粤华包Ｂ(200986)2006年年度报告摘要（英文版）

FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Stock Code:200986 Stock ID:Yuehuabao B Announcement No. 2007-006 FOSHAN HUAXIN PACKAGING CO., LTD. SUMMARY OF ANNUAL REPORT 2006 §1. Important Notes 1.1 The Board of Directors, the Supervisory Committee, directors, supervisors and senior executives of Foshan Huaxin Packaging Co., Ltd. (hereinafter referred to as the Company) warrant that this report does not contain any false or misleading statements or omit any material facts and all information set forth herein are true, accurate and complete. The summary of annual report 2006 is abstracted from the full text of such report; the investors are suggested to read the full text of such report to understand more details. 1.2 None of the directors, supervisors, senior management demonstrated uncertainty or disagreement about the truthfulness, accuracy, and completeness of this annual report. 1.3 All directors attended the Board meeting. 1.4 Guangdong Hengxin Delu Certified Public Accountants Co., Ltd. produced a standard unqualified Auditor’s Report for the Company. 1.5 Wang Qi, Chairman of the Board, Tan Shanghui, the person in charge of accounting affairs and Mao Zhizhu, manager of the Financial Department hereby ensure that the financial report enclosed in this 2006 Annual Report is a true and complete report. 1.6 This report has been prepared in Chinese and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report shall prevail. §2. Company Profile 2.1 Basic information Short form of the stock Foshan Huaxin Packaging B Stock code 200986 Listed stock exchange Shenzhen Stock Exchange Registered address No. 18, the 5th Jihua Road, Foshan Post code 528000 Office address 18th Floor, Jinghua Building, the 5th Jihua Road, Foshan Post code 528000 FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Internet website of the Company http://www.fshxp.com E-mail of the Company hf_zhouqh@fshxp.com 2.2 Contact person and contact method Secretary of the Board Securities Affairs Representative Name Zhou Qihong Contact address 18th Floor, Jinghua Building, the 5th Jihua Road, Foshan Telephone 0757-83981729 Fax 0757-83992026 E-mail hf_zhouqh@fshxp.com §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB Increase/decrease 2006 2005 compared with the 2004 last year（％） Income from main 670,134,266.81 604,126,491.12 10.93% 592,388,037.27 operations Total profit 88,711,759.61 73,366,607.28 20.92% 101,609,395.71 Net profit 86,049,103.07 70,018,600.47 22.89% 89,952,537.72 Net profit after deducting 83,098,211.72 70,174,644.40 18.42% 89,780,078.51 non-recurring gains and losses Net cash flow from 207,820,847.72 37,524,206.66 453.83% 58,343,514.75 operating activities Increase/decrease At the end of At the end of compared with the At the end of 2006 2005 end of the last 2004 year（％） Total assets 2,772,661,095.22 2,178,899,877.68 27.25% 1,591,392,595.17 Shareholder’s equity (excluding minority 1,152,216,170.80 1,066,167,067.73 8.07% 996,148,467.26 interests) 3.2 Major financial indexes Increase/decrease 2006 2005 compared with the 2004 last year（％） Earnings per share 0.20 0.16 25.00% 0.21 Earnings per share 0.20 - - - (note) Return on equity (%) 7.47% 6.57% 0.90% 9.03% Return on equity calculated based on net profit after deducting 7.21% 6.81% 0.40% 9.01% non-recurring gains and losses (%) FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Net cash flow per share arising from operating 0.473 0.085 456.47% 0.13 activities Increase/decrease At the end of At the end of At the end of compared with the 2006 2005 2004 end of last year（％） Net assets per share 2.62 2.43 7.82% 2.27 Net assets per share 2.61 2.41 8.30% 2.25 after adjustment Note: Earnings per share was calculated based on new share capital if the Company’s share capital from the end of report period to disclosure date of this report had been changed. Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Items of non-recurring gains and losses Amounts Gains/losses from disposal of long-term equity investment, fixed assets, project 969,389.21 in construction, intangible assets and other long-term assets Other various non-operating income/expenses 18,200.00 Return of various reserve for impairment withdrawn in the previous years 1,502,033.76 Income from transfer of New-style Materials Sub-company 577,595.09 Impact on income tax -116,326.71 Total 2,950,891.35 3.3 Difference in net profit as audited under PRC GAAP and IFRS: √Applicable □Inapplicable Unit: RMB PRC GAAP IFRS Net profit 86,049,103.07 81,629,000.00 Net profit (RMB’0000) As per IFRS 8,162.90 1. Amortization of the balance of equity investment -89.29 Explanation on the difference 2. Exchange gain of principal of foreign currency loans shall not be capitalized 761.30 3. Other -230.00 As per Accounting System for Business Enterprise 8,604.91 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share Unit:10,000 share Before the Change Increase/Decrease Of the Change (+,-) After the Change Number Allotment Capitalization Proportion Bonus Number of Proportion of of new of public Others Subtotal (%) shares shares (%) shares shares reserve I. Non-circulating 29,000 65.98% 29,000 65.98% shares 1. Promoters’ shares 29,000 65.98% 29,000 65.98% Including: State-owned shares Domestic legal 29,000 65.98% 29,000 65.98% person shares Foreign legal person shares Others FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— 2. Raised legal person shares 3. Employees’ shares 4. Preference shares or others Ⅱ. Listed circulating 14950 34.02% 14950 34.02% shares 1. RMB common shares 2. Domestically listed 14950 34.02% 14950 34.02% foreign shares 3. Overseas listed foreign shares 4. Others Ⅲ. Total shares 43,950 100.00% 43,950 100.00% 4.2 Statement of shares held by the top ten shareholders and the top ten tradable shareholders Unit: share(s) Total number of shareholders 19,278 Particulars about shares held by the top ten shareholders Total number of Number of shares Share pledged or Full name of Shareholder Type of shares Proportion shares held subject to moratorium frozen FOSHAN HUAXIN State-owned 65.20% 286,532,200 286,532,200 0 DEVELOPMENT CO., LTD. shareholders LIN CHU BIN Foreign 0.45% 1,969,297 Unknown shareholders HUANG JIA HAO Foreign 0.38% 1,650,851 Unknown shareholders WU HAO YUAN Foreign 0.26% 1,149,699 Unknown shareholders Foreign ABN AMRO BANK NV 0.22% 980,200 Unknown shareholders SURE WIDE INTERNATIONAL Foreign 0.22% 955,000 Unknown LIMITED shareholders Foreign PIAO JOY GUANGSHI 0.15% 651,744 Unknown shareholders HUANG HONG ZHUO Foreign 0.15% 650,000 Unknown shareholders THE CJINA INDEX FUND Foreign 0.14% 598,968 Unknown LIMITED shareholders LI FANG Foreign 0.13% 551,100 Unknown shareholders Particulars about shares held by the top ten shareholders holding shares not subject to moratorium Name of shareholders Numbers of shares not subject to Type of shares moratorium held LIN CHU BIN 1,969,297 Domestically listed foreign share HUANG JIA HAO 1,650,851 Domestically listed foreign share WU HAO YUAN 1,149,699 Domestically listed foreign share ABN AMRO BANK NV 980,200 Domestically listed foreign share SURE WIDE INTERNATIONAL LIMITED 955,000 Domestically listed foreign share PIAO JOY GUANGSHI 651,744 Domestically listed foreign share HUANG HONG ZHUO 650,000 Domestically listed foreign share THE CHINA INDEX FUND LIMITED 598,968 Domestically listed foreign share LI FANG 551,100 Domestically listed foreign share LI SHUN QI 546,500 Domestically listed foreign share Explanation on associated ① There exist no associated relationship between the controlling of the Company and other top relationship among the above nine shareholders and they are action-in-concert among them as described by Administrative shareholders or consistent Rules on Information Disclosure about Changing of Shareholding Status.; However It is unknown action whether there is any relationship among other top 9 shareholders, or whether there is any action-in-concert among them as described by Administrative Rules on Information Disclosure FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— about Changing of Shareholding Status. ② There were no shares held by the shareholders holding over 5% pledged in the report period. 4.3 Particulars about the controlling shareholders and actual controllers of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controllers of the Company □Applicable √Inapplicable 4.3.2 Introduction to detail situation for the controlling shareholders and the actual controllers About the Company’s controlling shareholder: Foshan Huaxin Development Co., Ltd. (FHD) holds 286,532,200 of the Company’s state-owned legal person shares (non-tradable), taking 65.2% of the total share capital. FHD was incorporated on May 27, 1993; its legal representative is Tong Laiming; its registered capital is RMB 457.93 million; its business scope: production, manufacture and distribution of packing materials, papermaking, cable, wire, new materials; distribution of packing machinery and repairing services, amplifiers and fittings, decoration materials, and drinks; information consulting, etc. Foshan Huaxin Development Co., Ltd. has 7 legal person shareholders, of which China Material Development and Investment Corporation holds 62.11% of the registered capital in FHD; China Material Development and Investment Company registered through State Administrative Bureau in June, 1988 and now is wholly state-owned enterprise of China Chengtong Holding Group. China Chengtong Holding Group (hereinafter refer to as China Chengtong) was China Chengtong Group formerly and was set up in accordance with the admission ticket NMXE Zi (1998)No.189 issued by State Administration for Domestic Trade on Jan. 22, 1998 as a large scale logistic enterprise group approved by State Administration for Industry and Commerce Bureau and managed by SASAC. China Chengtong owned the largest chain logistic distribution and allotment network and metal distribution network in the mainland and transportation net combining seas, railways, highway and airlines. In accordance with the Circular on Establishing and Perfecting the Pilot Work of Board of Directors in State-owned Companies by Central Enterprises promulgated by SASAC in June 2004, China Chengtong is selected by the SASAC as the pilot standard Board of Directors in the first seven pilot enterprises for establishing and perfecting the Board of Directors. China Chengtong has been on a rapid developing way and move towards the goal of international modern enterprises. The registered capital of the Chengtong is RMB1, 546,950,000 and the legal person is Mr. Ma Zhengwu, the registered address is Northern Yuetan Street No. 25, Western District of Beijing. The registered number of business license is 1000001002867. The major business of the Company is storage logistic and metal trade, etc. 4.3.3 The property right and controlling relationship between the Company and the actual controller are as follows: FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— SASAC 100% China Chengtong Holding Group 100% China Materials Development Investment Company 78.25% Jiacheng Enterprise Development Co., Ltd. 62.11% 6.62% Foshan Huaxin Development Co., Ltd. 0.11% 65.2% Foshan Huaxin Packing Co., Ltd. §5. Particulars about Directors, Supervisors and Senior Management 5.1 Particulars about changes in shares held by directors, supervisors and senior management Whether draw Drawing the the total payment remuneration Shares held Shares Reasons from the from the Name Title Sex Age Office terms at held at for Company in shareholding year-begin year-end changes the report companies or period(‘0000) other related units or not Chairman of Jun. 1, 2005- Wang Qi Male 53 0 0 0.00 Yes the Board May 31, 2008 Vice Tong Oct. 1, 2005- Chairman of Male 37 0 0 0.00 Yes Laiming May 31, 2008 the Board Tan Jun. 1, 2005- Director Male 56 0 0 0.00 No Shanghui May 31, 2008 Aug. 1, 2005- Xu Xinmin Director Male 43 0 0 0.00 Yes May 31, 2008 Jun. 1, 2005- He Jichang Director male 50 0 0 0.00 Yes May 31, 2008 Jun. 1, 2005- Huang Xin Director Male 43 0 0 0.00 Yes May 31, 2008 Sun Independent Jun. 1, 2005- Male 58 0 0 3.80 No Sheng’ai Director May 31, 2008 Zhong Independent Jun. 1, 2005- Male 53 0 0 3.80 No Liuhan Director May 31, 2008 Independent Jun. 1, 2005- Ge Yun Female 43 0 0 3.80 No Director May 31, 2008 Zhou Secretary of Sep. 1, 2006- Male 39 0 0 9.71 No Qihong the Board May 31, 2008 Chairman of Chen Jun. 1, 2005- Supervisory Female 55 0 0 0.00 Yes Zeqing May 31, 2008 Committee Ji May 1, 2006- Supervisor Male 32 0 0 0.00 Yes Xiangdong May 1, 2008 Gong Jun. 1, 2005- Supervisor Male 50 0 0 0.00 Yes Heping May 31, 2008 Huang Jun. 1, 2005- Supervisor Male 55 0 0 0.00 Yes Dabiao May 31, 2008 Huang Weiji Supervisor Male 53 Jun. 1, 2005- 0 0 0.00 Yes FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— May 31, 2008 Tan General Mar. 1, 2006- Male 56 0 0 50.05 No Shanghui Manager Jun. 30, 2008 Deputy Chen Mar. 1, 2006- General Male 41 0 0 44.21 No Haiyan Jun. 30, 2008 Manager Deputy Mar. 1, 2006- Chen Jiali General Male 49 0 0 41.54 No Jun. 30, 2008 Manager Deputy Mar. 1, 2006- Huang Xin General Male 43 0 0 28.22 No Jun. 30, 2008 Manager Deputy Mar. 1, 2006- Lu Liang General Male 34 0 0 37.12 No Jun. 30, 2008 Manager 0 0 - 222.25 - §6 Report of the Board of Directors 6.1 Discussion and analysis by the management team In the report period, the whole profit competence of domestic papermaking industry was decreased. On one hand, cost of raw material has increased, and price of international wood pulp was continuously increased with influence of increased need, production competence closure of North America and increased price of energy. At the same time, the costs of national paper companies were boosted in a large extent effected by waste paper demand of America and increasing import waste paper price of America. On the other hand, rapid industry energy lease made various kind of paper decrease gap between supply & demand and further decreased the price of national paper products. The continuous operation of supper raw materials and tight supply of coal, electricity and oil brought great pressure to cost control of the Company. Besides, the new project of national coated manila operation changed the frame of the market and made the competition more violent. The prices of products were extruded and the whole profits of the Company were affected. Facing the above-mentioned unfavorable business environment, the Company minimized the influence of such environment through improving production capacity, reducing wastage, enhancing quality management level and enhancing marketing strength. For the year, the income from main operation of the Company was RMB 670 million, an increase of 10.93% over the same period of the previous year. Its profit from main operation was RMB 55 million, a decrease of 8.81% over the same period of the previous year. Its net profit was RMB 86 million, an increase of 22.89% over the same period of the previous year. The net profit after deduction of non-recurring gains and losses was RMB 83 million, an increase of 18.39% over the same period of the previous year. 6.1.1 Possible accounting policies change and accounting estimate change subsequent to implementation of new accounting standards and the impact on the Company's financial status and operating results √Applicable □Inapplicable The Company has executed Accounting Standard for Business Enterprises issued by ministry of financial from Jan. 1, 2007. According to the regulation of Accounting Standard for Business Enterprises, the changes of accounting method on long-term share equity investment balance will produce influence of account treating on the investment income of the Company. After the tax shelter of the Company, the changes of accounting method of the Company would affect the net profit of the Company in a certain extent. Generally, as the Company continuously adhered to product accounting policies, the act of new Accounting Standard for Business Enterprise did not influence financial status and FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— operating results of the Company. 6.2 Main operations classified according to industries or products Unit: RMB’0000 Increase or Increase or Increase or decrease of decrease of decrease of Profit ratio of income from profit ratio of Classified cost from main Income from Cost of main main main main according to operations main operations operations operations operations operations industries compared with (%) compared compared with the last year with the last the last year (%) year (%) (%) Papermaking 56,499.69 52,906.33 6.36% 9.84% 12.45% -2.18% Printing 10,296.80 8,440.28 17.86% 25.88% 25.06% 0.37% Paper products 557.11 515.18 7.53% -53.67% -48.84% -8.73% Increase or Increase or Increase or decrease of decrease of decrease of income from Profit ratio of Classified Profit ratio of cost from main Income from Cost of main main main according to main operations main operations operations operations operations products operations compared with compared compared with the last year with the last the last year (%) year (%) (%) White board 56,499.69 52,906.33 6.36% 9.84% 12.45% -2.18% Presswork 10,296.80 8,440.28 17.86% 25.88% 25.06% 0.37% Composite paper 557.11 515.18 7.53% -53.67% -48.84% -8.73% can and other 6.3 Main operations classified according to area Unit: RMB’0000 Areas Income from main operations Increase/decrease of income from main operations over the last year (%) Domestic 24,352.67 -35.42% Overseas 43,000.93 89.38% 6.4 Use of the raised proceeds □Applicable √Inapplicable Particulars about the changed projects □Applicable √Inapplicable 6.5 Application of the non-raised proceeds √Applicable □Inapplicable Unit: RMB’0000 Name of projects Investment amount Progress of projects Earnings of in the year projects Huafeng Zhuhai 300,000 Successfully put into material tons coating white board in Sep. 2006, and put into the 133,389.00 project stage of trial-production in Oct. 2006. Total 133,389.00 - - 6.6 Explanation of the Board of Directors on the “Qualified Opinion” issued by the Certified Public Accountants □Applicable √Inapplicable FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— 6.7 Preplan of profit distribution or capitalization of common reserves for 2006 made by the Board of Directors √Applicable □Inapplicable As audited by the domestic certified public accountants, i.e., Guangdong Hengxin Delu Certified Public Accountants Co., Ltd., and the overseas certified public accountants, i.e., Hong Kong Ted Ho, retained by the Company for 2006 respectively according to Chinese accounting standards for business enterprises and international accounting standards, the after-tax profit of the Company for 2006 was RMB 86,049,103.07 and RMB 81,629,000.00 respectively. According to the provisions of Detailed Rules for Implementation of the Regulations on Domestically Listed Foreign Investment Shares of Joint Stock Limited Companies and the Articles of Association of the Company, dividends shall be distributed based on the lower of the cumulative after-tax distributable profit determined respectively according to Chinese accounting standards for business enterprises and international accounting standards. Based on the net profit of RMB 86,049,103.07 realized in 2006, after allocations of RMB 8,604,910.31 for statutory common reserve, plus year-beginning cumulative undistributed profit of RMB 270,276,737.22, therefore the profit as of the year available for distribution to shareholders is RMB 347,720,929.98. The Company would plan to distribute cash dividend of RMB 0.5 (tax included) for every 10 shares and bonus shares at the rate of 1.5 shares for 10 shares to all shareholders based on the total share capital of 439,500,000 shares as at Dec. 31, 2006 a total dividend of RMB 21,975,000. The retained profit of RMB 259,820,929.98 was carried forward to the next year for distribution. The above draft distribution plan shall be implemented so long as it is examined and passed in the Shareholders’ General Meeting. The Company did not appropriate share distribution preplan though the Company achieved the profit in the report period □Applicable √Inapplicable §7 Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable Explanation on the influences exerted by the issues mentioned in 7.1 and 7.2 upon the continuity of the Company’s business and the stability of the management team: 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 External guarantee of the Company (excluding the guarantee for the shareholding subsidiaries) Date of occurrence Guarantee for Name of the Company Amount of Guarantee Guarantee Accomplished (date of agreement related party guaranteed guarantee type term or not signed) (yes or not) Total amount of guarantee occurred in the report period 0.00 Total balance of guarantee at the end of the report period (A) 0.00 FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Guarantee of the Company for the shareholding subsidiaries Total amount of guarantee occurred for shareholding subsidiaries in the report period 8,500.00 Total balance of guarantee occurred for shareholding subsidiaries at the end of the report period (B) 42,463.39 Total amount of external guarantee of the Company (Including the guarantee for the shareholding subsidiaries) Total amount of guarantee (A+B) 42,463.39 The proportion of the total amount of guarantee in the net assets of the Company 36.85% Of which: The amount of guarantee provided for shareholders, actual controller and 0.00 other related parties(C) Guarantee amount for the debts of the guaranteed companies with an 0.00 asset-liability ratio of over 70 percent, directly or indirectly(D) The amount by which the total guarantee amount exceeded 50 percent of the 0.00 net assets (E) Total amount of the above three guarantees (C+D+E) 0.00 * Notice: as filling the “total amount of the above three guarantees” (C+D+E), total calculation is only once, provided a guarantee event presenting with the above three at one time. 7.4 Significant related transactions 7.4.1 Related transactions concerning routine operation □Applicable √Inapplicable 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Related parties Funds provided by the listed Funds provide by related parties to company to related parties listed company Occurred amount Balance Occurred amount Balance Huaxin Development Co., Ltd. 0.00 0.00 34,100.00 42,100.00 Total 0.00 0.00 34,100.00 42,100.00 Of which: The funds provided by the Listed Company to controlling shareholder and its subsidiaries during the report period totaled RMB 0.00, as well as the balance of RMB 0.00. 7.4.3 Progress of repayment on the capital occupied as at the end of 2005 □Applicable √Inapplicable New capital occupation in the year 2006 □Applicable √Inapplicable In case of the Company's failure to complete the repayment of the capital occupation of non-operating as at the end of 2006, relevant reason, measures for debt repayment and plan for responsibility ascertainment □Applicable √Inapplicable 7.5 Financing entrustment □Applicable √Inapplicable 7.6 Implementation of commitments 7.6.1 The commitments made by the original shareholders holding nontradable shares during the Share Merger Reform and their implementation FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— □Applicable √Inapplicable 7.6.2 The quantity of shares not subject to moratorium held by the original nontradable shareholders who hold over 5% of total shares at the end of the report period □Applicable √Inapplicable 7.7 Significant lawsuits and arbitrations □Applicable √Inapplicable §8 Report of the Supervisory Committee √Applicable □Inapplicable The Board of Supervisors believed that the company has operated strictly in accordance with the relevant laws and regulations, and that there is no problem on the financial situation, the use of funds, the purchase and sales transactions and the joint transactions of the company. §9 Financial Report 9.1 Auditing opinion: the standard unqualified auditors’ report 9.2 Financial statement FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated statement of income for the year ended 31 December 2006 (Expressed in Renminbi) Note 2006 2005 Rmb’000 Rmb’000 Revenue 3 670,134 604,126 Cost of sales (615,453) (545,247) ––––––––– ––––––––– Gross profit 54,681 58,879 Other operating income 4 4,810 1,696 Selling expenses (15,940) (17,882) Administrative expenses (38,478) (39,489) ––––––––– ––––––––– Operating profit before net financing income 5,073 3,204 ––––––––– ––––––––– Financial income 6 1,457 20,660 Financial expenses 6 (11,466) (1,519) ––––––––– ––––––––– Net financing costs (10,009) 19,141 ––––––––– ––––––––– Share of profit of an associate 13 86,739 70,387 ––––––––– ––––––––– Profit before tax 81,803 92,732 Income tax expense 7(a) (174) (1,061) ––––––––– ––––––––– Profit for the year 81,629 91,671 ======== ======== Attributable to: - Equity shareholders of the company 83,486 84,960 - Minority interest (1,857) 6,711 ––––––––– ––––––––– Profit for the year 81,629 91,671 ======== ======== Basic earnings per share 8 RMB 0.19 RMB 0.19 ======== ======== FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated balance sheet at 31 December 2006 (Expressed in Renminbi) Note 2006 2005 Rmb’000 Rmb’000 Assets Property, plant and equipment 9 671,254 647,408 Lease prepayments 10 52,714 50,606 Goodwill 11 640 640 Construction in progress 12 1,372,653 878,672 Investment in an associate 13 200,637 183,972 Other investments 14 3,213 3,213 –––––––– –––––––– Total non-current assets 2,301,111 1,764,511 –––––––– –––––––– Inventories 15 136,728 88,525 Accounts receivable 16 97,546 90,991 Bills receivable 42,525 49,131 Deposits, prepayments and other receivables 63,947 19,064 Amount due from an associate 241 - Taxation 7(c) 14,132 - Cash and cash equivalents 17 112,900 157,833 –––––––– –––––––– Total current assets 468,019 405,544 –––––––– –––––––– Total assets 2,769,130 2,170,055 ======= ======= FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated balance sheet at 31 December 2006 (Continued) (Expressed in Renminbi) Note 2006 2005 Rmb’000 Rmb’000 Equity Share capital 18 439,500 439,500 Reserves 19 695,425 611,939 –––––––– –––––––– Total equity attributable to equity shareholders of the company 1,134,925 1,051,439 Minority interest 182,540 184,397 –––––––– –––––––– Total equity 1,317,465 1,235,836 –––––––– –––––––– Liabilities Interest-bearing bank loans 20 349,269 436,275 –––––––– –––––––– Total non-current liabilities 349,269 436,275 –––––––– –––––––– Interest-bearing bank loans 20 433,213 282,572 Taxation 7(c) - 83 Amount due to immediate holding company 430,367 80,000 Amount due to an associate - 538 Accounts payable 204,490 96,486 Bills payable 18,959 23,043 Other payables and accrued expenses 15,367 15,222 –––––––– –––––––– Total current liabilities 1,102,396 497,944 –––––––– –––––––– Total liabilities 1,451,665 934,219 –––––––– –––––––– Total equity and liabilities 2,769,130 2,170,055 ======= ======= FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated statement of changes in equity for the year ended 31 December 2006 (Expressed in Renminbi) Total equity attributable to equity shareholders Share of the Minority Total capital Reserves company interest equity Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Note 19 At 1/1/2005 439,500 523,940 963,440 185,347 1,148,787 Opening balance adjustment arising from change in accounting policy - 3,039 3,039 - 3,039 ––––––– ––––––– –––––––– ––––––– –––––––– Restated balance at 1/1/2005 439,500 526,979 966,479 185,347 1,151,826 Profit for the year - 84,960 84,960 6,711 91,671 Distribution to minority shareholders - - - (7,661) (7,661) ––––––– ––––––– –––––––– ––––––– –––––––– At 31/12/2005 439,500 611,939 1,051,439 184,397 1,235,836 ====== ====== ======= ====== ======= At 1/1/2006 439,500 611,939 1,051,439 184,397 1,235,836 Profit for the year - 83,486 83,486 (1,857) 81,629 ––––––– ––––––– –––––––– ––––––– –––––––– At 31/12/2006 439,500 695,425 1,134,925 182,540 1,317,465 ====== ====== ======= ====== ======= FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated statement of cash flows for the year ended 31 December 2006 (Expressed in Renminbi) Note 2006 2005 Rmb’000 Rmb’000 Operating activities Profit before taxation 81,803 92,732 Adjustments for: - Depreciation 39,393 37,398 - Amortisation 882 882 - Financial income (1,457) (20,660) - Interest expenses 11,466 1,519 - Losses/(gains) on disposal of property, plant and equipment 594 65 - Provision for inventories (988) 1,394 - Impairment loss for bad and doubtful debts (1,579) 812 - Share of profit of an associate (86,739) (70,387) ––––––– –––––– Cash flows from operating activities before changes in working capital 43,375 43,755 Increase in inventories (47,215) (5,838) (Increase)/decrease in accounts receivable and bills receivable 1,630 (6,844) Decrease/(Increase) in deposits, prepayment and other receivables (45,124) 6,950 Increase/(Decrease) in amount due to an associate (538) 538 Increase in accounts payable and bills payable 103,920 25,077 (Increase)/Decrease in other payables and accrued expenses 145 (7,716) ––––––– –––––– Cash generated from operations 56,193 55,922 PRC income tax paid (14,389) (1,845) ––––––– –––––– Cash flows from operating activities 41,804 54,077 ––––––– –––––– FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Consolidated statement of cash flows for the year ended 31 December 2006 (Continued) (Expressed in Renminbi) Note 2006 2005 Rmb’000 Rmb’000 Investing activities Interest received 946 993 Dividends received 70,074 99,600 Payment for acquisitions of property, plant and equipment and construction in progress (557,814) (626,702) Increase of lease prepayments (2,990) (2,990) Capital injection to an associate - (12,415) Proceeds from disposal of unlisted equity securities investments - 1 ––––––– ––––––– Cash flows from investing activities (489,784) (541,513) ––––––– ––––––– Financing activities Interest paid (10,955) (29,450) New bank loans 540,954 562,872 Repayment of bank loans (477,319) (131,593) Advance from immediate holding company 350,367 80,000 Dividends paid to minority shareholder - (7,661) ––––––– ––––––– Cash flows from financing activities 403,047 474,168 ––––––– ––––––– Net decrease in cash and cash equivalents (44,933) (13,268) Cash and cash equivalents at 1 January 157,833 171,101 ––––––– ––––––– Cash and cash equivalents at 31 December 17 112,900 157,833 ====== ====== 9.3 Compared with the latest Annual Report, explanation on changes in accounting policy, accounting estimate and measure method in the report period. □Applicable √Inapplicable 9.4 Compared with the latest Annual Report, explanation on significant accounting errors or changed amounts, hence no reasons or influences. □Applicable √Inapplicable 9.5 Compared with the latest Annual Report, there were some changes in the consolidation statement scope: □Applicable √Inapplicable 9.6 Reconciliation statement about difference in shareholders’ equity between the new accounting standard and the old accounting standard FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Unit: RMB Items Amount Shareholder’s Equity as at Dec.31, 2006 (current Accounting Standards) 1,152,216,170.80 Balance of long-term equity investment -28,841,607.37 Of which: balance of long-term equity investment formed in the merger of an enterprise under -40,682,689.96 the same control Credit balance for long-term equity investment calculated based on equity method 11,841,082.59 Investment real estate measured based on fair value model Depreciation over the past years supplemental withdrew due to dismantling cost of assets Employee termination indemnity according with projected liability Share based payments Reorganization obligation according with projected liability Business Combinations 555,568.25 Of which: Book value of goodwill formed in the merger of an enterprise under the same 555,568.25 control Reserve for impairment of goodwill withdrawn based on new accounting standards Financial assets measured in line with fair value and its change amounts was recognized in profit or loss of current period and available-for sale financial assets Financial liability measured in line with fair value and its change amounts was recognized in profit or loss of current period Equity increased due to division of financial instruments Derivative financial instruments Income Tax 2,816,865.45 Minority interests 182,124,467.30 Other Shareholder Equity as at Jan. 1, 2007 (New Accounting Standard) 1,308,871,464.43 Review Opinion of Certified Public Accountant Foshan Huaxin Packaging Co., Ltd. Review Report on Reconciliation Statement about Difference in Shareholders’ Equity between New Accounting Standard and Old Accounting Standard (2007) HDZZ No. 77 To all shareholders of Foshan Huaxin Packaging Co., Ltd. We have reviewed the accompanying reconciliation statement about difference of shareholder’s equity between calculated the new accounting standard and the old accounting standard (the “Reconciliation Statement”) of Foshan Huaxin Packaging Co., Ltd. (the “Company”). Management is responsible for the reparation and fair presentation of this reconciliation statement in accordance with Accounting Standard for Business Enterprises No. 38 – First Time Adoption of Accounting Standard for Business Enterprises and the Circular on Doing Well the Financial Information Disclosure Related to the New Accounting Standard (ZJF[2006] No. 136, hereinafter referred to as the “Circular”). Our responsibility is to express a review report on this reconciliation statements based on our review. In accordance with the relevant provisions of the Circular, we conducted our review according to the provisions of the Standard on Review Engagements for CPAs of China No. 2101 – Engagements to Review Financial Statements. Such standard require that we plan and perform the review to obtain limited assurance whether this reconciliation statement are free from material misstatement. A review limits to enquiring for the relevant personnel and the relevant accounting policies and all materials reorganization, knowing calculation process of amount in the reconciliation statement, reading the reconciliation statement to consider whether follow the designated reparation basis and implement analysis procedure. The review provides the lower assurance than audit. We did not conduct the auditing, thus we did not express any auditing opinion. Based on our review, we believed that the reconciliation statement was prepared in accordance with FOSHAN HUAXIN PACKAGING CO., LTD.SUMMARY OF ANNUAL REPORT 2006 ————————————————————————————————————————— Accounting Standard for Business Enterprises No. 38 – First Time Adoption of Accounting Standard for Business Enterprises and the Circular in full. Furthermore, we call persons using such reconciliation statement for attention, the accompanying presentation of reasons listed in important notes of the reconciliation statement, for instance, the possible difference in the consolidated shareholder’s equity as at Jan. 1, 2007 prepared under New Accounting Standard listed in such reconciliation statement and the relevant data listed in Financial Report 2007 in the future exists. Guangdong Hengxin Delu Certified Public Accountants Co., Ltd. CPA: Du Xiaoqiang CPA: Yu Donghong Zhuhai · China 18 April 2007 Chairman of the Board: Wang Qi Foshan Huaxin Packaging Co., Ltd. Apr. 18, 2007