*ST中华A(000017)ST中华2001年年度报告（英文版）

SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED 2001 ANNUAL REPORT Content . Important Notices . Company Profile . Financial Highlight and Business Highlight . Changes in Share Capital and Particulars about Shareholders . Particulars about Director, Supervisor and Senior Executives and Staff . Administrative Structure . Brief Introduction to the Shareholders’ General Meeting . Report of the Board of Directors . Report of the Supervisory Committee . Significant Events . Financial Report . Documents Available for Reference I. IMPORTANT NOTICES: Board of Directors of the Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) and its members 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 report was prepared in Chinese version and English version respectively. In the event of difference in interpretation between the two versions, the Chinese version shall prevail. Da Hua Certified Public Accountants issued the domestic Auditors’ Report without reserved opinion but with explanatory notes; and K. C. Oh & Company Certified Public Accountants issued the overseas Auditors’ Report expressing no opinion for the Company. II. COMPANY PROFILE 1. Legal Name of the Company In Chinese: 深圳中华自行车 集团 股份有限公司 In English: SHENZHEN CHINA BICYCLE COMPANY (HOLDINGS) LIMITED Short form of English Name: CBC 2. Legal Representative: Mr. Xie Ruxian 3. Secretary of the Board of Directors: Mr. Li Hai Liaison Address: No. 3008, Buxin Road, Shenzhen , Guangdong Provice, China Tel: (86) 755 – 5516998 Fax: (86) 755 – 5516620 E-mail: dmc@china-cbc.com; leocbc@163.net 1 4. Registered Address and Office Address: No. 3008, Buxin Road, Shenzhen , Guangdong Provice, China Post Code: 518019 The Company’s Internet Website: www.china-cbc.com E-mail: cbc@china-cbc.com 5. Newspapers Chosen for Disclosing the Information: Securities Times and Ta Kung Pao Internet Website Designated for Publishing the Annual Report: www.cninfo.com.cn Place Where the Annual Report is Prepared and Placed: Secretariat of the Board of Directors, No. 3008 Buxin Road, Shenzhen 6. Stock Exchange Listed with, Short Form of the Stock and Stock Code: Stock Exchange Listed with: Shenzhen Stock Exchange Short Form of the Stock: ST ZHONGHUA – A, ST ZHONGHUA – B Stock Code: 000017, 200017 III. FINANCIAL HIGHLIGHTS AND BUSINESS HIGHLIGHTS 1. Major profit indexes as of the year 2001 (unit: RMB) Total Profit -2,013,806,000 Net Profit -2,013,356,093.47 Net profit after deducting non-recurring gains and losses -2,000,092,891.49 Profit from main business lines -11,481,000 Profit from other business lines 9,539,000 Operating profit -68,092,000 Investment income - Subsidy income 0 Net income / expenditure from non-operating - Net cash flows arising from operating activities -31,217,000 Net increase in cash and cash equivalents -70,471,000 Note: Explanations on difference of auditing results: net profit as of the year 2001 as audited by domestic certified public accountants and overseas certified public accountants was RMB -2,257,244,249.73 and RMB –2,013,356,093.47 respectively, a difference of RMB –243,888,156.26 existing. Items of net profit after deducting non-recurring gains and losses and related amounts: Item Amount (Unit: RMB) Estimated loss on guarantee offered -163,631,000.00 Provision for devaluation of fixed assets -76,569,000.00 Provisions for devaluation of construction-in-progress -2,320,000.00 Profit and loss on disposal of fixed aseets 126,359.49 Income from liabilities reorganization 252,657,000.00 Written back of house revolving fund 4, 225,000.00 Others -1,225,157.51 Total 13,263,201.98 2. Accounting data and financial indexes over the recent three year at the end of report 2 year (Unit: In RMB) Item 2001 2000 1999 Income from main business lines 51,875,000 67,973,0000 67,573,000 Net profit –2,013,356,093.47 -154,959,000 196,964,000 Total assets 558,088,000 2,411,717,000 2,655,294,000 Shareholder’s equity (excluding minority interests) -1,993,893,000 19,463,000 191,152,000 Earnings per share (Fully diluted) -4.20 -0.323 0.412 Earnings per share (Weighted average) -4.20 -0.323 0.412 Net assets per share -4.16 0.04 0.40 Net cash flows per share arising from operating activities -0.065 1.45 1.02 3. Supplementary statement of profit (return on equity and earnings per share) in the report year Return on equity (%) Earnings per share (RMB) Profit as of the year 2001 Fully Weighted Fully Weighted diluted average diluted average Profit from main business lines ----- ----- -0.024 -0.024 Operating profit ----- ----- -0.142 -0.142 Net profit ----- ----- -4.20 -4.20 Net profit after deducting non-recurring ----- ----- -4.17 -4.17 gains and losses 4. Changes in shareholders’ equity in the report year (Unit: RMB) Statutory Capital public Surplus Shareholder’s Items Share capital Public Retained profit reserve public reserve equity welfare fund 479,433,003.00 588,205,000 241,968,000 32,673,000 -3,303,499,093 -1,993,893,090 Total Amount at the year-begin 479,433,003.00 588,205,000 241,968,000 32,673,000 -1,290,143,000 19,463,003 Increase in the report year 0 0 0 0 -2,013,356,093 -2,013,356,093 Decrease in the report year 0 0 0 0 0 0 Amount at the year-end 479,433,003.00 588,205,000 241,968,000 32,673,000 -3,303,499,093 -1,993,893,090 Impairment loss Impairment loss on on doubtful debts doubtful debts and Causes and income from income from liabilities liabilities reorganization reorganization IV. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS (I) Particulars about change in share capital 1. Change in shares Statement of change in shares (Unit: share) Increase/decrease of this time (+, - ) Before the After the Items change Share Bonus Capitalization of Additional Sub- change Others Allotment shares public reserve issuance total I. Unlisted Shares 224,195,354 224,195,354 1. Promoters’ shares Including: State-owned share Domestic juristic person’s shares 111,607,002 111,607,002 Foreign juristic person’s shares 112,453,352 112,453,352 3 Others 2. Raised juristic person’s shares 3. Employees’ shares 135 000 135 000 4. Preference shares or others Total Unlisted shares 224,195,354 224,195,354 II. Listed Shares 255,237,649 255,237,649 1. RMB ordinary shares 76,617,000 76,617,000 2.Domestically listed foreign 178,620,649 178,620,649 shares 3. Overseas listed foreign shares 4. Others Total Listed shares 255,237,649 255,237,649 III. Total shares 479,433,003 479,433,003 2. Issuance and listing of the share: (1) The Company has not issued new shares over the recent three years at the end of the report year. (2) In the report period, the Company had never conducted any activities in connection with distributing bonus shares, transferring public reserve into shares capital, share allotment, additional issuance of new shares, consolidation by merger, transferring convertible bonds into shares, capital reduction, listing of employee’s shares and whatsoever. (3) The Company issued 5.3 million employee’s shares at the issuance price of RMB 3.75 per share dated Dec. 28, 1991, and the said 5.3 million shares were listed for trading. The directors of the Company held 135,000 shares and entrusted to Shenzhen Securities Registration Company for trustee. (II) About shareholders at the report year 1. Ended Dec. 31, 2001, the Company had 51,773 shareholders in total, including 31,996 shareholders of A-share and 19,777 shareholders of B-share. 2. Particulars about shares held by the top ten shareholders (Unit: share) Shares held Shares held Increase / Proportion No. Shareholders at the year- at the year- Types decrease in total shares begin end Shenzhen Lionda Holdings Co., Ltd. 111,607,002 -16,340,000 95,267,002 19.87% Domestic promoters’ 1 juristic person’s shares Hong Kong Zhuorun Technology Co., 0 +62,003,890 62,003,890 12.94% Foreign promoters’ juristic 2 Ltd. person’s shares Hong Kong (Link) Bicycles Limited 93,005,834 -62,003,890 31,001,944 6.47% Foreign promoters’ juristic 3 person’s shares STEPHEN & PARTNERS LTD. 19,447,518 - 19,447,518 4.06% Foreign promoters’ juristic 4 person’s shares Airline Trust and Investment Co., Ltd. 0 +10,340,000 10,340,000 2.16% Domestic promoters’ 5 juristic person’s shares Shenzhen International Trust and 0 +6,000,000 6,000,000 1.26% Domestic promoters’ 6 Investment Co., Ltd. juristic person’s shares Renjun Development Co., Ltd. 0 +4,037,920 4,037,920 0.85% Foreign social public 7 shares XIE YING JUN 1,800,000 - 1,800,000 0.38% Foreign social public 8 shares XU JING XIN 0 +1,753,644 1,753,644 0.37% Foreign social public 9 shares 4 CHEN YUAN FENG 1,631,040 - 1,631,040 0.34% Foreign social public 10 shares Note: 95,267,002 shares of the Company held by Shenzhen Lionda Holdings Co., Ltd. were frozen, including 41,968,590 shares were pledged; 31,001,944 shares of the Company held by Hong Kong (Link) Bicycle Limited were pledged and frozen. 3. Juristic person shareholders holding over 10% (including 10%) of the total shares: Shenzhen Lionda Holdings Co., Ltd.: Legal representative: Mr. Li Chengyou Date of foundation: In 1984 Registration capital: RMB 288.42 million Business scope: to initiate light industry based entities, operation of real estate, home trading, import and export based on both self-operation and agency, bonded trading, tourism, catering, services, technology trading, telecommunications, warehousing and transportation, financing, securities, futures, leasing, and information consulting. Structure of equity: total share capital is 288.42 million shares; 191.4 million state shares; 17.16 million social juristic person’s shares; 40.26 million domestic social public shares; 39.6 million foreign social public shares. Hong Kong Zhuorun Technology Co., Ltd. Legal representative: Zhang Hanke Date of foundation: In Sep. 2000 Business scope: IT industry, development of Internet, international trading and investment. 3. Hong Kong (Link) Bicycles Limited Legal representative: Mr. Shi Zhanxiong Business scope: bicycle import and export Shenzhen Medium People’s Court auctioned 62,003,890 foreign juristic person’s shares of the Company held by Hong Kong (Link) Bicycle Limited dated Jan. 17, and the said shares were purchased by Hong Kong Zhuyue Technology Co., Ltd.. The relevant Public Notice was published in Securities Times and Ta Kung Pao dated Jan. 19, 2001. (III) The holding shareholder of the holding shareholder of the Company Shenzhen Investment Management Co. is the holding shareholder of Shenzhen Lionda Holdings Co., Ltd. and Hong Kong Zhuorun Technology Co., Ltd., who was established in Feb. 1988. Legal representative: Li Heihu; registration capital: RMB 2 billion; business scope: Management and supervision of enterprise’s state assets, financing and property right; to share all kinds of enterprise and turn over investment, to offer credit and assurance; to impose profit after taxation and occupying expenses of assets of state enterprise and the other business authorized by municipal government. V. PARTICULARS ABOUT DIRECTOR, SUPERVISOR, SENIOR 5 EXECUTIVES AND STAFF (I) Basis condition 1. Directors, supervisors and senior executives Number of holding Number of Name Gender Age Title Office term shares at the year- holding shares at begin the year-end Xie Ruxian Male 39 Chairman of the Board May 31, 2001-May 31, 2004 0 0 Shi Zhanxiong Male 58 Vice chairman of the Board May 31, 2001-May 31, 2004 75,000 75,000 Liu Linfeng Male 45 Director, General Manager May 31, 2001-May 31, 2004 0 0 Hu Eryi Female 38 Director, Deputy General May 31, 2001-May 31, 2004 0 0 Manager, Chief Accountant Pan Shiming Male 31 Director Aug. 13, 2001-May 31, 2004 0 0 Li Zhenping Male 53 Independent Director May 31, 2001-May 31, 2004 0 0 Yang Lixun Male 39 Independent Director May 31, 2001-May 31, 2004 0 0 Chang Jingzhou Male 39 Independent Director May 31, 2001-May 31, 2004 0 0 Lan Qihua Male 52 Chairman of the Supervisory Aug. 13, 2001-Jul. 9, 2002 0 0 Committee Peng Tiesheng Male 53 Supervisor Jul. 9, 1999-Jul. 9, 2002 0 0 Yang Gui Male 60 Supervisor Jul. 9, 1999-Jul. 9, 2002 0 0 Note: Particulars about directors or supervisors holding the position in Shareholding Company Xie Ruxian took the position of General Manager of Shenzhen Lionda Holdings Co., Ltd.; Hu Eryi took the position of Vice Chief Accountant of Shenzhen Lionda Holdings Co., Ltd.; Pan Shiming took the position of Secretary of the Board and Manager of Property Dept. of Shenzhen Lionda Holdings Co., Ltd.. 2. Particulars about the annual salary Total annual Notes Name Gender Title salary (RMB) Xie Ruxian Male Chairman of the Board Drawing no pay from the Company Shi Zhanxiong Male Vice chairman of the Board 152,998.44 Liu Linfeng Male Director, General Manager 175,436.31 Hu Eryi Female Director, Deputy General Drawing no pay from the Company Manager, Chief Accountant Pan Shiming Male Director Drawing no pay from the Company Li Zhenping Male Independent Director Drawing no pay from the Company Yang Lixun Male Independent Director Drawing no pay from the Company Chang Jingzhou Male Independent Director Drawing no pay from the Company Lan Qihua Male Chairman of the Supervisory 103,447.93 Committee Peng Tiesheng Male Supervisor 87,255.15 Yang Gui Male Supervisor 78,498.15 Note: (1) The Company had totally 11 directors, supervisors and senior executives in office at present, and 5 persons draw the annual salary from the Company. The total annual salary received from the Company is RMB 597,635.98; the total amount of the top two directors is RMB 328,434.75, there is one senior executive draw his annual salary amounting to RMB175, 436.31 from the Company. (2) Of them, three enjoy their annual salary from RMB 100,000 to RMB 150,000 respectively; two enjoy their annual salary from RMB 80,000 to RMB 100,000 respectively. (3) Chairman of the Board Xie Ruxian, Director Hu Eryi and Pan Shiming draw their annual salary from 6 Shareholding Company; Independent Director Li Zhenping, Yang Lixun and Chang Jingzhou draw their annual salary from the respective company. 3. Directors, supervisors and senior executives leaving the office and the reason in the report year (1) 2001 Extraordinary Shareholders’ General Meeting was held on Aug. 13, 2001. In this meeting, Mr. Li Chengyou no longer took the position of Director and Chairman of the Board due to work demand; (2) The 5th meeting of the 3rd Board of Director was held at the conference room on 3/F of the Company, No. 3008 of Buxin Rd., Shenzhen in the morning of July 6, 2001. The Supervisory Committee of the Company agreed with Mr. Tao Xiaochun about resignation from the position of Supervisor due to work transfer. (3) The 2nd meeting of the 5th Board of Director was held on July 6, 2001, as nominated by Chairman of the Board, all directors recommended unanimously Mr. Liu Linfeng for the position of General Manager; as nominated by General Manager, Ms. Hu Eryi took the position of Deputy General Manager. Mr. Shi Zhangxiong no longer took the position of General Manager due to work demand. (II) About staff 1. The Company has totally 711 staff members at present, including: (1) Classified according to professional/occupational composition: production personnel: 452 persons; sales personnel: 114 persons; technician: 35 persons; financial personnel: 27 persons; administrative personnel: 81 persons; personnel working outside Shenzhen: 2 persons. (2) Classified according to the educational background: master’s degree or above (including the professionals who have once had advanced study abroad): 9 persons, bachelor’s degree: 57 persons; junior college graduates: 77 persons. Proportion of the personnel with education background of junior college or above in the whole staff: 20%. 2. The Company needs to bear the cost of 12 retirees. VI. ADMINISTRATIVE STRUCTURE (I) Administration of the Company Pursuant to the guiding spirit of normative documents issued by CSRC including Administrative Rules for Listed Companies, Guide Lines of Articles of Association for Listed Companies, Normative Opinions of the Shareholders’ General Meeting of Listed Companies etc. and in comparison with the Company’s actual conditions, the Company believed that there existed no big difference between the actual administration status and the requirements of above documents. The Company will revise and make new Articles of Association, Rules of Procedures of the Shareholders’ General Meeting, Rules of Procedures of the Board of Directors and Rules of Procedures of the Supervisory Committee etc, and will further clarify the functions and responsibilities of the Shareholders’ General Meeting, the Board of 7 Directors and the Supervisory Committee, operate the “Three Meetings” in a more standardized way and continually improve its legal person administrative structure. 1. Shareholders and the Shareholders’ General Meeting: The Company operates in a standardized way, and has been practically safeguarding the interests of medium and small shareholders, ensuring all shareholders fully implement their own rights, and could convene and hold the Shareholders’ General Meeting strictly according to the normative requirements for the Shareholders’ General Meeting. 2. Relationship Between the Controlling Shareholder and Public Company: The controlling shareholder behaviors in a standardized way, and hasn’t overstepped the Shareholders’ General Meeting to directly or indirectly interfere in the Company’s decision-making and management activities; The Company has pursued the “Five Separations” from the controlling shareholder in respect of business, personnel, assets, organization and finance; The Board of Directors, the Supervisory Committee and internal organizations could function independently. 3. Directors and the Board of Directors: The Company elected directors strictly according to the stated procedures in the Articles of Association; The number of members of the Board and its formation are in line with requirements of law and regulations; Every director could attend relevant trainings enthusiastically, get familiar with relevant laws and legislations, obtain an understanding of the rights, obligations and responsibilities of director, attend Board meeting and the Shareholders’ General Meeting with a conscientious attitude, and seriously perform the obligations of director of listed company. 4. Supervisors and the Supervisory Committee: The number of supervisors and the formation are in line with requirements of laws and legislations; Every supervisor could perform his obligations seriously, and make supervision on the Company’s finance and performance of directors and other senior executives in terms of compliance with laws in the principle of being responsible to shareholders. 6. About Relevant Beneficiaries: The Company has been fully respecting and safeguarding the legal rights and interests of the bank, other creditors, employees, consumers and other parties of related interests so as to collectively push the Company to develop in a sustained and healthy way. 7. Information Disclosure and Transparency: The Company could disclose information in a true, accurate, complete and timely manner strictly according to regulations of laws, legislations and the Articles of Association and ensure equal chance for all shareholders to obtain information. (II) Performance of Obligations by Independent Directors The Company has established independent director system and engaged 3 independent directors in the Board of Directors. The independent directors performed their rights and obligations in their office term strictly according to the Articles of Association of the Company and the Guide Opinions of Establishing Independent 8 Director System in Listed Company issued by CSRC, and expressed independent opinions regarding the Company’s administration and operation status. (III) Separation from the Controlling Company in Respect of Business, Personnel, Organization and Finance etc. 1. In respect of business: The Company is absolutely separated from the controlling shareholder in business and has independent and integrated business system and self- management capability. The Company has independent production, sales and service system as well as its own leading industry. The Company is not competing with the controlling shareholder and related parties in the same domain. The Company has been carrying out management activities all along in the name of independent legal person enterprise. 2. In respect of personnel: The Company is absolutely independent in management of labor, human affairs and salaries, and has established independent function department of labor and personnel administration as well as a series of corresponding administration systems. 3. In respect of assets: The Company is strictly separated from its controlling shareholder in assets, and they conduct wholly independent management. The Company holds integrated and independent purchase system, production system, sales system and corresponding service system, and intangible assets such as industrial property right, trademark and non-patent technologies all belong to the Company independently. 4. In respect of finance: The Company has established independent financial and accounting department as well as a complete set of integrated accounting systems and financial management systems. The Company is independent in making financial decisions, and the controlling shareholder hasn’t interfered in operation of funds. The Company has opened independent bank account, and never deposited money in the financial company or settlement center controlled by big shareholder or other related parties. The Company pays taxes according to law. 5. In respect of organization: The Company establishes organizations according to the normative requirements for listed company and the Company’s actual business features, which have independent offices. (IV) Establishment and Implementation of Performance Evaluation and Encouragement Mechanism and Relevant Rewarding System for Senior Executives The Company is positively making preparation for establishing open and transparent performance evaluation criteria and encouragement and binding mechanism for directors, supervisors and managers. Engagement of managers is open and transparent, which is in accordance with law. VII. BRIEFINGS ON THE SHAREHOLDERS’ GENERAL MEETING In the report year, the Company held 2000 Shareholders’ General Meeting and 2001 Provisional Shareholders’ General Meeting in the 3/F meeting room of the Head Office in No. 3008, Buxin Road, Shenzhen. The public notices on resolutions of the 9 meetings were published in Securities Times and Hong Kong Ta Kung Pao dated June 1, 2001 and August 14, 2001 respectively. Particulars about the meetings are as follows: (I) Briefings on 2000 Shareholders’ General Meeting 1. Convening of the Meeting The notification on holding the 10th Shareholders’ General Meeting as decided in the 18th Meeting of the 4th Board of Directors was published in Securities Times and Hong Kong Ta Kung Pao dated April 11, 2001. The participants were the Company’s directors, supervisors and senior executives as well as all the shareholders and shareholders’ proxies who had registered in Shenzhen Securities Registration Company by closing of the market in the afternoon of May 25, 2001. 2. Holding of the Shareholders’ General Meeting The 10th Shareholders’ General Meeting was held at 9:30AM on May 31, 2001. There were 6 shareholders and shareholders’ proxies attended the meeting who represented 96,587,402 shares, taking 20.15% of the Company’s total shares. Among the representing shares, there were 95,267,002 A shares, taking 19.87% of the total shares, and 1,320,400 B shares, taking 0.28% of the total shares. The following items were reviewed and passed through voting in the meeting: 1) 2000 Work Report of the Board of Directors; 2) 2000 Work Report of the Supervisory Committee; 3) 2000 Financial Report of Actual Budget; 4) Proposal on Election of the 5th Board of Directors. 3. Electing and Changing of Directors and Supervisors The Company’s directors were changed and reelected in the Shareholders’ General Meeting. Elected Li Chengyou, Shi Zhanxiong, Xie Ruxian, Liu Linfeng, Hu Eryi, Li Zhenping, Yang Lixun, and Chang Jingzhou to be director of the 5th Board of Directors. (II). Briefings On The Provisional Shareholders’ General Meeting 1.Convening of the Shareholders’ General Meeting The notification on holding 2001 Provisional Shareholders’ General Meeting as decided in the 2nd Meeting of the 5th Board of Directors was published in Securities Times and Hong Kong Ta Kung Pao dated July 11, 2001. The participants were the Company’s directors, supervisors and senior executives as well as all the shareholders and shareholders’ proxies who had registered in Shenzhen Securities Registration Company by closing of the market in the afternoon of August 6, 2001. 2. Holding of the Shareholders’ General Meeting 2001 Provisional Shareholders’ General Meeting was held at 3:00PM on August 13, 2001. There were 3 shareholders and shareholders’ proxies attended the meeting who represented 95,377,702 shares, taking 19.89% of the Company’s total shares. Among the representing shares, there were 95,267,002 A shares, taking 19.87% of the total shares, and 110,700 B shares, taking 0.02% of the total shares. The following items were reviewed and passed through voting in the meeting: 1) Proposal on Changing Directors of The Board; 2) Proposal on Changing Supervisors of the Supervisory Committee; 10 3) Proposal on Engaging Legal Advisor for 2001. 3. Electing and Changing of Directors and Supervisors 1) In the Shareholders’ General Meeting, the Company’s directors were changed and reelected, in which Mr. Pan Shiming was elected director; Mr. Li Chengyou wouldn’t take the post as director any more due to demand of work. 2) In the Shareholders’ General Meeting, the Company’s supervisors were changed and reelected, in which Mr. Lan Qihua was elected supervisor; Mr. Tao Xiaochun wouldn’t take the post as supervisor any more due to change of work. VIII. REPORT OF THE BOARD OF DIRECTORS (I) Business Highlights 1. Main business scope and the operation The Company is mainly engaged in the businesses of production and sales of bicycles and components. The Company has been enjoying a leading position in the sector: possessing the world biggest bicycle export production base with annual production capacity of 2.5 million bicycles, superior production conditions and reliable quality system, has good brand effect both at home and abroad and advanced technology; has excellent infrastructures and mature products and motor bicycles as the upgraded products. In the year 2001, the Company made great progress in organization and made great effort to improve the external operation environment. At the beginning of Sep. 2001, the largest debtor of the Company, Hua Rong Assets Management Co., Ltd. reached agreement with Shenzhen Lionda Group Co., Ltd. to reorganize the Company as the largest shareholder. This means the present status of the Company with heavy burden from liabilities may be improved. In aspect of internal operation and management, the Company attached great emphasis on the brand image establishment and the innovation for new product, especially focused on the development and marketing for motor bicycles. However, due to unfavorable factors including bicycle industry stagnancy, financial overburden and shortage in capital, no obvious straightening up showed in the Company’s operation. In 2001, the Company realized revenue of RMB –11,481,000 from main business lines, and suffered a deficit of RMB 2,013,356,093.47. 2. Problems and difficulties occurred in the operation and the solutions Major problems confronting the Company are the high liabilities and serious shortage in capital. To solve the problems, the Company, on one hand, exercised its potentiality and activated its property and remaining assets to increase the resources of capital; on the other hand, actively promoted the liabilities and assets reorganization, which was undergoing smoothly and expected great progress in the year. (II) Investment In the report period, the Company raised no proceeds and invested in no material projects. (III) Financial Highlights and Achievement of Operation Item 2001 2000 Changes Causes 11 Total assets 550,088,000 2,411,717,000 -1,861,629,000 Impairment loss on doubtful debts Long-term liabilities 50,211,000 66,712,000 -16,501,000 Shareholders’ equity -1,993,893,000 19,463,000 -2,013,356,000 Impairment loss on doubtful debts Profit from main -11,481,000 -13,632,000 2,151,000 Decrease in sales cost business lines Net profit -2,013,356,093.47 -154,959,000 -1,858,397,093 Impairment loss on doubtful debts (IV) Notes from the Board concerning issues involved in the Auditors’ Report with reserved opinion or expressing no opinion Board of Directors of the Company agrees with the Auditors’ Reports issued by Shenzhen Dahua Tiancheng Certified Public Accountants and K. C. Oh & Company Certified Public Accountants. Since the Company suffered large amount of deficits in 2001 and its liabilities over-exceeding its assets, both the domestic and overseas auditors expressed doubtful opinion on the Company’s ability in sustain operation. The Board made following notes to this issue: In 2001, the Company suffered a deficit as much as RMB 2.257 billion, mainly due to the provisions for large amount of doubtful debts and valuation of assets. (Deficit of the Company main business lines was RMB 11,641,600 in 2001). In the Agreement on Releasing Guarantee Responsibility of Lionda Group Co., Ltd. (“Lionda”) and Reorganization Draft for the Company as well as its supplementary agreements signed between the Company’s control shareholder, Lionda, and China Huarong Assets Management (“Huarong Company”) in Aug. 2001, the two parties made commitment on the Company’s reorganization. Till now, the said agreements were implemented or under implementation. Huarong Company has purchased partial equity as well partial production equipment and plant, auctioned due to failure in loan repayment, of the Company in March 2002 and become the control shareholder. Huarong Company has basically agreed to lend the said equipment to the Company for continue usage. April 16, 2002, four director candidates recommended by Huarong Company was approved to be directors of the Company in the 1st Extraordinary Shareholders’ General Meeting 2002. Based on above facts, the Board is of the opinion that actual reorganization of the Company are thoroughly carried out after the report period and the sustain operation of the Company will be resumed in 2002 under the united and active efforts of every relevant parties. (V) Independent Opinion from the independent director of the Company concerning issues involved in the Auditors’ Report expressing no opinion Independent director of the Company agrees with the Auditors’ Reports issued by Shenzhen Dahua Tiancheng Certified Public Accountants and K. C. Oh & Company Certified Public Accountants. Since the Company suffered large amount of deficits in 2001 and its liabilities over-exceeding its assets, both the domestic and overseas auditors expressed doubtful opinion on the Company’s ability in sustain operation. The independent director made following notes to this issue: In 2001, the Company suffered a deficit as much as RMB 2.257 billion, mainly due to the provisions for large amount of doubtful debts and valuation of assets. (Deficit of the Company main business lines was RMB 11,641,600 in 2001). In the Agreement 12 on Releasing Guarantee Responsibility of Lionda Group Co., Ltd. (“Lionda”) and Reorganization Draft for the Company as well as its supplementary agreements signed between the Company’s control shareholder, Lionda, and China Huarong Assets Management (“Huarong Company”) in Aug. 2001, the two parties made commitment on the Company’s reorganization. Till now, the said agreements were implemented or under implementation. Huarong Company has purchased partial equity as well partial production equipment and plant, auctioned due to failure in loan repayment, of the Company in March 2002 and become the control shareholder. Huarong Company has basically agreed to lend the said equipment to the Company for continue usage. April 16, 2002, four director candidates recommended by Huarong Company was approved to be directors of the Company in the 1st Extraordinary Shareholders’ General Meeting 2002. Based on above facts, the independent director is of the opinion that actual reorganization of the Company are thoroughly carried out after the report period and the sustain operation of the Company will be resumed in 2002 under the united and active efforts of every relevant parties. (VI) Operation Plan for 2002 Motivated by reform and availing the opportunity of reorganization, the Company will internally reform on its structure and unit the whole staff; and strive for the support of the government and establish a favorable image externally. Based on such development strategy, the Company will work hard with the target as industrial integration and reorganization of the Company based on following works: 1. To accomplish a overall success in liabilities reorganization; 2. To adjust the industrial structure and products mix and explore for new market and new profit resources through assets reorganization. 3. To integrate the bicycle industry with balanced structure, improve its flexibility, and further improve the brand popularity; and to resume and increase export by various means; 4. To establish Long Hua Industrial Park as the base for R&D, production and research transferring of projects with long-term development future; 5. To reduce cost, improve production efficiency and set the economy management mode with profit as target and cost as core issue; 6. To introduce capital and assign brand and core technology, improve the market share while activating the balance assets and reinforcing receivables collection. (VII) Routine Work of the Board of Directors The Board of Directors of the Company held totally five meetings in the report period, and the relevant resolutions were published in Securities Times and Ta Kung Pao. A. Board meetings and the resolutions 1. The 18th Meeting of the 3rd Board of Directors The meeting was held at 10 am, April 9, 2001. Five directors attended the meeting, which was in compliance with relevant regulations in laws and Articles of Association. Following resolutions were examined and approved in the meeting: 13 (1) 2000 Annual Report; (2) 2000 Financial Settlement Report; (3) 2000 Profit Distribution Preplan, the Company realized a net profit of RMB – 177,951,320.06, and no profit distribution would be conducted; (4) Proposal on Electing Directors for the 5th Board; (5) Proposal on Amending Articles of Association. 2. The 1st Meeting of the 5th Board of Directors The meeting was held on May 31, 2001. Eight directors were expected to attend the meeting while actually five of them were present, which was in compliance with relevant regulations of Company law and Articles of Association. Mr. Li Chengyou was elected as Chairman of the Board unanimously. 3. The 2nd Meeting of the 5th Board of Directors The meeting was held on July 6, 2001. Eight directors were expected to attend the meeting while actually seven of them (including three independent directors) were present, which was in compliance with relevant regulations of Company law and Articles of Association. Following resolutions were examined and approved in the meeting: (1) Due to work alter, it was approved that Mr. Li Chengyou resigned from the position of director and chairman of the Board; Mr. Pan Shiming was elected to be the director candidate. The resolution was examined and approved in Shareholders’ General Meeting. (2) Former director Xie Ruxian was elected as Chairman of the Board unanimously. (3) Nominated by the chairman of the Board, Mr. Liu Linfeng was engaged as general manager; nominated by the general manager, Ms. Hu Eryi was engaged as deputy general manager. 3. The 3rd Meeting of the 5th Board of Directors The meeting was held on Aug. 16, 2001. Eight directors were expected to attend the meeting while actually six of them were present, which was in compliance with relevant regulations of Company law and Articles of Association. 2001 Interim Report was examined and approved in the meeting and it was resolved to conduct neither profit distribution nor capital public reserve transferring into share capital in the interim of 2001. 4. The 4th Meeting of the 5th Board of Directors The meeting was held on Oct. 25, 2001. Eight directors were expected to attend the meeting while actually seven of them (including two independent directors) were present, which was in compliance with relevant regulations of Company law and Articles of Association. The Third Quarterly Report was examined and approved in the meeting. B. Implementation of resolutions of Shareholders’ General Meeting by the Board 1. Board of Directors of the Company strictly implemented all resolutions of the General Shareholders’ Meeting without material mistakes. 2. The Company conducted neither profit distribution, capital public reserve transferring into share capital, nor share allotment or additional issuance in the report 14 period without plan. (VIII) Profit Distribution Preplan for 2001 The Company will conduct neither profit distribution nor capital public reserve transferring into share capital for 2001, pending the examination and approval of Shareholders’ General Meeting. (IX) Other Matters The Company designated Securities Times and Ta Kung Pao as newspapers for information disclosure. IX. REPORT OF THE SUPERVISORY COMMITTEE In the spirit of being responsible to shareholders and strictly according to according to regulations in PRC Company Law and the Articles of Association, the Supervisory Committee has been loyally performing its obligations endowed by relevant laws and legislations, carrying out work positively and hard, safeguarding the legal rights and interests of the Company and shareholders, could put forward its opinions and suggestions promptly towards significant decisions made for productions, management and investment, has carried out supervision on the behaviors of directors and senior executives in terms of implementation of their obligations. I. Work of the Supervisory Committee in the Report Year In the report year, the Company held altogether 6 meetings of the Supervisory Committee. The public notices on resolutions of the meetings were published in Securities Times and Hong Kong Ta Kung Pao dated April 11, July 11, August 14, August 20, October 27, 2001respectively. 1. The 5th Meeting of 3rd Supervisory Committee was held on April 9, 2001, in which the Company’s 2000 annual report was passed unanimously. 2. The 6th Meeting of the 3rd Supervisory Committee was held on July 6, 2001, in which it was agreed to remove Mr. Tao Xiaochun from the post of supervisor due to change of work, and Mr. Lan Qihua was elected unanimously to be candidate of supervisor. 3. The 7th Meeting of 3rd Board of Directors was held on August 13, 2001, in which Mr. Lan Qihua was elected unanimously to be the convener of the Supervisory Committee. 4. The 8th Meeting of 3rd Supervisory Committee was held on August 16, 2001, in which the Company’s 2001interim report was reviewed and passed. 5. The 9th Meeting of the 3rd Supervisory Committee was held on October 11, 2001. The subject of the meeting was to learn relevant securities laws, regulations and policies, and to carefully study how to further improve the work of the Supervisory Committee and implement obligations of the Committee. 6. The 10th Meeting of the 3rd Supervisory Committee was held on October 25, 2001, in which the Company’s 3rd quarter report of 2001 was reviewed and passed. 15 II. Opinions on Relevant Issues in 2001 Expressed by the Supervisory Committee 1. Operation according to law: Pursuant to relevant national laws and legislations, the Supervisory Committee has carried out superintendence on the holding procedures of Shareholders’ General Meetings and Board meetings, resolution events, implementation of resolutions of Shareholders’ General Meetings by the Board of Directors, performance of duties of senior executives as well as the Company’s administration system etc.; It believed that in 2001, the Board of Directors strictly complied with PRC Company Law, Securities Law, Rules for Stock Listing, Articles of Association and other relevant systems, operated in a standardized manner, worked conscientiously, conducted business and made decisions in a scientific and reasonable way, and further improved internal administration and internal control system; The directors and managers haven’t violated law, legislation, the Articles of Association or damaged the interests of the Company and shareholders when performing duties. 2. Financial Inspection The 2001 interim financial report has truly reflected the financial status as of June 30, 2001 and the business results achieved from January to June in 2001. The 2001 auditors’ report is standard unqualified auditors’ report, which has truly reflected the Company’s financial status and business results in the year. 3. Application of raised funds: The Company had no issue regarding raised funds in the report year. 4. Purchase and sales of assets: About purchase or sales of assets in the report year, see the report of last year. 5. Opinions towards correlative transactions The Company conducted fair correlative transactions, haven’t damaged the interests of listed company, and there was no inside trading. X. SIGNIFICATN EVENTS (I) Material Lawsuit and Arbitration in the Report Year: The Company had no new material lawsuit or arbitration in the report year; Details about the material lawsuit or arbitration that occurred in the previous years see the notes of financial statement. (II) Purchase and Sales of Assets in the Report Year In the report year, there was no purchase and sales of assets. (III) Significant Correlative Transactions in the Report Year In the report year, there was no new significant correlative transaction; Details about the significant correlative transactions that occurred in the previous years see the notes of financial statement. (IV) Significant Contracts and Implementation of Contracts 1. In the report year, the Company hadn’t kept as custodian, contracted and leased any other company’s assets and vice versa. 16 2. In the report year, the Company had no new offering of guarantee; Details about the significant guarantee events that occurred in the previous year see the notes of financial statement. 3. In the report year, the Company hadn’t entrusted any other party to manage assets. (V) In the report year, the Company engaged Shenzhen Dahua Tiancheng Certified Public Accountants as the Group’s domestic auditing institution, whose remuneration was RMB 330,000, and engaged K. C. Oh & Company Certified Public Accountants as overseas auditing institution, whose remuneration was RMB 270,000. (VI) In the report year, the Company, the Board as well as directors hadn’t been punished by superintendence and administration authority. (VII) Other Significant Events: 1. On May 17, 2001, the Company announced the case of which the Merchants Bank took proceedings against the Company for the US$ 7.5 million loans the Company owed. According to SZFZZ No.29-232 and No.29-233 civil verdicts of Civil (2001) issued by Shenzhen Intermediate People’s Court, the Company was enforced to implement the case (see the public notice dated May 17, 2001). On September 19, 2001, the Company released the public notice on receiving (2001) SZFZZ No.29-233- 1 civil verdict issued by Shenzhen Intermediate People’s Court of Guangdong Province and on suspending the case of which the creditor Merchants Bank took proceedings against the Company (see the public notice dated September 19, 2001). 2. On June 2, 2001, the Company announced the case of which China Agriculture Bank (Singapore) Branch took proceedings against the Company for contract of guarantee. According to (1999) YGFZZ No.22-5 civil verdict and in light of the condition that the Company had no more assets to be executed, China Agricultural Bank (Singapore) Branch approved of postponing execution. The case involved totally US$ 10,249,000. (See the public notice dated June 2, 2001). 3. On June 13, 2001, the Company announced that it received (2000) GJCZ No.361 civil verdict released by Beijing Higher People’s Court on June 12, 2001, which pronounced the Company’s failure in the dispute case of contract of loans appealed by China Import and Export Bank. The case involved RMB 114,558,000. The case hasn’t been executed yet (see the public notice dated June 13, 2001). 4. On August 7, 2001, the Company announced that it received (2000) JJCZ No.53 civil verdict released by Jilin Higher People’s Court, in which the plaintiff Communication Bank Changchun Branch took proceedings against the Company to enforce it to undertake joint clearing liability for the RMB 50 million loans as well as the interests it owed to Gintian Industry (Group) Co., Ltd. (see the public notice dated August 7, 2001). 5. On August 31, 2001, the Company announced that it received (1998) SZFZZ No.532 civil verdict released by Shenzhen Intermediate Court of Guangdong Province, in which the creditor Bank of Guangdong Province Shenzhen Branch who took proceedings against the Company and Shenzhen Jia Nian Industrial Holding Co., Ltd. 17 for the dispute case of guarantee of loans came to reconciliation agreement so that (1998) SZFJTCZ No.146 civil mediating verdict was terminated. The case involved US$ 2 million (see the public notice dated August 31, 2001). 6. On December 13, 2001, the Company released a public notice, namely, according to the demand of International Finance Company who had provided the Company with loans against the mortgage raised on the its production equipment, Shenzehn Intermediate People’s Court entrusted Shenzhen Yi Chui International Auction Co., Ltd. to conduct auction on the mortgaged equipment in the morning of December 12, 2001 with a final transaction price of RMB 16.50 million. China Hua Rong Assets Management Company strokes the bargain successfully (see the public notice dated December 13, 2001). 7. Based on the debts reconstruction agreement signed by the Company and the foreign bank in 1999, the Company has gone through relevant legal text procedure of another foreign bank, in which US$ 14.30 million was involved (see the public notice dated August 31, 2001). 8. The Company’s first large shareholder Lionda Company signed the Framework Agreement on Rescinding Lionda’s Liability of Guarantee and on Reconstructing of CBC with Hua Rong Company on August 30, 2001, on which proxies from both of the two parties signed and stamped, and texts of the agreement were changed (see the public notice dated September 3, 2001). 9. According to the Framework Agreement on Rescinding Lionda’s Liability of Guarantee and on Reconstructing of CBC, Lionda Company and Hua Rong Company jointly established coordination team in the transitional period (see the public notice dated September 21, 2001). 10. The Company’s first large shareholder Lionda Company signed a Supplementary Agreement to the Framework Agreement on Rescinding Lionda’s Liability of Guarantee and on Reconstructing of CBC with Hua Rong Company on October 29, 2001, on which proxies from both of the two parties signed and stamped, and texts of the supplementary agreement were changed (see the public notice dated November 7, 2001). 11. In the auction of the Company’s production equipment on which a mortgage was raised for loans owed to International Finance Company, Hua Rong Company stoke the bargain (see the public notice dated December 13, 2001). 12. By September 30, 2001, the accounts receivable owed by the Company’s second large shareholder Hong Kong Da Huan Bicycle Co., Ltd. amounted to RMB 600,000,000, which occurred in the long-term trading between the two parties since 1998. Hong Kong Court declared liquidation of Da Huan Bicycle Company in May of 1999, which should be conducted in accordance with statutory liquidation procedures of Hong Kong. The Company had allocated RMB 127,000,000 accumulative provision for special bad debts, reinforced clearing and dunning, and will have collected altogether 67 million foreign legal person shares that Da Huan Bicycle held by September of this year. Since the liquidation work of Da Huan Company is in process, the Board of Directors was not able to decide on the liquidation period. The Company, however, will further reinforce dynamics in liquidation, try its best to 18 reclaim funds, and allocate as much provision as possible for bad debts in the principle of cautiousness (see the public notice dated December 29, 2001). XI. FINANCIAL REPORT (I) Auditors’ Report (please refer to the attachment) (II) Consolidated Financial Statements (please refer to the attachment) (III) Notes to the Consolidated Financial Statements (please refer to the attachment) XII. DOCUMENTS AVALIABLE FOR REFERENCE 1. Accounting statements carried with the personal signatures and seals of legal representative, person in charge of the accounting affairs and person in charge of the accounting department. 2. Original of auditors’ report carried with seal of the Certified Public Accountants as well as personal signatures and seals of certified public accountants. 3. Originals of all documents and public notices disclosed in public on the newspapers as designated by China Securities Regulatory Commission in the report period. 4. Annual reports disclosed in other securities markets. The Company will provide the above documents for reference timely provided that CSRC or Stock Exchange demands or shareholders requires according to the regulations and Articles of Association. Board of Director of Shenzhen China Bicycle Company (Holdings) Limited April 20, 2002 19 Attachment: Report of the auditors to the members of Shenzhen China Bicycle Company (Holdings) Limited (A joint stock limited company incorporated in the People’s Republic of China) We have audited the financial statements on pages 2 to 22, which are the responsibility of the Group’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. 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 the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In forming our opinion, we have considered the disclosures made in note 2(a) to the financial statements concerning the adequacy of the going concern basis as adopted in the financial statements. As explained in note 2(a) to the financial statements, the validity of the going concern basis depends upon the external funding being made available to meet the Group’s financial obligations that have been due and overdue. The board of directors believes that after the funding the Group will be able to meet its future working capital requirements. Accordingly the financial statements have been prepared on a going concern basis and do not include any adjustments that would result from the failure to obtain such funding. We consider that appropriate disclosures have been made. However, in view of the significant impact on the financial statements in relation to the possibility to raise sufficient working capital funds, we are unable to form an opinion as to the appropriateness of the going concern basis. Because of the uncertainty of the going concern basis, we are unable to form an opinion as to whether the financial statements give a true and fair view of the Group as at December 31, 2001 and the results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards. K. C. Oh & Company Certified Public Accountants Hong Kong : April 15, 2002 -1- Shenzhen China Bicycle Company (Holdings) Limited Consolidated profit and loss account for the year ended December 31, 2001 Note 2001 2000 RMB’000 RMB’000 Turnover 3 51,875 67,973 Cost of sales ( 63,356) ( 81,605) Gross loss ( 11,481) ( 13,632) Other revenue 9,539 11,127 Distribution costs ( 17,037) ( 10,528) Administrative expenses ( 46,369) ( 34,428) Other operating expenses ( 2,744) ( 3,510) Operating loss ( 68,092) ( 50,971) Finance costs ( 73,053) ( 86,268) Operating loss before abnormal items 4 ( 141,145) (137,239) Abnormal items 5 ( 1,870,830) ( 19,506) Operating loss after abnormal items (2,011,975) (156,745) Share of loss from associates ( 1,831) ( 615) Loss before taxation (2,013,806) (157,360) Taxation 6 - ( 9) Loss after taxation (2,013,806) (157,369) Minority interests 450 2,410 Loss for the year (2,013,356) (154,959) Loss per share RMB(4.199) RMB(0.323) Loss per share is calculated by dividing the loss of RMB2,013,356,000 (2000 - RMB154,959,000) attributable to shareholders by 479,433,003 shares in issue during the year. Shenzhen China Bicycle Company (Holdings) Limited Consolidated balance sheet as at December 31, 2001 Note 2001 2000 RMB’000 RMB’000 Non-current assets Property, plant and equipment 7 341,375 447,419 Construction in progress 8 36,833 36,387 Interests in unconsolidated subsidiaries 9 4,083 4,083 Interests in associates 10 29,589 45,301 Long-term investments 11 - 3,831 411,880 537,021 Current assets Inventories 12 63,159 215,972 Accounts receivable 13 8,798 254,040 Others receivable and prepayments 14 62,907 418,613 Amounts due from related companies 15 - 912,203 Bills receivable 50 93 Cash and bank balances 3,294 73,775 138,208 1,874,696 Total assets 550,088 2,411,717 Capital and reserves Share capital 17 479,433 479,433 Reserves 18 ( 2,473,326) ( 459,970) ( 1,993,893) 19,463 Minority interests 19 - - Long-term borrowings 20 50,211 66,712 Current liabilities Accounts payable 111,796 72,933 Others payable and receipts in advance 987,730 839,487 Amounts due to unconsolidated subsidiaries 2,870 - Amounts due to related companies 186,541 155,384 Accruals 377,994 403,464 Welfare payable 6,424 6,262 Overdue portion of long-term borrowings 20 88,456 88,456 Short-term borrowings 21 478,719 670,496 Provision for loss on guarantees 23 166,271 2,640 Tax payable 86,969 86,420 2,493,770 2,325,542 Total equity and liabilities 550,088 2,411,717 Shenzhen China Bicycle Company (Holdings) Limited Consolidated cash flow statement for the year ended December 31, 2001 2001 2000 RMB’000 RMB’000 Cash flow from operating activities Operating loss before taxation ( 2,013,806) ( 157,360) Adjustment items : Interest income ( 1,045) ( 6,570) Interest expense 65,496 84,848 Depreciation 24,104 24,527 Debt restructuring income ( 252,657) ( 33,179) Provision for loss on guarantees 163,631 - Reversal of housing benefit fund ( 4,225) - Provision for impairment loss of property, plant and equipment 76,569 - (Profit)/loss on disposal of property, plant and equipment ( 94) 6,164 Provision for impairment loss of construction in progress 2,320 - Provision for interest in a subsidiary not consolidated this year 43,981 - Provision for impairment loss of associates made/(reversed) 13,304 ( 1,923) Provision for impairment loss of long-term investments 50 - Provision for impairment loss of obsolete inventories 148,700 4,624 Provision for doubtful debts 1,660,487 44,222 Provision of minority interests made/(reversed) ( 1,002) 3,839 Profit on disposal of short-term investments - ( 14) Write-off of pre-operating and advertising expenses - 17,539 Retrospective effect on provision for doubtful debts - ( 16,730) Net operating cash outflow before movements in working capital ( 74,187) ( 30,013) Increase in amounts due to unconsolidated subsidiaries 2,870 - Increase in amounts due from associates ( 2,892) - Increase in amounts due to associates 3,509 - Decrease in inventories 4,113 19,735 (Increase)/decrease in accounts receivable ( 126,311) 15,106 Increase in others receivable and prepayments ( 135,468) ( 55,170) (Increase)/decrease in amounts due from related companies ( 38,683) 41,797 Decrease in bills receivable 43 7 Increase in accounts payable 38,863 10,215 Increase in amounts due to related companies 31,157 38,616 Increase/(decrease) in others payable, inclusive of tax payable 265,769 (183,435) Net cash outflow from operating activities ( 31,217) (143,142) (to be cont’d) Shenzhen China Bicycle Company (Holdings) Limited Consolidated cash flow statement for the year ended December 31, 2001 (cont’d) 2001 2000 RMB’000 RMB’000 Net cash outflow from operating activities ( 31,217) (143,142) Investing activities Interest received 1,045 6,570 Interest paid ( 130) ( 2,497) Proceeds from disposal of property, plant and equipment 6,099 300 Payment for acquisition of property, plant and equipment ( 672) ( 777) Increase in construction in progress ( 2,766) ( 4,043) Decrease in interest in associates 1,791 396 Proceeds from disposal of long-term investments 3,781 - Increase in pre-operating and advertising expenses - ( 237) Proceeds from disposal of short-term investments - 34 Net cash inflow/(outflow) from investing activities 9,148 ( 254) Financing activities (*) Increase/(decrease) in long-term borrowings ( 1,129) 12,178 Decrease in short-term borrowings ( 48,725) - Cash movement of minority interests 1,452 ( 72) Net cash inflow/(outflow) from financing activities ( 48,402) 12,106 Decrease in cash and cash equivalents ( 70,471) ( 131,290) Cash and cash equivalents as at beginning of the year 73,775 205,065 Adjustment of opening cash and bank balances of a subsidiary not consolidated this year ( 10) - Cash and cash equivalents as at end of the year 3,294 73,775 (*) Cash flow from financing Long-term Short-term Minority borrowings borrowings interests RMB’000 RMB’000 RMB’000 Balance as at the beginning of the year 155,168 670,496 - Opening adjustment of a subsidiary not consolidated - ( 84,047) - Cash flows from financing ( 1,129) ( 48,725) 1,452 Housing benefit fund transferred as income ( 4,225) - - Reallocation to others payable ( 11,147) ( 59,005) - Minority interests’ share of loss for the year - - ( 450) Absorption of minority interests’ loss reversed - - (1,002) Balance as at the end of the year 138,667 478,719 - Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 1. Corporate information Shenzhen China Bicycle Company (Holdings) Limited (the “Company”) is established in the People’s Republic of China (the “PRC”) as a joint stock limited company. The principal activities of the Company are manufacture of bicycles and investment holding whilst the principal activities of the subsidiaries and associates (which together with the Company comprise the “Group”) are set out in note 22 to the financial statements. 2. Principal accounting policies (a) Basis of accounting The financial statements have been prepared in accordance with International Accounting Standards (“IAS”) as if those standards had been applied consistently throughout the year. This basis of accounting differs from the statutory accounts of the Group which are in accordance with the accounting principles and the relevant financial regulations applicable to enterprises in the PRC. The principal activity of the Group is production and sales of “deluxe” motor cycles to overseas customers. However, owing to the worldwide anti-dumping measures, the turnover has dropped drastically for the past few years, leading to an accumulated loss of RMB3,303,499,000. In addition, the Group has substantial balances of bank borrowings, accounts payable, others payable and amounts due to related companies, etc. The Group is now undergoing external funding process and believes that the newly raised funds will be able to meet the Group’s future working capital requirements. In view of the above, the financial statements have been prepared on a going concern basis. (b) Basis of consolidation The consolidated financial statements incorporate the audited financial statements of the Company and its subsidiaries made up to December 31, 2001 and include the Group’s attributable share of post-acquisition results of its associates. Results of subsidiaries and associates acquired or disposed of during the year are consolidated/equity accounted for from or to their effective dates of acquisition or disposal, respectively. All significant intra-group transactions and balances are eliminated on consolidation. (c) Subsidiaries a subsidiary is a company in which the company holds, directly or indirectly, more than 50% of the equity interest as a long-term investment and/or has the power to cast the majority of votes at meetings of the board of directors/management committee. (d) Associates An associate is a company, not being a subsidiary, in which the Company holds, directly or indirectly, not less than 20% and not more than 50% equity interest as a long-term investment and is able to exercise significant influence on this company. Investment in associates is stated at cost plus the Group’s share of post- acquisition reserves. Profit/loss from associates represents the Group’s share of post-acquisition results by the associates during the year. (e) Related companies A related company is a company, not being a subsidiary or an associate, in which the major shareholders or directors of the Company or its group companies have a beneficial interest therein, or are in a position to exercise significant influence over that company. (f) Property, plant, equipment and depreciation Such assets are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the assets have been put into operation, such as repairs and maintenance and overhaul costs, are charged to the consolidated profit and loss account in the period in which they are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of the assets, the expenditures are capitalised as an additional cost of the assets. When assets are sold or retired, their cost and accumulated depreciation are eliminated from the accounts and any profit or loss resulting form their disposal is included in the consolidated profit and loss account. Depreciation is provided to write off the cost of depreciable assets, after taking into account of their estimated residual values, over their estimated useful lives on a straight line basis. The estimated useful lives of property, plant and equipment are as follows : Land and buildings 20 years Plant and machinery 10 years Office and electronic equipment 5 years Motor vehicles 5 years Others 5 years (g) Construction in progress Construction in progress represents properties under construction and equipment purchased prior to installation and is stated at cost. Cost comprises direct costs, attributable overheads and where applicable finance expenses arising from borrowings used specifically to finance the construction of the properties and the acquisition of the equipment until the construction or installation is completed. The cost of completed construction work is transferred to appropriate category of property, plant and equipment, and depreciation commences when the assets are ready for their intended use. (h) Investments Investments, whether they are held on a long-term or a short-term basis, are stated at cost less impairment loss considered necessary by the directors. Income from investments is accounted for to the extent of dividend and/or interest income received or receivable. (i) Inventories and work in progress Inventories are stated at the lower of cost, on the weighted average method, and net realisable value. The cost of finished goods and work in progress includes the actual costs of direct materials and direct labour together with an appropriate proportion of production overheads. Net realisable value is based on the estimated selling prices less further costs expected to be incurred to completion and disposal. (j) Revenue recognition Sales are recognised when the goods are delivered and the title has passed. Rental income under operating leases is recognised on a straight line basis over the term of the relevant lease. Interest income from bank deposits is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable. Dividend income from investments is recognised when the shareholders’ right to receive payment has been established. (k) Capitalisation of borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e. assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of these assets. Capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from borrowing costs capitalised. (l) Operating leases Leases under which all the risks and rewards of ownership of assets substantially remain with the lessor are accounted as operating leases. Annual rentals applicable to such operating leases are charged to the consolidated profit and loss account on a straight line basis over the lease terms. (m) Foreign currency transactions The PRC Group companies maintain their books and records in Renminbi. Foreign currency transactions are translated into Renminbi at the applicable rates of exchange prevailing at the first of January every year. Monetary assets and liabilities denominated in foreign currencies are translated into Renminbi at the applicable rates of exchange prevailing at the balance sheet date. Exchange differences arising from changes of exchange rates subsequent to the dates of transactions are included in the determination of the current year’s results. (n) Cash equivalents Cash equivalents are short-term, highly liquid investments that are readily available to known amounts of cash and which are subject to an insignificant risk of changes in value, less advances from bankers that are repayable within three months from the date of their inception. 3. Segment analysis of turnover, results and assets The turnover, results and assets of the Group, analysed by business activity are as follows : 2001 2000 RMB’000 RMB’000 Turnover Sales of goods 48,923 65,609 Property management 2,132 1,854 Others 820 510 51,875 67,973 Gross profit/(loss) Sales of goods ( 12,344) (14,378) Property management 632 237 Others 231 509 ( 11,481) (13,632) 4. Operating loss before abnormal items 2001 2000 RMB’000 RMB’000 The Group’s operating loss before abnormal items is arrived at after crediting Interest income 1,045 6,570 Exchange gain - 19 Profit on disposal of property, plant and equipment 94 - Profit on disposal of short-term investments - 14 Rental income 6,818 4,768 And after charging Write-off of pre-operating and advertising expenses - 17,539 Depreciation 24,104 24,527 Exchange loss 660 - Interest expense 65,496 84,848 Loss on disposal of property, plant and equipment - 6,164 Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 5. Abnormal items 2001 2000 Note RMB’000 RMB’000 Abnormal items comprise Provision for impairment loss of property, plant and equipment 7 ( 76,569) - Provision for impairment loss of construction in progress (*) ( 2,320) - Provision for loss on non-consolidated subsidiary 16 ( 43,981) - Provision for impairment loss of associates (*) ( 13,304) - Provision for impairment loss of long-term investment (*) ( 50) - Loss on disposal of obsolete inventories ( 19,672) - Provision for impairment loss of obsolete inventories (*) ( 148,700) ( 4,624) Provision for doubtful debts of accounts receivable (*) ( 371,553) ( 44,222) Provision for doubtful debts of others receivable and prepayments (*) ( 338,048) - Provision for doubtful debts of amounts due from related companies (*) ( 950,886) - Provision for loss on guarantees (*) ( 163,631) - Reversal/(absorption) of loss from minority interests 1,002 ( 3,839) Debt restructuring income (**) 252,657 33,179 Reversal of housing benefit fund 4,225 - ( 1,870,830) ( 19,506) (*) During the year, the Group made a critical review on assets that were obsolete, receivables that were long outstanding and guarantees that were provided to third parties and had made adequate provision for diminution in their value. (**) The debt restructuring process is in the final stage of completion. Debt restructuring income represents forfeited principals and interests agreed by creditors less incidental expenses in relation thereto. The accumulated debt restructuring income is RMB652,225,000 and is composed of the current year’s income of RMB252,657,000 plus the amount of RMB399,568,000 that had already been recognised in prior years. 6. Taxation 2001 2000 RMB’000 RMB’000 Income tax Company and subsidiaries - 9 Associates - - - 9 PRC income tax has been provided at the applicable rates based on the assessable profit in the PRC for the year as calculated in accordance with Accounting Principles and Tax Law of PRC. Taxation payable in the consolidated balance sheet includes VAT turnover tax and other taxes. Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 7. Property, plant and equipment Land and Plant and Office Electronic buildings machinery equipment equipment ve RMB’000 RMB’000 RMB’000 RMB’000 RM Cost Balance as at January 1, 2001 498,418 255,098 18,598 898 Adjustment for a subsidiary not consolidated this year - ( 173) 108 - Additions 66 52 415 6 Disposals ( 6,249) - ( 158) ( 66) ( Balance as at December 31, 2001 492,235 254,977 18,963 838 Accumulated depreciation Balance as at January 1, 2001 ( 152,577) (159,730) (16,308) (716) ( Adjustment for a subsidiary not consolidated this year - 84 ( 46) - Charged for the year ( 19,103) ( 4,347) ( 129) ( 28) ( Written back on disposals 584 - 143 46 Provision for impairment loss ( 2,085) ( 74,484) - - Balance as at December 31, 2001 (173,181) (238,477) (16,340) ( 698) ( Net book value As at December 31, 2001 319,054 16,500 2,623 140 As at December 31, 2000 345,841 95,368 2,290 182 By the end of the current year, a portion of the Group’s land and buildings and plant and machinery had been taken for auction sale in order to repay the relevant secured loans. sheet date. As the auction price was well below their net book value of RMB114,977,000, the Group had made a provision for impairment loss of RMB76,569,000. A portion of the Group’s land and buildings with respective areas of 14,992 square metres and 127,333 square metres and the construction in progress with an area of 5,571 s have been pledged to the bankers to obtain bank loan facilities in the amount of RMB159,564,000 and other export bills facilities. Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 8. Construction in progress 2001 2000 RMB’000 RMB’000 Balance as at beginning of the year 36,387 33,243 Additions during the year 2,766 4,083 Transfer to other assets - ( 899) Disposals during the year - ( 40) Provision for impairment loss ( 2,320) - Balance as at end of the year 36,833 36,387 9. Interests in unconsolidated subsidiaries 2001 2000 RMB’000 RMB’000 Investments in unconsolidated subsidiaries, at cost 18,743 18,246 Provision for impairment loss ( 14,660) (14,163) 4,083 4,083 10. Interests in associates 2001 2000 RMB’000 RMB’000 Capital contributions, at cost 73,958 73,918 Share of post-acquisition loss ( 11,499) ( 9,668) Share of net assets of associates 62,459 64,250 Provision for impairment loss ( 22,653) ( 9,349) 39,806 54,901 Amounts due from associates 2,892 - Amounts due to associates ( 13,109) ( 9,600) 29,589 45,301 Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 11. Long-term investments 2001 2000 RMB’000 RMB’000 Unlisted investments, at cost 50 3,831 Provision for impairment loss ( 50) - - 3,831 12. Inventories 2001 2000 RMB’000 RMB’000 Raw materials 264,060 269,321 Work in progress 2,854 - Finished goods 68,912 70,392 Consumable stores 2,091 2,317 Provision for diminution in value of obsolete inventories (274,758) (126,058) 63,159 215,972 13. Accounts receivable 2001 2000 RMB’000 RMB’000 Amounts receivable 636,900 510,589 Provision for doubtful debts (628,102) (256,549) 8,798 254,040 14. Others receivable and prepayments 2001 2000 RMB’000 RMB’000 Others receivable 399,598 415,721 Advance payments 405 2,463 Prepayments 952 429 400,955 418,613 Provision for doubtful debts (338,048) - 62,907 418,613 Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 15. Amounts due from related companies 2001 2000 RMB’000 RMB’000 Amounts due from related companies 1,121,581 1,082,898 Provision for doubtful debts (1,121,581) ( 170,695) - 912,203 16. Effect of a subsidiary not consolidated this year The subsidiary Zoria Pte. Ltd. is now insolvent and has ceased its business operations. As a result, it has not been consolidated for the current year. The assets and liabilities previously included in consolidation have been adjusted in the financial statements with details as follows : 2001 2000 RMB’000 RMB’000 Property, plant and equipment 38 - Others receivable and prepayments 153,126 - Cash and bank balances 10 - Accruals ( 25,146) - Short-term borrowings ( 84,047) - Net asset value 43,981 - A full provision has been made for the cost of the above subsidiary and the net asset value of RMB43,981,000 previously consolidated is dealt with in the current year’s abnormal items. 17. Share capital 2001 2000 RMB’000 RMB’000 Registered, issued and fully paid capital, at par value of RMB1 each 224,435,655 (2000 - 224,435,655) domestic shares 224,435 224,435 76,376,700 (2000 - 76,376,700) “A” shares 76,377 76,377 178,620,648 (2000 - 178,620,648) “B” shares 178,621 178,621 479,433 479,433 Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 18. Reserves Statutory Discretionary Statutory Capital surplus surplus public reserve reserve reserve welfare fund RMB’000 RMB’000 RMB’000 RMB’000 As at beginning of the year 588,205 185,011 24,284 32,673 Loss for the year - - - - Reclassification - - - - As at end of the year 588,205 185,011 24,284 32,673 According to the Company’s Articles of Association and the PRC’s relevant laws and policies, as well as after making up the Company’s loss, the Company is required to m determined in accordance with the PRC accounting standards, of the Company to the statutory surplus reserve until the reserve balance has reached 50% of the registered capita is also required to transfer 5% from the profit after taxation to the statutory public welfare fund. The statutory surplus reserve and the capital reserve may be applied only for the following purposes : i the statutory surplus reserve may be used to make up loss; and ii a reserve may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of t reserve is converted into share capital, the amount remaining in the reserve shall be no less than 25% of the newly increased registered capital. The directors do not recommend the transfer to such reserves or the payment of any dividend in respect of the year ended December 31, 2001. The statutory public welfare fund shall only be applied for the collective welfare of the Company’s employees, and upon utilisation, an amount equal to expenditure spent on public welfare fund to discretionary surplus reserve. Prior to making up the Company’s loss and the relevant appropriations to the statutory surplus reserve and the statutory public welfare fund, no dividend may be paid. Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 19. Minority interests 2001 2000 RMB’000 RMB’000 Minority interests (2,837) (3,839) Absorption of loss 2,837 3,839 - - 20. Long-term borrowings 2001 2000 RMB’000 RMB’000 Long-term loans from banks 88,456 90,456 Others 50,211 64,712 138,667 155,168 The borrowings are repayable as follows : Overdue 88,456 88,456 On demand or within one year - - More than one year 50,211 66,712 138,667 155,168 Amounts due for settlement within 12 months (shown under current liabilities) ( 88,456) ( 88,456) Amounts due for settlement after 12 months 50,211 66,712 The loans of RMB88,456,000 were obtained from various banks. They are either secured or guaranteed by the companies within the Group and the related companies. Certain collateral amounting to RMB70,550,000 were taken to auction sale. Others are unsecured, interest free and have no fixed repayment terms. 21. Short-term borrowings 2001 2000 RMB’000 RMB’000 Unsecured loans payable 244,978 263,730 Mortgaged loans payable 10,300 8,300 Guaranteed loans payable 223,441 398,466 478,719 670,496 The Group’s bank loans are secured by the properties of the Group and shareholders as well as the guarantees by the companies within the Group and related companies. They were all overdue as at year end date. 22. Principal subsidiaries and associates The details of the Group’s principal subsidiaries are as follows : Place of establishment/ Attributable Name operation equity interest Principal activity China Bicycles (Hong Kong) Hong Kong 100% Bicycle and spare part Co., Limited distribution Jiu Jiang Hua Tian Property PRC 100% Property development * Co., Ltd. Shenzhen Augule Property PRC 100% Property management Management Co., Ltd. Shenzhen China Bicycle PRC 100% Bicycle and spare part (Guangzhou) Distribution distribution * Co., Ltd. Zoria Pte. Ltd. Singapore 100% Bicycle and spare part distribution * Well Gain Enterprise PRC 98% Material supplies * (Shenzhen) Co., Ltd. Shenzhen China Bicycle PRC 70% Bicycle and spare part (Shanxi) Distribution distribution Co., Ltd. Shenzhen China Bicycle PRC 70% Bicycle and spare part (Hainan) Distribution distribution * Co., Ltd. Shenzhen China Bicycle PRC 60% Bicycle and spare part (Harbin) Distribution distribution Co., Ltd. Shenzhen China Bicycle PRC 55% Bicycle and spare part (Jiangxi) Distribution distribution * Co., Ltd. Huangzhou Chung Jiang PRC 51% Property development * Industrial Co., Ltd. Jiangxi Hong Ji Property PRC 51% Property development * Development Co., Ltd. * Not required to be consolidated as the subsidiary has ceased the business, is under liquidation or is unable to transfer funds to the parent because of its operations under long-term restrictions Note : Certain names are direct translation of their Chinese registered names 22. Principal subsidiaries and associates (cont’d) The details of the Group’s principal associates are as follows : Place of establishment/ Attributable Name operation equity interest Principal activity Shenzhen Jinhuan Print Plate PRC 38% Manufacture of bicycle Co., Ltd. and motorcycle spare parts Jiang Xi Li Hua Enterprise Ltd. PRC 34.62% Commercial service Shan Tou Special Economic PRC 30% Manufacture of bicycle Zone Da Peng Industrial aluminum spare parts Co., Ltd. Shenzhen Canghai Enterprise PRC 30% Manufacture of machinery Co., Ltd. Yang Zhou Xing Hua Bicycle PRC 30% Manufacture of bicycle Parts Co., Ltd. spare parts and motors, etc. Jian Xu Huai Yin Huayu PRC 25% Manufacture of bicycle Bicycle Parts Co., Ltd. spare parts Shenzhen Tange Bicycle PRC 20% Manufacture of bicycle Parts Co., Ltd. spare parts Shenzhen Zhunbao Industrial PRC 12.5% * Commercial and industrial Company service Hunam Guangnam Motor Cycle PRC 11% * Manufacture of motorcycle Company spare parts Shenzhen Emmelle PRC 2% * Manufacture of bicycle, Industry Co., Ltd. motor vehicle and motorcycle * The Groups is able to exercise significant influence on these companies Note : Certain names are direct translation of their Chinese registered names 23. Contingent liabilities and losses As at December 31, 2001, the Group had contingent liabilities and losses as follows : 2001 2000 RMB’000 RMB’000 Guarantees given to bankers, in respect of banking facilities utilised by subsidiaries and associates 191,542 100,542 Bills discounted with recourse - 339,304 191,542 439,846 Contingent loss on guarantees provided (166,271) ( 2,640) Contingent liabilities not provided 25,271 437,206 24. Pledge of assets As at December 31, 2001, the buildings and the machinery of the Group at net book value amounting to RMB441,209,000 (2000 - RMB441,209,000) together with the guarantees from a related company were pledged for securing loans of RMB534,890,000 (2000 - RMB557,274,000) available to the Group. However, a total sum of RMB114,977,000 at net book value of the collateral security of the Group was disposed of under forced sales during the year. 25. Related party transactions During the year, the Group had material transactions with the following related parties : Related parties Transactions 2001 2000 RMB’000 RMB’000 Shenzhen Lionda Holdings Interest paid 3,682 3,349 Company Limited Guarantee fee paid 6,888 7,182 Shenzhen Emmelle Royalty fee received 211 - Industry Co., Ltd. 26. financial instruments financial assets of the group include cash and bank balances, bills receivable, account receivables, prepayments, deposits and other receivables. financial liabilities include bank loans, account payables, other payables and accrued expenses. (a) credit risk cash and bank balances : the group mainly cash are deposited in bank. they does not have a significant exposure to credit risk. account receivables : the group does not have a significant exposure to any individual customer or counterpart. the major concentrations of credit risk arise from exposures to a substantial number of account receivables that are mainly located in the prc. (b) fair value the fair value of cash and bank balances, bills receivable, account receivables, prepayments, deposits and other receivables, bank loans, account payables, other payables and accrued expenses are not materially different from their carrying amount. the carrying value of short-term bank loans is estimated to approximate its fair value based on the borrowing terms and rates of similar loans. the fair value of long-term bank loans is estimated, by applying discounted cash flow method using carrying market interest rates for similar financial instruments, to approximate its carrying value. fair value estimates are made at a specific point in time and based on relevant market information and information about the financial instruments. these estimates are subjective in nature and involve uncertainties on matters of significant judgement, and therefore cannot be determined with precision. changes in assumptions could significantly affect the estimates. Shenzhen China Bicycle Company (Holdings) Limited Notes to the financial statements for the year ended December 31, 2001 (cont’d) 27. Impact of IAS adjustments on loss attributable to shareholders 2001 2000 RMB’000 RMB’000 As reported by PRC Certified Public Accountants (2,257,244) (177,951) Adjustments to conform to IAS Loss on disposal of property, plant and equipment reversed - 60 Absorption of operating loss in a subsidiary ( 14,231) - Write-back/(write-off) of deferred assets 8,311 ( 6,195) Loss on disposal of current assets made/(reversed) 5,823 ( 213) Loss on disposal of obsolete inventories ( 19,672) - Reversal of prepayments 5,773 - Reversal/(absorption) of loss from minority interests 1,002 ( 3,839) Reversal of housing benefit fund 4,225 - Debt restructuring income 252,657 33,179 As restated in conformity with IAS (2,013,356) (154,959) 28. Impact of IAS adjustments on net assets 2001 2000 RMB’000 RMB’000 As reported by PRC Certified Public Accountants (1,988,678) 45,588 Adjustments to conform to IAS Write-off of deferred assets ( 2,378) ( 16,463) Loss on disposal of current assets - ( 5,823) Absorption of loss from minority interests ( 2,837) ( 3,839) As restated in conformity with IAS (1,993,893) 19,463 29. language the translated english version of financial statements is for reference only. should any disagreement arise, the chinese version shall prevail. 30. comparative figures certain comparative figures have been reclassified so as to conform to the current year’s presentation.