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Document No. 2 for the 2006 Annual General Meeting
2006 Annual Report on the Work of the Supervisory Board
Dear Shareholders:
In 2006, the Supervisory Board held three meetings. The seventh meeting of the fourth session of the Supervisory Board was held on April 25, 2006, in the company’s fifth-floor conference room. At this meeting, the Board reviewed and approved the Supervisory Board’s Work Report for 2005; the “Supervisory Board Report” included in the Company’s 2005 Annual Report; a report on amending the Rules of Procedure of the Supervisory Board; and the audit opinions on the 2005 Annual Report and the first-quarter 2006 Quarterly Report. The eighth meeting of the fourth session of the Supervisory Board was held on August 17, 2006, in the company’s fifth-floor conference room. At this meeting, the Board reviewed and approved the Company’s 2006 Semi-Annual Report and its Summary, as well as the written audit opinions on the 2006 Interim Report. The ninth meeting of the fourth session of the Supervisory Board was held on October 24, 2006, in the company’s fifth-floor conference room. At this meeting, the Board reviewed and approved the Company’s 2006 Third-Quarter Quarterly Report and the written audit opinions on the 2006 Third-Quarter Quarterly Report.
The Supervisory Board hereby expresses the following independent opinion on the following matters:
1. Compliance with the law in the company’s operations. The company’s decision-making procedures are lawful, and a relatively comprehensive internal control system has been established. During the performance of their duties, the company’s directors and managers have not engaged in any conduct that violates laws, regulations, the company’s articles of association, or that harms the company’s interests.
2. Financial Condition of the Company. Both Dalian Hualian Certified Public Accountants LLP and PwC Zhongtian Certified Public Accountants LLP issued unqualified audit reports. The financial statements faithfully reflect the company’s financial position and operating results.
3. During the reporting period, the Company did not raise any new capital, nor did it continue to utilize funds raised in prior years.
4. During the reporting period, the company’s principal related-party transactions consisted of purchases of goods from affiliated companies. Such transactions were conducted on arm’s-length terms and did not prejudice the company’s interests.
5. The Company’s provision for asset impairment for the year 2006 was made in accordance with lawful resolution procedures and supported by sufficient supporting evidence.
Please review the above report.
May 22, 2007
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