粤华包Ｂ(200986)2004年年度报告摘要（英文版）

Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Foshan Huaxin Packaging Co., Ltd. Annual Report 2004 Summary §1 Important Declaration 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This text is abstracted from the complete Annual Report, for details please read the complete version of the Annual Report. 1.2 No Director(s) declares disagreement on the truthfulness, accuracy and completeness. 1.3 Director Liang Weidong absent from the Board meeting due to business travel. Director Wang Qi was entrusted to exercise the right of voting. Independent Director Liang Jinsong absent the meeting as well. 1.4 This report is prepared both in English and Chinese. When there is any conflict in understanding, the Chinese version shall prevail. 1.5 Guangdong Zhengzhong Jujiang Certified Public Accountants and KPMG Certified Public Accountants issued standard auditing report without qualified opinion. 1.6 Wang Qi, Chairman of the Board, Tan Shanghui, the person in charge of accounting affairs and Mao Zhizhu, manager of the Financial Department hereby ensure that the financial report enclosed in this 2004 Annual Report is a true and complete report. §2 Company Profile 2.1 Company Profile Stock ID Yuehuabao B Stock Code 200986 Stock Exchange Shenzhen Stock Exchange Registered address Registered Address: No. 18, Jihua Wu Road, Foshan and office address Office Address: 18/F., Jinghua Bldg., Jihua Rd.5th, Foshan, Guangdong Post Code of Registered Address: 528000 Post Code Post Code of Office Address: 528000 Website: http://www.fshxp.com Email. zhuaxin@163.com 1 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） 2.2 Contacts Secretary of the Board Name Chen Haiyan Address 18/F., Jinghua Bldg., Jihua Rd.5th, Foshan, Guangdong Tel. 0757-83981729 83992076 Fax. 0757-83992026 Email. chenhy@fshxp.com §3 Financial Highlights 3.1 Major accounting data In RMB Yuan 2004 2003 Increase/decrease from 2002 the previous year (%) Major business turnover 592,388,037.27 606,531,159.61 －２．３３％ 740,610,675.54 Gross profit 101,609,395.71 112,737,996.22 －９．８７％ 118,482,342.35 Net profit 89,952,537.72 96,453,236.65 －６．７４％ 95,711,067.10 Net profi t deducted 89,780,078.51 92,549,396.12 －２．９９％ non-recurring gain/loss 91,970,921.10 Net Cash flow generated by 58,343,514.75 50,244,743.93 １６．１２％ business operation 111,391,214.81 End of 2004 End of 2003 Increase/decrease (%) End of 2002 Gross Assets 1,591,392,595.17 1,289,959,140.57 ２３．３７％ 1,382,039,889.06 Shareholders’ Equity (Exclude 996,148,467.26 954,383,429.54 ４．３８％ Minority Shareholders’ Equity) 903,200,192.89 3.2 Major financial indices In RMB Yuan 2004 2003 Increase/decrease from the 2002 previous year (%) Earnings per share ０．２０ ０．２２ －９．０９％ ０．２２ Earnings per share (Note) ０．２０ － － － Net earnings / capital ratio ９．０３％ １０．１１％ －１．０８％ １０．６０％ 2 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Net profit/asset ratio on net profit less ９．０１％ １０．４５％ －１．４４％ １０．１８％ non-recurring gain/loss Net Cash flow per share generated by ０．１３ ０．１１ １８．１８％ ０．２５ business operation End of End of Increase/decrease (%) End of 2004 2003 2002 Net asset per share ２．２７ ２．１７ ４．６１％ ２．０６ Net asset per share, adjusted ２．２５ ２．１６ ４．１７％ ２．０４ Note: In case of the capital share has been changed at the date of this report comparing with that of at the beginning of report term, the new capital shares will be adopted in accounting of earnings per share. Non-recurring gain and loss items √ applicable □ not applicable In RMB Yuan Non-recurring gain and Amount loss items None business income / ２６１，３０１．８４ expense (net) Minor shareholders’ －８８，８４２．６３ gain/loss and income tax Total １７２，４５９．２１ 3.3 Diversity between the Domestic and the International Accounting Standards √ applicable □ not applicable In RMB Yuan Domestic Accounting Standard Overseas accounting standard: Net profit ８９，９５２，５３７．７２ ９５，６５０，０００．００ Net profit (RMB 10 thousand) Under International Accounting Standard ９，５６５．００ Statement about the 1. Amortizing of share equity investment diversity －８９．２９ diversity 2. Government allowance －４３１．００ 3. Others －４９．４１ Under “Corporation Accounting Standard” ８，９９５．３０ 3 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） §4 Changes in Share Capital & Particulars about Shareholders 4.1. Statement of Changes in Shares In Share Before the change Changed (+,-) After the changed Sub-total I. None negotiable shares 1. Promoter’s shares 290,000,000 290,000,000 Incl. State-owned shares Domestic legal person shares 290,000,000 290,000,000 Overseas legal person shares Others 2. Legal person shares placed 3. Employees’ shares 4. Preference shares or others Total of non-negotiable shares 290,000,000 290,000,000 II. Negotiable shares 1. Common shares in RMB 2. Foreign shares in domestic market 149,500,000 149,500,000 3. Foreign shares in overseas market 4. Others Total of negotiable shares 149,500,000 149,500,000 III. Total of capital shares 439,500,000 439,500,000 Shares allotted from foundations, employees’shares traded on site, shares allotted to strategic investors, and shares allotted to common legal persons shall be presented their amount. □applicable √ not applicable 4.2 Top Ten Shareholders and Top Ten Negotiable Share Holders Total shareholders at the 21,781 end of the report period Top Ten Shareholders Full name of Changed Shares held at the Pledged or Property of shareholder in the end of report term Proportion % Class of share frozen shareholder term Foshan Huaxin Development Co., 0 286,532,200 65.20% Non-negotiable State-owned Ltd. DEUTCHE BANK 2,844,033 0.65% Negotiable Others AG LONDON Wu Haoyuan -27,100 1,149,699 0.26% Negotiable Others SURE WIDE INTERNATIONAL -9,600 1,009,600 0.23% Negotiable Others LIMITED Li Shunqing -20,600 996,500 0.23% Negotiable Others PIAO JOY 720,900 0.16% Negotiable Others UANGSHI Luo Manling 690,600 0.16% Negotiable Others Zhang Chanci 580,000 0.13% Negotiable Others Foshan Xinhui Industrial 495,400 0.11% Non-negotiable Others Development Ltd. 4 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Guangdong Technology 495,400 0.11% Non-negotiable Others Reforming Investment Co. Top Ten Shareholders of Negotiable Shares Full name of shareholder Negotiable shares held at the end Share categories (A, B, H or others) of report term DEUTCHE BANK AG LONDON 2,844,033 B shares Wu Haoyuan 1,149,699 B shares SURE WIDE INTERNATIONAL 1,009,600 B shares LIMITED Li Shunqing 996,500 B shares PIAO JOY UANGSHI 720,900 B shares Luo Manling 690,600 B shares Zhang Chanci 580,000 B shares Li Fang 450,000 B shares Pi Lihua 402,200 B shares HKIT/006-113039-431 398,968 B shares ① There exists not business relations between the Company and its holding shareholder and other top 9 shareholders and they are not Notes to relationship or “action in persons of concerted action either; However the Company has no idea concert” among the top ten on whether there exists any business relations among its top 9 shareholders or they are persons of concerted action. shareholders. ② There were no shares held by the shareholders holding over 5% pledged in the report period. 4.3 Change in Controlling Shareholder and the Actual Controller 4.3.1 Change in Controlling Shareholder and the Actual Controller □applicable √ not applicable 4.3.2 Profile of the Controlling Shareholder and the Actual Controller About the Company’s holding shareholder: Foshan Huaxin Development Co., Ltd. (FHD) holds 286,532,200 of the Company’s state legal person shares (non-negotiable), taking 65.2% of the total share capital. FHD was incorporated on May 27, 1993; its legal representative is Xiao Jianwei; its registered capital is RMB 457.93 million; its business scope: production, manufacture and distribution of packing materials, paper, cable, wire, new materials; distribution of packing machinery and repairing services, amplifiers and fittings, decoration materials, and drinks; information consulting, etc. Foshan Huaxin Development Co., Ltd. has 7 legal person shareholders, of which Foshan Gongying Investment Holding Co., Ltd. holds 62.1% of the registered capital in FHD; while the actual controller of Foshan Gongying Investment Holding Co., Ltd. is Foshan Municipal Commission of State Assets. 5 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） 4.3.3 Diagram of the controlling relationship between the Company and actual controller Relationship in Ownership and Shareholding between the Company and its actual controller: Foshan Gongying Investment Holding Co., Ltd. 62.11% Foshan Huaxin Development Co., Ltd. 65.2% Foshan Huaxin Packing Co., Ltd. 6 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） §5 Directors, Supervisors and Senior Executives 5.1 Changes in Shares Held by Directors, Supervisors and Senior Executives Shares held at the Shares held at Causation of Name Position GenderAge Job Term beginning of term the end of change term Wang Qi Chairman M 51 Jun,02 to Jun, 05 0 0 Liang Vice Chairman M 42 Jun,02 to Jun, 0 0 Weidong 05 Tan Director General M 54 Jun,02 to Jun, 0 0 Shanghui Manager 05 Zhang Director M 39 Jun,02 to Jun, 0 0 Zhaoyang 05 He Jichang Director M 48 Jun,02 to Jun, 0 0 05 Huang Xin Director M 43 Jun,02 to Jun, 0 0 05 Ma Independent Director M 41 Jun,02 to Jun, 0 0 Zhengwu 05 Tan JinsongIndependent Director M 39 Jun,02 to Jun, 0 0 05 Sun Shenai Independent Director M 56 Jun,02 to Jun, 0 0 05 Chen Supervisor F 53 Jun,02 to Jun, 0 0 Zeqing 05 Feng Supervisor M 38 Jun,02 to Jun, 0 0 Daming 05 Huang Supervisor M 52 Jun,02 to Jun, 0 0 Dabiao 05 Zhang Zhe Supervisor F 47 Jun,02 to Jun, 0 0 05 Chen Jiali Vice General Manager M 47 Jun,02 to Jun, 0 0 05 Chen Vice General Manager M 39 Jun,02 to Jun, 0 0 Haiyan Secretary of board 05 Lu Liang Vice General Manager M 32 Jan, 04 to Jun, 0 0 05 5.2 Particulars about the directors and supervisors who take jobs in the shareholding parties √ applicable □ not applicable Name Name of the shareholder Position taken Job term Get reward or allowance? Wang Qi Foshan Huaxin General Manager Jun,02 to Jun, 05 Yes Development Co., Ltd. Chen Foshan Huaxin Secretary of CCCP Jun,02 to Jun, 05 Yes Zeqing Development Co., Ltd. Committee, Vice GM 7 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） 5.3 Annual remuneration of directors, supervisors and senior executives In RMB 10 thousand Yuan Total of annual reward 239.40 Top 3 directors 64.00 Top 3 managements 149.18 Independent Director 3.8010K/Person.Year Other expenses of Expenses due to performing of duties are reimbursed by the Company. Independent Directors: Directors and supervisors not Wang Qi, Liang Weidong, Zhang Zhaoyang, He Jichang, Huang Xin, Chen Zeqing, taking rewards from the Feng Daming, Zhang Zhe, Wu Tie Company Reward distribution Number of people 600K-650K 1 500K-550k 2 400K-450K 1 250K-300K 1 §6. Report of the Board of Directors 6.1 Analyzing of overall business status for the report term The Company is engaged in papermaking, printing and packaging industry and mainly produces and sells high-class and high-quality packaging materials and packaging products including high-class coated manila, soft packing boxes for liquid food (tetra pack), color printed packaging products and new-type aluminum and plastic compound paper cans. The Company comes out top in the industry in terms of production and operation scale, product quality and class, ability of technological innovation and comprehensive profit making level. The key products of the Company include high-class coated manila, color printed packaging products and aluminum and plastic compound paper cans. In the report period, the continuous rise in the price of raw materials, coal, electricity and oil brought great pressure on the cost of production and manufacturing. Besides, the intensification of market competition suppressed product price to a certain extent. The profitability of the whole company was somewhat affected. Facing the above-mentioned unfavorable business environment, the Company minimized the influence of such environment through improving production capacity, reducing wastage and enhancing quality management level. For the year, the income from main operation of the Company was RMB 0.592 billion, a decrease of 2.3% over the same period of the previous year. Its profit from main operation was RMB 0.088 billion, a decrease of 12.2% over the same period of the previous year. Its net profit was RMB 0.09 billion, a decrease of 6.7% over the same period of the previous year. The net profit after deduction of non-recurring gains and losses was RMB 0.089 billion, a decrease of 3% over the same period of the previous year. 6.2 Principal businesses classified based on industries/products 8 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） In RMB 10 thousand Yuan Distribution on products Major Major Gross Increase/decrease Major business cost On industry or business business profit of major business increased/decreased Gross profit ration product over corresponding increased/decreased turnover cost ratio % turnover (%) term White ５２，８９８．９０ ４５，０９５．０３１４．７５％ －３．９２％ －０．８９％ －２．６１％ paperboard Print products ６，０５２．５８ ５，２５５．７１１３．１７％ １０．７７％ ２．０４％ ７．４２％ Compound paper ７１８．９４ ５２７．１３２６．６８％ ８９．６３％ １１５．９７％ －８．９２％ cans and others Including: related ２９．６８ transactions Principle of pricing the On fair market price. related transactions Statement on the necessity and continuousness - of related transactions Including: The related transactions of the Company selling products to the controlling shareholders and its subsidiaries were amounted to RMB00.00 6.3 Major businesses distribution on regions In RMB 10 thousand Yuan Regions Major business turnover Increase/decrease of major business turnover (%) Domestic ４３，２４６．３４ －４．４２％ Overseas １５，９９２．４６ ３．７９％ 6.4 Suppliers and Customers In RMB 10 thousand Yuan Top 5 suppliers 16,919.00 takes the whole purchasing 37.70% Top 5 customers 7,994.02 Takes the whole sales 13.49% 6.5 Business performance of partnership subsidiaries √ applicable □ not applicable In RMB 10 thousand Yuan Name of the company Lile Huaxin (Foshan) Packaging Co., Ltd. Investment income contributed ７，４６０．０８ Proportion in the Company’s net profit ８２．９３％ Business Scope Manufacturing and trading of Lile packaging materials. Shareholding company Net profit ２９，８４０．３３ 9 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） 6.6 Major Change in the Principal Business or its Structure □applicable √ not applicable 6.7 Major Change in the Profitability (Gross Profit Rate) of the Major Business over the Previous Year □applicable √ not applicable 6.8 Causation of Major Change in the Profit Composition over the Previous Year □applicable √ not applicable Causations of significant change on overall financial status □applicable √ not applicable 6.9 Significant changes in business environment, national policies and regulations impacting the financial situation and business performance in the past, present or future. □applicable √ not applicable 6.10 Profitability prediction □applicable √ not applicable 6.11 Fulfilling of business plan □applicable √ not applicable 6.12 Utilization of fund raised from financing actions √ applicable □ not applicable In RMB 10 thousand Yuan Total of fund Total of fund raised and 1,901.00 raised 24,637.00 utilized Accumulated fund used 24,637.00 Committed Planned Changed or Practical Income Schedule and income Fulfilling of projects investment not investment generated expectation fulfilled or prediction not Acquiring of Huaqiao Paper 20,000.00No 20,000.00 Yes Yes Factory Acquiring of Color Printing Factory and 4,637.00No 4,637.00 No No expand its productivity Total 24,637.00 - 24,637.00 - - Statement for In viewing of overcoming the difficulties encountered in the years since the takeover of color overdue (in printing company and fully develop the business of color printed package, the Company detailed projects) workout the development ideology and put into action in 2004 to deal with the market competition, un-rational workshop layout, and overtime of equipments. Statement for reason of None changing and 10 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） procedure (in detailed projects) Changing of projects □applicable √ not applicable 11 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） 6.13 Utilizing of non-raised fund √ applicable □ not applicable In RMB 10 thousand Yuan Projects Amount of progress Profitability the project The negotiation over part of main equipment and contract signing were completed for the capacity expansion project in 2004. The preliminary design of hot spot station, main Productivity expanding control building and general descending station and the project of Foshan 84,000.00 major part of engineering design of pulping and Huafeng Paper Co., Ltd. papermaking workshops were completed. The purchasing in respect of thermal power station, pulping and papermaking workshops, feedwater treatment, sewage treatment and architectural engineering was carried out as planned. In order to increase the production and business operation scale and raise the grade of the products with introduced equipment from abroad and to make full use of the favourable policies of the state and reduce the cost of investment when Huaxin (Foshan) Color Printing Co., Ltd Purchasing Peral River moves to new site of the factory, Huaxin (Foshan) Color Color Printing Factory Color Printing Co., Ltd has purchased Peral River Color of Foshan chancheng 150.00 Printing Factory of Foshan chancheng District at the price District of RMB 150,000 on March 9,2005,the Peral River Color Printing Factory changed into the Peral River Color Printing Co., Ltd with registered capital of 1.5 million and Huaxin (Foshan) color printing Co., Ltd invests 1.35 million , taking the rate of 90%;Foshan Huafeng Paper Co., Ltd invests 0.15 million, taking the rate of 10%. Total 84,150.00 - - 6.14 Statement on the none-standard opinion issued by the CPA □applicable √ not applicable 6.15 Business plan for the new year √ applicable □ not applicable For the year of 2005, facing quick-changing market, the Company will actively change mode of thinking, enhance its adaptability and adapt to environmental change through scientific allocation of internal resources and effective utilization of external resources to make the operation of its overall system generate the best economic effect. (1) As for project construction, the Company should follow the work policy of "objectiveness, strictness, system and objective", keep clear understanding of the issues including construction period, fund organization, non-local investment and relocation and pay attention to the systematicness and thoroughness of project organization to ensure the smooth progress of the above-mentioned two projects. (2) To change market concept, gain new understanding of the market environment where it is in, adapt to environmental change and adjustment and establish new marketing system. (3) To vigorously promote technological innovation, strengthen personnel training, integrate flow of human resources, materials, funds and information, strive to attain optimal effect of resource allocation and effectively ensure smooth production and operation this year. 12 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Prediction of profitability □applicable √ not applicable 6.16 Current profit distribution plan or capitalization of common reserves plan √ applicable □ not applicable As audited by the domestic certified public accountants, i.e., Guangdong Zhengzhong Zhujiang Certified Public Accountants Co., Ltd., and the overseas certified public accountants, i.e., KPMG Hong Kong, retained by the Company for 2004 respectively according to Chinese accounting standards for business enterprises and international accounting standards, the after-tax profit of the Company for 2004 was RMB ８９，９５２，５３７．７２ and RMB ９５，６５０，０００．００ respectively. According to the provisions of Detailed Rules for Implementation of the Regulations on Domestically Listed Foreign Investment Shares of Joint Stock Limited Companies and the Articles of Association of the Company, dividends shall be distributed based on the lower of the cumulative after-tax distributable profit determined respectively according to Chinese accounting standards for business enterprises and international accounting standards. After allocations of RMB １３，４９２，８８０．６６ for statutory common reserve fund and statutory public welfare fund, the result of the net profit for this year, i.e., RMB ８９，９５２，５３７．７２, plus year-beginning cumulative undistributed profit of RMB １８２，６４６，２６９．７６ and minus dividends of RMB 48,345,000 distributed for 2003, i.e., RMB ２１０，７６０，９２６．８２, is the profit available for distribution for this year. In consideration of the fund demand of high-class coated white board paper capacity expansion project of Zhuhai Branch of Foshan Huafeng Paper Industrial Co., Ltd. and the new factory project of Huaxin (Foshan) Color Printing Co., Ltd., it was proposed that the profit for 2004 should not be distributed temporarily and the cumulative undistributed profit of RMB２１０，７６０，９２６．８２ should be carried forward for distribution in the next year. This profit distribution preplan is to be submitted to the shareholders' general meeting of the Company for examination. The company is making profit in the report term but not yet have any dividend plan. √ applicable □ not applicable Provide reason for not undertaking profit distribution when the company is making profit during the report Using and planning of retained profit term. In consideration of the fund demand of high-class coated white board paper capacity expansion project of Zhuhai Branch of Foshan Huafeng Paper Industrial Co., Ltd. andCarried over to the next year. the new factory project of Huaxin (Foshan) Color Printing Co., Ltd. 13 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） §7 Significant Events 7.1 Asset acquisitions □applicable √ not applicable 7.2 Selling of property □applicable √ not applicable 7.3 Significant guarantee √ applicable □ not applicable In RMB 10 thousand Yuan External guarantee (controlled subsidiaries not included) Guarantee Date of contract Amount Type of Term Completed or Related party or provided to guaranteed guarantee not not Total of guarantee occurred in the report term Total of the balance at the end of report term. Guarantee provided to controlled subsidiaries Total of guarantee provided to controlling 55,000.00 shareholder in the report term Total of balance of guarantee provided to controlling shareholder at the end of report 57,500.00 term Total guarantees provided by the Company (Including guarantees provided to controlled subsidiaries) Total of guarantee 57,500.00 Proportion of the total guarantee in the net 57.73% asset of the Company Guarantee for violation of regulations Amount of guarantee provided to the controlling shareholder and related parties 0.00 holding less than 50% of the total capital share Amount of guarantees provided to objects with liability/asset ratio over 70%, directly or 0.00 indirectly Whether the total guarantee has exceeded Yes 50% of the net asset? Total of illegal guarantee 0.00 7.4 Significant related transaction 7.4.1 Related sales and purchasing □applicable √ not applicable 7.4.2 Credit and debt interchange □applicable √ not applicable 7.5 Financing proxy 14 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） □applicable √ not applicable 7.6 Fulfilling of consent issues √ applicable □ not applicable 1. The Company entered the agreement together with its parent company, Foshan Huaxin Development Co., Ltd., for renting of the office building on the 20/F., Jinghua Bldg., Jihua Rd., Foshan City. The office is totally 907 square meters. The Company committed that will pay RMB326,520 of rent for the period from June 1, 2002 to June 1, 2005 at RMB30 / month / square meter. In addition, the administration fee of RMB25,200 will be paid on annual basis. 2. To meet with the needs of production expanding of Huaxin (Foshan) Color Printing Co., Ltd., the Company will purchase the land located in Foshan Chancheng High-tech Industry Development Zone from the Administrative Committee. The land scaled 83,065.274 square meter (73,462.841 square meter for buildings), the predictive price is RMB9,967,832.88. The “MOU of land purchasing” was signed by both of the parties. As set out in the MOU, Huaxin (Foshan) Color Printing Co., Ltd. shall pay 30% of the price amounted to RMB2,990,349.86. The payment was actually made on Feb. 7th 2005. 3. Ended December 31, 2004, Foshan Huafeng Paper Co., Ltd., the subsidiary of the Company engaged the contract with the vendors and national land administrative department for the extension project of 300KT high-class coated white board in Zhuhai. The contracts are amounted to RMB840,530,942.12, (Contracts signed in foreign currencies were converted upon the exchange rate on December 31st 2004.) According to the progress of construction, Foshan Huafeng Paper Co., Ltd. has paid Euro2,023,900.00, USD593,300.00, and RMB157,551,676.27 so far. 7.7 Material Lawsuits/Arbitrations □applicable √ not applicable 7.8. Statement of the independent directors Presenting the Board meetings Name of Independent Times of Board Presented Presented by Absent Note Director Meeting personally proxy Ma Zhengwu 7 7 0 0 Tan Jinsong 7 5 0 2 On business travel Sun Shenai 7 7 0 0 Objection opinion raised by the independent directors on the business of the Company □applicable √ not applicable 15 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） §8 Report of the Supervisory Committee √ applicable □ not applicable The Supervisory Committee acknowledges that the Company was operated legally, no problem exist in the financial status and related transactions in the report term. §9 Financial Report 9.1 Auditor’s Opinion Guangdong Zhengzhong Jujiang Certified Public Accountants and KPMG Certified Public Accountants issued standard auditing report without qualified opinion on the Financial Report 2004. 9.2 Financial Statements (Attached) Statement on the changing of accounting policies, accounting estimations and method of calculating comparing with the latest term √ applicable □ not applicable In viewing of reflecting the principal of stability in accounting, the Company adopted the suggestion of relative parties and with reference of bad debt accounting of other public companies, the following adjustment was performed: “for accounts aged within 1 year will be drawn provisions at 0%” was altered to “for accounts aged within 3 months will be drawn provisions at 0%, and for accounts between 3 months and 1 year will be drawn at 5%.” The other policies stay unchanged. 9.4 Correcting of significant accounting error and its impact □applicable √ not applicable 9.5 Changing of consolidation range comparing with the latest term □applicable √ not applicable Mr. Wang Qi, the Chairman of Board Foshan Huaxin Packaging Co., Ltd. April 1, 2005 16 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Balance Sheet In RMB Yuan Items At the end of term Initial Consolidated Parent company Consolidated Parent company Current asset: Monetary fund 171,100,575.63 3,733,764.85 100,845,176.07 33,436,033.87 Short-term investment Notes receivable 36,073,793.75 41,748,800.65 Dividend receivable 60,939,974.61 27,716,502.57 Interest receivable Account receivable 98,334,674.32 1,580,517.31 90,179,864.37 898,479.92 Other account receivable 13,318,238.88 152,953,277.50 10,293,768.14 297,610,811.28 Advance account 7,530,124.09 410,616.22 6,038,339.07 30,825.00 Allowance receivable Inventories 84,080,898.92 1,534,023.27 86,931,409.88 1,072,847.62 Expense to be amortized 1,008,094.28 3,199.92 151,544.10 2,850.44 Long-term credit invest expire in 1 year Other current asset Total of current asset 411,446,399.87 221,155,373.68 336,188,902.28 360,768,350.70 Long-term investment: Long-term share equity investment 234,454,440.80 791,504,036.06 219,771,900.19 679,601,643.04 Long-term credit investment Total of long-term investment 234,454,440.80 791,504,036.06 219,771,900.19 679,601,643.04 Consolidated price difference Fixed asset: Original value of fixed assets 954,776,114.23 1,206,578.46 926,786,655.74 1,085,504.46 Less: Accumulated depreciation 299,504,005.39 308,708.75 259,801,762.86 183,484.07 Net fixed assets 655,272,108.84 897,869.71 666,984,892.88 902,020.39 Less: Fixed asset impairment provision Net fixed asset 655,272,108.84 897,869.71 666,984,892.88 902,020.39 Engineering material Construction in progress 248,277,092.56 9,800.00 23,317,861.94 Fixed asset disposal Total of fixed assets 903,549,201.40 907,669.71 690,302,754.82 902,020.39 Intangible and others: Intangible assets 38,247,511.90 38,944,260.82 Long-term expenses to be amortized 3,695,041.20 93,961.99 4,751,322.46 137,500.99 Other long-term assets Total of intangible and other assets 41,942,553.10 93,961.99 43,695,583.28 137,500.99 Deferred tax: Deferred tax debit Total of assets 1,591,392,595.171,013,661,041.441,289,959,140.571,041,409,515.12 Current liabilities Short-term loans 15,000,000.00 15,000,000.00 87,470,000.00 85,000,000.00 Notes payable Account payable 79,013,166.81 834,053.32 40,192,055.07 308,674.06 Account received in advance 5,510,830.05 252,342.38 5,937,247.17 113,658.01 Prepaid wages 211,955.00 Welfare payable 62,060.79 165,581.52 Dividend payable 110,050.80 108,988.00 1,062.80 Tax payable 3,948,976.97 66,174.04 7,188,523.94 200,838.56 Other accounts to be delivered 60,533.26 6,184.49 264,976.51 17,961.36 Other account payable 12,668,370.99 1,088,529.12 11,933,654.38 1,337,695.60 Reserved expenses 156,302.83 156,302.83 3,138,508.53 47,257.99 Expected liabilities Long-term liability expire in 1 year 17 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Other current liability Total of current liability 116,530,292.50 17,512,574.18 156,503,564.92 87,026,085.58 Long-term liabilities Long-term borrowings 292,235,070.18 25,000,000.00 Bond payable Long-term payable Special payable 620,000.00 620,000.00 Other long-term liability Total of long-term liability 292,855,070.18 25,620,000.00 Deferred tax: Deferred tax credit Total of liability 409,385,362.68 17,512,574.18 182,123,564.92 87,026,085.58 Minor shareholders’ equity 185,858,765.23 153,452,146.11 Owner’s equity (or shareholders’ equity) Capital received or capital share 439,500,000.00 439,500,000.00 439,500,000.00 439,500,000.00 Less: returned investment Practical capital (or share capital), net 439,500,000.00 439,500,000.00 439,500,000.00 439,500,000.00 Capital reserves 253,763,982.00 253,763,982.00 253,606,482.00 253,606,482.00 Surplus reserves 92,123,558.44 92,123,558.44 78,630,677.78 78,630,677.78 Incl. Statutory public welfare 30,707,852.82 30,707,852.82 26,210,225.93 26,210,225.93 Un-distributed profit 210,760,926.82 210,760,926.82 182,646,269.76 182,646,269.76 Incl. Cash dividend 48,345,000.00 48,345,000.00 Investment loss not recognized Different of foreign currency translation Total of Owner’s equity (or shareholders’996,148,467.26 996,148,467.26 954,383,429.54 954,383,429.54 equity) Total of liabilities and owner’s equity (or 1,591,392,595.171,013,661,041.441,289,959,140.571,041,409,515.12 shareholders’ equity) 18 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Income Statement In RMB Yuan Items Current term Same period last year Consolidated Parent company Consolidated Parent company I. Major business turnover 592,388,037.27 7,189,405.88 606,531,159.61 3,791,187.31 Less: Major business cost 504,462,400.74 5,271,288.80 506,461,841.05 2,440,782.88 Major business tax and surtax 169,270.79 89,556.68 77,407.78 32,399.68 II. Major business profit (“-“ for loss) 87,756,365.74 1,828,560.40 99,991,910.78 1,318,004.75 Plus: Other business profit (“-“ for loss) 1,551,300.60 47,500.00 1,729,218.41 692,486.44 Less: Business expenses 17,039,135.75 312,281.83 14,795,993.42 217,794.75 Administrative expense 39,575,277.80 7,379,523.64 39,159,305.50 6,811,766.93 Financial expenses 5,053,069.38 -313,751.38 3,118,984.67 -3,732,055.84 III. Operational profit (“-“ for loss) 27,640,183.41 -5,501,993.69 44,646,845.60 -1,287,014.65 Plus: Investment gains (“-“ for loss) 73,707,910.46 95,454,531.41 67,264,680.17 97,666,605.69 Allowance income Non-business income 362,385.78 1,007,180.08 73,945.61 Less: Non-business expenses 101,083.94 180,709.63 300.00 IV. Gross profit (“-“ for loss) 101,609,395.71 89,952,537.72 112,737,996.22 96,453,236.65 Less: Income tax 4,407,984.34 6,150,295.06 Minor shareholders’ equity 7,248,873.65 10,134,464.51 Investment loss occurred this term but not recognized V. Net profit (“-“ for loss) 89,952,537.72 89,952,537.72 96,453,236.65 96,453,236.65 Plus: Retained profit at the beginning of 182,646,269.76 182,646,269.76 149,006,018.61 149,006,018.61 term Other transferred in VI. Distributable profit 272,598,807.48 272,598,807.48 245,459,255.26 245,459,255.26 Less: Statutory surplus reserves 8,995,253.77 8,995,253.77 9,645,323.67 9,645,323.67 Drawing of statutory public welfare 4,497,626.89 4,497,626.89 4,822,661.83 4,822,661.83 Employee award and welfare fund Reserves Enterprise development fund Profit returned to investment VII. Distributable profit 259,105,926.82 259,105,926.82 230,991,269.76 230,991,269.76 Less: Preference share dividend payable Optional surplus reserves Common share dividend payable 48,345,000.00 48,345,000.00 48,345,000.00 48,345,000.00 Common share dividend transferred to capital (or share capital) VIII. Undistributed profit 210,760,926.82 210,760,926.82 182,646,269.76 182,646,269.76 Income statement (Supplementary information) 1. Income from selling and disposal of -99,465.72 -99,465.72 department or invested entities 2. Loss due to nature disaster 3. Change to the gross profit due to changing of accounting policy 4. Change to the gross profit due to changing of accounting estimation 5. Loss from debt reconstruction 6. Others 19 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Cash Flow Statement In RMB Yuan Items Current term Consolidated Parent company I. Net cash flow from business operation Cash received from sales or providing of services 607,591,441.36 6,821,238.81 Tax returned Other cash inflow related to operation 9,926,364.71 92,514,004.60 Subtotal of cash inflow 617,517,806.07 99,335,243.41 Cash paid for purchasing of merchandise and services 463,550,860.33 3,839,553.41 Cash paid to staffs or paid for staffs 41,889,885.85 5,002,908.61 Taxes paid 29,358,159.00 125,214.86 Other cash paid related to operation 24,375,386.14 59,046,919.02 Subtotal of cash outflow 559,174,291.32 68,014,595.90 Net Cash flow generated by business operation 58,343,514.75 31,320,647.51 II. Cash flow generated by investing Cash received from returning of investment Cash received as investment profit 67,715,799.85 67,715,799.85 Net cash received from disposal of fixed assets, intangible assets and other 1,208,867.06 long-term assets Other cash received related to investment Subtotal of cash inflow 68,924,666.91 67,715,799.85 Cash paid to acquire fixed assets, intangible assets and other long-term assets205,125,411.57 156,457.00 Cash paid for investment 8,690,430.00 8,690,430.00 Other cash paid related to investment Subtotal of cash outflow 213,815,841.57 8,846,887.00 Net cash flow generated by investment -144,891,174.66 58,868,912.85 III. Cash flow generated by financing Proceeds from investments 25,105,245.47 Cash received from loans 286,076,903.86 15,000,000.00 Other cash received related to financing Subtotal of cash inflow 311,182,149.33 15,000,000.00 Cash paid for recovering of debt 93,160,990.07 85,000,000.00 Cash paid for dividend, profit or interest 56,633,884.29 49,891,829.38 Other cash paid related to financing 4,584,215.50 Subtotal of cash outflow 154,379,089.86134,891,829.38 Net cash flow generated by financing 156,803,059.47-119,891,829.38 IV. Influence of exchange rate movement V. Net increase of cash and cash equivalents 70,255,399.56 -29,702,269.02 Supplementary information 1. Net profit adjusted to operational cash flow Net profit 89,952,537.72 89,952,537.72 Plus: Asset impairment provision 456,710.00 Depreciation of fixed assets 40,461,484.84 125,224.68 Amortizing of intangible assets 696,748.92 Amortizing of long-term expenses 1,194,071.26 67,722.00 Decrease of expenses to be amortized (Less: increase) -856,550.18 -349.48 Increase of reserved expenses (Less: decrease) -2,982,205.70 109,044.84 Cash lost from treatment of fixed assets, intangible assets and other long-term -320,396.55 assets (less: gains) Loss of disposing fixed assets Financial expenses 8,352,295.12 1,655,817.38 Investment loss (less: gains) -73,707,910.46 -95,454,531.41 Credit of deferred tax (less: debit) Decreasing of inventories (less: increasing) 2,835,886.60 -461,175.65 Decrease (less: increase) in operating receivables 38,165,159.73 36,665,288.14 20 Ｆｏｓｈａｎ Ｈｕａｘｉｎ Ｐａｃｋａｇｉｎｇ Ｃｏ．， Ｌｔｄ． Ａｎｎｕａｌ Ｒｅｐｏｒｔ ２００４ （Ｓｕｍｍａｒｙ） Increase (less: decrease) in operating payables -53,153,190.20 -1,338,930.71 Others Minor shareholders’ equity 7,248,873.65 Net Cash flow generated by business operation 58,343,514.75 31,320,647.51 2. Investment and financial acts not involving with cash Liabilities converted to capital Convertible bond expire in 1 year Fixed assets leased through financing 3. Net increasing of cash and cash equivalents Balance of cash at period end 171,100,575.63 3,733,764.85 Less: Initial balance of cash 100,845,176.07 33,436,033.87 Plus: Balance of cash equivalents at the end of term Less: Balance of cash equivalents at the beginning of term Net increasing of cash and cash equivalents 70,255,399.56 -29,702,269.02 21