China Jushi | FY2006 business review

The group reported main-business revenue of RMB 2.0168014 billion in 2006 and stated glass fiber production capacity of 380,000 tonnes. Its wider business scope continued to include new materials, commercial property, and home-product chain distribution and logistics. Jushi Group was 59.90%-owned. The year's expansion was described through distinct projects at Tongxiang, Chengdu and Jiujiang, rather than one undifferentiated group-capacity increase.

Management describes proprietary design and construction capabilities for large alkali-free and medium-alkali furnaces and environmental furnaces using waste fiber as feedstock. Its process discussion links larger furnaces to drawing equipment and operating control. The 2006 filing reports commissioning of the combined 80,000-plus-20,000-tonne Tongxiang expansion. Technical capabilities and group capacity are separate statements; the report's claims of exceptional standing remain management assessments.

Management planned to complete and stabilise the 120,000-tonne line, improve the electronic-fabric, Chengdu and Jiujiang lines, and finish the Zhejiang, Chengdu and Jiujiang bases. The plan envisaged capacity exceeding 500,000 tonnes by the end of 2007. It also sought higher-value products and downstream activities while reducing exposure to lower-end markets. Planned year-end capacity is not reported 2006 production or a confirmed 2007 outcome.

Glass fiber and related products generated RMB 1.860480725 billion in main-business revenue. The product table reports a 30.76% main-business profit rate. Domestic revenue was RMB 885.7555 million and foreign revenue RMB 1.1310459 billion. The five largest customers accounted for 32.82% of sales. These figures describe reported product and geographic totals and concentration, without assigning every export sale to a particular factory or new line.

Glass fiber and related products generated CNY 1.860 billion of main-business revenue and CNY 1.288 billion of main-business costs. Other products generated CNY 156.321 million of revenue and CNY 99.196 million of costs; the two product categories reconcile to the main-business totals. The product table reports a 30.76% main-business profit rate for glass fiber and related products, down 1.43 percentage points, while the other category reports 36.54%. These table rates are not labelled net profit margins and do not deduct all group expenses. Total main-business cost rose from CNY 997.730 million to CNY 1.387 billion. The exact amounts imply approximately 39.05% growth, matching the product table; the cost note separately prints 41.79%. That source difference is retained rather than treated as a second measured cost increase. Management linked selling costs to transport and packaging, administrative costs to technical development and personnel associated with expansion, and finance costs partly to borrowing and reduced interest capitalization after projects were completed. Domestic main-business sales were CNY 885.756 million and foreign sales CNY 1.131 billion. These geographic amounts cover the whole main business, not only glass fiber; they reconcile to the consolidated sales total and are sales classifications rather than the location of production assets.

Reported glass-fiber and related-product revenue / 2006 / fy2006 core glass fiber and related product revenue 2006

RMB 1,860,480,725.23

Reported glass-fiber and related-product cost / 2006 / fy2006 core glass fiber and related product cost 2006

RMB 1,288,152,534.37

Reported glass-fiber and related-product revenue / 2006 / fy2006 core other product revenue 2006

RMB 156,320,718.28

Reported glass-fiber and related-product cost / 2006 / fy2006 core other product cost 2006

RMB 99,195,690.95

Reported domestic main-business revenue / 2006 / fy2006 core consolidated domestic main business revenue 2006

RMB 885,755,504.69

Reported foreign main-business revenue / 2006 / fy2006 core consolidated foreign main business revenue 2006

RMB 1,131,045,938.82

Group construction in progress fell from CNY 379.035 million to CNY 34.315 million after CNY 1.145 billion of additions and CNY 1.489 billion transferred to fixed assets. The disclosed main transfer rows were project 210 at CNY 834.642 million, Chengdu project 214 at CNY 391.910 million, the Jiujiang 30,000-tonne line at CNY 228.095 million and a technology building at CNY 28.154 million. Transfers are accounting classifications and are not additional nameplate capacity by themselves. Tongxiang project 215, explicitly labelled a 120,000-tonne line, closed at CNY 27.833 million after starting construction in September 2006. Its description includes a large-unit furnace, imported key equipment, oxygen combustion in the furnace and forehearth, multi-path drawing from large bushings and in-line chopped strands. The operating plan targeted completion and stabilization of this line and group capacity above 500,000 tonnes by the end of 2007. These are forward plans in the FY2006 filing, not evidence of a later commissioning outcome. The project passage’s reference to completion within the current year is not converted into a precise date without further support.

Reported construction opening balance / 2005 / fy2006 core consolidated construction opening 2005

RMB 379,034,946.77

Reported construction carrying-value additions / 2006 / fy2006 core consolidated construction additions 2006

RMB 1,144,534,233.92

Reported construction transfer to fixed assets / 2006 / fy2006 core consolidated construction transfers 2006

RMB 1,489,254,674.94

Reported construction closing balance / 2006 / fy2006 core consolidated construction closing 2006

RMB 34,314,505.75

China Fiberglass reported FY2006 main-business revenue of CNY 2.017 billion, 37.74% above CNY 1.464 billion in 2005. Management attributed the increase to expanded manufacturing scale and sales volumes; stated glass-fiber capacity rose from 210,000 to 380,000 tonnes a year, which is not actual annual production. Main-business profit was CNY 622.555 million after CNY 1.387 billion of main-business costs and CNY 6.898 million of related taxes and surcharges. Consolidated profit before income tax was CNY 324.260 million. After CNY 86.661 million of income tax and CNY 101.548 million of minority shareholders’ profit, net profit attributable to the listed shareholders was CNY 136.050 million, up 10.18%. Income tax increased from CNY 33.797 million; management attributed the increase partly to the expiry of Jushi Group’s earlier tax holiday. The subsidiary’s disclosed net profit of CNY 253.062 million has its own entity perimeter and is not the listed issuer’s net profit. The parent-only statements separately reported CNY 126.649 million of net profit under the historical accounting framework. Later restated comparative figures are separate reporting vintages and are not substituted into this account.

Reported business revenue / 2006 / fy2006 core consolidated main business revenue 2006

RMB 2,016,801,443.51

Reported business cost / 2006 / fy2006 core consolidated main business cost 2006

RMB 1,387,348,225.32

Reported consolidated operating profit / 2006 / fy2006 core consolidated operating profit 2006

RMB 307,765,095.48

Reported profit before tax / 2006 / fy2006 core consolidated profit before tax 2006

RMB 324,259,540.04

Profit attributable to subsidiary minority / 2006 / fy2006 core consolidated minority profit 2006

RMB 101,547,959.69

Reported consolidated owner profit / 2006 / fy2006 core consolidated historical owner profit 2006

RMB 136,050,103.9

Reported business revenue / 2005 / fy2006 core consolidated main business revenue 2005

RMB 1,464,189,288.56

Reported business cost / 2005 / fy2006 core consolidated main business cost 2005

RMB 997,729,897.86

Reported consolidated operating profit / 2005 / fy2006 core consolidated operating profit 2005

RMB 212,970,824.04

Reported profit before tax / 2005 / fy2006 core consolidated profit before tax 2005

RMB 245,774,290.29

Profit attributable to subsidiary minority / 2005 / fy2006 core consolidated minority profit 2005

RMB 88,500,829.59

Reported consolidated owner profit / 2005 / fy2006 core consolidated historical owner profit 2005

RMB 123,476,428.8

FY2006 consolidated operating cash inflow net of payments was CNY 323.289 million, compared with CNY 120.053 million in 2005. Cash spent acquiring or constructing fixed assets, intangible assets and other long-term assets was CNY 1.339 billion; it exceeded operating cash generation. Net investing cash outflow was CNY 1.424 billion, including CNY 86.082 million of investment payments. Net financing inflow was CNY 1.170 billion: investment cash receipts were CNY 107.158 million, new borrowing CNY 2.874 billion, debt repayments CNY 1.585 billion, and combined dividend, profit-distribution and interest payments CNY 228.475 million. Investment cash receipts in the consolidated statement do not establish a new share issue by the listed parent. After a CNY 1.633 million adverse exchange effect, cash increased by CNY 67.526 million. The parent-only statement separately reported CNY 55.107 million of operating cash outflow. Group operating cash, the parent’s cash and construction-account transfers retain their different perimeters and measures.

Reported operating cash flow / 2006 / fy2006 core consolidated operating cash 2006

RMB 323,289,457.08

Reported cash capital expenditure / 2006 / fy2006 core consolidated long lived asset acquisition cash 2006

RMB 1,339,356,698.66

Reported cash investment payments / 2006 / fy2006 core consolidated investment payment cash 2006

RMB 86,081,656.12

Reported investing cash flow / 2006 / fy2006 core consolidated investing net cash 2006

RMB -1,424,321,633.89

Reported financing cash flow / 2006 / fy2006 core consolidated financing net cash 2006

RMB 1,170,190,372.43

Reported cash borrowing receipts / 2006 / fy2006 core consolidated new borrowing cash 2006

RMB 2,874,140,600

Reported cash debt repayments / 2006 / fy2006 core consolidated debt repayment cash 2006

RMB 1,585,000,000

Reported cash dividends profit interest / 2006 / fy2006 core consolidated combined distribution interest cash 2006

RMB 228,475,459.48

Reported cash fx effect / 2006 / fy2006 core consolidated exchange effect 2006

RMB -1,632,602.7

Reported cash change / 2006 / fy2006 core consolidated cash change 2006

RMB 67,525,592.92

Reported operating cash flow / 2005 / fy2006 core consolidated operating cash 2005

RMB 120,053,455.42

At 31 December 2006, consolidated gross trade receivables were CNY 516.994 million, compared with CNY 383.472 million a year earlier. The bad-debt allowance rose from CNY 19.924 million to CNY 32.740 million. Receivables aged less than one year accounted for 87.69% of the closing gross balance. The five largest debtor balances totaled CNY 148.424 million, or 28.71% of gross receivables; this is a credit-concentration measure, not the largest customers' share of annual sales. The largest named balance was CNY 83.299 million owed by GIBSON INTERPRISES INC. Effective 1 January 2006, the general allowance rates for receivables aged four to five years and over five years increased from 40% to 70% and 100%, respectively. The report states that this policy change reduced FY2006 net profit by CNY 8.918 million. The allowance also included specific assessments: the Hebei Zhongyi balance was fully provided, so applying only the general aging percentages would not reproduce the table. A provision is an accounting assessment of collection risk, not proof that cash was written off or subsequently recovered.

Reported gross trade receivables / 2006 / fy2006 credit original source reported trade receivables gross 2006

RMB 516,994,312.54

Accounts receivable credit-loss allowance / 2006 / fy2006 credit original source accounts receivable allowance 2006

RMB 32,740,391.12

Reported gross trade receivables / 2005 / fy2006 credit original source reported trade receivables gross 2005

RMB 383,471,680.15

Accounts receivable credit-loss allowance / 2005 / fy2006 credit original source accounts receivable allowance 2005

RMB 19,924,201.66

Closing gross inventory was CNY 299.386 million and its allowance was CNY 111,506, leaving CNY 299.274 million net inventory, compared with CNY 236.845 million net a year earlier. The report connects the increase to the formal start of the 8+2 ten-thousand-tonne line, higher raw-material requirements, output and stocks of products. Raw materials were CNY 125.791 million and finished goods CNY 136.863 million; CNY 24.769 million of dispatched goods was separately classified in inventory. These are carrying values, not physical tonnes or a measurement of unused capacity. Customer advances were CNY 72.751 million, up from CNY 36.401 million. Of the closing balance, CNY 10.049 million was more than one year old; the note explains that customers paid before dispatch. Those advances do not establish a firm order backlog or recognized revenue. The component balances here retain the original FY2006 classification: later comparative presentations may classify raw materials and finished goods differently even when the total net inventory agrees.

Reported gross inventory / 2006 / fy2006 consolidated inventory gross 2006

RMB 299,385,904.59

Reported inventory allowance / 2006 / fy2006 consolidated inventory allowance 2006

RMB 111,506.25

Reported net inventory / 2006 / fy2006 consolidated inventory net 2006

RMB 299,274,398.34

Reported raw material inventory / 2006 / fy2006 consolidated raw material inventory 2006

RMB 125,791,261.13

Reported finished goods gross / 2006 / fy2006 consolidated finished goods gross 2006

RMB 136,863,074.59

Customer advances in contract liabilities / 2006 / fy2006 consolidated customer advances 2006

RMB 72,750,640.32

Reported net inventory / 2005 / fy2006 consolidated inventory net 2005

RMB 236,844,715.02

Customer advances in contract liabilities / 2005 / fy2006 consolidated customer advances 2005

RMB 36,400,717.48

Advance payments fell from CNY 251.803 million to CNY 125.975 million, a reported decline of 49.97%. The financial note attributes the change mainly to the transfer of advance construction payments for Jushi Group's project 210, described there as the 8+2 ten-thousand-tonne line, into fixed assets. The decline therefore cannot be read as a matching cash receipt or evidence that expansion had stopped. At year end, CNY 61.996 million of advances was less than one year old and CNY 54.370 million was one to two years old. The five largest balances totaled CNY 52.332 million, or 41.54%, and included construction work, goods and fuel. These balances represent prepayments ahead of supplier performance, rather than customer receivables, installed equipment or production output. Their accounting transfer also has a different scope from the construction-in-progress movements disclosed for the individual projects.

Management reported that exports exceeded half of glass-fiber sales volume and identified renminbi appreciation as a risk to export revenue. That physical-sales share is not the same measure as the geographic revenue table. Natural gas, electricity and oxygen were named production inputs; higher energy and raw-material prices could reduce margins. Management also warned that industry capacity growth increased competition and product-price volatility, while its own expansion kept leverage elevated. Proposed responses included changes in processes and raw-material formulations, some additional overseas raw-material and equipment purchases to offset currency exposure, more domestic sales, better product mix, and lower logistics costs. The report does not quantify the resulting savings or the proportion of foreign-exchange exposure hedged. Its expectation of demand in wind power, boats, vehicles, construction and engineering plastics is market context, not proof of named customer orders.

The issuer had guaranteed CNY 20.55 million of bank borrowing by Beijing Xiling Adhesive and Sealant. After the borrower failed to repay, the issuer paid CNY 19.926 million on its behalf and paid a further CNY 20.065 million court-security deposit to seek preservation of assets. The report says that litigation sought repayment from the borrower and the parties providing counter-guarantee or repayment commitments, and that some of their assets had been frozen or seized. The issuer's lawyer considered the prospects of success and recovery favorable, but the annual report does not report that the money had been recovered. The other-receivables note retained the repayment and court-security balances and recorded CNY 1.799 million of allowance based on their recoverability. These are cash already tied up and the associated accounting assessment, not merely an unused guarantee limit or a confirmed final loss. The court deposit named here is narrower than the full deposits category in other receivables, which also includes other amounts.

At 31 December 2006, the fixed-asset note states that the newly completed production-line buildings at Jushi Group, Jushi Jiujiang and Jushi Chengdu were still undergoing title-certificate processing and had not obtained the building certificates. Their net carrying values were CNY 81.568 million, CNY 23.726 million and CNY 45.765 million, respectively, totaling CNY 151.059 million after CNY 2.025 million of depreciation. This is a disclosed documentation condition affecting the manufacturing asset base. It does not establish that production had stopped, that the buildings were unlawful or that the certificates remained pending in a later year. The same note separately describes older Beixin Technology and Baoyu property certificates that had not been obtained because the relevant entities did not own the land-use rights; those are a different explanation from the new factories' processing status. Production completion, transfer into fixed assets and receipt of a title certificate are distinct milestones, so the construction history retains the certificate issue as a dated condition without reversing the reported commissioning events.

Reported untitled buildings net / 2006 / fy2006 core jushi group pending title net 2006

RMB 81,568,417.46

Reported untitled buildings net / 2006 / fy2006 core jushi jiujiang pending title net 2006

RMB 23,725,500.68

Reported untitled buildings net / 2006 / fy2006 core jushi chengdu pending title net 2006

RMB 45,765,492.01

Reported untitled buildings net / 2006 / fy2006 core three new production factory buildings pending title net 2006

RMB 151,059,410.15

Tianjian Huazheng Zhongzhou (Beijing) issued an unqualified financial audit opinion dated 10 April 2007 on China Fiberglass’s FY2006 balance sheet, income and profit-distribution statement, cash-flow statement and notes under the then-applicable Chinese accounting standards and Enterprise Accounting System. It considered financial-reporting controls to design audit procedures but did not issue an opinion on their effectiveness. A separate report reviewed the reconciliation of shareholders’ equity on first adoption of the new Chinese accounting standards on 1 January 2007. That work provided limited assurance, explicitly less than an audit, and warned that the opening-equity figures might differ from those in the subsequent FY2007 financial report. Financial-statement assurance is not independent verification of every production forecast, technology ranking or this site’s English editorial work.

The consolidated monetary-funds balance was CNY 603.300 million at the end of FY2006, compared with CNY 535.774 million at the end of FY2005. Its closing components were CNY 1.199 million of cash, CNY 396.728 million of bank deposits and CNY 205.372 million of other monetary funds. The last category mainly included CNY 20.000 million of bill security deposits at Beixin Technology and CNY 178.540 million of bill and letter-of-credit security deposits at Jushi Group. Those named deposits supported financing arrangements and should not be described as freely available cash. The note does not identify the nature of every remaining amount in the other-monetary-funds category, so the full CNY 205.372 million should not automatically be labeled either restricted or unrestricted. This distinction matters when assessing the cash available to support the expansion program and debt repayment; the balance-sheet total alone is insufficient for an unrestricted-cash or net-debt calculation.

Reported monetary funds / 2006 / fy2006 consolidated monetary funds 2006

RMB 603,299,509.55

Reported monetary funds / 2005 / fy2006 consolidated monetary funds 2005

RMB 535,773,916.63

Reported other monetary funds / 2006 / fy2006 consolidated other monetary funds 2006

RMB 205,372,327.05

Interest expense in the consolidated finance-cost note was CNY 150.905 million, compared with CNY 97.373 million in FY2005. Net finance expense was CNY 117.651 million, after interest income of CNY 16.743 million, an exchange gain of CNY 12.578 million, fees of CNY 4.684 million and a negative CNY 8.617 million other component. The issuer attributed the rise in net finance expense to higher long- and short-term borrowings. Separately, the construction-in-progress table reports CNY 10.229 million of interest capitalized during the year. That amount was included in construction asset costs rather than the same period's expensed-interest subtotal. Keeping the two accounting treatments separate helps assess how debt financed expansion without treating every borrowing cost as an immediate charge to earnings or confusing either amount with cash interest paid.

Reported interest expense / 2006 / fy2006 consolidated finance note interest expense 2006

RMB 150,905,090.77

Reported interest expense / 2005 / fy2006 consolidated finance note interest expense 2005

RMB 97,373,400.82

Consolidated net finance expense / 2006 / fy2006 consolidated net finance expense 2006

RMB 117,651,082.93

Capitalised interest in the year / 2006 / fy2006 consolidated construction capitalized interest 2006

RMB 10,228,688.29

Consolidated short-term borrowings rose to CNY 1.632 billion from CNY 1.345 billion. The closing amount comprised CNY 540 million of unsecured credit borrowing, CNY 946 million of guaranteed borrowing and CNY 146 million of borrowing secured by mortgages. The report attributes the increase to the expansion of production and operations. Non-current long-term borrowings were CNY 1.528 billion, compared with CNY 731.288 million a year earlier; a separate CNY 200 million of long-term borrowing was classified as due within one year. The non-current total includes the reported renminbi equivalents of USD 16.5 million and USD 26 million borrowings, rather than treating the dollar amounts as additional renminbi debt. The note states that the current portion had no amount already due and unpaid at year end; that is a statement about that borrowing category, not a guarantee against future repayment risk. Some loans had related-party guarantees, and the USD 26 million loan also had fixed-asset security. These balances measure debt still outstanding, whereas new borrowing receipts, repayments and capitalized interest in the cash-flow and construction notes measure different events.

Reported short-term borrowings / 2006 / fy2006 consolidated short term borrowings 2006

RMB 1,632,000,000

Reported short-term borrowings / 2005 / fy2006 consolidated short term borrowings 2005

RMB 1,345,000,000

Reported long term borrowings / 2006 / fy2006 consolidated noncurrent long term borrowings 2006

RMB 1,528,479,750

Reported long term borrowings / 2005 / fy2006 consolidated noncurrent long term borrowings 2005

RMB 731,288,300

Reported current long term borrowings / 2006 / fy2006 consolidated current long term borrowings 2006

RMB 200,000,000

The FY2006 tax note states a 15% income-tax rate for the listed issuer and a 26.4% applicable rate for Jushi Group, while additional-investment tax relief resulted in Jushi Group's reported actual rate of 21.62%. A later note compares that actual rate with 13.2% in FY2005 and identifies the increase, together with higher profit, as a reason for higher income tax payable at Jushi Group. Jushi Chengdu was separately reported at 15%. These are different legal-entity and historical tax scopes, not a single consolidated effective tax rate. Consolidated income-tax expense rose to CNY 86.661 million from CNY 33.797 million. The tax-rate figures therefore help explain manufacturing earnings, but cannot by themselves reconcile the group's tax expense without the individual taxable-profit bases and reliefs. They describe the conditions reported for 2006 and do not state the company's current tax treatment.

Reported historical corporate-income-tax rate by entity / 2006 / fy2006 issuer stated tax rate 2006

15 percent

Reported historical corporate-income-tax rate by entity / 2006 / fy2006 jushi group applicable tax rate 2006

26.4 percent

Reported historical corporate-income-tax rate by entity / 2006 / fy2006 jushi group actual tax rate 2006

21.62 percent

Reported historical corporate-income-tax rate by entity / 2005 / fy2006 jushi group actual tax rate 2005

13.2 percent

Reported consolidated income-tax expense / 2006 / fy2006 consolidated income tax expense 2006

RMB 86,661,476.45

Reported consolidated income-tax expense / 2005 / fy2006 consolidated income tax expense 2005

RMB 33,797,031.9

Consolidated investment income declined to CNY 4.456 million from CNY 21.444 million. The FY2006 table combines CNY 12.516 million of equity-method results, a positive CNY 174,114 investment-difference amortization component, a negative CNY 8.046 million impairment component and a CNY 187,792 disposal loss. Although the impairment row is labeled as a reversal in the source table, its printed amount is negative; the investment note separately records additional impairment of CNY 6.636 million for the Yantai Bohai investment and CNY 1.410 million for Kaisheng. The negative amount is therefore retained rather than translated into a positive earnings benefit. Subsidy income was CNY 20.586 million, comprising CNY 18.599 million of fiscal support, CNY 1.567 million of VAT refunds and CNY 420,000 of other support. The explanatory note mixes receipt-period descriptions, so recognition in the FY2006 income table is not proof that every underlying payment was received in that year. Net non-recurring profit was much smaller at CNY 3.823 million after disposal and other losses and the table's signed tax adjustment. Deducting it from reported net profit of CNY 136.050 million gives the report's CNY 132.228 million profit excluding non-recurring items. Gross subsidies, net non-recurring profit and ordinary manufacturing profit have different scopes and should not be used interchangeably.

Consolidated investment income or loss / 2006 / fy2006 consolidated investment income 2006

RMB 4,456,201.99

Consolidated investment income or loss / 2005 / fy2006 consolidated investment income 2005

RMB 21,444,222.9

Consolidated equity-method investment income / 2006 / fy2006 consolidated equity method income 2006

RMB 12,516,120.97

Reported nonrecurring net profit / 2006 / fy2006 reported net nonrecurring profit 2006

RMB 3,822,560.18

Profit excluding nonrecurring / 2006 / fy2006 reported profit excluding nonrecurring 2006

RMB 132,227,543.72

The appendix bridges CNY 841.835 million of equity under the old accounting basis at 31 December 2006 to CNY 1.536 billion at 1 January 2007 under the new basis. Its largest component is CNY 673.250 million under other adjustments, explained as opening minority interests: CNY 667.080 million already existed under the old presentation and CNY 6.170 million arose from subsidiary transition adjustments. The bridge also includes CNY 5.395 million of investment-difference adjustments, CNY 742,912 of financial-asset fair-value adjustment and CNY 15.141 million of deferred-tax asset recognition. The increase therefore cannot be interpreted as a corresponding cash injection, new manufacturing output or earnings earned overnight. Minority interests represent the interests of other holders in consolidated subsidiaries, so the new total is not entirely equity attributable to shareholders of the listed issuer. The separate accountant's report dated 10 April 2007 provided limited assurance on this transition schedule and explicitly did not provide an audit opinion on it. Both management and the reviewer warned that the eventual FY2007 financial statements could use different policies or judgments and produce different opening figures. This appendix is retained as the transition disclosure available with the FY2006 report, without overwriting the original FY2006 statements or claiming it is the final FY2007 comparative presentation.

Equity / 2007 / fy2006 transition opening total equity 2007

RMB 1,536,364,783.7

Closing subsidiary minority equity / 2007 / fy2006 transition opening minority equity 2007

RMB 673,249,712.48

The parent-only FY2006 statements reported CNY 174.893 million of investment income and CNY 126.649 million of net profit, compared with CNY 139.283 million and CNY 132.538 million in FY2005. This differs from the FY2006 consolidated investment income of CNY 4.456 million and profit attributable to listed shareholders of CNY 136.050 million. The historical accounting policy used the equity method for investments with sufficient voting interests or significant influence, and the parent investment schedule includes its controlled Jushi and Beixin interests as well as associates. Equity-method accounting records changes in the investor's share of investee results in its investment balance; the recorded return is not the same as cash distributed. The parent investment-income note comprises CNY 182.472 million of investee-equity profit adjustments, a positive CNY 467,325 investment-difference amortization component and a CNY 8.046 million impairment charge, reconciling to the CNY 174.893 million total. Its Jushi investment schedule separately records CNY 169.033 million of profit adjustments and CNY 30.549 million of reductions, rather than simply presenting the subsidiary's entire CNY 253.062 million net profit as parent income. The consolidated statement reports the controlled manufacturing businesses within the group perimeter and a separate minority-profit deduction. Parent and consolidated investment returns consequently must not be added together or treated as two independent revenue streams. These are the original FY2006 accounting presentations; the 1 January 2007 transition and later comparative restatements remain separate vintages.

Reported parent-only investment income / 2006 / fy2006 parent accounting parent investment income 2006

RMB 174,892,721.68

Reported parent-only investment income / 2005 / fy2006 parent accounting parent investment income 2005

RMB 139,282,950.82

Reported parent-only equity-method investment income / 2006 / fy2006 parent accounting parent equity method profit adjustments 2006

RMB 182,471,637.94

Parent-only net profit / 2006 / fy2006 parent accounting historical parent net profit 2006

RMB 126,649,117.43

Parent-only net profit / 2005 / fy2006 parent accounting historical parent net profit 2005

RMB 132,537,656.23

At the end of FY2006, China National Building Material Company Limited held 36.15% of the issuer, Zhenshi Group held 20.04% and Jiangyin Changjiang Steel Pipe held 3.81%. The report identifies China National Building Material Company Limited as the controlling shareholder and China National Building Material Group Corporation as the ultimate controller, with no change of control during the year. The split-share reform implemented on 17 August transferred 28,492,800 existing shares from non-tradable shareholders to tradable shareholders. It also provided CNY 49.862 million of cash from the named controller and non-tradable shareholders. Existing tradable holders received two shares and CNY 3.50 for each ten shares held; this was a transfer between holders, not an issuance of new shares by the company. Total shares stayed at 427,392,000. Restricted shares closed at 256,435,200, or 60%, and unrestricted shares at 170,956,800, or 40%. The report scheduled further release of 59,041,152 shares in August 2007, 85,478,400 in August 2008 and 111,915,648 in August 2009. Those were scheduled trading-eligibility changes, not forecasts that the shares would be sold. Although a later generic paragraph says there were no shareholder commitments, the detailed reform section specifies the initial twelve-month restriction and staged eligibility; that generic sentence should not erase the specific restrictions.

Issued shares at reporting date / 2006 / fy2006 issuer total issued shares 2006

427,392,000 shares

Reported issuer major shareholding percentage / 2006 / fy2006 issuer holder cnbm company 2006

36.15 percent

Reported issuer major shareholding percentage / 2006 / fy2006 issuer holder zhenshi group 2006

20.04 percent

Reported issuer major shareholding percentage / 2006 / fy2006 issuer holder jiangyin steel pipe 2006

3.81 percent

The board proposed a FY2006 cash dividend of CNY 1.00 before tax for every ten shares, totaling CNY 42.739 million on the 427,392,000-share base, with no capital-reserve conversion into shares. The proposed remaining undistributed profit was CNY 134.666 million. The report separately says that the FY2005 dividend of the same aggregate amount was paid on 10 July 2006. The cash paid in 2006 and the proposed distribution from FY2006 earnings are therefore distinct events, despite the matching amounts. The undistributed-profit note incorporates the FY2006 proposed dividend in its allocation table; this presentation does not by itself demonstrate that shareholders had approved or received that proposal by 31 December 2006. The deduction for statutory reserves and subsidiary reserve/development funds also means that reported consolidated net profit is not identical to the amount available for distribution.

Proposed cash dividend total / 2006 / fy2006 issuer fy2006 proposed cash dividend 2006

RMB 42,739,200

The main related-funding table reports CNY 20.880 million provided to Zhenshi Group during FY2006 and CNY 5.868 million outstanding at year end; the financial note includes the same closing amount in other receivables. A separate statement reports no funds provided to the controlling shareholder and its subsidiaries during the year or outstanding at year end. Zhenshi was a shareholder, so the narrower controlling-shareholder statement should not be expanded to mean that all shareholder balances were zero. The report also says that CNY 116,388 of opening non-operating occupation by a major shareholder or affiliated enterprise, described as audit travel costs, was repaid in cash in January 2006, leaving no closing balance in that particular category. That cleared category does not cancel ordinary related sales or the separately reported Zhenshi balance. The annual report alone does not establish the recovery of the latter after year end.

The main guarantee schedule reports a closing total of CNY 937.051 million, comprising CNY 735.051 million in the category labeled as excluding controlled subsidiaries and CNY 202.000 million for controlled subsidiaries. Its stated ratio to the issuer's net assets is 111.31%. The category labeled as excluding controlled subsidiaries nevertheless names Jushi Jiujiang and Jushi Chengdu, which the related-party disclosure identifies as subsidiaries of Jushi Group, as well as the Panden joint venture. The financial contingencies note separately lists CNY 429.000 million of loans supported for Jiujiang, CNY 508.130 million for Chengdu and CNY 290.000 million for Panden. Those listed loan totals do not reconcile to the main CNY 735.051 million closing category, so they are retained as different reported schedules rather than combined into a newly asserted exposure. For the issuer's direct Jushi Group guarantees, the note distinguishes limits of CNY 130 million and CNY 80 million from actual borrowing balances of CNY 122 million and CNY 50 million; these actual balances, together with CNY 30 million for Beixin Technology, explain the CNY 202 million subsidiary subtotal. The main table also prints CNY 6.983 million as the amount above 50% of net assets. That does not follow from its CNY 937.051 million total and the original CNY 841.835 million equity base, and remains an unreconciled source amount. Guarantees support debts that may already be recognized by a consolidated borrower; adding every guarantee to consolidated debt would double count rather than establish extra borrowings or a cash loss.

Reported guarantee classification amount / 2006 / fy2006 main total guarantee balance 2006

RMB 937,050,870

Reported guarantee classification amount / 2006 / fy2006 main controlled subsidiary guarantee balance 2006

RMB 202,000,000

Reported guarantee classification amount / 2006 / fy2006 jushi group supported jiujiang loan schedule 2006

RMB 429,000,000

Reported guarantee classification amount / 2006 / fy2006 jushi group supported chengdu loan schedule 2006

RMB 508,130,000

Reported guarantee classification amount / 2006 / fy2006 jushi group supported panden loan schedule 2006

RMB 290,000,000

Reported guarantee net asset ratio / 2006 / fy2006 main guarantee to net assets ratio 2006

111.31 percent

Guarantee above half equity / 2006 / fy2006 main printed unreconciled guarantee excess 2006

RMB 6,983,147.44

As a subsequent event, the report states that an extraordinary shareholder meeting on 23 January 2007 approved a proposal to increase Jushi Group's capital and introduce Pearl Success International Co., Ltd. The stated purposes were funding project construction and development while maintaining the then foreign-invested-enterprise status and associated historical tax treatment. The proposed registered capital would increase to USD 151.208 million, with new capital subscribed by China National Building Material Company Limited, the listed issuer and Pearl Success at USD 2.67 per USD 1 of registered capital. Pearl Success also agreed to acquire existing capital from Surest Finance. After completion, the proposed ownership was 51% for the listed issuer, 11.5% for China National Building Material Company Limited, 11% for Zhenshi, 8% for Surest and 18.5% for Pearl Success. The 51% was a proposed post-completion position, not the ownership at 31 December 2006. New subscription would fund the subsidiary, whereas the transfer of existing capital was a transaction between holders. The report also allowed the strategic investor a future share-swap or equity-transfer exit route; it does not establish that an exit or the capital transaction had already completed by that meeting.

The subsequent-events note reports that on 4 January 2007 Jushi Group agreed with Zhenshi Group to purchase ownership of the Jushi trademark for CNY 30 million. It describes the transfer as permanent, rather than a recurring trademark license, and records prior board approvals. This links the manufacturing brand to a specific related-party asset transaction and a stated price. The report's agreement disclosure does not separately demonstrate the payment date or the accounting recognition of the acquired right. It is a post-year-end event and should not be presented as an acquisition completed during FY2006 or as part of FY2006 product sales.

GIBSON INTERPRISES INC was described as Jushi Group's exclusive US distributor and as sharing a legal representative with Jushi Group's foreign shareholder. FY2006 sales to it were CNY 303.291 million, compared with CNY 291.117 million in FY2005; the main related-transaction section reports 15.04% of transactions of the same type. Other named related sales included CNY 66.053 million to Tongxiang Hengshi Fiberglass Fabrics, CNY 51.478 million to the CNBM import/export company and CNY 22.586 million to Jushi International Group (Canada). These reported sales are not an end-customer order book, and the note does not give the distributor's final customers. On the purchasing side, transactions included CNY 64.663 million with Tongxiang Leishi Micropowder, CNY 49.108 million with Tongxiang Jinshi Precious Metal Equipment and CNY 45.105 million with the Beixin building-material counterparty named in the note. The related-party list links several suppliers to the issuer's shareholders or key management. The report describes pricing by state-set prices and market prices and states that the directors considered the transactions fair; that is the issuer's assessment, not an independent conclusion by this database. Sales, purchases and year-end receivables measure different flows or balances and should not be added together as revenue.

Reported related-party sales transaction / 2006 / fy2006 named related sales gibson 2006

RMB 303,290,918.55

Reported related-party sales transaction / 2005 / fy2006 named related sales gibson 2005

RMB 291,116,954.53

Reported related-party sales transaction / 2006 / fy2006 named related sales hengshi 2006

RMB 66,053,237.66

Reported related-party sales transaction / 2006 / fy2006 named related sales cnbm import export 2006

RMB 51,478,290.18

Reported related-party purchase or service transaction / 2006 / fy2006 named related purchases leishi 2006

RMB 64,663,200.35

Reported related-party purchase or service transaction / 2006 / fy2006 named related purchases jinshi 2006

RMB 49,108,062.74

Reported related-party purchase or service transaction / 2006 / fy2006 named related purchases beixin building material 2006

RMB 45,104,923.38

The FY2006 related-party ownership table reports a 59.90% interest in Jushi Group and 95% in Beixin Technology. It separately lists Jushi Group's operating subsidiaries, including a 99% interest in Jiujiang and 57% in Chengdu, and describes Panden as a Jushi Group joint venture. These layered holdings explain why a subsidiary's full revenue, asset or profit amount is not the listed issuer's attributable economic share. The 59.90% Jushi Group interest is the year-end position in this report; it should not be replaced with the 51% interest contemplated in the following post-year-end capital proposal. The operating and accounting perimeters must therefore be kept attached to their own periods when comparing the expansion across years.

Reported equity interest / 2006 / fy2006 issuer interest jushi group 2006

59.9 percent

Reported equity interest / 2006 / fy2006 issuer interest beixin technology 2006

95 percent

Jushi Group, the glass-fiber and composite-materials manufacturing and sales business, reported CNY 4.882 billion of total assets and CNY 253.062 million of FY2006 net profit. The issuer held 59.90% of its registered capital at year end. Beixin Technology, 95%-owned and active in new materials, distribution and investment, reported CNY 210.377 million of assets and CNY 861,600 net profit. The substantially larger Jushi result identifies the principal earnings business, but it is not a separate amount to add to the consolidated group profit. The FY2006 consolidated statement deducts CNY 101.548 million of minority profit in arriving at CNY 136.050 million attributable to the listed shareholders. The subsidiary assets also overlap with the consolidated asset perimeter and must not be summed as additional group assets. Among associates, the 20% interest in Beixin Logistics concerned home-product distribution, chain operations, logistics and commercial-property activities; that company's disclosed assets were CNY 1.201 billion and net profit CNY 30.021 million. China Composites, held at 23%, combined materials manufacture with equipment, engineering and technical services and reported CNY 1.124 billion of assets and CNY 16.424 million net profit. Those are the associates' own totals, not the issuer's equity-method income or cash received. The report also describes small controlled home-furnishing market operations; their limited reported earnings do not change the manufacturing emphasis of this historical company profile.

Reported subsidiary assets / 2006 / fy2006 core jushi group own assets 2006

RMB 4,882,125,400

Reported subsidiary net profit / 2006 / fy2006 core jushi group own net profit 2006

RMB 253,061,800

Reported subsidiary assets / 2006 / fy2006 core beixin technology own assets 2006

RMB 210,376,800

Reported subsidiary net profit / 2006 / fy2006 core beixin technology own net profit 2006

RMB 861,600

Reported subsidiary assets / 2006 / fy2006 core beixin logistics associate own assets 2006

RMB 1,200,706,400

Reported subsidiary net profit / 2006 / fy2006 core beixin logistics associate own net profit 2006

RMB 30,020,800

Reported subsidiary assets / 2006 / fy2006 core china composites associate own assets 2006

RMB 1,123,503,300

Reported subsidiary net profit / 2006 / fy2006 core china composites associate own net profit 2006

RMB 16,424,100