2013 Annual Report of Guangdong Rieys Group Company Ltd. GUANGDONG RIEYS GROUP COMPANY LTD.
2013 Annual Report
April 2014
2013 Annual Report of Guangdong Rieys Group Company Ltd. Section I. Important Reminders, Catalogue& Explanation
The Board of Directors, the Supervisory Committee, directors, supervisors and senior management staff of Guangdong Rieys Group Company Ltd. (hereinafter referred to as “the Company”) warrant that this report is factual, accurate and complete without any false record, misleading statement or material omission. And they shall be jointly and severally liable for that.
All directors attended the board session for reviewing this report.
The Company plans not to distribute cash dividends or bonus shares or turn capital reserve into share capital.
Mr. Chen Hongcheng, company principal, Mr. Chen Jincai, chief of the accounting work, and Mr. Zheng Guangde, chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report enclosed in this report is factual, accurate and complete.
This report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail.
2013 Annual Report of Guangdong Rieys Group Company Ltd. Catalogue
2013 Annual Report ........................................................................................................................... 1 Section I. Important Reminders, Catalogue& Explanation .......................................................... 2 Section II. Company Profile .............................................................................................................. 6 Section III. Accouonting& Financial Indicator Highlights ........................................................... 9 Section IV. Report of the Board of Directors ................................................................................. 13 Section V. Significant Events ........................................................................................................... 30 Section VI. Change in Shares& Shareholders .............................................................................. 36 Section VII. Directors, Supervisors, Senior Management Staff& Employees ........................... 43 Section VIII. Corporate Governance ............................................................................................. 49 Section IX. Internal Control ........................................................................................................... 54 Section X. Financial Report ................................................................................................................ Section XI. Documents Available for Reference ............................................................................ 56
2013 Annual Report of Guangdong Rieys Group Company Ltd. Explanation
||||
|-|-|-|
||Refers||
|Term||Contents|
||to||
||Refers||
|Company, the Company||Guangdong Rieys Group Company Ltd.|
||to||
||Refers||
|Shenghengchang Huifu||Shenzhen Shenghengchang Huifu Industrial Co., Ltd.|
||to||
||Refers||
|Risheng Chuangyuan||Shenzhen Risheng Chuangyuan Asset Management Co., Ltd.|
||to||
||Refers||
|Lianhua Huiren||Shenzhen Lianhua Huiren Industrial Co., Ltd.|
||to||
||Refers||
|Rieys Industrial||Shenzhen Rieys Industrial Co., Ltd.|
||to||
||Refers|Ya’an Zhengxing Marble Co., Ltd. and Sichuan Baoxing Zhengxing|
|Zhengxing Companies|||
||to|Marble Co., Ltd.|
||Refers||
|Huafengqiang||Puning Huafengqiang Trading Co., Ltd.|
||to||
||Refers||
|CSRC||China Securities Regulatory Commission|
||to||
||Refers||
|SZSE, the stock exchange||Shenzhen Stock Exchange|
||to||
||Refers||
|The Company Law||The Company Law of the People’s Republic of China|
||to||
||Refers||
|The Securities Law||The Securities Law of the People’s Republic of China|
||to||
||Refers||
|Yuan||RMB Yuan|
||to||
||Refers||
|Reporting period||1 Jan. 2013-31 Dec. 2013|
||to||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Reminder of Major Risks
I. Risk of uncertain future earnings
The Company is mainly engaged in real estate development. Currently, except the Puning Shangdi Central Community project that has been developed, there is no subsequent project or land reserve. In 2013, we tried moderately diversified operations and set foot in sale of marble rough blocks. But this business is just starting and has not been able to reach a certain scale. The profit contributed by this new business to the Company is small. Therefore, our future earnings are uncertain.
In 2014, in face of the general adoption of the market principle and fiercer competition, based on our actual situation, we will tap our advantages, find the correct market positioning and keep forging ahead by means of innovation. We will discuss the strategies of capital, talent, brand, personalized service, proper land reserve, etc. to find the suitable development orientations and gradually increase our competitiveness. Subsequently, we will enhance expansion and determine subsequent projects as soon as possible with all the risks under control. At the same time, while exploring subsequent real estate projects, we will also continue to explore moderately diversified operations and seek for other profit growth points to ensure our sustainable development.
II. Risks concerning policies
The real estate industry is quite susceptible to policies. Policies have greatly affected the development of real estate enterprises, especially small and medium ones. As such, the uncertain macro-policies pose a major threat to the existence and development of small and medium real estate enterprises.
We will make ourselves known of the developments of thegovernment’s macro-economy policies in a timely and accurate manner, follow the directions pointed by the real estate policies, strictly standardize our development activities, find the correct directions for investment and development, and accurately estimate the future market demand so that we can adjust our marketing strategies in time.
III. Operation risks
Real estate development involves a wide range of links such as development, bidding, construction, examination before acceptance and marketing. Great management capability is needed in all these links, or we will face management and operation risks in the overall business.
In view of that, we will enhance internal control management, improve the internal control system, carry out regular or irregular risk assessments on the management of all links, spot defects and rectify them in time to prevent any management risk.
IV. This report involves futures plans and some other forward-looking statements, which shall not be considered as virtual promises to investors. Investors are kindly reminded to pay attention to possible risks.
2013 Annual Report of Guangdong Rieys Group Company Ltd. Section II. Company Profile
I. Company information
|||||
|-|-|-|-|
||||200168|
|Stock abbreviation|LYB|Stock code||
|Stock exchange listed with|Shenzhen Stock Exchange|||
||广东雷伊（集团）股份有限公司|||
|Chinese name of the Company||||
|Abbr. of the Chinese name of||||
||雷伊|||
|the Company||||
|English name of the Company||||
||GUANGDONG RIEYS GROUP COMPANY LTD|||
|(if any)||||
|Abbr. of the English name of||||
||Rieys|||
|the Company (if any)||||
|Legal representative of the|Chen Hongcheng|||
|Company||||
|Registered address|Meixin Industrial Park of Jun Bu Town, Puning, Guangdong|||
|Postal code for the registered||||
||515300|||
|address||||
||Room 4005-4006, International Chamber of Commerce Tower, No. 3 Fuhua Road, Futian District,|||
|Office address||||
||Shenzhen, Guangdong Province, China|||
|Postal code for the office||||
||518000|||
|address||||
|Internet website of the||||
||http://www.200168.com|||
|Company||||
||rieys@200168.com|||
|Email address||||

II. Contact us
||||
|-|-|-|
||Company Secretary|Securities Affairs Representative|
|Name|Xu Wei|Luo Dandan|
||Room 4005-4006, International Chamber|Room 4005-4006, International Chamber|
|Address|of Commerce Tower, No. 3 Fuhua Road,|of Commerce Tower, No. 3 Fuhua Road,|
||Futian District, Shenzhen, Guangdong|Futian District, Shenzhen, Guangdong|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||
|-|-|-|
||Province, China|Province, China|
||0755-82250045|0755-82250045|
|Tel.|||
||0755-82251182|0755-82251182|
|Fax|||
||xw@200168.com|xw@200168.com|
|E-mail|||

III. About information disclosure and where this report is placed
|||
|-|-|
|Newspapers designated by the Company for||
||Securities Times, Ta Kung Pao (HK)|
|information disclosure||
|Internet website designated by CSRC for||
||http://www.cninfo.com.cn|
|disclosing this report||
||Room 4005-4006, International Chamber of Commerce Tower, No. 3 Fuhua|
|Where this report is placed||
||Road, Futian District, Shenzhen, Guangdong Province, China|

IV. Change of the registered information
|||||||
|-|-|-|-|-|-|
|||||Registration code of||
||Registration date|Registration place|Business license No.||Organizational code|
|||||taxation||
|||Industrial and||||
|||Commercial||||
||||4400001000088|445281231131833|23113183-3|
|Initial registration|17 Nov. 1997|Administration||||
|||Bureau of||||
|||Guangdong Province||||
|||Industrial and||||
|||Commercial||||
|At the end of the||||||
||||445200000034656|445281231131833|23113183-3|
||9 May 2012|Administration||||
|reporting period||||||
|||Bureau of Jieyang||||
|||City||||
|Changes of the main business since listing||The main business of the Company shifted from garment making to real estate||||
|(if any)||development in 2013.||||
|Changes of the controlling shareholder (if||||||
|||Unchanged||||
|any)||||||

V. Other information
The CPAs firm hired by the Company:
2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||
|-|-|
||Asia (Group) CPAs (Special General Partnership)|
|Name||
|Office address|Room 301, No. 2 of Tower B, No. 9 Block, Chegongzhuang Street, West City District, Beijing|
||Zhou Hanjun, Zhou Tiehua|
|Signing accountants||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Section III. Accounting& Financial Indicator Highlights
I. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error?
□ Yes√ No
||||||
|-|-|-|-|-|
||||Increase or decrease of||
||2013|2012|this year over last year|2011|
||||(%)||
||148,458,757.00|300,982,925.62|-50.68%|87,302,398.51|
|Operating revenues (RMB Yuan)|||||
|Net profit attributable to|6,886,671.58|26,067,426.66|||
||||-73.58%|21,385,032.47|
|shareholders of the Company|||||
|(RMB Yuan)|||||
|Net profit attributable to|||||
||3,641,586.72|-5,555,456.60|-165.55%|-18,335,439.87|
|shareholders of the Company after|||||
|extraordinary gains and losses|||||
|(RMB Yuan)|||||
|Net cash flows from operating|65,325,107.33|54,080,052.09|||
||||20.79%|4,065,824.53|
|activities (RMB Yuan)|||||
||0.02|0.08|-75%|0.07|
|Basic EPS (RMB Yuan/share)|||||
||0.02|0.08|-75%|0.07|
|Diluted EPS (RMB Yuan/share)|||||
||1.92%|7.61%|-5.69%|6.29%|
|Weighted average ROE (%)|||||
||||Increase or decrease of||
||As at 31 Dec. 2013|As at 31 Dec. 2012|this year-end than last|As at 31 Dec. 2011|
||||year-end (%)||
||487,217,084.43|526,645,545.47|-7.49%|537,999,020.83|
|Total assets (RMB Yuan)|||||
|Net assets attributable to|362,500,175.66|355,613,504.08|||
||||1.94%|329,546,077.42|
|shareholders of the Company|||||
|(RMB Yuan)|||||

II. Items and amounts of extraordinary gains and losses
Unit: RMB Yuan
||||||
|-|-|-|-|-|
|Item|2013|2012|2011|Note|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||
|-|-|-|-|-|
||-488,207.85|||Gain/loss on disposalof fixed assets ,including the offsetasset impairmentprovision of RMB476,513.68|
|Gains/losses on the disposal of non-current|||||
|||-1,627.80|-2,010,753.22||
|assets (including the offset part of the asset|||||
|impairment provisions)|||||
|Tax rebates, reductions or exemptions due to|||||
|approval beyond authority or the lack of|||||
|official approval documents|||||
|Government grants recognized in the current|||||
|period, except for those acquired in the|||||
|ordinary course of business or granted at|||||
|certain quotas or amounts according to the|||||
|government’s unified standards|||||
|Capital occupation charges on non-financial|||||
|enterprises that are recorded into current|||||
|gains and losses|||||
|Gains due to that the investment costs for|||||
|the Company to obtain subsidiaries,|||||
|associates and joint ventures are lower than|||||
|the enjoyable fair value of the identifiable|||||
|net assets of the investees when making the|||||
|investments|||||
|Gain/loss on non-monetary asset swap|||||
|Gain/loss on entrusting others with|||||
|investments or asset management|||||
|Asset impairment provisions due to acts of|||||
|God such as natural disasters|||||
|||34,198,389.90|50,863,941.77||
|Gain/loss on debt restructuring|||||
|Expenses on business reorganization, such|||||
|as expenses on staff arrangements,|||||
|integration, etc.|||||
|Gain/loss on the part over the fair value due|||||
|to transactions with distinctly unfair prices|||||
|Current net gains and losses of subsidiaries|||||
|acquired in business combination under the|||||
|same control from period-begin to|||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||
|-|-|-|-|-|
|combination date|||||
|Gain/loss on contingent events irrelevant to|||||
|the Company’s normal business|||||
|Gains and losses on change in fair value|||||
|from tradable financial assets and tradable|||||
|financial liabilities, as well as investment|||||
|income from disposal of tradable financial||5,093.38|120,369.70||
|assets and tradable financial liabilities and|||||
|financial assets available for sales except for|||||
|effective hedging related with normal|||||
|businesses of the Company|||||
||5,117,350.70|||Some accountsreceivable which100% bad-debtprovisions had beenmade for werecollected.|
|Impairment provision reversal of accounts|||||
||||3,498,769.67||
|receivable on which the impairment test is|||||
|carried out separately|||||
|Gain/loss on entrustment loans|||||
|Gain/loss on change of the fair value of|||||
|investing real estate of which the subsequent|||||
|measurement is carried out adopting the fair|||||
|value method|||||
|Effect on current gains/losses when a|||||
|one-off adjustment is made to current|||||
|gains/losses according to requirements of|||||
|taxation, accounting and other relevant laws|||||
|and regulations|||||
|Custody fee income when entrusted with|||||
|operation|||||
||-104,524.93|||Various fines, delaycharges, donations,etc.|
|Non-operating income and expense other|||||
|||-1,249,537.38|-609,418.92||
|than the above|||||
|Other gain and loss items that meet the|||||
|definition of an extraordinary gain/loss|||||
||1,280,328.18|1,429,558.32|12,142,358.82||
|Less: Income tax effects|||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||
|-|-|-|-|-|
||-795.12|-100,123.48|77.84||
|Minority interests effects (after tax)|||||
||3,245,084.86|31,622,883.26|39,720,472.34|--|
|Total|||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Section IV. Report of the Board of Directors
I. Overview
Macro-control was the keynote of the real estate policies in 2013. The real estate market became polarized, with increasing market risks in the third- and fourth-tier cities. In the reporting period, upholding the operating principle of “seeking for progress in stability”, we carried forward all the work in an orderly manner, proactively dealt with the macro-control and worked hard on marketing. Meanwhile, we strictly controlled costs, carried out moderately diversified operations and kept improving internal control to ensure our sustainable development. For the reporting year, the Company achieved operating revenues of RMB 148.45 million, down50.68% from RMB 300.98 million of last year, which was mainly because the sale of real estate was slow under thegovernment’s macro-control policies. The operating profit recorded RMB 16.97 million, up283.72% from RMB 5.01 million of last year, which was mainly because the financial expenses decreased considerably. The net profit attributable to the Company recorded RMB 6.89 million, down73.58% from RMB 26.07 million of last year, which was mainly because the reporting year did not see any gain on debt restructuring. Accounts receivable at the end of the reporting year recorded RMB 12.30 million, down58.34% from the opening amount of RMB 29.54 million, which was mainly because the unsettled amounts in sale of commodity houses decreased. Other payables at the end of the reporting year recorded RMB 25.76 million, up195.68% from the opening amount of RMB 8.71 million, which was mainly because the guarantee money and the current accounts increased. Prepayments at the end of the reporting year recorded RMB 9.85 million, up602.83% from the opening amount of RMB 1.40 million, which was mainly because of the prepayments for engineering. Accounts payable at the end of the reporting year recorded RMB 12.91 million, down58.19% from the opening amount of RMB 30.88 million, which was mainly because some payments for engineering were made. The non-operating incomes for the reporting year recorded RMB 66,000, down99.81% from RMB 34.20 million of last year, which was mainly because the reporting year did not see any gain on debt restructuring.
Main work in 2013:
1. In 2013, according to the market condition and our own situation, we basically accomplished the sales objective of the Shangdi Central project. Up to the date of this report, the floor space sold in the reporting period accounted for17.63% of the total floor space.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 2. We repaid all the principals and interest of the overdue loans from China Everbright Bank. Currently, wedon’t have any bank loan.
3. In order to improve cash flows, carry out moderately diversified operations and change the single real estate business situation, controlled subsidiary Rieys Industrial signed the “Rough Block Procurement/Sale Agreement” with related party Zhengxing Companies to set foot in sale of marble rough blocks and products (construction stones). The participation in sale of stone materials would help enlarge the business scope, increase the operating revenues and improve the cash flows.
4. To further control the operating costs, we input great efforts in many aspects. For example, starting from 15 Dec. 2013, we reduced the rented office space, which helped reduce the operating costs.
5. In the reporting period, many companies successfully converted their B-shares to H-shares, and the number of B-share companies decreased further. We are following the new developments closely. And we will follow the current idea of reform, take into account our actual situation, work out relevant solutions and solve the left problems on an early date.
To sum up, in 2013, according to the set objectives, we did a lot to develop and sell the real estate project, explore new projects, solve overdue bank loans, control operating costs, expand financing channels, etc. Generally speaking, we accomplished all the tasks excellently.
II. Main business analysis
1. Overview
(1) Main operating revenues and costs by industry:
||||||
|-|-|-|-|-|
|Industry|2013||2012||
||Operating revenues|Operating costs|Operating revenues|Operating costs|
|Real estate|148,458,757.00|95,639,924.51|291,440,067.00|221,193,886.91|
|Garment|||9,528,458.62|5,655,751.36|
|Total|||300,968,525.62|226,849,638.27|
|Internal offset|||||
|Total|148,458,757.00|95,639,924.51|300,968,525.62|226,849,638.27|

2013 Annual Report of Guangdong Rieys Group Company Ltd. (2) Main operating revenues and costs by region:
||||||
|-|-|-|-|-|
|Region|2013||2012||
||Operating revenues|Operating costs|Operating revenues|Operating costs|
|Export of garments|||2,815,199.68|2,309,987.71|
|Domestic sale of garments|||6,713,258.94|3,345,763.65|
|Domestic processing ofgarments|||||
|Domestic sale of real estate|148,458,757.00|95,639,924.51|291,440,067.00|221,193,886.91|
|Subtotal|||300,968,525.62|226,849,638.27|
|Internal offset|||||
|Total|148,458,757.00|95,639,924.51|300,968,525.62|226,849,638.27|

Reasons for the changes:
(1) The operating revenue from real estate decreased because affected by thegovernment’s real estate macro-control policies, competition in the real estate markets of the third- and fourth-tier cities was fierce, leading to slow sales progress.
(2) The operating revenue from garments decreased100% from last year because we withdrew from the garment processing industry.
2. Changes of asset items and other financial data in the reporting period, as well as the reasons
|||||||
|-|-|-|-|-|-|
|Balance sheet items|31 Dec. 2013||31 Dec. 2012||YoY +/-%|
||Amount (RMB Yuan)|Proportion in total assets(%)|Amount (RMB Yuan)|Proportion in total assets(%)||
|Accounts receivable|12,308,091.34|2.53%|29,542,060.33|5.6%|-58.34%|
|Inventories|264,767,911.02|54.34%|340,802,511.47|64.71%|-22.31%|
|Fixed assets|83,747,681.91|17.19%|87,845,171.59|16.68%|-4.66%|
|Short-termborrowings|0|0|15,099,960.00|2.86%|-100%|
|Income statementitems|2013||2012||YoY +/-%|
|Selling expenses|312,084.09||2,897,050.38||-89.23%|
|Administrativeexpenses|21,588,972.13||22,178,714.94||-2.66%|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||
|-|-|-|-|
|Financial expenses|3,459,389.85|12,480,908.09|-72.28%|
|Income tax|10,060,408.92|11,990,093.78|-16.09%|

 Reasons for the changes:
(1) Accounts receivable decreased because the unsettled amounts in sale of commodity houses decreased. (2) Inventories decreased because some commodity houses were sold.
(3) Fixed assets decreased because some idle machines and transport tools were disposed.
(4) Short-term borrowings decreased because we repaid all the loans from the Guangzhou branch of China Everbright Bank.
(5) Selling expenses decreased because the spending on the sale of commodity houses decreased.
(6) Administrative expenses decreased because of the cost control.
(7) Financial expenses decreased because the Company repaid all the bank loans.
3. Cash flow breakdown, changes and reasons
|||||
|-|-|-|-|
||2013 (RMB Yuan)|2012 (RMB Yuan)|YoY +/- (%)|
|Net cash flows from operating activities|65,325,107.33|54,080,052.09|20.79%|
|Net cash flows from investing activities|162,237.29|-524,370.90|-139.94%|
|Net cash flows from financing activities|-30,709,416.05|-33,600,000.00|-8.6%|
|Effect of exchange rate changes on cash|-2,781.14|-938.03|196.49%|

Reasons for the changes:
Net cash flows from investing activities changed from last year because we disposed some fixed assets and did not acquire new fixed assets.
Review the reporting period progress of development strategies and business plans disclosed in previous periods: 4. In the 2012 Annual Report, we clearly stated that we were to focus on the following tasks in 2013:
(1) To continue to sell the Shangdi Central project to ensure earnings for 2013
A floor space of 33149.26 square meters of the Shangdi Central project was sold in the reporting period, accounting for17.63% of the total floor space. The sales progress was slow mainly because government policies created unfavorable factors in the real estate market and the fourth-tier cities in particular, saw oversupply and
fierce competition. Still, we managed to accomplish the annual sales objective basically.
(2) To find subsequent development projects as soon as possible and prepare well and reserve some land properly
2013 Annual Report of Guangdong Rieys Group Company Ltd. Considering thegovernment’s current macro-policies to real estate, we are prudent in selecting subsequent development projects, with risk control as our priority. In the reporting period, we proactively dealt with the macro-control, vigorously explored many real estate projects while inputting great efforts in sale of the existing products, and discussed matters concerning subsequent real estate projects. However, after comprehensively considering factors such as risks and the earnings cycle, we could not determine the subsequent projects. But we will continue to proactively explore subsequent project and try to determine suitable projects for subsequent development as soon as possible.
(3) To properly handle the rest of the overdue loans, gradually recover our financing capability in the banking system and adopt various financing channels and methods to further ensure our operation
On 4 Jul. 2013, we repaid all the principals and interest of the overdue loans from the Guangzhou branch of China Everbright Bank. Currently, we have no bank loan.
(4) To further improve the internal control mechanism and prepare well for the internal control audit report In the reporting period, we organized internal control trainings for our staff, rectified internal control defects and basically finished the preparations for the internal control audit.
(5) To continue to work on talent and brand development
In the reporting period, we recruited, trained, developed and reserved talent of various kinds through multiple channels and methods to further improve the talent team.
(6) Considering that many companies with A-shares and/or B-shares have started to deal with the B-share issue, indicating the B-share reform as the order of the day, we will continue to pay attention to and study the relevant developments and work out a practical solution for B-shares.
In 2013, many B-share companies successfully converted their B-shares to H-shares. The successful B-to-H-share conversion of Zhejiang Southeast Electric Power Co., Ltd. (only B-shares, the same as us) in particular, had great significance for our B-share reform. In 2014, we will continue to follow up and study new developments to work out a suitable B-share solution as soon as possible.
2. Revenues
Explanation:
For 2013, we achieved operating revenues of RMB 148,458,757.00, down by RMB 152,509,768.52 from last year
mainly because firstly, our business scope narrowed in 2013 upon our withdrawal from the garment processing
2013 Annual Report of Guangdong Rieys Group Company Ltd. industry; and secondly, thegovernment’s macro-policies created quite a hesitation in the real estate market, with the third- and fourth-tier cities in particular seeing oversupply and fierce competition, and the progress on the sale of real estate was slower than that of last year.
Is the Company's product sales revenue more than its service revenue?
√ Yes□ No
||||||
|-|-|-|-|-|
|Industry|Items|2013|2012|+/- (%)|
|||195|370|-47.3%|
||Sales volume||||
||Output|0|1,023|-100%|
|Real estate|||||
||Stock|458|653|-29.86%|
|||0|301,938|-100%|
||Sales volume||||
||Output|0|153,574|-100%|
|Garment|||||
||Stock|0|0|0%|

 Reasons for anyover-30% YoY movement of the data above:
√ Applicable□ Inapplicable
(1) The decrease of the sales volume of the real estate was influenced by the national real estate regulation policy and the fierce real estate market competition of the three or four line city led the selling stage slowed down;
(2) The decrease of the output of the real estate was because the Company had not developed new projects recently;
(3) The decrease of the output of the garment over last year was because the Company had quit the garment processing industry. Major customers:
|||
|-|-|
||8,896,713.00|
|Total sales to the top 5 customers (RMB Yuan)||
|Ratio of the total sales to the top 5 customers to the||
||6%|
|annual total sales (%)||

Information about the top 5 customers:
√ Applicable□ Inapplicable
|||||
|-|-|-|-|
|Serial No.|Name of customer|Sales (RMB Yuan)|Proportion in total annual sales (%)|
|1|Customer 1|2,175,646.00|1.47%|
|2|Customer 2|1,904,025.00|1.28%|
|3|Customer 3|1,673,494.00|1.13%|
|4|Customer 4|1,599,130.00|1.08%|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||
|-|-|-|-|
|5|Customer 5|1,544,418.00|1.04%|
|Total|--|8,896,713.00|6%|

 3. Costs
Classified by industry
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|||2013||2012|||
||||Proportion in||Proportion in||
|Industry|Item|||||+/- (%)|
|||Amount|operation cost|Amount|operation cost||
||||(%)||(%)||
|Real estate|Shangdi Central|95,639,924.51|100%|221,193,886.91|97.5%|-56.76%|
|Garment|Garment|0.00|0%|5,655,751.36|2.5%|-100%|

 Classified by product:
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|||2013||2012|||
||||Proportion in||Proportion in||
|Product|Item|||||+/- (%)|
|||Amount|operation cost|Amount|operation cost||
||||(%)||(%)||
|Commercial|||||||
|residential|Shangdi Central|95,639,924.51|100%|221,193,886.91|97.5%|-56.76%|
|building|||||||
|Garment|Garment|0.00|0%|5,655,751.36|2.5%|-100%|

 Notes:
The operation cost of 2013 was of RMB 95,639,924.51, which decreased of RMB 131,209,713.76 over last year and mainly due to the low operation revenue and the corresponding operation cost decreased in response.
Major suppliers:
|||
|-|-|
||2,303,993.08|
|Total purchases from the top 5 suppliers (RMB Yuan)||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||
|-|-|
|Ratio of the total purchases from the top 5 suppliers to the||
||98.21%|
|annual total purchases (%)||

Information about the top 5 suppliers:
√Applicable□ Inapplicable
|||||
|-|-|-|-|
|Serial No.|Name of supplier|||
|||Purchase amount (RMB Yuan)|Proportion in total annual purchase (%)|
|1||1,741,336.48|74.23%|
||Guangzhou Sunyu Construction Co., Ltd.|||
||Sichuan Baoxing Zhengxing Stone|||
|2||224,794.00|9.58%|
||Material Co., Ltd.|||
||Business Department of Shenzhen Baoan|||
|3||224,250.00|9.56%|
||Songgang Wenchangshun Glass|||
||Shantou Baishun Electromechanical|||
|4||59,000.00|2.51%|
||Device Co., Ltd.|||
||Jiangmen Quantai Optoelectronic Science|||
|5||54,612.60|2.33%|
||& Technology Co Ltd.|||
|Total|--|2,303,993.08|98.21%|

 4. Expense
(1) The decrease of the sales expenses was due to the decrease of the sales expense of the commercial residential building;
(2) The decrease of the financial expenses was due to the payment of the bank loans of the Company
5.R&D expenses
No such expenses for now.
6. Cash flows
Unit: RMB Yuan
|||||
|-|-|-|-|
|Item|2013|2012|YoY +/- (%)|
|Subtotal of cash inflows from|315,278,804.65|435,156,710.61||
||||-27.55%|
|operating activities||||
|Subtotal of cash outflows from|249,883,697.32|381,076,658.52||
||||-34.43%|
|operating activities||||
|Net cash flows from operating|65,325,107.33|54,080,052.09||
||||20.79%|
|activities||||
|Subtotal of cash inflows from|340,000.00|17,673.38||
||||1,823.8%|
|investing activities||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||
|-|-|-|-|
|Subtotal of cash outflows from|177,762.71|542,044.28||
||||-67.21%|
|investing activities||||
|Net cash flows from investing|162,237.29|-524,370.90||
||||-130.94%|
|activities||||
|Subtotal of cash inflows from||25,000,000.00||
||||-100%|
|financing activities||||
|Subtotal of cash outflows from|30,709,416.05|58,600,000.00||
||||-47.59%|
|financing activities||||
|Net cash flows from financing|-30,709,416.05|-33,600,000.00||
||||-8.6%|
|activities||||
|Net increase in cash and cash|34,775,147.43|19,954,743.16||
||||74.27%|
|equivalents||||

Reasons for anyover-30% YoY movement of the data above:
√ Applicable□ Inapplicable
(1) Cash outflows from operating activities decreased were due to the slowed down of the sales pace of the commercial residential building;
(2) Cash inflows from investing activities increased were due to the selling of the transportation facilities of the subsidiaries; (3) Cash outflows from investing activities decreased were due to the decrease of the acquisition or construction of the fixed assets during the reporting period;
(4) Net cash flows from investing activities decreased over the same period of last year were due to the disposal of the fixed assets and the failure of acquisition or construction of the fixed assets;
(5) Cash inflows from financing activities decreased were due to the offering of the security guarantees for the loans of the ICBC by Huafengqiang Company at the same period of last year and the offering of counter guarantee of the Huafengqiang Company for the Company;
(6) Cash outflows from financing activities decreased were due to the decrease of the payment of the loan principal for the financial institution at the last period;
(7) Net increase in cash and cash equivalents increased were due to the receiving of the sales amount of the houses& buildings of the Puning Evergrande Real Estate Co., Ltd. during the reporting period.
III. Breakdown of main business
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease||Increase/decrease|
||||||Increase/decrease||
||Operating||Gross profit rate|of operating||of gross profit|
|||Operating costs|||of operating costs||
||revenues||(%)|revenues over last||rate over last year|
||||||over last year (%)||
|||||year (%)||(%)|
|Classified by industry:|||||||
||148,458,757.00|95,639,924.51|35.58%|-49.06%|-56.76%|11.48%|
|Real estate|||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||||
|-|-|-|-|-|-|-|
||0.00|0.00|0%|-100%|-100%|-100%|
|Garment|||||||
|Classified by product:|||||||
|Commercial|||||||
|residential|148,458,757.00|95,639,924.51|35.58%|-49.06%|-56.76%|11.48%|
|building|||||||
|Garment|0.00|0.00|0%|-100%|-100%|-100%|
|Classified by region:|||||||
||0.00|0.00|0%|-100%|-100%|-100%|
|Garment export|||||||
|Domestic sale of|||||||
||0.00|0.00|0%|-100%|-100%|-100%|
|garments|||||||
|Domestic sale of|||||||
||148,458,757.00|95,639,924.51|35.58%|-49.06%|-56.76%|11.48%|
|real estate|||||||

IV. Asset and liability analysis
1. Major changes of asset items
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
||As at 31 Dec. 2013||As at 31 Dec. 2012||||
||||||Proportio||
|||Proportion in||Proportion in|||
||||||n change|Explain any major change|
||Amount|total assets|Amount|total assets|||
||||||(%)||
|||(%)||(%)|||
||56,330,640.22|11.56%|21,555,492.79|4.09%|7.47%||
|Monetary funds|||||||
|Accounts|12,308,091.34||29,542,060.33||||
|||2.53%||5.61%|-3.08%||
|receivable|||||||
||264,767,911.02||340,802,511.47||||
|||54.34%||64.71%|-10.37%||
|Inventories|||||||
|Investment real|||||||
|||0%||0%|||
|estate|||||||
|Long-term equity|||||||
|||0%||0%|||
|investment|||||||
|Fixed assets|83,747,681.91|17.19%|87,845,171.59|16.68%|0.51%||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||
|-|-|-|
|Construction in|||
||0%|0%|
|progress|||

2. Major changes of liability items
Unit: RMB Yuan
||||||||
|-|-|-|-|-|-|-|
||2013||2012||Proportio||
|||Proportion in||Proportion in|n change|Explain any major change|
||Amount|total assets|Amount|total assets|(%)||
|||(%)||(%)|||
||0||15,099,960.00|||The Company had paid for the whole|
|Short-term||||||loans of the Guangzhou Branch of|
|||0%||2.87%|-2.87%||
|borrowings||||||Everbright Bank during the reporting|
|||||||period|

V. Core competitiveness analysis
The core competitiveness of the Company remained unchanged during the reporting period.
VI. Investment analysis
1. Analysis to main subsidiaries and stock-participating companies
Particulars about main subsidiaries and stock-participating companies:
Unit: RMB Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||Main|||||||
|Company|Company|||Registered|||Operating|Operating||
|||Industry|products/ser||Total assets|Net assets|||Net profit|
|name|variety|||capital|||revenues|profit||
||||vices|||||||
|Shenzhen||||||||||
||||Investment||92,168,012.|43,003,759.||||
|Rieys||||50,000,000|||0.00|-990,156.33|-952,085.60|
||Subsidiary|Trade|and import|||||||
|Industrial|||||10|97||||
||||& export|||||||
|Co., Ltd.||||||||||
||||Production|||||||
|Puning|||and sale of|65,100,000|254,124,462|235,065,416|||-1,602,276.|
|Tianhe||Manufactur|||||0.00|47,519.98||
|Textile|Subsidiary||garments,|||||||
|||e||(HKD)|.53|.04|||28|
|Manufactor|||knitted dyed|||||||
|y Co., Ltd.||||||||||
||||cloth, etc.|||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Tianrui|||||62,116,376.|-27,025,545||-1,417,061.|-1,416,942.|
|||||1 (USD)|||0.00|||
|(HK)|Subsidiary|Trade|Trade|||||||
|Trading|||||29|.69||13|33|
|Co., Ltd.||||||||||
||||Real estate|||||||
||||developmen|||||||
|Puning||||||||||
||||t (operate|||||||
|Hengda|||||375,802,295|193,023,062|148,458,757|33,761,910.|25,205,354.|
||||with the|26,000,000||||||
|Real Estate|Subsidiary|Real estate||||||||
||||valid||.11|.90|.00|71|99|
|Developme||||||||||
||||qualificatio|||||||
|nt Co., Ltd.||||||||||
||||n|||||||
||||certificate)|||||||
||||Municipal|||||||
|Shenzhen||||||||||
|Yingda|||public|||||||
|Chuangyua||||||||||
||||engineering,|||||||
|n||||1|1,191.57|-1,358.43|0.00|-1,359.43|-1,359.43|
||Subsidiary|Real estate||||||||
|Constructio|||real estate|||||||
|n||||||||||
||||developmen|||||||
|Investment||||||||||
|Co., Ltd.|||t etc.|||||||

VII. Outlook of theCompany’s future development
(I) Industry competition structure and development tendency
In 2013, the regulatory policies of real estate had been increasingly tighter that had totally been through the policy fluctuations of firstly tight, then steady and at last tight, which led the development, sales, funds and land reserves etc. under certain restriction of the real estate industry. Since the second half of 2013, the new term of government had been making great efforts to establish and perfect the long-term mechanism as well as maintain the stability of the macro policy with the 3rd Plenary Session of the 18th Chinese Communist Party confirmed the center of the governmental work as the comprehensively deepen transform, registration of real estate as well as the affordable housing construction etc. In the future, the urbanization will still be the fundamental driving force of the development of the real estate industry, and due to many factors such as the on-going urbanization, the rigid demand for better housing, inflow of foreign funds and the money supply, the Company still holds an optimistic attitude towards the future of the real estate industry.
However, as the aggravation of the competition was the inexorable trend of the real estate industry and the enhancing of the concentration ratio, the real estate industry was in the state of transformation and upgrading with the core ability of the market competition was accelerating its formation, as well as a patch leading enterprises of the real estate of larger influence were standing out in the market. There enterprises had obviously advantages in the scale that became the unmatched flagship group by the other domestic real estate development companies. Thus, the small and medium-sized real estate enterprises need to develop their living space and will pay more
attention on the quality and brands, as well as strive for the market segment, find out their own characteristics and
cultivate their own core competitiveness.
(II) Future development strategy
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. The Company will continue to take the real estate as the main business and positively develop the subsequent projects on the basis of doing well of the existing sales work that further optimize the internal management structure of the Company, strengthen the talents team construction, confirm definitely of the strategic positioning, perfect the operation mode, abandon the inertial thinking, innovate and pursue the changes, so thus to improve the core competitiveness of the enterprise and grasp the market opportunity.
2. The Company will execute the diversified operation, continues to explore the development prospect of other industry on the basis of the doing well of the existing projects, so thus to avoid the risks of the business of the Company from being too much simplex and to ensure the sustainable development of the Company.
3. Primary goals of the Company in 2014:
(1) Continue to sell the Shangdi Central project and positively expand the subsequent projects.
(2) Continue to explore the development opportunity of the appropriate diversified operation and positively expand the development prospect of other industry so thus to offer the guarantee for the profit of Y2014.
(3) Continue to control the operation cost and improve the profitability of the Company.
(4) Do well of the financial work through various channels to offer the fund guarantee for the development of the Company..
(5) Continue to work on talent and brand development, confirm the market positioning of the Company, and form the development direction that meets with the traits of the Company and further enhancing the core competitiveness to ensure the sustainable development of the Company.
(6) Further improve the internal control mechanism, prepare well for the rectification work of the internal control defects, engage the internal audit institution in time and prepare well for the internal control audit report.
(7) Considering that many companies with A-shares and/or B-shares have started to deal with the B-share issue, the Company will continue to pay attention to and study the relevant developments and work out a practical solution for B-shares.
VIII. Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year
The accounting policy, accounting estimate and measurement methods remained the same as compared with the financial reporting of last year.
IX. Explain change of the consolidation scope as compared with the financial reporting of last year
Subjects newly included in the consolidate scope during the reporting period
||||
|-|-|-|
|Name of the Company|Net assets at the period-end|Net profit of the reporting period|
|Shenzhen Yingda ChuangyuanConstruction Investment Co., Ltd.|-1358.43|-1359.43|

2013 Annual Report of Guangdong Rieys Group Company Ltd. X. Profit/dividend distribution
1. TheCompany’s preplans or plans for profit distribution and turning capital reserve into share capital for the recent three years (including the reporting year):
The undistributed profit for the recent three years of the Company were both negatives so the Company had not execute the profit distribution during the recent three years.
Cash dividend distribution of the Company over the recent three years:
Unit: RMB Yuan
|||||
|-|-|-|-|
|||Net profit attributable to||
||||Ratio in net profit attributable to|
|||shareholders of listed||
||Amount of cash dividend||shareholders of listed|
|Year||companies under the||
||(tax included)||companies under the|
|||consolidated statement in the||
||||consolidated statement (%)|
|||year||
|2013|0.00|6,886,671.58|0%|
|2012|0.00|26,067,426.66|0%|
|2011|0.00|21,385,032.47|0%|

 XI. Particulars about researches, visits and interviews received in this reporting period
|||||||
|-|-|-|-|-|-|
||||||Main discussion and|
|Time of reception|Place of reception|Way of reception|Visitor type|Visitor|materials provided by the|
||||||Company|
||||||Inquired of the time for|
|10 Jan. 2013||||||
||the Company|By phone|Individual|Investor||
||||||resumption of share trading|
||||||Inquired of the execution|
||||||situation of the subsequent|
|14 Jan. 2013||||||
||the Company|By phone|Individual|Investor|projects of the Company|
||||||and the reform orientation|
||||||of the B share|
||||||Inquired of the operation|
|24 Jan. 2013||||||
||the Company|By phone|Individual|Investor|situation of the main|
||||||business of the Company|
||||||Inquired of the time when|
|30 Jan. 2013|||||the actual controller carry|
||the Company|By phone|Individual|Investor||
||||||out the overweight|
||||||commitment|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
||||||Inquired of the alterations|
|31 Jan. 2013||||||
||the Company|By phone|Individual|Investor|of the industry of the|
||||||Company|
||||||Put forward the reform|
|31 Jan. 2013||||||
||the Company|By phone|Individual|Investor||
||||||suggestion of the B share|
||||||Put forward the reform|
|22 Feb. 2013||||||
||the Company|By phone|Individual|Investor||
||||||suggestion of the B share|
||||||Inquired of the sales|
||||||situation of the real estate|
|22 Feb. 2013||||||
||the Company|By phone|Individual|Investor|of the Company and pit|
||||||forward the reform|
||||||suggestion of the B share|
||||||Inquired of the sales|
|28 Feb. 2013||||||
||the Company|By phone|Individual|Investor|situation of the real estate|
||||||of the Company|
||||||Inquired of the content of|
|5 Mar. 2013||||||
||the Company|By phone|Individual|Investor|the 2012 annual report of|
||||||the Company|
||||||Inquired of the reform|
|6 Mar. 2013||||||
||the Company|By phone|Individual|Investor||
||||||orientation of the B share|
||||||Inquired of the content of|
|6 Mar. 2013|||||the first quarter report and|
||the Company|By phone|Individual|Investor||
||||||the situation of the main|
||||||business of the Company|
||||||Put forward the reform|
|18 Mar. 2013||||||
||the Company|By phone|Individual|Investor||
||||||suggestion of the B share|
||||||Inquired of the matters of|
|20 Mar. 2013||||||
||the Company|By phone|Individual|Investor|the revocation of the risk|
||||||warning|
||||||Inquired of the matters of|
|11 Apr. 2013|||||anticipating the Annual|
||the Company|By phone|Individual|Investor||
||||||general meeting of the|
||||||Company|
||||||Inquired of the matters of|
|15 Apr. 2013|||||anticipating the Annual|
||the Company|By phone|Individual|Investor||
||||||general meeting of the|
||||||Company|
||||||Inquired of the time when|
|20 May 2013||||||
||the Company|By phone|Individual|Investor||
||||||the actual controller carry|
||||||out the overweight|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
||||||commitment|
||||||Inquired whether the|
||||||increase of the capital of|
||||||the second largest|
|14 Jun. 2013|||||shareholder by the actual|
||the Company|By phone|Individual|Investor||
||||||controller had the influence|
||||||on the Company and the|
||||||reform situation of the B|
||||||share|
||||||Inquired whether the|
||||||increase of the capital of|
||||||the second largest|
|14 Jun. 2013|||||shareholder by the actual|
||the Company|By phone|Individual|Investor||
||||||controller had the influence|
||||||on the Company and the|
||||||reform situation of the B|
||||||share|
||||||Inquired of the time when|
|20 Jun. 2013|||||the actual controller carry|
||the Company|By phone|Individual|Investor||
||||||out the overweight|
||||||commitment|
||||||Inquired of the suspension|
|21 Jun. 2013||||||
||the Company|By phone|Individual|Investor||
||||||of the Company|
||||||Inquired of the progress of|
|3 Jul. 2013|||||the restructuring of the|
||the Company|By phone|Individual|Investor||
||||||significant assets of the|
||||||Company|
||||||Inquired of the progress of|
|5 Jul. 2013|||||the restructuring of the|
||the Company|By phone|Individual|Investor||
||||||significant assets of the|
||||||Company|
||||||Inquired of the progress of|
|8 Jul. 2013|||||the restructuring of the|
||the Company|By phone|Individual|Investor||
||||||significant assets of the|
||||||Company|
||||||Inquired of the operation|
|7 Aug. 2013||||||
||the Company|By phone|Individual|Investor|situation and the reserve|
||||||situation of the lands|
||||||Inquired whether the water|
|23 Aug. 2013|||||district of Chaoshan Area|
||the Company|By phone|Individual|Investor||
||||||had the influence on the|
||||||production and operation of|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
||||||the Company and put|
||||||forward the resolution|
||||||suggestion of the B share|
||||||Inquired of the time when|
||||||the actual controller carry|
|6 Nov. 2013|||||out the overweight|
||the Company|By phone|Individual|Investor||
||||||commitment and the|
||||||execution situation of the|
||||||subsequent projects|
||||||Inquired of the operation|
|7 Dec. 2013||||||
||the Company|By phone|Individual|Investor||
||||||situation of the Company|
||||||Inquired of the operation|
|8 Dec. 2013||||||
||the Company|By phone|Individual|Investor||
||||||situation of the Company|
||||||Inquired of the situation of|
|3 Dec. 2013|||||the routine related|
||the Company|By phone|Individual|Investor||
||||||transactions of the|
||||||Company|

2013 Annual Report of Guangdong Rieys Group Company Ltd. V. Significant Events
I. Significant lawsuit or arbitration
□ Applicable√ Inapplicable
There was no significant lawsuit or arbitration during the reporting period.
II.Media’s questions
□ Applicable√ Inapplicable
There was nomedia’s question during the reporting period.
III. Significant related-party transactions
1. Related-party transactions concerning routine operation
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||Pricing||||Settlemen||||
|||Type of|Contents|||||||||
|||||principle||Transacti|Proportio|t method||||
|||the|of the|||||||||
|Related||||of the||on|n in same|of the||||
||Relations|related-pa|related-pa||Transacti||||Market|Date of|Index of|
|transactio||||related-pa||amount|kind of|related-pa||||
||hip|rty|rty||on price||||price|disclosure|disclosure|
|n party||||rty||(RMB|transactio|rty||||
|||transactio|transactio|||||||||
|||||transactio||0,000)|ns|transactio||||
|||n|n|||||||||
|||||n||||n||||
||||Rieys||||||||See|
||||signed the||||||||details to|
||||Purchase|Regarded|||||||the|
||Enterprise||and Sale|the|Executed||||||announce|
|Zhengxin|under the||Agreeme|market|the||||||ment|
|||Routine||||2,033,118||||28 Nov.||
|g|control of||nt of the|price as|market||100%||||disclosed|
|||operation||||.2||||2013||
|Company|the actual||Waste|the|fair value||||||on the|
||controller||Materials|pricing|price||||||Securities|
||||with|principle|||||||Times,|
||||Zhengxin||||||||Hong|
||||g||||||||Kong Ta|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Company||||||||Kung Pao|
||and Rieys||||||||and|
||Industrial||||||||www.cnin|
||worked||||||||fo.com.cn|
||on the||||||||, which|
||sales||||||||was|
||business||||||||No.2013-|
||of the||||||||038|
||waste|||||||||
||materials|||||||||
||of|||||||||
||marbles|||||||||
||and the|||||||||
||products.|||||||||
|||||2,033,118||||||
|Total||--|--||--|--|--|--|--|
|||||.2||||||
|||Recently, the main business of the Company was the development of the real estate,||||||||
|||and the Company had not confirmed the subsequent projects except the developed||||||||
|||project of the Shangdi Central Area lied in Puning. For solving the problems such as||||||||
|||the simplex projects and the industry cycle, the Company developed the sales business||||||||
|||of the stone materials, expanded the business scope, increased the operation revenue||||||||
|||and improved the cash flow of the Company.||||||||
|||Rieys Industrial cooperated with other franchisers by adopting flexible method, and at||||||||
|||the same time took use of the advantages of each other franchisers to construct the sales||||||||
|Necessity and consistency of the||||||||||
|||network and channels in the main sales areas of the stone materials across the country.||||||||
|related-party transaction, as well as the||||||||||
|reasons why the related party is chosen||The above related transactions were benefit to the Company for increasing the||||||||
|over other parties in the market to deal||||||||||
|||operation revenue and the cash flow, expanding the upstream and downstream||||||||
|with||||||||||
|||business, realizing the diversified operation as well as ensuring the sustainable||||||||
|||development of the Company.||||||||
|||The Company considered mainly base on the following points when selecting the||||||||
|||related parties for transactions: (1) was able to enquire better of the information of the||||||||
|||counterparty that was good for controlling the transaction risks; (2) The counterparty||||||||
|||owned the large high-quality mines, of which the marbles were of large reserve||||||||
|||volume, favorable quality, unique products and extensive propose that with a better||||||||
|||prospect of the development and utilization of the mines; (3) The stone materials||||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||
|-|-|
||market was of large capacity, stable sales and considerable prospect.|
||The time of selling of the Rieys Industrial was rather short and was in the development|
||stage of the market, of which the operation revenues and the profits were relatively|
|Influence of the related-party transaction||
||less, thus will neither influence the independency of the business nor bring the negative|
|on independency of the Company||
||effects to the production and operation as well as the current performance of the|
||Company.|

IV. Significant contracts and their fulfillment
1. Guarantees provided by the Company
Unit: RMB Ten Thousand Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Guarantees provided by the Company for external parties (excluding those for subsidiaries)|||||||||
||Disclosure||||||||
|||||||||Guarante|
||date of||||||||
||||Actual|||||e for a|
||relevant|||Actual|||||
|||Amount for|occurrence date||Type of|Period of|Executed|related|
|Guaranteed party|announcem|||guarantee|||||
|||guarantee|(date of||guarantee|guarantee|or not|party or|
||ent on the|||amount|||||
||||agreement)|||||not (yes|
||guarantee||||||||
|||||||||or no)|
||amount||||||||
|||||||Five years|||
|||||||from the|||
|Puning|||||||||
|||||||independent|||
||12 Oct.||||||||
|Huafengqiang Trade||3,000|8 Oct. 2012|2,500|Mortgage|contract|No|No|
||2012|||||(loan|||
|Co., Ltd.||||||contract)|||
|||||||coming into|||
|||||||effect|||
|Total external guarantee line||||Total actual occurred amount|||||
|||3,000||||2,500|||
|approved during the reporting||||of external guarantee during|||||
|period (A1)||||the reporting period (A2)|||||
|Total external guarantee line that||||Total actual external guarantee|||||
|||3,000||||2,500|||
|has been approved at the end of||||balance at the end of the|||||
|the reporting period (A3)||||reporting period (A4)|||||
|Guarantees provided by the Company for its subsidiaries|||||||||
||Disclosure|||||||Guarante|
||||Actual||||||
||date of|||Actual||||e for a|
|||Amount for|occurrence date||Type of|Period of|Executed||
|Guaranteed party|relevant|||guarantee||||related|
|||guarantee|(date of||guarantee|guarantee|or not||
||announcem|||amount||||party or|
||||agreement)||||||
||ent on the|||||||not|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||
|-|-|-|-|-|
||guarantee||||
||amount||||
|Total guarantee line approved for|||Total actual occurred amount||
|the subsidiaries during the||0|of guarantee for the|0|
|reporting period|||subsidiaries during the||
|(B1)|||reporting period (B2)||
|Total guarantee line that has been|||||
||||Total actual guarantee balance||
|approved for the subsidiaries at||0||0|
||||for the subsidiaries at the end||
|the end of the reporting period|||||
||||of the reporting period (B4)||
|(B3)|||||
|Total guarantee amount provided by the Company (total of the above-mentioned two kinds of guarantees)|||||
|Total guarantee line approved|||Total actual occurred amount||
|||3,000||2,500|
|during the reporting period|||of guarantee during the||
|(A1+B1)|||reporting period (A2+B2)||
|Total guarantee line that has been|||||
||||Total actual guarantee balance||
|approved at the end of the||3,000||2,500|
||||at the end of the reporting||
|reporting period|||||
||||period (A4+B4)||
|(A3+B3)|||||
|Proportion of total guarantee amount (A4+B4) to the net assets|||||
||||6.9%||
|of the Company (%)|||||
|Of which:|||||
|Amount of guarantee for shareholders, actual controller and|||||
||||0||
|related parties (C)|||||
|Amount of debt guarantee provided for the guaranteed party|||||
||||0||
|whose asset-liability ratio is not less than 70% directly or|||||
|indirectly (D)|||||
|Part of the amount of the total guarantee over 50% of net assets|||||
||||0||
|(E)|||||
||||0||
|Total amount of the above three guarantees (C+D+E)|||||
|Explanation on possible bearing joint responsibility of|||||
||||N/A||
|liquidation due to immature guarantee (if any)|||||
|Explanation on provision of guarantees for external parties in|||||
||||N/A||
|violation of the prescribed procedure (if any)|||||

Explanation on particulars about the guarantees by compound ways:
2013 Annual Report of Guangdong Rieys Group Company Ltd. V. Performance of commitments
1. Commitments made by the Company or shareholders holding over5% of theCompany’s shares in the reporting period or such commitments carried down into the reporting period
|||||||
|-|-|-|-|-|-|
||Commitment||Time of making|Period of||
|Commitment||Contents|||Fulfillment|
||maker||commitment|commitment||
|Commitment on share reform||||||
|Commitment in the acquisition report or||||||
|the report on equity changes||||||
|Commitments made upon the assets||||||
|reorganization||||||
|Commitments made upon IPO or||||||
|refinancing||||||
||||||The actual|
|||The actual||||
||||||controller of the|
|||controller made||||
||||||Company--Mr.|
|||a commitment to||||
||||||Chen|
|||increase the||||
||||||Hongcheng had|
|||shareholding in||||
||||||executed the|
|||the Company by||||
||||||overweight|
|||a controlled||||
||||||commitment|
|||account within||Within 12||
||||||through the|
||Actual|12 months since||months since the||
|Other commitments made to minority|||||persons acting i|
|||the first|14 Jan. 2013|first||
|shareholders|controller||||n concert—Mr.|
|||shareholding||shareholding||
||||||Ding Lihong on|
|||increase day,||increase day||
||||||21 Mar. 2014.|
|||with an||||
||||||(See details to|
|||increasing||||
||||||the|
|||proportion not||||
||||||announcement|
|||over 2% of the||||
||||||of the Company|
|||total share||||
||||||disclosed by the|
|||capital of the||||
||||||media appointed|
|||Company.||||
||||||by the CSRC)|
||Yes|||||
|Executed timely or not?||||||

VI. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||
|-|-|
||ASIA (Group) Accounting Firm (LLP)|
|Name of domestic CPAs firm||
||55|
|Remuneration of domestic CPAs firm (RMB 0’000)||
|Consecutive years of the audit services provided by||
||5|
|domestic CPAs firm||
|Name of the certified public accountants from the||
||Zhou Hanjun, Zhou Tiehua|
|domestic CPAs firm||

Reengage the CPAs firm at current period or not?
□ Yes√ No
2013 Annual Report of Guangdong Rieys Group Company Ltd. VI. Change in Share Capital and Particulars about Shareholders
I. Particulars about the changes in share capital
Unit: Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Increase/decrease (+, -)|||||After the change||
||||||Capitalizat|||||
||||Issuance||ion of|||||
|||Proportion||Bonus|||||Proportio|
||Amount||of new||public|Others|Subtotal|Amount||
|||(%)||shares|||||n (%)|
||||shares||reserve|||||
||||||fund|||||
||164,025,0|||||||164,025,0||
|||51.48%|0|0|0|0|0||51.48%|
|I. Shares subject to trading||||||||||
||00|||||||00||
|moratorium||||||||||
||0|0%|0|0|0|0|0|0|0%|
|1. Shares held by the State||||||||||
|2. Share held by||||||||||
||0|0%|0|0|0|0|0|0|0%|
|state-owned corporation||||||||||
||164,025,0|||||||164,025,0||
|||51.48%|0|0|0|0|0||51.48%|
|3. Shares held by other||||||||||
||00|||||||00||
|domestic corporation||||||||||
||164,025,0|||||||164,025,0||
|Among which: shares held||||||||||
|||51.48%|0|0|0|0|0||51.48%|
|by domestic corporation|00|||||||00||
|Shares held by domestic||||||||||
||0|0%|0|0|0|0|0|0|0%|
|natural persons||||||||||
|4. Shares held by foreign||||||||||
||0|0%|0|0|0|0|0|0|0%|
|investors||||||||||
|Among which: Shares held||||||||||
||0|0%|0|0|0|0|0|0|0%|
|by foreign corporation||||||||||
|Shares held by foreign||||||||||
||0|0%|0|0|0|0|0|0|0%|
|natural persons||||||||||
||154,575,0|||||||154,575,0||
|||48.52%|0|0|0|0|0||48.52%|
|II. Shares not subject to||||||||||
||00|||||||00||
|trading moratorium||||||||||
|1. Renminbi ordinary||||||||||
||0|0%|0|0|0|0|0|0|0%|
|shares||||||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||154,575,0|||||||154,575,0||
|||48.52%|0|0|0|0|0||48.52%|
|2. Domestically listed||||||||||
||00|||||||00||
|foreign shares||||||||||
|3. Overseas listed foreign||||||||||
||0|0%|0|0|0|0|0|0|0%|
|shares||||||||||
||0|0%|0|0|0|0|0|0|0%|
|4. Others||||||||||
||318,600,0|||||||318,600,0||
|||100%|0|0|0|0|0||100%|
|III. Total shares||||||||||
||00|||||||00||

II. Shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||Total number of shareholders on the fifth trading||||||
|Total number of shareholders at the||||||||||
|||12,427||day before the disclosure date of the annual||||12,613||
|reporting period||||||||||
|||||report||||||
|Particulars about shares held by shareholders or the top 10 shareholders with a shareholding percentage over 5%||||||||||
||||Total||||Pledged or frozen shares|||
|||||Increase/d|Number|||||
|||Shareholdi|shares|||Number of||||
|||||ecrease|of|||||
|Name of|Nature of|ng|held at|||tradable||||
|||||during the|non-trada|||||
|shareholder|shareholder|percentage|the|||shares|Status of shares||Number of shares|
|||||reporting|ble shares|||||
|||(%)|period-en|||held||||
|||||period|held|||||
||||d|||||||
|ShenzhenShenghengchangHuifu IndustrialCo., Ltd.|Domesticnon-state-ownedcorporation|36.99%|117,855,000|0|117,855,000|0||||
||||||||Pledged||117,855,000|
|ShenzhenRishengChuangyuanAssetManagement Co.,Ltd.|Domesticnon-state-ownedcorporation|10.68%|34,020,000|0|34,020,000|0||||
||||||||Pledged||34,020,000|
|GUOTAI|Foreign|7.68%|24,470,09|+24,470,0|0|24,470,09||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|JUNANSECURITIES(HONGKONG)LIMITED|corporation||2|92||2|||
|ShenzhenLianhua HuirenIndustrial Co.,Ltd.|Domesticnon-state-ownedcorporation|3.81%|12,150,000|0|12,150,000|0|||
||||||||Pledged|12,150,000|
|Su Youhe|Domestic naturalperson|2.27%|7,217,210|+70,955|0|7,217,210|||
|China EverbrightSecurities (HK)Limited|Foreigncorporation|2.19%|6,964,310|+6,964,310|0|6,964,310|||
|ShanghaiWanguoSecurities (HK)Limited|Foreigncorporation|1.1%|3,510,912|+1,416,143|0|3,510,912|||
|Fan Jiongyang|Domestic naturalperson|0.75%|2,396,620|+1,935,735|0|2,396,620|||
|Wei Guobin(NGAI KWOKPAN)|Domestic naturalperson|0.36%|1,145,816|0|0|1,145,816|||
|LUO DONG HUI|Domestic naturalperson|0.35%|1,100,000|-341,200|0|1,100,000|||
|Strategic investor or general|||||||||
|corporation becoming a top ten||Inapplicable|||||||
|shareholder due to placing of new|||||||||
|shares (if any) (see note 3)|||||||||
|Explanation on associated||Shenzhen Shenghengchang Huifu Industrial Co., Ltd., Shenzhen Risheng Chuangyuan Asset|||||||
|relationship or/and persons acting in||Management Co., Ltd. and Shenzhen Lianhua Huiren Industrial Co., Ltd., which belonged to|||||||
|concert among the above-mentioned||action-in-concert promulgated by Measures for the Administration of Disclosure of|||||||
|shareholders:||Information on the Change of Shareholdings in Listed Companies. The Company did not|||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||
|-|-|-|-|
||know whether there existed related relationship among other shareholders.|||
|Particulars about shares held by the top ten shareholders holding shares not subject to trading moratorium||||
|||Type of shares||
|Name of shareholder|Number of tradable shares held at the year-end|||
|||Type|Number|
|GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED|24,470,092|Domestically||
||||24,470,092|
|||listed foreign||
|||shares||
|Su Youhe|7,217,210|Domestically||
||||7,217,210|
|||listed foreign||
|||shares||
|China Everbright Securities (HK)Limited|6,964,310|Domestically||
||||6,964,310|
|||listed foreign||
|||shares||
|Shanghai Wanguo Securities (HK)Limited|3,510,912|Domestically||
||||3,510,912|
|||listed foreign||
|||shares||
|Fan Jiongyang|2,396,620|Domestically||
||||2,396,620|
|||listed foreign||
|||shares||
|Wei Guobin (NGAI KWOK PAN)|1,145,816|Domestically||
||||1,145,816|
|||listed foreign||
|||shares||
|LUO DONG HUI|1,100,000|Domestically||
||||1,100,000|
|||listed foreign||
|||shares||
|Ke Zhongfeng|754,664|Domestically||
||||754,664|
|||listed foreign||
|||shares||
|Han Liang|711,458|Domestically||
||||711,458|
|||listed foreign||
|||shares||
|Wang Yiping|707,213|Domestically||
||||707,213|
|||listed foreign||
|||shares||
|Explanation on associated||||
|relationship or/and persons acting in||||
|concert among the top ten tradable||||
||Unknown|||
|shareholders and between the top ten||||
|tradable shareholders and the top ten||||
|shareholders||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||
|-|-|
|Explanation on the top 10||
|shareholders participating in the||
||Naught|
|margin trading business (if any) (see||
|note 4)||

Did any shareholder of the Company carry out an agreed buy-back in the reporting period?
□ Yes√ No
2. Particulars about the controlling shareholder
Corporation
|||||||
|-|-|-|-|-|-|
||Legal|||||
|||Date of||||
|Name of controlling|representative|||||
|||establishm|Organization code|Registered capital|Business scope|
|shareholder|/ company|||||
|||ent||||
||principal|||||
||||||Sales of hardware,|
||||||electric, building|
||||||materials, electronic|
||||||products and auto parts;|
||||||import and export|
||||||goods, technology|
||||||import and export|
|Shenzhen Shenghengchang||14 May|||(except for projects|
||Ding Lihong||74122232-1|98,000,000||
|Huifu Industrial Co., Ltd.||1997|||prohibited by laws and|
||||||administrative|
||||||regulations; projects|
||||||prohibited by laws and|
||||||administrative|
||||||regulations can be|
||||||operated with|
||||||permission)|
|Operating results, financial||||||
|situation, cash flow and||||||
||Inapplicable|||||
|future development strategy,||||||
|etc.||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Change of the controlling shareholder during the reporting period
□ Applicable√ Inapplicable
3. Particulars about the actual controller
Natural person
||||
|-|-|-|
|||Whether gain the right of residence in other countries or|
|Name of the actual controller|Nationality||
|||regions or not|
|Chen Hongcheng|China|No|
||At present he is Chairman of the Board and legal representative of the Company,||
||had held the posts as the standing commissar of political consultative conference of||
||Puning, Guangdong, the deputy of the National People’s Congress of Jieyang City||
|Occupation and position over the five years|||
||and Guangdong Province, Vice Chairman of Costume Association of Guangdong||
||Province and Vice Chairman of Costume Association of Shenzhen City, and the||
||deputy of the People’s Congress of Jieyang City and Guangdong Province.||
|Particulars on his controlling listed companies|||
||Naught||
|over the past ten years|||

The ownership and controlling relationship between the actual controller of the Company and the Company is detailed as follows: Chen Chen Chen Chen Chen Chen Ding Lihong
Honghai Hongcheng Xuewen Hongcheng Hongzhen Yuezhong30% 70% 12.56% 56.25% 31.19% 80% 20% Shenghongchang Company Risheng Chuangyuan Company Lianhua Company36.99% 10.68% 3.81%
The Company
4. Particulars about other corporateshareholders’ share holding over10% of shares
|||||||
|-|-|-|-|-|-|
||Legal|Date of||||
|Name of corporate|||||Business scope or|
||representative|establishm|Organization code|Registered capital||
|shareholder|||||management activities|
||/ company|ent||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
||principal|||||
||||72470265-7||Be entrusted with asset|
||||||management, equity|
||||||investment, investment|
||||||consulting and|
||||||information consulting|
||||||(the above excluded|
||||||securities, insurance,|
||||||financial business,|
||||||human resources|
||||||consulting service and|
||||||other restricted|
||||||projects); invest and|
|Shenzhen Risheng||||||
||||||initiate industries (the|
|||8 Sep.||||
|Chuangyuan Asset|Ding Lihong|||16000|detailed project till|
|||2000|||further declared);|
|Management Co., Ltd.|||||domestic|
||||||trade(excluding|
||||||monopoly|
||||||commodities); import|
||||||and export of goods|
||||||(excluding projects|
||||||limited by laws and|
||||||administration|
||||||regulations;|
||||||certification shall be|
||||||gained for the above|
||||||mentioned limited|
||||||projects)|

III. Particulars on shareholding increase scheme during the reporting period proposed or implemented by the shareholders and act-in-concert persons
||||||||
|-|-|-|-|-|-|-|
|||||||Disclosure date|
|Name of|||||Initial disclosure|for the|
||Amount of shares|Shares proportion||Shares proportion|||
|shareholder /|||Amount of shares||date of the|completion of|
||to be increased|to be increased||increased actually|||
|act-in-concert|||actually held||shareholding|implementing the|
||holding|(%)||(%)|||
|person|||||increase scheme|shareholding|
|||||||increase scheme|
|Chen Hongcheng|≤6,372,000|≤2%|346,192|0.11%|14 Jan. 2013||

Explanation on other situations
2013 Annual Report of Guangdong Rieys Group Company Ltd. On 14 Jan. 2013, theCompany’s actual controller Mr. Chen Hongcheng made the commitments as follows: he and his act-in-concert person, with the confidence in theCompany’s development prospect, planned to increase the shareholding in the Company by the controlled account within 12 months since the first shareholding increase day in the future, with an increasing proportion not over2% of the total share capital of the Company. See details to the announcement of No. 2013-002 disclosed on the Securities Times, Ta Kung Pao and http://www.cninfo.com.cn on 14 Jan. 2013
On 21 Mar. 2014, theCompany’s actual controller Mr. Chen Hongcheng executed the above commitments through the persons acting inconcert—Mr. Ding Lihong that increased the shares holding of 346,192 shares which was of0.11% of theCompany’s total share capital, and after the overweight, the total amount of the share controlled by Mr. Chen Hongcheng and held by Mr. Chen Hongcheng and the persons acting in concert were of 164,371,192 shares which were of51.59% of the share capital of the Company, of which the , 164,025,000 shares were the non-tradable shares that covered51.48% of the share capital of the Company (see details to the announcement of No. 2014-004 disclosed on the Securities Times, Ta Kung Pao and http://www.cninfo.com.cn on 25 Mar. 2014).
VII. Directors, Supervisors, Senior Management Staffs and Employees I. Changes in shareholding of directors, supervisors and senior management staffs
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount of|Amount of||
|||||||||shares|shares|Amount of|
||||||||Shares||||
|||||||||increased|decreased|shares held|
|||Tenure||||Ending|held at the||||
|Name|Office title||Sex|Age|Start date|||at the|at the|at the|
|||status||||date|year-begin||||
|||||||||reporting|reporting|period-end|
||||||||(share)||||
|||||||||period|period|(share)|
|||||||||(share)|(share)||
|Chen|Chairman||||||||||
||||||28 Dec.|28 Dec.|||||
|||||56|||0|0|0|0|
|Hongchen|of the|Current|Male||||||||
||||||2012|2015|||||
|g|Board||||||||||
||Vice||||||||||
|Ding|Chairman|||43|28 Dec.|28 Dec.|0|0|0|0|
|||Current|Male||||||||
|Lihong|of the||||2012|2015|||||
||Board||||||||||
|Chen|||||28 Dec.|28 Dec.|||||
|||||60|||0|0|0|0|
||Director|Current|Male||||||||
|Honghai|||||2012|2015|||||
|Chen|||||28 Dec.|28 Dec.|||||
|||||34|||0|0|0|0|
||Director|Current|Female||||||||
|Xuewen|||||2012|2015|||||
||Independe||||28 Dec.|28 Dec.|||||
|||||37|||0|0|0|0|
|Liu Yong||Current|Male||||||||
||nt Director||||2012|2015|||||
|Su|Independe||||28 Dec.|28 Dec.|||||
|||||50|||0|0|0|0|
|||Current|Male||||||||
|Jianlong|nt Director||||2012|2015|||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Cai|Independe||||28 Dec.|28 Dec.|||||
|||||53|||0|0|0|0|
|||Current|Male||||||||
|Shaohe|nt Director||||2012|2015|||||
||Chairman||||||||||
||of the||||||||||
|Yan|||||28 Dec.|28 Dec.|||||
|||||46|||0|0|0|0|
||Supervisor|Current|Male||||||||
|Mingfei|||||2012|2015|||||
||y||||||||||
||Committee||||||||||
|Huang|||||28 Dec.|28 Dec.|||||
|||||48|||0|0|0|0|
||Supervisor|Current|Female||||||||
|Yanfang|||||2012|2015|||||
||||||28 Dec.|28 Dec.|||||
|||||45|||0|0|0|0|
|Li Ning|Supervisor|Current|Male||||||||
||||||2012|2015|||||
|Chen|CFO,Vice||||28 Dec.|28 Dec.|||||
|||||62|||0|0|0|0|
|||Current|Male||||||||
|Jincai|president||||2012|2015|||||
||Secretary||||||||||
||of the||||||||||
||||||28 Dec.|28 Dec.|||||
|||||37|||0|0|0|0|
|Xu Wei|Board,|Current|Male||||||||
||||||2012|2015|||||
||Vice||||||||||
||president||||||||||
|Feng|Vice||||12 Apr.|28 Dec.|||||
|||Current|Female|44|||0|0|0|0|
|Zhuokui|President||||2013|2015|||||
|Total|--|--|--|--|--|--|0|0|0|0|

 II. Post-holding situation
Main working experience of current directors, supervisors and senior management staffs over the past five years: Director Mr. Chen Honghai was born in 1954 and graduated from university; he acts as Director of Shenzhen Shenghengchang HuiFu Industrial Co., Ltd. (the controlling shareholder) over the long term.
Director Ms. Chen Xuewen, born in 1980, graduated from Project Management of University of Greenwich, Postgraduate qualifications and Master degree. Now she concurrently acts as Chairman of Shenzhen Missk Fashion Co., Ltd. She has served as Chairman and legal representative of Shenzhen Shenghengchang Industrial Co., Ltd.; as well as Chairman and legal representative in Shenzhen Risheng Investment Co., Ltd..
Independent Director Mr. Liu Yong, born in 1977, CPA, graduated from bachelor of the accounting major of Hunan College of Finance& Economics. Now he is partner of Shenzhen Pinghai Certified Public Accountants. Independent Director Mr. Su Jianlong, born in 1964, post doctorate, acts as Chairman of the Board of Shenzhen China Energy Conservation and Environmental Protection Co., Ltd. now. He successively held the posts of General Manager in Bio-Treat Technology Limited (listed on Singapore Exchange Main board), of General Manager of Shenzhen Zhongxing EnvironmentalE&T Ltd, of General Manager of Anhui Guo Zhen Environmental Protection Co., Ltd., Deputy General Manager of General Water of China Company Limited, of
General Manager of Yuanshui Technology (Beijing) Co., Ltd., of Chairman of the Board of General Water of
China (Shenzhen) Co., Ltd., of CMO and Chief Senior Advisor of China National Environmental Protection
Corporation.
2013 Annual Report of Guangdong Rieys Group Company Ltd. Independent Cai Shaohe, born in 1961, diploma of postgraduate, is a CPA and certified tax agent. He is Vice President of Shantou Institute of Certified Public Accountants and Guangdong Alpha Animation and Culture Co., Ltd, as well as member of National Committee of the ChinesePeople’s Political Consultative Conference of Chenghai District, executive committee member of Chenghai Federation of Industry and Commerce (Chamber of Commerce), standing directors of Accounting Academy of Chenghai District and Chenghai Association of Enterprises with foreign investment. He once acted as chief accountant and chief of finance of Chenghai state-owned Wine Factory, Vice Superintendent and Superintendent in ChenghaiAuditor’ Firm and Chief Accountant of Shantou Fengye Certified Public Accountants Co., Ltd, as well as independent director of the Company and Guangdong Orient Zirconic Ind Sci& Tech Co., Ltd..
Chairman of the Supervisory Committee Mr. Yan Mingfei was born in 1968, bachelor degree and engineer. Now he is in charge of general manager of Shantou Lianzhihua Information and Technology Co., Ltd. He took the post of assistant engineer of Shantou Teye Power Development Co., Ltd. and engineer of Shantou Special Economic Region Talents Exchange Center.
Supervisor Ms. Huang Yanfang, born in 1966, bachelor degree, she has engaged in enterprise financial work for many years. Now she serves in financial dep. of the Company.
Supervisor Mr. Li Ning, born in 1969, college degree, he now acts as Deputy General Manager of Administration and HR Department of the Company. He ever acted as Supervisor of the Company, General Manager of Dongguan Riseview Knitting Co., Ltd..
Vice President, Feng Zhuokui, born in 1970, graduated from Northeast Dianli University, Postgraduate
qualifications. She ever acted as GM of Shenzhen Xuyuan Investment&Development Co., Ltd., Shenzhen Baiyehua Technology Co., Ltd. and Shenzhen Zhi Lian Jia Industrial Co., Ltd. and Secretary of the Board of Guangzhou Ping An Group Co., Ltd., etc..
Chief Financial Officer, Mr. Chen Jincai, born in 1952, junior college education. He ever acted as Vice Chief and Chief of Financial Department of Shenhua (Group) Limited, Vice GM and CFO in Guanlan Golf, Chief Accountant and Chief of Financial Department in Shenzhen S.E.Z.Real Estate(Group)Co.,Ltd., etc.
Secretary of the Board Mr. Xuwei, born in 1977, graduated from Zhongnan University of Economics and Law, is a bachelor holder of economics and law. He once acted as Securities Affairs Representative and Secretary of the Board and Supervisor of the Company, General Manager of Securities Affairs and Secretary to the Chairman of the Board of Directors in ABest Department Store Supermarket.
Post-holding inshareholders’ units
√Applicable□Inapplicable
|||||||
|-|-|-|-|-|-|
|Name of the||||||
|person holding||||||
|||Position in|||Receives payment|
|any post in|Name of shareholders’ unit|shareholders’|Beginning date|Ending date of|from shareholders’|
||||of office term|office term||
|shareholders’||unit|||unit?|
|units||||||
||Shenzhen Shenghengchang HuiFu|||||
|||Chairman of||||
|Ding Lihong|Industrial Co., Ltd., Shenzhen Risheng||||No|
|||the Board||||
||Chuangyuan Asset Management Co., Ltd.|||||
|Chen Honghai|Shenzhen Shenghengchang HuiFu|Director|||No|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||
|-|
|Industrial Co., Ltd.|

Post-holding in other units
√Applicable□Inapplicable
|||||||
|-|-|-|-|-|-|
|Name of the||||||
|person holding||||||
||Name of other unit|Position in|Beginning date|Ending date of|Receives payment|
|any post in||other unit|of office term|office term|from other unit?|
|other units||||||
|||Chairman of||||
|Chen Xuewen|Shenzhen Missk Fashion Co., Ltd.||||Yes|
|||the Board||||
||Shenzhen Pinghai Certified Public|||||
|Liu Yong||Partner|||Yes|
||Accountants|||||
||Shenzhen China Energy Conservation and|Chairman of||||
|Su Jianlong|||||Yes|
||Environmental Protection Co., Ltd.|the Board||||
|||Vice||||
||Shantou Fengye Certified Public|||||
|||Chairman,||||
|Cai Shaohe|Accountants Co., Ltd., Guangdong Alpha||||Yes|
|||Independent||||
||Animation and Culture Co., Ltd.|||||
|||Director||||

III. Remuneration for directors, supervisors and senior management staffs
Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior management staffs
In accordance with the proposal on setting down remuneration of senior executives examined and passed at the 1st meeting of the
2nd
Board of Director for the year 2002, Proposal on Adjusting Allowance of Directors, Independent Director and Supervisors examined and passed at the annualShareholder’ General Meeting 2007 and Proposal on Remuneration Appraisal System of Directors, Supervisors and Senior Management Staffs examined and passed at the annualShareholder’ General Meeting 2012 directors and independent directors of the Company drew their annual allowance of RMB 50,000 (tax included) respectively from the Company; supervisors of the Company received the annual allowance of RMB 15,000 (tax included) respectively. The Company reimbursed the reasonable charges according to the actual situation which independent directors attended the meeting of the Board,shareholders’ general meeting or exercise their functions and powers in accordance with the relevant laws and regulations and Articles of Association.
Remuneration of the directors, supervisors and senior management staffs of the Company during the reporting
period
Unit: RMB Ten thousand Yuan
2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||||
|-|-|-|-|-|-|-|-|
||||||Total|Total||
||||||||Actual|
||||||remuneration|remuneration||
||||||||remuneration|
|Name|Position|Sex|Age|Tenure status|gained from the|gained from||
||||||||gained at the|
||||||Company|shareholder’s||
||||||||period-end|
||||||(Yuan)|unit (Yuan)||
|Chen|Chairman of|||||||
||||56|Current|237,200|0|237,200|
|||Male||||||
|Hongcheng|the Board|||||||
||Vice Chairman|||||||
||||43|Current|50,000|0|50,000|
|Ding Lihong||Male||||||
||of the Board|||||||
||||60|Current|50,000|0|50,000|
|Chen Honghai|Director|Male||||||
||||34|Current|50,000|0|50,000|
|Chen Xuewen|Director|Female||||||
||Independent|||||||
||||37|Current|50,000|0|50,000|
|Liu Yong||Male||||||
||Director|||||||
||Independent|||||||
||||50|Current|50,000|0|50,000|
|Su Jianlong||Male||||||
||Director|||||||
||Independent|||||||
||||53|Current|50,000|0|50,000|
|Cai Shaohe||Male||||||
||Director|||||||
||Chairman of|||||||
||||46|Current|15,000|0|15,000|
|Yan Mingfei|the Supervisory|Male||||||
||Committee|||||||
||||48|Current|126,360|0|126,360|
|Huang Yanfang|Supervisor|Female||||||
||||45|Current|107,424|0|107,424|
|Li Ning|Supervisor|Male||||||
||CFO,Vice|||||||
||||62|Current|94,800|0|94,800|
|Chen Jincai||Male||||||
||president|||||||
||Secretary of|||||||
||||37|Current|117,360|0|117,360|
|Xu Wei|the Board, Vice|Male||||||
||president|||||||
|Feng Zhuokui|Vice President|Female|44|Current|97,800|0|97,800|
|Total|--|--|--|--|1,095,944|0|1,095,944|

 IV. About employees
As at 31 Dec. 2013, the Company and its subsidiaries controlled by the Company had about 107 in-service staffs in total. Among them, 38production personnel, 12 salespersons, 24technicians, 15financial personnel and 18
administrative personnel; 4 persons with senior professional titles, and 9 persons with middle professional titles,
and 17 persons with preliminary professional titles. The Company did not bear expenses of retirees at present.
2013 Annual Report of Guangdong Rieys Group Company Ltd.Employees’ education backgrounds are listed as follows:
Employees’ Education Background
||
|-|
|Junior College Education|

Senior High School (Including Technical
Secondary School and Technical School)
Bachelor Degree
|||
|-|-|
||PrEomfepslosyieoen’sa Plr ocfaestseigonoarl iceastegories|
|PrEomfepslosyieoen’sa Plr ocfaestseigonoarl iceastegori|PrEomfepslosyieoen’sa Plr ocfaestseigonoarl iceastegori|

||
|-|
|Production staffProduction staffSales staffSales staffTechnical staffTechnical staffFinancial staffFinancial staffAdministrative staffAdministrative staff|

2013 Annual Report of Guangdong Rieys Group Company Ltd.VIII．Corporate Governance
I. Basic information of corporate governance
In the reporting period, the Company strictly in line with requirements of Company Law, Securities Laws and other relevant laws and regulations as well as requirement of a modern enterprise system, continued to perfected corporate governance structure, established and perfected internal management and control system, consistently dug in convene of corporate governance activities, so as to standardizing operation of the Company and promoting corporate governance level of the Company. During the reporting period, theCompany’s overall operation was standard and independent, and the information disclosure is standard, and the actuality of the corporate governance of the Company was in accordance with requirements of documentary files on corporate governance of listed companies issued by CSRC. In the reporting period, the Company strictly in line with requirements of Announcement on Conducting Norms Listed Company Related Transactions Special Activities, further perfected Related Transaction Management System, besides, in order to further standardize Remuneration System of the directors, supervisors and senior management staffs, the Company revised Remuneration Appraisal System of the Directors, Supervisors and Senior Management Staffs.
1. Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?
□ Yes√ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC. 2. Progress of corporate governance activities, promulgation and implementation of Registration System for Information Insiders
In order to perfect theCompany’s management system for inside information, do well the management work on the confidentiality of inside information and the registration of inside information, effectively prevent inside trading and other securities lawbreaking behaviors, and further protect the principle of fairness in information disclosure, the Company promulgated the Registration System for Information Insiders in accordance with the requirements of relevant laws and rules such as Company Law, Securities Law and Administrative Rules on Information Disclosure for Listed Companies and the Stock Listing Rules of Shenzhen Stock Exchange as well as by integrating the actuality of the Company. For details, please refer to the Announcement on Registration System for Information Insiders of Guangdong Rieys Group Company Ltd. published on http://www.cninfo.com.cn dated 3 Mar. 2010.
During the reporting period, the Company recorded the name list of information insiders before the disclosure of inside information and the time of insiders knowing the inside information truthfully and completely, then it timely reported relevant File of Information Insiders to CSRC and Shenzhen Stock Exchange.
During the reporting period, the Company made self-examination on particulars about information insiders trading theCompany’s stocks, and found no information insider manipulating insider information for trading theCompany’s shares before the Company disclosed significant and sensitive information that might affect its share price. And the Company received no investigation and punishment from regulatory authority as well as any problems to rectify.
II. Particulars about annualshareholders’ general meeting and specialshareholders’ general meeting held during the reporting period
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. Particulars about annualshareholders’ general meeting held during the reporting period
|||||||
|-|-|-|-|-|-|
|Session|Convening date|Name of proposal|Resolution|Disclosure date|Disclosure index|
|||1. Annual Work||||
|||Report of the Board||||
|||2012；2. Annual||||
|||Work Report of the||||
|||Supervisory Board||||
|||2012; 3. Annual||||
|||Financial Statement|||Announcement on|
|||Report 2012; 4.|||Resolutions Made at|
|||Annual Profit|||the 2012 Annual|
|||Distribution Plan|||Shareholders’|
|||2012; 5. Annual|||General Meeting of|
|||Report and Its|||Guangdong Rieys|
|2012 Annual||Abstract 2012; 6.|All the proposals are||Group Company|
|Shareholders’|22 Apr. 2013|Proposal on|approved at the|23 Apr. 2014|Ltd. (Announcement|
|General Meeting||Engaging the|session||No.: 2013-015) was|
|||Financial Audit Firm|||published on|
|||for 2012 and|||Securities Times ,|
|||Deciding the Audit|||Hong Kong Ta Kung|
|||Remuneration; 7.|||Pao and|
|||Proposal on|||http://www.cninfo.co|
|||Revising the Articles|||m.cn|
|||of Association.8.||||
|||Remuneration||||
|||Appraisal System of||||
|||the Directors,||||
|||Supervisors and||||
|||Senior Management||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||
|-|
|Staffs|

III. Performance of the Independent Directors during the Reporting Period
1. Particulars about the independent directors attending the board sessions and theshareholders’ general meetings
||||||||
|-|-|-|-|-|-|-|
|Particulars about the independent directors attending the board sessions|||||||
|||||||Failing to present|
||||Presence by||||
|Name of independent|Due presence|Presence in||Entrusted||in person for two|
||||telecommunicati||Absence (times)||
|directors|(times)|person (times)||presence (times)||consecutive|
||||on (times)||||
|||||||sessions or not|
||5|5|0|0|0|No|
|Liu Yong|||||||
||5|5|0|0|0|No|
|Su Jianlong|||||||
||5|5|0|0|0|No|
|Cai Shaohe|||||||
|Presence of independent directors in|||||||
|||1|||||
|shareholders’ general meeting (times)|||||||

2. Particulars about independent directors propose objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes√ No
The independent directorsdidn’t propose objection on relevant events during the reporting period.
IV. Performance of the Special Committees under the Board during the reporting period (I) Duty performance of the Audit Committee under the Board:
1. Examination and review of financial statements of the Company by the Audit Committee under the Board (1) The Audit Committee of the Board of Directors reviewed the Financial Statements compiled by the Company before theCPAs’ entry for the yearly audit of the Company, believing that, the statements was in line with the Accounting Standard for Business Enterprises published by the State, and truly reflected theCompany’s financial status, operating results and cash flows in 2012, so it was permitted that ASIA (Group) Accounting Firm carried out the annual audit for the year 2012 on the basis of the said statements.
(2) After the accounting firm had issued the preliminary audit opinion, the Audit Committee reviewed the related financial statements and believed that: the Financial Statements of the Company after the audit adjustment items were in compliance with the basic situation of the Company. The Audit Committee thus agreed to the preliminary
audit opinion issued for the 2012 Annual Financial Report.
(3) After the accounting firm had issued the 2012 Annual Audit Report for the Company, the Audit Committee
once again reviewed the Financial Report and agreed to the audit result issued by the accounting firm for the
2013 Annual Report of Guangdong Rieys Group Company Ltd.Company’s 2012 annual financial statements. And the Audit Committee also agreed to submit the said audit report to the Board of Directors for review.
2. The Audit Committee urged the accounting firm concerning the annual audit.
Before the entry of the CPAs, the Audit Committee, the Financial Department of the Company and the accounting firm discussed together to decide the schedule for the audit of theCompany’s 2012 Financial Report. After the entry of the CPAs, according to the said audit schedule determined through discussion with the accounting firm, the Audit Committee of the Board of Directors conducted face-to-face communication with accountants from the accounting firm and assigned specialized personnel to follow up the annual audit by telephone and e-mail, urging the accounting firm to submit the audit report within the time limit agreed upon.
3. Summary report on 2012 annual audit conducted by accounting firm
The Audit Committee under the Board of Directors were of the opinion that: ASIA (Group) Accounting Firm launched and accomplished theCompany’s 2012 annual audit in strict compliance with audit regulations and rules, with sufficient audit time, professional accountants and a strong sense of risk. The audit report issued thoroughly presented theCompany’s financial status, operating results and cash flows in the year 2012, with the audit conclusion factually reflecting the actual situation of the Company.
4. It was approved to reengage an audit agency for the year 2013.
The Audit Committee proposed to reengage ASIA (Group) Accounting Firm as the audit agency for theCompany’s 2013 annual audit.
(II) Summary of duty performance of Remuneration& Appraisal Committee
The Remuneration& Appraisal Committee under the Board of Directors believes that: Remuneration for theCompany’s directors, supervisors and senior executives in the year 2012 is determined according to relevant resolutions made by theShareholders’ General Meeting and rules of the Company, which is in compliance with the operation status of the Company in the year.
(III) Duty performance of Nomination Committee under the Board
Nominating Committee gave full play to their role as the independent review and advice when the Company appointed Ms. Feng Zhuokui as Vice President for the Company.
V. Performance of the Supervisory Committee
Whether the Supervisory Committee finds the Company existing risks or not in the supervisory activities during the reporting period?
□ Yes√ No
The Supervisory Committee has no objection on the supervised events during the reporting period
VI. Particulars about theCompany’s “five-separation” from the controlling shareholder in respect of business, personnel, assets, organization and financing
The Company totally kept separation from the controlling shareholder in respect of business, personnel, assets, organization and financing that it owned an independent and complete business as well as self-operation capability.
1. In respect of business, the Company owned an integrated business structure and independent operation, itdoesn’t depend on any shareholder or other party; besides, it exist no horizontal competition or any obviously unfair related-party transaction between the Company and its controlling shareholder, actual controller and other enterprises controlled by it, nor any event that the controlling shareholder directly or indirectly intervened the
2013 Annual Report of Guangdong Rieys Group Company Ltd. operation of the Company.
2. In respect of personnel, in terms of labor, personnel and salary management, the Company and the controlling shareholder were independent from each other. Such senior management staff as Chairman of the Board, General Manager, and Deputy General Managers all drew remuneration from the Company, and they did not take any post in the controlling shareholder and its subsidiaries.
3. In respect of assets, separated from the controlling shareholder, the Company owned independent production and operation site, integrated assets structure, independent production system, auxiliary production systems and ancillary facilities, land use right and ownership of house, etc., and independent procurement and sales system. Besides, it owned complete controlling right on all the assets, there was no illegal occupation of assets and funds by the controlling shareholder, actual controller or their controlling enterprises that did any harm to the interest of the Company.
4. In respect of organization, the Company has set up a perfect organization that was independent from the controlling shareholder or its functional departments.
5. In respect of financing, the Company owned independent financial department with independent accountants, established independent accounting system and financial management system, independently made the financial decision. Besides, it opened independent bank account and paid tax independently.
VII. Performance appraisal and incentive system for senior management staffs
During the reporting period, theCompany’s senior management staffs seriously performed their duties in strict accordance with the Company Law, Articles of Association and relevant laws and rules, actively implemented the resolutions made in theCompany’sshareholders’ general meeting and the board sessions, continued to strengthen the internal management under the correct direction of the Board of Directors, and well completed the tasks of the year. During the reporting period, the Company had established remuneration appraisal system of the Directors, Supervisors and Senior Management Staffs, further perfected theCompany’s system construction and promoted the continuous development of the Company.
2013 Annual Report of Guangdong Rieys Group Company Ltd. IX. Internal Control
I. Construction of internal control of the Company
The Company has set up a perfect internal control system in accordance with regulations of relevant laws and rules and relevant industrial standards as well as by integrating the actuality of the Company, moreover, it also conducted the control measures according to the system so as to ensure the legal operation and scientific decision-making of the Board of Directors, the Supervisory Committee and theShareholders’ General Meeting, with the details as follows:
1. The Company has set up perfect control structure and made the control procedures among various levels, so as to ensure the orders of the Board of Directors and senior management staffs to execute strictly. The Company clearly defined the target, duties and power of each department and position, and built corresponding authorization, inspection and progressively accountability system, so as to ensure performing relevant functions within the authorization range.
2. In accordance with the requirements of the Company Law, Accounting Law, Enterprise Accounting Standards and other relevant national tax laws as well as other supplementary regulations, the Company made suitable accounting system, accounting voucher, accounting book and the processing procedures for financial report, and implemented the accountability system for accountants, as well as built up a strict accounting control system. 3. The Company promulgated the Management System on External Investment, so as to clearly define the basic principle and decision-making procedures of external investment.
4. The Company promulgated the Management System on External Guarantee, making detailed stipulations on the guaranteed object, approval authority, decision-making procedure and safe measures, etc. for the external guarantee behaviors.
5. The Company promulgated the Management System on Related-party Transactions, clearly defining the recognition of related parties, the scope of related-party transactions and decision-making procedures as well as the execution and disclosure of related-party transactions, so as to regulate the trading behaviors with the related parties.
6. The Company promulgated the Internal Reporting System on Significant Information, Accountability System for Significant Mistakes in Annual Report Information Disclosure and Registration System for Information Insiders, clearly defining the basis principle, content, procedure and transfer, duty allocation, way and file management of information disclosure, and the range, confidential measures and accountability of information insiders.
7. The Company promulgated the Administration on Raised Funds, clearly defining the storage, approval on use, change in use and supervision of the raised funds
8. The Company built up the internal control on financial report on the basis of Enterprise Accounting Standards, Standard of Interior AccountingControl—Basic Standard (Trial) and other regulations.
9. The Company promulgated the Internal Audit System, making clear stipulations and requirements on the internal audit work of the Company. The Audit Department is directly under the Board of Directors, it, led by the Audit Committee under the Board, conducted the audit work according to annual audit work plan and implemented routine or special internal control examination. Besides, it timely found problems in the operating activities through internal audit, raised rectification advices, implemented rectification measures, so as to enhance the validity of internal control management and further prevent the operating risks and financial risks.
2013 Annual Report of Guangdong Rieys Group Company Ltd. II. Announcement from the Board to the responsibility of internal control
The Board of Directors of the Company has overall appraised the validity of the internal control of the Company, and believes that: the Company has set up a sound and perfect internal control management system, which is reasonable, complete and valid, as well as in line with relevant regulations and requirements of relevant laws and rules and the actuality of the Company. Besides, such system can meet the requirements of the management of the Company and the needs of the development of the Company, and provide reasonable guarantee on preparing real and fair financial statements, as well as guarantee the healthy operation of various business of the Company and the implementation of national laws& rules and the internal rules of the Company. Moreover, all the management systems on internal control have been executed effectively.
III. Basis on establishing the internal control for financial report
The internal control for financial report is decided according to the Company Law, Accounting Law, Enterprise Accounting Standards, Basic Rules for Enterprise Internal Control and relevant regulatory documents from the regulatory authorities. During the reporting period, the internal control on the financial report of the Company exist no significant deficit.
IV. Self-appraisal report on internal control
|||
|-|-|
|Particulars about significant deficits of internal control found during the reporting period in the self-appraisal report on internal||
|control||
|No significant deficits were found during the reporting period.||
|Disclosure date of the||
||26 Apr. 2014|
|Self-appraisal Report on Internal||
|Control||
|Disclosure index of the||
||Securities Times , Hong Kong Ta Kung Pao and http://www.cninfo.com.cn|
|Self-appraisal Report on Internal||
|Control||

V. Establishment and execution of rules of accountability for significant mistakes in annual report information disclosure
The Company has already formulated Rules of Accountability for Significant Mistakes in Annual Report Information Disclosure, relevant disclosure personnel strictly did well relevant work to avoid significant errors. In the reporting period, excepting the Announcement on Annual Report Correction disclosed on 5 Mar. 2013; there was not any amendment of significant accounting errors or complement of significant information omit, earnings preannouncement revising, etc..
2013 Annual Report of Guangdong Rieys Group Company Ltd. X. financial report
I.The audit report
|||
|-|-|
|The type of audit opinion|Standard unqualified audit opinion|
|The date of execution of the audit report|In 2014 04 months 24 days|
|The name of the auditing agency||
||Asia-Pacific (Group) CPAs (special general partnership)|
|The audit report|Ya-Kuai-A-Shen-Zi (2014) No. 009|
|CPA's name|Zhou han jun 、zhou tie hua|

IndependentAuditor’s Report
All shareholders of Guangdong Rieys Group Company Ltd.:
We have audited the accompanying consolidated financial statements of Guangdong Rieys Group Company Ltd. (the Company) and its subsidiaries, which comprise the consolidated and theCompany’s statement of financial position, the consolidated and theCompany’s statement of profit or loss and other comprehensive income, the consolidated and theCompany’s statement of cash flows, the consolidated and theCompany’s statement of changes in equity for the year ended 31 December 2013 and notes to the financial statements.
I.Management’s responsibility for the consolidated financial statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements. These responsibilities include: (1) giving a true and fair view in accordance with the Chinese Accounting Standards for Business Enterprises; and (2) for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
II.Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Chinese Standards on Auditing for Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
2013 Annual Report of Guangdong Rieys Group Company Ltd. opinion.
III. Audit opinion
In our opinion, the consolidated financial statements of the Company have been prepared according to the Chinese Accounting Standards for Business Enterprises in all material aspects, which give a true and fair view of the financial position of Guangdong Rieys Group Company Ltd. and its subsidiaries as at 31 December 2013 and of their financial performance and cash flows for the year then ended.
Consolidated Statement of Financial Position
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Ltd. Expressed in Renminbi Yuan
|||||
|-|-|-|-|
|Items|Note V|31.Dec.2013|31.Dec.2012|
|Current Assets:||||
|Monetary funds|(1)|56,330,640.22|21,555,492.79|
|Settlement reserves/provisions||||
|Deposit in banks and other financialinstitutions||||
|Financial assets at fair value throughprofit or loss||||
|Notes receivables||||
|Trade receivables|(2)|12,308,091.34|29,542,060.33|
|Prepayment|(4)|9,847,534.50|1,401,124.90|
|Premiums receivables||||
|Reinsurance premiums receivables||||
|Receivable reinsurance contract reserves||||
|Interest receivables||||
|Dividend receivables||||
|Other receivables|(3)|25,762,037.12|8,712,918.25|
|Financial assets purchased underagreements to resell||||
|Inventories|(5)|264,767,911.02|340,802,511.47|
|Non-current assets maturing within oneyear||||
|Other current assets||||
|Total current assets||369,016,214.20|402,014,107.74|
|Non-current assets:||||
|Entrusted loans and advances granted||||
|Available-for-sale financial assets||||
|Held-to-maturity investments||||
|Long-term trade receivables||||
|Long-term equity investments||||
|Investing properties||||
|Property, plant and equipment|(6)|83,747,681.91|87,845,171.59|
|Construction in progress||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Materials held for construction (7) 54,526.00 54,526.00
|||||
|-|-|-|-|
|Disposal of property, plant and equipment||||
|Production/Productive biological assets||||
|Oil-gas assets||||
|Intangible assets|(8)|27,046,989.09|27,720,177.33|
|R&D expenses||||
|Goodwill||||
|Long-term deferred expenses||241,200.00|434,160.00|
|Deferred tax assets|(9)|7,110,473.23|8,577,402.81|
|Other non-current assets||||
|Total non-current assets||118,200,870.23|124,631,437.73|
|Total assets||487,217,084.43|526,645,545.47|

 Consolidated Statement of Financial Position (Continued)
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Ltd. Expressed in Renmin
||||
|-|-|-|
|Items|Note V|31.Dec.2013|
|Current liabilities:|||
|Short-term brrowings|(11)||
|Borrowings from Central Bank|||
|Customer bank deposits and due to banks andother financial institutions|||
|Borrowings from banks and other financialinstitutions|||
|Financial liabilities at fair value throughprofit or loss|||
|Notes payables|||
|Trade payables|(12)|12,910,472.20|
|Advance payment|(13)|54,245,815.90|
|Financial assets sold for repurchase|||
|Handling charges and commissions payables|||
|Accrued payroll|(15)|570,074.38|
|Current tax liabilities|(16)|35,541,585.46|
|Interest payables|(17)||
|Dividend payables|||
|Other payables|(14)|17,148,584.83|
|Reinsurance premiums payables|||
|Insurance contract reserves|||
|Payables for acting trading of securities|||
|Payables for acting underwriting of securities|||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Long-term liabilities due within one year
||||
|-|-|-|
|Other current liabilities|||
|Total current liabilities||120,416,532.77|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payables|||
|Long-term payables|||
|Specific payables|||
|Estimated liabilities|||
|Deferred tax liabilities|||
|Other non-current liabilities|||
|Total non-current liabilities|||
|Total liabilities||120,416,532.77|
|Capital and reserves|||
|Share capital|(18)|318,600,000.00|
|Capital surplus|(10)|52,129,496.58|
|Less: Treasury stock|||
|Specific reserves|||
|Surplus reserves|(20)|86,036,260.20|
|General risk reserve|||
|Retained earnings|(21)|-94,265,581.12|
|Foreign exchange difference|||
|Total equity attributable to owners of theCompany||362,500,175.66|
|Non-controlling interests||4,300,376.00|
|Total equity||366,800,551.66|
|Total liabilities and owners’ (or shareholders')equity||487,217,084.43|

Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment：
Statement of Financial Position of the Company
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Ltd. Expressed in Renminbi Y
||||
|-|-|-|
|Items|Note XI|31.Dec.2013|
|Current Assets:|||
|Monetary funds||5,484,282.30|
|Financial assets at fair value through profit or loss|||
|Notes receivable|||
|Trade receivables|(1)||
|Prepayment|||
|Interest receivable|||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Dividend receivable
||||
|-|-|-|
|Other receivable|(2)|67,379,868.41|
|Inventories|||
|Non-current assets maturing within one year|||
|Other current assets|||
|Total current assets||72,864,150.71|
|Non-current assets:|||
|Available-for-sale financial assets|||
|Held-to-maturity investments|||
|Long-term trade receivable|||
|Long-term equity investment|(3)|243,312,509.68|
|Investing properties|||
|Property, plant and equipment||80,117,954.04|
|Construction in progress|||
|Materials held for construction||54,526.00|
|Disposal of property, plant and equipment|||
|Production/Productive biological assets|||
|Oil-gas assets|||
|Intangible assets||27,046,989.09|
|R&D expense|||
|Goodwill|||
|Long-term deferred expenses|||
|Deferred tax assets||2,503,495.16|
|Other non-current assets|||
|Total non-current assets||353,035,473.97|
|Total assets||425,899,624.68|

 Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment： Statement of Financial Position of the Company
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Ltd. Expressed in Renminbi Yuan
|||||
|-|-|-|-|
|Items|Note XI|31.Dec.2013|31.Dec.2012|
|Current liabilities:||||
|Short-term brrowings|||15,099,960.00|
|Financial liabilities at fair value through profit or loss||||
|Notes payables||||
|Trade payables||19,442.64|19,442.64|
|Advance payment||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Accrued payroll 209,326.67 159,511.60
||||
|-|-|-|
|Current tax liabilities|1,888,089.52|2,686,106.07|
|Interest payables||13,756,401.18|
|Dividend payables|||
|Other payables|197,551,742.96|186,273,159.74|
|Long-term liabilities due within one year|||
|Other current liabilities|||
|Total current liabilities|199,668,601.79|217,994,581.23|
|Non-current liabilities:|||
|Long-term borrowings|||
|Bonds payables|||
|Long-term payables|||
|Specific payables|||
|Estimated liabilities|||
|Deferred tax liabilities|||
|Other non-current liabilities|||
|Total non-current liabilities|||
|Total liabilities|199,668,601.79|217,994,581.23|
|Capital and reserves|||
|Share capital|318,600,000.00|318,600,000.00|
|Capital surplus|52,129,496.58|52,129,496.58|
|Less: Treasury stock|||
|Specific reserves|||
|Surplus reserves|86,036,260.20|86,036,260.20|
|General risk reserve|||
|Retained earnings|-230,534,733.89|-215,692,936.49|
|Total equity|226,231,022.89|241,072,820.29|
|Total liabilities and owners’ (or shareholders') equity|425,899,624.68|459,067,401.52|

 Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Ltd. Expressed in Renminbi Yuan
|||||
|-|-|-|-|
|Items|Note V|Year ended31.Dec.2013|Year ended 31.Dec.2012|
|I. Total operating revenue||148,458,757.00|300,982,925.62|
|Including: Revenue|(22)|148,458,757.00|300,982,925.62|
|Interest income||||
|Premium income||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Handling charge and commission income
|||||
|-|-|-|-|
|II. Total operating cost||131,490,665.96|295,977,846.76|
|Including: Cost of sales|(22)|95,639,924.51|226,849,638.27|
|Interest expenses||||
|Handling charge and commission expenses||||
|Surrenders||||
|Net claims paid||||
|Net amount withdrawn for the insurance contractreserve||||
|Expenditure on policy dividends||||
|Reinsurance premium||||
|Business Business taxes and associate charges|(23)|13,158,492.44|26,778,102.50|
|Distribution expenses||312,084.09|2,897,050.38|
|Administrative expenses||21,588,972.13|22,178,714.94|
|Finance costs|(24)|3,459,389.85|12,480,908.09|
|Asset impairment losses|(25)|-2,668,197.06|4,793,432.58|
|Add: Gain/(loss) from change in fair value (“-” for loss)||||
|Gain/(loss) from investment (“-” for loss)|(26)||5,093.38|
|Including: share of profits in associates and jointventures||||
|Foreign exchange gains (“-” for loss)||||
|III. Operating profit (“-” for loss)||16,968,091.04|5,010,172.24|
|Add: non-operating income|（27）|66,123.80|34,199,792.82|
|Less: non-operating expense|（28）|182,342.90|1,252,568.10|
|Including: loss from non-current asset disposal||||
|IV. Total profit (“-” for loss)||16,851,871.94|37,957,396.96|
|Less: Income tax expense|（29）|10,060,408.92|11,990,093.78|
|V. Net profit (“-” for loss)||6,791,463.02|25,967,303.18|

2013 Annual Report of Guangdong Rieys Group Company Ltd. 6,886,671.58
Attributable to owners of the Company
26,067,426.66
|||||
|-|-|-|-|
|Minority shareholders’ income||-95,208.56|-100,123.48|
|VI. Earnings per share|||-|
|(I) basic earnings per share|（30）|0.02|0.08|
|(II) diluted earnings per share|（30）|0.02|0.08|
|Ⅶ. Other comprehensive income||||
|Ⅷ. Total comprehensive incomes||6,791,463.02|25,967,303.18|
|Attributable to owners of the Company||6,886,671.58|26,067,426.66|
|Attributable to minority shareholders||-95,208.56|-100,123.48|

 Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment： The Company Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 Dec. 2013
Expressed in Renminbi Prepared by Guangdong Rieys Group Company Ltd. Yuan
|||||
|-|-|-|-|
|Items|Note XI|Year ended31.Dec.2013|Year ended 31.Dec.2012|
|Revenue|(4)||14,400.00|
|Less: Cost of sales|(4)|||
|Business taxes and associate charges|||806.40|
|Distribution expenses||||
|Administrative expenses||11,125,465.93|10,623,369.48|
|Finance costs||3,561,227.28|10,006,516.25|
|Asset impairment losses||146,638.62|303,985.48|
|Add:Gain/(loss) from change in fair value(“-”forloss)||||
|Investment income(“-”for loss)|(5)||5,093.38|
|Including:share of profits in associates andjointventures||||
|II. Operating profit (“-” for loss)||-14,833,331.83|-20,915,184.23|

2013 Annual Report of Guangdong Rieys Group Company Ltd. Add: Non-operating income 58,000.00 24,101,932.97
||||
|-|-|-|
|Less: Non-operating expense|103,125.23|1,068,150.00|
|Including: loss from non-current asset disposal|||
|III. Total profit (“-” for loss)|-14,878,457.06|2,118,598.74|
|Less: Income tax expense|-36,659.66|1,134,253.36|
|IV. Net profit (“-” for loss)|-14,841,797.40|984,345.38|
|V. Earnings per share|||
|(I) basic earnings per share|||
|(II) diluted earnings per share|||
|VI. Other comprehensive incomes|||
|VII. Total comprehensive incomes|-14,841,797.40|984,345.38|

 Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment： Consolidated Statement of Cash Flows
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group Company Expressed in Renminbi Ltd. Yuan
|||||
|-|-|-|-|
|Items|Note V|Year ended31.Dec.2013|Year ended 31.Dec.2012|
|I. Operating activities:||||
|Receipts from customers/Cash generated fromoperations||195,858,155.50|313,145,446.55|
|Net increase of deposits from customers and duesfrom banks||||
|Net increase of loans from the central bank||||
|Net increase of funds borrowed from otherfinancial institutions||||
|Cash received from premium of original insurancecontracts||||
|Net cash received from reinsurance business||||
|Net increase of deposits of policy holders andinvestment fund||||
|Net increase of disposal of tradable financialassets||||
|Cash received from interest, handling charges andcommissions||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. Net increase of borrowings from banks and other
financial institutions
|||||
|-|-|-|-|
|Net increase of funds in repurchase business||||
|Tax refunds received||36,687.67|7,900,000.00|
|Other cash received relating to operating activities|(31)1|119,313,961.48|114,111,264.06|
|Subtotal of cash inflows from operating activities||315,208,804.65|435,156,710.61|
|Payments to suppliers||53,782,047.88|199,917,910.09|
|Net increase of customer lendings and advances||||
|Net increase of funds deposited in the central bankand amount due from banks||||
|Cash for paying claims of the original insurancecontracts||||
|Cash for paying interest, handling charges andcommissions||||
|Cash for paying policy dividends||||
|Payments to employees||6,507,220.03|4,931,065.64|
|Income taxes paid||31,572,428.74|1,796,824.60|
|Other cash payment relating to operating activities|(31)2|158,022,000.67|174,430,858.19|
|Subtotal of cash outflows from operating activities||249,883,697.32|381,076,658.52|
|Net cash generated by operating activities||65,325,107.33|54,080,052.09|
|II. Investing activities:||||
|Proceeds from disposal of investment property|||17,673.38|
|Proceeds from return on investments||||
|Net cash received from disposal of property, plantand equipment, intangible assets and other long-termassets||340,000.00||
|Net cash inflow on disposal of subsidiary/ andassociate||||
|Other cash flows from investing activities||||
|Subtotal of cash inflows from investingactivities||340,000.00|17,673.38|
|Payment for property,plant and equipment,intangible assets and other long-term assets||177,762.71|542,044.28|

2013 Annual Report of Guangdong Rieys Group Company Ltd. Payment for investment/property
-
|||||
|-|-|-|-|
|Net increase of pledged loans|||-|
|Net cash paid to acquire subsidiaries and otherbusiness units|||-|
|Other cash payments relating to investingactivities|||-|
|Subtotal of cash outflows from investing activities||177,762.71|542,044.28|
|Net cash =generated by investing activities||162,237.29|-524,370.90|
|III. Financing Activities:||||
|Cash received from capital contributions|||-|
|Including: Cash received from minorityshareholder investments by subsidiaries||||
|Proceeds from loans and borrowings||||
|Cash received from issuance of bonds||||
|Other cash received relating to financingactivities|(31)3||25,000,000.00|
|Subtotal of cash inflows from financing activities||-|25,000,000.00|
|Repayment of loans and borrowings||15,099,960.00|58,600,000.00|
|Dividends and interest paid||15,609,456.05||
|Including: dividends or profit paid bysubsidiaries to minority shareholders||||
|Other cash payments relating to financingactivities||||
|Sub-total of cash outflows from financing activities||30,709,416.05|58,600,000.00|
|Net cash used in financing activities||-30,709,416.05|-33,600,000.00|
|IV. Effects of exchange rate changes on balance ofcash held in foreign currencies||-2,781.14|-938.03|
|V. Net increase in cash and cash equivalents||34,775,147.43|19,954,743.16|
|Add: Cash and cash equivalents at thebeginning of the year||21,555,492.79|1,600,749.63|
|VI. Cash and cash equivalents at the end of the year||56,330,640.22|21,555,492.79|

2013 Annual Report of Guangdong Rieys Group Company Ltd. Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment： Statement of Cash Flows of the Company
for the year ended 31 Dec. 2013
Prepared by Guangdong Rieys Group
Company Ltd. Expressed in Renminbi Yuan
|||||
|-|-|-|-|
|Items|Notes|Year ended 31.Dec.2013|Year ended 31.Dec.2012|
|I. Cash flows fromoperating activities:||||
|Cash received fromsale of commoditiesand rendering ofservice||1,276,000.00|14,400.00|
|Tax refunds received||||
|Other cash receivedrelating to operatingactivities||245,217,542.65|150,086,185.79|
|Subtotal of cashinflows from operatingactivities||246,493,542.65|150,100,585.79|
|Cash paid for goodsand services||||
|Cash paid to and foremployees||2,466,764.39|747,447.23|
|Taxes paid||1,778,251.66|863,120.48|
|Other cash paymentrelating to operatingactivities||213,675,139.06|123,609,102.33|
|Subtotal of cashoutflows fromoperating activities||217,920,155.11|125,219,670.04|
|Net cash flows fromoperating activities||28,573,387.54|24,880,915.75|
|II. Cash flows frominvesting activities:||||
|Cash received fromdisposal of investments|||17,673.38|
|Cash received fromreturn on investments||||
|Net cash receivedfrom disposal ofproperty, plant andequipment, intangible||||

2013 Annual Report of Guangdong Rieys Group Company Ltd. assets and other
long-term assets
||||
|-|-|-|
|Net cash receivedfrom disposal ofsubsidiaries or otherbusiness units|||
|Other cashreceived relating toinvesting activities|||
|Subtotal of cashinflows from investingactivities||17,673.38|
|Cash paid to acquireproperty, plant andequipment, intangibleassets and otherlong-term assets|8,500.00|8,700.00|
|Cash paid forinvestment|1.00||
|Net cash paid toacquire subsidiariesand other businessunits|||
|Other cash paymentsrelating to investingactivities|||
|Subtotal of cashoutflows frominvesting activities|8,501.00|8,700.00|
|Net cash flows frominvesting activities|-8,501.00|8,973.38|
|III. Cash Flows fromFinancing Activities:|||
|Cash received fromcapital contributions|||
|Cash received fromborrowings|||
|Other cash receivedrelating to financingactivities||25,000,000.00|
|Subtotal of cashinflows from financingactivities||25,000,000.00|
|Repayment of|15,099,960.00|43,600,000.00|

2013 Annual Report of Guangdong Rieys Group Company Ltd. borrowings
||||
|-|-|-|
|Cash paid forinterest expenses anddistribution ofdividends or profit|15,609,456.05||
|Other cashpayments relating tofinancing activities|||
|Sub-total of cashoutflows fromfinancing activities|30,709,416.05|43,600,000.00|
|Net cash flows fromfinancing activities|-30,709,416.05|-18,600,000.00|
|IV. Effect of foreignexchange rate changeson cash and cashequivalents|||
|V. Net increase in cashand cash equivalents|-2,144,529.51|6,289,889.13|
|Add: Cash andcash equivalents atyear-begin|7,628,811.81|1,338,922.68|
|VI. Cash and cashequivalents at the endof the year|5,484,282.30|7,628,811.81|

Legalrepresentative： Chief of the accountingwork： Chief of the accountingdepartment：
2013 Annual Report of Guangdong Rieys Group Company Ltd. Statement of Changes in Equity of the Company (Continued)
Prepared by Guangdong Rieys Group Expressed in for the year ended 31 Dec. 2012
Company Ltd. Renminbi Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Items|for the year ended 31 Dec. 2012||||||||
||Share capital|Capital surplus|Less:treasurystock|Specificreserve|Surplusreserve|Generalriskreserve|Retainedearnings|Total equity|
|I. Balance at the end of the previous year|318,600,000.00|52,129,496.58|||86,036,260.20||-216,677,281.87|240,088,474.91|
|Add: 1. Change of accountingpolicy||||||||0.00|
|2. Correction of errors in previousperiods||||||||0.00|
|3. Other||||||||0.00|
|II. Balance at the beginning of the year|318,600,000.00|52,129,496.58|||86,036,260.20||-216,677,281.87|240,088,474.91|
|III. Increase of amount in the year (“-”means decrease)|||||||984,345.38|984,345.38|
|(I) Net profit|||||||984,345.38|984,345.38|
|(II) Other comprehensive incomes netof income tax|||||||||
|Subtotal of (I) and (II)|||||||984,345.38|984,345.38|
|(III) Capital paid in and reduced byowners|||||||||
|1. Capital paid in by owners|||||||||
|2. Recognition of share-basedpayments|||||||||
|3. Others|||||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|(IV) Profit distribution||||||
|1. Appropriations to surplus reserves||||||
|2. Appropriations to general riskprovisions||||||
|3. Dividends||||||
|4. Other||||||
|(V) Internal carry-forward of owners’equity||||||
|1. Increase of share capitaltransferred from capital surplus||||||
|2. Increase of share capitaltransferred from surplus reserves||||||
|3. Surplus reserves for making uplosses||||||
|4. Other||||||
|(Ⅵ) Specific reserve||||||
|1. Withdrawn for the period||||||
|2. Used in the period||||||
|IV. Closing balance|318,600,000.00|52,129,496.58|86,036,260.20|-215,692,936.49|241,072,820.29|

Legalrepresentative： Chief of the accountingwork：
Chief of the accountingdepartment：
Statement of Changes in Equity of the Company (Continued)
Prepared by Guangdong Rieys Group Expressed in Renminbi for the year ended 31 Dec. 2012
Company Ltd. Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Items|for the year ended 31 Dec. 2012||||||||
||Share capital|Capitalsurplus|Less:treasurystock|Specificreserve|Surplusreserve|Generalriskreserve|Retainedearnings|Total equity|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|I. Balance at the end of the previous year|318,600,000.00|52,129,496.58|86,036,260.20|-216,677,281.87||
|Add: 1. Change of accountingpolicy|||||0.00|
|2. Correction of errors in previousperiods|||||0.00|
|3. Other|||||0.00|
|II. Balance at the beginning of the year|318,600,000.00|52,129,496.58|86,036,260.20|-216,677,281.87|240,088,474.91|
|III. Increase of amount in the year (“-”means decrease)||||984,345.38|984,345.38|
|(I) Net profit||||984,345.38|984,345.38|
|(II) Other comprehensive incomes net ofincome tax||||||
|Subtotal of (I) and (II)||||984,345.38|984,345.38|
|(III) Capital paid in and reduced byowners||||||
|1. Capital paid in by owners||||||
|2. Recognition of share-basedpayments||||||
|3. Others||||||
|(IV) Profit distribution||||||
|1. Appropriations to surplus reserves||||||
|2. Appropriations to general riskprovisions||||||
|3. Dividends||||||
|4. Other||||||
|(V) Internal carry-forward of owners’equity||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|1. Increase of share capital transferredfrom capital surplus||||||
|2. Increase of share capital transferredfrom surplus reserves||||||
|3. Surplus reserves for making uplosses||||||
|4. Other||||||
|(Ⅵ) Specific reserve||||||
|1. Withdrawn for the period||||||
|2. Used in the period||||||
|IV. Closing balance|318,600,000.00|52,129,496.58|86,036,260.20|-215,692,936.49|241,072,820.29|

Legalrepresentative： Chief of the accountingwork：
Chief of the accountingdepartment：
Consolidated Statement of Changes in Equity (Continued)
Prepared by Guangdong Rieys Group Expressed in for the year ended 31 Dec. 2012
Company Ltd. Renminbi Yuan
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Items|for the year ended 31 Dec. 2012|||||||||
||Equity attributable to owners of the Company|||||||Non-controlling interests|Total equity|
||Sharecapital|Capitalsurplus|Less:treasurystock|Specificreserve|Surplusreserve|Generalrisk reserve|Retainedearnings|||
|I. Balance at the end of the previous year|318,600,000.00|52,129,496.58|||86,036,260.20||-127,219,679.36|4,495,708.04|334,041,785.46|
|Add: 1. Change of accountingpolicy||||||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||||
|-|-|-|-|-|-|-|
|3. Other|||||||
|II. Balance at the beginning of the year|318,600,000.00|52,129,496.58|86,036,260.20|-127,219,679.36|4,495,708.04|334,041,785.46|
|III. Increase of amount in the year (“-”means decrease)||||26,067,426.66|-100,123.48|25,967,303.18|
|(I) Net profit||||26,067,426.66|-100,123.48|25,967,303.18|
|(II) Other comprehensive incomes net ofincome tax|||||||
|Subtotal of (I) and (II)||||26,067,426.66|-100,123.48|25,967,303.18|
|(III) Capital paid in and reduced byowners|||||||
|1. Capital paid in by owners|||||||
|2. Recognition of share-based payments|||||||
|3. Others|||||||
|(IV) Profit distribution|||||||
|1. Appropriations to surplus reserves|||||||
|2. Appropriations to general riskprovisions|||||||
|3. Dividends|||||||
|4. Other|||||||
|(V) Internal carry-forward of owners’equity|||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
||||||||
|-|-|-|-|-|-|-|
|2. Increase of share capital transferredfrom surplus reserves|||||||
|3. Surplus reserves for making uplosses|||||||
|4. Other|||||||
|(Ⅵ) Specific reserve|||||||
|1. Withdrawn for the period|||||||
|2. Used in the period|||||||
|IV. Closing balance|318,600,000.00|52,129,496.58|86,036,260.20|-101,152,252.70|4,395,584.56|360,009,088.64|

Legalrepresentative： Chief of the accountingwork：
Chief of the accountingdepartment：
Statement of Changes in Equity of the Company
Prepared by Guangdong Rieys Group Expressed in Company Ltd. for the year ended 31 Dec. 2013 Renminbi Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Items|for the year ended 31 Dec. 2013||||||||
||Share capital|Capital surplus|Less: treasurystock|Specific reserve|Surplusreserve|Generalriskreserve|Retainedearnings|Total equity|
|I. Balance at the end of the previous year|318,600,000.00|52,129,496.58|||86,036,260.20||-215,692,936.49|241,072,820.29|
|Add: 1. Change of accountingpolicy|||||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|3. Other||||||
|II. Balance at the beginning of the year|318,600,000.00|52,129,496.58|86,036,260.20|-215,692,936.49|241,072,820.29|
|III. Increase of amount in the year (“-”means decrease)||||-14,841,797.40|-14,841,797.40|
|(I) Net profit||||-14,841,797.40|-14,841,797.40|
|(II) Other comprehensive incomes net ofincome tax||||||
|Subtotal of (I) and (II)||||-14,841,797.40|-14,841,797.40|
|(III) Capital paid in and reduced byowners||||||
|1. Capital paid in by owners||||||
|2. Recognition of share-basedpayments||||||
|3. Others||||||
|(IV) Profit distribution||||||
|1. Appropriations to surplus reserves||||||
|2. Appropriations to general riskprovisions||||||
|3. Dividends||||||
|4. Other||||||
|(V) Internal carry-forward of owners’equity||||||
|1. Increase of share capital transferredfrom capital surplus||||||

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|3. Surplus reserves for making uplosses||||||
|4. Other||||||
|(Ⅵ) Specific reserve||||||
|1. Withdrawn for the period||||||
|2. Used in the period||||||
|IV. Closing balance|318,600,000.00|52,129,496.58|86,036,260.20|-230,534,733.89|226,231,022.89|

Legalrepresentative： Chief of the accountingwork：
Chief of the accountingdepartment：
Statement of Changes in Equity of the Company (Continued)
Prepared by Guangdong Rieys Group Expressed in Renminbi for the year ended 31 Dec. 2012
Company Ltd. Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
|Items|for the year ended 31 Dec. 2012||||||||
||Share capital|Capitalsurplus|Less:treasurystock|Specificreserve|Surplusreserve|General riskreserve|Retainedearnings|Total equity|
|I. Balance at the end of the previous year|318,600,000.00|52,129,496.58|||86,036,260.20||-216,677,281.87|240,088,474.91|
|Add: 1. Change of accounting policy||||||||0.00|
|2. Correction of errors in previous periods||||||||0.00|
|3. Other||||||||0.00|
|II. Balance at the beginning of the year|318,600,000.00|52,129,496.58|||86,036,260.20||-216,677,281.87|240,088,474.91|
|III. Increase of amount in the year (“-” meansdecrease)|||||||984,345.38|984,345.38|

2013 Annual Report of Guangdong Rieys Group Company Ltd.
|||||||
|-|-|-|-|-|-|
|||||984,345.38||
|(II) Other comprehensive incomes net of incometax||||||
|Subtotal of (I) and (II)||||984,345.38|984,345.38|
|(III) Capital paid in and reduced by owners||||||
|1. Capital paid in by owners||||||
|2. Recognition of share-based payments||||||
|3. Others||||||
|(IV) Profit distribution||||||
|1. Appropriations to surplus reserves||||||
|2. Appropriations to general risk provisions||||||
|3. Dividends||||||
|4. Other||||||
|(V) Internal carry-forward of owners’ equity||||||
|1. Increase of share capital transferred fromcapital surplus||||||
|2. Increase of share capital transferred fromsurplus reserves||||||
|3. Surplus reserves for making up losses||||||
|4. Other||||||
|(Ⅵ) Specific reserve||||||
|1. Withdrawn for the period||||||
|2. Used in the period||||||
|IV. Closing balance|318,600,000.00|52,129,496.58|86,036,260.20|-215,692,936.49|241,072,820.29|

Legalrepresentative： Chief of the accountingwork：
Chief of the accountingdepartment：
2013 Annual Report of Guangdong Rieys Group Company Ltd. I. Reporting entity
Guangdong Rieys Group Company Ltd. (hereinafter referred to as “the Company”) is a listed company promoted by five enterprises including Puning Haicheng Industrial Co., Ltd (which changed its name to Shenzhen Shenghengchang Industrial Co., Ltd when it relocated to Shenzhen, and then its name changed to Guangzhou Shenghengchang Investment Co., Ltd in 2007, in 2008 this company was renamed to Guangzhou Shenghengchang Trade Development Co., Ltd, on 28 Jan.2010 this company was renamed to Puning Shenghengchang Trade Development Co., Ltd., on 26 Jul. 2013, this company changed its name as Shenzhen Shenghengchang Huifu Industrial Co., Ltd. because of relocation), an original Sino-foreign cooperated enterprise of Hongxing Company. Under the approval of Guangdong Economic System Reform Committee (1997) No. 113 on 17 Nov.1997 after joint stock system restructure based on Puning Hongxing Textile and Apparel Production Factory Co., Ltd., which originally was a Sino-foreign joint venture. The registered capital of the Company is 80,000,000 when established, which was divided into 80,000,000 shares of RMB1.00 each.
In March 1999, with the approval of theShareholders’ General Meeting, the Company declared a Bonus Issue of 3.5 shares per 10 shares based on the total number of shares accrued in the register as at 31 Dec.1998 (80 million shares), making the registered capital increased to 108,000,000 shares.
The Company issued 60,000,000 shares of foreign invested stock domestically listed (“Stock B”) for foreign investors on 17 Oct.2000, and issued 9,000,000 shares of Stock B for exercise of over-allotment options during the period from 27 Oct.2000 to 22 Nov.2000 in accordance with approval of ZJFXZ (2000) No. 133 issued by China Securities Regulatory Commission on 29 Sep.2000. The registered capital of the Company increased to RMB 177,000,000 after issuance of Stock B, which was divided into 177,000,000 shares of RMB1.00 each. The registered capital of the Company increased to 318,600,000 after years of bonus distribution and transfer increase in paid-in capital, which was divided into 318,600,000 shares of RMB1.00 each.
As at 31 Dec. 2013, theCompany’s total share capital was 318,600,000 shares, including 164,025,000 non-tradable corporate shares (representing51.48% of total shares and 154,575,000 domestic listed foreign shares (stock B) (representing48.52% of total shares).
The Company and its subsidiaries (hereinafter referred to as “theGroup”)’s main scopes of business are manufacture, process and sales of various kinds of clothes including suit, fashion clothing, uniform, and knit
2013 Annual Report of Guangdong Rieys Group Company Ltd. goods, sales of industrial material for production, hardware, chemical product, daily necessities, furniture, arts and crafts and agricultural product and etc. (excluding commodities for exclusive sales, special control or monopolization), real estate development and various kinds of investment.
II. Significant accounting policies
1 Basis for the preparation
The Company carried out recognition and measurement and prepared the financial statements on the basis of the going-concern assumption, according to transactions and events that actually occurred, and in accordance with the requirements of "Accounting Standards for Business Enterprises - Basic Standards" and other accounting standards.
2 Statement of compliance
The financial statements prepared by the Company meet the requirements of "Accounting Standards for Business Enterprises - Basic Standards" issued by the Ministry of Finance of P.R. China on 15 Feb.2006 and 38 special accounting standards, as well as application guidance of the accounting standards for business enterprise, interpretation of the accounting standards for business enterprise and other relevant regulations (hereafter referred as “Accounting Standard for Business Enterprise”), and truly and fairly reflect the financial conditions, operation results and cash flows of the Company.
In addition, the Group's financial statements also comply with the disclosure requirements on financial statements and notes thereof in “Compilation Rules for Information Disclosures by Companies That Offer Securities to the Public No.15 - General Rules for Financial Reports” (hereinafter referred to as "the No. 15 ") amended by China Securities Regulatory Commission (hereinafter referred to as "SFC") in 2010.
3 Fiscal year
The fiscal year of the Company is the solar calendar year, which is from January 1 to December 31.
4 Presentation currency
The presentation currency of the Company is RMB.
5 Accounting treatment for business combinations under identical control and not under
identical control
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. Business combination under identical control
Business combination under identical control refers to that parties involved in the merger are subject to the ultimate control of the same party or same multi parties before& after the merger and such control is not temporary.
Assets and liabilities acquired by merging parties in a business combination are measured at the book value of the combined parties at the merge date. Upon any difference between book value of net assets obtained by merging parties and book value the merging price they pay (or the aggregate nominal amount of issued shares), it should adjust the capital reserve (share premium), and if capital reserve (share premium)isn’t sufficient to dilute, then adjust retained earnings. Merger date refers the date that the merging parties actually gain the control of the combined parties.
2. Business combination not under identical control
Business combination not under identical control refers to that parties involved in the merger are not subject to the ultimate control of the same party or same multi parties before& after the merger.
Costs of the combination paid by the purchasers are the sum of assets paid to obtain the control of the combined parties, liabilities incurred or assumed, the fair value of equity securities issued at the purchase date, and various direct costs occurred in the business combination. The difference between the fair value of its assets paid and the book value thereof is accrued to current profit or loss. Purchase date refers to the date that the purchasers actually gain the control of the purchased parties.
The purchasers allocate the costs of combination on the purchase date, and confirm the fair values of identifiable assets, liabilities and contingent liabilities of the purchased parties they obtain. The difference that costs of combination exceed the fair value of identifiable assets of the purchased parties obtained in the merger will be recognized as goodwill; the difference that costs of combination are less than the fair value of identifiable assets of the purchased parties obtained in the merger will be accrued in current profit or loss. 6 Preparation of the consolidated financial statements
The combined scope of consolidated financial statements includes the Company and its subsidiaries.Subsidiary’s operating results and financial position are included in the consolidated financial statements from the controlled date until the end date.
As for subsidiary obtained by the Company through business combination under identical control, in the
2013 Annual Report of Guangdong Rieys Group Company Ltd. preparation of current consolidated financial statements, it will be deemed that the combined subsidiary is incorporated into the consolidation scope when the ultimate controlling party of the Company implements the control right, and the beginning balance of consolidated financial statements and comparative statements will be adjusted accordantly.
As for subsidiary obtained by the Company through business combination not under identical control, in the preparation of current consolidated financial statements, the financial statements of such subsidiary will be adjusted based on the fair value of the identifiable assets and liabilities determined at the purchase date, and since the purchase date, the consolidated subsidiary will be incorporated into the consolidation scope. If the accounting period or accounting policy adopted by subsidiary and parent company are not consistent, a necessary adjustment shall be made to the financial statements of subsidiary in accordance with the accounting period or accounting policy of parent company when the consolidated financial statements are prepared. All major transactions, balances and unrealized profit or loss among enterprises within the consolidation scope will be offset in the preparation of consolidated financial statements.
Interests and income attributable to minority shareholders of subsidiary will be listed separately respectively under theShareholders’ Equity in the Consolidated Statement of financial position and under the Net Profit in the Consolidated Income Statement.
If the losses attributable to the non-controlling interests exceed the share of minority shareholders enjoyed in the ownership interest of the subsidiary, in addition to the part that the minority shareholders have the obligation and the ability to take, the balance will offset against theshareholders’ equity of parent company. If the subsidiary makes a profit subsequently, before making up the loss attributed to relevant minority shareholders beard byshareholders’ equity of parent company, all the profits are attributable toshareholders’ equity of parent company.
7 Standard for cash and cash equivalent
In preparing the statement of cash flows, the cash equivalents of the Company include the investments with short period (it usually expires within three months from the purchase date), characteristics of high liquidity, being readily convertible to a known amount of cash and being subject to an insignificant risk of changes in value.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 8 Transactions of foreign currencies and conversion of financial statements in foreign
currencies
1. Foreign currency transactions are converted into RMB for recording purpose at the exchange rate on the first day of the period when the transaction occurs.
Adjustments are made to foreign currency accounts in accordance with the exchange rate prevailing on the reporting date. Value of non-currency item accrued at fair value by foreign currency is adjusted in accordance with the exchange rate prevailing on fair value confirm date. Conversion differences arising from those specific borrowings are to be capitalized as part of the cost of the construction in progress in the period before the PPE being acquired and constructed has not yet reached working condition for its intended use. Conversion differences arising from other accounts are charged to finance costs.
2. In statement of financial position, assets and liabilities items are converted into RMB at the exchange rate prevailing on the consolidated statement of financial position date.Owner’s equity items (excluding undistributed profit item) are converted into RMB at the exchange rate when the transaction occurs. In statement of profit or loss and other comprehensive income, revenue and expenses items are accrued by the proper method and the approximate rate when the transaction occurs. Translation difference occurred for above reason is disclosed in the consolidated statement of financial position as a separate item.
9 Financial instruments
1. Classification of financial instruments
Based on the purposes of obtaining the financial assets and assuming the liabilities, theCompany’s management classifies the financial instruments into: the financial assets or financial liabilities that are calculated in the fair values and whose changes are accrued to current profit or loss, including financial assets and liabilities directly designated to be calculated in the fair values and whose changes are accrued to current profit or loss; the held-to-maturity investments; loans and receivables; available-for-sale financial assets; and other financial liabilities, etc.
2. Confirmation basis and measurement of financial instruments
(1) The financial assets (or financial liabilities) that are calculated in the fair values and whose changes are accrued to current profit or loss
The fair values (excluding cash dividends that have been declared but have not been distributed and bond
interests that have exceeded the expiry dates but have not been drawn) are deemed as the initial confirmation
2013 Annual Report of Guangdong Rieys Group Company Ltd. amount on acquisition. Relevant transaction expenses are charged to profit or loss of the period.
The interests or cash dividends obtained during the holding period are recognized as investment income. Change of fair values is charged to profit or loss of the period at the year end.
Difference between the fair value and initial book value is recognized as investment income upon disposal. Adjustment is made to gain or loss from changes in fair values.
(2) Held-to-maturity investments
The sum of fair values (excluding bond interests that have exceeded the expiry dates and have not been drawn) and relevant transaction expenses are deemed as the initial confirmation amount.
During the holding period, interest income is recognized as investment income based on the amortized cost and actual interest rate (if the difference between the actual interest rate and the nominal interest rate is tiny, calculation is based on the nominal interest rate). The actual interest rates are determined upon acquisition and remain unchanged during the expected holding period or a shorter period applicable.
Difference between the amount received and book value of the investment is charged to profit or loss of the period upon disposal.
If the Company sells or re-classifies a significant proportion of held-to-maturity investments prior to maturity (large amount refers to the total amount relative to such investments prior to the sale or re-classification), then the Company will re-classify the rest of such type of investment as available-for-sale financial assets, and the Company will not re-classify any financial assets as held-to-maturity in the current accounting period or following two fiscal years, excluding: the sale date or re-classification date is near to the maturity or redemption date of such investment (such as three months before maturity), and the market interest rate changes have no significant effect on the fair value of the investment; all the initial principal of such investment is nearly recovered according to the periodic payments or early repayment under the contract, resell or re-classify the remaining; sale or re-classification is caused by independent matters the Companycan’t control, not expected to recur and difficult to predict reasonably.
(3) Receivables and loans
Receivables primarily are the amount receivable formed from sales of goods or service provision of the Company and other claims, which initial recognition amount will be confirmed according to the contract or agreement price receivable from the purchasers. For recovery or disposal of loans and receivables, the difference between the price obtained and the book value of loans and receivables is charged to current profit
2013 Annual Report of Guangdong Rieys Group Company Ltd. or loss.
Loans are mainly loans issued by financial companies. For loans issued by financial institutions according to the current market conditions, the initial recognition amount will be confirmed according to the principal of loans issued and related transaction expenses. Interest income recognized during the holding period of the loan will be calculated at the actual rate. Real interest rate will be determined upon obtaining loans, and will be unchanged within the expected duration of the loan or applicable shorter period. If the difference between real interest rate and the contract interest rate is small, then the income will be calculated at the contract interest rate.
(4) Available-for-sale financial assets
The sum of fair values (excluding cash dividends that have been declared but have not been distributed and bond interests that have exceeded the expiry dates but have not been drawn) and relevant transaction expenses is deemed as the initial confirmation amount.
The interests and cash dividends generated during the holding period are accrued to investment income. At year end, available-for-sale financial assets are calculated in the fair values and the changes in fair values are accrued to the capital reserves (other capital reserves).
Difference between the amount received and the book value of the financial assets is recognized as investment gain or loss upon disposal. At the same time, the accumulated changes in fair value previously recognized in theowners’ equity are transferred into investment gain or loss.
(5) Other financial liabilities
The sum of fair values and relevant transaction expenses is deemed as the initial confirmation amount. The subsequent calculation adopts the amortized cost method. Method for determining fair value: directly refer to quotations in active markets (or using valuation techniques, etc.).(For using valuation techniques, it should disclose relevant valuation assumptions in accordance with various types of financial assets or financial liabilities, including prepayment rates, expected credit loss rate, interest rate or discount rate.)
3. Confirmation and measurement of transform of financial assets
The Company should terminate recognizing these financial assets when the transform occurs and almost all risk and return of the financial assets ownership have been transferred to the transferee; The Company should not terminate recognizing this financial assets if almost all risk and return of the financial assets ownership have been remained.
2013 Annual Report of Guangdong Rieys Group Company Ltd. Essence is more important than form when judging whether the transform meets the requirements of the financial assets termination recognition conditions mentioned above. The Company divides the transform of financial assets into entire transfer and partial transfer.
(1) If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following two items shall be recorded in current profit or loss:
①The book value of the transferred financial asset;
②The sum of consideration received from the transfer, and the accumulative amount of the changes in the fair values originally recorded in theowners’ equities (in the case that the financial asset involved in the transfer is an available-for-sale financial asset).
(2) For partial transfers of financial assets that meet the recognition conditions of termination in recognition, the book value of the whole financial assets are spitted into the derecognized portion and the ex-derecognized portion according to their respective relative fair values (under this situation, the retained service assets are deemed as a part of the exterminated financial assets), and the difference between the following two items shall be recorded in the current profit or loss:
①Book value of the derecognized portion;
②The sum of the consideration of the derecognized portion and the accumulated changes in fair value previously recognized in theowners’ equity related to the derecognized portion (in the case that the assets transferred are available-for-sale financial assets).
For transfers of financial assets that do not meet the conditions of termination in recognition, the financial assets remain recognition and the consideration received is recognized as financial liabilities.
(3) Derecognized financial liabilities
If the existing obligations of financial liabilities have been discharged in whole or in part, then the Company will derecognize such financial liability or part thereof.
If all or part of the financial liabilities is derecognized, the difference between the book value of the derecognized financial liabilities and payment will be charged into current profit or loss.
4. Confirmation of fair values of financial assets and financial liabilities
For financial assets or financial liabilities measured at fair value by the Company, the Company will use all or
2013 Annual Report of Guangdong Rieys Group Company Ltd. part of the quotations in the market (or use valuation techniques) as their fair values.
(1) Impairment of available-for-sale financial assets:
If at the year end the fair values of the available-for-sale financial assets decline significantly, or the trend of the decline is expected to be non-temporary after consideration of all relevant factors, the assets are deemed impaired and impairment loss is recognized together with the amount transferred from the accumulated decreases in fair values previously recognized in theowners’ equity.
(2) Impairment of held-to-maturity financial assets and loans:
For held-to-maturity investments and loans, if there is objective evidence on the incidence of impairment, then the impairment loss will be calculated and recognized according to the difference between the book value and the present value of estimated future cash flows.
10 Receivables
If there is objective evidence at the year end to indicate that impairment exists in accounts receivables (including accounts receivables, notes receivables, other receivables, long-term receivables, etc.), their carrying amount should be decreasingly recorded as recoverable amount. The decreased amount should be recognized as impairment loss of assets and be recorded into current profit or loss.
Prepayment’s risk characteristics are subject to the nature of prepayment, if the prepayment is for the purchase of goods or equipment, then before the agreed delivery date, or not settled but delivered, no provision for bad debts; if the other party of the contract fails to deliver and overdue more than one year after the contract data, provision for bad debts will be made according to the risk characteristics of receivables. For prepayment paid for the construction project, if not fully pay the whole price and the ownership of the construction project is expected to be obtained, no provision for bad debts.
For intra-group receivables, provision for bad debts will be made according to expected bad debt losses may occur.
Conduct impairment testing separately on accounts receivable with relatively higher individual price at end of the period. If there is objective evidence to indicate that impairment exists, recognize impairment loss and provide for bad and doubtful debts in accordance with the difference between its future cash flow and carrying amount.
Individual material receivables are the top five largest receivables or sum of receivables which account for
2013 Annual Report of Guangdong Rieys Group Company Ltd.10% of ending balance of accounts receivable. For individual receivables not material at end of the period, the Company can conduct impairment testing separately; for receivables without impairment through separate testing (including receivables material and not material), the Company will categorize them into the receivables groups with similar risk factors, and assigns a certain percentage of the end of the period balance of the receivable groups to determine the impairment loss and make provision for bad debts.
Except the receivables provided impairment loss separately, the Company set the provision rate in accordance with the actual loss percentage of the same or similar credit risk group by aging divided in the previous years and the real circs as follows:
Appropriation proportion of
Aging
receivables(%)
0 - 1 year 2
1 - 2 years 10
2 - 3 years 50
3 - 5 years 80
Over 5 years 100
11 Inventory
1. Inventory classification
Inventory is classified to:
(1) Real estate development products: completed property for sale, property in progress, and property to be developed.
(2) Non-real estate products: raw materials, working in progress, goods ready for sale, goods delivered, commission processing materials, etc.
2. Inventory valuation
Inventories are valued at the lower of cost and net realizable value.
Real estate development product costs include land cost, construction costs and other costs. Borrowing costs meet the capitalization conditions are also included in real estate development product costs. Non-real estate development product costs include purchase cost, process cost and other costs.
2013 Annual Report of Guangdong Rieys Group Company Ltd. The inventory is calculated using weighted average method when delivered.
3. Confirmation of net realizable value of inventory and Recording method of provision for inventory devaluation
At the end of the year, after overall check of the inventory, draw or adjust provision for inventory devaluation according to the lower of the cost of inventory and net realizable values of inventory.
In normal operation process, net realizable values of commodities inventories for direct sales including finished goods, commodities and materials for sales are determined by the estimated selling prices minus the estimated selling expenses and relevant taxes and fees; In normal operation process, net realizable values of materials that need further processing are determined by the estimated selling prices of the finished goods minus estimated cost to completion, estimated selling expenses and relevant taxes. For the inventory held to implement sales contract or work contract, its net realizable value is calculated on the basis of contract price. For the balance of inventory beyond the amount of the sales contract, its net realizable value is calculated on the basis of general selling price.
Provision for inventory devaluation is provided for based on individual inventory item at end of the period. For inventory that has large quantity and low unit price, the provision for inventory devaluation is provided for based on categories of the inventory. For inventory related to the products manufactured and sold in the same district, with same or similar use or purpose, and difficult to account for separately from other items, the provision for inventory devaluation is provided for on a consolidated basis.
When the factors that influence the decreased bookkeeping of inventory value have disappeared, switch back from the provision for inventory devaluation amount that previously appropriated and the amount that switched back is charged to profit or loss of current period.
4. System of stock inventories
Perpetual inventory system is applied.
5. Amortization for low cost and short lived articles and package materials
For low cost and short lived articles, use step-amortizationmethod；
For package materials, use lump-sum amortization method.
12 Investment in subsidiaries, associates, joint-ventures and other.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. Confirmation of initial investment cost
(1) Investment recognized in enterprise mergers
In case the investment are obtained under identical control:
If the Company pays cash, transfers non-monetary assets or bears liabilities as the consideration for the merger, the book value of the shares of the net assets of the merging party on merging day should be deemed as the initial investment cost of long-term equity investment.
The difference between the initial investment cost of investment and paid cash, transferred non-cash assets and book values of liabilities will be supplemented by the capital reserve; in case the capital reserve is not enough, the remaining gains will be adjusted. In case the Company issues the equity securities as the merger consideration, the book value share on the merging date to obtain theowners’ equities of the merging party will be deemed as the initial investment cost of long-term equity investment. If the book value amount of the issued shares is deemed as the capital, the difference between the initial investment cost of investment and the book value amount of the issued shares will be supplemented by the capital reserve; in case the capital reserve is not enough, the remaining gains will be adjusted. All direct expenses related to the enterprise merger, including the auditing expense, evaluation expense, legal service expense, etc. will be accrued to the current profit or loss.
In case the investment are made to obtain the equities of the merging enterprises which are not under identical control, the consolidation cost determined according to‘Accounting Standard for Business Enterprises No. 20– BusinessCombinations’ on the purchase date will be deemed as the initial investment cost.
(2) Other types of long-term equity investment
In case the investment is made by cash payment, the actual payment amount will be deemed as the initial investment cost.
In case the investment is made by issuing the equity securities, the fair values of issued equity securities will be deemed as the initial investment cost.
For the investment made by the investors, the values agreed in the investment contracts or agreements (deducting the cash dividends or profits that have been declared but have not been dismissed) will be deemed as the initial investment cost, except that the contracts or agreements provide that the values are not fair.
2013 Annual Report of Guangdong Rieys Group Company Ltd. In case the investment is made by exchanging the non-currency assets, and this exchange has the commercial substance and the fair values of exchanged assets can be reliably calculated, the fair values of assets surrendered will be deemed as the initial investment cost, unless there is conclusive evidence that the fair values of assets received are more reliable; for exchange of non-currency assets that do not satisfy the above conditions, the sum of book value of assets surrendered and relevant taxes payable will be deemed as the initial investment cost.
In case the investment is made by the mode of liability restructure, the fair values of the obtained equities will be deemed as the initial investment cost.
2. Judgment criteria of joint control and significant influence in the invested companies
If, in accordance with provisions in the contracts, the Company enjoys joint control over certain economic activities only when taking part in significant financial and operational decisions with investors in need of share of control who unanimously agree, the Company is deemed to enjoy joint control with other parties over the invested companies. If the Company is authorized to take part in decision making with regard to the financial and operational policies, but is unable to control or control jointly with other parties over the invested company, the Company is deemed to be able to exercise significant influence over the invested companies. 3. Subsequent measurement and profit& loss recognition
When the Company is able to exercise significant influence or joint control, the difference of cost of initial investment in excess of the proportion of the fair value of the net identifiable assets in the invested companies is not adjusted against the initial cost of long-term equity investment. The difference of cost of initial investment in short of the proportion of the fair value of the net identifiable assets in the invested companies is charged into the current profit or loss statement. .
TheCompany’s long-term equity investments in subsidiaries are accounted for by the cost method and adjusted according to the equity method when preparing consolidated financial statements. When the Company has neither joint control nor significant influence in the invested companies, there is no quotation available on the active market, and the fair value of the investment cannot be reliably measured, the investment is accounted for under the cost method.
When the Company has joint control or significant influence over the invested companies, the investment is accounted for under the equity method.
For profit or loss of internal transactions occurred among the Company and joint ventures, the proportion
2013 Annual Report of Guangdong Rieys Group Company Ltd. attributable to the Company will be calculated according to shareholdings and offset in the application of equity method.
Recognition of share of losses of the invested companies under the equity method is treated in the following steps: First, reduce the book value of the long-term equity investment. Second, when the book value is insufficient to cover the share of losses, investment losses are recognized up to a limit of book values of other long-term equity which form net investment in substance by reducing the book value of long term receivables, etc. Finally, after all the above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions stipulated in the investment contracts or agreements, provisions are recognized and charged into current investment loss according to the liabilities estimated.
If the invested company achieve profit in subsequent periods, the treatment is in the reversed steps described above after deduction of any unrecognized investment losses, i.e., reduce book value of provisions recognized, restore book values of other long-term equity which form net investment in substance, and in long-term equity investment, and recognize investment income at the same time.
Treatment of other equity changes except for net profit or loss in the invested companies: For other equity changes except for net profit or loss in the invested companies, if the proportion of investments remain unchanged, the Company calculates the proportion it shall enjoy or bear and adjust book value of long-term equity investment, and increase or decrease capital reserves– other capital reserves at the same time. 4. Impairment testing and impairment provision methods
(1) In case the cost method is used to calculate the long-term equity investments which are not quoted in the active market or whose fair values cannot be reliably calculated, the depreciation loss will be determined based on the difference between the book values and current values determined by the discounting of future cash flow in line with the current market return rate of similar financial assets.
(2) For other long-term equity investments, in case the calculation results of receivable amounts indicate that the receivable amount of this investment is less than their book values, the difference will be confirmed as the asset depreciation losses.
Once the depreciation loss of investment is confirmed, they will not be reversed.
13 Investment properties
Investment properties refer to properties held to earn rentals or for capital appreciation, or both, including
2013 Annual Report of Guangdong Rieys Group Company Ltd. leased land use right and those held and ready to transfer after value added, and leased buildings.
The Company uses the cost model to measure existing investment properties. For investment properties and rental assets measured at the cost model, they will be implemented the same depreciation policy similar to property, plant and equipment, land use right for rental will be implemented the same amortization policy to intangible assets; for those with the indication of impairment, the recoverable amount can only be estimated, and if recoverable amount is lower than its book value, the corresponding impairment loss should be confirmed.
14 Property, plant and equipment
1. Recognition standard of property, plant and equipment
Property, plant and equipment (hereinafter referred as PPE), tangible assets that are held for use in the production or supply of services, for rental to others, or for administrative purposes; they have useful lives over one fiscal year. And they shall be recognized only when both of the following conditions are satisfied: (1) It is probable that economic benefits associated with the assets will flow to the enterprise; and
(2) The cost of the PPE can be measured reliably.
2. Initial measurement of PPE
PPE are recorded at the actual cost on acquisition.
(1) The cost of PPE purchased includes purchase price, related tax, transportation expenses, loading and uploading expenses, installment expenses and specialist service expenses attributable to the assets that arise before the assets are completed and put into use.
(2) Where payment for the purchase price of a PPE is deferred beyond normal credit terms, such that the arrangement is in substance of a financing nature, the cost of the fixed asset shall be determined based on the present value of the purchase price, The difference between the purchase price and its present value shall be recognized in profit or loss over the period of credit. The cost of a self-constructed fixed asset comprises those expenditures necessarily incurred for bringing the asset to working condition for its intended use. (3) For PPE formed through obtaining them by the debtor paying for debt in debt restructure, recognize its recording value as fair value of the PPE, and record the difference between the carrying amounts of debt restructure and the PPE used for paying debt into current profit or loss.
(4) In the circumstance of the non-monetary assets exchange has commercial nature and fair value of
2013 Annual Report of Guangdong Rieys Group Company Ltd. surrendered or received assets can be measured reliably, recording value of received assets should be recognized as fair value of surrendered assets unless there is clear evidence to indicate that fair value of received assets is more reliable; for non-monetary assets exchange whichdoesn’t meet the requirement of premise mentioned above, cost of received assets should be recognized as carrying amount and related tax expenses payable of surrendered assets and should not be recognized as profit or loss.
(5) Recording value of PPE obtained by absorbing and consolidated by enterprise under identical control should be recognized as carrying amount of the consolidated party; recording value of PPE obtained by absorbing and consolidated by enterprise under different control should be recognized as fair value.
(6) Recording value of financing leasehold should be recognized as fair value of leasing assets and present value of lowest leasing payment when leasing occurs whichever is lower.
3. Depreciation method of PPE
Depreciation of PPE is provided for on a straight-line basis, the depreciation rate is recognized in accordance with category, estimated useful life and estimated residual rate of PPE.
PPE renovations expenses that meet the criteria of capitalization are depreciated on an individual basis over the interval of two renovations or remaining useful life of the PPE, whichever is shorter (2-5 years).
For PPE leased through finance lease, if it can reasonably determine that the ownership of the leased assets will be obtained when the lease period expires, provision for depreciation will be made in useful life of leased assets; if itcan’t reasonably determine that the ownership of the leased assets will be obtained when the lease period expires, provision for depreciation will be made in the lease period and useful life of leased assets, whichever is shorter.
PPE renovations expenses that meet the criteria of capitalization are averagely amortized according to the period between the two renovations, remaining lease period and the useful life of PPE, whichever is short. Estimated useful life and annual depreciation rate of PPE by categories are as follows:
Expect service life Expect residual Annual
Category
(year) value rate depreciation rate
Buildings and installations 35 5% 2.71%
Machines and equipment 10 5% 9.50%
Vehicles 8 5% 11.88%
2013 Annual Report of Guangdong Rieys Group Company Ltd. Office equipment and others 5 5% 19.00%
15 Construction in progress
1. Classification of construction in progress
The Construction in progress will be calculated based on the classification of proposed projects.
2. Transfer time of construction in progress to PPE
For the construction in progress, all expenses occurring before they are ready for the use will be the book values as the PPE. In case the construction in progress has been ready for use but the final accounts for completion have not been handled, from the date when such projects has been ready for use, the Company will evaluate the values and determine the costs based on the project budgets, prices or actual costs of projects, etc. and the depreciation amount will also be withdrawn; when the final accounts for completion are handled, the Company will adjust the originally evaluated values subject to the actual costs, but will not adjust the withdrawn depreciation amount.
16 Borrowing costs
1. Confirmation principle of capitalization of borrowing costs
In case the borrowing costs occurring in the Company may directly be attributable to the construction and productions of assets complying with the capitalization conditions, they will be capitalized and accrued to the relevant capital costs; other borrowing costs will be confirmed as the expenses based on the actual amount at the time of occurrence and accrued to the current profit or loss.
The assets complying with the capitalization conditions mean the assets such as PPE, investment real estates and inventory, etc. that need a long time of construction and production activities before they are ready for use or for sales.
The borrowing costs begin to be capitalized under the following circumstances:
(1) The asset payment have been made which include the payment such as the paid cashes, transferred non-currency assets or borne liabilities with the interests to construct or produce the assets complying with the capitalization conditions;
(2) The borrowing costs have occurred;
(3) The necessary construction or production activities to make the assets ready for use or sales have been
2013 Annual Report of Guangdong Rieys Group Company Ltd. launched.
In case during the construction or production period the assets complying with the capitalization conditions are abnormally suspended and the suspension period exceeds 3 months continuously, the capitalization of borrowing costs will also be suspended.
The capitalization of borrowing costs for the assets that have been constructed or produced and are ready for use or sales will be stopped.
When parts of the purchased assets or assets whose production satisfies the capitalization conditions are completed respectively and can be used individually, the capitalization of the borrowing costs of these parts will be stopped.
2. Capitalization period of borrowing costs
The capitalization period means the period from the moment that the borrowing costs start to be capitalized to the moment that the capitalization is stopped, which does not include the period that the capitalization of borrowing costs is suspended.
3. Calculation method about capitalization amount of borrowing costs
The interest expenses for special loans (after the deduction of interest income generated by the unused loan capitals or the investment return obtained from the temporary investments) and auxiliary expenses will be capitalized before the assets complying with the capitalization conditions are ready for the expected use or sales.
The interest amount of general loans to be capitalized will be determined by multiplying the weighted average amount of the asset payment by which the accumulated assets exceed the special loans with the capitalization rate of general loans. The capitalization rate will be determined based on the weighted average interest rate of general loans.
In case the loans have the discounts or premiums, the Company will adjust the interest amount in each period based on the amortized discount and premium amount in each accounting period in accordance with the actual interest rate method.
17 Intangible assets
1. Calculation method of intangible assets
When acquiring, the intangible assets are generally recorded according to actual cost.
2013 Annual Report of Guangdong Rieys Group Company Ltd. (1) For those the price of intangible assets deferred paid exceed normal credit condition so substantively has financing character, the cost of intangible assets is confirmed on the basis of present value of purchasing price.
(2) For intangible assets formed through obtaining them by the debtor paying for debt in debt restructure, recognize its recording value as fair value of the intangible assets, and record the difference between the carrying amounts of debt restructure and the intangible assets used for paying debt into current profit or loss; in the circumstance of the non-monetary assets exchange has commercial nature and fair value of surrendered or received assets can be measured reliably, recording value of received assets should be recognized as fair value of surrendered assets unless there is clear evidence to indicate that fair value of received assets is more reliable; for non-monetary assets exchange whichdoesn’t meet the requirement of premise mentioned above, cost of received assets should be recognized as carrying amount and related tax expenses payable of surrendered assets and should not be recognized as profit or loss.
(3) Recording value of intangible assets obtained by absorbing and consolidated by enterprise under identical control should be recognized as carrying amount of the consolidated party; recording value of PPE obtained by absorbing and consolidated by enterprise under different control should be recognized as fair value. 2. Useful life and amortization of intangible assets
(1) Estimation of useful life for intangible assets with finite useful life:
At end of each year, the Company will recheck the useful life of intangible assets with the definite useful life and amortization method will be rechecked.
According to the re-check, the useful life and amortization method of the intangible assets at the end of the year are not different from those estimated before.
(2) Amortization of intangible assets:
In case their useful life is limited, the intangible assets are amortized evenly over the period in which they produce economic profit for the Company; in case it is impossible to evaluate the useful life when the intangible assets bring the benefits to enterprises, it will be deemed that the useful life of such intangible assets is uncertain and amortization is not applicable.
18 Long-term deferred expenses to be amortized
Long-term deferred expenses to be amortized will be averagely amortized in the benefit period, including:
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. Prepaid rentals for operating leased PPE will be averagely amortized according to the term stipulated in the lease contract.
2. PPE improvement expenses for operating leased, long-term deferred expenses will be averagely amortized according to the remaining lease period and the useful life of leased assets, whichever is shorter.
19 Impairment of PPE, construction in progress, intangible assets, goodwill and other long-term non-financial assets
For long-term non-financial assets such as PPE, construction in progress, intangibles, etc., the Company assesses whether signs of possible impairment exist at end of each year. Impairment tests are performed on goodwill arises from business combinations and intangibles with uncertain useful life regardless of whether signs of possible impairment exist.
For assets with signs of impairment, recoverable amounts are estimated:
(1) When there are signs of possible impairment on assets, the Company estimates the recoverable amount of the assets on an individual basis.
(2) If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine the recoverable amount of the asset group to which the asset belongs.
(3) Recoverable amounts are determined as the fair value of the assets after netting off costs of disposal, and the current value of projected future cash flows generated by the assets, whichever is higher.
When the recoverable amount of an asset is lower than the book value of the asset, the book value of the asset is reduced to its recoverable amount. The amount reduced is recognized as impairment loss on assets in the current profit or loss statement, and provision for impairment loss on assets is recorded at the same time. Future depreciation or amortization of assets is adjusted after recognition of impairment loss so that the adjusted book value of the assets (less estimated residual value) is amortized systematically over their remaining useful life.
Impairment loss on long-term non-financial assets such as PPE, construction in progress, intangibles, etc. shall not be reversed once recognized.
When there are signs of possible impairment on assets, the Company estimates the recoverable amount of the assets on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine the recoverable amount of the asset group to which the asset belongs.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 20 Provisions
1. Recognizing principles:
When businesses related to external security, pending litigation or arbitration, product quality assurance, retrenchment plan, contract of loss, reconstruction obligation, disposing obligation of PPE and other contingencies satisfy all the following conditions, the Company will recognize them as liabilities:
(1) The obligation is the present obligation of the Company;
(2) The performance of such obligation is likely to lead to an outflow of economic benefits;
(3) The amount of the obligation can be reliably measured.
2. Measurement methods
Provisions shall be initially measured according to the best estimated amount required to be paid when current obligations are fulfilled.
When determining the best estimated amount, it should take full consideration of the risks, uncertainties and time value of money related to contingencies.
Best estimated amount is handled under the following circumstances:
(1) If the amount required is in a continuous range, and the likelihood of various outcomes within the scope is same, then the estimated amount is determined according to the median of the range, which is the average amount of upper and lower caps.
(2) If the amount requiredisn’t in a continuous range, or thereisn‘t such a continuous range but the likelihood of various outcomes within the scopeisn’t same, such as the contingency involves a single item, then the best estimated amount is determined in accordance with the amount with most likelihood; if the contingency involves several items, then the best estimated amount is determined according to various possible outcomes and associated probabilities.
If expenses required to settle all or part of estimated debt are expected to be compensated by a third party, then the amount of compensation will be separately recognized as an asset upon basically being identified to be received, and the amount of compensation recognized will not exceed the book value of projected liabilities.
21 Revenue
2013 Annual Report of Guangdong Rieys Group Company Ltd. 1. Sale of goods
Revenue from the sale of goods is recognized when the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods; the enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of income can be measured reliably; it is probable that the economic benefits associated with the transaction will flow to the enterprise; and the relevant amount of revenue and costs can be measured reliably.
Real estate sales will be confirmed the realization of revenue thereof upon the complete and acceptance of real estate, meeting the delivery terms of sales contract, and obtaining the proof of payment made by the purchasers according to the agreement under the contract on delivering real estate (usually after receiving the first phase of sales contract payment and confirming the payment arrangements of the remaining).
2. Rendering of service
In case on the preparation date of statement of financial position the results about service transaction can be reliably evaluated, the labor income will be confirmed by the completion percentage method. The completed percentage of service transactions is determined by the measurement of finished work (or the proportion of services performed to date to the total services to be performed, or the proportion of costs incurred to date to the estimated total costs).
The Company will determine the total amount of rendering of service based on the prices in contracts and agreements that have been received or will be receivable, except that such prices are not fair. On the statement of financial position date, the current labor incomes will be determined based on the amount after the total labor income amount multiplied by the completion progress deducts the accumulated labors in the past accounting periods. At the same time, the current labor costs will be carried forward based on the amount after the estimated total labor cost multiplied by the completion progress deducts the accumulated labor costs in the past accounting periods.
In case the service transaction results on the preparation date of statement of financial position cannot be reliably evaluated, they will be determined in the following methods:
(1) In case the labor costs that have occurred can be compensated, the labor costs will be confirmed based on such labor costs and the same amounts will be settled as the labor costs.
(2) In case the labor costs that have occurred cannot be compensated, such labor costs will be accrued to the current profit or loss and will not be confirmed as the labor costs.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 3. Transferring use right
In case the economic benefits related to the transaction will probably flow into the enterprise and the revenue amounts can be measured reliably, the Company recognizes the revenue amount by the following means: (1) The interest income amount will be calculated and determined based on the use time of currency capital from the Company by others and actual interest rate.
(2) The income amount of use expenses will be calculated and determined subject to the charging time and method agreed in the relevant contracts and agreements.
4. Government grants
Government grants refer to monetary assets or non-monetary assets obtained free by a company from the government, but not include the capital invested by government as a business owner. Government grants are classified to government grants related to assets and government grants related to income.
Government grants will be recognized upon meeting both of the following two conditions:
(1) The company can meet the conditions attached to government grants;
(2) The company can receive government grants.
Government grants related to assets are recognized as deferred income and are averagely distributed in the life of relevant assets, and recorded to current profit or loss. Government grants related to income are handled under the following circumstances:
(1) If such grants are used to compensate for relevant costs and losses of the company during later periods, they will be recognized as deferred income and recorded to current profit or loss upon recognizing related costs;
(2) If such grants are used to compensate for relevant costs and losses occurred of the company, they will be directly recorded into current profit or loss.
22 Deferred income tax assets / deferred income tax liabilities
Corporate income tax will be calculated by liability method of the statement of financial position.
Thecompany’s tax base will be determined upon the company obtains the assets or liabilities; on the statement of financial position date, take the statement of financial position as the basis, and if the book value of related assets or liabilities are different from the tax bases provided by tax laws, it will calculate and confirm
the deferred income tax assets or deferred income tax liabilities occurred in accordance with the provisions of
2013 Annual Report of Guangdong Rieys Group Company Ltd. tax laws, which effect will be included in current income tax expense.
The company is subject to the limit of the amount of taxable income likely to be used to offset temporary difference, thus confirms the deferred income tax asset produced by the deductible temporary difference. In addition to the cases specified under income guidelines that no need to confirm the deferred income tax liabilities, the company should recognize related deferred income tax liabilities for all taxable temporary differences.
23 Operating lease and finance lease
If the terms of the lease will be transferred to the lessee substantially together with all the risks and rewards related to the ownership of leased assets, then the lease is a finance lease, and other lease is operating lease.
1. The Company is a lessor
In finance lease, at the lease beginning date, the Company takes the minimum lease receipt and the initial direct costs as the entry value of finance lease receivable, and records the unguaranteed residual value; and the difference between the sum of minimum lease receipt, initial direct costs and unguaranteed residual value and its present value is recognized as unrealized finance income. For unrealized finance income at each period during the lease term, it will use the effective interest method to confirm the current financing income. For rent in operating lease, the Company will use the straight-line method to recognize profit or loss in each period during the lease term. Initial direct costs occurred will be recorded into current profit or loss.
2. The Company is a lessee
In finance lease, at the lease beginning date, the Company will take the lower of the fair value of the leased assets and the present value of minimum lease payment as the entry value of leased assets, and take the minimum lease payment as the entry value of long-term payables, and their difference will be as unrecognized finance cost. Initial direct costs are included in the value of leased assets. For unrecognized finance income each period during the lease term, it will use the effective interest method to confirm the current financing cost.
The Company uses depreciation policy consistent with its own PPE to make provision for depreciation of leased assets.
2013 Annual Report of Guangdong Rieys Group Company Ltd. For rent in operating leases, the Company will use the straight-line method to record it into the cost of relevant assets or current profit or loss in each period during the lease term; and initial direct costs occurred will be through current profit or loss.
Rent in operating leases will be recorded into the cost of relevant assets or current profit or loss in each period during the lease term.
24 Alternation of key accounting policies, accounting estimates and previous errors
There are no changes of key accounting policies, accounting estimates and correction of material accounting errors and relevant effects in 2013.
III. Taxation
Main type of tax and tax rate of the Company
Type of tax Tax rate Taxable basis
VAT 17% Sales
Business tax 5% Sales of real estate
Corporate income tax 25% Taxable income
1. The Company implements the uniform tax rebate policy of export, i.e. the export is exempt from VAT and the input-VAT of goods is refunded with refund rate according to relevant rules before export in accordance with the requirements of tax law.
2. Since 1 Jan.2008, other subsidiaries of the Company has adopted the applicable income tax rate of25%, except for those company established in the below-mentioned districts.
Companies established in Hong Kong SAR are entitled to a profits tax rate of16.5%.
IV. Business combination and the consolidated financial statements The Company adopts the Accounting Policies for Business Enterprises No. 33– Consolidated Financial Statements issued in M. 2006. All subsidiaries under theCompany’s control and main body with special objectives are included in the scope of consolidation.
The consolidated financial statements are prepared by the parent company based on the individual financial statements of the parent company as well as the subsidiaries included in the scope of consolidation, with reference made to other relevant information and after adjustment to the long-term investments insubsidiaries’ equity under equity method. The internal equity investment and theowner’s equity of
2013 Annual Report of Guangdong Rieys Group Company Ltd. subsidiaries, internal investment income and profit distribution of subsidiaries, internal transactions, internal claims and liabilities will be offset upon consolidation.
The accounting policies adopted by subsidiary and Parent Company are consistent. (If they are not consistent, a necessary adjustment has been made to the financial statements of subsidiary in accordance with the accounting policy of parent company when the consolidated financial statements are prepared.)
1 Status of subsidiaries
1. Subsidiaries obtained through the establishment or investment
Registered
Place of
Name Type Nature capital Scope of business
Registration
(Million)
Shenzhen Rieys Industrial Limited Investment and import&
Shenzhen Trading 50.00
Co., Ltd. company export trading
Puning Tianhe Garment Production and sales of
Limited Manufac 65.10
Manufacturing Factory Co., Puning clothes and knitting
company ture (HKD)
Ltd. colorized cloth
Shenzhen Yingda
Limited Real
Chuangyuan Construction Shenzhen 0.000001 Property development
company estate
Investment Co., Ltd.
Balance of net
Actual investment Share-hol Voting-ri
investment in Whether
Name as at 31 Dec.2013 dings ghts
subsidiaries in consolidated
(Million) (%) (%)
substance
Shenzhen Rieys Industrial
45.00 90.00 90.00 Yes
Co., Ltd.
Puning Tianhe Garment
65.10
Manufacturing Factory Co., 100.00 100.00 Yes
(HKD)
Ltd.
Shenzhen Yingda
Chuangyuan Construction 0.000001 100.00 100.00 Yes
Investment Co., Ltd.
2. Subsidiaries obtained through business consolidation not under common control
Place of Register
Name Type Registra Nature ed Scope of business
tion capital
Tianrui (HK) Trading Co., Ltd. Limited Hong Trading 1(USD) Trading
2013 Annual Report of Guangdong Rieys Group Company Ltd. company Kong
26 Property development
Puning Hengda Real Estate Limited
Puning Real estate Million (operate with valid
Development Co., Ltd. company
RMB qualification certificate)
Actual Balance of net
Share-hol Voting-ri
investment as investment in Whether
Name dings ghts
at 31 subsidiaries in consolidated
(%) (%)
Dec.2013 substance
Tianrui (HK) Trading Co., Ltd. 1(USD) 100.00 100.00 Yes
Puning Hengda Real Estate 146.6 Million
100.00 100.00 Yes
Development Co., Ltd. RMB
3. Non-controlling interests and gains& losses attributed to non-controlling interests
Balance of the owner's equity of parent
Gains& losses
company after deducting the share of current
Non-controlli attributed to Method to obtain
Name of subsidiaries losses of NCI over the share ofowner’s equity
ng interests non-controlling subsidiary
enjoyed by such NCI in the subsidiary in the
interest s
period beginning
Shenzhen Rieys
4,300,376.00 -95,208.56 Establishing
Industrial Co., Ltd.
2 Subjects newly included in current scope of consolidation and subjects no longer included in current scope of consolidation
1. Subsidiaries, subjects with special purposes and business entities which controlling right is formed by entrusted operation or lease newly included in current scope of consolidation
Name of subsidiaries Net asset at year ended 31 Dec.2013 Net profit for the year 2013
Shenzhen Yingda Chuangyuan
Construction Investment Co., -1,358.43 -1,359.43
Ltd.
2. Subsidiaries, subjects with special purposes and business entities which controlling right is formed by entrusted operation or lease no longer included in current scope of consolidation
Naught
3. Business combination not under common control occurred over the current period
Naught
4. Subsidiaries reduced by sale of equity without controlling right over the current period
Naught
2013 Annual Report of Guangdong Rieys Group Company Ltd. V Notes to the items of consolidated financial statement
3 Monetary funds
31 Dec.2013 31 Dec.2012 Exchange Presentation Exchange Presentation Foreign currency Foreign currency
rate currency rate currency Cash
RMB 800,400.54 1.0000 800,400.54 693,639.68 1.0000 693,639.68 USD 1.00 6.0969 6.10 1.00 6.2855 6.29 HKD 223.80 0.7862 175.96 73.80 0.8109 59.84 Subtotal 800,582.60 693,705.81 Amount of savings
RMB 55,529,534.71 1.0000 55,529,534.71 20,746,442.44 1.0000 20,746,442.44 USD 24.67 6.0969 150.42 10,044.64 6.2855 63,135.59 HKD 474.19 0.7862 372.49 39,771.66 0.8109 32,248.85 Subtotal 55,530,057.62 20,841,826.88 Other
RMB 19,960.10 1.0000 19,960.10 Subtotal 19,960.10 Total 56,330,640.22 21,555,492.79 1. Monetary funds increased by 34,775,147.43(161.33%) as Puning Hengda Real Estate Development Co., Ltd. received huge amounts in sales of properties.
2. No amount is restricted and has potential risks to withdraw because of mortgage, pledge.
4 Trade receivables
1. In categories
31 Dec.2013 31 Dec.2012 Categories Balances Write-down Balances Write-down Amounts % Amounts % Amounts % Amounts % Significant
individual
amount with 12,032,292.69 41.53 12,032,292.69 100 12,195,097.21 24.08 12,195,097.21 100 individually
assessed of bad
2013 Annual Report of Guangdong Rieys Group Company Ltd. debts
Provision for bad debts according to group
Insignificant
individual
amounts but
with significant
14,196,435.01 49.00 2,972,561.25 20.94 31,755,095.07 62.71 8,362,533.80 26.33 portfolio risk
after grouped by
credit risk
feature
Significant
individual
amounts
2,151,364.27 7.43 1,067,146.69 49.60 6,484,327.79 12.8 334,828.73 5.16 grouped by
credit risk
feature
Subtotal 16,347,799.28 56.43 4,039,707.94 24.71 38,239,422.86 75.51 8,697,362.53 22.74 Insignificant
individual
amount with
590,329.99 2.04 590,329.99 100.00 206,357.74 0.41 206,357.74 100.00 individually
assessed of bad
debts
Total 28,970,421.96 100.00 16,662,330.62 57.51 50,640,877.81 100.00 21,098,817.48 41.66 2. Significant individual amount with individually assessed of bad debts
Names of balances Balances Write-down % Reason Victoria International(USA) INC 5,263,005.46 5,263,005.46 100.00% * Long-term Hongkong Jinhua Trading company 4,224,304.63 4,224,304.63 100.00%
receivables Long-term Jinjing International Co., Ltd. 2,544,982.60 2,544,982.60 100.00%
receivables Total 12,032,292.69 12,032,292.69 100.00%
* Victoria International (USA) INC had applied for bankrupt thus the receivable is unlikely to recover; amount of 5,263,005.46 had been written-down.
3. Portfolios of insignificant individual amounts but with significant portfolio risk after grouped by credit risk feature
31 Dec.2013 31 Dec.2012 Aging
Balances Write-down Balances Write-down
2013 Annual Report of Guangdong Rieys Group Company Ltd. Amounts % Amounts %
0-1 year 10,770,000.00 75.86% 215,400.00 23,567,601.53 74.22% 471,352.03 1-2 years 691,800.53 4.87% 69,180.05
2-3 years 395,135.93 1.24% 197,567.97 Over 3 years 2,734,634.48 19.27% 2,687,981.20 7,792,357.61 24.54% 7,693,613.80 Total 14,196,435.01 100.00% 2,972,561.25 31,755,095.07 100.00% 8,362,533.80 4. No amounts due from shareholders holding5% or more shares in the year of 2013.
5. Amounts received in the year of 2013.
Amounts received in full amount of write-down recognized in 2012 is 4,907,017.30 in the year of 2013 Amount of write-down Amount Reason of amount Standard of provision for b
Names of balances recognised before received in received ad debt of receivables
2013 2013 Full effort on Aging over 5 years,
Chen Shunqin 1,186,345.00 1,186,345.00 recovery full amount write-down
Full effort on Aging over 5 years,
Lan Honghong 1,563,064.00 1,563,064.00 recovery full amount write-down
Full effort on Aging over 5 years,
Dai Xiaojun 890,268.80 890,268.80 recovery full amount write-down
Full effort on Aging over 5 years,
Guangzhou Tianma Corp. 861,087.50 861,087.50 recovery full amount write-down
Full effort on Aging over 5 years,
Chen Jinxi 397,036.00 397,036.00 recovery full amount write-down
Full effort on Aging over 5 years,
Chan Qihua 5,400.00 5,400.00 recovery full amount write-down
Full effort on Aging over 5 years,
Ke Jizhong 3,816.00 3,816.00 recovery full amount write-down
Total 4,907,017.30 4,907,017.30 6. Top 5 amounts of balances on 31 Dec.2013.
Percentage Names of balances Relation Amount Aging in the total receivables Victoria International(USA) INC Customer 5,263,005.46 Over 3years 18.17% Hongkong Jinhua Trading Company Customer 4,224,304.63 Over 3years 14.58% Jinjing International Co., Ltd. Customer 2,544,982.60 Over 3years 8.78% Brendwood International Corp. Customer 2,151,364.27 1-3 years 7.43% Futian Corp. Customer 919,026.75 Over 3years 3.17%
2013 Annual Report of Guangdong Rieys Group Company Ltd. Total 15,102,683.71 52.13% 5 Other receivables
1. In categories
31 Dec.2013 31 Dec.2012 Categories Balances Write-down Balances Write-down Amounts % Amounts % Amounts % Amounts % Significant
individual
amount with
2,331,608.20 4.62 2,331,608.20 100.00 6,163,106.00 19.49 3,493,353.00 56.68 individually
assessed of bad
debts
Provision for bad debts according to group
Insignificant
individual
amounts but
with significant
26,324,466.14 52.20 18,692,429.02 71.01 25,432,987.03 80.45 19,389,821.78 76.24 portfolio risk
after grouped by
credit risk
feature
Significant
individual
amounts
18,500,000.00 36.68 370,000.00 2.00
grouped by
credit risk
feature
Subtotal 44,824,466.14 88.88 19,062,429.02 42.53 25,432,987.03 80.45 19,389,821.78 76.24 Insignificant
individual
amount with
3,277,927.36 6.50 3,277,927.36 100.0 20,500.00 0.06 20,500.00 100.00 individually
assessed of bad
debts
Total 50,434,001.70 100.00 24,671,964.58 48.92 31,616,593.03 100.00 22,903,674.78 72.44 2. Significant individual amount with individually assessed of bad debts
Names of balances Balances Write-down % Reason Unresolvable balance Export tax rebate 2,331,608.20 2,331,608.20 100.00%
in previous fiscal year
2013 Annual Report of Guangdong Rieys Group Company Ltd. Total 2,331,608.20 2,331,608.20 100.00%
3. Portfolios of insignificant individual amounts but with significant portfolio risk after grouped by credit risk feature
31 Dec.2013 31 Dec.2012 Aging Balances Balances
Write-down Write-down Amounts % Amounts %
0-1 year 4,761,912.60 18.09% 95,238.25 987,397.85 3.88% 19,747.95 1-2 years 237,644.62 0.90% 23,764.46 1,674,024.53 6.58% 167,402.45 2-3 years 856,720.25 3.25% 428,360.13 3,004,642.64 11.81% 1,502,321.32 Over 3
20,468,188.67 77.76% 18,145,066.18 19,766,922.01 77.73% 17,700,350.06 years
Total 26,324,466.14 100.00% 18,692,429.02 25,432,987.03 100.00% 19,389,821.78 4. No amounts due from shareholders holding5% or more shares in the year ended 31.Dec.2013.
5. Top 5 amounts of balances on 31 Dec.2013.
Percentage in Names of balances Relation Amount Aging the total receivables Shenzhen Zhongjianhongji Construction
5,300,000.00 0-1year 10.51% Construction Co., Ltd. unit
Puning Xingsong Trade Co., Ltd. Supplier 5,000,000.00 0-1year 9.91% Puning Yalilai Trade Co., Ltd. Supplier 4,200,000.00 0-1year 8.33% Guangzhou Guanshenganggou Co.,
Supplier 4,000,000.00 0-1year 7.93% Ltd.
Over
Export rebate receivable Tax authority 2,331,608.20 4.62% 3years
Total 20,831,608.20 41.30% 6 Prepayment
6. Aging Analysis
31 Dec.2013 31 Dec.2012 Aging
Amounts % Amounts % 0-1 year 9,126,950.50 92.68% 330,540.90 23.59% 1-2 years 1,070,584.00 76.41% 2-3 years 720,584.00 7.32%
Over 3 years
Total 9,847,534.50 100.00% 1,401,124.90 100.00% Prepayment increased by 8,446,409.60(602.83%) as Puning Hengda Real Estate development Co., Ltd.
2013 Annual Report of Guangdong Rieys Group Company Ltd. prepaid project fund to construction units.
7. Top 5 amounts of balances on 31 Dec.2013.
Year of
Names of balances Relation Amount Reason occurred
Contract Puning Lilaisheng Trade Co., Ltd. Supplier 8,600,000.00 2013
performing Guangzhou Runhong Contract Construction unit 470,000.00 2013
Construction Co., Ltd. performing Puning Yongmao Building Material Contract Supplier 366,893.00 2011
Trade Co., Ltd. performing Puningshi Suoye advertisement Advertisement Contract 353,691.00 2011
designation Co., Ltd. Supplier performing Contract Rongchao Lessor 41,464.50 2013
performing Total 9,832,048.50
8. No amounts due from shareholders holding5% or more shares in the year ended 31 Dec.2013.
7 Inventories
9. Categories
31 Dec.2013 31 Dec.2012 Categories
Amounts Write-down Amounts Write-down Raw material
Goods ready for sale 1,737,707.86
Working in progress
Goods delivered
Property in progress
Completed property for
263,030,203.16 340,802,511.47
sale
Total 264,767,911.02 340,802,511.47
10. Impairment test on 31 Dec.2013 revealed no impairment needed for inventories in the year ended 31 Dec.2013.
8 Property, plant and equipment
11. Initial costs
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Buildings and installations 119,088,227.16 119,088,227.16 Machines and equipment 1,579,481.00 2,080.00 1,416,150.00 165,411.00 Vehicles 5,916,535.33 462,768.15 129,367.00 6,249,936.48 Office equipment and others 1,539,811.86 19,794.56 22,150.00 1,537,456.42
2013 Annual Report of Guangdong Rieys Group Company Ltd. Total 128,124,055.35 484,642.71 1,567,667.00 127,041,031.06 a.The company disposed some idle machines and vehicles with an initial cost of 1,567,667.00;
The company purchased some vehicles, office equipment and others in the year ended 31 Dec.2013. b.Pledged property, plant and equipment amount to 30,136,241.67,details refer to Note VIII.1
12. Accumulated depreciation
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Buildings and installations 35,494,687.18 3,499,042.56 38,993,729.74 Machines and equipment 925,300.74 15,452.40 871,611.64 69,141.50 Vehicles 2,668,105.49 674,955.06 73,854.33 3,269,206.22 Office equipment and others 714,276.67 263,126.70 16,131.68 961,271.69 Total 39,802,370.08 4,452,576.72 961,597.65 43,293,349.15 13. Impairment
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Buildings and installations
Machines and equipment 473,301.24 473,301.24
Vehicles
Office equipment and others 3,212.44 3,212.44
Total 476,513.68 476,513.68
14. Net book value
Categories 31 Dec.2012 31 Dec.2013 Buildings and installations 83,593,539.98 -3,499,042.56 80,094,497.42 Machines and equipment 180,879.02 -13,372.40 71,237.12 96,269.50 Vehicles 3,248,429.84 -212,186.91 55,512.67 2,980,730.26 Office equipment and others 822,322.75 -243,332.14 2,805.88 576,184.73 Total 87,845,171.59 -3,967,934.01 129,555.67 83,747,681.91 15. No property, plant and equipment leased in 2013.
16. Fully depreciated property, plant and equipment still in use
Accumulated
Categories Initial costs Net book value depreciation
Vehicles 802,954.10 762,806.39 40,147.71 Office equipment and others 549,894.00 522,399.30 27,494.70 Total 1,352,848.10 1,285,205.69 67,642.41 17. Pledged property, plant and equipment
Categories Initial costs Accumulated Net book value
2013 Annual Report of Guangdong Rieys Group Company Ltd. depreciation
Buildings and installations 30,136,241.67 7,344,509.56 22,791,732.11 Total 30,136,241.67 7,344,509.56 22,791,732.11 Details refer to Note. VIII. 1.
9 Materials held for construction
31 Dec.2012 31 Dec.2013 Categories Increases Decreases
Amounts Write-down Amounts Write-down Gravel and other 54,526.00 54,526.00
Total 54,526.00 54,526.00
10 Intangible assets
18. Initial costs
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Right to the Use of
33,659,416.00 33,659,416.00 State-owned Land
Computer software 373,115.00 373,115.00 Total 34,032,531.00 34,032,531.00 Right to the Use of State-owned Land that amounted to 10,097,307.02 had been pledged to ICBC (Jieyangrongcheng Branch) to form a maximum amount mortgage contract for Puning Huafengqiang Trade Co., Ltd., details refer to Note VIII.1.
19. Accumulated amortization
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Right to the Use of
5,939,238.67 673,188.24 6,612,426.91 State-owned Land
Computer software 373,115.00 373,115.00 Total 6,312,353.67 673,188.24 6,985,541.91 20. Net book value
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Right to the Use of
27,720,177.33 -673,188.24 27,046,989.09 State-owned Land
Computer software
Total 27,720,177.33 -673,188.24 27,046,989.09 Impairment test on 31 Dec.2013 revealed no impairment needed for intangible assets in the year ended 31 Dec.2013.
11 Deferred income tax assets
21. Recognized deferred income tax assets
2013 Annual Report of Guangdong Rieys Group Company Ltd. Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Provision for
8,577,402.81 181,973.18 1,648,902.76 7,110,473.23 impairment of assets
Total 8,577,402.81 181,973.18 1,648,902.76 7,110,473.23 22. Unrecognized Deferred income tax assets
Categories 31 Dec.2013 31 Dec.2012 Deductible temporary differences 1,637,841.05 1,094,388.32 Deductible loss
Total 1,637,841.05 1,094,388.32 23. Temporary differences corresponding to assets or liabilities causing temporary differences
Categories Amount of temporary differences Provision for impairment 28,441,892.92 Loss remediable
Total 28,441,892.92 12 Impairment
Decreases
Categories 31 Dec.2012 Increases 31 Dec.2013 Reversal Written off
Provision for bad debts 44,002,492.26 4,273,418.50 6,941,615.56 41,334,295.20 Including:
21,098,817.48 1,348,664.66 5,785,151.52 16,662,330.62 Trade receivables
Other receivables 22,903,674.78 2,924,753.84 1,156,464.04 24,671,964.58 Write-down of inventories
Impairment of property, plant
476,513.68 476,513.68
and equipment
Total 44,479,005.94 4,273,418.50 6,941,615.56 476,513.68 41,334,295.20 13 Short-term loan
24. Categories
Categories 31 Dec.2013 31 Dec.2012 Mortgage loan 15,099,960.00 Guaranteed loan
Total 15,099,960.00 Details of pledge and guarantee refer to Note VI.4.b.
25. No expired unpaid short-term loans.
The Company had repaid the entire principal (RMB 15,099,960.00) to China Everbright Bank, Guangzhou Branch. As of the date hereof, the Company had no other bank loan to China Everbright Bank,
Guangzhou Branch, details refer toNoteⅩ.1.
2013 Annual Report of Guangdong Rieys Group Company Ltd. 14 Trade payables
31 Dec.2013 31 Dec.2012 Aging
Amount % Amount % 0-1year 590,656.60 4.58% 30,387,537.73 98.41% 1-2years 11,830,030.61 91.63% 8,326.90 0.03% 2-3years 8,326.90 0.06% 363,281.74 1.18% Over3years 481,458.09 3.73% 118,176.34 0.38% Total 12,910,472.20 100.00% 30,877,322.71 100.00% Trade payables decreased by 17,966,850.51 due to paid project funds to property builder.
26. No amounts due to shareholders (holding5% or more shares) in the year of 2013.
27. Amounts due to other related party in the year of 2013 refers to NoteⅥ.4.3.
15 Advance payment
31 Dec.2013 31 Dec.2012 Aging
Amount % Amount % 0-1year 33,871,647.00 62.44% 28,451,015.24 99.56% 1-2years 20,249,064.66 37.33% 85,283.00 0.30% 2-3years 85,283.00 0.16%
Over3years 39,821.24 0.07% 39,821.24 0.14% Total 54,245,815.90 100.00% 28,576,119.48 100.00% Amounts payment increased by 25,669,696.42 due to Puning Hengda Real Estate Development Co.,Ltd.’s advances from customers.
28. No amounts due to shareholders (holding5% or more shares) in the year of 2013.
29. No amounts due to other related party in the year of 2013.
16 Other payables
Aging 31 Dec.2013 31 Dec.2012 0-1year 11,918,259.76 27,168,158.64 1-2years 838,101.18 3,813,448.99 2-3years 3,209,200.39 790,825.00 Over3years 1,183,023.50 1,043,785.46 Total 17,148,584.83 32,816,218.09 30. No amounts due to shareholders holding5% or more shares in the year of 2013
31. No amounts due to other related party in the year of 2013.
32. Other payables decreased 15,667,633.26(47.74%) as the Company repaid much payables that received from other related parties in previous years.
17 Accrued payroll
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013
2013 Annual Report of Guangdong Rieys Group Company Ltd. Payment Other
1. Salaries and wages,
bonus, allowance and 645,621.09 5,364,215.98 5,500,549.05 509,288.02 subsidies
2. Employee welfare 84,840.76 316,047.70 340,102.10 60,786.36 3. Social insurance 187,603.46 187,603.46
4. Housing welfare
23,955.15 23,955.15
fund
5.Union fund and
employee
education fund
6.Other
Total 730,461.85 5,891,822.29 6,052,209.76 570,074.38 According to social insurance policy specified by local government, the Company has gradually improved theCompany’s specific policies and payment standards of social insurance.
18 Current tax liabilities
Categories 31 Dec.2013 31 Dec.2012 Tax rate VAT -317,870.51 562,009.27 17% Business tax 10,481,731.69 14,906,947.44 5% Corporate income tax 14,572,976.86 15,267,403.16 25% Land appreciation tax 7,525,367.72 10,456,652.35 * Other 3,279,379.70 3,586,961.30
Total 35,541,585.46 44,779,973.52
* Land appreciation tax rate is levied on 3% of ordinary standard residences for sale,3.5% of non-ordinary standard residences for sale.
Current tax liabilities decreased by 9,238,388.06(20.63%) due to the decrease of recognition of
revenue-related taxation before the levy.
19 Interest payables
Categories 31 Dec.2013 31 Dec.2012 Interest payables of short-term loans 13,756,401.18 Total 13,756,401.18 Current interest liabilities decreased by 13,756,401.18(100.00%) due to the repayment of the entire principals and interests.
20 Share capital
Categories 31 Dec. 2012 % Increase(+)decrease(－) 31 Dec.2013 %
2013 Annual Report of Guangdong Rieys Group Company Ltd. Shares
New transferre
Bonus
shares d from Other Subtotal
shares
issued capital
reserve
I. Unlisted shares 164,025,000 51.48% 164,025,000 51.48% 1.Held by Promoter 164,025,000 51.48% 164,025,000 51.48% Including:
Held by the State
Held by domestic
164,025,000 51.48% 164,025,000 51.48% corporations
Held by foreign
corporations
2. Held by other corporates
3. Held by employees
4 Preferred shares and other
II. Listed shares 154,575,000 48.52% 154,575,000 48.52% 1. A shares
2. B shares 154,575,000 48.52% 154,575,000 48.52% 3. Listed shares in overseas
markets
4. Other
III. Total shares 318,600,000 100.00% 318,600,000 100.00% 21 Capital reserve
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Capital premium 52,129,496.58 52,129,496.58 Total 52,129,496.58 52,129,496.58 22 Surplus reserve
Categories 31 Dec.2012 Increases Decreases 31 Dec.2013 Statutory surplus reserve 49,036,260.20 49,036,260.20 Discretionary surplus reserve 37,000,000.00 37,000,000.00 Total 86,036,260.20 86,036,260.20 23 Retained earnings
Amount Rate Retained earnings as to 31 Dec.2012 without adjustment -101,152,252.70
Total adjustment to Retained earnings as to 31 Dec.2013 (add+, less-)
2013 Annual Report of Guangdong Rieys Group Company Ltd. Retained earnings as to 31 Dec.2012 adjusted -101,152,252.70
Add: Profit attributable to owners of the company 6,886,671.58
Less: Transfer to statutory surplus reserve
Transfer to discretionary surplus reserve
Transfer to risk reserve
Payment of dividends
Transfer to share capital (Bonus shares )
Retained earnings as to 31 Dec.2013 -94,265,581.12
Puning Hengda Real Estate Development Co., Ltd. achieved a profit of 25,205,354.99 in sales of commercial residential buildings.
24 Revenue and cost of sales
33. Revenue
Year ended 31 Year ended 31 Item
Dec.2013 Dec.2012 Revenue from principal activities 148,458,757.00 300,968,525.62 Revenue from other activities 14,400.00 Cost of principal activities 95,639,924.51 226,849,638.27 Cost of other activities
34. Revenue from principal activities (by industry)
Year ended 31 Dec.2013 Year ended 31 Dec.2012 Industry
Revenue Cost of sales Revenue Cost of sales Real estate 148,458,757.00 95,639,924.51 291,440,067.00 221,193,886.91 Textile industry 9,528,458.62 5,655,751.36 Total 300,968,525.62 226,849,638.27 Off-set internal
transactions
Total 148,458,757.00 95,639,924.51 300,968,525.62 226,849,638.27 35. Revenue from principal activities (by region)
Year ended 31 Dec.2013 Year ended 31 Dec.2012 Region
Revenue Cost of sales Revenue Cost of sales Clothing sales(Export) 2,815,199.68 2,309,987.71 Clothing
6,713,258.94 3,345,763.65 sales(Domestic)
Real estate
148,458,757.00 95,639,924.51 291,440,067.00 221,193,886.91 sales(Domestic)
Subtotal 300,968,525.62 226,849,638.27
2013 Annual Report of Guangdong Rieys Group Company Ltd. Off-set internal
transactions
Total 148,458,757.00 95,639,924.51 300,968,525.62 226,849,638.27 36. The total sales to Top 5 customers of the Company amounted to 8,896,713.00, accounting for6.00%of total revenue of the Company this year.
Percent in total revenue of the Name Revenue
Company Chen Ronghai 2,175,646.00 1.47% Li Songxian 1,904,025.00 1.28% Chen Jiajie 1,673,494.00 1.13% Xu Wenbin 1,599,130.00 1.08% Li Hong 1,544,418.00 1.04% Total 8,896,713.00 6.00% 25 Business tax and surcharges
Year ended 31 Year ended 31
Categories Rate Dec.2013 Dec.2012
Business tax 7,422,937.85 14,572,723.35 5% Urban maintenance and construction tax 519,605.65 1,020,090.63 7%、5% Education expenses and surcharges 371,146.90 728,636.17 3%、2% Land appreciation tax 4,844,802.04 10,456,652.35
Total 13,158,492.44 26,778,102.50
26 Finance costs
Categories Year ended 31 Dec.2013 Year ended 31 Dec.2012 Interest expenses 3,556,721.54 12,481,265.24 Less:Interest incomes 10,684.62 6,174.27 Exchange losses 19,435.76 2,979.71 Less: Exchange gains 133,969.56 28,726.47 Commission charges 27,886.73 31,563.88 Other
Total 3,459,389.85 12,480,908.09 27 Impairment expenses
Categories Year ended 31 Dec.2013 Year ended 31 Dec.2012 Bad debt allowance -2,668,197.06 4,316,918.90 Inventories allowance
Property, plant and equipment impairment 476,513.68
2013 Annual Report of Guangdong Rieys Group Company Ltd. Total -2,668,197.06 4,793,432.58 Impairment expenses increased by 7,461,629.64(155.66%) due to the receipt of trade receivables.
28 Investment income
Year ended 31 Year ended 31 Categories
Dec.2013 Dec.2012 Generated from disposal of equity investments
Generated from holding financial assets at fair value
5,093.38 through profit or loss
Other
Total 5,093.38 29 Non-operating income
Categories Year ended 31 Dec.2013 Year ended 31 Dec.2012 1.Gains on disposal of non-current assets 869.85 Including:
Gains on disposal of Property, plant and 869.85 equipment
Gains on disposal of intangible assets
2. Gains on debt restructuring 34,198,389.90 3. Gains on Non-monetary transactions
4. Donations
5. Government grants
6.Other 66,123.80 533.07 Total 66,123.80 34,199,792.82 Non-operating income decreased by 34,133,669.02(99.81%) due to no gains on debt restructuring.
30 Non-operating expense
Year ended 31 Year ended 31 Categories
Dec.2013 Dec.2012 1.Losses on disposal of non-current assets 11,694.17 2,497.65 Including:
11,694.17 2,497.65 Losses on disposal of Property, plant and equipment
Losses on disposal of intangible assets
2. Losses on debt restructuring
3. Losses on Non-monetary transactions
4. Donations 60,000.00 1,060,000.00 5.Loss of assets
2013 Annual Report of Guangdong Rieys Group Company Ltd. 6. Fines 10,348.73 36,808.37 7.Other 100,300.00 153,262.08 Total 182,342.90 1,252,568.10 31 Income tax expense
Categories Year ended 31 Dec.2013 Year ended 31 Dec.2012 Current tax 8,593,479.34 11,647,967.99 Deferred tax 1,466,929.58 342,125.79 Total 10,060,408.92 11,990,093.78 32 Calculations of ROE, basic EPS and diluted EPS
Weighted average
EPS Profit of yearended31 Dec.2013
ROE
Basic EPS Diluted EPS Net profit attributable to ordinary
1.92% 0.0216 0.0216 shareholders
Net profit attributable to ordinary
shareholders after deducting 1.01% 0.0114 0.0114 non-recurring gain or loss
The above data is calculated using the following formulae:
Weighted average return on net asset
Weighted average return on net asset= P /(E＋NP÷2＋E×M÷M–E×M÷M±E×M÷M )
0 0 i i 0 j j 0 k k 0
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to 0
ordinary shareholders of the Company after deducting non-recurring gain or loss; E is the year beginning 0
equity attributable to ordinary shareholders of the Company; E is increased equity attributable to ordinary i
shareholders of the Company which arises from new issuance of shares or conversion of debt instruments to stocks in the reporting period; E is reduced equity attributable to ordinary shareholders of the Company due j
to stock repurchase or cash dividend in the reporting period; M is the number of months of the reporting 0
period; M is the number of accumulative months from the next month that equity is increased to the year end i
of the reporting period; M is the number of months from the next month that equity is decreased to the year j
end of the reporting period; E is the change of equity resulting from other transactions or events and k
attributable to ordinary shareholders; M is the number of accumulative months from the next month that other k
change of equity occurs to the year end of the reporting period.
Basic earnings per share
Basic earnings per share= P÷S
0
S= S＋S＋S×M÷M–S×M÷M -S
0 1 i i 0 j j 0 k
S= S＋S＋S×M÷M–S×M÷M -S
0 1 i i 0 j j 0 k
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to 0
ordinary shareholders of the Company after deducting non-recurring gain or loss; S is weighted average
number of ordinary shares outstanding; S is the total number of shares at the beginning of the year; S is the
0 1
2013 Annual Report of Guangdong Rieys Group Company Ltd. number of increased shares as a result of capitalization of reserves or scrip dividend during the reporting period; S is the number of increased shares as a result of new issuance of shares or conversion of debt i
instruments to stocks during the reporting period; S is the number of reduced shares as a result of stock j
repurchase; S is the number of consolidated shares in the reporting period; M is the number of months of the k 0
reporting period; M is the number of accumulative months from the next month that the number of shares is i
increased to the year end of the reporting period; M is the number of accumulative months from the next j
month that the number of shares is decreased to the year end of the reporting period.
(If the Company have any dilutive potential ordinary shares<issuance of convertible bonds, stock options, warrants and other dilutive potential ordinaryshares>, they should be adjusted respectively and attributable to net profit of reporting period of ordinary shareholders and weighted average common shares outstanding, and bywhich calculate the diluted earnings per share)
Diluted earnings per share=P1/(S0＋S1＋Si×Mi÷M0–Sj×Mj÷M0–Sk+weighted average number of increased ordinary shares arising from warrants, stock options and convertible debts)
Where: P1 is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss, and after the consideration of the effects of dilutive potential ordinary shares, make adjustment according to relevant provisions of “Accounting Standards of Enterprises”.
In calculating the diluted earnings per share, the Company has taken into consideration the effects of all dilutive potential ordinary shares on net profit attributable to the Company's common shareholders or net profit attributable to the Company's common shareholders after deducting non-recurring profit or loss as well as weighted average number of shares, until the diluted earnings per share reach the lowest amount. (1) During period from statement of financial position date to the date approved to issue the financial report, if the occurred stock dividend, reserve capitalization, share split or share consolidation impact the number of outstanding ordinary shares or potential common shares but without influent the amount of owner's equity, it should recalculate the earnings per share each comparative period at adjusted number of shares.
(2) If business combination under identical control occurred during the reporting period, and the merging parties issue new shares as the price in the merger date, when calculate basic earnings per share for the reporting period, such new shares should be treated as outstanding common shares issued at the beginning of merge (weight average by weight of 1).When calculating of basic earnings per share during the comparison period, such shares should be treated as outstanding common shares issued at the beginning of comparison period. When calculating the earnings per share after deducting non-recurring profit or loss at the end of reporting period, the new shares issued by the merging parties on the merger date will be weighted from the month next to the combined date. When calculating the earnings per share after deducting non-recurring profit or loss during the comparison period, the new shares issued by the merging parties on the merger date will not be weighted (the weight is 0). For the occurrence of business combination under identical control at the reporting period, and the merging parties issue new shares as the price in the merger date, when calculating the diluted earnings per share in the reporting period and comparison period, it should be treated according to the principles on calculation of basic earnings per share.
2013 Annual Report of Guangdong Rieys Group Company Ltd. (3) In the reporting period, if the company realizes the unlisted companies to list indirectly through share issue to purchase assets or other means and which composing a reverse purchase, then when calculating earnings per share of the reporting period:
Weighted average number of ordinary shares in reporting period＝ weighted average number in the month from reporting period beginning to purchase date＋ weighted average number from the next month to purchase date to reporting period end
Weighted average number in the month from reporting period beginning to purchase date＝ weighted average number of purchaser (subsidiary in law)× exchange ratio in Purchase Agreement× number of cumulative months from year beginning to purchase date÷ number of months of reporting period
Weighted average number in the next month to purchase date to reporting period end＝ weighted average number of acquirer(parent company in law)× number of cumulative months from the next month to purchase date to reporting period end÷ number of months of reporting period
In the reporting period, if the company realizes the unlisted companies to list indirectly through share issue to purchase assets or other means, then when calculating earnings per share of the comparison period: Weighted average number of common shares in comparison period＝ Purchaser (subsidiary in law)× exchange ratio in Purchase Agreement
33 Note to statement of cash flows
37. Other proceeds from operating activities
Item Amount Proceeds from other corporations 107,630,180.60 Other proceeds from operating activities(excluding sales) 11,683,780.88 Total 119,313,961.48 38. Other payments in operating activities
Item Amount Payments to other corporations 136,789,869.68 Payments to auditor or other services provider 1,018,771.95 Other payments in operating activities 20,213,359.04 Total 158,022,000.67 34 Supplementary information for statement of cash flows
39. Indirect method of reporting cash flows from operating activities.
Year ended 31 Year ended 31 Item
Dec.2013 Dec.2012 1.Reconciliation of profit to cash flows from operating
activities：
Profit for the year 6,791,463.02 25,967,303.18 Add: Impairment loss -2,668,197.06 6,033,866.38
2013 Annual Report of Guangdong Rieys Group Company Ltd. Depreciations of tangible non-current assets 4,451,693.22 4,841,996.38 Amortizations of intangible assets 673,188.24 673,188.24 Amortizations of long-term deferred expenses 192,960.00 192,960.00 Loss in disposal of property, plant and equipment,
intangible assets, and other non-current assets. (“-” for 11,694.17 1,627.80 gains)
Loss in scrapping property, plant and equipment. (“-” for
gains)
Loss in changes in fair value of related items (“-” for
gains)
Finance costs (“-” for gains) 3,514,926.95 12,481,265.24 Loss in investing (“-” for gains) -5,093.38 Decreases in deferred income tax assets (“-” for increase) 1,466,929.58 342,125.79 Increases in deferred income tax liabilities (“-” for
decrease)
Decreases in inventories (“-” for increase) 76,034,600.45 -51,293,256.40 Decreases in operating receivables (“-” for increase) 380,141,384.36 -272,288,981.67 Increases in operating payables (“-” for decrease) -405,443,503.75 326,955,175.90 Other 157,968.15 177,874.63 Net cash flows generated by operating activities 65,325,107.33 54,080,052.09 2. Significant investing and financing activities without
cash flows
Liabilities transferring to capital
Convertible bond matured in 12 months
Property, plant and equipment acquired in a Finance
lease
3.Net increase in cash and cash equivalents:
Closing balance of cash 56,330,640.22 21,555,492.79 Less: Opening balance of cash 21,555,492.79 1,600,749.63 Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents 34,775,147.43 19,954,743.16 40. No acquisition or disposal of subsidiaries and other entities in Year ended 31 Dec.2013
41. Composition of cash and cash equivalents
Item 31 Dec.2013 31 Dec.2012 I. Cash 56,330,640.22 21,555,492.79
2013 Annual Report of Guangdong Rieys Group Company Ltd. Including:
800,582.60 693,705.81 Cash
Bank balances 55,530,057.62 20,841,826.88 Other deposits 19,960.10 II. Cash equivalents
Including:
Bond matured in less than 3 months
III. Closing balance of cash and cash equivalents on 56,330,640.22 21,555,492.79 Including:
Cash and cash equivalents under restriction held by
parent company or subsidiaries.
VI. Related party
35 Parent company of the company
Relation Type of Legal Business Name of parent company Registered place
ship enterprise representative nature No. 403, Build A, Qinggong
Shenzhen Shenghengchang Huifu Limited
Parent Changfang,Nanshang Road, Ding Lihong Trading Industrial Co., Ltd. company
Nanshang District, Shenzhen
Registered
Shares holding of Voting right of the Ultimate Organizatio Name of parent company capital (RMB
the Company(%) Company(%) controller n Code million)
Shenzhen Shenghengchang Huifu Chen 74122232- 98 36.99% 36.99%
Industrial Co., Ltd. Hongcheng 1
Note: Shenzhen Shenghengchang Huifu Industrial Co., Ltd., Shenzhen Risheng Chuangyuan Asset Management Co., Ltd. and Shenzhen Lianhua Huiren Industriy Co., Ltd. are controlled by the same family, thus constitute concerted action under Disclosure of Information on the Change of Shareholdings in Listed Companies.
36 Subsidiaries
Details refer to IV.1.
37 Other related parties
Name Relationship
Shenzhen Risheng Chuangyuan Asset Holding10.68% shares of the Company,
Management Co., Ltd. affiliate controlled under ChenHongcheng’s family Shenzhen Lianhua Huiren Industriy Co., Holding3.81% shares of the Company,
Ltd. affiliate controlled under ChenHongcheng’s family
2013 Annual Report of Guangdong Rieys Group Company Ltd. Chen Xuewen Direct relatives of Cheng Hongcheng
Vice-Board chairman of the Company, relative of Cheng Hongcheng, the legal representative of
Ding Lihong
parent company and Shenzhen Risheng Chuangyuan Asset Management Co., Ltd.
Sichuan Baoxing Zhengxing Marble Co.,
Affiliate controlled under Chen Hongcheng
Ltd.
38 Related parties transactions
42. Purchasing goods, providing and accepting services
Transaction under this category exists in this year.
Subsidiaries purchased marble material (pricing at 2,033,118.20 including tax) from Sichuan Baoxing Zhengxing Marble Co., Ltd.
43. Guarantee between related parties
No guarantee between related parties in this year.
44. Accounts receivable and payable among related parties
Name 31 Dec.2013 31 Dec.2012 Trade payables
Sichuan Baoxing Zhengxing Marble
224,794.00
Co., Ltd.
Total 224,794.00
VII Contingent liabilities and contingent assets
No contingent liabilities and contingent assets need to be disclosed.
VIII. Commitments
39 Assets mortgage and guarantee
In order to support Puning Huafengqiang Trade Co., Ltd. to obtain maximum amount mortgage contract, the Company continually mortgaged its real estate to Jieyang Rongcheng Branch, Industrial and Commercial Bank of China Co., Ltd. (hereinafter referred to as ICBC, Rongcheng Branch) in current period. The maximum amount mortgage contract (GDZ(2012) No. 5013 issued by ICBC, Rongcheng Branch) detailed that the secured principle credit was from 8 Oct. 2012 to 8 Oct. 2017, the estimated value of the collateral is 50.13 million. Besides, Puning Huafengqiang Trade Co., Ltd. provided counter guarantee for the Company with RMB 25 million which was borrowed from ICBC Rongcheng Branch.
The initial cost of the assets mentioned in the aforesaid was 40,233,548.69 with the net value of
2013 Annual Report of Guangdong Rieys Group Company Ltd. 31,391,271.67.
IX. Events after the reporting period
1. The related party, Sichuan Baoxing Zhengxing Marble Co., Ltd., changed its name to Yaan Zhengxing Hanbaiyu Co., Ltd. and its legal representative to Chen Xuewen on 28 Feb. 2014.
2. On 14 Apr. 2014, for Puning Yanlaili Trade Co., Ltd., the Company mortgaged its buildings and installations and signed a maximum amount mortgage contract with ICBC, Rongcheng Branch (GDZ(2014)No. 3943 issued by ICBC, Rongcheng Branch). The secured principle credit was 14 Arp. 2014 to 14 Apr. 2019, and the estimated value of the collateral is 39.43 million. Besides, Puning Yanlaili Trade Co., Ltd. provided counter guarantee for the Company with RMB 24 million which was borrowed from ICBC Rongcheng Branch.
X. Other significant events
40 Particulars on releasing the pledged real estate
The Company mortgaged its real estate in order to obtain RMB40 million loan from China Everbright Bank, Guangzhou Branch. The maturity date is 27 Sep. 2009. As at 31 Dec. 2013, the Company repaid the entire loan owed to China Everbright Bank, Guangzhou Branch, and the pledged real estate was released.
41 Continual operating capacity of the Company
According to the Eighteenth National Congress of the Communist Party of China, the goal of urbanization and completing the building of a moderately prosperous society in all respects in 2020 give the Company a strong faith in the development of the real estate sector in the next following 6 years.
However, due tocustomers’ growing standard of building quality and sale service, tight policy environment, shortage of fund supporting, and land supply limitation, the development of small-medium real estate companies will be challenged.
In 2013, the basic policy referring to real estate sector has no changed, the government clarifies that the effort is put on establishing long-term healthy development model of real estate industry. Adhering to the operating philosophy of “growth in stability”, the Company proactively expanded subsequent projects, researched many real estate markets and analyzed multiple projects. However, after considering the potential risks of researched projects, the company declined those subsequent projects. During 22 Jun. 2013 to 26 Jul. 2013, the Company suspended and planned asset restructuring projects.
Facing the furious competition, the Company will further optimize the resource, clarify its strategic position, improve talent development and operating mode, abandon the outdated notions and innovate itself to increase the core competitiveness and seize market opportunities. The company will adopt subsequent projects as soon as possible under the tolerable risks and also seek for new growth incentives to ensure theCompany’s sustainable development.
In 2013, net profit attributable to owners of parent company stood at 6.8867million, the recognized revenue of commercial residential building was 148,458,757.00, and the Company repaid the principal and interest to
2013 Annual Report of Guangdong Rieys Group Company Ltd. China Everbright Bank was 15,099,960.00 and 15,609,456.05 respectively. As to 31 Dec. 2013, the Company had no loan liabilities.
XI Notes to the items of theCompany’s financial statement
42 Trade receivables
45. In categories
31 Dec.2013 31 Dec.2012 Categories Balances Write-down Balances Write-down Amounts % Amounts % Amounts % Amounts % Significant
individual
amount with
4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00 individually
assessed of bad
debts
Provision for bad debts according to group
Insignificant
individual
amounts but
with significant
portfolio risk
after grouped by
credit risk
feature
Significant
individual
amounts
grouped by
credit risk
feature
Subtotal
Insignificant
individual
amount with
individually
assessed of bad
debts
Total 4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00 4,608,276.88 100.00 46. Significant individual amount with individually assessed of bad debts.
Names of balances Amounts Write-down Write-dow Reason
2013 Annual Report of Guangdong Rieys Group Company Ltd. n in
Amounts
%
Long-term credit, the Hongkong Jinhua Trading
4,224,304.63 4,224,304.63 100.00 balance is Company
controversial Long-term credit, the Chen Shunqin 335,904.80 335,904.80 100.00 balance is controversial Long-term credit, the Ningbo Industrial and
26,354.45 26,354.45 100.00 balance is Commercial Bureau
controversial Long-term credit, the Beijing Capital Airport 21,713.00 21,713.00 100.00 balance is controversial Total 4,608,276.88 4,608,276.88
47. Portfolios of insignificant individual amounts but with significant portfolio risk after grouped by credit risk feature
Naught
48. Top 5 amounts of balances on 31 Dec.2013.
Percentage in the Names of balances Relation Amount Aging
total receivables Hongkong Jinhua Trading
Customer 4,224,304.63 Over 3years 91.67% Company
Chen Shunqin Customer 335,904.80 Over 3years 7.29% Ningbo Industrial and
Customer 26,354.45 Over 3years 0.57% Commercial Bureau
Beijing Capital Airport Customer 21,713.00 Over 3years 0.47% Total 4,608,276.88 100.00% 49. No increase or decrease in trade receivable which had been fully written-down.
43 Other receivables
50. In categories
31 Dec.2013 31 Dec.2012 Categories Balances Write-down Balances Write-down Amounts % Amounts % Amounts % Amounts % Significant
individual
67,859,169.28 93.23 2,931,608.20 4.32 96,986,345.81 97.45 3,090,408.20 3.19 amount with
individually
2013 Annual Report of Guangdong Rieys Group Company Ltd. assessed of bad
debts
Provision for bad debts according to group
Insignificant
individual
amounts but
with significant
3,445,625.51 4.73 995,868.18 28.90 2,538,015.43 2.55 2,168,656.92 85.45 portfolio risk
after grouped by
credit risk
feature
Significant
individual
amounts
grouped by
credit risk
feature
Subtotal 3,445,625.51 4.73 995,868.18 28.90 2,538,015.43 2.55 2,168,656.92 85.45 Insignificant
individual
amount with
1,480,777.36 2.04 1,478,227.36 99.83
individually
assessed of bad
debts
Total 72,785,572.15 100.00 5,405,703.74 7.43% 99,524,361.24 100.00 5,259,065.12 5.28 51. Significant and insignificant individual amount with individually assessed of bad debts..
Allowance in
Names of balances Amounts Allowance Reason
Amounts%
Unsettled balance with little Export tax rebate 2,331,608.20 2,331,608.20 100.00%
estimated recovery possibility Long-term credit with little estimated Guangzhoushi Nanxiang Building Co., Ltd. 500,000.00 500,000.00 100.00%
recovery possibility
Long-term credit with little estimated Shenzhenshi Zhaotong Investment Co., Ltd. 600,000.00 600,000.00 100.00%
recovery possibility
Long-term credit with little estimated Lin Jialin 300,000.00 300,000.00 100.00%
recovery possibility
Shenzhenshi Baoanqu
Long-term credit with little estimated Gongmingqixingjianye Building Material 200,000.00 200,000.00 100.00%
recovery possibility
Sales
Shenzhen Jinmingren information consulting 200,000.00 200,000.00 100.00% Long-term credit with little estimated
2013 Annual Report of Guangdong Rieys Group Company Ltd. Co., Ltd. recovery possibility
Long-term credit with little estimated Zonglvquan 100,000.00 100,000.00 100.00%
recovery possibility
Long-term credit with little estimated Chengde Xingye Paper Co., Ltd. 89,229.41 89,229.41 100.00%
recovery possibility
Long-term credit with little estimated Puningshi Weililai textile Co., Ltd. 50,000.00 50,000.00 100.00%
recovery possibility
Long-term credit with little estimated Changsha Guanyuan Clothes Co., Ltd. 12,150.00 12,150.00 100.00%
recovery possibility
Long-term credit with little estimated Changsha Hat works 10,542.95 10,542.95 100.00%
recovery possibility
Long-term credit with little estimated Cai Weixian 9,500.00 9,500.00 100.00%
recovery possibility
Long-term credit with little estimated Chen Hanbiao 3,600.00 3,600.00 100.00%
recovery possibility
Long-term credit with little estimated Security deposit 3,000.00 3,000.00 100.00%
recovery possibility
Long-term credit with little estimated Shenzhenshi Youtianda Industry Co., Ltd. 205.00 205.00 100.00%
recovery possibility
Total 4,409,835.56 4,409,835.56
52. Portfolios of insignificant individual amounts but with significant portfolio risk after grouped by credit risk feature
31 Dec.2013 31 Dec.2012 Aging Balances Balances
Write-down Write-down Amounts % Amounts %
0-1 year 2,310,993.04 67.07% 46,219.86 11,517.72 0.45% 230.35 1-2 years 9,862.12 0.29% 986.21 340,424.80 13.41% 34,042.48 2-3 years 336,424.80 9.76% 168,212.40 33,732.36 1.33% 16,866.18 Over 3
788,345.55 22.88% 780,449.71 2,152,340.55 84.80% 2,117,517.91 years
Total 3,445,625.51 100.00% 995,868.18 2,538,015.43 100.00% 2,168,656.92 53. Top 5 amounts of balances on 31 Dec.2013.
Percentage in Names of balances Relation Amount Aging the total receivables Tianrui (HK) Trade Co., Ltd. Subsidiary 64,927,561.08 Over 3 years 89.20% Export tax rebate Tax authority 2,331,608.20 Over 3 years 3.21%
2013 Annual Report of Guangdong Rieys Group Company Ltd. Percentage in Names of balances Relation Amount Aging the total receivables Double Rider Medicine (China)
Customer 1,080,000.00 0-1 year 1.49% Co., Ltd.
Guangzhou Yuanfeng Trade
Supplier 700,000.00 Over 3 years 0.97% Development Co., Ltd.
Shenzhen Zhaotong Investment
Supplier 600,000.00 Over 3 years 0.83% Co., Ltd.
Total 69,639,169.28 95.70% 44 Investments in subsidiaries and associates
Accounting Shares in the Voting rights in the Difference Name
Method investee(%) investee(%) statement Shenzhen Rieys Industrial Co., Ltd. Cost method 90.00 90.00
25 held by other Puning Tianhe Garment Manufacturing
Cost method 75.00 100.00 entities in the Factory Co., Ltd.
group Tianrui (HK) Trading Co., Ltd. Cost method 100.00 100.00
Puning Hengda Real Estate Development
Cost method 100.00 100.00
Co., Ltd.
Shenzhen Yingda Chuangyuan Construction
Cost method 100.00 100.00
Investment Co., Ltd.
Increase and
Name Initial cost 31 Dec.2013 31 Dec.2012 decrease
Shenzhen Rieys Industrial Co., Ltd. 45,000,000.00 45,000,000.00 45,000,000.00 Puning Tianhe Garment Manufacturing
51,712,500.42 51,712,500.42 51,712,500.42 Factory Co., Ltd.
Tianrui (HK) Trading Co., Ltd. 8.26 8.26 8.26 Puning Hengda Real Estate Development
146,600,000.00 146,600,000.00 146,600,000.00 Co., Ltd.
Shenzhen Yingda Chuangyuan Construction
1.00 1.00 1.00 0.00 Investment Co., Ltd.
45 Revenue and cost of sales
Item Year ended 31 Dec.2013 Year ended 31 Dec.2012 Revenue 14,400.00 cost of sales
2013 Annual Report of Guangdong Rieys Group Company Ltd. Gross profit 14,400.00 46 Investment income
Categories Year ended 31 Dec.2013 Year ended 31 Dec.2012 Generated from disposal of equity investments
Generated from holding financial assets at fair
5,093.38 value through profit or loss
Total 5,093.38 47 Supplementary information for statement of cash flows
Year ended 31 Year ended 31 Item
Dec.2013 Dec.2012 1.Reconciliation of profit to cash flows from operatingactivities：
Profit for the year -14,841,797.40 984,345.38 Add: Impairment loss 146,638.62 303,985.48 Depreciations of tangible non-current assets 3,509,792.04 3,504,140.46 Amortizations of intangible assets 673,188.24 673,188.24 Amortizations of long-term deferred expenses
Loss in disposal of property, plant and equipment, intangible
assets, and other non-current assets. (“-” for gains)
Loss in scrapping property, plant and equipment. (“-” for gains)
Loss in changes in fair value of related items (“-” for gains)
Finance costs (“-” for gains) 3,561,227.28 9,996,965.24 Loss in investing (“-” for gains) -5,093.38 Decreases in deferred income tax assets (“-” for increase) -36,659.66 -75,996.37 Increases in deferred income tax liabilities (“-” for decrease)
Decreases in inventories (“-” for increase)
Decreases in operating receivables (“-” for increase) 25,030,616.68 45,360,840.67 Increases in operating payables (“-” for decrease) 10,530,381.74 -35,846,417.13 Other -15,042.84 Net cash flows generated by operating activities 28,573,387.54 24,880,915.75 2. Significant investing and financing activities without cash flows
Liabilities transferring to capital
Convertible bond matured in 12 months
Property, plant and equipment acquired in a Finance lease
3.Net increase in cash and cash equivalents:
Closing balance of cash 5,484,282.30 7,628,811.81
2013 Annual Report of Guangdong Rieys Group Company Ltd. Less: Opening balance of cash 7,628,811.81 1,338,922.68 Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increase in cash and cash equivalents -2,144,529.51 6,289,889.13 XII. Supplementary information
48 Statement of non-recurring gains or losses for the year ended 31 Dec.2013
Item Amount Remark Disposal of Property, plant and equipment, 1. Profit or loss from disposal of non-current assets, including including written-off -488,207.85
write-off impairment. amount of asset impairment reserves 476,513.68 2. Ultra vires approval, or without official approval, or
occasional tax return or relief;
3. Government subsidies through current profit or loss.
(Excluding that could be continuously received in normal
operations according to certain standard amount or
quantities, due to being in accord national policies and
regulations.
4. Interest from non-financial enterprises
5. Gain from acquiring subsidiaries or other entities with a
consideration less than the fair value of the net assets.
6. Non-monetary transactions profit or loss;
7. Profit or loss from entrusting others to invest or manage
assets;
8. Various impairment losses made due to force majeure,
such as natural disasters;
9. Debt restructuring gains and losses;
10. Corporate restructuring costs, such as the employees
arrange expenses, integration costs, etc.;
11. Profit or loss over the part of fair value generated by
transactions with obviously unfair trading price;
12. Profit or loss generated by subsidiaries acquired( under
the same control before acquisition) from year beginning to
the combination date;
2013 Annual Report of Guangdong Rieys Group Company Ltd. 13. Profit or loss generated by contingencies unrelated to
normal business;
14. Profit or loss from changes in fair values of financial
assets at fair value through profit or loss, and liabilities at fair
value through profit or loss or from disposals of financial
assets at fair value through profit or loss, liabilities at fair
value through profit or loss and available-for-sale financial
assets. Excluding effective hedging in normal operations.
Received full written-off 15. Reversal of write-off of receivables through separate
5,117,350.70 amount of trade impairment test;
receivables 16. Profit or loss from entrusted loans lend to other entities;
17. Profit or loss generated from changes in fair value of
investment property that using fair value method for
subsequent measurement;
18. According to tax, accountancy law and other regulations,
one-time adjustment on current profit or loss;
19. Commission Income obtained from commission
operation;
20. Other non-operating income and expenditure in addition
-104,524.93 Fines and donations to the above items;
21. Other profit or loss items meet the definition of
non-recurring gains and losses.
Subtotal 4,524,617.92
Income tax expense that should be deducted from
1,280,328.18
aforementioned non-recurring gains and losses
Profit or loss of non-controlling interests in consolidated
-795.12
financial statement
Total 3,245,084.86
49 ROE, basic EPS and diluted EPS
Weighted average
EPS Profit of yearended31 Dec.2013
ROE
Basic EPS Diluted EPS Net profit attributable to ordinary
1.92% 0.0216 0.0216 shareholders
Net profit attributable to ordinary
shareholders after deducting 1.01% 0.0114 0.0114 non-recurring gain or loss
50 Explanation to major anomalies in theCompany’s financial statements
Items in statements Change amount Change Notes
2013 Annual Report of Guangdong Rieys Group Company Ltd. proportion
Received money from the sales of commercial Monetary funds 34,775,147.43 161.33%
residential buildings
Decreased uncollected money of sales of Trade receivables -17,233,968.99 -58.34%
commercial residential buildings
Prepayment 8,446,409.60 602.83% Prepayment of project funds
Other receivables 17,049,118.87 195.68% Increased deposit and current accounts
Short-term
-15,099,960.00 -100.00% Repaid the entire loan of China Everbright Bank borrowings
Trade payables -17,966,850.51 -58.19% Paid project funds
Increased advances from commercial residential Advance payment 25,669,696.42 89.83%
building customers
Interest payable -13,756,401.18 -100.00% Repaid the interest to China Everbright Bank Other payables -15,667,633.26 -47.74% Repaid accounts payable to related parties Distribution Decreased distribution expenses of commercial -2,584,966.29 -89.23%
expenses residential building
Asset impairment
-7,461,629.64 -155.66% Money collected
loss
Non-operating
-34,133,669.02 -99.81% No gains on debt restructuring
income
XIII. Approval and issue of financial statements
The financial statements have been approved for issue by the Board of Directors on 24 Apr. 2014
Guangdong Rieys Group Company Ltd 24 Apr. 2014
2013 Annual Report of Guangdong Rieys Group Company Ltd. XI. Documents Available for Reference
I. Accounting statements with the signatures and seals of legal representative, CFO and person in charge of accounting;
II. Original ofAuditor’s Report with seals of accounting firm and certified public accountants and seals and signatures of certified public accountants
III. Originals of all the documents of the Company ever disclosed publicly on the information-disclosure media designated by CSRC, as well as original manuscripts of all notifications of the Company.
(The report, compiled by English respectively, in the event of different Chinese and foreign text comprehension, to Chinese text shall prevail.)