宝石Ｂ(000413)2006年年度报告摘要（英文版）

Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 000413 Stock GBaoshi A Announcement Stock Code： 200413 2007-008 Abbreviation： Baoshi B No.: Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. §1 Important notes 1.1 The Board of Directors and the directors of the Company hereby warrant that there are no misstatement, misleading representation or important omissions in this report and shall assume joint and several liability for the authenticity, accuracy and completeness of the contents hereof. The summary of this annual report is selected from the annual report. If investors intend to know the detailed contents, they should read the full text of the annual report. 1.2 No director declares inability to warrant or objection to the authenticity, accuracy and completeness of the content of the Annual report. 1.3 Director(s) absented the board meeting Name of the Reason of absent Consignee director Zhang Junhao On business 1.4 Zhong Xi Certified Public Accountants audited the financial report of the Company for this report period and issued standard unqualified auditor's report. 1.5 Mr. Shang Jianbin, board chairman of the Company, Mr. Song Hongbo,charge of accounting, and Mr.Zhou Yumao, the person in charge of financial accounting organ represent and warrant the financial report in this annual report is true and complete. §2 Basic Information 2.1 Basic information Stock abbreviation Baoshi A, Baoshi B Stock code 000413, 200413 Stock exchange for Shenzhen Stock Exchange listing No.9, Huanghe Road, Shijiazhuang High-tech Industrial Development Area, Registered address Shijiazhuang, Hebei Province Zip code Zip code of Registered address:050035 No.9, Huanghe Road, Shijiazhuang High-tech Industrial Development Area, Business address Shijiazhuang, Hebei Province Website Nil E-mail bsdz@heinfo.net 2.2 Contact person and contact manner Board secretary Securities affair representative Name Fu Yinfang Wang Hua No.9, Huanghe Road, Shijiazhuang High-techNo.9, Huanghe Road, Shijiazhuang High-tech Contact address Industrial Development Area, Shijiazhuang,Industrial Development Area, Shijiazhuang, Hebei Province（Law Securities Dept） Hebei Province（Law Securities Dept） Tel 0311-86917771 0311-86917776 Fax 0311-86917775 0311-86917775 Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. E-mail bsdz@heinfo.net bsdz@heinfo.net §3 Highlights of Accounting Data and Financial Indicators 3.1 Main accounting data Unit: RMB 2006 2004 Increase/decrease (%) 2004 Income from key 60,312,797.91 78,743,962.00 -23.41% 112,932,152.00 business Total profit -95,285,182.93 -442,995,546.00 78.49% 28,360,348.00 Net profit -77,971,801.20 -363,531,415.00 78.55% 1,344,608,017.00 Net profit after deducting -87,312,916.00 -369,018,622.00 76.34% 629,714,616.00 non-recurring gains and losses Net cash flow from Operating activities -32,941,408.32 -15,728,855.00 -109.43% -63,863,849.00 End of 2006 End of 2005 Increase/decrease End of 2004 (%) Total assets 402,812,336.84 839,028,088.00 -51.99% 1,344,608,017.00 Shareholders' equity (not including 200,203,658.09 266,183,201.00 -24.79% 629,714,616.00 minority interests) 3.2 Main financial indicators Unit: RMB 2006 2005 Increase/decrease (%) 2004 Earnings per share -0.20 -0.95 78.95% 0.074 Earnings per share -0.20 - - - (Note) Return on net assets -38.95% -136.57% 97.62% 4.50% Return on net assets calculated on basis of net profit after -43.61% -138.63% 95.02% 2.43% deducting non-recurring gains and losses Net cash flow per share from operating -0.086 -0.04 115.00% -0.17 activities End of 2006 End of 2005 Increase/decrease (%) End of 2004 Net assets per share 0.523 0.69 -24.20% 1.64 Net assets per share 0.496 0.67 -25.97% 1.62 after adjustment Note: The earnings per share calculated based on new share capital if the share capital of the Company changed in the period from the end of the report period to the date of report disclosure. Items of non-recurring gains and losses √ Applicable □ Not applicable Unit:RMB Items of non-recurring gains and losses Amount Disposal of Long-term equity investment ,fixed assets, Construction-in-process , intangible -3,409,356.00 assets and income form other long-term assets.(less:income) Fund possession cost collected -865,833.00 Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Allowance for reduction of inventory -5,021,011.00 to market Fixed assets devalue provision -44,915.00 Total -9,341,115.00 Unit: RMB 3.3 Difference of domestic and foreign accounting standards √ Applicable□ Not applicable Unit: RMB Domestic accounting standards Overseas（international）accounting standards Net profit -95,285,182.93 -83,292,924.93 Adjustment made pursuant to international financial report standards: Profit of RMB Notes to difference 11992258 was made through disposal of an affiliated company. §4 Particulars about the Changes in Share Capital and Shareholders 4.1. Statement of changes in shares Unit: Shares Before this change Increase or decrease this time (+/-) After this change Quantity proportio Share Bonus Capitaliza other subtotal Quantity proportio n allotment shares tion of n common reserve fund I. Share with 237,925,0 -19,375,1 -19,375,1 218,549,8 conditional 62.12% 57.06% 00 50 50 50 subscription 1.State-owned 230,410,5 -18,777,2 -18,777,2 211,633,2 60.16% 55.26% shares 00 73 73 27 2.Staee-owned legal person 3,000,000 0.78% -244,485 -244,485 2,755,515 0.72% shares 3.Other domestic 4,514,500 1.18% -353,392 -353,392 4,161,108 1.09% shares Of which： Domestic legal 4,500,000 1.17% -366,727 -366,727 4,133,273 1.08% person shares Domestic natural person 14,500 0.00% 13,335 13,335 27,835 0.01% shares 4.Share held by foreign investors Of which： Foreign legal person shares Foreign natural person shares II. Shares with 145,075,0 19,375,15 19,375,15 164,450,1 unconditional 37.88% 42.94% 00 0 0 50 subscription 1.Common shares 45,075,00 19,375,15 19,375,15 64,450,15 11.77% 16.83% in RMB 0 0 0 0 2.Foreign shares 100,000,0 100,000,0 in domestic 26.11% 26.11% 00 00 market 3.Foregin shares in overseas market Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 4.Other III. Total of 383,000,0 383,000,0 100.00% 100.00% capital shares 00 00 The time for listing of shares subject to sale restriction Unit :Share Quantity of additional shares Balance of shares Balance of shares that can be listed Time subject to sale not subject to sale Remark and traded upon the restriction restriction expiration of sale restriction period Commitment of the controlling shareholder: Other shares subject to sale restriction shall not be listed, traded or assigned within 12 months from the implementation day of the plan for share holding structure reform. Upon the expiration of the said commitment period, the proportion of the quantity of original shares 2007-03-29 26,038,788 192,511,062 190,488,938 traded through stock exchange to the total shares of the Company shall not exceed 5% within 12 months and 10% within 24 months. The shares shall not be listed, traded or assigned within 12 months from the date of implementation of the plan for share holding structure reform. Commitment of the controlling shareholder: Other shares subject to sale restriction shall not be listed, traded or assigned within 12 months from 2008-03-29 19,150,000 173,333,227 209,638,938 the implementation day of the plan for share holding structure reform. Upon the expiration of the said commitment Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. period, the proportion of the quantity of original shares traded through stock exchange to the total shares of the Company shall not exceed 5% within 12 months and 10% within 24 months. The shares shall not be listed, traded or assigned within 12 months from the date of implementation of the plan for share holding structure reform. Commitment of the controlling shareholder: Other shares subject to sale restriction shall not be listed, traded or assigned within 12 months from the implementation day of the plan for share holding structure reform. Upon the expiration of the said commitment period, the proportion of the quantity of original shares 2009-03-29 173,333,227 0 382,972,165 traded through stock exchange to the total shares of the Company shall not exceed 5% within 12 months and 10% within 24 months. The shares shall not be listed, traded or assigned within 12 months from the date of implementation of the plan for share holding structure reform. The quantity of shares held by the top 10 shareholders subject to sale restriction and conditions of sale restriction Unit：Shares Name of Quantity of shares Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. shareholder Quantity of held by the Time when holding additional shares No. shareholder shares can be Conditions of sale restriction shares subject that can be listed subject to sale listed and traded to sale and traded restriction restriction 2007-03-29 19,150,000 2008-03-29 19,150,000 2009-03-29 The shares shall not be listed, traded or assigned within 12 months from the date of implementation of the plan for share holding structure reform； Upon the expiration of the said commitment period, the proportion of the quantity of original shares traded through stock exchange to the total shares of the Company shall not exceed 5% within 12 months and 10% within 24 months. In addition to statutory minimum commitment, the controlling shareholder of the Company Baoshi Group Co. made the following special commitments: Shijiazhuan (1) Commitment concerning selling price g Baoshi If non-negotiable shares held by it are sold through Shenzhen Stock Exchange 1 Electronic 211,282,799 within 36 months from the date of obtaining the right of negotiation, the selling Group Co., 172,982,799 price shall not be lower than RMB 2.5 per share (In case of dividend distribution, Ltd. bonus share distribution and capital surplus capitalization, such price shall be treated on ex-right and ex-dividend basis). If the price of the shares sold through securities exchange within the said term is lower than RMB 2.5 per share, the proceeds of selling shares shall belong to the Company. (2) To advance the consideration to be paid by shareholders holding non-negotiable shares who have not explicitly agreed to the plan In order to smoothly carry out this share holding structure reform, Baoshi Group Co. promised to advance the consideration to be paid by the shareholders holding non-negotiable shares who had not explicitly agreed to the plan as of the stock right registration date for the implementation of this plan for share holding structure reform for the obtainment of the right of listing and negotiation of the non-negotiable shares held by such shareholders. China Electronic The shares shall not be listed, traded or assigned within 12 months from the date 2 Import and 1,837,010 2007-03-29 1,837,010 of implementation of the plan for share holding structure reform. Export Corporation Shijiazhuang Trust The shares shall not be listed, traded or assigned within 12 months from the date 3 1,000,000 2007-03-29 1,000,000 Investment of implementation of the plan for share holding structure reform. Co., Ltd. Zhonghua Hebei The shares shall not be listed, traded or assigned within 12 months from the date 4 918,505 2007-03-29 918,505 Company of implementation of the plan for share holding structure reform. Shanghai Zhonghai The shares shall not be listed, traded or assigned within 12 months from the date 5 Exhibition 250,000 2007-03-29 250,000 of implementation of the plan for share holding structure reform. design Co., Ltd. Suzhou China The shares shall not be listed, traded or assigned within 12 months from the date 6 Young Travel 247,000 2007-03-29 247,000 of implementation of the plan for share holding structure reform. Co., Ltd. Shanghai Huaneng The shares shall not be listed, traded or assigned within 12 months from the date 7 construction 200,000 2007-03-29 200,000 of implementation of the plan for share holding structure reform. engineering Co., Ltd. Hubei Julong Investment The shares shall not be listed, traded or assigned within 12 months from the date 8 200,000 2007-03-29 200,000 Management of implementation of the plan for share holding structure reform. Co., Ltd. China Electric engineering The shares shall not be listed, traded or assigned within 12 months from the date 9 183,701 2007-03-29 183,701 Designing of implementation of the plan for share holding structure reform. Institute Shanghai The shares shall not be listed, traded or assigned within 12 months from the date 10 Yunbin Trade 150,000 2007-03-29 150,000 of implementation of the plan for share holding structure reform. Co., Ltd. Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 4.2 Top 10 shareholders and top 10 holders of unconditional shares hares Unit：Shares Total number of The Company had 31335 registered shareholders in total, including 18074 shareholders shareholders holding A shares and 13261 shareholders holding B shares. Particulars about the shareholding of the top ten shareholders Name of shareholder Nature ofProportion (%) shareholder Quantity of shares (state-owned Conditional shares Pledged or frozen held shareholder or foreign Shijiazhuang Baoshi State-owned Electronic Group Co., 55.17% 211,282,799 211,282,799 0 shareholder Ltd. Foreign Huang Mushun 0.98% 3,746,120 0 0 shareholder GUOTAI JUNAN Foreign SECURIES HONG 0.68% 2,609,084 0 0 shareholder KONG LIMITED China Electronic State-owned Import and Export 0.52% 2,000,000 2,000,000 0 shareholder Corporation Zhonghua Hebei Other 0.48% 1,837,010 1,837,010 0 Import and Export Co. Foreign Liu Jianxuan 0.29% 1,095,800 0 0 shareholder Shijiazhuang Trust Other 0.26% 1,000,000 1,000,000 0 Investment Co. Zhonghua Hebei Other 0.24% 918,505 918,505 0 Company Foreign Chen Yongquan 0.23% 885,362 0 0 shareholder Zhu Lei Other 0.22% 860,071 0 0 Foreign Xu Hongyan 0.19% 727,521 0 0 shareholder Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Type of shares Huang Mushun 3,746,120RMB Common shares GUOTAI JUNAN SECURIES Foreign shares placed in domestic 2,609,084 HONG KONG LIMITED exchange Foreign shares placed in domestic Liu Jiaxuan 1,095,800 exchange Foreign shares placed in domestic Chen Yongquan 885,362 exchange Zhu Lei 860,071RMB Common shares Foreign shares placed in domestic Xu Hongyan 727,521 exchange Shanghai Yibaohang Trade Co., Ltd. 677,105RMB Common shares Foreign shares placed in domestic ABN AMRO BANK NV 655,600 exchange Foreign shares placed in domestic Huang Shuling 570,600 exchange Foreign shares placed in domestic You Peiyun 555,100 exchange Notes to the related relationship between the top ten shareholders or The relation between the top ten shareholders was unknown. their concerted action Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. It was unknown whether they are persons taking concerted action specified in Regulations on the Information Disclosure of the Change of Shareholding of Shareholders of Listed Companies. The relation between the top ten shareholders holding unconditional shares was unknown. 4.3 Introduction of the controlling shareholder and actual controller 4.3.1 Change of the controlling shareholder and actual controller □Applicable□√Not applicable 4.3.2 Particulars about the controlling shareholder and other actual controller The controlling shareholder of the Company is Shijiazhuang Baoshi Electronic Group Co., Ltd. Legal representative: Shang Jianbin. Date of establishment: June 13, 2004. Registered capital: RMB 1.389 billions, Business scope: Dealing in state-owned capital within authorized scope, color cathode-ray tube series products and supporting electronic components, etc. 2.Particulars about the actual controllers of the Company （1）China Great Wall Asset Management Co. China Great Wall Asset Management Co. is a solely state-owned financial enterprise with independent corporate capacity. Shijiazhuang Representative Office is the detached organ of the head office. It is mainly engaged in acquisition, management and disposition of the bad assets separated from Hebei Branch of Agricultural Bank of China within authorized scope and financial and securities business approved by finance supervision department. 4.3.3 The block diagram of the title and control relationship between the Company and actual controller is as follows: China Great China Orient Shijiazhuang China Huarong Wall Asset Asset State-owned Asset Management Management Assets Management 48.3% 27.45% 17.74% 6.51% Shijiazhuang Baoshi Electronic Group Co., Ld 55.26% Shijiazhuang Baoshi Electronic Glass Co., Ld §5 Particulars about Directors, Supervisors and Senior Executives 5.1 Change of Shareholding and Remuneration of Directors, Supervisors and Senior Executives Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Receivi ng remuner ation and Whether Shares Shares subsidy receivin held at Date of Date of held at Reason for g Name Title Sex Age the form the beginning ending the change remuner year-begi company ation or year-end nning in subsidy reporti ng term(RM B 0000) Shang Board Male 48 2006-09-05 2009-09-05 0 00 0.00 Yes Jianbin chairman Song General Male 52 2006-09-05 2009-09-05 0 00 10.28 No Hongbo manager The Company implement ed share holding structure reform and Zhou Director Male 41 2006-09-05 2009-09-05 6,800 9,724 shareholde 0.00 Yes Bo rs holding negotiable shares obtained shares as considerati on. Director, Fu Fem Board 39 2006-09-05 2009-09-05 0 00 4.80 No Yinfang ale secretary Yu Independen Rengan Male 60 2006-09-05 2009-09-05 0 00 1.00 No t director g Han Independen Male 42 2006-09-05 2009-09-05 0 00 1.00 No Zhiguo t director Zhang Independen Male 38 2006-09-05 2009-09-05 0 00 1.00 No Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Junha t director o Chairman Xie of the Mengxi superviso Male 50 2006-09-05 2009-09-05 0 00 0.00 Yes ong ry committee The Company implement ed share holding structure reform and Fan Zhenpin Supervisor Male 50 2006-09-05 2009-09-05 1,000 1,430 shareholde 0.00 Yes g rs holding negotiable shares obtained shares as considerati on. The Company implement ed share Li Huimin Supervisor Male 52 2006-09-05 2009-09-05 2,400 3,432 holding 2.78 No g structure reform and shareholde rs holding Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. negotiable shares obtained shares as considerati on. Hao Supervisor Male 53 2006-09-05 2009-09-05 0 00 2.22 No Junze The Company implement ed share holding structure reform and Li Hong Supervisor Male 52 2006-09-05 2009-09-05 800 1,144 shareholde 2.56 No rs holding negotiable shares obtained shares as considerati on. Lin Supervisor Male 27 2006-09-05 2009-09-05 0 00 0.00 Yes Xiang Wang Fem Supervisor 33 2006-09-05 2009-09-05 0 00 0.00 Yes Zhining ale Wang Deputy Male 44 2006-09-05 2009-09-05 0 00 3.70 No Xiaohu GM Yan Deputy Male 54 2006-09-05 2009-09-05 0 00 3.13 No Guang GM ZhangW Deputy Male 55 2006-09-05 2009-09-05 0 00 3.23 No enhai GM Zhou General Male 54 2006-09-05 2009-09-05 0 00 3.28 No Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Yumao Accountant Total - - - - - 11,000 15,730 - 38.98 - §6 Report of the Board of Directors 6.1 Discussion and analysis of the overall operation status The Company is engaged in the electronic parts and components industry, mainly in the manufacturing and sales of electronic vacuum glass devices and supporting electronic parts and components, export of the self-produced products of the Company and the import of mechanical equipment, parts and components, raw and auxiliary materials needed by the Company. In the report period, the progress of industrial upgrading concerning replacement of traditional CRT TV by flat television gradually accelerated. The market competition of color TV industry was fierce. The price of CRT products continued to be on low level. The price of raw materials and energy was kept on a high level. The Company faced great challenges. Facing unfavorable situation, the Company, on the one hand, strengthened technical renovation and innovation, constantly introduced new products according to market change to meet market demand, paid special attention to cost control, further lowered product cost through energy saving and consumption reduction and made efforts to guarantee the market share of products. On the other hand, the Company swapped out the equity of SBEG through implementation of asset reorganization to pay off debts of big amount so as to cut off loss source, reduce loss, improve financial condition and optimize asset structure. Through the above main measures, the Company ensured normal proceeding of production and operation. In the report period, the output of pins, anode caps and L-35 glass tubes was 152.62 million, 17.76 million and 5689 tons respectively. The sales volume of pins, anode caps and L-35 glass tubes was 155.09 million, 17.65 million and 5559 tons respectively. In the report period, income from main operation, Profit of main operation ,Investment Income , from main operation of the Company were RMB 60.3128 million, RMB 17.7781 million, RMB –84.7322,RMB-77.9718 million respectively. The gross profit rate and market share of its products were 30.65% and 30% respectively. Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 6.1.1 Analysis of difference between shareholders' equity calculated according to the prevailing accounting standards and that calculated according to new standards on January 1, 2007 from which new accounting standards are implemented √ applicable □not applicable (I) Analysis of difference between shareholders' equity calculated according to the prevailing accounting standards and that calculated according to new standards on January 1, 2007 from which new accounting standards are implemented: According to Cai Kuai (2006) No. 3 Circular of Printing and Issuing 38 Concrete Standards including No. 1 Accounting Standard for Business Enterprises - Inventories issued by Ministry of Finance on February 15, 2006, the Company should implement new Accounting Standards for Business Enterprises from January 1, 2007. The difference between accounting items pursuant to current accounting standards and new accounting standards on January 1, 2007, i.e., the day of first implementation, confirmed by the Company according to new accounting standards promulgated by Ministry of Finance is as follows: 1. Income tax In accordance with current accounting standards, the Company formulated accounting policies and made provision for bad debts in respect of accounts receivable and provision for impairment of fixed assets according to such accounting policies. New accounting standards will form the difference between book value of assets and tax base of assets (the former is less than the latter), generated deferred income tax assets and increased retained earnings as at January 1, 2007 by RMB 27,963,102. Owner's equity belonging to the parent company increased by RMB 27,196,490 and the owner's equity belonging to minority shareholders increased by RMB 766,611. 2. Minority interests Minority interests of RMB 9,208,551 of subsidiaries in the consolidated statements as at December 31, 2006 prepared by the Company according to current accounting standards will be accounted for as shareholders' equity according to new accounting standards. As a result, shareholders' equity as at January 1, 2007 will increase by RMB 9,208,551. In addition, as the equity belonging to minority shareholders in the deferred income tax assets generated by subsidiaries' provision for bad debts is RMB 766,611, minority interests pursuant to new accounting standards will be RMB 9,975,162. (II) According to the Company's strategic goals and business plan for the next year, the Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. possible change of accounting policies and accounting estimate after implementation of new accounting standards and its influence on the Company's financial position and operating results are mainly as follows: 1. In accordance with the prevailing accounting policies, the Company shall account for equity investment in subsidiaries on equity basis. In accordance with No.2 Accounting Standard for Business Enterprises -- Long-term Investment, the Company shall change to account for such investment on cost basis. Thus, the influence of operating profit and loss of subsidiaries on the Company's investment income for current period will decrease but this matter will not affect the Company's consolidated statements. 2. According to No. 18 Accounting Standard for Business Enterprises - Income Tax, the Company will change tax payable method under current policies to accounting method of tax payment influence for balance sheet, which will affect the Company's income tax expenses for current period and thus affect its profit and shareholders' equity. 3. According to new No. 9 Accounting Standard for Business Enterprises - Remuneration of Staff and Workers, the Company shall confirm remuneration of staff and workers payable according to actual situation and plan for welfare of staff and workers. Administrative expenses will be adjusted according to the difference between this amount and the welfare expenses payable originally transferred to remuneration of staff and workers payable and the Company's profit and shareholders' equity will thus be affected. (III) The said difference and influence may be adjusted according to the further explanation of new accounting standards by the Ministry of Finance. 6.2 Table of the status of key business in terms of line of business or product Unit: RMB'0000 The Status of key business in terms of line of business In terms of Increase/decre line of Income from Cost of key Gross profit Increase/decrease Increase/decrease ase of gross business or key business business rate (%) of income (%) of cost (%) profit rate (%) product Kinescope parts and 5,803.16 3,717.81 35.93% -7.64% -10.99% -2.41% components for color TV 6.3 The status of key business in terms of areas Unit: RMB'0000 Area Income from key business Increase/decrease of income (%) North China 6,031.28 -23.41% 6.4 Utilization of fund raised from financing actions □Applicable□√Not applicable Changing of projects □Applicable□√Not applicable 6.5 Utilizing of Non-raised fund Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. □Applicable□√Not applicable 6.6 Explanation of the board of directors to the "nonstandard opinions" □Applicable□√Not applicable 6.7 The preplan of the board of directors for profit distribution or capitalization of capital common reserve fund √ applicable□ not applicable As audited by Zhongxi Certified Public Accountants Co., Ltd., the net profit of the Company for 2006 was RMB-77，971，801.20 .The board of directors of the Company has decided neither to distribute profit nor capitalize any capital surplus for the report year. This preplan is to be submitted to 2006 annual shareholders' general meeting for examination. The Company made profit in the report period but did not make cash profit distribution preplan. □ applicable√ not applicable §7 Important Events 7.1 Asset acquisition □ applicable√ not applicable 7.2 Disposal of assets √ applicable □not applicable Net profit Wheth contributed Wheth er by this sale er the claims of assets to Relat title to and the Gain or ed the debts Note to Transaction Selling Company loss trans assets involv Assets sold Day of sale pricing party price from the from actio has ed principle beginning the sale n or been have of the not wholly been report year transfe wholly to the day rred transfe of sale rred Shijiazhuang Baoshi 49% equity of Subject to 1,199.2 Electronic SBEG owned by 2006-11-30 36,934.51 -8,473.22 Yes appraised Yes Yes 3 Group Co., SBCB value Ltd. The influence of the matters involved in item 7.1 and 7.2 on the continuity of the Company's business and stability of its management . The said disposal of assets had no influence on the continuity of the Company's business and the stability of its management. SBEG suffered sharp decrease of operating results and huge loss due to industrial influence. The assignment of the equity of SBEG held by the Company to Baoshi Group can avoid bigger loss to the Company. Setting off huge debt payable to Baoshi Group with the payment for assignment of equity of SBEG and the claims on SBEG reduced annual expenditure of fund possession cost of the Company and SBCB. The implementation of this transaction is in favor of the development of the Company and interests of all shareholders. Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 7.3 Material guarantee √ applicable□ not applicable Guarantees provided by the Company(Not including the guarantees provided to controlled subsidiaries) Date of guarantee Whether provided to Name of object Amount of Type of Guarantee Whether creation(Date of related parties(Yes or of guarantee guarantee guarantee period terminated agreement signing) no) Shijiazhuang Mortgage Construct 2006-09-18 1,880.00 1 year No No guarantee Investement Co. Total amount of guarantee in the report 1,880.00 Total balance of guarantee in the report 1,880.00 （A） Guarantees provided by the Company to its controlled subsidiaries Total amount of guarantees provided to controlled subsidiaries in the report 0.00 period Total balance of guarantees provided to controlled subsidiaries at the end of 0.00 the report period（B） Total amount of guarantees provided by the company (including the guarantees provided to controlled subsidiaries) Total amount of guarantee（A+B） 1,880.00 The proportion of total amount of guarantees to the net assets of the 9.39% Company Of which ： Guarantees provided to the shareholders, substantial controllers 0.00 and the related parties.© Guarantees provided to objects with over70%in liability/capital rate, 0.00 directly or indirectly(D) Amount of guarantee over50％ of the 0.00 net asset（E） Total of the above 3*（C+D+E） 0.00 Note：While filling in the aforesaid three guarantee amounts(C+D+E), If three conditions occurred in one guarantee, only one calculation was needed in the total calculations. 7.4 Particulars of related transactions 7.4.1 Related sales and purchases √applicable□not applicable Unit：RMB’0000 Sales of products and rendering of services to Purchases of products and acceptance of services Related party related parties from related parties The proportion of The proportion of transaction Transaction transaction amount to total Transaction amount to total amount of amount amount of similar amount similar transactions transactions Shijiazhuang Baoshi Electronic Group Co., 3,665.61 17.53% 0.00 0.00% Ltd. Shijiazhuang Baoshi Electric Pin 14,054.14 67.21% 0.00 0.00% Glass Co., Ltd. Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Shijiazhuang Baoshi Large-diameter 159.46 1.07% 0.00 0.00% Plastic Tube Co., Ltd. Baodong Electronic 267.67 1.80% 0.00 0.00% Co., Ltd. Shijiazhuang Baoshi Ruiming Co., 54.75 0.37% 0.00 0.00% Ltd. Shijiazhuang Baoshi Zhonghe 45.97 0.31% 0.00 0.00% steel model Material Co., Ltd. Henan Puyang Baoshi 1.55 0.03% 0.00 0.00% Co., Ltd. Total 18,249.15 88.32% 0.00 0.00% Of which: The total amount of product sales or rendering of services of the Company to its controlling shareholder and subsidiaries was RMB 182.4913 million in the report period. 7.4.2 Related creditor's rights and debts √applicable□not applicable Unit：RMB’0000 Financing to related party Financing of related party to the Company Related party Transaction Transaction Balance Balance amount amount Shijiazhuang Baoshi 0.00 0.00 -34,662.24 1,641.99 Electronic Group Co., Ltd. Shijiazhuang Baoshi Electric Pin Glass Co., 3,045.08 9,715.50 0.00 0.00 Ltd. Shijiazhuang Baoshi Large-diameter 103.56 543.39 0.00 0.00 Plastic Tube Co., Ltd. Baodong Electronic Co., -87.65 44.35 0.00 0.00 Ltd. Shijiazhuang Baoshi 34.94 281.20 0.00 0.00 Ruiming Co., Ltd. Shijiazhuang Baoshi Zhonghe steel model 21.91 290.29 0.00 0.00 Material Co., Ltd. Henan Puyang Baoshi Co., -12.28 122.49 0.00 0.00 Ltd. Total 3,105.56 10,997.22 -34,662.24 1,641.99 Of which: The Company provided funds of RMB 431.0556 million to its controlling shareholder and subsidiaries in the report period. The balance of the funds provided by the Company to them was RMB 109.9722 million. 7.4.3 Progress of repayment of the funds occupied at the end of 2005. □applicable√not applicable Occupation of funds newly increased in 2006 □ Applicable √ Not applicable Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. In case of the Company's failure to complete the repayment of the occupation of non-operating funds by the end of 2006, relevant reason, measures for debt repayment and plan for responsibility ascertainment □ Applicable √ Not applicable 7.5 Entrusted asset management □ Applicable □√ Not applicable 7.6 Performance of commitments 7.6.1 Commitment during the share merger reform made by the original non-tradable shareholders and its implementations. √applicable□not applicable Name of shareholder Special commitment Status of commitment Remark fulfillment (1) Commitment concerning selling price If non-negotiable shares held by it are sold through Shenzhen Stock Exchange within 36 months from the date of obtaining the right of negotiation, the selling price shall not be lower than RMB 2.5 per share (In case of dividend distribution, bonus share distribution and capital surplus capitalization, such price shall be treated on ex-right and ex-dividend basis). If the price of the shares sold through As of the end Shijiazhuang Baoshi securities exchange within the said term is lower of the report To be fulfilling based Electronic Group than RMB 2.5 per share, the proceeds of selling on commitment. period, in Co., Ltd. shares shall belong to the Company. commitment term (2) To advance the consideration to be paid by shareholders holding non-negotiable shares who have not explicitly agreed to the plan In order to smoothly carry out this share holding structure reform, Baoshi Group Co. promised to advance the consideration to be paid by the shareholders holding non-negotiable shares who had not explicitly agreed to the plan as of the stock right registration date for the implementation of this plan for share holding structure reform for the obtainment of the right of listing and negotiation of the non-negotiable shares held by such shareholders. 7.6.2 Amount of tradable shares with unrestricted conditions held by originalnon-tradable shareholders whose holding proportion exceeded 5% at the end of report period. □applicable√not applicable 7.7 Significant lawsuit and arbitrations □applicable√not applicable Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. §8 Report of the Supervisor Committee √ applicable□not applicable (1) The operation of the Company according to law In 2006, the Company was able to operate in accordance with relevant laws and regulations of the state, the Articles of Association of the Company and the resolutions of shareholders' general meeting. Its decision making procedure was legal. The Company established corresponding internal control system while gradually perfecting its corporate administration structure. No act of the directors and managers of the Company was found to violate the laws, regulations and the Articles of Association or harm the Company's interests when they performed their duties. （2）The 2006 financial reports of the Company truly reflected the financial status and operating results of the Company. Zhongxi Certified Public Accountants Co., Ltd. issued auditor's report with highlighted points. （3）. The Company did not raise funds in the report period. （4）. The Company neither acquired nor disposed of assets in the report period. After examining relevant agreements, documents and data, the supervisory committee of the Company held the opinion that the assignment of 49% equity to SBEG to Baoshi Group contributed to avoiding bigger loss incurred to the Company and reducing interest expenses of fund possession cost of big amount annually payable by the Company to Baoshi Group. The price of this transaction was based on the appraised value of 49% equity of SBEG provided by an appraisal agency with qualification for securities business after appraisal and determined after reduction of audited loss generated by the subject matter of assignment in the period from the base day of appraisal to the audit day of equity delivery. The transaction price was determined in a fair and reasonable way. A board meeting of the Company examined and adopted the said proposal. Related directors performed the duty of absence during vote according to law. The examination procedure of this transaction was legal and valid. The implementation of this transaction will not harm the interests of the Company and all shareholders. （5）. The related transactions were fair and did not harm the interests of the Company. §9 Financial Report 9.1 Audit opinion Audit opinion: Audit opinion with highlighted points Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 9.2 Financial Statements 9.2.1 Balance Sheet Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. December 31, 2006 Unit：RMB Year-end balance Year-beginning balance Items Consolidated Parent company Consolidated Parent company Current assets: Monetary capital 1,781,405.86 1,407,545.90 36,495,356.00 34,409,795.90 Short-term investment 0.00 0.00 0.00 0.00 Bills receivable 5,263,528.80 5,263,528.80 28,466,234.00 28,466,234.38 Dividends receivable 0.00 0.00 0.00 0.00 Interests receivable 0.00 0.00 0.00 0.00 Accounts receivable 38,727,924.63 38,727,924.63 16,780,477.00 16,780,477.00 Other receivables 91,922,235.60 86,701,515.96 13,415,407.00 12,010,359.00 Prepayments 6,753,469.18 6,753,469.18 1,657,716.00 1,657,715.39 Subsidy receivable 0.00 0.00 0.00 0.00 Inventory 24,469,376.20 24,277,701.08 32,157,984.00 31,987,684.35 Expenses to be amortized 5,846.80 5,846.80 17,731.00 17,730.40 Long-term creditors' right investment to mature 0.00 0.00 0.00 0.00 within one year Other current assets 58,000,000.00 0.00 58,000,000.00 0.00 Receivables form subordinate Company 0.00 0.00 56,543,811.00 32,934,964.00 Total current assets 226,923,787.07 163,137,532.35 243,534,716.00 158,264,960.42 Long-term investment Long-term equity investment 0.00 39,929,930.00 405,270,483.00 103,011,598.61 Long-term creditors' right investment 0.00 0.00 0.00 0.00 Total long-term investment 0.00 39,929,930.00 405,270,483.00 103,011,598.61 Consolidated price difference 0.00 0.00 0.00 0.00 Fixed assets Fixed assets- Original cost 373,786,802.10 320,305,697.99 364,404,618.00 310,808,737.48 Less: accumulated depreciation 215,797,339.68 200,073,643.68 202,763,532.00 189,386,434.98 Net value of fixed assets 157,989,462.42 120,232,054.31 161,641,086.00 121,422,302.50 Less: Fixed asset depreciation reserve 3,077,055.86 987,260.75 3,121,971.00 987,260.75 Net amount of fixed assets 154,912,406.56 119,244,793.56 158,519,115.00 120,435,041.75 Engineering materials 24,728.50 24,728.50 0.00 0.00 Construction-in-process 82,570.83 82,570.83 361,464.00 361,464.05 Fixed assets liquidation 0.00 0.00 0.00 0.00 Total Fixed asset 155,019,705.89 119,352,092.89 158,880,579.00 120,796,505.80 Intangible assets and other assets: Intangible asset 13,145,572.56 13,145,572.56 13,470,087.00 13,470,086.28 Long-term expenses to be amortized 7,723,271.32 7,723,271.32 7,711,826.00 7,711,825.99 Other long-term assets 0.00 0.00 0.00 0.00 Long-term receivables form subordinate 0.00 0.00 10,160,397.00 0.00 Company Total intangible assets and 20,868,843.88 20,868,843.88 31,342,310.00 21,181,912.27 Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. other assets Deferred tax Debit item of deferred tax 0.00 0.00 0.00 0.00 Total assets 402,812,336.84 343,288,399.12 839,028,088.00 403,254,977.10 Current liabilities Short-term loan 5,381,025.52 0.00 5,403,892.00 0.00 Bills payable 89,999.90 50,000.00 5,010,580.00 4,970,579.38 Accounts payable 23,184,431.15 20,752,477.64 13,693,177.00 11,261,223.49 Accounts received in advance 1,264,012.82 1,264,012.82 1,711,878.00 1,711,877.68 Wages payable 0.00 0.00 0.00 0.00 Welfare expenses payable 4,242,084.70 3,716,019.06 3,765,307.00 3,283,037.23 Dividends payable 0.00 0.00 0.00 0.00 Tax payable -2,711,528.96 -1,089,778.68 665,936.00 -113,411.21 Other accounts to be paid 120,617.95 19,593.93 158,559.00 55,337.56 Other payables 43,802,935.99 117,132,384.40 402,294,365.00 114,320,098.48 Expenses drawn in advance 39,939,548.28 1,240,031.86 39,565,430.00 1,583,034.00 Estimated liabilities 0.00 0.00 0.00 0.00 Long-term liabilities within one year 0.00 0.00 0.00 0.00 Other current liabilities 78,087,000.00 0.00 80,702,000.00 0.00 Total current liabilities 193,400,127.35 143,084,741.03 552,971,124.00 137,071,776.61 Long-term liabilities Long-term loan 0.00 0.00 0.00 0.00 Bonds payable 0.00 0.00 0.00 0.00 Long-term accounts payable 0.00 0.00 0.00 0.00 Special accounts payable 0.00 0.00 0.00 0.00 Other long-term liabilities 0.00 0.00 0.00 0.00 Total long-term liabilities 0.00 0.00 0.00 0.00 Deferred tax Debit item of deferred tax 0.00 0.00 0.00 0.00 Total liabilities 193,400,127.35 143,084,741.03 552,971,124.00 137,071,776.61 Minority interest 9,208,551.40 0.00 19,873,763.00 0.00 Owner's equity（or shareholders' equity）: Share capital 383,000,000.00 383,000,000.00 383,000,000.00 383,000,000.00 Less:：return investment 0.00 0.00 0.00 0.00 Share capital 383,000,000.00 383,000,000.00 383,000,000.00 383,000,000.00 Capital common reserve 550,253,744.43 550,253,744.43 538,261,486.00 538,261,485.63 Surplus common reserve 27,454,788.05 27,454,788.05 27,454,788.00 27,454,788.05 Of which: Statutory public welfare fund 0.00 0.00 8,350,163.91 8,350,163.91 Retained profit -760,504,874.39 -760,504,874.39 -682,533,073.00 -682,533,073.19 Of which:：Cash dividends 0.00 0.00 0.00 0.00 No acknowledgement 0.00 0.00 0.00 0.00 Investment loss Converted difference of foreign currency 0.00 0.00 0.00 0.00 statements Total owner's equity（or 200,203,658.09 200,203,658.09 266,183,201.00 266,183,200.49 shareholders' equity）: Total liabilities and owner's equity（or 402,812,336.84 343,288,399.12 839,028,088.00 403,254,977.10 shareholders' equity） 9.2.2 Profit and Profit Distribution Statement Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. January-December 2006 Unit：RMB Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Report period Same period of the previous year Items Consolidated Parent company Consolidated Parent company I. Income from the key business 60,312,797.91 60,312,797.91 78,743,962.00 78,743,962.00 Less: Cost of key business 41,824,472.37 41,824,472.37 56,825,593.00 56,825,593.00 Key business tax and surtax 710,227.11 710,227.11 893,749.00 893,749.00 II. Profit from key business (negative for 17,778,098.43 17,778,098.43 21,024,620.00 21,024,620.00 loss) Add: Profit from other businesses(negative for 6,776,146.40 5,351,393.12 18,485,104.00 15,158,895.00 loss) Less: Operating expenses 424,185.90 424,185.90 1,866,276.00 1,866,275.00 Administration expenses 30,507,237.84 27,520,024.96 53,438,124.00 50,271,822.00 Financial expenses 7,577,717.81 1,515,471.55 16,249,332.00 2,990,784.00 III. Operating profit(negative for loss) -13,954,896.72 -6,330,190.86 -32,044,008.00 -18,945,366.00 Add: Investment income(negative for -84,732,237.41 -75,073,927.41 -410,936,211.00 -344,570,721.00 loss) Subsidy income 0.00 0.00 0.00 0.00 Non-operating income 3,521,836.29 3,521,836.29 147,510.00 147,509.00 Less: non-operating expenses 119,885.09 89,519.22 162,837.00 162,837.00 IV. Total profit(negative -95,285,182.93 -77,971,801.20 -442,995,546.00 -363,531,415.00 for loss) Less: income tax 0.00 0.00 0.00 0.00 Gains and losses of minority shareholders -17,313,381.73 0.00 -79,464,131.00 0.00 Add：no acknowledgement 0.00 0.00 0.00 0.00 investment loss V. Net profit(negative -77,971,801.20 -77,971,801.20 -363,531,415.00 -363,531,415.00 for loss) Add: Year-beginning -682,533,073.19 -682,533,073.19 -319,001,658.00 -319,001,658.19 retained profit Other amount transferred in 0.00 0.00 0.00 0.00 VI. Distributable -760,504,874.39 -760,504,874.39 -682,533,073.00 -682,533,073.19 profit Less: Statutory surplus common reserve 0.00 0.00 0.00 0.00 appropriated Statutory public welfare fund 0.00 0.00 0.00 0.00 appropriated Staff and workers' bonus and welfare fund 0.00 0.00 0.00 0.00 appropriated Reserve fund appropriated 0.00 0.00 0.00 0.00 Enterprise development fund appropriated 0.00 0.00 0.00 0.00 Returned investment income 0.00 0.00 0.00 0.00 VII. Profit distributable to investors -760,504,874.39 -760,504,874.39 -682,533,073.00 -682,533,073.19 Less: Dividend of preferred shares payable 0.00 0.00 0.00 0.00 Discretionary surplus common reserve 0.00 0.00 0.00 0.00 appropriated Dividend of common shares payable 0.00 0.00 0.00 0.00 Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Capitalized dividends of common shares 0.00 0.00 0.00 0.00 VIII、Retained profit -760,504,874.39 -760,504,874.39 -682,533,073.00 -682,533,073.19 Profit Statem （Supplementary information:） 1. Proceeds from the sales or disposal of departments 0.00 0.00 0.00 0.00 or invested companies 2. Losses from natural calamities 0.00 0.00 0.00 0.00 3. Total profit increased (or decreased) by the change of accounting 0.00 0.00 0.00 0.00 policy 4. Total profit increased (decreased) by the change 0.00 0.00 0.00 0.00 of accounting estimate 5. Losses from debt restructuring 0.00 0.00 0.00 0.00 6. Other 0.00 0.00 0.00 0.00 9.2.3 Cash Flow Statement Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. January-December 2006 Unit：RMB Report period Items Consolidated Parent company I. Cash flow from operating activities: Cash received from commodity sales and labor provision 175,813,933.46 162,948,007.57 Refunded taxes and levies 0.00 0.00 Other cash receipts related to operating activities 9,489,101.67 4,843,442.94 Cash paid for purchasing commodities and accepting labor 185,303,035.13 167,791,450.51 Cash paid to and for staff and workers 175,407,434.69 173,720,212.98 Cash paid to and for staff and workers 12,479,077.97 12,271,862.17 Taxes and levies paid 9,631,669.16 8,610,233.22 Other cash payments related to operating activities 20,726,261.63 4,432,587.67 Subtotal of cash outflow 218,244,443.45 199,034,896.04 Net cash flow from operating activities -32,941,408.32 -31,243,445.53 2. Cash flow from investing activities Cash received from investment recovery 0.00 0.00 Cash received from obtaining investment 0.00 0.00 income Net cash received from the disposal of fixed assets, intangible assets and other long-term assets 6,668,408.51 6,668,408.51 Other cash receipts related to investing activities 0.00 0.00 Subtotal of cash inflow 6,668,408.51 6,668,408.51 Cash paid for constructing or purchasing fixed assets, intangible assets and other long-term assets 8,440,949.98 8,427,212.98 Cash payment to Investment activities 0.00 0.00 cash payment other related to investment activities 0.00 0.00 Subtotal of cash outflow 8,440,949.98 8,427,212.98 Net cash flow from investing activities -1,772,541.47 -1,758,804.47 3. Net cash flow from financing activities Cash received from absorption of investment 0.00 0.00 Cash received from loan 0.00 0.00 Other cash receipts from financing activities 0.00 0.00 Subtotal of cash inflow 0.00 0.00 Cash paid for debt repayment 0.00 0.00 Cash paid for distribution of dividends or profits or interest reimbursement 0.00 0.00 Other cash payment related to financing activities 0.00 0.00 Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. Subtotal of cash outflow 0.00 0.00 Net cash flow from financing activities 0.00 0.00 4. Influence of the change of exchange rate on cash 0.00 0.00 5. Net increase of cash and cash equivalents -34,713,949.79 -33,002,250.00 Supplementary information:: 1. Adjusting net profit to net cash flow in operating activities: Net profit -77,971,801.20 -77,971,801.20 Add: Asset depreciation reserve provided -2,101,292.57 2,126,379.34 Fixed assets depreciation 14,465,395.00 11,669,350.99 Amortization of intangible assets 332,764.00 332,764.00 Amortization of long-term expenses to be amortized 0.00 0.00 Decrease of expenses to be amortized (Less: increase) 11,884.20 11,884.20 Increase of expenses drawn in advance (Less: decrease) 374,118.28 -343,002.14 The losses from the disposal of fixed assets, intangible assets and other long-term assets (less: 0.00 0.00 gains) Loss from scrapping of fixed assets 33,864.16 3,498.29 Financial expenses 7,577,718.00 1,515,471.55 Investment losses (less: gains) 84,732,237.41 75,073,927.41 Credit item of deferred tax (Less: debit item) 0.00 0.00 Decrease of inventories(less: increase) 10,283,058.00 10,304,434.61 Decrease of operating accounts receivable (less: increase) -82,347,324.00 -49,843,542.67 Increase of operating accounts payable(less: decrease) 28,981,352.13 -4,122,809.91 Other 0.00 0.00 Gains and losses of Minority shareholders -17,313,381.73 0.00 Net cash flow from operating activities -32,941,408.32 -31,243,445.53 2. Investing and financing activities not involving cash receipts and expenditure Debts converted into capital 0.00 0.00 Convertible corporate bond to mature within one year 0.00 0.00 Fixed assets under financing lease 0.00 0.00 3. Net increase of cash and cash equivalents Balance of cash at the end of the period 1,781,405.86 1,407,545.90 Less: Balance of cash at the beginning of the period 36,495,355.65 34,409,795.90 Add: Balance of cash equivalent at the end of the 0.00 0.00 period加： Less: Balance of cash equivalent at the beginning of the period 0.00 0.00 Net increase/decrease) of cash and cash equivalents -34,713,949.79 -33,002,250.00 9.3 Compared with the annual report of the previous year, the change of accounting policies and accounting estimate and the correction of accounting errors did not occur in this report period. □ applicable√ not applicable 9.4 Content of significant accounting, amount of correction, reasons and its influence □ applicable√ not applicable 9.5 The consolidation scope of this report period remained unchanged compared with the annual report of the previous year. □ applicable√ not applicable Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. 9.6 Reconciliation statement of shareholders' equity difference caused by change of accounting standards Unit：RMB Name Amount Shareholders' equity as of December 31, 2006 (as per 200,203,658.09 prevailing accounting standards) Long-term equity investment difference 0.00 Including: Long-term equity investment difference formed by the merger of enterprises under the same 0.00 control Credit balance of other long-term equity investment 0.00 calculated on equity basis Real estate as investment to be calculated according to 0.00 fair value mode The provision for depreciation in previous years to be made retroactively due to estimation of assets 0.00 retirement expenses The compensation for dismissal that satisfies the 0.00 conditions for recognizing estimated liabilities Payment for shares 0.00 The obligation of reorganization that satisfies the 0.00 conditions for recognizing estimated liabilities Enterprise merger 0.00 Including: Book value of good will of merged 0.00 enterprises under the same control Provision for impairment of goodwill made 0.00 according to new standards Financial assets calculated according to fair value whose change is accounted for as profits or losses for 0.00 current period and financial assets available for sale Financial liabilities calculated according to fair value whose change is accounted for as profits or losses for 0.00 current period Equity increased by splitting of financial instruments 0.00 Derived financial instruments 0.00 Income tax 27,963,102.00 Minority Shareholder Equity 9,208,551.00 Other 0.00 Shareholders' equity as of January 1, 2007 (as per 237,375,311.09 prevailing accounting standards) Review opinions of certified public accountants Review Report Zhong Xi Shen Zi (2007) No. 01076 To all shareholders of Shijiazhuang Baoshi Electronic Glass Co., Ltd.: We reviewed the accompanying Reconciliation Statement of Shareholders' Equity Difference Caused by Change of Accounting Standards (hereinafter referred to as "Difference Reconciliation Statement") of Shijiazhuang Baoshi Electronic Glass Co., Ltd. (hereinafter referred to as "the Company"). It is the responsibility of the management of the Company to prepare the Difference Reconciliation Statement in accordance with relevant provisions of No. 38 Accounting Standard for Business Enterprises Article - Implementation of Accounting Standards for Business Enterprises for the First Time and the Circular of Proper Financial and Accounting Information Disclosure Concerning New Accounting Standards issued by China Securities Regulatory Commission (Zhen Jian Fa (2006) No. 136 Document, hereinafter referred to as the Circular). We are responsible for issuing review report on the Difference Reconciliation Statement based on our review. We conducted review in accordance with relevant provisions of the Circular and by reference to the provisions of No. 2101 Review Standard for Chinese Certified Public Accountants - Review of Financial Statements. This Summary of 2006 Annual Report of Shijiazhuang Baoshi Electronic Glass Co., Ltd. standard requires us to plan and conduct review to obtain limited assurance as to whether the Difference Reconciliation Statement is free from material misstatement. Review is mainly limited to inquiring of relevant personnel of the Company about accounting policies concerning the Difference Reconciliation Statement and all important confirmation, finding out the computational process of reconciliation amount in the Difference Reconciliation Statement and reading the Difference Reconciliation Statement to consider whether the designated basis for preparation is followed as well as implementing analysis procedure when necessary. The extent of guarantee provided by review is lower than that provided by audit. As no audit has been conducted, we do not express audit opinions. According to our review, we have not observed any matter that makes us believe the Difference Reconciliation Statement was not prepared in accordance with relevant provisions of No. 38 Accounting Standard for Business Enterprises - Implementation of Accounting Standards for Business Enterprises for the First Time and the Circular in all material aspects. In addition, we remind the users of the Difference Reconciliation Statement to note that there may be difference between shareholders' equity at the beginning of 2007 stated in the Difference Reconciliation Statement (pursuant to new accounting standards) and the corresponding data stated in the financial report for 2007, as mentioned in the Difference Reconciliation Statement attached hereinafter and the "important note" in notes. (No text on this page) Chinese C.P.A.: Wang Yinai Zhongxi Certified Public Accountants Co., Ltd. Chinese C.P.A.: Liu Junyong Beijing China Date of report: April 5, 2007 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Chairman of the board of directors: Shang Jian Bin April 10, 2007