PT金田Ａ(000003)2001年年度报告（英文版）

GINTIAN INDUSTRY (GROUP) CO., LTD. 金田實業(集團)股份有限公司 Audited Financial Statements For the year ended December 31, 2001 AUDITORS’ REPORT TO THE SHAREHOLDERS OF GINTIAN INDUSTRY (GROUP) CO., LTD. (Incorporated in the Peoples’ Republic of China with limited liability) We have audited the consolidated accounts on pages 3 to 20 of Gintian Industry (Group) Co., Ltd. (the “Company”) and its subsidiaries (together with the Company referred to as the “Group”) for the year ended December 31, 2001. These consolidated accounts are the responsibilities of the Group’s directors. Our responsibility is to express an opinion on these consolidated accounts based on our audit. We conducted our audit in accordance with International Standards on Auditing as promulgated by the International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and significant estimates made by directors, as well as evaluating the overall accounts presentation. However, the evidence available to us was limited in connection with the followings: 1. As at December 31, 2001, the Group’s accumulated losses amounted to RMB1,329,603,000 (2000: RMB1,346,164,000). Current liabilities exceeded current assets by RMB1,334,083,000 (2000: RMB1,436,046,000) whilst bank loans of RMB887,004,000 (2000: RMB872,004,000) have been overdue for repayment. Currently, the majority of the banks have undertaken legal action against the Group as the Group is unable to pay its debts as they fall due. These raise substantial doubts as to whether the Group can be operated as a going concern. Accordingly, it might not be appropriate for the financial statements to be prepared on a going concern basis. Should the Company be unable to continue to operate on the basis which is dependent on the outcome of negotiations for continuing bank financing and the outcome of the litigation cases being in the process, adjustments would have to be made to reduce the value of assets to their recoverable amounts, to provide for any further liabilities which might arise, and to reclassify non-current assets and long-term liabilities as current assets and liabilities. Currently, these have not yet been reflected in the consolidated financial statements for the year ended December 31, 2001. Consequently, we are unable to ascertain the impact of these adjustments to the net assets and net losses of the Group. 2. As at December 31, 2001, properties under development amounted to RMB359,068,000, of which an amount of approximately RMB22,600,000 (2000: RMB112,978,000) have already been under custody of the banks since July 2000 whilst an amount of RMB35,669,000 (2000: RMB37,759,000) is not properly supported by the legal evidence so that we are unable to conclude the ownerships. As the Group does not have sufficient working capital, the construction work of the remaining balance of RMB300,799,000 has been suspended and there is no plan set by the management as to when the construction work is to be resumed. As there was no satisfactory evidence available that we can ascertain the net realizable values of these properties under development, we are unable to determine with reasonable certainty about the realizable values of these balances. 1 AUDITORS’ REPORT TO THE SHAREHOLDERS OF GINTIAN INDUSTRY (GROUP) CO., LTD. - CONTINUED (Incorporated in the Peoples’ Republic of China with limited liability) 3 As at December 31, 2001, the Group has received over 68 legal claims which are in the process in different courts in the PRC. The parties which undertook the legal claims against the Group are mainly banks, construction contractors and customers and these claims mainly relate to the bank loans overdue for repayments, the outstanding construction fee and the sales of properties. The total amounts under legal proceedings against the Group are approximately RMB896,730,000. No provision has been accounted for in the financial statements of the Group. We are unable to ascertain the outcome and the impact of these legal claims on the financial statements. 4. As mentioned in note 9 to the financial statements, during the year, the Group recognized a gain of RMB103,905,000 which derived from the disposals of subsidiaries (which had been written off in the previous years). In accordance with the sales agreements, the disposals of these subsidiaries are subject to the re-organization plan, which is still being under process. Should the re-organization plan not be proceeded, the purchasers of these subsidiaries have the rights to return these subsidiaries to the Group and have the right to collect the amounts paid to the Group. We consider that this income should be deferred until the re-organization is finalized. 5. As mentioned in the preceding paragraph 1, bank loans of RMB887,004,000 (2000: RMB872,004,000) have been overdue for repayment. The Group has not yet accrued for the overdue bank interest totaling RMB54,334,000. In our opinion, this amount should be accrued in the financial statements. Because of the significance of the potential impacts of the matters as referred to in the preceding paragraphs, we are unable to form an opinion as to whether the consolidated accounts give a true and fair view of the state of affairs of the Group as at December 31, 2001, and of the profit and the cash flows of the Group for the year then ended in accordance with the International Accounting Standards as promulgated by the International Accounting Standards Committee. GLASS RADCLIFFE CHAN Certified Public Accountants Hong Kong, April 28, 2002 2 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2001 Restated Notes 2001 2000 RMB’000 RMB’000 Turnover 4 36,607 85,633 Cost of sales (40,845 ) (80,371 ) Gross (loss)/profit (4,238 ) 5,262 Other revenue less other expenses 13,551 6,547 Administrative expenses (26,720 ) (710,681 ) Distribution costs (1,816 ) (1,530 ) Loss from operations 6 (19,223 ) (700,402 ) Finance costs 7 (58,566 ) (62,973 ) Non-operating income less expenses (11,884 ) (18,686 ) Income/(Loss) from investments 8 2,330 (28,445 ) Gain on disposals of subsidiaries 9 103,904 - Profit / (Loss) before taxation 16,561 (810,506 ) Taxation 10 - - Profit/(Loss) attributable to shareholders 16,561 (810,506 ) Earnings/(Loss) per share Basic and diluted 11 RMB0.05 (RMB2.43 ) As the only component of recognized gains and losses is the net profit for the year, a separate statement in this respect is not provided. 3 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2001 Restated Notes 2001 2000 RMB’000 RMB’000 ASSETS Non-current assets Fixed assets 12 246,198 244,427 Construction in progress - 199 Interests in associates 14 54,083 77,793 Long term investments 15 37,633 111,003 Deferred assets - 4,686 337,914 438,108 Current assets Inventories 16 389,767 225,103 Trading securities 17 22,435 25,435 Accounts receivable, other receivables and prepayments 441,610 300,008 Other assets 122 - Cash and bank balances 7,061 11,245 860,995 561,791 Current liabilities Short term loans 18 919,642 953,962 Tax payable 48,565 47,645 Receipts in advance and other payables 698,125 654,490 Accruals and accounts payable 528,746 323,740 Current portion of long term liabilities - 18,000 2,195,078 1,997,837 Net current liabilities (1,334,083 ) (1,436,046 ) Total assets less current liabilities (996,169 ) (997,938 ) Non-current liabilities Long-term loans - 14,792 Net liabilities (996,169 ) (1,012,730 ) CAPITAL AND RESERVES Share capital 19 333,434 333,434 Reserves 20 (1,329,603 ) (1,346,164 ) (996,169 ) (1,012,730 ) Approved by the Board of Directors on DIRECTOR DIRECTOR 4 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2001 Notes 2001 RMB’000 Net cash inflow from operating activities 21 (77,859) Investing activities Dividends received 134 Receipts from sales of fixed assets 4,454 Receipts from sales of trading securities 2,530 Acquisition of fixed assets (8,555 ) Disposal of interest in subsidiary companies 200,985 Net cash inflow from investing activities 199,548 Financing activities Interest paid (58,761 ) Repayments of short-term bank loans 22 (52,320 ) Repayments of long-term bank loans 22 (14,792 ) Net cash used in financing activities (125,873 ) Net decrease in cash and cash equivalents (4,184 ) Cash and cash equivalents at beginning of year 11,245 Cash and cash equivalents at end of year 7,061 Analyze of the balance of cash and cash equivalents Bank balances and cash 7,061 Note: As management do not present the information for the restated cash flow statement for the year ended December 31, 2000, no comparative figures are provided. 5 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 1. CORPORATION INFORMATION Gintain Industry (Group) Co., Ltd. (“the Company”) was incorporated in 1988 in the People’s of Republic China (“PRC”)and was restructured as a stock limited company in 1989. The Company issued A and B shares in 1989 and 1993 respectively in the Shenzhen Stock Exchange. The principal activities of the Company and its subsidiaries (together with the Company referred to as the “Group”) are property development and management, sale and manufacture of floppy disks and trade of merchandises. 2. BASIS OF PREPARATION The financial statements have been prepared in accordance with International Accounting Standards (“IAS”) as if these standards had been applied consistently throughout the year. This basis of accounting differs from that used in the management accounts of the Group companies which were prepared in accordance with generally accepted accounting principles and relevant financial regulations in the PRC (“PRC GAAP”). Adjustments have been made for compliance with IAS but will not be recognized in the books of the companies within the Group. 3. PRINCIPAL ACCOUNTING POLICIES The following principal accounting policies are adopted by the Group in preparing the financial statements to comply with IAS: (a) Basis of consolidation The group accounts comprise the accounts of the Company and all its subsidiaries made up to December 31. All significant inter-company transactions and balances within the Group have been eliminated on consolidation. Minority interests represent the interests of outside shareholders in the operation results and net assets of subsidiaries. The results of subsidiaries acquired or disposed of during the year are included in the consolidated profit and loss account from the effective date of acquisition or up to the effective date of disposal, as appropriate. The group accounts also include the Group’s share of post acquisition profits less losses, and reserves, of its associated companies. (b) Subsidiaries A subsidiary is a company in which the Company, directly or indirectly, controls more than half of the voting power or issued share capital or controls the composition of the board of directors. 6 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 3. PRINCIPAL ACCOUNTING POLICIES – (continued) (c) Interests in associates An associate is an enterprise, not being a subsidiary or a joint venture, in which the Group has a long-term equity interest and is in a position to exercise significant influence in its management. The consolidated profit and loss account includes the Group’s share of the post-acquisition results of its associates for the year. In the consolidated balance sheet, interests in associates are initially reflected at cost and are subsequently adjusted for post-acquisition changes in the Group’s share of the net assets of its associates, plus any goodwill not yet written off or amortized. The carrying amount of such interests is reduced to recognize any decline, other than a temporary decline, in the value of individual investments. Investment in associated companies are stated at cost less provision for permanent diminution in value and the results of the associated companies are accounted for by the Company on the basis or dividends received and receivable. Where the Group transacts with its associates, unrealized profits and losses are eliminated to the extent of the Group’s interest in the relevant associate, except where unrealized losses provide evidence of an impairment of the asset transferred, in which case those unrealized losses are not eliminated. (d) Fixed assets and depreciation Fixed assets are stated at cost less accumulated depreciation and any provisions for impairment losses required to reflect recoverable amounts. Costs represent the purchase price and any directly attributable costs of bringing the asset to working condition for its intended use. Subsequent expenditure is capitalized when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the enterprise. All other subsequent expenditure, such as repairs and maintenance and overhaul costs, is recognized as an expense in the period in which it is incurred. Depreciation is provided to write off the cost of fixed assets less their estimated residual values over their anticipated useful lives, on the straight-line method. Estimated useful lives are summarized as follows: - Land and buildings 14-35years Leasehold improvements 5 years Plant and machinery 10 years Electronic equipment 5 years Motor vehicles 5-6 years Furniture, fixtures and office equipment 5 years When tangible fixed assets are sold or retired, their cost and accumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in the profit and loss account. 7 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 3. PRINCIPAL ACCOUNTING POLICIES – (continued) (d) Fixed assets and depreciation – (continued) Major costs incurred in restoring fixed assets to their normal working condition are charged to the profit and loss account. Improvements are capitalized and depreciated over their expected remaining useful lives to the Group. The carrying amounts of fixed assets are reviewed regularly to assess whether their recoverable amounts have declined below their carrying amounts. Expected future cash flows have not been discounted in determining the recoverable amount. (e) Investments (i) Long term investments Long term investments, which are held for long term, are stated at cost less provision for diminution in value other than temporary in nature. (ii) Trading securities Trading securities are carried at market value determined on an individual basis. Reductions to market value and reversals of such reductions are recognized in profit and loss account as they arise. (f) Properties held for/under development and completed properties held for sales Properties held for/under development and completed properties held for sales are stated at cost less net realizable value. Cost includes land use rights, construction cost and development costs, and interest capitalized during the development period and other direct costs. Net realizable value is the estimated selling price less related expenses in the normal course of business. (g) Inventories Inventories are stated the lower of cost and net realizable value. Costs, which comprise all costs of purchase, are calculated using the first-in first-out method. Net realizable value represents the estimated selling prices less all estimated costs of completion and selling expenses. (h) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalized as part of the cost of those assets. Capitalization 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 the borrowing costs capitalized. All other borrowing costs are recognized as an expense in the period in which they are incurred. 8 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 3. PRINCIPAL ACCOUNTING POLICIES – (continued) (i) Revenue recognition Revenue from sale of property is recognized when sales agreements are signed between the Group and the customers, deposits are received in full amount from the customers and the relevant risks and rewards were transferred to the customers. Revenue from the sale of goods is recognized upon the transfer of risks and rewards of ownership. Rental income under operating leases is recognized on a straight line basis over the term of the relevant lease. Interest income is recognized on a time proportion basis taking into account the principal amounts outstanding and the interest rates applicable. Dividend income from investments is recognized when the right to receive payment has been established. (j) Retirement benefit costs The Group participates in retirement schemes operated by local authorities and the annual cost of providing retirement benefits is charged to the consolidated profit and loss account according to the contribution determined by the relevant schemes. (k) Taxation The charge for taxation is based on the result for the year as adjusted for items, which are non-assessable or disallowable. Timing differences arise from the recognition for tax purposes of certain items of income and expense in a different accounting period from that in which they are recognized in the accounts. The tax effect of timing difference, computed using the liability method, is recognized in accounts to the extend in its probable a liabilities or an asset will crystallize in the foreseeable future. (l) Foreign currencies translation The Company and its major subsidiaries maintain their books and records in Renminbi (‘Rmb’). Transactions in foreign currencies are translated at exchange rates quoted by the People’s Bank of China at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Rmb at the exchange rate quoted by the People’s Bank of China at the balance sheet date. All exchange differences are dealt with in the profit and loss account. The accounts of subsidiaries and associated companies expressed in foreign currencies are translated at rates of exchange ruling at the balance sheet date. Exchange differences arising in these cases are dealt with as movement in reserves. 9 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 3. PRINCIPAL ACCOUNTING POLICIES – (continued) (m) Operating leasing Leases where substantially all the rewards and risks of ownership of assets remain with the lessors are accounted for as operating leases. Rentals income and expenses under operating leases are credited and charged respectively to the consolidated profit and loss account on a straight-line basis over the term of the relevant lease. (n) Cash and cash equivalents Cash and cash equivalents comprise short term highly liquid investments which are readily convertible into known amounts of cash and which were within three months of maturity when acquired, less advances from banks repayable within three months from the date of the advances. (o) Deferred taxation Deferred taxation is accounted for at the current taxation rate in respect of timing differences between profit as computed for taxation purposes and profit as stated in the accounts to the extent that an asset or liability is expected to be payable or receivable in the foreseeable future. 4. TURNOVER An analysis of the Group’s turnover by principal activities for the year ended December 31, 2001 is as follows: Restated 2001 2000 RMB’000 RMB’000 By activities: Sale of properties 7,450 39,239 Sale of manufacturing goods 13,887 21,920 Property management services 7,103 7,162 Trading income 8,167 17,312 Total revenue 36,607 85,633 10 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 5. BUSINESS AND GEOGRAPHICAL SEGMENTS For management purposes, the Group is organized into three major operating divisions – property, trading, and management services. The divisions are the basis on which the Group reports its primary segment information. Principal activities are as follows: Property - construction, sales and leasing of properties Manufacturing - manufacturing and sale of floppy disks Property management services - management income from management of properties Trading - sale of general merchandise All Group’s businesses are carried out in the PRC. Segment information about these businesses for the year ended December 31, 2001 is presented below: Sales of properties and management 2001 services Trading Manufacturing Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue External sales 14,553 8,167 13,887 - 36,607 Inter-segment sales 10,602 (10,602 ) - Total revenue 14,553 18,769 13,887 (10,602 ) 36,607 Inter-segment sales are charged on terms as determined by the directors. Sales of properties and management 2001 services Trading Manufacturing Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RESULTS Segment results (1,243 ) (23 ) (2,972 ) - (4,238 ) Operating expenses and unallocated corporate expenses (14,973 ) Operating loss (19,211 ) Finance costs (64,722 ) Non-operating income (11,885 ) less expenses Income from 2,330 investments Gain on disposals of 103,905 subsidiaries Profit before tax 10,417 Taxation - Net profit for the year 10,417 11 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 5. BUSINESS AND GEOGRAPHICAL SEGMENTS – (continued) Segment information about these businesses for the year ended December 31, 2000 is presented below: Sales of properties and management 2001 services Trading Manufacturing Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Revenue External sales 46,401 17,312 21,920 - 85,633 Inter-segment sales - 11,900 - (11,900 ) - Total revenue 46,401 29,212 21,920 (11,900 ) 85,633 Inter-segment sales are charged on terms as determined by the directors. Sales of properties Restated and management 2000 services Trading Manufacturing Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RESULTS Segment results 2,275 2,602 385 - 5,262 Operating expenses and unallocated corporate expenses (542,805 ) Operating loss (537,543 ) Finance costs (62,973 ) Non-operating income (18,686 ) less expenses Income from investments (11,233 ) Loss before tax (630,435 ) Taxation - Loss for the year (630,435 ) 12 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 6. LOSS FROM OPERATIONS Loss from operations has been arrived at after charging and crediting: Restated 2001 2000 RMB’000 RMB’000 After charging: Provision for doubtful debts 36,626 143,073 Depreciation - owned fixed assets (note 12) 22,116 14,816 Provision for inventories 605 45,350 Staff costs 10,133 9,157 Provision for diminution in value of investment - 7,071 And after crediting: Bad or doubtful debts written back 46,301 1,523 7. FINANCE COSTS Restated 2001 2000 RMB’000 RMB’000 Interest paid 58,761 63,072 Interest income (195) (99) 58,566 62,973 8. INCOME / (LOSS) FROM INVESTMENTS Restated 2001 2000 RMB’000 RMB’000 Dividends from equity investments 2,330 - Provision for diminution in value of investments - (28,445 ) 2,330 (28,445 ) 9. GAIN ON DISPOSALS OF SUBSIDIARIES During the year, the company sold some of its subsidiaries, a majority of which has been written off in the previous years, for a consideration of RMB107,163,000. These disposals resulted a gain of RMB103,904,000. 10. TAXATION In accordance with the relevant income taxation laws applicable to enterprises in Shenzhen Special Economic Zone, The Company and its subsidiaries are subject to income tax rate of 15% on its assessable profit except for Shenzhen Gintian Magnetic Technology Co., Ltd., a subsidiary, which is granted a 50% exemption from income taxation for the current year and therefore PRC income tax is provided at the rate of 7.5% on the estimated taxable income for the year. No deferred taxes have been provided in the financial statements, as there are no material timing differences. 13 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 11. EARNINGS/(LOSS) PER SHARE The calculation of earnings per share is based on the Group’s profit attributable to shareholders of RMB16,561,000 (2000: Loss of RMB810,506,000) and the 333,434,000 (2000: 333,434,000) shares in issue during the year. 12. FIXED ASSETS Furniture, fixtures and Land and office Motor Leasehold Electronic Plant and Buildings equipment vehicles improvements equipment machinery Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 COST At January 1, 2001 270,370 5,734 8,712 - 5,708 61,830 352,354 Additions 7,315 82 857 - 4 - 8,258 Disposals (6,500) (1) (1,117) - - - (7,618) Transferred from inventories 14,804 - - - - - 14,804 Transferred from deferred assets - - - 5,182 - - 5,182 At December 31, 2001 285,989 5,815 8,452 5,182 5,712 61,830 372,980 DEPRECIATION At January 1, 2001 48,896 5,285 7,791 - 5,051 40,904 107,927 Charged for the year 14,308 217 397 1,167 153 5,874 22,116 Eliminated on disposals (2,202) (11) (1,048) - - - (3,261) At December 31, 2001 61,002 5,491 7,140 1,167 5,204 46,778 126,782 NET BOOK VALUES At December 31, 2001 224,987 324 1,312 4,015 508 15,052 246,198 At December 31, 2000 221,474 449 921 - 657 20,926 244,427 As at December 31, 2001, land and buildings with net book value of RMB87,507,000 (2000: RMB89,878,000 ) have been pledged to the banks to secure general banking facilities for the Company and its subsidiaries (see note 23). 13. PRINCIPAL SUBSIDIARIES As at December 31, 2001 details of principal subsidiaries are as follows: Group’s attributable Place of Name of subsidiary equity interest Principal activity incorporation Direct Indirect % % Shenzhen Gintian Magnetic Technology Co., Ltd. 75 25 Floppy disks manufacturing PRC Shenzhen Gintian Real Estate Development Co., Ltd. 100 Property development PRC Shenzhen Gintian Property Management Co., Ltd. 100 Property management PRC Shenzhen Gintian Import and Export Co., Ltd. 100 Import and export trading PRC Shenzhen Gintian Building Property Management Co., Ltd. 100 Property management PRC 14 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 14. INTERESTS IN ASSOCIATES Restated 2001 2000 RMB’000 RMB’000 Cost of investment 93,391 93,391 Share of post-acquisition results, net of dividends received (26,973 ) (26,973 ) 66,418 66,418 Amounts due from / (to) associates (9,409 ) 14,301 Provision for diminution in value (2,926 ) (2,926 ) 54,083 77,793 Details of the principal associates at December 31, 2001 are as follows: Group’s attributable Place of Name of associate equity interest Principal activity incorporation Direct % Yantai Ginda Real Estate Development Co., Ltd. 37 Real estate and development PRC Peiking Gintian Investment Co., Ltd. 50 Investment PRC Fuoshan Kangman Foodstuff Co., Ltd. 25 Food Manufacturing PRC Xiamen Jinsong Property Development Co., Ltd. 50 Property development PRC Zhenzhen Hluikang Gintian Supermarket Co., Ltd. 49 Retailing PRC Hubei Gintian Commerce Industry and Agriculture Co., Ltd. 34 Manufacturing and trading of cotton PRC Dalian Gintian Lianyi Real Estate Property Development Co., Ltd. 45 Real estate and development PRC 上海金企咨詢有限公司 50 Property development PRC 深圳市灰狗巴士有限公司 50 Transportation service PRC 濰坊開發區金田實業公司 30 Property development PRC 15. LONG TERM INVESTMENTS Restated 2001 2000 RMB’000 RMB’000 Unlisted equity investments at cost 874,010 874,010 Provision for permanent diminution in value (34,123 ) (34,123 ) 839,887 839,887 Amounts due to unlisted equity investments (802,254) (728,884) 37,633 111,003 16. INVENTORIES Restated 2001 2000 RMB’000 RMB’000 Properties under development held for sale 359,068 220,151 Completed properties held for sale 26,413 - Raw materials 1,603 3,963 Work in progress 98 254 Finished goods 2,510 668 Consumables 75 67 389,767 225,103 15 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 16. INVENTORIES – (continued) Included in the properties under development are an amount of approximately RMB22,600,000 (2000: RMB112,978,000) which have already been under custody of the banks since July 2000 and an amount of RMB35,669,000 (2000: RMB37,759,000) which is under the title of a third party. As the Group does not have sufficient working capital, the construction work of the remaining balance of RMB300,799,000 has been suspended and there is no plan set by the management as to when the construction work is to be resumed. As at December 31, 2001, completed properties held for sale with a carrying value of RMB13,388,000 (2000:RMB13,388,000) have been pledged to the banks to secure general banking facilities for the subsidiaries (see note 23). 17. TRADING SECURITIES Restated 2001 2000 RMB’000 RMB’000 Listed securities, at market value 22,435 25,435 18. SHORT-TERM LOANS Restated 2001 2000 RMB’ 000 RMB’000 Mortgaged bank loans 280,517 307,424 Guaranteed bank loans 607,987 614,871 Other unsecured loans 31,138 31,667 919,642 953,962 Mortgaged and guaranteed bank loans are secured by the Group’s assets and bear interest at prevailing bank rates ranging from 5% to 12% (2000: 5% to 12%) per annum. Other unsecured loans bear interest at a rate of approximately 5% (2000: 5%) per annum. Mortgaged bank loans and guaranteed bank loans of RMB887,004,000 have been overdue for repayment. Management of the Company is now in the process of negotiating with the banks to extend the repayment due date. 19. SHARE CAPITAL 2001 2000 RMB’000 RMB’000 Registered, issued and fully paid: 259,195,384 “A” share of RMB1 each 259,196 259,196 74,236,802 “B” share of RMB1 each 74,237 74,237 333,433 333,433 All the shares rank pari passu with each other in all respects. 16 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 20. RESERVES Statutory capital Public Surplus Accumulated reserve welfare fund fund losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Balance at January 1, 2001 622,946 - 1,023 (1,884,783) (1,260,814 ) Prior year adjustment (13,414 ) 21,214 612 (93,762) (85,350 ) Restated 609,532 21,214 1,635 (1,978,545 ) (1,346,164 ) Net profit for the year - - - 16,561 16,561 Transfer 7,253 - (7,253) - Balance at December 31, 2001 616,785 21,214 1,635 (1,969,237 ) (1,329,603 ) Statutory reserve and statutory public welfare fund are maintained in accordance with the relevant laws and regulations in the PRC and form part of shareholders’ equity. Prior year adjustment relates to the reversals of profit recognized by a subsidiary company, Lingzhou Electric Power Factory, in the previous years. The results of this company had been consolidated accounts of the Group in the previous years. However, in 2002, it was held by Henan High Civil Court that the Company shall return the share of this company to the previous owner. Accordingly, the reversals of the results recognized in the previous years are accounted for as a prior year adjustment. 21. RECONCILIATION OF PROFIT FROM ORDINARY ACTIVITIES BEFORE TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES 2001 RMB’ 000 Profit from ordinary activities before taxation 16,561 Adjustment for: Interest expenses 58,761 Interest income (195 ) Bad or doubtful debts written back (46,301 ) Dividend income (134 ) Provision for doubtful debts 36,626 Provision for inventories 605 Depreciation 22,116 Gain on disposal of subsidiaries (103,905 ) Gain on disposal of fixed assets (97 ) Loss on sales of trading securities 470 Operating cash flows before movements in working capital (15,493 ) Increase in inventories (180,073 ) Increase in accounts receivables, other receivables and prepayments (131,927 ) Increase in other current assets (122 ) Increase in accruals and accounts payables 205,006 Increase tax payable 920 Increase in receipts in advance and other payables 43,635 Cash generated from by operations (78,054 ) Interest received 197 Net cash inflow from operating activities (77,859 ) 17 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 22. ANALYSIS OF CHANGES IN FINANCING DURING THE YEAR Short-term Long-term bank loans bank loans RMB’000 RMB’000 Balance at January 1, 2001 1,118,890 32,792 Reclassified of short-term loans due within 2-5 years 18,000 (18,000 ) Repayments of amounts borrowed (217,248 ) (14,792 ) Balance at December 31, 2001 919,642 - 23. PLEDGE OF ASSETS As at December 31, 2001, leasehold land and buildings with net book values of RMB87,507,000 (2000:RMB89,878,000) and completed properties held for sales of RMB13,388,000 (2000: RMB13,388,000) have been pledged to the banks for the general banking facilities granted to the Group. 24. CONTINGENT LIABILITIES Restated 2001 2000 RMB’000 RMB’000 Guarantees given to banks in respect of bank facilities utilised by third parties 338,700 410,200 25. OPERATING LEASES (a) Leases as leasee Non-cancelable operating leases are payable as follows: Restated 2001 2000 RMB’000 RMB’000 Land and buildings - expiring in the first year 813 1,253 - expiring in the second to fifth years inclusive 1,886 2,612 - expiring after the fifth year - - 2,699 3,865 (b) Leases as lessor The Group leases out certain properties under non-cancelable operating leases. Rental income to be received is as follows: Restated 2001 2000 RMB’000 RMB’000 Land and buildings - expiring in the first year 342 - - expiring in the second to fifth years inclusive 604 1,478 - expiring after the fifth year - - 946 1,478 18 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 26. LEGAL LITIGATION As at December 31, 2001, the Group has received over 68 legal claims which are in the process in different civil courts in the PRC. The parties which undertook the legal claims against the Group are mainly banks, construction contractors and customers and the claims mainly relate to the bank loans overdue for repayments, the outstanding construction fee and the sale of properties. The total amounts under legal proceedings against the Group are approximately RMB896,730,000 and no provision has been made in the financial statements of the Group. 27. IMPACT OF IAS ADJUSTMENTS ON PROFIT/LOSS Profit/(loss) for the year ended December 31, Restated 2001 2000 RMB’000 RMB’000 As reported in the financial statements prepared in accordance with PRC GAAP 11,521 (810,262) Adjustments to align with IAS: Write-back /(Write-off) of deferred expenses 37 (244) Additional depreciation (1,746) - Provision for obsolete stocks (606) - Capitalization of expenses 102 - Disposals of subsidiaries 7,253 - 16,561 (810,506) 28 IAS IMPACT ON CONSOLIDATED NET ASSETS December 31 Consolidated net assets Restated 2001 2000 RMB’000 RMB’000 As reported in financial statements prepared in accordance with PRC GAAP (993,712) (1,012,486) Adjustments to align with IAS: Write back/(Write-off) of deferred expenses 37 (244) Additional depreciation (1,746) Provision for obsolete stocks (606) Capitalization of expenses 102 Elimination of inter-company unrealized profit (244) (996,169) (1,012,730) 19 GINTIAN INDUSTRY (GROUP) CO., LTD 金田實業(集團)股份有限公司 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2001 29 CONTINGENT LIABILITIES As mentioned in note 9 to the financial statements, during the year, the Group recognized a gain of RMB103,904,000 which derived from the disposals of subsidiaries (which had been written off in the previous years). In accordance with the sales agreements, the disposals of these subsidiaries are subject to the re-organization plan, which is being under process. Should the re-organization plan not be proceeded, the purchasers of these subsidiaries have the rights to return these subsidiaries to the Group and have the right to collect the amounts paid to the Group. The Directors are of the opinion that, in view of the current situation, the re-organization plan will proceed and is to be finalized by the end of 2002. 30 COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform with the current year’s presentation of the financial statements. 20