Shang Gong Group Co., Ltd.
600843
900924
Semi-Annual Report 2014
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Important Notes
1. The Board of Directors, the Board of Supervisors, and all the directors, supervisors, and senior managerss guarantee that the contents of this semi-annual report are true, accurate, and complete, and there are no false statements, misleading statements, or major omissions herein, otherwise they will assume the joint and several legal responsibilities therefor.
2. All the members of the board of directors of this Company attended the meeting of the board of directors. 3. This Semi-annual financial report of the Company was not audited.
4. Zhang Min, the principal of this Company, Li Jiaming, the principal in charge of the accounting, and GaoLili, the head of the financial department declare that this Semi-Annual Report are true, accurate, and complete.
5. There was no occupation of fund of the Company occurred for non-operating use by holding shareholder and the related party.
6. There was no external guarantee against the rules and regulations of the Company.
7. If the English Version of this Semi-Annual Report involves any differences from the Chinese Version, the latter shall be effective.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Content
Part I Definition .............................................................................................................................................................. 4 Part II Company Profile ................................................................................................................................................ 5 Part III Accounting Data and Financial Index Highlights .......................................................................................... 6 Part IV Report of the Board of Directors ..................................................................................................................... 7 Part V Important Issues ............................................................................................................................................... 16 Part VI Share Change and Shareholder Status ......................................................................................................... 20 Part VII Relevant Situation about Preferred Shares................................................................................................. 25 Part VIII Directors, Supervisors and Senior Officers Status ................................................................................... 26 Part IX FianancialReport…….………………………………………………………………………………….….27 Part XReferences………...…….………………………………………………………………………………….….96
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part I Definition
1. Definition
Except stated otherwise in the context hereof, the following terms shall have the following meaning:
||||
|-|-|-|
|Definitions of common terms|||
|ShangGong Group, the Company,this Company|means|Shang Gong Group Co., Ltd.|
|PDSASAC|means|State-owned Assets Supervision and Administration Commissionof Shanghai Pudong New Area People‟s Government, thecontrolling shareholder and actual controller of Shang GongGroup Co., Ltd.|
|SG Europe, ShangGong Europe|means|ShangGong (Europe) Holding Corp. GmbH|
|DA AG|means|Duerkopp Adler Aktiengesellschaft, a German listed companycontrolled by ShangGong (Europe) Holding Corp. GmbH, thesubsidiary of Shang Gong Group Co., Ltd.|
|SG Butterfly, SG ButterflyCompany|means|Shanghai Shanggong Butterfly Sewing Machine Co., Ltd.|
|DA Trading|means|Dürkopp Adler Trading (Shanghai) Co., Ltd.|
|PFAFF AG|means|PFAFF Industriesysteme und Maschinen Aktiengesellschaft|
|KSL GmbH|means|KSL Keilmann Sondermaschinenbau GmbH, KSE GmbH, KSAVerwaltungs GmbH|
|German KSL GmbH and itsAffililates, K GmbH|means|KSL Keilmann Sondermaschinenbau GmbH, KSE GmbH, KSAVerwaltungs GmbH、KSA GmbH & Co. KG|
|BDO China Shu Lun Pan CertifiedPublic Accountant LLP|means|BDO China Shu Lun Pan Certified Public Accountant LLP(special general partnership)|
|CSRC|means|China Securities Regulatory Commission|
|SSE|means|Shanghai Stock Exchange|
|Report Period|means|From January 1, 2014 to June 30, 2014|
|After Report Period|means|From July 1, 2014 to the date of releasing these Statements|
|Company Law|means|The Company Law of the People‟s Republic of China|
|Securities Law|means|The Securities Law of the People‟s Republic of China|
|RMB, Yuan|means|Renminbi, China Yuan, the legal currency of China|
|EUR|means|Currency of European Union|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part II Company Profile
1. Company Information
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|-|-|
|Company name in Chinese|上工申贝（集团）股份有限公司|
|Abbreviation of the Company name in Chinese|上工申贝|
|Company name in English|Shang Gong Group Co., Ltd.|
|Abbreviation of the Company name in English|ShangGong Group|
|Legal representative of the Company|Zhang Min|

2. Contact
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|-|-|-|
||Secretary of Board of Directors|Representative of Securities Affairs|
|Name|Zhang Jianguo|Shen Lijie|
|Address|F 12, Orient Mansion, No. 1500, CenturyAvenue, Pudong New Area, Shanghai|F 12, Orient Mansion, No. 1500, CenturyAvenue, Pudong New Area, Shanghai|
|Telephone|021-68407515|021-68407700*1233|
|Fax|021-63302939|021-63302939|
|Email|zhangjianguo@sgsbgroup.com|shenlj@sgsbgroup.com|

3. Company Profile
12th
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|-|-|
|Registered Address|Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong NewArea, Shanghai|
|Postal Code|200122|
|Office address|Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong NewArea, Shanghai|
|Postal Code|200122|
|Website|http://www.sgsbgroup.com|
|Email|sgsb@sgsbgroup.com|

4. Information Release and Lodging Address
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|-|-|
|Name of newspaper selected by the Company forinformation release|Shanghai Securities News, Hong Kong CommercialDaily|
|Website appointed by CSRC for publishingsemi-annual report|http://www.sse.com.cn|
|Lodging address of semi-annual report of the Company|Office of board of directors of the Company|

5. Introduction toCompany’s Stock
||||||
|-|-|-|-|-|
|Introduction to Company‟s Stock|||||
|Type ofStock|Exchange where stock is listed|Abbreviation ofStock|Code ofStock|Abbreviation of Stock beforeChange|
|A Share|Shanghai Stock Exchange|SGSB|600843|Shanggong Stock, Gongfeng Share|
|B Share|Shanghai Stock Exchange|Shangong B Share|900924|Gongfeng B Share|

6. Registration Change of the Company in the Report Period
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|-|-|
|Registration date|July 31,2014|
|Registration place|Room A-D, 12th Floor, Orient Mansion, No. 1500, Century Avenue, Pudong New Area, Shanghai|
|License No.|310000400080303|
|Tax No.|310115132210544|
|Orgization No.|13221054-4|
|Registration changeduring report period|During the report period, the company completed non-public offering of stock, the company‟sregistered capital changed to RMB 548,589,600, refer to "Shanghai Securities News", " HongKong Commercial Daily" and the Shanghai Stock Exchange website Temporary Bulletin No.2014-027 of the Company on June 11, 2014.|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part III Accounting Data and Financial Index Highlights
1. Main Accounting Data and Financial Index of the Company
1.1 Main Accounting Data Unit: Yuan Currency: RMB
|||||
|-|-|-|-|
|Main Accounting Data|This Report Period(from Jan. to Jun.)|Same period in theprevious year|Increase or decrease in thisReport Period over theprevious year (%)|
|Operating revenue|969,890,167.03|871,423,265.72|11.30|
|Net profit attributable to shareholders oflisted company|41,854,215.80|30,674,302.78|36.45|
|Net profit after deduction ofnon-recurring profits and losses,attributable to shareholders of listedcompany|41,791,285.85|30,691,946.38|36.16|
|Net cash flows from operating activities|-18,746,773.41|-31,574,376.14|NA|
||At the end of thisReport Period|At the end of theprevious year|Increase or decrease at theend of this Report Periodover the previous year (%)|
|Net assets attributable to shareholders oflisted company|1,484,168,038.94|795,894,186.10|86.48|
|Total assets|2,682,230,955.77|2,047,916,471.17|30.97|

 1.2 Main Financial Index
|||||
|-|-|-|-|
|Main Financial Index|This Report Period(from Jan. to Jun.)|Same period in theprevious year|Increase or decrease ofthis Report Period overthe previous year (%)|
|Basic earnings per share (RMB/share)|0.0839|0.0683|22.84|
|Diluted earnings per share (RMB/share)|0.0839|0.0683|22.84|
|Basic earnings per share after deductionof non-recurring profits and losses(RMB/share)|0.0838|0.0684|22.51|
|Weighted average return on equity (%)|3.6846|4.2622|Decrease by 0.58%|
|Weighted average return on equity afterdeduction of non-recurring profits andlosses (%)|3.6791|4.2646|Decrease by 0.59%|

1.3 Items and Amount of Non-recurring Profits and Losses
Unit: Yuan Currency: RMB
|||
|-|-|
|Items of Non-recurring Profits and Losses|Amount|
|Profits and losses from disposal of non-current assets|265,010.30|
|government subsidies recorded in the current profit and loss|149,000.00|
|Except effective hedging business relevant to the normal business of the Company, gains andlosses from changes in fair value arising from trading financial assets and trading financialliabilities, and investment income from disposal of trading financial assets, trading financialliabilities and available-for-sale financial assets|-13,426.44|
|Other non-operating income and expenditure except the above-said items|-206,733.07|
|Impact on minority interests|-103,155.71|
|Impact on income tax|-27,765.13|
|Total|62,929.95|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part IV Report of the Board of Directors
1. Discussion and Analysis of the Board of Directors on the Operating Status of the Company during the Report Period
In the first half of 2014, the overall domestic economy continued to be stable and on the up-trend, the GDP grew7.4%, but due to the impact of the national economic structure adjustment and transformation and upgrading and downstream of textile and apparel market decline and other factors, the sewing machinery industry continued to show a downward trend overall.
Facing the downturn of conditions and complex market environment of sewing machinery industry, the company's management and staff work together to actively adhere to the "science and technology leading, innovation and development" business strategy, the overall operations of the reporting period stay healthy and stable. According to the business plan arrangement, the company focuses on the following aspects:
A. Non-public issuance of work completed according to plan for the long-term development. It laid a solid foundation for the company. The raising investment project is being actively promoted in accordance with the plan, investment on PFAFF project through Shanggong Europe has completed. The integration for DA , PFAFF and KSL in on the way. Synergy effect has been initially come out. The company 's technology, industry position and scale, market share and economic benefits have increased.
B. The company increases R& D investment to accelerate the transformation and upgrading of sewing products technology development, and promotes the extension of company's products range of applications from clothing, bags, shoes and other traditional manufacturing and auto ancillary industry to aerospace, aerospace engineering and other emerging industries. The company increases R& D investment , to enhance the degree of automation products , promote the transformation and upgrading and development of traditional manufacturing industries. The company further accelerates the integration of home sewing main industry, create synergies, improve economic efficiency, improve products and production layout adjustment, strengthen the construction of a global sales network and information systems.
C. The company accelerates transformation and development of its non- sewing business, accelerates the gradient transfer, enhance profitability, and achieved certain results.
In the Report Period, the operation revenue of the Company was RMB 969,890,000, increasing by11.3% on a year-on-year basis, wherein, the sales revenue of sewing equipment increased by20.09%, the operating profit was RMB 90,550,000, increasedby18.72% on a year-on-year basis, the net profit attributable to shareholders of the listed company was RMB 41,850,000, increasing by36.45% on a year-on-year basis, and the net profit attributable to shareholders of the listed company after deduction of non-recurring gains and losses increased by36.16% on a year-on-year basis.
1.1 Analysis on Main Business
1.1.1 Analysis on Change of Relevant Items in Financial Statements
Unit: Yuan Currency: RMB
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|-|-|-|-|
|Items|Amount in thisReport Period|Amount in the sameperiod in the previousReport Period|Increase or decrease(%)|
|Operating revenue|969,890,167.03|871,423,265.72|11.30|
|Operating expenses|661,303,736.20|606,814,372.70|8.98|
|Selling expenses|109,957,980.76|88,494,572.02|24.25|
|General and administration expenses|102,160,879.18|98,820,662.84|3.38|
|Financial expenses|10,122,179.92|10,718,964.95|-5.57|
|Net cash flow from operating activities|-18,746,773.41|-31,574,376.14|40.63|
|Net cash flow from investing activities|-527,878,281.68|-96,239,879.63|-448.50|
|Net cash flow from financing activities|570,261,489.85|89,345,710.67|538.26|
|Research and development expenditures|28,412,862.30|26,637,899.76|6.66|

 1.1.1.1 Large Change of Items in the Balance Sheet of the Company at the End of Report Period and Reasons Unit: Yuan Currency: RMB
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|-|-|-|-|-|-|
|Items|At the end of thisReport Period|At the end ofprevious year|Amount increaseor decrease|Increase ordecrease (%)|Analysis forreasons|
|Notes receivable|2,307,430.01|3,320,697.28|-1,013,267.27|-30.51|Note 1|
|Dividend receivable|12,734,735.09|2,881,577.53|9,853,157.56|341.94|Note 2|
|Other receivables|41,465,146.32|60,130,306.48|-18,665,160.16|-31.04|Note 3|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
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|-|-|-|-|-|-|
|Other current assets|539,034,806.53|64,405,666.67|474,629,139.86|736.94|Note 4|
|Project underconstruction|5,636,796.26|2,801,141.91|2,835,654.35|101.23|Note 5|
|Short-term loans|145,303,754.54|222,299,211.73|-76,995,457.19|-34.64|Note 6|
|Notes payable|0.00|6,225,975.90|-6,225,975.90|-100.00|Note 7|
|Taxes payable|42,981,940.21|31,916,230.42|11,065,709.79|34.67|Note 8|
|Other current debts|503,397.29|1,623,775.74|-1,120,378.45|-69.00|Note 9|
|Capital reserve|945,448,784.81|397,651,623.21|547,797,161.60|137.76|Note 10|
|Retained earnings|38,857,646.81|-2,996,568.99|41,854,215.80|1396.74|Note 11|

 Note 1: mainly caused by accepting the acceptance bill in this Period.
Note 2: dividend receivable distributed by Fiji Xerox of Shanghai Limited in this Period.
Note 3: mainly caused by completing non-public stock offering of the Company and carrying forward the issuance expense.
Note4：mainly caused by purchasing short-term RMB structured deposit products with principal guaranteed by bank in this Period in order to increase gains of funds.
Note 5: mainly caused by increasing investment in sewing equipment in this Period.
Note 6: mainly caused by refunding loans from domestic funds with high cost.
Note 7: mainly caused by paying the acceptance bill in this Period.
Note 8: mainly caused by balance of enterprise income tax payable at the end of this period due to profit increase of subsidiaries in this Period.
Note 9: mainly caused by the foreignsubsidiaries‟ writing off interest and rent originally recorded in this Period. Note 10: mainly cause by premium produced from funds raised from non-public share offering in this Period. Note 11: caused by profit in this Period.
1.1.1.2 Large Change of Items in the Income Statement of the Company in this Report Period and Reasons Unit: Yuan Currency: RMB
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|-|-|-|-|-|-|
|Items|This ReportPeriod|Same period inthe previousyear|Amountincrease ordecrease|Increase ordecrease(%)|Analysisforreasons|
|Loss of asset impairment|4,810,987.05|-589,244.67|5,400,231.72|916.47|Note 1|
|Income from changes in fair value|-13,426.44|-80,413.50|66,987.06|83.30|Note 2|
|Non-business income|621,043.73|441,573.12|179,470.61|40.64|Note 3|
|Non-business expenditure|413,766.50|316,661.06|97,105.44|30.67|Note 4|
|Other comprehensive income|8,184,632.48|-21,909,974.10|30,094,606.58|137.36|Note 5|

 Note 1: mainly caused by reversal of bad debt reserve for account receivable
Note 2: mainly caused by increasing change gain in fair value of trading financial assets on year-on-year basis Note 3: mainly caused by increasing income from disposal of fixed assets on year-on-year basis.
Note 4: mainly caused by increasing loss from disposal of fixed assets on year-on-year basis.
Note 5: mainly caused by increasing change of fair value of available-for-sale financial assets and conversion balance in foreign currency statements on year-on-year basis.
1.1.1.3 Large Change of Items in the Cash Flow Statement of the Company in this Report Period and Reasons Unit: Yuan Currency: RMB
|||||||
|-|-|-|-|-|-|
|Items|This ReportPeriod|Same period inthe previous year|Amount increaseor decrease|Increaseordecrease(%)|Analysisfor reasons|
|Net cash flow from operatingactivities|-18,746,773.41|-31,574,376.14|12,827,602.73|40.63|Note 1|
|Net cash flow from investingactivities|-527,878,281.68|-96,239,879.63|-431,638,402.05|-448.50|Note 2|
|Net cash flow from financingactivities|570,261,489.85|89,345,710.67|480,915,779.18|538.26|Note 3|
|Impact of change of exchangerate on cash flow|-1,056,688.04|-9,216,787.28|8,160,099.24|88.54|Note 4|

Note 1: mainly caused by increase of cash received from selling commodities and providing labor and paid to
employees paid on year-on-year basis.
Note 2: mainly caused by purchase of RMB structured deposit products of the bank in this Period and purchase of
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
100% equity of PFAFF by ShangGong Europe on year-on-year basis.
Note 3: mainly caused by receipt of funds raised from non-public stock offering and increase of net repayment amount of the bank loans on year-on-year basis in this Period.
Note 4: mainly caused by impact of change of Euro exchange rate.
1.1.2 Others
1.1.2.1 Detailed Statement on Major Change in Profit structure and Profit Sources of the Company In the Report Period, the main business of the Company was stable, and there was no major change in profit structure and profit sources of the Company.
1.1.2.2 Analysis and Statement on Implementation Progress of Various Financing and Major Assets Restructuring of the Company in the Earlier Stage
The third temporary 2013 general meeting of shareholders held by the Company on August 20, 2013, reviewed and adopted the pre-plan of non-public share offering (A Shares). In February 28, 2014, CSRC examined and approved the non-public share offering of the Company. This offering was completed on March 28, the actual offering number was 99,702,823 shares, the offering price was RMB 6.73/share, the amount of raised funds was RMB 670,999,998.79, and after deduction of offering fees of RMB 32,791,767.81, the net amount of raised funds was RMB 638,208,230.98. After this offering, the total share capital of the Company is 548,589,600 shares, and the lock-up period for the newly increased shares is 12 months (for details, see the Temporary Bulletin No. 2014-011 of Company).
1.1.2.3 Statement on progress of operation plan
In this Report Period, the Company actively organized to implement the annual operation plan established by the Board of Directors at the earlier of this year, and the production and operation of Company were healthy and steady. Without consideration of the impact of irregular factors, the operation performance basically met expectations. The investment projects for which funds were raised were under implementation positively.
1.2 Analysis on Operation Status by Industry, Product and Region
1.2.1 Main Business Status by Industry and Product
Unit: Yuan Currency: RMB
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|-|-|-|-|-|-|-|
|Main Business Status by Industry|||||||
|Industry|Operatingexpenses|Operatingexpenses|Grossprofitrate(%)|Increase ordecrease ofoperatingrevenueover thepreviousyear (%)|Increase ordecrease ofoperatingexpensesover thepreviousyear (%)|Increase or decreaseof gross profit rateover the previousyear (%)|
|Sewing equipment|758,165,170.26|472,316,173.27|37.70|20.09|19.24|Increase 0.44%|
|Export trade|138,078,065.37|134,983,016.70|2.24|-13.08|-12.52|Decrease 0.62%|
|Office Supplies andFilm Equipment|46,450,959.13|40,310,076.60|13.22|-11.55|-11.99|Increase 0.44%|
|Others|2,476,013.64|637,125.76|74.27|27.88|964.80|Decrease 22.64%|
|Total|945,170,208.40|648,246,394.33|31.41|11.90|8.72|Increase 2.01%|

 1.2.2 Main Business Status by Region
Unit: Yuan Currency: RMB
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|-|-|-|
|Region|Operating revenue|Increase or decrease of operating revenueover the previous year (%)|
|Domestic|397,189,456.19|-2.95|
|Overseas|609,890,630.29|26.32|

1.3 Analysis on Core Competitiveness
The Company is the first listed enterprise with the longest history in the domestic sewing equipment industry, and
has multiple years of experience in production of sewing equipment. The Company successfully purchased
GermanDürkopp Adler AG in 2005, one of the famous sewing machine manufacturing company in the world,
which gives the Company the most advanced sewing machine manufacturing technology in the world. In 2013,
through cross-border merger and acquisition, the Company successfully controlled German PFAFF AG and
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
German KSL GmbH and its affiliates, both of which were well-established sewing equipment manufacturing enterprises in the same industry, to make its international influence and brand recognition improve largely, and further enhance the core competence of the Company. The core competence of the Company is mainly shown in the following aspects:
I. Technology Advancement Advantage
German KSL GmbH, purchased by the Company, holds the leading position in CNC and robot controlled automatic sewing technologies, and its products are not only applied in the traditional market for sewing machine industry but also applied in some emerging fields, such as automobile, environmental protection, aeronautics and astronautics and renewable energy, etc. In many fields, such as automobile airbags, filters protecting environment, light carbon fiber structure for plane, etc., the sewing application technology of KSL GmbH has the absolute competition advantage, and especially, it originally created the sewing technology for light carbon fiber and 3D sewing automation. Technologies of KSL GmbH together with technologies of German DA AG and PFAFF AG make the Company own the most advanced sewing technologies in the world.
II. Brand and Product Advantage
Through overseas acquisition, the Company owns some internationally well-known brands, such as “DA” and “PFAFF” with 150years‟ history, and “KSL” and “Beisler” with more than 50years‟ history, etc., and some famous domestic brands, such as “Butterfly” brand with more than 90years‟ history and “Shanggong” brand with more than 50years‟ history. These brands have a high recognition and reputation in the sewing machine industry. The products of the Company focus on smart, modularized and highly efficient automatic sewing unit and other sewing equipment with integrated machinery and electronics, covering various advanced technologies in the field of high-end sewing equipment, and the Company holds the leading position in the segmented market of sewing equipment.
III. Technological Research and Development Capability
The Company highly attaches importance to the construction of technological research and development capabilities, which have become the important force driving the development of the Company. The Company has owned a powerful technological research and development team and had the complete and efficient scientific and technological innovation system, the leading sewing machine design plan and the first class assessment method for testing sewing machines in the world. Shanggong technology center domestically is the city level of research and development center in Shanghai, and has the strong digestion and absorption and supporting development capability.
IV. Sales Network throughout the Globe
The products of the Company are widely sold domestically, and the Company has established the relatively perfect marketing channel and service network, and had a great number of valuable and stable high-end clients which manufacture automobile accessories and luxuries.
V. Internationalized Operation and Management Experience
Since 2005, the Company has started to implement strategies of “going out”, and after conducting the internationalized operation of the main business, gradually cultured an operation and management team accumulating a great deal of experience in cross-border operation and management.
1.4 Analysis on Investment Status
1.4.1 Overall Analysis on Foreign Equity Investment
In the Report Period, the balance of long-term equity investment of the Company at the beginning was RMB 53,534,559.75, the balance at the end was RMB 53,569,069.13, and RMB 34,509.38 was increased. For details, see Note 5 (11) of these Statements.
1.4.1.1 Securities Investment Status
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|-|-|-|-|-|-|-|-|-|
|No.|Securitiestype|Securitiescode|Abbreviationof securities|Initialinvestmentamount(RMB)|Shareholdingnumber(shares)|Book valueat the endof ReportPeriod(RMB)|Proportionin totalsecuritiesinvestmentat the endof ReportPeriod (%)|Gains andlosses inthe ReportPeriod(RMB)|
|1|Fund|040002|Huaan AShare|100,000.00|559,435.23|264,053.43|100.00|-13,426.44|
|Investment in other securities held at the endof this Period|||||/||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
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|-|-|-|-|-|-|
|Gains and losses from investment ofsecurities sold in the Report Period|/|/|/|/||
|Total|100,000.00|/|264,053.43|100%|-13,426.44|

 1.4.1.2 Status of Holding Equity of Other Listed Companies
Unit: Yuan Currency: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Securitiescode|Abbreviationof securities|Initialinvestmentamount|Holdingproportionat thebeginningof ReportPeriod (%)|Holdingproportionat the endof ReportPeriod (%)|Book value atthe end ofReport Period|GainsandLossesinReportPeriod|Change ofowner‟sinterest in theReport Period|Accounting Items|Share source|
|600689|ShanghaiSanmao|1,779,800.00|<5%|<5%|3,972,744.90||-1,844,724.00|Available-for-salefinancial assets|Corporatesharesinvestment|
|600757|ChangjiangPublishing& Media|72,085,722.82|<5%|<5%|91,142,025.90||13,182,123.52|Available-for-salefinancial assets|Note|
|900932|Lujia BShares|773,099.71|<5%|<5%|1,113,362.70||-121,387.58|Available-for-salefinancial assets|Enforcement|
|Total||74,638,622.53|/|/|96,228,133.50||11,216,011.94|/|/|

 Note: Shares of Changjiang Publishing& Media were transferred to the Company by bank to which interests of Changjiang Publishing& Media were compensated in the bankruptcy and restructuring.
1.4.1.3 Status of Holding Equity of Financial Enterprises
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name ofEnterprise|Initialinvestmentamount(RMB)|Holdingproportionat thebeginningof ReportPeriod (%)|Holdingproportionat the endof ReportPeriod (%)|Book valueat the end ofReportPeriod(RMB)|Gains andLosses inReportPeriod(RMB)|Changeofowner‟sinterestin theReportPeriod(RMB)|AccountingItems|Sharesource|
|Bank of Shanghai|951,400.00|<5|<5|951,400.00|177,109.68||Long-termequityinvestment|Purchased|
|BaodingInvestment|7,500.00|<5|<5|7,500.00|||Long-termequityinvestment|Purchased|
|Shenyin&WanguoSecurities|200,000.00|<5|<5|200,000.00|3,238.84||Long-termequityinvestment|Purchased|
|Total|1,158,900.00|/|/|1,158,900.00|180,348.52||/|/|

 Statement on equity of financial enterprises held:
While the above-said financial enterprises were founded and established, the Company subscribed to their equity, and holds them until now.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.2 Status of Investment in Consigned Financing and Derivatives of Non-financial Companies
1.4.2.1 Consigned Financing
Unit: Ten Thousand Yuan Currency: RMB
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Name ofpartner|Product type|Amount|Startingdate|Ending date|Method ofdetermininggains|Predictedgains|Principalactuallyrecovered|Gainsactuallyobtained|Whetherlegalproceedingsareinvolved|Amount ofprovisionforimpairment|Whetheraffiliatedtransactionis involved|Whetherlawsuitisinvolved|Fundsourceandwhetherit israisedfund|Affiliatedrelationship|
|XuhuiBranch,Bank ofCommunications|Linghui Wealth.Huideli|5,000|2014-4-16|2014-10-16|Floatinggains withguaranteedprincipal|3.95%-4.06%|-|-|Yes|-|No|No|Yes||
|FuminBranch ofthe bank ofShanghai|“Wenjin” No. 2PhaseSD21406M27|27,000|2014-4-17|2014-10-16|Floatinggains withguaranteedprincipal|4.90%|-|-|Yes|-|No|No|Yes||
|FuminBranch ofthe bank ofShanghai|“Wenjin” No. 2PhaseSD21406M27|20,000|2014-4-17|2014-10-16|Floatinggains withguaranteedprincipal|4.90%|-|-|Yes|-|No|No|No||
|Total|/|52,000|/|/|/|/|-|-|/|-|/|/|/|/|
|Aggregate principal and gains amount overdue and non-refunded (RMB)|||||0||||||||||
|Statement on consigned financing|||||With the review and approval of the twelfth meeting of the Seventh Board of Directors on April 11, 2014, it isresolved that idle raised funds of RMB 320 million and self-owned funds of 200 million were managed in purchasingRMB structured deposit products of the bank with principal guaranteed.||||||||||

.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.2.2 Entrusted Loans
No entrusted loans in this Report Period
1.4.2.3 Other investment in financing products and derivatives
No other investment in financing products and derivatives in this Report Period
1.4.3 Use of Raised Funds
1.4.3.1 Overall Use of Raised Funds
Unit: Yuan Currency: RMB
||||||||
|-|-|-|-|-|-|-|
|Raisingyear|Raisingmethod|Total amount of raised funds|Total amount of raised fundsspent in this Report Period|Total amount of raised fundedaggregately spent|Total amount of raised funded notspent|Usage and allocation ofraised funded not spent|
|2014|Non-publicoffering|670,999,998.79|48,035,789.91|312,316,160.83|326,323,890.39|saved in specialaccount of raised funds|
|Total|/|670,999,998.79|48,035,789.91|312,316,160.83|326,323,890.39|/|
|Overall use statement on raised funds|||With the review and approval of the twelfth meeting of the Seventh Board of Directors on April 11, 2014, it is resolved thatpart of raised funds are replaced with self-owned funds of RMB 312,316,160.83 which were invested in projects for whichfunds were raised in advance; meanwhile, idle raised funds of RMB 320 million were managed in purchasing RMBstructured deposit products of the bank with principal guaranteed with half-year term. For details, see Temporary BulletinNo. 2014-017and 2014-018 of the Company.||||

1.4.3.2 Committed projects for which funds are raised
Unit：Ten Thousand Yuan Currency: RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Name ofcommitted project|Whetherproject ischanged|Amount ofraised fundsto beinvested|Investmentamount of raisedfunds in thisReport Period|Aggregate amountof raised fundsactually invested|Whetherscheduledprogress ismet|Projectprogress(%)|Predictedgains|Gainsproduced|Whetherpredictedgains aremet|Statement onscheduledprogress andgains not met|Reason forchange andstatement onchangeprocedures ofraised funds|
|PFAFF projectinvested throughShangGongEurope|No|20,000|4,565|20,003|Yes|100||-80.27||Not applicable|Not applicable|
|KSL and itsaffiliates projectinvested throughShangGongEurope|No|25,000|0|10,748.5|Yes|100||-453.20||Not applicable|Not applicable|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Project ofResearch anddevelopment andproduction ofautomatic sewingunit andelectroniccontrolled system|No|15,100|194.58|392.12|||||Not applicable|Not applicable|
|Project ofdevelopingmodern householdmulti-functionalsewing machines|No|5,000|44|88|||||Not applicable|Not applicable|
|Project ofestablishing andperfecting internalEnterpriseResourcePlanning (ERP)system|No|2,000|0|0|||||Not applicable|Not applicable|
|Total|/|67,100|4,803.58|31,231.62|/|/|/|/|/|/|
|Statement on raised fundsspent in committed projects||During the reporting period, the company‟s investment project by raised fund is in implementation as planned, among which the fund invested in PFAFFproject has completed. PFAFF has greatly decreased its loss, close to be breakeven, and its operating conditions continue to significantly improve; Investmentproject on Keilmann and its affiliates has been done according to the plan, share purchase agreement has completed, follow-up investment and integration ofthe implementation of the work is in accordance with the contractual stipulations. As KSL is project oriented, after acquired by ShangGong Europe, itincreased market exploration with increasing marketing costs, and some R&D project is in the developing period, which all cause its loss during the reportingperiod. At present, it is in the normal production and operation conditions. ShangGong Europe with DA, PFAFF and KSL as its subsidiaries, it continues topromote integration, and synergy effect is preliminary appeared. The overall strength of ShangGong Europe increased, economic efficiency has increased,with year-on-year increase of 18.36%.|||||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.4.3.3 Change of project for which funds are raised
No change of projects for which funds are raised in this Report Period.
1.4.4 Analysis on Main Subsidiaries and Companies of Which ShangGong Group holds shares
Unit: Yuan Currency: RMB
|||||||||
|-|-|-|-|-|-|-|-|
|Companyname|Businessscope|Registeredcapital|Total assets|Net assets|Operatingrevenue|Operatingprofit|Net profit|
|ShangGong(Europe)HoldingCorp.GmbH|Investment in,assetsmanagementon, andproduction,processingand sales ofindustrialsewingequipment|EUR12,500,000|1,466,810,774.04|511,833,285.06|618,987,520.73|87,457,475.58|60,317,590.25|
|ShanghaiShanggongButterflySewingMachineCo., Ltd.|Manufacturingand sales ofvarioussewingequipment|RMB 79million|125,375,117.70|82,706,501.85|157,455,369.97|4,324,683.53|3,856,221.08|
|DürkoppAdlerTrading(Shanghai)Co., Ltd.|Sales ofvarioussewingequipment|USD 6million|139,397,506. 17|51,019,066.93|89,427,415.66|4,493,695.40|4,286,087.70|

Circumstance under which the impact of investment gains from a single company of which the Company holds shares on net profit of the Company is more than10%
Unit: Ten Thousand Yuan Currency: RMB
|||||
|-|-|-|-|
|Company Name|Operating revenue|Operating profit|Net profit|
|Fuji Xerox of Shanghai Limited|138,707|5,347|4,167|

 1.4.5 Projects for which no funds are raised
No major projects for which no funds are raised in this Report Period.
2. Pre-plan of Profit Distribution and Capitalization of Capital Reserve
2.1 Implementation or Adjustment on Profit Distribution Plan Performed in the Report Period
In the Report Period, the 2013shareholders‟ meeting of the Company had adopted the profit distribution plan under which the dividend was not distributed in cash, no bonus shares were allotted, and no stock capital was capitalized, and such plan has been implemented.
2.2 Pre-plan of Profit Distribution and Capitalization of Capital Reserve to be prepared within the half year
|||
|-|-|
|Whether profit is distributed or capital reserve is capitalized?|No.|

 3. Other Issues Disclosed
3.1 Statement of the Board of Directors and the Supervision Committee on Non-standard Auditing Report Issued by the Certified Accountants Firm
 ApplicableNot applicable
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part V Important Issues
1. Major Litigations and Arbitrations and Issues generally Questioned by Media
1.1 Litigations and Arbitrations not Disclosed in the Temporary Bulletin or with the Follow-up Progress
Unit: Yuan Currency: RMB
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|In the Report Period:||||||||||
|Plaintiff(Applicant)|Defendant(Applied)|Party assumingjoint and severalresponsibilities|Type oflitigationandarbitration|Basic situation oflitigation (arbitration)|Amountinvolved inlitigation(arbitration)|Predicteddebts oramountformed inlitigation(arbitration)|Progress of litigation(arbitration)|Trial result and impact oflitigation (arbitration)|Decisionenforcementof litigation(arbitration)|
|ShanghaiShanggongImport andExportCo., Ltd.|ShanghaiShuangchongbaoSewing MachineCo., Ltd.||Bankruptcyandliquidation|Because ShanghaiShuangchongbaoSewing Machine Co.,Ltd., one subsidiarycontrolled by theCompany, could notpay off the outstandingand due debts, and wasinsolvent, inaccordance withrelevant provisions ofthe Bankruptcy Law ofthe People‟s Republicof China, ShanghaiShanggong Import andExport Co., Ltd., entityin charge of theliquidation, applied forcausing ShanghaiShuangchongbaoSewing Machine Co.,Ltd. to enter thebankruptcy proceduresat the end of 2012.|||Because the assets ofthe debtor, ShanghaiShuangchongbaoSewing Machines Co.,Ltd., were not enoughfor paying off thebankruptcy expenses,on March 3, 2014, theCompany received thecivil ruling made bythe people‟s court ofPudong New Area,Shanghai [(2013) PuMin Er (Shang) Po ZiNo. 9-7], in which itdecided to terminatethe bankruptcy andliquidation proceduresof ShanghaiShuangchongbaoSewing Machines Co.,Ltd.|The registered capital ofShuangchong Companywas RMB 12 million, andthe Company held 70%equity and owned 90%voting of ShuangchongCompany, and its initialinvestment amount wasRMB 10,800,000.Shuangchong Companyhad been shut down since2007, and the Companyhad drawn the impairmentloss for the full amount ofits equity investment inthe previous year. In theReport Period,ShuangchongbaoCompany was not coveredin the consolidatedstatements of theCompany.|TheCompany ishandlingcancellationproceduresof businesslicense andtaxation.|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
2. Issues Relevant to Bankruptcy and Restructuring
No issues relevant to bankruptcy and restructuring in the Report Period
3. Assets Transaction and Enterprise Merger
ApplicableNot applicable
4. Equity Incentive of the Company and Its Impact
 ApplicableNot applicable
5. Major Associated Transactions
Applicable Not applicable
5.1 Associated Transactions Relevant to Daily Operations
5.1.1 Issues already disclosed in the temporary bulletin and for which there was no progress or change in the follow-up implementation
|||
|-|-|
|Summary of Issues|Inquiry Index|
|Shanghai SGSB Electronic Co., Ltd., one wholly-owned subsidiary ofthe Company, sells products to Fiji Xerox of Shanghai Limited., and isits permanent accessory supplier, and the above-said transactionconstitutes the daily associated transaction. It is estimated that in 2014,the amount of products that it will sell to Fiji Xerox is RMB 40million, and in this Report Period, the sales amount was RMB18,463,600, and there was no major change.|The temporary bulletin No. 2014-009disclosed by the Company on March 21,2014, published in Shanghai Securities Newsand Hong Kong Commercial Daily andwebsite of Shanghai Stock Exchange(http://www.sse.com.cn/).|

5.2 AssociatedCreditor’s Rights and Debts
Except associatedcreditor‟s rights and debts relevant to daily operation, there were no other associatedcreditor‟s rights and debts in the Company.
For breakdown of associatedcreditor‟s rights and debts relevant to daily operation, see Note of these Statements. 6. Major Contracts and Their Performance
6.1 Trusteeship, Contracting and Lease
 ApplicableNot applicable
6.2 Guarantees
Applicable Not applicable
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Unit: Ten Thousand Yuan Currency: RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|External Guarantee of the Company (not including guarantee for subsidiaries)||||||||||||||
|Guarantor|a n d pb e tw nRlis e ete e lad n tiogc o m u a ra n s hipa ntoyr|Guaranteed|Guaranteeamount|(sGa t)ig Dug r e e m n in g ta er a n tee n d a te eaof|Begg einu a r n ina n gte dateof|Expg uiraa ntiora nte de a teof|GuaranteeType|hWa s dh eb the e n e rgfu ulfille a rantee|Whis oe thev ergr d u eu a rantee|Ovemrda ueo u n t g u a rantee|c oWuu an te rh e th-g erthra nerete ise|gWuaahffilia r a n e thte ete sfo e r itisr|relaAtio hffilians teip|
|Shang GongGroup Co.,Ltd.|Headquarters ofthe Company|ShanghaiPudongDevelopment(Group) Co.,Ltd.|7,374|June 9,2012|June 9,2012|June 8,2018|Jointandseveralliability|No|No|0|Yes|No|No|
|ShangGongEurope|Wholly-ownedsubsidiary|Commerzbank|4,659|July 30,2013|July30,2013|November 29,2015|Jointandseveralliability|No|No|0|Yes|No|No|
|Total guarantee amount at the end of Report Period (not including guarantee for subsidiaries)||||||||||-4,186||||
|Total guarantee balance at the end of Report Period (A) (not including guarantee for subsidiaries)||||||||||12,033||||
|Guarantee of the Company for Subsidiaries||||||||||||||
|Total guarantee amount for subsidiaries at the end of Report Period||||||||||7,000||||
|Total guarantee balance for subsidiaries at the end of Report Period (B)||||||||||18,794||||
|Total guarantee amount of the Company (including guarantee for subsidiaries)||||||||||||||
|Total guarantee amount (A+B)||||||||||30,827||||
|Proportion of guarantee amount in the net assets of the Company (%)||||||||||18.79||||
|Wherein:||||||||||||||
|Amount of guarantee provided to shareholder, actual controller and their affiliates (C)||||||||||0||||
|Amount of guarantee for debt directly or indirectly provided to guaranteed, the asset - liability ratio ofwhich is more than 70% (D)||||||||||0||||
|Balance between total guarantee amount and 50% of net assets (E)||||||||||0||||
|Total of above-said guarantees (C+D+E)||||||||||0||||
|Statement on guarantee undue for which joint and several liability can be assumed||||||||||||||

Statement on Guarantee:
1. In 2005, this Company issued to FAG Kugelfischer GmbH (FAG) a guarantee letter amounting to not more than USD 5,300,000 for house lease of a subsidiary of DA AG in the USA, the subsidiary controlled by ShangGong Europe, with a validity term from June 30, 2005, to October 31, 2015, and meanwhile, on June 30, 2005, ShangGong Europe provided FAG with a cash pledge of EUR 635,000 with the same validity term so as to provide the re-guarantee for transaction of house sales-leaseback between a subsidiary of DA AG in USA and UTF Norcross L.L.C.
2. On July 30, 2013, the Company provided to ShangGong Europe a financing guarantee letter issued by Xuhui Branch of the Bank of Communications for applying to Frankfurt Branch of the Bank of Communications for EUR loans for current funds equivalent to not more than RMB 80 million with oneyear‟s validity term, and meanwhile, the Company provided a bond of RMB 4 million and mortgaged its industrial real estate at No. 603 Dapu Road, Shanghai, to Xuhui Branch of the Bank of Communications.
3. ShangGong Europe mortgaged 1.2 million shares of DA AG which it held to Commerzbank so that Commerzbank issued to it a bank guarantee letter amounting EUR 5.55 million with a validity term of two years and four months, in order to provide a guarantee for paying the purchase price to the seller who sold equity of KeilmannSondermaschinenbau GmbH.
4. On March 25, 2014, the Company provided to ShangGong Europe a financing guarantee letter issued by the Shanghai Branch of Commerzbank for applying to Bielefeld Branch of Commerzbank for EUR loans for current
funds equivalent to not more than RMB 58 million with oneyear‟s validity term.
5. In this Report Period, this Company mortgaged100% equity of Shanggong Butterfly, which it held,80% equity
of Shanghai Butterfly Import and Export Co., Ltd., which was held by Shanggong Butterfly, and real estate at No.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
190 Huyi Road, owned by this Company, as counter-guarantees for a loan guarantee provided by Shanghai Pudong Development (Group) Co., Ltd., to this Company, amounting to RMB 115,600,000 with the validity term from June 9, 2012, to June 8, 2018. By the end of June 30, 2014, this Company had withdrawn a pledge of80% equity of Shanghai Butterfly Import and Export Co., Ltd., the amount of counter-guarantee is decreased by RMB 41,860,000, and the actual balance of aggregate loans is RMB zero.
6.3 Other Major Contracts and Transactions
No other major contracts and transaction in this Report Period
7. Performance of Committed Issues
 ApplicableNot applicable
8. Engagement and Dismiss of Accountants Firm
In the Report Period, with the approval of theshareholders‟ meeting of the Company, the Company continuously engaged BDO China Shu Lun Pan Certified Public Accountants LLP to act as the auditor of 2014 financial statements of the Company.
9. Punishment on and Rectification of Listed Company and Its Directors, Supervisors, Senior Officers, Shareholders Holding over5% shares, Actual Controller and Purchaser
In this Report Period, this Company and its directors, supervisors, senior officers, shareholders holding over5% shares, actual controller and purchaser were not investigated, imposed on the administrative punishment, and criticized with a circulated notice by CSRC, and publicly censured by the stock exchange.
10. Company Governance
In the Report Period, the Company, in strict accordance with relevant provisions of laws and regulations, such as the Company Law, the Securities Law, and the Code of Corporate Governance for Listed Companies, etc., and relevant requirements of CSRC, established and perfected and strictly implemented the internal control system, strengthened the inside information management, enhanced the information disclosure, gradually perfected the corporate governance structure, and practically maintained the interests of the Company and all the shareholders. There is no discrepancy between the governance of the Company and the requirements in the Code of Corporate Governance for Listed Companies.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VI Share Change and Shareholder Status
1. Capital Stock Change
1.1 Share Change
1.1.1 Share Change
Unit: Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before this change||Increase/decrease(+/-)|||||After this change||
||Number|Proportion(%)|Newsharesoffering|Allottedshare|Capitalization ofcapital reserve|Others|Sub-total|Number|Proportion(%)|
|1.Non-tradable shares|0|0|99,702,823|0|0|0|99,702,823|99,702,823|18.17|
|(1) State ownership|0|0|0|0|0|0|0|0|0|
|(2)Shareholding of state-owned corporate|0|0|42,302,823|0|0|0|42,302,823|42,302,823|10.46|
|(3)Other shareholding of domestic investors|0|0|57,400,000|0|0|0|57,400,000|57,400,000|7.71|
|Including: shareholding of domesticnon-state-owned corporate|0|0|57,400,000|0|0|0|57,400,000|57,400,000|7.71|
|Shareholding of domestic individuals|0|0|0|0|0|0|0|0|0|
|(4)Shareholding of foreign investors|0|0|0|0|0|0|0|0|0|
|Including: shareholding of foreign corporate|0|0|0|0|0|0|0|0|0|
|Shareholding of foreign individuals|0|0|0|0|0|0|0|0|0|
|2.Tradable shares|448,886,777|100|0|0|0|0|0|448,886,777|81.83|
|(1)Common shares in RMB|204,943,027|45.66|0|0|0|0|0|204,943,027|37.36|
|(2)B Share|243,943,750|54.34|0|0|0|0|0|243,943,750|44.47|
|(3)Foreign-invested shares listed in foreign|0|0|0|0|0|0|0|0|0|
|(4)Others|0|0|0|0|0|0|0|0|0|
|3.Total shares|448,886,777|100|99,702,823|0|0|0|99,702,823|548,589,600|100|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
1.1.2 Statement on share change
On March 28, 2014, the Company had non-publicly issued 99,702,823 A shares to seven specific objects, and completed registration and trusteeship procedures before Shanghai Branch of China Securities Depository and Clearing Co., Ltd. For details, see Part IV Report of Board of Directors: Analysis and Statement on Implementation Progress of Various Financing and Major Assets Restructuring of the Company in the Earlier Stage.
1.2 Change of non-tradable shares
Unit: Share
||||||||
|-|-|-|-|-|-|-|
|Name of Shareholder|Non-tradableshares at thebeginning ofthis Period|Non-tradablesharesremoved inthe ReportPeriod|Increasednon-tradableshares in theReportPeriod|Non-tradableshares at theend of thisPeriod|Reason fornon-trading|Date ofremovingnon-trading|
|China Great WallAsset ManagementCorporation|0|0|22,200,000|22,200,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|Nanjing RuisenInvestmentManagementPartnership (LimitedPartnership)|0|0|16,000,000|16,000,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|Orient SecuritiesCompany Ltd.|0|0|11,100,000|11,100,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|SAIC Finance Co.,Ltd.|0|0|11,100,000|11,100,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|Industrial BankGlobal funds - ChinaEverbright Bank –No. 2 of additionaloffering (classified)of assets managementplan for specificmultiple clients|0|0|11,100,000|11,100,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|China UniversalAsset ManagementCo., Ltd. - IndustrialBank Co., Ltd. –Tianfu–Haifu-additionaloffering of assetsmanagement plan ofShuangxiShengshi 1|0|0|9,700,000|9,700,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|SIG AssetManagement Co.,Ltd.|0|0|9,002,823|9,002,823|12 months oflock-up periodfor object ofCompany‟snon-public|March 28,2015|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||||
|-|-|-|-|-|-|-|
||||||offering||
|China UniversalAsset ManagementCo., Ltd. – ICBC –Foreign trade trust –Hengsheng fund trustof additional offeringportfolio|0|0|5,700,000|5,700,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|Industrial Bank Co.,Ltd. – Xingquanmixed securitiesinvestment fund withorganic increase andflexible allocation|0|0|2,450,000|2,450,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|China MerchantsBank Co., Ltd.–Xingquan securitiesinvestment fund oflight assets and shareinvestment type(LOF)|0|0|1,350,000|1,350,000|12 months oflock-up periodfor object ofCompany‟snon-publicoffering|March 28,2015|
|Total|0|0|99,702,823|99,702,823|/|/|

2. Shareholder Status
2.1 Shareholder Number
|||
|-|-|
|Total number of shareholders at the end of Report Period|46,512 (A Share: 18,088; B Share: 28,424)|

 Shareholding of top 10 shareholders who hold more than5% shares of the Company
Unit: Share
||||||||
|-|-|-|-|-|-|-|
|Shareholding of top 10 shareholders|||||||
|Name of shareholder(full name)|Increase ordecrease inthe ReportPeriod|Shareholdingnumber at theend of thisPeriod|Shareholdingpercentage(%)|Number ofnon-tradableshares held|Numberof sharespledged orfrozen|Nature ofshareholder|
|State-owned Assets Supervisionand AdministrationCommission of ShanghaiPudong New Area People‟sGovernment|0|105,395,358|19.21|0|No.|State|
|China Great Wall AssetManagement Corporation|22,200,000|27,730,514|5.05|22,200,000|No.|State-ownedcorporate|
|Nanjing Ruisen InvestmentManagement Partnership(Limited Partnership)|16,000,000|16,000,000|2.92|16,000,000|Unknown|Unknown|
|Orient Securities Company Ltd.|11,100,000|11,100,000|2.02|11,100,000|Unknown|Unknown|
|SAIC Finance Co., Ltd.|11,100,000|11,100,000|2.02|11,100,000|Unknown|State-ownedcorporate|
|Industrial Bank Global funds -China Everbright Bank – No. 2of additional offering(classified) of assets|11,100,000|11,100,000|2.02|11,100,000|Unknown|Others|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||||||
|-|-|-|-|-|-|-|-|-|
|China Universal AssetManagement Co., Ltd. -Industrial Bank Co., Ltd. –Tianfu –Haifu-additionaloffering of assets managementplan of ShuangxiShengshi 1|9,700,000|9,700,000|1.77|9,700,000||Unknown||Others|
|SIG Asset Management Co.,Ltd.|9,002,823|9,002,823|1.64|9,002,823||Unknown||State-ownedcorporate|
|China Universal AssetManagement Co., Ltd. – ICBC– Foreign trade trust –Hengsheng fund trust ofadditional offering portfolio|5,700,000|5,700,000|1.04|5,700,000||Unknown||Others|
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|784,052|2,666,888|0.49|0||Unknown||Foreigncorporate|
|Tradable shareholding of top 10 shareholders|||||||||
|Name of shareholder|||Number oftradable shares||Share type and number||||
||||||Type||Number||
|State-owned Assets Supervision and Administration Commissionof Shanghai Pudong New Area People‟s Government|||105,395,358||A Share||105,395,358||
|China Great Wall Asset Management Corporation|||5,530,514||A Share||5,530,514||
|GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED|||2,666,888||B Share||2,666,888||
|SHENYIN WANGUO NOMINEES (H.K.) LTD.|||2,325,028||B Share||2,325,028||
|Dividend insurance product of Zhongrong Life Insurance Co.,Ltd.|||2,036,140||A Share||2,036,140||
|Shanghai International Trust Co., Ltd.|||1,965,210||A Share||1,965,210||
|NORGES BANK|||1,742,114||B Share||1,742,114||
|VANGUARD TOTAL INTERNATIONAL STOCK INDEXFUND|||1,403,896||B Share||1,403,896||
|Shanghai Sanmao Enterprise (Group) Co., Ltd.|||1,400,000||A Share||1,400,000||
|Yu Zhongxi|||1,126,010||B Share||1,126,010||
|Statement on affiliated relationship or concerned acts ofabove-said shareholders|||The Company did not know whether there wasaffiliated relationship or concerned party amongabove-said shareholders.||||||

Shareholding number and non-tradable conditions of Top 10 Non-tradable shareholders
Unit: Share
|||||||
|-|-|-|-|-|-|
|No.|Name of non-tradable shareholder|Number ofnon-tradableshares|Listing transaction ofnon-tradable shares||Non-tradable condition|
||||Listingtransactiontime|Number oftradableshares newlyincreased||
|1|China Great Wall AssetManagement Corporation|22,200,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|2|Nanjing Ruisen InvestmentManagement Partnership (LimitedPartnership)|16,000,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|3|Orient Securities Company Ltd.|11,100,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|4|SAIC Finance Co., Ltd.|11,100,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|5|Industrial Bank Global funds -China Everbright Bank – No. 2 ofadditional offering (classified) ofassets management plan forspecific multiple clients|11,100,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|6|China Universal AssetManagement Co., Ltd. - IndustrialBank Co., Ltd. – Tianfu–Haifu-additional offering ofassets management plan ofShuangxiShengshi 1|9,700,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|7|SIG Asset Management Co., Ltd.|9,002,823|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|8|China Universal AssetManagement Co., Ltd. – ICBC –Foreign trade trust – Hengshengfund trust of additional offeringportfolio|5,700,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|9|Industrial Bank Co., Ltd. –Xingquan mixed securitiesinvestment fund with organicincrease and flexible allocation|2,450,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|10|China Merchants Bank Co., Ltd.–Xingquan securities investmentfund of light assets and shareinvestment type (LOF)|1,350,000|March 28,2015|0|12 months of lock-up periodfor object of Company‟snon-public offering|
|Statement on affiliated relationship or concerned acts ofabove-said shareholders|||The Company did not know whether there was affiliatedrelationship or concerned party among above-saidshareholders.|||

3. Change of Controlling Shareholder or Actual Controller
 ApplicableNot applicable
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VII Relevant Situation about Preferred Shares
No issues about preferred shares in this Report Period.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part VIII Directors, Supervisors and Senior Officers Status
1. Shareholding Change
1.1 Shareholding Change of Current Directors, Supervisors and Senior Officers and Dismissed Directors, Supervisors and Senior Officers in the Report Period
In this Report Period, there is no change in shareholding of directors, supervisors and senior officers of the Company.
1.2 Equity Incentive granted to directors, supervisors and senior officers in the Report Period
 ApplicableNot applicable
2. Change of Directors, Supervisors and Senior Officers of the Company
|||||
|-|-|-|-|
|Name|Title|Change|Reason for change|
|Ma Minliang|Director, general manager|Dismissal|Job change|
|XieYushou|Chairman of supervisioncommittee|Dismissal|Retirement|
|Li Jiaming|Director|Election|Increased|
|QiaoJunhai|Chairman of supervisioncommittee|Election|Increased|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Part IX Financial Report
The Financial part of 2014 semi-annual report of the Company is unaudited.
The Financial Report and Notes to the Financial Report are attached as follows.
Shang Gong Group Co., Ltd
Consolidated Statement of Financial Position
As of June 30, 2014
(Presented in RMB unless otherwise specified)
||||
|-|-|-|
|Item|Ending Balance|Opening Balance|
|Current assets:|||
|Cash and cash equivalents|481,253,440.80|459,200,229.44|
|Provision for settlement|||
|Fund for lending|||
|Financial assets held for trading|264,053.43|277,479.87|
|Notes receivable|2,307,430.01|3,320,697.28|
|Accounts receivable|315,259,526.68|247,894,529.49|
|Prepayment|20,356,511.23|25,241,304.15|
|Insurance receivable|||
|Accounts receivable reinsurance|||
|Contract provision for accounts receivable reinsurance|||
|Interest receivable|||
|Dividends receivable|12,734,735.09|2,881,577.53|
|Other receivables|41,465,146.32|60,130,306.48|
|Financial assets purchased under resale|||
|Inventories|479,098,229.66|405,244,436.59|
|Non-current assets to be expired in one year|||
|Other current assets|539,034,806.53|64,405,666.67|
|Total current assets|1,891,773,879.75|1,268,596,227.50|
|Non-current assets:|||
|Payment of entrustment loans and advances|||
|Available for sale financial assets|96,228,133.50|85,012,121.56|
|Held-to-maturity investment|||
|Long-term receivables|||
|Long-term equity investment|53,569,069.13|53,534,559.75|
|Investment properties|118,004,100.70|121,076,399.25|
|Fixed assets|261,704,903.69|261,035,902.23|
|Construction in progress|5,636,796.26|2,801,141.91|
|Construction materials|||
|Disposal of fixed assets|||
|Consumable biological asset|||
|Oil & gas asset|||
|Intangible assets|78,050,268.70|83,308,929.44|
|R&D expense|38,313,434.99|39,082,899.68|
|Goodwill|98,623,362.75|98,908,849.50|
|Long-term unamortized expense|29,700.00|33,000.00|
|Deferred tax assets|40,297,306.30|34,526,440.35|
|Other non-current assets|||
|Total non-current assets|790,457,076.02|779,320,243.67|
|Total assets|2,682,230,955.77|2,047,916,471.17|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Current liabilities:|||
|Short-term loans|145,303,754.54|222,299,211.73|
|Loans from central bank|||
|Deposits and placements|||
|Borrowing fund|||
|Financial liabilities held for trading|||
|Notes payable||6,225,975.90|
|Accounts payable|127,447,375.28|126,210,705.10|
|Receipt in advance|38,655,929.18|32,726,923.09|
|financial assets sold for repurchase|||
|Fee and commission payable|||
|Employee benefit payable|51,997,344.20|49,569,216.41|
|Taxes payable|42,981,940.21|31,916,230.42|
|Interest payable|||
|Dividends payable|1,032,818.86|1,032,818.86|
|Other payables|139,349,092.19|147,128,355.33|
|Accounts payable reinsurance|||
|Provision for insurance contract|||
|Acting sale of securities|||
|Acting underwriting securities|||
|Long-term liabilities to be expired in one year|520,000.00|520,000.00|
|Other current liabilities|503,397.29|1,623,775.74|
|Total current liabilities|547,791,651.75|619,253,212.58|
|Non-current liabilities:|||
|Long-term loans|79,003,153.28|80,675,181.52|
|Bonds payable|||
|Long-term payables|51,013,344.01|44,961,333.81|
|Specific payable|||
|Contingent liabilities|314,578,331.68|323,783,269.17|
|Deferred tax liabilities|48,875,381.08|49,451,110.79|
|Other non-current liabilities|||
|Total non-current liabilities|493,470,210.05|498,870,895.29|
|Total liabilities|1,041,261,861.80|1,118,124,107.87|
|Owners’ equity (or shareholder’s equity):|||
|Paid-up capital (or share capital)|548,589,600.00|448,886,777.00|
|Capital reserve|945,448,784.81|397,651,623.21|
|Less: treasury stock|||
|Special provision|||
|Surplus reserve|4,546,242.52|4,546,242.52|
|General risk reserve|||
|Retained earning|38,857,646.81|-2,996,568.99|
|Difference of foreign currency translation|-53,274,235.20|-52,193,887.64|
|Total owners' equity attributable to parent company|1,484,168,038.94|795,894,186.10|
|Minority interests|156,801,055.03|133,898,177.20|
|Total owners' equity|1,640,969,093.97|929,792,363.30|
|Total liabilities and owners' equity|2,682,230,955.77|2,047,916,471.17|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Financial Position
As of June 30, 2014
(Presented in RMB unless otherwise specified)
|||||
|-|-|-|-|
|Item||Ending balance|Opening balance|
|Current assets:||||
|Cash and cash equivalents||79,425,124.66|92,304,869.24|
|Financial assets held for trading||264,053.43|277,479.87|
|Notes receivable||530,000.00|1,926,580.00|
|Accounts receivable||7,187,211.01|7,262,152.76|
|Prepayment||1,940,881.48|2,631,470.98|
|Interest receivable||||
|Dividends receivable||12,734,735.09|2,881,577.53|
|Other receivables||51,641,057.21|49,056,660.77|
|Inventories||13,122,820.94|10,486,023.53|
|Non-current assets to be expired in one year||||
|Other current assets||520,000,000.00||
|Total current assets||686,845,883.82|166,826,814.68|
|Non-current assets:||||
||Available for sale financial assets|96,228,133.50|85,012,121.56|
|Held-to-maturity investment||||
|Long-term receivables||82,785,000.00|82,785,000.00|
|Long-term equity investment||322,719,068.90|322,719,068.90|
|Investment properties||94,071,775.89|96,621,944.48|
|Fixed assets||31,321,345.94|32,693,404.79|
|Construction in progress||2,346,196.81|796,503.00|
|Construction materials||||
|Disposal of fixed assets||||
|Consumable biological asset||||
|Oil & gas asset||||
|Intangible assets||22,846,216.67|23,447,572.61|
|R&D expense||||
|Goodwill||||
|Long-term unamortized expense||||
|Deferred tax assets||||
|Other non-current assets||||
|Total non-current assets||652,317,737.71|644,075,615.34|
|Total assets||1,339,163,621.53|810,902,430.02|
|Current liabilities:||||
|Short-term loans||348,148.62|123,948,148.62|
|Financial liabilities held for trading||||
|Notes payable||||
|Accounts payable||11,306,815.31|12,292,012.38|
|Advance payment||4,684,241.71|3,650,655.07|
|Wages and salaries unpaid|||840,000.00|
|Taxes payable||-52,360.25|312,461.15|
|Interest payable||||
|Dividends payable||1,032,818.86|1,032,818.86|
|Other payables||73,004,514.08|71,639,913.67|
|Long-term liabilities to be expired in one year||520,000.00|520,000.00|
|Other current liabilities||||
|Total current liabilities||90,844,178.33|214,236,009.75|
|Non-current liabilities:||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Long-term loans|1,489,984.87|1,489,984.87|
|Bonds payable|||
|Long-term accounts payable|1,611,944.32|1,611,944.32|
|Specific payable|||
|Contingent liabilities|||
|Deferred tax liabilities|1,197,067.41|1,197,067.41|
|Other non-current liabilities|||
|Total non-current liabilities|4,298,996.60|4,298,996.60|
|Total liabilities|95,143,174.93|218,535,006.35|
|Owners' equity (or shareholder’s equity):|||
|Paid-up capital (or share capital)|548,589,600.00|448,886,777.00|
|Capital reserve|1,025,191,302.80|475,469,882.88|
|Less: treasury stock|||
|Special provision|||
|Surplus reserve|4,546,242.52|4,546,242.52|
|General risk reserve|||
|Retained earnings|-334,306,698.72|-336,535,478.73|
|Total owners' equity( or shareholder‟s equity)|1,244,020,446.60|592,367,423.67|
|Total liabilities and owners' equity|1,339,163,621.53|810,902,430.02|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Comprehensive Incomes
January– June 2014
(Presented in RMB unless otherwise specified)
||||
|-|-|-|
|Item|Current Period|Last Period|
|1. Revenues|969,890,167.03|871,423,265.72|
|including：Operating revenues|969,890,167.03|871,423,265.72|
|Interest income|||
|Earned insurance|||
|Fees and commission income|||
|2. Costs|890,716,565.18|806,943,182.84|
|including：Operating expenses|661,303,736.20|606,814,372.70|
|Interest expense|||
|Fees and commission expense|||
|Surrender value|||
|Net claims paid|||
|Net reserve for Extraction of the insurance contract,|||
|Dividend expense for insurance policy|||
|Reinsurance costs|||
|Sales tax and surcharges|2,360,802.07|2,683,855.00|
|Selling expenses|109,957,980.76|88,494,572.02|
|General and administration expenses|102,160,879.18|98,820,662.84|
|Financial expenses|10,122,179.92|10,718,964.95|
|Impairment|4,810,987.05|-589,244.67|
|Add: Net gain/(loss) from fluctuation in fair values|-13,426.44|-80,413.50|
|Investment incomes|11,389,745.35|11,870,681.12|
|Including: investment income in associated and joint ventures|34,509.38|-1,156,806.53|
|Exchange earning(less: loss)|||
|3. Operating profit (less: loss)|90,549,920.76|76,270,350.50|
|Add：Non-operating income|621,043.73|441,573.12|
|Less：Non-operating expense|413,766.50|316,661.06|
|Including：net loss in disposal of non-current assets|207,013.43|66,661.06|
|4. Gross profits|90,757,197.99|76,395,262.56|
|Less：Corporate income taxes|25,973,330.78|24,972,535.87|
|5. Net profits|64,783,867.21|51,422,726.69|
|Net profit attributable to parent company|41,854,215.80|30,674,302.78|
|Minority interest|22,929,651.41|20,748,423.91|
|6. Earning per share|||
|（1）Basic earning per share|0.0839|0.0683|
|（2）Diluted earning per share|0.0839|0.0683|
|7. Other comprehensive income|8,184,632.48|-21,909,974.10|
|8. Total comprehensive income|72,968,499.69|29,512,752.59|
|Total comprehensive income attributable to parent company|50,065,621.86|14,817,415.60|
|Total comprehensive income attributable to minority interest|22,902,877.83|14,695,336.99|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Comprehensive Incomes
January– June 2014
(Presented in RMB unless otherwise specified)
||||
|-|-|-|
|Item|Current Period|Last Period|
|1. Operating revenues|27,220,004.78|69,747,644.17|
|Less：Operating expenses|16,793,787.06|49,958,633.47|
|Sales taxes and surcharges|1,861,497.46|2,281,840.37|
|Selling expenses|899,430.35|1,999,985.46|
|General and Administration expense|16,104,633.88|21,415,720.54|
|Financial expenses|455,939.74|2,424,750.00|
|Impairment|45,229.14|-942,101.96|
|Add: Net gains/(loss) from fluctuation in fair values|-13,426.44|-47,609.50|
|Investment income(less: loss)|11,355,235.97|13,039,034.64|
|Including: investment income in associated and joint ventures|||
|2. Operating profit|2,401,296.68|5,600,241.43|
|Add：Non-operating income|57,484.52|232,836.50|
|Less：Non-operating expense|230,001.19|293,415.57|
|Including：Net losses in disposal of non-current assets|23,435.69|43,415.57|
|3. Gross profit (less: loss)|2,228,780.01|5,539,662.36|
|Less：Corporate Income taxes|||
|4. Net profit (less: loss)|2,228,780.01|5,539,662.36|
|5. Earning per share|||
|(1) Basic earning per share|0.0045|0.0123|
|(2) Diluted earning per share|0.0045|0.0123|
|6. Other comprehensive incomes|11,216,011.94|-4,773,737.54|
|7. Total comprehensive incomes|13,444,791.95|765,924.82|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Cash Flows
January– June 2014
(Presented in RMB unless otherwise specified)
||||
|-|-|-|
|Item|Current Period|Last Period|
|1. Cash flow from operating activities:|||
|Cash inflow from sale of goods and provision of services|1,067,420,070.74|905,527,842.18|
|Customer deposits and payments with the net increase placements|||
|Net increase in loans to the Central Bank|||
|Net increase in Borrowings to other financial institutions|||
|Original insurance contract premiums received in cash|||
|Net cash received reinsurance|||
|Net increase in insured savings and investment section|||
|Net increase in disposal of tradable financial assets|||
|Cash inflow from interest, fees and commission|||
|Net increase in borrowings|||
|Net increase in repurchase business funds|||
|Tax refunds received|34,329,916.96|27,738,858.53|
|Cash inflow from other operating activities|5,006,716.31|4,501,485.50|
|Sub-total cash inflow from operating activities|1,106,756,704.01|937,768,186.21|
|Cash inflow from sale of goods and provision of services|764,799,059.44|674,999,807.97|
|Net increase in loans and advances to customers|||
|Net increase in deposit in central bank and interbank fund|||
|Cash for payment of original insurance claims|||
|Cash outflow from interest, fees and commission|||
|Cash dividends paid to policyholders|||
|Cash paid to and for employees|274,460,780.66|206,966,779.17|
|Cash paid for tax|22,911,548.63|23,532,537.46|
|Cash paid for other operating related activities|63,332,088.69|63,843,437.75|
|Sub-total cash outflow from operating activities|1,125,503,477.42|969,342,562.35|
|Net cash in/outflow from operating activities|-18,746,773.41|-31,574,376.14|
|2. Net cash in/outflow generated from investment activities:|||
|Cash inflow from taking back investment|42,067,164.04|41,869.09|
|Cash inflow from return on investment|652,078.41|1,720,736.00|
|Cash gain from disposal of fixed assets, intangible assets, and otherlong-term investment|631,062.15|280,983.04|
|Cash inflow from disposal of subsidiaries and other operating units|||
|Other proceeds related to investment activities|||
|Sub-total cash inflow from investing activities|43,350,304.60|2,043,588.13|
|Cash paid for acquisition of fixed assets, intangible assets and otherlong-term assets|20,219,883.21|27,766,902.96|
|Cash paid for investment|521,762,001.00||
|Net increase in securities in loan|||
|Cash paid for acquisition of subsidiaries and other operating units||8.05|
|Cash paid for other activities related to investment|29,246,702.07|70,516,556.75|
|Sub-total cash outflow from investing activities|571,228,586.28|98,283,467.76|
|Net cash in/outflow generated from investment activities|-527,878,281.68|-96,239,879.63|
|3. Cash flow from financing activities:|||
|Absorption of investment|651,882,998.82||
|Including cash inflow from absorbing minority shareholderinvestment|||
|Borrowings raised|57,223,360.00|180,597,322.29|
|Cash received from issuing bonds|||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Other cash inflow related to financing activities|712,000.00||
|Sub-total cash inflow from financing activities|709,818,358.82|180,597,322.29|
|Cash paid for debt|135,266,891.34|86,600,000.00|
|Dividend, interest and profit paid|3,642,978.96|4,288,651.97|
|Including dividend and profit paid by subsidiaries to minorityshareholder|||
|Other cash outflow related to financing activities|646,998.67|362,959.65|
|Sub-total cash outflow from financing activities|139,556,868.97|91,251,611.62|
|Net cash in/outflow from financing activities|570,261,489.85|89,345,710.67|
|4. Influence of fluctuation of exchange rate|-1,056,688.04|-9,216,787.28|
|5. Net increase/decrease in cash and cash equivalents|22,579,746.72|-47,685,332.38|
|Add: Beginning balance of cash and cash equivalents|446,063,638.27|461,395,048.30|
|6. Ending balance of cash and cash equivalents|468,643,384.99|413,709,715.92|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Consolidated Statement of Cash Flows
January– June 2014
(Presented in RMB unless otherwise specified)
||||
|-|-|-|
|Item|Current Period|Last Period|
|1. Cash flow from operating activities:|||
|Cash inflow from sale of goods and provision of services|29,560,524.15|75,269,572.19|
|Tax refunds received||140,790.00|
|Cash inflow from other operating activities|3,649,477.90|41,925,197.08|
|Subtotal cash inflow from operating activities|33,210,002.05|117,335,559.27|
|Cash inflow from sale of goods and provision of services|14,000,266.06|45,888,228.66|
|Cash paid to and for employees|12,350,541.27|18,515,227.57|
|Cash paid for tax|2,700,231.86|5,139,769.17|
|Cash paid for other operating related activities|18,957,591.16|21,783,044.58|
|Sub-total cash outflow from operating activities|48,008,630.35|91,326,269.98|
|Net cash in/outflow from operating activities|-14,798,628.30|26,009,289.29|
|2. Net cash in/outflow generated from investment activities:|||
|Cash inflow from taking back investment|||
|Cash inflow from return on investment|652,078.41|1,725,000.00|
|Cash gain from disposal of fixed assets, intangible assets, and otherlong-term investment|93,500.00|205,000.00|
|Cash inflow from disposal of subsidiaries and other operating units|||
|Other proceeds related to investment activities|||
|Sub-total cash inflow from investing activities|745,578.41|1,930,000.00|
|Cash paid for acquisition of fixed assets, intangible assets and otherlong-term assets|2,519,600.87|236,562.26|
|Cash paid for investment|521,762,001.00|20,000,000.00|
|Cash paid for acquisition of subsidiaries and other operating units|||
|Cash paid for other activities related to investment|||
|Sub-total cash outflow from investing activities|524,281,601.87|20,236,562.26|
|Net cash in/outflow generated from investment activities|-523,536,023.46|-18,306,562.26|
|3. Cash flow from financing activities：|||
|Absorption of investment|651,882,998.82||
|Borrowings raised||77,000,000.00|
|Cash received from issuing bonds|||
|Other cash inflow related to financing activities|||
|Subtotal cash inflow from financing activities|651,882,998.82|77,000,000.00|
|Cash paid for debt|123,600,000.00|86,600,000.00|
|Dividend, interest and profit paid|2,212,394.96|3,510,828.89|
|Other cash outflow related to financing activities|436,702.82||
|Subtotal cash outflow from financing activities|126,249,097.78|90,110,828.89|
|Net cash in/outflow from financing activities|525,633,901.04|-13,110,828.89|
|4. Influence of fluctuation of exchange rate|-178,993.86|-1,591.97|
|5. Net increase/decrease in cash and cash equivalents|-12,879,744.58|-5,409,693.83|
|Add: Beginning balance of cash and cash equivalents|88,304,869.24|43,545,254.69|
|6. Ending balance of cash and cash equivalents|75,425,124.66|38,135,560.86|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Consolidated Statement of Changes in Equity
January– June 2014
(Presented in RMB unless otherwise specified)
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Current Period||||||||||
||Shareholder‟s Equity Attributable to Parent Company||||||||Minority Interests|TotalShareholder‟sEquity|
||Shares|Capital Reserve|Less:TreasuryStocks|SpecialReserves|SurplusReserve|GeneralRiskReserves|RetainedEarnings|Others|||
|1. Previous year endingbalance broughtforward|448,886,777.00|397,651,623.21|||4,546,242.52||-2,996,568.99|-52,193,887.64|133,898,177.20|929,792,363.30|
|Add: accounting policychanges|||||||||||
|Correction of previous-periodaccounting errors|||||||||||
|Others|||||||||||
|2. Beginning balance|448,886,777.00|397,651,623.21|||4,546,242.52||-2,996,568.99|-52,193,887.64|133,898,177.20|929,792,363.30|
|3. Increase/decrease forthe current period|99,702,823.00|547,797,161.60|||||41,854,215.80|-1,080,347.56|22,902,877.83|711,176,730.67|
|(1) Net profit|||||||41,854,215.80||22,929,651.41|64,783,867.21|
|(2) Other comprehensiveincomes||9,291,753.62||||||-1,080,347.56|-26,773.58|8,184,632.48|
|Subtotal of (1) and (2)||9,291,753.62|||||41,854,215.80|-1,080,347.56|22,902,877.83|72,968,499.69|
|(3) Investment ordisinvestment|99,702,823.00|538,505,407.98||||||||638,208,230.98|
|a. Investment fromshareholders|99,702,823.00|538,505,407.98||||||||638,208,230.98|
|b. Shares included inowners' equity|||||||||||
|c. Others|||||||||||
|(4) Distribution|||||||||||
|a. Surplus reserve|||||||||||
|b. General risk reserve|||||||||||
|c. Distribution toshareholders|||||||||||
|d. Others|||||||||||
|(5) Internal transfer ofowners‟ equity|||||||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||
|-|-|-|-|-|-|-|-|
|a. Capital reserve turn tostock equity||||||||
|b. Surplus reserve turn tostock equity||||||||
|c. Surplus reserve torecover loss||||||||
|d. Others||||||||
|(6) Special reserves||||||||
|a. Appropriation forcurrent year||||||||
|b. Use in current year||||||||
|(7) Others||||||||
|4. Ending balance|548,589,600.00|945,448,784.81|4,546,242.52|38,857,646.81|-53,274,235.20|156,801,055.03|1,640,969,093.97|

||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Amount in last year||||||||||
||Shareholder‟s Equity Attributable to Parent Company||||||||Minority Interests|TotalShareholder‟sEquity|
||Shares|Capital Reserve|Less:TreasuryStocks|SpecialReserves|SurplusReserve|GeneralRiskReserves|RetainedEarnings|Others|||
|1. Previous year endingbalance broughtforward|448,886,777.00|409,073,943.83|||4,546,242.52||-82,548,593.18|-50,485,077.47|134,777,594.20|864,250,886.90|
|Add: accounting policychanges||-25,127,469.60|||||||-13,532,735.20|-38,660,204.80|
|Correction ofprevious-period accountingerrors|||||||||||
|Others|||||||||||
|2. Beginning balance|448,886,777.00|383,946,474.23|||4,546,242.52||-82,548,593.18|-50,485,077.47|121,244,859.00|825,590,682.10|
|3. Increase/decrease forthe current period||-6,529,466.42|||||30,674,302.78|-11,083,149.64|9,006,645.26|22,068,331.98|
|(1) Net profit|||||||30,674,302.78||20,748,423.91|51,422,726.69|
|(2) Other comprehensiveincomes||-6,529,466.42||||||-11,083,149.64|-4,297,358.04|-21,909,974.10|
|Subtotal of (1) and (2)||-6,529,466.42|||||30,674,302.78|-11,083,149.64|16,451,065.87|29,512,752.59|
|(3) Investment ordisinvestment|||||||||-7,444,420.61|-7,444,420.61|
|a. Investment fromshareholders|||||||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||
|-|-|-|-|-|-|-|-|
|b. Shares included inowners' equity||||||||
|c. Others||||||-7,444,420.61|-7,444,420.61|
|(4) Distribution||||||||
|a. Surplus reserve||||||||
|b. General risk reserve||||||||
|c. Distribution toshareholders||||||||
|d. Others||||||||
|(5) Internal transfer ofowners‟ equity||||||||
|a. Capital reserve turn tostock equity||||||||
|b. Surplus reserve turn tostock equity||||||||
|c. Surplus reserve torecover loss||||||||
|d. Others||||||||
|(6) Special reserves||||||||
|a. Appropriation forcurrent year||||||||
|b. Use in current year||||||||
|(7) Others||||||||
|4. Ending balance|448,886,777.00|377,417,007.81|4,546,242.52|-51,874,290.40|-61,568,227.11|130,251,504.26|847,659,014.08|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Shang Gong Group Co., Ltd
Separate Statement of Changes in Equity
January– June 2014
(Presented in RMB unless otherwise specified)
||||||||||
|-|-|-|-|-|-|-|-|-|
||Current Period||||||||
||Shares|Capital Reserve|Less:TreasuryStocks|SpecialReserves|Surplus Reserve|GeneralRiskReserves|Retained Earnings|Total Shareholder‟sEquity|
|1. Previous year endingbalance broughtforward|448,886,777.00|475,469,882.88|||4,546,242.52||-336,535,478.73|592,367,423.67|
|Add: accounting policychanges|||||||||
|Correction ofprevious-periodaccounting errors|||||||||
|Others|||||||||
|2. Beginning balance|448,886,777.00|475,469,882.88|||4,546,242.52||-336,535,478.73|592,367,423.67|
|3. Increase/decrease forthe current period|99,702,823.00|549,721,419.92|||||2,228,780.01|651,653,022.93|
|(1) Net profit|||||||2,228,780.01|2,228,780.01|
|(2) Other comprehensiveincomes||11,216,011.94||||||11,216,011.94|
|Subtotal of (1) and (2)||11,216,011.94|||||2,228,780.01|13,444,791.95|
|(3) Investment ordisinvestment|99,702,823.00|538,505,407.98||||||638,208,230.98|
|a. Investment fromshareholders|99,702,823.00|538,505,407.98||||||638,208,230.98|
|b. Shares included inowners' equity|||||||||
|c. Others|||||||||
|(4) Distribution|||||||||
|a. Surplus reserve|||||||||
|b. General risk reserve|||||||||
|c. Distribution to|||||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|shareholders||||||
|d. Others||||||
|(5) Internal transfer ofowners‟ equity||||||
|a. Capital reserve turn tostock equity||||||
|b. Surplus reserve turn tostock equity||||||
|c. Surplus reserve torecover loss||||||
|d. Others||||||
|(6) Special reserves||||||
|a. Appropriation forcurrent year||||||
|b. Use in current year||||||
|(7) Others||||||
|4. Ending balance|548,589,600.00|1,025,191,302.80|4,546,242.52|-334,306,698.72|1,244,020,446.60|

||||||||||
|-|-|-|-|-|-|-|-|-|
||Amount in last year||||||||
||Shares|Capital Reserve|Less:TreasuryStocks|SpecialReserves|SurplusReserve|GeneralRiskReserves|Retained Earnings|Total Shareholder‟sEquity|
|1. Previous year endingbalance broughtforward|448,886,777.00|459,527,835.03|||4,546,242.52||-364,229,319.60|548,731,534.95|
|Add: accounting policychanges|||||||||
|Correction ofprevious-periodaccounting errors|||||||||
|Others|||||||||
|2. Beginning balance|448,886,777.00|459,527,835.03|||4,546,242.52||-364,229,319.60|548,731,534.95|
|3. Increase/decrease forthe current period||-4,773,737.54|||||5,539,662.36|765,924.82|
|(1) Net profit|||||||5,539,662.36|5,539,662.36|
|(2) Other comprehensive||-4,773,737.54||||||-4,773,737.54|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|incomes||||||
|Subtotal of (1) and (2)||-4,773,737.54||5,539,662.36|765,924.82|
|(3) Investment ordisinvestment||||||
|a. Investment fromshareholders||||||
|b. Shares included inowners' equity||||||
|c. Others||||||
|(4) Distribution||||||
|a. Surplus reserve||||||
|b. General risk reserve||||||
|c. Distribution toshareholders||||||
|d. Others||||||
|(5) Internal transfer ofowners‟ equity||||||
|a. Capital reserve turn tostock equity||||||
|b. Surplus reserve turn tostock equity||||||
|c. Surplus reserve torecover loss||||||
|d. Others||||||
|(6) Special reserves||||||
|a. Appropriation forcurrent year||||||
|b. Use in current year||||||
|(7) Others||||||
|4. Ending balance|448,886,777.00|454,754,097.49|4,546,242.52|-358,689,657.24|549,497,459.77|

 Legal representative: Zhang Min Financial director: Li Jiaming Financial manager: Gao Lili
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Notes to Financial Statements
1. Background Information
Shang Gong Group Co., Ltd. (hereinafter referred to as “ShangGong Group”, “the Company”), joint stock limited company with publicly issued A& B shares on Shanghai Stock Exchange, is the first listed company in the sewing machinery sector of thePeople‟s Republic of China. The Company got the Corporate Business License numbered 310000400080303 authorized by local administration of industry and commerce in April, 1994. The Company, with register capital of RMB 548,589,600., has Room A-D,
12th
Floor, Orient Mansion, No.1500 Century Avenue, Pudong New Area, Shanghai as register address and theheadquarters‟ address, and Mr. Zhang Min as legal representative.
The Company is mainly engaged in the research and development, manufacture and sales of industrial and household sewing machines and equipment. In the meantime, the Company has also expanded its business in office appliances, sensitive films, international trade and logistic industries.
During recent years, the Company actively implements the internationalization strategy by cross-border mergers and acquisitions. After the acquisition ofDürkopp Adler Aktiengesellschaft (public listed company in Germany, hereinafter referred to as "DA AG") in 2005, the company has been availing the advanced technology of DA AG to realize the upgrade and development of theproducts‟ structure which obtained larger market share in the high-tech sewing equipment market in Europe and America. And the company gradually moved the production of DAAG‟s products which are popular in Asian market to China with purpose of satisfying the growing demand of customers for auto-running sewing machines. The company acquired100% shares of PFAFF Industriesysteme und Maschinen Aktiengesellschaft ( hereinafter referred to as "PFAFF" ) in March 2013 in order to consolidate and expand technical advantage and industry shares, and enhance marking competitiveness. In July 2013, the company purchased100% shares of KSL Keilmann Sondermaschinenbau GmbH (hereinafter referred to as "KSL”) and its related companies to supplement the shortage in automatic sewing technology area, expandcompany‟s industrial sewing machines to emerging industries, and upgrade the core competencies and sustainable development capability. At present, the company possesses international brands including DA, PFAFF, KSL, Beisler, etc. and registered trademarks like “Shanggong”, “Shuanggong”, “Butterfly”, “Bee” and “Flying Man”, etc..
On February 28, 2014, as approved by China Securities Regulatory Commission (CSRC) by document Zheng-Jian-Xu-Ke[2014] No. 237, the company was permitted to issue no more than 150,000,000 non-public shares. The actual non-public shares issued by the company are 99,702,823. The issue price is RMB 6.73 per share. The actual fund raised is RMB 670,999,998,79, issue expense is RMB 32,791,767,81, the net fund raised is RMB 638,208,230.98. After the issuance, the register capital changed to RMB 548,589,600, which has been verified by BDO China Shu Lun Pan Certified Public Accountants LLP by capital verification report Xin-Kuai-Shi-Bao-Zi[2014] No.111126.
As at June 30, 2014, the total of shares is of 548,589,600, including 448,886,777 unconditionally tradable shares (accounting for81.83% of total shares) and 99,702,823 conditionally tradable shares (accounting for18.17% of total shares).
2. Principal accounting policies, estimations and early errors
2.1 Basis for the formulation of financial statements
Based on the sustainable operation and according to really occurred transactions and affairs, the Company adopts “Accounting Standards for Business Enterprises-Basic Standards” and related additional regulations in the preparation of its financial statements.
2.2 Declaration for the adoption of the Accounting Standards for Enterprises
The financial statements and annotations prepared by the Company, strictly under the guideline of “Accounting Standards for Business Enterprises”, reflect truly and integrally the information such as financial status, business achievements and cash flows of the Company.
2.3 Accounting Calendar
The Company adopts the Gregorian calendar and defines every accounting year as beginning at January 1 and ending at the same December 31.
2.4 Measurement currency
The Company maintains its books and records in Renminbi (RMB).
The overseas subsidiaries of the Company adopt at their books respectively the currency adopted by the places
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
where their principal operations are installed, and translate them into Renminbi on the preparation of financial statements.
2.5 Accounting treatment of business combination under/not under the same controller
2.5.1 Under the same controller
The acquired assets and liabilities by the company through business combination are measured at their book value with the merged parties on the date of merger. The capital surplus should be adjusted based on the difference between the book value of net assets obtained from business combination and the book value of the paid price for the combination (or the total nominal value of issued shares). And in case that the capital surplus was less than the write-offs, the retained earnings should be adjusted.
All the direct costs paid by the Company for the conduct of business combination, including audit fees, appraisal fees, legal services, etc., should be accounted into current profit and loss at the time incurred.
The fees, commission, etc., occurred during the issuance of equity securities for the business combination should offset the premium income. In case that the premium income was less than write-downs, the retained earnings should be recorded for reduction.
If the accounting policies adopted by the merged parties are inconsistent with those of the Company, the Company can make adjustment in accordance with its accounting policies on the date of combination, and confirm them in accordance with the Accounting Standards for Enterprises confirmation.
2.5.2 Not under the same controller
The company accounts the assets and liabilities paid as price for the business combination at their fair value on the date of acquisition. The difference between the fair value and the book should be included in current profit and loss.
The company allocates the merger costs on the date of acquisition.
The Company recognize as goodwill the difference of the combination costs more than the fair value of the identifiable net assets obtained from the merged parties, and accounts into current profit and loss the difference of the fair value of the identifiable net assets obtained from the merged parties than the combination costs.
All the other assets except intangible assets (not limited to the identified assets originally belonged to the merged parties), whose economic benefits are likely to flow to the company and whose fair value can be reliably measured, should be accounted separately at their fair value; the intangible assets whose fair value can be reliably measured should be recognized separately as intangible assets and accounted at their fair value; all the other liabilities except contingent liabilities, whose fulfillment is likely to lead to outflow of economic benefits of the Company and whose fair value can be reliably measured, should be accounted separately at their fair value; the contingent liabilities obtained from the merged parties whose fair value can be reliably measured, should be recognized separately as liabilities and accounted at their fair value.
2.6 Preparation of the consolidated financial statements
The consolidation scope of the Company's financial statements has the real control as basis, and all subsidiaries are included in the consolidated financial statements.
All the consolidated subsidiaries adopt the same accounting policies and accounting period. In case that the subsidiary's accounting policies and accounting period are inconsistent with those of the Company, the inconsistent elements should be adjusted according to the company's accounting policies and accounting period. The Company prepares the consolidated financial statements based on the financial statements of the Company itself and of its subsidiaries, with adoption of other relevant information, and after necessary adjustments based on equity method.
There should be offset the influence of the internal transactions between the Company and its subsidiaries, the subsidiaries themselves upon the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, and consolidated owner's equity sheet.
If the current-period loss for minority shareholders of the subsidiaries is more than the beginning balance of the minority interests, the owner's equity of the Company should be offset when the Articles of Association or any other agreementshaven‟t shown that the minority shareholders should fulfill the obligation; or the minority shareholders should pay for the difference when the Articles of Association or any agreements share have fixed the obligation for them.
During the report period, for those subsidiaries newly absorbed by business combination under the same controller, the Company should adjust the beginning balance of the consolidated balance sheet; include the current-period income, expenses and profits of the subsidiaries into the consolidated profit and loss statement; and include the current-period cash flow of the subsidiaries into the consolidated cash flow statement.
During the report period, for those subsidiaries newly absorbed by business combination not under the same
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
controller, the Company should not adjust the beginning balance of the consolidated balance sheet; include the income, expenses and profits of the subsidiaries from the acquisition date to the period-end into the consolidated profit and loss statement; and include the cash flow of the subsidiaries from the acquisition date to the period-end into the consolidated cash flow statement.
During the report period, on disposal of subsidiaries, the Company should incorporate the income, expenses and profits of the subsidiaries from the period-beginning to the disposal date into the consolidated profit and loss statement; and incorporate the cash flow of the subsidiaries from the period-beginning to the disposal date into the consolidated cash flow statement.
2.7 Criteria for the definition of cash and cash equivalent
For the purpose of the cash flow statement, cash represents the cash on hand and ready for payment in cash deposits of the Company, cash equivalent comprises short-term investments with maturity within three months that are characterized with active fluidity, easy to transfer to realizable value and less risky for value fluctuation. 2.8 Foreign currency calculation and translation of financial statements in foreign currency
2.8.1 Foreign currency calculation
Foreign currency transactions are translated into the measurement currency using the spot exchange rate prevailing at the date of the transaction.
The balance of foreign currency monetary items is adjusted and translated into measurement currency at balance sheet date using the spot exchange rate. Regarding the year-end differences of translation in foreign currency, except those special borrowing accounts under the acquisition, building or production of assets to be capitalized are capitalized and accounted into related assets cost, all the other differences are accounted into current profits and losses. The foreign currency non-monetary items at historical cost are translated using the spot exchange rate. And the foreign currency non-monetary items at fair value are adjusted and translated into measurement currency at adoption date of fair value using the spot exchange rate. The difference of translation between different currencies is accounted into current profits and losses or capital reserves.
2.8.2 Translation of financial statements in foreign currency
All the assets and liabilities items in the Balance Sheet adopt for the translation the spot exchange rate at balance sheet date. The items under theowners‟ equity, except the undistributed profits, are translated at their occurrence at the spot exchange rate. The spot exchange rate at the transaction date or the exchange rate approximate to spot rate defined by a systematic rational method should be adopted for the income/expense items, and the difference caused by such translations should be listed separately under theowners‟ equity in the Balance Sheet.
On disposal of overseas operations, the corresponding difference of foreign currency translation related to the overseas operations should be moved fromowners‟ equity to current profits and losses. On partial disposal of overseas operations, the partial proportion of difference should also be converted into current profits and losses. 2.9 Financial instruments
Financial instruments consist of financial assets, financial liabilities and equity instruments.
2.9.1 Classification of financial instruments
The Company classifies the financial assets and liabilities by their purposes: financial assets or liabilities at fair value and accounted into current profits and losses (for example, tradable financial assets or liabilities); held to maturity investments; loans and receivable accounts; financial assets available for sale and other financial liabilities.
2.9.2 Definition and measurement of financial instruments
2.9.2.1 Financial assets and liabilities at fair value and accounted into current profits and losses
The fair value (after deduction of cash dividend to be distributed and bonds interest to be received) of the assets on the acquisition should be adopted as initial recognized value, and related transaction expenses should be accounted into current profits and losses.
The interests and cash dividend received should be recognized as investment income during the period, and the difference of fair value between initial and spot dates should be accounted into current profits and losses at the end of period.
On the disposal of the assets, the difference between the obtained price and the book value of investment should be recognized as investment income, and the accumulated fair value profits and losses should be accordingly adjusted.
2.9.2.2 Held to maturity investments
The fair value (after deduction of bond interests whose period has matured but not charged yet) plus the related
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
transactions fees should be adopted as initial recognized value.
During the holding period, the interest income should be confirmed and included into investment income in accordance with the amortized costs and the real interest rate (according to nominal interest rates if the difference between the real interest rate and the nominal interest rate is small). The real interest rate should be determined at the time made, and remain unchanged during the expected duration or applicable shorter period.
On disposal of these investments, the difference between the income from investment and the book value of investment should be accounted into investment income.
2.9.2.3 Receivable accounts
The contract price charged to the buyers should be recognized as initial value for those receivable accounts which mainly composes of the receivablecreditor‟s right caused by the sale of goods and the providing of labor services, and receivables in other companies excluding debt instruments priced in active markets, includes but not limits in receivable notes, receivable accounts, other receivables, prepayments and long-term receivables. If characterized as financing activities, the initial recognition should be priced at present value.
The differences between sale value and book value should be accounted into current profits and losses on its recovery or disposal.
2.9.2.4 Available for sale financial assets
The fair value (less than cash dividend to be distributed andbonds‟ interest to be received) and relevant transaction expenses of the assets on the acquisition should be adopted as initial recognized value.
The interests and cash dividend received should be recognized as investment income during the period, and the difference of fair value between initial and spot dates should be accounted into capital reserve (other capital reserve).
On the disposal of the assets, the difference between fair value and initial value should be recognized as investment profits and losses, and the accumulated variance of fair value caused by the disposal should be simultaneously moved fromshareholders‟ equity to investment profits and losses.
2.9.2.5 Other financial liabilities
The Company adopts the fair value and relevant transaction expenses as initial recognized value and takes amortized cost for subsequent measurement.
2.9.3 Recognition and measurement of the financial assets transfer
On the transfer of financial assets, these assets should be no longer recognized if nearly all the risks and rewards relating to the ownership have been transferred to the transferee; if in contrary cases, they should be still recognized as financial assets of the Company.
The principle of “Substance over Form” is adopted in judging the termination or not of recognizing financial assets. The transfer of financial assets is also divided into two cases: entire transfer and partial transfer. If the transfer of an entire financial asset satisfies the conditions for stop recognition, the difference between the amounts of the following 2 items shall recorded in the profits and losses of the current period:
2.9.3.1 The book value of the transferred financial asset;
2.9.3.2 The aggregate consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in theowner‟s equities (in the event that the financial asset involved in the transfer is a financial asset available for sale).
If the transfer of partial financial asset satisfies the conditions for stopping recognition, the carrying amount of the entire financial asset transferred shall, between the portion whose recognition has stopped and the portion whose recognition has not stopped (under such circumstance, the service asset retained shall be deemed as a portion whose recognition has not stopped), be allocated at their respective relative fair value, and the difference between the amounts of the following 2 items:
(1) The book value of the portion whose recognition has stopped;
(2) The aggregate consideration of the portion whose recognition has stopped, and the portion of the accumulative amount of the changes in the fair value originally recorded in theowner‟s equities which is corresponding to the portion whose recognition has stopped (in the event that the financial asset involved in the transfer is a financial asset available for sale).
The Company should recognize financial assets and recognize the reception of consideration as financial liabilities in case the transfer of these financial assetsdoesn‟t satisfy the definition of termination.
2.9.4 Conditions for derecognizing financial liabilities
If the current obligations of financial liabilities has been lifted in whole or in part, then the Company should derecognize the financial liabilities in whole or in part thereof; if the Company signs an agreement with creditors in order to take on new ways to replace the existing financial liabilities, and the new liabilities and the existing financial terms are substantially different, the Company should terminate recognizing the existing financial liabilities, and begin to recognize the new financial liabilities at the same time.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
If the terms of the contract involving the existing financial liabilities have been made with substantive changes in whole or in part, the Company should terminate recognizing the existing financial liabilities in whole or in part, and at the same time, adopt the modified version of financial liabilities as a new one.
On derecognizing the financial liabilities in whole or in part, the difference between the book value of these financial liabilities and the payment should be accounted into current profits and losses.
If buying back part of the financial liabilities, on the date of repurchase and in accordance with the comparative fair value of the part to be continuously recognized and to be derecognized, the Company should allocate the whole financial liabilities. The difference between the part assigned to the derecognized book value and the payment (including the roll-out of non-cash assets or new financial liabilities to be assumed) should be included into current-period profits and losses.
2.9.5 Definition of fair value of financial assets and liabilities
The Company adopts the year-end quotations in active markets as fair value of financial assets and liabilities. 2.9.6 Depreciation reserves for financial assets (excluding accounts receivable)
2.9.6.1 Depreciation reserves for financial assets available for sale
At end of report year, the accumulated loss caused by the fair value decrease should be reclassified from the original item ofowners‟ equity and recognized as impairment loss in case the fair value of financial assets available for sale has decreased significantly or the decrease trend is considered to be non-temporary under all the related conditions.
2.9.6.2 Depreciation reserves for held to maturity investments
The impairment loss of held to maturity investments is calculated in the light of the treatment of accountsreceivable‟s depreciation.
2.10 Accounts receivable
2.10.1 Recognition and accruement of provision for bad debt in accounts receivable of individually significant amount
2.10.1.1 Recognition criteria of provision for bad debt in accounts receivable of individually significant amount The accounts receivable of individually significant amount refer to the top five accounts receivable with significant amount.
2.10.1.2 Accruement of provision for bad debt in accounts receivable of individually significant amount
The Company takes individual depreciation test for those significant receivable accounts, and determines the impairment loss and makes provision for bad debts based on the difference between their future cash flow value and book value.
The estimated future cash flow of short-term accounts receivableshouldn‟t be discounted at the calculation of their impairment loss for the minor difference between their present value and future cash flow.
2.10.2 Recognition and accruement of provision for bad debt in accounts receivable of insignificant amount but whose package is characterized as highly risky credit portfolio
2.10.2.1 Definition of highly risky credit risk portfolio
For those insignificant receivable accounts, the Company classifies them as several groups whose credit risk level is similar to those individually tested non-depreciation accounts, and determines the impairment loss and makes proportional provision for bad debts based on the end-of-period balance.
2.10.2.2 Accruement based on highly risky credit risk portfolio
The Company determines the following proportion of provision for bad debts based on the actual loss ratio of the anterior-periods receivable accounts with similar credit risk, and the consideration of actual situations:
||||
|-|-|-|
|Age|Provision proportion for accounts receivable(%)|Provision proportion for other receivables(%)|
|Within one year|5|5|
|1-2 years|20|20|
|2-3 years|50|50|
|Over 3 years|100|100|

 2.11 Inventories
2.11.1 Classification of inventories
The inventories of the Company comprise: materials in transit, raw materials, turnover materials, inventory
products, work in progress, finished products, material in outside processing, etc.
2.11.2 Inventory pricing method on their delivery
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Inventory products are accounted with weighted average method on their delivery.
2.11.3 Determination of net realizable value of inventories and accruement of stock depreciation provision The Company takes inventory checkup at end of each accounting period, and states or adjusts depreciation reserves of inventories at the lower of cost or net realizable value.
During normal production, the cash realizable value of inventories directly for sale, such as products, merchants and materials for sale is accounted by the estimated price less the estimated sales expenses and taxes. During normal production, the cash realizable value of materials to be processed is accounted by the estimated price of finished product less the estimated cost, sales expenses and taxes. For those inventories with purpose of implementing sales contract or labor contract, the cash realizable value is based on the contract price; if the inventories held more than fixed in the contract, the cash realizable value of surplus part is accounted based on the market price.
At end of report year, the Company accrues separately the provisions for depreciation reserves of the inventories. In case of low-cost and numerous-in-variety inventories, the Company classifies the provision for depreciation of each kind of inventories. And the Company consolidates the provision for depreciation of those inventories related to the production and sales of products in the same region, with the same or similar utilization and purpose, and difficult to calculate separately.
In case the factors impacting the write-down of theinventories‟ value disappear, the write-down amount should be recovered and the according provision of impairment should be returned to current profits and losses.
2.11.4 Inventory system
The Company adopts perpetual inventory system to take periodic or non-periodic inventory checkup.
2.11.5 Provision for depreciation reserves of inventories
2.11.5.1 Inventory products are accounted with weighted average method on their delivery.
2.11.5.2 The amortization treatment of packing materials adopts one-off amortization method.
2.12 Long-term equity investment
2.12.1 Initial measurement
2.12.1.1 Long-term equity investment formed in the merger of enterprises
For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. All the directly related expenses, including audit fee, appraisal fee, legal services fee etc, shall be accounted into current profits and losses.
For the merger under different control, the merger cost should be accounted at the fair value of assets paid, liabilities carried and equity bonds issued by the merging party at the merger date, and other direct expenses related to the transaction. For the gradual merger realized by separate procedures, the merger cost should be the sum of every separate transaction. In case of any future events defined in merger contract whose predictable occurrence could influence the merger cost and the related amount could be reliably calculated at merger date, such amount should also be included in merger cost.
2.12.1.2 Long-term equity investment by other methods
The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid.
The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued.
The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract or agreement except the unfair value stipulated in the contract or agreement.
Under the conditions that the exchange of non-monetary assets is characterized with business essence, and the fair value of the assets received or surrendered can be accounted in a reliable way, the book value of assets received is defined on basis of the fair value of assets surrendered, except there are conclusive evidences for the stronger reliability of the fair value of assets received. For the exchange of those non-monetary assets not meeting the above premises, the book value of assets surrendered and related taxes should be accounted as cost of assets received and the profits and lossesshouldn‟t be concluded.
The initial cost of long-term equity investment obtained by recombination of liabilities shall be accounted at fair value.
2.12.2 Subsequent measurement and recognition of profits and losses
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
2.12.2.1 Subsequent measurement
For a long term equity investment on the subsidiary company of an investing enterprise, the investing enterprise shall accounted by employing the cost method, and shall make an adjustment by employing the equity method when it works out consolidated financial statements.
The cost method shall be employed when a long-term equity investment of the investing enterprise that does not do joint control or does not have significant influences on the invested entity, and has no offer in the active market and its fair value cannot be reliably measured.
A long-term equity investment of the investing enterprise that does joint control or significant influences over the invested entity shall be measured by employing the equity method. If the initial cost of a long-term equity investment is more than the investing enterprise' attributable share of the fair value of the invested entity's identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted; if the initial cost of a long-term equity investment is less than the investing enterprise' attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously. Where any change is made to the owner's equity other than the net profits and losses of the invested entity, the book value of the long-term equity investment shall be adjusted and be included in the owner's equity, and the capital reserves (other capital reserves) shall be accordingly adjusted, in accordance with the attributable share of the net profits or losses of the invested entity.
2.12.2.2 Recognition of profits and losses
Under cost method, the investment income recognized by the investing enterprise shall be limited to the amount received from the accumulative net profits that arise after the invested entity has accepted the investment. Where the amount of profits or cash dividends obtained by the investing entity exceeds the aforesaid amount, it shall be regarded as recovery of initial investment cost.
Under equity method, an investing enterprise shall recognize the net losses of the invested enterprise as following process: firstly, it shall dilute the book value of the long-term equity investment; secondly, if the book value of the long-term equity investment is insufficient to dilute, it shall dilute the book value of the long-term receivables under the limit of other long-term rights and interests which substantially form the net investment made to the invested entity; lastly, after the above treatments, it shall recognize the accrued liabilities according to the responsibilities in investment contract or agreement and account them into current profits and losses.
If the invested entity realizes profits in posterior periods, the investing enterprise shall adopt the contrary process, after the unrecognized losses, to write down the balance of the accrued liabilities, recover the book value of other long-term rights and interests which substantially form the net investment made to the invested entity, and recognize the investment profits.
2.12.3 Evidences for significant influences and the invested entity under joint control
Certain control is considered as joint control with other parties over the invested entity when it happens over an economic activity in accordance with the contracts and agreements, which does not exist unless the investing parties of the economic activity with one an assent on sharing the control power over the relevant important financial and operating decisions. Certain case is considered as significant influences when the investing entity owns the power to participate in making decisions on the financial and operating policies of an enterprise, but not to control or do joint control together with other parties over the formulation of these policies.
2.12.4 Impairment testing methods and impairment accrual method
For those long-term equity investments characterized with significant impact, not quoted in active markets, and whose fair valuecan‟t be reliably measured, the impairment loss is determined on basis of the difference between their book value and the present value of similar financial assets whose market rate of return on future cash flows can be discounted.
For those long-term equity investments, except the long- goodwill formed from business combination, if the recoverable amount of the measurement results show that the recoverable amount of the long-term equity investment below its book value, the difference will be recognized as impairment loss.
For goodwill formed by business combination, regardless of whether there is indication of impairment, there should be conducted annual impairment testing.
The impairment loss of long-term equity investmentscan‟t be returned back after the recognition.
2.13 Investment real estate
Investment real estate refers to the real estate held with purpose of rent earning, capital gaining or both of them, including land user which has been rented out or is held for transference after capital appreciation, and buildings which has been rented out.
The Company adopts cost calculation mode for measurement of investment real estate. On calculating the
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
depreciation, the Company adopts the same policy of fixed assets for measurement of investment real estate and assets for rent, and the same policy of intangible assets for measurement of right of land use for rent.
On appearance of evidence for depreciation, the Company estimates the recoverable value and defines the impairment loss when the recoverable value is lower than its book value.
The impairment loss of investment real estatecan‟t be returned back after the recognition.
2.14 Calculation and depreciation of fixed assets
2.14.1 Definition of fixed assets
The fixed assets of the Company refer to those tangible assets with service life more than one year and related to production, labor services, for lease or management. The Company recognizes the fixed assets when they meet the following conditions:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
(2) The cost of the fixed asset can be measured reliably.
2.14.2 Impairment method of fixed assets
The provision for decrease in value of fixed assets is made with straight-line method, with consideration of the category of the assets, their estimates of service life and net salvage.
The fixed assets fit-up fee eligible for capitalization should be accrued individually in straight-line method adopting the shorter period between two fit-ups and the remaining service life.
The estimated service life and depreciation rate of fixed assets by category is as following:
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|-|-|-|-|
|Category|Service year|Estimated net scrap value rate|Annual rate of depreciation|
|House and construction|5-50|0-10%|1.8% - 20%|
|Machinery and equipment|5-15|0-10%|6% - 20%|
|Motor vehicles|3-14|0-10%|6.43 % - 33.33%|
|Electric appliances|3-14|0-10%|6.43%-33.33%|
|Fixtures|5-15|--|6.67%-20%|
|Others|3-14|0-10%|6.43% - 33.33%|

2.14.3 Testing method and provision for depreciation of fixed assets
The Company determines whether there is evidence of impairment that may occur upon fixed assets at end of each period.
If there is indication of impairment of fixed assets, the Company should estimate its recoverable amount. The recoverable amount is to be determined by the higher between the net price of the fair value of fixed assets after subtracting costs of disposal and the present value of expected future cash flows from fixed assets.
When the recoverable amount of fixed assets is below their book value, the book value of fixed assets should be written down to its recoverable amount, and the amount of write-down should recognized as impairment loss of fixed assets, and included into current profits and losses. At the same time, the provision for depreciation of fixed assets should be accrued.
After the recognition of impairment losses of fixed assets, the depreciation of fixed assets for impairment should be accordingly adjusted in future periods so that during the remaining useful life of the fixed assets, the book value of adjusted fixed assets can be systematically amortized (less the estimated net residual value).
After the recognition, the impairment loss of fixed assetsshouldn‟t be recovered in subsequent accounting period. If there are indications showing that a possible impairment of fixed assets could take place, the Company should estimate its recoverable amount based on individual fixed assets. If difficult to do so, the Company should determine the recoverable amount of the assets group on basis of the asset groups to which the fixed assets belong. 2.15 Accounting of construction in progress
2.15.1 Category of construction in progress
The Company distinguishes the characteristics of each construction in progress in their real cost accounting. 2.15.2 Standards and conversion date from construction in progress to fixed assets
The book value of construction in progress is accounted into fixed assets at all the expenses occurred before the build-up of such assets available for intended use. After available for intended use but before the final settlement, the built-up fixed assets are accounted at estimated value and accrued under the depreciation policy of fixed assets
based onconstruction‟s budget, cost or real cost. After the settlement, the Company should adjust the provisional
estimate by real cost, but not the accrued.
2.15.3 Testing method and provision for depreciation of construction in progress
The Company determines whether there is evidence of impairment that may occur upon construction in progress
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
at end of each period.
If there is indication of impairment of construction in progress, the Company should estimate its recoverable amount. The recoverable amount is to be determined by the higher between the net price of the fair value of construction in progress after subtracting costs of disposal and the present value of expected future cash flows from construction in progress.
When the recoverable amount of construction in progress is below their book value, the book value of construction in progress should be written down to its recoverable amount, and the amount of write-down should recognized as impairment loss of construction in progress, and included into current profits and losses. At the same time, the provision for depreciation of construction in progress should be accrued.
After the recognition, the impairment loss of construction in progressshouldn‟t be recovered in subsequent accounting period.
If there are indications showing that a possible impairment of certain construction in progress could take place, the Company should estimate its recoverable amount based on individual construction. If difficult to do so, the Company should determine the recoverable amount of the assets group on basis of the asset groups to which the construction in progress belongs.
2.16 Capitalization of the loan fees
2.16.1 Definition of capitalization of the loan fees
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.
The term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate, inventories and other assets, of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements: (1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for capitalization;
(2) The borrowing costs has already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare the asset for its intended use or sale have already started.
2.16.2 Capitalization period
The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs.
When the assets of acquisition and construction or production are available for their intended use or marketable condition, the capitalization of loans goes to the end.
When certain part of the assets of acquisition and construction or production is separately completed and available for its intended use, the capitalization of loans for this part of assets goes to the end.
If different parts of the assets of acquisition and construction or production are separately completed, but they could be available for their intended use or marketable condition only after the completion of the construction in whole, the capitalization of loans goes to the end after the whole completion.
2.16.3 Suspension of capitalization period
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. Where the interrupted acquisition and construction or production of the qualified asset is available for intended use or marketable condition, the capitalization of loans should reinitiate. The borrowings occurred during the suspension period should be determined as current-period profits and losses, and the capitalization will not reinitiate until the reactivation of the interrupted acquisition and construction or production of the qualified asset. 2.16.4 Calculation of capitalized loan fees
The to-be-capitalized amount of interests of the specially borrowed loans (minus the income of the interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment) and the ancillary expense incurred to the specifically borrowed loans incurred before a qualified asset under acquisition, construction or production is ready for the intended use or sale, shall be capitalized at the incurred amount when they are incurred.
The Company shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be determined by the real interest rate method, and an adjustment shall be made to the amount of interests in each period.
2.17 Calculation of intangible assets
2.17.1 Pricing of intangible assets
2.17.1.1 The Company accounts its intangible assets at their real acquisition cost.
The cost of outsourcing intangible assets shall include the purchase price, relevant taxes and other necessary expenditures directly attributable to intangible assets for the expected purpose. Where the payment of purchase price for intangible assets is delayed beyond the normal credit conditions, which is of financing intention, the cost of intangible assets shall be determined on the basis of the current value of the purchase price.
The book value of the intangible assets acquired as debt assets through the recombination of liabilities shall be accounted on basis of the fair value of the intangible assets, and the difference between the book value of recombined liabilities and the fair value of debt assets should be accounted into current profits and losses. Under the conditions that the exchange of non-monetary assets is characterized with business essence, and the fair value of the assets received or surrendered can be accounted in a reliable way, the book value of assets received is defined on basis of the fair value of assets surrendered, except there are conclusive evidences for the stronger reliability of the fair value of assets received. For the exchange of those non-monetary assets not meeting the above premises, the book value of assets surrendered and related taxes should be accounted as cost of assets received and the profits and lossesshouldn‟t be concluded.
The book value of the intangible assets acquired through merger of enterprises under the same control should be accounted at the book value of the merged enterprise. The book value of the intangible assets acquired through merger of enterprise not under the same control should be accounted at the fair value of the acquired assets. The cost of intangible assets developed internally includes: material and labor expenses, register fee, amortization of other patent and franchise fee, interest expense eligible for capitalization during development process, and other direct expenses for making the intangible assets available to its intended use.
2.17.1.2 Subsequent measurement
The Company analyzes the service life of the acquired intangible assets.
For the intangible assets with limited service life, the economic benefits should be amortized with straight-line method; for the intangible assets whose service life of economic benefitscan‟t be predicted, the Company defines them as intangible assets with indefinite service life andwon‟t adopt amortization upon them.
2.17.2 Estimate of service life for the intangible assets with limited life
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|-|-|
|Classification|Service life|
|Land use right|50 years|
|Brand use right|10 years|
|Patent and Non-patent technology|4-8 years|
|Computer software|3-10 years|

 At end of report period, the Company should recheck the service life and amortization method of the limited-life intangible assets.
The recheck in current period shows that there is no difference in the estimate of service life and adoption of amortization method.
2.17.3 Provision for depreciation of intangible assets
For the intangible assets with definite service life, the Company practices the impairment testing at end of period when there is obvious indications of impairment.
For the intangible assets with uncertain service life, impairment testing should be realized at the end of each period.
With the impairment testing, the Company estimates the recoverable amount of intangible assets. The recoverable amount of intangible assets represents the higher between the net fair value of intangible assets less disposal fees and the present value of estimated future cash flow of intangible assets.
When the recoverable amount of intangible assets is less than their book value, the book value of intangible assets
should be written down to its recoverable amount, and the amount of write-down is recognized as an intangible
asset impairment losses, included in current profits and losses, and the corresponding provision for depreciation
should be accrued at the same time.
After the recognition of impairment losses of intangible assets, the Company should adjust accordingly the
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
depletion or amortization costs in future periods, so that during the remaining useful life, the adjusted book value of intangible assets (less estimated net residual value) can be systematically amortized.
The impairment losses of intangible assets will not be recovered in subsequent accounting periods after the recognition.
If there are indications of a possible impairment of intangible assets, the company should estimate the recoverable amount based on the individual intangible assets. In case thatit‟s difficult to estimate the recoverable amount of the individual intangible assets, the Company determines their recoverable amount based on the assets group to which the individual intangible assets belong.
2.17.4 Criteria for the division of research stage and development stage during internalR&D
Research stage: the stage during which original and planned investigation and research is carried out with purpose of obtaining and understanding new scientific or technical knowledge
Development stage: the stage before the commercial production and utilization, during which the research achievement or other knowledge is applied to a particular project or design in order to produce new or substantially improved materials, devices, products, etc.
The expenses occurred during the research stage of internalR&D projects are accounted into current-period profits and losses.
2.17.5 Criteria for the capitalization ofR&D expenses
The expenses during the development stage of internalR&D projects are defined as intangible assets when satisfying the following conditions:
a. The completion of such intangible assets for use or sale is technically feasible.
b. The Company has the intention to use or sell the intangible assets after their completion.
c. The method in which the intangible assets bring economic benefits shows that there exists consumption market for the products with use of these intangible assets or the intangible assets themselves, or that they are useful in case of internal utilization.
d. The Company has sufficient technological, financial and other resources to complete theR&D of the intangible assets and the ability to make them available for use or sale.
e. The Company can measure in reliable way the expense of such intangible assets during the development stage. 2.18 Payment to and for staff
2.18.1 Classification of payment to and for staff
The company's payment to and for staff is composed of wages, bonuses, allowances and subsidies;employees‟ benefits; medical insurance, pension insurance, unemployment insurance, work injury insurance, maternity insurance and other social insurance premiums; housing provident funds; union funds and employee education funding; non-monetary benefits; result of the dissolution of labor relations with the staff for their compensation (termination benefits), etc.
2.18.2 Definition and calculation of payment to and for staff
The Company treats as liabilities the payment to and for staff during the periods in which the workers provide services, and except the compensation for lifting the labor relations, treats respectively the earning targets under the following circumstances:
(1) that should be carried by the production of goods and labor services, accounted into production or labor service cost;
(2) that should be carried by the construction in progress and intangible assets, accounted into cost for construction of fixed assets or intangible assets;
(3) except the above-mentioned remuneration, directly charged into current profits and losses.
If the State has stipulations about the accrual ratio of payment to and for staff, the Company adopts these stipulations as guideline of accrual. If the Statehasn‟t such regulations, the Company estimates the payment to and for staff from past experience and actual situation, in case that the real cost is more or less than the estimated cost, the Company will supplement or return back the reserves.
If the company offers to its staff the self-owned products or housing, or rents free-of-charge the houses for its staff, it should account respectively in accordance with the fair value of products, depreciation or rent of each house, into self-production cost or current profits and losses dependent to the beneficial objects.
2.18.3 Termination benefits
The company should determine the payment to and for staff and account into current profits and losses according to its formal written plan or proposal thatcan‟t be withdrawn unilaterally (including the department, quantity, compensation standards, implementation time, etc.), in case that the Company proposes a compensation for anticipating the termination of labor contract or encouraging the staff to voluntarily cancel the contract.
For the voluntary layoff cases, the Company should estimate the quantity of employees accepting layoffs, and
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
accrue payable for staff according to the quantity and standards of compensation and in line with the articles in "Accounting Standards for Enterprises No. 13 --- Contingent Items".
2.19 Debt reorganization
During report period, the Company determines the debt reorganization respectively under the following circumstances:
2.19.1 The Company accounts the difference between the book value of reorganized debts and the really payable cash into current profits and losses in case of cash settlement of debt.
2.19.2 The Company accounts the difference between the book value of reorganized debts and the fair value of transferred non-cash assets into current profits and losses in case of covering the debts with non-cash assets. And the difference between fair value and book value of transferred non-cash assets also should be accounted into current profits and losses.
2.19.3 In case of conversion of debts into capital, the Company recognizes as capital (or paid-up capital) the total facial value of the equity converted from the abandoned claims of creditors, and the difference between fair value of equity and capital (or paid-up capital) should be determined as capital reserves. The difference between book value of reorganized debts and the fair value of equity should be included into current profits and losses.
2.19.4 On modification of other conditions about debts, the Company will adopt the fair value of debts after modification as book value of reorganized debts. The difference between the book value of reorganized debts and the book value after the reorganization will be accounted into current profits and losses.
2.19.5 In case that the revised terms of debt is related to contingent payable, and such contingent payable meets the conditions for confirming contingent liabilities in "Accounting Standards for Enterprises No. 13– Contingent Items", the Company should recognize as contingent liabilities such contingent payable. The difference between the book value of reorganized debts and the book value after reorganization plus the sum of contingent liabilities should be included into current profits and losses. The contingent payable refers to the payable for the future situations whose occurrence is considered with uncertainty.
2.19.6 When the debt reorganization is carried out with a combined package of cash settlement, payment with non-cash assets, debt to capital, and modification ofdebts‟ conditions, the Company will write-off the book value of the reorganized debts in order of cash, non-cash assets, and fair value of equity by creditors, and at last, treat them with the revised terms of debt.
2.20 Contingent liabilities
The company recognizes as contingent liabilities those matters involving the Company in litigation, debt guarantees, loss of contracts and reconstruction, which are likely to require the Company to deliver assets or provide services in future, and whose amount can be reliably measured.
2.20.1 Criteria of contingent liabilities
The obligations related to contingent items are defined as contingent liabilities when satisfying the following conditions:
This obligation means a present obligation for the Company;
The fulfillment of this obligation is likely to lead to outflow of economic benefits of the Company;
The amount of this obligation can be reliably measured.
2.20.2 Measurement of contingent liabilities
The company accounts for initial measurement of contingent liabilities the best estimated amount of expenditure to fulfill the related current obligations.
On defining the best estimated amount, the Company considers integrally the factors of risk, uncertainty and currency related to contingent items. For the significant influence ofcurrency‟s time value, the Company determines the best estimated amount through the discount of future cash outflows.
The best estimated amount is treated separately under the following circumstances:
There is a continuous range (or scope)of required expenditure among which the possibility for occurring different results maintains the same, the best estimated amount should be defined by the median, which means the average amount of upper and lower limits of the continuous range.
If itdoesn‟t exist a continuous range (or scope), or within the continuous range the possibility for occurring different cases result in different situations, the best estimated amount should be defined by the most possibly occurred amount when the contingent items are related to individual project, and be defined by the combination of different possible results and their probabilities.
2.21 Revenue recognition
2.21.1 Criteria for the time definition of income from selling goods
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.
2.21.2 Basis for determining the income from transferring the right to use assets
When the economic benefits related to the transaction will be likely to flow to the Company and the income amount can be reliably calculated. The treatment will be different in the following conditions:
2.21.2.1 The income of interests is determined on basis of the time and real interest rate of theCompany‟s cash funds which is utilized by other persons.
2.21.2.2 The income of royalties is determined on basis of the chargeable time and method fixed in relevant agreement or contract.
2.21.3 Basis and method to define the progress of contracted construction on determining the income from rendering of labor services through percentage-of-completion method
If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method. An enterprise may adopt the measurement of the work completed to ascertain the schedule of completion under the transaction concerning the providing of labor services.
The Company determines the total revenue from labor services in accordance with the received or receivable purchase price fixed by contract or agreement, except when the price is unfair. On balance sheet date, the Company confirms current-period labor services income according to the total revenue of labor services multiplied by the percentage of completion and less the accumulated determined services revenues in previous periods. At the same time, the Company confirms current-period labor services expenditure according to the total cost of labor services multiplied by the percentage of completion and less the accumulated determined services expenditure in previous periods.
If an enterprisecan‟t, on the date of the balance sheet, measure the result of a transaction concerning the providing of labor services in a reliable way, it shall be conducted in accordance with the following circumstances, respectively:
(1) If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall be carried forward at the same amount; or
(2) If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the current profits and losses, and no revenue from the providing of labor services may be recognized.
2.22 Government subsidies
2.22.1 Divisions of government subsidies
Government subsidies refer to the monetary and non-monetary assets that the company obtains free-of-charge from the Government. They are divided into asset-related government subsidies and benefit-related government subsidies.
2.22.2 Treatment of government subsidies
The government subsidies related to long-term assets such as acquisition& construction of fixed assets and intangible assets are determined as deferred income, and accounted into corresponding-period non-operating income according to the service life of the acquisition& construction assets.
The government subsidies related to economic benefits, if for covering the relevant expenses or losses in future periods, are determined as deferred income and accounted into current-period non-operating income; if for covering the occurred expenses or losses in the past, are included directly into current-period non-operating income.
2.23 Deferred income tax assets and liabilities
2.23.1 Basis for the determination of deferred income tax assets
The enterprise shall recognize the deferred income tax assets caused by deductible temporary differences under the limits of the taxable income which is likely to obtain for deducting the deductible temporary differences. 2.23.2 Basis for the determination of deferred income tax liabilities
The Company recognizes as deferred income tax liabilities the taxable temporary differences in current and previous periods. However, the goodwill, transactions not formed from business combination and whose occurrence will not impact accounting profits nor the taxable income or temporary differences of deductible losses
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
should not be included.
2.24 Affiliated parties
The company's affiliated parties including but not limited to:
(1) The company's parent company;
(2) A subsidiary of the company;
(3) Other enterprises of the company which are controlled by the same parent company;
(4) Investors implemented common control of the company;
(5) Investors which exert significant influence on the company;
(6) The joint venture of the company, including joint venture subsidiary;
(7) Affiliated enterprises of the company, including joint ventures, a subsidiary of;
(8) The company's main individual investors and his close family members;
(9) The company or its parent company's key management personnel and his close family members;
(10) The company's main individual investors, key management personnel or his close family members of the control, joint control of other enterprises.
2.25 Changes in accounting policies and estimates
2.25.1 Changes in accounting policies
There are no changes in accounting policies for current period.
2.25.2 Changes in accounting estimates
There are no changes in accounting estimates for current period.
2.26 Correction of accounting errors in previous periods
2.26.1 Retroactive restatement method
At the end of period, there are no accounting errors in previous periods adopting retroactive restatement method. 2.26.2 Prospective recognition method
At the end of period, there are no accounting errors in previous periods adopting prospective recognition method. 3. Taxation
Important taxes and tax rates
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|-|-|-|
|Type|Tax bases|Tax rate|
|V.A.T.|Sales turnover|6%, 7%, 13%, 17%, 19%|
|Business tax|Business turnover|5%, 7%|
|Income tax|Taxable income|25%, 16%-38%|
|City maintenance and construction tax|Acutally paid business tax, value-addedtax and consumption tax|1%, 7%|
|Extra charge of education fund|Acutally paid business tax, value-addedtax and consumption tax|2%, 3%|

Note: the overseas subsidiaries employ the tax rates according to theircountries‟ tax law.
4. Merger of enterprises and consolidated of financial statements
Except specially noted, the monetary unit in this chapter isRMB‟000.
4.1 About the subsidiaries
4.1.1 Subsidiaries acquired through foundation or investment
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|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Investedentity|Type|Registerplace|Classification|Registercapital|Businessscope|Realinvey es tma r e n de n t at|b eain tmOna cl v e s th e rentnet|pEro rtioqp o u ityn%|Votingshare%|nCo tonsolidatedor|Minorityinterests|mWin o rity te-d or wit neinrestsof|oWwn or witeers q-d‟eunityof|
|DurkoppAdler TradingShanghai Co.|sHu b s iao ldid ingry|Shanghai|Imp. &Exp. ofsewingmachines|USD6,000,000|Wholesale,broker andImp. &Exp. ofsewingmachines|USD3,600,000|USD2,400,000|60|100|Yes||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|ShanghaisShanggong u bsButterfly idiaSewing ryMachine. Co.|eWdholly-own|Shanghai|sewingmachines|79,000|M&Eproductsandinstruments|79,000||100|100|Yes|6,734.2|390||
|ShanghaiSuoying RealEstate Co.|sHu b s iao ldid ingry|Shanghai|Realestatedevelopment|13,000|Real estatedevelopment|8,970||69|69|Yes|5,001.5|22.1||
|ShangGong(Europe)HoldingCorp. GmbH|dWs u b s wh no ellyidia ry-o|Germany|Sewingmachines, etc.|EUR12,500,000|Sewingmachines,etc.|EUR12,500,000||100|100|Yes|105,412.6|20,336.3||
|ShanghaiShanggongShen BeiElectronicsCo..|dWs u b s wh no ellyidia -ory|Shanghai|Electronics|20,0 00|sale ofproductionofelectronicharness etc.|20,0 00||100|100|Yes||||
|ShanghaiShanggongShen BeiAssetsManagementCo.|sWubhs id wo llyiary -oned|Shanghai|AssetsManagement etc.|5,000|Assetsmanagement,investmentmanagement, companymanagement etc.|5,000||100|100|Yes||||
|ShanghaiIndustrialSewingMachinesMaterialsGeneral Co.|sWubhs id wo llyiary-oned|Shanghai|Sewingmachines, etc.|4,650|Sales ofsewingmachinesandcomponents|4,650||100|100|No||||
|ShanghaiShuangchongSewingMachines Co.|sHu b s iao ldid ingry|Shanghai|Sewingmachines, etc.|12,000|Productionanddevelopment ofoverlocksewingmachines|8,400|2,400|70|90|Yes|||215.|

4.1.2 Subsidiaries acquired in business combinations under the same control
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Investedentity|Type|Registerplace|Classification|Registercapital|Businessscope|Readla int y e a r v e s tme n e nt|inOv tmthe s e rentnet|pEro rtioqp o u ityn%|Votingshare%|nCo tonsolidatedor|inMteinreos tsrity|inmWte re tsin o or wites rity -dnof|oWwn eriters q-d‟ e o wunityof|
|SMPICsWaigaoqiao u bOffice Appas id.Co., Ltd. iary|nWedholly-ow|Shanghai|Propertymanagement|8,620|Free TradeZoneWarehousing|8,620||100|100|Yes||||
|SMPIC Imp.& Exp. Co.,Ltd.|sHu b s iao ldid ingry|Shanghai|Imp. &exp. ofofficeapparatus|12,000|Internationaltrading ofmerchants andtechnology|12,000||100|100|Yes||||

4.2 Changes in the consolidation of financial statements
During current period, the company added one subsidiary of fourth level in the consolidation statement, the reason
is: the company in the current period newly established PFAFF Industrial Sewing Machine Taicang Co., Ltd.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
4.3 Newly included and excluded subsidiaries in current period
Currently newly included subsidiaries, specific objects, business entities under control for entrust or rent operation:
||||
|-|-|-|
|Name|Net assets end of period（RBM 000‟）|Net profit end of period（RMB000‟）|
|PFAFF Industrial Sewing Machine Taicang Co., Ltd|1907.03|-27.56|

 4.4 Translation Rate of Financial Statement Prepared by Overseas Entities
The subsidiary ShangGong (Europe) Holding Corp. GmbH has Euros as the recording currency, so the Company adopts the following currency translation and treatment method: for assets and liabilities in balance sheet, the end-of-period exchange rate is 8.3946, and beginning-of-period rate is 8.4189; for income and costs in profit statement, current-period exchange rate is 8.4152, and anterior-period rate is 8.0536; for all the items inowners‟ equity, except "undistributed profits", the exchange rate is the spot rate; and the difference of translation of financial statements is listed separately in balance sheet.
5 Notes to Major Accounts on the Consolidated Financial Statements
(Expressed in RMB or Otherwise Specified)
5.1 Cash and Cash Equivalents
||||||||
|-|-|-|-|-|-|-|
|Item|Ending Balance|||Opening Balance|||
||Originalcurrency|Exchangerate|Translated toRMB|Originalcurrency|Exchangerate|Translated toRMB|
|Cash on hand|||||||
|RMB|||481,452.97|||310,724.70|
|HKD|3,651.80|0.7937|2,898.43|2,620.49|0.7862|2,060.23|
|EUR|97,343.61|8.3946|817,160.67|77,422.91|8.4189|651,815.74|
|USD|4.00|6.1528|24.61|4.00|6.0969|24.39|
|Subtotal|||1,301,536.68|||964,625.06|
|Bank deposit|||||||
|RMB|||109,819,423.53|||166,046,009.29|
|HKD|830,637.86|0.7937|659,277.27|325,347.52|0.7862|255,788.22|
|USD|215,785.65|6.1528|1,327,685.93|551,043.37|6.0969|3,359,656.34|
|EUR|35,575,468.27|8.3946|298,641,825.90|31,857,260.83|8.4189|268,203,093.23|
|Subtotal|||410,448,212.63|||437,864,547.08|
|Other monetary-funds|||||||
|RMB|||69,503,691.49|||20,371,057.30|
|Subtotal|||69,503,691.49|||20,371,057.30|
|Total|||481,253,440.80|||459,200,229.44|

 Funds with limited use are shown as follows:
|||||
|-|-|-|-|
|Item|Ending Balance|Opening Balance|Note|
|Deposits as guarantees|2,748,056.26|2,754,360.99|Note 1|
|Certificates of termdeposit as guarantees|5,861,999.55|5,670,230.18|Note 2|
|Deposits as countguarantee|4,000.000.00|4,000,000.00|Note 3|
|Deposits L/C guarantee||712,000.00||
|Total|12,610,055.81|13,136,591.17||

Note 1: The deposit, amounting to EUR 327,360.00, were pledged by ShangGong (Europe) Holding Corp. GmbH to the Commerzbank Germany, which were equivalent to RMB 2,748,056.26;.
Note 2: The term deposit, amounting to EUR 698,306.00, were pledged by the ShangGong (Europe) Holding Corp.
GmbH to the FAG Kugelfischer AG, which were equivalent to RMB 5,861,999.55;
Note 3: The deposits were pledged by Shang Gong Group Co., Ltd for financial guarantee issued by Bank of
Communications Xuhui Branch, which was used to guarantee the bank loan that ShangGong (Europe) Holding
Corp. GmbH applied in Bank of communications Frankfurt Branch;
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.2 Financial Assets Held for Trading
||||
|-|-|-|
||Ending Balance at Fair Value|Opening Balance at Fair Value|
|Financial assets measured at fair value andthe variation included into current-periodprofits and losses|264,053.43|277,479.87|
|Total|264,053.43|277,479.87|

 There are no financial assets held-for-trading with limited use.
5.3 Notes Receivable
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Bank acceptance bills|2,307,430.01|2,046,580.00|
|Commercial acceptance bills||1,274,117.28|
|Total|2,307,430.01|3,320,697.28|

 Notes receivable which has been mortgaged at period end: None.
Bill which has been converted to account receivables due to inability to fulfill the obligation, and bill which has been endorsed to other party at period end but not yet due: None.
5.4 Dividends Receivable
||||||||
|-|-|-|-|-|-|-|
|Item|OpeningBalance|Increase|Decrease|EndingBalance|Reason forreceivable|Impairment|
|Within one year|2,881,577.53|9,869,408.00|16,250.44|12,734,735.09|||
|Including: Shanghai FujiXerox Co., Ltd||9,869,408.00||9,869,408.00|||
|Shanghai Shenyin &Wanguo Secutities|16,194.20||16,194.20||||
|Shanghai Shensy EnterprisesDevelopment Co., Ltd|2,865,383.33||56.24|2,865,327.09|||
|Total|2,881,577.53|9869,408.00|16,250.44|12,734,735.09|||

5.5 Accounts Receivable
5.5.1 Accounts Receivable by Category
||||||||||
|-|-|-|-|-|-|-|-|-|
||Ending Balance||||Opening balance||||
||Carrying Amount||Bad Debt Provision||Carrying Amount||Bad Debt Provision||
||RMB|%|RMB|%|RMB|%|RMB|%|
|Individual itemwith significantbalances|21,112,419.00|4.73|21,112,419.00|100.00|28,051,774.80|7.48|21,173,533.50|75.48|
|Items as acollective group|177,024,094.47|39.63|94,012,023.29|53.11|162,868,120.35|43.40|92,779,351.80|56.97|
|Other insignificantitems|248,533,516.09|55.64|16,286,060.59|6.55|184,303,953.29|49.12|13,376,433.65|7.26|
|Total|446,670,029.56|100.00|131,410,502.88|29.42|375,223,848.44|100.00|127,329,318.95|33.93|

The balance that is limited to use is RMB 11,397,566.68, which is a deposit forbanker‟s letter of guarantee
pledged by ShangGong (Europe) Holding Corp.GmbH‟s subsidiary, KSL Keilmann Sondermaschinenbau GmbH
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
and its related companies.
5.5.2 Clarification for Composition of accounts receivable
Accounts receivable with significant individual amount and with individual provision for bad debt
||||||
|-|-|-|-|-|
||Carrying Amount|Bad Debt Provision|Provision%|Comments|
|Top 1 Customer|21,112,419.00|21,112,419.00|100.00|Impaired through individual test|
|Total|21,112,419.00|21,112,419.00|||

At the balance sheet date, the carrying amount of receivables to the ShangGong (Europe) Holding Corp. GmbH was significant and therefore was tested and provided for individually.
Items provided for using an ageing analysis as a collective group are as follows:
||||||||
|-|-|-|-|-|-|-|
||Ending Balance|||Opening Balance|||
||Carrying Amount||Bad DebtProvision|Carrying Amount||Bad DebtProvision|
||RMB|%||RMB|%||
|Within one year|82,080,528.14|46.37|4,104,026.41|69,566,351.56|42.71|3,478,317.59|
|1- 2 years|5,401,242.15|3.05|1,080,248.43|4,123,622.74|2.53|824,724.55|
|2-3 years|1,429,151.46|0.81|714,575.73|1,403,672.80|0.86|701,836.41|
|Over 3 years|88,113,172.72|49.77|88,113,172.72|87,774,473.25|53.90|87,774,473.25|
|Total|177,024,094.47|100.00|94,012,023.29|162,868,120.35|100.00|92,779,351.80|

 Other items which are not significant but provided for are as follows:
||||||
|-|-|-|-|-|
||Carrying Amount|Bad DebtProvision|Provision%|Comments|
|Other item (Note 1)|2,150,000.00|2,150,000.00|100.00|Impaired through individual test|
|Other item (Note 2)|478,353.29|478,353.29|100.00|Impaired through individual test|
|Other item (Note 2)|389,034.00|389,034.00|100.00|Impaired through individual test|
|Other item (Note 2)|150,174.00|150,174.00|100.00|Impaired through individual test|
|Other item (Note 3)|245,365,954.80|13,118,499.30|5.64|Impaired through individual test|
|Total|248,533,516.09|16,286,060.59|||

Note 1: The balance represents accounts receivable from Durkopp Adler Trading Shanghai Co., Ltd., and is tested separately for impairment;
Note 2: The balance represents accounts receivable from Shanghai Shanggong Butterfly Sewing Machines Co., Ltd., and is tested separately for impairment;
Note 3: The balance represents accounts receivable from ShangGong (Europe) Holding Corp. GmbH and is tested separately for impairment.
5.5.3 The accounts receivable actually written off in this report period: None.
5.5.4 Among the period-end accounts receivable, there are no obligators who holds individually5% or more equity of the Company.
5.5.5 Top five debtors of accounts receivable
||||||
|-|-|-|-|-|
|Entity or rank|Relation with theCompany|Sum|Duration|Proportion in totalaccounts receivable(%)|
|No.1 client|Third party|21,112,419.00|Over 3 years|4.73|
|No.2 client|Third party|11,530,775.39|Over 3 years|2.58|
|No.3 client|Third party|7,480,189.67|Over 3 years|1.67|
|No.4 client|Third party|7,410,919.46|Within 1 year|1.66|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||
|-|-|-|-|-|
|No.5 client|Third party|7,234,606.86|Over 3 years|1.62|
|Total||54,768,910.38||12.26|

 5.5.6 Among the period-end accounts receivables, those from affiliated parties shall be seen in 6.5
5.6 Other Receivables
5.6.1 Other Receivables by Category
||||||||||
|-|-|-|-|-|-|-|-|-|
||Ending Balance||||Opening Balance||||
||Carrying Amount||Bad Debt Provision||Carrying Amount||Bad Debt Provision||
||RMB|%|RMB|%|RMB|%|RMB|%|
|Individual items withsignificant balances|25,988,473.49|36.65|10,842,551.80|41.72|42,163,292.79|47.17|10,499,267.50|24.90|
|Items as a collectivegroup|36,501,511.16|51.47|18,608,822.27|50.98|38,747,122.27|43.35|18,757,139.71|48.41|
|Other insignificantitems|8,428,615.74|11.88|2,080.00|0.02|8,478,378.63|9.48|2,080.00|0.02|
|Total|70,918,600.39|100.00|29,453,454.07|41.53|89,388,793.69|100.00|29,258,487.21|32.73|

 5.6.2 Category Description
Other accounts receivable with significant individual amount and with individual provision for bad debt
||||||
|-|-|-|-|-|
||CarryingAmount|Bad DebtProvision|Provision%|Comments|
|Export VAT refund (Note 1)|15,145,921.69|||Unimpaired through individual test|
|Top 3 Customer|10,842,551.80|10,842,551.80|100.00|Impaired through individual test|
|Total|25,988,473.49|10,842,551.80|||

Note: This mainly refers to the export tax rebate receivable of subsidiaries in export sales, with non-impairment in individual testing.
Items provided for using an aging analysis as a collective group are as follows:
||||||||
|-|-|-|-|-|-|-|
||Ending Balance|||Opening Balance|||
||Carrying Amount||Bad DebtProvision|Carrying Amount||Bad DebtProvision|
||RMB|%||RMB|%||
|Within oneyear|18,541,773.60|50.80|927,088.68|20,557,701.99|53.06|1,027,885.09|
|1-2 years|265,300.42|0.73|53,060.08|487,983.14|1.26|97,596.62|
|2-3 years|131,527.27|0.36|65,763.64|139,558.27|0.36|69,779.13|
|Over 3 years|17,562,909.87|48.11|17,562,909.87|17,561,878.87|45.32|17,561,878.87|
|Total|36,501,511.16|100.00|18,608,822.27|38,747,122.27|100.00|18,757,139.71|

 Other items which are not significant but provided for are as follows:
||||||
|-|-|-|-|-|
||Carrying Amount|Bad Debt Provision|Provision%|Comments|
|Other insignificantitems (Note 1)|8,426,535.74|||Unimpaired through individual test|
|Other insignificantitems (Note 2)|2,080.00|2,080.00|100|Impaired through individual test|
|Total|8,428,615.74|2,080.00|||

Note 1: The balance represents accounts receivable from ShangGong (Europe) Holding Corp. GmbH and is tested separately for impairment;
Note 2: The balance represents accounts receivable from Shanghai Shanggong Butterfly Sewing Machines Co., Ltd and is tested separately for impairment;
5.6.3 The accounts receivable actually written off in this report period: None.
5.6.4 There are no receivables to shareholders or related parties who hold5% or more voting shares at the
balance sheet date
5.6.5 Top Five Customers with the Biggest Balances
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
||Relationship|Carrying Amount|Aging|%|Nature|
|Customer A|Third Party|15,145,921.69|Within 1 year|21.36|Export tax rebates|
|Customer B|Related Party|13,988,201.28|Within 1 year and over 3 years|19.72|General receivables|
|Customer C|Third Party|10,842,551.80|Within 1 year and over 3 years|15.29|General receivables|
|Customer D|Third Party|1,236,788.64|Within 1 year|1.74|General receivables|
|Customer E|Related Party|1,100,000,00|Within 1 year|1.55|General receivables|
|Total||42,313,463.41||59.66||

5.6.6 Among the period-end other receivables, those from affiliated parties shall be seen in 6.5.
5.7 Prepayment
5.7.1 Age Analysis
||||||
|-|-|-|-|-|
||Ending Balance||Opening Balance||
||Amount|%|Amount|%|
|Within one year|18,945,792.77|93.07|19,331,107.10|76.59|
|1-2 years|1,394,823.77|6.85|2,780,057.52|11.01|
|2-3 years|2,365.15|0.01|2,686,491.14|10.64|
|Over 3 years|13,529.54|0.07|443,648.39|1.76|
|Total|20,356,511.23|100.00|25,241,304.15|100.00|

 5.7.2 Top Five Biggest Balances
||||||
|-|-|-|-|-|
||Relationship|Carrying Amount|Ageing|Comments|
|Customer A|Third Party|3,597,022.18|Within 1 year|Goods undelivered|
|Customer B|Third Party|1,633,496.38|Within 1 year|Goods undelivered|
|Customer C|Third Party|1,360,000.00|Within 1 year|Goods undelivered|
|Customer D|Third Party|998,019.17|Within 1 year|Goods undelivered|
|Customer E|Third Party|836,031.51|Within 1 year|Goods undelivered|
|Total||8,424,569.24|||

5.7.3 There are no prepayments to shareholders or related parties who hold5% or more voting shares at the balance sheet date.
5.8 Inventory
5.8.1 Summary
||||||||
|-|-|-|-|-|-|-|
||Ending Balance|||Opening Balance|||
||Carrying Amount|Provision|Carrying Value|Carrying Amount|Provision|Carrying Value|
|Raw materials|225,232,121.37|45,359,537.70|179,872,583.67|190,557,234.94|45,570,635.82|144,986,599.12|
|Materials intransit|7,119,970.85||7,119,970.85|2,451,669.09||2,451,669.09|
|Revolvingmaterials|||||||
|Outsideprocessedmaterials|136,761.27||136,761.27|179,998.59||179,998.59|
|Work-in-process|142,960,932.18|33,190,347.33|109,770,584.85|120,630,231.78|33,652,519.21|86,977,712.57|
|Finished goods|209,,222,645.22|29,927,207.59|179,295,437.63|198,124,163.05|30,223,158.65|167,901,004.40|
|Consignments|2,902,891.39||2,902,891.39|2,578,494.05||2,578,494.05|
|Others|2,166,889.90|2,166,889.90||2,335,848.67|2,166,889.90|168,958.77|
|Total|589,742,212.18|110,643,982.52|479,098,229.66|516,857,640.17|111,613,203.58|405,244,436.59|

 There are no inventories pledged or mortgaged at the balance sheet date.
5.8.2 Provision for Obsolescent and Slow-moving Inventories
||||||||
|-|-|-|-|-|-|-|
||OpeningBalance|Additions||Additions||Ending Balance|
|||OtherAdditions|OtherAdditions|Reversal|Write-down||
|Raw materials|45,570,635.82||13,266.82||224,364.94|45,359,537.70|
|Materials in transit|||||||
|Revolvingmaterials|||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|Outsideprocessedmaterials||||||
|Work-in-process|33,652,519.21|7,994.69||470,166.57|33,190,347.33|
|Finished goods|30,223,158.65|500,000.00|744,803.33|51,147.73|29,927,207.59|
|Consignments||||||
|Others|2,166,889.90||||2,166,889.90|
|Total|111,613,203.58|521,261.51|744,803.33|745,679.24|110,643,982.52|

 In the reversal of provision, RMB 279,018.91 were due to difference of translation between foreign exchange rates of beginning and ending of the reporting period in the foreign currency financial statements of ShangGong (Europe) Holding Corp. GmbH.
|||||
|-|-|-|-|
||Reason for Provision|Reason for Reversal ofProvision|Reversal Accounting forTotal Balance of Inventory|
|Raw materials|NRV lower than carrying value|||
|Work-in-process|NRV lower than carrying value|||
|Finished goods|NRV lower than carrying value|NRV higher than carryingcost after reversal|0.42%|
|Others|NRV lower than carrying value|||

5.9 Other Current Assets
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Investment held to maturity|12,591,900.00|54,714,010.16|
|Input tax to be credited|3,260,585.28|7,420,393.00|
|Rentals and insurance fees prepaid|3,182,321.25|2,271,263.51|
|Structured deposits|520,000,000.00||
|Total|539,034,806.53|64,405,666.67|

 Structured deposits are the result of cash management by the company on the temporarily idle raised fund and self-owned fund, and were purchased from bank with guaranteed principal for period of six months.
5.10 Available-for-Sale Financial Assets
5.10.1 Fair Values
||||
|-|-|-|
||Ending Balance at Fair Value|Opening Balance at Fair Value|
|Debentures available for sale|||
|Equity instruments available for sale|96,228,133.50|85,012,121.56|
|Others|||
|Total|96,228,133.50|85,012,121.56|

 5.10.2 Restricted Free Floating Shares
There are no such shares as of the balance sheet date.
5.11 Long-term Equity Investment
5.11.1 Long-term Equity Investment by Category
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Joint ventures|||
|Affiliate|17,997,768.12|17,997,768.12|
|Other long-term equity investment|57,779,093.18|57,744,583.80|
|Subtotal|75,776,861.30|75,742,351.92|
|Deduct: Impairment|22,207,792.17|22,207,792.17|
|Total|53,569,069.13|53,534,559.75|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.11.2 Investment in Affiliates and Joint Ventures (Expressed in RMB Ten Thousand Yuan)
|||||||||
|-|-|-|-|-|-|-|-|
|Investee|Sharing%|Voting Share%|Total Assets atBalance SheetDate|Total Liabilities atBalance Sheet Date|Total Net Assets atBalance Sheet Date|Revenue|Net Profits|
|Affiliate:||||||||
|Changshu Qixing Elec-plating Co., Ltd.|90.00|Note 1|18.57|157.99|-139.42|||
|Shanghai Huazhijie Plastic Co., Ltd.|25.00|Note 1|545.72|251.21|294.51|||
|Durkopp Adler Sewing Machines suzhouCo., Ltd|49.00|49.00|5,854.99|2,317.86|3,537.13|1,492.14|14.38|
|Pfaff Industrial Iberica S.A.U.|49.00|Note 2|520.47|210.71|309.76|942.42|15.44|

 Note 1: Changshu Qixing Elec-plating Co., Ltd.and Shanghai Huazhijie Plastic Co., Ltd.had completed the cancellation of tax registration.
Note 2: Pfaff, the subsidiary of ShangGong (Europe) Holding Corp. GmbH, does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights. 5.11.3 Details of Long-term Equity Investment
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Investee||Initial Cost ofInvestment|OpeningBalance|Increase/(Decrease)|EndingBalance|Sharing|VotingShare%|Comments whereSharing DiffersVoting Shares|ProvisionforImpairment|ImpairmentLoss for ThisYear|Dividends|
|Changshu Qixing Elec-platingCo., Ltd.|Equitymethod|2,520,000.00||||90.00||Note 4||||
|Shanghai Huazhijie Plastic Co.,Ltd.|Equitymethod|1,766,689.38|736,283.66||736,283.66|23.04||Note 4|736,283.66|||
|Durkopp Adler SewingMachines suzhou Co., Ltd|Equitymethod|23,531,957.08|17,261,484.46|34,509.38|17,295,993.84|49.00|49.00||8,671,865.28|||
|Subtotal||27,818,646.46|17,997,768.12|34,509.38|18,032,277.50||||9,408,148.94|||
|Shanghai XingguangUnderwear (South Africa)|Costmethod|308,033.99|308,033.99||308,033.99|14.30|14.30||308,033.99|||
|Shanghai Shensi enterprisesdevelopment Co., Ltd|Costmethod|10,593,077.64|10,593,077.64||10,593,077.64|10.59|10.59|||||
|Wuxi Shanggong SewingMachines Co.,Ltd|Costmethod|153,814.26|153,814.26||153,814.26|80.00|80.00|Note 2|153,814.26|||
|Shanghai Hualian SewingMachinery Co.,Ltd.|Costmethod|400,000.00|400,000.00||400,000.00|21.74||Note 1||||
|Shanghai Fuji-Xerox Co.,Ltd.|Cost|29,140,749.49|29,140,749.49||29,140,749.49|15.92|15.92||||9,869,408.00|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Investee||Initial Cost ofInvestment|OpeningBalance|Increase/(Decrease)|EndingBalance|Sharing|VotingShare%|Comments whereSharing DiffersVoting Shares|ProvisionforImpairment|ImpairmentLoss for ThisYear|Dividends|
||method|||||||||||
|Shanghai Shanggong JiayuanM&E Co., Ltd.|Costmethod|500,000.00|500,000.00||500,000.00|12.50|12.50||500,000.00|||
|Shanghai Baoding InvestmentCo.,Ltd.|Costmethod|7,500.00|7,500.00||7,500.00|<5|<5|||||
|Bank of Shanghai Co.,Ltd.|Costmethod|951,400.00|951,400.00||951,400.00|<5|<5||||177,109.68|
|China Perfect MachineryCo.,Ltd.|Costmethod|90,000.00|90,000.00||90,000.00|<5|<5|||||
|Shenyin & Wanguo SecuritiesCo.,Ltd.|Costmethod|200,000.00|200,000.00||200,000.00|<5|<5||||3,238.84|
|Shanghai Hirose PrecisionIndustrial Co.,Ltd.|Costmethod|2,840,376.00||||30.00||Note 1|||850,000.00|
|Shanghai Industrial SewingMachines Materials GeneralCo.,Ltd|Costmethod|4,600,000.00|4,600,000.00||4,600,000.00|100.00|100.00|Note 2|1,037,794.98|||
|Shanghai Shuangchong SewingMachines Co.,Ltd.|Costmethod|10,800,000.00|10,800,000.00||10,800,000.00|70.00|90.00|Note 3|10,800,000.00|||
|Pfaff Industrial Iberica S.A.U.|Costmethod|8.42|8.42||8.42|49.00||Note 5||||
|Subtotal||60,584,959.80|57,744,583.80||57,744,583.80||||12,799,643.23||10,899,756.52|
|Total||88,403,606.26|75,742,351.92|34,509.38|75,776,861.30||||22,207,792.17||10,899,756.52|

 Note 1: ShangGong Group does not participate in the strategic decision making of Shanghai Hualian Sewing Machinery Co.,Ltd.and Shanghai Hirose Precision Industrial Co.,Ltd.and therefore does not exert significant influence on those companies. The investment in those companies is measured in cost methods.
Note2：Wuxi Shanggong Sewing MachinesCo.,Ltd、and Shanghai Industrial Sewing Machines Materials General Co.,Ltdhas been deregistered in the tax bureau and provision has been made under the cost method.
Note3:Shanghai Shuangchong Sewing Machines Co.,Ltd.has applied for liquidation and has established liquidation team.
Note4: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. have completed the tax deregistration in the reporting period.
Note5: ShangGong (Europe) Holding Corp. GmbH does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights
5.11.4 There is no restriction for investees to transfer their funds to the investor.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.12 Investment Property
||||||
|-|-|-|-|-|
||OpeningBalance|Increase|Decrease|EndingBalance|
|Initial cost|232,248,126.02||2 1 1 ,6 5 1 . 1 1|2 3 2 ,0 3 6 , 4 7 4 .9 1|
|Plant and property|179,140,880.86||211,651.11|178,929,229.75|
|Land use right|50,523,752.24|||50,523,752.24|
|Leasehold improvement|2,583,492.92|||2,583,492.92|
|Accumulated depreciation andamortization|102,828,613.87|3,001,714.12|116,985.42|105,713,342.57|
|Plant and property|91,423,666.36|2,290,259.08|116,985.42|93,596,940.02|
|Land use right|11,404,947.51|625,338.60||12,030,286.11|
|Leasehold improvement||86,116.44||86,116.44|
|Net book amount|129,419,512.15|-3,001,714.12|94,665.69|126,323,132.34|
|Plant and property|87,717,214.50|-2,290,259.08|94,665.69|85,332,289.73|
|Land use right|39,118,804.73|-625,338.60||3 8 ,4 9 3 , 4 6 6 .1 3|
|Leasehold improvement|2,583,492.92|-86,116.44||2 ,4 9 7 , 3 7 6 .4 8|
|Impairment|8,343,112.90||2 4 ,0 8 1 . 2 6|8 ,3 1 9 , 0 3 1 .6 4|
|Plant and property|8,343,112.90||24,081.26|8,319,031.64|
|Land use right||||-|
|Leasehold improvement|||||
|Net book value|121,076,399.25|-3,001,714.12|70,584.43|118,004,100.70|
|Plant and property|79,374,101.60|-2,290,259.08|70,584.43|77,013,258.09|
|Land use right|39,118,804.73|-625,338.60||3 8 ,4 9 3 , 4 6 6 .1 3|
|Leasehold improvement|2,583,492.92|-86,116.44||2 ,4 9 7 , 3 7 6 .4 8|

 The depreciation and amortization expenses amounted to 3,001,714.12.
The provision of impairment decreased 24,081.26 due to difference between foreign exchange rates of beginning and ending of the reporting period.
The investment properties, with the net book value 38,870,223.60, were pledged to bank for raising borrowings (details please referred to below 8. Commitment).
5.13 Fixed Assets
5.13.1 Summary
|||||||
|-|-|-|-|-|-|
||Opening Balance|Addition/Increase||Decrease|Ending Balance|
|Initial costs of fixedassets|964,701,696.95|16,970,294.15||17,276,456.09|964,395,535.01|
|Plant and property|385,600,860.07|452,894.80||971,102.97|385,082,651.90|
|Machinery|311,604,680.22|11,417,096.38||4532,707.79|318,489,068.81|
|Vehicle|11,095,764.18|||394,010.26|10,701,753.92|
|Electronic equipment|2,763,845.54|118,133.40||18,581.40|2,863,397.54|
|Leasehold improvement|253,636,546.94|4,982,169.57||11,360,053.67|247,258,662.84|
|||OtherAdditions|Charge for theperiod|||
|Accumulateddepreciation|695,183,553.38|146,799.91|14,841,460.02|15,963,423.33|694,208,389.98|
|Plant and property|211,971,370.63|129,564.07|3,486,319.92|507,623.11|215,079,631.51|
|Machinery|245,375,662.40|618.78|6,018,818.44|4,084,685.72|247,310,413.90|
|Vehicle|7,129,369.23|13,755.36|437,738.97|347,870.10|7,232,993.46|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
||Opening Balance|Addition/Increase||Decrease|Ending Balance|
|Electronic equipment|2,315,636.94|236.70|99,593.54|16,679.72|2,398,787.46|
|Others|228,391,514.18|2,625.00|4,798,989.15|11,006,564.68|222,186,563.65|
|Net book amount|269,518,143.57||||270,187,145.03|
|Plant and property|173,629,489.44||||170,003,020.39|
|Machinery|66,229,017.82||||71,178,654.91|
|Vehicle|3,966,394.95||||3,468,760.46|
|Electronic equipment|448,208.60||||464,610.08|
|Others|25,245,032.76||||25,072,099.19|
|Impairment provision|8,482,241.34||||8,482,241.34|
|Plant and property|6,118,541.16||||6,118,541.16|
|Machinery|2,239,862.87||||2,239,862.87|
|Vehicle|48,170.70||||48,170.70|
|Electronic equipment|37,818.61||||37,818.61|
|Others|37,848.00||||37,848.00|
|Net book value|261,035,902.23||||261,704,903.69|
|Plant and property|167,510,948.28||||163,884,479.23|
|Machinery|63,989,154.95||||68,938,792.04|
|Vehicle|3,918,224.25||||3,420,589.76|
|Electronic equipment|410,389.99||||426,791.47|
|Others|25,207,184.76||||25,034,251.19|

 The depreciation expenses amounted to RMB 14,841,460.02
The plants and properties, with the original value RMB 982,168.20, were transferred from construction in progress.
Some of the plants and properties were pledged to bank for raising borrowings (details please referred to below 8. Commitment).
5.13.2 There are no idle fixed assets at the balance sheet date.
5.13.3 There are no held-for-trade fixed assets at the balance sheet date.
5.13.4 Fixed Assets Whose Ownership Certificates Have Not Been Obtained
|||||
|-|-|-|-|
||Net Book Value|Reason|Estimate Date to Obtain the Certificate|
|Plant and property|346,163.74|Certificates are in process||
|Total|346,163.74|||

5.14 Construction In Progress
||||||||
|-|-|-|-|-|-|-|
||Ending Balance|||Opening Balance|||
||Carrying Amount|Provision|Carrying Value|Carrying Amount|Provision|Carrying Value|
|Sewingequipmentproject|2,451,314.95||2,451,314.95|1,165,354.41||1,165,354.41|
|ERPproject|839,284.50||839,284.50|839,284.50||839,284.50|
|Shenbeibuildingdecoration|2,346,196.81||2,346,196.81|796,503.00||796,503.00|
|Total|5,636,796.26||5,636,796.26|2,801,141.91||2,801,141.91|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Movement of Significant Construction in Progress:
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Budget|OpeningBalance|Increase|Transfer toFixedAssets|Decrease|InputtoBudget(%)|Progress|AccumulatedCapitalizedInterest|In which：CapitalizedInterest fortheReportingYear|CapitalizedInterest fortheReportingYear (%)|FundResource|ClosingBalance|
|Sewing machinery||1,165,354.41|2,271,492.38|982,168.20|3,363.64||||||Self-finance|2,451,314.95|
|ERP project||839,284.50|||||||||Self-finance|839,284.50|
|Shenbei buildingdecoration-householdmultifunctionalsewing machine|1,275,926.00|440,000.00|440,000.00||||||||Raisedfund|880,000.00|
|Shenbei building airconditioner-automatic sewingunit|1,619,318.00|356,503.00|1,109,693.81||||||||Raisedfund|1,466,196.81|
|Total||2,801,141.91|3,821,186.19|982,168.20|3,363.64|||||||5,636,796.26|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.15 Intangible Assets
5.15.1 Summary
||||||
|-|-|-|-|-|
||Opening Balance|Increase|Decrease|Closing Balance|
|Initial costs|145,549,703.50|1,326,346.80|274,718.90|146,601,331.40|
|Land use right|32,188,256.90|||32,188,256.90|
|Brand|20,161,268.51|||20,161,268.51|
|Software|76,000.00|||76,000.00|
|Patents and non-patenttechnologies|86,302,143.90|1,326,346.80|257,127.92|87,371,362.78|
|Others|6,822,034.19||17,590.98|6,804,443.21|
|Accumulated amortization|62,240,774.06|6,412,505.84|102,217.20|68,551,062.70|
|Land use right|8,740,684.29|601,355.94||9,342,040.23|
|Brand|20,161,268.51|||20,161,268.51|
|Software|29,133.21|3,799.98||32,933.19|
|Patents and non-patenttechnologies|27,160,756.98|5,178,857.24|86,424.42|32,253,189.80|
|Others|6,148,931.07|628,492.68|15,792.78|6,761,630.97|
|Net carrying amount|83,308,929.44|-5,086,159.04|172,501.70|78,050,268.70|
|Land use right|23,447,572.61|-601,355.94||2 2 , 8 4 6 ,2 1 6 . 6 7|
|Brand|||||
|Software|46,866.79|-3,799.98||43,066.81|
|Patents and non-patenttechnologies|59,141,386.92|-3,852,510.44|170,703.50|55,118,172.98|
|Others|673,103.12|-628,492.68|1,798.20|42,812.24|
|Impairment|||||
|Land use right|||||
|Brand|||||
|Software|||||
|Patents and non-patenttechnologies|||||
|Others|||||
|Net carrying value|83,308,929.44|-5,086,159.04|172,501.70|78,050,268.70|
|Land use right|23,447,572.61|-601,355.94||2 2 , 8 4 6 ,2 1 6 . 6 7|
|Brand|||||
|Software|46,866.79|-3,799.98||4 3 ,0 6 6 . 8 1|
|Patents and know-how|59,141,386.92|-3,852,510.44|170,703.50|55,118,172.98|
|Others|673,103.12|-628,492.68|1,798.20|42,812.24|

 The amortization expenses amounted to RMB 6,412,505.84
The intangible assets, with the net book value RMB 4,288,096.48, were pledged to bank for raising borrowings (details please referred to below 8. Commitment).
5.15.2 Development Costs
|||||||
|-|-|-|-|-|-|
||Opening Balance|Addition|Transfer-out||Ending Balance|
||||Through Profit or Loss|Recognized as Assets||
|Developmentcosts|39,082,899.68|9,252,015.63|10,021,480.32||38,313,434.99|
|Total|39,082,899.68|9,252,015.63|10,021,480.32||38,313,434.99|

 Opening and ending balances represent the development costs of ShangGong (Europe) Holding Corp. GmbH. 5.16 Goodwill
|||||||
|-|-|-|-|-|-|
|Nature|Opening Balance|Increase|Decrease|Ending Balance|Impairment|
|PFAFF Industriesystemeund Maschinen AG|7,440,086.27||21,474.79|7,418,611.48||
|KSL GmbH|62,215,050.53||179,575.21|62,035,475.32||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||
|-|-|-|-|-|-|
|KSE GmbH|5,818,874.36||16,795.38|5,802,078.98||
|KSA GmbH|2,736,130.88||7,897.47|2,728,233.41||
|Beisler|24,445,768.96|12,737.60||24,458,506.56|3,819,543.00|
|Total|102,655,911.00|12,737.60|225,742.85|102,442,905.75|3,819,543.00|

 The increase and decrease mainly represents the translation differences of financial statements of ShangGong (Europe) Holding Corp. GmbH.
5.17 Long-term Unamortized Expenses
||||||||
|-|-|-|-|-|-|-|
|Item|OpeningBalance|Increase|Amortization|OtherDecrease|EndingBalance|Reasons for OtherDecrease|
|Mailboxrental|33,000.00||3,300.00||29,700.00||

5.18 Deferred Tax Assets And Liabilities
5.18.1 Recognized Deferred Tax Assets and Liabilities
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Deferred tax assets|||
|Provision for impairment|9,266,540.89|3,407,604.05|
|Deductible losses for the tax purpose|88,879.25|87,382.12|
|Others-provision for pension|30,941,886.16|31,031,454.18|
|Subtotal|40,297,306.30|34,526,440.35|
|Deferred tax liabilities|||
|Appreciation of assets evaluation|48,413,499.95|48,987,892.64|
|Others|461,881.13|463,218.15|
|Subtotal|48,875,381.08|49,451,110.79|

 5.18.2 Details about Taxable Differences and Deductible Differences
|||
|-|-|
|Item|Amount|
|Taxable differences||
|Appreciation of assets evaluation|152,201,421.50|
|Others|1,442,026.63|
|Subtotal|153,643,448.13|
|Deductible differences||
|Provision for impairment|30,981,466.25|
|Deductible losses for the tax purpose|277,487.51|
|Others-provision for pension|96,602,829.10|
|Subtotal|127,861,782.86|

 5.19 Impairment
|||||||
|-|-|-|-|-|-|
||Opening Balance|Increase|Decrease||Ending Balance|
||||Reversal|Written-off||
|Bad debt provision|156,587,806.16|5,034,528.87||758,378.08|160,863,956.95|
|Inventoryobsolescenceprovision|111,613,203.58|521,261.51|744,803.33|745,679.24|110,643,982.52|
|Impairment forlong-term equityinvestment|22,207,792.17||||22,207,792.17|
|Impairment forinvestment property|8,343,112.90|||24,081.26|8,319,031.64|
|Impairment forfixed assets|8,482,241.34||||8,482,241.34|
|Impairment forgoodwill|3,747,061.50|72,481.50|||3,819,543.00|
|Total|310,981,217.65|5,628,271.88|744,803.33|1,528,138.58|314,336,547.62|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
The written-off of bad debt provision is due to the difference between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period.
Among the written-off of inventory obsolescence provision, the amount of RMB 279,018.91 is due to the difference between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period.
Among the decrease of impairment for investment property, the amount of RMB24,081.26 is due to the difference between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period.
The increase of impairment for goodwill is due to the difference between foreign exchange rates of beginning and ending of ShangGong (Europe) Holding Corp. GmbH in this reporting period
5.20 Short-term Loans
5.20.1 Summary
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Mortgage loans|87,872,325.92|155,351,063.11|
|Secured loans|57,083,280.00|66,600,000.00|
|Credit loans|348,148.62|348,148.62|
|Total|145,303,754.54|222,299,211.73|

 5.20.2 The Company mortgaged some assets to the banks for loan of RMB 87,872,324.92. (details referred to below 8. Commitment).
5.20.3 The Company raised secured loans amounting to RMB 57,083,280.00 in the reporting period (details referred to below 8. Commitment).
5.21 Notes Payable
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Commercial acceptance bills||6,225,975.90|
|Total||6,225,975.90|

 The amount due of Notes payable in the following accounting period is zero.
5.22 Accounts Payable
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Payables to suppliers|127,447,375.28|126,210,705.10|
|Total|127,447,375.28|126,210,705.10|

 There are no payables to those shareholders who hold5% or more voting shares in ShangGong Group.
Payables to related parties at the balance sheet date are referred to below„6.5 Related PartyTransactions‟. There are no payables whose aging is over one year at the balance sheet date.
5.23 Receipts In Advance
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Purchase payment|38,655,929.18|32,726,923.09|
|Total|38,655,929.18|32,726,923.09|

 There are no receipts from those shareholders who hold5% or more voting shares in ShangGong Group, nor from related parties at the balance sheet date.
There are no payables whose aging is over one year at the balance sheet date.
5.24 Employee Benefits Payable
||||||
|-|-|-|-|-|
||Opening Balance|Increase|Decrease|Ending Balance|
|Salary, bonus, allowance andsubsidies|49,503,198.21|213,663,395.13|211,250,992.84|51,915,600.50|
|Employee welfare|529.00|46,272,515.47|46,272,515.47|529.00|
|Social securities|65,489.20|7,286,806.49|7,276,951.29|75,344.40|
|Included: Medical insurance|20,532.40|2,287,062.88|2,284,929.68|22,665.60|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||
|-|-|-|-|-|
|Compulsory socialinsurance|39,337.20|4,366,496.74|4,359,323.34|46,510.60|
|Annuity|||||
|Unemployment insurance|2,809.80|311,453.20|310,993.30|3,269.70|
|Injury insurance|936.60|126,848.77|126,819.17|966.20|
|Maternity insurance|1,873.20|194,944.90|194,885.80|1,932.30|
|Housing funds||1,347,641.50|1,347,641.50||
|Labor union fees||384,759.63|383,716.03|1,043.60|
|Staff education fees||473,871.26|469,044.56|4,826.70|
|Release pay||73,011.00|73,011.00||
|Others||18,545.40|18,545.40||
|Total|49,569,216.41|269,520,545.88|267,092,418.09|51,997,344.20|

 There are no delinquent staff pays at the balance sheet date.
5.25 Taxes Payable
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Value added tax|1,289,019.57|378,801.36|
|Business tax|172,065.18|72,341.42|
|Corporate income tax|40,793,190.35|27,685,987.47|
|Individual income tax|631,173.23|3,722,971.59|
|City construction tax|40,808.89|24,834.16|
|Property tax||4,214.40|
|Education surcharge|45,410.74|24,457.25|
|Riverway management charges|10,272.25|2,622.77|
|Total|42,981,940.21|31,916,230.42|

 Overseas subsidiaries adopt applicable tax rates regulated in their host countries.
5.26 Dividends Payable
|||||
|-|-|-|-|
||Ending Balance|Opening Balance|Reason For Unpaid Over One Year|
|Light Industrial Holding GroupCo.,Ltd|959,269.79|959,269.79|Unable to pay due to long ageing|
|Privately-owned corporate shares|73,549.07|73,549.07|Unable to pay due to long ageing|
|Total|1,032,818.86|1,032,818.86||

5.27 Other Payables
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Total|139,349,092.19|147,128,355.33|

 There are no payables to those shareholders who hold5% or more voting shares in ShangGong Group.
Payables to related parties at the balance sheet date are referred to below„6.5 Related PartyTransactions‟. 5.28 Contingent liabilities
||||||
|-|-|-|-|-|
||Opening Balance|Increase|Decrease|Ending Balance|
|Pension|315,489,788.98||8,952,981.85|306,536,807.13|
|Others|8,293,480.19||251,955.64|8,041,524.55|
|Total|323,783,269.17||9,204,937.49|314,578,331.68|

 Provision for pensions is charged by ShangGong (Europe) Holding Corp. GmbH, according to amended IAS19-Employees benefits.
5.29 Non-current Liabilities Due within One Year
||||
|-|-|-|
|Item|Ending Balance|Opening Balance|
|Long-term loans due within one year|520,000.00|520,000.00|
|Bonds payable due within one year|||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Long-term payable due within one year|||
|Total|520,000.00|520,000.00|

 5.30 Other Current Liabilities
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Interest and rentals|3,397.29|1,123,775.74|
|Special fund for development of local brand|500,000.00|500,000.00|
|Total|503,397.29|1,623,775.74|

 The opening and closing balances of interest and rentals represent the interest and rental incomes received in advance by ShangGong (Europe) Holding Corp. GmbH, which will be recognized in the income statement in the following periods.
Encouraged by the circleHJXF[2012] No.765 promulgated by the Shanghai Economic Information Committee, ShangGong Group received special fund amounting to RMB 500,000.00 regarding development of local brand in the previous period. The fund constitutes a government grant. ShangGong Group will use the fund under the instruction regulated bythe„Measures of Speed-up of the construction of independent brands of special fundsmanagement‟and recognize the deferred revenue considering the progress of use of fund.
5.31 Long-term Loans
||||
|-|-|-|
||Ending Balance|Opening Balance|
|Mortgage loans|77,513,168.41|79,185,196.65|
|Credit loans|1,489,984.87|1,489,984.87|
|Total|79,003,153.28|80,675,181.52|

 ShangGong (Europe) Holding Corp. GmbH, raised mortgage loans by pledging its own fixed assets in the reporting period (details referred to below 8. Commitment).
5.32 Long-term Payables
||||
|-|-|-|
||Ending Balance|Opening Balance|
|SAP franchise fee|1,281,037.95||
|Final payment to KSL|44,026,394.71|43,180,068.66|
|Other|5,705,911.35|1,781,265.15|
|Total|51,013,344.01|44,961,333.81|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.33 Shares
|||||||||
|-|-|-|-|-|-|-|-|
||Opening Balance|Increase/(Decrease)|||||Ending Balance|
|||New Issues|Bonus Issues|Transfer from Surplus Reserves|Other|Subtotal||
|A. Restricted shares||||||||
|State-owned shares||||||||
|State-owned corporate shares||42,302,823.00||||42,302,823.00|42,302,823.00|
|Shares owned by domesticinvestors||57,400,000.00||||57,400,000.00|57,400,000.00|
|in which:||||||||
|Shares owned by entities||57,400,000.00||||57,400,000.00|57,400,000.00|
|Shares owned by individuals||||||||
|Shares owned by foreigninvestors||||||||
|in which:||||||||
|Shares owned by entities||||||||
|Shares owned by individuals||||||||
|Subtotal||9,702,823.00||||9,702,823.00|9,702,823.00|
|B. Free floating shares||||||||
|Ordinary shares in RMB|204,943,027.00||||||204,943,027.00|
|Floating A shares|243,943,750.00||||||243,943,750.00|
|Floating B shares||||||||
|Others||||||||
|Subtotal|448,886,777.00||||||448,886,777.00|
|Total|448,886,777.00|99,702,823.00||||99,702,823.00|548,589,600.00|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.34 Capital Surplus
||||||
|-|-|-|-|-|
||Opening Balance|Increase|Decrease|Ending Balance|
|Share premium|313,159,549.73|538,505,407.98||851,664,957.71|
|Changes in fair value|10,373,499.03|11,216,011.94||21,589,510.97|
|in which: Available for salefinancial assets|10,373,499.03|11,216,011.94||21,589,510.97|
|Others|74,118,574.45||1,924,258.32|72,194,316.13|
|Total|397,651,623.21|549,721,419.92|1,924,258.32|945,448,784.81|

 The increase of share premium is due to the non-public issuance of RMB ordinary shares (A Share) in the reporting period. The quantity is 99,702,823 shares which nominal value is RMB 1. Its issue price is RMB 6.73. The issuance expense is RMB 32,791,767.81.
5.35 Surplus Reserves
||||||
|-|-|-|-|-|
||Opening Balance|Increase|Decrease|Ending Balance|
|Statutory surplus reserves|2,273,121.26|||2,273,121.26|
|Discretionary surplus reserves|2,273,121.26|||2,273,121.26|
|Total|4,546,242.52|||4,546,242.52|

 5.36 Retained Earnings
||||
|-|-|-|
||Balance|Appropriation|
|Retained earnings as at December 31, 2013|-2,996,568.99||
|Plus: Net profit attributed to shareholders of parent company|41,854,215.80||
|Retained earnings as at June 30, 2014|38,857,646.81||

5.37 Revenues and Costs
5.37.1 Summary
||||
|-|-|-|
||Current Period|Prior Period|
|Sales|945,170,208.40|844,638,849.00|
|Other incomes|24,719,958.63|26,784,416.72|
|Cost of sales|661,303,736.20|606,814,372.70|

 5.37.2 Revenues and Costs by Industry
||||||
|-|-|-|-|-|
||Current Peroid||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Manufacturing|804,616,129.39|512,626,251.87|683,851,262.78|441,913,661.90|
|Trading|138,078,065.37|134,983,016.70|158,851,396.20|154,304,033.94|
|Others|2,476,013.64|637,125.76|1,936,190.02|59,835.46|
|Total|945,170,208.40|648,246,394.33|844,638,849.00|596,277,531.30|

 5.37.3 Revenues and Costs by Product
||||||
|-|-|-|-|-|
||Current Period||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Sewing machine|758,165,170.26|472,316,173.27|631,337,295.48|396,111,939.88|
|Export agent|138,078,065.37|134,983,016.70|158,851,396.20|154,304,033.94|
|Office supplies and Film equipment|46,450,959.13|40,310,078.60|52,513,967.30|45,801,722.02|
|Others|2,476,013.64|637,125.76|1,936,190.02|59,835.46|
|Total|945,170,208.40|648,246,394.33|844,638,849.00|596,277,531.30|

5.37.4 Revenues and Costs by Region
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||
|-|-|-|-|-|
||Current Period||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Domestic|397,189,456.19|348,048,236.05|409,262,058.59|365,699,989.85|
|Abroad|609,890,630.29|362,088,036.36|482,832,208.59|278,032,959.63|
|Less: elimination of intra-group sales|61,909,878.08|61,909,878.08|47,455,418.18|47,455,418.18|
|Total|945,170,208.40|648,246,394.33|844,638,849.00|596,277,531.30|

 Overseas and domestics locations represent the places in which the sales offices are located.
5.37.5 Sales to the Top Five Biggest Customers
||||
|-|-|-|
||Sales|% of total|
|Customer A|40,035,873.13|4.13|
|Customer B|19,447,527.20|2.01|
|Customer C|18,463,623.11|1.90|
|Customer D|18,458,374.98|1.90|
|Customer E|16,788,324.00|1.73|
|Total|113,193,722.42|11.67|

 5.38 Sales Tax and Surcharges
|||||
|-|-|-|-|
||Current Period|Prior Period|Tax Rate|
|Business tax|746,354.42|831,791.05|5%、7%|
|City construction tax|227,719.48|338,804.24|7%、1%|
|Education surcharge|195,641.65|261,839.93|3%、2%|
|Others|1,191,086.52|1,251,419.78||
|Total|2,360,802.07|2,683,855.00||

5.39 Selling Expenses
||||
|-|-|-|
||Current Period|Prior Period|
|Payroll expense|50,816,387.04|38,997,353.97|
|Fix and after-sale service|7,051,749.67|7,355,193.11|
|Office expense|1,554,464.89|430,775.81|
|Travelling expenses|6,650,362.56|5,299,250.64|
|Transportation expenses|9,115,711.32|6,721,859.03|
|Advertising expenses|2,539,824.71|1,163,050.95|
|Commission|9,908,944.45|8,860,788.09|
|Rental|3,069,168.81|2,684,603.40|
|Insurance|840,634.26|666,243.76|
|Packing expenses|2,896.28|7,370.00|
|Meeting|772,388.16|680,378.97|
|Depreciation|409,679.11|313,575.00|
|Exhibition|508,986.71|611,076.12|
|Water and electric expenses|8,459.44|6,382.19|
|Unloading expenses|10,985.29|355,048.40|
|Sample, printing and scraps|5,103,474.71|3,512,737.02|
|Other|11,593,863.35|10,828,885.56|
|Total|109,957,980.76|88,494,572.02|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
5.40 General and Administrative Expenses
||||
|-|-|-|
||Current Period|Prior Period|
|Payroll expenses|49,473,405.36|45,032,100.33|
|Office expenses|1,746,903.79|1,550,214.00|
|Water and electric|250,481.32|341,968.61|
|Entertainment|873,422.13|832,521.58|
|Asset insurance|1,298,558.19|1,054,399.71|
|Meeting|177,038.43|450,955.26|
|Travelling|2,724,606.10|1,893,774.77|
|Depreciation|3,120,149.11|4,609,242.77|
|Fix|116,127.26|28,918.46|
|Transportation|462,556.21|675,019.44|
|Rental|3,729,543.15|3,080,491.81|
|Board and supervision meeting|213,738.28|86,456.47|
|Advisory expenses|4,866,294.61|6,537,805.81|
|Lawsuit|213,982.23|68,971.50|
|Research and development|28,412,862.30|26,637,899.76|
|Tax|388,121.21|330,556.99|
|Amortization of intangible assets|1,237,786.80|1,253,758.48|
|Other|2,855,302.70|4,355,607.09|
|Total|102,160,879.18|98,820,662.84|

 5.41 Finance Expenses
||||
|-|-|-|
||Current Period|Prior Period|
|Interest expenses|11,476,827.50|9,838,114.99|
|Less: interest income|2,664,823.98|1,733,887.72|
|Exchange gains|512,275.69|1,462,778.71|
|Others|797,900.71|1,151,958.97|
|Total|10,122,179.92|10,718,964.95|

 5.42 Gains/(losses) From Fluctuation of Fair Value
||||
|-|-|-|
||Current Period|Prior Period|
|Held for trading financial assets|-13,426.44|-80,413.50|
|Held for trading financial liabilities|||
|Investment property at fair value|||
|Total|-13,426.44|-80,413.50|

 5.43 Investment Incomes
5.43.1 Summary
||||
|-|-|-|
||Current Period|Prior Period|
|Investment incomes using cost method|11,355,235.97|13,039,034.64|
|Investment losses using equity method|34,509.38|-1,156,806.53|
|Gains on disposal of long-term equity investment|||
|Gains on Trading financial assets|||
|Gains/(losses) on disposal of held for trading financial assets||-11,546.99|
|Gains on disposal of available-for-sale financial assets|||
|Total|11,389,745.35|11,870,681.12|

5.43.2 Investment Incomes Using Cost Method
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||
|-|-|-|-|
|Investee|Current Period|Prior Period|Comments|
|Shanghai Fuji-Xerox Co.,Ltd.|9,869,408.00|11,314,034.64|Decrease in cash dividends|
|Shanghai Huanzhong Commercial Co., Ltd|455,479.45|875,000.00|Decrease in cash dividends|
|Shanghai Hirose Precision IndustrialCo.,Ltd.|850,000.00|850,000.00||
|Bank of Shanghai Co.,Ltd.|177,109.68||Increase in cash dividends|
|Shenyin & Wanguo Securities Co.,Ltd.|3,238.84||Increase in cash dividends|
|Total|11,355,235.97|13,039,034.64||

5.43.3 Investment Incomes under Equity Method
|||||
|-|-|-|-|
|Investee|Current Period|Prior Period|Comments|
|Durkopp Adler Sewing MachinesSuzhou Co., Ltd|34,509.38|-1,241,395.18|Profits incurred|
|Total|34,509.38|-1,241,395.18||

5.43.4 There is no significant restriction of funds remittance.
5.44 Impairment
||||
|-|-|-|
||Current Period|Prior Period|
|Bad debt provision/(reversal)|5,034,528.87|-4,305,890.21|
|Inventory obsolescence provision|-223,541.82|3,716,645.54|
|Impairment on long-term equity investment|||
|Impairment on investment property|||
|Impairment for fixed assets|||
|Impairment for goodwill|||
|Total|4,810,987.05|-589,244.67|

 5.45 Non-operating income
5.45.1 Summary
|||||
|-|-|-|-|
||Current Period|Prior Period|Through Profit or Loss|
|Gains from disposal of non-current assets|472,023.73|66,039.12|472,023.73|
|In Which:||||
|Gains from disposal of fixed assets|472,023.73|66,039.12|472,023.73|
|Gains from disposal of intangible assets||||
|Gains from debts restructuring||||
|Government grants|149,000.00|218,790.00|149,000.00|
|Penalty revenue||82,500.00||
|Others|20.00|74,244.00|20.00|
|Total|621,043.73|441,573.12|621,043.73|

 5.45.2 Government Grants Breakdown
|||||
|-|-|-|-|
||Current Period|Prior Period|Comments|
|Enterprise employees training funds||140,790.00||
|Enterprise finance allowance funds|149,000.00|78,000.00||
|Total|149,000.00|218,790.00||

5.46 Non-operating Expense
|||||
|-|-|-|-|
||Current Period|Prior Period|Through Profit or Loss|
|Losses from disposal of non-current assets|207,013.43|66,661.06|207,013.43|
|In Which:||||
|Losses from disposal of fixed assets|207,013.43|66,661.06|207,013.43|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||
|-|-|-|-|
|Losses from disposal of intangible assets||||
|Donation|200,000.00|250,000.00|200,000.00|
|In Which:||||
|Public welfare donation|200,000.00|250,000.00|200,000.00|
|Penalties and fines|187.57||187.57|
|Compensation||||
|Others|6,565.50||6,565.50|
|Total|413,766.50|316,661.06|413,766.50|

 5.47 Corporate Income Taxes
||||
|-|-|-|
||Current Period|Prior Period|
|Corporate income tax expense|31,140,048.30|6,240,848.77|
|Deferred tax|-5,166,717.52|18,731,687.10|
|Total|25,973,330.78|24,972,535.87|

 5.48 Basic Earnings Per Share (EPS) and Diluted EPS
Basic EPS
Basic EPS= P0/S
S= S0+ S1+Si*Mi/M0 -Sj*Mj/M0 - Sk
In which:
P0 - net profits attributable to ordinary shareholders (or after deducting extraordinary profits);
S - weighted average number of ordinary shares issued;
S0 - opening shares;
S1 - additional shares due to transfer from surplus reserves or bonuses issues;
Si - additional shares due to new issues or debt for stock swap;
Sj - buy-back shares;
Sk - reverse shares;
M0 - number of months in the reporting year;
Mi - accumulated number of months since the next month shares are increased;
Mj - accumulated number of months since the next month shares are decreased.
Diluted EPS
Diluted EPS= P1/(S0+ S1+Si*Mi/M0 -Sj*Mj/M0–Sk+ stock warrants+ share options+ transfer from convertible debentures)
In which:
P1 - net profits attributable to ordinary shareholders (or after deducting extraordinary profits), considering the dilution effectto potential ordinary shares under the CAS. When the diluted EPS is calculated, effects are considered to the net profits and weighted average shares until the diluted EPS reaches a minimum.
Calculation of Basic EPS and Diluted EPS
Basic EPS represents the consolidated profits contributed to the ordinary shareholders divided by floated ordinary shares.
||||
|-|-|-|
||Current Period|Prior Period|
|Consolidated profits contributed to the ordinary shareholders|41,854,215.80|30,674,302.78|
|Average floated ordinary shares|498,738,188.50|448,886,777.00|
|Basic EPS (RMB/Share)|0.0839|0.0683|

The calculation of average floated ordinary shares is as follows:
||||
|-|-|-|
||Current Period|Prior Period|
|Opening numbers of floated ordinary shares|448,886,777.00|448,886,777.00|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Add：Issued floated ordinary shares in the current year|49,851,411.50||
|Less：Purchase back of floated ordinary shares|||
|Ending numbers of floated ordinary shares|498,738,188.50|448,886,777.00|

 Diluted EPS represents the adjusted consolidated profits contributed to the ordinary shareholders divided by adjusted floated ordinary shares.
||||
|-|-|-|
||Current Period|Prior Period|
|Consolidated profits contributed to the ordinary shareholders (diluted)|41,854,215.80|30,674,302.78|
|Average floated ordinary shares (diluted)|498,738,188.50|448,886,777.00|
|Diluted EPS (RMB/Share)|0.0839|0.0683|

 The calculation of average diluted floated ordinary shares is as follows:
||||
|-|-|-|
||Current Period|Prior Period|
|Ending numbers of floated ordinary shares|498,738,188.50|448,886,777.00|
|Influence of convertible debentures|||
|Influence of share options|||
|Ending numbers of floated ordinary shares (diluted)|498,738,188.50|448,886,777.00|

 Note 1: In the reporting year, there are no those potential ordinary shares that have dilutibililty but will be diluted in future.
Note 2: During the period between the balance sheet date and issuance date of financial statements, there are no significant changes in numbers of floated or potential ordinary shares.
5.49 Other Comprehensive Incomes
||||
|-|-|-|
||Current Period|Prior Period|
|A. Gains/(losses) on disposal of available for sale financial assets|11,216,011.94|-4,773,737.54|
|B. Interest in investees' comprehensive incomes using equity method|-1,951,031.90|-6,053,086.92|
|Less: Transfer from the retained earnings|||
|Subtotal|-1,951,031.90|-6,053,086.92|
|C. Gains/(losses) on hedging|||
|D. Translation differences of financial statements|-1,080,347.56|-11,083,149.64|
|E. Others|||
|Total|8,184,632.48|-21,909,974.10|

 5.50 Cash Flow Statements
Cash Flows Related to Operating Activities
|||
|-|-|
||Current Period|
|Receipt of receivables|2,192,892.33|
|Receipt of subsidies and grants|149,000.00|
|Receipt of interest income|2,664,823.98|
|Receipt of non-operating income||
|Other||
|Total|5,006,716.31|

 Cash Outflows Related to Operating Activities
|||
|-|-|
||Current Period|
|Settlement of payables and payment of commissions|2,151,537.15|
|Payment of selling expenses|36,760,316.58|
|Payment of general and administration expenses|23,415,581.18|
|Payment of non-operating expenses|206,753.07|
|Payment of bank charges and other expenses|797,900.71|
|Total|63,332,088.69|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
Cash Outflows Related to Investing Activities
|||
|-|-|
||Current Period|
|Payment to the acquisition of PFAFF (Taicang)|29,246,702.07|
|Total|29,246,702.07|

 Cash Inflows Related to Financing Activities
|||
|-|-|
||Current Period|
|Release of deposits L/C guarantee|712,000.00|
|Total|712,000.00|

 Cash Outflows Related to Financing Activities
|||
|-|-|
||Current Period|
|Non-public issuing and its related expense|436,702.82|
|Mortgage and pledge (e.g. certificate of term deposit, security deposit)|210,295.85|
|Total|646,998.67|

 5.51 Supplementary Information of Cash Flow Statement
5.51.1 Indirect Method
||||
|-|-|-|
|Item|Current Period|Prior Period|
|Net profits converted into cash flow from operating activities|||
|Net profits|64,783,867.21|51,422,726.69|
|Add:|||
|Provision for assets impairment|4,810,987.05|-589,244.67|
|Depreciation of fixed assets, of oil/gas assets and productive biologicalassets|17,217,835.54|14,865,121.77|
|Amortization of intangible assets|7,037,844.44|3,911,446.48|
|Amortization of long-term deferred expenses|3,300.00||
|Losses/(gains) on scrapping of fixed assets|-265,010.30|621.94|
|Losses/(gains) on scrapped fixed assets|||
|Losses/(gains) on changes in fair value|13,426.44|80,413.50|
|Financial expense|10,964,551.81|11,300,893.70|
|Investment loss/(income)|-11,389,745.35|-11,870,681.12|
|Decrease/ (increase) in deferred income tax assets|-3,153,605.22|6,678,577.23|
|Increase/ (decrease) in deferred income tax liabilities|-575,729.71|16,545,232.18|
|Decrease/(increase) in inventories|-72,884,572.01|-78,046,851.37|
|Decrease/(increase) in operational receivables|-55,392,061.55|-101,301,974.35|
|Increase/(decrease) in operational payables|20,082,138.24|55,429,341.88|
|Others|||
|Net cash flows generated from operating activities|-18,746,773.41|-31,574,376.14|
|Investing and financing activities that do not involve cash receipts andpayments|||
|Debt converted into capital|||
|Convertible bonds to be expired within one year|||
|Fixed assets under finance lease|||
|Net increase in cash and cash equivalents|||
|Cash at the end of the period|468,643,384.99|413,709,715.92|
|Less: Cash at the beginning of the period|446,063,638.27|461,395,048.30|
|Add: Cash equivalents at the end of the period|||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||
|-|-|-|
|Less: Cash equivalents at the beginning of the period|||
|Net increase in cash and cash equivalents|22,579,746.72|-47,685,332.38|

 5.51.2 Composition of Cash and Cash Equivalents
||||
|-|-|-|
|Item|Ending Balance|Opening Balance|
|Cash|468,643,384.99|446,063,638.27|
|Cash on hand|1,301,536.68|964,625.06|
|Bank deposit immediately available for payment|397,838,156.82|437,864,547.08|
|Other monetary fund immediately available for payment|69,503,691.49|7,234,466.13|
|Cash equivalents|||
|Ending balance of cash and cash equivalents|468,643,384.99|446,063,638.27|

 Cash and cash equivalents do not comprise those funds whose restricted periods are over 3 months in the parent company or other subsidiaries in the group.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
6. Related Parties and Related-party Transactions
6.1 Holding Entity (Expressed in RMB Ten Thousand)
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Item|Relationship|Type|RegisteredAddress|LegalRepresentative|Business Scope|RegisteredCapital|Sharing%|VotingShare%|Ultimate HoldingEntity|OrganizationCode|
|State-ownedAssetsSupervisionandAdministrationCommission inShanghaiPudong NewDistrict.|Holding entity||Shanghai|Sun Tong|State-ownedassetsmanagementunder thedelegation ofthe ShanghaiPudong NewDistrictGovernment||19.21|19.21|State-ownedAssets SupervisionandAdministrationCommission inShanghai PudongNew District.|00245606-0|

6.2 Subsidiaries (Expressed in RMB Ten Thousand)
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||Type|Registered Address|Legal Representative|Business|Registered Capital|Sharing%|VotingShare%|OrganisationCode|
|Durkopp AdlerTrading ShanghaiCo.,Ltd.|Controlled|Limitedcompany|Shanghai|Zhang Min|Import and export ofsewing machinery|USD600|60.00|86.00|78627462-7|
|ShanghaiShuangchongSewing MachinesCo.,Ltd.|Controlled|Limitedcompany|Shanghai|Chen Changbao|Sewing machinery|1,200|70.00|90.00|63132496-8|
|ShanghaiShanggongButterfly SewingMachines Co.,Ltd|Wholly-owned|One-personcompany withlimitedliability|Shanghai|Zhou Yongqiang|Sewing machinery|7,900|100.00|100.00|74809363-0|
|Shanghai|Wholly|Non-company|Shanghai|Jiang Yanhai|Sewing machinery|465|100.00|100.00|13224151-9|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Industrial SewingMachinesMaterials GeneralCo.,Ltd|-owned|||||||||
|ShangGong(Europe) HoldingCorp. GmbH|Wholly-owned|Limitedcompany|Germany|Zhang Min|Sewing machinery|EUR 1,250|100.00|100.00|-|
|SMPIC Imp. &Exp. Co., Ltd.|Wholly-owned|Limitedcompany|Shanghai|Li Jiaming|Import and export|1,200|100.00|100.00|72951976-3|
|Shanghai SGSBAsset-managementCo.,Ltd.|Wholly-owned|Limitedcompany|Shanghai|Zhang Shihe|Asset management|500|100.00|100.00|56803204-8|
|ShanghaiShanggongSMPICElectronics Co.,Ltd.|Wholly-owned|Limitedcompany|Shanghai|Wang Jie|Electronic devices|2,000|100.00|100.00|06931449-7|
|Shanghai FengjianProperty Co., Ltd.|Wholly-owned|Limitedcompany|Shanghai|Jin Wei|Property management|50|100.00|100.00|63023173-5|

6.3 Joint Ventures and Affiliates (Expressed in RMB Ten Thousand)
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Investee|Type|RegisteredAddress|LegalRepresentative|Business|RegisteredCapital|Sharing%|VotingShare%|Relationship|OrganizationCode|
|Affiliate||||||||||
|Changshu QixingElec-plating Co., Ltd.|Limitedcompany|Changshu|Wang Mujiong|Production of spares ofnumbering and coatingmachines|280.00|90.00|Note 1|Affiliate|14204429-5|
|Shanghai Huazhijie PlasticCo., Ltd.|Limitedcompany|Shanghai|Dai Siwei|Production of chemicalproducts|USD764|23.04|Note 1|Affiliate|60734921-7|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Durkopp Adler SewingMachines Suzhou Co., Ltd|Limitedcompany|JiangsuProvince|Pu Weiping|Sewing machines|USD750|49.00|49.00|Affiliate|57141865-4|
|Pfaff Industrial IbericaS.A.U.|Limitedcompany|Spain|Cornelia Mast|Sales of industrial sewingmachines|EUR29.19|49.00|Note 2|Affiliate||

Note 1: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. had completed the cancellation of tax registration.
Note 2: Pfaff, the subsidiary of ShangGong (Europe) Holding Corp. GmbH, does not control Pfaff Industrial Iberica S.A.U., and does not have voting rights.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
6.4 Related Parties
||||
|-|-|-|
||Relationship|Organization Code|
|Shanghai Hirose Precision Industrial Co.,Ltd.|Investee|60742796-7|
|Shanghai Fuji-Xerox Co.,Ltd.|Investee|60720953-X|

 6.5 Related Party Transactions
6.5.1 Related party transactions between those subsidiaries have been eliminated in the consolidated financial statements.
6.5.2 Purchase/Service Received
||||||||
|-|-|-|-|-|-|-|
|||Pricing|Current Period||Prior Period||
||||Amount|%|Amount|%|
|Durkopp Adler SewingMachines Suzhou Co., Ltd|Purchaseof sewingmachines|Agreed-upon prices|14,298,553.25|2.21|13,775,914.16|2.27|

6.5.3 Sales/Service Rendered
||||||||
|-|-|-|-|-|-|-|
|||Pricing|Current Period||Prior Period||
||||Amount|%|Amount|%|
|Shanghai Fuji-XeroxCo., Ltd.|Sale of goods|Agreed-uponprices|18,463,623.11|1.95|19,872,985.45|2.28|
|Durkopp Adler SewingMachines Suzhou Co.,Ltd|Sale of goods|Agreed-uponprices|7,599,612.94|0.80|2,206,711.09|0.25|

6.5.4 Receivables and Payables
Receivables from Related Parties
|||||||
|-|-|-|-|-|-|
||Related Parties|Ending Balance||Opening Balance||
|||Carrying Amount|Provision|CarryingAmount|Provision|
|Accountsreceivable||||||
||Shanghai Fuji-Xerox Co.,Ltd.|3,952,429.35|197,621.47|3,844,604.48|192,230.22|
||Durkopp Adler Sewing Machines Suzhou Co., Ltd|15,440,332.29|5,644,808.75|6,651,377.03|2,119,609.62|
||Shanghai Shuangchong Sewing Machines Co.,Ltd.|3,267,586.72|163,379.34|3,267,586.72|163,379.34|
|Otherreceivables||||||
||Shanghai Shuangchong Sewing Machines Co.,Ltd.|13,988,201.28|1,896,111.77|13,988,201.28|1,896,111.77|

 Payables to Related Parties
|||||
|-|-|-|-|
||Related Parties|Ending Balance|Opening Balance|
|Notes payable||||
||Durkopp Adler Sewing Machines Suzhou Co., Ltd||6,225,975.90|
|Accounts payable||||
||Durkopp Adler Sewing Machines Suzhou Co., Ltd|9,078,981.85|8,325,289.73|
|Other payables||||
||Shanghai Industrial Sewing Machines Materials General Co.,Ltd|3,578,389.56|3,578,389.56|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
6.5.5 Rentals
||||||||
|-|-|-|-|-|-|-|
|Lesser|Lessee|Assets Type|From|To|PricingBasis|RentalsRecognized|
|ShangGongGroup|Shanghai Hirose Precision Industrial Co., Ltd.|Machinery|Mar112011|Mar112016|Agreement|250,000.00|

7. Contingencies
7.1 Unsettled Lawsuit And Arbitration And the Effect on the Financial Statements
There are no such issues in the reporting period.
7.2 Contingent Liabilities Resulting From Guarantees And Effects on Financial Statements
7.2.1 Guarantees to ShangGong (Europe) Holding Corp. GmbH as of 30 June 2014
|||||||
|-|-|-|-|-|-|
|Guaranteed Company|Guaranteedamount (‟000)|Period|Type ofguarantee|Obligationdischarged|Effect tofinancialstatements|
|ShangGong (Europe)Holding Corp. GmbH|USD 5,300|30 June 2005 to31 Oct 2015|Writtenguaranteeconfirmation|No|Able to settleand no adverseeffect|
|Bank of CommunicaitonsXuhui Branch|RMB 80,000|30 July 2013 to29 July 2014|Writtenguaranteeconfirmation|No|Able to settleand no adverseeffect|
|Commerzbank AG|EUR 5,550|30 July 2013 to29 Nov 2015|Writtenguaranteeconfirmation|No|Able to settleand no adverseeffect|
|Commerzbank AGShanghai Branch|RMB70,000|25 Mar 2014 to24 Mar 2015|Writtenguaranteeconfirmation|No|Able to settleand no adverseeffect|

In Year 2005, the Company provided to the Kugelfischer GmbH (FAG) with a guarantee, which was limited to USD 5.3 million, on the property rent of a subsidiary of the DA Germany Company (DA), the subsidiary of ShangGong (Europe) Holding Corp. GmbH. The term of guarantee is from 30 June 2005 to 31 October 2015. Moreover, the ShangGong (Europe) Holding Corp. GmbH provided FAG with a same length term guarantee on 30 June 2005. Cash amounting to EUR 635,000 was used as the mortgage. Such guarantee was provided onFAG‟s re-insurance that is onDA‟s insurance given on a leaseback transaction between a USA subsidiary and UTF Norcross L.L.C. Details refer to 8.1.2.
On July 30, 2013, the company used 80 million RMB as collateral for a one-year loan in euro that ShangGong (Europe) Holding Corp. GmbH applied in Bank of Communications Frankfurt Branch, in the method of financing guarantee issued by Bank of Communications Xuhui Branch. The borrowing limit cannot exceed the equivalent amount of 80 million RMB. In the meanwhile, the company used 4 million RMB as security deposit and an industrial real estate located at No. 603 Dapu Rd, Shanghai as mortgage to Bank of Communications Xuhui Branch in exchange for the financing guarantee.
ShangGong (Europe) Holding Corp. GmbH used 1.2 million shares of Duerkopp Adler AG as collateral for 5.55 million euro bank guarantee which was issued by Commerzbank Germany. The term is two years and four months. The purpose is to guarantee that ShangGong (Europe) Holding Corp. GmbH would pay the second-period share purchase price to the vendor of KSL Keilmann Sondermaschinenbau GmbH.
On March 25, 2014, the company used RMB 70 million as collateral for a one-year loan in euro that ShangGong (Europe) Holding Corp. GmbH applied in Commerzbank Germany Bielefeld Branch, in the method of financing guarantee issued by Commerzbank Germany Shanghai Branch. The borrowing limit cannot exceed the equivalent amount of RMB 70 million.
As of 30 June 2014, there is no cash outflow regarding such above guarantee.
8. Commitments
8.1 Significant Commitments
8.1.1 Signed Contracts/Agreements to be Complete/ Not Fully Completed
There are no such contracts in the reporting period, including investment contracts, outsourcing contracts, rental
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
contracts, and merger and acquisition contracts.
8.1.2 Other Significant Commitment
8.1.2.1 Credit Loans or Mortgage Loans
|||||
|-|-|-|-|
|Mortgages/Collaterals|Purpose|Principal|Borrower|
|Rome 1201A-D, 1701-B-2, 1500,Century Avenue|Bank loans mortgage||ShangGong Group|
|Real estate on 603, Dapu Road|Bank loans mortgage||ShangGong Group|
|Real estate on 603, Dapu Road|Bank loans mortgage|EUR9,000,000|ShangGong (Europe) Holding Corp.GmbH|
|Bank deposit EUR 69,830,000|Security deposit||ShangGong (Europe) Holding Corp.GmbH|
|Bank deposit EUR 32,720,000|Security deposit||ShangGong (Europe) Holding Corp.GmbH|
|Account receivables valued atEUR,35,770,000|Security deposit|-|ShangGong (Europe) Holding Corp.GmbH|
|Fix assets valued at EURO1,585,360,000|Credit line securitydeposit|EUR10,700,000|ShangGong (Europe) Holding Corp.GmbH|
|1.2 million shares of DA AG heldby ShangGong (Europe) HoldingCorp. GmbH|Guarantee||ShangGong (Europe) Holding Corp.GmbH|

8.1.2.2 Guarantees Provided for Related Parties or Other Companies as of 30 June 2014
In the reporting period, the company provided certain assets as a counter-guarantee for the bank loans of Shanghai Pudong Development (Group) Co., Ltd. Such assets include total shares in Shanghai Shanggong Butterfly Sewing Machines Co., Ltd,80% shares in Shanghai Shanggong Butterfly Import& Export Co., Ltd which was held by Shanghai Shanggong Butterfly Sewing Machines Co., Ltd and the real estate (No. 190 Huyi Road) which is owned by the company. The maximum guarantee line amounted to RMB 115,600,000. The term of guarantee is from 9 June 2012 to 8 June 2018. By the balance sheet date, the company has withdrawn80% shares in Shanghai Shanggong Butterfly Import& Export Co., Ltd as pledge; the amount of the guarantee reduced RMB 41,860,000. Actual accumulated loan is RMB0.
8.2 There are no any disclosures on the discharge of previous commitment.
9. Subsequent Events
9.1 Significant Subsequent Event
None
9.2 Distribution of Dividends
According to the decision in the fifteenth board meeting (7th round) on 28 August 2014, no dividends will be distributed.
9.3 Other Events
None
10. Other Significant Issues
Assets and Liabilities at Fair Value
|||||||
|-|-|-|-|-|-|
||OpeningBalance|Fluctuation of Fair Value||Impairment|EndingBalance|
|||Attributed to Profitor Loss for CurrentPeriod|Attributed ToEquity|||
|Financial assets||||||
|Financial assets at fairvalue whose fluctuationis attributed to profit orloss for current period|277,479.87|-13,426.44|||264,053.43|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
||||||
|-|-|-|-|-|
|Available for sale assets|85,012,121.56||11,216,011.94|96,228,133.50|
|Subtotal|85,289,601.43|-13,426.44|11,216,011.94|96,492,186.93|
|Total|85,289,601.43|-13,426.44|11,216,011.94|96,492,186.93|
|Financial liabilities|||||

11. Notes to Major Accounts on the Financial Statements of Parent Company
11.1 Accounts Receivable
11.1.1 Summary
||||||||||
|-|-|-|-|-|-|-|-|-|
||Ending Balance||||Opening Balance||||
||Carrying Amount||Bad Debt Provision||Carrying Amount||Bad Debt Provision||
|||%||%||%||%|
|Individualitems withsignificantbalances|||||||||
|Items as acollectivegroup|86,951,839.24|100.00|79,764,628.23|91.73|86,965,274.21|100.00|79,703,121.45|91.65|
|Otherinsignificantitems|||||||||
|Total|86,951,839.24|100.00|79,764,628.23|91.73|86,965,274.21|100.00|79,703,121.45|91.65|

 There were no individual items with significant balances at the balance sheet date.
For those items as a collective group, an aging analysis is used as follows:
||||||||
|-|-|-|-|-|-|-|
|Ageing|Ending Balance|||Opening Balance|||
||Carrying Amount||Bad DebtProvision|Carrying Amount||Bad DebtProvision|
|||%|||%||
|Within one year|7,251,574.67|8.34|362,578.74|7,098,343.96|8.16|354,917.20|
|1-2 years|351,069.22|0.40|70,213.84|563,911.70|0.65|112,782.34|
|2-3 years|34,719.40|0.04|17,359.70|135,193.28|0.16|67,596.64|
|Over 3 years|79,314,475.95|91.22|79,314,475.95|79,167,825.27|91.03|79,167,825.27|
|Total|86,951,839.24|100.00|79,764,628.23|86,965,274.21|100.00|79,703,121.45|

 There were no individual items with insignificant balances at the balance sheet date.
11.1.2 There were no write-off of accounts receivables in the reporting period.
11.1.3 There were no receivables from shareholders or related parties who hold5% or more voting shares at the balance sheet date.
11.1.4 Top Five Biggest Customers
||||||
|-|-|-|-|-|
||Relationship|Carrying Amount|Ageing|% of Total|
|Customer A|Non-related party|11,530,775.39|Over three years|13.26|
|Customer B|Non-related party|7,480,189.67|Over three years|8.60|
|Customer C|Non-related party|7,234,606.86|Over three years|8.32|
|Customer D|Non-related party|4,679,327.49|Over three years|5.38|
|Customer E|Related party|3,267,586.72|Within one year|3.76|
|Total||34,192,486.13||39.32|

 11.1.5 Receivables From Related Parties
|||||
|-|-|-|-|
||Relationship|Carrying Amount|% of Total|
|Shanghai Shuangchong Sewing Machines Co., Ltd.|Subsidiary|3,267,586.72|3.76|
|Durkopp Adler Manufacturing (Shanghai) Co., Ltd.,|Sub-subsidiary|1,795,394.94|2.06|
|Shanghai Shanggong Butterfly Sewing Machines Co., Ltd|Subsidiary|734,478.90|0.84|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
11.2 Other Receivables
11.2.1 Summary
||||||||||
|-|-|-|-|-|-|-|-|-|
||Ending Balance||||Opening Balance||||
||Carrying Amount||Bad Debt Provision||Carrying Amount||Bad Debt Provision||
|||%||%||%||%|
|Individualitems withsignificantbalances|45,646,966.93|41.19|39,673,787.55|86.91|39,016,125.39|36.21|39,016,125.39|100.00|
|Items as acollectivegroup|65,171,155.00|58.81|19,503,277.17|29.93|68,740,120.72|63.79|19,683,459.95|28.63|
|Otherinsignificantitems|||||||||
|Total|110,818,121.93|100.00|59,177,064.72|53.40|107,756,246.11|100.00|58,699,585.34|54.47|

 Those receivables necessary to be provided for on an individual basisinclude：
||||||
|-|-|-|-|-|
||Carrying Amount|Bad Debt Provision|Provision %|Comment|
|Customer A|34,804,415.13|28,831,235.75|82.84|Impaired through individual test|
|Customer D|10,842,551.80|10,842,551.80|100.00|Impaired through individual test|
|Total|45,646,966.93|39,673,787.55|||

For those items as a collective group, an ageing analysis is used as follows:
||||||||
|-|-|-|-|-|-|-|
||Ending Balance|||Opening Balance|||
||Carrying Amount||Bad DebtProvision|Carrying Amount||Bad DebtProvision|
|||%|||%||
|Within one year|47,835,280.62|73.40|2,391,764.04|51,403,246.34|74.79|2,570,162.32|
|1-2 years|263,021.87|0.41|52,604.37|257,021.87|0.37|51,404.37|
|2-3 years|27,887.50|0.04|13,943.75|35,918.50|0.05|17,959.25|
|Over 3 years|17,044,965.01|26.15|17,044,965.01|17,043,934.01|24.79|17,043,934.01|
|Total|65,171,155.00|100.00|19,503,277.17|68,740,120.72|100.00|19,683,459.95|

 There were no individual items with insignificant balances at the balance sheet date.
11.2.2 There were no receivables from shareholders or related parties who hold5% or more voting shares at the balance sheet date.
11.2.3
11.2.4 Top Five Biggest Customers
|||||||
|-|-|-|-|-|-|
||Relationship|Carrying Amount|Ageing|% of Total|Nature|
|Customer A|Related party|34,804,415.13|Up to three years|31.41|General receivables|
|Customer B|Related party|20,086,211.86|One to three years|18.13|General receivables|
|Customer C|Related party|13,551,348.76|Within one year and over three years|12.23|General receivables|
|Customer D|Non-related party|10,842,551.80|Over three years|9.78|General receivables|
|Customer E|Related party|3,511,740.97|One to two year|3.17|General receivables|
|Total||82,784,527.55||74.72||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
11.2.5 Receivables from Related Parties
|||||
|-|-|-|-|
||Relationship|Carrying Amount|% of Total|
|Shanghai SGSB Asset-management Co.,Ltd|Subsidiary|34,804,415.13|31.41|
|Durkopp Adler Manufacturing (Shanghai) Co., Ltd.,|Sub-subsidiary|20,086,211.86|18.13|
|Shanghai Shuangchong Sewing Machines Co.,Ltd.|Subsidiary|13,551,348.76|12.23|
|SMPIC Imp. & Exp. Co., Ltd.|Subsidiary|4,763,695.17|4.30|
|ShangGong (Europe) Holding Corp. GmbH.|Subsidiary|3,511,740.97|3.17|
|Pfaff Industrial Sewing Machine Taicang Co., Ltd.|Sub-subsidiary|3,500,000.00|3.16|
|Shanghai ButterflyImp & Exp Co., Ltd|Sub-subsidiary|697,458.00|0.63|
|Shanghai Shanggong Imp & Exp Co., Ltd|Sub-subsidiary|641,402.02|0.58|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
11.3 Long-term Equity Investment
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Investee||Initial Cost|Opening Balance|Increase/(Decrease)|Ending Balance|Sharing|VotingShare%|CommentsWhereSharingDiffersVotingShares|ProvisionforImpairment|ImpairmentLoss forThis Year|Dividends|
|Affiliate||||||||||||
|Changshu Qixing Elec-platingCo., Ltd.|Equitymethod|2,520,000.00||||90.00||Note 1||||
|Shanghai Huazhijie Plastic Co.,Ltd.|Equitymethod|1,766,689.38|736,283.66||736,283.66|23.04||Note 1|736,283.66|||
|Subtotal||4,286,689.38|736,283.66||736,283.66||||736,283.66|||
|Subsidiary||||||||||||
|Durkopp Adler Trading ShanghaiCo.,Ltd.|Costmethod|24,403,443.11|24,403,443.11||24,403,443.11|60.00|86.00|||||
|Shanghai Industrial SewingMachines Materials GeneralCo.,Ltd|Costmethod|4,600,000.00|4,600,000.00||4,600,000.00|100.00|100.00||1,037,794.98|||
|Shanghai Shuangchong SewingMachines Co.,Ltd.|Costmethod|8,400,000.00|8,400,000.00||8,400,000.00|70.00|90.00||8,400,000.00|||
|Shanghai Shanggong ButterflySewing Machines Co.,Ltd|Costmethod|79,000,000.00|79,000,000.00||79,000,000.00|100.00|100.00|||||
|ShangGong (Europe) HoldingCorp. GmbH|Costmethod|142,370,693.64|142,370,693.64||142,370,693.64|100.00|100.00|||||
|SMPIC Imp. & Exp. Co., Ltd.|Costmethod|12,000,000.00|12,000,000.00||12,000,000.00|100.00|100.00|||||
|Shanghai SGSBAsset-management Co.,Ltd.|Costmethod|5,000,000.00|5,000,000.00||5,000,000.00|100.00|100.00||5,000,000.00|||
|Shanghai Shanggong SMPICElectronics Co., Ltd.|Costmethod|20,000,000.00|20,000,000.00||20,000,000.00|100.00|100.00|||||
|Shanghai Fengjian Property Co.,Ltd.|Costmethod|500,000.00||||100.00|100.00|||||
|Other Investees||||||||||||

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Shanghai Xingguang Underwear(South Africa)|Costmethod|308,033.99|308,033.99|308,033.99|14.30|14.30||308,033.99||
|Shanghai Shensy EnterprisesDevelopment Co., Ltd|Costmethod|10,593,077.64|10,593,077.64|10,593,077.64|10.59|10.59||||
|Wuxi Shanggong SewingMachines Co., Ltd|Costmethod|153,814.26|153,814.26|153,814.26|80.00|80.00||153,814.26||
|Shanghai Hualian SewingMachinery Co., Ltd.|Costmethod|400,000.00|400,000.00|400,000.00|21.74||Note 2|||
|Shanghai Fuji-Xerox Co., Ltd.|Costmethod|29,140,749.49|29,140,749.49|29,140,749.49|15.92|15.92|||9,869,408.00|
|Shanghai Baoding InvestmentCo., Ltd.|Costmethod|7,500.00|7,500.00|7,500.00|<5|<5||||
|Bank of Shanghai Co., Ltd.|Costmethod|951,400.00|951,400.00|951,400.00|<5|<5|||177,109.68|
|China Perfect Machinery Co.,Ltd.|Costmethod|90,000.00|90,000.00|90,000.00|<5|<5||||
|Shenyin & Wanguo SecuritiesCo., Ltd.|Costmethod|200,000.00|200,000.00|200,000.00|<5|<5|||3,238.84|
|Shanghai Hirose PrecisionIndustrial Co.,Ltd.|Costmethod|2,840,376.00|||30.00||Note 2||85,000.00|
|Subtotal||340,959,088.13|337,618,712.13|337,618,712.13||||14,899,643.23|10,899,756.52|
|Total||345,245,777.51|338,354,995.79|338,354,995.79||||15,635,926.89|10,899,756.52|

 Note 1: Changshu Qixing Elec-plating Co., Ltd. and Shanghai Huazhijie Plastic Co., Ltd. had completed the cancellation of tax registration.
Note2: The company does not participate into the strategic decision making of Shanghai Hualian Sewing Machinery Co., Ltd. And Shanghai Hirose Precision Industrial Co., Ltd. and therefore does not exert significant influences on the investees. Cost method is used to measure the investment.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
11.4 Sales and Cost of Sales
11.4.1 Summary
||||
|-|-|-|
||Current Period|Prior Period|
|Sales|14,908,693.94|52,526,546.02|
|Other Incomes|12,311,310.84|17,221,098.15|
|Cost of Sales|16,793,787.06|49,958,633.47|

 Revenues and Costs by Industry
||||||
|-|-|-|-|-|
||Current Period||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Manufacturing|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|
|Total|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|

 11.4.2 Revenues and Costs by Product
||||||
|-|-|-|-|-|
||Current Period||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Office Supplies andFilm Equipment|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|
|Total|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|

 11.4.3 Revenues and Costs by Region
||||||
|-|-|-|-|-|
||Current Period||Prior Period||
||Sales|Cost of Sales|Sales|Cost of Sales|
|Domestic Business|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|
|Total|14,908,693.94|13,458,020.87|52,526,546.02|45,845,346.54|

 11.4.4 Sales to the Top Five Biggest Customers
||||
|-|-|-|
||Sales|% of Total|
|Customer A|2,710,866.22|9.96|
|Customer B|1,340,100.00|4.92|
|Customer C|1,157,851.11|4.25|
|Customer D|1,125,509.00|4.13|
|Customer E|969,018.78|3.56|
|Total|7,303,345.11|26.82|

 11.5 Investment Incomes
11.5.1 Summary
||||
|-|-|-|
||Current Period|Prior Period|
|Investment incomes using cost method|11,355,235.97|13,039,034.64|
|Gains/(losses) on disposal of long-term equity investment|||
|Gains on trading financial assets|||
|Gains on held for trading financial assets|||
|Gains on disposal of Available-for-sale financial assets|||
|Total|11,355,235.97|13,039,034.64|

 There is no significant restriction of funds remittance.
11.5.2 Investment Incomes Using Cost Method
|||||
|-|-|-|-|
|Investee|Current Period|Prior Period|Comments of Fluctuation|
|Shanghai Fuji-Xerox Co.,Ltd.|9,869,408.00|11,314,034.64|Decrease in dividends|

Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||
|-|-|-|-|
|Shanghai Huanzhong Commercial Co., Ltd|455,479.45|875,000.00|Decrease in dividends|
|Shanghai Hirose Precision Industrial Co.,Ltd.|850,000.00|850,000.00||
|Bank of Shanghai Co.,Ltd.|177,109.68||Increase in dividends|
|Senyin & Wanguo Securities Co., Ltd|3,238.84||Increase in dividends|
|Total|11,355,235.97|13,039,034.64||

11.5.3 Investment Incomes under Equity Method
There was no investment income under equity method.
11.6 S upplementary Information of Cash Flow Statement
||||
|-|-|-|
||Current Period|Prior Period|
|Net profits converted into cash flow from operating activities|||
|Net profits|2,228,780.01|5,539,662.36|
|Add:|||
|Provision for assets impairment|45,229.14|-942,101.96|
|Depreciation of fixed assets, of oil/gas assets and productive biologicalassets|3,263,761.13|3,716,186.58|
|Amortization of intangible assets|1,226,694.54|1,242,666.22|
|Losses/(gains) on disposal of fixed assets|-34,028.83|33,929.07|
|Losses/(gains) from fluctuation in fair value|13,426.44|47,609.50|
|Financial expense|2,385,792.31|3,512,420.86|
|Investment loss/(income)|-11,355,235.97|-13,039,034.64|
|Decrease/(increase) in inventories|-1,673,539.98|-2,823,915.91|
|Decrease/(increase) in operating receivables|2,431,879.69|8,307,960.07|
|Increase/(decrease) in operating payables|-13,331,386.78|20,413,907.14|
|Net cash flows generated from operating activities|-14,798,628.30|26,009,289.29|
|Investing and financing activities that do not involve cash receipts andpayments|||
|Debt converted into capital|||
|Convertible bonds to be expired within one year|||
|Fixed assets under finance lease|||
|Net increase in cash and cash equivalents|||
|Cash at the end of the period|75,425,124.66|38,135,560.86|
|Less: Cash at the beginning of the period|88,304,869.24|43,545,254.69|
|Add: Cash equivalents at the end of the period|||
|Less: Cash equivalents at the beginning of the period|||
|Net increase in cash and cash equivalents|-12,879,744.58|-5,409,693.83|

 12. Supplementary Information
12.1 Extraordinary Profit or Loss
||||
|-|-|-|
||Current Period|Comments|
|Gains on disposal of non-current assets|265,010.30||
|Government grants through profit or loss|149,000.00||
|Gains on fluctuation of fair values of held for trading financial assets andliabilities and gains on disposal of held for trading financial assets andliabilities and available for sale financial assets|-13,426.44||
|Other non-operating incomes and expenses, net|-206,733.07||
|Effect on corporate tax income|-27,765.13||
|Net effect on non-controlling interest|-103,155.71||
|Total|62,929.95||

12.2 Rate of Return on Equity (ROE) and Earnings Per Share (EPS)
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
|||||
|-|-|-|-|
|Net Profits|WeightedAverage ROE(%)|EPS||
|||Basic|Diluted|
|Net profit attributable to ordinary shareholders|3.6846|0.0839|0.0839|
|Net profit attributable to common shareholders after non-currentprofit/loss|3.6791|0.0838|0.0838|

12.3 Abnormal Situations of Financial Statements and Explanation of Reason
||||||
|-|-|-|-|-|
|Accounts|Closing Balance|OpeningBalance|Fluctuation%|Comments|
|Notes receivable|2,307,430.01|3,320,697.28|-30.51|Mainly due to bill acceptance incurrent period|
|Dividends receivable|12,734,735.09|2,881,577.53|341.94|Dividend paid by Fuji Xerox|
|Other receivables|41,465,146.32|60,130,306.48|-31.04|Mainly due to decrease in stockissuance cost during the reportingperiod|
|Other current assets|539,034,806.53|64,405,666.67|736.94|Mainly due to purchase short-periodstructured deposits from bank withguaranteed principal to increasecapital gains.|
|Construction inprogress|5,636,796.26|2,801,141.91|101.23|Mainly due to increase in investmentof sewing equipment engineeringduring the reporting period|
|Short-term loans|145,303,754.54|222,299,211.73|-34.64|Mainly due to decrease in domesticshort-term loans with high capitalcost.|
|Notes payable|0|6,225,975.90|-100.00|Commercial acceptance bills due inthe reporting period|
|Tax payable|42,981,940.21|31,916,230.42|34.67|Mainly due to increase in EIT due tomore profits|
|Other currentliabilities|503,397.29|1,623,775.74|-69.00|Mainly due to increase in the write-offof interest and rent expense ofoverseas subsidiaries|
|Capital reserve|945,448,784.81|397,651,623.21|137.76|Mainly due to premium by non-publicissuance|
|Retained earnings|38,857,646.81|-2,996,568.99|1,396.74|Increase in profits|
|Impairment|4,810,987.05|-589,244.67|916.47|Mainly due to increase in bad-debtprovision for accounts receivables|
|Net gain/(loss) fromfluctuation in fairvalues|-13,426.44|-80,413.50|83.30|Mainly due to increase in fair valuesof held-for-trading financial assets|
|Non-operatingincome|621,043.73|441,573.12|40.64|Mainly due to increase in gains ondisposal of fixed assets|
|Non-operatingexpenses|413,766.50|316,661.06|30.67|Mainly due to increase in losses ondisposal of fixed assets|
|Other comprehensiveincomes|8,184,632.48|-21,909,974.10|137.36|Mainly due to fluctuation in fairvalues of Available-for-sale financialassets and increase in the translationdifferences of foreign currencyfinancial statements|

13. Authorization of the Publication of Financial Statements
The above financial statements have been authorized by the fifteenth board meeting
(7th
round) on August 28,
2014 to be submitted to the related authorities and the public.
Semi-Annual Report 2014 of Shang Gong Group Co., Ltd.
X. References
1. Semi-Annual Report with signature of the Chairman of BOD;
2. Financial statements signed by the legal person representative, Director in charge of accounting affairs and chief accountant;
3. All the original documents and announcements carried in the newspaper authorized by China Securities Regulatory Commission within report period.
Chairman of BOD: Zhang Min Shang Gong Group Co., Ltd. August 28, 2014