[年报]上工申贝：2014年年度报告
Shang Gong Group Co., Ltd. 600843 900924 Annual Report 2014 LOGO2.jpg Important Notes 1. The Board of Directors, the Board of Supervisors, and all the directors, supervisors, and senior managers guarantee that there are no false statement, vital misunderstandings or important omissions in this report, and hold both individual and joint liability for the authenticity, accuracy and integrity of its contents. 2. All the members of the Board of Directors attended the meeting of Shang Gong Group Co,. Ltd. 3. BDO China Shulun Pan Certified Public Accountants Co., Ltd. (special common partnership) provided a standard unqualified opinion audit report for the Company. 4. Zhang Min, Chairman of the Company, Li Jiaming, the principal in charge of the accounting, and Zhao Lixin, Chief of Accounting Affairs, make the pledge for the authenticity and integrity of the attached financial statements. 5. There was no occupation of fund of the Company occurred for non-operating use by holding shareholder and the related party. 6. There was no external guarantee against the rules and regulations of the Company. 7. If the English Version of this Annual Report involves any differences from the Chinese Version, the latter shall be effective. Contents Chapter 1 Definition and Significant Risk Warning .......................................................... 4 Chapter 2 Company Profile ............................................................................................... 5 Chapter 3 Accounting Data and Financial Index Highlights ............................................. 7 Chapter 4 Report by the Board of Directors ...................................................................... 9 Chapter 5 Important Events ............................................................................................. 29 Chapter 6 Changes in the Share Capital and Shareholder Status ..................................... 36 Chapter 7 Relevant Situation about Preferred Shares ...................................................... 44 Chapter 8 Director, Supervisor, Officer and Employee Status ........................................ 45 Chapter 9 Corporate Governance ..................................................................................... 52 Chapter 10 Internal Control ............................................................................................... 56 Chapter 11 Financial Report .............................................................................................. 57 Chapter 12 References ..................................................................................................... 149 Chapter 1 Definition and Significant Risk Warning 1. Definition As used in this Report, the following terms have the following meanings unless the context requires otherwise: Definition of common terms ShangGong Group, Company, the Company Refer to Shang Gong Group Co., Ltd Pudong SASAC Refers to Shanghai Pudong New Area State-owned Assets Supervision and Administration Commission”, the main shareholder and actual controller Shangggong Europe Refers to Shangggong (Europe) Holding GmbH DA AG Refer to Duerkopp Adler AG, a German listed company, Shanggong Europe holding 65.49% of its stock rights PFAFF AG Refers to PFAFF Industriesysteme und Maschinen AG KSL GmbH Refer to KSL Keilmann Sondermaschinenbau GmbH KSL and its affiliated companies Refer to KSLKeilmannSondermaschinenbau GmbH, KSE GmbH, KSA Verwaltungs GmbH, KSA GmbH & Co. KG DA Suzhou Refer to DAP Shanghai Refers to Duerkopp Adler PFAFF Trading (Shanghai) Co., Ltd Shanggong Butterfly, Shanggong Butterfly company Refers to Shanghai Shanggong Butterfly Sewing Machine Co., Ltd. BDO Refers to BDO China Shulun Pan Certified Public Accountants Co., Ltd. (special common partnership) CSRC Refers to China Securities Regulatory Commission SSE Refers to Shanghai Stock Exchange Report period Refers to From January 1, 2014 to December 31, 2014 Articles of Association Refers to The Articles of Association of SGSB Group Co., Ltd. Company Law Refers to Company Law of the Peoples Republic of China Securities Law Refers to Securities Law of the People's Republic of China RMB Refers to the lawful currency of China EUR Refers to the lawful currency of the European Union Chapter 2 Company Profile 1. Company information Company name in Chinese 上工申贝（集团）股份有限公司 Abbreviation of the Company name in Chinese 上工申贝 Company name in English Shang Gong Group Co., Ltd. Abbreviation of the Company name in English ShangGong Group Legal representative of the Company Zhang Min 2. Contact information Secretary of Board of Directors Representative of Securities Affairs Name Zhang Jianguo Shen Lijie Address Room A-D, 12th floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai Room A-D, 12th floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai Telephone 021-68407515 021-68407700*1233 Fax 021-63302939 021-63302939 zhangjianguo@sgsbgroup.com shenlj@sgsbgroup.com 3. Basic situation introduction Registered Address Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai Postal Code of Registered Address 200122 Office address Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai Postal Code of Office address 200122 Website http://www.sgsbgroup.com sgsb@sgsbgroup.com 4. Information disclosure and place for consulting Name of newspaper selected by the Company for information release Shanghai Securities News, Hong Kong Commercial Daily Website appointed by CSRC for publishing annual report http://www.sse.com.cn Lodging address of annual report of the Company Office of the Company 5. Corporate Stock Introduction to Company.s Stock Type of Stock Exchange where stock is listed Abbreviation of Stock Code of Stock Abbreviation of Stock before Change A Share Shanghai Stock Exchange SGSB 600843 Shanggong Stock, Gongfeng Share B Share Shanghai Stock Exchange SGBG 900924 Gongfeng B Share 6. Registration modification information (1) Basic information Registration date July 31,2014 Registration place Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai License No. 310000400080303 Tax No. 310115132210544 Orgization No. 13221054-4 Registration change During the report period, the company completed non-public offering of stock, the during report period company.s registered capital changed to RMB 548,589,600, refer to "Shanghai Securities News", "Hong Kong Commercial Daily" and the Shanghai Stock Exchange website Temporary Bulletin No. 2014-027 of the Company on June 11, 2014. (2) Related query index of first-time registration information The first-time registration information can be found in 2010 annual report of the Company. (3) Change of principal business since being listed The principal business of the Company has been the sewing equipment manufacturing industry since being listed, not changed during the report period. The business involves sewing equipment, office machinery, photo sensitive equipment, and commerce, trading, etc. (4) Change of main shareholder since being listed Since being listed in 1994, the Company.s main shareholder was Shanghai Light Industry Holding (Group) Company. On October 18, 2004, Shanghai Light Industry Holding (Group) Company transferred all shares of the Company to Shanghai Pudong New Area State-owned Assets Administration Office, which is later renamed as Pudong SASAC. Currently, the main shareholder and actual controller of the Company is Pudong SASAC. 7. Other information Accounting firm appointed by the Company (domestic) Name BDO China Shulun Pan Certified Public Accountants Co., Ltd. (special common partnership) Office address Fourth floor, No. 61, East Nanjing Road, Shanghai Signing name of accountants Li Ping Li Yue Sponsor engaged by the Company to conduct sustained supervision during the reporting period Name Shenwan Hongyuan Securities Underwriting Sponsors Co., Ltd Office address No. 171, Changshu Road, Shanghai Signing name of sponsors Huang Xuesheng Feng Zhenyu Consistent supervision period March 28, 2014 – December 31, 2015 Because of the reorganization matters that Shenyin Wanguo Securities Co., Ltd issued shares to absorb Hong Yuan Securities Co., Ltd,. Shenyin Wanguo Securities. underwriting and sponsoring business (except underwriting business of bonds, debt financing instruments of non financial enterprises, policy bank financial bond, corporate debt) and financial advisory business related with securities trading, securities investment was undertaken by Shenwan Hongyuan Securities Underwriting Sponsors Co., Ltd (see Temporary Bulletin No. 2015-002 of the Company). Chapter 3 Accounting Data and Financial Index Highlights 1. The Company’s main accounting data and financial index in the last three years (1) Main accounting data Unit: Yuan, Currency: RMB Main accounting data 2014 2013 Year-on-year increase/decrease (%) 2012 After adjustment Before adjustment After adjustment Before adjustment Total operating income 1,971,244,833.88 1,813,934,688.16 1,813,934,688.16 8.67 1,506,126,050.61 1,506,126,050.61 Net profit attributed to shareholders 197,616,061.21 79,552,024.19 79,552,024.19 148.41 41,686,253.70 41,686,253.70 Net profit attributed to shareholders after non-recurrent account profit/loss 74,094,778.99 38,502,021.64 38,502,021.64 92.44 28,831,010.92 28,831,010.92 Net cash flow from operating activities 101,603,959.96 69,806,628.03 69,806,628.03 45.55 138,676,454.10 138,676,454.10 End of 2014 End of 2013 Year-on-year increase/decrease (%) End of 2012 After adjustment Before adjustment After adjustment Before adjustment Net assets attributed to shareholders 1,596,085,177.75 795,894,186.10 795,894,186.10 100.54 704,345,823.10 729,473,292.70 Total assets 2,732,574,497.28 2,047,916,471.17 2,047,916,471.17 33.43 1,626,633,348.69 1,608,451,075.09 (2) Main financial data Main financial data 2014 2013 Year-on-year increase/decrease (%) 2012 After adjustment Before adjustment After adjustment Before adjustment Basic earnings per share (yuan/share) 0.3774 0.1772 0.1772 112.98 0.0929 0.0929 Diluted earnings per share (yuan/share) 0.3774 0.1772 0.1772 112.98 0.0929 0.0929 Basic EPS after non-recurrent account profit/loss (yuan/share) 0.1415 0.0858 0.0858 64.92 0.0642 0.0642 Weighted rate of return on net assets (%) 14.3895 10.6907 10.6907 Increased by 3.70% 5.8147 5.7978 Weighted average return on net assets after non-recurrent account profit/loss (%) 5.3953 5.1742 5.1742 Increased by 0.22% 4.0216 4.0099 2. Items and amount of non-recurring profit and loss Unit: Yuan, Currency: RMB Items and amount of non-recurring profit and loss 2014 2013 2012 Profits and losses from disposal of 104,418,371.04 38,149,700.05 12,256,764.82 non-current assets Government subsidies recorded in the current profit and loss 2,718,674.99 3,203,590.00 1,086,000.00 Except effective hedging business relevant to the normal business of the Company, gains and losses from changes in fair value arising from trading financial assets and trading financial liabilities, and investment income from disposal of trading financial assets, trading financial liabilities and available-for-sale financial assets 28,259,539.60 -58,593.34 825,269.83 Other non-operating income and expenditure except the above-said items -10,606,002.10 1,015,375.75 80,120.28 Impact on minority interests -515,414.86 -593,981.33 Impact on income tax -1,269,301.31 -744,655.05 -798,930.82 Total 123,521,282.22 41,050,002.55 12,855,242.78 3. Items for adopting fair value measurement Unit: Yuan, Currency: RMB Item Opening balance Ending balance Current change Influence on current profit 1. trading financial assets 277,479.87 -177,479.87 233,423.39 2、financial assets for sale 85,012,121.56 89,648,607.58 6,416,286.02 4,124,167.65 Total 85,289,601.43 89,648,607.58 6,238,806.15 4,357,591.04 Chapter 4 Report by the Board of Directors 1. Discussion and analysis by the Board regarding the operation of the Company during report period In 2014, China's development faced the complicated and severe international and domestic environment, global economic recovery is arduous and tortuous, developing trend of major economies is differenced. Domestic downturn pressure on the economy continued to increase, multiple difficulties and challenges are intertwined, economic development present the situation of generally smooth and stable with slightly rise. Total exports of China Sewing machinery products present the trend of increasing stably year-on-year, especially the automatic industrial sewing machine exports maintain good growth, and further optimize the structure of export products of industrial sewing machine of the industry. But in recent years, due to many factors such as the impact of domestic labor costs rise, many garment enterprise transferred to Southeast Asia and South Asia where labor costs are lower. As the demand of garment enterprises is going down, the sewing equipment market is cold inside and heat outside, and the enterprise.s production rhythm is slowdown in general, the majority of enterprises of the industry are facing downward pressure. Domestic market demand of China Sewing Machinery is transferring from high speed to middle and low speed. Low speed operation becomes the new normal development of sewing machinery industry in China. The company is facing severe challenges in the future, but there are also rising automation machine needs in the process of industrial structure adjustment. Facing the complex external environment, the company from top to bottom made concerted efforts, overcome difficulties, and achieved gratifying business performance. At the end of 2014, the total assets is 2,732.57 million yuan, comparing to 2,047.92 million yuan at the the end of last year, realize an increase of 684.65 million yuan, an increase of 33.43%. it is mainly because the company raise funds of 671 million yuan by non-public offering of stock in the current period. Liabilities amounted to 1,096.41 million yuan, comparing to 1118.12 million yuan at the end of 2013, reduced 21.71 million yuan, decreased by 1.94%. During the report year, the Company realized the operating revenue of RMB 1971.24 million, an increase of 8.67% year-on-year, mainly due to the sewing machine revenue increasing 10.21%, among which the operating profit amounted to RMB 194.97 million, an increase of 35.02%; the net profit attributable to shareholders of the listed company totaled RMB 197.62 million, an increase of 148.41% year-on-year, mainly due to the sound operation of ShangGong Europe and the purchase and storage of land use right of Lintong Road of the Company by the government. Looking back on 2014, the Company mainly implemented the following work: 1. Successfully complete the private placement of the financing, investment project with raised fund implement in an orderly manner The company began preparations for the issuance of non-public shares from the beginning of 2013. In the basis of basically complete the application, at the beginning of 2014, the company actively promotes and successfully obtained approval of the CSRC. At the end of March, the company completed non-public offering to 7 strategic investors, raised funds totaling 671 million yuan. With the funding in place, the company completed the preliminary input replacement work of its own funds. Each raised projects steadily and orderly advanced. In the project of SGE investing Germany PFAFF AG and KSL GmbH, the synergistic consolidation after the acquisition promoted orderly, and has achieved initial success. other projects with raised fund are also steadily advanced according to plan. The completion of non-public offering obviously improves the financial indicators of the company, such as cash flow, asset quality, debt repaying ability. The asset structure is more reasonable. The company's overall size and industry position is improved, and the overall strength and competitiveness of the company are significantly increased. The completion of non-public offering lays a solid foundation for the company.s long-term development and achieving the strategic goal, it is of important significance for the sustainable development of the company. 2. Actively promote global resource integration, synergy effect achieve initial success In 2014, the company continue to adhere to the internationalization development strategy, promote the implementation of SGE integration, implement unified management of SGE subsidiaries under the brand product strategy and marketing, research and development, share resource in each enterprise's production, procurement and other business activities and financial affairs, human resources, information systems, and other management aspects, maximize the synergistic effect of three companies, improve economic benefit, to achieve better investment returns. In order to be more conducive to implement the integration of SGE and its subsidiaries, and realize greater synergy, in 2014 the company repurchases 29% equity of DA AG. At the same time, in order to better implement the domestic and international linkage, the company acquired 51% equity of DA Suzhou from ZOJE Company. Through the internal reorganization and integration, the company continues to push forward the globalization business strategy, which caused the operating profit of oversea company increased sharply and laid a good foundation for the development of China manufacturing at the same time. 3. Increase strength of product research and development, enhance the brand influence The company adheres to the strategy of “leading by science and technology, developing by innovation”. The company attaches great importance to new product research and development and technology innovation, and constantly increases new product R&D efforts, strengthens brand construction, and improves brand influence. The company continues to increase investment in scientific research, enhance the ability of technology innovation. Under the company's unified leadership, through jointly research of SGE subsidiaries coordinated by SGE, the company establishes the brand advantage of products and the direction of research and development, and constantly meets the market demand. Through the Europe-Asia linkage, expand and upgrade China manufacturing innovation ability and technology transfer, and improve the technical level of domestic brands at the same time. Through the Butterfly brand as the starting point, promote the sustainable development of household multifunctional sewing machine, strengthen the brand construction, pay attention to the research and development of new modern household multifunctional machine, and further enhance the brand reputation of the Butterfly. 4. Promote the marketing model innovation, actively expand market share In 2014 the company vigorously promotes the construction of global sales network, restructure and establish a unified platform for marketing and regional marketing center, form local and regional marketing management system. Under the unified leadership and coordination of the company, each brand shares sales network and resource, so that the company could avoid internal competition and repeated construction. DA AG realized a new high in 2014. Sales, new orders and pretax profits increased obviously, operating revenue, profit before tax also increased significantly. After the reorganization, DAP Shanghai actively expand the market share in 2014. Its sales performance is remarkable; it also made a number of large orders, and continues to improve in the thick material machine sales with an increase of more than 50% year-on-year. Shanggong Butterfly innovated sales concept and mode; expand diversified household machine sales channels. in Tmall, Jingdong, No.1 Shop, Shanggong Butterfly established household multifunctional sewing machine store in these network platform. The store is officially launched in the "Oriental CJ" TV guide system as well, make butterfly products expanding to business field. It has significant influence in making good sales as well as Butterfly brand propaganda and product influence expansion. 5. Actively promote the transformation and upgrading of enterprises, improve profitability In 2014 the company continue to promote the development of industrial transformation and structural adjustment of the products, speed up the transformation and adjustment of gradient transfer for non-sewing business with poor profit situation. Further get out of trouble, enhance profitability through the innovation of management and business model, and has achieved certain results. Analyzing the subsidiary company on the basis of fully surveying and analyzing, each subsidiary searched for their own features and advantages of the management mode to become better and stronger. For the industry that does not meet the strategic objectives and plan of the company, continue to increase the force for adjustment and transformation of development or clearing from the dynamics. Film machine factory complete the relocation and realize the transformation in the first half of 2014, its original office machinery business was transferred to Shenbei Import and Export Company. At the same time, it merged with DA Manufacturing, and cooperated with PFAFF AG and KSL GmbH, began to precede the research and development and trial production of automatic sewing station. Because of government land reserve, GanGuang factory has completed block transfer transactions, and gradually implement production and placement of employees. 6. Strengthen internal control; enhance the competitiveness of the Company The company to further improve the management structure, explore management mode and internal control system that are in accordance with company characteristics and meet the requirements of the development, ensure the smooth flow of information, manage efficiently, improve the ability to resist risks, standardize the company operation, and enhance the competitiveness of enterprises. according to the company.s own actual situation, the company promotes the construction of internal control system and perfects the supervision mechanism from two aspects. In 2014 the company strengthened internal control management construction and supervision and inspection of subsidiaries overseas to ensure standard operation of subsidiaries overseas, to maintain the rights of property, to prevent the loss of assets, and to control risks effectively. In 2014, the company promoted the full implementation of the project with raised- fund, laid a solid foundation for business development, strove for sustainable development and. Seen from the various economic indicators, the company reached the best level in recent year, the stated objectives in 2013 have been fulfilled basically, and the integration and transformation has achieved initial success. However, there are still some problems in the operation of the company. The problems are mainly reflected in: first, with the development of the company, the lack of talent is more and more serious, the operator selection and incentive evaluation failed to achieve complete marketization, which hindered the sustainable and stable development of the company. Second, the profit ability of domestic enterprises. product is not strong, the Europe-asia linkage needs to be strengthened. Third, with the overseas subsidiaries business accounted for increasing proportion, how to optimize the overseas subsidiaries. risk control and management mode needs to be explored. 1.1 Analysis on Main Business 1.1.1 Analysis on Change of Relevant Items in Financial Statements Unit: Yuan, Currency: RMB Item Current period Previous period Variable proportion (%) Operating revenue 1,971,244,833.88 1,813,934,688.16 8.67 Operating expenses 1,368,150,933.75 1,296,513,813.16 5.53 Sales expenses 236,863,062.33 195,811,904.08 20.96 Administration expense 201,143,590.02 196,541,758.56 2.34 Financial expenses 11,394,584.70 26,305,480.06 -56.68 Net cash flow from operating activities 101,603,959.96 69,806,628.03 45.55 Net cash flow from investing activities -517,685,432.55 -224,390,206.30 -130.71 Net cash flow from financing activities 590,951,936.01 137,394,297.33 330.11 Research and development expenditures 43,697,065.40 54,928,206.42 -20.45 1.1.2 Income 1.1.2.1 Analysis on factors resulting in changes of business income During the report period, the Company achieved the operation revenue of RMB 1,971.24 million, an increase of 8.67% year-on-year, mainly because the Company advances global operating strategy through the integration and reorganization inside the Company. 1.1.2.2 Analysis on factors affecting the company’s product income based on physical sales During the reporting period, the company.s holding subsidiaries ShangGong Europe work unremittingly in developing industrial machine in the field of automobile manufacturing industry and Home Furnishing decoration industry, and expand the processing field of welding technology, fiber composite material and textile. Company.s sewing equipment sales revenue increased 10.21% year-on-year.. The production and sales of the industrial sewing machines of the company are 31,388 sets and 54,852 sets respectively. The sales of the household sewing machines reached 506,482 sets, in which the sales of modern house multi-function sewing machines reached 94,286 sets. 1.1.2.3 Influence analysis on new products and new services The company attaches great importance to new product development and innovation. In 2014, DA AG applied for 21 patents, 4 utility model, continue to be in the leading position in the industry. In the technical field of sleeve sewing, DA AG completed the research of 610 type sleeve pre melting and fiber sewing workstation, 630 type sleeve pre melting sewing workstation; focus on the pre sewn of cuffs, in order to meet the growing needs of the Asian market, DA AG restarted and completed the R&D of 971 type cuffs pre slit and edge cutting automatic sewing unit; in addition, DA AG also focused on leisure clothing market, research and develop 906 type jeans pocket machine, which is used in 5 Pocket Jeans sewing; for sewing thick materials, new type 967 sewing thick material machine, 969 barrel type bottom thick material machine not only can be used as a variant of H-Types tube plate type, but also can be used as a variant of H-Types arm type. It is another breakthrough of DA AG in the thick material sewing technology. PFAFF AG completed the research of 3791 recording sewing unit in 2014 (column bottom head), 3590 programmed pattern sewing machine, 3590 type zigzag sewing machine controlled, 4507 type special welding machine. At the same time, the R & D of cowboy series automatic sewing unit also have progress. KSL GmbH continued to make full use of its R&D advantages in automation control field. In 2014, KSL completed the R & D of sewing template car roof rolling special-sewing equipment, the CNC automatic sewing equipment replacement work station, tire cord special automatic sewing equipment. The company actively promoted the development of the assembly of automatic sewing workstation at home. Research sewing-related sewing equipment unit, independently design and develop new product of double head automatic multiple function template machine. At the same time, the company also focused on the design and development of modern multi-function domestic sewing machine, introduced a number of new models, which effectively promoted the market sales. 1.1.2.4 Main sale customers Unit: Ten thousand yuan, Currency: RMB Total sales of top 5 sales customers 23,437 Proportion in total sales（%） 11.89 1.1.3 Cost 1.1.3.1 Cost analysis Unit: Yuan By industry Cost item Sum in current period Current period proportion(%) Sum in previous period Previous period proportion (%) Increase/ decrease (%) Sewing equipment Material 584,755,250.05 43.63 555,660,781.80 43.94 5.24 Labor 236,493,358.50 17.65 237,062,911.14 18.74 -0.24 Depreciation 39,831,849.25 2.97 31,667,652.26 2.50 25.78 Manufacture cost 102,539,695.06 7.65 80,749,263.24 6.38 26.99 Subtotal 963,620,152.86 71.90 905,140,608.44 71.57 6.46 Export trade 273,188,987.39 20.38 262,054,227.82 20.72 4.25 Office equipment Material 58,211,035.54 4.34 51,057,757.28 4.04 14.01 Labor 9,580,529.75 0.71 5,862,683.01 0.46 63.42 Depreciation 559,581.20 0.04 634,730.90 0.05 -11.84 Manufacture cost 3,571,606.59 0.27 6,333,934.33 0.37 -43.61 Subtotal 71,922,753.08 5.37 63,889,105.52 5.05 12.57 Film materials Material 19,391,987.71 1.45 22,904,920.03 1.81 -15.34 Labor 2,259,918.81 0.17 2,707,544.27 0.21 -16.53 Depreciation 1,499,796.77 0.11 1,062,487.61 0.08 41.16 Manufacture cost 4,183,582.49 0.31 3,392,702.31 0.27 23.31 Subtotal 27,335,285.78 2.04 30,067,654.22 2.38 -9.09 Others 4,195,922.17 0.31 3,573,306.48 0.28 17.42 1.1.3.2 Main suppliers Unit: Ten thousand yuan, Currency: RMB Total purchase amount of top 5 suppliers 15,722 Proportion in total purchase（%） 11.40 1.1.4 Expense Unit: Yuan, Currency: RMB Item Sum in current period Sum in previous period Increase/decrease (%) Sales expense 236,863,062.33 195,811,904.08 20.96 Administration expense 201,143,590.02 196,541,758.56 2.34 Financial expense 11,394,584.70 26,305,480.06 -56.68 Income tax expense 54,757,852.97 45,348,330.25 20.75 Note: the financial expense this year decreased 56.68% year-on-year, mainly caused by the increased exchange income year-on-year. 1.1.5 R&D expenses Unit: Yuan Total R&D expenses 43,697,065.40 Total R&D expenses in proportion to net assets (%) 2.67 Total R&D expenses in proportion to operating income (%) 2.22 Note: During the reporting period, R & D expenditure is mainly used in the automation control field, such as sleeve technique, cuff pre sewing, patch pocket machine, automatic buttonhole sewing machine, control and drive technology, automatic sewing unit. 1.1.6 Cash flow Unit: Yuan, Currency: RMB Item Current year Previous year Increase/decrease (%) Reason Net cash flow from operating activities 101,603,959.96 69,806,628.03 45.55 Note 1 Net cash flow from investing activities -517,685,432.55 -224,390,206.30 -130.71 Note 2 Net cash flow from financing activities 590,951,936.01 137,394,297.33 330.11 Note 3 Influence of fluctuation of exchange rate upon cash and cash equivalents -39,085,212.59 1,857,870.91 -2,203.76 Note 4 Note 1: Mainly caused by the comprehensive effect of year-on-year increase in selling goods and providing labour services and the year-on-year increase in cash paid to employees. Note 2: Mainly caused by the comprehensive effect of the purchase of short-term RMB structured deposit and year-on-year increase of cash received in handle fixed assets. Note 3: Mainly caused by the comprehensive effect of the funds raised by non-public offering of stock received by the company and the year-on-year decrease in bank loan. Note 4: mainly caused by the change of Euro exchange rate 1.1.7 Others 1.1.7.1 Detailed description of major changes of profit composition or profit source Unit: Yuan, Currency: RMB Item Current year Previous year Increase/decrease (%) Reason Financial expense 11,394,584.70 26,305,480.06 -56.68 Note 1 Loss on assets depreciation 9,929,821.03 3,372,279.95 194.45 Note 2 Net income on changes in fair value -177,479.87 848,710.86 -120.91 Note 3 Non-operating income 112,112,852.67 10,480,742.23 969.70 Note 4 Non-operating expense 15,569,535.84 1,421,100.50 995.60 Note 5 Net other comprehensive income after-tax -39,655,787.46 13,301,241.38 -398.14 Note 6 Note 1: Mainly caused by the year-on-year increased exchange loss. Note 2: Mainly caused by the year-on-year decrease of receivable bad debt reserves, current-period reversed inventory falling price reserves and current-period withdrawing long-term equity investment depreciation reserves. Note 3: Mainly caused by the year-on-year decrease of the fair value variation earnings reversed in dealing with trading financial assets in current period. Note 4: Mainly caused by the year-on-year increase of the disposal of real estate. Note 5: Mainly caused by Write off the accounts of Shanghai Shuangchong Sewing Co., Ltd which is in bankruptcy liquidation. Note 6: Mainly caused by the translation reserve and the year-on-year decrease of changes in fair value of available for sale financial assets 1.1.7.2 Analysis and description on the earlier-stage implementation progress of various financing and major asset restructuring events of the company. The third temporary 2013 general meeting of shareholders held by the Company on August 20, 2013, reviewed and adopted the pre-plan of non-public share offering (A Shares). In February 28, 2014, CSRC examined and approved the non-public share offering of the Company. This offering was completed on March 28, the actual offering number was 99,702,823 shares, the offering price was RMB 6.73/share, the amount of raised funds was RMB 670,999,998.79, and after deduction of offering fees of RMB 32,791,767.81, the net amount of raised funds was RMB 638,208,230.98. After this offering, the total share capital of the Company is 548,589,600 shares, and the lock-up period for the newly increased shares is 12 months. 1.1.7.3 Description of development strategies and operation plans During the report period, the Company completed non-public share offering. The Company kept centering on expanding and strengthening the main sewing equipment business and creating the company into the international industrial sewing equipment leading enterprise with core competence and leading technologies in the world. The Company accelerated the integration of DA AG, PFAFF AG and KSL, the main subsidiaries of SGE, and strengthens the connection between Europe and Asia. The Company also insists on strengthening the research and development and innovation of high-end product, further optimizes product structure, and strives to develop intelligent and automatic products. Meanwhile the Company actively promotes the transformation of its domestic industries with weak profitability and strengthens the overall competitiveness and profit level of the enterprise. Seen from the completion of various economic indicators, the Company has basically fulfilled various established operation targets in 2014 and achieved positive progress in structural adjustment and transformation development. 1.2 Analysis on operation by industry, products or region 1.2.1 Principal operating activities by industry Unit: Yuan, Currency: RMB Main business by industries Industry Operating income Operating cost Gross margin(%) Operating income Increase/ decrease (%) Operating cost Increase/ decrease (%) Gross margin Increase/ decrease (%) Sewing equipment 1,520,940,801.38 963,620,152.86 36.64 10.21 6.46 Increase 2.23% Export trade 280,320,872.53 273,188,987.39 2.54 4.28 4.25 Increase 0.02% Office Equipment 30,619,073.37 27,335,285.78 10.72 -6.56 -9.09 Increase 2.47% Film materials 81,716,734.72 71,922,753.08 11.99 11.12 12.57 Decrease 1.13% others 9,002,888.89 4,195,922.17 53.39 48.46 17.42 Increase 12.31% Total 1,922,600,370.89 1,340,263,101.28 30.29 9.16 5.97 （未完）  |