SHENZHEN CHIWAN PETROLEUM SUPPLY BASE CO LTD 2006 S ANNUAL REPORT

Transcription

1 SHENZHEN CHIWAN PETROLEUM SUPPLY BASE CO LTD 2006 S ANNUAL REPORT Important Notes: 1 The directors, supervisors and senior managers guarantee that there exist no omission, misstatement, or misleading information in this annual report. The directors, supervisors and senior managers are responsible, individually and jointly, for the authenticity, accuracy and integrity of the information herein. There is no director, supervisor or senior manager who cannot guarantee the authenticity, accuracy and integrity of the content of this annual reportor does not agree with this report. The independent director, Mr. Lin Zhijun and Mr. Bai Youzhong were absent of the meeting for other business and authorized the independent director, Mr. Tian Rugeng to vote on behalf of them. 2 The Annual Report is written in both English and Chinese. In case of conflict between the two versions, Chinese version shall prevail. 3 PricewaterhouseCoopers presented audit reports with standard and non-reserved opinion for the Company. 4 Dr. Fu Yuning, the Chairman of the Board, Mr. Huang Fanzhi, the Financial Controller, and Ms. Yu Zhongxia, the Financial Manager, guarantee the authenticity and integrity of the financial result of this annual report. 1

2 Catalogue PART I. Company Profile 3 PART II. Highlights for Accounting and Business Data 4 PART III. Change for Contributed Capital and Shareholders 6 PART IV. Information of Directors, Supervisors, Senior Managers 9 PART V. Corporate Governance 11 PART VI. Review of Shareholder General Meetings 13 PART VII. The Board Report 14 PART VIII. The Supervisory Committee Report 18 PART IX. Significant Events 19 PART X. Financial Statements 20 PART XI. Documents Available for Verification 20 2

3 PART I. Company Profile: Name of the Company Legal Representative Secretary of the Board Securities Representative Office Address Shenzhen Chiwan Petroleum Supply Base Co., Ltd ( Chiwan Base ) Dr. Fu Yuning Mr. Fu Jialin Mr. Song Tao Post Code Address Website of the Company Designated Newspapers for Information Disclosure Website for Publishing the Annual Report Place where the Annual Report is available Stock Exchange Tel Fax Address sa@chiwanbase.com 14/F, Chiwan Petroleum Building, Chiwan, Nanshan District, Shenzhen, PRC sa@chiwanbase.com Securities Times, Wen Wei Po Secretary Department of Chiwan Base Shenzhen Stock Exchange Stock Series Chiwan Base -B Stock Code Date of Initial Registration 24 th July 1995 Initial Registration Address Registration Number for Business License Number of Taxation Registration Domestic Certified Public Accountants International Certified Public Accountants Industry and Commerce Administration Bureau of Shenzhen, Guangdong, PRC QGYSZZ No (N) (L) PricewaterhouseCoopers PricewaterhouseCoopers 3

4 PART II. Highlights of the Accounting and Business Data I. Accounting Data (Unit: RMB) Increase 2004 Revenue 194,705, ,468, ,545,213 EBIT 146,006, ,452, ,361,332 Net profit 136,256, ,725, ,412,034 Net profit after deducting non-recurring gains and 136,552, ,760, ,599,229 losses Net cash flows from operating activities 107,725, ,404, ,392, year-end 2005 year-end Increase 2004 year-end Total assets 1,280,440, ,236, ,030,599 Shareholders equity minorities equity excluded 810,364, ,757, ,238,052 The impact of IFRS adjustments on the PRC statutory financial statements are as follows: (Unit: RMB) As per the PRC statutory financial statements As per the IFRS Shareholders equity 810,256, ,177,465 Net profit 136,256, ,493,883 Explanation on Differences Differences between IFRS & PRC statutory financial statements II. Main Financial Indices (Unit: RMB) Increase 2004 Earnings per share Earnings per share* Return on equity (%) Return on equity after deducting of non-recurring gains & loses (%) Net cash flows per share from operating activities Shareholders equity per share Shareholders equity per share after adjustment 2006 year-end 2005 year-end Increase 2004 year-end

5 Note: Items included in the non-recurring gains & losses RMB 1. Loss from disposal of fixed assets minus: revenue 2. Revenue from other non-operating activities 3. Cost of other non-operating activities 4. Variance on Income tax from non-operating profit III. Accessories of Profit & Loss Statement in 2006 The hereby ROE and EPS were calculated in accordance with the requirement of Regulation (9th) of Compilation and Report of Information Disclosure for Company Distributing Securities to the Public issued by China Securities Regulatory Commission. Item Net profit Net profit after deducting non-recurring gains and losses ROE (%) EPS (RMB) ROE (%) EPS (RMB) Fully Weighted Basic Dilute Fully Weighted Basic Dilute diluted average EPS EPS diluted average EPS EPS Item IV. Change of Shareholders Equity Contributed capital Capital Reserves Statutory surplus Reserve Statutory Welfares Discretional Surplus Reserves (Unit: RMB) Retained Earnings Equity Year-begin 230,600, ,656,111 70,402,777 29,465,101 34,923, ,710, ,757,774 Increase 448,879 43,090,768 5,736, ,256, ,705,549 Decrease 29,465,101 82,461,111 63,099,157 Year-end 230,600, ,104, ,493,545 40,659, ,505, ,364,166 Reasons of change: 1. The increment of Statutory Surplus Reserve were drawn in accordance with the company s Articl e of Association. Statutory Surplus Reserves is 10% of the net profit. Discretional Surplus Reserve s is calculated as 5% of the net profit of last year. 2. The increase of Capital Reserves is caused by purchasing 10% equity of Chiwan Logistic. 3. The increase of Retained Earnings is the company s undistributed net profit realized this year. 5

6 PART III. Change of Contributed Capital and Particulars about Shareholders I. Changes for Contributed Capital: Illustration for Change of Contributed Capital: Before change Share allotment Change in number of shares Bonus shares Conversion of reserves to shares Others (Unit: share) Subtotal After change 1. Nontradable shares a. Promotors shares including State owned shares Ownership by Domestic legal entities Ownership by Foreign legal entities Others b. Shares raised from legal entities c. Employee s shares d. Preferred shares Total 2. Tradable shares a. A shares b. B shares c. Shares traded in Overseas Market d. Others Total 119,420, ,420, ,180, ,180, ,420, ,420, ,180, ,180, Total of shares 230,600, ,600,000 II. Share Issue and List: The Company issued, at the par value of RMB 1.00 per share, a total number of million shares of common B shares in June 1995, according to the approval of Shenzhen Securities and Exchange Commission. The total shares include million non-tradable A shares, million non-tradable B-shares for foreign promoters, and 60 million public traded B-shares for ordinary investors. The public traded B shares were issued on June 23 rd, 1995 at a price of HK$2.82 per and the fully diluted P/E of The B shares became public listed on July 28 th, The Company haven t issued any employees shares ever since. The number and the frame of the Company s shares remained unchanged this year. 6

7 III. Particulars about Shareholders (December 31, 2006) 9,351 CHINA NANSHAN DEVELOPMENT Domestic legal (GROUP) INCORPORATION entity owned OFFSHORE JOINT SERVICES(BASES) Foreign investment CO. OF SGP. PTE LTD shareholder Holding information of top ten tradable shareholders Name full name shares Type A B H or other OFFSHORE JOINT SERVICES(BASES) CO. OF SGP. PTE LTD B B B B B B B B B Among the top ten shareholders, the domestic legal entity shareholder China Nanshan Development (Group) Incorporation has no affiliated relations with other shareholders and does not fall Explanation for the Affiliated Relations or into the scope of united action person stipulated by Regulation of United Action of the Top Ten Shareholders Information Disclosure of the Change of Shareholding of listed company. It is unknown that whether other tradable-share shareholders fall into the scope of united action person. 7

8 IV. Profiles of Major Legal Entity Shareholders 4.1) China Nanshan Development (Group) Incorporation (CNDI) Legal representative: Fu Yuning Date of registration: October 1982 Registered Capital: RMB500,000,000 Business scope: land development; port transportation, industrial, commercial, real estate and tourism; customs bonded warehouses business; etc. 4.2) Substantial Controller of Holding Shareholder Being the holding shareholder of CNDI, China Merchants (NanShan) Holdings Ltd holds 37.01% equity in CNDI. China Merchants Holdings (International) Co, Ltd.(CMHI), which was listed on Hong Kong Exchange, indirectly or directly hold 100% shares of China Merchants (Nanashan) Holdings Ltd. Basic introduction about CMHI is presented as follows: Legal representative: Fu Yuning Date of registration: May 28, 1991 Registered Capital: HKD300,000,000 Business Scope: Port and port-related business, infrastructure construction and industrial production. 4.3) Controlling graph State-Owned Assets Supervisory and Administration Commission i i 100 China Merchants Group China Merchants Holdings (International) Co Ltd 100 China Merchants (Nanshan) Holdings Ld 37.01% China Nanshan Development (Group) Incorporation Shenzhen Chiwan Petroleum Supply Base Co., Ltd 4.4) Other shareholders with shares of 10% or above : OFFSHORE JOINT SERVICES (BASES) COMPANY OF SINGAPORE PTE LTD Legal representative: Mr. Koh Soo Keong Business scope: investing in the companies engaged on offshore oil supply services. 8

9 PART IV. Information of Directors, Supervisors and Senior Managers I. Brief information Name Position Gender Age Office Term Fu Yuning Chairman male Koh Soo Keong Vice Chairman male Han Guimao Executive Director male Fong Yue Kwong Director male Wang Fen Director female Liu Fu Director male Lin Zhijun Independent Director male Bai Youzhong Independent Director male Tian Rugeng Independent Director male Zhong Jingshen Convener of the male Supervisor Committee Ong Lee Keang Supervisor female Xiang Qingsheng Supervisor male Fan Zhaoping Supervisor male Zhang Xiang Employee Supervisor male Liu Bojiang Employee Supiervisor male Cui Wei Administrative Deputy GM male Huang Fanzhi Deputy GM & Financial male Controller Huang Dong Er Deputy GM male Ren Yongping Deputy GM male Fu Jialin Board Secretary male 9

10 Brief information (continued) Fu Yuning Koh Soo Keong Han Guimao Fong Yue Kwong Wang Fen Liu Fu Lin Zhijun Bai Youzhong Tian Rugeng Zhong Jingshen Ong Lee Keang Xiang Qingsheng Fan Zhaoping Zhang Xiang Liu Bojiang Cui Wei Huang Fanzhi Huang Dong Er Ren Yongping Fu Jialin Note: Seven of above directors or supervisors hold posts in CNDI, one of above supervisors or senior managers hold posts in subsidiaries, details as follows: Dr. Fu Yuning as the Chairman since Dec. 1998; Mdm. Wang Fen as the President since March 2002; Mr. Liu Fu as the Vice Chairman since May 2003; Mr. Han Guimao as the Senior Vice President since March 2002; Mr. Zhong Jingshen as the Vice Chairman since Aug. 2000; Mr. Xiang Qingsheng as the Director since Aug 2004; 10

11 Mr. Fan Zhaoping as the Senior Vice President since Dec Mr. Zhang Xiang as Deputy GM, General Manager of Guangzhou Baowan Logistic Co Ltd since Jun II. Annual Salary of Directors, Supervisor and Senior Managers 1) Decision Procedure and Basis Salary standard of the Company was decided and approved by the Board of Directors. Three independent directors, two employee supervisors and all senior executives draw their salaries, bonuses and other welfares from the Company, while others including Fu Yuning, Koh Soo Keong, Fong Yue Kwong, Wang Fen, Han Guimao, Liu Fu,Xiang Qingsheng, Zhong Jingshen, Ong Lee Keang and Fan Zhaoping, draw the pay from their respective shareholder party instead of the Company. 2) Changes of directors, supervisors and senior managers Mdm Ong Lee Keang had resigned as Supervisor of the 4 th Supervisory Committee on Sep for her job change. III. Information of Other Employees: As on Dec. 31, 2006, the Company has a staff of 463, including 182 labour engaging in production, 235 clerk in accounting, administration and other department, 46 in management. PART V. Corporate Governance The Company strictly implements the PRC Company Law, the Securities Law and other laws, and regulations issued by the CSRC; continuously improves the legal person administration system, makes every effort to build modern enterprise system and regulates its operation. According to Administration Guideline for listed Company, the Board of Directors explained the practice situation of the legal person administration of the company as follows: 1) In aspect of shareholders and shareholders general meeting: the company s administration structure can ensure the equal status of all shareholders, especially the minority shareholders, and can ensure shareholders fully exercised their legal rights. The convening procedure, the qualification of the person attending the meeting and the voting procedure of the meeting are in accordance with the stipulation of Company Law, Regulatory Opinion for General Meeting of Listed Company, Articles of Association. 2) In aspect of relations between the control shareholder and the Company: the Company s control shareholders attached importance to the listed company, gave energetic support, exercised shareholder s rights and undertook shareholder s obligation legally. The Company is independent of its control shareholder in terms of business, assets, organization, employees and finance. The Company undertakes responsibilities and risks independently. 3) In aspect of directors and Board of Directors: the Company elects directors strictly in line with the election procedure as regulated in the Articles of Association of the Company. The AOA stipulates that accumulative total voting system should be used in the Board election. All the directors shall exercise their duties loyally, bona fide and diligently. Both the number of directors and composition of the Board shall comply with relevant laws and regulations. The Company has established the independent director system, employed three independent directors taking charge of the special committee of the Board in accordance 11

12 with the requirements of the CSRC and the Shenzhen Securities Regulatory Office. 4) In aspect of supervisors and Supervisory Committee: Both the election of the Company s shareholder supervisors and employee supervisors shall comply with relevant laws and regulations. The member and the composition of the Supervisory Committee can ensure the Supervisory Committee to supervise and inspect directors, senior managers and the finance of the Company independently and efficiently. The Supervisory Committee stipulates Rules of Procedure of the Supervisory Committee. The meeting of the Supervisory Committee shall comply with the stipulated procedure. 5) In aspect of person having correlative benefit: the company respects the legal rights of banks and other creditors, employees, consumers, suppliers, communities and other persons who have correlative benefit. The company shall cooperate actively with them so as to achieve continuous and healthy development. 6) In aspect of information disclosure and transparency: The Company stipulates the regulation of information disclosure and authorizes the secretary of the Board and the authorized representative to take charge of securities affairs and information disclosure, and also to welcome the visit and inquiry of the shareholders. The Company discloses the relevant information in a real, accurate, complete and timely way strictly according to the law, regulations and the Articles of Association and the Companyensures all the shareholders to have equal opportunity in obtaining the information. Moreover, the Company timely disclosed the detailed information of the largest shareholder or concrete controller and changes in their shareholdings According to Administration Guideline for listed Company, the Board of Directors took the opinion that the practice situation of the Company s administration is basically in accordance with the requirement of Administration Guide Line for listed Company after improving each systems of the Company according to the requirement of the CSRC s Shenzhen Regional Office. II. Information of Independent Directors Performance According to the requirement of the CSRC and Shenzhen Securities Regulatory Office, the company employed three specialists as independent directors, majored in law, accounting and professional area of the company. The Company established three special committees of the Board of Directors and made and improved Detailed Work Rules of Nomination and Salary Committee of the Board of Directors, Detailed Work Rules of Strategy and Development Committee the Board of Directors and Detailed Work Rules of Audit Committee of the Board of Directors. During the period under review, in accordance with the requirement of CSRC s Guidance Opinion for Listed Company to Establish of Independent Directors System Articles of Association and Work System of Independent Director the Company s independent directors exercised their duties, took part in the decision-making of the Company s importance affairs, presented independent director s opinion and fully exerted the function of independent director. The information of independent directors to attend the directors meetings is as follows: Name The number of directors meetings to be present The number of presence 12 The number of authorizing Bai Youzhong Lin Zhijun 8 8 Tian Rugeng 8 8 The number of absence Reference Abroad for other business

13 III. The Company is independent of its control shareholder in terms of business, assets, organization, employees and finance, and has independent and integrated ability of operation and management. 1) In the aspect of operation, the business of the Company is entirely independent of its control shareholder. The control shareholder and its subordinate units did not engage in the business that are the same or similar to the business of the listed company. 2) In the aspect of employees, the employees of the Company are independent of the control shareholder. The senior managements, the leading official of the finance and the secretary of the Board do not occupy any position in the control shareholder. 3) In the aspect of assets, the assets invested by the control shareholder is independent, integrated and has clear ownership. 4) In the aspect of organization, the Company s Board of Directors, Supervisory Committee and other intern organizations operate independently. There is no affiliated relation between the control shareholder and its functional departments and the Company and the Company s functional departments. The control shareholder and its subordinate organization do not give any plan and instruction as to the operation to the Company and its subordinate organization or intervene the independence of the Company s management by other means. 5) In the aspect of finance, the Company establishes the regulatory system of finance and accounting and make it in accordance with correlative laws and regulations. The control shareholder will not intervene the Company s finance and accounting affairs. IV. Construction of internal control system The existing internal control system has been established. It can meet the requirements of manufacturing, management and development. It also can meet the requirements of advancing operation benefit and effectiveness of the Company, ensuring the safety of company assets and the trueness, integrity and equity of company information. It has supplied strong secure for carrying out law and internal regulation. The internal control system will be continuously perfected to follow the company development and the change of laws and regulations. These systems will be also carried out during the practice. PART VI. Review of Shareholders General Meeting The Company convened twice shareholders general meetings during the period under review, the details of which are as follows: 1. The annual shareholders general meeting for the year 2005 was held on the 14 th floor of Chiwan Petroleum Building, Shenzhen between 10:00-12:00 am on May 16, The Public Notice and Legal Opinions were published in Securities Times, Ta Kung Po and on May 17, The first extraordinary shareholders general meeting was held on the 14 th floor of Chiwan Petroleum Building, Shenzhen between 10:00-12:00 am on Sep. 25, The Public Notice and Legal Opinions were published in Securities Times, Wen Wei Po and on Sep. 26,

14 PART VII. The Board Report I Information of Company Business and Financial Highlights 1.1 Consolidated Major Indicators During the reporting period, revenue, net profit, ROE and cash flow generated from operating activities posted YOY increases of 18.4%, 18.8%, 8% and 0.3% respectively. The main reasons of the achievement are as follows: CSE achieved net profit of RMB million, which was increased of 35% compared with last year. The project of Shanghai Baowan Logistic Park (Phase II) had been partly completed in succession, which caused the revenue and net profit of Shanghai Baowan increase of 38% and 39%. At the end of reporting period, the total bank loan was RMB 370 million, and financial expenses incurred was RMB 8.57 million. The bank loan was mainly used to invest on the logistic park. 1.2 Operation Costs The total operation costs for the year 2006 was RMB 105 million, an increase of 21.75% or RMB million as compared with last year. The main reasons are as follows: Cost and expense increased due to the operation of the second phase of Shanghai Baowan and the starting operation of Guangzhou Baowan. Rental expenditure increased because of the renting of work shops and lands in Chiwan. Salary increased due to the new business development and increase of staff force. 1.3 Review of Business Sectors Offshore Petroleum Services The offshore petroleum logistics registered 9% and 16.9% increases in revenue and net profit to RMB million and RMB million respectively when excluding the headquarters expenditures. The using rates for the facilities was increased compared with last year. Chiwan Logistics: Revenue from Chiwan logistics sector increased by 22.8% to RMB17.34 million comparing with RMB million of last year. Net profit jumped to RMB 2.71 million. Baowan Logistics Services Shanghai Baowan: The construction of the second phase was successful. Revenue of Shanghai Baowan surged by 38% to RMB million and net profit reached RMB million, an increase of 39%. Guangzhou Baowan: Starting operation in April of 2006, warehouse was fully used. Revenue and net profit of 2006 were RMB 4.4 million and 0.92 million respectively. Offshore Engineering Chiwan Sembawang Engineering: 32% share held by Chiwan Base. Performance of Chiwan Sembawang continually maintained rapid increase in Net profit reached RMB 232 million, 35.7% increase comparing with last year. Contribution to Chiwan Base was RMB million. CPEC: 20% share held by Chiwan Base. Net profit in 2006 was RMB 1.29 million, of which RMB 0.26 contributed to Chiwan Base. 14

15 1.4 Status of the Investment Projects and Construction Progress 2 ND phase of Shanghai Baowan: Eight warehouses (about 80,000 m 2 ) have been constructed and put in use in The rest two warehouses (about 17,000 m 2 ) are scheduled to be constructed and put in use in Guangzhou Baowan: Three warehouses (about 20,000 m 2 ) have been constructed and put in use in Kunshan Baowan: The warehouses will start to be constructed in 2007, and the construction will be completed in Tianjin Baowan and Langfang Baowan: The Company was engaging on the prophase of the projects. 1.5 Key Tasks of Business of 2007 Complete the second phase construction of Shanghai Baowan and fully put the warehouses in use; continue to develop warehouse operation and foster the capability of value added service; Start the construction of Kunshan project and put part into use; Study and research for new projects; Ensure the business and operation of all projects. 1.6 Effects of the Implementation of New Enterprise Accounting Standards According to the regulations of Enterprise Accounting Standards, the Company should implement the new accounting standards from January 1, The confirmed differences between the former accounting and the new accounting standards on the first implementation day of the new standards, namely January 1, 2007 according to the new accounting standards of the Finance Ministry are as follows. (1)Deferred income tax liabilities According to the related regulations, the credit balance of deferred tax (RMB4,630,550) is adjusted to deferred income tax liabilities on Jan 1, The adjustment shall not influence the retained earnings, other financial status or performance. (2) According to the related regulations on long-term equity investment, equity method shall be changed to cost method. It shall decrease the influence to investment profit and net profit of the parent company by the profit of subsidiaries, but it shall not influence the consolidated statements. (3) According to the related regulations on investment property the Company shall choose historical-costs method continuously, which shall not influence the retained earnings, the financial status, or performance. (4) Other All the above and other adjustments shall not influence the retained earnings, they also shall not influence the future financial statements and operating achievements. 15

16 II. Main Business Statement Categorized by Business Business Revenue Cost Main Business Statement Categorized by Business Gross Increase of interest rate revenue Increase of cost (Unit: RMB 0000) Increase of gross interest rate Operation 7, , Warehouse 10, , Office rental 1, III. Main Business Statement Categorized by District (Unit: RMB 0000) District Revenue Increase of revenue Shenzhen 15, Shanghai 3, Guangzhou IV. Application of the Proceeds The company had invested US$20.5 million raised from stock market in its 1995 floatation in the projects approved by AGM. All projects had been completed by the end of 1996 and the results of which were disclosed accordingly. There is no application in this reporting period. V. Report on the Routine of Board of Directors 1.Board Meetings and Resolutions The Board had held eight meetings in the reporting period. 1) The 8th tele-communication meeting of the fourth Board of Directors was held by fasimile on Jan 23, The Public Notice was published in Securities Times, Ta Kung Pao and on Feb 7, ) The fifth meeting of the fourth Board of Directors was held on the 16 th floor of Chiwan Petroleum Building, Shenzhen on April 10, The Public Notice was published in Securities Times, Ta Kung Pao and on April 14, ) The 9 th tele-communication meeting of the fourth Board of Directors was held by facsimile on April 24, The Public Notice was published in Securities Times, Ta Kung Pao and on April 26, ) The 10 th tele-communication meeting of the fourth Board of Directors was held by facsimile on July 11, The Public Notice was published in Securities Times, Wen Wei Po and on July 14,

17 5) The 11 th tele-communication meeting of the fourth Board of Directors was held by facsimile on August 25, The Public Notice was published in Securities Times, Wen Wei Po and on August 29, ) The 12 th tele-communication meeting of the fourth Board of Directors was held by facsimile on Sep 7, The Public Notice was published in Securities Times, Wen Wei Po and on Sep 9, ) The 13 th tele-communication meeting of the fourth Board of Directors was held by facsimile on Oct 25, The Public Notice was published in Securities Times, Wen Wei Po and on Oct 27, ) The sixth meeting of the fourth Board of Directors was held on the 16 th floor of Chiwan Petroleum Building, Shenzhen on Nov 30, The meeting examined the business and operating achievements and discussed the future development of the Company. 2. Implementation of the Dividend Distribution Plan During the year under review, the Company implemented its 2006 dividend distribution plan on July 14, 2006: RMB cash bonus for each 10-share (tax included). Dividend for B shares was converted into HK dollars for distribution. VI. Dividend Distribution Preplan for the Year 2006 In accordance with the audited report by PriceWaterhouseCoopers, the Company s net profit for the year 2006 is RMB136,256,670. To conform with the Articles of the Company and relevant rules and regulations of PRC, the Board of Directors would like to propose the dividends distribution plan as follows: (1)Profit Distribution RMB Retained Earning B/F 91,874,836 Profits available for distribution 228,131,506 Less: Statutory surplus public reserve (10%) 13,625,667 Discretionary public reserve (5%) 6,812,834 Dividends (tax included) (50%) 68,128,335 The balance (35%) 47,689,834 Retained profits 139,564,670 (2)The cash dividend for the year 2006 of RMB2.95 for every ten shares (tax included) or RMB68,128,335 in total would be paid by the Company and for this purpose the conversion will be based on the closing rate between HK$ and RMB announced by the People s Bank of China on the first working day after the resolution is passed by the AGM. The above dividend distribution plan will be carried out after the final approval of the AGM The Company neither declared interim dividend nor converted any reserves into share capital in the year of

18 VII. Estimated Profit Distribution Policy for 2006 The estimated profit distribution policy for the year 2007 is as follows: (1) The Company will conduct profit distribution once in 2007; (2) Approximately 40%-60% of net profit realized in 2007 will be distributed as dividend; (3) The distribution will take the form of cash bonus. VIII. The Company did not plan to transfer Capital - Reserves into share capital for the year PART VIII. The Supervisory Committee Report I. Supervisory Committee Meetings Corporation Supervisory Committee convened five meetings in the reporting period. 1) The fourth meeting of the fourth supervisory committee was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, on April 10, The public notice was published in Securities Times, Ta Kung Pao and on April 14, ) The third tele-communication meeting of the fourth Supervisory Committee was held by facsimile on April 24, The meeting reviewed and approved to sign the written examination opinion for the first quarterly report of ) The fourth tele-communication meeting of the fourth Supervisory Committee was held by facsimile on August 25, The meeting reviewed and approved to sign the written examination opinion for the interim report of ) The fifth tele-communication meeting of the fourth Supervisory Committee was held by facsimile on October 25, The meeting reviewed and approved to sign the written examination opinion for the third quarterly report of ) The fifth meeting of the fourth supervisory committee was held on the 16th floor of Chiwan Petroleum Building, Shenzhen, on November 30, The meeting examined the business and operating achievements and discussed the future development of the Company. II. Opinions Formed by the Supervisory Committee as to the Company s operation in the Reporting Period as follows: 1) The Company s decision procedures were both healthy and lawful. The Company s management systems and internal control procedures were in place. The meeting also confirmed that neither the directors nor senior managers had acted in contravention of the laws, regulations, Articles of Association or detrimental to the interest of the company. 2) The Supervisory Committee carefully reviewed the financial report of the company and confirmed that the company was in good financial situation. The meeting further confirmed that the audit report prepared by the independent auditors PricewaterhouseCoopers gave a 18

19 true and fair presentation of the Company s financial performance by offering clear opinion in the audit report for the year ) In 2006 the Company did not raise capital or engage in any acquisition and disposal of the Company s assets. 4) All the affiliated transactions in 2006 were conducted in market principle and the Company s interests were safeguarded. PART IX. Significant Events 1) The Company did not experience any significant lawsuit or arbitration in the reporting year. 2) During the reporting period, neither the director nor the senior manager was fined or penalized by Securities Supervisory and Administration Authorities of PRC. 3) The Annual Shareholders General Meeting of the year 2006 was held on May 16, The meeting reviewed and approved the resolution of: Resolution on the project of Tianjin Baowan Logistic Center. The further information was published in Securities Times, Ta Kung Pao and on February 7, ) The first extraordinary shareholders meeting of the year 2006 was held on September 25, The meeting reviewed and approved the resolution of: Resolution on the project of Langfang Baowan Logistic Center. The further information was published in Securities Times, Wen Wei Po and on July 14, ) The first extraordinary shareholders meeting of the year 2006 was held on September 25, The meeting reviewed and approved the resolution of: Resolution on the project of Kunshan Baowan Logistic Center. The further information was published in Securities Times, Wen Wei Po and on July 14, ) The Annual Shareholders General Meeting of the year 2006 was held on May 16, The meeting reviewed and approved the resolution on the Transaction of Land with Relative Party. The further information was published in Securities Times, Ta Kung Pao and on April 14, ) The eleventh tele-communication meeting of the fourth board of directors was held on August 25, The meeting reviewed and approved the resolution on the Acquisition of the 10% Equity Shenzhen Chiwan Logistic co., ltd with Relative Party. The further information was published in Securities Times, Wen Wei Po and on August 29, ) The eleventh tele-communication meeting of the fourth board of directors was held on August 25, The meeting reviewed and approved the resolution on the Financing of RMB230 million with Relative Party. The further information was published in Securities Times, Wen Wei Po and on August 29, ) The Company paid RMB670,000 to PricewaterhouseCoopers, the accounting firm has provided auditing services for twelve years continually since the company listed. 10) The Company maintained its autonomy in personnel and financial management and possesses integrated assets. 11) The Company did not entrust, contract or lease other company s assets or was entrusted, 19

20 contracted or leased with its own assets. 12) There were neither other significant contract signed nor significant guarantee event happened in the reporting year. 13) There were no change in the Company s name or stock s short form in the reporting period. 14) On June 23, 2006, the Notice was published for the changing of oversea disclosure newspaper from Ta Kung Pao to Wen Wei Po. 15) Reception, investigation and interview situation of company during report period According to pertinent regulations of listed company information disclosures direct of Shenzhen bourse and Working system in management of investor relation of company, we always carry out the principle of equity, justice and publicity when receiving, investing, interviewing and developing activities to fair play total investors, guarantee all investors enjoying right to learn the truth and other lawful rights and interests, to introduce and reflect practical situation of the company objectively, really and insider dealing. 16) During the reporting period, the Company made all necessary disclosures. No significant events that should be disclosed were missing. PART X. Financial Statements Attached Audited by PWC according to IFRS PART XI. Documents Available for Verification: 1. Original copy of Annual Report carrying the signature of the Chairman; 2. Original copy of Auditor s Statements sealed by CPA and signed by registered accountants; 3. Original copy and press release of all the documents disclosed in 2006 in the newspapers specified by the China Securities Regulatory Commission; 4. Articles of Association; 5. Other related documents. Chairman of the Board: Dr Fu Yuning Shenzhen Chiwan Petroleum Supply Base Co., Ltd. Dated: 20 th April

21 INDEPENDENT AUDITORS REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2006 Contents Independent auditors report Consolidated balance sheet Consolidated income statement Consolidated statement of changes in equity Consolidated cash flow statement Notes to the consolidated financial statements 21

22 INDEPENDENT AUDITORS REPORT PricewaterhouseCoopers 22/F, Prince's Building Central, Hong Kong Telephone (852) Facsimile (852) TO THE BOARD OF DIRECTORS OF SHENZHEN CHIWAN PETROLEUM SUPPLY BASE CO., LTD. (Incorporated as a joint stock limited company in the People s Republic of China) Report on the financial statements We have audited the accompanying consolidated financial statements of Shenzhen Chiwan Petroleum Supply Base Co., Ltd. (the Company ) and its subsidiaries (together the Group ) which comprise the consolidated balance sheet as of 31 December 2006 and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. Management s responsibility for the financial statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit. Opinion In our opinion, the accompanying consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2006, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. [18 April],

23 CONSOLIDATED BALANCE SHEET (All amounts in Rmb unless otherwise stated) ASSETS Non-current assets Property, plant and equipment 147,601, ,248,612 Investment property 293,445, ,600,874 Leasehold land 234,412, ,969,436 Progress payments for leasehold land 29,423,683 94,620,826 Construction in progress 1,357,288 84,538,559 Intangible assets 279, ,818 Investments in associates 299,085, ,966,467 Other non-current assets 203,060,000-1,208,664, ,655,592 Current assets Inventories 1,667,370 2,217,363 Trade and other receivables 31,665,702 26,645,742 Restricted cash 210, ,000 Cash and cash equivalents 42,398,837 84,995,972 75,941, ,959,077 Total assets 1,284,606, ,614,

24 CONSOLIDATED BALANCE SHEET (CONTINUED) (All amounts in Rmb unless otherwise stated) EQUITY Note Capital and reserves attributable to equity holders of the Company Share capital ,841, ,841,503 Other reserves ,115, ,305,054 Retained earnings 218,220, ,636, ,177, ,782,739 Minority interest in equity - 4,631,707 Total equity 814,177, ,414,446 LIABILITIES Non-current liabilities Borrowings ,000,000 - Deferred income tax liabilities 20 4,630,549 5,872,938 Deferred revenue 21 33,315,194 32,915, ,945,743 38,788,693 Current liabilities Borrowings ,000, ,000,000 Trade and other payables 22 58,220,368 56,790,344 Current income tax liabilities 4,262,562 5,621, ,482, ,411,530 Total liabilities 470,428, ,200,223 Total equity and liabilities 1,284,606, ,614,

25 CONSOLIDATED INCOME STATEMENT (All amounts in Rmb unless otherwise stated) Note Revenue 5 194,705, ,468,106 Cost of sales 23 (83,589,909) (73,846,187) Gross profit 111,115,850 90,621,919 Other gains - net 132,644 89,997 Administrative expenses 23 (31,664,594) (20,433,951) Operating profit 5 79,583,900 70,277,965 Financial income , ,344 Finance costs 25 (9,239,591) (1,099,607) Finance assets - net 25 (8,458,875) (812,263) Share of profit of associates 12 78,118,622 55,771,478 Profit before income tax 149,243, ,237,180 Income tax expense 26 (9,262,906) (9,432,994) Profit for the year 139,980, ,804,186 Attributable to: Equity holders of the Company 139,493, ,510,156 Minority interest 486, , ,980, ,804,186 Earnings per share for profit attributable to the equity holders of the Company (expressed in Rmb per share) - basic and dilated

26 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (All amounts in Rmb unless otherwise stated) Attributable to equity holders of the Company Share Other capital reserves (Note 17) (Note 18) Retained earnings Total Minority Interest Total equity Balance at 31 December 2004/ Balance at 1 January ,841, ,811, ,825, ,478,600 4,337, ,816,277 Profit for the year ,510, ,510, , ,804,186 Dividend relating to 2004 (Note 28) - - (50,206,017) (50,206,017) - (50,206,017) Transfer to reserves - 16,493,176 (16,493,176) Balance at 31 December 2005/ Balance at 1 January ,841, ,305, ,636, ,782,739 4,631, ,414,446 Profit for the year ,493, ,493, , ,980,741 Dividend relating to 2005 (Note 28) - - (63,099,157) (63,099,157) - (63,099,157) Transfer to reserves - 19,361,954 (19,361,954) Capital contributions Acquisition of minority interest of a subsidiary (Note 18 (d)) (5,118,565) (5,118,565) Transfer to reserves for gain on acquisition of minority interest of a subsidiary - 448,879 (448,879) Balance at 31 December ,841, ,115, ,220, ,177, ,177,

27 CONSOLIDATED CASH FLOW STATEMENT (All amounts in Rmb unless otherwise stated) Note Cash flows from operating activities Cash generated from operations ,531, ,728,470 Interests paid (8,937,510) (1,475,823) Income tax paid (11,649,707) (11,901,902) Net cash generated from operating activities 98,944, ,350,745 Cash flows from investing activities Purchases of property, plant and equipment (23,092,639) (6,311,521) Payments for construction in progress (49,432,025) (70,937,270) Payments for leasehold land (74,023,150) (2,895,506) Purchases of intangible assets (31,110) (175,475) Dividends received from an associate - 3,312,000 Proceeds from disposals of property, plant and equipment ,112 2,877,008 Long-term prepayment of leasehold land (203,060,000) - Interests received 780, ,344 Net cash used in investing activities (348,442,096) (73,843,420) Cash flows from financing activities Borrowings from holding company 230,000, ,000,000 Proceeds from bank borrowings 340,000,000 55,668,000 Repayments of bank borrowings (300,000,000) (138,668,000) Dividends paid to shareholders (63,099,157) (50,206,017) Net cash generated from/(used in) financing activities 206,900,843 (33,206,017) Net decrease in cash and cash equivalents (42,597,135) (698,692) Cash and cash equivalents at beginning of year 16 84,995,972 85,694,664 Cash and cash equivalents at end of year 16 42,398,837 84,995,

28 1 General information Shenzhen Chiwan Petroleum Supply Base Co., Ltd. (the Company ) was incorporated as a Sino-foreign equity joint venture company in Shenzhen, the People s Republic of China (the PRC ) in February On 11 May 1995, the Company obtained the approval from the Shenzhen Municipal Government for its reorganisation into a joint stock limited company. On 28 July 1995, the Company s B shares were listed for trading on Shenzhen Stock Exchange. The Company and its subsidiaries (collectively the Group ) are principally engaged in leasing of office space and warehouses, provision of management, storage and marine logistics services in the PRC. The address of the Company s registered office is Base Building, Chiwan, Nanshan District, Shenzhen, PRC. These consolidated financial statements have been approved for issue by the Board of Directors on 18 April Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ( IFRS ). This basis of accounting differs from that used in the statutory financial statements of the Company which are prepared in accordance with the Accounting Standards for Business Enterprises and the Accounting System for Business Enterprises promulgated by the State of the PRC ( PRC GAAP ). Adjustments incorporated to restate the financial statements for conformity with IFRS have not been taken up in the Company s books. The financial statements have been prepared under the historical cost convention

29 2. Summary of significant accounting policies (continued) 2.1 Basis of preparation (continued) (a) Standards, amendments and interpretations effective in 2006 but not relevant for the Company s operations The following standards, amendments and interpretations are mandatory for accounting periods beginning on or after 1 January 2006 but are not relevant to the Company s operations: IAS 19 (Amendment), Employees Benefits; IAS 21 (Amendment), Net Investment in a Foreign Operation; IAS 39 (Amendment), Cash Flow Hedge Accounting of Forecast IntraCompany Transactions; IAS 39 (Amendment), The Fair Value Option; IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts; IFRS 6, Exploration for and Evaluation of Mineral Resources; IFRS 1 (Amendment), First-time Adoption of International Financial Reporting Standards and IFRS 6 (Amendment), Exploration for and Evaluation of Mineral Resources; IFRIC 6, Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment; IFRIC 4, Determining whether an Arrangement contains a Lease; and IFRIC 5, Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds. (b) Standards, interpretations to existing standards that are not yet effective and not relevant for the Company s operations The following standards, interpretations to existing standards have been published that are mandatory for the Company s accounting periods beginning on or after 1 May 2006 or later periods that not relevant for the Company s operations: IFRS 7, Financial Instruments: Disclosures, and the complementary Amendment to IAS 1, Presentation of Financial Statements Capital Disclosures; IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies (effective from 1 March 2006); IFRIC 8, Scope of IFRS 2; IFRIC 9, Reassessment of embedded derivatives (effective for annual periods beginning on or after 1 June 2006), and IFRIC 10, Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November 2006)