Foshan Huaxin Packaging Co., Ltd.
Semi-Annual Report 2010
Stock ID: Yuehuabao B Stock Listed in: Shenzhen Stock Exchange
Stock Code: 200986 First Listed: 6 July, 2000
Total Capital Share: 505.425 million shares Amount of negotiable B shares: 171.925 million shares2
Contents
I. Important Statement…………………………………………………………………3
II. Company Profile……………………………………………………………………3
III. Change of Share Capital and Shares Held by Principal Shareholders………….…5
IV. Particulars about the Directors, Supervisors and Senior Managements………...…7
V. Report of the Board of Directors…………………………………………….……7
VI. Significant Events……………………………………………………………..…13
VII. Financial Report…………………………………………………………………18
VIII. Documents Available for Reference……………………………………………893
Foshan Huaxin Packaging Co., Ltd.
Semi-Annual Report 2010
I. Important Statement
I. The Board of Directors, the Supervisory Committee as well as directors, supervisors
and senior managements of the Company guarantee that there are no any omissions,
fictitious or serious misleading statements carried in the report and will take all
responsibilities, individual and/or joint for the authenticity, accuracy and integrality of the
whole contents. The report is prepared both in Chinese and English. Should there be any
diversity in interpretation, the Chinese version shall prevail.
II. Mr. Tong Laiming, Chairman of the Board, Mr. Wang Qi, the General Manager and Mr.
Ji Xiangdong, the Chief Finance Officer (and Vice GM) hereby declares that the financial
report enclosed in this Semi-Annual Report is authentic and integrated.
III. The Semi-Annual Financial Report 2010 has not been audited.
II. Company Profile
(I) Company Profile
1. Legal name of the Company in Chinese: 佛山华新包装股份有限公司
Legal name in English: Foshan Huaxin Packaging Co., Ltd.
2. Stock Listed in: Shenzhen Stock Exchange
Stock ID: Yuehuabao B
Stock Code: 200986
3. Registered address: No. 18, Jihua Road 5th, Foshan City, Guangdong Province
Office Address: 18/F, Jinghua Bldg., No. 18, Jihua Road 5th, Foshan City, Guangdong
Post Code: 528000
Email: hejf@fshxp.com
4. Legal Representative: Tong Laiming
5. Secretary of the Board: Zhou Qihong
Address: 18/F, Jinghua Bldg, No. 18 Jihua Road 5th, Foshan City
Tel: 0757-83981729
Fax: 0757-83992026
Email: hf_zhouqh@fshxp.com
6. Securities Affairs Representative: Zhou Qihong
Address: 18/F, Jinghua Bldg., No. 18 Jihua Road 5th, Foshan City
Tel: 0757-83992076
Fax: 0757-83992026
Email: hejf@fshxp.com
7. Newspapers Designated for Information Disclosing: Securities Times, Ta Kung Pao
Website Designated by China Securities Regulatory Commission:
http://www.cninfo.com.cn4
The Place Where the Interim Report is Prepared and Placed: Office of the Board of the
Company
8. Other relevant Information of the Company:
Initial business registration was on: 21 Jun. 1999
Registered place: Guangdong Provincial Industrial and Commercial Administrative
Bureau
Business license number: 4400001008467
Tax registration number: Guo-shui-zi No. 440601707682279
(II) Main financial data and indices
Unit: RMB Yuan
At the end of the report
period
At the period-end of last year
Increase/decrease compared
with the period-end of last
year (％)
Total assets 6,088,425,259.43 5,755,441,114.36 5.79%
Owners’ equity attributable to shareholders of the
listed company
1,388,695,954.23 1,295,107,009.94 7.23%
Share capital 505,425,000.00 505,425,000.00 0.00%
Net assets per share attributable to shareholders of
the listed company (Yuan/share)
2.75 2.56 7.42%
In the report period (from
Jan. to Jun.)
The same period of last year
Increase/decrease
year-on-year (％)
Total operating income 1,905,987,412.15 574,193,444.90 231.94%
Operating profit 126,646,614.55 3,820,523.69 3,214.90%
Total profit 120,603,503.60 4,404,741.29 2,638.04%
Net profit attributable to shareholders of the listed
company
60,449,957.51 11,156,984.75 441.81%
Net profit attributable to shareholders of the listed
company after deducting non-recurring gain and
loss
63,575,096.81 -37,277,286.40 270.55%
Basic EPS (Yuan/share) 0.120 0.022 445.45%
Diluted EPS (Yuan/share) 0.120 0.022 445.45%
ROE 4.35% 0.87% 3.48 个百分点
Net cash flows from operating activities -26,301,171.33 48,667,492.35 -154.04%
Net cash flows per share from operating activities
(Yuan/share)
-0.052 0.096 -154.17%
(III) Non-recurring gains and losses
In “Net profit deducted non-recurring gains and losses” at the first half year of 2010,
the deducted items and relevant amounts were as follows:
Unit: RMB Yuan
Non-recurring gains and losses Amount
Gain/loss from non-current assets disposal -7,145,696.80
Government subsidies recognized into current gains and losses,
excluding those subsidies which are closely related to the normal
585,948.005
business of the Company and are enjoyed at fixed amounts or
proportions according to certain government policies
Other non-operating incomes and expenses besides the items above 516,637.85
Sub-total -6,043,110.95
Effect on income tax -1,812,379.21
Effect on minority interests 4,730,350.86
Total -3,125,139.30
(IV) Supplement of profit statement
According to requirements of Rule No. 9 on Information Disclosure and Financial
Records of Companies Publicly Issuing Securities issued by CSRC, the net assets
earning ratio and earnings per share were as follows:
ROE EPS
Jan.-Jun. 2010
Fully diluted Weighted average Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders
of the Company
4.35 4.45 0.120 0.120
Net profit attributable to ordinary shareholders
of the Company after deducting non-recurring
profit and loss
4.58 4.68 0.126 0.126
(Ⅴ) Difference between PRC GAAP and IFRS
There existed no difference between PRC GAAP and IFRS for the Company in the
current period.
III. Change of Share Capital and Shares Held by Principal Shareholders
(I) Change of share capital
There was no change in share capital of the Company in the report period
(II) The shareholders of the Company totaled to 17,144 as of the end of report period.
(III) Shareholder holding over 5% (including 5%) shares of the Company was Foshan
Huaxin Development Co., Ltd.
(IV) Particulars about the top ten shareholders
Particulars about the top ten shareholders who registered before 30 Jun. 2010:
Shares held by the top ten shareholders
Name of shareholders
Nature of
shareholder
Proportion of
shares held
Total shares held Non-tradable shares held
Shares pledged or
frozen
Foshan Huaxin Development Co.,
Ltd.
State-owned
corporation
65.20% 329,512,030 329,512,030 0
Wu Haoyuan Foreign natural 0.32% 1,602,5416
person
Zhu Shijie
Domestic natural
person
0.24% 1,233,726
NORGES BANK
Foreign
corporation
0.23% 1,178,308
KGI ASIA LIMITED
Foreign
corporation
0.18% 903,889
GUOTAI JUNAN
SECURITIES(HONGKONG)
LIMITED
Foreign
corporation
0.18% 886,585
Wang Zhiyong
Domestic natural
person
0.15% 744,000
Xu Yang
Domestic natural
person
0.14% 705,922
Ge Shaoyun
Domestic natural
person
0.14% 702,164
Ma Zeqi
Domestic natural
person
0.13% 670,000
Explanation on associated
relationship among the aforesaid
shareholders or acting-in-concert
There ① exists no related-party relationship between the first principal shareholder of the
Company—Foshan Huaxin Development Co., Ltd.—and other shareholders mentioned above. And
they are not parties acting in concert as stipulated in the Measures for the Administration of
Disclosure of Shareholder Equity Changes of Listed Companies.
② The Company is unknown whether other shareholders exists related relationship or whether it
belongs to action-in-concert regulated in Measures for the Administration of Disclosure of
Shareholder Equity Changes of Listed Companies.
③ In the report period, the shares held by shareholders of the Company holding over 5% (including
5%) were not pledged or frozen.
(V) Brief introduction of the top ten shareholders of tradable share
Name of shareholders Tradable shares held Variety of shares
Wu Haoyuan 1,602,541 Domestically listed foreign shares
Zhu Shijie 1,233,726 Domestically listed foreign shares
NORGES BANK 1,178,308 Domestically listed foreign shares
KGI ASIA LIMITED 903,889 Domestically listed foreign shares
GUOTAI JUNAN SECURITIES(HONGKONG)
LIMITED
886,585 Domestically listed foreign shares
Wang Zhiyong 744,000 Domestically listed foreign shares
Xu Yang 705,922 Domestically listed foreign shares
Ge Shaoyun 702,164 Domestically listed foreign shares
Ma Zeqi 670,000 Domestically listed foreign shares
PANG,KWOK SHI (Peng Guoshi) 646,405 Domestically listed foreign shares
Explanation on related-party relationship and
action-in-concert among shareholders mentioned
It is unknown whether there exists related-party relationship among
tradable share holders above and whether they are acting-in-concert7
above parties as stipulated in the Measures for the Administration of
Disclosure of Shareholder Equity Changes of Listed Companies.
(VI) Controlling shareholder and the actual controller of the Company
The controlling shareholder or actual controlling holder of the Company remained
unchanged in the report period.
IV. Particulars about the Directors, Supervisors and Senior Managements
(I) In the report period, none of the directors, supervisors and senior managements is
holding the stocks of the Company.
(II) During the report period, directors, supervisors and senior executives of the
Company remained unchanged.
V. Report of the Board of Directors
(I) Discussion and Analysis of overall operation
Starting from the beginning of the year 2010, the domestic economy experienced a
rapid and then slower growth. The overseas economy, affected by the sovereign debt
crisis in the Europe, also experienced ups and downs. And the paper-making and
packaging market, where the Company is, showed an upward and then downward
trend.
In the first quarter, there appeared a phenomenal increase in orders in the downstream
of the paper-making sector, which resulted in a rapid price growth of wood pulp and
wasted paper in the international market. Production and sales of white cardboard and
white paperboard were both strong with rising paper prices, which quickly expanded
room for gross profits in the paper-making industry. In the second quarter, the paper
market became more complicated. Affected by a worse sovereign debt crisis in
European countries, a slack sales season in the domestic market and other elements,
paper demand in the downstream market weakened, with fewer and fewer transactions
and a larger and larger stock of paper products. Prices of white cardboard and white
paperboard went down to some degree. In terms of the package printing sector this
year, government regulation became stricter and relevant authorities strengthened
their regulation on trademarks, intellectual property rights and regulation compliance
of presswork and publications. And the said stricter regulation on the industry will
facilitate growth of regular package printing enterprises.
With such a market environment, the Company took opportunities to give full play to
its scale advantage after the asset reorganization and achieve excellent operating
results. For the report period, the Company achieved an operating income reaching
RMB 1,905,987,400, up by 231.94% year on year; an operating profit as much as
RMB 126,646,600, up by 3,214.92% year on year; and a net profit attributed to
owners of the parent company amounting to RMB 60,450,000, representing a
year-on-year growth of 441.8%.
1. Explanation on significant changes in assets structure in the report period compared8
with the same period of last year
Unit: RMB Yuan
30 Jun. 2010 31 Dec. 2009
Item
Amount
Proportion in total
assets
Amount
Proportion in total
assets
Increase/decrea
se (%)
Total assets 6,088,425,259.43 100 5,755,441,114.36 100 5.79
Monetary funds 466,352,860.40 7.66 343,850,553.53 5.97 35.63
Notes receivable 270,881,168.90 4.45 118,884,296.65 2.07 127.85
Other receivables 49,840,441.46 0.82 28,902,006.60 0.50 72.45
Inventory 1,033,659,966.40 16.98 723,591,647.22 12.57 42.85
Construction in process 9,424,287.24 0.15 4,255,538.69 0.07 121.46
Notes payable 11,832,547.26 0.19 5,540,630.87 0.10 113.56
Accounts received in
advance
35,143,784.29
0.58
18,240,168.17
0.32
92.67
Interest payable 23,335,421.78 0.38 1,577,529.58 0.03 1,379.24
Long-term payables 511,205,432.43 8.40 83,482,757.86 1.45 512.35
Explanation on changes:
(1) Monetary funds as at the period-end were up by 35.63% as compared with the
period-begin, which was mainly due to expansion of the production and operation
scale in the current period;
(2) Notes receivable as at the period-end were up by 127.85% as compared with the
period-begin, which was mainly due to a sales growth in the current period;
(3) Other receivables as at the period-end were up by 72.45% as compared with the
period-begin, which was mainly because sales expanded in the current period, which
resulted in more other receivables and payables;
(4) Inventory as at the period-end was up by 42.85% as compared with the
period-begin, which was mainly due to an increase of materials;
(5) Construction in process as at the period-end was up by 121.46% as compared with
the period-begin, which was mainly due to an input increase in the production line
rebuilding project;
(6) Notes payable as at the period-end were up by 113.56% as compared with the
period-begin, which was mainly because production and operation expanded and
more raw materials were purchased;
(7) Accounts received in advance as at the period-end were up by 92.67% as9
compared with the period-begin, which was mainly due to a sales growth;
(8) Interest payable as at the period-end was up by 1,379.24% as compared with the
period-begin, which was mainly because notes increased in the interim of the current
period, which led to higher interest that should be withdrawn;
(9) Long-term payables as at the period-end were up by 512.35% as compared with
the period-begin, which was mainly because notes increased in the interim of the
current period.
2. Explanation on significant changes in operating income and expense items during
the report period year-on-year
Unit: RMB Yuan
Item First half of 2010 First half of 2009
Increase/decrease
year-on-year (%)
Operating income 1,905,987,412.15 574,193,444.90 231.94
Operating cost 1,579,050,537.72 562,186,817.24 180.88
Asset impairment loss 314,965.83 -10,300,000.00 103.06
Operating profit 126,646,614.55 3,820,523.69 3,214.90
Total profit 120,603,503.60 4,404,741.29 2,638.04
Explanation on changes:
(1) Operating income and cost were up by 231.94% and 180.88% respectively as
compared with the same period of last year, which was mainly because the production
and sales volume and selling prices of the Company registered a significant
year-on-year increase with a better market environment and Zhuhai S.E.Z. Hongta
Renheng Paper Co., Ltd. was included in the consolidated statements on 30 Jun. 2009;
(2) Asset impairment loss was up by 103.06% year on year, which was mainly
because an inventory falling price reserve of RMB 10.3 million was written off at the
same period of last year while there were no such events in the current period;
(3) Operating profit was up by 3,214.90% year on year, which was mainly because the
sales volume and selling prices increased with a better economic environment in the
current period and Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. was included in the
consolidated statements on 30 Jun. 2009;
(4) Total profit was up by 2,638.04% year on year, which was mainly because the
sales volume and selling prices increased with a better economic environment in the
current period and Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. was included in the
consolidated statements on 30 Jun. 2009.
3. Analysis and explanation on cash flows in the report period
Unit: (RMB) Yuan10
Item First half of 2010 First half of 2009
Year-on-year
increase/decrease
(%)
Net cash flows from operating activities -26,301,171.33 48,667,492.35 -154.04
Net cash flows from investing activities 43,405,242.82 434,457,512.22 -90.01
Net cash flows from financing activities -32,106,421.74 46,649,070.85 -168.83
Explanation on changes:
(1) Net cash flows from operating activities as of the current period were down by
154.04% year on year, which was mainly due to increase in materials for production
in the Company’s controlled subsidiaries;
(2) Net cash flows from investing activities as of the current period were down by
90.01% year on year, which was mainly because at the same period of last year,
Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. was included in the consolidated
statements;
(3) Net cash flows from financing activities as of the current period were down by
168.83% year on year, which was mainly because mature borrowings were repaid in
the current period.
(Ⅱ) Main operation in the report period
1. Scope of main businesses
In the report period, the major products of the Company were white cardboard, coated
white paperboard with grey back and color-printing packaging paper.
2. Operation of main businesses
(1) Main businesses regarding industries and products
Unit: RMB Ten thousand
Industries or products
Operating
income
Operating cost
Gross profit ratio
(%)
Year-on-year
increase/
decrease of
operating
income (%)
Year-on-year
increase/ decrease
of operating cost
(%)
Year-on-year increase/
decrease of operating
cost (%)
Main businesses regarding industries
Paper-making business 172,637.39 142,710.24 17.34 240.32 179.97 17.82%
Color-package printing
business
8,356.87 6,724.23 19.54 28.62 30.05 -0.88%
Main businesses regarding products11
White cardboard 116,385.13 94,427.26 18.87 ----- ----- -----
Coated white
paperboard with grey
back
56,252.26 48,282.98 14.17 10.89 -5.28 14.65%
Printing products 8,356.87 6,724.23 19.54 28.62 30.05 -0.88%
(2) Main business income regarding regions
Regions
Main business income (Unit: RMB Ten
thousand)
Year-on-year increase/ decrease (%)
Domestic 162,083.57 183.24
Foreign 18,910.69 477.09
(3) No significant changes occurred in structures of profit and main businesses in the
report period when compared with the previous report period.
(4) Explanation on the change of the profitability (gross profit ratio) of the Company’s
main businesses
① Sales volumes and unit prices of the Company’s main products—white cardboard
and coated white paperboard with grey back—increased significantly as compared
with the same period of last year;
② Purchase cost was excellently controlled by accurately judging price trends of raw
materials through scientific analysis and adopting strategic purchase.
3. Other businesses which had significant influence on net profit in the report period
In the report period, Tetra Pak Huaxin (Foshan) Packaging Co., Ltd.—the Company’s
affiliated company—achieved a net profit of RMB 107,035,000, which made a great
contribution to the total profit of the Company. With the Company holding 25% of its
shares, Tetra Pak Huaxin (Foshan) Packaging Co., Ltd. specialized in manufacturing
tetra packaging materials.
4. Difficulties and problems met in operation
As is known, the package paper-making industry is closely related to the national
economy. With the national economic growth slowing down as a whole, the domestic
market demand in the paper-making sector was limited to some degree. In addition,
affected by the debt crisis in European countries, the export business was not yet fully
recovered. All these led to mounting pressure on operation of the Company.
(Ⅲ) Investment in the report period
1. Use of raised funds
No funds were raised in the report period.12
2. Significant investment projects of non-raised funds
There were no significant investment projects of non-raised funds in the report period.13
VI Significant Events
(I) Corporate governance
In accordance with the Company Law, the Securities Law and other laws and
regulations issued by CSRC and Shenzhen Stock Exchange, the Company had, ever
since its being listed, continuously perfected its corporate governance structure,
regulated the operation and formulated a series of governance rules. The actual
corporate governance of the Company was basically in compliance with the
requirements of relevant regulatory documents issued by CSRC and Shenzhen Stock
Exchange. In the future, the Company would continue to improve its internal
management system, better the supervisory mechanism and strengthen the execution,
so as to ensure that every links of the Company’s operation would work well, and that
the Company’s business would grow steadily.
(II) Profit distribution plan of the Company
The Company did not conduct profit distribution or capitalization of public reserves
for the first half of 2010.
(III) As of the end of the report period, the equity of other listed companies, the equity
of financial enterprises (commercial banks, securities companies, insurance
companies, trust companies, futures companies, etc.) and the equity of would-be listed
companies held by the Company
Unit: (RMB) Yuan
Name of the held
object
Initial
investment
amount
Amount of
shares held
Proportion in
the total
shares of the
held object
Carrying
value at
period-end
Gains and
losses in
report
period
Change of
owners’ equity
in report
period
Accounting
subject
Source of shares
Guangdong
Development Bank
113,558.00 0 0.0004% 113,558.00 0.00 0.00
Long-term
equity
investment
By investment in
the establishment
of the held object
Fuhua Group Co.,
Ltd., Zhuhai S.E.Z
1,854,600.00
385,537.00
shares
0.11% 3,385,014.86 0.00 -222,840.39
Available-f
or-sale
financial
assets
By purchase
Total 5,068,158.00
385,537.00
shares
3,498,572.86 0.00 -222,840.39
(IV) Significant lawsuits and arbitrations14
Concerning the lawsuit filed by Foshan Huafeng Paper Co., Ltd. (hereinafter referred
to as “Huafeng Paper”)—the holding subsidiary of the Company—against Stora Enso
Packing Boards Asia Oy (hereinafter referred to as “Stora Enso”) over a disputed
transfer agreement, the basic details of the case had been disclosed in the previous
periodic reports. And the latest progress of the case by the end of the report period
was as follows:
In Jul. 2010, the Company received the Civil Ruling Paper (2007 ZZFMSC Zi No. 52)
from Zhuhai Intermediate People's Court Guangdong ,P.R.C., and the verdict are as
follows:
(1) The defendant Stora Enso should pay increased cost due to project reconstruction
and claim for compensation totaling RMB 1,711,000 to accuser Foshan Huafeng
Paper Co., Ltd within 10 days since this verdict is legal effective;
(2) The defendant Stora Enso should pay engineering management expense and wage
for staff as well as other salary and engineering interest due to project reconstruction
and claim for compensation totaling RMB 21,486,695.04 to accuser Foshan Huafeng
Paper Co., Ltd within 10 days since this verdict is legal effective;
(3) As for the ligation fee of RMB 331,291 and auditing expense of RMB 67,500,
Foshan Huafeng Paper Co., Ltd will pay RMB 206,743 and Stora Enso Packing
Boards Asia Oy will pay RMB 191,848.
At present, Both the accuser Foshan Huafeng Paper Co., Ltd and defendant Stora
Enso Packing Boards Asia Oy appealed to Guangdong High People’s Court. The
above verdict has not executed yet, therefore, the verdict caused no influence on profit
of the Company during the report period. The Company will publish public notice in
time when the case has progress.
(V) Significant related transactions
Related transactions arising from daily operation
In the report period, there were routine related transactions between the Company’s
holding subsidiaries, of which the details were specified in the Notes to the Financial
Statements.
Type of related
transaction
Related party
Transaction
amount
(RMB’0000)
Proportion in the
total transaction
amount of the
same kind of
transactions
Pricing principle Settlement method
Purchasing raw
materials
Foshan Huaxin
Import & Export
Co., Ltd
1,717.68 1.83%
Pricing according
to market value
Bank bills and
bank transfer
Purchasing raw
materials
China National
Paper-Industry
Investment Corp.
11,087.87 11.83%
Pricing according
to market value
Bank bills and
telegraphic transfer15
Selling products
Foshan Huaxin
Import & Export
Co., Ltd
33.50 0.02%
Pricing according
to market value
Bank bills and
bank transfer
(VI) Non-operational current of creditor’s rights and debts
1. According to the Loan Contract signed by the Company and its parent company
Foshan Huaxin Development Co., Ltd., as of 30 Jun. 2010, the loan balance of the
Company to Foshan Huaxin Development Co., Ltd. stood at RMB 66,029,900.
2. According to Agreement on Internal Use of Medium Term Note of China
Chengtong Holding Group Ltd, as of 30 Jun. 2010, China Chengtong Holding Group
Ltd raised and provided medium term note of RMB 500 million for the Company,
which was used for repayment loan from banks and making up current capital, with
issue interest rate being 4.23 and underwriting fee being 3‰ per year.
(VII) Significant contracts and their implementation in the report period
1. The Company did not conduct significant transactions involving holding in trust,
contracting or leasing other companies’ assets, nor vice versa in the report period, and
there existed no such transactions carried down from the previous periods.
2. The Company did not entrust others to manage its cash asset in the report period
and there existed no such transactions carried down from the previous periods.
3. Significant guarantees provided by the Company in the report period
As of 30 Jun. 2010, balance of external guarantees for which the Company still had
guarantee liability stood at RMB 858,730,000, with all of them being guarantees for
controlling subsidiaries, including guarantee balance of RMB 540 million for
Zhuhai Huafeng Paper Co., Ltd, guarantee balance of RMB 293,730,000 for Zhuhai
S.E.Z. Hongta Renheng Paper Co., Ltd., and guarantee balance of RMB 25 million for
Huaxin (Foshan) Color Printing Co., Ltd.. None of the guarantees were overdue.
Unit: (RMB) Ten thousand
External guarantees provided by the Company (excluding those for subsidiaries)
Name of the guaranteed
Date and No.
of Relevant
public notice
Guarantee
line
Date of
occurrence
(Date of
signing
agreement)
Actual
amount of
guarantee
Type of
guarantee
Term of
guarantee
Impleme
ntation
accompli
shed or
not
Guarantee
for related
parties or
not
Total external guarantees lines examined
and approved in the reporting period (A1)
0.00
Total external guarantees
occurred in the reporting period
(A2)
0.00
Total external guarantee lines examined
and approved at the period end (A3)
0.00
Balance of actual guarantees at
the period end (A4)
0.00
Guarantees provided for subsidiary companies
Name of the guaranteed
Date and No.
of Relevant
public notice
Guarantee
line
Date of
occurrence
(Date of
signing
Actual
amount of
guarantee
Type of
guarantee
Term of
guarantee
Impleme
ntation
accompli
shed or
Guarantee
for related
parties or
not16
agreement) not
Zhuhai S.E.Z. Hongta
Renheng Paper Co., Ltd.
30 Sep. 2009
2009-034
31,000.00 Oct. 16 2009 11,600.00
Security of
guarantee
16 Oct. 2009-31
Dec. 2010
No Yes
Zhuhai S.E.Z. Hongta
Renheng Paper Co., Ltd.
21 Aug. 2009
2009-032
10,000.00 9 Jul. 2009 5,000.00
Security of
guarantee
9 Jul. 2009-9 Jul.
2010
No Yes
Zhuhai S.E.Z. Hongta
Renheng Paper Co., Ltd.
5 Jul. 2010
2010-019
10,000.00 17 May 2010 7,773.00
Security of
guarantee
17 May-29 Dec.
2010
No Yes
Zhuhai S.E.Z. Hongta
Renheng Paper Co., Ltd.
28 Aug. 2009
2009-033
5,000.00 23 Jul. 2009 5,000.00
Security of
guarantee
23 Jul. 2009-23
Jul. 2010
No Yes
Zhuhai Huafeng Paper
Co., Ltd
20 Nov. 2009
2009-040
60,000.00 14 Nov. 2009 54,000.00
Security of
guarantee
24 Nov. 2009-4
Aug. 2010
No Yes
Huaxin (Foshan) Color
Printing Co., Ltd
28 Aug. 2009
2009-033
2,500.00 16 Dec. 2009 2,500.00
Security of
guarantee
6 Aug. 2009-6
Aug. 2010
No Yes
Total guarantees lines for subsidiaries
examined and approved in the reporting
period (B1)
150,000.00
Total guarantees for subsidiaries
occurred in the reporting period
(B2)
7,773.00
Total guarantee lines for subsidiaries
examined and approved at the period end
(B3)
150,000.00
Balance of actual guarantees at
the period end (B4)
85,873.00
Total guarantees of the Company (Total of the two above)
Total guarantees lines examined and
approved in the reporting period (A1+B1)
150,000.00
Total guarantees occurred in the
reporting period (A2+B2)
7,773.00
Total guarantees lines examined and
approved at the report period (A3+B3)
150,000.00
Total balance of actual
guarantees at the period end
(A4+B4)
85,873.00
Proportion of total actual guarantee amount (A4+B4) in net assets of the
Company
61.84%
Among which:
Amount of guarantees provided for shareholders, actual controller and other
related parties (C)
0.00
Amount of debt guarantees provided directly or indirectly for parties with
asset-liability ratio exceeding 70% (D)
0.00
Proportion of total guarantee amount exceeding 50% of the Company’s net
assets (E)
16,439.00
Total amount of the above three guarantees (C+D+E) 16,439.00
Explanation on possibility of taking several and joint liability involving
immature guarantees
Naught
(VIII) Particular explanation and independent opinion from independent directors on
capital occupation by related parties and the Company’s external guarantees
According to the Circular on Relevant Issues Concerning Regulating Capital Flow
between Listed Companies and Related Parties and Provision of External Guaranty
By Listed Companies (ZJF【2003】No.56) issued by CSRC, as the independent
directors of Foshan Huaxin Packaging Co., Ltd., we conscientiously and carefully17
examined the relevant materials provided by the Company’s Board of Directors, and
conducted investigations and checks on the Company’s relevant personnel concerning
the capital occupation by the controlling shareholder and other related parties, as well
as the external guarantees provided by the Company. And we hereby issue the
relevant explanation and our independent opinion as follows:
1. The Company adopted a prudent attitude towards and strictly controlled the
possible debt risks arising from the guarantees provided for external parties,
established a strict system for its provision of external guarantees and kept revising
and perfecting the system in time according to the Rules for Listing Shares in
Shenzhen Stock Exchange;
2. After our careful examinations and checks according to relevant regulations, it was
found that: in the report period, there existed no occupation of the Company’s capital
by the controlling shareholder or other related parties; all the external guarantees of
the Company were provided for its holding subsidiaries, and the Company strictly
went through the relevant approval and authorization procedures; and the Company
had provided no guarantees for its controlling shareholder or other related parties, as
well as any non-corporate unit or individual.
(IX) Interviews and visits received in the report period
Reception time Reception place Way of reception Visitor Main discussion and materials provided
16 Apr. 2010 The Company Field study Individual investor
Particulars about the Company’s main
business and operation
18 May 2010 The Company By telephone Individual investor
Particulars about the Company’s main
business and operation
(X) In the report period, the Company or the shareholders holding over 5% (including
5%) shares of the Company made no commitment that would significantly affect the
Company’s operating results and financial status. And there was no such
commitments carried down from the previous periods, either.
(XI) In the report period, the Company, its directors, supervisors, senior management
personnel, shareholders, actual controller and purchaser received no investigations
from relevant authorities, no enforcement measures from judicial and discipline
inspection organs, no transfer to judicial organs, no prosecution for criminal liability,
no investigation from CSRC, no administrative punishment from CSRC, no ban from
securities market, no circulars of criticism, no being recognized as improper persons,
no punishment from other administrations and no public criticism from any stock
exchange.
(XII) Engagement of CPA firm
On 16 Apr. 2010, the Company convened the 2009 Shareholders’ General Meeting, at
which the proposal on engaging a CPA firm for the year 2010 was examined and
approved. And the Company decided to engage Guangdong Dahua Delu Certified
Public Accountants as the Company’s auditing agency for its 2009 financial report.18
(XIV) Index for disclosed information
No. of public
notice
Date of disclosure Public notice
2010-001 14 Jan. 2010 Public Notice on Resolutions of the 1st Meeting of the 4th Board of Directors 2010
2010-002 14 Jan. 2010 Notice on Holding the 1st Provisional Shareholders’ Meeting 2010
2010-003 30 Jan. 2010 Public Notice on Resolutions of the 1st Provisional Shareholders’ Meeting 2010
2010-004 27 Mar. 2010 Public Notice on the 2nd Meeting of the 4th Board of Directors 2010
2010-005 27 Mar. 2010 Public Notice on Resolutions of the 1st Meeting of the 4th Supervisory Committee 2010
2010-006 27 Mar. 2010 Summary of 2009 Annual Report
2010-007 27 Mar. 2010 Public Notice on External Guarantees
2010-008 27 Mar. 2010 Public Notice on Obtaining Recognition of the Certificate of New High-tech Enterprise
2010-009 27 Mar. 2010 Public Notice on Daily Related Transaction of the Company
2010-010 27 Mar. 2010
Public Notice on Raising and Providing Medium Term Note of RMB 500 Million for the
Company by the Actual Controller and Related Transaction
2010-011 27 Mar. 2010 Notice on Holding Annual Shareholders’ General Meeting 2009
2010-012 10 Apr. 2010 Public Notice on Forecast of the 1st Quarterly Report 2010
2010-013 14 Apr. 2010 Supplementary Public Notice on the Annual Report 2009
2010-014 17 Apr. 2010 Public Notice on Resolutions of the Annual Shareholders’ General Meeting for 2009
2010-015 23 Apr. 2010 The 1st Quarterly Report 2010
2010-016 23 Apr. 2010 Public Notice on the 3rd Meeting of the 4th Board of Directors 2010
2010-017 28 Apr. 2010 Public Notice on Change its Name of the Actual Control of the Company
2010-018 30 Apr. 2010 Public Notice on Resolutions of the 4th Meeting of the 4th Board of Directors 2010
2010-019 5 Jun. 2010 Public Notice on the 5th Meeting of the 4th Board of Directors 2010
2010-020 5 Jun. 2010
Public Notice on Controlling Subsidiary of the Company Transferring Equity of Zhuhai
Hengshun Supply Chain Logistical Service Co., Ltd (Related Transaction)
2010-021 15 Jul. 2010 Public Notice on Performance Growing Forecast
The above-mentioned provisional public notices and periodic reports in the report
period were all disclosed on Securities Times, Ta Kung Pao and www.cninfo.com.cn.
VII. Financial Report (Un-audited)
Balance Sheet (I)
Prepared by Foshan Huaxin Packaging Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Notes Closing amount Opening amount
Items Consolidati
on
Parent
company
Consolidation Parent company Consolidation Parent company19
Current assets:
Monetary funds VIII (I) 466,352,860.40 42,084,107.08 343,850,553.53 76,393,266.55
Transactional financial assets - - - -
Notes receivable VIII (II) 270,881,168.90 - 118,884,296.65 -
Accounts receivable VIII (III) 721,708,128.89 - 854,641,257.43 -
Accounts paid in advance VIII (IV) 13,150,357.72 139,114.00 60,917,921.94 139,114.00
Interest receivable - - - -
Dividend receivable - - - -
Other accounts receivable VIII (V) IX (I) 49,840,441.461,222,507,378.75 28,902,006.60 985,419,468.76
Inventories VIII (VI) 1,033,659,966.40 - 723,591,647.22 -
Non-current assets due within 1 year - - - -
Other current assets VIII (VII) 182,115.86 - 322,924.57 -
Total current assets 2,555,775,039.631,264,730,599.832,131,110,607.941,061,951,849.31
Non-current assets: - - - -
Available-for-sale financial assets VIII (VIII) 3,385,014.86 - 3,647,180.02 -
Held-to-maturity investment - - - -
Long-term accounts receivable
Long-term equity investment VIII (IX) IX (II) 173,240,313.571,401,371,597.71 210,014,599.181,319,023,888.27
Investment real estate VIII (X) 3,875,510.21 - 3,957,603.83 -
Fixed assets VIII (XI) 3,197,646,739.44 1,977,061.533,251,312,634.23 2,132,576.72
Construction in progress VIII (XII) 9,424,287.24 - 4,255,538.69 -
Engineering material
Disposal of fixed assets -1,470.00 - - -
Productive biological assets - - - -
Oil and gas assets - - - -
Intangible assets VIII (XIII) 106,838,616.57 640,110.00 110,841,334.75 673,800.00
Development expense - - - -
Goodwill VIII (XIV) 9,129,025.01 - 9,129,025.01 -
Long-term deferred expenses VIII (IXV) 4,254,048.74 - 6,314,456.55 -
Deferred tax assets VIII (XVI) 24,858,134.16 - 24,858,134.16 -
Other non-current assets - - - -
Total non-current assets 3,532.650,219.801,403,988,769.243,624,330,506.421,321,830,264.99
Total assets 6,088,425,259.432,668,719,369.075,755,441,114.362,383,782,114.30
Balance Sheet (II)
Prepared by Foshan Huaxin Packaging Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Notes Closing amount Opening amount
Items
Consolidation Parent company Consolidation Parent company Consolidation Parent company
Current liabilities:
Short-term borrowings VIII (XVIII) 1,430,204,303.93 391,000,000.00 1,784,893,906.80 528,000,000.00
Transactional financial
liabilities
- - - -
Notes payable VIII (XIX) 11,832,547.26 - 5,540,630.87 -20
Accounts payable VIII (XX) 588,343,718.28 - 482,104,005.76 -
Accounts received in advance VIII (XXI) 35,143,784.29 - 18,240,168.17 -
Payroll payable VIII (XXII) 15,745,895.72 - 26,514,681.75 182,001.55
Tax payable VIII (XXIII) -47,567,950.14 31,857.35 -7,508,042.74 84,103.77
Interest payable VIII (XXIV) 23,335,421.78 5,600,000.00 1,577,529.58 -
Dividend payable VIII (XXV) 133,758.00 133,758.00 133,758.00 133,758.00
Other accounts payable VIII (XXVI) 216,508,347.37 67,282,519.23 204,221,346.17 155,744,634.61
Non-current liabilities due
within 1 year
240,000,000.00 240,000,000.00 140,000,000.00 80,000,000.00
Other current liabilities
Total current liabilities 2,513,679,826.49 704,048,134.58 2,655,717,984.36 764,144,497.93
Non-current liabilities
Long-term borrowings VIII (XXVII) 190,000,000.00 190,000,000.00 360,000,000.00 360,000,000.00
Bonds payable - - - -
Long-term payables VIII (XXVIII) 511,205,432.43 500,000,000.00 83,482,757.86 -
Special payables - - - -
Estimated liabilities VIII (XXIX) 20,792,500.00 - 20,496,692.50 -
Deferred tax liabilities VIII (XXX) 229,562.23 - 268,887.00 -
Other non-current liabilities VIII (XXXI) 1,320,000.00 - 1,320,000.00 -
Total non-current liabilities 723,547,494.66 690,000,000.00 465,568,337.36 360,000,000.00
Total liabilities 3,237,227,321.151,394,048,134.58 3,121,286,321.721,124,144,497.93
Owners’ equity (or shareholders’
equity)
Paid-up capital (or share capital) VIII (XXXII) 505,425,000.00 505,425,000.00 505,425,000.00 505,425,000.00
Capital reserves VIII (XXXIII) 283,918,372.22 250,531,482.00 250,779,385.44 250,531,482.00
Less: Treasury Stock - - - -
Surplus reserves VIII (XXXIV) 125,274,475.42 125,274,475.42 125,274,475.42 125,274,475.42
Retained profits VIII (XXXV) 474,078,106.59 393,440,277.07 413,628,149.08 378,406,658.95
Foreign exchange difference - - - -
Total owners’ equity attributable to
parent company
1,388,695,954.231,274,671,234.49 1,295,107,009.941,259,637,616.37
Minority interests 1,462,501,984.05 - 1,339,047,782.70 -
Total owners’ equity 2,851,197,938.281,274,671,234.49 2,634,154,792.641,259,637,616.37
Total liabilities and owners’ equity 6,088,425,259.432,668,719,369.07 5,755,441,114.362,383,782,114.30
Profit Statement
Prepared by: Foshan Huaxin Packaging Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan
Notes This period Same period of last year
Items
Consolidation
Parent
company
Consolidation Parent company Consolidation Parent company
Ⅰ. Total operating income 1,905,987,412.15 - 574,193,444.90 -
Including: operating income VIII (XXXVI) 1,905,987,412.15 - 574,193,444.90 -
Ⅱ. Total operating cost 1,806,099,550.21 11,733,309.49 648,803,973.40 39,009,395.8221
Including: operating cost VIII (XXXVI) 1,579,050,537.72 - 562,186,817.24 -
Business taxes and surcharges VIII (XXXVII) 2,395,958.57 - 359,108.28 -
Selling expenses VIII (XXXVIII) 83,953,631.14 - 20,071,354.31 -
Administrative expenses VIII (XXXIX) 64,515,064.87 5,781,776.73 36,520,388.07 7,100,048.64
Financial expenses VIII (XL) 75,869,392.08 5,951,532.76 39,966,305.50 31,909,347.18
Asset impairment loss VIII (XLI) 314,965.83 - -10,300,000.00 -
Add: gains/ losses from change in
fair value (“-” for losses)
Gains/ losses from investment
(“-” for losses)
VIII (XLII) IX (III) 26,758,752.61 26,758,752.61 78,431,052.19 40,414,527.45
Including: gains from
investment in joint ownership
enterprises and joint ventures
26,758,752.61 26,758,752.61 30,539,639.52 30,539,639.52
Foreign exchange difference (“-”
for losses)
- - - -
Ⅲ. Operating profit (“-” for losses) 126,646,614.55 15,025,443.12 3,820,523.69 1,405,131.63
Add: non-operating income VIII (XLIII) 1,240,862.04 8,175.00 587,217.60 -
Less: non-operating expense VIII (XLIV) 7,283,972.99 - 3,000.00 -
Including: loss from disposal of
non-current assets
Ⅳ.Total profit (“-” for losses) 120,603,503.60 15,033,618.12 4,404,741.29 1,405,131.63
Less: income tax expense VIII (XLIV) 6,567,716.86 - 2,252,647.07 -
Ⅴ. Net profit (“-” for losses) 114,035,786.74 15,033,618.12 2,152,094.22 1,405,131.63
Attributable to owners of parent
company
60,449,957.51 15,033,618.12 11,156,984.75 1,405,131.63
Minority interests 53,585,829.23 - -9,004,890.53 -
Ⅵ. Earnings per share
(Ⅰ) Basic earnings per share 0.120 - 0.022 -
(Ⅱ) Diluted earnings per share 0.120 - 0.022 -
Cash Flow Statement
Prepared by: Foshan Huaxin Packaging Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan
This period Same period of last year
Items
Consolidation Parent company Consolidation Parent company
Ⅰ. Cash flows from operating activities:
Cash received from sale of commodities and
provision of labor service
1,628.543,928.00 -462,242,026.13 -
Refund of taxes and fares received - - - -
Other cash received relating to operating activities 92,926,587.31 89,749,017.68 36,131,040.88 161,133,894.00
Sub-total of cash inflows from operating
activities
1,721,470,515.31 89,749,017.68498,373,067.01 161,133,894.00
Cash paid for goods and services 1,452,036,337.85 -371,426,185.90 -
Cash paid to and on behalf of employees 93,921,972.41 3,769,049.34 43,744,791.88 3,945,061.8422
Taxes and fares paid 130,034,101.30 766,585.58 11,720,686.07 802,914.45
Other cash paid relating to operating activities 71,779,275.08 327,406,681.25 22,813,910.81 83,516,813.73
Sub-total of cash outflows from operating
activities
1,747,771,686.64 331,942,316.17449,705,574.66 88,264,790.02
Net cash flows from operating activities -26,301,171.33 -242,193,298.49 48,667,492.35 72,869,103.98
Ⅱ. Cash flows from investment activities:
Cash received from investment income 63,533,038.22 63,533,038.22 - -
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets
24,644.00 14,050.00 449,466.45 -
Other cash received relating to investment activities - -443,362,104.65 -
Sub-total of cash inflows from investment
activities
63,557,682.22 63,547,088.22443,811,571.10 -
Cash paid for acquiring fixed assets, intangible
assets and other long-term assets
20,152,439.40 - 7,850,018.88 -
Cash paid for investments - 119,121,995.05 - 36,237,645.00
Other cash paid relating to investment activities - - 1,504,040.00 1,504,040.00
Sub-total of cash outflows from investment
activities
20,152,439.40 119,121,995.05 9,354,058.88 37,741,685.00
Net cash flows from investment activities 43,405,242.82 -55,574,906.83434,457,512.22 -37,741,685.00
Ⅲ. Cash flows from financing activities
Cash received from absorbing investment 103,230,199.29 12,075,960.09 -
Including: Cash received from minority investment
in subsidiaries
103,230,199.29 12,075,960.09 -
Cash received from borrowings 1,819,728,496.37 800,215,000.00573,967,770.99 336,000,000.00
Other cash received relating to financing activities - - - -
Sub-total of cash inflows from financing
activities
1,922,958,695.66 800,215,000.00586,043,731.08 336,000,000.00
Cash paid for settling debts 1,902,531,147.10 534,715,000.00508,285,447.87 248,000,000.00
Cash paid for interest expense and distribution of
dividends or profit
52,533,970.30 2,040,954.15 31,109,212.36 19,249,777.00
Including: Dividends and earnings paid to minority
shareholders by subsidiaries
- -- - -
Other cash paid relating to financing activities - - - -
Sub-total of cash outflows from financing
activities
1,955,065,117.40 536,755,954.15539,394,660.23 267,249,777.00
Net cash flows from financing activities -32,106,421.74 263,459,045.85 46,649,070.85 68,750,223.00
Ⅳ. Effect of foreign exchange rate changes on cash and
cash equivalents
-210,456.58 - - -
Ⅴ. Net increase in cash and cash equivalents -15,212,806.83 -34,309,159.47529,774,075.42 103,877,641.98
Add: Balance of cash and cash equivalents at
period-begin
329,035,163.08 76,393,266.55208,091,895.59 30,851,611.31
Ⅵ. Balance of cash and cash equivalents at period-end 313,822,356.25 42,084,107.08737,865,971.01 134,729,253.2923
Consolidated Statement of Changes in Owners’ Equity (I)
Prepared by: Foshan Huaxin Packaging Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan
Amount in this period
Owners’ equity attributable to parent company
Items
Paid-up capital
(or share capital)
Capital reserve
Less:
treasury
stock
Surplus public
reserve
General risk
reserve
Retained profit Others
Minority interests Total owners’ equity
I. Balance at the end of last year 505,425,000.00 250,779,385.44 - 125,274,475.42 413,628,149.08 1,339,047,782.70 2,634,154,792.64
Add: change of accounting policy - - - - - -
Correction of errors in previous period - - - - - - - -
II. Balance at the beginning of this year 505,425,000.00 250,779,385.44 - 125,274,475.42 413,628,149.08 - 1,339,047,782.70 2,634,154,792.64
III. Increase/decrease of amount in this year (“-” for decrease) - 33,138,986.78 - - 60,449,957.51 123,454,201.35 217,043,145.64
(I) Net profit - - - - 60,449,957.51 - 53,585,829.23 114,035,786.74
(II)Gain/loss directly included in owners’ equity - 33,138,986.78 - - - - -33,361,827.17 -222,840.39
1. Net amount of changes in fair value of financial assets
available for sale
- -93,515.63 - - - - -129,324.76 -222,840.39
2. Effect of changes in other owners’ equity of invested units
under equity method
- - - - - - - -
3. Effect of income tax relating to items recorded in owners’
equity
- - - - - - - -
4. Others - 33,232,502.41 - - - - -33,232,502.41
-,
Subtotal of (I) and (II) - 33,138,986.78 - - 60,449,957.51 - 20,224,002.06 113,812,946.35
(III) Investment by owners and capital reduction - - - - - - 103,230,199.29 103,230,199.29
1. Capital investment by owners - - - - - - 103,230,199.29 103,230,199.29
2. Amount of share-based payment recorded in owners’ equity - - - - - - - -24
3. others - - - - - -
(IV) Profit distribution - - - - - - -
1. Surplus public reserve withdrawn - - - - - - -
2. General risk reserve withdrawn - - - - - - -
3. Distribution to owners (or shareholders) - - - - - - - -
4. Others
(V)Internal carrying forward of owners’ equity - - - - - - - -
1. New increase of capital (or share capital) from capital
reserves
- - - - - - - -
2. Converting surplus reserves to capital (or share capital) - - - - - - - -
3. Surplus reserves used for making up losses - - - - - - - -
4. Others - - - - - - - -
IV. Balance at the end of this period 505,425,000.00 283,918,372.22 - 125,274,475.42 474,078,106.59 - 1,462,501,984.05
2,851,197,938.28
Consolidated Statement of Changes in Owners’ Equity (II)
Prepared by: Foshan Huaxin Packaging Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan
Amount of last period
Owners’ equity attributable to parent company
Items
Paid-up capital (or
share capital)
Capital reserve
Less:
treasury
stock
Surplus public
reserve
General risk
reserve
Retained profit Others
Minority
interests
Total owners’
equity
I. Balance at the end of last year 505,425,000.00 253,763,982.00 - 125,274,475.42 384,755,182.00 - 252,608,737.84 1,521,827,377.26
Add: change of accounting policy - - - - - - -
Correction of errors in previous period - - - - - - - -25
II. Balance at the beginning of this year 505,425,000.00 253,763,982.00 - 125,274,475.42 384,755,182.00 - 252,608,737.84 1,521,827,377.26
III. Increase/ decrease of amount in this year (“-” for
decrease)
- -3,232,500.00 - 11,156,984.75 - 976,157,643.65 984,082,128.40
(I) Net profit - - - 11,156,984.75 - -9,004,890.53 2,152,094.22
(II) Gain/loss directly included in owners’ equity -
1. Net amount of changes in fair value of financial
assets available for sale
- - - - - - - -
2. Effect of changes in other owners’ equity of invested
units under equity method
- - - - - - - -
3. Effect of income tax relating to items recorded in
owners’ equity
- - - - - - - -
4. Others -
Subtotal of (I) and (II) - - 11,156,984.75 - -9,004,890.53 2,152,094.22
(III) Investment by owners and capital reduction - - - - - - 985,162,534.18 985,162,534.18
1. Capital investment by owners - - - - - - 13,075,960.09 13,075,960.09
2. Amount of share-based payment recorded in owners’
equity
- - - - - - - -
3. others - - - - - - 972,086,574.09 972,086,574.09
(IV) Profit distribution - - -
1. Surplus public reserve withdrawn - - -
2. General risk reserve withdrawn - - -
3. Distribution to owners (or shareholders) - - -
4. Others - - -
(V) Internal carrying forward of owners’ equity - -3,232,500.00 - -3,232,500.00
1. New increase of capital (or share capital) from - - - - - - - -26
capital reserves
2. Converting surplus reserves to capital (or share
capital)
- - - - - - - -
3. Surplus reserves used for making up losses - - - - - - -
4. Others -3,232,500.00 - -3,232,500.00
IV. Balance at the end of this period 505,425,000.00 250,531,482.00 -
125,274,475.42
395,912,166.75 -1,228,766,381.49 2,505,909,505.66
Statement of Changes in Owners’ Equity of Parent Company
Prepared by: Foshan Huaxin Packaging Co., Ltd. Jan.-Jun. 2010 Unit: (RMB) Yuan
Amount for the year 2010 Amount for the year 2009
Items Paid-up capital
(or share capital)
Capital reserve
Less:
treasur
y stock
Surplus
public reserve
Retained profit
Total owners’
equity
Paid-up capital
(or share capital)
Capital reserve
Less:
treasur
y stock
Surplus public
reserve
Retained profit
Total owners’
equity
I. Balance at the end of
last year
505,425,000.00 250,531,482.00 -
125,274,475.4
2
378,406,658.95 1,259,637,616.37 505,425,000.00 250,531,482.00 - 125,274,475.42 386,209,879.36 1,267,440,836.78
Add: change of accounting
policy
- - - - - - - - - - - -
Correction of errors in
previous period
- - - - - - - - - - - -
II. Balance at the beginning
of this year
505,425,000.00 250,531,482.00 -
125,274,475.4
2
378,406,658.95 1,259,637,616.37 505,425,000.00 250,531,482.00 - 125,274,475.42 386,209,879.36 1,267,440,836.78
III. Increase/decrease of
amount in this year (“-” for
decrease)
- - - - 15,033,618.12 15,033,618.12 - - - 1,405,131.63 1,405,131.6327
(I) Net profit - - - - 15,033,618.12 15,033,618.12 - - - - 1,405,131.63 1,405,131.63
(II)Gain/loss directly
included in owners’ equity
- - - - - - - - - - - -
1. Net amount of
changes in fair value of
financial assets available for
sale
- - - - - - - - - - - -
2. Effect of changes in
other owners’ equity of
invested units under equity
method
- - - - - - - - - - - -
3. Effect of income tax
relating to items recorded in
owners’ equity
- - - - - - - - - - - -
4. Others - - - - - - - - - -
Subtotal of (I) and (II) - - - - 15,033,618.12 15,033,618.12 - - - - 1,405,131.63 1,405,131.63
(III) Investment by owners
and capital reduction
- - - - - - - - - - - -
1. Capital investment by
owners
- - - - - - - - - - - -
2. Amount of
share-based payment
recorded in owners’ equity
- - - - - - - - - - - -
3. others - - - - - - - - - - - -
(IV) Profit distribution - - - - - - - - - - -
1. Surplus public reserve - - - - - - - - - - - -28
withdrawn
2. Distribution to owners
(or shareholders)
- - - - - - - - - - -
3. Others - - - - - - - - - - - -
(V) Internal carrying
forward of owners’ equity
- - - - - - - - - - - -
1. New increase of
capital (or share capital) from
capital reserves
- - - - - - - - - - -
2. Converting surplus
reserves to capital (or share
capital)
- - - - - - - - - - - -
3. Surplus reserves used
for making up losses
- - - - - - - - - - - -
4. Others - - - - - - - - - - - -
IV. Balance at the end of this
period
505,425,000.00 250,531,482.00 -
125,274,475.4
2
393,440,277.07 1,274,671,234.49 505,425,000.00 250,531,482.00 - 125,274,475.42 387,615,010.99 1,268,845,968.4129
FOSHAN HUAXIN PACKAGING CO., LTD.
NOTE TO FINANCIAL STATEMENT
For the six months ended 30 June 2010
（All amounts in RMB Yuan unless otherwise stated）
[English version for reference only]
I. Company profiles
Foshan Huaxin Packing Co., Ltd. (hereinafter referred to as the Company) was
promoted by Foshan Huaxin Development Co., Ltd., as a main sponsor, 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 jointly invested by seven shareholders such as
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 Industry General Corporation, and
Foshan Light Industry Company by promotion with total share capital of RMB
290,000,000 at par value of RMB 1 per share. The Company is joint-stock company
who was registered in Administration Bureau for Commerce & Industry of
Guangdong Province on June 21, 1999. (Business License No. 40000000005147). In
the year of 2000, the Company successfully placed domestically listed foreign shares
(B shares) amounting to 149,500,000 by mean of private placing, which was listed in
Shenzhen Stock Exchange for trade. After offering, the Company’s total share capital
was increased to RMB 439,500,000.00. In June 2007, the Company distributed
dividends of 65,925,000 shares; therefore, the total share capital was changed into
RMB 505,425,000.00.
The Company is engaged in paper making, paper package and printing and 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. The
Company is located in No. 18, Jihua 5th Road, Foshan, Guangdong. Zhuhai S.E.Z Hongta
Renheng Paper Co., Ltd., Zhuhai Huafeng Paper Co., Ltd., Foshan Chengtong Paper Co., Ltd. and
Huaxin (Foshan) Color Printing Co., Ltd. are three shareholding subsidiaries of the Company, of
which main products include high-class coated white board, ivory board and color printed
packaging products.
II. Preparation basis of financial statement
With going-concern assumption as the basis, the Company prepares its financial statement in light
of the actual transactions and matters, as well as the accounting standard for business
enterprise-basic standard and other relevant regulations.
III. Statement for complying with the accounting standard for business enterprise
The financial statements for year 2009 prepared by the Company are in compliance with the
requirements of the accounting standard for business enterprise, and have reflected the Company’s30
financial status, operating results and cash flows in an accurate and complete way.
IV. Main accounting policies and accounting estimates adopted by the Company
(1) Accounting system
The Company performed the Accounting Standard for Business Enterprise (2006) and relevant
supplemental provisions.
(2) Fiscal year
The fiscal year of the Company is the solar calendar year, which is from January 1 to December
31.
(3) Standard currency of accounts
The Company adopts Renminbi as a standard currency of accounts.
(4) Accounting measurement attribute
The Company is to use accrual basis as record-keeping basis. The financial statement items shall
be accorded based on historical cost. Financial assets and financial liabilities which are measured
at their fair values, of which the variation is recorded into the profits and losses of the current
period, financial assets available for sale, derivative financial instruments shall be measured in the
light of fair value; inventories which are delayed in payment over the normal credit condition
when purchased and fixed assets shall be accorded with present value of purchase price;
inventories which impairment loss occurred shall be measured by net realizable value; other assets
depreciation shall be measured by recoverable amount (which higher between fair value and
present value); inventory surplus assets shall be measured by replacement cost.
(5) Recognition standard for cash equivalents
Cash equivalents of the Company refer to short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount of
cash and whose risks in change of value are minimal.
(6) Foreign currency
For a foreign currency occurred, the amount in the foreign currency shall be translated into the
amount in the functional currency at an approximate exchange rate with the spot exchange rate of
the transaction date. For the balance of foreign currency at the period-end in various foreign
currency accounts, the foreign currency monetary items shall be translated at the spot exchange
rate on the balance sheet date, the balance of exchange shall be recorded into the profits and losses
at the current period; except that the balance of exchange arising from foreign currency
borrowings for the purchase and construction or production of assets eligible for capitalization
shall be measured in the light of capitalization principle. The foreign currency non-monetary items
measured at the historical cost shall still be translated at the spot exchange rate on the transaction
date; the foreign currency non-monetary items measured at the fair value shall be translated at the
spot exchange rate on the fair value confirming date, the difference is taken as the changes in the
profit and loss of fair value.
(7) Recognition and measurement of financial instruments
A. Classification of financial assets and financial liabilities
Financial assets shall be classified into the following four categories when they are initially
recognized: (a) 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 financial31
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; (b) the investments which will be held to their maturity;
(c) loans and the account receivables; and (d) financial assets available for sale.
Financial liabilities shall be classified into the following two categories when they are initially
recognized: (a) the 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 which are measured at their fair values and of which the
variation is included in the current profits and losses; and (b) other financial liabilities.
B. Recognition basis and measurement method
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 by the
Company 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
value; 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: (a) 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;
(b) 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: (a) 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; (b 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. (c) 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: i. the best estimated
amount as outgone due to performing the relevant current obligation; or ii. the surplus after
accumulative amortization as determined according to the effective interest method is subtracted
from the initially recognized amount.32
C. Recognition 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 entire financial asset to be transferred and shall recognize the consideration it
receives 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: (a) If it gives up its control over the financial asset, it shall
stop recognizing the financial asset; (b) 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: (a) The book value of the transferred financial asset; (b) 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 2 items shall be included into the profits and
losses of the current period: (a) The book value of the portion whose recognition has been stopped;
(b) 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.
D. Determination of the fair value of financial assets and financial liabilities
As for the financial assets or financial liabilities for which there is an active market, the quoted
prices in the active market shall be used to determine the fair values thereof. Where there is no
active market for a financial instrument, the enterprise concerned shall adopt value appraisal
techniques (the value appraisal techniques mainly include the prices adopted by the parties, who
are familiar with the condition, in the latest market transaction upon their own free will, the
current fair value obtained by referring to other financial instruments of the same essential nature,
the cash flow capitalization method and the option pricing model, etc.) to determine its fair value.
As for the financial assets initially obtained or produced at source and the financial liabilities
assumed, the fair value thereof shall be determined on the basis of the transaction price of the
market.
E. Impairment inspection and withdrawal method of impairment provision for financial assets and
financial liabilities
The Company shall carry out an inspection, on the balance sheet day, on the carrying amount of
the financial assets other than those measured at their fair values and of which the variation is
recorded into the profits and losses of the current period. An impairment test shall be made on the
financial assets with significant single amounts. With regard to the financial assets with
insignificant single amounts, it shall be included in a combination of financial assets with similar
risk features so as to conduct another impairment test. Where, upon independent test, the financial
asset (including those financial assets with significant single amounts and those with insignificant33
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.
Where a financial asset which is measured on the basis of post-amortization costs and for which
there is any objective evidence proving that the impairment occurred, the impairment losses shall
be recognized in accordance with the balance between book value and the current value of the
predicted future cash flow. Where there is a very small gap between the predicted future cash flow
of a short-term account receivable item and the current value thereof, the predicted future cash
flow is not required to be capitalized when determining the relevant impairment-related losses.
Where an equity instrument investment for which there is no quoted price in the active market and
whose fair value cannot be reliably measured, or a derivative financial asset which is connected
with the equity instrument and which must be settled by delivering the equity instrument, suffers
from any impairment, the gap between the carrying amount of the equity instrument investment or
the derivative financial asset and the current value of the future cash flow of similar financial
assets capitalized according to the returns ratio of the market at the same time shall be recognized
as impairment-related losses. Where a fair value of financial assets available for sale drops by a
big margin or not contemporarily in anticipation, its impairment losses shall be recognized, the
accumulative losses arising from the decrease of the fair value of the owner’s equity which was
directly included shall be transferred out and recorded into impairment losses.
(8) Withdrawal method for reserve for bad debts of accounts receivable
A reserve for bad debts shall, in accordance with the balance of its current value of future cash
flow’s lowering than its book value, be withdrawn on accounts receivable (including accounts
receivable and other receivables) with significant single amounts and that there is any objective
evidence shows that it has been impaired and ones with insignificant single amounts but with the
greater risk after combination based on credit risk features; A withdrawal proportion for bad debts
reserve shall, based on the actual loss rate of accounts receivable combination with same aging
and combining the present situation, be confirmed on accounts receivable (including accounts
receivable and other receivables) with insignificant single amounts and those with significant
single amounts and there has not been impaired after independent test, Withdrawal proportions of
bad debts reserve are as follows:
Aging Withdrawal proportion
==================== =================
1-3 months -
4-12 months 5%
1-2 years 10%
2-3 years 20%
Over 3 years 50%
==================== =================
(9) Recognition and measurement of inventories
A. The term "inventories" refers to finished products or merchandise possessed by an enterprise
for sale in the daily of business, or work in progress in the process of production, or materials and
supplies to be consumed in the process of production or offering labor service.
B. The sending out inventories shall be measured by planned cost.
C. On the date of balance sheet, the inventories shall be measured whichever is lower in34
accordance with the cost and the net realizable value. The Company shall make provision for loss
on decline in value of inventories on the ground of the balance of the cost of inventories is higher
than the net realized value. Such merchandise inventory for sale directly as finished goods
inventories, merchandise and materials for sale, their net realizable value shall be the amount after
deducting estimated sale expense and relevant taxes from the estimated sale price of the
inventories in course of normal production and operation; the net realizable value of materials
inventories for processing shall be the amount after deducting the estimated cost of completion,
estimated sale expense and the relevant taxes from the estimated sale price of finished products in
course of normal production and operation; on the balance sheet date, for inventories with the
contract price and inventories without the contract price in the same inventories, their net
realizable value shall be measured separately, and comparing with their corresponding costs, their
amounts of provision for loss on decline in value of inventories withdrawn or carried forward shall
be confirmed respectively.
D. Inventory system for inventories: Perpetual inventory system shall be adopted.
E. The Company shall amortize the easily consumed products of low value and packing articles
and supplies by employing the one-off write-off method.
(10) Recognition and measurement of long-term equity investment
A. Recognition of initial investment cost of long-term equity investment
(a) For the merger of enterprises under the same control, if the consideration of the merging
enterprise is that it makes payment in cash, transfers non-cash assets or bear its debts or issue
equity securities, it shall, on the date of merger, regard the share of the book value of the owner's
equity of the merged enterprise as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the book value of
merger consideration paid or the total amount of the par value of share issued shall offset against
the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be
adjusted.
(b) For the merger under different control, the Company, on the date of merger, regards the fair
value of the merger consideration paid and various direct costs as the initial cost of the long-term
equity investment.
(c) Besides the long-term equity investments formed by the merger of enterprises, the initial cost
of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid; the initial cost of a long-term equity investment obtained on the basis of
issuing equity securities shall be the fair value of the equity securities issued; the initial cost of a
long-term equity investment of an investor shall be the value stipulated in the investment contract
or agreement except the unfair value stipulated in the contract or agreement.
B. A long-term equity investment that is controlled by the Company shall be accounted by
employing the cost method, and shall be made an adjustment by employing the equity method
when it works out consolidated financial statements. A long-term equity investment that does not
do joint control or does not have significant influence on the Company, and entity, and has no
offer in the active market and its fair value cannot be reliably measured, shall be measured by
employing the cost method. A long-term equity investment that does joint control or significant
influences over the Company shall be accounted by employing the equity method.
C. Recognition measurement for income from long-term equity investment
The price of a long-term equity investment measured by employing the cost method shall be35
included at its initial investment cost. If there are additional investments or disinvestments, the
cost of the long-term equity investment shall be adjusted. The dividends or profits declared to
distribute by the invested entity shall be recognized as the current investment income. The
investment income recognized by the investing enterprise shall be limited to the amount received
from the accumulative net profits that arise after the invested entity has accepted the investment.
Where the amount of profits or cash dividends obtained by the investing entity exceeds the
aforesaid amount, it shall be regarded as recovery of initial investment cost. The price of a
long-term equity investment measured by employing the equity method shall, in accordance with
the attributable share of the net profits or losses of the invested entity, recognize the investment
profits or losses and adjust the book value of the long-term equity investment. The investing
enterprise shall, in the light of the profits or cash dividends declared to distribute by the invested
entity, calculate the proportion it shall obtain, and shall reduce the book value of the long-term
equity investment correspondingly. Where any change is made to the owner's equity other than the
net profits and losses of the invested entity, the book value of the long-term equity investment
shall be adjusted and be included in the owner's equity. When disposing of a long-term equity
investment, the difference between its book value and the actual purchase price shall be included
in the current profits and losses. If any change other than the net profits and losses of the invested
entity occurs and is included in the owner's equity, the portion previously included in the owner's
equity shall, when disposing of a long-term equity investment measured by employing the equity
method, be transferred to the current profits and losses according to a certain proportion.
D. On the balance sheet date, where an long-term equity investment for which it is measured by
employing the cost method, there is no quoted price in the active market and whose fair value
cannot be reliably measured, there is any objective evidence proving that such long-term equity
investment has been impaired, shall be withdrawn provision for impairment of long-term equity
investment in the light of the gap between the book value of long-term equity investment and
current value of the future cash flow of similar investment according to the return ratio of the
market at the same time,. Where other investment for which there exist impairment signs, shall be
withdrawn provision for impairment of long-term equity investment in the light of the method
mentioned in IV (16) in the Notes to the Financial Statement.
E. Recognition basis of joint control and significant influences over the investing enterprises: the
joint control shall be recognized in the light of the control over an economic activity in accordance
with the contracts and agreements, which does not exist unless the investing parties of the
economic activity with one an assent on sharing the control power over the relevant important
financial and operating decisions. Significant influences shall be recognized in the light of 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. Where an investing enterprise is able to have significant influences on an invested entity,
the invested entity shall be its associated entity.
(11) Recognition and measurement of investment real estates
A. Investment real estates include: 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.
B. The initial measurement of the investment real estate shall be made at its cost. The Company
shall make a subsequent measurement to the investment real estate through the cost pattern36
C. An investment real estates measured through the cost pattern shall be withdrawn a depreciation
and made an amortization by employing the same method with fixed assets and intangible assets.
D. Where an investment real estates measured through the cost pattern for which there exist
impairment signs on the balance sheet, shall be withdrawn provision for impairment of investment
real estates in the light of the method mentioned in IV (16) in the Notes to the Financial Statement.
(12) Recognition and measurement of fixed assets
A. Fixed assets refers to the tangible assets that simultaneously possess the features as follows: (a)
they are held for the sake of producing commodities, rendering labor service, renting or business
management; and (b) their useful life is in excess of one fiscal year.
B. No fixed assets may be recognized unless it simultaneously meets the conditions as follows: (a)
the economic benefits pertinent to the fixed assets are likely to flow into the enterprise; and (b) the
cost of the fixed assets can be measured reliably. Where the subsequent expenditure related with
fixed assets, meeting the aforesaid recognition condition, shall be measured into the cost of the
fixed assets, while not meeting the aforesaid recognition condition, it shall be measured into the
profits and losses of the current period.
C. The initial measurement of fixed assets shall be made at its cost.
D. The Company shall account the depreciation of the fixed assets by employing the straight-line
method.
Category of fixed asset Useful life
Expected net
salvage value
Annual depreciation
rate (%)
================== =============== =========== ===============
House and building 40 years 10% 2.25%
Machinery equipment 20-30 years 10% 3-4.50%
Transport equipment 8 years 10% 11.25%
Other 5 -10 years 10% 9-18%
================== ============== =========== ===============
E. A fixed assets, for which it is stopped to use for six months in succession due to running under
its production capacity or natural disasters, shall be recognized idle fixed assets. The Company
shall withdraw depreciation of idle fixed assets by employing the method with other fixed assets.
F. On the balance sheet date, where a fixed assets for which there exist impairment signs, shall be
withdrawn provision for impairment of fixed assets in the light of the method mentioned in IV (16)
in the Notes to the Financial Statement.
(13) Recognition and measurement of construction in progress
A. No construction in progress may be recognized unless it simultaneously meets the conditions as
follows: a. the economic benefits are likely to flow into the Company, and b. the cost of the
construction in progress can be measured reliably. The construction in progress shall be measured
in the light of the actual cost when the assets complete and achieve estimated usable status.
B. Constructions in progress are carried down to fixed assets according to their actual costs when
completing and achieving estimated usable status. The fixed assets that have been completed and
reached estimated usable status but have not yet been through completion and settlement
procedures are charged to an account according to their estimate values; adjustment will be
conducted upon confirmation of their actual values.
C. On the balance sheet date, where a construction in progress for which there exist impairment37
signs, shall be withdrawn provision for impairment of the construction in progress in the light of
the method mentioned in IV (16) in the Notes to the Financial Statement.
(14) Recognition and measurement of intangible assets
A. The intangible assets shall be initially measured according to its cost.
B. In accordance with such integrative factors as intangible asset’s contractual right or other
statutory rights, same industry situation, historical experience as well as expert discussion, if it is
able to forecast the period when the intangible assets can bring economic benefit to the Company,
it shall be regarded as an intangible asset with certain service life; if it is unable to forecast the
period when the intangible assets can bring economic benefit to the Company, it shall be regarded
as an intangible asset with uncertain service life.
C. With regard to intangible assets with limited useful life, the following factors shall be
considered when the useful life is estimated: (aa) general life cycle of products manufactured with
the said assets, information of useful life of similar assets obtained; (b) estimation over the present
phase and future development tendency in the respect of technology and technics; (c) market
demand of products manufactured with the said assets and of labor service provided by the said
assets; (d) action taken by present or potential competitor; (e) expected maintain expenditure for
which it keeps economic benefit capacity brought by the said assets, and expenditure capacity paid
in advance by the Company; (f) such laws, regulations or the similar restriction related with
control period of the said assets, i.e. concession period and tenancy duration; and (g) relevance of
useful life of other assets held by the Company.
D. With regard to intangible assets with limited service life shall be amortized reasonably in
accordance with the expected realization pattern of the economic benefits which relevant to the
intangible assets within the service life, if it is unable to determine the expected realization pattern
reliably, intangible assets shall be amortized by the straight-line method. Intangible assets with
uncertain service life may not be amortized, but the Company shall check the service life of the
said intangible assets for every year, and make impairment testing.
E. On the balance sheet date, the Company shall check future economic benefit capacity is
expected to be brought by the intangible asset to it. And the said intangible assets shall be
withdrawn provision for impairment in the light of the method mentioned in IV (16) in the Notes
to the Financial Statement.
F. The research expenditures for its internal research and development projects of the Company
shall be recorded into the profit or loss for the current period. The development expenditures for
its internal research and development projects of the Company may be confirmed as intangible
assets when they satisfy the following conditions simultaneously:(a)It is feasible technically to
finish intangible assets for use or sale;(b)It is intended to finish and use or sell the intangible
assets;(c)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;(d)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 (e)The development expenditures of the
intangible assets can be reliably measured.
(15) Recognition and measurement of goodwill
The goodwill shall be recognized on the light of the positive balance between the business38
combination costs not under the same control and the fair value of the identifiable net assets it
obtains from the investee or acquiree on the day of acquisition or purchase.
The goodwill related to the subsidiaries shall be shown separately in the consolidated financial
statement, while the goodwill related to the affiliated enterprises and associated enterprises shall
be included into the carrying value of long-term equity investment.
The goodwill shown separately in the financial statement shall be subject to an impairment test at
least at the end of each year. When the Company makes an impairment test of assets, the carrying
value of the goodwill shall be apportioned to the beneficial asset groups or combinations of asset
groups in the light of synergistic effect of business combination.
(16) Impairment of assets
A. The Company shall, on the balance sheet date, make a judgment of assets (excluding
inventories, equity instrument investment without quoted price in the active market and whose fair
value cannot be reliably measured, investment real estates measured by fair value pattern,
consumptive biological assets, assets formed by construction contracts, deferred income tax assets,
unsecured residual value of the lessor in a financial leasing and assets out of financial assets) on
whether there is any sign of possible assets impairment. With there is any evidence indicating a
possible impairment of assets, the Company shall, on the basis of single item assets, estimate the
recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of the
group assets on the basis of the asset group to which the asset belongs.
B. The recoverable amount shall be determined in light of the higher one of the net amount of the
fair value of the single item assets, assets group, or combination of group assets minus the disposal
expenses and the current value of the expected future cash flow of the single item assets, assets
group, or combination of group assets.
C. Where the recoverable amount of the single assets is lower than its book value, its
corresponding provision for impairment of assets shall be recognized shall be withdrawn in
according to the balance of the book value of the single assets and the recoverable amount. Where
the recoverable amount of an asset group or a combination of asset groups is lower than its book
value, it shall be recognized as the corresponding impairment loss. The amount of the impairment
loss shall first charge against the book value of the headquarter' assets and goodwill which are
apportioned to the asset group or combination of asset groups, then charge it against the book
value of other assets in proportion to the weight of other assets in the asset group or combination
of asset groups with the goodwill excluded. The charges against the book value of the assets above
shall be treated as the impairment loss of the assets (including the goodwill) and shall be
withdrawn the provision for impairment of single assets.
D. Once any loss of asset impairment is recognized, it shall not be switched back in the future
accounting period.
(17) Recognition and measurement of borrowing costs
A. Recognition principle for 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
on the basis of the actual amount incurred, and shall be recorded into the current profits and losses.
The term "assets eligible for capitalization" shall refer to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may take39
quite a long time to get ready for its intended use or for sale.
B. Period of capitalization of borrowing costs
(a) The borrowing costs shall not be capitalized unless they simultaneously meet the following
requirements:(i)The asset disbursements have already incurred; (ii) The borrowing costs has
already incurred; and (iii)The acquisition and construction or production activities which are
necessary to prepare the asset for its intended use or sale have already started.
(b) Suspension of capitalization: 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, till the acquisition and construction or production of
the asset restarts.
(c) Ceaseing of capitalization: When the qualified asset under acquisition and construction or
production is ready for the intended use or sale, the capitalization of the borrowing costs shall be
ceased.
C. Capitalized amount of borrowing costs
As for specifically borrowed loans for the acquisition and construction or production of assets
eligible for capitalization, the to-be-capitalized amount of interests shall be determined in light of
the actual cost (including amortization of depreciation or premium recognized by the actual rate
method) incurred of the specially borrowed loan at the present period minus the income of
interests earned on the unused borrowing loans as a deposit in the bank or as a temporary
investment; Where a general borrowing is used for the acquisition and construction or production
of assets eligible for capitalization, the Company shall calculate and determine the
to-be-capitalized amount of interests on the general borrowing by multiplying the weighted
average asset disbursement of the part of the accumulative asset disbursements minus the general
borrowing by the capitalization rate (weighted average rate) of the general borrowing used. During
the period of capitalization, the amount of interest capitalized during each accounting period shall
not exceed the amount of interest actually incurred to the relevant borrowings in the current period.
During the period of capitalization, the exchange balance on foreign currency borrowings shall be
capitalized, and shall be recorded into the cost of assets eligible for capitalization. For the
ancillary expense incurred to a specifically borrowed loan, those incurred before a qualified asset
under acquisition, construction or production is ready for the intended use or sale shall be
capitalized at the incurred amount when they are incurred; those incurred after a qualified asset
under acquisition and construction or production is ready for the intended use or sale shall be
recorded into the profits and losses of the current period. The ancillary expenses arising from a
general borrowing shall be recognized as expenses at their incurred amount when they are
incurred, and shall be recorded into the profits and losses of the current period.
(18) Recognition principle of revenue
A. Selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: a. The significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; b. The enterprise retains neither continuous management
right that usually keeps relation with the ownership nor effective control over the sold goods; c.
The relevant amount of revenue can be measured in a reliable way; d. The relevant economic
benefits may flow into the enterprise; and e. The relevant costs incurred or to be incurred can be40
measured in a reliable way.
B. Providing labor services
If the Company can, on the date of the balance sheet, reliably estimate the outcome of a
transaction concerning the labor services it provides (The outcome of a transaction concerning the
providing of labor services can be measured in a reliable way, means that the following conditions
shall be met simultaneously: a. The amount of revenue can be measured in a reliable way; b. The
relevant economic benefits are likely to flow into the enterprise; c. The schedule of completion
under the transaction can be confirmed in a reliable way; and d. The costs incurred or to be
incurred in the transaction can be measured in a reliable way), it shall recognize the revenue from
providing services employing the percentage-of-completion method. And the Company shall
ascertain the schedule of completion under the transaction concerning the providing of labor
services in accordance with the measurement of the work completed. If an enterprise can not, on
the date of the balance sheet, measure the result of a transaction concerning the providing of labor
services in a reliable way, it shall be conducted in accordance with the following circumstances,
respectively: a. 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; or b. 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.
C. Abalienating the right to use assets
No revenue from abalienating of right to use assets may be recognized unless the following
conditions are met simultaneously: a. the relevant economic benefits are likely to flow into the
enterprise; and b. the amount of revenues can be measured in a reliable way. The amount of
interest revenue should be measured and confirmed in accordance with the length of time for
which the enterprise's cash is used by others and the actual interest rate; or the amount of royalty
revenue should be measured and confirmed in accordance with the period and method of charging
as stipulated in the relevant contract or agreement.
(19) Recognition and measurement of income taxes
A. Where there is difference between the book value of the assets or liabilities and its tax base (As
for an item that has not been recognized as an asset or liability, if its tax base can be determined in
light of the tax law, the difference between the tax base and its book value), the deferred income
tax assets or the deferred income tax liabilities shall be determined according to the applicable tax
rate in the course of prospective recovering assets or discharging liabilities.
B. The Company shall recognize the deferred income tax assets in accordance with the extent of
the amount of the taxable income which it is most likely to obtain and which can be deducted from
the deductible temporary difference. On the balance sheet date, where there is any exact evidence
showing that it is likely to acquire sufficient amount of taxable income tax in a future period to
offset against the deductible temporary difference, the deferred income tax assets unrecognized in
prior periods shall be recognized.
C. The carrying amount of deferred income tax assets shall be reexamined on balance sheet day. If
it is unlikely to obtain sufficient taxable income taxes to offset the benefit of the deferred income
tax assets, the carrying amount of the deferred income tax assets shall be written down. When it is
probable to obtain sufficient taxable income taxes, such write-down amount shall be subsequently41
reversed.
D. On the basis of measuring and recognizing income taxes of the current period (income taxes
payable of the current period) and deferred income tax (or income), the summation of both the
income taxes of the current period and deferred income tax of an enterprise shall be recognized as
income tax expenses or incomes in the income statement, but excluding influence on income tax
due to the transactions or events directly recognized as the owner's rights and interests.
(20) Preparation method of the consolidated financial statement
Parent company shall bring all subsidiaries under its control into the consolidation scope of
consolidated financial statement. In line with the Accounting Standard for Business Enterprise No.
33 – Consolidated Financial Statement, the consolidated financial statement shall be prepared by
parent company on the basis of the both financial statement of parent company and its subsidiaries
after adjusting long-term equity investment over its subsidiaries based on equity method in
accordance with other relevant information.
V. Change in accounting policies and accounting estimates and correction of accounting errors:
During the reporting period, there are no changes in accounting policies, accounting estimates and
correction of accounting errors.
VI. Taxation
Main taxes types and tax rate are applicable to the Company as follows:
1. Value-added tax (VAT)
VAT was paid based on tax rate of 17%.
2. Business tax
Business tax was paid based on tax rate of 5% of taxable income payable.
3. City maintenance and construction tax
City maintenance and construction tax was based on tax rate of 7% of turnover tax payable.
4. Educational surtax
Education surtax was based on tax rate of 3% of turnover tax payable.
5. Income tax
Income tax was paid based on 25% of taxable income.
The corporate income tax of Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd., the subsidiary
company controlled by the Company, in accordance with the Circular on the Implementation of
Transitional Preferential Enterprise Income Tax Policies (Guo-Fa [2007] No. 39 document)
issued by the State Council, shall be gone over into the statutory tax step by step within five years
since 2008. Of which, the income tax rate for this company in 2008 is 18%, and 20% in 2009,
22% in 2010, 24% in 2011, and 25% in 2012. On 14 Dec. 2009, Zhuhai S.E.Z. Hongta Renheng
Paper Co., Ltd. was recognized as a New High-tech Enterprise (but failed to obtain the Certificate
of New High-tech Enterprise until the reporting date), therefore, the said company shall pay
enterprise income tax at a 15-percent of amount of taxable income.
As approved by the State Tax Bureau of Foshan Chancheng District, Huaxin (Foshan) Color
Printing Co., Ltd., a shareholding subsidiary of the Company, enjoyed preferential taxation
policies of “two-year CIT exemption and three-year 50% CIT reduction” since year 2006, that is
to say, the CIP was exempted between 2006 and 2007, and CIT should be half reduced from 2008
to 2010.42
VII. Enterprise combination and consolidated financial statement
(I) Subsidiary company
1. Subsidiaries obtained through enterprise combinations under the same control
Proportion of
shares held by
the Company
---------
Full name of
subsidiaries
Registrat
ion place
Organization
code
Registered
capital
Natural of
business and
business scope
Actual
investment
amount up to
the
period-end
Net investment
balance over
subsidiaries in
fact
directl
y
indire
ctly
========= ===== ========= ======== ============ ========= ========== === ===
Zhuhai Huafeng
Paper Co., Ltd.
Zhuhai 61762142-1
CNY984,560,0
00
Manufacturing and
sale of high-class
paper and paper board
1,068,971,500 --- --- 100%
Huaxin (Foshan)
Color Printing
Co., Ltd.
Foshan
72111733-X
USD12,80
0,000
Process and printing of
packaging or
decorating printing
products, domestic and
export sales of
products
72,674,100
--- 75% ---
========== ====== ========= ========= ============== ========= ========== ==== ====
2. Subsidiaries obtained through enterprise combinations not under the same
control
Proportion of
shares held by
the Company
---------
Full name of
investees
Registrat
ion place
Organization
code
Registered
capital
Natural of business and
business scope
Actual
investment
amount up
to the
period-end
Net
investmen
t balance
over
subsidiarie
s in fact
directl
y
indire
ctly
============== ===== ======== ======= ================ ======= ======= === ===
Zhuhai S.E.Z Hongta
Renheng Paper Co.,
Ltd.
Zhuhai 61750210-7
USD243,61
0,000
manufacturing and selling
self-produced high-grade
packaging paperboard
927,570,00
0
---
41.965
3%
---
Zhuhai Hengshun
Supply Chain
Logistical Service
Co., Ltd.
Zhuhai 78485447-6
CNY30,000,0
00
International Cargo
Transportation agent
22,500,000 --- --- 75%
============= ===== ======== ======= ================ ======= ======= === ===
Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd., the subsidiary held by the Company,
intends to sign an Equity Transfer Agreement with China Logistical Corporation,43
which it transfer its 51% equities of Zhuhai Hengshun Supply Chain Logistical
Service Co., Ltd. to China Logistical Corporation. As at the end of reporting period,
the said transaction was not completed yet.
3. Subsidiaries obtained not through enterprise combinations
Proportion of
shares held by
the Company
---------
Full name of
investees
Registrat
ion place
Organization
code
Registered
capital
Natural of business
and business scope
Actual
investment
amount up to
the period-end
Net investment
balance over
subsidiaries in
fact
directl
y
indirec
tly
=========== ===== ========= ========= ============ ========= ========== ==== ====
Foshan Huazhi
Waste Paper
Recycling Co.,
Ltd.
Foshan
77620148-3 CNY5000000
Purchase and
sale of waste
paper and
waste
newspaper
5000000 --- --- 100%
Pearl River Color
Printing Co., Ltd.
of Chancheng
District, Foshan
Foshan
70817367-9 CNY1500000
Printing other
printed matter,
design & production
and release of
advertising
1500000 --- --- 100%
Foshan Huaxin
Jinfeng Industrial
Co., Ltd.
Foshan
67889495-X CNY3000000
Investing and
industrial 3000000 ---
100
%
---
Foshan Chengtong
Paper Co., Ltd
Foshan
68641217-2
CNY30000000
0
manufacturing and
selling high-grade
paper and paper
board
225000000 --- 75% ---
=========== ===== ========= ========= ============ ========= ========== === ====
(II) Change in consolidation scope in the reporting period
There is no change in consolidation scope in the reporting period.
(III) Minority interests
Full name of subsidiaries Minority interests
Amount of
minority
shareholder’s
gains and
losses offset
from
minority
shareholders’
equity
Balance of losses as of
this period borne by
minority shareholder of
subsidiaries exceeding
share enjoyed by
minority shareholders in
owner’s equity at the
period-begin offset from
owner’s equity of parent44
company
=========================== ============== ======== =================
Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd.
1,342,961,042.40 --- ---
Zhuhai Hengshun Supply Chain Logistical
Service Co., Ltd.
7,288,899.28 --- ---
Huaxin (Foshan) Color Printing Co., Ltd.
35,705,834.95
--- ---
Foshan Chengtong Paper Co., Ltd 76,546,207.42 --- ---
Total 1,462,501,984.05 --- ---
=========================== ============== ======== =================
VIII. Notes to the consolidated financial statement
Unless otherwise stated in the following items, amount at the closing balance refers to
data as at 30 June 2010, opening balance refers to data as at 1 January 2010, amount
of the current period refers to data from 1 January to 30 June 2010, the amount of last
period refers to data from 1 January to 30 June 2009.
(I) Monetary fund
Closing balance Opening balance
Items ------------------------------- ---------------------------------
Original
currency
Rate of
exchan
ge
Amount
converted into
RMB
Original
currency
Rate of
exchang
e
Amount
converted into
RMB
================== ========== ===== ========== ========= ====== ============
Cash — CNY --- --- 427,174.59 --- --- 336,419.90
Cash —HKD 31,527.29 0.8724 27,504.41 47,430.79 0.8804 41,772.83
Cash —USD 15,110.70 6.7909 102,615.25 15,860.70 6.8282 108,300.03
Bank deposit—HKD 6,526,066.51 0.8724 5,693,340.42 3,399,875.09 0.8804 2,993,401.45
Bank deposit—USD 5,157,657.97 6.7909 35,025,139.51 4,217,355.51 6.8282 28,797,119.60
Bank deposit—EUR 40,788.98 8.2710 337,365.65 2,573.98 9.7971 25,217.54
Bank deposit—CNY --- --- 271,890,985.28 --- --- 296,265,516.41
Other monetary fund
—CNY
--- --- 152,848,735.29 --- --- 15,280,714.36
Other monetary fund
—USD
--- --- --- 306.29 6.8282
2,091.41
------------ ------------
Total 466,352,860.40 343,850,553.53
========== ============45
1. Closing amount of monetary fund has increased by RMB 122,502,306.87 than the
opening amount, an increase of 35.63%, which was mainly because the expansion of
our production scale.
2. Closing amount of other monetary fund is RMB 152,848,735.29, of which, RMB
152,530,504.15 is margin paid into the bank for bank acceptance bill and letter of
credit, and others is credit card deposit.
3. Except for statement mentioned in above “2”, there was no payment with restricted
realization due to mortgage or freezing or deposited in overseas as well as with
potential risk.
(II) Notes receivable
Type Closing balance Opening balance
============================ ============= =============
Bank Acceptance Bill 270,881,168.90 118,884,296.65
Total
270,881,168.90 118,884,296.65
============= =============
1. There is no pledged note receivable at the end of reporting period.
2. By the end of reporting period, there are notes of RMB 236,347,687.37 that the endorsement
has been made but not yet due. Maturity date related to such notes would be 1 Jul. 2010 to 30 Jan.
2011.
(III) Accounts receivable
1. Composing of accounts receivable
Closing balance Opening balance
---------------------------------- ---------------------------------Items -
Book balance
Proport
ion
Reserve for bad
debts
Book balance
Proport
ion
Reserve for bad
debts
================ ============ ===== =========== ============== ===== =============
Accounts receivable
with significant single
amounts
220,320,037.32 28.92% 11,266,851.41 450,210,623.65 50.32% 11,266,851.41
Accounts receivable
with insignificant
single amounts but
with significant credit
risk
26,034,913.03 3.42% 20,736,755.78 22,952,921.42 2.57% 20,736,755.78
Other insignificant
515,384,613.18 67.66% 8,027,827.45 421,509,147.00 47.11% 8,027,827.45
------------- ----- ----------- -------------- ------ -------------
Total 761,739,563.53 100% 40,031,434.64 894,672,692.07 100% 40,031,434.64
============ ===== =========== ============ ===== ===========46
2. Aging analysis
Closing balance Opening balance
Aging ---------------------------------- ----------------------------------
Book balance
Proporti
on
Reserve for bad
debts
Book balance
Proporti
on
Reserve for bad
debts
============ ============ ===== =========== ============ ===== ===========
1-3 months 501,384,132.19 65.82% --- 767,862,008.25 85.83% ---
4-12 months 193,066,274.68 25.35% 1,451,281.28 54,181,564.76 6.06% 2,551,314.04
1-2 years 12,545,316.77 1.65% 2,348,904.84 26,878,815.55 3.00% 2,687,881.55
2-3 years 13,493,767.87 1.77% 2,133,539.67 6,970,018.41 0.78% 1,435,436.03
Over 3 years 41,250,072.02 5.41% 34,097,708.85 38,780,285.10 4.33% 33,356,803.02
-------------- --------------
Total 761,739,563.53 100% 40,031,434.64 894,672,692.07 100% 40,031,434.64
============ ===== =========== ============ ===== ===========
3. Up to 30 June 2010, there is no balance of accounts receivable due from
shareholders who own five or over five percent voting rights.
4. The top 5 arrearage in accounts receivable at the period-end
Name of debtor Arrearage
Term limit of
arrearage
Proportion in
total accounts
receivable
============================ ============ ======== ========
1st 75,864,952.00
Within 1 year
9.96%
2nd 21,470,645.30
Within 1 year
2.82%
3rd 17,831,230.97
Within 1 year
2.34%
4th 15,347,837.15
Within 1 year
2.01%
5th 13,954,196.80
Within 1 year
1.83%
================================ ============== ========= ==========
6. Accounts receivable – foreign currency balance
Closing balance Opening balance
---------------------------------- -----------------------------------
Currency
Original currency
Rate of
exchange
Converted into
RMB
Original currency
Rate of
exchange
Converted into
RMB
====== =========== ====== =========== =========== ====== ===========
USD 26,975,442.42 6.7909 183,187,531.93 9,392,365.22 6.8282 64,143,693.1247
HKD 19,841,806.83 0.8724 17,309,992.28 67,169,957.93 0.8804 59,097,613.22
EURO --- --- --- 1.01 9.7971 9.90
Total 200,497,524.21 123,241,316.24
=========== ===========
(IV) Prepayments
1. Aging analysis
Closing balance Opening balance
------------------------- ------------------------Aging -
Book balance Proportion Book balance Proportion
=============== ============== ====== ============== ======
Within 1 year 11,098,225.51 84.40% 54,602,898.85 89.63%
1-2 years 1,872,820.21 14.24% 4,762,742.64 7.82%
2-3 years 4,312.00 0.03% 1,374,474.60 2.26%
3 years 175,000.00 1.33% 177,805.85 0.29%
Total 13,150,357.72 100% 60,917,921.94 100%
============== ====== ============== ======
2. Prepayments that are material in amount
Name of debtor Amount
Nature or
Contents
======================================= ============= ==========
1st 1,801,300.00 Payment for
equipment
2nd 1,678,392.92 Project funds
3rd
1,367,854.96 Payment for
equipment
4th
1,305,980.60 Payment for
goods
5th 927,000.00 Payment for
equipment
======================================= ============= ==========
3. Up to 30 June 2010, there is no balance of prepayments due from shareholders who
own five or over five percent voting rights.
4. Prepayment– foreign currency balance
Currency Closing balance Opening balance48
---------------------------------- -----------------------------------
Original currency
Rate of
exchange
Converted into
RMB
Original currency
Rate of
exchange
Converted into
RMB
====== =========== ====== =========== =========== ====== ===========
USD --- 193,378.14 6.8282 1,320,772.70
HKD --- ---
EURO --- 17,525.00 9.7971 171,694.18
Total --- 1,492,466.88
=========== ===========
(V) Other receivables
1. Composing of other receivables
Closing balance Opening balance
--------------------------------- ---------------------------------Items -
Book balance
Proport
ion
Reserve for
bad debts
Book balance
Proport
ion
Reserve for bad
debts
================ =========== ===== ========== =========== ====== ===========
Accounts receivable
with significant single
amounts
40,386,074.45 66.21% 6,070,880.31 18,308,872.88 45.71% 6,000,000.00
Accounts receivable
with insignificant
single amounts but
with significant credit
risk
4,104,505.37 6.73% 3,946,179.73 3,991,744.73 9.96% 3,881,179.73
Other insignificant
16,505,174.48 27.06% 1,138,252.80 17,756,701.83 44.33% 1,274,133.11
---------------------- ------------------------
Total 60,995,754.30 100% 11,155,312.84 40,057,319.44 100% 11,155,312.84
=========== ===== ========== =========== ===== ===========
2. Aging analysis
Closing balance Opening balance
Items -------------------------------- --------------------------------
Book balance
Proporti
on
Reserve for bad
debts
Book balance
Proporti
on
Reserve for bad
debts
============ =========== ===== ========== =========== ===== ===========49
1-3 months 31,506,401.75 51.65% --- 6,241,993.26 15.58% ---
4-12 months 2,881,882.71 4.73% 118,489.07 3,168,571.65 7.91% 157,778.58
1-2 years 7,759,489.46 12.72% 274,897.84 12,959,916.15 32.35% 291,996.15
2-3 years 3,910,754.91 6.41% 380,043.49 4,364,578.49 10.90% 388,655.67
Over 3 years 14,937,225.47 24.49% 10,381,882.44 13,322,259.89 33.26% 10,316,882.44
------------------------- --------------------------
Total 60,995,754.30 100% 11,155,312.84 40,057,319.44 100% 11,155,312.84
=========== ===== ========== =========== ===== ===========
3. Up to 30 June 2010, there is no balance of other receivables due from shareholders who
own five or over five percent voting rights.
4. The top 5 arrearage in other receivables at the period-end
Name of debtor Arrearage Kind or contents
Term limit
of arrearage
Proportion in total
other receivables
================== =========== ============ ======== ===========
1st 12,308,872.88
Correspondent
Payment
1-3 years
20.18
2nd 31,562,526.72
Correspondent
Payment
With 1 year
51.75
3rd 6,000,000.00
Correspondent
Payment
Over 3 years
9.84
4th 2,596,547.16
Correspondent
Payment
With 1 year
4.26
5th 2,379,823.79
Correspondent
Payment
2-3 years
3.90
================== ============= ============== ========= ===========
(VI) Inventory
1. Composing of inventory
Closing balance Opening balance
--------------------------- --------------------------Items -
Book balance
Reserve for falling
price
Book balance
Reserve for falling
price
================ ============ =========== ============ ===========50
Raw materials 514,921,429.66 30,029.46 434,825,080.75 30,029.46
Goods in production 28,717,544.99 --- 26,219,366.91 ---
Finished products 454,557,485.25 1,245,724.64 222,225,379.23 1,245,724.64
Low-value consumption
goods 33,036,578.94 --- 35,231,462.24 ---
Materials in transit 3,702,681.66 --- 6,366,112.19 ---
Total 1,034,935,720.50 1,275,754.10 724,867,401.32 1,275,754.10
============ =========== ============ ===========
2. Reserve for falling price of inventory
Decrease for the current period
---------------------Items -
Opening
carrying balance
Withdrawal for
the current
period
Reversal Writing off
Closing
carrying
balance
================ ========== ========== ========== ======= =========
Raw materials 30,029.46 --- --- --- 30,029.46
Goods in production --- --- --- --- ---
Finished products 1,245,724.64 --- --- --- 1,245,724.64
Low-value consumption
goods --- --- --- --- ---
Materials in transit --- --- --- --- ---
Total 1,275,754.10 --- --- --- 1,275,754.10
========== ========== ========== ======= =========
Note: As at the period-end, if the cost of inventories is higher than the net realizable
value, the reserve for falling price of inventories shall be made. The net realizable
value is recognized that in the daily business activity the amount after deducting the
estimated cost of completion, estimated sale expense and relevant taxes from the
estimated sale price of inventories.
(VII) Other current assets
Items
Character or
content
Closing balance Opening balance
Insurance premium Expenses to be
apportioned
---
210,122.54
Other Expenses to be 182,115.86 112,802.0351
apportioned
---------------------------- --------------------------
Total 182,115.86 322,924.57
=========== ===========
(VIII) Sales of available-for-sale financial assets
Items Closing fair value Opening fair value
Available-for-sale equity instrument 3,385,014.86 3,647,180.02
Total 3,385,014.86 3,647,180.02
Note: Equity instrument available for sale is 385,537 shares subject to trading moratorium of
Zhuhai S.E.Z Fuhua Group Co., Ltd. after completing SMR, which are held by Zhuhai S.E.Z
Hongta Renheng Paper Co., Ltd. (a subsidiary of the Company), while such shares had been
transferred into circulating shares since the end of 2007.
(IX) Long-term equity investment
Closing balance Opening balance
-------------------------- --------------------------
Items
Book balance
Reserve for
impairment
Book balance
Reserve for
impairment
=============== ============== =========== ============ ============
Investment in affiliated
enterprises
173,126,755.57 --- 209,901,041.18 ---
Other equity investment 113,558.00 --- 113.558.00 ---
----------------------------- ------------------------ --------------------------- ---------------------------
Total 173,240,313.57 210,014,599.18
============= ============ ============= ============
1. Long-term equity investment measured at cost method
Name of investing
enterprise
Proportion
of shares
held
Initial investment
amount
Opening balance
Increase
for the
current
period
Decrease
for the
current
period
Closing balance
================= ===== =========== =========== ===== ===== ===========
Guangdong
Development Bank Co.,
Ltd.
0.0004% 113,558.00 113,558.00 --- --- 113,558.0052
-------------------------- --------------------------- ------------ ------------ --------------------------
Total 113,558.00 113,558.00 113,558.00
=========== =========== ===== ===== ===========
2. Long-term equity investment measured at equity method
Increase/decrease for the current period
-----------------------------
Name of investing
enterprise
Initial
investment
amount
Additional
investment
Opening balance Net gains and
losses adjusted
based on
equity method
Cash dividends
distributed
Change
in other
equity
Closing balance
=============== =========== ==== =========== =========== =========== ====== ===========
Affiliated
enterprise:
Tetra Huaxin
(Foshan) Packing
Co., Ltd.
145,945,947.55 --- 209,901,041.18 26,758,752.61 63,533,038.22 --- 173,126,755.57
----------- ---- ----------- ----------- ----------- ------ -----------
Total 145,945,947.55 --- 209,901,041.18 26,758,752.61 63,533,038.22 --- 173,126,755.57
=========== ==== =========== =========== =========== ====== ===========
Name of investing
enterprise
Registr
ation
place
Business
nature
Proport
ion of
shares
held by
the
Compa
ny
Voting
right
proportio
ns in
investing
enterprise
Total net assets
at the period-end
Total operating
income for the
current period
Net profit for the
current period
============= ===== ======= ===== ======= ============== ============== ============
Affiliated
enterprise:
Tetra Huaxin
(Foshan) Packing
Co., Ltd.
Foshan
Sino-fore
ign joint
venture
enterprise
25% 25% 692,507,022.30 507,878,878.77 107,035,010.43
============= ===== ======= ===== ======= ============ ============== ============
(X) Investment real estate
Items Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
=================== =========== =========== =========== ===========53
Original price
House and building 6,098,064.52 --- --- 6,098,064.52
Land use right --- --- --- ---
Total 6,098,064.52 ---- --- 6,098,064.52
--------------------------- -------------------------- ------------------------- ---------------------------
Accumulative depreciation
House and building 2,140,460.69 82,093.62 --- 2,222,554.31
Land use right --- --- --- ---
Total 2,140,460.69 82,093.62 --- 2,222,554.31
--------------------------- ------------------------- -------------------------- ---------------------------
Accumulative amount of
reserve for impairment
House and building --- --- --- ---
Land use right --- --- --- ---
Total --- --- --- ---
-------------------- -------------------------- -------------------------- --------------------------
Book value
House and building 3,957,603.83 -82,093.62 --- 3,875,510.21
Land use right --- --- --- ---
Total 3,957,603.83 -82,093.62 --- 3,875,510.21
=========== =========== =========== ===========
(XI) Fixed assets
1. Original price of fixed assets
Type Opening balance
Increase for the current
period
Decrease for the
current period
Closing balance
========== ============== ============== =========== ==============
House and
building
1,122,295,051.90 2,100,470.36
--- 1,124,395,522.26
Machinery
equipment
3,152,649,381.83 13,506,409.20
--- 3,166,155,791.03
Transportation
equipment
53,663,907.20 1,808,381.62
534,937.00
54,937,351.82
Other 109,936,648.83 3,157,742.77 ---- 113,094,391.60
---------------- ---------------- ------------- ----------------
Total 4,438,544,989.76 20,573,003.95 534,937.00 4,458,583,056.7154
============== ============== =========== ==============
Of which: During current period, the amount of fixed assets that are transferred from
completion of construction in progress is RMB 6,223,838.61.
As at the end of reporting period, the book value of fixed assets that are used for
pledge or guarantee is RMB 1,708,425,418.00.
2. Accumulative depreciation
Type Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
========== ============== ============ ============ =============
House and
building
215,077,168.90 14,287,732.93 ----
229,364,901.83
Machinery
equipment
812,789,555.53 54,072,121.81 ----
866,861,677.34
Transportation
equipment
35,914,771.09 2,092,927.05 528,838.00 37,478,860.14
Other 47,564,876.67 3,780,017.95 ---- 51,344,894.62
---------------- -------------- -------------- ---------------
Total 1,111,346,372.19 74,232,799.74 528,838.00 1,185,050,333.93
============== ============ ============ =============
3. Impairment of assets
Type Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
=========== ============== ============ ============ ============
Machinery
equipment
75,885,983.34 ---- ---- 75,885,983.34
---------------------------------- ------------------------------ ------------------------------ ------------------------------
Total
75,885,983.34 ---- ---- 75,885,983.34
============== ============ ============ ============
4. Carrying value of fixed assets
Type Closing balance Opening balance
=============================== ============= ==============
House and building 895,030,620.43 907,217,883.00
Machinery equipment 2,223,408,130.35 2,263,973,842.96
Transportation equipment 17,458,491.68 17,749,136.1155
Other 61,749,496.98 62,371,772.16
--------------------------- -----------------------------
Total
3,197,646,739.44 3,251,312,634.23
============= ==============
(XII) Construction in progress
1. Category of construction
Decrease for the current
period
---------------------
Name of projects
Opening
balance
Increase for
the current
period
Transferring
into fixed
assets
Other
decrease
Closing
balance
Resource of
funds
============ ========== ========== ========= ======== ========= ======
Renovation project
of white board
paper
2,467,290.20 3,267,012.80 5,734,303.00 ---- ---- Self-financing
Color printing
equipment
608,365.40 1,406,908.96 489,535.61 ---- 1,525,738.75 Self-financing
Reformation project
for color printing
plant
372,388.45 161,327.58 ---- ---- 533,716,03 Self-financing
Project for
production line of
Chengtong Plant
807,494.64 501,240.02 ---- ---- 1,308,734.66 Self-financing
Reformation project
for production line
of Huafeng Plant
---- 3,986,097.80 ---- ---- 3,986,097.80 Self-financing
Reformation project
for Hongta Plant
---- 2,070,000.00 ---- ---- 2,070,000.00 Self-financing
---------- ----------- ----------- --------- --------- ----
Total 4,255,538.69 11,392,587.16 6,223,838.61 ---- 9,424,287.24
========== ========== ========= ======== ========= ====
2. Construction in progress refers to an unfinished project under construction. As reviewed to the
actual construction of each project, there is no situation on reserve for impairment.56
(XIII) Intangible assets
1. Original value of intangible assets
Items
Opening original
value
Increase for the
current period
Decrease for the
current period
Closing original
value
============= =========== =========== =========== ===========
Land use right of
Hongta Renheng
63,195,561.60 ---- ---- 63,195,561.60
Land use right of
Chengtong Paper
26,254,010.50 ---- ---- 26,254,010.50
Land use right of
Color Printing
18,683,351.22 ---- ---- 18,683,351.22
Land use right of
Huafeng Co.
16,138,245.38 ---- ---- 16,138,245.38
Other 12,246,175.16 83461.54 951,221.94 11,378,414.76
---------------------------- ------------------------- -------------------------- --------------------------
Total 136,517,343.86 83461.54 951,221.94 135,649,583.46
=========== =========== =========== ===========
2. Accumulative amortization
Items Opening balance
Amortization for
the current period
Decrease for the
current period
Closing balance
============= =========== =========== =========== ===========
Land use right of
Hongta Renheng
15,451,067.82 684,804.30 ---- 16,135,872.12
Land use right of
Chengtong Paper
384,754.09 329,789.22 ---- 714,543.31
Land use right of
Color Printing
1,236,893.36 187,588.80 ---- 1,424,482.16
Land use right of
Huafeng Co.
7,007,312.55 2,123,137.32 ---- 9,130,449.87
Other 1,595,981.29 -190,361.86 ---- 1,405,619.43
---------------------------- ---------------------------- ---------------------------- ---------------------------
Total 25,676,009.11 3,134,957.78 ---- 28,810,966.89
============= ============= ============= =============
3. Carrying value of intangible assets
Items Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance57
============= =========== =========== =========== ===========
Land use right of
Hongta Renheng
47,744,493.78
-684,804.30
----
47,059,689.48
Land use right of
Chengtong Paper
25,869,256.41 -329,789.22 ---- 25,539,467.19
Land use right of
Color Printing
17,446, 457.86 -187,588.80 ---- 17,258,869.06
Land use right of
Huafeng Co.
9,130,932.83 -2,123,137.32 ---- 7,007,795.51
Other 10,650,193.87 273,823.40 951,221.94 9,972,795.33
--------------------------- ---------------------------- --------------------------- ----------------------------
Total 110,841,334.75 -3,051,496.24 951,221.94 106,838,616.57
=========== =========== =========== ===========
Note: As at the end of the reporting period, all the land use right (original price: RMB
62,547,304.90) of Hongta Renheng, which is located in Jinji Road North, E Cao Shan,
Zhuhai, has been pledged, of which, the certificate number for the land use right with
area of 206,984.38 sq.m. is YFDZZ No. C5617915, and other land with area of
71,094.48 sq.m. has been included in the above-ground building when handling
property right certificate.
(XIV) Goodwill
Name Opening
balance
Increase for the
current period
Decrease for the
current period
Closing
balance
Zhuhai S.E.Z Hongta Renheng
Paper Co., Ltd.
9,129,025.01 --- --- 9,129,025.01
Total
9,129,025.01 --- --- 9,129,025.01
(XV) Long-term deferred expense
Items Opening balance
Increase for the
current period
Amortization for
the current period
Closing balance
============= =========== =========== =========== ===========
Compensation on
road repairs
141,066.79 ------ 36,799.98 104,266.81
Charges for disposing
pollutants
1,555,020.73 --- 1,555,020.73 ---58
Expenditures incurred
on major repair and
improvement of the
rented fixed assets
4,618,369.03 -- 468,587.10 4,149,781.93
--- --- --- ---
Total 6,314,456.55 ------ 2,060,407.81 4,254,048.74
=========== =========== =========== ===========
(XVI) Deferred income tax assets
Closing balance Opening balance
------------------------- --------------------------
Items
Deferred income
tax assets
Deductible
temporary
difference
Deferred income
tax assets
Deductible
temporary
difference
================ ========== =========== ========== ===========
Reserve for impairment of
assets
9,342,811.32 52,365,066.80 9,342,811.32 52,365,066.80
Withholding unpaid
wages
2,250,000.00 15,000,000.00 2,250,000.00 15,000,000.00
Withholding agency fee
for distribution
508,915.36 3,392,769.04 508,915.36 3,392,769.04
Deductable deficit not yet
made up
12,756,407.48 57,336,420.57 12,756,407.48 57,336,420.57
Total 24,858,134.16 128,094,256.41 24,858,134.16 128,094,256.41
=========== =========== ========== ===========
(XVII) Reserve for impairment of assets
Decrease for the current
period
----------------
Closing carrying
balance
Items
Opening carrying
balance
Withholding for the
current period
Reversal
Writing
off
==================== ============ =========== ========== === ===========
Reserve for bad debt
51,186,747.48 --- --- --- 51,186,747.48
Reserve for falling price of
inventory
1,275,754.10 --- --- --- 1,275,754.10
Reserve for impairment of
long-term equity investment
--- --- --- --- ---
Reserve for impairment of
75,885,983.34 --- --- --- 75,885,983.3459
fixed assets
------------- ------------ ------------- --- ---------
Total
128,348,484.92 --- --- --- 128,348,484.92
============= ============= ========== === ============
(XVIII) Short-term loan
Type Closing balance Opening balance
================================== =============== ==============
Guaranteed loan
1,116,000,000.00 1,023,000,000.00
Credit borrowing 63,581,800.00 140,000,000.00
Trade financing 60,622,503.93 271,893,906.80
Collateral loan 190,000,000.00 350,000,000.00
Total 1,430,204,303.93 1,784,893,906.80
=============== ==============
Of which,
(1) Closing amount of loans in USD is RMB 10,292,602.09, converting into RMB
69,896,031.53. Closing amount of loans in HKD is RMB 4,952,700.00, converting
into RMB 4,320,735.48.
(2) No overdue short-term loan. Among guaranteed loan of RMB 1,116,000,000.00,
China Paper Investment General Corporation provides the joint responsibility
guarantee to the Company for RMB 391,000,000, the Company provides the joint
responsibility guarantee to Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. for the loan
of RMB 250,000,000, to Zhuhai Huafeng Paper Co., Ltd. for the loan of RMB
300,000,000, to China Paper Investment General Corporation for the loan of RMB
140,000,000 respectively. China Paper Investment General Corporation, Foshan
Huaxin Development Co., Ltd. and the Company jointly provide the responsibility
guarantee to Huaxin (Foshan) Color Printing Co., Ltd. for the loan of RMB
25,000,000; China Paper Investment General Corporation provides the joint
responsibility guarantee to Huaxin (Foshan) Color Printing Co., Ltd. for the loan of
RMB 10,000,000.
(3) Collateral loan of RMB 190,000,000 refers to Zhuhai S.E.Z Hongta Renheng
Paper Co., Ltd. make mortgage with self-owned building and machinery equipment
(XIX) Notes payable
Type Closing balance Opening balance
=================================== =========== ===========
Bank acceptance bill
11,832,547.26 5,540,630.87
------------------------ ------------------------
Total 11,83,2547.26 5,540,630.87
=========== ===========60
(XX) Accounts payable
1. In balance of accounts payable at the period-end, arrearage of RMB 35,082,541.67
due from shareholders which holding over 5% (including 5%) of shares with voting
right.
2. No account payable with aging over one year at the period-end.
3. Accounts payable-foreign currency balance
Closing balance Opening balance
--------------------------------- ---------------------------------
Currency
Original currency
Rate of
exchang
e
Converting into
RMB
Original currency
Rate of
exchange
Converting into
RMB
===== =========== ===== =========== =========== ====== ===========
USD 40,446,886.50 6.7909 274,670,761.53 12,051,574.16 6.8282 83,003,336.33
HKD 19,466,548.71 0.8724 16,982,617.09 19,687,763.30 0.8804 17,333,886.37
EURO 302,956.02 8.2710 2,505,749.24 691,540.02 9.7971 6,883,991.42
Total 294,159,127.86 107,221,214.12
=========== ===========
(XXI) Accounts in advance
1. In closing balance, no arrearage due to shareholders which holding over 5%
(including 5%) of shares with voting right.
2. No item received in advance with aging over one year at the period-end.
3. Accounts in advance – foreign currency balance
Closing balance Opening balance
--------------------------------- ----------------------------------
Currency
Original currency
Rate of
exchange
Converting into
RMB
Original currency
Rate of
exchange
Converting into
RMB
===== =========== ====== =========== =========== ====== ===========
USD --- --- --- 8,574.21 6.8282 58,561.86
HKD --- --- --- 611,035.70 0.8804 537,711.42
EUR --- --- --- --- --- ---
Total --- --- --- --- --- 596,273.28
============= =============
(XXII) Payable for employee
Items
Opening
balance
Increase for the
current period
Payable for the
current period
Closing balance
==================== =========== =========== =========== ==========
=61
Salary, premium, allowance and
subsidy
21,462,276.23 70,209,013.61 81,392,808.62 10,278,481.22
Employee benefits/welfare 877,319.11 2,404,887.55 2,636,271.19 645,935.47
Social insurance --- 5,461,035.74 5,458,819.30 2,216.44
Housing provident fund --- 257,888.50 318,362.70 -60,474.20
Labor union expenditure and
employee education expenses
4,175,086.41 1,974,968.51 1,270,318.13 4,879,736.79
Redemption of termination of
labor contract
--- 135,345.00 135,345.00 ---
Other --- 246,902.29 246,902.29 ---
Total 26,514,681.75 80,690,041.2 91,458,827.23 15,745,895.72
=========== ============= ============= ============
(XXIII) Taxes payable
Type of taxation Closing balance Opening balance
=================================== ============= =============
VAT -53,812,866.48 -18,362,600.36
City maintenance and construction tax 86,845.29 121,652.91
Business tax 348,741.82 2,798,497.20
Enterprise income tax 3,467,412.77 2,874,850.33
Individual income tax 362,222.89 288,816.18
Stamp tax 70,032.29 1,612,327.94
VAT for land --- 243,379.00
Tax for land use 596,032.08 1,594,959.34
Housing property tax 1,100,923.21 1,158,274.72
Embankment protection expense 148,255.55 100,574.77
Educational surtax 31,092.43 52,136.97
Tax for vehicle and vessel 33,358.01 ---
Other --- 9,088.26
--- ---
Total -47,567,950.14 -7,508,042.7462
============= =============
(XXIV) Interests payable
Items Closing balance Opening balance
=================================== ============ ============
Interests payable with aging within one year 23,335,421.78 1,577,529.58
------------------------------ ------------------------------
Total 23,335,421.78 1,577,529.58
============ ============
(XXV) Dividend payable
Name of investors Closing balance Opening balance
=================================== ============ ============
Foshan Xinhui Industrial Development Co., Ltd. 54,494.00 54,494.00
Foshan Light Industry Company 79,264.00 79,264.00
------------------------------ --------------
Total 133,758.00 133,758.00
============ ============
(XXVI) Other payables
Items Closing balance Opening balance
=================================== ============ ============
Loan of Foshan Huaxin Development Co., Ltd.
66,029,894.51 153,529,894.51
Freight charges and other 82,555,614.72 36,413,119.94
Margin and guarantee deposit
5,616,600.10 7,884,421.91
Temporary accounts payable
------ ------
Other
62,306,238.04 6,393,909.81
------------------------------ ------------------------------
Total 216,508,347.37 204,221,346.17
============ ============
1. Among the closing balance, RMB 66,751,842.38 and RMB 2,100,000.00 are the
arrearages that the Company owed Foshan Huaxin Development Co., Ltd. and China63
Paper Investment General Corporation respectively, the shareholders holding over 5%
(including 5%) of shares with voting right.
2. Other payables with the greater amount as at the period-end
Name of creditors Amount Contents
=================================== ============== ============
Foshan Huaxin Development Co., Ltd.
66,751,842.38
Borrow money and
current payment
=================================== ============== ============
(XXVII) Long-term Loan
Units Currency
Terms of
loan
Closing
balance
Opening
balance
Remark
==================== ====== ======= ========== ========== =========================
Agricultural Bank of
China, Foshan Huada
Sub-branch
CNY Guarantee 190,000,000.0
0
360,000,000.
00
Joint Liability Guarantee is
provided by China Paper
Investment General Corporation
----------- -----------
Total 190,000,000.00 360,000,000.00
========== ==========
(XXVIII) Long-term accounts payable
Items Closing balance Opening balance Remark
Yunnan Hongta Group Co., Ltd. --- 72,277,325.43 interest-free
Yanlord Industries Pte. Ltd. 11,205,432.43 11,205,432.43 interest-free
China Chengtong Holding Group Ltd. 500,000,000.00 ---
interest-bearing
Total 511,205,432.43 83,482,757.86
(XXIX) Accrued liabilities
Items Closing balance Opening balance
Guarantee money for product quality 20,792,500.00 20,496,692.50
Total 20,792,500.00 20,496,692.5064
Accrued liabilities are a compensation estimated by Zhuhai S.E.Z Hongta Renheng
Co., Ltd. for quality of the sold products, as well as short settlement of loss by
insurance company.
(XXX) Deferred income tax liabilities
Closing balance Opening balance
------------------------- --------------------------
Items
Deferred income
tax liabilities
Temporary
difference
Deferred income
tax liabilities
Temporary
difference
==================== =========== =========== ========== ===========
Change in fair value 229,562.23 1,530,414.84 268,887.00 1,792,580.00
------------------------- -------------------------- ------------------------- --------------------------
Total 229,562.23 1,530,414.84 268,887.00 1,792,580.00
=========== =========== ========== ===========
(XXXIII) Other non-current liabilities
Items Closing balance Opening balance
=================================== ============ ============
Deferred income 1,320,000.00 1,320,000.00
------------------------------ ------------------------------
Total 1,320,000.00 1,320,000.00
============ ============
(XXXII) Share capital
Opening balance
Increase/decrease for the current period
(+,-)
Closing balance
--------------- ----------------------------------- ----------------
Items
Number
proporti
on
Issua
nce of
new
share
Bonus
shares
Capitalization
of
share
capital
Other Subtotal Number
proporti
on
======================= ======== ===== === ======= ====== ==== ======= ======== =====
I. Unlisted shares
1. Sponsor’s shares 333,500,000 65.99% --- --- --- --- --- 333,500,000 65.99%
Including:
Shares held by the State --- --- --- --- --- --- --- --- ---
Shares held by domestic legal 333,500,000 65.99% --- --- --- --- --- 333,500,000 65.99%65
person
Shares held by foreign legal
person
--- --- --- --- --- --- --- --- ---
Other --- --- --- --- --- --- --- --- ---
2. Raised legal person’s shares --- --- --- --- --- --- --- --- ---
3. Inner employee shares --- --- --- --- --- --- --- --- ---
4. Preferred shares or other --- --- --- --- --- --- --- --- ---
Including: transferred allotted
shares
---
--- --- --- --- --- ---
---
---
--------- ----- ---- ------ ------ ---- ---- --------- -----
Total unlisted shares 333,500,000 65.99% --- --- --- --- --- 333,500,000 65.99%
--------- ----- ---- ------ ------ ---- ---- --------- -----
II. Listed shares
1. RMB ordinary shares ---- --- --- --- --- --- --- --- ---
2. Domestically listed foreign
shares
171,925,000 34.01% --- --- --- --- --- 171,925,000 34.01%
3. Overseas listed foreign shares --- --- --- --- --- --- --- --- ---
4. Other --- --- --- --- --- --- --- --- ---
--------- ----- ---- -------- ------ ---- ---- --------- -----
Total listed shares 171,925,000 34.01% --- --- --- --- --- 171,925,000 34.01%
--------- ----- ---- -------- ------ ---- ---- --------- -----
III. Total shares 505,425,000 100% --- --- --- --- --- 505,425,000 100%
======== ===== === ======= ===== === ======== ======== =====
Note: The above-mentioned paid-in capital has been inspected and verified by
Guangdong Hengxin Delu Certified Public Accountants Co., Ltd., issuing the Capital
Verification Report with (2007) HDZY No. 25.
(XXXIII) Capital reserve
Items Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
============= ============ =========== =========== ============
Share premium 250,531,482.00 --- --- 250,531,482.00
Other capital reserve 247,903.44 33,138,986.78 --- 33,386,890.22
----------------------------- ---------------------------- ---------------------------- -----------------------------
Total 250,779,385.44 33,138,986.78 --- 283,918,372.22
============== ============= ============= ==============
Changes in other capital reserves in current period:66
1. Based on equity proportion of the Company, the change in fair value of available-for-sale
financial assets held by Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd., the subsidiary of the
Company, has decreased by RMB 935,156,300.
2. Increasing capital and expanding shares to Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd.,
the Company subscribed capital converting into RMB 119,121,993.22, correspondingly,
shareholding proportion to Hongta Renheng has increased to 41.9653% from 40.176%, up by
1.7893 percent. Capital subscription that corresponding to increased equity is less than share of net
assets, resulting in increase of capital reserve by RMB 33,232,502.41.
(XXXIV) Surplus reserve
Items Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
============= ============ =========== ========== ============
Statutory surplus
public reserve
125,274,475.42 --- --- 125,274,475.42
----------------------------- ---------------------------- ------------------------ ------------------------------
Total 125,274,475.42 --- --- 125,274,475.42
============ =========== ========== ============
(XXXV) Retained profit
Items Amount
======================================== =============
Opening retained profit 413,628,149.08
Add: net profit for the current period 60,449,957.51
Less: withdrawing statutory surplus public reserve ---
Withdrawing arbitrary surplus public reserve ---
Distributing dividend of common shares ---
Transferring into capital ---
Closing retained profit 474,078,106.59
======================================== =============
(XXXVI) Operating income and operating cost
1. Operating income
Items Current amount Amount of last period67
============================= ============== ==============
Income form main operation
1,817,269,286.89 572,252,462.97
Other operating income
88,718,125.26 1,940,981.93
---------------------------------- ---------------------------------
Total
1,905,987,412.15 574,193,444.90
============== ==============
Sales revenue from the top five customers
Items Current amount Amount of last period
=================================== ============= ==============
Total sales revenue from the top five customers 318,862,000.44 117,763,022.95
Proportion in total operating income (%) 17.55% 20.58%
=================================== ============== ==============
2. Operating cost
Items Current amount Amount of last period
=================================== ============== =============
Cost on main operation 1,497,487,680.08 561,438,243.09
Other operation cost 81,562,857.64 748,574.15
---------------- ---------------
Total 1,579,050,537.72 562,186,817.24
============== =============
3. Category of main operation income and cost according to products
Current amount Amount of last period
------------------------------- --------------------------------
Items
Income from main
operation
Cost on main operation Income from main
operation
Cost on main
operation
====== =============== =============== ============== ==============
White
board
paper
572,906,794.35 493,214,036.13 511,537,329.07 513,991,481.09
White
cardboard
1,165,442,477.54 945,863,775.16 --- ---
Printing 83,641,077.01 67,314,654.29 64,973,168.97 51,704,797.07
Logistical 7,326,664.28 3,142,940.79 --- ---
Offsetting
-12,047,726.29 -12,047,726.29 -4,258,035.07 -4,258,035.0768
each
other
among
industries
within the
Company
Total 1,817,269,286.89 1,497,487,680.08 572,252,462.97 561,438,243.09
============= ============== ============= ==============
4. Category of main operation income and cost according to area
Current amount Amount of last period
------------------------------- ---------------------------
Area
Income from main
operation
Cost on main operation Income from main
operation
Cost on main
operation
========== ============== ============== ============ ============
Home sales 1,628,162,348.53 1,325,657,463.83 539,483,603.31 528,457,792.91
Export sales 189,106,938.36 171,830,216.25 32,768,859.66 32,980,450.18
--------------------------------- ---------------------------------- ------------------------------ -------------------------------
Total
1,817,269,286.89 1,497,487,680.08 572,252,462.97 561,438,243.09
============== ============== ============ ============
(XXXVII) Business tax and extra
Items Current amount Amount of last period
=================================== ============== ==============
City maintenance and construction tax 1,007,507.02 7,497.00
Education surtax 368,691.84 3,213.00
Embankment protection cost 645,837.82 348,398.28
Business tax 373,921.89 ---
Total 2,395,958.57 359,108.28
============== ==============
(XXXVIII) Selling expense
Items Current amount
Amount of last
period
=============================== ============ ============
Sales expense 83,953,631.14 20,071,354.31
=============================== ============ ============
(XXXIX) Administrative expense
Items Current amount
Amount of last
period69
=============================== ============ ============
Administrative expense 64,515,064.87 36,520,388.07
=============================== ============ ============
(XL) Financial expense
Category Current amount
Amount of last
period
=============================== ============ ============
Interest expense
71,840,756.52 39,105,220.67
Less: interest revenue
366,376.52 1,277,617.02
Exchange loss
435,752.77 ---
Less: exchange profit
514,208.91 104,239.21
Other
4,473,468.22 2,242,941.06
------------------------------ ------------------------------
Total 75,869,392.08 39,966,305.50
============ ============
(XLI) Loss on assets impairment
Items Current amount
Amount of last
period
=============================== ============ ============
Loss on bad debts 314,965.83 ---
Loss on falling price of inventory --- -10,300,000.00
------------------------------ ------------------------------
Total 314,965.83 -10,300,000.0
============ ============
(XLII) Investment income
Items Current amount
Amount of last
period
=============================== ============ ============
Attributable share of the net profits and losses
recognized under equity method of the invested
entity
26,758,752.61 30,539,639.52
Income from disposal of equity investment 47,891,412.67
------------------------------ -----------------------------70
Total 26,758,752.61 78,431,052.19
============ ============
Note: There was no significant restriction to investment income transfer in the
Company.
(XLIII) Non-operating income
Items Current amount
Amount of last
period
=============================== ============ ============
Income from disposal of fixed assets 10,075.00 456,632.60
Financial subsidies 585,948.00 ---
Other 644,839.04 130,585.00
------------------------------ ------------------------------
Total 1,240,862.04 587,217.60
============ ============
(XLIV) Non-operating expense
Items Current amount
Amount of last
period
=============================== ============ ============
Loss on disposal of fixed assets 7,155,771.80 ---
Donation outlay
--- 3,000.00
Other
128,201.19 ---
------------------------------ ------------------------------
Total
7,283,972.99 3,000.00
============ ============
(XLV) Income tax expense
Items Current amount
Amount of last
period
=============================== ============ ============
Current income tax expense 6,567,716.86 1,002,647.07
Deferred income tax expense --- 1,250,000.00
------------------------------ ------------------------------71
Total
6,567,716.86 2,252,647.07
============ ============
(XLVI) Notes to cash flow statement
1. Other cash received related with operating activities
Items Current amount
Amount of last
period
=============================== ============ ============
Total 92,926,587.31 36,131,040.88
============== ==============
Including: Interest revenue 366,376.52 830,360.03
Margin received 600.916.32 ---
Governmental subsidy
585,948.00 ---
Rental income
31,348.08 618,492.00
============ ============
2. Other cash paid related with operating activities
Items Current amount
Amount of last
period
======================================== ============ ============
Total 71,779,275.08 22,813,910.81
============== ==============
Including: transportation expenses for products 30,329,841.83 6,404,252.62
Bank charge
4,146,136.15 320,113.29
Car road toll
1,221,540.11 246,861.09
Business entertainment
4,475,868.09 824,383.52
Export charges
237,537.84 942,007.77
Office expenses
2,175,340.19 221,080.08
============== ==============
3. Supplemental information of cash flow statement
Supplemental information Current amount
Amount of last
period72
================================================ ============== =============
1. Transferring net profit into cash flows of operating activities:
Net profit
114,035,786.74 2,152,094.22
Add: Reserve for assets impairment --- -10,300,000.00
Depreciation of fixed assets, oil and gas assets and
productive biological assets
73,786,055.36 51,881,901.80
Amortization of intangible assets 3,134,957.78 766,180.52
Amortization of long-term deferred expenses 2,060,407.81 992,226.84
Loss for disposal of fixed assets, intangible assets and
other long-term assets (income is listed as “-”)
7,145,696.80 -406,849.33
Losses on scrapping of fixed assets (income is listed as
“-”)
--- ---
Losses on change in fair value (income is listed as “-”) --- ---
Financial expense (income is listed as “-”) 76,314,224.74 39,105,220.67
Losses arising from investment (income is listed as “-”) -26,758,752.61 -78,431,052.19
Decrease of deferred income tax assets (increase is listed
as “-”)
--- 1,250,000.00
Increase of deferred income tax liabilities (decrease is
listed as “-”)
---
18,937,523.29
Decrease of inventories (increase is listed as “-”) -310,068,319.18 195,788,545.75
Decrease in operating receivables (increase is listed as
“-”)
145,994,935.75 -149,124,742.52
Increase in operating payables (decrease is listed as “-”) -111,946,164.52 -23,943,556.70
Other --- ---
Net cash flows arising from operating activities -26,301,171.33 48,667,492.35
(2) Investing and financing activities that do not involving
significant cash receipts and payments
Conversion of debt into capital --- ---
Reclassify convertible bonds to be expired within one
year as current liabilities
--- ---
Fixed assets financed by financing leases --- ---
(3) Change in cash and cash equivalents
Closing balance of cash 313,822,356.25 737,865,971.01
Less: opening balance of cash 329,035,163.08 208,091,895.59
Add: Closing balance of cash equivalents --- ---73
Less: Opening balance of cash equivalents --- ---
Net increase in cash and cash equivalents -15,212,806.83 529,774,075.42
================================================ ============== =============
4. Cash and cash equivalent
Items Current amount
Amount of last
period
============================================== ============ ============
I. Cash 313,822,356.25 737,865,971.01
Including: Cash on hand 557,294.25 351,173.02
Bank deposit used for payment at any moment 312,946,830.86 650,234,980.04
Other monetary funds used for payment at any moment 318,231.14 87,279,817.95
(2) Cash equivalents --- ---
Of which: Bonds investment to be expired within three months --- ---
(3) Balance of cash and cash equivalents at the end of the period 313,822,356.25 737,865,971.01
Of which: Cash and cash equivalents restricted when parent
company and the Group
--- ---
============================================== ============ ===========
IX. Notes to the financial statement of parent company
(I) Other receivables
1. Composing of other receivable
Closing balance Opening balance
---------------------------------- ---------------------------------
Items
Book balance
Proport
ion
Reserve for
bad debts
Book balance
Proport
ion
Reserve for
bad debts
================ ============== ===== ========= ============= ===== ==========
Accounts receivable
with significant single
amounts
1,222,482,267.68 100%
70880.31
985,483,057.69 99.62% 70880.31
Accounts receivable
with insignificant
single amounts but
with significant credit
risk
26,448.47 --- 26,448.47 26,448.47 --- 26,448.47
Other insignificant 96,097.38 --- 106.00 7,397.38 0.38% 106.00
---------------------------- ----------- -------------------- --------------------------- ----------- --------------------
Total 1,222,604,813.53 100% 97,434.78 985,516,903.54 100% 97,434.7874
================ ====== =========== =============== ====== ===========
2. Aging analysis
Closing balance Opening balance
--------------------------------- ------------------------------- Items
Book balance Proportion
Reserve for bad
debts
Book balance
Proportio
n
Reserve for bad
debts
========== ============= ===== ======== ============ ===== =========
1-3 months 14,981,891.74 1.23% --- 376,896,626.94 38.25% ---
4-12 months 1,207,525,247.01 98.77% --- 603,652,949.50 61.25% ---
1-2 years --- 0.00% --- 4,940,772.63 0.50% 70,880.31
2-3 years 70,880.31 0.00% 70,880.31 106.00 --- 106.00
Over 3 years 26,794.47 0.00% 26,554.47 26,448.47 --- 26,448.47
------------------------------- ------------ -------------------- ----------------------------- ------------ --------------------
Total 1,222,604,813.53 100% 97,434.78 985,516,903.54 100% 97,434.78
============= ===== ======== ============ ===== =========
3. Other receivables with significant single amounts
Name of debtor Arrearage Proportion
withdrawn
Reason
======================== ============== ======= =========================
Foshan Huafeng Paper Co., Ltd. 434,019,994.06 --- Subsidiary companies that can be
controlled, and with normal
production and operation, a little
probability for loss of bad debts
Huaxin (Foshan) Color Printing Co.,
Ltd.
12,204,287.50 --- Subsidiary companies that can be
controlled, and with normal
production and operation, a little
probability for loss of bad debts
Foshan Chengtong Paper Co., Ltd. 379,951,329.30 --- Subsidiary companies that can be
controlled, and with normal
production and operation, a little
probability for loss of bad debts
Zhuhai S.E.Z Hongta Renheng Paper
Co., Ltd.
395,296,520.82 --- Subsidiary companies that can be
controlled, and with normal
production and operation, a little
probability for loss of bad debts
======================== ============== ======= =========================
4. In closing balance, no arrearage due to shareholders which holding over 5%
(including 5%) of shares with voting right.
5. The top 5 arrearage in other receivables at the period-end
Name of debtor Arrearage Kind or contents Term limit Proportion in75
of
arrearage
total other
receivables
====================== ============== ============ ======= ==========
Foshan Huafeng Paper Co., Ltd.
434,019,994.06
funds appropriated Rolling for
many years
35.50%
Zhuhai S.E.Z Hongta Renheng
Paper Co., Ltd.
395,296,520.82 funds appropriated Rolling for
many years
32.33%
Foshan Chengtong Paper Co., Ltd. 379,951,329.30
funds appropriated Rolling for
many years
31.08%
Huaxin (Foshan) Color Printing
Co., Ltd.
12,204,287.50
funds appropriated Rolling for
many years
1.00%
Other
1,010,136.00
Current payment
4-12
months
0.08%
====================== ============== ============ ======= ==========
6. Other receivables of related parties as at the period-end took up 99.99% of total
other receivables.
(II) Long-term equity investment
Closing balance Opening balance
--------------------------- ---------------------------
Items
Book balance
Reserve for
impairment
Book balance
Reserve for
impairment
================= ============== ========= ============= =========
Investment in subsidiaries 1,228,244,842.14 --- 1,109,122,847.09 ---
Investment in affiliated
enterprises
173,126,755.57 --- 209,901,041.18
---
--------------------- ------------------------------- -----------------------
Total 1,401,371,597.71 --- 1,319,023,888.27 ---
================ ========== =============== ==========
1. Long-term equity investment measured at cost method
(1) Investment measured at cost method in subsidiary companies
Name of investing enterprise
Proportion
of shares
held
Initial investment
amount
Opening balance
Increase for the
current period
Decrease for the
current period
Closing balance
==================== ==== ======== ======== ======== ======== ========
Huaxin (Foshan) Color Printing
Co., Ltd.
Direct
75%
72,674,145.03 72,674,145.03 --- --- 72,674,145.03
Foshan Huaxin Jinfeng Industrial
Co., Ltd.
Direct
100%
3,000,000.00 3,000,000.00 --- --- 3,000,000.0076
Zhuhai S.E.Z Hongta Renheng
Paper Co., Ltd.
Direct
41.9653%
808,448,702.06 808,448,702.06 119,121,995.05 --- 927,570,697.11
Foshan Chengtong Paper Co., Ltd.
Direct
75%
225,000,000.00 225,000,000.00 --- --- 225,000,000.00
----------- ----------- ----------- ----------- -----------
Total 1,109,122,847.09 1,109,122,847.09 119,121,995.05 --- 1,228,244,842.14
======== ======== ======== ======== ========
(2) Other equity investment measured at equity method: naught
2. Long-term equity investment measured at equity method
Increase/decrease for the current period
----------------------------
Name of investing
enterprise
Initial investment
amount
Addition
al
investm
ent
Opening balance
Net gains and
losses adjusted
based on equity
method
Cash dividends
distributed
Change
in other
equity
Closing balance
============= ======== ==== ======== ======== ======== ==== ========
Affiliated enterprise:
Tetra Huaxin (Foshan)
Packing Co., Ltd.
145,945,947.55 --- 209,901,041.18
26,758,752.61 63,533,038.22 ---
173,126,755.57
---------- ---- ---------- --------- ---------- ---- ----------
Total 145,945,947.55 --- 209,901,041.18 26,758,752.61 63,533,038.22 --- 173,126,755.57
======== === ======== ======== ======== === ========
Name of investing enterprise
Registratio
n place
Business
nature
Proportion
of shares
held by the
Company
Voting right
proportions in
investing
enterprise
Total net assets at
the period-end
Total operating
income for the
current period
Net profit for the
current period
=========== ===== ====== ===== ======= ======== ========= ========
Affiliated enterprise:
Tetra Huaxin (Foshan)
Packing Co., Ltd.
Foshan Sino-foreign
joint venture
enterprise
25% 25% 692,507,022.30 507,878,878.77 107,035,010.43
============ ===== ====== ===== ======= ======== ========= ========
(III) Investment income
Items Current amount Amount of last period
===================================== ============ ============
Attributable share of the net profits and losses recognized under
equity method of the invested entity
26,758,752.61 30,539,639.52
Dividend distribution measured in the light of cost method declared
by the invested company
--- ---
Income from equity disposal (at cost method) --- 9,874,887.93
----------------------------- ------------------------------77
Total 26,758,752.61 40,414,527.45
============ ============
Note: (1) There was no significant restriction to investment income transfer in the
Company.
(2) Income from disposal of equity investment calculated at cost method is the
difference between investment costs of Foshan Huafeng Paper Co., Ltd. and its fair
value.
ⅩⅩ.
Related Party Relationship and Transactions
(Ⅰ) Recognition standard of related parties
According to the Accounting Standards for Business Enterprises No.36—Disclosure of Related
Parties, when a party controls, jointly controls or exercises significant influence over another party,
or when two or more parties are under the control, joint control or significant influence of the
same party, the related party relationships are constituted.
According to the Administrative Measures for Information Disclosure of Listed
Companies (Decree No.40 of CSRC), the special related legal person and related
natural person are also recognized as related parties.
(Ⅱ) Related parties with control relationship
1. Particulars about related parties with control relationship
(1) Related parties controlling the Company
Name of
enterprise
Registrati
on place
Main businesses
Relations
hip with
the
Company
Natural
of
business
Legal
representa
tive
Organization
code
======== ===== =============================== ===== ===== ===== =========
Foshan Huaxin
Development
Co., Ltd.
Foshan
Manufacturing and trading of: packaging materials,
paper, cable, wire, new materials; trading of;
packaging machinery and maintenance, amplifier
and parts, decoration materials, beverages;
Information and consulting service.
(Manufacturing items are operated by the
subsidiaries)
Parent
company
Limited
company
Tong
Laiming
19353992-5
China Paper
Investment
General Corp.
*
Beijing Main businesses: Investment and development of
important industrial materials; sales of metal
materials (rare metal excluded), construction
materials, wood, cement, chemical materials and
products, garment, paper, rubber, tires,
electro-mechanic products, wire & cable, industrial
boilers, crops, automobile (including sales of cars
Actual
controller
ownershi
p by the
whole
people
Tong
Laiming
10000890-778
to final users) (items limited by national
government excluded); Import & export business
in the above range of products for home market
(only those products in the approved merchandise
list, excluding import and export business operated
by designated enterprises or governmental
departments); assembling with supplied parts,
processing with supplied materials and samples,
and compensation trade; counter-trading business.
Sideline: technical consultancy and service related
to material development.
China
Chengtong
Holding Group
Co., Ltd. *
Beijing
Operation and management of assets; entrustment
management; merger and acquisition; investment
management and consultation; logistical service,
import & export business and sales of steels
Ultimate
controller
Limited
company
(state-ow
ned
corporate
)
Ma
Zhengwu
71092254-4
======== ===== =============================== ===== ===== ===== =========
* On June 28, 2005, Foshan Gongying Investment Holdings Co., Ltd. transferred its 62.1142%
equity of Foshan Huaxin Development Co., Ltd. (investment amount of RMB 284.44 million) to
China Materials Investment Corp.. Owing to the fact that Foshan Huaxin Development Co., Ltd.
was the parent company of the Company and held 65.2% equity of the Company, and the fact that
China Materials Investment Corp. already held 0.11% equity of the Company, China Materials
Investment Corp. directly and indirectly held 65.31% equity of the Company, who became the
actual controller of the Company. China Chengtong Holding Group Co., Ltd. held 100% equity of
China Materials Investment Corp., which thus made it the ultimate controller of the Company.
(2) Related parties controlled by the Company
For details, please refer to Note Ⅶ (I).
2. Registered capital of related parties with controlling relationship and its changes
Name of enterprise
Amount at
period-begin
(Unit: ‘0000)
Increase in
current period
(Unit: ‘0000)
Decrease in
current
period
(Unit: ‘0000)
Amount at
period-end
(Unit: ‘0000)
================================ =========== ======== ======= ===========
Foshan Huaxin Development Co., Ltd. CNY45,793 --- --- CNY45,793
China Chengtong Holding Group Co., Ltd. CNY256,016 --- --- CNY256,016
China Paper Investment General Corp. CNY131,729 --- --- CNY131,729
Zhuhai Huafeng Paper Co., Ltd. CNY98,456 --- --- CNY98,45679
Huaxin (Foshan) Color Printing Co., Ltd. USD1,280 --- --- USD1,280
Foshan Huazhi Wasted Paper Recovery Co., Ltd CNY500 --- --- CNY500
Foshan Chancheng District Pearl River Color
Printing Co., Ltd.
CNY150
--- ---
CNY150
Foshan Huaxin Jinfeng Industry Co., Ltd. CNY300 --- --- CNY300
Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. USD21,106 USD3,255 --- USD24,361
Zhuhai Hengshun Supply Chain Logistic Service
Co., Ltd.
CNY3,000 --- --- CNY3,000
Foshan Chengtong Paper Co., Ltd. CNY 30,000 --- --- CNY30,000
================================ =========== ======== ======= ===========
3. Shares held by the related parties with controlling relationship and its changes
Amount at period-begin Increase in current period
Decrease in
current period
Amount at period-end
------------------ -------------- --------- Name of enterprise -----------------
Amount
Proportio
n
Amount
Propor
tion
Amoun
t
Proport
ion
Amount
Proportio
n
======================== ========== ===== ======== === ==== === =========== =====
Foshan Huaxin Development Co., Ltd.
329,512,030.00
65.20%
directly
--- --- --- --- 329,512,030.00
65.20%
directly
China Chengtong Holding Group Co.,
Ltd.
569,710.00
0.11%
directly
--- --- --- --- 569,710.00
0.11%
directly
Huaxin (Foshan) Color Printing Co.,
Ltd.
72,674,145.03
75%
directly
--- --- --- --- 72,674,145.03
75%
directly
Foshan Huazhi Wasted Paper
Recovery Co., Ltd
5,000,000.00
100%
directly
--- --- --- --- 5,000,000.00
100%
directly
Foshan Chancheng District Pearl
River Color Printing Co., Ltd.
1,500,000.00
100%
directly
--- --- --- --- 1,500,000.00
100%
directly
Foshan Huaxin Jinfeng Industry Co.,
Ltd.
3,000,000.00
100%
directly
--- --- --- --- 3,000,000.00
100%
directly
Zhuhai S.E.Z Hongta Renheng Paper
Co., Ltd.
808,448,702.06
40.176
%
directly
119,121,995.05
1.7893
%
directl
y
--- --- 927,570,697.11
41.9653
%
directly
Zhuhai Hengshun Supply Chain
Logistic Service Co., Ltd.
22,500,000.00
75%
directly
--- --- --- --- 22,500,000.00
75%
directly80
Foshan Chengtong Paper Co., Ltd.
4,500,000.00
75%
directly
--- --- --- --- 4,500,000.00
75%
directly
======================== ========== ===== ======== === ==== === =========== =====
(III) Related parties without control relationship
Name of enterprise Organization code
Relationship with the
Company
============================ ================ ================
Tetra Huaxin (Foshan) Packaging Co., Ltd. 61762144-8 Affiliated company
Foshan Huaxin Import & Export Co., Ltd.
19354411-8 Under the same actual
controller
Qingdao Chengtong Fuel Co., Ltd.
73728500-4 Under the same ultimate
controller
Zhanjiang Guanlong Paper Co., Ltd.
61827072-3 Under the same actual
controller
Dragon State International Co., Ltd.
Under the same ultimate
controller
============================ ================ ================
(IV) Related parties transactions
1. Concerning the subsidiary companies with control relationship which were
included in the Company’s consolidated accounting statements, their transactions with
each other and with the parent company had been offset.
2. Pricing principle of related transactions
The prices were decided upon negotiation based on market prices.
3. Goods purchased from related parties
The current period The last period
---------------------- ----------------------
Name of enterprise
Amount
(RMB’0000)
Proportion in
same kinds
of
transactions
(%)
Amount
(RMB’0000)
Proportion in
same kinds
of
transactions
(%)
======================== ========== ======= ========== =======
China Paper Investment General Corp. 11,087.87 11.83 --- ---
Foshan Huaxin Import & Export Co., Ltd. 1,717.68 1.83 203.60 3.20
Qingdao Chengtong Fuel Co., Ltd. --- --- 1,270.11 19.76
------------------------- -------------- ------------------------- ---------------81
Total 12,805.55 13.66% 1,473.71 22.96
========== ======= ========== =======
4. Goods sold to related parties
The current period The last period
---------------------- ----------------------
Name of enterprise
Amount
(RMB’0000)
Proportion in
same kinds
of
transactions
(%)
Amount
(RMB’0000)
Proportion in
same kinds
of
transactions
(%)
======================== ========== ======= ========== =======
Foshan Huaxin Import & Export Co., Ltd. 33.50 0.02 5,970.68 10.43
----------------------- ---------------- ------------------------ ---------------
Total 33.50 0.02 5,970.68 10.43
========== ======= ========== =======
5. Unsettled amount with related parties
Amount at period-end Amount at period-begin
---------------------- ----------------------
Items
Balance
Provision for
bad debt
Balance
Provision for
bad debt
========================= ============ ======= ============= =======
Accounts receivable:
Tetra Huaxin (Foshan) Packaging Co.,
Ltd.
--- --- 80,000.00 ---
Foshan Huaxin Import & Export Co., Ltd. 184,706.28 --- 1,661,709.64 ---
Accounts payable:
Qingdao Chengtong Fuel Co., Ltd. --- --- 0.12 ---
China Paper Investment General Corp. 35,082,541.67 --- 21,203,333.87 ---
Foshan Huaxin Import & Export Co., Ltd. 2,482,688.23 --- 1,150,581.70 ---
Other payables:
China Paper Investment General Corp. 2,100,000.00 --- --- ---
Foshan Huaxin Development Co., Ltd. 66,751,842.38 --- 153,549,676.19 ---
========================= ============ ======= ============= =======
6. Other related parties transactions82
(1) Leasing of office building
The Company entered the agreement with Foshan Huaxin Development Co., Ltd. to rent its
907-square-metre office area located at the 18/F Jinghua Building, Jihua 5th Road, Foshan, with
the term of lease lasting from 1 Jan. 2006 to 31 Dec. 2007. Upon its expiration on 31 Dec. 2007,
the term of lease was extended to 31 Dec. 2010. The Company committed to pay office building
use fee of RMB 326,520.00 and parking fee of RMB 25,200.00 to Foshan Huaxin Development
Co., Ltd. per year during the leasing period.
(2) Loans with related parties
According to the Loan Contract signed between the Company and Foshan Huaxin Development
Co., Ltd., the balance of the loan that the Company got from Foshan Huaxin Development Co.,
Ltd. stood at RMB 66,029,894.51, with the loan interest rate determined by the bank deposit
interest rate at the same period.
(3) Guarantees provided for and by related parties
During the report period, there existed no external guarantees (excluding guarantees provided for
holding subsidiaries) or illegal guarantees provided by the Company. As at 30 Jun. 2010, the
Company provided guarantees totaling RMB 858.73 million for its holding subsidiaries,
accounting for 61.84% of the Company’s net assets.
Unit: RMB’0000
Name of subsidiary Balance of guarantee
Zhuhai Huafeng Paper Co., Ltd. 54,000
Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. 29,373
Huaxin (Foshan) Color Printing Co., Ltd. 2,500
Total 85,873
Note: Concerning the above-mentioned balance of guarantee provided for Huaxin (Foshan) Color
Printing Co., Ltd., RMB 25 million was jointly provided by China Paper Investment General
Corp., Foshan Huaxin Development Co., Ltd. and the Company;
Meanwhile, China Paper Investment General Corp. and Foshan Huaxin Development Co., Ltd.
provided joint guarantees for the Company amounting to RMB 50 million;
Meanwhile, China Paper Investment General Corp. provided the guarantee to the Company for
RMB 1,055,800,000, and Foshan Huaxin Development Co., Ltd. provided guarantees for the
Company amounting to RMB 50 million;
(4) Medium-term notes raised by related parties
China Chengtong Holding Group Ltd., the real controller of the Company, raised and provided
RMB 500 million worth of Medium-term Notes (MTN) for the Company, which was used for
repaying bank loan of the Company and supplementing current capital. Service life is about five
years with issuance rate being 4.23%, as well as expiry date being 24 March 2015 and annual
underwriting fees for issuance being 3%. In addition, the Company needs to allocate the part of
issuance fees (i.e. attorney fee) in accordance with the proportion of capital limit used in raised
funds of MTN issued in the reporting period. In March 2010, the Company had received the
payment for MTN of RMB 500 million. The both parties signed the Agreement on Internal Use of
Medium-term Notes for 2010, in which the Company should pay the interest once to China
Chengtong Holding Group Ltd. per year, thereafter, China Chengtong Holding Group Ltd. made
unified external payment.83
. Ⅶ Contingent events
1. Contingent liabilities due to pending lawsuits and arbitrations, as well as financial influence
thereof
(1) As at the end of reporting period, Guangdong Regall Group Co., Ltd. (hereinafter
referred to as “Regall Group”) owed a goods payment of RMB 10,047,398.58 to the
Company’s subsidiary Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. (hereinafter
referred to as “Hongta Renheng”) (with an account age over three years). On 28 Mar.
2008, the said two parties signed an agreement on repayment with wood pulp.
According to the said agreement, Regall Group should repay with wood pulp as the
consideration, which should be executed before 15 May 2008. However, Regall
Group has not accomplished the execution according to the said agreement. Up until
31 Oct. 2008, only RMB 3,099,200.00 had been executed as consideration for the
debt. On 29 Oct. 2008, Hongta Renheng sent a Notice on Terminating Agreement to
Regall Group, but Regall Group asked to continue the execution of the Agreement.
On 6 Dec. 2008, Hongta Renheng submitted a bill of compliant on the goods payment
dispute to Guangzhou Huangfu People’s Court, requesting the Court to terminate the
agreement on repayment with wood pulp and asking Regall Group to repay the goods
payment of RMB 10,047,398.58 and take the responsibilities thus caused. On 28 Jun.
2009, the Court issued the Civil Judgment Letter (2009) HMEC Zi No.72, deciding to
declare the Company’s Notice on Terminating Agreement legally null. Hongta
Renheng appealed to Guangzhou Intermediate People’s Court against the decision and
Guangzhou Intermediate People’s Court ruled that the case should be remanded for
retrial in the Court of the first instance. Up until the date of this Report, the court has
not been opened for the case. On 12 June 2010, Guangzhou Huangpu District
People’s Court made the ruling, which Yuejing Group should repay Hongta Renheng
the payment for goods of RMB 9,786,596.96, and the interest should be calculated in
accordance with the interest rate for loans of the same category and in the same period
of People’s Bank of China from 16 May 2008 to the date of paying off. The results of
the judgment failed to be enforced. At present, Yuejing Group had lodged an appeal
against the decision. And Hongta Renheng has withdrawn bad debt provision for the
said account receivable at full amount.
(2) As at the end of reporting period, Zhuhai East Zhengtai Power Equipment Co., Ltd.
owed a goods payment of RMB 2,405,789.44 to Hongta Renheng. Hongta Renheng
has submitted a bill of compliant to Zhuhai Xiangzhou People’s Court. On 5 May
2010, the Court made the judgment, which Zhuhai East Zhengtai Power Equipment
Co., Ltd. should refund Hongta Renheng the payment for goods of RMB 2,405,789.44,
and the interest should be calculated in accordance with the interest rate for loans of
the same category and in the same period of People’s Bank of China from 7 June
2008 to the date of paying off. The results of the judgment failed to be enforced. At
present, Zhuhai East Zhengtai Power Equipment Co., Ltd. had lodged an appeal
against the decision. Hongta Renheng has withdrawn 90% bad debt provision for the
said account receivable.84
(3) Up until the end of reporting period, Zhuhai Gongbei Ronghui Trade Co., Ltd.
owed a goods payment of RMB 1,016,655.73 to Hongta Renheng. Hongta Renheng
has submitted a bill of compliant to Zhuhai Xiangzhou People’s Court.
On 30 March 2010, the Court made the judgment, which Zhuhai Gongbei Ronghui
Trading Co., Ltd. should repay Hongta Renheng the payment for goods of RMB
1,016,655.73, and the interest should be calculated in accordance with the interest rate
for loans of the same category and in the same period of People’s Bank of China from
1 January 2008 to the date of paying off. The results of the judgment failed to be
enforced. At present, Zhuhai Gongbei Ronghui Trading Co., Ltd. had lodged an
appeal against the decision. Hongta Renheng has withdrawn 90% bad debt provision
for the said account receivable.
(II) Contingent liabilities formed due to external guarantee up to 30 June 2010
Ended 30 June 2010, no external guarantee existed in the Company. As to guarantee provided by
the Company for its subsidiaries, please refer to Note X (IV) 6.
(III) Other contingent liabilities
As at the end of reporting period, undue banker’s acceptance bills with endorsement
valued RMB 236,347,687.37, with the mature dates from 1 July 2010 to 30 January
2011.
XII. Commitment events
As at the end of reporting period, with its self-owned housing properties with original
value at RMB 408,212,724.47 and its land use right with original value at RMB
62,547,304.90 as pledges (housing properties with certificate No. YFDZ Zi No.
1248028, No. 1248029, No. 1248031, No. 1248032, No. 1248047, No. 1248048, No.
1248051, No. 1248233, No. 1248234, No. 1248236 and No. 1248238 and No. YFDZ
Zi C5617915, No. C5617916, No. C5617917, No. C3961436, No. C3961437 and No.
C3961435, and No. YFDZ Zi 1248049, 1248050, 1248226, 1248239 were brought
into mortgage registration together with the land because all the above-mentioned
housing properties are within the same red-line map drew by land planning
authorities.), the Company’s subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co.,
Ltd. (hereinafter referred to as “Hongta Renheng”) provided a maximum pledge
guarantee with the maximum claim amount of RMB 420 million for main contracts
signed with the Zhuhai Branch of Bank of Communications during the period from 22
Jun. 2008 to 18 Jun. 2012 and a maximum pledge guarantee with the maximum claim
amount of RMB 200 million for main contracts signed with the Zhuhai Branch of
Bank of Communications during the period from 22 May 2008 to 30 Nov. 2009. In
addition, with its machines, office equipments and other equipments with original
value at RMB 1,153,453,453.69 as pledges, Hongta Renheng provided a maximum
pledge guarantee with the maximum claim amount of RMB 600 million for main
contracts signed with the Zhuhai Branch of Bank of Communications during the
period from 23 Jun. 2009 to 18 Jun. 2012. As at 30 June 2010, balance of the loan of
Hongta Renheng borrowing from the Zhuhai Branch of Bank of Communications85
stood at RMB 190 million, as well as the letter of credit opened amounting to USD
388,467.98.
XIII. Events after balance sheet date
Naught
XIV. Other events
(I) Leasing
Operating lease
Various leased assets of the Company are as follows:
Type Closing carrying value Opening carrying value
========================== ============== ==============
House and building 3,875,510.21 3.957,603.83
----------------------------------- -----------------------------------
Total 3,875,510.21 3.957,603.83
============== ==============
(II) Other significant events
1. The Company entered into the Joint Venture Agreement with STORAENSO
PACKAGING BOARDS ASIAOY on 28 October 2005, in which the both purchased
the assets of Foshan Huafeng Paper Co., Ltd. Zhuhai Branch Company, the subsidiary
company of the Company, at the price of RMB 710,265,723.03, and together set up a
joint venture company, namely STORAENSO HUAXIN (ZHUHAI) PACKAGING
PAPER LTD., through assets merger. The said joint venture company’s total
investment amount was USD 98 million with registered capital of USD 49 million as
well as operating duration of 50 years. Of which, the Company invested in RMB 9.8
million, STORAENSO PACKAGING BOARDS ASIAOY invested in USD 39.2
million.. As approved by Department of Foreign Trade and Economic Cooperation of
Guangdong Province with YWJMZ Zi [2005] No. 673, the joint venture company has
obtained certificate of approval for foreign-funded enterprise with SWZYHZZ Zi
[2005] No. 0043. Owing to the said purchase, Foshan Huafeng Paper Co., Ltd. Zhuhai
Branch Company’s project on production expansion of 300,000-ton high-class coated
white board at place out of Zhuhai under construction was changed into project on
production of liquid package paper board with production scale of 300,000 tons.
However, the Company had a notice from STORAENSO PACKAGING BOARDS
ASIAOY on 29 November 2005, in which STORAENSO PACKAGING BOARDS
ASIAOY decided to give up the said investment and refuse handle the procedure
related with enterprise corporate business license of joint-venture company because
rate of return on profit from project on liquid package paper board was no all
idealization, as a result, the Assets Transfer Agreement failed to be continued to carry
out, as well as significant economic losses to Foshan Huafeng Paper Co., Ltd..86
Unilateral statistics from Foshan Huafeng Paper Co., Ltd., such economic losses
totaled to about RMB 58 million, including expense on rebuilding, claim on customer
or vendor, engineering management expense during rebuilding, salary for staffs and
project interests during the delay period. Due to unilateral termination of the
cooperation from STORAENSO PACKAGING BOARDS ASIAOY, in accordance
with the Clause 22.1 and 22.2 in the Agreement, “if any part in the Joint Venture
Agreement fails to implement any obligation under the Agreement…, the said party
shall be regard that it violate this agreement”, STORAENSO PACKAGING
BOARDS ASIAOY “shall undertake duties for direct and real loss (excluding indirect)
for abiding party due to its breach of contract.”
The Company considered that STORAENSO Huaxin (Zhuhai) Packaging Paper Ltd. failed to be
established due to unilateral termination of the cooperation from STORAENSO PACKAGING
BOARDS ASIAOY, resulting in a great of cost put into the project of coated white board in
Zhuhai by the Company, for which the Company take proceedings against STORAENSO
PACKAGING BOARDS ASIAOY for loss to the Company, in order to safeguard the legal rights
of Foshan Huafeng Paper Co., Ltd.. The said dispute case on agreement transfer has been accepted
by Zhuhai Intermediate Court on 20 Aug. 2007.
But STORAENSO PACKAGING BOARDS ASIAOY proposed an objection to right
of jurisdiction in this case. On 20 November 2007, as judged by Zhuhai Intermediate
People's Court with Civil Judgment (2007) ZZFMSC Zi No. 52, the Court rejected the
said objection on right of jurisdiction in this case. STORAENSO PACKAGING
BOARDS ASIAOY has appeal from the judgment of Zhuhai Intermediate People's
Court to Guangdong Higher People Court. On 16 June 2008, Guangdong Higher
People's Court made the final order with written civil ruling (2008) YGFLMZ Zi No.
65, overruling the appeal of STORAENSO PACKAGING BOARDS ASIAOY,
maintaining the first trial as well.
In June 2010, the Company received the Civil Ruling Paper (2007 ZZFMSC Zi No. 52) from
Zhuhai Intermediate People's Court Guangdong, P.R.C., and the verdict are as follows:
(1) The defendant Stora Enso should pay increased cost due to project reconstruction and claim for
compensation totaling RMB 1,711,000 to accuser Foshan Huafeng Paper Co., Ltd within 10 days
since this verdict is legal effective;
(2) The defendant Stora Enso should pay engineering management expense and wage for staff as
well as other salary and engineering interest due to project reconstruction and claim for
compensation totaling RMB 21,486,695.04 to accuser Foshan Huafeng Paper Co., Ltd within 10
days since this verdict is legal effective;
(3) As for the ligation fee of RMB 331,291 and auditing expense of RMB 67,500, Foshan Huafeng
Paper Co., Ltd will pay RMB 206,743 and Stora Enso Packing Boards Asia Oy will pay RMB
191,848.
At present, both the accuser Foshan Huafeng Paper Co., Ltd and defendant Stora Enso
Packing Boards Asia Oy appealed to Guangdong High People’s Court. The above
verdict has not executed yet, therefore, the verdict caused no influence on profit of the
Company during the reporting period.
XV. Non-recurring gains and losses
Items Jan.-Jun. 2010 Jan.-Jun. 200987
==================================== =========== ===========
Gains/losses from disposal of non-current assets -7,145,696.80 456,632.60
Government subsidies recorded into profit and loss of the
current period
585,948.00 ---
Other non-operating income and expense
516,637.85 130,585.00
Other non-recurring gains and losses
--- 234,801.56
Income from equity disposal
--- 47,891,412.67
Donation outlay
--- -3,000.00
------------- -------------
Subtotal -6,043,110.95 48,710,431.83
------------- -------------
Less: Influence on income tax 1,812,379.21 130,106.28
Quotient shared by minority shareholders -4,730,350.86 146,054.40
Net non-recurring gains and losses
-3,125,139.30 48,434,271.15
=========== ===========
Note: Date mentioned above table, “+” shows profit or income, “-” shows loss or
expense
XVI. Return on equity and earnings per share
Return on equity（%） Earnings per share（RMB/share）
------------------------------- -------------------------------
Fully diluted Weighted average EPS-Basic EPS-diluted
--------------- --------------- --------------- ---------------
Profit as of the report
period
Jan.-Jun.
2010
Jan.-Jun.
2009
Jan.-Jun.
2010
Jan.-Jun.
2009
Jan.-Jun.
2010
Jan.-Jun.
2009
Jan.-Jun.
2010
Jan.-Jun.
2009
============== ====== ====== ====== ====== ====== ====== ====== ======
Net profit attributable
to common shareholder
of the Company
4.35 0.87 4.45 0.88 0.1196 0.0221 0.1196 0.0221
Net profit after
deducting
non-recurring gains and
losses attributable to
common shareholder of
the Company
4.58 -2.92 4.68 -2.92 0.1258 -0.0738 0.1258 -0.0738
============== ====== ====== ====== ====== ====== ====== ====== ======
Calculation formula on return on equity and earnings per share
1. Fully diluted return on equity88
Fully diluted return on equity=P÷E
Of which: P refers to Net profit attributable to common shareholder of the Company
or net profit after deducting non-recurring gains and losses attributable to common
shareholder of the Company; E refers to net assets at the period-end attributable to
common shareholders of the Company. “Net profit attributable to common
shareholder of the Company” excluded minority interest, “net profit after deducting
non-recurring gains and losses attributable to common shareholder of the Company”
would be calculated based on consolidated net profit after deducting minority interests;
deducting non-recurring gain and loss of parent company (the Company should
consider influence of income tax) and non-recurring gain and loss of each subsidiary
(the Company should consider influence of income tax) ; “net assets at the period-end
attributable to common shareholders of the Company” excluded minority interests.
2. Weighted average return on equity
Weighted average return on equity = P/ （ E0 ＋ NP÷2 ＋ Ei×Mi÷M0 －
Ej×Mj÷M0±Ek×Mk÷M0）
Of which: P refers to Net profit attributable to common shareholder of the Company
or net profit after deducting non-recurring gains and losses attributable to common
shareholder of the Company; NP refers to net profit attributable to common
shareholders of the Company; E0 refers to net assets at the period-begin attributable
to common shareholders of the Company; Ei refers to net assets increased due to
issuance of new share or debts for equity swap or attributable to common
shareholders of the Company; Ej refers to net assets decreased due to repurchased or
dividends in cash or attributable to common shareholders of the Company; M0 refers
to the number of months during the report period; Mi refers to the number of months
from the next month when net assets increased to the end of the report period; Mj
refers to the number of months from the next month when net assets decreased to the
end of the report period; Ek refers to change of increase/decrease of net assets due to
other transaction events; Mk refers to the number of months from the next month
when other net assets changed the end of the report period
3. Earnings per share-basis
Earnings per share-basis = P÷S
S=S0＋S1＋Si×Mi÷M0－Sj×Mj÷M0－Sk
Of which: P refers to net profit attributable to shareholders holding ordinary shares or
net profit attributable to shareholders holding ordinary shares after deducting
non-recurring gains and losses; S weighted average number of ordinary shares issued
out; S0 refers to total number of shares at the period-begin; S1 refers to the number of
shares increased due to transferring capital reserve into share capital or dividend
distribution of shares during the report period; Si refers to the number of shares
increased due to issuance of new shares or debt for equity swap during the report
period; Sj refers to the number of shares decreased due to stock repurchase during the
report period; Sk refers to the number of split-share during the report period; M0
refers to the number of months during the report period; Mi refers to the number of
months from the next month to the end of the report period for increase of shares; Mj89
refers to the number of months from the next month to the end of the report period for
decrease of shares
4. Earnings per share-diluted
Earnings per share-diluted =[P+（potential diluted interests of ordinary shares
recognized as expense－transfer fee）×（1- income tax rate）]/（S0＋S1＋Si×Mi÷M0
－Sj×Mj÷M0—Sk + weighted average amount of ordinary shares increased due to
warrant, share options、convertible bond)）
Of which, P refers to net profit attributable to shareholders holding ordinary shares or
net profit attributable to shareholders holding ordinary shares after deducting
non-recurring gains and losses. The Company shall consider all influence on potential
diluted interests of ordinary shares when the Company calculated diluted earnings per
share, till to minimum diluted EPS.
XVII. Approval of financial statement
The said financial statement has been approved by the Board of Directors of the
Company on 9 Aug. 2010.
VIII. Documents Ready for Inquiring
1. Semi-Annual Report 2010 carrying the personal signature and seal of the Chairman of the
Board;
2. Financial Report with signatures and seals of the legal representative, Chief Financial Officer
and Person in charge of accounting organs;
3. Originals of all the Company’s documents and manuscripts of public notices disclosed in the
newspapers designated by China Securities Regulatory Commission in the report period;
Board of Directors of
Foshan Huaxin Packaging Co., Ltd.
Chairman of the Board: Tong Laiming
9 Aug. 2010
