上市公司年报（译文）

（部分）

B. The Basic of Preparing Financial Statements

As of Dec 31st 2006, the company had prepared the legal finance statements according to the nation’s accounting standards (the former “Accounting Principles and Systems”) which are applicable to urban commercial banks, including mainly Ministry of Finance’s Accounting Standards for Finance Enterprises in 2001. From Jan 1st 2007, the company begins to implement Ministry of Finance’s Accounting Standards for Business Enterprises in 2006 (the “Accounting Standards for Business Enterprises”).

When preparing this financial statement, the company has made relevant retrospective adjustments according the Accounting Standards for Business Enterprises. The balances have been adjusted to Jan 1st 2004, and all items have been re-prepared. The mainly adjusted accounting events are the followings:

1. For financial assets with large amount in single item, individual evaluations are made to consider whether there are external proofs for their depreciations. Afterwards, for financial assets with immaterial amount in single item and those without any depreciation after evaluations, compounding evaluations are made to consider whether there are external proofs for their depreciations.

2. All financial assets are divided into financial assets which are measured by their fair value and their variations are recorded in current profit/loss, investments held to maturity, loans, receivables and available-for-sale investments. The book values of financial assets (liabilities) which are measured by their fair value and their variations are recorded in current profit/loss, and available-for-sale investments have been adjusted according to their fair value.

3. All derivative financial instruments are measured by their fair values and their variations have been recorded in current profit/loss.

4. The temporary differences in book values of assets or liabilities arising from different tax calculation basis determine the relevant deferred income tax assets and liabilities.

This financial statement adopts an accrual basis in accounting records. Except for the financial assets which are measured by their fair value and their variations are recorded in current profit/loss,  available-for-sale assets and all derivative financial instruments, all accounting items in this statement are measured by their historical cots.

This financial statement is prepared on the basis of summarizing financial statements or other documents of the company’s head office, branches in Beijing and Tianjin. While summarizing these statements and documents, the major transactions and their balances between all levels of branches of the company have been offset.

This financial statement is prepared for the purpose of IPO of RMB ordinary shares (A shares) and going public of the company. And the disclosure of footnotes of this financial statement also is complied China Securities Regulatory Commission’s Rules for the Compilation of Information Disclosures by the Companies That Offer Securities to the Public (No. 15) – General Rules for Financial Statements, and (No. 18) – Special Rules for Information Disclosures by the Commercial Banks.

C. The Major Accounting Policies and Estimation

(A) The Major Accounting Policies

1. Fiscal Year

The company’s fiscal year is from Jan 1st to Dec 31st on Gregorian calendar.

2. Base Currency for Recording

The company’s base currency for recording is RMB.

3. Accounting Method for Foreign Currency Transaction and Transaction of Foreign Currency Statements

The items in financial information are recorded in the currency (the functional currency) which the company uses in its basic operating economic environment. The company’s functional currency and base currency is RMB.

When foreign currency transaction takes place, the recording rates on this transaction day used to recording exchange incomes or losses because of such foreign currency transaction and those because of converting the monetary assets and liabilities in foreign currency into base currency for recording are separately the exchange rates on this transaction day and on balance sheet date. For the income and expenditure items measured in foreign currencies, their exchange rates are the spot rates on transaction day and the transaction incomes or losses are recorded in income statements.

The non-monetary items, such as tradable financial assets, their exchange differences are recorded in profit/loss of fair value variation, and for available-for-sale investments, their transaction differences are recorded in their net variation of owner’s equity.

4. Cash and Cash Equivalent

In cash flow statement, cash and cash equivalent mean the cash and monetary assets within 3 months before initial maturity date, including deposits in central bank (exclude legal reserves), deposits in other banks, loans to other banks, purchase restituted assets and short-term notes.

5. Financial Assets

(1) Transaction Recoding Date

The company will confirm the purchase or sale of financial assets on transaction day, namely the date when the company promises to purchase or sell financial assets.

(2) Classifications, Confirmation and Measurement of Financial Assets

At initial confirmation, financial assets can be divided into tradable financial assets, investments held to maturity, loans, receivables and available-for-sale investments. The dividing of financial assets is dependent on the purpose and ability of holding such assets by the company.

① Tradable Financial Assets

If the company’s main purpose for taking financial assets is to purchase or sale them in the near future, or there are any proofs showing that the company obtains part of identifiable financial instruments combination for the purpose of short-term profit, such assets will be divided as financial assets held for the purpose of transaction. Except for derivative financial instruments for the purpose of hedging, the other assets should be divided as tradable financial assets.

The initial confirmation and follow-up measurement for these assets are their fair value. The transaction fee on transaction day, namely the date when the company promises to purchase or sale the assets will be recorded in current profit/loss.

The profit/loss for these assets’ fair value variations (exclude accrued interests) will be recorded in investment income and the profit/loss of fair value variations. The accrued interest will be recorded in interest income.

② Investments Held to Maturity

Investments held to maturity mean non-derivative financial assets which have fixed maturity date, recoverable or determinable amount and been able to be held to maturity date by the company with clear purpose. The initial confirmed amount of investments held to maturity is the sum of fair value and relevant transaction fee on transaction day. This kind of financial assets adopt an accounting method of effective rate of interest and are measured by amortized cost on balance sheet date. Comparing with the total amount of investments held to maturity before being sold or re-divided, if the amount of any investment held to maturity which the company will sell or re-divide as available-for-sale asset before the maturity date within a fiscal year is comparatively bigger, the remained part of such asset should not be re-divided as available-for-sale asset and must not be divided as investment held to maturity in current fiscal year and the whole two fiscal years followed.

③ Loans and Receivable Investments

Loan and receivable investments mean non-derivative financial assets which have no quotations in active market but have fixed recoverable or determinable amounts, including customers’ loans and certificate treasury investments. This kind of financial assets adopt an accounting method of effective rate of interest and are measured by amortized cost less their depreciation reserves on balance sheet date.

④ Available-for-Sale Investments

Available-for-sale investments include the non-derivative financial assets which are appointed to be available for sale at initial confirmation and the financial assets which are not divided as other kind of assets. Available-for-sale investments are recorded in their fair values on balance sheet date and the estimation incomes or losses for fair value variations should be confirmed in owner’s equity prior to such financial assets are to be transferred or considered as variations. After such financial assets are indeed transferred or considered as variations, the accumulated estimation incomes or losses confirmed in owner’s equity before should be recorded in income statements.

(3) Confirmation of Financial Assets’ Terminations

When the right to get cash flow from financial assets has been expired or transferred, and the company has transferred almost all risks and rewards, the financial assets’ terminations are confirmed.

(4) Confirmation of Financial Assets’ Fair Value

The fair value of financial assets in active market is confirmed by the quotation in active market. For financial assets in inactive market, the company will confirm their fair value by using estimating techniques. Such techniques include references of the prices which are quoted in recent market transactions by each party who is familiar with conditions and trades willingly and the current fair value of other financial assets with the same substance, and the method of discounted cash flow and the model of option pricing, at the same time, using to the most extent more data of the market but less data of the company itself.

资料来源：北京华文翻译公司
 
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