2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
FOSHAN HUAXIN PACKAGING CO., LTD.
2015 ANNUAL REPORT
Public Announcement No.: 2016-038W
March 2016
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section I. Important Reminders, Catalogue & Explanation
The Board of Directors, the Supervisory Committee, as well as all directors, supervisors and
senior management staff of Foshan Huaxin Packaging Co., Ltd. (hereinafter referred to as
“the Company”) warrant that this report is factual, accurate and complete without any false
record, misleading statement or material omission. And they shall be jointly and severally
liable for that.
Huang Xin, company principal, Ji Xiangdong, chief of the accounting work, and Yang Yinghui,
chief of the accounting organ (chief of accounting), hereby confirm that the Financial Report
enclosed in this report is factual, accurate and complete.
Except for the following Directors, other Directors attended the board meeting to review the
annual report in person
Name Position Reason Proxy
Zhang Wenjing Independent Director Absent owning to business Yang Zhenyu
Any forward-looking statement such as those involving the future operating environment and
the operating plans as well as the efficient estimates of the investment projects in this report
shall not be considered as virtual promises of the Company to investors. And investors are
kindly reminded to pay attention to possible risks.
Preliminary plan for profit distribution which has been reviewed and approved at the board
meeting: Based on the total 505,425,000 shares, a cash dividend of RMB0.38 (tax included)
will be distributed to all the shareholders for every 10 shares that they hold. No bonus shares
will be granted and no capital reserve will be turned into share capital.
This report is prepared in both Chinese and English. Should there be any understanding
discrepancy between the two versions, the Chinese version shall prevail.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Catalogue
Section I. Important Reminders, Catalogue & Explanation.......................................................... 2
Section II. Company Profile and Major Financial Indicators ....................................................... 5
Section III. Business Highlights ........................................................................................................ 9
Section IV. Discussion & Analysis by Management ...................................................................... 12
Section V. Significant Events ........................................................................................................... 28
Section VI. Change in Shares & Shareholders .............................................................................. 45
Section VII. Preferred Shares ......................................................................................................... 52
Section VIII. Directors, Supervisors, Senior Management Staff & Employees ......................... 53
Section IX. Corporate Governance ................................................................................................ 61
Section X. Financial Report ............................................................................................................ 69
Section XI. Documents Available for Reference .......................................................................... 212
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Explanation
Refers
Term Contents
to
Refers
Company, the Company, our Company Foshan Huaxin Packaging Co., Ltd.
to
Actual controller of the Company—China Paper Corporation, whose
Refers
China Paper primitive name is China National Paper-Industry Investment Corp. and
to
renamed in Jan. 2014
Refers Ultimate controller of the Company—China Chengtong Holdings Group
China Chengtong
to Ltd.
Refers Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. (which had completed
Hongta Renheng
to renamed as: Zhuhai Hongta Renheng Packaging Co., Ltd.)
Refers
Golden Pheasant Chemical Zhuhai Golden Pheasant Chemical Co., Ltd.
to
Refers
Foshan Chengtong Foshan Chengtong Paper Co., Ltd.
to
Refers
Huaxin Color Printing Huaxin (Foshan) Color Printing Co., Ltd.
to
Refers
Kunshan Focai Kunshan Focai Packaging & Printing Co., Ltd.
to
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section II. Company Profile and Major Financial Indicators
I. Basic information of the Company
Stock abbreviation FSHXP B Stock code 200986
Stock exchange listed with Shenzhen Stock Exchange
Chinese name of the Company 佛山华新包装股份有限公司
Abbr. of the Chinese name of
华新包装
the Company
English name of the Company
Foshan Huaxin Packaging Co., Ltd.
(if any)
Abbr. of the English name of
FSHXP
the Company (if any)
Legal representative of the
Huang Xin
Company
Registered address 19/F, Jinghua Building, No. 18, the 5th Jihua Road, Foshan, Guangdong Province, P.R.C.
Postal code for the registered
528000
address
Office address 19/F, Jinghua Building, No. 18, the 5th Jihua Road, Foshan, Guangdong Province, P.R.C.
Postal code for the office
528000
address
Internet website of the
http://www.fshxp.com
Company
Email address jzw-hxbz@chinapaper.com.cn
II. Contact us
Company Secretary Securities Affairs Representative
Name Mr. Yang Yinghui Mr. Jiang Zhuowen
20/F, Jinghua Building, No. 18, the 5th 19/F, Jinghua Building, No. 18, the 5th
Contact address Jihua Road, Foshan, Guangdong Province, Jihua Road, Foshan, Guangdong Province,
P.R.C. P.R.C.
Tel. 0757-83992076 0757-83992076
Fax 0757-83992026 0757-83992026
E-mail yyh-hxbz@chinapaper.com.cn jzw-hxbz@chinapaper.com.cn
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
III. About information disclosure and where this report is placed
Newspapers designated by the Company for
Securities Times, Ta Kung Pao (HK)
information disclosure
Internet website designated by CSRC for disclosing
http://www.cninfo.com.cn
this report
Where this report is placed BOD Office of the Company
IV. Change of the registered information
Organizational code 914406007076822793
Changes of the main business since listing
Unchanged
(if any)
Changes of the controlling shareholder (if
Unchanged
any)
V. Other information
The CPAs firm hired by the Company:
Name Dahua CPA (LLP)
Office address 1101 of the No. 7 Building, No. 16 Yard, Mid of West 4th Ring Road, Haidian District, Beijing
Signing accountants Zhang Yan, Liu Jiliang
Sponsor engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
Financial consultant engaged by the Company to conduct sustained supervision during the reporting period
□ Applicable √ Inapplicable
VI. Major accounting data and financial indicators
Does the Company adjust retrospectively or restate accounting data of previous years due to change of any accounting policy or
correction of any accounting error?
□ Yes √ No
Increase or decrease of
2015 2014 this year over last year 2013
(%)
Operating revenues (RMB Yuan) 3,282,043,995.12 3,552,698,716.17 -7.62% 4,006,109,812.66
Net profit attributable to
shareholders of the Company 133,094,696.66 83,284,859.23 59.81% 79,060,852.74
(RMB Yuan)
Net profit attributable to 11,175,961.64 56,027,427.75 -80.05% 31,046,179.76
shareholders of the Company after
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
extraordinary gains and losses
(RMB Yuan)
Net cash flows from operating
613,491,329.76 479,890,329.98 27.84% 821,251,323.61
activities (RMB Yuan)
Basic EPS (RMB Yuan/share) 0.26 0.16 62.50% 0.16
Diluted EPS (RMB Yuan/share) 0.26 0.16 62.50% 0.16
Weighted average ROE (%) 7.10% 4.70% 2.40% 4.61%
Increase or decrease of
As at 31 Dec. 2015 As at 31 Dec. 2014 this year-end than last As at 31 Dec. 2013
year-end (%)
Total assets (RMB Yuan) 6,059,337,427.41 6,434,127,025.51 -5.83% 5,773,266,460.61
Net assets attributable to
shareholders of the Company 1,938,277,232.13 1,812,763,910.47 6.92% 1,729,936,978.68
(RMB Yuan)
VII. 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 √ Inapplicable
No difference.
2. Differences of net profit and net assets disclosed in financial reports prepared under overseas and
Chinese accounting standards
□ Applicable √ Inapplicable
No difference.
VIII. Major financial indicators classified by quarters
Unit: RMB Yuan
The first quarter The second quarter The third quarter The fourth quarter
Operating revenues 770,917,814.66 809,017,692.83 832,624,532.55 869,483,955.08
Net profit attributable to
924,536.92 11,639,642.77 9,227,754.12 111,302,762.85
shareholders of the Company
Net profit attributable to
shareholders of the Company after -456,555.81 7,849,115.93 6,699,935.16 -2,916,533.64
extraordinary gains and losses
Net cash flows from operating
110,920,169.38 192,187,074.13 61,139,767.33 249,244,318.92
activities
Whether there was significant difference between the above financial indicators or their total amount and relevant financial indicators
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
from the disclosed quarter reportas well as the semi-annual financial report
□ Yes √ No
IX. Items and amounts of extraordinary gains and losses
√Applicable □ Inapplicable
Unit: RMB Yuan
Item 2015 2014 2013 Notes
Gain/loss on the disposal of non-current
assets (including the offset part of the asset 114,279,468.16 24,546,653.22 51,123,921.58
impairment provisions)
Government grants recognized in the current
period, except for those acquired in the
ordinary course of business or granted at 16,481,293.41 14,044,743.94 7,246,780.00
certain quotas or amounts according to the
government’s unified standards
Gain/loss on debt restructuring 2,288,256.01
Gains and losses on change in fair value
from tradable financial assets and tradable
financial liabilities, as well as investment
income from disposal of tradable financial
-5,985,459.17
assets and tradable financial liabilities and
financial assets available for sales except for
effective hedging related with normal
businesses of the Company
Non-operating income and expenses other
2,386,314.75 4,027,332.47 16,236,462.91
than the above
Less: Income tax effects 1,604,695.65 7,172,671.53 12,941,980.74
Minority interests effects (after tax) 5,926,442.49 8,188,626.62 13,650,510.77
Total 121,918,735.02 27,257,431.48 48,014,672.98 --
Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory
Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and
Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item
□ Applicable √ Inapplicable
No such cases during the reporting period.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section III. Business Highlights
I. Main business during the reporting period
The Company specializes in the R&D, production and sales of machine-made paper and paperboard, and the latex and calcium
carbonate used for paper making, as well as color printing business. The businesses are described as follows:
I. High-end coated ivory board
The ivory board is a product of the Company’s main business, which accounts for a majority of the Company’s business revenue.
The R&D, production and sales of the ivory board is mainly undertaken by Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. and
Zhuhai Huafeng Paper Co., Ltd. The Company now has three coated ivory board production lines, and the annual production
capacity around 600,000 tons. The coated ivory board, as a category of ivory board, is a kind of packaging paper with wide
applications (it can be used as the packaging box for daily chemical products, electronics products, and cigarette, paper handbags,
various paper box, cards, paper cups, food packaging, and liquid food packaging, etc.). In general, it can be divided into the social
ivory board and tobacco packaging board. Over the years, as the hygienic conditions for the paper increase, a new category—the
food grade ivory board (including the liquid food packing paper) has emerged.
As one of the first companies that go into the ivory board production field in China, since its independent R&D and production of the
first piece of ivory board in China, the Company has always been devoted to the production and sales of the high-end ivory board and
personalized anti-counterfeit papers. The Company now own five brands: Hongta, Yunhe, Yinguan, Hongmei and Hongsong, and is
producing and selling three series of products: tobacco packing boards, food grade cards, and high-end social ivory boards. In recent
years, the Company continuously development new products, adjusting the product and customer structure, expanding the proportion
of food grade board, liquid food packaging papers and mid-range tobacco packaging board in the total production and sales amount,
achieving good operation effects. The introduction to the main categories of products is as follows:
(I)The Company’s dominant product—coated ivory board for tobacco packaging, is widely used in the high-end tobacco packaging
market, taking up a dominant position in the domestic tobacco packaging field. It represents the highest level of coated ivory board
quality in China. It has won the golden award of the International Paper Expo-Chian, 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 or true-color fiber—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 tobaccos in the “Hongta Group” and
“Hongyun Honghe Group” brands to combat counterfeiting from the packaging materials, reaching the significant anti-counterfeit
results of “easily identifiable but difficult to copy”, creating a unified tobacco brand image for the tobacco enterprises.
(II) The ivory boards for food packaging is an important development direction of the Company. The Hongta Hengren is the first to
break the foreign technological monopoly, by independently developing the sterile paper for packaging of liquid milk, fruit juice,
herbal tea and other drinks, effectively substituting imported products. The series of food packaging products such as anti-oil food
grade coated board and high-end paper cup have been recognized by well-known catering groups such as McDonald’s after they are
put into the market.
(III) The high-end social ivory board papers are traditional products of the Company that aim to meet the personalized demands of
customers. They are widely applied the segmented packaging market fields like the high-end medicine, cosmetics, and daily
necessities. In which, the “Sports Lottery Ticket Paper” is a kind of special ivory paper specially developed and produced for the
State Sports Lottery Administration Center for making sports lottery tickets; 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, which does not
only solve the difficulties posed by impact from counterfeit and shoddy products for customers at the source, but also effectively
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
reduces the customer’s anti-counterfeit costs and fake product crackdown expanses and win high trust from the market.
II. Latex and calcium carbonate for paper making
This business is an important attempt to extend the paper-making industry chain by the Company, the R&D, production and sales of
which are mainly undertaken by Zhuhai Jinji Chemical Co., Ltd. Jinji Chemical mainly supplies the carboxylic butadiene-styrene
latex, styreren acrylate latex and calcium carbonate fillings for the paper-making enterprises in south China, and is devoted to
become the main supporting supplier of paper-making chemicals for the Company and the south China area. Influenced the price
change of raw materials (petrochemicals), the product price of latex industry varies greatly. In 2015, the raw material price turns
downward as a whole, and therefore, the latex price started to gradually lower from the middle of the years. In 2016, as the raw
material price may begin to rise, the latex price will probably go up.
Since presently many large paper-making groups have their own latex factories that pose competition with enterprises that specialize
in the production of latex, the competition in the latex industry is increasing. The main rivals of the Company’s latex business are
Trinseo, BASF, LG, etc., and the competition is mainly reflected in product quality, product variety and suitability, and product
price.
III. Color printing business
Color printing business is a traditional business of the Company, which covers designing and manufacturing packaging materials and
providing packaging solutions for customers. This business is mainly undertaken by Huaxin (Foshan) Color Printing Co., Ltd. and a
small part by Kunshan Focai. The Company now owns the offset, flexo and intaglio printing workshop, and Huaxin Color Printing
mainly undertakes the single packaging or collective packaging of terminal consumer goods such as electronics, home appliances,
medicine, foods, snacks, daily chemicals and daily necessities, with the small color boxes, tab paper, sticker tabs and barcode
printings, as the main products, covering the wide downstream industries. In the report period, the printing business expanded the
offset printing capacity, and the Company will need a certain period of time to find new purchase orders and digest the newly
increased production capacity.
II. Material changes in main assets
1. Material changes in main assets
Main assets Material change
During the reporting period: 1. the Company sold the held 75% equities of Foshan
Chengtong Paper Co., Ltd., which ened the duplex grey board business; 2. newly built up
Equity assets
the wholly owned subsidiary-Pinghu Huaxin Packaging Materials Science & Technology
Co., Ltd. with the registered capital of RMB15 million.
During the reporting period, the assets of the Company at the period-end would no longer
Fixed assets be included in the consolidated financial report owning to the disposal of the equities of
the subsidiary-Foshan Chengtong Paper Co., Ltd.
During the reporting period, the assets of the Company at the period-end would no longer
Intangible assets be included in the consolidated financial report owning to the disposal of the equities of
the subsidiary-Foshan Chengtong Paper Co., Ltd.
During the reporting period, the expansion project of the Phase III production workshop
Construction in progress
of Huaxin Color Printing transferred in the fixed assets.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. Main assets overseas
□ Applicable √ Inapplicable
III. Core competitiveness analysis
During the reporting period, there was no any disadvantage change of the core competitiveness (factors such as management team,
key technical employee, turn right equipment, patents and non-patent technology) of the Company.
1. List of the patents: in 2015, Hongta Renheng newly applied 5 invention patents; acquired 3 authorized patents, of which 2
invention patents, 1 utility model respectively were the invention patents and utility mode of “a semi-automatic glue device for the
margin water absorption value detection” and the invention patent of “white card base paper can be directly vacuum aluminum
plated”; recently there were 33 items of the total amount of the granted authorized patents of Hongta Renheng Company including 14
invention patents and 19 utility models.
2. Construction of the technology center: in 2015, Hongta Renheng successfully passed the recognition of the Guangdong Functional
Coated White Cardboard Engineering Technology Research Center; Hongta Renheng passed the reexamination of Hi-tech enterprise;
8 products received the recognition of Guangdong Hi-tech Products; Zhuhai Huafeng Hi-tech Enterprise succeded in the cultivating
storage; Zhuhai Huafeng passed the recognition of Guangdong Innovative Enterprise (trial); the Company participated in the revision
of 5 national and industrial standards; edited and published the Anti-counterfeiting Technology and Application of Coated Ivory
Board; Hongta Renheng awarded the awards such as the “China Production-study-research Cooperation Innovation Award”, “Top 10
of China Counterfeiting Industries” and “Honorable Mention of Zhuhai Science and Technology Innovation Contest”.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section IV. Discussion & Analysis by Management
I. Overview
According to the information disclosed on the website of National Bureau of Statistics of China, in 2015, the production of the
machine-made paper and paperboard in China was of 117,741,000 tons with the YoY increase of 1.7%,and the accumulative
operating income of the paper machine paper products industry was of RMB1,392.34 billion with the YoY increase of 3.4%, and the
total accumulative amount of the profits of the paper machine paper products industry was of RMB74.44 billion with the YoY
increase of 6.2%. The total moving situation was stable. According to the survey statistics and analysis prediction from Jan.- Sep. of
2015 of the domestic papermaking from the China Paper Association, although the major business of the papermaking of Y2015 had
increased, the production and sales of the paperboard was still in the poor state with the market confidence still weak-oriented and the
price of the majority subdivide products maintained the low-price running. And the differentiation of the different subdivide
industries inside the papermaking industry was so obvious that the demand of the cardboard paper and corrugated paper estimated to
increase rather rapidly, and the profits condition of the household paper was still good with the stable delined demand of the
production of the coated paper that the production and the sales of the white board was estimated to equal to that of last year while
the releasing production potence would further aggravate the competition.
During the reporting period, the white cardboard production industry which the Company involved in was still in the low state that
mainly due to the slow increase of the paper demand, and the release of he newly increased the capacity was still in the progress,
which may be estimated to take a rather long time to digest newly increased capacity. Influenced by which, the competition method
among the subdivided trade structure was based on the price competition and each competitor among the industry snatched the
market share one after another, which led to a certain decline of the price of the high-and-medium grade white cardboard that pressed
greatly on the operation.
For handling with the difficulties, the Company executed the internal and external “both hands” on basis of “product structure
adjustment” of the recent two years. On the one hand, the Company promoted the “lean production” among the internal management
for digging out the “profits maintain point” from the “internal part”; on the other hand, to further and deepen optimize the production
structure and to take advantage of the self liquid package paper technology and try to raise the rate of sale of liquid packing board to
seek for new “profit increase point” from the “external part” with the white cardboard business maintained the profitable as well as
stable state. The papermaking chemical industry business of the Company influence by the market squeeze and the fluctuation of the
production price from the intensifying competition, the gross profit rate declined and the profits decreased. And influenced by the
demand contraction of the down stream customers of the printing business, the operating income of the Company failed to increase
but owning to the release of the newly increase printing capacity, the fixed assets depreciation increased with the cost increased as
well as the profits fell after rise.
II. Main business analysis
1. Overview
Refer to the relevant content of “I. Overview” of “Discussion & Analysis by Management”.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. Revenues and costs
(1) Breakdown of operating revenues
Unit: RMB Yuan
2015 2014
In total operating In total operating +/-
Amount Amount
revenues revenues
Total of the
3,282,043,995.12 100% 3,552,698,716.17 100% -7.62%
operating income
Classified by industries
Industries 3,203,045,668.83 97.59% 3,397,014,091.45 95.62% -5.71%
Other 78,998,326.29 2.41% 155,684,624.72 4.38% -49.26%
Classified by products
White board 0.00 0.00% 48,802,387.17 1.37% -100.00%
Ivory board 2,820,881,163.79 85.95% 2,893,604,162.62 81.45% -2.51%
Printed matter 245,352,660.29 7.48% 247,590,676.51 6.97% -0.90%
Rubber latex 136,811,844.75 4.17% 207,016,865.15 5.83% -33.91%
Other 78,998,326.29 2.41% 155,684,624.72 4.38% -49.26%
Classified by regions
Domestic sales 2,922,728,178.70 89.05% 3,161,607,778.53 88.99% -7.56%
Export 359,315,816.42 10.95% 391,090,937.64 11.01% -8.12%
(2) Segments, products or areas contributing over 10% of operating revenues or profit
√ Applicable □ Inapplicable
Unit: RMB Yuan
Operating Gross profit
Operating Gross profit Operating cost:
Operating cost revenue: +/- from margin: +/-from
revenue margin +/- from last year
last year last year
Classified by industries
Industries 3,203,045,668.83 2,667,631,646.77 16.72% -5.71% -7.38% 1.50%
Classified by products
Ivory board 2,820,881,163.79 2,353,512,145.87 16.57% -2.51% -3.54% 0.89%
Printed matter 245,352,660.29 200,741,759.66 18.18% -0.90% 1.69% -2.09%
Rubber latex 136,811,844.75 113,377,741.24 17.13% -33.91% -30.51% -4.06%
Classified by regions
Domestic sales 2,843,729,852.41 2,327,894,983.59 18.14% -5.40% -7.36% 1.73%
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Export 359,315,816.42 339,736,663.18 5.45% -8.12% -7.51% -0.63%
Main business data of the previous year restated according to the changed statistical caliber for the reporting period
□ Applicable √ Inapplicable
(3) Are the Company’s goods selling revenue higher than the service revenue?
√ Yes □ No
Industry Item Unit 2015 2014 YoY +/-
Sales volume 10,000’ tons 46.54 50.48 -7.81%
Paper-making
Output 10,000’ tons 47.63 49.06 -2.91%
industry
Stock 10,000’ tons 7.17 6.6 8.64%
Reasons for any over-30% YoY movement of the data above:
□ Applicable √ Inapplicable
(4) List of the execution of the signed significant sales contracts of the Company up to the reporting period
□ Applicable √ Inapplicable
(5) Operating cost form
Category of industries and products
Unit: RMB Yuan
2015 2014
Category of
Items Ratio to the Ratio to the YoY +/-
industries Amount Amount
operating cost operating cost
Industry 2,667,631,646.77 100.00% 2,880,124,643.42 100.00% -7.38%
Unit: RMB Yuan
2015 2014
Category of
Items Ratio to the Ratio to the YoY +/-
products Amount Amount
operating cost operating cost
Ivory board 2,353,512,145.87 88.22% 2,439,881,057.80 84.71% -3.54%
Printed matter 200,741,759.66 7.53% 197,410,288.54 6.85% 1.69%
Rubber latex 113,377,741.24 4.25% 163,155,417.90 5.66% -30.51%
White board 0.00 0.00% 79,677,879.18 2.77% -100.00%
Notes
(6) Whether there were changes of the consolidation scope during the reporting period
√ Yes □ No
1. The Company built up the wholly owned subsidiary in Pinghu, Zhejiang Province in Dec. 2015: Pinghu Huaxin Packaging
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Materials Science & Technology Co., Ltd., of which was included in the scope of the 2015 consolidated financial report.
2. The Company disposed the controlling subsidiary-Foshan Chengtong Paper Co., Ltd. at the year-end of 2015 and according to the
regulations of the accounting policies, during the reporting period, as the Company disposing the subsidiary or the business, the
revenues, expenses and the profits of the subsidiary or the business should be included in the consolidiated statement of income from
the period-begin to the disposal date; the cash flow of the subsidairy or the business from the period-begin to the disposal date should
also be included in the consolidated statement of cash flow; its assets, liabilities and the owner’s equities should not be included in
the year-end consolidated statement. The realized operating income of 2015 of the Company was of RMB0.5145 million with the
corresponding operating cost of RMB0.3358 million. And the realized operating income of 2014 was of RMB53.4788 million with
the corresponding operating cost of RMB87.3372 million.
(7) List of the significant changes or adjustment of the industries, products or services of the Company
during the reporting period
√ Applicable □ Inapplicable
During the reporting period, the Company disposed the subsidiary-Foshan Chengtong Paper Co., Ltd. and the subsidiary was the
original business undertaking entity of the duplex grey board, and the Company had suspended the white manila board business in
Jan. 2014 and please refer to the 2014 Annual Report. In Y2014, Foshan Chengtong realized the operating income of
RMB53,478,800 with the net profits of RMB-77,763,900.
(8) List of the major trade debtors and major suppliers
List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB Yuan) 818,623,722.32
Ratio of the total sales to the top 5 customers to the
24.95%
annual total sales
Information of the top 5 customers of the Company
Serial No. Name of customer Sales amount (RMB Yuan) Proportion in annual total sales
1 No. 1 363,331,238.92 11.07%
2 No. 2 169,779,157.21 5.17%
3 No. 3 103,888,955.33 3.17%
4 No. 4 97,987,270.79 2.99%
5 No. 5 83,637,100.07 2.55%
Total -- 818,623,722.32 24.95%
Notes of the other situation of the major customers
□ Applicable √ Inapplicable
List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan) 990,422,877.87
Ratio of the total purchase to the top 5 suppliers to the
43.28%
annual total purchase
Information of the top 5 suppliers of the Company
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
No. Name of supplier Purchase amount (RMB Yuan) Ratio to the annual purchase amount (%)
1 No. 1 309,407,839.40 13.52%
2 No. 2 259,740,531.62 11.35%
3 No. 3 157,241,985.86 6.87%
4 No. 4 132,271,673.03 5.78%
5 No. 5 131,760,847.96 5.76%
Total -- 990,422,877.87 43.28%
Notes of the other situation of the major suppliers:
□ Applicable √ Inapplicable
3. Expenses
Unit: RMB Yuan
2015 2014 YoY +/- Notes of the significant changes
Sales expenses 172,400,338.43 164,537,468.45 4.78%
The management expenses increased
rather more than that of the last period,
which mainly due to the increase of the
R&D expenses of the reporting period;
the increase of the R&D expenses was
mainly due to the Company had
Management expenses 158,119,192.47 140,664,702.02 12.41%
disposed the subsidiary-Foshan
Chengtong Paper Co., Ltd. and had
ceased the development activities of
which the development expenses had
transferred and be included in the R&D
expenses of the reporting period.
Financial expenses 133,872,055.72 126,985,102.16 5.42%
4. R&D investment
√ Applicable □ Inapplicable
In 2015, the Company studied and developed multiple of the new products through the merger of the market and the technology
power, of which the R&D items achieved great progress were follows:
1. Lightweight cigarette paper: the product further highlighted the fully-utilized characteristics of the resources based on the red fiber
white cardboard, which on one hand realized the low quantitative energy-saving target,on the other hande realized the tarket to
maintain the unchage of the main physical performance indicators and to alter the price of the anti-fake performance.
2. Nature color food packaging paper: aimed at the gradually increase tendency of the domestic market demand of the liquid
packaging paper, developed a set of nature color food packaging paper for replace the import paper and the domestic White liquor
packaging paper with favourable health indicators and physical properties.
16
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
3. Identification code coated ivory board: as the pioneer and the patent holder in the field of ID code anti-counterfeiting, the
Company continued to expand the application of the identification code among each anti-counterfeiting product, such as the
application among the liquid packaging paper,the self-provided paper and the food paper to satisfy the constantly increased
anti-counterfeiting efficiency demand of the products from the customers and to realize the application of the among the
identification code in the fields such as the cigarettes and food.
4. The Company and other R&D items had acquired certain progress, and will constantly,proactively reserve the scientific research
project for the sustainable technology reserve for the innovation demand, satisfaction demand and the digging of the satisfaction
points from the customers.
List of the R&D investment of the Company
2015 2014 Varied ratio
Number of the R&D personnel
130 137 -5.11%
(person)
Ratio to the R&D personnel 5.93% 6.00% -0.07%
Investment amount of the R&D
126,521,223.18 124,552,001.34 1.58%
(RMB10,000’)
Ratio of the R&D investment to
3.85% 3.51% 0.34%
the operating income
Amount of the capitalized R&D
9,981,324.00 0.00 0.00%
investment (RMB Yuan)
Ratio of the capitalized R&D
investment to the R&D 6.46% 0.00% 0.00%
investment
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating income
□ Applicable √ Inapplicable
Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation
√ Applicable □ Inapplicable
1. Owning to the capitalization of the R&D expenses was not the regular items, the Company executed the capitalization on the parts
which were recognized could be capitalized as well as were in the development phase according to the actual situation of the R&D
investment while the last reporting period didn’t appear any situation meet with the capitalization.
List of the patents number of the recent 2 years
√ Applicable □ Inapplicable
Accumulative gained up to
Applied Gained
the period-end
Patent for invention 10 10 16
Utility model 4 7 24
Appearance design 0 0 0
List of the changes of the core technology
No change
team or the key technology personnel of
17
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2015
Whether belongs to the high-tech
No
enterprises recognized by the MOST
5. Cash flow
Unit: RMB Yuan
Item 2015 2014 YoY +/-
Subtotal of cash inflows from
3,163,621,643.76 3,346,146,233.58 -5.45%
operating activities
Subtotal of cash outflows from
2,550,130,314.00 2,866,255,903.60 -11.03%
operating activities
Net cash flows from operating
613,491,329.76 479,890,329.98 27.84%
activities
Subtotal of cash inflows from
118,088,031.70 9,603,980.96 1,129.57%
investing activities
Subtotal of cash outflows from
56,315,072.57 402,938,656.29 -86.02%
investing activities
Net cash flows from investing
61,772,959.13 -393,334,675.33 115.70%
activities
Subtotal of cash inflows from
2,214,769,096.43 2,529,205,000.37 -12.43%
financing activities
Subtotal of cash outflows from
2,822,887,656.76 2,702,056,106.89 4.47%
financing activities
Net cash flows from financing
-608,118,560.33 -172,851,106.52 -251.82%
activities
Net increase in cash and cash
72,711,701.24 -87,000,163.56 183.58%
equivalents
Notes of the major effects on the YoY significant changes occurred of the data above
√ Applicable □ Inapplicable
1. The YoY increase of the cash inflow from investment activities was of 1129.57%, which mainly due to the received land
purchasing and storage amount of RMB65,600; the disposal amount of the Foshan Chengtong Paper Co., Ltd. was of RMB44,870.
2. The YoY decrease of the cash outflow from investment activities was of 86.02%, mainly due to the purchase of the equities of
Chengtong Financial Company in 2014 while there was no such situation of the reporting period; the amount of the long-term assets
such as the purchase and the construction of the fixed assets of the reporting period decreased a bit.
3. The YoY increase of the net amount of the cash flow from financial activities was of 251.82%, mainly due to the decrease of the
borrowings acquired from the reporting period and had paid for the long-term debt of RMB0.42 billion at the same time.
4. Influenced by the comprehensive operating activieties, investment activities and the financial activities,the YoY net added amount
of the cash and the cash equivalents was increased by 183.58%.
18
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of 2015 of
the Company during the reporting period
□ Applicable √ Inapplicable
III. Analysis of the non-core business
√ Applicable □ Inapplicable
Unit: RMB Yuan
Ratio to the total
Amount Notes of the causes Whether was sustainability
profits amount
Sales of the equities profits
Investment profits 121,166,566.33 64.90% No
of the subsidiary
Profits from the difference
between the contract locked
Variable profit and exchange rate of the forward
1,528,810.76 0.82% No
loss of fair value exchange rate and the
exchange rate at the
period-end
Inventories and bad debts
Assets impairment 26,624,300.40 14.26% No
falling price provision
Non-operating Profits from the government,
23,729,196.71 12.71% No
revenues non-current assets disposal
Disposal losses of the
Non-operating costs 1,263,680.97 0.68% No
non-current assets
IV. List of the assets and liabilities
1. List of the significant changes of the assets form
Unit: RMB Yuan
As at 31 Dec. 2015 As at 31 Dec. 2014
Proportio
Proportion in Proportion in Explain any major change
Amount Amount n change
total assets total assets
509,706,611.0
Monetary funds 8.41% 474,549,403.56 7.38% 1.03%
7
Accounts 791,325,305.7
13.06% 837,978,587.68 13.02% 0.04%
receivable 9
712,880,811.9
Inventories 11.76% 942,156,138.62 14.64% -2.88%
3
Investing real
11,945,127.02 0.20% 12,605,907.08 0.20% 0.00%
estate
19
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Long-term equity 262,089,226.4
4.33% 246,747,332.67 3.83% 0.50%
investment 5
2,539,372,551. 2,926,710,908.
Fixed assets 41.91% 45.49% -3.58%
91 66
Construction in
28,305,202.78 0.47% 154,209,661.31 2.40% -1.93%
progress
912,724,440.1 1,130,267,087.
Short-term loans 15.06% 17.57% -2.51%
6 23
Long-term loans 0.00% 0.00% 0.00%
2. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB Yuan
Gain/loss on
Cumulative fair Impairment Purchased
fair value Sold amount in
Opening value change provisions in amount in the Closing
Item change in the the reporting
amount recorded into the reporting reporting amount
reporting period
equity period period
period
Financial assets
1. Financial
assets measured
at fair value
and whose
changes are
recorded into 1,741,500.00 1,741,500.00
current gains
and losses
(excluding
derivative
financial assets)
3.Available-for-
sale financial 113,558.00 175,142.00 288,700.00
assets
Subtotal of
113,558.00 1,916,642.00 2,030,200.00
financial assets
Total of the
113,558.00 1,916,642.00 2,030,200.00
above
Financial
0.00 212,689.24 212,689.24
liabilities
Whether was significant change of the measurement attribution of the main assets of the Company during the reporting period?
20
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
□ Yes √ No
V. List of the investment
1. Overall condition
√ Applicable □ Inapplicable
Investment amount of the reporting period Investment amount of the same period of
Variation amount
(RMB Yuan) last year (RMB Yuan)
3,000,000.00 231,450,200.00 -98.70%
2. List of the significant equity investment acquired from the reporting period
□ Applicable √ Inapplicable
3. List of the significant non-equity investment has been executing during the reporting period
□ Applicable √ Inapplicable
4. Investment on the financial assets
(1) List of the securities investment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
(2) List of the derivative investment
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
5. Use of raised funds
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
VI. Selling of the significant assets and the equities
1. List of the selling of the significant assets
□ Applicable √ Inapplicable
No such situation of the Company during the reporting period.
21
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. List of the selling of the significant equities
√ Applicable □ Inapplicable
Proporti
Net
on of
profits
the net Whether
contribu
profits execute
ted by
of the d as
the Whether
contribu schedul
equities the
ted ed and
Transact to the involve
Influenc amount if failed,
ion listed Pricing Whether Relation d
e of the of the should
price compani principl was the ship equities Disclos
Counter Sold Sold selling equities state the Disclos
(RMB es from es of the related with the all ure
party equities date of the selling reasons ure date
Ten the equities transacti counter complet index
Compan to the and the
Thousan period-b selling on party ed the
y listed adopted
d Yuan) egin to ownersh
compani measure
the sold ip
es to the ments of
date transfer
total the
(RMB
amount Compan
Ten
of the y
Thousan
net
d Yuan)
profits
Decreas
ed the
negative
influenc
es of the
profits Confirm
75% of the ed the
equities Compan bottom
Lion
of the y by the price
Asset
Foshan subsidia based Non-rel
Manage 31 Dec. -6,713.7 31 Dec.
Chengto 15,000 ry, and 47.05% on the No ated Yes Yes
ment 2015 1 2015
ng improve assessm party
Co.,
Paper d the ent and
Ltd.
Co., whole sold by
Ltd. earning the
capacity listing
of the
Compan
y which
was
benefit
22
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
for the
Compan
y of the
advanta
ges of
the
resource
s
concentr
ation
develop
ment.
VII. Analysis of the major controlling and stock-participating companies
√ Applicable □ Inapplicable
List of the stock-participating companies which the influence over 10% of the net profits of the Company by the major subsidiaries
Unit: RMB Yuan
Name Type Main Registered Operating Operating
Total assets Net assets Net profit
services capital revenues profit
Zhuhai
Ivory board,
S.E.Z.
packaging
Hongta
base paper
Renheng USD243,609 4,772,308,24 2,711,212,75 3,032,414,95 97,421,152.4 100,626,805.
Subsidiary for liquid
Paper Co., ,909.00 7.40 0.31 4.02 0 71
food, latex
Ltd.
and calcium
(combination
carbonate
)
Zhuhai
S.E.Z. Ivory board,
Hongta packaging
USD243,609 4,309,204,78 2,707,958,65 1,830,134,08 103,082,759. 101,204,010.
Renheng Subsidiary base paper
,909.00 9.12 1.93 5.69 50 45
Paper Co., for liquid
Ltd. food
(monomer)
Ivory board,
Zhuhai
packaging
Huafeng 2,281,429,17 975,953,598. 1,661,528,18 14,340,220.7
Subsidiary base paper 984,560,000 6,245,378.49
Paper Co., 8.62 46 1.35 1
for liquid
Ltd.
food
Zhuhai Latex and 206,674,961. 150,179,956. 231,419,140. 19,350,769.5 17,016,891.7
Subsidiary 69,271,900
Golden calcium 54 15 21 0 2
23
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Pheasant carbonate
Chemical
Co., Ltd.
Huaxin
(Foshan) Color
USD12,800, 440,747,729. 204,819,506. 253,942,092.
Color Subsidiary packing and 4,252,816.41 6,842,420.92
000 36 61 65
Printing Co., label print
Ltd.
Subsidiaries acquired or disposed during the reporting period:
√ Applicable □ Inapplicable
Purpose for acquiring or disposing the Effect on the overall production and
Name of subsidiary
subsidiary in the reporting period business performance
Decreased the negative influences of the
profits of the Company by the subsidiary,
and improved the whole earning capacity
Foshan Chengtong Paper Co., Ltd. Sold by listing
of the Company which was benefit for the
Company of the advantages of the
resources concentration development.
List of the major controlling stock-participating companies
1. Hongta Renheng headquarters, Zhuhai Huafeng, Golden Pheasant Chemical: influenced by the constantly concentrate release of
the newly increased capacity of the domestic and overseas macroeconomic environment and white cardboard industry and the
disharmony between the demand the capacity growth rate, the ivory board appeared to be shrank of the price as well as the volume,
thus the profits of Hongta Renheng (combination, including Golden Pheasant Chemical) had a bit decrease with the total amount of
the whole year’s profits of RMB0.114 billion and the YoY decrease of about 23.56%.
2. Huaxin Color Printing: the packaging printing business had shrank owning to the slow down of the economic growth, and the
fierce horizontal competition triggered the decrease of the processing price, so it had to switch down the price among the market
competition for maintaining the market share with the operating income had a bit increase but the profits had a YoY decrease in 2015.
3. Foshan Chengtong had stopped the production in Jan. 2014.
VIII. List of the structured main bodies controlled by the Company
□ Applicable √ Inapplicable
IX. Outlook of the Company’s future development
I. Industry environment and outlook
(I) Overall situation of domestic papermaking industry
In 2015, the newly increased production capacity of ivory board will continue to be released. With the average production capacity
growth rate up to 25% in the past three years, the market price of some social ivory boards have dropped below the RMB4,000/ton
mark, only 200-300 Yuan/ton higher than the high-end coated duplex board with gray back, and the price competition has reached
the boiling point. Affected by the macroeconomic environment, the growth of demand for ivory boards will remain slow, causing
inventories to balloon. The destocking activities have been going on in the ivory board industry for nearly one year, but no obvious
improvement has shown up.
24
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Looking into the ivory board industry in 2016, the conflict between the demand and supply will persist, and the competition will
further deteriorate. It’s likely that the market price of ivory board will continue to drop and the cutthroat competition of social ivory
board sales price is not going to turn better easily. In 2016, the overall situation of the industry will remain not optimistic, and the
company will face numerous difficulties in operation.
II. Opportunities and strategies for future development of the company
Strive to solve the issues rooted in the history of B share, build the channel to move from one capital platform to another, build the
company into a comprehensive supplier that can provide the packaging solution and new materials through the horizontal and vertical
extension and value chain expansion based on the packaging and new material manufacturing industry.
(I) Develop the intensively processed paper products and pursue higher added value to products. The company will, following the
thought of increasing the added value of papers, strive to develop products with higher technical contents to take a lead in the market.
(II) Expand the overseas tobacco packaging board market with great efforts, with an eye to the overseas cooperation at a high starting
point. The gradual development of international business can reduce the risks brought by domestic price competition to the company.
(III) Expand the medicine packaging and special packaging and other such high-end products in the package printing business.
Conduct new product research and core product upgrade and transformation for key clients, develop more high-end products for
clients, and especially conduct the focus research for high-end products such as the medicine packaging and special packaging.
(IV) Seek an approach to break the capital market bottleneck, and expand more room for the company development.
III. Main work of 2016
(I) Continue to strengthen the lean management
Push forward and implement vie lean management modules: that is, “5S”, “small team action & improvement proposal”, “TPM”,
“warehousing and logistics optimization”, “internal quality improvement”. Strengthen the cost control during the production, and
utilize opportunity that the MES system is going live to further regulate the on-site management process, shift from the previous
qualitative management to quantitative management, improve the on-site management level, reduce the unconscious wastes, ask the
management for profits, continue the internal tapping of latent potentials, so as to address the challenges brought by further drop of
tobacco packaging board price.
(II) Continue to implement the product structural focus
Continue to deepen the optimization of product structure, utilize the company’s own strength in liquid packaging paper technology to
realize the shift to liquid food packaging paper production. Strengthen the speed at which the non-Terta liquid food packaging paper
are coming to the market, stabilize the product quality, and provide good services to current customers, address the risks that might
be brought by putting the new production capacity into operation .
(III) Systematically optimize the operation process and integrate machine products horizontally
Strengthen the system’s planning and synergy, use the functional advantage shift process to improve the company’s overall operation
capability; push forward the production integration to realize the quality consistence of core products produced on different
machines.
(IV) Strengthen the expansion of market for new projects
1. Strengthen the efforts put into expanding the market for Jinji Chemical’s latex products, focus on the expansion and service of
enterprises in the Chinese paper industry, increase Jinji Chemical’s production and sales amount and profits.
2. Do a good job in the development of Huaxin Color Printing’s Phase III market and production management and turn them into the
new profit growth point.
IV. Main risk factors and countermeasures
1. Market risk
Affected by the falling demand for high-end package and the tobacco industry, the inflection point of tobacco packaging board
market has appeared. The continuous and concentrated release of the new production capacity for various ivory boards in China in
the past two years has brought unprecedented competition pressure to the industry market. Countermeasure: adjust the product
structure, and strengthen the efforts in developing new products and expanding new market.
25
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. Raw material price fluctuation
The great change in international paper pulp price results in the cost risks. Countermeasure: keep a close watch on the price change
trend, and RMB exchange rate tendency, and foreign currency index change. Conduct the bulk purchase and use the exchange rate
locking tool in a timely manner.
3. Risk related to recovery of funds and loans occupied by low-efficiency or inefficient inventory
Countermeasure: continue to strictly control the company’s new low-efficiency and inefficient inventory, strengthen the liquidation
of low-efficiency and inefficient inventory. Make the enterprise financial risk control and management, ask the financial, purchase
and sales department to work hand in hand to strictly control the bad debt risks in amount receivable and prepayment.
4. Risk in constantly increasing environmental protection policies and environmental protection costs.
Countermeasure: urge the enterprises to implement the environmental protection and production safety requirements, and nip the
hazards in the bud to the greatest extent, reduce the environmental protection policy risks and ensure the production safety, avoid
people and property losses.
X. List of the received researches, visits and interviews
1. Particulars about researches, visits and interviews received in this reporting period
√ Applicable □ Inapplicable
Time of reception Way of reception Visitor type Index of the researches basic information
Inquired of the operating situation of the
9 Jan. 2015 Telephone communication Individual
Company
Inquired of the operating situation of the
12 Jan. 2015 Telephone communication Individual
Company
Developed towards the Share A market
13 Mar. 2015 Telephone communication Individual by delisting first then applying for the
listing.
Inquired of the current policies of
solving the Share B and the feasible
20 May 2015 Telephone communication Individual
proposal put forward to solve the Share
B problems
29 May 2015 Telephone communication Individual Inquired of solving the Share B problems
Inquired of the progress of the
10 Sep. 2015 Telephone communication Individual
significant events
Inquired of the progress of the
26 Oct. 2015 Telephone communication Individual
significant events of the Company
Inquired of the progress of the
18 Nov. 2015 Telephone communication Individual
significant events
Reception times 8
Number of reception institutions 0
Number of reception person 8
26
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Number of receipting other targets 0
Whether disclose, reveal or let out unpublished
No
significant information
2. Particulars about researches, visits and interviews received from the period-end to the disclosure date
√√ Applicable □ Inapplicable
Time of reception Way of reception Visitor type Index of the researches basic information
Inquired for the time when would the
26 Feb. 2016 Telephone communication Individual
share relist
1Reception times 1
Number of reception institutions 0
Number of reception person 1
Number of receipting other targets 0
Whether disclose, reveal or let out unpublished
No
significant information
27
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section V. Significant Events
I. List of the profits distribution of the common shares and turning capital reserve into share
capital of the Company
List of the formulation, execution or adjustment of the profits distribution policies of the common shares, especially the cash
dividend policies
√ Applicable □ Inapplicable
During the reporting period, the Company executed the dividend work according to the 2014 profits distribution proposal reviewed
and approved the 2014 Annual General Meeting (based on the total share capital on 31 Dec. 2014 and distributed the cash dividends
of RMB0.15 (tax included) for every 10 shares to the whole shareholders.
Special explanation of cash dividend policy
Whether conformed with the regulations of the Articles of
association or the requirements of the resolutions of the Yes
shareholders’ meeting:
Whether the dividend standard and the proportion were definite
Yes
and clear:
Whether the relevant decision-making process and the system
Yes
were complete:
Whether the independent director acted dutifully and exerted the
Yes
proper function:
Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal Yes
interest had gained fully protection:
Whether the conditions and the process met the regulations and
was transparent of the adjustment or altered of the cash dividend Not yet adjusted
policy:
List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning capital reserve into
share capital of the Company of the recent 3 years
2015 profits distribution preplan: which approved by the 2016 4th Session of the 6th Board of Directors that based on the total share
capital on 31 Dec. 2015 to distribute the cash dividends of RMB0.38(tax included) for every 10 shares to the whole shareholders.
2014 profits distribution proposal: based on the total share capital on 31 Dec. 2014, the Company distributed the cash dividends of
RMB0.15 (tax included) for every 10 shares to the whole shareholders.
2013 profits distribution proposal: neither executed the profits distribution nor executed the turn from reserved funds to share capital.
Cash dividend distribution of the common shares of the Company of the recent 3 years (including the reporting period)
Unit: RMB Yuan
The ratio accounting
Net profit belonging
in net profit which
to shareholders of
Amount of cash belongs to Amount of the cash Ratio of the cash
the listed company
Dividend year dividend (including shareholders of the dividend by other dividend by other
in consolidated
tax) listed company in methods methods
statement of
consolidated
dividend year
statement
2015 19,206,150.00 133,094,696.66 14.43% 0.00 0.00%
2014 7,581,375.00 83,284,859.23 9.10% 0.00 0.00%
2013 0.00 79,060,852.74 0.00% 0.00 0.00%
The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the common shares held
by the shareholders of the Company (without subsidiaries) was positive, but it did not put forward a preplan for cash dividend
distribution of the common shares:
□ Applicable √ Inapplicable
28
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
II. Pre-plan for profit allocation and turning capital reserve into share capital for the
reporting period
√ Applicable □ Inapplicable
Bonus shares for every 10 shares (share) 0
Dividend for every 10 shares (RMB Yuan) (tax
0.38
included)
Turning capital reserve into share capital for every
0
10 shares (share)
Total shares as the basis for the allocation preplan 505,425,000
(share)
Total cash dividends (RMB Yuan) (tax included) 19,206,150.00
Distributable profit (RMB Yuan) 19,206,150.00
Percentage of the cash bonus of the total profits 100.00%
dividends
Cash dividend situation
If the development stage of the Company belongs to the mature period without any significant assets expenditure arrangement,
when executing the profits distribution, the ratio of the cash dividend to the profits distribution of the reporting period should at
least reach 20%.
Details about the profit allocation or turning capital reserve into share capital
Based on the total share capital on 31 Dec. 2015, the Company distributed the dividends of RMB0.38for every 10 shares to the
whole shareholders with no bonus share and without executing the turn from reserved funds to share capital
III. Performance of commitments
1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the
Directors, the Supervisors and the Senior Executives or the other related parties during the reporting
period and those hadn’t been completed execution up to the period-end
√ Applicable □ Inapplicable
Time of
Commitmen Period of
Commitment Commitment type Contents making Fulfillment
t maker commitment
commitment
Commitment on
share reform
China supplies development
investment corporation (has
changed its name to “China
National Paper-Industry
Investment Corp. ”) in order to
avoid potential future
competition, CNPIC made the
following commitment:
Commitment in 1. The Company and the
China Paper
the acquisition Company’s wholly owned and
Industry Normal
report or the controlling companies ensured 28 Jun. 2005 Long-term
Investment performance
report on equity that there is no same or similar
Corporation
changes business with Foshan Huaxin
Packaging Co., Ltd. 2. The
Company and the Company’s
wholly owned and controlling
companies ensured that there is
no same or similar business
with Foshan Huaxin Packaging
Co., Ltd.; The Company and the
Company’s wholly owned and
29
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
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 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. committed
that: if a third party claim, such
as right, housing demolition any
lead to Hongta Group Co., Ltd.,
can not normally possess,
utilize, profit from and dispose
of defective (real estate),
Hongta Group Co., Ltd., and
Yanlord Industries Pte. Ltd.
Singapore
agreed to pay the compensation
Renheng
of suffered losses of Foshan
Industry
Huaxin Packaging Co., Ltd and
Co., Ltd.;
Long Bon International Co., Long-term
Yunnan
Commitments Ltd. within 30 days from commitment
Hongta
made upon the ?? receiving notice of Foshan 19 Oct. 2012 Long-term belonging to
Group Co.,
assets replacement Huaxin Packaging Co., Ltd and need trigger
Ltd.,(both
Long Bon International Co., conditions
are not the
Ltd., the value of defect real
shareholders
estate was comprehensive
of the
determined according to the
Company)
Rights and Interests of All
Shareholders Value Assets
Evaluation Report of Zhuhai
Special Economic Zone Hongta
Group Co., Ltd., issued by
Zhongshang Assets Appraisal
Co., Ltd. on 7 Nov. 2008
and used years and depreciation
of real estate Compensation
does not exceed the total
assessment net value of the
defective real estate of RMB
10,746,298.00.
Foshan Huaxin Development
Co., Ltd. as the controlling
shareholder of Foshan Huaxin
Packaging Co., Ltd. (here in
Commitments Foshan after referred to as "YHB"
made upon first Huaxin committed that Will not in 23 Jun. 1999 Normal
Long-term
issuance or Developmen any place within or outside of performance
refinance t Co., Ltd. Guangdong province in any
way (including, but not limited
to, with individual
proprietorship, joint venture or
through another company hold
30
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
the share or own equities to
participate in similar business
activities may directly form
competition with YHB at that
time. Excepting as the
subsequent restructuring,
transfer, newly issuance, etc.,
Foshan Huaxin Development
Co., Ltd. no long effectively
control YHB.
Commitment on
equity incentive
The Company future the next
three years (2015-2017) the
specific returns planning of
shareholder: 1, the company
can take the ways of cash,
shares or cash combined to
allocate dividends, can
undertake metaphase cash
dividends. 1, the Company can
take cash, shares or
combination o f cash and share,
with stock allocation of
dividends, can undertake
metaphase cash dividends. 2.
The next three years, the
Company will actively take
cash distribution of profits. In
accord with relevant laws,
regulations and provisions of
the Articles of Corporation and
the system and conditions and
Foshan the profit in the Company meet
Huaxin the capital demand of normal Normal
29 Jun. 2015 2018-08-31
Packaging production and business performance
Co., Ltd. operation and fully reserved
Other legal accumulation fund and
commitments surplus accumulation, under
made to minority such condition, if there is no
shareholders major investment plan or major
cash payments, etc, the next
three years cumulative
distribution of profits in cash
will be not less than thirty
percent of the average annual
distributable profits realized in
recent three years. 3, According
to the actual situation of the
Company and long-term
sustainable development, the
Board of Directors thought that
when the profit allocation by
stock dividend meets all the
overall interests of
shareholders, the Company can
conduct stock dividend to
distribute profit.
The Company future the next
three years (2012-2014) the
Foshan specific returns planning of Had
Huaxin shareholder: 1, the company 18 Jul. 2012 2015-08-31 completed the
Packaging can take the ways of cash, performance
Co., Ltd. shares or cash combined to
allocate dividends, can
undertake metaphase cash
31
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
dividends. 1, the Company can
take cash, shares or
combination o f cash and share,
with stock allocation of
dividends, can undertake
metaphase cash dividends. 2.
The next three years, the
Company will actively take
cash distribution of profits. In
accord with relevant laws,
regulations and provisions of
the Articles of Corporation and
the system and conditions and
the profit in the Company meet
the capital demand of normal
production and business
operation and fully reserved
legal accumulation fund and
surplus accumulation, under
such condition, if there is no
major investment plan or major
cash payments, etc, the next
three years cumulative
distribution of profits in cash
will be not less than thirty
percent of the average annual
distributable profits realized in
recent three years. 3, According
to the actual situation of the
Company and long-term
sustainable development, the
Board of Directors thought that
when the profit allocation by
stock dividend meets all the
overall interests of
shareholders, the Company can
conduct stock dividend to
distribute profit.
Executed timely
Yes
or not?
If the
commitments
failed to complete
the execution as
expired, should
Inapplicable
specifically state
the unfulfillment
reasons and the
work plan for the
next step
2. Assets or projects existing profit forecast, which were still in the profit forecast period, the Company
made note and explain to the assets or project arrived at original profit forecast
□ Applicable √ Inapplicable
IV. Occupation of the Company’s capital by the controlling shareholder or its related parties
for non-operating purposes
□ Applicable √ Inapplicable
No such cases in the reporting period.
32
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
V. Explanation by the Board of Directors, the Supervisory Committee and the Independent
Directors (if any) about the “non-standard audit report” issued by the CPAs firm for the
reporting period
□ Applicable √ Inapplicable
VI. Explanation of the changes of the accounting policy, the accounting estimates and the
accounting methods compared to the last financial report
□ Applicable √ Inapplicable
No such cases in the reporting period.
VII. Explain retrospective restatement due to correction of significant accounting errors in
the reporting period
□ Applicable √ Inapplicable
No such cases in the reporting period.
VIII. Explain change of the consolidation scope as compared with the financial reporting of
last year
√ Applicable □ Inapplicable
There was 1 increased and 1 decreased of the main entities included in the scope of the consolidated financial
statement of the reporting period when compared to the last period, of which:
1. Subsidiary newly included in the consolidated scope of the reporting period
Name Reason of alternation
Pinghu Huaxin Packaging Materials Science & Newly built up a subsidiary of the reporting period
Technology Co., Ltd.
2. Subsidiary not longer be included in the consolidated scope of the reporting period
Name Reason of alternation
Foshan Chengtong Paper Co., Ltd. Disposal of the subsidiaries of the reporting period
The Company disposed the controlling subsidiary-Foshan Chengtong Paper Co., Ltd. at the year-end of 2015 and
according to the regulations of the accounting policies, the revenues, expenses and profits should be included in
the consolidated statement of income from the period-begin to the disposal date of the business or subsidiaries
which disposed by the Company during the reporting period; and the cash flow from the period-begin to the
disposal date of the subsidiary or the business should be included in the consolidated cash flow statement; of
which the assets, liabilities and the owners’ interests should not be included in the consolidated statement at the
year-end.
IX. Particulars about engagement and disengagement of CPAs firm
CPAs firm engaged at present
Name of domestic CPAs firm Dahua CPA (LLP)
Remuneration for domestic CPAs firm for the
100
reporting period (RMB Ten Thousand Yuan)
Consecutive years of the audit services provided by
1
domestic CPAs firm
Name of domestic CPAs firm Zhang Yan, Liu Jiliang
Reengage the CPAs firm at current period or not?
□ Yes √ No
Reengage the CPAs firm during auditing period or not?
33
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
□ Yes √ No
Particulars on engaging the audit firm for the internal control, financial adviser or sponsor
√ Applicable □ Inapplicable
The Company engaged the Dahua CPA (LLP) as the internal control audit CPA of this year and paid for the internal control audit
expenses of RMB0.3 million.
X. Particulars about trading suspension and termination faced after the disclosure of annual
report
□ Applicable √ Inapplicable
XI. Bankruptcy and reorganization
□Applicable √ Inapplicable
There was no such situation of the Company during the reporting period.
XII. Significant lawsuit or arbitration
□ Applicable √ Inapplicable
XIII. Punishment and rectification
□ Applicable √ Inapplicable
No such cases in the reporting period.
XIV. Honesty situations of the Company, its controlling shareholders and actual controller
□ Applicable √ Inapplicable
XV. List of the execution of the stock incentive plan, ESOP, or other Staff incentives
□ Applicable √ Inapplicable
No such cases in the reporting period.
34
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
XVI. Significant related-party transactions
1. Related-party transactions relevant to routine operation
√ Applicable □ Inapplicable
Approv
Transact ed Settlem
Pricing
Type of Content ion Proporti transacti ent
principl Whethe
the of the amount on in on method
e of the Transact r exceed Similar Disclos
Related Relation related- related-p (RMB same quota of the Disclos
related- ion the market ure
party ship party arty Ten kind of (RMB related- ure date
party price approve price index
transacti transacti Thousa transacti Ten party
transacti d quota
on on nd ons Thousa transacti
on
Yuan) nd on
Yuan)
Being
decided
China Purchasi through
Routine Transfer
Paper Actual ng raw negotiat
related Market 28,647. , bank Inapplic 22 Mar.
Investme controll material ion 12.52% 35,500 No
transacti value 61 accepta able 2016
nt Co., er s and based
on nce
Ltd. power on the
market
value
28,647.
Total -- -- -- 35,500 -- -- -- -- --
61
Details of large amount of sales
N/A
returns
As for the prediction on the total
amount of routine related-party
transactions to be occurred in the
Inapplicable
reporting period by relevant types, the
actual performance in the reporting
period (if any)
Reason for significant difference
between the transaction price and the Inapplicable
market price (if any)
2. Related-party transactions regarding purchase and sales of assets
□ Applicable √ Inapplicable
No such cases in the reporting period.
35
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
3. Related-party transactions common external investment
□ Applicable √ Inapplicable
No such cases in the reporting period.
4. Credits and liabilities with related parties
□ Applicable √ Inapplicable
Whether was any contract related to the non-operating credits and liabilities with related parties?
√Yes □ No
Debt payable of the related parties
Newly
Returned
increased Interests of
Opening amount of Closing
amount of the reporting
balance the reporting balance
the reporting period (RMB
Related parties Relationship Reason (RMB Ten period (RMB Interests rate (RMB Ten
period (RMB Ten
Thousand Ten Thousand
Ten Thousand
Yuan) Thousand Yuan)
Thousand Yuan)
Yuan)
Yuan)
Paid for the
bank loans
China
and
Chengtong
Ultimate supplemente
Holdings 41,875 0 41,875 4.80% 331.92 0
controller d the
Group Co.,
circulating
Ltd.
funds of the
Company
Influences on the operating
results and the financial
Had returned the loans to the actual controller and decreased the long-term debts of the Company
conditions of the Company
by the related debts
5. Other significant related-party transactions
□ Applicable √ Inapplicable
No such cases in the reporting period.
36
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
XVII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Contract
□ Applicable √ Inapplicable
No such cases in the reporting period.
(3) Lease
□ Applicable √ Inapplicable
No such cases in the reporting period.
2. Significant guarantees
√ Applicable □ Inapplicable
(1) List of guarantees
Unit: RMB Ten Thousand Yuan
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Guarantees provided by the Company for its subsidiaries
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Zhuhai S.E.Z. Hongta 21 May 33,000 7 May 2014 12,530.13 Guarantee of 2014.05.07-2 No Yes
37
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Renheng Paper Co., 2014 joint liability 017.05.06
Ltd.
Zhuhai S.E.Z. Hongta
12 Feb. Guarantee of 2015.01.26-2
Renheng Paper Co., 10,000 26 Jan. 2015 4,000 No Yes
2015 joint liability 016.01.26
Ltd.
Zhuhai S.E.Z. Hongta
12 Feb. Guarantee of 2015.01.07-2
Renheng Paper Co., 15,000 7 Jan. 2015 1,425.05 No Yes
2015 joint liability 016.01.07
Ltd.
Zhuhai S.E.Z. Hongta
28 Apr. Guarantee of 2015.06.16-2
Renheng Paper Co., 23,000 16 Jun. 2015 23,000 No Yes
2016 joint liability 016.06.16
Ltd.
Huaxin (Foshan)
Guarantee of 2013.07.01-2
Color Printing Co., 6 Jun. 2016 6,500 1 Jul. 2013 0 No Yes
joint liability 017.12.31
Ltd.
Huaxin (Foshan)
10 Mar. Guarantee of 2015.06.29-2
Color Printing Co., 3,000 29 Jun. 2015 1,556.24 No Yes
2014 joint liability 016.06.28
Ltd.
Zhuhai Huafeng Paper 31 Dec. Guarantee of 2013.10.29-2
35,000 29 Oct. 2013 14,101.5 No Yes
Co., Ltd. 2013 joint liability 016.10.28
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 240,000 51,000
subsidiaries during the
reporting period (B1)
reporting period (B2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 125,500 56,612.92
at the end of the reporting
end of the reporting period (B3)
period (B4)
Guarantees provided by the subsidiaries for their subsidiaries
Disclosure Guarante
Actual
date of Actual e for a
Amount for occurrence date Type of Period of Executed
Guaranteed party relevant guarantee related
guarantee (date of guarantee guarantee or not
announcem amount party or
agreement)
ent not
Zhuhai Huafeng Paper 24 Mar. Guarantee of 2015.02.12-2
25,000 12 Feb. 2015 20,015.48 No Yes
Co., Ltd. 2015 joint liability 016.01.15
Zhuhai Golden 21 Nov. 10,000 31 Aug. 2015 4,000 Guarantee of 2015.08.31-2 No Yes
38
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Pheasant Chemical 2015 joint liability 016.08.31
Co., Ltd.
Total actual occurred
Total guarantee line approved for
amount of guarantee for the
the subsidiaries during the 40,000 35,000
subsidiaries during the
reporting period (C1)
reporting period (C2)
Total actual guarantee
Total guarantee line that has been
balance for the subsidiaries
approved for the subsidiaries at the 35,000 24,015.48
at the end of the reporting
end of the reporting period (C3)
period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total actual occurred
Total guarantee line approved
amount of guarantee during
during the reporting period 280,000 86,000
the reporting period
(A1+B1+C1)
(A2+B2+C2)
Total actual guarantee
Total guarantee line that has been
balance at the end of the
approved at the end of the 160,500 80,628.4
reporting period
reporting period (A3+B3+C3)
(A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
41.60%
assets of the Company
Of which:
Amount of debt guarantee provided for shareholders, actual
0
controller and the related-party (D)
Amount of debt guarantee provided for the guaranteed party
whose asset-liability ratio is not less than 70% directly or 0
indirectly (E)
Total guarantee amount exceeded 50% of the net assets (F) 0
Total amount of the above three guarantees (D+E+F) 0
Explanation on guarantee that adopts complex method
(1) Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
The Company did not illegally provide any guarantee for any external party in the reporting period.
39
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
3. Cash assets management entrustment
(1) Wealth management entrustment
□ Applicable √ Inapplicable
No such cases in the reporting period.
(2) Entrustment loans
□ Applicable √ Inapplicable
No such cases in the reporting period.
4 Other significant contracts
□ Applicable √ Inapplicable
No such cases in the reporting period.
XVIII. Other significant events
√ Applicable □ Inapplicable
During the reporting period, the Company planed the significant events involving the solving of the historical problems of the Share
B and the shares of the Company constantly delisted as the market started since 22 Jun. 2015, which the Company issued once
process announcement on the delist of the significant events on every 5 transaction date.
XIX. Significant events of subsidiaries
√ Applicable □ Inapplicable
Restructuring of Hongta Renheng
On 14 Dec. 2015, approved by the Board of the Directors of the Company, the subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co.,
Ltd. completely altered as the limited liability company, which regarded 31 Jul. 2015 as the base date and after the alternation, the
share capital changed to RMB0.6 billion and the shareholding proportion of the original shareholders remained unchanged.
On 29 Jan. 2016, Zhuhai Hongta Renheng Packaging Co., Ltd. held the establishment meeting.
On 1 Mar. 2016, the industrial and commercial change of Zhuhai Hongta Renheng Packaging Co., Ltd. had completed with the name
of the company had officially altered.
XX. Social responsibilities
√ Applicable □ Inapplicable
The Company according to the requirements of the Company Law, Securities Law and Articles of Association and other relevant
laws and regulations as well as combined with the actual situation, constructed the normative corporate governance structure, the
Annual General Meeting, the Board of the Directors, the Board of Supervisors and the managers level charged by the GM with
responsibilities and clear as well as constructed the corporate checks and balances management mechanism with seperated ownership
and managerial authority, independent decision-making power, executive power and supervision power as well as cofigurative
Annual General Meeting, the Board of Directors and the Board of Supervisors. The Company strictly stipulated the rights,
40
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
obligations and responsibility scope of the Annual General Meeting, the Board of Directors, the Board of Supervisions and the GM.
The Company paid attention on the execution of the social responsibilities which exceeded the idea of regarding the profits as the
sole target, so in the process of the production, operating and the business development, when creating the value for the shareholders,
it took great efforts to achieve the mutual coordination between the economic efficiency and the social efficiency, the short-term
profits and the long-term profits, the self development and the society development by complying with the other appeal of the nation
and devoting itself to the promotion of the comprehensive development of the society that to realize the healthy and harmonious
development of between the Company and the employees, the Company and the society, the Company and the environment.
The Company took the provide of the green environmental protection packaging materials as it s mission, regarded the construction
of the enternational first-class enterprise as the target, unshakenly walked on the scientific innovation development path, constantly
innovate the enterprise management, enhanced the products quality, enlarged the R&D strength of the new products, produced the
paper products with high quality and high-tech content that met with the production social demand, made great efforts to forge the
excellent project of the national paper brand and create the environmental proteting as well as high quality social wealth. When the
Company was realizing the profits, should insist to share the development results with the society, try its best to pursuit the
harmonious and unity with the social development, constantly promots the development and progress of the society and the
ecnomomy, so that to pay for and contribute to the society with excellent performances.
The Company devoted itself to the construction of the international first-class papermaking enterprise possessed of green ecology
and constantly development and as one of the majoy enterprises among the domestic papermaking, during the years’ development,
the Company always regard the development of the green ecological paper industry as the goal and positively introduced and
upgraded the high-efficient, engergy-saving and environmental protection international high-end production line for promoting the
transformation and upgrade of the enterprise.
The key emission reduction energy-saving work completed by the Company was including: firstly, the investment and operation of
the reclaimed water reuse project of the Zhuhai Huafeng construction started, which could intensify the recycle usage of the water,
reduce the water consumption and realize the target of energy-saving and emission-reduction; secondly, the investment and operation
of the waste water biochemical treatment of Hongta Renheng construction, which could further improve the processing capacity of
the water pollutant and satisfy the newest emission requirements; lastly, Foshan Chengtong Paper Co., Ltd. ceased the production
that led to the halt of the external emission of the pollutant.
Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the environmental protection
authorities of the country?
□ Yes √ No
Whether issue social responsibility report or not?
□ Yes √ No
XXI. Corporation bonds
Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not fully paid on the
approval report date of annual report
Yes
1. Basic information of the Company bonds
Bonds balance
Way of
Name Abbr. Code Release date Due date (RMB Ten Interest rate
redemption
Thousand
41
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Yuan)
2012 Company Paid for the
bonds of interests once
Foshan Huaxin 12HBZ 112130 26 Nov. 2012 26 Nov. 2017 79,998 5.80% by year and the
Packaging Co., principals once
Ltd. when expired
Listed or transferred trading
SZSE
place of the Company bonds
List of the interests payment of
the Company bonds during the Normal
reporting period
According to the Prospectus on the Public Issuance of Company Bonds of Foshan Huaxin
Packaging Co., Ltd. (hereinafter referred to as “Prospectus”) disclosed on 22 Nov. 2012 by Foshan
Huaxin Packaging Co., Ltd. (hereinafter referred to as “the Company”) and the stated sell-back
provisions of the Company bonds issued in Y2012 (bond code: 112130 with the abbr. of
Execution of the relevant
“12HBZ”) was disclosed on the 1st Indicative Announcement of the Nominal Interest Rate
regulations during the reporting
Adjustment of the “12HBZ” and the Execution Methods of the Sell-back of the Bonds Holders of
period such as the affiliated
Foshan Huaxin Packaging Co., Ltd. (Announcement No.:2015-042), and had respectively issued
option clause of the issuers or
the 2nd, 3rd, 4th Indicative Announcement on 29 Oct. 2015, 30 Oct. 2015, 2 Nov. 2015
investors, special clauses such
(Announcement No.: 2015-044, 2015-058, 2015-W13). The investors could choose not to put
as the exchangeable regulations
back, partly put back or wholly put back to the Company of the held “12HBZ” on the put-back
of the Company bonds (if
registeration date with the put-back price of RMB100/piece and the put-back registeration date of
applicable)
the “12HBZ” was respectively of 20 Oct. 2015, 30 Oct. 2015 and 2 Nov. 2015. According to the
data from the Shenzhen Branch of CSDC, the total number of the put-back of the “12HBZ” was of
200 with the total put-back amount of RMB20,000.00 (interests excluded) and the retained trusted
amount of 7,999,800.
2. List of the bond trustee and the rating organization
Bond trustee:
19F and 20F,
Guangzhou
International
Guangzhou Finance Center,
Contact
Name Securities Co., Office address No. 5 of Contact Liao Jianqiang 020-88836636
number
Ltd. Zhujiang West
Rd, Tianhe
District,
Guangzhou
Rating organization executed the tracking rating of the Company bonds of the reporting period
F12, PICC Building, No. 2 of Jianguomen Outer
Name United Ratings Co., Ltd. Office address
Street, Chaoyang District, Beijing
42
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
3. List of the usage of the raised funds of the Company bonds
List of the usage of the raised funds and
Had wholly used for the payment for the bank loans and supplement to the current
the execution process of the Company
funds according to the regulations
bonds
Closing balance (RMB Ten Thousand
0
Yuan)
Operating situation of the raised funds
The raised funds had complete the usage and the special account had been written-off
special account
Whether the usage of the raised funds met
with the usage, using plan and other No difference
agreements committed on the prospectus
4. Rating situation of the Company bonds information
It’s estimated that in Apr. 2016, United Ratings Co., Ltd. will execute the tracking rating on the current Company bonds with the
rating results will be timely disclosed on the www.cninfo.com.cn.
5. Credit-adding mechanism, repayment plan and other repayment guarantee measures of the Company
bonds
The Company was with favourable operating conditions and strong repayment capacity that completedly performed as the repayment
plan on the prospectus.
6. Convene situation of the bonds holders meeting during the reporting period
N/A
7. List of the duty execution of the bonds trustee during the reporting period
The bonds trustee will disclose the entrusted management affairs report on www.cninfo.com.cn and the website of SZSE after the
disclose of the annual report of the Company.
8. The major accounting data and the financial indicators of the recent 2 years of the Company up the
period-end
Unit: RMB Ten Thousand Yuan
Item 2015 2014 Change rate of the same period
EBITDA 48,470.99 47,412.37 2.23%
Net amount of the cash flow
6,177.3 -39,333.47 115.70%
from investing activities
Net amount of the cash flow -60,811.86 -17,285.11 -251.82%
43
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
from financing activities
Balance of the cash and cash
18,596.03 11,324.86 64.21%
equivalents at the period-end
Current ratio 167.21% 132.35% 34.86%
Asset-liability ratio 42.09% 46.80% -4.71%
Quick ratio 120.72% 89.31% 31.41%
Total debt ratio of EBITDA 23.81% 19.65% 4.16%
Times interest earned 1.32 1.63 -19.02%
Times interest earned of cash 5.53 5.18 6.76%
Times interest earned of
3.44 3.69 -6.78%
EBITDA
Loan repayment rate 100.00% 100.00%
Interest coverage 100.00% 100.00%
Main reason of the above accounting data and the financial indicators with the YoY change exceeded 30%
√ Applicable □ Inapplicable
Reason of the change of the net amount of the cash flow from investment activietis: in 2014 the Company purchased 20% of
Chengtong Financial Co., Ltd. and the Phase III workshop of Foshan Color Printing executed the production expansion investment;
Reason of the change of the net amount of the cash flow from financing activities: the increase of the operating cash flow and the
decrease of the borrowings;
Reason of the change of the cash and cash equivalents balance at the period-end: the increase of the bank deposits balance;
Reason of the change of the current ratio: the descend range of the current liabilities was rather big;
Reason of the change of the quick ratio: the deline of the current liabiliteis and the inventories.
9. List of the restricted assets right up to the report-end
Assets with restricted ownership or use right
Item Balance Restricted reason
Monetary funds 323,746,286.83 The notes, the L/C guarantee deposits and the deposits were pledged
as the borrowings
Notes receivable 14,508,279.00 The notes were pledged for receiving the bank loans
Fixed assets 15,411,432.68 Be as the guarantee assets when apply for the compulsory execution
Total 353,665,998.51
The restricted assets mainly were the short-term financiang margin which not influenced the normal operating of
the Company.
10. List of the interest payment of other bonds and bonds financing instruments during the reporting
period
The Company issued the mid-term bills of RMB0.2 billion during the reporting period without any due payment or cash payment
event.
44
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
11. List of the acquired bank credit lines, usage and the repayment of the bank loans
The average bank credit scale of the reporting period was of RMB4.4 billion with the average usage amount of RMB1.3 billion with
the whole bank loans should be entirely and timely paid or paid in advance.
12. List of the execution of the agreements or the commitments related to the Company bonds raising
specification during the reporting period
Normal
13. Significant events occurred during the reporting period
N/A
14. Whether there was guarantor of the Company bonds
□ Yes √ No
45
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section VI. Change in Shares & Shareholders
I. Changes in shares
I. Changes in shares
Unit: share
Before the change Increase/decrease (+/-) After the change
Capitaliza
Newly
Bonus tion of Proportio
Amount Proportion issue Other Subtotal Amount
shares public n
share
reserves
333,500,0 333,500,0
I. Unlisted shares 65.98% 65.98%
00 00
333,500,0 333,500,0
1. Sponsor’s shares 65.98% 65.98%
00 00
Shares held by domestic 332,930,2 332,930,2
65.87% 65.87%
corporations 90 90
II. Listed shares 5,697,101 0.11% 5,697,101 0.11%
2. Domestically listed 171,925,0 171,925,0
34.02% 34.02%
foreign shares 00 00
171,925,0 171,925,0
III. Total shares 34.02% 34.02%
00 00
505,425,0 505,425,0
I. Unlisted shares 100.00% 100.00%
00 00
Reason for the change in shares
□ Applicable √ Inapplicable
Approval of the change in shares
□ Applicable √ Inapplicable
Reason for the change in shares
□ Applicable √ Inapplicable
Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the
Company and other financial indexes over the last year and last period
□ Applicable √ Inapplicable
Other contents that the Company considered necessary or were required by the securities regulatory authorities to disclose
□ Applicable √ Inapplicable
46
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. Changes in restricted shares
□ Applicable √ Inapplicable
II. Issuance and listing of securities
1. Issuance of securities (excluding preferred stock) in reporting period
□ Applicable √ Inapplicable
2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and
liabilities
□ Applicable √ Inapplicable
3. Existent shares held by internal staffs of the Company
□ Applicable √ Inapplicable
III. Particulars about the shareholders and actual controller
1. Total number of shareholders and their shareholding
Unit: share
Total number of
preferred
stockholder with
Total number of Total number of
vote right
Total number of shareholders on preferred
restored on the
shareholders at the 30th trading stockholder with
14,170 14,170 0 30th trading day 0
the reporting day before the vote right
before the
period disclosure date of restored (if any)
disclosure date of
the annual report (see Notes 8)
the annual report
(if any) (see
Notes 8)
Shareholding of shareholders holding more than 5% shares
Number Number Pledged or frozen shares
Increase Number
of of shares
and of shares
sharehol held
Holding decrease held not
Name of Nature of ding at subject
percenta of shares subject to
shareholder shareholders the end to Status of shares Amount
ge during trading
of the trading
reporting moratoriu
reporting moratori
period m
period um
47
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
FOSHAN
HUAXIN State-owned 329,512, 329,512,
65.20% 0 0
DEVELOPMENT corporation 030 030
CO., LTD.
GUOTAI JUNAN
SECURITIES(H Foreign 4,084,90
0.81% 0 0 4,084,905
ONGKONG) corporation 5
LIMITED
Foreign 2,561,99
WU HAOYUAN 0.42% 0 0 2,561,991
individual 1
VANGUARD
TOTAL
Foreign 1,362,90
INTERNATIONA 0.27% 0 0 1,362,902
corporation 2
L STOCK
INDEX FUND
Foreign 1,352,72
NORGES BANK 0.27% 0 0 1,352,720
corporation 0
ESSENCE
INTERNATIONA
Foreign 1,305,15
L SECURITIES 0.26% 0 0 1,305,152
corporation 2
(HONG KONG)
CO., LTD.
BOCI
Foreign 1,280,99
SECURITIES 0.25% 0 0 1,280,990
corporation 0
LIMITED
Domestic 1,233,90
WU FENQIANG 0.24% 0 0 1,233,901
individual 1
FOSHAN CHAN
BEN DE State-owned 1,139,42 1,139,42
0.23% 0 0
DEVELOPMENT corporation 0 0
CO., LTD.
Domestic 1,119,20
MIAO JUN 0.22% 0 0 1,119,200
individual 0
Explanations about associated It is unknown to the Company whether there exists associated relationship among the
relationship or concerted action shareholders above or they are acting-in-concert entities as stipulated in the Administrative
among the above shareholders Measures on Information Disclosure of Changes in Shareholding of Listed Companies.
Shareholdings of the top ten common shareholders not subject to trading moratorium
Amount of listed and circulated shares at the end of Type of shares
Name of shareholders
the year Type Amount
GUOTAI JUNAN 4,084,905 Domestically 4,084,905
48
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
SECURITIES(HONGKONG) listed foreign
LIMITED shares
Domestically
Wu Haoyuan 2,561,991 listed foreign 2,561,991
shares
VANGUARD TOTAL Domestically
INTERNATIONAL STOCK INDEX 1,362,902 listed foreign 1,362,902
FUND shares
Domestically
NORGES BANK 1,352,720 listed foreign 1,352,720
shares
Domestically
Essence International Securities
1,305,152 listed foreign 1,305,152
(Hong Kong) Co., Ltd.
shares
Domestically
BOCI SECURITIES LIMITED 1,280,990 listed foreign 1,280,990
shares
Domestically
Wu Fenqiang 1,233,901 listed foreign 1,233,901
shares
Domestically
Miao Jun 1,119,200 listed foreign 1,119,200
shares
Domestically
CMS (HK) Co., Ltd. 1,069,410 listed foreign 1,069,410
shares
Domestically
KGI ASIA LIMITED 1,002,459 listed foreign 1,002,459
shares
Explanation about associated
relationship and concerted action
among the top ten common
It is unknown whether the tradable share holders above are related parties or whether they are
shareholders not subject to trading
parties acting in concert as stipulated in the Administrative Methods for Information
moratorium as well as between the Disclosure Regarding Shareholding Changes of Listed Companies.
top ten common shareholders not
subject to trading moratorium and
the top ten common shareholders
Did any top ten shareholder of common share and the top ten shareholders not subject to trading moratorium of the Company carry
49
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
out an agreed buy-back in the reporting period?
□ Yes √ No
Top ten shareholder of common share and the top ten shareholders not subject to trading moratorium of the Company did carry out an
agreed buy-back in the reporting period
2. Particulars about the controlling shareholder
Nature of controlling shareholder: central state-owned holding
Type of controlling shareholder: legal person
Name of controlling Legal representative
Date of establishment Organization code Business scope
shareholder / company principal
Production, manufacture
and distribution of packing
materials, papermaking,
cable, wire, new materials;
FOSHAN HUAXIN distribution of packing
Ji Xiangdong 5 Jan. 1993 19353992-5
DEVELOPMENT CO., LTD. machinery and repairing
services, amplifiers and
fittings, decoration
materials, and drinks;
information consulting
Equity of shareholding and
participating shares of
controlling shareholders in
N/A
other domestic and foreign
listed company during the
reporting period
Changes in controlling shareholders during the reporting period
□ Applicable √ Non-applicable
The controlling shareholder did not change during the reporting period.
3. Particulars about the actual controller
Nature of actual controller: central state-owned assets management institutions
Type of actual controller: legal person
Legal
representative /
Name of actual controller Date of foundation Organization code Business scope
head of unit
91110000100008907C( Investment and development of
China National Paper Industry
Tong Laiming 22 Jan. 1998 unified social credit capital goods of major industrial
Investment Corp.
code) products, metal materials, sales
50
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
of raw materials and products of
chemical light industry and
paper, import & export industry.
Particulars about shareholding
of controlling shareholders
Guangdong Guanhao High-tech Co., Ltd. (600433.SH), Yueyang Forest & Paper Co., Ltd.
controlling and holding shares
(600963.SH).
of other listed companies during
the reporting period
Change in actual controller in the reporting period
□ Applicable √ Inapplicable
Diagram of ownership and control relationship between the Company and its actual controller:
SASAC
100%
China Chengtong Holding Group
Co., Ltd
100%
78.26%
China National Paper Industry
Investment Corp.
66.79%
Jiacheng Forestryry Holdings
Co., Ltd.
0.11%
Foshan Huaxin Development Co.,
6.62%
Ltd
65.2% 34.69%
Foshan Huaxin Packaging Co., Ltd Other sponsors shareholders
& shareholders of B share
The actual controller controls the Company by the means of trust or other means of assets management
□ Applicable √ Inapplicable
4. Other Corporate Shareholder with a shareholding percentage over 10%
□ Applicable √ Inapplicable
51
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller,
restructuring parties and other commitment entities
□ Applicable √ Inapplicable
52
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section VII. Preferred stock
□ Applicable √ Inapplicable
There was no preferred stock during reporting period
53
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section VIII. Directors, Supervisors, Senior Management Staff &
Employees
I. Changes in shareholding of directors, supervisors and senior management staff
Shares Shares
Starting Closing Increase Decrease
held at Other held at
date of date of of shares of shares
the increased/ the end of
Incumben office office in this in this
Name Title Gender Age beginning decreased the
t or not term term reporting reporting
the change reporting
(yy-mm-d (yy-mm-d period period
reporting (share) period
d) d) (share) (share)
period (share)
Huang Incumben 4 Dec. 6 Jun.
Director Male 53 0 0 0 0 0
Xin t 2015 2017
Ji
Vice Incumben 6 Jun. 6 Jun.
Xiangdon Male 41 0 0 0 0 0
president t 2014 2017
g
Incumben 6 Jun. 6 Jun.
Hong Jun Director Male 56 0 0 0 0 0
t 2014 2017
Zhang Incumben 27 Jan. 6 Jun.
Director Male 41 0 0 0 0 0
Qiang t 2016 2017
Incumben 6 Jun. 6 Jun.
Ye Meng Director Male 47 0 0 0 0 0
t 2014 2017
Yang Incumben 6 Jun. 6 Jun.
Director Male 45 0 0 0 0 0
Weixing t 2014 2017
Independ
Incumben 6 Jun. 6 Jun.
Zhao Wei ent Male 55 0 0 0 0 0
t 2014 2017
Director
Independ
Yang Incumben 6 Jun. 6 Jun.
ent Male 45 0 0 0 0 0
Zhenyu t 2014 2017
Director
Independ
Zhang Incumben 6 Jun. 6 Jun.
ent Male 48 0 0 0 0 0
Wenjing t 2014 2017
Director
Superviso
Ren Incumben 6 Jun. 6 Jun.
ry Board Male 53 0 0 0 0 0
Xiaoming t 2014 2017
Chairman
54
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Huang Superviso Incumben 6 Jun. 6 Jun.
Male 59 0 0 0 0 0
Jianrong r t 2014 2017
Yang Superviso Incumben 6 Jun. 6 Jun.
Male 42 0 0 0 0 0
Chenglin r t 2014 2017
Ji
Incumben 6 Jun. 6 Jun.
Xiangdon GM Male 41 0 0 0 0 0
t 2014 2017
g
Incumben 6 Jun. 6 Jun.
Chen Jiali Vice GM Male 58 0 0 0 0 0
t 2014 2017
Liu Incumben 6 Jun. 6 Jun.
Vice GM Male 46 0 0 0 0 0
Hanwen t 2014 2017
Wu Incumben 6 Jun. 6 Jun.
Vice GM Male 53 0 0 0 0 0
Yirong t 2014 2017
Chen Incumben 6 Jun. 6 Jun.
Vice GM Male 49 0 0 0 0 0
Zhenran t 2014 2017
Vice GM,
Yang CFO, Incumben 6 Jun. 6 Jun.
Male 45 0 0 0 0 0
Yinghui Board t 2014 2017
Secretary
Chairman
Tong 6 Jun. 3 Dec.
of the Former Male 46 0 0 0 0 0
Laiming 2014 2015
Board
Total -- -- -- -- -- -- 0 0 0 0 0
II. Particulars about changes of Directors, Supervisors and Senior Executives
Name Position Type Date Reason
Chairman of the
Tong Laiming Left 3 Dec. 2015 Change of work
Board
Chairman of the Selected as the Chairman of the Board by the Board of
Huang Xin Appointed 4 Dec. 2015
Board Directors
Zhang Qiang Director Appointed 27 Jan. 2016 Change of work
III. Resumes of important personnel
Main working experience of current directors, supervisors and senior management staff
Director: Huang Xin, born in 1962, master degree holder. From 1993 to Mar. 2006, he successively served as Deputy General
Manager, Manager of Operation Dept.Ⅱ, Manager of Industrial Dept., Deputy Manager of Stratagem Investment Dept. and Manager
of Asset Management Dept. in China Material Development Investment Corporation. He has been acting as the Director of the
Company since May 2003. He held a post in Foshan Huaxin Packaging Co., Ltd as a Deputy General Manager from Mar. 2006 to
55
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
May 2008. He worked as Deputy General Manager in Foshan Huaxin Development Co., Ltd from May 2008 to Jul. 2009; he acted as
General Manager in Zhuhai Hongta Renheng Paper Co., Ltd from Jun. 2008 to March 2012, and is also Deputy General Manager in
Foshan Huaxin Packaging Co., Ltd from Jul. 2009 to Jun. 2011, and now is Executive, Vice Manager. He has been acting as General
Manager of Hunan Tiger Forest & Paper Group Co., Ltd. since Aug. 2012, and now is Chairman; From July 2013 up to now act as
Chairman of Yueyang Forest & Paper Co., Ltd.
Vice president & General Manager: Ji Xiangdong, born in 1974, MBA holder and CPA. He held the posts in China Materials
Development Investment Corporation as Deputy Manger and Manager of Financial Dept from Aug. 2004 to May 2007; from May
2007 to May 2009, he acted as Chief Financial Officer in Foshan Huaxin Packaging Co., Ltd. He has been acting as Deputy General
Manager in Zhuhai Hongta Renheng Paper Co., Ltd since Jan. 2009. He acted as the Assistant General Manager in China Materials
Development Investment Corporation from May to Jul. 2009. He acted as Deputy General Manager in Foshan Huaxin Packaging Co.,
Ltd from Jul. 2009 to May 2014. He has been acting as Vice president & General Manager in Foshan Huaxin Packaging Co., Ltd
since 2014.
Director: Hong Jun, born in 1959, is a postgraduate degree holder and senior economist. From 1991 to Sep. 2007, he successively
took posts as Vice Chief of Appointment & Dismissal Office, Personnel Division in Materials Department, Vice Chief of Cadre
Office of Personnel Organ in Domestic Trade Department and General Manager of Human Resource Department in China
Chengtong Holding Group Co., Ltd; he has been successively holding a post as Vice Secretary and Secretary of the CPC, Deputy
General Manager in China National Paper-industry Investment Corp. since Sep. 2007; Concurrently he acted as Secretary of the CPC
in Foshan Huaxin Packaging Co., Ltd since Jul. 2008 as well as Chairman of the Supervisory Committee of Foshan Huaxin
Packaging Co., Ltd from May 2008 to May 2014. He has been acting as Director of Foshan Huaxin Packaging Co., Ltd.
Director: Zhang Qiang, male, born in 1974, is a CPA with master’s degree. He used to act as the Assistant Manager of the Operating
Management Department of the China Material Development Corporation, the Assistant Manager of Strategic Development
Department, the Deputy General Manager of Zhanjiang Guanlong Paper Industrial Co., Ltd., the GM Assistant of Guangdong
Guanhao High-tech Co., Ltd., the Manager of the Strategic Development Department of China Paper Investment Co., Ltd., the
Chairman of the Board and the legal representative of MCC Meili Pulp Paper Co., Ltd., the Director, the Deputy Chairman of the
Board, the GM, the Generation of Board Secretary of MCC Meili Paper Industry Co., Ltd.; and now he acts as the Chairman of the
Board of MCC Meili Paper Industry Co., Ltd., the Director of MCC Meili Paper Group Co., Ltd., the Chairman of the Board of
Guangdong Guanhao High-tech Co., Ltd. and the Vice GM of China Paper Investment Co., Ltd.
Director: Ye Meng, born in 1968, master degree holder, Senior Economist, he acted as HR Manager in Yueyang Paper Co., Ltd. from
Feb. 2003 to Apr. 2003, Deputy GM in Yueyang Paper Co., Ltd. from Apr. 2003 to Sep. 2006; he acted as Secretary of the Board in
Tiger Forest & Paper Group Co., Ltd. from Sep. 2006 to Jan. 2008, Chief Economist and Chief Legal Officer from Sep. 2006 to Sep.
2009 in Tiger Forest & Paper Group Co. , Ltd. he has been acting as Vice President & Communist Party Member(concurrently) in
Tiger Forest & Paper Group Co. , Ltd. since Nov. 2007; he acted as Secretary of the Party Committee in Yueyang Paper Co., Ltd.
(concurrently). Since Aug. 2011, he has been acting as General Manager Assistant in China National Paper-Industry Investment
Corp. (now known as: China Paper Corporation ), Vice President & Communist Party Member(concurrently) in Tiger Forest &
Paper Group Co. , Ltd. Since Apr. 2012, he has been acting as Chairman of the Supervisors in Yueyang Paper Co., Ltd. And he has
been acting as Director in Foshan Huaxin Development Packaging co., Ltd since Jun. 2014.
Director: Yang Weixing, born in 1970, is a bachelor degree holder and economist. From Dec. 1999 to Aug. 2006, he successively
took posts as Vice Director of Assets Operation Department in Foshan Industry Investment Holding Co., Ltd, Minister of Property
Management Department, Assistant to General Manager and Deputy General Manger in Foshan Chan Ben De Development Co., Ltd
and Deputy General Manager in Foshan Taiji Wine Co., Ltd; he acted as General Manager in Foshan Chan Ben De Development Co.,
Ltd since Jun. 2007. From Jan. 2010 to Nov. 2013, he acted as Chairman of Board of Supervisors in Foshan Investment Holdings Co.,
Ltd.; from Oct. 2013 up to now, he has been acting as Chairman of Foshan East Asia Co., Ltd.; from Dec. 2013 up to now, he has
been acting as Director, Deputy General Vice Manager in Foshan Investment Holdings Co., Ltd.
Independent Director: Zhao Wei, born in 1960, is a bachelor degree holder and senior engineer. He has took post of Vice Director in
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Personnel Division in Clerk and Cadre Office of Ministry of Light Industry from Apr. 1987 to Mar. 1991; of Office Director,
Director of Production Office of Paper Production Division of Ministry of Light Industry from Mar. 1991 to Feb. 1993; of Vice
Director of Paper Industry Office of China National Light Industry Association from Feb. 1993 to Aug. 1998. He has been Vice
Chairman and concurrent Secretary of China Paper Association since Feb. 1998.
Independent Director: Yang Zhenyu, born in 1970, college degree, auditor. He has been Chief of Business Section of Hong Kong
Jieren Co., (Guangzhou) Company from Jun. 1994 to Mar. 1996; Manager of Guangxi Datong Certified Public Accountant from Mar.
1996 to Dec. 1997; Vice GM of Guangdong Guangxin Certified Public Accountant from De. 1997 to Sep. 2009. He has been partner
of Grant Thornton China and Ascenda Certified Public Accountants since Sep. 2009.
Independent Director: Zhang Wenjing, born in 1967, master degree, lawyer. He acted as Prosecutor in Zhuhai West Zone People's
Procuratorate from Jul, 1995 to Dec. 1997. He has been acting as lawyer officer of Guangdong Chenguang Law Offices (now
renamed as De Heng (Zhuhai) Law Offices). Now he acts as the Standing Committee of the National People' s Congress of Zhuhai
City, Legal Counsel of Zhuhai Municipal Housing and Urban and Rural Planning Construction Bureau. He has been acting as
Independent Director in Foshan Huaxin Packaging Co., Ltd. since Jun. 2014.
Chairman of the Supervisory Committee: Ren Xiaoming, born in 1962, bachelor degree, lecturer. he has successively held the posts
of Deputy Manager of Planning Department, Director of Financial Department, Deputy Officer of Integrated Office, Deputy
Manager of Personnel Administration Department (Office) Party Committee, Deputy Officer of General Manager Office (Party-Mass
Work) in China Materials Development Investment Corporation ( now renamed as China National Paper-industry Investment Corp.)
he has been acting as Commission for Discipline Inspection Committee in China Materials Development Investment Corporation
( now renamed as China National Paper-industry Investment Corp.) since May 2008, Discipline Inspection Commission Secretary,
Party Committee Members in Foshan Huaxin Packaging Co., Ltd. since Oct. 2011. He has been acting as Chairman of the
Supervisory Committee in Foshan Huaxin Packaging Co., Ltd. since Jun. 2014.
Supervisor; Huang Jianrong, born in 1956, is a MBA degree holder and Senior Political Worker. From May 1990 to Mar. 2008, he
successively acted as Deputy Director General of Foshan Secrecy Bureau, Vice Secretary of the CPC and Deputy General Manager
in Foshan Petroleum Chemical Industry Co., Ltd, Director of Enterprise Management Department as well as Secretary of Discipline
Inspection Committee in Foshan Zhongli Management Co., Ltd; Director of Administration Office, Director of the Party Committee
Office and Vice Secretary of Discipline Inspection Committee in Foshan Huaxin Development Co., Ltd; he has been holding posts as
the Chairman of the Supervisory Committee in Foshan Huaxin Development Co., Ltd since May 2008; he has been holding posts as
Manager of Human Resource Department since Mar. 2008 and Vice Secretary of Discipline Inspection Committee and Director of
Communist Party Office in Foshan Huaxin Packaging Co., Ltd. since Jul. 2008.
Supervisor; Yang Chenglin, born in 1973, with a bachelor degree and is a CPA. He acted as CFO in Zhuhai Huihai Development Co.,
Ltd. from Aug. 2001 to Nov. 2006, Financial Manager in MABOX from Dec. 2006 to Jun. 2009. He successively acted as
Accounting, Deputy Director, Deputy Financial Manager, Financial Manager, and Assistant of General Manager in Zhuhai S.E.Z
Hongta Renheng Paper Co., Ltd. since Jun. 2009. He has been acting as Supervisor (Staff Representative) in Foshan Huaxin
Packaging Co., Ltd. since Jun. 2014.
Deputy General Manager: Chen Jiali, born in 1957, is a junior college graduate and engineer. He served as Deputy General Manager
in Huaxin Tetra (Foshan) Packaging Co., Ltd from Feb. 1997 to Sep. 2012. He has been acting as Deputy General Manager in
Foshan Huaxin Packaging Co., Ltd since Jul. 1999, concurrently serves as Chairman of the Board in Huaxin (Foshan) Color Printing
Co., Ltd.; since Feb. 2011, he has been GM of Foshan Chengtong Paper Co., Ltd.
Vice General Manager: Liu Hanwen, born in 1969, bachelor degree, an engineer. He acted as technician in Technology Reform
Office, Assistant Engineer and Minister of Production Technology Division of Foshan Huafeng Paper Co., Ltd. from 1989 to 2001;
as GM of Strategy Development Division of Foshan Huaxing Packaging Co., Ltd. from 2001 to 2002; as GM of Huaxin (Foshan)
Color Printing Co., Ltd from 2002 to 2003; as Director of Production Line, Assistant to GM, GM of Foshan Huafeng Paper Co., Ltd
from 2004 to 2008; as Vice GM since 2009 to present; and Vice GM of Foshan Huaxin Packaging Co., Ltd. since Jun. 2011.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Vice General Manager: Wu Yirong, born in Oct. 1962, bachelor degree, Senior Engineer. He acted as Deputy Section Chief, Section
Chief, the Chief Engineer in Hongjiang Paper-Making Factory, Technology Deputy Managers, Sales Managers, Deputy Chief
Engineer, Deputy General Manager in Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. He has been acting as Deputy General
Manager in Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. since 2008. He has been acting as Deputy General Manager in Foshan
Huaxin Packaging Co., Ltd. since 2014.
Vice General Manager: Chen Zhenran, born in 1966, is a MBA degree holder and Mechanical Engineer. From June 1989 to Dec.
1990, he acted as Technician of New Plant Construction Office of Foshan Huaxin Composite Materials Co., Ltd.; from Jan. 1991 to
Jun. 1995, he acted as Vice manager and duty manager in production department of Foshan Huaxin Composite Material Co., Ltd.;
from Jul. 1995 to Jun. 2004, he acted as Printing Manager, QA Manager, WCM Coordinator in Tetra Huaxin (Foshan) Packaging Co.,
Ltd.; from Jul. 2004 to Jun. 2006, he acted as Vice Manager and New Plant Project Manager in Huaxin (Foshan) Color Printing Co.,
Ltd.; from Jul. 2006 up to now, he has been acting as General Manage of Huaxin (Foshan) Color Printing Co., Ltd.
He has been acting as Vice General Manage of Huaxin (Foshan) Color Printing Co., Ltd. since 2014.
Deputy General Manager, Secretary of the Board of Directors, CFO: Yang Yinghui, born in 1970, bachelor degree holder, senior
accountant, CPA, CTA and CIA. From Mar. 1997 to Jun. 2001, he acted as accountant of finance department of Zhuhai Huafeng
Foodstuff Industry (group) Co., Ltd., Chief of Finance Section of Zhuhai Huafeng Color Print Co., Ltd. and Zhuhai Huafeng
Membrane Co., Ltd., subordinated to Zhuhai Huafeng Foodstuff Industry (group) Co., Ltd. From Jun. 2001 to Feb. 2014, he was
working in Finance Department of Zhuhai Hongta Renheng Paper Co., Ltd., successively took posts of Chief Accountant in sales,
Vice GM, GM of Finance Department, Assistant of General Manager and Deputy General Manager. From Jun. 2011 up to now, he
has been acting Supervisor of Foshan Huaxin Development Co., Ltd; from Jul. 2013 up to now, he has been acting as Deputy General
Manager of Foshan Huaxin Packaging Co., Ltd; from Oct. 2013, he has been acting as CFO and Secretary of Board of Directors in
Foshan Huaxin Packaging Co., Ltd.
Employment in shareholders’ companies
√ Applicable □ Inapplicable
Whether receiving
Posts held in subsidies and
Name of Start date of Expiration
Name of shareholders’ companies shareholders’ remuneration in
employers tenure Date of tenure
companies shareholders’
companies
Huang Xin China Paper Investment Co., Ltd. GM 1 May 2012 Yes
Party
Hong Jun China Paper Investment Co., Ltd. Secretary, 1 Sep. 2007 Yes
Vice GM
Zhang Qiang China Paper Investment Co., Ltd. Vice GM 1 Sep. 2014 Yes
Ye Meng China Paper Investment Co., Ltd. GM Assistant 1 Aug. 2011 Yes
Foshan Chan Ben De Development Co.,
Yang Weixing GM 1 Jun. 2007 Yes
Ltd.
Employment in other entities
√ Applicable □ Inapplicable
Posts held in Whether
Name of Start date of Expiration
Name of other companies shareholders’ receiving
employers tenure Date of tenure
companies subsidies and
58
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
remuneration in
other companies
Vice
Chairman and
Zhao Wei China Paper Association 1 Jan. 1998 Yes
concurrent
Secretary
Grant Thornton China and Ascenda
Yang Zhenyu Partner 1 Sep. 2009 Yes
Certified Public Accountants
Zhang Wenjing De Heng (Zhuhai) Law Offices Director 1 Dec. 1997 Yes
Particulars about the Company's current directors, supervisors and senior executives ‘punishments from Securities Regulatory
Institution of recent three years in reporting period
□ Applicable √ Inapplicable
IV. Remuneration for directors, supervisors and senior management
Decision-making procedure, determining basis and actual payment for the remuneration of 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 executives in the reporting period
Unit: Ten Thousand Yuan
Total amount of
Total amount of
remuneration
remuneration
Name Title Gender Age Incumbent or not received from
received from the
shareholders’
Company
companies
Chairman of the
Huang Xin Male 53 Current 0 Yes
Board
Ji Xiangdong Vice president Male 41 Current 119.3 No
Hong Jun Director Male 56 Current 0 Yes
Zhang Qiang Director Male 41 Current 0 Yes
Ye Meng Director Male 47 Current 0 Yes
59
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Yang Weixing Director Male 45 Current 0 Yes
Independent
Zhao Wei Male 55 Current 8 No
Director
Independent
Yang Zhenyu Male 45 Current 8 No
Director
Independent
Zhang Wenjing Male 48 Current 8 No
Director
Chairman of the
Ren Xiaoming Supervisory Male 53 Current 52.7 No
Committee
Huang Jianrong Supervisor Male 59 Current 17.5 No
Yang Chenglin Supervisor Male 42 Current 53.3 No
Vice General
Chen Jiali Male 58 Current 38.9 No
Manager
Vice General No
Liu Hanwen Male 46 Current 79.1
Manager
Vice General No
Wu Yirong Male 53 Current 79.4
Manager
Vice General
Chen Zhenran Male 49 Current 20.8 No
Manager
Vice General
Manager, CFO,
Yang Yinhui Secretary of the Male 45 Current 75 No
Board of
Directors
Chairman of the
Tong Laiming Male 46 Former 0 Yes
Board
Total -- -- -- -- 560 --
Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the reporting
period
□ Applicable √ Inapplicable
V. Employees of the Company
Employees of the Company and professional structure: The Company has 2,194 in-service employees, including
1,363 production staff, 61 technical staff, 113 sales staff, 46 financial staff and 611 administrative staff. There
existed no retirees whom the Company will bear the expenses. The staff above included staff from subsidiary
holding company.
List of the salary cost of the enterprise
60
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Reporting period
Total number of employees accepted salaries
2,194
(person)
Total salaries (Ten Thousand Yuan) 16,297.7
Proportion of operation revenue in reporting
4.97%
period (%)
Average salary of senior executives (Ten
68.75
Thousand Yuan/person)
Average salary of total employees (Ten Thousand
7.31
Yuan/person)
61
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section IX. Corporate governance
I. Basic information about corporate governance
In the reporting period, the Company continuously perfected its corporate governance structure, built up a modern
enterprise system, and regulated its operation in accordance to Company Law, Securities Law and Code of
Corporate Governance of Listed Companies as well as requirements of other relevant laws and statutes. In view of
this, the Board of Directors believes that the actual situation of the Company’s corporate governance is basically
in line with the requirements of the Code of Corporate Governance for Listed Companies, which is detailed as
follows:
(I) About shareholders and Shareholders’ General Meeting: The Company according to requirements such as the
Articles of Association and Rules of Procedure of the General Assembly, further standardized the convening of
the Shareholders’ General Meeting, so as to ensure the full exercise of all shareholders’ legal rights and interests;
to fully take advantage of the internet voting instruments, to ensure the full exercise of all shareholders’ legal
rights and interests, as well as the fair treatment for all shareholders, especially minority shareholders.
(II) About the controlling shareholders and the listed Company: the controlling shareholders acted according to
rules, and did not go beyond the Shareholders’ General Meeting for direct or indirect interference in the
Company’s decisions and business activities; the Company was separated from its controlling shareholders in
such aspects as personnel, assets, financial affairs, organs and business activities. The Board of Directors, the
Board of Supervisors and the Company’s other internal organs worked independently; the transactions between
the Company and its controlling shareholders, as well as other related parties, were conducted in a fair and just
way.
(III) About the directors and the Board of Directors: directors of the Company were elected in strict compliance
with the stipulation in the Company Law and the Articles of Association of the Company. And the number of
directors and the structure of the Board of Directors were in accordance to the requirements of laws and
regulations. In according to Rules of Procedures for the Board, attended the Board meetings in a conscientious
and responsible manner.
(IV) About Supervisors and the Board of Supervisors: the number of supervisors and the structure of the Board of
Supervisors were in line with the requirements of laws and regulations. And all the supervisors of the Company
conscientiously performed their duties by supervising the legitimacy of duty performance of the directors,
managers and other senior management personnel.
(V) Independent directors played an important role in the Company’s decision-making. The Company paid
attention to the roles of the independent directors and during the management, the independent directors carried
out a carefully investigation of the financial audit, significant related transaction, recruitment of senior executives
and declared relevant independent advice.
(VI) About the performance appraisal and incentive & restraining mechanism: the performance appraisal and
incentive & restraining mechanism of Directors, Supervisors and Senior Executives were being gradually
established in the Company to work impartially and transparently.
(VII) About information disclosure and transparency: the Secretary of the Board of Directors was assigned by the
Company to take charge of information disclosure. In strict compliance with relevant laws and regulations, as well
as the Information Disclosure Rules, relevant information was disclosed in time with authenticity, accuracy and
completeness. And it was made sure that all shareholders were fairly treated in terms of information disclosure.
62
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
(VIII) About related beneficiaries: the Company fully respected and protected the legal rights and interests of its
related beneficiaries, and managed to reach a balance among interests of its shareholders, employees, the society
and other related beneficiaries, so as to promote the Company’s continuous and healthy development.
(IV) About management of the relationship with investors: the Company had specially-appointed staff to manage
the relationship with investors, and established a platform of communication with investors. And the phones calls
and letters from investors were carefully answered and replied in details. Meanwhile, the investors visiting the
Company in person were well received.
Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not?
□ Yes √ No
There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.
II. Particulars about the Company’s separation from the controlling shareholder in respect of
business, personnel, assets, 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 personnel: the Copmany 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. 2.
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. 3. As for the finance: the Company set up the independent financial and
accounting department and built up the independent accouting calculation mechanism and financial management
sytsem; the Company opened the independent account and paid for the taxes according to laws. 4. As for the
institutions: the Company set up the organizations and institions independent of the controlling shareholders for
independently handling the official business and the execution of the functions. 5. 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.
III. Horizontal competition
□ Applicable √ Inapplicable
IV. Particulars about the annual shareholders’ general meeting and special shareholders’
general meetings held during the reporting period
1. Particulars about the shareholders’ general meeting in reporting period
Date of holding Proposal passed on
Meetings Resolution Date of disclosure Index for disclosure
meetings the meetings
Name of
2014 Annual General Annual General
0.00% 29 Jun. 2015 30 Jun. 2015 announcement:
Meeting Meeting
Foshan Huaxin
63
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Packaging Co.,
Ltd.-Announcement
on Resolution of
2015 Annual
General Meeting;
Number of
announcement:
2015-018
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Name of
announcement:
Foshan Huaxin
Packaging Co.,
Ltd.-Announcement
on Resolution of the
1st Extra ordinary
General Meeting for
st
The 1 Extra 2015; Number of
Extra ordinary
ordinary General 0.00% 16 Nov. 2015 17 Nov. 2015 announcement:
General Meeting
Meeting for 2015 2015-057
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
Name of
announcement:
Foshan Huaxin
nd
The 2 Extra Packaging Co.,
Extra ordinary
ordinary General 0.00% 27 Nov. 2015 28 Nov. 2015 Ltd.-Announcement
General Meeting
Meeting for 2015 on Resolution of the
2nd Extra ordinary
General Meeting for
2015; Number of
64
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
announcement:
2015-063
Newspaper and
website on which the
announcement was
disclosed: Securities
Times, HK Ta Kung
Pao, Cninfo
(http:/www.cninfo.co
m.cn)
List of the institution investors
Times attended the Annual General
Name Number served as the Directors
Meeting
2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting
right
□ Applicable √ Inapplicable
V. Performance of the Independent Directors
1. Particulars about the independent directors attending the board sessions and the shareholders’ general
meetings
Particulars about the independent directors attending the board sessions
Sessions required Attendance by Non-attendance
to attend during Attendance in way of Entrusted in person for two
Independent director Absence rate
the reporting person telecommunicati presence (times) consecutive
period on times
Zhao Wei 8 1 7 0 0 No
Yang Zhenyu 8 1 7 0 0 No
Zhang Wenjing 8 1 7 0 0 No
General meetings sat in on by
3
independent directors
Notes to non-attendance in person for two consecutive times:
Inapplicable
2. Particulars about independent directors proposing objection on relevant events
Whether independent directors propose objection on relevant events or not?
□ Yes √ No
During the reporting period, no independent directors proposed any objection on relevant events of the Company.
65
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
3. Other explanations about the duty performance of independent directors
Whether advices to the Company from independent directors were adopted or not
√ Yes □ No
Explanation on the advices of independent directors for the Company being adopted or not adopted
The Company, according to the relevant regulations and requirements of Company Law and Guideline on
Establishing Independent Director System in Listed Company, Articles of Association, earnestly fulfilled the
obligations of laws and regulations, articles of association and independent director system, actively attended the
board meetings and shareholders’ general meetings, examined and guided the production and operation of the
Company, proposed independent opinions on significant events, put forward many valuable and expert advices
about internal control and daily operation decisions, fulfilled the duties diligently, faithfully, brought their roles
into full play and effectively safeguarded the interests of listed companies and general shareholders.
VI. Duty performance of special committees affiliated to the board of directors during the
reporting period
The board of directors of the Company set up nomination committee, remuneration and appraisal committee, audit
and strategy committee. Each committee proposed expert advices and opinions about the development of the
Company in line with its own responsibilities and promoted the standardized corporate development. In 2015,
duty performance of each committee affiliated to the board of directors:
1. During the reporting period, the audit committee totally participated in the annual audit work for 2014 and the
formulation of the 2015 audit plan including formulation of plan on annual audit, examination and verification of
the first draft of annual audit report and establishment of the final draft. The audit committee held 3 meetings in
2015, of which the first one deliberated and approved report on 2014 annual financial statements, the annual final
account report, and the second one put forward the proposal on engaging the accounting firm and the last one
communicated with accounting firm for the audit plan of the 2015 annual financial report.
2, During the reporting period, the remuneration committee held one meeting in total on which deliberated and
approved proposal on remuneration distribution of the management for 2014.
3. During the reporting period, the nomination committee held one meeting in total on which deliberated and
approved proposal on the Supplement of the Directors by the Board of the Directors of the Company.
VII. Particulars about the work of supervisory committee
Whether there existed risks in the Company during the reporting period on the basis of supervision conducted by the supervisory
committee
□ Yes √ No
The supervisory committee made no objection to events under supervision during the reporting period.
VIII. Particulars about appraisal and incentive mechanisms for senior executives
1. The Company, according to principles of remuneration and stock incentive mechanisms approved by shareholders’ general
meeting , Management Method of Remuneration and Incentive of Foshan Huaxin Packaging Co., Ltd. and Implementation Rules of
Remuneration and Incentive of Foshan Huaxin Packaging Co., Ltd. revised in 2010 by the remuneration and appraisal committee and
the board of directors, determined the amount of incentive remuneration for senior executives on the basis of appraisal results.
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2. In the reporting period, the subsidy for independent directors was RMB80 thousand per year and the expenses for duty
performance were borne by the Company.
IX. Internal Control
1. Particulars about significant defects found in the internal control during reporting period
□ Yes √ No
2. Self-appraisal report on internal control
Disclosure date of the Self-appraisal
22 Mar. 2016
Report on Internal Control
Disclosure index of the Self-appraisal
2015 Self-appraisal Report on Internal Control, www.cninfo.com.cn
Report on Internal Control
The proportion of total assets included in
evaluation scope entities in the
100.00%
Company's total assets of the consolidated
financial statements
The proportion of operation revenue
included in evaluation scope entities in
100.00%
the Company's operation revenue of the
consolidated financial statements
Defect judging standards
Category Financial Report Non-Financial Report
Indications of the great defeat of the If there were unambiguous evidence
financial report including: ① malpractices indicated the Company possessed one of
of the Directors, Supervisors and the Senior the following conditions among the
Executives of the Company; ② published evaluation at the period-end, should be
financial report with significant recognized as the great defeat 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
Qualitative criteria 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. The indications of the criminal penalties or be ordered for
significant defeat of the financial report suspension of production or business, be
including: ① the environmental control withheld or revoked the permits or
67
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
was invalid; ② the accounting polices license; ④ the great defeat 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 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 defeat of
execute; ⑥ there was one or multiple the internal control: ① there was
defeats 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. that caused rather big mistake; ③
General defect refers to the other control violated the national laws, regulations,
defect except for the above great defeat and rules and the normative documents that
significant defeat. 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 defeat; ⑤ the significant
defeat of the internal control had not
been verified. The general defeat refers
to the other control defect except for the
above great defeat and significant defeat.
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 defeat alone or
defeat alone or accompanied with other accompanied with other defeats which
defeats which may cause the amount of the may cause the amount of the directly
misstatement of the financial report lower financial losses lower than 0.5% of the
than 0.5% of the total assets amount of the total assets amount of the consolidated
consolidated statements, should be statements, should be recognized as the
Quantitative criteria
recognized as the general defeat; if exceeded general defeat; 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 defeat; if exceeded 1% of the significant defeat; 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
defeat. great defeat.
68
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Number of significant defects of financial
0
report (Piece)
Number of significant defects of non-
0
financial report (Piece)
Number of important defects of financial
0
report (Piece)
Number of important defects of
0
non-financial report (Piece)
X. Audit report on internal control
√ Applicable □ Inapplicable
Audit opinion paragraphs in the Audit Report on Internal Control
Huaxin Packaging maintained valid internal control of the financial report in the significant aspects according to the C-SOX and
the relevant regulations on 31 Dec. 2015.
Particulars about Audit Report on
Disclosure
Internal Control
Disclosure date of the Audit Report
22 Mar. 2016
on Internal Control
Disclosure index of the Audit
http://www.cninfo.com.cn/
Report on Internal Control
Type of Audit Report on Internal
Unqualified auditor’s report
Control
Whether there is significant defect
No
in non-financial report
Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?
□ Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or
not?
√ Yes □ No
69
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Section X. Financial Report
I. Auditor’s Report
Type of audit opinions Standard unqualified opinions
Signing date of audit report 18 Mar. 2016
Name of audit institution Dahua CPA (LLP)
No. of audit report DHSZ[2016]No. 002579
Name of CPA Zhang Yan, Liu Jiliang
Text of the Auditor’s Report
Audit repot
DHSZ[2016]No. 002579
TO THE SHAREHOLDERS OF FOSHAN HUAXIN PACKAGING CO., LTD.:
We have audited the attached financial statements of Foshan Huaxin Packaging Co., Ltd.
(hereinafter referred to as “Huaxin Packaging”) which comprise the balance sheet and the
consolidated balance sheet as at 31 Dec. 2015, the income statement and consolidated income
statement, the cash flow statement and consolidated cash flow statement, the statement of changes
in shareholders’ equity and consolidated statement of changes in shareholders’ equity as well as the
notes to the financial statements.
I. Management’s responsibility for the financial statements
The management of the Company is responsible for the preparation of these financial statements
and fair presentation. These responsibilities include: (1) preparing financial statements according to
the Accounting Standards for Business Enterprises and make them a fair presentation; and (2)
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.
II. Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
have conducted our audit in accordance with the Audit Standards for Chinese Registered
Accountants, which require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance as to whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risks assessments, the auditor considers the internal control
related to the preparation and fair presentation of the financial statements so as to design proper
audit procedures An audit also includes evaluating the appropriateness of accounting policies used
70
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate, which provides a
basis for us to express auditing opinion.
III. Audit opinion
In our opinion, the financial statements of the Company have been prepared, in all material aspects,
according to the Enterprise Accounting Standards, which give a fair view of the Company’s
financial position as at 31 Dec. 2015 and the Company’s operating results and cash flows for the
year then ended.
Dahua CPA (LLP) CPA:
ChinaBeijing
CPA:
18 Mar. 2016
II. Financial statements
Unit of statements in financial notes is: RMB Yuan
1. Consolidated balance sheet
Name of enterprise: Foshan Huaxin Packaging Co., Ltd.
31 Dec. 2015
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
Monetary funds 509,706,611.07 474,549,403.56
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded in 1,741,500.00
current profits and losses
Derivative financial assets
Notes receivable 265,679,151.34 345,827,854.88
Accounts receivable 791,325,305.79 837,978,587.68
Accounts paid in advance 116,290,696.98 181,932,527.24
Premiums receivable
71
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Reinsurance premiums receivable
Receivable reinsurance contract
reserves
Interest receivable 5,233,556.60
Dividend receivable
Other accounts receivable 143,862,308.16 106,548,714.08
Financial assets purchased under
agreements to resell
Inventories 712,880,811.93 942,156,138.62
Assets held for sale
Non-current assets due within 1 year
Other current assets 17,147,074.25 8,212,679.56
Total current assets 2,563,867,016.12 2,897,205,905.62
Non-current assets:
Loans by mandate and advances
granted
Available-for-sale financial assets 288,700.00 113,558.00
Held-to-maturity investments
Long-term accounts receivable 490,240,600.41
Long-term equity investment 262,089,226.45 246,747,332.67
Investing real estate 11,945,127.02 12,605,907.08
Fixed assets 2,539,372,551.91 2,926,710,908.66
Construction in progress 28,305,202.78 154,209,661.31
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 108,048,541.44 129,264,164.34
R&D expense 12,556,242.88
Goodwill 11,547,305.29 11,547,305.29
Long-term deferred expenses 2,903,771.31 510,136.71
Deferred income tax assets 33,209,638.28 35,246,535.27
Other non-current assets 7,519,746.40 7,409,367.68
Total of non-current assets 3,495,470,411.29 3,536,921,119.89
Total assets 6,059,337,427.41 6,434,127,025.51
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Current liabilities:
Short-term borrowings 912,724,440.16 1,130,267,087.23
Borrowings from Central Bank
Customer bank deposits and due to
banks and other financial institutions
Intra-group borrowings
Financial liabilities measured at fair
value of which changes are recorded in 212,689.24
current profits and losses
Derivative financial liabilities
Notes payable 127,562,392.61 68,436,123.39
Accounts payable 365,555,758.89 442,828,366.71
Accounts received in advance 9,817,369.72 23,232,010.74
Financial assets sold for repurchase
Handling charges and commissions
payable
Payroll payable 33,391,126.62 32,322,152.63
Tax payable 37,570,856.48 22,020,173.90
Interest payable 10,684,484.26 29,816,504.46
Dividend payable 11,019,644.79 170,913.00
Other accounts payable 24,761,471.30 21,260,151.32
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of
securities
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within 1
418,750,000.00
year
Other current liabilities
Total current liabilities 1,533,300,234.07 2,189,103,483.38
Non-current liabilities:
Long-term borrowings
Bonds payable 995,587,962.29 794,912,384.37
Of which: preferred shares
73
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Perpetual bonds
Long-term payables 7,630,748.49 10,506,735.99
Long-term payroll payables
Specific payables
Estimated liabilities 1,758,780.68 7,431,237.75
Deferred income 9,200,905.88 6,648,333.32
Deferred income tax liabilities 2,875,132.08 2,805,584.00
Other non-current liabilities
Total non-current liabilities 1,017,053,529.42 822,304,275.43
Total liabilities 2,550,353,763.49 3,011,407,758.81
Owners’ equity:
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 256,822,373.42 256,822,373.42
Less: Treasury stock
Other comprehensive income 169,714.39 169,714.39
Specific reserves
Surplus reserves 187,280,095.40 187,280,095.40
Provisions for general risks
Retained profits 988,580,048.92 863,066,727.26
Total equity attributable to owners of
1,938,277,232.13 1,812,763,910.47
the Company
Minority interests 1,570,706,431.79 1,609,955,356.23
Total owners’ equity 3,508,983,663.92 3,422,719,266.70
Total liabilities and owners’ equity 6,059,337,427.41 6,434,127,025.51
Legal representative: Huang Xin Person-in-charge of the accounting work: Ji Xiangdong
Person-in-charge of accounting firm: Yang Yinghui
2. Balance sheet of the parent company
Unit: RMB Yuan
Item 31 Dec. 2015 31 Dec. 2014
Current Assets:
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Monetary funds 68,234,826.12 10,063,979.96
Financial assets measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial assets
Notes receivable
Accounts receivable 12,775,461.68 42,393,540.95
Accounts paid in advance 141,509.43
Interest receivable
Dividend receivable
Other accounts receivable 964,414,178.70 1,437,567,917.18
Inventories
Assets held for sale
Non-current assets due within 1 year
Other current assets 1,432,574.60
Total current assets 1,046,998,550.53 1,490,025,438.09
Non-current assets:
Available-for-sale financial assets 288,700.00
Held-to-maturity investments
Long-term accounts receivable 490,240,600.41
Long-term equity investment 1,312,361,239.94 1,518,626,016.33
Investing real estate
Fixed assets 380,975.78 269,949.29
Construction in progress
Engineering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 433,782.13 523,980.01
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total of non-current assets 1,803,705,298.26 1,519,419,945.63
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Total assets 2,850,703,848.79 3,009,445,383.72
Current liabilities:
Short-term borrowings 100,000,000.00
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable 45,000,000.00
Accounts payable 12,775,461.68 42,393,540.96
Accounts received in advance
Payroll payable
Tax payable 142,128.32 1,176,814.16
Interest payable 9,179,970.44 22,709,722.31
Dividend payable 179,458.65 170,913.00
Other accounts payable 5,003,595.00 1,265,692.77
Liabilities held for sale
Non-current liabilities due within 1
418,750,000.00
year
Other current liabilities
Total current liabilities 172,280,614.09 486,466,683.20
Non-current liabilities:
Long-term borrowings
Bonds payable 995,587,962.29 794,912,384.37
Of which: preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 995,587,962.29 794,912,384.37
Total liabilities 1,167,868,576.38 1,281,379,067.57
Owners’ equity:
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Share capital 505,425,000.00 505,425,000.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves 250,531,482.00 250,531,482.00
Less: Treasury stock
Other comprehensive income
Specific reserves
Surplus reserves 187,280,095.40 187,280,095.40
Retained profits 739,598,695.01 784,829,738.75
Total owners’ equity 1,682,835,272.41 1,728,066,316.15
Total liabilities and owners’ equity 2,850,703,848.79 3,009,445,383.72
3. Consolidated income statement
Unit: RMB Yuan
Item 2015 2014
I. Total operating revenues 3,282,043,995.12 3,552,698,716.17
Including: Sales income 3,282,043,995.12 3,552,698,716.17
Interest income
Premium income
Handling charge and commission
income
II. Total operating costs 3,240,504,576.79 3,410,828,486.83
Including: Cost of sales 2,733,163,536.13 2,970,740,412.17
Interest expenses
Handling charge and commission
expenses
Surrenders
Net claims paid
Net amount withdrawn for the
insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges 16,325,153.64 14,596,194.98
Selling and distribution expenses 172,400,338.43 164,537,468.45
77
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Administrative expenses 158,119,192.47 140,664,702.02
Financial expenses 133,872,055.72 126,985,102.16
Asset impairment loss 26,624,300.40 -6,695,392.95
Add: Gain/(loss) from change in fair
1,528,810.76
value (“-” means loss)
Gain/(loss) from investment (“-”
121,166,566.33 12,486,831.40
means loss)
Including: share of profits in
15,711,019.67 7,690,138.47
associates and joint ventures
Foreign exchange gains (“-” means
loss)
III. Business profit (“-” means loss) 164,234,795.42 154,357,060.74
Add: non-operating income 23,729,196.71 43,948,392.57
Including: Gains on disposal of
2,265,238.32 25,556,368.05
non-current assets
Less: non-operating expense 1,263,680.97 1,329,662.94
Including: Losses on disposal of
955,586.75 1,009,714.83
non-current assets
IV. Total profit (“-” means loss) 186,700,311.16 196,975,790.37
Less: Income tax expense 15,784,568.82 47,717,250.82
V. Net profit (“-” means loss) 170,915,742.34 149,258,539.55
Net profit attributable to owners of
133,094,696.66 83,284,859.23
the Company
Minority shareholders’ income 37,821,045.68 65,973,680.32
VI. After-tax net amount of other
-1,632,644.73
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to -457,927.44
owners of the Company
(I) Other comprehensive incomes
that will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees that
cannot be reclassified into gains and
78
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and -457,927.44
losses
1. Enjoyable shares in other
comprehensive incomes in investees that
-457,927.44
will be reclassified into gains and losses
under the equity method
2. Gains and losses on fair
value changes of available-for-sale
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
statement translation difference
6. Other
After-tax net amount of other
comprehensive incomes attributable to -1,174,717.29
minority shareholders
VII. Total comprehensive incomes 170,915,742.34 147,625,894.82
Attributable to owners of the
133,094,696.66 82,826,931.79
Company
Attributable to minority
37,821,045.68 64,798,963.03
shareholders
VIII. Earnings per share
(I) Basic earnings per share 0.26 0.16
(II) Diluted earnings per share 0.26 0.16
Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before
the business mergers was RMB XXX, with the corresponding amount for the last period being RMB XXX.
Legal representative: Huang Xin Person-in-charge of the accounting work: Ji Xiangdong
Person-in-charge of accounting firm: Yang Yinghui
4. Income statement of the Company
Unit: RMB Yuan
79
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Item 2015 2014
I. Total sales 255,247,489.31 288,258,240.65
Less: cost of sales 255,247,489.31 218,075,280.68
Business taxes and surcharges 208,990.35 4,186,523.39
Distribution expenses
Administrative expenses 10,678,245.22 9,699,461.03
Financial costs -11,234,310.55 -17,690,231.39
Impairment loss
Add: gain/(loss) from change in fair
value (“-” means loss)
Gain/(loss) from investment (“-”
-39,467,993.33 7,068,374.19
means loss)
Including: income form investment
15,735,223.61 7,068,374.19
on associates and joint ventures
II. Business profit (“-” means loss) -39,120,918.35 81,055,581.13
Add: non-operating income 1,473,110.14 23,852,512.83
Including: Gains on disposal of
1,108,861.40 23,837,376.07
non-current assets
Less: non-operating expense 1,860.53 870.00
Including: Losses on disposal of
non-current assets
III. Total profit (“-” means loss) -37,649,668.74 104,907,223.96
Less: Income tax expense 24,507,617.94
IV. Net profit (“-” means loss) -37,649,668.74 80,399,606.02
V. After-tax net amount of other
comprehensive incomes
(I) Other comprehensive incomes that
will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
that will be reclassified into gains and
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
statement translation difference
6. Other
VI. Total comprehensive incomes -37,649,668.74 80,399,606.02
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of
3,039,588,223.77 3,292,918,326.94
commodities and rendering of service
Net increase of deposits from
customers and dues from banks
Net increase of loans from the central
bank
Net increase of funds borrowed from
other financial institutions
Cash received from premium of
original insurance contracts
Net cash received from reinsurance
81
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
business
Net increase of deposits of policy
holders and investment fund
Net increase of disposal of financial
assets measured at fair value of which
changes are recorded into current gains
and losses
Cash received from interest, handling
charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 80,290.26 115,495.24
Other cash received relating to
123,953,129.73 53,112,411.40
operating activities
Subtotal of cash inflows from operating
3,163,621,643.76 3,346,146,233.58
activities
Cash paid for goods and services 1,989,083,751.81 2,378,278,547.25
Net increase of customer lendings
and advances
Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original
insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 203,434,376.23 212,913,710.51
Various taxes paid 179,765,117.75 145,880,960.62
Other cash payment relating to
177,847,068.21 129,182,685.22
operating activities
Subtotal of cash outflows from
2,550,130,314.00 2,866,255,903.60
operating activities
Net cash flows from operating activities 613,491,329.76 479,890,329.98
II. Cash flows from investing activities:
Cash received from withdrawal of 7,669,463.73
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
investments
Cash received from return on
370,307.68
investments
Net cash received from disposal of
fixed assets, intangible assets and other 68,780,908.16 1,934,517.23
long-term assets
Net cash received from disposal of
44,869,829.86
subsidiaries or other business units
Other cash received relating to
4,066,986.00
investing activities
Subtotal of cash inflows from investing
118,088,031.70 9,603,980.96
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 56,315,072.57 171,488,456.29
assets
Cash paid for investment 231,450,200.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
56,315,072.57 402,938,656.29
investing activities
Net cash flows from investing activities 61,772,959.13 -393,334,675.33
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Including: Cash received from
minority shareholder investments by
subsidiaries
Cash received from borrowings 2,177,214,602.70 2,526,205,000.37
Cash received from issuance of
bonds
Other cash received relating to
37,554,493.73 3,000,000.00
financing activities
Subtotal of cash inflows from financing
2,214,769,096.43 2,529,205,000.37
activities
83
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Repayment of borrowings 2,648,801,607.88 2,218,884,556.85
Cash paid for interest expenses and
174,086,048.88 121,870,769.48
distribution of dividends or profit
Including: dividends or profit paid
41,400,266.00
by subsidiaries to minority shareholders
Other cash payments relating to
361,300,780.56
financing activities
Sub-total of cash outflows from
2,822,887,656.76 2,702,056,106.89
financing activities
Net cash flows from financing activities -608,118,560.33 -172,851,106.52
IV. Effect of foreign exchange rate
5,565,972.68 -704,711.69
changes on cash and cash equivalents
V. Net increase in cash and cash
72,711,701.24 -87,000,163.56
equivalents
Add: Opening balance of cash and
113,248,623.00 200,248,786.56
cash equivalents
VI. Closing balance of cash and cash
185,960,324.24 113,248,623.00
equivalents
6. Cash flow statement of the Company
Unit: RMB Yuan
Item 2015 2014
I. Cash flows from operating activities:
Cash received from sale of
328,257,641.76 282,982,651.03
commodities and rendering of service
Tax refunds received
Other cash received relating to
731,296,731.46 429,286,185.00
operating activities
Subtotal of cash inflows from operating
1,059,554,373.22 712,268,836.03
activities
Cash paid for goods and services 328,257,641.77 212,806,528.66
Cash paid to and for employees 6,744,701.10 6,267,950.81
Various taxes paid 2,878,820.20 41,674,623.68
Other cash payment relating to
591,337,365.04 61,951,789.20
operating activities
Subtotal of cash outflows from
929,218,528.11 322,700,892.35
operating activities
84
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Net cash flows from operating activities 130,335,845.11 389,567,943.68
II. Cash flows from investing activities:
Cash received from retraction of
investments
Cash received from return on
19,796,783.06
investments
Net cash received from disposal of
fixed assets, intangible assets and other 65,610,551.60 18,300.00
long-term assets
Net cash received from disposal of
45,000,000.00
subsidiaries or other business units
Other cash received relating to
investing activities
Subtotal of cash inflows from investing
130,407,334.66 18,300.00
activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 201,641.91 27,656.00
assets
Cash paid for investment 3,288,700.00 231,450,200.00
Net cash paid to acquire subsidiaries
and other business units
Other cash payments relating to
investing activities
Subtotal of cash outflows from
3,490,341.91 231,477,856.00
investing activities
Net cash flows from investing activities 126,916,992.75 -231,459,556.00
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings 449,100,000.00 100,000,000.00
Cash received from issuance of
bonds
Other cash received relating to
financing activities
Subtotal of cash inflows from financing
449,100,000.00 100,000,000.00
activities
Repayment of borrowings 568,770,000.00 220,000,000.00
85
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Cash paid for interest expenses and
79,411,991.70 73,335,611.09
distribution of dividends or profit
Other cash payments relating to
4,500,000.00
financing activities
Sub-total of cash outflows from
652,681,991.70 293,335,611.09
financing activities
Net cash flows from financing activities -203,581,991.70 -193,335,611.09
IV. Effect of foreign exchange rate
changes on cash and cash equivalents
V. Net increase in cash and cash
53,670,846.16 -35,227,223.41
equivalents
Add: Opening balance of cash and
10,063,979.96 45,291,203.37
cash equivalents
VI. Closing balance of cash and cash
63,734,826.12 10,063,979.96
equivalents
7. Consolidated statement of changes in owners’ equity
2015
Unit: RMB Yuan
2015
Equity attributable to owners of the Company
Other equity
Other Minorit Total
Item instruments Less: General
Share Capital compre Specific Surplus Retaine y owners’
Prefer Perpet treasury risk
capital reserve hensive reserve reserve d profit interests equity
red ual Other stock reserve
incomes
shares bonds
I. Balance at the 505,42 1,609,9 3,422,7
256,822 169,714 187,280 863,066
end of the 5,000. 55,356. 19,266.
,373.42 .39 ,095.40 ,727.26
previous year 00 23 70
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
86
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
II. Balance at the 505,42 1,609,9 3,422,7
256,822 169,714 187,280 863,066
beginning of the 5,000. 55,356. 19,266.
,373.42 .39 ,095.40 ,727.26
year 00 23 70
III. Increase/
decrease in the 125,513 -39,248, 86,264,
period (“-” means ,321.66 924.44 397.22
decrease)
(I) Total
133,094 37,821, 170,915
comprehensive
,696.66 045.68 ,742.34
incomes
(II) Capital
-12,343, -12,343,
increased and
394.48 394.48
reduced by owners
1. Common
-12,343, -12,343,
shares increased
394.48 394.48
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit -7,581,3 -64,726, -72,307,
distribution 75.00 575.64 950.64
1.
Appropriations to
surplus reserves
2.
Appropriations to
general risk
provisions
3.
Appropriations to -7,581,3 -64,726, -67,913,
owners (or 75.00 575.64 923.87
shareholders)
4. Other -4,394,0 -4,394,0
87
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
26.77 26.77
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
505,42 1,570,7 3,508,9
IV. Closing 256,822 169,714 187,280 988,580
5,000. 06,431. 83,663.
balance ,373.42 .39 ,095.40 ,048.92
00 79 92
2014
Unit: RMB Yuan
2014
Equity attributable to owners of the Company
Other equity Minorit
Other Total
Item instruments y
Less: General
Share Capital compre Specific Surplus Retaine owners’
treasury risk interest
Prefer Perpet equity
capital reserve hensive reserve reserve d profit
red ual Other stock reserve s
incomes
shares bonds
I. Balance at the 505,42 256,822 627,641 179,240 787,821 1,545,1 3,275,0
end of the 5,000. ,373.42 .83 ,134.80 ,828.63 56,393. 93,371.
88
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
previous year 00 20 88
Add: change of
accounting policy
Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the 505,42 1,545,1 3,275,0
256,822 627,641 179,240 787,821
beginning of the 5,000. 56,393. 93,371.
,373.42 .83 ,134.80 ,828.63
year 00 20 88
III. Increase/
decrease in the -457,92 8,039,9 75,244, 64,798, 147,625
period (“-” means 7.44 60.60 898.63 963.03 ,894.82
decrease)
(I) Total
-457,92 83,284, 64,798, 147,625
comprehensive
7.44 859.23 963.03 ,894.82
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit 8,039,9 -8,039,9
distribution 60.60 60.60
1. 8,039,9 -8,039,9
Appropriations to 60.60 60.60
89
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
surplus reserves
2.
Appropriations to
general risk
provisions
3.
Appropriations to
owners (or
shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
505,42 1,609,9 3,422,7
IV. Closing 256,822 169,714 187,280 863,066
5,000. 55,356. 19,266.
balance ,373.42 .39 ,095.40 ,727.26
00 23 70
8. Statement of changes in owners’ equity of the Company
2015
90
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Unit: RMB Yuan
2015
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the
505,425, 250,531,4 187,280,0 784,829 1,728,066
end of the previous
000.00 82.00 95.40 ,738.75 ,316.15
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the
505,425, 250,531,4 187,280,0 784,829 1,728,066
beginning of the
000.00 82.00 95.40 ,738.75 ,316.15
year
III. Increase/
decrease in the -45,231, -45,231,0
period (“-” means 043.74 43.74
decrease)
(I) Total
-37,649, -37,649,6
comprehensive
668.74 68.74
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
91
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
4. Other
(III) Profit -7,581,3 -7,581,37
distribution 75.00 5.00
1.
Appropriations to
surplus reserves
2.
Appropriations to -7,581,3 -7,581,37
owners (or 75.00 5.00
shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
IV. Closing 505,425, 250,531,4 187,280,0 739,598 1,682,835
balance 000.00 82.00 95.40 ,695.01 ,272.41
2014
Unit: RMB Yuan
92
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
2014
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the
505,425, 250,531,4 179,240,1 712,470 1,647,666
end of the previous
000.00 82.00 34.80 ,093.33 ,710.13
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the
505,425, 250,531,4 179,240,1 712,470 1,647,666
beginning of the
000.00 82.00 34.80 ,093.33 ,710.13
year
III. Increase/
decrease in the 8,039,960 72,359, 80,399,60
period (“-” means .60 645.42 6.02
decrease)
(I) Total
80,399, 80,399,60
comprehensive
606.02 6.02
incomes
(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by
holders of other
equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
93
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
(III) Profit 8,039,960 -8,039,9
distribution .60 60.60
1.
8,039,960 -8,039,9
Appropriations to
.60 60.60
surplus reserves
2.
Appropriations to
owners (or
shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital
(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific
reserve
1. Withdrawn
for the period
2. Used in the
period
(VI) Other
IV. Closing 505,425, 250,531,4 187,280,0 784,829 1,728,066
balance 000.00 82.00 95.40 ,738.75 ,316.15
II. Company profiles
1. Place of incorporation, organization form and address of headquarters
94
2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
Foshan Huaxin Packing Co., Ltd. (hereinafter referred to as the Company) was promoted by Foshan Huaxin
Development Co., Ltd., as a main sponsor, under approval of People’s Government of Guangdong Province with
YBH (1999) No. 297 document and Economic System Reform Committee of Guangdong Province with YTG
(1999) No. 032 document, and jointly invested by seven shareholders such as Foshan Municipal Investment
General Corporation, Foshan Xinhui Industrial Development Co., Ltd., China Packaging General Corporation,
China Material Development & Investment General Corporation, Guangdong Technical Reforming & Investment
Co., Ltd., China Chemistry & Light Industry General Corporation, and Foshan Light Industry Company by
promotion with total share capital of RMB290,000,000 at par value of RMB1 per share. The Company is
joint-stock company who was registered in Administration Bureau for Commerce & Industry of Guangdong
Province on June 21, 1999. (Business License No. 40000000005147). In the year of 2000, the Company
successfully placed domestically listed foreign shares (B shares) amounting to 149,500,000 by mean of private
placing, which was listed in Shenzhen Stock Exchange for trade. After offering, the Company’s total share capital
was increased to RMB439,500,000.00. In June 2007, the Company distributed dividends of 65,925,000 shares,
thus, the total share capital was changed into RMB505,425,000.00. The Company is mainly engaged in the paper
making, paper package and printing industry.
As at 31 Dec. 2015, the Company accumulatively issued 505,425,000 shares in number and the registered capital
stood at RMB505,425,000. The Company’s registered address is No. 18; Jihua 5th Road, Foshan, Guangdong, and
the office address of headquarter is 19/F, Jinghua Bldg., Jihua Rd., Foshan.
The parent company of the Company is Foshan Huaxin Development Co., Ltd., and the Ultimate controller of the
Company is China Chengtong Holding Group Co., Ltd.
2. Nature of the business and main operation activities
The Company is in the industry of papermaking, paper packaging and printing, and mainly manufactures
(operated by subsidiary companies under the Company) and sells packaging materials, and packaging products,
materials for decoration and aluminum and plastic compound materials; sells and maintains package machinery;
invests in industry in terms of package and printing. Main products include high-grade coated white paperboard,
high-grade coated white board and color packages printing products.
3. Issuance of the financial statements authorized
The financial statement was approved to issue by the Board of Directors on 18 Mar. 2016.
The body included in the scope of consolidated financial statements increased 1 comparing to that in last period,
of which:
1. Subsidiary newly included in consolidated scope
Name Reason of change
Pinghu Huaxin Packing Material Co., Ltd Subsidiary newly established in reporting period
2. Subsidiary was no longer included in consolidated scope
Name Reason of change
Foshan Chengtong Paper Co., Ltd. The disposal of subsidiary
IV. Basis for the preparation of financial statements
1. Preparation basis
With the going-concern assumption as the basis and based on transactions and other events that actually occurred,
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2015 Annual Report of Foshan Huaxin Packaging Co., Ltd.
the Group prepared financial statements in accordance with Enterprises—Basic Standard> issued by the Ministry of Finance and with each specific accounting standard, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting by China Securities Regulatory Commission. 2. Continuation The Company evaluated the processes constantly operation ability with 12 months since the reporting period. There was no significant suspect event to the continuation. Thus, the financial statement was prepared on the base of the assumption of continuation V. Important accounting policies and estimations Indication of specific accounting policies and estimations: Naught 1. Statement for complying with the accounting standard for business enterprise The financial statements for the reporting period prepared by the Company are in compliance with the requirements of the accounting standard for business enterprise, and have reflected the Company’s financial status, 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 January 1 to December 31. 3. Operating cycle The operating cycle of the Company is 12 months. 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. Each transaction items, conditions and economy influence in confirm with the following one or several conditions, when realizing enterprise combination by steps. Several transaction events were considered as a package deal and conducted accounting method (1) The transaction was set up in the same time or had considered the influence to each others: (2) The transaction only stand as a whole, a perfect commercial result can be arrived. (3) A transaction incurred depends on at least one transaction occurred; 96 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (4) A transaction is not economical, however, together with other transaction are economical. 1. Business combination under the same control The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party (including goodwill formed from the final control party purchase combined party) combing party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted. In the event that the contingent consideration exists and the accrued liabilities or assets need to be recognized, the difference between the accrued liabilities or assets and the settlement amount of subsequent contingent consideration shall adjust the capital surplus (capital premium or stock premium), and if the capital surplus is not sufficient, adjust the retained earnings. Where the corporate merger and acquisition is realized through multiple transactions, if these transactions belong to a package transaction, each transaction shall be accounted as a transaction to obtain the right to control; if these transactions do not belong to a package transaction, on the date the right to control is obtained, the difference between the initial investment costs of the long-term equity investment and the carrying value of long-term equity investment before the M&A plus the carrying value of the new consideration paid to further get the shares on the date of M&A shall be charged against the capital surplus, and if the capital surplus is insufficient, the difference shall be charged against the remaining earnings. For the equity investment held before the date of M&A, the other comprehensive earnings accounted for using the equity method or recognized with the financial tool and accounted for and recognized using the measurement criteria shall not be accounted, until the investment is disposed, at which time, the investment shall be accounted on the same basis as the investee directly disposes related assets or liabilities; the changes to the owner’s equity in the investee’s net assets accounted and recognized using the equity method other than the net profit or losses, other comprehensive earnings and profit distribution, shall not be accounted, until the investment is disposed, at which time, it shall be carried over to the current profits or losses. 2. Business combination not under the same control The Company shall, on the acquisition date, measure the assets given and liabilities incurred or assumed by an enterprise for a business combination in light of their fair values, and shall record the balances between them and their carrying amounts into the profits and losses at the current period. The Company shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. The Company shall record, upon recheck, the negative balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree into the profit and loss of the current period. Where a merger of enterprises not under the same control is realized through multiple transactions step by step, if these transactions belong to a package transaction, each transaction shall be accounted as a transaction to obtain the right to control; if these transactions do not belong to a package transaction, and the equity investment held before the date of M&A is accounted using the equity method, the sum of the carrying value of the equity investment in the acquiree held before the date of the acquisition, plus the new investment costs on the date of the acquisition shall be the initial investment costs of the investment; other comprehensive earnings of the equity investment held before the date of acquisition accounted and recognized using the equity method shall be accounted on the same basis as the investee directly disposes relevant assets or liabilities when the investment is disposed. If the equity investment held before the date of M&A is recognized using the financial tool and accounted using the measurement criterion, the sum of the fair value of the equity investment on the date of M&A 97 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. plus the new investment costs shall be the initial investment costs at the date of M&A. The difference between the fair value and carrying value of the held equity and changes to the accumulated fair value charged against other comprehensive earnings shall be fully converted the current investment earnings at the date of M&A. 3. Relevant costs incurred from the business combination The intermediary fees (fees for audit, legal and evaluation & consulting services, etc.) and other relevant management expenses incurred on the acquirer for the business combination shall be recorded into current gains and losses when incurred. The trading expenses arising from the acquirer's issuing equity securities or debt securities as the combination consideration shall be included in the initially recognized amount of the equity securities or debt securities. 6. Methods for preparing consolidated financial statements 1. Consolidation scope The scope of consolidated financial statements shall be confirmed based on the control. All subsidiaries (including individual entities controlled by the Company) of the Company shall be included into the consolidated financial statement. 2. Consolidation process The Company based on the financial statements of itself and its subsidiaries, in line with other relevant information, prepare the consolidated financial statements. The consolidated financial statements the Company prepare was considered the whole enterprise group as a accountant entity, in line with the requirement of presentation, recognition and calculation in ASBE and a uniform accountant policies, reflect the financial situation, operation results and cash flows of the whole enterprise group. The accounting policies and accounting period adopted by the subsidiaries that are included into the scope of consolidated financial statement consistent with those the Company adopts. If the accounting policies and accounting period adopted by a subsidiary are different from those adopted by the Company, necessary adjustments shall be made to the financial statements under the accounting policies and accounting period adopted by the Company. Consolidated financial statement shall be prepared by the parent company after the effects of the internal transactions between the Company and its subsidiaries and between its subsidiaries themselves on the consolidated balance sheets, consolidated income statement, consolidated cash flow and consolidated statement of change in owners’ equity are offset. If standing at the point of view of enterprise group consolidated financial statement, and its recognition of common trade differ from the accounting entity of Company or subsidiary, adjust it from the point of view of the enterprise group. Minority shareholders’ portions of equities and income in subsidiaries shall be separately stated respectively under owners’ equity in the consolidated balance sheet and net profit in the consolidated income statement. For the deficit of current period exceeding the share in the beginning of owner’s equity, the balance shall offset against the minority shareholder’s equity. For subsidiary obtained by business combination under same control, adjust the financial statement on the base of book value of assets, liabilities (including goodwill formed by the financial control party purchasing the subsidiary) in financial statement of final control party. For subsidiary obtained by business combination not under same control, adjust the financial statement on the base of identifiable net assets on purchase date 1. Increasing the subsidiaries or business During the reporting period, for the added subsidiary companies for business combination under the same control, 98 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. shall adjust the beginning balance of the consolidated balance sheet, and shall involve the incomes, expenses and profits of the subsidiary companies incurred from the beginning of the current period to the end of reporting year into consolidated income statement; and shall include the cash flow of the subsidiary companies from the beginning of the current period to the reporting period into the consolidated cash flow statement. Meanwhile, relevant items in the statements shall be compared and adjusted with the reporting subject after the consolidation being regarded to have always existed since the control party start to control. Owning to the reasons such as the additional investment, for the subsidiaries could execute control on the investees under the same control, should be regard as the individuals participated in the combination that to execute adjustment by existing as the current state when the ultimate control party began to control. For the equity investment held before acquiring the control right of the combined parties, the confirmed relevant gains and losses, other comprehensive income and the changes of other net assets since the date of the earlier one between the date when acquiring the original equity right and the date when the combine parties and combined ones were under the same control to the combination date, should be respectively written down and compared with the beginning balance of retained earnings or the current gains and losses during the statement period. During the reporting period, for the added subsidiary companies for business combination note under the same control, shall adjust the beginning balance of the consolidated balance sheet, and shall involve the incomes, expenses and profits of the subsidiary companies incurred from purchase date to the end of reporting year into consolidated income statement; and shall include the cash flow of the subsidiary companies from purchase date to the reporting period into the consolidated cash flow statement. Owning to the reasons such as the additional investment that the subsidiaries could execute the control of the investees under different control, the Company shall re-measure the equity interests in the acquiree held by it before the acquisition date according to the equity interests’ fair value on the acquisition date. And the difference between the fair value and the book value is recorded into current investment gains. Where the equity interests in the acquiree held by the Company which involved with the other comprehensive profits and changes of the other owners’ equities except for the net gains and losses, other comprehensive profits as well as the profits distribution under the measurement of equity method before the acquisition date involves other comprehensive incomes, the relevant other comprehensive incomes and the changes of the other owners’ equities are restated as investment gains for the period which the acquisition date belongs to, 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. 2. Disposal of the subsidiaries or business 1) General disposing method The consolidated cash flow statement shall include the cash flow from the beginning of the current period to the settlement date. Where the Company loses the control over a former subsidiary due to disposal of some equity investments or other reasons, the Company re-measures the remaining equity investments after the disposal according to the fair value on the date when the control ceases. The consideration obtained in the equity disposal, plus the fair value of the remaining equities, less the Company’s share of net assets in the former subsidiary calculated from the acquisition date according to the former shareholding ratio, is recorded into the investment gains for the period when the control ceases. Other comprehensive incomes in relation to the equity investments in the former subsidiary are restated as investment gains for the period when the control ceases. Where the equity interests in the subsidiary held by the Company which involved with the other comprehensive profits and changes of the other owners’ equities except for the net gains and losses, other comprehensive profits as well as the profits distribution when losing control, the relevant other comprehensive incomes and the changes of the other owners’ equities are 99 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. restated as investment gains for current period , 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. 2) Step by step disposing the subsidiaries Where the Company losses control on its original subsidiaries due to step by step disposal of equity investments through multiple transactions, all the transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investment are in accordance with one or more of the following conditions, which usually indicate the multiple transactions should be considered as a package deal for accounting treatment: A. The transaction was set up in the same time or had considered the influence to each others; B. The transaction only stand as a whole, a perfect commercial result can be arrived. C. A transaction incurred depends on at least one transaction occurred; D. A transaction is not economical, however, together with other transaction are economical. When disposing each transaction of the Company losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, should be considered as a transaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred into the current profits and losses in the loss of control , when the Company losing control on its subsidiary. When disposing each transaction of the Company losses control on its subsidiaries due to disposal of equity investments not belonging to a package deal, before which losing the control right, should execute the accounting disposal according to the partly dispose the equity investment of the subsidiaries under the situation not losing the control right; when losing the control right, should execute accounting disposal according to the general disposing method disposal of the subsidiaries. 3. Purchasing minority equities of the subsidiaries If there is any difference between the newly obtained long-term equity investment due to the Company’s acquisition of minority interests and the Company’s share of identifiable net assets which began to be calculated from the purchase date (or the combination date) in the subsidiary calculated according to the newly increased shareholding ratio, the stock premium under capital reserve in the balance sheet shall be adjusted according to the said difference. If the stock premium under capital reserve is not sufficient to be offset, the retained profit is adjusted. 4. Disposing the equity investment of the subsidiaries under the situation not losing the control right The differences between the disposal income due to the Company’s disposal of some equity investments in a subsidiary without losing the control over the subsidiary and the Company’s share of net assets in the subsidiary calculated according to the disposed long-term equity investments, the stock premium under capital reserve in the balance sheet shall be adjusted according to the said difference. If the stock premium under capital reserve is not sufficient to be offset, the retained profit is adjusted. 7. Classification of joint arrangements and accounting treatment of joint operations 8. Recognition standard for cash and cash equivalents When preparing the cash flow statement, the term “cash” refers to cash on hand and deposits that are available for payment at any time. The term “cash equivalents” refers to short-term ( within 3 months from the purchase date) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an 100 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. insignificant risk of change in value. 9. Foreign currency businesses and translation of foreign currency financial statements 1. Business of foreign currencies As for a foreign currency transaction, 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 foreign currency borrowings for the purchase and construction or production of assets eligible for capitalization shall be measured in the light of capitalization principle. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot exchange rate on the transaction date, 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 capital reserve. If it belongs available for sale foreign currency non-monetary items, the difference form of exchange record into other comprehensive income 2. Translation for foreign currency financial statements All the assets and liabilities items should be translated as CNY according to the basic rate of the spot rate on the balance sheet date; All the equity item except " Undistributed profits" item, other item adopt spot exchange rate to exchange. Income and cost item in profit statement, adopt average exchange rate of opening period and closing period. The translation balance of foreign financial statement incurred in line with the aforesaid translation, recorded into other comprehensive income. When disposing an overseas business, the Company shall shift the balance, which is presented under the items of the owner’s equities in the balance sheet and arises from the translation of foreign currency financial statements related to this oversea business, into the disposal profits and losses of the current period. When disposing part of equity investment or the decrease of holding of oversea operating share equity proportion but not losing control of the oversea operation due to other reason, the translation reserve related to disposal part of oversea operation will belong to the translation balance of minority shareholders, and not transfer into current profits or losses. When disposing part of equity of joint venture or association enterprise oversea operation, the translation reserve related to the oversea operation will transfer into current profits or losses in line with the disposal proportion 10. Financial instruments Financial instruments include financial assets and liabilities and equity instruments. 1. Categorization of financial instruments The Management team shall divide the financial instruments pursuant to the purpose to acquire the said financial assets or undertake the financial liabilities: the financial assets and liabilities which are measured at their fair values and of which the variation is included in the current profits and losses, including transactional financial assets and liabilities and the designated financial assets and liabilities which are measured at their fair values and of which the variation is included in the current profits and losses; the investments which will be held to their maturity; loans and the account receivables; financial assets available for sale; and other financial liabilities. 2. Recognition basis and calculation method of financial instrument 101 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 1. Financial assets (liabilities) measured by fair value and the changes included in the current gains and losses The financial assets (or financial liabilities) that are measured by fair value with its change s recognized in the current profits and losses, including the transactional financial assets or financial liability and the financial assets or financial liabilities that are directly designated to be measured by fair value with its change recognized in the current losses and profits. Transactional financial assets or financial liabilities mean the financial assets or financial liabilities that meet any one of the following conditions: 1) The purpose of obtaining the financial assets or financial liabilities is to sell, repurchase or redeem it in a short time; 2) It is a part of the identifiable combination of financial instrument that the company manages together and there is objective evidence of a recent pattern of short-term profit making; 3) It belongs to the derivative financial instrument, but is designated as the derivative instrument of valid arbitrage instrument or belongs to the derivation instrument of financial guarantee contract, or it is connected to the equity instrument investment for which there is no quotation in active market and its fair value cannot be reliably measured, the derivative tool that shall be settled through delivering the equity instrument excluded. Only if one of the following conditions is met, could the financial assets or financial assets be designated as the financial assets or financial liability that shall be measured by fair value with changes recognized in profit or loss in the period: 1) The designation is able to eliminate or obviously reduce the discrepancies in the recognition or measurement of relevant gains or losses arising from the different basis of measurement of the financial assets or financial liability; 2) The official written document of risk management or investment strategies of the enterprise concerned have described that the said combination of financial assets, the combination of financial liabilities, or the combination of financial assets and financial liabilities will be managed and evaluated on the basis of their fair values and will be reported to the key management personnel. 3) The mixed instruments include one or more embedded derivative instrument, unless the embedded derivative instrument does not materially change the cash flow of the mixed instrument, or it is obvious that the embedded instrument shall not be split from the relevant mixed instrument; 4) The mixed instrument that include the embedded derivative instrument that shall be split but cannot be separately measured when it is obtained or on the subsequent date of balance sheet. For the financial assets or financial liabilities that is measured by fair value with its change recognized in the current profits or losses, the company will use the fair value (deducting the cash dividend that is announced but not issued, or the bond interest that is due but has not be claimed) as the initially recognized amount, and the related transaction costs shall be recognized in the current profits and losses. The interest or cash dividend obtained during the holding period shall be recognized as the investment earning, and at the end of the period, the change in fair value shall be recognized in the current profits and losses. At the time of disposal, the difference between its fair value and the initially recognized amount shall be recognized as the investment earnings, and at the same time, the change in fair value shall be recognized as the profit or loss. 2. Accounts receivable The creditor’s rights arising from selling goods or providing service by the Company and other creditor’s rights to other enterprises held by the company that are not quoted in an active market, including accounts receivable, notes receivable, other receivables, long-term receivables, etc., the contract or agreement price should be taken as the initial recognition amount. If it has the nature of financing, it shall be recognized by present value. 102 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Difference between the amount received and book value of the receivables shall be included into the profit or loss of the current period upon collection or disposal. 3. Available-for-sale financial assets Available-for-sale financial assets were referred to the non-derivative financial assets available for sale, as well as the financial assets other than the other financial asset classes in the initial recognition. When available-for-sale financial assets are acquired, its initial amount shall be recognized at the fair value (excluding cash dividends that have been declared but not yet distributed or bond interests that have matured but not yet received) plus transaction expense thereof. Interest or cash dividend received in holding period were recognized as investment income. Profits or losses from the change in fair value of available-for-sale financial assets except impairment losses and translation balance form foreign monetary financial assets, directly record into other comprehensive income. When disposing available-for-sale financial assets recorded the difference between the price and the book value of the financial assets into investment profits or losses, meanwhile, roll out the disposal part of the accumulative amount of change in fair value originally and directly recorded into other comprehensive income and record into investment profits or losses. The equity instrument investment without offer and its fair value without reliable calculation, and derivative financial assets linked to and settled by the equity instruments, measured at cost. 4. Other financial liabilities Other financial liabilities shall be initially recognized at fair value plus transaction costs. The subsequent measurement shall be made by adopting amortized costs. 3. Recognition and measurement of transfer of financial assets Where an enterprise has transferred nearly all of the risks and rewards relating to the ownership of the financial asset to the transferee, it shall stop recognizing the financial asset. If it retains nearly all of the risks and rewards relating to the ownership of the financial asset, it shall not stop recognizing the financial asset. Substance over form philosophy should be adopted to determine whether the transfer of a financial asset can satisfy the conditions as described in these Standards for de-recognition of a financial asset. An enterprise shall differentiate the transfer of a financial asset into the entire transfer and the partial transfer of financial assets. If the transfer of an entire financial asset satisfies the conditions for stop recognition, the difference between the amounts of the following 2 items shall recorded in the profits and losses of the current period: (1) The carrying amount of the transferred financial asset; (2) The aggregate consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in the owner’s equities (in the event that the financial asset involved in the transfer is a financial asset available for sale). If the transfer of partial financial asset satisfies the conditions for stopping recognition, the carrying amount of the entire financial asset transferred shall be allocated at their respective relevant fair value, between the portion whose recognition has stopped and the portion whose recognition has not stopped, and the difference between the amounts of the following 2 items: (1) The carrying amount of the portion whose recognition has stopped; (2) The aggregate consideration of the portion whose recognition has stopped, and the portion of the accumulative amount of the changes in the fair value originally recorded in the owner’s equities which is corresponding to the portion whose recognition has stopped (in the event that the financial asset involved in the transfer is a financial asset available for sale). The transfer of financial assets does not meet the de-recognition condition, the financial assets shall continue to be recognized, and the consideration received will be recognized as financial liabilities. 4. Termination of recognition of financial liabilities 103 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Company (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it shall terminate the recognition of the existing financial liability, and shall at the same time recognize the new financial liability. Where the Company makes substantial revisions to some or all of the contractual stipulations of the existing financial liability, it shall terminated the recognition of the existing financial liability or part of it, and at the same time recognize the financial liability after revising the contractual stipulations as a new financial liability. Where the recognition of a financial liability is totally or partially terminated, the Company concerned shall include into the profits and losses of the current period the gap between the carrying amount which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed). Where the Company buys back part of its financial liabilities, it shall distribute, on the report day, the carrying amount of the whole financial liabilities in light of the comparatively fair value of the part that continues to be recognized and the part whose recognition has already been terminated. The gap between the carrying amount which is distributed to the part whose recognition has terminated and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed) shall be recorded into the profits and losses of the current period. 5. Determination of the fair value of financial assets and financial liabilities As for the Company’s financial assets and liabilities measured at their fair values, where there is an active market, the closing quoted prices in the active market shall be used to determine the fair values thereof. Initially obtained or derivative financial assets or the market transaction price of bared financial liabilities was considered as the basis of fair value; Where there is no active market for a financial assets and financial liabilities, the Company concerned shall adopt value appraisal techniques to determine its fair value. When evaluating, the Company adopt the valuation technique with sufficient useful data and supported by other information which suitable for the current situation, choose a input in concern with the characteristics of assets or liabilities considered in relevant assets or liabilities transaction with the market players, and as much as possible, give prior to using the relevant observable input under the situation that, the observable input value or it is not feasible to obtain, use unobservable input value. 6. Testing method of impairment and withdrawal method of provision for impairment on financial assets (excluding accounts receivable) Except for financial assets which are measured at their fair values and of which the variation is included in the current profits and losses, the Company checks the book values of all other financial assets on the balance sheet date. If there is objective evidence proving that a financial asset is impaired, an impairment provision is made. The objective evidences of impairment provision of financial assets include but not limited to: 1. Issuer or debtor had serious financial difficulties: 2. The debtor violates the items of the contact, such as violate a treaty or overdue to repay the interest or principal, etc; 3. The creditor considering the factors of economy or law makes concession to the debtor who had serious financial difficulty; 4. The debtor probably may go out of business or had other financial recombination; 5. Due to the issuer had serious financial difficulty; the financial assets cannot continue to trade in the active market; 104 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 6. The cash flow of a kind of asset in a group of financial assets decrease or not was beyond recognition, however, after conducting the overall evaluation in line with the public data, the estimate cash flow of the group of financial assets actually decrease and gaugeable since initial recognition, if the repay ability of the debtor steadily worsened, or the increase of unemployment rate, the decrease in the price of guaranty or the industry downturn that the district or country the debtor in, etc; 7. The great disadvantage change in technology, market, economy or legal environment that operation place that issuer of equity instrument locate at, which lead to the irrecoverable of investment cost of the equity instrument investors; 8. The fair value occurred seriously or non-transient decrease; The specific impairment provision methods of financial assets were as follows: (1) Provision for impairment of available-for-sale financial assets: On balance sheet date, the Company executes individually inspection on each available-for-sale financial statement, if the fair value of the equity instruments which invests on the balance sheet date is lower than its initial investment cost for more than 50% (including 50%) or lower than its initial investment cost for the duration time for more than 1 year (including 1 year), which indicates that it had occurred impairment; if the fair value of the equity instruments which invests on the balance sheet date is lower than its initial investment cost for more than 20% (including 20%) but not reaches at 50%, the Company will comprehensively considerate the other relevant factors such as the price volatility etc. and will judge the equity investment whether had occurred impairment. The aforesaid "cost" recognized in line with the initial investment cost of available for sale financial instrument deducting principal recovered, amount amortized and the impairment losses recorded into profits or losses. “fair value" recognized through the closing price of Securities Exchange at period end unless the investment of available for sale equity instrument was in the restricted stock trade period. For investment of available for sale equity instrument was in the restricted stock trade period, recognized in line with the closing price of Securities Exchange at period end deducting the risk of market player cannot sell the equity instrument, thus, require compensation. Where a sellable financial asset is impaired, even if the recognition of the financial asset has not been terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which was directly included shall be transferred out of the owners’ equities and recorded into the profits and losses of the current period. The accumulative losses that are transferred out shall be the balance obtained from the initially obtained costs of the sold financial asset after deducting the principals as taken back, the current fair value and the impairment-related losses as was recorded into the profits and losses of the current period. As for the sellable debt instruments whose impairment-related losses have been recognized, if, within the accounting period thereafter, the fair value has risen and are objectively related to the subsequent events that occur after the originally impairment-related losses were recognized, the originally recognized impairment-related losses shall be reversed and be recorded into the profits and losses of the current period as for the impairment-related losses incurred to a sellable equity instrument investment, should be reversed by equity when the value raised of the equity instruments; however, the impairment-related losses incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument and which shall be settled by delivering the said equity instrument, may not be reversed. 7. The offset of financial assets and financial liabilities Financial assets and financial liabilities are shown separately in balance sheet However, if they satisfy the following conditions, shown the net amount in the balance sheet after the offset; (1) The Company had legal rights of offsetting the recognition amount, and the legal right is executable in 105 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. recently; (2) The Company plans to settle at net amount, or meanwhile realize the financial assets and pay off the financial liabilities. 11. Accounts receivable (1) Bad debt provision for individually significant accounts receivable Judgment basis or monetary standards of provision for bad debts An account receivable exceeds 10 million, or another account of the individually significant accounts receivable receivable exceeds five million An impairment test shall be conducted on the account receivable and the difference of the present value of expected future cash flow less than its book value shall be withdrawn as the bad debt Accounts receivable with significant single amount for which provision and recorded into current gains/losses. Where an bad debt provision separately accrued at the period-end impairment test is conducted on an account receivable and no impairment occurs, classify into relevant group and withdraw bad debt provision. (2) Accounts receivable which the bad debt provision is withdrawn by credit risk characteristics Name of the group Bad debt provision method Certain accounts receivable groups divided by aging characteristics Aging analysis method group Aging analysis method In the groups, adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Withdrawal proportion for accounts Withdrawal proportion for other accounts Aging receivable receivable Within 1 year (including 1 year) 0.00% 0.00% 1-3 months 0.00% 0.00% 4-12 months 5.00% 5.00% 1-2 years 10.00% 10.00% 2-3 years 20.00% 20.00% Over 3 years 50.00% 50.00% In the groups, adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable 106 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually There existing evidence that the Company unable to recover the Reason of individually withdrawing bad debt provision: account receivable in line with the original items. Where there is objective evidence proving that an account receivable may have been impaired, the account receivable shall Withdrawing bad debt provision method be separated from the relevant group and an independent impairment test shall be conducted on the account receivable so as to recognize the impairment loss. 12. Inventory 1. Category Inventory was referred to the finished goods or commodities for sale, products in the process, materials in production or providing services, etc. Mainly include: raw materials, revolving materials, merchandise inventory, goods in process, goods sent out, goods in outside processing and etc. 2. Pricing method for outgoing inventories When obtaining, the cost was considered as the initial calculation, including purchase cost, conversion cost and other cost. Adopting the weighted average method for pricing when outgoing inventories according to the end of the month at a time 3. Recognition of net realizable value and withdrawal of provision for falling price of inventory At the end of every year, the Company shall make an overall checking to inventory, thereafter, the provision for falling price of inventory shall be measured according to its cost or its net realizable value, whichever is lower. Finished goods, merchandise inventories, and available for sale materials which are applied directly for sales of stock inventory, under normal producing process, to the amount after deducting the estimated sale expense and relevant taxes from the estimated sell price of the inventory, the net realizable value has been recognized. Material 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. The net realizable value of inventories held for the execution of a sales contract or labor contract shall be calculated on the basis of the contract price. If an enterprise holds more inventories than the quantities subscribed in the sales contract, the net realizable value of the excessive inventories shall be calculated on the basis of the general sales price. Ordinarily the Company shall make provision for falling price of inventories on the ground of each item of inventories. For inventories with large quantity and relatively low unit prices, the provision for falling price of inventories shall be made on the ground of the categories of inventories. For the inventories related to the series of products manufactured and sold in the same area, and of which the final use or purpose is identical or similar thereto, and if it is difficult to measure them by separating them from other items, the provision for falling price of inventories shall be made on a combination basis. If the factors causing any write-down of the inventories have disappeared, the amount of write-down shall be resumed and be reversed from the provision for the loss on decline in value of inventories that has been made. The reversed amount shall be included in the current profits and losses. 4. Inventory system for inventories: Inventory system: Perpetual inventory system 107 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 5. Amortization method of the low-value consumption goods and packing articles 1. Adopting one-off amortization method for the low-value consumption goods 2. Adopting one-off amortization method for the packaging articles 13. Divided as assets held for sale 1. Recognition judgment of divided as assets held for sale The company recognizes the components of the enterprise (or non-current assets) that meet all of the following conditions as the assets held for sales: (1) The component must be available for immediate sale under the current situations according to the commonly used provisions for the component; (2)The enterprise has made a resolution about the disposal of the component, and if the dispose requires the approval from shareholders as specified, the approval has been obtained from the shareholders; meeting or relevant power authority; (3) The enterprise has signed in irrevocable transfer agreement with the transferee. (4) The transfer can be finished within one year. 2. Accounting of assets classified as held-for-sale assets For the fixed assets held for sale, the company will adjust the expected net salvage of the fixed assets to reflect the amount of the fair value minus the costs of disposal, but it shall not exceed the original carrying value of the fixed assets when it meets the conditions for held-for-sales conditions, and the difference between the original carrying value and the adjusted expected net salvage shall be charged against the current profit or loss as the impairment losses of the asset. No depreciation or amortization will be recorded for the fixed assets held for sale. Instead, it shall be measured by the carrying value or the fair value minus the costs of disposal, whichever is lower. The other non-current assets that meet the held-for-sale conditions such as the equity investment or intangible assets shall be accounted following the above-stated principle, but not including the deferred tax assets, the financial assets specified in No. 22 of ASBE—Recognition and Measurement of Financial Instrument, the investment real estate and biological assets measured by fair value and the contract rights arising from insurance contract. 14. Long-term equity investment 1. The recognition of investment cost (1) The relevant accounting policy of long term equity investment formed by enterprise combination, please refer to Note. V, (V) Accounting disposal method of the enterprise merger under or not under the same control (2) Long-term equity investment gained by other methods The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which is actually paid. The initial cost of a long-term equity investment includes the cost, tax and other necessary expense directly relevant to gaining long-term equity investment The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value of the equity securities issued. As for a non-monetary assets transaction, under the premise that the transaction is commercial in nature and the fair value of the assets received or surrendered can be measured reliably, the initial cost of the fair value of the long-term equity investment received shall be recognized based on the fair value of the assets surrendered, unless there is any exact evidence showing that the fair value of the assets received is more reliable. Where any 108 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. non-monetary assets transaction does not meet the conditions as prescribed in the above premises at the same time, the book value and relevant payable taxes of the assets surrendered shall be the initial cost of the long-term equity investment received. The initial cost of a long-term equity investment obtained by debts restructuring shall be recognized based on the fair value. 2. Subsequent measurement and gain/loss recognition method (1) Long-term equity investment measured by adopting cost method The Company adopts cost method for measurement of the long-term equity investment controlled by invested entities, and shall be calculated at its initial investment cost, add or withdraw investment and adjust the cost of the long-term equity investment. The return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment. (2) Long-term equity investment measured by adopting equity method The Company adopts the equity method to measure the long-term equity investment of the associated enterprises and joint ventures. for part of equity investment of associated enterprise through risk investment institutions, mutual funds, trust companies or directly held by including within unit-linked insurance fund similar entities, adopts fair value method, and its change records into profits or losses. The long-term equity investment that does joint control or significant influences over the Company shall be measured by employing the equity method. If the initial cost of a long-term equity investment is more than the investing enterprise’ attributable share of the fair value of the invested entity’s identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than the investing enterprise' attributable share of the fair value of the invested entity’s identifiable net assets for the investment, the difference shall be included in the current profits and losses. The Company should respectively recognize investment income and other comprehensive income according to the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment and according to the accounting policies as well as the accounting period of the Company, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. For the transaction happened between the Company and associated enterprises as well as joint ventures, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Company according to the calculation of the enjoyed proportion, should offset and recognized the investment gains and losses on the basis. The Company shall handle to the net losses of the invested enterprise recognized by it: (1) offset book value of long-term equity investment; (2) if the book value of long-term equity investment is insufficient to dilute, investment loss shall be recognized based on the book value of other long-term rights and interests (reminder: should clearly confirm the specific content and the recognition standard of the sort of long-term rights and interest) which substantially form the net investment made to the invested entity, to offset book value of long-term receivables items; and (3) through the above treatment, where the Company still has the obligation to undertake 109 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. extra losses as per investment contracts or agreements, the obligation that is expected to undertake shall be recognized the project liabilities, and recorded into losses on investment of the current period. The investee profit in the subsequent periods, the Company after deducting unrecognized share loss amount, adopts the aforesaid progress. Writes off the book value of estimated liabilities recognized, recovers others actual form the book value of long term equity and long term equity investment of the net investment of investee, and recovers the recognition of investment income. 3. The accounting method transfer of long-term equity investment 1. Fair value calculation transfer to equity method The Company’s original holding of investee's equity investment that without control, common control or significant influence recognized at financial tools and accounted at standards of measurement, due to the additional investment and other reason s that had significant influence to the investee or implement of common control but not form control of the investee, in line with the Accounting Standards for Business Enterprises No. 22--Recognition and Measurement of Financial Instruments, recognized the total of original holding of fair value of equity investment plus the newly increase investment cost, which considered as the initial investment cost changing measurement at equity method. The difference between the fair value and carrying value of the original held equity investment classify as available for sale financial assets, and changes to the accumulated fair value charged against other comprehensive earnings shall be fully converted the current profits or losses change measurement at equity method. The initial investment cost measured at equity method which smaller than the difference between the fair value of net identifiable assets on additional date the investee enjoyed recognized in line with the new shareholding proportion measurement after additional investment, adjust the book value of long term equity investment, and record into current non-operation income. 2. Fair value calculation or equity method accounting transfer to cost method The Company's original holding of investee's equity investment that without control, common control or significant influence recognized at financial tools and accounted at standards of measurement, or original holding of long term equity investment to joint venture or associated enterprise, due to the additional investment and other reasons that control the investee not under same control, When preparing individual financial statement, in line with the total of the book value of equity investment original held plus the newly increase investment cost, which considered as the initial investment cost changing measurement at cost method. The original held of equity investment was recognized as other comprehensive income due to adopting equity accounting, when disposing the investment adopt accounting treatment on the same basis with that the investee directly disposing the relevant assets or liabilities. The equity investment before purchase date, adopt accounting treatment in line with the stipulations of Accounting Standards for Business Enterprises No. 22--Recognition and Measurement of Financial Instruments, and the change in fair value originally recorded into other comprehensive income record into current profits or losses when changing accounting method as cost method . 3. Equity method transfer into fair value calculation The remained equity due to the disposal of part of equity and other reason losing common control or significant influence to the investee, calculated in line with the Accounting Standards for Business Enterprises No. 22--Recognition and Measurement of Financial Instruments after disposal. The difference between the fair value and book value on the date of losing common control or significant influence was record into current profit or losses. The original held of equity investment was recognized as other comprehensive income due to adopting equity accounting, when terminating adopt equity method, adopt accounting treatment on the same basis with that the 110 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. investee directly disposing the relevant assets or liabilities. 4. Cost method transfer into equity method The remained equity implementing common control or had significant influence to the investee, due to the Company's disposal of part of equity investment losing the control to the investee, changes accounting treatment as equity method, When preparing individual financial statement, adjusts the remained equity adopt equity method since gained. 5. Fair value measurement items at level 1 The remained equity cannot implementing common control or had significant influence to the investee, due to the Company's disposal of part of equity investment losing the control to the investee, calculated in line with stipulation of the Accounting Standards for Business Enterprises No. 22--Recognition and Measurement of Financial Instruments, when preparing individual financial statement, The difference between the fair value and book value on the date of losing control was record into current profit or losses. 4. Disposal of long-term equity investment When disposing long term equity investment, the difference between the book value and actual purchase price shall be record into current profits or losses. The equity investment adopting equity accounting, when disposing the investment, adopt accounting treatment on the same basis with that the investee directly disposing the relevant assets or liabilities and conducts accounting treatment to part of them originally recorded into other comprehensive income in line with relevant proportion. Each transaction items, conditions and economy influence in confirm with the following one or several conditions, several transaction events were considered as a package deal and conducted accounting method; 1. The transaction was set up in the same time or had considered the influence to each others; 2. The transaction only stand as a whole, a perfect commercial result can be arrived; 3. A transaction incurred depends on at least one transaction occurred; 4. A transaction is not economical, however, together with other transaction are economical. For that the Company's disposal of part of equity investment losing the control to the investee and not belonging to a package deal, conducts accounting treatment to the individual financial statement and consolidated financial statement respectively: (1) In the individual financial statement, for the disposal equity, the difference between the book value and actual purchase price was recorded into current profits or losses. The remained equity cannot implementing common control or had significant influence to the investee, changes accounting treatment as equity method, when preparing individual financial statement, adjusts the remained equity adopt equity method since gained, the remained equity cannot implementing common control or had significant influence to the investee, after disposal, calculated in line with stipulation of the Accounting Standards for Business Enterprises No. 22--Recognition and Measurement of Financial Instruments, the difference between the fair value and book value on the date of losing control was record into current profit or losses. (2) In consolidated financial statement, for each transaction before losing the control to the subsidiary, the difference between the disposal price and the corresponding net assets share enjoyed of subsidiary when disposing long term equity investment since purchase date or start calculation, adjusts capital reserve (stock premium), capital reserve is insufficient for write-downs, adjusts the retained earnings. 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 net assets share enjoyed of subsidiary when disposing long term equity investment since purchase date or start calculation according to the former shareholding ratio, is recorded into the investment gains for the period when the control ceases, meanwhile, writes down goodwill. Other comprehensive income related to former subsidiary's equity investment, transfer into current investment income when the control ceases. 111 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. When disposing each transaction of the Company losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, should be considered as a transaction of disposing equity investment of subsidiary and losing control, conduct accounting treatment, conducts accounting treatment to the individual financial statement and consolidated financial statement respectively: (1) In individual financial statement, the difference between each disposal price before losing control and the book value of corresponding long term equity investment in the disposal of equity, recognized as other comprehensive income, when the control ceases, transfers into current profits or losses of the period of losing control. (2) In consolidated financial statement, 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, recognized as other comprehensive income, when the control ceases, transfers into current profits or losses of the period of losing control. 5. Judgment standard of joint control and significant influences If the Company implements a collective control arrangement together with other participants in line with relevant agreement, and the activity decision with significant influence to the reward of the arrangement only exist when the participants who sharing the control power have a common agreement, which was considered as the Company and the participants are in control of a arrangement, and the arrangement was belong to the joint venture arrangement. The joint venture arrangement arrived at individual entity, in line with the relevant agreements, when judging the power the Company enjoy the net assets in the individual entity, considers the individual entity as joint venture, and adopts equity method. If, in line with the relevant agreements, when judging the power the Company does not enjoy the net assets in the individual entity, considers the individual entity as joint operation, the Company recognized the relevant items of the profits of joint operation, and conducts accounting treatment in line with the stipulations of relevant Accounting Standards for Business Enterprises. The term “significant influence” means having the power to participate in the formulation of financial and operating policies of an enterprise, but not the power to control or jointly control the formulation of these policies together with other parties. The Company through the follow one or several situations and comprehensively consider all the facts and conditions to judge the significant influence to the investee. (1)Have representatives in the Board of Directors of investee or similar organ of authority; (2) Take part in the establish progress of finance and operation policies of investee; (3) Have significant transaction with the investee; (4) Send administrators to the investee; (5) Provide key technology information to investee. 15. Investment property Measurement mode of investment real estates Measurement of cost method Depreciation or amortization method In line with the estimate useful life and net ratio of remaining value withdrawing depreciation or amortization. The lists of investment property in line with the estimate useful life and net ratio of remaining value withdrawing depreciation or amortization are as follows: Category Estimate useful life (year) Estimate net ratio of The rate of depreciation remaining value (amortization) Houses and buildings 30 5% 3.17% 112 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 16. Fixed assets (1) Recognized standard of fixed assets The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows: they are held for the sake of producing commodities, rendering labor service, renting or business management; and their useful life is in excess of one fiscal year. No fixed asset may be recognized unless it simultaneously meets the conditions as follows: (1) The economic benefits pertinent to the fixed asset 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 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 19.00 Electronic equipment and Straight-line depreciation 5-10 5 9.50-19.00 other (3) Recognition basis and pricing method of fixed assets by finance lease Where one of the following provisions is regulated in the rental agreement signed between the Company and the leaser, is shall be recognized as an asset acquired under finance leases: (1) the ownership of the leased asset is transferred to the Company after the term of lease expires; (2) the Company 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; (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. (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, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. When the negotiation of lease and signing lease contract occurred simultaneously, the handling charge, attorney’s fees and traveling expenses, stamp duty, and other direct cost belonging to the lease project, recorded into value of leased assets. The unrecognized financing cost was amortized by effective interest method at each period within the lease term. The Company adopting depreciation policies in concern with self-owned fixed assets withdraw depreciation of fixed assets under financing lease. The ownership of fixed assets under financing lease reasonably ensured to obtain the expiration of the lease term, withdraw depreciation within useful life; The ownership of fixed assets under financing lease cannot reasonably ensured to obtain the expiration of the lease term, withdraw depreciation within the shorter one of useful life and lease term. 113 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 17. Construction in progress 1. Construction in progress The valuation of the Company's self-construction of construction in progress is in line with the actual cost which was formed by all the necessary expenditures that the asset of construction arrived at the expected useful status, including cost of engineering materials, labor cost, and the relevant cost of tax, the borrowing cost of should being capitalization and the indirect cost should be amortized. The Construction in progress is calculated in project classification. 2. Standard and time point of construction in progress transferring into fixed assets All expenditure occurred before the assets are brought to the expected conditions for use shall be recognized as the entering value of fixed assets. The construction in progress of fixed assets has been reached to the expected conditions for use but has not yet has handle completion and settlement procedures, the construction in progress shall be transferred into the fixed assets at the appraisal value in accordance with construction budget, cost or actual cost since the date that the construction in progress reaches to the expected conditions for use, and the depreciation of the fixed assets shall withdrawn in the light of the depreciation policy of fixed assets. After completion and settlement procedures, the Company shall adjust the original provisional estimate price at the actual cost, but not adjust original depreciation withdrawn. 18. Borrowing costs 1. Recognition principle of capitalization of borrowing costs Where the borrowing costs incurred to the Company can be directly attributable to the acquisition and construction or production of assets eligible for capitalization, it shall be capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be recognized as expenses on the basis of the actual amount incurred, and shall be recorded into the current profits and losses. The term “assets eligible for capitalization” shall refer to the fixed assets, investment real estate, inventories and other assets, of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale. The borrowing costs shall not be capitalized unless they simultaneously meet the following requirements: (1) The asset disbursements have already incurred, which shall include the cash, transferred non-cash assets or interest bearing debts paid for the acquisition and construction or production activities for preparing assets eligible for capitalization; (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. Capitalization period The capitalization period shall refer to the period from the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of capitalization of the borrowing costs. When the qualified asset under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. When the part of projects in the qualified asset under acquisition and construction or production are completed separately and is ready for use alone, the capitalization of the borrowing costs of such part of assets shall be ceased. 114 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Where each part of an asset under acquisition and construction or production is completed separately and is ready for use or sale during the continuing construction of other parts, but it cannot be used or sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased when the asset is completed entirely. 3. The period of suspension of capitalization of the borrowing costs 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. If the interruption is a necessary step for making the qualified asset under acquisition and construction or production ready for the intended use or sale, the capitalization of the borrowing costs shall continue. The borrowing costs incurred during such period shall be recognized as expenses, and shall be recorded into the profits and losses of the current period, till the acquisition and construction or production of the asset restarts. 4. Calculation method of capitalized amount of borrowing costs Interest of specific loan (deducting interest income of loan capital deposit in the bank or investment income obtained from temporary investment) and its subsidiary expenses before the construction or production of assets eligible for capitalization arrived at available for use or sale, capitalized them. The enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing. Where there is any discount or premium, the amount of discounts or premiums that shall be amortized during each accounting period shall be determined by the real interest rate method, and an adjustment shall be made to the amount of interests in each period. 19. Biological assets 20. Oil and gas assets 21. Intangible assets (1) Pricing method, useful life and impairment test 1. Initial measurement of intangible assets The cost of outsourcing intangible assets shall include the purchase price, relevant taxes and other necessary expenditures directly attributable to intangible assets for the expected purpose. Where the payment of purchase price for intangible assets is delayed beyond the normal credit conditions, which is of financing intention, the cost of intangible assets shall be determined on the basis of the current value of the purchase price. For intangible assets obtained through debt restructuring, which are pay a debt by the debtor, its entering value shall be recognized based on the fair value of such intangible assets. The balance between book value for debt restructuring and the fair value of the intangible assets shall be recorded into the profits and losses of the current period. As for a non-monetary assets transaction, under the premise that the transaction is commercial in nature and the fair value of the assets received or surrendered can be measured reliably, the initial cost of the fair value of the intangible assets received shall be recognized based on the fair value of the assets surrendered, unless there is any exact evidence showing that the fair value of the assets received is more reliable. Where any non-monetary assets transaction does not meet the conditions as prescribed in the above premises at the same time, the book value and 115 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. relevant payable taxes of the assets surrendered shall be the initial cost of the intangible assets received. As for intangible assets through business combination under the same control, its entering value shall be recognized based on the book value of combined party. As for intangible assets through business combination not under the same control, its entering value shall be recognized at its fair value. The cost of self-developed intangible assets shall include: materials used, service cost, registration fee when developing such intangible assets, and amortization expenses of other patent right used in the course of development and interest expense eligible for capitalization, as well as other direct cost incurred before the expected purposes of use of such intangible assets are realized. 2. Subsequent measurement The Company shall analyze and judge the service life of intangible assets, classify as intangible assets with limited service life and intangible assets with uncertain service life 1. Intangible assets with limited service life With regard to intangible assets with limited service life, shall be amortized by the straight-line method within the period when the intangible asset can bring economic benefits to the Company. Estimated useful life of intangible assets with limited useful life: Item Estimated useful life Basis Software 2-10 years Estimated useful life Land use right 50 years Property ownership certificate or land use certificate Non-patent right 10 years Estimated useful life The Company shall, at the end of every year, check the useful life and the amortization method of the said intangible assets with limited service life. If there is any difference between the expected useful life and the previously estimated data, the expected useful life shall be adjusted. After check, useful life and the amortization method of the said intangible assets remained the same as the previous valuation. 2. Intangible assets with uncertain service life If it is unable to forecast the period when the intangible asset can bring economic benefits to the enterprise, it shall be regarded as an intangible asset with uncertain service life. The Company shall, at the end of every year, check the useful life and does not conduct the amortization method of the said intangible assets with uncertain service life. If after check, useful life of the said intangible assets remained in uncertainty, the Company shall make an impairment test at the end of year. (2) Accounting policies of internal R&D expenses 1. Standard for classifying 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. 116 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 1. Standard for capitalization of development expenditures The expenses in R&D stage for its internal research and development projects of the Company may be capitalized when they satisfy the following conditions simultaneously: (1) It is feasible technically to finish intangible assets for use or sale; (2) It is intended to finish and use or sell the intangible assets; (3) The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally; (4) It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources; and (5) The development expenditures of the intangible assets can be reliably measured. The expenses not meet the aforesaid conditions, record into current profits or losses. R&D expenses had recorded into profits or losses in previous period, was derecognized as assets in the subsequent period. The capitalized expenses in R&D stage had been listed as R&D expenses in the balance sheet; transfer into intangible assets since the project arrived at the date expected use. 22. Impairment of long-term assets The Company shall, on the day of balance sheet, make a judgment on whether there is any sign of possible assets impairment. If there are signs of long-term assets impairment, on the basis of single item assets, estimate the recoverable amount; for it is difficult to estimate the recoverable amount of an individual asset, determines the recoverable amount of an asset group based on the assets belongs to the group. The estimation of recoverable amount of assets, recognized according to the higher between the net present value after its fair value minus the disposal expenses and the present value of expected future cash flow of an asset. The measurement results of the recoverable amount show that, the recoverable amount lower than the book value, writes down the book value of long term assets to recoverable amount which recognized as assets impairment losses, record into current profits or losses. Meanwhile, withdraw relevant assets impairment provision. Once the assets impairment losses are recognized, it will no longer being switch back in subsequent accounting period. After the recognization of assets impairment losses, the depreciation and amortization expenses of impairment assets adjusted in future period, which ensure the assets systematically amortized the book value of assets after the adjustment ( after deducting estimate net salvage) within the remaining service life. For intangible assets with uncertain goodwill or service life formed by enterprise combination, whatever there is sign of impairment conduct impairment test every year. When conducting impairment test to the goodwill, share the book value of goodwill to the group assets or combination of group assets estimate benefited from synergistic effect of enterprise combination When conducting impairment test to the relevant group assets or combination of group assets including goodwill, if there is sign of impairment, conduct impairment test to those excluding goodwill, calculate recoverable amount and compare to the relevant book value, recognize the relevant impairment losses. Then, conduct impairment test to the relevant group assets or combination of group assets including goodwill, compare the book value( including the part of book value of goodwill amortized and its recoverable amount, if the recoverable amount lower than its book value, recognize the impairment losses of goodwill 117 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 23. Long-term unamortized expenses 1. Amortization method Long-term deferred expenses refer to general expenses with the apportioned period over one year that have occurred but attributable to the current and future periods. Long-term deferred expense shall be straight-line amortized by stage within benefit period. 2. Amortization period The amortization period of the long-term deferred expenses shall be decided by the benefit period. 24. Payroll (1) Accounting treatment of short-term compensation Short-term compensation refers to the payroll payment of the employee providing service during the end of reporting period within 12 months that the Company should pay, excepting the welfare after demission and termination benefits. During the accounting period that the employees providing the service, should be calculated and recognized the corresponding payroll amount according to the stated withdrawal basic and proportion (2) Accounting treatment of the welfare after demission Welfare after demission refers to the Company, in order to obtain services provided by the employees, provide all kinds of rewards and benefits after the retirement of the employees or cancellation of staff employment contracts, excepting short-term compensation and retirement benefits. All the Company's welfare after demission plans are setting drawing plans. The setting drawing plan of welfare after demission is the social basic pension insurance, unemployment insurance, etc, which implemented by the local labor and social security offices. During the accounting period that the employee providing service for the Company, the amount should pay in line with the setting drawing plan will be recognized as liabilities and record into current profits or losses or cost of relevant assets. (3) Accounting treatment of demission welfare Demission welfare is refers to the Company's cancellation of the labor relationship with the employees before the labor contract maturity or compensation for encouraging the employee voluntarily accept reduction, when the Company is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the layoff proposal, or when recognizing the costs or expenses (the earlier one between the two) related to the reorganization of paying the demission welfare, should recognize the payroll liabilities from the demission welfare and include in the current gains and losses. (4) Accounting treatment of other welfare of the long-term employees Other welfare of the long-term employees refers to other welfares excluding short term compensation, welfare 118 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. after demission and demission welfare. 25. Accrued liabilities 1. Recognition standard of estimated liabilities The obligation pertinent to the Contingencies shall be recognized as estimated liabilities when the following conditions are satisfied simultaneously: (1) The obligation is a current obligation of the company; (2) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; (3) The amount of the obligation can be measured in a reliable way. 2. Measurement method of estimated liabilities The estimated debts shall be initially measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. To determine the best estimate, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies. If the time value of money is of great significance, the best estimate shall be determined after discounting the relevant future outflow of cash. The best estimate shall be conducted in the light of the following situations: If there is a sequent range for the necessary expenses and if all the outcomes within this range are equally likely to occur, the best estimate shall be determined in accordance with the middle estimate (average number of bound) within the range. If there is not a sequent range for the necessary expenses, or although there is a sequent range for the necessary expenses but all possible outcomes are not the same within the scope, i.e. If the Contingencies concern a single item, best estimate shall be determined in the light of the most likely outcome; If the Contingencies concern two or more items, the best estimate should be calculated and determined in accordance with all possible outcomes and the relevant probabilities. When all or some of the expenses necessary for the liquidation of an estimated debts of an enterprise is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement should not exceed the book value of the estimated debts. 26. Share-based payment 27. Other financial instruments such as preferred shares and perpetual capital securities 28. Revenue 1. Criteria for recognition time of revenue from sale of goods The significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; The enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; The relevant amount of revenue can be measured in a reliable way; The relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way. 119 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Confirmation methods of sales revenues of the Company: Confirmation methods of domestic sales revenue Shall satisfy following conditions: products should be delivered according to customer’s requirements; amount of sales revenues is determined, received or respected to receive; sales slip should be invoiced; costs of sold products should be calculated; Confirmation methods of export sales revenue Shall satisfy following conditions: products should be produced according to export sales agreement signed with customers, received export declaration after qualified inspection and obtained bill of lading (waybill) after delivery by transport company; amount of sales revenues is determined, received or respected to receive; sales slip should be invoiced; costs of sold products should be calculated. 2. Recognition basis of revenue from transferring use rights of assets The relevant economic benefits are likely to flow into the enterprise; and the amount of revenues can be measured in a reliable way. The revenue from a alienating the right to use assets shall be recognized in the light of the following methods: (1) The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by others and the actual interest rate; (2) The amount of royalty revenue should be measured and confirmed in accordance with the period and method of charging as stipulated in the relevant contract or agreement. 3. Recognition basis and method for recognizing the revenue from providing labor services If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method. Schedule of completion under the transaction concerning the providing of labor services shall be recognized in the light of the measurement of the work completed. The reliably estimate the outcome of a transaction concerning the labor services it provides, which simultaneously meets the following conditions: (1) The amount of revenue can be measured in a reliable way. (2) Relevant economy profits may inflow enterprises (3) The schedule of completion of the transaction can be measured in a reliable way. (4) The cost occurred or will occur in the transaction can be measured in a reliable way. The Company shall ascertain the total revenue from the providing of labor services in accordance with the received or to-be-received price of the party that receives the labor services as stipulated in the contract or agreement, unless the received or to-be-received price as stipulated in the contract or agreement is unfair. The Company shall, on the date of the balance sheet, ascertain the current revenue from providing labor services in accordance with the amount of multiplying the total amount of revenues from providing labor services by the schedule of completion then deducting the accumulative revenues from the providing of labor services that have been recognized in the previous accounting periods. At the same time, the enterprise shall carry forward the current cost of labor services in accordance with the sum of multiplying the total amount of revenues arising from the providing of labor services by the schedule of completion and then deducting the accumulative revenues from the providing of labor services. If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method. (1) If the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of 120 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. labor services shall be carried forward at the same amount; (2) If the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the current profits and losses, and no revenue from the providing of labor services may be recognized. If the contracts the Company sign with other enterprises include sale of goods and rendering of service, and both of them can be separated and individually calculated, deal with them separately. For those sale of goods and rendering of service cannot be separated, or though can be separated but not be individually calculated, consider sale of goods and rendering of service as sale of goods. 4. Assets transfer with repurchase conditions When selling goods or transferring assets, the Company signs agreement of sale of goods or assets transfer, judges the sale of goods whether meeting the recognition condition of revenue or not in lie with the agreement or not. If sales with Buyback Agreements belong to financing transaction, the Company derecognizes the revenue of sale, when delivering products or assets. If the price of repurchase is higher than the balance of sale price, withdraw interest on schedule during the repo period, withdraw financial cost. 29. Government subsidies (1) Judgment basis and accounting treatment of government subsidies related to assets Recognize as deferred income, record into non-operation revenue by stage in line with service life of assets purchased or constructed; (2) Judgment basis and accounting treatment of government subsidies related to profits Government subsidies related to profits, as for those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in non-operation revenue during the period when the relevant expenses are recognized; those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in non-operation revenue of current period. The government recognized need to return, which deposited in the balance of relevant deferred income, write-downs related deferred income balance, the part beyond include in the current profits and losses, for those not in deferred income, include in current profits or losses directly. 30. Deferred income tax assets/deferred income tax liabilities Deferred income tax assets and deferred income tax liabilities recognize in line with the difference between tax base of assets and liabilities and their book value. On balance sheet date, deferred income tax assets and deferred income tax liabilities calculated in line with suitable tax rate in the period of estimate recover the assets or pay off the liabilities. 1. Recognition basis of deferred income tax assets The Company probably recognizes the deferred income tax assets incurred from deductable temporary difference using the limit of taxable income amount of deductible losses and tax credits deducting temporary differences and can be brought forward to next accounting year. However, derecognize the deferred income tax assets incurred from the initial recognition of assets or liabilities in the transaction of the follows with these characteristics: (1) 121 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. The transaction is not enterprise combination. (2) When the transaction occurring, it has no influence to the accounting profits, taxable amount or deductible losses. The deductable temporary difference of relevant association enterprise investment, simultaneously meet the follow conditions, recognize as corresponding deferred tax assets; temporary difference probably switch back in the foreseeable future, and obtain taxable amount using for deducting deductable temporary difference 1. Recognition basis of deferred income tax liabilities The Company recognizes the taxable temporary differences unpaid in the current period or previous period as deferred income tax liabilities. But not include: (1) Temporary differences formed by the initial recognition of goodwill (2) The transaction or event is not formed by enterprise combination, and the happen of transaction or event has no influence to the accounting profits or temporary differences formed by taxable income (Deductible losses) (3) For taxable temporary differences related to the investment with the subsidiary and association enterprise, the time of the reverse of temporary differences can be control and the temporary difference probably does not switch back in the foreseeable future. 31. Lease (1) Accounting treatment of operating lease (1) Rent charge paid for leasing assets shall be apportioned at the straight-line method and recorded into the current expense within the overall rent period including rent-free period. The initial direct expense paid by the Company related to lease transaction shall be included into the current expense. Where the lessor undertakes the expenses related to the lease that should be undertaken by the Company, the Company shall deduct such expense from total rental, and such deducted rental fee shall be apportioned within the rent period and included into the current expense. (2) Rent charge received for renting out assets shall be apportioned at the straight-line method and recognized as rental income within the overall rent period including rent-free period. The initial direct expense paid by the Company related to lease transaction shall be included into the current expense. In the event of the larger amount, it shall be capitalized and recoded into the current income by installment within the overall lease period. Where the Company undertakes the expenses related to the lease that should be undertaken by the lessor, the Company shall deduct such expense from total rental income, and such deducted rental fee shall be apportioned within the rent period. (2) Accounting treatments of financial lease (1) Assets acquired under finance leases: On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. (2) Assets lost under finance leases: On the lease beginning date, the Company shall recognize the difference between financing lease receivables and the unguaranteed residual value in a finance lease as unrealized financing income and recognize as income of lease during the future period of receiving lease income. The initial direct cost 122 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. related to lease transaction occurred in the Company, record into initial calculation of financing lease receivables, decrease the amount of lease income recognized during lease period . 32. Changes in other significant accounting policies and estimates 1. Changes in accounting policies There is no change in significant accounting policies in reporting period. 2. Changes in accounting estimates There is no change in significant accounting estimates in reporting period. 33. Changes in main accounting policies and estimates (1) Change of accounting policies □ Applicable √ Inapplicable (2) Changes in accounting estimates □ Applicable √ Inapplicable 34. Other VI. Taxation 1. Main taxes and tax rate Category of taxes Tax basis Tax rate Income of sale of goods and rendering VAT 17% labor services Business tax Taxable turnover 5% Urban maintenance and construction tax Turnover tax actually paid 7% Enterprise income tax Income tax payable 25% 70% of the original value of the property Property tax 1.2% considered as tax base Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate Name Income tax rate Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. 15% Zhuhai Jinji Chemicals Co., Ltd. 15% Pearl River Color Printing Co., Ltd. of Chancheng District, Authorize the taxable income of 7% of the total amount of the Foshan income and the income tax rate is still 25% 123 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 2. Tax preference 1. According to the Circular on issuing the First Name List of Hi-tech Enterprise through the review in Guangdong Province for Y2012 (YKGZi (2013) Document No. 27) jointly issued by Science & Technology Department of Guangdong Province, Finance Department of Guangdong Province, National Tax Bureau of Guangdong Province and Local Tax Bureau of Guangdong Province, the Company’s shareholding subsidiary company Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. passed First Batch of Hi-tech Enterprise in Guangdong Province for Y2012, and gained Certificate for Hi-tech Enterprise (Certificate No.: GF2012440000283, with three years of validity). So the subsidiary can enjoy the relevant tax preference for Hi-tech enterprise since Y2012 (include Y2012) for three years, whose CIT rate was 15%. According to the Circular on issuing the First Name List of Hi-tech Enterprise through the review in Guangdong Province for Y2015 (YKGS (2015) Document No. 24) issued by Science & Technology Department of Guangdong Province , Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. passed First Batch of Hi-tech Enterprise in Guangdong Province for Y2015, thus, whose CIT rate was 15%. 2. According to the Circular on issuing the Second Name List of Hi-tech Enterprise in Guangdong Province for Y2013 (YKGZi (2014) Document No. 1362) jointly issued by Science & Technology Department of Guangdong Province, Department of Finance of Guangdong Province, Guangdong Provincial Office, SAT, Guangdong Local Taxation Bureau, the sub-subsidiary of the Company Zhuhai Jinji Chemicals Co., Ltd. had passed the affirmation of the second name list of high-tech enterprise of 2013 and the gained the Certification of Hi-tech Enterprise (the Certification No.: GR201344000618 with the validity for 3 years). Thus the sub-subsidiary Zhuhai Jinji Chemicals Co., Ltd. had been enjoyed the relevant preferential policies of the high-tech enterprise of the state for continuous three years since 2013 (including 2013), with the corporate income tax be calculated according to 15% of the taxable income. 3. Other According to business income tax rate of sub-subsidiary Pearl River Color Printing Co., Ltd. of Chancheng District, Foshan as at 7% of total revenue, income tax rate remained 25%. VII. Notes on major items in consolidated financial statements of the Company 1. Monetary funds Unit: RMB Yuan Item Closing balance Opening balance Cash on hand 312,658.48 283,310.72 Bank deposits 185,647,665.76 110,640,137.90 Other monetary funds 323,746,286.83 363,625,954.94 Total 509,706,611.07 474,549,403.56 Other notes: Of which the lists of restricted monetary capital were as followed: 124 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Item Closing balance Opening balance Deposit of bank acceptance 57,756,239.27 5,614,583.26 L/C Guarantee deposits 2,858,600.00 115,119,272.90 Performance bond 20,000,000.00 91,331,459.72 Fixed time deposit or call deposits used for 243,077,190.17 149,235,464.68 guarantee Other use restricted deposits 54,257.39 --- Total 323,746,286.83 361,300,780.56 2. Financial assets measured by fair value and the changes be included in the current gains and losses Unit: RMB Yuan Item Closing balance Opening balance Transactional financial assets 1,741,500.00 Total 1,741,500.00 Other notes: The Company’s subsidiary, Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. signed Forward Exchange Rate Contract with the bank, considering 31 Dec. 2015 as the fair value of exchange rate calculation. 3. Derivative financial assets □ Applicable √ Inapplicable 4. Notes receivable (1)Notes receivable listed by category Unit: RMB Yuan Item Closing balance Opening balance Bank acceptance bill 265,679,151.34 345,827,854.88 Total 265,679,151.34 345,827,854.88 (2) Notes receivable pledged by the Company at the period-end Unit: RMB Yuan Item Amount Bank acceptance bill 14,508,279.00 Total 14,508,279.00 125 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end Unit: RMB Yuan Amount of recognition termination at the Amount of not terminated recognition at Item period-end the period-end Bank acceptance bill 641,644,169.70 Total 641,644,169.70 (4) Notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement Unit: RMB Yuan Amount of the notes transferred to accounts receivable at the Item period-end Other notes: 5. Accounts receivable (1) Accounts receivable classified by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Accounts receivable withdrawal of bad 793,480, 6,249,28 787,230,9 839,154 5,237,919 833,916,13 debt provision of by 95.26% 0.79% 93.28% 0.62% 231.46 0.00 51.46 ,059.30 .48 9.82 credit risks characteristics: Accounts receivable with insignificant single amount for 39,491,7 35,397,4 4,094,354 60,446, 56,384,48 4,062,447.8 4.74% 89.63% 6.72% 93.28% which bad debt 72.33 18.00 .33 932.71 4.85 6 provision separately accrued 832,972, 41,646,6 791,325,3 899,600 61,622,40 837,978,58 Total 100.00% 5.00% 100.00% 6.85% 003.79 98.00 05.79 ,992.01 4.33 7.68 126 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Subentry within 1 year 1-3 months 705,325,789.75 3-12 months 75,724,627.84 3,785,722.07 5.00% Subtotal of within 1 year 781,050,417.59 3,785,722.07 5.00% 1 to 2 years 7,863,138.98 786,313.90 10.00% 2 to 3 years 2,020,311.38 404,062.28 20.00% Over 3 years 2,546,363.51 1,273,181.75 50.00% Total 793,480,231.46 6,249,280.00 0.79% Notes of the basis of recognizing the group: In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB 15,265,232.01; the amount of the reversed or collected part during the reporting period was of RMB 35,240,938.34. Significant amount of reversed or recovered bad debt provision Unit: RMB Yuan Name of the entity Amount Method The withdrawal amount of the bad debt provision during the reporting period was of RMB15,265,232.01; the bad debt provision roll out was of RMB35,240,938.34, mainly was the disposal of subsidiary, Foshan Chengtong Paper Co., Ltd., the roll out bad debt provision was the change of consolidated scope. The note of disposal of subsidiary, see Note. VIII. Change in consolidated scope (3) Particulars of the actual verification of accounts receivable during the reporting period Unit: RMB Yuan Item Amount Naught Of which: significant actual verification of accounts receivable 127 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions Notes: No such cases in reporting period. (4) Top five of account receivable of closing balance collected by arrears party Name of the entity Closing balance Proportion% Bad debt provision withdrawn Customer A 59,392,154.99 7.13 636,583.92 Customer B 52,052,532.44 6.25 --- Customer C 28,197,019.70 3.39 223,824.03 Customer D 25,411,072.23 3.05 14,367.70 Customer E 22,938,936.19 2.75 696,558.30 Total 187,991,715.55 22.57 1,571,333.95 (5) Derecogniziton of account receivable due to the transfer of financial assets (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Other notes: 6. Prepayment (1) List by aging analysis: Unit: RMB Yuan Closing balance Opening balance Aging Amount Proportion Amount Proportion Within 1 year 100,305,038.17 86.25% 169,346,566.63 93.08% 1 to 2 years 14,339,162.73 12.33% 12,302,740.61 6.76% 2 to 3 years 1,295,593.58 1.12% 71,240.00 0.04% Over 3 years 350,902.50 0.30% 211,980.00 0.12% Total 116,290,696.98 -- 181,932,527.24 -- Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time: Name of the entity Closing balance Aging Reason 128 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Guangzhou Devotion Heat Energy 10,889,644.79 1-2 years Payment in advance of trading in Technology Co., Ltd. installment deduction (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target Name of the entity Closing balance Proportion(%) Time Reason Customer A 27,884,562.96 23.98 1-3 months Did not arrived in the settlement period Customer B 17,599,079.27 15.13 1-3 months Did not arrived in the settlement period Customer C 13,789,593.57 11.86 1-3 months Did not arrived in the settlement period Customer D 10,889,644.79 9.36 1-2 years Did not arrived in the settlement period Customer E 10,643,357.00 9.15 1-3 months Did not arrived in the settlement period Total 80,806,237.59 69.48 Other notes: 7. Interest receivable (1) Category of interest receivable Unit: RMB Yuan Item Closing balance Opening balance Fixed time deposits 5,233,556.60 Total 5,233,556.60 (2) Significant overdue interest Entity Closing balance Overdue time Overdue reason Whether occurred 129 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. impairment and its judgment basis Other notes: 8. Dividend receivable (1) Dividend receivable Unit: RMB Yuan Item (or investees) Closing balance Opening balance (2) Significant dividend receivable aged over 1 year Unit: RMB Yuan Whether occurred Item (or investees) Closing balance Aging Reason impairment and its judgment basis Other notes: 9. Other accounts receivable (1) Other account receivable classified by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Other accounts receivable with insignificant single 18,610,6 18,610,6 17,874, 17,874,41 10.93% 100.00% 13.68% 100.00% amount for which 29.25 29.25 414.64 4.64 bad debt provision separately accrued Other accounts receivable withdrawn 146,532, 2,669,92 143,862,3 107,239 790,904.6 106,448,71 bad debt provision 86.03% 1.83% 82.09% 0.74% 231.59 3.43 08.16 ,618.76 8 4.08 according to credit risks characteristics 130 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Other accounts receivable with insignificant single 5,178,29 5,178,29 5,529,8 5,429,851 3.04% 100.00% 4.23% 98.19% 100,000.00 amount for which 0.54 0.54 51.77 .77 bad debt provision separately accrued 170,321, 26,458,8 143,862,3 130,643 24,095,17 106,548,71 Total 100.00% 15.53% 100.00% 18.44% 151.38 43.22 08.16 ,885.17 1.09 4.08 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Other accounts Other accounts receivable Bad debt provision Withdrawal proportion Withdrawal reason receivable Hong Kong Hang Fung Holdings Limited Co., 12,610,629.25 12,610,629.25 100.00% Not expected to recover Ltd. Zhuhai Yidesheng 6,000,000.00 6,000,000.00 100.00% Not expected to recover Industrial Co., Ltd. Total 18,610,629.25 18,610,629.25 -- -- In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion Subentry within 1 year 1-3 months 114,030,138.17 4-12 months 27,488,755.67 1,374,437.79 5.00% Subtotal of within 1 year 141,518,893.84 1,374,437.79 5.00% 1 to 2 years 2,165,029.47 202,234.77 9.34% 2 to 3 years 1,197,555.91 229,511.17 19.16% Over 3 years 1,650,752.37 863,739.70 52.32% Total 146,532,231.59 2,669,923.43 1.83% Notes: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable 131 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMB6,327,755.89; the amount of the reversed or collected part during the reporting period was of RMB3,964,083.76. Significant amount of reversed or recovered bad debt provision; Unit: RMB Yuan Name of the entity Reversed or collected amount Method 1. Mainly was the disposal of subsidiary, Foshan Chengtong Paper Co., Ltd., the roll out bad debt provision was the change of consolidated scope. The note of disposal of subsidiary, see Note. VIII. Change in consolidated scope (3) Particulars of the actual verification of other accounts receivable during the reporting period Unit: RMB Yuan Item Amount Naught Of which: significant actual verification of other accounts receivable Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions Notes of write-off other accounts receivable: (4) Other account receivable classified by account nature Unit: RMB Yuan Nature Closing book balance Opening book balance Margin 4,341,696.10 1,041,399.82 Pretty cash 1,862,991.83 1,863,927.83 Freight and miscellaneous charges on 3,036,100.63 2,383,900.07 behalf Loans 31,209,797.91 Amount of equity transfer 105,000,000.00 Land purchase and storage 64,499,000.00 Other intercourse funds 24,870,564.91 60,855,657.45 Total 170,321,151.38 130,643,885.17 132 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan Closing balance of Name of the entity Nature Closing balance Aging Proportion% bad debt provision Lion Capital Amount of equity Management Co., 105,000,000.00 1-3 months 61.65% transfer Ltd. Ningxia Shunhao Chemical Product Loan 25,209,797.91 4-12 months 14.80% 1,260,489.90 Sales Co., Ltd. Hong Kong Hang Fung Holdings Intercourse funds 12,610,629.25 Over 3 years 7.40% 12,610,629.25 Limited Co., Ltd. Zhuhai Yidesheng Loan 6,000,000.00 Over 3 years 3.52% 6,000,000.00 Industrial Co., Ltd. Bureau of land and Margin 3,000,000.00 1-3 months 1.76% resources of Pinghu Total -- 151,820,427.16 -- 89.13% 19,871,119.15 (6) Account receivable involving government subsidies Unit: RMB Yuan Project of government Estimated recovering Name of the entity Closing balance Closing aging subsidies time, amount and basis (7) Other account receivable derecognized due to the transfer of financial assets (8) Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement Other notes: 10. Inventory (1) Category of inventory Unit: RMB Yuan Closing balance Opening balance Item Falling price Falling price Book balance Book value Book balance Book value reserves reserves 133 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Raw materials 216,300,558.09 13,733,332.71 202,567,225.38 445,735,602.35 7,809,558.43 437,926,043.92 Goods in process 68,497,349.74 68,497,349.74 110,950,017.57 110,950,017.57 Inventory goods 453,400,085.67 11,583,848.86 441,816,236.81 405,756,387.77 12,476,310.64 393,280,077.13 Total 738,197,993.50 25,317,181.57 712,880,811.93 962,442,007.69 20,285,869.07 942,156,138.62 (2) Falling price reserves of inventory Unit: RMB Yuan Increase Decrease Item Opening balance Reverse or Closing balance Withdrawal Other Other write-off Raw materials 7,809,558.43 5,923,774.28 13,733,332.71 Inventory goods 12,476,310.64 850,773.02 1,743,234.80 11,583,848.86 Total 20,285,869.07 6,774,547.30 1,743,234.80 25,317,181.57 (3) Notes of the closing balance of the inventory which includes capitalized borrowing expenses (4) Completed unsettled assets formed from the construction contact at the period-end Unit: RMB Yuan Item Amount Other notes: 11. Assets divided as held-to-sold Unit: RMB Yuan Estimated disposal Item Closing book value Fair value Estimated disposal time expense Other notes: 12. Non-current assets due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Other notes: 13. Other current assets Unit: RMB Yuan Item Closing balance Opening balance 134 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. The VAT deduction 17,147,074.25 8,212,679.56 Total 17,147,074.25 8,212,679.56 Other notes: 14. Available-for-sale financial assets (1) List of available-for-sale financial assets Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Available-for-sale equity 288,700.00 288,700.00 113,558.00 113,558.00 instruments Measured by cost 288,700.00 288,700.00 113,558.00 113,558.00 Total 288,700.00 288,700.00 113,558.00 113,558.00 (2) Available-for-sale financial assets measured by fair value at the period-end Unit: RMB Yuan Available-for-sale equity Available-for-sale debt Category Total instruments instruments (3) Available-for-sale financial assets measured by cost at the period-end Unit: RMB Yuan Book balance Depreciation reserves Shareholdi Cash ng bonus of Investee Opening Closing Opening Closing proportion the Increase Decrease Increase Decrease period period period period among the reporting investees period China Guangfa 113,558.00 175,142.00 288,700.00 0.00% Bank Co., Ltd Total 113,558.00 175,142.00 288,700.00 -- (4) Changes of the impairment of the available-for-sale financial assets during the reporting period Unit: RMB Yuan 135 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Available-for-sale equity Available-for-sale debt Category Total instruments instruments (5) Relevant notes of the fair value of the available-for-sale equity instruments which seriously fell or temporarily fell but not withdrawn the impairment provision Unit: RMB Yuan Item of Falling range of Withdrawn Reason of not available-for-sale Continued falling Investment cost Closing fair value the fair value impairment withdrawn the equity time (month) against the cost amount impairment instruments Other notes: The Company received 0.0004248% share equity of China Guangfa Bank Co., Ltd held by the subsidiary Foshan Chengtong Paper Co., Ltd. On 31 Jul. 2015, the both parties had signed Transfer Agreement, Foshan Chengtong Paper Co., Ltd. transfer 50,856 shares of China Guangfa Bank Co., Ltd. at evaluation price of RMB288,700.00 to the Company, the balance of book value of available-for-sale financial assets increased RMB175,142.00. 15. Investment held-to-maturity (1) List of investment held-to-maturity Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves (2) Significant held-to-maturity investment at the period-end Unit: RMB Yuan Bond item Book value Nominal interest rate Actual interest rate Due date (3) Re-classified held-to-maturity investment during the reporting period Other notes: 16. Long-term accounts receivable (1) Long-term accounts receivable Unit: RMB Yuan Item Closing balance Opening balance Discount rate 136 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Bad debt Bad debt range Book balance Book value Book balance Book value provision provision 490,240,600.4 490,240,600.4 Loan 1 1 490,240,600.4 490,240,600.4 Total -- 1 1 (2) Long-term accounts receivable which terminate the recognition owning to the transfer of the financial assets (3) The amount of the assets and liabilities formed by the transfer and the continues involvement of long-term accounts receivable Other notes: In reporting period, the Company disposes its subsidiary Foshan Chengtong Paper Co., Ltd. which shall pay RMB490,240,600.41 to the Company. In line with the Creditor’s Rights and Debts Settlement Agreement signed, since 1 Jan. 2016, the Company charge interest of capital usage once a quarter from Foshan Chengtong Paper Co., Ltd., in according to the same period of three-year benchmark lending interest rate on a regular basis issued by People’s Bank of China. Foshan Chengtong Paper Co., Ltd. had paid all the principal and interest before 31 Dec. 2019. 17. Long-term equity investment Unit: RMB Yuan Increase/decrease in reporting period Investme Closing Adjustme nt profit Withdraw balance Additiona nt of Declarati Opening Negative and loss Other n Closing of Investee l other on of cash balance investmen recognize equity impairme Other balance impairme investmen comprehe dividends t d under changes nt nt t nsive or profits the equity provision provision income method I. Joint ventures II. Associated enterprises Guangdo ng Chengton 8,228,758 -24,203.9 369,125.8 7,835,428 g .48 4 9 .65 Logistics Co., Ltd. 137 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Chengton 238,518,5 15,735,22 254,253,7 g Finance 74.19 3.61 97.80 Co., Ltd. 246,747,3 15,711,01 369,125.8 262,089,2 Subtotal 32.67 9.67 9 26.45 246,747,3 15,711,01 369,125.8 262,089,2 Total 32.67 9.67 9 26.45 Other notes: (1) In, 2012, the subsidiary of the Company Zhuhai S.E.Z.Hongta Renheng Paper Co., Ltd. held 24% of the shares of Guangdong Chengtong Logistics Co., Ltd., which had significant influences and measured by equity method. On 31 Mar. 2013, Guangdong Chengtong Logistics Co., Ltd. executed the shares withdrawal and assets reduction [(Singapore) Renheng Industry Co., Ltd. (occupied shares 25%) withdrawn the equity of Guangdong Chengtong Logistics Co., Ltd.]. Thus, the shareholding proportion of Guangdong Chengtong Logistics Co., Ltd. by the subsidiary of the Company Zhuhai S.E.Z.Hongta Renheng Paper Co., Ltd. rose from 24% to 32%, which still had significant influences and measured by equity method. (2) On 23 Dec. 2013, the Company reviewed and approved Proposal on the Related Transaction of Purchasing 20% Equity of Chengtong Finance Co., Ltd. held by China Project Ltd in 2013, of which the company had signed the Equity Transfer Agreement with China Paper Industry Co., Ltd., which planed to transfer 20% equity of Chengtong Finance Co., Ltd. held by China Paper Industry Investment Co., Ltd. with the equity transfer price of RMB 231,450,200 after the negotiation by both parties. Chengtong financial Co., Ltd. had changed its shareholder registration on 23 Jun. 2014. Thus, since Jul. 2014, Chengtong financial Co., Ltd. held equity proportion was 20%, calculated at equity method. Thus the Company held 20% equity of Chengtong Finance Co., Ltd. since Jul. 2014 and be measured by equity method. 18. Investment property (1) Investment property adopted the cost measurement mode √ Applicable □ Inapplicable Unit: RMB Yuan Item Houses and buildings Land use right Construction in progress Total I. Original book value 20,444,648.02 20,444,648.02 1. Opening balance 20,444,648.02 20,444,648.02 2. Increased amount of the period (1) Outsourcing (2) Transfer of inventory\fixed assets\project under construction 138 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (3) Increased from enterprise merger 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Closing balance 20,444,648.02 20,444,648.02 II. Accumulative depreciation and accumulative amortization 1. Opening balance 7,838,740.94 7,838,740.94 2. Increased amount 660,780.06 660,780.06 of the period (1) Withdrawal or 660,780.06 660,780.06 amortization 3. Decreased amount of the period (1) Disposal (2) Other transfer 4. Closing balance 8,499,521.00 8,499,521.00 III. Depreciation reserves 1. Opening balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal (2) Other transfer 139 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 4. Closing balance IV. Book value 1. Book value of the 11,945,127.02 11,945,127.02 period-end 2. Opening book 12,605,907.08 12,605,907.08 value (2) Investment property adopted fair value measurement mode □ Applicable √ Inapplicable (3) Details of investment property failed to accomplish certification of property Unit: RMB Yuan Item Book value Reason Other notes: 19. Fixed assets (1) List of fixed assets Unit: RMB Yuan House and buildings Machinery Transportation Other electronic Item Total equipment equipment I. Original book value 1. Opening 1,266,791,313.14 3,430,709,549.60 61,601,986.77 99,853,876.75 4,858,956,726.26 balance 2. Increased 122,428,492.26 81,637,536.83 2,306,129.04 26,946,766.09 233,318,924.22 amount of the period (1) Purchase 2,679,781.80 3,782,896.78 2,306,129.04 26,946,766.09 35,715,573.71 (2) Transfer of project under 119,748,710.46 77,854,640.05 197,603,350.51 construction (3) Increased from enterprise merger 3. Decreased 189,689,233.65 750,910,717.54 9,111,490.75 26,701,454.09 976,412,896.03 amount of the period 140 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (1) Disposal or 1,701,582.44 19,595,806.86 3,280,832.17 491,105.41 25,069,326.88 Scrap Other transfer 187,987,651.21 731,314,910.68 5,830,658.58 26,210,348.68 951,343,569.15 4. Closing balance 1,199,530,571.75 2,761,436,368.89 54,796,625.06 100,099,188.75 4,115,862,754.45 II. Accumulative depreciation 1. Opening 379,383,575.27 1,345,967,274.35 44,186,159.05 86,029,051.93 1,855,566,060.60 balance 2. Increased 31,910,546.05 109,328,763.51 4,380,207.11 4,833,752.50 150,453,269.17 amount of the period (1) Withdrawal 31,910,546.05 109,328,763.51 4,380,207.11 4,833,752.50 150,453,269.17 3. Decreased 72,389,693.23 405,865,903.40 5,540,914.68 22,412,372.92 506,208,884.23 amount of the period (1) Disposal or 324,318.26 17,456,591.37 2,752,899.66 441,875.69 20,975,684.98 Scrap Other transfer 72,065,374.97 388,409,312.03 2,788,015.02 21,970,497.23 485,233,199.25 4. Closing balance 338,904,428.09 1,049,430,134.46 43,025,451.48 68,450,431.51 1,499,810,445.54 III. Depreciation reserves 1. Opening 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. Closing balance 76,679,757.00 76,679,757.00 IV. Book value 1. Closing book 860,626,143.66 1,635,326,477.43 11,771,173.58 31,648,757.24 2,539,372,551.91 value 2. Opening book 887,407,737.87 2,008,062,518.25 17,415,827.72 13,824,824.82 2,926,710,908.66 value 141 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (2) List of temporarily idle fixed assets Unit: RMB Yuan Accumulative Impairment Item Original book value Book value Notes depreciation provision Naught (3) Fixed assets leased in from financing lease Unit: RMB Yuan Accumulative Item Original book value Impairment provision Book value depreciation Houses and buildings 12,212,610.00 6,292,599.05 5,920,010.95 Machinery equipment 3,160,000.00 2,427,148.94 732,851.06 Total 15,372,610.00 8,719,747.99 6,652,862.01 (4) Fixed assets leased out from operation lease Unit: RMB Yuan Item Closing book value Naught (5) Details of fixed assets failed to accomplish certification of property Unit: RMB Yuan Item Book value Reason Property right certificate was under Houses and buildings 123,343,609.47 processing Other notes: 1. Zhuhai Jinji Chemicals Co., Ltd. under control of the Company, apply to the court for property attachment prior to lawsuit, required close down the inventory of RMB0.75 million of respondent, and all comprehensive buildings (Property right certificate No.YFDZZ No.C5229601) as guarantee, the net book value of comprehensive building was RMB2,449,958.04. 2. Zhuhai Huafeng Paper Co., Ltd. under control of the Company, apply to the court for property attachment prior to lawsuit, required to frozen the bank deposits of the respondent, and close down the land and machinery equipments, Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. mortgaged its housewares locate at Qianshan Jinji Road No. 508 ( QZ No.C5617917), the net book value of the houseware was RMB12,961,474.64. 142 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 20. Construction in progress (1) List of construction in progress Unit: RMB Yuan Closing balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Expansion project for production 119,774,790.92 119,774,790.92 workshop phase III Self -bring heating boiler environmental upgrading 10,419,623.13 10,419,623.13 technical renovation project Advanced wastewater treatment and 3,085,481.43 3,085,481.43 water reuse project BM1 transmission 3,099,922.32 3,099,922.32 2,843,941.12 2,843,941.12 actuator renovation Renovation of BM1multi-disc 2,221,705.07 2,221,705.07 machine BM3 Tetra 4,651,150.58 4,651,150.58 2,163,918.29 2,163,918.29 project Upscale special white cardboard 2,272,891.62 2,272,891.62 2,113,080.67 2,113,080.67 BM4 new project Paper cutter 1,159,264.85 1,159,264.85 project Videojet ink-jet 1,119,000.00 1,119,000.00 printer Huafeng OARS 3,032,611.11 3,032,611.11 143 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. library BM3 energy management 1,364,476.46 1,364,476.46 569,613.10 569,613.10 center construction BM3 vacuum pump energy 2,228,316.18 2,228,316.18 12,410.00 12,410.00 saving renovation project Automatic packaging line 7,357,259.18 7,357,259.18 renovation project Latex phase II matching raw 1,025,703.02 1,025,703.02 280,301.88 280,301.88 material tank farm project PP diaphragm 1,043,219.59 1,043,219.59 filter press project Other 2,229,652.72 2,229,652.72 8,446,530.85 8,446,530.85 Total 28,305,202.78 28,305,202.78 154,209,661.31 154,209,661.31 (2) Changes of significant construction in progress Unit: RMB Yuan Of Amount Proporti which: Accumul that on the Capitaliz Other ative transferr estimate amount ation rate Estimate decrease amount Name of Opening ed to Closing d of the Project of the of the Capital d Increase d amount of item balance fixed balance project progress capitaliz interests resources number of the capitaliz assets of accumul ed of the period ed the ative interests period interests period input of the period Advance d wastewat 4,917,70 3,085,48 943,433. 4,028,91 81.93% 100 Other er 0.00 1.43 94 5.37 treatmen t and 144 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. water reuse project Self -bring heating boiler environ mental 22,000,0 10,419,6 11,674,9 22,094,5 100.43% 100 Other upgradin 00.00 23.13 41.89 65.02 g technical renovati on project BM3 Manufac turing 6,000,00 918,359. 4,090,78 5,009,14 83.49% 100 Other executio 0.00 60 1.53 1.13 n system project Expansio n project for color printing 98,100,0 119,774, 29,994,9 149,769, 11,068,9 3,667,24 producti 152.67% 100 7.39% Other 00.00 790.92 27.99 718.91 82.69 3.25 on worksho p phase III Upscale special white 700,000, 2,113,08 159,810. 2,272,89 cardboar 0.22% 0.22 Other 000.00 0.67 95 1.62 d BM4 new project BM3 energy manage 2,572,00 569,613. 794,863. 1,364,47 53.05% 53.05 Other ment 0.00 10 36 6.46 center construct 145 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. ion Automat ic packagin 7,003,00 7,357,25 7,357,25 g line 105.10% 99.00 Other 0.00 9.18 9.18 renovati on project BM3 vacuum pump energy 2,600,00 12,410.0 2,215,90 2,228,31 85.70% 85.70 Other saving 0.00 0 6.18 6.18 renovati on project BM3 18,730,0 2,163,91 2,487,23 4,651,15 Tetra 24.83% 24.83 Other 00.00 8.29 2.29 0.58 project BM1 transmis sion 2,600,00 2,843,94 255,981. 3,099,92 119.23% 99.00 Other actuator 0.00 1.12 20 2.32 renovati on PP diaphrag 1,400,00 1,043,21 1,043,21 m filter 74.52% 74.52 Other 0.00 9.59 9.59 press project 865,922, 141,901, 61,018,3 180,902, 22,017,2 11,068,9 3,667,24 Total -- -- -- 700.00 218.26 58.10 340.43 35.93 82.69 3.25 (3) List of the withdrawal of the impairment provision of the construction in progress Unit: RMB Yuan Item Withdrawn amount Reason Naught Other notes: 146 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 21. Engineering material Unit: RMB Yuan Item Closing balance Opening balance Other notes: 22. Liquidation of fixed assets Unit: RMB Yuan Item Closing balance Opening balance Other notes: 23. Productive biological assets (1) Productive biological assets adopted cost measurement mode □ Applicable √ Inapplicable (2) Productive biological assets adopted fair value measurement mode □ Applicable √ Inapplicable 24. Oil and gas assets □ Applicable √ Inapplicable 25. Intangible assets (1) List of intangible assets Unit: RMB Yuan Item Land use right Patent right Non-patent right Software and others Total I. Original book value 1. Opening 160,462,312.76 20,181,101.40 6,891,264.42 187,534,678.58 balance 2. Increased 432,003.89 9,981,324.61 1,619,958.84 12,033,287.34 amount of the period (1) Purchase 432,003.89 1,619,958.84 2,051,962.73 (2) Internal R 9,981,324.61 9,981,324.61 &D 147 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (3) Increased from enterprise merger 3. Decreased 29,210,743.54 3,409,273.96 323,937.14 32,943,954.64 amount of the period (1) Disposal Other transfer 29,210,743.54 3,409,273.96 323,937.14 32,943,954.64 4. Closing 131,683,573.11 26,753,152.05 8,187,286.12 166,624,011.28 balance II. Total accrued amortization 1. Opening 43,762,368.31 12,808,786.63 1,699,359.30 58,270,514.24 balance 2. Increased 2,656,181.13 1,598,753.86 890,038.74 5,144,973.73 amount of the period (1) 2,656,181.13 1,598,753.86 890,038.74 5,144,973.73 Withdrawal 3. Decreased 3,124,711.31 1,676,210.39 39,096.43 4,840,018.13 amount of the period (1) Disposal Other transfer 3,124,711.31 1,676,210.39 39,096.43 4,840,018.13 4. Closing 43,293,838.13 12,731,330.10 2,550,301.61 58,575,469.84 balance III. Depreciation reserves 1. Opening balance 2. Increased amount of the period (1) Withdrawal 3. Decreased amount of the period (1) Disposal 148 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 4. Closing balance IV. Book value 1. Closing book 88,389,734.98 14,021,821.95 5,636,984.51 108,048,541.44 value 2. Opening 116,699,944.45 7,372,314.77 5,191,905.12 129,264,164.34 book value The proportion of the intangible assets formed from the internal R&D through the Company amount the balance of the intangible assets at the period-end was12.98%. (2) Details of fixed assets failed to accomplish certification of land use right Unit: RMB Yuan Item Book value Reason Other notes: 26. R&D expenses Unit: RMB Yuan Opening Closing Item Increase Decrease balance balance New product 12,556,242.8 12,556,242.8 development 8 8 12,556,242.8 12,556,242.8 Total 8 8 Other notes: Opening balance of R&D expense was book value of the disposal of subsidiary of the Company Foshan Chengtong Paper Co., Ltd., due to the R&D activity was suspended; all of them were transfer into the R&D expense of the Company in reporting period. 27. Goodwill (1) Original book value of goodwill Unit: RMB Yuan Name of the investees or the Opening balance Increase Decrease Closing balance events formed goodwill 149 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Zhuhai S.E.Z. Hongta Renheng 9,129,025.01 9,129,025.01 Paper Co., Ltd. Zhuhai Jinji Chemicals Co., 2,418,280.28 2,418,280.28 Ltd. Total 11,547,305.29 11,547,305.29 (2) Impairment provision of goodwill Unit: RMB Yuan Name of the investees or the Opening balance Increase Decrease Closing balance events formed goodwill Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses: Other notes: On 30 Jun. 2009, the Company obtained the control of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. through business combination not under the same control, the combination costs was RMB808.4487 million, obtained the fair value of the identifiable net assets of the Company was RMB799.319,7 million. Combination cost being large than the fair value of the identifiable net assets balance formed goodwill RMB9129025.01. At the end of the period, combine the analysis of the present value of the expected future cash flow of the assets, the evaluation of assets group of the two production line equipment and recoverable amount; there was no sign of goodwill impairment, thus no provision for impairment loss. On 1 Jul. 2012, the Company obtained the control of Zhuhai Jinji Chemicals Co., Ltd. through business combination not under the same control, the combination costs was RMB69,000,000.00, obtained the fair value of the identifiable net assets of the Company was RMB66,581,719.72, Combination cost being large than the fair value of the identifiable net assets balance formed goodwill RMB2,418,280.28. At the end of the period, combine the analysis of the present value of the expected future cash flow of the assets, the evaluation of assets group of the two production line equipment and recoverable amount; there was no sign of goodwill impairment, thus no provision for impairment loss. 28. Long-term unamortized expenses Unit: RMB Yuan Amortization Item Opening balance Increase Decrease Closing balance amount Decoration expense 510,136.71 270,646.68 239,490.03 for rent-in plant Fee for technical 436,513.00 29,100.88 407,412.12 service 150 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Maintaining renovation of 2,751,700.01 494,830.85 2,256,869.16 construction project Total 510,136.71 3,188,213.01 794,578.41 2,903,771.31 Other notes: 29. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set Unit: RMB Yuan Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Assets impairment 159,371,305.68 27,822,494.18 173,726,182.78 31,651,663.16 provision Internal trading 2,953,255.99 632,811.37 unrealized profits Estimated unpaid salary 1,248,945.82 312,236.45 Withholding sales 9,155,596.07 1,373,339.41 6,921,826.10 1,038,273.92 agency fee Accrued liabilities 837,738.20 125,660.73 6,961,893.98 1,044,284.10 Withholding transportation fee of 21,702,217.24 3,255,332.59 8,000,517.69 1,200,077.64 paper Total 194,020,113.18 33,209,638.28 196,859,366.37 35,246,535.27 (2) Deferred income tax liabilities had not been off-set Unit: RMB Yuan Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Added value of evaluation of assets not 17,756,549.66 2,645,810.47 18,703,893.34 2,805,584.00 under same control enterprise combination Net amount of change in 1,528,810.76 229,321.61 fair value of trading 151 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. financial assets Total 19,285,360.42 2,875,132.08 18,703,893.34 2,805,584.00 (3) Deferred income tax assets or liabilities listed by net amount after off-set Unit: RMB Yuan Mutual set-off amount of Amount of deferred Amount of deferred Mutual set-off amount of deferred income tax income tax assets or income tax assets or Item deferred income tax assets and liabilities at liabilities after off-set at liabilities after off-set at assets and liabilities the period-end the period-end the period-begin Deferred income tax 33,209,638.28 35,246,535.27 assets Deferred income tax 2,875,132.08 2,805,584.00 liabilities (4) List of unrecognized deferred income tax assets Unit: RMB Yuan Item Closing balance Opening balance Deductible losses 88,387,629.70 301,542,428.22 Total 88,387,629.70 301,542,428.22 (5) Deductible losses of unrecognized deferred income tax assets will due the following years Unit: RMB Yuan Years Closing balance Opening balance Notes 2017 75,181,411.76 2018 13,206,217.94 Total 88,387,629.70 -- Other notes: 30. Other non-current assets Unit: RMB Yuan Item Closing balance Opening balance Prepayment of equipment 7,519,746.40 7,409,367.68 Total 7,519,746.40 7,409,367.68 Other notes: 152 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 31. Short-term loans (1) Category of short-term loans Unit: RMB Yuan Item Closing balance Opening balance Pledge loan 272,724,440.16 406,720,259.72 Mortgage loan Guaranteed loan 510,000,000.00 502,216,032.75 Credit loan 130,000,000.00 78,952,000.00 Trade financing 142,378,794.76 Total 912,724,440.16 1,130,267,087.23 Notes of short-term loans category (2) List of the short-term loans overdue but not return The total amount of the overdue but not return short-term borrowings at the period-end was of RMB 000, of which the situation of the significant overdue but not return short-term borrowings as follows: Unit: RMB Yuan Entity Closing balance Borrowing rate Overdue time Overdue rate Other notes: 32. Financial liabilities measured by fair value and the changes included in the current gains and losses Unit: RMB Yuan Item Closing balance Opening balance Financial liabilities specified as measured by fair value and the changes included in 212,689.24 the current gains and losses Total 212,689.24 Other notes: Financial liabilities measured by fair value and the changes included in the current gains and losses was the Company’s subsidiary, Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. signed Forward Exchange Rate Contract with the bank, considering 31 Dec. 2015 as the fair value of exchange rate calculation. 33. Derivative financial liabilities □ Applicable √ Inapplicable 153 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 34. Notes payable Unit: RMB Yuan Category Closing balance Opening balance Bank acceptance bill 127,562,392.61 68,436,123.39 Total 127,562,392.61 68,436,123.39 The total amount of the due but not pay notes payable at the period-end was of RMB000. 35. Accounts payable (1) List of accounts payable Unit: RMB Yuan Item Closing balance Opening balance Payment of material 271,218,660.09 357,662,340.57 Payment of equipment 25,102,687.10 6,321,955.99 Other 69,234,411.70 78,844,070.15 Total 365,555,758.89 442,828,366.71 (2) Notes of the accounts payable aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason Shenzhen Huayu Trade Development Co., 4,089,569.42 Unsettled Ltd. Qingdao Shuncheng Investments Co., Ltd. 1,530,733.65 Unsettled Total 5,620,303.07 -- Other notes: 36. Advance from customers (1) List of advance from customers Unit: RMB Yuan Item Closing balance Opening balance Within 1 year 8,449,921.92 21,178,860.84 1-2 years 727,234.35 1,624,309.26 2-3 years 640,213.45 428,840.64 Total 9,817,369.72 23,232,010.74 154 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (2) Significant advance from customers aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason Shenzhen Jiajing Paper Products Co., Ltd. 354,387.02 Unsettled Foshan Nanhai District Pingzhou Pingbei Yingui Paper Products Operation 200,000.00 Unsettled Department Zhuhai Jingsheng Trade Development Co., 223,289.41 Unsettled Ltd. Total 777,676.43 -- (3) Particulars of settled but unfinished projects formed by construction contract at period-end. Unit: RMB Yuan Item Amount Other notes: 37. Payroll payable (1) List of Payroll payable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance I. Short-term salary 32,283,733.94 193,528,402.21 192,421,009.53 33,391,126.62 II. Post-employment benefit-defined 38,418.69 13,963,043.67 14,001,462.36 contribution plans III. Termination benefits 1,987,658.17 1,987,658.17 Total 32,322,152.63 209,479,104.05 208,410,130.06 33,391,126.62 (2) List of Short-term salary Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance 1. Salary, bonus, 25,029,372.58 166,384,369.63 165,664,524.94 25,749,217.27 allowance, subsidy 2. Employee welfare 10,517,415.97 10,517,415.97 3. Social insurance 36,681.00 7,710,688.63 7,747,369.63 155 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Including: 1. Medical insurance 34,456.31 6,112,037.50 6,146,493.81 premiums Work-related 1,761.25 841,602.31 843,363.56 injury insurance Maternity 463.44 757,048.82 757,512.26 insurance 4. Housing fund 24,147.66 5,438,969.96 5,170,273.62 292,844.00 5. Labor union budget and employee education 7,193,532.70 3,476,958.02 3,321,425.37 7,349,065.35 budget Total 32,283,733.94 193,528,402.21 192,421,009.53 33,391,126.62 (3) List of drawing scheme Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Basic pension benefits 27,187.95 13,017,824.19 13,045,012.14 Unemployment insurance 11,230.74 945,219.48 956,450.22 Total 38,418.69 13,963,043.67 14,001,462.36 Other notes: 1. Among the decrease of payroll payable in reporting period, mainly was the disposal of subsidiary, Foshan Chengtong Paper Co., Ltd., the roll out bad debt provision was the change of consolidated scope. The note of disposal of subsidiary, see Note. VIII. Change in consolidated scope 38. Taxes payable Unit: RMB Yuan Item Closing balance Opening balance VAT 22,744,304.43 Business tax 2,205.00 294,497.66 Corporate income tax 6,341,081.18 12,629,131.42 Personal income tax 172,648.12 158,712.09 Urban maintenance and construction tax 1,718,019.44 1,609,791.92 Property tax 3,646,294.99 3,676,497.57 Education Surcharge 1,228,217.17 1,157,379.13 Dike fee 154,587.98 147,845.87 156 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Stamp tax 287,791.21 1,535,611.28 Land use tax 1,275,706.96 810,706.96 Total 37,570,856.48 22,020,173.90 Other notes: 39. Interest payable Unit: RMB Yuan Item Closing balance Opening balance Enterprise bond interest 9,031,776.00 5,928,888.96 Interest payable of short-term loans 1,652,708.26 7,106,782.15 Other 16,780,833.35 Total 10,684,484.26 29,816,504.46 Particulars of significant overdue unpaid interest: Unit: RMB Yuan Entity Overdue amount Overdue reason Other notes: 40. Dividends payable Unit: RMB Yuan Item Closing balance Opening balance Common stock dividends 11,019,644.79 170,913.00 Total 11,019,644.79 170,913.00 Notes: Including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed: Closing balance of interest payable mainly was the profits of minority shareholder of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. 41. Other accounts payable (1) Other accounts payable listed by nature of the account Unit: RMB Yuan Item Closing balance Opening balance Pledged and margin 10,042,416.81 6,512,189.60 Prepayment 5,569,221.82 6,430,368.16 Capital of related parties 5,000,000.00 1,100,000.00 157 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Final payment of engineering 1,155,901.59 1,809,212.47 Other 2,993,931.08 5,408,381.09 Total 24,761,471.30 21,260,151.32 (2) Other significant accounts payable with aging over one year Unit: RMB Yuan Item Closing balance Unpaid/ Un-carry-over reason Logistics margin, transaction is under Yunan Yuxi Tengyin Logistics Co., Ltd. 1,050,000.00 processing Final payment of engineering, settlement Changsha Chaint Machinery Co., Ltd. 768,000.00 period not arrived Guangdong Chengtong Logistics Co., Ltd. 570,384.98 Magin and payment on behalf Logistics margin, transaction is under Eastern Sunday Logistics Co., Ltd. 500,000.00 processing Total 2,888,384.98 -- Other notes: 42. Liabilities classified as holding for sale Unit: RMB Yuan Item Closing balance Opening balance Other notes: 43. Non-current liabilities due within 1 year Unit: RMB Yuan Item Closing balance Opening balance Long-term account payable due within 1 418,750,000.00 year Total 418,750,000.00 Other notes: The Opening balance was the RMB 500 million provided by China Chengtong Holdings Group Ltd. to the Company from the funds raised through the medium-term notes issued by China Chengtong. Deducting investors chose to exercise the re-sell option and the re-sell amount RMB81.25 million, the due date for the relevant MTNs would be 24 Mar. 2015; the payment had been completed. There was no closing balance in the reporting period. 158 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 44. Other current-liabilities Unit: RMB Yuan Item Closing balance Opening balance Changes on short term bonds payable: Unit: RMB Yuan Overflow The Withdraw Pay in Name of Book Issue Opening discount Closing Issue date Period current interest at current the bond value amount balance amortizati balance issue par period on Other notes: 45. Long-term loan (1) Category of long-term loan Unit: RMB Yuan Item Closing balance Opening balance Notes of short-term loans category: Other notes including interest rate range: 46. Bonds payable (1) Bonds payable Unit: RMB Yuan Item Closing balance Opening balance Corporation bonds 796,365,205.30 794,912,384.37 Medium-term notes of the bank 199,222,756.99 Total 995,587,962.29 794,912,384.37 (2) Changes on bonds payable (not including other financial instrument classified as preferred stock and perpetual capital securities of financial liabilities) Unit: RMB Yuan 12Huabao 800,000,0 2012/11/2 791,700,0 794,912,3 46,399,88 1,472,820 796,365,2 5 years 20,000.00 Bebt 00.00 6 00.00 84.37 5.59 .93 05.30 15Huabao 200,000,0 199,100,0 199,100,0 4,455,452 122,756.9 199,222,7 2015/7/31 3 years MTN001 00.00 00.00 00.00 .05 9 56.99 Total -- -- -- 990,800,0 794,912,3 199,100,0 50,855,33 1,595,577 20,000.00 995,587,9 159 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 00.00 84.37 00.00 7.64 .92 62.29 (3) Note to conditions and time of share transfer of convertible bonds (4) Note to other financial instrument classified as financial liabilities Basic information of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-end Change list of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-end Unit: RMB Yuan Financial Opening period Increase Decrease Closing period instruments outstanding Amount Book value Amount Book value Amount Book value Amount Book value issued Notes to the basis of other financial instrument classified as financial liabilities Other notes: 1. In accordance with the Resolution Made at the 6th Session of the 5th Board of Directors on 16 Dec. 2012, and the Resolution Made at the First Special Shareholders’ General Meeting for 2012 on 4 Jan. 2012, as well as the approval of CSRC with the Reply on Approving the Public Issuance of Corporate Bonds for Foshan Huaxin Packaging Co., Ltd. (ZJXK [2012] No. 725) on 28 May 2012, the Company publicly issued 8 million pieces of corporate bonds with the par value of RMB100 per piece by adopting the ways of online public issuance for the public investors and off-line inquiry placing for the institution investors, with the nominal rate of 5.8%, and the term of bonds was five years from the date of issuance, and the raised capital after deducting the bond issuance underwriting fees and custodian fees was RMB791,700,000.00, the bonds using simple interest on yearly basis, regardless of the compound interest which been paid once a year, the final phase of interest is paid together with the principal redemption, and the interest period started from 26 Nov. 2012. 2. In line with the Company held the Second Special Meeting of the General Shareholders on 10 Nov. 2014, the meeting reviewed and approved the Proposal of the Issue of Medium-Term Notes which agreed to issue no more than RMB five hundred million of the medium-term notes. The Company received the Acceptance of Registration Notice ZSXZ [2015] No. MTN253 which agreed to the Company's registration of Medium-Term Notes, which issued by NAFMII. The Company's total issue amount was RMB200, 000,000.00, coupon rate 5.28%, the limitation of Medium-Term Notes was 3 years, and the raised capital after deducting the bond issuance underwriting fees and custodian fees was RMB199,100,000.00, the bonds using simple interest on yearly basis, regardless of the compound interest, which been paid once a year, the final phase of interest is paid together with the principal redemption, and the interest period started from 31 Jul. 2015. 47. Long-term payable (1) Long-term payable listed by nature of the account Unit: RMB Yuan Item Closing balance Opening balance 160 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Finance lease 7,630,748.49 10,506,735.99 Other notes: 48. Long term payroll payable (1) List of long term payroll payable Unit: RMB Yuan Item Closing balance Opening balance (2) Changes of defined benefit plans Present worth of defined benefit plans obligation: Unit: RMB Yuan Item Reporting period Same period of last year Plan assets: Unit: RMB Yuan Item Reporting period Same period of last year Net liabilities (net assets) of defined benefit plans Unit: RMB Yuan Item Reporting period Same period of last year Notes to the influence of the content and related risk of defined benefit plans to the future cash flows, time and uncertainty of the Company: Notes to analysis results of major actuarial assumptions and sensibility of defined benefit plans Other notes: 49. Special payable Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Formation reasons Other notes: 50. Accrued liabilities Unit: RMB Yuan Item Closing balance Opening balance Formation reasons Claim due to the quality Product quality assurance 1,758,780.68 7,431,237.75 problem in sale of product Total 1,758,780.68 7,431,237.75 -- Other notes, including related important assumptions and estimates of accrued liabilities: 161 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 51. Deferred income Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Formation reasons Government 6,648,333.32 4,066,986.00 1,514,413.44 9,200,905.88 subsidies Total 6,648,333.32 4,066,986.00 1,514,413.44 9,200,905.88 -- Items involved in government subsidies: Unit: RMB Yuan Amount accrued Amount of newly Related to the Item Opening balance in non-business Other changes Closing balance subsidy assets/ income income Renovation project of the information system of Related to the 800,000.00 16,000.00 784,000.00 paper-making assets enterprise energy management center (1) Project of the information system of Related to the paper-making 1,050,000.00 350,000.00 700,000.00 assets enterprise energy management center (1) No. 1 paper machine update Related to the 240,000.00 240,000.00 & renovation assets project (2) Liquid paper Related to the renovation 338,333.32 35,000.04 303,333.28 assets project (3) Funds for energy-saving Related to the and 900,000.00 300,000.00 600,000.00 assets emission-reductio n (4) Renovation Related to the 1,400,000.00 1,400,000.00 project of the assets 162 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. information system of energy management center (5) Steam condensation Related to the water recycling 1,920,000.00 1,920,000.00 assets and energy saving projects (5) Subsidy of improvement of Related to the 3,496,986.00 699,413.40 2,797,572.60 Zhuhai motor assets efficiency (6) Subsidy of latex phase II production line Related to the 570,000.00 114,000.00 456,000.00 technological assets transformation (7) Total 6,648,333.32 4,066,986.00 1,514,413.44 9,200,905.88 -- Other notes: 1. In accordance with the Notice of Zhuhai Municipal Bureau of Finance on Delivering the Interest Subsidy Funds on Technical Renovation of the Provincial Industrial Structure Adjustment Special Funds in 2012 (ZCG [2012] No. 066), the Company’s subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. gained the government grant of RMB800,000.00 for the information system renovation project of the Paper-making Enterprises Energy. The system had been put into use in 2015, which amortized in line with asset depreciation period. In 2013, the Company received the government subsidiary RMB1.4 million, and the system had been put into use in 2014, which amortized in line with asset depreciation period, and the system had been put into use in 2014, which amortized in line with asset depreciation period. 2. Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. gained the government grant of RMB240,000.00 for No. 1 paper machine update & renovation project in Oct. 2012. Because the issue has not been used in the reporting period, it was not calculated into non-operating income. 3. RMB350,000 of government subsidies for Tetra liquid paper renovation project in Nov. 2013, the system was put in use, and was written off according to their estimated depreciation period from 2014. 4. RMB1.2 million of special fund for Tetra liquid paper renovation project in Nov. 2013, the system was put in use, and was written off according to their estimated depreciation period from 2014. 5.According to the Announcement About Ordering Special Funds for Province Energy Saving of 2012 (the second) (ZCG [2012] No. 123), the sub-subsidiary of the Company Zhuhai Huafeng Co., Ltd. received RMB1.92 million of government subsidies for steam condensation water recycling and energy saving projects, 1.40 million of government subsidies for information system project and energy management center project in Feb, 2013 because the issue has not been used in the reporting period, it was not calculated into non-operating income. 6. In line with Issue of the Announcement on Rules for the Implementation of Subsidiary for Improvement of 163 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Motor Efficiency of Guangdong Province (YCG [2013] No. 389, Issue of the Announcement on Rules for the Implementation of Subsidiary for Improvement of Motor Efficiency of Zhuhai (ZKGMX [2014] No. 392 issued by Guangdong Finance Department and Economic and Information Council of Guangdong. The Company's subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. received RMB1, 813,877.00 of Government Subsidy for Improvement of Motor Efficiency. Zhuhai Huafeng Co., Ltd.. The Subsidiary of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd., had received RMB1, 683,109.00 of Government Subsidy for Improvement of Motor Efficiency. The purchase of equipment had been put into use, and was written off according to their estimated depreciation period from this year. 7. In line with the spirit of documents of Issue of Announcement on Advice on Implementation of Promoting Industry Structure Adjustment (ZHF[2010] No. 162, Interim Measure of Zhuhai Technology Innovation Assets Management (ZKGMX [2013] No. 259), Zhuhai Jinji Chemical Co., Ltd. under the control of the Company, received government subsidiary RMB570,000. Latex phase II Project had been completed and put into use, and was written off according to their estimated depreciation period from reporting period. 52. Other non-current liabilities Unit: RMB Yuan Item Closing balance Opening balance Other notes: 53. Share capital Unit: RMB Yuan Increase/decrease (+/-) Opening Capitalization Closing Newly issue balance Bonus shares of public Other Subtotal balance share reserves The sum of 505,425,000.00 505,425,000.00 shares Other notes: 54. Other equity instruments (1) Basic information of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin (2) Change list of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin Unit: RMB Yuan Financial Opening period Increase Decrease Closing period 164 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. instruments outstanding Amount Book value Amount Book value Amount Book value Amount Book value issued Changes, reason of change and basis of relevant accounting treatment of other equity instruments in reporting period: Other notes: 55. Capital reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Capital premium 256,362,525.38 256,362,525.38 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 stock Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Other notes, including changes and reason of change: 57. Other comprehensive income Unit: RMB Yuan Reporting period Less: Amount transferred into profit and loss in the Amount After-tax After-tax Opening current period Less: Closing Item incurred attribute to attribute to balance that income tax balance before the parent minority recognized expense income tax company shareholder into other comprehensive income in prior period I. Other comprehensive no longer 169,714.3 169,714.39 reclassified into profits or losses 9 Shares in other comprehensive 169,714.3 income no longer reclassified into 169,714.39 9 profits or losses in future in investee 165 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. entity under the equity method 169,714.3 total 169,714.39 9 Other notes, including the adjustment of the recognition of initial amount of effective part of the cash flow hedging gains and losses transfer into arbitraged items: 58. Special reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Other notes, including changes and reason of change: 59. Surplus reserves Unit: RMB Yuan Item Opening balance Increase Decrease Closing balance Statutory surplus 187,280,095.40 187,280,095.40 reserves Total 187,280,095.40 187,280,095.40 Other note, including changes and reason of change 60. Retained profits Unit: RMB Yuan Item Reporting period Last period Opening balance of retained profits before 863,066,727.26 787,821,828.63 adjustments List of adjustment of opening retained profits: 863,066,727.26 787,821,828.63 (Increase +, decrease -) Opening balance of retained profits after 863,066,727.26 adjustments Add: Net profit attributable to owners of the 133,094,696.66 83,284,859.23 Company Less: Withdrawal of statutory surplus reserves 8,039,960.60 Dividend of common stock payable 7,581,375.00 Closing retained profits 988,580,048.92 863,066,727.26 List of adjustment of opening retained profits: 1) RMB000 opening retained profits was affected by retrospective adjustment conducted according to the Accounting Standards for Business Enterprises and relevant new regulations. 166 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 2) RMB000 opening retained profits was affected by changes on accounting policies. 3) RMB000 opening retained profits was affected by correction of significant accounting errors. 4) RMB000 opening retained profits was affected by changes in combination scope arising from same control. 5) RMB000 opening retained profits was affected totally by other adjustments. 61. Revenues and operating costs Unit: RMB Yuan Reporting period Same period of last year Item Revenue Operating costs Revenue Operating costs Main operations 3,203,045,668.83 2,667,631,646.77 3,397,014,091.45 2,880,124,643.42 Other operations 78,998,326.29 65,531,889.36 155,684,624.72 90,615,768.75 Total 3,282,043,995.12 2,733,163,536.13 3,552,698,716.17 2,970,740,412.17 62. Business tax and surcharges Unit: RMB Yuan Item Reporting period Same period of last year Business tax 379,975.11 3,617,483.37 Urban maintenance and construction tax 8,583,319.05 5,515,184.19 Education Surcharge 6,144,296.15 3,956,565.52 Dike fee 1,217,563.33 1,506,961.90 Total 16,325,153.64 14,596,194.98 Other notes: 63. Sales expenses Unit: RMB Yuan Item Reporting period Same period of last year Salary and benefits 12,957,318.34 13,642,924.09 Sales agency fee 8,525,942.10 6,149,876.04 Business entertainment fees 6,502,420.81 6,493,157.23 Packing charges 9,227,310.96 8,975,622.62 Warehousing fees 4,468,599.38 3,796,237.56 Transport fees 127,476,312.11 113,506,495.17 Office expenses 1,232,279.29 958,106.80 Other 2,010,155.44 11,015,048.94 167 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Total 172,400,338.43 164,537,468.45 Other notes: 64. Administrative expenses Unit: RMB Yuan Item Reporting period Same period of last year Salary and benefits 49,783,049.42 47,858,720.68 Social insurance 18,426,517.99 16,608,351.81 Housing fund 4,551,491.31 4,431,864.70 Tax 10,769,454.82 12,718,284.85 Amortization of depreciation fee 15,870,608.84 15,273,193.09 Office expenses 4,173,721.57 1,868,436.49 R&D expenses 21,373,458.01 4,139,248.05 Employ agency fee 5,500,609.79 5,842,229.27 Water & electricity fees 3,109,682.52 4,224,297.62 Rental fee 1,818,076.44 2,875,182.68 Business travel charges 2,685,182.34 2,452,278.24 Business entertainment fees 2,144,447.74 2,587,432.32 Long-term unamortized expenses 1,028,872.80 1,028,872.80 Material consumption 5,233,346.30 4,996,383.22 Other 11,650,672.58 13,759,926.20 Total 158,119,192.47 140,664,702.02 Other notes: 65. Financial expenses Unit: RMB Yuan Item Reporting period Same period of last year Interest expenses 112,147,615.10 121,068,027.97 Less: Interest income 8,764,125.77 2,037,453.21 Exchange gains and losses 24,566,838.57 Other 5,921,727.83 8,289,745.01 Total 133,872,055.72 126,985,102.16 Other notes: 168 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 66. Asset impairment loss Unit: RMB Yuan Item Reporting period Same period of last year I. Bad debt loss 21,592,987.90 2,432,129.09 II. Inventory falling price loss 5,031,312.50 -9,127,522.04 Total 26,624,300.40 -6,695,392.95 Other notes: 67. Gains on the changes in the fair value Unit: RMB Yuan Source Reporting period Same period of last year 2. Financial assets measured by fair value and the changes be included in the current 1,741,500.00 profits and losses Financial liabilities measured by fair value and the changes included in the current -212,689.24 gains and losses Total 1,528,810.76 Other notes: Profits from change in fair value were the Company’s subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. signed Forward Exchange Rate Contract with the bank, locking the exchange rate and the closing rate differences. 68. Investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income 15,711,019.67 7,690,138.47 accounted by equity method Investment income arising from disposal of 112,969,816.59 long-term equity investments Investment income received from disposal of financial assets measured by fair value and the -7,690,593.72 changes be included in the current profits and losses during holding period Investment income received from disposal of 176,323.79 4,796,692.93 available-for-sale financial assets Total 121,166,566.33 12,486,831.40 169 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Other notes: Investment income arising from disposal of long-term equity investments was the investment income from the Company’s disposal of equity of its subsidiary Foshan Chengtong Paper Co., Ltd., for details, see Note VIII. Change in consolidated scope, 1. Disposal of subsidiary. 69. Non-operating gains Unit: RMB Yuan Recorded in the amount of the Item Reporting period Same period of last year non-recurring gains and losses Total gains from disposal of 2,265,238.32 25,556,368.05 2,265,238.32 non-current assets Including: Gains from disposal 1,156,376.92 1,727,368.05 1,156,376.92 of fixed assets Gains from disposal of 1,108,861.40 23,829,000.00 1,108,861.40 intangible assets Gains from debt restructuring 2,288,256.01 2,288,256.01 Government subsidies 16,481,293.41 14,044,743.94 16,481,293.41 Other 2,694,408.97 4,347,280.58 2,694,408.97 Total 23,729,196.71 43,948,392.57 23,729,196.71 Government subsidies recorded into current profits and losses Unit: RMB Yuan Whether Whether influence the Related to the Distribution Distribution Special Reporting Same period Item Nature/type profits or assets/ entity reason subsidy or period of last year losses of the income not year or not Subsidy gained due to Amortization confirming of Zhuhai with local government Municipal government Related to the Subsidy Yes No 1,514,413.44 2,161,666.68 subsidies in Finance attracting assets deferred Bureau investment revenue and local supportive policy etc. Special funds Zhuhai Subsidy Related to the of promoting Municipal Subsidy gained due to Yes No 993,624.00 2,016,485.00 income import Finance confirming 170 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (Import Bureau with local discount government interest) attracting investment and local supportive policy etc. Subsidy gained due to Import confirming discount Zhuhai with local interest for Municipal government Related to the promote & Subsidy Yes No 2,182,820.00 2,338,500.00 Finance attracting income encourage Bureau investment important and local goods supportive policy etc. Subsidy gained due to confirming The special Zhuhai with local matching Municipal government Related to the funds for Subsidy Yes No 1,097,523.00 353,539.70 Finance attracting income expending Bureau investment import and local supportive policy etc. Subsidy Zhuihai gained due to International Zhuihai confirming Freight International with local Terminal Freight government Related to the (Gaolan) Co., Subsidy Yes No 967,010.00 187,890.00 Terminal attracting income Ltd. (Gaolan) Co., investment government Ltd. and local consign supportive subsidy policy etc. Zhuhai Subsidy Industrial Gaolan gained due to water price Financial confirming Related to the Subsidy Yes No 3,977,454.00 3,096,498.90 difference Treasury with local income subsidy Payment government Center attracting 171 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. investment and local supportive policy etc. Special funds for promoting Subsidy from the Zhuhai R&D transformatio Municipal Technical Related to the Subsidy Yes No 525,000.00 216,000.00 n and Finance updating and income upgrading of Bureau transformatio processing n, etc. trade Subsidy from Zhuhai Zhuhai R&D technical Municipal Technical Related to the Subsidy Yes No 160,000.00 410,000.00 transformatio Finance updating and income n fund Bureau transformatio n, etc. Special funds for provincial enterprise Subsidy from transformatio Zhuhai R&D n and Municipal Technical Related to the upgrading Subsidy Yes No 100,000.00 120,000.00 Finance updating and income (two Bureau transformatio integration n, etc. management system project) Subsidy from Subsidy for Zhuhai R&D Zhuhai Municipal Technical Related to the enterprise Subsidy Yes No 2,458,331.97 Finance updating and income R&D fee of Bureau transformatio 2013 n, etc. Subsidy Special fund gained due to Bureau of for external confirming finance of economy with local Related to the Foshan Subsidy Yes No 1,040,000.00 trade government income Chancheng development attracting District of 2015 investment and local 172 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. supportive policy etc. Subsidy gained due to Special fund confirming for Province Zhuhai with local and ministry Municipal government Related to the cooperation Subsidy Yes No 500,000.00 Finance attracting income of industry, Bureau investment university and local and research supportive policy etc. Zhuhai Subsidy Bureau of gained due to Quality confirming Supervision Zhuhai with local Technology Municipal government Related to the Award Yes No 260,000.00 Standards Finance attracting income Strategy Bureau investment Special Fund and local Application supportive Project policy etc. Subsidy gained due to confirming Foshan Foshan with local government Municipal government Related to the Award Yes No 200,000.00 bonds Finance attracting income support funds Bureau investment and local supportive policy etc. Subsidy gained due to confirming Special funds Zhuhai with local for energy Municipal government Related to the Subsidy Yes No 300,000.00 saving of Finance attracting income 2015 Bureau investment and local supportive policy etc. Special Fund Plan Finance Subsidy Subsidy Yes No 100,000.00 50,000.00 Related to the 173 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. for Office of gained due to income Technology Quality and confirming Standards Technical with local Strategy of Supervision government Guangdong of attracting of 2015 Guangdong investment Province and local supportive policy etc. Subsidy gained due to confirming Discount Zhuhai with local funds for Municipal government Related to the Subsidy Yes No 1,244,434.00 promoting Finance attracting income important Bureau investment and local supportive policy etc. Subsidy gained due to confirming Zhuhai with local Imported Municipal government Related to the wood pulp Subsidy Yes No 544,858.66 Finance attracting income incentive Bureau investment and local supportive policy etc. Subsidy gained due to confirming Zhuhai with local Energy Municipal government Related to the Subsidy Yes No 430,000.00 saving funds Finance attracting income Bureau investment and local supportive policy etc. Zhuhai Subsidy Enterprise Municipal gained due to Related to the Award Yes No 201,581.00 award capital Finance confirming income Bureau with local 174 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. government attracting investment and local supportive policy etc. Subsidy gained due to confirming Cash rewards Zhuhai with local for expand Municipal government Related to the Award Yes No 200,000.00 domestic Finance attracting income enterprise Bureau investment and local supportive policy etc. Subsidy gained due to confirming Zhuhai with local Gaolan port Municipal government Related to the Subsidy Yes No 162,250.00 subsidies Finance attracting income Bureau investment and local supportive policy etc. Subsidy gained due to confirming Zhuhai with local Municipal government Related to the Other Subsidy Yes 105,117.00 311,040.00 Finance attracting income Bureau investment and local supportive policy etc. 16,481,293.4 14,044,743.9 Total -- -- -- -- -- -- 1 4 Other notes: 70. Non-operating expenses Unit: RMB Yuan 175 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Recorded in the amount of the Item Reporting period Same period of last year non-recurring gains and losses Loss on disposal of non-current 955,586.75 1,009,714.83 955,586.75 assets Including: Loss on disposal of 955,586.75 1,009,714.83 955,586.75 fixed assets Donation 54,000.00 54,000.00 Fines, compensation, fine for 102,650.00 13,232.17 102,650.00 delaying payment Other 151,444.22 306,715.94 151,444.22 Total 1,263,680.97 1,329,662.94 1,263,680.97 Other notes: 71. Income tax expense (1) Lists of income tax expense Unit: RMB Yuan Item Reporting period Same period of last year Current income tax expense 13,680,317.37 46,386,834.46 Deferred income tax expense 2,104,251.45 1,330,416.36 Total 15,784,568.82 47,717,250.82 (2) Adjustment process of accounting profit and income tax expense Unit: RMB Yuan Item Reporting period Total profits 186,700,311.16 Current income tax expense accounted by tax and relevant 46,675,077.79 regulations Influence of different tax rate suitable to subsidiary -13,201,045.34 Influence of income tax before adjustment -214,532.07 Influence of non taxable income -16,914,980.35 Influence of not deductable costs, expenses and losses 2,262,220.80 Influence of deductible losses of unrecognized deferred income -4,360,769.81 tax assets used in previous years The influence of R&D fee plus the deduction 1,538,597.80 Income tax expense 15,784,568.82 176 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Other notes: 72. Other comprehensive income Refer to the notes 73. Supplementary information to cash flow statement (1) Other cash received relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Intercourse funds 103,110,590.80 38,118,303.07 Government subsidies 14,966,879.97 11,894,743.94 Interest income 3,530,569.17 2,002,902.83 Income of compensation 2,345,089.79 1,096,461.56 Total 123,953,129.73 53,112,411.40 Notes: (2) Other cash paid relevant to operating activities Unit: RMB Yuan Item Reporting period Same period of last year Intercourse funds 117,650,598.40 74,751,080.50 Expense 56,815,933.81 51,212,864.16 Employee pretty cash 3,380,536.00 3,218,740.56 Total 177,847,068.21 129,182,685.22 Notes: (3) Other cash received relevant to investment activity Unit: RMB Yuan Item Reporting period Same period of last year Government subsidies 4,066,986.00 Total 4,066,986.00 Notes: (4) Other cash paid relevant to investment activity Unit: RMB Yuan 177 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Item Reporting period Same period of last year Notes: (5) Other cash received relevant to financing activities Unit: RMB Yuan Item Reporting period Same period of last year Restrict monetary capital used for margin 37,554,493.73 or pledge Interests subsidies 3,000,000.00 Total 37,554,493.73 3,000,000.00 Notes: (6) Other cash paid relevant to financing activities Unit: RMB Yuan Item Reporting period Same period of last year Restrict monetary capital used for margin 361,300,780.56 or pledge Total 361,300,780.56 Notes: 74. Supplementary information to cash flow statement (1) Information of net profit to net cash flows generated from operating activities Unit: RMB Yuan Supplementary materials Reporting period Last period 1. Reconciliation of net profit to net cash -- -- flows generated from operating activities Net profit 170,915,742.34 149,258,539.55 Add: Provision for impairment of assets 26,624,300.40 -6,695,392.95 Depreciation of fixed assets, of oil-gas 151,114,049.23 151,939,219.54 assets, of productive biological assets Amortization of intangible assets 5,144,973.73 4,056,752.84 Long-term unamortized expenses 794,578.41 419,150.95 Losses on disposal of fixed assets, intangible assets and other long-term assets (gains: -1,309,651.57 -24,546,653.22 negative) 178 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Losses from variation of fair value -1,528,810.76 Financial cost (gains: negative) 140,956,000.53 120,732,810.36 Investment loss (gains: negative) -121,166,566.33 -12,486,831.40 Decrease in deferred income tax assets 2,036,896.99 1,491,628.80 (gains: negative) Increase in deferred income tax liabilities 69,548.08 -518,417.75 (“-” means decrease) Decrease in inventory (gains: negative) 204,919,569.38 -161,653,458.31 Decrease in accounts receivable from 73,634,068.38 86,877,346.52 operating activities (gains: negative) Increase in payables from operating -51,269,611.93 171,015,635.05 activities (decrease: negative) Other 12,556,242.88 Net cash flows generated from operating 613,491,329.76 479,890,329.98 activities 2. Investing and financing activities that do -- -- not involving cash receipts and payment: 3. Net increase in cash and cash equivalents -- -- Closing balance of cash 185,960,324.24 113,248,623.00 Less: Opening balance of cash 113,248,623.00 200,248,786.56 Net increase in cash and cash equivalents 72,711,701.24 -87,000,163.56 (2) Net Cash paid of obtaining the subsidiary Unit: RMB Yuan Amount Of which: -- Of which: -- Of which: -- Other notes: (3) Net Cash receive of disposal of the subsidiary Unit: RMB Yuan Amount Cash or cash equivalents received from disposal of subsidiaries in 44,869,829.86 reporting period Of which: -- 179 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Of which: -- Of which: -- Net Cash receive from disposal of the subsidiary 44,869,829.86 Other notes: The Company disposed Foshan Chengtong Paper Co., Ltd. in reporting period (4) Cash and cash equivalents Unit: RMB Yuan Item Closing balance Opening balance I. Cash 185,960,324.24 113,248,623.00 Including: Cash on hand 312,658.48 283,310.72 Bank deposit on demand 185,647,665.76 110,640,137.90 Other monetary funds on demand 2,325,174.38 III. Closing balance of cash and cash 185,960,324.24 113,248,623.00 equivalents Other notes: 75. Note of statement of changes in the owner's equity Explain "other" project name and adjustment amount of the adjustment of closing balance in previous year, etc.: 76. The assets with the ownership or use right restricted Unit: RMB Yuan Item Closing book value Restricted reason Note, credit margin, deposit as the loan Monetary capital 323,746,286.83 mortgage Notes receivable 14,508,279.00 Obtained bank loan by mortgage the note Applying compulsory execution, as the Fixed assets 15,411,432.68 guarantee assets, for details, see Note 19. Fixed assets. Total 353,665,998.51 -- Other notes: 77. Foreign currency monetary items (1) Foreign currency monetary items Unit: RMB Yuan 180 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Closing foreign currency Closing convert to RMB Item Exchange rate balance balance Including: USD 5,133,725.21 6.4936 33,336,358.02 EUR 47,862.00 7.0952 339,590.46 HKD 2,485.83 0.8378 2,082.63 Including: USD 5,791,502.55 6.4936 37,607,700.96 HKD 3,014,552.88 0.8378 2,525,592.40 Other notes: (2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place, recording currency and selection basis, if there are changes into recording currency, shall also disclose the reason. □ Applicable √ Inapplicable 78. Arbitrage According to arbitrage category to disclose arbitrage item, relevant arbitrage tools and the arbitraged risk qualitative and quantitative information: 79. Other VIII. Changes of merge scope 1. Business merger not under same control (1) Business merger not under same control in reporting period Unit: RMB Yuan Income of Net profits of Time and Cost of Way to gain Recognition acquiree acquiree Name of place of Proportion of gaining the the stock Purchase date basis of during the during the acquiree gaining the stock rights stock rights rights purchase date purchase date purchase date stock rights to period-end to period-end Other notes: (2) Combined cost and goodwill Unit: RMB Yuan Combination cost Note to determination method, consideration and changes of fair value of combined cost: The main formation reason for the large goodwill: 181 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Other notes: (3) The identifiable assets and liabilities of acquiree at purchase date Unit: RMB Yuan Fair value on purchase date Book value on purchase date The recognition method of the fair value of identifiable assets and liabilities Contingent liability of acquiree undertaken by business merger Other notes: (4) The profit or loss from equity held by the date before acquisition in accordance with the fair value measured again Whether there is a transaction that through multiple transaction step by step to realize enterprises merger and gaining the control during the reporting period □ Yes √ No (5) Note to merger could not be determined reasonable consideration or Identifiable assets, Fair value of liabilities of the acquiree at acquisition date or closing period of the merge (6) Other notes 2. Business combination under the same control (1) Business combination under the same control during the reporting period Unit: RMB Yuan Income from Net profits the from the Recognition Income Net profits period-begin reporting Combined Proportion of Combination basis of during the during the Basis to the period to the party the profits date combination period of period of combination combination date comparison comparison date of the date of the combination combination Other notes: (2) Combination cost Unit: RMB Yuan Combination cost Note to contingent consideration or other changes: 182 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Other notes: (3) The book value of the assets and liabilities of the combined party at combining date Unit: RMB Yuan Combination date Period-end of last period Contingent liabilities of the combined party undertaken in combination Other notes: 3. Counter purchase Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights and interests in accordance with the equity transaction process. 4. The disposal of subsidiary Whether there is a single disposal of the investment to subsidiary and lost control √ Yes □ No Unit: RMB Yuan Balance between the Amount disposal The of other price and profit or Recognit compreh the net loss from ion ensive assets remainin Book Book method income Recognit proportio Remaini g equity value of value of and main transfer ion n of ng equity held by remainin remainin assumpti into Name of Equity Time of judgmen subsidiar proportio the date Equity Equity g equity g equity on of investme the disposal losing t of time y in n on the before disposal disposal on the on the remainin nt profits subsidiar proportio controlli of consolid date of acquisiti price method date of date of g equity or losses y n ng losing ated losing on in losing losing on the related to controlli financial control accordan control control date of equity ng statemen right ce with right right losing investme ts the fair control nt of dimensio value right original ns of measure subsidiar correspo d again y nding of the disposal 183 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. investme nt Signed Foshan property 31 Chengto 150,000, Up for right 112,969, 75.00% Dec. 0.00% 0.00 0.00 Naught 0.00 ng Paper 000.00 sale transacti 816.58 2015 Co., Ltd. on contract Other notes: On December 29, 2015, the company entered into an Assets and Equity Exchange Contract with Jiacheng Forestry Holdings Co., Ltd and Lion Fund Management Co., Ltd., through which the company and Jiacheng Forestry Holdings Co., Ltd will respectively transfer 75% and 25% equity of Foshan Chengtong Paper Co., Ltd. they held to Lion Fund Management Co., Ltd. (the equity investment fund managed on its behalf—“Lion Fund DongAn No.1 equity investment fund” ) at the transfer price of RMB 200 million, in which, the transfer price for the 75% equity held by the company is RMB 150 million. The company’s Proposal on Putting up for Sales of Equity in Subsidiary for the disposal of the 75% equity in Foshan Chengtong Paper Co., Ltd. was approved in the second interim shareholders’ meeting of 2015, and on November 30, 2015, the equity it held was publicly put up in Beijing Equity Exchange for sale at the price of RMB 150 million. During the put-up period, the Lion Fund Management Co., Ltd. responded as the transferee to buy the 100% equity of Foshan Chengtong at the price of RMB 200 million according to laws. The equity transfer contract specified that the transfer price will be paid in installment. In the first installment, 30% of the transfer price will be directly offset against the deposit paid by Lion Fund Management Co., Ltd. The company received the equity transfer money of RMB 4500 transferred by Beijing Equity Exchange on December 30, 2015; the second installment, 60% of the transfer price will be paid in the half year after the contract takes off; and the third installment, the remaining transfer price will be paid off in 12 month since the effective date of the contract. In line with the agreement, Beijing Lion Enterprise Management Co., Ltd. bear guarantee responsibility for Lion Fund Management Co., Ltd.’s debt of baying the payment of equity transfer according to the agreement. After the company and Jiacheng Forestry Holdings Co., Ltd. received the first installment of the transfer price, Foshan Chengtong Paper Co., Ltd. has submitted the application for registration change to Guangdong Foshan Bureau of Business and Industry Administration on December 31, 2015; the company confirms that it has lost the control over Foshan Chengtong Paper Co., Ltd. and transferred the equity on December 31, 2015. On December 31, 2015, on the company’s consolidated financial statement, the net assets of Foshan Chengtong Paper Co., Ltd. owned by the company was RMB 37.030.200, so the difference RMB 112,969,800 between the net assets and the transfer price was recognized as the investment earnings of the period it arose. As of December 31, 2015, the company was yet to receive RMB 490,240,600 from Foshan Chengtong Co., Ltd. On December 31, 2015, a Debt Settlement Agreement was made by and between the company and the transferee, which agreed that since January 1, 2016, an interest for use of fund will be payable by Foshan Chentong Paper Co., Ltd. quarterly according to the benchmark rate of 3-year termed loan issued by the People’s Bank of China for the period; and all the loan principle and interest will be paid up on or before December 31, 2019. Whether there are multiple transactions step by step dispose the investment to subsidiary and lost control in reporting period □ Yes √ No 184 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 5. Other reasons for the changes in combination scope Note to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant information: 1. Subsidiary newly included in consolidated scope Name Reason of change Pinghu Huaxin Packing Material Co., Ltd Subsidiary newly established in reporting period 6. Other IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Name of the Main operating Nature of Holding percentage (%) Registration place Way of gaining subsidiary place business Directly Indirectly Business Huaxin (Foshan) Manufacturing combination Color Printing Foshan Foshan 100.00% industry under the same Co., Ltd. control Business Zhuhai Huafeng Manufacturing combination Zhuhai Zhuhai 100.00% Paper Co., Ltd. industry under the same control Business Zhuhai S.E.Z. Manufacturing combination not Hongta Renheng Zhuhai Zhuhai 41.97% industry under the same Paper Co., Ltd. control Pearl River Color Printing Co., Ltd. Manufacturing Foshan Foshan 100.00% Establishment of Chancheng industry District, Foshan Kunshan Focai Manufacturing Packaging & Suzhou Suzhou 100.00% Establishment industry Printing Co., Ltd. Business Zhuhai Jinji Manufacturing combination not Chemicals Co., Zhuhai Zhuhai 51.00% industry under the same Ltd. control 185 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Pinghu Huaxin Manufacturing Packing Material Jiaxing Jiaxing 100.00% Establishment industry Co., Ltd Notes: holding proportion in subsidiary different from voting proportion: 1. On acquisition date as 30 Jun. 2009, the Company gained 40.176% shares of Hongta Renheng by the ways of capital and share increase, there were five directors in the Board of Directors of Hongta Renheng, of which the Company sent three directors, Yunnan Hongta Group Co., Ltd and Renheng Industrial Co., Ltd. sent one director respectively. The Chairman of the Board (Legal representative) was sent by the Company, General Manager and Chief Financial Officer were also sent by the Company, so as to control the routine producing and operating activities of Hongta Renheng, and thus consolidated into the consolidated statement of the Company since Jul. 2009. On 1 Feb. 2010, Hongta Renheng finished the changes procedures for capital increase in industry and commerce, so shares of Hongta Renheng held by the Company increased to 41.9653%, meanwhile, revised the contract and Articles of Association of Hongta Renheng according to the resolutions of the Board of Directors of Hongta Renheng on 25 Feb. 2010, after which the directors of the Board of Directors changed from five to seven, as the Company sent four directors (originally three), Yunnan Hongta Group Co., Ltd. sent two directors (originally one), Renheng Industrial Co., Ltd. sent one, Dragon State International Limited didn’t send any directors. The Company still can decide the financial and operating policies of Hongta Renheng, so continued to consolidate it to the consolidated scope. Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been controlled investee: Significant structure entities and controlling basis in the scope of combination: Basis of determine whether the Company is the agent or the principal: Other notes: (2) Significant not wholly owned subsidiary Unit: RMB Yuan The profits and losses Declaring dividends Balance of minority Shareholding proportion Name of the subsidiary arbitrate to the minority distribute to minority shareholder at closing of minority shareholder shareholders shareholder period Zhuhai S.E.Z. Hongta 58.03% 52,886,797.62 27,377,389.55 1,521,143,961.92 Renheng Paper Co., Ltd. Holding proportion of minority shareholder in subsidiary different from voting proportion: Other notes: (3) The main financial information of significant not wholly owned subsidiary Unit: RMB Yuan Name of Closing balance Opening balance the Non-curr Non-curr Non-curr Non-curr current Total Current Total current Total Current Total subsidiar ent ent ent ent assets assets liabilities liabilities assets assets liabilities liabilities y assets liability assets liability 186 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Zhuhai S.E.Z. Hongta 2,247,65 2,524,64 4,772,30 1,298,18 762,913, 2,061,09 2,610,58 2,586,28 5,196,86 1,711,08 789,469, 2,500,55 Renheng 9,971.76 8,275.64 8,247.40 1,498.26 998.83 5,497.09 4,363.19 0,434.50 4,797.69 9,328.58 663.93 8,992.51 Paper Co., Ltd. Unit: RMB Yuan Reporting period Same period of last year Name of the Total Total Operation Operating Operation Operating subsidiary Net profit comprehensi Net profit comprehensi revenue cash flow revenue cash flow ve income ve income Zhuhai S.E.Z. Hongta 3,032,414,95 100,626,805. 100,626,805. 579,124,223. 3,186,263,07 134,146,834. 132,122,671. 430,818,841. Renheng 4.02 71 71 10 8.91 91 28 68 Paper Co., Ltd. Other notes: (4) Significant restrictions of using enterprise group assets and pay off enterprise group debt (5) Provide financial support or other support for structure entities incorporate 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 owner’s equity share changed in subsidiary (2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company Unit: RMB Yuan Other notes: 3. Equity in joint venture arrangement or associated enterprise (1) Significant joint venture arrangement or associated enterprise Name Main operating Registration place Nature of Holding percentage (%) Accounting 187 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. place business treatment of the investment of Directly Indirectly joint venture or associated enterprise Chengtong Beijing Beijing Financial industry 20.00% Equity method Finance Co., 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: (2) Main financial information of significant joint venture Unit: RMB Yuan Closing balance/ reporting period Opening balance /last period Other notes: (3) Main financial information of significant associated enterprise Unit: RMB Yuan Closing balance/ reporting period Opening balance /last period Chengtong Finance Co., Ltd. Chengtong Finance Co., Ltd. current assets 7,216,204,389.99 4,726,244,903.00 Non-current assets 6,659,691.42 8,795,688.23 Total assets 7,222,864,081.41 4,735,040,591.23 Current liabilities 6,064,250,674.62 3,655,103,302.48 Total liabilities 6,064,250,674.62 3,655,103,302.48 Equity attribute to the parent company 1,158,613,406.79 1,079,937,288.75 Net assets proportion measured at 231,722,681.36 215,987,457.75 shareholding proportion Book value of equity investment to 254,253,797.80 238,518,574.19 associated enterprise Operation revenue 131,793,995.59 111,741,235.34 Net profit 78,676,118.04 66,236,252.18 Total comprehensive income 78,676,118.04 66,236,252.18 Other notes: 188 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (4) Summary financial information of insignificant joint venture or associated enterprise Unit: RMB Yuan Closing balance/ reporting period Opening balance /last period Joint venture: -- -- The total of following items according to the -- -- shareholding proportions Associated enterprise: -- -- The total of following items according to the -- -- shareholding proportions Other notes: (5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company (6) The excess loss of joint venture or associated enterprise Unit: RMB Yuan The cumulative recognized The derecognized losses or the The noncumulative Name losses in previous share of net profit in reporting unrecognized losses in reporting accumulatively derecognized period period Other notes: (7) The unrecognized commitment related to joint venture investment (8) Contingent liabilities related to joint venture or associated enterprise investment 4. Significant common operation Proportion /share portion Name Main operating place Registration place Nature of business Directly Indirectly Note to holding proportion or share portion in common operation different from voting proportion: Basis of common operation as a single entity, classify as common operation Other notes: 5. Equity of structure entity not including in the scope of consolidated financial statements Related notes to structure entity not including in the scope of consolidated financial statements 189 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 6. Other X. The risk related financial instruments XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value Unit: RMB Yuan Closing 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 (I) Financial assets calculated by fair value 1,741,500.00 1,741,500.00 and changes record into current profits or losses 1.Transactional financial 1,741,500.00 1,741,500.00 assets (V) Transactional 212,689.24 212,689.24 financial liabilities II. Inconsistent fair value -- -- -- -- measurement 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 The Company listed the book value of financial assets instruments measured at fair value on 31 Dec. 2015. according to three levels of fair value, when the overall fair value classified in three levels were in line with the first level of three levels of each significant input value used in the calculation of fair value. The definitions of three levels were as follows: The first level, the unadjusted offer of same assets or liabilities in active market on calculation date; The second level, the directly or indirectly observable input value of related assets or liabilities excepting the input value of first level; 1) The second level input value including : Offer of similar assets or liabilities in active market; 2) The second level input value including : Offer of similar assets or liabilities in non-active market; 3) Other observable input value excepting offer, including the observable interest rate in interval period of common offer, profit rate curve, implied volatility and credit spread. The third level was the unobservable input value of related assets or liabilities. 190 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2 4. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 3 5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3 6. Explain the reason for conversion and the policy governing 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 change 8. Fair value of financial assets and liabilities not measured at fair value 9. Other XII. Related party and related Transaction 1. Information related to parent company of the Company Proportion of voting Proportion of share rights owned by Name of parent held by parent Registration place Nature of business Registered capital parent company company company against the against the Company Company (%) (%) Foshan Huaxin Manufacturing Development Co., Foshan 457930000 65.20% 65.20% industry Ltd. China National Paper Industry Beijing Comprehensive 5033000000 65.31% 65.31% Investment Corp. China Chengtong Holdings Group Co., Beijing Comprehensive 7480165600 65.31% 65.31% Ltd. Notes: information on the parent company: Foshan Huaxin Development Co., Ltd. On 28 Jun. 2005, Foshan Gongying Investment Holding Co., Ltd. transferred 62.1142% shares (capital contribution was RMB 284,440,000) of Foshan Huaxin Development Co., Ltd. to China National Materials Development & Investment Corporation, which has changed its name to China National Paper-industry Investment Corporation. Foshan Huaxin Development Co., Ltd is the parent company and holds 65.20% shares of the Company, 191 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. China National Paper Industry Investment Corp.; China National Paper-industry Investment Corporation originally holds 0.11% shares of the Company, so that China National Paper-industry Investment Corporation held 65.31% shares of the Company directly and indirectly and becomes actual controller of the Company. China Chengtong Holdings Group Co., Ltd.; China Chengtong Holdings Group Co., Ltd. holds 100% shares of China National Paper-industry Investment Corporation and has become the ultimate controller of the Company. The ultimate controller of the Company was China Chengtong Holdings Group Co., Ltd.. Other notes: 2. Subsidiaries of the Company See details to Notes IX. Equity in other entities, 3. Information on the joint ventures and associated enterprises of the Company The details of significant joint venture and associated enterprise of the Company, please refer to Notes IX. Equity in other entities. Information on other joint venture and associated enterprise of occurring related party transactions with the Company in reporting period, or form balance due to related party transactions in previous period: Name Relationship Guangdong Chengtong Logistics Co., Ltd. Subsidiary of joint venture Chengtong Finance Co., Ltd. Subsidiary of joint venture Other notes: 4. Information on other related parties of the Company Name Relationship Foshan Huaxin Import & Export Co., Ltd. Under the control of the same actual controller Guangdong Guanhao High-tech Co., Ltd. Under the control of the same actual controller Dragon State International Limited Under the control of the same ultimate controller Tianjin Port Free Trade Zone Zhongwu Investment Development Under the control of the same actual controller Co., Ltd. Yueyang Forest & Paper Co., Ltd. Under the control of the same actual controller Yueyang Antai industrial Co., Ltd Under the control of the same actual controller Yuanjian Paper Co., Ltd. Under the control of the same actual controller Hunan Juntai Pulp Paper Co., Ltd. Under the control of the same actual controller Guangdong Guanhao High-tech Co., Ltd. Under the control of the same ultimate controller 192 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Long Bond Investment Development Co., Ltd. Under the control of the same ultimate controller Foshan Chengtong Paper Co., Ltd. Subsidiary disposed in reporting period Other notes: 5. List of related-party transactions (1) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan) Unit: RMB Yuan The approval trade Whether exceed trade Same period of last Related-party Content Reporting period credit credit or not year China National Purchase of raw Paper Industry 286,476,105.01 355,000,000.00 No 145,922,526.89 material Investment Corp. Guangdong Purchase of raw Guanhao High-tech 17,245.46 754,850.00 No 73,078.85 material Co., Ltd. Tianjin Port Free Trade Zone Zhongwu Purchase of raw 21,844,699.64 86,600,000.00 No 66,201,848.87 Investment material Development Co., Ltd. Guangdong Providing Chengtong 21,796,488.21 22,100,000.00 No 21,897,955.85 logistics services Logistics Co., Ltd. Guangdong Purchase of raw Guanhao High-tech 582,918.39 414,609.92 material Co., Ltd. Foshan Huaxin Purchase of raw Import & Export 108,218.97 material Co., Ltd. Foshan Huaxin Purchase of raw Import & Export 2,178,617.16 material Co., Ltd. Yuanjian Paper Co., Purchase of raw 1,636,875.00 Ltd. material Hunan Juntai Pulp Purchase of raw 2,280,291.54 Paper Co., Ltd. material 193 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Information of sales of goods and provision of labor service Unit: RMB Yuan Related-party Content Reporting period Same period of last year China National Paper Industry Sales of raw materials 24,293,495.59 Investment Corp. Yuanjian Paper Co., Ltd. Sales of raw materials 3,924,986.64 Yueyang Forest & Paper Co., Sale of products 12,936,664.65 1,526,923.63 Ltd. Guangdong Guanhao High-tech Sale of products and raw 1,265,830.00 754,222.21 Co., Ltd. materials Long Bond Investment Wood pulp 74,379,473.02 Development Co., Ltd. Foshan Huaxin Import & Sale of products 903,029.40 Export Co., Ltd. Notes: (2) Related trusteeship/contract Lists of related trusteeship/contract: Unit: RMB Yuan Name of the Name of the Income entruster/contract entrustee/ Type Initial date Due date Pricing basis recognized in the ee contractor reporting period Notes: Lists of entrust/contractee Unit: RMB Yuan Name of the Name of the Charge entruster/contract entrustee/ Type Initial date Due date Pricing basis recognized in the ee contractor reporting period Notes: (3) Information of related lease The Company was lessor: Unit: RMB Yuan The lease income confirmed in The lease income confirmed in Name of lessee Category of leased assets this year last year Guangdong Chengtong Houses and buildings 1,328,194.00 1,256,863.00 Logistics Co., Ltd. The Company was lessee: 194 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Unit: RMB Yuan The lease income confirmed in lessor Category of leased assets Category of leased assets this year Foshan Huaxin Development Office and office equipment 569,400.00 569,400.00 Co., Ltd. Notes: (4) Related-party guarantee The Company was guarantor: Unit: RMB Yuan Execution accomplished Secured party Guarantee amount Start date End date or not Zhuhai S.E.Z. Hongta 33,000.00 7 May 2014 6 May 2017 No Renheng Paper Co., Ltd. Zhuhai S.E.Z. Hongta 10,000.00 26 Jan. 2015 26 Jan. 2016 No Renheng Paper Co., Ltd. Zhuhai S.E.Z. Hongta 15,000.00 7 Jan. 2015 7 Jan. 2016 No Renheng Paper Co., Ltd. Zhuhai S.E.Z. Hongta 23,000.00 16 Jun. 2015 16 Jun. 2016 No Renheng Paper Co., Ltd. Huaxin (Foshan) Color 6,500.00 1 Jul. 2013 31 Dec. 2017 No Printing Co., Ltd. Huaxin (Foshan) Color 3,000.00 29 Jun. 2015 28 Jun. 2016 No Printing Co., Ltd. Zhuhai Huafeng Paper 35,000.00 29 Oct. 2013 28 Oct. 2016 No Co., Ltd. The Company was Secured party Unit: RMB Yuan Execution accomplished Guarantor: Guarantee amount Start date End date or not China National Paper Industry Investment 61,000.00 17 Apr. 2013 17 Apr. 2016 No Corp. Notes: (5) Inter-bank lending of capital of related parties： Unit: RMB Yuan 195 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Amount borrowed and Related-party Initial date Due date Explanation loaned Borrowed China Chengtong 418,750,000.00 24 Mar. 2010 24 Mar. 2015 Holdings Group Co., Ltd. Loaned Foshan Chengtong Paper 490,240,600.41 1 Jan. 2016 31 Dec. 2019 Co., Ltd. (6) Related party asset transfer and debt restructuring Unit: RMB Yuan Related-party Content Reporting period Same period of last year (7) Rewards for the key management personnel Unit: RMB Yuan Item Reporting period Same period of last year Rewards for the key management 5,600,281.00 4,913,649.10 personnel (8) Other related-party transactions According to the 1st Meeting of 5th Board of Directors of 2013 on 18 April, 2013 and 2012 Annual General Meeting on 15 May, 2013, the review of Financial Services Agreement signed by this Company and Hengtong Financial Co., Ltd and related transaction bill for financial services has agreed to sign Financial Services Agreement signed by this Company and Hengtong Financial Co., Ltd and conduct financial services; sum of daily maximum outstanding of deposits and interests on deposit of this Company in Chengtong Financial Co., Ltd should not be higher than 5% of last year audit amount (outstanding of deposits excluding loans or settlement amount); sum of credit extension and interests should not be greater than RMB600,000,000; and all settlement businesses should be conducted according to requirements. Until 31 Dec. 2015, outstanding of deposits of the Company in Chengtong Financial Co., Ltd was RMB129, 537,835.34 and loan balance was RMB30, 000,000.00. 6. Receivables and payables of related parties (1) Receivables Unit: RMB Yuan Closing balance Opening balance Name o f item Related-party Book balance Bad debt provision Book balance Bad debt provision 196 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Guangdong Guanhao Account receivable: 5,973.80 267.32 29,875.20 High-tech Co., Ltd. Yueyang Forest & Account receivable: 839,714.61 1,574,001.70 Paper Co., Ltd. Yueyang Antai Account receivable: 5,302.10 1,590.63 5,302.10 530.21 industrial Co., Ltd Guangdong Account receivable: Chengtong Logistics 252,199.10 75,659.73 252,199.10 25,219.91 Co., Ltd. China National Account receivable: Paper Industry 20,275,925.21 Investment Corp. Foshan Huaxin Account receivable: Import & Export 726,513.19 72,651.32 726,513.19 Co., Ltd. Long Bond Investment Account receivable: 168.21 8.41 156.16 Development Co., Ltd. China National Prepayment: Paper Industry 27,884,562.96 11,612,211.87 Investment Corp. Guangdong Other accounts Chengtong Logistics 1,167,236.74 91,912.67 967,052.75 9,922.14 receivable: Co., Ltd. China National Other accounts Paper Industry 264,600.00 249,255.39 receivable: Investment Corp. Other accounts receivable: (2) Payables Unit: RMB Yuan Name o f item Related-party Closing book balance Opening book balance China National Paper Industry Accounts payable 5,727,471.54 30,359,297.02 Investment Corp. Guangdong Chengtong Accounts payable 3,257,342.93 Logistics Co., Ltd. Accounts payable Foshan Chengtong Paper Co., 267,230.97 197 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Ltd. Guangdong Guanhao High-tech Accounts payable 109,865.03 50,184.38 Co., Ltd. Tianjin Port Free Trade Zone Accounts payable Zhongwu Investment 12,906,627.84 Development Co., Ltd. Guangdong Chengtong Other account payable 570,384.98 392,547.84 Logistics Co., Ltd. Foshan Huaxin Development Other account payable 5,000,000.00 1,100,000.00 Co., Ltd. China National Paper Industry Other account payable 14,355.00 Investment Corp. Interest payable Chengtong Finance Co., Ltd. 44,458.33 196,000.00 China Chengtong Holding Interest payable 16,780,833.35 Group Co., Ltd. Other non-current liabilities due China Chengtong Holding 418,750,000.00 within 1 year Group Co., Ltd. 7. Related party commitment Reviewed and approved by the 1st Meeting of the 5th Session of the Board of Directors on 7 Mar. 2014, 2013 General Meeting of Shareholders on 16 May 2015, the 3rd Meeting of the 5th Session of the Board of Directors on 19 May 2014 and the 1st Special Meeting of shareholders on 6 Jun. 2014, the Company provided no more than RMB 2.4 billion guarantee for loan to its subsidiaries Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd.( including Zhuhai Huafeng Paper Co., Ltd. , Zhuhai Jinji Chemical Co., Ltd. and Huaxin (Foshan) Color Printing Co., Ltd. allowed Hongta Renheng providing maximum guarantee RMB 400,000,000, in total of RMB 2.8 billion. When applying for integrated Credit/Loan to the bank, will within line of guarantee, the Company will provide the joint liability guarantee, the guarantee amount, every deal and guarantee period will be agreed in the specific contract. 8. Other XIII. Stock payment 1. The Stock payment overall situation □ Applicable √ Inapplicable 2. The Stock payment settled by equity □ Applicable √ Inapplicable 198 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. 3. The Stock payment settled by cash □ Applicable √ Inapplicable 4. Modification and termination of the stock payment Naught 5. Other XIV. Commitments 1. Significant commitments Significant commitments at balance sheet date As of 31 Dec. 2015, there were no significant commitments to be disclosed. 2. Contingency (1) Significant contingency at balance sheet date Pending action, contingency formed by arbitration and its financial influence (1) The Company’s sub-subsidiary Zhuhai Jinji Chemical Co., Ltd. signed a loan contract with Guangzhou Hong He Gu Kang Ti Leisure Co., Ltd. (hereinafter referred to as“Hong He Gu Company”) on 12 Dec. 2011, the contract agree that Hong He Gu Company borrowed RMB 500000 from Zhuhai Jinji Chemical Co., Ltd. the term of the loan was from 12 Dec. 2011 to 31 May 2012. When the contract expired, Hong He Gu Company should take the initiative to repay the loan principal and interest. The legal representative Wang Renhe should be the guarantee of Hong He Gu Company. On 12 Dec. 2012, the Contract was maturity; Hong He Gu Company did not paid the loan as agreed. In line with Civil Judgment (2015) ZJFPMCZ No. 20, the Hong He Gu Company should repay RMB500,000 to the Company and Wang Renhe should bare the joint liquidated liability. Zhuhai Jinji Chemical Co., Ltd. had individually withdrawn 100% bad debt provision for the said other account receivable of RMB 500000 of Hong He Gu Company. (2) As of 31 Dec. 2015, Guangdong Regall Group Co., Ltd. (hereinafter referred to as “Regall Group”) owed a goods payment of RMB 9,919,562.58 to the Company’s subsidiary Zhuhai S.E.Z Hongta Renheng Paper Co., Ltd. (hereinafter referred to as “Hongta Renheng”) (with an account age over three years). On 28 Mar. 2008, the said two parties signed an agreement on repayment with wood pulp. According to the said agreement, Regall Group should repay with wood pulp as the consideration, which should be executed before 15 May 2008. However, Regall Group has not accomplished the execution according to the said agreement. Up until 31 Oct. 2008, only RMB 3,099,200.00 had been executed as consideration for the debt. On 29 Oct. 2008, Hongta Renheng sent a Notice on Terminating Agreement to Regall Group, but Regall Group asked to continue the execution of the Agreement. On 6 Dec. 2008, Hongta Renheng submitted a bill of compliant on the goods payment dispute to Guangzhou Huangfu People’s Court, requesting the Court to terminate the agreement on repayment with wood pulp and asking Regall Group to repay the goods payment of RMB 10,047,398.58 and take the responsibilities thus caused. On 28 Jun. 2009, the Court issued the Civil Judgment Letter (2009) HMEC Zi No.72, deciding to declare the Company’s Notice on Terminating Agreement legally null. Hongta Renheng appealed to Guangzhou 199 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Intermediate People’s Court against the decision and Guangzhou Intermediate People’s Court ruled that the case should be remanded for retrial in the Court of the first instance. On 12 Jun. 2010, the Court issued the Civil Judgment Letter (2010) HMEC Zi No.1, deciding to declare the Agreement on Set Debt off with Pulp Payment legal and effective. However, as Regall Group wasn’t able to fulfill liability of supplying pulp, it should pay RMB 9,786, 596.96 back to Hongta Renheng. Regall Group appealed to Guangzhou Intermediate People’s Court against the decision. On 25 Nov. 2010, in accordance with the Civil Judgment Letter (2010) SZFMEZ Zi No. 1851, the Court rejected the appeal and maintained the original judgment. Up until the date of this Report, RMB 127,836.00 of executed account was received. Hongta Renheng has withdrawn 100% bad debt provision for the said account receivable at full amount. (3) As of 31 Dec. 2015, Zhuhai Eastern Zhengtai Power Equipment Co., Ltd. owed a goods payment of RMB 2,925,825.54 to Hongta Renheng. In line with Civil Judgment (2010) XMEC Zi No.641, Hongta Renheng won the appeal and Zhuhai East Zhengtai Power Equipment Co., Ltd. should pay loans of RMB 2,405,789.44 and its penalty back to Hongta Renheng as a result. Zhuhai East Zhengtai Power Equipment Co., Ltd. filed an appeal against the sentence. The court dismissed the appeal in the second trial and the decision was upheld on 12 Oct. 2010. As Zhuhai East Zhengtai Power Equipment Co., Ltd. hasn’t executed the verdict yet, Hongta Renheng has applied to the court for enforcement. Hongta Renheng withdrew 90% bad debt provision for the said account receivable in 2010, yet didn’t change the ratio of bad debt provision due to uncertainty of receiving goods payment. (4) As of 31 Dec. 2015,, Zhuhai Gongbei Ronghui Trade Co., Ltd. owed a goods payment of RMB 1,016,655.73 to Hongta Renheng. Hongta Renheng won the appeal at the first instance in accordance with the Civil Judgment Letter (2009) XMEC Zi No. 2174. Hongta Renheng withdrew 90% bad debt provision for the said account receivable in 2010, but Zhuhai Gongbei Ronghui Trade Co., Ltd. has no properties to execute the judgment, so it continued to withdraw 90% bad debt provision for the said account receivable at period-end. (5) As of 31 Dec. 2015, Shenzhen Xieji Industry Co., Ltd. owed a goods payment of RMB 3,760,350.10 to Hongta Renheng, in accordance with Civil Judgment Letter (2011) SZFMEZ Zi No. 1318, Hongta Renheng won the appeal. Hongta Renheng withdrew 50% bad debt provision for the said account receivable in 2010. Up until the date of this Report, Hongta Renheng was preparing to appeal to the Court for executing the judgment, so it continued to withdraw 50% bad debt provision for the said account receivable. (6) As of 31 Dec. 2015, Qingdao Donglu Packing Development Co., Ltd. owed a goods payment of RMB 450,000.00 to Hongta Renheng. Hongta Renheng won the appeal at the first instance in accordance with the Civil Judgment Letter (2010) NSC Zi No. 20678. And Hongta Renheng has won the first instance; however there were no properties to execute the judgment, so it continued to withdraw 100% bad debt provision for the said account receivable at period-end. (7) As of 31 Dec. 2015, Foshan Jiahe Paper Trading Co., Ltd. owed a goods payment of RMB 4,902,239.70 to Hongta Renheng. Hongta Renheng won the appeal at the first instance in accordance with the Civil Judgment Letter (2011) FCFMEC Zi No. 852.In 2014, through negotiation, Hongta Renheng withdrew RMB 1.5 million, and the balance was RMB 3,402,239.70, withdrew 85.59% bad debt provision for the said account receivable at period-end. So it continued to withdraw 85.59% bad debt provision for the said account receivable. (8) As of 31 Dec. 2015, Kaifeng Boke Printing Co., Ltd owned good payment of Zhuhai Huafeng Paper Co., Ltd. RMB4,635,249.60. In line with Civil Judgment (2015) ZJFMECZ No. 609, Kaifeng Boke Printing Co., Ltd should repay RMB4,635,249.60 and relevant interest. Zhuhai Huafeng Paper Co., Ltd. had applied to the court for property attachment prior to lawsuit, and frozen bank deposit of respondent, closed down his land and equipment, estimated fully recovered the payment of good. As of 31 Dec. 2015, the aforesaid account receivable withdraw bad debt provision measured by aging, the income of interest was derecognized. 200 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (2) The Company have no significant contingency to disclose, also should be stated There was no significant contingency in the Company. 3. Other XV. Events after balance sheet date 1. Significant events had not adjusted Unit: RMB Yuan Influence number to the Reason of unable to estimate Item Content financial position and operating influence number results 2. Profit distribution Unit: RMB Yuan Profits or dividends planed to allocate 19,206,105 Profits or dividends allocation was reviewed and approved 19,206,105 3. Sales return 4. Notes of other significant events 1. The restructuring of Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. On 14 Dec. 2015, the Company's subsidiary Zhuhai S.E.Z. Hongta Renheng Paper Co., Ltd. changed as incorporated company and considered 31 Jul. 2015 as the base date, which reviewed and approved by the Board of Directors, and the share capital was RMB600 million after change and the shareholding proportion remained unchanged. On 29 Jan. 2016, Zhuhai S.E.Z. Hongta Renheng Paper Packing Co., Ltd. held Establish Meeting. 1 Mar. 2016, the change of industrial and commercial registration of Zhuhai S.E.Z. Hongta Renheng Paper Packing Co., Ltd. had been completed, and the Name of the Company was officially changed. XVI. Other significant events 1. The accounting errors correction in previous period (1) Retrospective restatement Unit: RMB Yuan Content Processing program Name of the influenced report Cumulative impact 201 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. items during comparison period (2) Prospective application Content Processing program Reason of adopting prospective application 2. Debt restructuring 3. Replacement of assets (1) Non-monetary assets exchange (2) Other assets replacement 4. Pension plan 5. Discontinuing operation Unit: RMB Yuan Termination of the business Income tax profits Item Revenue Expense Total profits Net profit expense attributable to the parent company owner Other notes: 6. Segment information (1) Recognition basis and accounting policies of reportable segment (2) The financial information of reportable segment Unit: RMB Yuan Item Offset in segment Total 202 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (3) There was no reportable segment, or the total amount of assets and liabilities of each part of reportable segment, shall disclose the reason. (4) Other notes 7. Other important transactions and events have an impact on investors’ decision-making 1. In accordance with the Resolution Made at the 6th Session of the 5th Board of Directors on 16 Dec. 2012, and the Resolution Made at the First Special Shareholders’ General Meeting for 2012 on 4 Jan. 2012, as well as the approval of CSRC with the Reply on Approving the Public Issuance of Corporate Bonds for Foshan Huaxin Packaging Co., Ltd. (ZJXK [2012] No. 725) on 28 May 2012, the Company publicly issued 8 million pieces of corporate bonds with the par value of RMB 100 per piece by adopting the ways of online public issuance for the public investors and off-line inquiry placing for the institution investors, with the nominal rate of 5.8%, and the term of bonds was five years from the date of issuance. The issue amounts of bond pre-set online and offline were RMB100, 000,000.00 and 700,000,000.00. Up to 29 Nov. 2012, the total raised capital from the public issuance of corporate bonds in this time was RMB 800,000,000.00, and the actual raised capital after deducting the bond issuance underwriting fees and custodian fees was RMB 791,700,000.00. 2. In line with the Company held the Second Special Meeting of the General Shareholders on 10 Nov. 2014, the meeting reviewed and approved the Proposal of the Issue of Medium-Term Notes which agreed to issue no more than RMB five hundred million of the medium-term note used for the supplement of the Company's cash flow and working capital. On 12 Jun. 2015, the Company received the Acceptance of Registration Notice ZSXZ [2015] No. MTN253 which agreed to the Company's registration of Medium-Term Notes, which issued by NAFMII. On 29 Jul. 2015, the Company's total issue amount was RMB200, 000,000.00, coupon rate 5.28%, the limitation of Medium-Term Notes was 3 years, and the raised capital after deducting the bond issuance underwriting fees and custodian fees was RMB199, 100,000.00. 8. Other XVII. Notes of main items in the financial statements of the Company 1. Accounts receivable (1) Accounts receivable classified by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n 203 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Accounts receivable withdrawal of bad 12,775,4 12,775,46 42,393, 42,393,540. debt provision of by 100.00% 100.00% 61.68 1.68 540.95 95 credit risks characteristics: 12,775,4 12,775,46 42,393, 1,005.00 42,393,540. Total 100.00% 61.68 1.68 540.95 % 95 Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Account receivable Bad debt provision Withdrawal proportion Subentry within 1 year 1-3 months 12,775,461.68 Total 12,775,461.68 Notes: In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision: □ Applicable √ Inapplicable In the groups, accounts receivable adopting other methods to withdraw bad debt provision: (2) Bad debt provision withdrawal, reversed or recovered in the report period The withdrawal amount of the bad debt provision during the reporting period was of RMBXXX; the amount of the reversed or collected part during the reporting period was of RMBXXX. Significant amount of reversed or recovered bad debt provision Unit: RMB Yuan Name of the entity Amount Method (3) Particulars of the actual verification of accounts receivable during the reporting period Unit: RMB Yuan Item Amount Of which: significant actual verification of accounts receivable Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions 204 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Notes: (4) Top five of account receivable of closing balance collected by arrears party Name of the entity Closing balance Proportion% Bad debt provision withdrawn Customer A 2,642,544.18 20.68 --- Customer B 4,349,692.84 34.05 --- Customer C 1,279,271.85 10.01 --- Customer D 4,503,952.81 35.26 --- Total 12,775,461.68 100.00 --- (5) Derecogniziton of account receivable due to the transfer of financial assets (6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable Other notes: 2. Other accounts receivable (1) Other account receivable classified by category Unit: RMB Yuan Closing balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Withdra Book Proportio wal Proportio Withdrawal Book value Amount Amount value Amount Amount n proportio n proportion n Other accounts receivable withdrawn 1,437,5 964,414, 964,414,1 1,437,567,9 bad debt provision 100.00% 67,917. 100.00% 178.70 78.70 17.18 according to credit 18 risks characteristics 1,437,5 964,414, 964,414,1 1,437,567,9 Total 100.00% 67,917. 100.00% 178.70 78.70 17.18 18 Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end □ Applicable √ Inapplicable In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision: 205 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. √ Applicable □ Inapplicable Unit: RMB Yuan Closing balance Aging Other accounts receivable Bad debt provision Withdrawal proportion Subentry within 1 year 1-3 months 105,163,917.24 4-12 months Total 105,621,194.10 Notes: In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision □ Applicable √ Inapplicable In the groups, other accounts receivable adopting other methods to withdraw bad debt provision: □ Applicable √ Inapplicable (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision during the reporting period was of RMBXXX; the amount of the reversed or collected part during the reporting period was of RMBXXX. Significant amount of reversed or recovered bad debt provision; Unit: RMB Yuan Name of the entity Reversed or collected amount Method (3) Particulars of the actual verification of other accounts receivable during the reporting period Unit: RMB Yuan Item Amount Of which: significant actual verification of other accounts receivable Unit: RMB Yuan Whether occurred Name of the entity Nature Amount Reason Procedure because of related party transactions Notes of write-off other accounts receivable: (4) Other account receivable classified by account nature Unit: RMB Yuan Nature Closing book balance Opening book balance Pretty cash, etc 457,276.86 244,868.03 Payment on behalf 163,917.24 206 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Land purchase and storage fee 64,499,000.00 Amount of equity transfer 105,000,000.00 Intercourse fund in consolidated scope 858,792,984.60 1,372,824,049.15 Total 964,414,178.70 1,437,567,917.18 (5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party Unit: RMB Yuan Closing balance of Name of the entity Nature Closing balance Aging Proportion% bad debt provision Zhuhai S.E.Z. Hongta Renheng Paper Co., Intercourse funds 637,819,153.58 1-3 years 66.14% Ltd. Huaxin (Foshan) Color Printing Co., Intercourse funds 145,775,154.35 1-3 years 15.12% Ltd. Lion Fund Amount of equity 105,000,000.00 1-3 months 10.89% Management Co., Ltd. transfer Zhuhai Huafeng Intercourse funds 75,198,676.67 1-3 years 7.80% Paper Co., Ltd. Payment on behalf Withholding charge 163,917.24 1-3 months 0.02% Total -- 963,956,901.84 -- 99.97% (6) Account receivable involving government subsidies Unit: RMB Yuan Project of government Estimated recovering Name of the entity Closing balance Closing aging subsidies time, amount and basis (7) Other account receivable derecognized due to the transfer of financial assets (8) Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement Other notes: 3. Long-term equity investment Unit: RMB Yuan Item Closing balance Opening balance 207 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Investment to the 1,058,107,442.14 1,058,107,442.14 1,280,107,442.14 1,280,107,442.14 subsidiary Investment to joint ventures and 254,253,797.80 254,253,797.80 238,518,574.19 238,518,574.19 associated enterprises Total 1,312,361,239.94 1,312,361,239.94 1,518,626,016.33 1,518,626,016.33 (1) Investment to the subsidiary Unit: RMB Yuan Withdrawn Closing balance impairment Investee Opening balance Increase Decrease Closing balance of impairment provision in the provision reporting period Huaxin (Foshan) Color Printing Co., 122,536,745.03 122,536,745.03 Ltd. Foshan Chengtong 225,000,000.00 225,000,000.00 Paper Co., Ltd. Zhuhai S.E.Z. Hongta Renheng 927,570,697.11 927,570,697.11 Paper Co., Ltd. Kunshan Focai Packaging & 5,000,000.00 5,000,000.00 Printing Co., Ltd. Pinghu Huaxin Packing Material 3,000,000.00 3,000,000.00 Co., Ltd Total 1,280,107,442.14 3,000,000.00 225,000,000.00 1,058,107,442.14 (2) Investment to joint ventures and associated enterprises Unit: RMB Yuan Increase/decrease in reporting period Closing balance Opening Additiona Negative Investme Adjustme Other Declarati Withdraw Closing Investee of balance l investmen nt profit nt of equity on of cash n Other balance impairme investmen t and loss other changes dividends impairme nt 208 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. t recognize comprehe or profits nt provision d under nsive provision the equity income method I. Joint ventures II. Associated enterprises Chengton 238,518,5 15,735,22 254,253,7 g Finance 74.19 3.61 97.80 Co., Ltd. 238,518,5 15,735,22 254,253,7 Subtotal 74.19 3.61 97.80 238,518,5 15,735,22 254,253,7 Total 74.19 3.61 97.80 (3) Other notes 1. On acquisition date as 30 Jun. 2009, the Company gained 40.176% shares of Hongta Renheng by the ways of capital and share increase, there were five directors in the Board of Directors of Hongta Renheng, of which the Company sent three directors, Yunnan Hongta Group Co., Ltd and Renheng Industrial Co., Ltd. sent one director respectively. The Chairman of the Board (Legal representative) was sent by the Company, General Manager and Chief Financial Officer were also sent by the Company, so as to control the routine producing and operating activities of Hongta Renheng, and thus consolidated into the consolidated statement of the Company since Jul. 2009. On 1 Feb. 2010, Hongta Renheng finished the changes procedures for capital increase in industry and commerce, so shares of Hongta Renheng held by the Company increased to 41.9653%, meanwhile, revised the contract and Articles of Association of Hongta Renheng according to the resolutions of the Board of Directors of Hongta Renheng on 25 Feb. 2010, after which the directors of the Board of Directors changed from five to seven, as the Company sent four directors (originally three), Yunnan Hongta Group Co., Ltd. sent two directors (originally one), Renheng Industrial Co., Ltd. sent one, Dragon State International Limited didn’t send any directors. The Company still can decide the financial and operating policies of Hongta Renheng, so continued to consolidate it to the consolidated scope in reporting period. 2. According to the 4th Session of the Fifth Board of Directors held on 28 Jun. 2013, which received and approved the Proposal on Related Transaction of Purchasing Equity of Huaxin (Foshan) Color Printing Co., Ltd. Owned by Longbon International Co., Ltd., which planed the Company to purchase 25% equity of Huaxin (Foshan) Color Printing Co., Ltd. Owned by Longbon International Co., Ltd. through the Equity Transfer Agreement with the base day of the equity protocol transfer on 30 Jun. 2013. The transfer price took the net assets through assessment of Huaxin (Foshan) Color Printing Co., Ltd. of RMB 199,450,300 as reference, and the both parties agreed to transfer 25% equity with the price of RMB 49,862,600 and had completed the equity alternation procedure on Sep. 2013. On Oct. 2013, the Company had completely paid the equity purchasing account of RMB 49,862,600. After the equity transfer, Huaxin (Foshan) Color Printing Co., Ltd. became the wholly-owned subsidiary of the Company. 3. The Company disposed Foshan Chengtong Paper Co., Ltd. in reporting period, for details, see note VIII, Change in consolidated scope. 4. On 23 Dec. 2013, the Company’s Third Special General Meeting of Shareholders reviewed and approved the 209 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Proposal on purchasing the 20% equity related transaction of Chengtong financial Co., Ltd. held by China National Paper Industry Investment Corp..On 23 Jan. 2014, Chengtong financial Co., Ltd. had sign Equity Transfer Agreement with China National Paper Industry Investment Corp., plan to transfer 20% of equity to China National Paper Industry Investment Corp., after negotiation by both parties, agreed that the transfer price was RMB 231.4502 million, Chengtong financial Co., Ltd. had changed its shareholder registration on 23 Jun. 2014. Thus, since Jul. 2014, Chengtong financial Co., Ltd. held equity proportion was 20%, calculated at equity method. Thus the Company held 20% equity of Chengtong Finance Co., Ltd. since Jul. 2014 and be measured by equity method. 4. Revenues and operating costs Unit: RMB Yuan Reporting period Same period of last year Item Revenue Operating costs Revenue Operating costs Main operations 255,247,489.31 255,247,489.31 218,075,280.68 218,075,280.68 Other operations 70,182,959.97 Total 255,247,489.31 255,247,489.31 288,258,240.65 218,075,280.68 Other notes: 5. Investment income Unit: RMB Yuan Item Reporting period Same period of last year Long-term equity investment income 19,796,783.06 accounted by cost method Long-term equity investment income 15,735,223.61 7,068,374.19 accounted by equity method Investment income arising from disposal of -75,000,000.00 long-term equity investments Total -39,467,993.33 7,068,374.19 6. Other XVIII. Supplementary materials 1. Items and amounts of extraordinary gains and losses √ Applicable □ Inapplicable Unit: RMB Yuan Item Amount Explanation 210 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Gains/losses on the disposal of non-current 114,279,468.16 assets Tax rebates, reductions or exemptions due to approval beyond authority or the lack of 16,481,293.41 official approval documents Gains and losses from debt restructuring 2,288,256.01 Gain/loss from change of fair value of transactional assets and liabilities, and investment gains from disposal of transactional financial assets and liabilities -5,985,459.17 and available-for-sale financial assets, other than valid hedging related to the Company’s common businesses Other non-operating income and expenses 2,386,314.75 other than the above Less: Income tax effects 1,604,695.65 Minority interests effects 5,926,442.49 Total 121,918,735.02 -- Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item □ Applicable √ Inapplicable 2. Return on equity (ROE) and earnings per share (EPS) EPS（Yuan/share） Profit as of reporting period Weighted average ROE (%) EPS-basic EPS-diluted Net profit attributable to common 7.10% 0.26 0.26 shareholders of the Company Net profit attributable to common shareholders of the Company after 0.60% 0.02 0.02 deduction of non-recurring profit and 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 √ Inapplicable 211 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. (2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards □ Applicable √ Inapplicable (3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions 4. Other 212 2015 Annual Report of Foshan Huaxin Packaging Co., Ltd. Section XI. Documents Available for Reference Investors and relevant departments can refer to the following materials in office of secretary to the Board in office building of the Company: 1. Financial statements signed and sealed by legal representative, principal of accounting work, and manager of finance department; 2. Original document of audit report stamped by accountant firm, signed and sealed by certificated accountant; 3. Texts of all the Company’s documents ever disclosed on http://www. cninfo.com.cn in the reporting period, and the originals of the public notices. 4. The Annual Report for 2015 with signatures of the Chairman of the Board of Directors. The Board of Foshan Huaxin Packaging Co.,Ltd.. March 18, 2016 213
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