宝石Ｂ(200413)2007年年度报告（英文版）

Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 石家庄宝石电子玻璃股份有限公司 SHIJIAZHUANG BAOSHI ELECTRONIC GLASS COMPANY LIMITED Annual Report 2007 （Full text） Stock code: 000413, 200413 Stock abbreviation: *ST Baoshi A, *ST Baoshi B Date of disclosure:：March 28, 2008 1 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Important Notes The Board of Directors of the Company hereby guarantees 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. Zhong Xi Certified Public Accountants audited the financial report of the Company for this report period and issued standard unqualified auditor's report. Mr. Shang Jianbin, board chairman of the Company, Mr. Song Hongbo, General Manager and Mr.Zhou Yumao, Chief accountant represent and warrant the financial report in this annual report is true and complete. Table of Contents Chapter 1 Brief Introduction of the Company Chapter 2 Highlights of Accounting Data and Business Data Chapter 3 Particulars about the Changes of Share Capital and Shareholders Chapter 4 Directors, Supervisors, Senior Executives and Staff Chapter 5 Control Structure of the Company Chapter 6 Brief Introduction of Shareholders’ General Meeting Chapter 7 Report of the Board of Directors Chapter 8 Repot of the Supervisory Committee Chapter 9 Important Events Chapter 10 Financial Reports 2 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Chapter 11 List of Documents Available for Inspection Chapter 1 Brief Introduction of the Company (I) Statutory name of the Company In Chinese :石家庄宝石电子玻璃股份有限公司 In English : Shijiazhuang Baoshi Electronic Glass Co., Ltd. Abbreviation of English name: SJZBS (II) Legal Representative: Shang Jianbin (III) Secretary of the Board of Directors: Fu Yinfang Securities affair representative: Wang Hua Contact address: No.9, Huanghe Road, Shijiazhuang High-tech Industrial Development Area, Shijiazhuang, Hebei Province (Law Securities Dept.) Tel:0311-86917771、86917776 Fax:0311-86917775 E-mail:bsdz@heinfo.net (IV) Registered Address: No.9, Huanghe Road, Shijiazhuang High-tech Industrial Development Area, Shijiazhuang, Hebei Province Office Address: No.9, Huanghe Road, Shijiazhuang High-tech Industrial Development Area, Shijiazhuang, Hebei Province Zip Code: 050035 E-mail: bs@bseg.cn (V) Newspapers for Information Disclosure: China Securities Daily, Hong Kong Commercial Daily Website Designated by CSRC for Publishing the Annual Report: http://www.cninfo.com.cn The place for preparing and placing the annual report: Law Securities Dept. of the Company (VI). Stock exchange for listing: Shenzhen Stock Exchange Stock abbreviation: *ST Baoshi A, *ST Baoshi B Stock code: 000413, 200413 (VII) Other Relevant Information 1 .e T h eb d a t e2 w, h e n9 a n d t hh ei p l a c eu w hn e r eC t h e C o m p a n y m a d e i t s f i r s t r e g i s t r a t i o n : D c e m e r 6 1 9 2 S j i a z h a g i t y 2. Registration No. of Legal Entity Business License: 1300001001778 3. Tax Registration No.: 130102104395983 4. Organization Code：104395983 5.The name and office address of the Certified Public Accountants engaged by the Company: Domestic Certified Public Accountants: Zhongxi Certified Public Accountants Co., Ltd. Address: Room 422, Capital Time Piaza, No.88. Changan Street West, Beijing. Chapter 2 Highlights of Accounting Data and Business Data (I) Main profit indicators of the report year (consolidated financial statement) 3 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Item Amount(RMB) Operation profit 18,843,034.48 Total profit 18,466,341.64 Net profit attributable to shareholders of 10,339,042.87 the listed company Net profit after deducting of non-recurring gain/lossattributable to the shareholders 9,189,327.91 of the listed company Cash flow generated by business 13,067,666.22 operation , net Deducted nonrecurring gain or loss items and related amount of money Non-recurring gain and loss items Amount Other irregular profit and loss items recognized by China Securities Regulatory 1,604,026.86 Commission Income tax -355,727.20 Gain and loss to minority shareholders -98,584.70 Total 1,149,714.96 (II)The net profit calculated pursuant to Chinese accounting standards and International Accounting Standards (IAS) and the notes to the net profit difference. (Unaudited) Unit：RMB Domestic accounting Overseas accounting standard standard Net profit 10,339,042.87 10,339,042.87 Net assets 245,223,630.03 245,223,630.03 Statement There was no difference in this report period. about the diversity (III) Main Accounting Data and Financial Indicators over the Past Three Years as at the End of the Report Period 1.Main accoubnting date Unit：RMB Changed Year 2007 Year 2006 over last Year 2005 year（％） After Before Before After After adjustment adjustmen Adjustment Adjustment adjustment t Operating profit 228,141,181.38 60,312,797.91 231,608,310.31 -1.50% 78,743,962.00 297,713,182.00 4 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 -442,995,546. -442,042,890.0 Total profit 18,466,341.64 -95,285,182.93 -76,058,769.49 124.28% 00 0 Net profit attributable to -363,531,415. -365,092,524.8 the shareholders of the 10,339,042.87 -77,971,801.20 -63,009,449.36 116.41% 00 9 listed company Net profit after deducting of non-recurring gain/loss -369,018,622. -370,579,731.8 9,189,327.91 -87,312,916.00 -79,276,897.16 111.59% attributable to the 00 9 shareholders of listed company Cash flow generated by -15,428,855.0 13,067,666.22 -32,941,408.32 -32,941,408.32 139.67% -15,428,855.00 business operation, net 0 Changed End of 2007 End of 2006 over last End of 2005 year（％） After Before Before After After adjustment adjustmen Adjustment Adjustment adjustment t 839,028,088.0 Gross Assets 434,451,241.87 402,812,336.84 420,220,483.91 3.39% 857,317,955.67 0 Shareholders’ equity attributable to 266,183,201.0 245,223,630.03 200,203,658.09 234,884,587.16 4.40% 300,793,194.67 shareholders of the 0 company 2. Main Financial Indicators Unit：RMB Changed Year 2007 Year 2006 over last Year 2005 year（%） After Before Before After After adjustment adjustmen Adjustment Adjustment adjustment t Basic gains per share 0.03 -0.20 -0.16 116.41% -0.95 -0.95 Diluted gains per share 0.03 -0.20 -0.16 116.41% -0.95 -0.95 Basic earning per share after deducting of non-recurring 0.02 -0.23 -0.21 111.59% -0.96 -0.97 gains/losses Net income on asset, fully 4.22% -38.95% -26.83% 31.05% -136.57% -121.38% diluted Net income on asset, 4.31% -33.44% -24.13% 28.44% -81.15% -77.81% Weighted Net income on asset, fully diluted and deducted 3.75% -43.61% -33.75% 37.50% -138.63% -123.20% non-recurring gain/loss Net income on asset, weighted and deducted 3.83% -37.44% -30.36% 34.19% -82.38% -78.98% non-recurring gain/loss Net cash flow per share generated by business 0.03 -0.09 -0.09 139.67% -0.04 -0.04 operation Changed End of 2007 End of 2006 over last End of 2005 year（％） 5 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 After Before Before After After adjustment adjustmen Adjustment Adjustment adjustment t Net asset per share attributable to shareholders 0.64 0.52 0.61 4.92% 0.69 0.85 of the listed company (IV) Attached Schedule of Profit Statement Profit in the Return on net assets (%) Earnings per share (RMB report period Fully diluted Weighted average Fully diluted Weighted average Same Same Same Same period of period of period of period of Report Report Report Report the the the the period period period period previous previous previous previous year year year year Operating profit 0.08 -0.34 0.08 -0.30 0.05 -0.21 0.05 -0.21 Net profit 0.04 -0.27 0.04 -0.24 0.03 -0.16 0.03 -0.16 Net profits after deducting non-recurring 0.04 -0.34 0.04 -0.30 0.02 -0.21 0.02 -0.21 gains and losses 6 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Chapter 3 Particulars about Changes in Share Capital and Shareholders (I) The changes of share capital of the Company 1. The total number and the structure of the shares of the Company remained unchanged in the report period. 2. The statement of changes of share capital Before this change Increase/decrease this time (+ , - ) After Bonu Issuing Proporti s Transferred Amount of new Other Subtotal Amount on share from reserves shares s 1.Shares with 218,537,745 57.06% -25,743,291 -25,743,291 192,794,454 conditional subscription 1.State-owne d shares 2.State-owne 214,490,945 56.00% -22,034,288 -22,034,288 192,456,657 d legal person shares 3.Other domestic 4,046,800 1.06% -3,709,003 -3,709,003 337,797 shares Incl ： 4,031,070 1.05% -3,705,070 -3,705,070 326,000 Non-state owned domestic legal person shares Domestic 15,730 0.004% -3,933 -3,933 11,797 nature person shares 4.Foreign shareholding Incl： 7 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Overseas legal person shares Foreign nature person share II.Shares with 164,462,255 42.94% +25,743,291 +25,743,291 190,205,546 unconditional subscription 1.Common 64,462,255 16.83% +25,743,291 +25,743,291 90,205,546 shares in RMB 2.foreign 100,000,000 26.11% 100，000，00 shares in domestic market 3.Foregn shares in overseas market 4.Other III. Total of 383,000,000 100% 383,000,000 capital shares Notes of Stock change: (1)Upon the implementation Shareholders Structure Reform of the Company, the Company's controlling shareholder B non-tradable shareholders prepaid the consideration they should pay. On March 27 2007 and October 29,2007, Part of the original shares and 54,928 shares to Baoshi Corporation. (2)Because in the Shareholders Structure Reform the restriction of sale of state-owned shares is cancelled, Baoshi Corporatio In the report period, a total of 13,580,000 shares are reduced. (3) The reduction of other limited-sale shares is because that the limited-sale shares of part of the original non-tradable sha held by to sell shares to lift restrictions limit the sale of shares held by the off-office executives were due to thaw. 8 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 3. Change in conditional shares Unit：shares Name of the Conditional Released this Increased this Conditional Reason of Date of releasing shareholder shares at year year shares at end of condition beginning of year year Shijiazhuang Baoshi Share Electronic Group Co., 211,282,799 19,150,000 323,858 192,456,657 structure 2007.3.30 Ltd. reform China Electronic Share Imports and exports 1,837,010 1,837,010 0 0 structure 2007.3.30 Company reform Share Zhonghua Hebei 918,505 918,505 0 0 structure 2007.3.30 Comnpany reform Hebei Guoxin Share Investment Group Co., 918,505 918,505 0 0 structure 2007.3.30 Ltd. reform Shanghai Zhonghai Share Exhibition Design Co., 229,626 229,626 0 0 structure 2007.3.30 Ltd. reform Suzhou Share Young Travel service 226,871 226,871 0 0 structure 2007.3.30 Company reform China Electronics Share Engineering Design 183,701 183,701 0 0 structure 2007.3.30 institute reform Shanghai Huaneng Share Construction 183,701 183,701 0 0 structure 2007.11.9 Engineering Co., Ltd. reform Hubei Julong Share Investment 183,701 183,701 0 0 structure 2007.3.30 Management Co., Ltd. reform Share Shanghai Yunbin 137,776 137,776 0 0 structure 2007.3.30 Trade Co., Ltd. reform Share 1,334,591 2007.3.30 Other conditional 2,419,820 0 326,000 structure 435,371 reform 2007.11.9 China Securities Registration & Settlement Co. Ltd. Shares hold by Share sale Shenzhen company limit for Branch executives 15,730 3,933 0 11,797 executives adjusts the policy of shares with sale limit conditions hold by executives. Total 218,537,745 25,743,291 323,858 192,794,454 － － 9 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 (II) Particulars about the issuing and listing of shares 1.The Company did not issue new shares in the previous three years by the end of the report period. 2．In the reporting period, there are no changes in total share number and share structure of the company caused by giving shares, increasing shares and issuing new shares. 3. The Company did not issue inter Employee shares. (III) Particulars about shareholders 1.Number of shareholders and Particulars shareholders Unit：shares By the end of the report period, the Company had 23,885 shareholders in Total number of shareholders total, including 13,508 shareholders holding A shares and 10,377 shareholders holding B shares. Particulars about the shareholding of the top ten shareholders Nature of Proportion Quantity of Name of shareholder Conditional shares Pledged or frozen shareholder (%) shares held Shijiazhuang Baoshi State-owned 51.74% 198,146,657 192,456,657 0 Electronic Group Co., Ltd. Legal person Merchants securities Foreign legal 1.50% 5,733,175 0 unknown Hongkong Co., Ltd. person Domestic Feng Jia 0.54% 2,071,000 0 unknown natural person GUOTAI JUNAN Foreign legal SECURIES HONG 0.46% 1,779,084 0 unknown person KONG LIMITED Foreign legal Zheng Shunzhen 0.39% 1,486,400 0 unknown person Foreign legal KGI ASIA LIMITED 0.30% 1,145,000 0 unknown person Foreign legal Qi Yuyan 0.27% 1,018,303 0 unknown person Domestic Non- Hebei Xindu Trade Co., State-ow 0.24% 930,674 0 unknown Ltd. ned Legal person Foreign legal Chen Yongquan 0.23% 885,462 0 unknown person Domestic Ma Jing 0.22% 861,412 0 unknown natural person Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Type of shares Foreign shares placed in domestic Merchants securities Hongkong Co., Ltd. 5,733,175 exchange Shijiazhuang Baoshi Electronic Group 5,690,000 RMB Common shares Co., Ltd. Feng Jia 2,071,000 RMB Common shares GUOTAI JUNAN SECURIES HONG Foreign shares placed in domestic 1,779,084 KONG LIMITED exchange Foreign shares placed in domestic Zheng Shunzhen 1,486,400 exchange Foreign shares placed in domestic KGI ASIA LIMITED 1,145,000 exchange Qi Yuyan 1,018,303 Foreign shares placed in domestic 10 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 exchange Hebei Xindu Trade Co., Ltd. 930,674 RMB Common shares Foreign shares placed in domestic Chen Yongquan 885,462 exchange Ma Jing 861,412 RMB Common shares Among the top ten shareholders as listed above, there exists no associated Notes to the related relationship among the shareholders of legal person share. The relation relationship between the between the top ten shareholders was unknown. It was unknown whether top ten shareholders or they are persons taking concerted action specified in Regulations on the their concerted action Information Disclosure of the Change of Shareholding of Shareholders of Listed Companies. Notes：At the end of the report period, the amount of limited-sale shares held by does not include the amount of other prepaid shares the non-tradable shareholders shall repay. 2．Shareholding changes in shareholders who hold 5% of the shares of the company. At the end of the reporting period, the shareholder holding 5% of the shares of the company is Shijiazhuang Baoshi Electronics Group Co., Ltd., holding 198,146,657 shares of the company, of which: the shares with sale limit conditions are 192,456,657 shares, 18,826,142 shares less than those at period beginning; the tradable shares without sale limit conditions are 5,690,000 shares, 5,690,000 share more than those at period beginning. Causes for shareholding changes: (1). In the reporting period, 19,150,000 sale-limit shares were cancelled and were circulated in market; 19,580,000 sale-limit shares were reduced through the trading system of Shenzhen Stock Exchange. In the course of reduction, 120,000 shares were mistakenly bought in, the company had mad timely disclosure in accordance with relevant regulations. (2) In the reporting period, 323,858 shares of consideration shares paid in advance by part of the original non-tradable shareholders were received. 3．Particulars of the controlling shareholder of the company The controlling shareholder of the company is shijiazhuang Baoshi Electronic Group Co., Ltd.Legal representative:ShangJianbin. 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, 4. Particulars about the actual controllers of the Company The actual controllers of the Company is 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. 5.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 11 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 48.3% 27.45% 17.74% 6.51% Shijiazhuang Baoshi Electronic Group Co., Ld 51.74% Shijiazhuang Baoshi Electronic Glass Co., Ld 6. The equity of non-current shareholders in the top 10 shareholders and the conditions for limit on sale. Particulars Date when trading allowed Shares with of subscription conditions Name of conditions holder conditioned Conditions Date when Newly added subscription trading allowed tradable shares 注1 Shijiazhuang Baoshi Electronic 192456657 March 30,2008 19150000 Note 2 Group Co., Ltd. March 30,2009 173306657 Note 1：At the end of the report period, the amount of limited-sale shares held by does not include the amount of other prepaid shares the non-tradable shareholders shall repay. Note 2：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. Chapter 4 Particulars about Directors, Supervisors, Senior Executives and Employees I. Particulars about directors, supervisors and senior executives 1. Basic information Shares Increase/de The total Shares Date of beginning held at held at Name Title Sex Age the crease amount of the year-begi and ending year-end nning amount remuneration 12 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 received from the Company in the report period (RMB) Shang Board 2006.9-2009.9 0 Male 49 0 0 0 Jianben chairman Song Director, 2006.9-2009.9 115984 Hongbo General Male 53 0 0 0 Manager Zhou Bo Director Male 42 2006.9-2009.9 9724 9724 0 0 Fu Director, Fema 2006.9-2009.9 66344 Board 40 0 0 0 Yinfang secretary le Yu Independent Male 61 2006.9-2009.9 0 0 0 10000 director Rengang Han Independent Male 43 2006.9-2009.9 0 0 0 10000 director Zhiguo Zhang Independent Male 39 2006.9-2009.9 0 0 0 10000 director Junhao Xie Chairman of 2006.9-2009.9 0 the Mengxio supervisory Male 51 0 0 0 ng committee Fan 2006.9-2009.9 0 Zhenpin Supervisor Male 51 1430 1430 0 g Li 2006.9-2009.9 34003 Supervisor Male 53 3432 3432 0 Huiming Hao 2006.9-2009.9 33566 Supervisor Male 54 0 0 0 Junze Li Hong Supervisor Male 53 2006.9-2009.9 1144 1144 0 28323 Lin Male 28 2006.9-2009.9 0 Supervisor 0 0 0 Xiang Wang Fema 34 2006.9-2009.9 0 Supervisor 0 0 0 Zhining le Wang Deputy GM Male 45 2006.9-2009.9 0 0 0 39282 13 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Xiaohu Yang 2006.9-2009.9 24031 Deputy GM Male 55 0 0 0 Guang Zhou General 2006.9-2009.9 33578 Male 55 0 0 0 Yumao Accountan 师 2. Main work experience of the current directors, supervisors and senior executives over the Past five Years as at the End of the Report Period (1)Shang Jianbin: Board chairman. From March 2001 to October 2005, he served as vice board chairman of Shijiazhuang Oriental Thermal Power Co., Ltd. From October 2005 to June 2006, he served as deputy director of Shijiazhuang State-owned Assets Commission. Since June 2006, he has served as board chairman of Baoshi Group Co. Since September 2006, he has served as board chairman of the Company. (2) Song Hongbo, director and general manager. From 1999 to June 2000, he served as director and general manager assistant of Baoshi Group Co. From June 2000 to June 2004, he served as director and general manager of the Company and concurrently served as director of Baoshi Group Co. Since June 2004, he has served as director and general manager of the Company. (3) Zhou Bo, director. From 1997 to June 2004, he served as director of the Company and concurrently served as director of Baoshi Group Co. and deputy general manager of Shijiazhuang Baoshi Electric Glass Co., Ltd. Since June 2004, he has served as director of the Company and concurrently served as director and general manager of Baoshi Group Co. and deputy general manager of Shijiazhuang Baoshi Electric Pin Glass Co., Ltd. （4）Fu Yinfang: Director and board secretary. From 2000 to July 2006, she served as legal adviser and deputy director of Party office. Since August 2006, she has served as director of Law and Securities Dept. of the Company. Since September 2006, she has served as director and board secretary of the Company. （5）Yu Rengang: Independent director. From August 2001 to November 2005, he served as secretary of Party committee and professor of Hebei Economy and Trade University. Since November 2005, he served as professor of Hebei Economy and Trade University. Since September 2006, he has served as independent director of the Company. （6）Han Zhiguo: Independent director. 2000 to September 2003，he served as teacher of Hebei Law College,Sine September ,2003，he has served as Lawyer of Zhengchen Law office, Since September 2006 , he has served as independent director of the Company. （7）Zhang Junhao: Independent director. Since 2000, he has served as project manager of Hebei Tianhua Certified Public Accountants Co., Ltd. Since September 2006, he has served as independent director of the Company. （8）Xie Mengxiong, supervisor. From 1997, he served as deputy secretary of Party committee of Baoshi Group Co. Since June 2004, he has served as supervisor of the Company and concurrently served as deputy secretary of Party committee of Baoshi Group Co. （9）Fan Zhenping, supervisor. He has served as supervisor of the Company since 1992 and concurrently served as deputy chief of Public Security Division of Baoshi Group Co. since April 1999. (10) Li Huiming, supervisor. Since 1997, he has served as supervisor and chairman of labor union of the Company. 14 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 （11）Hao Junze: Supervisor. From 2000 to August 2006, he served as deputy director of Audit Dept. of Baoshi Group Co. Since August 2006, he has served as director of Audit Dept. of the Company. （12）Li Hong, supervisor. From 1997 to June 2000, he served as supervisor and deputy workshop superintendent of the Company. Since June 2000, he has served as supervisor of the Company and deputy director of Tool and Mould Factory; （13）Lin Xiang: Supervisor. Since 2000, he has worked at China Electronics Import and Export Corporation and served successively as auditor and audit team head of Audit Dept., senior project manager of Investment Management Dept. and fund section chief of Financial Management Dept. and general manager assistant. Since September 2006, he has served as supervisor of the Company. （14）Wang Zhining: Supervisor. In 2002, he served as supervisor of Analysis and Evaluation Dept. of Zhonghua Hebei Company. From 2003 to 2005, he served as supervisor of Accounting Dept. of Zhonghua Hebei Company. Since 2006, he has served as deputy manager of Finance Dept. of Zhonghua Hebei Company. Since September 2006, he has served as supervisor of the Company. （15）Wang Xiaohu: Deputy general manager. From July 1999 to May 2006, he served as deputy factory director of Component Factory of the Company. Since May 2006, he served as deputy General manager of Company and Director of component Factory. （16）Yang Guang, deputy general manager. From February 1997 to June 2000, he served as the director of Tool and Mould Factory of the Company. Since June 2000, he has served as deputy general manager of the Company. (17) Zhou Yumao, chief accountant. From May 1993, he served as deputy director of Management Dept. of Finance Co. of Baoshi Group Co. Since June 2000, he has served as chief accountant of the Company. 3. Posts held at corporate shareholders of the directors, supervisors and senior executives Name Unit Title Whether receiving remuneration or subsidy Shang JianbinShijiazhuang Baoshi Electric Board chairman Yes Group Co., Ltd Zhou Bo Shijiazhuang Baoshi Electric Director, General Manager Yes Group Co., Ltd Xie Shijiazhuang Baoshi Electric Deputy secretary of Yes Mengxiong Group Co., Ltd Party committee Fan Zhenping Shijiazhuang Baoshi Electric Deputy chief of Public Yes Group Co., Ltd Security Division Lin Xiang General manager Yes China Electronic Import and Export Co. assistant Wang Zhining Deputy manager of Yes Zhonghua Hebei Co Finance Dept 4. Posts held at other units of the directors, supervisors and senior executives Name Unit Title Whether receiving remuneration or subsidy 15 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Shang Jianbin Shijiazhuang Baoshi Electric Group Board chairman No Co., Ltd Zhou Bo Shijiazhuang Baoshi Electric Pin Director No Glass Co., Ltd. Yu Rengang Hebei Economy and Trade professor Yes University Han Zhiguo Zhengchen Law office Lawyer Yes Zhang Junhao Hebei Tianhua Certified Public Project Yes Accountants Co., Ltd manager 5. Annual remuneration (1) The procedure of deciding the remuneration and the basis for determining remuneration In the report period, post skill wage system applied to the directors, supervisors and senior executives of the Company. Their remuneration is determined according to the wage management system of the Company. The remuneration of independent directors is determined by shareholders' general meeting. (2) The annual remuneration of the current directors, supervisors and senior executives Except that Shang Jianbin,Zhou Bo,Xie Mengxiong,Fan Zhenping,Lin Xiang and Wang Zhining receive remuneration from corporate shareholders, other directors, supervisors and senior executives all receive remuneration from the Company. The annual subsidy of independent directors is RMB 10000 / person. 6. Change of directors, supervisors and senior executives in the report period During the reporting period, Zhang Wenhai, Vice general manager of the company, applied to resign from his position of vice general manager, and his application was adopted in the seventh meeting of the fifth board of directors. During reporting period, there were no changes happened in the positions of other directors, supervisors and senior managers. II. Particulars about employees As of December 31, 2007, the Company has 677 staff members in total, including 530 production staff members, 10 sales staff members, 33 technical staff members, 10 financial staff members, 60 administrative staff members and 34 other staff members. The personnel with university, college and secondary specialized school education accounted for 27% of the total staff and workers.27% of the staff had professional technical titles. The number of the retired staff whose retirement pension is paid by the Company is 70. Chapter 5 Corporate Administration Structure I. Particulars about corporate administration During the reporting period, complying with the Notice on Strengthening the Governance on Listed Company issued by China Securities Regulatory Commission and the requirements in relevant files issued by Heibei Securities Regulatory Commission and Shenzhen Stock Exchange, and in accordance with Company Law, Security Law and other 16 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 relevant laws, administrative regulations, departmental rules, after the three steps of learning, public commenting and rectification and improvement, and widely accepting the views and suggestions from regulatory bodies investors and the general public, the company found the problems existing in company governance and developed a clear rectification plan, and further improved the legal person governance structure. At the same time, combining with the problems raised in the rectification notice by China Securities Regulatory Commission Hebei Regulatory Bureau from September 3 to September 7 , 2007, the company earnestly carried out rectification and reform, and strengthened standardized operation, and strived to improve the company governance. After the rectification, the governance of the company has got new improvements in the following aspects: 1. The basic work of corporate governance has been further strengthened and improved. The company established and improved an internal control system, modified the Work Rules for General Manager, and developed Work System for Reception and Promotion, Management System for Funds Raising, and System for the Management of Shares Hold by Directors, Supervisors and senior managers and the Changes. 2. In accordance with the requirements and regulations in Management Methods for Information Disclosure in Listed Company and Stock Listing Rules in Shenzhen Stock Exchange, combining with the actual situations of company information disclosure, the company developed Information Disclosure System. 3. Further improved corporate governance structure, set up a strategy committee, an auditing committee, a nominating Committee, and salary and evaluation committee, the four special committees of the Board of Directors, and formulated detailed implementation rules for all the special committees. 4. Basically eliminated overlapping in positions in some management office and controlling shareholders and the situations that a few management offices and controlling shareholders joined to work, so as to separate the shareholders and the institutions. At present, the governance of the company is basically in line with the requirements for governance in listed companies issued by China Securities Regulatory Commission. II. Particulars about duty performance of independent directors The number of independent directors in the board of directors of the Company is 3. The proportion of the number of independent directors to total number of board members meets the requirements of Independent Director System of Listed Companies. In the report period，three independent directors of the Company seriously and independently performed their duties according to relevant provisions of the Articles of Association of the Company, attended board meetings on time, investigated the proposals examined at meetings and seriously expressed their own opinions. They expressed independent opinions on important events including important asset sales and related transactions and gave play to their due function. In the report period，independent directors of the Company did not make objection to the matters examined at all previous board meetings of the Company. Attendance at board meetings by independent directors: Name of Attendance The supposed times of Attendance in Absence independent through agent Remarks attendance this year person (times) (times) director (times) Go on Yu Rengang 6 5 1 0 bussiness 17 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Han Zhiguo 6 6 0 0 Zhang Junhao 6 5 0 1 III. Separation of the company and the controlling shareholders in business, personnel, assets, institutions, and finance. In the reporting period, , the company carried out active rectification and reform in accordance with the existing problems in the company, and improved company governance standards.The Company has made efforts to realize separation from its controlling shareholder in respect of business, personnel, assets, organs and finance according to relevant requirements of CSRC. The Company and the controlling shareholder respectively have independent and complete business and the ability of independent operation. 1. Business: The Company is independent of its controlling shareholder, owns independent and complete production, sales and finance system and independently conducts operation management activities within statutory business scope. 2. Personnel: The Company is completely independent in respect of labor, personnel and wage management. The general manager, deputy general managers and other senior executives of the Company all received remuneration from the Company, who did not held any position at any corporate shareholder. 3. Assets: The property right relationship between the Company and the controlling shareholder is clear and the Company owns independent production system and supporting facilities. 4. Organ: In accordance with relevant laws and regulations including the Company Law and the Securities Law, the Company established organs including shareholders' general meeting, the board of directors and the supervisory committee, formulated basic work regulations including Rules of Procedure of Shareholders' General Meeting of the Company, Rules of Procedure of the Board of Directors and Rules of Procedure of the Supervisory Committee, established and perfected decision making system. The controlling shareholder of the Company participated in the Company's decision making according to legal procedure and did not affect the independence of the Company's operation management. The Company did not work side by side with its controlling shareholder. 5. Finance: The Company has established independent finance department, independent accounting system and financial management system and opened independent bank accounts. It independently pays tax according to law. The accounting personnel do not hold concurrent posts at the controlling shareholder. The Company will continue to make improvement in above aspects according to relevant requirements in the future. IV. Establishment and perfecting of company internal control 1. Overview of company internal control Since the establishment of the company, according to the requirements for modern enterprise system and legal person’s governance structure in listed companies, and in accordance with the relevant policies issued by relevant regulatory authorities, the company had gradually established and perfected and timely amended the system of rules and regulations of the company, and had constantly improved the legal person governance structure of the company, so as to ensure the normal operation of the company. The company had developed Company Constitution, Rules of Procedures for the General 18 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Shareholders Meeting, Rules of Procedures for the Board of Directors, Rules of Procedures for the Board of Supervisors, and other corporate management system, in addition, the company had also developed Management System for Investor Relations, Work System for Information disclosure, Work Rules for General Managers, Work System for Independent Directors and System for Internal Major Matters Reporting, which effectively guaranteed the normal operation of the company. During the reporting period, according to the relevant provisions in Notice on Strengthening the Special Governance Activities among Listed Companies issued by China Securities Regulatory Commission and Internal Control Guidance for Listed Companies, combining with the self-inspection and rectification in “Special Governance Activities in Listed Companies” and the on-site inspection by Hebei Security Supervisory Bureau, the company comprehensively carried out the establishment, perfecting, implementation and effective supervision of internal control of the company. The company amended Work Rules for General Managers and Work System for Information Disclosure, and developed Work System for Reception and Promotion, System for Fund Raising Management and other management systems, which formed the internal control system centering around Company Constitution; and further improved company governance structure, established the strategy committee, auditing committee, nominating committee, and salary and evaluation committee, the four special committees of the Board of Directors, and formulated various implementation details for all special committees. At present, the governance of the company is basically in line with the requirements for governance in listed companies issued by China Securities Regulatory Commission. The company sets up an audit department, with one ministry and one auditor. The audit department conducts regular and irregular audit to the company, subsidiaries, and key departments of the company. Internal audit and internal control system of the company are complete and effective. In the reporting period, the internal control activities of the company and the establishment of perfect internal control system are in line with the relevant state laws, regulations and requirements by regulatory authorities, ensuring the normal management operation of the company, with reasonability, integrity and effectiveness. 2. The key internal control activities (1) Internal control of the controlling subsidiary of the company The controlling subsidiary of the company is Shijiazhuang Baoshi Color Glass shell Co., Ltd. The company holds 81.26% of its shares. The controlling subsidiary has independent financial accounting system, the company exercises controlling rights by sending directors and employing auditing agencies. (2) Internal control on related transactions of the company Internal transactions of the company follow the principles of faithfulness, equality, voluntary, fairness, and openness, do not harm the interests of the company and other shareholders. The approval rights, approving procedures and voting avoidance of related transactions strictly comply with the regulations in Company Constitution and Rules of Procedures for the General Shareholders Meeting. The pricing of related transactions happened in the reporting period is fair and reasonable, meets the needs for company development and production operation, and does not harm the interests of the company and other shareholders. In the reporting period, the company found no situations of violating the Internal Control Guidelines and the relevant rules and regulations of the company. 19 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 (3). Internal control on external guarantee of the company. In accordance with the relevant laws and administrative regulations, departmental rules and the relevant regulations in Rules for Stock Listing in Shenzhen Stock Exchange, the approval right on external guarantee of the general shareholders meeting and the board of directors is clearly stipulated in Company Constitution. No external guarantee events happened in the reporting period. (4). Internal control on major investments of the company In accordance with the relevant laws and administrative regulations, departmental rules and the relevant regulations in Rules for Stock Listing in Shenzhen Stock Exchange, the approval right on major investments of the general shareholders meeting and the board of directors is clearly stipulated in Company Constitution. No major investments happened in 2007. (5). Internal control on the use of raised funds The company developed the System for Management of Raised Funds, and standardized the use and management of raised funds. In the reporting period, the company did not raise funds, and no raised funds before the reporting period extended to this reporting period. (6). Internal control on information disclosure The company revised Information Disclosure System, and classified the procedures of information disclosure, and made complete and effective control on information disclosure and major internal information communication. The company strictly enforced the System, and followed the requirements and provisions in relevant laws, regulations and regulatory documents, earnestly carried out obligations of information disclosure, and found no situations of violating Internal Control Guideline and relevant rules and regulations. 3. Problems and improvement plans (1). The company continues to revise and improve the internal controls system of the company according to business development and the requirements from Shenzhen Stock Exchange and other regulatory departments. In the same time, the company strengthens the training of relevant laws and regulations and internal control on directors, supervisors, senior managers, and enhances the awareness of management personnel at all levels. (2). The company should enhance communication with investors, trying to communicate with investors by a variety of methods, and in accordance with the requirements in Information Disclosure System, further enhance the initiative awareness of information disclosure to ensure that the trueness, accuracy, timeliness, completeness and fairness of information disclosure. 4. Overall evaluation on internal control The internal control system of the company is rational, perfect, and verified to be feasible and effective. With the company's development, the company will continue to improve its internal control system and carry out the implementation of the system according to the situation and regulatory requirements, so as to give active function for the company’s healthy operation and supervision, self-restraint active role, and to ensure the legitimate rights and interests of shareholders. 5. Views of independent directors’ self-assessment on internal control The company has set up a relatively sound internal control system, which is in line with the requirements of state laws, administrative regulations and departmental regulations. The internal control system is legitimate, reasonable and effective. The governance, production management, information disclosure and major issues of the company are conducted strictly in accordance with the regulations of all internal control systems. The internal control of the company is effective. 20 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The evaluation report on internal control objectively reflects the actual situation of the construction, implementation and monitoring of current internal control system. 6. Views of supervisors’ self-assessment on internal control The self-assessment of internal control is in line with the requirements in Internal Control Guidance for Listed Companies issued by Shenzhen Stock Exchange and other related documentation; the self-assessment truly and completely reflects the current status of establishment, improvement and implementation of internal control system and the main problems; on the whole, the evaluation of internal control is objective and accurate. Chapter 6 Brief Introduction to Shareholders' General Meeting In the report period，the Company held one shareholders’ general meeting and one relevant shareholders' meeting. Relevant particulars are as follows: The Company held the relevant shareholders' meeting in the meeting room of the office building of the Company at 9:00 a.m. of April 29, 2007. The announcement of relevant resolutions was published on China Securities Daily, Hong Kong Commercial Daily and www.cninfo.com.cn on April 30, 2007. Chapter 7 Report of the Board of Directors I. Operating status of the Company 1. The scope of main operation and its operating 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 reporting period, facing the reshuffle in CRT industry and more fierce market competition, under the situation of price rising of energy raw materials and the rise of manufacturing cost, and under the correct leadership of the board of directors of the company, the company's management lead all the staff to open up the market space and improve the production process, to survive with quality and to develop with new products, and to expand market shares; innovative management and requiring efficiency to the management, actively promoting "7S" management, and do a good job in saving energy, enhancing competitiveness of products, digesting and overcoming unfavorable factors and turning deficits into profits, avoiding the risk of reshuffle, and laying a solid foundation for the further development of the company. In the report period, the output of pins, anode caps and L-35 glass tubes was 93.907 million, 11.0965 million and 46.30 tons respectively. The sales volume of pins, anode caps and L-35 glass tubes was 99.664 million, 12.535 million and 25.23 tons respectively. In the report period, income from main operation, Total amount of Profit ,Net Profit, Gross 21 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 profit rate of product of the Company were RMB 228.1412 million, RMB 18.4663 million, RMB 10.3390 and 13.78% respectively. The volume of pins, anode caps and L-35 glass tubes market share of its products were 27.6% ,16% and 80% respectively. II.The Company's main operation and its operating status (1). Table of the status of main operation in terms of business line and product(unit:RMB’0000) Rate of In terms of Increase or profit Increase/decrease of Increase/decrease of Income Cost of decrease of rate of business line from income from main cost of main operation from main main profit from main main operation over the over the previous year operation operation operation over the operation previous year (%) (%) previous year (%) (%) Kinescope parts and components 8638.64 7131.96 17.44 37.83 68.71 +42.57% for color TV Rate of In terms of product Increase or profit Increase/decrease of Increase/decrease of Income Cost of decrease of rate of from income from main cost of main operation from main main profit from main main operation over the over the previous year operation operation operation over the operation previous year (%) (%) previous year (%) (%) Kinescope parts and components 8638.64 7131.96 17.44 37.83 68.71 +42.57% for color TV （2）Table of the status of main operation in terms of area (unit:RMB’0000) Increase/decrease of income from Area Income from main operation main operation over the previous year (%) North China 8638.64 37.83 3. Main suppliers and customers The total amount of purchase from the top five suppliers accounted for72.93 % of the total purchase amount of the year. The total amount of sales to the top five customers accounted for76.19% of the total sales amount of the year. 4. In the report period, Assets structure and expenses charge（Unit：RMB） （1）Assets structure and expenses charge Item Amount Proportion Increase and Change Cause End of Beginning Decrease（%） Year 2007 Year 2006 2007 of 2007 In this year, transfer Accounts 110,863,653.40 38,727,924.63 25.52% 9.22% 186.26% the power cost of Pin receivable Company in other Other receivables to the 19,903,577.19 91,922,235.60 4.58% 21.87% -78.35% accounts receivable. receivables 22 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The glass tube plant of the company was in reproduction in November 2006, in 35,911,975.95 24,469,376.20 8.27% 5.82% 46.76% 2007, the plant is in normal production, so the inventories increased than in last Inventory year. Projects under construction was 0.00 82,570.83 0.00 0.02% -100% completed and was Construction-i transferred to fixed n-process assets. The devaluation provision originally accounted and 10,890,000.58 16,617,257.07 2.51% 3.95% -34.47% provision for bad debts was transferred back, Assets of and timing differences deferred tax tax rate is 25%. （2）Expenses structure and expenses charge Item Year 2007 Year 2006 Increase Change Cause and Decrease （%） The labor income of controlling subsidiary of the 887,202.72 1,149,740.73 -22.83% Key business tax and company Color Shell surtax Company decreased. Because the glass tube project in this year was put into production, so the sales 854,857.59 424,185.90 101.53% amount increased and the sales cost also increased Sale Expenses accordingly. The company strengthened 20,637,374.43 31,598,088.63 -34.69% Administration expenses cost control. After the assets restructure in 2006, the cost for fund occupying would not be -3,961,366.58 7,629,601.81 -151.92% accounted, and exchange loss and gain from RMB appreciation would be Financial expenses produced. The company dealt with the glass tube which had been accounted reserves for devaluation in this year, and -5,824,228.79 -2,043,506.79 -185.01% transferred the inventory devaluation provisions, so that Losses form Assets the assets devaluation loss devalue transferred back in this year 23 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 was more than that of last year in the same period. In 2006, the controlling subsidiary of the company Color Shell Company transferred all its shares in Pin Company to the controlling 0.00 -66,406,595.97 100.00% shareholder Baoshi Group Company, there was no long-term investment project in the year of consolidating Investment income statement. In 2006, the company dealt with the debt-paying house 0.00 3,521,836.29 -100.00% and formed the income of assets disposal, no such Non-operating income incomes happened in 2007 In 2007, the income from 7,322,473.86 829,836.60 782.40% payable tax deterred income Expenses of income tax tax increased. Operating profit 18,843,034.48 -79,460,720.69 123.71% In 2006, the joint company of Total profit 18,466,341.64 -76,058,769.49 124.28% the company Xiaozi Company caused big investment loss to the company, in 2007, the equity in Xiaozi company was transferred to the controlling 10,339,042.87 -63,009,449.36 116.41% shareholders of the company Net profit attributable to Baoshi Group Company, the the owners of parent company would not undertake company the investment loss. 5. Cash flow from operating activities in the report term Item Year 2007 Year 2006 Increase and Change Cause Decrease（%） Net cash flow from The company operating activities strengthened the power to collect 13,067,666.22 -32,941,408.32 139.67% money and strictly applied the funds appraisal system. Net cash flow from After the overhaul investing activities and reproduction of the Glass Tube -143,800 -1,772,541.47 91.89% plant of the company, there were no new big investment items. 6. In the reporting period, there were no other operational business activities which constituted great impact on profit. 24 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 7. In the reporting period, there was such case that the investment income of a single shareholding company had more 10% impact on the net profit of the company. 8. The operation information and performance of the controlling company of the company. With registered capital of RMB 540.68 million, Shijiazhuang Baoshi Color Glass Bulb Co., Ltd. (SBCB) is a controlled subsidiary of the Company. The Company owns 81.26% equity of SBCB. SBCB, Nippon Electric Glass Co., Ltd. and Nissho Iwai Corporation jointly established Shijiazhuang Baoshi Electric Glass Co., Ltd. (hereinafter referred to as "SBEG") on July 3, 1997. SBCB owns 49% equity of SBEG. SBEG is mainly engaged in production and sales of kinescope glass bulb for color TV. On November 30, 2006, SBCB fully assigned the equity of SBEG owned by it to Shijiazhuang Baoshi Electronic Group Co., Ltd. In the report period, SBCB earned operating income of RMB 1.8815 million and net profit of RMB 3.7686 million. 9. There were no such bodies that were not controlled with special purpose. II. Forecast of the Company's future development Forecast of the Company's future development With the transition from traditional CRT display to panel display in global color TV market, the dominant position of CRT television has met with unceasing impact from panel television. In addition, the price of raw materials has risen unceasingly and production capacity competition has been fierce. These objective factors have caused downtrend of market share of CRT television. As CRT television has advantages of clear color, steady quality and low price and ultrathin CRT television has been introduced, CRT television still has big share in domestic second and third markets and rural market at present. Due to the regional difference of domestic economic development and the demand of other developing countries and countries to be developed on CRT television, the market demand of CRT television is expected to be still big in the next period of time. The Company's leading products are electronic components supporting traditional color television. The Company has strong market competitiveness in the industry at home and abroad in respect of technology, scale and product quality. 2. Business plan for the new year The industry upgrading occurred in color TV industry made the Company face big opportunities and great challenges. The key work in the new year is to realize the Company's sustainable development. （1）Glass Tube Factory will continue to tackle technological problems, enhance quality and qualification rate, reduce cost, further improve management, guarantee stable, safe and economic operation of production, make efforts to strengthen the development of international market, increase export share and try to develop with scale advantage and quality advantage. （2）Component Factory will give play to its own advantages, deeply investigate market, strengthen technical force, stress tackling of key technological problems, promote manufacturing localization of materials and process improvement, reduce cost and increase market share. It will strengthen the development of inter-trade new products and quicken product transformation based on renovation of existing products. （3）To further strengthen internal management, take establishing "resource-saving enterprise" as an objective, seek improvement of operating results through innovation of management mode. It will also strengthen the recovery of accounts receivable and ensure safe and efficient operation of funds. （4）To actively plan and continue to promote asset reorganization and ensure sustainable development. 25 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 3. Risk factors that possibly have adverse influence on the future development strategy and operation objective of the Company and the countermeasures The Company mainly confronts difficulties in respect of external business environment. Display products have entered a period of malicious competition in the world since 2006. CRT market has shrunk continuously, which has resulted in superfluous production capacity. The whole industry has started transformation. The business environment confronted by confronted by the Company is extremely unfavorable. All these factors have made great impact on the key business of the Company. To cope with this situation, the Company improved quality management, renovated oxidation technology, strengthened production process control and made all-out efforts to promote the manufacturing localization of pin materials. The quality of its products has been enhanced steadily, which were appraised as famous-brand products of Hebei Province in 2007. The Company strengthened new product development. Glass sealed casting die, a new produt, has passed small batch certification and the Company has the capacity for volume production. The Company gave play to the technology and quality advantage of lead glass tube, ensured stable and efficient operation of kilns and enhanced competitiveness of products through unceasingly tackling key problems, improving quality and reducing cost and steadily increased its market share through developing international market. III. Investment in the reporting period 1. Projects invested by fund raising In the reporting period, the company had no newly raised funds, there were no such situations that the raised funds before this period deterred to this period. 2. Major projects that invested by non-raised funds in the reporting period. During the reporting period, the company had no major projects that invested by non-raised funds. IV.Routine work of the board of directors 1. Board meetings and resolutions in the report period In the report period, the Company held 6 board of director. Relevant particulars are as follows: (1). The 7th meeting of the fifth board of directors was held on April 8, 2007，The announcement of resolutions of this meeting were published on China Securities Daily,Hong Kong Commercial Daily and www.cninfo.com.cn on April 9,2007. （2）The 8th meeting of the fifth board of directors was held on April 26, 2007，The announcement of resolutions of this meeting were published on China Securities Daily,Hong Kong Commercial Daily and www.cninfo.com.cn on April 27,2007. （3）The 9th meeting of the fifth board of directors was held on June 28, 2007，The announcement of resolutions of this meeting were published on China Securities Daily,Hong Kong Commercial Daily and www.cninfo.com.cn on June30,2007. （4）The 10th meeting of the fifth board of directors was held on August 22, 2007， （5）The 11th meeting of the fifth board of directors was held on September 27, 2007，The announcement of resolutions of this meeting were published on China Securities Daily,Hong Kong Commercial Daily and www.cninfo.com.cn on September 28,2007. （6）The 12th meeting of the fifth board of directors was held on October 26, 2007，The announcement of resolutions of this meeting were published on China Securities Daily,Hong Kong Commercial Daily and www.cninfo.com.cn on October 27,2007. 2. Implementation by the board of directors of the resolutions of the shareholders' general meeting 26 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The board of directors duly implemented all resolutions of the shareholders' general meeting in the report period. 3. Summary report on duty performance of the audit committee under the board of directors The audit committee under the board of directors of the Company reviewed the financial and accounting statements prepared by the Company before the entrance of the certified public accountants for annual audit. In its opinion, the preparation of the Company's financial statements for 2007 basically complies with laws and regulations, the Articles of Association and internal management system of the Company and the information contained therein basically reflects the financial position and operating results of the Company for the year. After the entrance of the certified public accountants for annual audit, the audit committee determined the schedule for audit of the Company's financial reports for the report year through consultation with the certified public accountants for annual audit and urged them to submit auditor's report within agreed time. After the certified public accountants for annual audit gave preliminary opinions, the audit committee reviewed the financial and accounting statements of the Company again. In its opinion, the content and format of the financial and accounting statements for 2007 audited by the certified public accountants for annual audit comply with relevant regulations of CSRC, Shenzhen Stock Exchange and Accounting Standards for Business Enterprises and gave a fair view of the Company's financial position as at December 31, 2007 and its operating results and cash flow for the year then ended. After the certified public accountants for annual audit issued official auditor's report, the audit committee reviewed the audited financial and accounting statements for 2007. In its opinion, the preparation of the Company's financial statements for 2007 basically complies with laws and regulations, the Articles of Association and internal management system of the Company and the information contained therein gives true and fair view, in all aspects, the financial position and operating results of the Company for the year. The standard unqualified auditor's report issued by Zhongxi Certified Public Accountants Co., Ltd. for the Company's financial reports for 2007 gives true and objective view of the Company's financial position, operating results and cash flow and the audit conclusion reflects the Company's actual conditions. The audit committee submitted to the board of directors the evaluation report on the audit work of Zhongxi Certified Public Accountants Co., Ltd. for the Company in the report year. In its opinion, this accounting firm has prudent and earnest working attitude and meticulous and practical work style and satisfactorily completed all audit tasks for the Company. To keep the continuity of the audit work for the Company, the audit committee suggested the board of directors to continue to engage Zhongxi Certified Public Accountants Co., Ltd. as financial audit body for the Company in 2008. 4. Summary report on duty performance of the remuneration committee under the board of directors The remuneration and appraisal committee under the board of directors audited the remuneration of the directors, supervisors and senior executives of the Company. In its opinion, the remuneration (allowance) of the directors, supervisors and senior executives disclosed in 2007 annual report of the Company was paid according to the wage management system of the Company and the remuneration of independent directors was paid according to the amount determined by shareholders' general meeting. The remuneration and appraisal committee accepted it. 5. Profit distribution preplan As audited by Zhongxi Certified Public Accountants Co., Ltd., the net profit of the Company for 2007 was RMB 10,339,042.87. As the Company still has uncovered losses 27 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 of RMB 550,421,660.64, the board of directors of the Company decided neither to distribute profit nor capitalize any capital surplus for the report year. The net profit of the Company for 2007 will be used to make up the losses of the Company for previous years according to relevant accounting regulations. This preplan is to be submitted to 2007 annual shareholders' general meeting for examination. The independent directors of the Company expressed independent opinions on the above profit distribution preplan of the Company and held the opinion that such preplan complied with the Company's status quo and relevant accounting regulations and did not harm shareholders' equity. 6. Miscellaneous The newspapers selected by the Company for information disclosure remained China Securities Daily, Hong Kong Commercial Daily and www.cninfo.com.cn ,No change in the report period. Chapter 8 Report of the Supervisory Committee I. The meetings of the supervisory committee In the report period, the supervisory committee held 4 meetings in total. The particulars of the meetings are as follows: 1. The 5th meeting of the Fifth supervisory committee of the Company was held on April 8, 2007. The meeting examined and adopted the following: (1) 2006 work report of the supervisory committee of the Company; (2) 2006 annual report of the Company; (3) Final accounting report of the Company for 2006; （4）The proposal for changing accounting policies of the Company. 2. The 6th meeting of the Fifth supervisory committee of the Company was held on April 26, 2007. The meeting examined and adopted the following: （1）Report for the First Quarter of 2007 （2） The Company's report on self inspection of "special activities for strengthening governance of listed companies". 3. The 7th meeting of the Fifth supervisory committee of the Company was held on August 22, 2007. The meeting examined and adopted 2007 semiannual report of the Company and its Summary. 4. The 8th meeting of the Fifth supervisory committee of the Company was held on October 26, 2007. The meeting examined and adopted the Company's report for the third quarter of 2007. II. The independent opinions of the supervisory committee of the Company (1) The operation of the Company according to law In 2007, 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 28 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 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 2007 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. （5）. The related transactions were fair and did not harm the interests of the Company. Chapter 9 Important Events I.The Company was not involved in any material lawsuit or arbitration in the report period. II. In the report period, the Company did not hold any share of other listed companies or intended listed companies or financial enterprises such as commercial banks, securities companies, insurance companies, trust companies and futures companies. III. The Company neither acquired nor disposed of assets nor was involved in any merger by absorption in the report period. IV. Material related transactions 1. The related transactions in respect of purchase and sales of commodities and provision of labor service Related parties Contents of Transactio Pricin Mod Proportio Influence transactions n amount g e of n of the on the profit (RMB) princip settl same kind of the le eme of Company nt transactio n Sales of marker Curre Profit finished place ncy increase Baoshi Group Co. products 19,337,847 price (controlling shareholder) 22.39% .31 and Agreed price Sales of marker Curre Profit power place ncy increase 16,102,631 price 12.06% .62 and Agreed price Buy of marker Curre Profit material 8,873,554. place ncy 12.44% 29 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 84 price increase and Agreed price buy of marker Curre Profit finished place ncy increase products 5,568,301. price 7.81% 16 and Agreed price Sales of marker Curre Profit finished place ncy increase products 12,703,131 price 14.70% .83 and Agreed price Sales of marker Curre Profit power place ncy increase SBEG 110,369,54 price (Controlled by the same 82.66% parent company) 7.98 and Agreed price Provisio marker Curre Profit n of labor place ncy increase service 4,989,007. price 18.30% 73 and Agreed price As the products of the Company and the above related parties have upstream-and-downstream relationship and their production is in the same place, the occurrence of the above related transactions is necessary and normal. If product structure and production site do not change, the above related transactions will continue to occur. 2. The Company neither acquired nor disposed of assets nor was involved in any merger by absorption in the report period. 3. The Company was not involved in related transactions caused by external investment with related parties in the report period. 4. The credit (debt) relationship between the Company and related parties Related party Amount Reason of formation Influence on the Company (RMB’0000) Share of energy and power on the Baoshi Group Co. -2243.94 Operating debts same production site (controlling shareholder) SBEG Share of energy and power on the (Controlled by the same 9686.75 Operating debts same production site parent company) V. Important contracts and their performance 1.The Company did not provide guarantee to others in the report period. On September 18, 2006, the Company provided guarantee, together with Shijiazhuang Baoshi Electronic Group Co., Ltd., for the application of Shijiazhuang Construction Investment Co., Ltd. for loan of RMB 70 million) with some land and houses (with 30 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 appraised value of RMB 30.3018 million) (The valid guarantee value for the Company is RMB 18.80 million). The guarantee period is one year. The type of guarantee is mortgage guarantee. In the report period, the guarantee event is still in the guarantee period. This guarantee has expired. 3.The Company did not entrust others to management its cash assets in the report VI. The commitments made by the Company and shareholders holding over 5% of the total shares of the Company in the report period. (1). The Company published the announcement of the resolutions of the 9th meeting of the third Board of Directors on China Securities Daily and Hong Kong Commercial Daily on November 7, 2001. The Board of Directors of the Company and Baoshi Group Co. reached agreement on the horizontal competition between the Company and Baoshi Group Co. arising from the project of renovating and constructing L-35 glass tube production line and will properly solve this issue by the means of asset exchange or other means. In report period, the glass & tube production lines of Baoshi Corporation had been closed, and currently there was no industry competition. (2) Special commitments made by the original non- negotiateble shareholders in the process of share structure reform and the performance of them. In addition to statutory minimum commitment, the controlling shareholder of the Company Baoshi Group Co. made the following special commitments: (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 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. In the report period, Baoshi Group Co., the controlling shareholder of the Company, and other shareholders holding shares subject to sale restriction strictly fulfilled their commitments made in the Company's plan for share holding structure reform. VII. Selling of stocks of the Company by the controlling shareholder of the Company 1. The controlling shareholder of the Company strictly fulfilled its statutory commitment made in the Company's share holding structure reform. After the expiration of the period of sale restriction, it sold 13,580,000 shares of the Company, which accounts for 3.55% of the total share capital of the Company. 2. Shijiazhuang Baoshi Electronic Group Co., Ltd. bought 120,000 shares due to misoperation during sales. The Company timely made disclosure as required. As confirmed by Shijiazhuang Baoshi Electronic Group Co., Ltd., the buying price was the top limit for the day. Therefore, this trading did not generate any profit. VIII. The engagement of certified public accountants and the payment of remuneration 1. Engagement of certified public accountants 31 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The report period, the Company held 2006 Annual Shareholders Meeting, and agreed to employ Zhongxi Certified Public Accountants Co., Ltd. as the audit agencies of the Company. The cost for auditing was to be RMB 0.37 million，The traveling expenses were borne by the audit bodies themselves.. Zhongxi Certified Public Accountants Co., Ltd. had provided audit services to the Company for 1 consecutive years. IX.Punishment and rectification to the Company In the report period, all the directors, supervisors, senior Senior Executives and Staff of the Company did not receive inspections, administrative penalties, notices of criticism from China Securities Regulatory Commission and public condemn from Stock Exchange. X. The Company's acceptance of investigation and research and interview In the report period, the Company did not accept investigation and research or interview. The investors received by the company mostly are individual investors. The company mainly provides advisories on the progress of company restructure, 2007 performance and company operational business status. .The Company answered the questions of personal investors strictly according to the Guidelines of Shenzhen Stock Exchange for Fair Information Disclosure of Listed Companies and in the light of the principle of openness, impartiality and fairness. It did not separately disclose its non-public important information to specific objects in private, in advance or on selection basis and guaranteed the fairness of information disclosure. XI. Index of announcements published Events Date of Official presses and website publishing Announcement on Investigation by CSRC and 2007.1.9 China Securities Daily, Hong Handling Result Kong Commercial Daily and http://www.cninfo.com.cn Presentation notice on relieving the limited 2007.3.29 China Securities Daily, Hong sale of the limited tradable shares in Kong Commercial Daily and shareholders structure reform. http://www.cninfo.com.cn Announcement of the Resolutions of 7th 2007.4.10 China Securities Daily, Hong Meeting of the Fifth Board of Directors Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 5th 2007.4.10 China Securities Daily, Hong Meeting of the Fifth Supervisory Committee Kong Commercial Daily and http://www.cninfo.com.cn Announcement of Expected Daily Related 2007.4.10 China Securities Daily, Hong Transactions in 2007 Kong Commercial Daily and http://www.cninfo.com.cn Notice of Holding 2006 Annual Shareholders' 2007.4.10 China Securities Daily, Hong General Meeting Kong Commercial Daily and http://www.cninfo.com.cn Announcement on Caution of Delisting Risk 2007.4.10 China Securities Daily, Hong of the Company's Stocks Kong Commercial Daily and http://www.cninfo.com.cn 2006 annual report of the Company and its 2007.4.10 China Securities Daily, Hong summary Kong Commercial Daily and http://www.cninfo.com.cn 32 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Correction Announcement on holding the 2006 2007.4.11 China Securities Daily, Hong annual meeting of shareholders. Kong Commercial Daily and http://www.cninfo.com.cn Notice on Baoshi Corporation reducing the 2007.4.19 China Securities Daily, Hong equity of the Company. Kong Commercial Daily and http://www.cninfo.com.cn Announcement of Board of Directors 2007.4.20 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Suspension Announcement 2007.4.26 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 8th 2007.4.27 China Securities Daily, Hong Meeting of the Fifth Board of Directors Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 6th 2007.4.27 China Securities Daily, Hong Meeting of the Fifth Supervisory Committee Kong Commercial Daily and http://www.cninfo.com.cn Forenotice of Earnings for Interim Period of 2007.4.27 China Securities Daily, Hong 2007 Kong Commercial Daily and http://www.cninfo.com.cn The First Quarterly Report 2007 2007.4.27 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of Board of Directors 2007.4.27 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of Resolutions of 2006 Annual 2007.5.8 China Securities Daily, Hong Shareholders' General Meeting Kong Commercial Daily and http://www.cninfo.com.cn Announcement on Baoshi Corporation 2007.5.10 China Securities Daily, Hong reducing the equity of the Baoshi Company. Kong Commercial Daily and http://www.cninfo.com.cn Announcement on Baoshi Corporation 2007.5.15 China Securities Daily, Hong reducing the equity of the Baoshi Company. Kong Commercial Daily and http://www.cninfo.com.cn Announcement temporary suspension of share 2007.5.16 China Securities Daily, Hong exchange. Kong Commercial Daily and http://www.cninfo.com.cn Suspension Announcement 2007.5.18 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of Board of Directors 2007.6.4 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 9th 2007.6.30 China Securities Daily, Hong Meeting of the Fifth Board of Directors Kong Commercial Daily and http://www.cninfo.com.cn Self-inspection reports and rectification plan 2007.6.30 China Securities Daily, Hong 33 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 on the special activities of governance for Kong Commercial Daily and listed companies. http://www.cninfo.com.cn Correction Announcement on Forenotice of 2007.7.7 China Securities Daily, Hong Earnings for Interim Period of 2007 Kong Commercial Daily and http://www.cninfo.com.cn Channels for Public comment on the special 2007.7.21 China Securities Daily, Hong activities of governance for companies. Kong Commercial Daily and http://www.cninfo.com.cn 2007 Semi- annual report of the Company 2007.8.24 China Securities Daily, Hong and its summary Kong Commercial Daily and http://www.cninfo.com.cn Forenotice of Earnings for The Third 2007.8.24 China Securities Daily, Hong Quarterly. Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 11th 2007.9.28 China Securities Daily, Hong Meeting of the Fifth Board of Directors Kong Commercial Daily and http://www.cninfo.com.cn Rectification report on on-site inspection by 2007.10.29 China Securities Daily, Hong China Securities Regulatory Commission Kong Commercial Daily and Hebei Supervisory Bureau. http://www.cninfo.com.cn Summary report on special company 2007.10.29 China Securities Daily, Hong governance activities. Kong Commercial Daily and http://www.cninfo.com.cn Correction Announcement of the Third 2007.10.29 China Securities Daily, Hong Quarterly Report 2007 Kong Commercial Daily and http://www.cninfo.com.cn Forenotice of Earnings of 2007 2007.10.29 China Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn Announcement of the Resolutions of 12th 2007.10.29 China Securities Daily, Hong Meeting of the Fifth Board of Directors Kong Commercial Daily and http://www.cninfo.com.cn Correction Announcement of the Third 2007.10.30 China Securities Daily, Hong Quarterly Report 2007 Kong Commercial Daily and http://www.cninfo.com.cn Presentation notice on relieving the limited 2007.11.9 China Securities Daily, Hong sale of the limited tradable shares in Kong Commercial Daily and shareholders structure reform. http://www.cninfo.com.cn Chapter 9 Financial Reports Auditor’s Report(attached hereinafter) Accountant Statements Balance Sheet (Attached hereinafter) Profit Statement (Attached hereinafter) Cash Flow Statement (Attached hereinafter) Statement on changes of owners’equity 3. Notes to Financial Statements (Attached hereinafter) 34 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Chapter 10 Documents Available for Inspection 1.The original Annual report bearing the signature of the Chairman of the Board of Directors of the Company; 2.The text of the financial report bearing the seal and signature of the person in charge of the Company, financial ontroller and the person in charge of accounting organ 3.The original of all Company’s documents and the original manuscripts of announcements publicly disclosed on China Securities Daily and Hong Kong Commercial Daily in the report period. Board chairman:Shang Jianbin Shijiazhuang Baoshi Electronic Glass Co., Ltd. March 28,2008 35 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Auditor’s Report 2007 annual Financial Statements Notes to Financial Statements 36 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 （I）Auditor's Report Zhong Xi Shen Zi (2008) No. 01147 To all shareholders of Shijiazhuang Baoshi Electronic Glass Co., Ltd.: We audited accompanying financial statements of Shijiazhuang Baoshi Electronic Glass Co., Ltd. (hereinafter referred to as "the Company"), including balance sheet and consolidated balance sheet as at December 31, 2007, profit statement and consolidated profit statement, cash flow statement and consolidated cash flow statement, statement of changes in shareholders' equity and consolidated statement of changes in stockholders equity for the year then ended and the notes to financial statements. I. The responsibility of the management for financial statements Preparation of financial statements in accordance with the Accounting Standards for Business Enterprises is the responsibility of the management of the Company. Such responsibility includes: (1) design, implementation and maintenance of internal control related to the preparation of financial statements so that financial statements are free from material misstatement caused by fraudulent practices or errors; (2) selection and application of proper accounting policies; (3) making reasonable accounting estimate. II. Responsibility of certified public accountants We are responsible for expressing opinions on financial statements based on our audit. We conducted audit in accordance with the audit criteria for Chinese certified public accountants. The audit criteria for Chinese certified public accountants require us to abide by professional ethics, plan and conduct audit to obtain reasonable assurance as to whether financial statements are free from material misstatement. Audit involves carrying out audit procedure to obtain the audit evidences about the amounts and disclosure of financial statements. The selected audit procedure relies on the judgment of certified public accountants, including the appraisal of risk of material misstatement of financial statements caused by fraudulent practices or errors. While appraising risks, we considered the internal control related to the preparation of financial statements to design proper audit procedure but the purpose is not to express an opinion on the effectiveness of internal control. The audit also includes the appraisal of suitability of accounting policies selected by the management, the reasonableness of accounting estimate and the overall presentation of financial statements. We believe that the audit evidences obtained by us are full and appropriate and provide a basis for expressing audit opinion. III. Audit opinion In our opinion, the financial statements of the Company have been prepared in accordance with the provisions of Accounting Standards for Business Enterprises and give a fair view, in all material aspects, of the financial position of the Company as at December 31, 2007 and its operating results and cash flow for the year then ended. Chinese C.P.A.: Liu Junyong Zhongxi Certified Public Accountants Co., Ltd. Chinese C.P.A.: Wang Aiying China Beijing 2008.3.26 37 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Consolidation Balance Sheet Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. December 31, 2007 Unit：RMB December December Items Notes 31,2007 31,2006 Current asset： Monetary fund 14,705,272.08 1,781,405.86 Trading financial assets Bills receivable 13,595,138.65 5,263,528.80 Account receivable 110,863,653.40 38,727,924.63 Prepaid fund 8,437,464.16 6,759,315.98 Interest receivable Dividend receivable Other receivable 19,903,577.19 91,922,235.60 Inventories 35,911,975.95 24,469,376.20 Non-current asset due in 1 year Other current assets 58,689,946.00 58,790,890.00 Total of current asset 262,107,027.43 227,714,677.07 Non-current assets： Disposable financial asset Expired investment in possess Long-term receivable Long-term share equity investment Property investment Fixed assets 140,919,783.70 154,912,406.56 Construction in progress 82,570.83 Engineering material 24,728.50 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 12,811,158.84 13,145,572.56 R & D expense Goodwill Long-term expenses to be amortized 7,723,271.32 7,723,271.32 Differed income tax asset 10,890,000.58 16,617,257.07 Other non-current asset Total of non-current asset 172,344,214.44 192,505,806.84 Total of assets 38 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 434,451,241.87 420,220,483.91 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Consolidation Balance Sheet Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. December 31, 2007 Unit：RMB December December Items Notes 31,2007 31,2006 Current liabilities Short-term loans 5,381,025.52 Trade off financial liabilities Bills payable 89,999.90 89,999.90 Account payable 37,695,196.84 23,184,431.15 Prepayment received 1,596,612.48 1,264,012.82 Employees’ wage payable 6,920,685.94 11,896,064.92 Tax payable -4,779,154.16 -2,590,911.01 Interest payable 13,008,521.43 12,561,961.65 Dividend payable Other payable 41,028,540.44 41,355,582.63 Non-current liability due in 1 year Other current liability 73,399,226.94 78,087,000.00 Total current liability 168,959,629.81 171,229,167.58 Non-current liabilities： Long-term loan Bond payable Long-term payable Special payable Expected liabilities Differed income tax liability Other non-current liabilities 5,356,427.96 Total of non-current liabilities 5,356,427.96 0.00 Total of liability 174,316,057.77 171,229,167.58 Owners’ equity Share capital 383,000,000.00 383,000,000.00 Capital reserves 385,190,502.62 385,190,502.62 Less：Shares in stock Surplus reserves 27,454,788.05 27,454,788.05 Common risk provision Undistributed profit -550,421,660.64 -560,760,703.51 Different of foreign currency translation Total of owner’s equity belong to the parent company 245,223,630.03 234,884,587.16 Minor shareholders’ equity 14,911,554.07 14,106,729.17 39 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Total of owners’ equity 260,135,184.10 248,991,316.33 Total of liabilities and owners’ equity 434,451,241.87 420,220,483.91 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Parent company Balance Sheet Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. December 31, 2007 Unit：RMB December December Items Notes 31,2007 31,2006 Current asset： Monetary fund 14,385,269.68 1,407,545.90 Trading financial assets Bills receivable 13,595,138.65 5,263,528.80 Account receivable 110,863,653.40 38,727,924.63 Prepaid fund 8,437,464.16 6,759,315.98 Interest receivable Dividend receivable Other receivable 14,680,876.06 86,701,515.96 Inventories 35,768,850.83 24,277,701.08 Non-current asset due in 1 year Other current assets 689,946.00 790,890.00 Total of current asset 198,421,198.78 163,928,422.35 Non-current assets： Disposable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 61,169,306.96 61,169,306.96 Property investment Fixed assets 107,653,859.34 119,244,793.56 Construction in progress 82,570.83 Engineering material 24,728.50 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 12,811,158.84 13,145,572.56 R & D expense Goodwill Long-term expenses to be amortized 7,723,271.32 7,723,271.32 Differed income tax asset 10,890,000.58 16,617,257.07 Other non-current asset Total of non-current asset 200,247,597.04 218,007,500.80 Total of assets 398,668,795.82 381,935,923.15 40 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Parent company Balance Sheet Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. December 31, 2007 Unit：RMB Current liabilities December December 31,2007 31,2006 Short-term loans 0.00 0.00 Trade off financial liabilities 0.00 0 Bills payable 50,000.00 50,000.00 Account payable 35,263,243.33 20,752,477.64 Prepayment received 1,596,612.48 1,264,012.82 Employees’ wage payable 6,881,256.88 11,369,999.28 Tax payable -3,399,415.59 -1,070,184.75 Interest payable 0.00 0 Dividend payable 0.00 0.00 Other payable 116,190,106.55 114,685,031.04 Non-current liability due in 1 year 0.00 0 Other current liability 353,226.94 0.00 Total current liability 156,935,030.59 147,051,336.03 Non-current liabilities： Long-term loan Bond payable Long-term payable Special payable Expected liabilities Differed income tax liability Other non-current liabilities Total of non-current liabilities Total of liability 156,935,030.59 147,051,336.03 Owners’ equity Share capital 383,000,000.00 383,000,000.00 Capital reserves 355,857,851.87 355,857,851.87 Less：Shares in stock 0 Surplus reserves 32,204,150.60 32,204,150.60 Undistributed profit -529,328,237.24 -536,177,415.35 Total of owners’ equity 241,733,765.23 234,884,587.12 Total of liabilities and owners’ equity 398,668,795.82 381,935,923.15 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao 41 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Consolidation Profit statement January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit：RMB Same period of Report period the previous Items Notes year I.Income from the key business 228,141,181.38 231,608,310.31 Less：Business cost 196,704,307.53 205,904,324.75 Business tax and surcharge 887,202.72 1,149,740.73 Sales expense 854,857.59 424,185.90 Administrative expense 20,637,374.43 31,598,088.63 Financial expenses -3,961,366.58 7,629,601.81 Asset impairment loss -5,824,228.79 -2,043,506.79 Add：Gains from change of fir value （ “-”for loss） “-”for loss） Investment gain（ -66,406,595.97 Incl: investment gains from affiliates Gains from currency exchange（ “-”for loss） II. Operational profit（“-”for loss） 18,843,034.48 -79,460,720.69 Add：Non-business income - 3,521,836.29 Less：Non business expenses 376,692.84 119,885.09 Incl：Loss from disposal of non-current assets III.Total profit(“-”for loss) 18,466,341.64 -76,058,769.49 Less：Income tax expenses 7,322,473.86 829,836.60 IV. Net profit（“-”for net loss） 11,143,867.78 -76,888,606.09 Net profit attributable to the owners of parent company 10,339,042.87 -63,009,449.36 Minor shareholders’ equity 804,824.91 -13,879,156.73 V. Earnings per share： （I）Basic earnings per share 0.03 -0.16 (II)Diluted earnings per share 0.03 -0.16 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo 42 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Chief Accountant: Zhou Yumao Parent Company Profit statement January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit：RMB Same period of Report period the previous Items Notes year I.Income from the key business 226,259,649.38 228,196,797.38 Less：Business cost 196,375,658.66 204,298,151.22 Business tax and surcharge 887,202.72 769,154.61 Sales expense 854,857.59 424,185.90 Administrative expense 19,111,275.88 28,680,875.75 Financial expenses 658,282.97 1,567,355.55 Asset impairment loss -5,872,778.79 60,968,161.82 Add：Gains from change of fir value （ “-”for loss） Investment gain（“-”for loss） Incl: investment gains from affiliates Gains from currency exchange（“-”for loss） 14,245,150.35 -68,511,087.47 “-”for loss） III. Operational profit（ 3,521,836.29 Add：Non-business income 73,498.38 89,519.22 Less：Non business expenses Incl：Loss from disposal of non-current assets 14,171,651.97 -65,078,770.40 IV.Total profit(“-”for loss) 7,322,473.86 829,836.60 Less：Income tax expenses 6,849,178.11 -65,908,607.00 V. Net profit（“-”for net loss） 226,259,649.38 228,196,797.38 Net profit attributable to the owners of parent company 196,375,658.66 204,298,151.22 Minor shareholders’ equity 887,202.72 769,154.61 VI. Earnings per share： 854,857.59 424,185.90 （I）Basic earnings per share 19,111,275.88 28,680,875.75 (II)Diluted earnings per share 658,282.97 1,567,355.55 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo 43 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Chief Accountant: Zhou Yumao 44 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Consolidation Cash flow statement January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit：RMB Same period of Report period the previous Items Notes year I.Cash flows from operating activities Cash received from sales of goods or rending of 208,697,314.97 175,813,933.46 services Refunded expenses of taxation received Other cash receipts related to operating activities 7,308,712.95 9,489,101.67 Subtotal of cash inflow 216,006,027.92 185,303,035.13 Cash paid for purchasing commodities and accepting 169,842,600.75 175,407,434.69 labor services Cash paid to and for staff and workers 11,207,408.75 12,479,077.97 Expenses of taxation paid 15,181,514.52 9,631,669.16 Other cash payments related to operating activities 6,706,837.68 20,726,261.63 Subtotal of cash outflow 202,938,361.70 218,244,443.45 Net cash flow from operating activities 13,067,666.22 -32,941,408.32 II. Cash flow from investing activities: Cash received from investment recovery Cash received from obtaining investment income Net cash received from the disposal of fixed 25,200.00 6,668,408.51 assets, intangible assets and other long-term assets Net cash recived from subsidiaries and other operational units Other cash receipts related to investing activities Subtotal of cash inflow 25,200.00 6,668,408.51 Cash paid for constructing or purchasing fixed 169,000.00 8,440,949.98 assets, intangible assets and other long-term assets Cash paid for investment Net cash received from subsidiaries and other operational units Other cash payment related to investing activities Subtotal of cash outflow 169,000.00 8,440,949.98 Net cash flow from investing activities -143,800.00 -1,772,541.47 III. Net cash flow from financing activities: Cash received from absorption of investment Cash received from loans Other cash receipts from financing activities Subtotal of cash inflow Cash paid for debt repayment Cash paid for distribution of dividends or profits or interest reimbursement Other cash payment related to financing activities 45 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Subtotal of cash outflow Net cash flow from financing activities IV. Influence of the change in exchange rate on cash V. Net increase of cash and cash equivalents 12,923,866.22 -34,713,949.79 Add：Balance of cash and cash equivalents at the 1,781,405.86 36,495,355.65 period -begin VI. balance of cash and cash equivalents at the 14,705,272.08 1,781,405.86 period-end. Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Parent company Cash flow statement January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit：RMB Same period of the Report period Items Notes previous year I.Cash flows from operating activities Cash received from sales of goods or rending of 208,697,314.97 162,948,007.57 services Refunded expenses of taxation received Other cash receipts related to operating activities 6,694,518.70 4,843,442.94 Subtotal of cash inflow 215,391,833.67 167,791,450.51 Cash paid for purchasing commodities and 170,358,056.01 173,720,212.98 accepting labor services Cash paid to and for staff and workers 10,691,953.49 12,271,862.17 Expenses of taxation paid 14,645,674.44 8,610,233.22 Other cash payments related to operating 6,574,625.95 4,432,587.67 activities Subtotal of cash outflow 202,270,309.89 199,034,896.04 Net cash flow from operating activities 13,121,523.78 -31,243,445.53 II. Cash flow from investing activities: Cash received from investment recovery Cash received from obtaining investment income Net cash received from the disposal of fixed 25,200.00 6,668,408.51 assets, intangible assets and other long-term assets Net cash recived from subsidiaries and other operational units Other cash receipts related to investing activities Subtotal of cash inflow 25,200.00 6,668,408.51 Cash paid for constructing or purchasing fixed 169,000.00 8,427,212.98 assets, intangible assets and other long-term assets Cash paid for investment Net cash received from subsidiaries and other 46 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 operational units Other cash payment related to investing activities Subtotal of cash outflow 169,000.00 8,427,212.98 Net cash flow from investing activities -143,800.00 -1,758,804.47 III. Net cash flow from financing activities: Cash received from absorption of investment Cash received from loans Other cash receipts from financing activities Subtotal of cash inflow Cash paid for debt repayment Cash paid for distribution of dividends or profits or interest reimbursement Other cash payment related to financing activities Subtotal of cash outflow Net cash flow from financing activities IV. Influence of the change in exchange rate on cash V. Net increase of cash and cash equivalents 12,977,723.78 -33,002,250.00 Add：Balance of cash and cash equivalents at the 1,407,545.90 34,409,795.90 period -begin VI. balance of cash and cash equivalents at the 14,385,269.68 1,407,545.90 period-end. Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao 47 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Consolidation Statement on Change in Owners’ Equity(I) January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit:RMB Amount of the Current term（2007） Owner’s equity Attributable to the Parent Company Less: Surplus Common risk Attrbutable Share Capital Capital reserves Shares in Ot reserves provission profit Items stock I.Balance at the end of last year 383,000,000.00 550,253,744.43 27,454,788.05 -760,504,874.39 Add: Change of accounting policy -165,063,241.81 199,744,170.88 Correcting of previous errors II.Balance at the beginning of current year 383,000,000.00 385,190,502.62 27,454,788.05 -560,760,703.51 III.Changed in the current year 10,339,042.87 （I） Net profit 10,339,042.87 （ II ） Gains losses accounted into owners’ equity directly I.Change in fair value of sellable financial assets, net 48 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 2. Influence of change in other owners’ equity of invested enterprises on equity basis 3．Influence of income tax related to owners’ equity items 4．Other Total of (I) and (II) 10,339,042.87 （ III ） Investment or decreasing of capital by owners 1.Investment by owners 2．Amount of shares paid and accounted as owners’ equity 3．Other （ IV ） Profit allotment 1．Providing of surplus reserves 2.Providing of common risk provisions 3 ． Allotment to the owners 4．Other 49 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 （ V ） Internal transferring of owners’ equity 1 ． Capitalizing of capital reserves 2 ． Capitalizing of surplus reserves 3．Making up losses by surplus reserves 4．Other IV. Balance at the end of this term 383,000,000.00 385,190,502.62 27,454,788.05 -550,421,660.64 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Consolidation Statement on Change in Owners’ Equity(OI) January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit:RMB Amount of the Same period of the previous year（2006） Owner’s equity Attributable to the Parent Company Less: Surplus Common risk Attrbutable Share Capital Capital reserves Shares in Ot reserves provission profit Items stock I.Balance at the end of last year 383,000,000.00 538,261,486.00 27,454,788.05 -682,533,073.00 Add: Change of accounting policy -150,171,825.38 184,781,819.05 Correcting of previous errors 50 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 II.Balance at the beginning of current year 383,000,000.00 388,089,660.62 27,454,788.05 -497,751,253.95 III.Changed in the current year （I） Net profit -63,009,449.56 （ II ） Gains losses accounted into owners’ equity directly I.Change in fair value of sellable financial assets, net 2. Influence of change in other owners’ equity of invested enterprises on equity basis 3．Influence of income tax related to owners’ equity items 4．Other Total of (I) and (II) -63,009,449.56 （ III ） Investment or decreasing of capital by owners 1.Investment by owners 51 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 2．Amount of shares paid and accounted as owners’ equity 3．Other （ IV ） Profit allotment 1．Providing of surplus reserves 2.Providing of common risk provisions 3．Allotment to the owners 4．Other （ V ） Internal transferring of owners’ equity -2,899,158.00 1．Capitalizing of capital reserves 2．Capitalizing of surplus reserves 3．Making up losses by surplus reserves 4．Other -2,899,158.00 IV. Balance at the end of this term 383,000,000.00 385,190,502.62 27,454,788.05 -560,760,703.51 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao 52 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Parent company Statement on Change in Owners’ Equity(OI) January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit:RMB Amount of the Current term（2007） Less: Shares Share Capital Capital reserves Surplus reserves Items in stock I.Balance at the end of last year 383,000,000.00 550,253,744.43 27,454,788.05 Add: Change of accounting policy -194,395,892.56 4,749,362.55 Correcting of previous errors II.Balance at the beginning of current year 383,000,000.00 355,857,851.87 32,204,150.60 III.Changed in the current year （I） Net profit （ II ） Gains losses accounted into owners’ equity directly I.Change in fair value of sellable financial assets, net 2. Influence of change in other owners’ equity of invested enterprises on equity basis 3．Influence of income tax related to owners’ equity items 4．Other Total of (I) and (II) （ III ） Investment or decreasing of capital by owners 1.Investment by owners 2 ． Amount of shares paid and accounted as owners’ equity 53 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 3．Other （IV） Profit allotment 1．Providing of surplus reserves 2.Providing of common risk provisions 3．Allotment to the owners 4．Other （ V ） Internal transferring of owners’ equity 1．Capitalizing of capital reserves 2．Capitalizing of surplus reserves 3 ． Making up losses by surplus reserves 4．Other IV. Balance at the end of this term 383,000,000.00 355,857,851.87 32,204,150.60 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao Parent company Statement on Change in Owners’ Equity(II) January-December 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. Unit:RMB Amount of the Same period of the previous year（2006） Less: Shares Share Capital Capital reserves Surplus reserv Items in stock I.Balance at the end of last year 383,000,000.00 538,261,485.63 27,454,788 Add: Change of accounting policy -182,403,633.76 4,749,362 Correcting of previous errors II.Balance at the beginning of current year 383,000,000.00 355,857,851.87 32,204,150 III.Changed in the current year （I） Net profit 54 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 （II） Gains losses accounted into owners’ equity directly I.Change in fair value of sellable financial assets, net 2. Influence of change in other owners’ equity of invested enterprises on equity basis 3 ． Influence of income tax related to owners’ equity items 4．Other Total of (I) and (II) （III） Investment or decreasing of capital by owners 1.Investment by owners 2．Amount of shares paid and accounted as owners’ equity 3．Other （IV） Profit allotment 1．Providing of surplus reserves 2.Providing of common risk provisions 3．Allotment to the owners 4．Other （V） Internal transferring of owners’ equity 1．Capitalizing of capital reserves 2．Capitalizing of surplus reserves 3．Making up losses by surplus reserves 4．Other IV. Balance at the end of this term 383,000,000.00 355,857,851.87 32,204,150 Legal Representative of the Company：Shang Jianbin General manager:Song Hongbo Chief Accountant: Zhou Yumao 55 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. 2007 年 1-12 月 Return on net assets（%） Earnings per share Profit for the report Items period Fully diluted Weighted average Fully diluted Fully diluted(EPS) Business profit 18,843,034.48 0.08 0.08 0.05 0.05 Netprofit attributable to shareholder of common share of the company 10,339,042.87 0.04 0.04 0.03 0.03 Net profit after deductingnon-recurring gains and losses attributable to shareholder of commonshare of the cmpany 9,189,327.91 0.04 0.04 0.02 0.02 Prepared by: Shijiazhuang Baoshi Electronic Glass Co., Ltd. 2006 年 1-12 月 Return on net assets（%） Earnings per share Profit for the report Items period Fully diluted Weighted average Fully diluted Fully diluted(EPS) Business profit -79,460,720.69 -0.34 -0.30 -0.21 -0.21 Netprofit attributable to shareholder of common share of -63,009,449.36 -0.27 -0.24 -0.16 -0.16 the company Net profit after deductingnon-recurring gains and -79,276,897.16 -0.34 -0.30 -0.21 -0.21 losses attributable to shareholder of commonshare of the cmpany 56 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 57 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Notes to financial statements December 31,2007 I.Brief introduction of the Company： Shijiazhuang Baoshi Electronic Glass Co., Ltd.(Hereinafter referred to as “ The Company”)is a company listed with Shenzhen stock Exchange which issued domestically listed ordinary shares (A shares) and domestically listed foreign-capital shares (B shares). The approved business scope of the Company is the manufacturing and sales of kinescope bulb and kinescope for black-and –white TV.Due to the abrupt change of domestic TV market in 1997, the Company’s production line producing kinescope bulb and kinescope for black –and-white TV stopped production from June 1997. The Company held provisional general meeting on March 30, 2000. The meeting passed the resolution for selling this production line to its controlling shareholder Shijiazhuang Baoshi Electronic Group CO., Ltd.(the Controllin Co.) to exchange it for the componentfactory of the Controlling Co. engaged in the production of kinescope part of color TV. From then on, the main operating activities of the Company were the production and sales of pins and anode caps used for kinescope bulb for color TV. As adopted by annual shareholders’general meeting , the Company’s business scope was extended to include the export of self-made products and the import of mechanical equipment, parts and components, raw and auxiliary materials needed by the Company in addition to the original dealing in electro-vacuum glass devices and supporting electronic components. The subsidiary whose shares controlled by the Company (with the Company collectively called ‘the Group’) Shijiazhuang Baoshi Colour bulbs Co., Ltd (hereinafter referred to as ‘Color bulbs’), on July 3, 1997, jointly invested and established Shijiazhuang Baoshi Electric Nitrate & Glass Co., Ltd (hereinafter referred to as Pin Co.) with Japan Electric Pin Company and the Japan IWAI Corporation to set up a venture in S The yield Glass Limited. Color Shell owned 49% equity of Nitrate Co. The main business of Nitrate Co. is production and sales of the glass shell of picture tube for color TV. On November 30 2006, Color bulbs transferred all his equity in Pine Co. to Shijiazhuang Baoshi Electronics Group Co., Ltd. II. Influences from the change of important accounting policies of the company: The company implemented the Enterprise Accounting System and the relevant standards before this fiscal year, since January 1, 2007, the company implements the Enterprise Accounting Standards and it application guidance issued on February 15, 2006 by state Ministry of Finance. 1. Influences on enterprise finance status from accounting policy changes: According to Explanation for Enterprise Accounting Standards No. 1, and at the same time in accordance with domestic and international financial reporting standards, the listed companies of B share and H share which provide financial statement, on the first implementation day, according to the relevant information obtained, the transactions and events due to the change of accounting policy can have retrospective adjustment, the result 58 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 after the retrospective adjustment can be taken as the balance of the first implementation day, influences from retrospective adjustment events and financial status and the operational result in comparison period are as follows: N Events Adjust the Adjust the public Influences on Influences on the net profit o distribution of reserve at the the net asset during the comparison profit at the beginning of amount at the statement period. beginning of 2007 beginning of 2007 2007 Year 2006 Years 2005 1 In 2004, Baoshi Parent Company 1,827,977.00 -1,827,977.00 - - - received the special funds allocated by government 2 Interest-free income of Baohsi 70,741,572.00 -70,741,572.00 - - - Parent Company in 1998 3 Interest-free income of the controlling subsidiary of 77,602,277.37 -77,602,276.37 - - - the company Color Shell Company in 1998 4 The controlling subsidiary of the company Color Shell 14,891,416.44 -14,891,416.44 - 14,891,416.44 - Company sold it shares in Xiaozi Company 5 Recognition of deterred -2,513,765.8 16,617,257.07 - 16,617,258.07 income tax -829,836.50 9 assets 6 Recognition of dismiss -3,175,706.00 - -3,175,706.00 welfare of 900,772.00 952,656.00 workers 7 The interest that Color Shell Company 21,239,377.00 - 21,239,377.00 - - did not have to pay in previous years Total -1,561,109.8 199,744,170.88 -165,063,241.81 34,680,929.07 14,962,351.94 9 59 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Notes to Item 7 Adjustment Event: Shijiazhuang Baishi Electronics Group Co., Ltd. informed the controlling subsidiary of the company Color Shell Company on October 16, 2007 that: Shijiazhuang Baoshi Electronics Group Co., Ltd organized the work of debts transferring to shares to China Great Wall Asset Management Corporation, China Oriental Asset Management Company, China Huarong Asset Management Corporation in 2004, and established a limited company jointly invested by three asset management companies and State Asset Commission. The loan units involved in the debts transferring to shares include: Shijiazhuang Baoshi Color Glass Tube Shell Co., Ltd. and other members of Group Company. Completed the debts transferring to shares, Shijiazhuang Baoshi Color Glass Tube Shell Co., Ltd. settle up all the borrowing principal and interest of the three asset management companies above, the interest originally accounted relating to debts transferring to debts is not to be paid. The interest relating to debts transferring to debts on the book is RMB 26,137,554.77 , because the Color Shell company accounted the interest before on January 1, 2005, the company accounted more interest to adjust the retained earnings in 2005 in accordance with the provisions in the new guidelines. The company occupies 81.26% of the shares of Color Shell Company, this adjustment increased the retained earnings at the beginning of 2005 in consolidated statement RMB 21,239,377.00 , and increased net assets at beginning of 2005 ,RMB 21,239,377.00 , it did not affect the profit in the period of comparative statements. III. Statement on complying with enterprise accounting standards The Company state: the financial statements prepared are in line with the requirements in enterprise accounting standards in line with of system, and have truly and completely reflected of the financial status, operational results, cash flow, and other relevant information. IV.Accounting policies, accounting estimation and the method of preparing consolidatedfinancial statements： (1) Basis for preparing financial statements： The accounting statement was compiled in accordance with the Corporate Accounting Standards and its application guidelines released by the state Ministry of Finance on February 15, 2006. (2) Accounting year: from January 1 to December 31 as one accounting year. (3) Standard currency for bookkeeping：The Company takes RMB as the standard currency for bookkeeping. (4) Book keeping basis and pricing principle. The Company tqakes the accrual system as the basis for book keeping. Accounting factors are usually measured by historical cost, using the replacement costs, the realizable net value, the present value, the fair value to measure, to ensure that the amount of accounting factors can be obtained and measured. (5)Foreign currency translation Transactions denominated in foreign currencies are translatedf into RMB at the applicable basic ratesof exchange quoted by the People’s Bank of China ( “PBOC”) prevailing at the dates of the transaction. The foreign currency accounts on the balance sheet date were converted to RMB according to the median price of the RMB exchange rate on that date 60 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 announced by the People's Bank. The exchange differences were accounted to gains or losses of the current period besides the exchange losses or gains from special funds and interests in the period of construction of fixed assets that were accounted to the long-term unamortized expenses. (6)Cash and cash equivalents The cash stated in cash flow statement refers to cash in hand and bank deposits usable for payment at any time. Cash equivalent refers to the investments with holding period of less than three months that are readily convertible to known amouunt of cash and subject to insignificant risk of changes in value. (7). Accounting method of financial instruments (1). Classification of initial confirmation of financial assets and financial liabilities. Financial assets can be divided into four categories at the initial recognition,: 1). The financial assets measured by fair value and their changes are included in the gains and losses in the current period, including transactional financial assets and the financial assets measured by fair value and their changes are included in the gains and losses in the current period; 2). The expiry investments held; 3). Loans and receivables; 4). Financial assets available for sale. Financial liabilities can be divided into two categories at the initial recognition: 1). The financial liabilities measured by fair value and their changes are included in the gains and losses in the current period, including transactional financial liabilities and the financial liabilities measured by fair value and their changes are included in the gains and losses in the current period; 2) Other financial liabilities. (2). The follow-up measurement of financial assets and financial instruments follows the relevant provisions in Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, and Accounting Standards for Business Enterprises No. 23. (8) Accounts receivable and provision for bed debts Accounts receivable include the accounts receivable and other receivable . The Group had adopted allowance accounting method to account the possible bad debts losses. method. The account Receivable was the net value of the actual amount minus the bad debt reserve. (a）Accounts receivable Accounts receivable include the accounts receivable from related parties and non-related parties. For the related accounts receivable, the receivability, the other accounts receivable and the non-related account receivable that exists evident differences, the Group adopts the method of individual identifying to account the special bad debt reserve. (b)Other receivables For the accounts of other receivable, the Group uses the method of individual identifying to account the special bad debts reserve. (c) Recognition standards for bad Debt losses. For the receivables that can not be repaid with evidence are recognized as bad debts, offsetting the bad debt reserve accounted. (9) Inventories 61 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Inventories including raw materials, products in production, Low-value consumable goods, goods in stock, spare parts, are listed depending on which is lower between cost and net value realizable. For stock releasing, accounts by month-end weighted average method. For the consuming of Consumable Goods of Low Value, uses once conversion method to account the cost. For the consuming of packaging materials, accounts it to the cost at one time. For the cost of finished products and products in production including the raw materials, direct labor, all indirect production costs under normal production capacity, and the conversion of the cost of inventory sold, accounts by month-end weighted average method. For inventory at period end, accounts the inventory price falling reserve according to the difference between the cost of individual inventory project and the net value realizable. For the inventories that have similar purposes and relate to the products in the same region, and in fact, are difficult to distinguish the serial products from other items, collectively account the price falling reserve; For inventories that have large quantity but low in price, account the price falling reserve according to stock categories. For the net value realizable in accordance with the normal production process, determine the amount by the estimated stock price minus the estimated cost, cost of sales and related taxes. (10) Long-term equity investment Long-term equity investments includes the equity investment on subsidiaries, consolidated enterprises and joint enterprises and other equity investments prepared to hold more than one year. (1) Initial measures: (i) For the long-term equity investments formed by the merger of enterprises, determines its initial investment costs in accordance with the following provisions: For the corporate merger under the same control, the merging parties paying by cash, transfer of non-cash assets, or the means of debt bearing as the merger price. The merger should be made in accordance with the combined book value of the owner's equity share of the equity investment as a long-term investment in the initial cost, long-term equity investment initial investment costs the cash payment, transfer of the non-cash assets and the assumption of debt by book value to the difference between the adjusted capital surplus; for surplus less than the offset capital, adjusts the retained earnings; for the merging parties with the issuance of securities as interest on the price of the merger, the merger should be made in accordance with the merging parties the rights of owners book value of equity shares as a long-term investment in the initial cost of the investment. In accordance with the issued shares and total value of equity, long-term equity investments and the cost of initial investment by issuing shares of a face value of the difference between the amount should be adjusted capital surplus; for Less capital surplus, adjusts the retained earnings. Long-term equity investment formed by the merger of enterprises under different control, determine the initial cost of long-term equity investment according to the cost of enterprise merger at the date of purchase. (ii) Besides the long-term equity investment obtained by the other way of the merger, determine the initial investment cost in accordance with the following provisions: For the long-term equity investment obtained by cash, determine the initial investment cost in accordance with the actual payment of the purchase price. Initial investment costs include the costs, taxes and other necessary expenses directly related to the obtaining of long-term equity investment; 62 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 For the long-term equity investment obtained by the issuance of equity securities, determine the initial investment cost in accordance with the fair value of the equity securities issued. For the long-term equity investment invested by investors, determine the initial investment cost in accordance with value in the investment contract or agreement, besides the contract or agreement regulates the value can not be the fair value. For the long-term equity investments obtained through the exchange of non-monetary assets, determine the initial investment costs in accordance with the Enterprise Accounting Standards No. 7--non-monetary exchange of assets. For the long-term equity investments obtained through debt restructuring, determine initial investment costs in accordance with the Enterprise Accounting Standards No. 12--Debt Restructuring. (2) Follow-up measurement: (i)For the long-term equity investments that do not have joint control or significant influence on subsidiaries, have no market quotations, the and the fair value can not be reliably measured, accounts by the cost method.. For the cash dividend or profit declared by the units invested, recognizes it as current investment income. Confirmation of investment income is restricted to cumulative net profit of sub-quotas after units invested receiving the investments. For the part that surpass the above amount, recovers it as the initial investment cost. (ii) For the long-term equity investments that have joint control or significant influence on the units invested, accounts it by the method of equity. Upon the acquiring of the long-term equity investment, based on the fair assets value recognized by the units invested, confirm the investment losses or gains and adjust the account value of long-term equity investment after adjusting the net losses and gains achieved by the units invested. The owning part of the profit and cash dividends declared by the units invested, correspondingly reduce the book value of the long-term equity investment. For the other changes in the rights of the owners apart from the net gains and losses of the units invested, adjusts the book value of the long-term equity investments and recognizes it as capital surplus. Adjust the book value of long-term equity investment and include it in owner's equity. On the date of balance sheet, accounts it according to which is lower between the book value of long-term equity investments and the amount recoverable, if the amount recoverable is lower than the book value, accounts the assets devaluation preparations and confirms the devaluation losses. The Company adopts the method of accounting long-term equity investment term by term, once the devaluation preparation is confirmed, it shall not be converted back in the accounting period in the future. For the long-term investments that have market price, judge and account the devaluation preparations according to the following situations: The market price lower than the book value in continuous two years; The investment is suspended for one year or more; The units invested have serious losses in that year; The units invested have losses in continuous two years; The units invested have rectification, liquidation and other signs of unsustainable business. For the long-term investments without market price, judge and account the devaluation preparations in accordance with the following signs: The changes in political or legal environment like the issuance or rectification of tax lows and trading lows that affect the operation of the units invested, may result in the huge losses in the units invested. 63 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The changes in market demands due to the goods or labor provided by the units invested are obsolete or due to consumers’ preferences change, resulted in serious influences in the financial situation in the units invested; The production technologies in the industries of the units invested have significant changes, the units invested have lost their competitive capacity, thus leading to serious financial situations, for example: rectification, liquidation etc; The other situations that there is evidence to show the investment will not actually bring economic interests for the Group Standards for fixed assets: the assets held for the purpose of goods production, labor providing, rent or management; the service life more than one year; the tangible assets with high unit value. (11) The fixed assets depreciation: (1) Economic benefits related to the fixed assets may flow to the enterprise; (2) The cost of the fixed assets can be reliably measured. Initial measurement of fixed assets: account the value of the fixed assets in accordance with the actual cost of construction & purchase of them. The follow-up expenditures related to fixed assets, for the ones that meet the conditions of fixed assets confirmation, should be included in the cost of fixed assets; For the ones that do not meet the conditions of fixed assets recognition, should be included in the current gains and losses. For the follow-up expenditures on fixed assets, should be included in the cost of fixed assets, and should terminate the book value of fixed assets that was replaced. The enterprise should account depreciation for all fixed Assets. But except the fixed assets that had accounted adequate depreciation but continued to use and the land separately accounted. Depreciation Method: for depreciation of fixed assets, uses the straight-line method, accounting by the recorded value minus the estimated residual net value in the expected life period. Determine the depreciation rate according to the categories of fixed assets, expected life span and the expected rate of net residuals, as follows : Type of Fixed Estimated useful Estimated Depreciation Houses & 4.62～4.85( ) 20～21 3 buildings Mechinery and 11～12 3 8.08～8.82 Equipment Means of 11～12 3 8.08～8.82 transportation Other Equipment 11～12 3 8.08～8.82 At the end of each year, the Group checks the fixed assets item by item. If recoverable amount is below the book value because the steady fall of the market price, or technological obsolescence, damage or long-term idleness or other factors, them make the difference between the recoverable amount and the book value as the reserve for fixed assets devaluation, which was accounted as the individual assets. If the fixed assets of the company actually have had losses, then account the devaluation reserve. When one of the following circumstances exists, completely account 64 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 the reserve for fixed assets devaluation in accordance with the full book value of fixed assets: The fixed assets that being put aside in long term, or no longer be used in the foreseeable future, and have no value of transfer; Due to technological advances and other factors, the fixed assets can not be used; Although the fixed assets can be used, but if use, large quantity of unqualified products may produce; The fixed assets that had been damaged, and there is no usage value or value of transfer; Other fixed assets that cannot bring economic benefits for the Group. Upon the recognition of the fixed assets devaluation losses, depreciation or amortization expenses of the devalued assets should have correspondent adjustment in the future periods, so that in the remaining service life of the assets, systematically adjust the book value of the assets (excluding the predicted net residuals). Upon the recognition of the fixed assets devaluation losses, in the subsequent accounting period they shall not be converted back. Costs of the project include the construction costs, and other direct costs, original price cost and installation cost of the equipment, and the loan expenses from the loan for purchase of fixed assets for the construction project. The construction project reached the predicted purpose and was transferred to the fixed assets state, and started to account depreciation from the second month. The Group conducts overall inspection to the construction projects at the end of each year, if there is evidence to show that the construction projects have already devaluated, devaluation reserves should be accounted. If there is one or more of the following circumstances, devaluation reserves for construction projects should be accounted: (12) Construction-in -progress Construction in progress represents capital asets under construction or instrallation and is stated at actual cost. The projects that had long been stopped or the projects that will not restarted in three years.; The projects that was lagged behind in both performance and in technique, and that may bring great uncertainty for the economic benefits of the Group. Other situations that can prove that depreciation has already occurred to the construction projects. Once the devaluation losses of the construction projects are confirmed, they shall be converted back in subsequent accounting period. (13)Intangible assets For intangible assets, including patents, generic technology, trademark, copyright, land-use right, permit right, etc, are listed by the net value that cost minus accumulated amortization and accumulated devaluation. The amount of amortization of intangible assets should be systematically amortized within the service life. Amortization method should reflect the economic profit and the expected achievement methods related to the intangible assets. If unable to determine the expected achievement methods, adopt the method of straight line to amortize. For the intangible assets that can not confirm the service life, do not amortize. For the right of land use, the actual payment of the purchase price is the actual cost, accounting the intangible assets before the construction of the project, and using method of straight line to amortize according to the land use period. Use the straight-line method and amortize it in 50 year. For the expenditures on internal research & development projects, the company pays the 65 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 expenses according to the research phase and development phase. The expenditures in the research phase are included in current profit and loss; For the expenditures that meet the conditions in the development phase, shall be capitalized and recognized as intangible assets. At the end of each year, the Group checks the capability of all intangible assets that is expected to bring economic benefits for the Group in the future. For the expected recoverable amount below its book value, account the reserves for devaluation. For the intangible assets, account the reserves for devaluation according to the individual item. When there is one or more of the following cases, the book value of intangible assets shall be completely converted to the current profit and loss: The intangible asset that have been replaced by some other new technology, and it had no use value and transfer value; The intangible assets the has exceeded the legal time limit, and it can not bring economic benefits for the Group; Other cases that can prove the intangible asset had lost its use value and transfer value. When there is one or more of the following circumstances, account the devaluation reserves for the intangible assets: The intangible assets that have been replaced by other new technologies, and that makes it produce great adverse affect to economic interests of the Group. The market value of certain intangible assets had a sharp decline in the current period, and will no resume in the remaining amortization period; The intangible assets the has exceeded the legal time limit, but they still have some value; Other cases that can prove the intangible assets have had devaluations. Once the devaluation losses of the intangible assets have been recognized, they can not be converted back in the subsequent accounting period. (14) Long-term amortization expenses. If the long-term amortization expenses are precious metals, amortize according to the actual damage degree of the precious metals, and listed by the net amount of actual expenditure minus the accumulated amortization. (15) Loan expenses. (1) Recognition principles for the capitalization of loan expenses. Loan expenses include the interest on borrowings, the amortization of premium or discount, support expenses and the exchange differences from foreign currency loans etc. For the loan expenses, if can be directly attributed to the capital, account them into the capital costs; For the other loan expenses, account them into the losses and gains in the current period according to the occurrence amount. If the loan expenses meet the all following conditions in the same time, they shall be capitalized and included into the cost of that assets : ① Assets expenditure has occurred; ② The loan costs have occurred; ③ The necessary construction or production activities for the assets to achieve the predicted state. The loans include the specialized loan and the general loan. (2) For the additional expenses from specialized loan, before the achieving of the expected use or sale state and meet the capitalized condition, according to the occurance amount to have capitalization, and account it into the capital cost that meet the capitalization condition; after the achieving of the expected use or sale state and meet the capitalized conditions, according to the occurance amount to recognize as cost, and account it into the current losses and gains. For the additional expenses from general loans, recognize the occurance amount as the expenses, and account it into the current losses and gains. 66 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 (2) Calculation method for loan expenses capitalization. For the special loan for the construction and production of capitalized assets, the actual interest expense from special loan minus the interest income from loan deposited in the bank or the amount of investment gains from temporary investment. For the general loan for the construction and production of capitalized assets, according to the capital expense weighted average amount of the cumulative capital expenditure multiply the capitalization rate of the general loan occupied, account interest amount of the general loan capitalization. The capitalization rate is accounted according to the general loan weighted average interest rate. (16) Social security of staff and workers The Group participates in social security sysem for staff and owrkers establishedbygovernmental agencies according to relevant regulations, including endowment insurance, public accurnulation fund for housing construction and others. Except the above –mentioned, the Company did not make other important commitment in respect of welfare of staff and workers The Group allocates for insurance premium and common reserve fund according to certainproportion of total payroll under the premise of not exceeding the specified top limit and make payment to labor and social security organ in accordance with relevant regulations. Corresponding expenditure is included in current production costs or expenses. (17) )Income recognition Sales of products： The risks and rewards on goods ownership are transferred to the buyers. The company will no longer implement the right of management and the right of actual control. The amount of income can be reliably accounted. The economic interest related to transactions flows into the Group and the cost related to the sale of the goods, the realization of business income confirmed. Provision of balor services： The operating income from the labor services started and finished within the samefiscalyear is recognized when the labor services are finished. The income from labor services that are started and completed in different years is recognized with completion percentage method on the date of balance sheet where the result of provision of labor services can be reliably estimated. Transferring the use right of the assets: The related economic interests are likely to flow into the enterprise, and the amount of the revenue can be reliably measured, confirm it as income. For the income from use fee, account it according to the charge time and method agreed in the contract or the agreement. Other income is recognized on the following basis： The interest income is recognized according to the time proportion of deposit periodandeffective yield . Operating lease income is confirmed by straight-line method within the lease term. (18)Accounting process of income tax The unpaid income taxes in the current and prior period shall be confirmed as liabilities. And the over paid income tax shall be confirmed as assets. Upon the acquisition of the assets and liabilities, tax accounting basis shall be confirmed. If there are differences between the account value of the assets and liabilities and the tax accounting basis, the deferred income tax assets or deferred income tax liabilities shall be confirmed according to the relevant regulations. 67 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 (19) Method of preparing consolidated financial statements The Group compiles the consolidated accounting statements according to Finance Ministry Accounting word [2006] the 3rd Enterprise Accounting Standards No. 33 – regulations for consolidating financial statements. The Company starts to consolidate the income , cost and profit of subsidiaries for corresponding period from the date of obtaining the actual control of subsidiaries and stops the consolidation from the date of losing actual control. All material balances of current accounts, transactions and unrealized profits between the Company and the subsidiaries have been eliminated on consolidation. For the minority shareholders’ equity that belongs to the equity of the subsidiary but does not belong to the Group is listed with the item of ‘minority shareholders equity’. For the minority shareholders equity in the current net gains and losses shall be listed the in item ‘minority shareholders equity’ under the item of net profit in the integrated profit sheet. V. Taxation Major taxes. Tax Rate. Tax Base. VAT 17% Product sales revenue. VAT 13% Sales revenue of energy and power. Sales tax 3～5% Income from labor services and lease. City 7% Turnover tax to be construction paid allowances. tax. Surcharge for 4% Turnover tax to be education paid allowances. Corporate 33% Taxable income income tax. VI. .Controlled subsidiaries and associated companies Full Regi Busi Register Business Amount Minority Whethe name strati ness ed scope of interests r Or not ofthe on natur capital investmen ( Decemb consoli investm plan e （RMB’ t made by Proportion(%) er 31, dated ent e 0000） the 2007) compan company y directly Indirect Shijiazh No.1 Man 54,068 Productio 43,934 81.26% 1,491 Yes uang 0, ufact n and Baoshi Hua uring sales of Color nghe Indus glass bulb Roa try bulbs for Co., Ltd. d, colour 68 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Shiji kinescope azhu and ang electronic glass products VII. Notes to main iterms of Consolidation financial statements(RMB：RMB) 1. Monetary capital Item Decemer 31, 2007 December 31, 2006 Cash 83,483.36 92,762.48 Bank deposit 14,621,788.72 1,688,643.38 Other Currency capital - - Total 14,705,272.08 1,781,405.86 2. Bill receivable Item Decemer 31, 2007 December 31, 2006 Trade acceptance 6,340,125.17 - Bank acceptance 7,255,013.48 5,263,528.80 Total 13,595,138.65 5,263,528.80 The paid but undue bills Issue unit/Endorsing Type Units End of balance Issue date Mature date Bank Rizhao Lingrun 1,500,000.00 2007-9-29 2008-3-29 acceptance Bank Foshan Runtao 400,000.00 2007-11-29 2008-5-19 acceptance Bank Liaocheng Zhongtong 50,000.00 2007-9-17 2008-3-17 acceptance Bank Beijing Panasonic 710,722.60 2007-8-29 2008-2-28 acceptance Bank Beijing Panasonic 772,676.66 2007-10-26 2008-4-26 acceptance Bank Changsha Hualiang 300,000.00 2007-10-29 2008-4-29 acceptance Bank Guangdong 532,194.20 2007-10-31 2008-4-30 acceptance Bank Hefei 400,000.00 2007-11-23 2008-5-23 acceptance Bank Zhejiang Jifa 100,000.00 2007-9-11 2008-3-11 acceptance 69 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Bank Ningbo Huabang 100,000.00 2007-10-22 2008-4-22 acceptance Bank Xinye 100,000.00 2007-10-24 2008-4-24 acceptance Bank Hebei Tianxiang 10,000.00 2007-11-21 2008-5-21 acceptance Bank Hebei Tianxiang 20,000.00 2007-11-21 2008-5-21 acceptance Bank Changzhou Tianyi 50,000.00 2007-9-12 2008-3-12 acceptance Bank Laiwu Sanyuan 100,000.00 2007-9-5 2008-3-5 acceptance Bank Henan Xinye 100,000.00 2007-10-26 2008-4-26 acceptance Bank Luoyang 760,000.00 2007-9-30 2008-3-30 acceptance Bank Guangxi Guiyou 100,000.00 2007-11-14 2008-5-14 acceptance Bank Wuling Electric 100,000.00 2007-12-16 2008-6-16 acceptance Trade Hua Fei 2,000,000.00 2008-1-10 2008-7-10 acceptance Trade Hua Fei 545,706.50 2007-12-26 2008-6-26 acceptance Trade Hua Fei 1,000,000.00 2008-1-10 2008-7-10 acceptance Trade Hua Fei 1,121,215.00 2008-1-10 2008-7-10 acceptance Trade Hua Fei 441,969.37 2007-12-30 2008-6-30 acceptance Trade Hua Fei 681,914.40 2007-7-30 2008-1-30 acceptance Trade Hua Fei 549,319.90 2007-9-30 2008-3-30 acceptance Total 12,545,718.63 3. 3.Account receivable （1）Type Analyse: Balance in year-end Balance in year-begin Bad debt Bad debt Amount Proportion(%) Amount Proportion(%) Type reserve reserve Significant account receivable of single amount 106,640,555.26 75.48 8,041,810.3233,879,644.13 48.05 8,098,054.76 70 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The receivables that the individual amount is not large but the risk is great 25,853,779.54 18.30 22,369,604.5024,613,042.09 34.90 23,689,116.74 Other unsignificant of account receivable 8,780,733.42 6.22 -12,022,409.91 17.05 - Total 141,275,068.22 100.00 30,411,414.8270,515,096.13 100.0031,787,171.50 Note：Class standard of account recivable： ①The receivables of large amount: The receivables that rank at top five and the total amounts account for 10% or more; ②The receivables that the individual amount is not large but the risk is great and the period more than 3 years; ③Other receivables which are not significant: the receivables besides ①, ②. （2）The age of acounts analyzed Balance in year-end Balance in year-begin Proport Bad debt Proporti Bad debt Amount Amount Age ion(%) reserve on(%) reserve Within 1 year 104,971,055.77 74.30 - 35,872,439.00 50.87 - 1-2 years 3,796,390.00 2.69 759,278.00 8,702,844.00 12.34 5,847,358.37 2-3 years 6,567,809.32 4.65 3,714,040.00 4,327,770.32 6.14 4,327,770.32 Over 3 years 25,939,813.13 18.36 25,938,096.82 21,612,042.81 30.65 21,612,042.81 Total 141,275,068.22 100.00 30,411,414.82 70,515,096.13 100.00 31,787,171.50 Note： The receivable balance on December 31, 2007 increased RMB 70.76 million than that at the end of 2006, the increase rate 100.35%, the cause was that the cost of Xiaozi Company in other receivables was transferred to the receivables. Description of provision for bad debts written off and charged off in this year （3）There were no important accounts receivable from the main shareholders of the Company holding nore than 5% (including 5%) of the total shares of the Company. （4）Bed debts Provisions notes of Written off and charged off at this period Amount of provisions for Accou Amount of bad debts at Description nting provisions for period of accounting metho Written off in Charged off in bad debts at Reasons for Description of Items beginning bad debts ds this period this period period end writing off Charging off This fund was not received for more than Jinjingjin 1,068,883.68three years, Individ 1,068,883.68 Glass Shell and the ual Co., Ltd. customer was Accou The debt was in poor nting recovered. 71 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 operation for a long term. This fund was not received for more than Henan Ancai three years, Group 1,066,151.00and the 426,454.36 639,696.64 Voluntary to give up Chengdu customer was Individ debt right and will not Electronic in poor ual claim according to the Glass Co., operation for a Accou The debt wasdebt restructuring Ltd. long term. nting recovered. agreement Total 2,135,034.68 1,495,338.04 639,696.64 （5）The balance at the period end of the receivables of related parties is RMB 91.9914 million, accounting for 65.12% of the balance of accounts receivable at the period end. (6) The top 5 in accounts receivable Item Balance at the period end. Age Proportion% Shijiazhuang Electric Pin Glass Co., Ltd. 91,805,301.13Within 1 year 64.98 Henan Ancai Gaoke Co., Ltd. 13,210,185.25Within 1 year 9.35 3,714,040.00 2-3 years 2.63 Tianjing Anjing Glass Co., Ltd. 4,327,770.32 Over 3 years 3.06 Baoshi TV Factory 14,009,355.59 Over 3 years 9.92 Anyang Xinyi Ecectric Glass Co., Ltd. 3,796,390.00 1-2 years 2.69 Total 130,863,042.29 92.63 4Other receivable （1）Type analyse Balance in year-end Balance in year-begin Bad debt Bad debt Amount Proportion(%) Amount Proportion(%) Type reserve reserve Significant account receivable of single amount 1,316,890.85 5.22 - 76,868,311.00 79.05 - The receivables that the individual amount is not large but the risk is great 11,466,166.20 45.455,323,832.29 7,783,827.00 8.005,323,832.29 Other unsignificant of account receivable 12,444,352.43 49.33 -12,593,929.89 12.95 - Total 25,227,409.48 100.00 5,323,832.2997,246,067.89100.00 5,323,832.29 Note：Class standard of account recivable： The receivables of large amount: The receivables that rank at top five and the total amounts account for 10% or more; ②The receivables that the individual amount is not large but the risk is great and the period more than 3 years; ③Other receivables which are not significant: the receivables besides ①,(2) (4) Individual recognition is adopted to account provisions for bad debts in other receivables. （2）Age analyse 72 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Balance in year-end Balance in year-begin Bad debt Bad debt Amount Proportion(%) Amount Proportion(%) Age reserve reserve 6,327,261.92 Within 1 year 25.08 - 82,896,418.00 85.24 - 4,550,497.67 1-2 years 18.04 - 3,223,888.00 3.31 - 3,223,888.00 2-3 years 12.78 - 3,341,934.89 3.44 - 11,125,761.89 Over 3 years 44.10 5,323,832.29 7,783,827.00 8.01 5,323,832.29 Total 25,227,409.48 100.00 5,323,832.29 97,246,067.89 100 5,323,832.29 （3）There were no important accounts receivable from the main shareholders of the Company holding nore than 5% (including 5%) of the total shares of the Company. （4）In other receivables, the balance at the period end of the related parties is RMB 16.6017 million, accounting for65.81% of the balances of other receivables. （5）The top 5 in accounts receivable Item Balance at the period end. Age Proportion% 3,308,714.11 1-2 years 13.12 Pin Co Within 1 1,753,495.09 year 6.95 Within 1 1,882,200.32 year 7.46 Large-diameter Co. 1,623,704.46 1-2 years 6.44 1,438,561.96 2-3 years 5.70 1,794,665.45Over 3 years 7.11 Within 1 388,300.69 year 1.54 Steel Plastic Co 621,578.58 1-2 years 2.46 498,293.93 2-3 years 1.98 1,643,829.45Over 3 years 6.52 Within 1 88,292.09 year 0.35 Industry Trade Co 169,124.86 1-2 years 0.67 13,298.98 2-3 years 0.05 1,578,641.75Over 3 years 6.26 Hannan Fuyang Baoshi Glass Co., Ltd. Within 1 1,066,930.25 year 4.23 Total 17,869,631.97 70.83 5.Prepayment (1) Age analyse December 31, December Age 2007 Proportion% 31,2006 Proportion % 73 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Within 1 year 8,333,653.53 98.76 6,759,315.98 100.00 1-2 years 103,810.63 1.2 2-3 years - - Over 3 years Total 8,437,464.16 100.00 6,759,315.98 100.00 (2)There were no important accounts Prepayment from the main shareholders of the Company holding nore than 5% (including 5%) of the total shares of the Company. 6. Inventory and inventory depreciation reserve Report period Same period of the previous year Depreciation Depreciation Amount Amount Items reserve reserve Raw materials 30,691,577.41 20,732,512.30 29,523,830.45 29,564,621.30 Commodities in stock 32,590,511.89 8,707,898.59 27,946,115.59 5,044,703.98 Commissioned material processing 1,098,640.12 121,422.43 293,125.02 - Material Cost difference -732,506.71 - -843,518.65 - Material in transit 67,006.11 - 44,552.52 - Product Cost 1,758,580.45 - 2,155,273.34 40,676.79 Total 65,473,809.27 29,561,833.32 59,119,378.27 34,650,002.07 Note: The reference for accounting provisions for inventory devaluation is that the net value of inventory at the period end is lower than the cost. In this period, the inventory that has accounted provision for inventory devaluation has correspondingly transferred back the provision for inventory devaluation RMB 5,238,488.00. The amount transferred back in this period accounted for 8.00% of the balance of the inventory at the period end. 7.Fexed assets and accumulated depreciation Increase in this Decrease in this December 31, 2007 Item December 31, 2006 period period I.Cost 373,786,802.10 1,656,241.73 2,758,160.68 372,684,883.15 Incl: Houses and buildings 182,844,995.60 828,102.11 448,511.21 183,224,586.50 Machine and equipment 182,564,713.41 828139.62 2,309,649.47 181,083,203.56 Electrionic Communication Equipment 6,831,727.67 - - 6,831,727.67 Means of transportation 1,545,365.42 - - 1,545,365.42 Other equipment - - - - II.Total accumulated depreciation 215,797,339.68 15,232,786.09 2,342,082.18 228,688,043.59 Incl: Houses and buildings 88,524,849.44 8,314,423.99 145,317.12 96,693,956.31 74 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Machine and equipment 122,096,990.15 6,918,362.10 2,089,306.68 126,926,045.57 Electrionic Communication Equipment 4,459,843.90 - - 4,459,843.90 Means of transportation 715,656.19 - 107,458.38 608,197.81 Other equipment - - - - III.Total of Fixed assets Devalue Provision 3,077,055.86 - - 3,077,055.86 Incl: Houses and buildings 2,126,239.95 - - 2,126,239.95 Machine and equipment 950,815.91 - - 950,815.91 Electrionic Communication Equipment - - - - Means of transportation - - - - Other equipment IV.Total of Fixed asset 154,912,406.56 140,919,783.70 Incl: Houses and buildings 94,320,146.16 84,404,390.24 Machine and equipment 57,390,667.4 53,206,342.08 Office equipment - Electrionic Communication Equipment 2,371,883.77 2,371,883.77 Means of transportation 829,709.23 937,167.61 Other equipment - - - - Note：The actual value of fixed assets transferred from the projects under construction is RMB 538931.08. Information on Mortgages of Fixed assets, see Note 10. 8.Consruction in progress Report period Same period of the previous year Depreciati Depreciation Amount Amount Item on reserve Net amount reserve Net amount Consruct ion in progress - - - 82,570.83 - 82,570.83 Change of Consruction in progress Interest Transfer Capitalzation Interest December Rate Capitalzation December Increase in Decrease in this Name 31, 2006 this period period Fixed assets （％） Amount 31, 2007 Deliver - - - - Matenrial 82,570.83 90,750.00 173,320.83 75 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 machine Glass Bulb - - - - - II 348,561.96 348,561.96 Laser - - - - solder 17,048.29 - 17,048.29 - - - Total 82,570.83 456,360.25 - 538,931.08 Note： The actual value of fixed assets transferred from the projects under construction is RMB 538931.08. 9.Intangible assets Increase in Decrease in this December 31, Name December 31, 2006 this period period 2007 I.Cost Total 16,036,491.00 16,036,491.00 Land use right 15,997,361.00 - - 15,997,361.00 Software 39,130.00 - - 39,130.00 II.Total of Accumulative amortized 2,890,918.44 334,413.72 - 3,225,332.16 Land use right 2,871,236.44 325,563.72 - 3,196,800.16 Software 19,682.00 8,850.00 - 28,532.00 III.Total of intangible assets devalue reserve - - - - Land use right - - - - Software - - - - IV.Total of intangible assets value 13,145,572.56 -325,563.72 - 12,811,158.84 Land use right 13,126,124.56 -325,563.72 - 12,800,560.84 Software 19,448.00 - - 10,598.00 Intangible assets , see Note 10. 10. .Long-term expenses to be amortized Accumulati Increase ve Original December 31, in this Transfer Out Amourtization amortizati December 31, Item amount 2006 year in this period in this period on 2007 Other (Noble Metal) 7,723,271.32 - - - - 7,723,271.32 Total 7,723,271.32 7,723,271.32 Long-term unamortized expense is the metal stirring rods which have been put into use. 11. Deffed tax assets Item Balance at the period Balance at the end. beginning of the year. 76 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Bad debt reserve. 4,004,717.93 5,364,384.63 Inventory devaluation provision 5,989,879.67 9,601,758.35 Assets devaluation provision 314,404.34 415,013.61 Welfare for workers’ dismissing 580,998.64 1,047,982.00 Loss to be made up - 188,118.48 Total 10,890,000.58 16,617,257.07 12.Assets devalue provision list Provision for Decrease for current Item December 31, 2006 current Switch back Resellers Total Dcember 31, 2007 I.Bad debts provision 37,111,003.79 759,278.00 1,495,338.04 639,696.64 2,135,034.68 35,735,247.11 Incl: Account receivable 31,787,171.50 759,278.00 1,495,338.04 639,696.64 2,135,034.68 30,411,414.82 Other receivable 5,323,832.29 - - - - 5,323,832.29 II.Fixed assets Devalue provision 3,077,055.86 - - - - 3,077,055.86 III.Inventory Depreciation reserve 34,650,002.07 150,319.25 - 5,238,488.00 5,238,488.00 29,561,833.32 13.Short-term loan Balance at Balance at the beginning the period of the year. Borrower end. Loan condition Hebei Finance - 381,025.52 Credit loan Department Zhijiazhuang - 5,000,000.00 Credit loan Fund raising office Total - 5,381,025.52 Credit loan Note: The loan has been overdue for several years, in this year, the short-term loans will be diverted to other non-current liabilities. 14. Bill payable Balance at the Balance at the period end. beginning of the Items year. Bank acceptance 89,999.90 89,999.90 77 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Total 89,999.90 89,999.90 Notes payable have has expired, the unit holding the notes lost the notes, so they are not paid for a long term. 15. Accounts payable Balance at the Balance at the period end. beginning of Items the year. Accounts payabl 37,695,196.84 23,184,431.15 Other payable 41,028,540.44 41,355,582.63 Accounts prepayment 1,596,612.48 1,264,012.82 Note：（1）The borrowing amount of the shareholder units holding more than 5% at the period end was RMB 20, 302,613.39. (2) The advanced expenses in other payables which are listed according to expenses category are as follows: Balance at period Balance at period Type end beginning Reasons for balance at year end Audit costs for Other 451,038.10 937,000.00intermediary agencies Total 451,038.10 937,000.00 The other payables of the controlling subsidiary Color Shell Company include the equipment commission of Color Shell project RMB 4,768,474.88, which has not been repaid because no other units ask for collection. 16. Payable Employee wage beginning of Increase in Payment amountEnd of Balance Balance this period Item - 15,671,331.23 15,671,331.23 1. Wage, Bonus and Allowance - 4,242,084.70 103,701.94 4,345,786.64 2 Welfarism - 3. One of the five - 8,003,589.03 8,003,589.03 insurance - 4.Labour union Outlay and 3,687,385.22 402,581.84 183,220.12 3,906,746.94 Education outlay 5.Refuse welfarism 3,966,595.00 - 952,656.00 3,013,939.00 Total 11,896,064.92 24,181,204.04 29,156,583.02 6,920,685.94 Note：The payable workers’ salary at the year end decreased RMB 4.9754 million than that at the year beginning, the reduction rate 41.82%, the reason for the change is that the practice of new enterprise accounting standards which do not account welfares and the balance of payable welfare at the year end will be charged back. 78 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 17. Tax payable beginning Tax type End Balance Balance Legal tax rate(%) VAT PAYABLE -8,637,063.94 -5,099,791.11 17% or 13% Business tax payable 3,794,331.04 3,733,946.34 5% Income tax payable -67,036.91 -1,662,252.91 33% Land VAT payable - - City construction tax payable -8,079.70 236,610.75 7% House tax payable 151,935.69 -42,103.02 1.2% and 12% 9yuan/㎡ and 5yuan/ Land use tax payable -0.01 123,541.99 ㎡ Individual income tax payable 0.10 - Education supertax payable -19,205.14 120,617.95 4% Other tax 5,964.71 -1,481.00 Total -4,779,154.16 -2,590,911.01 18.Interest payable beginning of Items End of Balance Balance Loan interest 13,008,521.43 12,561,961.65 Total 13,008,521.43 12,561,961.65 19．Other current liabilities beginning of Items End of Balance Balance USD exchange 73,046,000.00 78,087,000.00 Other 353,226.94 - Total 73,399,226.94 78,087,000.00 Note： In 1993,the Group signed the agreement on exchange of US dollars which agreed returning 10,000,000 US dollars to the Exchange Unit and repossess the 58,000,000 Yuan exchanged in November 1998, By December 2007, the Group still consults with the Exchange Unit on the returning of the exchange. 20. Share capital Items End of Balance beginning of Balance 79 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Share with conditional subscription 192,794,454.00 218,537,745.00 Shares with unconditional subscriptio 190,205,546.00 164,462,255.00 Total 383,000,000.00 383,000,000.00 21.Capital common reserve Beginning of Increase in Decrease in this Items Balance this period period End of Balance Capital stock premium 355,857,851.87 - - 355,857,851.87 Other capital reserve 29,332,650.75 - - 29,332,650.75 Total 385,190,502.62 - - 385,190,502.62 22.Surplus common reserve Beginning of Increase in Decrease in this Items Balance this period period End of Balance Surplus common reserve 27,454,788.05 - - 27,454,788.05 23.Retained profit Retained profit at the end of last period -760,504,874.39 Add ： Influences from the change of accounting policies according to the new standard 178,504,793.85 Other adjustment events 21,239,377.03 The retained profit at the end of this period after adjustment -560,760,703.51 Add：The net profit which belongs to the owner of the parent company in this period. 10,339,042.87 The profit for distribution -550,421,660.64 Less：The reserved fund extracted - Less ： The profit handed to the parent company - The retained profit at the period end -550,421,660.64 Note：The reserved profit at the year beginning is adjusted according to the regulations in Item 5-Item 19 in Accounting Standards for Business Enterprises No. 38 - the first time implementation of accounting standards, and the regulations in Accounting Standards for Business Enterprises No. 1. The reserved profit at the year beginning adjusted is RMB 199,744,170.88, of which: confirm the deferred income tax assets to transfer to the retained profit at the year beginning RMB 16,617,257.07 ; at the same time, the listed companies that issue B shares are to be conducted comprehensive retrospective adjustments, the interest-free income originally included in capital reserve and government subsidies are transferred to retained profits RMB 153,813,653.04; confirm the dismiss welfare to transfer to the retained profit RMB 80 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 3,175,706.00, adjust the interest which is accounted before 2005 and not to be paid RMB 26137554.77, adjust the reserved profit at the period end of the consolidated statement RMB 21,239,377.00. 24.Business income and Business cost Same period of the Items Report period previous year Main business income 86,386,382.10 62,677,982.29 Other business income 141,754,799.28 168,930,328.02 Total 228,141,181.38 231,608,310.31 Business income Business cost Same period of the Same period of the Items Report period previous year Report period previous year Glass Plain tub sales 48,361,606.45 4,646,395.00 39,423,785.42 5,094,507.98 Component sales 38,024,775.65 58,031,587.29 31,895,769.62 37,178,077.39 Subtotal of Main business income 86,386,382.10 62,677,982.29 71,319,555.04 42,272,585.37 Gas 65,486,348.61 75,721,791.47 65,486,348.81 75,519,945.69 Electricity 49,012,920.97 56,022,750.68 50,567,723.05 59,453,481.53 Other income 27,255,529.70 37,185,785.87 9,330,680.63 28,658,312.16 Subtotal of other business income 141,754,799.28 168,930,328.02 125,384,752.49 163,631,739.38 Total 228,141,181.38 231,608,310.31 196,704,307.53 205,904,324.75 Note：The total amount of main business income of top five customers is RMB 75.5249 million, accounting for 76.19% of the total amount of main business income in this year; the sale of glass tube increased much in this year due to the production of glass tube is officially started in November 2006. 25.Business tax and additional Amount in this Type Standard period Sales tax 5% 95,636.91 City safeguard and construction tax 7% 503,723.70 Education surtax 4% 287,842.11 Total 887,202.72 26.Sales and management expenses Same period of Type Report period the previous year Sales expenses 854,857.59 424,185.90 Management expenses 20,637,374.43 31,598,088.63 81 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Management costs reduced RMB 10.9607 million than the same period in last year, mainly because the company strengthened cost control. Sales costs increased RMB 0.4307 million due to the production of glass tube is officially started in this year. 27.Financial expenses Same period of the Type Report period previous year Interest expenses 1,337,348.91 11,682,674.48 Less：Income from interest 12,310.58 1,440,465.99 Exchange loss（Or Gains） -5,290,431.11 -2,636,013.27 Commission charge 4,026.20 23,406.59 Other - - Total -3,961,366.58 7,629,601.81 Note：Financial cost in the current period decrease RMB 11.5910 million than in the same period of last year, the main reasons: ① In 2006, the shares in Xiaozi Company held by the controlling subsidiary of the company Color Shell Company were transferred to Baoshi Group to set off the loan of former group, in this year, the fund occupying cost will not be accounted to Baoshi group. ② The controlling subsidiary of the company Color Shell Company had exchange income RMB 5.41 million due to the replacement of US 10 million. 28. Investment income Amount in the Amount in current same period of Sources of production investment income period last year The amount of net increase of owner’s equity of the invested enterprise adjusted at the period end Income from equity transferring -66,406,595.97 Investment income from other projects Total -66,406,595.97 In 2006, the controlling subsidiary of the company Color Shell Company had transferred all the shares in Pin Company to Baoshi Group Company, there was no long-term investment project in the consolidated statement of this year. 29. Assets Devalue losses Amount in the same period Items Amount in current period of last year bad debts losses -736,060.04 144,868.91 Decline in value of inventories prepared -5,088,168.75 -2,188,375.70 82 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Total -5,824,228.79 -2,043,506.79 The company had accounted devaluation preparations for the glass tube and written off the devaluation preparations for inventory, therefore, the asset devaluation loss transferred back in this year was more than that in the same period of last year. 30.Non-operating incme Amount in current Amount in the same period Items period of last year Loss of fixed assets - Net Income of disposition fixed - 3,521,836.29 assets Income of debt - - restructuring Forfeit income - - Government subsidy - - Total - 3,521,836.29 The fixed asset income from disposal of houses setting off debt in 2006. 31. Non-operating expenses Same period of the previous Items Report period year Loss of fixed assets - - Net loss of the loss of non-current assets disposal 370,426.93 112,480.46 Loss of debt restructuring - - Special loss - - Forfeit 5,889.60 2,319.52 Other 376.31 5,085.11 Total 376,692.84 119,885.09 32．Income tax expenses Amount in the same Items Amount in current period period of last year Expense of current income tax 1,595,216.00 Expense of deferred income tax 5,727,257.86 829,836.60 Total 7,322,473.86 829,836.60 33. Other cash received from business operation Items Amount Management expense 6,681,454.63 83 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Bank interest income 9,864.07 Money exchanges 617,394.25 Total 7,308,712.95 34. Other cash paid for business activities Items Amount Sales expense 854,857.59 Management expense 5,719,768.36 Money exchanges 132,211.73 Total 6,706,837.68 35．Supplement information (Cash Flow Statement) Amount in the same period of last Items Amount in current period year I. Cash flow from operating activities: Net profit 11,143,867.78 -76,888,606.09 Add:Impairment provision for assets -5,824,228.79 -2,043,506.79 Depreciation on fixed assets, loss oil 15,232,786.09 14,465,395.00 & gas and Product biology Depreciation on assets 334,413.72 332,764.00 Amortization of intangible assets - - Amortization of long-term 370,426.93 33,864.16 deferredexpense Disposal of fixed assets, - - intangibleassets and otherII Disposa of fixed assets Financial expenses -3,961,366.58 7,577,718.00 Investment losses(less ： 84,732,237.41 gains) Decrease of deferred income taxasset(less：increase) 5,727,256.48 829,836.60 Decrease in inventory（less： -11,442,599.75 10,283,058.00 increase） Increase in operating receivable（lwss：increase） Increase in operating payables 7,236,820.23 10,083,155.39 (less decrease) Other 84 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Net cash flows from operating 3,067,666.22 32,941,408.32 activities 2.Investing and financing activities that do not involve - - cash receipts and payments Conversion of debt into - - capital Convertible bonds to be expiredwithin one year Fixed assets under financial 14,705,272.08 1,781,405.86 lease 3.Net increase in cash and cash 1,781,405.86 36,495,355.65 equivalents Cash at the end of the period - - Less：Cash at the beginning of - - the period Add：Cash equivalents at the end 12,923,866.22 -34,713,949.79 of the period Less：Cash equivalents at the 11,143,867.78 -76,888,606.09 beginning of the period Net increase in cash and cash -5,824,228.79 -2,043,506.79 equivalents VIII.Parent company of main statement Notes(Unit：RMB) 1. Account receivable （1）Type analyse Report period Same period of the previous year ProportionDepreciation ProportionDepreciation Type Amount ％ reserve Amount ％ reserve Significant account receivable of single amount 106,640,555.26 80.83 8,041,810.32 33,879,644.13 55.39 17,445,710.35 The receivables that the individual amount is not large but the risk is great16,592,157.54 12.51 13,021,948.9112,264,386.00 24.96 4,993,805.56 Other unsignificant of account receivable 8,694,699.83 6.66 - 12,022,409.91 19.65 - Total 131,927,412.63 100.00 21,063,759.23 61,167,440.54 100.00 22,439,515.91 Note：Class standard of account recivable： The receivables of large amount: The receivables that rank at top five and the total amounts account for 10% or more; ②The receivables that the individual amount is not large but the risk is great and the period more than 3 years; ③Other receivables which are not significant: the receivables besides ①,(2) （2）Age analyse Report period Same period of the previous year Proportion Depreciation Proportion Depreciation Age Amount ％ reserve Amount ％ reserve Within 1 year 104,971,055.77 79.57 - 35,872,440.12 58.65 - 85 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 1-2 years 3,796,390.00 2.88 759,278.00 8,702,844.00 14.23 5,847,359.59 2-3 years 6,567,809.32 4.98 3,714,040.00 4,327,770.32 7.08 4,327,770.32 Over 3 years 16,592,157.54 12.58 16,590,441.23 12,264,386.00 20.05 12,264,386.00 Total 131,927,412.63 100.00 21,063,759.23 61,167,440.54 100.00 22,439,515.91 Note： On December 31, 2007, the balance of receivables increased70.76 million than at the end of 2006, an increase of 115.6%, the reason was that the power cost of Xiaozi Company of other receivables in this year was transferred to the accounts receivable. （3）There were no important accounts receivable from the main shareholders of the Company holding nore than 5% (including 5%) of the total shares of the Company. （4）Bed debts Provisions notes of Written off and charged off at this period Amount of provisions for Accou Amount of bad debts at Description nting provisions for period of accounting metho Written off in Charged off in bad debts at Reasons for Description of Items beginning bad debts ds this period this period period end writing off Charging off This fund was not received for more than three years, 1,068,883.68and the 1,068,883.68 Jinjingjin customer was Individ Glass Shell in poor ual Co., Ltd. operation for a Accou The debt was long term. nting recovered. This fund was not received for more than Henan Ancai three years, Group 1,066,151.00and the 426,454.36 639,696.64 Voluntary to give up Chengdu customer was Individ debt right and will not Electronic in poor ual claim according to the Glass Co., operation for a Accou The debt wasdebt restructuring Ltd. long term. nting recovered. agreement Total 2,135,034.68 1,495,338.04 639,696.64 （5）The balance of receivables of the related parties in accounts receivable at period end was 91.9914 million, accounting for 69.73% of the balance of accounts receivable. （6）The top five in accounts receivable. Proportion Items December 31, 2007 Age % Shijiazhuang Electric Pin Glass Co., Ltd. 91,805,301.13 Within 1 year 69.59 131,927,412.63 Henan Ancai Gaoke Co., Ltd. 13,210,185.25Within 1 year 10.01 131,927,412.63 3,714,040.00 2-3 years 2.82 131,927,412.63 Tianjing Anjing Electric Glass Co., Ltd. 4,327,770.32 Over 3 years 3.28 131,927,412.63 Baoshi TV Factory 6,661,700.00 Over 3 years 5.05 131,927,412.63 Anyang Xinyi Electric Glass Co., Ltd. 3,796,390.00 1-2 years 2.88 131,927,412.63 Total 123,515,386.70 93.62 131,927,412.63 2. Other receivable （1）Type analyse 86 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Report period Same period of the previous year ProportionDepreciation ProportionDepreciation Type Amount ％ reserve Amount ％ reserve Significant account receivable of single amount 1,316,890.85 6.95 -76,868,311.00 84.51 - The receivables that the individual amount is not large but the risk is great 10,055,761.94 39.55 4,253,832.29 6,713,827.00 7.38 4,253,832.29 Other unsignificant of account receivable 7,562,055.56 53.50 - 7,373,210.25 8.11 - Total 18,934,708.35 100.00 4,253,832.2990,955,348.25 100.00 4,253,832.29 Note：Class standard of account recivable： The receivables of large amount: The receivables that rank at top five and the total amounts account for 10% or more; ②The receivables that the individual amount is not large but the risk is great and the period more than 3 years; ③Other receivables which are not significant: the receivables besides ①,(2) (4) Individual recognition is adopted to account provisions for bad debts in other （2）Age analyse Balance in year-end Balance in year-begin Bad debt Bad debt Amount Proportion(%) Amount Proportion(%) Age reserve reserve Within 1 year 2,758,347.49 14.57 - 77,754,128.31 85.49 - 1-2 years 2,974,888.72 15.71 - 3,145,458.00 3.46 - 2-3 years 3,145,458.00 16.61 - 3,341,934.94 3.67 - Over 3 years 10,055,761.94 53.11 4,253,832.29 6,713,827.00 7.38 4,253,832.29 Total 18,934,456.15 100.00 4,253,832.29 90,955,348.25 100 4,253,832.29 （3）There were no important accounts receivable from the main shareholders of the Company holding nore than 5% (including 5%) of the total shares of the Company. （4）In other receivables, the balance at the period end of the related parties is RMB 78.72.11 million, accounting for 93.41% of the balances of other receivables. （5）The top five in accounts receivable. Items December 31, 2007 Age Proportion% Baodong Electrinic 452,317.24Within 1 year 2.39 6,573,578.09Within 1 year 34.72 1,816,646.22 1-2 years 9.59 Large-diameter plastic tube Co. 1,623,704.46 2-3 years 8.58 1,438,561.96 Over 3 years 7.60 388,300.69Within 1 year 2.05 487,116.59 1-2 years 2.57 Zhonghe Steel Plastic Shape Co. 498,293.93 2-3 years 2.63 1,643,829.45 Over 3 years 8.68 Industry Trade Co 88,292.09Within 1 year 0.47 87 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 169,124.86 1-2 years 0.89 13,298.98 2-3 years 0.07 1,578,641.75 Over 3 years 8.34 Fuyang Baoshi Glass Co. 1,066,930.25Within 1 year 5.63 Total 17,838,636.56 94.21 3. Long-term equity investment Origin Bad debt December 31, December Items Investment reserve 2006 Increase Decrease 31,2007 Long-term equity 439,342,000.00 378,172,693.04 61,169,306.96 - - 61,169,306.96 investment （1）.Long-term equity investment(Investment type) Items Same period of the previous Report period year Subsidiary Company investment 61,169,306.96 61,169,306.96 Associated enterprises investment - - Other investment - - Total 61,169,306.96 61,169,306.96 （2）Long-term equity investment（Investment unit） Begin Add to Increase/ Increase/decrease End Name Proportion(%) investment investment Decrease of accumulative balance Colr Amount - 81.26% - bulb Co. Total - 81.26% - - 61,169,30 6.96 Note： The reserved profit at the year beginning is adjusted according to the regulations and the regulations in Accounting Standards for Business Enterprises No. 1. (Fanincial [2007]14).The Long-term equity at the year beginning adjusted is RMB 399,411,926.80, of which: adjustment increase of the subsistence income at the year beginning 518,316,984.81; adjustment decrease assets of the capital public at the year beginning RMB 123, 654, 320.56. adjustment increase of the surplus public at the year beginning 4,749,362.55; adjustment increase value less than account value,The devalue provision RMB 378,172,549.80. 4. Business income \Business cost Business income Business cost Items Same period of Same period of the Report period the previous year Report period previous year Glass Plain tub sales 48,361,606.45 2,281,210.62 39,423,785.42 4,646,395.00 Component sales 38,024,775.65 58,031,587.29 31,895,769.62 37,178,077.39 88 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Subtotal of Main business income 86,386,382.10 60,312,797.91 71,319,555.04 41,824,472.39 Gas 65,486,348.61 75,521,791.47 65,486,348.81 75,519,945.69 Electricity 49,012,920.97 56,022,750.68 50,567,723.05 59,453,481.53 Other income 25,373,997.70 36,339,457.32 9,002,031.76 27,500,251.61 Subtotal of other business income 139,873,267.28 167,883,999.47 125,056,103.62 162,473,678.83 Total 226,259,649.38 228,196,797.38 196,375,658.66 204,298,151.22 5．Supplement information (Cash Flow Statement) Items Amount in current period Amount in the same period of last year I. Cash flow from operating activities: Net profit 6,849,178.11 -65,908,607.00 Add:Impairment provision for assets -5,727,128.79 2,126,379.34 Depreciation on fixed assets, loss oil & gas and Product biology 12,857,420.46 11,669,350.99 Depreciation on assets 334,413.72 332,764.00 Amortization of intangible assets 0.00 Amortization of long-term deferredexpense Disposal of fixed assets, intangibleassets and otherII 370,426.93 Disposa of fixed assets Financial expenses 363,125.19 1,515,471.55 Investment losses(less： gains) 75,073,927.41 Decrease of deferred income taxasset(less： increase) 5,727,256.48 829,836.60 Decrease in inventory （less：increase） -11,442,599.75 10,304,434.61 Increase in operating receivable（lwss：increase） -4,142,464.40 -49,843,542.67 Increase in operating payables (less decrease) 7,931,895.83 -17,346,958.65 Other Net cash flows from operating activities 13,121,523.78 -31,243,445.53 2.Investing and financing activities that do not involve cash receipts and payments - Conversion of debt into capital - - Convertible bonds to be expiredwithin one year 89 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Fixed assets under financial lease 3.Net increase in cash and cash equivalents -33,002,250.00 Cash at the end of the period 14,385,269.68 1,407,545.90 Less：Cash at the beginning of the period 1,407,545.90 34,409,795.90 Add：Cash equivalents at the end of the period Less：Cash equivalents at the beginning of the period Net increase in cash and cash equivalents 12,977,723.78 -33,002,250.00 IX. Relation with related parties and related transactions(Unit：RMB) 1. Related Parties with controlling relation (1) Related Parties with controlling relation Registered Relationshipwith Economic nature Enterprise Name address Main Buiness the Company 9 Huanghe Road, Shijiazhuang High-tech Final Limited Industrial Controllin liability Development g company compay Area, Shijiazhuang Electronic glass and Shijiazhuang Baoshi Electrinic Group , Hebei other supporting Co., Ltd. Province electronic products 9 Huanghe Road, Shijiazhuang High-tech Controlled Limited liability Industrial subsidiary compay Development Area, Shijiazhuang, Investmentin Colr bulb Co. Hebei Province companies (2) The registered capital of the related parties with controlling relationship and the change thereof Enterprise Name December 31, 2007 December 31, 2006 Shijiazhuang Baoshi Electrinic Group Co., Ltd. 1,389,272,300.00 1,389,272,300.00 Colr bulb Co. 540,681,957.00 540,681,957.00 90 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 (3) The shares or equity of the company held by therelated parties with controlling relationshipand the change thereof Report period Same period of the previous year Enterprise Name Amount Proportion（％） Amount Proportion（％） Shijiazhuang Baoshi Electrinic Group Co., Ltd. 198,146,657.00 55.74% 211,282,800.00 55.1% 2. Nature of the non-relationship with related parties Enterprise Name Relationship with the Company Shijiazhuang Baoshi Electrinic vacuum Glass Co., Ltd. Controlled by the same parent company Shijiazhuang Baoshi Large-diameter Controlled by the same parent company plastic tube Co., ltd. Shijiazhuang Baoshi Zhonghe Steel Controlled by the same parent company Plastic Shape Co., Ltd. Shijiazhuang Baoshi Ruiming Co., Controlled by the same parent company Ltd. Shijiazhuang Baodong Electrinic Controlled by the same parent company Co.,Ltd. Hannan Fuyang Baoshi Glass Co., Ltd. Controlled by the same parent company 3. The transactions with the ultimate holding company ①Sales of raw materials and Work in process Unliquidated Unit Items Transactions amount Pricing policy Make price and two Sales raw materials 19,337,847.31 sides agreement Make price and two Sales power 16,102,631.62 sides agreement Shijiazhuang Baoshi Electrinic Group Make price and two Co., Ltd. Assets ues expense 1,885,000.00 sides agreement Make price and two Provide repair income 738,574.61 sides agreement Make price and two Subtotal 38,064,053.54 - sides agreement ② Purchase raw materials and Commodity Unliquidated Items Transactions amount Pricing policy Purchase raw Make price and two Shijiazhuang Baoshi Electrinic Group materials 14,441,856.00 20,302,613.39 sides agreement Co., Ltd. Subtotal 14,441,856.00 4. Nature of the non-relationship with related partie. ①Sales goods or providing labor services Shijiazhuang Baoshi Electrinic vacuum Unliquidated Glass Co., Ltd. Items Transactions amount Pricing policy Sales of raw materials and Make price and two Work in process 12,703,131.83 31,528,326.16 sides agreement Make price and two Sales of power 110,369,547.98 65,339,185.27 sides agreement 91 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Make price and two Provide repair income 4,989,007.73 sides agreement Make price and two Lease income 1,905,560.70 sides agreement Subtotal 129,967,248.24 96,867,511.43 5.Current account of associated enterprises 1.Account receivable Name of associated enterprises December 31, 2007 Proportion(%) December 31, 2006 Proportion(%) Shijiazhuang Electric Pin Glass Co., 131.17 Ltd. 92,205,606.14 65.27 92,493,091.71 Hannan Fuyang Baoshi Glass Co., Ltd. 186,050.75 0.13 186,050.75 0.26 Total 92,391,656.89 65.40 96,679,142.46 131.43 2.other Name of associated enterprises December 31, 2007 Proportion(%) December 31, 2006 Proportion(%) Shijiazhuang Electric Pin Glass 4.79 Co., Ltd. 4,661,905.29 18.48 4,661,905.29 Shijiazhuang Baoshi Large-diameter 5.59 plastic tube Co., ltd. 6,739,132.19 26.71 5,433,862.00 Shijiazhuang Baoshi Zhonghe Steel 3.06 Plastic Shape Co., Ltd. 3,152,002.65 12.49 2,977,688.57 Shijiazhuang Baoshi Ruiming Co., 3.32 Ltd. 129,130.00 0.51 3,223,951.10 Shijiazhuang Baodong Electrinic 0.46 Co.,Ltd. 452,317.24 1.79 443,467.82 Hannan Fuyang Baoshi Glass Co., 1.07 Ltd. 1,066,930.25 4.23 1,038,880.25 Total 16,201,417.62 64.22 17,779,755.03 18.28 3.Advance account Name of associated enterprises December 31, 2007 Proportion(%) December 31, 2006 Proportion(%) Shijiazhuang Baoshi Electronic Glass 0% Group Co., Ltd. 10,405.00 0.12 - Total 10,405.00 0.12 - 0% 4.Account payable Name of associated enterprises December 31, 2007 Proportion(%) December 31, 2006 Proportion(%) Shijiazhuang Baoshi Zhonghe Steel 0.32 Plastic Shape Co., Ltd. 74,824.86 0.20 74,824.86 Total 74,824.86 0.20 74,824.86 0.32 5.other payable December 31, 2007 Proportion(%) December 31, 2006 Proportion(%) Shijiazhuang Baoshi Electronic Glass 39.70 Group Co., Ltd. 22,439,412.95 54.69 16,419,949.00 Total 22,439,412.95 54.69 16,419,949.00 39.70 X. External security and commitment events. On September 18 2006, the Group signed (contract number : 072006100101) mortgage contract with the Development Zone Branches of Shijiazhuang Commercial Bank, providing 18.8 million Yuan mortgage 92 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 security for Shijiazhuang Construction & Investment Co., Ltd, the mortgage property: the land located at NO. 8 Electronic Plant Street, Chang’an District(land No.CA-2-8-3), and the house located at No.8 Chang’an District(House Ownership No.1900027). 93 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 XI.The corresponding disclosure of changes in shareholder;s equity under new and Unit：RMB The corresponding disclosure of changes in shareholder;s equity under new and old acco The amounts to be disclosed in The amounts to be No. Name 2007 disclosed in 2006 difference Shareholders equity in December 2006 （ Former accounting rules） 200,203,659.05 200,203,659.05 Difference of long-term 1 equityinvestment Inclz; difference of long-tem equity investgment caused by enterprise merger under same control Other difference of long-term equity investment calculated with other equity method Investment property to 2 measured with fair value Provision for depreciation in former years caused by estimated expenses for assets 3 discard Resignation compensation in accordance with estimated The deterre liability confirmation subsidiary 4 standard -3,175,705.56 -3,175,705.56 confirmed i 94 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 5 Share delivery Reorganization liability in accordance with estimated 6 liability confirm standards 7 Enterprise merger Incl: Goodwill account valuecaused by enterprise merger under same control Goodwill depreciation reserveprovided in accordance with new rules Financial assets, measured by fair value and its change shall be reckoned into current 8 profit and loss Tradable financial assets, measured by fair value and its change shall be reckoned 9 into capital reserve Increased wquity cused by 10 financial instruments split Derivative financial 11 instruments 95 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 The dismiss were confir Standard fo 12 Income Tax 16,617,257.07 27,963,102.00 -11,345,844.93 statements. The subsidia need to pa retained pr 13 Minority shareholders equity 14,106,729.17 9,208,551.00 4,898,178.17 B and H shares lissue 14 company adjustment The subsidia need to pa equity attri the retaine 15 Other 21,239,376.60 21,239,376.60 Shareholders equity in January 1,2007(New accounting rules) 248,991,316.33 237,375,312.05 11,616,004.28 96 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 XII.Supplement Information： 1. The net asset income rate and the income of each share were accounted according to the No. 9 of Information Disclosure Rules for Companies which are Publicly Listed - Net Asset Income Rate and the Calculation and Disclosure of Each Share issued by China Securities Regulatory Commission: Return on net assets（%） Earnings per share Profit for the report Items period Fully diluted Weighted average Fully diluted Fully diluted(EPS) Business profit 18,843,034.48 0.08 0.08 0.05 0.05 Netprofit attributable to shareholder of common share of the company 10,339,042.87 0.04 0.04 0.03 0.03 Net profit after deductingnon-recurring gains and losses attributable to shareholder of commonshare of the cmpany 9,189,327.91 0.04 0.04 0.02 0.02 Note：Calculation method on return on equity and earnings per share： （1）Fully diluted return on equity Fully diluted return on equity=P÷E Of which:P refers to Net profit attributable to common shareholder of the Company or net profit after deducting non-recurring gains and losses attributable to common shareholder of the Cmpany ; E refers to net assets at the period-end attributable to common shareholders of the company. When the Company prepared and disclosed the consolidated statement, “ Net profit attributable to common shareholder of the Company” excluded minority interest, : net profit after deducting non-recurring gains and losses attributable to common shareholder of the Company” would be calculated based on consolidated net profit after deducting minority interests; deducting non-recurring gain and loss of parent company(ther company should consider influence of income tax) and non-recurring gain and loss of each subsidiary (the company should consider influence of income tax) and non-recurring gain and loss of each subsidiary (the company shluld consider influence of income tax); : net assets at the period-end attributable to common shareholders of the company” excluded minority interests. （2）Weighted average return on equity Weighted average return on equity=P/（E0＋NP÷2＋Ei×Mi÷M0－Ej×Mj÷M0±Ek×Mk÷M0） Of which：P REFERS TO Net profit attributable to common shareholder of the Company or netprofit after deducting non-recurring gains and losses attributable to common shareholder of the Company; NP refers to net profit attributable to common shareholders of the Company; EO refers to net assets at the period-begin attributable to common shareholders of the company; Ei refers to net assets increased due to issuance of new share ordebts for equity swap or attributable to common shareholders of the Company; Ej refers to net assets decreased due to repurchased or dividends in cash or attributable to common shareholders of the Company; Mo refers to the number of months during the report period; Mi refers to the number of months from the next month when net assets decreased to the end of the reort period; Ek refers to change of increase/decrease of net assets due to other transaction events; Mk refers to the number of months from the next month when other net assets changed the end of the report period. （3）Earnings per share-basis EPS=P÷S S=S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk Of which：P refers to net profit attributable to shareholders holding ordinary shares or net profitattributable to shareholders holding ordinary shares after deducting non-recurring gains and lossesl S weighted average number of ordinary shares issued out; S0 refers to total number of shares at the period-begin; S1 refers to the number of shares increased due to transferring capital reserve into share capital or dividend distribution of shares during the report period; Si referrs to the number of shares incueased due to issuance of new shares or debt for equity swap during the report period; Sj refers to the number of shares decreased due to stock repurchase during the report period; Sk refers to the number of split-share during the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the next monthe to the end of the report period for increase of sharesl Mj refers to the number of months from the next month to the end of the report period for decrease of shares. 97 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 （4）Earnings per share-diluted EPS-diluted=[P+（Potential diluted interests of ordinary shares recognized as expense－Transfer fee）× （1-income tax rate）]/（S0＋S1＋Si×Mi÷M0-Sj×Mj÷M0-Sk+weighted average amount of ordinary shares increased due to warrant , share options, convertible bood. Of whichA:P refers to net profit attributable to shareholders holding ordinary shares or net profit attributable to shareholders holding ordinary shares after deducting non-recurring gains and losses; SO refers to total number of shares at the peiod-begin; S1 refers to the number of shares increased due to transferring capital reserve into share capital or dividend distribution of shares during the report period; Si refers to the number of shares increased due to issuance of new shares or debt for equity swap during the report period; Sj refers to the number of shares decrease dut to stock repurchase during the report period; Sk refers to the number of split-share during the report period; M0 refers to the number of months during the report period; Mi refers to the number of months from the next month to the end of the report period for increase of shares; Mj refers to the number of months from the next month to the end of the report period for decrease of shares. The Company shall consider all influence on potential diluted interests of ordinary shares when the company calculated diluted earnings per share, till to minimum diluted EPS . 2. Items and amounts of non-operating profit or loss Items Amount （1）Gain/loss from disposal of non-current assets （2）Tax return and tax deduction exemption over examinationright or without formal document - （3）Government subsidy recorded into current profit and loss - （4）Capital occupied recorded into current profit and loss （5）Gain/loss from combination costs and the fair value oftheidentifiable net assets when the ecterprise combination - （6）Gain/loss from exchange of non-monetary assets - （7）Gain/loss from trust investment - （8）Provisions for impairment of assets due to act of God,suchasnature disaster. - （9）Gain/loss from debt restructuring - （10）Expense of enterprise restructuring - （11）Gain/Loss from that of trading price higher than fire value - （12）Net current profit and loss of subsidiaries under thesamecontrol from period-begin till combination date - （13）Gain/loss from projected liabilities without relationshipwith main operation - （14）Net amount of non-operating income and expense excepttheaforesaid items （15）Other items of non-recurrring gain and loss recognized by CSRC. 1,604,026.86 Total 1,604,026.86 Income tax 355,727.20 Gain and loss to minority shareholders 98,584.70 Influence on net profit due to net amount of non-recurring gainand loss 1,149,714.96 3.Adjusted items for profit and loss statement in 2006： 98 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Items Before adjustment Amount After adjustment I.Operating income 60,312,797.91 171,295,512.40 231,608,310.31 Less：Operating expenses 41,824,472.37 164,079,852.38 205,904,324.75 Operating tax and Surtax 710,227.11 439,513.62 1,149,740.73 Sales expenses 424,185.90 424,185.90 Management expenses 30,507,237.84 1,090,850.79 31,598,088.63 Fanincial expenses 7,577,717.81 51,884.00 7,629,601.81 Asset impairment losses -2,043,506.79 -2,043,506.79 Add：Other profit 6,776,146.40 -6,776,146.40 0 Gain/loss from change in fair value 0 Investment Income -84,732,237.41 18,325,641.44 -66,406,595.97 Incl：investment income from consolidated enterprises and joint venture enterprises 0 II.Operating profit -98,687,134.13 19,226,413.44 -79,460,720.69 Add：Non-Operating income 3,521,836.29 3,521,836.29 Subsidy income 0 Less0：Non-Operating expenses 119,885.09 119,885.09 Incl: non-current assets disposal losses 0 III.Total profit -95,285,182.93 19,226,413.44 -76,058,769.49 Less：Income tax expense 829,836.60 829,836.60 Gain/loss to minority shareholders -17,313,381.73 17,313,381.73 0 IV. Net profit -77,971,801.20 10,83,195.11 -76,888,606.09 Net profit attributable to owner’s parentcompany -77,971,801.20 -63,009,449.36 Gain/loss attributable to minority shareholders -13,879,156.73 -13,879,156.73 4.Adjusted items for profit and loss statement in 2006： Items Before adjustment Amount After adjustment I.Operating income 60,312,797.91 167,883,999.47 228,196,797.38 99 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 Less：Operating expenses 41,824,472.37 162,473,678.85 204,298,151.22 Operating tax and Surtax 710,227.11 58,927.50 769,154.61 Sales expenses 424,185.90 - 424,185.90 Management expenses 27,520,024.96 1,160,850.79 28,680,875.75 Fanincial expenses 1,515,471.55 51,884.00 1,567,355.55 Asset impairment losses 60,968,161.82 60,968,161.82 Add：Other profit 5,351,393.12 -5,351,393.12 - Gain/loss from change in fair value - Investment Income -75,073,927.41 75,073,927.41 - Incl：investment income from consolidated enterprises and joint venture enterprises II.Operating profit -81,404,118.27 12,893,030.80 -68,511,087.47 Add：Non-Operating income 3,521,836.29 3,521,836.29 Subsidy income - Less0：Non-Operating expenses 89,519.22 89,519.22 Incl: non-current assets disposal losses - III.Total profit -77,971,801.20 12,893,030.80 -65,078,770.40 Less：Income tax expense 829,836.60 829,836.60 Gain/loss to minority shareholders - IV. Net profit -77,971,801.20 12,063,194.20 -65,908,607.00 Net profit attributable to owner’s parentcompany Gain/loss attributable to minority - - shareholders 5，2006 Annual difference adjustment for net profit： Net profit in 2006（Original accounting standard） -77,971,801.20 The total amount influenced by retroactive adjustment items Incl：1. The financial assets measured by fair value and its changes included in the current profit or loss 2. long-term equity investment difference formed in enterprise merging under the same control 3. The credit difference of long-term equity investment accounted by using the equity method 100 Shijiazhuang Baoshi Electronic Glass Co., Ltd. Annual Report 2007 4. Investment losses not recognized by subsidiaries 5.Income tax -829,836.60 6. Profit and loss of minority shareholders in original -17,313,381.73 statement 7. Change the profit and loss of minority shareholders in consolidation scope Total number of influences from other items 19,226,413.44 Net profit in 2006 in simulation -76,888,606.09 Other items: 1. The related transaction difference formed by the subsidiary of the company Color Shell Company selling its shares in Xiaozi Company was retroactively adjusted as the investment income in 2006, which increased the profit in 2006 consolidated statement RMB 18,325,641.44 . 2. Retroactively adjust the dismiss welfare of dismissed workers, which increased the profit in 2006 consolidated statement RMB 900,772.00. 101