华新水泥(600801)G华新2005年年度报告

华新水泥股份有限公司 600801 2005 年年度报告 0 目录 一、重要提示 ....................................................................... 1 二、公司基本情况简介 .............................................................. 1 三、会计数据和业务数据摘要........................................................ 2 四、股本变动及股东情况 ............................................................ 4 五、董事、监事和高级管理人员 ..................................................... 7 六、公司治理结构 .................................................................. 10 七、股东大会情况简介 ............................................................. 11 八、董事会报告 .................................................................... 12 九、监事会报告 .................................................................... 19 十、重要事项 ...................................................................... 20 十一、财务会计报告 ................................................................ 22 十二、备查文件目录 ............................................................... 102 1 一、重要提示 1、本公司董事会、监事会及董事、监事、高级管理人员保证本报告所载资料不存在任何虚假 记载、误导性陈述或者重大遗漏，并对其内容的真实性、准确性和完整性承担个别及连带责任。 2、独立董事林宗寿先生因工作原因未出席本次董事会，授权董事张天武先生代为出席并行使 表决权。 3、公司董事长陈木森先生、总裁李叶青先生，财务总监孔玲玲女士，会计机构负责人何凤萍 女士声明：保证本年度报告中财务报告的真实、完整。 二、公司基本情况简介 1、公司法定中文名称：华新水泥股份有限公司 公司法定中文名称缩写：华新水泥 公司英文名称：HUAXIN CEMENT CO., LTD. 公司英文名称缩写：HUAXINCEM 2、公司法定代表人：陈木森 3、公司董事会秘书：王锡明 联系地址：湖北省黄石市黄石大道 897 号 电话：0714-6328310 传真：0714-6235204 E-mail：investor@huaxincem.com 公司证券事务代表：王璐 联系地址：湖北省黄石市黄石大道 897 号 电话：0714-6328471 传真：0714-6235204 E-mail：investor@huaxincem.com 4、公司注册地址：湖北省黄石市黄石大道 897 号 公司办公地址：湖北省黄石市黄石大道 897 号 邮政编码：435002 公司国际互联网网址：http//www.huaxincem.com 公司电子信箱：investor@huaxincem.com 5、公司信息披露报纸名称：《中国证券报》、《上海证券报》、《香港商报》 登载公司年度报告的中国证监会指定国际互联网网址：http//www.sse.com.cn 公司年度报告备置地点：公司证券办公室 6、公司 A 股上市交易所：上海证券交易所 公司 A 股简称：华新水泥 公司 A 股代码：600801 公司 B 股上市交易所：上海证券交易所 公司 B 股简称：华新 B 股 公司 B 股代码：900933 7、其他有关资料 公司首次注册登记日期：1993 年 11 月 30 日 公司首次注册登记地点：湖北省黄石市黄石大道 897 号 公司变更注册登记日期：2000 年 1 月 11 日 公司法人营业执照注册号：4200001000351 公司税务登记号码：420203178423X 公司聘请的境内会计师事务所名称：信永中和会计师事务所 公司聘请的境内会计师事务所办公地址：北京市东城区朝阳门北大街 8 号富华大厦 C 座 12 层 公司聘请的境外会计师事务所名称：普华永道中国有限公司 公司聘请的境外会计师事务所办公地址：广州市建设六马路 33 号宜安广场 1808 室 76 三、会计数据和业务数据摘要 （一）本报告期主要财务数据 单位:元 项目 金额 利润总额 81,377,759.92 净利润 62,073,249.69 扣除非经常性损益后的净利润 58,348,087.76 主营业务利润 503,360,796.69 其他业务利润 2,829,450.25 营业利润 46,622,515.02 投资收益 -1,239,116.97 补贴收入 30,882,780.26 营业外收支净额 5,111,581.61 经营活动产生的现金流量净额 503,134,090.50 现金及现金等价物净增加额 -29,022,911.52 （二）国内外会计准则差异（人民币千元） 本公司股权持有人 本公司股权持有人 应占之利润 应占之净资产 中国法定帐目所列 62,073 1,213,617 国际财务报告准则和其他调整之影响: —拨回以前年度已冲销之商誉的摊销 261 (1,861) —将开办费于发生当期计入利润 表 101 (1,192) —国家补贴计入递延收入或补贴收入 1,447 (9,125) --冲回对正商誉之摊销 1,060 1,060 —借款利息资本化入物业、机器及设 备 6,296 6,296 将长期应付款按折现值重列所产生的差异 （349） （349） 确认递延税项 8,269 28,106 经国际财务报告准则调整后所重列 79,158 1,236,552 （三）扣除非经常性损益项目和金额 单位:元 非经常性损益项目 金额 处置长期股权投资、固定资产、在建工程、无形资产、其他 3,707,350.96 长期资产产生的损益 扣除公司日常根据企业会计制度规定计提的资产减值准备后 -800,758.35 的其他各项营业外收入、支出 所得税影响数 818,569.32 合计 3,725,161.93 2 （四）报告期末公司前三年主要会计数据和财务指标 单位:元 本年比上年 2005 年 2004 年 2003 年 增减(%) 主营业务收入 2,639,380,167.10 2,188,101,303.80 20.62 1,188,827,685.49 利润总额 81,377,759.92 255,160,148.41 -68.11 117,841,100.71 净利润 62,073,249.69 148,550,557.65 -58.22 68,244,142.01 扣除非经常性损益的净利润 58,348,087.76 120,802,513.29 -51.70 68,741,266.17 每股收益 0.19 0.45 -57.78 0.21 减少 7.62 个 净资产收益率（%） 5.11 12.73 8.46 百分点 扣除非经常性损益后净利润为基础计算的 减少 5.54 个 4.81 10.35 8.51 净资产收益率（%） 百分点 扣除非经常性损益后净利润为基础计算的 减少 9.17 个 4.92 14.09 8.74 加权平均净资产收益率（%） 百分点 经营活动产生的现金流量净额 503,134,090.50 490,510,424.42 2.57 294,856,868.91 每股经营活动产生的现金流量净额 1.53 1.49 2.68 0.90 本年末比上 2005 年末 2004 年末 2003 年末 年末增减(%) 总资产 6,108,292,177.68 4,955,799,957.40 23.26 3,017,709,764.81 股东权益（不含少数股东权益） 1,213,617,527.85 1,166,712,965.39 4.02 806,816,113.16 每股净资产 3.70 3.55 4.23 2.46 调整后的每股净资产 3.58 3.43 4.37 2.41 （五）报告期内股东权益变动情况及变化原因 单位:元 项目 股本 资本公积 盈余公积 法定公益金 未分配利润 股东权益合计 期初 328,400,000 544,391,528.16 140,620,564.13 36,906,794.99 153,300,873.10 1,166,712,965.39 数 本期 4,535,312.77 12,517,424.00 6,258,712.00 49,555,825.69 66,608,562.46 增加 本期 19,704,000.00 19,704,000.00 减少 期末 328,400,000 548,926,840.93 153,137,988.13 43,165,506.99 183,152,698.79 1,213,617,527.85 数 报告期内股东权益变动的原因系本公司盈利及利润分配。 3 四、股本变动及股东情况 （一）股本变动情况 1、股份变动情况表 单位:股 本次变动前 本次变动增减（＋，－） 本次变动后 公积 比例 比例 数量 发行新股 送股 金转 其他 小计 数量 (%) (%) 股 一、有限售条件股份 1、国家持股 91,526,880 27.9 -12,276,232 79,250,648 24.1 2、国有法人持股 3、其他内资持股 其中：境内法人持股 24,873,120 7.6 -2,123,768 22,749,352 6.9 境内自然人持股 4、外资持股 其中：境外法人持股 境外自然人持股 有限售条件股份合计 116,400,000 35.4 -14,400,000 102,000,000 31.1 二、无限售条件股份 1、人民币普通股 48,000,000 14.6 +14,400,000 62,400,000 19.0 2、境内上市的外资股 164,000,000 49.0 164,000,000 49.9 3、境外上市的外资股 4、其他 无限售条件股份合计 212,000,000 64.6 226,400,000 68.9 三、股份总数 328,400,000 328,400,000 有限售条件股份可上市交易时间 单位:股 限售期满新增 有限售条件股 无限售条件股 时 间 可上市交易股 说 明 份数量余额 份数量余额 份数量 2006-12- 12,879,120 89,120,880 239,279,120 29 2008-12- 其中，国家股新增可上市流通的 3,962,532 股通过 13,832,764 75,288,116 253,111,884 29 上海证券交易所挂牌出售的价格不低于 9 元 2009-12- 7,925,065 67,363,051 261,036,949 通过上海证券交易所挂牌出售的价格不低于 9 元 29 2010-12- 67,363,051 0 328,400,000 29 2、股票发行与上市情况 (1) 前三年历次股票发行情况 截止本报告期末至前三年，公司未有增发新股、配售股份等股票发行与上市情况。 (2)公司股份总数及结构的变动情况 报告期内没有因送股、配股等原因引起公司股份总数及结构的变动。 (3) 现存的内部职工股情况 本报告期末公司无内部职工股。 4 （二）股东情况 1、股东数量和持股情况 单位:股 报告期末股东总数 36,626 前十名股东持股情况 持股 股东 持有有限售条 质押或冻结的 股东名称 比例 持股总数 年度内增减 性质 件股份数量 股份数量 (%) 外资 HOLCHIN B.V. 26.1 85,761,300 8,761,300 股东 国家拥有股份(由华新集团有限 国有 质押 24.1 79,250,648 -12,276,232 79,250,648 公司代国家持有) 股东 36,000,000 华新集团有限公司 其他 3.0 9,870,232 -2,123,768 9,870,232 外 资 MEINLBANK AKTIENGESELLSCHAFT 1.6 5,199,735 100,000 股东 荆州沙隆达财务咨询有限公司 其他 1.2 4,100,000 4,100,000 中国工商银行－申万巴黎盛利精 其他 1.0 3,349,442 3,349,442 选证券投资基金 全国社保基金一零九组合 其他 0.8 2,643,339 2,643,339 黄石铁路联营公司 其他 0.8 2,520,000 2,520,000 泰康人寿保险股份有限公司 其他 0.6 1,953,621 1,953,621 外 资 NAITO SECURITIES CO., LTD. 0.5 1,695,779 675,279 股东 前十名无限售条件股东持股情况 股东名称 持有无限售条件股份数量 股份种类 HOLCHIN B.V. 85,761,300 境内上市外资股 MEINL BANK AKTIENGESELLSCHAFT 5,199,735 境内上市外资股 中国工商银行－申万巴黎盛利精选证券投资基金 3,349,442 人民币普通股 全国社保基金一零九组合 2,643,339 人民币普通股 泰康人寿保险股份有限公司 1,953,621 人民币普通股 NAITO SECURITIES CO., LTD. 1,695,779 境内上市外资股 TOYO SECURITIES ASIA LTD. A/C CLIENT 1,609,589 境内上市外资股 全国社保基金六零一组合 1,263,228 人民币普通股 南京豪盾节能科技有限责任公司 1,155,286 人民币普通股 中国银行－银华优势企业(平衡型)证券投资基金 955,773 人民币普通股 除华新集团有限公司代国家持有的国家股份外，前 10 名股东之间不存在关联关系，也不属于 上述股东关联 《上市公司持股变动信息披露管理办法》中规定的一致行动人。 关系或一致行 公司未知前 10 名无限售条件流通股股东之间是否存在关联关系或一致行动关系。 动关系的说明 公司未知前 10 名股东和前 10 名无限售条件流通股股东之间是否存在关联关系或一致行动关系。 2、前十名有限售条件股东持股数量及限售条件 单位:股 有限售条件股份可上市交易 持有的有限 情况 有限售条件 售条件股份 新增可上市 限售条件 股东名称 可上市交易时 数量 交易股份数 间 量 2008-12-29 3,962,532 自股权分置改革方案实施之日起，十二个月内不上市交 2009-12-29 7,925,065 易或者转让；第十三至第三十六个月内不通过上海证券 交易所挂牌交易出售；第三十七至第四十八个月内通过 国家拥有股 上海证券交易所挂牌交易出售的数量不超过股权分置改 份(由华新集 79,250,648 革后华新集团代国家持有的国家股数量的 5%，出售价格 团有限公司 2010-12-29 67,363,051 不低于 9 元/股；第四十九至第六十个月内通过上海证券 代国家持有) 交易所挂牌交易出售的数量不超过股权分置改革后华新 集团代国家持有的国家股数量的 10%，出售价格不低于 9 元/股。 5 自股权分置改革方案实施之日起，十二个月内不上市交 华新集团有 9,870,232 2008-12-29 9,870,232 易或者转让；第十三至第三十六个月内不通过上海证券 限公司 交易所挂牌交易出售。 荆州沙隆达 自股权分置改革方案实施之日起，十二个月内不上市交 财务咨询有 4,100,000 2006-12-29 4,100,000 易或者转让。 限公司 黄石铁路联 自股权分置改革方案实施之日起，十二个月内不上市交 2,520,000 2006-12-29 2,520,000 营公司 易或者转让。 武汉石化鹏 自股权分置改革方案实施之日起，十二个月内不上市交 1,200,000 2006-12-29 1,200,000 鹤物资公司 易或者转让。 湖北众联资 自股权分置改革方案实施之日起，十二个月内不上市交 产评估有限 768,000 2006-12-29 768,000 易或者转让。 公司 湖北东亚实 自股权分置改革方案实施之日起，十二个月内不上市交 768,000 2006-12-26 768,000 业有限公司 易或者转让。 中国工商银 自股权分置改革方案实施之日起，十二个月内不上市交 行湖北省分 768,000 2006-12-29 768,000 易或者转让。 行直属支行 深圳中农信 自股权分置改革方案实施之日起，十二个月内不上市交 实业投资公 768,000 2006-12-29 768,000 易或者转让。 司 中国信达资 自股权分置改革方案实施之日起，十二个月内不上市交 768,000 2006-12-29 768,000 产管理公司 易或者转让。 3、控股股东及实际控制人简介 （1）法人控股股东情况 控股股东名称：华新集团有限公司 法人代表：陈木森 注册资本：370,000,000 元 成立日期：1996 年 11 月 14 日 主要经营业务或管理活动：制造、销售水泥制品、机械配件、房地产开发、商业、服务等 （2）法人实际控制人情况 实际控制人名称：黄石市国有资产管理委员会 （3）控股股东及实际控制人变更情况 本报告期内公司控股股东及实际控制人没有发生变更。 （4）公司与实际控制人之间的产权及控制关系的方框图 黄石市国有资产管理委员会 100% 华新集团有限公司 27.1%（合计持有） 华新水泥股份有限公司 4、其他持股在百分之十以上的法人股东 截止本报告期末公司无其他持股在百分之十以上的法人股东。 6 五、董事、监事和高级管理人员 （一）董事、监事、高级管理人员情况 单位:股 报告期 内从公 性 年 任期起始日 任期终止日 年初持 年末持 股份增 司领取 姓名 职务 变动原因 别 龄 期 期 股数 股数 减数 的报酬 总额 (万元) 购股、股改 送股和部分 陈木森 董事长 男 57 2003-04-28 2006-04-28 14,900 97,900 83,000 59 年薪购股所 致 股改送股和 董事、总 李叶青 男 42 2003-04-28 2006-04-28 24,300 54,042 29,742 部分年薪购 59 裁 股所致 Tom 董事 男 58 2004-10-21 2006-04-28 / Clough Daniel 董事 男 43 2005-04-26 2006-04-28 / Bach Paul 董事 男 40 2003-04-28 2006-04-28 / Thaler 股改送股和 纪昌华 董事 男 52 2003-04-28 2006-04-28 15,300 35,160 19,860 部分年薪购 38 股所致 张天武 独立董事 男 43 2003-04-28 2006-04-28 5 谢获宝 独立董事 男 39 2003-04-28 2006-04-28 5 林宗寿 独立董事 男 49 2003-04-28 2006-04-28 5 股改送股和 监事会主 周家明 男 52 2003-04-28 2006-04-28 15,100 30,900 15,800 部分年薪购 38 席 股所致 杨春华 监事 男 55 2003-04-28 2006-04-28 6 阮汉文 监事 男 48 2003-04-28 2006-04-28 6 占卫国 监事 男 33 2003-04-28 2006-04-28 4 樊彤涛 监事 男 37 2003-04-28 2006-04-28 2 副总裁兼 股改送股和 王锡明 董事会秘 男 47 2003-04-28 2006-04-28 15,000 32,500 17,500 部分年薪购 39 书 股所致 股改送股和 彭清宇 副总裁 男 46 2003-04-28 2006-04-28 15,900 33,100 17,200 部分年薪购 39 股所致 股改送股和 孔玲玲 副总裁 女 42 2003-04-28 2006-04-28 15,300 31,260 15,960 部分年薪购 39 股所致 股改送股和 冯东光 副总裁 男 39 2003-04-28 2006-04-28 6,500 20,800 14,300 部分年薪购 38 股所致 股改送股和 柯友良 副总裁 男 41 2003-04-28 2006-04-28 6,500 21,100 14,600 部分年薪购 38 股所致 128,80 356,76 合计 / / / / / 227,962 / 420 0 2 注：董事 Tom Clough 先生、 Daniel Bach 先生、 Paul Thaler 先生自愿放弃 2005 年度董事津贴 USD5,910 元。 7 董事、监事、高级管理人员最近 5 年的主要工作经历： (1)陈木森先生，57 岁，大学学历,高级经济师。陈木森先生于 1999 年 11 月加入本公司，一 直担任本公司董事长。陈木森先生亦兼任控股公司华新集团有限公司董事长。 (2)李叶青先生，42 岁，博士,教授级高级工程师。李叶青先生于 1984 年毕业于武汉建材学院 （今武汉理工大学）硅酸盐专业，获工学学士学位；1992 年毕业于武汉工业大学工业管理专业， 获工学硕士学位；2002 年 6 月毕业于华中科技大学管理科学与工程专业，获管理学博士学位。李 叶青先生于 1987 年 11 月加入华新水泥厂（本公司前身），先后任中心化验室质量控制工程师、石 灰石矿副矿长、扩改办副主任、生产技术处长，1993 年 1 月任华新水泥厂副厂长，1994 年 6 月任 本公司副总经理，1999 年 12 月任本公司总经理，2004 年 3 月任本公司总裁。1994 年起，出任本 公司董事。 (3)Tom Clough 先生，59 岁，英国籍，University of Leeds(利兹大学)采矿工程学士。1997 年至今, 先后担任 Holcim 集团 PT Semen Makmur(马克姆尔水泥公司)执行董事、Alsons Cement Corporation(阿尔松斯水泥公司)CEO、PT Semen Cibinong Tbk(西比龙水泥公司)执行董事、 Holcim 集团执行委员会成员。2004 年 10 月起，出任本公司董事。 (4)Daniel Bach 先生，43 岁，瑞士籍，瑞士联邦理工大学（ETH）机械工程硕士、博士。1989 ~ 1994，任 ETH 机械学院研究助理、高级助理；1994 年至今, 先后担任 Holcim 集团瑞士 “HOLDERBANK”工程公司经理助理、项目经理；"Holderbank"/Holcim 集团业务风险管理(BRM)经 理助理、副总裁助理；印尼西比龙水泥公司（Holcim 集团旗下公司）技术总监；Holcim 执委助 理。2005 年 4 月起，出任本公司董事。 (5)Paul Thaler 先生，40 岁，律师，瑞士籍。苏黎士大学法律专业硕士及法学博士，北京大 学研究学者。1997-1998，北京海问律师行外方律师；2000 年至今，瑞士文斐律师事务所驻北京办 事处常驻合伙人。2003 年 4 月起，出任本公司董事。 (6)纪昌华先生，52 岁，大学学历,高级政工师。纪昌华先生于 1972 年 2 月加入华新水泥厂 （本公司前身），先后任机修车间副书记、副主任、主任兼书记；1997 年起，任华新集团有限公 司副总经理。2000 年 2 月起，出任本公司董事、党委副书记。 (7)张天武先生，43 岁，法律硕士,律师。1998- 2005 年，任湖北君尚君律师事务所副主任； 2005 年至今，任湖北得伟君尚律师事务所执行合伙人。现为武汉市律师协会理事、武汉仲裁委员 会仲裁员、武汉市江岸区政协委员。2002 年 4 月起，出任本公司独立董事。 (8)谢获宝先生，39 岁，武汉大学企业管理博士，中南财经政法大学会计学博士后。1993 年至 今，历任武汉大学商学院会计系助教、讲师、副教授、教授、系副主任。2002 年 4 月起，出任本 公司独立董事。 (9)林宗寿先生，49 岁，武汉工业大学无机非金属材料专业硕士、武汉理工大学博士生导师。 1985 年至今，历任武汉理工大学教师、教授、博士生导师。 第九届、第十届全国人大代表。2003 年 4 月起，出任本公司独立董事。 8 (10)周家明先生，52 岁，大学学历,工程师，高级经济师。周家明先生于 1971 年 11 月加入华 新水泥厂（本公司前身），先后任中心化验室副主任、主任；1997 年 4 月-2000 年 2 月，任本公司 副总经理；2000 年 2 月起，任本公司纪委书记、工会主席、监事会主席 。 (11)杨春华先生，55 岁，大学学历，高级经济师。杨春华先生于 1970 年 7 月加入华新水泥厂 （本公司前身），先后任本公司组织部干部科长、组织部副部长兼人事处副处长、劳动人事部部 长、黄石分公司副总经理、本公司政工部部长、纪委副书记。2000 年 4 月起，任本公司工会副主 席、监事。 (12)阮汉文先生，48 岁，经济学硕士，经济师。阮汉文先生于 1981 年加入华新水泥厂（本公 司前身），先后任投资部财务科长、财务部科长、财务部经理助理；2000 年 4 月起，任本公司审 计部经理兼监事会办公室主任、监事。 (13)占卫国先生，33 岁，大学学历，水泥工艺工程师。占卫国先生于 1993 年加入华新水泥厂 （本公司前身），先后任制造二分厂生产值班调度长、中控室副主任；2003 年起，任阳新分公司 生产品质部部长。2003 年 4 月起，出任本公司职工监事。 (14)樊彤涛先生，37 岁，大专学历，机械工程师。樊彤涛先生于 1990 年加入华新水泥厂（本 公司前身），先后任制成车间机械技术员、团委副书记，2000 年 5 月-2003 年 6 月，任制造一分厂 原料车间副主任、机械主管；2003 年起，在本公司制造二分厂从事机械设备管理工作。2003 年 4 月起，出任本公司职工监事。 (15)王锡明先生，47 岁，工商管理硕士，高级经济师。1982 年 2 月毕业于武汉钢铁学院（今 武汉科技大学）化学专业，获工学学士学位；1993 年 1 月毕业于中国人民大学工商管理专业，获 工商管理硕士（MBA）学位。王锡明先生于 1982 年加入华新水泥厂（本公司前身），先后任华新中 专教师，华新水泥厂团委副书记，黄石市委组织部干部，华新水泥厂劳动人事处副处长、计划处副 处长，本公司证券部副经理、经理、董秘兼证券部经理。2000 年 4 月起, 任本公司副总经理，董 事会秘书。2004 年 3 月起，任本公司副总裁。 (16)彭清宇先生，46 岁，硕士，高级经济师。2004 年 4 月毕业于华中科技大学西方经济学专 业，获经济学硕士学位。彭清宇先生于 1979 年 1 月加入华新水泥厂（本公司前身），先后任华新 水泥厂销售处科长、华新南通贸易公司副经理、华通贸易公司经理兼上海办事处主任，本公司销售 部经理、销售公司副经理。2000 年 4 月起，任本公司副总经理兼销售公司经理。2004 年 3 月起， 任本公司副总裁。 (17) 孔玲玲女士，42 岁，经济学硕士，高级经济师。1985 年毕业于武汉工业大学（今武汉理 工大学），获工学学士学位；1992 年 12 月毕业于复旦大学企业管理专业，获经济学硕士学位。孔 玲玲女士于 1985 年 7 月加入华新水泥厂（本公司前身），先后任华新水泥厂科研所工程师、团委 副书记，本公司财务部副部长、计划部副部长、财务部经理。2000 年 4 月起，任本公司副总经 理。2004 年 3 月起，任本公司副总裁。 (18)冯东光先生，39 岁，硕士，工程师。1989 年毕业于武汉工业大学（今武汉理工大 学）硅酸盐工程专业，获工学学士学位；2003 年毕业于华中科技大学工商管理专业，获工商管理 9 硕士学位。冯东光先生于 1989 年加入华新水泥厂（本公司前身），先后任本公司干法分厂厂长助 理、厂长。2001 年 11 月，任本公司总经理助理。2003 年 4 月起，任本公司副总经理。2004 年 3 月起，任本公司副总裁。 (19)柯友良先生，41 岁，经济学硕士，高级经济师。2001 年毕业于武汉理工大学产业经济学 专业，获经济学硕士学位。柯友良先生于 1985 年加入华新水泥厂（本公司前身），先后任本公司 投资部经理助理、工程部管理部部长、工程部综合管理部副部长、计划发展部经理。2001 年 11 月，任本公司总经理助理兼计划发展部经理。2003 年 4 月起，任本公司副总经理。2004 年 3 月 起，任本公司副总裁。 （二）在股东单位任职情况 姓名 股东单位名称 担任的职务 任期起始日期 是否领取报酬津贴 陈木森 华新集团有限公司 董事长 1999-11-05 否 李叶青 华新集团有限公司 党委书记 2001-09-07 否 纪昌华 华新集团有限公司 副总经理 1997-04-02 否 周家明 华新集团有限公司 工会主席、纪委书记 2000-02-22 否 在其他单位任职情况 除独立董事及董事 Tom Clough 先生、Daniel Bach 先生、Paul Thaler 先生外（其任职情况详 见上述董事工作经历），截止本报告期末公司无董事、监事、高管在其他单位任职。 （三）董事、监事、高级管理人员报酬情况 1、董事、监事、高级管理人员报酬的决策程序：董事会薪酬与考核委员会提议，董事会讨论 决定高级管理人员的薪酬；涉及董事、监事的年度报酬报股东大会批准。 2、董事、监事、高级管理人员报酬确定依据：1、公司董事、监事报酬的确定依据：2004 年 4 月 28 日公司 2003 年度股东大会通过的《关于调整董事和监事职务津贴标准的议案》。2、公司高 级管理人员报酬的确定依据：2004 年 4 月 28 日公司 2003 年度股东大会通过的《关于高管薪酬的 议案》、2005 年 4 月 26 日公司第四届董事会第二十次会议通过的《关于管理层 2005 年度短期激 励考核指标的议案》。 （四）公司董事监事高级管理人员变动情况 姓名 担任的职务 离任原因 Gerard Letellier 董事 工作变动 本报告期公司没有聘任或解聘高级管理人员。 （五）公司员工情况 截止报告期末，公司在职员工为 6,695 人，需承担费用的离退休职工为 721 人。 员工的结构如下： 1、专业构成情况 专业构成的类别 专业构成的人数 生产人员 5,233 销售人员 323 技术人员 450 财务人员 140 行政人员 549 2、教育程度情况 教育程度的类别 教育程度的人数 博士、硕士 37 大学本科 351 大学专科 1,026 中专 627 其他 4,654 10 六、公司治理结构 （一）公司治理的情况 报告期内，公司严格按照《公司法》、《证券法》和中国证监会有关法律法规要求，规范运 作、诚信经营，同时对照《上市公司治理准则》，严格执行《公司章程》、《股东大会议事规 则》、《董事会议事规则》、《监事会议事规则》、《经理工作细则》等规章制度，进一步加强了 公司董事、监事和高管人员诚信自律、勤勉尽责的意识和依法遵章履行职责的理念。报告期内，公 司通过完成股权分置改革工作，积极推进了投资者关系管理工作，公司治理水平得到进一步的提 升。 （二）独立董事履行职责情况 1、独立董事参加董事会的出席情况 独立董事姓名 本年应参加董事会次数 亲自出席（次） 委托出席（次） 缺席（次） 备注 张天武 7 7 谢获宝 7 7 林宗寿 7 6 1 报告期内，3 名独立董事尽职尽责，严格遵守国家法律、法规、规章和《公司章程》的要求，本 着对全体股东负责的态度，参加了公司召开的 7 次董事会及 2 次股东大会，分别从法律、财务和技 术角度对公司的战略发展、对外投资与担保、高级管理人员薪酬考核等事项发表了独立、客观的意 见，强化了董事会重大决策的科学性、合理性，为公司的健康、快速发展起到了应有的作用。 2、独立董事对公司有关事项提出异议的情况 报告期内，公司独立董事未对公司本年度的董事会议案及其他非董事会议案事项提出异议。 （三）公司相对于控股股东在业务、人员、资产、机构、财务等方面的独立情况 1)、业务方面：业务独立 2)、人员方面：人员独立 3)、资产方面：资产独立 4)、机构方面：机构独立 5)、财务方面：财务独立 （四）高级管理人员的考评及激励情况 遵照 2003 年 10 月 27 日公司四届七次董事会通过的《关于翰威特研究的华新高管薪酬报告的 议案》和 2004 年 4 月 28 日公司 2003 年度股东大会通过的《关于高管薪酬的议案》及 2005 年 4 月 20 日公司第四届董事会第二十次会议通过的《关于管理层 2005 年度短期激励考核指标的议案》的 规定，依据董事会薪酬与考核委员会提议和董事会决议，并结合本年度 EBITDA 和经营净现流完成 情况，公司董事会对高级管理人员的业绩进行考评与兑现。管理层人员的年薪分为固定薪酬和短期 激励两部分，其中，董事长与总裁年薪中的固定薪酬和短期激励各占 50%，其他高级管理人员及相 应职位任职者固定薪酬占 60%、短期激励占 40%。所有管理层人员短期激励的 70%以现金兑现，另 30%用以购买公司的股票。 七、股东大会情况简介 （一）年度股东大会情况 公司于 2005 年 4 月 26 日召开了 2004 年度股东大会，决议公告刊登在 2005 年 4 月 27 日的 《中国证券报》、《上海证券报》、《香港商报》。 （二）临时股东大会情况 公司于 2005 年 12 月 16 日召开了股权分置改革 A 股市场相关股东会议，决议公告刊登在 2005 年 12 月 19 日的《中国证券报》、《上海证券报》、《证券时报》。 11 八、董事会报告 （一）管理层讨论与分析 1、报告期内公司经营情况的回顾 (1)报告期内总体经营情况 2005 年，是水泥行业经营最困难的一年。随着国家宏观调控政策效应的逐步显现，固定资产 投资增幅下降，房地产降温，水泥产销量增长明显放缓，水泥供过于求的局面日益凸现。产能过剩 直接导致价格下滑，加之煤、电涨价的双重挤压，全行业利润大幅下滑。根据中国水泥网统计结 果，2005 年全国水泥产量达到 10.48 亿吨，年增幅 11.7%；水泥销售收入 2,608.35 亿元，同比增 长 16.2%；但水泥利润总额却只有 80.50 亿元，同比下降了 38.0%。 2005 年，公司同样面临非常严峻的外部市场环境。一方面，前几年水泥行业过热投资所形成 的产能规模，在 2004~05 年集中释放，使得我国水泥产能规模严重过剩，而产能过剩直接导致价格 下滑，公司产品全年的平均售价降至近 10 年的新低；另一方面，占公司产品成本约六成的煤和电 与 2004 年相比，价格均大幅上涨，使得公司产品成本呈刚性上扬之态，极大地蚕食了公司的盈利 空间。公司的盈利能力未能与规模扩张同步提升，产能发挥也由此明显受限，公司的生产经营滑向 低谷。 面对困难与挑战，公司采取了强有利的应对措施，不仅在严酷的市场环境下取得了相对较好的 经营业绩，而且公司规模更加壮大，市场份额稳步提高，竞争力进一步增强。目前，公司已具有年 产 1200 万吨熟料、2200 万吨水泥的生产能力，使公司真正成为业内具有重要影响的水泥行业龙头 企业。 公司的主要做法如下： 在生产管理上，公司进一步精细管理，以 IT 信息技术为基础，以扁平、矩阵、协调、效益、 效率、创新为原则，以设备系统运行效率为突破口，提高和优化生产运行的指标、效率，力控运行 成本。淘汰落后生产工艺，调整了集团内能耗高的三台湿法窑生产线及六条干法中空窑的生产作业 计划，并以现代新型干法生产线来替代生产，保证集团内的生产综合平衡。 在市场营销上，讲求理性，有所为有所不为。公司适时收减在上海市场的销量，加大在湖北市 场的销售力度，提升市场占有份额。同时谋求新的销售渠道，重开产品的出口业务。公司仍以效益 优先为原则，参与价格竞争，但不挑起价格竞争。 在发展上，公司以战略管理为手段，统筹规划，规范管理。项目规划、建设、资金落实、人员 配备、项目投产、产品投放等工作有条不紊，新建项目已成为公司主要的利润来源。年内，公司已 建成投产武穴 6000 吨/日熟料水泥生产线、宜都二期 2500 吨/日熟料生产线、苏州金猫 3500 吨/日 熟料生产线、西藏山南 1000 吨/日熟料水泥生产线和岳阳年产 80 万吨水泥粉磨站、武汉武钢华新 二期年产 60 万吨水泥粉磨线、华新南通二期年产 65 万吨水泥粉磨线及武汉年产 120 万方混凝土搅 12 拌站项目，新增水泥生产能力 750 万吨、混凝土 120 万方。目前，公司在湖北省的战略布局已基本 完成。 2005 年，本集团水泥和熟料销售总量 1518 万吨（内部统计口径，下同），其中水泥销量 1340 万吨，熟料销量 178 万吨，产销量名列全国前茅。实现主营业务收入 2,639,380,167.10 元、经营 活动产生的现金流量净额 503,134,090.50 元，分别比 2004 年增长 21%、3%。实现利润总额 81,377,759.92 元、净利润 62,073,249.69 元，虽较 2004 年分别下降 68%、58%，但仍为公司自上 市以来较好的年份之一。 (2)公司主营业务及经营状况 主营业务分行业、分产品情况表 单位:元 主营业 主营业 主营 务收入 务成本 业务 主营业务利润率比 分行业或分产品 主营业务收入 主营业务成本 比上年 比上年 利润 上年增减（%） 增减 增减 率(%) （％） （％） 行业 水泥 2,574,343,439.41 2,076,888,915.66 18.67 20.0 31.4 减少 7.09 个百分点 其他 65,036,727.69 40,868,379.62 34.82 50.0 70.7 减少 6.43 个百分点 合计 2,639,380,167.10 2,117,757,295.28 19.07 20.6 32.0 减少 6.99 个百分点 产品 32.5 等级水泥 1,434,385,968.74 1,115,995,277.06 21.55 44.6 51.4 减少 3.58 个百分点 42.5 等级及以上 减少 11.35 个百分 1,056,933,573.80 890,656,512.26 15.08 -5.3 9.3 水泥 点 熟料 83,023,896.87 70,237,126.34 14.75 125.5 147.0 减少 7.48 个百分点 其他 65,036,727.69 40,868,379.62 34.82 50.0 70.7 减少 6.43 个百分点 合计 2,639,380,167.10 2,117,757,295.28 19.07 20.6 32.0 减少 6.99 个百分点 主营业务分地区情况表 单位:元 地区 主营业务收入 主营业务收入比上年增减(％) 湖北省 1,297,375,096 57.0 江苏省 599,580,832 -23.9 上海市 111,076,563 -66.4 重庆市 126,431,786 597.4 安徽省 、江西省 108,927,969 -11.3 河南省 106,375,873 288.3 湖南省 68,417,647 214.4 浙江省 、福建省 44,803,440 -15.9 西藏自治区 33,121,220 / 出口 143,269,740 / 合计 2,639,380,167 20.6 生产经营的主要产品及市场占有率情况的说明 本集团生产经营的主要产品为水泥和熟料。2005 年，公司在湖北销售水泥 736 万吨，市场 13 占有率 21.6%，同比增长 44%；在江苏销售水泥 305 万吨，市场占有率 4.2%；在上海销售水泥 57 万吨，市场占有率 2.7%；在西藏销售水泥 8 万吨，市场占有率 4.6%；在重庆销售水泥 51 万吨， 市场占有率 2.3%；在安徽、江西销售水泥 59 万吨；在河南销售水泥 58 万吨；在湖南销售水泥 44 万吨；在浙江、福建销售水泥 22 万吨（以上数据均源自内部统计）。 主要供应商、客户情况 前五名供应商采购金额合计（元） 504,289,768.35 占采购总额比重 36.18 前五名销售客户销售金额合计（元） 309,981,291.26 占销售总额比重 11.74 (3)主要控股及参股公司的经营情况及业绩 单位:元 公司名称 业务性质 主要产品或服务 注册资本 资产规模 净利润 华新水泥（宜昌）有限 有限责任公司 生产及销售水泥 150,000,000 755,061,000 48,509,978 公司 华新水泥（阳新）有限 有限责任公司 生产及销售水泥 500,000,000 647,869,000 62,064,911 公司 华新水泥（恩施）有限 有限责任公司 生产及销售水泥 60,000,000 271,717,000 35,273,345 公司 华新水泥（西藏）有限 有限责任公司 生产及销售水泥 50,000,000 182,938,000 5,216,337 公司 华新水泥（仙桃）有限 有限责任公司 生产及销售水泥 23,900,000 37,163,000 974,863 公司 华新混凝土（武汉）有 混凝土的制造及 有限责任公司 10,000,000 42,937,739 2,195,927 限公司 销售 华新金猫水泥(苏州)有 - 中外合资 生产及销售水泥 USD,136,000,000 1,450,953,000 限公司 48,952,805 武汉武钢华新水泥有限 有限责任公司 生产及销售水泥 40,000,000 162,648,000 8,381,196 公司 华新南通水泥有限公司 中外合资 生产及销售水泥 108,000,000 191,282,000 -6,910,476 生产及销售水泥 黄石华新包装有限公司 有限责任公司 8,000,000 42,252,000 3,419,773 包装袋 黄石华新水泥科研设计 建材、建筑工程 有限责任公司 1,000,000 60,604,47 915,519 有限公司 设计 华新水泥（岳阳）有限 有限责任公司 生产及销售水泥 25,000,000 97,422,000 -3,092,017 公司 华新水泥（昭通）有限 有限责任公司 生产及销售水泥 75,000,000 167,189,514 / 公司 华新水泥（武汉）有限 有限责任公司 生产及销售水泥 60,000,000 139,810,888 / 公司 14 2、公司未来发展的展望 (1)公司所处行业的发展趋势及面临的市场竞争格局 2006 年是实施“十一五”规划的开局之年。作为循环经济的重点行业---水泥行业，将进入新 的发展阶段。预计“十一五”我国 GDP 增长率和固定资产投资增长率仍将保持较高的水平。工业 化、城市化和基础设施建设投资的增长，必然带动水泥产业的发展。另外，我国水泥业的集中度 低、落后工艺产能仍超过半壁江山的现实，也决定了新型干法生产线仍将继续发展。水泥产业结构 的进一步升级、规模化生产、集约化经营将成为中国水泥产业发展的总趋势，大型企业仍将保持在 整合、并购中的竞争优势，获得加快发展的机会。 但仅就 2006 年而言，水泥行业仍处在发展过程中的收缩周期，增长率有可能出现稍低于 GDP 增 长的情况。随着前几年投资形成的生产能力陆续投产，预计水泥生产总量将达到 11.3 亿吨左右，同 比上年仍有增长。但是，受国家宏观调控、水泥需求增速下降和前期新增水泥产能增速过快的影响， 水泥投资会继续下降。据中国水泥协会的预测，2006 年，全国新建新型干法水泥生产线将达到 50 条 左右，新增产能 4000 万吨。到 2006 年底，全国水泥产能将达到 13.7 亿吨，其中新型干法水泥产量 的比重将由 2005 年的 40%提高到 2006 年 45%左右，结构将进一步优化。节能、环保和发展循环经济 的效果逐渐显现。 2006 年，水泥价格将继续维持低位运行略有波动的态势，部分地区可能有恢复性增长。水泥行 业整体供大于求、落后的产能明显过剩、需求增速放缓仍然是水泥价格难有大幅上升的主要原因。尽 管水泥价格仍将维持在低位徘徊，但水泥企业 2006 年盈利总水平回升应该是有望的。 本公司是中国水泥业界有重要影响的大型集团，是中南地区最大的水泥生产企业，产能规模位 居全国前列。公司现在已先于任何竞争对手在湖北省东西南北中等各地都进行了战略布局，并将在今 后一两年内形成 3000 万吨的产能规模；在湖北地区的销售份额将超过 40%，区域竞争优势明显。湖 北作为中部地区，将保持高于全国平均水平较多的固定资产投资增长率，为本公司引导该地区水泥市 场规范、有序的竞争创造了条件。而展望公司另一目标市场--华东地区，预计水泥市场仍会延续 2005 年的态势，供给严重大于需求，竞争依然残酷、价格依然低位整理，市场形势难有大的改观。 2006 年，随着煤炭行业投资建设的加快，煤炭供应紧张的局面将会有效缓解。据国家发改委的 预测，全年煤炭总产量将达到 22 亿吨，需求 21.6 亿吨，供需大体平衡。预计一度制约公司生产的煤 炭紧张局面，在 2006 年不会出现。但 2005 年下半年开始征收的“煤炭价格调节资金”和煤炭资源税 的调整以及煤电联动政策的推动，预计 2006 年煤炭出厂价格仍将继续高位小幅波动运行。相对 2005 年，本公司煤炭采购价格虽然将继续维持市场同步的高位，但在煤炭品质的保证上将有相应提高，按 照单位热值计算的煤炭相对采购成本会有下降。另外，影响公司成本的另一大能源—电力，在 2006 年不会再紧张的情况下，价格会继续维持在高位，但如果国家推行煤电联动，则不排除因煤价上涨而 15 带动电力涨价情况的出现。 2005 年 12 月，国务院新发布了《促进产业结构调整暂行规定》和产业结构调整指导目录。产 业结构调整政策和 2006 年 7 月 1 日即将实施的新环保标准，将会对小水泥企业的生产起到抑制作 用，对大水泥企业将是新的机遇。但 2006 年实际能带来的影响还有待观察。 (2)公司未来发展机遇、新年度经营计划 新的产业结构调整政策和环保标准，将会进一步加大新型干法水泥生产线替代立窑、湿法窑等 落后水泥生产线的力度；节约资源、发展循环经济；建设社会主义新农村、缩小城乡差距；公司的 主导市场湖北 2006 年的固定资产投资还将保持 30%左右的增长速度、并将成为促进中部地区崛起的 重要战略支点等等，这些都将成为公司未来的发展机遇。 新年度经营计划：2006 年，生产熟料 1300 万吨,生产水泥 2000 万吨,商品混凝土 60 万方立方 米、设备制造总量 10000 吨、销售收入 43 亿元。 （3）重大资本支出计划。 2006 年，公司将继续按照战略规划、战略布局实施新建扩建水泥生产线。工程总投资 12,69 亿 元。资金来源构成：①经营活动净现金流 5.27 亿元，②净增银行贷款 3.83 亿元，③其余资金通过股 权融资解决。 资本支出计划中在建及新建项目概况如下： 单位：万元 项目名称 产能 总投资 2006 年计划投资 熟料生产线 214,341 88,769 阳新 二期 年产水泥 200 万吨 32,879 23,015 武穴 二期 年产水泥 250 万吨 35,487 2,000 襄樊 一期 年产水泥 150 万吨 34,434 13,619 咸宁 一期 年产水泥 150 万吨 37,511 25,258 云南昭通 年产水泥 150 万吨 37,037 9,479 河南光山 年产水泥 150 万吨 36,993 15,398 粉磨站 32,871 14,374 武汉一期 年产水泥 200 万吨 16,871 3,374 湖南湘钢 年产水泥 300 万吨 16,000 11,000 混凝土搅拌站 6,126 6,126 汉口 年产 120 万方 2,166 2,166 汉阳 年产 120 万方 2,166 2,166 黄石 年产 60 万方 1,794 1,794 合计 253,338 109,269 16 （4）公司面临的风险因素分析 2006 年，公司面临的最大风险是在建新建项目不能如期投产。另外，持续的高速发展带来公 司自有资金的不足以及资金时间结点的不平衡，是公司面临的风险因素。 面对风险，公司将加大项目监管力度，全力推进新建在建项目的进度。同时，科学调节资金， 积极寻求新的资金渠道，缓解公司的资金压力。今年，要创造条件实现股权融资计划。 （二）公司投资情况 报告期内公司投资额为 1,123,090 千元人民币，比上年增加 246,577 千元人民币，增加的比例 为 28.13％。 1、募集资金使用情况 报告期内，公司无募集资金或前期募集资金使用到本期的情况。 2、非募集资金项目情况 (1)2005 年公司投产项目 ①武穴 6000 吨/日熟料水泥生产线。项目计划总投资 55,671 万元，实际完成投资 47,349 万 元。该生产线已于 2005 年 4 月 26 日点火投产，当年生产熟料 120 万吨，生产水泥 54 万吨。 ②西藏山南 1000 吨/日熟料水泥生产线。项目计划总投资 15,004 万元，实际完成投资 14,494 万元。该项目于 2005 年 6 月 28 日建成投产，当年生产熟料 10 万吨，生产水泥 9 万吨。 ③苏州金猫 130 万吨水泥粉磨站技改工程。项目计划总投资 8,700 万元，实际完成投资 6,420 万元。该工程第一套水泥磨系统于 2004 年 10 月 18 日建成，第二套水泥磨系统于 2005 年 4 月 26 日建成投产，当年生产水泥 67.87 万吨。 ④苏州金猫 3500 吨/日熟料生产线技术改造工程。项目计划总投资 8,413 万元，实际完成投资 5,287 万元。该项目于 2005 年 8 月 28 日建成投产，当年生产熟料 25 万吨。 ⑤宜都二期 2500 吨/日熟料生产线工程。项目计划总投资 19,808 万元，实际完成投资 17,103 万元。该工程水泥磨系统于 2005 年 8 月 30 日建成投产，窑系统于 2005 年 9 月 25 日建成投产，当 年生产熟料 14 万吨，生产水泥 36 万吨。 ⑥武汉年产 120 万方混凝土搅拌站项目。项目计划总投资 3,058 万元，实际完成投资 3,250 万 元。该项目于 2005 年 6 月建成投产，当年生产商品混凝土 5.4 万方。 (2)2005 年公司在建项目 ①云南 4000 吨/日熟料水泥生产线工程。项目计划投资 37,037 万元。2004 年 10 月场平开 工，土建工程基本完成，进入设备安装阶段，预计 2006 年 6 月建成投产。 ②襄樊 4000 吨/日熟料水泥生产线工程。项目计划投资 34,434 万元。2005 年 3 月 30 日开 工，窑线主体工程已基本完成，预计 2006 年 7 月建成投产。 ③武汉年产 200 万吨水泥粉磨站。项目计划投资 16,871 万元。2004 年 11 月 30 日开工，主体 17 工程已基本建成，预计 2006 年 4 月建成投产。 ④华新水泥（阳新）有限公司 4800 吨/日熟料水泥生产线二期工程。项目计划投资 32,879 万 元。2005 年 9 月 29 日开工，土建基础工程已基本完成，即将进入主体施工阶段，预计 2006 年 10 月建成投产。 （三）董事会日常工作情况 1、董事会会议情况及决议内容 1)公司于 2005 年 3 月 22 日召开第四届董事会第十九次会议董事会会议，审议通过：①公司 2004 年度报告及 2004 年度报告摘要；②公司 2004 年度财务决算报告；③公司 2004 年度利润分配 预案；④关于决定管理层 2004 年度短期激励的议案；⑤关于更换董事的议案；⑥关于设立华新水 泥（武汉）有限公司的议案；⑦关于设立华新混凝土（武汉）有限公司的议案；⑧关于续聘会计师 事务所的议案；⑨关于召开 2004 年度股东大会的议案。决议公告刊登在 2005 年 3 月 24 日的《中 国证券报》、《上海证券报》及《香港商报》。 2)公司于 2005 年 4 月 26 日召开第四届董事会第二十次会议董事会会议，审议通过：①公司 2005 年第一季度报告；②关于管理层 2005 年度短期激励考核指标的议案；③关于设立华新水泥股 份有限公司武穴分公司的议案；④关于公司 2005 年上半年业绩预告的议案。决议公告刊登在 2005 年 4 月 27 日的《中国证券报》、《上海证券报》及《香港商报》。 3)公司于 2005 年 8 月 10 日召开第四届董事会第二十一次会议董事会会议，决议公告刊登在 2005 年 8 月 12 日的《中国证券报》、《上海证券报》及《香港商报》。 4)公司于 2005 年 8 月 29 日召开第四届董事会第二十二次会议董事会会议，审议通过公司 2006 年预算假设和目标建议的报告。 5)公司于 2005 年 10 月 28 日召开第四届董事会第二十三次会议董事会会议，决议公告刊登在 2005 年 10 月 31 日的《中国证券报》、《上海证券报》及《香港商报》。 6)公司于 2005 年 11 月 7 日召开第四届董事会第二十四次会议董事会会议，审议通过：①公司 2006 年度财务预算报告；②公司 2006 年度资本支出计划。， 7)公司于 2005 年 11 月 25 日召开第四届董事会第二十五次会议董事会会议，审议通过：①关 于向建设银行申请 15 亿元授信额度的议案；②关于申请发行短期融资券的议案。 2、董事会对股东大会决议的执行情况 本年度，公司董事会根据《公司法》的规定，履行了公司章程规定的董事会职权，严格执行了 股东大会所通过的各项决议，较好地发挥了董事会作用。 （四）利润分配或资本公积金转增预案 经信永中和会计师事务所审计，2005 年母公司实现净利润 62,587,119.94 元，合并后净利润 为 62,073,249.69 元。根据公司章程的规定，提取 10%法定盈余公积金 6,258,712.00 元，提取 10%法定公益金 6,258,712.00 元。截止 2005 年 12 月 31 日合并后可分配利润 183,152,698.79 元。 公司董事会审议通过如下利润分配预案：以 2005 年末总股本 32,840 万股为基数，每股派发现 金红利 0.06 元(含税)，合计分配 19,704,000 元，余额全部转入未分配利润。2005 年度，不进行 资本公积金转增股本。 以上利润分配预案须经公司股东大会批准后实施。 （五）独立董事张天武先生、谢获宝先生、林宗寿先生关于对外担保情况的专项说明 “根据《关于规范上市公司与关联方资金往来及上市公司对外担保若干问题的通知》（证监发 [2003]56 号）和《公司章程》及其它有关文件的要求，我们对公司 2005 年度的对外担保事项进行 了认真审核，公司 2005 年度当期和累计均没有为控股股东及其附属公司、公司持股 50%以下的其 它关联方、任何非法人单位或个人提供担保，公司有效控制了对外担保风险。 我们认为：2005 年度，公司对外担保的决策程序合法、合理，没有损害公司及股东、特别是 中小股东利益。” 18 九、监事会报告 （一）监事会的工作情况 2005 年,监事会召开了 2 次会议。第一次会议的主要议题是：1、审议通过了公司 2004 年度报 告及报告摘要、公司 2004 年度财务决算报告、公司 2004 年度利润分配预案；2、审议通过了公司 2004 年度监事会工作报告。第二次会议的主要议题是：审议通过了公司 2004 年度半年度报告。 （二）监事会对公司依法运作情况的独立意见 报告期内，公司董事会及管理层能够依照法律法规和公司章程规范运作，决策程序合法，无违 反法律、法规、公司章程和损害公司利益的行为。公司高级管理人员本着对全体股东和全体员工负 责的精神，抢抓机遇，科学决策，战略计划稳步实施，生产规模不断扩大，新建项目经济效益情况 较好。 （三）监事会对检查公司财务情况的独立意见 报告期内，公司能够严格执行相关法律法规和公司财务制度，财务运作情况正常。监事会还对 信永中和会计事务所和普华永道中国有限公司出具的审计意见及涉及事项进行了审查，认为其出具 的财务报告公允地反映了公司的财务状况和经营成果，参与年度报告和审议的人员的行为都严格遵 循了保密的原则。 （四）监事会对公司最近一次募集资金实际投入情况的独立意见 报告期内，公司无募集资金使用情况。 （五）监事会对公司收购出售资产情况的独立意见 报告期内，公司无收购出售资产情况。 （六）监事会对公司关联交易情况的独立意见 报告期内，公司的关联交易均遵循公正、公平、公开的原则进行，无损害公司利益的情况。 19 十、重要事项 （一）重大诉讼仲裁事项 本年度公司无重大诉讼、仲裁事项。 （二）报告期内公司收购及出售资产、吸收合并事项 本年度公司无收购及出售资产、吸收合并事项。 （三）报告期内公司重大关联交易事项 1、与日常经营相关的关联交易 (1)购买商品、接受劳务的重大关联交易 单位:万元 关联交易 关联交易定价 关联交易金 占同类交易额 对公司利 关联方 结算方式 内容 原则 额 的比重(％) 润的影响 华新纤维水泥 购买本公 市价原则 336 0.13 现金结算 制品有限公司 司水泥 (2)销售商品、提供劳务的重大关联交易 单位:万元 关联交易定价 关联交易金 占同类交易额 对公司利 关联方 关联交易内容 结算方式 原则 额 的比重(％) 润的影响 华新集团 向本公司提供 协商定价 480 100 现金结算 有限公司 劳务 向本公司提供 Holcim 协商定价 242 100 现金结算 技术服务 （四）托管情况 本年度公司无托管事项。 （五）承包情况 本年度公司无承包事项。 （六）租赁情况 本年度公司无租赁事项。 （七）担保情况 单位:元 公司对控股子公司的担保情况 报告期内对控股子公司担保发生额合计 155,000,000.00 报告期末对控股子公司担保余额合计 377,540,000.00 公司担保总额情况（包括对控股子公司的担保） 担保总额 377,540,000.00 担保总额占公司净资产的比例(%) 31.11 （八）委托理财情况 本年度公司无委托理财事项。 （九）其他重大合同 本年度公司无其他重大合同。 20 （十）承诺事项履行情况 公司股权分置改革方案已经 2005 年 12 月 16 日华新水泥股份有限公司股权分置改革 A 股市场 相关股东会议通过，并于 12 月 26 日实施。公司控股股东华新集团有限公司在《华新水泥股份有限 公司股权分置改革方案》中承诺： 1、 自股权分置改革方案实施之日起，十二个月内不上市交易或者转让。 2、 其代国家持有的华新水泥国家股及其持有的华新水泥境内法人股自股权分置改革方案实施 之日起第十三至第三十六个月内不通过上海证券交易所挂牌交易出售。 3、 其代国家持有的华新水泥国家股自股权分置改革方案实施之日起第三十七至第四十八个月 内通过上海证券交易所挂牌交易出售的数量不超过股权分置改革后华新集团代国家持有的 国家股数量的 5%(相当于公司目前总股本的 1.21%)，出售价格不低于 9 元/股（如果自股权 分置改革方案实施之日起至华新集团出售股份期间有派息、送股、资本公积金转增股本等 事项，将对该价格进行除权除息处理）。 4、 其代国家持有的华新水泥国家股自股权分置改革方案实施之日起第四十九至第六十个月内 通过上海证券交易所挂牌交易出售的数量不超过股权分置改革后华新集团代国家持有的国 家股数量的 10%(相当于公司目前总股本的 2.41%)，出售价格不低于 9 元/股（如果自股权 分置改革方案实施之日起至华新集团出售股份期间有派息、送股、资本公积金转增股本等 事项，将对该价格进行除权除息处理）。 5、 其代国家持有的华新水泥国家股通过上海证券交易所挂牌交易出售的数量每达到华新水泥 的股份总数 1%时，自该事实发生之日起两个工作日内做出公告，但公告期间无需停止出售 股份。 该项承诺正在履行过程中。 （十一）聘任、解聘会计师事务所情况 报告期内，公司续聘信永中和会计师事务所为公司 2005 年度境内审计机构，支付其年度审计 工作的酬金共约 550,000 元人民币，截止本报告期末，该会计师事务所已为本公司提供了 11 年的 审计服务。 公司续聘普华永道中国有限公司为公司 2005 年度境外审计机构，支付其年度审计工作的酬金 共约 1,150,000 元人民币，截止本报告期末，该会计师事务所已为本公司提供了 12 年的审计服 务。 2005 年，公司除支付给两家会计师事务所上述报酬外，另负担审计期间的差旅费。 （十二）公司、董事会、董事受处罚及整改情况 报告期内，公司、公司董事及高级管理人员无受监管部门处罚及整改情况。 （十三）其它重大事项 2005 年 12 月 29 日，公司成功完成了 A 股市场股权分置改革工作。 21 十一、财务会计报告 国内审计报告 XYZH/2005A3019 华新水泥股份有限公司全体股东： 我们审计了后附的华新水泥股份有限公司（以下简称“华新水泥公司”）2005 年 12 月 31 日的合并及母公司资产负债表以及 2005 年度的合并及母公司利润表和现金流量表。这些会 计报表及其编制是华新水泥公司管理当局的责任，我们的责任是在实施审计工作的基础上对这 些会计报表发表意见。 我们按照中国注册会计师独立审计准则计划和实施审计工作，以合理确信会计报表是否 不存在重大错报。审计工作包括在抽查的基础上检查支持会计报表金额和披露的证据，评价管 理当局在编制会计报表时采用的会计政策和作出的重大会计估计，以及评价会计报表的整体反 映。我们相信，我们的审计工作为发表意见提供了合理的基础。 我们认为，上述会计报表符合国家颁布的企业会计准则和《企业会计制度》的规定，在 所有重大方面公允反映了华新水泥公司 2005 年 12 月 31 日的财务状况以及 2005 年度的经营成 果和现金流量情况。 信永中和会计师事务所 注册会计师 张克东 注册会计师 李素平 北京市东城区朝阳门北大街 8 号富华大厦 C 座 12 层 2006 年 3 月 3 日 22 资产负债表 单位:元 合并 母公司 项目 合并 期末数 期初数 期末数 期初数 资产： 流动资产： 货币资金 五-1 368,316,897.24 397,339,808.76 116,523,790.75 168,790,952.83 短期投资 应收票据 五-2 104,574,447.75 117,045,564.16 55,038,800.53 48,826,221.90 应收股利 应收利息 304,555.62 应收账款 五-3 109,388,504.02 65,581,732.92 50,082,233.45 29,087,547.97 其他应收款 五-4 82,937,052.52 67,521,873.19 262,157,755.66 131,709,886.31 预付账款 五-5 16,112,108.95 43,448,775.66 25,289,952.47 46,197,660.96 应收补贴款 存货 五-6 328,836,476.04 285,613,147.56 123,314,015.16 135,474,166.76 待摊费用 五-7 1,123,035.17 1,266,224.48 827,322.45 894,685.11 一年内到期的长 期债权投资 其他流动资产 流动资产合计 1,011,288,521.69 978,121,682.35 633,233,870.47 560,981,121.84 长期投资： 长期股权投资 五-8 22,711,800.80 23,950,917.77 1,482,498,456.48 914,709,627.19 长期债权投资 五-8 59,057.32 59,057.32 59,057.32 59,057.32 长期投资合计 22,770,858.12 24,009,975.09 1,482,557,513.80 914,768,684.51 其中：合并价差 五-8 8,003,799.64 9,251,145.04 固定资产： 固定资产原价 五-9 5,635,949,416.58 4,550,430,830.57 2,408,334,950.34 2,339,725,759.39 减：累计折旧 五-9 1,596,682,649.93 1,378,073,394.33 855,023,065.10 756,364,608.04 固定资产净值 五-9 4,039,266,766.65 3,172,357,436.24 1,553,311,885.24 1,583,361,151.35 减：固定资产减 五-9 65,456,142.75 102,879,245.77 4,047,235.70 4,047,235.70 值准备 固定资产净额 五-9 3,973,810,623.90 3,069,478,190.47 1,549,264,649.54 1,579,313,915.65 工程物资 五-10 116,090,592.93 73,190,483.12 在建工程 五-11 440,347,060.74 448,111,293.23 188,083,767.64 269,659,546.03 固定资产清理 固定资产合计 4,530,248,277.57 3,590,779,966.82 1,737,348,417.18 1,848,973,461.68 无形资产及其他 资产： 无形资产 五-12 512,819,727.58 329,695,355.41 84,724,047.31 71,078,173.38 长期待摊费用 五-13 31,164,792.72 33,192,977.73 11,198,709.46 12,179,248.30 其他长期资产 无形资产及其他 543,984,520.30 362,888,333.14 95,922,756.77 83,257,421.68 资产合计 递延税项： 递延税款借项 资产总计 6,108,292,177.68 4,955,799,957.40 3,949,062,558.22 3,407,980,689.71 23 负债及股东权 益： 流动负债： 短期借款 五-14 581,300,000.00 445,380,000.00 360,700,000.00 283,200,000.00 应付票据 五-15 195,396,247.88 77,430,625.01 72,201,399.24 14,685,625.01 应付账款 五-16 481,526,792.21 384,040,381.29 164,351,726.73 138,115,439.40 预收账款 五-17 85,799,398.18 49,688,371.11 151,945,799.35 142,179,982.98 应付工资 8,617,457.22 22,436,260.55 1,582,000.00 12,295,103.00 应付福利费 7,341,878.01 6,639,807.98 3,248,691.60 4,699,902.53 应付股利 五-18 393,006.80 702,119.60 393,006.80 702,119.60 应交税金 五-19 60,406,138.88 57,716,542.69 24,646,484.71 52,607,711.45 其他应交款 五-20 12,038,818.28 8,889,820.25 9,838,518.17 7,650,834.10 其他应付款 五-21 129,607,479.64 108,347,299.42 61,896,754.20 63,697,314.90 预提费用 五-22 6,544,801.68 23,990,999.37 3,809,821.15 12,281,320.76 预计负债 一年内到期的长 五-23 427,155,356.45 384,338,902.68 329,155,356.45 255,338,902.68 期负债 其他流动负债 流动负债合计 1,996,127,375.23 1,569,601,129.95 1,183,769,558.40 987,454,256.41 长期负债： 长期借款 五-24 2,050,484,081.12 1,546,464,534.89 1,532,444,081.12 1,229,924,534.89 应付债券 长期应付款 五 25- 128,831,336.31 61,568,450.69 12,305,943.81 15,273,058.19 专项应付款 五-26 3,795,701.96 6,000,000.00 3,795,701.96 6,000,000.00 其他长期负债 长期负债合计 2,183,111,119.39 1,614,032,985.58 1,548,545,726.89 1,251,197,593.08 递延税项： 递延税款贷项 负债合计 4,179,238,494.62 3,183,634,115.53 2,732,315,285.29 2,238,651,849.49 少数股东权益 五-27 715,436,155.21 605,452,876.48 股东权益： 股本 五-28 328,400,000.00 328,400,000.00 328,400,000.00 328,400,000.00 减：已归还投资 股本净额 328,400,000.00 328,400,000.00 328,400,000.00 328,400,000.00 资本公积 五-29 548,926,840.93 544,391,528.16 549,388,282.66 544,852,969.89 盈余公积 五-30 153,137,988.13 140,620,564.13 153,137,988.13 140,620,564.13 其中：法定公益 43,165,506.99 36,906,794.99 43,165,506.99 36,906,794.99 金 未分配利润 五-31 183,152,698.79 153,300,873.10 185,821,002.14 155,455,306.20 其中：拟分配现 五-32 19,704,000.00 19,704,000.00 金股利 股东权益合计 1,213,617,527.85 1,166,712,965.39 1,216,747,272.93 1,169,328,840.22 负债和股东权益 6,108,292,177.68 4,955,799,957.40 3,949,062,558.22 3,407,980,689.71 总计 24 利润及利润分配表 单位:元 合并 母公司 项目 合并 本期数 上年同期数 本期数 上年同期数 一、主营业务收入 五-33 2,639,380,167.10 2,188,101,303.80 1,407,992,916.08 1,240,150,338.16 减：主营业务成本 五-33 2,117,757,295.28 1,604,559,832.97 1,219,514,499.88 919,909,557.17 主营业务税金及附 五-34 18,262,075.13 13,233,330.55 10,000,266.91 9,596,988.78 加 二、主营业务利润 503,360,796.69 570,308,140.28 178,478,149.29 310,643,792.21 加：其他业务利润 五-35 2,829,450.25 4,522,839.91 10,454,477.02 -446,244.22 减: 营业费用 187,353,041.67 141,005,322.44 74,902,179.68 79,493,364.09 管理费用 161,102,470.33 165,148,266.48 74,587,498.84 105,261,316.74 财务费用 五-36 111,112,219.92 85,863,859.69 76,846,799.18 61,103,593.85 三、营业利润 46,622,515.02 182,813,531.58 -37,403,851.39 64,339,273.31 加：投资收益 五-37 -1,239,116.97 -825,033.61 83,483,602.37 75,634,057.81 补贴收入 五-38 30,882,780.26 38,477,512.83 8,381,529.27 12,879,284.63 营业外收入 五-39 10,808,085.86 39,514,722.33 848,889.52 39,328,431.67 减：营业外支出 5,696,504.25 4,820,584.72 527,742.84 824,389.11 四、利润总额 81,377,759.92 255,160,148.41 54,782,426.93 191,356,658.31 减：所得税 10,707,805.26 60,295,586.82 -7,804,693.01 41,006,174.30 减：少数股东损益 8,596,704.97 46,314,003.94 五、净利润 62,073,249.69 148,550,557.65 62,587,119.94 150,350,484.01 加：年初未分配利 153,300,873.10 54,524,412.25 155,455,306.20 54,878,918.99 润 其他转入 六、可供分配的利 215,374,122.79 203,074,969.90 218,042,426.14 205,229,403.00 润 减：提取法定盈余 6,258,712.00 15,035,048.40 6,258,712.00 15,035,048.40 公积 提取法定公益金 6,258,712.00 15,035,048.40 6,258,712.00 15,035,048.40 七、可供股东分配 202,856,698.79 173,004,873.10 205,525,002.14 175,159,306.20 的利润 减：应付优先股股 利 提取任意盈余公积 应付普通股股利 19,704,000.00 19,704,000.00 19,704,000.00 19,704,000.00 转作股本的普通股 股利 八、未分配利润 183,152,698.79 153,300,873.10 185,821,002.14 155,455,306.20 其中：拟分配现金 19,704,000.00 19,704,000.00 股利 补充资料： 1.出售、处置部门 或被投资单位所得 849,271.00 收益 25 现金流量表 单位:元 本期数 项目 合并 合并数 母公司数 一、经营活动产生的现金流量： 销售商品、提供劳务收到的现金 3,140,685,680.41 1,706,762,072.31 收到的税费返还 41,175,857.75 14,630,627.29 收到的其他与经营活动有关的现金 五-40 36,286,375.00 103,043,113.13 经营活动现金流入小计 3,218,147,913.16 1,824,435,812.73 购买商品、接受劳务支付的现金 2,170,863,181.21 1,340,148,191.99 支付给职工以及为职工支付的现金 181,782,685.29 92,523,514.69 支付的各项税费 242,931,480.10 91,636,982.27 支付的其他与经营活动有关的现金 五-41 119,436,476.06 121,575,768.22 经营活动现金流出小计 2,715,013,822.66 1,645,884,457.17 经营活动现金流量净额 503,134,090.50 178,551,355.56 二、投资活动产生的现金流量： 收回投资所收到的现金 其中：出售子公司收到的现金 取得投资收益所收到的现金 2,230,085.85 处置固定资产、无形资产和其他长期资产而收回的现 14,975,312.61 4,499,869.81 金 收到的其他与投资活动有关的现金 五-42 2,000,000.00 投资活动现金流入小计 16,975,312.61 6,729,955.66 购建固定资产、无形资产和其他长期资产所支付的现 1,070,713,644.59 489,018,348.27 金 投资所支付的现金 40,000,000.00 支付的其他与投资活动有关的现金 39,900,000.00 投资活动现金流出小计 1,070,713,644.59 568,918,348.27 投资活动产生的现金流量净额 -1,053,738,331.98 -562,188,392.61 三、筹资活动产生的现金流量： 吸收投资所收到的现金 其中：子公司吸收少数股东权益性投资收到的现金 借款所收到的现金 1,680,600,000.00 1,075,700,000.00 收到的其他与筹资活动有关的现金 五-43 1,922,804.23 538,804.23 筹资活动现金流入小计 1,682,522,804.23 1,076,238,804.23 偿还债务所支付的现金 988,921,010.75 608,911,010.75 分配股利、利润或偿付利息所支付的现金 170,085,547.49 135,052,255.02 其中：支付少数股东的股利 支付的其他与筹资活动有关的现金 五-44 1,378,523.16 364,207.02 其中：子公司依法减资支付给少数股东的现金 筹资活动现金流出小计 1,160,385,081.40 744,327,472.79 筹资活动产生的现金流量净额 522,137,722.83 331,911,331.44 四、汇率变动对现金的影响 -556,392.87 -541,456.47 五、现金及现金等价物净增加额 -29,022,911.52 -52,267,162.08 26 补充材料 1、将净利润调节为经营活动现金流量： 净利润 62,073,249.69 62,587,119.94 加：少数股东损益(亏损以“-”号填列) 8,596,704.97 减：未确认的投资损失 加：计提的资产减值准备 -5,447,129.82 -3,621,513.23 固定资产折旧 269,962,163.11 118,419,282.04 无形资产摊销 13,300,147.10 2,280,215.40 长期待摊费用摊销 11,229,976.16 4,702,461.72 待摊费用减少（减：增加） 143,189.31 67,362.66 预提费用增加（减：减少） -17,934,868.94 -6,647,308.06 处理固定资产、无形资产和其他长期资产的损失(减: -3,707,350.96 291,264.55 收益) 固定资产报废损失 财务费用 114,896,741.98 78,732,595.14 投资损失（减：收益） 1,239,116.97 -83,483,602.37 递延税款贷项（减：借项） 存货的减少（减：增加） -29,450,325.99 -25,830,116.51 经营性应收项目的减少(减：增加) -18,008,264.08 -25,855,725.97 经营性应付项目的增加(减：减少) 96,240,741.00 56,909,320.25 其他(预计负债的增加) 经营活动产生的现金流量净额 503,134,090.50 178,551,355.56 2．不涉及现金收支的投资和筹资活动： 债务转为资本 一年内到期的可转换公司债券 融资租入固定资产 3、现金及现金等价物净增加情况： 现金的期末余额 368,316,897.24 116,523,790.75 减：现金的期初余额 397,339,808.76 168,790,952.83 加：现金等价物的期末余额 减：现金等价物的期初余额 现金及现金等价物净增加额 -29,022,911.52 -52,267,162.08 27 合并资产减值准备明细表 单位:元 本年减少数 因资产 本年 其他原 项目 年初余额 价值回 年末余额 增加数 因转出 合计 升转回 数 数 一、坏账准备合计 32,527,830.73 / / 12,409,832.73 20,117,998.00 其中：应收账款 29,842,716.15 / / 12,695,943.49 17,146,772.66 其他应收款 2,685,114.58 / / 286,110.76 2,971,225.34 二、短期投资跌价准备合 计 其中：股票投资 债券投资 三、存货跌价准备合计 17,417,745.33 569,499.65 17,987,244.98 其中：库存商品 原材料 17,417,745.33 17,417,745.33 低值易耗品 569,499.65 569,499.65 四、长期投资减值准备合 5,955,600.00 3,180,000.00 2,775,600.00 计 其中：长期股权投资 5,955,600.00 3,180,000.00 2,775,600.00 长期债权投资 五、固定资产减值准备合 102,879,245.77 37,423,103.02 65,456,142.75 计 其中：房屋、建筑物 27,674,723.19 1,760,800.04 25,913,923.15 机器设备 74,829,854.58 35,662,302.98 运输设备 369,423.00 369,423.00 其他设备 5,245.00 5,245.00 六、无形资产减值准备合 计 其中：专利权 商标权 七、在建工程减值准备合 564,162.79 564,162.79 计 八、委托贷款减值准备合 计 九、总 计 28 母公司资产减值准备明细表 单位:元 本年减少数 因资产 行 本年 其他原 项目 年初余额 价值回 年末余额 次 增加数 因转出 合计 升转回 数 数 一、坏账准备合计 1 24,381,747.50 / / 6,980,043.14 17,401,704.36 其中：应收账款 2 21,946,632.92 / / 6,900,385.54 15,046,247.38 其他应收款 3 2,435,114.58 / / 79,657.60 2,355,456.98 二、短期投资跌价准备合 4 计 其中：股票投资 5 债券投资 6 三、存货跌价准备合计 7 12,342,624.17 12,342,624.17 其中：库存商品 8 原材料 9 12,342,624.17 12,342,624.17 四、长期投资减值准备合 10 2,775,600.00 2,775,600.00 计 其中：长期股权投资 11 2,775,600.00 2,775,600.00 长期债权投资 12 五、固定资产减值准备合 13 4,047,235.70 4,047,235.70 计 其中：房屋、建筑物 14 2,142,896.70 2,142,896.70 机器设备 15 1,904,339.00 1,904,339.00 六、无形资产减值准备合 16 计 其中：专利权 17 商标权 18 七、在建工程减值准备合 19 564,162.79 564,162.79 计 八、委托贷款减值准备合 20 计 九、总 计 21 29 华新水泥股份有限公司 合并会计报表注释 2005 年 1 月 1 日至 12 月 31 日 (本注释除另有注明者外均以人民币千元为单位) 一、 基本情况 华新水泥股份有限公司（下称“本公司”）是由原国营华新水泥厂重组而设立的股份有限公 司，本公司正式成立于 1993 年 11 月 30 日。至 2005 年 12 月 31 日，本公司的总股本为人民币 328,400 千元，其中境内发行人民币普通股为 164,400 千股；境内发行人民币外资股(B 股)164,000 千股。 本公司地处湖北省黄石市，主要经营活动为生产和销售水泥、水泥熟料及复合袋。 本公司已于 2005 年 12 月 29 日完成 A 股市场股权分置改革，改革完成后本公司股本构 成如下： 股权性质 千股 一、有限售条件的流通股份 1、国家股(由华新集团代国家持有) 79,251 2、境内法人股 22,749 有限售条件的流通股份合计 102,000 二、无限售条件的流通股份 1、流通 A 股 62,400 2、流通 B 股 164,000 无限售条件的流通股份合计 226,400 合计 328,400 二、 本公司采用的主要会计政策和合并会计报表的编制方法 1 会计制度 本公司执行国家颁布的企业会计准则和《企业会计制度》及其补充规定。 2 会计年度 本公司的会计年度为公历 1 月 1 日至 12 月 31 日。 3 记账本位币 本公司以人民币为记账本位币。 30 4 记账基础和计价原则 本公司会计核算以权责发生制为记账基础，以历史成本为计价原则。 5 外币业务核算办法 本公司的外币交易按业务发生当日中国人民银行公布的市场汇价折算成人民币记账，资产负债 表日外币货币性资产和负债按当日中国人民银行公布的市场汇价折算。由此产生的汇兑损益计入当 期损益；属于筹建期间的计入长期待摊费用，与购建固定资产有关的，按借款费用资本化的原则处 理。 6 现金等价物的确定标准 本公司以持有期限短（一般指从购买日起三个月内到期）、流动性强、易于转换为已 知金额现金、价值变动风险很小的投资作为现金等价物。 7 应收款项坏账损失核算方法 (1) 坏账的确认标准：由于债务单位撤销、破产、资不抵债、现金流量严重不足、发生严重自 然灾害等导致停产而在可预见的时间内无法偿付债务等；债务单位逾期未履行偿债义务超过 3 年； 其他确凿证据表明确实无法收回或收回的可能性不大。 (2) 坏账损失的核算方法：坏账损失的核算采用备抵法核算,本公司在对应收款项的可回收性作 出具体评估后计提坏账准备。对于有确凿证据表明确实无法收回的应收款项，经本公司董事会批准 后列作坏账损失，冲销提取的坏账准备。对于本公司之控股股东以及控股股东之子公司的应收款项 不全额计提坏账准备。除关联公司外应收款项坏账准备计提比例一般为： 计提比例 逾期 1-2 年（有回款） 5% 逾期 1-2 年（无回款） 15% 逾期 2-3 年（有回款） 10% 逾期 2-3 年（无回款） 30% 逾期 3 年以上 40% 无法收回 100% 一年内应收账款主要为应收国家重点项目，有较充分的结算资金保障，且这些应收款主要是由 于结算日差异产生的，故对这些应收账款不计提坏账准备。 31 8 存货 (1) 存货的分类：存货主要包括原材料、低值易耗品、在产品、产成品等。 (2) 存货的计价方法：存货实行永续盘存制，购入原材料以买价加运输、装卸、保险等费用作为实 际成本；在产品和产成品以制造和生产过程中发生的各项实际支出作为实际成本，包括直接材料、 直接工资和经适当分配的间接费用；低值易耗品采用一次摊销法，包装物在领用时一次摊销成本。 (3) 期末存货计价原则及存货跌价准备确认标准和计提方法：期末存货按成本与可变现净 值孰低原则计价；期末，在对存货进行全面盘点的基础上，对于存货因遭受毁损、全部或部分 陈旧过时或销售价格低于成本等原因，预计其成本不可收回的部分，提取存货跌价准备。存货 跌价准备按单个存货项目的成本高于其可变现净值的差额提取，可变现净值按估计售价减去估 计完工成本、销售费用和税金后确定。 9 长期投资核算方法 (1) 长期股权投资 1) 长期股权投资的计价及收益确认方法：长期股权投资在取得时按实际支付的价款或确 定的价值作为初始成本。本公司对投资额占被投资企业有表决权资本总额 20%以下，或虽占 20%或 20%以上但不具重大影响的股权投资，采用成本法核算；对投资额占被投资企业有表决 权资本总额 20%或 20%以上，或虽不足 20%但具有重大影响的股权投资，采用权益法核算；对 投资额占被投资企业有表决权资本 50%以上的股权投资采用权益法核算并编制合并会计报表。 2) 长期股权投资差额的摊销方法和期限：初始投资成本与投资时应享有被投资企业所有 者权益份额之间的差额，作为股权投资差额，其中借方差额按一定的期限摊销计入损益，合同 规定了投资期限的，按投资期限平均摊销，合同没有规定投资期限的，股权投资借方差额按不 超过 10 年摊销；股权投资贷方差额计入资本公积。 (2) 长期债权投资按取得时的实际成本作为初始投资成本，以支付现金取得的长期债权投 资，按实际支付的全部价款减去尚未领取的债券利息，作为初始投资成本。长期债权投资按权 责发生制原则按期计提应计利息，计入投资收益。 (3) 长期投资减值准备的确认标准和计提方法：本公司期末对由于市价持续下跌或被投资 企业经营状况恶化等原因，导致可收回金额低于账面价值，并且这种降低的价值在可预计的未 来期间内难以恢复的长期投资，按其可收回金额低于长期投资账面价值的差额，计提长期投资 减值准备。 32 10 固定资产 (1) 固定资产的确认标准：固定资产是指使用期限在一年以上的房屋、建筑物和其他主要 生产经营设备，以及单位价值在 2,000 元以上并且使用期限超过两年的非主要生产经营设备。 (2) 固定资产的分类：房屋建筑物、机器与设备、办公设备家具及固定装置、汽车及运输 设备。 (3) 固定资产的计价：除于本公司成立时，国家投资入股的原华新水泥厂固定资产以评估值入 账外，固定资产以历史成本入账。 (4) 固定资产折旧方法：除已提足折旧仍继续使用的固定资产等外，本公司对所有固定资 产计提折旧。计提折旧时按固定资产预计经济使用年限采用平均年限法计算，固定资产分类预 计净残值率及折旧率如下： 类别 净残值率（%） 年折旧率(%) 房屋建筑物 4% 2.4-3.84% 机器与设备 4% 6-12% 办公设备、家具及固定装置 4% 5.33-12% 汽车及运输设备 4% 8-12% (5) 固定资产后续支出的处理：固定资产的后续支出主要包括修理支出、更新改良支出及 装修支出等内容，其会计处理方法为： 1） 固定资产修理费用（含大修），直接计入当期费用； 2） 固定资产改良支出，以增计后不超过该固定资产的可收回金额的部分计入固定资产账 面价值，其余金额计入当期费用； 3） 固定资产装修费用，符合上述原则可予资本化的，在“固定资产”内单设明细科目核 算，并在两次装修期间与固定资产尚可使用年限两者中较短的期间内，采用直线方法单独计提 折旧。 (6) 固定资产减值准备的确认标准及计提方法：本公司于期末对固定资产进行检查，如发 现存在如下情况，则评价固定资产的可收回金额，以确定资产是否已经发生减值。对于可收回 金额低于其账面价值的固定资产，按该资产可收回金额低于其账面价值的差额计提减值准备。 计提时按单项资产计提。 33 1) 固定资产市价大幅度下跌，其跌幅大大高于因时间推移或正常使用而预计的下跌，并 且预计在近期内不可能恢复； 2) 固定资产陈旧过时或发生实体损坏等； 3) 固定资产预计使用方式发生重大不利变化，如企业计划终止或重组该资产所属的经营 业务、提前处置资产等情形，从而对企业产生负面影响； 4) 企业所处经营环境，如技术、市场、经济或法律环境，或者产品营销市场在当期发生 或在近期发生重大变化，并对企业产生负面影响。 5) 同期市场利率等大幅度提高，进而很可能影响企业计算固定资产可收回金额的折现 率，并导致固定资产可收回金额大幅度降低； 6) 其他有可能表明资产已经发生减值的情况。 11 在建工程核算方法 (1) 在建工程的计价：在建工程指正在兴建中的资本性资产，按实际发生的支出确定工程成 本。自营工程按直接材料、直接工资、直接施工费等计量；出包工程按支付的工程价款计量；设备 安装工程按所安装设备的价值、安装费用、工程试运转等所发生的支出确定工程成本。 (2) 在建工程结转固定资产的时点：本公司建造的固定资产在达到预定可使用状态之日起，根 据工程预算、造价或工程实际成本等，按估计的价值结转固定资产，次月起开始计提折旧。待办理 了竣工决算手续后再做调整。 (3) 在建工程减值准备的确认标准和计提方法：本公司于每年年度终了，对在建工程进行全面 检查，当存在下列一项或若干项情况时，按该项工程可收回金额低于其账面价值的差额计提减值准 备，计提时按工程项目分别计提。 1) 长期停建并且预计在未来 3 年内不会重新开工的在建工程。 2) 所建项目无论在性能上，还是在技术上已经落后，并且给本公司带来的经济利益具有 很大的不确定性； 3) 其他足以证明在建工程已经发生减值的情形。 34 12 借款费用的会计处理方法 (1) 借款费用资本化的确认原则：借款费用包括因借款而发生的利息、折价或溢价的摊销 费用和辅助费用，以及因外币借款而发生的汇兑差额。除为购建固定资产的专门借款所发生的 借款费用外，其他借款费用均于发生当期计入财务费用。当以下三个条件同时具备时，为购建 固定资产而借入的专门借款费用开始资本化： 1) 资产支出已经发生； 2) 借款费用已经发生； 3) 为使资产达到预定可使用状态所必要的购建活动已经开始。 (2) 借款费用资本化的期间：为购建固定资产所发生的借款费用，满足上述资本化条件的，在 该固定资产达到预定可使用状态前所发生的，计入所购建固定资产成本，在达到预定可使用状态后 所发生的，于发生当期直接计入财务费用。 (3) 借款费用资本化金额的计算方法：每一会计期间的利息资本化金额根据截止当期末购建固 定资产累计支出按月计算的加权平均数，乘以资本化率计算得出。资本化率为专门借款的加权平均 利率。 13 无形资产计价及摊销方法 (1) 无形资产的计价方法：无形资产在取得时，按实际成本计量。购入的无形资产，按实际支 付的价款作为实际成本；投资者投入的无形资产，按投资各方确认的价值作为实际成本（本公司为 首次发行股票而接受投资者投入的除土地使用权外的无形资产，以该无形资产在投资方的账面价值 作为入账价值）；自行开发并按法律程序申请取得的无形资产，按依法取得时发生的注册费、聘请 律师费等费用作为无形资产的实际成本，在研究与开发过程中发生的材料、工资及其他费用直接计 入当期损益。 (2) 无形资产摊销方法和期限：无形资产自取得当月起按预计使用年限、合同规定的受益年限 和法律规定的有效年限三者中最短者分期平均摊销，计入当期损益。合同、法律均未规定年限的， 摊销年限不应超过 10 年。本公司的无形资产分为商标权、土地使用权、矿山使用权等。其中商标 权以投资入股的评估值入账，按 20 年平均摊销；除投资入股的土地使用权按评估值入账外，其他 土地使用权以实际成本入账，并按 50 年或规定的受益期，以直线法平均摊销；矿山使用权按实际 成本入账，并按规定的受益期以直线法平均摊销。 (3) 无形资产减值准备的确认标准和计提方法：本公司期末对存在下列一项或若干项情况的无 形资产，按其预计可收回金额低于账面价值的差额计提无形资产减值准备。 35 1) 已被其他新技术等所代替，使其为本公司创造经济利益的能力受到重大不利影响； 2) 市价在当期大幅下跌，在剩余摊销年限内预期不会恢复； 3) 已超过法律保护期限，但仍然具有部分使用价值。 4) 其他足以证明实际上已经发生减值的情形。 14 长期待摊费用 本公司长期待摊费用包括土地开发费用、铁路专用线扩建改造费及其他递延支出。土地开 发费用为矿山土地整理改造费用，按开采量受益年限 39 年平均摊销。铁路专用线扩建改造费是为 提高运输能力而支付的铁路扩建改造费用，按 12 年平均摊销。其他递延支出在受益期内平均摊 销。 15 退休福利 有关职工养老保险的费用于发生时计入当期损益。 16 预计负债 (1) 预计负债的确认原则：当与对外担保、商业承兑汇票贴现、未决诉讼或仲裁、产品质量保 证等或有事项相关的业务同时符合以下条件时，本公司将其确认为负债： 1) 该义务是本公司承担的现时义务； 2) 该义务的履行很可能导致经济利益流出企业； 3) 该义务的金额能够可靠地计量。 (2) 预计负债的计量方法：按清偿该或有事项所需支出的最佳估计数计量。 36 17 收入确认的方法 本公司的营业收入主要包括产品销售收入和提供劳务收入，其收入确认原则如下： (1) 销售商品：在已将商品所有权上的主要风险和报酬转移给购货方，本公司不再对该商品实 施与所有权有关的继续管理权和实际控制权，与交易相关的经济利益能够流入企业，相关的收入和 成本能够可靠地计量时，确认商品销售收入的实现。 (2) 提供劳务：在同一年度内开始并完成的劳务，在完成劳务时确认收入；劳务的开始和完成 分属不同的会计年度，在提供劳务交易的结果能够可靠估计的情况下，于资产负债表日按完工百分 比法确认相关的劳务收入。 18 所得税的会计处理方法 本公司所得税采用应付税款法核算。 19 利润分配方法 按适用于本公司的有关法规及本公司章程的规定，本公司税后利润按下列顺序分配： (1) 弥补以前年度亏损； (2) 提取法定盈余公积金 10%（当此公积金累计至本公司注册资本的 50%时可不再提取）； (3) 提取法定公益金 10%； (4) 提取任意盈余公积金； (5) 支付股利。按有关规定,可供派发股利的利润系根据中国法定账目及按国际会计准则调整后 之账目两者较低者为利润分配基础。 20 合并会计报表编制方法 (1) 合并范围的确定原则：本公司将投资额占被投资企业有表决权资本总额 50%以上，或虽不足 50%但拥有实际控制权的被投资企业，纳入合并会计报表范围；虽拥有实际控制权但对合并会计报 表无重大影响的，不纳入合并会计报表范围。 (2) 合并会计报表所采用的会计方法：本公司合并会计报表是按照财政部《合并会计报表暂行 规定》及有关补充规定的要求编制，合并时合并范围内的所有重大内部交易和往来业已抵销。 37 三 税项 1 企业所得税 本公司除控股子公司华新南通水泥有限公司、华新金猫水泥（苏州）有限公司执行外商投 资企业所得税政策外均执行 33%的所得税率。 本公司控股子公司华新南通水泥有限公司、华新金猫水泥（苏州）有限公司所得税率为 24%。根据（2004）吴中国税外（减免）字 002 号《苏州市吴中区国家税务局涉外税务分局关于华 新金猫水泥（苏州）有限公司申请企业所得税减免的批复》，华新金猫水泥（苏州）有限公司 2003、2004 年免征外商投资企业所得税，2005、2006、2007 年减半征收外商投资企业所得税；根 据南通市国家税务局第三税务分局的批准，华新南通水泥有限公司从 2004 年起开始享受二年免 征、三年减办征收企业所得税的优惠。 根据湖北省黄石市国家税务局 2005 年 6 月 30 日签发的黄国税函发[2005]69 号《市国家税 务局关于华新水泥股份有限公司 2004 年度资源综合利用产品免征企业所得税的批复》，本公司本 期因利用废弃原材料进行生产而获得免征 8,200 千元企业所得税的优惠。 本公司控股子公司华新水泥（宜昌）有限公司因采购国产设备用于特定技术改造项目而享 受企业所得税抵免的优惠，2005 年 2 月 28 日经湖北省宜都市国家税务局批准，华新宜昌水泥有限 公司 2005 年度技术改造国产设备投资可抵免企业所得税金额为 6,807 千元。 华新水泥（西藏）有限公司地处西部地区，属于国家西部大开发鼓励类产业，根据西藏山 南地区行政公署文件山行发[2003]41 号《山南地区行政公署关于落实对西藏华新水泥有限公司优 惠政策的通知》，华新水泥（西藏）有限公司执行 15%的企业所得税率。 华新水泥（恩施）有限公司地处湖北省恩施自治州，根据湖北省恩施自治州国家税务局州 国税直函[2006]1 号《关于华新水泥（恩施）有限公司享受所得税优惠政策申请的批复》，华新水 泥（恩施）有限公司符合财税字[94]第 001 号文件精神，属于国家确定的老、少、边、穷地区新办 的企业，可自投产之日起在三年内减征或免征所得税。华新水泥（恩施）有限公司 2005 年 1 月 1 日正式投产，根据政策可在 2005、2006、2007 年度均免征企业所得税。 华新水泥（阳新）有限公司地处湖北省阳新县，根据湖北省阳新县国家税务局《关于华新 水泥（阳新）有限公司要求免征企业所得税的回复》，华新水泥（阳新）有限公司属于国家确定的 老、少、边、穷地区新办的企业，“依据财税字[94]001 号文件精神，从 2005 年 1 月 1 日起，可 以享受免征企业所得税照顾。” 38 2 增值税 本公司销售收入适用增值税，其中：水泥、熟料、电力等税率为 17%，生产购入的烟煤、石 膏等税率为 13%，本公司购买原材料等所支付的增值税进项税可以抵扣销项税。本公司的增值税应 纳税额为当期销项税额扣减当期进项税额后的余额。本公司出口销售收入在 2005 年 1-9 月份享受 生 产 企 业 免 、 抵 、 退 税 政 策 ， 从 2005 年 10 月 份 开 始 ， 经 湖 北 省 黄 石 市 国 家 税 务 局 编 号 420203010014 出口货物退（免）税认定表认定为流通企业，享受先征后退政策，退税率为 13%。 3 营业税 本公司商标使用费、咨询费、场地使用费适用营业税，税率为 5%，储运收入适用营业税， 税率为 3%。 4 城市维护建设税、教育费附加、堤防费 本公司城市维护建设税、教育费附加和堤防费分别按流转税应纳税额的 7%（或 1%）、3%和 2%计提交纳。 5 资源税 按照本公司对石灰石的开采量每吨 2 元计提并上缴。 6 个人所得税 本公司职工的个人所得税由个人承担，本公司代扣代缴。 四 控股子公司 截止 2005 年 12 月 31 日本公司拥有之控股子公司如下： 注册资本 本公司初始投资金额 子公司名称 持股比例 经营范围 （人民币千元） （人民币千元） 华新水泥（仙桃）有限公司*1 23,900 14,658 80% 生产及销售水泥 华新南通水泥有限公司*2 108,000 89,680 85% 生产销售水泥及其制品 黄石华新包装有限公司*3 8,000 7,870 98.38% 生产销售水泥包装袋及其他包装制品 武汉武钢华新水泥有限责任公司*4 40,000 20,000 50% 生产及销售矿渣水泥 水泥及建材制品、包装制品制造、销 华新水泥（宜昌）有限公司*5 150,000 105,000 70% 售；水泥技术服务 生产及销售硅酸盐水泥、水泥制品的 华新水泥（恩施）有限公司*6 60,000 40,200 90.1% 加工与销售 39 建材工程设计、建筑工程设计、水泥 黄石华新水泥科研设计有限公司*7 1,000 990 99% 生产技术服务 华新金猫水泥(苏州)有限公司*8 136,000 千美元 28,390 千美元 51% 生产、销售水泥产品 生产经营各种硅酸盐水泥及水泥制 华新水泥（西藏）有限公司*9 50,000 30,000 60% 品、提供水泥技术服务 华新水泥（昭通）有限公司*10 75,000 45,000 88% 水泥及水泥制品制造与销售 水泥及建材制品、包装制品制造、销 华新水泥（岳阳）有限公司*11 25,000 22,500 97% 售；水泥技术服务 水泥、水泥包装袋、建材制品制造、 华新水泥（阳新）有限公司*12 500,000 400,000 80% 销售；水泥技术咨询服务 华新水泥（武汉）有限公司*13 60,000 42,000 94% 水泥制造、销售 华新混凝土（武汉）有限公司*14 10,000 7,000 94% 混凝土制造、销售 *1、本公司于 2001 年 5 月 31 日以水泥生产线等实物资产及“华新”牌商标权等无形资产与仙桃市 水泥厂共同设立华新仙桃水泥有限公司（以下简称“仙桃公司”），仙桃公司注册资本 23,900 千 元，本公司持股比例为 80%，股权投资贷方差额 4,462 千元，该股权投资差额系本公司实物出资作 价高出账面净值金额所形成。另一方股东仙桃市水泥厂持股比例为 20%。，2005 年 4 月 28 日仙桃 公司更名为华新水泥（仙桃）有限公司。仙桃公司位于湖北省仙桃市，会计报表已纳入合并范围。 *2、本公司于 1993 年以货币出资 36,720 千元与华能国际电力开发公司南通分公司（以下简称“华 能南通分公司”）等公司共同投资设立华新南通水泥有限公司（以下简称“南通公司”），南通公 司系中外合资企业，注册资本 108,000 千元，本公司原持股比例为 34%。2002 年 3 月本公司与中国 南山开发（集团）股份有限公司（以下简称“南山公司”）签订了关于南山公司持有南通公司 25% 股权全部转让给本公司的协议，同月本公司与新加坡 RDC 国际私人有限公司（以下简称“RDC 公 司”）签订了关于委托本公司管理并预约受让对南通公司 26%股权的协议，2002 年 4-5 月南通公司 变更合资经营合同并取得外经贸部颁发变更股东后的外商投资企业批准证书。本公司于 2002 年 6 月支付收购股权价款的 50%，因此自 2002 年 6 月起对南通公司以 85%的比例按权益法核算且合并会 计报表。2004 年 8 月 5 日本公司与 RDC 公司签订了关于将《股权委托管理及预约转让协议书》的 期限延长至 2005 年 3 月 20 日的补充协议书。2005 年 6 月 8 日本公司与 RDC 公司签订了《股权转 让协议书》，由于华能南通分公司正在进行内部组织结构调整，未能取得该股东的相关批准手续， 所以截止到 2005 年 12 月 31 日，该协议尚未履行。股权投资借方差额 12,473 千元，系本公司于 2002 年 6 月 1 日收购中国南山开发(集团)股份有限公司及新加坡 RDC 国际私人有限公司所持有南 通公司共计 51%股权所形成。南通公司位于江苏省南通市，会计报表已纳入合并范围。 *3、本公司于 2003 年 9 月以净资产 7,870 千元与徐文书等 5 名自然人共同设立黄石华新包装有限 公司（以下简称“包装公司”），包装公司注册资本 8,000 千元，本公司持股比例为 98.38%。其 他自然人股东持股比例为 1.62%。包装公司位于湖北省黄石市，会计报表已纳入合并范围。包装公 司于 2003 年 6 月 19 日与华新水泥股份有限公司工会共同投资设立华新宜都包装有限公司（以下简 称“宜都包装”），注册资本 1,500 千元，包装公司出资 890 千元，占 59.33%，本公司工会出资 610 千元，占 40.67%。宜都包装位于宜都市枝城镇，会计报表已纳入合并范围。 40 *4、本公司于 1999 年 9 月 21 日及 2000 年 9 月 30 日以货币资金共计 20,000 千元与武汉钢铁（集 团）公司共同设立武汉武钢华新水泥有限公司（以下简称“武钢公司”），本公司持股比例为 50%。另一方股东武汉钢铁（集团）公司持股比例为 50%。武钢公司注册资本为 40,000 千元，位于 湖北省武汉市，本公司对武钢公司拥有实质控制，会计报表已纳入合并范围。 *5、本公司于 2002 年 4-12 月共出资人民币 105,000 千元与宜都方德投资有限公司共同投资设立华 新宜昌水泥有限公司（以下简称“宜昌公司”）。宜昌公司注册资本人民币 150,000 千元，本公司 持股比例 70%。2005 年 5 月 20 日更名为华新水泥（宜昌）有限公司。宜昌公司位于湖北省宜都 市，会计报表已纳入合并范围。 *6、本公司于 2003 年 9-12 月以货币资金 40,200 千元与恩施州连珠水泥有限责任公司共同设立华 新恩施水泥有限公司（以下简称“恩施公司”），恩施公司注册资本 60,000 千元，本公司持股比 例为 67%，另一方股东恩施州连珠水泥有限责任公司持股比例为 33%。2004 年 7 月 21 日，宜昌公 司与恩施州连珠水泥有限责任公司签定股权转让合同，受让恩施州连珠水泥有限责任公司所持有恩 施公司 33%的股权，股权受让价款 19,800 千元。2005 年 5 月 9 日更名为华新水泥（恩施）有限公 司。恩施公司位于湖北省恩施市， 2004 年 9 月试生产，2005 年 1 月正式生产，会计报表已纳入合 并范围。 *7、本公司于 2003 年 4 月以实物资产投资 990 千元与黄石华信工程监理有限公司共同设立黄石市 华新水泥科研设计有限公司（以下简称“科研设计公司”），科研设计公司注册资本 1,000 千元， 本公司持股比例为 99%。另一方股东黄石华信工程监理有限公司持股比例为 1%。科研设计公司位于 湖北省黄石市，会计报表已纳入合并范围。 *8、本公司于 2003 年 6 月 10 日和 2003 年 5 月 16 日分别与东方茂邦水泥私人有限公司(以下简称 “东方茂邦”)和苏州市吴中区木渎镇经济发展总公司(以下简称“木渎经发”)签订股权购买协 议，分别以 27,451 千美元和 940.5 千美元（折合人民币 7,784 千元）收购东方茂邦所持苏州金猫 水泥有限公司（以下简称“金猫公司”）50%及木渎经发所持金猫公司 1%的股权，共计持有金猫公 司 51%的股权，由此形成股权投资贷方差额 27,681.2 千美元（折合人民币 229,466 千元）该项收 购已于 2003 年 11 月 26 日得到中国证券监督管理委员会的审核批准并于 2003 年 12 月 29 日获得股 东大会通过。本公司于 2004 年 1 月 9 日至 13 日支付全部收购款。2003 年 12 月 31 日金猫公司获 得苏州工业园区管理委员会苏园管复字[2003]510 号《关于苏州金猫水泥有限公司名称、股权、经 营范围等变更的批复》，并于 2004 年 1 月 2 日变更企业法人营业执照，公司名称变更为华新金猫 水泥（苏州）有限公司，根据金猫公司的公司章程，本公司在十一人的董事会中占六个席位，董事 长由本公司委派，并且一般的经营管理事项仅需二分之一董事赞成即可通过，因此本公司管理层从 上述变更营业执照之日起对金猫公司拥有实质控制权，金猫公司位于江苏省苏州市，会计报表已纳 入合并范围。 *9、本公司于 2003 年 12 月 22 日与西藏山南地区兴业水泥厂共同投资设立西藏华新水泥有限公司 （以下简称“西藏公司”），注册资本 50,000 千元，根据合资合同，本公司以现金出资 30,000 千 41 元，持股比例为 60%，另一方股东山南地区兴业水泥厂以现金 6,000 千元、实物资产 8,000 千元、 无形资产——土地使用权 6,000 千元出资，持股比例为 40%。2005 年 4 月更名为华新水泥（西藏） 有限公司。西藏公司位于西藏山南地区泽当镇，目前公司已正常生产，会计报表已纳入合并范围。 *10、本公司于 2004 年 12 月 19 日与宜昌公司共同出资设立华新昭通水泥有限公司（以下简称“昭 通公司”），注册资本 75,000 千元，其中本公司出资 45,000 千元，占 60%；另一方股东宜昌公司 出资 30,000 千元，占 40%，全部为货币资金方式，注册资本在一年内分期缴付。截止 2005 年 10 月 30 日，本公司完成出资 45,000 千元。2005 年 5 月 9 日更名为华新水泥（昭通）有限公司。昭 通公司位于云南省昭通市，会计报表已纳入合并范围。 *11、本公司于 2004 年 11 月 10 日与宜昌公司共同投资设立华新岳阳水泥有限公司（以下简称 “岳阳公司”），注册资本 25,000 千元，根据合资合同，本公司以实物出资 22,500 千元，持股比 例为 90%，另一方股东宜昌公司以实物出资 2,500 千元，持股比例为 10%。2005 年 3 月 16 日更名 为华新水泥（岳阳）有限公司。岳阳公司位于湖南省岳阳市，会计报表已纳入合并范围。 *12、本公司于 2005 年 2 月 22 日与黄石亿瑞达投资有限公司共同设立华新水泥（阳新）有限公司 （以下简称阳新公司），阳新公司注册资本 500,000 千元，本公司以实物资产出资 400,000 千元， 持股比例为 80%，另一股东黄石亿瑞达投资有限公司以无形资产出资 100,000 千元，持股比例为 20%。阳新公司位于湖北省阳新县，会计报表已纳入合并范围。 *13、本公司于 2005 年 9 月 25 日与阳新公司共同设立华新水泥（武汉）有限公司（以下简称武汉 公司），注册资本 60,000 千元，本公司以实物形式出资 42,000 千元，持股比例为 70%，阳新公司 以实物形式出资 18,000 千元，持股比例 30%。武汉公司位于湖北省武汉市，会计报表已纳入合并 范围。 *14、本公司于 2005 年 4 月 8 日与阳新公司共同设立华新混凝土（武汉）有限公司（以下简称混凝 土公司），混凝土公司注册资本 10,000 千元，本公司以货币资金出资 7,000 千元，持股比例为 70%，阳新公司以货币资金出资 3,000 千元，持股比例为 30%。混凝土公司位于武汉市青山区，会 计报表已纳入合并范围。 五 合并会计报表主要项目注释 1 货币资金 项目 2005 年 2004 年 现金 458 436 银行存款 346,865 380,829 其他货币资金 20,994 16,075 合计 368,317 397,340 42 期末货币资金中包括以下外币资金： 外币名称 外币(千元) 折算汇率 金额 美元 116.11 8.0702 937 港元 14.45 1.0403 15 新加坡元 0.41 4.8543 2 瑞士法郎 0.53 6.1375 3 欧元 2.38 9.5797 23 合计 980 2 应收票据 票据种类 2005 年 2004 年 银行承兑汇票 104,574 111,046 商业承兑汇票 6,000 合计 104,574 117,046 3 应收账款 账龄 2005 年 2004 年 金额 比例％ 坏账准备 金额 比例％ 坏账准备 1 年以内 100,371 79 63,574 67 728 1至2年 8,596 7 448 1,418 1 57 2至3年 668 0.5 92 1,511 2 446 3 年以上 16,900 13.5 16,607 28,922 30 28,612 合计 126,535 100 17,147 95,425 100 29,843 本期新增应收账款较多，主要是 2005 年新投产分子公司增加销售所致。 应收账款欠款前五名单位合计金额为 23,466 千元，占应收账款总额的 18.55%。应收账 款中无持有本公司 5%以上表决权股份的股东单位的款项。 2005 年度本公司根据董事会决议将长期无法收回的应收账款 3,358 千元予以核销，经 黄石市国家税务局黄国税函发[2006]11 号文件批准，2,945 千元允许在税前扣除。 4 其他应收款 账龄 2005 年 2004 年 金额 比例％ 坏账准备 金额 比例％ 坏账准备 1 年以内 75,498 89 54,869 78 0 43 1至2年 1,391 2 5,038 7 0 2至3年 2,281 2 1,848 3 395 3 年以上 6,738 7 2,971 8,452 12 2,290 合计 85,908 100 2,971 70,207 100 2,685 其他应收款欠款前五名单位合计金额为 56,112 千元，占其他应收款总额的 65.32%；其 他应收款期末余额较期初余额增长较大的原因为应收其他单位借款增加以及垫支款项增加；其 他应收款中持有本公司 5%以上表决权股份的股东单位华新集团有限公司的欠款 78 千元。 其他应收款中含金猫公司支付给其股东金雄国际集团公司往来款项 44,240 千元。 5 预付账款 账龄 2005 年 2004 年 金额 比例％ 金额 比例％ 1 年以内 12,150 75 42,179 97 1至2年 3,904 24 767 2 2至3年 58 1 137 0 3 年以上 366 1 合计 16,112 100 43,449 100 账龄超过 1 年的预付账款余额为未结算的材料及设备尾款；预付账款中无持有本公司 5%以 上表决权股份的股东单位的款项。 6 存货 项目 2005 年 2004 年 金额 跌价准备 金额 跌价准备 原材料 176,366 13,178 170,164 17,418 在产品 60,291 48,454 0 产成品 61,017 82,913 0 低值易耗品 49,149 4,809 1,500 0 合计 346,823 17,987 303,031 17,418 存货期末余额较期初余额增长较大的主要原因为分子公司本年建成投产所致。 7 待摊费用 项目 2005 年 2004 年 结存原因 财产保险 784 832 受益期 05-06 年 汽车保险费 250 172 受益期 05-06 年 船舶保险 12 137 受益期 05-06 年 其他 77 125 受益期 05-06 年 合计 1,123 1,266 44 8 长期投资 (1) 长期投资包括： 项目 2005 年 2004 年 股权投资 25,487 29,906 减：长期投资减值准备 2,776 5,956 股权投资净额 22,711 23,950 债权投资 59 59 合计 22,770 24,009 （2） 股权投资 所占 本期 2005 年 2004 年 初始投 累计权 期末 被投资公司名称 比例 权益 减值准 减值准 资金额 益调整 金额 (%) 调整 备 备 黄石华新宾馆有限公司 49 294 8 (7) 287 0 0 华新集团宜都公司 4 20 0 0 20 20 20 湖北黄石发电股份有限公司 3.9 11,724 0 0 11,724 0 0 黄石市交通银行 0.014 2,000 0 0 2,000 0 0 中国太平洋保险公司 0.03 696 0 0 696 0 0 郑州新星实业集团股份有限公 司 17.2 2,000 0 0 2,000 2,000 2,000 长江经济开发公司 3 150 0 0 150 150 150 湖北省建材工贸集团公司 12.72 506 0 0 506 506 506 平顶山中南煤炭公司 5.71 100 0 0 100 100 100 上海金猫水泥有限公司* 64 3,180 (3,180) (3,180) 0 0 3,180 合并价差 12,473 (1,247) (4,469) 8,004 0 0 合计 33,143 (4,419) (7,656) 25,487 2,776 5,956 * 本公司之控股子公司金猫公司于 2005 年 8 月 31 日，与上海建工物资公司达成协议，双方一致同意终止上 海金猫水泥有限公司的经营。 （3） 股权投资差额 被投资单位名称 初始金额 形成原因 摊销期限 本期摊销额 累计摊销额 摊余价值 华新南通水泥有限公司* 12,473 收购股权 10 年 1,247 4,469 8,004 45 * 系本公司于 2002 年 6 月 1 日收购中国南山开发(集团)股份有限公司及新加坡 RDC 国际私人 有限公司所持有华新南通水泥有限公司共计 51%股权所形成。 (4) 债权投资 项目 2005 年 2004 年 鄂黄大桥建设债券 59 59 合计 59 59 46 9 固定资产及折旧 （1） 固定资产及折旧 办公设备家具及 汽车及运 项目 房屋建筑物 机器与设备 合计 固定装置 输设备 固定资产原价 2005 年 1 月 1 日 1,713,933 2,395,265 277,827 163,405 4,550,430 本年增加: 455,183 861,395 -174,912 45,351 1,187,017 其中: 在建工程转入 417,212 659,757 28,866 25,543 1,131,378 购并公司增加 0 0 0 0 0 重分类 25,988 182,419 -208,407 0 0 本年减少 3,603 86,657 164 11,074 101,498 2005 年 12 月 31 日 2,165,513 3,170,003 102,751 197,682 5,635,949 累计折旧 2005 年 1 月 1 日 339,574 934,983 23,035 80,481 1,378,073 本年增加 65,234 190,426 -211 14,513 269,962 0 0 0 0 0 其中：购并公司增加 重分类 9,107 -9,107 0 本年减少 1,141 41,993 143 8,076 51,353 2005 年 12 月 31 日 403,667 1,083,416 22,681 86,918 1,596,682 固定资产净值 2005 年 1 月 1 日 1,374,359 1,460,282 254,792 82,924 3,172,357 2005 年 12 月 31 日 1,761,846 2,086,587 80,070 110,764 4,039,267 （2） 固定资产减值准备 项目 2004 年 本期增加 本期减少 2005 年 房屋建筑物 27,675 0 1,761 25,914 机器设备 74,830 0 35,662 39,168 运输设备 369 0 0 369 其他设备 5 0 0 5 合计 102,879 37,423 65,456 本年减少固定资产减值准备系金猫公司处置部分固定资产所致。 10 工程物资 项目 2005 年 2004 年 专用材料 7,058 专用设备 116,090 1,000 预付大型设备款 65,132 合计 116,090 73,190 工程物资期末余额较期初余额增长较大的原因为襄樊项目、昭通公司、阳新二期工程处 于建设期所致。 47 11 在建工程 （1） 在建工程 工程名称 工程 2004 年 12 月 本期 本期 其他 2005 年 资金 其中借 投入 工程 预算 31 日 增加 转固 减少 12 月 31 来源 款费用 占预 进度 日 资本化 算比 阳新公司二期 4800 吨熟料生产线 328,800 0 14,675 0 0 14,675 自有资金 0 5% 10% 西藏公司 1000 吨水 自筹和借 泥熟料生产线 160,040 27,687 124,029 146,270 0 5,446 款 3,198 95% 95% 武穴 6000 吨水泥熟 自筹和借 料生产线 556,710 218,104 323,748 500,709 0 41,143 款 13,066 97% 95% 武汉年产 120 万方混 凝土项目 30,580 0 15,654 14,264 0 1,390 自有资金 0 50% 50% 岳阳公司 80 万吨水 泥粉磨生产线 85,500 31,351 53,761 85,112 0 0 自有资金 0 100% 100% 南通公司 65 万吨水 泥粉磨生产线 23,014 15,107 613 15,720 0 0 自有资金 0 68% 100% 宜昌公司 2500 吨水 自有资金 泥熟料生产线 198,080 545 174,557 160,790 0 14,312 和借款 1,583 88% 90% 昭通公司 2000 吨水 泥熟料生产线 268,000 5,686 89,311 0 0 94,997 自有资金 0 35% 40% 襄樊 4000 吨水泥熟 料生产线 186,000 14,440 101,986 0 0 116,426 自有资金 0 60% 70% 武汉公司 200 万吨废 自有资金 渣粉磨站 156,620 10,449 69,283 0 0 79,732 和借款 2,500 50% 50% 金 猫 公 司 一 厂 3500 自有资金 吨水泥熟料技改项目 70,000 8,746 80,164 88,910 0 0 和借款 43 120% 100% 金猫公司三厂 130 万 自有资金 吨水泥磨技术改造 68,000 51,241 18,016 69,257 0 0 和借款 240 100% 100% 储运公司水运散装系 统改造 5,520 4,916 1,726 0 0 6,642 自有资金 0 120% 99% 散装水泥中转库 4,000 2,778 1,316 4,045 40 9 自有资金 0 100% 100% 咸宁 4000 吨水泥熟 料生产线 357,000 0 197 0 0 197 自有资金 0 1% 1% 恩施矿山建设项目 45,000 16,732 16,886 11,506 0 22,112 自有资金 0 75% 70% 其他工程* 40,893 37,168 34,795 43,266 自有资金 0 合计 448,675 1,123,090 1,131,378 40 440,347 20,630 *其他工程中包括阳新一期 5000T/D 熟料生产线项目收尾工程，由于数额较小并入其他工程。 48 （2） 在建工程减值准备 项目 2004 年 本期增加 本期减少 2005 年 80 万吨熟料粉磨站 564 0 564 0 合计 564 0 564 0 12、无形资产 项目 土地使用权 商标权 其他 合计 取得方式 投入、购入 投入 购入 原值 551,923 55,200 5,705 612,828 2004 年 12 月 31 日 302,124 27,540 31 329,695 本年增加 197,001 5,673 202,674 其中：购并公司增加 0 本年摊销 10,453 2,762 85 13,300 其他转出 6,249 6,249 累计摊销 63,251 30,422 86 93,759 2005 年 12 月 31 日 482,423 24,778 5,619 512,820 剩余摊销年限 37-49 年 7-9 年 4-29 年 本年增加的无形资产主要是武穴公司购入土地使用权、矿山使用权。本公司期末无形资产 不需计提减值准备。 13、长期待摊费用 项目 土地开发 铁路扩建费 矿山转让及 其他递延支出 合计 费用 勘探费 原值 9,267 7,800 19,259 23,223 59,549 2004 年 12 月 31 日 7,587 3,900 16,543 5,163 33,193 本年增加 0 0 0 9,202 9,202 其中:购并公司增加 0 0 0 0 0 本年摊销 396 857 1,241 8,736 11,230 累计摊销 2,076 4,757 3,957 17,594 28,384 2005 年 12 月 31 日 7,191 3,043 15,302 5,629 31,165 剩余摊销年限 12-32 年 1-7 年 12-16 年 1-24 年 49 14、短期借款 项目 2005 年 年利率 2004 年 信用借款 366,300 4.65-5.859% 301,300 保证借款 15,000 5.58% 22,500 抵押借款 200,000 4.65-6.138% 121,580 质押借款 0 合计 581,300 445,380 以上保证借款 15,000 千元由本公司提供担保。 以上抵押借款中 25,000 千元由宜昌公司以土地、机器设备作为抵押，抵押物账面净值 28,337 千元；20,000 千元由南通公司以土地作为抵押，抵押物账面净值 8,625 千元；7,000 千元 由仙桃公司以土地及房屋作为抵押，抵押物账面净值 10,797 千元；140,000 千元由金猫公司以土 地、房屋、机器设备作为抵押，抵押物账面净值 203,865 千元；8,000 千元由武钢公司以机器设备 作为抵押，抵押物账面净值 21,957 千元。 短期借款期末余额较期初余额增长较大的原因为金猫公司、宜昌公司增加流动资金借款。 15、应付票据 项目 2005 年 2004 年 银行承兑汇票 195,396 77,431 合计 195,396 77,431 应付票据期末余额增长较大是由于本期采用票据方式支付材料采购款的情形增加。 期末应付票据中不含持本公司 5%及 5%以上表决权股份的股东单位的应付票据款。 16、应付账款 2005 年 12 月 31 日本公司应付账款余额 481,527 千元(2004 年 12 月 31 日余额为 384,040 千元)，应付账款增长较大，系襄樊项目、云南公司、阳新二期工程建设等应付设备款及工程款增 加所致。账龄超过三年的应付账款余额 2,209 千元，系未结算的材料、设备尾款。应付账款中无持 有本公司 5%以上表决权股份的股东单位的款项。 50 17、预收账款 2005 年 12 月 31 日本公司预收账款余额 85,799 千元(2004 年 12 月 31 日余额为 49,688 千元)，1 年以上预收账款金额 3,374 千元 ，系未结算的销售尾款。本年期末余额较上年大幅 增加主要是由于新成立的分子公司较多，销售增加所致。预收账款中无持有本公司 5%以上表 决权股份的股东单位的的款项。 18、应付股利 项目 2005 年 2004 年 社会法人股 393 702 合计 393 702 19、应交税金 项目 适用税率 2005 年 2004 年 增值税 17%、13% 23,776 15,705 城市维护建设税 7%、1% 3,643 737 房产税 1.2% 919 1,760 印花税 定额或定率 1,007 739 土地使用税 1－8 元/平方米 950 473 营业税 3%、5% 241 461 资源税 2 元/吨 5,958 3,911 企业所得税 15%、24%、33% 20,708 32,287 个人所得税 5%-45% 1,446 1,615 其他 1,758 29 合计 60,406 57,717 20、其他应交款 项目 计缴标准 2005 年 2004 年 教育费附加 按流转税的 3% 1,729 443 堤防费 按流转税的 2% 9,807 8,169 水利工程费 0 160 平抑物价基金 55 51 地方教育发展费 447 67 合计 12,038 8,890 51 21、其他应付款 2005 年 12 月 31 日本公司其他应付款余额为 129,607 千元(2004 年 12 月 31 日余额为 108,347 千元), 其中不含持本公司 5%及 5%以上表决权股份的股东单位的应付款。其他应付款 中账龄超过 3 年的应付款项 12,596 千元，主要为基建工程款、质保金以及代垫运费。其他应 付款明细如下： 项目 2005 年 2004 年 代垫运杂费 30,190 14,140 基建工程及大修尾款 10,057 33,190 保证金及押金 43,358 12,986 其他 46,002 48,031 合 计 129,607 108,347 22、预提费用 项目 2005 年 2004 年 结存原因 利息 1,659 3,540 尚未支付 电费 88 3,772 尚未支付 销售年薪 209 7,177 尚未支付 散装储运联运费 2,364 3,535 尚未支付 Holcim 顾问费 0 2,998 其他 2,225 2,969 尚未支付 合计 6,545 23,991 23、 一年内到期的长期负债 (1) 一年内到期的长期借款 项目 2005 年 年利率 2004 年 信用借款 230,000 4.9410%－5.76% 198,000 保证借款 116,716 0-6.03% 52,032 抵押借款 80,439 LIBOR+1%-5.99% 131,036 合计 427,155 381,068 以上保证借款中，1,716 千元由湖北省建设银行和湖北省计划委员会提供担保；50,000 千元由本公司为宜昌公司提供担保；47,000 千元由华新集团有限公司提供保证担保；18,000 由子公司武钢公司借入，由双方股东本公司及武汉钢铁(集团)公司各保证担保 50%。 52 以上抵押借款中，30,000 千元由恩施公司以机器设备作为抵押，抵押物账面净值 58,179 千元；2,018 千元及以下长期借款中 5,046 千元由本公司以商务合同项下进口的卸船机 及国内配套运输船作抵押，抵押物账面净值 10,373 元；48,421 千元及以下的长期借款中 232,018 千元为本公司以土地、设备、房产作为抵押，抵押物账面净值 440,944 千元。 (2) 一年内到期的长期借款包括以下外币资金： 外币名称 外币(千元) 折算汇率 金额 美元 6,000 8.0702 48,421 丹麦克朗 1,340 1.2805 1,716 欧元 210.68 9.5797 2,018 合计 52,155 (3) 一年内到期的长期应付款 项目 2005 年 2004 年 华新集团有限公司 0 3,271 合计 0 3,271 年初应付华新集团有限公司 3,271 千元系本公司于 2002 年 11 月收购华新集团有限公司之 全资子公司华新红旗水泥有限公司的股权收购款，按收购协议约定，已经于 2005 年内支付完 毕。 24、长期借款 (1) 长期借款包括： 项 目 2005 年 年利率 2004 年 信用借款 435,000 4.9410%-6.12% 310,000 保证借款 383,420 0-5.99% 375,038 抵押借款 1,232,064 4.9963%-6.12% 861,426 合计 2,050,484 1,546,464 以上保证借款中，24,880 千元由湖北省中国建设银行和湖北省计划委员会提供保证担 保；226,540 千元由本公司提供担保；22,000 千元由子公司武钢公司借入，由双方股东本公司 及武汉钢铁(集团)公司各保证担保 50%；110,000 千元由子公司西藏公司借入，由华新水泥股 份公司保证担保 60%。 53 以上抵押借款中：5,046 千元及一年内到期的长期借款中 2,018 千元由本公司以商务合 同项下进口的卸船机及国内配套运输船作抵押，抵押物账面净值 11,661 千元；232,018 千元 及一年内到期的长期借款中 48,421 千元为本公司以土地、设备、房产作为抵押，抵押物账面 净值 440,944 千元；255,500 千元由本公司以设备作为抵押，抵押物账面净值为 334,612 千 元；350,000 千元为本公司兴建武穴项目借款，银行对其授信 360,000 千元，由该项目形成的 固定资产提供抵押担保，至 2005 年 12 月 31 日，企业已使用 350,000 千元，形成的固定资产 净值 502,072 千元，抵押手续尚在办理之中；80,000 千元由宜昌公司国有土地使用权抵押,抵 押物净值 52,469 千元；65,000 千元由宜昌公司机器设备抵押，抵押物净值 202,330 千元； 14,500 千元由武钢水泥矿渣立式料磨机、水泥配料混合机、输变电站抵押，抵押物净值 28,455 千元；另外 230,000 千元的贷款抵押手续尚在办理中。 (2) 长期借款包括以下外币资金： 外币名称 外币(千元) 折算汇率 金额 美元 28,750 8.0702 232,018 丹麦克朗 19,430 1.2805 24,880 欧元 527 9.5797 5,049 合计 261,947 (3) 长期借款明细如下： 借款单位 金额 年利率 借款期限 中国建设银行黄石市胜阳港支行 820,500 5.1840%-5.85% 2003.08.27-2010.03.17 丹麦政府贷款 24,880 0% 1994.08.24-2021.04.01 荷兰政府贷款 5,046 5.99% 2000.10.26-2009.01.31 中国银行黄石市分行 232,018 4.9963% 2003.09.02-2011.09.02 中国农业银行宜都支行 115,000 5.76-6.12% 2005.07.29-2011.07.27 中国农业银行昭通分行 100,000 5.76-5.85% 2005.11.09-2010.10.09 中国银行黄石市胜阳港支行 20,000 6.1200% 2005.03.10-2011.03.10 中国银行武穴支行 330,000 5.76%-6.12% 2004.06.21-2011.6.29 中国建设银行武汉钢城支行 14,500 6.048% 2005.10.28-2008.10.28 中国银行宜都市支行 86,540 5.58% 2002.10.25-2009.01.17 中国民生银行武汉分行 100,000 5.76% 2005.02.25-2008.02.25 中国建设银行岳阳云溪支行 40,000 5.85% 2005.6.30-2010.6.29 中国建设银行清江支行 30,000 5.76% 2005.11.07-2008.12.27 中国银行西藏分行 110,000 3.6% 2004.06.29-2009.06.29 招商银行股份有限公司 22,000 5.58% 2004.12.01-2007.12.01 合计 2,050,484 54 25、长期应付款 项目 2005 年 2004 年 宜都方德投资有限公司 42,255 46,285 黄石亿瑞达投资有限公司 74,260 0 红旗职工安置费 12,136 15,103 其他 180 180 合计 128,831 61,568 26、专项应付款 拨款单位 2005 年 2004 年 湖北省经济贸易委员会、湖北省财政厅*1 3,296 6,000 湖北省科学技术厅、湖北省财政厅 500 0 合计 3,796 6,000 依据湖北省经济贸易委员会、湖北省财政厅鄂经贸投资（2003）462 号文件，本公司收到技 改贴息基金 6,000 千元，本年结转已经发生的利息支出 2,704 千元。 依据湖北省科学技术厅、湖北省财政厅鄂科技发计[2005]81 号文件，本公司收到应用技术 研究与开发资金 500 千元。 27、少数股东权益 少数股权 少数股东名称 2005 年 12 月 31 日 2004 年 12 月 31 日 比例 金雄国际集团有限公司 49% 444,835 468,822 中国信达资产管理公司 宜都方德投资有限公司 30% 77,956 61,608 山南地区兴业水泥厂 40% 22,167 20,000 黄石亿瑞达投资有限公司 20% 112,413 - 新加坡 RDC 国际私人有限公司 15% 15,574 16,611 武汉钢铁(集团)公司 50% 36,202 31,820 仙桃市水泥厂 20% 5,288 5,651 自然人徐文书等 1.62% 137 130 黄石华信工程监理有限公司 1% 25 16 华新集团有限公司工会 839 795 合 计 715,436 605,453 55 28 股本 (1) 本公司股份均为每股面值 1 元人民币，股本结构如下：(单位：千股) 股权分置改 项目 2004 年 配股/ 公积金转 其他 2005 年 革* 送股 股 一、尚未流通股份 1、发起人股份 91,527 0 0 -91,527 0 0 其中：国家拥有股份 91,527 0 0 -91,527 0 0 2、募集法人股份 24,873 0 0 -24,873 0 0 尚未流通股合计 116,400 0 0 -116,400 0 0 二、有限售条件的流通股份 1、发起人股份 0 0 0 79,251 79,251 其中：国家拥有股份 0 0 0 79,251 79,251 2、募集法人股份 0 0 0 22,749 22,749 有限售条件的流通股份合计 0 0 0 102,000 0 102,000 三、无限售条件的已流通股份 1、境内上市人民币普通股份 48,000 0 0 14400 0 62,400 2、境内上市外资股份 164,000 0 0 0 0 164,000 已上市流通股份合计 212,000 0 0 14,400 0 226,400 合计 328,400 0 0 0 0 328,400 * 根据 2005 年 12 月 16 日召开的股权分置改革 A 股市场相关股东会议审议通过的《华新水泥 股份有限公司股权分置改革方案》，华新集团有限公司（以下简称华新集团）及中国信达资产管理 公司、中国工商银行湖北省分行直属支行、湖北众联资产评估有限公司、深圳中农信实业投资公司 和湖北东亚实业有限公司等五家 A 股非流通股东需向 A 股流通股股东每 10 股支付 3 股对价，共计 14,400 千股,以换取 A 股非流通股东所持非流通股份的流通权。华新集团同意先从其持有的境内法 人股中代上述五家持有本公司发起人股的境内法人股股东支付应由该等股东支付的 515.048 千股； 股权分置改革完成后，如果该五家境内法人股股东的股份需流通，应与代为其支付的本公司国有股 股东协商后确定，并由本公司董事会向上海证券交易所提出该等股份的上市流通申请；其他 12 家 境内法人股股东将不支付对价，也不获得对价。执行对价安排的 A 股股权登记日为 2005 年 12 月 27 日，对价股份上市流通日为 2005 年 12 月 29 日。公司所有非流通股股份自股权分置改革方案实 施之日起，十二个月内不上市交易或者转让。 除上述法定承诺事项以外，华新集团附加承诺以下事项： ①华新集团承诺，其代国家持有的本公司国家股及其持有的本公司境内法人股自股权分置改 革方案实施之日起第十三至第三十六个月内不通过上海证券交易所挂牌交易出售。 56 ②华新集团承诺，其代国家持有的本公司国家股自股权分置改革方案实施之日起第三十七至 第四十八个月内通过上海证券交易所挂牌交易出售的数量不超过股权分置改革后华新集团代国家持 有的国家股数量的 5%(相当于公司目前总股本的 1.21%)，出售价格不低于 9 元/股（如果自股权分 置改革方案实施之日起至华新集团出售股份期间有派息、送股、资本公积金转增股本等事项，将对 该价格进行除权除息处理）。 ③华新集团承诺，其代国家持有的本公司国家股自股权分置改革方案实施之日起第四十九至 第六十个月内通过上海证券交易所挂牌交易出售的数量不超过股权分置改革后华新集团代国家持有 的国家股数量的 10%(相当于公司目前总股本的 2.41%)，出售价格不低于 9 元/股（如果自股权分置 改革方案实施之日起至华新集团出售股份期间有派息、送股、资本公积金转增股本等事项，将对该 价格进行除权除息处理）。 ④华新集团承诺，其代国家持有的本公司国家股通过上海证券交易所挂牌交易出售的数量每 达到华新水泥的股份总数 1%时，自该事实发生之日起两个工作日内做出公告，但公告期间无需停 止出售股份。 (2) 本公司股东名称、股份性质、持股数量及其变动情况如下（单位：千股）： 股东名称或股份类别 股份性质 2005 年 12 月 31 日 2004 年 12 月 31 日 国家股(由华新集团代国家持有) 国家股 79,250.648 91,526.880 华新集团有限公司 境内法人股 9,870.232 11,994 荆州沙隆达财务咨询有限公司 境内法人股 4,100 4,100 黄石铁路有限责任公司 境内法人股 2,520 2,520 武汉石化鹏鹤物资公司 境内法人股 1,200 1,200 中国信达资产管理公司 境内法人股 768 768 中国工商银行湖北省分行直属支行 境内法人股 768 768 湖北众联资产评估有限公司 境内法人股 768 768 深圳中农信实业投资公司 境内法人股 768 768 湖北东亚实业有限公司 境内法人股 768 768 武汉科学技术咨询服务中心技术开发部 境内法人股 600 600 武汉市建筑材料总公司 境内法人股 120 120 湖北省冶金物资总公司 境内法人股 120 120 北京长城水泥装备联合公司 境内法人股 120 120 武汉如一文化发展有限公司 境内法人股 100 100 黄石长江港务总公司 境内法人股 96 96 上海楚天大酒店 境内法人股 60 60 黄石市沈三阳五金线材厂 境内法人股 2.4 2.4 长江证券有限责任公司 境内法人股 0.72 0.72 境内上市人民币普通股 流通 A 股 62,400 48,000 境内上市外资股 流通 B 股 164,000 164,000 境外上市外资股 合 计 328,400 328,400 57 29、资本公积 项目 2004 年 本期增加 本期减少 2005 年 股本溢价 270,334 270,334 接收捐赠 4,332 4,332 资产评估增值准备 27,659 27,659 股权投资准备 231,051 4,534 235,585 其他资本公积转入 11,016 11,016 合计 544,392 4,534 548,926 资本公积本期增加 4,534 千元的原因是控股子公司资本公积增加而形成的，其中：因子公司 宜昌公司依据宜都市财政局都财预发[2005]97 号文件、宜都市科技局和宜都市财政局都市科 [2004]31 号文件及都市科[2004]34 号文件收到财政专项拨款金额共计 5,983 千元而增加本公司资 本公积 4187 千元；因子公司武钢公司收到青山开发区政府给予的奖励生产发展基金款而增加本公 司资本公积 120 千元；因子公司西藏公司收到西藏山南地区财政局拨付的企业发展资金而增加本公 司资本公积 192 千元；因子公司包装公司之控股子公司宜都包装公司收到市财政局专项资金拨款而 增加本公司资本公积 35 千元。 30、盈余公积 项目 2004 年 本期增加 本期减少 2005 年 法定盈余公积金 49,715 6,259 0 55,974 任意盈余公积金 53,998 0 53,998 法定公益金 36,907 6,259 0 43,166 合计 140,620 12,518 0 153,138 31、未分配利润 项目 2005 年 2004 年 期初未分配利润 153,301 54,524 加：本年净利润 62,073 148,551 减：提取法定盈余公积金 6,259 15,035 提取法定公益金 6,259 15,035 提取任意盈余公积金 0 分配股利 19,704 19,704 期末未分配利润 183,152 153,301 上年本公司第四届董事会第十九次会议通过的有关决议，以 2004 年 12 月 31 日总股本为基 数，向全体股东实施派发现金红利每股 0.06 元（含税）的利润分配预案，该决议已于 2005 年 4 月 28 日得到股东大会表决通过。 58 32、现金股利 项目 2005 年 2004 年 应付现金股利 19,704 19,704 合计 19,704 19,704 根据本公司第四届董事会第二十六次会议通过的有关决议，本公司拟以 2005 年 12 月 31 日 总股本 328,400 千股为基数，向全体股东实施派发现金红利每股 元（含税）的利润分配预案， 剩余利润作为未分配利润留存。该决议尚须经股东大会表决通过。 33、主营业务收入及主营业务成本 2005 年 2004 年 项目 收入 成本 收入 成本 包装水泥 1,331,086 1,003,777 829,547 562,997 散装水泥 1,160,234 1,002,875 1,278,392 989,186 熟料 83,024 70,237 36,814 28,431 其他 65,036 40,868 43,348 23,946 合计 2,639,380 2,117,757 2,188,101 1,604,560 本年销售收入大幅增加，主要是本公司新建分子公司投产使生产能力大幅增加所致。本公 司销售前五名单位销售收入总额为 309,981 千元，占本期主营业务收入总额的 11.74%。 34、主营业务税金及附加 项目 计缴比例 2005 年 2004 年 城建税 7%、1% 8,888 6,178 教育费附加 3% 4,875 3,194 堤防费 2% 2,052 1,958 营业税 3%、5% 1,665 1,388 其他 782 515 合计 18,262 13,233 35、其他业务利润 项 目 2005 年 2004 年 收入 支出 利润 收入 支出 利润 材料销售 556,693 552,926 3,767 16,567 13,586 2,981 运杂费 5,273 5,051 222 815 216 599 商标使用费 843 47 796 电费 7,791 8,592 (801) 14,771 14,341 430 其他 2,975 3,334 (359) 862 1,145 (283) 合计 572,732 569,903 2,829 33,858 29,335 4,523 59 36、财务费用 项目 2005 年 2004 年 利息支出 125,678 82,815 减：利息收入 3,785 3,054 加：汇兑损失 545 3,868 减：汇兑收益 14,304 219 加：贴现息 481 1,801 加：其他支出 2,497 653 合计 111,112 85,864 汇兑收益本年增加较多主要是因为人民币汇率上升，本公司外币借款期末产生汇兑收益。 37、投资收益 （1）投资收益明细如下： 项 目 2005 年 2004 年 股票投资收益 0 0 债权投资收益 0 0 其中：债券收益 0 0 委托贷款收益 0 0 其他债券投资收益 0 0 成本法核算的被投资公司分配来的利润 0 437 期末按权益法调整分享被投资公司净利润 8 (15) 股权投资差额摊销 (1,247) (1,247) 股权转让收益 0 0 短期投资跌价准备 0 0 长期投资跌价准备 0 0 委托贷款减值准备 0 0 合 计 (1,239) (825) （2）期末按权益法调整分享被投资公司净利润的明细如下： 被投资公司名称 2005 年 2004 年 备注 黄石华新宾馆有限公司 8 (15) 合 计 8 (15) 60 38、补贴收入 项目 2005 年 2004 年 增值税返还 30,883 35,199 政府补贴 0 3,279 合计 30,883 38,478 本公司依据湖北省发展和改革委员会、湖北省国家税务局和湖北省地方税务局鄂发改环资 [2004]563 号《省发展改革委、省国税局、省地税局关于认定湖北省耐火材料厂等企业为资源综合 利用企业的通知》认定为资源综合利用企业，并经湖北省资源综合利用企业（项目）鄂资认字 [2004]第 017 号认定书认定，其利用粉煤灰等生产的 32.5s 级复合硅酸盐水泥在 2004－2006 年度 被认定为资源综合利用产品，2005 年度本公司下属黄石分公司取得增值税退税 8,382 千元。 本公司之控股子公司金猫公司根据苏州市资源综合利用认定委员会“苏资综企证书 2005 年 第 089 号”认定，其生产的 32.5 等级矿渣水泥被认定为资源综合利用产品，并根据苏州市吴中区 国家税务局第六税务分局关于对部分资源综合利用产品减免税的批复〔（2005）苏州吴中国税外 （免）002 号〕文件，2005 年度取得增值税退税 5,883 千元，其中 4,706 千元计入当年补贴收入。 本公司之控股子公司宜昌公司依据湖北省经济贸易委员会、湖北省国家税务局和湖北省地 方税务局、湖北省电力局鄂经贸资源[2003]411 号《关于认定武汉晨建新型墙体材料有限责任公司 等企业为资源综合利用企业的通知》，认定为资源综合利用企业，并经湖北省资源综合利用企业 （项目）鄂资认字[2003]第 169 号认定书认定，其利用粉煤灰生产复合硅酸盐水泥在 2003－2005 年度被认定为资源综合利用产品，2005 年度取得增值税退税 7,992 千元。 本公司之控股子公司恩施公司依据湖北省发展和改革委员会、湖北省国家税务局和湖北省 地方税务局鄂发改环资[2005]489 号《关于认定湖北娲石股份有限公司等企业为资源综合利用企业 的通知》，认定为资源综合利用企业，并经湖北省资源综合利用鄂资认定[2005]第 126 号认定书认 定，其利用煤矸石、粉煤灰、炉渣生产的 32.5 级复合硅酸盐水泥在 2005-2007 年度被认定为资源 综合利用产品，2005 年度取得增值税退税 1,910 千元。 本公司之控股子公司阳新公司依据湖北省发展和改革委员会、湖北省国家税务局和湖北省地 方税务局鄂发改环资[2005]489 号《关于认定湖北娲石股份有限公司等企业为资源综合利用企业的 通知》，认定为资源综合利用企业，并经湖北省资源综合利用鄂资认定[2005]第 029 号认定书认 定，其利用粉煤灰、钢渣生产的 32.5 级复合硅酸盐水泥在 2005-2007 年度被认定为资源综合利用 产品，2005 年度取得增值税退税 1,212 千元。 本公司之控股子公司南通公司依据南通市资源综合利用办公室第 0733 号苏资综企证书认 定，其生产的复合水泥在 2004-2005 年度被认定为资源综合利用产品，并根据财税（2001）198 号 61 《财政部国家税务总局关于部分资源综合利用及其他产品增值税政策问题的通知》，2005 年取得 南通市国税局增值税退税 3,443 千元。 本公司之控股子公司仙桃公司依据湖北省经济贸易委员会、湖北省国家税务局和湖北省地 方税务局鄂经贸资源[2003]199 号《关于认定武汉钢铁集团冶金渣有限责任公司等企业为资源综合 利用企业的通知》，认定为资源综合利用企业，并经湖北省资源综合利用企业（项目）鄂资认字 [2003]第 126 号认定书认定，其利用粉煤灰生产粉煤灰硅酸盐水泥在 2003－2005 年度被认定为资 源综合利用产品，2005 年度取得增值税退税 3,237 千元。 39、营业外收入 项目 2005 年 2004 年 处置固定资产净收益 9,041 2,291 处置砂页岩矿山净收益 0 36,650 出售无形资产收益 652 373 罚款净收入 5 81 其他 1,110 120 合计 10,808 39,515 处置固定资产净收益比上年增长较多的原因是，本公司之控股子公司金猫公司于 2005 年处 置淘汰的设备取得净收益 8,877 千元。 40、收到的其他与经营活动有关的现金 项目 2005 年 扶散费返还款 4,491 收回保证金、押金、定金 8,312 收回备用金 2,767 代收往来款 6,680 利息收入 3,785 其他 10,251 合计 36,286 41、支付的其他与经营活动有关的现金 项目 2005 年 管理费用支出 39,990 经营费用支出 17,531 垫付运费 6,094 62 支出备用金 6,725 支出保证金及押金 5,157 支付往来款 6,875 支付扶散费 6,172 其他 30,891 合计 119,436 42、收到的其他与投资活动有关的现金 项目 2005 年 云南省技改项目专项补助资金 2,000 合计 2,000 43、收到的其他与筹资活动有关的现金 项目 2005 年 政府贴息等 1,923 合计 1,923 44、支付的其他与筹资活动有关的现金 项目 2005 年 银行手续费等 1,379 合计 1,379 六 母公司会计报表主要项目注释 1、应收账款 账龄 2005 年 2004 年 金额 比例％ 坏账准备 金额 比例％ 坏账准备 1 年以内 42,079 65 0 27,325 53 0 1至2年 8,311 13 420 765 2 29 2至3年 66 1 31 1,108 2 226 3 年以上 14,672 21 14,595 21,836 43 21,691 合计 65,128 100 15,046 51,034 100 21,946 应收账款欠款前五名单位的合计数为 10,442 千元，占应收账款总额的 16.03 %。应收账款 中无持有本公司 5%以上表决权股份的股东单位款项。 63 2、其他应收款 账龄 2005 年 2004 年 金额 比例％ 坏账准备 金额 比例％ 坏账准备 1 年以内 260,660 99 107,857 81 0 1至2年 625 0 22,965 17 0 2至3年 473 0 1,353 1 395 3 年以上 2,755 1 2,355 1,970 1 2,040 合计 264,513 100 2,355 134,145 100 2,435 其他应收款欠款前五名单位合计 100,041 千元，占其他应收款总额的 37.82 %。其他应收款 期末余额较期初余额增长较大的原因为本公司与新建子公司恩施公司、宜昌公司、武汉公司往来款 增加所致； 其他应收款中持有本公司 5%以上表决权股份的股东单位华新集团有限公司的欠款 78 千元。 3、长期投资 （1） 长期投资包括： 项目 2005 年 2004 年 股权投资 1,485,274 917,485 减：长期投资减值准备 2,776 2,776 股权投资净额 1,482,498 914,709 债权投资 59 59 合计 1,482,557 914,768 (2) 股权投资 所占 初始投资金 本期权益调 累计权 期末 2005 年 2004 年 被投资公司名称 比例 额 整 益调整 金额 减值准 减值准 (%) 备 备 华新金猫水泥(苏州) 51 464,810 (24,966) (1,818) 462,992 0 0 有限公司 华新水泥（宜昌）有 70 105,000 38,145 76,896 181,896 0 0 限公司 华新水泥（恩施）有 67 40,200 23,633 23,633 63,833 0 0 限公司 华新水泥（昭通）有 60 45,000 0 0 45,000 0 0 限公司 华新水泥（西藏）有 60 30,000 3,250 3,250 33,250 0 0 64 限公司 华新水泥（阳新）有 80 400,000 49,652 49,652 449,652 0 0 限公司 华新南通水泥有限公 85 89,680 (7,121) 6,579 96,259 0 0 司 武汉武钢华新水泥有 50 20,000 4,383 16,202 36,202 0 0 限公司 华新水泥（仙桃）有 80 14,658 1,003 3,037 17,695 0 0 限公司 华新水泥（岳阳）有 90 22,500 (2,783) (2,783) 19,717 0 0 限公司 华新水泥(武汉)有限 70 42,000 0 0 42,000 0 0 公司 华新混凝土（武汉） 70 7,000 1,537 1,537 8,537 0 0 有限公司 黄石华新包装有限公 98.38 7,870 372 410 8,280 0 0 司 黄石市华新水泥科研 99 990 906 1,488 2,478 0 0 设计有限公司 黄石华新宾馆有限公 49 294 8 (7) 287 0 0 司 华新集团宜都公司 4 20 20 20 20 湖北黄石发电股份有 3.9 11,724 11,724 0 0 限公司 交通银行 0.014 2,000 2,000 0 0 中国太平洋保险公司 0.03 696 696 0 0 郑州新星实业集团股 17.2 2,000 2,000 2,000 2,000 份有限公司 长江经济开发公司 3 150 150 150 150 湖北省建材工贸集团 12.72 506 506 506 506 公司 平顶山中南煤炭公司 5.71 100 100 100 100 合计 1,307,198 88,019 178,076 1,485,274 2,776 2,776 (3) 股权投资差额 被投资单位名称 初始 形成原因 摊销 本期摊销 累计摊销 摊余价值 金额 期限 额 额 华新南通水泥有限公司* 12,473 收购股权 10 年 1,247 4,469 8,004 实物出资作价高出 华新水泥（仙桃）有限公司** (4,462) 20 年 (223) (1,004) (3,458) 账面净值金额 合计 8,011 1,024 3,465 4,546 * 系本公司于 2002 年 6 月 1 日收购中国南山开发(集团)股份有限公司及新加坡 RDC 国际 私人有限公司所持有南通公司共计 51%股权所形成。 ** 本公司于 2001 年 5 月 31 日与仙桃市水泥厂共同出资设立仙桃公司，该股权投资差额 系本公司实物出资作价高出账面净值金额所形成。 (4) 债权投资 项目 2005 年 2004 年 鄂黄大桥建设债券 59 59 合计 59 59 65 4 主营业务收入及主营业务成本 2005 年 2004 年 项目 收入 成本 收入 成本 包装水泥 559,512 464,933 507,056 354,590 散装水泥 433,015 401,348 465,156 356,499 熟料 270,964 225,648 200,946 159,046 其他 144,502 127,585 66,992 49,774 合计 1,407,993 1,219,514 1,240,150 919,909 本 公 司 销 售前 五 名 单 位销 售 收 入 总额 为 201,128 千 元 ， 占本 期 主 营 业务 收 入 总 额 的 14.28% 。 5 投资收益 （1）投资收益明细如下： 项 目 2005 年 2004 年 股票投资收益 0 0 债权投资收益 0 0 其中：债券收益 0 0 委托贷款收益 0 0 其他债券投资收益 0 0 成本法核算的被投资公司分配来的利润 0 437 期末按权益法调整分享被投资公司净利润 84,507 76,221 股权投资差额摊销 (1,024) (1,024) 股权转让收益 0 0 短期投资跌价准备 0 0 长期投资跌价准备 0 0 委托贷款减值准备 0 0 合 计 83,483 75,634 （2）期末按权益法调整分享被投资公司净利润的明细如下： 被投资公司名称 2005 年 2004 年 备注 华新金猫水泥（苏州）有限公司 (24,966) 23,082 华新宜昌水泥有限公司 33,957 35,385 华新恩施水泥有限公司 23,633 0 华新昭通水泥有限公司 0 0 华新西藏水泥有限公司 3,130 0 华新水泥（阳新）有限公司 49,652 0 华新南通水泥有限公司 (5,874) 7,657 66 武汉武钢华新水泥有限责任公司 4,191 6,545 华新仙桃水泥有限公司 780 3,565 华新岳阳水泥有限公司 (2,783) 0 华新水泥(武汉)有限公司 0 0 华新混凝土（武汉）有限公司 1,537 0 黄石华新包装有限公司 336 23 黄石市华新水泥科研设计有限公司 906 (21) 黄石华新宾馆有限公司 8 (15) 合 计 84,507 76,221 七 关联方关系及其交易 （一）关联方关系 1、存在控制关系的关联方 注册 与本公司关 法定 关联方名称 主营业务 经济性质 地址 系 代表人 湖北省 制造、销售水泥制品、机械配件、房 公司之控股 华新集团有限公司 国有独资 陈木森 黄石市 地产开发、商业、服务等 公司 湖北省 公司控股之 黄石华新包装有限公司 生产销售水泥包装袋及其它包装制品 有限责任公司 孔玲玲 黄石市 子公司 公司控股之 湖北省 华新宜都包装有限公司 生产销售包装用品 子公司的子 有限责任公司 徐文书 宜都市 公司 华新水泥（仙桃）有限公 湖北省 公司控股之 水泥生产、销售 有限责任公司 李叶青 司 仙桃市 子公司 武汉武钢华新水泥有限责 湖北省 公司控股之 生产及销售矿渣水泥 有限责任公司 李富山 任公司 武汉市 子公司 江苏省 公司控股之 华新南通水泥有限公司 生产销售水泥及其制品 中外合资 陈木森 南通市 子公司 华新水泥（宜昌）有限公 湖北省 水泥及建材制品、包装制品制造、销 公司控股之 有限责任公司 李叶青 司 宜都市 售；水泥技术服务 子公司 黄石市华新水泥科研设计 湖北省 建材工程设计、建筑工程设计、水泥 公司控股之 有限责任公司 程亚民 有限公司 黄石市 生产技术服务 子公司 67 华新水泥（恩施）有限公 湖北省 生产及销售硅酸盐水泥、水泥制品的 公司控股之 有限责任公司 李叶青 司 恩施市 加工与销售 子公司 华新金猫水泥（苏州）有 江苏省 公司控股之 生产、运输、储存和销售水泥产品等 中外合资 李叶青 限公司 苏州市 子公司 华新水泥（昭通）有限公 云南省 公司控股之 水泥及水泥制品制造与销售 有限责任公司 李叶青 司 昭通市 子公司 华新水泥（岳阳）有限公 湖南省 水泥及建材制品、包装制品制造、销 公司控股之 有限责任公司 李叶青 司 岳阳市 售；水泥技术服务 子公司 华新水泥（西藏）有限公 生产经营各种硅酸盐水泥及水泥制 公司控股之 西藏 有限责任公司 纪昌华 司 品、提供水泥技术服务 子公司 华新水泥（阳新）有限公 湖北省 水泥、水泥包装袋、建材制品制 公司控股之 有限责任公司 李叶青 司 阳新县 造、销售；水泥技术咨询服务 子公司 华新水泥（武汉）有限公 湖北省 公司控股之 水泥制造、销售 有限责任公司 李叶青 司 武汉市 子公司 华新混凝土（武汉）有限 湖北省 公司控股之 混凝土制造、销售 有限责任公司 彭清宇 公司 武汉市 子公司 2、存在控制关系的关联方的注册资本、所持比例及其变化 注册资本 持股比例 关联方名称 2005 年 2004 年 2005 年 2004 年 华新集团有限公司 510,000 510,000 27.14% 31.52% 黄石华新包装有限公司 8,000 8,000 98.38% 98.38% 华新宜都包装有限公司 1,500 1,500 59.33% 59.33% 华新水泥（仙桃）有限公司 23,900 23,900 80% 80% 武汉武钢华新水泥有限责任公司 40,000 40,000 50% 50% 华新南通水泥有限公司 108,000 108,000 85% 85% 华新水泥（宜昌）有限公司 150,000 150,000 70% 70% 黄石市华新水泥科研设计有限公司 1,000 1,000 99% 99% 华新水泥（恩施）有限公司 60,000 60,000 90.1% 90.1% 136,000 (千美 136,000 (千美 华新金猫水泥（苏州）有限公司 51% 51% 元) 元) 华新水泥（昭通）有限公司 75,000 20,000 88% 88% 华新水泥（岳阳）有限公司 25,000 25,000 97% 97% 华新水泥（西藏）有限公司 50,000 50,000 60% 60% 68 华新水泥（阳新）有限公司 500,000 80% 华新水泥（武汉）有限公司 60,000 94% 华新混凝土（武汉）有限公司 10,000 94% 3、不存在控制关系的关联方的性质 关联方名称 关系 与本公司关联交易内容 华新纤维水泥制品有限公司 受同一母公司控制 购买本公司产品 Holcim 本公司第二大股东之关联公司 向本公司提供咨询服务 黄石亿瑞达投资有限公司 受同一母公司控制 共同投资设立华新阳新水泥有限公司 黄石华新宾馆有限公司 本公司之参股公司 代垫款项 (二) 关联方定价政策 本公司关联交易作价以市场价格为基础。 (三) 关联交易 a) 销售产品 关联方名称 2005 年 2004 年 华新纤维水泥制品有限公司 3,356 3,357 b) 接受劳务及服务 关联方名称 2005 年 2004 年 华新集团有限公司*1 4,800 4,800 Holcim*2 2,421 2,483 *1 依据本公司与华新集团有限公司（以下简称“集团公司”）所签订综合服务合同，集团公 司为本公司提供职工劳动条件及劳动保护服务、厂区及生活区综合服务、社会公益事业服务、党 团、工会活动的组织及相关服务，年服务费为人民币 4,800 千元，按月支付。 *2 依据本公司与 Holcim Group Support (Jona) Ltd.,（以下简称 Holcim）签订的顾问服务 协议，Holcim 向本公司提供管理咨询、人力资源培训等服务，年服务费为 300 千元美金，按 2005 年 12 月 31 日汇率折合人民币 2,421 千元。 69 c) 关联方资金往来 向关联方提供资金 关联方向上市公司提供资金 关联方 发生额 余额 发生额 余额 华新纤维水泥制品有限公司 1,053 360 华新集团有限公司 367 78 黄石市亿瑞达投资有限公司 75,840 74,260 黄石华新宾馆有限公司 0 54 47 29 合 计 1,420 492 75,887 74,289 （四）关联方往来余额 关联方名称 科目名称 2005 年 2004 年 华新集团有限公司 其他应收款 78 26 华新集团有限公司 其他应付款 0 1,792 华新集团有限公司 一年内到期的长期应付款 0 3,271 华新集团有限公司 长期应付款 0 0 华新纤维水泥制品有限公司 其他应收款 324 244 华新纤维水泥制品有限公司 应收账款 36 0 华新纤维水泥制品有限公司 预付账款 0 8 黄石华新宾馆有限公司 其他应收款 54 123 黄石华新宾馆有限公司 其他应付款 29 0 黄石亿瑞达投资有限公司 其他应付款 0 1,580 黄石亿瑞达投资有限公司* 长期应付款 74,260 0 * 根据本公司与黄石亿瑞达投资有限公司（以下简称亿瑞达公司）于 2004 年 12 月 16 日达成 的投资协议，亿瑞达公司以拥有的阳新项目所必需的 9 幅土地(面积总计 2,000,046.1 平方米,使用 权价值 177,973.20 千元人民币，已经湖北永业行评估咨询有限公司(鄂)永地(2004)(估)字第 0181 号土地估价报告估价)使用权投入 2005 年 2 月 22 日成立的阳新公司中,双方股东确认亿瑞达公司出 资额为 100,000 千元，占阳新公司注册资本的 20%，同时阳新公司在 48 年内每年(12 月 1 日之前) 支付亿瑞达公司 1,580 千元人民币的土地使用权补偿费，作为对亿瑞达公司所出资的 9 幅土地使用 权价值的补偿。上述土地的产权过户手续已经办理完毕。阳新公司已于本期支付 1,580 千元土地使 用权补偿费，期未长期应付款余额为 74,260 千元。 （五） 本公司其他重要关联交易 截至 2005 年 12 月 31 日本公司为子公司提供借款担保 377,540 千元，担保总额占 2005 年 末净资产的 31.11%。 70 八 资本性承诺 1、 约定重大对外投资支出 截止 2005 年 12 月 31 日，本公司尚有已签订合同但未付的约定重大对外投资支出共计 316,180 千元（2004 年 12 月 31 日为 369,808 千元），具体情况如下： 投资项目名称 合同投资额 已付投资额 未付投资额 预计投资期间 备注 襄樊项目 208,712 95,161 113,551 2006-2007 年 云南公司项目 251,227 124,069 127,158 2006-2007 年 宜昌公司二期 111,894 88,869 23,025 2006 年底 阳新公司二期 62,684 14,775 47,909 2006 年底 岳阳公司项目 68,546 64,009 4,537 2006 年底 合 计 703,063 386,883 316,180 2、 除存在上述承诺事项外，截止 2005 年 12 月 31 日，本公司无其他重大承诺事项。 九 或有事项 1、 对外提供债务担保形成的或有负债 截止 2005 年 12 月 31 日，本公司为下列单位提供担保： 被担保单位名称 担保类型 金 额 占净资产的比例 公司对外（含并表单位）担保 宜昌华新水泥有限公司 借款担保 136,540 11% 西藏华新水泥有限公司 借款担保 66,000 5% 武汉武钢华新水泥有限责任公司 借款担保 20,000 2% 恩施华新水泥有限责任公司 借款担保 15,000 1% 岳阳华新水泥有限责任公司 借款担保 40,000 3% 云南华新水泥有限责任公司 借款担保 100,000 8% 合 计 377,540 31% 2、 除存在上述或有事项外，截止 2005 年 12 月 31 日，本公司不存在需要披露的重大未决诉 讼、未决索赔、税务纠纷等或有事项。 71 十 期后事项 本公司无应需披露的重大期后事项。 十一 其他重要事项 1、 2005 年度本公司将长期无法收回的应收账款 3,358 千元予以核销，参见附注五、3 应收账款； 2、 2005 年 11 月 25 日，本公司第四届董事会第二十五次会议原则同意关于申请发行短期融资 券的议案，并授权管理层全权办理本次公司发行公司短期融资券的事宜。 补充资料 按照中国证监会《公开发行证券的公司信息披露编报规则第九号―净资产收益率和每股收 益的计算及披露》的要求，本公司 2005 年度全面摊薄和加权平均计算的净资产收益率及每股收益 如下： 报告期利润 净资产收益率(%) 每股收益(元/股) 全面摊薄 加权平均 全面摊薄 加权平均 2005 年 2004 年 2005 年 2004 年 2005 年 2004 年 2005 年 2004 年 主营业务利润 41.48 48.88 42.37 65.46 1.53 1.74 1.53 1.74 营业利润 3.84 15.67 3.92 20.98 0.14 0.56 0.14 0.56 净利润 5.11 12.73 5.23 17.05 0.19 0.45 0.19 0.45 扣除非经常性 4.81 10.35 4.92 14.09 0.18 0.37 0.18 0.37 损益后的净利润 非经常性损益明细项目： 项 目 2005 年 2004 年 所得税前 所得税后 所得税前 所得税后 处置长期股权投资、固定资 产、在建工程、无形资产、 3,707 4,580 36,993 24,786 其他长期资产产生的损益 政府补贴 3,279 2,197 扣除资产减值准备后的其他 (801) (855) (2,299) (1,541) 营业外收入、支出 以前年度已经计提各项减值 3,442 2,306 准备的转回 合计 2,906 3,725 41,415 27,748 净利润 62,073 148,551 扣除非经常性损益之后的净 58,348 利润 120,803 非经常性损益的定义：非经常性损益是指公司发生的与经营业务无直接关系，以及虽与经营业 务相关，但由于其性质、金额或发生频率，影响了真实、公允地反映公司正常盈利能力的各项收 入、支出。 72 国际审计师报告书 致华新水泥股份有限公司列位股东 (于中华人民共和国注册成立之股份有限公司) 本审计师已完成审核华新水泥股份有限公司(“贵公司”)及其附属公司(“贵集团”)于二零零五年十 二月三十一日的合并资产负债表及截至该日止年度的合并利润表、合并现金流量表以及合并权益变 动表。编制载于第 2 页至第 37 页之合并账目乃贵公司管理层的责任。本审计师的责任是根据审核 工作的结果，对该等账目发表意见。 本审计师是按照国际审计准则实行审核工作。该等准则要求本审计师通过策划和进行审核工 作，获得充分凭证，就该等账目是否存在重大错误陈述，作出合理之确定。审核范围包括以抽查方 式查核与账目所载数额及披露事项有关的凭证，亦包括评审管理层采用的会计政策和重大估计，以 及评估账目的整体列账方式。本审计师相信，我们的审核工作已为下列意见提供合理的基础。 本审计师认为，上述的合并账目真实与公平地反映贵集团于二零零五年十二月三十一日的财 务状况，及贵集团截至该日止年度的经营成果和现金流量，并根据国际财务报告准则妥善编制。 普华永道中国有限公司 二零零六年三月[三]日 73 华新水泥股份有限公司 合并现金流量表 截至二零零五年十二月三十一日止年度 (除特别注明外，金额单位为人民币千元) 附注 二零零五年 二零零四年 营业收入 5 2,695,976 2,188,101 销售成本 (2,303,530) (1,684,664) 毛利 392,446 503,437 其他经营净利润 6 36,181 75,241 销售费用 (113,990) (74,596) 管理费用 (120,546) (144,621) 经营利润 194,091 359,461 财务费用净额 9 (103,807) (82,973) 应占联营公司利润/(损失) 15 8 (15) 除税前利润 90,292 276,473 所得税费用 10 (3,167) (49,087) 本年利润 87,125 227,386 由下列各方应占 - 本公司股权持有人 79,158 179,340 - 少数股东 7,967 48,046 87,125 227,386 本公司股权持有人应占每股盈利 (加权平均及摊 11 人民币 0.241 元 人民币 0.546 元 薄) 附注 二零零五年 二零零四年 资产 非流动资产 预付租赁款 12 491,384 372,951 物业、机器及设备 13 4,492,736 3,539,601 无形资产 14 47,549 (158,422) 联营公司权益 15 287 279 可供销售之投资 16 14,480 14,480 递延税款借项 27 35,774 20,930 5,082,210 3,789,819 流动资产 存货 17 328,836 285,613 应收账款 18 213,963 182,627 其它应收款项、预付款项及按金 19 100,172 112,542 受限制之现金 20 72,728 15,963 76 现金及现金等价物 20 295,589 381,377 1,011,288 978,122 资产总额 6,093,498 4,767,941 权益 本公司股权持有人应占之股本及储备 股本 21 328,400 328,400 其他储备 22 686,629 462,267 未分配利润 221,523 176,224 1,236,552 966,891 少数股东权益 714,026 606,764 权益总额 1,950,578 1,573,655 负债 非流动负债 借款 23 2,041,479 1,546,464 递延收入 24 18,666 16,653 其他非流动负债 25 78,690 64,659 递延税款贷项 27 7,303 - 2,146,138 1,627,776 流动负债 应付账款 468,663 301,194 应付工程款、预提费用及预收款 26 498,981 406,583 借款 23 1,008,430 826,448 应交税金 20,708 32,285 1,996,782 1,566,510 负债总额 4,142,920 3,194,286 负债及权益总额 6,093,498 4,767,941 本公司股权持有人应占 少数股东权益 权益合计 股本 其他储备 未分配利润 (附注 (附注 21) 22(a),(b)) 于二零零四年一月一日之余额 - 以往呈报为权益 328,400 406,120 72,735 - 807,255 于二零零四年一月一日之余额 - 以往单独呈报为少数股东权益 - - - 116,228 116,228 于二零零四年一月一日之余额 - 经重列 328,400 406,120 72,735 116,228 923,483 少数股东对新成立附属公司 之资本投入 - - - 20,000 20,000 收购附属公司 - - - 446,582 446,582 收购附属公司之少数股东权益 - - - (19,800) (19,800) 派发二零零三年股利(附注 22(d)) - - (19,704) (4,292) (23,996) 本年利润 - 179,340 48,046 227,386 由未分配利润转至其他储备 - 26,077 (26,077) - - 提取储备基金 - 30,070 (30,070) - - 于二零零四年十二月三十一日之余 额 328,400 462,267 176,224 606,764 1,573,655 75 于二零零五年一月一日之余额 - 以往呈报为权益 328,400 462,267 176,224 - 966,891 于二零零五年一月一日之余额 - 以往单独呈报为少数股东权益 - - - 606,764 606,764 调整负商誉至年初未分配利润(附注 14) - - 210,207 - 210,207 由未分配利润转至其他储备 (附注 14) - 210,207 (210,20 - - 于二零零五年一月一日之余额 - 经重列 328,400 672,474 176,2 606,764 1,783,862 少数股东对新成立附属公司 之资本投入 - - - 100,000 100,000 派发二零零四年股利(附注 22(d)) - - (19,704) (705) (20,409) 本年利润 - - 79,158 7,967 87,125 由未分配利润转至其他储备 - 1,637 (1,637) - - 提取储备基金 - 12,518 (12,518) - - 于二零零五年十二月三十一日之余 额 328,400 686,629 221,523 714,026 1,950,578 附注 二零零五年 二零零四年 营业活动现金流量 经营业务之现金流入净额 28 555,270 452,848 利息支出 (150,070) (97,915) 所得税支出 (22,285) (55,363) 营业活动中现金流入净额 382,915 299,570 投资活动现金流量 购买附属公司之现金净流出 -- (110,014) 收购附属公司之少数股东之权益的现金流出 -- (19,800) 处置矿山使用权所得的现金 - 50,000 出售物业、机器及设备所得款项 14,975 10,825 购置物业、机器及设备 (1,153,637) (767,452) 增加预付租赁款 (5,213) (26,805) 购置无形资产 (195) (2,406) 给予少数股东之暂借款 (2,850) (41,390) 收到政府补贴 6,041 - 股息收入 -- 437 利息收入 3,785 3,054 投资活动中现金流出净额 (1,137,094) (903,551) 融资活动现金流量 收到借款 1,680,600 1,122,370 偿还借款 (984,799) (523,171) 偿还其他非流动负债 (4,123) (6,614) 偿还应付控股股东款项 (3,271) - 少数股东之资本投入 -- 6,000 支付股利予本公司股东 (19,311) (19,704) 支付股利予少数股东 (705) (4,292) 融资活动之现金流入净额 668,391 574,589 现金及现金等价物减少 (85,788) (29,392) 现金及现金等价物年初余额 381,377 410,769 现金及现金等价物年末余额 20 295,589 381,377 76 华新水泥股份有限公司 合并现金流量表 截至二零零五年十二月三十一日止年度 (除特别注明外，金额单位为人民币千元) 一般资料 华新水泥股份有限公司(“本公司”)为一间于中华人民共和国(“中国”)成立的股份有限公司。本 公司于上海交易所挂牌上市。本公司的注册地为湖北省黄石市黄石大道 897 号。本公司及其附属 公司(“本集团”)主要从事水泥生产及销售，主要营业额来源于中国境内。 主要会计政策 以下是编制合并账目的主要会计政策。除特别说明外，本公司在已合并账目所覆盖之年度一 贯地采用该等会计政策。 2.1 编制基准 本合并账目是按照国际会计准则委员会颁布的国际财务报告准则，包括国际会计准则及阐释而编 制。此会计基准与编制中国法定账目所使用的基准有所不同。本公司及组成本集团的附属公司的 中国法定账目乃根据中国有关会计准则和规定而编制。本账目已对中国法定账目作出适当的调整 以符合国际财务报告准则，而有关的调整并没有反映于本集团的会计记录之上。 本合并账目以历史成本为基准编制。 根据国际财务报告准则的要求，编制本账目时需要对某些重要事项作出估计。国际财务报告准则 也要求管理层在应用本集团会计政策的过程中运用其判断。涉及重要和复杂的估计及对账目存在 重大影响的假设和估计的事项已在附注 4 中作出披露。 2.2 会计政策之变更 于二零零五年一月一日，本集团采纳了下列与其业务相关的经修改之国际财务报告准则。根 据有关要求，二零零四年的比较数字已作出相应修改。 国际会计准则第 1 号 (二零零三年修改版) 账目列报 国际会计准则第 2 号 (二零零三年修改版) 存货 国际会计准则第 8 号 (二零零三年修改版) 会计政策、会计估计变 更和会计差错 国际会计准则第 10 号 (二零零三年修改版) 资产负债表日后事项 国际会计准则第 16 号 (二零零三年修改版) 物业、机器及设备 国际会计准则第 17 号 (二零零三年修改版) 租赁 国际会计准则第 21 号 (二零零三年修改版) 汇率变动之影响 国际会计准则第 24 号 (二零零三年修改版) 关联方披露 国际会计准则第 27 号 (二零零三年修改版) 合并和单独账目 国际会计准则第 28 号 (二零零三年修改版) 联营公司权益 国际会计准则第 32 号 (二零零三年修改版) 金融工具：披露和列报 76 国际会计准则第 33 号 (二零零三年修改版) 每股盈利 国际会计准则第 39 号 (二零零三年修改版) 金融工具：确认和计量 上述之国际会计准则第 1、2、8、10、16、17、21、24、27、28、32、33 及 39 号(二零零 三年修改版)并无导致本集团会计政策出现重大变更： — 国际会计准则第 1 号(二零零三年修改版)影响了少数股东权益及其他披露事项之呈列方 式。 — 国际会计准则第 2、8、10、16、17、27、28、32、33 及 39 号(二零零三年修改版)并无 对本集团会计政策产生重大影响。 — 国际会计准则第 21 号(二零零三年修改版)对本集团会计政策并无重大影响。各集团公 司之功能货币已按照修改后准则之指引重新选择。各集团公司采用相同的功能货币和 计量本位币。 — 国际会计准则第 24 号对关联方之确认及若干关联方之披露造成影响。 2.3 合并账目 (a) 附属公司 附属公司是指本集团有能力控制其财务及经营政策的公司，一般情况下本集团拥有该公司 50%以上投票权。判断本集团是否控制另一经营实体时，已考虑是否存在本集团可使用或可 转换的潜在表决权及该潜在表决权的有效性。附属公司自本集团享有对其控制权之日起纳入 合并范围，并从本集团终止对其控制权之日起不予纳入合并范围。 收购附属公司采用购买法核算。收购成本按为收购而付出的资产、权益类金融工具以及已承 担或预计的债务在收购日时的公允价值加上与收购直接相关的费用列示。合并时所收购之可 单独确认之资产、负债及或然负债初始价值以收购日之公允价值计量，不考虑应归属少数股 东的部分。收购成本超出本集团应占所收购可单独确认的净资产的公允价值部份作为商誉。 收 购 成本 低于 所 收购 附属 公 司净 资产 公 允价 值部 份 ，则 直接 于 利润 表中 确 认（ 见附注 2.8）。 内部交易、余额及内部交易产生的未实现利润均被抵销。除有证据表明所转换资产出现减值 外，未实现亏损也予抵销。附属公司之会计政策已作适当修改，以确保与本集团所采纳之政 策一致。 少数股东权益是指附属公司之经营结果及净资产不由本集团直接或间接拥有的份额。 (b) 联营公司 联营公司是指本集团对其有重大影响但不拥有控制权的公司，一般情况下本集团拥有该公司 20%至 50%投票权。对联营公司之投资以权益法核算，以成本价格作为初始价值确认。 本集团应占收购后的联营公司的利润或亏损于利润表中确认，而应占收购后联营公司的储备 变动在储备中确认。并根据收购后的累积变动调整投资之账面值。除本集团发生相关义务或 代联营公司支付款项外，当本集团应占联营公司亏损等于或大于对联营公司的投资(包括任何 其他没有担保的应收款项)时，本集团不再确认进一步的损失。本集团与联营公司之间交易而 产生的未实现利润按本集团所享有的份额抵销。除有证据表明该交易所转移的资产出现减值 1 外，未实现亏损亦应抵销。联营公司之会计政策已作适当修改，以确保与本集团所采纳之政 策一致。 2.4 分部报告 业务分部是指按所提供的产品或服务所对应的风险和回报的不同而划分的资产和业务组合。 地区分部是指按在某一特定经济环境下从事提供产品或服务的活动所对应的风险和回报的不 同而划分的资产和业务组合。 2.5 外币换算 (a) 功能及报告货币 本集团内各公司账目均以该公司经营之主要经济环境通行之货币(“功能货币”)列示。合并 账目以人民币呈列，而该货币亦为本公司的功能及报告货币。 (b) 交易及余额 外币交易均按交易当日之汇率折算为功能货币入账。上述交易结算时出现的汇兑收益或汇兑 损失以及以外币为单位之货币性资产和负债按年终汇率换算出现的汇兑收益或汇兑损失均在 利润表中确认。 2.6 预付租赁款 本集团为购买其生产经营所在场地及矿山使用权所支付的价款作为预付租赁款单独列示。有 特定期限的预付租赁款之成本根据尚余使用年限以直线法分摊入费用，无特定期限的预付租 赁款之成本根据五十年以直线法分摊入费用。 2.7 物业、机器及设备 (a) 所有物业、机器及设备按对集团的历史成本减累计折旧及累计减值准备列示。历史成本 包括取得该项资产所直接花费的各项费用。 物业、机器及设备的折旧按估计可使用年限及考虑预计残值后以直线法计算。采用的主要年 折旧率为： 年折旧率 建筑物 2.4-3.84% 机器及设备 6-12% 家具、固定装置及办公室设备 5.33-12% 汽车及运输设备 8-12% 在资产负债表日，本集团对相关资产的预计残值和使用年限进行审核，适当时进行调整。 (b) 在建工程指正在建造的厂房以及正在安装的机器及设备。在建工程按成本值列账，包括 建造费用、机器设备购置成本，及为建造项目达到可使用状态前于建造或安装期间而发生的 借款利息支出。 厂房及机器设备的在建工程在投产时转入物业、机器及设备。当厂房及机器设备能按商业数 量持续生产可予售卖之质素产品时，则被视为已投产。 2 (c) 若某资产之账面值大于其估计可收回金额(附注 2.9)，该资产之账面值将即时减至其可收 回金额。 (d) 出售物业、机器及设备之盈亏，是指有关资产之销售所得款项净额与账面价值两者之差 额，并于发生时计入利润表。 (e) 物业、机器及设备的后续支出仅在与该物业、机器及设备相关的未来经济利益可能流入 本集团，并且该项支出能够可靠计量的情况下才会增加该资产的账面价值，或在适当的时候 确认为一项单独资产，并按预计该资产尚可使用年限计提折旧。其他维修费用于发生时直接 计入利润表。 2.8 无形资产 (a) 商誉 (i) 商誉为收购成本超过本集团所享有的被收购附属公司在收购日可辨认净资产公允价值之 间的差额。负商誉为本集团应占所收购净资产之公允价值超出收购成本之间的差额。收 购子公司产生的商誉以无形资产列示。 (ii) 对合同签订日为二零零四年三月三十一日以前的业务合并所产生的商誉，在以前年度以 直线法在其预计有效年限通常不超出二十年内摊销。于二零零五年一月一日，该等商誉 停止摊销，累计摊销额与商誉成本互相抵销。 对合同签订日为二零零四年三月三十一日及以后的业务合并所产生的商誉，以及上述合 同签订日为二零零四年三月三十一日以前之业务合并而产生的，并于二零零五年一月一 日抵销了累计摊销后列示的商誉，本集团每年评估其有否减值并按成本减减值准备后的 净值列示。出售附属公司之收益及亏损包括对应该公司之商誉的账面值。 商誉将分摊到各现金流量产出单位进行减值评估。 (iii) 对合同签订日为二零零四年三月三十一日以前的业务合并所产生的负商誉，在以前年度 以直线法在购入之非货币性资产的剩余加权平均可用年限进行摊销。于二零零五年一月 一日，该等负商誉作撇账处理并相应将其余额转入年初未分配利润。 由二零零四年三月三十一日及以后的业务合并所产生的负商誉，于收购日直接计入利润 表。 (b) 矿山开发费 矿山开发费予以资本化，并以直线法按矿山预计之可使用年限摊销。 (c) 铁路容量扩建费 铁路容量扩建费予以资本化，并以直线法按预计之铁路可使用年限分十二年摊销。 (d) 商标 商标按历史成本入账。有确切可使用年限的商标按成本减累计摊销列示，摊销按其估计可使 用年限以直线法计算。 (e) 其他无形资产 其他无形资产主要为支付给当地电力局的电力增容费用，按其估计受益年限十年以直线法摊销。 2.9 资产减值 无明确可使用年限之资产无须摊销，并于每年或每当有事项或情况转变显示其账面值不可收 回时进行减值测试。需要摊销之资产每当有事项或情况转变显示其账面值不可收回时进行减 值测试。减值亏损按资产账面值超出其可收回金额之部分确认。可收回金额为资产之公允价 3 值减销售成本与其可使用价值之较高者。在评估减值时，各项资产将按其产生的可单独辨认 现金流量的最低资产组合水平进行分组(现金流量产出单位)，以便评估资产减值。 2.10 投资 本集团将其投资分以下类别：借款和应收款项以及可供销售之投资。该等分类以取得该等投 资之目的为依据。管理层在初始投资时确定其分类，并于每个报告日对该等认定进行复核。 (a) 借款及应收款项 借款及应收款项乃非衍生金融资产，有固定或可予厘定之付款金额，但不会在活跃市场上买 卖。借款及应收款项于本集团向债务人直接提供金钱、货物或服务时产生，且该债务人无意 买卖该应收款项。借款及应收款项计入流动资产内，但到期日超过资产负债表日后十二个月 之款项除外，该等借款及应收款项被列作非流动资产。借款及应收款项于资产负债表内列作 应收账款、其他应收款项、预付款项及按金。 借款及应收款项以使用实际利率法计算之摊销成本列示。 (b) 可供销售之投资 除对附属公司及联营公司的投资外，无特定持有期限，并可根据现金流量的需要或利率变动 而转让的投资视为可供销售之投资并列示于非流动资产中。而管理层有意在资产负债表日后 十二个月内转让或为了增加营运资本而转让之可供销售投资列示于流动资产中。 购入或出售投资于交易日确认，交易日为本集团承诺购入或出售该投资之日。可供销售之投 资的初始价值以其公允价值确定，该公允价值为付出代价之公允价值加上交易成本，并需在 日后进行减值复核。当从该等投资获得现金流的权利已到期或者被转让，并且本集团已实质 上转移了与所有权相关之所有风险及报酬时，本集团应不再确认该等投资。 本集团于各个资产负债表日评估是否有客观证据显示一项金融资产或一组金融资产已减值。 倘若权益性投资被列作可供销售投资，则在决定权益性投资是否减值时应考虑其公允价值是 否大幅或持续下降至低于其成本。倘若出现该等证据，则累积亏损(即购买成本与现行公允价 值之差额减去先前于利润表内确认之累计减值准备)将从权益项目中转出并计入利润表。已在 利润表确认的权益类金融工具之减值准备不可在利润表内转回。 2.11 存货 存货按成本及可变现净值两者的较低者列账。原材料、配件及耗用品之成本乃根据发票价格按 加权平均法计算列账。在制品和产成品的成本包括直接原材料、直接人工以及基于正常产能并按恰当 比例分摊的间接生产费用，但不包括借贷成本。可变现净值是在正常经营情况下存货的估计售价扣除 完工成本及销售费用之金额。 2.12 应收账款 应收账款以公允价值入账，以后按实际利率法计算之摊销成本减坏账准备列示。当有客观证据表 明本集团不能按照原收款条件全额收回应收账款时，需确认应收账款坏账准备。坏账准备的金额 应为账面价值与以实际利率计算的预计未来现金流入现值之间的差额。坏账准备在利润表中确 认。 2.13 现金及现金等价物 现金及现金等价物包括库存现金及可随时用于支付的银行存款。 4 2.14 股本 普通股列为股本。 2.15 借款 借款按公允价值扣除已产生之交易成本入账。初始确认后之借款按摊销成本列账。所得款项（扣 除交易成本）与赎回价值之差额于借款期内使用实际利率法计入利润表。 直接与收购、兴建或生产，需耗用一定时间方可达到可使用状态或销售的资产相关之借贷成本将 予以资本化,作为该资产的部分成本。其他借贷成本计入费用。 除本集团有权无条件延迟至资产负债表日后十二个月或以上偿还的负债外，其他借款列为流动负 债。 2.16 税项 中国所得税乃按照适用于集团各公司的税率及估计应课税收入作出拨备。 递延所得税采用负债法就资产与负债的税务基准与账目中之账面值的暂时性差异作出拨备。 然而，如果递延税项是由于初始确认某项资产或负债(该资产或负债不是在企业合并的交易中 所产生并该交易不会影响账面及税务利润或亏损)而产生，则不予确认。计算递延税款时采用 资产负债表日预计在递延所得税借项实现时或递延所得税贷项转回时适用的税率。 递延所得税借项按估计将来年度之应课税收入足以令上述暂时性差异得以实现的金额范围内 确认。 因投资附属公司及合营公司而产生的时间性差异确认为递延所得税，但本集团可以控制该时 间性差异转回的时间或该时间性差异在可预见的将来不可转回的情况除外。 2.17 退休计划 养老金义务 本集团参加当地政府管理的定额供款退休计划。本集团的义务包括向该计划供款，而供款金 额以员工工资的一定百分比确定。定期供款按权责发生制在利润表中确认并构成当期员工成 本的一部分。除按供款计划缴款外，本集团无其他进一步支付的义务。 2.18 拨备 当本集团因已发生的事件须承担现有之法律性或推定性的责任，而解除责任时有可能消耗资 源，并在责任金额能够可靠地作出估算的情况下，需确认拨备。未来经营之亏损不应确认为 拨备。 若存在一组相类似的义务，在决定是否需要支付现金时应将此类义务作为整体去考虑。即使 在同一组义务中履行其中一项义务需支付现金的可能性很小，亦要确认整项拨备。 2.19 政府补贴 当能够合理地保证补贴可收取且本集团将符合所有附带条件时，政府补贴以公允价值确认入 账。 与成本有关之补贴需递延确认，并在与其补贴的费用相匹配的期间内在利润表中确认。 5 与购买物业、机器及设备有关之政府补贴列作非流动负债下之递延收入，并按有关资产之预 期可用年期以直线法计入利润表。 2.20 收入确认 收入为销售商品及提供劳务之公允价值(扣除增值税、折让及折扣)，并抵销了集团内部销 售。收入包括以下方面： (a) 销售商品 来自商品销售之收入在和商品所有权有关的主要风险和报酬转移给购货方，并且有关应收款 项的可回收性能合理保证时确认。所有权之转移一般 与商品发出时间一致。 (b) 利息收入 利息收入按实际利率及时间比例入账。倘若一项应收款项出现减值，本集团会将应收款项账 面值调减至其可回收全额 (可回收金额以使用原有实际利率折现未来预计现金流所得)，并在 以后将解除折现所产生的影响确认为利息收入。 (c) 股利收入 股利收入乃于拥有收取股息权利时入账。 2.21 租赁 经营租赁指租赁资产的绝大部分风险及回报皆由出租人承担的租赁。租赁付款(扣除出租人提 供的优惠)在租赁期内按直线法计入利润表。 2.22 股利 派发予本公司股东之股利在获得本公司股东批准后，于本集团合并账目中确认为负债。 风险控制 (a) 金融风险因素 本集团业务承受各种金融风险，包括外汇风险、信贷风险、流动性风险及现金流利率风险。 (i) 外汇风险 本集团内之公司均在中国境内经营，大部份交易均以人民币结算。本集团承受人民币 兑换美元、欧元及丹麦克朗之外汇风险。本集团并无用套期保值工具抵销外汇风险。 此外，将人民币兑换成外国货币受到中国政府有关外汇管制的法律法规所规限。 (ii) 信贷风险 本集团并无高度集中之信贷风险。合并资产负债表所列之应收账款账面值反映本集团 金融资产之最高信贷风险。 (iii) 流动性风险 本集团确保自身持有充足的现金及信贷资源，以应付流动资金需求。 6 (iv) 现金流及公允价值利率风险 因本集团无重大计息资产，所以本集团之收入及经营现金流量不会因市场利率变动而 产生严重影响。 本集团之利率变动风险主要来自长期借款。本集团因以变动利率借入之借款而承担现 金流风险。本集团因以固定利率借入借款而承担公允价值利率风险。本集团并无利用 套期保值工具，抵销现金流及公允价值利率风险。 (b) 公允价值估计 下列金融工具之账面价值与其公允价值无重大差异。 现金及现金等价物、应收账款、其他应收款项、预付款项及按金、应付账款、应付工程款、预提 费用及预收款、其他非流动负债及借款。 重大的估计及假设 估计和判断乃根据以往经验及其他因素，包括在某种情况下确信为合理的未来事项的基础上 作出，并将持续复核。 本集团就未来作出多项估计及假设，由此而作出的会计估计极少与相应的实际结果保持完全 一致。其中极可能导致下一个财政年度资产及负债账面值出现重大调整的估计及假设列示如 下： (a) 商誉的预期减值 本集团根据附注 2.8(a) 所述的会计政策，每年测试商誉是否存在减值问题。现金流量产出单 位之可回收金额依据可使用价值确定。而计算可使用价值需要作出适当估计。 (b) 物业、机器及设备以及可供销售之投资的预期减值 每当有事项或情况转变显示物业、机器及设备以及可供销售之投资之账面价值可能不能收回 时，本集团将评估该等资产是否存在减值。该等资产之可回收金额需要参考其可使用价值。 而计算可使用价值需要作出适当估计及判断。 (c) 本年税金及递延税款 本集团须在中国缴纳所得税。在确定应付所得税金额及其支付时间时需要运用一定程度的判 断。日常业务中存在许多不能确定最终税负金额的交易。如果此等交易的最终税负结果与当 初入账之金额不同，有关差异将会影响当期的所得税及递延税款。 5. 分部资料 由于本集团之销售收入、费用、资产及负债主要源自生产和销售水泥及其相关产品，本集团没有编 制业务分部资料。由于本集团的所有产品均在中国境内生产且源自海外市场的销售收入及经营成果 占集团销售收入及经营成果的份额少于 10%，本集团没有编制地区分部资料。 二零零五年 二零零四年 7 产品销售收入 2,695,976 2,188,101 利息收入于附注 9 中披露。 6. 其他经营净利润 二零零五年 二零零四年 税款补贴(注释a) 31,467 38,478 处置矿山使用权及相关 矿山开采设备之净收益 - 36,650 处置物业、机器及设备的净收益 3,387 - 其他 1,327 113 36,181 75,241 (a) 税款补贴为由于利用废弃原材料进行生产而取得的增值税返还计入其他经营利润。 7. 按性质分类之费用 二零零五年 二零零四年 预付租赁款分摊计入之费用 11,172 8,013 物业、机器及设备折旧 269,757 212,484 无形资产摊销 4,431 (13,952) 产成品及在制品变动 9,000 (59,642) 原材料及低值易耗品耗用 1,433,170 1,007,822 转回呆账及坏账准备 (3,801) (3,381) 计提存货减值准备 569 14,141 员工成本 150,318 160,841 递延收入摊销冲减费用 (4,028) (1,324) 出售物业、机器及设备损失 - 2,320 8. 员工成本 二零零五年 二零零四年 薪金及工资 122,190 126,530 退休计划供款 17,453 21,949 其他社会福利保障 10,675 12,362 150,318 160,841 本集团内各公司已参加由当地社会福利保障部门管理之退休保险计划。本集团每月供款乃按 员工工资总额之特定比率计算。 9. 财务费用净额 二零零五年 二零零四年 非上市投资收入 - 437 利息收入 3,785 3,054 净汇兑收益/(损失) 13,759 (3,649) 利息支出 (121,351) (82,815) - 银行借款 (149,435) (96,213) - 其他借款 - (1,702) 减：利息资本化之金额 28,084 15,100 (103,807) (82,973) 8 10. 所得税费用 二零零五年 二零零四年 本年税金 10,708 60,296 递延税款 (附注 27) (7,541) (11,209) 3,167 49,087 本集团实际税负与按本集团税前利润乘以本公司所得税率计算得出的理论税负之差异分析如 下： 二零零五年 二零零四年 除税前利润 90,292 276,473 按 33%税率计算 (2004: 33%) 29,796 91,236 税收返还 * (13,796) (16,554) 不须纳税之附属公司之利润净额 ** (31,731) (19,457) 不予确认递延税款借项之附属公司之亏损 17,951 - 不须纳税之收入 (561) (8,221) 不能扣除的费用开支 2,619 2,083 附属公司享受较低税率的影响 (1,111) - 税项支出 3,167 49,087 * 根据黄石市国家税务局于二零零五年六月三十日签发的黄国税函发 [2005]69 号，本公司因 利用废弃资源进行生产而获得免征企业所得税人民币 8,201,000 元 (二零零四年：人民币 6,225,000 元) 的优惠处理。根据湖北省宜都市国家税务局于二零零五年二月二十八日签发 的文件，华新水泥(宜昌)有限公司因采购国产设备用于特定技术改造项目而享有减免所得 税的优惠人民币 5,595,000 元 (二零零四年: 人民币 10,329,000 元)。 ** 根据中国财政部及国家税务总局于一九九四年三月二十九日颁发的财税字[1994]001 号 文，华新水泥(阳新)有限公司和华新水泥(恩施)有限公司属于在国务院确定的“老、少、 边、穷”地区新办的企业，从开始经营的年度(即二零零五年)起享受三年的所得税减免。 11. 每股盈利 二零零五年 二零零四年 本公司股东应占之盈利 79,158 179,340 加权平均之普通股股份 (千股) 328,400 328,400 加权平均及摊薄之每股盈利 (人民币元每股) 0.241 0.546 本集团于二零零五年及二零零四年没有尚未认购之普通股，因此摊薄每股盈利和加权平均每 股盈利一致。 9 12. 预付租赁款 于二零零四年一月一日 成本 225,288 累计摊销 (16,518) 净值 208,770 截至二零零四年十二月三十一日止年度 年初账面净值 208,770 增加 26,805 收购子公司而新增之预付租赁款 159,474 本年摊销 (8,013) 本年转出 (14,085) 年末账面净值 372,951 于二零零四年十二月三十一日 成本 387,753 累计摊销 (14,802) 净值 372,951 截至二零零五年十二月三十一日止年度 年初账面净值 372,951 增加 129,605 本年摊销 (11,172) 年末账面净值 491,384 于二零零五年十二月三十一日 成本 517,358 累计摊销 (25,974) 净值 491,384 包括于预付租赁款中账面净值为人民币 142,286,000 元之土地使用权(二零零四年: 人民币 138,346,000 元)已抵押于银行作为银行借款之抵押(附注 23)。 13. 物业、机器及设备 家具、 汽车及 机器及设 固定装置及 运输设 在建 建筑物 备 办公室设备 备 工程 总额 于二零零四年一月一日 成本 913,271 1,493,471 24,305 116,465 291,616 2,839,128 减值准备 (2,143) (1,904) - - - (4,047) 累计折旧 (170,173) (502,778) (13,464) (53,233) - (739,648) 净值 740,955 988,789 10,841 63,232 291,616 2,095,433 截至二零零四年十二月三十一日止年 度 年初账面净值 740,955 988,789 10,841 63,232 291,616 2,095,433 10 收购附属公司 364,965 346,081 2,127 11,134 13,014 737,321 增加 13,644 19,357 6,264 9,183 889,295 937,743 转拨 272,973 416,662 - 12,263 (701,898) - 报废 (14,283) (2,257) (441) (1,431) - (18,412) 本年折旧 (50,208) (146,550) (3,557) (12,169) - (212,484) 年末账面净值 1,328,046 1,622,082 15,234 82,212 492,027 3,539,601 于二零零四年十二月三十一日 成本 1,544,560 2,266,537 31,223 129,495 492,027 4,463,842 减值准备 (2,143) (1,904) - - - (4,047) 累计折旧 (214,371) (642,551) (15,989) (47,283) - (920,194) 净值 1,328,046 1,622,082 15,234 82,212 492,027 3,539,601 截至二零零五年十二月三十一日止年 度 年初账面净值 1,328,046 1,622,082 15,234 82,212 492,027 3,539,601 增加 4,971 3,337 5,618 18,446 1,205,447 1,237,819 (1,132,74 转拨 417,213 655,721 32,903 26,905 2) - 报废 (2,062) (9,846) (20) (2,999) - (14,927) 本年折旧 (64,567) (183,384) (7,292) (14,514) - (269,757) 1,683,60 年末账面净值 1 2,087,910 46,443 110,050 564,732 4,492,736 于二零零五年十二月三十一日 1,963,69 成本 9 2,912,827 69,581 169,412 564,732 5,680,251 减值准备 (2,143) (1,904) - - - (4,047) 累计折旧 (277,955) (823,013) (23,138) (59,362) - (1,183,468 1,683,60 净值 1 2,087,910 46,443 110,050 564,732 4,492,736 13． 物业、机器及设备(续) 截至二零零五年十二月三十一日及二零零四年十二月三十一日止年度，计入利润表各项目之 折旧列示如下： 二零零五年 二零零四年 销售成本 243,302 194,293 销售费用 15,239 10,040 管理费用 11,216 8,151 269,757 212,484 账面净值为人民币 433,457,000 元之建筑物(二零零四年：人民币 788,696,000 元)和账面净 值为人民币 1,513,008,000 元之机器及设备(二零零四年：人民币 543,526,000 元)以及部分土 地使用权(附注 12)已抵押于银行作为人民币 1,512,503,000 元银行借款之抵押物(二零零四 年：人民币 1,114,043,000 元)(附注 23)。 11 本年度资本化的利息为人民币 28,084,000 元(二零零四年：人民币 15,100,000 元)，资本化利 率参照用于这些建设项目的银行借款年利率为 5.465%(二零零四年：5.083% )。 14. 无形资产 矿山开 铁路 商誉 发费用 扩建费 商标权 其他 总额 于二零零四年一月一日 成本 12,473 9,268 7,800 - 5,369 34,910 累计摊销 (1,975) (1,427) (3,250) - (2,644) (9,296) 净值 10,498 7,841 4,550 - 2,725 25,614 截至二零零四年十二月三十一日止年度 年初账面净值 10,498 7,841 4,550 - 2,725 25,614 收购附属公司 (229,466) - - 27,917 1,155 (200,394) 增加 - 2,013 - - 393 2,406 本年摊销 18,231 (329) (650) (2,500) (800) 13,952 年末账面净值 (200,737) 9,525 3,900 25,417 3,473 (158,422) 于二零零四年十二月三十一日 成本 (216,993) 11,281 7,800 27,917 6,917 (163,078) 累计摊销 16,256 (1,756) (3,900) (2,500) (3,444) 4,656 净值 (200,737) 9,525 3,900 25,417 3,473 (158,422) 矿山开 铁路 商誉 发费用 扩建费 商标权 其他 总额 截至二零零五年十二月三十一日止年度 年初账面净值 - 如以往所呈 报 (200,737) 9,525 3,900 25,417 3,473 (158,422) 调整负商誉至年 初未配利润 210,207 - - - - 210,207 年初账面净值 - 经重列 9,470 9,525 3,900 25,417 3,473 51,785 增加 - - - - 195 195 本年摊销 - (557) (650) (2,500) (724) (4,431) 年末账面净 值 9,470 8,968 3,250 22,917 2,944 47,549 于二零零五年十二月三十一日 成本 9,470 11,281 7,800 27,917 7,112 63,580 累计摊销 - (2,313) (4,550) (5,000) (4,168) (16,031) 净值 9,470 8,968 3,250 22,917 2,944 47,549 根据本公司分别与苏州吴中区木渎经济发展总公司和东方茂邦水泥私人有限公司于二零零三 年五月十六日和二零零三年六月十日达成的协议，本公司分别从苏州吴中区木渎经济发展总 公司和东方茂邦水泥私人有限公司购入其持有的苏州金猫水泥有限公司 1%和 50%股权。于 二零零四年十二月三十一日，因此项收购而产生的负商誉扣除累计摊销后的金额为人民币 210,207,000 元。根据国际财务报告准则 3 – 业务合并，于二零零五年一月一日该负商誉的 12 账面净值作撇账处理，并相应地直接计入年初未分配利润。同时，根据中国政府颁布的有关 法规规定，该等收益不得作为可分配利润，该金额随即由未分配利润转入其他储备。 15. 联营公司权益 二零零五年 二零零四年 年初账面净值 279 294 应占联营公司之利润/(亏损) 8 年末账面净值 287 联营公司(为非上市公司)为: 本公司所占股 公司成立地 权比例 主要业务 黄石华新宾馆有限公司 中国 49% 经营酒店 16. 可供销售之投资 二零零五年 二零零四年 年末账面净值 14,480 14,480 截至二零零五年十二月三十一日及二零零四年十二月三十一日止年度，本集团并无新增、处 置可供销售之投资或为可供销售之投资计提减值准备。可供销售之投资没有在市场上流通且 没有固定到期日，以成本减除减值准备计量。 于二零零五年十二月三十一日及二零零四年十二月三十一日，可供销售之投资均为对非上市 公司之投资。其中包括持有一家由湖北省电力局控制的地方供电企业的 3.9%股权(二零零四 年：3.9%)之投资成本，价值人民币 11,724,000 元 (二零零四年：人民币 11,724,000 元)。 17. 存货 二零零五年 二零零四年 原材料 121,448 78,041 在制品 50,744 40,689 产成品 71,329 90,384 配件及耗用品 85,315 76,499 328,836 285,613 于销售成本及期间费用中确认的存货成本为人民币 2,317,101,000 元(二零零四年: 人民币 1,750,028,000 元)。 于二零零五年，本集团将存货中账面价值高于估计可收回价值的差异共人民币 569,000 元(二 零零四年: 人民币 14,141,000 元)计入管理费用。 13 18. 应收账款 二零零五年 二零零四年 应收账款 231,110 212,470 - 应收关联公司(附注29) 73,046 26,838 - 应收第三方 158,064 185,632 减：呆坏账准备 (17,147) (29,843) 213,963 182,627 19. 其它应收款项、预付款项及按金 二零零五年 二零零四年 预付原材料及机器设备采购款 16,112 43,449 - 关联公司(附注29) 9,053 20,914 - 第三方 7,059 22,535 其他应收款及按金 84,060 69,093 - 关联公司(附注29) 18,562 - 第三方 65,498 100,172 112,542 其他应收款及按金中包括给予本集团少数股东金额为人民币 44,240,000 元(二零零四年：人民 币 41,390,000 元)之暂借款。该款项为无抵押、免利息及没有固定还款期。 20. 现金及银行存款 二零零五年 二零零四年 现金及银行存款结余 303,376 301,340 短期银行定期存款 64,941 96,000 现金及银行存款 368,317 397,340 减：受限制之银行存款 (72,728) (15,963) 现金及现金等价物 295,589 381,377 短期银行定期存款的实际利率为 2.00%(二零零四年：1.62%)。该等存款平均到期日为 149 天。 现金及银行存款包括为本集团开具商业票据作担保的银行存款人民币 72,728,000 元(二零零四 年：人民币 15,963,093 元)。该等余额已重分类至受限制之银行存款。 21. 股本 二零零五年 二零零四年 注册、已发行及缴足之股本 每股面值人民币 1 元 国家股 (注释 a、b) 79,251 91,527 法人股 (注释 a、b) 22,749 24,873 14 已上市 A 股 (注释 b) 62,400 48,000 164,400 164,400 已上市 B 股 (注释 b) 164,000 164,000 328,400 328,400 (a) 根据 2005 年 12 月 16 日股东大会的决议以及湖北省国有资产监督管理委员会发布的“鄂国资 产权[2005]313 号文”的批复，12,276,232 股国家股及 2,123,768 股法人股作为股权分置方案 之对价转让给 A 股股东。同时，在满足一定条件的情况下，国家股及法人股可上市流通并转 让。 (b) 根据公司章程第八条，国家股、法人股、A 股及 B 股均为注册普通股份，享有同等权利。 22. 其他储备 储备基金 法定盈 任意盈 余公积 法定 余公积 其他储备 资本公积金 金 公益金 金 总额 (注释 a) (注释 b) (注释 b) (注释 b) 二零零四年一月一日 295,569 34,680 21,871 54,000 406,120 由未分配利润转入 26,077 - - - 26,077 提取储备基金 - 15,035 15,035 - 30,070 二零零四年十二月三十一日 321,646 49,715 36,906 54,000 462,267 二零零五年一月一日 – 如以往所呈报 321,646 49,715 36,906 54,000 462,267 由未分配利润转入(附注 14) 210,207 - - - 210,207 二零零五年一月一日 – 经重列 531,853 49,715 36,906 54,000 672,474 由未分配利润转入 1,637 - - - 1,637 提取储备基金 - 6,259 6,259 - 12,518 二零零五年十二月三十一日 533,490 55,974 43,165 54,000 686,629 (a) 资本公积金 于二零零五年十二月三十一日之资本公积金包括人民币 292,898,000 元(二零零四年：人民币 292,898,000 元)之股份溢价。根据中国有关法规，资本公积金只能用于增加股本。 本年由未分配利润转入资本公积金之金额主要为已在利润表中确认的政府补贴收入人民币 1,637,000 元(二零零四年：人民币 26,077,000 元)。根据中国政府颁布的有关法规规定，该 部分收入不得作为可分配利润。 (b) 储备基金 (i) 根据中国有关法规及本公司的公司章程，税后利润应按以下之次序分派： (1) 弥补亏损(如有)； (2) 提取税后利润 10%往法定盈余公积金。当法定盈余公积金金额达到股本/实收 资本的 50%，可以不再提取； (3) 提取税后利润 10%往法定公益金； (4) 提取由股东于股东大会通过之任意盈余公积金； (5) 派发股利予股东。 15 提取往法定盈余公积金、法定公益金和任意盈余公积之金额应根据本公司之法定审计 账目之税后利润为准。 (ii) 法定盈余公积金及任意盈余公积金 根据中国有关法规，法定盈余公积金及任意盈余公积金可用于弥补亏损及增加到股本 /实收资本。除弥补亏损外，在使用法定盈余公积金后，余额不应低于股本/实收资本 的 25%。 (iii) 法定公益金 根据中国有关法规，法定公益金只限于使用在本公司员工集体福利设施的资本性支 出。法定公益金除公司破产外，不可以派发给股东。根据财政部发出之文件，当使用 法定公益金时，相关资产的成本或法定公益金的结余较低之金额须从法定公益金转到 任意盈余公积金。当处理变卖有关资产时，原来从法定公益金转出的金额，须转回法 定公益金。 (c) 可供派发予股东之利润 根据中国有关法规，可供派发予股东之利润是依据中国会计法规厘定之累积可供分派利润， 以及按国际财务报告准则调整后之累积可供分派利润，两者之较低者为利润分配基准。根据 本集团 之中 国法定 账目 ，本集 团于 二零零 五年 十二月 三十 一日之 可分 配利润 为人 民币 183,153,000 元(二零零四年：人民币 153,301,000 元)。 (d) 股息 根据二零零五年三月二十二日董事会的决议，本公司宣布按每股人民币 0.06 元发放二零零四 年度现金股利，共计人民币 19,704,000 元。 根据二零零六年三月[三]日董事会的决议，本公司宣布按每股人民币[•]元发放二零零五年度现 金股利，共计人民币[•]元。此应付股利将作为二零零六年度未分配利润的分配，没有在本账 目中反映。 23. 借款 附注 二零零五年 二零零四年 非流动部分 有抵押之银行借款 (a) 1,232,064 861,427 无抵押之银行借款 (b) 793,540 653,540 其他无抵押之借款 (c) 15,875 31,497 2,041,479 1,546,464 流动部分 有抵押之银行借款 (a) 280,439 252,616 无抵押之银行借款 (b) 726,300 571,800 其他无抵押之借款 (c) 1,691 2,032 1,008,430 826,448 借款总额 3,049,909 2,372,912 本集团面临利率变动风险之借款按相应的合同利率重订日分类列示如下： 附注 一年以内 五年以上 合计 于二零零五年十二月三十一日 有抵押之银行借款 (a) 1,505,439 7,064 1,512,503 无抵押之银行借款 (b) 1,519,840 - 1,519,840 其他无抵押之借款 (c) - 17,566 17,566 16 3,025,279 24,630 3,049,909 于二零零四年十二月三十一日 有抵押之银行借款 (a) 1,103,348 10,695 1,114,043 无抵押之银行借款 (b) 1,225,340 - 1,225,340 其他无抵押之借款 (c) - 33,529 33,529 2,328,688 44,224 2,372,912 (a) 以上抵押银行借款包括：(1) 年利率介乎 4.65%至 6.138%(二零零四年：5.31% to 6.12%)之 贷款总额共人民币 1,225,000,000 元(二零零四年：人民币 786,081,000 元)，分别以账面净值 人民币 308,970,000 元之建筑物、人民币 1,184,889,000 元之设备和人民币 142,286,000 元 之土地使用权作抵押(附注 12、 13)；(2) 年利率为 LIBOR+1%(二零零四年：5.99%)之借款 34,750,000 美金(二零零四年：40,750,000 美金)，以账面净值人民币 124,487,000 元之建筑 物及人民币 316,456,000 元之设备作抵押(附注 13)；(3)年利率为 5.99%(二零零四年：5.99%) 之借款 737,392 欧元(二零零四年：948,077 欧元)，以账面净值为人民币 11,663,000 元之设 备作抵押(附注 13)。 (b) 以上无抵押银行借款总额共人民币 1,519,840,000 元(二零零四年：人民币 1,225,340,000 元)，年利率介乎 3.78% 至 6.12%之间(二零零四年：3.60% 至 6.03% )。 (c) 其他无抵押借款为通过中国技术进出口总公司借入的丹麦克朗借款。该借款用于购买生产设 备，并以实际利率 6.1%计算之摊余价值列示。该笔原额为 67,000,000 丹麦克朗之借款是由 一国营银行作担保人并分两部分偿还。第一部分为 33,500,000 丹麦克朗附息借款，已于二零 零二年度全部偿还。余下 33,500,000 丹麦克朗为免息借款，于一九九六年四月开始分五十期 每半年归还一次。 本集团短期借款及长期借款的账面价值与其公允价值并没有重大差异。 非流动借款到期日如下： 有抵押之 无抵押之 其它无抵 二零零五年 二零零四年 银行借款 银行借款 押之借款 总额 总额 一至二年内偿还 275,440 129,500 1,592 406,532 388,640 三至五年内偿还 703,291 664,040 4,239 1,371,570 727,818 五年后偿还 253,333 - 10,044 263,377 430,006 1,232,064 793,540 15,875 2,041,479 1,546,464 24. 递延收入 二零零五年 二零零四年 年初余额 16,653 17,977 增加 6,041 - 本年摊销 (4,028) (1,324) 年末余额 18,666 16,653 递延收入为已收到之用作购买物业、机器及设备之政府补贴。 25. 其它非流动负债 二零零五年 二零零四年 应付控股股东款项 - 3,271 17 宜都方德投资有限公司(注释 a) 42,255 46,285 下岗人员补偿费用(注释 b) 12,136 15,103 应付土地使用权款 24,299 - 78,690 64,659 (a) 该款项为应付宜都方德投资公司转让其土地使用权之款项。根据本公司与宜都方德投资公司 签署之协议，该款项免利息并应于二零一二年前归还。本公司已于本年偿还人民币 4,030,000 元(二零零四年：人民币 3,700,000 元)。 (b) 该款项为购入之华新红旗水泥有限公司(“红旗”)的下岗员工补偿费用。根据当地劳动管理规 定，本公司需按月向红旗的下岗职工支付其基本工资及最低的养老、医疗及其他福利费用， 直至其达到政府规定的正式退休年龄。该应付款项已按高素质投资项目于资产负债表日之市 场收益率折现。 26. 应付工程款、预提费用及预收款 二零零五年 二零零四年 应付工程款 268,147 207,531 - 关联公司(附注 29) 35,278 47,194 - 第三方 232,869 160,337 预收货款 85,799 49,688 - 关联公司(附注 29) 50,934 21,374 - 第三方 34,865 28,314 应付工资及福利费 15,959 32,685 应交增值税及其他应交税金 51,737 34,321 预提费用 6,545 23,991 其他应付款 70,401 58,367 - 关联公司(附注 29) 8,017 33,746 - 第三方 62,384 24,621 应付股利 393 - 498,981 406,583 27. 递延税款 于二零零五年十二月三十一日，本集团没有可以相互对冲之递延所得税借项和贷项。递延所 得税借项及贷项列示如下： 二零零五年 二零零四年 递延所得税借项 - 估计于十二个月后实现 (398) (398) - 估计于十二个月内实现 (35,376) (20,532) (35,774) (20,930) 递延所得税贷项 - 估计于十二个月后转回 1,450 - - 估计于十二个月内转回 5,853 - 7,303 - 合并的递延所得税变动列示如下： 18 二零零五年 二零零四年 年初余额 (20,930) (9,721) 贷记利润表所得税 (附注 10) (7,541) (11,209) 年末余额 (28,471) (20,930) 递延所得税借项及贷项之变动列示如下： 二零零四年 借记利润表 二零零五年 递延所得税借项 因可供销售之投资减值准备而产生的可抵扣 暂时性差异 (398) - (398) 因应收账款呆坏账准备而产生的可抵扣暂时 性差异 (4,295) 3,069 (1,226) 冲销附属公司开办费而产生可抵扣暂时性差 异 (3,207) (1,532) (4,739) 因存货减值准备而产生的可抵扣性暂时差异 (4,440) - (4,440) 确认费用的时间差异 (7,879) 4,494 (3,385) 抵销集团内部销售收入中未实现利润而产生 的可抵扣性暂时差异 (711) (170) (881) 可抵扣未来年度应纳税所得之经营亏损 - (20,561) (20,561) 将长期应付款折现而产生的暂时性差异 - (144) (144) (20,930) (14,844) (35,774) 二零零四年 借记利润表 二零零五年 递延所得税贷项 因初始确认固定资产而产生的时间性差异 - 7,303 7,303 留待以后年度祢补的税前亏损所对应的递延所得税借项仅在预计公司于未来年度有足够的应纳 税所得用于祢补亏损时确认。本集团没有确认税前亏损约人民币 54,397,000 元（二零零四 年：零）所对应递延所得税借项约人民币 17,951,000 元（二零零四年：零）。已确认了递延 所得税借项的税前亏损约人民币 62,306,000 元（二零零四年：零）将于二零一一年到期。 28. 经营业务的现金流量 二零零五年 二零零四年 本年利润 87,125 227,386 调整: 所得税费用 3,167 49,087 物业、机器及设备折旧 269,757 212,484 预付租赁款分摊确认之费用 11,172 8,013 处置物业、机器及设备之净(收益)/损失 (3,387) 2,320 处置矿山使用权及矿山开采设备之净收益 - (36,650) 非上市投资收入 - (437) 利息收入 (3,785) (3,054) 利息支出 121,351 82,815 无形资产摊销 4,431 (13,952) 递延收入摊销 (4,028) (1,324) 19 应占联营公司之(利润)/亏损 (8) 15 汇兑(收益)/损失 (13,759) 3,649 营运资金变动： 存货 (43,223) (102,759) 应收账款、其他应收款、预付款及按金 (13,304) (9,043) 受限制之银行存款 (56,765) (7,816) 应付账款、预提费用及预收款 196,526 42,114 经营业务现金流入净额 555,270 452,848 29. 有关联公司交易 本公司董事认为，本公司之控股股东为于中国成立的华新集团有限公司。于二零零五年十二月 三十一日，该公司代表国家持有本公司 27.1% (二零零四年：31.6%)股权，并拥有本公司董事 会的多数表决权。 (a) 与关联公司之交易 截至二零零五年十二月三十一日及二零零四年十二月三十一日止年度，本集团与关联公司进行 了以下重大交易： 二零零五年 二零零四年 销售货物 - 销售产成品及原材料予由控股股东 持有重大股权之关联公司(注释(i)) 814 3,357 - 销售产成品予其他关联公司(注释(i)) 37,859 - - 销售产成品予其他由国家控制之企业(注释 (i)) 640,692 158,202 679,365 161,559 购买货物及接受服务 - 应付予控股股东之管理及服务费 (注释(ii)) 4,800 4,800 - 应付予本公司一股东的顾问费(注释(iii)) 2,421 2,483 - 应付予国家控制之企业的工程款(注释(iv)) 108,912 205,386 - 向国家控制之企业购买原材料(注释(i)) 370,376 258,125 486,509 470,794 关键管理人员报酬 - 薪金及工资 3,982 3,563 - 退休计划供款 58 55 - 其他社会福利保障 59 51 4,099 3,669 注释： (i) 与关联公司间的销售和采购货物均以有关合同为依据，本公司 董事认为该等合同之条款以当年市场价格为参考。 20 (ii) 管理及服务费以本公司控股股东为本集团所提供服务为基础， 并根据有关协议条款收取。 (iii) 顾问费以关联方为本集团所提供服务为基础，并根据有关协议 条款收取。 (iv) 应付予国家控制之企业的工程款以有关合同为依据，本公司董 事认为该等合同之条款以当年市场价格为参考。 (v) 本集团向若干政府部门或其代理购买基本之暖气、电力等。该 等交易以标准条件执行，与公众所获取之价格无重大差异。 (vi) 控股股东及其附属公司为本集团之银行借款共人民币 47,000,000 元(二零零四年：人民币 59,500,000 元)作担保。该等贷款将于二零零六年到 期。 (b) 除附注 25 以外，本集团于二零零五年十二月三十一日和二零零四年十二月三十一日与关联 方有以下重大余额： 二零零五年 二零零四年 应收账款： - 国家控制之企业 70,507 23,484 - 其他关联公司 2,539 3,354 73,046 26,838 其他应收款, 预付款项及押金： - 控股股东 101 25 - 国家控制之企业 23,963 40,615 - 其他关联公司 3,551 305 27,615 40,945 应付账款： - 国家控制之企业 52,243 28,547 应付工程款： - 国家控制之企业 19,549 36,786 - 其他关联公司 15,729 10,408 35,278 47,194 预收账款 - 国家控制之企业 10,557 21,374 - 其他关联公司 40,377 - 50,934 21,374 其他应付款： - 控股股东 72 1,873 - 国家控制之企业 7,945 28,679 - 其他关联公司 - 3,194 8,017 33,746 上述与关联公司之交易款项为无抵押、免息及没有固定还款期。 21 30. 附属公司 于资产负债表日，本公司直接或间接拥有以下附属公司，彼等均为于中国成立的公司。 名称 实益股权 主要业务 二零零五年 二零零四年 % % 华新水泥(恩施)有限公司 90.10 90.10 生产及销售水泥 (前身为华新恩施水泥有限公 司) 黄石华新包装有限公司 98.38 98.38 生产及销售包装用品 黄石市华新水泥科技设计有 99 99 水泥工程项目的设计 限公司 以及与水泥相关的技 术服务 华新宜都包装有限公司 59.33 59.33 生产及销售包装用品 武汉武钢华新水泥有限公司 50 50 生产销售水泥 (注释(a)) 华新水泥(仙桃)有限公司 80 80 生产及销售水泥 (前身为华新仙桃水泥有限公 司) 华新水泥(宜昌)有限公司 70 70 生产及销售水泥 (前身为华新宜昌水泥有限公 司) 华新金猫水泥(苏州)有限公司 51 51 生产及销售水泥 华新水泥(西藏)有限公司 (前身为西藏华新水泥有限公 60 60 生产及销售水泥 司) 华新水泥(昭通)有限公司 (前身为华新昭通水泥有限公 88 88 生产及销售水泥 司) 华新水泥(岳阳)有限公司 97 97 生产及销售水泥 (前身为华新岳阳水泥有限公 司) (a) 由于本公司对该公司有经营上的控制权，所以该公司被作为附属公司。 (b) 本公司与黄石亿瑞达投资有限公司于二零零四年十二月十六日签署协议，双方共同出资成立一 合资企业－华新水泥(阳新)有限公司。根据该协议，本公司以价值人民币 400,000,000 元之 固定资产出资，黄石亿瑞达投资有限公司以价值人民币 100,000,000 元之土地使用权出资， 分别占阳新水泥 80%和 20%的股权。阳新水泥于二零零五年二月二十二日成立，并于本年度 开始其商业营运。 (c) 本公司与阳新水泥于二零零五年三月二十三日签订协议共同出资成立一合资企业－华新水泥 (武汉)有限公司。根据该协议，本公司以人民币 42,000,000 元之固定资产出资，阳新水泥以 22 人民币 18,000,000 元之固定资产出资，分别占武汉水泥 70%和 30%的股权。武汉水泥于二 零零五年九月二十九日成立，截至二零零五年十二月三十一日尚在开办筹建期。 (d) 本公司与阳新水泥于二零零五年三月二十三日签订协议共同出资成立一合资企业－华新混凝 土(武汉)有限公司。根据该协议，本公司以人民币 7,000,000 元之现金出资，阳新水泥以人民币 3,000,000 元之现金出资，分别占武汉混凝土 70%和 30%的股权。武汉混凝土于二零零五年四月二 十三日成立，并于本年度开始其商业营运。 (e) 根据二零零二年三月二十一日本公司与新加坡RDC国际私人有限公司("RDC公司")签订的 《股权委托管理及预约转让协议书》，RDC公司委托本公司管理其持有的南通水泥26%的股 权。同时双方约定，如果在本协议到期日无其他公司同意接收该等股权时，RDC公司承诺转 让、本公司承诺收购上述股权。本公司需支付RDC公司共人民币27,224,000元作为保证金。 根据二零零五年六月八日本公司与RDC公司签订的股权转让协议，本公司正式收购RDC公司 持有南通水泥之股权。收购价款为人民币28,263,000元，其中人民币27,224,000元由已付的保 证金抵扣，剩余人民币1,039,000元需于协议生效后三天内支付。该协议需经南通水泥其他股 东、董事会及相关政府部门批准方可生效。截至本报告日止，尚未取得南通水泥其他股东及相 关部门的批复。 31. 承诺 资本性承诺 于资产负债表日已签约但未拨备之资本性承诺为： 二零零五年 二零零四年 物业、机器及设备 316,180 369,808 33. 账目之批准 此账目已于二零零六年三月[三]日经本公司董事会通过。 国际财务报告准则调整对中国法定账目的影响如下： 本公司股权持有人 本公司股权持有人 应占之利润 应占之净资产 中国法定账目所列 62,073 1,213,617 国际财务报告准则调整之影响： - 拨回以前年度已冲销之商誉的摊销 261 (1,861) - 将开办费于发生当期计入利润表 101 (1,192) - 政府补贴计入递延收入或补贴收入 1,447 (9,125) - 冲回对正商誉之摊销 1,060 1,060 - 借款利息资本化入物业、机器及设备 6,296 6,296 - 将长期应付款按折现值重列所产生的差异 (349) (349) - 确认递延税项 8,269 28,106 经国际财务报告准则调整后所重列 79,158 1,236,552 23 十二、备查文件目录 (一)载有法定代表人、主管会计工作负责人、会计机构负责人（会计主管人员）签名并盖章的会计报 表。 (二)信永中和会计师事务所及其注册会计师按中国会计制度审核签名并盖章、普华永道中国有限公司 按国际审计准则审核签字的公司 2005 年度审计报告原件。 (三)报告期内在中国证监会指定报纸上公开披露过的所有公司文件的正本及公告的原稿。 董事长：陈木森 华新水泥股份有限公司 2006 年 3 月 3 日 24 董事、高级管理人员关于 2005 年年度报告的声明 作为华新水泥股份有限公司董事、高级管理人员，我们认为本公司 2005 年年度报告真实、准 确地反映了公司的经营情况和财务状况，我们保证 2005 年年度报告所载资料不存在任何虚假记载、 误导性陈述或者重大遗漏，并对其内容的真实性、准确性和完整性承担个别及连带责任。 声明人签名 陈木森、李叶青、纪昌华、Tom Clough、Daniel Bach、Paul Thaler 张天武、谢获宝、林宗寿、王锡明、彭清宇、孔玲玲、柯友良、冯东光 2006 年 3 月 3 日 25 Huaxin Cement Co., Ltd. 华新水泥股份有限公司 ANNUAL REPORT 2005 2005 年年度报告 HUAXIN CEMENT CO., LTD. Chapter 1 Important Notice ······································································· 1 Chapter 2 General ······················································································ 2 Chapter 3 Financial Highlights ·································································· 4 Chapter 4 Changes in Share Capital and Shareholders ························· 6 Chapter 5 Directors, Supervisors and Senior Management ················· 11 Chapter 6 Corporate Governing ······························································ 17 Chapter 7 Shareholders’ General Meeting ············································· 19 Chapter 8 Directors' Report ····································································· 20 Chapter 9 Supervisors' Report ································································ 29 Chapter 10 Major Events ··········································································· 30 Chapter 11 Accounts and Auditors' Reports ··········································· 33 PRC Auditors' Report ············································································· 34 International Auditors' Report ································································· 89 Chapter 12 Documents for Inspection ···················································· 129 600801-G 华新-426 K5 AR EN.doc 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 1 Important Notice Chapter 1 Important Notice 1. The Board of Directors of the Company and its members, Supervisory Committee of the Company and its members and members of senior management guarantee that there is no false or misleading statement or material omission in this report and shall be severally and jointly liable for the truthfulness, accuracy and completeness of its contents. 2. Independent Director Mr. Lin Zongshou did not attend this board meeting due to other commitments and authorized director Mr. Zhang Tianwu to attend and exercise voting rights on his behalf. 3. Chairman of the Company Mr Chen Musen, CEO Mr Li Yeqing, CFO Mdm Kong Lingling, and chief of financial department Mdm He Fengping declare and guarantee that this annual report is true and complete. 600801-G 华新-426 K5 AR EN.doc 1 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 2 General Chapter 2 General 1. Legal Name of the Company: 华新水泥股份有限公司 Legal Abbreviation in Chinese: 华新水泥 Name in English: Huaxin Cement Co., Ltd. Abbreviation in English: HUAXINCEM 2. Legal Person Representative: Mr. Chen Musen 3. Secretary to the Board: Mr. Wang Ximing Liaison Address: 897 Huangshi Avenue, Huangshi City, Hubei Province Tel: (0714) 6328310 Fax: (0714) 6235204 E-mail: investor@huaxincem.com Contact person for Information Disclosure of the Company: Ms. Wang Lu Liaison Address: 897 Huangshi Avenue, Huangshi City, Hubei Province Tel: (0714) 6328471 Fax: (0714) 6235204 E-mail: investor@huaxincem.com 4. Registered location of the Company: 897 Huangshi Avenue, Huangshi City, Hubei Province Administrative location of the Company: 897 Huangshi Avenue, Huangshi City, Hubei Province Post code: 435002 Web site: http://www.huaxincem.com E-mail: investor@huaxincem.com 5. Press for Information Disclosure: China Securities Journal, Shanghai Securities News, Hong Kong Commercial Daily Annual Report available on the Internet website appointed by CSRC: http://www.sse.com.cn The Place available: the Securities Office of the Company 6. Place of listing for A share: Shanghai Stock Exchange Abbreviation of A share: Huaxin Cement Stock Code: 600801 Place of listing for B share: Shanghai Stock Exchange Abbreviation of B share: Huaxin B share Stock Code: 900933 600801-G 华新-426 K5 AR EN.doc 2 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 2 General 7. Other information: Date of first registration: November 30, 1993 First registered location of the Company: 897 Huangshi Avenue, Huangshi City, Hubei Province Date of Alternation: January 11, 2000 Registered Number of the Representative Business License: 4200001000351 Registered Number for Taxation: 420203178423X Domestic Accountant Offices appointed by the Company: ShineWing CPAs Address: 12/C, Fuhua Building, North Street, Chaoyang Gate, Dongcheng District, Beingjing International Accountant Offices appointed by the Company: PricewaterhouseCoopers (China) Co., Ltd. Address: Room 1808, Yi’an Square, No. 33, Jianshe Sixth Road, Guangzhou 600801-G 华新-426 K5 AR EN.doc 3 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 3 Financial Highlights Chapter 3 Financial Highlights 1. Financial Highlights for the Report Year Unit: RMB Total profit 81,377,759.92 Net profit 62,073,249.69 Net profit after elimination of extra-ordinary items 58,348,087.76 Profit from major operations 503,360,796.69 Profit from other operations 2,829,450.25 Operating profit 46,622,515.02 Investment income -1,239,116.97 Subsidy income 30,882,780.26 Net amount of non-operating income/expenditure 5,111,581.61 Net cash flows from operating activities 503,134,090.50 Net increase of cash and cash equivalents -29,022,911.52 2. Difference between national and international accounting standards Unit: 000 RMB profit net assets attributable attributable to shareholders to shareholders As per the PRC accounts 62,073 1,213,617 Impact of IFRS and other adjustments: Reversal of amortisation of goodwill having been written off in prior years. 261 (1,861) Recognition of pre-operating expenses in income statement when they are incurred 101 (1,192)- Government grants recognised as deferred income and subsidy income 1,447 (9,125) Reversal of amortisation of positive goodwill 1,060 1,060 Interest capitalised in property, plant and equipment 6,296 6,296 Difference arising from restatement of long-term payables to their current value (349) (349) Deferred tax assets 8,269 28,106 As restated after IFRS and other adjustments 79,158 1,236,552 3. Extra-ordinary items and amount Unit: RMB Extra-ordinary items Amount Gains from disposal of assets except for products 3,707,350.96 Other non-operating incomes less provisions for -800,758.35 impairment Impact for income tax 818,569.32 Total 3,725,161.93 4. Financial Statements summary and Financial Indicators of the last three years Unit: RMB 600801-G 华新-426 K5 AR EN.doc 4 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 3 Financial Highlights Change over Item 2005 2004 2003 last period (%) Income from major operations 2,639,380,167.10 2,188,101,303.80 20.62 1,188,827,685.49 Total profit 81,377,759.92 255,160,148.41 -68.11 117,841,100.71 Net profit 62,073,249.69 148,550,557.65 -58.22 68,244,142.01 Net profit after extraordinary items 58,348,087.76 120,802,513.29 -51.70 68,741,266.17 Earnings per share 0.19 0.45 -57.78 0.21 -7.62 percentage Return on net assets, % 5.11 12.73 points 8.46 Return on net assets after -5.54 percentage 4.81 10.35 8.51 extra-ordinary items, % points Return on net assets after -9.17 percentage extra-ordinary items, weighted 4.92 14.09 points 8.74 average, % Net cash flow from Operating 503,134,090.50 490,510,424.42 2.57 294,856,868.91 Activities Net cash flow per share from 1.53 1.49 2.68 0.90 Operating Activities Change over last 2005 end 2004 end 2003 end period (%) Total assets 6,108,292,177.68 4,955,799,957.40 23.26 3,017,709,764.81 Shareholders’ equity (excluding the 1,213,617,527.85 1,166,712,965.39 4.02 806,816,113.16 minority) Net assets per share 3.70 3.55 4.23 2.46 Net assets per share after 3.58 3.43 4.37 2.41 adjustment 5. Changes of shareholders’ equity in the report period and reasons Unit: RMB Statutory Total Share Capital Surplus Undistributed Item common shareholders’ capital reserves reserves profit reserves equity At year 328,400,000 544,391,528.16 140,620,564.13 36,906,794.99 153,300,873.10 1,166,712,965.39 beginning Increase in 4,535,312.77 12,517,424.00 6,258,712.00 49,555,825.69 66,608,562.46 the year Decrease in 19,704,000.00 19,704,000.00 the year At year end 328,400,000 548,926,840.93 153,137,988.13 43,165,506.99 183,152,698.79 1,213,617,527.85 The reasons for changes of shareholders’ equity are profit earning and profit distribution of the Company. 600801-G 华新-426 K5 AR EN.doc 5 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 4 Changes in Share Capital and Shareholders Chapter 4 Changes in Share Capital and Shareholders (I). Changes in Share Capital 1. Changes in the capital structure Unit: share Before the change Change during the period +/- After the change Capital Placement Bonus Shares % reserves others Sub-total Shares % issue issue to share 1. shares subject to conditional sales 1. State-owned shares -12,276, 91,526,880 27.9 79,250,648 24.1 232 2. Shares held by State legal person 3. Shares held by other domestic investors Including: Shares held by -2,123,7 24,873,120 7.6 22,749,352 6.9 domestic legal persons 68 Shares held by domestic natural persons 4. Shares held by foreign investor Including: Shares held by foreign legal persons Shares held by foreign natural persons Sub-total -14,400, 116,400,000 35.4 102,000,000 31.1 000 2. shares not subject to conditional sales 1.RMB ordinary shares 14,400, 48,000,000 14.6 62,400,000 19.0 000 2.Domestic listed foreign 164,000,000 49.9 164,000,000 49.9 investment shares 3. Overseas listed foreign investment shares 4. Others Sub-total 212,000,000 64.6 226,400,000 68.9 Total 328,400,000 328,400,000 Tradable time of shares subject to conditional sales Unit: share Time Increment of Number of Number of Remarks listed shares outstanding outstanding upon expiry of shares shares not locking period subject to subject to conditional conditional sales sales 2006-12-29 12,879,120 89,120,880 239,279,120 3,962,532 state shares which are tradable in SSE at not less than 9 2008-12-29 13,832,764 75,288,116 253,111,884 yuan. 2009-12-29 7,925,065 67,363,051 261,036,949 Tradable in SSE at not less than 9 yuan. 2010-12-29 67,363,051 0 328,400,000 2. Share issuing and listing 600801-G 华新-426 K5 AR EN.doc 6 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 4 Changes in Share Capital and Shareholders 1). Share issuing in prior three years There is no new issuing or placement issuing of shares in previous three year from end of report period. 2). Changes of total shares and share structure of the Company There are no changes on total shares and share structure of the Company occurred for bonus issue or placement issue etc. 3). Existing internal employee shares There are no internal employee shares in the report period (II). General Information about the Shareholders 1. Number of shareholders and listed-share holders Unit: share Total numbers of shareholders at the end of 36,626 report period Top ten shareholders and listed-share holders Shares Share Total Change subject to Mortgage Names of Shareholders holder In % Shares in conditional or frozen type hold shares sales 85,761,3 8,761,3 HOLCHIN B.V. Foreign 26.1 00 00 36,000,00 State-owned Shares (held by Huaxin Group 79,250,6 -12,276, 79,250,64 State 24.1 0 Co., Ltd.) 48 232 8 mortgaged 9,870,23 -2,123,7 Huaxin Group Co., Ltd. Other 3.0 9,870,232 2 68 5,199,73 MEINL BANK AKTIENGESELLSCHAFT Foreign 1.6 100,000 5 Jingzhou Shalong Financial Consultant Co., 4,100,00 Other 1.2 4,100,000 Ltd 0 ICBC – Shenwan balishengli Securities 3,349,44 3,349,4 Other 1.0 Investment Fund 2 42 2,643,33 2,643,3 Pension Fund Project 109 Other 0.8 9 39 Huangshi Railway Joint Operating 2,520,00 Other 0.8 2,520,000 Company 0 1,953,62 1,953,6 Taikang Life Insurance Co., Ltd. Other 0.6 1 21 1,695,77 NATIO SECURITIES CO., LTD. Foreign 0.5 675,279 9 600801-G 华新-426 K5 AR EN.doc 7 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 4 Changes in Share Capital and Shareholders Top ten holders of shares not subject to conditional sales Names of Shareholders Number of Shares Type of share HOLCHIN B.V. Domestic listed foreign 85,761,300 investment shares Domestic listed foreign MEINL BANK AKTIENGESELLSCHAFT 5,199,735 investment shares ICBC – Shenwan balishengli Securities RMB ordinary shares Investment Fund 3,349,442 Pension Fund Project 109 2,643,339 RMB ordinary shares Taikang Life Insurance Co., Ltd. 1,953,621 RMB ordinary shares Domestic listed foreign NATIO SECURITIES CO., LTD. 1,695,779 investment shares TOYO SECURITIES ASIA LTD. A/C CLIENT Domestic listed foreign 1,609,589 investment shares Pension Fund Project 601 1,263,228 RMB ordinary shares Nanjing Haodun energy efficiency S&T Co., RMB ordinary shares Ltd. 1,155,286 Bank of China – Yinhua Advanced Enterprise RMB ordinary shares (Balanced) Securities Investment Fund 955,773 Remark on related None of the top ten shareholders are co-related parties, or concert-actors referred to in the partnerships and “Administrating Measures of Disclosing Changes in Shareholding for Listed Companies”. concert-action except that state shares held by Huaxin Group Co., Ltd. on behalf of the State. ships of the above It is unknown to the Company whether or not there exists any related party relationship or shareholders concert-action relationship between any of the top ten holders of listed shares subject to conditional sales. It is unknown to Company whether or not there exists any related party relationship or concert-action relationship between any of the top ten shareholders and top ten holders of listed shares subject to conditional sales. 2. Top ten holders of shares subject to conditional sales Unit: share Names of Number of Trading of shares Conditions Shareholders shares Tradable Increment of Time tradable shares State-owned 2008-12-29 3,962,532 * Shares (held by Huaxin 79,250,648 2009-12-29 7,925,065 Group Co., Ltd.) 2010-12-29 67,363,051 Huaxin Group None of the shares shall be listed, traded or Co., Ltd. transferred 12 months after the Share Partition Reform Plan is successfully implemented, none of 9,870,232 2008-12-29 9,870,232 the shares shall be listed, traded or sold in the SSE during the period from the thirteenth month to the thirty sixth month after the Share Partition Reform Plan is successfully implemented. Jingzhou None of the shares shall be listed, traded or Shalong transferred 12 months after the Share Partition Financial 4,100,000 2006-12-29 4,100,000 Reform Plan is successfully implemented. Consultant Co., Ltd Huangshi None of the shares shall be listed, traded or Railway Joint transferred 12 months after the Share Partition 2,520,000 2006-12-29 2,520,000 Operating Reform Plan is successfully implemented. Company 600801-G 华新-426 K5 AR EN.doc 8 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 4 Changes in Share Capital and Shareholders Wuhan None of the shares shall be listed, traded or Petrifaction transferred 12 months after the Share Partition Penghe 1,200,000 2006-12-29 1,200,000 Reform Plan is successfully implemented. Materials Company Hubei None of the shares shall be listed, traded or Zonglian transferred 12 months after the Share Partition Assets 768,000 2006-12-29 768,000 Reform Plan is successfully implemented. Evaluation Co., Ltd. Hubei Dongya None of the shares shall be listed, traded or Industries transferred 12 months after the Share Partition CoWuhan Reform Plan is successfully implemented. Petrifaction 768,000 2006-12-29 768,000 Penghe Materials Company Co., Ltd. ICBC Hubei None of the shares shall be listed, traded or Branch central 768,000 2006-12-29 768,000 transferred 12 months after the Share Partition sub-Branch Reform Plan is successfully implemented. Shenzhen None of the shares shall be listed, traded or CITIC transferred 12 months after the Share Partition 768,000 2006-12-29 768,000 Industries Reform Plan is successfully implemented. Investments Xinda Assets None of the shares shall be listed, traded or Entrustment 768,000 2006-12-29 768,000 transferred 12 months after the Share Partition Reform Plan is successfully implemented. * None of the shares shall be listed, traded or transferred 12 months after the Share Partition Reform Plan is successfully implemented, none of the shares shall be listed, traded or sold in the SSE during the period from the thirteenth month to the thirty sixth month after the Share Partition Reform Plan is successfully implemented; the number of the shares listed, traded or sold in the SSE from the thirty seventh month to the forty eighth month shall not exceed 5% of the state shares that Huaxin Group Co., Ltd. holds after the Share Partition Reform, and the transaction price shall not be lower than 9 yuan/share; the number of the shares listed, traded or sold in the SSE from the forty ninth month to the sixtieth month shall not exceed 10% of the state shares that Huaxin Group Co., Ltd. holds after the Share Partition Reform, and the transaction price shall not be lower than 9 yuan/share. 3. General information of controlling shareholder and actual controller 1). Legal person controlling shareholder Name of controlling shareholder: Huaxin Group Co., Ltd. Legal Representative: Mr. Chen Musen Registered capital: RMB 370,000,000 Date of incorporation: November 14, 1996 Business range: manufacture and sales of cement product, parts of machines, development of real estate, commerce, service and so on. 2). Legal person actual controller Name of actual controller: Huangshi Municipal State Assets Administration 3). Change of controlling shareholder and actual controller There is no change on controlling shareholder and actual controller of the Company in the report period. 600801-G 华新-426 K5 AR EN.doc 9 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 4 Changes in Share Capital and Shareholders 4). Ownership and controlling relationship between the Company and actual controller Huangshi Municipal State Assets Administration 100% Huaxin Group Co., Ltd 27.1% (in total) Huaxin Cement Co., Ltd. 4. Other Legal person shareholders holding over 10% shares There were no other legal person shareholders holding over 10% shares in the report period. 600801-G 华新-426 K5 AR EN.doc 10 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management Chapter 5 Directors, Supervisors and Senior Management (I). Directors, supervisor and senior management situation 1. General Unit: share Share Share S s held Payment from s held Reason for Name Position e Age Term at year Change the Company at year changes x begin (10 k yuan) end ning Purchased shares, grant shares from Chen 2003.4.28~ Share Partition Mushen Chairman M 57 2006.4.28 14,900 97,900 83,000 Reform or shares 59 bought with part of annual pay Grant shares from Share Partition Ref 2003.4.28~ Li Yeqing Director/CEO M 42 2006.4.28 24,300 54,042 29,742 orm or shares bou 59 ght with part of an nual pay Tom 2004.10.21 Clough Director M 58 ~ 2006.4.28 / Daniel 2005.4.26~ Bach Director M 43 2006.4.28 / Paul 2003.4.28~ Thaler Director M 40 2006.4.28 / Grant shares from Share Partition Ref Ji 2003.4.28~ Changhua Director M 52 2006.4.28 15,300 35,160 19,860 orm or shares bou 38 ght with part of an nual pay Zhang Independent 2003.4.28~ Tianwu director M 43 2006.4.28 5 Xie Independent 2003.4.28~ Huobao director M 39 2006.4.28 5 Lin Independent 2003.3.28~ Zongshou director M 49 2006.4.28 5 Grant shares from Chairman of Share Partition Ref Zhou the 2003.4.28~ Jiaming Supervisory M 52 2006.4.28 15,100 30,900 15,800 orm or shares bou 38 ght with part of an Committee nual pay Yang 2003.4.28~ Chunhua Supervisor M 55 2006.4.28 6 Ruan 2003.4.28~ Hanwen Supervisor M 48 2006.4.28 6 Zhan 2003.4.28~ Weiguo Supervisor M 33 2006.4.28 4 Fan 2003.4.28~ Tongtao Supervisor M 37 2006.4.28 2 Grant shares from Share Partition Ref Wang VP, secretary 2003.4.28~ Ximing to the board M 47 2006.4.28 15,000 32,500 17,500 orm or shares bou 39 ght with part of an nual pay Grant shares from Share Partition Ref Peng 2003.4.28~ Qingyu VP M 46 2006.4.28 15,900 33,100 17,200 orm or shares bou 39 ght with part of an nual pay Grant shares from Share Partition Ref Kong 2003.4.28~ Lingling VP F 42 2006.4.28 15,300 31,260 15,960 orm or shares bou 39 ght with part of an nual pay Grant shares from Share Partition Ref Feng 2003.4.28~ Dongguan VP M 39 2006.4.28 6,500 20,800 14,300 orm or shares bou 38 ght with part of an nual pay Grant shares from Ke 2003.4.28~ Youliang VP M 41 2006.4.28 6,500 21,100 14,600 Share Partition Ref 38 orm or shares bou 600801-G 华新-426 K5 AR EN.doc 11 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management ght with part of an nual pay 128,80 356,76 Toatl / / / / 0 2 227,962 / 420 Note: Directors Mr. Tom Clough, Mr. Daniel Bach and Mr. Paul Thaler voluntarily waived their director allowances for 2005, amounting in total to USD5,910. Major careers of Directors, supervisors and senior management during the last 5 years: 1). Mr. Chen Musen, 57 years old, university graduate, senior economist. Mr. Chen Musen entered the Company at November 1999 as Chariman of the Company all along. Mr. Chen Musen is also the Chairman of Huaxin Group Co., Ltd., controlling company of the Company. 2). Mr. Li Yeqing: 42 years old, Doctor, senior engineer. Mr. Li Yeqing graduated from Portland Major of Wuhan Building Material Institute (now Wuhan University of Technology and Science) as Bachelor of Science in 1984; in 1992 graduated from Industrial Management Major of Wuhan University of Technology as Master of Science; and graduated from Management Science and Engineer Major of Central China University of Science as Doctor of Business Administration at June 2002. Mr. Li Yeqing entered Huaxin Cement Plant (former name of the Company) at November 1987, taking position of quality control engineer of Central Lab, vice manager of Limestone Quarry, vice director of Extension Office and manager of production technology, and became vice manager of Huaxin Cement Plant at January 1993, he became Deputy General Manager of the Company at June 1994, General Manager of the Company at December 1999 and CEO of the Company at March 2004. He has taken the position of director of the Company from 1994. 3). Mr. Tom Clough, 59 years old, British, Bachelor of Mining engineering of University of Leeds. From 1997 to now, he has taken position of Executive Director of PT Semen Makmur Of Holcim, CEO of Alsons Cement Corporation, Executive Director of PT Semen Cibinong Tbk and member of EXCO of Holcim Group. He became director of the Company from October 2004. 4). Mr. Daniel Bach, 43 years old, Swiss. Diploma and PhD in Mechanical Engineering at the Swiss Federal Institute of Technology (ETH); 1989 ~ 1994, Research Assistant and Chief Assistant at the Institute of Mechanics of ETH; 1994 till present, Assistant to Head and Project Manager at "Holderbank" Engineering Switzerland (HES); Deputy of Head of Business Risk Management (BRM) of the "Holderbank"/Holcim Group, Assistant Vice President; Technical Director of PT Semen Cibinong Tbk (member of the Holcim Group) in Indonesia; Assistant to the Member of the Holcim Executive Committee. He became director of the Company from April 2005. 5). Mr. Paul Thaler, 40 years old, lawyer, Swiss. He is Master of Law and Doctor of Law of Zurich University and research scholar of Beijing University. He was foreign lawyer of Beijing Haiwen Lawyer Firm from 1997 to 1998; from 2000 to today he has been resident partner of Wenger Vieli Belser Beijing Office. He became director of the Company from April 2003. 6). Mr. Ji Changhua, 52 years old, university graduate, senior political engineer. Mr. Ji Changhua entered Huaxin Cement Plant (former name of the Company) at February 1972 and took position of vice secretary, vice director, director and secretary of Mechanic Workshop; he became Deputy general Manager of Huaxin Group Co., Ltd. from 1997. He became director and vice Secretary of Party Committee of the Company from February 2000. 7). Mr. Zhang Tianwu, 43 years old, Master of Law, lawyer. 1998 ~ 2005, vice director of Hubei Junshangjun Law Firm. From 2005, executive partner of Hubei Deweijunshang Law firm. He is now council member of Wuhan Lawyer Association, arbitrator of Wuhan Arbitration Committee, 600801-G 华新-426 K5 AR EN.doc 12 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management member of Wuhan Political Consulting Committee. He became independent director of the Company from April 2002. 8). Mr. Xie Huobao, 39 years old, Doctor of Enterprise Management of Wuhan University, Post-Doctor of Accounting of Zhongnan University of Finance and Law. From 1993 to today he has been assistant professor, instructor, deputy professor, professor and vice director of Accounting Department of Business School of Wuhan University. He became independent director of the Company from April 2002. 9). Mr. Lin Zongshou, 49 years old, Master in Non-metal Material Department of Wuhan University of Technology, Doctor tutor in Wuhan University of technology and Science. He has been teacher, professor and doctor tutor of Wuhan University of technology and Science from 1985 to today. He is representative of Ninth and tenth People’s Congress of China. He became independent director of the Company from April 2003. 10). Mr. Zhou Jiaming, 52 years old, university graduate, engineer, senior economist. Mr. Zhou Jiiming entered Huaxin Cement Plant at November 1971, he use to take position of vice director and director of Central Lab and was DGM of the Company from April 1997 to February 2000. From February 2000 he has been Secretary of Discipline Committee, Chairman of Labor Union and Chairman of Supervisory Committee. 11). Mr. Yang Chunhua, 55 years old, university graduate, senior economist. Mr. Yang Chunhua entered Huaxin Cement Plant at July 1970, and use to be chief in Organization Department, vice manager of Organization Department, vice manager of Personnel Department and manager of Labor and Personnel Department. He became DGM of Huangshi Branch, manager of Political Work department, Vice Secretary of Discipline Committee. He became vice Chairman of Labor Union and Supervisor at April 2000. 12). Mr. Ruan Hanwen, 48 years old, Master of Economy, economist. Mr. Ruan Hanwen entered Huaxin Cement Plant in 1981 and used to be financial chief of Investment Department, Section chief of Financial Department, and assistant manager of Investment Department. He became Manager of Auditing Department, director of Supervisory Office and Supervisor at April 2000. 13). Mr. Zhan Weiguo, 32 years old, university graduate, cement process engineer. Mr. Zhan Weiguo entered Huaxin Cement Plant in 1993, used to be shift chief and vice director of CCR in No. 2 Manufacture Plant; became manager of Production and Quality Department of Yangxin Branch from 2003. He became employee supervisor of the Company at April 2003. 14). Mr. Fan Tongtao, 37 years old, university graduate, mechanical engineer. Mr. Fan Tongtao entered Huaxin Cement Plant in 1990 and used to be mechanical technician and vice secretary of the Youth League Committee of Mill Department, from May 2000 to June 2003 he was vice director and mechanical chief of Mill Department of No. 1 Plant; he has been in charge of mechanical equipment in No. 2 Plant of the Company from 2003. He became employee supervisor of the Company at April 2003. 15). Mr. Wang Ximing, 47 years old, MBA, senior economist. He graduate from Chemistry Major of Wuhan Steel Institute (Wuhan University of Science) and got Bachelor of Science at February 1982; and he graduate Business and Administration Major of Renming University of China and got MBA degree. Mr. Wang Ximing entered Huaxin Cement Plant in 1982 and used to be teacher in Huaxin Technique School, vice secretary of Youth League Committee of Huaxin Cement Co., Ltd., carders of Organization Department of CPC Huangshi Committee, Vice manager of Labor and Personnel Department of Huaxin Cement Plant, Vice Manager of Planning Department, Vice Manager, Manager of Securities Department of the Company, Secretary to the Board. He took position of DGM and Secretary to the Board of the Company from April 2000 and became Vice 600801-G 华新-426 K5 AR EN.doc 13 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management Present of the Company at March 2004. 16). Mr. Peng Qingyu, 46 years old, Master, senior economist. He graduated from Western Economics Major of Central China University of Science and got Master degree of Economics at April 2004. Mr. Peng Qingyu entered Huaxin Cement Plant at January 1979 and used to be Chief in Sales Department, Vice manager and manager of Huaxin Nantong Trading Company, Director of Shanghai Office, Manager of Sales Department of the Company and vice manager of Sales Company. He took position of DGM of the Company and manager of Sales Company from April 2000. He became Vice Present of the Company at March 2004. 17). Mdm Kong Lingling, 42 years old, Master of Economics, senior economist. She graduated from Wuhan University of Technology and got Bachelor degree of Science in 1985; and graduated from Enterprise Administration Major of Fudan University and got Master degree of Economic in 1992. Mdm Kong Lingling entered Huaxin Cement Plant at July 1985 and used to be engineer in Research Firm of Huaxin Cement Plant, vice secretary of Youth League Committee, Vice Manager of Financial Department, Vice Manager of Planning Department and Manager of Financial Department. He became DGM of the Company from April 2000 and Vice President of the Company at March 2004. 18). Mr. Feng Dongguang, 39 years old, Master, engineer. He graduated from Portland Major of Wuhan University of Technology and got Bachelor degree of Science in 1989 and graduated from Business Administration Major of Central China University of Science and got MBA degree. Mr. Feng Dongguang entered Huaxin Cement Plant in 1989 and used to be assistant manager and manager of Dry Process Plant. He became assistant GM of the Company at November 2001 and DGM from April 2003. He took position of Vice President of the Company at March 2004. 19). Mr. Ke Youliang, 41 years old, Master of Economics, senior economist. He graduated from Economics Major of Wuhan University of Technology and Science and got Master Degree of Economics in 2001. Mr. Ke Youliang entered Huaxin Cement Plant in 1985 and used to be assistant manager of Investment Department, manager of Engineering Administration Department, vice manager of Comprehensive Administration Department of Engineering Division and manager of Planning and Development Department. He was appointed Assistant GM and Manager of Planning and Development Department at November 2001 and DGM of the Company from April 2003. He was appointed Vice President of the Company at March 2004. 2. Position at controlling Company Has Name of Controlling Name Position Starting Ending remuneration Company or allowance Mr. Chen Huaxin Group Co., Ltd. Chairman 1999-11-05 No Musen Mr. Li Huaxin Group Co., Ltd. Party Secretary 2001-09-07 No Yeqing Mr. Ji Huaxin Group Co., Ltd. DGM 1997-04-02 No Chanhghua Chairman of Labour Union, No Mr. Zhou Huaxin Group Co., Ltd. Secretary of 2000-02-22 Jiaming Disciplinary Committee Position at other companies 600801-G 华新-426 K5 AR EN.doc 14 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management Directors, supervisors and senior management have no position in other companies in the report period, excluding three independent directors, director Mr. Tom Clough, director Mr. Daniel Bach, and director Mr. Paul Thaler. (see the above details about their career experiences) (III). Remuneration for directors, supervisors and senior management 1. Decision procedures of remuneration for directors, supervisors and senior management a). Proposal by the Remuneration and Assessment Committee of the Board of Directors; b). payment for senior management is discussed and decided by the Board of Directors; c). approval by the shareholders' general meeting in case of position allowance for directors and supervisors. 2. Basis for deciding remunerations for directors, supervisors and senior management 1). Basis for directors and supervisors: the Proposal in Respect of Adjusting Duty Allowance for Directors and Supervisors adopted by the Annual Shareholders’ General Meeting of the Company for 2003 convened on April 28, 2004. 2). Basis for senior management: the Proposal in respect of Remuneration for Senior Management adopted by the Annual Shareholders’ General Meeting of the Company for 2003 convened on April 28, 2004 and the Proposal in Respect of 2005 KPI's for the Management adopted by the Twentieth Meeting of the Fourth Board of Directors convened on April 26, 2005, (IV). Changes of Directors, supervisor and senior management Name Position Reason for leaving Gerard Letellier Director Change in position No management member was employed or unemployed during the report period. (V). Employees By the end of the report period, the Company possess of 6,695 employees and the Company is responsible for paying for pension for 721 employees. Employee structure 1. Major structure Type Number Production staff 5,233 Sales staff 323 Technique staff 450 Financial staff 140 Administrative staff 549 600801-G 华新-426 K5 AR EN.doc 15 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 5 Directors, Supervisors and Senior Management 2. Education level Education level Number Doctor, Master graduate 37 University graduate 351 Institute graduate 1,026 Technique school graduate 627 Others 4,654 600801-G 华新-426 K5 AR EN.doc 16 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 6 Corporate Governing Chapter 6 Corporate Governing (I). Company Governance The operations of the Company during the report period were in strict compliance with provisions contained in the Company Law, Security Law and the relevant laws and rules of CSRC. Other regulations, such as the Rules of Governing of Listed Companies, the Articles of Association of the Company, the Rules of Procedures of Shareholders' General Meetings, the Rules of Procedures of the Board of Directors, the Rules of Procedures of the Supervisory Committee and the Rules of Procedures of Manager, to further enhance the honesty, self-disciplining, due diligence and legal compliance of directors, supervisors and senior management members. During the report period, investor relationship management was promoted due to the successful implemented Share Partition Reform, while the Company governance level was future improved. (II). Performance of Functions by Independent Directors 1. Independent directors present at Board Meeting Meeting number Name Present in person Present in proxy Absent Remarks shall attend Xie Huobao 7 7 Zhang Tianwu 7 7 Lin Zongshou 7 6 1 During the report period, the three independent directors worked diligently, strictly abide by provisions contained in the states laws, rules and regulations, and in the Articles of Association of the Company, participated in seven board meetings and two shareholders' general meetings with an attitude of responsibility for all shareholders, expressed independent and objective opinions from legal, financial and technical perspectives on the strategic development, investments and guarantees, and remuneration assessment of the senior management. This helps positively in major decisions for a healthy and fast development of the Company. 2. Objection from independent directors to issues of the Company There is no objection from independent directors of the Company to proposals of board meetings of this year and other non-board meeting proposals in the report period. (III). Business, employee, assets, structure and finance separations between the Company and the Controlling Shareholders of the Company 1) Business: independent 2) Employee: independent 3) Assets: independent 4) Structure: independent 5) Finance: independent (IV). Senior Management Personnel Assessment and Incentive Mechanism The Board of Directors made valuation of the senior management performance and payments were made, in accordance with the Proposal in Respect of “Report on Remuneration for Senior Management of Huaxin” by Hewitt adopted in the Seventh Meeting of the Fourth Board of 600801-G 华新-426 K5 AR EN.doc 17 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 6 Corporate Governing Directors on October 27, 2003, the Proposal in Respect of Remuneration for Senior Management adopted in the 2003 Annual Shareholders' General Meeting on April 28, 2004, the Proposal in Respect of 2005 KPI's for the Management adopted in the Twentieth Meeting of the Fourth Board of Directors on April 20, 2005, on the basis of proposals of the Remuneration and Assessment Committee of the Board of Directors and resolutions of the Board of Directors, and in combination of fulfilments of EBITDA and net operating cash flows. The annual remuneration of the management members consists of fixed pay and short term incentive pay. The fixed pay and the short term incentive pay covers 50% each for chairman of the board and CEO, and 60% and 40% respectively for the other members of the senior management. 70% of the short term incentive pay for all the management members is paid in cash, while the rest 30% is used to purchase shares of the Company. 600801-G 华新-426 K5 AR EN.doc 18 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 7 Shareholders’ General Meeting Chapter 7 Shareholders’ General Meeting (I). Annual Shareholders’ General Meeting The Annual Shareholders' General Meeting For 2004 of the Company was convened on April 26, 2005. The announcement of resolutions of the Meeting was published on China Securities Journal, Shanghai Securities News and Hong Kong Commercial Daily on April 27, 2005. (II). Extraordinary Shareholders’ General Meeting The Meeting of Relevant holders of A Shares for the Share Partition Reform was convened on December 16, 2005. The announcement of resolutions of the Meeting was published on China Securities Journal, Shanghai Securities News and Securities Times on December 19, 2005. 600801-G 华新-426 K5 AR EN.doc 19 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report Chapter 8 Directors' Report (I) Discussion and analysis of the Management 1. Review of the Company’s operation in the report period (1) Overall operation in the report period 2005 was the toughest year for the operation of the cement industry. With the gradual occurrence of effect of the state macro control policy, the growth rate of the fixed assets investment decreased, the real estate business was cooling and the production and sales of cement slowed down, so that the cement was becoming more and more oversupplied . Capacity redundancy led to the falling of prices, meanwhile due to dual pressure from the price escalation of coal and power, the profit of the whole industry decreased substantially. According to the statistic results of “China cements”, in 2005, the cement output in China reached 1.048 billion tons, and yearly growth was 11.7%; the sales revenue of the cement was 260.835 billion yuan, with an increase of 16.2% compared with the same period of last year; the total cement profit was only 8.050 billion yuan, a decrease of 38.0% compared with the same period last year. In 2005, the Company also faced austere external marketing environment. On one hand, the release of the capacity in 2004~05 from the overheated investment in last few years led to the over surplus of cement production capacity, causing a decrease in the prices, so that the Company’s annual average sales price fell to the lowest point in 10 years; on the other hand, the price of coal and power which accounts for 60% of the cost of the product was rising sharply as compared to 2004, thus the cost took away the profit. So the profitability failed to improve with the expansion of the capacity, and the production capacity was not brought into play, the production and operation of the Company went to low level. Facing with challenges and difficulties, the Company adopted effective measures. The Company not only made good operation achievements, but also enlarged the capacity, increased the market share and enhanced the competitiveness. At present, the Company has the capacity of a yearly output of 12 million tons of clinker or 22 million tons of cement, making the Company the influential leader in the industry. The main measures are: In production, the Company further refined the management. With the IT as the basis, and flat, matrix, coordination, benefit, efficiency, and innovation as principle, the operating efficiency of the equipment system as breakthrough point, the Company optimized the operating index and efficiency to control the operating cost. Discarded the out-of-date process, adjusted the operating plans of 3 wet-process kiln and 6 dry-process kiln production lines that consume high energy, and replaced the production with new dry-process production lines, so as to guarantee the overall balance of the Group. In marketing, the Company emphasized the rationality, act or not according the situation. The Company timely decreased the sales in Shanghai, and made more sales effort in Hubei, to raise market share, while seeking for new sales channel, and restarting export. The priority was still given to the benefit. Participated in price competition, but did not initiate the price competition. In the development, the Company took strategic management as a method, to make overall planning, and standardize the management. Project planning, construction, capital, staffing, project operation, product sales were carried out in due order, the newly built projects had already become the main profit sources of the Company. In 2005, the Company has already built 600801-G 华新-426 K5 AR EN.doc 20 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report and put into operation Wuxue 6,000 tpd clinker production line, Yidu 2,500 tpd clinker production line, phase II, Suzhou Golden Cat 3,500 tpd clinker production line, Tibet Shannan 1,000 tpd clinker production line, Yueyang 800,000 tpy cement grinding station, Wuhan Wugang Huaxin 600,000 tpy cement grinding line, phase II, Huaxin Nantong 650,000 tpy cement grinding lines phase II, Wuhan 1200 km3py RMC station project, so the added capability was 7.5 million tons of cement and 1200 km3 of concrete. At present, the strategic layout of the Company in Hubei had been basically completed. In 2005, the total sales of cement and clinker of the Group was 15.18 million tons (internal statistics, the same below), in which, the sales of cement was 13.40 million tons, and the clinker was 1.78 million tons. The amount of production and sales took the lead in China, and the main operating income was 2,639,380,167.10 yuan, the net cash flow from the operating activities was 503,134,090.50 yuan, which increases by 21%, and 3% respectively compared with that of 2004. The total profit was 81,377,759.92 yuan, and net profit was 62,073,249.69 yuan, which dropped by 68%, and 58% respectively, compared with 2004, yet 2005 is still one of the good years since listing. (2) Major operations 1) The classification of major operation according to industry and product Unit RMB Operating Income Cost Operating profit change change Profit Income from over the Industry or Operating % over the change Product major previous over the cost previous operations year last year year % % % Industry -7.09 Cement 2,574,343,439.41 2,076,888,915.66 18.67 20.0 31.4 percentage points -6.43 Others 65,036,727.69 40,868,379.62 34.82 50.0 70.7 percentage points -6.99 Total 2,639,380,167.10 2,117,757,295.28 19.07 20.6 32.0 percentage points Product -3.58 Cement 1,434,385,968.74 1,115,995,277.06 21.55 44.6 51.4 percentage 32.5 points Cement -11.35 42.5 and 1,056,933,573.80 890,656,512.26 15.08 -5.3 9.3 percentage above points -7.48 Clinker 83,023,896.87 70,237,126.34 14.75 125.5 147.0 percentage points -6.43 Others 65,036,727.69 40,868,379.62 34.82 50.0 70.7 percentage points -6.99 Total 2,639,380,167.10 2,117,757,295.28 19.07 20.6 32.0 percentage points 600801-G 华新-426 K5 AR EN.doc 21 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report 2) The classification of major operation according to regions Unit: RMB Region Income from major operations Income change over the last year % Hubei 1,297,375,096 57.0 Jiangsu 599,580,832 -23.9 Shanghai 111,076,563 -66.4 Chongqing 126,431,786 597.4 Anhui, Jiangxi 108,927,969 -11.3 Henan 106,375,873 288.3 Hunan 68,417,647 214.4 Zhejiang, Fujian 44,803,440 -15.9 Tibet 33,121,220 / Export 143,269,740 / Total 2,639,380,167 20.6 3) Main products and market share The main products produced and operated by the Group were cement and clinker. In 2005, the Company sold cement 7.36 million tons In Hubei, and market share was 21.6%, an increase of 44% compared with the same period of last year; sold cement 3.05 million tons In Jiangsu, market share was 4.2%; sold cement 0.57 million tons in Shanghai, market share was 2.7%; sold cement 0.08 million tons in Tibet, market share was 4.6%; sold cement 0.51 million tons in Chongqing, market share was 2.3%; sold cement 0.59 million tons in Anhui and Jiangxi; sold cement 0.58 million tons in Henan; sold cement 0.44 million tons in Hunan; sold cement 0.22 million tons in Zhejiang and Fujian (Internal statistics). 4) Main supplier and clients Unit: RMB Total of top 5 suppliers 504,289,768.35 % of total amount 36.18 Total of top 5 clients 309,981,291.26 % of total amount 11.74 (3) Operation and achievement of major subsidiaries Unit: RMB .Name Type Products or service Registered capital Assets scale Net profit Huaxin Cement Limited Production and sales 150,000,000 755,061,000 48,509,978 (Yichang) Co., liabilities of cement Ltd. Huaxin Cement Limited Production and sales 500,000,000 647,869,000 62,064,911 (Yangxin) Co., liabilities of cement Ltd. Huaxin Cement Limited Production and sales 60,000,000 271,717,000 35,273,345 (Enshi) Co., Ltd. liabilities of cement Huaxin Cement Limited Production and sales 50,000,000 182,938,000 5,216,337 (Tibet) Co., Ltd. liabilities of cement Huaxin Cement Limited Production and sales 23,900,000 37,163,000 974,863 (Xiantao) Co., liabilities of cement Ltd. Huaxin Concrete Limited Production and sales 10,000,000 42,937,739 2,195,927 (Wuhan) Co., liabilities of concrete Ltd. 600801-G 华新-426 K5 AR EN.doc 22 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report Huaxin Golden Cat Cement Sino-Joint Production and sales USD,136,000,000 1,450,953,000 -48,952,805 (Suzhou) Co., venture of cement Ltd. Wuhan Wugang Limited Production and sales 40,000,000 162,648,000 8,381,196 Huaxin Cement liabilities of cement Co., Ltd. Huaxin Nantong Sino-joint Production and sales 108,000,000 191,282,000 -6,910,476 Cement Co., Ltd. venture of cement Huangshi Huaxin Limited Production and sales 8,000,000 42,252,000 3,419,773 Packaging Co. liabilities of cement bag Ltd. Huangshi Huaxin Cement Building material, Limited 1,000,000 60,604,47 915,519 Research and building engineering liabilities Designing Co., designing Ltd. Huaxin Cement Limited Production and sales 25,000,000 97,422,000 -3,092,017 (Yueyang) Co., liabilities of cement Ltd. Huaxin Cement Limited Production and sales 75,000,000 167,189,514 / (Zhaotong) Co., liabilities of cement Ltd. Huaxin Cement Limited Production and sales 60,000,000 139,810,888 / (Wuhan) Co., liabilities of cement Ltd. 2. Outlook of the future development of the Company (1) Development and Competition 2006 is the beginning year of “the eleventh five year” plan period. As the major industry in cycling economy – cement industry will step into a new development phase. The growth rate of China’s GDP and the fixed asset investment are expected to remain at high level in “the eleventh five year” period. The increase of the investment in the industrialization, urbanization and the infrastructural construction will lead to the further development of the cement industry. There will be more new type dry process lines, considering that the Chinese cement industry is not intensified, and that the backward capacities cover over half of the total national capacity. The further upgrading of the cement industrial structure, scaled production, and intensive operation will be the general trend of the cement industrial development; large enterprises will still keep the competitive advantage by means of the acquisitions and mergers in order to gain the opportunity of quickening the development. But in 2006, the cement industry is in the down cycle of the development, so the growth ratio may be lower than the GDP’s. With the gradual putting into production of the capacity from the investment in previous years, it is predicated that the whole production output of the cement will be up to about 1.13 billion tons, the output still increases as compared with that of last year. However, the investment of the cement will continue to fall, due to the state macro control, decrease in the cement demand growth and the over rapid increase in the cement capacity in the previous years. China Cement Association predicts that there will be 50 new dry process cement production lines and the new increased capacity will reach 40 million tons in 2006. In the end of year 2006, the China’s cement capacity will be up to 1.37 billion tons, the percentage of the output from the new dry process will be about 45% in 2006 from 40% in 2005, and then the structure will be further optimized. The effects of energy saving, environmental protection and developing cycling economy will gradually appear. In 2006, the cement price will continue to keep in a low level with little fluctuation, but in some areas there may be a slight rebound. Supply exceeding demand, obvious surplus capacity of lagged process and slow demand are the main reasons which makes it difficult for the cement price to rise. Although the cement price still keeps at the low level, it shall be prospective for the 600801-G 华新-426 K5 AR EN.doc 23 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report cement enterprises to recover to the general level profitability in 2006. The Company is a big influential group in Chinese cement industry, and is the biggest cement manufacturer in the mid-south China area, with its capacity in the lead in the country. At present, the company has carried out the strategy arrangement in each area in Hubei preceding any rival, and the capacity will be up to 30 million tons in one or two years; the marketing share will exceed 40% in Hubei, it is easy to see that the area competitive advantage is obvious. As the midland, Hubei will keep the growth ratio of the fixed asset investment at a level above the national average a lot, which will create the conditions for the Company to lead the regulated and ordered competition of the cement market in this area. Looking forward to another target market – east China, it is predicated that the cement market will still continue the status of the year 2005, the supply will exceed the demand seriously, the competition will be bitter, the price will also be at a low level, so it is difficult to foresee a big change in the market. In 2006, with the acceleration of the investment for construction in coal industry, the tension in the coal supply will be relieved effectively. The State Development and Reform Commission predicts that the total output of the coal in the year will be up to 2.2 billion tons, and the demand 2.16 billion tons, the supply can balance the demand. It is predicted that the coal shortage which limited production once a while will not occur in 2006. With the drive of levying “regulating fund of the coal price” which was started in the second half year of 2005, adjustment in the coal resource tax, coal and power linkage policy, it is predicted that the ex-mine price of the coal will still be at high level with little fluctuation. Compared with the year of 2005, although the procurement price of the coal will still keep the high market level, the quality of the coal will improve, so the procurement price of the coal which is calculated according to the specific heat value will decrease accordingly. Additionally, another big energy which influences the cost of the company – power, without the shortage in 2006, the price will continue to keep at high level, but if the state implements the coal and power linkage policy, the situation which the rising price of the coal drives the rising price of the power may occur. In December 2005, the State Council issued “Provisional Regulations on Promoting Industrial Restructuring” and the Table of Contents of Guidelines for Industrial Restructuring. The industrial restructuring policy and the new environmental protection standard which will be implemented as from July 1, 2006 will restrain the production of the small cement companies, which is a new opportunity for large cement enterprises. But the actual impact in 2006 is to be observed. (2) Future development opportunity and operation plan for the new year The new industrial restructuring policy and environmental protection standard will further the step to use the new dry process cement production line to replace the lagged cement production lines, such as shaft kiln, wet process kiln and so on; to save the energy, develop cycling economy; build new socialist country side, reduce the gap between the city and the village; the leading market Hubei will keep the growth rate of the fixed asset investment at around 30% in 2006, and it will be the main strategy point to promote the uprising of the middle China. The above will become the future development opportunity for the Company. Operation plan of the new year：in 2006, produce 13 million tons clinker, 20 million tons cement, and RMC 600,000m3; the total output of equipment 10 k tons, sales revenue 4.3 billion yuan. (3) Capital expenditure plan In 2006, the Company shall continue to increase the cement production lines according to strategic planning and layout. The total investment of the project is 1.269 billion yuan. The sources of the fund: a. cash flow from the operation activities 0.527 billion yuan, b. net increase of the bank loan 0.383 billion yuan, c. the rest fund from equity financing. 600801-G 华新-426 K5 AR EN.doc 24 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report New projects and CIPs in the Capital Expenditures Plan are as follows: Unit: 10 k yuan Names of the Projects Capacity Total investment Planned investment in 2006 Clinker production line 214,341 88,769 Yangxin Phase II 2000ktpy cement 32,879 23,015 Wuxue Phase II 2500ktpy cement 35,487 2,000 Xiangfan Phase I 1500ktpy cement 34,434 13,619 Xianning Phase I 1500ktpy cement 37,511 25,258 Zhaotong, Yunnan 1500ktpy cement 37,037 9,479 Guangshan, Henan 1500ktpy cement 36,993 15,398 Grinding station 32,871 14,374 Wuhan Phase I 2000ktpy cement 16,871 3,374 Xianggang, Hunan 3000ktpy cement 16,000 11,000 RMC station 6,126 6,126 3 Hankou 1,200,000 m py 2,166 2,166 3 Hanyang 1,200,000 m py 2,166 2,166 3 Huangshi 600,000 m py 1,794 1,794 Total 253,338 109,269 (4) Analysis of the risk for the Company In 2006, the biggest risk for the Company is whether or not the new projects and CIPs will be put into operation as scheduled. Additionally, other risks are the shortage of the Company’s own capital and different cash availabilities at different times due to the continuous and rapid development of the Company. In face of such risks, the company will enhance project supervision, push ahead progresses of the construction for the new projects and CIPs, properly arrange allocations of capital and seek new financing channels in order to ease the cash pressure for the Company. This year, the company shall try to make it possible to realize the equity financing plan. (II). Investments Total investment of the Company in the report period is 1,123,090 k yuan, increased by 246,577 k yuan or 28.13% over the previous year. 1. Application of proceeds No capital was raised in the report period. No capital that had been raised previously was used in the report period. 2. Funds of other sources 600801-G 华新-426 K5 AR EN.doc 25 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report (1). Project completed in 2005 1). Wuxue 6000tpd clinker production line. Total planned investment of the project was 556.71 million yuan, while the actual investment was 473,490 k yuan. The project was put into operation on April 26, 2005. The production volume was clinker 1200 k tons and cement 540 k tons in the year. 2). Tibet Shannan 1000tpd clinker production line. Total planned investment of the project was 150,04 million yuan, while the actual investment was 144.94 million yuan. The project was put into operation on June 28, 2005. The production volume was clinker 100 k tons and cement 90 k tons in the year. 3). Technical renovation of Suzhou Golden Cat 1300 k tpy cement grinding station. Total planned investment of the project was 87 million yuan, while the actual investment was 64.2 million yuan. The first cement mill system was completed on October 18, 2004 and the second was completed and put into operation on April 26, 2005. The production volume was cement 678.7 k tons in the year. 4). Technical renovation of Suzhou Golden Cat 3500tpd clinker production line. Total planned investment of the project was 84.13 million yuan, while the actual investment was 52.87 million yuan. The project was put into operation on August 28, 2005. The production volume was clinker 250 k tons in the year. 5). Yidu 2500tpd clinker production line project, phase II. Total planned investment of the project was 198.08 million yuan, while the actual investment was 171.03 million yuan. Cement mill system was put into operation on August 30, 2005, and the kiln system was put into operation on September 25, 2005. The production volume was clinker 140 k tons and cement 360 k tons in the year. 6). Wuhan 1,200 KM3 py RMC station project. Total planned investment of the project was 30.58 million yuan, while the actual investment was 32.5 million yuan. The project was put into operation in June, 2005. The production volume was RMC 54 KM3 in the year. (2). CIPs in 2005 1). Yunnan 4000tpd clinker production line project. Total planned investment of the project is 370.37 million yuan, site preparation was started in October 2004, civil construction was basically completed and the project entered period of equipment instalment. It is estimated to be completed and put into operation within June 2006. 2). Xiangfan 4000tpd clinker production line project. Total planned investment of the project is 344.34 million yuan, it was started on March 30, 2005 and main body of the kiln line was basically completed. It is estimated to be completed and put into operation within July 2006. 3). Wuhan 2000 k tpy cement grinding station. Total planned investment of the project is 168.71 million yuan, it was started on November 30, 2004 and main body of the project was basically completed. It is estimated to be completed and put into operation within April 2006. 4). Huaxin Cement (Yangxin) Co., Ltd. 4800tpd clinker production line project, phase II. Total planned investment of the project is 328.79 million yuan, it was started on September 29, 2005, civil construction was basically completed and the project entered period of main body construction. It is estimated to be completed and put into operation within October 2006. 600801-G 华新-426 K5 AR EN.doc 26 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report (III). Work of the Board of Directors 1. Board meetings and contents 1). The Nineteenth Meeting of the Fourth Board of Directors of the Company was convened on March 22, 2005, where the Annual Report of the Company for 2004, and its abstract, the Final Financial Report of the Company for 2004, the Profit Distribution Proposal for 2004, the Proposal in Respect of Deciding the Risk Income for the Management for 2004, the Proposal in Respect of Replacement of Directors, the Proposal in Respect of Setting Up Huaxin Cement (Wuhan) Co., Ltd., the Proposal in Respect of Setting Up Huaxin RMC (Wuhan) Co., Ltd., the Proposal in Respect of Appointing Accounting Firms, and the Proposal in Respect of Convening the Annual Shareholders’ General Meeting for 2004 were reviewed and adopted. The announcement of resolutions of the meeting was published on China Securities Journal, Shanghai Securities News and Hong Kong Commercial Daily on March 24, 2005. 2). The Twentieth Meeting of the Fourth Board of Directors of the Company was convened on April 26, 2005, where the First Quarter Report for 2005, the Proposal in Respect of 2005 KPI's for the Management, the Proposal in Respect of Setting Up Huaxin Cement Co., Ltd. Wuxue Branch, and the Proposal in Respect of Preannouncement of the Operating Results of the Company During the First Half of 2005 were reviewed and adopted. The announcement of resolutions of the meeting was published on China Securities Journal, Shanghai Securities News and Hong Kong Commercial Daily on April 27, 2005. 3). The Twenty First Meeting of the Fourth Board of Directors of the Company was convened on August 10, 2005. The announcement of resolutions of the meeting was published on China Securities Journal, Shanghai Securities News and Hong Kong Commercial Daily on August 12, 2005. 4). The Twenty Second Meeting of the Fourth Board of Directors of the Company was convened on August 29, 2005, where the Report in Respect of Budget Assumption and Target Proposal for 2006 was reviewed and adopted. 5). The Twenty Third Meeting of the Fourth Board of Directors of the Company was convened on October 28, 2005. The announcement of resolutions of the meeting was published on China Securities Journal, Shanghai Securities News and Hong Kong Commercial Daily on October 31, 2005. 6). The Twenty Fourth Meeting of the Fourth Board of Directors of the Company was convened on November 7, 2005, where the Financial Budget Report of the Company for 2006 and the CAPEX of the Company for 2006 were reviewed and adopted. 7). The Twenty Fifth Meeting of the Fourth Board of Directors of the Company was convened on November 25, 2005, where the Proposal in Respect of Applying to the CBC For a 1.5 Billion Yuan Credit Limit and the Proposal in Respect of Applying for an Issue of Short Term Financial Bonds were reviewed and adopted. 2. Execution of resolutions of the shareholders’ general meeting In the year, the board, pursuant to the Company Law, did the duties stipulated for the Board of Directors in the Articles of Association of the Company; strictly executed resolutions adopted by the Shareholders’ General Meeting, and functioned fully as a board. 600801-G 华新-426 K5 AR EN.doc 27 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 8 Directors' Report (IV). Profit Distribution Proposal for 2005 According to the results of audits by ShineWing CPAs, the net profit of the Company for 2005 was 62,587,119.94 yuan (parent company) or 62,073,249.69 yuan after consolidation. Pursuant to the provisions contained in the Company Law and the Articles of Association of the Company, 10%, i.e. 6,258,712.00 yuan will be appropriated to statutory surplus common reserve fund; 10%, i.e. 6,258,712.00 yuan, to statutory public welfare fund. The consolidated allocable profit (consolidated) is 183,152,698.79 yuan by the end of December 2005. The board reviewed and adopted the following profit distribution proposal: on the basis of the 328.40 million shares as at the year end, a cash dividend of 0.06 yuan per share (incl. tax) shall be distributed to all shareholders, hence 19,704,000 yuan shall be distributed, and the whole of the remaining shall be booked as unallocated profit. No capital reserve shall be converted into share capital for 2005. The above profit distribution proposal shall be subject to the approval by shareholders' general meeting before implementation. (V). Remarks of independent directors on external guarantees Pursuant to requirements contained in “Notice on Regulating Cash Transactions Between Listed Companies and Their Parties and External Guarantees by Listed Companies and Other Related Issues” (Document no.: Zheng Jian Fa [2003] 56), the Articles of Association of the Company and other relevant documents, we made careful verification of the Company in terms of external guarantees. The Company did not provide any guarantee in the year or in accumulation to any of controlling shareholder or its subsidiaries, other related parties where the Company had not more than 50% equity, non-legal-person organizations or individuals. The Company had an effective control of external guarantee risks. In our opinion, external guarantees of the Company were reasonable and legitimate in terms of deciding procedures, and did not harm the interests of the Company or shareholders, especially medium and small shareholders. 600801-G 华新-426 K5 AR EN.doc 28 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 9 Supervisors' Report Chapter 9 Supervisors' Report (I). Work of the Supervisory Committee 1. In 2005, two meetings were convened by the Supervisory Committee. The first meeting: a). reviewed and adopted the Annual Report for 2004 and its abstract, Final Financial Report for 2004, and Profit Distribution Proposal for 2004; and b). reviewed and adopted the Work Report of Supervisory Committee for 2004. The second meeting: a). reviewed and adopted the Half Year Report for 2004. (II). Operation of the Company According to Law In the report period, members of the board and the management did not have conducts, when implementing their duties that violated laws, rules and regulations and the Articles of Association of the Company or harmed the benefits of the Company. The senior management worked diligently for the benefits of all shareholders and employees, seized the opportunities, made decisions in a scientific manner, so that strategic plans were implemented steadily, production scale was continuously enlarged, and the new projects had good profits. (III). Financial Supervision In the report period, the Company strictly abided by relevant laws and regulations, as well as the accounting policies of the Company, so that the finance functioned properly. The Supervisory Committee reviewed the auditing opinions by Shinewing CPAs and PricewaterhouseCoopers China Limited and related issues, and believed that the financial reports fairly reflected the financial positions and operating results of the Company. The members involved in compiling Annual Report and auditing acted with strict confidentiality. (IV). Application of last proceeds There was no application of pervious proceeds in the report period. (V). Assets acquisition and disposal There was no assets acquisition and disposal in the report period. (VI). Related transactions In the report period, the related transactions of the Company were equal, fair and open, and did not harm the interests of the Company. 600801-G 华新-426 K5 AR EN.doc 29 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 10 Major Events Chapter 10 Major Events (I). The Company did not get involved in any new material lawsuit or arbitration in the report period. (II). There is no assets acquisition, disposal and merging in the report period. (III). Important related transaction in the report period 1. The related transaction in connection with the daily operation (1) Related transaction of purchasing goods or accepting services Unit: 10 k yuan % in same Pricing Influence to profit Related party Content Amount transaction payment principle of the Company type Huaxin Cement Purchase cement of Fabric Product Market price 336 0.13 Cash the Company Co., Ltd. (2) Related transaction of selling goods or providing services Unit: 10 k yuan % in same Pricing Influence to profit Related party Content Amount transaction payment principle of the Company type Provide labour Huaxin Group service to the Negotiation 480 100 Cash Co., Ltd. Company Provide technique Holcim service to the Negotiation 242 100 Cash Company (IV). No trust occurred in the report period. (V). No contracting occurred in the report period. (VI). No renting or leasing occurred in the report period. (VII). Guarantee in the report period. Unit: yuan Guarantee from the Company to subsidiaries Guarantee amount for subsidiaries occurred in the report period 155,000,000.00 Guarantee amount from subsidiaries left at the report period end 377,540,000.00 Total guarantee amount (including guarantee for subsidiaries) Total guarantee amount 377,540,000.00 % in net asset of the Company 31.11 (VIII). No entrustment occurred in the report period. (IX). There is no other important contract in the report period. (X). Executive of commitment 600801-G 华新-426 K5 AR EN.doc 30 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 10 Major Events The Proposal of Share Partition Reform of the Company was reviewed and adopted by the Meeting of relevant holders of A shares for the Share Partition Reform on December 16, 2005 and was implemented on December 26. The controlling shareholder Huaxin Group Co., Ltd. committed the following in the “Proposal of Share Partition Reform of Huaxin Cement Co., Ltd.”: 1. None of the shares shall be listed, traded or transferred 12 months after the Share Partition Reform Plan is successfully implemented. 2. None of the state shares held on behalf of the state and the domestic legal person shares shall be listed, traded or sold in the SSE during the period from the thirteenth month to the thirty sixth month after the Share Partition Reform Plan is successfully implemented. 3. The number of the state shares held on behalf of the state that would be listed, traded or sold in the SSE from the thirty seventh month to the forty eighth month shall not exceed 5% (equivalent to 1.21% of the current total shares of the Company) of the state shares that Huaxin Group Co., Ltd. holds after the Share Partition Reform, and the transaction price shall not be lower than 9 yuan/share (subject to conversions in case of dividends distribution, bonus issue, capital reserve conversion during the period from the implementing date of Share Partition Reform to sales of the shares by Huaxin Group, if any). 4. The number of the state shares held on behalf of the state that would be listed, traded or sold in the SSE from the forty ninth month to the sixtieth month shall not exceed 10% (equivalent to 2.41% of the current total shares of the Company) of the state shares that Huaxin Group Co., Ltd. holds after the Share Partition Reform, and the transaction price shall not be lower than 9 yuan/share (subject to conversions in case of dividends distribution, bonus issue, capital reserve conversion during the period from the implementing date of Share Partition Reform to sales of the shares by Huaxin Group, if any). 5. For each 1% of the total shares of Huaxin Cement that are held on behalf of the state and sold through the listing system of the SSE, an announcement will be made within 2 working days after such transaction, during which 2 days the transactions do not have to be suspended. The above commitments are being implemented. (XI). Appointment of Certified Public Accountants In the report period, the Company continued to employ ShineWing CPAs as domestic auditor for 2005 and pay about 550,000 yuan for its auditing service in previous year. By the end of the report period, the CPA has provided auditing service to the Company for 11 years. The Company continued to employ PriceWaterHouseCoopers (China) Co., Ltd. as international auditor for 2005 and pay about 1,150,000 yuan for its auditing service in previous year. By the end of the report period, the CPA has provided auditing service to the Company for 12 years. For the year 2005, besides payment for above-mentioned service, the Company paid for the transport and lodging expenditures in the auditing period. (XII). Punishment and improvement for the Company, directors or senior management Neither the Company nor any director or senior management member was involved in any punishment or improvement by regulatory authorities. 600801-G 华新-426 K5 AR EN.doc 31 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 10 Major Events (XIII). Other major events. The Company successfully completed the Share Partition Reform for A shares on December 29, 2005. 600801-G 华新-426 K5 AR EN.doc 32 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report PRC Auditors' Report .................................................................................. 34 Balance Sheet ............................................................................................. 35 Income and Income Appropriation Statement ............................................. 37 Supplement information .............................................................................. 37 Cash Flow Statement .................................................................................. 38 Statement of Provision for Assets ............................................................... 40 Notes to the Financial Statements .............................................................. 42 International Auditors' Report International Auditors' Report ...................................................................... 89 Consolidated Income Statement ................................................................. 90 Consolidated Balance Sheet ....................................................................... 91 Consolidated Statement Of Changes In Equity ........................................... 92 Consolidated Cash Flow Statement ............................................................ 94 Notes to the Accounts ...................................................................... 95 to 128 Supplementary Information ....................................................................... 128 600801-G 华新-426 K5 AR EN.doc 33 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report PRC Auditors' Report 北京市东城区朝阳门北大街8号 联系电话: +86(010)65542288 富华大厦A座9层 telephone: +86(010)65542288 9th Floor, Block A, Fu Hua Mansion 传真: +86(010)6554 7190 No.8, Chao Yang Men Bei Da Jie, ShineWing Dong Cheng District, facsimile: +86(010)6554 7190 certified public accountants Beijing, 100027, P.R.China REPORT OF THE AUDITORS XYZH/2005A3019 To HUAXIN CEMENT COMPANY LIMITED We have audited the accompanying balance sheet (consolidated and company)of the Huaxin Cement Company Limited （hereafter” the Company”）as of December 31, 2005, and the related income statement, cash flows statement ( consolidated and company ) for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with Standards for Independent Audits of PRC Certified Public Accountants. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2005, and the results of its operations and its cash flows for the year then ended in accordance with Accounting Standards of PRC and Accounting Regulations for Enterprises. ShineWing Certified Public Accountants [CPA signature] Zhang Kedong Li Suping March 3, 2006 600801-G 华新-426 K5 AR EN.doc 34 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Balance Sheet In RMB Yuan Assets Notes Consolidated The company 2005.12.31 2004.12.31 2005.12.31 2004.12.31 Current assets Cash 5(1) 368,316,897.24 397,339,808.76 116,523,790.75 168,790,952.83 Short term investment - - - - Notes receivable 5(2) 104,574,447.75 117,045,564.16 55,038,800.53 48,826,221.90 Dividends receivable - - - - Interest receivable - 304,556 - - Accounts receivable 5(3) 109,388,504.02 65,581,732.92 50,082,233.45 29,087,547.97 Other receivables 5(4) 82,937,052.52 67,521,873.19 262,157,755.66 131,709,886.31 Prepayments 5(5) 16,112,108.95 43,448,775.66 25,289,952.47 46,197,660.96 Subsidiary receivable - - - - Inventories 5(6) 328,836,476.04 285,613,147.56 123,314,015.16 135,474,166.76 Deferred and prepaid 1,123,035.17 1,266,224.48 827,322.45 894,685.11 expenses 5(7) Long term bonds investment within one - - - - year Other current assets - - - - Total current assets 1,011,288,521.69 978,121,682.35 633,233,870.47 560,981,121.84 Long term investments Long-term equity 22,711,800.80 23,950,917.77 1,482,498,456.48 914,709,627.19 investments 5(8) Long-term debts 59,057.32 59,057.32 59,057.32 59,057.32 investments 5(8) Total Long term 22,770,858.12 24,009,975.09 1,482,557,513.80 914,768,684.51 Investment Consolidation difference 8,003,799.64 9,251,145.04 - - 5(8) Fixed assets Fixed assets - cost 5(9) 5,635,949,416.58 4,550,430,830.57 2,408,334,950.34 2,339,725,759.39 Less: Accumulated 1,596,682,649.93 1,378,073,394.33 855,023,065.10 756,364,608.04 depreciation 5(9) Fixed assets - net book 4,039,266,766.65 3,172,357,436.24 1,553,311,885.24 1,583,361,151.35 value 5(9) Less:provision for fixed 65,456,142.75 102,879,245.77 4,047,235.70 4,047,235.70 assets 5(9) Fixed assets-net value 5(9) 3,973,810,623.90 3,069,478,190.47 1,549,264,649.54 1,579,313,915.65 Construction materials 5(10) 116,090,592.93 73,190,483.12 - - Construction in progress 5(11) 440,347,060.74 448,111,293.23 188,083,767.64 269,659,546.03 Fixed assets pending for - - - - disposal Total fixed assets 4,530,248,277.57 3,590,779,966.82 1,737,348,417.18 1,848,973,461.68 Intangible and other assets Intangible assets 5(12) 512,819,727.58 329,695,355.41 84,724,047.31 71,078,173.38 Long term deferred 31,164,792.72 33,192,977.73 11,198,709.46 12,179,248.30 expenses 5(13) Other long-term assets - - - - Total intangible and 543,984,520.30 362,888,333.14 95,922,756.77 83,257,421.68 other assets Deferred tax charges: Deferred tax charges - - - - Total assets 6,108,292,177.68 4,955,799,957.40 3,949,062,558.22 3,407,980,689.71 The accompanying notes form an integral part of the financial statements. 600801-G 华新-426 K5 AR EN.doc 35 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Balance Sheet (Continued) In RMB yuan LIABILITIES AND OWNERS' EQUITY Notes Consolidated The Company 2005.12.31 2004.12.31 2005.12.31 2004.12.31 Current liabilities Short term loans 5(14) 581,300,000.00 445,380,000.00 360,700,000.00 283,200,000.00 Notes payable 5(15) 195,396,247.88 77,430,625.01 72,201,399.24 14,685,625.01 Accounts payable 5(16) 481,526,792.21 384,040,381.29 164,351,726.73 138,115,439.40 Advances from 85,799,398.18 49,688,371.11 151,945,799.35 142,179,982.98 customers 5(17) Accrued payroll 8,617,457.22 22,436,260.55 1,582,000.00 12,295,103.00 Staff and workers' bonus and welfare 7,341,878.01 6,639,807.98 3,248,691.60 4,699,902.53 fund Dividends payable 5(18) 393,006.80 702,119.60 393,006.80 702,119.60 Taxes payable 5(19) 60,406,138.88 57,716,542.69 24,646,484.71 52,607,711.45 Other statutory 12,038,818.28 8,889,820.25 9,838,518.17 7,650,834.10 payables 5(20) Other payables 5(21) 129,607,479.64 108,347,299.42 61,896,754.20 63,697,314.90 Accrued expenses 5(22) 6,544,801.68 23,990,999.37 3,809,821.15 12,281,320.76 Accrued - - - - payables Long term liabilities due within 427,155,356.45 384,338,902.68 329,155,356.45 255,338,902.68 one year 5(23) Other current - - - liabilities Total current 1,996,127,375.23 1,569,601,129.95 1,183,769,558.40 987,454,256.41 liabilities Long term liabilities Long term loans 5(24) 2,050,484,081.12 1,546,464,534.89 1,532,444,081.12 1,229,924,534.89 Debentures - - - - payables Long term 128,831,336.31 61,568,450.69 12,305,943.81 15,273,058.19 payables 5(25) Special payables 5(26) 3,795,701.96 6,000,000.00 3,795,701.96 6,000,000.00 Other long term - - - - liabilities Total long term 2,183,111,119.39 1,614,032,985.58 1,548,545,726.89 1,251,197,593.08 liabilities Deferred tax charge: Deferred taxes - - - - liabilities Total liabilities 4,179,238,494.62 3,183,634,115.53 2,732,315,285.29 2,238,651,849.49 Minority interests Minority interests 5(27) 715,436,155.21 605,452,876.48 - - Owner' equity Share capital 5(28) 328,400,000.00 328,400,000.00 328,400,000.00 328,400,000.00 Capital reserve 5(29) 548,926,840.93 544,391,528.16 549,388,282.66 544,852,969.89 Surplus reserve 5(30) 153,137,988.13 140,620,564.13 153,137,988.13 140,620,564.13 Including: Welfare 43,165,506.99 36,906,794.99 43,165,506.99 36,906,794.99 reserves Undistributed 183,152,698.79 153,300,873.10 185,821,002.14 155,455,306.20 profits 5(31) Including: Cash 19,704,000.00 19,704,000.00 dividends 5(32) Total owners' 1,213,617,527.85 1,166,712,965.39 1,216,747,272.93 1,169,328,840.22 equity Total liablities and owners' 6,108,292,177.68 4,955,799,957.40 3,949,062,558.22 3,407,980,689.71 equity The accompanying notes form an integral part of the financial statements. 600801-G 华新-426 K5 AR EN.doc 36 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Income and Income Appropriation Statement In RMB yuan Item Notes Consolidated The Company 2005 2004 2005 2004 Operating income 5(33) 2,639,380,167.10 2,188,101,303.80 1,407,992,916.08 1,240,150,338.16 Less: Operating cost 5(33) 2,117,757,295.28 1,604,559,832.97 1,219,514,499.88 919,909,557.17 Operating tax and 5(34) 18,262,075.13 13,233,330.55 10,000,266.91 9,596,988.78 surcharge Gross profit 503,360,796.69 570,308,140.28 178,478,149.29 310,643,792.21 Add: Other operating profit 5(35) 2,829,450.25 4,522,839.91 10,454,477.02 -446,244.22 Less: Operating expenses 187,353,041.67 141,005,322.44 74,902,179.68 79,493,364.09 General and administrative 161,102,470.33 165,148,266.48 74,587,498.84 105,261,316.74 expenses Financial expenses 5(36) 111,112,219.92 85,863,859.69 76,846,799.18 61,103,593.85 Operating profit / (loss) 46,622,515.02 182,813,531.58 -37,403,851.39 64,339,273.31 Add: Income from 5(37) -1,239,116.97 -825,033.61 83,483,602.37 75,634,057.81 investments Subsidiary income 5(38) 30,882,780.26 38,477,512.83 8,381,529.27 12,879,284.63 Non-operating income 5(39) 10,808,085.86 39,514,722.33 848,889.52 39,328,431.67 Less: Non-operating 5,696,504.25 4,820,584.72 527,742.84 824,389.11 expenses Total profit 81,377,759.92 255,160,148.41 54,782,426.93 191,356,658.31 Less: Income tax 10,707,805.26 60,295,586.82 -7,804,693.01 41,006,174.30 Minority interests 8,596,704.97 46,314,003.94 - - Net profit/(loss) afiter tax 62,073,249.69 148,550,557.65 62,587,119.94 150,350,484.01 Add: Undistribution profit 153,300,873.10 54,524,412.25 155,455,306.20 54,878,918.99 Add: surplus reserve - - - - Profit available to 215,374,122.79 203,074,969.90 218,042,426.14 205,229,403.00 distribution Less: Mandatory appropriation to surplus 6,258,712.00 15,035,048.40 6,258,712.00 15,035,048.40 reserves Mandatory appropriation to welfare 6,258,712.00 15,035,048.40 6,258,712.00 15,035,048.40 reserves Profit available to 202,856,698.79 173,004,873.10 205,525,002.14 175,159,306.20 distribution to shareholder Less: Preferred dividend - - - - payable Discretionary appropriation to surplus - - - - reserves Dividends payable 19,704,000.00 19,704,000.00 19,704,000.00 19,704,000.00 Dividends transferred to - - - - share Undistribution profit 183,152,698.79 153,300,873.10 185,821,002.14 155,455,306.20 Including: Cash - 19,704,000.00 - 19,704,000.00 dividends Supplement information Item Consolidated The Company Notes 2005 2004 2005 2004 Gain on sale and disposal of a department or an invested 849,271.00 - - - enterprise Losses arising from natural - - - - diasters Increase/decrease in income before tax due to a change in - - - - accounting policy Increase/decrease in income before tax due to a change in - - - - accounting estimate Losses arising from debt retructurings Others The accompanying notes form an integral part of the financial statements. 600801-G 华新-426 K5 AR EN.doc 37 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Cash Flow Statement In RMB yuan Item Notes Consolidated 2005 The Company 2005 1. Cash flows from operating activities Cash received from sales of goods or 3,140,685,680.41 1,706,762,072.31 rendering of services Refund of tax 41,175,857.75 14,630,627.29 Other cash received relating to operating 36,286,375.00 103,043,113.13 activities 5(40) Sub-total of cash inflows 3,218,147,913.16 1,824,435,812.73 Cash paid for goods and services 2,170,863,181.21 1,340,148,191.99 Cash paid to and on behalf of employees 181,782,685.29 92,523,514.69 Various kinds of tax paid 242,931,480.10 91,636,982.27 Other cash paid relating to operating activities 5(41) 119,436,476.06 121,575,768.22 Sub-total of cash outflows 2,715,013,822.66 1,645,884,457.17 Net cash from operating activities 503,134,090.50 178,551,355.56 2. Cash flows from investing activities: Cash received from return of investments - - Cash received from distribution of dividends - 2,230,085.85 or profits Net cash received from disposal of fixed 14,975,312.61 4,499,869.81 assets, intangible assets and other long-term assets Other cash received relating to investing 2,000,000.00 - activities 5(42) Sub-total of cash inflows 16,975,312.61 6,729,955.66 Cash paid to acquire fixed assets, intangible 1,070,713,644.59 489,018,348.27 assets and other long-term assets Cash paid to acquire equity investments 0.00 40,000,000.00 Other cash paid relating to investing activities - 39,900,000.00 Sub-total of cash outflows 1,070,713,644.59 568,918,348.27 Net cash from investing activities -1,053,738,331.98 -562,188,392.61 3. Cash flows from financing activities Proceeds form issuing shares - - Including: cash from minority interests - - Proceeds from issue of bonds - - Proceeds from borrowings 1,680,600,000.00 1,075,700,000.00 Other proceeds relating to financing activities 5(43) 1,922,804.23 538,804.23 Sub-total of cash inflows 1,682,522,804.23 1,076,238,804.23 Cash repayments of amounts borrowed 988,921,010.75 608,911,010.75 Cash payments for distribution of dividends or 170,085,547.49 135,052,255.02 profits Other cash payments relating to financing 1,378,523.16 364,207.02 activities 5(44) Sub-total of cash outflows 1,160,385,081.40 744,327,472.79 Net cash from financing activities 522,137,722.83 331,911,331.44 4. Effect of foreign exchange rate changes on -556,392.87 -541,456.47 cash 5. Net increase in cash and cash equivalents -29,022,911.52 -52,267,162.08 The accompanying notes form an integral part of the financial statements. 600801-G 华新-426 K5 AR EN.doc 38 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report CASH FLOW STATEMENT (Continued) In RMB yuan ITEM Notes Consolidated 2005 The Company 2005 1. Reconciliation of net profit to cash flows from operating activities Net profit 62,073,249.69 62,587,119.94 Add: Minority Interest 8,596,704.97 Add: Provision for loss on assets -5,447,129.82 -3,621,513.23 Depreciation of fixed assets 269,962,163.11 118,419,282.04 Amortization of intangible assets 13,300,147.10 2,280,215.40 Depreciation of long-term deferred expenses 11,229,976.16 4,702,461.72 Deferred Expenses 143,189.31 67,362.66 Accrued expenses -17,934,868.94 -6,647,308.06 Losses on disposal of fixed assets, intangible -3,707,350.96 291,264.55 assets and other long-term Losses on scrapping of fixed assets 0.00 - Financial expenses 114,896,741.98 78,732,595.14 Losses arising from investments (or deduct: 1,239,116.97 -83,483,602.37 gains) Deferred tax credit (or deduct : debit) - - Decrease in inventories (or deduct: increase) -29,450,325.99 -25,830,116.51 Decrease in operating receivables (or deduct: -18,008,264.08 -25,855,725.97 increase) Increase in operating payables (or deduct: 96,240,741.00 56,909,320.25 decrease) Other Net cash flows from operating activities 503,134,090.50 178,551,355.56 2. Investing and financing activities that do not involve in cash receipts and payments Capital by the transfer of debts - - Convertible bonds within one year - - Fixed assets by financial lease - - 3. Net increase in cash and cash equivalents cash at the end of the period 368,316,897.24 116,523,790.75 Less: cash at the beginning of the period 397,339,808.76 168,790,952.83 Add: cash equivalents at the ending of the period - - Less: cash equivalents at the beginning of the - - period Net increase in cash and cash equivalents -29,022,911.52 -52,267,162.08 The accompanying notes form an integral part of the financial statements. 600801-G 华新-426 K5 AR EN.doc 39 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Statement of Provision for Assets (consolidated) In RMB yuan Addition from Item 2004.12.31 Increase acquisition Decrease Write off 2005.12.31 1.Provison for bad 32,527,830.73 - -3,811,640.47 - 8,598,192.26 20,117,998.00 debts Including: 29,842,716.15 - -4,097,751.23 - 8,598,192.26 17,146,772.66 accounts receivable 2,685,114.58 - 286,110.76 - - 2,971,225.34 Other receivables 2.Provision for loss on realization of - - - - - - short-term investments Including: equity - - - - - - investments - - - - - - Investments in bonds 3.Provision for loss on realization of 17,417,745.33 - 569,499.65 - - 17,987,244.98 inventories Including: Raw 17,417,745.33 - - - - 17,417,745.33 materials - - - - - - Work in progress - - - - - - finished goods Low value and - - 569,499.65 - - 569,499.65 perishable articles 4.Provision for loss on realization of 5,955,600.00 - - - 3,180,000.00 2,775,600.00 long-term investments Including: long-term equity 5,955,600.00 - - - 3,180,000.00 2,775,600.00 investments Long-term investments - - - - in bonds 5.Provision for loss 102,879,245.7 on realization of fixed - -2,204,989.00 - 35,218,114.02 65,456,142.75 7 assets Including: 27,674,723.19 - - - 1,760,800.04 25,913,923.15 buildings 74,829,854.58 -2,204,989.00 - 33,457,313.98 39,167,551.60 Machinery Motor 369,423.00 - - - - 369,423.00 Vehicles Office equipment, furniture 5,245.00 - - - - 5,245.00 and fixtures 6.Provision for loss on realization of - - - - - - intangible assets Including: - - - - - land-use Right - - - - - - Patent - - - - - - Trade mark 7.Provision for loss on realization of 564,162.79 - - - 564,162.79 - construction in process 8.Provision for loss on realization of - - - - - - commison loan 600801-G 华新-426 K5 AR EN.doc 40 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Statement of Provision for Assets (the Company) In RMB yuan Addition from Item 2004.12.31 Increase acquisition Decrease Write off 2005.12.31 1.Provison for bad 24,381,747.50 - -3,621,513.23 - 3,358,529.91 17,401,704.36 debts Including: 21,946,632.92 - -3,541,855.63 3,358,529.91 15,046,247.38 accounts receivable 2,435,114.58 - -79,657.60 - 2,355,456.98 Other receivables 2.Provision for loss on realization of - - - - - - short-term investments Including: - - - - - - equity investments - - - - - - Investments in bonds 3.Provision for loss on realization of 12,342,624.17 - - - - 12,342,624.17 inventories Including: Raw 12,342,624.17 - - - 12,342,624.17 materials Work - - - - - - in progress - - - - - - finished goods Low value and perishable - - - - - articles 4.Provision for loss on realization of 2,775,600.00 - - - - 2,775,600.00 long-term investments Including: long-term equity 2,775,600.00 - - - - 2,775,600.00 investments Long-term - - - investments in bonds 5.Provision for loss on realization of 4,047,235.70 - - - - 4,047,235.70 fixed assets Including: 2,142,896.70 - - - - 2,142,896.70 buildings 1,904,339.00 - - - 1,904,339.00 Machinery Motor - - - - - - Vehicles Office equipment, furniture - - - - - - and fixtures 6.Provision for loss on realization of - - - - - - intangible assets Including: - - - - - land-use Right - - - - - - Patent - - - - - - Trade mark 7.Provision for loss on realization of 564,162.79 - - - 564,162.79 - construction in process 8.Provision for loss on realization of - - - - - - commison loan 600801-G 华新-426 K5 AR EN.doc 41 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Notes to the Financial Statements – 31 December 2005 (Unless otherwise indicated, all figures are stated in RMB’000) 1 General Huaxin Cement Company Limited (the "Company") is a joint stock limited company restructured from the previous state-owned enterprises Huaxin Cement Plant. The Company was registered on 30 November 1993. As at 31 December 2005, the total share capital was RMB 328.4 million including: 164.4 million RMB common shares issued domestically, and 164 million RMB special shares (B shares). The Company is located in Huangshi City, Hubei province and its principal activities are the production and sale of cement, cement clinker and paper-cloth bags. On 29 December 2005, reform of non-tradeable shares has been accomplished, after that the share capital is as follows: Shares in thousands 1 Listed shares with certain criteria and conditions (1) State-owned shares 79,251 (2) Legal entity shares 22,749 Sub- total 102,000 2 Listed shares (1) A shares 62,400 (2) B shares 164,000 Sub- total 226,400 Total 328,400 2 Principal accounting policies and basis of consolidation (1) Basis of presentation of the financial statements The financial statements have been prepared in conformity with Accounting Standards for Enterprises and Accounting Regulations for Enterprises. (2) Accounting period The accounting period of the Company is the calendar year. (3) Reporting currency The Company uses RMB as its reporting currency. (4) Basis of Accounting 600801-G 华新-426 K5 AR EN.doc 42 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements The Company adopts the accrual basis and historical costing principle as its accounting basis. (5) Foreign currency translation Foreign currency transactions are translated into RMB at the rates of exchange quoted by the People's Bank of China prevailing at the transaction date. Foreign currency monetary assets and liabilities are translated into RMB at the rates of exchange prevailing at the balance sheet date. Exchange gains and losses arising from foreign currency translation are all included in operating results. Exchange gains and losses occurred during pre-operating period are included in deferred asset while exchange gains and losses related to CIP are capitalised as the cost of CIP. (6) Cash equivalents Cash equivalents are short-term, highly liquid investments (normally less than three months from date of purchase to due date) that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (7) Provision for bad debts The Company accounts for bad debts using provision method. Unrecoverable accounts receivable due to bankruptcy or death of debtor and relevant conclusive evidence are affirmed as bad debt loss. Provision for bad debts is made based on appraising the collectible of accounts receivable. No all provision is provided against related party balances. For other balances, general provisions are provided as the following scheme. 1-2 year (liquid) 5% 1-2 year (idle) 15% 2-3 year (liquid) 10% 2-3 year (idle) 30% More than 3 year 40% Unrecoverable 100% The accounts receivable within one year mainly represents the receivables associated with significant projects invested by the State. Based on the analysis, no provision is necessary because of quick settlement. (8) Inventories Inventories comprising mainly raw materials, work-in-progress, finished goods and low value and perishable articles, are valued at the lower of cost and its realizable value. Costs of raw materials include purchase price and expenditures on transportation, loading and unloading and insurance. Cost of work in progress and finished goods include direct materials, direct labor and an appropriate proportion of production overheads. 600801-G 华新-426 K5 AR EN.doc 43 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Cost of inventory is determined on a weighted average basis. Cost of low value and perishable articles is charged to profit and loss accounts at the time it is put into use. Because of inventory loss, out-dated production, lower-than-cost sales price and other reasons, reserve against price decline had been withdrawn at the end of period. Reserve against price decline for inventory had been withdrawn according to the balance between the unit inventory cost and its discountable net value by inventory categories. (9) Long-term investments Long-term investments include investments in bonds and equity investments. Investments in bonds are stated at cost. For equity investments, cost method is adopted when the possessed equity interest is less than 20% of the total registered capital of the invested company; Equity method is adopted when the possessed equity interest therein is 20% to 50%; and when the equity interest is more than 50% , or unless the Company exerts controlling power essentially, the equity method is adopted and being consolidated. If the recoverable amount of any investment is less than the carrying amount of that investment as a result of a continuing decline in market value or change in operating condition of the invested enterprises, and such decline can not be recovered in an estimated future period, the difference between the recoverable amount and the carrying amount of the investment should be provided against investment. The acquisition difference between equity investment and possessed equity interest are amortized within 20 years. (10) Fixed assets 1) Fixed assets definition Fixed assets are assets with a useful life over one year, such as buildings and constructions, major equipment, and non-major equipment used in the operations whose unit value is over RMB 2,000 Yuan and with a useful life of over 2 years. 2) Fixed assets classification Fixed assets consist of buildings and constructions, machinery and equipment, vehicles and office equipment, furniture and fixtures, motor vehicles. 3) Fixed assets valuation Fixed assets contributed by Huaxin Cement Plant as the state-owned shares' contribution are stated at valuation. Fixed assets purchased or constructed by the Company are stated at cost. 4) Depreciation method 600801-G 华新-426 K5 AR EN.doc 44 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements The Company withdraw the depreciation for all its assets except for some fully withdrawn. Depreciation of fixed assets is calculated to write off their cost on the straight line basis over their expected useful lives. The principal residual value rate and depreciation rate are as follows: Item Residual value rate Annual depreciation rate Buildings 4% 2.4 –3.84% Machinery and equipment 4% 6-12% Office equipment, furniture and fixtures 4% 5.33-12% Motor Vehicles 4% 8-12% 5) The criterion and method of provision for impairment of fixed assets Provision for impairment of fixed assets is recorded as amount of the devaluation of certain items after reviewing the value of fixed assets at the end of the period. A continuing decline in market value which is abnormal and can not be recovered in an estimated future period. Being damaged or out-dated. Use of the FA is changed such as business reorganization, enterprise ending and disposal ahead of schedule. Operating conditions of the company are worsened. Because of interest rate increasing greatly the recoverable amount reduces. Other conditions that prove the impairment of FA. (11) Construction in progress 1) Valuation of CIP Construction in progress represents the plant and machinery under construction and installation. It is stated at cost, which includes the acquisition cost of the equipment and machinery, construction expenditures and interest charges arising from borrowings used to finance the construction during the construction period. 2) Provision for the impairment of CIP Provision for impairment of CIP is made, if evidence exists to approve that there is significant impairment on the realizable value of CIP. 600801-G 华新-426 K5 AR EN.doc 45 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Long-term ceasing and non-reconstructing within future 3 years CIP. Both function and technique of CIP have been out of date while their benefit is uncertain. Other conditions that prove the impairment of CIP. (12) Borrowing cost 1) Capitalization on borrowing cost Borrowing costs include interest resulting from borrowing、amortization of discount or premium on bond or debtors issued，and supplementary expenses, as well as the exchange gains & losses arising from foreign currency borrowing. Except these borrowings cost particularly for purchase and construction of fixed assets, other borrowing costs are charged to financial expense when it occurs. When the following three conditions are met, the specialized borrowing cost for purchase and construction of fixed assets begin to be capitalized: The expenditure for asset has occurred. The borrowing cost has occurred. The activities of purchase and construction of fixed asset has begun. 2) Cease of capitalizing borrowing cost When constructed fixed asset is ready for use, capitalization of borrowing cost ceased, after that, it was expensed as it occurs. (13) Intangible assets (i) The actual cost should be determined as followed: The amount of an intangible asset purchased should be recorded at the amount actually. The amount of an intangible asset contributed by an investor should be determined at an amount agreed upon by all the investors. However, if an intangible asset is contributed in an initial public offering by an investor in exchange for shares of an enterprise, the intangible asset should be recorded at the book value originally recorded in the books of the investors except the ownership of land. The amount of an intangible asset that is developed by enterprise itself and a legal right to the asset has been obtained should include the amount of expenditures such as registration fees and legal fees incurred on acquisition of the asset according to law. Expenses incurred during the process of research and development such as materials, wages and welfare for employees and other fees directly engaged in the R&D programme should be recorded as expenses of the period in which they are incurred. 600801-G 华新-426 K5 AR EN.doc 46 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements (ii) The amortization period of an intangible asset should be determined in accordance with the following rules: The cost of an intangible asset should be amortized evenly over its expected useful life, starting from the month in which it is acquired. The period is up to the shortest one among the contract, laws and the beneficial term. If neither the relevant contract nor the law stipulates the effective period, the amortization period should not exceed 10 years. The Company’s intangible assets include trademark, land use right, limestone mine use right etc. The trademark right is stated at appraised value and is amortized on a straight-line basis over 20 years. Other than the land use rights injected into the Company as capital contribution, which are stated at appraised value, land use rights are stated at cost and are amortized on a straight-line basis over 50 years or the granted beneficiary period. Limestone mine use rights are stated at cost and are amortized on a straight-line basis in granted beneficiary period. Provision is made, if evidences exist to approve that there is significant impairment on the realizable value of intangible assets. (14) Long-term deferred expenses Long-term deferred expenses represent overhaul expenses, development expenses, specific railway expansion and improvement expenses and other deferred expenses. Land development expenses are the improvement expenses for mine sites and are amortized over the beneficiary period of 39 years on a straight-line basis. Specific railway expansion and improvement expenses are expenses used to increase transportation capacity and they are amortized over 12 years on a straight-line basis. Other deferred expenses are amortized on a straight-line basis in granted beneficiary period. (15) Retirement benefits The payments of staff retirement benefit incurred are charged to the income statement when incurred. (16) Estimated liability Liabilities are recognized when activities involve guaranty for others、discounting of commercial acceptable notes、unsettled litigation or arbitration meet the following conditions: The obligation is current obligation of the company. Fulfill of the obligation will probably result in outflow of economic resource of the company. Amount of the obligation could be measured properly. (17) Revenue recognition Revenue represents sales of cement and cement clinker. It is recognized when the risk and 600801-G 华新-426 K5 AR EN.doc 47 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements benefit associated with the ownership of products have been transferred and the resources on sales that could flow into the Company, the related sales revenue, and cost of sales could be measured properly. (18) Income tax Income tax is calculated based on the tax rates applicable to the Company and its subsidiaries and their taxable income. The Company accounts for corporate income tax using the tax payable method. (19) Profit distribution According to relevant PRC laws and regulations for joint stock limited companies and the Articles of Association of the Company, profit after tax is utilized in the following order: To cover accumulated losses. Appropriation of 10% of the statutory surplus reserve. When the balance of the statutory surplus reserve reaches 50% of the share capital, no further appropriation to the reserve is required. Appropriation of 10% of the statutory public welfare fund. Appropriation of the discretionary surplus reserve. Distribute dividends to shareholders. In accordance with relevant PRC regulations, the basis to profit distribution to shareholders is the lower the retained profits after appropriation of reserves as mentioned above, as shown in the PRC statutory accounts and the accounts prepared under International Accounting Standards. (20) Basis of consolidation When the equity is more than 50% or unless the Company exerts controlling power essentially, the equity method is adopted and being consolidated. Consolidated financial statements have been prepared in conformity with the Provisional Regulations on Consolidated Financial Statement and the relevant requirements promulgated by the MOF. All significant inter-company transactions and balances have been eliminated upon consolidation. The subsidiaries which throw little effects to The Company are not consolidated. 3 Principal Taxation (1) Enterprise income tax The Company is subject to 33% income tax except for the subsidiary companies Nantong and Suzhou Golden Cat, as they are Sino-foreign joint ventures that enjoy preferential income tax policy. The income tax rate of Nantong Company and Golden Cat Company is 24%. According to 600801-G 华新-426 K5 AR EN.doc 48 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Circular (2004) No. 002 issued by State Tax Bureau in Suzhou City, Golden Cat Company was approved to pay the income tax freely from 2003 to 2004 and half of it from 2005 to 2007. According to approval of State Tax Bureau in Nantong City, Nantong Company would enjoy the preference of joint venture income tax policy from 2004 to 2008. According to Circular (2005) No. 69 issued by State Tax Bureau in Huangshi City, Huaxin Company Co. Ltd. was approved to be free of income tax RMB 8,200 thousand. State Tax Bureau in Yidu City confirmed that Yichang Cement Company could take this tax advantage because of purchasing domestic equipment. The company was approved to be free charge of the income tax RMB 6,807 thousand on February 28, 2005. Tibet Cement Company is located in the West Region of China. According to the encouraging policies of the State, the income tax rate of Tibet Company is 15%. According to Circular (2006) No. 1 issued by State Tax Bureau in En’shi Area, Huaxin En’shi Cement Company located in Minority Region and was approved to pay the income tax freely from 2005 to 2007. According to the approval issued by State Tax Bureau in Yangxin county, Yangxin Cement Company located in Poverty Region and was approved to pay the income tax freely from 2005. (2) Value added tax The Company is subject to value added tax (VAT). The output VAT rate of cement, cement clinker and power, etc is 17%, and the input VAT rate of stones, coal etc. is 13%. Input VAT from purchase of raw material could be netted off against output VAT. VAT payable is the net difference between output VAT and input VAT. The Company’s export income is applicable to preferential VAT policy of manufacture enterprise from January to September in 2005. At the beginning of October the Company was affirmed to commodity circulation enterprise by State Tax Bureau in Huangshi City and its drawback rate is 13%. (3) Business tax Storage and transportation income is subject to business tax; the tax rate is 3%. Trademark use right, consultation and land rental income is subject to business tax, the tax rate is 5%. (4) City construction tax, education surtax and flood embankment improvement surcharge. City construction tax, education surtax and flood embankment improvement surcharge are calculated at 7%, 3% and 2% of the turn over tax payable respectively. (5) Natural resource tax Natural resource tax is calculated at RMB 2 per ton based on quantities of exploiting limestone. (6) Individual Income Tax 600801-G 华新-426 K5 AR EN.doc 49 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Individual income tax is borne by the individual employees. The Company withholds individual income tax from employees for payment to the tax authorities. 4 Subsidiaries (1) General At December 31 2005, the Company owns subsidiaries as follows: Name of Registered Investment Equity Business scope subsidiaries capital (RMB (RMB thousand) proportio Thousand) n Huaxin Xiantao 23,900 14,658 Produce and sale Cement Co., Ltd.*1 80% slag cement Huaxin Nantong 108,000 89,680 Produce and sale Cement Co., Ltd.*2 85% cement and its product Huangshi Huaxin 8,000 7,870 Produce and sale Packging Co. Ltd.*3 98.38% packaging materials Wuhan 40,000 20,000 Produce and sale Wugang-Huaxin 50% slag cement Cement Co., Ltd.*4 Huaxin Yichang 150,000 105,000 Produce and sale Cement Co., Ltd.*5 70% cement, products for construction. Package and cement technology service Huaxin En’shi 60,000 40,200 Produce and sale Cement Co., Ltd.*6 90.1% Portland cement and its product Huaxin Cement 1,000 990 Construction scientific research 99% engineering, and design Co. Ltd.*7 cement produce technology service Huaxin Golden Cat 136,000(KUSD) 28,390(KUSD) Produce and sale Cement (Suzhou) 51% cement and its Co. Ltd.*8 product Huaxin Tibet Cement 50,000 30,000 Produce and sale Co. Ltd. *9 60% Portland cement and its product, cement technology service Huaxin Zhao tong 75,000 45,000 Produce and sale Cement Co. Ltd. *10 88% cement and its product Huaxin Yueyang 25,000 22,500 Construction Cement Co. Ltd. *11 97% engineering, t d 600801-G 华新-426 K5 AR EN.doc 50 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements cement produce technology service Huaxin Yangxin 500,000 400,000 Produce and sale Cement Co. Ltd. *12 80% cement, products for construction. Package and cement technology service Huaxin Wuhan Co. 60,000 42,000 Produce and sale Ltd. *13 94% cement and its product Huaxin Wuhan 10,000 7,000 Produce and sale Concrete Co. Ltd. *14 94% concrete *1 The Company invested physical assets of a cement production line and intangible assets of the trademark right “Huaxin” to jointly establish Huaxin Xiantao Cement Co., Ltd (“Xiantao Company”) with Xiantao Cement Plant. The registered capital of Xiantao Company is RMB 23,900 thousand, and the Company holds 80% of its share interests, credit investment difference of RMB 4,462 thousand raised due to the excess of appraised value against net book value of the physical assets. The other shareholder - Xiantao Cement Plant holds 20% of its share interests. Xiantao Company is located in Xiantao City, Hubei Province, and is in normal operation. The financial statements were consolidated. *2 The Company jointly established Huanxin Nantong Cement Co., Ltd. (“The Nantong Company”) with Huaneng International Power Development Co., (“The Huaneng Company”) and other companies in 1993. The Nantong Company is a Sino-foreign Joint Venture with registered capital of RMB108,000 thousand. The Company originally owned its shares of 34%. In March 2002, the Company established an agreement with Nanshan development Co., Ltd of China (“Nanshan Company”) for acquisition of 25% share interests of Nantong Company. The Company established another agreement with RDC International Individual Corporation of Singapore (RDC) on entrusting the share interests and contracting future acquisition of 26% share interests of Nantong Company held by RDC. During April and May 2002, Nantong Company revised its JV Contract and obtained approval from the Ministry of China Foreign Economic & Trade Relationship. According to above two agreements, the Company paid RMB 40,000 thousand to Nanshan Company and RDC in June 2002, which accounts for 50% of the acquisition price. Therefore the equity accounting was adopted for the investment of Nantong Company at 85% interests since June 2002 and its financial statements were consolidated. On 5 August 2004, the Company reached a supplemental agreement with RDC to extend the effective period of the Agreement on Shares Entrust Management and Pre-contract Share Transfer to 20 March 2005. On 8 June 2005, the Company and RDC had reached the Agreement on Shares Transfer.Up to 31 December 2005, because no approval from authorities of the Huaneng company was obtained,the Agreement on Shares Transfer had not been carried out.The Huaneng company expressed approval on the Shares Transfer in a meeting summary on 6 Feb,2006. Nantong Company is located in Nantong City, Jiangsu Province, and is in normal operation. *3 The Company invested net assets of RMB 7,870 thousand to jointly establish Huaxin Huangshi Packaging Co., Ltd. (“Packaging Company”) with Mr. Xu Wenshu and another 4 natural persons. The registered capital of Packaging Company is RMB 8,000 thousand, and the Company holds 98.38% of its share interests, and the other shareholders hold 1.62%. Packaging Company is located in Huangshi City, Hubei Province. The financial statements were consolidated. 600801-G 华新-426 K5 AR EN.doc 51 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huaxin Group Co., Ltd. jointly established Huaxin Yidu Packaging Co., Ltd. (“Yidu Packaging Company”) with Huaxin Huangshi Packaging Co., Ltd. on June 19, 2003. The registered capital of Yidu Packaging Company is RMB 1,500 thousand. According to the contract, Huaxin Group’s labour union holds 41% of its share interests with money capital amounted to RMB 610 thousand, while Huaxin Huangshi Packaging Company holds 59% with money capital amounted to RMB890 thousand. It is located in Zhichengzhen, Yidu City and the financial statements were consolidated. *4 The Company invested RMB 20,000 thousand to jointly establish Wuhan Wugang Huaxin Cement Co., Ltd. ( “ Wugang Company” ) with Wuhan Steel Group Co.. Each of the shareholders holds 50% of its share interests. The registered capital of Wugang Company is RMB 40,000 thousand. Wugang Company is located in Wuhan City, Hubei Province. Since the Company exerts the essential control on Wugang Company, its financial statements were consolidated. *5 The Company invested RMB 105,000 thousand to jointly establish Huaxin Yichang Cement Co., Ltd.(“Yichang Company”) with Yidu Fangde Investing Co., Ltd. during April to December 2002. The registered capital of Yichang Company is RMB 150,000 thousand. It is located in Yidu City, Hubei Province, and initiated its operation on July 1, 2004. The financial statements were consolidated. *6 The Company invested RMB 40,200 thousand to jointly establish Huaxin En’shi Cement Co., Ltd. ( “En’shi Company”) with En’shi Lianzhu Cement Co., Ltd.. The registered capital of En’shi Company is RMB 60,000 thousand, and the Company holds 67% of its share interests, and En’shi Lianzhu Co.Ltd holds 33% according to the contract. En’shi Company is located in En’shi City, Hubei Province. The expected date of operation was September of 2004 and it has been running steadily from January of 2005, its financial statements were consolidated. *7 The Company invested physical assets amounted to RMB 990 thousand to jointly establish Huaxin Cement Scientific Research & Design Co., Ltd. (“SRD Company”) with Huangshi Huaxin Engineering Supervision Co., Ltd.. The registered capital of SRD Company is RMB 1,000 thousand, The Company holds 99% of its share interests, and the other shareholder holds 1%. It is located in Huangshi City, Hubei Province and the financial statements were consolidated. *8 The Company had signed an agreement with Dongfang Maobang Cement Pte. Ltd. (“Dongfang Maobang”) and Suzhou Wuzhong Muduzhen Economic Development Company (“Mudujingfa”) for the acquisition of 51% shares of Suzhou Golden Cat Cement Co., Ltd. (“Suzhou Golden Cat”). The acquisition price was USD 27,451 thousand and USD 940.5 thousand (RMB 7,784) thousand. China Securities Regulatory Commission on November 26, 2003 as well as the shareholders’ conference had approved this acquisition on December 29, 2003. The Company has made the entire acquisition payment from January 9 to January 13, 2004. According to the approved document Suyuanguanfuzi (2003) No. 510 issued by Suzhou Industry Zone Regulatory Committee on “Approval of the change of name, share equity and business scope to Suzhou Golden Cat Cement Co., Ltd.”, Suzhou Golden Cat altered its business license on January 2, 2004. According to the constitution of Huaxin Suzhou Golden Cat, the Company occupies 6 out of 11 members of the Board of Directors. The Company assigns the chairman of the Board. Therefore the management of the Company considered that the Company exerts the essential control of Suzhou Golden Cat after the acquisition payment made. It is located in Suzhou City, Jiangsu Province and its financial statements were consolidated. *9 The Company jointly established Huanxin Tibet Cement Co., Ltd. (“Tibet Company”) with Xingye Cement Plant in South of Tibet (“Xingye Plant”) on December 22, 2003. The registered capital of Tibet Company is RMB50, 000 thousand. According to the contract, the company holds 60% of its share interests with money capital amounted to RMB30, 000 thousand, while Xingye Plant holds 40% with physical capital amounted to RMB20, 000 thousand including 10,000 tons 600801-G 华新-426 K5 AR EN.doc 52 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements PC32.5 cement. It is located in Zedangzhen, South of Mountains area, Tibet Province and the financial statements were consolidated. *10 The Company invested RMB 45,000 thousand to jointly establish Huaxin Zhaotong Cement Co., Ltd. ( “Zhaotong Company”) with Huaxin Yichang Cement Co., Ltd.. The registered capital of Zhaotong Company is RMB 75,000 thousand, and the Company holds 60% of its share interests, and the other shareholder holds 40% with money capital amounted to RMB 30,000 thousand. The capital should be paid within one year by installment and the investment was amounted to RMB 45,000 thousand at October of 2005. It is located in Zhaotong City, Yunnan Province and its financial statements were consolidated. *11 The Company jointly established Huaxin Yueyang Cement Co., Ltd. (“Yueyang Company”) with Huaxin Yichang Cement Co., Ltd. The registered capital of Yueyang Company is RMB25, 000 thousand. According to the contract, the company holds 90% of its share interests with physical capital amounted to RMB22, 500 thousand, and Yichang Company holds 10% with physical capital amounted to RMB2, 500 thousand. It is located in Yueyang City, Hunan Province and the financial statements were consolidated. *12 The Company jointly established Huaxin Yangxin Cement Co., Ltd. (“Yangxin Company”) with Huangshi Yiruida Investment Co., Ltd. The registered capital of Yangxin Company is RMB500, 000 thousand. According to the contract, the company holds 80% of its share interests with physical capital amounted to RMB400, 000 thousand, and Yiruida Company holds 20% with intangible assets amounted to RMB100,000 thousand. It is located in Yangxin County, Hunan Province and the financial statements were consolidated. *13 The Company jointly established Huaxin Wuhan Cement Co., Ltd. (“Wuhan Company”) with Huaxin Yangxin Cement Co., Ltd. The registered capital of Wuhan Company is RMB60, 000 thousand. According to the contract, the company holds 70% of its share interests with physical capital amounted to RMB42, 000 thousand, and Yangxin Company holds 30% with physical capital amounted to RMB18, 000 thousand. It is located in Wuhan City, Hunan Province and the financial statements were consolidated. *14 The Company jointly established Huaxin Wuhan Concrete Co., Ltd. (“Concrete Company”) with Huaxin Yangxin Cement Co., Ltd. The registered capital of Concrete Company is RMB10, 000 thousand. According to the contract, the company holds 70% of its share interests with money capital amounted to RMB7, 000 thousand, and Yangxin Company holds 30% with money capital amounted to RMB3, 000 thousand. It is located in Wuhan City, Hunan Province and the financial statements were consolidated. 5 Notes to consolidated financial statements (1) Cash Item 2005 2004 Cash on hand 458 436 Cash in bank 346,865 380,829 Others 20,994 16,075 Total 368,317 397,340 The cash balance include the following foreign currencies 600801-G 华新-426 K5 AR EN.doc 53 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Currency Foreign currency (thousand) Exchange rate Amount USD 116.11 8.0702 937 HKD 14.45 1.0403 15 SGD 0.41 4.8543 2 CHF 0.53 6.1375 3 EUR 2.38 9.5797 23 Total 980 (2) Notes receivable Item 2005 2004 Bank acceptance 104,574 111,046 Trade acceptance 0 6,000 Total 104,574 117,046 (3) Accounts receivable 2005 2004 Bad debt Age of Bad debt Amount % Amount % provisio accounts provision n Within 1 year 100,371 79 0 63,574 67 728 1-2 years 8,596 7 448 1,418 1 57 2-3 years 668 0.5 92 1,511 2 446 More than 3 years 16,900 13.5 16,607 28,922 30 28,612 Total 126,535 100 17,147 95,425 100 29,843 Total amount of the five biggest debtors was 23,466 thousand, which was about 18.55% of the total amount of accounts receivable. There was no receivable due from companies held with more than 5% shares of the Company. The addition in 2005 was mainly due to the increase of sales by newly established subsidiaries. An amount of unrecoverable accounts receivable RMB 3,358 thousand was written off in 2005 and RMB 2,945 thousand could be deduct before calculation of income tax according to the Circular (2006) No.11 approved by State Tax Bureau in Huangshi city. (4) Other receivables 2005 2004 Age of Amount % Bad debt Amount % Bad debt accounts provision provision 600801-G 华新-426 K5 AR EN.doc 54 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Within 1 year 0 0 75,498 89 54,869 78 1-2 years 0 0 1,391 2 5,038 7 2-3 years 0 395 2,281 2 1,848 3 More than 3 2,971 2,290 years 6,738 7 8,452 12 2,971 2,685 Total 85,908 100 70,207 100 Total amount of the five biggest debtors was RMB 56, 112 thousand, which was about 65.32% of the total amount of other receivables. The addition in 2005 was mainly due to the increase of money advanced for other companies. There was RMB 44,240 thousand receivable between Jinxiong International Company and Golden Cat Company. There was RMB 78 thousand receivable due from companies held with more than 5% shares of the Company. (5) Prepayments 2005 2004 Age of accounts Amount % Amount % Within 1 year 12,150 75 42,179 97 1-2 years 3,904 24 767 2 2-3 years 58 1 137 0 More than 3 years 0 0 366 1 Total 16,112 100 43,449 100 Prepayment of age over one year was unsettled equipment payment. There was no prepayment due from companies held with more than 5% shares of the Company. (6) Inventories Item 2005 2004 Amount Provision Amount Provision for for impairment impairmen t 600801-G 华新-426 K5 AR EN.doc 55 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Raw materials 176,366 13,178 170,164 17,418 Work in progress 60,291 0 48,454 0 Finished goods 61,017 0 82,913 0 Low value and perishable articles 49,149 4,809 1,500 0 Total 346,823 17,987 303,031 17,418 The addition in 2005 was mainly due to the increase of newly established subsidiaries. (7) Deferred and prepaid expenses Item 2005 2004 Description Property insurance 784 832 Beneficial period is year 05 -06 Auto insurance 250 172 Beneficial period is year 05 -06 Ship insurance 12 137 Beneficial period is year 05 -06 Others 77 125 Beneficial period is year 05 -06 Total 1,123 1,266 (8) Long-term investments 1) Long-term investment Item 2005 2004 Equity investments 25,487 29,906 Less: Provision for long- term investment 2,776 5,956 Net equity investments 22,711 23,950 Investments in bonds 59 59 Total 22,770 24,009 2) Equity investment Names of Equity Origina Equity Accumu Balanc Provisio Provisio invested proporti l adjust lated e at n for n for companies on% investe ment equity period impairm impairme d adjustm end ent nt Amoun ent 2005 2004 t 600801-G 华新-426 K5 AR EN.doc 56 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huangshi Huaxin Hotel Co., Ltd.. 49 294 8 (7) 287 0 0 Huaxin Group Yidu Co., Ltd. 4 20 0 0 20 20 20 Hubei Huangshi Power Development Company 3.9 11,724 0 0 11,724 0 0 Bank of Communicati on 0.014 2,000 0 0 2,000 0 0 China Pacific Insurance Company 0.03 696 0 0 696 0 0 Zhengzhou Xinxing Group Co., Ltd. 17.2 2,000 0 0 2,000 2,000 2,000 Changjiang Development Company 3 150 0 0 150 150 150 Hubei Province Construction Materials Trading Company 12.72 506 0 0 506 506 506 Pingdingshan Zhongnan Coal Company 5.71 100 0 0 100 100 100 Shanghai Golden Cat Cement (3,180 Co., Ltd.* 64 3,180 ) (3,180) 0 0 3,180 Consolidated (1,247 difference 12,473 ) (4,469) 8,004 0 0 Sub-total (4,419 33,143 ) (7,656) 25,487 2,776 5,956 * Huaxin Cement Company (Golden Cat) agreed with Shanghai Construction Material Co., Ltd. to cease operating of Shanghai Golden Cat Cement Co., Ltd. 3) Equity Investment Difference Name of Original Reason Amortizati Amortizati Accumulat Balanc Invested Investme of on Period on ed e C 600801-G 华新-426 K5 AR EN.doc t f ti A t A ti ti 57 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Company nt formatio Amount Amortizati Amount n on Amount Huaxin Equity Nantong 12,473 acquisitio 10 years 1,247 4,469 8,004 Cement Co., n Ltd.* * The difference was resulted from the acquisition 51% share interests of Huaxin Nantong Cement Co., Ltd from Nanshan Development Co., Ltd. and RDC InterState Individual Corporation of Singapore. 4) Investments in bonds Item 2005 2004 E’huang Bridge construction bond 59 59 Total 59 59 (9) Fixed Assets 1) Fixed assets and Depreciation Buildings Machiner Office Motor Total y equipment vehicle & and s equipmen furniture t Cost / valuation At 1 Jan, 2005 1,713,933 2,395,265 277,827 163,405 4,550,430 Additions 455,183 861,395 -174,912 45,351 1,187,017 Including: Transfer from CIP 417,212 659,757 28,866 25,543 1,131,378 Addition from acquisition 0 0 0 0 0 Reclassification 25,988 182,419 -208,407 0 0 Disposals 3,603 86,657 164 11,074 101,498 At 31 Dec, 2005 2,165,513 3,170,003 102,751 197,682 5,635,949 Accumulated depreciation At 1 Jan, 2005 339,574 934,983 23,035 80,481 1,378,073 Additions 65,234 190,426 -211 14,513 269,962 Including: Addition from acquisition 0 0 0 0 0 Reclassification 0 9,107 -9,107 0 0 Disposals 1,141 41,993 143 8,076 51,353 600801-G 华新-426 K5 AR EN.doc 58 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements At 31 Dec, 2005 403,667 1,083,416 22,681 86,918 1,596,682 Net book value at 1 Jan, 1,374,359 1,460,282 254,792 82,924 3,172,357 2005 Net book value at 31 Dec, 2005 1,761,846 2,086,587 80,070 110,764 4,039,267 2) Provision for fixed assets Item 2004 Addition Disposal 2005 Building 27,675 0 1,761 25,914 Machinery and equipment 74,830 0 35,662 39,168 Motor vehicles 369 0 0 369 Others 5 0 0 5 Total 102,879 0 37,423 65,456 The decrease in 2005 was caused by equipment disposal by Suzhou Golden Cat Cement Co., Ltd. (10) Engineering Materials Item 2005 2004 Special Materials 0 7,058 Special Equipments 116,090 1,000 Unsettled equipment payment 0 65,132 Total 116,090 73,190 The construction of Xiangfan Company, Zhaotong Company and Yangxin Company caused the increase in 2005. (11) Construction in progress 1) Construction in progress Name of project Project 2004 Addition Transferred Other 2005 Source of Including: Input Cons budget to Fixed decrease fund interest vs. progr Assets capitalised Budget Yangxin 4800T cement production line（phase II） 328,800 0 14,675 0 0 14,675 self-financing 0 5% 10% bank loan Tibet 1000T cement and production line 160,040 27,687 124,029 146,270 0 5,446 self-financing 3,198 95% 95% 600801-G 华新-426 K5 AR EN.doc 59 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Wuxue 6000T bank loan cement production and line 556,710 218,104 323,748 500,709 0 41,143 self-financing 13,066 97% 95% Wuhan concrete production line 30,580 0 15,654 14,264 0 1,390 self-financing 0 50% 50% Yueyang cement grinding project 85,500 31,351 53,761 85,112 0 0 self-financing 0 100% 100% Nantong cement grinding project 23,014 15,107 613 15,720 0 0 self-financing 0 68% 100% Yichang 2500T bank loan production line and (phase II) 198,080 545 174,557 160,790 0 14,312 self-financing 1,583 88% 90% Zhaotong 2000T cement production line 268,000 5,686 89,311 0 0 94,997 self-financing 0 35% 40% Xiangfan 4000T cement production line 186,000 14,440 101,986 0 0 116,426 self-financing 0 60% 70% bank loan Wuhan cement and grinding project 156,620 10,449 69,283 0 0 79,732 self-financing 2,500 50% 50% Golden Cat renovation of 3500T bank loan cement production and line 70,000 8,746 80,164 88,910 0 0 self-financing 43 100% 100% Golden Cat renovation of bank loan cement grinding and project 68,000 51,241 18,016 69,257 0 0 self-financing 240 100% 100% Chuyun renovation of water-transportation system 5,520 4,916 1,726 0 0 6,642 self-financing 0 120% 99% Constraction of warehouse for cement in bulk 4,000 2,778 1,316 4,045 40 9 self-financing 0 100% 100% Xianning 4000T cement production line 357,000 0 197 0 0 197 self-financing 0 1% 1% En’shi limestone mine construction 45,000 16,732 16,886 11,506 0 22,112 self-financing 0 75% 70% Others 40,893 37,168 34,795 0 43,266 0 Total 448,675 1,123,090 1,131,378 40 440,347 20,630 2) Provision for construction in progress 600801-G 华新-426 K5 AR EN.doc 60 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Item 2004 Addition Decrease 2005 800MT pulverizing 564 0 564 0 station Total 564 0 564 0 (12) Intangible assets Item Land use right Trade-mark Others Total right Acquisition method Invested or Invested by purchased shareholders Cost / Valuation 551,923 55,200 5,705 612,828 Balance at 31 Dec. 2004 302,124 27,540 31 329,695 Additions 197,001 0 5,673 202,674 Including: Addition from acquisition Amortization 10,453 2,762 85 13,300 Other decrease 6,249 0 0 6,249 Accumulated amortization 63,251 30,422 86 93,759 Balance at 31 Dec. 2005 482,423 24,778 5,619 512,820 Residual amortization 37-49 years 7-9 years 4-29years period (year) The increase of intangible assets was mainly due to the purchase of usufruct for limestone mine and land by Wuxue Company. No provision on Intangible assets was required at the end of 2005. (13) Long-term deferred assets Item Land Specific Mine Other Total develop railway line transfer deferred ment expansion expenditur expenditure expendit & e ure improveme nt expenditure Cost / Valuation 9,267 7,800 19,259 23,223 59,549 Balance at 31 Dec. 7,587 3,900 16,543 5,163 33,193 2004 Additions 0 0 0 9,202 9,202 Amortization 0 0 0 0 0 Accumulated 396 857 1,241 8,736 11,230 amortization Balance at 31 Dec. 2,076 4,757 3,957 17,594 28,384 2005 600801-G 华新-426 K5 AR EN.doc 61 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements 2005 Residual 7,191 3,043 15,302 5,629 31,165 amortization period (year) Cost / Valuation 12-32year 1-7years 12-16years 1-24years s (14) Short-term loans Item 2005 Annual rate(%) 2004 Unsecured and without guarantee 366,300 4.65%-5.859% 301,300 Secured loan 15,000 5.58% 22,500 Mortgaged loan 200,000 4.65-6.138% 121,580 Pledged loan 0 0 Total 581,300 445,380 Included in short-term loans, RMB 15,000 thousand was guaranteed by Huaxin Group Co., Ltd.,. RMB 25,000 thousand was secured by the equipment of Huaxin Yichang Cement Co., Ltd (net value: RMB 28,337 thousand), RMB 20,000 thousand by the land of Huaxin Nantong Cement Co., Ltd. (net value: RMB 8,625 thousand), RMB 7,000 thousand by the land & buildings of Huanxin Xiantao Cement Co. Ltd. (net value: RMB 10,797 thousand), RMB 140,000 thousand by the land & equipment of Huaxin Golden Cat Cement Co., Ltd. (net value: RMB 203,865 thousand) and RMB 8,000 by the equipment of Wuhan Wugang-Huaxin Cement Co., Ltd. (net value: RMB 21,957 thousand) The increase of short-term loans was mainly due to the requirement of cash flow by Golden Cat Company and Yichang Company. (15) Notes payable Item 2005 2004 Bank accepted notes 195,396 77,431 Total 195,396 77,431 The increase of notes payable was mainly due to requirement of purchasing raw materials. There was no prepayment due from companies held with more than 5% shares of the Company. (16) Accounts payable The accounts payable balance was RMB 481,527 thousand at December 31 2005 (2004: RMB 384,040 thousand). The increase of accounts payable was mainly due to purchasing equipment of Xiangfan Company and Zhaotong Company. The 3-year-old accounts payable is RMB 2,209 thousand which are unsettlement of materials. There was no account payable due to companies held with more than 5% shares of the 600801-G 华新-426 K5 AR EN.doc 62 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Company. (17) Advance from customers The advance from customers was RMB 85,799 thousand at December 31 2005 (2004: RMB 49,688 thousand). There is RMB 3,374 thousand aged over one year because of unsettlement of sales.There was no account from companies held with more than 5% shares of the Company. (18) Dividends payable Item 2005 2004 Social corporate shares 393 702 Total 393 702 (19) Taxes payable Item Tax rate (%) 2005 2004 VAT 17% or 13% 23,776 15,705 City construction tax 7% or 1% 3,643 737 Property tax 1.2% 919 1,760 Stamp duty Certain amount or rate 1,007 739 2 Land-use tax 1-8yuan/M 950 473 Business tax 3% or 5% 241 461 Natural resource tax 2yuan /Ton 5,958 3,911 Income tax on enterprises 15%, 24%, 33% 20,708 32,287 Income tax on persons 5-45% 1,446 1,615 Others 1,758 29 Total 60,406 57,717 (20) Other statutory payables Item Computation 2005 2004 standard Educational surcharges 3% 1,729 443 Dike fees 2% 9,807 8,169 Irrigation works Fund 0 160 Price control Fund 55 51 Local education development 447 67 fees Total 12,038 8,890 600801-G 华新-426 K5 AR EN.doc 63 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements (21) Other payables Other payables balance was RMB 129,607 thousand at December 31, 2005 (2004: RMB 108,347 thousand). The amount of other payables aged more than 3 years was RMB 12,596 thousand including unsettled payment of construction, caution money on quality. There was no account from companies held with more than 5% shares of the Company. Item 2005 2004 Advanced freight expense 30,190 14,140 Construction work outstanding 10,057 33,190 Caution money 43,358 12,986 Other 46,002 48,031 Total 129,607 108,347 (22) Accrued expenses Item 2005 Descriptio 2004 n Loan interest Outstandin 1,659 3,540 g Electricity expense Outstandin 88 3,772 g Annual wages to sales Outstandin 209 7,177 g Bulk cement freight expense Outstandin 2,364 3,535 g Consultant fee to Holcim 0 2,998 Others 2,225 2,969 Outstandin g Total 6,545 23,991 (23) Long-term liabilities due within one year 1) Long-term liabilities due within one year Item 2005 Annual rate (%) 2004 Unsecured without guarantee 230,000 4.9410%－5.76% 198,000 Secured loan 116,716 0-6.03% 52,032 Mortgaged loan 80,439 LIBOR+1%-5.99% 131,036 Total 427,155 381,068 Among the long-term loans within one year above, RMB 1,716 thousand was guaranteed by the Construction Bank of China of Hubei province and the Plan Committee of Hubei province. RMB 600801-G 华新-426 K5 AR EN.doc 64 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements 50,000 thousand was guaranteed by the Company for Yichang Company. RMB 47,000 thousand was guaranteed by Huaxin Group. Moreover, RMB 18,000 was guaranteed for Wugang-Huaxin Company by its shareholders – the Company and Wuhan Steel (Group) Co., Ltd., with half of it respectively. RMB 30,000 thousand was pledged by En’shi Company with the equipment (net value: RMB 58,179 thousand). RMB 2,018 thousand and the following stated long-term loan of RMB 5,046 thousand was pledged with imported ship-unloading equipments plus the domestic transportation ship under corresponding business contract (net value: RMB 10,373 thousand). RMB 48,421 thousand and the following stated long term loan of RMB 232,018 thousand was pledged by the Company with the land, building and equipment (net value: RMB 440,944 thousand). 2) Long-term loan due within one year include the following foreign currencies Currency Foreign currency Exchange rate Amount USD 6,000 8.0702 48,421 DKK 1,340 1.2805 1,716 EUR 210.68 9.5797 2,018 Total 52,155 3) Long-term payables within one year Item 2005 2004 Payables for acquisition of 0 3,271 Hongqi Company Total 0 3,271 According to the contract of acquisitiong on Hongqi Cement Company, acquisition money should be paid off in 2005. (24) Long-term loans 1) Long-term loans Item 2005 Annual rate(%) 2004 Unsecured without guarantee 435,000 4.9410%-6.12 310,000 % Guaranteed loan 383,420 0-5.99% 375,038 Mortgaged loan 1,232,064 4.9963%-6.12 861,426 % Total 2,050,484 1,546,464 Among the long-term loans included above, RMB 24,880 thousand was guaranteed by the Construction Bank of China of Hubei province and the Plan Committee of Hubei province. RMB 226,540 thousand was guaranteed by the Company for its subsidiaries. RMB22,000 thousand was borrowed by Wugang Company and guaranteed by its shareholders – the Company and Wuhan Steel (Group) Co., Ltd., with half of it respectively. RMB 110,000 thousand was 600801-G 华新-426 K5 AR EN.doc 65 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements guaranteed by the Company at 60 percentage for Tibet Company. RMB 5,046 thousand and long-term loan due within one year of RMB 2,018 thousand was pledged with imported ship-unloading equipments plus the domestic transportation ship under corresponding business contract (net value: RMB 11,661 thousand). RMB 232,018 thousand and long-term loan due within one year of RMB 48,421 thousand was pledged by the Company with land, equipment and real estate (net value: RMB 440,944 thousand). RMB 255,500 thousand was pledged by the Company with equipment (net value: RMB 440,944 thousand). RMB 350,000 thousand was Project Loan borrowed from the Bank of China for the construction of Wuxue Project (at 31 December of 2005 net value of it’s fixed assets is RMB 502,072 thousand ) whose credit limit is RMB 360,000 thousand and the pledge was in processing. RMB 80,000 thousand was pledged by Yichang Company with land (net value: RMB 52,469 thousand). RMB 65,000 thousand was pledged by Yichang Company with equipment (net value: RMB 202,330 thousand). RMB 14,500 thousand was pledged by Wugang-Huaxin Company with equipment (net value: RMB 28,455 thousand). RMB 230,000 thousand pledge was in process. 2) Long-term loans include the following foreign currencies Currency Foreign currency Exchange rate Amount USD 28,750 8.0702 232,018 DKK 19,430 1.2805 24,880 EUR 527 9.5797 5,049 Total 261,947 3) The breakdown of long-term loans Name of lender Amount Annual interest Term rates Construction Bank of China, 2003.08.27-2010.03.1 Shengyanggang Branch 820,500 5.1840%-5.85% 7 Demark Government Loans 1994.08.24-2021.04.0 24,880 0% 1 Holland Government Loans 2000.10.26-2009.01.3 5,046 5.99% 1 Bank of China, Huangshi Branch 2003.09.02-2011.09.0 232,018 4.9963% 2 Agriculture Bank of China, Yidu Branch 2005.07.29-2011.07.2 115,000 5.76-6.12% 7 Agriculture Bank of China, Zhaotong 2005.11.09-2010.10.0 Branch 100,000 5.76-5.85% 9 Bank of China, Huangshi, 2005.03.10-2011.03.1 Shengyanggang Branch 20,000 6.1200% 0 Bank of China, Wuxue Branch 330,000 5.76%-6.12% 2004.06.21-2011.6.29 Construction Bank of China, 2005.10.28-2008.10.2 Gangcheng Branch in Wuhan City 14,500 6.048% 8 Bank of China, Yidu Branch 86,540 5.58% 2002.10.25-2009.01.1 600801-G 华新-426 K5 AR EN.doc 66 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements 7 China Minsheng Banking Corporation, 2005.02.25-2008.02.2 Wuhan Branch 100,000 5.76% 5 Construction Bank of China, Yunxi Branch in Yueyang City 40,000 5.85% 2005.6.30-2010.6.29 Construction Bank of China, Qingjiang 2005.11.07-2008.12.2 Branch 30,000 5.76% 7 Bank of China, Tibet Branch 2004.06.29-2009.06.2 110,000 3.6% 9 China Merchants Bank 2004.12.01-2007.12.0 22,000 5.58% 1 Total 2,050,484 (25) Long-term payables Item 2005 2004 Yidu Fangde Investing Co., Ltd 42,255 46,285 Huangshi Yiruida Investment Co., Ltd. 74,260 0 Aftercare expense for Hongqi employees 12,136 15,103 Others 180 180 Total 128,831 61,568 (26) Special Payables Lender 2005 2004 Economic and trade Committee of Hubei Province, Finance Bureau of Hubei Province* 3,296 6,000 Technology Committee of Hubei Province, 500 0 Finance Bureau of Hubei Province** Total 3,796 6,000 * According to the document of (2003) No. 462 issued by the Economic and Trade Committee of Hubei and Finance Bureau of Hubei, the Company received a fund of RMB 6,000 thousand to the construction of Tibet Cement Plant and expended RMB 2,704 thousand in 2005. ** According to the document of (2005) No. 81 issued by the Technology Committee of Hubei and Finance Bureau of Hubei, the Company received R&D fund of RMB 500 thousand. (27) Minority interests Equity Minority names 2005 2004 proportion 600801-G 华新-426 K5 AR EN.doc 67 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Jinxiong International Company 45.11% 409,521 431,603 China CINDA Asset Management Corporation 3.89% 35,314 37,219 Yidu Fangde Investment Co., Ltd. 30% 77,956 61,608 Xingye Cement Plant in South of Tibet 40% 22,167 20,000 Huangshi Yiruida Investment Co., Ltd. 20% 112,413 0- RDC International Individual Corporation of Singapore 15% 15,574 16,611 Wuhan Steel Group Co. 50% 36,202 31,820 Xiantao Cement Plant 20% 5,288 5,651 Natural persons 1.62% 137 130 Huangshi Huaxin Project Supervising Co., Ltd. 1% 25 16 Huaxin Group’s labour union 839 795 合 计 715,436 605,453 (28) Share capital 1) The par value is RMB1 yuan, the structure of share capital is as followed (thousand shares): 600801-G 华新-426 K5 AR EN.doc 68 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Right Item Bonu Reform of s Transfe Non-trada issue r from ble Othe 2004 d reserve shares* r 2005 1 Unlisted shares (1) Initiator shares 91,527 0 0 -91,527 0 0 Including：State shares 91,527 0 0 -91,527 0 0 (2) Legal entity shares 24,873 0 0 -24,873 0 0 Sub- total 116,400 0 0 -116,400 0 0 2 Listed shares with certain criteria and conditions (1) Initiator member 0 0 0 79,251 79,251 shares State-owned shares 0 0 0 79,251 79,251 (2) Legal entity shares 0 0 0 22,749 22,749 0 0 0 102,000 0 102,00 Sub- total 0 3 Listed shares (1) A shares 48,000 0 0 14,400 0 62,400 (2) B shares 164,000 0 0 0 0 164,00 0 Sub- total 212,000 0 0 14,400 0 226,40 0 Total 328,400 0 0 0 0 328,40 0 At 16 December, 2005 Huaxin shareholders held a meeting and passed “Scheme of Reform on Non-tradable Shares”. According to the scheme, unlisted shares which were held by Huaxin Group Co., Ltd. (Huaxin Group), China CINDA Asset Management Corporation, ICBC branch of Hubei, Hubei United Assets Appraisal Corporation, Shenzhen ZhongNongXin Industry Company and Hubei DongYa Industry Company should be paid partially to A shares listed. The considerration is that every ten listed shares can get three unlisted shares and the total paid shares are amounted to 14,400 thousand. At the same time, Huaxin Group agreed to pay on behalf of the other five unlisted share holders amounted to 515.048 thousand. The registration day of A-share holders was 27 December of 2005 and two days later the shares can be bargained in security market. In twelve months, the unlisted shares cannot be bargained in market or transferred to others. Further more, Huaxin Group made commitments as followed: (i) Unlisted shares belonged to Huaxin Group would not be exchanged in the shanghai security exchange market in three years after the scheme coming into effect. 600801-G 华新-426 K5 AR EN.doc 69 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements (ii) Maximum 5 percent of State-owned shares could be exchanged in shanghai security exchange market among four years. The sales price would exceed RMB 9 yuan per share. (iii) Maximum 10 percent of State-owned shares could be exchanged in shanghai security exchange market among five years. The sales price would exceed RMB 9 yuan per share. (iv) If the sales amount came to 1 percent of total shares, it must be claimed to public in two working days without exchange ceasing. 2) The shareholders and the shares they owned are as followed: Character of the Shareholders 2005 2004 shares State shares(held by Huaxin State owned 79,250.648 91,526.880 Group) shares Legal entity Huaxin Group Co., Ltd. 9,870.232 11,994 shares Jingzhou Shao longda Legal entity 4,100 4,100 Finance Consultant Co., Ltd. shares Huangshi Railway Station Co., Legal entity 2,520 2,520 Ltd. shares Wuhan petrochemicalPenghe Legal entity 1,200 1,200 Co., Ltd. shares China CINDA Asset Legal entity 768 768 Management Corporation shares Legal entity ICBC branch of Hubei Province 768 768 shares Hubei United Assets Appraisal Legal entity 768 768 Corporation shares Shenzhen ZhongNongXin Legal entity 768 768 Industry Company shares Hubei DongYa Industry Legal entity 768 768 Company shares Wuhan Technology Consultant Legal entity 600 600 Service Centure shares Wuhan Construction Materials Legal entity 120 120 Co., Ltd. shares Hubei Metallurgy Material Co., Legal entity 120 120 Ltd. shares Beijing Changcheng Cement Legal entity 120 120 Equipment Co., Ltd. shares Legal entity WUhan Ruyi Culture Co., Ltd. 100 100 shares Huangshi Changjiang River Legal entity 96 96 Shipping Service Co., Ltd. shares Legal entity Shanghai Chutian Hotel 60 60 shares 600801-G 华新-426 K5 AR EN.doc 70 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huangshi Shen sanyang Legal entity 2.4 2.4 Ironware Factory shares Changjiang Securities Co., Ltd. Legal entity 0.72 0.72 shares Shares exchanged with RMB A shares listed 62,400 48,000 domestically Shares exchanged with USD B shares listed 164,000 164,000 domestically Shares exchanged outside the State Total 328,400 328,400 (29) Capital surplus Item 2004 Addition Disposal 2005 Share premium 270,334 0 0 270,334 Donations 4,332 0 0 4,332 Revaluation surplus 27,659 0 0 27,659 Provision for Equity investments 231,051 4,534 0 235,585 Other 11,016 0 0 11,016 Total 544,392 4,534 0 548,926 The increase was due to the subsidiaries. According to Circular (2005) No. 97 issued by Financial Bureau of Yidu, Yichang Company received special allotment amounted to RMB 5,983 thousand which led to increase of capital surplus amounted to RMB 4,187 thousand. (30) Surplus reserves Item 2004 Addition Disposal 2005 Statutory surplus reserve 49,715 6,259 0 55,974 Discretionary surplus reserve 53,998 0 0 53,998 Welfare reserve 36,907 6,259 0 43,166 Total 140,620 12,518 0 153,138 (31) Undistributed Profit Item 2005 2004 Balance at 1 Jan. 2005 153,301 54,524 600801-G 华新-426 K5 AR EN.doc 71 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Add: Net profit for year 2005 62,073 148,551 Less: Mandatory appropriation to surplus reserve 6,259 15,035 Less: Mandatory appropriation to welfare reserve 6,259 15,035 Less: Discretionary appropriation to surplus reserve 0 0 Less: Dividends distributed for 2005 19,704 19,704 Balance at 31 Dec. 2005 183,152 153,301 Upon the resolution of the nineteenth conference of the Fourth Board of Directors, the Company distributed 0.06 yuan per share (pretax), the profit after distribution is to be retained as undistributed profit. The resolution has to be approved by the Shareholders’ conference on April 28th, 2005. (32) Cash Dividend Item 2005 2004 Cash dividend payable 19,704 19,704 Total 19,704 19,704 Upon the resolution of the twenty-sixth conference of the Fourth Board of Directors, the Company planned to distribute 0.06 yuan per share (pretax), the profit after distribution is to be retained as undistributed profit. The resolution has to be approved by the Shareholders’ conference. (33) Operating income and operating cost 2005 2004 Item Operating Operating Operating Operating income cost income cost Packaged 1,331,086 1,003,777 829,547 562,997 cement Bulk cement 1,160,234 1,002,875 1,278,392 989,186 Clinker 83,024 70,237 36,814 28,431 Other 65,036 40,868 43,348 23,946 Total 2,639,380 2,117,757 2,188,101 1,604,560 The enormous increase of operation income was due to the rapid expansion of the Company’s production capacity. The total sales from the top 5 major customers amounted to RMB 309,981 thousand, which was about 11.74% of total sales. (34) Operating tax and surcharge Item Tax rate 2005 2004 City construction tax 7% or 1% 8,888 6,178 600801-G 华新-426 K5 AR EN.doc 72 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Educational fees and 3% surcharge 4,875 3,194 Dike fees 2% 2,052 1,958 Sales tax 3% 1,665 1,388 Others 782 515 Total 18,262 13,233 (35) Other operating profit 2005 2004 Item Other Other Other Other Other Other operatin operatin operatin operatin operatin operati g g g profit g income g ng income expense expense profit s s Sales of material 556,693 552,926 3,767 16,567 13,586 2,981 Freight and transportation 5,273 5,051 222 815 216 599 Use of trade mark 0 0 0 843 47 796 Electricity expense 7,791 8,592 (801) 14,771 14,341 430 Others 2,975 3,334 (359) 862 1,145 -283 Total 572,732 569,903 2,829 33,858 29,335 4,523 (36) Financial expenses Item 2005 2004 Interest expenses 125,678 82,815 Less: Interest income 3,785 3,054 Exchange losses 545 3,868 Less: Exchange gains* 14,304 219 Discount interests 481 1,801 Others 2,497 653 Total 111,112 85,864 * The increase of exchange gains was due to rising of RMB Exchange Rate, which led the Company’s foreign loan reduced much. (37) Investment income 1) Income from equity investments Item 2005 2004 Income from stock investments 0 0 600801-G 华新-426 K5 AR EN.doc 73 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Income from debt investments 0 0 Including : Bonds investments 0 0 Income from intrusting loans 0 0 Other bonds income 0 0 Income from equity in the companies invested on cost method 0 437 Adjustment of equity in the companies invested on equity method 8 (15) Amortization of equity investment difference (1,247) (1,247) Income from intrusting loans equity transfer 0 0 Provision for short-term investment 0 0 Provision for long-term investment 0 0 Provision for intrusting loans 0 0 Total (1,239) (825) 2) Adjustment of equity in the companies invested at balance sheet day as followed: Companies invested 2005 2004 Huangshi Huaxin Hotel Co., Ltd. 8 (15) Total 8 (15) (38) Subsidy income Item 2005 2004 VAT refund 30,883 35,199 Government subsidy 0 3,279 Total 30,883 38,478 According to Circular (2004) No. 563 jointly issued by the Economy and Trade Committee of Hubei province, State Tax Bureau and Local Tax Bureau of Hubei Province, Huangshi Branch was qualified as a Resource Comprehensive Utilization Enterprise. The Portland cement produced by utilized coal powder was regarded as Resource Comprehensive Utilization Product, and was granted for a VAT refund; as a result, Huangshi Branch got RMB 8,382 thousand for the year 2005. According to the written approval (2004) No. 002 concerning the Suzhou State Tax Bureau on the preference of VAT, Huaxin Golden Cat Company with its compound cement was granted for a VAT refund amounting to RMB 5,883 thousand for the year 2005. RMB 4,706 thousand of the VAT refund was accounted to subsidy income. According to Hubei Province Circular (2003) No.411 jointly issued by the Economy and Trade Committee of Hubei province, State Tax Bureau, Local Tax Bureau and Electric Power Bureau of 600801-G 华新-426 K5 AR EN.doc 74 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Hubei Province, Yichang Company was qualified as a Resource Comprehensive Utilization Enterprise. Portland cement produced by Yichang Company with coal powder and ash from 2003 to 2005 was regarded as Resource Comprehensive Utilization Product and the company was granted for a VAT refund amounting to RMB 7, 992 thousand. According to Hubei Province Circular (2005) No.489 jointly issued by the Economy and Trade Committee of Hubei province, State Tax Bureau, Local Tax Bureau of Hubei Province, En’shi Company with its 32.5 Slag cement was granted for a VAT refund amounting to RMB1, 910 thousand for the year 2005. According to Hubei Province Circular (2005), No.489 jointly issued by the Economy and Trade Committee of Hubei province, State Tax Bureau, Local Tax Bureau and Electric Power Bureau of Hubei Province, Yangxin Company was qualified as a Resource Comprehensive Utilization Enterprise. Its 32.5 Slag cement produced by coal powder and ash from 2005 to 2007 was regarded as Resource Comprehensive Utilization Product and the company was granted for a VAT refund amounting to RMB 1, 212 thousand for the year 2005. According to the written approval (2004) No. 02-03 & 05-08 concerning the Nantong State Tax Bureau on the refund of VAT on Resource Comprehensive Utilization Product, Huaxin Nantong Company with its 32.5 Slag cement was granted for a VAT refund amounting to RMB 3,443 thousand in 2005. According to Hubei Province Circular (2003) No.199 concerning the qualification of Resource Comprehensive Utilization Enterprise, Portland cement produced by Huaxin Xiantao Cement Co., Ltd with coal powder and ash from 2003 to 2005 was regarded as Resource Comprehensive Utilization Product. In addition, the company was granted for a VAT refund amounting to RMB 3,237 thousand from Xiaotao State Tax Bureau in 2005. (39) Non-operating income Item 2005 2004 Net income from disposal of FA 9,041 2,291 Net income from disposal of sandstone mine 0 36,650 Income from sale of intangible assets 652 373 Net income from penalty 5 81 Others 1,110 120 Total 10,808 39,515 The increase against 2004 was mainly due to the disposal of outdate equipment in Golden Cat Company amounted to RMB 8,877 thousand. (40) Other cash received relating to operating activities Item 2005 Received Bulk cement fund 4,491 Received deposit 8,312 600801-G 华新-426 K5 AR EN.doc 75 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Received pretty cash 2,767 Received internal deal 6,680 Interest income 3,785 Others 10,251 Total 36,286 (41) Other cash paid relating operating activities Item 2005 Administration expense 39,990 Operating expense 17,531 Advanced freight fee 6,094 Paid pretty cash 6,725 Paid deposit 5,157 Internal payment 6,875 Paid bulk cement fund 6,172 Others 30,892 Total 119,436 (42) Other cash received relating to investing activities Item 2005 Technology reforming subsidy from Yunnan province 2,000 Total 2,000 (43) Other proceeds relating to financing activities Item 2005 Grant-in-aid fund from government 1,923 Total 1,923 (44) Other cash paid relating financing activities Item 2005 Bank fees 1,379 Total 1,379 6 Notes to the company's financial statements (1) Accounts receivable 600801-G 华新-426 K5 AR EN.doc 76 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements 2005 2004 Bad debt Bad debt Age of accounts Amount % Amount % provision provision Within 1 year 42,079 65 0 27,325 53 0 1-2 years 13 2 8,311 420 765 29 2-3 years 1 2 66 31 1,108 226 More than 3 years 21 43 14,672 14,595 21,836 21,691 Total 100 100 65,128 15,046 51,034 21,946 Total amount of the major five biggest debtors was RMB 10,442 thousand, which was about 16.03% of total A/R balances as of Dec 31, 2005. There was no account due from companies held with more than 5% shares of the Company. (2) Other receivables 2005 2004 Age of Amount % Bad debt Amount % Bad debt accounts provisio provisio n n Within 1 year 260,660 99 0 107,857 81 0 1-2 years 625 0 0 22,965 17 0 2-3 years 473 0 0 1,353 1 395 More than 3 years 2,755 1 2,355 1,970 1 2,040 Total 264,513 100 2,355 134,145 100 2,435 Total amount of the major five biggest debtors was RMB 100,041 thousand, which was about 37.82% of total balance as of Dec 31, 2005. The enormous increase was mainly due to internal deal with new subsidiaries such as En’shi Company Wuhan Company and Yichang Company. There was RMB 78 thousand due from companies held with more than 5% shares of the Company. (3) Long-term investments 1) Long-term equity investments Item 2005 2004 Equity investments 1,485,274 917,485 Less: Provision for long-term investments 2,776 2,776 600801-G 华新-426 K5 AR EN.doc 77 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Net equity investments 1,482,498 914,709 Bonds investments 59 59 Total 1,482,557 914,768 2) Equity investment Names of Equity Original Equity Accumulated Balance Provision Provision invested proportion invested adjustment Equity at period for for companies % amount adjustment end impairment impairment 2005 2004 Huaxin Golden Cat Cement (Suzhou) Co. Ltd. 51 464,810 (24,966) (1,818) 462,992 0 0 Huaxin Cement (Yichang) Co., Ltd. 70 105,000 38,145 76,896 181,896 0 0 Huaxin Cement (En’shi)Co., Ltd. 67 40,200 23,633 23,633 63,833 0 0 Huaxin Cement (Zhao tong) Co. Ltd. 60 45,000 0 0 45,000 0 0 Huaxin Cement (Tibet) Co. Ltd. 60 30,000 3,250 3,250 33,250 0 0 Huaxin Cement (Yangxin) Co. Ltd. 80 400,000 49,652 49,652 449,652 0 0 Huaxin Cement (Nantong) Co., Ltd. 85 89,680 (7,121) 6,579 96,259 0 0 Wuhan Wugang-Huaxin Cement Co., Ltd. 50 20,000 4,383 16,202 36,202 0 0 Huaxin Cement (Xiantao)Co., Ltd. 80 14,658 1,003 3,037 17,695 0 0 Huaxin Cement (Yueyang)Co. Ltd. 90 22,500 (2,783) (2,783) 19,717 0 0 Huaxin Cement (Wuhan)Co. Ltd. 70 42,000 0 0 42,000 0 0 600801-G 华新-426 K5 AR EN.doc 78 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huaxin Concrete (Wuhan)Co. Ltd. 70 7,000 1,537 1,537 8,537 0 0 Huangshi Huaxin Packaging Co., Ltd. 98.38 7,870 372 410 8,280 0 0 Huaxin Cement Scientific Research and Design Co., Ltd. 99 990 906 1,488 2,478 0 0 Huangshi Huaxin Hotel Co., Ltd. 49 294 8 (7) 287 0 0 Huaxin Group Yidu Company 4 20 0 0 20 20 20 Hubei Huangshi Power Development Company 3.9 11,724 0 0 11,724 0 0 Bank of Communication 0.014 2,000 0 0 2,000 0 0 China Pacific Insurance Company 0.03 696 0 0 696 0 0 Zhengzhou Xinxing Industrial Group Co., Ltd. 17.2 2,000 0 0 2,000 2,000 2,000 Changjiang River Company Of Economic Development 3 150 0 0 150 150 150 Hubei Province Construction Materials Trading Company 12.72 506 0 0 506 506 506 Pingdingshan Zhongnan Coal Company 5.71 100 0 0 100 100 100 Total 1,307,198 88,019 178,076 1,485,274 2,776 2,776 3) Equity investment difference 600801-G 华新-426 K5 AR EN.doc 79 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Name of Original Reason Amortizati Amortizati Accumulat Balanc invested investme of on period on amount ed e company nt formatio amortizatio amount n n amount Huaxin Nantong Equity Cement Co., acquisiti Ltd.* 12,473 on 10 years 1,247 4,469 8,004 Huaxin The Xiantao differenc Cement Co., e from Ltd.** the price on invested assets and its net-book (4,462) - value 20 years (223) (1,004) (3,458) Sub-total 8,011 1,024 3,465 4,546 * The difference was resulted from the acquisition 51% share interests of Huaxin Nantong Cement Co., Ltd from Nanshan Development Co., Ltd. and RDC InterState Individual Corporation of Singapore on June 1st, 2002. ** The difference was resulted from the price on invested assets and its net book value when the Company jointly established Huaxin Xiaotao Co., Ltd. with Xiantao Cement Factory on May 31, 2001. 4) Bonds investments Item 2005 2004 E’huang Bridge construction bond 59 59 Total 59 59 (4) Operating income and operating cost 2005 2004 Item Operating Operating Operating Operating income cost income cost Packaged 559,512 464,933 507,056 354,590 cement Bulk cement 433,015 401,348 465,156 356,499 Clinker 270,964 225,648 200,946 159,046 Others 144,502 127,585 66,992 49,774 Total 1,407,993 1,219,514 1,240,150 919,909 600801-G 华新-426 K5 AR EN.doc 80 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements The total sale from top 5 major customers was RMB 201,128 thousand, which was about 14.28% of total operating income. (5) Investment income 1) Income from equity investments Item 2005 2004 Income from stock investments 0 0 Income from debt investments 0 0 Including : Bonds investments 0 0 Income from intrusting loans 0 0 Other bonds income 0 0 Income from equity in the companies invested on cost method 0 437 Adjustment of equity in the companies invested on equity method 84,507 76,221 Amortization of equity investment difference (1,024) (1,024) Income from intrusting loans equity transfer 0 0 Provision for short-term investment 0 0 Provision for long-term investment 0 0 Provision for intrusting loans 0 0 Total 83,483 75,634 2) Adjustment of equity in the companies invested at balance sheet day as followed: Companies invested 2005 2004 Huaxin Golden Cat Cement (Suzhou) Co. Ltd. (24,966) 23,082 Huaxin Cement (Yichang) Co., Ltd. 33,957 35,385 Huaxin Cement (En’shi)Co., Ltd. 23,633 0 Huaxin Cement (Yunnan) Co. Ltd. 0 0 Huaxin Cement (Tibet) Co. Ltd. 3,130 0 Huaxin Cement (Yangxin) Co. Ltd. 49,652 0 Huaxin Cement (Nantong) Co., Ltd. (5,874) 7,657 Wuhan Wugang-Huaxin Cement Co., Ltd. 4,191 6,545 Huaxin Cement (Xiantao)Co., Ltd. 780 3,565 Huaxin Cement (Yueyang)Co. Ltd. (2,783) 0 Huaxin Cement (Wuhan)Co. Ltd. 0 0 600801-G 华新-426 K5 AR EN.doc 81 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huaxin Concrete (Wuhan)Co. Ltd. 1,537 0 Huangshi Huaxin Packaging Co., Ltd. 336 23 Huaxin Cement Scientific Research and Design Co., Ltd. 906 (21) Huangshi Huaxin Hotel Co., Ltd. 8 (15) Total 84,507 76,221 7 Related party transactions (1) Relationship of related party 1) The Company has the following holding company and related parties with controlling interests: Name of Place of Business scope Relationship Legal Legal Company registratio Status representativ n e Huaxin Group Co., China Production and sale of Holding SOE Chen Musen Ltd. cement production, company fittings machine; real estate; business, service etc. Huangshi Huaxin China Produce and sale Subsidiary Compan Kong Lingling Packaging Co., packaging materials y Ltd. Huaxin Yidu China Produce and sale Subsidiary Compan Xu Wenshu Packaging Co., Ltd packaging materials y Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (Xiantao)Co., Ltd. cement y Wuhan China Produce and sale slag Subsidiary Compan Li Fushan Wugang-Huaxin cement y Cement Co., Ltd. Huaxin Cement China Produce and sale Subsidiary Joint Chen Musen (Nantong) Co., Ltd. cement and its product Venture Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (Yichang) Co., Ltd. cement, products for y construction. Package and cement technology service Huaxin cement China Engineering design, Subsidiary Compan Cheng Yamin Scientific cement technology y Research and service Design Co., Ltd. Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (En’shi)Co., Ltd. Portland cement and its y product Huaxin Golden Cat China Produce and sale Subsidiary Joint Li Yeqing C t (S h ) t d it d t V t 600801-G 华新-426 K5 AR EN.doc 82 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Cement (Suzhou) cement and its product Venture Co. Ltd. Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (Zhao tong) Co. cement and its product y Ltd. Huaxin Cement China Construction Subsidiary Compan Li Yeqing (Yueyang)Co. Ltd. engineering, cement y produce technology service Huaxin Cement China Produce and sale Subsidiary Compan Ji Changhua (Tibet) Co. Ltd. Portland cement and its y product, cement technology service Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (Yangxin) Co. Ltd. cement, products for y construction. Package and cement technology service Huaxin Cement China Produce and sale Subsidiary Compan Li Yeqing (Wuhan)Co. Ltd. Portland cement y Huaxin Concrete China Produce and sale Subsidiary Compan Peng Qingyu (Wuhan)Co. Ltd. concrete y 2) Changes of registered capital for the parties that have controlling interest with the Company are as bellow: 600801-G 华新-426 K5 AR EN.doc 83 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Registered capital Holding shares (%) Name of related parties 2005 2004 2005 2004 Huaxin Group Co., Ltd. 510,000 510,000 27.14% 31.52% Huangshi Huaxin Packaging Co., Ltd. 8,000 8,000 98.38% 98.38% Huaxin Yidu Packaging Co., Ltd 1,500 1,500 59.33% 59.33% Huaxin Cement (Xiantao)Co., Ltd. 23,900 23,900 80% 80% Wuhan Wugang-Huaxin Cement Co., Ltd. 40,000 40,000 50% 50% Huaxin Cement (Nantong) Co., Ltd. 108,000 108,000 85% 85% Huaxin Cement (Yichang) Co., Ltd. 150,000 150,000 70% 70% Huaxin cement Scientific Research and Design Co., Ltd. 1,000 1,000 99% 99% Huaxin Cement (En’shi)Co., Ltd. 60,000 60,000 90.1% 90.1% Huaxin Golden Cat Cement (Suzhou) 136,000 136,000 Co. Ltd. (KUSD) (KUSD) 51% 51% Huaxin Cement (Zhao tong) Co. Ltd. 75,000 20,000 88% 88% Huaxin Cement (Yueyang)Co. Ltd. 25,000 25,000 97% 97% Huaxin Cement (Tibet) Co. Ltd. 50,000 50,000 60% 60% Huaxin Cement (Yangxin) Co. Ltd. 500,000 0 80% 0 Huaxin Cement (Wuhan)Co. Ltd. 60,000 0 94% 0 Huaxin Concrete (Wuhan)Co. Ltd. 10,000 0 94% 0 3) Related parties that have no controlling interest with the Company Name of related party Relationship Description of related party transaction WuHan Fiber Product Co., Ltd. Subsidiary of Huaxin Purchase products of the Group Co., Ltd. Company Holcim Related Party of Providing consulting service shareholder Huangshi Yiruida Investment Subsidiary of Huaxin Jointly establishing Huaxin Co., Ltd. Group Co., Ltd. Yangxin Cement Co., Ltd. 600801-G 华新-426 K5 AR EN.doc 84 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Huaxin Hotel Co., Ltd. Subsidiary of Huaxin Providing charges advanced for Group Co., Ltd. hotel and getting back later (2) Pricing policy Prices of related party transactions are based on market prices. (3) Related parties transaction 1) Sales Name of related party 2005 2004 Huaxin Fiber Product Co., Ltd. 3,356 3,357 2) Services Name of related party 2005 2004 Huaxin Group Co., Ltd.* 4,800 4,800 Holcim** 2,421 2,483 * According to the service contract signed by the Company and the Huaxin Group Co., Ltd. (Huaxin Group), Huaxin Group provide such services as labor protection, Huaxin Group charges RMB 4,800 thousand annually for such services and the Company should pay it on a monthly basis. ** According to the service contract signed by the Company and the Holcim Group Support (Jona) Ltd., (“Holcim”), Holcim shall provide the Company with services on management consultant and Human Resources training. Holcim charges USD 300 thousand annually for such services, translated to RMB 2,421 thousand for 2005. 3) Current account with related parties To related party From related party Current End. Current End. year blance year blance Name of related party cumulative cumulative Huaxin Fiber Product Co., Ltd. 1,053 360 0 0 Huaxin Group Co., Ltd. 367 78 0 0 Huangshi Yiruida Investment Co., Ltd. 0 0 75,840 74,260 Huaxin Hotel Co., Ltd. 0 54 47 29 Total 1,420 492 75,887 74,289 (4) Outstanding balance with related parties 600801-G 华新-426 K5 AR EN.doc 85 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Name of related party Account 2005 2004 Huaxin Group Co., Ltd. Other receivables 78 26 Huaxin Group Co., Ltd. Other payables 0 1,792 Huaxin Group Co., Ltd. Long-term 0 3,271 payables in one year Huaxin Group Co., Ltd. Long-term payables 0 0 Huaxin Fiber Product Co., Ltd. Other receivables 324 244 Huaxin Fiber Product Co., Ltd. Accounts receivable 36 0 Huaxin Fiber Product Co., Ltd. Prepayments 0 8 Huaxin Hotel Co., Ltd. Other receivables 54 123 Huaxin Hotel Co., Ltd. Other payables 29 0 Huangshi Yiruida Investment Co., Ltd. Other payables 0 1,580 Huangshi Yiruida Investment Co., Ltd.* Long-term payables 74,260 0 * According to the contract signed by the Company and Huangshi Yiruida Investment Co., Ltd. (“Yiruida Company”), Yiruida Company would invest use of the nine parcels of land (total area 2,000,046.1 M2, evaluated value RMB 177,973.20 thousand confirmed by Hubei Yongye Consultant Co.,Ltd.) to exchange for money capital RMB 100,000 thousand which covered 20% of the registered capital of Yangxin Company. In compensation for usage value of Yiruida’s land, Yangxin Company would pay RMB 1,580 thousand to Yiruida annually (before December) for 48 years from the company’s setting-up. The ownership of land has been transferred to Yangxin Company and Yangxin Company has paid RMB 1,580 thousand to Yiruida in 2005. Up to banlance sheet day, there is RMB 74,260 thousand to be paid. (5) Collaterals As at December 31, 2005, the Company guaranteed borrowings for its subsidiaries amounted to RMB 337,540 thousand. The total amount of the collaterals accounted for 31.11% of its net assets. 8 Capital Commitments 1) At the balance sheet date, the Company had the following capital commitments amounted to RMB 316,180 thousand (2004: RMB 369,808 thousand): Name of Project Total amount Paid amount Unpaid amount project period Xiangfan project 208,712 95,161 113,551 2006-2007 Zhaotong project 251,227 124,069 127,158 2006-2007 Yichang project (phase II) 111,894 88,869 23,025 2006 Yangxin project (phase II) 62,684 14,775 47,909 2006 Yueyang project 68,546 64,009 4,537 2006 600801-G 华新-426 K5 AR EN.doc 86 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Total 703,063 386,883 316,180 2) There are no other capital commitments on December 31, 2005. 9 Contingent liabilities 1) At December 31 2005, the Company guaranteed borrowings for its subsidiaries which led to contingent liabilities, details as followed: Subsidiaries name Guarantee Amount Ratio on net content asset Huaxin Cement (Yichang) Co., Ltd. Loans 136,540 11% Huaxin Cement (Tibet) Co., Ltd. Loans 66,000 5% Wuhan Wugang-Huaxin Cement Co., Ltd. Loans 20,000 2% Huaxin Cement (En’shi)Co., Ltd. Loans 15,000 1% Huaxin Cement (Yueyang) Co., Ltd. Loans 40,000 3% Huaxin Cement (Yunnan) Co., Ltd. Loans 100,000 8% Total 377,540 31% 2) The Company has no other material contingent liabilities as at 31 Dec. 2005 that should be disclosed. 10 Events after report day The Company has no significant events after 31 Dec. 2005 that should be disclosed. 11 Other Significant events (1) In 2005, the Company wrote off an amount of unrecoverable accounts receivable of RMB 3,358 thousand, please refer to Note 5(3). (2) On the twenty fifth meeting of the fourth Board of Directors, the directors had reviewed and approved in principle the Proposal in Respect of applying for an Issue of Short Term Financial Bonds. In addition, the meeting authorized the Board of Directors with full power to handle matters in connection with the Issue. 600801-G 华新-426 K5 AR EN.doc 87 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports PRC Auditors' Report Notes to the Financial Statements Supplement Information According to the document “Rule No.9 of Information Disclosure Preparation for Listing Companies– the Calculation and Disclosure of Profit Ration on Net Asset and Earning per Share” which issued by China Securities Regulatory Commission. The amounts are as follows: Earning per Profit during the Profit ratio on net asset (%) share(Yuan/share) accounting period Average Overall diluted Average Overall diluted weighted weighted 2005 2004 2005 2004 2005 2004 2005 2004 Gross profit on sales 41.48 48.88 42.37 65.46 1.53 1.74 1.53 1.74 Operating profit 3.84 15.67 3.92 20.98 0.14 0.56 0.14 0.56 Net profit 5.11 12.73 5.23 17.05 0.19 0.45 0.19 0.45 Net profit after elimination of 4.81 10.35 4.92 14.09 0.18 0.37 0.18 0.37 extra-ordinary items Nonrecurring profit & loss: 2005 2004 Amount Amount Item after after Amount deduction Amount deduction of income of income tax tax Balance from disposal of Equity investment, FA, CIP, IA and other long-term assets 3,707 4,580 36,993 24,786 Government subsidy 0 0 3,279 2,197 Non-operating income & expense after deduction of provision for assets (801) (855) (2,299) (1,541) Reversal provision 0 0 3,442 2,306 Total 2,906 3,725 41,415 27,748 Net profit 62,073 148,551 Net profit after deduction of nonrecurring profit & loss 58,348 120,803 Nonrecurring profit & loss is the business which is not directly relevant to main operation of the company, but it can affect the impartiality and reality of financial report. 600801-G 华新-426 K5 AR EN.doc 88 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report International Auditors' Report Telephone +1 (212) 819 5083 Mailing Address: P.O. Box 1448 New York, NY 10185-1448 United States of America AUDITORS' REPORT TO THE SHAREHOLDERS OF HUAXIN CEMENT CO., LTD. (Incorporated as a joint stock limited company in the People's Republic of China) We have audited the accompanying consolidated balance sheet of Huaxin Cement Co., Ltd. (the “Company”) and its subsidiaries (the “Group”) as of 31 December 2005, and the related consolidated statements of income, cash flows and changes in equity for the year then ended. These financial statements set out on pages 90 to 94 are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2005, and of the results of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards. PricewaterhouseCoopers 3 March 2006 600801-G 华新-426 K5 AR EN.doc 89 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) HUAXIN CEMENT CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 Note 2005 2004 Sales 5 2,695,976 2,188,101 Cost of goods sold (2,303,530) (1,684,664) Gross profit 392,446 503,437 Other operating income - net 6 36,181 75,241 Selling and marketing costs (113,990) (74,596) Administrative expenses (120,546) (144,621) Operating profit 194,091 359,461 Finance costs - net 9 (103,807) (82,973) Share of profit/(loss) of an associate 15 8 (15) Profit before income tax 90,292 276,473 Income tax expense 10 (3,167) (49,087) Profit for the year 87,125 227,386 Attributable to: Equity holders of the Company 79,158 179,340 Minority interest 7,967 48,046 87,125 227,386 Earnings per share for profit attributable to the equity holders of the Company during the year (basic and diluted) 11 RMB0.241 RMB0.546 The notes on pages 95 to 128 form an integral part of these consolidated accounts 600801-G 华新-426 K5 AR EN.doc 90 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) HUAXIN CEMENT CO., LTD. CONSOLIDATED BALANCE SHEET AS OF 31 DECEMBER 2005 Note 2005 2004 ASSETS Non-current assets Prepaid lease 12 491,384 372,951 Property, plant and equipment 13 4,492,736 3,539,601 Intangible assets 14 47,549 (158,422) Investment in an associate 15 287 279 Available-for-sale investments 16 14,480 14,480 Deferred tax assets 27 35,774 20,930 5,082,210 3,789,819 Current assets Inventories 17 328,836 285,613 Trade receivables 18 213,963 182,627 Other receivables, prepayments and deposits 19 100,172 112,542 Restricted cash 20 72,728 15,963 Cash and cash equivalents 20 295,589 381,377 1,011,288 978,122 Total assets 6,093,498 4,767,941 EQUITY Capital and reserves attributable the Company’s equity holders Share capital 21 328,400 328,400 Other reserves 22 686,629 462,267 Retained earnings 221,523 176,224 1,236,552 966,891 Minority interests 714,026 606,764 Total equity 1,950,578 1,573,655 LIABILITIES Non-current liabilities Borrowings 23 2,041,479 1,546,464 Deferred income 24 18,666 16,653 Other non-current liabilities 25 78,690 64,659 Deferred tax liabilities 27 7,303 - 2,146,138 1,627,776 Current liabilities Trade payables 468,663 301,194 Construction costs payable, accrued charges and deposits received 26 498,981 406,583 Borrowings 23 1,008,430 826,448 Current income tax liabilities 20,708 32,285 1,996,782 1,566,510 Total liabilities 4,142,920 3,194,286 Total equity and liabilities 6,093,498 4,767,941 The notes on pages 95 to 128 form an integral part of these consolidated accounts 600801-G 华新-426 K5 AR EN.doc 91 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) HUAXIN CEMENT CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2005 Attributable to equity holders Minority Total of the Company interest equity Share Other Retained capital reserves earnings (note 21) (note 22 (a),(b)) Balance at 1 January 2004, as previously reported as equity 328,400 406,120 72,735 - 807,255 Balance at 1 January 2004, as previously separately reported as minority interest - - - 116,228 116,228 Balance at 1 January 2004, as restated 328,400 406,120 72,735 116,228 923,483 Capital contribution for establishment of a subsidiary - - - 20,000 20,000 Acquisition of a subsidiary - - - 446,582 446,582 Acquisition of equity interest from a minority shareholder in a subsidiary - - - (19,800) (19,800) Dividend relating to 2003 (note 22 (d)) - - (19,704) (4,292) (23,996) Profit for the year - - 179,340 48,046 227,386 Transfer from retained earnings to other reserves - 26,077 (26,077) - - Appropriation - 30,070 (30,070) - - Balance at 31 December 2004 328,400 462,267 176,224 606,764 1,573,655 Balance at 1 January 2005, as previously reported as equity 328,400 462,267 176,224 - 966,891 Balance at 1 January 2005, as previously separately reported as minority interest - - - 606,764 606,764 Derecognition of negative goodwill with corresponding adjustment to the opening balance of retained earnings (note 14) - - 210,207 - 210,207 Transfer from retained earnings to other reserves (note 14) - 210,207 (210,207) - - The notes on pages 95 to 128 form an integral part of these consolidated accounts 600801-G 华新-426 K5 AR EN.doc 92 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Balance at 1 January 2005, as restated 328,400 672,474 176,224 606,764 1,783,862 Capital injection from minority shareholders for establishment of a subsidiary - - - 100,000 100,000 Dividend relating to 2004 (note 22 (d)) - - (19,704) (705) (20,409) Profit for the year - - 79,158 7,967 87,125 Transfer from retained earnings to other reserves - 1,637 (1,637) - - Appropriation - 12,518 (12,518) - - Balance at 31 December 2005 328,400 686,629 221,523 714,026 1,950,578 The notes on pages 95 to 128 form an integral part of these consolidated accounts 600801-G 华新-426 K5 AR EN.doc 93 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) HUAXIN CEMENT CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 Note 2005 2004 Cash flows from operating activities Cash generated from operations 28 555,270 452,848 Interest paid (150,070) (97,915) Income tax paid (22,285) (55,363) Net cash generated from operating activities 382,915 299,570 Cash flows from investing activities Acquisition of a subsidiary, net of cash acquired - (110,014) Acquisition of equity interest from a minority shareholder in a subsidiary - (19,800) Proceeds from disposal of mine usage right - 50,000 Proceeds from disposal of property, plant and equipment 14,975 10,825 Purchases of property, plant and equipment (1,153,637) (767,452) Payments for prepaid lease (5,213) (26,805) Purchase of intangible assets (195) (2,406) Cash advance to a minority shareholder of a subsidiary (2,850) (41,390) Government grants received 6,041 - Dividends received - 437 Interest received 3,785 3,054 Net cash used in investing activities (1,137,094) (903,551) Cash flows from financing activities Proceeds from borrowings 1,680,600 1,122,370 Repayment of borrowings (984,799) (523,171) Repayment of other non-current liabilities (4,123) (6,614) Repayment of long-term payables to the controlling shareholder (3,271) - Capital contribution from minority shareholders - 6,000 Dividends paid to the equity holders of the Company (19,311) (19,704) Dividends paid to minority interests (705) (4,292) Net cash generated from financing activities 668,391 574,589 Net decrease in cash and cash equivalents (85,788) (29,392) Cash and cash equivalents at beginning of the year 381,377 410,769 Cash and cash equivalents at end of the year 20 295,589 381,377 The notes on pages 95 to 128 form an integral part of these consolidated accounts 600801-G 华新-426 K5 AR EN.doc 94 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Notes to the Accounts 1. General information Huaxin Cement Co., Ltd. (the “Company”) is a joint stock limited company incorporated and domiciled in the People's Republic of China (the “PRC”). The Company is listed on the Shanghai Stock Exchange. The address of its registered office is 897 Huangshi Avenue, Huangshi City, Hubei Province. The Company and its subsidiaries (the "Group") are principally engaged in manufacturing and sales of cement. The majority of the sales are made in the PRC. 2. Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") including International Accounting Standard and Interpretation issued by the International Accounting Standards Board. This basis of accounting differs from that used in the preparation of the statutory financial statements in the PRC ("the statutory financial statements"). The statutory financial statements of the Company and its subsidiaries comprising the Group have been prepared in accordance with the accounting principles and regulations as applicable in the PRC. Appropriate adjustments have been made to these financial statements to conform to IFRS but such adjustments are not incorporated in the Group's statutory accounting records. The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 4. 2.2 Changing in accounting policies At 1 January 2005, the Group adopted the revised IFRS below, which are relevant to its operations. The 2004 comparatives have been amended as required, in accordance with the relevant requirements. IAS 1 (revised 2003) Presentation of Financial Statements IAS 2 (revised 2003) Inventories IAS 8 (revised 2003) Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 (revised 2003) Events after the Balance Sheet Date IAS 16 (revised 2003) Property, Plant and Equipment IAS 17 (revised 2003) Leases 600801-G 华新-426 K5 AR EN.doc 95 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) IAS 21 (revised 2003) The Effects of Changes in Foreign Exchange Rates IAS 24 (revised 2003) Related Party Disclosures IAS 27 (revised 2003) Consolidated and Separate Financial Statements IAS 28 (revised 2003) Investments in Associates IAS 32 (revised 2003) Financial Instruments: Disclosure and Presentation IAS 33 (revised 2003) Earnings per Share IAS 39 (revised 2003) Financial Instruments: Recognition and Measurement The adoption of IAS 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 32, 33 and 39 (all revised 2003) did not result in substantial changes to the Group’s accounting policies. In summary: – IAS 1 (revised 2003) has affected the presentation of minority interest and other disclosures. – IAS 2, 8, 10, 16, 17, 27, 28, 32, 33 and 39 (all revised in 2003) had no material effect on the Group’s policies. – IAS 21 (revised 2003) had no material effect on the Group’s policy. The functional currency of each of the consolidated entities has been re-evaluated based on the guidance to the revised standard. All the Group entities have the same functional currency as their measurement currency. – IAS 24 has affected the identification of related parties and certain related party disclosures. 2.3 Consolidation (a) Subsidiaries Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement (see Note 2.8). Inter-company transactions, balances and unrealised gains on transactions between Group’s entities are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 600801-G 华新-426 K5 AR EN.doc 96 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Minority interest is that part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned directly or indirectly by the Group. (b) Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for by the equity method of accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. 2.4 Segment reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. 2.5 Foreign currency translation (a) Functional and presentation currency Items included in the accounts of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is the functional currency of all the entities comprising the Group and the presentation currency of the Company. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. 2.6 Prepaid lease 600801-G 华新-426 K5 AR EN.doc 97 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Cost of acquiring rights to use certain land or mine for the Group’s operations over a certain period is recorded as prepaid lease. Cost of prepaid lease with specific term is recognised as an expense on a straight-line basis over the unexpired period of the rights. Cost of prepaid lease with unspecific term is recognised as an expense on a straight-line basis over the expected useful lives of 50 years. 2.7 Property, plant and equipment (a) All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation of property, plant and equipment is calculated to write off their cost on the straight-line basis over their expected useful lives to the group, taking into account the estimated residual value of the assets concerned. The principle annual depreciation rates used are: Item Annual depreciation rate Buildings 2.4% - 3.84% Plant and machinery 6% - 12% Furniture, fixtures and office equipment 5.33% - 12% Motor vehicles 8 - 12% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. (b) Construction in progress represents factory premises under construction, and production plants and machinery and other related fixed assets under installation. Construction in progress is stated at cost, which includes the cost of construction, purchase cost of plant and machinery, as well as interest charges arising from borrowings used to finance the construction during the period of time that is required to complete and prepare the asset for its intended use. Construction in progress for production plants and machinery is transferred to fixed assets on the commissioning date. Plant and machinery are considered to be commissioned when they are capable of producing saleable quality output in commercial quantities on an ongoing basis. (c) An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.9). (d) Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. (e) Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All 600801-G 华新-426 K5 AR EN.doc 98 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. 2.8 Intangible assets (a) Goodwill (i) Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. (ii) Goodwill arising from business combinations of which the agreement date is before 31 March 2004 was previously amortised on a straight line basis over its useful life, which will not exceed 20 years from initial recognition. As at 1 January 2005, amortisation of goodwill was ceased and the carrying amount of related accumulated amortisation was eliminated with a corresponding decrease in goodwill. Goodwill arising from business combinations of which the agreement date is on and after 31 March 2004, as well as goodwill arising from business combinations of which the agreement date is before 31 March 2004 after elimination of accumulated amortisation at 1 January 2005, are tested annually for impairment and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-generating units for the purpose of impairment testing (note 2.9). (iii) Negative goodwill arising from business combinations of which the agreement date is before 31 March 2004 was previously amortised on a straight line basis over the remaining weighted average useful life of non-monetary assets acquired. At 1 January 2005, the carrying amount of negative goodwill has been derecognised with a corresponding adjustment to the opening balance of retained earnings. Negative goodwill arising from business combinations of which the agreement date is on and after 31 March 2004 is recognised in the income statement immediately on the date of acquisition. (b) Mine development cost Cost incurred for the preparation of mine sites are capitalised and amortised on a straight-line basis over the estimated useful lives of the mine sites. (c) Railway improvement cost Cost incurred for railway improvement is capitalised and amortised on a straight-line basis over the estimated useful lives of the railway of 12 years. (d) Trademarks 600801-G 华新-426 K5 AR EN.doc 99 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Trademarks are shown at historical cost. Trademarks have a definite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives. (e) Other intangible assets Other intangible assets mainly represent the electricity usage fees paid to the local electricity bureau and are amortised on a straight-line basis over the estimated beneficial period of 10 years. 2.9 Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 2.10 Investments The Group classifies its investments in the following categories: loans and receivables and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date. (a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in trade receivables, other receivables, prepayments and deposits in the balance sheet. Loans and receivables are carried at amortised cost using the effective interest method. (b) Available-for-sale investments Investments other than those in subsidiaries and associates, intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale investments. They are included in non-current assets unless management intends to dispose of the investment for within 12 months of the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Purchases and sales of investments are recognised on trade-date, the date that the Group commits to purchase or sell the asset. Available-for-sale investments are carried at fair value which is initially measured at fair value of consideration given for them plus 600801-G 华新-426 K5 AR EN.doc 100 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) transaction costs and are subsequently subject to impairment review. Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale investments, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. 2.11 Inventories Inventories are stated at the lower of cost and net realisable value. Cost of raw materials, spare parts and consumables represents invoiced price calculated using the weighted average costing method. Cost of work in progress and finished goods includes direct materials, direct labour and an appropriate proportion of production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. 2.12 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method less provision for impairment. A provision for impairment of trade receivables is established when there is an objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement. 2.13 Cash and cash equivalents Cash and cash equivalents includes cash in hand and deposits held at call with banks. 2.14 Share capital Ordinary shares are classified as equity. 2.15 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds net of transaction costs and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. 600801-G 华新-426 K5 AR EN.doc 101 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Borrowing costs that are directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to be ready for their intended use or sale are capitalised as part of the costs of the assets. All other borrowing costs are expensed. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. 2.16 Taxation PRC income taxes are provided for based on the taxable assessable profits and the applicable tax rates for the Group’s entities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. 2.17 Retirement scheme Pension obligations The Group participates in a defined contribution retirement scheme (the “Scheme”) operated by the local government. The Group's obligations include contributions to the Scheme determined at a certain percentage of the salaries of the employees. The regular contributions, which are charged to the income statement on an accrual basis, constitute net periodic costs for the year in which they are due and as such are included in staff costs. Once the contributions have been paid, the Group has no further payment obligations. 2.18 Provision Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item 600801-G 华新-426 K5 AR EN.doc 102 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) included in the same class of obligations may be small. 2.19 Government grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the income statement on a straight-line basis over the expected lives of the related assets. 2.20 Revenue recognition Revenue comprises the fair value for the sale of goods and services, net of value-added tax, rebates and discounts and after eliminated sales within the Group. Revenue is recognised as follows: (a) Sales of goods Revenue from sales of goods is recognised when significant risks and rewards of ownership of the goods are transferred to the buyers, which generally coincides with the time when delivery is made and collectibility of the related receivables is reasonably assured. (b) Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cashflow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. (c) Dividend income Dividend income is recognised when the right to receive payment is established. 2.21 Leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any incentives received from the lessor are charged to the income statement on a straight-line basis over the period of relevant leases. 2.22 Dividend distribution 600801-G 华新-426 K5 AR EN.doc 103 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders. 3. Financial risk management (a) Financial risk factors The Group’s activities expose it to a variety of financial risks: foreign exchange risk, credit risk, liquidity risk and cash flow interest-rate risk. (i) Foreign exchange risk The Group’s entities operate in the PRC with most of the transactions denominated in Renminbi. The Group is exposed to foreign exchange risk arising from the exposure of Renminbi against USD, Euro and Danish Krona. The Group has not hedged its foreign exchange rate risk. In addition, the conversion of Renminbi into foreign currencies is subject to the rules and regulations of the foreign exchange control promulgated by the PRC government. (ii) Credit risk The Group has no significant concentrations of credit risks. The carrying amount of the trade receivables included in the consolidated balance sheet represent the Group’s maximum exposure to credit risk in relation to its financial assets. (iii) Liquidity risk The Group ensures that it maintains sufficient cash and credit lines to meet its liquidity requirements. (iv) Cash flow and fair value interest rate risk As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group has not hedged its cash flow and fair value interest rate risk. (b) Fair value estimation The carrying amounts of the following financial instruments approximate to their fair values. Cash and cash equivalents, trade receivables, other receivables, prepayments and deposits, trade payables, construction costs payable, accrued charged and deposits received, other non-current liabilities and borrowings. 600801-G 华新-426 K5 AR EN.doc 104 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) 4. Critical accounting estimates and assumptions Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Estimated impairment of goodwill The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.8(a). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of estimates. (b) Estimated impairment of property, plant and equipment and available-for-sale investments Property, plant and equipment and available-for-sales investments are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amounts of property, plant and equipment and available-for-sale investments have been determined based on value-in-use calculations. These calculation and valuations require the use of judgement and estimates. (c) Current taxation and deferred taxation The Group is subject to taxation in the PRC. Significant judgement is required in determining the amount of the provision for taxation and the timing of payment of the related taxations. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the income tax and deferred tax provisions in the periods in which such determination are made. Segment information No business segment information of the Group is presented as the Group’s sales, expenses, assets and liabilities are primarily attributable to manufacturing and sales of cement and related products. No geographical segment information has been prepared as products of the Group are all manufactured in the PRC and less than 10% of the Group’s sales and results are attributable to the market outside the PRC. 2005 2004 Sales of goods 2,695,976 2,188,101 600801-G 华新-426 K5 AR EN.doc 105 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Revenue arising from interest income is disclosed in note 9. 6. Other operating income – net 2005 2004 Tax refund (note a) 31,467 38,478 Net income of disposal of the mine usage right and relevant equipment - 36,650 Net income of disposal of property, plant and equipment 3,387 - Others 1,327 113 36,181 75,241 (a) Included in other operating income is a tax refund of value-added-tax (“VAT”) for sales of goods having utilised wasted natural materials. 7. Expenses by nature 2005 2004 Cost of prepaid lease recognised as an expense 11,172 8,013 Depreciation of property, plant and equipment 269,757 212,484 Amortisation of intangible assets 4,431 (13,952) Changes in finished goods and work in progress 9,000 (59,642) Raw materials and consumables used 1,433,170 1,007,822 Reversal of provisions for bad and doubtful debts (3,801) (3,381) Write-down of carrying amounts of inventories 569 14,141 Staff costs 150,318 160,841 Amortisation of deferred income offset against expenses (4,028) (1,324) Loss on disposal of property, plant and equipment - 2,320 8. Staff costs 2005 2004 Wages and salaries 122,190 126,530 Pension costs – defined contribution plan 17,453 21,949 Other social security costs 10,675 12,362 150,318 160,841 The companies comprising the Group participate in defined contribution retirement scheme (the “Scheme”) operated by the relevant local government. Contributions to the Scheme 600801-G 华新-426 K5 AR EN.doc 106 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) were made based on a percentage of the aggregate payroll of the staff on monthly basis. 9. Finance costs – net 2005 2004 Gain from unlisted investments - 437 Interest income 3,785 3,054 Net foreign exchange gain/(loss) 13,759 (3,649) Interest expenses (121,351) (82,815) - bank borrowings (149,435) (96,213) - other borrowings - (1,702) Less: interest capitalised 28,084 15,100 (103,807) (82,973) 10. Income tax expense 2005 2004 Current tax 10,708 60,296 Deferred tax (note 27) (7,541) (11,209) 3,167 49,087 The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the effective tax rate of the Company is analysed as follows: 2005 2004 Profit before tax 90,292 276,473 Tax calculated at the rate of 33% (2004: 33%) 29,796 91,236 Tax refund * (13,796) (16,554) Net profit and loss of subsidiaries not subject to tax ** (31,731) (19,457) Loss in a subsidiary not recognised for deferred tax assets 17,951 - Income not subject to tax (561) (8,221) Expenses not deductible for tax purposes 2,619 2,083 Effect of lower tax rate in a subsidiary (1,111) - Tax charge 3,167 49,087 600801-G 华新-426 K5 AR EN.doc 107 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) * Pursuant to an approval “Huang Guo Shui Han Fa [2005] No. 69” issued by Hubei Province Huangshi City State Taxation Bureau on 30 June 2005, the Company is entitled to an exemption from income tax of RMB8,201,000 (2004: RMB6,225,000) as the Company have utilised wasted natural materials for production of cement. Pursuant to a document issued by Hubei Pronvince Yidu City State Taxation Bureau on 28 February 2005, Huaxin Cement (Yichang) Co., Ltd. is entitled an exemption from income tax of RMB5,595,000 (2004: RMB10,329,000) for the purpose of using domestically manufactured equipment in special projects. ** Pursuant to the circular “Cai Shui Zi [1994] No. 001” jointly issued by Ministry of Finance and National State Taxation Bureau of the PRC on 29 March 1994, Huaxin Cement (Yangxin) Co., Ltd. (“Yangxin Cement”) and Huaxin Cement (Enshi) Co., Ltd., (“Enshi Cement”) which were set up in the destitute and remote area determined by the State Council of the RPC can be entitled to an exemption from income tax for the first three years from the company commencing its full commercial operation. Yangxin Cement and Enshi Cement commenced their full commercial operations in the year. 11. Earnings per share 2005 2004 Profit attributable to equity holders of the Company 79,158 179,340 Weighted average number of ordinary shares in issue 328,400 328,400 (th d ) Basic and diluted earnings per share (RMB per share) 0.241 0.546 The diluted earnings per share is equivalent to the basic earnings per share as there were no potential ordinary shares outstanding during the years ended 31 December 2005 and 2004. 12. Prepaid lease At 1 January 2004 Cost 225,288 Accumulated amortisation (16,518) Net book amount 208,770 Year ended 31 December 2004 Opening net book amount 208,770 Additions 26,805 Acquisition of a subsidiary 159,474 Amortisation charge (8,013) Transfer out (14,085) Closing net book amount 372,951 At 31 December 2004 600801-G 华新-426 K5 AR EN.doc 108 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Cost 387,753 Accumulated amortisation (14,802) Net book amount 372,951 Year ended 31 December 2005 Opening net book amount 372,951 Additions 129,605 Amortisation charge (11,172) Closing net book amount 491,384 At 31 December 2005 Cost 517,358 Accumulated amortisation (25,974) Net book amount 491,384 Included in prepaid lease are certain land use rights with a total net book value of RMB142,286,000 (2004: RMB138,346,000) which have been pledged to secure certain bank borrowings (note 23). 13. Property, plant and equipment Furnitur e, fixtures and Constructi Plant and Motor office on machiner equipm in Buildings vehicles Total y ent progress At 1 January 2004 Cost 913,271 1,493,471 24,305 116,465 291,616 2,839,128 Impairment (2,143) (1,904) - - - (4,047) Accumulated depreciation (170,173) (502,778) (13,464) (53,233) - (739,648) Net book amount 740,955 988,789 10,841 63,232 291,616 2,095,433 Year ended 31 December 2004 Opening net book amount 740,955 988,789 10,841 63,232 291,616 2,095,433 Acquisition of subsidiary 364,965 346,081 2,127 11,134 13,014 737,321 Additions 13,644 19,357 6,264 9,183 889,295 937,743 600801-G 华新-426 K5 AR EN.doc 109 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Transfer 272,973 416,662 - 12,263 (701,898) - Disposals (14,283) (2,257) (441) (1,431) - (18,412) Depreciation charge (50,208) (146,550) (3,557) (12,169) - (212,484) Closing net book amount 1,328,046 1,622,082 15,234 82,212 492,027 3,539,601 At 31 December 2004 Cost 1,544,560 2,266,537 31,223 129,495 492,027 4,463,842 Impairment (2,143) (1,904) - - - (4,047) Accumulated depreciation (214,371) (642,551) (15,989) (47,283) - (920,194) Net book amount 1,328,046 1,622,082 15,234 82,212 492,027 3,539,601 Year ended 31 December 2005 Opening net book 82,212 amount 1,328,046 1,622,082 15,234 492,027 3,539,601 Additions 4,971 3,337 5,618 18,446 1,205,447 1,237,819 Transfer 417,213 655,721 32,903 26,905 (1,132,742) - Disposals (2,062) (9,846) (20) (2,999) - (14,927) Depreciation charge (64,567) (183,384) (7,292) (14,514) - (269,757) Closing net book amount 1,683,601 2,087,910 46,443 110,050 564,732 4,492,736 At 31 December 2005 Cost 1,963,699 2,912,827 69,581 169,412 564,732 5,680,251 Impairment (2,143) (1,904) - - - (4,047) Accumulated (1,183,468 depreciation (277,955) (823,013) (23,138) (59,362) - ) Net book amount 1,683,601 2,087,910 46,443 110,050 564,732 4,492,736 Depreciation charges for the years ended 31 December 2005 and 2004 were expensed in the following category in the income statements: 2005 2004 Cost of goods sold 243,302 194,293 Selling and marketing costs 15,239 10,040 600801-G 华新-426 K5 AR EN.doc 110 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Administrative expenses 11,216 8,151 269,757 212,484 Buildings and plant and machinery with a net book value of RMB433,457,000 (2004: RMB788,696,000) and RMB1,513,008,000 (2004: RMB543,526,000), respectively, together with certain land use rights (note 12) have been pledged to certain banks for securing borrowings totalling RMB1,512,503,000 (2004: RMB1,114,043,000) (note 23). Borrowing costs of RMB28,084,000 (2004: RMB15,100,000), arising on financing the construction were capitalised during the year. Capitalisation rate of 5.465% (2004: 5.083%) per annum was used, representing the borrowing cost of the loan used to finance the construction project. 14. Intangible assets Mine Railway developme nt improvement Goodwill Trademar cost cost k Others Total At 1 January 2004 Cost 12,473 9,268 7,800 - 5,369 34,910 Accumulated amortisation (1,975) (1,427) (3,250) - (2,644) (9,296) Net book amount 10,498 7,841 4,550 - 2,725 25,614 Year ended 31 December 2004 Opening net book amount 10,498 7,841 4,550 - 2,725 25,614 (200,394 Acquisition of subsidiary (229,466) - - 27,917 1,155 ) Additions - 2,013 - - 393 2,406 Amortisation charge 18,231 (329) (650) (2,500) (800) 13,952 (158,422 Closing net book amount (200,737) 9,525 3,900 25,417 3,473 ) At 31 December 2004 (163,078 Cost (216,993) 11,281 7,800 27,917 6,917 ) Accumulated amortisation 16,256 (1,756) (3,900) (2,500) (3,444) 4,656 (158,422 Net book amount (200,737) 9,525 3,900 25,417 3,473 ) Mine Railway developme nt improvement Goodwill Trademar cost cost k Others Total Year ended 31 December 2005 Opening net book amount, (200,737) 9,525 3,900 25,417 3,473 (158,422 600801-G 华新-426 K5 AR EN.doc 111 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) as previously reported ) Derecognition of negative goodwill 210,207 - - - - 210,207 Opening net book amount, as restated 9,470 9,525 3,900 25,417 3,473 51,785 Additions - - - - 195 195 Amortisation charge - (557) (650) (2,500) (724) (4,431) Closing net book amount 9,470 8,968 3,250 22,917 2,944 47,549 At 31 December 2005 Cost 9,470 11,281 7,800 27,917 7,112 63,580 Accumulated amortisation - (2,313) (4,550) (5,000) (4,168) (16,031) Net book amount 9,470 8,968 3,250 22,917 2,944 47,549 Pursuant to an agreement entered into between the Company and Suzhou City Wuzhong District Mudu Town Economic Development General Corporation on 16 May 2003 and an agreement entered into between the Company and Yangtze Cement Holding PTE Ltd. on 10 June 2003, the Company acquired 1% and 50% equity interests in Suzhou Golden Cat Cement Co., Ltd. from the aforementioned two companies. As at 31 December 2004, the negative goodwill arising from this acquisition net of the accumulated amortisation amounted to RMB210,207,000. As at 1 January 2005, the balance of negative goodwill was derecognised with the corresponding adjustment to opening balance of retained earnings in accordance with International Financial Reporting Standard 3 – Business Combination (“IFRS 3”), and was simultaneously transferred to other reserves as it is not distributable to the shareholders of the Company in accordance with relevant PRC regulations. 15 Investment in an associate 2005 2004 Opening net book amount 279 294 Share of profit/(loss) in an associate 8 (15) Closing net book amount 287 279 The principal unlisted associated undertaking was as follows: Country of % of Principal incorporatio interest activities n held Huangshi Huaxin Hotel Co., Ltd. PRC 49% Hotel operation 16. Available-for-sale investments 2005 2004 Net book amount 14,480 14,480 600801-G 华新-426 K5 AR EN.doc 112 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) There was no addition, disposal or impairment provision on available-for-sale investments during the years ended 31 December 2005 and 2004. Available-for-sale investments of the Group have neither a quoted market price in an active market nor a fixed maturity, and are measured at cost less provision for impairment. As at 31 December 2005 and 2004, available-for-sale investments are all unlisted investments, included in which was an amount of approximately RMB11,724,000 (2004: RMB11,724,000) representing the cost of an investment of 3.9% (2004: 3.9%) equity interest in a local power supply enterprise which is controlled by the Hubei Electricity Bureau. 17. Inventories 2005 2004 Raw materials 121,448 78,041 Work in progress 50,744 40,689 Finished goods 71,329 90,384 Spare parts and consumables 85,315 76,499 328,836 285,613 The cost of inventories recognised as expenses and included in cost of goods sold amounted to RMB2,317,101,000 (2004: RMB1,750,028,000). During the year, write-down of carrying amounts of obsolete raw materials and spare parts to their net realisable value amounted to RMB569,000 (2004: RMB14,141,000), which was included in administrative expenses. 18. Trade receivables 2005 2004 Trade receivables 231,110 212,470 - Related parties (note 29) 73,046 26,838 - Third parties 158,064 185,632 Less: Provision for bad and doubtful debts (17,147) (29,843) 213,963 182,627 19. Other receivables, prepayments, and deposits 2005 2004 600801-G 华新-426 K5 AR EN.doc 113 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Prepayments for purchase of raw material and equipment 16,112 43,449 - Related parties (note 29) 9,053 20,914 - Third parties 7,059 22,535 Other receivables and deposits: 84,060 69,093 - Related parties (note 29) 18,562 20,031 - Third parties 65,498 49,062 100,172 112,542 Other receivables include advances to a minority shareholder of a subsidiary of the Company of RMB44,240,000 (2004: RMB41,390,000). The amounts are unsecured, interest free and have no fixed terms of repayment. 20. Cash and bank balances 2005 2004 Cash at bank and in hand 303,376 301,340 Short-term bank deposits 64,941 96,000 Cash and bank balances 368,317 397,340 Less: Restricted cash (72,728) (15,963) Cash and cash equivalents 295,589 381,377 The effective interest rate on short-term bank deposits was 2.00% (2004: 1.62%); these deposits have an average maturity of 149 days. Cash and bank balances include time deposits totalling RMB72,728,000 (2004: RMB15,963,093) which have been used as collateral for issuance of bills. The amounts were classified as restricted cash. 21. Share capital 2005 2004 Registered, issued and fully paid of RMB1 each Shares held by the State (note a, b) 79,251 91,527 Shares held by entities (note a, b) 22,749 24,873 A shares, listed (note b) 62,400 48,000 164,400 164,400 B shares, listed (note b) 164,000 164,000 328,400 328,400 600801-G 华新-426 K5 AR EN.doc 114 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) (a) Pursuant to a resolution of General Meeting held on 16 December 2005 and an approval “E Guo Zi Chan Quan [2005] No. 313” obtained from State-owned Assets Supervision and Administration Commision of Hubei Province, 12,276,232 shares held by the State and 2,123,768 shares held by entities were transferred to A shares owners. In return, subject to certain criteria and conditions, shares held by the State and entities will be traded and transferable on the Shanghai Stock Exchange. (b) Pursuant to Article 8 of the Company’s Articles of Association, shares held by the State and entities, A and B shares are registered ordinary shares and carry equal rights. 22. Other reserves Reserve fund Statutor Statutory Total y public Discretiona other Capital surplus welfare ry surplus reserve reserves reserves fund reserves s (note a) (note b) (note b) (note b) Balance at 1 January 2004 295,569 34,680 21,871 54,000 406,120 Transfer from retained earnings 26,077 - - - 6,077 Appropriation - 15,035 15,035 - 30,070 Balance at 31 December 2004 321,646 49,715 36,906 54,000 462,267 Balance at 1 January 2005, as previous reported 321,646 49,715 36,906 54,000 462,267 Transfer from retained earnings (note 14) 210,207 - - - 10,207 Balance at 1 January 2005, as restated 531,853 49,715 36,906 54,000 672,474 Transfer from retained earnings 1,637 - - - 1,637 Appropriation - 6,259 6,259 - 12,518 Balance at 31 December 2005 533,490 55,974 43,165 54,000 686,629 (a) Capital reserves Included in capital reserves as of 31 December 2005 is share premium of RMB292,898,000 (2004: RMB292,898,000). According to the relevant PRC regulations, capital reserves can only be used to increase share capital. The amounts transferred from retained earnings to capital reserves comprise government 600801-G 华新-426 K5 AR EN.doc 115 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) grants recognised in income statement totalling RMB1,637,000 (2004: RMB26,077,000). In accordance with the relevant PRC regulations, these incomes are not distributable to shareholders. (b) The balance of the reserve funds represents: (i) Pursuant to the relevant PRC regulations and the Articles of Association of the Company, profit after the taxation shall be appropriated in the following sequence: (1) off set accumulated losses, if any; (2) transfer 10% of the profit after tax to the statutory surplus reserve. When the balance of the statutory surplus reserves reaches 50% of the share capital, such transfer need not be made; (3) transfer 10% of the profit after tax to the statutory public welfare fund; (4) transfer to the discretionary surplus reserves with an amount approved by the shareholders at general meeting; (5) distribute dividends to shareholders. The amounts transfer to the reserve funds shall be based on the profit after tax of the Group’s statutory financial statements. (ii) Statutory surplus reserves and discretionary surplus reserves According to the relevant PRC regulations, statutory surplus reserves and discretionary surplus reserves can be used to make up losses or to increase share capital. Except for the reduction of the reserves due to losses incurred, any other usage should not result in the reserves falling below 25% of the share capital. (iii) Statutory public welfare fund According to relevant PRC regulations, the use of statutory public welfare fund is restricted to capital expenditures for collective employee welfare facilities. The statutory public welfare fund is not available for distribution to shareholders except in liquidation. According to a document issued by the Ministry of Finance, when the statutory public welfare fund is utilised, an amount equal to the lower of cost of the assets and the balance of the statutory public welfare fund is transferred from the statutory public welfare fund to the discretionary surplus reserve. On disposal of the relevant assets, the original transfers from the statutory public welfare fund are reversed. (c) Profit available for distribution to shareholders Pursuant to the relevant PRC regulations, profit available for distribution to shareholders shall be the lower of the retained earnings determined according to PRC accounting standards and regulations as appeared in the statutory financial statements and the retained earnings adjusted according to IFRS. According to the Company’s PRC statutory financial statements as of 31 December 2005, RMB183,153,000 is available for distribution to shareholders (2004: RMB153,301,000). 600801-G 华新-426 K5 AR EN.doc 116 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) (d) Dividend Pursuant to a resolution of the board of directors on 22 March 2005, a final cash dividend in respect of 2004 of RMB0.06 per share totalling RMB19,704,000 was declared. Pursuant to a resolution of the board of directors on 3 March 2006, a final cash dividend in respect of 2005 of RMB0.06 per share totalling RMB19,704,000 was declared. These financial statements do not reflect this dividend payable, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in the year ending 31 December 2006. 23. Borrowings Notes 2005 2004 Non-current portion Secured bank borrowings (a) 1,232,064 861,427 Unsecured bank borrowings (b) 793,540 653,540 Other unsecured borrowings (c) 15,875 31,497 2,041,479 1,546,464 Current portion Secured bank borrowings (a) 280,439 252,616 Unsecured bank borrowings (b) 726,300 571,800 Other unsecured borrowings (c) 1,691 2,032 1,008,430 826,448 Total borrowings 3,049,909 2,372,912 The exposure of the Group’s borrowings to interest-rate changes and the contractual repricing dates are as follows: Notes Within 1 year Over 5 years Total At 31 December 2005 Secured bank borrowings (a) 1,512,503 1,505,439 7,064 Unsecured bank (b) - 1,519,840 borrowings 1,519,840 Other unsecured (c) 17,566 17,566 borrowings - Total borrowing 24,630 3,025,279 3,049,909 600801-G 华新-426 K5 AR EN.doc 117 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) At 31 December 2004 Secured bank borrowings (a) 10,695 1,114,043 1,103,348 Unsecured bank (b) 1,225,340 borrowings 1,225,340 - Other unsecured (c) 33,529 33,529 borrowings - Total borrowing 44,224 2,372,912 2,328,688 (a) The secured bank borrowings include the following: (1) borrowings of RMB1,225,000,000 (2004: RMB786,081,000) with annual interest ranging from 4.65% to 6.138% (2004: 5.31% to 6.12%), which are secured by buildings, plant and machinery and land use rights with a net book value of RMB308,970,000, RMB1,184,889,000 and RMB142,286,000 respectively (note 12, 13). (2) borrowings of USD34,750,000 (2004: USD40,750,000) with interest rate of LIBOR+1% (2004: 5.99%) per annum and are secured by buildings and plant and machinery with net book value of RMB124,487,000 and RMB316,456,000, respectively (note 13); (3) borrowings of EURO737,392 (2004: EURO948,077) with interest rate of 5.99% (2004: 5.99%) per annum and are secured by plant and machinery with net book value of RMB11,663,000 (notes 13). (b) Included in unsecured bank borrowings are loans of RMB1,519,840,000 (2004: RMB1,225,340,000) with annual interest rate ranging from 3.78% to 6.12% (2004: 3.60% to 6.03%). (c) The other unsecured borrowing represents a Danish Krona loan borrowed via the China National Technical Import and Export Corporation for the purchase of production equipment, which was stated at amortised cost with an effective interest rate of 6.1%. This loan with an original principal of DKK67,000,000 is guaranteed by a stated-owned bank and repayable in two tranches. The first tranche of DKK33,500,000 was fully repaid in 2002 and the other tranche amounting to DKK33,500,000 is interest-free and repayable by fifty semi-annual instalments commencing from April 1996. The carrying amounts of short-term borrowings and long-term borrowings approximate their fair value. The maturity of non-current borrowings is as follows: Secured Unsecured Other bank bank unsecured 2005 2004 borrowings borrowings borrowing Total Total s Between 1 and 2 years 275,440 129,500 1,592 406,532 388,640 600801-G 华新-426 K5 AR EN.doc 118 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Between 1,371,57 3 and 5 years 703,291 664,040 4,239 0 727,818 Over 5 years 253,333 - 10,044 263,377 430,006 2,041,47 1,232,064 793,540 15,875 9 1,546,464 24. Deferred income 2005 2004 At beginning of year 16,653 17,977 Additions 6,041 - Amortisation (4,028) (1,324) At end of year 18,666 16,653 Deferred income represents subsidies granted by government for the construction and purchase of property, plant and equipment. 25. Other non-current liabilities 2005 2004 Controlling shareholder of the Company - 3,271 Yidu Fang De Investment Co., Ltd. (“Yidu Fang De”) (note (a)) 42,255 46,285 Redundant staff of the Company (note (b)) 12,136 15,103 Long term payable for land use right 24,299 - 78,690 64,659 (a) Amount represents payable for purchase of land usage right from Yidu Fang De, which is interest free and repayable in 2012. During the year, the Company has paid RMB4,030,000 (2004: RMB3,700,000). (b) Amount represents the compensation payable to the redundant staff in Huaxin Hongqi Cement Co., Ltd. (“Hongqi”). As required by local administration regulations, the Company is obligate to make monthly payments to the redundant staff based on their present basic salary plus the minimum staff pension, medical and other welfare payments until they reach their retirement age. The payables are discounted using the discount rate determined by reference to market yields at the balance sheet date on high quality investments. 26. Construction costs payable, accrued charges and deposits received 600801-G 华新-426 K5 AR EN.doc 119 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) 2005 2004 Construction costs payable 268,147 207,531 - Related parties (note 29) 35,278 47,194 - Third parties 232,869 160,337 Advance from customers 85,799 49,688 - Related parties (note 29) 50,934 21,374 - Third parties 34,865 28,314 Accrued payroll and staff welfare 15,959 32,685 Payable of VAT and other tax 51,737 34,321 Accrued charges 6,545 23,991 Other payables 70,401 58,367 - Related parties (note 29) 8,017 33,746 - Third parties 62,384 24,621 Dividend payable 393 - 498,981 406,583 27. Deferred income tax As at 31 December 2005, no deferred income tax assets and liabilities were offset and the gross amounts of deferred income tax assets and liabilities are as follows: 2005 2004 Deferred tax assets: - to be recovered after more than 12 months (398) (398) - to be recovered within 12 months (35,376) (20,532) (35,774) (20,930) Deferred tax liabilities: - to be recovered after more than 12 months 1,450 - - to be recovered within 12 months 5,853 - 7,303 - The gross movements on the deferred income tax were as follows: 600801-G 华新-426 K5 AR EN.doc 120 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) 2005 2004 At beginning of the year (20,930) (9,721) Income statement credit (note 10) (7,541) (11,209) At end of the year (28,471) (20,930) The movements in deferred tax assets and liabilities during the year were as follows: Debited/(credite d) to the income 2004 statement 2005 Deferred income tax assets: Provision for available-for-sale investments (398) - (398) Provision for bad and doubtful debts (4,295) 3,069 (1,226) Write-off of pre-operating expenses in subsidiaries (3,207) (1,532) (4,739) Write-down of inventories (4,440) - (4,440) Temporary difference in recognition of expenses (7,879) 4,494 (3,385) Unrealised profit arising in elimination of inter-company transactions (711) (170) (881) Tax loss - (20,561) (20,561) Restatement of long-term payable to their current value - (144) (144) (20,930) (14,844) (35,774) Debited to the income 2004 statement 2005 Deferred income tax liabilities: Difference in initial recognition of property, plant and equipment - 7,303 7,303 Deferred income tax assets are recognised for tax loss carry-forward to the extent that the realisation of the related tax benefit through the future taxable profits is probable. The Group did not recognised deferred income tax asses of approximately 600801-G 华新-426 K5 AR EN.doc 121 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) RMB17,951,000 (2004: nil) in respect of the losses amounting to approximately RMB54,397,000 (2004: nil) that can be carried forward against future taxable income. Loss of approximately RMB62,306,000 (2004: nil), for which deferred tax asset has been recognised, expire in 2011. 28. Cash generated from operations 2005 2004 Profit for the year 87,125 227,386 Adjustments for: Income tax expense 3,167 49,087 Depreciation of property, plant and equipment 269,757 212,484 Cost of prepaid lease recognised as expenses 11,172 8,013 Net (gain)/loss of disposal of property, plant and equipment (3,387) 2,320 Net income of disposal of the mine usage right and relevant equipment - (36,650) Gain from unlisted investment - (437) Interest income (3,785) (3,054) Interest expenses 121,351 82,815 Amortisation of intangible assets 4,431 (13,952) Amortisation of deferred income (4,028) (1,324) Share of (gain)/loss of an associate (8) 15 Exchange (gain)/loss (13,759) 3,649 Changes in working capital: Inventories (43,223) (102,759) Trade receivables, other receivables, prepayments and deposits (13,304) (9,043) Changes in restricted cash (56,765) (7,816) Trade payables, accrued charges and deposits received 196,526 42,114 Cash generated from operations 555,270 452,848 29. Related party transactions The directors are of the view that the controlling shareholder of the Company is Huaxin Group Co., Ltd., a company incorporated in the PRC, which represents the State to hold 27.1% (2004: 31.6%) of the Company’s share capital as of 31 December 2005, and has a 600801-G 华新-426 K5 AR EN.doc 122 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) majority vote on the board of directors. (a) Transactions with related parties During the years ended 31 December 2005 and 2004, the Group had the following significant transactions with related parties. 2005 2004 Sales of goods: - Sales of finished goods to related parties in which the controlling shareholder has significant equity interests (note (i)) 814 3,357 - Sales of finished goods to other related parties (note (i)) 37,859 - - Sales of finished goods to state-controlled entities (note (i)) 640,692 158,202 679,365 161,559 Purchases of goods and services: - Management fee payable to the controlling shareholder (note (ii)) 4,800 4,800 - Consulting fee payable to a company related to a shareholder (note (iii)) 2,421 2,483 - Construction fee charged by state-controlled entities (note (iv)) 108,912 205,386 - Purchase of materials from state-controlled entities(note (i)) 370,376 258,125 486,509 470,794 Key management compensation - Wages and salaries 3,982 3,563 - Pension costs defined contribution plan 58 55 - Other social security costs 59 51 4,099 3,669 Notes: i) Sales and purchases of goods to/from related parties were carried out in accordance with the terms of the underlying agreements which, in the opinion of the directors of the Company, were determined with reference to the market prices in the prescribed years. ii) The management fee was charged based on the service rendered by the controlling shareholder of the Company to the Group and in accordance with the terms of the underlying agreement. 600801-G 华新-426 K5 AR EN.doc 123 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) iii) The consulting fee was charged based on the service rendered by the related party to the Group and in accordance with the terms of the underlying agreement. iv) Construction fees charged by state-controlled entities were based on the underlying agreements which, in the opinion of the directors of the Company, were determined with reference to the market prices in the prescribed years. v) The Group has transactions with government agencies for the provision of basic heat, electricity etc, all of which are carried out at standardised terms that are available to the general public. vi) The controlling shareholder of the Company and its subsidiaries have provided corporate guarantees for the Group’s borrowings to the extent of RMB47,000,000 (2004: RMB59,500,000) in respect of loans made to the Company. Such loans are due in 2006. b) Balances with related parties Other than as disclosed in note 25, as at 31 December 2005 and 2004, the Group had the following significant balances with related parties. 2005 2004 Trade receivables: - State-controlled entities 70,507 23,484 - Other related parties 2,539 3,354 73,046 26,838 Other receivables, prepayments and deposits: - Controlling shareholders of the Company 101 25 - State-controlled entities 23,963 40,615 - Other related parties 3,551 305 27,615 40,945 Trade payables: - State-controlled entities 52,243 28,547 Construction costs payable: - State-controlled entities 19,549 36,786 - Other related parties 15,729 10,408 35,278 47,194 Advances from customers: - State-controlled entities 10,557 21,374 600801-G 华新-426 K5 AR EN.doc 124 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) - Other related parties 40,377 - 50,934 21,374 Other payables: - Controlling shareholders of the Company 72 1,873 - State-controlled entities 7,945 28,679 - Other related parties - 3,194 8,017 33,746 The above amounts due from/to related parties are unsecured, interest-free and without fixed terms of repayments. 30. Subsidiary companies As of the balance sheet date, the Company directly and indirectly held equity interests in the following subsidiaries all of which were established in the PRC: Attributable equity Name interest Principal activities 2005 2004 % % Huaxin Cement (Enshi) Co., Ltd. (formerly known as Huaxin Enshi 90.10 90.10 Production and sale Cement Co., Ltd.) of cement Huangshi Huaxin Packaging Co., Ltd. 98.38 98.38 Production and sale of packaging materials Huaxin Cement Scientific Research and 99 99 Designing of cement Design Co., Ltd. project and technical service for cement Huaxin Yidu Packaging Co., Ltd. 59.33 59.33 Production and sale of packaging materials Wuhan Wugang Huaxin Cement Co., Ltd. 50 50 Production and sale (note (a)) of cement Huaxin Cement (Xiantao) Co., Ltd. 80 80 Production and sale (formerly known as Huaxin Xiantao of cement 600801-G 华新-426 K5 AR EN.doc 125 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) Cement Co., Ltd.) Huaxin Cement (Yichang) Co., Ltd. 70 70 Production and sale (formerly Known as Huaxin Yichang of cement Cement Co., Ltd.) Huaxin Golden Cat Cement (Suzhou) Co., 51 51 Production and sale Ltd. of cement Huaxin Cement (Tibet) Co., Ltd. 60 60 Production and sale (formerly known as Tibet Huaxin of cement Cement Co., Ltd.) Huaxin Cement (Zhaotong) Co., Ltd. 88 88 Production and sale (formerly known as Huaxin Zhaotong of cement Cement Co., Ltd.) Huaxin Cement (Yueyang) Co., Ltd. 97 97 Production and sale (formerly known as Huaxin Yueyang of cement Cement Co., Ltd.) Huaxin Cement (Yangxin) Co., Ltd. 80 - Production and sale (formerly known as Huaxin Yangxin of cement Cement Co., Ltd.) (note (b)) Huaxin Cement (Wuhan) Co., Ltd. 94 - Production and sale (“Wuhan Cement”) (note (c)) of cement Huaxin Concrete (Wuhan) Co., Ltd. 94 - Production and sale (formerly known as Huaxin Wuhan of concrete Cement Co., Ltd., “Wuhan Concrete”) (note (d)) Huaxin Nantong Cement Co., Ltd. 85 85 Production and sale (“Nantong Cement”) (note (e)) of cement * The names of the above subsidiary companies represent management’s best efforts at translating the Chinese names of these companies as no English names have been registered or available. (a) The Company has operational control of Wuhan Wugang Huaxin Cement Co., Ltd. which is therefore considered as a subsidiary company for consolidation purposes. (b) Pursuant to an agreement on 16 December 2004, the Company and Huangshi Yiruida Investment Co., Ltd. (“Yiruida”) jointly established an equity joint venture namely Huaxin Cement (Yangxin) Co., Ltd. The Company contributed fixed assets of RMB400,000,000 600801-G 华新-426 K5 AR EN.doc 126 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report (All amounts in Rmb thousands unless otherwise stated) and Yiruida contributed land use rights of RMB100,000,000, which accounted for 80% and 20% equity interests in Yangxin Cement, respectively. Yangxin Cement was established on 22 February 2005 and has commenced its full commercial operations in the year. (c) The Company entered into an agreement with Yangxin Cement on 23 March 2005 to jointly establish an equity joint venture namely Huaxin Cement (Wuhan) Co., Ltd. The Company contributed fixed assets of RMB42,000,000 and Yangxin Cement contributed fixed assets of RMB18,000,000, which accounted for 70% and 30% equity interests in Wuhan Cement Co., Ltd., respectively. Wuhan Cement was established on 29 September 2005 and was in its pre-operating stage up to 31 December 2005. (d) The Company entered into an agreement with Yangxin Cement on 23 March 2005 to jointly establish an equity joint venture namely Huaxin Concrete (Wuhan) Co., Ltd. The Company contributed cash of RMB7,000,000 and Yangxin Cement contributed cash of RMB3,000,000, which accounted for 70% and 30% equity interests in Wuhan Concrete respectively. Wuhan Concrete was established on 13 April 2005 and has commenced its full commercial operations in the year. (e) According to the agreement entered into by the Company and RDC International Pte Ltd. ("RDC") on 21 March 2002, RDC entrusted the Company to hold on its behalf of its 26% equity interest in Nantong Cement, RDC committed to sell and the Company committed to acquire the above said equity interest at the expiration date of the agreement if no other entity agree to take up the equity interest at that time. The Company was required to pay a deposit to RDC of RMB27,224,000. On 8 June 2005, the Company entered into an agreement with RDC to formally acquire the RDC’s equity interest in Nantong Cement The total consideration is RMB28,263,000, among which RMB27,224,000 will be deducted by paid deposit and the remaining RMB1,039,000 should be settled within 3 days after the agreement takes effect. The agreement will take effect after it is approved by other shareholders and board of directors of Nantong Cement and local authorities. At the date of this report, the approval from other shareholders of Nantong Cement and local authorities were not yet obtained. 31. Capital commitments Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows: 2005 2004 Property, plant and equipment 316,180 369,808 32. Approval of financial statements The financial statements were approved by the board of directors of the Company on 3 March 2006. 600801-G 华新-426 K5 AR EN.doc 127 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 11 Accounts and Auditors' Reports International Auditors' Report HUAXIN CEMENT CO., LTD. SUPPLEMENTARY INFORMATION IFRS ADJUSTMENTS ON THE STATUTORY ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2005 Profit attributable Net assets to equity attributable to holders of equity holders of the Company the Company Rmb’000 As per the statutory financial statements 62,073 1,213,617 Impact of IFRS adjustments: Reversal of amortisation of goodwill having been written off in prior years 261 (1,861) Recognition of pre-operating expenses in income statement when they are incurred 101 (1,192) Government grants recognised as deferred income and subsidy income 1,447 (9,125) Reversal of amortisation of positive goodwill 1,060 1,060 Interest capitalised in property, plant and equipment 6,296 6,296 Difference arising from restatement of long-term payables to their current value (349) (349) Deferred income tax 8,269 28,106 As restated after IFRS adjustments 79,158 1,236,552 600801-G 华新-426 K5 AR EN.doc 128 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 12 Documents for Inspection Chapter 12 Documents for Inspection Financial Statements carrying the signatures of the legal representative, administrative leader of accounting and chief of accounting department. Original Auditors Report of Year 2005, audited and signed by ShineWing CPAs to domestic accounting standard, audited and signed by PriceWaterHouseCoopers Certified Public Accountants pursuant to international accounting standard. All original copies of the public notice and documents that were published on presses designated by China Securities Supervisory Committee. Chairman: Chen Musen Huaxin Cement Co., Ltd. March 3, 2006 600801-G 华新-426 K5 AR EN.doc 129 华新水泥股份有限公司 Huaxin Cement Co., Ltd. ANNUAL REPORT 2005 2005 年年度报告 Chapter 12 Documents for Inspection Declaration of Directors and Senior Management in Respect of Annual Report 2005 We, members of the board and senior management of Huaxin Cement Co., Ltd., believe that the Annual Report for 2005 of the Company truly and accurately reflects the operation results and financial position of the Company, hereby further guarantee that there is no false or misleading statement or material omission in this report, and shall be severally and jointly liable for the truthfulness, accuracy and completeness of its contents. Signature Chen Musen, Li Yeqing, Ji Changhua, Tom Clough, Daniel Bach, Paul Thaler, Zhang Tianwu, Xie Huobao, Lin Zongshou, Wang Ximing, Peng Qingyu, Kong Lingling, Ke Youliang, Feng Dongguang March 3, 2006 600801-G 华新-426 K5 AR EN.doc 130