方大Ｂ(200055)2007年度报告摘要（英文版）

China Fangda Group Co., Ltd. Summary of Annual Report 2007 Stock Code: 000055, 200055 Stock ID: Fangda A, Fangda B Announcement No. 2008-06 China Fangda Group Co., Ltd. Summary of Annual Report 2007 §1 Important Declaration 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This summary is abstracted from the completed text of Annual Report 2005, for details of the report please go to the complete version. 1.2 None of the directors, supervisors, nor senior executives is holding uncertain opinion or disagreement over the truthfulness, accuracy, and completeness over the Annual Report. 1.3 Name of the Director Reason of absent Consignee Wen Simei Business engagement Zheng Xueding 1.4 Ascenda Certified Public Accountants issued standard auditing report without qualified opinion on the Financial Statements 2007. 1.5 Mr. Xiong Jianming, the Chairman, and Mr. Lin Kebing, the Financial Principal hereby declares that: The financial statements carried in this annual report are of verity and complete. §2 Company Profile 2.1 Company Profile Stock ID Fangda A, Fangda B Stock Code 000055、200055 Stock Exchange Shenzhen Stock Exchange Reg. Add. Fangda Building, Kejinan 12th Avenue, High-tech Zone, Shenzhen, PR China. Post Code 518057 Office address Technology Building, Fangda Town, Xili Longjing, Nanshan District, Shenzhen, PRC Post Code: 518055 Website www.fangda.com Email. fd@fangda.com 1 China Fangda Group Co., Ltd. Summary of Annual Report 2007 2.2 Liaison People Secretary of the Board Representative of Stock Affairs Name Zhou Zhigang Wang Shuiying Technology Building, Fangda Town, Xili Technology Building, Fangda Town, Xili Address Longjing, Nanshan District, Shenzhen, Longjing, Nanshan District, Shenzhen, PRC PRC Tel. 86(755) 26788571 ext. 6622 86(755) 26788571 ext. 6622 Fax. 86(755)26788353 86(755)26788353 Email. zqb@fangda.com zqb@fangda.com §3 Financial Highlights 3.1 Major accounting data In RMB Yuan Increase/decrease Year 2007 Year 2006 Year 2005 (%) Not adjusted Adjusted Adjusted Not adjusted Adjusted Turnover 640,246,885.64 702,817,644.34 702,817,644.34 -8.90% 634,486,504.53 634,486,504.53 Total profit 23,850,523.77 7,187,475.63 20,178,171.35 18.20% -58,461,648.42 -54,353,853.44 Net profit attributable to the shareholders of 24,386,023.62 7,986,812.14 20,610,993.31 18.32% -58,365,528.85 -54,257,733.87 the listed company Net profit attributable to shareholders of listed company after -32,626,195.59 -12,915,565.01 -5,749,448.12 382.39% -77,160,203.83 -73,052,408.85 deducting of non-recurring gain/loss Cash flow generated by business operation, 81,895,449.43 81,321,516.65 81,321,516.65 0.71% -26,849,352.82 -26,849,352.82 net Increase/decrease End of 2007 End of 2006 End of 2005 (%) Not adjusted Adjusted Adjusted Not adjusted Adjusted Gross Assets 1,316,903,872.37 1,125,006,290.66 1,185,591,408.67 11.08% 1,201,275,986.46 1,243,995,094.72 Owners’ 581,919,810.07 425,135,885.04 485,544,759.85 19.85% 417,069,075.26 464,933,766.54 (shareholders’) equity 2 China Fangda Group Co., Ltd. Summary of Annual Report 2007 3.2 Major financial indices In RMB Yuan Increase/decrease Year 2007 Year 2006 Year 2005 (%) Not Not Adjusted Adjusted Adjusted adjusted adjusted Basic gains per share 0.0629 0.0226 0.0584 7.71% -0.1969 -0.1831 Diluted gains per share 0.0629 0.0226 0.0584 7.71% -0.1969 -0.1831 Basic earning per share after deducting of -0.08 -0.0366 -0.02 300.00% -0.2603 -0.25 non-recurring gains/losses Net income on asset, fully diluted 4.19% 1.88% 4.24% -0.05% -13.99% -11.67% Net income on asset, weighted 4.59% 1.90% 4.82% -0.23% -13.11% -11.03% Net income on asset, fully diluted and deducted -5.61% -3.04% -1.18% -4.43% -18.50% -15.71% non-recurring gain/loss Net income on asset after deducting of non-recurring -6.15% -3.07% -1.34% -4.81% -17.33% -14.85% gain/loss Net Cash flow per share generated by business 0.21 0.23 0.23 -8.70% -0.091 -0.09 operation End of Increase/decrease End of 2006 End of 2005 2007 (%) Not Not Adjusted Adjusted Adjusted adjusted adjusted Net asset per share attributable to shareholders of the 1.50 1.21 1.38 8.70% 1.41 1.57 Company Non-recurring gain and loss items √ applicable □ not applicable In RMB Yuan Non-recurring gain and loss items Amount Gain/loss of non-current assets 55,761.72 Government subsidy counted into current gain/loss account 11,756,035.47 Gains from fluctuation of investment property fair value 42,321,760.27 Gain/loss from debt reorganization 344,176.42 Carrying back of welfare payable balance 1,360,833.10 Gains from subscription of new stocks and funds 2,069,943.32 Net amount of other non-operational gain/expenses other than the above 4,027,266.06 Less: Income tax (15%) -1,224,435.76 Minor shareholders’ gain/loss in non-recurring gain/loss -3,699,121.39 Total 57,012,219.21 Items accounted on fair value basis √ applicable □ not applicable In RMB Yuan Balance at the beginning Balance at the end of Projects Change of current term Influence on current profit of term term Disposable financial asset 16,503,989.67 81,678,821.05 65,174,831.38 0.00 Property investment 223,029,458.35 265,461,218.62 42,431,760.27 42,173,134.77 Total 239,533,448.02 347,140,039.67 107,606,591.65 42,173,134.77 3 China Fangda Group Co., Ltd. Summary of Annual Report 2007 3.3 Difference between domestic and international accounting standard √ applicable □ not applicable In RMB Yuan Domestic accounting standard Overseas accounting standard: Net profit 24,386,023.62 -18,095,736.65 Net asset 581,919,810.07 589,343,586.44 Statement about the According to IAS, gain/loss from fluctuate of fair value of investment properties has been accounted in previous diversity years. §4 Changes in Share Capital & Particulars about Shareholders 4.1. Statement of Changes in Shares in Shares Before the change Changed (+,-) After the change Issuing of Bonus Transferred Amount Proportion new Others Sub-total Amount Proportion shares from reserves shares I. Shares with 109,110,775 30.93% 7,191,918 -37,219,095 -30,027,177 79,083,598 20.38% conditional subscription 1. State-owned shares 2. State-owned legal person shares 3. Other domestic shares 109,110,775 30.93% 7,191,918 -37,219,095 -30,027,177 79,083,598 20.38% Incl. Non-government domestic legal person 109,032,000 30.91% 7,184,040 -37,191,600 -30,007,560 79,024,440 20.37% shares Domestic natural 78,775 0.02% 7,878 -27,495 -19,617 59,158 0.01% person shares 4. Share held by foreign investors Incl. Shares held by foreign legal persons Foreign natural person shares II. Shares with unconditional 243,605,225 69.07% 28,079,682 37,219,095 65,298,777 308,904,002 79.62% subscription 1. Common shares in 70,617,305 20.02% 10,780,890 37,219,095 47,999,985 118,617,290 30.57% RMB 2. Foreign shares in 172,987,920 49.05% 17,298,792 0 17,298,792 190,286,712 49.05% domestic market 3. Foreign shares in overseas market 4. Others III. Total of capital 352,716,000 100.00% 35,271,600 0 35,271,600 387,987,600 100.00% shares 4 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Change of conditional shares In shares Conditional shares Name of the Increased this Conditional shares Reason of at beginning of Released this year Date of releasing shareholder year at end of year condition year Restriction period Banglin 60,000,000 17,635,800 4,236,420 46,600,620 April 25, 2007 not expired yet Shenzhen Shilihe Restriction period Investment Co., 47,112,000 17,635,800 2,947,620 32,423,820 April 25, 2007 not expired yet Ltd. Shenzhen Shekou Yu’er Industrial 1,920,000 1,920,000 0 0 ----- April 25, 2007 Co., Ltd. Shares held by Xiong Jianming 53,022 14,581 5,302 43,743 May 21, 2007 directors Shares held by Wang Shengguo 18,684 5,138 1,869 15,415 May 21, 2007 directors Shares held by director and has quit from the Zhu Weiping 7,069 7,776 707 0 April 26, 2007 position for half year in the report term Total 109,110,775 37,219,095 7,191,918 79,083,598 － － 4.2 Top 10 shareholders and top 10 holders of unconditional shares in Shares Total of shareholders 56,575 (including 33,803 A-share holders, and 22,772 B-share holders) at the end of report term Top 10 Shareholders Name of the shareholder Properties of shareholder Share proportion % Total shares Conditional shares Pledged or frozen Domestic non-state-owned Banglin 12.50% 48,480,620 46,600,620 46,600,620 legal person Shenzhen Shilihe Domestic non-state-owned 8.49% 32,923,820 32,423,820 0 Investment Co., Ltd. legal person Onforce International Overseas legal person 4.95% 19,200,000 0 0 Ltd. Gu Feng Domestic natural person 0.54% 2,097,821 0 N/A Chen Jinbiao Domestic natural person 0.50% 1,949,188 0 N/A Cao Yifan Domestic natural person 0.47% 1,808,620 0 N/A Sun En’ju Domestic natural person 0.36% 1,395,000 0 N/A Zhang Lingyi Domestic natural person 0.23% 898,000 0 N/A Natio Securities Overseas legal person 0.20% 794,929 0 N/A Co.,Ltd. Lu Yineng Domestic natural person 0.20% 788,071 0 N/A Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Category of shares Onforce International Ltd. 19,200,000 Foreign shares placed in domestic exchange Gu Feng 2,097,821 Foreign shares placed in domestic exchange Chen Jinbiao 1,949,188 Foreign shares placed in domestic exchange Banglin 1,880,000 RMB common shares Cao Yifan 1,808,620 Foreign shares placed in domestic exchange 5 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Sun En’ju 1,395,000 RMB common shares Zhang Lingyi 898,000 RMB common shares Natio Securities Co.,Ltd. 794,929 Foreign shares placed in domestic exchange Lu Yineng 788,071 Foreign shares placed in domestic exchange Lu Haiyun 778,100 Foreign shares placed in domestic exchange Notes to relationship or Among the top 10 shareholders, Banglin and Onforce are under the same controlling shareholder, therefore “action in concert” they are regarded as related and act-in-concert parties. As for the other holders of current shares, the among the top ten Company has not been informed any situation of related parties or concerted operators. shareholders. 4.3 Particulars about the holding shareholder and the substantial holder 4.3.1 Change in holding shareholder and the substantial holder □applicable √ not applicable 4.3.2 Particulars about Controlling Shareholder and the Substantial Controller All of the sponsors of Shenzhen Banglin Technologies Development Co., Ltd. – the controlling shareholder of the Company, are natural person. In which Mr. Xiong Jianming – Chairman of the Company is holding 85% of the shares, and is the practical controller of the Company. Mr. Xiong Jianming is a Chinese resident, and has been taking the position of the Chairman of the Company for the latest five years. 4.3.3 Holding relationship chart Xiong Jianming 85% Shenzhen Banglin Technologies Development Co., Ltd. 12.50% China Fangda Group Co., Ltd. 6 China Fangda Group Co., Ltd. Summary of Annual Report 2007 §5 Directors, Supervisors and Senior Executives 5.1 Changing in shareholding and remuneration of the directors, supervisors and senior executives Shares held at Shares held Remuneration accepted Cause of Name Position Sex Age Job term the beginning at the end from the company in change of term of term report term (RMB0’000) Xiong Chairman, Transferred M 50 2005.5.27-2008.5.27 53,022 58,324 43.69 Jianming president from reserves Wang Director, Vice Transferred M 49 2005.5.27-2008.5.27 18,684 20,553 21.18 Shengguo president from reserves Xiong Director M 39 2005.5.27-2008.5.27 0 0 ----- 15.65 Jianwei Director, 2007.4.9-2008.5.27 Zhou Secretary of the M 46 0 0 ----- 17.04 Zhigang 2005.5.27-2008.5.27 Board Zheng Independent M 44 2005.5.27-2008.5.27 0 0 ----- 6.00 Xueding Director Independent Wen Simei M 49 2005.5.27-2008.5.27 0 0 ----- 6.00 Director Dong Independent M 66 2007.4.9-2008.5.27 0 0 ----- 4.50 Likun Director Host of the Yu Guoan Supervisory M 49 2007.4.9-2008.5.27 0 0 ----- 15.77 Committee Song Supervisor M 46 2005.5.27-2008.5.27 0 0 ----- 10.5 Wenqing Zhen Hua Supervisor F 48 2005.5.27-2008.5.27 0 0 ----- 17.07 Yang Vice President M 53 2005.5.27-2008.5.27 0 0 ----- 17.46 Xiaozhuan Li Gang Vice President M 46 2007.3.18-2008.5.27 0 0 ----- 53.00 Total --- --- --- ----- 71,706 78,877 ----- 227.86 Note: None of the directors, supervisors or executives is getting paid from the shareholding parties or other related parties. Future shares and conditional shares hold by or granted to the above persons. □applicable √ not applicable §6 Report of the Board 6.1 Report of the Executives 1. Review of operation during the report period. (1) Operation summary In 2007, the civil economy kept running in high speed, and the price index kept increasing, the macroscopical economic adjustment continuously enhanced, the Back of China increased prime rate, the cost of material, human resource and raising capital continuously increased, the operation environment for enterprise has gotten tougher, operation cost increased and the competition has been more tougher. During the period, the Company overcame lots of difficulties to achieve the assigned operation target. The Company had a year income of RMB858,988,300 which increased 97.10% compared to that last year, and operation income of RMB640,246,900, net profit of RMB24,386,000 which increased 205.33% compared to that last year, and operation cash flow of RMB81.895,400.Till the end of the report period, the Company had a order stock of RMB547,810,000, which 7 China Fangda Group Co., Ltd. Summary of Annual Report 2007 will support the operation in 2008 well. (2) Main business and operation The Company engages in design, development, manufacturing, installation, sale, after sale service of new type construction material, composite material, metal products, metal structure, environment protecting equipment and devices, security devices, metallurgy equipment, integrative optical mechanical products, macromolecule material and products, precision chemistry products, mechanism, optical-electricity material and devices, electronic display devices, vision and hearing devices, transportation utilities, subway shielded door, heating plumb products, water distribution devices, centralized air conditioner and peripheries, semiconductor material and components, IC, light source devices, sun energy product. And logistics, car park etc. 1) The new type construction material industry orbited in continuous development During the period, the market exploiting of new type construction industry was good. Basing on the construction technology advantages of energy saving and environment protecting, The Company emphasized on the purchase order of curtain wall construction, signed the curtain wall construction contracts with Mongolia Ulan Bator Development Building, Nanjing Hongqiao New City Plaza, Xi’an Europe-Asia Economic Forum Building, 2008 Beijing Olympic Bicycle Building--Laoshan Bicycle Gym, Shenyang Hilton restaurant, Xiamen Haifu Center, Xiamen Strait Communication and International Meeting Center, Hanzhou Jindu City Xinyu Center and other major projects. And signed the aluminum board supplying contracts with Guanzhou Agriculture Bank Building, Shenzhen Fulong Tunnel, Hubei Tumour Hospital, Fujian Longyan Tobacco Building. Thereinto, the Hanzhou Jundu City Xinyu Project was the super scale high technology energy-saving construction contract price amounts to RMB163,700,000.During the period, the international market exploration achieved great progress, signed the 0.1 trillion Macao dollars (about RMB0.65 trillion) aboard sale agreement of curtain wall products, and signed the curtain wall construction contract with the Macao Science Building. In 2007, the Company signed new type construction material contract orders of RMB735,730,000 with sale income of RMB525,538,900.During the period, basing on the manufacturing capacity advantage of Nanchang manufacturing base, the Company achieved highest sale volume and sale income in the history on aluminum board. During the report, the exclusively-invested subsidiary corporation of Shenzhen Fangda Construction Decoration Co.,Ltd was honored as “Shenzhen High-tech Enterprise”; as “2006 China Curtain wall Industry Top 50” by the China Construction Decoration Industry Association; as “China Construction Technology Self-innovation Enterprise” by the China Construction Department.; the constructed Chongqing Times Plaza curtain wall project was honor as the “Luban Prize” by the China Construction Department; the constructed Qinghua University Art College Teaching Building was honored silver medal to be as the national excellent project in 2007; the China Life Insurance Plaza curtain wall decoration project was honored the Purple Gold Cup prize to be as the excellent Jiansu construction decoration project. Facing the tough competition, the Company’s new type construction material industry has shown advantages on human resource, administration, technology, brand, manufacturing capacity by couples of years’ efforts. The brand of Fangda has continuously being increased force on effect and competition. 2) The orbited shielded door products with self IP rights achieved major success In 2007 the orbited shielded door products achieved major success in the aspects of technology research and market exploration. During the report period, the orbited shielded door products with self IP rights gained the bid of general contract of Shenzhen subway first rail continuous construction project screen door (PSD) and gained the bids of east part of the Shenyang subway first rail extension project and the project of Shenzhen subway second rail project. During the period, the demo version of orbited shielded door products with self IP rights smoothly passed the evaluation of 1 million non-error test by corresponding organization, and passed the professional evaluation by the national Construction Department technology group and the National Development Reform Commission, and honored the prize of “introduction, digestion, absorb, innovation” in the Shenzhen technology innovation prize evaluation in 2006. The Company’s self-developed orbited shielded door products has matured and successfully promoted on the market, it entirely fulfilled requirements of the nation system of orbited shielded door for transportation, which finished the long term foreign monopolization in China of the core technology of the orbited shielded door. The transportation orbited shielded door products with self IP rights is very useful to sharply decrease cost and improve market competitive force and occupying rate, and it has very important sense to the development of the Company’s transportation orbited shielded door industry. Now the Company’s subway screen door has more than 8 China Fangda Group Co., Ltd. Summary of Annual Report 2007 100 national patents and software author right, and has broadly used in the subway system of Hongkong , Guangzhou, Shanghai, Tianjin, Beijing, Shenzhen, Shenyang and other big cities in China, the market occupation rate is number one and keeps the comprehensive leader position on human resource, technology, brand, market in the industry of subway shielded door. 3) Semi-conductor lighting industry was facing new developing opportunities. During the period, to further expand scale and improve the competitive force, the Company invested RMB 0.357 billion jointly with Shenyang Hunnan New District National Asset Operation company to establish Shenyang Fangda Semi-conductor Lighting Co.,Ltd, which has important strategic sense to power and expand the Company’s semi-conductor lighting industry. After many years’ technology accumulation and development in the semi-conductor industry, the Company has occupied the leader position in the Chinese semi-conductor industry, has achieved series of major technology breakthrough and self-owned intelligence property rights, which has formed a compete industry chain of from semi-conductor lighting extension chip, chip, to the development, design, manufacturing, installation of semiconductor lighting products and application projects, which been consummated during the business operation procedure. 4) Energy saving and environment protecting products have good developing trends, technology innovation continuously improved deeply. Along with the complete deployment of the “11th five years” plan, the government has deployed energy saving as the national policy, the energy saving and waster reducing is a important policy in the economic development and is the necessary choice and road in establishing resource saving and environment friendly society and in improving economic structure adjustment, in changing the way of promoting economy. The best reducing waste measure is energy saving which promote it from the source. Under the trend of government developing recycling economy and enhancing the energy saving and waste reducing, the manufacturers of the energy saving and reducing waste devices are facing the historical developing opportunity, the energy saving and reducing waste industry will be a new born important force in the future economic development in the society, this industry has large developing potentials. The Company’s semiconductor lighting products, subway screen door products, Solar photovoltaic curtain wall are all high efficient, energy saving, waste reducing products and have comprehensive advantages of own intelligence property rights, technology and performance advance, brand, market and others, which in accordance with the national industry developing direction and get broad application, these products have large developing potentials, which well support sharing achievements of national developing recycling economy. During the report period, the Company was honored as “The Top Ten Developing Recycling Economy Enterprise (the 1st time)” “Basing on Technology, Sourcing on Innovation” is the Company’s operation policy. In many years, the Company highly emphasize on technology innovation and intelligence property right, persist in own innovation, the force of self-innovation increases continuously, the comprehensive innovation force has been the leader position among the congeneric companies. During the period, the Company’s exclusively-invested subsidiary the Shenzhen Fangda Decoration Project Co.,Ltd was honored the “China Constructing technology self-innovation preponderant enterprise” and “Shenzhen high-tech enterprise” by the Construction Department. The Shenzhen New World Business Center curtain wall project constructed by the Company was listed in the Shenzhen city energy saving rate-compensation projects and gotten the government’s energy saving and rate compensation for be in accordance with the national industrial policies and having the wonderful performance of high efficiency and energy saving. During the period, the Company won the bid of implementing the major project of semiconductor lighting in the “11th five years” 863 plan, which named “high efficiency and high power GAN LED chip and white semiconductor lighting technology”; the Company’s successfully researched Inverse Installation Soldered LED chip—“Tiger” high power semiconductor lighting LED chip was listed as the 2006 National Important Product and as the 2006 Guangdong Province Important New Product; the national industrial subway shielded door standard of “orbited shielded door standard” which solely compiled by the Company was published out and deployed from Mar 1 2007 by the Construction Department; the orbited shielded door products which the Company own the IP were honored the Shenzhen 2006 technology innovation prize of “introducing, digestion, re-innovation”; the Company also set up five “china enterprise records”, and set up record amounting up to 25.During the report period, the Company applied national patents of 104 Pcs, which comprised of 36 invention patents. Till the end of the report period, the Company had 448 national authorized patents, comprising of 19 invention patents, the contents included new type construction material, subway screen door, semiconductor lighting and etc. During the period, besides the responsibility of national, province, city technology projects, the Company also implemented nine new product research projects and four technology innovation projects. During 9 China Fangda Group Co., Ltd. Summary of Annual Report 2007 the report period, the Company was referred as the Shenzhen city IP advantageous enterprise, the first batch of Shenzhen city main private company, 2006 Shenzhen city top one hundred. (3) Assets Composition Till the end of the period, the Company’s total asset was RMB1,316,900,000 which comprised of account receivable of RMB276,750,000 which occupied 21.02% of the total asset, and stock of RMB95,710,000 which occupied 7.27% of the total asset, and investing property of RMB265,460,000 which occupied 20.16% of the total asset, and long-term stock equity investment of RMB4,500,000 which occupied 0.34% of the total asset, and fixed asset of RMB290,880,000 which occupied 22.09% of the total asset, and projects on constructing of RMB560,000 which occupied 0.04% of the total asset, and short-term loan of RMB165,000,000 which occupied 12.53% of the total asset, and long-term loan of RMB198,000,000 which occupied 15.04% of the total asset During the period, the Company using fair value calculation model on the investing property, the fair value calculation model was evaluated by the Shenzhen Guozheng Property Evaluation Co.,Ltd using the method of market comparison, During the period, the sale expense, management expense, finance expense, income tax and other finance data had no major change comparing with those of the last year. (4) Cash flow composition During the period, the Company’s net cash flow comes from operation was RMB81,895,400, and net cash flow comes from investing was RMB-20,596,100, and net cash flow comes from raising capital was RMB-10,595,200 which increased 24.58% compared to last year which mainly come from the cash input and bank loan increasing because of building up joint stock company in Shenyang city. During the period, the Company enhanced the customer credit management, and improved push force on account receivable, the year end account receivable decreased about RMB60,000,000 comparing with the year’s beginning, which caused the cash flow high than the net profit. 2. Future Development Prospect In 2008, the national economy increasing will keep on going in high speed, the market requirement will keep on going quickly, but the price increasing trend will still be going on and the national macroscopical adjustment will be enhanced, the contracted currency policy will continue. Simultaneously, the government deeply realized the importance of energy saving and waste reducing and referred the implementation of energy saving and waste reducing as the important standard on evaluating the government’s developing economy, and as the implementation of the scientific development. Now, more relevant polices, measures are or were setting up and deployed, the all level governments are promoting the energy saving and waste reducing highly ever than never happened. Under these circumstances, the Company will deeply exploit the market of curtain wall, semiconductor lighting, subway screen door which have own IP rights to devote to the national recycling economy and to promote energy saving and waste reducing. The products of solar curtain wall, super low energy consumption curtain wall system, color semiconductor lighting curtain wall, nanometer ALCF board and other energy saving and waste reducing products is broadly used in important model construction projects in many countries, the Company has obvious advantages in the high-end energy saving construction material field, the many project constructed were horned series of national and provincial prizes such as “Zhantianyou Construction Prize” and “Luban Prize”. Invited by the relative nation department, the Company attended the compilation of some standards such as the national first construction energy saving standard. Along with the national energy saving and environment protecting polices’ deep implementation, the market of the Company’s l energy saving and environment protecting products was inspired. In 2008, by consummating regulations especially the inspiring regulation, the Company will continuously keep the advantages on the aspects of technology, brand, manufacturing capacity to further enhance the new product research, and will emphasize on high grade major orders to positively exploit international market especially the international market of high end products to consummate the market structure, and the Company will continue to implement the current orders and control the cost especially the cost of the aluminum, steel, glass material by deploying more measures to support a large and wonderful progress in the new material industry. The Company won the bid of Shenzhen Subway 1st rail continuing construction screen door system, and the market had undergoing a major breakthrough for the transportation orbited shied door products which have own 10 China Fangda Group Co., Ltd. Summary of Annual Report 2007 IP right, the national first transportation orbited screen door standard compiled mainly by the Company was published out, the Company had gained advance opportunities in the market of the transportation orbited screen door products. Along with quick increasing economy, the cities like Beijing Shanghai Shenzhen Guangzhou Nanjing Shenyang Wuhan Hangzhou Chengdou are promoting the subway construction, the civil subway screen door market has come into the high increasing term. In 2008, the Company will tightly hold the excellent developing opportunity of subway shied door, and continuously consummate the research of subway screen door products to upgrade the products to keep the competitive force of the Company’s products. Simultaneously, utilizing the comprehensive leading advantages and powerful effects in the industry, the Company will deeply exploit market to further promote the market of self-owned products to consolidate the market share in the industry and share the achievements accompanied with the national high increasing subway screen door industry. The government put more emphasis on energy saving and water reducing, the semiconductor lighting industry is one with the highest potentials, the policies for promoting the semiconductor lighting industry were or are setting up. After many years’ technology accumulation and development in the semi-conductor industry, the Company has occupied the leader position in the Chinese semi-conductor industry, has achieved series of major technology breakthrough and self-owned intelligence property rights, which has formed a compete industry chain of from semi-conductor lighting extension chip, chip, to the development, design, manufacturing, installation of semiconductor lighting products and application projects. In 2007, to further expand scale and enhance competitive power, the Company invested and set up the Shenyang Fangda Semiconductor Lighting Co., Ltd. In 2008, the Company will enhance the planning and construction of the Shenyang Fangda Semiconductor lighting Co., Ltd to fasten the beginning manufacturing and to fasted the Company entering into new fast lane of developing to entirely share the achievements of the national developing recycling economy. 6.2 Principal businesses distribution on industries/products In RMB 10 thousand Yuan Distribution on industries Change of operation Operation Operation Change of income Change of cost On industry or product Turnover profit ratio over last year cost profit ratio over last year % over last year % % Sales of products 19,985.51 16,768.90 16.09% -9.13% -14.53% 5.30% Construction and installations 40,481.23 35,382.20 12.60% -10.33% -10.40% 0.07% Sub-total 60,466.75 52,151.10 13.75% -9.93% -11.77% 1.79% Distribution on products Outer-wall products 34,910.52 30,609.95 12.32% 18.88% 14.44% 3.40% Complex aluminium boards 12,658.44 10,215.63 19.30% 6.40% -2.19% 7.09% and single profiled plates Preshaped aluminum material 4,502.34 4,355.58 3.26% -42.11% -40.63% -2.41% and others Screen door of metro station 5,570.72 4,772.25 14.33% -64.69% -62.54% -4.92% 6.3 Major businesses distribution on regions In RMB 10 thousand Yuan Regions Turnover Change of income over last year % North 8,524.38 -30.15% South-west 4,168.03 578.69% East 13,668.72 17.67% North-east 1,472.11 26.05% Central 2,849.42 -52.17% North-west 3,846.43 37.38% South 19,664.32 -31.02% 11 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Export 6,273.35 46.97% Total 60,466.75 -9.93% 6.4 Using of proceeds from financing actions □applicable √ not applicable Changing of projects □applicable √ not applicable 6.5 Using of fund from other sources √ applicable □ not applicable In RMB 10 thousand Yuan Amount of the Projects Investment progress of the project Turnover of the project project Business registration completed, Establishing of Shenyang Fangda 35,710.00 currently under construction of the None Semiconductor Lighting Co., Ltd. workshops Total 35,710.00 --- --- 6.6 Statement on the none-standard opinion issued by the CPA □applicable √ not applicable 6.7 Profit distribution or capitalizing of common reserves adopted by the Board of Directors √ applicable □ not applicable The consolidated and audited net profit of year 2007 was RMB24,386,023.62, the net profit of the parent company was RMB30,081,775.80. No profit distribution will be implemented for year 2007. The Company plans to capitalize the capital common reserves to the whole shareholders. As of December 31st 2007, the balance of capital reserves was audited to RMB70,956,956.18. While RM38,798,760 will be capitalized to capital shares. On the base of total capital shares amounted 387,987,600, one new share will be added upon each 10 shares. Namely 1 new shares to each 10 A-shares, totally 19,770,089 are about to be added; and 1 new shares to each 10 B-shares, totally 19,028,671 are about to be added. The capital shares of the Company will become 426,786,360 after the capitalization. No cash dividend proposal was raised though the Company is making profit for the report term. √ applicable □ not applicable Reason for making profit but not have any dividend plan Plan for the profit not distributed Net profit at the end of year was relatively small, thus will be Net profit at the end of year was relatively small, thus will be retained for future expanding in 2008 retained for future expanding in 2008 12 China Fangda Group Co., Ltd. Summary of Annual Report 2007 §7 Significant Events 7.1 Acquisition □applicable √ not applicable 7.2 Selling of property √ applicable □ not applicable In RMB 10 thousand Yuan Profit contributed If it was a The Gain/loss Debt & by the sold assets related Completely other Date of from Pricing credit Asset traded Price from the beginning transaction transferred or party of disposal disposal of policies transferred of year until the day (state pricing not trade the asset or not of being sold basis if yes) Zhang Fangda US March 3,906.69 0.00 -86.07 No Yes Yes Jian Co. 20 2007 Shenzhen Zhang Fangda Hanjin, Apr 30 Special 500.00 0.00 158.24 No Yes Yes Rao 2007 Structure Libing Co., Ltd. Impact of the issues said in 7.1 and 7.2 on the continuity and stability of the management No major influence on the consistency of the Company’s business operation nor on the stability of the management. 7.3 Significant Guarantees √ applicable □ not applicable In RMB 10 thousand Yuan External Guarantee (Exclude controlled subsidiaries) Amount Type of Completed or Related party Guarantee provided to Date of contract Term guaranteed guarantee not or not Total occurred in the report term 0.00 Total of balance of guarantee at the end of report term 0.00 Guarantee provided to controlled subsidiaries Total of guarantee provided to subsidiaries in the report term 23,192.22 Total of balances of guarantees to the subsidiaries at the end of 15,437.22 report term Total of guarantee (including provided to controlled subsidiaries) Total of guarantees 15,437.22 Proportion of the total guarantee in the net asset of the 26.53% Company Including: Guarantee provided to shareholders, substantial controller and 0.00 their related parties Total of guarantee provided directly or indirectly to parties 0.00 with liability/asset ratio over 70% Guarantees totaled over 50% of the net asset 0.00 Total of the above 3 items 0.00 13 China Fangda Group Co., Ltd. Summary of Annual Report 2007 7.4 Significant Related Transactions 7.4.1 Related transactions regarding normal operation □applicable √ not applicable 7.4.2 Related credit and debt transaction □applicable √ not applicable 7.4.3 Capital adoption and clearance in year 2007 □applicable √ not applicable Capital adoption newly occurred in 2007 □applicable √ not applicable If the clearance of non-business adoption of capital is not finished up to the end of 2007, please provide reasons and plans for it. □applicable √ not applicable 7.5 Financing proxy □applicable √ not applicable 7.6 Fulfilling of consent issues □applicable √ not applicable 7.7 Material Lawsuits/Arbitrations √ applicable □ not applicable (1) On January 13, 2002, Shenzhen Fangda Decoration Engineering Co., Ltd. (Fangda Decoration) appealed to Dalian Arbitration Committee against Dalian Hongjin World Trade Center for the outstanding payment of RMB22,112,004.30 and interests. As of December 31, 2007, this case is still in arbitration process. (2) On February 29, 2004, Fangda Decoration appealed to Beijing No.2 Middle Court against Beijing Jiaxuan Real-estate Development Co., Ltd. for the outstanding debt of RMB14,979,345.88 and interests. As of December 31, 2007, this case is still in hearing process. (3) On April 30, 2007, Fangda Decoration appealed to Heilongjiang Ha’erbin Middle Court against Heilongjiang Beiya Real-estate Development Co., Ltd. For the outstanding debt of RMB10,954,157.88 and interests. As of December 31, 2007, this case is still in hearing process. 7.8 Notes to the other Significant Events and their Influences and Analysis on the Solutions 7.8.1 Securities investment □applicable √ not applicable 14 China Fangda Group Co., Ltd. Summary of Annual Report 2007 7.8.2 Holding of shares of other listed companies √ applicable □ not applicable In RMB Yuan Gain/loss of Change of owners’ Stock Initial Share Book value at the Accounting Source Stock ID the report equity in the report Code investment portion end of term subject of shares term term Debt Xugong Disposable 000425 9,520,388.31 0.36% 33,758,256.25 0.00 19,871,499.71 paid in Tech financial asset kind Debt Sihuan Disposable 000518 6,270,000.00 0.70% 47,920,564.80 0.00 33,552,112.86 paid in Biology financial asset kind S*ST Long-term Debt 600800 Magnetic 4,850,000.00 0.18% 1,500,000.00 0.00 0.00 share equity paid in Card investment kind Total 20,640,388.31 - 83,178,821.05 0.00 53,423,612.57 - - 7.8.3 Holding of shares of non-public financial entities □applicable √ not applicable 7.8.4 Trading of shares of other listed companies √ applicable □ not applicable In RMB Yuan Amount of shares at Trading amount in Amount at the Capital Investment income Name of shares beginning of term the report term end of term used gained Yuyin Holdings 0 2,000 0 27,580 0.00 China Petrol 0 40,000 0 668,000 0.00 Yunhai Metal 0 1,500 0 16,185 0.00 Quanjude 0 1,500 0 17,085 0.00 Guangbai 0 1,000 0 11,680 0.00 China Railway 0 42,000 0 201,600 0.00 Construction Purchased Chengfei Jicheng 0 1,500 0 14,850 0.00 Wuhan Fangu 0 500 0 10,550 0.00 China Marine 0 28,000 0 185,360 0.00 Container Hailong Software 0 500 0 5,245 0.00 Dongjing Electronics 0 500 0 4,400 0.00 China Pacific 0 11,000 0 330,000 0.00 Insurance Selling Yuyin Holdings 0 2,000 0 0 93,932.00 China Petrol 0 40,000 0 0 1,268,184.00 Yunhai Metal 0 1,500 0 0 18,177.00 Quanjude 0 1,500 0 0 44,170.00 Guangbai 0 1,000 0 0 27,681.92 China Railway 0 42,000 0 0 116,281.20 Construction 15 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Chengfei Jicheng 0 1,500 0 0 13,984.20 Wuhan Fangu 0 500 0 0 12,109.00 China Marine 0 28,000 0 0 113,850.24 Container Hailong Software 0 500 0 0 11,189.00 Dongjing Electronics 0 500 0 0 7,113.76 China Pacific 0 11,000 0 0 206,833.00 Insurance §8 Report of the Supervisory Committee √ applicable □ not applicable 1. Meetings held in the report term, and the resolutions (1) The 9th meeting of the 4th term of Supervisory Committee was held in the morning of March 18, 2007 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were published by March 20, 2007 issues of Securities Times, China Securities Daily, Shanghai Securities Daily and Hong Kong Commercial Daily. (2) The 10th meeting of the 4th term of Supervisory Committee was held in the morning of April 9, 2007 in the meeting room on the 5th floor of Fangda Technologies Building. The resolutions were published by April 10, 2007 issues of Securities Times, China Securities Daily, Shanghai Securities Daily and Hong Kong Commercial Daily. (3) The 11th meeting of the 4th term of Supervisory Committee was held in the afternoon of April 19, 2007 in the meeting room on the 5th floor of Fanda Technologies Building. The 1st Quarterly Report was examined and passed at the meeting. (4) The 12th meeting of the 4th term of Supervisory Committee was held in the afternoon of July 19th 2007 in the meeting room on the 5th floor of Fanda Technologies Building. The Interim Report 2007 and the summary were examined and passed at the meeting. (5) The 13th meeting of the 4th Supervisory Committee was held in the afternoon of October 17th 2006 in the meeting room at the 5th floor of Fangda Technologies Building. The 3rd Quarterly Report 2007 was examined on the meeting. 2. The Supervisory Committee issues the independent opinion on the following issues: (1) The Company has already established a mature internal control system and has been inproving it constantly. The procedure of decision-making was in conformity with Company Law and Articles of Association of the Company. The directors and senior executives had no actions of breaking national laws and regulations and Articles of Association or damaging the interest of the Company when they performed their duties. (2) Ascenda Certified Public Accountants issued standard auditing report without qualified opinion for the financial report of 2007. The financial report is frankly reflecting the financial situation and business performance of the Company. (3) The Company actually raised RMB112.8784 million in the share allotting in 1999. All of the fund raised has been put into investment as set out by the Share Placing Prospectus. (4) Asset purchasing or selling were on rational prices, and no under table transactions were conducted. No operation was done harming the shareholders’ interests or cause losses of the Company’s capital. (5) No trade with related parties occurred in the report term, thus no impairment on the Company’s interest. 16 China Fangda Group Co., Ltd. Summary of Annual Report 2007 §9 Financial Report 9.1 Auditor’s Opinion Auditor’s Report Standard report without qualified opinion Auditors’ Report Auditors’ Report 天健华证中洲审（2008）GF 字第 020068 号 To the Shareholders of China Fangda Group Co., Ltd., We have audited the Financial Statements of China Fangda Group Co., Ltd. (“Fangda Group”) attached hereafter, including the Balance Sheet and Consolidated Balance Sheet ended December 31, 2007 and the Income Statement, Consolidated Income Statement, Cash Flow Statement, Consolidated Cash Flow Statement, Statement on Change of Shareholders’ Equity, Consolidated Statement on Change of Shareholders’ Equity, and Notes to the Financial Statements. I. Executives’ responsibilities on the Financial Statements Preparing of the Financial Statements according to Enterprise Accounting Standard issued by the Ministry of Finance on February 15, 2006 is the responsibility of the management of Fangda Group. This responsibility is including: (1) Design, implement and maintain the internal control system related to producing of the Financial Statements, to prevent the Financial Statements from major false presentation due to cheating or error; (2) Select and use of appropriate accounting policies; (3) Make reasonable estimations. II. Responsibilities of the CPA Our responsibilities are to issue auditing opinions on the Financial Statements basing on the auditing works we’ve done on them. We carried out the auditing works with compliance to Chinese CPA Auditing Standard, which requires us to plan and implement our works with professional ethic standards, and obtain reasonable guarantee that the Financial Statements are free of major false statements. Auditing works are involving in auditing practices to obtain evidences regarding the amounts and presentation of the Financial Statements. Selecting of auditing practices is based on the CPA’s judgment, including evaluation on the risks of major false statements due to cheating or error. At evaluating of the risks, we’ve considered the relative internal control system related to the preparation of the Financial Statements. However we don’t comment on the effectiveness of the internal control system. The auditing works also include evaluations on the felicitousness of accounting policy selecting, the rationality of accounting estimations, and the overall presentation of the Financial Statements as well. We believe that the evidences we’ve obtained are appropriate and sufficient, which provided foundations to our issuing of auditing opinions. 17 China Fangda Group Co., Ltd. Summary of Annual Report 2007 III. Auditors’ Opinion We believe that Fangda Group has been following with the Enterprise Accounting Standard published by the Ministry of Finance on February 15, 2006 in preparing of the Financial Statements. The Financial Statements is reflecting, in all important aspects, the financial situation of Fangda Group as of December 31, 2007, and the business performance and cash flow of year 2007. CPA China Ascenda Certified Public Accountants Xiong Jianyi Beijing, China CPA China Zhou Junchao Date of report: April 18, 2008 18 China Fangda Group Co., Ltd. Summary of Annual Report 2007 9.2 Financial Statements 9.2.1 Balance Sheet Prepared by: China Fangda Group Co., Ltd. December 31st 2007 RMB yuan At the end of term Beginning of term Items Consolidated Parent company Consolidated Parent company Current asset: Monetary fund 171,607,741.24 2,608,321.55 123,714,024.86 14,945,658.66 Settlement provision Outgoing call loan Trading financial assets 200,000.00 Notes receivable 2,144,441.42 369,000.00 Account receivable 276,751,473.17 59,101,758.10 342,046,757.77 82,812,141.30 Prepayment 11,384,014.12 2,533,879.38 17,155,062.23 3,872,222.98 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Other account receivable 36,063,260.79 214,641,721.45 25,661,514.71 91,804,346.85 Repurchasing of financial assets Inventories 95,709,965.96 2,833,466.97 101,483,784.74 14,459,232.75 Non-current asset due in 1 year Other current asset Total of current asset 593,660,896.70 281,719,147.45 610,630,144.31 207,893,602.54 Non-current assets Loans and payment on other’s behalf disbursed Disposable financial asset 81,678,821.05 16,503,989.67 Expired investment in possess Long-term receivable Long-term share equity investment 4,500,000.00 363,774,960.00 1,500,000.00 313,633,039.23 Property investment 265,461,218.62 257,611,057.62 223,029,458.35 216,099,456.35 Fixed assets 290,883,402.37 50,100,169.79 304,941,946.38 108,016,852.50 Construction in process 562,672.60 155,452.00 Engineering material Fixed asset disposal Production physical assets Gas & petrol Intangible assets 59,907,005.27 11,165,600.75 19,957,840.05 13,045,638.60 R&D expense 1,696,494.43 Goodwill 8,197,817.29 1,031,411.20 Long-term prepaid expenses 30,750.00 Differed income tax asset 10,355,544.04 7,810,416.71 Other non-current asset Total of non-current assets 723,242,975.67 682,651,788.16 574,961,264.36 650,794,986.68 Total of assets 1,316,903,872.37 964,370,935.61 1,185,591,408.67 858,688,589.22 19 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Current liabilities Short-term loans 165,000,000.00 10,000,000.00 421,352,390.00 120,000,000.00 Loan from Central Bank Deposit received and hold for others Call loan received Trade off financial liabilities Notes payable 54,751,865.74 38,141,544.89 10,000,000.00 Account payable 117,241,376.77 3,870,241.38 133,567,698.13 12,048,388.53 Prepayment received 66,983,683.48 798,939.90 50,635,531.06 5,923,109.51 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 3,996,570.07 8,045,758.56 Tax payable 18,759,988.17 1,742,074.08 15,778,377.34 1,108,374.19 Interest payable 449,392.50 449,392.50 Other account payable 23,426,039.07 192,273,165.73 17,602,859.13 180,036,750.01 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Non-current liability due in 1 year Other current liability 2,623,887.53 2,383,379.24 8,400,000.00 4,800,000.00 Total of current liability 453,232,803.33 211,517,192.83 693,524,159.11 333,916,622.24 Non-current liabilities Long-term borrowings 198,000,000.00 198,000,000.00 Bond payable Long-term payable Special payable Expected liabilities 2,000,000.00 Differed income tax liability 12,108,590.11 176,243.20 Other non-recurring liabilities Total of non-current liabilities 210,108,590.11 198,000,000.00 2,176,243.20 Total of liability 663,341,393.44 409,517,192.83 695,700,402.31 333,916,622.24 Owners’ equity (or shareholders’ equity) Practical capital collected (or share capital) 387,987,600.00 387,987,600.00 352,716,000.00 352,716,000.00 Capital reserves 145,358,857.54 70,956,956.18 108,881,471.81 106,228,556.18 Less: Shares in stock Surplus reserves 6,388,697.44 6,388,697.44 35,402,732.12 35,402,732.12 Common risk provision Retained profit 42,184,655.09 89,520,489.16 -11,215,403.21 30,424,678.68 Different of foreign currency translation -240,040.87 Total of owner’s equity belong to the parent company 581,919,810.07 554,853,742.78 485,544,759.85 524,771,966.98 Minor shareholders’ equity 71,642,668.86 4,346,246.51 Total of owners’ equity 653,562,478.93 554,853,742.78 489,891,006.36 524,771,966.98 Total of liabilities and owners’ equity 1,316,903,872.37 964,370,935.61 1,185,591,408.67 858,688,589.22 20 China Fangda Group Co., Ltd. Summary of Annual Report 2007 9.2.2 Income Statement Prepared by: China Fangda Group Co., Ltd. Jan-Dec 2007 RMB Yuan Current term Same period last year Items Consolidated Parent company Consolidated Parent company I. Total revenue 640,246,885.64 73,127,558.88 702,817,644.34 201,370,565.29 Incl. Business income 640,246,885.64 73,127,558.88 702,817,644.34 201,370,565.29 Interest income Insurance fee earned Fee and commission received II. Total business cost 677,081,305.13 85,122,641.12 711,000,831.43 205,450,825.96 Incl. Business cost 536,294,233.72 59,404,952.68 606,648,036.60 193,429,790.97 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid Net insurance policy reserves provided Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 14,984,340.29 2,294,226.19 12,440,678.95 2,396,211.81 Sales expense 21,126,765.08 909,966.79 21,941,624.61 Administrative expense 64,749,937.04 15,849,228.12 58,567,319.82 11,467,422.58 Financial expenses 27,991,185.35 8,793,912.68 21,687,074.71 8,225,683.66 Asset impairment loss 11,934,843.65 -2,129,645.34 -10,283,903.26 -10,068,283.06 Plus: Gains from change of fair value (“-“ for loss) 42,431,760.27 41,511,601.27 8,516,386.19 7,803,470.84 Investment gain (“-“ for loss) 379,279.76 -4,329,886.23 513,516.86 2,291,003.80 Incl. Investment gains from affiliates Gains from currency exchange (“-“ for loss) III. Operational profit (“-“ for loss) 5,976,620.54 25,186,632.80 846,715.96 6,014,213.97 Plus: Non business income 21,572,038.08 4,659,468.10 22,907,665.82 7,644,342.06 Less: Non-business expenses 3,698,134.85 52,085.00 3,576,210.43 537,202.38 Incl. Loss from disposal of non-current assets 200,477.00 3,605.38 IV. Gross profit (“-“ for loss) 23,850,523.77 29,794,015.90 20,178,171.35 13,121,353.65 Less: Income tax expenses 352,443.26 -287,759.90 366,514.55 V. Net profit (“-“ for net loss) 23,498,080.51 30,081,775.80 19,811,656.80 13,121,353.65 Net profit attributable to the owners of parent company 24,386,023.62 20,610,993.31 Minor shareholders’ equity -887,943.11 -799,336.51 VI. Earnings per share: (I) Basic earnings per share 0.0629 0.0584 (II) Diluted earnings per share 0.0629 0.0584 21 China Fangda Group Co., Ltd. Summary of Annual Report 2007 9.2.3 Cash Flow Statement Prepared by: China Fangda Group Co., Ltd. Jan-Dec 2007 RMB Yuan Current term Same period last year Items Parent Parent Consolidated Consolidated company company I. Net cash flow from business operation Cash received from sales of products and providing of 706,343,586.70 98,160,925.66 750,827,896.60 124,124,764.25 services Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Net increase of trade financial asset disposal Cash received as interest, processing fee, and commission Net increase of inter-bank fund received Net increase of repurchasing business Tax returned 5,042,867.35 3,143,775.82 Other cash received from business operation 45,647,337.28 16,506,198.66 50,014,389.51 305,729,250.78 Sub-total of cash inflow from business activities 757,033,791.33 114,667,124.32 803,986,061.93 429,854,015.03 Cash paid for purchasing of merchandise and services 542,618,330.84 65,749,440.90 613,013,503.54 126,133,478.76 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 49,105,950.73 4,739,348.28 44,335,845.92 3,507,104.82 Taxes paid 23,794,526.56 3,655,969.64 26,017,275.75 2,892,919.28 Other cash paid for business activities 59,619,533.77 96,133,689.92 39,297,920.07 205,751,763.97 Sub-total of cash outflow from business activities 675,138,341.90 170,278,448.74 722,664,545.28 338,285,266.83 Cash flow generated by business operation, net 81,895,449.43 -55,611,324.42 81,321,516.65 91,568,748.20 II. Cash flow generated by investing Cash received from investment retrieving 200,000.00 Cash received as investment gains 2,069,943.32 Net cash retrieved from disposal of fixed assets, intangible 6,794,128.00 28,660.00 1,075,527.44 assets, and other long-term assets Net cash received from disposal of subsidiaries or other 6,438,693.00 1,000,000.00 1,000,000.00 operational units Other investment-related cash received 976,156.58 Sub-total of cash inflow due to investment activities 10,040,227.90 6,467,353.00 2,075,527.44 1,000,000.00 Cash paid for construction of fixed assets, intangible assets 14,859,831.07 2,419,680.49 20,942,090.57 596,334.15 and other long-term assets Cash paid as investment 12,919,481.00 33,200,000.00 200,000.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units 22 China Fangda Group Co., Ltd. Summary of Annual Report 2007 Other cash paid for investment activities 2,857,043.23 Sub-total of cash outflow due to investment activities 30,636,355.30 35,619,680.49 21,142,090.57 596,334.15 Net cash flow generated by investment -20,596,127.40 -29,152,327.49 -19,066,563.13 403,665.85 III. Cash flow generated by financing Cash received as investment 50,000,000.00 Incl. Cash received as investment from minor shareholders 50,000,000.00 Cash received as loans 799,000,000.00 357,000,000.00 613,155,385.00 219,900,000.00 Cash received from bond placing Other financing-related cash received 3,129,203.79 15,000,000.00 Subtotal of cash inflow from financing activities 849,000,000.00 357,000,000.00 616,284,588.79 234,900,000.00 Cash to repay debts 831,429,520.48 265,000,000.00 631,036,703.00 320,152,981.00 Cash paid as dividend, profit, or interests 28,165,634.96 7,781,257.18 22,608,617.33 8,888,459.96 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities Subtotal of cash outflow due to financing activities 859,595,155.44 272,781,257.18 653,645,320.33 329,041,440.96 Net cash flow generated by financing -10,595,155.44 84,218,742.82 -37,360,731.54 -94,141,440.96 IV. Influence of exchange rate alternation on cash and cash -65,304.34 -107,880.32 -802,553.90 -31,970.67 equivalents V. Net increase of cash and cash equivalents 50,638,862.25 -652,789.41 24,091,668.08 -2,200,997.58 Plus: Balance of cash and cash equivalents at the beginning 65,836,850.44 2,849,285.99 41,745,182.36 5,050,283.57 of term VI. Balance of cash and cash equivalents at the end of term 116,475,712.69 2,196,496.58 65,836,850.44 2,849,285.99 23 China Fangda G 7.2.4 Change in Owners’ Equities Prepared by: China Fangda Group Co., Ltd. December 31st 2007 RMB yuan Amount of the Current Term Owners’ Equity Attributable to the Parent Company Owners’ Equity Attrib Minor Items Practical capital Less: Common Total of owners’ Practical capital Less: Capital Surplus shareholders’ Capital collected (or share Shares risk Retained profit Others equity collected (or share Shares reserves reserves equity reserves capital) in stock provision capital) in stock I. Balance at the end of 352,716,000.00 108,881,471.81 35,402,732.12 -11,215,403.21 -240,040.87 4,346,246.51 489,891,006.36 296,400,000.00 164,427,617.04 6 last year Plus: Change of -2 accounting policy Correcting of previous errors II. Balance at the 352,716,000.00 108,881,471.81 35,402,732.12 -11,215,403.21 -240,040.87 4,346,246.51 489,891,006.36 296,400,000.00 164,427,617.04 3 beginning of current year III. Changed in the current year (“-“ for 35,271,600.00 36,477,385.73 -29,014,034.68 53,400,058.30 240,040.87 67,296,422.35 163,671,472.57 56,316,000.00 -55,546,145.23 decrease) (I) Net profit 24,386,023.62 240,040.87 -887,943.11 23,738,121.38 (II) Gains/losses accounted into owners’ 71,748,985.73 -22,498,334.54 49,250,651.19 769,854.77 equity directly 1. Change in fair value of sellable financial 53,423,612.57 53,423,612.57 559,559.56 assets, net 2. Influence of change in other owners’ equity of invested 18,325,373.16 18,325,373.16 210,295.21 enterprises on equity basis 3. Influence of income tax related to owners’ equity items 4. Others -22,498,334.54 -22,498,334.54 Total of (I) and (II) 71,748,985.73 24,386,023.62 240,040.87 -23,386,277.65 72,988,772.57 769,854.77 (III) Investment or decreasing of capital by 90,682,700.00 90,682,700.00 owners 1. Investment by 90,682,700.00 90,682,700.00 owners 2. Amount of shares paid and accounted as owners’ equity 3. Others (IV) Profit allotment 3,008,177.58 -3,008,177.58 1. Providing of 3,008,177.58 -3,008,177.58 surplus reserves 2. Providing of common risk provisions 3. Allotment to the owners (or shareholders) China Fangda G 4. Others (V) Internal transferring of owners’ 35,271,600.00 -35,271,600.00 -32,022,212.26 32,022,212.26 56,316,000.00 -56,316,000.00 equity 1. Capitalizing of capital reserves (or to 35,271,600.00 -35,271,600.00 56,316,000.00 -56,316,000.00 capital shares) 2. Capitalizing of surplus reserves (or to capital shares) 3. Making up losses -32,022,212.26 32,022,212.26 by surplus reserves 4. Others IV. Balance at the end of 387,987,600.00 145,358,857.54 6,388,697.44 42,184,655.09 71,642,668.86 653,562,478.93 352,716,000.00 108,881,471.81 3 this term China Fangda Group Co., Ltd. Summary of Annual Report 2007 9.3 Explanation on changes of accounting policies, accounting estimation, and accounting method □applicable √ not applicable 9.4 Content, amount, reason and impact of major accounting errors □applicable √ not applicable 9.5 Explanation on changes of consolidation range comparing with the previous annual report √ applicable □ not applicable 1. Shenyang Fangda was the newly established subsidiary which was included in the consolidation range of the current year. 2. Woke Company was the subsidiary obtained as enterprise under different control and was included in the consolidation range of the current year. 3. Two companies was eliminated in this year they are: Shenzhen Fangda Special Structure Co., Ltd. and Fangda (US) Co. whose share equities were disposed in the report year. China Fangda Group Co., Ltd. The Board of Directors April 18, 2008 26