粤华包Ｂ(200986)2003年年度报告摘要（英文版）

Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) §1 Important 1.1 The Board of Directors of Foshan Huaxin Packaging Co., Ltd. (hereinafter referred to as the Company) hereby confirms that there are no important omissions, fictitious statements or misleading information carried in this report, and shall take all responsibilities, individually and/or jointly, for the reality, accuracy and completeness of the whole contents. This summary is abstracted from the whole text of the Annual Report. If the investors want to know the full text, please read the whole annual report. 1.2 No director has ever made any statement expressing that he/she cannot make sure of or has different opinion on the reality, accuracy or completeness of this annual report. 1.3 All of the directors attended the board meeting. 1.4 Guangdong Zhengzhong Pearl River Certified Public Accountants Co., Ltd.and KPMG Hong Kong produced unqualified auditor’ s report without any explanatory notice for the Company. 1.5 Mr. Wang Qi, the Chairman of board, Mr. Tan Shanghui the Chief Financial Officer and Mao Zhizhu, Manager of the Financial Department hereby guarantee that the financial report enclosed in this Annual Report is true and complete. §2 Company Information 2.1 Basic Information Short Form of the Stock Yue Hua Bao -B Stock Code 200986 Stock Exchange Shenzhen Stock Exchange Listed with Registered and Office Addresses No.18 , Jihua Rd.5th, Foshan Post Code 528000 Internet Web Site http://www.fshxp.com E-mail Zhuaxin@163.com 2.2 Liaison Persons and Way of Communincation Secretary of the Board Name Chen Haiyan Address 18/F, Jinghua Bldg., Jihua Rd., Foshan Tel. 0757-83981729, 83992076 Fax 0757-83992026 E-mail ｃｈｅｎｈｙ＠ｆｓｈｘｐ．ｃｏｍ 1 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) §3 Financial Highlights 3.1 Accounting Data Summary In RMB Increase/Decrease over 2002 the previous year (％) 2003 2001 Not adjusted Adjusted Not Adjusted adjusted Income from major 606,531,159.61 740,610,675.54 740,610,675.54 -18.10 -18.10 511,303,619.01 businesses Total profit 112,737,996.22 118,482,342.35 118,482,342.35 -4.85 -4.85 129,052,598.24 Net profit 96,453,236.65 95,711,067.10 95,711,067.10 0.78 0.78 118,696,950.89 Net profit, less the non-recurring gains 92,549,396.12 91,970,921.10 91,970,921.10 0.63 0.63 70,343,301.66 and losses Increase/Decrease over End of 2002 the end of previous year End of 2001 End of 2003 (％) Not adjusted Adjusted Not Adjusted adjusted Gross assets 1,289,959,140.57 1,382,039,889.06 1,382,039,889.06 -6.66 -6.66 1,382,069,889.06 Shareholders’equity (excluding minority 954,383,429.54 854,855,192.89 903,200,192.89 11.64 5.67 865,942,625.79 shareholders’equity) Net cash flows arising from 50,244,743.93 111,391,214.81 111,391,214.81 -54.89 -54.89 26,953,113.09 operating activities 3.2 Financial Data Summary In RMB Increase/Decrease 2002 over the previous 2003 year (％) 2001 Not Adjusted Not Adjusted adjusted adjusted Earnings per share 0.219 0.218 0.218 0.46 0.46 0.27 Earnings per share* 0.219 0.218 0.218 0.46 0.46 0.27 Net asset-income ratio 10.11% 11.20% 10.60% -9.73 -4.62 13.71% Net asset-income ratio based on net profit after deduction of the non-recurring gains 9.70% 10.76% 10.18% -9.85 -4.72 8.12% and losses Net cash flows per share arising from 0.11 0.25 0.25 -54.89 -54.89 0.06 operating activities Increase/Decrease End of End of 2002 over the end of End of 2003 previous year (％) 2001 Not Adjusted Not Adjusted adjusted adjusted Net asset per share 2.17 1.95 2.06 11.28 5.34 1.97 Net asset per share after adjustment 2.16 1.93 2.04 11.92 5.88 1.95 3.3 Difference between the Domestic and the International Accounting Standards In RMB10 thousand Domestic Accounting Standards International Accounting Standards 2 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Net profit 9,645.30 9,655.50 Upon IAS 9,645.30 1. Amortizing of equity investment balance -89.29 Differences 2. Others 79.09 Upon “Enterprise Accounting Standard” 9,655.50 §4 Changes in Share Capital & Particular about Shareholders 4.1 Statement of Changes in Shares In shares Before the Change Increase/Decrease in After the Change the Change（+/-） I. Non-listed circulating Shares 1. Promoters’shares 290,000,000 0 290,000,000 Incl.: State-owned shares 0 0 Domestic legal person shares 290,000,000 0 290,000,000 Foreign legal person shares 0 0 Others 0 0 2. Legal person shares placed 0 0 3. Employees’shares 0 0 4. Preference shares or others 0 0 Total 290,000,000 0 290,000,000 II. Listed circulating shares 1. RMB common shares 0 0 2. Foreign shares listed domestically 149,500,000 0 149,500,000 3. Foreign shares listed abroad 0 0 4. Others 0 0 Total 149,500,000 0 149,500,000 III. Total Shares 439,500,000 0 439,500,000 4.2 Top Ten Shareholders Total shareholders at end of the 22,235 report period Top ten shareholders Shareholders Increase/Decre Shares held at Proportion Type of Shares Types of (Full names) ase in the end of the (％) shares (in pledged or shareholders report year report year (In circulation frozen (State (In shares) shares) / not in (In shares) shareholders circulation) or Foreign shareholders) Foshan Huaxin 0 286,532,200 65.20 State Development Co., Ltd. Unlisted 0 shareholders Dapu Investment Co., 0 1,267,190 0.29 Foreign Ltd. Listed Unknown shareholders Wu Haoyuan 0 1,122,599 0.26 Foreign Listed Unknown shareholders SURE WIDE N/A 1,000,000 0.23 Foreign INTERNATIONAL Listed Unknown LIMITED shareholders Li Shunqin N/A 975,900 0.22 Foreign Listed Unknown shareholders CHAN PONG HUNG -377,000 897,900 0.20 Foreign Listed Unknown shareholders 3 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Huang Jianwei 406,100 746,960 0.17 Foreign Listed Unknown shareholders Chen Yuanfeng 710,000 0.16 Foreign N/A Listed Unknown shareholders SUMITOMO/DAIWA -30,000 710,000 0.16 Foreign CHINA FUND Listed Unknown shareholders Luo Manlin 0 690,600 0.16 Foreign Listed Unknown shareholders Notes to relationship among top ten 1. There exists no related parties among the top ten shareholders and they are shareholders or concerted action. not the persons of collaborated action. 2.There was no shares pledged held by its shareholders holding over 5% of the total shares in the report period. The top 10 holders of current shares are as the followings: Current shares No. Name of the shareholder Type of share held 1 Dapu Investment Co., Ltd. 1267190 Current B share 2 Wu Haoyuan 1122599 Current B share 3 SURE WIDE INTERNATIONAL LIMITED 1000000 Current B share 4 Li Shunqin 975900 Current B share 5 CHAN PONG HUNG 897900 Current B share 6 Huang Jianwei 746960 Current B share 7 Chen Yuanfeng 710000 Current B share 8 SUMITOMO/DAIWA CHINA FUND 710000 Current B share 9 Luo Manlin 690600 Current B share 10 PIAO J 687000 Current B share 4.3 About Controlling Shareholder and Actual Controller 4.3.1 Change in Controlling Shareholder and Actual Controller □ Applicable √ Not Applicable 4.3 About Controlling Shareholder and Actual Controller Foshan Huaxin Development Co., Ltd. holds 286532200 state legal person shares (non-circulating shares) of the Company, taking 65.2% of the total share capital. The company was established on May 27, 1993, its legal representative is Liang Weidong, its registered capital is RMB 457.93 million. Business scope: producing, manufacturing, distributing packaging materials, paper, cable, wires, new materials; distributing packaging machinery and repairing, amplifiers and parts, decoration materials and beverage; information consulting, etc. Hoshan Huaxin Development Co., Ltd. has 7 legal person shareholders. Of them, Foshan Industrial Investment Management Co., Ltd. has contributed 62.1% of its capital. The actual controller of Foshan Industrial Investment Management Co., Ltd. is Foshan Municipal State Assets Management Commission. §5 Directors, Supervisors and Senior Executives 4 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) 5.1 Changes in Shares Held by Directors, Supervisors and Senior Executives Shares held at Shares held the year at the year Names Titles Sex Age Office Term Reasons beginning end (In (In shares) shares) Wang Qi Chairman Male 50 2002.6-2005.6 0 0 Liang Weidong Vice Chairman Male 41 2002.6-2005.6 0 0 Tan Shanghui Director/GM Male 53 2002.6-2005.6 0 0 Zhang Zhaoyang Director Male 38 2002.6-2005.6 0 0 He Jichang Director Male 47 2002.6-2005.6 0 0 Huang Xin Director Male 42 2003.6-2006.6 0 0 Ma Zhengwu Independent director Male 40 2002.6-2005.6 0 0 Tan Jinsong Independent director Male 38 2002.6-2005.6 0 0 Sun Shen’ai Independent director Male 55 2003.6-2005.6 0 0 Chen Zeqing Chairman of the Female 52 2003.6-2005.6 supervisory 0 0 committee Feng Daming Supervisor Male 37 2002.6-2005.6 0 0 Huang Dabiao Supervisor Male 51 2002.6-2005.6 0 0 Zhang Zhe Supervisor Female 46 2003.6-2005.6 0 0 Wu Tie Supervisor Male 46 2003.6-2005.6 0 0 Zhou Qihong Vice GM Male 36 2002.6-2005.6 0 0 Chen Jiali Vice GM Male 46 2002.6-2005.6 0 0 Chen Haiyan Vice GM / secretary Male 38 2002.6-2005.6 0 0 of the Board Lu Liang Vice GM Male 31 2004.1-2005.7 0 0 5.2. Engagement of Directors and Supervisors in the Shareholders √ Applicable □ Not Applicable Remuneration/All Titles in Shareholder owances from the Names Shareholder Companies Office Term Companies Company (Y/N) Foshan Huaxin Development June, 2002 – June, Wang Qi General Manager Y Co., Ltd. 2005 Liang Foshan Huaxin Development General Manager N Weidong Co., Ltd. Secretary of the CPC Foshan Huaxin Development June, 2002 – June, Chen Zeqing Committee, Deputy General Y Co., Ltd. 2005 Manager 5.3 Annual Remuneration to Directors, Supervisors, Senior Executives In RMB10 thousand Total annual remuneration 178 Total remuneration to the 3 135 directors enjoying highest pay Total remuneration to the 3 senior executives enjoying 135 highest pay Allowances for independent RMB 38 thousand per person per year directors Other pay to independent The necessary expenses of the independent directors for performing of directors responsibilities are undertaken by the Company. Directors and supervisors Wang Qi, Liang Weidong, Zhang Zhaoyang, He Jichang, Huang Xin, enjoying no remuneration/ Chen Zeqing, Feng Daming, Huang Dabiao, Zhang Zhe, Wu Tie allowances from the Company Remuneration range Number of Persons RMB 50 –60 thousand 1 RMB 30 –40 thousand 3 5 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) §6. Report of the Board of Directors 6.1 Overall Operation Discussion and Analysis The Company is engaged in paper-making, packaging and printing industry, mainly producing and selling high-grade and high-quality packaging materials and packaging products including coated white board, soft packing cases (Lile case) for liquid food, color-printed packaging, new-typed packing materials, aluminum-plastic compound paper cans, etc. The Company comes out in front among domestic enterprises in the same sector in terms of production and operation scale, product quality level, technology innovation ability and comprehensive profit-making ability. The Company’ s key products include high-grade coated white board, color-printed packaging and aluminum-plastic compound paper cans. In the report period, the breaking out of Iraq war and SARS brought negative influence on the business environment of the Company. For the 2nd half of year 2003, the white paper board market of Pearl River Delta became severe, along with the increasing of raw material prices, the cost of the Company was under great pressure. The Company was not pulling back in the difficult situation though. In stead, the Company pushed forward the internal management reforming and technical innovation to upgrade the products. An advanced sales and marketing strategy was established, and the operation and management were pushed up to a higher level. The color-printed packaging business was turning positively and realized an increasing. In the report year, the income of the Company from the major business was RMB6.07 ten billions, an drop of 18.10% over the same period of the previous year; its profit from the major business was RMB1 ten billions, a drop of 32.9% from the same period of the previous year; the realized net profit was RMB0.96 ten billions, an increase of 0.78% over the same period of the previous year, the net profit after deducting of non-recurring gain/loss was RMB0.93 ten billions, which increased by 0.63% over the previous year. 6.2 Major businesses classified based on sectors/products In RMB10 thousand Increase/ Increase/ Decrease of Increase/ Decrease of income from Decrease of Income from Cost of Gross cost of major Sectors/ major gross profit major major profit rate businesses Products businesses rate over the businesses businesses (%) over the over the previous year previous year previous year (％) (％) (％) White cardboard 55,057.49 45,499.42 17.36 15.36 23.93 -24.77 Printed products 5,464.33 5,150.51 5.74 4.62 1.58 96.13 Aluminum-plastic 379.12 292.18 22.93 29.75 55.55 -23.06 compound paper cans Incl.: Amount involved -- -- -- -- -- -- in related transactions Pricing principle for related transactions -- Note to necessity/duration of related -- transactions 6.3 Major businesses based on regions In RMB10 thousand Increase/Decrease of income from Regions Income from major businesses major businesses over the previous year (％) 6 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Domestic sales 45,244.07 -29.84 Export 15,409.04 61.00 6.4 Suppliers and Customers In RMB10 thousand Total procurement from Proportion in total 14,279.00 19.85% the top five suppliers procurement Total sales to the top five 9,605.04 Proportion in total sales 15.84% customers 6.5 Associates (applicable to the investment income taking over 10% of the net profit) √ Applicable □ Not Applicable In RMB10 thousand Associates Lile Huaxin (Foshan) Packaging Co., Ltd. Investment income contributed in 6,825.56 the report period Proportion to net profit of the 70.77% Company Business scope Producing and selling Lile packaging materials Associate Net profit 26,430.15 6.6 Big Change in the Principal Business or its Structure □ Applicable √ Not Applicable 6.7 Big Change in the Earning Capacity (Gross Profit Rate) of the Principal Business over the Previous Year □ Applicable √ Not Applicable 6.8 Reasons of Big Change in the Operation Result and Profit Composition over the Previous Year □ Applicable √ Not Applicable Reasons of Big Change in Overall Financial Position over the Previous Year □ Applicable √ Not Applicable 6.9 Notes to significant changes taken place in the production and operation environment, macro-policies, laws and regulations which have produced, are producing or shall produce material influence upon the Company’s financial position and operation results. □ Applicable √ Not Applicable 6.10 Realization of profit estimation □ Applicable √ Not Applicable 6.11. Fulfillment of Business Plan □ Applicable √ Not Applicable 6.12. Application of the Proceeds Raised through Share Offering √ Applicable □ Not Applicable In RMB10 thousand Total proceeds Total Total proceeds raised 24,636 utilized in the 0.00 accumulative 22,735 through share offering report year proceeds utilized 7 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Complying with Change of the planned Investment Actual Project as committed project Resulted revenue progress/ amount planned investment (Y/N) predicted revenue (Y/N) Acquisition of Overseas Chinese 20,000.0 N 20,000.00 — Y Branch Paper Mill Acquisition of Color Printing Plant and extension of 5,182 N 2,735.00 — N production and operation scale Total 25,182 — 22,735.00 — Note to failure to As the color printed packing products were involved in big change of the market comply with the during the operation and the product structure was in big adjustment, the Company planned progress could not realized the predicted objective in terms of sales income and profit making and revenue in the report period. To deal with the problems in the operation of color printed (project by project) packaging, the Company is reinforcing the internal management and quickening the steps of adjustment of the product structure. The new team performed right away the enhancement on supervising of management and production site. The losing situation has been effectively controlled within the past few months. The section is showing a trend of recovering. Statement about Nil the reason of changing Change of Projects □ Applicable √ Not Applicable 6.13. Investment with the Funds not Raised by Share Offering √ Applicable □ Not Applicable In RMB10 thousand Projects Investment Progress Earnings Acquisition of 70% equity of 1,848.35 Foshan Huahao Chemical Completed 413 Co., Ltd. Production extension of Lile Purchase contracts for 464.47 Huaxin (Foshan) Packaging key equipment are Co., Ltd. and the production signed, other works are of new products. in progress. Total 2,312.82 -- -- 6.14 Explanation of the Board to the “Non-standard Opinion”Presented by the Certified Public Accountants □ Applicable √ Not Applicable 6.15 Business Plan of New Year √ Applicable □ Not Applicable For the year of 2004, the Company will keep enforce the internal management of the Company. Along with the enhancing of enterprise competitive, the Company will focus on the developing of core business to lay a good foundation for the future development. 1. Major forces of the Company will be concentrated on the extension project of high-class coated white paper board of Huafeng Paper Co., Ltd. With the hardworking of 2003, the construction was pushed onto the preset rails. Professional teams are going all out to push the project into fast 8 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) lane within 2004. The project was planned to be invested with RMB1.2 billion in total. It will increase the productivity of high-class white paper board by 300 thousand ton over the existing 130 thousand ton. 2. As in the new stage of development, the Company is exploring the new ideas and strategies on the co-operation with Lile Company. The existing co-operation will be fine adjusted to enable Lile Huaxing Company being operated more successfully. A double win situation will be founded on the bases of mutual benefit and synchronistic development. 3. Further develop the functions of Packaging Engineering and Researching Centre to establish a technical innovation system on enterprise level. Emphasis will be laid on adjustment of product structure and upgrading of product. Keep developing new products, new techniques, and new materials. Strengthen the functions of paper and printing products. Technical supporting for the extension projects is also been stressed on. 4. The enterprise culture will be founded to fit with the new age. Education and preserving of manpower will be stressed in the meantime. In the new stage of development, the requirement for high quality personnel is also growing. Except recruiting high quality personnel and establishing of motivation system, a good enterprise culture can greatly brush up the spirit of the employees. The Company will keep motivating the employees through implementing of effective motivation system to fully develop their potential and prepare for the future development. Profit-making Prediction in the New Year □ Applicable √ Not Applicable 6.16 Profit Distribution or Converting Capital Public Reserve into Share Capital As audited by Guangdong Zhengzhong Pearl River Certified Public Accountants, the Company’ s domestic auditor engaged and KPMG Certified Public Accountants, the Company’ s international auditor, according to the Chinese Accounting Standards (CAS) and the International Accounting Standards (IAS), the after-tax profit realized in 2003 was RMB96,453,236.65and RMB96,555,000 respectively. In accordance with the Articles of Association, the profit distribution for the year 2003 should be based on the lower of the net profit as audited by the two auditors. The Company’ s net profit of RMB 96,453,236.65 in 2003 as the basis for profit distribution. RMB9,571,106.71is to be drawn as statutory public reserve and RMB 4,785,553.36 as the statutory public welfare fund, plus the not distributed profit of accumulated at the beginning of current year amounted to RMB149,006,018.61, and less the profit distributed for common shares dividend amounted to RMB48,345,000 for year 2002, The profit available for distribution to shareholders is RMB182,646,269.76. For the Company is investing on new projects and undertaking placing of new stock and applying for loan applying for the fund required. If the financing requests are approved by the authorities before the end of June 2004,then the profit distribution will be implemented upon the plan of RMB1.1 of cash dividend for each 10 shares(tax included); if the financing requests are not approved by the authorities before the end of June 2004, then the distribution plan shall not be implanted. So far the company has already raised. the financing request, but it is uncertain if it will be approved. This profit distribution plan is subject to the examination and approval of the Shareholders’General Meeting. §7 Important Events 9 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) 7.1 Assets Acquisition □ Applicable √ Not Applicable 7.2 Sales of Assets √Applicable □Not Applicable In RMB10 thousand Object and Date of the Price of the Net profit Gain/loss Provide Description of Transaction transaction contributed by generated pricing policy the Transaction the asset from by the if it is a beginning of transaction related the year till it transaction was sold The transaction of March 28, 2003 1,902.60 0.00 -9.95 Pricing policy the 70% of Foshan based on the Huahao Chemistry evaluation Co., Ltd. which report was held by the Guangzhou Company to Zhongtian Foshan Industrial Heng Ping Zi Investment (2003) 008. Administrative Co., Ltd. Impact of the acquisition or selling of assets on the stability of the business and management of the Company. In the report term , in viewing of the electricity expense was changing dramatically, which impact greatly the cost of the company. In order to get around the risks, the Company transferred the 70% of Foshan Huahao Chemistry Co., Ltd. which was held by the Company. Therefore the Company can concentrate on the business of packaging material and packaging product. 7.3．Material Guarantees Applicable √ Not Applicable 7.4 Related Credits and Debts √Applicable □ Not Applicable In RMB10 thousand Provide money to the related Receive money from the related Related Parties parties parties Occurred Balance Occurred Balance Foshan Huaxin Development Co., Ltd. 0.00 0.00 346.91 27.40 Foshan Industrial Investment 848.35 0.00 1,902.55 0.00 Administrative Co., Ltd. Foshan Huaxin Imp./Exp. Co., Ltd. 0.00 0.00 21.88 21.88 Lile Huaxin (Foshan) Packing Co., Ltd. 19.11 19.11 9.25 9.25 Total 867.46 19.11 2,280.59 58.53 7.5 Assets Management on Commission □ Applicable √ Not Applicable 7.6. Implementation of Commitments √Applicable □ Not Applicable 10 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) １． The Company and its parent company, Foshan Huaxin Development Co., Ltd. entered into an agreement on office building leasing. The Company rented office building located on the 18th floor of Jinghua Building, Jihua Wu Road, Foshan from Foshan Huaxin Development Co., Ltd. with floorage of 907 square meters. The Company committed to pay the rental at the rate of RMB 30/m2 of floorage/month from January 1, 2002 through December 31, 2003. On this basis, the Company shall pay the office site use management fee amounting to RMB 326,520 and parking lot management fee amounting to RMB 25,200 to Foshan Huaxin Development Co., Ltd. every year. 2. Foshan Huafeng Paper Co., Ltd., the subsidiary of the Company, entered an integrated contract with Zhuhai Lingang Industrial Zone Management Commission. The contract sets out the transactions of land-using right, water and power supply, and sewage service. In the contract, Huafeng Paper Co., Ltd. undertake the land-using right of 397354.70 squre meter at price of RMB23/squre meter. Totally it is RMB9,139,158.10. Currently Foshan Huafeng Paper Co., Ltd. has paid RMB913,915.81 of advances at rate of 10% of the total amount. 7.7 Material Lawsuits and Arbitration □ Applicable √ Not Applicable 7.8. Performance of Independent Directors In the report term, 1 independent directors was engaged which made the number of independent directors reached the requirement of the “Instructions on the establishing of independent director system of public companies”. Presently the company has 3 independent directors, they are: Mr. Ma Zhengwu, Mr. Tan Jinsong, and Mr. Sun Sheng’ai. The independent directors presented every single meeting of the Board in the report term, they performed their duties properly and took active role in the decision-making processes of the Board. They also issued the independent statement on the issues of senior management movement and offering of guarantees to external parties. They were practically protecting the benefits of the investors and the entire company. §8 Report of the Supervisory Committee In the opinion of the Supervisory Committee, the Company conducted operation according to the law, the financial position, utilizing of proceeds raised, assets acquisition and sales and related transactions were objective, fair and righteous, and there existed no problem §9 Financial Report 9.1 Auditors’Opinions The Company’s 2002 Financial Report has been audited by Guangdong Zhengzhong Jujiang Certified Public Accountants Co., Ltd. and KPMG Certified Public Accountants Limited and signed by the certified public accountants. Both of the domestic and international auditors produced a standard unqualified Auditor’s Report for the Company. 9.2 Balance Sheet, Statement of Profit / Income Statement and Cash Flow Statement are attached hereafter. 9.3 In comparison with the latest annual report, the changes happened on the accounting policy, accounting estimation and accounting method in the report period. 1. Details about the changing of accounting policy In according with “The notification on publishing of ‘Enterprise Accounting Standard – After 11 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Issues of Balance Sheet’”(Cai-kuai [2003]No.12) issued by the Ministry of Accounting, from the year 2003 on, the cash dividend in the profit distribution plan, which issued between the date of balance sheet and the approval date of the report, was treated as non-adjustment item instead of the original adjustment item. The cash dividend in the profit distribution plan, which approved by the Board of Directors, was originally carried under the “Common share dividend payable”(subsidiary account of profit distribution) of Income Statement and the “Dividend payable”of Balance Sheet, but now it is solely carried under the “Owners’Equity”item of the Balance Sheet. The Company performed trace-back adjustment on the treatment of cash dividend of year 2002. Through this adjustment, the consolidated Income Statement and the parent Income Statement were modified. Profit not distributed at the beginning of year 2003 (and also the end of year 2002) was increased by RMB48,345,000.00; Profit not distributed at the beginning of year 2002 was increased by RMB58,453,500.00; whereas the dividend payable at the end of 2002 was decreased by RMB48,345,000.00. 2. No changing been made on accounting estimation. 3. No changing been made on accounting method. 9.4 Note to change in the consolidation range in the report period in comparison with the latest annual report. The Company entered the equity transferring agreement with Foshan Industrial Investment Administrative Co., Ltd. (shown as “Foshan Industry”hereinafter) on March 28th, 2003. The agreement set out the transaction of the 70% of Foshan Huahao Chemistry Co., Ltd. which was held by the Company to Foshan Industry. Therefore the financial statements of Foshan Huahao Chemistry Co., Ltd. was not consolidated in. Foshan Huaxin Packaging Co., Ltd. Board of Directors April 08, 2004 12 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Consolidated income statement for the year ended 31 December 2003 (Expressed in Renminbi Yuan) 2003 2002 Rmb’000 Rmb’000 Revenue 606,531 735,259 Cost of sales -506,539 -585,987 Gross profit 99,992 149,272 Other operating income, net 3,047 3,032 Selling expenses -14,796 -22,286 Administrative expenses -39,530 -50,593 Profit from operations 48,713 79,425 Net financing costs -3,119 -12,817 Share of profit of associate 83,539 66,819 Profit from ordinary activities before taxation 129,133 133,427 Income tax expense - company and subsidiaries -6,150 -8,521 - associate -16,275 -11,551 Profit from ordinary activities after taxation 106,708 113,355 Minority interests -10,153 -14,783 Profit attributable to shareholders 96,555 98,572 ========= ========= Basic earnings per share Rmb 0.22 Rmb 0.22 ========= ========= No separate consolidated statement of recognised gains and losses has been prepared as the net profit for the year would be the only component of this statement. 13 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Consolidated balance sheet at 31 December 2003 (Expressed in Renminbi Yuan) 2003 2002 Rmb’000 Rmb’000 Assets Property, plant and equipment 666,011 721,681 Lease prepayments 40,241 41,124 Intangible assets -2,829 -3,515 Construction in progress 23,318 28,289 Investment in associate 183,514 165,257 Other investments 3,214 3,810 Total non-current assets 913,469 956,646 --------------- --------------- Inventories 86,931 90,989 Trade receivables 89,691 124,136 Bills receivable 32,865 29,017 Amount due from immediate holding company - 2,843 Other receivables and prepayments 16,971 36,209 Cash and cash equivalents 109,728 108,092 Total current assets 336,186 391,286 --------------- --------------- Total assets 1,249,655 1,347,932 ========= ========= 14 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Consolidated balance sheet at 31 December 2003 (continued) (Expressed in Renminbi Yuan) 2003 2002 Rmb’000 Rmb’000 Equity Share capital 439,500 439,500 Reserves 476,635 428,425 Total equity 916,135 867,925 --------------- --------------- Minority interests 153,467 150,098 --------------- --------------- Liabilities Non-current liabilities Interest-bearing bank loans 25,000 25,000 --------------- --------------- Current liabilities Interest-bearing bank loans 57,470 133,327 Taxation 1,315 9,092 Loan from associate 30,000 - Amounts due to immediate holding company 176 - Amounts due to related companies - 23,672 Trade payables 40,192 53,240 Other payables and accrued expenses 25,900 85,578 155,053 304,909 --------------- --------------- Total liabilities 180,053 329,909 --------------- --------------- Total equity, minority interests and liabilities 1,249,655 1,347,932 ========= ========= 15 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Consolidated statement of cash flows for the year ended 31 December 2003 (Expressed in Renminbi Yuan) 2003 2002 Rmb’000 Rmb’000 Operating activities Profit from ordinary activities before taxation 129,133 133,427 Adjustments for: - Depreciation 39,498 47,586 - Amortisation 453 421 - Interest income -341 -592 - Interest expense 3,278 13,326 - (Gain)/loss on disposal of property, plant and equipment -327 500 - Net loss on disposal of subsidiaries 93 - - Share of profit of associate -83,539 -66,819 Cash flows from operating activities before changes in working capital 88,248 127,849 (Increase)/decrease in inventories -25,140 22,752 (Increase)/decrease in trade receivables and bills receivable -2,100 2,253 Decrease/(increase) in net amount due from immediate holding company 3,019 -2,843 Decrease in other receivables and prepayments 5,096 78,845 (Decrease)/increase in amounts due to related companies -18,003 10,444 Increase/(decrease) in trade payables 7,487 -6,885 Decrease in other payables and accrued expenses -13,622 -23,543 PRC income tax paid -11,781 -7,751 Cash flows from operating activities 33,204 201,121 --------------- --------------- 16 Foshan Huaxin Packaging Co., Ltd. 2003 Annual Report (Summary) Consolidated statement of cash flows for the year ended 31 December 2003(continued) (Expressed in Renminbi Yuan) 2003 2002 Rmb’000 Rmb’000 Investing activities Interest received 341 592 Dividends received 54,331 50,429 Payment for acquisitions of property, plant and equipment and construction in progress -37,050 -39,738 Disposal of subsidiaries, net of cash disposed of 5,827 - Acquisition of subsidiaries, net of cash acquired - -3,048 Capital injection to associate -3,725 - Proceeds from disposal of property, plant and equipment 2,669 4,582 Cash flows from investing activities 22,393 12,817 --------------- --------------- Financing activities Interest paid -3,278 -13,326 New bank loans - 145,000 Repayment of bank loans -41,741 -247,491 New loan from associate 30,000 - Capital injection from minority shareholder 20,602 - Dividends paid -48,345 -58,453 Dividends paid to minority shareholder -11,199 -6,413 Cash flows from financing activities -53,961 -180,683 --------------- --------------- Net increase in cash and cash equivalents 1,636 33,255 Cash and cash equivalents at 1 January 108,092 74,837 Cash and cash equivalents at 31 December 109,728 108,092 ========= ========= 17