year RMB’ Item Year 2005 Year 2004 Increase Increase /decrease /decrease (%) Net cash flow from operating activities 39,377,776.83 15,917,342.47 23,460,434.36 147.39 Net cash flow from investing activities 105,870,901.14 5,823,903.39 100,046,997.75 1,717.87 Net cash flow from financing activities -208,991,651.68 -110,934,430.64 -98,057,221.04 -88.39 Influence of fluctuation of exchange rate -3,666,641.13 -451,581.84 -3,215,059.29 -711.95 Net increase in cash and cash equivalents -67,409,614.84 -89,644,766.62 22,235,151.78 24.80 - the increase in net cash flow from operating activities was mainly caused by the gross-margin enhancement of principal operation of the subsidiary Shanggong (Europe) Holding Co., Ltd.; - the increase in net cash flow from investing activities was mainly due to that the subsidiary SMPIC Corporation received the stock-right transfer payment and land-right compensatory payment totaling RMB 49 million, and the Company itself received the appropriation of RMB 28.30 million from the holding shareholder Shanghai Pudong New Area State-owned Assets Management Office covering the entrusted investment in national bonds; - the decrease in net cash flow from financing activities attributed mainly to the facts that Shanggong (Europe) Holding Co., Ltd. paid RMB 90.84 million for the borrowings of the original shareholders of Durkopp Adler AG, and the Company decreased the interest payment by a reduction of bank loans valued RMB 81 million. (8) Utilization of equipments, acquisition of orders, sales and overstock of products, flow of chief technical staff and other important information about the Company’s business During the report year, the main production equipments ran soundly without any significant equipment breakdown or safety accident. The good-condition rate and full-function record accorded with the evaluation standards. The Company linked its production with orders and kept close contacts with the customers by organizing exchange fairs. The Company also maintains certain inventories considering its broad products’ variety and long processing period. By acquiring the advanced technology of Durkopp Adler AG, the Company is transforming its production structure to middling and high ranks and speeding the disposition of inventories. The core technical staff, particularly the technicians of Durkopp Adler AG in key positions, keeps on their positions and fulfills diligently their duties. (9) Business information and analysis of the main subsidiary and associate undertakings 1) Business information of the main subsidiary and associate undertakings RMB’000 Company Classification Main products Register capital Assets’ scale Net profits /services Shanghai Fuji Xerox Limited Manufacturer Production and sale 182,879 736,667 75,943 of copy machines Shanghai Xinhu Glass Factory Manufacturer Production and sale 18,205 151,288 1,470 of glass articles Shanghai Fuhua Light Trader Sale of sewing 5,760 8,454 -269 Industrial Machinery Co., Ltd. machines Shanghai Industrial Sewing Trader Sale of sewing 4,650 4,215 -345 Machines Materials Trading machines Co., Ltd. Shanghai Yongde Economic Trader Sale of electrical/ 2,000 3,461 -473 Development Co., Ltd. mechanical products and spare parts 2) Single subsidiary or associate company influences more than 10% of the Company’s net profits. RMB’000 Company Principal operating income Principal operating profit Net profit Shanghai Fuji Xerox Limited 2,330,780 1,711,450 75,940 2. Prospects for the Company’s future development (1) Development trend of the industrial sewing machinery sector, market competition situation and their possible impacts on the Company The sector of sewing machinery (sewing machines as core products, and composed of specialized machines and instruments of tailoring, binding, ironing, garment-suspending system and supplementary devices) is the industrial sector supporting the garment, leather, hat/shoes, decoration and furniture industries, important for enhancing the quality and comfort of people’s daily life, and of fair importance in the national economy. Quoting the information of China Sewing Machinery Association, there are around 6,000 types of sewing machines in the world, and China can produce totally more than 1,500 of them, 600-700 regular types included. With the appearance of high technology, the development of sewing machinery has bright opportunities and prospects. In the contexts of the international market, the manufacture of sewing machines is concentrated in Japan, Germany, South Korea and Taiwan. In recent years, China is emerging as new production center. At the end of 2004, there were 670 manufacturers of sewing machines in China, more than 80% of the worldwide number, producing more than 50% of the world’s output, which amounted to 21,000,000-22,000,000 units. Among the Chinese manufacturers, the joint-venture or exclusive foreign invested companies numbered more than 80, and they took an important position in the industry for their output, number of types, technology and export volume. In 2004, China exported more than 11 million sewing machines (around 9 million household units and more than 2,200,000 industrial units), and the main destinations, in order, were Southeastern Asia, South America, Europe, North America and Africa. Meanwhile, China imported about 350,000 units (120,000 household and 230,000 industrial), and the main origins were Japan, South Korea, Taiwan, Germany, Italy and United States. In recent year, the production of ordinary household sewing machines is gently descending in China, while the production of multi-purpose household units, mostly for export, holds 50% of the worldwide output. With the rapid export growth of garments, textile, leather and shoes, the production of medium and low grade industrial sewing machines is also growing considerably. The future trend of international sewing machinery lies in the elevation and expansion of high & new technology (digital, computerized, sensor system, artificial intelligence, laser and remote sensing, etc.). It is estimated that, during the Eleventh Five-Year-Plan (2006-2010), the production of industrial sewing machines will meet a sharp growth, the mechanical-electrical integrated products an increase of 30%-40%, and the market demand for specialized sewing machines will expand. These characteristics require that the manufacturers adjusted the production structure, elevate the grade of products, and transform itself from quantity-growth style to be oriented by benefit, quality and diversity. (2) Opportunities, challenges, development strategy and business planning for the Company 1) Opportunities a. China’s Eleventh Five-Year-Plan for sewing machinery sector clearly points out that, the country’s sewing machinery industry should take the road of industrialization oriented by “high S&T, high earning, low energy consumption, low environment pollution, and fully availed HR resources”, and should rank among the strong sewing machinery economies. b. Shanghai holds a sound basis and unique advantage in accelerating paces to build a solid base of advanced manufacture, to develop the equipment manufacture, and to enhance the profile of traditional industries using H&N and advanced technology. c. The Company has completed all the legal procedures for acquiring Durkopp Adler AG, prestigious sewing machinery manufacturer of the world, and has obtained simultaneously the top-grade manufacturing technology of industrial sewing machinery, first-class trademark and the international market of high-level products. All these facts will help much to elevate the technological level of the country’s sewing machinery manufacture. d. The ambition of the central government, to development the capital market and to enhance the profile of listed companies, makes the Company to meet an unprecedented sound environment and broad space to realize its stock-right restructure, improve the assets’ quality, and promote its virtuous development. 2) Challenges a. The competition in sewing machinery manufacture is very tight. The price of core products is descending and the profit margin is limited. b. The price of raw materials for manufacturing sewing machines, such as iron, steel and energy, appears to be growing. The heavy pressure from the numerous employees also keeps the cost and expenses on a high level. c. The realization of overseas project and the strategic adjustment of domestic production bases make the Company seriously short of qualified human recourses. d. The revaluation of Renminbi is a negative factor for the Company’s products competing in the international market. 3) Development strategy After acquiring Durkopp Adler AG, the Company defines sewing machinery manufacture as its core business. Meanwhile, the Company tries to achieve a simultaneous development of industrial sewing machines, household units and spare parts, with the profit contribution from its investment in office equipments, video instruments, new materials and trading. With purpose of making itself a leading sewing machinery manufacturer with top-rank technology and trademark, the Company will integrate the business in Asia and Europe, elevate the ability of independent innovation and development, and pave a way towards the success of transnational operation. 4) Development strategy by sectors a. Sewing machines manufacture as core business Actually, the core business is divided in two parts: the domestic base consists of industrial sewing machines branch, household sewing machines branch and spare parts branch, and the overseas base consists of Durkopp Adler AG and its sub-companies, which mainly produces and sells middle and high level sewing machines. - Striving for coordinated effect and leading position in the sector of industrial sewing machinery The Company, on basis of international vision and strategic thinking, should enhance the profile of the trademarks DA and Shanggong in home and abroad, through providing the market products high qualified, diversified and capable of meeting the multi-level demands of the clients, and keep itself among the worldwide top three in contexts of sales volume. The Company will further enhance the production, sales and business performance of the high-rank products of Durkopp Adler AG, establish a first-class joint-venture production and sales company, improve the quality of middle & high rank sewing machines through importing, digesting and absorbing the advanced technology of DA. Besides, the Company will look for system innovation, by diversifying, privatizing, transferring the low-grade products to low-cost regions, or OEM, so as to make the low-grade products competitive in the market. - Striving for upgrade and development in the sector of household sewing machines The Company will improve the profile of household sewing machines through technological innovation and explore new business by new products, new technology and new consumption idea. The Company plans to have multi-purpose household sewing machines and computer embroider machines as its breakthrough direction, and reshape the Butterfly trademark by strengthening the cooperation with foreign partners. It will also make Shanggong (Europe) Holding Co., Ltd. a platform to explore the European market, and at the same time, restore the prestige of Shanghai household sewing machines manufacturers by cultivating a domestic market for high-grade household units. - Striving for benefits and development of high-grade products in the sector of spare parts The Company should follow the principle of “various types, small lots, high precision and quick delivery” and develop independently its products according to the marketing demands. With purpose of maximizing the benefits and lowering the cost of DA, the Company will develop the production of spare parts for DA and Shanggong’s high-rank products, and supply qualified parts to Durkopp Adler AG. b. Modern office equipments, digital video instruments and other sectors The Company should adopt an overall vision and deepen the reform of investment entity diversification to maximize the benefits. - Modern office equipments, try to enhance the earning level by strengthening joint-ventured relation and cooperation with foreign entities. - Video instruments, availing outside resources On basis of maintaining the existing market share of traditional sensitive materials, the Company will actively create conditions for enlarging cooperation with foreign companies and explore new markets for digital sensitive materials. With utilization of existing equipments, the Company wants to change the feeble structure of products by developing digital products independently and with cooperation of foreign enterprises. - International trade, advancing to abroad The Company will avail its overseas platform to broaden international trade channels and to improve its share in the global market. - Other sectors, supporting overall business For the non-core business and small non-profitable companies, the Company will adopt the principle of “close-cease-merger-transfer-retirement, and close as priority” and the strategy of “transformation, restructure and quit out”. It will also try to activate the inventory assets and improve the overall operation profile. (3) Business planning for the coming year In 2006, the Company will attach priority to the following missions with purpose of strengthening the business integration of its European and Asian branches and achieving coordinated effects: 1) Take more measures to stabilize the production and sale of Durkopp Adler AG. The Company will strengthen the construction of global sales network for DA’s products. On basis of consolidating the European and American markets, SGSB will develop more products for Asian market, and elevate the sales volume of DA. 2) Seizing the construction of joint-venture production and sales units in China and making them backing and platform for the core business In current year, the Company will realize batch production of GC8900, DA7700 DA267 and DA281, reorganize the sales resources in Asian market, and achieve the cost control and benefit increase based on the sales growth. 3) Restructure the existing business and realize a fruitful adjustment and reform The branch company producing household units will strengthen the R&D of multi-purpose computerized sewing machines and enlarge the batch production of computerized embroider sewing machines with premise of stable quality. The branch company for industrial sewing machines, which has been in deficit for successive years, needs a thorough reform, to transfer the production of popular products to the joint-venture entity, and move the production of low-grade products to low-cost regions or even privatize the department. The spare parts branch company will pay priority to produce accessories of high precision for Durkopp Adler AG and enlarge its sales volume with characteristic and high-quality products. SMPIC Co. should realistically transform the production form according to the different demands of office equipments, sensitive materials, electric wire bind and other sectors, and try best to control the cost and increase the profits. 4) Enforce the centralized management and ensure the concentration of effective resources in the core business All the subsidiaries should implement strictly the budget and keep the enterprises under controllable situation. The unprofitable small subsidiary companies should be transformed and restructured in order, so as to control the bleeding points of the Company. (4) Funds demanded for development strategies, the utilization planning, and the sources The funds demanded for the resources’ integration in Europe and Asia in 2006 will be partly resolved by using capitals raised from the additional issuance of B shares to the designated investors in previous years, and partly generated from the independent collection or bank loans. Meanwhile, the funds needed for reorganizing other existing business will be resolved by cashing the inventory assets. (5) Negative factors and risks affecting the realization of the development strategies and business targets, and the countermoves or measures been adopted or to be adopted 1) Business risks In the sector of sewing machines, the foreign companies, with advantages of technology and funds, are more competitive in the market of high-rank products, and the domestic competitors are mainly fighting on cost and price. The Company is facing the tight competition with its counterparts and the business performance is stepping down year by year. The Company has been holding shareholder of Durkopp Adler AG through international acquisition, and owns internationalized trademark, first-class technology and global sales network. By importing advanced technology and management from DA, the Company can elevate its competitivity and put itself among the first-rank manufacturers in the world. 2) Resource integration risks In most failed cases of international M&A, a bad integration of resources is the chief culprit. After the M&A, achieving an effective integration or not upon the target company can influence the estimated large-scale production and the coordinated effects. The Company is taking a series of measures for the integration, such as promoting the communication, understanding and trust between both-sides management teams; enforcing exchange of visits, E.C. and technology; promoting cooperation on trade, quality-control, spare parts setting and development of new products; restructuring the marketing and sales departments of Durkopp Adler AG; building joint-venture production and trade units in Shanghai with purpose of cutting down the cost and elevating the profit margin; etc. At the same time, the Company is availing DA’s advanced technology to construct high-rank sewing machines project, enhance the quality and technology of the existing products, and promote the business profile. 3) Overseas investment risks There exist many differences of culture, social system and national conditions between China and Germany. It’s a new challenge for the Company how to strengthen the control and administration of Durkopp Adler AG, to maintain the personnel stability of management, technology and production, to stimulate their initiative, and to coordinate the relationship with Durkopp Adler AG. The Company has amended the of Durkopp Adler AG, reorganized the Board of Supervisors, and ensured the effective control over the significant decisions of its German subsidiary. Through a scientifically structured evaluation and incentive system, the Company tries to balance the duties, rights and benefits of the management operators. Furthermore, the Company wants to build common-shared values with DA by enforcing exchange of personnel and information. 4) Cost risks Both the production and sales activities of Durkopp Adler AG are realized abroad, and the export business contributes a high proportion for the sales volume of the Company. These facts make the Company under risk of foreign exchange loss. The Company will designate the concerned department to keep attention on the risks and take some necessary measures such as using foreign exchange financial instruments, to avoid and reduce the risks in project investment and business operations. 3. Investments by the Company during the report period (1) Use of the raised funds RMB’000 Total raised funds 322,640 Current-year utilized amount Accumulated utilized amount Project Any Planned Devoted Accumu- Rate of Current Comple- As Income as Significant variation investment amount lated progress year tion date planned anticipated variation or not amount in amount (%) earning schedule or not of (partial current or not feasibility variation year or not included) Acquisition of No 200,960 142,015 150,603 4,616.3 July 1, Yes Yes No Durkopp Adler AG 2005 Production project No 195,000 11,349 11,349 Yes / / of computerized special-purposed industrial sewing machines availing technology of DA Total / 395,960 153,364 161,952 Explanation for not getting anticipated progress or income / Reasons and procedures for variation / The Company has fulfilled all the duties fixed in the equity transfer agreement with FAG Kugelfischer AG. On July 1, 2005, Shanggong (Europe) Holding Co., Ltd., wholly-owned subsidiary of the Company, finished the hand-over procedures with FAG acquiring 94.98% stock right of Durkopp Adler AG. The project of the assembly line producing computerized special-purposed industrial sewing machines with the imported technology from Durkopp Adler AG constitutes an essential part of the Europe-Asian integration program of the Company. SGSB is utilizing DA’s technology to develop products suitable for domestic and Asian markets, and localizing the production of the four products with purpose of putting them out. (2) Use of non-raised funds During the report year, the Company didn’t do investments using non-raised funds. 4. Routine of the Board of Directors (1) Meetings and resolutions of the Board of Directors during the report year 1) The Fourth Board of Directors held its 17th session on January 21, 2005, and the resolutions were announced in and dated January 25, 2005. 2) The 18th session of the Fourth Board of Directors was convened on April 25, 2005 and the resolutions were announced in and dated April 27, 2005. 3) The provisional meeting of the Fourth Board of Directors was convened via teleconference on April 28, 2005, in which the Directors considered the . 4) The Fourth Board of Directors held the 19th session on July 7, 2005, and the resolution was carried in and dated July 8, 2005. 5) The 20th session of the Fourth Board of Directors was gathered on July 21, 2005 and the announcements appeared in and dated July 23, 2005. 6) The 21st session of the Fourth Board of Directors was convened on August 18, 2005, and the resolutions were announced in and dated August 20, 2005. 7) The Fourth Board of Directors held the 22nd session on October 27, 2005. The meeting considered the , the report about the partial adjustment of the project establishing the joint-venture Durkopp Adler Manufacturing (Shanghai) Co., Ltd., and the summary report about the adjustment and reform of the industrial sewing machinery branch company. 8) The 23rd session of the Fourth Board of Directors, on December 28, 2005, considered and passed the . (2) Implementation of the resolutions made by General Meetings of Shareholders During the report year, the Board of Directors implemented in an all-round way the resolutions and decisions by General Meetings of Shareholders, and completed the formalities on the change of organization name, adjustment of business fields, etc. 5. Proposal on profit appropriation or reserve fund capitalization As audited by Shanghai Zhonghua Certified Public Accountants (adopting PRC accounting standards), the consolidated net profit for the year 2005 amounted to RMB -276,608,231.59, (quoting IAS audit report by DBO International, the consolidated net profit for the year 2005 accounted for RMB -277,105,000), and the net profit of the parent company totaled RMB -269,277,598.54. Because of the current-period loss, the Company doesn’t appropriate statutory surplus reserve, and after absorbing the 2004 year-end undistributed profit data of RMB 510,825.49, the 2005 year-end undistributed profit numbered RMB -277,478,452.55. As a result, the Company proposes neither profit appropriation nor reserve fund capitalization. Chapter IX. Report by the Board of Supervisors 1. Information about works of the Board of Supervisors during report year During the report year, the Board of Supervisors held six sessions: (1) The 14th session of the Fourth Board of Supervisors, on January 21, 2005, considered and approved the financial budget of the Company in 2005, the adjustment project of the administration structure and the personnel movement proposals of senior managers. (2) The Fourth Board of Supervisors had its 15th session on April 25, 2005, in which the Supervisors considered and approved , proposal on retroactive adjustment of the accounting errors in 2003 Annual Financial Statements, proposal for treating the investment in national bonds, working report of General Manager, financial working report, proposal of profit appropriation, proposal of payment to accounting firms for 2004 annual audit service, , proposal to amend the and proposal to amend . (3) The 16th session of the Fourth Board of Supervisors, held on April 28, 2005, discussed and approved 2005 First Quarter Report. (4) On August 18, 2005, the Fourth Board of Supervisors took its 17th session, in which the Supervisors discussed and approved , proposal to establish the joint-venture Durkopp Adler Manufacturing (Shanghai) Co., Ltd., proposal to found the joint-venture Durkopp Adler Trading (Shanghai) Co., Ltd., and proposal of the merger between the two subsidiaries of the Company Shanghai Butterfly Imp. & Exp. Co., Ltd. And Shanghai Flying Man Imp. & Exp. Co., Ltd. (5) On October 27, 2005, the 18th session of the Fourth Board of Supervisors considered and passed 2005 Third Quarter Report of the Company. (6) On December 28, 2005, the Fourth Board of Supervisors convened its 19th session, in which the Supervisors discussed and approved . 2．Independent opinion of the Board of Supervisors on the law-abiding operations of the Company in 2005 During the report year, the Board of Supervisors can work strictly in line with , , , and implement seriously the resolutions made by the General Meetings of Shareholders. The decisions of the Company can progress strictly in conformity with legal procedures. All the Directors and senior managers can do their duties with honesty, diligence, earnestness, and no behaviors were found among them violating laws, regulations or articles of association of the Company, nor acts infringing rights and interests of the Company and its shareholders. 3. Independent opinion of the Board of Supervisors on accounting affairs of the Company in 2005 The 2005 annual financial statements of the Company were prepared strictly under the state financial statutes and the regulations of China Securities Regulatory Committee. As verified and audited by Shanghai Zhonghua Certified Public Accountants, these financial statements gave a true, objective, integrated and accurate view of the Company’s financial position and the results of its operations. 4. Independent opinion of the Board of Supervisors on utility of collected capital of the Company in 2005 The Board of Supervisors checked the real utility of collected capital of the Company and agreed their identity with the capital-utility program. 5. Independent opinion of the Board of Supervisors on acquisition and sale of assets of the Company in 2005 The acquisition and sale of assets of the Company is based on equity, mutual benefit and fair price. The Board of Supervisors found no behind-the-scene deals or behaviors harming the benefits of the Company and its shareholders. Chapter X. Significant Events 1. Important arbitration and litigation proceedings (1) The Company hasn’t been involved in any arbitration or litigation proceedings in current report year. (2) Progress of the arbitration and litigation proceedings that took place in previous years and go down to current report year The Company won the lawsuit in which it litigated against Deheng Securities Co., Ltd., who presumed upon impawning the Company’s investment in national debts valued RMB 30 million. But in November 2004, the court ruled to suspend the execution of the civil judgment. According to the regulations of China Securities Regulatory Committee, the Company declared its creditor’s rights to the Trustee Office of China Huarong Assets Management Co., Ltd. which is authorized to dispose the assets of Deheng Securities Co., Ltd. The validated debts will be liquidated in line with the laws, regulations and policies of the country (reference to the Company’s 2004 Annual Report). As to the end of report year, the Company didn’t learn of any definite liquidation scheme. With purpose of supporting the normal operations of the Company, Shanghai Pudong New Area State-owned Assets Management Office, holding shareholder of SGSB, promised to recoup the loss of the above-mentioned investment. On December 31, 2005, the Company received finally the transfer of RMB 28.3 million from its holding shareholder (the Company invested RMB 30 million and got paid RMB 1.7 million in early stages). 2. Acquisition/sale of assets, and M&A during the report year (1) Equity transfer The 19th session of the Company’s Fourth Board of Directors authorized its wholly-owned subsidiary Shanggong (Europe) Holding Co., Ltd. (abbreviated as SG Europe, holding 7,788,540 shares of DA, 94.98% of DA’s interest) to transfer 401,800 and 16,400 shares of Durkopp Adler AG (4.9% and 0.2% of DA’s interest) respectively to Shanghai International (Europe) Group Co. and Fact Verwaltungs-und Beratung Sgesellschaft mbH, at a price of 49,000 and 2,000 euros. The principal purpose of these transactions realized shortly before the acquisition is to maintain DA’s status as listed company in the register country. After the transfer, SG Europe holds 7,370,340 shares, 89.88% of DA’s equity. (2) Equity acquisition As stipulated in German security laws, SG Europe announced the acquisition offer to the minority shareholders of Durkopp Adler AG from August 11 to September 9, 2005. The acquisition quotation, based on the appraisal by PriceWaterhouseCoopers, was priced at 1.41 euro per share. On the offer’s deadline, the acquired equity amounted to 4,083 shares. Thus, SG Europe holds 7,374,423 shares, 89.932% of Durkopp Adler AG’s stock right. 3. Significant affiliated transactions during the report year (1) Significant affiliated transactions of assets and stock right The Company hasn’t any significant affiliated transactions of assets or stock right to announce during the report year. (2) Creditor rights and debts between affiliated parties RMB’000 Employer Ending employed Beginning employed Accumulated sum, Accumulated sum, amount amount debit creditor Shanggong Huaxin Precision 0 0 10,280 10,280 Machinery Co., Ltd. Shanghai Shanggong Needles -1,280 13,040 40,840 55,160 Co., Ltd. 4. Information about intrusting affairs The Company didn’t entrust its assets to other companies during the report year. 5. Information about contract affairs The Company didn’t contract its assets to other companies during the report year. 6. Information about lease affairs The Company didn’t lease its assets to other companies during the report year. 7. Information about guaranty affairs RMB’000 Company Incurred date Guaranteed Relationship Valid period Com- Affiliat- (dd/mm/yy) amount pleted ed-party or not guaranty or not Shanghai Worldbest Industry 11/11/2004 30,000 Joint-Liability 11/11/2004- No No Development Co., Ltd. Guaranty 09/11/2005 Shanghai Worldbest Industry 29/03/2005 10,000 Joint-Liability 29/03/2005- No No Development Co., Ltd. Guaranty 29/09/2005 Shanghai Worldbest Industry 27/05/2005 10,000 Joint-Liability 27/05/2005- No No Development Co., Ltd. Guaranty 23/05/2006 Shanghai Worldbest Industry 13/06/2005 10,000 Joint-Liability 13/06/2005- No No Development Co., Ltd. Guaranty 29/09/2005 Shanghai Worldbest Industry 06/06/2005 30,000 Joint-Liability 06/06/2005- No No Development Co., Ltd. Guaranty 01/06/2006 Shanghai Worldbest Industry 14/07/2005 30,000 Joint-Liability 14/07/2005- No No Development Co., Ltd. Guaranty 04/07/2006 Shanghai Worldbest Industry 29/07/2005 19,000 Joint-Liability 29/07/2005- No No Development Co., Ltd. Guaranty 18/01/2006 Shanghai Shanggong Needles Co., 22/11/2005 5,000 Joint-Liability 22/11/2005- No No Ltd. Guaranty 18/01/2006 Guaranty sum incurred in report year 114,000 Remaining sum at end of report year 144,000 Guaranties for subsidiary undertakings Guaranty sum incurred in report year 356,240 Remaining sum at end of report year 356,240 Total guaranty amount (guaranties for subsidiary undertakings included) Total guaranty amount incurred 500,240 Proportion in the net assets 88.40% Including: Guaranty for holding shareholder, real controller 0 and their affiliated parties Direct or indirect guaranty for organizations whose 293,740 assets-liabilities ratio is more than 70% Exceedance of total guaranty amount than the half 0 of the net assets Total guaranty amount under these three items 293,740 (1) According to related articles in the equity acquisition agreement signed with FAG Kugelfischer AG: 1) On June 30, 2005, the wholly affiliated subsidiary Shanggong (Europe) Holding Co., Ltd. (SG Europe) paid to FAG Kugelfischer AG the transfer consideration 949,821 euros and the first payment of bank borrowing transfer 8,000,000 euros for the original shareholders. On August 3, 2005, SG Europe paid the second payment of bank borrowing transfer 1,482,436.84 euros. The rest transfer price around 27,040,000 euros will be covered with equal payment in nine years at a rate of 6% on every anniversary since the year 2007 and the interest paid once every June 30. The Company offers a guaranty for SG Europe’s payment to the maximum 12,500,000 euros. 2) Bank of Shanghai offered Durkopp Adler AG a one-year valid line of credit and guaranty of 9,000,000 euros and West LB AG as beneficiary. The Company endorsed a counter-guaranty to Bank of Shanghai with the same period and value, and had two buildings and RMB 30,000,000 in cash as mortgage. State Administration of Foreign Exchange Shanghai Branch also gave an official reply No. SHHF(2005)25 on April 30, 2005. Till December 31, 2005, Durkopp Adler AG didn’t apply the corresponding borrowing to West LB AG. 3) The Company offered a guaranty of USD 5,300,000 to FAG Kugelfischer AG for the housing lease contract of Durkopp Adler AG in the United States, valid from June 30, 2005 to October 31, 2015. On the same day June 30, 2005, SG Europe offered a cash mortgage of 622,000 euros to FAG (with the same period of validity) for the latter’s guaranty responsibility in the sale and lease-back between DA’s American subsidiary and UTF Norcross L.L.C. (2) The Company has contracted a mutual credit guaranty relationship with Shanghai Worldbest Industry Development Co., Ltd.. Ending the report year, the Company acted as guarantor for seven borrowings of Shanghai Worldbest Industry Development Co., Ltd. totaling RMB 139,000,000, among which three borrowings valued RMB 50,000,000 were overdue. The Company has taken counter-guaranty measures for the overdue borrowings and Shanghai Worldbest Industry Development Co., Ltd., together with its parent company, is also taking active measures to eliminate as soon as possible these risky factors. 8. Information about trust investment The Company didn’t contract trust investment during the report year. 9. Other significant contracts The Company didn’t sign other significant contracts during report year. 10. Fulfillment of the commitments by the Company or the shareholders taking 5% or more of the Company’s stock right The Company sent out written requests to all the shareholders taking 5% or more of its equity, consulting their opinion on the reform of non-tradable shares, and has received their feedback showing active posture towards the reform. The Company’s state-owned shareholder will strengthen the negotiation with the non-tradable shareholders and try to complete the reform before June, 2006. On the announcement of the Annual Report, the Company has begun the progress of reform. 11. Engagement and dismissal of accounting firms During the report year, the Company re-contracted Shanghai Zhonghua Certified Public Accountants as domestic auditor for its annual financial statements. The year 2005 is successively the 12th year that Zhonghua works as Shanggong’s domestic auditor. In current year, the Company paid RMB 460,000 to Shanghai Zhonghua Certified Public Accountants as auditor fee (the same amount in anterior year), RMB 5,000 for specific affairs auditor service, and RMB 13,800 as subsidy of accommodation and transportation (RMB 7,400 in the previous year). The Company has engaged BDO International as its foreign auditor, which has offered international audit services for successively three years. In 2005, the Company paid RMB 500,000 to BDO International as auditor service fee (the same amount in the previous year), but didn’t cover any subsidy of accommodation or transportation. 12. Punishment upon the Company, its BOD or the Directors, and the correction measures During the report year, the Board of Directors, the Directors, or the Company itself, had neither received any check, administration punishment or criticism notice from China Securities Regulatory Committee, nor been publicly condemned by Shanghai Stock Exchange. Between September 7 and September 13, 2005, China Securities Regulatory Committee Shanghai Inspection Bureau realized an itinerant examination in the Company and issued an Inspection Missive. The Company convened a particular BOD meeting, considered and agreed the . 13. Other significant events According to the with FAG Kugelfischer AG for acquiring its subsidiary Durkopp Adler AG, the main preconditions of the acquisition comprised that the Company should offer a performance guaranty valued USD 5.3 million for the housing lease contract of DA’s subsidiary in United States, an authorized credit and a business guaranty respectively of 5 million euros and 4 million euros for DA itself. During the report year, the Company fulfilled the duties, and its wholly-owned subsidiary Shanggong (Europe) Holding Co., Ltd. has been holding shareholder of Durkopp Adler AG since July 1, 2005 (SG Europe holding 89.932% of DA’s stock right at the end of the report year). Chapter XI. Financial Statements by Domestic & International Auditors Domestic Auditor’s Report Huzhongkuaizi (2006) No.0285 To the shareholders of SGSB Group Co., Ltd. We have accepted the entrustment from SGSB (Group) Co., Ltd. (“SGSB” or “the Company”) and have audited the accompanying balance sheet of the Company as of 31 December 2005 and the related consolidated cash flow statements, profit / loss and profit distribution statements for the year then ended. The preparation of these consolidated financial statements is the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with PRC Independent Standards on Audit for certified accountants and made sure the exclusion of any important omissions. Our audit included paper and on-spot check of all the proofs supporting financial statements and documents, the adoption of accounting policy and standards, significant estimations and the overall reflection evaluating the accounting statements. As a result, we take the assurance that our audit offers reasonable basis for our opinion. In our opinion, the financial statements, according with the regulations of “Accounting Norms for Enterprises” and “Accounting System for Limited Companies”, give a true and fair view of the financial position of the Company as of 31 December 2005 and of the results of its operations and its cash flows in all significant aspects for the period then ended. The measures are following the consistent principals for accounting. Shanghai Zhong Hua Certified Public Accountants PRC Certified Public Accountant Liu Wanchun PRC Certified Public Accountant Zhou Zhengyun Shanghai, PRC, 20 April 2006 Balance Sheet As at 31 December 2005 Prepared by SGSB Group Co., Ltd. RMB’ Note Consolidated Parent Company Item Parent At beginning of At beginning of Consolidated At end of period At end of period Company period period Assets: Current assets: Cash and bank 478,555,903.19 545,965,518.03 274,321,581.47 325,701,535.51 Short-term investment 821,924.05 29,687,059.43 395,182.33 28,698,982.61 Bills receivable 26,334,081.46 2,577,432.58 552,274.50 840,000.00 Dividend receivable 327,102.05 68,109.70 5,094,498.42 4,436,795.87 Interest receivable 72,642.87 Accounts receivable 390,593,524.60 180,997,765.43 54,478,181.27 111,469,669.70 Other receivables 44,879,526.01 120,276,478.60 40,573,193.76 46,531,450.52 Prepayments 19,245,185.58 7,468,201.86 901,622.61 1,947,039.99 Subsidy receivable 1,242,765.36 2,573,254.21 Inventories 476,503,092.49 203,972,040.44 73,053,450.19 138,639,753.53 Deferred expenses 1,295,532.62 210,533.86 Long-term creditor-investment to be expired in one year Other current assets Total current assets 1,439,871,280.28 1,093,796,394.14 449,369,984.55 658,265,227.73 Long-term investment Long-term investment in 173,064,880.77 196,954,396.29 625,588,824.27 528,810,520.82 stock Long-term 1,055,000.00 1,000,000.00 creditor-investment Total long-term investment 173,064,880.77 198,009,396.29 625,588,824.27 529,810,520.82 Among which: variance due to consolidation (“-” for credit 63,354,512.19 73,690,206.73 balance, consolidated) Among which: variance of investment in stock (“-” for 63,354,512.19 73,690,206.73 credit balance, consolidated) Fixed assets: Fixed assets, at cost 1,590,190,739.54 700,921,038.74 556,448,165.82 555,776,592.33 Less: accumulated 1,025,168,528.71 342,895,348.89 314,547,460.17 292,906,159.99 depreciation Fixed assets, net value 565,022,210.83 358,025,689.85 241,900,705.65 262,870,432.34 Less: Provision for 75,238,065.48 75,262,191.48 75,111,879.85 75,111,879.85 devaluation of fixed assets Fixed assets, net amount 489,784,145.35 282,763,498.37 166,788,825.80 187,758,552.49 Construction materials Construction in progress 5,026,956.00 8,448,983.17 1,342,557.50 Disposal of fixed assets Total fixed assets 494,811,101.35 291,212,481.54 166,788,825.80 189,101,109.99 Intangible and other assets Intangible assets 252,896,132.18 198,072,003.20 114,640,169.19 110,176,733.07 Long-term deferred expenses 141,136.41 5,644,302.17 4,680,000.00 Other long-term assets Total intangible and other 253,037,268.59 203,716,305.37 114,640,169.19 114,856,733.07 assets Deferred taxation: Deferred taxation, debit 81,365,771.39 Total assets 2,442,150,302.38 1,786,734,577.34 1,356,387,803.81 1,492,033,591.61 Liabilities and shareholders’ equity Current liabilities: Short-term loans 520,415,905.72 601,510,000.00 369,770,000.00 465,020,000.00 Bills payable 220,000.00 610,000.00 220,000.00 610,000.00 Accounts payable 207,789,162.37 164,705,128.04 81,390,154.68 83,866,218.62 Advances on sales 40,569,303.72 14,401,387.23 14,128,642.96 2,163,352.10 Wages and salaries unpaid 15,568,104.51 7,030,945.01 Staff welfare fund unpaid 32,986,414.58 495,143.76 Dividend unpaid 2,939,137.92 3,354,912.62 1,532,818.86 1,532,818.86 Tax unpaid -899,955.00 2,735,880.09 207,127.54 -212,108.93 Other outstanding payments 48,529.58 54,050.43 1,436.43 169.23 Other payables 186,419,987.87 76,835,512.84 301,112,727.94 81,945,704.49 Pre-paid expenses 462,402.50 230,225.89 19,845.00 Contingent liabilities Deferred income 967,012.76 Long-term liabilities to be 400,000.00 400,000.00 400,000.00 400,000.00 expired in one year Other current liabilities Total current liabilities 1,007,886,006.53 872,363,185.91 768,782,753.41 635,326,154.37 Long-term liabilities: Long-term loans 1,609,984.87 2,109,984.87 Bonds payable Long-term accounts payable 765,815,894.79 1,626,944.32 1,474,782.00 1,474,782.00 Specific payable Other long-term liabilities Total long-term liabilities 767,425,879.66 3,736,929.19 1,474,782.00 1,474,782.00 Deferred taxation: Deferred tax, credit 30,238,603.13 1,197,067.41 Total liabilities 1,805,550,489.32 877,297,182.51 770,257,535.41 636,800,936.37 Minority interests 70,709,927.36 52,116,378.07 (consolidated) Shareholders’ equity Share capital 448,886,777.00 448,886,777.00 448,886,777.00 448,886,777.00 Less: returned investment Contributed capital, net value Capital reserve fund 383,789,877.38 383,614,665.68 383,789,877.38 383,614,665.68 Surplus reserve fund 26,001,680.07 24,620,633.62 4,546,242.52 4,546,242.52 Including: staff welfare fund 11,305,424.74 10,717,606.50 2,273,121.26 2,273,121.26 Undistributed profit -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 Cash dividend to be distributed Difference of foreign currency -12,145,043.64 translation Less: unverified investment 3,164,952.56 311,885.03 loss (consolidated) Total shareholders’ equity 565,889,885.70 857,321,016.76 586,130,268.40 855,232,655.24 Total liabilities and 2,442,150,302.38 1,786,734,577.34 1,356,387,803.81 1,492,033,591.61 shareholders’ equity Legal representative: Zhang Min CFO: Ma Minliang Financial Director: Xu Xiaohui Profit/Loss and Profit Distribution Statement For the year 2005 Prepared by SGSB Group Co., Ltd. RMB’ Note Consolidated Parent Company Item During the same During the same Parent During current During current Consilidated period of anterior period of anterior Company period period year year 1. Principal operating revenues 1,482,659,146.38 996,246,688.32 101,531,138.28 159,280,966.67 Less: principal operating cost 1,219,764,073.92 882,059,263.40 112,962,718.77 140,742,918.78 Operating tax and subsidies 947,454.33 2,400,219.10 2. Principal operating profit 261,947,618.13 111,787,205.82 -11,431,580.49 18,538,047.89 Add: other operating profit 1,234,590.63 17,758,328.09 -11,418,723.77 5,431,428.77 Less: Operating expense 148,862,316.29 36,496,343.49 11,489,927.08 6,546,019.34 Administration expense 368,747,264.65 157,151,050.82 195,550,349.89 56,447,442.88 Financial expense 54,977,786.22 27,658,171.10 31,956,349.06 19,808,711.82 3. Operating profit -309,405,158.40 -91,760,031.50 -261,846,930.29 -58,832,697.38 Add: investment income 17,022,028.38 74,250,899.99 -7,658,653.46 56,031,748.00 Subsidy income 3,129.00 1,748,184.00 23,156.00 Non-operating income 5,395,209.24 33,712,084.27 291,809.69 242,220.61 Less: non-operating expense 2,099,851.60 -5,560,006.54 63,824.48 -5,763,975.27 4. Total profit -289,084,643.38 23,511,143.30 -269,277,598.54 3,228,402.50 Less: income tax payable -10,598,554.71 13,029,329.67 Minority interests 1,287,095.48 6,700,052.63 Add: unverified investment 3,164,952.56 -14,017.98 loss (consolidated) 5. Net profit -276,608,231.59 3,767,743.02 -269,277,598.54 3,228,402.50 Add: undistributed profit at 510,825.49 7,073,237.47 18,184,970.04 15,602,248.04 beginning of period Transfer from other resources 77,032.50 1,158,003.22 6. Profit available for -276,020,373.60 11,998,983.71 -251,092,628.50 18,830,650.54 distribution Less: provision of statutory 779,267.83 7,342,037.09 322,840.25 surplus reserve Provision of statutory public 678,811.12 4,146,121.13 322,840.25 welfare reserve Fund for staff welfare and reward Provision of reserve fund Provision of development fund For refund of investment 7. Profit available for -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 distribution to shareholders Less: Dividend payable for priority shares Provision of discretionary surplus reserve Dividend payable for common shares Dividend for common shares capitalized 8. Undistributed profit -277,478,452.55 510,825.49 -251,092,628.50 18,184,970.04 Supplements: a. profit from sale and disposal of invested units b. loss from natural disasters c. profit increase/decrease by accounting policy change d. profit increase/decrease by accounting estimation change e. loss in liabilities’ restructure f. others Legal representative: Zhang Min CFO: Ma Minliang Financial Director: Xu Xiaohui Cash Flow Statement For the year 2005 Prepared by SGSB Group Co., Ltd. RMB’ Note Current-period Item Parent Consolidated Consolidated Parent company company 1. Cash flows from operating activities Cash inflow from sale of goods and provision of services 1,603,403,417.05 167,298,967.01 Repayment of tax received 60,313,813.70 222,850.05 Other cash inflow relating to operating activities 12,659,678.06 261,439,957.40 Total cash inflow from operating activities 1,676,376,908.81 428,961,774.46 Payment for purchase of goods and receipt of services 1,138,892,839.83 150,088,685.84 Payment to and for staff 315,701,688.26 43,276,706.14 Taxation paid 32,583,811.59 7,018,719.38 Other payment relating to operating activities 149,820,792.30 84,220,060.53 Total cash outflow from operating activities 1,636,999,131.98 284,604,171.89 Net cash inflow/outflow generated from operations 39,377,776.83 144,357,602.57 2. Cash flow from investing activities Cash inflow from retirement of investment 70,560,286.12 29,950,000.00 Including: cash inflow from sale of subsidiaries Cash inflow from profit of investment 27,685,728.84 2,575,937.58 Cash gain of disposal of fixed assets, intangible assets, and 25,380,823.04 5,187,264.00 other long-term investment Other proceeds relating to investment activities Total cash inflow from investing activities 123,626,838.00 37,713,201.58 Cash paid for acquisition of fixed assets, intangible assets, 28,377,416.66 202,943.46 and other long-term investment Cash paid for investment -10,621,479.80 108,432,772.14 Cash paid for other activities relating to investment Total cash outflow from investing activities 17,755,936.86 108,635,715.60 Net cash inflow/outflow generated from investment activities 105,870,901.14 -70,922,514.02 3. Cash flow from financing activities Absorption of investment Among which: absorption of stock investment of minority shareholders by subsidiary companies Borrowings raised 705,525,905.72 549,220,000.00 Other cash inflow relating to financing activities Total cash inflow from financing activities 705,525,905.72 549,220,000.00 Borrowings repaid 875,542,900.20 644,470,000.00 Dividend, interest and profit paid 38,974,657.20 26,092,653.58 Among which: pay for dividends of minority shareholders 1,333,795.48 Other cash outflow relating to financing activities Among which: payment to minority shareholders for reduction of capital stock by subsidiary companies Total cash outflow from financing activities 914,517,557.40 670,562,653.58 Net cash inflow/outflow from financing activities -208,991,651.68 -121,342,653.58 4. Influence of fluctuation of exchange rate -3,666,641.13 -3,472,389.01 5. Net increase/decrease in cash and cash equivalents -67,409,614.84 -51,379,954.04 Supplementary Information 1. Adjustment of net profit to cash flows generating from operations: Net profit -276,608,231.59 -269,277,598.54 Add: minority interests / loss 1,287,095.48 Less: unverified investment loss 3,164,952.56 Add: provision for devaluation of assets 102,771,913.23 69,386,793.83 Depreciation of fixed assets 61,952,656.83 23,566,358.93 Amortization of intangible assets 14,970,073.92 4,043,337.48 Amortization of long-term expenses 10,936,361.80 Decrease of deferred expenses (less: increase) -1,084,998.76 Increase of prepaid expense (less: decrease) 234,610.37 19,845.00 Loss on disposal of fixed assets, intangible assets and other 88,213.06 -112,405.09 long-term assets (less: profit) Loss on retirement of fixed assets Financial expenses 49,864,445.59 26,084,645.25 Investment loss (less: investment gain) -16,945,563.97 7,702,000.58 Deferred tax, credit (less: debit) -32,570,980.00 Decrease of inventories (less: increase) 65,820,049.54 45,137,172.16 Decrease of receivables in operations (less: increase) -462,792,771.14 32,589,823.36 Increase of payables in operations (less: decrease) 524,619,855.03 205,217,629.61 Others (increase of predetermined liabilities) Net cash inflow/outflow generated from operations 39,377,776.83 144,357,602.57 2. Investing and financing activities not relating to cash flows: Capital transferred from liabilities Transferable bonds to be expired in one year Fixed assets transferred from financing activites 3. Net increase/decrease in cash and cash equivalents Cash and bank balances at end of period 478,555,903.19 274,321,581.47 Less: cash and bank balances at beginning of period 545,965,518.03 325,701,535.51 Add: cash equivalent at end of period Less: cash equivalent at beginning of period Net increase/decrease in cash and cash equivalents -67,409,614.84 -51,379,954.04 Legal representative: Zhang Min CFO: Ma Minliang Financial Director: Xu Xiaohui Chapter XII. For Reference 1. Financial Statements signed by the legal representative, chief accountant and accounting manager 2. Original audit report signed by the certified public accountants and sealed by the accounting firm 3. Original documentation and announcements about the Company, carried in the newspaper assigned by China Security Regulatory Committee within the report year If the English Version of this Annual Report involves any differences from the Chinese Version, the latter shall be effective. Verification Letter of the Directors and Senior Managers upon 2005 Annual Report of SGSB Group Co., Ltd. In line with the Article 68 of and the related requirements of (No.2 Contents and Forms of Annual Report Edition 2005), as Directors and Senior Managers of the Company, we have fully understood and inspected the 2005 Annual Report, which we consider gives a fair profile of the Company’s financial status and business performance in current report year. The audit report by Shanghai Zhonghua Certified Public Accountants is also realistic, objective and fair. We guarantee that there are no false statements, vital misunderstandings or important omissions in this report, and hold both individual and joint liability for the authenticity, accuracy and integrity of its contents. Signatures: Zhang Min Ma Minliang Wang Lixi Zhang Fei Fangyu Liu Xiangdong Zongming Liu Rende Wang Zhile Jia Chunrong Shen Yibo Zhang Chen Changbao Hengliang Chen Mingqi Xu Weikun Xu Xiaohui Zhang Yifeng April 20, 2006 REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF SGSB GROUP CO., LTD. (Incorporated in the People’s Republic of China with limited liability) We have audited the accompanying consolidated balance sheet of SGSB Group Co., Ltd. (the “Company”) and its subsidiaries (the “Group”) as at 31 December 2005, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the year then ended which have been prepared in accordance with International Finance Reporting Standards. These consolidated financial statements set out on pages 2 to 44 are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2005, and the results of its operations and its cash flows for the year then ended in accordance with International Finance Reporting Standards. BDO International Shanghai Zhonghua Certified Public Accountants Shanghai, China 20 April 2006 1 SGSB GROUP CO., LTD. Year ended 31 December 2005 Consolidated Income Statement For the year ended 31 December 2005 2005 2004 Notes RMB ’000 RMB ’000 Sales 6 1,480,925 1,019,351 Cost of sales (1,218,653) (907,414) Gross profit 262,272 111,937 Other operating profits 7 (64,940) 127,841 Selling expenses (148,862) (36,496) Administrative expenses (263,840) (148,026) Operating profit (215,370) 55,256 Finance costs 8 (59,678) (32,452) Share of results of associates before tax (11,320) (891) Profit before tax 9 (286,368) 21,913 Income tax expenses 10 10,550 (13,396) Profit for the year (275,818) 8,517 Attribute to: Equity holders of the parent (277,105) 1,817 Minority interests 1,287 6,700 (275,818) 8,517 Earnings per share(basic and diluted) 11 Rmb(0.617) Rmb0.004 The accompanying notes form an integral part of these consolidated financial statements. 2 SGSB GROUP CO., LTD. Year ended 31 December 2005 Consolidated Balance Sheet As of 31 December 2005 2005 2004 Notes RMB ’000 RMB ’000 Assets Non-current assets Intangible assets 12 220,072 192,561 Fixed assets 13 489,925 283,098 Construction in progress 14 5,027 8,449 Interests in associates 15 30,124 52,118 Available-for-sale investments 16 79,435 72,201 Goodwill 17 96,179 79,201 Deferred income tax assets 18 81,366 - 1,002,128 687,628 Current assets Inventories 19 476,503 203,579 Notes receivable 26,334 2,577 Trade receivable 20 390,066 180,998 Due from shareholders 21 - - Due from associates 22 530 3,749 Due from related companies 23 - 20,932 Prepayments and other receivables 24 67,060 105,915 Trading investments 25 822 29,687 Cash and cash equivalents 478,556 545,966 1,439,871 1,093,403 Total assets 2,441,999 1,781,031 3 SGSB GROUP CO., LTD. Year ended 31 December 2005 Consolidated Balance Sheet (Continued) As of 31 December 2005 2005 2004 Notes RMB ’000 RMB ’000 Equity Capital and reserves Share capital 31 448,887 448,887 Reserves 32 116,851 405,926 Equity attributable to equity holders of the parent 565,738 854,813 Minority interests 70,710 52,116 636,448 906,929 Liabilities Non- current liabilities Long-term bank loans 28 1,610 1,490 Long-term payables 29 765,816 1,627 Deferred income tax liabilities 30 30,238 1,197 Current liabilities Notes payable 220 610 Trade payable 207,529 164,705 Due to shareholders 21 - 1,459 Due to associates 22 2,337 1,970 Due to related companies 23 2,741 - Accruals and other payables 26 274,177 95,778 Deferred income 967 - Tax payable (900) 2,736 Short-term bank loans 27 520,816 602,530 1,007,887 869,788 Total equity and liabilities 2,441,999 1,781,031 For and on behalf of the Board ______________________________ _____________________________ Director Director The accompanying notes form an integral part of these consolidated financial statements. 4 SGSB GROUP CO., LTD. Year ended 31 December 2005 Consolidated Cash Flow Statement For the year ended 31 December 2005 2005 2004 Notes RMB’000 RMB’000 Cash flow from operating activities Cash generated from operations 33 (12,181) (11,889) Taxes paid (32,584) (27,806) Net cash (used in)/generated from operating activities (44,765) 15,917 Cash flow from investing activities Proceeds from disposal of fixed assets 25,381 37,937 Proceeds from disposal of long-term investments 2,260 1,775 Proceeds from disposal of short-term investments 28,300 72,560 Dividend received 27,686 13,452 Interests received 4,701 3,347 Purchases of fixed assets (28,377) (36,058) Increase in trading investments - (100,200) Net cash inflow of disposal of subsidiary 40,000 77,950 Purchases of intangible assets - (89,579) (Increase)/decrease in available-for-sale investments (776) 23,525 Net cash used in investing activities 99,175 4,709 Cash flow from financing activities Dividend paid to minority interests (1,334) - Interests paid (37,641) (39,283) Repayment of bank loans (784,704) (932,883) New borrowed bank loans 705,526 862,347 Net cash (used in)/generated from financing activities (118,153) (109,819) Increase/(decrease) in cash and cash equivalents (63,743) (89,193) Movement in cash and cash equivalents At the beginning of the year 545,966 635,610 Increase/(Decrease) (63,743) (89,193) Effect of exchange rate changes (3,667) (451) At the end of the year 478,556 545,966 The accompanying notes form an integral part of these consolidated financial statements. 5 SGSB GROUP CO., LTD. Year ended 31 December 2005 Consolidated Statement of Changes in Shareholders’ Equity For the year ended 31 December 2005 Share Capital Reserve Accumulated Exchange capital surplus funds profits/(losses) differences Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at 31 December 2003 390,336 441,977 14,290 6,204 - 852,807 Net profit for 2004 - - - 1,817 - 1,817 Appropriation to reserve funds - - 11,488 (11,488) - - Transferring to Share capital 58,551 (58,551) - - - - Others - 189 (1,158) 1,158 - 189 Balance at 31 December 2004 448,887 383,615 24,620 (2,309) - 854,813 Net profit for 2005 - - - (277,105) - (277,105) Appropriation to reserve funds - - 1,458 (1,458) - - Exchange differences - - - - (12,145) (12,145) Others - 175 (77) 77 - 175 Balance at 31 December 2005 448,887 383,790 26,001 (280,795) (12,145) 565,738 The accompanying notes form an integral part of these consolidated financial statements. 6 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements For the year ended 31 December 2005 (Expressed in RMB) 1. Group background SGSB Group Co., Ltd. (the “Company”) is a joint stock limited company incorporated in the People’s Republic of China (the “PRC”). The Company is listed on the Shanghai Stock Exchange. The Company and its subsidiaries (the “Group”) are mainly engaged in the manufacturing and sale of sewing machines, material handling and related spare parts. The activities of the Group’s subsidiaries are set out in Note 5 of the financial statements. The address of the Company is as follows: 12th Floor, Orient Mansion, No. 1500 Century Avenue, Pudong New Area, Shanghai, PRC. 2. Adoption of new and revised standards and interpretations In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (the "IASB") and the International Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2005. The adoption of these new and revised Standards and Interpretations has resulted in changes to the Group’s accounting policies in the following areas that have affected the amounts reported for the current or prior years: IFRS 3, Business Combinations Goodwill IFRS 3 has been adopted for business combinations for which the agreement date is on or after 31 March 2004. After initial recognition, IFRS 3 requires goodwill acquired in a business combination to be carried at cost less any accumulated impairment losses. Under IAS 36 Impairment of Assets (as revised in 2004), impairment reviews are required annually, or more frequently if there are indications that goodwill might be impaired. IFRS 3 prohibits the amortisation of goodwill. Previously, under IAS 22, the Group carried goodwill in its balance sheet at cost less accumulated amortisation and accumulated impairment losses. Amortisation was charged over the estimated useful life of the goodwill, subject to the rebuttable presumption that the maximum useful life of goodwill was 20 years 7 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 2. Adoption of new and revised standards and interpretations (Continued) In additions, in accordance with the transitional rules of IFRS 3, the Group has applied the revised accounting policy for goodwill prospectively from the beginning of its first annual period beginning on or after 31 March 2004, i.e. 1 January 2005, to goodwill acquired in business combinations for which the agreement date was before 31 March 2004. Therefore, from 1 January 2005, the Group has discontinued amortising such goodwill and has tested the goodwill for impairment in accordance with IAS 36. At 1 January 2005, the carrying amount of amortisation accumulated before that date of RMB 56,414 thousand has been eliminated, with a corresponding decrease in goodwill. Because the revised accounting policy has been applied prospectively, the change had no impact on amounts reported for 2004 or prior periods. No amortisation has been charged in 2005. The charge in 2004 was RMB 12,445 thousand. 3. The potential impact on new standards and interpretations At the date of authorization of these financial statements, the following Standards and Interpretations were in issue but not yet effective: IAS 1 (Amendment) Capital Disclosures IAS 19 (Amendment) Actuarial Gains and Losses, Group Plans and Disclosures IAS 39 (Amendment) Cash Flow Hedges of Forecast Intra-group Transactions IAS 39 (Amendment) The Fair Value Option IAS 39 and IFRS 4(Amendment) Financial Guarantee Contracts IFRS 6 Exploration for and Evaluation of Mineral Resources IFRS 7 Financial Instruments: Disclosures IFRIC — INT 4 Determining whether an Arrangement contains a Lease IFRIC — INT 5 Right to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 6 Liabilities Arising from Participating in a Specific Market -Waste Electrical and Electronic Equipment IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives 8 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 3. The potential impact on new standards and interpretations-continued The Group has commenced considering the potential impact of these new IFRSs, but is not yet in a position to determine whether these IFRSs would have a significant impact on how its results of operations and financial position are prepared and presented. These IFRSs may result in changes in the future as to how the results and financial position are prepared and presented. 4. Principal accounting policies Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Finance Reporting Standards (“IFRS”). The Group also prepares a set of financial statements that comply with the PRC Accounting Standards and Regulations (“PRC GAAP”). A reconciliation of the Group’s results and shareholders’ equity under IFRS and PRC GAAP is presented in note 39 of the financial statement. A summary of the principal accounting policies is set out below: A. Basis of preparation of the financial statements The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates. 9 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued B. Basis of consolidation The consolidated financial statements of the Group include the financial statements of the Company and all its subsidiary companies made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from or to the date of their acquisition or disposal, as appropriate. All material inter-company transactions ， balances and unrealized gains on transactions between group companies are eliminated; unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. (1) Subsidiary companies Subsidiary undertakings, which are those entities in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. See note 4 for the accounting policy on goodwill. Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated; Unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made of minority interests in the financial statements. Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries. Details of the Group’s subsidiaries are set out in note 5. 10 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued B. Basis of consolidation-continued (2) Associates Associates are entities over which the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. Investments in associates are accounted for by the equity method of accounting. Under this method, the Company’s share of the post-acquisition profits or losses of associates is recognized in the income statement and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the cost of the investment. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investments in associates include goodwill (net of accumulated impairment) on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group will not recognize further losses, unless the Group has incurred obligations or made payments on behalf of the associate. Particulars of the Group’s principal associates are shown in note 15. (3) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control or common control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to control, common control or common significant influence by the same company. C. Foreign currency translation (1) Measurement currency Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the “measurement currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is the measurement currency of the Group. 11 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued C. Foreign currency translation-continued (2) Transactions and balances Foreign currency transactions are translated into the measurement currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the consolidated income statement. Translation differences on other monetary financial assets measured at fair value are included in foreign exchange gains and losses. (3) Group companies Income statements and cash flows of foreign entities are translated into the Group’s reporting currency at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling on 31 December. Exchange differences arising from the translation of the net investment in foreign entities are taken to shareholders’ equity. When a foreign entity is sold, such exchange differences are recognized in the consolidated income statement as part of the gain or loss on sale. D. Impairment of assets An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognized for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s value in use or its net selling price. On every balance sheet day, company should evaluate the impairment of assets and estimated the recoverable amount. An impairment loss is recognized if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the income statement in the period in which it arises. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization), had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is credited to the income statement in the period in which it arises. 12 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued E. Fixed assets All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment charge. Depreciation is calculated on the straight-line method to write off the cost of the assets to their residual values over their estimated useful lives and ratios as follows: Buildings 20-50years 1.92%-4.5% Machinery and equipment 5-15 years 6.4%-19.2% Motor vehicles 5-10years 9.6%-19.2% Furniture and office equipment 5-10 years 9.6%-19.2% Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Repairs and maintenance are charged to the consolidated income statement during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. F. Construction in progress Construction in progress represents fixed assets under construction and is stated at cost. This includes the cost of construction as well as interest charges arising from borrowings used to finance the construction during the construction period. Depreciation is not provided on construction in progress until the related asset is completed and ready for intended use. 13 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued G. Intangible assets (1) Land use rights Land use rights are up-front payments to acquire long-term interest in land. These payments are stated at cost and amortized on a straight-line basis over the unexpired period of the rights or 50 years, whichever is shorter, net off accumulated impairment charge. (2) Other intangible assets Expenditure to acquire know-how and trademark are capitalized and amortized using the straight-line method over its economic useful life or 10 years, whichever is shorter. (3) Impairment Where an indication of impairment exists, the carrying amount of any intangible asset is assessed and written down immediately to its recoverable amount. H. Investments The Group classified its investments in debt and equity securities into the following categories: trading, held-to-maturity and available-for-sale. The classification is dependent on the purpose for which the investments were acquired. Management determines the classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in current assets; for the purpose of these financial statements short term is defined as three months. Investments with a fixed maturity that management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date, which are classified as current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale; and are included in non-current assets unless management has the expressed intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Purchases and sales of investments are recognized on the trade date, which is the date that the Group commits to purchase or sell the asset. Cost of purchase includes transaction costs. Available-for-sale and trading investments are subsequently carried at fair value. Realized and unrealized gains and losses arising from changes in the fair value of available-for-sale and trading investments are included in the consolidated income statement in the period in which they arise. 14 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued H. Investments-continued The fair values of investments are based on quoted bid prices or amounts derived from cash flow models. Fair values for unlisted equity securities are estimated using applicable price/earnings or price/cash flow ratios refined to reflect the specific circumstances of the issuer. Equity securities for which fair values cannot be measured reliably are recognized at cost less impairment. Impairments are recognized when the fair value less than the lost (unless the impairments are temporary), and charged to the profit and loss. Impairments are classified by investment item separately. Impairments should be reversed when the fair value increased or confirmed to be increased. I. Goodwill Goodwill arising on consolidation represents the excess of the purchase consideration over the fair value ascribed to the separable net assets at the date of acquisition of the subsidiaries. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash- generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. J. Operating leases (1) The Group companies are the lessees Leases where a significant portion of the risks and rewards of ownership are retained by the lesser are classified as operating leases. Payments made under operating leases (net of any incentives received from the lesser) are charged to the consolidated income statement on a straight-line basis over the period of relevant leases. 15 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued J. Operating leases-continued (2) The Group companies are the lesser Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognized on a straight-line basis over the lease term. K. Inventories Inventories are stated at the lower of cost or net realizable value. Raw material and Low-value consumption articles are stated at the purchase price. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. L. Trade receivables Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is an objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers. M. Cash and cash equivalents Cash and cash equivalents are defined as cash on hand, demand deposits and short term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents are carried in the consolidated balance sheet at cost. For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and bank deposits. 16 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued N. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The compensation can be recognized as assets when the Group forecast the provision can be compensated. O. Borrowing costs Borrowings are carried in the consolidated balance sheet at cost. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are expensed. P. Employee benefits (1) Pension scheme The Group participates in a defined contribution retirement scheme organized by the respective municipal governments where the Group companies operate. The Group is required to make contributions for its employees in accordance with prescribed rules and regulations of the pension scheme. Contributions to the scheme are charged to the consolidated income statement in the year to which they relate. (2) Termination benefits Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. 17 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued P. Employee benefits-continued (3) Accommodation benefits Contributions to an accommodation fund administered by the Public Accommodation Funds Administration Center are charged to the income statement as incurred. Q. Revenue recognition Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably. Revenue, probably obtained by the Group is recognized in the income statement as follows: (1) Sale of goods Revenue is recognized when goods are delivered at the customers’ premises which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership. Revenue excludes value added or other sales taxes and is after deduction of any trade discounts. (2) Rental income from operating leases Rental income receivable under operating leases is recognized on a straight-line basis over the term of the lease. (3) Dividends Dividend income is recognized when the shareholder’s right to receive payment is established. (4) Interest income Interest income is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable. 18 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 4. Principal accounting policies-continued R. Income taxes PRC income tax is provided at rates applicable to enterprises in the PRC on the income for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax legislation, practices and interpretations thereof. Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognized for all deductible temporary differences, carry- forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable (greater than 50%) that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. S. Dividends Dividends are recorded in the Group’s consolidated financial statements in the period in which they are approved by the Group’s shareholders. T. Government grants and subsidies Grants and subsidies from the government are recognized at their fair value where there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs, which it is intended to compensate. Where the grant or subsidy relates to an asset, the fair value is deducted in arriving at the carrying amount of the related asset. 19 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 5. Subsidiary companies At 31 December 2005, the Company had investments in the following principal subsidiaries: Registered Equity capital interest Company’s name RMB ’000 (%) Principal activities Shanghai Shanggong Import & Export 32,000 90 Provision of import and export business Co., Ltd. Shanghai Flyingman Import and 10,000 80 Provision of import and export business Export Co., Ltd. Shanghai Shuangchong Sewing Manufacturing and sale of sewing machines 12,000 70 Machine Co., Ltd. and spare parts Shanghai Industrial Sewing Properties Properties development and provision of 5,000 90 Development Co. Ltd. consultation and management services Shanghai Shangyuan Technology Development and design of sewing machines 6,000 70 Development Co., Ltd. and provision of consultation services Shanghai Sifangtongji Purified Water 10,550 91.54 Manufacturing and sale of purified water Co., Ltd. Shanghai Shanggong Jiarong Sewing Manufacturing and sale of household sewing 4,000 55 Machine Co., Ltd. machines and spare parts Shanghai Shanggong Fangtian Manufacturing and sale of sewing machines 3,000 60 Machinery Co., Ltd. and spare parts Manufacturing and sale of sewing machines Shanghai Shanggong Xinda Sewing 3,100 67.74 and spare parts and provision of after sale Machine Co., Ltd. services Shanghai Butterfly Import and Export 10,000 80 Provision of import and export business Co., Ltd. Shanghai Shanggong Songda Manufacturing and sale of sewing machines 3,000 65 Machinery Co., Ltd. and spare parts Shanghai Shanggong Jiayuan Manufacturing and sale of sewing machines Machinery & Electronic Technology 3,000 56 and spare parts Co., Ltd. Shanghai shanggong asset operat 30,000 90 Investing and consulting &manage Co.,Ltd. Manufacturing and sale of office equipment SMPIC Corporation Ltd. 125,000 90 and glass products ShangGong (Europe) Holding Corp. Investment & Management, Manufacturing EUR10,000 100 GmbH and sale of sewing machines 20 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 6. Sales Sales of the Group are mainly made in the PRC and Germany, and mainly represent the sale of sewing machines, material handling and related spare parts to customers, at invoiced value net of any trade discounts, sales tax and value-added tax, after eliminating inter-company transaction amounts. 2005 2004 RMB ’000 RMB ’000 Sales: Sewing equipments 956,864 491,911 Glass products - 120,960 Export agency 207,745 205,183 Material handlings 150,555 - Office equipments 100,570 120,691 Biochemistry product - 28,114 Film products 50,591 41,751 Others 14,600 10,741 1,480,925 1,019,351 21 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 7. Other Operating profits 2005 2004 RMB ’000 RMB ’000 Other operating income: Material selling income 11,085 14,333 Rental income 13,050 10,818 Trademark management 988 392 Service income 2,524 4,831 Technical consultation - 4 Interest income 4,701 4,794 Other gains from investments 28,623 75,562 Gains from disposal of fixed assets 731 32,599 Others 3,748 2,814 65,450 146,147 Other operating expenses: Materials selling cost 27,492 13,206 Provision for bad and doubtful debts 79,794 8,729 Provision for impairment loss of inventories 22,998 2,511 Provision for impairment loss of long-term investments 4 29 Provision for impairment loss of other investments - 24 Provision for impairment loss of fixed assets (24) (6,280) Others 126 87 130,390 18,306 Net income from other operating (64,940) 127,841 22 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 8. Finance costs 2005 2004 RMB ’000 RMB ’000 Interest expense 49,782 30,808 Net exchange losses 7,348 452 Others 2,548 1,192 59,678 32,452 9. Profit before tax 2005 2004 notes RMB ’000 RMB ’000 Included in the profit before income tax are the following revenue items: Sales 6 1,480,925 1,019,351 Other operating income 7 65,450 146,147 Profit before income tax is arrived at after charging the following expenses: Other operating expenses 7 130,390 18,306 Interest expenses 8 49,782 30,808 Exchange losses 8 7,348 452 Depreciation of fixed assets 13 73,009 36,467 Amortization of intangible assets 12 14,367 16,673 Staff costs: 104,360 61,789 -Wages and salaries 90,278 48,574 -Retirement costs (defined contribution fund) 14,082 13,215 23 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 10. Income tax expenses Pursuant to relevant PRC tax regulations, the income tax rate applicable to the Company is 15%. The Group’s subsidiaries are subject to tax rates applicable to enterprises located in the PRC and the other countries. 2005 2004 RMB ’000 RMB’000 Company and subsidiaries (10,598) 13,029 Share of taxation of associates 48 367 (10,550) 13,396 Provision income tax for the year 3,288 13,396 Deferred taxation (13,838) - (10,550) 13,396 11. Earnings per share Earning per share is calculated by dividing the Group’s net profit attributable to shareholders of the parent for the year ended 31 December 2005 of RMB –277,105,000 (2004: RMB 1,817,000) and the number of 448,886,777 “A” and “B” shares in issue (2004: 448,886,777 shares) during the year. 24 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 12. Intangible assets Trademark Land use rights Know-how Total RMB ’000 RMB ’000 RMB ’000 RMB ’000 Original value: At 12 December 2004 20,161 232,376 2,327 254,864 Additions - - 41,891 41,891 Disposal - - (13) (13) At 12 December 2005 20,161 232,376 44,205 296,742 Amortization: At 12 December 2004 7,056 54,456 791 62,303 Amortization (note 9) 2,016 4,010 8,341 14,367 Written back for the year - - - - At 12 December 2005 9,072 58,466 9,132 76,670 Net value At 12 December 2005 11,089 173,910 35,073 220,072 At 12 December 2004 13,105 177,920 1,536 192,561 25 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 13. Fixed assets Machinery Furniture and Motor and office Buildings equipment vehicles equipment Total RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 Cost: At 12 December 2004 237,343 422,517 21,398 19,663 700,921 Addition 325,304 314,511 1,126 315,948 956,889 Transfer from construction in progress (note14) 8,395 1,501 75 - 9,971 Disposal (1,200) (51,079) (6,181) (18,655) (77,115) At 12 December 2005 569,842 687,450 16,418 316,956 1,590,666 Accumulated depreciation: At 12 December 2004 63,027 250,439 14,046 15,048 342,560 Addition for the year 198,370 277,504 2,009 273,550 751,433 Written back for the year (703) (44,283) (5,363) (18,141) (68,490) At 12 December 2005 260,694 483,660 10,692 270,457 1,025,503 Provision for impairment: At 12 December 2004 4,914 70,349 - - 75,263 Charge for the year - - - - - Written back for the year - (25) - - (25) At 12 December 2005 4,914 70,324 - - 75,238 Net book value after provision: At 12 December 2005 304,234 133,466 5,726 46,499 489,925 At 12 December 2004 169,402 101,729 7,352 4,615 283,098 (a) Certain buildings of the Group were pledged on the short-term bank loans amounting to RMB 74,290,000(note 27). (b) The above depreciation additions include the amount of RMB 678,424,000 caused by the first consolidation with of ShangGong (Europe) Holding Corp. GmbH, a subsidiary of the Company, and RMB 73,009,000 charged for the year (note9). The Company’s directors are of the opinion that the provision for impairment of fixed assets is adequate and appropriate. 26 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 14. Construction in progress 2005 2004 RMB ’000 RMB ’000 At 12 December 2004 8,449 9,248 Additions 7,497 20,774 Transfer to fixed assets (9,971) (11,293) Other decrease (766) (10,280) 5,209 8,449 Provision for impairment of construction in progress (182) - At 12 December 2005 5,027 8,449 No interest costs on borrowings are capitalized during the year (2004: Nil). The Company’s directors are of the opinion that the provision for impairment of construction in progress is adequate and appropriate. 15. Interests in associates 2005 2004 RMB’000 RMB’000 At beginning of year 52,118 26,828 Share of results before tax (11,118) (805) Share of tax (48) (366) Dividends received (132) - Disposal associates (5,117) (23,800) Others (5,579) 50,261 At end of year 30,124 52,118 27 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 15. Interests in associates-continued Particulars of the associates, which were all established and operate in the PRC, are as follows: equity interest Company’s name (%) Principal activities Shanghai Fuhua Light Industrial 55% Manufacturing and sale of sewing machine Machinery Co., Ltd. Shanghai Yongde Economic Development 80% Electric equipment and parts、construct hardware Co., Ltd. Nantong Shanggong sewing machine Co., 65% Manufacturing and sale of sewing machine Ltd. Shanghai Juki Sewing Machine Co., Ltd. 30% Manufacturing and sale of household sewing machine Shanghai Industrial Sewing Machine 54.49% Manufacturing of paint coating Maoqiao Paint Coating Factory Shanghai Sewing Machine No. 4 Factory 68% Manufacturing of sewing machine parts Sijing Associated Factory Changshu Qixing Electroplate Hardware 45% Manufacturing of hardware Co., Ltd. Shanghai SMPIC Hui-he Office Equipment 30% Manufacturing and sale of office equipment Co.,Ltd. Shanghai Baochi Great Wall Printing 20% Manufacturing and sale of Number-Machine Number Machine Co.,Ltd. Polaroid of shanghai Ltd. 27% Sale of digital & Photo sensitive products Shanghai SMPIC Light Communication 30% Manufacturing and sale of Communications Materials Co.,Ltd. Shanghai SMPIC ChangFeng Kryptol 20.77% Manufacturing and sale of Kryptol Co.,Ltd. Shanghai Yichang Office Equipment 50% Manufacturing and sale of office equipment Co.,Ltd. Shanghai SMPIC BoWen modern office 52.50% Sale of office equipment equipment Co., Ltd. 28 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 16. Available-for-sale investments 2005 2004 RMB ’000 RMB ’000 Listed investments 28,120 28,118 Unlisted investments 53,144 44,865 Others - 1,055 81,264 74,038 Provision for impairment of Available-for-sale investments (1,829) (1,837) 79,435 72,201 Available-for-sale investments represent listed and unlisted investments incorporated companies of not more than 20% of their share capital/paid up capital. Investments in listed companies represent various legal person shares in certain listed companies in the PRC. Pursuant to the legal relevant regulations issued by relevant PRC authorities, legal person shares are not transferable and not allowed to be traded on the stock markets except with the approval of relevant authorities. Such investments are measured at cost. At 31 December 2005, available-for-sale investments other than the investments in legal person shares of the Group have neither a quoted market price in an active market nor a fixed maturity, and are measured at cost after assessment of impairment. The Company’s directors are of the opinion that the provision for impairment of available-for- sale investments is adequate and appropriate. 29 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 17. Goodwill RMB ’000 Cost： At 1 January 2004 and 31 December 2004 135,615 Acquisition of subsidiary in 2005 27,915 Elimination of accumulated amortization upon the application of IFRS 3 (56,414) At 31 December 2005 107,116 Accumulated amortization： At 1 January 2004 43,969 Provided for the year 12,445 At 31 December 2004 56,414 Elimination of accumulated amortization upon the application of IFRS 3 (56,414) At 1 January 2005 and 31 December 2005 - Accumulated impairment losses： At 1 January 2004 and 31 December 2004 - Provided for the year 10,937 At 31 December 2005 10,937 Net book value： At 31 December 2005 96,179 At 31 December 2004 79,201 At the balance sheet date, the Directors of the Company reviewed the carrying amount of goodwill with reference to the recoverable amount, and no impairment loss was identified and charged to the income statement. 30 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 18. Deferred income tax assets 2005 2004 RMB ’000 RMB ’000 Deferred income tax assets 81,366 - The above balance amount of deferred income tax assets, represented in balance sheet, is calculated by using the balance sheet liability method by DA AG according to the related taxation regulations of the counties registered in. 19. Inventories 2005 2004 RMB ’000 RMB ’000 Raw materials 218,155 49,242 Work in progress 152,431 28,549 Finished goods 253,589 157,248 Low-value consumable articles 2,646 2,293 626,821 237,332 Provision for impairment (150,318) (33,753) 476,503 203,579 The Company’s directors are of the opinion that the provision for impairment of inventories is adequate and appropriate. 20. Trade receivable 2005 2004 RMB ’000 RMB ’000 Book balances 515,457 229,216 Provision for bad debts (125,391) (48,218) Carrying amounts 390,066 180,998 31 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 21. Due from / (to) shareholders The amounts due from/(to) shareholders are unsecured, interest-free and are repayable on demand. 22. Due from / (to) associates The amounts due from/(to) associates are unsecured, interest-free and are repayable on demand. 23. Due from / (to) related companies The amounts due from/(to) related companies are unsecured, interest-free and are repayable on demand. 24. Prepayments and other receivables 2005 2004 RMB ’000 RMB ’000 Prepayments 19,245 7,468 Other receivables 76,596 121,885 95,841 129,353 Provision for bad debt (28,781) (23,438) 67,060 105,915 The Company’s directors are of the opinion that the provision for prepayments and other receivables is adequate and appropriate. 25. Trading investments 2005 2004 RMB ’000 RMB ’000 Fund investment 612 1,387 Bond investment 210 28,300 822 29,687 32 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 26. Accruals and other payables 2005 2004 RMB ’000 RMB ’000 Advances from customers 40,569 14,401 Other payables and accrued liabilities 233,608 81,377 274,177 95,778 27. Short-term bank loans 2005 2004 RMB ’000 RMB ’000 Short-term bank loans: Secured 399,116 514,460 Unsecured 121,700 88,070 520,816 602,530 Short-term bank loans: Due in one year 520,416 601,510 Long-term loan repaid in one year 400 1,020 520,816 602,530 (a) The short-term bank loans include secured bank loans in a total amount of RMB 74,290,000 (2004: RMB 72,790,000). The short-term bank loans are secured over certain of the buildings of the Group (note 13). 33 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 27. Short-term bank loans-continued (b) Certain short-term bank loans of the Group guaranteed by the following companies: 2005 2004 RMB’000 RMB’000 Shanghai Huayuan Enterprise Development Co., Ltd.* 45,300 127,870 Shanghai Construction Material (Group) Company - 70,500 China Huayuan Group Co., Ltd. - 97,300 Shanghai PuDong Development (Group) Co., Ltd. 158,120 - Shanghai Jiuhe Enterprise Development Co., Ltd. - 2,000 Shanghai Industry Economic Assurance Co., Ltd. - 10,000 203,420 307,670 * The Group has provided cross guarantees for bank borrowings granted to these companies. Details are shown in note 35. (c) The bank loans RMB121,406,000 (2004: RMB134,000,000) are impawned over bank deposit and trade receivables. 28. Long-term bank loans 2005 2004 RMB’000 RMB’000 Long-term bank loans: Unsecured 1,610 1.490 34 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 29. Long-term payables 2005 2004 RMB’000 RMB’000 Pension 506,755 FAG 259,061 - Others - 1,627 765,816 1,627 The pension above is calculated by DA AG according to the law in German, DA AG is a subsidiary company of the Group registered and operating in Germany. The amount of FAG is due to the arrearage of ShangGong (Europe) Holding Corp. GmbH, a subsidiary of the Company, to FAG Kugelfischer GmbH, the ex-shareholder of DA AG. 30. Deferred income tax liabilities 2005 2004 RMB’000 RMB’000 Deferred income tax liabilities 30,238 1,197 The above balance amount of deferred income tax liabilities, represented in balance sheet, is calculated by using the balance sheet liability method by DA AG according to the related taxation regulations of the country registered in. 35 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 31. Share capital At 31 December 2005, the registered and issued share capital of the Company are as follows: 2005 2004 RMB ’000 RMB ’000 A shares of par value of RMB 1 each issued to: State government of the PRC 143,468 143,468 PRC corporate investors 40,844 40,844 PRC individual investors 20,631 20,631 204,943 204,943 B shares of RMB 1 each issued to: Overseas investors & inland investors 243,944 243,944 448,887 448,887 The holders of A and B shares carry equal rights with respect to the distribution of the Company’s assets and profits and are ranked pair passes in all other respects. The A shares may only be held by the PRC Government and PRC investors; the B shares may be held by foreign investors and PRC investors as well. 36 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 32. Reserves Statutory Discretion Accumul Other Statutory public -ary -ated Share capital surplus welfare surplus profits/ Exchange premium reserve reserve fund reserve (losses) difference Total (a(i)) (a(ii)) (b(i)) (b(ii)) (b(iii)) (c) RMB RMB RMB RMB RMB RMB RMB RMB ’000 ’000 ’000 ’000 ’000 ’000 ’000 ’000 At 31 December 2003 434,277 7,700 7,145 7,145 - 6,204 - 462,471 Net income for 2004 - - - - - 1,817 - 1,817 Transfer to reserves - - 7,342 4,146 - (11,488) - - Transfer to capital (58,551) - - - - - - (58,551) Others - 189 (579) (579) - 1,158 - 189 At 31 December 2004 375,726 7,889 13,908 10,712 - (2,309) - 405,926 Net income/(loss) for 2005 - - - - - (277,105) - (277,105) Transfer to reserves - - 779 679 - (1,458) - - Exchange difference - - - - - - (12,145) (12,145) Others - 175 (39) (38) - 175 - 175 At 31 December 2005 375,726 8,064 14,648 11,353 - (280,795) (12,145) 116,851 (a) Share premium and other capital surplus （i）Share premium represents the premium on the issue of ordinary shares. Pursuant to relevant PRC regulations, capital reserve and share premium can be used to increase ordinary shares subject to approval by shareholders at general meeting. （ii）Other capital surplus mainly includes the transferring of the former appraised added value of assets. 37 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 32. Reserves -continued (b) Reserve funds （i）Statutory surplus reserve The Group is required each year to transfer 10% of the profit after tax as reported under the PRC statutory financial statements to the statutory surplus reserve until the balance reaches 50% of the registered share capital. This reserve can be used to reduce any losses incurred or to increase ordinary shares. Except for the reduction of losses incurred, any other usage should not result in this reserve balance falling below 25% of the registered capital. （ii）Statutory public welfare fund The Group is required each year to transfer 5% - 10% of the profit after tax as reported under the PRC statutory financial statements to the statutory public welfare fund. This reserve is restricted to capital expenditure for staff collective welfare facilities, which are owned by the Group. The statutory public welfare fund is not available for distribution to the shareholders except upon liquidation of the Company. (ⅲ) Discretionary surplus reserve The discretionary surplus reserve can be set up by means of appropriation from the retained earnings or transfer from statutory public welfare fund. Subject to approval by shareholders in general meeting, the reserve can be used to reduce any losses incurred, to increase ordinary shares or for paying dividends. Any transfer to the reserve also requires the approval of shareholders at general meeting. （iv）Transfer from profit for the year The amount transferred to the statutory surplus reserve and statutory public welfare fund shall be based on the profit after tax in the statutory financial statements prepared in accordance with PRC GAAP. （c）Profit distributable to shareholders Pursuant to a document issued by the Ministry of Finance of the PRC, the profit after appropriation to reserves and available for distribution to shareholders shall be the lower of the accumulated distributable profits as determined based on PRC GAAP and the accumulated distributable profits adjusted according to IFRS. 38 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 33. Cash generated from operations 2005 2004 RMB’000 RMB’000 Profit before tax (286,368) 21,913 Adjustments for: Minority interests (1,287) (6,700) Depreciation 73,009 36,467 Provision /(written back) for bad debt 79,794 8,729 Provision /(written back) for impairment loss of inventories 22,998 (2,511) Provision /(written back) for impairment loss of long-term - 29 Provision /(written back) for impairment loss of fixed assets (24) (6,550) Provision /(written back) for impairment loss of short-term (8) 24 Amortization of intangible assets 14,367 16,673 Net loss/(gain) from disposal of fixed assets 731 (30,967) Interest (income) (4,701) (3,347) Loss/(gain) from investment (16,035) (9,405) Loss/(gain) from disposal of long-term investment (911) (63,524) Interest expenses 49,782 39,283 Loss/(gain) from foreign exchange 3,667 452 Profit before working-capital (64,986) 566 Decrease/(increase) in inventories 65,820 (38,025) Decrease /(increase) in notes receivables (23,757) 86,531 Decrease /(increase) in accounts receivables (250,768) (115,259) Decrease/(Increase) in prepayments and other receivables (15,486) (17,027) Increase/(decrease) in notes payables (390) (27,706) Increase/(decrease) in accounts payables 28,597 (818) Increase/(decrease) in accruals and other payables 261,739 22,179 Increase/(decrease) in tax payables (3,636) 46,800 Deferred tax (assets)/liability (32,571) - Increase/(decrease) in deferred income 967 - Increase/(decrease) in other accrued payables - 60,676 Cash flow from operating activities (34,471) 17,917 Income tax paid (10,294) (2,000) Net cash outflow from operating activities (44,765) 15,917 39 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 34. Related party transactions (a) Relationships In the opinion of the directors, Shanghai Pudong New Area State-owned Assets Management Office, a company incorporated in the PRC and which owns 26.40% of the Company’s shares, is the major shareholder of the Company. Particulars of principal subsidiaries and associates are shown in note 5 and note 15 respectively. (b) During 2005, the Group has the following transactions with related parties: 2005 2004 Kind of transaction RMB’ 000 RMB’ 000 Provide finance to shareholders - 197,130 Provide finance to associates 51 142,130 Provide finance to related companies 408,380 - Purchase of shares of subsidiary to shareholders - 189,110 Disposal of subsidiary to related parties - 93,416 Purchase of Land use rights to shareholders - 89,579 (c) Details of balance with shareholders, associates and related companies are set out in notes21, 22, 23 respectively. (d) Key managements’ remuneration The total remuneration of the key managements for the year was approximately RMB 1,989,500 (2004: RMB2, 399,600). 40 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 35. Commitments and contingents (a) At 31 December 2005, the Group had provided guarantees for bank borrowings granted to the following companies: 2005 2004 RMB’000 RMB’000 Shanghai Huayuan Enterprise Development Co., Ltd.* 139,000 140,000 Shanghai Construction Material (Group) Company - 70,000 China Huayuan Group Co., Ltd. - 30,000 Shanghai Filiale Of China Economy Technology Investment Assurance Co., Ltd. - 4,250 Shanghai Xin-hu Glasswork Co., Ltd. - 1,150 Shanghai Shanggong Needle Co., Ltd. 5,000 19,010 144,000 264,410 * The company has provided cross guarantees in respect of bank short-term bank loans granted to the Group. Details are shown in note 27. (b) During 2005, the lawsuit, in which the Company litigated for the impawn case of the national debts amounting to RMB 28,300,000, has not been settled up to the end of the current report year. With purpose of supporting the normal operations of the Company, Shanghai Pudong New Area State-owned Assets Management Office, the major shareholder of the Company has transferred the amount of RMB 28,300,000 to the Company on December 31,2005. (c) According to the share of DA AG sale and purchase agreement between the Company and FAG Kugelfischer GmbH (the “FAG”), the Company was obliged to provide relevant guarantees as follows: (i) The Company undertakes to reimburse the shareholder loans to FAG for ShangGong (Europe) Holding Corp. GmbH, a subsidiary of the Company, and the aggregate amount shall not exceed EUR 12,500,000. (ii) The Company’s certain buildings and RMB 30,000,000 deposit are pledged to Shanghai Bank on the re-guarantee of the Financing Guarantee Letter relating to EUR 9,000,000 Credit Limitation, which is approved to DA AG by the WestLB, a bank in Germany. 41 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 35. Commitments and contingents-continued (iii) The Company offers a performance guaranty amounting to USD 5,300,000 for the housing lease contract of DA AG’s subsidiary in United States. The period of validity is from June 30, 2005 to October 31, 2015. 36. Pension scheme The PRC companies within the Group participate in certain employee pension scheme managed by local governmental organizations. According to the relevant provisions, the Group is required to make contributions to local government organizations based on 22.5% (2004: 22.5%) of the basic salaries of the employees. The Group has no further liabilities other than the above contributions. 37. Subsequent events (non-adjusted events) (a) During the period subsequent to the balance sheet date, the group borrowed short-term bank loans RMB 181,370,000 and repaid the loans RMB167,320,000. (b) On April 11 2006, the Company established a new subsidiary named Dürkopp Adler Trading (Shanghai) Co., Ltd. in shanghai, PRC. The registered capital is USD 1,500,000. 42 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 38. Other significant events (a) During 2005, the major shareholder of the company, Shanghai Light Industrial Holding (Group) Company transferred 26.40% State government shares to Shanghai Pudong New Area State-owned Asset Management Office. All the legal procedures have been fulfilled. (b) On April 17 2006, the proposal of reform on non-tradable shares was pronounced. The proposal will be carried out in 2006. According to the proposal, for the purpose that all the non- tradable A shares become tradable on a certain date in future, the main non-tradable A share shareholders will transfer to the tradable A share shareholders 4.5 shares for every 10 listed shares held by these shareholders for zero consideration. All expenses occurred during the share reform procedure have been and will be burdened by the major shareholder Shanghai Pudong New Area State-owned Assets Management Office. 39. Impact of IFRS adjustments on the PRC statutory financial statements The impact of IFRS and other adjustments on the PRC statutory financial statements is as follows: 2005 2005 Profit attribute to Equity attribute equity holders to equity holders of the parent of the parent RMB’000 RMB’000 As per the PRC statutory financial statements (276,608) 565,890 IFRS and other adjustments -Recognition excess losses of investments (2,853) - -Elimination of unrealized gains/(losses) on transaction to associates 241 (152) -Written-back of the long-term prepayments 2,115 - As restated after IFRS and other adjustments (277,105) 565,738 43 SGSB GROUP CO., LTD. Year ended 31 December 2005 Notes to the Financial Statements (Cont’d) For the year ended 31 December 2005 (Expressed in RMB) 40. Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. 41. Approval of the consolidated financial statements The consolidated financial statements were approved and authorized for issue by the Board of Directors of the Company on 20th April 2006. 44