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神州长城(000018)公告正文

ST中冠B:2011年半年度报告(英文版)

公告日期:2011-08-30

    深圳中冠纺织印染股份有限公司
    Shenzhen Victor Onward Textile Industrial Co., Ltd.
    2011年半年度报告
    The Semiannual Report 2011
    August 29, 2011
    1/102
    Important Notes
    The board of directors and directors of the Company hereby guarantees that there are no false records,
    misleading representation or important omissions in this report and shall assume joint and several liability
    for the authenticity, accuracy and completeness of the contents hereof.
    Hu Yongfeng, Chairman of the Board of Directors and General Manager, Mr.Zhang Jinliang, Deputy General Manager
    and Mr. Ren Changzheng, Manager of Finance Department represent and warrant the financial and accounting report in
    the Semi-annual report is true and complete.
    The financial report of the semi-annual report has not been audited.
    2/102
    Table of contents
    Chapter I. Brief Introduction of the Company
    Chapter II. Change of Share Capital and Shareholding of Principal Shareholders
    Chapter III. Information about Directors, Supervisors and Senior Executives
    Chapter IV. Report of the Board of Directors
    Chapter V. Important Events
    Chapter VI. Financial Report (Unaudited)
    Chapter VII. List of Documents Available for Inspection
    3/102
    Chapter I. Brief Introduction of the Company
    I. Brief Introduction of the Company
    (I) Name of the Company in Chinese: 深圳中冠纺织印染股份有限公司
    Name in English:        Shenzhen Victor Onward Textile Industrial Co., Ltd.
    English abbreviation: VICTOR ONWARD
    (II) Stock exchange for listing: Shenzhen Stock Exchange
    Stock Abbreviation: ST Victor Onward A, ST Victor Onward B
    Stock Code : 000018, 200018
    (III) Registered address: No. 26, Kuipeng Road, Baishigang, Kuiyong Town, Longgang District, Shenzhen
    Office address: No. 26, Kuipeng Road, Baishigang, Kuiyong Town, Longgang District, Shenzhen
    Contact address: Room 1308, Hualian Building, No.2008 Shennan Zhong Road, Shenzhen
    Zip Code: 518119
    Website: http://www.chinaszvo.com
    E-mail:szvo@chinaszvo.com
    (IV) Legal Representative: Hu Yongfeng
    (V) Secretary of the Board of Directors : Zhang Jinliang
    Contact address: Room 1308, Hualian Building, No.2008 Shennan Zhong Road, Shenzhen
    Tel: (755)83668254
    Fax: (755)83668427
    E-mail:cx@chinaszvo.com
    (VI) Designated newspapers for information disclosure: Securities Times and Hong Kong Commercial
    Daily
    Designated website for information disclosure: http://www.cninfo.com.cn
    The place for preparing and placing the semiannual report: Secretariat of the Board of the Company
    (VII) Other Relevant Information:
    1. The date and place when and where the Company made its first registration:
    The Company was first registered as Shenzhen Victor Onward Printing and Dyeing Co., Ltd. in
    Shenzhen in 1984.
    The Company changed its registration and was registered as Shenzhen Victor Onward Textile Industrial
    Co., Ltd. in Shenzhen in 1991.
    2. Company’s Enterprise Legal Business Registration Number::440301501131182
    3. Tax Registration No.: 440301618801483
    4. The name and business address of the Certified Public Accountants engaged by the Company
    Name: Shinewing Certified Public Accountants
    Address: Room 4001A,Lianhe Plaza, Futian District, Shenzhen, China
    II. Highlights of financial data and indexes
    (I) Main profit indexes for the semi-annual 2011
    Unit: RMB
    End of the report     End of the     Increase /Decrease
    year           previous year        (%)
    4/102
    Total assets                    184,292,208.00          195,732,419.00                      -5.84%
    Owners’ equity attributable to shareholders
    131,308,677.00          142,929,499.00                      -8.13%
    of the listed company
    Share capital                    169,142,356.00          169,142,356.00                      0.00%
    Net assets per share attributable to
    shareholders of the listed                         0.78                   0.85                     -8.24%
    company(RMB/share)
    Report period           Same period last Increase /Decrease (%)
    (January-June)               year
    Total operating income                    5,528,810.00           5,280,588.00                     4.70%
    Operating profit                       -8,268,334.00          5,365,210.00                 -254.11%
    Total profit                        -8,261,438.00          5,364,951.00                 -253.99%
    Net profit attributable to shareholders of the
    -8,232,521.00          5,412,704.00                 -252.10%
    listed company
    Net profit attributable to shareholders of the
    listed company after deducting                 -8,253,558.00          5,412,963.00                 -252.48%
    non-recurring gains and losses
    Basic earnings per share(RMB/share)                         -0.05                  0.03                 -266.67%
    Diluted earnings per share(RMB/share)                        -0.05                  0.03                 -266.67%
    Return on equity(%)                            -6.08%                 3.69%                      -9.77%
    Net cash flow arising from operating
    815,584.00            -371,870.00                 -319.32%
    activities
    Net cash flow per share arising from
    0                  0                     0.00%
    operating activities (RMB/share)
    (2) Items of non-recurring gains and losses deducted(yuan)
    Notes(if
    Items of non-recurring gains and losses                           Amount
    applicable)
    Gains and losses of non-recurring                                                              -529
    Except the effective hedge business related to the normal
    operation business of the Company, the profit and loss in
    the changes of fair values caused by the holding of tradable
    financial assets and tradable financial liabilities as well as                            14,141
    the investment returns in disposal of tradable financial
    assets, tradable financial liabilities and saleable financial
    assets
    Other non-operating income and expenditure beside for the                                     7,425
    above items
    Total                                                      21,037            -
    (3) Attached schedule of profit statement
    Return on net assets, Weighted
    Profit in the report period                                                            Earnings per share
    (%)
    5/102
    Diluted
    Basic earnings
    earnings per
    per share
    share
    Net profit attributable to the
    owners of parent Company.                               -0.05                         -0.05                 -0.05
    Net profit attributable to the
    owners of parent Company after
    deducting      of      non-recurring                    -0.05                         -0.05                 -0.05
    gain/loss.
    (IV)Difference adjustment statement of accounting statement :
    Unit:RMB
    Net profit attributable to shareholders of the Owner equity attributable to shareholders of
    listed company                                   the listed company
    Beginning of the
    Current term       Same period last year End of the report year
    report year
    Pursuant to overseas
    -8,175,265.00              5,472,350.00         124,454,625.00               135,858,634.00
    accounting standards
    Pursuant to Chinese
    -8,232,521.00              5,412,704.00         131,308,677.00               142,929,499.00
    accounting standards
    Subitem and total adjusted pursuant to international accounting standards::
    Switch back the part of
    Hong Kong house
    57,256.00                 59,646.00            -6,854,052.00               -7,070,865.00
    property assessment in
    accordance with IAS
    Total difference of
    Chinese and overseas                     57,256.00                 59,646.00            -6,854,052.00               -7,070,865.00
    accounting standards
    Notes difference of
    The influence of appreciation through appraisal of workshop and 2 parking spaces in Hong
    Chinese and overseas
    Kong in 1992.
    accounting standards
    IV. Particulars about Changes in Shareholders' Equity in the Report Period
    Owner’s equity Attributable to the Parent Company                    Minor           Total       of
    Items          Share                                    Attributable                   shareholders’ owners’
    Other
    Capital                                      profit                         equity             equity
    Balance at
    the
    169,142,356    39,872,534    26,704,791     -98,665,017    5,874,835          -1,311,595       141,617,904
    beginning of
    current year
    Changed in
    -215,997                    -8,232,521    -3,172,304            -28,917       -11,649,739
    the current
    6/102
    year
    Balance at
    the end of         169,142,356    39,656,537      26,704,791    -106,897,538       2,702,531         -1,340,512       129,968,165
    this term
    Chapter II. Change of Share Capital and Shareholding of Principal Shareholders
    I. Particulars schedule of change in share capital
    The total number and the structure of the shares of the Company remained unchanged in the report
    period.
    The statement of changes of share capital
    Unit:Shares
    Before this change                     Increase or decrease this time (+/-)                     After this change
    Quantity        Proportio     Issuin          Transfe                                           Quantity        Proporti
    Bo
    n%             g of             rred                                                            on%
    nus
    new               from           Other             Subtotal
    sha
    share           reserve
    res
    s                 s
    I. Share
    with
    conditiona
    0            0           0     0            0                0                   0              0           0
    l
    subscriptio
    n
    1.State-own
    0            0           0     0            0                0                   0              0           0
    ed shares
    2.Staee-ow
    ned       legal
    0            0           0     0            0                0                   0              0           0
    person
    shares
    3.Other
    domestic                     0            0           0     0            0                0                   0              0           0
    shares
    Of which:
    Domestic
    legal person                 0            0           0     0            0                0                   0              0           0
    shares
    Domestic
    natural
    0            0           0     0            0                0                   0              0           0
    person
    shares
    4.Foreign                    0            0           0     0            0                0                   0              0           0
    7/102
    shareholdin
    g
    Of
    which:
    Foreign
    legal person                   0       0        0     0            0      0      0              0         0
    shares
    Foreign
    natural
    0       0        0     0            0      0      0              0         0
    person
    shares
    II.     Shares
    with
    uncondition           169,142,356    100        0     0            0      0      0
    al
    169,142,356    100
    subscription
    1.Common
    shares           in    99,720,453   58.96       0     0            0      0      0     99,720,453   58.96
    RMB
    2.Foreign
    shares in
    69,421,903   41.04       0     0            0      0      0     69,421,903   41.04
    domestic
    market
    3.Foregin
    shares in
    0       0        0     0            0      0      0              0         0
    overseas
    market
    4.Other                    0       0        0     0            0      0      0              0         0
    III. Total
    of capital            169,142,356    100        0     0            0      0      0    169,142,356    100
    shares
    II. By the end of the report period, the Company had 11,858 registered shareholders in total, including
    7,259 shareholders holding A shares and 4,599 shareholders holding B shares.
    III. Top 10 shareholders and top 10 holders of unconditional shares
    Unit :shares
    Total number of shareholders                                       11,858
    Particulars about the shareholding of the top ten shareholders
    8/102
    Nature of        Proportion     Quantity of     Conditional     Pledged or
    Name of shareholder
    shareholder           (%)        shares held        shares         frozen
    Domestic
    non
    Union Holdings Co., Ltd.                 State-o        25.51%     43,141,032                   0              0
    wned
    Legal person
    Foreign
    STYLE-SUCCESS LIMITED                                   14.46%     24,466,029                   0              0
    Legal person
    Shenzhen Textile (Group)          State-owned
    5.64%     9,543,394                   0              0
    Holdings Co., Ltd                 Legal person
    Foreign
    Rich Crown Investment Co., Ltd.                           3.62%     6,114,556                   0              0
    Legal person
    Domestic
    non
    Union Developing Group Co.,
    State-o          3.44%     5,821,089                   0              0
    Ltd.
    wned
    Legal person
    Foreign
    BOCI SECURITIES LIMITED                                   1.15%     1,940,767                   0     Unknown
    Legal person
    GUOTAI JUNAN                      Foreign
    1.12%     1,895,600                   0     Unknown
    SECURITIES(HONGKONG)LIMITED       Legal person
    Foreign
    Shing Ying Chieh                  Nature                  1.11%     1.618,982                   0     Unknown
    person
    Domestic
    non
    Liuzhou Jiali Real Estate
    State-o          0.88%     1,496,000                   0     Unknown
    Development Co., Ltd.
    wned
    Legal person
    Domestic
    non
    Hualong Securities Co, Ltd.              State-o          0.82%     1,389,970                   0     Unknown
    wned
    Legal person
    Top 10 holders of unconditional shares
    Name of the shareholder                    Unconditional shares                 Type of shares
    Union Holdings Co., Ltd.                                        43,141,032        RMB Common shares
    Foreign shares placed in
    STYLE-SUCCESS LIMITED                                           24,466,029
    domestic exchange
    Shenzhen Textile (Group) Holdings Co.,
    9,534,394        RMB Common shares
    Ltd
    Foreign shares placed in
    Rich Crown Investment Co., Ltd.                                    6,114,556
    domestic exchange
    9/102
    Union Developing Group Co., Ltd.                                   5,821,089       RMB Common shares
    Foreign shares placed in
    BOCI SECURITIES LIMITED                                           1,940,767
    domestic exchange
    GUOTAI JUNAN                                                                      Foreign shares placed in
    1,895,600
    SECURITIES(HONGKONG)LIMITED                                                      domestic exchange
    Foreign shares placed in
    Shing Ying Chieh                                                   1.618,982
    domestic exchange
    Liuzhou Jiali Real Estate Development
    1,496,000       RMB Common shares
    Co., Ltd.
    Hualong Securities Co, Ltd.                                        1,389,970       RMB Common shares
    Notes to the related relationship            The controlling shareholder of the above-mentioned largest
    between     the    shareholders   or   their   shareholder Shenzhen Union Holdings Ltd. and fourth
    concerted action                               shareholder Rich Crown Investment Co., Ltd.. Is Union
    Developing Group Ltd.
    IV. The controlling shareholder of the Company
    The actual controller of the Company remained unchanged in the report period.
    Chapter III. Information about Directors, Supervisors and Senior Executives
    I. Status of Shareholding of Directors, Supervisors and Senior Executives
    In the report period, the directors, supervisors and senior executives of the Company neither held nor
    traded the shares of the Company.
    II. The changes of director, supervisors and senior executives in the report period
    In the report period, the shares of the Company held by the directors, supervisors and senior executives of the
    Company remained unchanged.
    Chapter IV. Report of the Board of Directors
    I. The discussion and analysis on the operation status
    The Company’s printing & dyeing plant in Shenzhen ceased production, Five subsidiaries controlled
    by the Company stopped the operation of relevant printing and dyeing business due to the production
    suspense of printing and dyeing mill and most of them maintained their daily operation by house property
    lease. The Company’s printing & dyeing plant in Shenzhen ceased production, Due to the reason on the side of the other
    party of joint venture and change of industry prospect,the capital increasing of the joint venture project has not
    yet completed. Recently, We have an increasingly hollow core business.
    (I) Operation achievements
    Unit: RMB’0000
    10/102
    January-June        January-June
    Items                                                    Increase/decrease   Increase/decrease(%)
    2011               2010
    Operating
    552                    528                 24                 4.55%
    income
    Operation profit             -826                   536             -1,362               -254.10%
    Total profit                 -826                   536             -1,362               -254.10%
    Net            profit
    attributable      to
    shareholders of              -823                   541             -1,364               -252.13%
    the            listed
    company
    1. Operation income conspicuously Increased by RMB 0.24 million year on year mainly due to Rental
    income has increased;
    2.Operation profit decreased by RMB 13.62 year on year mainly due to the operation loss of Zhejiang
    Union Hangzhou Bay Ventures, a joint stock subsidiary;
    3. The reason of Total profit and Net profit attributable to shareholders of the listed company dressed more
    than last year mainly due to abovementioned.
    (II) Financial status
    Unit:RMB’0000
    Change margin
    Items                       June 30, 2011         December 31, 2010    Increase/decrease
    (%)
    Total assets                                   18,429                  19,573                -1,144             -5.84%
    Shareholders’ equity attributable
    13,130                  14,292                -1,162             -8.13%
    Of the parent Company
    1.Total assets decreased by RMB 11.44 million over the beginning of the year
    mainly due to the operation loss and exchange rate changes of Zhejiang Union Hangzhou Bay Ventures, a
    joint stock subsidiary;
    2. Shareholders’ equity attributable of the parent Company Shareholders’ equity decreased by RMB 11.62 million
    over the beginning of the year mainly due to abovementioned.
    II. Operation in the report period
    (I) Scope of key business
    The Company's key business scope still covers printing and dyeing, processing and sales of all kinds of pure cotton, pure
    linen, polyester-mixed cotton, linen-mixed cotton and blended high-grade lining and the finished garments. The vacant
    ground and houses that became idle after production suspense were leased.
    (II) The industry or product whose income or profit accounts for over 10% of total income from key
    business or profit from key business in the report period
    Unit:RMB’0000
    The Status of key business in terms of industry of business
    11/102
    Increase/decreas                        Increase or
    e of income      Increase/decrease decrease of Gross
    In terms of business line     Income from        Cost of main     Gross profit            from main         of cost of main profit ratio from
    or product           main operation        operation       ratio(%)           operation over operation over the main operation
    the previous year previous year (%) over the previous
    (%)                                year (%)
    Bleaching, printing
    -100.00%          -100.00%           -71.15%
    and dyeing
    Lease                              552               233             57.79%               23.19%             11.59%             33.03%
    The status of key business in terms of Areas .
    Unit:RMB’0000
    Increase/decrease of income
    Area                                 Income from key business
    (%)
    China                                                                            461                                   2.44%
    Hongkong and overseas                                                            91                                   16.67%
    (III) The profit structure and key business structure in the report period much compared with the previous
    report period:
    1. The operating profit in the report period (RMB-826 million) decreased by RMB13.62 million over
    the same period of the previous year (RMB 5.36 million). The profit structure is as follows:
    Unit :RMB’0000
    Proportio      Amount of         Proportio
    Amount
    n to         same period         n to
    Items               of current                                                             Main reason for change
    operating of previous operating
    period
    profit %          year           profit %
    Profit    from        main
    319        -38.62%           292            54.48% Rental income has increased.
    operation
    Affected by decrease of business
    Selling expenses                                             38             7.09%
    volume
    Administrant
    431        -52.18%           430            80.22%
    expenses
    Financial
    36        -4.36%            -36            -6.72% Influence of Exchange ratio
    expenses
    Income                from
    -4        0.48%              -2            -0.37% Influence of market price fluctuation
    change in fair value
    With the impact of the Operating loss of Zh
    Investment income              -673       81.48%            678            126.49% ejiang Union Hangzhou Bay Ventures Comp
    any
    12/102
    2.key business structure in the report period
    Unit: RMB’0000
    Items                     In the report      The same period of    Increase/decrease Change
    period                last year        amount            margin (%)
    Bleaching, printing and
    104                -104
    dyeing
    Lease                        552                      424                128            23.19%
    The vacant ground and houses that became idle after production suspense were leased.
    (IV) The other business activities that have significant influences on the profit in this report period.
    None.
    (V)The income from investment in no joint venture accounted for more than 10% of the Company's net
    profit.
    Zhejiang Union Hangzhou Bay Ventures Co., Ltd., an affiliated company in which Hong Kong Victor
    Onward, a subsidiary of the Company, has invested for long term, earned accumulated losses of RMB
    26,995,474 in the report period. The income of the Company calculated and recognized on equity
    basis is RMB-6,748,868, accounting for 81.69% of net profit for the current period.
    (VI)Problems and difficulties occurred in operation
    The Company is a traditional printing and dyeing enterprise. The Company has faced the situation of no
    main operation. Due to delay of basic construction, Nanjing Factory failed to commence production as
    scheduled. The Capital increasing of the joint venture project has not yet completed
    There is no sign of improvement of the Company's printing and dyeing business in the near future and the
    Company is facing an operation predicament.
    III. Investment of the Company in the report period
    (1) There were neither funds raised in the report period nor those raised in previous periods whose use
    continued in the report period.
    (2) There were no projects invested with non-raised proceeds in the report period
    IV.Due to loss of real estate projects of Zhejiang Union Hangzhou Bay Ventures Co., Ltd. accounted for on
    equity basis, the accumulative net profit for the period from January 2011 to September 2011 is estimated
    to be loss and about RMB-15 million to RMB-12 million.
    V. The management’s remarks on any changes in and results of issues related to the ―non opinions‖ by the
    auditors for the previous year.
    (I) Basic information
    Shine Wing Certified Public Accountants issued unqualified auditor's report with paragraph of emphasized
    matters for the Company's financial statements for 2010. Basic information of emphasized matters: Since
    March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and dismissed most
    of workers. The Company have ceased production of the printing & dyeing plant in Shenzhen or are
    13/102
    maintaining daily operation by house property lease, And most subsidiaries of the company had stopped
    production and it maintained daily operation by house leasing. Shenzhen Victor Onward Textile Industrial
    Co., Ltd. had disclosed its improvement measures in Note 13 of Financial Statement, but its sustainable
    operation ability is still uncertain. This paragraph does not affect audit opinions that have been given.
    (2) Extent of influence of this matter on the Company:
    This event greatly impacted the production & operation activities and sustainable development of
    company, it made company had the situation of implementing other special treatment which was
    stipulated in Shenzhen Stock Exchange Listing Rules , the stock of our company had been implemented
    for other special treatment.
    (3) The possibility of eliminating this matter and its influence:
    Though the transfer of printing and dyeing business has been somewhat delayed, The board of directors of
    company is positively studying the future development of company to enhance company's sustainable
    operating ability.
    (4) Concrete measures
    The Company is communicating with joint venture partner and trying to minimize the losses and
    settle this joint venture project issue properly.
    Chapter V. Important Events
    I. Particulars about corporate administration
    (1)The Company has unceasingly improved its corporate governance structure, established modern
    enterprise system, standardized its operation and earnestly conducted governance work strictly according
    to the requirements of the Company Law and the Securities Law and relevant laws and regulations of
    CSRC. There was no great difference between the actual status of corporate governance and the
    requirements of relevant documents of CSRC.
    (2)Progress of Formulation of Internal Control Regulations
    According to the Notice of Experimental Work Concerning Internal Control Regulations of Listed Companies in
    Shenzhen (Shen Zheng Ju Gong Si Zi (2011) No. 31), the Company attached great importance to this matter, established
    internal control leading team and formulated the Scheme for Implementation of Internal Control Regulations of the
    Company, which was examined and adopted at the 15th meeting of the fifth board of directors.
    In the report period, The Company started to systematically straighten out all its systems. This work is still in progress.
    II. Implementation of profit distribution plan
    As approved by 2010 Annual Shareholders' General Meeting held on May 23, 2011, the Company neither
    distributed profit for the year 2010 nor capitalized any capital common reserve fund.
    III. The Company was not involved in any material lawsuits or arbitrations in the report period.
    IV. The Company was not involved any material assets acquisition or disposal and asset reorganization
    14/102
    occurred in the report period.
    V. Important related transactions
    Pricing of the transactions with related parties has all been based upon the normal market prices.
    (1) Related parties’ balance of receivable and payable account
    (Unit:RMB)
    Name of
    Name of Related parties                subject            June 30, 2011          December 31, 2010
    Accounts
    307,079                    314,198
    Shenye Union(HK) Co., Ltd. *                 receivables
    Union Group**                                Other payable               22,456,162                 22,564,462
    Shenzhen Union Property Group Co.,
    683,414                    699,258
    Ltd.**                                       Other payable
    * Provision has been in full preparation for bad debts
    ** The fund provided by related parties to the Company is the working capital loan provided by Union
    Group and Union Property to Nanhua Company, a subsidiary of the Company.
    changes mainly due to the impact of the exchange rate in the report period
    (2) Mutual credit guarantees with related parties
    N/A
    VI.Important contracts and their performance
    (I) The Company did not hold in trust or contract for the assets of other companies nor did other
    companies hold in trust or contract for the assets of the Company in the report period.
    (II) Other material contracts and external guarantees
    1. Important loan contracts- Short-term loans
    N/A.
    2The occupation of funds of the Company by the controlling shareholder and its subsidiaries: No
    N/A
    3.Important guarantees:
    In the report period, the Company did not provided the external guarantee mentioned in ZJF (2003) No. 56 Document
    issued by CSRC. There was no significant guarantee that was provided in previous periods but continued to be valid in
    the report period. The Company will actively implement the gist of ZJF No. 56 Document strictly according to the
    requirements of laws and regulations of the Company Law, the Securities Law, Stock Listing Rules and the Articles of
    Association of the Company, further standardize the fund transfer between the Company and the controlling shareholder
    and other related parties, lower operation risk and protect the legitimate rights and interests of investors.
    (III)The special statement and independent opinions of the independent directors on the external guarantee of the
    Company.
    According to relevant provisions of the Circular on Certain Issues Relating to Standardization of
    Fund Transfer Between Listed Companies and Their Related Parties and Guarantees Provided by Listed
    15/102
    Companies (ZJF (2003) No. 56 Document), the Circular of Strengthening Disclosure of Information about
    Fund Occupation and Regulation-violating Guarantee of Listed Companies (SZJFZ (2004) No. 338
    Document) and the Circular of Regulating External Guarantees Provided by Listed Companies (ZJF (2005)
    No. 120 Document), we hereby make special statement and express opinions on the status of fund
    occupation by related parties and external guarantee of the Company in the current period after learning
    the condition of the Company and looking up documents:
    As of June 30, 2011:
    (1)The company controlling shareholders and other related partiers do not possess company's funds;
    (2)The Company did not provide guarantee to its controlling shareholder and unincorporated entity or
    individual against regulations nor did the controlling shareholder and other related parties force the Comp
    any to provide guarantee to others
    VII Commitments events
    1. The external investment contract and the related financial expenses signed haven’t been executed or
    fully performed
    As of June 30, 2011, Group has signed a contract but there are still outstanding major agreement total foreign
    investment RMB 30 million .Specific conditions are as follows:
    Name                      Investment       Payable          Non-payable          Investmen       Notes
    amount         amount            amount of            t Period
    of             investment
    investme
    nt
    Investment in
    machinery       and
    equipment         in
    30 million              -             30 million
    Nanjing         East
    Asia       Textiles
    Co., Ltd
    2.The Signed or is ready to carry out the contract of large contracts
    As of June 30, 2011,The Group still has signed the agreement but did not pay large amounts of letting contracts total
    RMB 1.71 million. Specific conditions are as follows:
    Name               Contracts           Payable          Non-payab         Investme             Notes
    amount        amount of          le amount         nt Period
    investment             of
    investment
    The                                                                                   The Capital increasing o
    1,710,000         855,000          855,000
    allocation of                                                                         f the project has not yet
    16/102
    production                                                                   completed
    equipment as
    a       whole
    works
    3.Except for the events described above, as of June 30, 2011,the Group has no other significant
    commitment events.
    VIII. Other material events
    1.We purchased new shares with self RMB 5 million funds in report term, As of June 30, 2011, achieve
    investment earning RMB 14,141.
    2. Index for important information
    The above information were also all published in Securities Times and Hong Kong Commercial Daily and
    www.cninfo.com.cn.
    Date                  No.                                Name of announcement
    2011.1.26                             2011-0570     Forenotice of Earnings for 2010
    2011.4. 14                             2011-0571     Forenotice of Earning’s for the first Quarterly 2011
    2011.4.14                             2011-0572          Earnings prediction 2010
    2011.4.29                             2011-0573     2010 annual report of the Company and its summary
    2011.4.29                             2011-0574                  The first Quarterly Report 2011
    2011.4.29                             2011-0575     Announcement of the resolutions of 15th Meeting of the Fifth
    Board of Directors
    2011.4.29                             2011-0576     Announcement of the 12th Meeting of Fifth Supervisor Committee
    2011.4.29                             2011-0577          Notice of Holding 2010 annual shareholders’ General Meeting
    2011.5.24                             2011-0578     Announcement of Resolutions of 2010 annual shareholders’
    General Meeting
    3. The registration form of acceptance of investigation, communication and interview in the report period for future
    reference
    Reception        Reception plane        Reception Mode        Reception           Discussion issue and offered
    date                                                          Object             information
    The              Company
    Director & Secretary   Telephone                                 communicated with investors
    April 30,2011                                                 Investor
    office                 communication                             in respect of its production
    and operation status
    June 8,2011      Director & Secretary   Telephone             Investor            Inquiry about the Company's
    17/102
    office               communication                            whether the Company has any
    plan for reorganization
    IX. In the report period, the Company, its board of directors and its directors were not investigated by
    CSRC, administratively punished or publicly criticized by CSRC, punished by other administrative
    departments or publicly condemned by stock exchange.
    Chapter VI. Financial Report
    Balance Sh eet
    June    30, 2011
    Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.                 Unit:RMB
    June 30,2011                          December 31, 2010
    Assets                               Parent Company.                          Parent Company.
    Consolidated                             Consolidated
    Monetary fund                  51,938,921              22,061,774       51,786,613          23,577,186
    Trading financial
    108,700                  108,700          77,235              77,235
    assets
    Bill receivable
    Account receivable               850,324                                  586,576
    Prepayments                         19,173                                   23,225
    Interest receivable                                                           6,646
    Other              account
    297,592             74,309,627           175,951         75,638,428
    receivable
    Inventories                      419,878                  419,878         429,613              429,612
    Non-current asset due
    in 1 year
    Other current asset
    Total of current assets        53,634,588              96,899,979       53,085,859          99,722,461
    Non-current assets:
    Disposable financial
    638,618                                  874,427
    asset
    Expired investment in
    possess
    Long-term receivable
    Long term share
    68,778,887              37,738,287       77,199,476          38,613,199
    equity investment
    Property investment            37,043,068               5,710,153       39,679,004           6,019,483
    Fixed assets                   16,989,466              13,976,304       17,492,132          14,313,935
    Construction in
    18/102
    progress
    Engineering material
    Fixed asset disposal
    Intangible assets            1,976,361               1,976,361             2,049,023               2,049,023
    R & D petrol
    Goodwill                     5,231,220                                     5,352,498
    Long-germ expenses
    to be amortized
    Differed income tax
    asset
    Other non-current
    asset
    Total of non-current
    130,657,620              59,401,105          142,646,560              60,995,640
    assets
    Total of assets          184,292,208            156,301,084           195,732,419             160,718,101
    Legal representative:Hu Yongfeng   Financial controller:Zhang Jinliang   The person in change of the financial Dept:
    Ren Changzheng
    19/102
    Consolidated Balance Sheet(Cont’d)
    June    30, 2011
    Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.                      Unit:RMB
    June 30, 2011                        December 31, 2010
    Liabilities and owners’
    Parent Company.                   Parent Company.
    equity                 Consolidated                            Consolidated
    Current Liabilities
    Short-term loans
    Trade        off      financial
    liabilities
    Bill payable
    Accounts payable                       3,318,295                114,350       3,353,297              115,281
    Advance payment                     2,745,351              1,968,155       2,718,175          1,939,819
    Salaries payable to Staff                560,156                495,129         620,363              579,911
    Taxes payable                       2,835,965              1,673,167       2,914,867          1,723,217
    Dividends payable                    1,247,324                              1,276,241
    Other payable                         30,523,556                618,340      29,974,945              651,133
    Non-current liabilities
    due in 1 year
    Other current liabilities                1,402,271              1,360,690       1,228,163          1,185,618
    Total current liabilities               42,632,918              6,229,831      42,086,051          6,194,979
    Non-Current liabilities:
    Long-term loan                         1,254,740                              1,350,126
    Long-term payable                    8,705,861                              8,907,695
    Special payable
    Accrued liabilities
    Deferred income tax
    liabilities                                872,138              4,116,486         892,357          4,211,921
    Other Non-current
    liabilities                                858,386                858,386         878,286              878,286
    Total Non-current
    liabilities                             11,691,125              4,974,872      12,028,464          5,090,207
    Total liabilities                       54,324,043              11,204,703     54,114,515         11,285,186
    Shareholders’ Equity
    Share capital                    169,142,356             169,142,356     169,142,356        169,142,356
    Capital surplus                    39,656,537              31,606,598     39,872,534         31,606,598
    Less: Shares in stock
    Surplus reserves                   26,704,791              26,309,287     26,704,791         26,309,287
    Common risk provision
    Reserved profit                     -106,897,538             -81,099,432     -98,665,017        -80,137,758
    Different of foreign                   2,702,531               -862,428       5,874,835          2,512,432
    20/102
    currency translation
    Total of owner’s equity
    belong to the parent
    company                              131,308,677           145,096,381              142,929,499          149,432,915
    Minor shareholders’ equity           -1,340,512                                     -1,311,595
    Total of owners’ equity             129,968,165           145,096,381              141,617,904          149,432,915
    Total of liabilities and
    owners’ equity                      184,292,208           156,301,084              195,732,419          160,718,101
    Legal representative:Hu Yongfeng      Financial controller:Zhang Jinliang     The person in change of the financial Dept:Ren
    Changzheng
    Profit statement
    January-June 2011
    Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.                           Unit:RMB
    January-June 2011                          January-June 2010
    Items
    Consolidated         Parent Company          Consolidated        Parent Company
    I. Total Operating income                         5,528,810                   725,313         5,280,588               527,589
    Including:Operating income                    5,528,810                   725,313         5,280,588               527,589
    II. Total Operating cost                          7,013,815                 1,651,997         6,677,394            1,034,818
    Including:Operating cost                         2,331,440                   239,549         2,360,424             -292,095
    Operating taxes and extras
    Sales expenses                                                                          377,292
    Administrative expenses                       4,316,273                 2,702,203         4,297,439            2,705,698
    Financial expenses                                366,102             -1,289,755              -357,761          -1,378,785
    Loss of devaluation of assets
    Add:Changing income of fair value                  -48,602                   -48,602            -17,686
    Investment income                          -6,734,727                     14,141         6,779,702               106,843
    Including:Investment income on
    affiliated company and joint venture
    III. Operating profit                           -8,268,334                   -961,145         5,365,210             -400,386
    Add:Non-operating income                             8,413
    Less:Non-operating expenses                          1,517                      529                  259                 199
    Including:Disposal loss of non-current
    assets
    IV. Total profit                                -8,261,438                   -961,674         5,364,951             -400,585
    Less:Income tax expenses
    V. Net profit                                   -8,261,438                   -961,674         5,364,951             -400,585
    Net profit attributable to the Parent
    -8,232,521                   -961,674         5,412,704             -400,585
    company
    21/102
    Minority shareholders’ gain and losses               -28,917                                     -47,753
    VI. Earnings per share
    (i)Basic earning per share                     -0.05                                        0.03
    (ii)Diluted earning per share                  -0.05                                        0.03
    VII. Other comprehensive income                 -3,388,301            -3,374,860            -2,035,702           -1,456,247
    VIII. Total comprehensive income               -11,649,739            -4,336,534              3,329,249          -1,856,832
    Total comprehensive income
    attributable to the owner of the parent        -11,649,739            -4,336,534              3,316,852          -1,856,832
    company
    Total comprehensive income
    attributable minority shareholders                                                                  12,397
    Legal representative:Hu Yongfeng        Financial controller:Zhang Jinliang   The person in change of the financial Dept:Ren
    Changzheng
    22/102
    Cash flow statement
    January-June 2011
    Prepared by: Shenzhen Victor Onward Textile Industrial Co., Ltd.                             Unit:RMB
    January-June 2011                  January-June 2010
    Items
    Consolidated          Parent         Consolidated       Parent
    I.Cash flows arising from operating                                   Company                           Company
    Cash received from sales of goods and
    activities                                              5,295,137         820,983        6,350,921        2,601,112
    supply of labor
    Net Increase of Disposition transactional
    -              -        171,272          171,272
    financial assets
    Rebated taxes received                                           -              -        186,855          105,777
    Other business related cash receipts                      474,345         502,155        1,075,375         560,865
    Subtotal of cash flow in from operating
    5,769,482       1,323,138        7,784,423        3,439,026
    activity
    Cash paid for purchase of goods and
    452,166         452,166        2,254,184        1,254,184
    reception of labor services
    Cash paid to and for employees                          1,623,382         973,334        1,723,236         980,423
    Taxes paid                                               987,685         464,791        1,116,582         466,421
    1,890,665         961,154        3,062,291        1,395,215
    Other business related cash payments
    Subtotal of cash flow out from operating
    4,953,898       2,851,445        8,156,293        4,096,243
    activity
    Net cash flows arising from operating
    815,584       -1,528,307        -371,870         -657,217
    activities
    II.Cash flow generated by investing
    Cash received from investment retrieving
    Cash received as investment gains                                                           1,595
    Net cash retrieved from disposal of fixed
    10,000         10,000           7,270            7,270
    assets, intangible assets, and other
    long-term assets
    Net cash received from disposal of
    subsidiaries or other operational units
    Other investment-related cash received
    Sub-total of cash inflow due to
    10,000         10,000           8,865            7,270
    investment activities
    Cash paid for construction of fixed assets,
    11,031                       133,824            56,478
    intangible assets and other long-term
    Cashassetsas investment
    Net increase of loan against pledge
    23/102
    Net cash received from subsidiaries
    and other operational units
    Other cash paid for investment activities
    Sub-total of cash outflow due to
    11,031            -      133,824       56,478
    investment activities
    Net cash flow generated by investment                 -1,031       10,000     -124,959      -49,208
    III.Cash flow generated by financing
    Cash received as investment
    Incl: Cash received as investment from
    minor shareholders
    Cash received as loans
    Cash received from bond placing
    Other financing –related ash received
    Sub-total of cash inflow from financing
    -            -            -            -
    activities
    Cash to repay debts
    Cash paid as dividend, profit, or interests
    Incl: Dividend and profit paid by
    subsidiaries to minor shareholders
    Other cash paid for financing activities
    Sub-total of cash outflow due to financing
    -            -            -            -
    activities
    Net cash flow generated by financing                        -            -            -            -
    IV.Influence of exchange rate alternation
    -662,245          2,895     -285,374       -2,353
    on cash and cash equivalents
    V.Net increase of cash and cash equivalents         152,308     -1,515,412     -782,203     -708,778
    Add: balance of cash and cash equivalents
    51,786,613     23,577,186   56,105,626   24,960,502
    at the beginning of term
    VI. Balance of cash and cash equivalents at
    51,938,921     22,061,774   55,323,423   24,251,724
    the end of term
    24/102
    Legal representative:Hu Yongfeng   Financial controller:Zhang Jinliang   The person in change of the financial Dept:Ren
    Changzheng
    25/102
    Consolidated Statement of Change in Owners’ Equity
    Prepared by:   Shenzhen Victor Onward Textile Industrial Co., Ltd.
    January-June 2011                                                        Unit :RMB
    January-June 2011
    Less:                               Common                                        Minor
    Items                               Capital                   Special   Surplus                     Attributable                                 Total of owners’
    Share Capital                     Shares in                               risk                       Other        shareholders’
    reserves                   reserve   reserves                       profit                                         equity
    stock                               provisions                                    equity
    I.Balance at the end of last
    169,142,356      39,872,534                            26,704,791                    -98,665,017    5,874,835      -1,311,595       141,617,904
    year
    Add: Change of
    -
    accounting policy
    Correcting of previous
    -
    errors
    Other                                                                                                                                                                        -
    II.Balance at the beginning
    169,142,356      39,872,534            -         -     26,704,791          -         -98,665,017    5,874,835      -1,311,595       141,617,904
    of current year
    III.Changed in the current
    -         -215,997            -         -               -         -          -8,232,521   -3,172,304         -28,917       -11,649,739
    year
    (I) Net profit                                                                                                      -8,232,521                      -28,917        -8,261,438
    (II)Other misc.income                              -215,997                                                                        -3,172,304                        -3,388,301
    Total of (I) and (II)                     -         -215,997            -         -               -         -          -8,232,521   -3,172,304         -28,917       -11,649,739
    (III) Investment or
    decreasing of capital by                   -                  -          -         -               -         -                  -            -               -                 -
    owners
    1. Capital inputted by
    -
    owners
    2.Amount of shares paid
    and accounted as owners’                                                                                                                                                      -
    equity
    3. Other                                                                                                                                                                      -
    26/102
    (IV)Profit allotment                      -            -             -            -             -          -                   -                   -           -             -
    1.Providing of surplus
    -
    reserves
    2.Providing of common
    -
    risk provisions
    3.Allotment to the owners
    -
    (or shareholders)
    4.Other                                                                                                                                                                     -
    (V) Internal transferring of
    -            -             -            -             -          -                   -                   -           -             -
    owners’ equity
    1. Capitalizing of capital
    reserves (or to capital                                                                                                                                                        -
    shares)
    2. Capitalizing of surplus
    reserves (or to capital                                                                                                                                                        -
    shares)
    3.Making up losses by
    -
    surplus reserves.
    4. Other                                                                                                                                                                       -
    (VI) Special reserves                       -            -             -            -             -          -                   -                   -           -             -
    1. Provided this year                                                                                                                                                          -
    2.Used this term                                                                                                                                                              -
    IV. Balance at the end of
    169,142,356    39,656,537            -            -    26,704,791          -        -106,897,538          2,702,531    -1,340,512   129,968,165
    this term
    Legal representative:Hu Yongfeng   Financial controller:Zhang Jinliang   The person in change of the financial Dept:Ren Changzheng
    27/102
    Consolidated Statement of Change in Owners’ Equity
    Prepared by:      Shenzhen Victor Onward Textile Industrial Co., Ltd.
    January-June 2011                                                        Unit :RMB
    January-June 2010
    Less:                               Common                                       Minor
    Items                                   Capital                   Special   Surplus                     Attributable                                Total of owners’
    Share Capital                     Shares in                               risk                      Other        shareholders’
    reserves                   reserve   reserves                       profit                                        equity
    stock                               provisions                                   equity
    I.Balance at the end of last
    169,142,356      39,297,104                            26,704,791                  -102,767,941   10,682,638        508,088        143,567,036
    year
    Add: Change of
    -
    accounting policy
    Correcting of previous
    -
    errors
    Other                                                                                                                                                                       -
    II.Balance at the beginning
    169,142,356      39,297,104            -         -     26,704,791          -       -102,767,941   10,682,638        508,088        143,567,036
    of current year
    III.Changed in the current
    -          575,430            -         -               -         -          4,102,924   -4,807,803      -1,819,683        -1,949,132
    year
    (I) Net profit                                                                                                      4,102,924                   -1,731,989         2,370,935
    (II)Other misc.income                             575,430                                                                       -4,807,803         -87,694        -4,320,067
    Total of (I) and (II)                     -          575,430            -         -               -         -          4,102,924   -4,807,803      -1,819,683        -1,949,132
    (III) Investment or
    decreasing of capital by                   -                  -          -         -               -         -                 -            -               -                 -
    owners
    1. Capital inputted by
    -
    owners
    2.Amount of shares
    paid and accounted as                                                                                                                                                         -
    owners’ equity
    3. Other                                                                                                                                                                     -
    (IV)Profit allotment                   -                  -          -         -               -         -                 -            -               -                 -
    1.Providing of surplus                                                                                                                                                        -
    28/102
    reserves
    2.Providing of common
    -
    risk provisions
    3.Allotment to the owners
    -
    (or shareholders)
    4.Other                                                                                                                                                                -
    (V) Internal transferring of
    -                -            -          -               -          -                   -               -            -             -
    owners’ equity
    1. Capitalizing of capital
    reserves (or to capital                                                                                                                                                      -
    shares)
    2. Capitalizing of surplus
    reserves (or to capital                                                                                                                                                      -
    shares)
    3.Making up losses by
    -
    surplus reserves.
    4. Other                                                                                                                                                                     -
    (VI) Special reserves                     -                -            -          -               -          -                   -               -            -             -
    1. Provided this year                                                                                                                                                        -
    2.Used this term                                                                                                                                                            -
    IV. Balance at the end of
    169,142,356     39,872,534             -          -      26,704,791          -         -98,665,017        5,874,835   -1,311,595   141,617,904
    this term
    Legal representative:Hu Yongfeng    Financial controller:Zhang Jinliang   The person in change of the financial Dept:Ren Changzheng
    29/102
    Parent Company Statement on Change in Owners’ Equity
    Prepared by:     Shenzhen Victor Onward Textile Industrial Co., Ltd.
    January-June 2011                                                            Unit :RMB
    January-June 2011
    Less:                                    Common
    Items                               Capital                   Special        Surplus                   Attributable    Difference    Of foreign     Total of
    Share Capital                   Shares in                                    risk
    reserves                   reserve        reserves                     profit             exchange             owners’ equity
    stock                                    provisions
    I.Balance at the end of
    169,142,356    31,606,598            -                   26,309,287           -      -80,137,758                2,512,432        149,432,915
    last year
    Add: Change of
    -
    accounting policy
    Correcting of
    -
    previous errors
    Other                                                                                                                                                                 -
    II.Balance at the
    beginning of current          169,142,356    31,606,598            -         -         26,309,287           -      -80,137,758                2,512,432        149,432,915
    year
    III.Changed in the
    -              -          -         -                    -         -         -961,674            -3,374,860            -4,336,534
    current year
    (I) Net profit                                                                                                    -961,674                                    -961,674
    (II)Other
    -3,374,860            -3,374,860
    misc.income
    Total of (I) and (II)                   -              -          -         -                    -         -         -961,674            -3,374,860            -4,336,534
    (III) Investment or
    decreasing of capital by                 -              -          -         -                    -         -               -                         -                 -
    owners
    1. Capital inputted
    -
    by owners
    30/102
    2.Amount of
    shares paid and
    -
    accounted as owners’
    equity
    3. Other                                                                                                                                                         -
    (IV)Profit allotment                 -              -             -            -                -       -                 -                      -            -
    1.Providing of surplus
    -
    reserves
    2.Providing         of
    -
    common risk provisions
    3.Allotment to the
    owners (or                                                                                                                                                        -
    shareholders)
    4.Other                                                                                                                                                     -
    (V) Internal
    transferring of owners’                 -              -             -            -                -       -                 -                      -            -
    equity
    1. Capitalizing of
    capital reserves (or to                                                                                                                                           -
    capital shares)
    2. Capitalizing of
    surplus reserves (or to                                                                                                                                           -
    capital shares)
    3.Making up losses by
    -
    surplus reserves.
    4. Other                                                                                                                                                          -
    (VI) Special reserves                    -              -             -            -                -       -                 -                      -            -
    1. Provided this year                                                                                                                                             -
    2.Used this term                                                                                                                                                 -
    IV. Balance at the end of
    169,142,356     31,606,598            -            -        26,309,287      -       -81,099,432              -862,428    145,096,381
    this term
    Legal representative:Hu Yongfeng    Financial controller:Zhang Jinliang   The person in change of the financial Dept:Ren Changzheng
    31/102
    Parent Company Statement on Change in Owners’ Equity
    Prepared by:   Shenzhen Victor Onward Textile Industrial Co., Ltd.
    January-June 2011                                                           Unit :RMB
    January-June 2010
    Less:                                   Common
    Items                              Capital                   Special       Surplus                     Attrbutable    Difference    Of foreign     Total of
    Share Capital                    Shares in                                   risk
    reserves                   reserve       reserves                       profit            exchange             owners’ equity
    stock                                   provisions
    I.Balance at the end of
    169,142,356     31,606,598            -                  26,309,287             -     -76,527,638                7,772,431        158,303,034
    last year
    Add: Change of
    -
    accounting policy
    Correcting of
    -
    previous errors
    Other                                                                                                                                                                 -
    II.Balance at the
    beginning of current         169,142,356     31,606,598            -         -        26,309,287             -     -76,527,638                7,772,431        158,303,034
    year
    III.Changed in the
    -              -          -         -                   -           -      -3,610,120            -5,259,999            -8,870,119
    current year
    (I) Net profit                                                                                                  -3,610,120                                  -3,610,120
    (II)Other
    -5,259,999            -5,259,999
    misc.income
    Total of (I) and (II)                   -              -          -         -                   -           -      -3,610,120            -5,259,999            -8,870,119
    (III) Investment or
    decreasing of capital by                 -              -          -         -                   -           -              -                         -                 -
    owners
    1. Capital inputted
    -
    by owners
    2.Amount of                                                                                                                                                       -
    32/102
    shares paid and
    accounted as owners’
    equity
    3. Other                                                                                                                                                          -
    (IV)Profit allotment                  -                -                 -          -                -        -                  -               -             -
    1.Providing of surplus
    -
    reserves
    2.Providing         of
    -
    common risk provisions
    3.Allotment to the
    owners (or                                                                                                                                                          -
    shareholders)
    4.Other                                                                                                                                                      -
    (V) Internal
    transferring of owners’                   -                -                 -          -                -        -                  -               -             -
    equity
    1. Capitalizing of
    capital reserves (or to                                                                                                                                             -
    capital shares)
    2. Capitalizing of
    surplus reserves (or to                                                                                                                                             -
    capital shares)
    3.Making up losses by
    -
    surplus reserves.
    4. Other                                                                                                                                                            -
    (VI) Special reserves                      -                -                 -          -                -        -                  -               -             -
    1. Provided this year                                                                                                                                               -
    2.Used this term                                                                                                                                                   -
    IV. Balance at the end of
    169,142,356      31,606,598                 -          -        26,309,287       -        -80,137,758        2,512,432   149,432,915
    this term
    Legal representative:Hu Yongfeng        Financial controller:Zhang Jinliang       The person in change of the financial Dept:Ren Changzheng
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    (本财务报表附注除特别注明外,均以人民币元列示)
    1.Basic Information of the Company
    Shenzhen Victor Onward Textile Industrial Co., Ltd. (hereinafter referred to as "the
    Company"), grew out of the Xingnan Printing Factory Co., Ltd, founded in 1980, was
    the first wholly foreign-owned enterprise in Shenzhen. In April 1984, Xingnan Printing
    Factory Co., Ltd was changed into foreign joint venture, and was renamed Shenzhen
    Victor Onward Textile Industrial Co., Ltd. . On November 19, 1991, the Company was
    reorganized into a joint stock limited company and renamed Shenzhen Victor Onward
    Textile Industrial Co., Ltd. pursuant to the approval of Shenzhen Municipal
    Government.
    The domestically listed RMB ordinary shares ("A shares, Stock code: 000018" ) and
    domestically listed foreign investment shares ("B shares ,stock code: 200018") issued
    by the Company were listed on Shenzhen Stock Exchange in 1992.
    As of June 30, 2011, the total share capital was 169,142,356 million shares, of which
    circulating A-share 99,720,453 shares, circulating B-share 69,421,903. of which Union
    Holdings Co., Ltd. (hereinafter referred to Union Holdings ) holding limit-sale A-share
    43,141,032 shares, accounting for 25.51% of the total equity, is the controlling
    shareholder of the company, Union Development Group Co., Ltd. (hereinafter referred
    to Union Group)holding circulating A –share 5,821,089 shares, accounting for 3.44% of
    the total equity, Union Group holds 31.32% of equity of Hualian Holdings and has the
    right to control Union Holdings, thus Union Group is the actual controller of the
    Company.
    As of June 30, 2011, Victor Onward printing and dyeing (Hong Kong) Co., Ltd.
    (hereinafter referred to as "Hong Kong Victor Onward"), Hong Kong Victor Onward
    Digital Printing Co., Ltd. (hereinafter referred to as "Victor Onward Digital Printing"),
    Shengzhong Industrial Co., Ltd. (hereinafter referred to as "Shengzhong") , Shenzhen
    East Asia Victor onward Holding (hereinafter referred to as ―East Asia Company)and
    Shenzhen Nanhua Printing and Dyeing as well as its wholly-funded subsidiary Nanhua
    Xingye Co., Ltd (hereinafter referred to as "Nanhua Xingye") are all subsidiaries of
    the Company. The Company and its subsidiaries are collectively referred to as "the
    Group".
    The Group is mainly engaged in the production and processing (printing and dyeing) and sales of
    various high-grade fabrics of pure cotton, pure linen, polyester-mixed cotton, linen cotton and mixed
    fiber and finished garments.     Registered address: 26 Kuipeng Road, Kuiyong Town,
    Longgang District, Shenzhen         Legal Representative: Hu Yongfeng
    II. Basis for the preparation of financial statements
    The financial statements was prepared on the basis of the Group's continuous operation.
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    III. Complying with the statements in Accounting Standards for Business Enterprises
    The financial statements of the Group comply with the requirements of Accounting
    Standards for Business Enterprises, truly reflect the integrity of the financial situation,
    operating results and cash flows, and other relevant information of the company.
    IV. Accounting policies, accounting estimation and the method of preparing consolidated
    financial statements
    (1)Fiscal year
    The fiscal year of the Group starts on January 1 and ends on December 31 on the
    Gregorian calendar.
    (2)Standard currency for book keeping
    Except for Shenzhen East Asia Company taking RMB as the standard currency for
    bookkeeping, the Company and other subsidiaries of the Group all take HKD as the
    standard currency for bookkeeping.
    (3) Basis for bookkeeping and costing principle
    The Group's basis for bookkeeping is accrual system. Except that the financial assets for
    transaction, the financial liabilities for transaction, and financial assets available for sale
    are accounted by fair value, generally, account by historical cost.
    (4) Cash and cash equivalents
    The cash stated in cash flow statement refers to cash in hand and bank deposits usable for
    payment at any time. Cash equivalent refers to the investments with holding period of less than
    3 months and strong liquidity that are readily convertible to known amount of cash and subject
    to insignificant risk of changes in value.
    (5)Foreign currency Convert
    (1)Foreign currency Transactions
    The foreign currency transactions the Group were accounted according to the amount of foreign currency on
    the first day of the current month converting to the amount of bookkeeping currency. On the balance sheet
    date, foreign currency monetary items would be converted into RMB by using the spot exchange rate on the
    balance sheet date, the conversion differences produced shall be directly included in the current loss and gain
    except the exchange differences produced by foreign currency special loans borrowed for purchasing or
    production of the assets which meet the capitalization conditions. The foreign currency non-monetary items
    measured by fair value shall be converted into RMB by the spot exchange rate on the fair value date, the
    conversion differences produced shall be directly included in current loss and gain as fair value changes. The
    foreign currency non-monetary items measured by historical costs shall be converted by using the spot
    exchange rate on the transaction date, and its RMB amount will not be changed.
    (2)Foreign currency statement Convert
    The financial statements of the company and the subsidiaries making HK dollars as
    bookkeeping currency shall be converted into RMB. In the course of conversion, the assets &
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    liabilities items shall be converted by using the spot exchange rate on the balance sheet date,
    the items of shareholders equity except for the retained profit shall be converted according to
    the spot exchange rate, the items of incomes and expenses in the profit statement shall be
    converted by the approximate exchange rate of spot exchange rate on the transaction date. The
    conversion differences of foreign currency statements produced in the above conversions shall
    be individually listed under the item of shareholders equity.
    The cash flow in the cash flow statement are converted by the average exchange rate of the
    market rates announced in the accounting period. The influences on cash flow from the changes
    of exchange rate are separately listed in cash flow statement.
    (6) Financial assets and Financial liabilities
    (1). Financial assets:
    According to investment purposes and economic nature, the financial assets of the Group can
    be divided into the financial assets measured by fair value and the changes included in the
    current loss and gain, the expired investments held, receivables and financial assets for sale, the
    four categories.
    1). The financial assets measured by fair value and the changes included in the current loss and gain: mainly
    refer to the financial assets for sale in short term, which shall be listed in balance sheet in transactional
    financial assets.
    2). The expired investments held: refer to the non-derivative financial assets which have fixed expire date and
    fixed or determined recovering amount, and the management level has the intention or ability to hold the
    assets.
    3). Receivables: refer to the non-derivative financial assets which have no quotation in active market but
    have fixed or determined recovering amount, including notes receivable, accounts receivable, interest
    receivable, dividends receivable and other receivables.
    4). Financial assets for sale: include the non-derivative financial assets which are recognized as for sale when
    they are initially confirmed, and the financial assets which are not divided into other categories.
    Financial assets are conducted initial confirmation by at fair value. The relevant expenses to
    obtain the financial assets measured by fair value and the changes included in the current loss
    and gain shall be included in the current loss and gain, the relevant transactional expenses of
    other financial assets shall be the initial confirmation amount. When the contract right of a
    financial asset is ended or the risk and reward of ownership of the financial asset are transferred
    to the corresponding party, the confirmation of financial assets shall be ended.
    At fair value and changes in their gains and losses included in the current period of financial
    assets and financial assets to be sold in accordance with the fair value of follow-up measures;
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    receivables and investments held to maturity using the effective interest method to share more
    than the cost listed.
    The changes of fair values of financial assets measured by fair value and the changes included
    in the current loss and gain shall be included in the changing loss and gain of fair value; all the
    interest and cash dividends obtained during the period holding the assets shall be confirmed as
    investment income; upon the disposal of the assets, the differences between the fair value and
    initial bookkeeping amount shall be confirmed as investment loss and gain, and at the same
    time, the changing loss and gain of fair value shall be adjusted.
    The changes of fair values of financial assets for sale shall be included in equity of shareholders;
    during the holding period, the interest accounted by actual interest rate shall be included in the
    investment income; the cash dividends of equity tool investment for sale shall be included in
    investment income upon the invested unit’s declaration of distributing dividends; upon the
    disposal, the differences between the price and book value deducting the fair value originally
    included in shareholders equity shall be included in investment loss and gain.
    (2)Financial Liabilities
    The financial liabilities of our Group shall be classified into the financial liabilities or other ones which are
    measured at their fair values and the variation of which is recorded into the profits and losses of the current
    period when they are initially recognized.
    The financial liabilities, which are measured at their fair values and the variation of which is recorded into
    the profits and losses of the current period, including transactional financial liabilities and the financial
    liabilities designated which are measured at their fair values and variation of which is recorded into the
    profits and losses of the current period when they are initially recognized, shall be made subsequent
    measurement on its financial assets according to their fair values, and the profits and losses arising from the
    change in the fair value and the dividends and interests expenses related to the financial liability shall be
    recorded into the profits and losses of the current period.
    The subsequent measurement shall be made on the basis of the post-amortization costs by adopting the actual
    interest rate method for other financial liabilities.
    (3)The determination method for fair value of financial assets and financial liabilities
    If there is active market for a financial instrument, the quoted prices in the active market shall be used to
    determine the fair values thereof. In the active market, the quoted prices of our Group for the financial assets
    it holds or the financial liabilities it plans to assume shall be the present actual offer for the corresponding fair
    values of assets or liabilities, while the quoted prices of our Group for the financial assets it plans to acquire
    or the financial liabilities it has assumed shall be the available charge for the corresponding fair values of
    assets or liabilities. Where there is no available offer or charge for a financial asset or financial liability, but
    there is no any significant change to the economic environment after the latest transaction day, we shall adopt
    the market quoted price of the latest transaction to determine the fair value of the said financial asset or
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    financial liability.
    Where there is no active market for a financial instrument, we shall adopt value appraisal techniques to
    determine its fair value. The value appraisal techniques mainly include the prices adopted by the parties, who
    are familiar with the condition, in the latest market transaction upon their own free will, the current fair value
    obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization
    method and the option pricing model, etc.
    (7).Account receivable and provisions for bad debts
    The Group will recognize the following cases as the determination standard of loss on bad debts for accounts
    receivable: the debt or others can't be repaid in the foreseeable period, e.g. the debtor units have been closed,
    revocation, bankruptcy, insolvent, severe insufficient cash flow or the occurrence of natural disasters; the
    repayment obligations are delayed and failed to be performed beyond 3-year by the debt entities; there are
    other absolute evidences proving that unable to be collected or little possibility.
    The Group adopted the method of counter compensation for the possible bad debt losses, which
    were drown provision for bad debt by the method of individual recognition at period end and
    were included in the current loss and gain. The receivables which were not to be recovered,
    after being approved by the Group, would be regarded as bad debt loss and the provision for
    bed debt would be written off.
    (1)Accounts receivable with material specific amount and specific provisioned bad Debt
    preparation.
    Judgment criteria or amount standard of Account receivable with special account
    material specific amount or amount receivable exceeding RMB 1 million is
    criteria                                        viewed as material accounts receivable.
    Provision method with material specific Provision            Had     debt    preparation   in
    amount and provision of specific bad             accordance with the difference of
    debt preparation                                 present value of future cash flow below
    the book value .
    (2)The accounts receivable of bad debt provisions made by Group
    Determine the basis of Group
    Group of account age                         The Group is classified by the credit risk features
    based on the account age of receivables
    Group of affiliated party                    The Group is classified by the credit risk features
    based on the relations of account receivables and
    transaction objects.
    Deposit Group                                The Group is classified by the credit risk features
    based on the account age of receivables .
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    The withdrawing method of bad debt reserves carried by Group.
    Group of account age                       The provisions for bad debts withdrawn by the analysis
    method of account age
    Group of affiliated party                  Generally without the provisions for bad debts.
    Group of account age                       Generally without the provisions for bad debts.
    1)Provision proportion of bad debt preparation of accounts receivable adopting aging
    analysis method:
    Age                                               Proportion
    Within 1 year                                                                   3%
    1-2 years                                                                      10%
    2-3 years                                                                      50%
    Over 3 years                                                                   100%
    2)The accounts receivable of bad debt provisions withdrawn by adopting other methods:
    Special relationship between the related party and
    the Group (such as joint ventures, associates, etc.),
    Related party Group                           there is a little balance between the predicted future
    cash flow and the carrying amount.
    Including the rent deposit, purchase deposit and reserve
    deposit, etc., but without great individual amount and the
    Deposit Group                                 bad debt reserves withdrawn by combination are difficult
    to reflect the accounts receivable of risk features.
    3)Account receivable with non-material specific amount but specific bad debt preparation
    Accounts receivable with non-material specific amount
    Reason of specific bad debt preparation       and being not able to relent its risk character by
    provision                                     provisioning bad debt preparation in accordance with
    provision
    Bad debt preparation will be provisioned in accordance
    Provision method of bad debt preparation       with the difference of present value of its future cash flow
    below its book value.
    (8) Inventories
    The inventories of the Company include raw materials, work-in-process, finished
    products, low-value and easily-worn articles and packing articles and are stated at the
    lower of cost and net realizable value.
    Perpetual inventory system was implemented for inventory, the inventory would be
    priced according to actual cost; upon receiving or sending inventory, weighted average
    method would be used. The low value consumable products would be amortized by
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    method of one-time writing off.
    The inventory at year end can be priced by depending on which is lower between cost
    and realizable net value if the inventory were damaged or full or partly unused or the
    sale price lower than cost and other reasons. The provision for devaluation of finished
    products and big raw materials shall be drown according to the difference which the
    cost of individual inventory item higher than the realizable net value; other raw
    materials with large quantity and low unit price shall be drown provision for devaluation
    according to categories.
    Goods in stock, products in production and other materials directly for the sale, the
    amount of the realizable net value shall be determined according to the estimated sale
    price deducting the estimated sale expenses and relevant taxes; the amount of realizable
    value of material inventory for production shall be determined according to the
    estimated sale value of finished products deducting the estimated cost which will
    happen before the completion and estimated sale cost and relevant taxes. The inventory
    holding for the implementation of sale contract or service contract, the realizable net
    value shall be accounted on the basis of contract price; if the quantity of inventory held
    by enterprise is bigger than the quantity ordered in the sale contract, the realizable net
    value of the excess inventory shall be accounted on the basis of general sale price.
    (9).Long-term equity investment
    Long-term equity investments mainly include the equity investments which are held by
    the Group and the ones that the units being invested can be controlled or jointly
    controlled, or the equity investments which have not quotation in active market and the
    fair value can not be reliably measured.
    Joint control refers to the control that common control on some economic activities
    according to contract. The references for the determination of common control are the
    business activities which any operating party can not be controlled independently; the
    decisions relating to basic operating activities of the joint venture enterprise are to be
    agreed by all joint parties.
    Significant impact refers to having the right to participate in decision making on
    financial and operating policies of the units being invested but can not control or jointly
    control the making of these policies. The determining reference of significant impact is
    to own 20% (inclusive) or more but less than 50% of the voting shares directly owned
    by the Group or owned through subsidiaries, unless there is clear evidence that under
    that circumstance the production operating decision can not be participated and no
    major influence will formed.
    The long-term equity investments obtained through merger of companies under same
    control the merger were the owner's equity book value of the shares as a long-term
    40/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    equity investment of initial investment cost. The long-term equity investments obtained
    through merger of companies under different control shall make the fair value which
    made on the merger (purchase) to pay the control of the assets or liabilities as the
    merger cost.
    Apart from the long-term equity investments stated above, the long-term equity
    investment obtained by cash, the initial investment obtained by cash will be determined
    according to the price actually paid, initial investment costs include the direct costs, tax,
    and other necessary expenses to obtaining long-term investment; the initial investment
    will be determined according to the fair value of the equity securities issued; the
    long-term equity investments invested by investors, the initial investment cost shall be
    determined according to contract value; the long-term equity investment obtained by
    debt restructuring, non-monetary assets or other methods, the initial investment cost
    shall be determined according to the relevant accounting standards.
    If the subsidiary uses the cost method to account, adjustment shall be conducted
    according to equity method when prepare the consolidated financial statements; the
    joint venture and joint venture investment using the equity method; for the long-term
    equity investments which have no control or joint control or significant influence and no
    price in an active market, the method of cost shall be adopted to account; the long-term
    equity investments which have no control or joint control or significant influence, there
    are quotations in an active market and the fair value can be reliably measured, shall be
    accounted as financial assets for sale.
    When using the method of cost accounting, the long-term equity investments were
    priced by the initial investment costs. Additional investment to recover the cost of
    long-term equity investment. When using the equity method accounting, the current
    investment gains and losses are the share of net losses and gains to be owned or shared
    and achieved in the current year by the unit being invested. When determining the share
    to be shared by the unit being invested, on the basis of the fair value of the identifiable
    assets, according to the accounting policy and accounting period of the Group,
    offsetting the internal transaction loss and gain and the part that the equity proportion
    attributable to the joint enterprise and united enterprise, and confirm the net profit of the
    unit being invested after profit adjustment.
    For the long-term equity investments on joint venture enterprises and joint owned
    enterprises held before the first implementation date, if existing the debit difference
    relating to the equity investment, the debit difference of equity investment, after
    deducting the investment loss and gain according to the original remained period,
    should be confirmed as investment gains and losses.
    41/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    The Group shall adopt the cost method to calculate for those invested units that never
    have the jointed control or significant impacts due to the investment reduced, and a
    long-term equity investment for which there is no quoted price in the active market and
    whose fair value cannot be reliably measured; Also, the cost method shall be adopted to
    calculate for the long-term equity investment able to be implemented and controlled to
    the invested units due to the investment supplemented; Moreover, the equity method
    shall be adopted to account for performing the jointed control or significant impacts to
    the invested units but no control formed due to the investment supplemented, or without
    control to the invested units but able to implement the long-term equity investment of
    jointed control or major impacts to the invested units due to disposing of the investment.
    The gap between the carrying amount and actual payment gained in disposal of the
    long-term equity investment will be recorded into the investment interest of the current
    period. Using the equity method for calculating the long-term equity investment which
    is recorded into the owner's equity due to other changes except for the net profits or
    losses of the invested units, the initial parts recorded into the owner's equity shall be
    transferred into the investment returns of the current period when disposal of the
    investment.
    (10). Investment real estate
    The investment real estates of the Group are the rental buildings.
    The investment real estates are accounted by the cost, the purchased investment real
    estates include the cost of the purchase price, related taxes and fees and other expenses
    which can be directly attributable to the assets; the costs of investment real estate self
    constructed include the necessary expenses to construct the asset to reach the predicted
    use state.
    The Group adopts the cost method to conduct follow-up measurement on investment
    real estates are accounted devaluations and amortized. The expected service life, net
    residual rate and value depreciation rates of investment real estate are as follows:
    Type                      Expected useful         Estimated       Annual depreciation rate(%)
    life(Year)   residual value
    rate
    Real estate in                 20-50 years
    Hongkong                                                    0%                          2%-5%
    Real estate in                 20-30 years
    China                                                       10%                        3%-4.5%
    If the investment real estate is changed to self use, since the date of change,
    investment real estate shall be converted into fixed assets or intangible assets. The
    function of self-use real estate is to earn rent or capital appreciation, then since the date
    of change, the fixed assets or intangible assets shall be converted into investment real
    42/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    estate. When the conversion happens, the book value before the conversion will be the
    book value after the conversion.
    When the real estate investment is disposed or will never be used, and economic
    interests can not be obtained from the disposal, the confirmation of the investment real
    estate shall be terminated. The amount of the income from the sale, transfer, disposal of
    the investment in real estate deducting the book value and related taxes and fees shall be
    included in the current loss and gain.
    (11). Fixed assets
    Fixed assets refer to the tangible assets which have the following characteristics at
    the same time, namely, held for production of goods, providing services, leasing or
    operation and management, and the life span shall not be more than a year, and the unit
    value is high.
    Classification of fixed assets: houses and buildings, machinery and equipments,
    transportation equipments, office equipments and others.
    The fixed assets shall be measured according to the actual cost to obtain them, including,
    the cost of purchasing the fixed assets including the purchase price, value-added tax,
    import tariffs and other related taxes, and other expenses happened to reach the
    predicted use state; the cost of building the fixed assets, which are composed of the
    expenses to reach the predicted use state of the assets; the fixed assets invested by
    investors, the value on the contract or agreement shall be the accounting value, but if the
    contract or agreement value is not fair, the fair value shall be accounted; the fixed leased
    assets, the lower amount of the fair value of leased assets and the present value of the
    lowest lease payment shall be as the accounting value.
    Follow-up expenditures on fixed assets, including major repair expenses, expenses on updated
    improvement and other, To confirm compliance with the conditions of fixed assets, it shall be
    included in the cost fixed assets, the recognition of book value of replaced the part shall be
    terminated;  If not meeting the conditions of confirming fixed assets, they should be
    included in the current period.
    In addition to the fixed assets which depreciation and impairment had already fully
    accounted and the lands which are separately accounted, the Group accounts
    depreciation on all fixed assets. The method of average number of years will be used
    when accounting depreciation which will be included in the costs and expenses of the
    relevant assets. The predicted net residual rate, classified depreciation years and
    depreciation rates are as follows:
    Type                     Expected useful    Estimated residual Annual depreciatio
    No                                   life(Year)       value rate            n rate(%)
    43/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Real estate in Hong       20-50 years
    1          Kong                                                               0%              2%-5%
    Real estate in            20-30 years
    2          China                                                             10%            3%-4.5%
    Machinery           and 5-14 years
    3          equipment                                                         10%             6%-18%
    Transportation            4-5 years
    4          Equipment                                                         10%          18%-22.5%
    Office equipment and 5 years
    5          other                                                             10%                  18%
    At the end of each year, the Group shall recheck the predicted service life of fixed
    assets, the predicted net residual value and depreciation method, if changes happen, then
    it shall be treated as accounting estimate.
    When the fixed assets were disposed, or expected to be used or the disposal can not
    have economic interests, the confirmation of the fixed assets shall be terminated. The
    income from the sale, transfer or damage of the fixed assets deducting the book value
    and related taxes shall be included in the current loss and gain.
    (12). Construction in progress
    The price of the construction project: determine the costs according to the actual
    expenditure on the project. Measure the price of the self-operated projects according to
    the direct materials, direct wages, direct construction costs; Measure the turnkey
    projects according to the price should be paid on the project; measure the project of
    equipment installation according to the value, of the equipment, installation costs, and
    the expenditures on the trial operation to determine the project costs. The costs of
    projects under construction also include the cost of borrowing to be capitalized and
    exchange gain and loss.
    The time for the construction project converted to the fixed assets: the fixed assets of the company
    reached the predicted state, according to the budget of the project, construction cost or the actual cost
    of the project, transfer the fixed assets according to the predicted price, account the depreciation
    from the next month on. Upon finishing the procedures, make relevant adjustment.
    13.Borrowing costs
    Borrowing costs include interest on borrowings, amortization of discount or premium,
    as well as the supporting costs and exchange difference due to foreign currency
    borrowing. The borrowing costs which can be directly attributed to capitalized condition,
    and taken place in the capital expenditure, borrowing costs have taken place, in order to
    meet the assets available for sale or purchase of the necessary state of construction or
    production activities, the capitalization begins; when the construction or purchase of the
    44/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    conditions of production in line with the capital assets reached the sale state, the
    capitalization should stop. And the rest borrowing costs should be recognized as
    expenses in the current period.
    The expenses on interests for the specialized loan happened in current period deducting
    the interest income from the bank or the investment income from temporary investment
    should be capitalized; the general assets of the borrower in accordance with the
    cumulative excess of expenditure over the assets of the specialized part of the borrower
    multiplied by the weighted average expenditure occupied by the weighted average
    borrowings to determine the amount of capitalization, until the restart of construction or
    purchase of assets. The capitalization rate shall be calculated and determined in the light of the
    general borrowing and weighted average interest rate.
    The assets which meet capitalization conditions, refer to the fixed assets,
    investment real estates and other inventories which are constructed for a long time
    (usually more than one year) to achieve the intended use or sale of state to.
    If meet the capitalization conditions or non-normal breaks occurred in the course of
    production and the break time is more than three months, then the capitalization of
    borrowing costs shall be suspended; when the acquisition or construction or production
    meet the conditions of capitalization and achieve the predicted use or sale state, the
    (14). Intangible assets
    The intangible assets of the Group include land use rights and computer software.
    Including: For the intangible assets purchased, the actual purchase price was the actual
    cost; For the intangible assets invested by investors, The actual cost of intangible assets
    invested by investors, shall be determined according to the contract or agreement value,
    but if the contract or agreement values are not fair, the actual costs shall be determined
    according to the fair value.
    Since the date of selling land use rights, they are amortized according to the years
    sold; patent technology, non-patent technology and other intangible assets are amortized
    in accordance with the expected number of years, the benefited years specified in the
    contract and the effective length according to law. The amount to be amortized will be
    included in the related asset costs and current loss and gain according to the benefited
    targets.
    The predicted service life of the intangible assets and amortization methods should
    be rechecked and adjusted at the end of each year. Recheck the intangible assets with
    uncertain service life in each accounting period should be rechecked, if there is evidence
    showing that the service life of the intangible asset is limited, then estimate its service
    life and amortized it within the predicted service life.
    45/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    (15) Impairment in non-financial assets
    The Group conducts inspection on long-term equity investments, fixed assets,
    construction in progress, intangible assets with limited service life on every balance
    sheet date. when exist the following signs showing that the assets may have impairment,
    the Group will conduct impairment test. The intangible assets without certain service
    life, whether it has impairment signs, impairment tests shall be conducted at the end of
    each year. If the recoverable amount of single asset can not be tested, it shall be tested
    on the basis of the asset group the asset belong to or the asset combination.
    After the impairment test, if the book value of the asset exceeds its recoverable amount,
    the deficiency is recognized as the impairment loss, upon the confirmation of the above
    assets, they will not be transferred back in the following accounting period. The
    recoverable amount of the asset refer to the net amount of the fair value of the asset
    deducting disposal cost of assets and the present value of the expected future cash
    flows.
    The signs of impairment as follows:
    (1). Current market value of assets decreased significantly, the decline is significantly
    higher than the decline due to time passage or normal use.
    (2) The economic, technical or legal environment of the company and the market of the
    assets will have significant change in the current period or in the near future, therefore
    negative impact on the enterprise.
    (3) Market interest rates or other market return rate of investment in the current period
    have been increased, thus affecting the discount rate of the predicted cash flow, and
    resulting in the significant reduction in the amount of recoverable assets.
    (4) There is evidence showing that the assets were actually obsolete or damaged.
    (5) The assets have been or will be idle, ended the use or disposed in advance.
    (6)There are evidences of internal report showing that the economic performance of the
    assets has been lower than or less than what expected, such as the net cash flow created
    by assets or the operating profits (or losses) realized are far below (or above)the
    expected amount.
    (7) Other signs showing the assets may have or have had impairment.
    (16)Goodwill
    Goodwill refers to the difference of equity investment under the control of the same cost
    or merger of enterprises should enjoy more than the cost or a merger of the investment
    was the purchase of flats or net assets in order to obtain.
    The goodwill related to subsidiaries shall be individually listed in the consolidated
    financial statements, the goodwill related to joint companies and associated companies
    shall be included in the book value of long-term equity investments.
    (17).Long-term amortized expenses
    The long-term expenses of the Group to be amortized refer to all the expenses already
    paid but should be undertaken in the current period or in the coming period with
    amortization period more than 1 year (not including 1 year), the expenses will be
    46/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    amortized averagely in the benefit period. If the long-term prepaid expenses can not
    benefit from subsequent accounting period, then all amortization value of the project not
    amortized should be transferred to the current loss and gain.
    (18). Employee’s salary
    During the accounting period, workers’ salary shall be recognized as liability, and
    be included in relevant cost and expenses according to the beneficiary target of the
    service provided by workers, and shall be included in the relevant cost and expenses.
    The compensations for the cancelation of workers’ labor relationship shall be included
    in the current loss and gain.
    Including wages, bonuses, allowances and subsidies, welfares, social insurance and
    housing accumulation fund, union fee and workers’ education fund, and other related
    expenses related to obtain services provided by employees.
    If decide to relieve the labor relationships with employee before the employment
    contracts become mature, or encourage workers to voluntarily accept the compensation
    proposal due to redundancy, while the Group has have a formal plan for termination of
    labor relationship or have proposed the voluntary redundancy scheme which will be
    implemented, and the Group is unable to unilaterally withdraw the plan on the
    cancellation of labor relationship or the layoff proposal, the anticipated debts, confirmed
    to be caused by the compensation due to relieve of labor relationships with workers,
    shall be recorded into the profits and losses of the current period.
    (19). Predicted liabilities
    When the external security, commercial acceptance bill discount, pending
    litigation or arbitration, product quality assurance or business related matters subject to
    the following conditions at the same time, the Group will identify it as liabilities: the
    obligation is a present obligation of the Group; the enforcement of the obligation is
    likely to lead to the outflow of economic benefits; the amount of the obligation can be
    measured reliably.
    Predicted liabilities shall be conducted initial measurement according to the best estimates of
    related existing liabilities, and comprehensively consider risks, uncertainties and the time value of
    money and other factors relating to contingent events. Time value of money has the greatest
    influence, the best estimates shall be determined by future cash outflow. On the balance sheet,
    recheck the book value of predicted liabilities, adjust the book value to reflect the current best
    estimates if there are any changes.
    47/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    (20). Principle for confirmation of income
    The Group's revenues mainly include: incomes from sales of goods and transferring
    assets use right. The principle of income confirmation is as follows:
    When the Group had transferred the ownership of the risks and rewards of the
    commodities to the buyer, the Group does not keep the management right relating to
    ownership and does not implement effective control on the commodities sold out, the
    income amount can be reliably measured, and the related economic benefit will possibly
    flow into the enterprise, and when the related costs may happen or had happened can be
    measured reliably, the realization of the commodity sold out should be confirmed.
    The economic interests relating to transaction can flow into the company, and the
    relevant incomes and costs can be reliably measured, the sales income of transferring
    assets use right shall be confirmed.
    (21). Government subsidies
    Government subsidies, when the Group can meet the conditions attached and can
    receive, shall be confirmed. If government subsidies are monetary assets, they shall be
    measured according to the amount received; the subsidies allocated according to rated
    standards, they shall be measured according to the amount receivable. If government
    subsidies are non-monetary assets, they shall be measured according to fair value; if the
    fair value can not be reliably measured, they shall be measured according to nominal
    amount (1 yuan).
    The government subsidies relating to assets shall be recognized as deferred income, and
    be averagely distributed within the service life of relevant assets, and be included in
    the current loss and gain. If the government subsidies relating to income are used to
    compensate the related expenses and losses, they shall be confirmed as deferred income
    and be included in the current loss and gain in the period of confirming relevant
    expenses. If used to compensate the relevant expenses and losses happened, they shall
    be included in the current loss and gain.
    (22). Deferred income tax assets and deferred income tax liabilities
    Deferred income tax assets and deferred income tax liabilities shall be confirmed
    according to the difference between the tax base of assets and liabilities and their book
    value (temporary differences). The loss and tax which can be offset in the future years
    shall be recognized as temporary differences to determine the corresponding deferred
    income tax assets. On the balance sheet date, deferred income tax assets and deferred
    income tax liabilities shall be measured by the predicted application rate.
    The Group shall determine the deferred income tax assets produced by the deductible
    temporary differences within the amount limit of payable taxes which are likely used to
    deduct the temporary differences. The book value of the recognized deferred income tax
    assets shall be deducted when the deferred income tax assets produced by the deductible
    temporary differences within the amount limit of payable taxes which are likely used to
    48/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    deduct the temporary differences. When enough payable tax can be obtained, the
    deducted amount shall be transferred back.
    (23). Lease
    At the beginning date of lease, the Group divided leasing into financing lease
    and operating lease.
    Financing lease essentially refers to the lease that transferred all the risks and rewards relating
    to asset ownership. As the lessee, on the beginning date of lease, the Group took lower one in the
    cash of the fair value and the lowest lease payment as the book-keeping value of the fixed assets
    leased in by financing, and the lowest lease payment as the accounting value of the long-term
    payment, and the difference between the them will be recorded as financing costs not confirmed.
    Operating lease refers to the other lease apart from financing lease. As the lessee,
    during the lease period, the Group included the related asset cost and current losses and
    gains by the straight-line method during the lease period. The rent of the Group will be
    confirmed as income during the lease period by the straight-line method.
    (24).Accounting of income tax
    The accounting of income tax of the Group shall use the method of debt of balance
    sheet. The income tax expenses include current income tax and deferred income tax.
    The current income tax and deferred income tax relating to the transactions and events
    directly included in shareholders equity shall be included in shareholders equity, except
    the book value of deferred income tax adjustment goodwill, the rest current income tax
    and deferred income tax or income shall be included in the current loss and gain.
    Current income tax cost refers to the amount of payable income tax which shall be paid
    to tax department according to the current transactions and events determined according
    to tax provisions; deferred income tax refers to difference between deferred income tax
    balance sheet debt in accordance with the law shall be recognized deferred income tax
    assets and deferred income tax liabilities in the amount originally confirmed.
    (25). Corporate consolidation
    Corporate consolidation refers to two or more separate companies merge and form a transaction
    or event of report subject. The consolidation day or purchase day or the consolidation date of
    obtaining the assets or liabilities, shall be confirmed as the date of obtaining the control right of the
    party being merged or purchased.
    The corporate consolidation under same control: the assets and liabilities obtained by the
    consolidation party in the merger shall be measured according to the book value of
    merged party on the consolidation day. The difference between the book value of net
    assets obtained by the consolidation party and the book value of the consolidation price
    paid, the capital public reserve shall be adjusted; if the capital public reserve is not
    enough to be deducted, the retained earnings shall be adjusted.
    The corporate consolidation under different control: the consolidation cost is the fair
    value of equity stocks issued and the assets and debts paid to obtain the control right of
    the purchased party on the purchase day. The difference between the consolidation cost
    49/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    and fair value of recognizable net asset, shall be confirmed as goodwill; if the
    consolidation cost is smaller than the fair value of recognizable net asset of the
    purchased party, the difference shall be included in current loss and gain upon
    confirmation.
    (26).Methods for compilation of consolidated financial statements
    (1). Principles to determine the scope of merger:
    The Group will include the subsidiaries which have actual controlling right and the
    subjects which have special purpose into the scope of consolidated financial statements.
    (2) Accounting methods adopted in consolidated financial statements:
    The consolidated financial statements of the Group shall be compiled in accordance
    with Enterprise Accounting Standards No. 33 - Consolidated Financial Statements and
    the related provisions, the major internal transaction in the scope of consolidation and
    transactions shall be offset. The part of shareholders equity of the subsidiary which does
    not belong to the parent company, shall be individually listed as equity of minority
    shareholders in the consolidated financial statement. If the accounting policy and
    accounting period of the subsidiary and the company are not consistent, when compile
    consolidated financial statement, the financial statement of the subsidiary shall be
    adjusted according to the accounting policy and accounting period of the company.
    For the subsidiary obtained by corporate merger under different control, when prepare
    consolidated financial statements, the individual financial statement shall be adjusted on the basis of
    fair value of the net assets on the purchase day; for the subsidiary obtained by corporate merger
    under same control, it will be taken as having been existed at the year beginning, its assets, liabilities,
    operating results and cash flow shall be consolidated in the financial statement according to original
    book value since the year beginning of the consolidation period.
    V. Changes in accounting policies and estimates
    1.Changes in accounting policies and estimates
    According to the provisions of ―Accounting Standards Interpretation for Enterprises No.
    4‖ (Finance [2010] 15) that ―in the consolidated financial statements, if the current
    losses burdened by the minority shareholders of subsidiary company exceed the portion
    shared in the owner’s equity by the minority shareholders at the beginning of the
    subsidiary, the balance shall reduce the equity of minority shareholders. Which will be
    traced to adjust except the impracticable if the minority shareholders haven’t disposed
    as per above provision before the interpretation is released.‖ in 2010, the Group changes
    the excess deficit of minority shareholder of the subsidiary burdened by parent company
    into that burdened by the minority shareholder of the subsidiary. But the subsidiary
    company – South China Company whose minority shareholders has declared bankrupt
    in 2000 and have compulsory liquidation which can’t be taken back, so the minority
    shareholders of South China Company no longer bear the losses.
    50/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    2. Changes and impact of the accounting estimation
    The Group has no changes in accounting estimation this year.
    3..Correction of accounting errors from previous term
    There is no correction of the accounting error from previous term in the report period.
    VI. Taxation
    1. Corporate income tax
    The interest rate of corporate income tax of the company and subsidiaries in China
    mainland is 25%, according to the State Council on December 26, 2007, of the [2007]
    No. 39 Notice on the Implementation of Enterprise Income Tax Preferential Policies for
    the Transition, the enterprise income tax rate of the Company and the subsidiaries in
    China mainland gradually transited from 15% to 25%, the company implement the
    transition rate of 22% in 2010. the interest rate of the income from Hong Kong of the
    subsidiaries in Hong Kong is 16.5%.
    2.VAT
    The sales interest rate of processing income and sale income of printing products
    of subsidiaries in China mainland and the company is 17%, export products will be
    adopted the method of "free, credit and rebate", the tax rebate rate is 16% (2010). The
    purchase of raw materials such as VAT input tax paid by the amount of output tax can
    be offset, the tax rate is 17%. Of which: the input tax of VAT for export products can
    apply for payment of rebate. VAT taxable amount is the balance of the current output
    tax offsetting the current input tax.
    The subsidiaries of the Company in Hong Kong do not need to pay VAT.
    3. Business tax
    The housing rental income of the company and Nanhua Printing & Dyeing Company
    shall be applied to business tax, applicable rate 5%. The subsidiaries of the Company in
    Hong Kong do not need to pay business tax.
    4. City construction tax and education additional expenses
    The subsidiaries of the company in Hong Kong do not need to pay City construction tax
    and education additional expenses, subsidiaries in mainland China, the applicable City
    construction tax rate is 7%, applicable education additional tax rate of 3%.
    51/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    5. Property tax
    70% of the original value of property of the subsidiaries of the Company in China
    mainland shall be the tax basis, applicable tax rate 1.2% ,Rental property to real estate
    tax based on rental income, applicable tax rate 12%, subsidiaries in Hong Kong do not
    pay property taxes.
    52/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    VII. Corporation Consolidation and Consolidation Financial statement
    (1)Subsidiaries
    Proportion%                      Whether
    Registration                     Registered                                        Investment                                Vote   right the
    Name                           Quality                            Business scope                                                                                      Notes
    place                            capital                                           amount                Direct   Indirect Proportion% merger of
    statement
    Purchase of raw materials,
    Hong     Kong                                                     marketing of printed and
    2,400,002                                             2,400,002
    Hongkong       Trade                              dyed       woven      fabrics,                         100%                   100%     Yes              1
    Victor Onward
    investment      and   holding             (HKD)
    Co.                                                   (HKD)     business
    Shengzhong                                       1,000,000        Sales      of    Corduroy, 1,000,000
    Trade                                                                                                  100%      100%     Yes          2
    Hongkong                         (HKD)
    dyed cloth and printed cloth
    (HKD)
    Company
    Nanhua                                             85,494,700     Production and sales of          HKD16,874,255
    Production                         printed cloth and dyed cloth                          54.82%    14.62%       69.44%           Yes       3
    Company          Shenzhen                           (HKD)                                        +4,240,100RMB
    Trade        10,000                                            10,000
    Xinye                                                             Sales of printed cloth and                                          100%      100%            Yes       4
    Hongkong                            (HKD)                                           (HKD)
    Company                                                           dyed cloth
    Textile, Printing and
    dyeing industry and
    Shenzhen                                                          Raw
    3,000,000     materials ,Machinery
    1,530,000
    East   Asia Shenzhen                                                                                                      51%                   51%             Yes       5
    Co.                  Trade                           (RMB)        equipment and other                   (RMB)
    fabrics
    53/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    1.The Company invested HKD 2,400,002 in 1984 to establish Hong Kong              Victor Onward   Company in
    Hong Kong.
    2. Shengzhong Company was established in November 9 1993, registered capital 1 million Hong Kong
    dollars, Hong Kong Victor Onward holding 100% equity.
    3. Nanhuan Company was established in July 21, 1988, registered capital 85.49 million Hong Kong dollars,
    by December 31, 2010 the shareholding structure as follows:
    Year-beginning
    Name of investor                            Proportion%     Year-end amount    Proportion
    amount
    Shenye Union (Hongkong)Co.,
    Ltd.                              26,127,180.32          30.56%       26,127,180.32       30.56%
    The Company                       46,868,194.54          54.82%       46,868,194.54       54.82%
    Hong Kong Victor Onward Company   12,499,325.14          14.62%       12,499,325.14       14.62%
    Total                85,494,700.00          100.00%      85,494,700.00      100.00%
    4. Xinye Company invested HKD10,000 to establish Industry Company in Hong Kong in December
    1996. Nanhua Company Holding’s 100% of the equity.
    5. Shenzhen East Asia Company was established in February 28, 2007, registered capital RMB 3 million , the
    company invested RMB1.53 million , holding 51% equity, Nanjing East Asia Textile Co., Ltd. invested RMB 1.47
    million , holding 49% equity.
    (2)The changes of consolidated scope
    No changes of consolidated scope happened during the current period.
    (3) Foreign currency translation
    Except that Shenzhen East Asia Company has RMB as basic accounting currency, the company and
    other subsidiaries have Hong Kong dollars as basic accounting currency. The financial statements
    are reflected after conversion of RMB and the foreign currency conversion methods were described
    in Note IV, 5, of which the spot exchange rate of HK dollar to RMB was 0.8509 at year beginning,
    and the spot exchange rate at year end was 0.83162 the approximate exchange rate of the spot
    exchange rate uses the current average exchange rate 0.8413.
    VIII. Notes to the main items of consolidated financial statements and the Company's financial
    statements
    The following financial statements disclosed below, except where indicated otherwise, "year
    54/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    beginning" means January 1, 2011, "year end" means June 30, 2011, "this year" means from January
    1, 2011 to June 30, "last year" means from January 1, 2010 to June 30, the currency unit RMB.
    1.Monetary Capital
    Items                        Year-end balance                              Year-beginning balance
    Original        Exchange                           Original        Exchange
    currency          rate        RMB equivalent       currency          rate     RMB equivalent
    Stock cash                                                    67,185                                         91,999
    RMB                      62,959         1.0000              62,959             81,570     1.0000           81,570
    HKD                        5,082       0.83162               4,226             12,256     0.8509           10,429
    Bank deposit                                             51,257,501                                      46,026,397
    RMB                   25,742,817        1.0000         25,742,817        20,478,001       1.0000       20,478,001
    HKD                   29,349,572       0.83162         24,407,691        28,692,137       0.8509       24,414,139
    USD                     171,054         6.4716          1,106,993           171,268       6.6227        1,134,257
    Other monetary
    614,235                                       5,668,217
    capital
    RMB                     614,235         1.0000            614,235         5,668,217       1.0000        5,668,217
    HKD                                                                                  -                           -
    Total                       —            —      51,938,921                   —        —       51,786,613
    * Funds in other currencies (RMB) mainly kept in the securities of the Group companies for the purchase
    of new shares issued by drawing lots of money does not exist at the end of restrictions on the use of monetary
    funds.
    2.Financial assets for transaction
    Item                                              Year-end balance              Year-beginning balance
    Equity     tool   investment        for                          108,700                            77,235
    transaction.
    Total                                                            108,700                            77,235
    Transactional equity tools are the shares which are to be cashed at any time purchased by the
    subsidiary of the company, priced by fair value, its cash has no major restrictions.
    55/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    3.Account receivable
    (1)Categories of account receivable
    Year-end balance                                            Year-beginning balance
    Type                               Book Balance        Provision for bad debts              Book Balance                  Provision for bad debts
    Amount        Proportion%   Amount         Proportion%        Amount      Proportion%          Amount      Proportion%
    Account       receivable
    with         significant
    specific amount that
    5,490,349        37.67      4,640,025             84.51       5,334,174            36.47       4,747,598                89
    were provisioned had
    debt         preparation
    separately
    Aging group                    -              -            -                   -     -               -                -               -
    account       receivable
    that      were      not
    significant but have
    9,083,245        62.33      9,083,245             100         9,293,828            63.53       9,293,828               100
    been provisioned bad
    debt         preparation
    separately
    Total                      14,573,594        100       13,723,270            94.17   14,628,002            100        14,041,426          86.86
    56/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    1) Account receivable with significant specific amount that were provisioned had debt preparation
    separately
    Provision             Reason of
    Name                        Book balance           Bad debts
    proportion%           provision
    Victor Onward                                                                            Aging long
    Textile (HK)Co.,                1,569,885                 833,297              53.08
    Ltd.
    Shenzhen
    Jinrongyuan
    Enterprise                      1,757,457                  21,844                1.24                        -
    Development         Co.,
    Ltd.
    Carnival        Index                                                                     Aging long
    1,126,897                1,126,897            100.00
    International Ltd
    TAI            YANG                                                                       Aging long
    ENTERPRISE                       1,036,110               1,036,110            100.00
    CO.,LTD.
    Shenzhong                                                                                 The company ins
    Enterprise                                 -             1,621,877               N/A      olvent, to be can
    Co.,Ltd.                                                                                               celed
    Total                           5,490,349                4,640,025             89.00                       —
    *Shengzhong Company, a subsidiary of the Company, was planned to be deregistered. The
    Company made full provision for bad debts in respect of the accounts of RMB 1,621,877 receivable
    from this company. On consolidation, these accounts receivable were eliminated, but corresponding
    provision for bad debts was not eliminated.
    2) As of December 31, 2011, account receivable that were not significant but have been provisioned
    bad debt preparation separately
    Provision          Reason of
    Name                                  Book balance          Bad debts
    proportion%         provision
    VEGA GARMENT CO.,LTD                           752,622         752,622                100.00    Aging long
    Fly Dragon International                       588,335         588,335                100.00 Aging long
    Grateful Textiles Co.,Ltd                      581,284         581,284                100.00 Aging long
    World Fabrica (Int'l) Ltd                      477,128         477,128                100.00 Aging long
    Shenzhen Fangzhou Textile                                                                    Aging long
    457,871         457,871                100.00
    Co., Ltd.
    Ezhou        Xiangya       Garments            360,570         360,570                100.00 Aging long
    57/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Provision             Reason of
    Name                                Book balance         Bad debts
    proportion%             provision
    Co., Ltd.
    Tak Shing Buying Office Led              342,108              342,108                  100.00 Aging long
    Starline Textile CO.Ltd.                 340,807              340,807                  100.00 Aging long
    U.D.C. (H.K.) Co.,Ltd                    307,079              307,079                  100.00 Aging long
    Panther Fabric Ltd.                      302,703              302,703                  100.00 Aging long
    Other (Total 110)                      4,572,738             4,572,738                 100.00 Aging long
    Total                                  9,083,245             9,083,245                 100.00
    (2)Of the account receivables at the end of period, there were none owed by corporate shareholders of the
    Company holding over 5% (including 5%) of its total shares with voting rights.
    (3)The front 5 units’ information of account receivable
    Percentage of
    Unit name                 Relation with           Amount
    Age               account
    the company                                              receivable(%)
    Non-Related
    Victor Textile (Hong Kong) Ltd                                  1,569,885     2-3 years                10.77%
    parties
    Shenzhen          Jinrongyuan         Non-Related
    1,480,417     1-2 years                10.16%
    Development Co., Ltd.                 parties
    Non-Related                                Over 3
    1,126,897                               7.73%
    CarnivalIndexInternationalLtd         parties                                      years
    Non-Related                                Over 3
    1,036,110                               7.11%
    TAIYANGENTERPRISECO.,LTD.             parties                                      years
    Non-Related                                Over 3
    752,622                                5.16%
    VEGA GARMENT CO.,LTD                  parties                                      years
    Total                                            5,965,931                              40.94%
    (4)About the account receivable from the related parties
    Relation with this
    Name                                                                    Amount             Proportion(%)
    company
    The related parties
    controlled the same            307,079                        2.11%
    Shenye Union(HK)Co., Ltd.                     Actual controller
    (5)Accounts receivable include the following foreign currency balances
    Foreign                       Year-end balance                            Year-beginning balance
    58/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    currency         Original       Exchange        RMB             Original        Exchange        RMB
    Name           currency          rate       equivalent        currency           rate       equivalent
    HKD             11,038,875       0.83162      9,180,149        11,038,875        0.8509        9,392,979
    USD              405,753         6.4716       2,625,871             405,753      6.6227        2,687,180
    Total                                      11,806,020                                      12,080,159
    4. Prepayments
    (1) Aging
    Year-end balance                         Year-beginning balance
    Items                          amount             Proportion              amount            Proportion
    (%)                                     (%)
    Within 1 year                        19,173                100.00                22,832              98.31
    1-2 years                                                                         393                1.69
    Total                                19,173                100.00                23,225             100.00
    (2) Prepayments main unit
    Relation with
    Company Name                                   Amount                Age                  Causes
    the Company
    Non-Related                                 Within 1       Payments for goods
    11,540
    Insurance premium       parties                                      year              not paid
    Non-Related                                 Within 1       Payments for goods
    4,410
    Vehicle license fees    parties                                      year              not paid
    Business     Register   Non-Related                                                Payments for goods
    1,794
    fees                    parties                                     1-2 years          not paid
    Non-Related                                 Within 1       Payments for goods
    1,429
    Other                   parties                                      years             not paid
    Total                                                19,173
    (3) Of the Prepayment at the end of period, there were none owed by corporate shareholders of the
    Company holding over 5% (including 5%) of its total shares with voting rights.
    (4)Prepayments include the following foreign currency balances
    Foreign                        Year-end balance                          Year-beginning balance
    Currency of       Original       Exchange         RMB           Original        Exchange        RMB
    Name          currency         rate         equivalent      currency          rate        equivalent
    59/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Foreign                       Year-end balance                          Year-beginning balance
    Currency of        Original    Exchange        RMB             Original     Exchange        RMB
    Name            currency      rate        equivalent        currency       rate        equivalent
    HKD                23,055       0.83162          19,173          27,295        0.8509            23,225
    Total                                            19,173                                          23,225
    5.Interest receivable
    Items        Year-beginning     Increase in        Decrease in      Exchange        Year-end
    balance       the current        the current         rate          balance
    period            period        Differences
    Interest on Fixed              6,646                             6,646                                  0
    deposits
    Total                          6,646                             6,646                                  0
    60/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    6.Other receivables
    (1) Categories of other receivable
    Year-end balance                                         Year-beginning balance
    Type                                 Book Balance             Provision for bad debts            Book Balance             Provision for bad debts
    Amount       Proportion%     Amount       Proportion%       Amount       Proportion%     Amount         Proportion%
    Other    receivable      with
    significant specific amount
    3,299,737            71.56   3,299,737          100.00      3,376,237            73.57   3,376,237           100.00
    that were provisioned bed
    debt preparation separately
    Other accounts that were
    provisioned     bad      debt
    -               -            -                 -            -               -              -               -
    preparation in accordance
    with aging Group
    Deposit Group                    297,592              6.45            -                 -    175,951              3.83              -               -
    Other receivable that were
    not significant but have
    1,013,499            21.98   1,013,499          100.00      1,036,996            22.60   1,036,996           100.00
    been provisioned had debt
    preparation separately
    Total                           4,610,828           100.00   4,313,236          100.00      4,589,184           100.00   4,413,233            96.17
    61/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    1) Other receivable with significant specific amount that were provisioned had debt preparation separately
    Provision             Reason of
    Name                        Book balance         Bad debts
    proportion%            provision
    Nanjing East Asia               1,291,370               1,291,370         100.00              Aging long
    CCB.Guangdong                                                                                 Aging long
    1,055,492               1,055,492         100.00
    Shunde Branch
    Changzhou Dongfeng                                                                            Aging long
    Textile Printing & dyeing          952,875               952,875          100.00
    Equipment Co., Ltd.
    Total                           3,299,737               3,299,737            -
    2) Group-Deposit Group
    Provision            Reason of
    Name                         Book balance          Bad debts
    proportion%             provision
    RECOVERABLECLIENT                    27,685                         -                     -
    Huachuang Room 1802                  24,090                         -                     -
    CRE18050(DD18JUN96)                 7,784                         -                     - Deposit, No
    Customs    bond   of                                                                        provision
    Shenzhen & Hongkong                  7,808                         -                     - for        bad
    car                                                                                           debts
    Rent deposit                        162,220                         -                     -
    Other                                68,005                         -                     -
    Total                               297,592                                      -
    3) As of December 31, 2011, account receivable that were not significant but have been provisioned
    bad debt preparation separately
    Book                               Provision             Reason of
    Name                                                Bad debts
    balance                            proportion%            provision
    HongKong Victor Onward                 711,859           711,859                 100.00 Aging long
    Shanghai Huayinke Industry                                                       100.00 Aging long
    175,916           175,916
    Co., Ltd.
    Shenzhen          Environmental                                                  100.00 Aging long
    Management               System         34,206            34,206
    Certification Center
    Shenzhen Huaxinfeng Industrial                                                   100.00
    32,353            32,353
    Co., Ltd.                                                                                     Aging long
    Shenzhen Design Institute of                                                     100.00 Aging long
    29,319            29,319
    Ministry of Machinery Industry
    62/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Book                              Provision        Reason of
    Name                                                         Bad debts
    balance                           proportion%          provision
    Shanghai Branch
    Other (Total 14)                                 29,846             29,846             100.00 Aging long
    Total                                       1,013,499            1,013,499                     -                -
    (2)Of the Other account receivable at the end of period, there were none owed by corporate shareholders
    of the Company holding over 5% (including 5%) of its total shares with voting rights.
    (3)The front 5 units’ information of Other account receivable
    Relation with                            Account     Proportion(%)
    Name                                              Amount                                             Content
    the company                              Age
    Nanjing East Asia          Non-Related                             Over 3 y
    1,291,370                              28.01% Goods
    C                            parties                                    ears
    CCB.Guangdong              Non-Related                               Over 3
    1,055,492                              22.89% Goods
    Shunde Branch               parties                                   years
    Changzhou
    Dongfeng
    Textile Printing           Non-Related                               Over 3
    952,875                              20.67% Goods
    &              dyeing        parties                                   years
    Equipment Co.,
    Ltd.
    HongKong        Victor     Non-Related                               Over 3
    711,859                              15.44% Goods
    Onward                       parties                                   years
    Shanghai
    Huayinke                   Non-Related                               Over 3
    175,915                               3.82% Goods
    Industry         Co.,        parties                                   years
    Ltd.
    Total                                             4,187,511                             90.82%
    (4)Other receivable include the following foreign currency balance
    Foreign                            Year-end balance                           Year-beginning balance
    Currency of          Original      Exchange           RMB           Original      Exchange        RMB
    Name              currency         rate          equivalent      currency         rate       equivalent
    HKD                     1,032,870       0.83162          858,955       1,219,263       0.8509       1,037,471
    Total                                              858,955                                    1,037,471
    63/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    7.Inventory
    (1)Inventory types
    Year-end balance                              Year-beginning balance
    Book           Provision for    Book value           Book       Provision      Book
    Items
    balance          bad debts                           balance      for bad       value
    debts
    Raw
    2,083,119         1,663,241        419,878        2,131,413      1,701,800      429,613
    materials
    Stock
    630,016           630,016            -               644,622     644,622           -
    goods
    Total          2,713,135         2,293,257        419,878        2,776,035      2,346,422      429,613
    The Company has been out of production, the closing inventories shall be written down after deducting the full
    amount provisions except the preservation materials.
    (2)Provision for impairment of inventories
    Decrease in the current
    Increase in                                  Exchange
    Year-beginning                                period                             Year-end
    Items                              the current                                    rate
    balance                         Transferred                                  balance
    period                      Reselling      changes
    back
    Raw
    -38,559      1,663,241
    materials          1,701,800
    Stock
    -14,606       630,016
    goods                 644,622
    Total              2,346,422                                                     -53,165      2,293,257
    8.Financial assets for sale
    (1) Financial assets for sale
    Items                   Year-beginning balance (Fair        Year-end balance (Fair value )
    value )
    Equity tools for sale.                                       638,618                          874,427
    Total                                                        638,618                          874,427
    The equity tools for sale are the shares held by the subsidiary of the company Hong Kong Victor Onward , because
    they are not to be cashed in a short term, so they are classified in this item, the change of fair value in the current
    period RMB215,997 has been included in the public capital reserve.
    9.Long-term equity investment
    64/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    (1)Long-term equity investment
    Items                                 Year-end balance         Year-beginning balance
    The cost of long-term equity
    investment accounting                                                                   -
    The equity method long-term
    68,778,887                 77,199,476
    equity investment
    Total    of      long-term   equity
    investment                                        68,778,887                 77,199,476
    Less    :      Long-term    equity
    investments for impairment
    Net     value    long-term   equity
    investment                                        68,778,887                 77,199,476
    65/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    (2)The equity method long-term equity investment
    Cash
    Holdings          Vote
    Investment                                      Exchange rate Year-end       dividend
    Name                                  Proportion   proportion                                       change
    Cost             Amount of                        change        balance      at this
    (%)        (%)
    year-beginning                                                year
    1.Zhejiang Union Hangzhou Bay
    25%            25%       58,588,403          77,199,476   -6,748,868      -1,671,721   68,778,887              -
    Chuangye Co., Ltd.
    2. Shenzhen Lianchang Printing &                                                   -
    37.5%           37.5%      1,403,456                                                                            -
    dyeing Co., Ltd.
    Total                                         59,991,859         77,199,476      -6,748,868     -1,671,721    68,778,887              -
    Zhejiang Union Hangzhou bay chuangye Co., Ltd. (hereinafter named―Hangzhoubay‖) current change including current profit confirmed by equity method is
    RMB6,748,868. Shenzhen Lianchang Printing & Dyeing Co. Ltd. was in loss for many years, its net assets were negative, the operation of the company has stopped, the
    balance of long-term equity investment has been adjusted to zero.
    66/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    (3)The investment in the Enterprise
    Total
    Holdings      Vote        Total assets               Total          Net asset
    Business       Net profit
    Name          Proportion   proportion     at the end        Liabilities at       total at the
    income tat     at this year
    (%)      (%)            year            the end year            end year
    this year
    Zhejiang
    Union
    Hangzhou
    25%         25%      1,327,411,709      1,022,981,400         307,430,308   16,026,997      -26,995,474
    Bay
    Chuangye
    Co., Ltd.
    10.Property investment
    The investment in real estate companies use the cost model measures
    Decrease         Exchange
    Increase in          in                                 Year-end
    rate changed
    Amount of           current period       current                              balance
    Items             year-beginning                             period
    Original Value                101,717,557                                               -2,304,753          99,412,804
    House, Building             101,717,557                                               -2,304,753          99,412,804
    Accumulated
    62,038,553          1,736,874                         -1,405,691          62,369,736
    amortisation
    House, Building                 62,038,553          1,736,874                         -1,405,691          62,369,736
    Book Net value                    39,679,004         -1,736,874                           -899,062          37,043,068
    House, Building                 39,679,004         -1,736,874                           -899,062          37,043,068
    Impairment Provision                        -                                                                          -
    House, Building                           -                                                                          -
    Book value                        39,679,004         -1,736,874                  -        -899,062          37,043,068
    House, Building                 39,679,004         -1,736,874                  -        -899,062          37,043,068
    11.Fixed assets
    (1)Breakdown of Fixed assets
    Decrease          Exchange
    Increase in                                            Year-end
    Amount of                              in current
    current period                       rate changed        balance
    Items           year-beginning                             period
    Original Value.           169,118,038               11031             104227       -3,831,938    165,192,904
    67/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Decrease        Exchange
    Increase in                                     Year-end
    Amount of                         in current
    current period                 rate changed      balance
    Items            year-beginning                        period
    House and building          50,351,436                                      -1,140,881     49,210,555
    Machine and
    104,233,077                                      -2,361,751    101,871,326
    Equipment
    Transportation
    4,915,122                        104227          -111,369       4,699,526
    Equipment
    Office    equipment
    9,618,403           11031                        -217,937       9,411,497
    and other
    Accumulated
    116,821,045          106930           93804      -2,646,973    114,187,198
    amortization
    House and building          27,537,760                                        -623,961     26,913,799
    Machine and
    78,727,442                                      -1,783,835     76,943,607
    Equipment
    Transportation
    4,243,598                           93804         -96,153       4,053,641
    Equipment
    Office    equipment
    6,312,245          106930                        -143,025       6,276,150
    and other
    Impairment
    34,804,861                                        -788,621     34,016,240
    Provision
    House and building          16,232,914                                        -367,811     15,865,103
    Machine and
    15,697,431                                        -355,678     15,341,753
    Equipment
    Transportation
    50,369                                          -1,141         49,228
    Equipment
    Office    equipment
    2,824,147                                         -63,991       2,760,156
    and other
    Book value                  17,492,132          -95899           10423         -396344     16,989,466
    House and building           6,580,762                                         -149109       6,431,653
    Machine and
    9,808,204                                         -222238       9,585,966
    Equipment
    Transportation
    621,155                           10423          -14075        596,657
    Equipment
    Office    equipment
    482,011          -95899                          -10921        375,191
    and other
    (2)Details of temporary idle fixed assets are as follows:
    Book
    Items            Original               Accumulated             Impairment
    value                   depreciation             provision   Book Net value
    68/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    House and building                 45,691,372         25,823,161        15,865,103              4,003,108
    Machine and
    101,553,401         76,790,369        14,607,692          10,155,340
    Equipment
    Transportation
    3,056,322          2,750,657                  -              305,665
    Equipment
    Office equipment and
    7,738,263          4,964,765          2,568,916              204,582
    other
    Total                   158,039,358       110,328,952         33,041,711          14,668,695
    The original value of the temporarily idle machinery and equipments to be invested in Nanjing
    Textile Printing & dyeing Co., Ltd. was RMB 78,181,395 , Accumulated amortization was
    RMB56,834,112, Impairment Provision was 13,529,143 , Book value was RMB 7,818,140.
    12.Intangible assets
    Decrease in     Exchange
    Increase in                                       Year-end
    Amount of                          current
    current period                  rate changed       balance
    Items           year-beginning                           period
    Original Value            13,669,525                                          -309,729    13,359,796
    Land use right           12,968,839                                          -293,853    12,674,986
    software                   700,686                                           -15,876          684,810
    Accumulated
    11,382,077            26,234                       -257,899        11,150,412
    amortisation
    Land use right           10,919,815             26,234                       -247,425    10,698,624
    software                   462,262                                           -10,474          451,788
    Book Net value              2,287,448           -26,234                        -51,830         2,209,384
    Land use right             2,049,023           -26,234                        -46,428         1,976,361
    software                   238,425                                             -5,402         233,023
    Impairment
    238,425                                             -5,402         233,023
    Provision
    Land use right
    software                   238,425                                             -5,402         233,023
    Book value                  2,049,023           -26,234                        -46,428         1,976,361
    Land use right             2,049,023           -26,234                        -46,428         1,976,361
    software                            -
    The real estate title certificate issued by Shenzhen Land Resource and House Property
    Administration for part of the land for the factory building and office building of the Company
    located at 26 Kuipeng Road, Baishigang, Kuiyong Town, Longgang District, Shenzhen was obtained
    on January 18, 2010. The valid term is from March 5, 1999 to March 4, 2049.
    69/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Increase in accumulated amortization, Amortization RMB53,686 in this year.
    13. Goodwill
    Increase    Decrease     Exchange
    Year-beginning            in        in
    rate       Year-end      Impairment
    Items
    balance        current     current                  balance       in year end
    changed
    period      period
    For            the
    goodwill
    formed from
    holding                    5,352,498            -           -       -121,278    5,231,220
    shares    of
    Nanhua
    Company,
    Total               5,352,498            -           -       -121,278    5,231,220
    Nanhua Printing and Dyeing Company has also been discontinued, whose daily operations
    maintained rely on the rental housing. Although South China Company has a negative net asset, the
    company has a vast piece of land and property in Shenzhen city. And the historical cost of assets
    recorded into account basis will changed, which will be appreciated in value greatly once assessed,
    we believe that there is no value-reduced of the investment, so the goodwill is not impaired.
    14.Impairment of assets schedule
    Decrea
    se in
    Amount of                              the
    Accrual                   Exchange rate     Amount of
    Items           year-beginn                           current
    amount                       change          year-end
    ing                             period
    Switch
    back
    Provision for bad
    18,454,659                                           -418,153        18,036,506
    debts
    Stock
    Impairment                2,346,422                                            -53,165         2,293,257
    Provision
    Impairment of
    34,804,861                                           -788,621        34,016,240
    fixed assets
    Inta
    238,425                                           -5,402              233,023
    Impairment         of
    70/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Intangible assets
    Total          55,844,367                                        -1,265,341             54,579,026
    15.Account payable
    (1)Account payable
    Items                                       Year-end balance                Year-beginning balance
    Total                                                      3,318,295                         3,353,297
    Including:over      1 year                                3,318,295                           332,468
    Accounts payable with age over one year included a number of accounts, without single
    significant amount of accounts payable.
    (2)Of the account payable at the end of period, there were none owed by corporate shareholders
    of the Company holding over 5% (including 5%) of its total shares with voting rights.
    (3)Accounts payable include the following foreign currency balances.
    Name of                       Year-end balance                         Year-beginning balance
    Foreign       Original        Exchange           RMB          Original    Exchange         RMB
    Currency        currency           rate          equivalent     currency       rate        equivalent
    HKD                324,942        0.83162           270,228      324,942       0.8509          276,493
    Total                                               270,228                                    276,493
    16.Advanced account
    (1)Advanced account
    Items                          Year-end balance                Year-beginning balance
    Total                                         2,745,351                         2,718,175
    Including:over 1 year                                     2,745,351                         2,718,175
    Advanced account more than 1 year was mainly the sale fund for the wasted materials from the
    relocation of the company, and due to delays in the overall relocation plan, the money paid in
    advance was temporarily suspended.
    (2)Of the prepayments at the end of period, there were none owed by corporate shareholders
    of the Company holding over 5% (including 5%) of its total shares with voting rights.
    (3)Advanced Accounts include the following foreign currency balances.
    71/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Name of                        Year-end balance                               Year-beginning balance
    Foreig
    n              Original        Exchange              RMB             Original      Exchange          RMB
    Currency        currency            rate             equivalent        currency        rate          equivalent
    HKD             2,339,945           0.83162            1,945,945       2,339,945       0.8509         1,991,059
    USD                  101,903         6.4716              659,475        101,903        6.6227           674,873
    Total                                               2,605,420                                      2,665,932
    17.Wage payables to employees
    Year-begin                         Decrease in     Exchange
    Increase in                                    Year-end
    Items                    ning                             current          rate
    current period                                   balance
    balance                            period        changed
    Wage (Including reward ,
    501,231            990,640        1,025,830                      466,041
    allowance and subsidy)
    Welfares For employees                           -                                                                -
    Social insurance premiums                        -        160,206          160,206                                -
    Including :
    -          27,760          27,760                                -
    Medical insurance premiums
    Basic      old-age      insurance
    -        125,742          125,742                                -
    premiums
    Unemployment           insurance
    -            2,829           2,829                               -
    expenses
    Industrial injury insurance
    -            1,230           1,230                               -
    premiums
    Childbirth             insurance
    -            2,645           2,645                               -
    premiums
    Housing accumulation fund                        -                                                                -
    Trade union outlays and
    119,132                9,590         34,607                        94,115
    employee education outlays
    Other                                            -
    Total                    620,363          1,160,436        1,220,643               -      560,156
    18.Fees and taxes payables
    Items                               Year-end balance           Year-beginning balance
    VAT                                                                      802,463                      821,067
    Business tax                                                             200,198                      237,054
    Enterprise income tax                                                  1,307,243                    1,337,550
    Tax    on      city     maintenance       and
    14,014
    construction                                                                                             1,224
    72/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                          Year-end balance           Year-beginning balance
    Property tax                                                   277,637                     283,975
    Individual income tax                                                                              98
    Stamp tax                                                      228,404                     233,699
    Educational surcharge                                             6,006                           200
    Total                                                         2,835,965                  2,914,867
    19.Dividend payable
    Items                 Year-end           Year-beginning
    balance               balance           Reasons of arrears
    State       Development        &
    249,465                255,248
    Investment Co., Ltd*2
    CITIC Group *2                          249,465                255,248
    Shenzhen       Nanyou     (Group)
    124,732                127,624
    Company*2
    Capital tense*1
    Shenye Union(Hongkong)Co.,
    124,732                127,624
    Ltd.
    Changzhou Dongfeng Printing
    498,930                510,497
    and dyeing plant *2
    Total                  1,247,324               1,276,241
    *1 The above payable dividends were the payable dividends of Nanhua Company, a subsidiary of the company, the
    change in balance mainly due to the change of exchange rate. Because Nanhuan Company’s capital was more
    tension and the shareholders did not ask for the fund, the payable dividends have not been paid. The payable
    dividends reduced at the end of the period mainly due to the change of exchange rate.
    *2 The above four companies are the former shareholders of Nanhuan Company, the subsidiary of the company.
    20.Other accounts payable
    (1)Other accounts payable
    Items                   Year-end balance                  Year-beginning balance
    Total                                               30,523,556                          29,974,945
    Including:Over 1 year                              29,834,627                          29,626,008
    Other payables which are longer than one year mainly were the loans borrowed by Nanhuan Company the
    subsidiary of the company from related companies, which have not been paid because of capital tension.
    (2) Of the Other payables at the end of period, there were none owed by corporate shareholders of the
    Company holding over 5% (including 5%) of its total shares with voting rights.
    (3)Other payable by large in year end year
    73/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                   Amount                Age               Nature or content
    Gao Minping                               150,506           2-3 years                 Deposit
    Room 760 Cargo Floor(#HKS
    249,486       1-2 years                 Deposit
    PINNERS-760)
    State      Development   &
    2,931,921       Over 3 years                Loans
    Investment Co., Ltd
    Union Group                              22,456,162       Over 3 years                Loans
    Jinrongyuan Company-Deposit                   996,853     Over 3 years                Deposit
    Total                                    26,784,928
    (4)Other payable Accounts include the following foreign currency balances.
    Name     of                Year-end balance                         Year-beginning balance
    Foreign       Original    Exchange          RMB           Original      Exchange         RMB
    currency        currency       rate       equivalent        currency         rate        equivalent
    HKD             923,050       0.83162          767,627       923,050         0.8509           785,423
    Total                                          767,627                                        785,423
    21.Other current liabilities
    Items                                           Year-end balance            Year-beginning balance
    Sewage charges                                                  62,600                          62,598
    Audit fees                                                   1,250,906                    1,076,785
    Land use fees                                                   88,000                          87,997
    Securities management Fees                                          765                           783
    Total                                                        1,402,271                    1,228,163
    22.Long-term borrowing
    (1)Classification of long-term borrowing
    Type                                     Year-end balance                 Year-beginning balance
    Impawn borrowing                                        1,254,740                         1,350,126
    Total                                     1,254,740                         1,350,126
    The borrowing was the installment payment for the housing in Hong Kong bought by the subsidiary of
    the company Xingye Company, the mortgage article was the house purchased. The installment
    payment was HKD 2,366,000 , which paid in 240 month, As of December 31, 2011 ,Principal
    amount of HKD 1,508,790 (RMB1,254,740)
    23.Long-term payable
    74/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Unit                    Time       Year-beginning     Interest         Interest       Year-end      Borrowing
    balance        rate(%)                         balance      condition
    Assess          the Non-time         8,907,695                   -                -                        -
    value            of                                                                   8,705,861
    assets
    Total                         8,907,695                   -                -   8,705,861            -
    * The company was authorized by People's Bank of China when it was reorganized into joint-stock company,
    the revaluation of the assets of the revaluation gain attributable to the restructuring of the Company before the
    shareholder. The asset was re-assessed on January 31, 1992, which generated about 14,754,000 HKD revaluation
    gain, recorded on account as long-term payable subject, part of them have been used to offset the bad debts prior to
    listing (about 4,285,000 HKD ). The shareholders before the reorganization have agreed not to require the
    company to pay such amounts with cash, to offset each other when purchase stocks of the company in the future,
    the decrease of long-term payables mainly due to the change of exchange rate.
    24.Deferred income tax liabilities
    (1)The confirmed Deferred income tax liabilities
    Items                           Year-end balance                 Year-beginning balance
    The income tax of taxable temporary
    difference.                                                          872,138                             892,357
    Total                                              872,138                             892,357
    (2)The temporary difference
    Item of the taxable temporary                  Year-end balance                 Year-beginning balance
    Assets assessment appreciation                                  5,285,682                             5,408,224
    Total                                                           5,285,682                             5,408,224
    Tax rate                                                             16.50%                               16.5%
    Confirmation       of     the   Deferred
    income tax liabilities.                                              872,138                             892,357
    * When the company was reorganized into joint-stock company, the company was approved by the People's
    Bank of China, the added value of the assets of the subsidiary of the company Hong Kong Victor Onward Company,
    according to Hong Kong Standards, can not be adjusted, and was not to be deducted when accounting the income
    tax, resulting in the differences in net value of fixed assets and accounting basis.
    25.Other non-current liabilities
    Items                                                Year-end balance                 Year-beginning balance
    ERP Information construction                                           234,105                        239,532
    Technology subsidies                                                   624,281                       638,754
    75/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                Year-end balance                  Year-beginning balance
    Total                                                                       858,386                      878,286
    (1)The above funds were the special subsidies received from Shenzhen Department of Finance
    in 2004 for the digital jet printing projects and for the construction of enterprise information. The
    deal must be accepted by the Financial Bureau before accounting, so it was suspended. The
    reduction was due to the change in exchange rates.
    26.Share capital
    Name/Type                 Year-beginning balance             Change                    Year-end balance
    Amount        Proportion%          Amount                 Amount            Proportion%
    Restricted shares
    Common shares in
    99,720,453              58.96                  -           99,720,453             58.96
    RMB
    Foreign     shares     in
    69,421,903              41.04                  -           69,421,903             41.04
    domestic market
    Total           restricted
    169,142,356             100.00                  -          169,142,356            100.00
    shares
    Total      of     capital
    169,142,356             100.00                  -          169,142,356            100.00
    shares
    27.Capital common reserve
    Items             Year-beginning          Increase in              Decrease in           Year-end
    balance            current period           current period          balance
    Share capital Premium             29,718,829                            -                    -        29,718,829
    Other Capital common              10,153,705                                          215,997          9,937,708
    reserve
    Total                             39,872,534                                          215,997         39,656,537
    Current increment in capital surplus came from current fair value gain of finance assets available for sale.
    28.Surplus common reserve
    Items             Year-beginning          Increase in              Decrease in           Year-end
    balance            current period           current period          balance
    Statutory           Surplus
    26,704,791                                                          26,704,791
    common reserve
    Total                 26,704,791                                                          26,704,791
    76/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    29.Retained profit
    Items                            Amount           Proportion(%)
    Balance at the end of last period                       -98,665,017
    Add: The beginning of the undistributed
    profits adjustments
    Including:Change of accounting policy
    Correcting previous errors
    Change of consolidated scope
    Other adjustments
    Balance at the beginning of current year                -98,665,017
    Add:The net profit due to the shareholders of           -8,232,521
    the parent company in the year
    Less : Withdrawing statutory surplus public
    reserve
    Withdrawing discretionary surplus reserve
    Withdrawing Ordinary risk allowance
    Common stocks dividends payable
    Stock dividend transferred in stock capital
    Balance at the end of current year                     -106,897,538
    30.Minority shareholders equity
    Name of Subsidiary              Proportion%                             Year-beginning
    Year-end amount
    balance
    Nanhua Company*                            30.56
    Shenzhen   East          Asia
    -1,340,512       -1,311,595
    Company                                    49.00
    Total                                                           -1,340,512       -1,311,595
    Nanhua Company and Shenzhen East Asia, two subsidiaries of the Company, suffered excess loss.
    According to No. 4 Interpretation of Accounting Standards for Business Enterprises, where the loss
    for current period shared by minority shareholders of a subsidiary exceeds the owner's equity
    enjoyed by them in this subsidiary at the beginning of period in consolidated financial statements,
    the difference shall write off minority interests. Whether the Articles of Association of the Company
    or an agreement defines the obligation of minority shareholders for excess loss or not, excess loss
    shall write off minority interests, i.e., minority interests will be negative when the subsidiary
    suffering excess loss is included for statement consolidation. However, the minority shareholders of
    77/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Nanhua Company were declared bankrupt and suffered compulsory liquidation in 2000. No
    retroaction can be conducted. Therefore, the minority shareholders of Nanhua Company shall no
    longer bear losses. changes mainly due to the impact of the exchange rate in the report period
    31. Business income, Business cost
    Items                                                     Amount of current        Amount of Previous
    period                     period
    Key business income                                                                          1,037,461
    Other business income                                               5,528,810                4,243,127
    Total                                                               5,528,810                5,280,588
    Key business cost                                                                               304,606
    Other business cost                                                 2,331,440                2,055,818
    Total                                                               2,331,440                2,360,424
    (1)Key business—Product
    Amount of current period             Amount of Previous period
    Name                                Business                              Business
    Business cost                        Business cost
    income                            income
    Cloth bleaching, printing and
    dyeing                                                                        1,037,461         304,606
    Rent                                    5,528,810          2,331,440          4,243,127      2,055,818
    Total                      5,528,810          2,331,440          5,280,588      2,360,424
    The total sale incomes of the top five customers was RMB4,562,448 , representing 82.52% of
    the main business income in this year. The Company’s and Its subsidiary Nanhua Company is still
    operating normally
    (1) Revenue from main business status of top 5 clients
    Name of customer                          Business Revenues          Proportion to revenue from main
    business(%)
    Shenzhen     Finance          sources
    3,525,000                                     63.76%
    Development Co., Ltd.
    SCS EXPRESS                                               504,756                                  9.13%
    Shenzhen    Nanshan   Saint   Laurent
    252,000                                  4.56%
    Wedding Photography
    CVA holdings                                              175,655                                  3.18%
    BOAST                                                     105,037                                  1.90%
    Total                                                4,562,448                                     82.52%
    78/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    32.Management expenses
    The management cost in this year was RMB 4,316,273, slightly increased compare with same period,
    last year.
    33..Financial expenses
    Items                                                     Amount of current       Amount of Previous
    period                  period
    Interest expenses                                                    529,892
    Less:Interest income                                                246,775 86,313
    Add:Exchange rate loss                                                  76,737             -275,285
    Add:Other expenses                                                       6,248                  3,836
    Total                                                                366,102                -357,761
    34.Changes income in fair value /loss
    Items                                                           Amount of         Amount of Previous
    current period            period
    Trading financial assets-                                            -48,602                 -17,686
    Total                                                                 -48,602                -17,686
    35.Investment income
    (1)Investment income generated by the sources listed
    Items                                                     Amount of current           Amount of
    period              Previous period
    Income from transfer of equity investment                          -6,748,868              6,606,835
    Disposal trading financial assets to achieve return
    14,141
    investment                                                                                   172,867
    Total                                  -6,734,727              6,779,702
    There were no major restrictions in the investment income at the period end.
    (2)Equity method
    Items           Amount of       Amount                                reason
    current            of
    period       Previous
    period
    Total         -6,734,727 6,779,702
    Including:                                 Affiliated company Hangzhou Bay has loss in the report period
    -6,748,868 6,606,835
    Hangzhou
    79/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items         Amount of            Amount                                reason
    current             of
    period       Previous
    period
    Bay
    Company
    36.Non-operating income
    (1) Non-operating income
    Items                    In the report   The same period of    Amount of non-current gains &
    period             last year                 loss in this year
    Other                              8,413                                             8,413
    Total                     8,413                                             8,413
    * Other deposit regaining from the subsidiary company of HongKong Victor Onward
    37.Non-operating expense
    Items                        In the         The same
    Amount of non-current gains &
    report          period of
    period          last year            loss in this year
    Loss disposition Non-current                      529
    8,413
    assets
    529                                                    529
    Including: loss on disposal of
    fixed assets
    Other                                             988             259                                    988
    Total                                  1,517            259                                            1,517
    * Other donation is from the subsidiary company of Shenzhen East Asia South China Company.
    38.Calculation process for Basic gains per share and Diluted gains per shares
    Items                                                                                 The same
    In the report
    No                                          period of last
    period
    year
    Net profit attributable
    to shareholder of the        1                                             -8,232,521           5,412,704
    Parent Company
    non-recurring
    gain/loss
    attributable     to    the   2                                                   21,037               -259
    shareholders of the
    Parent Company
    80/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                      The same
    In the report
    No                            period of last
    period
    year
    Attributable to the
    shareholders of the
    Parent Company, Net
    3=1-2                   -8,253,558        5,412,963
    profit after deducting
    of      non-recurring
    gain/loss
    Total of shares at
    169,142,356     169,142,356
    year-beginning             4
    Public reserve was
    transferred as capital
    and share increase         5
    from          dividend
    distribution(Ⅰ)
    The issuance of new
    shares or increase the
    number of shares and       6
    other       debt-equity
    swap(Ⅱ)
    Increase in the shares
    (Ⅱ)from     the   next
    month to the end           7
    month       of       the
    reporting period
    Shares decreased in
    the reporting period       8
    due to repurchase.
    Decrease      in     the
    shares from the next
    month to the end           9
    month       of       the
    reporting period
    Share            number
    decrease for shares 10
    deduction
    Number of months of        11
    81/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                                      The same
    In the report
    No                                period of last
    period
    year
    the reporting period
    The            weighted
    average number of              12=4+5+6×7÷11
    169,142,356     169,142,356
    ordinary              shares        -8×9÷11-10
    issued out.
    Basic gains per share                                                       -0.05
    0.03
    (Ⅰ)                         13=1÷12
    Diluted      gains      per                                                 -0.05
    0.03
    share(Ⅱ)                    14=3÷12
    The        interest       of
    ordinary              shares
    15
    which was confirmed
    as costs
    Conversion costs               16
    Income tax rate                17                                            22%              22%
    Warrants, shares with
    18
    equity right increase
    Diluted      gains      per                                                 -0.05
    19=[1+(15-16)×(1-17)]÷(12+18)                                0.03
    share(Ⅰ)
    Diluted      gains      per
    19=[3+(15-16)×(1-17)]÷(12+18)              -0.05             0.03
    share(Ⅱ)
    39.Other comprehensive income
    Items                                                                Amount of       Amount of
    current         previous
    period           period
    1.Loss amount produced by sellable financial assets                   -215,997             -6,238
    Less:Income tax infection produced by sellable financial assets
    Net amount transferred into profit and loss at current period that
    reckoned into other comprehensive income at former period
    Subtotal                                                               -215,997             -6,238
    2.The enjoyed share in other comprehensive income of other
    invested unit according to equity method
    Less:Income tax infection produced from the enjoyed share
    in other comprehensive income of other invested unit
    according to equity method
    82/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                                 Amount of      Amount of
    current        previous
    period          period
    Net amount transferred into profit and loss at current period
    that reckoned into other comprehensive income at former period
    Subtotal
    3.Benefit (Or loss) amount produced from cash flow
    Less:Income tax infection produced from cash flow the aging
    instruments
    Net amount transferred into profit and loss at current period
    that reckoned into other comprehensive income at former period
    Transferred to the adjustment of initial confirmation amount of
    items at hedged period
    Subtotal
    4.Translating difference in foreign currency financial reports       -3,172,304       -2,041,861
    Less:Net amount that transferred into profit and loss at current
    period in disposed overseas business
    Subtotal                                                              -3,172,304       -2,041,861
    5.Other                                                                                   12,397
    Less : Taxation infection arising from reckoning other
    comprehensive income
    Net amount transferred into profit and loss at current period that
    reckoned into other comprehensive income at former period.
    Subtotal                                                                                   12,397
    Total                                                                 -3,388,301       -2,035,702
    40.Cash Flow Statement
    Supplement information of Cash Flow Statement
    Items                                   Amount of
    Amount of
    current
    previous period
    period
    1. Adjusting net profit to net cash flow in operating activities:
    Net profit                                                          -8,261,438          5,364,951
    Add: Provision for impairment of assets
    Fixed assets depreciation                                           1,499,463           1,840,723
    Amortization of intangible assets                                  26,234              26,866
    Amortization of long-term expenses to be amortize
    The losses on the disposal of fixed assets, intangible assets and            529
    83/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                            Amount of
    Amount of
    current
    previous period
    period
    other long-term assets
    Loss on retirement of fixed assets
    Loss on changes of Fair value                                 48,602               17,686
    Financial expenses                                           366,102             -357,761
    Investment losses                                             6,734,727          -6,779,702
    Decrease of deferred income tax asset
    Increase of deferred income tax liability                      -20,219             -68,400
    Decrease in inventory                                         9,735             -44,253
    Decrease in operating receivable                               -374,691           2,900,080
    Increase in operating payables                                 546,867           -3,272,060
    Other                                                    239,673
    Net cash flows from operating activities                          815,584             -371,870
    2.Investing and financing activities that do not involve cash
    receipts and payments
    Conversion of debt into capital                                                               -
    Convertible bonds to be expired within one year                                                 -
    Fixed assets under financial lease                                                             -
    3.Net increase in cash and cash equivalents
    Cash at the end of the period                                51,938,921          55,323,423
    Less:Cash at the beginning of the period                  51,786,613          56,105,626
    Add: Cash equivalents at the end of the period                                               -
    Less:Cash equivalents at the beginning of the period                                           -
    Net increase in cash and cash equivalents                         152,308             -782,203
    (1) Cash and cash equivalents
    Items                           Amount of      Amount of
    current        previous
    period          period
    Cash                                                             51,938,921     55,323,423
    Including :Stock of cash                                             67,185        132,304
    The bank deposits which can be used at any time                  51,257,501     44,882,082
    The other monetary funds which can be used at any time              614,235     10,309,037
    The funds deposited in the central bank which be used                     -                -
    The funds deposited in the same industry                                  -                -
    The funds offered by the same industry                                     -                -
    Cash equivalents                                                           -                -
    84/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                   Amount of           Amount of
    current             previous
    period               period
    Including : Debt investments which will due within three months                     -                 -
    Balance of cash and cash equivalents at the period end                51,938,921          55,323,423
    Including : the restricted cash and cash equivalents used by the                    -                 -
    parent company or subsidiary of the Group
    IX. Related party relationship and related transactions
    1.Related party relationship
    (1)The parent Company with controlling relationship
    (a) The parent Company with controlling relationship
    Parent                        Registered                                  Legal   Organizati
    Type                                  Nature
    company                          address                                representa on Code
    tive
    Union        Issue company     11/F,Union         Production              Dong
    192471500
    Holdings                       Building,       and sale of clothing Binggen
    Limited                                             real
    Shennan Zhong and textiles,& andexport
    Union            Import
    Union                                                                 Dong
    Road,Shenzhen estate developin                              190337957
    Group        liability        Building,Shennan business ―processing Binggen
    Company          Zhong         Road, with materials‖ and
    Shenzhen            processing
    The registered capital and change of the parent Company           with
    Parent company                                 imported materials
    Balance in year Increase of this Decrease of           Balance in year
    beginning           period         this period               end
    Union Group                  90,606,000                      -                 -       90,606,000
    Union Holding               1,123,887,712                    -                 -   1,123,887,712
    Holdings
    (b) the share held by the parent company or equity and the changes .
    Shares amount                   Holding proportion%
    Parent company
    Amount in          Amount          Amount in               Amount
    year end          in year          year end               in year
    5,821,089        5,821,089          3.44%                  3.44%
    Union Group                                     beginning                               beginning
    Union Holding                 43,141,032        43,141,032         25.51%                25.51%
    Holdings
    * Union Group holds 31.32% of equity capital of Union Holdings, it controls Union Holdings, and Union
    Holdings is a controlling shareholder of the company, thus Union Group is the actual controller of the company
    (2). Subsidiary
    The subsidiaries of the Company as described in Note VII
    85/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    (3).Joint venture and affiliated company.
    Joint venture and affiliated company ,see Notes VIII,9
    (4). Other Related party
    Related
    Organization
    Type                                           Name                       transactions
    Code
    The       related       parties                                                                     -
    Current balance
    controlled the same Actual
    controller                         Shenye Union(HK)Co., Ltd.
    The      related       parties                                                                192199105
    Current balance
    controlled the same Actual Shenzhen            Union          Property
    controller                        Group Co., Ltd.
    2. Related transactions
    1.Lease assets to the related parties
    In the report year, the Company leased Room 1307 and 1308 of Union Building owned by Union
    Group. The term of tenancy is from January 1, 2009 to May 31, 2009. The monthly rent is RMB
    6800. The rent was determined according to market price. * The original lease contract agreement still
    continues down to the expiration of the contract , without signing a new lease contract.
    3. Balance current related parties
    Related parties                           Year-end balance       Year-beginning balance
    Account receivable
    Shenye Union(HK)Co., Ltd.                                               307,079                    314,198
    Other payable
    Union Group                                                          22,456,162                   22,564,462
    Shenzhen Union Property Group Co., Ltd.                                   683,414                    699,258
    X.Subsequent events
    As of December 31, 2011,The company has no formed form other Importance events.
    XI. Commitment events
    1.Importance Commitment events
    1). The external investment contracts and the related financial expenditures which have signed or not yet
    completely fulfilled.
    As of June 30, 2011,The Group still has the major external investments RMB 30 million which have signed but
    still not paid, as follows:
    Names of investment         Contractual      Prepaid         Unpaid          Expected       Remarks
    86/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    projects                    investment     investme      investment      investment
    amount          nt           amount          period
    amount
    Invest Nanjing East                                                                    The        Capital
    Asia Textile Co., Ltd                                                                  increasing of the
    30 million              -      30 million       Unsure
    with machinery and                                                                     project has not
    equipments                                                                             yet completed
    2) The big contract which has been signed or is ready to be carried out
    As of December 31, 2011, The Group still has big contract which has been signed but not paid, a total of
    RMB1.71 million, as follows:
    Name       of       Contractual        Prepaid       Unpaid            Expected       Remarks
    investment          investment       investment    investment         investment
    projects              amount           amount        amount             period
    location      of                                                                      The         Capital
    production                                                                            increasing of the
    1,710,000       855,000       855,000         Unsure
    equipments as                                                                         project has not yet
    a whole                                                                               completed
    2. Except for the events described above, By December 31, 2011,the Group has no other significant commitment
    events.
    XII . Events after balance sheet date
    The Group had no other significant matters after the balance sheet date.
    XIII. Other Significant Events
    1.Lease
    (1) Business in leasing assets
    Year-end balance             Year-beginning
    Type                                                               balance
    Cost                                                                  99,412,804             101,717,557
    House, Building                                                99,412,804             101,717,557
    Accumulated amortization                                              60,632,861              62,038,553
    House, Building                                                60,632,861              62,038,553
    Impairment provision                                                                                    -
    House, Building                                                                                  -
    The book value                                                        38,779,943              39,679,004
    House, Building                                                    38,779,943              39,679,004
    87/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    (2).Items related to measurement of fair value.
    Item                Amount at    Gains and      Accumulative      Provision    Amount
    the                                           for      at the end
    losses from     change of fair
    beginning                                    impairment   of period
    change of          value
    of period                                      made in
    fair value in   accounted for      current
    current      as rights and      period
    period         interests
    Financial assets
    1.       Financial     assets
    calculated according to
    fair value whose change is          77,235       -48,602                                    108,700
    accounted for as profits or
    losses for current period
    Trading financial assets           874,427                       -215,997                   638,618
    Subtotal      of     financial
    951,662       -48,602         -215,997                   747,318
    assets
    (3).Foreign financial assets and foreign financial liability
    Item                Amount at    Gains and      Accumulative      Provision    Amount
    the                                           for      at the end
    losses from     change of fair
    beginning                                    impairment   of period
    change of          value
    of period                                      made in
    fair value in   accounted for      current
    current      as rights and      period
    period         interests
    Financial assets
    1.       Financial     assets
    calculated according to
    fair value whose change is
    accounted for as profits or
    losses for current period
    Trading financial assets           874,427                       -215,997                   638,618
    Subtotal      of     financial     874,427
    -215,997                   638,618
    assets
    (4).Other Significant Events
    Since March 2007, Shenzhen Victor Onward Textile Industrial Co., Ltd. stopped production and
    dismissed most of workers. The company currently only had some house leasing business.
    88/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    5 subsidiaries controlled by the company had stopped the operation and were depending on house
    lease to maintain. In 2007 the company intended to invest part of machineries and equipments to
    Nanjing East Asia Textile Printing & Dyeing Co., Ltd. But due to the reasons of the joint venture
    party and the prospect change in the industry, the investment plan was delayed.
    Up to the present, the project has been delayed for 3 years. The difficulties for the joint venture project have
    constantly increased. The Company is actively negotiating with the other party of the joint venture and trying to
    settle this problem properly.
    89/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    XIV.    Notes of main items of parent company’s financial statements
    1. Account receivable
    (1)Categories of account receivable
    Year-end balance                                         Year-beginning balance
    Type                         Book Balance             Provision for bad debts           Book Balance            Provision for bad debts
    Amount      Proportion%     Amount       Proportion%       Amount       Proportion%    Amount       Proportion%
    Account receivable
    with       significant
    specific      amount
    that             were    3,784,885           31.60    3,784,885            100      3,872,632           31.60   3,872,632            100
    provisioned       had
    debt       preparation
    separately
    Aging group                                      -                              -                           -                             -
    -                           -
    90/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Year-end balance                                     Year-beginning balance
    Type                        Book Balance            Provision for bad debts         Book Balance           Provision for bad debts
    Amount       Proportion%    Amount       Proportion%    Amount       Proportion%    Amount       Proportion%
    account receivable
    that    were    not
    significant but have
    been    provisioned
    8,194,466          68.40    8,194,466            100    8,384,444          68.40    8,384,444           100
    bad            debt
    preparation
    separately
    Total                  11,979,351           100    11,979,351            100   12,257,076           100    12,257,076           100
    91/102
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    (本财务报表附注除特别注明外,均以人民币元列示)
    1)        Account receivable with significant specific amount that were provisioned had debt
    preparation separately
    Provision         Reason of
    Name                           Book balance        Bad debts
    proportion%        provision
    Carnival Index International                                                              Aging long
    1,126,897         1,126,897                 100.00
    Ltd
    TAI YANG ENTERPRISE                                                                       Aging long
    1,036,110          1,036,110                100.00
    CO.,LTD.
    The company
    Shenzhong        Enterprise
    1,621,877         1,621,877                 100.00    insolvent, to
    Co.,Ltd.
    be canceled
    Total                                3,784,884         3,784,884                 100.00         -
    2)        As of December 31, 2011, account receivable that were not significant but have been
    provisioned bad debt preparation separately
    Book                            Provision        Reason of
    Name                                                    Bad debts
    balance                         proportion%        provision
    Fly Dragon International                   588,335           588,335             100.00    Aging long
    Grateful Textiles Co.,Ltd                  581,284           581,284             100.00 Aging long
    World Fabrica (Int'l) Ltd                  477,128           477,128             100.00 Aging long
    Shenzhen Fangzhou Textile Co.,                                                             Aging long
    457,871           457,871             100.00
    Ltd.
    Ezhou Xiangya Garments Co.,                                                                Aging long
    360,570           360,570             100.00
    Ltd.
    Tak Shing Buying Office Led                342,108           342,108             100.00 Aging long
    Starline Textile CO.Ltd.                   340,807           340,807             100.00 Aging long
    U.D.C. (H.K.) Co.,Ltd                      307,079           307,079             100.00 Aging long
    Panther Fabric Ltd.                        302,703           302,703             100.00 Aging long
    Changshu Jiangsu Garments                                                                  Aging long
    277,105           277,105             100.00
    Import & Export Co., Ltd.
    Other (Total 109)                        4,159,477          4,159,477            100.00 Aging long
    Other                                    8,194,467          8,194,467            100.00
    (2) Of the prepayments at the end of period, there were none owed by corporate shareholders of the Company
    holding over 5% (including 5%) of its total shares with voting rights.
    (3)The front 5 units’ information of account receivable
    92/102
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    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Unit name                 Relation with            Amount          Fixed year         Percentage of
    the company                                               account receivable
    Shenzhong Enterprise Co.,Ltd.                                                    Over 3
    Subsidiary                 1,621,877                                  13.54
    years
    Non-Related                                Over 3
    Carnival Index International Ltd                                  1,126,897                                   9.41
    parties                               years
    Non-Related                                Over 3
    TAIYANGENTERPRISECO.,LTD.                                         1,036,110                                   8.65
    parties                               years
    Non-Related                                Over 3
    Fly Dragon International                                           588,335                                    4.91
    parties                               years
    Non-Related                                Over 3
    Grateful Textiles Co.,Ltd                                          581,284                                    4.85
    parties                               years
    Total                                                             4,954,503                                  41.36
    (4)About the account receivable from the related parties
    Relation
    Name                                          with this             Amount                   Proportion(%)
    company
    Name                                          Subsidiary                 1,621,877                           13.54
    Shenzhong Enterprise Co.,Ltd.                 Subsidiary                   62,570                             0.52
    Shenzhen East Asia Victor Onward             The related
    Textile Printing & dyeing
    parties
    controlled
    the same
    Actual
    controller                  307,079                            2.56
    Shenye Union(HK)Co., Ltd.                                              1,991,526                           16.62
    Total
    (5)Balance of foreign currency in account receivable
    Year-end balance                             Year-beginning balance
    Foreign
    Original       Exchange       Amount in          Original        Exchange         Amount in
    currency
    currency         rate               RMB          currency             rate           RMB
    HKD                11,038,875       0.83162           9,180,149     11,038,875        0.8509           9,392,979
    Total                                                 9,180,149                                        9,392,979
    93/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    2. Other receivables
    (1)Categories of other receivable
    Year-end balance                                          Year-beginning balance
    Type                                      Book Balance            Provision for bad debts           Book Balance             Provision for bad debts
    Amount       Proportion%     Amount        Proportion%    Amount          Proportion%   Amount          Proportion%
    Other         receivable      with
    significant specific amount that
    77,573,582           98.10   3,299,737            4.25   78,976,883             98.09   3,376,237       4.27
    were provisioned bed debt
    preparation separately
    Other    accounts      that   were
    provisioned          bad      debt
    -             -               -             -
    preparation in accordance with
    aging Group
    Deposit Group                           35,782             0.05                                    37,782             0.05               -             -
    Other receivable that were not
    significant    but    have    been
    1,463,885            1.85   1,463,885          100.00     1,497,823             1.86   1,497,823       100.00
    provisioned          had      debt
    preparation separately
    Totla                                79,073,249          100.00   4,763,622            6.02   80,512,488            100.00   4,874,060       6.05
    94/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    1) Other receivable with significant specific amount that were provisioned had debt preparation separately
    Provision              Reason of
    Name                             Book balance       Bad debts
    proportion%             provision
    HongKong         Victor
    61,182,666                                     -
    Onward
    Shenzhen      East
    Asia Victor Onward
    12,704,993                                     -
    Textile    Printing     &
    dyeing
    Nanjing East Asia                    1,291,370       1,291,370             100.00 Aging long
    CCB.Guangdong
    1,055,492       1,055,492             100.00 Aging long
    Shunde Branch
    Changzhou
    Dongfeng Textile
    952,875        952,875              100.00 Aging long
    Printing    &    dyeing
    Equipment Co., Ltd.
    Total                               77,187,396       3,299,737               4.27 —
    2) Group –Deposit Group
    Book                               Provision           Reason of
    Name                                                      Bad debts
    balance                            proportion%          provision
    Dang Zewen                                    5,000                    -                  -
    Jiang Guangbin                                1,481                    -                  -
    Huanggang Endorsement                                                                          Deposit, No
    1,361                    -                  -
    of deposit                                                                                     provision for
    Shenzhen          Port                                                                         bad debts
    Administration Service                      27,940                     -                  -
    Centre
    Other                                       35,782                     -                  -
    Total
    3) As of December 31, 2011, Other receivable that were not significant but have been provisioned
    bad debt preparation separately
    Name                              Book balance      Amount          Proportion %             Reason
    HongKong               Victor
    711,859         711,859              100.00 Aging long
    Onward
    Shenzhen East Asia
    501,845         501,845              100.00 Aging long
    Victor     Onward      Textile
    95/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Name                       Book balance      Amount           Proportion %             Reason
    Printing & dyeing
    Shanghai Huayinke                                                               Aging long
    Trade Industry Co.,             175,916          175,916              100.00
    Ltd.
    Shenzhen                                                                        Aging long
    Environmental
    34,206           34,206              100.00
    Management System
    Certification Center
    Shenzhen      Design                                                            Aging long
    Institute of Ministry
    29,319           29,319              100.00
    of Machinery Industry
    Shanghai Branch
    Other                            10,740           10,740              100.00 Aging long
    Total                         1,463,885       1,463,885               100.00             -
    (2)As of December 31,2011,In the balance of accounts payable, there were no payables to shareholders holding
    5.00% (including 5.00%) or more of the voting right of the Company;
    (3) The front 5 units’ information of Other account receivable
    Proportion(%)
    Unit name            Relation        Amount
    Account
    with the                                                     Content
    Age
    company
    Over 3
    HongKong Victor Onward                     61,182,666                           77.37
    Subsidiary                       years                           Business
    Shenzhen        Nanhua
    Printing & dyeing Co.,                     13,000,000         2-3               16.44
    Ltd.                         Subsidiary                      years                            Business
    Non-Related                     Over 3                      Payment for
    Nanjing East Asia                          1,291,370                             1.63
    parties                      years                              goods
    CCB.Guangdong               Non-Related                     Over 3                       Payment for
    1,055,492                             1.33
    Shunde Branch                    parties                      years                              goods
    Changzhou Dongfeng
    Textile Printing & dyeing   Non-Related        952,875      Over 3               1.21    Payment for
    Equipment Co., Ltd.              parties                      years                              goods
    Total                                      77,482,402                           97.98
    (4) Account receivable from Related affiliated parties
    Name                                Relation with the company                Amount                  Proportion(%)
    96/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Name                                     Relation with the company                       Amount                  Proportion(%)
    HongKong Victor Onward                               Subsidiary                                 61,182,666                     77.37
    Shenzhen East Asia Victor
    Onward Textile Printing &                            Subsidiary                                    501,845                      0.63
    dyeing Company
    Shenzhen Nanhua Printing
    Subsidiary                                 12,704,994                     16.07
    & dyeing Company
    Total                                                                                           74,389,505                     94.07
    (5)Other receivable include the following foreign currency balances
    Foreign                       Year-end balance                                  Year-beginning balance
    Currency          Original       Exchange                 RMB            Original      Exchange         RMB
    of Name           currency             rate           equivalent         currency         rate        equivalent
    HKD                79,793,066          0.83162         66,357,510         79,822,967      0.8509       67,921,362
    Total                                               66,357,510                                      67,921,362
    3. Long-term equity investment
    (1) Long-term equity investment
    Items                                               Year-end balance                 Year-beginning balance
    The cost of long-term equity
    39,023,518
    investment accounting                                                                               39,928,226.
    Total     of      long-term      equity
    39,023,518
    investment                                                                                           39,928,226
    Less     :      Long-term       equity
    1,285,231
    investments for impairment                                                                            1,315,027
    Net      value     long-term     equity
    37,738,287
    investment                                                                                           38,613,199
    (2)The cost method and equity method long-term equity investment
    Cash
    dividend
    Vote           Initial Year-beginning                  Exchange      Year-end
    Name       Proportion %                                                    change                                   of the
    proportion % amount                   balance                 rate change     balance
    current
    period
    The        cost
    method
    HongKong
    22,266,157                   504,515   21,761,642
    Victor Onward                 100              100     2,411,282
    97/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Cash
    dividend
    Vote        Initial Year-beginning                        Exchange      Year-end
    Name               Proportion %                                                 change                                    of the
    proportion % amount            balance                        rate change     balance
    current
    period
    Nanhua
    Printing           &                                23,082,83      16,347,042                         370,397   15,976,645
    dyeing                        54.82       54.82            1
    Shenzhen
    1,315,027                          29,796    1,285,231
    East Asia                          51          51   1,470,000
    26,964,11
    39,928,226                         904,708   39,023,518
    Total                                                 3
    (3)Provision for impairment on long-term equity investment
    Name of invested
    Year-beginning          Increase in the        Decrease in the           Year-end
    company
    balance              current period             current period         balance
    Shenzhen East Asia                  1,315,027                                           29,796          1,285,231
    4. Business income, Business cost
    Items                                                         Amount of current              Amount of Previous
    period                        period
    Key business income                                                                                           43,481
    Other business income                                                       725,313 484,108
    Total                                                                       725,313                       527,589
    Key business cost                                                                                         -531,197
    Other business cost                                                         239,549                       239,102
    Total                                                                       239,549                       -292,095
    Key business-product
    Amount of current period                   Amount of Previous period
    Name of product
    Revenue                Cost                 Revenue             Cost
    Cloth bleaching, printing and
    43,481                  -531,197
    dyeing
    House lease                      725,313             239,549                 484,108          239,102
    Total                        725,313             239,549                 527,589          -292,095
    5.Investment revenue
    98/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                   Amount of current         Amount of
    period            Previous period
    Disposal trading financial assets to achieve return                    14,141            106,843
    investment
    Total                                                                  14,141            106,843
    XV. Supplementary Information
    1. Non–operating gain and loss statement of this year
    Items                                                  Amount of         Amount of         Notes
    current period       Previous
    period
    Gain/loss form disposal of non-current assets                    -529
    Tax refund, deduction and exemption that is
    examined and approved by authority exceeding
    or has no official approval document.
    Governmental Subsidy accounted as current
    gain/loss
    List into ― the fund occupation expense charged
    on non-financial enterprise‖, subordinate to the
    accounting items ― Current profit & loss‖
    Earning arising from identifiable fair value of
    net assets of investees, which should be
    enjoyed when costs (which are obtained by the
    enterprise) invested in subsidiary companies,
    pool companies and joint ventures, is less than
    the obtained investment
    Non-currency asset exchange profit & loss
    Profit & loss arising from entrusting the third
    party to invest or manage assets
    Provision for asset impairment with drawn due
    to force majeure (e.g. natural disaster)
    Profit & loss arising from debt recombination
    Expenses for enterprise recombination
    99/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                   Amount of       Amount of   Notes
    current period   Previous
    period
    Profit & loss that exceed the fair value, arising
    from transaction with unfair transaction price
    Net profit & loss during term beginning to
    merger date of the subsidiaries arising form
    business merger under same control
    Profit & loss arising from the probable events
    irrelevant to normal operating business of the
    company
    Except the effective hedge business related to
    the normal operation business of the Company,
    the profit and loss in the changes of fair values
    caused by the holding of tradable financial
    14,141
    assets and tradable financial liabilities as well as
    the investment returns in disposal of tradable
    financial assets, tradable financial liabilities and
    saleable financial assets
    Single impairment test for impairment of
    receivables transferred back to preparation
    Profit & loss obtained from loan for outwards
    entrust
    Profit & loss arising from change of fair value
    of     investment-based     real   estate    where
    subsequent Measurement is conducted by
    using the fair value mode
    Impact on the current profit & loss caused by
    one-off adjustment conducted on the current
    profit & loss according to requirements
    stipulated by taxation /accounting laws and
    regulations
    Entrusting earning arising from the entrusted
    operation.
    100/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    Items                                                             Amount of          Amount of            Notes
    current period        Previous
    period
    Except the above items, other non-operating                                 7,425
    -259
    earning and expenditure
    Other profit & loss items confirming to the
    definition of nonrecurring profit & loss
    Subtotal                                                                 21,037              -259
    Amount of influence of income tax
    Amount of influence of minority interests
    Total                                                                    21,037              -259
    2.Return on net assets and earnings per share
    Earnings per share(RMB)
    Profit of the report period         Return on net assets .   Weighted(%) Basic earnings per   Diluted gains per
    share                 share
    Net   profit    attributable   to
    shareholder      of     parent                    -0.05                         -0.05              -0.05
    company
    Net profit attributable to the
    parent                 company
    -0.05                         -0.05              -0.05
    shareholders after deducting
    of non-recurring gain/loss.
    XVI. The approval of financial reports
    The report of the financial statements was approved by all directors of the board of directors of
    the Company on August 29,2011.
    Section VII. List of Documents Available for Inspection
    I. The semi-annual report 2011 of the Company;
    II. The semi-annual financial report bearing the signatures and seals of the legal representative,
    person in charge of accounting work and the person in charge of the accounting department;
    III. The texts of all the Company's documents publicly disclosed in the newspapers and periodicals
    designated by China Securities Regulatory Commission in the report period.
    IV. The text of the Articles of Association of the Company.
    101/102
    深圳中冠纺织印染股份有限公司财务报表附注
    2011 年 1 月 1 日至 2011 年 06 月 30 日
    (本财务报表附注除特别注明外,均以人民币元列示)
    The Board of Directors of Shenzhen Victor Onward Textile Industrial Co., Ltd
    August 29, 2011
    102/102