Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
FOSHAN HUAXIN PACKAGING CO., LTD.
ANNUAL REPORT 2018
March 2019
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Foshan Huaxin Packaging Co., Ltd. (hereinafter
referred to as the “Company”) hereby guarantee the factuality, accuracy and completeness of
the contents of this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Ren Xiaoping, the Company’s legal representative, Ding Guoqiang, the Company’s Chief
Financial Officer, and Luo Jing, the Company’s Financial Manager hereby guarantee that the
financial statements carried in this Report are factual, accurate and complete.
Except for the following directors, all the other directors attended in person the Board
meeting for the review of this Report and its summary.
Reason for not attending the Proxy entrusted to attend the
Name Office title
meeting in person meeting
Zhang Wenjing Independent Director For the reason of work Li Jun
Any outlook for the Company’s development in 2019 or other forward-looking statements
mentioned in this Report and its summary shall NOT be considered as promises to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.
Risks facing the Company have been explained in detail in “Part IV Operating Performance
Discussion and Analysis” herein.
The Company has no final dividend plan, either in the form of cash or stock, for the
Reporting Period.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Table of Contents
Part I Important Notes, Table of Contents and Definitions ........................................................... 2
Part II Corporate Information and Key Financial Information ................................................... 5
Part III Business Summary ............................................................................................................. 10
Part IV Operating Performance Discussion and Analysis ........................................................... 14
Part V Significant Events ................................................................................................................ 29
Part VI Share Changes and Shareholder Information ................................................................. 61
Part VII Preferred Shares ............................................................................................................... 68
Part VIII Directors, Supervisors, Senior Management and Staff ............................................... 69
Part IX Corporate Governance ...................................................................................................... 79
Part X Corporate Bonds .................................................................................................................. 87
Part XI Financial Statements .......................................................................................................... 88
Part XII Documents Available for Reference .............................................................................. 221
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Definitions
Term Definition
Foshan Huaxin Packaging Co., Ltd. and its consolidated subsidiaries, except
The “Company”, “FSHXP” or “we”
where the context otherwise requires
China Paper China Paper Corporation (the actual controller of the Company)
China Chengtong China Chengtong Holdings Group Ltd. (the ultimate controller of the Company)
Huaxin Development Foshan Huaxin Development Co., Ltd.
Hongta Renheng Zhuhai Hongta Renheng Packaging Co., Ltd.
Zhuhai Huafeng Zhuhai Huafeng Paper Co., Ltd.
Golden Pheasant Chemical Zhuhai Golden Pheasant Chemical Co., Ltd.
Huaxin Color Printing Huaxin (Foshan) Color Printing Co., Ltd.
Kunshan Focai Kunshan Focai Packaging & Printing Co., Ltd.
Zhejiang Hongta Zhejiang Hongta Renheng Packaging Technology Co., Ltd.
Chengtong Finance China Chengtong Finance Corporation Ltd.
The “Reporting Period” or “Current Period” The period from 1 January 2018 to 31 December 2018
Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB, RMB’0,000
of Renminbi
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Huaxin Packaging-B Stock code 200986
Stock exchange for stock
Shenzhen Stock Exchange
listing
Company name in Chinese 佛山华新包装股份有限公司
Abbr. 华新包装
Company name in English (if
Foshan Huaxin Packaging Co.,Ltd
any)
Abbr. (if any) FSHXP
Legal representative Ren Xiaoping
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic Development Zone, Nanzhuang
Registered address
Town, Chancheng District, Foshan, Guangdong Province, P.R.China
Zip code 528000
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic Development Zone, Nanzhuang
Office address
Town, Chancheng District, Foshan, Guangdong Province, P.R.China
Zip code 528000
Company website http://www.fshxp.com
Email address hxbz@chinapaper.com.cn
II Contact Information
Board Secretary Securities Representative
Name Ding Guoqiang Shi Hui
2/F, Block 7, 3 Keyang Road, Luoge Park, 2/F, Block 7, 3 Keyang Road, Luoge Park,
Chancheng Economic Development Zone, Chancheng Economic Development Zone,
Address
Nanzhuang Town, Chancheng District, Nanzhuang Town, Chancheng District,
Foshan, Guangdong Province, P.R.China Foshan, Guangdong Province, P.R.China
Tel. 0756-8666975 0756-8666978
Fax 0756-8666922 0756-8666922
Email address dinggq@htrh-paper.com shih@htrh-paper.com
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for
Securities Times, Ta Kung Pao
information disclosure
Website designated by CSRC for publication of this
http://www.cninfo.com.cn
Report
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic
Place where this Report is lodged Development Zone, Nanzhuang Town, Chancheng District, Foshan,
Guangdong Province, P.R.China
IV Changes to Company Registered Information
Unified social credit code No change
Change to principal activity of the
No change
Company since going public (if any)
Every change of controlling shareholder
No change
since incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Pan-China Certified Public Accountants LLP
Office address 6/F, 128 Xixi Road, Xihu District, Hangzhou City, Zhejiang Province, China
Accountants writing signatures Li Qinglong and Liu Jingya
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2018-over-2017
2018 2017 2016
change (%)
Operating revenue (RMB) 3,683,004,543.50 3,583,157,646.37 2.79% 3,607,758,904.01
Net profit attributable to the listed
-2,814,965.92 18,637,865.97 -115.10% 61,324,088.11
company’s shareholders (RMB)
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Net profit attributable to the listed
company’s shareholders before -36,089,244.17 12,337,519.04 -392.52% 27,820,866.82
exceptional items (RMB)
Net cash generated from/used in
393,465,394.72 -21,910,921.08 1,895.75% 409,111,111.08
operating activities (RMB)
Basic earnings per share
-0.01 0.04 -125.00% 0.12
(RMB/share)
Diluted earnings per share
-0.01 0.04 -125.00% 0.12
(RMB/share)
Weighted average return on equity Down by 1.08 perce
-0.14% 0.94% 3.13%
(%) ntage points
Change of 31
December 2018 over
31 December 2018 31 December 2017 31 December 2016
31 December 2017
(%)
Total assets (RMB) 5,794,694,744.15 5,426,368,352.69 6.79% 6,182,737,808.93
Equity attributable to the listed
1,970,946,820.29 1,982,859,436.21 -0.60% 1,980,395,170.24
company’s shareholders (RMB)
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 791,489,361.74 955,666,979.18 966,386,108.12 969,462,094.46
Net profit attributable to the listed
-10,204,661.39 -5,095,101.40 5,007,777.78 7,477,019.09
company’s shareholders
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Net profit attributable to the listed
company’s shareholders before -11,700,027.27 -7,503,716.60 4,637,788.37 -21,523,288.67
exceptional items
Net cash generated from/used in
25,982,578.72 42,810,407.39 316,624,480.08 8,047,928.53
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2018 2017 2016 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance 42,435.21 275,303.86 -690,044.71
write-offs)
Government subsidies charged to current
profit or loss (exclusive of government
subsidies given in the Company’s ordinary
17,519,293.30 13,791,511.79 26,022,524.47
course of business at fixed quotas or
amounts as per the government’s uniform
standards)
Capital occupation charges on non-financial
enterprises that are charged to current profit 14,745,309.37 22,334,467.56
or loss
Gain equal to the amount by which
investment costs for the Company to obtain
subsidiaries, associates and joint ventures
21,561,238.54
are lower than the Company’s enjoyable fair
value of identifiable net assets of investees
when making investments
Gain or loss on fair-value changes in trading
financial assets and liabilities & investment
income from disposal of trading financial
assets and liabilities and available-for-sale 12,578,644.03 1,326,459.63 5,536,398.42
financial assets (exclusive of effective
portion of hedges that arise in the
Company’s ordinary course of business)
Non-operating income and expense other
-2,043,196.49 -24,429,364.21 -263,588.90
than the above
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Other gains and losses that meet the
definition of exceptional gain/loss
Less: Income tax effects 761,426.39 -661,998.98 2,645,887.81
Non-controlling interests effects (net
15,622,709.95 70,872.49 16,790,647.74
of tax)
Total 33,274,278.25 6,300,346.93 33,503,221.29 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
√ Applicable □ Not applicable
Item Amount involved (RMB) Reason
Other gains and losses that
meet the definition of 7,800,232.76 Interest income from structured deposits
exceptional gain/loss
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
The Company specializes in the R&D, production and sales of high-end coated ivory board, chemicals for paper making and color
printing products. The businesses are described as follows:
(I) High-end coated ivory board
The ivory board is a product of the Company’s main business, as a category of ivory board, is widely applied in various fields such as
cigarette packaging, food packaging, medicine packaging, cosmetic packaging and living supplies packaging, which is an important
source of the Company's major business income. The R&D, production and sales of the ivory board is mainly undertaken by Zhuhai
HongtaRenheng Packaging Co., Ltd. and Zhuhai Huafeng Paper Co., Ltd. HongtaRenheng is the core high-end packaging board
platform under Huaxin Packaging which is based in domestic and overseas high-end packaging markets of cigarette and food and
provides "personalized" products and services for customers with "differentiation" business strategy. The Company now has three
coated ivory board production lines, and the annual production capacity around 600,000 tons. The Company's products can be
divided into the following categories:
1. Coated ivory board for cigarette packaging of company’s dominant product, is widely used in the high-end cigarette packaging
market. The coated ivory board for cigarette packaging produced by HongtaRenheng takes up a dominant position in the domestic
cigarette packaging field. It represents the highest level of coated ivory board quality in China. It has won a Golden Award at China’s
International Paper & Paper Product Brands Exhibition, and the top award of the Chinese science and technology community—the
first-class State Science and Technology Advancement Award. The anti-counterfeit coated ivory board with color fiber and
true-color fiber etc.—a technology that is independently developed by the Company and has been granted the national invention
patent of China—has been successfully applied in the packaging of a series of cigarettes in the “Hongta Group” and
“HongyunHonghe Group" brands to combat counterfeiting from the packaging materials, reaching the significant anti-counterfeit
results of “easily identifiable but difficult to copy”. Currently, a new type of ivory board for cigarette packaging is at the stage of trial
production.
2. The ivory boards for liquid food packaging is an important development direction of the Company. HongtaRenheng is the first to
break the foreign technological monopoly, by independently developing the sterile paper for packaging of liquid milk, fruit juice,
herbal tea and other drinks, effectively substituting imported products. The series of food packaging products such as anti-oil food
grade coated board and high-end paper cup have been recognized by well-known catering groups such as McDonald’s after they are
put into the market.
3. The high-end commercial ivory board papers aim to meet the personalized demands of customers. They are widely applied in the
segmented packaging market fields like the high-end medicine, cosmetics, and daily necessities. The anti-counterfeit coated ivory
paper with personalized identification code independently developed by the Company and for which it has been granted the invention
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
patent has been successfully applied in the anti-counterfeit packaging of the high-end products like high-end medicine and cosmetics,
which does not only solve the difficulties posed by impact from counterfeit and shoddy products for customers at the source, but also
effectively reduces the customer’s anti-counterfeit costs and fake product crackdown expanses and win high trust from the market.
(II) Paper making business
Chemicals for paper making is business to extend the paper-making industry chain by the Company, the R&D, production and sales
of which are mainly undertaken by Zhuhai Jinji Chemical Co., Ltd., a subsidiary of the Company, which mainly supplies the
carboxylic butadiene-styrene latex, styrene-acrylic latex and calcium carbonate of domestically first-class quality.
(III) Color printing business
Color printing business is an important industrial linkage supporting business of the Company, which covers designing and
manufacturing packaging materials and providing packaging solutions for customers. This business is mainly undertaken by Huaxin
(Foshan) Color Printing Co., Ltd.. The Company now owns the offset, flexo and intaglio printing workshop. Main products include
color boxes, various labels (paper label, in-mold label and sticker), barcode printing, brochure, books and periodicals involved in
wide terminal consumption industry.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major assets Main reason for significant changes
Up 7888%. The Company appointed a director to investee Chengtong Finance during the
Reporting Period, thus having significant influence in the joint venture’s substantial
Equity assets decision-making. Therefore, the accounting of the Company’s investment in Chengtong
Finance changed from an available-for-sale financial asset to a long-term equity
investment measured at the equity method.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
(I) Backed by a central government-owned enterprise
The ultimate controller of the Company, China Chengtong Holdings Group Ltd. (China Chengtong), authorized by the State-owned
Assets Supervision and Administration Commission of the State Council to perform relevant duties of the investor on behalf of the
State Council, is listed among the first batch of pilot enterprises by the State-owned Assets Supervision and Administration
Commission to construct the standard board of directors and the first pilot state-owned asset management Company. In 2016, China
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Chengtong was approved to be the pilot state-owned capital operation Company, and its main business includes equity operation,
financial services, asset management, integrated logistics services, production materials trading, forestry-pulp paper production
development and utilization etc.. It is also the only large-scale central enterprise approved by the State-owned Assets Supervision and
Administration Commission of the State Council to focus on production, development and utilization of forestry, wood pulp and
paper.
As a pilot enterprise of the state-owned asset management companies, China Chengtong has built a platform for the state-owned
assets restructuring and capital operation in accordance with prevailing market principles, explored the central enterprise’s non-main
business and a special path for the NPA’s market-oriented specialized operations and disposal, and reorganized and integrated a
number of subsidiaries subordinated to central enterprises by means of trusteeship and the transfer of state-owned property rights.
In 2016, China Chengtong was entrusted by the State-owned Assets Supervision and Administration Commission of the State
Council to participate in the diversification reform of Sinopec International Petroleum Exploration and Production Corporation,
managed China Railway Materials Co., Ltd. in the form of trusteeship, and invested Guoyuan Coal Asset Management Co., Ltd.. As
approved by the State Council and entrusted by the State-owned Assets Supervision and Administration Commission, China
Chengtong, as the main sponsor, cooperated with nine central enterprises, local state-owned enterprises and financial institutions to
jointly set up the largest domestic private equity investment fund with a total investment of RMB 350 billion Yuan -- The China
State-Owned Enterprise Restructuring Fund. Meanwhile, Chengtong Fund Management Co., Ltd. was also established to take
responsibility for the implementation of relevant fund management affairs.
China Chengtong is aiming at improving the state-owned capital’s operation efficiency, serving the national strategy, abiding by the
law of the market, and building a state-owned capital operation platform featuring the market-oriented operation and professional
management. In addition, it will promote the rational flow and optimized of the state-owned capital and optimizing the configuration
through equity operation, value management, and flexible transfer etc.. so as to form an institutional mechanism and operational
model that meet various functional requirements for corresponding state-owned capital operation.
(II) Technological innovation advantage
The Company persists in taking "scientific and technological innovation" as the core power that drives enterprise development. The
Company has over 20 years of technical experience in the production of high-end coated ivory board. Over the years, the Company
has developed anti-counterfeit products such as the coated ivory board with color fiber and true-color fiber and formed strong
anti-counterfeit product innovation capability. Meanwhile, the Company has personalized product technique innovation capability
and has developed the "anti-counterfeit coated ivory paper with personalized identification code" which can attain anti-counterfeiting
according to the customer's personalized demand and solve the difficulties posed by impact from counterfeit and shoddy products for
customers at the source. Currently, the Company is developing quite a few individualized products featuring new technologies. In
addition, to ensure safe, green and clean products, the Company has managed to effectively control toxic and harmful substances
such as VOCS in its products through continuous commitment of R&D resources and tests.
By means of continuous research and development, the Company has obtained various patents, providing the most important
technical support and guarantee for the advancement of product competitiveness. As of the end of the Reporting Period, the
Company had been granted 50 duly authorized patents, including 24 invention patents and 26 utility models. There are 18 pending
patents, including 12 invention patents and 6 utility models.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
In recent years, the Company has made unremitting effort to promote its subsidiaries’ R&D system improvement:
1. HongtaRenheng was re-recognized as a "National High-tech Enterprise" in 2018. It has established a technology R&D center
equipped with completed devices, and been recognized by the Municipal and Provincial Technology Centers, Engineering R&D
Center and Guangdong Provincial Innovation Pilot Enterprise; in 2016, the "Nature Color Packaging Paper Project" of
HongtaRenheng won second-class Science and Technology Advancement Award issued by China National Light Industry Council.
Meanwhile, the company also participated in formulating corresponding national and industrial standards including Coated Paper and
Board-Coated Ivory Board and Quality Requirements and Test Methods for Intaglio Printed Matter. In 2018, HongtaRenheng set up
the New Materials Research Institute by integrating R&D resources and committing more such resources in a bid to remaining
technologically advanced in the area of new materials.
2. In 2016, the subsidiary Zhuhai Huafeng Paper Co., Ltd. was recognized as a "National High-tech Enterprise", as well as by the
Municipal and Provincial Technology Centers and Engineering R&D Centers.
3. The subsidiary Zhuhai Golden Pheasant Chemical Co., Ltd. was re-recognized as a "National High-tech Enterprise" in 2016, as
well as by the Municipal and Provincial Engineering Centers.
4. The subsidiary Huaxin Color Printing was re-recognized as a "National High-tech Enterprise" in 2018, as well as by the Foshan
Enterprise Technology Center.
All the Company’s main subsidiaries have been recognized as "National High-tech Enterprise" and were granted the 10% relief from
income tax in three successive years.
(III) Quality and brand advantage
HongtaRenheng has the top award of the Chinese science and technology community—the first-class State Science and Technology
Advancement Award. The high-end coated ivory board produced by HongtaRenheng has excellent printing performance. Dominant
product—coated ivory board for tobacco packaging, is widely used in the high-end tobacco packaging market, takes up a dominant
position in high-end tobacco packaging field. "Hongta" coated ivory board takes up a leading position in domestic and overseas ivory
board industry and leads the development of production and technology of domestic middle and top grade coated ivory board.
"Hongta" coated ivory board represents the highest level of production, technology and product of coated ivory board in China.
(IV) Management advantage
“The fittest survives. That’s why we must be open-minded and innovative for survival and development.” is the Company’s
management philosophy. Upon more than two decades of accumulation, the Company has possessed a large pool of high-quality
talent in technological innovation and management, as well as formulated a corporate culture that is well accepted by its key
personnel. In 2018, reforms were implemented in terms of supply chain management, human resources and so on, which have
produced positive results.
(V) Superiority in environment protection
Hongta Renheng’s boilers are using biomass molding fuel (BMF). Its emission reduction through BMF program is China’s biggest
biomass boiler program. BMF, a clean energy which releases zero harmful emissions to the environment, is used for 70% of Hongta
Renheng’s energy consumption, which can help bring a nearly 70% reduction in carbon emission during the papermaking process, as
well as a reduction of 60,000~100,000 tons of carbon dioxide emission every year. BMF has helped create remarkable superiority in
emission reduction and environment protection.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part IV Operating Performance Discussion and Analysis
I Overview
(I) Market Environment
In 2018, affected by China-US trade conflicts and exchange rate fluctuations, macroeconomic index fell and the packaging and
paper-making industries that are highly associated with macro economy were impacted at different degrees. The market end demands
showed great decrease and the supply side continued the trend of 2017 with new increases instead of any decrease in 2018. The
capacity that could be placed in market increased, while the whole industry witnessed oversupply. As a result, the paper-making
industry took on an overall trend of narrowed profit margins.
(II) Company Performance during the Reporting Period
In 2018, based on the core concepts of “four news” and “strictness, practicality, transparency and rapidness”, the Company stuck to
three “consistencies”, aimed at “five new forces”, sought “four breakthroughs” and centered around “three decreases, one increase
and one control” to keep strengthening party building, strive to explore strategic reforms, proactively expand external markets, fully
enhance the internal management level, continue to refine the institutional reform, increase R&D investment and seek the increase of
operating profits.
The competition was fierce with unbalanced supply and demand development in the ivory board industry in which the Company is
engaged and related industries. The production and operation of the ivory board segment were basically stable. In the whole year, the
production reached 513,000 tons, which was an increase of 15% from the previous year; the sales volume reached 483,000 tons, an
increase of 2.2% from the previous year; and the price rose by 6.63% from the previous year, which was an increase against the trend.
In respect of the cost end, affected by the persistently high price of raw wood pulp, production costs increased substantially, resulting
in big YOY decrease in the profits of the paper segment and causing losses. In terms of the printing segment, the total operating
revenue and profits increased by 15% and 561% respectively from the previous year as a result of proactive attraction to external
quality resources and diversification of the industrial chain. In the chemical industry, latex sales volume increased by 3% from the
previous year and revenue rose by 2% from the previous year due to persistent optimization of production techniques, and the
operating budget goal established at the beginning of the year was achieved. Despite the good performance of the printing and
chemical segments, the whole-year budget goal was not achieved by the Company as a whole due to the losses in the paper segment.
For 2018, the Company recorded operating revenue of RMB3,683 million, a net profit attributable to the listed company’s
shareholders of RMB-2.81 million, and net cash generated from operating activities of RMB393.47 million. As at 31 December 2018,
total assets stood at RMB5,794.69 million and equity attributable to the listed company’s shareholders of RMB1,970.95 million.
(III) Management Measures Taken within the Reporting Period
1. Reform the organization structure and optimize remuneration distribution and talent promotion mechanism
Aimed at “reducing hierarchies, grouping functions and flattening management”, the Company adjusted its internal organization
structure to serve the purpose of matching staff abilities with position requirements and established a performance-based position
performance and remuneration system. The reform on the Company’s existing remuneration system was carried out in accordance
with the motivating distribution principle of “focusing on performance, awarding diligence and punishing laziness; encouraging
creation and increasing profits”. The career promotion channel was established and a comprehensive review on the technical, skilled
and management professionals at each hierarchy would be conducted in proportion annually to guide staff to be concerned with the
improvement in their skills and abilities, effectively motivate and stabilize the staff team and serve the future strategic development
of the Company.
2. Reform the marketing system and inspire the sales potential
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
In accordance with the thinking of “new era and new marketing”, the Company carried out an all-round reform on its marketing
system to highlight the core function of marketing. A brand new performance appraisal system was implemented to inspire staff to
develop new orders; a new mechanism of bottom out, awarding diligence and punishing laziness was established to keep improving
corporate competitiveness.
3. Practice the concept of “four newness” and strictly control period costs
Centering around the concept of “four newness” of “new measures for reforms, new methods for management, new thinking for
operations and new mechanisms for activation”, the Company implemented the outsourcing of warehousing and logistics in its
factory area to save and reduce logistics costs through a professional warehousing and logistics outsourcing service mode. The
Company expanded financing channels and financing modes to increase the fund utilization efficiency and control the risk of
exchange rate fluctuations, resulting in an obvious YOY decrease in financial costs.
4. Persist in technology-orientation and intensify the creation of profits through R&D
The Company adjusted the organization of the Technical R&D Department to make the function of new product development and the
function of routine process maintenance run independently. It persisted in the goal of technology-orientation, intensified the core
function of technical R&D and motivated the vitality of innovation and profits creation. So far there have been more than ten types of
new product projects being developed, with breakthroughs made in some products.
II Core Business Analysis
1. Overview
See “I Overview” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2018 2017
As % of total As % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 3,683,004,543.50 100% 3,583,157,646.37 100% 2.79%
By operating division
Manufacturing 3,588,986,332.24 97.45% 3,387,712,195.06 84.92% 5.94%
Other 94,018,211.26 2.55% 195,445,451.31 15.08% -51.90%
By product category
Ivory board 2,948,225,373.27 80.05% 2,788,623,257.46 72.68% 5.72%
Presswork 300,249,287.80 8.15% 255,573,322.07 7.28% 17.48%
Latex 340,511,671.17 9.25% 343,515,615.53 4.96% -0.87%
Other 94,018,211.26 2.55% 195,445,451.31 15.08% -51.90%
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
By operating segment
Domestic 3,130,591,132.61 85.00% 3,105,722,094.04 84.17% 0.80%
Overseas 552,413,410.89 15.00% 477,435,552.33 15.83% 15.70%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Is the Company subject to any disclosure requirements for special industries?
No.
Unit: RMB
YoY change in YoY change in
Operating Gross profit YoY change in
Cost of sales operating revenue gross profit
revenue margin cost of sales (%)
(%) margin (%)
By operating division
Manufacturing 3,588,986,332.24 3,290,603,851.05 8.31% 5.94% 11.60% -4.65%
By product category
Ivory board 2,948,225,373.27 2,798,619,637.59 5.07% 5.72% 14.70% -7.43%
Presswork 300,249,287.80 233,559,654.68 22.21% 17.48% 6.84% 7.75%
Latex 340,511,671.17 258,424,558.78 24.11% -0.87% -10.84% 8.48%
By operating segment
Domestic 3,036,572,921.35 2,742,909,279.61 9.67% 4.34% 9.81% -4.50%
Overseas 552,413,410.89 547,694,571.44 0.85% 15.70% 21.54% -4.76%
Core business data of the prior year restated according to the changed statistical caliber for the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2018 2017 Change (%)
Unit sales 0,000 tons 48.31 47.31 2.11%
Paper-making Output 0,000 tons 51.3 44.61 15.00%
Inventory 0,000 tons 4.82 3.77 27.85%
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
16
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2018 2017
Operating
Item As % of total cost As % of total cost Change (%)
division Cost of sales Cost of sales
of sales (%) of sales (%)
Manufacturing 3,290,603,851.05 98.04% 2,948,469,093.13 94.86% 11.60%
Other 65,742,861.68 1.96% 159,896,380.04 5.14% -58.88%
Unit: RMB
2018 2017
Product category Item As % of total cost As % of total cost Change (%)
Cost of sales Cost of sales
of sales (%) of sales (%)
White cardboard 2,798,619,637.59 83.38% 2,440,020,977.87 78.50% 14.70%
Presswork 233,559,654.68 6.96% 218,608,477.34 7.03% 6.84%
Latex 258,424,558.78 7.70% 289,839,637.92 9.32% -10.84%
Other 65,742,861.68 1.96% 159,896,380.04 5.14% -58.88%
Note:
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
Kunshan Focai Packaging & Printing Co., Ltd., the subsidiary of the Company, was cancelled in the Reporting Period, no more
included into the scope of the consolidated financial statements.
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 619,276,954.35
Total sales to top five customers as % of total sales of the
16.81%
Reporting Period (%)
17
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Total sales to related parties among top five customers
0.00%
as % of total sales of the Reporting Period (%)
Information about top five customers:
Sales revenue contributed for
No. Customer As % of total sales revenue (%)
the Reporting Period (RMB)
1 Customer A 256,868,748.22 6.97%
2 Customer B 95,460,896.85 2.59%
3 Customer C 91,168,325.20 2.48%
4 Customer D 88,525,346.53 2.40%
5 Customer E 87,253,637.55 2.37%
Total -- 619,276,954.35 16.81%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 1,705,167,566.62
Total purchases from top five suppliers as % of total
50.28%
purchases of the Reporting Period (%)
Total purchases from related parties among top five
suppliers as % of total purchases of the Reporting Period 19.61%
(%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
1 China Paper Corporation 665,169,020.33 19.61%
2 Supplier B 345,571,770.48 10.19%
3 Supplier C 275,747,857.34 8.13%
4 Supplier D 230,376,071.10 6.79%
5 Supplier E 188,302,847.37 5.55%
Total -- 1,705,167,566.62 50.28%
Other information about major suppliers:
□ Applicable √ Not applicable
3. Expense
Unit: RMB
18
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2018 2017 Change (%) Reason for any significant change
Selling expense 169,422,183.20 182,923,723.55 -7.38%
Administrative expense 113,073,452.18 120,342,343.74 -6.04%
Finance costs 89,130,763.80 121,627,924.65 -26.72%
R&D expense 32,784,184.94 5,134,464.54 538.51%
4. R&D Expense
√ Applicable □ Not applicable
In 2018, the Company continued to intensify product structure adjustment, strengthen technological innovation, and develop new
products to transform into new generation according to the situation of domestic economy and industrial development, based on
market needs, with the purpose of improving the added value of products.
The product structure of the Company was further upgraded towards high-end and high added value products to enhance the market
competitiveness of the products and facilitate the significant improvement of economic benefit. The Company continued to lead the
development of ivory board industry with product quality and technological innovation.
To proactively respond to the general trend of restricting plastic packages around the world, the Company has input lots of labor and
resources to develop plastic substitute products. Among those products, the “film-free eco paper cup card” has passed the appraisal
for scientific achievements. The project has taken the lead in the production of film-free eco paper cup cards with inner-coating in the
ivory board machine and the technology is in the “domestic leading position”.
At the same time, the Company continued to improve product quality and reduce costs through research and development of new raw
and auxiliary materials instead and innovation of process and technology. As a result, the production and manufacturing cost was
controlled effectively and significant economic benefits were achieved.
By the end of the Reporting Period, the Company has obtained 50 valid authorized patents, 24 of which were patents for invention,
and the rest 26 were utility model; 18 patents in the process of application, where there were 12 patents for invention in the process
of application and 6 utility model in the process of application, improved products’ comprehensive competitiveness of the Company.
Details about R&D expense:
2018 2017 Change (%)
Number of R&D personnel 126 143 -11.89%
R&D personnel as % of total
7.50% 7.34% 0.16%
employees
R&D expense (RMB) 120,065,948.12 113,827,129.75 5.48%
R&D expense as % of operating
3.26% 3.18% 0.08%
revenue
Capitalized R&D expense
9,053,412.40 19,038,707.23 -52.45%
(RMB)
Capitalized R&D expense as %
7.54% 16.73% -9.19%
of total R&D expense
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
19
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
5. Cash Flows
Unit: RMB
Item 2018 2017 Change (%)
Subtotal of cash generated from
4,002,240,424.49 3,582,514,948.89 11.72%
operating activities
Subtotal of cash used in
3,608,775,029.77 3,604,425,869.97 0.12%
operating activities
Net cash generated from/used in
393,465,394.72 -21,910,921.08 1,895.75%
operating activities
Subtotal of cash generated from
258,543,412.90 769,936,987.88 -66.42%
investing activities
Subtotal of cash used in
572,551,931.82 431,123,041.42 32.80%
investing activities
Net cash generated from/used in
-314,008,518.92 338,813,946.46 -192.68%
investing activities
Subtotal of cash generated from
2,053,749,572.93 1,817,952,730.48 12.97%
financing activities
Subtotal of cash used in
2,263,808,296.08 2,227,191,111.64 1.64%
financing activities
Net cash generated from/used in
-210,058,723.15 -409,238,381.16 48.67%
financing activities
Net increase in cash and cash
-126,239,226.52 -102,851,789.07 -22.74%
equivalents
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
(1) Net cash flows from operating activities was RMB393.47 million in 2018, which increased RMB415.38 million from last year
mainly due to the increase of the sales of the Company in the Reporting period with the increase of cash of RMB341.69 million from
last year from selling products and providing labor services but the decrease of various taxes of RMB60.64 million from last
year(mainly the decrease of VAT)
(2) Net cash flows from investing activities was RMB-314.01 million in 2018, which decreased RMB652.82 million from last year
mainly due to the recovering of principal and interests of borrowing of related parities of RMB0.516 billion in the last Reporting
Period.
(3) Net cash flows from financing activities was RMB-210.06 million in 2018, which increased RMB199.18 million from last year
mainly because eth Company cashed the due medium term note of RMB200 million in the Reporting Period.
Reason for any big difference between the net operating cash flow and the net profit for this Reporting Period
√ Applicable □ Not applicable
During the Reporting Period, the production and sales volume of the Company increased, and the increase of the operating revenue
resulted in the increase of the net cash flows from operating activities from last year. But due to the largely increase of the costs, the
operating profits decreased from the year earlier.
20
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
Amount As % of total profit Source/Reason Exceptional or recurrent
Long-term equity investment
income calculated by equity
Investment income 18,008,673.27 -32.26% method (joint venture) and Recurrent
income from financial assets
available for sale
Gain/loss on
Financial liabilities at fair
changes in fair 2,394,879.25 -4.29% Exceptional
value through profit or loss
value
Bad debt and inventory
Asset impairments 18,009,523.05 -32.27% Exceptional
falling price provisions
Balance between carrying
Non-operating value and net assets when
32,719,902.12 -58.62% Exceptional
income converting the equity
method
Abnormal factory shutdown
Non-operating
8,259,701.51 -14.80% losses and abandonment Exceptional
expense
losses
Asset disposal Gains/losses of fixed assets
1,390,311.65 -2.49% Exceptional
income disposal
Other income 11,229,258.30 -20.12% Governmental subsidy Exceptional
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2018 31 December 2017
Change in Reason for any significant
As % of total As % of total
Amount Amount percentage (%) change
assets assets
133,983,939.7 Decreased by
Monetary capital 2.31% 287,652,868.65 5.30%
3 2.99%
Accounts 781,215,643.8 Increased by
13.48% 730,130,223.06 13.46%
receivable 9 0.02%
1,022,167,373. Increased by
Inventories 17.64% 586,179,348.11 10.80%
51 6.84%
21
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Investment Decreased by
30,763,683.73 0.53% 32,092,356.29 0.59%
property 0.06%
Long-term equity 662,590,158.0 Increased by
11.43% 8,294,365.17 0.15%
investments 0 11.28%
2,178,817,683. 2,302,301,389. Decreased by
Fixed assets 37.60% 42.43%
33 40 4.83%
Construction in Decreased by
38,735,958.38 0.67% 39,315,774.19 0.72%
progress 0.05%
Short-term 862,776,823.8 Decreased by
14.89% 897,426,244.52 16.54%
borrowings 6 1.65%
Long-term 100,000,000.0 Decreased by
1.73% 200,000,000.00 3.69%
borrowings 0 1.96%
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on Cumulative
Impairment
fair-value fair-value Purchased in Sold in the
Beginning allowance for Ending
Item changes in the changes the Reporting Reporting
amount the Reporting amount
Reporting charged to Period Period
Period
Period equity
Financial assets
3.
Available-for-sa -627,355,141.0
627,643,841.04 288,700.00
le financial 4
assets
Subtotal of -627,355,141.0
627,643,841.04 288,700.00
financial assets 4
Total of the -627,355,141.0
627,643,841.04 288,700.00
above 4
Financial
2,394,879.25 -2,394,879.25 0.00
liabilities
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
Reason for significant changes to the measurement attributes of the major assets and influences on its business performance and
financial conditions in the Reporting Period
In the Reporting Period, according to the Proposal of Electing Ding Guoqiang as the Company’s Director reviewed and approved by
The 1st Extraordinary General Meeting of 2018 of China Chengtong Finance Corporation Ltd in 2018, the CFO of the Company Ding
22
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Guoqiang was qualified for the Director of China Chengtong Finance Corporation Ltd, and will take office from the approval date of
qualification for directors of Beijing Banking Bureau. In accordance with the Approval Beijing Banking Bureau about Examination
of Ding Guoqiang’s Qualification for the Director of China Chengtong Finance Corporation Ltd (JYJX[2018] No. 531) by Beijing
Supervision Bureau of China Banking Regulatory Commission, Ding Guoqiang was qualified for the Director of China Chengtong
Finance Corporation Ltd on 24 October 2018. The Company designated a director in China Chengtong Finance Corporation Ltd, and
had the right to participate in decision-making of the Finance and operating policies of China Chengtong Finance Corporation Ltd.
The Company had a significant influence on China Chengtong Finance Corporation Ltd, so with regard to the investment in China
Chengtong Finance Corporation Ltd, it can convert the financial assets available for sale to long-term equity investment calculated by
equity method.
3. Restricted Asset Rights as at the Period-End
RMB305.9713 million of total assets of the Company was restricted, of which other current assets was RMB300.00 million (fixed
deposits for pledge guarantee); monetary assets was RMB5,971,300 (L/G cash deposits).
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Major Equity Investments Made in the Reporting Period
□ Applicable √ Not applicable
3. Major Non-Equity Investments Ongoing in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period
23
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
□ Applicable √ Not applicable
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect on the Company’s net profit:
Unit: RMB
Relationship Principal Registered Operating Operating
Name with the activity Total assets Net assets Net profit
capital revenue profit
Company
Zhuhai
High-grade
Hongta
coated white
Renheng
cardboard, 600,000,000. 4,833,610,77 2,669,129,82 3,391,466,29 -108,418,625 -104,530,265
Packaging Subsidiary
latex and 00 9.51 6.01 1.03 .93 .78
Co., Ltd.
calcium
(consolidated
carbonate
)
Zhuhai
Hongta
High-grade
Renheng 600,000,000. 4,073,699,93 2,620,254,15 2,332,201,21 -67,139,270. -64,719,737.
Subsidiary coated white
Packaging 00 3.83 7.24 8.45 76 36
cardboard
Co., Ltd.
(alone)
Zhuhai
High-grade
Huafeng 984,559,331. 2,656,411,97 1,000,375,46 2,132,710,19 -53,784,966. -49,534,013.
Subsidiary coated white
Paper Co., 06 1.36 8.32 9.75 12 34
cardboard
Ltd.
Zhuhai
Golden Latex and
69,271,940.0 278,529,227. 180,025,780. 463,326,859. 36,858,123.7 32,445,872.2
Pheasant Subsidiary calcium
0 13 51 91 8 4
Chemical carbonate
Co., Ltd.
Huaxin Subsidiary Color 96,895,605.1 407,437,871. 228,320,219. 310,467,280. 15,743,178.4 13,690,939.8
24
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(Foshan) packaging 4 53 16 14 2 8
Color printing
Printing Co.,
Ltd.
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
How subsidiary was obtained or disposed Effects on overall operations and operating
Subsidiary
in the Reporting Period performance
Kunshan Focai Packaging & Printing Co.,
Liquidation No
Ltd.
Information about major majority- and minority-owned subsidiaries:
During the reporting period, affected by the continuously increasing price of raw materials of wood pulp, and the fluctuation of US
dollar currency rate, the production costs of ivory board produced and sold by subsidiaries Hongta Renheng and Zhuhai Huafeng
increased dramatically, causing a large decline in the profit of paper section from last year.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
IX Prospects
(I) Industrial Competition Framework and Development Trend
Affected by China-US trade conflicts and exchange rate fluctuations, macroeconomic index fell and the packaging and paper
industries that are highly associated with macro economy were impacted at different degrees. The market end demands showed great
decrease and the supply side continued the trend of 2017 with new increases instead of any decrease in 2018. The capacity that could
be placed in market increased, while the whole industry presented a status of supply exceeding demand. As a result, the paper
industry took on an overall trend of narrowed profit margins. The investigation report shows that, compound annual growth rate of
domestic ivory board industry will reach about 5.5% in next few years, but the growth trend of subdivided paper grades is expected
to present differentiation. The annual average growth rate of food packaging board is about 7%; the annual average growth rate of
liquid packaging board is about 5%; the annual average growth rate of social ivory board in cosmetics and personal care field is about
9%; the annual average growth rate of social ivory board in medicines and health products field is about 6%; by contrast, with the
tobacco industry's entering the downlink stage of its development cycle, it is expected that the annual growth rate of cigarette box
board packaging market will drop at an average annual rate of 2% by 2030.
(II) Development Strategy
The Company will grasp the development opportunity in the new era, make full use of its advantages, develop towards the depth of
the industrial chain and relevant fields through specialized and market-oriented acquisition and reorganization, improve its capacity
for design, R&D, manufacturing and whole service of high-end paper packaging materials, eventually achieve its transformation and
upgrading from traditional paper making industry to "packaging material field",make the packaging material industry better, stronger
and bigger, and become a first-class provider of green and environmental protection packaging materials and packaging solutions
which integrates design, manufacturing and service.
(III) Management Solution for 2019
2019 marks the 70th anniversary of the founding of the People’s Republic of China and is a crucial year upon the release of the
25
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Guangdong-Hong Kong-Macao Greater Bay Area Planning. The Company will stick to the guidance of Xi Jinping’s thought on
socialism with Chinese characteristics for a new era, deeply implement the spirit of the 19 th National Congress of the Communist
Party of China and the Central Economic Working Conference, give full play the leading role of party building and ensure the
integration of party building and the Company’s operation in cohesion for joint development. The Company will keep an eye on
domestic and foreign policies, understand and follow the economic trend and continue to explore share transfer to provide a capital
platform guarantee for its sustainable development. It will persist in the concept of green development, opening up and innovation,
and oriented by market with focus on customers, center around its development strategy to carry out work and proactively promote
key projects. It will keep driving corporate in-depth reforms, optimizing the existing mechanism and refine the echelon talent team,
build a “fighter-oriented” talent development system, focus resources towards fighters and incline the incentive mechanism towards
fighters. It will keep enhancing its standardized operation and governance level and effectively prevent operation risks. It will
reinforce the strength of new product development and marketing, return to the development route led by technology and fully
increase the corporate competitiveness.
(IV) Possible Risks
1. Market risk
High-end coated ivory board is the dominant product of the Company. However, affected by the concentrated release of the new
production capacity for various ivory boards in China in the past two years, the domestic demands didn’t increase greatly. The more
fierce market competition of the ivory boards in China has brought a great impact on the market of the Company’s products.
Countermeasure: intensify product structure adjustment, and strengthen the efforts in developing new products and expanding new
market.
2. Raw material price and exchange rate fluctuation risk
The raw material used by the Company’s main products is imported paper pulp. Due to the continuously increased price of
international paper pulp during the Reporting Period, and the fluctuation of US dollar currency rate, the Company is under great
pressure to the costs control.
Countermeasure: keep a close watch on the paper pulp price change trend and US dollar exchange rate tendency, gradually purchase
more paper pulp at home, and meanwhile, strategically purchase paper pulp as reserves when necessary, in order to effectively
control the cost.
3. Safety and Environmental Protection Risk
The company is specialized in manufacturing with large mechanical equipment. Due to complicated production and manufacturing
environment, safety production and environmental requirements become much more stringent.
Countermeasures: strengthen the recognition and management of safety and environmental protection hazards; improve the
management of production & manufacturing machines and pollution discharge equipment/facilities; clearly define personnel
responsibilities of front-line production workers; enhance the supervision and inspection of safety operation on the production site;
reinforce corresponding publicity and education and create possible safety production atmosphere; consolidate job responsibilities for
staffs in environmental protection department; strictly implement environmental protection and emission standards; eliminate
possible risks of safety and environmental protection accidents.
X Communications with the Investment Community such as Researches, Inquiries and
Interviews
1. During the Reporting Period
√ Applicable □ Not applicable
Date Way of communication Type of communication Index to main information
26
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
party communicated
Inquired whether the Company would
conduct share reform recently, and
whether there was specific scheme and
9 February 2018 By phone Individual
idea. The Company replied according to
the disclosed information with no
materials offered.
Inquired the production operation of the
company, and whether the performance
in the first quarter improved; inquired
the significant event plan after the share
21 March 2018 By phone Individual trading suspension of the Company and
the plan for share reform after the share
trading resumption. The Company
replied according to the disclosed
information with no materials offered.
Inquired the procedure of transferring
29 March 2018 By phone Individual non-tradable share. The Company had
replied with no materials offered.
Inquired the production operation of the
company, and the reason and
countermeasures of the declining
20 April 2018 By phone Individual
performance. The Company replied
according to the disclosed information
with no materials offered.
Inquired the production operation and
the thought of the future share reform of
28 May 2018 By phone Individual the company. The Company replied
according to the disclosed information
with no materials offered.
Inquired the production operation and
whether there was a plan for share
26 June 2018 By visit Individual
reform recently. The Company had
replied with no materials offered.
Inquired whether there was a plan for
share reform recently. The Company
29 August 2018 By phone Individual
replied according to the disclosed
information with no materials offered.
The share price of the Company
continuously decreasing, so whether the
3 September 2018 By phone Individual
performance in the second half year
could improved, and whether there was a
27
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
plan for assets restructuring. The
Company replied according to the
disclosed information with no materials
offered.
Inquired the main reasons of the
declining performance of the Company,
and whether there was a good news. The
10 September 2018 By phone Individual
Company replied according to the
disclosed information with no materials
offered.
Inquired the reason for changing the
accounting firm. The Company replied
17 October 2018 By phone Individual
according to the disclosed information
with no materials offered.
Inquired the event of attending the
Extraordinary General Meeting of the
29 October 2018 By phone Individual Company. The Company replied
according to the disclosed information
with no materials offered.
Inquired whether the Company could
make a profit at the end of the year. The
13 November 2018 By phone Individual Company replied according to the
disclosed information with no materials
offered.
Inquired the production operation and
development direction. The Company
17 December 2018 By phone Individual
replied according to the disclosed
information with no materials offered.
Times of communications 13
Number of institutions communicated with 1
Number of individuals communicated with 12
Number of other communication parties 0
Tip-offs or leakages of substantial
supposedly-confidential information during None
communications
28
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revised
in the Reporting Period:
√ Applicable □ Not applicable
During the Reporting Period, the Company didn’t carry out the annual profit distribution plan temporarily due to the operating losses.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Non-controlling interests are able to fully express their opinion
Yes
and desire and their legal rights and interests are fully protected
In case of adjusting or changing the cash dividend policy, the
conditions and procedures involved are in compliance with No adjustments or changes
applicable regulations and transparent
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the Reporting
Period) are summarized as follows:
2018 profit distribution plan: the Company didn’t carry out the 2018 profit distribution plan temporarily due to the operating losses
during the Reporting Period..
2017 profit distribution plan: Based on the total shares of the Company as of 31 December 2017, a dividend of RMB0.18 (tax
inclusive) per 10 shares would be distributed to all shareholders of the Company.
2016 profit distribution plan: Based on the total shares of the Company as of 31 December 2016, a dividend of RMB0.32 (tax
inclusive) per 10 shares would be distributed to all shareholders of the Company.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Net profit
attributable to Total cash
Cash ordinary Cash dividends dividends
A as % of B in other forms C as % of B D as % of B
Year dividends (tax shareholders (including
(%) (such as share (%) (%)
inclusive) (A) of the listed repurchase) (C) those in other
company in forms) (D)
consolidated
29
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
statements for
the year (B)
2018 0.00 -2,814,965.92 0.00% 0.00 0.00% 0.00 0.00%
2017 9,097,650.00 18,637,865.97 48.81% 0.00 0.00% 0.00 48.81%
2016 16,173,600.00 61,324,088.11 26.37% 0.00 0.00% 0.00 26.37%
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the
facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributable to the
ordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
□ Applicable √ Not applicable
The Company has no final dividend plan, either in the form of cash or stock.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√Applicable □ Not applicable
Date of
Type of Details of Term of
Commitment Promisor commitment Fulfillment
commitment commitment commitment
making
Commitments made in share reform
In order to
avoid
potential
horizontal
competition,
China
Commitments made in acquisition
China Paper Supplies 28 June 2005 Normal
documents or shareholding alteration Long-term
Corporation Development performance
documents
Investment
Corporation
(which has
changed its
name to
“China Paper
30
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Corporation”)
makes the
following
commitment:
1. The
Company and
the
Company’s
wholly owned
and
controlling
companies
ensure that
there is no
same or
similar
business with
Foshan
Huaxin
Packaging
Co., Ltd. 2.
The Company
and the
Company’s
wholly owned
and
controlling
companies
ensure that
there is no
same or
similar
business with
Foshan
Huaxin
Packaging
Co., Ltd.; The
Company and
the
Company’s
wholly owned
and
controlling
companies
31
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
will not
self-run no
same or
similar
business with
Foshan
Huaxin
Packaging
Co., Ltd.; not
self- run any
similar
projects
constitute a
direct
competition
with Foshan
Huaxin
Packaging
Co., Ltd.; nor
any method of
investment
business
constituted
or may
constituted
competition
with Foshan
Huaxin
Packaging
Co., Ltd. thus
ensure to
avoid any
direct or
indirect
business
competition to
the production
and operation
of Foshan
Huaxin
Packaging
Co., Ltd..
Commitments made in time of asset Singapore For defective 29 October Long-term
Long-term
restructuring Renheng real estate 2012 commitment
32
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Industry Co., failing to belonging to
Ltd.; Yunnan obtain the need trigger
Hongta Group drawbacks of conditions
Co., Ltd.,(both the ownership
are not the certificate,
shareholders Hongta Group
of the Co., Ltd. and
Company) Yanlord
Industries Pte.
Ltd. undertake
that if a third
party claims
right or
property
demolition,
which results
in the inability
of Hongta
Renheng to
normally
possess,
utilize, profit
from and
dispose of
defective (real
estate),
Hongta Group
Co., Ltd and
Yanlord
Industries Pte.
Ltd agree to
pay the
compensation
for the losses
of Foshan
Huaxin
Packaging
Co., Ltd. and
Long Bon
International
Co., Ltd.
within 30 days
from receiving
the notice of
33
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Foshan
Huaxin
Packaging
Co., Ltd. and
Long Bon
International
Co., Ltd. The
value of
defective real
estate will be
comprehensiv
ely
determined
according to
the Rights and
Interests of All
Shareholders
Value Assets
Evaluation
Report of
Zhuhai
Special
Economic
Zone Hongta
Renheng
Paper Co.,
Ltd. issued by
Zhongshang
Assets
Appraisal Co.,
Ltd. on 7
November
2008 as well
as used years
and
depreciation
of real estate.
The
compensation
shall not
exceed the
total assessed
net value of
the defective
34
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
real estate of
RMB10,746,2
98.00.
Foshan
Huaxin
Development
Co., Ltd. as
the controlling
shareholder of
Foshan
Huaxin
Packaging
Co., Ltd. (here
in after
referred to as
"YHB")undert
akes that it
will not in any
place within
or outside of
Guangdong
province in
Foshan
any way
Commitments made in time of IPO or Huaxin Normal
(including, but 23 June 1999 Long-term
refinancing Development performance
not limited to,
Co., Ltd.
with
individual
proprietorship,
joint venture
or through
another
company hold
the share or
own equities)
participate in
similar
business
activities that
may directly
form
competition
with YHB at
that time, but
with the
35
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
exception that
Foshan
Huaxin
Development
Co., Ltd. no
longer
actually
controls YHB
in the case of
any
subsequent
restructuring,
transfer, new
issuance, etc.,
Equity incentive commitments
The
Company’s
specific
planning for
returns to its
shareholders
for the next
three years
(2018-2020):
1. The
Company can
use cash,
shares or cash
Foshan
and shares
Other commitments made to minority Huaxin Normal
combined to 15 April 2018 14 April 2021
shareholders Packaging performance
allocate
Co., Ltd.
dividends and
allocate
interim cash
dividends.2.
Within the
next three
years, the
Company will
proactively
distribute
profits in cash.
In accordance
with relevant
36
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
laws,
regulations
and the related
provisions and
terms of the
Company’s
Articles of
Incorporation
and policies, if
the Company
makes profits
and meets the
capital
demand of
normal
production
and business
operation with
sufficient
reserved legal
accumulation
fund and
surplus
accumulation
and if there is
no major
investment
plan or major
cash
payments,
etc., the
cumulative
profits in cash
to be
distributed in
the next three
years will be
no less than
thirty percent
of the average
annual
attributable
profits
realized in
37
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
recent three
years. 3.
Depending on
the actual
situation of
the
Company’s
long-term and
sustainable
development,
when the
Board of
Directors
deems that the
profit
allocation in
share
dividends
meets the
overall
interests of all
shareholders,
the Company
can use share
dividends to
distribute
profits.
The
Company’s
specific
planning for
returns to its
shareholders
for the next
Foshan
three years Had
Huaxin 31 August
(2015-2017): 29 June 2015 completed the
Packaging 2018
1. The performance
Co., Ltd.
Company can
use cash,
shares or cash
and shares
combined to
allocate
dividends and
38
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
allocate
interim cash
dividends.2.
Within the
next three
years, the
Company will
proactively
distribute
profits in cash.
In accordance
with relevant
laws,
regulations
and the related
provisions and
terms of the
Company’s
Articles of
Incorporation
and policies, if
the Company
makes profits
and meets the
capital
demand of
normal
production
and business
operation with
sufficient
reserved legal
accumulation
fund and
surplus
accumulation
and if there is
no major
investment
plan or major
cash
payments,
etc., the
cumulative
39
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
profits in cash
to be
distributed in
the next three
years will be
no less than
thirty percent
of the average
annual
attributable
profits
realized in
recent three
years. 3.
Depending on
the actual
situation of
the
Company’s
long-term and
sustainable
development,
when the
Board of
Directors
deems that the
profit
allocation in
share
dividends
meets the
overall
interests of all
shareholders,
the Company
can use share
dividends to
distribute
profits.
Fulfilled on time Yes
Specific reasons for failing to fulfill
commitments on time and plans for N/A
next step (if any)
40
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√Applicable □ Not applicable
1) The Company prepared 2018 Financial Statements in accordance with the Notes of the Ministry of Finance on
Revising and Printing the Format of 2018 General Enterprises Financial Statement (CK [2018] No. 15) and the
interpretation of it and the requirements of the Accounting Standards for Enterprises. Retroactive adjustment was
adopted for the changes in the accounting policy. The significantly affected items and amounts in 2017 Financial
Statements are as follows:
Item and amount in original financial statement Item and amount in new financial statement
Notes receivable 430,699,664.45 1,160,829,887.51
Notes and accounts
Accounts receivable 730,130,223.06
receivable
Interest receivable 141,388.09 Other receivables 20,249,531.23
Other receivables 20,108,143.14
Notes payable 8,530,196.41 Notes and accounts 349,777,358.80
Accounts payable 341,247,162.39 payable
Interest payable 7,865,380.83 Other payables 50,811,351.70
Dividends payable 12,116,789.76
Other payables 30,829,181.11
Administrative expense 125,476,808.28 120,342,343.74
Administrative
expense
5,134,464.54
R&D expense
Cash generated from other 66,763,328.29 Cash generated from 81,627,128.29
operating activities[Note] other operating
activities
41
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Cash generated from other 735,773,715.83 Cash generated from 720,909,915.83
investing activities [Note] other investing
activities
[Note]: the presentation of actually received Government subsidy of RMB14,863,800.00 related to assets in cash
flow statement shall be adjusted from “cash generated from other investing activities” to “cash generated from
other operating activities”.
2) The Ministry of Finance in 2017 announced the Interpretation to the Accounting Standards for Enterprises No.
9 - Regarding the Accounting Treatment of Net Investment Losses under the Equity Method, Interpretation to the
Accounting Standards for Enterprises No. 10 - Regarding the Depreciation Method Based on the Use of Incomes
Generated from Fixed Assets, Interpretation to the Accounting Standards for Enterprises No. 11 - Regarding the
Amortization Method Based on the Use of Incomes Generated from Intangible Assets and Interpretation to the
Accounting Standards for Enterprises No. 12 - Regarding Whether the Provider and the Receiver of Key
Management Personnel Service Are Related Parties. The Company has implemented the aforementioned
interpretations to the accounting standards for enterprises since 1 January 2018 and the implementation does not
have any effect on the opening financial data of the Company.
VII Retrospective Restatements due to Correction of Material Accounting Errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
Kunshan Focai Packaging & Printing Co., Ltd. has been liquidated and de-registered during the Reporting Period, and has thus no
longer been included in the consolidated financial statements.
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Pan-China Certified Public Accountants (LLP)
The Company’s payment to the domestic independent auditor
95
(RMB’0,000)
How many consecutive years the domestic independent auditor
1
has provided audit service for the Company
Names of the certified public accountants from the domestic
Li Qinglong, Liu Jingya
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
1
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
42
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
√ Yes □ No
Indicate by tick mark whether the independent auditor was changed during the audit period.
√ Yes □ No
Indicate by tick mark whether an approval procedure was implemented for the change of independent auditor.
√ Yes □ No
Further details about the change of independent auditor:
The former CPAs has consecutively served for three years. According to the actual operation and development, the Company
engaged Pan-China Certified Public Accountants (LLP) as the 2018 Finance audit institution.
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company engaged Pan-China Certified Public Accountants (Special General Partnership) as the internal control auditor for the
Current Year and paid RMB0.3 million additionally for that.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Legal Matters
√Applicable □ Not applicable
Involved Index to
Decisions and Execution of Disclosure
General information amount Provision Progress disclosed
effects decisions date
(RMB’0,000) information
A major production As of the
safety accident was end of the http://www.c
caused by a flash Reporting ninfo.com.cn/
burn when Jiangsu Period, cninfo-new/d
Tianxing Zhuhai isclosure/szse
High-Altitude Huafeng 6 March _main/bulleti
1,116 None Pending Pending
Anti-Corrosion received 2017 n_detail/true/
Engineering Co., compensati 1203132688?
Ltd. (hereinafter on of announceTim
referred to as RMB1.1.4 e=2017-03-0
"Jiangsu Tianxing") million 6
and Wuhan Kedio from
43
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Electric Power defendants,
Technology Co., and there
Ltd. (hereinafter still are
referred to as RMB9.76
"Wuhan Kedio") million to
carried out the be claimed
maintenance of from them.
120m chimney This civil
anti-corrosion compensati
project for Zhuhai on case has
Huafeng, the not yet been
holding subsidiary closed.
of the company, on
4 March 2017. Six
construction
workers of the
construction
company died in the
accident. Zhuhai
Huafeng paid a total
compensation of
RMB 11.16 million
to relatives of the
victims on 7 March
2017 for Jiangsu
Tianxing and Wuhan
Kedio in accordance
with the
requirements and
under the
supervision of the
government. Zhuhai
Huafeng applied to
Zhuhai Jinwan
District People's
Court for property
preservation before
litigation on 14
March 2017. Zhuhai
Huafeng applied to
Zhuhai Jinwan
District People's
Court for recovery
action in which
44
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Jiangsu Tianxing
and Wuhan Kedio
were taken as joint
defendants on 16
March 2017. Then
Wuhan Kedio
applied to add
Yancheng Xinda
High-Altitude
Anti-Corrosion Co.,
Ltd. (hereinafter
referred to as
YanchengXinda) as
a defendant and
YanchengXinda
applied to add Liu
Jiechun as a
defendant.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
√Applicable □ Not applicable
Relation Type of Specific Pricing Transact Total As % of Approv Over Method Obtaina Index
Related Disclos
ship transacti transacti principl ion value total ed the of ble to
party ure date
with the on on e price (RMB’0 value of transacti approve settleme market disclose
45
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Compan ,000) all on line d line or nt price for d
y same-ty (RMB’0 not same-ty informa
pe ,000) pe tion
transacti transacti
ons ons
Being
decided
through
China http://w
Actual Purchasi negotiat 17
Paper Continu Market 66,516. 114,236 Remitta ww.cni
controll ng ion 19.61% Not -- March
Corporati ing price 9 .03 nce nfo.co
er products based 2018
on m.cn
on the
market
value
A
compan Being
y decided
Guangzho controll through
http://w
u ed by negotiat 17
Continu Selling Market Remitta ww.cni
Chenhui actual ion 6,660.4 1.81% 20,000 Not -- March
ing products price nce nfo.co
Paper controll based 2018
m.cn
Co., Ltd er on the
indepen market
dent value
director
73,177. 134,236
Total -- -- -- -- -- -- -- --
3 .03
Large-amount sales return in detail N/A
Give the actual situation in the
Reporting Period (if any) where an
estimate had been made for the total
N/A
value of continuing related-party
transactions by type to occur in the
Reporting Period
Reason for any significant difference
between the transaction price and the N/A
market reference price (if applicable)
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
46
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicable
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
□ Yes √ No
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
47
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosure
Guarante
date of the
Actual Having e for a
guarantee Line of Actual Type of Term of
Obligor guarantee expired related
line guarantee occurrence date guarantee guarantee
amount or not party or
announcem
not
ent
Guarantees provided by the Company as the parent for its subsidiaries
Disclosure
Guarante
date of the
Actual Having e for a
guarantee Line of Actual Type of Term of
Obligor guarantee expired or related
line guarantee occurrence date guarantee guarantee
amount not party or
announcem
not
ent
27
Zhuhai Hongta 12
27 September September
Renheng Packaging February 3,880 3,880 Joint-liability Nott Yes
2017 2017 to 13
Co., Ltd. 2015
March 2020
28 February
Zhuhai Hongta
24 January 28 February 2017 to 28
Renheng Packaging 20,000 20,000 Joint-liability Not Yes
2017 2017 February
Co., Ltd.
2019
Zhuhai Hongta 23 May 2017
24 May
Renheng Packaging 33,000 23 May 2017 27,800 Joint-liability to 22 May Not Yes
2017
Co., Ltd. 2020
1 March
Zhuhai Hongta 2016 to 31
29 April
Renheng Packaging 20,000 1 March 2016 2,800 Joint-liability December Not Yes
2016
Co., Ltd. 2019
Zhuhai Hongta 15 July 2017
Renheng Packaging 5 July 2017 20,000 15 July 2017 0 Joint-liability to 15 July Not Yes
Co., Ltd. 2019
24 February
Zhuhai Hongta
24 January 24 February 2017 to 24
Renheng Packaging 10,000 0 Joint-liability Yes Yes
2017 2017 February
Co., Ltd.
2018
Zhuhai Hongta 23 June 10,000 28 July 2017 10,000 Joint-liability 28 July 2017 Not Yes
48
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Renheng Packaging 2017 to 14 May
Co., Ltd. 2018
12
Zhuhai Hongta
23 June 12 September Joint-liability September
Renheng Packaging 10,000 4,602 Not Yes
2017 2017 2017 to 31
Co., Ltd.
March 2019
10 November
Zhuhai Hongta
24 May 10 November 2017 to 9
Renheng Packaging 10,000 9,999 Joint-liability Not Yes
2017 2017 November
Co., Ltd.
2019
13 November
Zhuhai Hongta
24 May 13 November 2017 to 3
Renheng Packaging 10,000 0 Joint-liability Yes Yes
2017 2017 September
Co., Ltd.
2018
Zhuhai Hongta 30 1 January
Joint-liability
Renheng Packaging December 3,120 1 January 2018 1,120 2018 to 13 Not Yes
Co., Ltd. 2017 March 2020
Zhuhai Hongta 8 June 2018
18 July
Renheng Packaging 5,000 8 June 2018 5,000 Joint-liability to 7 June Not Yes
2018
Co., Ltd. 2019
26 October
Zhuhai Hongta
23 August 2018 to 31
Renheng Packaging 10,000 26 October 2018 10,000 Joint-liability Not Yes
2018 December
Co., Ltd.
2019
29 October
Zhuhai Huafeng Paper 25 October Joint-liability
35,000 29 October 2016 16,602 2016 to 28 Not Yes
Co., Ltd. 2016
October 2019
10 October
Zhuhai Huafeng Paper 23 August
8,000 10 October 2018 6,198 Joint-liability 2018 to 31 Not Yes
Co., Ltd. 2018
July 2020
1 January
Huaxin (Foshan)
5 August 2016 to 31
Color Printing Co., 6,000 1 January 2016 3,000 Joint-liability Not Yes
2016 December
Ltd.
2020
Huaxin (Foshan) 10 October
30 October
Color Printing Co., 2,000 10 October 2018 1,000 Joint-liability 2018 to 10 Not Yes
2018
Ltd. October 2019
Total approved line for such Total actual amount of such
guarantees in the Reporting Period 300,000 guarantees in the Reporting 216,000
(B1) Period (B2)
Total approved line for such 300,000 Total actual balance of such 122,001
49
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
guarantees at the end of the guarantees at the end of the
Reporting Period (B3) Reporting Period (B4)
Guarantees provided between subsidiaries
Disclosure
Guarante
date of the
Actual Having e for a
guarantee Line of Actual Type of Term of
Obligor guarantee expired related
line guarantee occurrence date guarantee guarantee
amount or not party or
announcem
not
ent
31 December
Zhuhai Huafeng Paper 31 December
5 July 2017 15,000 0 Joint-liability 2017 to 13 Yes Yes
Co., Ltd. 2017
July 2018
Zhuhai Golden 21 31 August
Pheasant Chemical November 10,000 31 August 2015 0 Joint-liability 2015 to 30 Yes Yes
Co., Ltd. 2015 August 2018
Total approved line for such Total actual amount of such
guarantees in the Reporting Period 40,000 guarantees in the Reporting 25,000
(C1) Period (C2)
Total approved line for such Total actual balance of such
guarantees at the end of the 40,000 guarantees at the end of the 0
Reporting Period (C3) Reporting Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total actual guarantee
Total guarantee line approved in
340,000 amount in the Reporting 241,000
the Reporting Period (A1+B1+C1)
Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at
balance at the end of the
the end of the Reporting Period 340,000 122,001
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
61.9%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual controller
0
and their related parties (D)
Balance of debt guarantees provided directly or indirectly for
0
obligors with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50% of the
23,453.66
Company’s net assets (F)
Total of the three amounts above (D+E+F) 23,453.66
Compound guarantees:
50
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
None.
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company paid attention on the execution of the social responsibilities, so in the process of the production, operating and the
business development, when creating the value for the shareholders, it took great efforts to achieve the mutual coordination between
the economic efficiency, the social efficiency and the ecological efficiency, the short-term profits and the long-term profits, the self
development and the society development by complying with the other appeal of the nation and devoting itself to the promotion of
the comprehensive development of the society that to realize the healthy and harmonious development of between the Company and
the employees, the Company and the society, the Company and the environment.
The Company took the provider of the green environmental protection packaging materials and the packaging solving proposals as it
s mission, regarded the construction of the international first-class enterprise as the target, unshakably walked on the scientific
innovation development path, constantly innovate the enterprise management, enhanced the products quality, enlarged the R&D
strength of the new products, produced the packaging materials products with high quality and high-tech content that met with the
production social demand, made great efforts to forge the excellent project of the national packaging materials brand and create the
environmental protecting as well as high quality social wealth. When the Company was realizing the profits, should insist to share the
development results with the society, try its best to pursuit the harmonious and unity with the social development, constantly
promotes the development and progress of the society and the economy, so that to pay for and contribute to the society with green
51
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
ecological development.
The Company devoted itself to the construction of the international first-class packaging materials enterprise possessed of green
ecology and constantly development and as one of the major enterprises among the domestic papermaking, during the years’
development, the Company always regard green ecology as the goal of survival and development and positively introduced and
upgraded the high-efficient, energy-saving and environmental protection international high-end production equipment system for
promoting the transformation and upgrade of the enterprise.
Since its foundation, the company has always paid attention to environmental protection and insisted on the path of sustainable
development and has always been committed to controlling pollution, continuously improving environmental behavior and
conscientiously fulfilling social responsibility. Subsidiaries Hongta Renheng and Zhuhai Huafeng have passed the quality,
environment, occupational health and safety and food safety management certification and FSC/COC management system
certification and gotten the certificates. Moreover, the products of subsidiaries Hongta Renheng and Zhuhai Huafeng have passed QS
certification to ensure that products which conform to food safety requirements continuously and stably are supplied to consumers.
Meanwhile, Hongta Renheng and Zhuhai Huafeng has won the title of "Environmental Protection and Integrity Enterprise" for
successive years and has been awarded the green card "Five-Star Environmental Protection and Integrity Enterprise".
The Company has been fulfilling its social responsibility and insisting on building it into a green and environmental enterprise. Main
energy saving and emission reduction and technical transformation projects completed in recent years include:
(1) The subsidiary Hongta Renheng initially introduced the largest biomass solid moulding fuel energy saving and emission
reduction project which fulfills the large scale transition of energy structure to clean energy and achieves "eco zero emission" and
"low-carbon papermaking;
(2) The subsidiaries Hongta Renheng and Zhuhai Huafeng set up the energy management center, passed the energy management
system (GB/T23331-2009) certification, provided digital supporting platform tool for the company to achieve management energy
saving;
(3)Hongta Renheng completed the renovation of BM2 air compressor energy saving project via energy management contracting;
(4) Zhuhai Huafeng completed the construction of reclaimed water reuse project, strengthened the reuse of recycled water, reduced
water consumption, realized the energy saving and emission reduction project;
(5)Zhuhai Huafeng completed boiler desulfurization and denitrification transformation to further reduce sulfur dioxide emission;
(6) Zhuhai Huafeng invested in the turbine fan project to dramatically reduce paper machine dewatering energy consumption.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
The Company will carry out the targeted poverty alleviation according to the poverty alleviation plan of the leading group of the
actual controller China paper Corporation.
(2) Summary of the Related Work Done in the Reporting Period
The Company didn’t carry out any related work during the Reporting Period.
(3) Results
Indicator Measurement unit Quantity/Progress
1. General results —— ——
52
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Itemized results —— ——
2.1 Out of poverty by industrial development —— ——
2.2 Out of poverty by transferring
—— ——
employment
2.3 Out of poverty by relocation —— ——
2.4 Out of poverty by education —— ——
2.5 Out of poverty by improving health —— ——
2.6 Out of poverty by protecting ecological
—— ——
environment
2.7 Subsidy for the poorest —— ——
2.8 Social poverty alleviation —— ——
2.9 Other items —— ——
3. Accolades received (for what and at what
—— ——
level)
(4) Subsequent Plans
The Company will seriously carry out the targeted poverty-relief work with China Paper Corporation according to the
implementation plan of poverty alleviation project of the actual controller China Paper Corporation, and continuously carry out the
subsequent targeted poverty alleviation plan.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
authorities.
Yes
Discharge
Name of Number of Distribution Discharge Approved
Name of Way of standards Total Excessive
major discharge of discharge concentratio total
polluter discharge implemente discharge discharge
pollutants outlets outlets n discharge
d
Chemical
Chemical Chemical
oxygen
Discharged Chemical oxygen oxygen
demand,
Chemical into water oxygen demand, demand,
and
oxygen quality Sewage demand≤80 and and
Hongta ammonia
demand, purificatio 1 disposal mg/l and ammonia ammonia Naught
Renheng nitrogen are
ammonia n plant center ammonia nitrogen are nitrogen are
37.85mg/l
nitrogen after being nitrogen≤8 122.16t and 294.4t and
and
disposed mg/l 1.42t 29.44t
0.46mg/l
respectively respectively
respectively
53
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Sulfur
dioxide, Sulfur Sulfur
Sulfur
nitrogen dioxide, dioxide,
dioxide≤50
Sulfur oxide, nitrogen nitrogen
mg/m3,
dioxide, smoke are oxide, oxide,
Hongta Organized Power nitrogen
nitrogen 1 0.79mg/m3, smoke are smoke are Naught
Renheng discharge boiler oxide≤200
oxide, 59.76mg/m 0.60t, 34.04t,
mg/m3, and
smoke 3, and 44.73t, and 136.15t, and
smoke
17.26mg/m 12.83t 20.42t
≤30mg/m3
3 respectively respectively
respectively
Chemical
Chemical Chemical
oxygen
Discharged Chemical oxygen oxygen
demand,
Chemical into water oxygen demand, demand,
and
oxygen quality Sewage demand≤80 and and
Zhuhai ammonia
demand, purificatio 1 disposal mg/l and ammonia ammonia Naught
Huafeng nitrogen are
ammonia n plant center ammonia nitrogen are nitrogen are
34.04mg/l
nitrogen after being nitrogen≤8 73.46t and 180t and
and
disposed mg/l 1.36t 22.5t
0.53mg/l
respectively respectively
respectively
Sulfur Sulfur
Sulfur
dioxide, dioxide, Sulfur
dioxide,
nitrogen nitrogen dioxide,
Sulfur nitrogen
oxide, oxide, nitrogen
dioxide, oxide,
Zhuhai Organized Power smoke are smoke are oxide,
nitrogen 1 smoke are Naught
Huafeng discharge boiler 28.5mg/m3, 50mg/m3, smoke are
oxide, 55.82t,
64.75mg/m 100mg/m3, 68t, 142t,
smoke 129.76t, and
3, and and and 26t
23.9t
12.13mg/m 20mg/m3 respectively
respectively
3 respectively
Secondary
standard of
Phase II of
Emission
20m
Non-methan Upper-air Limit for
Golden discharge
e emissions Air
Pheasant 2 outlet after 16mg/m? 1.123t 2.246t Naught
hydrocarbo after being Pollution
Chemical the disposal
n disposed (DB44/27-
of RCO
2001) and
Emission
Limit for
Odor
54
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Pollutants
(GB14554
-1993)
Chemical Chemical Chemical
oxygen Chemical oxygen oxygen
Chemical demand, oxygen demand, demand,
Discharged
Golden oxygen Sewage and demand≤35 and and
to sewage
Pheasant demand, 1 disposal ammonia 0mg/l and ammonia ammonia Naught
discharge
Chemical ammonia center nitrogen are ammonia nitrogen are nitrogen are
outlet
nitrogen 68mg/l and nitrogen≤25 3.125t and 3.528t and
7.6mg/l mg/l 0.201t 0.252t
respectively respectively respectively
Chemical
Chemical Chemical
oxygen
Chemical oxygen oxygen
demand,
oxygen demand, demand,
Nanzhuang and
Huaxin Chemical Discharged demand≤11 and and
Jili ammonia
Color oxygen after being 1 0mg/l and ammonia ammonia Naught
Sewage nitrogen are
Printing demand disposed ammonia nitrogen are nitrogen are
Surge 8.294mg/l
nitrogen≤15 0.156t and 0.178t and
and
mg/l 0.021t 0.026t
0.0984mg/l
respectively respectively
respectively
Construction and operation of facilities for preventing pollution:
(I) Hongta Renheng
The Sewage Station and Boiler were all built and operated by the third party. As for sewage, Hongta Renheng belongs to State key
monitoring enterprise; as for smoke, Hongta Renheng belongs to Zhuhai key monitoring enterprise.
1. The company established a Sewage Station whose maximum processing capacity was 12000m3/d, and it was put into service on 1
April 2013 with the investment of RMB14 million through applying A/O technology. The quality of water after such processing
could meet relevant national discharge standards stated in Discharge Standard of Water Pollutants for Pulp & Paper Industry
(GB3544-2008), and waste water (after processing) reaching corresponding standards would be discharged into Qianshan Water
Quality Purification Plant via the municipal sewage pipeline network of Xiangzhou District.
Meanwhile, corresponding COD, ammonia nitrogen, total phosphorus, and total nitrogen, and PH values auto monitoring system
would be installed at the discharge outlet, and the qualified unit, Zhuhai Fixed Star EP Technology Co., Ltd, would be in charge of its
operation management and 24-hour auto online detection and monitoring of COD, ammonia nitrogen, total phosphorus, and total
nitrogen, and PH values.
2. The company established 2 biomass briquette boilers with the operating capacity of 40 tons per hour were installed in association
with relevant dust removal measures. As ceramic multi-tube cyclone dust collector and bag-type dust removal technology were
applied to dispose flue gas, all discharged smoke pollutants, SO2 and nitric oxides via the 25m chimney would meet corresponding
discharge limit standard stated in Emission Standard of Air Pollutants for Boilers (DB44/765-2010).
Moreover, corresponding flue gas auto monitoring system would be installed at the discharge outlet, and the qualified unit would be
in charge of its operation management and 24-hour auto online detection and monitoring of discharged SO2, nitric oxides and smoke
dust.
(II) Zhuhai Huafeng
The company began to overhaul in downtime on 15 May in the first half year of 2018, and began to manufacturing on 7 June, which
55
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
were 22 days for overhaul.
1. The company established a Sewage Station whose maximum processing capacity was 22000m3/d, and it was put into service on 28
September 2006 with the floor space 21,358m2 and the investment of RMB38 million through applying flocculation precipitation +
SBR technology. In addition, SBR biochemical system applied Canada ADI company’ s SBR technology, and key devices were all
introduced from foreign countries. The quality of water after such processing could meet relevant national discharge standards stated
in Discharge Standard of Water Pollutants for Pulp & Paper Industry (GB3544-2008), and waste water (after processing) reaching
corresponding standards would be discharged into Nanshui Water Quality Purification Plant via the municipal sewage pipeline
network of Gaolan Port District.
Meanwhile, corresponding COD, ammonia nitrogen, total phosphorus, and total nitrogen, and PH values auto monitoring system
would be installed at the discharge outlet, and the qualified unit, Zhuhai Fixed Star EP Technology Co., Ltd, would be in charge of its
operation management and 24-hour auto online detection and monitoring of COD, ammonia nitrogen, total phosphorus, and total
nitrogen, and PH values.
2. The company established two self-supplied fire coal CFBs were installed with the operating capacity of 75t per hour in association
with relevant sulphur and dust removal measures. As out-of-furnace alkaline-mode wet desulphurization technology, bag-type dust
remover, low-temperature and low-nitrogen combustion technology + SNCR were applied to dispose flue gas, the
desulfurization rate is over 90%, the dust removal efficiency would exceed 99.6% and the denitration efficiency over 85%. All
discharged smoke pollutants, SO2 and nitric oxides via the 120m chimney (discharged in temporary chimney in the first half year of
2018) would meet special discharge limit standard stated in Emission Standard of Air Pollutants for Thermal Power Plants
(GB13223-2011).
Moreover, corresponding flue gas auto monitoring system would be installed at the discharge outlet, and the qualified unit would be
in charge of its operation management and 24-hour auto online detection and monitoring of discharged SO2, nitric oxides and smoke
dust (the online monitoring system was not in operation due to the use of temporary chimney).
(III) Golden Pheasant Chemical
Exhaust processing system and sewage station are in normal operation.
(1) Establishing a Sewage Station whose maximum processing capacity was 70m3/d, and the actual processing capacity was about
20m3 per day through applying biosorption technology. Sewage disposal equipment is running normally, and waste water (after
processing) reaching corresponding standards would be discharged into Nanshui Sewage Disposal Plant in Zhuhai City via the
municipal sewage pipeline network of Gaolan Port District, Zhuhai City. When all industrial waste water after disposal in sewage
station can reach Class 1 Standard during the second period stated in Discharge Limits of Water Pollutants (DB44/26-2001), it will
be disposed after being discharged into Nanshui Sewage Disposal Plant in Zhuhai City via the municipal sewage pipeline network of
Gaolan Port District, Zhuhai City.
(2) Establishing a exhaust processing system respectively in phase I with 1000m3 per hour processing capacity and phase II with
2000m3 per hour processing capacity. It adopted the equipment of bio-trickling, activated carbon adsorption, and photo-catalytic
oxidation to discharge orderly after processing and reaching corresponding standards. Secondary standard of Phase II of Emission
Limit for Air Pollution (DB44/27-2001) and Emission Limit for Odor Pollutants (GB14554-1993) were reached.
Two exhaust gas devices and a waste water device are in normal operation.
(IV) Huaxin Color Printing
The Sewage Station is in normal operation.
The company established its own Sewage Station whose maximum processing capacity can reach 20m3/d, and the qualified
environmental protection company has always been involved in disposing waste water. All industrial waste water after disposal and
reaching Class 1 Standard during the second period stated in Discharge Limits of Water Pollutants (DB44/26-2001) will be
discharged into Nanzhuang Sewage Surge.
Appraisal of environment influences for construction project and other administrative licensing of environment protection
(I) Hongta Renheng
56
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
1. In September 1998, passed the environmental impact assessment for the 150,000-ton high-grade packaging cardboard project by
the State Environmental Protection Administration and Guangdong Province Environmental Protection Bureau respectively (HF
[1998] No. 321 and YHH [1998] No. 208);
2. In 2010, passed the environmental impact assessment for the MBF technical renovation project (ZHJ [2010] No. 5) and the test run
of the renovation project (ZHS [2010] No. 6) by the Environmental Protection Bureau of Zhuhai Municipality;
3. In 2012, obtained the approval for the environmental impact report on the clean production of paper machines and the
comprehensive waste water treatment technology renovation project (ZXHJB [2012] No. 155) by the Environmental Protection
Bureau of Xiangzhou District;
4. In December 2003, passed the environmental acceptance for the completion of the 150,000-ton high-grade packaging cardboard
project (YHH [2003] No. 969);
5. In 2013, completed the acceptance of the MBF technical renovation project (ZHY [2013] No. 5);
6. In 2014, completed the acceptance of the biochemical treatment of waste water project (ZXHY [2014] No. 10)
7. In 2017, obtained the approval for the environmental impact report on the sludge resource utilization technical project (ZXHJB
[2017] No. 63)
Pollutant discharge permit, No. 91440400617502107U001P; validity period: from 7 June 2017 to 6 June 2020; issued by:
Environmental Protection Bureau of Xiangzhou District of Zhuhai City.
(II) Zhuhai Huafeng
1. The reply letter of review opinions of the State Environmental Protection Administration on the environmental impact report for
the capital increase of Foshan Huafeng Paper Co., Ltd. for building a new project with the annual capacity of 300,000-ton high-grade
coating ivory board (HS [2005] No. 156)
2. The reply letter of opinions on the environmental protection acceptance for the completion of the autonomous MBF environmental
upgrading and technical renovation project of Zhuhai Huafeng Paper Co., Ltd. (ZHY [2015] No. 3)
3. The reply on the environmental assessment for the new annual 60,000-ton ivory board film processing construction project of
Zhuhai Huafeng Paper Co., Ltd. (ZGHJ [2012] No. 115)
4. The review opinions on the environmental impact report for the reuse of reclaimed water project of Zhuhai Huafeng Paper Co.,
Ltd. (ZGHJ [2013] No. 54)
5. The reply on the environmental assessment for the sludge burning project of Zhuhai Huafeng Paper (ZGHJ [2008] No. 69)
6. The review opinions of the Environmental Protection Bureau of Gaolangang District of Zhuhai Municipality on the environmental
assessment report for the expansion of the annual 180,000-ton ivory board production line project of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2014] No. 67)
7. The review opinions on the environmental impact registration for the garbage concentration center of Zhuhai Huafeng Paper Co.,
Ltd. (ZGHJ [2016] No. 58)
8. The approval on the environmental assessment for the waste water treatment renovation project of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2016] No. 106)
Pollution discharge permit, No. 914404006176214217001P; validity period: from 7 June 2017 to 6 June 2020; issued by:
Environmental Protection Bureau of ZHUHAI GAOLAN PORT ECONOMIC ZONE MANAGEMENT COMMITTEE.
(III) Golden Pheasant Chemical
Acceptance inspection of Phase I environmental assessment: ZGHJY[2017] –No.007
Acceptance inspection of Phase II environmental assessment: ZGHJY[2016] –No.20
Pollution discharge permit, No. 4404062010000030 renewed on 28 December 2018, and it is valid until 31 July 2021; issued by:
Planning and Construction Environmental Protection Bureau of ZHUHAI GAOLAN PORT ECONOMIC ZONE.
(IV) Huaxin Color Printing
57
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Pollution discharge permit, No. 4406042010231001; validity period: from 17 October 2018 to 16 October 2021; issued by:
Environmental Protection Bureau of Chancheng District of Foshan City.
Emergency plan for abrupt environment affairs
(I) Hongta Renheng
Hongta Renheng prepared the Emergency Plan for Environmental Pollution and filed it with Zhuhai Environmental Protection
Bureau Environment Monitoring Branch on 17 December 2015; Filing No.: 44040120150P-L Emergency Plan for Abrupt
Environment Affairs of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. and the Risk Assessment Report for Abrupt Environment
Affairs of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. A new round of compiling work of emergency plan for abrupt environment
affairs and risk assessment report for abrupt environment affairs is underway.
(II) Zhuhai Huafeng
Zhuhai Huafeng prepared the Emergency Plan for Environmental Pollution and filed it with Environmental Protection Bureau of
ZHUHAI GAOLAN PORT ECONOMIC ZONE on 24 October 2013; and filed the Emergency Plan for Abrupt Environment Affairs
of Zhuhai Huafeng Paper Co., Ltd. (“Zhuhai Huafeng”) and the Risk Assessment Report for Abrupt Environment Affairs of Zhuhai
Huafeng Paper Co., Ltd. (“Zhuhai Huafeng”) with Environmental Emergency Management Office of Department of Environmental
Protection of Guangdong Province on 23 January 23 2015. Reassessment of emergency plan was completed on December 2018, and
it was filed on Environmental Protection Bureau of ZHUHAI GAOLAN PORT.
(III) Golden Pheasant Chemical
Golden Pheasant Chemical prepared the Investigation Report for Environmental Emergency Resources, Time Risk Assessment
Report for Abrupt Environment, and Comprehensive Emergency Plan for Abrupt Environment Affairs and filed them with
Environmental Protection Bureau of ZHUHAI GAOLAN PORT ECONOMIC ZONE on October 2018.
(IV) Huaxin Color Printing
Huaxin Color Printing prepared the Emergency Plan for Abrupt Environment Affairs and the Risk Assessment Report for Abrupt
Environment Affairs. Filing No.: 440604-2017-034-L.
Environment self-monitoring scheme
(I) Hongta Renheng
Hongta Renheng prepared self-monitoring scheme, annual self-monitoring report and self-monitoring result information and
disclosed the same on the Platform for Disclosure of Self-Monitoring Information of State-Controlled Enterprises at the Provincial
Level in Guangdong and the National Pollutant Sources Monitoring Data Management System Platform according to the
requirements of the Measures for the Self-Monitoring and Information Disclosure by the Enterprises subject to Intensive Monitoring
and Control of the State (for Trial Implementation) (HF[2013] No. 81) and the Work Scheme for the Self-Monitoring and Information
Disclosure by the Enterprises subject to Intensive Monitoring and Control of the State. The enterprise self-monitoring content
includes: air pollutant emission monitoring at main exhaust emission outlets, water pollutant emission monitoring at main wastewater
discharge outlets, and factory boundary noise monitoring, as follows:
(1) Chemical oxygen demand and ammonia nitrogen shall be monitored every two hours every day and the values monitored shall be
disclosed; biochemical oxygen demand, total phosphorus and total nitrogen shall be monitored once a week and the values monitored
shall be disclosed; other pollutants in the wastewater shall be monitored once a month at least;
(2) Sulfur dioxide, nitrogen oxides and particles shall be monitored every hour every day and the values monitored shall be disclosed;
other pollutants in the exhaust shall be monitored once a season at least;
(3) Factory boundary noise shall be monitored once a season at least;
(4) Factory boundary odor concentration shall be monitored once a season.
If the self-monitoring shall be carried out by an entrusted institution, a social testing institution that is certified by the competent
department of environmental protection at the provincial level or an environment monitoring institution to which the competent
58
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
department of environmental protection belongs shall be entrusted to carry out the monitoring task. The environment monitoring
institution to which the competent department of environmental protection belongs that has undertaken a supervisory monitoring task
shall not undertake the self-monitoring entrustment business of the enterprise monitored.
The enterprise has an online monitoring system of chemical oxygen demand, an online monitoring system of ammonia-nitrogen
containing wastewater and an online monitoring system of flue gas. The data of online monitoring systems of chemical oxygen
demand, ammonia-nitrogen, sulfur dioxide, nitrogen oxides and particles shall be disclosed on the Integrated Management Platform
of Key Pollution Sources in Guangdong Province every day; other pollutants shall be monitored by a qualified third party testing
institution that is entrusted according to relevant requirements and then monitoring data shall be disclosed on the Integrated
Management Platform of Key Pollution Sources in Guangdong Province and the Management System Platform of National Pollutant
Sources Monitoring Data.
(II) Zhuhai Huafeng
Zhuhai Huafeng prepared self-monitoring scheme, annual self-monitoring report and self-monitoring result information and disclosed
the same on the Platform for Disclosure of Self-Monitoring Information of State-Controlled Enterprises at the Provincial Level in
Guangdong and the National Pollutant Sources Monitoring Data Management System Platform according to the requirements of the
Measures for the Self-Monitoring and Information Disclosure by the Enterprises subject to Intensive Monitoring and Control of the
State (for Trial Implementation) (HF[2013] No. 81) and the Work Scheme for the Self-Monitoring and Information Disclosure by the
Enterprises subject to Intensive Monitoring and Control of the State. The enterprise self-monitoring content includes: air pollutant
emission monitoring at main exhaust emission outlets, water pollutant emission monitoring at main wastewater discharge outlets, and
factory boundary noise monitoring, as follows:
(1) Chemical oxygen demand and ammonia nitrogen shall be monitored every hour every day and the average values shall be
disclosed; other pollutants in the wastewater shall be monitored once a month at least;
(2) Sulfur dioxide, nitrogen oxides and particles shall be monitored every hour every day and the average values shall be disclosed;
other pollutants in the exhaust shall be monitored once a season at least;
(3) Factory boundary noise shall be monitored once a season at least;
(4) Factory boundary odor concentration shall be monitored once a season.
(5) The daily monitoring data of PH value, chroma and suspended solids in the wastewater and the weekly monitoring data of total
phosphorus and total nitrogen shall be disclosed on the Management System Platform of National Pollutant Sources Monitoring
Data.
If the self-monitoring shall be carried out by an entrusted institution, a social testing institution that is certified by the competent
department of environmental protection at the provincial level or an environment monitoring institution to which the competent
department of environmental protection belongs shall be entrusted to carry out the monitoring task. The environment monitoring
institution to which the competent department of environmental protection belongs that has undertaken a supervisory monitoring task
shall not undertake the self-monitoring entrustment business of the enterprise monitored.
The enterprise has an online monitoring system of chemical oxygen demand, an online monitoring system of ammonia-nitrogen
containing wastewater and an online monitoring system of flue gas. The data of online monitoring systems of chemical oxygen
demand, ammonia-nitrogen, sulfur dioxide, nitrogen oxides and particles shall be disclosed on the Integrated Management Platform
of Key Pollution Sources in Guangdong Province every day; other pollutants shall be monitored by a qualified third party institution
that is entrusted according to relevant requirements and then monitoring data shall be disclosed on the Integrated Management
Platform of Key Pollution Sources in Guangdong Province and the Management System Platform of National Pollutant Sources
Monitoring Data.
(III) Golden Pheasant Chemical
In accordance with the requirements of the Work Scheme for the Self-Monitoring and Information Disclosure by the Enterprises
subject to Intensive Monitoring and Control of the State, Golden Pheasant Chemical entrusts a qualified third party testing institution
59
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
to conduct wastewater and factory boundary noise test every year, as follows:
(1) Biochemical oxygen demand, ammonia nitrogen, suspended solids and chemical oxygen demand test shall be conducted four
times a year at least;
(2) Factory boundary noise test shall be conducted once a year at least.
(IV) Huaxin Color Printing
In accordance with the requirements of the Work Scheme for the Self-Monitoring and Information Disclosure by the Enterprises
subject to Intensive Monitoring and Control of the State, Huaxin Color Printing entrusts a qualified third party testing institution to
conduct wastewater, exhaust and factory boundary noise test every year, as follows:
(1) PH value, ammonia nitrogen, suspended solids, chemical oxygen demand, biochemical oxygen demand, chroma, sulfides test
shall be conducted twice a year at least;
(2) Benzene, toluene and xylene test shall be conducted once a year at least;
(3) Factory boundary noise test shall be conducted once a year at least.
Other environment-related information that should be disclosed:
None.
Other relevant information:
None.
XIX Other Significant Events
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
60
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as
Shares as
dividend
dividend
Percentag New converted Percentag
Shares converted Other Subtotal Shares
e (%) issues from e (%)
from
capital
profit
reserves
333,500,0 333,500,0
1. Private shares 65.98% 65.98%
00 00
333,500,0 333,500,0
1.1 Promoter’s shares 65.98% 65.98%
00 00
Such shares held by 332,930,2 332,930,2
65.87% 65.87%
domestic legal persons 90 90
Other 5,697,101 0.11% 5,697,101 0.11%
171,925,0 171,925,0
2. Public shares 34.02% 34.02%
00 00
2.2 Domestically listed 171,925,0 171,925,0
34.02% 34.02%
foreign shares 00 00
505,425,0 505,425,0
3. Total shares 100.00% 100.00%
00 00
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchase:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
61
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of
Number of
Number of preferred
ordinary
preferred shareholders
shareholders
Number of shareholders with resumed
at the
ordinary 13,422 13,367 with resumed 0 voting rights at 0
month-end
shareholders voting rights the month-end
prior to the
(if any) (see prior to the
disclosure of
note 8) disclosure of
this Report
this Report (if
62
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
any) (see note
8)
5% or greater shareholders or top 10 shareholders
Total Shares in pledge or frozen
Increase/
Sharehol shares
decrease Private Public
Name of Nature of ding held at
in the shares shares
shareholder shareholder percenta the Status Shares
Reportin held held
ge period-en
g Period
d
FOSHAN
HUAXIN State-owned 329,512, 329,512,
65.20% 0 0
DEVELOPMENT legal person 030 030
CO., LTD.
GUOTAI JUNAN
SECURITIES(H Foreign legal 3,192,45
0.63% -94600 0 3,192,453
ONGKONG) person 3
LIMITED
Foreign natural 2,561,99
WU HAOYUAN 0.51% 0 0 2,561,991
person 1
Domestic natural 1,570,00
CAI YUJIU 0.31% 376348 0 1,570,000
person 0
Domestic natural 1,522,80
MIU JUN 0.30% 286500 0 1,522,800
person 0
Foreign legal 1,352,72
NORGES BANK 0.27% 0 0 1,352,720
person 0
ESSENCE
INTERNATIONA
Foreign legal 1,205,25
L SECURITIES 0.24% 0 0 1,205,252
person 2
(HONG KONG)
CO., LTD.
FOSHAN CHAN
BEN DE ASSET State-owned 1,139,42
0.23% 0 0 1,139,420
MANAGEMENT legal person 0
CO., LTD
KGI ASIA Foreign legal 1,111,95
0.22% -50000 0 1,111,959
LIMITED person 9
Domestic natural 1,053,23
PENG RUIHUA 0.21% 0 1,053,239
person 9
Strategic investor or general legal None
63
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
person becoming a top-10 ordinary
shareholder due to rights issue (if
any) (see note 3)
Related or acting-in-concert parties It is unknown whether there is among the above shareholders any related or acting-in-concert
among the shareholders above party as defined in the Administrative Measures for the Acquisition of Listed Companies.
Top 10 public shareholders
Shares by type
Name of shareholder Public shares held at the period-end
Type Shares
GUOTAI JUNAN Domestically
SECURITIES(HONGKONG) 3,192,453 listed foreign 3,192,453
LIMITED stock
Domestically
WU HAOYUAN 2,561,991 listed foreign 2,561,991
stock
Domestically
CAI YUJIU 1,570,000 listed foreign 1,570,000
stock
Domestically
MIU JUN 1,522,800 listed foreign 1,522,800
stock
Domestically
NORGES BANK 1,352,720 listed foreign 1,352,720
stock
ESSENCE INTERNATIONAL Domestically
SECURITIES (HONG KONG) CO., 1,205,252 listed foreign 1,205,252
LTD. stock
Domestically
KGI ASIA LIMITED 1,111,959 listed foreign 1,111,959
stock
Domestically
PENG RUIHUA 1,053,239 listed foreign 1,053,239
stock
Domestically
ZHANG LI 1,011,300 listed foreign 1,011,300
stock
Domestically
MA ZEQI 959,762 listed foreign 959,762
stock
Related or acting-in-concert parties It is unknown whether there is among the above shareholders any related or acting-in-concert
among top 10 unrestricted public party as defined in the Administrative Measures for the Acquisition of Listed Companies.
64
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
shareholders, as well as between top
10 unrestricted public shareholders
and top 10 shareholders
Top 10 ordinary shareholders
involved in securities margin trading None
(if any) (see note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a central state-owned legal person
Type of the controlling shareholder: legal person
Legal
Name of controlling Unified social credit
representative/person Date of establishment Principal activity
shareholder code
in charge
Production, manufacture
and distribution of packing
materials, papermaking,
cable, wire, new materials;
FOSHAN HUAXIN distribution of packing
Yan Su 5 January 1993 914406001935399258
DEVELOPMENT CO., LTD. machinery and repairing
services, amplifiers and
fittings, decoration
materials, and drinks;
information consulting
Controlling shareholder’s
holdings in other listed
None
companies at home or abroad
in the Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Central institution for state-owned assets management
65
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Type of the actual controller: legal person
Legal
Date of Unified social credit
Name of actual controller representative/per Principal activity
establishment code
son in charge
Production, exploitation, and
utilization of wood-pulp-paper;
investment and development of
important industrial products’
means of production; sales of
metallic materials, building
materials, wood, cement,
chemical light raw materials
(excluding dangerous
China Paper Corporation Huang Xin 16 September 1988 91110000100008907C chemicals ) and its products,
clothes, paper, rubber, tire,
mechanical and electrical
products, wire, cable, and
automobile; import and export
trade; technology consulting and
service related to material
development; wholesale and
retail of coal and coke, sales of
food.
Other listed companies at home
or abroad controlled by the Guangdong Guanhao High-tech Co., Ltd. (600433.SH), Yueyang Forest & Paper Co., Ltd.
actual controller in the (600963.SH).
Reporting Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
66
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
SASAC of the State Council
100%
China Chengtong Holdings Group
Ltd
100%
China Paper Corporation Foshan Chan Ben De Asset
Management Co., Ltd
78.87% 21.13%
Foshan Huaxin Development Co.,
Ltd
34.69%
0.11% 65.2%
Foshan Huaxin Packaging Co., Ltd Other promoter shareholders
& B-shareholders
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
67
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
68
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part VIII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Beginnin Increase Decrease
Other Ending
g in the in the
Office Incumben Start of End of increase/d sharehold
Name Gender Age sharehold Reporting Reporting
title t/Former tenure tenure ecrease ing
ing Period Period
(share) (share)
(share) (share) (share)
Huang Incumben 6 June 16 April
Chairman Male 56 0 0 0 0 0
Xin t 2014 2020
Ren Vice Incumben 15 March 16 April
Male 46 0 0 0 0 0
Xiaoping president t 2018 2020
15
Ren Incumben 16 April
GM Male 46 January 0 0 0 0 0
Xiaoping t 2020
2018
Incumben 17 April 16 April
Hong Jun Director Male 59 0 0 0 0 0
t 2017 2020
Zhang Incumben 17 April 16 April
Director Male 44 0 0 0 0 0
Qiang t 2017 2020
Incumben 17 April 16 April
Ye Meng Director Male 50 0 0 0 0 0
t 2017 2020
30
Yang 17 April
Director Former Male 48 January 0 0 0 0 0
Weixing 2017
2019
Xu Independ
Incumben 17 April 16 April
Changlon ent Male 56 0 0 0 0 0
t 2017 2020
g Director
Independ
Zhang Incumben 6 June 16 April
ent Male 51 0 0 0 0 0
Wenjing t 2014 2020
Director
Independ
Incumben 17 April 16 April
Li Jun ent Male 46 0 0 0 0 0
t 2017 2020
Director
Superviso
Ren Incumben 17 April 16 April
ry Board Male 56 0 0 0 0 0
Xiaoming t 2017 2020
Chairman
Zhang Superviso Incumben Female 48 17 April 16 April 14,600 0 0 0 14,600
69
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Hong r t 2017 2020
Employee 21
Zhao Incumben 16 April
superviso Male 25 Septembe 0 0 0 0 0
Yaxing t 2020
r r 2018
Employee
Chen Incumben 17 April 30 August
superviso Male 39 0 0 0 0 0
Long t 2017 2018
r
Vice GM,
Ding CFO, and Incumben 17 July 16 April
Male 34 0 0 0 0 0
Guoqiang Board t 2018 2020
Secretary
Yang Incumben 17 April 16 April
Vice GM Male 45 0 0 0 0 0
Chenglin t 2017 2020
Wu Incumben 17 April 16 April
Vice GM Male 56 0 0 0 0 0
Yirong t 2017 2020
Vice GM,
1 August 26 March
Liu Yan Board Former Female 38 0 0 0 0 0
2017 2018
Secretary
Yang 17 April 13 July
CFO Former Male 45 0 0 0 0 0
Chenglin 2017 2018
30
Zhang Incumben 16 April
Vice GM Male 46 January 0 0 0 0 0
Chunhua t 2020
2019
Total -- -- -- -- -- -- 14,600 0 0 0 14,600
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Vice GM, Board
Liu Yan Dismissed 26 March 2018 Job change
Secretary
Yang Chenglin CFO Dismissed 13 July 2018 Job change
Vice GM, CFO,
Appointed and
Ding Guoqiang and Board 17 July 2018 Appointed by Board of Directors
dismissed
Secretary
Employee
Chen Long Left 30 August 2018 Resignation
supervisor
Employee Appointed and 7 September
Zhao Yaxing The workers’ congress election
supervisor dismissed 2018
70
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Appointed and
Zhang Chunhua Vice GM 31 January 2019 Appointed by Board of Directors
dismissed
Yang Weixing Director Left 30 January 2019 Resignation
III Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
Board Chairman Huang Xin, male, born in 1962, Bachelor’s degree holder and Engineer. He successively served as Deputy Manager
of Development Operation Dept.Ⅱ, Manager of Industrial Investment Dept., Manager of Stratagem Investment Dept. and Manager
of Asset Management Dept. Deputy GM, and Party Committee in China Material Development Investment Corporation (renaming to
China National Paper-Industry Investment Corp. and China Paper Corporation successively); the Executive GM and GM and Deputy
Party Secretary of China National Paper-Industry Investment Corp (renaming to China Paper Corporation later); Deputy GM of
Foshan Huaxin Development Co., Ltd and Foshan Huaxin Packaging Co., Ltd; GM of Zhuhai Hongta Renheng Paper Co., Ltd. Now
he is the Chairman and Party Secretary of China Paper Corporation; the Chairman of Tiger Forest &Paper Group Co., Ltd and
Yueyang Forest & Paper Co., Ltd, the Chairman of Longbang Investment and Development Co., Ltd; Director of Foshan Huaxin
Development Co., Ltd; the Chairman of Foshan Huaxin Packaging Co., Ltd; and the Chairman of Zhuhai Hongta Renheng Packaging
Co., Ltd.
Vice President and GM Ren Xiaoping, male, born in 1972, is a Master’s degree holder, professor and CPA. He successively worked
as Director of the Teaching and Research Section of Financial Management and Deputy Dean of Management Department in China
University of Labor Relations; GM of Management Center, Stratagem Development Dept. in China Paper Corporation; Supervisor of
Mcc Meili Cloud Computing Industry Investment Co., Ltd. He now acts as Supervisor of Tiger Forest Paper Group Co., Ltd; Director
of Guangdong Guanhao High-tech Co., Ltd; Director of Mcc Meili Cloud Computing Industry Investment Co., Ltd; Party Secretary,
Vice President, and GM of Foshan Huaxin Packaging Co., Ltd; Party Secretary, Vice President, and GM of Zhuhai Hongta Renheng
Packaging Co., Ltd.
Director Hong Jun, male, born in 1959, is a Bachelor’s degree holder and senior economist. He successively took posts as General
Manager of Human Resource Department in China Chengtong Holding Group Co., Ltd; Party Secretary, and Deputy GM of China
Material Development Investment Corporation (renaming to China National Paper-Industry Investment Corp. and China Paper
Corporation successively), the Party Secretary, Director, and Deputy GM of China Paper Corporation; Party Secretary of Guangdong
Guanhao High-tech Co., Ltd; Director of Yueyang Forest & Paper Co., Ltd; and now he is the Party Secretary and Deputy GM of
Chengtong Real Estate Investment Co., Ltd; Director of Tiger Forest Paper Group Co., Ltd and Director of Foshan Huaxin Packaging
Co., Ltd and Zhuhai Hongta Renheng Packaging Co., Ltd., and Director of Guangdong Guanhao High-tech Co., Ltd.
Director Zhang Qiang, male, born in 1974, is a CPA with master’s degree. He used to act as the Deputy Manager of the Operating
Management Department, the Deputy Manager of Strategic Development Department in China Material Development Investment
Corporation (renaming to China National Paper-Industry Investment Corp. and China Paper Corporation successively); Management
Representative of Zhanjiang Guanlong Paper Industrial Co., Ltd.; Assistant of GM in Guangdong Guanhao High-tech Co., Ltd;
Manager of Strategic Development Department of China National Paper-Industry Investment Corp (renaming to China Paper
Corporation later); Vice President, GM, and President of MCC Meili Paper Industry Co., Ltd; and Deputy GM of China Paper
Corporation. Now he is a Director and GM of China Paper Corporation; the Chairman of Guangdong Guanhao High-tech Co., Ltd;
Director of MCC Meili Paper Group Co., Ltd; Executive Director of Beijing Xingchengwang Industry Co., ltd; and Director of
Foshan Huaxin Packaging Co., Ltd
Director Ye Meng, male, born in 1968, is a Senior Economist with master’s degree. He used to be the HR Minister, Deputy GM, and
Party Secretary of Yueyang Paper Co., Ltd.; Chief Economist and Chief Legal Officer, Secretary of the Board, Deputy GM, Deputy
Party Secretary, and Secretary of Commission in Tiger Forest & Paper Group Co., Ltd.; Deputy Party Secretary of Yueyang Forest &
Paper Co., Ltd, General Manager Assistant in China Paper Corporation. He now is Party Secretary, Director, and GM of Tiger Forest
71
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
& Paper Group Co., Ltd; Party Secretary of Yueyang Forest & Paper Co., Ltd; and Director of Foshan Huaxin Development Co., Ltd
and Foshan Huaxin Packaging Co., Ltd.
Independent Director Xu Changlong, male, born in 1962, is a certified public accountant, certified cost engineer and member of
Revolutionary Committee of the Chinese Kuomintang with master’s degree. Xu Changlong once served as the auditor of Hunan
Provincial Audit Office and the Changsha Resident Office, National Audit Office of the People's Republic of China and has
successively held the posts of the head of Hunan Zhongshan Auditing Firm, the Chairman and Senior Accountant of Hunan Yongxin
Limited Liability Accounting Firm, the General Manager of Hunan Yongxin Assets Appraisal Co., Ltd., the Head of Hunan Yongxin
Judicial Expertise Institute, the Chairman of Hunan Yongxin Engineering Project Management Co., Ltd., and the Equity Partner of
Shinewing Certified Public Accountants Limited. At present, he holds the posts of the Chairman of the Council of Hunan Zheng
Dongguo Education Foundation, the General Manager of Reanda Certified Public Accountants Hunan Branch, and the Vice President
of ZBX Construction Cost Consulting (Beijing) Co., Ltd; Independent Director of Foshan Huaxin Packaging Co., Ltd, Huatian Hotel
Group Co., Ltd, Talkweb Information System Inc., and Zhanijajie Tourism Group Co., Ltd, and China Tungsten and Hightech
Materials Co., Ltd.
Independent Director Zhang Wenjing, male, born in 1967, is a lawyer with master’s degree. He acted as a lawyer of Guangdong
Chenguang Law Offices (renamed as De Heng (Zhuhai) Law Offices later); Independent Director of Huajin Capital Co., Ltd. He now
is a Lawyer and Director of De Heng (Zhuhai) Law Offices; legal adviser of the Standing Committee of the National People' s
Congress of Zhuhai City, People’s Government of Zhuhai, Discipline Inspection Committee of Zhuhai, High-tech Zone Management
Committee of Zhuhai, State-owned Assets Supervision and Administration Commission of People’s Government of Zhuhai, Zhuhai
Municipal Housing and Urban and Rural Planning Construction Bureau, Finance Bureau in Hnegqin New District, Development
Revolution and Finance Bureau in Gaolangang Economical Area; Independent Director in Foshan Huaxin Packaging Co., Ltd. and
Zhuhai Port Co., Ltd.
Independent Director Li Jun, Male, born in 1972, is a professor and doctoral supervisor with doctoral degree. He worked as teacher,
lecture, associate professor, and professor in South China University of Technology. Now he is a Vice President of School of Light
Industry Science and Engineering in South China University of Technology; the team head of Processing Technology and Equipment;
Deputy Director of State Key laboratories in Pulp and Paper Engineering of South China University of Technology; Independent
Director of Foshan Huaxin Packaging Co., Ltd.
Chairman of the Supervisory Committee Ren Xiaoming, male, born in 1962, is a lecturer with bachelor’s degree. He once was a
teacher in Beijing Materials University; Deputy Director of Information Teaching and Research Office of Computing Center in
Beijing Materials University; the staff, Manager of Operation Dept. I, and Manager of Future Goods Dept. in Beijing Company of
China’s Defense Military Supplies; Deputy Manager, Deputy Director of Administration (Party Committee) Office, Deputy Manager
of HR & Admin Dept., and Deputy Director of Part Committee Office, Deputy Manager and member of CCDI in Party-mass work
Dept and General management Dept in China Material Development Investment Corporation (renaming to China National
Paper-Industry Investment Corp. and China Paper Corporation successively); Party Committee Member, Secretary of Commission,
chairman of the labor union, and Chairman of Supervisory board in Foshan Huaxin Packaging Co., Ltd; Deputy Party Secretary,
Secretary of Commission, and Chairman of Supervisory board in Zhuhai Hongta Renheng Packaging Co., Ltd.; Chairman of
Supervisory board in Huaxin (Foshan) Color Printing Co., Ltd. He now is the GM of Foshan Huaxin Import & Export Co., Ltd;
Chairman of Supervisory board in Foshan Huaxin Development Co., Ltd; Chairman of Supervisory board in Huaxin (Foshan) Color
Printing Co., Ltd; Deputy Party Secretary, Secretary of Commission, and supervisor in Zhuhai Hongta Renheng Packaging Co., Ltd.;
and chairman of the labor union, and Chairman of Supervisory board in Foshan Huaxin Packaging Co., Ltd.
Supervisor: Zhang Hong, female, born in 1970, bachelor degree, Human Resources Management Division, Level 1. Zhang Hong
once held the posts of the Teacher, the Secretary for the Office of the Party Committee, and the Deputy Business Director of Labor
Output Training Division in Jiangxi Yichun Technician School; the Office Executive Secretary, Deputy Director and Director and the
Human Resources Manager in Zhuhai Hongta Renheng Packaging Co., Ltd; Human Resources Manager in Foshan Huaxin
Packaging Co., Ltd; Now, she is the GM Assistant, Director of Human Resources Administration Center in Zhuhai Hongta Renheng
72
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Packaging Co., Ltd, and Deputy Party Secretary, Secretary of Commission, and supervisor in Foshan Huaxin Packaging Co., Ltd.
Employee supervisor Zhao Yaxing, male, was born in 1993, bachelor degree. He once worked in the Logistics Department, Security
Investment Department, and Ministry of Law of Zhuhai Hongta Renheng Packaging Co., Ltd; now he is the employee supervisor in
Foshan Huaxin Packaging Co., Ltd and Deputy Director of Zhuhai Hongta Renheng Packaging Co., Ltd.
Vice GM, Board Secretary, and CFO Ding Guoqiang, male, born in 1984, is a certified public accountant with bachelor degree. He
once acted as the Director of Finance Management Department and deputy manager in China Paper Corporation; Vice GM, Chief
Accountant, and Secretary of the Board in Mcc Meili Cloud Computing Industry Investment Co., Ltd; Supervisor of Ningxia Meili
Paper Group Environmental Protection and Energy Saving Co., Ltd; GM of Strategic Development Department of Ningxia Yu;
Supervisor of Guangdong Guanhao High-tech Co., Ltd; and Director of Mcc Meili Cloud Computing Industry Investment Co., Ltd.
Now he is the Vice GM, Board Secretary, and CFO in Foshan Huaxin Packaging Co., Ltd, and Vice GM, CFO, and Board Secretary
in Zhuhai Hongta Renheng Packaging Co., Ltd.
Deputy GM Yang Chenglin, male, born in 1973, with a master degree and is a CPA. He acted as CFO in Zhuhai Huihai Development
Co., Ltd.; Financial Manager in Zhuhai MABOX Furniture Co., Ltd; Deputy Financial Manager, Financial Manager, and Assistant of
General Manager in Zhuhai Hongta Renheng Packaging Co., Ltd; Deputy GM and CFO in Foshan Huaxin Packaging Co., Ltd and
Zhuhai Hongta Renheng Packaging Co., Ltd. Now he is the Deputy GM of Foshan Huaxin Packaging Co., Ltd and Zhuhai Hongta
Renheng Packaging Co., Ltd.
Deputy General Manager Wu Yirong, male, born in 1962, is a Senior Engineer with bachelor’s degree. He acted as Technology
Deputy Managers, Sales Deputy Managers, Deputy Chief Engineer, Deputy General Manager in Zhuhai S.E.Z Hongta Renheng
Paper Co., Ltd. He has been acting as Deputy General Manager in Zhuhai Hongta Renheng Packaging Co., Ltd. He has been acting
as Deputy General Manager in Foshan Huaxin Packaging Co., Ltd. and Zhuhai Hongta Renheng Packaging Co., Ltd.
Deputy General Manager Zhang Chunhua, male, born in 1972, is a senior engineer with master degree. He once held the posts of
Deputy Manager, Manager, and General Manager Assistant of Equipment Management Department in Zhuhai Hongta Renheng
Packaging Co., Ltd, and Deputy GM of Foshan Huaxin Packaging Co., Ltd.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Office held in
Remuneration or
the
Name Shareholding entity Start of tenure End of tenure allowance from the
shareholding
shareholding entity
entity
Chairman and
Huang Xin China Paper Corporation Deputy Party 23 August 2016 Yes
Secretary
6 November
Zhang Qiang China Paper Corporation Director, GM Yes
2016
Ye Meng Foshan Huaxin Development Co., Ltd Director, 23 March 2015 No
Notes N/A
Offices held concurrently in other entities:
√Applicable □Not applicable
Remuneration or
Office held in
Name Other entity Start of tenure End of tenure allowance from
the entity
the entity
Zhuhai Hongta Renheng Packaging Co., 5 December
Huang Xin Chairman No
Ltd. 2015
73
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Huang Xin Tiger Forest &Paper Group Co., Ltd Chairman 7 June 2016 No
Huang Xin Yueyang Forest & Paper Co., Ltd Chairman 19 March 2015 No
Longbang Investment and Development
Huang Xin Chairman 1 January 2016 No
Co., Ltd
Zhuhai Hongta Renheng Packaging Co., 30 January
Hong Jun Director No
Ltd. 2017
Party
23 October
Hong Jun Chengtong Real Estate Investment Co., Ltd Secretary and No
2018
Deputy GM
22 January
Hong Jun Guangdong Guanhao High-tech Co., Ltd Director No
2010
1 February
Zhang Qiang Guangdong Guanhao High-tech Co., Ltd Chairman No
2016
Zhang Qiang MCC Meili Paper Industry Co., Ltd Director 1 March 2013 No
Executive
Zhang Qiang Beijing Xingchengwang Industry Co., ltd 6 April 2016 No
Director
Ren Xiaoping Tiger Forest &Paper Group Co., Ltd Supervisor 25 August 2016 No
Zhuhai Hongta Renheng Packaging Co., 15 January
Ren Xiaoping Director, GM Yes
Ltd. 2018
23 September
Ren Xiaoping Guangdong Guanhao High-tech Co., Ltd Director No
2017
Mcc Meili Cloud Computing Industry 6 February
Ren Xiaoping Director No
Investment Co., Ltd 2018
Party
Ye Meng Tiger Forest &Paper Group Co., Ltd Committee 7 June 2017 No
Member, GM
Deputy Party
Ye Meng Yueyang Forest & Paper Co., Ltd 29 March 2015 No
Secretary
Reanda Certified Public Accountants Hunan Executive 1 February
Xu Changlong c
Branch Head 2011
1 November
Xu Changlong Hunan Reanda Judicial Expertise Institute Head Yes
2011
Vice
ZBX Construction Cost Consulting Chairman and 28 November
Xu Changlong Yes
(Beijing) Co., Ltd GM of Hunan 2014
Branch
Independent
Xu Changlong Talkweb Information System Inc 27 June 2016 Yes
Director
74
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Independent
Xu Changlong Zhanijajie Tourism Group Co., Ltd 12 July 2018 Yes
Director
President and
Hunan Zheng Dongguo Education Legal 1 November
Xu Changlong No
Foundation (charity fund) Representativ 2015
e
Independent 19 September
Xu Changlong Huatian Hotel Group Co., Ltd Yes
Director 2017
China Tungsten and Hightech Materials Independent
Xu Changlong 16 June 2017 Yes
Co., Ltd. Director
1 December
Zhang Wenjing De Heng (Zhuhai) Law Offices Director Yes
1997
Independent
Zhang Wenjing Zhuhai Port Co., Ltd. 27 July 2015 Yes
Director
Professor and
Li Jun South China University of Technology 28 August 2017 Yes
Director
Zhuhai Hongta Renheng Packaging Co., 30 January
Ren Xiaoming Supervisor yes
Ltd. 2016
Chairman of
Ren Xiaoming Huaxin (Foshan) Color Printing Co., Ltd Supervisory 6 July 2017 No
board
Ren Xiaoming Foshan Huaxin Import & Export Co., Ltd GM 28 April 2016 No
Assistant of
GM and
Director of
Zhuhai Hongta Renheng Packaging Co.,
Zhang Hong Human 7 March 2018 Yes
Ltd.
Resources
Administratio
n Center
Zhuhai Hongta Renheng Packaging Co., Deputy 12 September
Zhao Yaxing Yes
Ltd. Director 2018
Vice GM,
Ding Zhuhai Hongta Renheng Packaging Co., Board
7 August 2018 Yes
Gguoqiang Ltd. Secretary, and
CFO
Zhuhai Hongta Renheng Packaging Co., 30 January
Yang Chenglin Deputy GM Yes
Ltd. 2016
25 October
Yang Chenglin Huaxin (Foshan) Color Printing Co., Ltd Director Yes
2017
Wu Yirong Zhuhai Hongta Renheng Packaging Co., Deputy GM 30 January Yes
75
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Ltd. 2016
Director and 25 October
Zhang Chunhua Huaxin (Foshan) Color Printing Co., Ltd Yes
GM 2017
Notes N/A
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
1. Decision-making procedure of remuneration of directors, supervisors and senior executives: remuneration of directors and
supervisors was deliberated and approved by shareholders’ general meeting; the standards of remuneration of senior executives were
decided by the remuneration and appraisal commission according to management regulations of remuneration and business
performance, and then were submitted to the board of directors for approval.
2. Determination basis of remuneration of directors, supervisors and senior executives: the Company, according to the income level
of industry and region and considering business performance of the Company and contribution to the Company, decided the scope of
annual remuneration of directors, supervisors and senior executives. On the basis of appraisal results, annual remuneration was
determined. Moreover, according to the growth of annual business performance and accomplishment of major projects, the extra
rewards would be granted after the authorization of the board of directors and verification of Chairman of the board of directors.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-tax
Any
Incumbent/Forme remuneration
Name Office title Gender Age remuneration
r from the
from related party
Company
Huang Xin Chairman Male 56 Incumbent Yes
Vice Chairman,
Ren Xiaoping Male 46 Incumbent 36.55 No
GM
Hong Jun Director Male 59 Incumbent Yes
Zhang Qiang Director Male 44 Incumbent Yes
Ye Meng Director Male 50 Incumbent Yes
Yang Weixing Director Male 48 Incumbent No
Independent
Zhang Wenjing Male 51 Incumbent 8 No
Director
Independent
Xu Changlong Male 56 Incumbent 8 No
Director
Li Jun Independent Male 46 Incumbent 8 No
76
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Director
Chairman of
Ren Xiaoming Supervisory Male 56 Incumbent 42.92 No
Board
Zhang Hong Supervisor Female 48 Incumbent 43.56 No
Employee
Zhao Yaxing Male 25 Incumbent 10.06 No
Supervisor
Employee
Chen Long Male 39 Former 14.95 No
Supervisor
Wu Yirong Deputy GM Male 56 Incumbent 47.42 No
Zhang Chunhua Deputy GM Male 46 Incumbent 32.47 No
Yang Chenglin CFO Male 45 Former 49.9 No
Ding Gguoqiang CFO Male 35 Incumbent 10.49 Yes
Total -- -- -- -- 312.32 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent 17
Number of in-service employees of major subsidiaries 1,671
Total number of in-service employees 1,688
Total number of paid employees in the Reporting Period 1,688
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 1,248
Sales 69
Technical 126
Financial 46
Administrative 199
Total 1,688
Educational backgrounds
Educational background Employees
77
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Master’s degree and above 13
Bachelor’s degree 215
Junior college 291
Technical secondary school 246
High school 923
Total 1,688
2. Employee Remuneration Policy
Combined with industry situations of the market, development strategy of the Company, and operation performance, the employee
remuneration policy of the Company provides employees with competitive salary level in industries and regions. Meanwhile, the
Company set up a normalized, standardized, and systematic salary management system according to national laws and regulations
and the actual conditions of the Company. Salary distribution is inclined to strategic talents, production backbones, and technical
personnel to ensure the market competitiveness of core talents’ income level. The employee remuneration policy incentivizes the
performance and reflects the market with clear guidance and difference. Among the compensation package of the Company’s
employees, the salary is decided by position value in line with the market, and the bonus is decided by their performance to stand out
their contributions. Moderate adjustments and collections are done to the remuneration policy of the Company according to the
development strategy and managerial demands of production operation every year. Sharing innovative achievements with staffs, the
Company provides employees with legal labor remuneration as their due to improve employees’ happiness.
The Company is pushing forward the establishment of engagement system of professional technical and skilled talents’ grade
evaluation, with recognition to employees’ professional abilities, providing competent skilled and technical talents with performance
with multi career development channel other than management position to comprehensively build the employment mechanism of
attracting talents, incentivizing talents, and retaining talents as well.
3. Employee Training Plans
Guided by strategic objectives of organization and development requirements of HR, the Company provides employees with targeted
and systematic trainings, including various respects, such as, post knowledge, job qualification, safety education, system standards,
and administrative regulations, etc. The Company carried out the training in the whole company for 6 times with the participation of
6000 people in 2018, which includes the training of promotion for writing ability, training of internal auditor, training of crane
license, Youth Talent Cultivation of China Paper Corporation, training of internal trainer, training of senior executives of Lingyun
Commercial college in China Paper Corporation, and Skills Training for Post Operation to improve knowledge and skills,
comprehensive quality, to build an excellent staff team and strengthen the competitiveness ability of core talents of the Company, and
to achieve the objective of mutual development between the Company and employees.
4. Labor Outsourcing
□ Applicable √ Not applicable
78
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part IX Corporate Governance
I General Information of Corporate Bonds
During the Reporting Period, the Company continuously improved corporate governance structure, and established modern
enterprises system to standardize the Company’s operation in strict accordance with the related laws and regulations of Corporation
Law, Securities Law, Governance Regulations of listing Companies and related rules of Shenzhen Stock Exchange. On the basis of
the related regulations of Corporation Law, Stock Listing Rules, Rules of Procedure of General Meeting of Shareholders, Board of
Directors, and Supervisory Board, the Company convened General Meeting of Shareholders, Board of Directors, and Supervisory
Board in time within the involved terms of reference of decision-making events, fully implementing the decided events; the
responsibility of General Meeting of Shareholders, Board of Directors, Supervisory Board, and Business Management is clear with
effectively operated balance mechanism, and the decision-making and rules of procedure are democratic and transparent. The actual
conditions of the Company’s governance are in line with the related regulations of CSRC.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
Asset, Organization and Financial Affairs
The Company, the controlling shareholders and the actual controllers of the Company realized the independent execution in business,
personnel, assets, finance and institution with independent calculation and respectively burden the responsibilities and risks. The
Company possesses independent and entire business and self operating ability.
1. As for the business: the Company possessed the independent and complete business and decision-making system as well as the
independent operating ability that entirely independent of the controlling shareholders and the actual controllers.
2. As for the personnel: the Company possessed independent labor, HR and salary management system and the Senior Executives
such as the GM, the managers, the Financial Administrator and the Board Secretary were all paid by the Company and unable to take
charge in the controlling shareholders’ units of the Company.
3. As for the assets: the Company possessed the independent production and operating system as well as the supporting facilities, and
the assets the controlling shareholders invested in the Company were independent as well as complete with clear ownership.
4. As for the institutions: the Company set up the organizations and intuitions independent of the controlling shareholders for
independently handling the official business and the execution of the functions.
5. As for the finance: the Company set up the independent finance management department and built up the independent accounting
calculation mechanism and financial management system; the Company opened the independent account and paid for the taxes
according to laws.
III Horizontal Competition
□ Applicable √ Not applicable
79
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor Index to disclosed
Meeting Type Date of the meeting Disclosure date
participation ratio information
Name of
announcement:
Announcement on
Resolution of The 1st
Extraordinary
General Meeting of
2018 of Foshan
Huaxin Packaging
The 1st Extraordinary Co., Ltd. ; Number
Extraordinary
General Meeting of 66.05% 31 January 2018 1 February 2018 of announcement:
General Meeting
2018 2018-082 ;
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Name of
announcement:
Announcement on
Resolution of The
2017 Annual
General Meeting of
Foshan Huaxin
Packaging Co., Ltd. ;
The 2017 Annual Annual General Number of
66.09% 17 April 2018 18 April 2018
General Meeting Meeting announcement:
2018-044 ;
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
80
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
m.cn)
Name of
announcement:
Announcement on
Resolution of The
2nd Extraordinary
General Meeting of
2018 of Foshan
Huaxin Packaging
The 2nd
Co., Ltd. ; Number
Extraordinary Extraordinary
65.80% 11 May 2018 12 May 2018 of announcement:
General Meeting of General Meeting
2018-082 ;
2018
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Name of
announcement:
Announcement on
Resolution of The 3rd
Extraordinary
General Meeting of
2018 of Foshan
Huaxin Packaging
The 3rd
Co., Ltd. ; Number
Extraordinary Extraordinary
65.55% 31 October 2018 1 November 2018 of announcement:
General Meeting of General Meeting
2018-082 ;
2018
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
Total number The
Board
of board Board Board independent
Board meetings
meetings the meetings meetings the director failed General
Independent meetings attended by
independent attended independent to attend two meetings
director attended on way of
director was through a director failed consecutive attended
site telecommunica
eligible to proxy to attend board meetings
tion
attend (yes/no)
Xu Changlong 9 1 8 0 0 No 1
Zhang Wenjing 9 1 8 0 0 No 1
Li Jun 9 0 8 1 0 No 4
Why any independent director failed to attend two consecutive board meetings:
Not applicable.
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
In accordance with the related requirements of Institutional guidance of Independent Directors of Listing Companies, Articles of
Association, and Rules of Procedure of Board of Directors, the independent Directors of the Company performed the duties, and
earnestly reviewed various proposals of Board of Directors, fully expressed their opinions about the significant events of the
Company, and also expressed related opinions about the events in need of approval opinions of independent Directors or independent
opinions in advance, giving a full play to the functions of independent directors, and providing effective guarantee to the scientific
decision-making of Board of Directors.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
(I) Performance of the Audit Committee of the Board of Directors
The Audit Committee of the Board of Directors held one meeting. In accordance with the responsibilities of the Audit Committee of
the Board of Directors of the company, the Audit Committee mainly coordinates, supervises and checks the internal and external
82
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
audit:
1. The audit committee fully communicated with the accounting firm responsible for annual audit of the company with respect to the
audit plan, engagement letter, risk and control etc.
2. Before the certified public accountant responsible for annual audit of the company entered the site, the audit committee reviewed
the financial statements prepared preliminarily by the company and believed that the statements reflect the current financial state of
the company in all material respects.
3. After the certified public accountant responsible for annual audit of the company provided his preliminary opinion, the audit
committee reviewed the financial statements of the company and communicated with the accounting firm concerning important
issues and main accounting estimation issues, audit adjustment issues and important accounting policies that may have an potential
impact on the financial statements, believed that the financial and accounting statements of the company reflected the overall
situation of the company truly, accurately and completely and agreed to prepare the annual report of FY 2018 based on these
statements.
4. The audit committee reviewed the financial statements of FY 2018 which has been audited by the auditor, believed that these
statements reflected the financial state, operating results and cash flow of the company in FY 2018 fairly in all materials respects, and
agreed to submit these statements to the Board of Directors for deliberation.
(II) Performance of the Remuneration and Appraisal Committee of the Board of Directors
The Remuneration and Appraisal Committee of the Board of Directors held just one meeting in total. In accordance with own
responsibilities, the Remuneration and Appraisal Committee of the Board of Directors reviewed the annual pay declared by directors,
supervisors and senior executives of the company and believed that the annual pay declared by directors, supervisors and senior
executives of the company is consistent with that they actually collect from the company. The remuneration of directors, supervisors
and senior executives of the company is paid according to the salary management regulations of the company. Meanwhile, annual
salary allocation proposal for management staff of the company was deliberated, passed and submitted to the Board of Directors.
(III) Nomination Committee of the Board of Directors
The Nomination Committee of the Board of Directors held two meetings in total. In accordance with own responsibilities, the
Nomination Committee of the Board of Directors reviewed the qualifications of personnel involved in the Proposal of Employment
of General Manager, and the Proposal of Employment of Deputy General Manager, Secretary of the Board, and CFO.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
In the principle of reasonableness, fairness, and justice, the Company thinks highly of the combination of material incentives with
spirit incentives, and the combination of operation target of the Company with dedication spirit, social responsibility, and career
achievement of the senior executive at the same time.
During the Reporting Period, the Company established the appraisal system based on system of objective responsibility in
accordance with Methods of Compensation Management and Enforcement Regulations of Compensation Incentives reviewed and
approved by board of Directors and Compensation and Appraisal Committee. The Company and executive officers signed the
Liability Statement of the Company’s Annual Operation to confirm the compensation incentives scheme of executive officers. The
Board of Directors evaluates the performance of executive officers to confirm the compensation according to the indicators of
83
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Liability Statement of the Annual Operation, including multidimensional indicators, like various annual financial indicators, internal
operation management indicators, and special indicators of main work, and etc.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
Disclosure date of the internal control
18 March 2019
self-evaluation report
Index to the disclosed internal control
http://www.cninfo.com.cn
self-evaluation report
Evaluated entities’ combined assets as % of
100.00%
consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 100.00%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over financial Weaknesses in internal control not
Type
reporting related to financial reporting
(1) Indications of the great defect of the (1) If there were unambiguous evidence
financial report including: ① malpractices indicated the Company possessed one of
of the Directors, Supervisors and the Senior the following conditions among the
Executives of the Company; ② published evaluation at the period-end, should be
financial report with significant recognized as the great defect of the
misstatement which influenced its internal control: ① the significant
authenticity, integrity and fairness that the events lacked of the legal
Company would make certain verification; decision-making process; ② lacked of
③ CPA discovered the significant the decision-making process or the
Nature standard misstatement of the current financial report process was not normative that caused
while the internal control failed to find out significant mistakes; ③ violated the
during the operating;④ the supervision on national laws, regulations, rules or
the internal control by the Audit Committee normative documents that received the
and the internal audit institution of the administrative punishment such as the
Company was invalid. (2) The indications of criminal penalties or be ordered for
the significant defect of the financial report suspension of production or business, be
including: ① the environmental control withheld or revoked the permits or
was invalid; ② the accounting polices license; ④ the great defect of the
formulated by the Company violated the internal control had not been verified; ⑤
84
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
ASBE; ③ the applied accounting polices the significant business lacked of the
not met with the accounting system of the systematic control or which was invalid.
Company; ④ had not built up the fraud (2) There was unambiguous evidence
program and control measurements; ⑤ the indicated the Company possessed one of
financial treatment with unconventional or the following conditions among the
special transactions did not build up evaluation at the period-end, should be
corresponding control system or failed to recognized as the significant defect of
execute; ⑥ there was one or multiple the internal control: ① there was
defects during the control of financial report decision-making process but not
at the period-end and could not reasonably complete enough; ② the
ensure the statement of the compile of the decision-making process was irregular
financial report was real and complete. (3) that caused rather big mistake; ③
General defect refers to the other control violated the national laws, regulations,
defect except for the above great defect and rules and the normative documents that
significant defect. received the administrative punishment
except the criminal penalties or the order
of the suspension of production or
business or be withheld or revoked the
permits or license; ④ significant
business mechanism or system existed
significant defect; ⑤ the significant
defect of the internal control had not
been verified. (3) The general defect
refers to the other control defect except
for the above great defect and significant
defect
The quantitative criteria regarded the total The quantitative criteria regarded the
assets amount of the consolidated financial directly financial losses amount as the
report as the measurement index. If the measurement index. If the defect alone or
defect alone or accompanied with other accompanied with other defects which
defects which may cause the amount of the may cause the amount of the directly
misstatement of the financial report lower financial losses lower than 0.5% of the
than 0.5% of the total assets amount of the total assets amount of the consolidated
consolidated statements, should be statements, should be recognized as the
Quantitative standard
recognized as the general defect; if exceeded general defect; if exceeded 0.5% of the
0.5% of the total assets amount of the total assets amount of the consolidated
consolidated statement but still lower than statement but still lower than 1% of
1% of which, should be recognized as the which, should be recognized as the
significant defect; if exceeded 1% of the significant defect; if exceeded 1% of the
total assets amount of the consolidated total assets amount of the consolidated
statement, should be recognized as the great statement, should be recognized as the
defect. great defect.
Number of material weaknesses in internal
0
control over financial reporting
85
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Number of material weaknesses in internal
0
control not related to financial reporting
Number of serious weaknesses in internal
0
control over financial reporting
Number of serious weaknesses in internal
0
control not related to financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
Huaxin Packaging maintained valid internal control of the financial report in the significant aspects according to the C-SOX and
the relevant regulations on 31 December 2018.
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 18 March 2019
Index to such report disclosed www.cninfo.com.cn
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
√ Yes □ No
86
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part X Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this
Report’s approval or were due but could not be redeemed in full?
No.
87
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part XI Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 15 March 2019
Name of the independent auditor Pan-China Certified Public Accountants(LLP)
Name of the certified public accountants Li Qinglong, Liu Jingya
Text of the Independent Auditor’s Report
Independent Auditor’s Report
Pan-China Audit Report [2019] No. 8-14
To the Shareholders of Foshan Huaxin Packaging Co., Ltd.
I. Opinion
We have audited the accompanying financial statements of Foshan Huaxin Packaging Co., Ltd.
(together with its consolidated subsidiaries included in the consolidated financial statements, the
“Company”), which comprise the parent’s and consolidated balance sheets as at 31 December 2018,
the parent’s and consolidated income statements, the parent’s and consolidated cash flow statements,
the parent’s and consolidated statements of changes in owners’ equity for the year then ended, as
well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of
Accounting Standards for Business Enterprises in all significant aspects which gave a true and fair
view of the consolidated and parent financial position of Foshan Huaxin Packing Co., Ltd. as at 31
December 2018 and the consolidated and parent business performance and cash flow for 2018.
II. Basis for Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. In accordance with professional ethics
for certified public accountants, we are independent with Foshan Huaxin Packing Co., Ltd. and we
have fulfilled our other ethical responsibilities. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the Current Period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
(II) Accounted by Equity Method on the Investment of Associated Companies
1. Event description
Refer to Note V. (I) 8, Note V. (II) 12 and Note VII. (III) 1 to the financial statements for the details
of the relevant information disclosure;
88
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
During the Reporting Period, the management of Huaxin Packaging (hereinafter referred to as “the
management”) made the following significant judgments: Although Huaxin Packaging holds less
than 20% of the equity of Chengtong Finance Corporation Ltd. (hereinafter referred to as
Chengtong Finance), it has the rights to delegate directors to Chengtong Finance, participate in the
operation and financial decision-making of Chengtong Finance and independently declare opinions
during the operation and financial decision-making process, and it has actually delegated directors
to Chengtong Finance. Therefore, it has significant effects on Chengtong Finance. Huaxin
Packaging converted its investment on Chengtong Finance from available-for-sale financial assets
into long-term equity investment accounted by equity method, and recognized into non-operating
revenue the difference amount of RMB21,561,200 between the initial investment cost and the fair
value of the identifiable net assets of the investee on the conversion date that it should be entitled to.
This event has significant effects on the consolidated financial statements of Huaxin Packaging.
2. Audit response
Audit procedures we implemented against the changes in the accounting method for associated
companies include:
(1) Obtain the documents on the Articles of Incorporation, and organization structure of Chengtong
Finance to understand the investment purposes.
(2) By checking relevant document records, including the explanation on the delegation of directors
by Huaxin Packaging, understand the significant effects of Huaxin Packaging on Chengtong
Finance, including the delegation of representatives in the board of directors of Chengtong Finance,
participation in the formulation of financial and operation policies and connected transactions.
Determine whether the conversion from cost method to equity method and the confirmation of the
conversion date on Chengtong Finance during the Reporting Period was reasonable.
(3) Obtain the financial statements of Chengtong Finance, determine the fair value of the
identifiable net assets of Chengtong Finance, and execute the audit procedures including
recalculation to check the accuracy of the amount of non-operating income and the appropriateness
of relevant accounting treatment by the management.
(4) Check the presentation and disclosure of the event.
(II) Revenue Recognition
1. Event description
Refer to Note III. (XXIV) and Note V. (II) 1 to the financial statements for the details of the
relevant information disclosure;
Huaxin Packaging is mainly engaged in the production and sale of ivory board, latex and printing
products. In 2018, the operating revenue of Huaxin Packaging was RMB 3,683,004,500, which was
mainly from domestic sale. According to the sale terms, the revenue from domestic sale shall be
recognized when products have been delivered to the place requested by the customer with the
acknowledgment on the receipt while the revenue from overseas sale shall be recognized when
products have been cleared by the customs with the declaration for export obtained.
As operating revenue is one of the key performance indicators of Huaxin Packaging, there might be
the inherent risk of the management intending to achieve certain goals or expectations through
improper revenue recognition. Therefore, we identify revenue recognition as a key audit event.
2. Audit response
Audit procedures we implemented against revenue recognition mainly include:
(1) Understand key internal control related to revenue recognition, evaluate its design and execution
89
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
and test the operation effectiveness of relevant internal control;
(2) Check key sale contracts, identify the terms related to the major risks and remuneration shift of
commodity ownership, evaluate whether the revenue recognition policy complies with the
regulation of the accounting standards for enterprises;
(3) Implement the analysis procedures on operating revenue and gross profit margin by product and
customer, identify whether there are any significant or unusual fluctuations and find out the reasons;
(4) In terms of domestic sale, check the supporting documents related to revenue recognition using
the sampling method, including sale contracts, sale invoices and customers’ acknowledgment
receipts; for overseas sale, check the supporting documents using the sampling method, including
sale contracts, declarations for export and sale invoices;
(5) Based on the letters of confirmation on accounts receivable, confirm with key customers on the
sales for the Reporting Period;
(6) Use the sampling method to check the revenue recognized around the balance sheet date against
the supporting documents such as customers’ acknowledgment receipts and declarations for export
and evaluate whether the revenue has been recognized in an appropriate period;
(7) Check whether the information related to operating revenue has been properly presented and
disclosed in the financial statements.
IV. Other Information
The management is responsible for the other information. The other information comprises all of
the information included in the annual report other than the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibility of Management and Those Charged with Governance for the Financial
Statements
The management is responsible for the preparation and fair presentation of these financial
statements in accordance with Accounting Standards for Business Enterprises to make them a fair
presentation and designing, implementing and maintaining internal control relevant to the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the management either intends to liquidate
or to cease operations, or has no realistic alternative but to do so.
Government of Foshan Huaxin Packing Co., Ltd (hereinafter refer to as “Government”) are
responsible for overseeing the Company’s financial reporting process.
VI. CPA’s Responsibility for the Audit of the Financial Statements
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose.
We do not assume responsibility towards or accept liability to any other person for the contents of
this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, and if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
(VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an audit opinion on the financial statements.
We are responsible for the direction, supervision and performance of the Company’s audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
that were of most significance in the audit of the financial statements of the Current Period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Foshan Huaxin Packaging Co., Ltd.
15 March 2019
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 133,983,939.73 287,652,868.65
Settlement reserve
Interbank loans granted
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes and accounts receivable 1,058,839,572.02 1,160,829,887.51
Including: Notes receivable 277,623,928.13 430,699,664.45
Accounts receivable 781,215,643.89 730,130,223.06
Prepayments 114,855,049.09 130,297,310.05
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other receivables 26,332,955.74 20,249,531.23
Including: Interest receivable 7,800,232.76 141,388.09
Dividends receivable
Financial assets purchased under resale
agreements
Inventories 1,029,236,159.71 586,179,348.11
Assets classified as held for sale
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Current portion of non-current assets
Other current assets 338,311,849.45 44,160,627.03
Total current assets 2,701,559,525.74 2,229,369,572.58
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 288,700.00 627,643,841.04
Held-to-maturity investments
Long-term receivables
Long-term equity investments 662,590,158.00 8,294,365.17
Investment property 30,763,683.73 32,092,356.29
Fixed assets 2,178,817,683.33 2,302,301,389.40
Construction in progress 38,735,958.38 39,315,774.19
Productive living assets
Oil and gas assets
Intangible assets 131,907,260.76 139,717,215.22
R&D expense 7,752,439.97
Goodwill 11,547,305.29 11,547,305.29
Long-term prepaid expense 4,755,506.18 3,256,890.17
Deferred income tax assets 31,549,345.48 27,594,599.01
Other non-current assets 1,495,963.49 5,235,044.33
Total non-current assets 3,100,204,004.61 3,196,998,780.11
Total assets 5,801,763,530.35 5,426,368,352.69
Current liabilities:
Short-term borrowings 862,776,823.86 897,426,244.52
Borrowings from central bank
Customer deposits and interbank
deposits
Interbank loans obtained
Financial liabilities at fair value through
2,394,879.25
profit or loss
Derivative financial liabilities
Notes and accounts payable 782,312,573.76 349,777,358.80
Advances from customers 33,431,588.79 21,769,745.08
Financial assets sold under repurchase
agreements
93
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Handling charges and commissions
payable
Payroll payable 44,817,842.45 29,262,158.33
Taxes payable 41,288,520.29 21,397,103.10
Other payables 179,737,877.39 50,811,351.70
Including: Interest payable 6,315,962.71 7,865,380.83
Dividends payable 25,083,228.68 12,116,789.76
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities directly associated with assets
classified as held for sale
Current portion of non-current liabilities 200,000,000.00 199,834,258.85
Other current liabilities
Total current liabilities 2,144,365,226.54 1,572,673,099.63
Non-current liabilities:
Long-term borrowings 100,000,000.00 200,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 16,825,912.17
Long-term payroll payable
Provisions 1,508,735.64 1,366,445.61
Deferred income 30,305,313.30 30,773,540.27
Deferred income tax liabilities 2,131,935.03 2,238,594.61
Other non-current liabilities
Total non-current liabilities 133,945,983.97 251,204,492.66
Total liabilities 2,278,311,210.51 1,823,877,592.29
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 256,822,373.42 256,822,373.42
94
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Less: Treasury stock
Other comprehensive income 169,714.39 169,714.39
Specific reserve
Surplus reserves 196,399,250.80 192,647,450.61
General reserve
Retained earnings 1,012,130,481.68 1,027,794,897.79
Total equity attributable to owners of the
1,970,946,820.29 1,982,859,436.21
Company as the parent
Non-controlling interests 1,552,505,499.55 1,619,631,324.19
Total owners’ equity 3,523,452,319.84 3,602,490,760.40
Total liabilities and owners’ equity 5,801,763,530.35 5,426,368,352.69
Legal representative: Ren Xiaoping Chief Financial Officer: Ding Guoqiang
Financial Manager: Luo Jing
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 357,681.85 27,448,820.30
Financial assets at fair value through
profit or loss
Derivative financial assets
Notes and accounts receivable
Including: Notes receivable
Accounts receivable
Prepayments
Other receivables 61,127,498.79 187,029,661.31
Including: Interest receivable 4,481,906.67
Dividends receivable
Inventories
Assets classified as held for sale
Current portion of non-current assets
Other current assets 45,344.03 18,255.56
Total current assets 61,530,524.67 214,496,737.17
Non-current assets:
Available-for-sale financial assets 288,700.00 627,643,841.04
95
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Held-to-maturity investments
Long-term receivables
Long-term equity investments 1,719,127,360.28 1,070,107,442.14
Investment property
Fixed assets 89,328.44 121,857.50
Construction in progress
Productive living assets
Oil and gas assets
Intangible assets 95,808.24 118,626.24
R&D expense
Goodwill
Long-term prepaid expense 168,411.39 213,321.10
Deferred income tax assets
Other non-current assets
Total non-current assets 1,719,769,608.35 1,698,205,088.02
Total assets 1,781,300,133.02 1,912,701,825.19
Current liabilities:
Short-term borrowings
Financial liabilities at fair value through
profit or loss
Derivative financial liabilities
Notes and accounts payable
Advances from customers
Payroll payable 10,500.40 5,701.66
Taxes payable 1,214.50 1,698.89
Other payables 51,738,991.68 11,731,091.24
Including: Interest payable 2,536,586.20 4,511,037.89
Dividends payable 229,593.13 219,338.35
Liabilities directly associated with assets
classified as held for sale
Current portion of non-current liabilities 199,834,258.85
Other current liabilities
Total current liabilities 51,750,706.58 211,572,750.64
Non-current liabilities:
Long-term borrowings
96
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Provisions
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 51,750,706.58 211,572,750.64
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 250,531,482.00 250,531,482.00
Less: Treasury stock
Other comprehensive income
Specific reserve
Surplus reserves 196,399,250.80 192,647,450.61
Retained earnings 777,193,693.64 752,525,141.94
Total owners’ equity 1,729,549,426.44 1,701,129,074.55
Total liabilities and owners’ equity 1,781,300,133.02 1,912,701,825.19
3. Consolidated Income Statement
Unit: RMB
Item 2018 2017
1. Revenue 3,683,004,543.50 3,583,157,646.37
Including: Operating revenue 3,683,004,543.50 3,583,157,646.37
Interest income
Premium income
Handling charge and
commission income
2. Costs and expenses 3,796,303,733.02 3,566,071,163.08
97
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Including: Cost of sales 3,356,346,712.73 3,108,365,473.17
Interest expense
Handling charge and
commission expense
Surrenders
Net claims paid
Net amount provided as
insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
expense
Taxes and surcharges 17,536,913.12 22,967,010.28
Selling expense 169,422,183.20 182,923,723.55
Administrative expense 113,073,452.18 120,342,343.74
R&D expense 32,784,184.94 5,134,464.54
Finance costs 89,130,763.80 121,627,924.65
Including: Interest
97,699,988.40 122,634,675.32
expense
Interest
11,188,199.94 20,462,322.12
income
Asset impairment loss 18,009,523.05 4,710,223.15
Add: Other income 11,229,258.30 13,791,511.79
Investment income (“-” for loss) 18,008,673.27 34,641,907.00
Including: Share of profit or
5,625,141.25 22,353,488.34
loss of joint ventures and associates
Gain on changes in fair value (“-”
2,394,879.25 -3,966,220.91
for loss)
Foreign exchange gain (“-” for
loss)
Asset disposal income (“-” for
1,390,311.65 689,820.93
loss)
3. Operating profit (“-” for loss) -80,276,067.05 62,243,502.10
Add: Non-operating income 32,719,902.12 4,412,955.57
Less: Non-operating expense 8,259,701.51 29,256,836.85
4. Profit before tax (“-” for loss) -55,815,866.44 37,399,620.82
Less: Income tax expense 1,168,739.98 2,171,808.47
5. Net profit (“-” for net loss) -56,984,606.42 35,227,812.35
98
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
5.1 Net profit from continuing
-56,866,173.83 37,706,435.17
operations (“-” for net loss)
5.2 Net profit from discontinued
-118,432.59 -2,478,622.82
operations (“-” for net loss)
Net profit attributable to owners of
-2,814,965.92 18,637,865.97
the Company as the parent
Net profit attributable to
-54,169,640.50 16,589,946.38
non-controlling interests
6. Other comprehensive income, net of
tax
Attributable to owners of the
Company as the parent
6.1 Items that will not be
reclassified to profit or loss
6.1.1 Changes caused by
remeasurements on defined benefit
pension schemes
6.1.2 Share of other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
6.2 Items that may subsequently be
reclassified to profit or loss
6.2.1 Share of other
comprehensive income of investees that
will be reclassified to profit or loss
under equity method
6.2.2 Gain/Loss on changes in
fair value of available-for-sale financial
assets
6.2.3 Gain/Loss arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
6.2.4 Effective gain/loss on cash
flow hedges
6.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
6.2.6 Other
Attributable to non-controlling
interests
99
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
7. Total comprehensive income -56,984,606.42 35,227,812.35
Attributable to owners of the
-2,814,965.92 18,637,865.97
Company as the parent
Attributable to non-controlling
-54,169,640.50 16,589,946.38
interests
8. Earnings per share
8.1 Basic earnings per share -0.01 0.04
8.2 Diluted earnings per share -0.01 0.04
Where business combinations under common control occurred in the current period, the net profit achieved by the acquirees before
the combinations was RMB0.00, with the amount for last year being RMB0.00.
Legal representative: Ren Xiaoping Chief Financial Officer: Ding Guoqiang
Financial Manager: Luo Jing
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Operating revenue 0.00 0.00
Less: Cost of sales 0.00 0.00
Taxes and surcharges 1,320.00 28,682.69
Selling expense
Administrative expense 2,283,741.47 5,978,826.57
R&D expense
Finance costs 68,524.98 4,020,985.86
Including: Interest expense 8,806,,875.29 55,902,473.17
Interest income 8,822,547.45 51,954,404.84
Asset impairment loss 7,369.57
Add: Other income
Investment income (“-” for loss) 18,317,719.37 33,862,273.89
Including: Share of profit or
5,103,538.56 22,059,145.80
loss of joint ventures and associates
Gain on changes in fair value (“-”
for loss)
Asset disposal income (“-” for
loss)
2. Operating profit (“-” for loss) 15,956,763.35 23,833,778.77
Add: Non-operating income 21,561,238.54 2,449.44
100
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Less: Non-operating expense 108,053.64
3. Profit before tax (“-” for loss) 37,518,001.89 23,728,174.57
Less: Income tax expense 4,386.83
4. Net profit (“-” for net loss) 37,518,001.89 23,723,787.74
4.1 Net profit from continuing
37,518,001.89 23,723,787.74
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
tax
5.1 Items that will not be reclassified
to profit or loss
5.1.1 Changes in caused by
remeasurements on defined benefit
pension schemes
5.1.2 Share of other
comprehensive income of investees that
will not be reclassified to profit or loss
under equity method
5.2 Items that may subsequently be
reclassified to profit or loss
5.2.1 Share of other
comprehensive income of investees that
will be reclassified to profit or loss
under equity method
5.2.2 Gain/Loss on changes in fair
value of available-for-sale financial
assets
5.2.3 Gain/Loss arising from
reclassification of held-to-maturity
investments to available-for-sale
financial assets
5.2.4 Effective gain/loss on cash
flow hedges
5.2.5 Differences arising from
translation of foreign
currency-denominated financial
statements
5.2.6 Other
6. Total comprehensive income 37,518,001.89 23,723,787.74
7. Earnings per share
101
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities
3,842,502,603.81 3,500,810,257.77
and rendering of services
Net increase in customer deposits and
interbank deposits
Net increase in borrowings from
central bank
Net increase in loans from other
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Net increase in proceeds from
disposal of financial assets at fair value
through profit or loss
Interest, handling charges and
commissions received
Net increase in interbank loans
obtained
Net increase in proceeds from
repurchase transactions
Tax rebates 77,562.83
Cash generated from other operating
159,737,820.68 81,627,128.29
activities
Subtotal of cash generated from
4,002,240,424.49 3,582,514,948.89
operating activities
Payments for commodities and
3,126,706,099.95 3,151,914,393.79
services
Net increase in loans and advances to
customers
Net increase in deposits in central
bank and in interbank loans granted
Payments for claims on original
insurance contracts
102
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Interest, handling charges and
commissions paid
Policy dividends paid
Cash paid to and for employees 202,823,160.04 198,978,451.99
Taxes paid 82,766,773.12 143,402,317.73
Cash used in other operating
196,478,996.66 110,130,706.46
activities
Subtotal of cash used in operating
3,608,775,029.77 3,604,425,869.97
activities
Net cash generated from/used in
393,465,394.72 -21,910,921.08
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment
Investment income 10,245,728.00 47,768,096.34
Net proceeds from disposal of fixed
assets, intangible assets and other 16,914,152.88 1,258,975.71
long-lived assets
Net proceeds from disposal of
subsidiaries or other business units
Cash generated from other investing
231,383,532.02 720,909,915.83
activities
Subtotal of cash generated from
258,543,412.90 769,936,987.88
investing activities
Payments for acquisition of fixed
assets, intangible assets and other 27,351,931.82 34,123,041.42
long-lived assets
Payments for investments 396,000,000.00
Net increase in pledged loans granted
Net payments for acquisition of
subsidiaries and other business units
Cash used in other investing
545,200,000.00 1,000,000.00
activities
Subtotal of cash used in investing
572,551,931.82 431,123,041.42
activities
Net cash generated from/used in
-314,008,518.92 338,813,946.46
investing activities
3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by
non-controlling interests to subsidiaries
Increase in borrowings obtained 1,964,748,616.03 1,625,060,964.89
103
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Net proceeds from issuance of bonds
Cash generated from other financing
89,000,956.90 192,891,765.59
activities
Subtotal of cash generated from
2,053,749,572.93 1,817,952,730.48
financing activities
Repayment of borrowings 2,109,665,980.99 2,061,300,029.05
Payments for interest and dividends 108,171,060.59 132,490,125.69
Including: Dividends paid by
6,648,241.15
subsidiaries to non-controlling interests
Cash used in other financing
45,971,254.50 33,400,956.90
activities
Subtotal of cash used in financing
2,263,808,296.08 2,227,191,111.64
activities
Net cash generated from/used in
-210,058,723.15 -409,238,381.16
financing activities
4. Effect of foreign exchange rate
4,362,620.83 -10,516,433.29
changes on cash and cash equivalents
5. Net increase in cash and cash
-126,239,226.52 -102,851,789.07
equivalents
Add: Cash and cash equivalents,
254,251,911.75 357,103,700.82
beginning of the period
6. Cash and cash equivalents, end of the
128,012,685.23 254,251,911.75
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities
and rendering of services
Tax rebates
Cash generated from other operating
13,374,787.33 1,277,482,830.05
activities
Subtotal of cash generated from
13,374,787.33 1,277,482,830.05
operating activities
Payments for commodities and
services
Cash paid to and for employees 1,321,951.81 3,744,473.34
Taxes paid 1,020.00 222,684.00
Cash used in other operating
1,173,471.23 442,612,705.55
activities
104
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Subtotal of cash used in operating
2,496,443.04 446,579,862.89
activities
Net cash generated from/used in
10,878,344.29 830,902,967.16
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment
Investment income 10,000,000.00 46,915,384.12
Net proceeds from disposal of fixed
assets, intangible assets and other 25,320.71
long-lived assets
Net proceeds from disposal of
8,214,180.81
subsidiaries or other business units
Cash generated from other investing
304,272,441.64 511,909,915.83
activities
Subtotal of cash generated from
322,486,622.45 558,850,620.66
investing activities
Payments for acquisition of fixed
assets, intangible assets and other 249,580.00
long-lived assets
Payments for investments 396,000,000.00
Net payments for acquisition of
subsidiaries and other business units
Cash used in other investing
156,310,000.00
activities
Subtotal of cash used in investing
156,310,000.00 396,249,580.00
activities
Net cash generated from/used in
166,176,622.45 162,601,040.66
investing activities
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained
Net proceeds from issuance of bonds
Cash generated from other financing
55,600,000.00
activities
Subtotal of cash generated from
55,600,000.00
financing activities
Repayment of borrowings 200,000,000.00 899,980,000.00
Payments for interest and dividends 19,702,981.05 74,484,459.27
Cash used in other financing
40,000,000.00
activities
Sub-total of cash used in financing 259,702,981.05 974,464,459.27
105
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
activities
Net cash generated from/used in
-204,102,981.05 -974,464,459.27
financing activities
4. Effect of foreign exchange rate
-43,124.14
changes on cash and cash equivalents
5. Net increase in cash and cash
-27,091,138.45 19,039,548.55
equivalents
Add: Cash and cash equivalents,
27,448,820.30 8,409,271.75
beginning of the period
6. Cash and cash equivalents, end of the
357,681.85 27,448,820.30
period
7. Consolidated Statements of Changes in Owners’ Equity
2018
Unit: RMB
2018
Equity attributable to owners of the Company as the parent
Other equity Non-co
Other Retaine Total
Item instruments Less: ntrollin
Share Capital compre Specific Surplus General d owners’
Treasur g
Prefer Perpet equity
capital reserves hensive reserve reserves reserve earning
y stock interests
red ual Other
income s
shares bonds
1. Balances as at 505,42 1,027,7 1,619,6 3,602,4
256,822 169,714 192,647
the end of the prior 5,000. 94,897. 31,324. 90,760.
,373.42 .39 ,450.61
year 00 79 19 40
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations
under common
control
Other
adjustments
2. Balances as at 505,42 1,027,7 1,619,6 3,602,4
256,822 169,714 192,647
the beginning of 5,000. 94,897. 31,324. 90,760.
,373.42 .39 ,450.61
the year 00 79 19 40
106
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3. Increase/
decrease in the 3,751,8 -15,664, -67,125, -79,038,
period (“-” for 00.19 416.11 824.64 440.56
decrease)
3.1 Total
-2,814,9 -54,169, -56,984,
comprehensive
65.92 640.50 606.42
income
3.2 Capital
increased and
reduced by owners
3.2.1
Ordinary shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit 3,751,8 -12,849, -12,956, -22,053,
distribution 00.19 450.19 184.14 834.14
3.3.1
3,751,8 -3,751,8
Appropriation to
00.19 00.19
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to -9,097,6 -12,956, -22,053,
owners (or 50.00 184.14 834.14
shareholders)
3.3.4 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
107
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4
Changes in
defined benefit
pension schemes
transferred to
retained earnings
3.4.5 Other
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other
4. Balances as at 505,42 1,012,1 1,552,5 3,523,4
256,822 169,714 196,399
the end of the 5,000. 30,481. 05,499. 52,319.
,373.42 .39 ,250.80
period 00 68 55 84
2017
Unit: RMB
2017
Equity attributable to owners of the Company as the parent
Non-co
Other equity
Other ntrollin Total
Item instruments Less: Retaine
Share Capital compre Specific Surplus General g owners’
Prefer Perpet Treasur d
capital reserves hensive reserve reserves reserve interest equity
red ual Other y stock earnings
income s
shares bonds
1. Balances as at 505,42 1,027,7 1,618,3 3,598,7
256,822 169,714 190,275
the end of the prior 5,000. 03,010. 19,827. 14,997.
,373.42 .39 ,071.84
year 00 59 16 40
Add: Adjustments
for changed
accounting
policies
Adjustments for
108
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
corrections of
previous errors
Adjustments for
business
combinations
under common
control
Other
adjustments
2. Balances as at 505,42 1,027,7 1,618,3 3,598,7
256,822 169,714 190,275
the beginning of 5,000. 03,010. 19,827. 14,997.
,373.42 .39 ,071.84
the year 00 59 16 40
3. Increase/
decrease in the 2,372,3 91,887. 1,311,4 3,775,7
period (“-” for 78.77 20 97.03 63.00
decrease)
3.1 Total
18,637, 16,589, 35,227,
comprehensive
865.97 946.38 812.35
income
3.2 Capital
increased and
reduced by owners
3.2.1
Ordinary shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit 2,372,3 -18,545, -15,278 -31,452,
distribution 78.77 978.77 ,449.35 049.35
3.3.1
2,372,3 -2,372,3
Appropriation to
78.77 78.77
surplus reserves
3.3.2
Appropriation to
general reserve
109
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3.3.3
Appropriation to -16,173, -15,278 -31,452,
owners (or 600.00 ,449.35 049.35
shareholders)
3.3.4 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4
Changes in
defined benefit
pension schemes
transferred to
retained earnings
3.4.5 Other
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other
4. Balances as at 505,42 1,027,7 1,619,6 3,602,4
256,822 169,714 192,647
the end of the 5,000. 94,897. 31,324. 90,760.
,373.42 .39 ,450.61
period 00 79 19 40
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2018
Unit: RMB
2018
Item
Share Other equity instruments Capital Less: Other Specific Surplus Retaine Total
110
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
capital reserves Treasury comprehe reserve reserves d owners’
Preferre Perpetu
Other stock nsive earnings equity
d shares al bonds
income
1. Balances as at
505,425, 250,531,4 192,647,4 752,525 1,701,129
the end of the prior
000.00 82.00 50.61 ,141.94 ,074.55
year
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as at
505,425, 250,531,4 192,647,4 752,525 1,701,129
the beginning of
000.00 82.00 50.61 ,141.94 ,074.55
the year
3. Increase/
decrease in the 3,751,800 24,668, 28,420,35
period (“-” for .19 551.70 1.89
decrease)
3.1 Total
37,518, 37,518,00
comprehensive
001.89 1.89
income
3.2 Capital
increased and
reduced by owners
3.2.1
Ordinary shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit 3,751,800 -12,849, -9,097,65
distribution .19 450.19 0.00
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3.3.1
3,751,800 -3,751,8
Appropriation to
.19 00.19
surplus reserves
3.3.2
Appropriation to -9,097,6 -9,097,65
owners (or 50.00 0.00
shareholders)
3.3.3 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4 Changes
in defined benefit
pension schemes
transferred to
retained earnings
3.4.4 Other
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other
4. Balances as at
505,425, 250,531,4 196,399,2 777,193 1,729,549
the end of the
000.00 82.00 50.80 ,693.64 ,426.44
period
2017
Unit: RMB
2017
Item
Share Other equity instruments Capital Less: Other Specific Surplus Retaine Total
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
capital reserves Treasury comprehe reserve reserves d owners’
Preferre Perpetu
Other stock nsive earnings equity
d shares al bonds
income
1. Balances as at
505,425, 250,531,4 190,275,0 747,347 1,693,578
the end of the prior
000.00 82.00 71.84 ,332.97 ,886.81
year
Add: Adjustments
for changed
accounting
policies
Adjustments for
corrections of
previous errors
Other
adjustments
2. Balances as at
505,425, 250,531,4 190,275,0 747,347 1,693,578
the beginning of
000.00 82.00 71.84 ,332.97 ,886.81
the year
3. Increase/
decrease in the 2,372,378 5,177,8 7,550,187
period (“-” for .77 08.97 .74
decrease)
3.1 Total
23,723, 23,723,78
comprehensive
787.74 7.74
income
3.2 Capital
increased and
reduced by owners
3.2.1
Ordinary shares
increased by
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
3.2.4 Other
3.3 Profit 2,372,378 -18,545, -16,173,6
distribution .77 978.77 00.00
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3.3.1
2,372,378 -2,372,3
Appropriation to
.77 78.77
surplus reserves
3.3.2
Appropriation to -16,173, -16,173,6
owners (or 600.00 00.00
shareholders)
3.3.3 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4 Changes
in defined benefit
pension schemes
transferred to
retained earnings
3.4.4 Other
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other
4. Balances as at
505,425, 250,531,4 192,647,4 752,525 1,701,129
the end of the
000.00 82.00 50.61 ,141.94 ,074.55
period
III Company Profile
Foshan Huaxin Packaging Co., Ltd. (hereinafter referred to as the Company) was sponsored and set by Foshan
Huaxin Development Co., Ltd., Foshan Municipal Investment General Corporation, Foshan Xinhui Industrial
Development Co., Ltd., China Packaging General Corporation, China Material Development & Investment
General Corporation, Guangdong Technical Reforming & Investment Co., Ltd., China Chemistry & Light
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Industry General Corporation, and Foshan Light Industry Company under approval of People’s Government of
Guangdong Province with YBH (1999) No. 297 document and Economic System Reform Committee of
Guangdong Province with YTG (1999) No. 032 document, and was registered in Administration Bureau for
Commerce & Industry of Guangdong Province on 21 June 1999. The Company holds the business license with the
unified social credit code of 914406007076822793. And its registered capital is RMB505,425,000.00 with total
505,425,000.00 shares (RMB1 per share), among which, there are unrestricted public 171,925,000.00 B shares
and unrestricted private 333,500,000.00 B shares. The Company’s stocks were listed in Shenzhen Stock Exchange
for trade in 2000.
The Company is in the industry of papermaking, paper packaging and printing. Main business scope: mainly
manufactures (operated by subsidiary companies under the Company) and sells packaging materials, and
packaging products, materials for decoration and aluminum and plastic compound materials; sells and maintains
package machinery; invests in industry in terms of package and printing. Main products or services include
high-grade coated white cardboard and color packages printing products, and etc.
The financial statement is reported after the approval of the 2nd Meeting of the 7th Board of Directors in 2019 of
the Company.
The Company included five subsidiaries, Zhuhai Hongta Renheng Packaging Co., Ltd (hereinafter referred to as
Hongta Renheng), Zhuhai Huafeng Paper Co., Ltd (hereinafter referred to as Huafeng Paper), Zhuhai Golden
Pheasant Chemical Co., Ltd (hereinafter referred to as Golden Pheasant Chemical), Huaxin (Foshan) Color
Printing Co., Ltd. (hereinafter referred to as Foshan Color Printing), and Zhejiang Hongta Renheng Packaging
Technology Co., Ltd, into the scope of consolidated financial statement in the Reporting Period. For details, see
changes in consolidation scope of the notes to financial statement and the explanation for equities in other entities.
IV. Basis for the Preparation of Financial Statements
1. Preparation Basis
The financial statement of the Company was prepared on the base of the assumption of continuation.
2. Continuation
There was no such case where the sustainable operation ability within 12 months since the end of the Reporting
Period was highly doubted.
V. Important Accounting Policies and Estimations
Is the Company subject to any disclosure requirements for special industries?
No.
Indication of specific accounting policies and estimations:
Naught
1. Statement for Complying with the Accounting Standard for Business Enterprise
The financial statements for the Reporting Period prepared by the Company are in compliance with the
requirements of the accounting standard for business enterprise, and have reflected the Company’s financial status,
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
operating results and cash flows in an accurate and complete way.
2. Fiscal Period
The fiscal year of the Company is a solar calendar year, which is from 1 January to 31 December.
3. Operating Cycle
The operating cycle of the Company’s business is comparatively short with 12 months as the classification
standard for the mobility of assets and liabilities.
4. Standard Currency of Accounts
The Company adopts Renminbi as a standard currency of accounts.
5. Accounting Process of Business Combinations under the Same Control and not under the Same Control
1. Accounting Process of Business Combinations under the Same Control
The assets and liabilities that the Company obtains in a business combination shall be measured on the basis of
their carrying amount combined party in the consolidated financial statements of the final controller on the
combining date. As for the balance between the carrying amount of combined party’s owners equities in the
consolidated financial statements of the final controller and the carrying amount of the consideration paid by it or
the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in
capital is not sufficient to be offset, the retained earnings shall be adjusted.
2. Accounting Process of Business Combinations not under the Same Control
The Company shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets obtained from the acquiree on purchase date as goodwill. If the combination costs are less
than the fair value of the identifiable net assets obtained from the acquire, the Company shall recheck the various
identifiable assets and liabilities obtained from the acquire, fair value with liabilities, and measurement of
combination costs. If the combination costs are less than the fair value of the identifiable net assets obtained from
the acquire after recheck, the Company shall the record the balance into the profit and loss of the current period.
6. Methods for Preparing Consolidated Financial Statements
The Company as the parent included its all subsidiaries into the consolidation scope of consolidated financial
statements. Based on the financial statements of the Company as the parent and its subsidiaries and other related
materials, the consolidated financial statements were prepared by the Company as the parent according to
Accounting Standards for Enterprises No. 33 –Consolidated Financial Statements.
7. Classification of Joint arrangements and Accounting Treatment of Joint Operations
1. Joint arrangement is classified into joint operation and joint ventures.
2. When the Company is a party of a joint operation, recognize the following items related to the profits in the
joint operation:
(1) Recognize the assets held independently, and recognize the assets held jointly in the holding portion;
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(2) Recognize the liabilities borne independently, and recognize the liabilities held jointly in the holding portion;
(3) Recognize the revenue generated from the output portion of joint operation shared for selling the Company;
(4) Recognize the revenue generated from the sale of assets in joint operation in the holding portion of the
Company;
(5) Recognize the expenses incurred independently, and recognize the expenses incurred in joint operation in the
holding portion of the Company.
8. Recognition Standard for Cash and Cash Equivalents
The term “cash” listed and presented in the cash flow statement refers to cash on hand and deposits that are
available for payment at any time. The term “cash equivalents” refers to short-term and highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in
value.
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
1. Translation of Foreign Currency Business
As for a foreign currency transaction in its initial recognition, the amount in the foreign currency shall be
translated into the amount in the Renminbi at the spot exchange rate of the transaction date. On balance sheet date,
the foreign currency monetary items shall be translated as the spot exchange rate on the balance sheet date, the
balance occurred thereof shall be recorded into the profits and losses at the current period except that the balance
of exchange arising from the principal and interests of foreign currency borrowings for the purchase and
construction or production of assets eligible for capitalization. The foreign currency non-monetary items measured
at the historical cost shall still be translated at the spot exchange rate on the transaction date, of which the amount
of functional currency shall not be changed. The foreign currency non-monetary items measured at the fair value
shall be translated at the spot exchange rate on the confirming date of fair value, of which the balance of exchange
shall be included into the profit and loss of the current period or other comprehensive income.
2. Translation of Foreign Currency Financial Statements
The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet
date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit
statements shall be translated at the spot exchange rate of the transaction date. The differences arising from the
translation of foreign currency financial statements in compliance with the aforesaid Items shall be recorded into
other comprehensive incomes.
10. Financial Instruments
1. Classification of Financial Assets and Financial Liabilities
Financial assets shall be classified into the following four categories when they are initially recognized: the
financial assets which are measured at their fair values and the variation of which is recorded into the profits and
losses of the current period (including transactional financial assets and the financial assets which are measured at
their fair values and of which the variation is included in the current profits and losses); the investments which
will be held to their maturity; loans and the account receivables; and financial assets available for sale.
Financial liabilities shall be classified into the following two categories when they are initially recognized: the
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
financial liabilities which are measured at their fair values and of which the variation is included in the current
profits and losses (including transactional financial liabilities and the designated financial liabilities n its initial
recognition which are measured at their fair values and of which the variation is included in the current profits and
losses) and other financial liabilities.
2. Recognition Basis, Calculation Method, and Termination of Recognition of Financial Assets and Liabilities
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financial
liability. The financial assets and financial liabilities initially recognized shall be measured at their fair values. For
the financial assets and liabilities measured at their fair values and of which the variation is recorded into the
profits and losses of the current period, the transaction expenses thereof shall be directly recorded into the profits
and losses of the current period; for other categories of financial assets and financial liabilities, the transaction
expenses thereof shall be included into the initially recognized amount.
The Company shall make subsequent measurement on its financial assets according to their fair values, and may
not deduct the transaction expenses that may occur when it disposes of the said financial asset in the future.
However, those under the following circumstances shall be excluded: (1)The investments held until their maturity,
loans and accounts receivable shall be measured on the basis of the post-amortization costs by adopting the actual
interest rate method; (2) The equity instrument investments for which there is no quotation in the active market
and whose fair value cannot be measured reliably, and the derivative financial assets which are connected with the
said equity instrument and must be settled by delivering the said equity instrument shall be measured on the basis
of their costs.
The Company shall make subsequent measurement on its financial liabilities on the basis of the post-amortization
costs by adopting the actual interest rate method, with the exception of those under the following circumstances:
(1) For the financial liabilities measured at their fair values and of which the variation is recorded into the profits
and losses of the current period, they shall be measured at their fair values, and none of the transaction expenses
may be deducted, which may occur when the financial liabilities are settled in the future; (2) For the derivative
financial liabilities, which are connected to the equity instrument for which there is no quotation in the active
market and whose fair value cannot be reliably measured, and which must be settled by delivering the equity
instrument, they shall be measured on the basis of their costs; (3)For the financial guarantee contracts which are
not designated as a financial liability measured at its fair value and the variation thereof is recorded into the profits
and losses of the current period, and for the commitments to grant loans which are not designated to be measured
at the fair value and of which the variation is recorded into the profits and losses of the current period and which
will enjoy an interest rate lower than that of the market, a subsequent measurement shall be made after they are
initially recognized according to the higher one of the following: 1) the amount as determined according to the
Accounting Standards for Enterprises No. 13 - Contingencies; 2) the surplus after accumulative amortization as
determined according to the principles of the Accounting Standards for Enterprises No. 14 - Revenues is
subtracted from the initially recognized amount.
Profits or losses from the change in fair value of financial assets or financial liabilities, unless related to hedging,
shall be treated in the following methods: (1) Profits or losses from the change in fair value of financial assets
measured by fair value and the changes included in the current gains and losses shall be included in gains from the
change in fair value; interests or cash dividends gained during asset holding shall be recognized as investment
income; at disposal, the difference between the amount actually received and the initially recognized amount shall
be recognized as investment income, and at the same time, income from the change in fair value shall be adjusted.
(2) The change in fair value of available-for-sale financial assets shall be included into other comprehensive
income; interests calculated in the actual interest rate method during the holding shall be included into investment
income; cash dividends from the investment of available-for-sale equity instruments shall be included into
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
investment income when the investee announces the issue of dividends; at disposal, the difference between the
amount actually received and the book value after deducting the cumulative amount of the change in fair value
originally included into other comprehensive income shall be recognized as investment income.
When the contractual right to receive the cash flow from a financial asset has been terminated or almost all the
risks and remunerations in respect of the ownership of the financial asset have been shifted, the financial asset
shall be derecognized; when the current obligations of a financial liability are fully or partially terminated, the
financial liability or a part of it shall be derecognized accordingly.
3. Recognition Basis and Measurement of Transfer of Financial Assets
Where the Company has transferred nearly all of the risks and rewards related to the ownership of the financial
asset to the transferee, it shall stop recognizing the financial asset. If it retained nearly all of the risks and rewards
related to the ownership of the financial asset, it shall continue to recognize the transferred financial asset, and
recognize the received consideration as a financial liability. Where the Company does not transfer or retain nearly
all of the risks and rewards related to the ownership of a financial asset, it shall deal with it according to the
circumstances as follows, respectively: (1) If it gives up its control over the financial asset, it shall stop
recognizing the financial asset; (2) If it does not give up its control over the financial asset, it shall, according to
the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and
recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The book
value of the transferred financial asset; (2) The sum of consideration received from the transfer, and the
accumulative amount of the changes of the fair value originally recorded in the owner's equities. If the transfer of
partial financial asset satisfies the conditions to stop the recognition, the entire book value of the transferred
financial asset shall, between the portion whose recognition has been stopped and the portion whose recognition
has not been stopped, be apportioned according to their respective relative fair value, and the difference between
the amounts of the following two items shall be included into the profits and losses of the current period: (1)The
book value of the portion whose recognition has been stopped; (2)The sum of consideration of the portion whose
recognition has been stopped, and the portion of the accumulative amount of the changes in the fair value
originally recorded in the owner's equities which is corresponding to the portion whose recognition has been
stopped.
4. Recognition Method of Financial Assets and Financial Liabilities’ Fair Value
The Company adopts the valuation technique with sufficient useful data and supported by other information
which is suitable for the current situation to recognize the fair value of related financial assets and liabilities. The
Company classifies the input value used in the valuation technique into the following levels and uses them in
sequence:
(1) The first level of input value is the non-adjustable offer of the same assets or liabilities in the active market on
the calculation date;
(2) The second level of input value is the directly or indirectly observable input value of related assets or liabilities
except the input value on the first level, including: offer of similar assets or liabilities in the active market; offer of
identical or similar assets or liabilities in the non-active market; other observable input value except offer,
including the observable interest rate during the interval period of common offer, profit rate curve, etc.; the input
value for market verification etc..
(3) The third level of input value is the non-observable input value of related assets or liabilities, including interest
rates that cannot be observed directly or verified by the data of observable market, stock fluctuation rate, future
cash flow of the disposal obligation borne in corporate mergers, financial forecast based on self-data, etc..
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
5. Impairment Test and Withdrawal Method of Provision for the Impairment of Financial Assets
(1) Except for financial assets which are measured at their fair values and of which the variation is included in the
current profits and losses, the Company checks the book values of all other financial assets on the balance sheet
date. If there is objective evidence proving that a financial asset is impaired, an impairment provision is made.
(2) For held-to-maturity investments, loans and accounts receivable, financial assets with significant ingle
amounts shall be separated first, and carry out an impairment test independently. With regard to the financial
assets with insignificant single amounts, an independent impairment test may be carried out, or they may be
included in a combination of financial assets with similar credit risk features so as to carry out an
impairment-related test. Where, upon independent test, the financial asset (including those financial assets with
significant single amounts and those with insignificant amounts) has not been impaired, it shall be included in a
combination of financial assets with similar risk features so as to conduct another impairment test. If the test
results show that it has been impaired, the impairment losses shall be recognized according to the positive balance
between its carrying value and the estimated present value of future cash flow.
(3) Financial Assets Available for sale
1) The objective evidences that can prove the impairment of debt instrument available for sale in investment shall
include:
A serious financial difficulty occurs to the debtor;
The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
interests or the principal, etc.;
The Company makes concession to the debtor which is in financial difficulties due to economic or legal factors,
etc.;
The debtor will probably become bankrupt or carry out other financial reorganizations;
)The debt instrument can no longer continue to be traded in the active market due to serious financial
difficulties of the debtor;
⑥Other objective evidences showing the impairment of the debt instrument available for sale
2) Objective evidences showing the impairment of equity instrument include: the fair value of the equity
instrument investment drops significantly or not temporarily; Any seriously disadvantageous change has occurred
to technical, market, economic or legal environment, etc. wherein the invested companies’ business, which makes
the Company unable to take back its cost of investment.
On balance sheet date, the Company separately examines each available-for-sale equity instrument investment. If
the fair value of the equity instruments which invests on the balance sheet date is lower than its initial investment
cost for more than 50% (including 50%) or lower than its initial investment cost for the duration time for more
than 12 months (including 12 months), which indicates that it had occurred impairment; if the fair value of the
equity instruments which invests on the balance sheet date is lower than its initial investment cost for more than
20% (including 20%) but not reach at 50%, or lower than its initial investment cost for the duration time for more
than 6 months (including 6 months) but not exceed 12 months, the Company will comprehensively considerate the
other relevant factors such as the price volatility etc. and will judge the equity investment whether had occurred
impairment. In respect of the equity instrument investment measured at cost, the Company determines whether
there is any impairment to the equity instrument by comprehensively considering whether there are any
unfavorable changes to the technical, market, economic or legal environment operated by the investee.
When there is any impairment to the available-for-sale financial assets measured at fair value, the accumulative
losses from decrease in fair value originally and directly recorded into other comprehensive income shall be rolled
out and included into impairment losses. As for the investment of available-for-sale debt instruments whose
120
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
impairment-related losses have been recognized, if, after the accounting period, the fair value has risen and is
objectively related to the subsequent events that occur after the originally impairment-related losses were
recognized, the originally recognized impairment-related losses shall be reversed and be recorded into the profits
and losses of the current period. As for the investment of available-for-sale equity instruments whose
impairment-related losses have been recognized, the increased fair value after the accounting period shall be
recorded into other comprehensive income.
When there is any impairment to the available-for-sale equity instruments measured at cost, the difference
between the book value of the equity instrument investment and the present value obtained from the discount of
future cash flow with the present market return of similar financial assets shall be recognized as impairment losses
and recorded into current profits or losses. Once recognized, the impairment losses shall not be reversed.
11. Notes and Accounts Receivable
(1) Bad Debt Provision for Individually Significant Accounts Receivable
Judgment basis or monetary standards of provision for bad debts An account receivable exceeds RMB10 million (inclusive), or
of the individually significant accounts receivable another account receivable exceeds RMB5 million (inclusive).
An impairment test shall be conducted separately on the account
Accounts receivable with significant single amount for which receivable and the difference of the present value of expected
bad debt provision separately accrued at the period-end future cash flow less than its book value shall be withdrawn as
the bad debt provision.
(2) Accounts Receivable which the Bad Debt Provision is Withdrawn by Credit Risk Characteristics
Name of the group Bad debt provision method
Aging Aging analysis method
Amounts of connected-parties within the scope of consolidation
In the groups, adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Withdrawal proportion for accounts Withdrawal proportion for other accounts
Aging
receivable receivable
1-3 months 0.00% 0.00%
4-12 months 5.00% 5.00%
1-2 years 10.00% 10.00%
2-3 years 20.00% 20.00%
Over 3 years 50.00% 50.00%
3-4 years 50.00% 50.00%
4-5 years 50.00% 50.00%
Over 5 years 50.00% 50.00%
In the groups, adopting balance percentage method to withdraw bad debt provision:
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
□ Applicable √ Not applicable
In the groups, adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
(3) Accounts Receivable with an Insignificant Single Amount but for which the Bad Debt Provision is Made
Individually
There exists evidence that the Company unable to recover the
Reason of individually withdrawing bad debt provision:
account receivable in line with the original items.
An impairment test shall be conducted separately on the account
receivable and the difference of the present value of expected
Withdrawing bad debt provision method
future cash flow less than its book value shall be withdrawn as
the bad debt provision.
12. Inventory
Is the Company subject to any disclosure requirements for special industries?
No.
1. Category
Inventory was referred to the finished goods or commodities for sale, products in the process, materials in
production or providing services in daily activities, etc.
2. Pricing Method for Outgoing Inventories
Adopting the weighted average method for pricing at the end of the month at a time
3. Recognition basis of Net Realizable Value of Inventory
On the balance sheet date, inventory shall be measured at the lower of cost or net realizable value, and provision
shall be made for falling price of inventories on the ground of the difference between the cost of each item of
inventories and the net realizable value. Inventories directly for sale, under normal producing process, to the
amount after deducting the estimated sale expense and relevant taxes from the estimated sell price of the inventory,
the net realizable value has been recognized; inventories which need to be processed, under normal producing
process, to the amount after deducting the estimated cost of completion, estimated sale expense and relevant taxes
from the estimated sale price of produced finished goods, the net realizable value has been recognized; on the
balance sheet date, in the same item of inventories, if some have contractual price agreement while others do not,
the net realizable value shall be recognized respectively and compared with their cost, and the amount of
provision withdrawal or reversal for falling price of inventories shall be recognized respectively.
4. Inventory System for Inventories:
Inventory system: Perpetual inventory system
5. Amortization Method of the Low-value Consumption Goods and Packing Articles
(1) Low-value Consumption Goods
One-off amortization method
(2) Packing Articles
One-off amortization method
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
13. Divided as Assets Held for Sale
1. Classification of Non-current assets or disposal group Held for Sale
Non-current assets or disposal group are confirmed to be the components held for sale when the following
conditions are simultaneously satisfied: (1) According to the convention of similar transactions selling this kind of
assets or disposal group, they can be sold instantly in such conditions. (2) Sale is extremely likely to happen, that
is, the Company has made the decision of a sale plan, and got the confirmed purchase commitment. It is estimated
that the sale will be finished within 1 year.
Non-current assets or disposal groups specifically obtained by the Company for resale will be classified as
held-for-sale on the acquisition date when they meet the stipulated conditions of “expected to be sold within one
year” on the acquisition date, and may well satisfy the category of held-for-sale within a short time (which is
usually 3 months).
If any transaction between non-related parties fails to complete within one year due to one of the following
reasons outside the Company’s control, and the Company still commits to sell non-current assets or disposal
groups, the non-current assets or disposal groups shall be still classified as the held-for-sale category: (1) For
conditions of sale delay resulting from the accidental setting by the buyer or another party, the Company has duly
taken actions against those conditions and it is expected that the delay factors can be smoothly solved within one
year since the conditions of sale delay resulting from the setting; (2) Non-current assets or disposal groups held
for sale fail to be sold within one year due to rare circumstances, and the Company has taken necessary measures
against those new situations within the first year and re-satisfied the conditions for classifying them into the
held-for-sale category.
2. Measurement of held-for-sale non-current assets or disposal groups
(1) Initial measurement and subsequent measurement
For the initial measurement and the re-measurement of held-for-sale non-current assets or disposal groups on the
balance sheet date, if the book value is higher than the net amount of the fair value deducting the selling expenses,
the book value shall be written down to the net amount of the fair value deducting the selling expenses. The
written down amount shall be recognized as asset impairment losses and recorded into current profits or losses,
and at the same time, the held-for-sale asset impairment provision shall be withdrawn.
In respect of non-current assets or disposal groups classified into the held-for-sale category on the date of
obtainment, when initially measuring them, compare the initially measured amount supposing that they are not
classified into the held-for-sale category and the amount of the fair value deducting the selling expenses, and
measure them at the lower amount. Other than the non-current assets or disposal groups obtained in corporate
mergers, the difference generated from the net amount of the fair value of non-current assets or disposal groups
deducting the selling expenses as the initially measured amount shall be recorded into current profits or losses.
For the amount of asset impairment losses recognized in respect of held-for-sale disposal groups, first write off the
book value of goodwill in the disposal groups, and then write off their book value in proportion according to the
percentage of the book value of each non-current asset in the disposal groups.
Depreciation or amortization shall not be withdrawn for held-for-sale non-current assets or the non-current assets
in disposal groups, while the interests of liabilities and other expenses in held-for-sale disposal groups shall still
be recognized.
(2) Accounting Methods for the Recovery of Assets Impairment Losses
If the net amount that the fair value of the non-current assets held for sale on the follow-up balance sheet date
minus the sale costs increases, the previous written-down amount will be restored, and reversed to the asset
impairment loss confirmed after the assets being classified as held-for-sale. The reversed amount will be included
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in the current profit or loss. Impairment losses on assets recognized prior to classification as held for sale are not
reversed.
If the net amount that the fair value of the disposal groups held for sale on the follow-up balance sheet date minus
the sale costs increases, the previous written-down amount will be restored, and reversed to the asset impairment
loss confirmed after the assets being classified as held-for-sale. The reversed amount will be included in the
current profit or loss. The book value of deducted goodwill and the non-current assets applicable to the
measurement of held-for-sale categories will not be reversed if the asset impairment loss is recognized before it is
classified as held for sale.
For the subsequent reversal amount of the asset impairment loss recognized by the disposal group held for sale, its
book value shall be increased proportionately to the proportion of the book value of various non-current assets
measured by the disposal group in addition to goodwill.
(3) Accounting Methods for Ceasing to be classified as held-for-sale and Termination of Recognition
When a non-current asset or disposal group ceases to be classified as held-for-sale or a non-current asset is
removed out from the held-for-sale disposal group due to failure in meeting the classification conditions for the
category of held-for-sale, it will be measured by one of the followings whichever is lower: ① The book value
before being classified as held for sale will be adjusted according to the depreciation, amortization or impairment
that would have been recognized under the assumption that it was not classified as held for sale; ② The
recoverable amount.
When terminating the recognition of non-current assets or disposal group held for sale, the unconfirmed gains or
losses shall be recorded into the current profits and losses.
14. Long-term Equity Investment
1. Judgment of Joint Control and Significant Influences
The term "joint control" refers to the joint control over an arrangement in accordance with the related agreements,
which does not exist unless the participants sharing the control power agree with each other about the related
arranged activity. The term "significant influences" refers to the power to participate in making decisions on the
financial and operating policies of an enterprise, but not to control or do joint control together with other parties
over the formulation of these policies.
2. Recognition of Investment Cost
(1) If the business combination is under the common control and the acquirer obtains long-term equity investment
in the consideration of cash, non-monetary asset exchange, bearing acquiree’s liabilities, or the issuance of equity
securities, the initial cost is the carrying amount of the proportion of the acquiree’s owner’s equity at the
acquisition date. The difference between the initial cost of the long-term equity investment and the carrying
amount of the paid combination or the total amount of the issued shares should be adjusted to capital surplus. If
the capital surplus is not sufficient for adjustment, retained earnings are adjusted respectively.
When a long-term equity investment is formed from the business combination under common control through the
Company’s multiple transactions step by step, the treatment shall be carried out based on whether the transactions
constitute the “package deal”. If they do, the accounting treatment shall be carried out on the basis of assuming all
transactions as one transaction with the acquisition of control. If they do not, the initial investment cost shall be
the portion of the carrying value of acquiree’s net assets entitled in the consolidated financial statements of the
final controller after the consolidation. The difference between the initial investment cost of the long-term equity
investment on the combination date and the carrying value of the investment before the combination plus the
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carrying value of the newly-paid consideration for the acquisition of the shares on the consolidation date shall be
adjusted to capital reserve; if the capital reserve is insufficient for the adjustment, retained earnings should be
adjusted accordingly.
(2) For those formed from the business combination under different control, the initial investment cost is the fair
value of the combination consideration paid on the acquisition date.
When a long-term equity investment is formed from the business combination under different control through the
Company’s multiple transactions step by step, the accounting treatment shall be carried out based on whether the
financial statements are individual or consolidated:
1) In individual financial statements, the initial investment cost accounted in cost method is the sum of the book
value of the equity investment originally held and the cost of new investment.
2) In consolidate financial statements, judge whether the transactions constitute the “package deal”. If they do, the
accounting treatment shall be carried out on the basis of assuming all transactions as one transaction with the
acquisition of control. If they do not, for the acquiree’s equity held before the acquisition date, re-measurement
shall be carried out according to the fair value of the equity on the acquisition date and the difference between the
fair value and the book value shall be recorded into current investment income; if the acquiree’s equity held
before the acquisition date involves other comprehensive income accounted in equity method, other
comprehensive income related to it shall be transferred into the income for the period in which the acquisition date
falls, with the exception of the other comprehensive incomes occurred because of the changes of net liabilities or
net assets of the defined benefit pension plans be re-measured for setting by the investees.
3) For those formed other than from business combination: If they are acquired in cash payment, the initial
investment cost is the purchase price actually paid; if they are acquired in the issue of equity securities, the initial
investment cost is the fair value of the issued equity securities; if they are acquired in debt restructuring, the initial
investment cost shall be recognized according to the Accounting Standards for Enterprises No. 12 - Debt
Restructuring; if they are acquired in the exchange of non-monetary assets, the initial investment shall be
recognized according to the Accounting Standards for Enterprises No. 7 - Exchange of Non-Monetary Assets.
3. Method of subsequent measurement and recognition of profits and losses
Long-term equity investment with control over investees shall be accounted in cost method; long-term equity
investment on associated enterprises and joint ventures shall be accounted in equity method.
4. Method of treating the disposal of the investment in a subsidiary stem by step through multiple transactions
until the loss of the controlling right
(1) Individual financial statements
For the disposed equity, the difference between its fair value and the actually obtained price shall be recorded into
current profits or losses. For the residual equity, the part that still has significant effects on investees or with
common control jointly with other parties shall be accounted in equity method; the part that has no more control,
common control or significant effects on investees shall be recognized as financial assets and accounted in
accordance with the relevant regulation of the Accounting Standards for Enterprises No. 22 - Recognition and
Measurement of Financial Instruments.
(2) Consolidated financial statements
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1) For the disposal of the investment in subsidiaries step by step until the loss of the controlling right through
multiple transactions, which do not constitute the “package deal”
Before the loss of the controlling right, for the balance between the disposal remuneration and the shares of net
assets in the subsidiaries that have been calculated since the acquisition date or combination date corresponding to
the disposal of long-term equity investment, capital reserve (capital premium) shall be adjusted, and if the capital
premium is not sufficient for the write-down, the retained earnings shall be written down.
At the loss of the controlling right over the original subsidiaries, the residual equity shall be re-measured at its fair
value on the date of losing the controlling right. The difference between the consideration obtained in the equity
disposal, plus the fair value of the remaining equities, less the Company’s share of net assets enjoyed of the
former subsidiary that has been calculated since the acquisition date or combination date according to the former
shareholding ratio, shall be recorded into the investment gains for the period when the control ceases; meanwhile,
goodwill shall be written down. Other comprehensive income related to former subsidiary's equity investment
shall be transferred into current investment income when the control ceases.
2) For the disposal of the investment in subsidiaries step by step until the loss of the controlling right through
multiple transactions, which constitute the “package deal”
The accounting treatment shall be carried out on the basis of considering each transaction as a transaction of
disposing the subsidiary and losing control. However, before losing control, the difference between each disposal
price before losing the control, and the corresponding net assets share enjoyed of subsidiary when disposing
long-term equity investment, shall be recognized as other comprehensive income in the consolidated financial
statements and when the control ceases, transferred into current profits or losses of the period of losing control.
15. Investment Property
Measurement mode of investment real estates
Measurement of cost method
Depreciation or amortization method
1. The term "investment real estate" includes the right to use any land which has already been rented, the right to
use any land which is held and prepared for transfer after appreciation, and the right to use any building which has
already been rented.
2. The Company initially measures the investment property according to the costs, and adopts the cost method in
the subsequent measurement of investment property, and adopts the same methods with fixed assets and
intangible assets to withdraw depreciation or amortization.
16. Fixed Assets
(1) Recognized Standard of Fixed Assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are
held for the sake of producing commodities, rendering labor service, renting or business management; and their
useful life is in excess of one fiscal year. No fixed asset may be recognized unless it simultaneously meets the
conditions as follows: (1) The economic benefits are likely to flow into the enterprise; (2) The cost of the fixed
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asset can be measured reliably.
(2) Depreciation Method
Expected net salvage
Category Depreciation method Useful life Annual deprecation
value
Houses and buildings Straight-line depreciation 30-40 5% 2.375%-3.17%
Machinery equipment Straight-line depreciation 10-25 5% 3.8%-9.5%
Transportation Straight-line depreciation 5 5% 19%
Electronic equipment and
Straight-line depreciation 5-10 5% 9.5%-19%
other
(3) Recognition Basis and Pricing Method of Fixed Assets by Finance Lease
Where one of the following provisions is regulated in the rental agreement, it shall be recognized as an asset
acquired under finance leases: (1) the ownership of the leased asset is transferred to the lessee after the term of
lease expires; (2) the lessee has the option to buy the asset at a price which is far lower than the fair value of the
asset at the date when the option becomes exercisable; (3) the lease term covers the major part of the use life of
the leased asset [usually accounting for 75%(75% inclusive) of the use life of the leased asset]; (4) in the case of
the lessee, the present value of the minimum lease payments on the lease beginning date amounts to substantially
all of the fair value of the leased asset [above 90% (90% inclusive)]; in the case of the lessor, the present value of
the minimum lease payments on the lease beginning date amounts to substantially all of the fair value of the
leased asset [above 90% (90% inclusive)] (5) When nature of the leased asset is special, if there is no great
transform, only the Company can use it, As for the fixed assets by finance lease, the Company shall record the
lower one of the fair value of the leased asset and the present value of the minimum lease payments as the
entering value in an account, and make provision for depreciation according to the depreciation policy of
self-owned fixed assets.
17. Construction in Progress
Is the Company subject to any disclosure requirements for special industries?
No.
1. No construction in progress may be recognized unless it simultaneously meets the conditions as follows: (1)
The economic benefits are likely to flow into the enterprise; (2) The cost of the fixed asset can be measured
reliably. Construction in progress shall be measured according to the occurred actual costs before the assets
available for the intended use.
2. When the construction in progress is available for the intended use, it shall be transferred to fixed assets
according to the actual cost of the project. For construction in progress available for the intended use but not
dealing with final accounts of completed project, it shall be transferred to fixed assets according to the estimated
value first, and then adjust original temporarily estimated value based on the actual costs after the final accounts
of completed project, but not adjust the depreciation that was already calculated.
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18. Borrowing Costs
1. Recognition Principle of Capitalization of Borrowing Costs
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of
relevant assets. Other borrowing costs shall be recognized as expenses when it occurred, and shall be recorded
into the current profits and losses.
2. Capitalization Period of Borrowings Costs
(1) The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements: 1)
The asset disbursements have already incurred; 2) The borrowing costs have already incurred; 3) The acquisition
and construction or production activities which are necessary to prepare the asset for its intended use or sale have
already started.
(2) Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the
interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. The
borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits
and losses of the current period, till the acquisition and construction or production of the asset restarts.
(3) When the acquisition and construction or production of a qualified asset eligible for capitalization are
available for its intended use or sale, the capitalization of borrowing costs shall be stopped.
3. Capitalized rate and amount of borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset,
the amount of borrowing costs eligible for capitalization on that asset is determined as the actual interest costs
(including amortization of discount and premium confirmed according to effective interest method) incurred on
that borrowing during the period less any investment income on the temporary investment of the borrowing. To
the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a qualifying
asset, the amount of borrowing costs eligible for capitalization shall be determined by applying a capitalization
rate to the weighted average of excess of accumulated expenditures on qualifying asset over that on specific
purpose borrowing.
19. Biological Assets
20. Oil and Gas Assets
21. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
1. Intangible assets include right to use land sites, patent right and non-patented technology, and conduct the initial
measurement according to the costs.
2. With regard to intangible assets with limited service life, it shall be amortized systematically and reasonably
within their service life according to the expected implementation of economic interests related to the intangible
assets. If it can’t recognize the expected implementation reliably, it shall be amortized by straight-line method.
The specific useful lives are as follows:
Items Useful life for amortization (years)
Right to use land sites 50
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Non-patented technology 10
Software and others 2-10
The intangible assets with uncertain service life shall not be amortized, and the Company rechecks the service life
of the intangible assets in every accounting period.
(2) Accounting Policies of Internal R&D Expenses
The expenses in research stage for its internal research and development projects shall be recorded into the current
profits and losses when it occurred. The expenses in development stage for its internal research and development
projects of the Company may be capitalized when they satisfy the following conditions simultaneously: (1) It is
feasible technically to finish intangible assets for use or sale; (2) It is intended to finish and use or sell the
intangible assets; (3) The usefulness of methods for intangible assets to generate economic benefits shall be
proved, including being able to prove that there is a potential market for the products manufactured by applying
the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be
used internally; (4) It is able to finish the development of the intangible assets, and able to use or sell the
intangible assets, with the support of sufficient technologies, financial resources and other resources; and (5) The
development expenditures of the intangible assets can be reliably measured.
Standard for Classifying the Expenses of Research Phase and Development Phase of the Company’s R&D
Projects
The term “research” refers to the creative and planned investigation to acquire and understand new scientific or
technological knowledge.
The term "development" refers to the application of research achievements and other knowledge to a certain plan
or design, prior to the commercial production or use, so as to produce any new material, device or product, or
substantially improved material, device and product.
The expenditures of R&D stage in internal R&D project, was recorded into current profits or losses.
22. Impairment of Long-term Assets
For long-term assets, such as long-term equity investment, investment property measured by cost model, fixed
assets, construction in progress, and intangible assets with limited service life, the Company shall estimate the
recoverable amount if there are signs of impairment on balance sheet date. For intangible assets with uncertain
goodwill or service life formed by enterprise combination, whether or not there is sign of impairment, impairment
test shall be conducted every year. Goodwill combination and its related assets group or combination of assets
group shall be conducted the impairment test.
If the recoverable amount of the above-mentioned long-term assets is lower than its carrying value, it shall make
the preparation for assets impairment based on its balance and be recorded into current profits and losses.
23. Long-term Unamortized Expenses
Long-term deferred expenses refer to general expenses with the amortized period over one year (one year
excluded) that have occurred. Long-term deferred expense shall be recorded into the account according to the
actual accrual. Long-term deferred expense shall be amortized averagely within benefit period or specified period.
In case of no benefit in the future accounting period, the amortized value of such project that fails to be amortized
shall be transferred into the profits and losses of the current period.
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24. Payroll
(1) Accounting Treatment of Short-term Compensation
During the accounting period when the employees providing the service for the Company, the actual short-term
compensation shall be recognized as liabilities, and be recorded into the current profits and losses or related assets
costs.
(2) Accounting Treatment of the Welfare after Demission
The Company's welfare after demission plans is divided into defined contribution plans and defined benefit plans
(1) During the accounting period when the employee providing service for the Company, the amount paid in line
with the setting drawing plan will be recognized as liabilities and recorded into current profits or losses or cost of
relevant assets.
(2) The accounting treatment of defined benefit plans usually consists of the following steps:
1) According to the expected cumulative welfare unit method, adopt unbiased and mutually consistent actuarial
assumptions to evaluate related demographic variables and financial variables, measure the obligations generated
from defined benefit plans and recognize the period in respect of related obligations. Meanwhile, discount the
obligations generated from defined benefit plans to recognize their present value and the current service costs;
2) If there are any assets in a defined benefit plan, the deficit or surplus formed from the present value of the
defined benefit plan obligations less the fair value of the defined benefit plan assets shall be recognized as net
liabilities or net assets of a defined benefit plan. If there is any surplus in a defined benefit plan, the net assets of
the plan shall be measured at the lower of the surplus or the upper asset limit;
3) At the end of the period, the staff remuneration costs generated from a defined benefit plan shall be recognized
as services costs, net interests of the net liabilities or net assets of the plan and changes from the re-measurement
of the net liabilities or net assets of the plan. Service costs and net interests of the net liabilities or net assets of the
plan shall be recorded into the current profits or losses or related asset costs, while changes from the
re-measurement of the net liabilities or net assets of the plan shall be recorded into other comprehensive income
and shall not be transferred back to profits or losses in subsequent accounting periods. But the amounts recognized
in other comprehensive income may be transferred within the equity scope.
(3) Accounting Treatment of Demission Welfare
When the Company is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the layoff
proposal, or when recognizing the costs or expenses (the earlier one between the two) related to the reorganization
of paying the demission welfare, should recognize the payroll liabilities from the demission welfare and include in
the current gains and losses.
(4) Accounting Treatment of other Welfare of the Long-term Employees
The Company provides the other long-term employee benefits for the employees, and for those met with the defined
contribution plans, accounting treatment should be conducted according to the related regulations of the defined
contribution plans; the for the others long-term employee benefits except for the former, accounting treatment
should be conducted according to the related regulations of the defined benefit plans. In order to simplify the
related accounting treatment, the payrolls shall be recognized as service costs, the net amount of interest of net
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liabilities and net assets of other welfare of the long-term employees. The total net amounts made up from the
changes of measuring the net liabilities and net assets of other welfare of the long-term employees again shall be
recorded into the current profits and losses or related assets costs.
25. Accrued Liabilities
1. The obligation such as external guaranty, litigation or arbitration, product quality assurance, loss contract,
pertinent to a contingencies shall be recognized as an estimated debts when the following conditions are satisfied
simultaneously: ① That obligation is a current obligation of the enterprise; ② It is likely to cause any economic
benefit to flow out of the enterprise as a result of performance of the obligation; and ③ The amount of the
obligation can be measured in a reliable way.
2. The Company shall conduct the initial measurement to accrued liabilities according to the best estimate number
needed for performing the related current obligation and recheck the carrying value of accrued liabilities on
balance sheet date.
26. Share-based Payment
27. Other Financial Instruments such as Preferred Shares and Perpetual Capital Securities
28. Revenue
Is the Company subject to any disclosure requirements for special industries?
No.
1. Revenue Recognition Principle
(1) Sale of goods
No revenue from selling goods may be recognized unless the following conditions are met simultaneously: 1) The
significant risks and rewards of ownership of the goods have been transferred to the buyer by the Company; 2)The
Company retains neither continuous management right that usually keeps relation with the ownership nor effective
control over the sold goods; 3) The revenue amount could be reliably measured; 4) The relevant economic benefits
may flow into the Company; and 5) the relevant cost which had occurred or will occur could be reliably measured.
(2) Providing labor services
If the provision of labor services can be reliably estimated (all the following conditions are met: ① The amount of
income can be measured reliably; ②The relevant economic benefits are likely to inflow to the Company; ③ The
progress of the transaction can be reliably determined; ④ The cost incurred and to be incurred in the transaction can
be measured reliably), it shall recognize the revenue from providing services employing the
percentage-of-completion method, and confirm the completion of labor service according to the costs incurred as
a percentage of the total estimated costs. If the Company can’t, on the date of the balance sheet, reliably estimate
the outcome of a transaction concerning the labor services it provides, it shall be handled under the following
conditions: If the cost of labor services incurred is expected to be compensated, the revenue from the providing of
labor services shall be recognized in accordance with the amount of the cost of labor services incurred, and the
cost of labor services shall be carried forward at the same amount; If the cost of labor services incurred is not
expected to compensate, the cost incurred should be included in the current profits and losses, and no revenue
from the providing of labor services may be recognized.
(3) Transferring the Right to Use Assets
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The revenue of transferring the right to use assets may not be recognized unless the following conditions are both
met: the relevant economic benefits are likely to inflow to the Company; and the revenue can be reliably measured.
The interest income shall be recognized according to the time and actual interest rate in which other people use
the Company’s monetary funds. Royalty revenue shall be recognized according to the chargeable time and method
stipulated in related contracts and agreements.
2. Confirmation methods of sales revenues
(1) Confirmation methods of domestic sales revenue
Shall satisfy following conditions: products should be delivered according to customer’s requirements and signed
by customers; amount of sales revenues is determined, received or respected to receive; sales slip should be
invoiced; costs of sold products should be calculated;
(2) Confirmation methods of export sales revenue
Shall satisfy following conditions: products should be produced according to export sales agreement signed with
customers, received export declaration and obtained bill of lading (waybill); amount of sales revenues is
determined, received or respected to receive; sales slip should be invoiced; costs of sold products should be
calculated.
If the collection of the price as stipulated in the contract or agreement is delayed and if it has the financing nature,
the revenue incurred by selling goods shall be ascertained in accordance with the fair value of the receivable price
as stipulated in the contract or agreement.
29. Government Subsidies
1. If the government subsidies meet with the following conditions at the same, it should be recognized: (1) The
entity will comply with the condition attaching to them; (2) The grants will be received from government. If a
government subsidy is a monetary asset, it shall be measured according to the amount received or receivable. If a
government subsidy is a non-monetary asset, it shall be measured at its fair value, and shall be measured at a
nominal amount when the fair value cannot be obtained reliably.
2. Judgment basis and accounting methods of government subsidies related to assets
The government subsidies that are acquired for construction or form long-term assets in other ways according to
government documents shall be defined as asset-related government subsidies. For those not specified in
government documents, the judgment shall be made based on the compulsory fundamental conditions for
acquiring the subsidies. If the subsidies are acquired with construction or the formation of long-term assets in
other ways as fundamental conditions, they shall be recognized as asset-related government subsidies. For
asset-related government subsidies, the book value of related assets shall be written down or recognized as
deferred income. If asset-related government subsidies are recognized as deferred income, it shall be recorded into
profits or losses by period in a reasonable and systemic manner within the life of related assets. Government
subsidies measured at the nominal amount shall be directly recorded into current profits or losses. If related assets
are sold, transferred, disposed of or destroyed before the end of their life, the undistributed balance of related
deferred income shall be transferred into the profits or losses for the period of the asset disposal.
3. Judgment basis and accounting treatment of profits-related government subsidies
Government subsidies other than asset-related government subsidies shall be defined as profits-related
government subsidies. For government subsidies consisting of both asset-related parts and profits-related parts,
which is difficult to judge whether they are related to assets or profits, the entirety shall be classified as
profits-related government subsidies. Profits-related government subsidies that are used to compensate the related
future expenses or losses shall be recognized as deferred income and shall be included into the current
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profit/losses or write down related costs during the period when the relevant expenses or losses are recognized;
those subsidies used to compensate the related expenses or losses incurred shall be directly included into the
current profits/losses or write down related costs.
4. Government subsidies related to the Company’s routine operating activities shall be included into other income
or write down related costs according to the economic business nature. Government subsidies not related to the
Company’s routine activities shall be included into non-operating income and expenditure.
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
1. In accordance with the balance (the item not recognized as assets and liabilities can confirm their tax bases
according to the tax law, the balance between the tax bases and its carrying amount) between the carrying amount
of assets or liabilities and their tax bases, deferred tax assets and deferred tax liabilities should be recognized at
the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
2. A deferred tax asset shall be recognized within the limit of taxable income that is likely to be obtained to offset
the deductible temporary differences. At the balance sheet date, where there is strong evidence showing that
sufficient taxable profit will be available against which the deductible temporary difference can be utilized, the
deferred tax asset unrecognized in prior period shall be recognized.
3. The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that
sufficient taxable profit will not be available against which the deductible temporary difference can be utilized,
the Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available.
4. The current income tax and deferred income tax of the Company are recorded into the current gains and losses
as income tax expenses or revenue, except in the following circumstances:
(1) Business combination
(2) The transaction or event directly included in owner’ equity
31. Lease
(1) Accounting Treatment of Operating Lease
As a Lessee, the Company shall record the rent into relevant assets cost or recognize it as the current profit or loss
on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current
profit or loss; Contingent rents shall be charged into the current profit or loss when they are incurred.
As a lessor, the Company shall recognize the rent as the current profit or loss on a straight-line basis over the lease
term. Initial direct costs incurred by the lessor shall be directly recognized as the current profit or loss except that
costs with larger amounts shall be capitalized and recorded into the current profit and loss by stages; Contingent
rents shall be charged into the current profit or loss when they are incurred.
(2) Accounting Treatments of Financial Lease
For the lessee, a fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased
asset and the present value of the minimum lease payments at the inception of lease. The minimum lease
payments as the entering value in long-term account payable, the difference as unrecognized financing charges;
the initial direct costs shall be directly recorded into leasing asset value. At each period during the lease term, the
effective interest rate method shall be adopted to calculate and confirm the current financing charge.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
On the initial date of financial lease, lessee of the financial lease shall record the sum of the minimum lease
payments and initial direct costs as the financing lease accounts receivable, and also record the non-guaranteed
residual value; recognize the difference between the total minimum lease payments, initial direct costs,
non-guaranteed residual value and sum of the present value as the unrealized financing income; At each period
during the lease term, the effective interest rate method shall be adopted to calculate and confirm the current
financing income.
32. Other Significant Accounting Policies and Estimates
33. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√Applicable □ Not applicable
Contents and reasons Procedures Remarks
According to the adjust from the relevant
requirements of Article 15 of CK[2018],
Adjusting the format of financial statement the format of the financial statement was
according to the relevant requirements of reviewed by the 2th Meeting of the 7th
Article 15 of CK[2018] Board of Directors of 2019, with no need
to be reviewed by General Meeting of
Shareholders.
Revising the relevant accounting criteria
according to the relevant regulations of
financial instruments newly issued by
Revising the relevant accounting criteria
Ministry of Finance, this revision was
according to the regulations of new
already reviewed by the 2th Meeting of the
financial instrument
7th Board of Directors of 2019, with no
need to be reviewed by General Meeting of
Shareholders.
1) The Company prepared 2018 Financial Statements in accordance with the Notes of the Ministry of Finance on
Revising and Printing the Format of 2018 General Enterprises Financial Statement (CK [2018] No. 15) and the
interpretation of it and the requirements of the Accounting Standards for Enterprises. Retroactive adjustment was
adopted for the changes in the accounting policy. The significantly affected items and amounts in 2017 Financial
Statements are as follows:
Item and amount in original financial statement Item and amount in new financial statement
Notes receivable 430,699,664.45 1,160,829,887.51
Notes and accounts
Accounts receivable 730,130,223.06
receivable
Interest receivable 141,388.09 Other receivables 20,249,531.23
Other receivables 20,108,143.14
Notes payable 8,530,196.41 Notes and accounts 349,777,358.80
Accounts payable 341,247,162.39 payable
134
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Interest payable 7,865,380.83 Other payables 50,811,351.70
Dividends payable 12,116,789.76
Other payables 30,829,181.11
Administrative expense 125,476,808.28 120,342,343.74
Administrative
expense
5,134,464.54
R&D expense
Cash generated from other 66,763,328.29 Cash generated from 81,627,128.29
operating activities[Note] other operating
activities
Cash generated from other 735,773,715.83 Cash generated from 720,909,915.83
investing activities [Note] other investing
activities
[Note]: the presentation of actually received Government subsidy of RMB14,863,800.00 related to assets in cash
flow statement shall be adjusted from “cash generated from other investing activities” to “cash generated from
other operating activities”.
2) The Ministry of Finance in 2017 announced the Interpretation to the Accounting Standards for Enterprises No.
9 - Regarding the Accounting Treatment of Net Investment Losses under the Equity Method, Interpretation to the
Accounting Standards for Enterprises No. 10 - Regarding the Depreciation Method Based on the Use of Incomes
Generated from Fixed Assets, Interpretation to the Accounting Standards for Enterprises No. 11 - Regarding the
Amortization Method Based on the Use of Incomes Generated from Intangible Assets and Interpretation to the
Accounting Standards for Enterprises No. 12 - Regarding Whether the Provider and the Receiver of Key
Management Personnel Service Are Related Parties. The Company has implemented the aforementioned
interpretations to the accounting standards for enterprises since 1 January 2018 and the implementation does not
have any effect on the opening financial data of the Company.
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
34. Other
VI. Taxation
1. Main Taxes and Tax Rate
Category of taxes Tax basis Tax rate
VAT Sale of goods or rendering taxable services 5%, 6%, 10%, and 16%
Urban maintenance and construction tax Turnover tax actually paid 7% and 5%
Enterprise income tax Taxable income 25% and 15%
For taxation according to price, it shall pay
Property tax 1.2% and 12%
1.2% of the residual value of original
135
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
property value subtracting 30%; for
taxation according to rent, it shall pay 12%
of rental income
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
The Company 25%
Hongta Renheng 15%
Zhuhai Huafeng 15%
Golden Pheasant Chemical 15%
Huaxin Color Printing 15%
Zhejiang Hongta 25%
2. Tax Preference
1. According to the Notice on Issuing the First Name List of Proposed Hi-tech Enterprise in Guangdong Province
for Y2018 published issued by Science & Technology Department of Guangdong Province, Hongta Renheng, the
Company’s subsidiary, passed the reaffirmation of First Batch of Hi-tech Enterprise in Guangdong Province for
Y2018, and gained Certificate for Hi-tech Enterprise. Hongta Renheng shall pay the corporate income tax
according to the corporate income tax rate of 15%in 2018.
2. According to the First Name List of Proposed Hi-tech Enterprise in Guangdong Province for Y2016 published
by the National Leading Group Office for the Management of High-tech Enterprises Recognition, Zhuhai
Huafeng Paper, the Company’s subsidiary, passed the affirmation of First Batch of Proposed Hi-tech Enterprise in
Guangdong Province for Y2016, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201644001293,
with three years of validity). Thus Zhuhai Huafeng Paper shall pay the corporate income tax according to the
corporate income tax rate of 15% in 2018.
3. According to the Notice on Issuing the Second Name List of Proposed Hi-tech Enterprise in Guangdong
Province for Y2016 published by the National Leading Group Office for the Management of High-tech
Enterprises Recognition, Golden Pheasant Chemical, the Company’s subsidiary, passed the reaffirmation of
Hi-tech Enterprise, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201644004219, with three
years of validity). Thus Golden Pheasant Chemical shall pay the corporate income tax according to the corporate
income tax rate of 15% in 2018.
4. According to the Notice on Issuing the Second Name List of Proposed Hi-tech Enterprise in Guangdong
Province for Y2018 jointly issued by Science & Technology Department of Guangdong Province, Department of
Finance of Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, the
subsidiary of the Company Huaxin (Foshan) Color Printing, passed the reaffirmation of high-tech enterprise of
2018 and the gained the Certification of Hi-tech Enterprise. Thus Huaxin (Foshan) Color Printing shall pay the
corporate income tax according to the corporate income tax rate of 15% in 2018.
136
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
3. Other
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary Funds
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 131,195.64 173,601.37
Bank deposits 127,881,489.59 254,078,310.38
Other monetary funds 5,971,254.50 33,400,956.90
Total 133,983,939.73 287,652,868.65
Other notes:
The letter of guarantee of other monetary funds was RMB5,971,254.50 at the period-end. For those money whose
usage was limited, the Company had already got rid of it from the balance of cash and of cash equivalents at the
period-end when it prepared the cash flow statement.
2. Financial Assets at Fair Value through Profit or Loss
Unit: RMB
Item Ending balance Beginning balance
Other notes:
3. Derivative Financial Assets
□ Applicable √ Not applicable
4. Notes Receivable and Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
Notes receivable 277,623,928.13 430,699,664.45
Accounts receivable 781,215,643.89 730,130,223.06
Total 1,058,839,572.02 1,160,829,887.51
(1)Notes Receivable
1) Notes Receivable Listed by Category
Unit: RMB
137
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Bank acceptance bill 271,186,964.94 428,945,798.73
Commercial acceptance bill 6,436,963.19 1,753,865.72
Total 277,623,928.13 430,699,664.45
2) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
Item Amount
3) Notes Receivable which Had Endorsed by the Company or had Discounted and had not Due on the Balance Sheet Date at the
Period-end
Unit: RMB
Amount of recognition termination at the Amount of not terminated recognition at
Item
period-end the period-end
Bank acceptance bill 1,415,305,636.24
Total 1,415,305,636.24
4) Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute the Contract or Agreement
Unit: RMB
Amount of the notes transferred to accounts receivable at the
Item
period-end
Other notes
The acceptors of bank acceptance bills are commercial banks. Since commercial banks have relatively high credit
and bank acceptance bills are less likely to not be paid at maturity, the Company has confirmed the termination of
bank acceptance bills which had endorsed or discounted. But the Company will still undertake joint liability for
bearers pursuant to Law on Negotiable Instruments if those notes are not paid at maturity.
(2)Accounts Receivable
1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra
Carrying Carrying
Proportio wal Proportio Withdrawal
Amount Amount value Amount Amount value
n proportio n proportion
n
Accounts receivable
withdrawal of bad
785,225, 4,009,93 781,215,6 733,348 3,218,491 730,130,22
debt provision by 94.83% 0.51% 94.67% 0.44%
577.36 3.47 43.89 ,714.44 .38 3.06
credit risks
characteristics
138
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Accounts receivable
with insignificant
single amount for 42,815,1 42,815,1 41,284, 41,284,52
5.17% 100.00% 5.33% 100.00%
which bad debt 89.86 89.86 524.04 4.04
provision separately
accrued
828,040, 46,825,1 781,215,6 774,633 44,503,01 730,130,22
Total 100.00% 5.65% 100.00% 5.75%
767.22 23.33 43.89 ,238.48 5.42 3.06
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end：
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Subentry within 1 year
1-3 months 714,159,083.62
4-12 months 65,543,693.32 3,277,184.67 5.00%
Subtotal of within 1 year 779,702,776.94 3,277,184.67 0.42%
1 to 2 years 5,049,001.48 504,900.15 10.00%
2 to 3 years 30,169.41 6,033.88 20.00%
Over 3 years 443,629.53 221,814.77 50.00%
Total 785,225,577.36 4,009,933.47 0.51%
Notes of the basis of recognizing the group:
Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting other methods to withdraw bad debt provision:
2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB2,325,487.14; the amount of the reversed
or collected part during the Reporting Period was of RMB0.00.
Significant amount of reversed or recovered bad debt provision:
Unit: RMB
Name of the entity Amount Method
3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Balance payment unrecoverable 3,379.23
Of which: significant actual verification of accounts receivable
139
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
Notes of the verification of accounts receivable:
The accounts receivable actually verified during the Reporting Period is RMB3379.23.
(4) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the Arrears Party
Name of the entity Carrying amount Proportion to Bad debt provision
balance of accounts
receivable (%)
No.1 35,888,170.76 4.33 613,705.20
No.2 32,448,953.80 3.92
No.3 27,367,696.63 3.31
No.4 25,304,474.36 3.06
No.5 24,583,778.51 2.97 697,859.26
Total 145,593,074.06 17.59 1,311,564.46
5) Derecogniziton of Accounts Receivable due to the Transfer of Financial Assets
6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Accounts Receivable
Other notes:
5. Prepayments
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 94,869,167.00 82.61% 106,169,940.89 81.48%
1 to 2 years 532,773.51 0.46% 23,790,082.66 18.26%
2 to 3 years 19,115,822.08 16.64%
Over 3 years 337,286.50 0.29% 337,286.50 0.26%
Total 114,855,049.09 -- 130,297,310.05 --
Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:
(2) Top 5 of the Ending Balance of the Prepayments Collected according to the Prepayment Target
Name of the entity Carrying amount Proportion to the
balance of
prepayments (%)
140
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
No.1 19,305,029.21 16.81
No.2 19,072,741.17 16.61
No.3 15,116,875.61 13.16
No.4 8,123,672.49 7.07
No.5 6,450,924.49 5.62
Total 68,069,242.97 59.27
Other notes:
6. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 7,800,232.76 141,388.09
Other receivables 18,532,722.98 20,108,143.14
Total 26,332,955.74 20,249,531.23
(1) Interest Receivable
1) Category of Interest Receivable
Unit: RMB
Item Ending balance Beginning balance
Fixed time deposits 7,800,232.76 141,388.09
Total 7,800,232.76 141,388.09
2) Significant Overdue Interest
Unit: RMB
Whether occurred
Entity Ending balance Overdue time Overdue reason impairment and the
judgment basis
Other notes:
(2) Dividends Receivable
1) Dividends Receivable
Unit: RMB
Item (or investees) Ending balance Beginning balance
2) Significant Dividends Receivable Aged over 1 Year
Unit: RMB
Whether occurred
Item (or investees) Ending balance Aging Reason
impairment and the
141
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
judgment basis
Other notes:
(3) Other Receivables
1) Other Receivables Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra
Carrying Carrying
Proportio wal Proportio Withdrawal
Amount Amount value Amount Amount value
n proportio n proportion
n
Other receivables
with significant
single amount for 19,188,9 19,188,9 18,582, 18,582,48
42.27% 100.00% 40.04% 100.00%
which bad debt 43.82 43.82 481.20 1.20
provision separately
accrued
Other receivables
withdrawn bad debt
20,020,8 1,488,16 18,532,72 21,621, 1,513,213 20,108,143.
provision according 44.11% 7.43% 46.60% 7.00%
89.73 6.75 2.98 356.32 .18 14
to credit risks
characteristics
Other receivables
with insignificant
single amount for 6,180,87 6,180,87 6,198,5 6,198,529
13.62% 100.00% 13.36% 100.00%
which bad debt 8.67 8.67 29.18 .18
provision separately
accrued
45,390,7 26,857,9 18,532,72 46,402, 26,294,22 20,108,143.
Total 100.00% 59.17% 100.00% 56.67%
12.22 89.24 2.98 366.70 3.56 14
Other receivables with significant single amount for which bad debt provision separately accrued at the period-end
√ Applicable □ Not applicable
Unit: RMB
Other receivables (by Ending balance
unit) Other receivables Bad debt provision Withdrawal proportion Withdrawal reason
Hong Kong Hang Fung
Holdings Limited Co., 13,188,943.82 13,188,943.82 100.00% Irrecoverable expected
Ltd.
142
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Zhuhai Yidesheng
6,000,000.00 6,000,000.00 100.00% Irrecoverable expected
Industrial Co., Ltd.
Total 19,188,943.82 19,188,943.82 -- --
Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Subentry within 1 year
1-3 months 5,805,855.78
4-12 months 2,232,010.13 111,600.51 5.00%
Subtotal of within 1 year 8,037,865.91 111,600.51 1.39%
1 to 2 years 11,132,387.07 1,113,238.70 10.00%
2 to 3 years 539,969.43 107,993.89 20.00%
Over 3 years 310,667.32 155,333.65 50.00%
Total 20,020,889.73 1,488,166.75 7.43%
Notes:
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
Among these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB563,765.68; the amount of the reversed or
collected part during the Reporting Period was of RMB0.00.
Significant amount of reversed or recovered bad debt provision during the Reporting Period:
Unit: RMB
Name of the entity Reversed or collected amount Method
3) Particulars of the Actual Verification of Other Receivables during the Reporting Period
Unit: RMB
Item Amount
Of which: significant actual verification of other receivables:
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
Notes of verification of other receivables:
143
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
4) Other Receivables Classified by Account Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Margin 4,769,090.02 5,129,666.50
Pretty cash 393,469.10 1,563,520.43
Freight and miscellaneous charges on
384,229.74 3,088,597.59
behalf
Compensation for victim’s families on
9,760,000.00 9,760,000.00
behalf
Other intercourse funds 30,083,923.36 26,860,582.18
Total 45,390,712.22 46,402,366.70
(5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Ending balance of
Name of the entity Nature Ending balance Aging balance of other
bad debt provision
receivables%
No.1 Other intercourse
13,188,943.82 Over 3 years 29.06% 13,188,943.82
funds
No.2 Payment of
compensation on 9,760,000.00 1 to 2 years 21.50% 976,000.00
behalf
No.3 Borrowings 6,000,000.00 Over 3 years 13.22% 6,000,000.00
No.4 Margin and cash
2,131,423.52 1 to 3 months 4.70%
pledge
No.5 Borrowings 2,000,000.00 Over 3 years 4.41% 2,000,000.00
Total -- 33,080,367.34 -- 72.89% 22,164,943.82
6) Accounts Receivable Involving Government Subsidies
Unit: RMB
Project of government Estimated recovering
Name of the entity Ending balance Aging at period-end
subsidies time, amount and basis
7) Derecogniziton of Other Receivables due to the Transfer of Financial Assets
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Other Receivables
Other notes:
7. Inventories
Whether the Company need satisfy relevant disclosure requirements governing the real estate industry
No
144
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(1) Category of Inventories
Unit: RMB
Ending balance Beginning balance
Item Falling price Falling price
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Raw materials 467,532,479.83 4,480,886.67 463,051,593.16 307,249,280.55 4,405,881.46 302,843,399.09
Goods in process 44,261,927.39 44,261,927.39 37,051,626.77 37,051,626.77
Inventory goods 425,642,397.59 17,513,957.49 408,128,440.10 226,189,790.49 6,490,549.35 219,699,241.14
Merchandise
110,747,269.74 4,021,856.88 106,725,412.86 26,585,081.11 26,585,081.11
shipped
Total 1,048,184,074.55 26,016,701.04 1,022,167,373.51 597,075,778.92 10,896,430.81 586,179,348.11
Whether the Company need satisfy relevant disclosure requirements stated in SZSE Industrial Information Disclosure Guidance
No.4---Listed Company Specialized in Seed Industry and Planting Businesses or not?
No
Whether the Company need satisfy relevant disclosure requirements stated in SZSE Industrial Information Disclosure Guidance
No.11-Listed Company Specialized in Jewelry-related Business or not?
No
(2) Falling Price Reserves of Inventories
Unit: RMB
Increase Decrease
Beginning
Item Reverse or Ending balance
balance Withdrawal Other Other
write-off
Raw materials 4,405,881.46 123,116.16 48,110.95 4,480,886.67
Inventory goods 6,490,549.35 11,720,215.62 696,807.48 17,513,957.49
Merchandise
4,021,856.88 4,021,856.88
shipped
Total 10,896,430.81 15,865,188.66 744,918.43 26,016,701.04
(3) Notes to the Ending Balance of Inventories Including Capitalized Borrowing Expense
(4) Completed but Unsettled Assets Generated from Construction Contacts at the Period-end
Unit: RMB
Item Amount
Other notes:
145
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
8. Held-for-sale Assets
Unit: RMB
Estimated disposal
Item Ending carrying value Fair value Estimated disposal time
expense
Other notes:
9. Current Portion of Non-current Assets
Unit: RMB
Item Ending balance Beginning balance
Other notes:
10. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT deduction 19,509,101.68 22,185,700.04
Structured Deposits 317,200,000.00 1,000,000.00
Prepaid expense 1,598,646.30
Advance Payment of corporate income tax 4,101.47 13,826.63
Damaged property to be disposed for
20,961,100.36
typhoon
Total 338,311,849.45 44,160,627.03
Other notes:
11. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserves amount reserves
Available-for-sale equity
288,700.00 288,700.00 627,643,841.04 627,643,841.04
instruments:
Measured at cost 288,700.00 288,700.00 627,643,841.04 627,643,841.04
Total 288,700.00 288,700.00 627,643,841.04 627,643,841.04
146
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(2) Available-for-sale Financial Assets Measured by Fair Value at the Period-end
Unit: RMB
Available-for-sale equity Available-for-sale debt
Category Total
instruments instruments
(3) Available-for-sale Financial Assets Measured by Cost at the Period-end
Unit: RMB
Carrying amount Depreciation reserves Shareholdi Cash
ng bonus of
Investee Period-beg Period-beg proportion the
Increase Decrease Period-end Increase Decrease Period-end
inning inning among the Reporting
investees Period
China
Guangfa
288,700.00 288,700.00 0.00%
Bank Co.,
Ltd.
China
Chengtong
627,355,14 627,355,14 10,000,000
Finance
1.04 1.04 .00
Corporatio
n Ltd.
627,643,84 627,355,14 10,000,000
Total 288,700.00 --
1.04 1.04 .00
(4) Changes in Depreciation of Available-for-sale Financial Assets during the Reporting Period
Unit: RMB
Available-for-sale equity Available-for-sale debt
Category Total
instruments instruments
(5) Notes to the Available-for-sale Equity Instrument with Serious Fall or Non-transient Fall in Ending Fair
Value but without Provisions for Impairment
Unit: RMB
Item of
Falling scope of Withdrawn Reason for not
available-for-sale Duration of
Investment cost Ending fair value fair value against impairment withdrawing the
equity falling (month)
the cost amount impairment
instruments
Other notes
147
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
12. Held-to-maturity Investments
(1) List of Held-to-maturity Investments
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
(2) Significant Held-to-maturity Investments at the Period-end
Unit: RMB
Item Par value Coupon rate Actual interest rate Due date
(3) Re-classified Held-to-maturity Investments during the Reporting Period
Other notes
13. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
Ending balance Beginning balance
Interval of
Item Carrying Bad debt Carrying Bad debt
Carrying value Carrying value discount rate
amount provision amount provision
(2) Derecogniziton of Long-term Receivables due to the Transfer of Financial Assets
(3) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of
Long-term Receivables
Other notes
14. Long-term Equity Investments
Unit: RMB
Increase/decrease Ending
Additiona Gains and Adjustme Cash Withdraw balance
Beginnin Reduced Changes Ending
Investees l losses nt of bonus or al of of
g balance investmen of other Other balance
investmen recognize other profits depreciati depreciati
t equity
t d under comprehe announce on on
148
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
the equity nsive d to issue reserves reserves
method income
I. Joint ventures
II. Associated enterprises
Guangdo
ng
Chengton 8,294,365 521,602.6 245,728.0 8,570,239
g .17 9 0 .86
Logistics
Co., Ltd.
China
Chengton
5,103,538 648,916,3 654,019,9
g Finance
.56 79.58 18.14
Corporati
on Ltd.
8,294,365 5,625,141 245,728.0 648,916,3 662,590,1
Subtotal
.17 .25 0 79.58 58.00
8,294,365 5,625,141 245,728.0 648,916,3 662,590,1
Total
.17 .25 0 79.58 58.00
Other notes
In accordance with the Proposal on Electing Ding Guoqiang as the Director of China Chengtong Finance
Corporation Ltd. approved on the 1st Extraordinary General Meeting of 2018 held by China Chengtong Finance
Corporation Ltd. in 2018, Mr. Ding Guoqiang, the CFO of the Company, acquired the qualification for directors
in China Chengtong Finance Corporation Ltd. and will take office from the date of approval of qualification for
directors by Beijing China Banking Regulatory Commission. In line with the Reply on the Approval of Ding
Guoqiang’s Qualification for Directors in China Chengtong Finance Corporation Ltd. by Beijing China Banking
Regulatory Commission (JYJF[2018]No.531) issued by Beijing office of China Banking Regulatory Commission,
Mr. Ding Guoqiang acquired the qualification for directors in China Chengtong Finance Corporation Ltd. on 24
October 2018. The Company delegates one director to go to China Chengtong Finance Corporation Ltd. who has
the right to participate in the decision-making for the Finance and operation policies of China Chengtong Finance
Corporation Ltd. The Company has significant influence on the latter. Thus, the investment to the latter by the
Company was transferred to long-term equity investment calculated by equity method from available-for-sale
financial assets.
15. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Item Houses and buildings Land use right Construction in progress Total
149
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
I. Original carrying value
1. Beginning balance 46,506,036.02 46,506,036.02
2. Increased amount of
35,171.57 35,171.57
the period
(1) Outsourcing
(2) Transfer from
inventories\fixed
35,171.57 35,171.57
assets\construction in
progress
(3) Enterprise
combination increase
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4. Ending balance 46,541,207.59 46,541,207.59
II. Accumulative
depreciation and
accumulative
amortization
1. Beginning balance 14,413,679.73 14,413,679.73
2. Increased amount of
1,363,844.13 1,363,844.13
the period
(1) Withdrawal or
1,363,844.13 1,363,844.13
amortization
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4. Ending balance 15,777,523.86 15,777,523.86
III. Depreciation reserves
1. Beginning balance
2. Increased amount of
150
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
the period
(1) Withdrawal
3. Decreased amount
of the period
(1) Disposal
(2) Other transfer
4. Ending balance
IV. Carrying value
1. Ending carrying
30,763,683.73 30,763,683.73
value
2. Beginning carrying
32,092,356.29 32,092,356.29
value
(2) Investment Property Adopting the Fair Value Measurement Mode
□ Applicable √ Not applicable
(3) Investment Property Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Other notes
16. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed assets 2,178,817,683.33 2,302,301,389.40
Total 2,178,817,683.33 2,302,301,389.40
(1) List of Fixed Assets
Unit: RMB
Machinery Transportation Electronic
Houses and
Item equipment equipment and Total
buildings
others
I. Original carrying
151
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
value
1. Beginning
1,158,249,569.78 2,825,912,365.48 44,645,338.25 134,213,664.23 4,163,020,937.74
balance
2. Increased
2,228,359.83 21,231,929.66 2,414,272.98 8,467,200.95 34,341,763.42
amount of the period
(1) Purchase 2,228,359.83 10,858,214.92 2,128,461.02 4,191,205.14 19,406,240.91
(2) Transfer
from construction in 10,373,714.74 285,811.96 4,275,995.81 14,935,522.51
progress
(3) Enterprise
combination increase
3. Decreased
1,234,794.05 2,693,142.02 2,840,997.28 2,152,683.84 8,921,617.19
amount of the period
(1) Disposal or
1,199,622.48 2,693,142.02 2,840,997.28 2,152,683.84 8,886,445.62
Scrap
(2) Other
35,171.57 35,171.57
decrease
4. Ending balance 1,159,243,135.56 2,844,451,153.12 44,218,613.95 140,528,181.34 4,188,441,083.97
II. Accumulative
depreciation
1. Beginning
400,525,039.42 1,247,659,071.06 38,150,002.83 97,705,678.03 1,784,039,791.34
balance
2. Increased
33,820,250.86 111,086,567.27 2,026,086.82 8,956,184.21 155,889,089.16
amount of the period
(1) Withdrawal 33,820,250.86 111,086,567.27 2,026,086.82 8,956,184.21 155,889,089.16
3. Decreased
1,053,727.14 1,754,849.20 2,115,636.89 2,061,023.63 6,985,236.86
amount of the period
(1) Disposal or
1,053,727.14 1,754,849.20 2,115,636.89 2,061,023.63 6,985,236.86
Scrap
(2) Other
decrease
4. Ending balance 433,291,563.14 1,356,990,789.13 38,060,452.76 104,600,838.61 1,932,943,643.64
III. Depreciation
reserves
1. Beginning
76,679,757.00 76,679,757.00
balance
152
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Increased
amount of the period
(1) Withdrawal
3. Decreased
amount of the period
(1) Disposal or
Scrap
4. Ending balance 76,679,757.00 76,679,757.00
IV. Carrying value
1. Ending carrying
725,951,572.42 1,410,780,606.99 6,158,161.19 35,927,342.73 2,178,817,683.33
value
2. Beginning
757,724,530.36 1,501,573,537.42 6,495,335.42 36,507,986.20 2,302,301,389.40
carrying value
(2) List of Temporarily Idle Fixed Assets
Unit: RMB
Original carrying Accumulative Depreciation
Item Carrying value Note
value depreciation reserves
(3) Fixed Assets Leased in by Financing Lease
Unit: RMB
Accumulative
Item Original carrying value Depreciation reserves Carrying value
depreciation
Houses and buildings 12,212,610.00 11,601,979.50 610,630.50
Machinery equipment 3,160,000.00 3,002,000.00 158,000.00
Total 15,372,610.00 14,603,979.50 768,630.50
(4) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying value
(5) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
153
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Item Carrying value Reason
Property right certificate was under
Houses and buildings 99,135,653.46
process
Total 99,135,653.46
Other notes
(6) Proceeds from Disposal of Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Other notes
17. Construction in Progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 38,735,958.38 39,315,774.19
Total 38,735,958.38 39,315,774.19
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserves reserves
Latex phase II
matching raw
17,151,537.73 17,151,537.73 15,918,047.55 15,918,047.55
material tank
farm project
Treatment system
for industrial 1,556,896.56 1,556,896.56
waste gas
Internal and
external
antiseptic
1,943,205.00 1,943,205.00
treatment for the
120-meter
chimney
BM3 Tetra
6,338,209.24 6,338,209.24 5,168,440.11 5,168,440.11
project
154
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Renovation
project on the
control system of 1,444,396.61 1,444,396.61
BM3 paper
machines
Advanced
waste-water
treatment and 2,477,929.63 2,477,929.63 2,431,959.91 2,431,959.91
water reuse
project
BM2 Self-made
Sizing Starch 1,978,479.72 1,978,479.72 74,308.06 74,308.06
System
Renovation
project on BM3 56,813.64 56,813.64 1,302,234.23 1,302,234.23
Broke Pulper
BM3 Reel
alternation of
hydro-acupunctur 1,967,411.17 1,967,411.17
e renovation
project
BM3 coating
draught fan
energy saving 1,070,085.47 1,070,085.47
renovation
project
Equipment in
5,047,332.75 5,047,332.75
process
Other 5,788,490.25 5,788,490.25 6,335,954.94 6,335,954.94
Total 38,735,958.38 38,735,958.38 39,315,774.19 39,315,774.19
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Proporti Accumul Of Capitaliz
on of ated which: ation rate
Transferr
Beginnin Other accumul amount amount of
Increase ed in Ending Job Capital
Item Budget g decrease ated of of interests
d amount fixed balance schedule resources
balance d amount investme interest capitaliz for the
assets
nt in capitaliz ed Reportin
construct ation interests g Period
155
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
ions to for the
budget Reportin
g Period
BM3
18,730,0 5,168,44 1,169,76 6,338,20
Tetra 33.84% 33 Other
00.00 0.11 9.13 9.24
project
Latex
phase II
matching
raw 20,000,0 15,918,0 1,233,49 17,151,5
85.76% 85 Other
material 00.00 47.55 0.18 37.73
tank
farm
project
Treatme
nt
system
for
industria
l waste
gas of
Guangzh
ou 6,020,00 1,556,89 1,556,89
25.86% 25 Other
Tongshe 0.00 6.56 6.56
ng
Environ
mental
Protectio
n
Technolo
gy Co.,
Ltd.
Internal
and
external
antisepti
c 3,500,00 1,943,20 1,943,20
55.52% 55 Other
treatmen 0.00 5.00 5.00
t for the
120-met
er
chimney
Advance 18,000,0 2,431,95 45,969.7 2,477,92 13.77% 13 Other
156
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
d 00.00 9.91 2 9.63
waste-w
ater
treatmen
t and
water
reuse
project
BM3
Reel
alternati
on of
hydro-ac 2,000,00 1,967,41 16,808.2 1,984,21
99.21% 100 Other
upunctur 0.00 1.17 4 9.41
e
renovati
on
project
Renovati
on
project
on the
control 2,000,00 1,444,39 1,444,39
72.22% 70 Other
system 0.00 6.61 6.61
of BM3
paper
machine
s
BM3
coating
draught
fan
1,300,00 1,070,08 1,070,08
energy 82.31% 100 Other
0.00 5.47 5.47
saving
renovati
on
project
Renovati
on
1,370,00 1,138,43 1,138,43
project 100.00% 100 Other
0.00 8.44 8.44
of BM1
QCS
BM2 2,900,00 74,308.0 1,904,17 1,978,47 68.22% 68 Other
157
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Self-mad 0.00 6 1.66 9.72
e Sizing
Starch
System
Renovati
on
project 3,500,00 1,302,23 71,570.0 1,316,99 56,813.6
100.00% 100 Other
on BM3 0.00 4.23 0 0.59 4
Broke
Pulper
Equipme
5,047,33 2,009,76 7,057,10
nt in Other
2.75 9.04 1.79
process
6,335,95 1,821,22 2,368,68 5,788,49
Other Other
4.94 2.12 6.81 0.25
79,320,0 39,315,7 14,355,7 14,935,5 38,735,9
Total -- -- --
00.00 74.19 06.70 22.51 58.38
(3) List of the Withdrawal of the Depreciation Reserves for Construction in Progress
Unit: RMB
Item Amount withdrawn Reason for withdrawal
Other notes
(4) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Depreciation Carrying Depreciation
Carrying amount Carrying value Carrying value
reserves amount reserves
Other notes:
18. Productive Living Assets
(1) Productive Living Assets Adopting Cost Measurement Mode
□ Applicable √ Not applicable
(2) Productive Living Assets Adopting Fair Value Measurement Mode
□ Applicable √ Not applicable
158
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
19. Oil and Gas Assets
□ Applicable √ Not applicable
20. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Item Land use right Patent right Non-patent right Software and other Total
I. Original carrying
value
1. Beginning
146,970,093.89 56,822,865.97 8,653,219.40 212,446,179.26
balance
2. Increased
9,053,412.40 6,053,220.75 15,106,633.15
amount of the period
(1) Purchase 2,679,066.14 2,679,066.14
(2) Internal
9,053,412.40 9,053,412.40
R&D
(3) Business
combination increase
(4) Transfer
from construction in 3,374,154.61 3,374,154.61
progress
3. Decreased
14,532,760.00 14,532,760.00
amount of the period
(1) Disposal 14,532,760.00 14,532,760.00
4. Ending balance 132,437,333.89 65,876,278.37 14,706,440.15 213,020,052.41
II. Accumulated
amortization
1. Beginning
49,595,308.00 19,221,477.69 3,912,178.35 72,728,964.04
balance
2. Increased
2,798,699.44 5,176,198.90 1,109,388.10 9,084,286.44
amount of the period
(1) Withdrawal 2,798,699.44 5,176,198.90 1,109,388.10 9,084,286.44
3. Decreased
700,458.83 700,458.83
amount of the period
159
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(1) Disposal 700,458.83 700,458.83
4. Ending balance 51,693,548.61 24,397,676.59 5,021,566.45 81,112,791.65
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount of the period
(1) Withdrawal
3. Decreased
amount of the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying
80,743,785.28 41,478,601.78 9,684,873.70 131,907,260.76
value
2. Beginning
97,374,785.89 37,601,388.28 4,741,041.05 139,717,215.22
carrying value
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending balance of
intangible assets was 30.92%.
(2) Land Use Right with Certificate of Title Uncompleted
Unit: RMB
Item Carrying value Reason
Other notes:
21. R&D Expense
Unit: RMB
Beginning Ending
Item Increase Decrease
balance balance
SBS coated
(combined)
1,809,893.80 1,809,893.80
ivory board
(coated with
160
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
copper)
Craft board 2,733,903.09 2,733,903.09
High barrier
3,020,246.66 3,020,246.66
board
R&D of
tobacco stem 2,799,715.49 2,799,715.49
board
R&D of
environmenta
l protection
1,489,368.85 1,489,368.85
food
packaging
board
R&D of
special
546,784.41 546,784.41
testing carton
base paper
Special food
packaging
4,405,940.07 4,405,940.07
board with
natural color
16,805,852.3
Total 9,053,412.40 7,752,439.97
7
Other notes
22. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Name of the
invested units or Beginning
Increase Decrease Ending balance
events generating balance
goodwill
Zhuhai S.E.Z.
Hongta Renheng 9,129,025.01 9,129,025.01
Paper Co., Ltd.
Zhuhai Golden
Pheasant
2,418,280.28 2,418,280.28
Chemicals Co.,
Ltd.
161
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Total 11,547,305.29 11,547,305.29
(2) Depreciation Reserves of Goodwill
Unit: RMB
Name of the
invested units or Beginning
Increase Decrease Ending balance
events generating balance
goodwill
Zhuhai S.E.Z.
Hongta Renheng 0.00 0.00
Paper Co., Ltd.
Zhuhai Golden
Pheasant
0.00 0.00
Chemicals Co.,
Ltd.
Total 0.00 0.00
Information on the assets group or combination of assets groups which goodwill belongs to
Notes of the testing process of goodwill impairment, parameters (such as growth rate of the forecast period, growth rate of stable
period, rate of profit, discount rate, forecast period and so on for prediction of future present value of cash flows) and the recognition
method of goodwill impairment losses:
The testing process, method and conclusion of goodwill impairment
The recoverable amount of goodwill is calculated based on the present value of the estimated future cash flow.
The cash flow is estimated based on the 5-year cash flow forecast approved by the Company. The discount rate
used for cash flow forecast is 4.75%. The cash flow after the forecast period was speculated based on the growth
rate of 5% which is comparable to the overall long-term average growth rate of the paper industry.
Other key data in the impairment test include: predicted selling price of products, sales volume, production cost
and other related expenses.
The Company confirmed the above-mentioned key data against its historical experience and the forecast of market
development. The discount rate adopted by the Company is the pre-tax rate that reflects the current market
currency time value and the specific risks of the relevant asset group.
The above estimation of the recoverable amount indicates that there is no impairment loss on goodwill.
Influence of goodwill impairment testing
Other notes
23. Long-term Prepaid Expense
Unit: RMB
Amortization Other decreased
Item Beginning balance Increased amount Ending balance
amount of the period amount
162
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Decoration expense
213,321.10 44,909.71 168,411.39
for rent-in plant
Fee for technical
232,806.84 87,302.64 145,504.20
service
Maintaining
renovation of
2,810,762.23 2,834,671.33 1,203,842.97 4,441,590.59
construction
project
Total 3,256,890.17 2,834,671.33 1,336,055.32 4,755,506.18
Other notes
24. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Set-off
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for impairment
176,170,867.67 26,425,630.18 144,093,941.83 21,629,140.63
of assets
Unrealized profit of
9,851,070.07 1,477,660.51
internal transactions
Accrued expenses 24,307,031.93 3,646,054.79 37,374,843.28 5,606,226.49
Net amount of change in
fair value of trading 2,394,879.25 359,231.89
financial liabilities
Total 210,328,969.67 31,549,345.48 183,863,664.36 27,594,599.01
(2) Deferred Income Tax Liabilities Had Not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Assets evaluation
appreciation in the
14,212,900.20 2,131,935.03 14,923,964.07 2,238,594.61
business combination not
under the same control
Total 14,212,900.20 2,131,935.03 14,923,964.07 2,238,594.61
163
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Off-set
Unit: RMB
Mutual set-off amount of Ending balance of Mutual set-off amount of Beginning balance of
deferred income tax deferred income tax deferred income tax deferred income tax
Item
assets and liabilities at assets or liabilities after assets and liabilities at assets or liabilities after
the period-end off-set the period-begin off-set
Deferred income tax
31,549,345.48 27,594,599.01
assets
Deferred income tax
2,131,935.03 2,238,594.61
liabilities
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible losses 199,990,599.74 67,269,298.96
Provision for impairment of assets 208,702.94 201,333.37
Total 200,199,302.68 67,470,632.33
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
Years Ending amount Beginning amount Notes
Y2019
Y2020 72,934,938.44 49,162,723.17
Y2021 1,734,170.90 1,734,170.90
Y2022 9,996,774.57 3,166,186.95
Y2023 115,324,715.83
Total 199,990,599.74 54,063,081.02 --
Other notes:
25. Other Non-current Assets
Unit: RMB
Item Ending balance Beginning balance
Prepayment of equipment 1,495,963.49 5,235,044.33
Total 1,495,963.49 5,235,044.33
Other notes:
164
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
26. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Pledge borrowings 199,095,460.59
Guaranteed borrowings 662,776,823.86 698,330,783.93
Credit borrowings 200,000,000.00
Total 862,776,823.86 897,426,244.52
Notes of short-term borrowings category:
(2) List of the Short-term Borrowings Overdue but Not Returned
The amount of the overdue unpaid short-term borrowings at the period-end was of RMB0.00, of which the significant overdue
unpaid short-term borrowings are as follows:
Unit: RMB
Borrower Ending balance Interest rate Overdue time Overdue charge rate
Other notes:
27. Financial Liabilities at Fair Value through Profit or Loss
Unit: RMB
Item Ending balance Beginning balance
Specified as financial liabilities at fair
2,394,879.25
value through profit or loss
Total 2,394,879.25
Other notes:
28. Derivative Financial Liabilities
□ Applicable √ Not applicable
29. Notes Payable and Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Notes payable 310,600,000.00 8,530,196.41
Accounts payable 464,643,787.56 341,247,162.39
Total 775,243,787.56 349,777,358.80
165
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(1) Notes Payable Listed by Category
Unit: RMB
Category Ending balance Beginning balance
Bank’s acceptance bill 310,600,000.00 8,530,196.41
Total 310,600,000.00 8,530,196.41
The total amount of the due but not paid notes payable at the end of the period was of RMB0.00.
(2) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Payment of materials 375,399,151.20 257,450,045.60
Payment of equipment 6,104,986.59 9,163,006.20
Payment of freight 42,626,350.09 53,544,546.45
Other 40,513,299.68 21,089,564.14
Total 464,643,787.56 341,247,162.39
(3) Significant Accounts Payable Aging over One Year
Unit: RMB
Item Ending balance Unpaid/ Un-carry-over reason
Other notes:
30. Advances from Customers
(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balance
Within 1 year 32,561,871.59 21,099,280.81
1-2 years 236,602.58 185,873.32
2-3 years 103,015.37 239,511.43
Over 3 years 530,099.25 245,079.52
Total 33,431,588.79 21,769,745.08
(2) Significant Advances from Customers Aging over One Year
Unit: RMB
166
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Item Ending balance Unpaid/ Un-carry-over reason
(3) Settled but Uncompleted Projects Formed by Construction Contracts at the Period-end
Unit: RMB
Item Amount
Other notes:
31. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 29,068,767.86 190,941,490.14 178,932,415.55 41,077,842.45
II. Post-employment
benefit-defined 193,390.47 21,089,267.03 17,542,657.50 3,740,000.00
contribution plans
III. Termination benefits 6,546,612.00 6,546,612.00
Total 29,262,158.33 218,577,369.17 203,021,685.05 44,817,842.45
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus,
19,456,610.16 166,935,427.76 156,018,011.07 30,374,026.85
allowance, subsidy
2. Employee welfare 8,501,127.96 8,501,127.96
3. Social insurance 6,425,059.22 6,425,059.22
Of which: Medical
5,468,476.86 5,468,476.86
insurance premiums
Work-re
449,701.28 449,701.28
lated injury insurance
Materni
506,881.08 506,881.08
ty insurance
4. Housing fund 4,705,409.16 4,671,499.80 33,909.36
5. Labor union budget
and employee education 9,612,157.70 4,374,466.04 3,316,717.50 10,669,906.24
budget
167
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Total 29,068,767.86 190,941,490.14 178,932,415.55 41,077,842.45
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension benefits 11,610,669.71 11,610,669.71
2. Unemployment
531,263.71 531,263.71
insurance
3. Annuity 193,390.47 8,947,333.61 5,400,724.08 3,740,000.00
Total 193,390.47 21,089,267.03 17,542,657.50 3,740,000.00
Other notes:
32. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
VAT 30,384,238.41 9,173,589.49
Corporate income tax 3,347,494.70 4,829,691.00
Personal income tax 155,162.18 220,969.58
Urban maintenance and construction tax 78,011.80 443,966.24
Education Surcharge 55,722.70 317,118.82
Stamp tax 376,052.60 149,295.59
Property tax 5,085,707.04 3,997,526.54
Land use tax 1,694,485.83 2,264,945.84
Other 111,645.03
Total 41,288,520.29 21,397,103.10
Other notes:
33. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Interest payable 6,315,962.71 7,865,380.83
Dividends payable 25,083,228.68 12,116,789.76
Other payables 148,338,686.00 30,829,181.11
Total 179,737,877.39 50,811,351.70
168
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(1) Interest Payable
Unit: RMB
Item Ending balance Beginning balance
Interest of long-term borrowings with
installment payments of interest and 454,930.56 887,413.70
payment of principal at maturity
Enterprise bond interest 4,455,452.06
Interest payable of short-term borrowings 1,841,377.53 2,466,929.24
Interest payable of borrowings provided by
4,019,654.62 55,585.83
units
Total 6,315,962.71 7,865,380.83
List of the significant overdue unpaid interest:
Unit: RMB
Borrower Overdue amount Overdue reasons
Other notes:
(2) Dividends Payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share dividends 25,083,228.68 12,116,789.76
Total 25,083,228.68 12,116,789.76
Other notes, including significant dividends payable unpaid for over one year, the unpaid reason shall be disclosed:
(3) Other Payables
1) Other Payables Listed by Nature
Unit: RMB
Item Ending balance Beginning balance
Margin and cash pledge 40,981,285.95 13,124,079.64
Prepayment 8,523,323.85 6,232,605.94
Intercourse funds among units 92,200,000.00 8,110,384.98
balance payment of engineering 733,688.95 1,158,579.69
Other 5,900,387.25 2,203,530.86
Total 148,338,686.00 30,829,181.11
(2) Significant Other Payables Aging over One Year
Unit: RMB
169
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Item Ending balance Unpaid/Un-carry-over reason
Other notes
34. Held-for-sale Liabilities
Unit: RMB
Item Ending balance Beginning balance
Other notes:
35. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term borrowings 200,000,000.00
Current portion of bonds payable 199,834,258.85
Total 200,000,000.00 199,834,258.85
Other notes:
36. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Increase/decrease of the short-term bonds payable:
Unit: RMB
Amortizat
Withdraw
ion of Repayme
The al of
Bonds Issuing Issuing Beginnin premium nt in the Ending
Par value Duration current interest
name date amount g balance and Reporting balance
issue by par
depreciati Period
value
on
Other notes:
37. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Guaranteed borrowings 100,000,000.00 200,000,000.00
Total 100,000,000.00 200,000,000.00
170
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Notes to the category of long-term borrowings:
Other notes, including the interval of interest rate:
38. Bonds Payable
(1) List of Bonds Payable
Unit: RMB
Item Ending balance Beginning balance
(2) Increase/Decrease of Bonds Payable (Excluding Other Financial Instrument Classified as Financial
Liabilities such as Preferred Shares and Perpetual Bonds)
Unit: RMB
(3) Notes to the Conditions and Time of the Shares Transfer of the Convertible Corporate Bonds
(4) Notes to Other Financial Instruments Classified as Financial Liabilities
Basic situation of other financial instruments such as preferred shares and perpetual bonds outstanding at the period-end
Changes in financial instruments such as preferred shares and perpetual bonds outstanding at the period-end
Unit: RMB
Outstanding Period-beginning Increase Decrease Period-end
financial Carrying Carrying Carrying Carrying
Amount Amount Amount Amount
instrument value value value value
Notes to basis for the classification of other financial instruments as financial liabilities
Other notes
39. Long-term Payables
Unit: RMB
Item Ending balance Beginning balance
Long-term payables 16,825,912.17
Total 16,825,912.17
(1) Long-term Payables Listed by Nature
Unit: RMB
Item Ending balance Beginning balance
Financial leasing 825,912.17
Borrowings from non-financial institution 16,000,000.00
171
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Total 16,825,912.17
Other notes:
(2) Specific Payables
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Other notes:
40. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
Item Ending balance Beginning balance
(2) Changes in Defined Benefit Plans
Obligation present value of defined benefit plans:
Unit: RMB
Item Reporting period Same period of last year
Plan assets:
Unit: RMB
Item Reporting period Same period of last year
Net liabilities (net assets) of defined benefit plans:
Unit: RMB
Item Reporting period Same period of last year
Notes of influence of content of defined benefit plans and its relevant risks to the future cash flow, time and uncertainty of the
Company:
Notes to the results of significant actuarial assumptions and sensitivity analysis of defined benefit plans:
Other notes:
41. Provisions
Unit: RMB
Item Ending balance Beginning balance Reason for formation
Predicted losses resulting from
Product quality guarantee 1,508,735.64 1,366,445.61
any product quality problem
Total 1,508,735.64 1,366,445.61 --
172
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Other notes, including notes to related significant assumptions and evaluation of significant provisions:
42. Deferred Income
Unit: RMB
Reason for
Item Beginning balance Increase Decrease Ending balance
formation
Capital
Government compensating related
30,773,540.27 3,613,697.19 4,081,924.16 30,305,313.30
subsidies funds for
construction
Total 30,773,540.27 3,613,697.19 4,081,924.16 30,305,313.30 --
Item involving government subsidies:
Unit: RMB
Amount Amount
recorded into recorded into Amount
Amount of Related to
Beginning non-operatin other income offset cost in Other Ending
Item newly assets/related
balance g income in in the the Reporting changes balance
subsidy income
the Reporting Reporting Period
Period Period
Renovation
project of the
information
system of
Related to
paper-making 720,000.00 32,000.00 688,000.00
assets
enterprise
energy
management
center
No. 1 paper
machine
Related to
update & 224,000.00 9,600.00 214,400.00
assets
renovation
project
Liquid paper
Related to
renovation 233,333.20 35,000.04 198,333.16
assets
project
Renovation
project of the
Related to
information 1,096,666.71 279,999.96 816,666.75
assets
system of
energy
173
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
management
center
Steam
condensation
water Related to
1,536,000.00 384,000.00 1,152,000.00
recycling and assets
energy saving
projects
Subsidy of
improvement
Related to
of Zhuhai 1,398,794.33 699,397.24 699,397.09
assets
motor
efficiency
Subsidy of
latex phase II
production
Related to
line 228,000.00 114,000.00 114,000.00
assets
technological
transformatio
n
BM1 ink-jet
printer
system and
drive system
10,031,627.7 Related to
upgrade 447,507.56 9,584,120.15
1 assets
synthesis
technique
transformatio
n project
Zhuhai
Gaolan Port
national
treasury
equipment Related to
960,266.59 41,600.04 918,666.55
renewal assets
(Robot
Application)
special fund
subsidies
Energy
Related to
management 891,746.71 227,679.96 664,066.75
assets
center
174
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
energy-savin
g
technological
innovation
support fund
Post-awarded
subsidies of
Automatic Related to
4,268,161.40 179,005.68 4,089,155.72
packaging assets
line technical
innovation
Post-awarded
subsidies of
HCB-Turn
Nozzle
Related to
optimization 1,754,105.57 72,834.84 1,681,270.73
assets
and
technological
transformatio
n project
Post-awarded
subsidies of
TP liquid
food packing
Related to
board 4,937,748.66 4,937,748.66
assets
synthesis
technique
transformatio
n project
Post-awarded
subsidies of
MES
technical
renovation Related to
1,893,089.39 649,059.24 1,244,030.15
project of assets
Zhuhai
Huafeng
Paper Co.,
Ltd.
Support
funds for Related to
600,000.00 600,000.00 0.00
restoring assets
production
175
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
after typhoon
Subsidy for
migration of Related to
2,358,270.19 39,339.60 2,318,930.59
high voltage assets
cable
Specific
project
subsidy for a
new round of
technical Related to
442,727.00 442,727.00
renovation in assets
Finance
Bureau of
Chancheng
District
2017
provincial
industrial and
information
specific funds Related to
812,700.00 270,900.00 541,800.00
of Foshan assets
Finance
Bureau
(technical
renovation)
30,773,540.2 30,305,313.3
Total 3,613,697.19 600,000.00 3,481,924.16
7 0
Other notes:
43. Other Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Other notes:
44. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning
New shares Bonus issue Ending balance
balance Bonus shares Other Subtotal
issued from profit
176
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
The sum of
505,425,000.00 505,425,000.00
shares
Other notes:
45. Other Equity Instruments
(1) The Basic Information of Other Financial Instruments such as Preferred Stock and Perpetual Bond
Outstanding at the End of the Period
(2) Changes in Financial Instruments such as Preferred Stock and Perpetual Bond Outstanding at the End
of the Period
Unit: RMB
Outstanding Period-beginning Increase Decrease Period-end
financial Carrying Carrying Carrying Carrying
Amount Amount Amount Amount
instruments value value value value
The current changes in other equity instruments and the corresponding reasons and the basis of the relevant accounting treatment
Other notes:
46. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
256,362,525.38 256,362,525.38
(premium on stock)
Other capital reserves 459,848.04 459,848.04
Total 256,822,373.42 256,822,373.42
Other notes, including changes and reason of change:
47. Treasury Shares
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Other notes, including changes and reason of change:
48. Other Comprehensive Income
Unit: RMB
Reporting Period
Beginning Ending
Item Income Less: recorded Less: Attributable Attributable balance
balance
before in other Income tax to owners to
177
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
taxation in comprehensive expense of the non-control
the Current income in Company ling
Period prior period as the interests
and transferred parent after after tax
in profit or tax
loss in the
Current
Period
II. Other comprehensive income that
169,714.3
may subsequently be reclassified to 169,714.39
9
profit or loss
Of which: Share of other
comprehensive income of investees 169,714.3
169,714.39
that will be reclassified to profit or 9
loss under equity method
169,714.3
Total of other comprehensive income 169,714.39
9
Other notes, including the adjustment of the effective gain/loss on cash flow hedges to the initial recognized amount:
49. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Other notes, including changes and reason of change:
50. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
192,647,450.61 3,751,800.19 196,399,250.80
reserves
Total 192,647,450.61 3,751,800.19 196,399,250.80
Notes, including changes and reason of change:
51. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings before
1,027,794,897.79 1,027,703,010.59
adjustments
Beginning balance of retained earnings after 1,027,794,897.79 1,027,703,010.59
178
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
adjustments
Add: Net profit attributable to owners of the
-2,814,965.92 18,637,865.97
Company as the parent
Less: withdrawal of statutory surplus reserves 3,751,800.19 2,372,378.77
Dividend of ordinary shares payable 9,097,650.00 16,173,600.00
Ending retained earnings 1,012,130,481.68 1,027,794,897.79
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the Accounting Standards
for Business Enterprises and relevant new regulations.
(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.
(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same control.
(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.
52. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same Period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 3,588,986,332.24 3,290,603,851.05 3,387,712,195.06 2,948,469,093.13
Other operations 94,018,211.26 65,742,861.68 195,445,451.31 159,896,380.04
Total 3,683,004,543.50 3,356,346,712.73 3,583,157,646.37 3,108,365,473.17
53. Taxes and Surtaxes
Unit: RMB
Item Reporting Period Same Period of last year
Urban maintenance and construction tax 3,608,728.97 6,902,983.13
Education Surcharge 2,588,747.22 4,933,650.70
Property tax 6,522,892.91 6,460,903.34
Land use tax 2,038,050.46 2,412,212.48
Vehicle and vessel use tax 21,277.57 43,663.68
Stamp Duty 2,453,442.87 2,213,596.95
Other 303,773.12
Total 17,536,913.12 22,967,010.28
Other notes:
179
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
54. Selling Expense
Unit: RMB
Item Reporting Period Same Period of last year
Salary and benefits 16,869,968.19 13,510,588.27
Business entertainment fees 5,124,436.79 6,092,497.55
Packing charges 10,274,001.73 10,055,322.24
Warehousing fees 9,048,439.87 4,020,228.11
Transport charge 119,273,809.00 141,141,510.57
Office expenses 504,015.59 726,361.44
Other 8,327,512.03 7,377,215.37
Total 169,422,183.20 182,923,723.55
Other notes:
55. Administrative Expense
Unit: RMB
Item Reporting Period Same Period of last year
Salary and benefits 47,688,944.73 43,313,668.97
Social insurance 8,615,815.27 20,611,798.52
Housing fund 1,324,367.76 4,287,169.43
Depreciation and amortization 18,816,835.86 19,587,722.05
Office expenses 3,441,391.70 3,422,223.93
Fees for agencies 6,427,166.04 7,384,158.05
Utilities 3,663,342.86 4,858,252.20
Rental fees 5,213,126.28 1,209,743.51
Business travel fees 2,104,812.31 2,726,094.32
Business entertainment fees 2,260,907.57 1,982,313.19
Material consumption 3,193,820.09 3,156,395.79
Other 10,322,921.71 7,802,803.78
Total 113,073,452.18 120,342,343.74
Other notes:
56. R&D Expense
Unit: RMB
Item Reporting Period Same Period of last year
180
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Salary 8,401,940.35 3,141,582.90
Material drawing out 19,702,922.55 365,879.52
Experiment and inspection fees 1,830,531.43 334,994.82
Depreciation and amortization 1,788,418.60 233,600.59
Fees for technical service 104,015.01
Entertainment fees 174,240.80 122,275.39
Business travel fees 260,409.89 203,870.77
Office expenses 161,192.50 209,495.04
Other 464,528.82 418,750.50
Total 32,784,184.94 5,134,464.54
Other notes:
57. Finance Costs
Unit: RMB
Item Reporting Period Same Period of last year
Interest expense 97,699,988.40 122,634,675.32
Less: Interest income 11,188,199.94 20,462,322.12
Foreign exchange gains or losses -1,796,490.75 15,787,286.73
Other 4,415,466.09 3,668,284.72
Total 89,130,763.80 121,627,924.65
Other notes:
58. Asset Impairment Loss
Unit: RMB
Item Reporting Period Same Period of last year
I. Bad debt loss 2,889,252.82 2,314,605.74
II. Loss on inventory valuation 15,120,270.23 2,395,617.41
Total 18,009,523.05 4,710,223.15
Other notes:
59. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government subsidy related to assets 3,481,924.16 2,915,637.18
181
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Government subsidy related to income 7,747,334.14 10,875,874.61
Total 11,229,258.30 13,791,511.79
60. Investment Income
Unit: RMB
Item Reporting Period Same Period of last year
Long-term equity investment income
5,625,141.25 22,353,488.34
accounted by equity method
Investment income from disposal of financial
5,292,680.54
assets at fair value through profit or loss
Investment income from holding of available
10,000,000.00 6,995,738.12
for sale financial assets
Investment income from disposal of financial
2,383,532.02
liabilities at fair value through profit or loss
Total 18,008,673.27 34,641,907.00
Other notes:
61. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Financial assets at fair value through profit
-1,571,341.66
or loss
Financial liabilities at fair value through
2,394,879.25 -2,394,879.25
profit or loss
Total 2,394,879.25 -3,966,220.91
Other notes:
62. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Fixed asset disposal income 1,390,311.65 689,820.93
Total 1,390,311.65 689,820.93
63. Non-operating Income
Unit: RMB
182
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Amount recorded in the current
Item Reporting Period Same Period of last year
non-recurring profit or loss
Government subsidy 6,290,035.00 6,290,035.00
Compensation income 1,504,158.25
Difference between the carrying
value and net assets enjoyed
21,561,238.54 21,561,238.54
when transferred by equity
method
Other 4,868,628.58 2,908,797.32 4,868,628.58
Total 32,719,902.12 4,412,955.57 32,719,902.12
Government subsidies recorded into current profit or loss
Unit: RMB
Whether
influence the Special Related to
Distribution Distribution Reporting Same period
Item Nature profits or subsidy or assets/related
entity reason Period of last year
losses of the not income
year or not
Support
funds for
Related to
restoring Subsidy Yes No 600,000.00
income
production
after typhoon
Subsidy for
losses on
suspension of Related to
Subsidy Yes No 5,690,035.00
production income
due to power
failure
Total 6,290,035.00
Other notes:
64. Non-operating Expense
Unit: RMB
Amount recorded in the current
Item Reporting Period Same Period of last year
non-recurring profit or loss
Donation 3,000.00 29,750.00 3,000.00
Loss on damage and scrap of
1,347,876.44 414,517.07 1,347,876.44
non-current assets
Penalty, reparations and fine for 815,704.33
183
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
delaying payment
Loss on scrap of raw materials 132,982.11
Loss on abnormal suspension of
6,875,690.07 27,797,264.89 6,875,690.07
production
Other 33,135.00 66,618.45 33,135.00
Total 8,259,701.51 29,256,836.85 8,259,701.51
Other notes:
65. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same Period of last year
Current income tax expense 5,230,146.03 5,922,905.23
Deferred income tax expense -4,061,406.05 -3,751,096.76
Total 1,168,739.98 2,171,808.47
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation -55,815,866.44
Current income tax expense accounted at statutory/applicable tax
-13,953,966.61
rate
Influence of applying different tax rates by subsidiaries 9,242,820.07
Influence of income tax before adjustment -3,147,582.74
Influence of non-taxable income -9,244,434.68
Influence of non-deductable costs, expenses and losses 973,805.90
Influence of deductable temporary difference or deductable
losses of unrecognized deferred income tax at the beginning of -230,133.58
the Reporting Period
Influence of deductable temporary difference or deductable
losses of unrecognized deferred income tax in the Reporting 17,878,979.61
Period
Influence of R&D expense deduction -350,748.02
Income tax expense 1,168,739.98
Other notes
184
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
66. Other Comprehensive Income
Refer to Note 48 for details.
67. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same Period of last year
Intercourse funds 101,993,952.31 20,712,965.39
Government subsidies 17,051,066.33 26,339,674.61
Cash deposit received 12,875,827.91
Interest income 3,529,355.27 26,629,976.60
Other 24,287,618.86 7,944,511.69
Total 159,737,820.68 81,627,128.29
Notes:
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same Period of last year
Intercourse funds 30,000,000.00 55,652,086.82
Fees 162,012,997.06 51,716,874.45
Petty cash for employees 1,773,035.43 2,761,745.19
Cash deposit paid 2,627,073.52
Other 65,890.65
Total 196,478,996.66 110,130,706.46
Notes:
(3) Cash Generated from Other Investing Activities
Unit: RMB
Item Reporting Period Same Period of last year
Principal of structural deposits 229,000,000.00 209,000,000.00
Principal and interest of borrowings 511,909,915.83
Disposal of trading financial liabilities 2,383,532.02
Total 231,383,532.02 720,909,915.83
185
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Notes:
(4) Cash Used in Other Investing Activities
Unit: RMB
Item Reporting Period Same Period of last year
Principal of structural deposits 545,200,000.00 1,000,000.00
Total 545,200,000.00 1,000,000.00
Notes:
(5) Cash Generated from Other Financing Activities
Unit: RMB
Item Reporting Period Same Period of last year
Restricted monetary capital recovered as
33,400,956.90 176,891,765.59
margin or pledge
Borrowings from non-financial institutions 55,600,000.00 16,000,000.00
Total 89,000,956.90 192,891,765.59
Notes:
(6) Cash Used in Other Financing Activities
Unit: RMB
Item Reporting Period Same Period of last year
Restricted monetary capital as margin or
5,971,254.50 33,400,956.90
pledge
Repayment for borrowings from external
40,000,000.00
parties
Total 45,971,254.50 33,400,956.90
Notes:
68. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash
-- --
flows generated from operating activities
186
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Net profit -56,984,606.42 35,227,812.35
Add: Provision for impairment of assets 18,009,523.05 4,710,223.15
Depreciation of fixed assets, oil-gas assets,
157,252,933.29 159,400,760.10
and productive living assets
Amortization of intangible assets 9,084,286.44 7,993,240.03
Amortization of long-term prepaid expenses 1,336,055.32 1,267,488.68
Losses from disposal of fixed assets,
intangible assets and other long-lived assets -1,390,311.65 -689,820.93
(gains: negative)
Losses from scrap of fixed assets (gains:
1,347,876.44 414,517.07
negative)
Losses from changes in fair value (gains:
-2,394,879.25 3,966,220.91
negative)
Finance costs (gains: negative) 93,337,367.57 108,435,156.14
Investment loss (gains: negative) -18,008,673.27 -34,641,907.00
Decrease in deferred income tax assets
-3,954,746.47 -3,260,644.87
(increase: negative)
Increase in deferred income tax liabilities
-106,659.58 -490,451.89
(decrease: negative)
Decrease in inventory (gains: negative) -451,108,295.63 26,685,441.54
Decrease in accounts receivable generated
116,122,123.02 11,803,322.52
from operating activities (gains: negative)
Increase in accounts payable used in
530,923,401.86 -342,732,278.88
operating activities (decrease: negative)
Net cash generated from/used in operating
393,465,394.72 -21,910,921.08
activities
2. Significant investing and financing
activities without involvement of cash -- --
receipts and payments
3. Net increase/decrease of cash and cash
-- --
equivalent:
Ending balance of cash 128,012,685.23 254,251,911.75
Less: beginning balance of cash 254,251,911.75 357,103,700.82
Net increase in cash and cash equivalents -126,239,226.52 -102,851,789.07
(2) Net Cash Paid For Acquisition of Subsidiaries
Unit: RMB
187
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Amount
Of which: --
Of which: --
Of which: --
Other notes:
(3) Net Cash Receive from Disposal of the Subsidiaries
Unit: RMB
Amount
Cash or cash equivalents received in the Reporting Period from
8,214,180.81
disposal of subsidiaries in the Current Period
Of which: --
Kunshan Focai Packaging & Printing Co., Ltd. 8,214,180.81
Less: cash and cash equivalents held by subsidiaries on the date of
8,214,180.81
losing control power
Of which: --
Kunshan Focai Packaging & Printing Co., Ltd. 8,214,180.81
Of which: --
Other notes:
(4) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 128,012,685.23 254,251,911.75
Including: Cash on hand 131,195.64 173,601.37
Bank deposit on demand 127,881,489.59 254,078,310.38
III. Ending balance of cash and cash
128,012,685.23 254,251,911.75
equivalents
Other notes:
69. Notes to Items of the Statements of Changes in Owners’ Equity
Notes to the name of “Other” of ending balance of the same period of last year adjusted and the amount adjusted:
70. Assets with Restricted Ownership or Right to Use
Unit: RMB
188
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Item Ending carrying value Reason for restriction
Monetary capital 5,971,254.50 Cash deposit for letter of guarantee
Other current assets 300,000,000.00 Pledge guarantee
Total 305,971,254.50 --
Other notes:
71. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary capital -- --
Of which: USD 5,386,930.36 6.8632 36,971,580.45
EUR
HKD 93,216.36 0.8762 81,676.17
GBP 248,100.07 8.6762 2,152,565.83
Accounts receivable -- --
Of which: USD 6,482,218.67 6.8632 44,488,763.18
EUR
HKD 2,982,178.46 0.8762 2,612,984.77
Long-term borrowings -- --
Of which: USD
EUR
HKD
Other receivables
Of which: HKD 15,052,435.31 0.8762 13,188,943.82
Short-term borrowings
Of which: USD 15,266,468.12 6.8632 104,776,824.00
Accounts payable
Of which: USD 16,147,177.64 6.8632 110,821,309.58
EUR 225,967.00 7.8473 1,773,230.84
Other notes:
189
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant
Reasons Shall Be Disclosed.
□ Applicable √ Not applicable
72. Arbitrage
Qualitative and quantitative information of relevant arbitrage instruments, hedged risk in line with the type of arbitrage to disclose:
73. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
Amount recorded in the current
Category Amount Listed items
profit or loss
Government subsidy related to
3,481,924.16 Other income 3,481,924.16
assets
Government subsidy related to
600,000.00 Non-operating income 600,000.00
assets
Government subsidy, related to
income, and used to compensate
5,690,035.00 Non-operating income 5,690,035.00
accrual cost expense or losses
of the Company
Government subsidy, related to
income, and used to compensate
7,747,334.14 Other income 7,747,334.14
accrual cost expense or losses
of the Company
Total 17,519,293.30 17,519,293.30
(2) Return of Government Subsidy
□ Applicable √ Not applicable
Other notes:
190
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
74. Other
VIII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control during the Reporting Period
Unit: RMB
Income of Net profits of
Time and
Cost of Recognition acquiree from acquiree from
Name of place of Proportion of Way to gain
gaining the Purchase date basis of the purchase the purchase
acquiree gaining the equity the equity
equity purchase date date to date to
equity
period-end period-end
Other notes:
(2) Combination Cost and Goodwill
Unit: RMB
Combination cost
Note to determination method of the fair value of the combination cost, consideration and changes:
The main formation reason for the large goodwill:
Other notes:
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
Fair value on purchase date Carrying value on purchase date
The determination method of the fair value of identifiable assets and liabilities
Contingent liability of acquiree undertaken in the business combination
Other notes:
(4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair Value
Whether there is a transaction that through multiple transaction step by step to realize business combination and gaining the control
during the Reporting Period
□ Yes √ No
191
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquiree
that Cannot Be Determined on the Acquisition Date or during the Period-end of the Merger
(6) Other Notes
2. Business Combination under the Same Control
(1) Business Combination under the Same Control during the Reporting Period
Unit: RMB
Income from Net profits
the from the Income of the Net profits of
Recognition
period-begin period-begin acquiree the acquiree
Combined Proportion of Combination basis of
Basis ning to the ning to the during the during the
party the equity date combination
combination combination period of period of
date
date of the date of the comparison comparison
acquiree acquiree
Other notes:
(2) Combination Cost
Unit: RMB
Combination cost
Note to contingent consideration and the changes:
Other notes:
(3) The Carrying Value of Assets and Liabilities of the Combined Party on the Combination Date
Unit: RMB
Combination date Period-end of the last period
Contingent liabilities of the combined party undertaken in the business combination
Other notes:
3. Counter Purchase
Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies
whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights
and interests in accordance with the equity transaction process:
4. Disposal of Subsidiary
Whether there is a single disposal of the investment to the subsidiary and lost control?
192
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
□ Yes √ No
Whether there are several disposals of the investment to the subsidiary and lost controls?
□ Yes √ No
5. Changes in Combination Scope for Other Reasons
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevant
information:
Kunshan Focai Packaging & Printing Co., Ltd. has been liquidated and de-registered during the Reporting Period and has thus no
longer been included in the consolidated financial statements.
6. Other
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main operating Nature of Holding percentage (%)
Name Registration place Way of gaining
place business Directly Indirectly
Business
Zhuhai S.E.Z.
Manufacturing combination not
Hongta Renheng Zhuhai Zhuhai 41.9653%
industry under the same
Paper Co., Ltd.
control
Business
Zhuhai Huafeng Manufacturing combination
Zhuhai Zhuhai 100.00%
Paper Co., Ltd. industry under the same
control
Zhuhai Golden Business
Pheasant Manufacturing combination not
Zhuhai Zhuhai 51.00%
Chemical Co., industry under the same
Ltd. control
Huaxin (Foshan)
Manufacturing
Color Printing Foshan Foshan 100.00% Establishment
industry
Co., Ltd.
Zhejiang Hongta
Renheng
Manufacturing
Packaging Pinghu Pinghu 100.00% Establishment
industry
Technology Co.,
Ltd.
Notes: holding proportion in subsidiary different from voting proportion:
193
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but not
controlling the investee:
The Company holds 41.9653% shares of Hongta Renheng, and in accordance with the contract and articles, there
is seven directors in Hongta Renheng, of which four directors are sent by the Company, two sent by Yunnan
Hongta Group Co., Ltd.(now renamed to Yunnan Hehe (Group) Co., Ltd.) and one sent by Renheng Industrial Co.,
Ltd.. Dragon State International Limited didn’t send any director. The Company still control Hongta Renheng,
and will continue to include it into the consolidated financial statements of the Company in this year.
Significant structural entities and controlling basis in the scope of combination:
Basis of determining whether the Company is the agent or the principal:
Other Notes:
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding proportion The profit or loss Declaring dividends Balance of
Name of non-controlling attributable to the distributed to non-controlling interests
interests non-controlling interests non-controlling interests at the period-end
Zhuhai Hongta Renheng
58.0347% -69,644,772.71 1,503,534,129.76
Packaging Co., Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion:
Other notes:
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Non-curr Non-curr Non-curr Non-curr
Name Current Total Current Total Current Total Current Total
ent ent ent ent
assets assets liabilities liabilities assets assets liabilities liabilities
assets liability assets liability
Zhuhai
Hongta
Renheng 2,583,10 2,250,50 4,833,61 2,010,15 154,329, 2,164,48 2,066,88 2,341,31 4,408,19 1,247,24 374,334, 1,621,58
Packagin 4,910.22 5,869.29 0,779.51 1,157.60 795.90 0,953.50 7,651.66 1,528.10 9,179.76 8,199.38 704.45 2,903.83
g Co.,
Ltd.
Unit: RMB
Reporting Period Same period of last year
Total Cash flows Total Cash flows
Name Operating Operating
Net profit comprehensi from Net profit comprehensi from
revenue revenue
ve income operating ve income operating
194
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
activities activities
Zhuhai
Hongta
3,391,466,29 -104,532,316. -104,532,316. 353,344,964. 3,320,528,76 17,181,492.2 17,181,492.2 -63,846,227.2
Renheng
1.03 66 66 20 0.26 4 4 2
Packaging
Co., Ltd.
Other notes:
(4) Significant Restrictions on Using the Assets and Liquidating the Liabilities of the Company
(5) Financial Support or Other Supports Provided to Structural Entities Incorporated into the Scope of
Consolidated Financial Statements
Other notes:
2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling the
Subsidiary
(1) Note to the Owner’s Equity Share Changed in Subsidiary
(2) The Transaction’s Influence on the Equity of Non-controlling Interests and the Owner's Equity
Attributable to the Company as the Parent
Unit: RMB
Other notes
3. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Holding percentage (%) Accounting
treatment of the
Main operating Nature of investment to
Name Registration place
place business Directly Indirectly joint venture or
associated
enterprise
China Chengtong
Accounted by
Finance Beijing Beijing Financial industry 10.00%
equity method
Corporation Ltd.
Notes to holding proportion of joint venture or associated enterprise different from voting proportion:
Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does not
have a significant impact:
195
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
During the Reporting Period, the voting proportion in China Chengtong Finance Corporation Ltd. enjoyed by the
Company is less than 20%. Since the Company has sent directors to participate in its operation and
decision-making, the Company still has significant influence on it.
(2) Main Financial Information of Significant Joint Ventures
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
Other notes
(3) Main Financial Information of Significant Associated Enterprise
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
China Chengtong Finance Corporation
Ltd.
Current assets 25,573,917,580.26
Non-current assets 9,674,484,033.81
Total assets 35,248,401,614.07
Current liabilities 28,708,202,432.69
Total liabilities 28,708,202,432.69
Equity attributable to shareholders of the
6,540,199,181.38
Company as the parent
Shares of net assets calculated by
654,019,918.14
shareholding ratio
Carrying value of equity investment in
654,019,918.14
associated enterprises
Operating revenue 499,562,019.89
Net profit 270,315,188.67
Total comprehensive income 270,315,188.67
Other notes
(4) Summary Financial Information of Insignificant Joint Ventures or Associated Enterprises
Unit: RMB
Ending balance/Reporting Period Beginning balance/The same period of last
196
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
year
Joint venture: -- --
The total of following items according to the
-- --
shareholding proportions
Associated enterprise: -- --
Total carrying value of investment 8,570,239.86 8,294,365.17
The total of following items according to the
-- --
shareholding proportions
--Net profit 541,784.24 328,338.89
--Total comprehensive income 541,784.24 328,338.89
Other notes
(5) Note to the Significant Restrictions on the Ability of Joint Ventures or Associated Enterprises to
Transfer Funds to the Company
(6) The Excess Loss of Joint Ventures or Associated Enterprises
Unit: RMB
The cumulative recognized The derecognized losses (or the
The accumulative unrecognized
Name losses in previous share of net profit) in Reporting
losses in Reporting Period
accumulatively derecognized Period
Other notes
(7) The Unrecognized Commitment Related to Investment to Joint Ventures
(8) Contingent Liabilities Related to Investment to Joint Ventures or Associated Enterprises
4. Significant Common Operation
Proportion /share portion
Name Main operating place Registration place Nature of business
Directly Indirectly
Notes to holding proportion or share portion in common operation different from voting proportion:
For common operation as a single entity, basis of classifying as common operation
Other notes
5. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements
Notes to the structured entity excluded in the scope of consolidated financial statements:
197
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
6. Other
X. The Risk Related to Financial Instruments
The Company is engaged in risk management to achieve balance between risks and returns, minimizing the
negative effects of risks on its operation performance and maximizing the interests of its shareholders and other
equity investors. Based on that risk management goal, the fundamental strategy of its risk management is to
identify and analyze various risks facing the Company, establish an appropriate risk bottom line, carry out risk
management and monitor various risks in a timely and reliable manner to control them within a restricted scope.
The Company faces various risks related to financial instruments in its routine activities, mainly including credit
risk, liquidity risk market risk. The management has reviewed and approved the policies of managing those risks,
which are summarized as follows.
(I) Credit Risk
Credit risk means the risk of financial losses incurred to the other party when one party of a financial instrument is
unable to fulfill its obligations.
The Company’s credit risk mainly comes from bank deposits and accounts receivable. To control the
aforementioned relevant risks, the Company has adopted the following measures.
1. Bank deposits
The Company places its bank deposits with financial institutions of high credit ratings. Thus, its credit risk is low.
2. Accounts receivable
The Company conducts credit assessment on the customers trading in the mode of credit on a regular basis. Based
on the credit assessment result, the Company chooses to trade with recognized customers with good credit and
monitor the balance of the accounts receivable from them to ensure that the Company will not face any significant
bad debt risk.
As the Company’s risk points of accounts receivable are distributed among a number of cooperation parties and
customers, as at 31 December 2018, 17.59% (31 December 2017: 18.04%) of its accounts receivable came from
the top five customers of balance and the Company did not have any significant credit concentration risk.
(1) The analysis on the amount not overdue and without impairment and the amount overdue but without
impairment of the Company’s accounts receivable and the overdue aging is as follows:
Item Period-end
Not overdue and Overdue but not devalued Total
devalued Within 1 1 to 2 Over 2
year years years
Notes receivable and 717,524,096.14 717,524,096.14
accounts receivable
Other receivables 5,805,855.78 5,805,855.78
Subtotal 723,329,951.92 723,329,951.92
(Continued)
Item Period-beginning
Not overdue and Overdue but not devalued Total
devalued Within 1 1 to 2 Over 2
year years years
Notes receivable and 680,265,898.71 680,265,898.71
198
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
accounts receivable
Other receivables 3,608,477.00 3,608,477.00
Subtotal 683,874,375.71 683,874,375.71
(2) The information on the accounts receivable of individual withdrawn impairment is shown in the notes on
accounts receivable for consolidated financial statements in the notes to the financial statements.
(II) Liquidity Risk
Liquidity risk refers to the risk of fund shortage occurring when the Company fulfills the settlement obligation in
the mode of cash delivery or other financial assets. Liquidity risk may originate from the failure to sell financial
assets at fair value as soon as possible; or from the other party’s failure to pay off its contractual debts; or from the
earlier maturity of debts; or from the failure to generate the expected cash flow.
To control the risk, the Company comprehensively adopts multiple financing approaches including notes clearing
and bank loans, appropriately combine long-term and short-term financing modes and optimize the financing
structure to maintain the balance between financing sustainability and flexibility. The Company has obtained the
line of credit from a number of commercial banks to satisfy its operation fund needs and capital expenditure.
Classification of financial liabilities by remaining maturity days
Item Period-end
Carrying value Contract amount not Within 1 year 1 to 3 years Over 3
discounted years
Bank’s 1,162,776,823.86 1,192,606,559.00 1,091,188,156.22 101,418,402.78
borrowings
Current
portion of
notes payable
Notes payable 775,243,787.56 775,243,787.56 775,243,787.56
and accounts
payable
Other payables 154,654,648.71 154,654,648.71 154,654,648.71
Subtotal 2,092,675,260.13 2,122,504,995.27 2,021,086,592.49 101,418,402.78 -
(Continued)
Item Period-beginning
Carrying value Contract amount not Within 1 year 1 to 3 years Over 3
discounted years
Bank’s 1,097,426,244.52 1,150,897,387.67 949,418,290.45 201,479,097.22
borrowings
Current portion 199,834,258.85 201,313,356.07 201,313,356.07
of notes
payable
Notes payable 349,777,358.80 349,777,358.80 349,777,358.80
and accounts
payable
Other payables 38,694,561.94 38,694,561.94 38,694,561.94
Long-term 16,825,912.17 16,825,912.17 16,825,912.17
199
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
payables
Subtotal 1,702,558,336.28 1,757,508,576.65 1,556,029,479.43 201,479,097.22
(III) Market Risk
Market risk means the fluctuation risk of the fair value of financial instruments or the future cash flow due to
market price changes.
1. Interest rate risk
Interest rate risk means the fluctuation risk of the fair value of financial instruments or the future cash flow due to
changes of market interest rate. The risk of changes of market interest rate facing the Company is mainly related
to its borrowings with interests calculated in floating interest rates.
As at 31 December 2018, the amount of the Company’s bank borrowings with interests calculated in floating
interest rates was RMB240,000,000.00 (31 December 2017: RMB593,000,000.00). Under the hypothesis of other
variables remaining unchanged, suppose that the interest rates changed by 50 reference points, then there would
be no significant effects on the Company’s total profits and shareholders’ equity.
2. Foreign exchange risk
Foreign exchange risk means the fluctuation risk of the fair value of financial instruments or the future cash flow
due to changes of foreign exchange rate. The risk of changes of foreign exchange facing the Company is mainly
related to the Company’s foreign-currency monetary assets and liabilities. As for foreign currency assets and
liabilities, when short-tem imbalances occur, the Company will trade foreign currencies at market rate as
necessary, so as to limit the net risk exposure to an acceptable level.
The information on the Company’s foreign currency monetary assets and liabilities at the period-end is shown in
the notes on foreign currency monetary items of other for consolidated financial statements in the notes to the
financial statements.
XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Ending fair value
Item Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
II. Inconsistent fair value
-- -- -- --
measurement
200
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 2
4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning and
Ending Carrying Value of Consistent Fair Value Measurement Items at Level 3
6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if
Conversion Happens among Consistent Fair Value Measurement Items at Different Levels
7. Changes in the Valuation Technique in the Current Period and the Reason for Such Changes
8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
9. Other
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of share Proportion of voting
held by the rights owned by the
Name Registration place Nature of business Registered capital Company as the Company as the
parent against the parent against the
Company (%) Company (%)
Foshan Huaxin
Manufacturing
Development Co., Foshan RMB457,930,000 65.20% 65.20%
industry
Ltd.
Notes: information on the Company as the parent
China National Paper-industry Investment Corporation, the actual controller of the Company, directly holds 0.11% shares of the
Company. The total shares of the Company directly held by China National Paper-industry Investment Corporation and indirectly
held through Foshan Huaxin Development Co., Ltd. are 65.31%. China Chengtong Holdings Group Co., Ltd., the ultimate controller
of the Company, enjoys all shares of China National Paper-industry Investment Corporation.
The ultimate controller of the Company is China Chengtong Holdings Group Co., Ltd.
Other notes:
201
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Subsidiaries of the Company
Refer to Note IX Equity in Other Entities for details.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note IX Equity in Other Entities for details of significant joint ventures or associated enterprises of the Company.
Information on other joint venture or associated enterprise of occurring related-party transactions with the Company in Reporting
Period, or forming balance due to related-party transactions made in previous period:
Name Relationship with the Company
Guangdong Chengtong Logistics Co., Ltd. Associated enterprise
Other notes
4. Information on Other Related Parties
Name Relationship with the Company
Foshan Huaxin Import & Export Co., Ltd. Under the control of the same actual controller
Guangdong Guanhao High-tech Co., Ltd. Under the control of the same actual controller
Dragon State International Limited Under the control of the same ultimate controller
Tianjin Port Free Trade Zone Zhongwu Investment Development
Under the control of the same actual controller
Co., Ltd.
Yueyang Forest & Paper Co., Ltd. Under the control of the same actual controller
Yueyang Antai industrial Co., Ltd Under the control of the same actual controller
Yuanjiang Paper Co., Ltd. Under the control of the same actual controller
Hunan Juntai Pulp Paper Co., Ltd. Under the control of the same actual controller
Zhejiang Guanhao Advanced Materials Co., Ltd. Under the control of the same actual controller
Guangdong Guanhao High-tech Industrial Co., Ltd. Under the control of the same ultimate controller
Dragon State Investment Development Co., Ltd. Under the control of the same ultimate controller
China Chengtong International Co., Ltd. Under the control of the same ultimate controller
HONG KONG DRAGON STATE YAN WING
Under the control of the same ultimate controller
INTERNATIONAL COMPANY
Zhanjiang Guanhao Paper Co., Ltd. Under the control of the same ultimate controller
Under the control of the independent director of the actual
Guangzhou Chenhui Pulp & Paper Trading Co., Ltd.
controller
Chengtong Energy (Guangdong) Co., Ltd. Under the control of the same ultimate controller
Chengtong Real Estate Investment Co., Ltd. Under the control of the same ultimate controller
Tianjin CMST Chuangshi Logistics Co., Ltd. Under the control of the same ultimate controller
Other notes
202
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
The approval trade Whether exceed trade Same period of last
Related party Content Reporting Period
credit credit or not year
Guangdong
Reception of labor
Chengtong 840,416.67 6,450,000.00 Not 17,407,421.76
service
Logistics Co., Ltd.
Guangdong
Guanhao High-tech Purchase of goods 140,188.96 3,230,000.00 Not 369,490.76
Industrial Co., Ltd.
Guangzhou
Chenhui Pulp &
Purchase of goods 10,640,606.77 45,000,000.00 Not 6,453,777.61
Paper Trading Co.,
Ltd.
Yueyang Antai
Purchase of goods 890,156.90 5,500,000.00 Not 663,229.06
Industrial Co., Ltd.
Zhejiang Guanhao
Advanced Materials Purchase of goods 307,537.99 Not
Co., Ltd.
China National
Paper Industry Purchase of goods 665,169,020.33 1,142,360,300.00 Not 192,949,030.08
Investment Corp.
Tianjin Port Free
Trade Zone
Zhongwu
Purchase of goods 3,913,511.43
Investment
Development Co.,
Ltd.
Tianjin CMST
Reception of labor
Chuangshi Logistics 56,477,625.12 110,000,000.00 Not
service
Co., Ltd.
Total 734,465,552.74 1,312,540,300.00 221,756,460.70
Information of sales of goods and provision of labor service
Unit: RMB
Related party Content Reporting Period Same period of last year
Guangdong Guanhao High-tech Sales of goods 10,934,163.52 12,646,501.73
203
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Co., Ltd.
Guangzhou Chenhui Pulp &
Sales of goods 66,604,008.15 107,144,946.76
Paper Trading Co., Ltd.
Yueyang Forest & Paper Co.,
Sales of goods 15,681,631.95 25,872,112.25
Ltd.
Zhanjiang Guanhao Paper Co.,
Sales of goods 174,670.48 65,290.60
Ltd.
Zhejiang Guanhao Advanced
Sales of goods 325,948.27
Materials Co., Ltd.
China National Paper Industry
Sales of goods 2,377,452.61 34,121,462.56
Investment Corp.
Guangdong Chengtong
Other 63,600.00
Logistics Co., Ltd.
Total 96,097,874.98 179,913,913.90
Information of sales/purchase of goods and provision/reception of labor service
(2) Information on Related-party Trusteeship/Contract
Lists of trusteeship/contract:
Unit: RMB
Name of the Name of the Income
entruster/contract entrustee/ Type Start date Due date Pricing basis recognized in this
ee contractor Reporting Period
Notes:
Lists of entrust/contractee
Unit: RMB
Name of the Name of the Charge
entruster/contract entrustee/ Type Start date Due date Pricing basis recognized in this
ee contractor Reporting Period
Notes:
(3) Information on Related-party Lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
the Reporting Period the same period of last year
Guangdong Chengtong
Houses and buildings 409,600.00 737,413.33
Logistics Co., Ltd.
204
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Chengtong Energy
Houses and buildings 5,714.29
(Guangdong) Co., Ltd.
The Company was lessee:
Unit: RMB
The lease fee confirmed in the The lease fee confirmed in the
Name of lessor Category of leased assets
Reporting Period same period of last year
Notes:
(4) Information on Related-party Guarantee
The Company was guarantor:
Unit: RMB
Execution accomplished
Secured party Guarantee amount Start date End date
or not
The Company was secured party
Unit: RMB
Execution accomplished
Guarantor: Guarantee amount Start date End date
or not
Notes:
(5) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMB
Related party Amount Start date End date Note
Borrowing
China Paper Corporation 20,000,000.00 4 April 2018 3 August 2018
China Paper Corporation 5,000,000.00 4 April 2018 6 August 2018
China Paper Corporation 15,000,000.00 4 April 2018 28 December 2018
China Paper Corporation 10,000,000.00 4 April 2018 28 December 2018
Foshan Huaxin
5,600,000.00 9 August 2018 31 December 2018
Development Co., Ltd.
Foshan Huaxin
12,600,000.00 1 September 2018 31 December 2018
Development Co., Ltd.
Lending
(6) Information on Assets Transfer and Debt Restructuring by Related Party
Unit: RMB
Related party Content Reporting period Same period of last year
205
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(7) Information on Remuneration for Key Management Personnel
Unit: RMB
Item Reporting period Same period of last year
Remuneration for key management
3,123,231.54 3,845,000.00
personnel
(8) Other Related-party Transactions
The Company deposited the monetary capital in China Chengtong Finance Corporation Ltd. The relevant interest received in the
Reporting Period is RMB324,764.07. The notes receivable of the Company were discounted in China Chengtong Finance
Corporation Ltd. for which RMB2,224,702.02 of handling charge was paid in the Reporting Period.
6. Accounts Receivable and Payable of Related Party
(1) Accounts Receivable
Unit: RMB
Ending balance Beginning balance
Item Related party
Carrying amount Bad debt provision Carrying amount Bad debt provision
Foshan Huaxin
Notes receivable and
Import & Export 549,882.60 330,982.23 549,882.60 201,380.64
accounts receivable
Co., Ltd.
Notes receivable and Guangdong Guanhao
3,344,313.88 4,380,668.14
accounts receivable High-tech Co., Ltd.
Guangzhou Chenhui
Notes receivable and
Pulp & Paper 2,606,562.50 2,018,375.33
accounts receivable
Trading Co., Ltd.
Notes receivable and Yueyang Forest &
3,906,883.44 7,043,454.67
accounts receivable Paper Co., Ltd.
Notes receivable and Yueyang Antai
5,302.10 5,302.10 5,302.10 5,302.10
accounts receivable Industrial Co., Ltd
Notes receivable and Zhanjiang Guanhao
2,617.76 130.89
accounts receivable Paper Co., Ltd.
Long Bond
Notes receivable and Investment
175.15 175.15 176.14 88.07
accounts receivable Development Co.,
Ltd.
Subtotal 10,415,737.43 336,590.37 13,997,858.98 206,770.81
Prepayments China Paper 1,939,495.40
206
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Corporation
Guangzhou Chenhui
Prepayments Pulp & Paper 3,259,470.15
Trading Co., Ltd.
Guangdong
Prepayments Chengtong Logistics 558,233.03
Co., Ltd.
Subtotal 558,233.03 5,198,965.55
Guangdong
Other receivables Chengtong Logistics 899,858.00 50,250.77 1,019,540.63 62,254.41
Co., Ltd.
Subtotal 899,858.00 50,250.77 1,019,540.63 62,254.41
(2) Accounts Payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Notes payable and accounts Guangdong Chengtong
510,997.88 4,413,891.39
payable Logistics Co., Ltd.
Notes payable and accounts Guangzhou Chenhui Pulp &
1,726,693.70 1,726,693.70
payable Paper Trading Co., Ltd.
Notes payable and accounts
China Paper Corporation 112,621,632.26 19,794,676.49
payable
Notes payable and accounts Yueyang Antai Industrial Co.,
229,398.00 298,400.00
payable Ltd
Notes payable and accounts Zhejiang Guanhao Advanced
118,390.00
payable Materials Co., Ltd.
Notes payable and accounts Tianjin CMST Chuangshi
33,071,832.47
payable Logistics Co., Ltd.
Notes payable and accounts Guangdong Guanhao High-tech
135,922.28
payable Industrial Co., Ltd.
Tianjin Port Free Trade Zone
Notes payable and accounts
Zhongwu Investment 2,052,704.73
payable
Development Co., Ltd.
Subtotal 148,278,944.31 28,422,288.59
Advances from customers China Paper Corporation 1,147,031.58 573,515.79
Guangzhou Chenhui Pulp &
Advances from customers 94,989.97 1,992,812.03
Paper Trading Co., Ltd.
Subtotal 1,242,021.55 2,566,327.82
207
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Foshan Huaxin Development
Other payables 13,007,084.99 7,055,585.83
Co., Ltd.
Guangdong Chengtong
Other payables 1,110,384.98 1,110,384.98
Logistics Co., Ltd.
Tianjin CMST Chuangshi
Other payables 16,400,000.00
Logistics Co., Ltd.
Other payables China Paper Corporation 81,634,166.67
Subtotal 112,151,636.64 8,165,970.81
7. Commitments of Related Party
8. Other
XIII. Stock Payment
1. The Overall Situation of Stock Payment
□ Applicable □ Not applicable
2. The Stock Payment Settled in Equity
□ Applicable □ Not applicable
3. The Stock Payment Settled in Cash
□ Applicable □ Not applicable
4. Modification and Termination of the Stock Payment
Naught
5. Other
XIV. Commitments and Contingency
1. Significant Commitments
Significant Contingency on Balance Sheet Date
As of 30 December 2018, there was no significant commitment for the Company to disclose.
208
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
2. Contingency
(1) Significant Contingency on Balance Sheet Date
Contingency generated from pending action or arbitration and the corresponding financial influence
“3.4” high altitude falling production safety accident caused by a flash burn (hereinafter referred to as the“3.4
Safety Accident”)
At around 9:15am on 4 March 2017, a major production safety accident occurred in the factory area of Huafeng
Paper Co., Ltd., a subsidiary of the Company. It was mainly because that Wuhan Kedio Electric Power
Technology Co., Ltd. (hereinafter referred to as “Wuhan Kedio”) undertook the 120m reinforced concrete
chimney anti-corrosion project in the name of Jiangsu Tianxing High-Altitude Anti-Corrosion Engineering Co.,
Ltd. (hereinafter referred to as “Jiangsu Tianxing”); Wuhan Kedio subcontracted the project to Liu Jiechun in the
form of labor and material subcontracting and Liu Jiechun undertook the project in the name of Yancheng Xinda
High-Altitude Anti-Corrosion Co., Ltd. (hereinafter referred to as Yancheng Xinda). On 4 March 2017, Liu
Jiechun took nine workers (including the six victims who had died in the accident) to carry out the 120m
reinforced concrete chimney anti-corrosion project in the factory area of Huafeng Paper and during the
construction, flash burn caused high altitude falling and resulted in the death of six workers.
After the accident, as the owner, Huafeng Paper immediately launched the emergency plan for safety accident.
The emergency group comprising principal leaders of Huafeng Paper rushed to the scene to handle the accident at
the first time and transferred RMB11.16 million to the regulatory bank account of Zhuhai Gaolan Port Economic
Zone in accordance with the requirements of the government of Zhuhai Gaolan Port Economic Zone to
compensate the relatives of the victims. Then Jiangsu Tianxing also transferred RMB1.4 million to the regulatory
bank account. After handling the accident, the government of Zhuhai Gaolan Port Economic Zone returned the
remaining RMB1.4 million in the regulatory bank account to Huafeng Paper, so Huafeng Paper actually paid
RMB9.76 million to the relatives of victims.
Zhuhai Huafeng brought a lawsuit of recourse against Jiangsu Tianxing High-Altitude Anti-Corrosion Engineering
Co., Ltd. and Wuhan Kedio Electric Power Technology Co., Ltd. on 16 Mar. 2017. Then, Wuhan Kedio Electric
Power Technology Co., Ltd. applied to add Yancheng Xinda High-Altitude Anti-Corrosion Co., Ltd. as a defendant
and Yancheng Xinda High-Altitude Anti-Corrosion Co., Ltd. applied to add Liu Jiechun, the actual constructor, as a
defendant.
The criminal case shall be tried before civil compensation case. In June 2018, the criminal case was closed; as at
31 December 2018, the civil compensation case was not closed yet.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant
Statements
There was no significant contingency in the Company.
3. Other
XV. Events after Balance Sheet Date
1. Significant Non-adjusted Events
Unit: RMB
209
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Influence number to the
Reason of inability to estimate
Item Content financial position and operating
influence number
results
2. Profit Distribution
Unit: RMB
Profits or dividends to be distributed 0.00
Profits or dividends announced to be distributed after the approval 0.00
3. Sales Return
4. Notes to Other Events after Balance Sheet Date
XVI. Other Significant Events
1. The Accounting Errors Correction in Previous Period
(1) Retrospective Restatement
Unit: RMB
Name of the influenced report
Content Processing program accumulative impact
items during comparison period
(2) Prospective Application
Reason for adopting prospective
Content Processing program
application
2. Debt Restructuring
3. Assets Replacement
(1) Non-monetary Assets Exchange
(2) Other Assets Replacement
4. Pension Plan
Approved in the 9th meeting of the 6th of Board of Directors in 2016, the Company could participate in the
corporate pension plan of China Chengtong Holdings Co., Ltd., and formulate its own pension plan
implementation rules under the framework of China Chengtong Holdings Co., Ltd. in line with China National
Paper Industry Investment Corp. Pension Plan Implementation Rules and the actual situation. Annuity payment is
210
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
divided into enterprise contribution and individual contribution. The total annual contribution of the enterprise is 5%
of the total salary of the previous year, the individual contribution of the employee is 25% of the contribution of
the enterprise, and the employee who is in service before 1 Jan. 2017 of the Company can volunteer to
participation in the annuity plan.
5. Discontinued Operations
Unit: RMB
Profit from
discontinued
operations
Income tax
Item Income Expense Total profit Net profit attributable to
expense
owners of the
Company as the
parent
Kunshan Focai
Packaging & 56,860.50 -118,432.59 -118,432.59 -118,432.59
Printing Co., Ltd.
Other notes
6. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
In accordance with the internal organization structure, management requirements and internal report system, the
Company identified the reportable segments based on the product segment and assessed the operational
performance of ivory business, printing business and latex business. The assets and liabilities sharing with other
segments shall be proportionally distributed among segments by scales.
(2) The Financial Information of Reportable Segment
Unit: RMB
Offset among
Item Ivory board Printed matter Latex Other Total
segment
Main business
2,967,099,980.90 300,303,707.84 340,511,671.17 -18,929,027.67 3,588,986,332.24
revenue
Main business
2,815,978,176.83 233,505,234.64 258,424,558.78 -17,304,119.20 3,290,603,851.05
cost
-3,415,587,102.0
Total assets 6,730,111,905.19 407,437,871.53 278,529,227.13 1,794,202,842.37 5,794,694,744.15
7
-1,167,771,660.8
Total liabilities 3,109,482,279.63 179,117,652.37 98,503,446.62 51,910,706.58 2,271,242,424.31
9
211
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
(3) If there Was no Reportable Segment, or the Total Amount of Assets and Liabilities of Each Reportable
Segment Could not Be Reported, Relevant Reasons Shall Be Clearly Stated
(4) Other Notes
7. Other Significant Transactions and Events with Influence on Investors’ Decision-making
8. Other
XVII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Notes Receivable and Accounts Receivable
Unit: RMB
Item Ending balance Beginning balance
(1) Notes Receivable
1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
2) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
Item Amount
3) Notes Receivable Endorsed by the Company or Discounted and not due on the Balance Sheet Date at the Period-end
Unit: RMB
Non-derecognized amount at the
Item Derecognized Amount at the period-end
period-end
4) Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute the Contract or Agreement
Unit: RMB
Amount of the notes transferred to accounts receivable at the
Item
period-end
Other notes
(2) Accounts Receivable
1) Accounts Receivable Classified by Category
Unit: RMB
Category Ending balance Beginning balance
212
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Bad debt
Bad debt provision Carrying value Carrying value
provision
Withdra Carrying Bad debt
Proportio wal amount Proportio Withdrawal provision
Amount Amount Amount Amount
n proportio n proportion
n
Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:
□ Applicable √ Not applicable
Among these groups, accounts receivable adopting other methods to withdraw bad debt provision:
2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB0.00; the amount of the reversed or
collected part during the Reporting Period was of RMB0.00.
Significant amount of reversed or recovered bad debt provision:
Unit: RMB
Name of the entity Amount Method
3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Of which: significant actual verification of accounts receivable
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
Notes to verification of accounts receivable:
4) Top5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
5) Derecogniziton of Accounts Receivable due to the Transfer of Financial Assets
6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Accounts Receivable
Other notes:
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 4,481,906.67
213
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Other receivables 56,645,592.12 187,029,661.31
Total 61,127,498.79 187,029,661.31
(1) Interest Receivable
1) Category of Interest Receivable
Unit: RMB
Item Ending balance Beginning balance
Interest of borrowings among units 4,481,906.67
Total 4,481,906.67
2) Significant Overdue Interest
Unit: RMB
Whether occurred
Entity Ending balance Overdue time Overdue reason impairment and its
judgment basis
Other notes:
(2) Dividends Receivable
1) Dividends Receivable
Unit: RMB
Item (or investees) Ending balance Beginning balance
2) Significant Dividends Receivable Aged over 1 Year
Unit: RMB
Whether occurred
Item (or investees) Ending balance Aging Reason impairment and its
judgment basis
Other notes:
(3) Other Receivables
1) Other Receivables Disclosed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Withdra
Carrying Carrying
Proportio wal Proportio Withdrawal
Amount Amount value Amount Amount value
n proportio n proportion
n
214
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Other receivables
withdrawn bad debt
56,652,9 56,645,59 187,029 187,029,66
provision according 100.00% 7,369.57 0.01% 100.00%
61.69 2.12 ,661.31 1.31
to credit risks
characteristics
56,652,9 56,645,59 187,029 187,029,66
Total 100.00% 7,369.57 0.01% 100.00%
61.69 2.12 ,661.31 1.31
Other receivables with significant single amount for which bad debt provision separately accrued at the end of the period
□ Applicable √ Not applicable
Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
√ Applicable □ Not applicable
Unit: RMB
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Subentry within 1 year
1-3 months 40,955.85
4-12 months 147,391.46 7,369.57 5.00%
Total 188,347.31 7,369.57 3.91%
Notes:
Among these groups, other receivables adopting balance percentage method to withdraw bad debt provision
□ Applicable √ Not applicable
Among these groups, other receivables adopting other methods to withdraw bad debt provision:
□ Applicable √ Not applicable
2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB7,369.57; the amount of the reversed or
collected part during the Reporting Period was of RMB0.00.
Significant amount of reversed or recovered bad debt provision:
Unit: RMB
Name of the entity Reversed or collected amount Method
3) Particulars of the Actual Verification of Other Receivables during the Reporting Period
Unit: RMB
Item Amount
Of which, the verification of significant other receivables:
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
215
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Notes to the verification of other receivables:
4) Other Receivables Classified by Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Accounts of related party within the scope of
56,464,614.38 186,766,283.28
combination
Petty cash 188,347.31 263,378.03
Total 56,652,961.69 187,029,661.31
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Ending balance of
Name of the entity Nature Ending balance Aging balance of total other
bad debt provision
receivables%
Huaxin (Foshan)
Within 1 year, 1 to 2
Color Printing Co., Intercourse funds 56,464,614.38 99.67%
years
Ltd.
Zhang Jiangyong Petty cash 101,994.66 Within 1 year 0.18% 3,839.84
Huang Guoguang Petty cash 45,432.10 Within 1 year 0.08% 1,483.70
Liu Yulu Petty cash 40,920.55 Within 1 year 0.07% 2,046.03
Total -- 56,652,961.69 -- 100.00% 7,369.57
6) Accounts Receivable Involving Government Subsidies
Unit: RMB
Project of government Estimated recovering
Name of the entity Ending balance Ending aging
subsidies time, amount and basis
7) Derecogniziton of Other Receivables due to the Transfer of Financial Assets
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of Other Receivables
Other notes:
3. Long-term Equity Investment
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
Investment to
1,065,107,442.14 1,065,107,442.14 1,070,107,442.14 1,070,107,442.14
subsidiaries
Investment to
654,019,918.14 654,019,918.14
joint ventures and
216
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
associated
enterprises
Total 1,719,127,360.28 1,719,127,360.28 1,070,107,442.14 1,070,107,442.14
(1) Investment to Subsidiaries
Unit: RMB
Depreciation Ending balance of
Beginning
Investee Increase Decrease Ending balance reserve depreciation
balance
withdrawn reserve
Zhuhai Hongta
Renheng
927,570,697.11 927,570,697.11
Packaging Co.,
Ltd.
Huaxin (Foshan)
Color Printing Co., 122,536,745.03 122,536,745.03
Ltd.
Kunshan Focai
Packaging & 5,000,000.00 5,000,000.00
Printing Co., Ltd.
Zhejiang Hongta
Renheng
Packaging 15,000,000.00 15,000,000.00
Technology Co.,
Ltd.
Total 1,070,107,442.14 5,000,000.00 1,065,107,442.14
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Ending
Gains and Adjustme
Cash Withdraw balance
Additiona losses nt of
Beginnin Reduced Changes bonus or al of Ending of
Investee l recognize other
g balance investmen of other profits impairme Other balance depreciati
investmen d under comprehe
t equity announce nt on
t the equity nsive
d to issue provision reserve
method income
I. Joint ventures
II. Associated enterprises
China
5,103,538 648,916,3 654,019,9
Chengton
217
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
g Finance .56 79.58 18.14
Corporati
on Ltd.
5,103,538 648,916,3 654,019,9
Subtotal
.56 79.58 18.14
5,103,538 648,916,3 654,019,9
Total
.56 79.58 18.14
(3)Other Notes
4. Operating Revenue and Cost of Sales
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Other notes:
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
11,803,128.09
accounted by cost method
Long-term equity investment income
5,103,538.56 22,059,145.80
accounted by equity method
Investment income from disposal of
3,214,180.81
long-term equity investment
Investment income from holding of
10,000,000.00
available-for-sale financial assets
Total 18,317,719.37 33,862,273.89
6. Other
XVIII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
218
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Gains/losses on the disposal of non-current
1,390,311.65
assets
Government grants recognized in the current
period, except for those acquired in the
ordinary course of business or granted at 17,519,293.30
certain quotas or amounts according to the
government’s unified standards
Gains due to that the investment costs for the
Company to obtain subsidiaries, associates
and joint ventures are lower than the
21,561,238.54
enjoyable fair value of the identifiable net
assets of the investees when making the
investments
Gain/loss from change of fair value of
trading assets and liabilities, and investment
gains from disposal of trading financial
assets and liabilities and available-for-sale 12,578,644.03
financial assets, other than valid hedging
related to the Company’s common
businesses
Other non-operating income and expense
-2,043,196.49
other than the above
Other items conformed with the definition of
non-recurring profit or loss
Less: Income tax effects 761,426.39
Non-controlling interests effects 15,622,709.95
Total 33,274,278.25 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √Not applicable
Item Amount (RMB) Reason
2. Return on Equity and Earnings Per Share
EPS (Yuan/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to ordinary
-0.14% -0.01 -0.01
shareholders of the Company
Net profit attributable to ordinary -1.83% -0.07 -0.07
219
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
shareholders of the Company after
deduction of non-recurring profit or
loss
3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International
and Chinese Accounting Standards
□ Applicable √ Not applicable
(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas and
Chinese Accounting Standards
□ Applicable √ Not applicable
(3) Explain Reasons for the Differences between Accounting Data under Domestic and Overseas
Accounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by the
Foreign Auditing Agent, Such Foreign Auditing Agent’s Name Shall Be Clearly Stated
4. Other
220
Foshan Huaxin Packaging Co., Ltd. Annual Report 2018
Part XII Documents Available for Reference
221
