Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
ANNUAL REPORT 2020
2021-027
March 2021
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Foshan Huaxin Packaging Co., Ltd. (hereinafter
referred to as the “Company”) hereby guarantee that the contents of this Report and its
summary are true, accurate and complete and free of any misrepresentations, misleading
statements or material omissions, and collectively and individually accept legal responsibility
for such contents.
Mr. Ren Xiaoping, the Company’s legal representative, Mr. Ding Guoqiang, the Company’s
Chief Financial Officer, and Ms. Luo Jing, the Company’s Financial Manager hereby
guarantee that the financial statements carried in this Report are truthful, accurate and
complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
Any outlook for the Company’s development in 2021 or other forward-looking statements
mentioned in this Report and its summary shall NOT be considered as promises to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.
Risks facing the Company have been explained in detail in “Part IV Management Discussion
and Analysis” herein.
The Board has approved a final dividend plan as follows: based on the share capital of
505,425,000 shares, a cash dividend of RMB0.34 (tax inclusive) per 10 shares is planned to be
distributed to the shareholders, with no bonus issue from either profit or capital reserves.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 5
Part III Business Summary............................................................................................................. 10
Part IV Management Discussion and Analysis.............................................................................. 16
Part V Significant Events.................................................................................................................33
Part VI Share Changes and Shareholder Information................................................................. 61
Part VII Preference Shares..............................................................................................................69
Part VIII Convertible Corporate Bonds........................................................................................ 70
Part IX Directors, Supervisors, Senior Management and Staff...................................................71
Part X Corporate Governance........................................................................................................ 80
Part XI Corporate Bonds.................................................................................................................88
Part XII Financial Statements.........................................................................................................89
Part XIII Documents Available for Reference............................................................................. 236
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Definitions
Term Definition
Foshan Huaxin Packaging Co., Ltd. and its consolidated subsidiaries, except
The “Company”, “FSHXP” or “we”
where the context otherwise requires
China Chengtong China Chengtong Holdings Group Ltd. (the ultimate controller of the Company)
China Paper China Paper Corporation (the actual controller of the Company)
Foshan Huaxin Development Co., Ltd. (the controlling shareholder of the
Huaxin Development
Company)
Hongta Renheng Zhuhai Hongta Renheng Packaging Co., Ltd.
Huaxin Color Printing Huaxin (Foshan) Color Printing Co., Ltd.
Zhuhai Huafeng Zhuhai Huafeng Paper Co., Ltd.
Golden Pheasant Chemical Zhuhai Golden Pheasant Chemical Co., Ltd.
Chengtong Finance China Chengtong Finance Corporation Ltd.
Guanhao High-Tech Guangdong Guanhao High-Tech Co., Ltd.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Huaxin Packaging-B Stock code 200986
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 佛山华新包装股份有限公司
Abbr. 华新包装
Company name in English (if
Foshan Huaxin Packaging Co.,Ltd
any)
Abbr. (if any) FSHXP
Legal representative Ren Xiaoping
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic Development Zone, Nanzhuang
Registered address
Town, Chancheng District, Foshan, Guangdong Province, P.R.China
Zip code 528000
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic Development Zone, Nanzhuang
Office address
Town, Chancheng District, Foshan, Guangdong Province, P.R.China
Zip code 528000
Company website http://www.fshxp.com
Email address hxbz@chinapaper.com.cn
II Contact Information
Board Secretary Securities Representative
Name Ding Guoqiang Shi Hui
2/F, Block 7, 3 Keyang Road, Luoge Park, 2/F, Block 7, 3 Keyang Road, Luoge Park,
Chancheng Economic Development Zone, Chancheng Economic Development Zone,
Office address
Nanzhuang Town, Chancheng District, Nanzhuang Town, Chancheng District,
Foshan, Guangdong Province, P.R.China Foshan, Guangdong Province, P.R.China
Tel. 0756-8666629 0756-8666978
Fax 0756-8666922 0756-8666922
Email address dinggq@htrh-paper.com shih@htrh-paper.com
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for Securities Times, Ta Kung Pao
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
information disclosure
Website designated by the CSRC for publication of
http://www.cninfo.com.cn
this Report
2/F, Block 7, 3 Keyang Road, Luoge Park, Chancheng Economic
Place where this Report is lodged Development Zone, Nanzhuang Town, Chancheng District, Foshan,
Guangdong Province, P.R.China
IV Change to Company Registered Information
Unified social credit code Unchanged
Change to the principal activity of the
Unchanged
Company since going public (if any)
Every change of controlling shareholder
Unchanged
since incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Pan-China Certified Public Accountants LLP
Office address Tower B, Huarun Building, 1366 Qianjiang Road, Jianggan District, Hangzhou City, Zhejiang
Province, China
Accountants writing signatures Li Qinglong and Liu Jingya
The independent sponsor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2020-over-2019
2020 2019 2018
change (%)
Operating revenue (RMB) 4,064,071,623.72 3,930,629,985.81 3.39% 3,683,004,543.50
Net profit attributable to the listed
139,427,823.70 35,704,671.22 290.50% -2,814,965.92
company’s shareholders (RMB)
Net profit attributable to the listed
company’s shareholders before 122,347,146.60 25,885,573.07 372.65% -36,089,244.17
exceptional gains and losses
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(RMB)
Net cash generated from/used in
713,924,336.73 91,344,251.74 681.58% 393,465,394.72
operating activities (RMB)
Basic earnings per share
0.28 0.07 300.00% -0.01
(RMB/share)
Diluted earnings per share
0.28 0.07 300.00% -0.01
(RMB/share)
Weighted average return on equity Up by 4.93 percenta
6.73% 1.80% -0.14%
(%) ge points
Change of 31
December 2020 over
31 December 2020 31 December 2019 31 December 2018
31 December 2019
(%)
Total assets (RMB) 5,648,229,669.75 5,591,643,310.38 1.01% 5,794,694,744.15
Equity attributable to the listed
2,138,497,940.21 2,006,651,491.51 6.57% 1,970,946,820.29
company’s shareholders (RMB)
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative for the last three accounting years, and the latest independent auditor’s report indicated that there was
uncertainty about the Company’s ability to continue as a going concern.
□ Yes √ No
Indicate by tick mark whether the lower of the net profit attributable to the listed company’s shareholders before and after exceptional
gains and losses was negative.
□ Yes √ No
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 822,098,273.22 1,027,484,101.48 1,058,146,561.68 1,156,342,687.34
Net profit attributable to the listed
20,649,171.61 26,920,655.88 39,880,379.86 51,977,616.35
company’s shareholders
Net profit attributable to the listed
company’s shareholders before 19,396,299.90 22,877,752.19 35,323,204.13 44,749,890.38
exceptional gains and losses
Net cash generated from/used in
418,064,605.24 129,167,404.31 -192,911,242.60 359,603,569.78
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their summations differs materially from what
have been disclosed in the Company’s quarterly or interim reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2020 2019 2018 Note
Gain or loss on disposal of non-current
assets (inclusive of impairment allowance -1,632,261.47 -88,727.47 42,435.21
write-offs)
Government grants through profit or loss
(exclusive of government grants given in the
Company’s ordinary course of business at 27,242,697.14 14,875,074.09 17,519,293.30
fixed quotas or amounts as per the
government’s uniform standards)
Capital occupation charges on non-financial
153,364.13 197,199.36
enterprises that are through profit or loss
Gain equal to the amount by which
investment costs for the Company to acquire
subsidiaries, associates and joint ventures
21,561,238.54
are lower than the Company’s enjoyable fair
value of identifiable net assets of investees
when making investments
Gain or loss on fair-value changes on
held-for-trading and derivative financial 12,578,644.03
assets and liabilities & income from disposal
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
of held-for-trading and derivative financial
assets and liabilities and other debt
investments (exclusive of the effective
portion of hedges that arise in the
Company’s ordinary course of business)
Reversed portions of impairment allowances
for receivables and contract assets which are 283,005.50 2,514,391.37
tested individually for impairment
Non-operating income and expense other
13,372,786.46 4,128,431.82 -2,043,196.49
than the above
Less: Income tax effects 3,740,814.32 1,041,662.60 761,426.39
Non-controlling interests effects (net of tax) 18,598,100.34 10,765,608.42 15,622,709.95
Total 17,080,677.10 9,819,098.15 33,274,278.25 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or listed in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Exceptional Gain/Loss
Items:
□ Applicable √ Not applicable
No such cases for the Reporting Period.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
The Company specializes in the R&D, production and sales of high-end coated ivory board, chemicals for paper
making and color printing products. The businesses are described as follows:
(I) High-end coated ivory board
High-end coated ivory board is the primary product of the Company. As a category of white paperboard, it is
applied in various fields such as cigarette packaging, liquid and food packaging, medicine packaging, cosmetic
packaging and living supplies packaging, which represent the core business of the Company. The R&D,
production and sales of the ivory board is mainly undertaken by Zhuhai Hongta Renheng Packaging Co., Ltd. and
Zhuhai Huafeng Paper Co., Ltd. Based in domestic and overseas high-end packaging markets of cigarette and
food, this business provides "personalized" products and services for customers with "differentiation" business
strategy. The Company now has three coated ivory board production lines, and the annual production capacity
around 600,000 tons. The Company's products can be divided into the following categories:
1. Coated ivory board for cigarette packaging, the primary product of the Company, is used in the high-end
cigarette packaging market. The coated ivory board for cigarette packaging produced by Hongta Renheng takes up
a dominant position in the domestic cigarette packaging field. It represents the highest level of coated ivory board
quality in China. It has won a Golden Award at China’s International Paper & Paper Product Brands Exhibition,
and the top award of the Chinese science and technology community—the first-class State Science and
Technology Advancement Award. The anti-counterfeit coated ivory board with color fiber and true-color fiber
etc.—a technology that is independently developed by the Company and has been granted the national invention
patent of China—has been successfully applied in the packaging of a series of cigarettes in the “Hongta Group”
and “HongyunHonghe Group" brands to combat counterfeiting from the packaging materials, reaching the
significant anti-counterfeit results of “easily identifiable but difficult to copy”. The “tobacco fiber ivory board”, a
new product of the Company that pursues the recycling philosophy of “Coming from Tobacco, Used for Tobacco”,
is being tested on the market. And the “black cardboard for cigarette packaging” newly launched to the market is
well-received among customers with stable hue in printing and wide application.
2. In terms of ivory board for liquid and food packaging, a priority for the Company’s future development with
growing market demand, the Company is the first to break the foreign technological monopoly with its ivory
board for liquid packaging. The Company’s homegrown sterile paperboard for packaging of liquid milk, fruit
juice, herbal tea and other drinks has effectively substituted imported products. The ivory board series for food
packaging such as anti-oil food grade coated board and high-end paper cup have been recognized by well-known
catering groups after they are put into the market. Upholding the philosophy of green and sustainable development
and following the national policy of “plastic reduction” and “plastic ban”, the Company has successfully
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
developed the “plastic-free coated board for food packaging” and the “degradable PBS-coated paper”, which is an
effective alternative to PE-coated paper and can help reduce the use of non-degradable plastic.
3. The high-end commercial ivory board is applied in the segmented packaging market fields like the high-end
medicine, cosmetics, and daily necessities. The anti-counterfeit coated ivory paper with personalized
identification code independently developed by the Company and for which it has been granted the invention
patent has been successfully applied in the anti-counterfeit packaging of the high-end products like high-end
medicine and cosmetics. Featuring an anti-counterfeit function and customization for high-end brands, this
product not only effective reduces anti-counterfeit costs for customers, but also boosts their brand recognition,
winning high trust from the market. Meanwhile, new products such as “high-whiteness sun-proof paper” and
“paper for cluster packaging” deliver a remarkable performance in required circumstances and are well-received
among users.
(II) Chemicals for paper making
Chemicals for paper making represent an upstream extension of the Company’s business of the paper-making
industrial chain. The R&D, production and sales of which are mainly undertaken by Golden Pheasant Chemical, a
subsidiary of the Company, which mainly supplies carboxylic butadiene-styrene latex, styrene-acrylic latex,
calcium carbonate and auxiliary chemicals for paper making. These products are mainly used as adhesive and
pigment by major coated board producers in China for packaging of high-quality food and cigarette. Chemicals of
different grades with domestically first-class quality can be supplied as the customer requires. Golden Pheasant
Chemical is considered a well-known papermaking latex producer in China.
(III) Color printing products
Color printing represents a downstream extension of the Company’s business of the paper-making industrial chain,
which covers designing and manufacturing packaging materials and providing one-stop packaging solutions for
customers. This business is mainly undertaken by Huaxin (Foshan) Color Printing Co., Ltd., which owns offset,
flexo and intaglio printing workshops. Huaxin Color Printing focuses on process and technological innovation of
foldable paper boxes, cartons, wet glue labels, self-adhesive labels, shrink labels, in-mold labels, film labels,
barcode printing, brochures and books, and variable data printing is also available, which cater to various fields of
end consumer goods, including medicine, condiments and beverages. The most outstanding advantage is
customization from the material end, providing greener, more economical and individualized packaging materials
for customers.
No significant changes have occurred to either the principal acidities of the Company or its business models in the
Reporting Period.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major assets Main reason for significant changes
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
(I) Backed by a central government-owned enterprise
The ultimate controller of the Company, China Chengtong Holdings Group Ltd. (China Chengtong), authorized
by the State-owned Assets Supervision and Administration Commission of the State Council to perform relevant
duties of the investor on behalf of the State Council, is listed among the first batch of pilot enterprises by the
State-owned Assets Supervision and Administration Commission to construct the standard board of directors and
the first pilot state-owned asset management Company. In 2016, China Chengtong was approved to be the pilot
state-owned capital operation Company, and its main business includes equity operation, financial services, asset
management, integrated logistics services, production materials trading, forestry-pulp paper production
development and utilization etc.. It is also the only large-scale central enterprise approved by the State-owned
Assets Supervision and Administration Commission of the State Council to focus on production, development and
utilization of forestry, wood pulp and paper. China Chengtong is aiming at improving the state-owned capital’s
operation efficiency, serving the national strategy, abiding by the law of the market, and building a state-owned
capital operation platform featuring the market-oriented operation and professional management. In addition, it
will promote the rational flow and optimized of the state-owned capital and optimizing the configuration through
equity operation, value management, and flexible transfer etc.. so as to form an institutional mechanism and
operational model that meet various functional requirements for corresponding state-owned capital operation.
As a pilot enterprise of the state-owned asset management companies, China Chengtong has built a platform for
the state-owned assets restructuring and capital operation in accordance with prevailing market principles,
explored the central enterprise’s non-main business and a special path for the NPA’s market-oriented specialized
operations and disposal, and reorganized and integrated a number of subsidiaries subordinated to central
enterprises by means of trusteeship and the transfer of state-owned property rights. In 2016, China Chengtong was
entrusted by the State-owned Assets Supervision and Administration Commission of the State Council to
participate in the diversification reform of Sinopec International Petroleum Exploration and Production
Corporation, managed China Railway Materials Co., Ltd. in the form of trusteeship, and invested Guoyuan Coal
Asset Management Co., Ltd.. As approved by the State Council and entrusted by the State-owned Assets
Supervision and Administration Commission, China Chengtong, as the main sponsor, cooperated with nine central
enterprises, local state-owned enterprises and financial institutions to jointly set up The China State-Owned
Enterprise Restructuring Fund with a total investment of RMB 350 billion Yuan. Through the combination of FOF,
sub-fund and direct investment, the fund focuses on serving the development of centrally-controlled SOEs. It
supports their industrial integration, professional restructuring, capacity adjustment, international M & A and other
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
projects, promotes better planning of key SOEs and industries, improves industrial concentration, and enhances
capital operation efficiency and reporting. In December 2020, with the approval of the State Council, China
Chengtong, as the main sponsor, worked with several companies to establish a mixed ownership reform fund of
RMB 200 billion for China's SOEs. It aims to attract various kinds of social capital to participate in the reform of
SOEs through market-oriented operations, drive the mixed reform ownership enterprises to improve the modern
enterprise system and transform the operation mechanism, and improve the quality and effect of the mixed
ownership reform. This is of great significance for deepening the reform of SOEs in the new stage.
(II) Technological innovation advantage
The Company always sticks to taking “innovation” as the core motivation of enterprise development while
upholding the “market-oriented and customer-centric” philosophy. Aiming for high-quality development, the
Company adheres to its future product positioning and takes the initiative to overcome difficulties. In recent years,
the Company has researched and developed many new products, and launched them to the market, such as
PBS-coated paper, non plastic coated food packaging board, black cigarette packaging board , tobacco fiber ivory
board, special paper for cluster bag, etc., actively practiced environmental protection conception, developed
recycling economy, promoted “replacing plastic with paper” and individualized products. The Company can
provide customized solution from material end and provide more environmental friendly, more economical and
more individualized packaging materials for customers. Currently, several new technologies are in reserve, R&D
and promotion. In recent years, the Company continuously promote the affiliated enterprises to complete R&D
system construction:
1. Hongta Renheng has constantly adjusted and integrated relevant functions of R&D, and reformed system and
mechanism. R&D combines with market closely, and the New Material Development and Industrial Technology
Research Institute has established. Relying on Enterprise Technology Center of Guangdong Province, Engineering
Technology R&D Center of Guangdong Province, National Hi-Tech Enterprise, and other technology platforms,
the Company undertakes the R&D of new product, new process, new technology, and new raw and auxiliary
materials. Meanwhile, the Company undertakes product R&D and technology service of external paper making
and chemical industry enterprises, as well as the scientific research projects of new materials of national,
provincial and municipal strategic emerging industries. Huaxin Color Printing strengthens R&D input, meets the
needs of variable data printing, and provides solution of customized package printing for customers from material
end.
2. Hongta Renheng has established a professional R&D team led by doctoral holders in relevant fields and
comprising seasoned technical staff, which means it is capable of independent product development. In the
Reporting Period, it participated in the formulation of the group standard—The Looseness Requirements for
Foldable Cartons for Cigarette Packaging and Testing Methods and a printing-industry standard—The Control
Requirements for the Production Process of Green Printing Paper for Food Packaging. By the end of the
Reporting Period, Hongta Renheng has led and participated in formulation and revision of 24 national and
industrial standards (the most in the industry), built leading industrial brand while leading the development of the
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
industry. Huaxin Color Printing was evaluated as Technology Center of Excellent Enterprises of Guangdong. The
Company constantly creates and develops new technologies, and enterprise technology center becomes an
important carrier for technological fruits conversion.
3. Hongta Renheng, Zhuhai Huafeng, Golden Pheasant Chemical, and Huaxin Color Printing which are affiliated
companies of the Company have all passed the review recognition of “National Hi-Tech Enterprise” and enjoyed
the preferential policy of reduction or exemption of enterprise income tax.
4. The Company has obtained various patents, providing the most important technical support and guarantee for
the advancement of product competitiveness. As of the end of the Reporting Period, the Company had been
granted 72 duly authorized patents, including 30 invention patents and 42 utility models. There are 32 pending
patents, including 16 invention patents and 16 utility models.
(III) Quality and brand advantage
Hongta Renheng has the top award of the Chinese science and technology community—the first-class State
Science and Technology Advancement Award. The high-end coated ivory board produced by Hongta Renheng
has excellent printing performance. Dominant product—coated ivory board for tobacco packaging, setting the
quality standard for China’s coated ivory board, takes up a dominant position in high-end tobacco packaging field
with a close to 1/4 market share. "Hongta" coated ivory board takes up a leading position in quality in domestic
and overseas ivory board industry. "Hongta" coated ivory board represents the highest level of production,
technology and product of coated ivory board in China, with a high reputation at home and abroad. In 2020,
Hongta Renheng was recognized as one of “Top 100 Enterprises of Zhuhai in 2020”, which showcased the
company’s comprehensive competitiveness. Huaxin Color Printing continued to deepen its system control and
monitor product quality throughout the whole process to ensure that its products meet customers’ requirements
and improve its market competitiveness.
(IV) Management advantage
With so many years of experience accumulation, the Company cultivates a lot of excellent innovative talents of
technology innovation and operation management, established operation management and decision-making team
of strong ability, high level, wide vision and advanced conception. The Company practices a corporate culture of
“Help Build Civilization, Promote Humanity in Business, Fight against Headwinds and Stay Ambitious”, and
forms management team advantage integrating enterprise culture and core talents gradually. At the same time, the
Company made active steps to promote the mechanism reform and stepped up effort to attract talents, which led to
continuous improvements in its operations management. Hongta Renheng stuck to the principle of “seeking
well-being and development for employees” and persisted in the operation policy of “working at full capacity,
increasing turnover and adjusting structure”. It strengthened the sense of responsibility of all management levels
through the work method of “improving work styles, identifying gaps, addressing weaknesses, monitoring
implementation and intensifying accountability”.
(V) Industry chain advantage
The Company owns a large paper-making industrial chain characteristic of complementary strengths and great
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
synergy. At the procurement end, the Company has effectively reduced procurement costs of certain raw materials,
fast and effective matching of raw materials, as well as improvement in production adaptability. At the marketing
end, the Company adopts a more direct approach in respect of supplying for customers, which streamlines the
industry chain and improves the Company’s overall profitability.
(VI) Environmental protection advantage
The Company adopts a philosophy of high-quality and sustainable development, promotes a green manufacturing
system and plays an active part as a corporate citizen. The Company runs the green development conception
through daily production and operation activities, constantly researches and develops environmental protection
products, selects overseas high quality renewable wood pulp raw materials, implements green upgrading of
production line, introduces the design concept of green ecology, and promotes to turn waste water and solid waste
into resources and the harmless treatment of these wastes. By doing so, it strives for high-quality and sustainable
development. Hongta Renheng, Huafeng Paper and Huaxin Color Printing win the honor of “National Green
Factory”. In addition, Hongta Renheng is among the first paper-making enterprises to be titled “National
Demonstration Enterprise for Green Supply Chain Management”.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part IV Management Discussion and Analysis
I Overview
(I) Market environment of the industry
In the first half of 2020, affected by the COVID-19 pandemic and the complicated economic conditions at home
and abroad, the market condition was tough, with a great number of manufacturers under tremendous pressure. In
the second half of the year, as the domestic pandemic condition improved, along with the implementation of
government policies of “plastic ban” and “restriction on the use of plastic” such as the Opinion on Further
Strengthening the Control of Plastic Pollution and the Announcement on Matters Concerning Comprehensively
Prohibiting the Import of Solid Wastes, the demand of ivory board saw an increase, with better prospects for the
industry. Meanwhile, as China carried on with the structural reform of the supply side, outdated ivory board
capacity faded away. At the same time, the integration of top paper-makers in China produced prominent results.
All these created tremendous opportunities and challenges for the Company’s reform and development. In
addition, as consumer spending upgraded, demand for color printing, a supporting sector for the packaging of
consumer goods, was on the rise. As for the chemicals industry, the year under review saw great volatility in the
prices of raw materials, posing challenges for the operation and development of enterprises in the industry.
(II) Operating results during the Reporting Period
In 2020, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, the Company
implemented the guidelines at the work meetings of superior Party committees, fulfilled its responsibility in
strengthening Party discipline, gave full play to the role of “controlling directions, managing the overall situation
and ensuring implementation”, made tangible effort to ensure stability on the six fronts, performed the tasks of
ensuring security in the six areas, and promoted the integration of Party building into production and operations.
These efforts were meant to lay a solid foundation for the Company to seek strategic transformation and achieve
high-quality development. While guaranteeing the anti-epidemic effort, the Company centered around its annual
production and operation budget and followed the requirements of “Reduce Inventories, Receivables and
Expenditure, Improve Efficiency and Control Costs”. It addressed external market changes and boosted the
efficiency of internal management by taking a suite of measures, including proactively expanding the external
market, increasing effort in R&D and innovation, adjusting the product structure, reforming its organizational
management system, refining the development of its supplier management system, strengthening risk control,
enhancing the level of information management, introducing market-oriented talents and exercising lean
production management.
Product sales volume in the paper segment grew steadily and the operation efficiency improved markedly with an
upward trend of various operating indicators. In 2020, over 580,000 tons of paper products were sold, up by
11.3% year-on-year; the inventory of finished paper products declined by over 32%. The paper segment went
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
from loss to huge profits. In terms of the color printing segment, efforts were continuously made to expand the
external market, strengthen internal management and adjust the product mix, leading to stable growth in operating
revenue and profits. In the chemical segment, the Company faced up to the unfavorable business environment by
overcoming difficulties such as shortage in supply of raw materials from external parties. Through continuous
R&D and innovation and improvement in production process, the Company had the sales volume of latex up by
23% with an evidently stronger profitability.
For the Reporting Period, the Company recorded operating revenue of RMB4,064.0716 million, a gross profit of
RMB291.37 million, and a net profit attributable to the listed company’s shareholders of RMB139.4278 million.
As at the end of the Reporting Period, the total assets of the Company amounted to RMB5,648.2297 million, with
a debt/asset ratio of 32.77%.
(III) Operation measures during the Reporting Period
1. Sticking to Party leadership and integrating such guidance in the Company’s operations
In 2020, the Company’s Party committee adhered to Xi Jinping Thought on Socialism with Chinese
Characteristics for a New Era, conscientiously implemented the decisions and arrangements of the CPC Central
Committee, and put into effect the guidelines of superior Party committees’ work meetings on Party building. In
accordance with the “Three-Five-Four” reform and development guidance, the Company focused on production
and operations, and persisted in the deep integration of Party building into production, operations, corporate
culture, team building and the work about organizations. It gave play to the role of “controlling directions,
managing the overall situation and ensuring implementation”, carried out the action of strengthening and
deepening Party building and advanced the Party building projects of integrating bylaws, leadership systems and
program mechanisms and integrating informatization and industrialization. The Company adhered to the
employment standards of “being loyal to the Party, being bold for innovation, managing itself properly,
prospering itself with tangible results and staying incorruptible”, exercised a work style of “strictness, honesty,
transparency and efficiency”, strengthened discipline and accountability, and drove the work of reinforcing Party
discipline, so as to lay a solid foundation for its transformation and high-quality development.
2. Reinforcing the internal mechanism reform and enhancing operation efficiency
In 2020, the Company continued to improve its organizational structure and at the same time stepped up effort in
the recruitment of marketized mature talents, and introduced professionals to inject new impetus into the
Company for its development. Furthermore, the Company promoted the new appraisal model focusing on the
maximization of “efficiency and profits” to boost the morale of employees. It carried out a reform on its existing
remuneration system based on the principle of linking performance with salary, which “values performance,
rewards the diligent, punishes the lazy, encourages creation, and increases profits”. The Company established
promotion channels comprising five hierarchies to conduct annual comprehensive review of technical, skilled and
management talents at each hierarchy in a specific proportion, thus satisfying the development needs of both itself
and its employees, improving the core competitiveness of both, and guiding employees to focus on improving
their skills and abilities.
17
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
3. Increasing spending on R&D and innovation and improving the incentive mechanism
In 2020, the Company continued to improve R&D spending and pursued “differentiation” in the increasingly
homogeneous market. Its newly founded New Material Development and Industrial Technology Research
Institute integrates paper manufacturing, chemical engineering, printing and packaging technologies of the
paper-making industrial chain, extends research into the “new materials+” in emerging industries, and engages in
the R&D of new products, new processes, new technologies and new raw and auxiliary materials in businesses. In
addition, the Research Institute undertakes the product R&D and technical services to external companies in paper
manufacturing and chemical industry, and engages in the scientific research projects on new materials in national
and provincial strategic emerging industries. New Material Development and Industrial Technology Research
Institute has set up a flexible and market-oriented new incentive mechanism to inspire the technological
innovation ability of scientific and technological personnel, and fully exert and mobilize their creativity and
activity.
4. Advancing the marketing system reform and promoting synergy in the internal management system
The Company has established a market-oriented system in its marketing department to optimize “value
marketing”. It appraises sales performance by measuring the growth of sales volume, forming a competitive
remuneration and incentive mechanism. Moreover, based on its product characteristics and the market status quo,
the Company has continued to improve its marketing structure towards better allocation and use of marketing
resources. It has made improvement to various supply chain links to enhance its overall business capacity.
II Core Business Analysis
1. Overview
See “I Overview” above.
2. Revenue and Cost Analysis
(1) Breakdown of Operating Revenue
Unit: RMB
2020 2019
As a % of total As a % of total
Change (%)
Operating revenue operating revenue Operating revenue operating revenue
(%) (%)
Total 4,064,071,623.72 100% 3,930,629,985.81 100% 3.39%
By operating division
Manufacturing 4,025,002,709.90 99.04% 3,884,748,646.12 98.83% 3.61%
Other 39,068,913.82 0.96% 45,881,339.69 1.17% -14.85%
18
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
By product category
Ivory board 3,393,698,281.73 83.50% 3,265,693,118.99 83.08% 3.92%
Presswork 309,495,589.03 7.62% 302,420,890.22 7.69% 2.34%
Latex 321,808,839.14 7.92% 316,634,636.91 8.06% 1.63%
Other 39,068,913.82 0.96% 45,881,339.69 1.17% -14.85%
By operating segment
Domestic 3,729,190,370.93 91.76% 3,473,332,619.21 88.37% 7.37%
Overseas 334,881,252.79 8.24% 457,297,366.60 11.63% -26.77%
(2) Operating Division, Product Category or Operating Segment Contributing over 10% of Operating
Revenue or Operating Profit
√ Applicable □ Not applicable
Unit: RMB
YoY change in YoY change in
Operating Gross profit YoY change in
Cost of sales operating revenue gross profit
revenue margin cost of sales (%)
(%) margin (%)
By operating division
Manufacturing 4,025,002,709.90 3,345,900,852.96 16.87% 3.61% -4.40% 6.96%
By product category
Ivory board 3,393,698,281.73 2,881,476,073.74 15.09% 3.92% -4.90% 7.88%
Presswork 309,495,589.03 241,221,310.04 22.06% 2.34% 6.19% -2.82%
Latex 321,808,839.14 223,203,469.18 30.64% 1.63% -7.99% 7.25%
By operating segment
Domestic 3,690,121,457.11 3,073,119,994.26 16.72% 7.66% 0.50% 5.93%
Overseas 334,881,252.79 272,780,858.70 18.54% -26.77% -38.29% 15.21%
Core business data restated according to the changed methods of measurement that occurred in the Reporting Period:
□ Applicable √ Not applicable
(3) Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2020 2019 Change (%)
Unit sales 0,000 tons 58.01 52.14 11.26%
Paper-making Output 0,000 tons 57.7 50.02 15.35%
Inventory 0,000 tons 2.92 4.33 -32.56%
19
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Any over 30% YoY movements in the data above and why:
√ Applicable □ Not applicable
As at the end of the Reporting Period, ivory board inventory was 29,200 tons, down 32.56% year on year. This is mainly because the
ivory board market was stronger, and the Company actively explored markets while achieving solid results in the marketing reform.
As a result, the unit sales of ivory board were higher than its output, causing a considerable decline in inventory.
(4) Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
(5) Breakdown of Cost of Sales
By operating division and product category
Unit: RMB
2020 2019
Operating
Item As a % of total As a % of total Change (%)
division Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Manufacturing 3,345,900,852.96 99.33% 3,499,755,144.95 99.09% -4.40%
Other 22,474,586.08 0.67% 32,039,756.91 0.91% -29.85%
Unit: RMB
2020 2019
Product category Item As a % of total As a % of total Change (%)
Cost of sales Cost of sales
cost of sales (%) cost of sales (%)
Ivory board 2,881,476,073.74 85.54% 3,030,009,118.76 85.79% -4.90%
Presswork 241,221,310.04 7.16% 227,168,634.44 6.43% 6.19%
Latex 223,203,469.18 6.63% 242,577,391.75 6.87% -7.99%
Other 22,474,586.08 0.67% 32,039,756.91 0.91% -29.85%
Note:
None.
(6) Changes in the Scope of Consolidated Financial Statements for the Reporting Period
□ Yes √ No
(7) Major Changes to the Business Scope or Product or Service Range in the Reporting Period
□ Applicable √ Not applicable
20
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(8) Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 802,841,459.22
Total sales to top five customers as a % of total sales of
19.75%
the Reporting Period (%)
Total sales to related parties among top five customers as
0.00%
a % of total sales of the Reporting Period (%)
Top five customers:
Sales revenue contributed for
No. Customer As a % of total sales revenue (%)
the Reporting Period (RMB)
1 Customer A 250,512,862.46 6.16%
2 Customer B 237,508,693.75 5.84%
3 Customer C 130,788,505.73 3.22%
4 Customer D 93,726,068.40 2.31%
5 Customer E 90,305,328.88 2.22%
Total -- 802,841,459.22 19.75%
Other information about major customers:
□ Applicable √ Not applicable
Major suppliers:
Total purchases from top five suppliers (RMB) 1,062,849,802.92
Total purchases from top five suppliers as a % of total
38.20%
purchases of the Reporting Period (%)
Total purchases from related parties among top five
suppliers as a % of total purchases of the Reporting 0.00%
Period (%)
Top five suppliers:
Purchase in the Reporting
No. Supplier As a % of total purchases (%)
Period (RMB)
1 Supplier A 359,147,335.92 12.91%
2 Supplier B 212,678,204.57 7.64%
3 Supplier C 205,790,193.12 7.40%
4 Supplier D 155,078,731.72 5.57%
5 Supplier E 130,155,337.59 4.68%
Total -- 1,062,849,802.92 38.20%
Other information about major suppliers:
21
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
2020 2019 Change (%) Reason for any significant change
Selling expense 206,102,948.57 183,190,086.17 12.51%
Administrative expense 103,157,480.93 100,105,438.67 3.05%
Better capital control by reducing
Finance costs 49,058,721.82 75,379,250.90 -34.92%
interest-bearing loans
More input to product development
R&D expense 89,899,073.34 57,601,470.09 56.07%
and building the R&D team
4. R&D Investments
√ Applicable □ Not applicable
Amid the widespread COVID-19 pandemic and faster market integration in 2020, the Company adopted active measures and adhered
to independent development. The Company relied on Enterprise Technology Center of Guangdong Province, Engineering
Technology R&D Center of Guangdong Province, National Hi-Tech Enterprise, and other technology platforms, focused on three
R&D directions of “developing paper products to replace plastic”, “research on the comprehensive utilization of cigarette waste” and
functional ivory board, and conducted development of new products and new technology. The Company successfully developed and
launched to the market “new products, such as non plastic coated board for food, tobacco fiber ivory board, black cigarette packaging
board, high end sunshine resistant coated ivory board, etc.”, and enabled the Company to keep on leading the development of ivory
board industry with product quality, technology innovation, and obtained stage achievements. Among them, the development of
tobacco fiber ivory board provided solution for tobacco company to utilize waste of tobacco and realize recycling economy, and
obtained stage achievement. As for products of “paper replacing plastic” , the R&D and promotion of non plastic coated food
packaging board and ivory board for PE-free green paper cups effectively realized plastic reduction and plastic degeneration function,
and laid foundation for the development of green environmental protection packaging materials. The R&D and innovation of
technology consolidated the technology leading position of the Company in ivory board field.
As of the end of the Reporting Period, the Company had been granted 72 duly authorized patents, including 30 invention patents and
42 utility models. There are 32 pending patents, including 16 invention patents and 16 utility models.
Details about R&D investments:
2020 2019 Change (%)
Number of R&D personnel 142 140 1.43%
22
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
R&D personnel as a % of total
8.20% 7.60% 0.60%
employees
R&D investments (RMB) 131,899,073.34 129,946,865.55 1.50%
R&D investments as a % of
3.25% 3.31% -0.06%
operating revenue
Capitalized R&D investments
3,446,208.90 4,952,724.48 -30.42%
(RMB)
Capitalized R&D investments
as a % of total R&D 2.61% 3.81% -1.20%
investments
Reasons for any significant YoY change in the percentage of R&D investments in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D investments and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2020 2019 Change (%)
Subtotal of cash generated from
3,982,992,697.82 3,378,172,404.73 17.90%
operating activities
Subtotal of cash used in
3,269,068,361.09 3,286,828,152.99 -0.54%
operating activities
Net cash generated from/used in
713,924,336.73 91,344,251.74 681.58%
operating activities
Subtotal of cash generated from
400,324,600.99 447,936,584.07 -10.63%
investing activities
Subtotal of cash used in
652,287,972.37 439,806,258.16 48.31%
investing activities
Net cash generated from/used in
-251,963,371.38 8,130,325.91 -3,199.06%
investing activities
Subtotal of cash generated from
2,159,250,340.98 2,949,831,729.99 -26.80%
financing activities
Subtotal of cash used in
2,528,725,645.18 3,064,260,818.25 -17.48%
financing activities
Net cash generated from/used in
-369,475,304.20 -114,429,088.26 -232.31%
financing activities
Net increase in cash and cash
94,847,939.47 -15,953,538.58 694.53%
equivalents
23
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Explanation of why any of the data above varies significantly on a year-on-year basis:
√ Applicable □ Not applicable
(1) Net cash generated from operating activities was RMB713.92 million in 2020, up by RMB622.58 million year-on-year. This was
mainly because ① the unit sales of ivory board saw a significant increase in the year due to greater efforts in boosting sales; and ②
a stricter appraisal system was adopted with regard to payment collection in cash. Therefore, proceeds from sale of commodities and
rendering of services went up by RMB582.18 million on a year-on-year basis, while payments for commodities and services declined
by RMB91.98 million year-on-year, resulting in a considerable year-on-year increase in net cash generated from operating activities.
(2) Net cash generated from investing activities was RMB-251.96 million in 2020, down by RMB260.09 million year-on-year. This
was mainly because of the new term deposits and structured deposits in the year.
(3) Net cash generated from financing activities was RMB-369.48 million in 2020, down by RMB255.05 million year-on-year. This
was mainly because of the repayment of bank loan in the year.
Explanation of why the net cash generated from/used in operating activities varies significantly from the net profit of the Reporting
Period:
□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As a % of gross
Amount Source/reason Recurrent or not
profit
Return on long-term equity
Return on investment in associate
28,847,970.39 9.90% Yes
investment measured at the equity
method
Asset impairment Reversed inventory
1,389,714.51 0.48% Not
loss valuation loss
Non-operating Income from scrap and
14,549,745.47 4.99% Not
income others
Non-operating
2,989,320.64 1.03% Other non-operating expense Not
expense
Credit impairment Reversed doubtful account
397,510.98 0.14% Not
loss loss
24
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Asset disposal Income from disposal of
180,100.16 0.06% Not
income fixed assets
Other income 27,242,697.14 9.35% Government grant Not
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Indicate whether the Company has adopted the new accounting standards governing revenue and leases since 2020 and restated the
beginning amounts of relevant financial statement line items in the year.
Applicable.
Unit: RMB
31 December 2020 1 January 2020 Reason for
Change in percentage any
As a % of total As a % of total
Amount Amount (%) significant
assets assets
change
Up by 10.49 percentage
Monetary assets 808,336,749.66 14.31% 213,743,010.81 3.82%
points
Accounts Down by 5.78
543,703,145.28 9.63% 861,496,771.58 15.41%
receivable percentage points
Down by 1.7 percentage
Inventories 571,680,057.95 10.12% 660,926,072.21 11.82%
points
Investment Down by 0.22
17,187,286.30 0.30% 29,115,661.86 0.52%
property percentage points
Long-term equity Down by 0.09
657,022,801.63 11.63% 655,312,367.55 11.72%
investments percentage points
Down by 1.92
Fixed assets 1,979,652,177.39 35.05% 2,067,109,815.77 36.97%
percentage points
Construction in Up by 0.07 percentage
37,659,416.51 0.67% 33,321,697.05 0.60%
progress points
Short-term Down by 10.72
569,724,731.69 10.09% 1,163,487,459.95 20.81%
borrowings percentage points
2. Assets and Liabilities at Fair Value
□ Applicable √ Not applicable
3. Assets to which the Company’s Rights Were Restricted as at the Period-End
RMB653.1819 million of total assets of the Company was restricted, of which monetary assets was RMB588.9315 million (cash
deposits for notes and pledge of term deposits); and receivables financing was RMB64.2504 million (pledge for asset pool ).
25
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
V Investments Made
1. Total Investment Amount
□ Applicable √ Not applicable
2. Significant Equity Investments Acquired in the Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments of which the Acquisition Was Uncompleted in the Reporting Period
□ Applicable √ Not applicable
4. Financial Investments
(1) Securities Investments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Investments in Derivative Financial Instruments
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Use of Raised Funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VI Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
26
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
2. Sale of Major Equity Investments
□ Applicable √ Not applicable
VII Principal Subsidiaries and Joint Stock Companies
√ Applicable □ Not applicable
Principal subsidiaries and joint stock companies with an over 10% effect on the consolidated net profit:
Unit: RMB
Relationship Principal Registered Operating Operating
Name with the activity Total assets Net assets Net profit
capital revenue profit
Company
Zhuhai
Hongta
High-grade
Renheng 600,000,000. 3,734,182,58 2,667,507,69 2,702,646,00 96,115,024.7 95,799,422.9
Subsidiary coated ivory
Packaging 00 4.25 7.75 4.76 4 6
board
Co., Ltd.
(alone)
Zhuhai
High-grade
Huafeng 984,559,331. 2,661,153,82 1,096,121,44 2,218,099,94 89,873,907.0 95,101,706.8
Subsidiary coated ivory
Paper Co., 06 9.97 8.43 6.22 3 4
board
Ltd.
Zhuhai
Golden Latex and
69,271,940.0 245,339,309. 203,935,298. 431,993,081. 47,456,892.8 44,578,753.7
Pheasant Subsidiary calcium
0 97 90 54 2 9
Chemical carbonate
Co., Ltd.
Huaxin
(Foshan) Color
96,895,605.1 416,631,527. 280,644,575. 328,113,053. 30,117,855.7 28,441,909.0
Color Subsidiary packaging
4 25 11 59 4 3
Printing Co., printing
Ltd.
Subsidiaries acquired or disposed of in the Reporting Period:
□ Applicable √ Not applicable
Other information on principal subsidiaries and joint stock companies:
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
27
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
IX Prospects
(I) Development trend of the Company industry
The Company industry is white cardboard, color packages printing products, papermaking chemicals. Recovery and upgrading of
consumption spurs the gradual recovery of demand for white cardboard as important upmarket packaging materials. In addition, the
“stay-at-home economy” provides new soil for the rising demand for white cardboard. With the implementation of environmental
policies, such as the ban on importing waste and the restrictions on the production, sale and use of single-use plastic products, paper
packages as eco-friendly materials are powerful alternatives to plastic packaging materials. This has opened up a new market of
“replacing plastics with paper” and stimulated a rapid growth in the market demand for white cardboard, leading to a positive
momentum for the development of the whole industry chain. According to related studies, a white cardboard market gap of nearly 4
million tons is expected to arise in the next five years.
(II) Development strategy
The Company is engaging in the asset restructuring with Guanhao High-Tech. Upon the restructuring, the Company will stand at a
new start point to vigorously promote the industrial mixed ownership reform and expedite the release of financial performance. It
will stick to the new development concept and make full effort to build a new development pattern in the new development stage.
The Company will continue to keep an eye on the policies and elements of the capital market, step up effort to combine the industry
and the capital market, give full play to its own advantages and achieve more leaping development through professional and
market-oriented acquisition and restructuring.
(III) Operation and development planning of the Company in 2021
In 2021, the Company will continue to adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully
implement the overall requirements of Party building in the new era, put into effect the guidelines of the fifth plenary session of the
19th CPC Central Committee, give play to the leading and core role of the Party, execute the central cultural concept of “Help Build
Civilization, Promote Humanity in Business, Fight against Headwinds and Stay Ambitious”, and promote reforms and transformation.
Meanwhile, the Company will firmly grasp the important opportunity of the asset restructuring, focus on the goal of high-quality and
sustainable development and integrate high-quality resources to build a coordinated and innovative development system and drive the
building of a green manufacturing system. It will continue to deepen the mechanism reform, refine the market-oriented operation
mechanism, advance the development of medium and long-term incentives and unleash its vigor and vitality. It will continue to
develop new marketing models, judge on the new market context, expand new market and step up efforts for the development of new
products and product marketing. The Company will strengthen lean management, enhance the level of information-based
management and boost the efficiency of operations management. It will reinforce internal management, improve its risk prevention
capacity and build up defense against risks.
(IV) Possible risk
1. Market risk
High-end coated ivory board is the primary product of the Company. However, affected by the concentrated release of the new
production capacity for various ivory boards in China in the past two years, the domestic demands didn’t increase greatly. The more
fierce market competition of the ivory boards in China has brought a great impact on the market of the Company’s products.
Meanwhile, with faster integration and more concentration in the industry, ivory board prices may encounter fluctuations.
Additionally, the pandemic situation overseas poses uncertain risk to the export of the Company’s ivory board.
Countermeasure: intensify product structure adjustment, and strengthen the efforts in developing new products and expanding new
market.
2. Compliance risk
Policies and rules change quickly under new situation, various supervisions with wide coverage have many requirements, and there
are risks in abiding by laws and regulations, Party regulations, supervision requirements, commercial practice, industry code, ethic
28
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
regulations, and other external and internal requirements.
Countermeasures: Sort out and complete current management systems of the Company, and meet compliance requirements; Appoint
external legal consultants to conduct compliance review for systems of the Company; Strictly implement relevant systems,
investigate and punish behaviors against disciplines and regulations, and safeguard the authority of the Company systems.
3. Safety and Environmental Protection Risk
The Company is specialized in manufacturing with large mechanical equipment. Due to complicated production and manufacturing
environment, safety production and environmental requirements become much more stringent.
Countermeasures: strengthen the recognition and management of safety and environmental protection hazards; improve the
management of production & manufacturing machines and pollution discharge equipment/facilities; clearly define personnel
responsibilities of front-line production workers; enhance the supervision and inspection of safety operation on the production site;
reinforce corresponding publicity and education and create possible safety production atmosphere; consolidate job responsibilities for
staffs in environmental protection department; strictly implement environmental protection and emission standards; eliminate
possible risks of safety and environmental protection accidents.
4. Risks of changes in raw material prices and exchange rates
The imported wood pulp used as raw materials by the Company in its main products are affected by the sharp changes in
international wood pulp price and fluctuations in the exchange rate of RMB against USD. This will bring great pressure on the
Company’s control of production cost.
Countermeasures: Keep close watch on the changes of wood pulp price and the trend of the exchange rate of RMB against USD and
trade on forward contracts when appropriate; Gradually raise the proportion of domestic wood pulp purchases and when necessary,
carry out strategic purchase for inventory to control cost; Beef up sales, expand sales channels and increase prices to cover the impact
of cost when appropriate.
X Communications with the Investment Community such as Researches, Inquiries and
Interviews
1. During the Reporting Period
√ Applicable □ Not applicable
Main
Type of the discussions and
Way of Communication Index to the relevant
Date Place communication materials
communication party information
party provided by the
Company
Inquired about
the restructuring
10 September
- By phone Individual Individual plan and the -
2020
share swap
percentage
Inquired about
11 September the restructuring
- By phone Individual Individual -
2020 plan, the share
swap percentage
29
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
and the cash
option
Inquired about
substantial
shareholders’
participation in
11 September the asset
- By phone Individual Individual -
2020 restructuring and
the Company’s
judgment on its
future business
performance
Inquired about
the restructuring
plan and the date
14 September
- By phone Individual Individual when trading in -
2020
the Company’s
shares would
resume
Offered specific
advices with
22 September
- By phone Individual Individual regard to the -
2020
restructuring
plan
Inquired about
the restructuring
24 September
- By phone Individual Individual plan and the -
2020
subsequent
arrangements
Offered advices
with regard to
the restructuring
25 September plan and
- By phone Individual Individual -
2020 inquired about
arrangements
subsequent to
the restructuring
Inquired about
the restructuring
9 October 2020 - By phone Individual Individual progress, the -
Company’s
business
30
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
performance and
assets, etc.
Inquired about
the Company’s
13 October 2020 - By phone Individual Individual business -
performance and
restructuring
Inquired about
the specific
15 October 2020 - By phone Individual Individual -
procedures of
the share swap
Inquired about
the restructuring
plan, the share
20 October 2020 - By phone Individual Individual swap -
percentage, the
lockup period,
etc.
Inquired about
the general
meeting’s
21 October 2020 - By phone Individual Individual -
approval of the
restructuring
plan
Inquired about
the general
meeting to be
held with regard
5 November
- By phone Individual Individual to the -
2020
restructuring
plan and the
specific share
swap procedures
Inquired about
the share reform
10 November
- By phone Individual Individual and the provider -
2020
of the cash
option
Inquired about
24 November the time of the
- By phone Individual Individual -
2020 general meeting
and the future
31
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
business plan
Inquired about
27 November the poll results
- By phone Individual Individual -
2020 of the general
meeting
Inquired about
how to attend
3 December One-on-one the general
- Individual Individual -
2020 meeting meeting for the
restructuring
plan
Times of communications 17
Number of institutions communicated with 0
Number of individuals communicated with 17
Number of other communication parties 0
Tip-offs or leakages of substantial confidential
None
information
32
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders was formulated, executed or revised
in the Reporting Period:
√ Applicable □ Not applicable
It is estimated that the Company will distribute dividends of RMB0.34 (tax inclusive) per 10 shares to all shareholders based on the
total shares of the Company on 31 December 2020.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and
Yes
resolution of general meeting
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and
Yes
played their due role
Non-controlling interests are able to fully express their opinion
Yes
and desire and their legal rights and interests are fully protected
In case of adjusting or changing the cash dividend policy, the
conditions and procedures involved are in compliance with No adjustments or changes
applicable regulations and transparent
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three years (including the Reporting
Period) are summarized as follows:
2020 profit distribution plan: Based on the total shares of the Company as of 31 December 2020, a dividend of RMB0.34 (tax
inclusive) per 10 shares would be distributed to all shareholders of the Company.
2019 profit distribution plan: Based on the total shares of the Company as of 31 December 2019, a dividend of RMB0.15 (tax
inclusive) per 10 shares would be distributed to all shareholders of the Company.
2018 profit distribution plan: the Company didn’t carry out the 2018 profit distribution plan temporarily due to the operating losses
during the Reporting Period.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period):
Unit: RMB
Net profit
Total cash
attributable to
Cash Cash dividends dividends
ordinary A as % of B in other forms C as % of B D as % of B
Year dividends (tax (including
shareholders (%) (such as share (%) (%)
inclusive) (A) repurchase) (C) those in other
of the listed
forms) (D)
company in
33
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
consolidated
statements for
the year (B)
2020 17,184,450.00 139,427,823.70 12.32% 0.00 0.00% 17,184,450.00 12.32%
2019 7,581,375.00 35,704,671.22 21.23% 0.00 0.00% 7,581,375.00 21.23%
2018 0.00 -2,814,965.92 0.00% 0.00 0.00% 0.00 0.00%
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the ordinary shareholders despite the
facts that the Company has made profits in the Reporting Period and the profits of the Company as the parent distributed to the
ordinary shareholders are positive.
□ Applicable √ Not applicable
II Final Dividend Plan for the Reporting Period
√ Applicable □ Not applicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB) (tax inclusive) 0.34
Total shares as the basis for the profit distribution 505,425,000
proposal (share)
Cash dividends (RMB) (tax inclusive) 17,184,450.00
Cash dividends in other forms (such as share
0.00
repurchase) (RMB)
Total cash dividends (including those in other
17,184,450.00
forms) (RMB)
Distributable profit (RMB) 23,660,421.79
Total cash dividends (including those in other
72.63%
forms) as % of total profit distribution
Cash dividend policy
Other
Details about the proposal for profit distribution and converting capital reserve into share capital
According to the commitments related to the Dividend Plan for Future Three Years (2018~2020) established on the 2nd Meeting of
the 7th Board of Directors of the Company in 2018 and requirements of Measures for Administration of Securities Issuance by
Listed Companies that “In compliance with the relevant laws and regulations and the relevant provisions of the Articles of
Association, if the company is profitable, and meets the company's normal production and operation funding requirements, and
reserves statutory reserve funds and surplus reserves in full, if no major investment plans or significant cash expenditures and other
events occurred, the company's cumulative profit distribution in cash over the next three years shall be not less than 30% of the
annual distributable profits realized in the last three years.”
34
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and Acquirers, as well
as the Company Itself and other Entities Fulfilled in the Reporting Period or Ongoing at the Period-end
√Applicable □ Not applicable
Date of
Type of Term of
Commitment Promisor Details of commitment commitment Fulfillment
commitment commitment
making
Commitments made in
share reform
In order to avoid potential
horizontal competition,
China Supplies
Development Investment
Corporation (which has
changed its name to “China
Paper Corporation”) makes
the following commitment:
1. The Company and the
Company’s wholly owned
and controlling companies
ensure that there is no same
or similar business with
Foshan Huaxin Packaging
Commitments made in Co., Ltd. 2. The Company
acquisition documents or China Paper and the Company’s wholly 28 June 2005 Normal
Long-term
shareholding alteration Corporation owned and controlling performance
documents companies ensure that there
is no same or similar
business with Foshan
Huaxin Packaging Co.,
Ltd.; The Company and the
Company’s wholly owned
and controlling companies
will not self-run no same or
similar business with
Foshan Huaxin Packaging
Co., Ltd.; not self- run any
similar projects constitute a
direct competition with
Foshan Huaxin Packaging
Co., Ltd.; nor any method
35
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
of investment business
constituted or may
constituted competition
with Foshan Huaxin
Packaging Co., Ltd. thus
ensure to avoid any direct
or indirect business
competition to the
production and operation of
Foshan Huaxin Packaging
Co., Ltd..
For defective real estate
failing to obtain the
drawbacks of the ownership
certificate, Hongta Group
Co., Ltd. and Yanlord
Industries Pte. Ltd.
undertake that if a third
party claims right or
property demolition, which
results in the inability of
Hongta Renheng to
Singapore
normally possess, utilize,
Renheng
profit from and dispose of
Industry
defective (real estate),
Co., Ltd.;
Hongta Group Co., Ltd and Long-term
Yunnan
Yanlord Industries Pte. Ltd commitment
Commitments made in Hongta 29 October
agree to pay the Long-term belonging to
time of asset restructuring Group Co., 2012
compensation for the losses need trigger
Ltd.,(both
of Foshan Huaxin conditions
are not the
Packaging Co., Ltd. and
shareholders
Long Bon International Co.,
of the
Ltd. within 30 days from
Company)
receiving the notice of
Foshan Huaxin Packaging
Co., Ltd. and Long Bon
International Co., Ltd. The
value of defective real
estate will be
comprehensively
determined according to the
Rights and Interests of All
Shareholders Value Assets
Evaluation Report of
36
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Zhuhai Special Economic
Zone Hongta Renheng
Paper Co., Ltd. issued by
Zhongshang Assets
Appraisal Co., Ltd. on 7
November 2008 as well as
used years and depreciation
of real estate. The
compensation shall not
exceed the total assessed
net value of the defective
real estate of
RMB10,746,298.00.
Foshan Huaxin
Development Co., Ltd.
undertakes that it will not in
any place within or outside
of Guangdong province in
any way (including, but not
limited to, with individual
proprietorship, joint venture
or through another company
Foshan hold the share or own
Commitments made in Huaxin equities) participate in Normal
23 June 1999 Long-term
time of IPO or refinancing Developmen similar business activities performance
t Co., Ltd. that may directly form
competition with YHB at
that time, but with the
exception that Foshan
Huaxin Development Co.,
Ltd. no longer actually
controls YHB in the case of
any subsequent
restructuring, transfer, new
issuance, etc.,
Equity incentive
commitments
The Company’s specific
planning for returns to its
Other commitments made shareholders for the next Normal
15 April 2018 14 April 2021
to minority shareholders three years (2018-2020): 1. performance
The Company can use cash,
shares or cash and shares
37
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
combined to allocate
dividends and allocate
interim cash dividends. 2.
Within the next three years,
the Company will
proactively distribute
profits in cash. In
accordance with relevant
laws, regulations and the
related provisions and terms
of the Company’s Articles
of Incorporation and
policies, if the Company
makes profits and meets the
capital demand of normal
production and business
operation with sufficient
reserved legal accumulation
fund and surplus
accumulation and if there is
no major investment plan or
major cash payments, etc.,
the cumulative profits in
cash to be distributed in the
next three years will be no
less than thirty percent of
the average annual
attributable profits realized
in recent three years. 3.
Depending on the actual
situation of the Company’s
long-term and sustainable
development, when the
Board of Directors deems
that the profit allocation in
share dividends meets the
overall interests of all
shareholders, the Company
can use share dividends to
distribute profits.
Fulfilled on time Yes
Specific reasons for
failing to fulfill N/A
commitments on time and
38
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
plans for next step (if
any)
2. Where there had been an earnings forecast for an asset or project and the Reporting Period was still
within the forecast period, explain why the forecast has been reached for the Reporting Period.
□Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√Applicable □ Not applicable
(1) The Company implemented the Accounting Standards for Business Enterprises No. 14 - Revenue (hereinafter referred to as the
new revenue standards) revised by the Ministry of Finance from January 1, 2020. According to the relevant provisions on the
transition between the new and old standards, information of comparable periods shall not be adjusted. For the cumulative impact
from the implementation of the new standards on the date of the first implementation, the amount of retained earnings as at the
beginning of the reporting period and other related items in the financial statements will be retroactively adjusted.
1) The main influence on the Company’s financial statements on 1 January 2020 by the implementation of new standards governing
revenue is as follows:
Item Balance sheet
31 December 2019 Influenced 1 January 2020
Advances from customers 23,303,552.10 -23,303,552.10
Contract liabilities 20,622,612.48 20,622,612.48
Other current liabilities 2,680,939.62 2,680,939.62
2) For contract changes before 1 January 2020, the Company adopts the simplified treatment method. In respect of all contracts,
according to the final arrangement of contract changes, the Company identifies fulfilled and unfulfilled performance obligations,
determines transaction prices, and apportions transaction prices between fulfilled and unfulfilled performance obligations. The
simplified method has no significant impact on the Company’s financial statements.
(2) The Company implemented the Interpretation No. 13 on Accounting Standards for Business Enterprises issued by the Ministry of
Finance in 2019 from 1 January 2020. The accounting policy change is treated in the prospective application method.
39
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
VII Retrospective Restatements due to Correction of Material Accounting Errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Pan-China Certified Public Accountants (LLP)
The Company’s payment to the domestic independent auditor
95
(RMB’0,000)
How many consecutive years the domestic independent auditor
3
has provided audit service for the Company
Names of the certified public accountants from the domestic
Li Qinglong, Liu Jingya
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
3
have provided audit service for the Company
Indicate by tick mark whether the independent auditor was changed for the Reporting Period.
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls:
√ Applicable □ Not applicable
The Company engaged Pan-China Certified Public Accountants (Special General Partnership) as the internal control auditor for the
Current Year and paid RMB0.3 million additionally for that.
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XII Major Legal Matters
√Applicable □ Not applicable
40
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Involved
Index to
amount Decisions and Execution of Disclosure
General information Provision Progress disclosed
(RMB’0,000 effects decisions date
information
)
A major production safety
accident was caused by a flash
burn when Jiangsu Tianxing
High-Altitude Anti-Corrosion
Engineering Co., Ltd.
(hereinafter referred to as
"Jiangsu Tianxing") and
Wuhan Kedio Electric Power
Technology Co., Ltd.
(hereinafter referred to as
"Wuhan Kedio") carried out The judgment has
the maintenance of 120m been made that
chimney anti-corrosion one fifth of
The case enters
project for Zhuhai Huafeng, As of the responsibility of
the execution
the holding subsidiary of the end of the RMB2.232 http://www.
phase and
company, on 4 March 2017. Reporting million of cninfo.com.
Zhuhai Huafeng
Six construction workers of Period, the compensation is cn/new/disc
is claiming
the construction company final respectively born losure/detai
compensation
died in the accident. Zhuhai judgment for by Zhuhai l?orgId=gss
from other
Huafeng paid a total the civil Huafeng and other 6 March z0200986&
1,116 None defendants.
compensation of RMB 11.16 compensatio four defendants. 2017 announcem
Zhuhai Huafeng
million to relatives of the n case has At present, Zhuhai entId=1203
is applying for
victims on 7 March 2017 for been made, Huafeng has 132688&an
legal
Jiangsu Tianxing and Wuhan and the case received the nouncemen
enforcement to
Kedio in accordance with the enters the compensation of tTime=201
Zhuhai Jinwan
requirements and under the execution RMB2.29 million 7-03-06
District People’s
supervision of the phase. from defendants.
Court.
government. Zhuhai Huafeng RMB6.64 million
applied to Zhuhai Jinwan is still to be
District People's Court for recovered.
property preservation before
litigation on 14 March 2017.
Zhuhai Huafeng applied to
Zhuhai Jinwan District
People's Court for recovery
action in which Jiangsu
Tianxing and Wuhan Kedio
were taken as joint defendants
on 16 March 2017. Then
Wuhan Kedio applied to add
41
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Yancheng Xinda
High-Altitude Anti-Corrosion
Co., Ltd. (hereinafter referred
to as YanchengXinda) as a
defendant and YanchengXinda
applied to add Liu Jiechun as
a defendant. It is a dispute
case over the right of recourse
of the subsidiary of the
Company.
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
√Applicable □ Not applicable
As % of Obtaina
total Approv ble Index
Relation Over
Total value of ed Method market to
ship Type of Specific Pricing Transact the
Related value all transacti of price for Disclos disclose
with the transacti transacti principl ion approve
party (RMB’0 same-ty on line settleme same-ty ure date d
Compan on on e price d line or
,000) pe (RMB’0 nt pe informa
y not
transacti ,000) transacti tion
ons ons
China Actual Purchasi Being Market 24 http://w
Continu Market 7,419.6
Paper controll ng decided 2.67% 21,800 No Transfer referenc March ww.cni
ing price 3
Corporati er commod through e price 2020 nfo.co
42
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
on ities negotiat m.cn
ion
based
on the
market
price
Subordi
Being
nate
decided
Tianjin enterpri
through
CMST se under Receptio http://w
public Market 24
Chuangsh the Continu n of Market 7,071.0 7,071.0 ww.cni
bidding 43.41% No Transfer referenc March
i control ing labor price 4 4 nfo.co
based e price 2020
Logistics of the service m.cn
on the
Co., Ltd. final
market
controll
price
er
14,490. 28,871.
Total -- -- -- -- -- -- -- --
67 04
Large-amount sales return in detail N/A
Give the actual situation in the
Reporting Period (if any) where an
estimate had been made for the total
N/A
value of continuing related-party
transactions by type to occur in the
Reporting Period
Reason for any significant difference
between the transaction price and the N/A
market reference price (if applicable)
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Related Transactions Regarding Joint Investments in Third Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicable
Indicate by tick mark whether there were any credits and liabilities with related parties for non-operating purposes.
43
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
□ Yes √ No
No such cases in the Reporting Period.
5. Other Major Related-Party Transactions
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company as the parent and its subsidiaries for external parties (exclusive of those for subsidiaries)
Disclosure
Guarante
date of the
Actual Having e for a
guarantee Line of Actual Type of Term of
Obligor guarantee expired related
line guarantee occurrence date guarantee guarantee
amount or not party or
announcem
not
ent
Guarantees provided by the Company as the parent for its subsidiaries
Obligor Disclosure Line of Actual Actual Type of Term of Having Guarante
44
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
date of the guarantee occurrence date guarantee guarantee guarantee expired or e for a
guarantee amount not related
line party or
announcem not
ent
Zhuhai Hongta
30 October 20 December 2020.5.27-20
Renheng Packaging 20,000 0 Joint-liability Not
2019 2019 21.12.31
Co., Ltd.
Zhuhai Hongta
24 May 2020.5.20-20
Renheng Packaging 33,000 9 August 2019 12,793 Joint-liability Not
2017 23.5.19
Co., Ltd.
Zhuhai Hongta
23 August 2020.6.29-20
Renheng Packaging 30,000 20 May 2020 24,100 Joint-liability Not
2018 21.12.31
Co., Ltd.
Zhuhai Hongta
12 March 7 December 2020.8.7-202
Renheng Packaging 10,000 8,037 Joint-liability Not
2020 2020 1.7.15
Co., Ltd.
Zhuhai Hongta
24 April 28 December 2020.8.21-20
Renheng Packaging 6,000 1,893 Joint-liability Not
2018 2020 21.3.31
Co., Ltd.
Zhuhai Hongta
25 April 2020.6.29-20
Renheng Packaging 17,000 21 August 2020 10,000 Joint-liability Not
2020 23.6.28
Co., Ltd.
Zhuhai Hongta
12 March 4 December 2020.7.3-202
Renheng Packaging 40,000 10,981 Joint-liability Not
2020 2019 1.7.3
Co., Ltd.
Zhuhai Hongta
27 August 18 September 2020.1.16-20
Renheng Packaging 13,000 6,643 Joint-liability Not
2019 2020 22.1.15
Co., Ltd.
Zhuhai Hongta
12 March 2020.5.28-20
Renheng Packaging 10,000 9 October 2020 4,581 Joint-liability Not
2020 21.3.11
Co., Ltd.
Zhuhai Hongta
22 August 2020.11.2-20
Renheng Packaging 10,657 21 January 2020 4,569 Joint-liability Not
2020 22.7.31
Co., Ltd.
Zhuhai Hongta
12 March 2019.12.25-2
Renheng Packaging 7,000 7 January 2020 565 Joint-liability Not
2020 024.12.25
Co., Ltd.
Zhuhai Huafeng Paper 12 March 1 September 2019.09.27-2
5,000 5,000 Joint-liability Not
Co., Ltd. 2020 2020 020.7.31
45
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Zhuhai Huafeng Paper 25 October 30 September 2019.10.28-2
35,000 23,934 Joint-liability Not
Co., Ltd. 2016 2019 022.10.27
Zhuhai Huafeng Paper 22 August 2020.11.2-20
10,657 9 October 2020 3,505 Joint-liability Not
Co., Ltd. 2020 22.7.31
Huaxin (Foshan) 24
30 December 2020.12.28-2
Color Printing Co., December 5,000 990 Joint-liability Not
2020 021.12.27
Ltd. 2020
Huaxin (Foshan) 7
1 December 2019.12.24-2
Color Printing Co., December 8,100 3,000 Joint-liability Not
2020 022.12.23
Ltd. 2019
Huaxin (Foshan)
12 March 28 February 2020.3.13-20
Color Printing Co., 3,000 987 Joint-liability Not
2020 2020 25.3.13
Ltd.
Huaxin (Foshan)
30 October 24 December 2019.09.12-2
Color Printing Co., 4,000 1,000 Joint-liability Not
2019 2019 020.09.11
Ltd.
Total approved line for such Total actual amount of such
guarantees in the Reporting Period 320,000 guarantees in the Reporting 267,414
(B1) Period (B2)
Total approved line for such Total actual balance of such
guarantees at the end of the 320,000 guarantees at the end of the 122,579
Reporting Period (B3) Reporting Period (B4)
Guarantees provided between subsidiaries
Disclosure
Guarante
date of the
Actual Having e for a
guarantee Line of Actual Type of Term of
Obligor guarantee expired related
line guarantee occurrence date guarantee guarantee
amount or not party or
announcem
not
ent
Zhuhai Golden 1
2019.11.27-2
Pheasant Chemical December 10,000 17 April 2020 1,000 Joint-liability Not Yes
022.11.26
Co., Ltd. 2018
Zhuhai Golden
23 August 2020.6.4-202
Pheasant Chemical 3,000 17 June 2020 500 Joint-liability Not Yes
2018 2.6.4
Co., Ltd.
Total approved line for such Total actual amount of such
guarantees in the Reporting Period 20,000 guarantees in the Reporting 13,000
(C1) Period (C2)
Total approved line for such Total actual balance of such
20,000 1,500
guarantees at the end of the guarantees at the end of the
46
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Reporting Period (C3) Reporting Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total actual guarantee
Total guarantee line approved in
340,000 amount in the Reporting 280,414
the Reporting Period (A1+B1+C1)
Period (A2+B2+C2)
Total actual guarantee
Total approved guarantee line at
balance at the end of the
the end of the Reporting Period 340,000 124,079
Reporting Period
(A3+B3+C3)
(A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
58.02%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual controller
0
and their related parties (D)
Balance of debt guarantees provided directly or indirectly for
0
obligors with an over 70% debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50% of the
17,154
Company’s net assets (F)
Total of the three amounts above (D+E+F) 17,154
Compound guarantees:
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Entrusted Loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Continuing Major Contracts
√Applicable □ Not applicable
47
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Sales revenue for
Name of the the Reporting Collection of
Name of the Performance
contracting Contract object Total amount Period and those accounts
counterparty progress
company accumulatively receivable
recognized
Significant variance between the progress of major contracts and the contractual stipulation with influence of over 30% of the
contract amount
□ Applicable √ Not applicable
5. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company actively fulfils its social responsibility as a centrally-controlled SOE in the new era and demonstrates its new image to
society with its action. In its development strategy, production and operations, the Company has been guided by Xi Jinping Thought
on Socialism with Chinese Characteristics for a New Era to implement the development concept of “Lucid waters and lush
mountains are invaluable assets”. Focusing on the strategy of sustainable development, the Company has achieved coordination
between economic, social and ecological benefits, between short-term and long-term benefits and between its own and social
development.
Facing abrupt COVID-19 in 2020, Huaxin Packaging carried out work from an absolute political height and took multi-thronged
measures that enhanced its role in performing social responsibility.
First, in terms of the epidemic prevention and control, the Company strictly fulfilled its responsibility as an entity, strictly adhered to
the concept of “implementing targeted measures towards science-based approaches with strong confidence and concerted effort”, and
strictly implemented the strategy of regular prevention and control. It stepped up effort to keep all staff safe from harm of the
pandemic, and none of its employees was infected with the virus in 2020. Second, Huaxin Packaging persisted in the corporate
culture of “Help Build Civilization, Promote Humanity in Business, Fight against Headwinds and Stay Ambitious” and promoted the
spirit of “When disaster strikes, help comes from all sides”. It made active steps to organize and carry out donation activities to help
fight COVID-19, receiving a total donation of RMB186,173.78, including RMB68,473.78 received by Hongta Renheng, RMB88,000
by Huaxin Color Printing and RMB29,700 by Golden Pheasant Chemical. During the pandemic, subsidiaries of Huaxin Packaging
donated anti-epidemic supplies to the frontlines of the fight against COVID-19 and of targeted poverty alleviation areas. Hongta
Renheng donated 1,000 pairs of medical safety goggles to Zhuhai People’s Hospital, 2,000 surgical masks to Mingzhu Police Station
and Gaolangang Police Station, and 300 pairs of medical safety goggles to Yiyang County of Luoyang City in Henan Province, a
targeted poverty alleviation area of China Paper. Huaxin Color Printing offered helping hands to local government agencies in their
anti-epidemic efforts, including printing a total of 31,975 anti-epidemic publicity posters in four batches for free and donating
anti-epidemic supplies to Foshan People’s Hospital, Police Station and Ecology and Environment Bureau. Golden Pheasant Chemical
donated anti-epidemic supplies to Gaolangang District Government and hospitals and won the title of “Anti-Epidemic” Pioneering
Party Organization as a New Economic Organization in Gaolangang District in 2020.
Third, after the resumption of work, Huaxin Packaging proactively responded to the call for SOEs to waive or reduce rentals for
small and micro-sized enterprises, strictly followed the central government’s requirements for
48
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
“ensuring stability on the six fronts and security in the six areas”, and conscientiously implemented the SASAC’s guidelines on
addressing the epidemic and supporting SMEs to jointly tide over the difficulties. As part of its fast response to the requirements of
China Chengtong and China Paper for promoting the resumption of work and production, the Company waived and reduced rentals
of more than RMB500,000 for medium, small and micro-sized companies and individual businesses.
In 2020, Huaxin Packaging stuck to the concept that “Packaging is connected with people’s happy life”, persisted in the path of
high-quality and sustainable development and continued to make new breakthroughs in clean production, environmental protection,
energy conservation and consumption reduction. Hongta Renheng’s project “Intelligent Manufacturing Factory of Coated White
Cardboard” was successfully recognized as one of Guangdong’s intelligent manufacturing pilot demonstration projects for 2020; its
full-series brand products were included in Green Raw and Auxiliary Material and Product Catalogue (2020); its plastic-free coated
board for food packaging won the “Green Packaging New Material Award”; Hongta Renheng won the title of “National
Demonstration Enterprise for Green Supply Chain Management” of 2020. Both Hongta Renheng and Zhuhai Huafeng won the title
of “Environmental Integrity Enterprise (Green Sign)”. Huaxin Color Printing passed the certification of “Foshan Green Packaging
Huaxin Color Printing Engineering Technology Research Center” and won the “Green Fashion Award of 2020 Asia Label Awards”.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
The Company will carry out the targeted poverty alleviation according to the poverty alleviation plan and arrangements of the final
controller China Chengtong Holdings Group Ltd. and the actual controller China Paper Corporation.
(2) Summary of the Related Work Done in the Reporting Period
Huaxin Packaging seriously practices and implements the strategic deployment of poverty alleviation of the central government. And
under the unified deployment of China Paper Corporation, it conducted the agricultural products purchasing work of targeted poverty
alleviation for Yiyang County, Luoyang City, Henan Province. Meanwhile, it did a good job in poverty alleviation in the area of it.
That is to conduct the agricultural products purchasing work of targeted poverty alleviation for the matching assisting object of
Zhuhai-Nujiang Lisu Autonomous Prefecture, Yunnan Province as required by Zhuhai Municipal Federation of Trade Unions.
(3) Results
Indicator Measurement unit Quantity/Progress
1. General results —— ——
Of which: 1.1 Funds Ten thousand 5
1.2 Money converted from materials Ten thousand 9.18
1.3 Number of poor persons with filing
Person 0
achieving poverty alleviation
2. Itemized results —— ——
2.1 Out of poverty by industrial development —— ——
2.2 Out of poverty by transferring
—— ——
employment
2.3 Out of poverty by relocation —— ——
49
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
2.4 Out of poverty by education —— ——
2.5 Out of poverty by improving health —— ——
2.6 Out of poverty by protecting ecological
—— ——
environment
2.7 Subsidy for the poorest —— ——
2.8 Social poverty alleviation —— ——
2.8.2 Input of targeted poverty
Ten thousand 14.18
alleviation
2.9 Other items —— ——
3. Accolades received (for what and at what
—— ——
level)
(4) Subsequent Plans
The Company will continuously carry out the targeted poverty-relief work with China Chengtong Holdings Group Ltd and area of it
according to the implementation plan of poverty alleviation project of the final controller China Chengtong Holdings Group Ltd, and
continuously carry out the subsequent targeted poverty alleviation plan.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major polluter by the environmental protection
authorities
Yes
Discharge
Name of Number of Distribution Discharge Approved
Name of Way of standards Total Excessive
major discharge of discharge concentratio total
polluter discharge implemente discharge discharge
pollutants outlets outlets n discharge
d
Chemical
Chemical Chemical Chemical
Discharged oxygen
oxygen oxygen oxygen
Chemical into water demand,
demand, demand, demand,
oxygen quality Sewage and
Hongta and and and
demand, purification 1 disposal ammonia Naught
Renheng ammonia ammonia ammonia
ammonia plant after center nitrogen are
nitrogen nitrogen are nitrogen are
nitrogen being 33.69mg/l
are≤80mg/l 101.86t and 294.4t and
disposed and
and ≤8mg/l 0.45t 29.44t
0.146mg/l
Sulfur Sulfur Sulfur Sulfur Sulfur
Power
dioxide, dioxide, dioxide, dioxide, dioxide,
Hongta Organized boiler of
nitrogen 1 nitrogen nitrogen nitrogen nitrogen Naught
Renheng discharge Power
oxide, oxide, oxide, oxide, oxide,
Department
smoke smoke are smoke are smoke are smoke are
50
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
3.93mg/m3, ≤50mg/m3, 4.28t, 34.04t,
57.06mg/m ≤100mg/m3 62.477t and 136.15t and
3 and ≤20mg/m3 6.7t 20.42t
6.24mg/m3
Emissions
Chemical trading and
Chemical Chemical
oxygen the
oxygen oxygen
Chemical demand, chemical
Discharged demand, demand,
oxygen Sewage and oxygen
Zhuhai to sewage and and
demand, 1 disposal ammonia demand, Naught
Huafeng discharge ammonia ammonia
ammonia center nitrogen are and
outlet nitrogen are nitrogen are
nitrogen 32.97mg/l ammonia
≤80mg/l 57.826t and
and nitrogen are
and 8mg/l 0.319t
0.208mg/l 180t and
22.5t
Sulfur
Sulfur
dioxide, Sulfur
dioxide, Sulfur
nitrogen dioxide,
Sulfur nitrogen dioxide,
Discharged Power oxide, nitrogen
dioxide, oxide, nitrogen
Zhuhai from the boiler of smoke are oxide,
nitrogen 1 smoke are oxide, Naught
Huafeng 120-meter-h Power 11.12mg/m smoke are
oxide, 50mg/m3, smoke are
igh chimney Department 3, 22.454t,
smoke 100mg/m3 68t, 142t
61.79mg/m 112.234t
and and 26.42t
3 and and 9.594t
20mg/m3
5.49mg/m3
The limits
in Table 5
and Table 6
of Emission
Standard for
Pollutants
from the
20m
Non-methan Upper-air Petrochemic
Golden discharge
e emissions al Industry
Pheasant 1 outlet after 15.1mg/m 15.4729t 22.464t Naught
hydrocarbo after being (GB31571-
Chemical the disposal
n disposed 2015) and
of RCO
the stricter
one in the
Table 2 of
the
secondary
standard of
Phase II of
51
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Guangdong
Emission
Limit for
Air
Pollution
(DB44/27-2
001) and
Emission
Limit for
Odor
Pollutants
(GB14554-
1993)
Chemical Chemical
Chemical Chemical
oxygen oxygen
oxygen oxygen
Chemical demand, demand,
Discharged demand, demand,
Golden oxygen Sewage and and
to sewage and and
Pheasant demand, 1 disposal ammonia ammonia Naught
discharge ammonia ammonia
Chemical ammonia center nitrogen are nitrogen are
outlet nitrogen are nitrogen are
nitrogen 265mg/l ≤350mg/l
2.7108t and 3.528t and
and and
0.1945t 0.252t
16.18mg/l ≤25mg/l
First level
standard of
Phase II for
maximum
emission Chemical
Chemical Chemical
concentratio oxygen
oxygen oxygen
Chemical n of Class II demand,
Discharged demand, demand,
Huaxin oxygen Sewage pollutant in and
to sewage and and
Color demand, 1 disposal Guangdong ammonia Naught
discharge ammonia ammonia
Printing ammonia center local nitrogen are
outlet nitrogen are nitrogen are
nitrogen standard- 0.01217t
8mg/l and 0.17t and
Discharge and
0.04mg/l 0.019t
Limit of 0.00006t
Water
Pollutants
(DB44/26-2
001)
20m II time
Huaxin
Organized discharge period of
Color Total VOCs 4 9.53mg/m3 9.9019t 17.5186t Naught
discharge outlet after lithographic
Printing
the disposal printing and
52
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
intaglio
printing in
Guangdong
local
standard-E
mission
Standard for
Volatile
Organic
Compounds
in Printing
Industry
(DB44/815-
2010）
Construction and operation of facilities for preventing pollution:
Construction and operation of facilities for preventing pollution:
The Sewage Station and Boiler were all built and operated by the third party. As for sewage, Hongta Renheng belongs to State key
monitoring enterprise; as for smoke, Hongta Renheng belongs to Zhuhai key monitoring enterprise.
1. The company established a Sewage Station whose maximum processing capacity was 12000m3/d, and it was put into service on 1
April 2013 with the investment of RMB14 million through applying A/O technology. The quality of water after such processing
could meet relevant national discharge standards stated in Discharge Standard of Water Pollutants for Pulp & Paper Industry
(GB3544-2008), and waste water (after processing) reaching corresponding standards would be discharged into Qianshan Water
Quality Purification Plant via the municipal sewage pipeline network of Xiangzhou District.
Meanwhile, corresponding COD, ammonia nitrogen, total phosphorus, and total nitrogen, and PH values auto monitoring system
would be installed at the discharge outlet, and the qualified unit, Zhuhai Fixed Star EP Technology Co., Ltd, would be in charge of its
operation management and 24-hour auto online detection and monitoring of COD, ammonia nitrogen, total phosphorus, and total
nitrogen, and PH values.
2. The company established 2 biomass briquette boilers with the operating capacity of 40 tons per hour were installed in association
with relevant dust removal measures. As ceramic multi-tube cyclone dust collector and bag-type dust removal technology were
applied to dispose flue gas, all discharged smoke pollutants, SO2 and nitric oxides via the 25m chimney would meet corresponding
discharge limit standard stated in Emission Standard of Air Pollutants for Boilers (DB44/765-2010). From 1 July 2019 onwards, the
emission of pollutants smoke, sulphur dioxide and nitrogen oxides must comply with the limit requirements of the Emission Standard
of Air Pollutants for Boilers (DB44/765/2019). To meet the requirements for the emission of nitrogen oxides, the company
introduced a set of SNCR denitration equipment to carry out denitration.
Moreover, corresponding flue gas auto monitoring system would be installed at the discharge outlet, and the qualified unit would be
in charge of its operation management and 24-hour auto online detection and monitoring of discharged SO2, nitric oxides and smoke
dust.
Zhuhai Huafeng
The sewage station started to entrust the third party to operate in 2020. Businesses engaged in waste water and gases are under key
monitoring of the state.
Production status in 2020: Equipment was shut down for overhaul on April 9 for nine consecutive days and restarted for production
on April 18. For the rest of the year, production was normal except for short-period scheduled maintenance and temporary shutdown
due to paper machine fault.
53
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
1. The company established a Sewage Station whose maximum processing capacity was 22000m3/d, and it was put into service on 28
September 2006 with the floor space 21,358m2 and the investment of RMB38 million through applying flocculation precipitation +
SBR technology. In addition, SBR biochemical system applied Canada ADI company’ s SBR technology, and key devices were all
introduced from foreign countries. The quality of water after such processing could meet relevant national discharge standards stated
in Discharge Standard of Water Pollutants for Pulp & Paper Industry (GB3544-2008), and waste water (after processing) reaching
corresponding standards would be discharged into Nanshui Water Quality Purification Plant via the municipal sewage pipeline
network of Gaolan Port District.
Meanwhile, corresponding COD, ammonia nitrogen, total phosphorus, and total nitrogen, and PH values auto monitoring system
would be installed at the discharge outlet, and the qualified unit, Zhuhai Fixed Star EP Technology Co., Ltd, would be in charge of its
operation management and 24-hour auto online detection and monitoring of COD, ammonia nitrogen, total phosphorus, and total
nitrogen, and PH values.
In April 2020, the Company commenced the capping and deodorization project for its sewage pool. In December 2020, the project
was put into operations. A total of RMB5,589,600 was invested in the project. According to the project requirements, monomers that
tend to produce odor, such as SBR tanks, sludge thickening tanks, mixed sludge tank and flocculation reaction tanks, should be
sealed with steel structured reverse fluorocarbon fibre; and odor should be collected and treated with biological deodorization. Waste
gas treatment capacity of the system should be 33,000m3/h.
2. The company established two self-supplied fire coal CFBs were installed with the operating capacity of 75t per hour in association
with relevant sulphur and dust removal measures. As out-of-furnace alkaline-mode wet desulphurization technology, bag-type dust
remover and wet ESP, low-temperature and low-nitrogen combustion technology + SNCR were applied to dispose flue gas, the
desulfurization rate is over 90%, the dust removal efficiency would exceed 99.9% and the denitration efficiency over 85%. All
discharged smoke pollutants, SO2 and nitric oxides via the 120m chimney would meet special discharge limit standard stated in
Emission Standard of Air Pollutants for Thermal Power Plants (GB13223-2011).
Moreover, corresponding flue gas auto monitoring system would be installed at the discharge outlet, and the qualified unit Zhuhai
Fixed Star EP Technology Co., Ltd would be in charge of its operation management and 24-hour auto online detection and
monitoring of discharged SO2, nitric oxides and smoke dust.
By completing wet limestone-gypsum process FGD in 2015 and wet ESP in 2019, the Company successfully reached ultra-low
emissions of sulfur dioxide and smoke, namely, SO2≤35mg/Nm3 and smoke≤5mg/Nm3. The denitration upgrading project is expected
to complete in May 2021, which will achieve ultra-low emissions of oxynitride, namely, NOx≤50mg/Nm3.
Golden Pheasant Chemical
Exhaust processing system and sewage station are in normal operation.
(1) The Sewage Station possesses the maximum processing capacity of 80m3/d, and the actual processing capacity was about 20m3
per day through applying biochemistry, coagulation flocculation, nitrate precipitation and MBR membrane technology. Sewage
disposal facility is running normally, and waste water (after processing) reaching corresponding standards would be discharged into
Nanshui Sewage Disposal Plant in Zhuhai City via the municipal sewage pipeline network of Gaolan Port District, Zhuhai City.
When all industrial waste water after disposal in sewage station can reach the discharge limit of Table 1 in Emission Standards for
Pollutants from the Petrochemical Industry (GB31571-2015) and Class 3 Standard during the second period stated in Discharge
Limits of Water Pollutants (DB44/26-2001) and the water entry standard designed by Nanshui Quality Purification Plant, it will be
disposed after being discharged into Nanshui Sewage Disposal Plant in Zhuhai City via the municipal sewage pipeline network of
Gaolan Port District, Zhuhai City.
(2) The regenerative catalytic oxidizer (RCO) exhaust processor has a capacity of 30,000m3/h. Phase I and II exhaust is pre-treated
by the original filter, and then recycled by secondary condensation. It is introduced into the RCO exhaust processor for treatment.
After reaching the emission standard, it is discharged in an organized way. The strictest of the limits in Table 5 & 6 of Emission
Standard of Pollutants for Petroleum Chemistry Industry (GB31571-2015), Secondary standard of Phase II of Emission Limit for Air
54
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Pollution (DB44/27-2001) and Table 2 of Emission Limit for Odor Pollutants (GB14554-1993).
The unit of waste gas devices is in normal operations while the unit of waste water treatment devices is in the commissioning stage.
Huaxin Color Printing
The company has appointed Foshan Green Leaf Environmental Protection Center to operate and maintain its waste water processing
pool, which has been in normal operations since the beginning. The pool adopts the “coagulative precipitation - contact oxidation”
process and has a maximum capacity of 48m3/d. When industrial waste water reaches the primary standard of the second time
interval in Guangdong’s local standard Discharge Limits of Water Pollutants (DB44/26-2001) after being processed by the
processing pool, the reclaimed water will be used to flush toilets (complying with the Water Quality Standard for Urban
Miscellaneous Water Consumption).
2. The organic waste gas from the Phase III Project is discharged when reaching the discharge limit of the second time interval of
lithography in Guangdong’s local standard Emission Standard of Volatile Organic Compounds for Printing Industry
(DB44/815-2010) after being processed by three units of secondary low-temperature plasma purifiers. The devices are in normal
operations.
3. In Phase IV project, a new set of “highly efficient physical and chemical reactions + biofilter system” to process organic exhaust.
After reaching the limits in the second time interval of lithography in Guangdong’s local standard Emission Standard of Volatile
Organic Compounds for Printing Industry (DB44/815-2010), the organic exhaust will be discharged. The equipment is in normal
operations.
Appraisal of environment influences for construction project and other administrative licensing of environment protection
Hongta Renheng
1. In September 1998, passed the environmental impact assessment for the 150,000-ton high-grade packaging cardboard project by
the State Environmental Protection Administration and Guangdong Province Environmental Protection Bureau respectively (HF
[1998] No. 321 and YHH [1998] No. 208);
2. In 2010, passed the environmental impact assessment for the MBF technical renovation project (ZHJ [2010] No. 5) and the test run
of the renovation project (ZHS [2010] No. 6) by the Environmental Protection Bureau of Zhuhai Municipality;
3. In 2012, obtained the approval for the environmental impact report on the clean production of paper machines and the
comprehensive waste water treatment technology renovation project (ZXHJB [2012] No. 155) by the Environmental Protection
Bureau of Xiangzhou District;
4. In December 2003, passed the environmental acceptance for the completion of the 150,000-ton high-grade packaging cardboard
project (YHH [2003] No. 969);
5. In 2013, completed the acceptance of the MBF technical renovation project (ZHY [2013] No. 5);
6. In 2014, completed the acceptance of the biochemical treatment of waste water project (ZXHY [2014] No. 10)
7. In 2017, obtained the approval for the environmental impact report on the sludge resource utilization technical project (ZXHJB
[2017] No. 63)
Pollutant discharge permit, No. 91440400617502107U001P; validity period: from 7 June 2017 to 6 June 2025; issued by:
Environmental Protection Bureau of Xiangzhou District of Zhuhai City.
Zhuhai Huafeng
The reply letter of review opinions of the State Environmental Protection Administration on the environmental impact report for the
capital increase of Foshan Huafeng Paper Co., Ltd. for building a new project with the annual capacity of 300,000-ton high-grade
coating ivory board (HS [2005] No. 156)
The reply letter of opinions on the environmental protection acceptance for the completion of the autonomous MBF environmental
upgrading and technical renovation project of Zhuhai Huafeng Paper Co., Ltd. (ZHY [2015] No. 3)
The reply on the environmental assessment for the new annual 60,000-ton ivory board film processing construction project of Zhuhai
55
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Huafeng Paper Co., Ltd. (ZGHJ [2012] No. 115)
The review opinions on the environmental impact report for the reuse of reclaimed water project of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2013] No. 54)
The reply on the environmental assessment for the sludge burning project of Zhuhai Huafeng Paper (ZGHJ [2008] No. 69)
The review opinions of the Environmental Protection Bureau of Gaolangang District of Zhuhai Municipality on the environmental
assessment report for the expansion of the annual 180,000-ton ivory board production line project of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2014] No. 67)
The review opinions on the environmental impact registration for the garbage concentration center of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2016] No. 58)
The approval on the environmental assessment for the waste water treatment renovation project of Zhuhai Huafeng Paper Co., Ltd.
(ZGHJ [2016] No. 106)
Pollution discharge permit, No. 914404006176214217001P; validity period: from 7 June 2017 to 6 June 2025; issued by:
Environmental Protection Bureau of Gaolan Port Branch of Zhuihai Ecological Environment Bureau.
Golden Pheasant Chemical
1. Acceptance inspection of Phase I environmental assessment: ZGHJY[2017] –No.007
2. Acceptance inspection of Phase II environmental assessment: ZGHJY[2016] –No.20
3. Pollution discharge permit, No. 91440400776235931G001P renewed on 18 August 2020, and it is valid until 17 August 2023;
issued by: Zhuihai Ecological Environment Bureau.
Huaxin Color Printing
1. In August 2004, the project was approved by the Environmental Protection Bureau of Chancheng District of Foshan City through
the document Approval on the Report of the Environmental Impact of the Relocation and Expansion Project of Huaxin (Foshan)
Color Printing Co., Ltd. (No. B2004-0393). In October 2006, the relocation and expansion project of Huaxin (Foshan) Color Printing
Co., Ltd. passed the evaluation on environmental protection, as it was officially approved in the Application for Evaluation on
Environmental Protection of Construction Projects (CHY [2006] No. 149);
2. In May 2008, Chancheng Branch of the Planning Bureau of Foshan City approved the Company’s construction of waste water
pool through the document Opinions on the Planning Conditions of Construction Projects (FG (C) LGZ [2007] No. J223). In
September 2008, the construction project passed the evaluation on environmental protection, as it was officially approved in the
Application for Evaluation on Environmental Protection of Construction Projects (CHY [2008] No. 136);
3. In June 2012, the project was approved by the Environmental Protection Bureau of Chancheng District of Foshan City through the
document Approval on the Report of the Environmental Impact of the Phase III Production Workshop Expansion Project of Huaxin
(Foshan) Color Printing Co., Ltd. (No. CB2012-1-028). In December 2018, evaluation on the environmental protection of the Phase
III production workshop expansion project of Huaxin (Foshan) Color Printing Co., Ltd. was conducted in the form of independent
evaluation.
4. In December 2019, the project was approved by Foshan Ecological Environment Bureau through the document Approval on the
Report of the Environmental Impact of the Phase IV Expansion Project of Huaxin (Foshan) Color Printing Co., Ltd. and Change of
the Legal Person (FCH(N)S[2019]No. 082).
5. The pollution discharge permit, No. 9144060072111733XJ001V; validity period: from 28 August 2020 to 27 August 2023; issued
by: Foshan Ecological Environment Bureau. And the original pollution discharge permit (No. 4406042010231001) became invalid.
Emergency plan for abrupt environment affairs
Hongta Renheng
Hongta Renheng prepared the Emergency Plan for Environmental Pollution and filed it with Zhuhai Environmental Protection
56
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Bureau Environment Monitoring Branch on 17 December 2015; Filing No.: 44040120150P-L Emergency Plan for Abrupt
Environment Affairs of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. and the Risk Assessment Report for Abrupt Environment
Affairs of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. A new round of filing with Xiangzhou Branch of Zhuhai Environmental
Protection Bureau on 21 March 2019; Filing No.: 440402-2019-016-L Emergency Plan for Abrupt Environment Affairs of Zhuhai
Hongta Renheng Packaging Co., Ltd. and the Risk Assessment Report for Abrupt Environment Affairs of Zhuhai Hongta Renheng
Packaging Co., Ltd.
Zhuhai Huafeng
Zhuhai Huafeng prepared the Emergency Plan for Environmental Pollution and filed it with Environmental Protection Bureau of
ZHUHAI GAOLAN PORT ECONOMIC ZONE on 24 October 2013; and filed the Emergency Plan for Abrupt Environment Affairs
of Zhuhai Huafeng Paper Co., Ltd. (“Zhuhai Huafeng”) and the Risk Assessment Report for Abrupt Environment Affairs of Zhuhai
Huafeng Paper Co., Ltd. (“Zhuhai Huafeng”) with Environmental Emergency Management Office of Department of Environmental
Protection of Guangdong Province on 23 January 2015; filing No.: YHYJB[2015]No. 17. Reassessment of Emergency Plan for
Abrupt Environment Affairs of Zhuhai Huafeng Paper Co., Ltd. was completed on December 2018, and it was filed on
Environmental Protection Bureau of Zhuhai Gaolan Port, filing No.: 440466-2018-059-L .
Golden Pheasant Chemical
Golden Pheasant Chemical prepared the Investigation Report for Environmental Emergency Resources, Time Risk Assessment
Report for Abrupt Environment Affairs, and Comprehensive Emergency Plan for Abrupt Environment Affairs and filed them with
Environmental Protection Bureau of ZHUHAI GAOLAN PORT ECONOMIC ZONE on October 2018.
Huaxin Color Printing
Huaxin Color Printing prepared the Investigation Report for Environmental Emergency Resources, Time Risk Assessment Report for
Abrupt Environment Affairs and Comprehensive Emergency Plan for Abrupt Environment Affairs and filed them with
Environmental Monitoring Sub-bureau in Chancheng District of Foshan on 15 December 2017; Filing No.: 440604-2017-034-L. The
filing of it was renewed on 18 December 2020 and now is under review of the Ecological Environment Bureau.
Environment self-monitoring scheme
Hongta Renheng
Hongta Renheng prepared self-monitoring scheme, annual self-monitoring report and self-monitoring result information and
disclosed the same on the Platform for Disclosure of Self-Monitoring Information of State-Controlled Enterprises at the Provincial
Level in Guangdong and the National Pollutant Sources Monitoring Data Management System Platform according to the
requirements of the Measures for the Self-Monitoring and Information Disclosure by the Enterprises subject to Intensive Monitoring
and Control of the State (for Trial Implementation) (HF[2013] No. 81) and the Work Scheme for the Self-Monitoring and Information
Disclosure by the Enterprises subject to Intensive Monitoring and Control of the State. The enterprise self-monitoring content
includes: air pollutant emission monitoring at main exhaust emission outlets, water pollutant emission monitoring at main wastewater
discharge outlets, and factory boundary noise monitoring, as follows:
(1) Chemical oxygen demand and ammonia nitrogen shall be monitored every two hours every day and the values monitored shall be
disclosed; biochemical oxygen demand, total phosphorus and total nitrogen shall be monitored once a week and the values monitored
shall be disclosed; other pollutants in the wastewater shall be monitored once a month at least;
(2) Sulfur dioxide, nitrogen oxides and particles shall be monitored every hour every day and the values monitored shall be disclosed;
other pollutants in the exhaust shall be monitored once a season at least;
(3) Factory boundary noise shall be monitored once a season at least;
(4) Factory boundary odor concentration shall be monitored once a season.
If the self-monitoring shall be carried out by an entrusted institution, a social testing institution that is certified by the competent
department of environmental protection at the provincial level or an environment monitoring institution to which the competent
department of environmental protection belongs shall be entrusted to carry out the monitoring task. The environment monitoring
57
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
institution to which the competent department of environmental protection belongs that has undertaken a supervisory monitoring task
shall not undertake the self-monitoring entrustment business of the enterprise monitored.
The enterprise has an online monitoring system of chemical oxygen demand, ammonia-nitrogen, total phosphorus and total nitrogen
containing wastewater separately and an online monitoring system of flue gas. The data of online monitoring systems of chemical
oxygen demand, ammonia-nitrogen, sulfur dioxide, nitrogen oxides and particles shall be disclosed on the Management System
Platform of National Pollutant Sources Monitoring Data every day; other pollutants shall be monitored by a qualified third party
testing institution that is entrusted according to relevant requirements and then monitoring data shall be disclosed on the Management
System Platform of National Pollutant Sources Monitoring Data.
Zhuhai Huafeng
Zhuhai Huafeng prepared self-monitoring scheme, annual self-monitoring report and self-monitoring result information and disclosed
the same on the Platform for Disclosure of Self-Monitoring Information of State-Controlled Enterprises at the Provincial Level in
Guangdong and the National Pollutant Sources Monitoring Data Management System Platform according to the requirements of the
Measures for the Self-Monitoring and Information Disclosure by the Enterprises subject to Intensive Monitoring and Control of the
State (for Trial Implementation) (HF[2013] No. 81) and the Work Scheme for the Self-Monitoring and Information Disclosure by the
Enterprises subject to Intensive Monitoring and Control of the State. The enterprise self-monitoring content includes: air pollutant
emission monitoring at main exhaust emission outlets, water pollutant emission monitoring at main wastewater discharge outlets, and
factory boundary noise monitoring, as follows:
(1) Chemical oxygen demand and ammonia nitrogen shall be monitored every hour every day and the average values shall be
disclosed; other pollutants in the wastewater shall be monitored once a month at least;
(2) Sulfur dioxide, nitrogen oxides and particles shall be monitored every hour every day and the average values shall be disclosed;
other pollutants in the exhaust shall be monitored once a season at least;
(3) Factory boundary noise shall be monitored once a season at least;
(4) Factory boundary odor concentration shall be monitored once a season.
(5) The daily monitoring data of PH value, chroma and suspended solids in the wastewater and the weekly monitoring data of total
phosphorus and total nitrogen shall be disclosed on the Management System Platform of National Pollutant Sources Monitoring
Data.
If the self-monitoring shall be carried out by an entrusted institution, a social testing institution that is certified by the competent
department of environmental protection at the provincial level or an environment monitoring institution to which the competent
department of environmental protection belongs shall be entrusted to carry out the monitoring task. The environment monitoring
institution to which the competent department of environmental protection belongs that has undertaken a supervisory monitoring task
shall not undertake the self-monitoring entrustment business of the enterprise monitored.
The enterprise has an online monitoring system of chemical oxygen demand, ammonia-nitrogen, total phosphorus and total nitrogen
containing wastewater separately and an online monitoring system of flue gas. The data of online monitoring systems of chemical
oxygen demand, ammonia-nitrogen, sulfur dioxide, nitrogen oxides and particles shall be disclosed on the Management System
Platform of National Pollutant Sources Monitoring Data every day; other pollutants shall be monitored by a qualified third party
testing institution that is entrusted according to relevant requirements and then monitoring data shall be disclosed on the Management
System Platform of National Pollutant Sources Monitoring Data.
Golden Pheasant Chemical
Golden Pheasant Chemical entrusts a qualified third party testing institution to conduct waste gas, wastewater and factory boundary
noise test every year, as follows:
(1) The test for Triphenyl phosphine, ammonia, odor concentration, styrene and butadiene shall be conducted once half a year, and
the test for non-methane hydrocarbon shall be conducted once a month;
(2) The test for total nitrogen, total phosphorus, pH, suspended matter, petroleum, sulfide, volatile phenol shall be conducted once
58
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
half a year; the test for five-day biochemical oxygen demand, total organic carbon, fluoride, total cyanide and AOX shall be
conducted once a quarter; the test for Chemical oxygen demand and ammonia nitrogen shall be conducted once a week.
(3) Factory boundary noise test shall be conducted once a year at least.
(4) LDAR test shall be conducted once a quarter.
Huaxin Color Printing
Huaxin Color Printing entrusts a qualified third party testing institution to conduct wastewater, exhaust and factory boundary noise
test every year, as follows:
(1) The industrial wastewater test (PH value, ammonia nitrogen, suspended solids, chemical oxygen demand, biochemical oxygen
demand, chroma, sulfides, total nitrogen and total phosphorus) shall be conducted twice a year at least;
(2) Organized organic waste gas test (Benzene, toluene, xylene and total VOCs) shall be conducted twice a year at least;
(3) Disorganized organic waste gas test (Benzene, toluene, xylene and total VOCs) shall be conducted once a year at least;
(4) Factory boundary noise test shall be conducted four times a year at least.
Other environment-related information that should be disclosed:
Hongta Renheng
Hongta Renheng published the environmental protection information on the electronic screen of its gate on a daily basis and made
information disclosure on the Company’s website since January 2020.
Zhuhai Huafeng
Zhuhai Huafeng published the information about the basic information of the company in 2020 and the discharge of wastewater and
waste gas on the environmental information disclosure platform of enterprises and public institutions in Gaolan Port District since
January 2020. Meanwhile, it published the environmental protection information on the electronic screen of its gate on a daily basis.
Other relevant information:
Hongta Renheng
Hongta Renheng is recognized as the “Cleaner Production” Enterprise of Guangdong Province in February 2019 and the National
“Green Factory” Enterprise on 12 September 2019. It is granted the title of “Environmental and Integrity Enterprise (Green Plate)” of
Guangdong Province in 2020, and the national title of “Demonstration Enterprise for Green Supply Chain Management” in October
2020. Its “Green Design Products” has been approved by the ministries and agencies of the province.
Zhuhai Huafeng
The project of flue gas denitrification upgrading is under construction which is estimated to be completed in May 2021.
Approved in August 2020, the 2019 annual credit evaluation of Zhuhai Huafeng is recognized the provincial “Green Plate”
(recognized as “Green Plate” enterprise for three consecutive years).
Approved by the provincial Department of Housing and Construction and Department of Development and Reform, Zhuhai Huafeng
is recognized as the “Water Conservation Enterprise of Guangdong Province in December 2020.
XIX Other Significant Events
√Applicable □ Not applicable
During the Reporting Period, the Company engaged in the share conversion absorption merger of Guangdong Guanhao High-Tech
Co., Ltd. For more details, please refer to relevant matters disclosed by the Company on Cninfo.
59
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
60
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares as
Shares as
dividend
dividend
Percent New converted Subtot Percentag
Shares converted Other Shares
age (%) issues from al e (%)
from
capital
profit
reserves
1. Private shares 333,500,000 65.98% 333,500,000 65.98%
1.1 Promoter’s shares 333,500,000 65.98% 333,500,000 65.98%
Of which: such shares held
0 0.00% 0 0.00%
by state
Such shares held by
332,930,290 65.87% 332,930,290 65.87%
domestic legal persons
Such shares held by
0 0.00% 0 0.00%
foreign legal persons
Other 569,710 0.11% 569,710 0.11%
1.2. Legal persons’ shares
0 0.00% 0 0.00%
raised
1.3 Staff-held shares 0 0.00% 0 0.00%
1.4 Preferred shares or
0 0.00% 0 0.00%
others
2. Public shares 171,925,000 34.02% 171,925,000 34.02%
2.1 RMB ordinary shares 0 0.00% 0 0.00%
2.2 Domestically listed
171,925,000 34.02% 171,925,000 34.02%
foreign shares
2.3 Overseas listed foreign
0 0.00% 0 0.00%
shares
2.4 Other 0 0.00% 0 0.00%
100.00
3. Total shares 505,425,000 505,425,000 100.00%
%
61
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchase:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to the Company’s ordinary
shareholders and other financial indicators of the prior year and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of Number of Number of
Number of ordinary
ordinary preferred preferred
shareholders at the 11,870 11,807 0 0
shareholders at shareholders shareholders
period-end
the month-end with with resumed
62
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
prior to the resumed voting rights at
disclosure of voting rights the month-end
this Report at the prior to the
period-end disclosure of this
(if any) (see Report (if any)
note 8) (see note 8)
5% or greater shareholders or top 10 shareholders
Increase/ Shares in pledge or frozen
Sharehol
Nature of Total shares decrease
ding Private Public
Name of shareholder shareholde held at the in the
percenta shares held shares held Status Shares
r period-end Reportin
ge
g Period
State-own
FOSHAN HUAXIN
ed
DEVELOPMENT CO., 65.20% 329,512,030 0 329,512,030 0
corporatio
LTD.
n
State-own
CHINA MERCHANTS
ed 4,290,93
SECURITIES (HK) CO., 0.89% 4,503,434 4,503,434
corporatio 4
LIMITED
n
GUOYUAN
Foreign
SECURITIES 4,173,45
corporatio 0.83% 4,173,450 4,173,450
BROKERAGE (HONG 0
n
KONG) LIMITED
GUOTAI JUNAN Foreign
SECURITIES(HONGKO corporatio 0.63% 3,160,585 -43425 3,160,585
NG) LIMITED n
Foreign
WU HAOYUAN 0.62% 3,127,291 0 3,127,291
individual
Domestic
ZHAI YUZHEN 0.41% 2,066,800 12,600 2,066,800
individual
Domestic
CAI YUJIU 0.39% 1,963,900 -5700 1,963,900
individual
Foreign
NORGES BANK corporatio 0.27% 1,352,720 0 1,352,720
n
Domestic 1,321,10
ZHOU SHIYU 0.26% 1,321,100 1,321,100
individual 0
ESSENCE Foreign
INTERNATIONAL corporatio 0.24% 1,205,252 0 1,205,252
SECURITIES (HONG n
63
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
KONG) CO., LTD.
Strategic investor or general
corporation becoming a top-10
None
ordinary shareholder due to rights
issue (if any) (see note 3)
The Company is not aware of, among the shareholders above, any related or
Related or acting-in-concert parties
acting-in-concert parties as defined in the Methods for the Administration of the Acquisition
among the shareholders above
of Listed Companies.
Above shareholders involved in
entrusting/entrusted with and giving None
up voting rights
Top 10 public shareholders
Shares by type
Name of shareholder Public shares held at the period-end
Type Shares
Domesticall
CHINA MERCHANTS y listed
4,503,434 4,503,434
SECURITIES (HK) CO., LIMITED foreign
stock
Domesticall
GUOYUAN SECURITIES
y listed
BROKERAGE (HONG KONG) 4,173,450 4,173,450
foreign
LIMITED
stock
Domesticall
GUOTAI JUNAN
y listed
SECURITIES(HONGKONG) 3,160,585 3,160,585
foreign
LIMITED
stock
Domesticall
y listed
WU HAOYUAN 3,127,291 3,127,291
foreign
stock
Domesticall
y listed
ZHAI YUZHEN 2,066,800 2,066,800
foreign
stock
Domesticall
y listed
CAI YUJIU 1,963,900 1,963,900
foreign
stock
Domesticall
NORGES BANK 1,352,720 1,352,720
y listed
64
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
foreign
stock
Domesticall
y listed
ZHOU SHIYU 1,321,100 1,321,100
foreign
stock
Domesticall
ESSENCE INTERNATIONAL
y listed
SECURITIES (HONG KONG) CO., 1,205,252 1,205,252
foreign
LTD.
stock
Domesticall
y listed
MIU JUN 960,000 960,000
foreign
stock
Related or acting-in-concert parties
among top 10 unrestricted public The Company is not aware of, among the shareholders above, any related or
shareholders, as well as between top acting-in-concert parties as defined in the Methods for the Administration of the Acquisition
10 unrestricted public shareholders of Listed Companies.
and top 10 shareholders
Top 10 ordinary shareholders
involved in securities margin trading None
(if any) (see note 4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders of the
Company conducted any promissory repo during the Reporting Period.
□ Yes √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a central state-owned legal person
Type of the controlling shareholder: legal person
Legal
Name of controlling Unified social credit
representative/person Date of establishment Principal activity
shareholder code
in charge
Production, manufacture
and distribution of packing
materials, papermaking,
FOSHAN HUAXIN cable, wire, new materials;
Li Shan 5 January 1993 914406001935399258
DEVELOPMENT CO., LTD. distribution of packing
machinery and repairing
services, amplifiers and
fittings, decoration
65
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
materials, and drinks;
information consulting
Controlling shareholder’s
holdings in other listed
None
companies at home or abroad
in the Reporting Period
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Central institution for state-owned assets management
Type of the actual controller: legal person
Legal
Date of Unified social credit
Name of actual controller representative/per Principal activity
establishment code
son in charge
Asset operations and
management; entrusted
management; mergers and
acquisitions; investment
management and consultation;
logistics services; import and
export; sales of metal materials,
mechanical and electrical
products, chemical materials and
products (excluding dangerous
chemicals), ferrous metal and
minerals, nonferrous materials
China Chengtong Holdings and minerals, coke, building
Zhu Bixin 22 January 1998 911100007109225442
Group Ltd. materials, natural rubber, wood,
cement and automobiles; sales
of hardware, electrical
equipment, chemicals, textiles,
clothes, daily supplies, cultural
and sports goods; production,
development and utilization of
forestry-pulp-paper. (The
enterprise shall independently
select business items and carry
out business activities according
to law. For items that require
approval by law, the enterprise
66
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
must obtain approval from
relevant authorities before
carrying out the business
activities. The enterprise shall
not engage in business activities
that are prohibited and restricted
by the industrial policy of the
city.)
China Chengtong holds 45.74% of shares in CMST Development Co., Ltd. (600787) A-share
listed through CMST; holds 33.17% of shares in Mcc Meili Cloud Computing Industry
Investment Co., Ltd. (000815) A-share listed through shareholding in Beijing Xingchengwang
Industrial Co., Ltd., MCC Paper Group Co., Ltd. and China Xinyuan Asset Management
Other listed companies at home Company; holds 55.92% of shares in Tiger Forest & Paper Group Co., Ltd. (hereinafter referred to
or abroad controlled by the as “Tiger Forest & Paper”) which directly holds 27.87% of shares in listed Yueyang Forest &
actual controller in the Paper Co., Ltd. (600963) through China Paper; directly holds 14.31% of shares in listed Yueyang
Reporting Period Forest & Paper Co., Ltd. (600963) through China Paper; holds 26.10% of shares in listed
Guangdong Guanhao High-Tech Co., Ltd. (600433) through China Paper; holds 52.03% of shares
in China Chengtong Development Group Limited (00217); holds 45.58% of shares in listed Cts
International Logistics Corporation Limited (603128.SH) through China Chengtong Hong Kong
Company Limited and Beijing Chengtong Jinkong Investment Co., Ltd.
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
67
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual Controller,
Reorganizer and Other Commitment Makers
□ Applicable √ Not applicable
68
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
69
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part VIII Convertible Corporate Bonds
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
70
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part IX Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Beginnin Increase Decrease
Other Ending
g in the in the
Office Incumben Start of End of increase/d sharehold
Name Gender Age sharehold Reporting Reporting
title t/Former tenure tenure ecrease ing
ing Period Period
(share) (share)
(share) (share) (share)
Chairman
Zhong Incumben 14 April
of the Male 41 0 0 0 0 0
Tianqi t 2020
Board
Vice
Ren Chairman Incumben 15 March
Male 48 0 0 0 0 0
Xiaoping of the t 2018
Board
Incumben 17 April
Ye Meng Director Male 52 0 0 0 0 0
t 2017
Director， Incumben 17 April
Li Fei Male 38 0 0 0 0 0
Vice GM t 2017
26
Zhou Incumben
Director Male 50 Novembe 0 0 0 0 0
Gaosong t
r 2019
Independ
Zhang Incumben 9 April
ent Male 53 0 0 0 0 0
Wenjing t 2019
Director
Independ
Incumben 17 April
Li Jun ent Male 48 0 0 0 0 0
t 2017
Director
Independ 26
Lu Incumben
ent Male 52 Novembe 0 0 0 0 0
Guihua t
Director r 2019
Chairman
of the
Ren Superviso Incumben 17 April
Male 58 0 0 0 0 0
Xiaoming ry t 2017
Committe
e
Zhang Superviso Incumben 17 April
Female 50 26,800 0 0 0 26,800
Hong r t 2017
71
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Employee 21
Zhao Incumben
superviso Male 27 Septembe 0 0 0 0 0
Yaxing t
r r 2018
15
Ren Incumben
GM Male 48 January 0 0 0 0 0
Xiaoping t
2018
Incumben 24 June
Li Fei Vice GM Male 38 0 0 0 0 0
t 2019
Vice GM,
Ding CFO, and Incumben 17 July
Male 36 0 0 0 0 0
Guoqiang Board t 2018
Secretary
Wu Incumben 17 April
Vice GM Male 58 0 28,200 0 0 28,200
Yirong t 2017
30
Zhang Incumben
Vice GM Male 48 January 0 0 0 0 0
Chunhua t
2019
Chairman
Huang 17 April 10 March
of the Former Male 58 0 0 0 0 0
Xin 2017 2020
Board
Zhang 17 April 24 April
Director Former Male 46 0 0 0 0 0
Qiang 2017 2017
Total -- -- -- -- -- -- 26,800 28,200 0 0 55,000
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Name Office title Type of change Date of change Reason for change
Chairman of the
Huang Xin Left 10 March 2020 Resignation and arrangement from the Party
Board
Chairman of the
Zhong Tianqi Elected 24 March 2020 Elected by general meeting
Board
Zhang Qiang Director Left 24 April 2020 Resignation and arrangement from the Party
III Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the incumbent directors, supervisors and
senior management:
Chairman of the Board Zhong Tianqi, male, born in 1979, is a Master’s degree holder. He successively worked as the Deputy
Manager and Manager in China Material Development & Investment Corporation (successively renamed as ChinaNational
Paper-Industry Investment Corp. and China Paper Corporation); the Party Secretary, Vice President and GM in Guangdong Guanhao
High-Tech Co., Ltd. He now acts as the vice GM of China Paper Corporation, the Chairman of the Board of Guangdong Guanhao
72
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
High-Tech Co., Ltd., Foshan Huaxin Packaging Co., Ltd and Zhuhai Hongta Renheng Packaging Co., Ltd.
Vice President and GM Ren Xiaoping, male, born in 1972, is a Master’s degree holder, professor and CPA. He successively worked
as Director of the Teaching and Research Section of Financial Management and Deputy Dean of Management Department in China
University of Labor Relations; GM of Management Center, Stratagem Development Dept. in China Paper Corporation; Supervisor
and Director of Mcc Meili Cloud Computing Industry Investment Co., Ltd, Supervisor of Tiger Forest Paper Group Co., Ltd and GM
of Zhuhai Hongta Renheng Packaging Co., Ltd.. He now acts as Director of Guangdong Guanhao High-tech Co., Ltd; Director of
Foshan Huaxin Development Co., Ltd., Party Secretary, Vice President, and GM of Foshan Huaxin Packaging Co., Ltd; Party
Secretary and Vice President of Zhuhai Hongta Renheng Packaging Co., Ltd.
Director Ye Meng, male, born in 1968, is a Senior Economist with master’s degree. He used to be the HR Minister, Deputy GM, and
Party Secretary of Yueyang Paper Co., Ltd.; Chief Economist and Chief Legal Officer, Secretary of the Board, Deputy GM, Deputy
Party Secretary, and Secretary of Commission in Tiger Forest & Paper Group Co., Ltd.; Deputy Party Secretary of Yueyang Forest &
Paper Co., Ltd, General Manager Assistant in China Paper Corporation. He now is Party Secretary, Chairman of the Board, GM of
Tiger Forest & Paper Group Co., Ltd; Party Secretary and Chairman of the Board of Yueyang Forest & Paper Co., Ltd; and Director
of Foshan Huaxin Development Co., Ltd and Foshan Huaxin Packaging Co., Ltd.
Director and Deputy GM Li Fei, male, born in 1982, is a bachelor degree holder. He used to be the Project Manager of Strategic
Development Department, the Business Executive of Metal Business Department, the Deputy GM of General Management
Department, the Deputy GM of General Management Department & the Deputy GM of Human Resource Department, GM of
General Management Department & the GM of Human Resource Department in China Paper Corporation, the Deputy GM and
Board Secretary of Yueyang Forest & Paper Co.,Ltd., Employee Director of China Paper Corporation. He now is the Director and
Deputy GM of Foshan Huaxin Packaging Co., Ltd, GM and Deputy Party Secretary of Zhuhai Hongta Renheng Packaging Co., Ltd.
and Supervisor of MCC Paper Group Co., Ltd.
Director Zhou Gaosong, male, born in 1970, is a bachelor degree holder. He used to be the Deputy GM of Foshan Dongping Assets
Management Co., Ltd., GM Assistant in Foshan Financial Investment Holdings Co., Ltd. He now is the Director of Foshan Financial
Investment Holdings Co., Ltd., Chairman of the Board of FOSHAN CHAN BEN DE ASSET MANAGEMENT CO., LTD, GM of
Foshan Southern Assets & Equity and Supervisor of Guangdong Equity Exchange.
Independent Director Zhang Wenjing, male, born in 1967, is a lawyer with master’s degree. He acted as a lawyer of Guangdong
Chenguang Law Offices (renamed as De Heng (Zhuhai) Law Offices later); Independent Director of Huajin Capital Co., Ltd. He now
is a Lawyer and Director of De Heng (Zhuhai) Law Offices; legal adviser of the Standing Committee of the National People' s
Congress of Zhuhai City, People’s Government of Zhuhai, Discipline Inspection Committee of Zhuhai, High-tech Zone Management
Committee of Zhuhai, State-owned Assets Supervision and Administration Commission of People’s Government of Zhuhai, Zhuhai
Municipal Housing and Urban and Rural Planning Construction Bureau, Finance Bureau in Hengqin New District, Development
Revolution and Finance Bureau in Gaolangang Economical Area; Independent Director in Foshan Huaxin Packaging Co., Ltd. and
Zhuhai Port Co., Ltd.
Independent Director Li Jun, male, born in 1972, is a professor and doctoral supervisor with doctoral degree. He worked as teacher,
lecture, associate professor, and professor in South China University of Technology. Now he is a Vice President of School of Light
Industry Science and Engineering in South China University of Technology; the team head of Processing Technology and Equipment;
Deputy Director of State Key laboratories in Pulp and Paper Engineering of South China University of Technology; Independent
Director of Foshan Huaxin Packaging Co., Ltd.
73
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Independent Director Lu Guihua, male, born in 1968, is a member of Communist Party of China with doctoral degree, professorship,
a post-doctor, a CPA, an assistant engineer and an economist. He now is the professor and doctoral tutor of Accounting Institute of
Central University of Finance and Economics, the part-time professor of Tsinghua Shenzhen Graduate School, State Grid Advanced
Training Center, PANYAPIWAT INSTITUTE OF MANAGEMENT and Graduate School of Chinese Academy of Social Sciences,
Independent Director of Beijing Shunxin Agriculture Co., Ltd., Beijing Electronics Zone Investment and Development Group Co.,
Ltd. and Foshan Huaxin Packaging Co., Ltd. .
Chairman of the Supervisory Committee Ren Xiaoming, male, born in 1962, is a lecturer with bachelor’s degree. He once was a
teacher in Beijing Materials University; Deputy Director of Information Teaching and Research Office of Computing Center in
Beijing Materials University; the staff, Manager of Operation Dept. I, and Manager of Future Goods Dept. in Beijing Company of
China’s Defense Military Supplies; Deputy Manager, Deputy Director of Administration (Party Committee) Office, Deputy Manager
of HR & Admin Dept., and Deputy Director of Part Committee Office, Deputy Manager and member of CCDI in Party-mass work
Dept and General management Dept in China Material Development Investment Corporation (renaming to China National
Paper-Industry Investment Corp. and China Paper Corporation successively); Party Committee Member, Secretary of Commission,
chairman of the labor union, and Chairman of the Supervisory Committee in Foshan Huaxin Packaging Co., Ltd; Deputy Party
Secretary, Secretary of Commission, and Chairman of the Supervisory Committee in Zhuhai Hongta Renheng Packaging Co., Ltd.;
Supervisor in Huaxin (Foshan) Color Printing Co., Ltd., the GM of Foshan Huaxin Import & Export Co., Ltd; Chairman of the
Supervisory Committee in Foshan Huaxin Development Co., Ltd; Now he is the director of Discipline Inspection Supervision Office
in China Paper Corporation, Chairman of the Supervisory Committee in Foshan Huaxin Packaging Co., Ltd. and Supervisor of
Zhuhai Hongta Renheng Packaging Co., Ltd.
Supervisor: Zhang Hong, female, born in 1970, bachelor degree, Human Resources Management Division, Level 1. Zhang Hong
once held the posts of the Teacher, the Secretary for the Office of the Party Committee, and the Deputy Business Director of Labor
Output Training Division in Jiangxi Yichun Technician School; the Office Executive Secretary, Deputy Director and Director and the
Human Resources Manager in Zhuhai Hongta Renheng Packaging Co., Ltd; Human Resources Manager in Foshan Huaxin
Packaging Co., Ltd; the GM Assistant, Director of Human Resources Administration Center in Zhuhai Hongta Renheng Packaging
Co., Ltd, now she is the Deputy Party Secretary, Secretary of Commission, Chairman of the Labor Union and supervisor in Foshan
Huaxin Packaging Co., Ltd., the Deputy Party Secretary, Secretary of Commission in Zhuhai Hongta Renheng Packaging Co., Ltd.
Employee supervisor Zhao Yaxing, male, was born in 1993, bachelor degree. He once worked in the Logistics Department, Security
Investment Department, and Ministry of Law of Zhuhai Hongta Renheng Packaging Co., Ltd and once acted as the Deputy Director
of Party Building Center in Zhuhai Hongta Renheng Packaging Co., Ltd; now he is the Secretary of Youth League Committee, the
employee supervisor in Foshan Huaxin Packaging Co., Ltd and Deputy Director of Risk Compliance Department in Zhuhai Hongta
Renheng Packaging Co., Ltd.
Vice GM, Board Secretary, and CFO Ding Guoqiang, male, born in 1984, is a certified public accountant with bachelor degree. He
once acted as the Director of Finance Management Department and deputy manager in China Paper Corporation; Vice GM, Chief
Accountant, and Secretary of the Board in Mcc Meili Cloud Computing Industry Investment Co., Ltd; Now he is the director in
China Chengtong Finance Corporation Ltd and Guangdong Chengtong Logistics Co., Ltd. and member of the Party Committee, Vice
GM, CFO, and Board Secretary in Zhuhai Hongta Renheng Packaging Co., Ltd. and Foshan Huaxin Packaging Co., Ltd.
Deputy General Manager Wu Yirong, male, born in 1962, is a Senior Engineer with master’s degree. He acted as Technology Deputy
Managers, Sales Deputy Managers, Deputy Chief Engineer, Deputy General Manager in Zhuhai S.E.Z Hongta Renheng Paper Co.,
74
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Ltd. He has been acting as Deputy General Manager in Zhuhai Hongta Renheng Packaging Co., Ltd. He has been acting as Deputy
General Manager and member of the Party Committee in Foshan Huaxin Packaging Co., Ltd. and Zhuhai Hongta Renheng
Packaging Co., Ltd.
Deputy General Manager Zhang Chunhua, male, born in 1972, is a senior engineer with master degree. He once held the posts of
Deputy Manager, Manager, and General Manager Assistant of Equipment Management Department in Zhuhai Hongta Renheng
Packaging Co., Ltd, and now acts as the member of the Party Committee and Deputy GM of Foshan Huaxin Packaging Co., Ltd. and
the general Party branch secretary, Director and GM of Huaxin (Foshan) Color Printing Co., Ltd.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Office held in
Remuneration or
the
Name Shareholding entity Start of tenure End of tenure allowance from the
shareholding
shareholding entity
entity
23 September
Ren Xiaoping Foshan Huaxin Development Co., Ltd Director, No
2020
Ye Meng Foshan Huaxin Development Co., Ltd Director, 23 May 2015 No
10 October
Zhong Tianqi China Paper Corporation Vice GM Yes
2020
27 September
Ren Xiaoming China Paper Corporation Chairperson Yes
2019
FOSHAN CHAN BEN DE ASSET Chairman of
Zhou Gaosong 27 July 2018 No
MANAGEMENT CO., LTD the Board
Notes N/A
Offices held concurrently in other entities:
√Applicable □Not applicable
Remuneration or
Office held in the End of
Name Other entity Start of tenure allowance from
entity tenure
the entity
Chairman of the
Zhong Tianqi Guangdong Guanhao High-tech Co., Ltd 15 May 2020 Yes
Board
Zhuhai Hongta Renheng Packaging Co., Director, Party
Ren Xiaoping 15 January 2018 Yes
Ltd. Secretary
Ren Xiaoping Guangdong Guanhao High-tech Co., Ltd Director 23 September 2017 No
Party Secretary,
Ye Meng Tiger Forest &Paper Group Co., Ltd Chairman of the 20 August 2020 Yes
Board, GM
Party Secretary,
Ye Meng Yueyang Forest & Paper Co., Ltd Chairman of the 29 March 2015 No
Board
Zhuhai Hongta Renheng Packaging Co., Deputy Party
Li Fei 1 June 2019 Yes
Ltd. Secretary, GM
Li Fei MCC Meili Paper Industry Co., Ltd Supervisor 1 March 2013 No
75
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Foshan Southern Assets & Equity Co.,
Zhou Gaosong GM 1 July 2016 Yes
Ltd.
Foshan Financial Investment Holdings
Zhou Gaosong Director 1 May 2017 Yes
Co., Ltd.
Guangdong Financial Hi-Tech Zone
Zhou Gaosong Supervisor 1 June 2017 No
Equity Exchange Center Co., Ltd.
Zhang Wenjing De Heng (Zhuhai) Law Offices Chairperson 1 December 1997 Yes
Independent
Zhang Wenjing Zhuhai Port Co., Ltd. 27 July 2015 Yes
Director
Professor and
Li Jun South China University of Technology 28 August 2017 Yes
Director
Central University of Finance and Professor and
Lu Guihua 1 October 2007 Yes
Economics doctoral tutor
Independent
Lu Guihua Beijing Shunxin Agriculture Co.,Ltd. 6 December 2019 Yes
director
Beijing Electronics Zone Investment and Independent
Lu Guihua 6 April 2016 Yes
Development Group Co.,Ltd. director
Zhuhai Hongta Renheng Packaging Co.,
Ren Xiaoming Supervisor 30 January 2016 No
Ltd.
Deputy Party
Zhuhai Hongta Renheng Packaging Co., Secretary,
Zhang Hong 15 April 2019 Yes
Ltd. Secretary of
Commission
Zhuhai Hongta Renheng Packaging Co.,
Zhao Yaxing Deputy Director 12 September 2018 Yes
Ltd.
China Chengtong Finance Corporation
Ding Guoqiang Director 24 October 2018 No
Ltd.
Vice GM, Board
Secretary, Party
Zhuhai Hongta Renheng Packaging Co.,
Ding Guoqiang Committee 7 August 2018 Yes
Ltd.
Member and
CFO
Guangdong Chengtong Logistics
Ding Guoqiang Director 1 November 2019 No
Co.,Ltd.
Party Committee
Zhuhai Hongta Renheng Packaging Co.,
Wu Yirong Member and Vice 30 January 2016 Yes
Ltd.
GM
General Party
Zhang Chunhua Huaxin (Foshan) Color Printing Co., Ltd Branch Secretary, 25 October 2017 Yes
Director and GM
Notes N/A
Punishments imposed in the recent three years by the securities regulator on the incumbent directors, supervisors and senior
76
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors, supervisors and senior
management:
1. Decision-making procedure of remuneration of directors, supervisors and senior executives: remuneration of directors and
supervisors was deliberated and approved by shareholders’ general meeting; the standards of remuneration of senior executives were
decided by the remuneration and appraisal commission according to management regulations of remuneration and business
performance, and then were submitted to the board of directors for approval.
2. Determination basis of remuneration of directors, supervisors and senior executives: the Company, according to the income level
of industry and region and considering business performance of the Company and contribution to the Company, decided the scope of
annual remuneration of directors, supervisors and senior executives. On the basis of appraisal results, annual remuneration was
determined. Moreover, according to the growth of annual business performance and accomplishment of major projects, the extra
rewards would be granted after the authorization of the board of directors and verification of Chairman of the board of directors.
Remuneration of directors, supervisors and senior management for the Reporting Period
Unit: RMB'0,000
Total before-tax
Any
Incumbent/Forme remuneration
Name Office title Gender Age remuneration
r from the
from related party
Company
Chairman of the
Zhong Tianqi Male 41 Incumbent 0 Yes
Board
Vice Chairman of
Ren Xiaoping Male 48 Incumbent 62.04 No
the Board, GM
Ye Meng Director Male 52 Incumbent 0 Yes
Director， Vice
Li Fei Male 38 Incumbent 72.32 No
GM
Zhou Gaosong Director Male 50 Incumbent 0 Yes
Independent
Zhang Wenjing Male 53 Incumbent 8 No
Director
Independent
Li Jun Male 48 Incumbent 8 No
Director
Independent
Lu Guihua Male 52 Incumbent 8 No
Director
Chairman of the
Ren Xiaoming Supervisory Male 58 Incumbent 0 Yes
Committee
Zhang Hong Supervisor Female 50 Incumbent 40.18 No
Employee
Zhao Yaxing Male 27 Incumbent 20.02 No
supervisor
77
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
CFO, Board
Ding Guoqiang Male 36 Incumbent 43.07 No
Secretary
Zhang Chunhua Vice GM Male 48 Incumbent 94.16 No
Wu Yirong Vice GM Male 58 Incumbent 49.95 No
Chairman of the
Huang Xin Male 58 Former 0 Yes
Board
Zhang Qiang Director Male 46 Former 0 Yes
Total -- -- -- -- 405.74 --
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable √ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent 8
Number of in-service employees of major subsidiaries 1,631
Total number of in-service employees 1,639
Total number of paid employees in the Reporting Period 1,639
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 1,032
Sales 86
Technical 60
Financial 46
Administrative 238
177
Total 1,639
Educational backgrounds
Educational background Employees
Doctor’s degree 1
Master’s degree 40
Bachelor’s degree 242
Junior college 298
78
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Vocational school and secondary technical school 367
Senior high school below 691
Total 1,639
2. Employee Remuneration Policy
Combined with industry situations of the market, development strategy of the Company, and operation performance, the employee
remuneration policy of the Company provides employees with competitive salary level in industries and regions. Meanwhile, the
Company set up a normalized, standardized, and systematic salary management system according to national laws and regulations
and the actual conditions of the Company. Salary distribution is inclined to strategic talents, production backbones, and technical
personnel to ensure the market competitiveness of core talents’ income level. The employee remuneration policy incentivizes the
performance and reflects the market with clear guidance and difference. Among the compensation package of the Company’s
employees, the salary is decided by position value in line with the market, and the bonus is decided by their performance to stand out
their contributions. Moderate adjustments and collections are done to the remuneration policy of the Company according to the
development strategy and managerial demands of production operation every year. Sharing innovative achievements with staffs, the
Company provides employees with legal labor remuneration as their due to improve employees’ happiness.
The Company is pushing forward the establishment of engagement system of professional technical and skilled talents’ grade
evaluation, with recognition to employees’ professional abilities, providing competent skilled and technical talents with performance
with multi career development channel other than management position to comprehensively build the employment mechanism of
attracting talents, incentivizing talents, and retaining talents as well.
3. Employee Training Plans
Guided by strategic objectives of organization and development requirements of HR, the Company provides employees with targeted
and systematic trainings, including various respects, such as, post knowledge, job qualification, safety education, system standards,
and administrative regulations, etc.
Hongta Renheng introduced high quality external training resources through various training methods, and improved the business
ability and comprehensive quality of employees of different levels.
4. Labor Outsourcing
□ Applicable √ Not applicable
79
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part X Corporate Governance
I General Information of Corporate Bonds
During the Reporting Period, the Company continuously improved corporate governance structure, and established modern
enterprises system to standardize the Company’s operation in strict accordance with the related laws and regulations of Corporation
Law, Securities Law, Governance Regulations of listing Companies and related rules of Shenzhen Stock Exchange. On the basis of
the related regulations of Corporation Law, Stock Listing Rules, Rules of Procedure of General Meeting of Shareholders, Board of
Directors, and Supervisory Board, the Company convened General Meeting of Shareholders, Board of Directors, and Supervisory
Board in time within the involved terms of reference of decision-making events, fully implementing the decided events; the
responsibility of General Meeting of Shareholders, Board of Directors, Supervisory Board, and Business Management is clear with
effectively operated balance mechanism, and the decision-making and rules of procedure are democratic and transparent. The actual
conditions of the Company’s governance are in line with the related regulations of CSRC.
Indicate by tick market whether there is any material incompliance with the regulatory documents issued by the CSRC governing the
governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
Asset, Organization and Financial Affairs
The Company, the controlling shareholders and the actual controllers of the Company realized the independent execution in business,
personnel, assets, finance and institution with independent calculation and respectively burden the responsibilities and risks. The
Company possesses independent and entire business and self operating ability.
1. As for the business: the Company possessed the independent and complete business and decision-making system as well as the
independent operating ability that entirely independent of the controlling shareholders and the actual controllers.
2. As for the personnel: the Company possessed independent labor, HR and salary management system and the Senior Executives
such as the GM, the managers, the Financial Administrator and the Board Secretary were all paid by the Company and unable to take
charge in the controlling shareholders’ units of the Company.
3. As for the assets: the Company possessed the independent production and operating system as well as the supporting facilities, and
the assets the controlling shareholders invested in the Company were independent as well as complete with clear ownership.
4. As for the institutions: the Company set up the organizations and intuitions independent of the controlling shareholders for
independently handling the official business and the execution of the functions.
5. As for the finance: the Company set up the independent finance management department and built up the independent accounting
calculation mechanism and financial management system; the Company opened the independent account and paid for the taxes
according to laws.
III Horizontal Competition
□ Applicable √ Not applicable
80
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor Index to disclosed
Meeting Type Date of the meeting Disclosure date
participation ratio information
Name of
announcement:
Announcement on
Resolution of The
2019 Annual
General Meeting of
Foshan Huaxin
Packaging Co., Ltd. ;
Number of
announcement:
2020-022 ;
Newspaper and
website on which the
announcement was
The 2019 Annual Annual General
65.72% 14 April 2020 15 April 2020 disclosed: Securities
General Meeting Meeting
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Index:
http://www.cninfo.co
m.cn/new/disclosure/
detail?plate=szse&or
gId=gssz0200986&s
tockCode=200986&
announcementId=12
07498675&announc
ementTime=2020-04
-15。
Name of
announcement:
Announcement on
The 1st Extraordinary
Extraordinary Resolution of The 1st
General Meeting of 0.29% 15 July 2020 16 July 2020
General Meeting Extraordinary
2020
General Meeting of
2020 of Foshan
Huaxin Packaging
81
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Co., Ltd. ; Number
of announcement:
2020-037 ;
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Index:
http://www.cninfo.co
m.cn/new/disclosure/
detail?plate=szse&or
gId=gssz0200986&s
tockCode=200986&
announcementId=12
08035766&announc
ementTime=2020-07
-16。
Name of
announcement:
Announcement on
Resolution of The
2nd Extraordinary
General Meeting of
2020 of Foshan
Huaxin Packaging
Co., Ltd. ; Number
of announcement:
The 2 Extraordinary
nd
2020-066 ;
Extraordinary
General Meeting of 5.41% 14 December 2020 15 December 2020 Newspaper and
General Meeting
2020 website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Index:
http://www.cninfo.co
m.cn/new/disclosure/
detail?plate=szse&or
82
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
gId=gssz0200986&s
tockCode=200986&
announcementId=12
08900782&announc
ementTime=2020-12
-15
2. Special General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
Total number The
Board
of board Board Board independent
Board meetings
meetings the meetings meetings the director failed General
Independent meetings attended by
independent attended independent to attend two meetings
director attended on way of
director was through a director failed consecutive attended
site telecommunica
eligible to proxy to attend board meetings
tion
attend (yes/no)
Zhang Wenjing 10 0 10 0 0 No 0
Li Jun 10 0 10 0 0 No 1
Lu Guihua 10 0 10 0 0 No 0
Why any independent director failed to attend two consecutive board meetings:
Not applicable
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company
In accordance with the related requirements of Institutional guidance of Independent Directors of Listing Companies, Articles of
83
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Association, and Rules of Procedure of Board of Directors, the independent Directors of the Company performed the duties, and
earnestly reviewed various proposals of Board of Directors, fully expressed their opinions about the significant events of the
Company, and also expressed related opinions about the events in need of approval opinions of independent Directors or independent
opinions in advance, giving a full play to the functions of independent directors, providing effective guarantee to the scientific
decision-making of Board of Directors, Guaranteeing the Board’s independence and justice and safeguarding legislative interests of
minority shareholders.
VI Performance of Duty by Specialized Committees under the Board in the Reporting Period
(I) Performance of the Audit Committee of the Board of Directors
The Audit Committee of the Board of Directors held three meetings. In accordance with the responsibilities of the Audit Committee
of the Board of Directors of the company, the Audit Committee mainly coordinates, supervises and checks the internal and external
audit:
1. The audit committee fully communicated with the accounting firm responsible for annual audit of the company with respect to the
audit plan, engagement letter, risk and control etc.; Before the certified public accountant responsible for annual audit of the company
entered the site, the audit committee reviewed the financial statements prepared preliminarily by the company and believed that the
statements reflect the current financial state of the company in all material respects; After the certified public accountant responsible
for annual audit of the company provided his preliminary opinion, the audit committee reviewed the financial statements of the
company and communicated with the accounting firm concerning important issues and main accounting estimation issues, audit
adjustment issues and important accounting policies that may have an potential impact on the financial statements, believed that the
financial and accounting statements of the company reflected the overall situation of the company truly, accurately and completely
and agreed to prepare the annual report of FY 2020 based on these statements; The audit committee reviewed the financial statements
of FY 2020 which has been audited by the auditor, believed that these statements reflected the financial state, operating results and
cash flow of the company in FY 2020 fairly in all materials respects, and agreed to submit these statements to the Board of Directors
for deliberation.
2. The audit committee communicated with the accounting firm regarding the share conversion absorption merger of Guanhao
High-Tech and reviewed the financial statements prepared by the Company.
(II) Performance of the Remuneration and Appraisal Committee of the Board of Directors
The Remuneration and Appraisal Committee of the Board of Directors held just one meeting in total. In accordance with own
responsibilities, the Remuneration and Appraisal Committee of the Board of Directors reviewed the annual pay declared by directors,
supervisors and senior executives of the Company and believed that the annual pay declared by directors, supervisors and senior
executives of the Company is consistent with that they actually collect from the Company. The remuneration of directors, supervisors
and senior executives of the company is paid according to the salary management regulations of the Company.
(III) Nomination Committee of the Board of Directors
The Nomination Committee of the Board of Directors held one meeting in total. In accordance with own responsibilities, the
Nomination Committee of the Board of Directors reviewed the qualifications of directors and proposed candidates.
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its supervision in the Reporting
Period.
□ Yes √ No
84
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
In the principle of reasonableness, fairness, and justice, the Company thinks highly of the combination of material incentives with
spirit incentives, and the combination of operation target of the Company with dedication spirit, social responsibility, and career
achievement of the senior executive at the same time. During the Reporting Period, as required by the higher level unit, the Company
established the appraisal system based on system of objective responsibility in accordance with Methods of Compensation
Management and Enforcement Regulations of Compensation Incentives reviewed and approved by board of Directors and
Compensation and Appraisal Committee. The Company and executive officers signed the Liability Statement of the Company’s
Annual Operation to confirm the compensation incentives scheme of executive officers. The Board of Directors evaluates the
performance of executive officers to confirm the compensation according to the indicators of Liability Statement of the Annual
Operation, including multidimensional indicators, like various annual financial indicators, internal operation management indicators,
and special indicators of main work, and etc.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
Disclosure date of the internal control
17 March 2021
self-evaluation report
Index to the disclosed internal control
http://www.cninfo.com.cn
self-evaluation report
Evaluated entities’ combined assets as % of
100.00%
consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 100.00%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over financial Weaknesses in internal control not
Type
reporting related to financial reporting
(1) Indications of the great defect of the (1) If there were unambiguous evidence
financial report including: ① malpractices indicated the Company possessed one of
of the Directors, Supervisors and the Senior the following conditions among the
Executives of the Company; ② published evaluation at the period-end, should be
Nature standard
financial report with significant recognized as the great defect of the
misstatement which influenced its internal control: ① the significant
authenticity, integrity and fairness that the events lacked of the legal
Company would make certain verification; decision-making process; ② lacked of
85
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
③ CPA discovered the significant the decision-making process or the
misstatement of the current financial report process was not normative that caused
while the internal control failed to find out significant mistakes; ③ violated the
during the operating; ④ the supervision on national laws, regulations, rules or
the internal control by the Audit Committee normative documents that received the
and the internal audit institution of the administrative punishment such as the
Company was invalid. (2) The indications of criminal penalties or be ordered for
the significant defect of the financial report suspension of production or business, be
including: ① the environmental control withheld or revoked the permits or
was invalid; ② the accounting polices license; ④ the great defect of the
formulated by the Company violated the internal control had not been verified; ⑤
ASBE; ③ the applied accounting polices the significant business lacked of the
not met with the accounting system of the systematic control or which was invalid.
Company; ④ had not built up the fraud (2) There was unambiguous evidence
program and control measurements; ⑤ the indicated the Company possessed one of
financial treatment with unconventional or the following conditions among the
special transactions did not build up evaluation at the period-end, should be
corresponding control system or failed to recognized as the significant defect of
execute; ⑥ there was one or multiple the internal control: ① there was
defects during the control of financial report decision-making process but not
at the period-end and could not reasonably complete enough; ② the
ensure the statement of the compile of the decision-making process was irregular
financial report was real and complete. (3) that caused rather big mistake; ③
General defect refers to the other control violated the national laws, regulations,
defect except for the above great defect and rules and the normative documents that
significant defect. received the administrative punishment
except the criminal penalties or the order
of the suspension of production or
business or be withheld or revoked the
permits or license; ④ significant
business mechanism or system existed
significant defect; ⑤ the significant
defect of the internal control had not
been verified. (3) The general defect
refers to the other control defect except
for the above great defect and significant
defect
The quantitative criteria regarded the total The quantitative criteria regarded the
assets amount of the consolidated financial directly financial losses amount as the
report as the measurement index. If the measurement index. If the defect alone or
Quantitative standard defect alone or accompanied with other accompanied with other defects which
defects which may cause the amount of the may cause the amount of the directly
misstatement of the financial report lower financial losses lower than 0.5% of the
than 0.5% of the total assets amount of the total assets amount of the consolidated
86
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
consolidated statements, should be statements, should be recognized as the
recognized as the general defect; if exceeded general defect; if exceeded 0.5% of the
0.5% of the total assets amount of the total assets amount of the consolidated
consolidated statement but still lower than statement but still lower than 1% of
1% of which, should be recognized as the which, should be recognized as the
significant defect; if exceeded 1% of the significant defect; if exceeded 1% of the
total assets amount of the consolidated total assets amount of the consolidated
statement, should be recognized as the great statement, should be recognized as the
defect. great defect.
Number of material weaknesses in internal
0
control over financial reporting
Number of material weaknesses in internal
0
control not related to financial reporting
Number of serious weaknesses in internal
0
control over financial reporting
Number of serious weaknesses in internal
0
control not related to financial reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
Huaxin Packaging maintained valid internal control of the financial report in the significant aspects according to the Auditing
Guideline for Enterprise Internal Control and the relevant regulations of Practice Standards for Certified Public Accountants of
China on 31 December 2020.
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 17 March 2021
Index to such report disclosed http://www.cninfo.com.cn
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report on the Company’s internal
control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is consistent with the internal
control self-evaluation report issued by the Company’s Board.
√ Yes □ No
87
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part XI Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were outstanding before the date of this
Report’s approval or were due but could not be redeemed in full?
No.
88
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Part XII Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 17 March 2021
Name of the independent auditor Pan-China Certified Public Accountants(LLP)
Number of the Auditor’s Report
Name of the certified public accountants Li Qinglong, Liu Jingya
Text of the Independent Auditor’s Report
Independent Auditor’s Report
Pan-China Audit Report [2021] No. 8-XXX
To the Shareholders of Foshan Huaxin Packaging Co., Ltd.
I. Opinion
We have audited the accompanying financial statements of Foshan Huaxin Packaging Co., Ltd.
(together with its consolidated subsidiaries included in the consolidated financial statements, the
“Company”), which comprise the parent’s and consolidated balance sheets as at 31 December 2020,
the parent’s and consolidated income statements, the parent’s and consolidated cash flow statements,
the parent’s and consolidated statements of changes in owners’ equity for the year then ended, as
well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of
Accounting Standards for Business Enterprises in all significant aspects which gave a true and fair
view of the consolidated and parent financial position of Foshan Huaxin Packing Co., Ltd. as at 31
December 2020 and the consolidated and parent business performance and cash flow for 2020.
II. Basis for Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. In accordance with professional ethics
for certified public accountants, we are independent with Foshan Huaxin Packing Co., Ltd. and we
have fulfilled our other ethical responsibilities. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
89
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the Current Period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
(I) Revenue Recognition
1. Event description
Please refer to Note 3 (23) and Note 5 (2) 1 of the financial statements for relevant information
disclosure. Huaxin Packaging is mainly engaged in the production and sales of white cardboard,
latex and presswork. In 2020, Huaxin Packaging achieved operating revenue of RMB4,064,071,600.
According to the terms of sale, the Company’s sales of products is regarded as fulfillment of
performance obligations at a time point. For domestic sales, when the products are delivered to the
customer according to the contract and the customer has accepted the commodities; the payment for
the goods has been collected or the receipt has been obtained, with relevant economic benefits
likely to flow in; the main risks and rewards in respect of the ownership of the commodities have
been transferred; and the legal ownership of the commodity has been transferred, the revenue will
be recognized. For foreign sales, when the products are declared according to the contract and the
export declaration form has been obtained; the payment for the goods has been collected or the
receipt has been obtained, with relevant economic benefits likely to flow in; the main risks and
rewards in respect of the ownership of the goods have been transferred; and the legal ownership of
the goods has been transferred, the revenue will be recognized.
As operating revenue is one of the key performance indicators of Huaxin Packaging, there might be
the inherent risk of the management of Huaxin Packaging (hereinafter referred to as “the
management”) intending to achieve certain goals or expectations through improper revenue
recognition. Therefore, we identify revenue recognition as a key audit event.
2. Audit response
Audit procedures we implemented against revenue recognition mainly include:
(1) Understand key internal control related to revenue recognition, evaluate its design and execution
and test the operation effectiveness of relevant internal control;
(2) Check key sale contracts, know main contract terms or conditions, evaluate whether the revenue
recognition method is appropriate;
(3) Implement the analysis procedures on operating revenue and gross profit margin by product and
customer, identify whether there are any significant or unusual fluctuations and find out the reasons;
(4) In terms of domestic sale, check the supporting documents related to revenue recognition using
the sampling method, including sale contracts, sale invoices and customers’ acknowledgment
receipts; for overseas sale, check the supporting documents using the sampling method, including
sale contracts, declarations for export and sale invoices;
(5) Based on the letters of confirmation on accounts receivable, confirm with key customers on the
sales for the Reporting Period;
(6) Use the sampling method to check the revenue recognized around the balance sheet date against
the supporting documents such as customers’ acknowledgment receipts and declarations for export
and evaluate whether the revenue has been recognized in an appropriate period;
(7) Check whether the information related to operating revenue has been properly presented in the
financial statements.
(II) Impairment of accounts receivable
90
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
1. Item description
Refer to Note III, (X) and Note V, (I)3 of financial statement for the detailed information disclosure.
By 31 December 2020, carrying amount of accounts receivable of Xinhua Packaging Company was
RMB584.3075 million, and bad debt reserve is RMB40.6044 million, with the carrying value as
RMB543.7031 million.
According to credit risk characteristics of various accounts receivable, on the basis of single
account receivable or portfolio of accounts receivable, the management layer calculates loss reserve
according to amount of expected credit loss in the whole duration. As for accounts receivable
which calculates expected credit loss on the basis of single item, the management layer should
comprehensively consider predicted rational and well grounded information based on previous
events, current state, and future economic situation, estimate cash flow to be charged as expected,
and confirm the accrual bad debt reserve according to it; as for accounts receivable which calculates
expected credit loss on the basis of portfolio, the management layer divides portfolio based on debt
age, refers to historical credit loss experience, adjusts according to forward-looking estimation,
compiles comparison form table of debt age of accounts receivable and loss rate of contract breach,
and confirms the accrual bad debt reserve according to it.
Because amount of accounts receivable is large, and impairment of accounts receivable involves
major judgment of management layer, we should confirm impairment of accounts receivable as the
key auditing item.
2. Audit response
In view of impairment of accounts receivable, auditing procedures implemented by us mainly
include:
(1) Understand key internal control relating to impairment of accounts receivable, evaluate the
design of these controls, confirm whether it is executed and test the effect of operation of relevant
internal control.
(2) Review successive actual write off or transfer back of the accrual bad debt reserve of accounts
receivable of last year before check, evaluate the accuracy of previous prediction of management
layer.
(3) Review relevant considerations and objective evidences of credit risk evaluation for accounts
receivable, evaluate whether the management layer has recognized the credit risk value of various
accounts receivable.
(4) As for accounts receivable which calculates expected credit loss based on single item, obtain and
inspect management layer’s prediction of cash flow to be charged as expected, evaluate rationality
of key assumptions and accuracy of data used in prediction, and compare with the obtained external
evidences.
(5) As for accounts receivable which calculates expected credit loss based on portfolio, evaluate the
rationality of portfolio division according to credit risk characteristics; according to historical credit
loss experience of portfolio with similar credit risk characteristics and forward-looking, evaluate the
rationality of comparison table of debt age of accounts receivable loss rate of contract breach
compiled by management layer; test the accuracy and completeness of data used by the
management layer (including debt of account receivable, historical loss rate, migration rate, etc.)
and whether the accrual of bad debt reserve is accurate.
(6) Inspect the successive collection situation of accounts receivable, evaluate the rationality of
accrual of bad debts of accounts receivable.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(7) Confirm important customers’ balance of accounts receivable, compare the debt amount
confirmed by the customer with book balance of accounts receivables.
(8) Check whether relevant information of impairment of accounts receivable has been listed in
financial statement.
IV. Other Information
The management is responsible for the other information. The other information comprises all of
the information included in the annual report other than the financial statements and our auditor’s
report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibility of Management and Those Charged with Governance for the Financial
Statements
The management is responsible for the preparation and fair presentation of these financial
statements in accordance with Accounting Standards for Business Enterprises to make them a fair
presentation and designing, implementing and maintaining internal control relevant to the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the management is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the management either intends to liquidate
or to cease operations, or has no realistic alternative but to do so.
Government of Foshan Huaxin Packing Co., Ltd (hereinafter refer to as “Government”) are
responsible for overseeing the Company’s financial reporting process.
VI. CPA’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose.
We do not assume responsibility towards or accept liability to any other person for the contents of
this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(II) Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
(III) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(IV) Conclude on the appropriateness of the management’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, and if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, and whether
the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
(VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Company to express an audit opinion on the financial statements.
We are responsible for the direction, supervision and performance of the Company’s audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the Current Period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
1. Consolidated Balance Sheet
Prepared by Foshan Huaxin Packaging Co., Ltd.
Unit: RMB
Item 31 December 2020 31 December 2019
Current assets:
Monetary assets 808,336,749.66 213,743,010.81
Settlement reserve
Loans to other banks and financial
institutions
Held-for-trading financial assets
Derivative financial assets
Notes receivable 1,101,664.07
Accounts receivable 543,703,145.28 861,496,771.58
Receivables financing 754,556,891.52 573,333,722.20
Prepayments 70,131,883.90 31,443,452.10
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract
reserve
Other receivables 34,051,361.60 41,390,516.58
Including: Interest receivable
Dividends receivable 27,000,000.00 28,000,000.00
Financial assets purchased under
resale agreements
Inventories 571,680,057.95 660,926,072.21
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 4,372,797.34 237,644,272.39
Total current assets 2,786,832,887.25 2,621,079,481.94
Non-current assets:
Loans and advances to customers
Debt investments
Other debt investments
Long-term receivables
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Long-term equity investments 657,022,801.63 655,312,367.55
Investments in other equity
instruments
Other non-current financial assets 288,700.00 288,700.00
Investment property 17,187,286.30 29,115,661.86
Fixed assets 1,979,652,177.39 2,067,109,815.77
Construction in progress 37,659,416.51 33,321,697.05
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 120,516,031.69 127,168,024.42
Development costs 3,550,832.92
Goodwill 11,547,305.29 11,547,305.29
Long-term prepaid expense 4,267,358.53 3,478,736.33
Deferred income tax assets 28,482,764.09 31,250,198.70
Other non-current assets 4,772,941.07 8,420,488.55
Total non-current assets 2,861,396,782.50 2,970,563,828.44
Total assets 5,648,229,669.75 5,591,643,310.38
Current liabilities:
Short-term borrowings 569,724,731.69 1,163,487,459.95
Borrowings from the central bank
Loans from other banks and financial
institutions
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable 641,510,664.49 312,234,422.87
Accounts payable 321,548,477.65 321,955,510.64
Advances from customers 23,303,552.10
Contract liabilities 56,287,168.45
Financial assets sold under
repurchase agreements
Customer deposits and deposits from
other banks and financial institutions
Payables for acting trading of
securities
Payables for underwriting of
securities
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Employee benefits payable 63,027,996.20 42,342,384.19
Taxes and levies payable 10,330,525.32 13,467,917.06
Other payables 151,343,664.83 49,222,655.01
Including: Interest payable
Dividends payable 238,138.78 229,593.13
Fees and commissions payable
Reinsurance payables
Liabilities directly associated with
assets held for sale
Current portion of non-current
100,229,305.56
liabilities
Other current liabilities 7,315,245.65
Total current liabilities 1,821,088,474.28 2,026,243,207.38
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions 2,739,970.26 1,696,811.00
Deferred income 25,291,987.88 26,604,363.11
Deferred income tax liabilities 2,079,682.03 2,180,826.02
Other non-current liabilities
Total non-current liabilities 30,111,640.17 30,482,000.13
Total liabilities 1,851,200,114.45 2,056,725,207.51
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserves 256,822,373.42 256,822,373.42
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Less: Treasury stock
Other comprehensive income 169,714.39 169,714.39
Specific reserve
Surplus reserves 201,651,448.95 199,022,513.20
General reserve
Retained earnings 1,174,429,403.45 1,045,211,890.50
Total equity attributable to owners of
2,138,497,940.21 2,006,651,491.51
the Company as the parent
Non-controlling interests 1,658,531,615.09 1,528,266,611.36
Total owners’ equity 3,797,029,555.30 3,534,918,102.87
Total liabilities and owners’ equity 5,648,229,669.75 5,591,643,310.38
Legal representative: Ren Xiaoping Chief Financial Officer: Ding Guoqiang
Financial Manager: Luo Jing
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2020 31 December 2019
Current assets:
Monetary assets 63,589,544.53 5,342,379.55
Held-for-trading financial assets
Derivative financial assets
Notes receivable
Accounts receivable 2,344,500.00
Receivables financing
Prepayments 278,085.63
Other receivables 27,164,725.00 53,371,168.86
Including: Interest receivable
Dividends receivable 27,000,000.00 28,000,000.00
Inventories
Contract assets
Assets held for sale
Current portion of non-current assets
Other current assets 97,084.24 135,661.98
Total current assets 93,473,939.40 58,849,210.39
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 1,703,167,071.69 1,696,777,505.79
Investments in other equity
instruments
Other non-current financial assets 288,700.00 288,700.00
Investment property
Fixed assets 58,151.55 69,775.81
Construction in progress
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 50,172.69 72,990.24
Development costs
Goodwill
Long-term prepaid expense 78,591.95 123,501.67
Deferred income tax assets
Other non-current assets
Total non-current assets 1,703,642,687.88 1,697,332,473.51
Total assets 1,797,116,627.28 1,756,181,683.90
Current liabilities:
Short-term borrowings
Held-for-trading financial liabilities
Derivative financial liabilities
Notes payable
Accounts payable
Advances from customers
Contract liabilities 16,048.00
Employee benefits payable 235,144.61 114,646.21
Taxes and levies payable 75,710.81 4,685.50
Other payables 22,299,690.89 280,301.76
Including: Interest payable
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Dividends payable 238,138.78 229,593.13
Liabilities directly associated with
assets held for sale
Current portion of non-current
liabilities
Other current liabilities
Total current liabilities 22,626,594.31 399,633.47
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preference shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term employee benefits
payable
Provisions
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 22,626,594.31 399,633.47
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserves 250,531,482.00 250,531,482.00
Less: Treasury stock
Other comprehensive income
Specific reserve
Surplus reserves 201,651,448.95 199,022,513.20
Retained earnings 816,882,102.02 800,803,055.23
Total owners’ equity 1,774,490,032.97 1,755,782,050.43
Total liabilities and owners’ equity 1,797,116,627.28 1,756,181,683.90
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
3. Consolidated Income Statement
Unit: RMB
Item 2020 2019
1. Revenues 4,064,071,623.72 3,930,629,985.81
Including: Operating revenue 4,064,071,623.72 3,930,629,985.81
Interest income
Insurance premium income
Fee and commission income
2. Costs and expenses 3,842,320,029.07 3,968,183,969.20
Including: Cost of sales 3,368,375,439.04 3,531,794,901.86
Interest expense
Fee and commission expense
Surrenders
Net insurance claims paid
Net amount provided as insurance
contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and levies 25,726,365.37 20,112,821.51
Selling expense 206,102,948.57 183,190,086.17
Administrative expense 103,157,480.93 100,105,438.67
R&D expense 89,899,073.34 57,601,470.09
Finance costs 49,058,721.82 75,379,250.90
Including: Interest expense 73,042,690.41 78,599,801.94
Interest
23,384,117.39 15,006,123.48
income
Add: Other income 27,242,697.14 14,875,074.09
Return on investment (“-” for loss) 28,847,970.39 30,722,209.55
Including: Share of profit or loss of joint
28,843,042.44 30,722,209.55
ventures and associates
Income from the derecognition of
financial assets at amortized cost (“-” for
loss)
Exchange gain (“-” for loss)
Net gain on exposure hedges (“-” for
loss)
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Gain on changes in fair value (“-”
for loss)
Credit impairment loss (“-” for loss) 397,510.98 520,373.34
Asset impairment loss (“-” for loss) 1,389,714.51 19,687,758.40
Asset disposal income (“-” for loss) 180,100.16 -25,775.66
3. Operating profit (“-” for loss) 279,809,587.83 28,225,656.33
Add: Non-operating income 14,549,745.47 5,256,262.75
Less: Non-operating expense 2,989,320.64 1,330,146.84
4. Gross profit (“-” for loss) 291,370,012.66 32,151,772.24
Less: Income tax expense 11,313,758.93 7,967,207.29
5. Net profit (“-” for net loss) 280,056,253.73 24,184,564.95
5.1 By operating continuity
5.1.1 Net profit from continuing
280,056,253.73 24,184,564.95
operations (“-” for net loss)
5.1.2 Net profit from discontinued
operations (“-” for net loss)
5.2 By ownership
5.2.1 Net profit attributable to owners of
139,427,823.70 35,704,671.22
the Company as the parent
5.2.1 Net profit attributable to
140,628,430.03 -11,520,106.27
non-controlling interests
6. Other comprehensive income, net of
tax
Attributable to owners of the Company as
the parent
6.1 Items that will not be reclassified to
profit or loss
6.1.1 Changes caused by remeasurements
on defined benefit schemes
6.1.2 Other comprehensive income that
will not be reclassified to profit or loss
under the equity method
6.1.3 Changes in the fair value of
investments in other equity instruments
6.1.4 Changes in the fair value arising
from changes in own credit risk
6.1.5 Other
6.2 Items that will be reclassified to profit
or loss
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
6.2.1 Other comprehensive income that
will be reclassified to profit or loss under
the equity method
6.2.2 Changes in the fair value of other
debt investments
6.2.3 Other comprehensive income
arising from the reclassification of
financial assets
6.2.4 Credit impairment allowance for
other debt investments
6.2.5 Reserve for cash flow hedges
6.2.6 Differences arising from the
translation of foreign
currency-denominated financial
statements
6.2.7 Other
Attributable to non-controlling interests
7. Total comprehensive income 280,056,253.73 24,184,564.95
Attributable to owners of the Company as
139,427,823.70 35,704,671.22
the parent
Attributable to non-controlling interests 140,628,430.03 -11,520,106.27
8. Earnings per share
8.1 Basic earnings per share 0.28 0.07
8.2 Diluted earnings per share 0.28 0.07
Where business combinations involving entities under common control occurred in the current period, the net profit achieved by the
acquirees before the combinations was RMB0.00, with the amount for last year being RMB0.00.
Legal representative: Ren Xiaoping Chief Financial Officer: Ding Guoqiang
Financial Manager: Luo Jing
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2020 2019
1. Operating revenue 27,217,408.75 0.00
Less: Cost of sales 27,902,779.73 0.00
Taxes and levies
Selling expense 1,457,834.88
Administrative expense 5,352,748.74 3,128,794.19
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
R&D expense
Finance costs -240,936.80 -913,575.24
Including: Interest expense 1,525,711.11 460,862.35
Interest income 1,790,622.37 1,384,511.31
Add: Other income 150,000.00 50,000.00
Return on investment (“-” for
33,394,493.85 28,392,854.86
loss)
Including: Share of profit or loss of
33,389,565.90 30,650,456.62
joint ventures and associates
Income from the derecognition of
financial assets at amortized cost (“-”
for loss)
Net gain on exposure hedges (“-”
for loss)
Gain on changes in fair value (“-”
for loss)
Credit impairment loss (“-” for loss) -118.51 4,988.08
Asset impairment loss (“-” for loss)
Asset disposal income (“-” for loss)
2. Operating profit (“-” for loss) 26,289,357.54 26,232,623.99
Add: Non-operating income
Less: Non-operating expense
3. Gross profit (“-” for loss) 26,289,357.54 26,232,623.99
Less: Income tax expense
4. Net profit (“-” for net loss) 26,289,357.54 26,232,623.99
4.1 Net profit from continuing
26,289,357.54 26,232,623.99
operations (“-” for net loss)
4.2 Net profit from discontinued
operations (“-” for net loss)
5. Other comprehensive income, net of
tax
5.1 Items that will not be reclassified to
profit or loss
5.1.1 Changes caused by
remeasurements on defined benefit
schemes
5.1.2 Other comprehensive income that
will not be reclassified to profit or loss
under the equity method
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
5.1.3 Changes in the fair value of
investments in other equity instruments
5.1.4 Changes in the fair value arising
from changes in own credit risk
5.1.5 Other
5.2 Items that will be reclassified to
profit or loss
5.2.1 Other comprehensive income that
will be reclassified to profit or loss
under the equity method
5.2.2 Changes in the fair value of other
debt investments
5.2.3 Other comprehensive income
arising from the reclassification of
financial assets
5.2.4 Credit impairment allowance for
other debt investments
5.2.5 Reserve for cash flow hedges
5.2.6 Differences arising from the
translation of foreign
currency-denominated financial
statements
5.2.7 Other
6. Total comprehensive income 26,289,357.54 26,232,623.99
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2020 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and
3,926,004,344.62 3,343,828,919.51
rendering of services
Net increase in customer deposits and
deposits from other banks and financial
institutions
Net increase in borrowings from the
central bank
Net increase in loans from other
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
financial institutions
Premiums received on original
insurance contracts
Net proceeds from reinsurance
Net increase in deposits and
investments of policy holders
Interest, fees and commissions
received
Net increase in loans from other
banks and financial institutions
Net increase in proceeds from
repurchase transactions
Net proceeds from acting trading of
securities
Tax and levy rebates
Cash generated from other operating
56,988,353.20 34,343,485.22
activities
Subtotal of cash generated from
3,982,992,697.82 3,378,172,404.73
operating activities
Payments for commodities and
2,698,533,995.81 2,790,516,416.60
services
Net increase in loans and advances to
customers
Net increase in deposits in the central
bank and other banks and financial
institutions
Payments for claims on original
insurance contracts
Net increase in loans to other banks
and financial institutions
Interest, fees and commissions paid
Policy dividends paid
Cash paid to and for employees 232,721,100.26 199,311,230.25
Taxes and levies paid 165,811,928.90 97,134,445.32
Cash used in other operating
172,001,336.12 199,866,060.82
activities
Subtotal of cash used in operating
3,269,068,361.09 3,286,828,152.99
activities
Net cash generated from/used in
713,924,336.73 91,344,251.74
operating activities
2. Cash flows from investing activities:
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Proceeds from disinvestment
Return on investment 28,137,536.31 10,000,000.00
Net proceeds from the disposal of
fixed assets, intangible assets and other 338,536.00 10,600.00
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
371,848,528.68 437,925,984.07
activities
Subtotal of cash generated from
400,324,600.99 447,936,584.07
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other 57,587,972.37 22,306,258.16
long-lived assets
Payments for investments
Net increase in pledged loans granted
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing activities 594,700,000.00 417,500,000.00
Subtotal of cash used in investing
652,287,972.37 439,806,258.16
activities
Net cash generated from/used in
-251,963,371.38 8,130,325.91
investing activities
3. Cash flows from financing activities:
Capital contributions received
Including: Capital contributions by
non-controlling interests to subsidiaries
Borrowings raised 1,357,999,217.46 2,443,859,860.36
Cash generated from other financing
801,251,123.52 505,971,869.63
activities
Subtotal of cash generated from
2,159,250,340.98 2,949,831,729.99
financing activities
Repayment of borrowings 2,042,781,741.81 2,352,093,355.70
Interest and dividends paid 51,994,355.62 101,020,610.93
Including: Dividends paid by
10,363,426.30 37,572,417.47
subsidiaries to non-controlling interests
Cash used in other financing activities 433,949,547.75 611,146,851.62
Subtotal of cash used in financing
2,528,725,645.18 3,064,260,818.25
activities
Net cash generated from/used in
-369,475,304.20 -114,429,088.26
financing activities
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
4. Effect of foreign exchange rates
2,362,278.32 -999,027.97
changes on cash and cash equivalents
5. Net increase in cash and cash
94,847,939.47 -15,953,538.58
equivalents
Add: Cash and cash equivalents,
112,059,146.65 128,012,685.23
beginning of the period
6. Cash and cash equivalents, end of the
206,907,086.12 112,059,146.65
period
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2020 2019
1. Cash flows from operating activities:
Proceeds from sale of commodities and
28,335,306.85
rendering of services
Tax and levy rebates
Cash generated from other operating
6,712,335.23 525,911.34
activities
Subtotal of cash generated from
35,047,642.08 525,911.34
operating activities
Payments for commodities and
31,547,382.58
services
Cash paid to and for employees 2,027,481.20 1,271,375.64
Taxes and levies paid
Cash used in other operating
11,161,226.97 2,125,693.89
activities
Subtotal of cash used in operating
44,736,090.75 3,397,069.53
activities
Net cash generated from/used in
-9,688,448.67 -2,871,158.19
operating activities
2. Cash flows from investing activities:
Proceeds from disinvestment
Return on investment 28,004,927.95 10,000,000.00
Net proceeds from the disposal of
fixed assets, intangible assets and other
long-lived assets
Net proceeds from the disposal of
subsidiaries and other business units
Cash generated from other investing
25,388,979.97 90,946,521.05
activities
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Subtotal of cash generated from
53,393,907.92 100,946,521.05
investing activities
Payments for the acquisition of fixed
assets, intangible assets and other
long-lived assets
Payments for investments
Net payments for the acquisition of
subsidiaries and other business units
Cash used in other investing activities 50,000,000.00 54,000,000.00
Subtotal of cash used in investing
50,000,000.00 54,000,000.00
activities
Net cash generated from/used in
3,393,907.92 46,946,521.05
investing activities
3. Cash flows from financing activities:
Capital contributions received
Borrowings raised 50,000,000.00
Cash generated from other financing
50,000,000.00 17,000,000.00
activities
Subtotal of cash generated from
100,000,000.00 17,000,000.00
financing activities
Repayment of borrowings 50,000,000.00
Interest and dividends paid 9,039,079.35
Cash used in other financing activities 28,000,000.00 56,090,665.16
Subtotal of cash used in financing
87,039,079.35 56,090,665.16
activities
Net cash generated from/used in
12,960,920.65 -39,090,665.16
financing activities
4. Effect of foreign exchange rates
-34,839.92
changes on cash and cash equivalents
5. Net increase in cash and cash
6,631,539.98 4,984,697.70
equivalents
Add: Cash and cash equivalents,
5,342,379.55 357,681.85
beginning of the period
6. Cash and cash equivalents, end of the
11,973,919.53 5,342,379.55
period
7. Consolidated Statements of Changes in Owners’ Equity
2020
Unit: RMB
Item 2020
108
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Equity attributable to owners of the Company as the parent
Other equity Other Non-c
Total
instruments Less: compr Surplu Retain ontroll
Share Capital Specifi Genera owners
Prefe Perpe Treasu ehensi s ed Subtot ing
capita reserve c l Other ’
rence tual ry ve reserve earnin al interes
l Other s reserve reserve equity
share bond shares incom s gs ts
s s e
1. Balance as at 505,4 256,82 199,02 1,045, 2,006, 1,528, 3,534,
169,71
the end of the 25,00 2,373. 2,513. 211,89 651,49 266,61 918,10
4.39
prior year 0.00 42 20 0.50 1.51 1.36 2.87
Add:
Adjustment for
change in
accounting
policy
Adjustment
for correction of
previous error
Adjustment
for business
combination
involving
entities under
common control
Other
adjustments
2. Balance as at 505,4 256,82 199,02 1,045, 2,006, 1,528, 3,534,
169,71
the beginning of 25,00 2,373. 2,513. 211,89 651,49 266,61 918,10
4.39
the year 0.00 42 20 0.50 1.51 1.36 2.87
3.
Increase/decreas 129,21 131,84 130,26 262,11
2,628,
e in the period 7,512. 6,448. 5,003. 1,452.
935.75
(“-” for 95 70 73 43
decrease)
3.1 Total 139,42 139,42 140,62 280,05
comprehensive 7,823. 7,823. 8,430. 6,253.
income 70 70 03 73
3.2 Capital
increased and
reduced by
owners
3.2.1 Ordinary
shares increased
109
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
by owners
3.2.2 Capital
increased by
holders of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’ equity
3.2.4 Others
-10,21 -10,36 -17,94
3.3 Profit 2,628, -7,581,
0,310. 3,426. 4,801.
distribution 935.75 375.00
75 30 30
3.3.1
Appropriation 2,628, -2,628,
to surplus 935.75 935.75
reserves
3.3.2
Appropriation
to general
reserve
3.3.3
-10,36 -17,94
Appropriation -7,581, -7,581,
3,426. 4,801.
to owners (or 375.00 375.00
30 30
shareholders)
3.3.4 Other
3.4 Transfers
within owners’
equity
3.4.1
Increase in
capital (or share
capital) from
capital reserves
3.4.2
Increase in
capital (or share
capital) from
surplus reserves
3.4.3
Surplus reserves
110
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
used to offset
loss
3.4.4
Changes in
defined benefit
schemes
transferred to
retained
earnings
3.4.5 Other
comprehensive
income
transferred to
retained
earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1
Increase in the
period
3.5.2 Used
in the period
3.6 Other
4. Balance as at 505,4 256,82 201,65 1,174, 2,138, 1,658, 3,797,
169,71
the end of the 25,00 2,373. 1,448. 429,40 497,94 531,61 029,55
4.39
period 0.00 42 95 3.45 0.21 5.09 5.30
2019
Unit: RMB
2019
Equity attributable to owners of the Company as the parent
Other equity Other Non-co
instruments Less: compr Surplu Retain ntrollin Total
Item
Share Capital Specifi Genera
Treasu ehensi s ed Subtot g owners’
Prefe Perp
capita reserve c l Other
ry ve reserve earnin al interest equity
rence etual
l Other s reserve reserve
shares incom s gs s
share bond
s s e
1. Balance as at 505,4 256,82 196,39 1,012, 1,970, 1,552,5 3,523,4
169,71
the end of the 25,00 2,373. 9,250. 130,48 946,82 05,499. 52,319.
4.39
prior year 0.00 42 80 1.68 0.29 55 84
Add:
Adjustment for
111
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
change in
accounting
policy
Adjustment
for correction
of previous
error
Adjustment
for business
combination
involving
entities under
common
control
Other
adjustments
2. Balance as at 505,4 256,82 196,39 1,012, 1,970, 1,552,5 3,523,4
169,71
the beginning 25,00 2,373. 9,250. 130,48 946,82 05,499. 52,319.
4.39
of the year 0.00 42 80 1.68 0.29 55 84
3. Increase/
33,081 35,704
decrease in the 2,623, -24,238 11,465,
,408.8 ,671.2
period (“-” for 262.40 ,888.19 783.03
2 2
decrease)
3.1 Total 35,704 35,704
-11,520 24,184,
comprehensive ,671.2 ,671.2
,106.27 564.95
income 2 2
3.2 Capital
increased and
reduced by
owners
3.2.1 Ordinary
shares
increased by
owners
3.2.2 Capital
increased by
holders of other
equity
instruments
3.2.3
Share-based
payments
included in
112
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
owners’ equity
3.2.4 Other
3.3 Profit 2,623, -2,623, -12,718 -12,718
distribution 262.40 262.40 ,781.92 ,781.92
3.3.1
Appropriation 2,623, -2,623,
to surplus 262.40 262.40
reserves
3.3.2
Appropriation
to general
reserve
3.3.3
Appropriation -12,718 -12,718
to owners (or ,781.92 ,781.92
shareholders)
3.3.4
Other
3.4 Transfers
within owners’
equity
3.4.1
Increase in
capital (or
share capital)
from capital
reserves
3.4.2
Increase in
capital (or
share capital)
from surplus
reserves
3.4.3
Surplus
reserves used to
offset loss
3.4.4
Changes in
defined benefit
schemes
transferred to
retained
113
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
earnings
3.4.5
Other
comprehensive
income
transferred to
retained
earnings
3.4.6
Other
3.5 Specific
reserve
3.5.1
Increase in the
period
3.5.2 Used
in the period
3.6 Other
4. Balance as at 505,4 256,82 199,02 1,045, 2,006, 1,528,2 3,534,9
169,71
the end of the 25,00 2,373. 2,513. 211,89 651,49 66,611. 18,102.
4.39
period 0.00 42 20 0.50 1.51 36 87
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2020
Unit: RMB
2020
Other equity
Other Retaine
instruments Less: Total
Item Share Capital compreh Specific Surplus d
Prefere Perpet Treasury Other owners’
capital reserves ensive reserve reserves earning
nce ual Other shares equity
income s
shares bonds
1. Balance as at 505,42 800,80
250,531, 199,022, 1,755,782,
the end of the 5,000.0 3,055.2
482.00 513.20 050.43
prior year 0 3
Add: Adjustment
for change in
accounting
policy
Adjustment
for correction of
previous error
114
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Other
adjustments
2. Balance as at 505,42 800,80
250,531, 199,022, 1,755,782,
the beginning of 5,000.0 3,055.2
482.00 513.20 050.43
the year 0 3
3. Increase/
decrease in the 2,628,93 16,079, 18,707,98
period (“-” for 5.75 046.79 2.54
decrease)
3.1 Total
26,289, 26,289,35
comprehensive
357.54 7.54
income
3.2 Capital
increased and
reduced by
owners
3.2.1 Ordinary
shares increased
by owners
3.2.2 Capital
increased by
holders of other
equity
instruments
3.2.3
Share-based
payments
included in
owners’ equity
3.2.4 Other
3.3 Profit 2,628,93 -10,210 -7,581,375
distribution 5.75 ,310.75 .00
3.3.1
2,628,93 -2,628,
Appropriation to
5.75 935.75
surplus reserves
3.3.2
Appropriation to -7,581, -7,581,375
owners (or 375.00 .00
shareholders)
3.3.3 Other
3.4 Transfers
within owners’
equity
115
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
3.4.1
Increase in
capital (or share
capital) from
capital reserves
3.4.2
Increase in
capital (or share
capital) from
surplus reserves
3.4.3
Surplus reserves
used to offset
loss
3.4.4
Changes in
defined benefit
schemes
transferred to
retained earnings
3.4.5 Other
comprehensive
income
transferred to
retained earnings
3.4.6 Other
3.5 Specific
reserve
3.5.1
Increase in the
period
3.5.2 Used
in the period
3.6 Other
4. Balance as at 505,42 816,88
250,531, 201,651, 1,774,490,
the end of the 5,000.0 2,102.0
482.00 448.95 032.97
period 0 2
2019
Unit: RMB
2019
Item Share Other equity Capital Less: Other Specific Surplus Retained Total
Other
capital instruments reserves Treasur compre reserve reserves earnings owners’
116
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Prefer Perpet y shares hensive equity
ence ual Other income
shares bonds
1. Balance as at 505,42
250,531 196,399 777,193,6 1,729,549,4
the end of the 5,000.
,482.00 ,250.80 93.64 26.44
prior year 00
Add:
Adjustment for
change in
accounting
policy
Adjustment
for correction
of previous
error
Other
adjustments
2. Balance as at 505,42
250,531 196,399 777,193,6 1,729,549,4
the beginning 5,000.
,482.00 ,250.80 93.64 26.44
of the year 00
3. Increase/
decrease in the 2,623,2 23,609,36 26,232,623.
period (“-” for 62.40 1.59 99
decrease)
3.1 Total
26,232,62 26,232,623.
comprehensive
3.99 99
income
3.2 Capital
increased and
reduced by
owners
3.2.1 Ordinary
shares increased
by owners
3.2.2 Capital
increased by
holders of other
equity
instruments
3.2.3
Share-based
payments
included in
117
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
owners’ equity
3.2.4 Other
3.3 Profit 2,623,2 -2,623,26
distribution 62.40 2.40
3.3.1
Appropriation 2,623,2 -2,623,26
to surplus 62.40 2.40
reserves
3.3.2
Appropriation
to owners (or
shareholders)
3.3.3 Other
3.4 Transfers
within owners’
equity
3.4.1
Increase in
capital (or share
capital) from
capital reserves
3.4.2
Increase in
capital (or share
capital) from
surplus reserves
3.4.3
Surplus
reserves used to
offset loss
3.4.4
Changes in
defined benefit
schemes
transferred to
retained
earnings
3.4.5 Other
comprehensive
income
transferred to
retained
earnings
118
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
3.4.6 Other
3.5 Specific
reserve
3.5.1
Increase in the
period
3.5.2 Used
in the period
3.6 Other
4. Balance as at 505,42
250,531 199,022 800,803,0 1,755,782,0
the end of the 5,000.
,482.00 ,513.20 55.23 50.43
period 00
III Company Profile
Foshan Huaxin Packaging Co., Ltd. (hereinafter referred to as the Company) was sponsored and set by Foshan
Huaxin Development Co., Ltd., Foshan Municipal Investment General Corporation, Foshan Xinhui Industrial
Development Co., Ltd., China Packaging General Corporation, China Material Development & Investment
General Corporation, Guangdong Technical Reforming & Investment Co., Ltd., China Chemistry & Light
Industry General Corporation, and Foshan Light Industry Company under approval of People’s Government of
Guangdong Province with YBH (1999) No. 297 document and Economic System Reform Committee of
Guangdong Province with YTG (1999) No. 032 document, and was registered in Administration Bureau for
Commerce & Industry of Guangdong Province on 21 June 1999. The Company holds the business license with the
unified social credit code of 914406007076822793. And its registered capital is RMB505,425,000.00 with total
505,425,000.00 shares (RMB1 per share), among which, there are unrestricted public 171,925,000.00 B shares
and unrestricted private 333,500,000.00 B shares. The Company’s stocks were listed in Shenzhen Stock Exchange
for trade in 2000.
The Company is in the industry of papermaking, paper packaging and printing. Main business scope: mainly
manufactures (operated by subsidiary companies under the Company) and sells packaging materials, and
packaging products, materials for decoration and aluminum and plastic compound materials; sells and maintains
package machinery; invests in industry in terms of package and printing. Main products or services include
high-grade coated white cardboard and color packages printing products, and etc.
The financial statement is reported after the approval of the 2nd Meeting of the 7th Board of Directors in 2021 of
the Company held on 15 March 2021.
The Company included four subsidiaries, Zhuhai Hongta Renheng Packaging Co., Ltd (hereinafter referred to as
Hongta Renheng), Zhuhai Huafeng Paper Co., Ltd (hereinafter referred to as Huafeng Paper), Zhuhai Golden
Pheasant Chemical Co., Ltd (hereinafter referred to as Golden Pheasant Chemical), and Huaxin (Foshan) Color
Printing Co., Ltd. (hereinafter referred to as Foshan Color Printing), into the scope of consolidated financial
statement in the Reporting Period. For details, see the note VI to financial statement.
119
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
IV. Basis for the Preparation of Financial Statements
1. Preparation Basis
The financial statement of the Company was prepared on the base of the assumption of continuation.
2. Continuation
There was no such case where the sustainable operation ability within 12 months since the end of the Reporting
Period was highly doubted.
V. Important Accounting Policies and Estimations
Indication of specific accounting policies and estimations:
Important prompts: The Company has worked out specific accounting policies and estimations regarding
transactions or items such as impairments of financial instruments, depreciation of fixed assets, amortization of
intangible assets and revenue recognition based on features of actual production and operation.
1. Statement for Complying with the Accounting Standard for Business Enterprise
The financial statements for the Reporting Period prepared by the Company are in compliance with the
requirements of the accounting standard for business enterprise, and have reflected the Company’s financial status,
operating results and cash flows in an accurate and complete way.
2. Fiscal Period
The fiscal year of the Company is a solar calendar year, which is from 1 January to 31 December.
3. Operating Cycle
The operating cycle of the Company’s business is comparatively short with 12 months as the classification
standard for the mobility of assets and liabilities.
4. Standard Currency of Accounts
The Company adopts Renminbi as a standard currency of accounts.
5. Accounting Process of Business Combinations under the Same Control and not under the Same Control
1. Accounting Process of Business Combinations under the Same Control
The assets and liabilities that the Company obtains in a business combination shall be measured on the basis of
their carrying amount combined party in the consolidated financial statements of the final controller on the
combining date. As for the balance between the carrying amount of combined party’s owners equities in the
consolidated financial statements of the final controller and the carrying amount of the consideration paid by it or
the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in
120
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
capital is not sufficient to be offset, the retained earnings shall be adjusted.
2. Accounting Process of Business Combinations not under the Same Control
The Company shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets obtained from the acquiree on purchase date as goodwill. If the combination costs are less
than the fair value of the identifiable net assets obtained from the acquire, the Company shall recheck the various
identifiable assets and liabilities obtained from the acquire, fair value with liabilities, and measurement of
combination costs. If the combination costs are less than the fair value of the identifiable net assets obtained from
the acquire after recheck, the Company shall the record the balance into the profit and loss of the current period.
6. Methods for Preparing Consolidated Financial Statements
The Company as the parent included its all subsidiaries into the consolidation scope of consolidated financial
statements. Based on the financial statements of the Company as the parent and its subsidiaries and other related
materials, the consolidated financial statements were prepared by the Company as the parent according to
Accounting Standards for Enterprises No. 33 –Consolidated Financial Statements.
7. Classification of Joint arrangements and Accounting Treatment of Joint Operations
1. Joint arrangement is classified into joint operation and joint ventures.
2. When the Company is a party of a joint operation, recognize the following items related to the profits in the
joint operation:
(1) Recognize the assets held independently, and recognize the assets held jointly in the holding portion;
(2) Recognize the liabilities borne independently, and recognize the liabilities held jointly in the holding portion;
(3) Recognize the revenue generated from the output portion of joint operation shared for selling the Company;
(4) Recognize the revenue generated from the sale of assets in joint operation in the holding portion of the
Company;
(5) Recognize the expenses incurred independently, and recognize the expenses incurred in joint operation in the
holding portion of the Company.
8. Recognition Standard for Cash and Cash Equivalents
The term “cash” listed and presented in the cash flow statement refers to cash on hand and deposits that are
available for payment at any time. The term “cash equivalents” refers to short-term and highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in
value.
121
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
9. Foreign Currency Businesses and Translation of Foreign Currency Financial Statements
As for a foreign currency transaction in its initial recognition, the amount in the foreign currency shall be
translated into the amount in the Renminbi at the spot exchange rate of the transaction date. On balance sheet date,
the foreign currency monetary items shall be translated as the spot exchange rate on the balance sheet date, the
balance occurred thereof shall be recorded into the profits and losses at the current period except that the balance
of exchange arising from the principal and interests of foreign currency borrowings for the purchase and
construction or production of assets eligible for capitalization. The foreign currency non-monetary items measured
at the historical cost shall still be translated at the spot exchange rate on the transaction date, of which the amount
of functional currency shall not be changed. The foreign currency non-monetary items measured at the fair value
shall be translated at the spot exchange rate on the confirming date of fair value, of which the balance of exchange
shall be included into the profit and loss of the current period or other comprehensive income.
10. Financial Instruments
1. Classification of Financial Assets and Financial Liabilities
Financial assets shall be classified into the following three categories when they are initially recognized: (1)
financial assets measured at amortized cost; (2) financial assets at fair value through other comprehensive income;
(3) financial assets at fair value through profit or loss.
Financial liabilities shall be classified into the following four categories when they are initially recognized: (1)
financial liabilities at fair value through profit or loss; (2) financial liabilities generated from transfer of financial
assets not conforming to requirements of derecognition or continuous involvement of transferred financial assets;
(3) financial guarantee contracts not belonging to above (1) or (2), and loan commitments not belonging to above
(1) and at lower interest rate than the market interest rate; (4) financial liabilities measured at amortized cost.
2. Recognition Basis, Calculation Method, and Termination of Recognition of Financial Assets and
Liabilities
(1) Recognition basis and initial calculation method of financial assets and liabilities
When the Company becomes a party to a financial instrument, it shall recognize a financial asset or financial
liability. The financial assets and financial liabilities initially recognized shall be measured at their fair values. For
the financial assets and liabilities measured at their fair values and of which the variation is recorded into the
profits and losses of the current period, the transaction expenses thereof shall be directly recorded into the profits
and losses of the current period; for other categories of financial assets and financial liabilities, the transaction
expenses thereof shall be included into the initially recognized amount. However, when the accounts receivable
initially recognized by the Company do not include significant financing or the Company does not consider the
financing in contracts not over one year, it shall be initially calculated at the transaction price defined in
Accounting Standards for Business Enterprises No. 14-Revenue.
(2) Subsequent calculation method of financial assets
1) Financial assets at amortized cost
The Company shall make subsequent measurement on its financial assets at amortized cost by adopting the actual
interest rate method. The gains or losses generated from the financial assets at amortized cost and not belonging to
any hedging relationship shall be recorded into the current profit of loss when decognized, reclassified, amortized
with the actual interest rate method or recognizing impairments.
Investments in debt instruments at fair value through other comprehensive income
The Company shall make subsequent measurement at fair value. The interest calculated by adopting the actual
interest rate method, impairment losses or profits and foreign exchange gains shall be recorded into the current
122
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
profit or loss, and other profits or losses shall be recorded into other comprehensive income. When derecognized,
the accumulative profits or losses thereof originally recorded into other comprehensive income shall be transferred
out and then recorded into the current profit or loss.
Investments in equity instruments at fair value through other comprehensive income
The Company shall make subsequent measurement at fair value. The dividends obtained (exclude those belong to
recovery of investment cost) shall be recorded into the current profit or loss, and other gains or losses recorded
into other comprehensive income. When derecognized, the accumulative gains or losses thereof originally
recorded into other comprehensive income shall be transferred out and then recorded into the retained earnings.
Financial assets at fair value through profit or loss
The Company shall make subsequent measurement at fair value. The gains or losses generated (include interest
and dividend income) shall be recorded into the current profit or loss, unless the financial asset is one part of a
hedging relationship.
Subsequent calculation method of financial liabilities
Financial liabilities at fair value through profit or loss
Such financial liabilities include trading financial liabilities (include derivative instruments belonging to financial
liabilities) and those designated as financial liabilities at fair value through profit or loss. For such financial
liabilities, the subsequent measurement shall be conducted at fair value. The amount of changes in fair value of
designated financial liabilities at fair value through profit or loss due to the Company’s credit risk changes shall be
recorded into other comprehensive income, unless this treatment will result in or enlarge accounting mismatch of
the profit or loss. The other gains or losses generated from such financial liabilities (including interest expense,
changes of fair value not caused by the Company’s credit risk changes) shall be recorded into the current profit or
loss, unless the they are one part of a hedging relationship. And when derecognized, the accumulative gains or
losses thereof originally recorded into other comprehensive income shall be transferred out and then recorded into
the retained earnings.
Financial liabilities generated from financial assets transfer not conforming to derecognition conditions or
continuous involvement of transferred financial assets
They shall be measured in accordance with regulations of Accounting Standards for Business Enterprises
No.23-Transfer of Financial Assets
financial guarantee contracts not belonging to above (1) or (2), and loan commitments not belonging to above (1)
and at lower interest rate than the market interest rate;
The subsequent measurement shall be conducted according to the higher of the following two amounts after initial
recognition: ① amount of allowance for impairments recognized in accordance with the impairment provisions
of financial instruments; ② the residual of initial recognized amount after deducted accumulative amortized
amount recognized as relevant regulations in Accounting Standards for Business Enterprises No. 14-Revenue.
Financial liabilities at amortized cost
The Company shall measure at amortized cost by adopting actual interest rate method. The gains or losses
generated from financial liabilities at amortized cost and not belonging to any hedging relationship shall be
recorded into the current profit or loss when derecognized or amortized with actual interest rate method.
Derecognition of financial assets and financial liabilities
Derecognize financial assets when meeting one of the following conditions:
① The contract rights for collecting cash flow of financial assets have terminated;
② Financial asset has been transferred and the transfer meets the provisions of Accounting Standards for
Business Enterprises No.23-Transfer of Financial Assets governing the derecognition of financial assets.
2) When the current obligation of the financial liability (or some of it) has been relieved, the financial liability (or
some of it) shall be accordingly derecognized.
3. Recognition Basis and Measurement of Transfer of Financial Assets
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
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 and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities. If it retained nearly all of the risks and
rewards related to the ownership of the financial asset, it shall continue to recognize the transferred financial asset.
Where the Company does not transfer or retain nearly all of the risks and rewards related to the ownership of a
financial asset, it shall deal with it according to the circumstances as follows, respectively: (1) If it gives up its
control over the financial asset, it shall stop recognizing the financial asset and separately recognize the rights and
obligations generated retained from the transfer as assets or liabilities; (2) If it does not give up its control over the
financial asset, it shall, according to the extent of its continuous involvement in the transferred financial asset,
recognize the related financial asset and recognize the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between
the amounts of the following 2 items shall be recorded in the profits and losses of the current period: (1) The
carrying value of the transferred financial asset on the derecognition date; (2) The sum of consideration received
from the transfer of financial assets, and derecognition amount among the accumulative amount of the changes of
the fair value originally recorded in the other comprehensive income (the financial assets involve transfer are
investments in debt instruments at fair value through other comprehensive income. If the transfer of partial
financial asset satisfies the conditions to stop the recognition, the entire carrying 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 on the transfer date, and the
difference between the amounts of the following two items shall be included into the profits and losses of the
current period: (1)The carrying value of the portion whose recognition has been stopped; (2)The sum of
consideration of the portion whose recognition has been stopped, and derecognition amount among the
accumulative amount of the changes of the fair value originally recorded in the other comprehensive income (the
financial assets involve transfer are investments in debt instruments at fair value through other comprehensive
income.
4. Recognition Method of Financial Assets and Financial Liabilities’ Fair Value
The Company adopts the valuation technique with sufficient useful data and supported by other information
which is suitable for the current situation to recognize the fair value of related financial assets and liabilities. The
Company classifies the input value used in the valuation technique into the following levels and uses them in
sequence:
(1) The first level of input value is the non-adjustable offer of the same assets or liabilities in the active market on
the calculation date;
(2) The second level of input value is the directly or indirectly observable input value of related assets or liabilities
except the input value on the first level, including: offer of similar assets or liabilities in the active market; offer of
identical or similar assets or liabilities in the non-active market; other observable input value except offer,
including the observable interest rate during the interval period of common offer, profit rate curve, etc.; the input
value for market verification etc..
(3) The third level of input value is the non-observable input value of related assets or liabilities, including interest
rates that cannot be observed directly or verified by the data of observable market, stock fluctuation rate, future
cash flow of the disposal obligation borne in corporate mergers, financial forecast based on self-data, etc..
5. Impairment of financial instrument
(1) Impairment measurement and accounting handling of financial instrument
Based on expected credit loss, the Company conducts impairment handling and confirms loss reserve for financial
assets which is measured by amortized cost, debt instrument investment which is measured by fair value and
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whose change is calculated into other comprehensive profits, contract assets, accounts receivable of rental, loan
commitment which is beyond financial debt classified as the one which is measured by fair value and whose
change is calculated into current profits and losses, financial debt which does not belong to the one which is
measured by fair value and whose change is calculated into current profits or losses, or financial guarantee
contract of financial debt which is formed when it does not belong to financial asset transfer and doesn’t conform
to confirmation condition of termination or keeps on being involved in transferred financial asset.
Expected credit loss refers to weighted average of credit loss of financial instrument which takes the risk of
contract breach occurrence as the weight. Credit loss refers to the difference between all contract cash flow which
is converted into cash according to actual interest rate and receivable according to contract and all cash flow
which to be charged as expected, i.e. current value of all cash shortage. Among it, as for financial asset purchased
or original which has had credit impairment, it should be converted into cash according actual interest rate of this
financial asset after credit adjustment.
As for financial asset purchased or original which has had credit impairment, the Company only confirms
cumulative change of expected credit loss within the whole duration after initial confirmation on the balance sheet
date as loss reserve.
As for accounts receivable and contract assets which are formed from regulated transactions complying with
Accounting Standards for Business Enterprises No. 14-Revenue and don’t include major financing contents or the
Company does not consider financing contents in contract which is less than one year, the Company applies
simplified measurement method, and measures loss reserve according to amount of expected credit loss within the
whole duration.
As for account receivable of rental, accounts receivable and contract assets which are formed from regulated
transactions complying with Accounting Standards for Business Enterprises No. 14-Revenue and include major
financing contents, the Company applies simplified measurement method, and measure loss reserve according to
amount of expected credit loss within the whole duration.
As for financial asset beyond above mentioned measurement methods, the Company evaluates whether its credit
risk has increased obviously since the initial confirmation on each balance sheet date. In case credit risk has
increased obviously, the Company measures the loss reserve according to amount of expected credit loss within
the whole duration; in case the credit risk does not increase obviously, the Company measures loss reserve
according to the amount of expected credit loss in next 12 months.
By utilizing obtainable rational and well grounded information, including forward-looking information,
comparing the risk of contract breach on balance sheet date and risk of contract breach on initial confirmation date,
the Company confirms whether the credit risk of financial instrument has increased obviously from initial
confirmation.
On balance sheet date, in case the Company judges that the financial instrument just has relatively low credit risk,
then it will be assumed that credit risk of the financial instrument has not increased obviously.
Based on single financial instrument or financial portfolio, the Company evaluates expected credit risk and
measures expected credit loss. When based on financial instrument portfolio, the Company takes common risk
characteristics as the basis, and divides financial instruments into different portfolios.
The Company measures expected credit loss again on each balance sheet date, the increase of loss reserve or
amount which is transfer back generated by it is calculated into current profits and losses as impairment profits or
losses. As for financial asset which is measured by amortized cost, loss reserve offsets the carrying value of the
financial asset listed in the balance sheet; as for debt investment which is measured by fair value and whose
change is calculated into other comprehensive profits, the Company confirms its loss reserve in other
comprehensive profits and does not offset the carrying value of the financial asset.
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(2) Financial instruments assessing expected credit risk by groups and measuring expected credit losses
Item Recognition basis Method of measuring expected
credit losses
Other receivables-intercourse Consulting historical
Related party within the
funds among related party group experience in credit losses,
combination scope
within the consolidation scope combining actual situation and
other receivables-dividends prediction for future economic
Accounts nature situation, the group’s expected
receivable group
credit loss rate shall be
Other receivables-interest
Accounts nature accounted through exposure at
receivable group
default and the expected credit
loss rate within the next 12
Other receivables-aging group Aging
months or the entire life
(3) Accounts receivable and contract assets with expected credit losses measured by groups
1) Specific groups and method of measuring expected credit loss
Item Recognition basis Method of measuring expected
credit losses
Bank’s acceptance bills Consulting historical
receivable experience in credit losses,
combining actual situation and
Trade acceptance bills prediction for future economic
receivable Bill type situation, to calculated the
expected credit loss rate
through exposure at default
and the expected credit loss
rate over the entire life
Accounts receivable-related Related party within the Consulting historical
party within the consolidation consolidation scope experience in credit losses,
scope group combining actual situation and
prediction for future economic
situation, to calculated the
expected credit loss rate
through exposure at default
and the expected credit loss
rate over the entire life
Accounts receivable-credit risk Aging group Prepare the comparative list
characteristics group between aging of accounts
receivable and expected credit
loss rate over the entire life by
consulting historical
experience in credit losses,
combining actual situation and
prediction for future economic
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situation
2) Accounts receivable-the comparative list between aging of aging group and expected credit loss rate over the
entire life
Aging Expected credit loss rate of accounts receivable
and Trade acceptance bills receivable (%)
1 to 3 months (inclusive, the same below)
4 to 12 months 5.00
1 to 2 years 10.00
2 to 3 years 20.00
Over 3 years 50.00
6. Offset between financial asset and financial debt
Financial asset and financial debt are listed in the balance sheet separately and don’t offset each other. However,
when the following conditions are met at the same time, the Company will list the net amount after mutual offset
in the balance sheet: (1) The Company has the legal right to offset the confirmed amount, and the legal right is
executable currently; (2) The Company plans to settle by net amount, or monetize the financial asset and liquidate
the financial debt at the same time.
For those transfers of financial assets not meeting the derecognition conditions, the Company does not offset the
transferred financial assets and relative liabilities.
Notes Receivable
Accounts Receivable
Accounts Receivable Financing
Other Receivables
Recognition and accounting treatment methods regarding expected credit losses of other receivables
15. Inventory
1. Category
Inventory was referred to the finished goods or commodities for sale, products in the process, materials in
production or providing services in daily activities, etc.
2. Pricing Method for Outgoing Inventories
Adopting the weighted average method for pricing at the end of the month at a time
3. Recognition basis of Net Realizable Value of Inventory
On the balance sheet date, inventory shall be measured at the lower of cost or net realizable value, and provision
shall be made for falling price of inventories on the ground of the difference between the cost of each item of
inventories and the net realizable value. Inventories directly for sale, under normal producing process, to the
amount after deducting the estimated sale expense and relevant taxes from the estimated sell price of the inventory,
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the net realizable value has been recognized; inventories which need to be processed, under normal producing
process, to the amount after deducting the estimated cost of completion, estimated sale expense and relevant taxes
from the estimated sale price of produced finished goods, the net realizable value has been recognized; on the
balance sheet date, in the same item of inventories, if some have contractual price agreement while others do not,
the net realizable value shall be recognized respectively and compared with their cost, and the amount of
provision withdrawal or reversal for falling price of inventories shall be recognized respectively.
4. Inventory System for Inventories:
Inventory system: Perpetual inventory system
5. Amortization Method of the Low-value Consumption Goods and Packing Articles
(1) Low-value Consumption Goods
One-off amortization method
(2) Packing Articles
One-off amortization method
16. Contract Assets
The Company’s right to collect consideration from customers unconditionally (i.e. only depending on the passage
of time) is listed as receivables, and its right to collect consideration after transferring goods to customers
(depending on factors other than the passage of time) is listed as contract assets.
17. Contract Costs
Assets related to contract cost include contract acquisition cost and contract performance cost.
If the incremental cost incurred by the Company to obtain the contract is expected to be recovered, it shall be
recognized as an asset as the contract acquisition cost. If the amortization period of the contract acquisition cost
does not exceed one year, it is directly included in the current profits/losses when it occurs.
If the cost incurred by the Company to perform a contract does not fall in the scope of relevant standards, such as
inventory, fixed assets or intangible assets, and at the same time meets the following conditions, it shall be
recognized as an asset as the contract performance cost:
The cost is directly related to a current or expected contract, including direct labor, direct materials,
manufacturing expenses (or similar expenses), costs clearly borne by the customer and other costs arising from the
contract only;
The cost increases the resources used by the Company to fulfill its performance obligations in the future;
The cost is expected to be recovered.
For the assets related to the contract cost, the Company shall use the same basis as the recognition of revenue
from goods or services related to the assets to carry out the amortization, which shall be included in the current
profits/losses.
If the book value of an asset related to the contract cost is higher than the expected residual consideration for the
transfer of the goods or services related to the asset minus the estimated cost to be incurred, the Company shall
make provision for impairment of the excess part and recognize it as an asset impairment loss. If the factors of
impairment in the previous periods change so that the expected residual consideration of the goods or services
related to the transfer of the asset minus the estimated cost to be incurred is higher than the book value of the asset,
the original provision for impairment of the asset shall be reversed and included in the current profits/losses. But
the book value of the asset after reversal shall not exceed the book value of the asset on the reversal date under the
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assumption that no provision for impairment is made.
18. Assets Classified as Held for Sale
19. Investments in Debt Obligations
20. Investments in other Debt Obligations
21. Long-term Receivables
22. Long-term Equity Investments
1. Judgment of Joint Control and Significant Influences
The term "joint control" refers to the joint control over an arrangement in accordance with the related agreements,
which does not exist unless the participants sharing the control power agree with each other about the related
arranged activity. The term "significant influences" refers to the power to participate in making decisions on the
financial and operating policies of an enterprise, but not to control or do joint control together with other parties
over the formulation of these policies.
2. Recognition of Investment Cost
(1) If the business combination is under the common control and the acquirer obtains long-term equity investment
in the consideration of cash, non-monetary asset exchange, bearing acquiree’s liabilities, or the issuance of equity
securities, the initial cost is the carrying amount of the proportion of the acquiree’s owner’s equity at the
acquisition date. The difference between the initial cost of the long-term equity investment and the carrying
amount of the paid combination or the total amount of the issued shares should be adjusted to capital surplus. If
the capital surplus is not sufficient for adjustment, retained earnings are adjusted respectively.
When a long-term equity investment is formed from the business combination under common control through the
Company’s multiple transactions step by step, the treatment shall be carried out based on whether the transactions
constitute the “package deal”. If they do, the accounting treatment shall be carried out on the basis of assuming all
transactions as one transaction with the acquisition of control. If they do not, the initial investment cost shall be
the portion of the carrying value of acquiree’s net assets entitled in the consolidated financial statements of the
final controller after the consolidation. The difference between the initial investment cost of the long-term equity
investment on the combination date and the carrying value of the investment before the combination plus the
carrying value of the newly-paid consideration for the acquisition of the shares on the consolidation date shall be
adjusted to capital reserve; if the capital reserve is insufficient for the adjustment, retained earnings should be
adjusted accordingly.
(2) For those formed from the business combination under different control, the initial investment cost is the fair
value of the combination consideration paid on the acquisition date.
When a long-term equity investment is formed from the business combination under different control through the
Company’s multiple transactions step by step, the accounting treatment shall be carried out based on whether the
financial statements are individual or consolidated:
1) In individual financial statements, the initial investment cost accounted in cost method is the sum of the
carrying value of the equity investment originally held and the cost of new investment.
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2) In consolidate financial statements, judge whether the transactions constitute the “package deal”. If they do, the
accounting treatment shall be carried out on the basis of assuming all transactions as one transaction with the
acquisition of control. If they do not, for the acquiree’s equity held before the acquisition date, re-measurement
shall be carried out according to the fair value of the equity on the acquisition date and the difference between the
fair value and the carrying value shall be recorded into current investment income; if the acquiree’s equity held
before the acquisition date involves other comprehensive income accounted in equity method, other
comprehensive income related to it shall be transferred into the income for the period in which the acquisition date
falls, with the exception of the other comprehensive incomes occurred because of the changes of net liabilities or
net assets of the defined benefit pension plans be re-measured for setting by the investees.
3) For those formed other than from business combination: If they are acquired in cash payment, the initial
investment cost is the purchase price actually paid; if they are acquired in the issue of equity securities, the initial
investment cost is the fair value of the issued equity securities; if they are acquired in debt restructuring, the initial
investment cost shall be recognized according to the Accounting Standards for Enterprises No. 12 - Debt
Restructuring; if they are acquired in the exchange of non-monetary assets, the initial investment shall be
recognized according to the Accounting Standards for Enterprises No. 7 - Exchange of Non-Monetary Assets.
3. Method of subsequent measurement and recognition of profits and losses
Long-term equity investment with control over investees shall be accounted in cost method; long-term equity
investment on associated enterprises and joint ventures shall be accounted in equity method.
4. Method of treating the disposal of the investment in a subsidiary stem by step through multiple transactions
until the loss of the controlling right
(1) Individual financial statements
For the disposed equity, the difference between its fair value and the actually obtained price shall be recorded into
current profits or losses. For the residual equity, the part that still has significant effects on investees or with
common control jointly with other parties shall be accounted in equity method; the part that has no more control,
common control or significant effects on investees shall be accounted in accordance with the relevant regulation
of the Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments.
(2) Consolidated financial statements
1) For the disposal of the investment in subsidiaries step by step until the loss of the controlling right through
multiple transactions, which do not constitute the “package deal”
Before the loss of the controlling right, for the balance between the disposal remuneration and the shares of net
assets in the subsidiaries that have been calculated since the acquisition date or combination date corresponding to
the disposal of long-term equity investment, capital reserve (capital premium) shall be adjusted, and if the capital
premium is not sufficient for the write-down, the retained earnings shall be written down.
At the loss of the controlling right over the original subsidiaries, the residual equity shall be re-measured at its fair
value on the date of losing the controlling right. The difference between the consideration obtained in the equity
disposal, plus the fair value of the remaining equities, less the Company’s share of net assets enjoyed of the
former subsidiary that has been calculated since the acquisition date or combination date according to the former
shareholding ratio, shall be recorded into the investment gains for the period when the control ceases; meanwhile,
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goodwill shall be written down. Other comprehensive income related to former subsidiary's equity investment
shall be transferred into current investment income when the control ceases.
2) For the disposal of the investment in subsidiaries step by step until the loss of the controlling right through
multiple transactions, which constitute the “package deal”
The accounting treatment shall be carried out on the basis of considering each transaction as a transaction of
disposing the subsidiary and losing control. However, before losing control, the difference between each disposal
price before losing the control, and the corresponding net assets share enjoyed of subsidiary when disposing
long-term equity investment, shall be recognized as other comprehensive income in the consolidated financial
statements and when the control ceases, transferred into current profits or losses of the period of losing control.
23. Investment Property
Measurement mode of investment real estates
Measurement of cost method
Depreciation or amortization method
1. The term "investment real estate" includes the right to use any land which has already been rented, the right to
use any land which is held and prepared for transfer after appreciation, and the right to use any building which has
already been rented.
2. The Company initially measures the investment property according to the costs, and adopts the cost method in
the subsequent measurement of investment property, and adopts the same methods with fixed assets and
intangible assets to withdraw depreciation or amortization.
24. Fixed Assets
(1) Recognized Standard of Fixed Assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are held for the sake of
producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year.
No fixed asset may be recognized unless it simultaneously meets the conditions as follows: (1) The economic benefits are likely to
flow into the enterprise; (2) The cost of the fixed asset can be measured reliably.
(2) Depreciation Method
Expected net salvage
Category Depreciation method Useful life (Year) Annual deprecation
value
Houses and buildings Straight-line depreciation 30-40 5% 2.375%-3.17%
Machinery equipment Straight-line depreciation 10-25 5% 3.80%-9.50%
Transportation Straight-line depreciation 5 5% 19%
Electronic equipment and
Straight-line depreciation 5-10 5% 9.50%-19.00%
other
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(3) Recognition Basis and Pricing Method of Fixed Assets by Finance Lease
Where one of the following provisions is regulated in the rental agreement, it shall be recognized as an asset acquired under finance
leases: (1) the ownership of the leased asset is transferred to the lessee after the term of lease expires; (2) the lessee has the option to
buy the asset at a price which is far lower than the fair value of the asset at the date when the option becomes exercisable; (3) the
lease term covers the major part of the use life of the leased asset [usually accounting for 75%(75% inclusive) of the use life of the
leased asset]; (4) in the case of the lessee, the present value of the minimum lease payments on the lease beginning date amounts to
substantially all of the fair value of the leased asset [above 90% (90% inclusive)]; in the case of the lessor, the present value of the
minimum lease payments on the lease beginning date amounts to substantially all of the fair value of the leased asset [above 90%
(90% inclusive)] (5) When nature of the leased asset is special, if there is no great transform, only the Company can use it, As for the
fixed assets by finance lease, the Company shall record the lower one of the fair value of the leased asset and the present value of the
minimum lease payments as the entering value in an account, and make provision for depreciation according to the depreciation
policy of self-owned fixed assets.
Fixed assets leased for financing shall be recorded at the lower of the fair value of the leased asset and the present value of the
minimum lease payment at the inception of lease and the depreciation thereof shall be withdrawn in accordance with the depreciation
policy for self-owned fixed assets.
25. Construction in Progress
1. No construction in progress may be recognized unless it simultaneously meets the conditions as follows: (1)
The economic benefits are likely to flow into the enterprise; (2) The cost of the fixed asset can be measured
reliably. Construction in progress shall be measured according to the occurred actual costs before the assets
available for the intended use.
2. When the construction in progress is available for the intended use, it shall be transferred to fixed assets
according to the actual cost of the project. For construction in progress available for the intended use but not
dealing with final accounts of completed project, it shall be transferred to fixed assets according to the estimated
value first, and then adjust original temporarily estimated value based on the actual costs after the final accounts
of completed project, but not adjust the depreciation that was already calculated.
26. Borrowing Costs
1. Recognition Principle of Capitalization of Borrowing Costs
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and
construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of
relevant assets. Other borrowing costs shall be recognized as expenses when it occurred, and shall be recorded
into the current profits and losses.
2. Capitalization Period of Borrowings Costs
(1) The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements: 1)
The asset disbursements have already incurred; 2) The borrowing costs have already incurred; 3) The acquisition
and construction or production activities which are necessary to prepare the asset for its intended use or sale have
already started.
(2) Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the
interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended. The
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borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits
and losses of the current period, till the acquisition and construction or production of the asset restarts.
(3) When the acquisition and construction or production of a qualified asset eligible for capitalization are
available for its intended use or sale, the capitalization of borrowing costs shall be stopped.
3. Capitalized rate and amount of borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset,
the amount of borrowing costs eligible for capitalization on that asset is determined as the actual interest costs
(including amortization of discount and premium confirmed according to effective interest method) incurred on
that borrowing during the period less any investment income on the temporary investment of the borrowing. To
the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a qualifying
asset, the amount of borrowing costs eligible for capitalization shall be determined by applying a capitalization
rate to the weighted average of excess of accumulated expenditures on qualifying asset over that on specific
purpose borrowing.
27. Biological Assets
28. Oil and Gas Assets
29. Right-of-Use Assets
30. Intangible Assets
(1) Pricing Method, Useful Life and Impairment Test
1. Intangible assets include right to use land sites, non-patented technologies, software and others, and conduct the
initial measurement according to the costs.
2. With regard to intangible assets with limited service life, it shall be amortized systematically and reasonably
within their service life according to the expected implementation of economic interests related to the intangible
assets. If it can’t recognize the expected implementation reliably, it shall be amortized by straight-line method.
The specific useful lives are as follows:
Items Useful life for amortization (years)
Right to use land sites 50
Non-patented technologies 10
Software and others 2-10
The intangible assets with uncertain service life shall not be amortized, and the Company rechecks the service life
of the intangible assets in every accounting period.
(2) Accounting Policies of Internal R&D Expenses
The expenses in research stage for its internal research and development projects shall be recorded into the current
profits and losses when it occurred. The expenses in development stage for its internal research and development
projects of the Company may be capitalized when they satisfy the following conditions simultaneously: (1) It is
feasible technically to finish intangible assets for use or sale; (2) It is intended to finish and use or sell the
intangible assets; (3) The usefulness of methods for intangible assets to generate economic benefits shall be
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proved, including being able to prove that there is a potential market for the products manufactured by applying
the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be
used internally; (4) It is able to finish the development of the intangible assets, and able to use or sell the
intangible assets, with the support of sufficient technologies, financial resources and other resources; and (5) The
development expenditures of the intangible assets can be reliably measured.
Standard for Classifying the Expenses of Research Phase and Development Phase of the Company’s R&D
Projects
The term “research” refers to the creative and planned investigation to acquire and understand new scientific or
technological knowledge.
The term "development" refers to the application of research achievements and other knowledge to a certain plan
or design, prior to the commercial production or use, so as to produce any new material, device or product, or
substantially improved material, device and product.
The expenditures of R&D stage in internal R&D project, was recorded into current profits or losses.
31. Impairment of Long-term Assets
For long-term assets, such as long-term equity investment, investment property measured by cost model, fixed
assets, construction in progress, and intangible assets with limited service life, the Company shall estimate the
recoverable amount if there are signs of impairment on balance sheet date. For intangible assets with uncertain
goodwill or service life formed by enterprise combination, whether or not there is sign of impairment, impairment
test shall be conducted every year. Goodwill combination and its related assets group or combination of assets
group shall be conducted the impairment test.
If the recoverable amount of the above-mentioned long-term assets is lower than its carrying value, it shall make
the preparation for assets impairment based on its balance and be recorded into current profits and losses.
32. Long-term Prepaid Expenses
Long-term deferred expenses refer to general expenses with the amortized period over one year (one year
excluded) that have occurred. Long-term prepaid expense shall be recorded into the account according to the
actual accrual. Long-term prepaid expense shall be amortized averagely within benefit period or specified period.
In case of no benefit in the future accounting period, the amortized value of such project that fails to be amortized
shall be transferred into the profits and losses of the current period.
33. Contract Liabilities
The Company presented the obligations to transfer commodities to customers due to the consideration receivable
or has received from customers as contract liabilities.
34. Employee Benefits
(1) Accounting Treatment of Short-term Compensation
During the accounting period when the employees providing the service for the Company, the actual short-term
compensation shall be recognized as liabilities, and be recorded into the current profits and losses or related assets
costs.
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(2) Accounting Treatment of the Welfare after Demission
The Company's welfare after demission plans is divided into defined contribution plans and defined benefit plans
(1) During the accounting period when the employee providing service for the Company, the amount paid in line
with the setting drawing plan will be recognized as liabilities and recorded into current profits or losses or cost of
relevant assets.
(2) The accounting treatment of defined benefit plans usually consists of the following steps:
1) According to the expected cumulative welfare unit method, adopt unbiased and mutually consistent actuarial
assumptions to evaluate related demographic variables and financial variables, measure the obligations generated
from defined benefit plans and recognize the period in respect of related obligations. Meanwhile, discount the
obligations generated from defined benefit plans to recognize their present value and the current service costs;
2) If there are any assets in a defined benefit plan, the deficit or surplus formed from the present value of the
defined benefit plan obligations less the fair value of the defined benefit plan assets shall be recognized as net
liabilities or net assets of a defined benefit plan. If there is any surplus in a defined benefit plan, the net assets of
the plan shall be measured at the lower of the surplus or the upper asset limit;
3) At the end of the period, the staff remuneration costs generated from a defined benefit plan shall be recognized
as services costs, net interests of the net liabilities or net assets of the plan and changes from the re-measurement
of the net liabilities or net assets of the plan. Service costs and net interests of the net liabilities or net assets of the
plan shall be recorded into the current profits or losses or related asset costs, while changes from the
re-measurement of the net liabilities or net assets of the plan shall be recorded into other comprehensive income
and shall not be transferred back to profits or losses in subsequent accounting periods. But the amounts recognized
in other comprehensive income may be transferred within the equity scope.
(3) Accounting Treatment of Demission Welfare
When the Company is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the
layoff proposal, or when recognizing the costs or expenses (the earlier one between the two) related to the
reorganization of paying the demission welfare, should recognize the payroll liabilities from the demission
welfare and include in the current gains and losses.
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(4) Accounting Treatment of other Welfare of the Long-term Employees
The Company provides the other long-term employee benefits for the employees, and for those met with the
defined contribution plans, accounting treatment should be conducted according to the related regulations of the
defined contribution plans; the for the others long-term employee benefits except for the former, accounting
treatment should be conducted according to the related regulations of the defined benefit plans. In order to
simplify the related accounting treatment, the payrolls shall be recognized as service costs, the net amount of
interest of net liabilities and net assets of other welfare of the long-term employees. The total net amounts made
up from the changes of measuring the net liabilities and net assets of other welfare of the long-term employees
again shall be recorded into the current profits and losses or related assets costs.
35. Lease Liabilities
36. Provisions
1. The obligation such as external guaranty, litigation or arbitration, product quality assurance, loss contract,
pertinent to a contingencies shall be recognized as the provisions when the following conditions are satisfied
simultaneously: ① That obligation is a current obligation of the enterprise; ② It is likely to cause any economic
benefit to flow out of the enterprise as a result of performance of the obligation; and ③ The amount of the
obligation can be measured in a reliable way.
2. The Company shall conduct the initial measurement to provisions according to the best estimate number needed
for performing the related current obligation and recheck the carrying value of accrued liabilities on balance sheet
date.
37. Share-based Payment
38. Other Financial Instruments such as Preferred Shares and Perpetual Bonds
39. Revenue
The Accounting Policy Adopted for Recognition and Measurement of Revenue
Revenue recognition principle
On the contract start date, the Company evaluates the contract, identifies the individual performance obligations
contained in the contract, and determines whether the individual performance obligations are fulfilled within a
certain period of time or at a certain point of time.
It shall be regarded as fulfillment of a performance obligation within a certain period of time when one of the
following conditions is met; otherwise, it shall be regarded as fulfillment of a performance obligation at a certain
point of time. (1) The customer obtains and consumes the economic benefits brought by the Company’s
performance when the Company is performing the contract; (2) The customer can control the commodities in
progress during the Company’s performance of the contract; (3) The commodities produced by the Company
during its performance of the contract have irreplaceable purposes, and the Company has the right to collect
payments for the accumulated performance part which has been completed so far throughout the contract period.
For performance obligations fulfilled in a certain period of time, the Company shall recognize the revenue
according to the performance progress in that period of time. If the performance progress cannot be reasonably
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
determined and the cost incurred is expected to be compensated, the revenue shall be recognized according to the
cost amount incurred until the performance progress can be reasonably determined. For performance obligations
fulfilled at a certain point of time, the revenue shall be recognized when the customer obtains control over the
related commodity or service. When judging whether the customer has acquired control over the commodity, the
Company considers the following signs: (1) The Company has the current right to collect payment for the
commodity, that is, the customer has the current obligation to pay for the commodity; (2) The Company has
transferred the legal ownership of the commodity to the customer, that is, the customer has had the legal
ownership of the commodity; (3) The Company has transferred the physical commodity to the customer, that is,
the customer has owned the commodity physically; (4) The Company has transferred the main risks and rewards
of the ownership of the commodity to the customer, that is, the customer has obtained the main risks and rewards
of the ownership of the commodity; (5) The customer has accepted the commodity; (6) Other signs indicating that
the customer has obtained control over the commodity.
Revenue measurement principle
The Company measures revenue at the transaction price allocated to each individual performance obligation.
Transaction price is the consideration that the Company expects to be entitled to receive due to the transfer of a
commodity or service to a customer, excluding the amount collected on behalf of third parties and the amount
expected to be returned to the customer.
If there is variable consideration in a contract, the Company shall determine the best estimate of the variable
consideration according to the expected value or the most likely amount, but the transaction price inclusive of the
variable consideration shall not exceed the amount of the accumulated recognized revenue that is very likely not
to have a significant reversal when related uncertainties are eliminated.
If there is any significant financing component in a contract, the Company shall determine the transaction price
according to the amount payable in cash when the customer obtains control over the commodity or service. The
difference between the transaction price and the consideration of the contract shall be amortized in the effective
interest rate method during the contract period. On the contract start date, if the Company expects that the interval
between the customer's acquisition of control over the commodity or service and the payment for the price by the
customer does not exceed one year, the significant financing component in the contract shall not be considered.
If there are two or more performance obligations in a contract, the Company shall allocate the transaction price to
each single performance obligation according to the relative proportion of the individual selling price of the
commodity promised in each single performance obligation on the start date of the contract.
Specific methods of revenue recognition
Revenue recognized by point of time
The Company’s sales of white cardboard and other products is regarded as fulfillment of performance obligations
at a certain point of time. Recognition of revenue from domestic sales of products should meet the following
conditions: The company has delivered the products to the customer according to the contract and the customer
has accepted the goods; payment for the goods has been collected or the receipt has been obtained, with relevant
economic benefits likely to flow in; the main risks and rewards of the ownership of the goods have been
transferred; and the legal ownership of the goods has been transferred. Recognition of revenue from foreign sales
of products should meet the following conditions: The Company has declared the products according to the
contract and obtained the declaration form; payment for the goods has been collected or the receipt has been
obtained, with relevant economic benefits likely to flow in; the main risks and rewards of the ownership of the
goods have been transferred; and the legal ownership of the goods has been transferred.
Differences in accounting policies for the recognition of revenue caused by different business models for the same type of business
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
40. Government Grants
1. If the government subsidies meet with the following conditions at the same, it should be recognized: (1) The
entity will comply with the condition attaching to them; (2) The grants will be received from government. If a
government subsidy is a monetary asset, it shall be measured according to the amount received or receivable. If a
government subsidy is a non-monetary asset, it shall be measured at its fair value, and shall be measured at a
nominal amount when the fair value cannot be obtained reliably.
2. Judgment basis and accounting methods of government subsidies related to assets
The government subsidies that are acquired for construction or form long-term assets in other ways according to
government documents shall be defined as asset-related government subsidies. For those not specified in
government documents, the judgment shall be made based on the compulsory fundamental conditions for
acquiring the subsidies. If the subsidies are acquired with construction or the formation of long-term assets in
other ways as fundamental conditions, they shall be recognized as asset-related government subsidies. For
asset-related government subsidies, the carrying value of related assets shall be written down or recognized as
deferred income. If asset-related government subsidies are recognized as deferred income, it shall be recorded into
profits or losses by period in a reasonable and systemic manner within the life of related assets. Government
subsidies measured at the nominal amount shall be directly recorded into current profits or losses. If related assets
are sold, transferred, disposed of or destroyed before the end of their life, the undistributed balance of related
deferred income shall be transferred into the profits or losses for the period of the asset disposal.
3. Judgment basis and accounting treatment of profits-related government subsidies
Government subsidies other than asset-related government subsidies shall be defined as profits-related
government subsidies. For government subsidies consisting of both asset-related parts and profits-related parts,
which is difficult to judge whether they are related to assets or profits, the entirety shall be classified as
profits-related government subsidies. Profits-related government subsidies that are used to compensate the related
future expenses or losses shall be recognized as deferred income and shall be included into the current
profit/losses or write down related costs during the period when the relevant expenses or losses are recognized;
those subsidies used to compensate the related expenses or losses incurred shall be directly included into the
current profits/losses or write down related costs.
4. Government subsidies related to the Company’s routine operating activities shall be included into other income
or write down related costs according to the economic business nature. Government subsidies not related to the
Company’s routine activities shall be included into non-operating income and expenditure.
5. Accounting treatment of policy-based preferential loans with interest subsidies
(1) If the finance authority allocates interest subsidies to a lending bank, and the lending bank provides loans to
the Company at a policy-based preferential interest rate, the amount of loan actually received shall be taken as the
entry value of the loan, and the relevant borrowing costs shall be calculated according to the loan principal and the
policy-based preferential interest rate.
(2) If the finance authority allocates interest subsidies directly to the Company, the corresponding interest
subsidies should be used to write down the relevant borrowing costs.
41. Deferred Income Tax Assets/Deferred Income Tax Liabilities
1. In accordance with the balance (the item not recognized as assets and liabilities can confirm their tax bases
according to the tax law, the balance between the tax bases and its carrying amount) between the carrying amount
of assets or liabilities and their tax bases, deferred tax assets and deferred tax liabilities should be recognized at
138
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
2. A deferred tax asset shall be recognized within the limit of taxable income that is likely to be obtained to offset
the deductible temporary differences. At the balance sheet date, where there is strong evidence showing that
sufficient taxable profit will be available against which the deductible temporary difference can be utilized, the
deferred tax asset unrecognized in prior period shall be recognized.
3. The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If it’s probable that
sufficient taxable profit will not be available against which the deductible temporary difference can be utilized,
the Company shall write down the carrying amount of deferred tax asset, or reverse the amount written down later
when it’s probable that sufficient taxable profit will be available.
4. The current income tax and deferred income tax of the Company are recorded into the current gains and losses
as income tax expenses or revenue, except in the following circumstances:
(1) Business combination
(2) The transaction or event directly included in owner’ equity
42. Lease
(1) Accounting Treatment of Operating Lease
As a Lessee, the Company shall record the rent into relevant assets cost or recognize it as the current profit or loss
on a straight-line basis over the lease term. The initial direct costs incurred shall be recognized as the current
profit or loss; Contingent rents shall be charged into the current profit or loss when they are incurred.
As a lessor, the Company shall recognize the rent as the current profit or loss on a straight-line basis over the lease
term. Initial direct costs incurred by the lessor shall be directly recognized as the current profit or loss except that
costs with larger amounts shall be capitalized and recorded into the current profit and loss by stages; Contingent
rents shall be charged into the current profit or loss when they are incurred.
(2) Accounting Treatments of Financial Lease
For the lessee, a fixed asset acquired under finance lease shall be valued at the lower of the fair value of the leased
asset and the present value of the minimum lease payments at the inception of lease. The minimum lease
payments as the entering value in long-term account payable, the difference as unrecognized financing charges;
the initial direct costs shall be directly recorded into leasing asset value. At each period during the lease term, the
effective interest rate method shall be adopted to calculate and confirm the current financing charge.
On the initial date of financial lease, lessee of the financial lease shall record the sum of the minimum lease
payments and initial direct costs as the financing lease accounts receivable, and also record the non-guaranteed
residual value; recognize the difference between the total minimum lease payments, initial direct costs,
non-guaranteed residual value and sum of the present value as the unrealized financing income; At each period
during the lease term, the effective interest rate method shall be adopted to calculate and confirm the current
financing income.
43. Other Important Accounting Policies and Accounting Estimations
1. Confirmation standard and accounting handling method for operation termination
Components which meet one of the following conditions, have been disposed or divided as held for sale category
and can be distinguished separately are confirmed as operation termination.
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(1) The component represents one important independent main business or one single main operation area.
(2) The component is one part of a related plan which plans to dispose one independent main business or one
single main operation area.
(3) The component is a subsidiary which is obtained for resale specially.
44. Changes in Main Accounting Policies and Estimates
(1) Change of Accounting Policies
√Applicable □ Not applicable
Contents and reasons Procedures Remarks
(1) The Company implemented the Accounting Standards for Business Enterprises No. 14 - Revenue (hereinafter
referred to as the new revenue standards) revised by the Ministry of Finance from 1 January 2020. According to
the relevant provisions on the transition between the new and old standards, information of comparable periods
shall not be adjusted. For the cumulative impact from the implementation of the new standards on the date of the
first implementation, the amount of retained earnings as at the beginning of the reporting period and other related
items in the financial statements will be retroactively adjusted.
1) Main influence on the financial statements of the Company on 1 January 2020 by Implementation of the New
Standards governing Revenue is as follows:
Item Balance sheet
31 December 2019 Influenced 1 January 2020
Advanced from 23,303,552.10 -23,303,552.10
customers
Contract liabilities 20,622,612.48 20,622,612.48
Other current liabilities 2,680,939.62 2,680,939.62
2) For contract changes before 1 January 2020, the Company adopts the simplified treatment method. In respect of
all contracts, according to the final arrangement of contract changes, the Company identifies fulfilled and
unfulfilled performance obligations, determines transaction prices, and apportions transaction prices between
fulfilled and unfulfilled performance obligations. The simplified method has no significant impact on the
Company’s financial statements.
(2) The Company implemented the Interpretation No. 13 on Accounting Standards for Business Enterprises issued
by the Ministry of Finance in 2019 from 1 January 2020. The accounting policy change is treated in the
prospective application method.
(2) Changes in Accounting Estimates
□ Applicable √ Not applicable
(3) Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New
Standards Governing Revenue or Leases since 2020
Applicable
Whether items of balance sheets at the beginning of the year need adjustment
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
√ Yes □ No
Consolidated balance sheet:
Unit: RMB
Item 31 December 2019 1 January 2020 Adjustment
Current assets:
Monetary assets 213,743,010.81 213,743,010.81
Settlement reserve 0.00
Interbank loans granted 0.00
Held-for-trading financial
0.00
assets
Derivative financial assets 0.00
Notes receivable 1,101,664.07 1,101,664.07
Accounts receivable 861,496,771.58 861,496,771.58
Accounts receivable
573,333,722.20 573,333,722.20
financing
Prepayments 31,443,452.10 31,443,452.10
Premiums receivable 0.00
Reinsurance receivables 0.00
Receivable reinsurance
0.00
contract reserve
Other receivables 41,390,516.58 41,390,516.58
Including: Interest
0.00
receivable
Dividends
28,000,000.00 28,000,000.00
receivable
Financial assets purchased
0.00
under resale agreements
Inventories 660,926,072.21 660,926,072.21
Contract assets 0.00
Assets classified as held
0.00
for sale
Current portion of
0.00
non-current assets
Other current assets 237,644,272.39 237,644,272.39
Total current assets 2,621,079,481.94 2,621,079,481.94
Non-current assets:
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Loans and advances to
customers
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
655,312,367.55 655,312,367.55
investments
Investments in other equity
0.00
instruments
Other non-current financial
288,700.00 288,700.00
assets
Investment property 29,115,661.86 29,115,661.86
Fixed assets 2,067,109,815.77 2,067,109,815.77
Construction in progress 33,321,697.05 33,321,697.05
Productive living assets 0.00
Oil and gas assets 0.00
Right-of-use assets
Intangible assets 127,168,024.42 127,168,024.42
R&D expense 3,550,832.92 3,550,832.92
Goodwill 11,547,305.29 11,547,305.29
Long-term prepaid
3,478,736.33 3,478,736.33
expense
Deferred income tax assets 31,250,198.70 31,250,198.70
Other non-current assets 8,420,488.55 8,420,488.55
Total non-current assets 2,970,563,828.44 2,970,563,828.44
Total assets 5,591,643,310.38 5,591,643,310.38
Current liabilities:
Short-term borrowings 1,163,487,459.95 1,163,487,459.95
Borrowings from central
0.00
bank
Interbank loans obtained 0.00
Held-for-trading financial
0.00
liabilities
Derivative financial 0.00
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
liabilities
Notes payable 312,234,422.87 312,234,422.87
Accounts payable 321,955,510.64 321,955,510.64
Advances from customers 23,303,552.10 0.00 -23,303,552.10
Contract liabilities 20,622,612.48 20,622,612.48
Financial assets sold under
repurchase agreements
Customer deposits and
interbank deposits
Payables for acting trading
of securities
Payables for underwriting
of securities
Payroll payable 42,342,384.19 42,342,384.19
Taxes payable 13,467,917.06 13,467,917.06
Other payables 49,222,655.01 49,222,655.01
Including: Interest
0.00
payable
Dividends
229,593.13 229,593.13
payable
Handling charges and
commissions payable
Reinsurance payables
Liabilities directly
associated with assets
classified as held for sale
Current portion of
100,229,305.56 100,229,305.56
non-current liabilities
Other current liabilities 2,680,939.62 2,680,939.62
Total current liabilities 2,026,243,207.38 2,026,243,207.38
Non-current liabilities:
Insurance contract reserve
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual bonds
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions 1,696,811.00 1,696,811.00
Deferred income 26,604,363.11 26,604,363.11
Deferred income tax
2,180,826.02 2,180,826.02
liabilities
Other non-current
0.00
liabilities
Total non-current liabilities 30,482,000.13 30,482,000.13
Total liabilities 2,056,725,207.51 2,056,725,207.51
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preferred
shares
Perpetual bonds
Capital reserves 256,822,373.42 256,822,373.42
Less: Treasury stock
Other comprehensive
169,714.39 169,714.39
income
Specific reserve
Surplus reserves 199,022,513.20 199,022,513.20
General reserve
Retained earnings 1,045,211,890.50 1,045,211,890.50
Total equity attributable to
owners of the Company as 2,006,651,491.51 2,006,651,491.51
the parent
Non-controlling interests 1,528,266,611.36 1,528,266,611.36
Total owners’ equity 3,534,918,102.87 3,534,918,102.87
Total liabilities and owners’
5,591,643,310.38 5,591,643,310.38
equity
Notes to the adjustments:
Balance sheet of the Company as the parent:
Unit: RMB
Item 31 December 2019 1 January 2020 Adjustment
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Current assets:
Monetary assets 5,342,379.55 5,342,379.55
Held-for-trading financial
assets
Derivative financial assets
Notes receivable
Accounts receivable
Accounts receivable
financing
Prepayments
Other receivables 53,371,168.86 53,371,168.86
Including: Interest
receivable
Dividends
28,000,000.00 28,000,000.00
receivable
Inventories
Contract assets
Assets classified as held
for sale
Current portion of
non-current assets
Other current assets 135,661.98 135,661.98
Total current assets 58,849,210.39 58,849,210.39
Non-current assets:
Investments in debt
obligations
Investments in other debt
obligations
Long-term receivables
Long-term equity
1,696,777,505.79 1,696,777,505.79
investments
Investments in other equity
instruments
Other non-current financial
288,700.00 288,700.00
assets
Investment property
Fixed assets 69,775.81 69,775.81
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Construction in progress
Productive living assets
Oil and gas assets
Right-of-use assets
Intangible assets 72,990.24 72,990.24
R&D expense
Goodwill
Long-term prepaid
123,501.67 123,501.67
expense
Deferred income tax assets
Other non-current assets
Total non-current assets 1,697,332,473.51 1,697,332,473.51
Total assets 1,756,181,683.90 1,756,181,683.90
Current liabilities:
Short-term borrowings
Held-for-trading financial
liabilities
Derivative financial
liabilities
Notes payable
Accounts payable
Advances from customers
Contract liabilities
Payroll payable 114,646.21 114,646.21
Taxes payable 4,685.50 4,685.50
Other payables 280,301.76 280,301.76
Including: Interest
payable
Dividends
229,593.13 229,593.13
payable
Liabilities directly
associated with assets
classified as held for sale
Current portion of
non-current liabilities
Other current liabilities
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Total current liabilities 399,633.47 399,633.47
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred
shares
Perpetual bonds
Lease liabilities
Long-term payables
Long-term payroll payable
Provisions
Deferred income
Deferred income tax
liabilities
Other non-current
liabilities
Total non-current liabilities
Total liabilities 399,633.47 399,633.47
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Including: Preferred
shares
Perpetual bonds
Capital reserves 250,531,482.00 250,531,482.00
Less: Treasury stock
Other comprehensive
income
Specific reserve
Surplus reserves 199,022,513.20 199,022,513.20
Retained earnings 800,803,055.23 800,803,055.23
Total owners’ equity 1,755,782,050.43 1,755,782,050.43
Total liabilities and owners’
1,756,181,683.90 1,756,181,683.90
equity
Notes to the adjustments:
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(4) Retroactive Adjustments to Comparative Data of Prior Years when First Execution of any New
Standards Governing Revenue or Leases since 2020（
□ Applicable √ Not applicable
45. Other
VI Taxes
1. Main Taxes and Tax Rates
Category of taxes Tax basis Tax rate
Output VAT is calculated on the income
from product sales and taxable labor
services, based on tax laws. The remaining
VAT 5%、6%、9%、13%
balance of output VAT, after subtracting
the deductible input VAT of the period, is
VAT payable.
Urban maintenance and construction tax Turnover tax actually paid 7%、5%
Enterprise income tax Taxable income 25%、15%
For taxation according to price, it shall pay
1.2% of the residual value of original
Property tax property value subtracting 30%; for 1.2%、12%
taxation according to rent, it shall pay 12%
of rental income
Education surcharge Turnover tax actually paid 3%
Local education surcharge Turnover tax actually paid 2%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
The Company 25%
Hongta Renheng 15%
Zhuhai Huafeng 15%
Golden Pheasant Chemical 15%
Huaxin Color Printing 15%
2. Tax Preference
1. According to the Notice on Issuing the Name List of Hi-tech Enterprise in Guangdong Province for Y2018
jointly issued by Science & Technology Department of Guangdong Province, Department of Finance of
Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, Hongta Renheng,
the subsidiary of the Company, passed the affirmation of First Batch of Hi-tech Enterprise in Guangdong Province
148
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
for Y2018, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201844005432, with three years of
validity). Hongta Renheng shall pay the corporate income tax according to the corporate income tax rate of 15%
in 2020.
2. According to the Notice on Issuing the Name List of Hi-tech Enterprise in Guangdong Province for Y2019
jointly issued by Science & Technology Department of Guangdong Province, Department of Finance of
Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, Zhuhai Huafeng,
the subsidiary of the Company, passed the affirmation of First Batch of Hi-tech Enterprise in Guangdong Province
for Y2019, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201944002868, with three years of
validity). Zhuhai Huafeng shall pay the corporate income tax according to the corporate income tax rate of 15% in
2020.
3. According to the Notice on Issuing the Name List of Hi-tech Enterprise in Guangdong Province for Y2019
jointly issued by Science & Technology Department of Guangdong Province, Department of Finance of
Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, Golden Pheasant
Chemical, the subsidiary of the Company, passed the affirmation of First Batch of Hi-tech Enterprise in
Guangdong Province for Y2019, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201944000753,
with three years of validity). Golden Pheasant Chemical shall pay the corporate income tax according to the
corporate income tax rate of 15% in 2020.
4. According to the Notice on Issuing the Name List of Hi-tech Enterprise in Guangdong Province for Y2018
jointly issued by Science & Technology Department of Guangdong Province, Department of Finance of
Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, Huaxin Color
Printing, the subsidiary of the Company, passed the affirmation of First Batch of Hi-tech Enterprise in Guangdong
Province for Y2018, and gained Certificate for Hi-tech Enterprise (Certificate No.: GR201844009816, with three
years of validity). Huaxin Color Printing shall pay the corporate income tax according to the corporate income tax
rate of 15% in 2020.
3. Other
VII. Notes to Major Items in the Consolidated Financial Statements of the Company
1. Monetary assets
Unit: RMB
Item Ending balance Beginning balance
Cash on hand 119,257.53 215,289.12
Bank deposits 770,285,953.55 211,843,857.53
Other monetary assets 37,931,538.58 1,683,864.16
Total 808,336,749.66 213,743,010.81
Other notes
The bank deposits at the end of 2020 included RMB 551 million of time deposits and accrued interest of
RMB12,498,124.96. The Company pledged RMB 351 million of time deposits to issue RMB 301 million of bank
acceptance bills, of which RMB100 million of time deposits was pledged to issue letters of credit, and other
monetary funds at the end of the period were bank acceptance bill deposits of RMB 37,931, 538.58. For the
money with restriction on usage, the Company has already gotten rid of it from the cash and cash equivalents at
149
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
the period-end when prepared the cash flow statement.
2. Trading Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Of which:
Of which:
Total 0.00
Other notes:
3. Derivative Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
Other notes:
4. Notes Receivable
(1) Notes Receivable Listed by Category
Unit: RMB
Item Ending balance Beginning balance
Commercial acceptance bill 1,101,664.07
Total 1,101,664.07
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Carrying Carrying
Withdrawal Withdrawal
AmountProportionAmount value Amount ProportionAmount value
proportion proportion
Of which:
Notes
receivable
with bad
1,101,664.07 100.00% 1,101,664.07
debt
provision
withdrawn
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Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
by groups:
Of which:
Commercial
acceptance 1,101,664.07 100.00% 1,101,664.07
bill
Total 1,101,664.07 100.00% 1,101,664.07
Bad debt provision separately accrued:
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion
Bad debt provision withdrawn according to groups:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Notes of the basis of recognizing the group:
If the bad debt provision for notes receivable was withdrawn in accordance with the general model of expected
credit losses, information related to bad debt provision shall be disclosed by reference to the disclosure method of
other receivables:
□ Applicable √ Not applicable
(2) Bad Debt Provision Withdrawn, Collected or Reversed during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Increase/decrease
Beginning
Category Collected or Ending balance
balance Withdrawn Verified Other
reversed
Of which, bad debt provision collected or reversed with significant amount:
□ Applicable √ Not applicable
(3) Notes Receivable Pledged by the Company at the Period-end
Unit: RMB
Item Amount pledged
(4) Notes Receivable which Had Endorsed by the Company or had Discounted and had not Due on the
Balance Sheet Date at the Period-end
Unit: RMB
151
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Commercial acceptance bill 51,000,000.00
Total 51,000,000.00
(5) Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute the Contract
or Agreement
Unit: RMB
Amount of the notes transferred to accounts receivable
Item
at the period-end
Other notes
(6) Notes Receivable with Actual Verification for the Reporting Period
Unit: RMB
Item Amount verified
Of which, verification of significant notes receivable:
Unit: RMB
Whether occurred
Name of the Reason for because of
Nature Amount verified Procedure
entity verification related-party
transactions
Notes of the verification of notes receivable:
5. Accounts Receivable
(1) Accounts Receivable Classified by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
Category Carrying Carrying
Withdrawal Withdrawal
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Accounts
receivable
for which 39,882,9 39,882,9 40,889,5 40,889,5
6.83% 100.00% 4.51% 100.00%
bad debt 36.26 36.26 93.47 93.47
provision
accrued
152
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
separately
Of which:
Accounts
receivable
withdrawn 544,424, 721,440. 543,703,14 865,968, 4,471,69 861,496,7
93.17% 0.13% 95.49% 0.52%
bad debt 585.47 19 5.28 470.25 8.67 71.58
provision
by group
Of which:
584,307, 40,604,3 543,703,14 906,858, 45,361,2 861,496,7
Total 100.00% 6.95% 100.00% 5.00%
521.73 76.45 5.28 063.72 92.14 71.58
Accounts receivable for which bad debt provision accrued separately: RMB 39,882,936.26
Unit: RMB
Ending balance
Name Withdrawal
Carrying amount Bad debt provision Withdrawal reason
proportion
Guangdong Yuejing Expected
9,919,562.58 9,919,562.58 100.00%
Group Co., Ltd. unrecoverable
HONG KONG C&K
Expected
DEVELOPMENT 4,829,903.11 4,829,903.11 100.00%
unrecoverable
LIMITED
Shenzhen Xieji Expected
3,760,350.10 3,760,350.10 100.00%
Industrial Co., Ltd. unrecoverable
Foshan Jiahe Paper Expected
3,152,239.70 3,152,239.70 100.00%
Trading Co., Ltd. unrecoverable
Foshan Nanhai Expected
1,225,359.43 1,225,359.43 100.00%
Gurunxuan Co., Ltd. unrecoverable
Shenzhen Yutong
Expected
Packing & Printing 1,078,810.45 1,078,810.45 100.00%
unrecoverable
Co., Ltd.
Zhuhai Gongbei
Expected
Ronghui Trading Co., 1,016,655.73 1,016,655.73 100.00%
unrecoverable
Ltd.
Kaifeng Bokai Expected
922,328.60 922,328.60 100.00%
Printing Co., Ltd. unrecoverable
Guangdong Jiangnan Expected
787,318.74 787,318.74 100.00%
Paper Co., Ltd. unrecoverable
Expected
Other 13,190,407.82 13,190,407.82 100.00%
unrecoverable
153
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Total 39,882,936.26 39,882,936.26 -- --
Accounts receivable withdrawal of bad debt provision by groups: RMB 721,440.19
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Aging group 544,424,585.47 721,440.19 0.13%
Total 544,424,585.47 721,440.19 --
Notes of the basis of recognizing the group:
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 543,289,662.12
1-3 months 534,476,456.75
4-12 months 8,813,205.37
1 to 2 years 368,863.55
2 to 3 years 463,787.79
Over 3 years 40,185,208.27
3 to 4 years 302,272.01
Over 5 years 39,882,936.26
Total 584,307,521.73
(2) Bad Debt Provision Withdrawn, Collected or Reversed during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Increase/decrease
Beginning
Category Collected or Ending balance
balance Withdrawn Verified Other
reversed
Bad debt
provision
40,889,593.47 -518,620.96 283,005.50 205,030.75 39,882,936.26
withdrawn
separately
Bad debt 4,471,698.67 -3,750,258.48 721,440.19
154
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
provision
withdrawn by
groups
Total 45,361,292.14 -4,268,879.44 283,005.50 205,030.75 40,604,376.45
Of which, bad debt provision collected or reversed with significant amount:
Unit: RMB
Name of the entity Amount Method
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount verified
Bad debt provision withdrawn separately 205,030.75
Total 205,030.75
Of which significant actual verification of accounts receivable:
Unit: RMB
Whether occurred
Name of the Reason for because of
Nature Amount verified Procedure
entity verification related-party
transactions
Notes of the verification of accounts receivable:
(4) Top 5 of Account Receivable of Ending Balance Collected by Arrears Party
Unit: RMB
Proportion to total balance of Ending balance of bad debt
Name of the entity Ending balance
accounts receivable (%) provision
No. 1 37,498,052.36 6.42%
No. 2 29,534,689.56 5.05%
No. 3 22,519,738.65 3.85%
No. 4 21,430,531.28 3.67%
No. 5 18,991,015.04 3.25%
Total 129,974,026.89 22.24%
155
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(5) Derecognition of Account Receivable due to the Transfer of Financial Assets
(6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement
of Accounts Receivable
Other notes:
6. Accounts Receivable Financing
Unit: RMB
Item Ending balance Beginning balance
Notes Receivable 754,556,891.52 573,333,722.20
Total 754,556,891.52 573,333,722.20
Changes in accounts receivable financing and fair value in the Reporting Period
□ Applicable √ Not applicable
Please refer to the relevant information of disclosure of depreciation reserve of other accounts receivable if
adopting the general mode of expected credit loss to withdraw depreciation reserve of accounts receivable
financing.
□ Applicable √ Not applicable
Other notes:
Since the acceptor of bankers' acceptance bill is a commercial bank which has high credit, and the payment failure
at the due date of a bankers' acceptance bill is not likely to happen, our company will terminate the
acknowledgment of the bankers' acceptance bill which has been endorsed or discounted. However, if the bill fails
to be paid at the due date, the company will be jointly and severally liable to the holder in accordance with the
provisions of the Law of Negotiable Instruments.
7. Prepayment
(1) List by Aging Analysis
Unit: RMB
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 68,292,413.72 97.37% 28,122,703.79 89.44%
1 to 2 years 1,112,791.28 1.59% 2,766,586.31 8.80%
2 to 3 years 519,224.41 0.74% 430,705.50 1.37%
Over 3 years 207,454.49 0.30% 123,456.50 0.39%
Total 70,131,883.90 -- 31,443,452.10 --
Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:
156
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(2) Top 5 of the Ending Balance of the Prepayment Collected according to the Prepayment Target
Name of the entity Carrying amount Proportion to the balance of
prepayments (%)
China Paper Corporation 15,579,872.74 22.22
No. 2 9,357,857.45 13.34
No. 3 7,629,740.49 10.88
No. 4 7,190,000.00 10.25
No. 5 5,154,691.55 7.35
Subtotal 44,912,162.23 64.04
Other notes:
8. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Interest receivable 0.00
Dividends receivable 27,000,000.00 28,000,000.00
Other Receivables 7,051,361.60 13,390,516.58
Total 34,051,361.60 41,390,516.58
(1) Interest receivable
1) Category of Interest Receivable
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
2) Significant Overdue Interest
Unit: RMB
Whether occurred
Entity Ending balance Overdue time Overdue reason impairment and the
judgment basis
Other notes:
3) Withdrawal of Bad Debt Provision
□ Applicable √ Not applicable
157
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(2) Dividends receivable
1) Category of Dividends Receivable
Unit: RMB
Item (or investees) Ending balance Beginning balance
Dividends of associated enterprises 27,000,000.00 28,000,000.00
Total 27,000,000.00 28,000,000.00
2) Significant Dividend Receivable Aged over 1 Year
Unit: RMB
Whether occurred
Item (or investees) Ending balance Aging Reason impairment and the
judgment basis
3) Withdrawal of Bad Debt Provision
□ Applicable √ Not applicable
Other notes:
(3) Other Receivables
1) Other Receivables Classified by Category
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Margin 3,374,011.11 2,557,766.50
Petty cash 704,359.76 549,296.72
Freight and miscellaneous charges
555,914.81 113,941.24
on behalf
Compensation for victim’s families
6,451,557.15 6,696,000.00
on behalf
Other intercourse funds 27,921,339.82 31,274,959.21
Total 39,007,182.65 41,191,963.67
2) Withdrawal of Bad Debt Provision
Unit: RMB
Bad debt provision First stage Second stage Third stage Total
158
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Expected loss in the
Expected credit Expected loss in the
duration (credit
loss of the next 12 duration (credit
impairment not
months impairment occurred)
occurred)
Balance of 1 January
169,121.91 1,925,536.86 25,706,788.32 27,801,447.09
2020
Balance of 1 January
2020 in the Reporting —— —— —— ——
Period
--Transfer to Second
-169,121.91 169,121.91
stage
--Transfer to Third
-1,302,799.03 1,302,799.03
stage
Withdrawal of the
111,256.26 -301,701.57 4,344,819.27 4,154,373.96
Reporting Period
Balance of 31
111,256.26 490,158.17 31,354,406.62 31,955,821.05
December 2020
Changes of carrying amount with significant amount changed of loss provision in the Reporting Period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Carrying amount
Within 1 year (including 1 year) 5,302,369.74
1-3 months 3,077,244.54
4-12 months 2,225,125.20
1 to 2 years 759,612.85
2 to 3 years 1,270,666.12
Over 3 years 31,674,533.94
3 to 4 years 31,674,533.94
Total 39,007,182.65
3) Bad Debt Provision Withdrawn, Collected or Reversed during the Reporting Period
Bad debt provision withdrawn in the Reporting Period:
Unit: RMB
Increase/decrease
Beginning
Category Collected or Ending balance
balance Withdrawn Verified Other
reversed
159
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Bad debt
provision of
27,801,447.09 4,154,373.96 31,955,821.05
other
receivables
Total 27,801,447.09 4,154,373.96 31,955,821.05
Of which bad debt provision reversed or collected with significant amount during the Reporting Period:
Unit: RMB
Name of the entity Reversed or collected amount Method
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period
Unit: RMB
Item Amount verified
Of which significant verification of other receivables:
Unit: RMB
Whether occurred
Name of the Reason for because of
Nature Amount verified Procedure
entity verification related-party
transactions
Notes of verification of other receivables:
5) Top 5 of the Ending Balance of the Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to
Ending balance of
Name of the ending balance of
Nature Ending balance Aging bad debt
entity other receivables
provision
(%)
Other intercourse
No. 1 12,668,731.65 Over 3 years 32.48% 12,668,731.65
funds
No. 2 Borrowings 6,000,000.00 Over 3 years 15.38% 6,000,000.00
Compensation for
No. 3 victim’s families 2,232,000.00 Over 3 years 5.72% 2,232,000.00
on behalf
Compensation for
No. 4 victim’s families 2,232,000.00 Over 3 years 5.72% 2,232,000.00
on behalf
Other intercourse
No. 5 2,000,000.00 Over 3 years 5.13% 2,000,000.00
funds
Total -- 25,132,731.65 -- 64.43% 25,132,731.65
160
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
6) Accounts Receivable Involving Government Subsidies
Unit: RMB
Estimated recovering
Project of Aging at the
Name of the entity Ending balance time, amount and
government subsidies period-end
basis
7) Derecognition of Other Receivables due to the Transfer of Financial Assets
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement
of Other Receivables
Other notes:
9. Inventory
Whether the Company needs to comply with the disclosure requirements for real estate industry
No
(1) Category of Inventory
Unit: RMB
Ending balance Beginning balance
Falling price Falling price
reserves of reserves of
inventory or inventory or
Item Carrying depreciation Carrying depreciation
Carrying value Carrying value
amount reserves of amount reserves of
contract contract
performance performance
cost cost
Raw materials 330,540,092.11 3,807,599.61 326,732,492.50 329,199,695.38 4,159,204.71 325,040,490.67
Goods in
28,722,031.18 28,722,031.18 42,393,859.68 42,393,859.68
process
Inventory
157,692,180.60 1,001,468.54 156,690,712.06 266,701,629.28 2,169,737.93 264,531,891.35
goods
Goods in
59,534,822.21 59,534,822.21 28,959,830.51 28,959,830.51
transit
Total 576,489,126.10 4,809,068.15 571,680,057.95 667,255,014.85 6,328,942.64 660,926,072.21
161
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(2) Falling Price Reserves of Inventory and Depreciation Reserves of Contract Performance Cost
Unit: RMB
Increase Decrease
Beginning
Item Reverse or Ending balance
balance Withdrawn Other Other
write-off
Raw materials 4,159,204.71 351,605.10 3,807,599.61
Inventory
2,169,737.93 1,168,269.39 1,001,468.54
goods
Total 6,328,942.64 1,519,874.49 4,809,068.15
Particular basis of net realizable value and reason for reversal or write-off of falling price reserves of inventory:
Item Particular basis of net realizable Reason for reversal of Reason for write-off of
value falling price reserves of falling price reserves
inventory of inventory
Raw materials Net realizable value shall be the Net realizable value of The inventory
amount after the estimated sale inventory withdrawn withdrawn falling
price of relevant finished goods falling price reserves of price reserves of
minus the cost estimated to be inventory in prior period inventory at the
incurred till completion and increased period-beginning has
estimated selling expenses and been sold
relevant taxes
Inventory goods Net realizable value shall be the Net realizable value of The inventory
amount after the estimated sale inventory withdrawn withdrawn falling
price or contract price of relevant falling price reserves of price reserves of
finished goods minus estimated inventory in prior period inventory at the
selling expenses and relevant taxes increased period-beginning has
been sold
(3) Notes to the Ending Balance of Inventory Including Capitalized Borrowing Expense
(4) Notes to Amortization of the Contract Performance Cost
10. Contract assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation
Carrying value
amount reserve value amount reserve
Total 0.00
Significant changes in amount of carrying value of contract assets and reason in the Reporting Period:
162
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Unit: RMB
Item Amount changed Reason
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if
adopting the general mode of expected credit loss to withdraw bad debt provision of contract assets:
□ Applicable √ Not applicable
Information of depreciation reserve withdrawn of contract assets:
Unit: RMB
Withdrawal of the
Item Reversal Write-off/Verification Reason
Reporting Period
Other notes:
11. Held-for-sale Assets
Unit: RMB
Ending Estimated
Depreciation Ending Estimated
Item carrying Fair value disposal
reserve carrying value disposal time
amount expense
Other notes:
12. Current Portion of Non-current Assets
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
Significant creditors’ investment/other creditors’ investment
Unit: RMB
Ending balance Beginning balance
Item Coupon Actual Coupon Actual
Par value Due date Par value Due date
rate rate rate rate
Other notes:
13. Other Current Assets
Unit: RMB
Item Ending balance Beginning balance
The VAT deduction 2,562,872.00 8,216,317.40
Structured deposits 214,000,000.00
Accrued interests 4,453,333.32
Prepaid expense 1,775,207.06 10,974,621.67
163
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Advance payment of corporate
34,718.28
income tax
Total 4,372,797.34 237,644,272.39
Other notes:
14. Creditors’ Investment
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserve amount reserve
Significant creditors’ investment
Unit: RMB
Ending balance Beginning balance
Item Coupon Actual Coupon Actual
Par value Due date Par value Due date
rate rate rate rate
Withdrawal of depreciation reserve
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next 12 duration (credit
impairment not
months impairment occurred)
occurred)
Balance of 1 January
2020 in the Reporting —— —— —— ——
Period
Changes of carrying amount with significant amount changed of loss provision in the Reporting Period
□ Applicable √ Not applicable
Other notes:
15. Other Creditors’ Investment
Unit: RMB
Accumulative
loss provision
Accumulative
Beginning Accrued Changes in Ending recognized in
Item Cost changes in Notes
balance interests fair value balance other
fair value
comprehensive
income
Significant other creditors’ investment
164
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Unit: RMB
Ending balance Beginning balance
Item Coupon Actual Coupon Actual
Par value Due date Par value Due date
rate rate rate rate
Withdrawal of depreciation reserve
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next 12 duration (credit
impairment not
months impairment occurred)
occurred)
Balance of 1 January
2020 in the Reporting —— —— —— ——
Period
Changes of carrying amount with significant amount changed of loss provision in the Reporting Period
□ Applicable √ Not applicable
Other notes:
16. Long-term Receivables
(1) List of Long-term Receivables
Unit: RMB
Ending balance Beginning balance
Interval of
Item Carrying Bad debt Carrying Carrying Bad debt Carrying
discount rate
amount provision value amount provision value
Impairment of bad debt provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the
Expected credit Expected loss in the
Bad debt provision duration (credit Total
loss of the next 12 duration (credit
impairment not
months impairment occurred)
occurred)
Balance of 1 January
2020 in the Reporting —— —— —— ——
Period
Changes of carrying amount with significant amount changed of loss provision in the Reporting Period
□ Applicable √ Not applicable
165
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(2) Derecognition of Long-term Receivables due to the Transfer of Financial Assets
(3) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement
of Long-term Receivables
Other notes
166
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
167
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
17. Long-term Equity Investment
Unit: RMB
Increase/decrease
Beginning Ending Ending
Gains and losses Adjustment of Cash bonus or
balance Changes Withdrawal of balance balance of
Investees Additional Reduced recognized other profits
(carrying of other depreciation Other (carrying depreciation
investment investment under the equity comprehensive announced to
value) equity reserves value) reserves
method income issue
I. Joint ventures
II. Associated enterprises
Guangdong
Chengtong
8,642,303.90 -4,546,523.46 132,608.36 3,963,172.08
Logistics Co.,
Ltd.
China
Chengtong
Finance 646,670,063.65 33,389,565.90 27,000,000.00 653,059,629.55
Corporation
Ltd.
Subtotal 655,312,367.55 28,843,042.44 27,132,608.36 657,022,801.63
Total 655,312,367.55 28,843,042.44 27,132,608.36 657,022,801.63
168
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
169
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Other notes
China Chengtong Finance Corporation Ltd. (hereinafter referred to as Chengtong Finance) reviewed and approved
the Proposal on Electing Ding Guoqiang as a Director of the Company at the First Extraordinary Meeting of
Shareholders' Meeting in 2018. Ding Guoqiang, the chief financial officer of the Company, was qualified as a
director of Chengtong Finance, and began to perform his duties on the date when he passed the qualification
approval of the director of Beijing Office of China Banking and Insurance Regulatory Commission. According to
the Reply of the Approval of the Director Qualification of Ding Guoqiang in China Chengtong Finance
Corporation Ltd. by the Beijing Office of China Banking and Insurance Regulatory Commission (JYJF [2018] No.
531), Ding Guoqiang obtained the Director qualification in China Chengtong Finance Corporation Ltd. on
October 24, 2018. The Company's shareholding ratio in Chengtong Finance Corporation Ltd. is 10%, but a
director is appointed in Chengtong Finance Corporation Ltd. who has the right to participate in decision-making
on the financial and operating policies of Chengtong Finance Corporation Ltd., so the investment in Chengtong
Finance Company is accounted according to the long-term equity investment accounted by the equity method
18. Other Equity Instrument Investment
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
Non-trading equity instrument investment in the Reporting Period disclosed by items
Unit: RMB
Reason for
Amount of Reason for
assigning to
other other
measure in fair
Dividend comprehensive comprehensive
Accumulative Accumulative value of which
Item income income income
gains losses changes
recognized transferred to transferred to
included other
retained retained
comprehensive
earnings earnings
income
Other notes:
19. Other Non-current Financial Assets
Unit: RMB
Item Ending balance Beginning balance
Classified to financial assets
measured by fair value through 288,700.00 288,700.00
profit or loss
Total 288,700.00 288,700.00
Other notes:
170
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
20. Investment Property
(1) Investment Property Adopting the Cost Measurement Mode
√ Applicable □ Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use right Total
progress
I. Original carrying
value
1. Beginning
46,541,207.59 46,541,207.59
balance
2. Increased
5,032,075.80 5,032,075.80
amount of the period
(1) Outsourcing
(2) Transfer from
inventories/fixed
5,032,075.80 5,032,075.80
assets/construction in
progress
(3) Enterprise
combination increase
3. Decreased
16,654,030.46 16,654,030.46
amount of the period
(1) Disposal
(2) Other transfer
Transferred in fixed
16,654,030.46 16,654,030.46
assets
4. Ending
34,919,252.93 34,919,252.93
balance
II. Accumulative
depreciation and
accumulative
amortization
1. Beginning
17,425,545.73 17,425,545.73
balance
2. Increased
3,259,961.92 3,259,961.92
amount of the period
(1) Withdrawal 1,352,940.28 1,352,940.28
171
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
or amortization
Fixed assets
1,907,021.64 1,907,021.64
transferred in
3. Decreased
2,953,541.02 2,953,541.02
amount of the period
(1) Disposal
(2) Other transfer
Transferred in fixed
2,953,541.02 2,953,541.02
assets
4. Ending
17,731,966.63 17,731,966.63
balance
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount of the period
(1) Withdrawal
3. Decreased
amount of the period
(1) Disposal
(2) Other transfer
4. Ending
balance
IV. Carrying value
1. Ending
17,187,286.30 17,187,286.30
carrying value
2. Beginning
29,115,661.86 29,115,661.86
carrying value
(2) Investment Property Adopting the Fair Value Measurement Mode
□ Applicable √ Not applicable
(3) Investment Property Failed to Accomplish Certification of Property
Unit: RMB
172
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Item Carrying value Reason
Other notes
21. Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Fixed Assets 1,979,652,177.39 2,067,109,815.77
Total 1,979,652,177.39 2,067,109,815.77
(1) List of Fixed Assets
Unit: RMB
Electronic
Houses and Machinery
Item Transportation equipment and Total
buildings equipment
others
I. Original
carrying value
1. Beginning
1,167,028,654.32 2,871,770,577.46 45,322,148.01 144,118,405.59 4,228,239,785.38
balance
2. Increased
amount of the 17,808,486.39 51,045,519.46 922,898.15 5,574,780.90 75,351,684.90
period
(1) Purchase 1,154,455.93 11,293,509.91 751,211.56 4,654,161.47 17,853,338.87
(2) Transfer
from construction 39,752,009.55 171,686.59 920,619.43 40,844,315.57
in progress
(3) Enterprise
combination
increase
(4) Others 16,654,030.46 16,654,030.46
3. Decreased
amount of the 5,247,116.51 13,002,447.51 3,610,529.54 639,895.09 22,499,988.65
period
(1) Disposal
215,040.71 13,002,447.51 3,610,529.54 639,895.09 17,467,912.85
or scrap
(2) Others 5,032,075.80 5,032,075.80
4. Ending
1,179,590,024.20 2,909,813,649.41 42,634,516.62 149,053,291.40 4,281,091,481.63
balance
173
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
II. Accumulative
depreciation
1. Beginning
466,945,628.57 1,464,896,139.69 39,472,399.77 113,136,044.58 2,084,450,212.61
balance
2. Increased
amount of the 36,669,525.46 110,212,573.97 1,285,428.52 9,571,584.17 157,739,112.12
period
(1)
33,715,984.44 110,212,573.97 1,285,428.52 9,571,584.17 154,785,571.10
Withdrawal
(2) Others 2,953,541.02 2,953,541.02
3. Decreased
amount of the 1,935,960.40 11,500,177.63 3,387,352.58 606,286.88 17,429,777.49
period
(1) Disposal
28,938.76 11,500,177.63 3,387,352.58 606,286.88 15,522,755.85
or scrap
(2) Others 1,907,021.64 1,907,021.64
4. Ending
501,679,193.63 1,563,608,536.03 37,370,475.71 122,101,341.87 2,224,759,547.24
balance
III. Depreciation
reserves
1. Beginning
76,679,757.00 76,679,757.00
balance
2. Increased
amount of the
period
(1)
Withdrawal
3. Decreased
amount of the
period
(1) Disposal
or scrap
4. Ending
76,679,757.00 76,679,757.00
balance
IV. Carrying
value
174
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
1. Ending
677,910,830.57 1,269,525,356.38 5,264,040.91 26,951,949.53 1,979,652,177.39
carrying value
2. Beginning
700,083,025.75 1,330,194,680.77 5,849,748.24 30,982,361.01 2,067,109,815.77
carrying value
(2) List of Temporarily Idle Fixed Assets
Unit: RMB
Original carrying Accumulative Depreciation
Item Carrying value Notes
value depreciation reserve
(3) Fixed Assets Leased in by Financing Lease
Unit: RMB
Original carrying Accumulative
Item Depreciation reserve Carrying value
value depreciation
Houses and buildings 12,212,610.00 11,601,979.50 610,630.50
Machinery equipment 3,160,000.00 3,002,000.00 158,000.00
Subtotal 15,372,610.00 14,603,979.50 768,630.50
(4) Fixed Assets Leased out by Operation Lease
Unit: RMB
Item Ending carrying value
(5) Fixed Assets Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Certification of property was under
Houses and buildings 91,807,347.38
process
Subtotal 91,807,347.38
Other notes
(6) Proceeds from Disposal of Fixed Assets
Unit: RMB
Item Ending balance Beginning balance
Other notes
175
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
22. Construction in progress
Unit: RMB
Item Ending balance Beginning balance
Construction in progress 37,659,416.51 33,321,697.05
Total 37,659,416.51 33,321,697.05
(1) List of Construction in Progress
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserve amount reserve
Latex phase II
matching raw
18,270,058.37 18,270,058.37 17,621,170.82 17,621,170.82
material tank
farm project
Treatment
system for
3,723,869.66 3,723,869.66
industrial
waste gas
Advanced
waste-water
treatment and 2,477,929.63 2,477,929.63
water reuse
project
Equipment
renovation of
BM3 bag 51,397.44 51,397.44
ventilation
system
BM3 core
dilution water
upgrading and 1,592,920.35 1,592,920.35
renovation
project
BM2 Vacuum
pump to
turbine fan 3,774,532.70 3,774,532.70
energy-saving
renovation
176
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Boiler
denitration
upgrading and 2,267,889.90 2,267,889.90
renovation
project
50,000 tons
latex
2,829,220.12 2,829,220.12 107,766.99 107,766.99
expansion
project
Other 8,924,795.07 8,924,795.07 9,339,562.51 9,339,562.51
Total 37,659,416.51 37,659,416.51 33,321,697.05 33,321,697.05
177
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
178
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
(2) Changes in Significant Construction in Progress during the Reporting Period
Unit: RMB
Of which:
Proportion of Amount of Capitalization
Accumulated
Transferred Other accumulated capitalized rate of
Beginning Ending Job amount of Capital
Item Budget Increase in fixed decreased investment in interests interests for
balance balance schedule interest resources
assets amount constructions for the the Reporting
capitalization
to budget Reporting Period
Period
Latex phase II
matching raw
20,000,000.00 17,621,170.82 648,887.55 18,270,058.37 91.35% 95% Other
material tank
farm project
Treatment
system for
6,020,000.00 3,723,869.66 1,022,867.28 4,746,736.94 100.00% 100% Other
industrial
waste gas
Advanced
waste-water
treatment and 8,990,000.00 2,477,929.63 2,477,929.63 13.77% 15% Other
water reuse
project
Capping and
deodorization
6,305,000.00 5,007,341.94 5,007,341.94 100.00% 100% Other
project for
sewage pool
179
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
Heidelberg
six-color 11,504,424.78 11,000,178.59 11,000,178.59 100.00% 100% Other
offset press
Protection and
treatment
4,619,469.03 2,830,000.00 2,830,000.00 100.00% 100% Other
equipment for
waste gas
Equipment
renovation of
BM3 bag 3,000,000.00 51,397.44 2,623,715.30 2,675,112.74 100.00% 100% Other
ventilation
system
BM3 core
dilution water
upgrading and 2,000,000.00 1,592,920.35 1,592,920.35 80.00% 85% Other
renovation
project
BM3 Vacuum
pump to
turbine fan 4,500,000.00 3,774,532.70 3,774,532.70 85.00% 90% Other
energy-saving
renovation
Boiler
denitration
upgrading and 13,616,000.00 2,267,889.90 2,267,889.90 20.00% 25% Other
renovation
project
50,000 tons 15,000,000.00 107,766.99 2,721,453.13 2,829,220.12 20.00% 25% Other
180
Foshan Huaxin Packaging Co., Ltd. Annual Report 2020
latex
expansion
project
Other 9,339,562.51 17,480,392.76 14,584,945.36 3,310,214.84 8,924,795.07 Other
Total 95,554,893.81 33,321,697.05 50,970,179.50 40,844,315.57 5,788,144.47 37,659,416.51 -- -- --
181
(3) List of the Withdrawal of the Depreciation Reserves for Construction in Progress
Unit: RMB
Item Amount withdrawn Reason for withdrawal
Other notes
(4) Engineering Materials
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserve value amount reserve value
Other notes:
23. Productive Living Assets
(1) Productive Living Assets Adopting Cost Measurement Mode
□ Applicable √ Not applicable
(2) Productive Living Assets Adopting Fair Value Measurement Mode
□ Applicable √ Not applicable
24. Oil and Gas Assets
□ Applicable √ Not applicable
25. Right-of-use Assets
Unit: RMB
Item Houses and buildings Total
I. Original carrying value
1. Beginning balance
2. Increased amount of the period
3. Decreased amount of the period
4. Ending balance
II. Accumulative depreciation
1. Beginning balance
182
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
4. Ending balance
III. Depreciation reserves
1. Beginning balance
2. Increased amount of the period
(1) Withdrawal
3. Decreased amount of the period
(1) Disposal
4. Ending balance
IV. Carrying value
1. Ending carrying value
2. Beginning carrying value
Other notes:
26. Intangible Assets
(1) List of Intangible Assets
Unit: RMB
Non-patent Software and
Item Land use right Patent right Total
technology other
I. Original
carrying value
1. Beginning
132,437,333.89 70,829,002.85 15,323,772.53 218,590,109.27
balance
2. Increased
amount of the 3,446,208.90 545,644.18 3,991,853.08
period
(1)
545,644.18 545,644.18
Purchase
(2) Internal
3,446,208.90 3,446,208.90
R&D
(3)
Enterprise
combination
183
increase
3. Decreased
amount of the
period
(1)
Disposal
4. Ending
132,437,333.89 74,275,211.75 15,869,416.71 222,581,962.35
balance
II. Accumulated
amortization
1. Beginning
54,371,141.70 30,065,283.17 6,985,659.98 91,422,084.85
balance
2. Increased
amount of the 2,677,593.09 5,728,220.77 2,238,031.95 10,643,845.81
period
(1)
2,677,593.09 5,728,220.77 2,238,031.95 10,643,845.81
Withdrawal
3. Decreased
amount of the
period
(1)
Disposal
4. Ending
57,048,734.79 35,793,503.94 9,223,691.93 102,065,930.66
balance
III. Depreciation
reserves
1. Beginning
balance
2. Increased
amount of the
period
(1)
Withdrawal
184
3. Decreased
amount of the
period
(1) Disposal
4. Ending
balance
IV. Carrying
value
1. Ending
75,388,599.10 38,481,707.81 6,645,724.78 120,516,031.69
carrying value
2. Beginning
78,066,192.19 40,763,719.68 8,338,112.55 127,168,024.42
carrying value
The proportion of intangible assets formed from the internal R&D of the Company at the Period-end to the ending
balance of intangible assets was 33.36%.
(2) Land Use Right Failed to Accomplish Certification of Property
Unit: RMB
Item Carrying value Reason
Other notes:
27. Development Costs
Unit: RMB
Increase Decrease
Transfer to
Beginning Recognized Ending
Item Internal current
balance Other as intangible balance
development gains and
assets
losses
R&D of
tobacco stem 2,799,715.49 668,045.13 3,446,208.90 21,551.72
board
Renovation
and R&D of
503,329.83 144,740.60 648,070.43
BM1 product
line
Microporous
patterns test 247,787.60 247,787.60
roll
185
Total 3,550,832.92 144,740.60 668,045.13 3,446,208.90 917,409.75
Other notes
28. Goodwill
(1) Original Carrying Value of Goodwill
Unit: RMB
Name of the Increase Decrease
invested units
Beginning Formed by
or events Ending balance
balance business Disposal
generating
combination
goodwill
Zhuhai Hongta
Renheng
9,129,025.01 9,129,025.01
Packaging Co.,
Ltd.
Zhuhai Golden
Pheasant
2,418,280.28 2,418,280.28
Chemical Co.,
Ltd.
Total 11,547,305.29 11,547,305.29
(2) Depreciation Reserves of Goodwill
Unit: RMB
Name of the Increase Decrease
invested units
Beginning
or events Ending balance
balance Withdrawn Disposal
generating
goodwill
Total
Information on the assets group or combination of assets groups which goodwill belongs to
Notes of the testing process of goodwill impairment, parameters (such as growth rate of the forecast period,
growth rate of stable period, rate of profit, discount rate, forecast period and so on for prediction of future present
value of cash flows) and the recognition method of goodwill impairment losses:
The testing process, methods and conclusion of goodwill impairment:
The measurement of recoverable amount of goodwill shall be in line with the prediction of future present value of
cash flows. It was based on the cash-flow prospect of 5 years approved by the Company, utilized the discount rate
which reflects the time value of money in the present market and the specific risks of the asset at the same time,
186
and figure out the future present value of cash flows of investee units so as to determine the recoverable amount.
The other key data adopted in the test of goodwill include the expected selling price of products, sales volume,
production cost and other relevant expenses. The above critical data shall be determined according to the
historical experience and the forecast of market development by the Company.
The aforesaid prediction of recoverable amount indicates that there was no impairment loss of goodwill.
Influence of goodwill impairment testing
Other notes
29. Long-term Prepaid Expense
Unit: RMB
Amortization
Beginning Other decreased
Item Increase amount of the Ending balance
balance amount
period
Decoration
expense for 123,501.67 44,909.72 78,591.95
rent-in plant
Fee for technical
58,201.56 58,201.56
service
Decoration and
renovation project 3,297,033.10 1,531,133.98 1,332,733.86 3,495,433.22
of workshops
Workshop
NipcoFlex 800,000.00 106,666.64 693,333.36
overhaul
Total 3,478,736.33 2,331,133.98 1,542,511.78 4,267,358.53
Other notes
30. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets that Had not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Depreciation reserves
153,845,189.33 23,076,778.40 155,967,724.07 23,395,158.61
of assets
Unrealized profit of
1,809,882.80 271,482.42 2,681,803.60 402,270.54
internal transactions
187
Accrued expenses 34,230,021.80 5,134,503.27 49,685,130.33 7,452,769.55
Total 189,885,093.93 28,482,764.09 208,334,658.00 31,250,198.70
(2) Deferred Income Tax Liabilities Had not Been Off-set
Unit: RMB
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Assets evaluation
appreciation in the
business combination 13,864,546.87 2,079,682.03 14,538,840.13 2,180,826.02
not under the same
control
Total 13,864,546.87 2,079,682.03 14,538,840.13 2,180,826.02
(3) Deferred Income Tax Assets or Liabilities Listed by Net Amount after Off-set
Unit: RMB
Mutual set-off Mutual set-off
Ending balance of Beginning balance of
amount of deferred amount of deferred
deferred income tax deferred income tax
Item income tax assets and income tax assets and
assets or liabilities assets or liabilities
liabilities at the liabilities at the
after off-set after off-set
period-end period-begin
Deferred income tax
28,482,764.09 31,250,198.70
assets
Deferred income tax
2,079,682.03 2,180,826.02
liabilities
(4) List of Unrecognized Deferred Income Tax Assets
Unit: RMB
Item Ending balance Beginning balance
Deductible losses 134,245,446.56 260,851,721.46
Depreciation reserves of assets 203,833.37 203,714.86
Total 134,449,279.93 261,055,436.32
(5) Deductible Losses of Unrecognized Deferred Income Tax Assets will Due in the Following Years
Unit: RMB
188
Years Ending amount Beginning amount Notes
Y2020 72,934,938.44
Y2021 1,734,170.90 1,734,170.90
Y2022 9,996,774.57 9,996,774.57
Y2023 50,305,926.03 114,385,480.74
Y2024 65,167,394.75 61,800,356.81
Y2025 7,041,180.31
Total 134,245,446.56 260,851,721.46 --
Other notes:
31. Other Non-current Assets
Unit: RMB
Ending balance Beginning balance
Item Carrying Depreciation Carrying Carrying Depreciation Carrying
amount reserve value amount reserve value
Prepayment of equipment 4,772,941.07 4,772,941.07 8,420,488.55 8,420,488.55
Total 4,772,941.07 4,772,941.07 8,420,488.55 8,420,488.55
Other notes:
32. Short-term Borrowings
(1) Category of Short-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Pledged borrowings 20,876,364.11
Guaranteed borrowings 448,688,367.58 933,181,293.29
Credit borrowings 100,160,000.00 230,306,166.66
Total 569,724,731.69 1,163,487,459.95
Notes of short-term borrowings category:
(2) List of the Short-term Borrowings Overdue but not Returned
The amount of the overdue unpaid short-term borrowings at the period-end was of RMB0.00, of which the
significant overdue unpaid short-term borrowings are as follows:
Unit: RMB
Entity Ending balance Interest rate Overdue time Overdue charge rate
189
Other notes:
33. Trading Financial Liabilities
Unit: RMB
Item Ending balance Beginning balance
Of which:
Of which:
Total 0.00
Other notes:
34. Derivative Financial Liabilities
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
Other notes:
35. Notes Payable
Unit: RMB
Item Ending balance Beginning balance
Commercial acceptance bill 51,000,000.00
Bank acceptance bill 320,510,664.49 312,234,422.87
Domestic L/C 270,000,000.00
Total 641,510,664.49 312,234,422.87
The total amount of the due but not paid notes payable at the end of the period was of RMB0.00.
36. Accounts Payable
(1) List of Accounts Payable
Unit: RMB
Item Ending balance Beginning balance
Payment of materials 277,339,350.36 272,330,279.37
Payment of equipment 1,218,082.03 4,126,064.70
Payment of freight 38,125,016.93 44,252,556.51
Other 4,866,028.33 1,246,610.06
Total 321,548,477.65 321,955,510.64
190
(2) Significant Accounts Payable Aged over 1 Year
Unit: RMB
Item Ending balance Unpaid/ Un-carry-over reason
Other notes:
37. Advances from Customers
(1) List of Advances from Customers
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
(2) Significant Advances from Customers Aged over 1 Year
Unit: RMB
Item Ending balance Unpaid/ Un-carry-over reason
38. Contract Liabilities
Unit: RMB
Item Ending balance Beginning balance
Advances on sales 56,287,168.45 20,622,612.48
Total 56,287,168.45 20,622,612.48
Significant changes in amount of carrying value and the reason in the Reporting Period
Unit: RMB
Item Amount changed Reason
39. Payroll Payable
(1) List of Payroll Payable
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
I. Short-term salary 42,209,286.31 239,033,169.71 218,351,119.22 62,891,336.80
II. Post-employment
benefit-defined 133,097.88 2,436,773.56 2,433,212.04 136,659.40
contribution plans
III. Termination 13,412,085.88 13,412,085.88
191
benefits
Total 42,342,384.19 254,882,029.15 234,196,417.14 63,027,996.20
(2) List of Short-term Salary
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Salary, bonus,
31,673,430.59 217,659,773.73 197,901,434.50 51,431,769.82
allowance, subsidy
2. Employee welfare 8,002,226.88 8,002,226.88
3. Social insurance 4,890,000.31 4,890,000.31
Of which: Medical
4,221,012.67 4,221,012.67
insurance premiums
Work-related injury
32,625.63 32,625.63
insurance
Maternity insurance 636,362.01 636,362.01
4. Housing fund 5,251,013.28 5,251,013.28
5. Labor union
budget and employee 10,535,855.72 3,230,155.51 2,306,444.25 11,459,566.98
education budget
Total 42,209,286.31 239,033,169.71 218,351,119.22 62,891,336.80
(3) List of Defined Contribution Plans
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
1. Basic pension
1,093,271.08 1,093,271.08
benefits
2. Unemployment
31,613.72 31,613.72
insurance
3. Annuity 133,097.88 1,311,888.76 1,308,327.24 136,659.40
Total 133,097.88 2,436,773.56 2,433,212.04 136,659.40
Other notes:
40. Taxes Payable
Unit: RMB
Item Ending balance Beginning balance
192
VAT 5,274,107.80 7,708,757.58
Corporate income tax 2,738,240.16 3,974,465.87
Personal income tax 1,080,529.77 263,130.54
Urban maintenance and construction
457,243.44 641,488.51
tax
Property tax 21,252.43 55,672.21
Education surcharge 193,835.62 274,923.65
Local education surcharge 129,223.75 183,282.43
Stamp tax 279,610.00 325,271.46
Other 156,482.35 40,924.81
Total 10,330,525.32 13,467,917.06
Other notes:
41. Other Payables
Unit: RMB
Item Ending balance Beginning balance
Interest payable 0.00
Dividends payable 238,138.78 229,593.13
Other Payables 151,105,526.05 48,993,061.88
Total 151,343,664.83 49,222,655.01
(1) Interest payable
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
List of the significant overdue unpaid interest:
Unit: RMB
Entity Overdue amount Overdue reason
Other notes:
(2) Dividends payable
Unit: RMB
Item Ending balance Beginning balance
Ordinary share dividends 238,138.78 229,593.13
193
Total 238,138.78 229,593.13
Other notes, including significant dividends payable unpaid for over 1 year, the unpaid reason shall be disclosed:
(3) Other Payables
1) Other Payables Listed by Nature
Unit: RMB
Item Ending balance Beginning balance
Pledged and margin 22,739,265.17 16,008,042.64
Accrued expenses 15,609,162.91 12,283,948.35
Intercourse funds of units 107,496,032.20 15,266,830.85
Final payment of engineering 623,030.46 442,889.51
Other 4,638,035.31 4,991,350.53
Total 151,105,526.05 48,993,061.88
2) Significant Other Payables Aged over 1 Year
Unit: RMB
Item Ending balance Unpaid/ Un-carry-over reason
Other notes
42. Held-for-sale Liabilities
Unit: RMB
Item Ending balance Beginning balance
Other notes:
43. Current Portion of Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Current portion of long-term
100,229,305.56
borrowings
Current portion of lease liabilities
Total 100,229,305.56
Other notes:
194
44. Other Current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Pending output VAT 7,315,245.65 2,680,939.62
Total 7,315,245.65 2,680,939.62
Increase/decrease of the short-term bonds payable:
Unit: RMB
Amortization Repayment
The Withdrawal
Bonds Par Issuing Issuing Beginning of premium in the Ending
Duration current of interest by
name value date amount balance and Reporting balance
issue par value
depreciation Period
Other notes:
45. Long-term Borrowings
(1) Category of Long-term Borrowings
Unit: RMB
Item Ending balance Beginning balance
Notes to the category of long-term borrowings:
Other notes, including the interval of interest rate:
46. Bonds Payable
(1) Bonds Payable
Unit: RMB
Item Ending balance Beginning balance
(2) Increase/Decrease of Bonds Payable (Excluding Other Financial Instrument Classified as Financial
Liabilities such as Preferred Shares and Perpetual Bonds)
Unit: RMB
Amortization Repayment
The Withdrawal
Bonds Par Issuing Issuing Beginning of premium in the Ending
Duration current of interest by
name value date amount balance and Reporting balance
issue par value
depreciation Period
Total -- -- --
195
(3) Notes to the Conditions and Time of the Shares Transfer of the Convertible Corporate Bonds
(4) Notes to Other Financial Instruments Classified as Financial Liabilities
Basic situation of other financial instruments such as preferred shares and perpetual bonds outstanding at the
period-end
Changes in financial instruments such as preferred shares and perpetual bonds outstanding at the period-end
Unit: RMB
Outstanding Period-beginning Increase Decrease Period-end
financial Carrying Carrying Carrying Carrying
Amount Amount Amount Amount
instruments value value value value
Notes to basis for the classification of other financial instruments as financial liabilities
Other notes
47. Lease Liabilities
Unit: RMB
Item Ending balance Beginning balance
Unpaid lease payment amount
Unrecognized financing charges
Total
Other notes
48. Long-term Payables
Unit: RMB
Item Ending balance Beginning balance
(1) Long-term Payables Listed by Nature
Unit: RMB
Item Ending balance Beginning balance
Other notes:
(2) Specific Payables
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Other notes:
196
49. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Unit: RMB
Item Ending balance Beginning balance
(2) Changes in Defined Benefit Plans
Obligation present value of defined benefit plans:
Unit: RMB
Item Reporting period Same period of last year
Plan assets:
Unit: RMB
Item Reporting period Same period of last year
Net liabilities (net assets) of defined benefit plans
Unit: RMB
Item Reporting period Same period of last year
Notes of influence of content of defined benefit plans and its relevant risks to the future cash flow, time and
uncertainty of the Company:
Notes to the results of significant actuarial assumptions and sensitivity analysis of defined benefit plans:
Other notes:
50. Provision
Unit: RMB
Item Ending balance Beginning balance Reason for formation
Predicted losses resulting
Product quality guarantee 2,739,970.26 1,696,811.00 from any product quality
problem
Total 2,739,970.26 1,696,811.00 --
Other notes, including notes to related significant assumptions and evaluation of significant provisions:
51. Deferred Income
Unit: RMB
Beginning Reason for
Item Increase Decrease Ending balance
balance formation
Government Capital
26,604,363.11 2,478,210.00 3,790,585.23 25,291,987.88
subsidies compensating
197
related funds for
construction
Total 26,604,363.11 2,478,210.00 3,790,585.23 25,291,987.88 --
Item involving government subsidies:
Unit: RMB
Amount
Amount
recorded Amount
recorded into
Amount into other offset cost Related to
Beginning non-operating Other Ending
Item of newly income in in the assets/related
balance income in the changes balance
subsidy the Reporting to income
Reporting
Reporting Period
Period
Period
Renovation
project of the
information
system of
Related to
paper-making 656,000.00 32,000.00 624,000.00
assets
enterprise
energy
management
center
No. 1 paper
machine update Related to
204,800.00 9,600.00 195,200.00
& renovation assets
project
Liquid paper
Related to
renovation 163,333.12 35,000.04 128,333.08
assets
project
Renovation
project of the
information
Related to
system of 536,666.79 279,999.96 256,666.83
assets
energy
management
center
Steam
condensation
Related to
water recycling 768,000.00 384,000.00 384,000.00
assets
and energy
saving projects
BM1 ink-jet 9,136,612.5 447,507.56 8,689,105.03 Related to
198
printer system 9 assets
and drive
system upgrade
synthesis
technique
transformation
project
Zhuhai Gaolan
Port national
treasury
equipment Related to
877,066.36 41,599.89 835,466.47
renewal (Robot assets
Application)
special fund
subsidies
Energy
management
center
Related to
energy-saving 436,386.79 227,679.96 208,706.83
assets
technological
innovation
support fund
Post-awarded
subsidies of
Automatic 3,910,150.0 Related to
179,005.68 3,731,144.36
packaging line 4 assets
technical
innovation
Post-awarded
subsidies of
HCB-Turn
Nozzle
1,608,435.8 Related to
optimization 72,834.84 1,535,601.05
9 assets
and
technological
transformation
project
Post-awarded
subsidies of TP
liquid food 4,921,289.5 Related to
197,509.92 4,723,779.58
packing board 0 assets
synthesis
technique
199
transformation
project
Post-awarded
subsidies of
MES technical
renovation Related to
594,970.91 594,970.91
project of assets
Zhuhai
Huafeng Paper
Co., Ltd.
Subsidy for
migration of 2,224,599.7 Related to
94,330.80 2,130,268.99
high voltage 9 assets
cable
Specific project
subsidy for a
new round of
technical Related to
295,151.33 147,575.67 147,575.66
renovation in assets
Finance Bureau
of Chancheng
District
2017 provincial
industrial and
information
specific funds Related to
270,900.00 270,900.00
of Foshan assets
Finance Bureau
(technical
renovation)
Renovation
subsidy for
volatile organic 925,410.0 Related to
308,470.00 616,940.00
compounds 0 assets
head space
(VOCS project)
Yunshang
150,000.0 Related to
Cloud platform 150,000.00
0 assets
system
Anti-epidemic
1,377,900. Related to
special national 459,300.00 918,600.00
00 assets
debt funds
200
(technical
renovation)
subsidies
Industrial
enterprises'
technological
renovation Related to
24,900.00 8,300.00 16,600.00
fixed assets assets
investment
awards and
subsidies
26,604,363. 2,478,210. 3,790,585.2 25,291,987.8
Total
11 00 3 8
Other notes:
52. Other Non-current Liabilities
Unit: RMB
Item Ending balance Beginning balance
Total 0.00
Other notes:
53. Share Capital
Unit: RMB
Increase/decrease (+/-)
Beginning Ending
New shares Bonus issue
balance Bonus shares Other Subtotal balance
issued from profit
The sum of
505,425,000.00 505,425,000.00
shares
Other notes:
54. Other Equity Instruments
(1) Basic situation of other financial instruments such as preferred shares and perpetual bonds
outstanding at the period-end
(2) Changes in financial instruments such as preferred shares and perpetual bonds outstanding at the
period-end
Unit: RMB
201
Outstanding Period-beginning Increase Decrease Period-end
financial Carrying Carrying Carrying Carrying
Amount Amount Amount Amount
instruments value value value value
The current changes in other equity instruments and the corresponding reasons and the basis of the relevant
accounting treatment:
Other notes:
55. Capital Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Capital premium
256,362,525.38 256,362,525.38
(premium on stock)
Other capital reserves 459,848.04 459,848.04
Total 256,822,373.42 256,822,373.42
Other notes, including changes and reason of change:
56. Treasury Shares
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Other notes, including changes and reason of change:
57. Other Comprehensive Income
Unit: RMB
Reporting period
Less: Recorded
Less: Recorded
in other
in other
Income comprehensive
comprehensive Attributable
before income in prior Less: Attributable to
Beginning income in prior to owners of Ending
Item taxation in period and Income non-controlling
balance period and the Company balance
the transferred to tax interests after
transferred in as the parent
Reporting retained expense tax
profit or loss in after tax
Period earnings in the
the Reporting
Reporting
Period
Period
II. Other
comprehensive 169,714.
169,714.39
income that may 39
subsequently be
202
reclassified to
profit or loss
Of which: Share
of other
comprehensive
income of
investees that 169,714.
169,714.39
will be 39
reclassified to
profit or loss
under equity
method
Total of other
169,714.
comprehensive 169,714.39
39
income
Other notes, including the adjustment of the effective gain/loss on cash flow hedges to the initial recognized
amount:
58. Specific Reserve
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Other notes, including changes and reason of change:
59. Surplus Reserves
Unit: RMB
Item Beginning balance Increase Decrease Ending balance
Statutory surplus
199,022,513.20 2,628,935.75 201,651,448.95
reserves
Total 199,022,513.20 2,628,935.75 201,651,448.95
Notes, including changes and reason of change:
The change of surplus reserve was generated from the withdrawal of statutory surplus reserve in accordance with
10% of net interest of the Company.
60. Retained Earnings
Unit: RMB
Item Reporting Period Same period of last year
Beginning balance of retained earnings 1,045,211,890.50 1,012,130,481.68
203
before adjustments
Beginning balance of retained earnings
1,045,211,890.50 1,012,130,481.68
after adjustments
Add: Net profit attributable to owners of
139,427,823.70 35,704,671.22
the Company as the parent
Less: Withdrawal of statutory surplus
2,628,935.75 2,623,262.40
reserve
Dividend of ordinary shares payable 7,581,375.00
Ending retained earnings 1,174,429,403.45 1,045,211,890.50
List of adjustment of beginning retained earnings:
(1) RMB0.00 beginning retained earnings was affected by retrospective adjustment conducted according to the
Accounting Standards for Business Enterprises and relevant new regulations.
(2) RMB0.00 beginning retained earnings was affected by changes in accounting policies.
(3) RMB0.00 beginning retained earnings was affected by correction of significant accounting errors.
(4) RMB0.00 beginning retained earnings was affected by changes in combination scope arising from same
control.
(5) RMB0.00 beginning retained earnings was affected totally by other adjustments.
61. Operating Revenue and Cost of Sales
Unit: RMB
Reporting period Same period of last year
Item
Operating revenue Cost Operating revenue Cost
Main operations 4,025,002,709.90 3,345,900,852.96 3,884,748,646.12 3,499,755,144.95
Other operations 39,068,913.82 22,474,586.08 45,881,339.69 32,039,756.91
Total 4,064,071,623.72 3,368,375,439.04 3,930,629,985.81 3,531,794,901.86
Audited net profit before and after deducting non-recurring gains and losses (whichever is lower, negative value
or not)
□Yes √ No
Relevant information of revenue:
Unit: RMB
Category of contracts Segment 1 Segment 2 Total
Type of goods
Of which:
Ivory board 3,366,480,872.98 3,366,480,872.98
Presswork 309,495,589.03 309,495,589.03
Latex 321,808,839.14 321,808,839.14
Other 27,217,408.75 27,217,408.75
204
Subtotal 4,025,002,709.90 4,025,002,709.90
Classified by the time
of goods transfer
Of which:
Goods (transferred at
4,025,002,709.90 4,025,002,709.90
a certain time point)
Subtotal 4,025,002,709.90 4,025,002,709.90
Total 4,025,002,709.90 4,025,002,709.90
Information related to performance obligations:
The Company's product sales business fulfills its performance obligations upon delivery, and payment for goods is
made within the contracted credit period after the customer receives the goods.
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or not
fully performed yet was RMB0.00 at the period-end, among which RMB0.00 was expected to be recognized in
the year, RMB0.00 in the year and RMB0.00 in the year.
Other notes
The income recognized in the reporting period included in the initial book value of contract liabilities is RMB
19,821,948.60.
62. Taxes and Surtaxes
Unit: RMB
Item Reporting period Same period of last year
Consumption tax
Urban maintenance and construction
8,181,569.59 5,095,625.12
tax
Education surcharge 5,843,978.28 3,639,664.32
Resources tax
Property tax 6,586,204.46 6,471,466.16
Land use tax 2,050,705.53 2,058,608.44
Vehicle and vessel use tax 19,972.28 18,850.48
Stamp tax 2,712,152.04 2,613,490.58
Other 331,783.19 215,116.41
Total 25,726,365.37 20,112,821.51
Other notes:
63. Selling Expense
Unit: RMB
Item Reporting Period Same period of last year
205
Salary and benefits 24,379,649.43 16,389,050.28
Business entertainment fees 6,610,622.40 4,424,627.54
Packing charge 13,239,842.94 10,310,293.67
Warehousing fees 3,116,310.70 7,486,368.05
Freight charges 140,235,304.35 130,094,199.22
Office expenses 519,980.94 298,933.41
Other 18,001,237.81 14,186,614.00
Total 206,102,948.57 183,190,086.17
Other notes:
64. Administrative Expense
Unit: RMB
Item Reporting Period Same period of last year
Salary and benefits 51,980,999.28 45,640,999.55
Depreciation and amortization 18,593,291.15 19,335,401.28
Office expenses 2,480,189.43 2,913,453.41
Charge for the agency 6,110,229.88 3,928,189.50
Water & electricity fees 3,218,417.21 3,041,045.40
Rental fees 3,527,915.25 3,342,067.14
Business travel charges 1,280,229.66 3,038,209.75
Business entertainment fees 2,309,600.22 2,678,205.42
Material consumption 1,184,369.83 994,762.81
Other 12,472,239.02 15,193,104.41
Total 103,157,480.93 100,105,438.67
Other notes:
65. R&D Expense
Unit: RMB
Item Reporting Period Same period of last year
Salary and benefits 18,870,247.30 9,603,375.75
Material requisitioned 65,400,920.34 43,669,973.24
Experiment and inspection 322,338.51 26,425.90
Depreciation and amortization 4,028,473.24 3,363,036.03
Technical service fee 398.00
Entertainment expenses 35,156.00
Business travel charges 72,987.95 114,695.30
Office expenses 38,811.68 11,407.96
Other 1,165,294.32 777,001.91
Total 89,899,073.34 57,601,470.09
Other notes:
66. Finance Costs
Unit: RMB
Item Reporting Period Same period of last year
Interest expense 73,042,690.41 78,599,801.94
Less: Interest income 23,384,117.39 15,006,123.48
206
Foreign exchange gains or losses -6,558,828.15 7,001,273.23
Other 5,958,976.95 4,784,299.21
Total 49,058,721.82 75,379,250.90
Other notes:
67. Other Income
Unit: RMB
Sources Reporting Period Same period of last year
Government subsidy related to assets 3,790,585.23 3,700,950.19
Government subsidy related to income 23,452,111.91 11,174,123.90
Total 27,242,697.14 14,875,074.09
68. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
28,843,042.44 30,722,209.55
accounted by equity method
Income from investment over the holding
period of a financial instrument-other 4,927.95
non-current financial assets
Total 28,847,970.39 30,722,209.55
Other notes:
69. Net Gains on Exposure Hedges
Unit: RMB
Item Reporting Period Same period of last year
Other notes:
70. Gain on Changes in Fair Value
Unit: RMB
Sources Reporting Period Same period of last year
Other notes:
71. Credit Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
Bad debt loss of other receivables -4,154,373.96 -943,457.85
Accounts receivable bad debt loss 4,551,884.94 1,463,831.19
Total 397,510.98 520,373.34
Other notes:
72. Assets Impairment Loss
Unit: RMB
Item Reporting Period Same period of last year
II. Loss of inventory falling price and loss
of impairment of contract performance 1,389,714.51 19,687,758.40
cost
Total 1,389,714.51 19,687,758.40
Other notes:
207
73. Asset Disposal Income
Unit: RMB
Sources Reporting Period Same period of last year
Gains of disposal of fixed assets 180,100.16 -25,775.66
Total 180,100.16 -25,775.66
74. Non-operating Income
Unit: RMB
Amount recorded in the current
Item Reporting Period Same period of last year
non-recurring profit or loss
Compensation for typhoon
18,100.00 1,302,262.63 18,100.00
damage
Scrap and waste income 10,738,066.39 1,899,839.13 10,738,066.39
Amount payable that cannot be
3,130,790.16 3,130,790.16
paid
Other 662,788.92 2,054,160.99 662,788.92
Total 14,549,745.47 5,256,262.75 14,549,745.47
Government subsidies recorded into current profit or loss:
Unit: RMB
Whether
influence the Special Related to
Distribution Distribution Reporting Same period
Item Nature profits or subsidy or assets/related
entity reason Period of last year
losses of the not to income
year or not
Other notes:
75. Non-operating Expense
Unit: RMB
Amount recorded in the current
Item Reporting Period Same period of last year
non-recurring profit or loss
Donation 258,146.70 258,146.70
Losses of damage and scrap of
1,812,361.63 62,951.81 1,812,361.63
non-current assets
Penalty, indemnity and overdue
826,400.84
fine
Other 918,812.31 440,794.19 918,812.31
Total 2,989,320.64 1,330,146.84 2,989,320.64
Other notes:
76. Income Tax Expense
(1) List of Income Tax Expense
Unit: RMB
Item Reporting Period Same period of last year
Current income tax expense 8,647,468.31 7,619,169.52
Deferred income tax expense 2,666,290.62 348,037.77
Total 11,313,758.93 7,967,207.29
208
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Unit: RMB
Item Reporting Period
Profit before taxation 291,370,012.66
Current income tax expense accounted at statutory/applicable tax
72,842,503.17
rate
Influence of applying different tax rates by subsidiaries -26,508,065.52
Influence of adjusting prior income tax -2,471,688.31
Influence of non-taxable income -7,665,412.96
Influence of non-deductible cost, expenses and losses 591,503.21
The effect of using deductible losses of deferred income tax
-17,121,726.38
assets that have not been recognized in the previous period
Influence of deductible temporary difference or deductible losses
1,760,324.71
of unrecognized deferred income tax in the Reporting Period
Influence of additional deduction of R&D expense -10,113,678.99
Income tax expense 11,313,758.93
Other notes
77. Other Comprehensive Income
Refer to Note 57 for details.
78. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Intercourse funds 1,168,762.64 4,081,204.65
Government subsidies 25,930,321.91 11,247,189.50
Value-added tax refund 11,650,016.68
Margin received 13,751,678.00 15,017,608.18
Interest income 1,283,552.11 790,864.48
Other 3,204,021.86 3,206,618.41
Total 56,988,353.20 34,343,485.22
Notes:
(2) Cash Used in Other Operating Activities
Unit: RMB
Item Reporting Period Same period of last year
Intercourse funds 595,970.15 511,828.55
Expenses 135,924,638.17 172,123,072.84
Petty cash for employees 1,555,132.26 1,966,981.81
Margin expenditure 33,758,808.40 24,403,735.36
Other 166,787.14 860,442.26
Total 172,001,336.12 199,866,060.82
Notes:
(3) Cash Generated from Other Investing Activities
Unit: RMB
209
Item Reporting Period Same period of last year
Principal and interest of structural deposits 371,848,528.68 437,925,984.07
Total 371,848,528.68 437,925,984.07
Notes:
(4) Cash Used in Other Investing Activities
Unit: RMB
Item Reporting Period Same period of last year
Principals such as time deposits and
594,700,000.00 417,500,000.00
structured deposits
Total 594,700,000.00 417,500,000.00
Notes:
(5) Cash Generated from Other Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Restricted monetary capital recovered as
3,251,123.52 5,971,869.63
margin or pledge
Borrowings of non-financial institutions 100,000,000.00 200,000,000.00
Note financing 418,000,000.00 300,000,000.00
Domestic letter of credit financing 280,000,000.00
Total 801,251,123.52 505,971,869.63
Notes:
(6) Cash Used in Other Financing Activities
Unit: RMB
Item Reporting Period Same period of last year
Restricted monetary assets as margin or
21,724,245.85 1,683,864.16
pledge
Repayment for borrowings from external
14,955,054.71 299,948,811.85
parties
Note financing and commission 397,270,247.19 309,424,175.61
Other 90,000.00
Total 433,949,547.75 611,146,851.62
Notes:
79. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Unit: RMB
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash
-- --
flows generated from operating activities
Net profit 280,056,253.73 24,184,564.95
Add: Provision for impairment of assets -1,787,225.49 -20,208,131.74
Depreciation of fixed assets, oil-gas assets,
156,138,511.48 154,479,187.41
and productive living assets
Depreciation of right-of-use assets
210
Amortization of intangible assets 10,643,845.81 10,309,293.20
Amortization of long-term prepaid expenses 1,542,511.78 1,633,957.79
Losses from disposal of fixed assets,
intangible assets and other long-lived assets -180,100.16 25,775.66
(gains: negative)
Losses from scrap of fixed assets (gains:
1,812,361.63 62,951.81
negative)
Losses from changes in fair value (gains:
negative)
Finance costs (gains: negative) 25,820,996.89 58,319,000.75
Investment loss (gains: negative) -28,847,970.39 -30,722,209.55
Deferred income tax assets decrease
2,767,434.61 299,146.78
(increase: negative)
Deferred income tax liabilities increase
-101,143.99 48,890.99
(decrease: negative)
Decrease in inventories (increase: negative) 90,765,888.75 379,661,749.14
Decrease in accounts receivable generated
105,910,902.06 -291,439,579.41
from operating activities (gains: negative)
Increase in accounts payable used in
69,382,070.02 -195,310,346.04
operating activities (decrease: negative)
Others
Net cash generated from/used in operating
713,924,336.73 91,344,251.74
activities
2. Significant investing and financing
activities without involvement of cash -- --
receipts and payments
Debt into capital
Convertible corporate bonds due within
one year
Fixed assets under financing lease
3. Net increase/decrease of cash and cash
-- --
equivalent:
Ending balance of cash 206,907,086.12 112,059,146.65
Less: Beginning balance of cash 112,059,146.65 128,012,685.23
Add: Ending balance of cash
equivalents
Less: Beginning balance of cash
equivalents
Net increase in cash and cash
94,847,939.47 -15,953,538.58
equivalents
(2) Net Cash Paid for Acquisition of Subsidiaries
Unit: RMB
Amount
211
Of which: --
Of which: --
Of which: --
Other notes:
(3) Net Cash Received from Disposal of the Subsidiaries
Unit: RMB
Amount
Of which: --
Of which: --
Of which: --
Other notes:
(4) Cash and Cash Equivalents
Unit: RMB
Item Ending balance Beginning balance
I. Cash 206,907,086.12 112,059,146.65
Including: Cash on hand 119,257.53 215,289.12
Bank deposit on demand 206,787,828.59 111,843,857.53
III. Ending balance of cash and cash
206,907,086.12 112,059,146.65
equivalents
Other notes:
80. Notes to Items of the Statements of Changes in Owners’ Equity
Notes to the name of “Other” of ending balance of the same period of last year adjusted and the amount adjusted:
81. Assets with Restricted Ownership or Right to Use
Unit: RMB
Item Ending carrying value Reason for restriction
Monetary assets 588,931,538.58 Bills margin and time deposit pledge
Accounts receivable financing 64,250,401.33 Asset pool pledged
Total 653,181,939.91 --
Other notes:
82. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Unit: RMB
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary assets -- -- 34,346,377.32
Of which: USD 5,257,930.74 6.5249 34,307,472.29
EUR 10.00 8.0250 80.25
HKD 46,052.14 0.8416 38,757.48
GBP 7.57 8.8903 67.30
Accounts receivable -- -- 20,965,866.54
Of which: USD 2,828,540.80 6.5249 18,455,945.87
EUR
HKD 2,982,178.46 0.8416 2,509,920.68
212
Long-term borrowings -- --
Of which: USD
EUR
HKD
Other receivables 12,668,129.56
Of which: HKD 15,052,435.31 0.8416 12,668,129.56
Short-term borrowings 199,392,013.63
Of which: USD 30,558,631.34 6.5249 199,392,013.63
Accounts payable 46,795,846.07
Of which: USD 7,171,887.09 6.5249 46,795,846.07
Other notes:
(2) Notes to Overseas Entities Including: for Significant Oversea Entities, Main Operating Place, Recording
Currency and Selection Basis Shall Be Disclosed; if there Are Changes in Recording Currency, Relevant
Reasons Shall Be Disclosed.
□ Applicable √ Not applicable
83. Arbitrage
Qualitative and quantitative information of relevant arbitrage instruments, hedged risk in line with the type of arbitrage to disclose:
84. Government Subsidy
(1) Basic Information on Government Subsidy
Unit: RMB
Amount recorded in the current
Category Amount Listed items
profit or loss
Government subsidy related to
3,790,585.23 Other income 3,790,585.23
assets
Government subsidy related to
23,452,111.91 Other income 23,452,111.91
income
Total 27,242,697.14 27,242,697.14
(2) Return of Government Subsidy
□ Applicable √ Not applicable
Other notes:
85. Other
VIII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control during the Reporting Period
Unit: RMB
Income of Net profits of
Time and
Cost of Recognition acquiree from acquiree from
Name of place of Proportion of Way to gain
gaining the Purchase date basis of the purchase the purchase
acquiree gaining the equity the equity
equity purchase date date to date to
equity
period-end period-end
Other notes:
(2) Combination Cost and Goodwill
Unit: RMB
213
Combination cost
Note to determination method of the fair value of the combination cost, consideration and changes:
The main formation reason for the large goodwill:
Other notes:
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Unit: RMB
Fair value on purchase date Carrying value on purchase date
The determination method of the fair value of identifiable assets and liabilities
Contingent liability of acquiree undertaken in the business combination
Other notes:
(4) Gains or losses from Re-measurement of Equity Held before the Purchase Date at Fair Value
Whether there is a transaction that through multiple transaction step by step to realize business combination and gaining the control
during the Reporting Period
□ Yes √ No
(5) Notes to Reasonable Consideration or Fair Value of Identifiable Assets and Liabilities of the Acquiree
that Cannot Be Determined on the Acquisition Date or during the Period-end of the Merger
(6) Other Notes
2. Business Combination under the Same Control
2. Business Combination under the Same Control
Unit: RMB
Income from Net profits
the from the Income of the Net profits of
Recognition
period-begin period-begin acquiree the acquiree
Combined Proportion of Combination basis of
Basis ning to the ning to the during the during the
party the equity date combination
combination combination period of period of
date
date of the date of the comparison comparison
acquiree acquiree
Other notes:
(2) Combination Cost
Unit: RMB
Combination cost
Note to contingent consideration and the changes:
Other notes:
(3) The Carrying Value of Assets and Liabilities of the Combined Party on the Combination Date
Unit: RMB
Combination date Period-end of the last period
Contingent liabilities of the combined party undertaken in the business combination
Other notes:
3. Counter Purchase
Basic information of trading, the basis of transactions constitute counter purchase, the retain assets, liabilities of the listed companies
whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights
and interests in accordance with the equity transaction process:
214
4. Disposal of Subsidiary
Whether there is a single disposal of the investment to the subsidiary and lost control?
□ Yes √ No
Whether there are several disposals of the investment to the subsidiary and lost controls?
□ Yes √ No
5. Changes in Combination Scope for Other Reasons
Note to changes in combination scope for other reasons (such as newly establishment or liquidation of subsidiaries, etc.) and relevant
information:
6. Other
IX. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Main operating Nature of Holding percentage (%)
Name Registration place Way of gaining
place business Directly Indirectly
Business
Zhuhai Hongta
Manufacturing combination not
Renheng Paper Zhuhai Zhuhai 41.9653%
industry under the same
Co., Ltd.
control
Business
Zhuhai Huafeng Manufacturing combination
Zhuhai Zhuhai 100.00%
Paper Co., Ltd. industry under the same
control
Zhuhai Golden Business
Pheasant Manufacturing combination not
Zhuhai Zhuhai 51.00%
Chemical Co., industry under the same
Ltd. control
Business
Huaxin (Foshan)
Manufacturing combination
Color Printing Foshan Foshan 100.00%
industry under the same
Co., Ltd.
control
Notes: Holding proportion in subsidiary different from voting proportion:
Basis of holding half or less voting rights but still controlling the investee and holding more than half of the voting rights but not
controlling the investee:
Significant structural entities and controlling basis in the scope of combination:
The Company holds 41.9653% shares of Hongta Renheng, and in accordance with the articles, there is seven
directors in Hongta Renheng, of which four directors are sent by the Company, two sent by Yunnan Hongta
Group Co., Ltd. (now renamed to Yunnan Hehe (Group) Co., Ltd.) and one sent by Renheng Industrial Co., Ltd.
Dragon State International Limited didn’t send any director. The Company still controls Hongta Renheng, and
will continue to include it into the consolidated financial statements of the Company during the reporting period.
Basis of determining whether the Company is the agent or the principal:
Other notes:
215
(2) Significant Non-wholly-owned Subsidiary
Unit: RMB
Shareholding proportion The profit or loss Declaring dividends Balance of
Name of non-controlling attributable to the distributed to non-controlling interests
interests non-controlling interests non-controlling interests at the period-end
Zhuhai Hongta Renheng
58.0347% 140,628,430.03 10,363,426.30 1,658,531,615.09
Packaging Co., Ltd.
Holding proportion of non-controlling interests in subsidiary different from voting proportion:
Other notes:
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Unit: RMB
Ending balance Beginning balance
Non- Non- Non- Non-
Name Current Total Current Total Current Total Current Total
current current current current
assets assets liabilities liabilities assets assets liabilities liabilities
assets liability assets liability
Zhuhai
Hongta
Renheng 2,561,30 2,019,18 4,580,48 1,687,82 48,412,8 1,736,23 2,461,92 2,141,70 4,603,63 1,925,20 50,675,5 1,975,87
Packa- 1,731.93 7,390.74 9,122.67 4,314.78 61.04 7,175.82 6,612.57 9,928.17 6,540.74 1,252.84 86.53 6,839.37
ging Co.,
Ltd.
Unit: RMB
Ending balance Beginning balance
Cash flows Cash flows
Total Total
Name Operating from Operating from
Net profit comprehensi Net profit comprehensi
revenue operating revenue operating
ve income ve income
activities activities
Zhuhai
Hongta
3,727,270,87 226,855,671. 226,855,671. 679,157,420. 3,616,969,06 -28,651,342.7 -28,651,342.7 33,640,132.4
Renheng
6.78 78 78 54 6.32 2 2 0
Packaging
Co., Ltd.
Other notes:
(4) Significant Restrictions on Using the Assets and Liquidating the Liabilities of the Company
(5) Financial Support or Other Supports Provided to Structural Entities Incorporated into the Scope of
Consolidated Financial Statements
Other notes:
2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling the
Subsidiary
(1) Note to the Owner’s Equity Share Changed in Subsidiary
(2) The Transaction’s Influence on the Equity of Non-controlling Interests and the Owner's Equity
Attributable to the Company as the Parent
Unit: RMB
216
Other notes
3. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Holding percentage (%) Accounting
treatment of the
Main operating Nature of investment to
Name Registration place
place business Directly Indirectly joint venture or
associated
enterprise
China Chengtong
Accounted by
Finance Beijing Beijing Financial industry 10.00%
equity method
Corporation Ltd.
Notes to holding proportion of joint venture or associated enterprise different from voting proportion:
Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does not
have a significant impact:
During the Reporting Period, the voting proportion in China Chengtong Finance Corporation Ltd. enjoyed by the
Company is less than 20%. Since the Company has sent directors to participate in its operation and
decision-making, the Company still has significant influence on it.
(2) Main Financial Information of Significant Joint Ventures
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
Other notes
(3) Main Financial Information of Significant Associated Enterprise
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
China Chengtong Finance Corporation China Chengtong Finance Corporation
Ltd. Ltd.
Current assets 21,720,490,112.82 12,200,783,753.87
Non-current assets 3,288,492,060.40 10,740,612,707.36
Total assets 25,008,982,173.22 22,941,396,461.23
Current liabilities 18,466,501,829.25 16,474,695,824.72
Total liabilities 11,884,048.43 16,474,695,824.72
Equity attributable to owners of the
18,478,385,877.68 6,466,700,636.51
Company as the parent
Portion of net assets calculated according
6,530,596,295.54 646,670,063.65
to proportion of shareholdings
Carrying value of equity investment to
653,059,629.55 646,670,063.65
associated enterprise
Operating revenue 653,059,629.55 559,310,798.07
Net profit 410,123,242.49 306,501,455.12
217
Total comprehensive income 334,168,058.82 306,501,455.12
Dividend received from associated
334,168,058.82 10,000,000.00
enterprises in the current year
Other notes
(4) Summary Financial Information of Insignificant Joint Ventures or Associated Enterprise
Unit: RMB
Beginning balance/The same period of last
Ending balance/Reporting Period
year
Joint ventures: -- --
The total of following items according to the
-- --
shareholding proportions
Associated enterprises: -- --
Total carrying value of investment 3,963,172.08 8,642,303.90
The total of following items according to the
-- --
shareholding proportions
--Net profit -4,038,242.03 225,200.13
--Total comprehensive income -4,038,242.03 225,200.13
Other notes
(5) Note to the Significant Restrictions on the Ability of Joint Ventures or Associated Enterprises to
Transfer Funds to the Company
(6) The Excess Loss of Joint Ventures or Associated Enterprises
Unit: RMB
The cumulative recognized The derecognized losses (or the
The accumulative unrecognized
Name losses in previous share of net profit) in Reporting
losses in Reporting Period
accumulatively derecognized Period
Other notes
(7) The Unrecognized Commitment Related to Investment to Joint Ventures
(8) Contingent Liabilities Related to Investment to Joint Ventures or Associated Enterprises
4. Significant Common Operation
Proportion /share portion
Name Main operating place Registration place Nature of business
Directly Indirectly
Notes to holding proportion or share portion in common operation different from voting proportion:
For common operation as a single entity, basis of classifying as common operation:
Other notes
5. Equity in the Structured Entity Excluded in the Scope of Consolidated Financial Statements
Notes to the structured entity excluded in the scope of consolidated financial statements:
6. Other
X. The Risk Related to Financial Instruments
The Company is engaged in risk management to achieve balance between risks and returns, minimizing the
negative effects of risks on its operation performance and maximizing the interests of its shareholders and other
equity investors. Based on that risk management goal, the fundamental strategy of its risk management is to
identify and analyze various risks facing the Company, establish an appropriate risk bottom line, carry out risk
management and monitor various risks in a timely and reliable manner to control them within a restricted scope.
The Company faces various risks related to financial instruments in its routine activities, mainly including credit
218
risk, liquidity risk market risk. The management has reviewed and approved the policies of managing those risks,
which are summarized as follows.
(I) Credit Risk
Credit risk means the risk of financial losses incurred to the other party when one party of a financial instrument is
unable to fulfill its obligations.
1. Credit risk management practice
(1) Credit risk assessment method
On each balance sheet date, the Company assesses whether the credit risk of relevant financial instruments has
increased significantly since initial recognition. In determining whether the credit risk has increased significantly
since the initial recognition, the Company considers reasonable and grounded information that can be obtained
without having to pay unnecessary additional costs or efforts, including qualitative and quantitative analysis based
on historical data, external credit risk rating and forward-looking information. Based on a single financial
instrument or a combination of financial instruments with similar credit risk characteristics, the Company
compares the default risk of the financial instruments on the balance sheet date with the default risk on the initial
recognition date, so as to determine changes concerning the default risk of the financial instruments within the
expected duration.
When one or more of the following quantitative and qualitative criteria are triggered, the Company believes that
the credit risk of the financial instrument has increased significantly:
1) Quantitative criteria: On the balance sheet date, the probability of default for the remaining duration increases
by more than a defined proportion compared with the initial recognition;
2) Qualitative criteria: There are significant adverse changes in the debtor’s business or financial conditions,
existing or expected changes in technology, market, economy or legal environment, which will have a significant
adverse impact on the debtor’s ability to repay the Company.
(2) Definition of assets with default and credit impairment
When a financial instrument meets one or more of the following conditions, the Company defines it as a financial
asset with default, and the criteria are consistent with the definition of those with credit impairment:
1) The debtor has major financial difficulties;
2) The debtor violates the binding terms on the debtor in the contract;
3) The debtor is likely to go bankrupt or carry out other forms of financial restructuring;
4) Out of the economic or contractual considerations related to the debtor’s financial difficulties, the creditor gives
the debtor concessions that will not be made under any other circumstances.
2. Measurement of expected credit loss
The key parameters for the measurement of expected credit loss include default probability, default loss rate and
default risk exposure. The Company considers the quantitative analysis of historical statistical data (such as rating
of counterparties, guarantee methods, types of collateral, repayment methods, etc.) and forward-looking
information, and establishes the default probability, default loss rate and default risk exposure model.
3. Refer to Notes V(1) 2, V(1) 3, V(1) 4 and V(1) 6 of the financial statements for the reconciliation statement of
the opening balance and the closing balance of the provision for loss of financial instruments.
4. Credit risk exposure and credit risk concentration
The Company’s credit risk mainly comes from monetary funds and accounts receivable. To control the
aforementioned related risk, the Company has taken the following measures.
(1) Bank deposits
The Company places its bank deposits with financial institutions of high credit ratings. Thus, its credit risk is low.
(2) Accounts receivable
219
The Company conducts credit assessment on the customers trading in the mode of credit on a regular basis. Based
on the credit assessment result, the Company chooses to trade with recognized customers with good credit and
monitor the balance of the accounts receivable from them to ensure that the Company will not face any significant
bad debt risk.
The Company's risk points of accounts receivable are distributed among multiple partners and multiple customers.
As of December 31, 2020, 22.24% (December 31, 2019: 19.83%) of its accounts receivable was from the top five
customers for the balance. Therefore, the Company has no significant concentrated credit risk.
The maximum credit risk exposure of the Company is the book value of each financial asset in the balance sheet.
(II) Liquidity Risk
Liquidity risk refers to the risk of fund shortage occurring when the Company fulfills the settlement obligation in
the mode of cash delivery or other financial assets. Liquidity risk may originate from the failure to sell financial
assets at fair value as soon as possible; or from the other party’s failure to pay off its contractual debts; or from the
earlier maturity of debts; or from the failure to generate the expected cash flow.
To control the risk, the Company comprehensively adopts multiple financing approaches including notes clearing
and bank loans, appropriately combine long-term and short-term financing modes and optimize the financing
structure to maintain the balance between financing sustainability and flexibility. The Company has obtained the
line of credit from a number of commercial banks to satisfy its operation fund needs and capital expenditure.
Financial liabilities classified by remaining maturity:
Item Ending balance
Undiscounted contract
Carrying value Within 1 year 1 to 3 years Over 3 years
amount
569,724,731.69 576,915,505.69 576,915,505.69
Bank loan
641,510,664.49 641,510,664.49 641,510,664.49
Notes payable
321,548,477.65 321,548,477.65 321,548,477.65
Accounts
payable
151,105,526.05 160,837,470.49 160,837,470.49
Other payables
1,683,889,399.88 1,700,812,118.32 1,700,812,118.32
Subtotal
(Continued)
Item Beginning balance
Undiscounted contract
Carrying value Within 1 year 1 to 3 years Over 3 years
amount
1,263,716,765.51 1,287,599,534.77 1,287,599,534.77
Bank loan
312,234,422.87 312,234,422.87 312,234,422.87
Notes payable
321,955,510.64 321,955,510.64 321,955,510.64
Accounts
payable
220
48,993,061.88 48,993,061.88 48,993,061.88
Other payables
1,946,899,760.90 1,970,782,530.16 1,970,782,530.16
Subtotal
(III) Market Risk
Market risk means the fluctuation risk of the fair value of financial instruments or the future cash flow due to
market price changes.
1. Interest rate risk
Interest rate risk means the fluctuation risk of the fair value of financial instruments or the future cash flow due to
changes of market interest rate. The risk of changes of market interest rate facing the Company is mainly related
to its borrowings with interests calculated in floating interest rates.
The Company determines the proportion of financial instruments with fixed rates and floating rates according to
the market environment, and maintains an appropriate portfolio of financial instruments through regular review
and monitoring. The interest rate risk of cash flow faced by the Company is mainly related to its bank loans with
floating rates.
As of December 31, 2020, the Company had RMB 131,314,257.85 (December 31, 2019: RMB 160,000,000.00)
bank borrowings with floating rates. Under the assumption that other variables remain unchanged, if the interest
rate changes by 50 basis points, it will not have a significant impact on the Company’s total profits and
shareholders’ equity.
2. Foreign exchange risk
Foreign exchange rate refers to the risk that may lead to the changes of fair value of financial instruments or future
cash flows due to fluctuation in exchange rate. The risk of changes of exchange rate facing the Company is mainly
related to foreign currency monetary assets and liabilities of the Company. As for foreign currency assets and
liabilities, if short-term imbalance occurred, the Company will sell or buy foreign currency as necessary to ensure
the net exposures maintaining at an acceptable level.
Refer to Note V(4) 2 of the financial statements for ending foreign currency monetary assets and liabilities of the
Company.
XI. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Unit: RMB
Ending fair value
Item Fair value measurement Fair value measurement Fair value measurement
Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
-- -- -- --
measurement
Accounts receivable
754,556,891.52 754,556,891.52
financing
Total assets consistent fair
754,556,891.52 754,556,891.52
value measurement
II. Inconsistent fair value
-- -- -- --
measurement
221
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level
1
3. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 2
4. Valuation Technique Adopted and Nature and Amount Determination of Important Parameters for
Consistent and Inconsistent Fair Value Measurement Items at Level 3
The fair value of a financing project in accounts receivable should be the discounting of its future cash flow. Cash flow due in a short
period according to the contract and within 12 months is not discounted, and the financing cost in accounts receivable shall be the
fair value.
5. Sensitiveness Analysis on Unobservable Parameters and Adjustment Information between Beginning and
Ending Carrying Value of Consistent Fair Value Measurement Items at Level 3
6. Explain the Reason for Conversion and the Governing Policy when the Conversion Happens if
Conversion Happens among Consistent Fair Value Measurement Items at Different Levels
7. Changes in the Valuation Technique in the Current Period and the Reason for Such Changes
8. Fair Value of Financial Assets and Liabilities Not Measured at Fair Value
9. Other
XII. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of share Proportion of voting
held by the rights owned by the
Name Registration place Nature of business Registered capital Company as the Company as the
parent against the parent against the
Company (%) Company (%)
Foshan Huaxin
Manufacturing
Development Co., Foshan 45,793.00 65.20% 65.20%
industry
Ltd.
Description of the company’s parent company
China National Paper-industry Investment Corporation, the actual controller of the Company, directly holds
0.11% shares of the Company. The total shares of the Company directly held by China National Paper-industry
Investment Corporation and indirectly held through Foshan Huaxin Development Co., Ltd. are 65.31%. China
Chengtong Holdings Group Co., Ltd., the ultimate controller of the Company, enjoys all shares of China National
Paper-industry Investment Corporation.
The ultimate controller of the Company is China Chengtong Holdings Group Co., Ltd.
Other notes:
2. Subsidiaries of the Company
Refer to Note IX for details of Subsidiaries of the Company.
3. Information on the Joint Ventures and Associated Enterprises of the Company
Refer to Note IX for details of significant joint ventures or associated enterprises of the Company.
Information on other joint venture or associated enterprise of occurring related-party transactions with the Company in Reporting
Period, or forming balance due to related-party transactions made in previous period:
Name Relationship with the Company
Guangdong Chengtong Logistics Co., Ltd. Associated enterprise
Other notes
222
4. Information on Other Related Parties
Name Relationship with the Company
Foshan Huaxin Import & Export Co., Ltd. Under the control of the same actual controller
Guangdong Guanhao High-tech Co., Ltd. Under the control of the same actual controller
Yueyang Forest & Paper Co., Ltd. Under the control of the same actual controller
Yueyang Antai Industrial Co., Ltd Under the control of the same actual controller
Zhejiang Guanhao Advanced Materials Co., Ltd. Under the control of the same actual controller
Zhanjiang Guanhao Paper Co., Ltd. Under the control of the same ultimate controller
Tianjin CMST Chuangshi Logistics Co., Ltd. Under the control of the same ultimate controller
Zhuhai Guanhao Barcode Technology Co., Ltd. Under the control of the same ultimate controller
Other notes
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
Information on acquisition of goods and reception of labor service
Unit: RMB
The approval trade Whether exceed trade Same period of last
Related party Content Reporting Period
credit credit or not year
Yueyang Forest & Purchase of
6,770,485.03 26,000,000.00 No 452,088.93
Paper Co., Ltd. products
Zhejiang Guanhao
Purchase of
Advanced Materials 1,154,457.94 Yes 426,101.61
products
Co., Ltd.
China Paper Purchase of
74,196,288.20 218,000,000.00 No 157,971,614.12
Corporation products
Guangdong
Purchase of
Guanhao High-tech 20,933.25 Yes
products
Co., Ltd.
Tianjin CMST
Receiving labor
Chuangshi Logistics 70,710,393.34 70,710,393.34 No 83,065,010.92
service
Co., Ltd.
Guangdong
Receiving labor
Chengtong 190,087.75 Yes
service
Logistics Co., Ltd.
Total 153,042,645.51 314,710,393.34 241,914,815.58
Information of sales of goods and provision of labor service
Unit: RMB
Related party Content Reporting Period Same period of last year
Guangdong Guanhao High-tech Sales of products
4,791,301.89 9,163,839.14
Industrial Co., Ltd.
Yueyang Forest & Paper Co., Sales of products
9,109,536.83 16,454,301.05
Ltd.
China Paper Corporation Sales of products 163,129.90 3,891,640.35
Zhanjiang Guanhao Paper Co., Sales of products 91,415.93
223
Ltd.
Zhuhai Guanhao Barcode
Sales of products 126,169.24
Technology Co., Ltd.
Total 14,190,137.86 29,601,196.47
Information of sales/purchase of goods and provision/reception of labor service
(2) Information on Related-party Trusteeship/Contract
Lists of trusteeship/contract:
Unit: RMB
Name of the Name of the Income
entruster/contract entrustee/ Type Start date Due date Pricing basis recognized in this
ee contractor Reporting Period
Notes:
Lists of entrust/contractee:
Unit: RMB
Name of the Name of the Charge
entruster/contract entrustee/ Type Start date Due date Pricing basis recognized in this
ee contractor Reporting Period
Notes:
(3) Information on Related-party Lease
The Company was lessor:
Unit: RMB
The lease income confirmed in The lease income confirmed in
Name of lessee Category of leased assets
the Reporting Period the same period of last year
Tianjin CMST Chuangshi
Forklift rental 634,385.05 647,787.61
Logistics Co., Ltd.
The Company was lessee:
Unit: RMB
The lease fee confirmed in the The lease fee confirmed in the
Name of lessor Category of leased assets
Reporting Period same period of last year
Notes:
(4) Information on Related-party Guarantee
The Company was guarantor
Unit: RMB
Execution accomplished
Secured party Guarantee amount Start date End date
or not
The Company was secured party
Unit: RMB
Execution accomplished
Guarantor: Guarantee amount Start date End date
or not
Notes:
(5) Information on Inter-bank Lending of Capital of Related Parties
Unit: RMB
Related party Amount Start date End date Note
Borrowing
224
Foshan Huaxin
12,600,000.00 1 September 2018 13 March 2020
Development Co., Ltd.
China Chengtong
200,000,000.00 15 October 2019 13 March 2020
Finance Corporation Ltd.
China Chengtong
100,000,000.00 15 December 2020 14 December 2021
Finance Corporation Ltd.
China Paper Corporation 100,000,000.00 1 July 2020 30 June 2023
Lending
(6) Information on Assets Transfer and Debt Restructuring by Related Party
Unit: RMB
Related party Content Reporting Period Same period of last year
(7) Information on Remuneration for Key Management Personnel
Unit: RMB
Item Reporting Period Same period of last year
Remuneration for key management
4,057,444.67 4,518,463.69
personnel
(8) Other Related-party Transactions
The Company deposited the monetary assets in China Chengtong Finance Corporation Ltd. with charging interest
of RMB134,187.47 in the Reporting Period.
6. Accounts Receivable and Payable of Related Party
(1) Accounts Receivable
Unit: RMB
Ending balance Beginning balance
Item Related party
Carrying amount Bad debt provision Carrying amount Bad debt provision
Foshan Huaxin
Accounts receivable Import & Export 549,882.60 549,882.60 549,882.60 549,882.60
Co., Ltd.
Guangdong Guanhao
310,602.00 2,708,860.03 2,427.75
High-tech Co., Ltd.
Yueyang Forest &
1,039,509.60 3,018,105.34
Paper Co., Ltd.
China Paper
3,824,037.81 191,201.89
Corporation
Yueyang Antai
5,302.10 5,302.10
Industrial Co., Ltd
Zhanjiang Guanhao
75,977.76 416.64
Paper Co., Ltd.
Subtotal 1,899,994.20 549,882.60 10,182,165.64 749,230.98
China Paper
Prepayments 15,579,872.74 2,861,546.97
Corporation
Subtotal 15,579,872.74 2,861,546.97
Other accounts Guangdong 515,666.66 69,056.34 515,666.66 51,519.74
225
receivable Chengtong Logistics
Co., Ltd.
Yueyang Forest &
63,297.98 2,381.49
Paper Co., Ltd.
Tianjin CMST
Chuangshi Logistics 108,800.00
Co., Ltd.
Subtotal 624,466.66 69,056.34 578,964.64 53,901.23
(2) Accounts Payable
Unit: RMB
Item Related party Ending carrying amount Beginning carrying amount
Guangdong Chengtong
Accounts payable 820,165.01 611,068.48
Logistics Co., Ltd.
China Paper Corporation 8,419,441.37 280,461.45
Zhejiang Guanhao Advanced
26,491.26
Materials Co., Ltd.
Tianjin CMST Chuangshi
16,652,851.20 19,714,358.38
Logistics Co., Ltd.
Yueyang Forest & Paper Co.,
185,840.70 208,180.00
Ltd.
Subtotal 26,078,298.28 20,840,559.57
Foshan Huaxin Development
Other accounts payable 13,155,712.50
Co., Ltd.
Guangdong Chengtong
170,384.98 170,384.98
Logistics Co., Ltd.
Tianjin CMST Chuangshi
6,301,893.81 2,100,000.00
Logistics Co., Ltd.
China Paper Corporation 100,000,000.00
Foshan Huaxin Import &
388,090.67
Export Co., Ltd.
Subtotal 106,860,369.46 15,426,097.48
7. Commitments of Related Party
8. Other
XIII. Stock Payment
1. The Overall Situation of Stock Payment
□ Applicable Not applicable
2. The Stock Payment Settled in Equity
□ Applicable Not applicable
3. The Stock Payment Settled in Cash
□ Applicable Not applicable
226
4. Modification and Termination of the Stock Payment
5. Other
XIV. Commitments and Contingency
1. Significant Commitments
Significant Contingency on Balance Sheet Date
As of 31 December 2020, there was no significant commitment for the Company to disclose.
2. Contingency
(1) Significant Contingency on Balance Sheet Date
As of 31 December 2020, there was no significant contingency for the Company to disclose.
(2) In Despite of no Significant Contingency to Disclose, the Company Shall Also Make Relevant
Statements
There was no significant contingency in the Company.
(3) Other information required by industry information disclosure guidelines
The Company shall comply with the disclosure requirements of the “Shenzhen Stock Exchange Industry Information Disclosure
Guidelines No. 16 - Listed Companies Engaged in Automobile Manufacturing-Related Businesses”
The sales amount of mortgage sales, financial leasing and other modes account for more than 10% of the operating income
□ Applicable □ Not applicable
The company's guarantee to the dealer
□ Applicable □ Not applicable
3. Other
XV. Events after Balance Sheet Date
1. Significant Non-adjusted Events
Unit: RMB
Influence number to the
Reason of inability to estimate
Item Content financial position and operating
influence number
results
2. Profit Distribution
Unit: RMB
Profits or dividends planned to distribute 17,184,450.00
Reviewed and approved profits or dividends declared to distribute 17,184,450.00
3. Sales Return
4. Notes to Other Events after Balance Sheet Date
As of the date of approval of the financial statements, the Company does not have any other post-balance sheet
events that need to be disclosed except for the above-mentioned matters.
XVI. Other Significant Events
1. The Accounting Errors Correction in Previous Period
(1) Retrospective Restatement
Unit: RMB
Name of the influenced report
Content Processing program Accumulative impact
items during comparison period
(2) Prospective Application
Content Processing program Reason for adopting prospective
227
application
2. Debt Restructuring
3. Assets Replacement
(1) Non-monetary Assets Exchange
(2) Other Assets Replacement
4. Pension Plan
5. Discontinued Operations
Unit: RMB
Profit from
discontinued
operations
Income tax
Item Income Expense Total profit Net profit attributable to
expense
owners of the
Company as the
parent
Other notes
6. Segment Information
(1) Determination Basis and Accounting Policies of Reportable Segment
In accordance with the internal organization structure, management requirements and internal report system, the
Company identified the reportable segments based on the product segment and assessed the operational
performance of ivory business, printing business and latex business. The assets and liabilities sharing with other
segments shall be proportionally distributed among segments by scales.
(2) The Financial Information of Reportable Segment
Unit: RMB
Ivory board Printing products Latex Inter- segment
Item Other Total
elimination
Main business -1,098,894,307.0
4,356,973,477.46 309,495,589.03 430,210,541.71 27,217,408.75 4,025,002,709.90
revenue 5
Main business -1,098,507,403.3
3,844,110,661.74 240,030,124.60 331,173,504.80 27,902,779.73 3,344,709,667.52
cost 5
-3,206,194,208.9
Total assets 6,395,336,414.22 416,631,527.25 245,339,309.97 1,797,116,627.28 5,648,229,669.75
7
Total liabilities 2,631,707,268.04 135,986,952.14 41,404,011.07 22,626,594.31 -980,524,711.11 1,851,200,114.45
(3) If there was no reportable segment, or the total amount of assets and liabilities of each reportable
segment could not be reported, relevant reasons shall be clearly stated
(4) Other Notes
7. Other Significant Transactions and Events with Influence on Investors’ Decision-making
According to the Agreement on the Consolidation by Merger with Stock Swap Between Guangdong Guanhao
High-tech Co., Ltd. and Foshan Huaxin Packaging Co., Ltd., Guangdong Guanhao High-tech Co., Ltd. intends to
issue A-shares to all shareholders of the Company involved in the stock swap in exchange for the shares they hold
of the Company. Upon the merger, the Company will delist itself and cancel its status as a corporate entity.
Guangdong Guanhao High-tech Co., Ltd., as the surviving company after the merger, will inherit and undertake
all the assets, liabilities, business, personnel, contracts and other rights and obligations of the Company. The act
228
constitutes a major asset restructuring of the Company. As of the approval date of the financial statements for
issue, the restructuring was conditionally approved on 11 March 2021.
8. Other
XVII. Notes of Main Items in the Financial Statements of the Company as the Parent
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Unit: RMB
Ending balance Beginning balance
Carrying amount Bad debt provision Carrying amount Bad debt provision
With- With-
Category Carrying Carrying
Propor- drawal Propor- drawal
Amount Amount value Amount Amount value
tion propor- tion propor-
tion tion
Accounts receivable
for withdrawal of bad 2,344,50 2,344,500
100.00%
debt provision by 0.00 .00
group
2,344,50 2,344,500
Total 100.00%
0.00 .00
Individual withdrawal of bad debt provision:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion Reason for withdrawal
Withdrawal of bad debt provision by group:
Unit: RMB
Ending balance
Name
Carrying amount Bad debt provision Withdrawal proportion
Notes of the basis of recognizing the group:
Please refer to the relevant information of disclosure of bad debt provision of other accounts receivable if adopting the general mode
of expected credit loss to withdraw bad debt provision of accounts receivable.
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (inclusive) 2,344,500.00
1-3 months 2,344,500.00
Total 2,344,500.00
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Information of withdrawal of bad debt provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Others
recovery
229
Significant amount of reversed or recovered bad debt provision:
Unit: RMB
Name of the entity Reversed or collected amount Method
(3) Particulars of the Actual Verification of Accounts Receivable during the Reporting Period
Unit: RMB
Item Amount
Of which the verification of significant accounts receivable:
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
Notes to the verification of accounts receivable:
(4) Top 5 of the Ending Balance of Accounts Receivable Collected according to the Arrears Party
Unit: RMB
Proportion to ending balance of Ending balance of bad debt
Name of the entity Ending balance
total accounts receivable (%) provision
First 2,344,500.00 100.00%
Total 2,344,500.00 100.00%
(5) Derecognition of Accounts Receivable due to the Transfer of Financial Assets
(6) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of
Accounts Receivable
Other notes:
2. Other Receivables
Unit: RMB
Item Ending balance Beginning balance
Dividends receivable 27,000,000.00 28,000,000.00
Other receivables 164,725.00 25,371,168.86
Total 27,164,725.00 53,371,168.86
(1) Interest Receivable
1) Category of Interest Receivable
Unit: RMB
Item Ending balance Beginning balance
2) Significant Overdue Interest
Whether occurred
Entity Ending balance Overdue time Overdue reason impairment and its
judgment basis
Other notes:
3) Information of Withdrawal of Bad Debt Provision
□ Applicable √ Not applicable
(2) Dividends Receivable
1) Category of Dividends Receivable
Unit: RMB
Item (or investees) Ending balance Beginning balance
230
Dividends receivable 27,000,000.00 28,000,000.00
Total 27,000,000.00 28,000,000.00
2) Significant Dividends Receivable Aged over 1 Year
Unit: RMB
Whether occurred
Item (or investees) Ending balance Aging Reason impairment and its
judgment basis
3) Information of Withdrawal of Bad Debt Provision
□ Applicable √ Not applicable
Other notes:
(3) Other Receivables
1) Other Receivables Disclosed by Accounts Nature
Unit: RMB
Nature Ending carrying amount Beginning carrying amount
Accounts of related party within the scope
25,301,487.37
of combination
Petty cash 117,225.00
Other intercourse funds 50,000.00
Total 72,062.98
Accounts of related party within the scope
167,225.00 25,373,550.35
of combination
2) Information of Withdrawal of Bad Debt Provision
Unit: RMB
First stage Second stage Third stage
Expected loss in the Expected loss in the
Bad debt provision Expected credit loss Total
duration (credit impairment duration (credit impairment
of the next 12 months
not occurred) occurred)
Balance of 1 January
2,381.49 2,381.49
2020
Balance of 1 January
2020 in the current —— —— —— ——
period
Withdrawal of the
118.51 118.51
current period
Balance of 31 December
2,500.00 2,500.00
2020
Changes of carrying amount with significant amount changed of loss provision in the current period
□ Applicable √ Not applicable
Disclosure by aging
Unit: RMB
Aging Ending balance
Within 1 year (including 1 year) 167,225.00
1 to 3 months 117,225.00
231
4 to 12 months 50,000.00
Total 167,225.00
3) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
Information of Withdrawal of Bad Debt Provision:
Unit: RMB
Changes in the Reporting Period
Beginning
Category Reversal or Ending balance
balance Withdrawal Write-off Other
recovery
Of which bad debt provision recovered or reversed with significant amount during the Reporting Period:
Unit: RMB
Name of the entity Reversed or collected amount Method
4) Particulars of the Actual Verification of Other Receivables during the Reporting Period
Unit: RMB
Item Amount
Of which the verification of significant other receivables:
Unit: RMB
Whether occurred
because of
Name of the entity Nature Amount Reason Procedure
related-party
transactions
Notes to the verification of other receivables:
5) Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Unit: RMB
Proportion to ending
Ending balance of
Name of the entity Nature Ending balance Aging balance of total other
bad debt provision
receivables%
First Security deposit 117,225.00 1 to 3 months 70.10%
Second Reserve fund 50,000.00 4 to 12 months 29.90% 2,500.00
Total -- 167,225.00 -- 100.00% 2,500.00
6) Accounts Receivable Involving Government Subsidies
Unit: RMB
Project of government Estimated recovering
Name of the entity Ending balance Ending aging
subsidies time, amount and basis
7) Derecognition of Other Receivables due to the Transfer of Financial Assets
8) The Amount of the Assets and Liabilities Formed due to the Transfer and the Continued Involvement of
Other Receivables
Other notes:
3. Long-term Equity Investmen
Unit: RMB
Ending balance Beginning balance
Item Depreciation Depreciation
Carrying amount Carrying value Carrying amount Carrying value
reserve reserve
Investment to 1,050,107,442.14 1,050,107,442.14 1,050,107,442.14 1,050,107,442.14
232
subsidiaries
Investment to
joint ventures and
653,059,629.55 653,059,629.55 646,670,063.65 646,670,063.65
associated
enterprises
Total 1,703,167,071.69 1,703,167,071.69 1,696,777,505.79 1,696,777,505.79
(1) Investment to Subsidiaries
Unit: RMB
Beginning Increase/decrease
Ending balance
balance Withdrawal of Ending balance
Investee Additional Reduced of depreciation
(carrying impairment Other (carrying value)
investment investment reserve
value) provision
Hongta 927,570,697.1
927,570,697.11
Renheng 1
Huaxin
(Foshan) Color 122,536,745.0
122,536,745.03
Printing Co., 3
Ltd.
1,050,107,442. 1,050,107,442.
Total
14 14
(2) Investment to Joint Ventures and Associated Enterprises
Unit: RMB
Increase/decrease
Gains and
Begin- Adjust- Cash Ending
losses With- Ending
ning Addi- ment of bonus or balance
Reduced recog- Changes drawal of balance
Investee balance tional other profits of depre-
invest- nized of other impair- Other (carrying
(carrying invest- compre- announ- ciation
ment under the equity ment value)
value) ment hensive ced to reserve
equity provision
income issue
method
I. Joint ventures
II. Associated enterprises
China
Cheng-
tong
646,670,0 33,389,56 27,000,00 653,059,6
Finance
63.65 5.90 0.00 29.55
Corpo-
ration
Ltd.
646,670,0 33,389,56 27,000,00 653,059,6
Subtotal
63.65 5.90 0.00 29.55
646,670,0 33,389,56 27,000,00 653,059,6
Total
63.65 5.90 0.00 29.55
233
(3) Other Notes
4. Operating Revenue and Cost of Sale
Unit: RMB
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 27,217,408.75 27,902,779.73 0.00 0.00
Total 27,217,408.75 27,902,779.73 0.00 0.00
Relevant information of revenue:
Unit: RMB
Category of contracts Segment 1 Segment 2 Total
Type of products 27,217,408.75 27,217,408.75
Of which:
Other 27,217,408.75 27,217,408.75
Total 27,217,408.75 27,217,408.75
Information related to performance obligations:
None
Information related to transaction value assigned to residual performance obligations:
The amount of revenue corresponding to performance obligations of contracts signed but not performed or not fully performed yet
was RMB at the period-end, among which RMB was expected to be recognized in the year, RMB in the year and RMB in the year.
Other notes:
5. Investment Income
Unit: RMB
Item Reporting Period Same period of last year
Long-term equity investment income
33,389,565.90 30,650,145.51
accounted by equity method
Investment income from disposal of
-2,257,290.65
long-term equity investment
Investment income during the holding period
of financial instruments—other non-current 4,927.95
financial assets
Total 33,394,493.85 28,392,854.86
6. Other
XVIII. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
√ Applicable □ Not applicable
Unit: RMB
Item Amount Note
Gains/losses on the disposal of non-current
-1,632,261.47
assets
Government grants recognized in the current
period, except for those acquired in the
ordinary course of business or granted at 27,242,697.14
certain quotas or amounts according to the
government’s unified standards
234
Capital occupation charges on non-financial
enterprises that are recorded into current 153,364.13
gains and losses
Depreciation reserves returns of receivables
and contract assets with separate 283,005.50
depreciation test
Other non-operating income and expense
13,372,786.46
other than the above
Less: Income tax effects 3,740,814.32
Non-controlling interest effects 18,598,100.34
Total 17,080,677.10 --
Explain the reasons if the Company classifies an item as an non-recurring gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Non-recurring Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √Not applicable
2. Return on Equity and Earnings Per Share
EPS (Yuan/share)
Profit as of Reporting Period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to ordinary
6.73% 0.28 0.28
shareholders of the Company
Net profit attributable to ordinary
shareholders of the Company after
5.90% 0.24 0.24
deduction of non-recurring profit or
loss
3. Differences between Accounting Data under Domestic and Overseas Accounting Standards
(1) Differences of Net Profit and Net Assets Disclosed in Financial Reports Prepared under International
and Chinese Accounting Standards
□ Applicable √ Not applicable
(2) Differences of Net profit and Net assets Disclosed in Financial Reports Prepared under Overseas and
Chinese Accounting Standards
□ Applicable √ Not applicable
(3) Explain Reasons for the Differences between Accounting Data under Domestic and Overseas
Accounting Standards; for any Adjustment Made to the Difference Existing in the Data Audited by the
Foreign Auditing Agent, Such Foreign Auditing Agent’s Name Shall Be Clearly Stated
4. Other
235
Part XIII Documents Available for Reference
1. The financial statements signed and stamped by the Company’s legal representative, General Manager and Chief Financial Officer.
2. The original audit report stamped by the accounting firm with the signature and seal of the certified public accountant.
3. The originals of all the Company’s announcements and documents disclosed to the public during the Reporting Period on the
media designated by the CSRC for information disclosure.
4. The 2020 Annual Report signed by the legal representative of the Company.
236
