1、(I) Auditors Report TZJS Zi 2010 No. 1243 TO THE SHAREHOLDERS OF HUBEI SANONDA CO., LTD. We have audited the accompanying financial statements of Hubei Sanonda Co., Ltd. (the “Company”), which comprise the balance sheet and the consolidated balance sheet as at December 31 2009, the income statement,
2、 the consolidated income statement, the statement of change in equity, the consolidated statement of change in equity, the cash flow statement and the consolidated cash flow statement for the year then ended, and a notes to the financial statements. I. The management levels responsibility for the fi
3、nancial statements Preparing financial statements in compliance with Accounting Standard for Business Enterprise (promulgated by the Ministry of Finance on 15 Feb. 2006) is the responsibility of the Companys management. This responsibility includes: (a) designing, implementing and maintaining intern
4、al controls relevant to the preparation of these financial statements to prevent these financial statements from material misstatement arising from fraud or error; (b) selecting and applying proper accounting policies; and (c) making reasonable accounting estimates. II. Auditors responsibility Our r
5、esponsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with Auditing Standards for CICPA. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
6、from material misstatement. An audit includes performing audit procedures, so as to obtain audit evidence to support the amounts and disclosures in the financial statements. Audit procedures are relied on the auditors judgments, including assessment on the risk of material misstatement of these fina
7、ncial statements arising from fraud or error. In risk assessment procedures, we consider internal controls relating to the preparation of these financial statements to design appropriate audit procedures, but our objective is not to express our opinion on the effectiveness of internal controls. An a
8、udit also includes assessing the reasonability of accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that the audit evidence we have obtained is sufficient and effective, providing a reasonable
9、basis for our opinion. III Audit opinion In our opinion, the financial statements comply with Accounting Standard for Business Enterprise (promulgated by the Ministry of Finance on 15 Feb. 2006), and present fairly in all material respects the financial position of the Company as of December 31 2009
10、 and the results of its financial performance and its cash flows for the year then ended. Vocation International Certified Public Accountants Co., Ltd. CPA of China Kuang Min Beijing China CPA of China Li Chongying 13 April 2010 Annual Report 2009 1(II) Financial statement Balance Sheet Prepared by
11、Hubei Sanonda Co., Ltd. 31 Dec. 2009 Unit: RMB Yuan Consolidation Parent Company Serial number for notes Assets Closing balance Opening balance Closing balance Opening balance ConsolidationParent CompanyCurrent assets: Monetary funds 474,460,623.29 562,832,319.76 424,584,953.40 490,154,426.30 VIII.
12、1 Settlement fund reserve Dismantle fund Transaction financial asset - 4,183,872.00 - 4,183,872.00 VIII. 2 Notes receivable 10,746,710.09 8,620,358.99 2,714,810.09 6,982,848.99 VIII. 3 Account receivable 65,857,262.23 82,676,725.12 9,940,149.67 7,589,321.37 VIII. 4 XIX. 1 Account paid in advance 24,
13、018,481.41 15,918,504.32 25,138,734.64 11,598,028.21 VIII. 6 Premium receivables Receivables from reinsurers Reinsurance contract reserve receivables Interest receivable Dividend receivable Other account receivable 19,220,669.32 15,914,988.01 97,072,583.33 117,681,311.43 VIII. 5 XIX. 2 Financial ass
14、ets purchased under agreements to resell Inventories 198,762,663.23 346,551,634.75 146,279,805.97 233,367,834.29 VIII. 7 Non-current assets due within 1 year Other current assets Total current assets 793,066,409.57 1,036,698,402.95 705,731,037.10 871,557,642.59 Non-current assets: Loans and advance
15、Available for sale financial assets Held to maturity investments Long-term account receivable Long-term equity investment 11,378,382.63 12,818,382.63 49,533,405.95 73,932,025.27 VIII. 8 XIX. 3 Investing property 5,116,012.50 5,356,412.50 5,116,012.50 5,356,412.50 VIII. 9 Fixed asset 778,661,093.09 7
16、81,010,440.01 728,578,456.14 730,043,892.69 VIII. 10 Project in construction 287,858,631.17 37,121,583.37 281,349,294.67 31,539,313.21 VIII. 11 Engineering material - 7,580.83 - - Fixed asset disposal Bearer biological asset Annual Report 2009 2Oil assets Intangible assets 150,488,348.86 158,813,608
17、.07 136,774,286.23 115,835,981.98 VIII. 12 Development expense Goodwill Long-term expense to be apportioned - 14,273.21 - - Deferred income tax assets 12,501,729.59 17,641,169.12 10,146,664.99 14,049,527.17 VIII. 13 Other non-current assets - - - - Total of non-current assets 1,246,004,197.84 1,012,
18、783,449.74 1,211,498,120.48 970,757,152.82 Total assets 2,039,070,607.41 2,049,481,852.69 1,917,229,157.58 1,842,314,795.41 Legal Representative: Li Zuorong Person in Charge of Accounting Activity: He Xuesong Person in Charge of Accounting Organ: He Xuesong Annual Report 2009 3Balance Sheet (Con.) P
19、repared by Hubei Sanonda Co., Ltd. 31 Dec. 2009 Unit: RMB Yuan Consolidation Parent Company Serial number for notes Liabilities and shareholders equity Closing balance Opening balance Closing balance Opening balance ConsolidationParent CompanyCurrent liabilities: Short-term borrowings 39,899,274.54
20、187,000,000.00 35,000,000.00 170,000,000.00 VIII. 16 Borrowings from Central Bank Deposits and due to banks and other financial institutions Borrowings from banks and other financial institutions Transactional financial liabilities Notes payable 5,000,000.00 19,040,000.00 5,000,000.00 15,000,000.00
21、VIII. 17 Accounts payable 116,941,353.00 102,784,556.06 66,229,596.12 66,963,994.66 VIII. 18 Accounts received in advance 30,731,258.63 112,330,681.17 18,309,739.93 30,364,281.48 VIII. 19 Financial assets sold under agreements to repurchase Handling charges and commissions payable Employees compensa
22、tion payable 17,231,898.45 25,448,279.39 13,295,096.69 14,813,333.63 VIII. 20 Taxes and fares payable -4,458,696.03 51,639,246.20 2,208,088.91 54,951,662.72 VIII. 21 Interest payable - - - - Dividend payable 349,463.30 - 349,463.30 - VIII. 22 Other accounts payable 39,413,834.96 43,139,725.39 27,182
23、,609.39 16,757,176.12 VIII. 23 Due to reinsurers Insurance contract reserve Amount payable for acting trading securities Amount payable for acting underwriting securities Non-current liabilities due within 1 year 95,000,000.00 70,000,000.00 95,000,000.00 70,000,000.00 VIII. 24 Other current liabilit
24、ies Total current liabilities 340,108,386.85 611,382,488.21 262,574,594.34 438,850,448.61 Non-current liabilities: Long-term borrowings 579,560,000.00 297,560,000.00 579,560,000.00 297,560,000.00 VIII. 25 Debentures payable Long-term payables 9,840,000.00 9,840,000.00 9,840,000.00 9,840,000.00 VIII.
25、 26 Specific-purpose account payables - 2,761,170.00 - - VIII. 27 Accrued liabilities Annual Report 2009 4Deferred income tax liabilities Other non-current liabilities 9,209,677.27 11,549,512.89 6,990,000.00 6,990,000.00 VIII. 28 Total non-current liabilities 598,609,677.27 321,710,682.89 596,390,00
26、0.00 314,390,000.00 Total liabilities 938,718,064.12 933,093,171.10 858,964,594.34 753,240,448.61 Shareholders equity Share capital 593,923,220.00 593,923,220.00 593,923,220.00 593,923,220.00 VIII. 29 Capital surplus 271,591,478.35 271,719,841.74 268,447,075.77 268,447,075.77 VIII. 31 Less: Treasury
27、 Stock - - - - Special reserve 20,689,819.99 22,451,964.08 13,898,173.74 16,364,992.87 VIII. 30 Surplus reserve 72,736,287.77 72,590,626.92 72,736,287.77 72,590,626.92 VIII. 32 General risk provision Retained earnings 129,046,856.85 137,432,584.20 109,259,805.96 137,748,431.24 VIII. 33 Foreign excha
28、nge difference Total owners equity attributable to holding company 1,087,987,662.96 1,098,118,236.94 1,058,264,563.24 1,089,074,346.80 Minority interests 12,364,880.33 18,270,444.65 - - Total owners equity 1,100,352,543.29 1,116,388,681.59 1,058,264,563.24 1,089,074,346.80 Total liabilities and owne
29、rs equity 2,039,070,607.41 2,049,481,852.69 1,917,229,157.58 1,842,314,795.41 Legal Representative: Li Zuorong Person in Charge of Accounting Activity: He Xuesong Person in Charge of Accounting Organ: He Xuesong Annual Report 2009 5Income Statement Prepared by Hubei Sanonda Co., Ltd. Jan.- Dec. 2009
30、 Unit: RMB Yuan Consolidation Parent Company Serial number for notes Items 2009 2008 2009 2008 ConsolidationParent CompanyI. Total operating income 1,650,444,264.94 2,217,343,196.68 1,203,712,854.00 1,665,775,296.38 Including: Sales 1,650,444,264.94 2,217,343,196.68 1,203,712,854.00 1,665,775,296.38
31、 VIII. 34 XIX. 4 Interest income Premium income Handling charges and commission income II. Total operating cost 1,641,214,632.81 1,981,567,490.83 1,197,965,266.44 1,420,175,347.62 Including: Cost of sales 1,409,017,869.89 1,616,017,584.32 1,038,056,451.91 1,165,488,408.18 VIII. 34 XIX. 4 Interest ex
32、penses Handling charges and commission expenses Surrender value Claim expenses-net Insurance contract reserve-net Policy dividend payment Amortized reinsurance expense Taxes and associate charges 3,346,947.50 6,592,083.18 1,909,769.14 4,930,428.00 VIII. 35 Selling and distribution expenses 59,852,75
33、1.77 76,879,142.01 43,475,486.42 57,375,840.22 Administrative expenses 99,374,972.70 148,452,853.97 64,733,449.68 101,233,728.98 Financial expense 41,397,001.65 46,159,860.53 40,268,758.85 37,974,702.53 VIII. 36 Asset impairment loss 28,225,089.30 87,465,966.82 9,521,350.44 53,172,239.71 VIII. 37 Ad
34、d: gain/(loss) from change in fair value (“-” means loss) - -3,025,868.96 - -3,025,868.96 VIII. 38 Gain/(loss) from investment (“-” means loss) 20,964,235.54 14,220,208.45 3,878,452.30 29,630,885.14 VIII. 39 XIX. 5 Including: income form investment on affiliated enterprises and jointly-run enterpris
35、e - - - - Foreign exchange difference (“-” means loss) III. Business profit (“-” means loss) 30,193,867.67 246,970,045.34 9,626,039.86 272,204,964.94 Add: non-business income 6,029,679.66 9,440,022.39 264,771.22 90,767.78 VIII. 40 Less: non-business expense 5,432,474.98 36,249,749.34 4,531,340.36 33
36、,216,854.79 VIII. 41 Including: loss on non-current asset disposal 4,003,075.49 32,039,441.84 3,583,452.84 30,315,865.36 IV. Total profit (“-” means loss) 30,791,072.35 220,160,318.39 5,359,470.72 239,078,877.93 Less: Income tax expense 11,599,154.02 65,242,864.05 3,902,862.18 58,534,300.82 VIII. 42
37、 V. Net profit (“-” means loss) 19,191,918.33 154,917,454.34 1,456,608.54 180,544,577.11 Attributable to owners of parent company 19,310,850.13 159,892,332.65 1,456,608.54 180,544,577.11 Minority interests -118,931.80 -4,974,878.31 - - VI. Earnings per share XX. 1 (I) basic earnings per share 0.0325
38、 0.2692 (II) diluted earnings per share 0.0325 0.2692 . Other comprehensive income -142,625.99 - - - VIII. 43 Annual Report 2009 6. Total comprehensive income 19,049,292.34 154,917,454.34 1,456,608.54 180,544,577.11 Attributable to owners of parent company 19,182,486.74 159,892,332.65 1,456,608.54 1
39、80,544,577.11 Attributable to minority shareholders -133,194.40 -4,974,878.31 - - Legal Representative: Li Zuorong Person in Charge of Accounting Activity: He Xuesong Person in Charge of Accounting Organ: He Xuesong Annual Report 2009 7Cash Flow Statement Prepared by Hubei Sanonda Co., Ltd. Jan.- De
40、c. 2009 Unit: RMB Yuan Consolidation Parent Company Serial number for notes Items 2009 2008 2009 2008 ConsolidationParent Company1. Cash flows from operating activities: Cash received from sales of goods or rending of services 1,573,671,456.62 2,152,166,414.42 1,167,883,718.07 1,547,063,360.00 Net i
41、ncrease in customer bank deposits and due to banks and other financial institutions Net increase in borrowings from central bank Net increase in borrowings from other financial institutions Premium received from original insurance contracts Net cash received from reinsurance Net increase in policy h
42、older deposits and investment funds Net increase in disposal of held-for-trading financial assets Interest, handling charges and commissions received Net increase in borrowings from banks and other financial institutions Net increase in buy-back business Refund of taxes and fares received 22,494,693
43、.64 22,937,733.69 14,867,937.73 13,776,089.55 Other cash received relating to operating activities 51,915,693.96 65,514,681.87 59,234,631.50 45,927,386.91 VIII. 44 Sub-total of cash inflows from operating activities 1,648,081,844.22 2,240,618,829.98 1,241,986,287.30 1,606,766,836.46 Cash paid for go
44、ods and services 1,179,050,628.02 1,588,594,197.03 847,473,833.35 1,153,613,691.43 Net increase in loans and advances to customers Net increase in deposits with central bank and other financial institutions Original insurance contract claims paid Cash paid for interest, fees and commissions Dividend
45、s paid to policyholders Cash paid to and on behalf of employees 126,673,115.70 125,759,324.72 95,242,668.46 79,078,230.73 Taxes and fares paid 81,888,725.79 97,645,663.50 61,862,827.68 72,163,837.48 Other cash paid relating to operating activities 72,205,587.09 75,818,297.73 42,588,293.95 22,885,242
46、.56 VIII. 44 Sub-total of cash outflows from operating activities 1,459,818,056.60 1,887,817,482.98 1,047,167,623.44 1,327,741,002.20 Net cash flows from operating activities 188,263,787.62 352,801,347.00 194,818,663.86 279,025,834.26 VIII. 45 2. Cash Flows from Investment Activities: Cash received
47、from withdrawing investments 10,246,198.46 45,761,649.50 10,246,198.46 65,525,374.57 Cash received from investment income 1,092,552.97 8,437,404.72 11,971,751.08 8,805,756.34 Annual Report 2009 8Net cash received from disposal of fixed assets, intangible assets and other long-term assets 7,375,721.9
48、2 652,918.00 3,346,199.63 389,943.00 Net proceeds from sale of subsidiaries and other operating units 6,111,428.39 - 16,000,000.00 - Other cash received relating to investment activities 2,219,677.27 - - - VIII. 44 Sub-total of cash inflows from investment activities 27,045,579.01 54,851,972.22 41,564,149.17 74,721,073.91 Cash paid for acquiring fixed assets, intangible assets and other long-term assets 385,871,317.46 431,345,763.47 350,945,710.32 423,644,284.50 Cash paid for investments 5,730,795.00 44,410,619.40 15,600,000.00 44,410,619.40 Net increase in pledged loans N
