京粮控股(000505)珠江控股2001年年度报告（英文版）

HAINAN PEARL RIVER HOLDINGS CO., LTD. 2001 ANNUAL REPORT Important: Board of Directors of HaiNan Pearl River Holdings Co., Ltd. (hereinafter referred to as the Company) individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. This annual report summary was abstracted from the full text, so investors are suggested to read the full text for more detailed information. Director Yang Changwei and Director Yang Hong were absent from the recent Board meeting. I. COMPANY PROFILE 1. Legal Name of the Company In Chinese: 海南珠江控股股份有限公司 In English: HaiNan Pearl River Holdings Co., Ltd. 2. Registered Address of the Company: 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue, Haikou Office Address of the Company: 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue, Haikou Post Code: 570125 E-mail: hnpearl@public.hk.hi.cn 3. Legal Representative: Zheng Qing 4. Secretary of the Board of Directors: Feng Pai Authorized Representative in Charge of Securities Affairs: Gu Lirong Liaison Address: 29/F, Royal Empire Building, Pearl River Plaza, Binhai Avenue, Haikou Tel: (86) 898-68583723 (86) 898-68581888 Fax: (86) 898-68581026 5. Newspapers Chosen for Disclosing the Information: Securities Times and Ta Kung Pao Internet Website Designated by CSRC for Publishing the Annual Report of the Company: http://www.cninfo.com.cn The Place Where the Annual Report is Prepared and Placed: Secretariat of Board of Directors 6. Stock Exchange Listed with: Shenzhen Stock Exchange Short Form of the Stock: Pearl River Holdings, Pearl River B Stock Code: 000505, 200505 7. Date and Place of the Initial Registration: Jan. 1, 1992; Haikou, Hainan Registration Number of Enterprise Juristic Person’s Business License: 20128455-6 Registration Number of Taxation: 460100800600377 The Certified Public Accountants Engaged by the Company: Name: Hainan Cong Xin Certified Public Accountants 1 Address: Room 1202 of CMEC Buliding, Guomao Av., Haikou II. FINANCIAL HIGHLIGHTS AND BUSINESS HIGHLIGHTS (I) Particulars about Profit as of the Report Year (Unit: In RMB) Total profit －４９，８９３，７０６ Net profit －３８，２１４，３９６ Net profit after deducting non-recurring gains and losses －２０，２５２，６７０ Profit from main business lines １９，３１２，９２３ Profit from other business lines １，３９４，０９３ Operating profit －２９，７２４，２２２ Investment income －１６，２６０，７３４ Net income / expenditure from non-operating －３，９０８，７５０ Net cash flows arising from operating activities －１７，５９１，８１７ Net increase in cash and cash equivalents －３５，３１８，２０５ Note: Item and amount of deducted non-recurring gains and losses: Item deducted Amount (RMB ‘000) (1) Income from equity transfer of Yanzhou Dabao Cement Factory 827,000 (2) Net income / expenditure from non-operating -3,908,750 (3) Dilution of investment balance －１，４６１，８３３ (4) Provisions for devaluation of long-term investment －１３，１７９，２９６ (5) Provisions for price falling of inventory － ２３８，８４７ (II) Major Accounting Data and Financial Indexes Over the Past Three Years ended the report year: 1. Major Accounting Data and Financial Indexes Unit: In RMB 2000 Item 2001 1999 Before adjustment After adjustment Income from main business lines 91,705,847 37,217,630 37,217,630 40,180,269 Net profit -38,214,396 62,724,718 60,471,973 27,494,827 Total assets 716,629,413 804,014,294 773,127,931 899,605,994 Shareholders’ equity 390,482,798 463,705,167 434,004,311 398,498,249 Earnings per share (Fully diluted) -0.10 0.17 0.16 0.07 Earnings per share (Weighted average) -0.10 0.17 0.16 0.07 Earnings per share after deducting the -0.05 -0.05 -0.05 -0.11 non-recurring gains and losses Net assets per share 1.03 1.23 1.15 1.06 Net assets per share after adjustment 0.95 1.17 1.09 1.02 Net cash flows per share arising from -0.046 0.014 0.014 0.104 operating activities Net return on equity (%) -9.79 13.53 13.93 6.65 2. Profit as calculated according to Regulations on the Information Disclosure of Companies Publicly Issuing Shares (No. 9) released by CSRC: Profit Net return on equity (%) Earnings per share as of the report period Fully diluted Weighted average Fully diluted Weighted average Profit from main business ４．９５ ４．６８ ０．０５１ －０．０５４ lines Operating profit －７．６１ －７．２１ －０．０７９ －０．０７９ Net profit －９．７９ －９．２７ －０．１０１ －０．１０１ Net profit after deducting －５．１９ －４．９１ －０．０５４ －０．０５４ non-recurring gains and 2 losses (III) Notes to difference in the net profit as audited according to CAS and IAS As audited by Hainan Cong Xin Certified Public Accountants according to CAS and Grant Thornton Certified Public Accountants under IAS, net profit of the Company as of 2001 was respectively RMB –38.214 million and RMB –60.51 million. The difference was mainly due to follows: Unit: In ’000 RMB (Loss)/Profit for the Net assets as at year ended 31 31 December, December, 2001 2001 As reported in statutory accounts under CAS 38,214 390,483 Previous adjustment (35,742) Accounting renewed (73,956) 390,483 Impact of other adjustment according to IAS (1) Written back of costs of property, plant and equipment and 10,517 corresponding accumulated depreciation (2) (Written back of) provision for doubtful debts (5,600) (14,600) (3) Adjustment on capitalization of interest charges arising from borrowings used to finance the construction-in-progress and 7,684 (10,987) properties under development during the construction period and corresponding depreciation (4) Unrecognized loss of consolidated subsidiaries 6,007 (5) Previous years' unrecognised losses of a subsidiary which has 6,042 already been taken up in previous years under IAS (6) Adjustment to income from an associated company 9,929 (7) Adjustment to income from debt restructuring 699 (8) Others 111 2,888 The restatement of related data for the Company and its affiliated 60,510 352,079 company (IV) Particulars about Change in Shareholders’ Equity Share Capital public Statutory Investment Losses Surplus public Retained profit Shareholders’ Items capital reserve public welfare unrecognized reserve (RMB) (RMB) equity (RMB) (share) (RMB) funds (RMB) (RMB) Amount at the year-begin 376650800 283154743.16 60448768.07 49405780.55 -5453705.22 -331202074.59 434004311.97 Increase as of the period 699411.38 699411.38 Decrease as of the period 6006559.80 38214395.94 44220955.74 Amount at the year-end 376650800 283854184.54 60448768.07 49405780.55 -11460265.02 -369416470.53 390482797.61 Reason for change: Increase in capital public reserve was due to the liabilities reorganization. Increase in investment losses unrecognized was because of unconfirmed losses of the investee company. Decrease in retained profit was due to deficits suffered in the report year. III. CHANGE IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS (I) Change in share capital Statement of change in share (Unit: share) Amount at the Amount at the year-begin year-end . Shares not in circulation 1. Promoters’ shares Including: Domestic juristic person’s shares 206,744,976 206,744,976 2. Employees’ shares Total shares not in circulation 206,744,976 206,744,976 3 . Shares in circulation 1. Domestically listed RMB ordinary shares 113,405,824 113,405,824 2. Domestically listed foreign shares 57,500,000 57,500,000 Total listed shares 170,905,824 170,905,824 . Total shares 377,650,800 377,650,800 (II) Particulars about shareholders 1. By the end of the year 2001, the Company had totally 59483 shareholders of A- share and 4869 shareholders of B-share. 2. Particulars about shares held by the top ten shareholders of the Company: No Shares held as Proportion of the Type of share Shareholders’ names total share (%) . end of the year Beijing Wanfa Real Estate Development 112,628,976 29.82 Juristic person’s Co., Ltd. shares Guangzhou Lishengde Investment Co., 17,000,000 4.50 Juristic person’s Ltd. shares Henglong International Co., Ltd. 13,570,000 3.59 Juristic person’s shares Shanghai Zhongnan Investment and 11,000,000 2.91 Juristic person’s Management Co., Ltd. shares Hainan Development Bank Haikou 7,820,000 2.07 Juristic person’s Branch shares Hebei Securities Co., Ltd. 5,390,000 1.43 Juristic person’s shares Guangzhou Pearl River Foreign Capital 4,896,000 1.30 Juristic person’s Contraction Design Institute, Hainan shares Branch China Ping An Insurance 3,450,000 0.91 Juristic person’s shares Shenzhen Yueyin Science and 2,660,000 0.70 Juristic person’s Technology Co. Ltd. shares Shenzhen Gintian Industrial Co., Ltd. 2,300,000 0.61 Juristic person’s shares Notes: (1) In the report year, there is no change in the holding shareholder; and there exist no association relationship among the top ten shareholders. (2) In the report year, the second shareholder Yangpu Yinxin Consultation Co., Ltd., original holding 6.21% of the total shares of the Company, transferred 21.46 million juristic person’s share in the report period. The third shareholder Guangzhou Pearl River Foreign Capital Contraction Design Institute, Hainan Branch, original holding 5.8% of the total shares of the Company, transferred 4.5% of shares to Guangzhou Lishengde Investment Co., Ltd.. (3) The shares held by the top ten shareholders had never been pledged or frozen except that 2,300,000 shares held by Shenzhen Gintian Industrial Co., Ltd. were frozen. 3. Particulars about the control shareholder The first shareholder of the Company is Beijing Wanfa Real Estate Development Co., Ltd. (“Wanfa Real Estate”), which was established in Nov. 1995 with registration capital of RMB 280,000,000 and legal representative as Meng Qiao. As a joint-stock company, it is principally engaged in the development and operation of real estate. Its major shareholders are Beijing Xinxing Real Estate Development General Company, Beijing Jiaheng Taishi Industrial Co., Ltd., Beijing Shengcai Science and Trade Co., 4 Beijing Jiuzhu Property and Management Co., Ltd. and Beijing Yitai Co.. The actual controller of the Company’s control shareholder, Beijing Xingxin Real Estate Development General Company, (“Xingxin Real Estate”) is one of the shareholders of Beijing Wanfa Real Estate Development Co., Ltd.. established in 1992 with registration capital of RMB 10,000,000 and legal representative as Zhengqing. The company is principally engaged in the development and operation of real estate as a collective enterprise. IV. PARTICULARS ABOUT DIRECTOR, SUPERVISOR AND SENIOR EXECUTIVES AND STAFF 1. Directors, supervisors and senior executives (1) Particulars about directors, supervisors and senior executives in office at present Shares in hold at Increase or Shares in hold Name Title Gender Age Office term the year-begin decrease in at the year-end Notes (share) this year (share) Director of Beijing Wanfa Real Estate., increase of Zheng Chairman of the Board Jun. 1999 – number of holding shares is Male 35 0 0 0 Qing General Manager Jun. 2002 due to purchase of shares in circulating, the said share are frozen. Li Jun. 1999 – Deputy General Manager Director Female 48 0 0 0 Jianhua Jun. 2002 of Wanfa Real Estate Wu Jun. 1999 – Director Male 50 0 0 0 Xiaojing Jun. 2002 Shi Jun. 1999 – Deputy General Manager Director Male 37 0 0 0 Yonghui Jun. 2002 of Wanfa Real Estate Peng Jun. 1999 – Director Male 44 0 0 0 Shuyin Jun. 2002 He resigned Director in 10th meeting of 3rd Board Liu Jun. 1999 – of Directors; the said Director Male 53 0 0 0 Changwei Jun. 2002 proposal is subject to Shareholders’ General Manager for approval. He resigned Director in 10th meeting of 3rd Board Yang Feb.6, 2001 of Directors; the said Director Female 33 0 0 0 Hong – Jun. 2002 proposal is subject to Shareholders’ General Manager for approval. Dec. 1999 – He Jie Director Female 31 0 0 0 Jun. 2002 Wang May 2001 – Independent Director Male 43 0 0 0 Zhigang Jun. 2002 Convener of the Liu Jun. 1999 – Supervisory Male 38 0 0 0 Wenjie Jun. 2002 Committee She Jun. 1999 – Supervisor Female 48 0 0 0 Jianhui Jun. 2002 He resigned Supervisor in 5th meeting of 3rd Supervisory Committee; Wen Jun. 1999 – Supervisor Male 61 0 0 0 the said proposal is Zhaolong Jun. 2002 subject to Shareholders’ General Manager for approval. In the report year, he was Jul. 2001 – Xu Jingui Supervisor Male 32 0 0 0 elected as employee’s Jun. 2002 supervisor. Chen Deputy General Jun. 1999 – Male 40 0 0 0 Xiaoqing Manager Jun. 2002 Secretary of the Board Jun. 1999 – Feng Pai Administration Male 38 0 0 0 Jun. 2002 Supervisor Chen Financial Chief Male 45 2001 – 2004 0 0 0 Binlian Supervisor (2) Particulars about the annual salary 5 Directors, supervisors and senior executives in office draw their annual salary based on the Company’s Wage Management System. At present, the Company has not established Allowance System for Independent Director. One director, one supervisor and three senior executives draw the annual salary from the Company totaling RMB 630,000. Of them, one enjoys an annual salary between RMB 200,000 to RMB 250,000; one enjoys an annual salary between RMB 150,000 to RMB 200,000; two enjoy an annual salary between RMB 50,000 to RMB 100,000; one enjoys an annual salary under RMB 50,000. The total annual salary of the top three senior executives amounts to RMB 510,000. Director Li Jianhua, Wu Xiaojing, Shi Yonghui, Peng Shuyin, Liu Changwei, Yang Hong and He Jie, Independent Director Wang Zhigang, Supervisor Liu Wenjie, She Jianhui and Wen Zhaolong receive no pay from the Company. (3) In the report year, Dir. Yang Xu, Dir. Chen Binlian, Supervisor Zhu Biqing and Supervisor Wang Binjian resigned from their respective position due to work need. To fill the vacancy, Yang Hong, Wang Zhigang and Xu Jingui were respectively engaged as director, independent director and employees’ representative supervisor. (4) In the report year, the Company has not dismissed the General Manager or the Secretary of the Board. Feng Pai, Chen Binlian and Wang Bin were engaged as administration supervisor, financial chief supervisor and real estate chief supervisor respectively. . V. ADMINISTRATIVE STRUCTURE 1. Administrative Structure of the Company Strictly according to relevant regulations of PRC Company Law, Securities Law and CSRC as well as requirements of Rules of Shenzhen Stock Exchange for Stock Listing, the Company, since its listing, established the modern enterprise system, kept on improving the legal person administrative structure, standardizing operation, and reinforcing information disclosure, embodied in the actual operation its compliance with the basic principles and contents of Administrative Rules for Listed Companies as issued by CSRC and State Economic and Trade Commission, and kept on filling in the gap and making improvement. (1) According to requirements of Administrative Rules for Listed Companies as well as Normative Opinions of the Shareholders’ General Meeting and Guide Opinions of Independent Directors, the Company made important revision on Articles of Association again (subject to approval by shareholders’ general meeting), clarified investment limit of authority for the Board of Directors, and further standardized the Company’s actions so as to ensure a good legal person administrative structure. (2) The Company ensures that all the shareholders, especially medium or small shareholders are equal and they could enjoy their full rights. The Company has revised the Rules of Procedures of the Shareholders’ General Meeting (subject to approval by shareholders’ general meeting, and has strictly standardized convening, holding, proposing, discussing and voting of the Shareholders’ General Meeting. (3) The number of personnel of the Board of Directors and the Supervisory Committee and personnel formation are in line with laws and legislations including PRC Company Law etc. and regulations of Articles of Association. Directors and supervisors perform their duties in a diligent, honest and reliable manner. The Company revised the Rules of Procedures of the Board of Directors and the Rules of Procedures of the Supervisory Committee so as to ensure that the Board of Directors and the Supervisory Committee function in an effective and standardized way. 6 (4) The Company has been fully respecting and safeguarding the legal rights and interests of banks and other creditors, staff, consumers and communities of related interests, developing the Company in a consistent and healthy way, and attaching importance to social responsibilities of the Company. (5) The Company has been implementing obligation for consistent information disclosure strictly according to laws and legislations, and has been disclosing information in a truthful, accurate, complete and timely manner. (6) The company is studying to make performance evaluation, encouragement and binding mechanism for directors, supervisors and managers. 2. Independent Directors The Company added “the independent director system” when making revision on Articles of Association. In the reporting year, the Company engaged one independent director who seriously performed his duties and exerted full play of his role as independent director. The Company will engage enough independent directors so as to meet the requirement in the stated period. 3. The Company and the Controlling shareholder The Company is separated from its first large shareholder - Beijing Wan Fa Real Estate Development Co., Ltd. in personnel, assets, finance, organization and business. They made business accounting independently, and undertook responsibilities and risks independently. VI. BRIEFINGS ON THE SHAREHOLDERS’ GENERAL MEETING (I) The public notice on holding the 1st Provisional Shareholders’ General Meeting of 2000 was published in the Securities Times dated December 26, 2000. The meeting was held in Haikou Baohua Seaview Hotel on February 9, 2001, in which following resolutions were passed: 1. Approved the Proposal on Developing Wuhan Xudong Jinhu Resident District (name not defined); 2. Approved the Proposal on Changing of Directors. The resolutions were published in Securities Times dated February 10, 2001. (II) The public notice on holding the Shareholders’ General Meeting of 2000 was published in Securities Times dated March 30, 2001. The meeting was held in Haikou Baohua Seaview Hotel on May 11, 2001, in which the following resolutions were passed: 1. Approved 2000 Work Report of the Board of Directors 2000; 2. Approved 2000 Financial Report of Actual Budget; 3. Approved 2000 Profit Distribution Preplan; 4. Approved 2000 Work Report of the Supervisory Committee; 5. Approved the Proposal on Amendment of the Articles of Association; 6. Approved the Proposal on Changing of Directors; Mr. Chen Binglian resigned his post as director, and Mr. Wang Zhigang was elected independent director; 7. Approved the Proposal on Changing of Supervisors Wang Bin and Zhu Biqing resigned their post as supervisor so that number of the Supervisory Committee members decreased from 5 to 3. The resolutions were published in Securities Times dated May 12, 2001. VII. REPORT OF THE BOARD OF DIRECOTRS (I) Operation Principally engaged in the development and operation of real estate, the Company actively carried out the prophase work of its new projects in the report period, laying a solid foundation for its further development in terms of main business. 7 1. In respect of business in Wuhan: the Company established Hubei Pearl River Real Estate Development Co., Ltd., which conducted the prophase work for the new project in spite of the tough negotiation on land assignment. 2. In respect of business in Sanya: after over one year’s sophisticate prophase preparation for Pearl River International Holiday Inn, the Company made a practical breakthrough with construction bidding completed and underground earthwork settled. 3. The Company enjoyed a improvement in sales revenue and profit from main business lines through reinforcing distribution of unsold properties. 4. Taking the favorable opportunity of recovering of real estate market in Hainan, the Company attached great emphasis on the production and sales of architecture materials represented by tubular pipe, which resulted in the obvious improvement in market share and profitability. (II) Segment Operation Achievement A. Particulars about business generating over 10% of the income from main business line Unit: in RMB’000 Sales revenue Sales cost Gross profit rate (%) Real estate 39,810 28,210 23.63 Architecture materials 39,340 31,600 19.52 B. Main business of the Company located in Hainan district. (III) Operation Achievement of Wholly Owned and Partially Controlled Subsidiaries Registered Equity Total Net profit Principal Name capital in hold assets (RMB’000) activities (RMB’000) (%) (RMB’000) Shanghai Real Estate Branch, Real estate Hainan Pearl River Industrial 40,000 100 75,160 -6,010 development Co., Ltd. Hainan Pearl River Property & Property & hotel 1,000 90 9,030 -330 Hotel Management Co., Ltd. management Hainnan Pearl River Tourism service 5,000 100 1,320 20 International Travel Agency Hainan Pearl River Industrial Construction 800 100 490 -10 Construction Supervision Co. supervision Hainan Pearl River Tubular Production and 3,000 100 53,380 4,300 Pipe Co., Ltd. sale of tubular pipe Beijing Xinliji Vacuum Glass R&D of vacuum 25,000 57.8 15,530 -11,240 Technology Co., Ltd. glass Hubei Pearl River Real Estate Real estate 20,000 85 19,280 -730 Development Co., Ltd. development Qingdao Xinliji Technology Production and Application Co., Ltd. 1,000 52 9,490 18,770 sales of vacuum glass Hainan Pearl River Tubular Pipe Co., Ltd. increased its registered capital from RMB 10 million to RMB 30 million. Principally engaged in the production and sales of tubular pipe, the company enjoyed a large market share in Hainan province and most key provincial projects and large-sized real estate projects employed the company’s products. In the report period, turnover, sales revenue and profit of the company were improved by great margin. (IV) Major Suppliers and Customers A. The calculated purchase amount to the top five suppliers, RMB 8.06 million, accounts for 32.25% of the total purchase amount of the Company in the report period. B. The calculated sales amount to the top five customers, RMB 55.04 million, 8 accounts for 60.02% of the total sales volume. (V) Investment 1. Equity investment A. In the report period, the Company invested RMB 17 million to incorporate Hubei Pearl River Real Estate Development Co., Ltd. with registered capital of RMB 20 million including 85% from the Company, mainly engaging in the development and operation of real estate projects in Wuhan. B. In the report period, the Company invested RMB 14.45 million to incorporate Beijing Xinliji Vacuum Glass Technology Co., Ltd. with registered capital of RMB 25 million including 57.8% from the Company, mainly engaging in the R&D, development and sales of vacuum glass. C. In the report period, the Company invested RMB 15 million to participate in the capital increase of Beijing Baili Net Technology Co., Ltd. from RMB 5 million to RMB 20 million. The Company held totally 25% of the share capital of the Company and by the end of the report period; the Company has injected RMB 5 million. D. In the report period, the Company purchased 40% equity of Beijing Feikai Biology Technology Co., Ltd. at the price of RMB 13.45 million. By the end of the report period, the Company has injected RMB 5 million at the 1st phase payment. Registered capital of the company was RMB 15 million and principal engagement was the R&D and production of hog cholera bacteria. E. In the report period, the Company purchased 10% equity of Zhongwangcu Technology Investment Co., Ltd. at the price of RMB 10 million. Total registered capital of the company was RMB 88 million. F. Hainan Tubular Pipe Co., Ltd., a subsidiary of the Company, repaid its accounts due to the Company totaling RMB 20 million with its equity in the report period. G. Beijing Xinliji Vacuum Glass Technology Co., Ltd., a shareholding subsidiary of the Company, purchased 90% equity of Qingdao Xinliji Technology Application Co., Ltd. at the price of RMB 18.44 million, mainly engaging in the R&D, production and sales of vacuum glass. 2. The Company raised no proceeds in the report period and no previously raised proceeds were applied in the report period. 3. The Company invested in no material projects; the Wuhan project and the Sanya project did not required large amount of investment now. (VI) Financial Highlights Unit: in RMB’000 The Year The Year Items +/- (%) Causes 2001 2000 Total assets ７１６，６２９，４００ ７７３，１２７，９００ －７．３ Long-term liabilities 0 0 Shareholders’ equity ３９０，４８２，８００ ４３４，００４，３００ －１０．０３ Deficits as of 2001 and withdrawal of provisions for devaluation of assets Profit from main business lines １９，３１２，９００ －２，９３５，８００ Increase in profit realized by Hainan Tubular Pipe Co., Ltd. Net profit －３８，２１４，４００ ６０，４７２，０００ Decrease in investment income (VII) Operation Plan for the New Year 1. To expedite the construction of Sanya Hotel Project with ensured quality, complete the construction of main body in 2002; 2. To speed up the prophase preparation for Wuhan Project including designing, planning and application, etc., strive for early construction; 3. To continually reinforce the management over the subsidiaries and investment and improve the operation of wholly and partially owned subsidiaries. (VIII) Implementation of Resolutions of the Shareholders’ General Meeting by the Board of Directors 9 In the report period, the Company had no plan for profit distribution, capital public reserve transferring into share capital, share allotment or additional issuance. (IX) Preplan of Profit Distribution or Public Reserve Transferring into Share Capital The Company suffered a deficit in the report period, so it decided to conduct neither profit distribution nor capital public reserve transferring into share capital. VIII. REPORT OF THE SUPERVISORY COMMITTEE (1) Particulars about the meetings of the Supervisory Committee In the report year, the Company held 2 meetings of the Supervisory Committee. The 4th Meeting of the 3rd Supervisory Committee was held in Sanya on March 26, 2001, in which resolutions were made as follows: (1) Reviewed and passed 2000 Work Report of the Supervisory Committee; (2) Reviewed and passed 2000 Annual Report and the Summary; (3) Reviewed and passed 2000 Financial Report of Actual Budget; (4) Reviewed and passed the Proposal on Changing of Supervisors; The resolutions were published in Securities Times dated March 30, 2001. The 5th Meeting of 3rd Supervisory Committee was held in Sanya dated July 26, 2001, in which resolutions were made as follows: (1) Reviewed and passed 2001 Interim Report; (2) Reviewed and passed the Proposal on Changing of Supervisors; (3) Reviewed and passed the Proposal on Modifying Internal Control System; (4) Reviewed and passed the Special Report on Provision for Fixed Assets Devaluation; (5) Reviewed and passed the Special Report on Offsetting Part of Long-term Investment. The resolutions were published in Securities Times dated July 28, 2001. 2. According to relevant national laws and legislations, the Supervisory Committee has been supervising the Company to see if it operated in conformity to law. It believes the Company’s decision-making procedures are legitimate, and directors, senior executives have neither violated laws, legislations and the Articles of Association nor damaged the Company’s interests during their performance of obligations. The Supervisory Committee checked up the financial status, and believes the Company’s financial report has truly reflected the financial status and management results. The Supervisory Committee believes the Company purchased and sold assets at reasonable transaction prices, and there was no inside trading, no damaging of part of shareholders’ rights and interests or runoff of the Company’s assets. The Supervisory Committee believes that correlative transactions are fair and reasonable, which haven’t damaged the Company’s interests. The Supervisory Committee believes that the Company has established rather perfect internal control system, and the procedures and evidences regarding provision for assets devaluation and offset are legal and adequate. IX. SIGNIFICANT EVENTS 1. In the report year, the Company was not involved in any significant lawsuit or arbitration. 2. Events on purchase and sale assets: (1) In the report year, the Company acquired 40% of equity from Beijing Fei Kai Biological Technology Co., Ltd. at the price of RMB 13,450,000, and paid the first installment of RMB 5 million by the end of the report year. Fei Kai has registration capital of RMB 15 million and is mainly engaged in research and production of hog 10 cholera vaccine. (2) The Company acquired 10% of equity from Zhongwangcu Science and Technology Investment Co., Ltd at the price of RMB 10 million, which has a registration capital of RMB 88 million. (3) The Company’s wholly owned subsidiary, Beijing Xinliji Vacuum Glass Technology Co., Ltd paid RMB 18,440,000 to acquire 90% of equity from Qingdao Xinliji Technical Application Co., Ltd., which is mainly engaged in research, development, production and sales of vacuum glass. 1. Correlative events occurred in the report year: (1) In November of 1999, Beijing Xin Xing Real Estate Development Head Company entrusted Zhong Xin Industrial Trusteeship Company to offer RMB 50 million and RMB 40 million of trust loans to the Company, which was passed in the Board meeting and the Shareholders’ General Meeting. The loans were renewed for one year in 2000 and 2001 respectively. (2) In January of 2001, Beijing Xin Xing Real Estate Development Head Company transformed RMB 37 million of debts owed by the Company to trust loans due to Zhong Xin Industrial Trusteeship Company. (3) In December of 2001, Beijing Xin Xing Real Estate Development Head Company offered guarantee for a 9-month loan of RMB 47,500,000 granted by Communication Bank Hainan Branch of to the Company. 4. In the report year, the Company had no significant contracts of keeping as custodian, contracting and leasing assets, offering guarantee or entrusting others to manage assets. 5. In the report year, the Company or shareholder holding over 5% of shares hadn’t made any promises. 6. In the report year, the Company hadn’t changed Certified Public Accountants. Hainan Cong Xin Certified Public Accountants undertook auditing of A shares, and their remuneration was RMB 250,000 (excluding traveling fees); Grant Thornton Certified Public Accountants undertook auditing of B shares, and their remuneration was HK$ 400,000 (including traveling fees). 7. In the report year, the Company, the Board, directors and senior executives had neither been investigated or punished by CSRC or superintending and administration authorities etc., nor been criticized or condemned publicly by Shenzhen Stock Exchange. 8. The impact of China’s Entry into WTO on the Company’s Future Management: The Company is mainly engaged in real estate business, which carries with strong significance according to regions and keeps high degree of openness and absorbing foreign funds. Thus it is estimated that China’s entry into WTO will not impact much on the domestic estate business in the short run. Besides, tariff of imported construction materials and equipment will be greatly reduced in the future so that it is beneficiary to reduce development cost of real estate. X. FINANCIAL REPORT (I) Financial Statements (please refer to the attachment) (II) Notes to Financial Statements 1. Hainan Cong Xin Certified Public Accountants issued standard Auditors’ Report without conserved opinion for the Company’s financial statements. 2. Changes in accounting policy The Company previously implemented the Accounting Regulation for Joint Stock Enterprises and the relevant regulations, while started to implement the Accounting Regulations for Enterprises and the supplementary regulations from Jan. 1, 2001 pursuant to CKZ (2000) No. 25 Document, Circular on Printing and Distributing 11 ‘Accounting Regulations for Enterprises’, and CKZ (2001) No. 17 Document, Regulations concerning the Policy Cohesion in Implementing ‘Accounting Regulations for Enterprises’ and other relevant regulations released by the Ministry of Finance. Changes in accounting policy are mainly in following aspects: (1) Before adjustment: fixed assets at the end of the report period were stated at the historical cost. After adjustment: fixed assets at the end of the report period were stated at the lower between the carrying amount and the recoverable amount and provisions for devaluation of assets were withdrawn based on the single item. (2) Before adjustment: No provisions for construction in progress at the end of the report period were withdrew. After adjustment: provisions for construction in progress at the end of the report period were withdrew at the balance of its carrying amount less its recoverable amount based on the single item. (3) Before adjustment: No provisions for intangible assets at the end of the report period were withdrew. After adjustment: provisions for intangible assets at the end of the report period were withdrew at the balance of its carrying amount less its recoverable amount based on the single item. (4) Before adjustment: organization expenses are amortized in five years equally. After adjustment: organization expenses are counted under expense as of the first month of operation at one-off. Due to above changes in accounting policy, the Company had made retroactive adjustments on the retained profit as well as other items as at the beginning of the year, which caused an accumulative effect of RMB 30,868,046.87, provisions for devaluation of fixed assets. Accordingly, retained profit as of 2000 and as at the beginning of the 2001 was decreased by RMB 30,868,046.87. 4. Changes in consolidation scope Three companies were increased in the Company’s consolidation, namely, Hubei Pearl River Real Estate Development Co., Ltd., Beijing Xinliji Vacuum Glass Technology Co., Ltd. and Qingdao Xinliji Technology Application Co., Ltd. XI. DOCUMENTS FOR REFERENCE 1. The accounting report carried with signatures and seals of legal representative, financial person in charge, and accounting clerk; 2. The master copy of auditors’ report carried with seal of Certified Public Accountants and signatures and seals of certified public accountants; 3. All the master copies of documents and original copies of public notices publicly disclosed in Securities Times in the report year. Board of Directors of HaiNan Pearl River Holdings Co., Ltd. April 19, 2002 12 Attachment: AUDITORS' REPORT TO THE MEMBERS OF HAINAN PEARL RIVER HOLDING COMPANY LIMITED (incorporated in the People's Republic of China with limited liability) We have audited the financial statements of Hainan Pearl River Holding Company Limited (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2001 on pages 2 to 19 which have been prepared in accordance with International Accounting Standards. The financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing issued by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the financial statements give a true and fair view of the state of the Group's affairs as at 31 December 2001 and of the Group's loss and cash flows for the year then ended. Grant Thornton Certified Public Accountants Hong Kong 16 April 2002 13 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 H AINAN PEARL R IVER HOLDING COMPANY LIMITED Consolidated Statement of Income For the year ended 31 December 2001 Notes 2001 2000 RMB'000 RMB'000 Turnover 4 91,706 22,878 Cost of sales (72,393) (36,737) Gross profit/(loss) 19,313 (13,859) Other income 6 4,345 105,675 Selling, general and administrative expenses (74,707) (28,943) (Loss)/Profit from operations (51,049) 62,873 Net finance costs 7 (13,003) (25,692) (Loss)/Income from associates (2,334) 20,000 (Loss)/Profit before taxation 5 (66,386) 57,181 Taxation 8 - - (Loss)/Profit before minority interests (66,386) 57,181 Minority interests 5,876 (207) (Loss)/Profit for the year 19, 22 (60,510) 56,974 (Loss)/Earnings per share (RMB) 9 (0.16) 0.15 H AINAN PEARL R IVER HOLDING COMPANY LIMITED Consolidated Balance Sheet As at 31 December 2001 Notes 2001 2000 RMB'000 RMB'000 ASSETS AND LIABILITIES Non-current assets Property, plant and equipment 10 55,055 63,985 Long term investments 11 203,273 231,595 Intangible assets 12 18,493 - 276,821 295,580 Current assets Properties held for sale 13 261,958 286,963 Inventories 14 7,615 8,757 Trade and other receivables 15 72,096 87,056 Amounts due from unconsolidated subsidiaries 92 185 Amounts due from associates 8,485 9,578 Amounts due from investee companies 21,634 1,159 Cash at banks and in hand 31,584 66,902 403,464 460,600 Current liabilities Bank loans 16 239,135 219,582 Trade and other payables 17 75,291 72,802 Amount due to unconsolidated subsidiary - 990 Amounts due to associates 1,021 4,633 Amount due to a related company 500 - Loan from a shareholder company - 5,000 Loan from a related company - 37,000 Dividends payable 3,213 3,213 14 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 319,160 343,220 Net current assets 84,304 117,380 Minority interests 9,046 371 Net assets 352,079 412,589 CAPITAL AND RESERVES Share capital 18 377,651 377,651 Reserves 19 (25,572) 34,938 Shareholders’ funds 352,079 412,589 H AINAN PEARL R IVER HOLDING COMPANY LIMITED Consolidated Statement of Cash Flows As at 31 December 2001 2001 2000 RMB'000 RMB'000 CASH FLOWS FROM/(USED IN) OPERATING ACTIVITIES (Loss)/Profit before taxation (66,386) 57,181 Adjustments for : Depreciation 6,999 6,614 Provision for doubtful receivables 11,612 4,270 Permanent diminution in value of long term investments 17,713 12,519 Provision for properties held for sale 313 8,000 Loss/(Income) from an associate 2,334 (20,000) Interest income (1,894) (191) Interest expense 14,897 25,883 Gain on disposal of investment in a long term investment/an associate (827) (100,000) Loss/(Gain) on disposal of property, plant and equipment 647 (107) Provision for diminution in value of property, plant and equipment 18,603 - Amortisation of goodwill 1,372 - Operating profit/(loss) before changes in working capital 5,383 (5,831) Decrease/(Increase) in trade and other receivables 10,332 (13,055) Decrease in properties held for sale 24,692 3,898 Decrease/(Increase) in inventories 1,161 (1,851) Decrease in amount due from an unconsolidated subsidiary 93 - Decrease in amounts due from associates 1,093 728 Increase in amounts due from investee companies (20,475) (469) Increase/(Decrease) in trade and other payables 219 (15,580) Decrease in amount due to an unconsolidated subsidiary (990) - Decrease in amount due to an associate (3,612) - Increase in amount due to a related company 500 - 13,013 (26,329) 18,396 (32,160) Interest paid (14,897) (18,877) Net cash flow from/(used in) operating activities 3,499 (51,037) CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment 182 709 Proceeds from disposal of a long term investment/an associate 827 104,000 Acquisition of a subsidiary net of cash acquired (see note 21) (18,248) - Increase in long term investments (20,000) - Purchases of property, plant and equipment (14,373) (3,309) Interest received 1,894 191 Dividend received from an associate 20,850 - Net cash (used in)/flows from investing activities (28,868) 101,591 CASH FLOWS FROM/(USED IN) FINANCING ACTIVITES Loan repayment (18,500) (75,380) New loan taken out 37,000 74,340 (Decrease)/Increase in loan from a shareholder company (5,000) - Decrease in loan from a related company (37,000) (16,442) Increase in minority interest 13,551 - 15 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 Net cash flows used in financing activities (9,949) (17,482) (Decrease)/Increase in cash (35,318) 33,072 Cash at beginning of year 66,902 33,830 16 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 1. ORGANISATION AND OPERATIONS Hainan Pearl River Holding Company Limited (the "Company") (formerly known as Hainan Pearl River Enterprises Holdings Company Limited) was incorporated in the People's Republic of China (the "PRC") in November 1987. On 3 January 1992, the Hainan Provincial People's Government approved the reorganisation of the Company into a joint stock limited company. The principal activities of the Company and its subsidiaries (the "Group") are property development. The registered office of the Company is located at 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou, Hainan, PRC. The average number of employees of the Group during the year was 526. (2000: 400) 2. BASIS OF PRESENTATION The consolidated financial statements of the Group incorporate the financial statements of the Company and its major subsidiaries made up to 31 December 2001. All material inter-company transactions and balances are eliminated on consolidation. As at 31 December 2001, the Company had the following subsidiaries, which were all incorporated in the PRC : Attributable Date of equity Registered Principal Company name establishment interest capital activities Consolidated subsidiaries Hainan Pearl River Properties and 22 August 1991 90% RMB1,000,000 Property Hotels Management Co., Ltd. management Hainan Pearl River Enterprises 29 June 1993 100% RMB40,000,000 Property Holding Co., Ltd. Shanghai development Real Estate Co. Hainan Pearl River Pile Co., Ltd. 8 July 1993 100% RMB30,000,000 Manufacture of PHC - Pipe Hainan Pearl River Enterprises 18 September 1993 100% RMB800,000 Construction Project Construction supervision and Supervision Co., Ltd. management Hainan Pearl River Tourism Co. 5 April 1994 100% RMB5,000,000 Travel services Beijing Xin Li Ji Vacuum Glass 27 March 2001 57.8% RMB25,000,000 Investment Technique Co., Ltd holding 17 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 2. BASIS OF PRESENTATION (Continued) Attributable Date of equity Registered Principal Company name establishment interest capital activities Consolidated subsidiaries Qingdao Xin Li Ji Technique 14 July 1998 52.02% RMB10,000,000 Manufacture of Application Co., Ltd vacuum glass products but not yet commence operations Hubei Pearl River Real Estate 12 April 2001 85% RMB20,000,000 Property Development Co., Ltd development A subsidiary is a company controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of a company so as to obtain benefit from its activities. 18 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 2. BASIS OF PRESENTATON (Continued) As at 31 December 2001, the Company had the following associates, which were all incorporated in the PRC : Attributable Date of equity Registered Principal Company name establishment interest capital activities Hainan Pearl River Haikou 29 January 1992 50% RMB500,000 Cease operations Environmental Engineering Co. Hainan Pearl River Enterprises 22 November 1994 30% RMB1,000,000 Cease operations Decoration Engineering Co., Ltd. Shanghai Sea Pearl Property 31 May 1995 50% USD200,000 Property Management Co., Ltd. management Longzhu Shunda Entertainment 19 May 1997 38% RMB8,000,000 Catering and Co., Ltd. entertainment Southwest Securities Co., Ltd. 28 December 1999 13.3% RMB1,128,209,000 Securities dealer 深圳市迪瑞计算技术有限公司 12 August 1999 27.27% RMB41,250,000 Hotel video communication system An associate is a company, other than a subsidiary, in which the Group has a long term equity interest and over which the Group is in a position to exercise significant influence on its financial and operating policy decisions. Investments in associates, except Southwest Securities Co., Ltd. ("Southwest") and 深圳市迪瑞计算技术有限公司 ("迪 瑞"), are stated in the consolidated balance sheet at cost less provision for permanent diminution in value. The results of operations and net assets of these associates are not accounted for on the equity basis for the purpose of the restatement of the financial statements to conform to IAS, because, in the opinion of the directors, they are not material to the results of operations and financial position of the Group taken as a whole. The results of these companies are dealt with in the consolidated statement of income to the extent of dividend income received and receivable from them. The results of Southwest and 迪瑞 are accounted for by using the equity method of accounting. The Group's interest in Southwest and 迪瑞 is stated at its share of net assets value. 19 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 3. PRINCIPAL ACCOUNTING POLICIES The financial statements on page 2 to 19 are prepared in accordance with International Accounting Standards ("IAS") issued by the International Accounting Standards Committee ("IASC") and interpretations issued by the Standard Interpretation Committee of the IASC as if those standards had been applied consistently throughout the year. This basis of accounting differs from that used in the statutory accounts of the Group which were prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises in the PRC. The financial statements are prepared under the historical cost convention. The following principal accounting policies were adopted in restating the financial statements of the Group to conform to IAS : (a) Property, plant and equipment (i) Depreciation Depreciation is provided to write off the cost or carrying value of property, plant and equipment over their estimated useful lives, taking into account the estimated residual value, using the straight line method. The estimated useful lives of property, plant and equipment are as follows : Land and buildings 25 years Machinery and equipment 10 years Furniture and fixtures 5 years Motor vehicles 5 years (ii) Measurement bases Property, plant and equipment are stated at cost less provision for diminution in value and less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to the working condition and location for its intended use. Subsequent expenditure relating to property, plant and equipment is added to the carrying amount of the assets if it can be demonstrated that such expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the assets. When assets are sold, any gain or loss resulting from their disposal, being the difference between the net disposal proceeds and the carrying amount of the assets, is included in the consolidated statement of income. 20 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (b) Construction in progress Construction in progress represents machineries and properties under construction and is stated at cost. Cost includes construction cost plus interest charges arising from borrowings used to finance these projects during the construction period. Construction in progress is transferred to property, plant and equipment when it is capable of producing saleable output on a commercial basis. (c) Goodwill Goodwill represents the premium of purchase consideration over the fair values ascribed to the net assets of subsidiaries or associates acquired and is amortised, using the straight line method, over a period of 10 years. (d) Production technique Production technique represents a technique acquired by the Group and is stated at cost. Amortisation is charged to the consolidated statement of income on a straight- line basis over a period of 10 years starting from the date on which the technique is available for use. (e) Properties held for sale Properties held for sale are stated at the lower of cost and net realisable value. Cost of properties held for sale includes cost of construction, development expenditures and interest charges capitalised. Net realisable value is determined on the basis of the estimated selling price less further costs of constructions and estimated costs necessary to make the sale. (f) Long term investments Long term investments are stated at cost less provision for permanent diminution in value where necessary. (g) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. 21 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 3. PRINCIPAL ACCOUNTING POLICIES (Continued) (h) Foreign currencies Transactions in foreign currencies are translated into Renminbi Yuan at the rates of exchange ruling at the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Renminbi Yuan at the rates of exchange ruling at that date. Profits and losses arising on exchange are dealt with in the consolidated statement of income. (i) Recognition of revenue Revenue from the sale of developed properties is recognised when title of the property is transferred and the buyer takes legal possession of the property. Revenue from the sale of goods is recognised when the goods are delivered to customers. Revenue from property management is recognised when the management fee is due and receivable. 4. TURNOVER Turnover comprises income from sales of developed properties and sales of goods and property management. 5. (LOSS)/PROFIT BEFORE TAXATION 2001 2000 RMB'000 RMB'000 (Loss)/Profit before taxation is arrived at after charging : Amortisation of goodwill 1,372 - Depreciation of property, plant and equipment 6,999 6,614 Staff cost 4,995 3,692 Impairment loss of property, plant and equipment 18,603 - Provision for diminution in value of long term investments 17,713 12,519 Provision for doubtful receivables 11,612 4,270 Provision for properties held for sale 313 8,000 22 HAINAN P EARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 6. OTHER INCOME 2001 2000 RMB'000 RMB'000 Gain on disposal of investment in an associate 827 100,000 Rental income 1,816 2,723 Others 1,702 2,952 4,345 105,675 7. NET FINANCE COSTS 2001 2000 RMB'000 RMB'000 Interest expenses 14,897 25,883 Interest income (1,894) (191) 13,003 25,692 8. TAXATION The Group provides for taxation on the basis of its income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes. 9. (LOSS)/EARNINGS PER SHARE (Loss)/Earnings per share was calculated based on the loss for the year of RMB60,510,000 (2000 : profit of RMB56,974,000) and on the weighted average number of 377,650,800 (2000 : 377,650,800) shares. 23 HAINAN PEARL RIVER HOLDING COMPANY LIMITED Notes to the Financial Statements For the year ended 31 December 2001 10. PROPERTY, PLANT AND EQUIPMENT Land and Machinery and Motor Furniture Construction buildings equipment vehicles and fixture in progress Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 At cost less impairments At 1 January 2001 57,296 32,232 8,232 5,628 381 103,769 Impairment (29,294) - - - - (29,294) Additions 2,591 14,023 474 152 261 17,501 Disposals - (1,335) (682) - - (2,017) At 31 December 2001 30,593 44,920 8,024 5,780 642 89,959 Accumulated depreciation At 1 January 2001 13,066 16,482 5,599 4,637 - 39,784 Written back on impairment (10,691) - - - - (10,691) Charge for the year 1,864 4,384 580 171 - 6,999 Written back on disposals - (632) (556) - - (1,188) At 31 December 2001 4,239 20,234 5,623 4,808 - 34,904 Net book value At 31 December 2001 26,354 24,686 2,401 972 642 55,055 At 31 December 2000 44,230 15,750 2,633 991 381 63,985 24 11. LONG TERM INVESTMENTS 2001 2000 RMB'000 RMB'000 Investments in unconsolidated subsidiaries - unlisted, at cost 727 2,057 Investments in associates - unlisted, at cost 5,258 16,907 Interest in associates - unlisted, share of net assets value (see below) 158,516 170,000 Investments in unlisted shares of public companies, at cost 1,680 9,680 Other investments, at cost (see below) 63,290 63,083 229,471 261,727 Provisions (26,198) (30,132) 203,273 231,595 Included in interest in associates is the Group's share of net assets value of an associate – 迪瑞 which was included under other investments in 2000 at cost of RMB19,125,000 as it only commenced full operation this year. 12. INTANGIBLE ASSETS Product production technique Goodwill Total RMB'000 RMB'000 RMB'000 At 1 January 2001 - - - Additions 3,000 - 3,000 Goodwill arising on investment in an associate - 7,425 7,425 Goodwill arising on acquisition of subsidiaries - 9,440 9,440 Amortisation - (1,372) (1,372) At 31 December 2001 3,000 15,493 18,493 25 13. PROPERTIES HELD FOR SALE 2001 2000 RMB'000 RMB'000 Completed properties 140,126 153,104 Properties under development 130,145 141,859 Less : Provisions (8,313) (8,000) 261,958 286,963 Particulars of properties under development as at 31 December 2001 are as follows : Area in Average cost square per square Project meter meter Cost RMB RMB'000 Yanjiang First Road 76,780 741 56,913 Sanya Bay 33,000 838 27,653 Longzhou New Town/ 龙珠国际大酒店 37,300 1,129 42,044 Others 3,470 130,080 As stated in Note 3 (e) above, properties held for sale are stated at the lower of cost and net realisable value. The estimation of net realisable value of properties held for sale requires the Company's directors to make assumptions on future market conditions with reference to currently available information. As at 31 December 2001, the directors' valuation on properties for sale was performed after taking into consideration the latest sale transactions, if any, or the announcement of the minimum selling prices on the land located nearby the properties held for sale held by the Group. The minimum selling prices are set by the government from time to time based on the supply and demand of the property market in the PRC. According to the best estimates of the directors, the carrying value would not be less than the net realisable value of the properties held for sale as at 31 December 2001. 26 14. INVENTORIES As at 31 December 2001, all of the inventories held were stated at cost. 15. TRADE AND OTHER RECEIVABLES 2001 2000 RMB'000 RMB'000 Trade receivables 44,283 40,925 Other receivables and prepaid expenses 59,798 66,504 Less : Provisions (31,985) (20,373) 72,096 87,056 16. BANK LOANS Bank loans of approximately RMB50 millions (2000 : RMB60 millions) were secured by certain properties held for sale and property, plant and equipment. At 31 December 2001, all of the bank loans were in RMB. The bank loans bear interests ranging from 6.44% to 9.12% per annum (2000 : 5.37% to 6.44%). 17. TRADE AND OTHER PAYABLES 2001 2000 RMB'000 RMB'000 Trade payables 30,316 28,074 Other payables and accrued expenses 44,975 44,728 75,291 72,802 27 18. SHARE CAPITAL 2001 2000 RMB'000 RMB'000 Registered and fully paid 206,744,976 legal entity shares of RMB 1 each 206,745 206,745 113,405,824 A shares of RMB 1 each 113,406 113,406 57,500,000 B shares of RMB 1 each 57,500 57,500 377,651 377,651 19. RESERVES Capital Revenue Accumulated reserve reserve losses Total RMB'000 RMB'000 RMB'000 RMB'000 Balance at 1 January 2000 288,912 109,488 (420,436) (22,036) Profit for the year - - 56,974 56,974 Balance at 31 December 2000 and as at 1 January 2001 288,912 109,488 (363,462) 34,938 Transfer - 367 (367) - Loss for the year - - (60,510) (60,510) Balance at 31 December 2001 288,912 109,855 (424,339) (25,572) According to the Company Law of the PRC and the Article of Association of the Company, when distributing net profit of each year, the Company shall set aside 10% of its net profits as reported in the statutory accounts for the statutory common reserve fund (except when the fund has reached 50% of the Company's registered share capital) and 5% to 10% for the statutory common welfare fund (collectively as "Revenue reserve"). These reserves cannot be used for purposes other than those for which they are created and are not distributable as cash dividends. The Company declares dividends based on the lower of retained earnings as reported in the statutory accounts and the financial statements prepared under IAS. As the statutory accounts have been prepared on an accounting basis other than IAS, the net profit/(loss) as reported in the statutory accounts is different from the amount reported in the accompanying consolidated statement of income (see Note 22). 28 20. RELATED PARTY TRANSACTIONS During the year the Group had the following transactions with its related parties : 2001 2000 RMB'000 RMB'000 Handling charges paid to a related company 954 - Interest paid to a related company - 10,587 Interest paid to a shareholder company - 297 Interest received from an investee company 1,174 - 21. NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT During the year, the Group acquired a subsidiary and the fair value of assets acquired and liabilities assumed were as follows: 2001 2000 RMB'000 RMB'000 Cash at banks and in hand 192 - Property, plant and equipment 3,230 - Intangible assets 3,000 - Inventories 19 - Trade and other receivables 11,829 - Bank loans (6,000) - Trade and other payables (2,270) - Minority interests (1,000) - Net assets acquired 9,000 Goodwill arising on acquisition 9,440 - 18,440 - Satisfied by : Cash consideration 18,440 - Cash acquired (192) Cash outflow on acquisition net of cash acquired 18,248 - 29 22. IMPACT OF IAS AND OTHER ADJUSTMENTS ON (LOSS)/PROFIT FOR THE YEAR AND NET ASSETS (Loss)/Profit for the year ended Net assets as at 31 December 31 December 2001 2000 2001 2000 RMB'000 RMB'000 RMB'000 RMB'000 As reported in statutory accounts (38,214) 60,472 390,483 434,007 Impact of IAS and other adjustments - Opening balances adjustments - impairment loss of property, plant and equipment (30,886) 2,253 - 30,886 - previous years' unrecognised losses of a subsidiary (6,042) - - - - reversal of provision for staff quarter expense 1,186 - - (1,186) - others - 2,339 - - (35,742) 4,592 - 29,700 - write back of costs of property, plant and equipment and corresponding accumulated depreciation 10,516 495 - (10,516) - adjustment on capitalisation of interest charges arising from borrowings used to finance the construction-in-progress and properties under development during the construction period and corresponding depreciation 7,684 1,350 (10,987) (18,671) - previous years' unrecognised losses of a subsidiary which has already been taken up in previous years under IAS 6,042 - - - - unrecognised losses of consolidated subsidiaries (6,007) (6,617) - - - provision for bad and doubtful debts (5,600) (3,000) (14,600) (9,000) - adjustment on treasury stock - - (1,410) (1,410) - wavier of interest payable to a related company recognised as capital reserve in PRC statutory accounts now adjusted as income for the year - 9,100 - - - adjustment to income from an associated company - (9,929) (9,929) (9,929) - adjustment to income from debt restructuring 699 - - - - others 112 511 (1,478) (1,592) As restated for the Group (60,510) 56,974 352,079 412,589 30 23. FINANCIAL INSTRUMENTS (a) Fair value of financial instruments The directors consider that the carrying amount of cash, trade and other receivables, trade and other payables and banks loans approximates to their fair value. (b) Credit risks At balance sheet date, the Group has no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the consolidated balance sheet. 24. APPROVAL OF THE FINANCIAL STATEMENTS The financial statements on pages 2 to 19 were approved by the board of directors on 16 April 2002. 31