Audit Report
Sichuan Dadi Industrial Group Co., Ltd.:
We have audited the financial statements of Sichuan Dadi Industrial Group Co., Ltd. (hereinafter referred to as "Dadi Group"), which include the consolidated and parent company balance sheets as of December 31, 2011, the consolidated and parent company income statements, consolidated and parent company cash flow statements, and consolidated and parent company statements of changes in equity for the year 2011, along with the notes to the financial statements.
1. Management's Responsibility for the Financial Statements
The preparation and fair presentation of the financial statements are the responsibility of the management of Dadi Group. This responsibility includes: (1) preparing the financial statements in accordance with the provisions of the Accounting Standards for Enterprises and ensuring that they fairly reflect the financial position; (2) designing, implementing, and maintaining necessary internal controls to ensure that the financial statements are free from material misstatements due to fraud or error.
2. Auditor's Responsibility
Our responsibility is to express an audit opinion on the financial statements based on our audit work. We conducted our audit in accordance with the Chinese Certified Public Accountant Auditing Standards. These standards require us to comply with the Code of Ethics for Chinese Certified Public Accountants, plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. The audit work involves performing audit procedures to obtain audit evidence regarding the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial statements to design appropriate audit procedures, but not for the purpose of expressing an opinion on the effectiveness of the internal controls. The audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
3. Audit Opinion
In our opinion, the financial statements of Dadi Group have been prepared in all material respects in accordance with the Accounting Standards for Enterprises and fairly present the consolidated and parent company financial position of Dadi Group as of December 31, 2011, as well as the consolidated and parent company operating results and cash flows for the year 2011.
Sichuan Huaxin (Group) CPA Firm Certified Public Accountant: Xu Jiamin Limited Liability Company China · Chengdu Certified Public Accountant: Yuan Guangming May 26, 2012
Consolidated Balance Sheet
| Item | Note No. | December 31, 2011 | December 31, 2010 |
|---|---|---|---|
| Current Assets: | |||
| Cash and Cash Equivalents | 5.1 | 182,521,873.36 | 647,647,261.42 |
| Settlement Reserve | |||
| Financial Assets Held for Trading | 5.2 | 87,587,112.00 | 300,000.00 |
| Notes Receivable | 5.3 | 9,694,780.00 | |
| Accounts Receivable | 5.4 | 356,279,641.55 | 141,897,174.58 |
| Prepayments | 5.6 | 11,992,140.62 | 19,588,552.20 |
| Other Receivables | 5.7 | 701,219,208.26 | 307,280,980.74 |
| Inventories | 5.8 | 1,447,042,504.57 | 711,617,403.18 |
| Other Current Assets | 5.9 | 10,696,988.73 | 66,065,991.08 |
| Total Current Assets | 2,810,379,509.09 | 1,902,100,223.20 | |
| Non-Current Assets: | |||
| Long-term Receivables | 79,796,906.37 | 91,850,668.14 | |
| Long-term Equity Investments | 5.10 | 1,014,864,071.29 | 469,034,453.48 |
| Investment Properties | 5.11 | 168,468,992.33 | 207,941,099.15 |
| Fixed Assets | 5.12 | 22,125,148.58 | 24,056,210.04 |
| Construction in Progress | 5.13 | 273,810.00 | |
| Intangible Assets | 5.14 | 2,172,383.37 | 2,188,666.67 |
| Goodwill | 5.15 | 101,144,325.02 | |
| Deferred Tax Assets | 5.17 | 19,598,439.98 | 8,580,318.88 |
| Total Non-Current Assets | 394,708,583.02 | 435,761,287.90 | |
| Total Assets | 3,205,088,092.11 | 2,337,861,511.10 |